<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 28, 1997
REGISTRATION NO. 333-40053
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- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
SUNGARD DATA SYSTEMS INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
----------------
DELAWARE 7379 51-0267091
(STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
JURISDICTION OF CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
INCORPORATION OR
ORGANIZATION)
SUNGARD DATA SYSTEMS INC.
1285 DRUMMERS LANE
WAYNE, PA 19087
TELEPHONE: (610) 341-8700
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
----------------
LAWRENCE A. GROSS, ESQ.
VICE PRESIDENT AND GENERAL COUNSEL
SUNGARD DATA SYSTEMS INC.
1285 DRUMMERS LANE
WAYNE, PA 19087
TELEPHONE: (610) 341-8700
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES TO:
RICHARD E. CLIMAN, ESQ. MICHAEL C. PHILLIPS, ESQ.
KEITH A. FLAUM, ESQ. MORRISON & FOERSTER LLP
COOLEY GODWARD LLP 775 PAGE MILL ROAD
FIVE PALO ALTO SQUARE PALO ALTO, CA 94304-1018
3000 EL CAMINO REAL (650) 813-5600
PALO ALTO, CA 94306-2155
(650) 843-5000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable following the effectiveness of this Registration Statement and the
effective time of the proposed merger of Information Data Inc. with and into
Infinity Financial Technology, Inc., as described in the Agreement and Plan of
Merger and Reorganization, dated as of October 17, 1997, attached as Appendix
A to the Proxy Statement/Prospectus forming a part of this Registration
Statement (the "Reorganization Agreement").
If the securities being registered on this Form are to be offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(a) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
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<PAGE>
[LOGO OF INFINITY FINANCIAL TECHNOLOGY, INC.]
INFINITY FINANCIAL TECHNOLOGY, INC.
640 CLYDE COURT
MOUNTAIN VIEW, CALIFORNIA 94043
Dear Stockholder:
As you may be aware, Infinity Financial Technology, Inc. ("Infinity") has
entered into an Agreement and Plan of Merger and Reorganization (the
"Reorganization Agreement") with SunGard Data Systems Inc., a Delaware
corporation ("SunGard"), providing for the acquisition of Infinity by SunGard.
Pursuant to the Reorganization Agreement, a special meeting of stockholders of
Infinity (the "Infinity Special Meeting") will be held at the principal
executive offices of Infinity located at 640 Clyde Court, Mountain View,
California 94043 on December 30, 1997 at 9:00 a.m., local time.
At the Infinity Special Meeting you will be asked to consider and vote upon
a proposal to adopt and approve the Reorganization Agreement which provides
for the merger of a wholly owned subsidiary of SunGard with and into Infinity
(the "Merger"). Upon consummation of the Merger, Infinity will become a wholly
owned subsidiary of SunGard. As a result of the Merger, each outstanding share
of common stock of Infinity will be converted into the right to receive 0.68
of a share of common stock of SunGard (subject to adjustment as appropriate to
reflect any stock split, stock dividend, reverse stock split,
reclassification, recapitalization or other similar transaction involving the
common stock of SunGard or the common stock of Infinity between the date of
the Reorganization Agreement and the effective time of the Merger). In
addition, SunGard will assume Infinity's obligations with respect to
outstanding options and rights to purchase Infinity stock. The Merger is
described more fully in the accompanying Proxy Statement/Prospectus.
After careful consideration, the Infinity Board of Directors has unanimously
approved the Reorganization Agreement and the Merger, and has concluded they
are fair to, and in the best interests of, Infinity and its stockholders. Your
Board of Directors unanimously recommends a vote in favor of the adoption and
approval of the Reorganization Agreement and the approval of the Merger.
In the materials accompanying this letter you will find a Notice of Special
Meeting of Stockholders, a Proxy Statement/Prospectus relating to the proposal
to be voted upon at the Infinity Special Meeting and a Proxy Card. The Proxy
Statement/Prospectus more fully describes the proposed transaction.
Stockholders are urged to review carefully the information contained in the
accompanying Proxy Statement/Prospectus, including the information under the
captions "Risk Factors," "Infinity Special Meeting--Board Recommendation,"
"Approval of the Merger and Related Transactions--Infinity's Reasons For the
Merger," "--Background of the Merger" and "--Interests of Certain Persons in
the Merger" prior to voting on the proposal.
All stockholders are cordially invited to attend the Infinity Special
Meeting in person. If you attend the Infinity Special Meeting, you may vote in
person if you wish even though you have previously returned your completed
proxy. WHETHER OR NOT YOU PLAN TO ATTEND THE INFINITY SPECIAL MEETING, IT IS
IMPORTANT THAT YOUR SHARES BE REPRESENTED AND VOTED AT THE INFINITY SPECIAL
MEETING, REGARDLESS OF THE NUMBER OF SHARES YOU HOLD. APPROVAL OF THE MERGER
REQUIRES THE AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF THE OUTSTANDING
SHARES OF INFINITY COMMON STOCK. THEREFORE, PLEASE COMPLETE, SIGN, DATE AND
RETURN YOUR PROXY IN THE ENCLOSED ENVELOPE. PLEASE DO NOT SEND IN THE STOCK
CERTIFICATE(S) REPRESENTING YOUR INFINITY COMMON STOCK AT THIS TIME.
On behalf of the Board, I thank you for your support and ask you to vote in
favor of the Merger.
Sincerely,
Roger A. Lang, Jr.
Chief Executive Officer
YOUR VOTE IS IMPORTANT--PLEASE RETURN YOUR PROXY PROMPTLY
<PAGE>
December 1, 1997
INFINITY FINANCIAL TECHNOLOGY, INC.
640 CLYDE COURT
MOUNTAIN VIEW, CALIFORNIA 94043
----------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 30, 1997
----------------
TO THE STOCKHOLDERS OF INFINITY FINANCIAL TECHNOLOGY, INC.:
NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders (the "Infinity
Special Meeting") of Infinity Financial Technology, Inc., a Delaware
corporation ("Infinity"), will be held on December 30, 1997, at 9:00 a.m.,
local time, at the principal executive offices of Infinity located at 640
Clyde Court, Mountain View, California 94043 to consider and vote upon the
following proposal:
To (i) adopt and approve the Agreement and Plan of Merger and
Reorganization (the "Reorganization Agreement"), dated as of October 17,
1997, among Infinity, SunGard Data Systems Inc., a Delaware corporation
("SunGard"), and Information Data Inc., a Delaware corporation and wholly
owned subsidiary of SunGard ("Merger Sub"), and (ii) approve the merger of
Merger Sub with and into Infinity pursuant to which Infinity will become a
wholly owned subsidiary of SunGard.
Information relating to the above proposal is set forth in the attached
Proxy Statement/Prospectus. Stockholders of record at the close of business on
November 14, 1997 are entitled to notice of, and to vote at, the Infinity
Special Meeting and any adjournments or postponements thereof. Approval and
adoption of the Reorganization Agreement and approval of the merger described
above will require the affirmative vote of the holders of a majority of the
shares of Infinity common stock outstanding on the record date. All
stockholders are cordially invited to attend the Infinity Special Meeting in
person.
By order of the Board of Directors
Terry H. Carlitz
Chief Financial Officer, Vice
President, Finance and Secretary
Mountain View, California
December 1, 1997
WHETHER OR NOT YOU EXPECT TO ATTEND THE INFINITY SPECIAL MEETING, PLEASE
COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD AND MAIL IT PROMPTLY IN THE
ENCLOSED ENVELOPE IN ORDER TO ENSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE
NEEDS TO BE AFFIXED IF THE PROXY CARD IS MAILED IN THE UNITED STATES.
<PAGE>
INFINITY FINANCIAL TECHNOLOGY, INC.
PROXY STATEMENT
---------------
SUNGARD DATA SYSTEMS INC.
PROSPECTUS
---------------
This Proxy Statement/Prospectus is being furnished to holders of common
stock, $0.001 par value per share ("Infinity Common Stock"), of Infinity
Financial Technology, Inc., a Delaware corporation ("Infinity"), in connection
with the solicitation of proxies by the Infinity Board of Directors for use at
Infinity's Special Meeting of Stockholders or any adjournment or postponement
thereof (the "Infinity Special Meeting"). The Infinity Special Meeting is
being called to consider and vote upon a proposal to adopt and approve the
Agreement and Plan of Merger and Reorganization, dated as of October 17, 1997,
among SunGard Data Systems Inc., a Delaware corporation ("SunGard"),
Information Data Inc., a Delaware corporation and a wholly owned subsidiary of
SunGard ("Merger Sub"), and Infinity (the "Reorganization Agreement"), and to
approve the merger of Merger Sub with and into Infinity (the "Merger").
Upon consummation of the proposed Merger, Infinity will become a wholly
owned subsidiary of SunGard and each outstanding share of Infinity Common
Stock will be converted into the right to receive sixty-eight hundredths
(0.68) of a share of common stock, $0.01 par value per share, of SunGard
("SunGard Common Stock") (subject to adjustment as appropriate to reflect any
stock split, stock dividend, reverse stock split, reclassification,
recapitalization or other similar transaction involving the SunGard Common
Stock or the Infinity Common Stock between the date of the Reorganization
Agreement and the effective time of the Merger). (The fraction of a share of
SunGard Common Stock, currently 0.68, into which each share of Infinity Common
Stock will be converted pursuant to the Reorganization Agreement is referred
to as the "Exchange Ratio"). If the Merger is consummated, Infinity's 1989
Stock Option Plan, Infinity's 1993 Stock Incentive Plan and Infinity's 1996
Stock Incentive Plan (collectively, the "Infinity Stock Option Plans") will be
assumed by SunGard and each option to purchase Infinity Common Stock
outstanding under the Infinity Stock Option Plans (each, an "Infinity Option")
will be converted into an option to purchase that number of shares of SunGard
Common Stock determined by multiplying the number of shares of Infinity Common
Stock subject to such Infinity Option immediately prior to the effective time
of the Merger by the Exchange Ratio, rounded down to the next lowest whole
number of shares (with cash, less the applicable exercise price, being payable
for any fraction of a share), at an exercise price equal to the exercise price
of such option at the time of the Merger divided by the Exchange Ratio,
rounded up to the next highest cent.
The obligations of SunGard and Infinity to effect the Merger and otherwise
consummate the transactions contemplated by the Reorganization Agreement are
subject to the satisfaction or waiver of various conditions, including the
adoption and approval of the Reorganization Agreement and the approval of the
Merger by holders of a majority of the outstanding shares of Infinity Common
Stock and the expiration or termination of the waiting period applicable to
the Merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"). The Merger will be consummated shortly after such
stockholder approval is obtained, such waiting period expires or is terminated
and the other conditions to the consummation of the Merger are satisfied or
waived. It is currently anticipated that the Merger will be consummated
shortly after the Infinity Special Meeting.
This Proxy Statement/Prospectus also constitutes the prospectus of SunGard
with respect to shares of SunGard Common Stock to be issued in the Merger in
exchange for outstanding shares of Infinity Common Stock.
All information contained or incorporated by reference herein concerning
SunGard has been furnished by SunGard, and all information contained or
incorporated by reference herein concerning Infinity has been furnished by
Infinity.
This Proxy Statement/Prospectus and the accompanying form of proxy are first
being mailed to stockholders of Infinity on or about December 1, 1997.
---------------
THE ABOVE MATTERS ARE DISCUSSED IN DETAIL IN THIS PROXY
STATEMENT/PROSPECTUS. STOCKHOLDERS OF INFINITY ARE STRONGLY URGED TO READ AND
CONSIDER CAREFULLY THIS PROXY STATEMENT/PROSPECTUS IN ITS ENTIRETY, INCLUDING
THE MATTERS REFERRED TO UNDER "RISK FACTORS" BEGINNING AT PAGE 16.
---------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION (THE "COMMISSION") NOR HAS THE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT/PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------
The date of this Proxy Statement/Prospectus is December 1, 1997.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
AVAILABLE INFORMATION...................................................... 1
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE............................ 1
SUMMARY.................................................................... 3
The Companies............................................................ 3
The Infinity Special Meeting............................................. 3
The Merger............................................................... 4
Risk Factors............................................................. 11
Markets and Market Prices................................................ 11
Selected Historical and Pro Forma Financial Information.................. 12
Comparative Per Share Data............................................... 15
RISK FACTORS............................................................... 16
Risks Relating to the Merger............................................. 16
Uncertainty Relating to Integration.................................... 16
Risks Associated with Fixed Exchange Ratio............................. 16
Effect of Merger on Operating Results, Customers and Partners.......... 16
Rights of Holders of Infinity Common Stock Following the Merger........ 17
Risks Relating to SunGard's Business..................................... 17
Acquisitions........................................................... 17
Technological Changes.................................................. 17
Product Development.................................................... 17
Financial Services Industry............................................ 17
New Business Line...................................................... 17
Risks Relating to Infinity's Business.................................... 17
THE INFINITY SPECIAL MEETING............................................... 19
Purpose of the Infinity Special Meeting.................................. 19
Date, Time and Place of Meeting.......................................... 19
Record Date and Outstanding Shares....................................... 19
Voting of Proxies........................................................ 19
Vote Required............................................................ 19
Board Recommendation..................................................... 20
Quorum; Abstentions...................................................... 20
Solicitation of Proxies; Expenses........................................ 20
INFINITY PRINCIPAL STOCKHOLDERS............................................ 21
COMPARATIVE PER SHARE MARKET PRICE DATA AND DIVIDEND POLICY................ 22
APPROVAL OF THE MERGER AND RELATED TRANSACTIONS............................ 23
Background of the Merger................................................. 23
Infinity's Reasons for Merger............................................ 25
SunGard's Reasons for the Merger......................................... 26
Opinion of Deutsche Morgan Grenfell Inc.................................. 28
Comparative Stock Price Performance.................................... 29
Historical Exchange Ratio Analysis..................................... 29
Premium Analysis....................................................... 29
Contribution Analysis.................................................. 30
Peer Group Comparison.................................................. 30
Selected Precedent Transactions........................................ 30
Potential Future Share Price Analysis.................................. 30
Pro Forma Analysis of the Merger....................................... 31
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
Interests of Certain Persons in the Merger.............................. 32
Officers and Directors of Infinity.................................... 32
Indemnification and Insurance......................................... 32
Options under the Infinity Stock Option Plans......................... 32
Employment/Severance Arrangement...................................... 32
Officers and Directors of SunGard..................................... 32
Voting Agreements....................................................... 33
Affiliate Agreements.................................................... 33
Noncompetition Agreements............................................... 34
Certain Federal Income Tax Consequences................................. 34
Anticipated Accounting Treatment........................................ 35
Regulatory Matters...................................................... 36
Absence of Appraisal Rights............................................. 36
Resale of SunGard Common Stock.......................................... 36
THE REORGANIZATION AGREEMENT.............................................. 37
General................................................................. 37
Merger Consideration.................................................... 37
Stock Options; Employee Stock Purchase Plan............................. 37
Stock Ownership Following the Merger.................................... 38
Conversion of Shares; Procedures for Exchange of Certificates........... 38
Effect on Certificates.................................................. 38
Corporate Matters....................................................... 39
Representations and Warranties.......................................... 39
Covenants............................................................... 39
Non-Solicitation........................................................ 42
Indemnification and Insurance........................................... 43
Conditions to the Merger................................................ 43
SunGard and Merger Sub................................................ 43
Infinity.............................................................. 46
Termination............................................................. 47
Expenses and Termination Fee............................................ 48
Amendment; Waiver....................................................... 49
Unaudited Pro Forma Financial Information............................... 50
COMPARISON OF CAPITAL STOCK............................................... 58
Description of SunGard Capital Stock.................................... 58
Description of Infinity Capital Stock................................... 58
COMPARISON OF RIGHTS OF HOLDERS OF SUNGARD COMMON STOCK AND HOLDERS OF
INFINITY COMMON STOCK.................................................... 59
EXPERTS................................................................... 60
LEGAL MATTERS............................................................. 60
REPRESENTATIVES OF INDEPENDENT AUDITORS................................... 60
APPENDIX A - AGREEMENT AND PLAN OF MERGER AND REORGANIZATION.............. A-1
APPENDIX B - OPINION OF DEUTSCHE MORGAN GRENFELL INC...................... B-1
</TABLE>
ii
<PAGE>
AVAILABLE INFORMATION
SunGard and Infinity are subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith file reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). The reports, proxy
statements and other information filed by SunGard and Infinity with the
Commission may be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, as well as at the Commission's regional offices at 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661 and 7 World Trade Center,
Suite 1300, New York, New York 10048. Copies of such material may also be
obtained from the Commission at prescribed rates by writing to the Public
Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C.
20549. The SunGard Common Stock is listed on the New York Stock Exchange
("NYSE") and reports and other information concerning SunGard may be inspected
at the offices of the NYSE at 20 Broad Street, New York, New York 10005. The
Infinity Common Stock is quoted on the Nasdaq National Market and reports and
other information concerning Infinity may be inspected at the offices of the
National Association of Securities Dealers, Inc., 1735 K. Street, N.W.,
Washington, D.C. 20006.
SunGard has filed with the Commission a Registration Statement on Form S-4
(herein, together with all amendments and exhibits thereto, referred to as the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the SunGard Common Stock to be issued in
the Merger. This Proxy Statement/Prospectus does not contain all of the
information set forth in the Registration Statement, certain portions of which
have been omitted pursuant to the rules and regulations of the Commission and
to which portions reference is hereby made. For further information with
respect to SunGard, Infinity, the Merger, the securities offered hereby and
related matters, reference is made to the Registration Statement. The
Registration Statement and the exhibits thereto may be inspected, without
charge, at the offices of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and copies may be obtained from the Commission at
prescribed rates.
The Commission maintains a World Wide Web site that contains reports, proxy
and information statements and other information regarding registrants that
file electronically with the Commission. The address of the site is
http://www.sec.gov.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed with the Commission by SunGard
(Commission File Number 1-12989) pursuant to the Exchange Act are incorporated
by reference into this Proxy Statement/Prospectus:
1. SunGard's Annual Report on Form 10-K for the fiscal year ended December
31, 1996;
2. SunGard's Quarterly Reports on Form 10-Q for the quarterly periods ended
March 31, 1997, June 30, 1997 and September 30, 1997;
3. SunGard's Current Report on Form 8-K filed with the Commission on
October 27, 1997; and
4. The description of the SunGard Common Stock contained in the
Registration Statement on Form 8-A filed with the Commission on May 14,
1997.
The following documents previously filed with the Commission by Infinity
(Commission File Number 0-21601) pursuant to the Exchange Act are incorporated
by reference into this Proxy Statement/Prospectus:
1. Infinity's Annual Report on Form 10-K for the fiscal year ended December
31, 1996;
2. Infinity's Quarterly Reports on Form 10-Q for the quarterly periods
ended March 31, 1997, June 30, 1997 and September 30, 1997; and
3. The description of the Infinity Common Stock contained in the
Registration Statement on Form 8-A filed with the Commission on October
22, 1996.
1
<PAGE>
The information relating to SunGard and Infinity contained in this Proxy
Statement/Prospectus does not purport to be comprehensive and should be read
together with the information in the documents incorporated by reference
herein.
All documents filed by SunGard and Infinity pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this Proxy
Statement/Prospectus and prior to the date of the Infinity Special Meeting
shall be deemed to be incorporated by reference into this Proxy
Statement/Prospectus and to be a part hereof from the dates of filing such
documents or reports. Any statement contained herein or in a document
incorporated or deemed to be incorporated by reference herein shall be deemed
to be modified or superseded for purposes of this Proxy Statement/Prospectus
to the extent that a statement contained herein or in any other subsequently
filed document which is also incorporated or is deemed to be incorporated
herein modifies or supersedes such statement. Any such statement so modified
or superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Proxy Statement/Prospectus.
----------------
THIS PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH
ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE
WITHOUT CHARGE TO ANY PERSON TO WHOM A COPY OF THIS PROXY STATEMENT/PROSPECTUS
HAS BEEN DELIVERED UPON WRITTEN OR ORAL REQUEST TO SUNGARD DATA SYSTEMS INC.,
1285 DRUMMERS LANE, WAYNE, PA 19087 ATTENTION: INVESTOR RELATIONS, TELEPHONE
(610) 341-8700, WITH RESPECT TO DOCUMENTS RELATING TO SUNGARD, OR TO INFINITY
FINANCIAL TECHNOLOGY, INC., 640 CLYDE COURT, MOUNTAIN VIEW, CA 94043,
ATTENTION: INVESTOR RELATIONS, TELEPHONE (650) 940-6100, WITH RESPECT TO
DOCUMENTS RELATING TO INFINITY. IN ORDER TO ENSURE DELIVERY PRIOR TO THE
INFINITY SPECIAL MEETING, REQUESTS SHOULD BE RECEIVED BY DECEMBER 22, 1997.
----------------
This Proxy Statement/Prospectus is being furnished to Infinity's
stockholders in connection with the solicitation of proxies by the Infinity
Board of Directors for use at the Infinity Special Meeting. Each copy of this
Proxy Statement/Prospectus mailed to the Infinity stockholders is accompanied
by a form of proxy for use at the Infinity Special Meeting. This Proxy
Statement/Prospectus is also being furnished by SunGard to holders of Infinity
Common Stock as a prospectus in connection with the shares of the SunGard
Common Stock to be issued upon consummation of the Merger.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROXY
STATEMENT/PROSPECTUS IN CONNECTION WITH THE OFFERING AND THE SOLICITATION MADE
HEREBY AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY SUNGARD, MERGER SUB OR INFINITY. THIS
PROXY STATEMENT/PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO PURCHASE, ANY SECURITIES, OR THE SOLICITATION OF A
PROXY, IN ANY JURISDICTION IN WHICH, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL
TO MAKE SUCH AN OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROXY
STATEMENT/PROSPECTUS NOR ANY DISTRIBUTION OF SECURITIES MADE HEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE ANY INFERENCE THAT THERE HAS NOT BEEN ANY
CHANGE IN THE INFORMATION SET FORTH HEREIN OR IN THE AFFAIRS OF EITHER SUNGARD
OR INFINITY SINCE THE DATE HEREOF.
----------------
This Proxy Statement/Prospectus contains trademarks of SunGard and Infinity
as well as trademarks of other companies.
2
<PAGE>
SUMMARY
The following is a summary of certain information contained elsewhere in this
Proxy Statement/Prospectus. This summary is not, and is not intended to be,
complete by itself. This Proxy Statement/Prospectus contains forward-looking
statements (including those set forth or referenced in "Approval of the Merger
and Related Transactions--Background of the Merger," "--Infinity's Reasons for
the Merger," "--SunGard's Reasons for the Merger" and "--Opinion of Deutsche
Morgan Grenfell Inc.") that involve risks and uncertainties. SunGard's and
Infinity's actual results may differ materially from those anticipated in these
forward-looking statements as a result of certain risks and uncertainties,
including risks relating to: (a) the integration of SunGard and Infinity; (b)
the respective businesses of SunGard and Infinity (including risks relating to
the timing and magnitude of software sales, the timing and scope of
technological advances and the overall condition of the financial services
industry); and (c) other matters set forth under "Risk Factors" and elsewhere
in this Proxy Statement/Prospectus and in the documents incorporated herein by
reference. This summary is qualified in its entirety by reference to the more
detailed information contained elsewhere in this Proxy Statement/Prospectus,
the appendices attached hereto and the documents referred to or incorporated by
reference herein. Stockholders of Infinity are urged to review carefully all of
the information contained in this Proxy Statement/Prospectus, the
Reorganization Agreement attached as Appendix A and the other appendix attached
hereto.
THE COMPANIES
SUNGARD DATA SYSTEMS INC.
SunGard is a computer services and software company that specializes in
proprietary investment support systems, comprehensive computer disaster
recovery services and proprietary healthcare information systems.
SunGard was incorporated in Delaware in June 1982. The principal executive
offices of SunGard are located at 1285 Drummers Lane, Wayne, Pennsylvania
19087. SunGard's telephone number is (610) 341-8700.
INFINITY FINANCIAL TECHNOLOGY, INC.
Infinity develops and markets enterprise solutions software for financial
risk management. Founded in 1989, Infinity currently has more than 65 customers
around the world, consisting primarily of large banks and other financial
institutions with sophisticated trading operations and risk management needs.
Infinity was incorporated in California in June 1989 and was reincorporated
in Delaware in September 1996. The principal executive offices of Infinity are
located at 640 Clyde Court, Mountain View, California 94043. Infinity's
telephone number is (650) 940-6100.
INFORMATION DATA INC.
Merger Sub is a corporation recently organized as a wholly owned subsidiary
of SunGard for the purpose of effecting the Merger. Merger Sub has no material
assets and has not engaged in any activities except in connection with the
Merger.
The principal executive offices of Merger Sub are located at 1285 Drummers
Lane, Wayne, Pennsylvania 19087. Merger Sub's telephone number is (610) 341-
8700.
THE INFINITY SPECIAL MEETING
TIME, DATE, PLACE AND PURPOSE
The Infinity Special Meeting will be held at the principal executive offices
of Infinity located at 640 Clyde Court, Mountain View, California 94043 on
Tuesday, December 30, 1997, at 9:00 a.m., local time. The purpose of the
Infinity Special Meeting is to vote upon a proposal to adopt and approve the
Reorganization Agreement and to approve the Merger.
3
<PAGE>
RECORD DATE AND VOTE REQUIRED
Only Infinity stockholders of record at the close of business on November 14,
1997 (the "Record Date") are entitled to vote at the Infinity Special Meeting.
Under the Delaware General Corporation Law (the "DGCL") and the Certificate of
Incorporation of Infinity, approval and adoption of the Reorganization
Agreement and approval of the Merger requires the affirmative vote of the
holders of a majority of the outstanding shares of Infinity Common Stock
entitled to vote (the "Required Vote"). As of the Record Date, directors and
executive officers of Infinity, and their affiliates, owned in the aggregate
issued and outstanding shares of Infinity Common Stock representing
approximately 45.9% of the shares of Infinity Common Stock issued and
outstanding as of the Record Date. Pursuant to certain voting agreements with
SunGard (the "SunGard Voting Agreements"), certain directors, officers and
other affiliates of Infinity, who owned in the aggregate issued and outstanding
shares of Infinity Common Stock representing approximately 45.9% of the shares
of Infinity Common Stock issued and outstanding as of the Record Date, have
agreed that, prior to the earlier of the date upon which the Reorganization
Agreement is validly terminated or the date upon which the Merger becomes
effective (such earlier date being referred to as the "Expiration Date"), they
will vote their shares of Infinity Common Stock in favor of: (i) the Merger;
(ii) the execution and delivery by Infinity of the Reorganization Agreement;
(iii) the adoption and approval of the terms of the Reorganization Agreement;
and (iv) each of the other actions contemplated by the Reorganization Agreement
and any action required in furtherance thereof. See "Approval of the Merger and
Related Transactions--Voting Agreements."
This Proxy Statement/Prospectus and the accompanying Notice of Special
Meeting of Stockholders were mailed to all Infinity stockholders of record as
of the Record Date and constitute notice of the Infinity Special Meeting in
conformity with the requirements of the DGCL.
THE MERGER
GENERAL
At the Effective Time (as defined below), Merger Sub will merge with and into
Infinity, the separate existence of Merger Sub will cease and Infinity will
become a wholly owned subsidiary of SunGard. It is currently anticipated that
the Effective Time will occur shortly after the Infinity Special Meeting. In
addition, the Reorganization Agreement provides that subject to the terms and
conditions thereof, at the Effective Time, the following will occur:
Conversion of Infinity Common Stock. Subject to the provisions contained in
the Reorganization Agreement relating to the payment of cash in lieu of
fractional shares, each share of Infinity Common Stock then outstanding (except
for any such shares held by Infinity as treasury stock and any such shares held
by SunGard or any subsidiary of SunGard or Infinity) will be converted into the
right to receive sixty-eight hundredths (0.68) of a share of SunGard Common
Stock (subject to adjustment as appropriate to reflect any stock split, stock
dividend, reverse stock split, reclassification, recapitalization or other
similar transaction involving the SunGard Common Stock or the Infinity Common
Stock between the date of the Reorganization Agreement and the effective time
of the Merger). (The fraction of a share of SunGard Common Stock into which
each share of Infinity Common Stock will be converted pursuant to the
Reorganization Agreement is referred to as the "Exchange Ratio").
Infinity Stock Options. All rights with respect to Infinity Common Stock
under each Infinity Option then outstanding will be converted into and become
rights with respect to SunGard Common Stock, and SunGard will assume each such
Infinity Option in accordance with the terms (as in effect as of October 17,
1997) of the stock option plan under which it was issued and the stock option
agreement by which it is evidenced (subject to appropriate adjustments to the
exercise price and number of shares subject thereto based upon the Exchange
Ratio). See "The Reorganization Agreement--Stock Options; Employee Stock
Purchase Plan."
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<PAGE>
Infinity Employee Stock Purchase Plan. The Infinity 1996 Employee Stock
Purchase Plan (the "Infinity Purchase Plan") will be terminated as of the
Effective Time. The rights of participants in the Infinity Purchase Plan with
respect to any offering period then underway under the Infinity Purchase Plan
shall be determined by treating the last business day prior to the Effective
Time as the last day of such offering period and by making such other pro-rata
adjustments as may be necessary to reflect the reduced offering period but
otherwise treating such offering period as a fully effective and completed
offering period for all purposes under the Infinity Purchase Plan. See "The
Reorganization Agreement--Stock Options; Employee Stock Purchase Plan."
EFFECTIVE TIME OF THE MERGER; CLOSING DATE
The Merger will become effective upon the filing of a Certificate of Merger
with the Secretary of State of the State of Delaware or at such later time as
may be specified in the Certificate of Merger (the "Effective Time"). The
consummation of the transactions contemplated by the Reorganization Agreement
will take place on a date to be designated by SunGard (the "Closing Date"),
which will be no later than the second business day after the satisfaction or
waiver of all of the conditions to closing set forth in the Reorganization
Agreement. Assuming that all of the conditions to the Merger are satisfied or
waived, it is anticipated that the Merger will be consummated shortly after the
Infinity Special Meeting.
STOCK OWNERSHIP FOLLOWING THE MERGER
Based upon the number of shares of Infinity Common Stock issued and
outstanding as of the Record Date, an aggregate of approximately 13,157,698
shares of SunGard Common Stock will be issued to holders of Infinity Common
Stock. Based upon the number of shares of SunGard Common Stock issued and
outstanding as of the Record Date, and after giving effect to the additional
shares of SunGard Common Stock that are proposed to be issued in the Merger
(and assuming no exercise of outstanding options or rights to purchase SunGard
Common Stock or Infinity Common Stock), the former holders of Infinity Common
Stock would hold approximately 13.03% of SunGard's total issued and outstanding
shares.
EXCHANGE OF INFINITY STOCK CERTIFICATES
As soon as practicable after the Effective Time, Norwest Bank Minnesota, N.A.
(the "Exchange Agent") will mail to the holders of Infinity Common Stock (i) a
letter of transmittal (the "Letter of Transmittal") with respect to the
surrender of valid certificates representing shares of Infinity Common Stock
("Infinity Stock Certificates") in exchange for certificates representing
SunGard Common Stock and (ii) instructions for use of the Letter of
Transmittal. INFINITY STOCKHOLDERS SHOULD NOT SURRENDER THEIR INFINITY STOCK
CERTIFICATES FOR EXCHANGE UNTIL THEY RECEIVE A LETTER OF TRANSMITTAL. See "The
Reorganization Agreement--Conversion of Shares; Procedures for Exchange of
Certificates."
INFINITY'S REASONS FOR THE MERGER
The Infinity Board of Directors considered a wide variety of information and
a number of factors in connection with its evaluation of the proposed Merger
and the Reorganization Agreement, and determined that the Merger provides an
opportunity that serves the best interests of Infinity and its stockholders.
The Infinity Board of Directors believes that the Merger may result in a number
of benefits to Infinity and its stockholders, including, among other benefits,
the following: (i) the potential synergy and compatibility between Infinity and
SunGard, based on the compatibility of the companies' product lines and the
benefits of an integration strategy in the financial services software
industry; (ii) the financial strength of SunGard that would enable the combined
company to commit greater resources to both current and emerging product
development efforts and fund the future growth of its business; (iii) the
ability to leverage SunGard's extensive sales network to increase sales of
Infinity's products; and (iv) the opportunity for Infinity, as part of the
combined company, to compete more
5
<PAGE>
effectively in the increasingly competitive and rapidly changing financial
services software industry. See "Approval of the Merger and Related
Transactions--Infinity's Reasons for the Merger," and "The Infinity Special
Meeting--Board Recommendation."
RECOMMENDATION OF THE INFINITY BOARD OF DIRECTORS
The Infinity Board of Directors has unanimously approved the Reorganization
Agreement and the Merger, and recommends a vote FOR adoption and approval of
the Reorganization Agreement and FOR approval of the Merger by the stockholders
of Infinity.
OPINION OF DEUTSCHE MORGAN GRENFELL INC.
Deutsche Morgan Grenfell Inc. ("DMG") delivered its opinion dated October 17,
1997 (the "DMG Opinion") to the Infinity Board of Directors that, as of the
date of such opinion, the Exchange Ratio was fair from a financial point of
view to the holders of Infinity Common Stock. The full text of the DMG Opinion,
which sets forth, among other things, assumptions made, procedures followed,
matters considered and limitations on the scope of the review undertaken in
connection with the DMG Opinion, is attached hereto as Appendix B and is
incorporated herein by reference. The DMG Opinion does not constitute a
recommendation as to how any holder of Infinity Common Stock should vote at the
Infinity Special Meeting. Holders of Infinity Common Stock are urged to, and
should, read the DMG Opinion in its entirety. See "Approval of the Merger and
Related Transactions--Opinion of Deutsche Morgan Grenfell Inc."
SUNGARD'S REASONS FOR THE MERGER
The SunGard Board of Directors considered a wide variety of information and a
number of factors in connection with its evaluation of the proposed Merger and
the Reorganization Agreement, and determined that the Merger provides an
opportunity that serves the best interests of SunGard and its stockholders. The
SunGard Board of Directors believes that the Merger may result in a number of
benefits to SunGard and its stockholders, including, among other benefits, the
following: (i) the acquisition of Infinity's products will complement and
broaden SunGard's existing product lines in the investment support systems
businesses; (ii) the acquisition of Infinity's primary product, the Infinity
Platform, should help establish SunGard as a leading provider of trading and
risk management platform and solutions software; and (iii) the combination of
the technologies and product development resources of SunGard and Infinity
should enable SunGard to respond more effectively to the continuing emergence
of trading and risk management systems. See "Approval of the Merger and Related
Transactions--SunGard's Reasons for the Merger."
NON-SOLICITATION
Pursuant to the Reorganization Agreement, Infinity has agreed that it will
not directly or indirectly, and will not authorize or permit any of the
officers, directors, employees, agents, attorneys, accountants, advisors or
representatives (the "Representatives") of Infinity or any subsidiary of
Infinity (Infinity and each such subsidiary being referred to as the "Acquired
Corporations") directly or indirectly to (i) solicit, initiate, encourage or
induce the making, submission or announcement of any Acquisition Proposal (as
defined under "Approval of the Merger and Related Transactions--Voting
Agreements") or take any action that could reasonably be expected to lead to an
Acquisition Proposal, (ii) furnish any information regarding any of the
Acquired Corporations to any third party in connection with or in response to
an Acquisition Proposal, (iii) engage in discussions or negotiations with any
third party with respect to any Acquisition Proposal, (iv) approve, endorse or
recommend any Acquisition Proposal or (v) enter into any letter of intent or
similar document or any contract or other agreement contemplating or otherwise
relating to any Acquisition Transaction; provided, however, that: (A) no
provision in the Reorganization Agreement shall prohibit the Infinity Board of
Directors from disclosing to Infinity's stockholders a position with respect to
a tender offer pursuant to Rules 14d-9 and 14e-2 promulgated
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<PAGE>
under the Exchange Act; and (B) prior to the adoption and approval of the
Reorganization Agreement by the Required Vote, such provisions shall not
prohibit Infinity from (x) furnishing nonpublic information regarding the
Acquired Corporations to any third party in response to an Acquisition Proposal
that is submitted by such third party (and not withdrawn), or (y) entering into
discussions with any third party in response to a Superior Offer (as defined
under "The Reorganization Agreement--Covenants") that is submitted by such
third party (and not withdrawn) if, in either such case, (a) neither Infinity
nor any Representative of any of the Acquired Corporations has violated any of
the restrictions set forth above in this sentence, (b) the Infinity Board of
Directors believes in good faith, based upon the advice of outside legal
counsel, that such action is required in order for the Infinity Board of
Directors to comply with its fiduciary obligations to Infinity's stockholders
under applicable law, (c) prior to furnishing any such nonpublic information
to, or entering into discussions with, such third party, Infinity gives SunGard
written notice of the identity of such third party and of Infinity's intention
to furnish nonpublic information to, or enter into discussions with, such third
party, and Infinity receives from such third party an executed confidentiality
agreement containing limitations on the use and disclosure of all nonpublic
written and oral information furnished to such third party by or on behalf of
Infinity, and (d) prior to furnishing any such nonpublic information to such
third party, Infinity furnishes such nonpublic information to SunGard (to the
extent such nonpublic information has not been previously furnished by Infinity
to SunGard). See "The Reorganization Agreement--Non-Solicitation."
CONDUCT OF BUSINESS
Pursuant to the Reorganization Agreement, Infinity has made certain covenants
regarding the conduct of Infinity's business during the period from the date of
the execution of the Reorganization Agreement through the Effective Time,
including, without limitation, covenants to: (i) provide SunGard with access to
certain information regarding its business; (ii) conduct its business and
operations (a) in the ordinary course and in accordance with past practices and
(b) in compliance in all material respects with legal requirements and material
contracts; (iii) use reasonable efforts to preserve its business organization
and the services of its current officers and employees and maintain its
relations and goodwill with suppliers, customers, landlords, creditors,
licensors, licensees, employees and other persons; (iv) maintain insurance
policies; (v) use reasonable efforts to provide all notices, assurances and
support required by any material contract relating to proprietary assets; and
(vi) cause its officers to report regularly to SunGard concerning the status of
the business of Infinity. In addition, Infinity has agreed not to take or to
agree to take certain actions relating to: (i) dividends or distributions; (ii)
the sale or issuance of securities; (iii) the amendment of stock option plans;
(iv) the amendment of charter documents; (v) the formation of subsidiaries or
the acquisition of equity interests; (vi) capital expenditures; (vii) material
contracts; (viii) the acquisition, lease, license, sale or disposal of assets;
(ix) the loaning of money; (x) the establishment or adoption of employee
benefit plans; (xi) material changes in accounting; (xii) material tax
elections; (xiii) commencement or settlement of material legal proceedings; or
(xiv) material transactions. See "The Reorganization Agreement--Covenants--
Certain Covenants of Infinity."
CONDITIONS TO THE MERGER
The obligations of SunGard and Merger Sub to effect the Merger and otherwise
consummate the transactions contemplated by the Reorganization Agreement are
subject to the satisfaction or waiver of certain conditions relating to, among
other things: (i) the accuracy of the representations and warranties of
Infinity contained in the Reorganization Agreement; (ii) the performance in all
material respects by Infinity of certain covenants and obligations contained in
the Reorganization Agreement; (iii) the effectiveness of the Registration
Statement; (iv) the adoption and approval of the Reorganization Agreement and
the approval of the Merger by the Infinity stockholders; (v) receipt of certain
consents; (vi) receipt of certain agreements, letters, certificates, legal
opinions and resignations (including letters relating to the appropriateness of
pooling of interests accounting treatment); (vii) the absence of any change
that has had or would reasonably be expected to have a material adverse effect
on Infinity's business; (viii) the expiration or termination of the waiting
period applicable to the
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<PAGE>
Merger under the HSR Act; (ix) the approval for listing of the SunGard Common
Stock to be issued in the Merger on the NYSE; (x) the absence of restraining
orders, injunctions and other orders preventing the consummation of the Merger;
and (xi) the absence of certain litigation or administrative actions or
proceedings.
The obligation of Infinity to effect the Merger and otherwise consummate the
transactions contemplated by the Reorganization Agreement is subject to the
satisfaction of certain conditions relating to: (i) the accuracy of the
representations and warranties of SunGard contained in the Reorganization
Agreement; (ii) the performance in all material respects by SunGard of certain
covenants and obligations contained in the Reorganization Agreement; (iii) the
effectiveness of the Registration Statement; (iv) the adoption and approval of
the Reorganization Agreement and the approval of the Merger by the Infinity
stockholders; (v) receipt of a certain legal opinion and certificate; (vi) the
absence of any change that has had or would reasonably be expected to have a
material adverse effect on SunGard's business; (vii) the expiration or
termination of the waiting period applicable to the Merger under the HSR Act;
(viii) the approval for listing of the SunGard Common Stock to be issued in the
Merger on the NYSE; and (xix) the absence of restraining orders, injunctions
and other orders preventing the consummation of the Merger. See "The
Reorganization Agreement--Conditions to the Merger."
TERMINATION
The Reorganization Agreement may be terminated prior to the Effective Time,
whether before or after approval of the Merger by the stockholders of Infinity:
(i) by mutual written consent of SunGard and Infinity; (ii) subject to certain
exceptions, by either SunGard or Infinity if the Merger shall not have been
consummated by March 31, 1998; (iii) by either SunGard or Infinity in
connection with certain legal or governmental actions having the effect of
permanently restraining, enjoining or otherwise prohibiting the Merger; (iv) by
SunGard, subject to certain limitations, if any of Infinity's representations
and warranties contained in the Reorganization Agreement shall be or shall have
become inaccurate or if any of Infinity's covenants in the Reorganization
Agreement shall have been breached; (v) by Infinity, subject to certain
limitations, if any of SunGard's representations and warranties contained in
the Reorganization Agreement shall be or shall have become inaccurate or if any
of SunGard's covenants contained in the Reorganization Agreement shall have
been breached; (vi) by SunGard if (a) the Infinity Board of Directors shall for
any reason have withdrawn or shall have amended or modified in a manner adverse
to SunGard its unanimous recommendation in favor of the adoption and approval
of the Reorganization Agreement or the approval of the Merger, (b) Infinity
shall have entered into any letter of intent or similar document or any
contract relating to any Acquisition Proposal, or (c) a tender or exchange
offer relating to securities of Infinity shall have commenced and Infinity
shall have not sent to its securityholders, within ten business days after the
commencement of such tender or exchange offer, a statement disclosing that
Infinity recommends rejection of such tender or exchange offer; or (vii) by
either SunGard or Infinity if (a) the Infinity Special Meeting shall have been
held and (b) the Reorganization Agreement and the Merger shall not have been
adopted and approved at such meeting. See "The Reorganization Agreement--
Termination."
EXPENSES AND TERMINATION FEE
Pursuant to the Reorganization Agreement, all fees and expenses incurred in
connection with the Reorganization Agreement and the transactions contemplated
by the Reorganization Agreement shall be paid by the party incurring such
expenses, whether or not the Merger is consummated; provided, however, that
SunGard and Infinity shall share equally all fees and expenses incurred in
connection with the printing and filing of this Proxy Statement/Prospectus and
the Registration Statement of which this Proxy Statement/Prospectus is a part
and the filing of the premerger notification and report forms relating to the
Merger under the HSR Act. If the Reorganization Agreement is terminated under
certain circumstances, Infinity will be required to pay to SunGard a
nonrefundable fee in the amount of $9.5 million. See "The Reorganization
Agreement--Expenses and Termination Fee."
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<PAGE>
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain members of Infinity's management and Board of Directors may be deemed
to have certain interests in the Merger that are in addition to their interests
as stockholders of Infinity generally. The Infinity Board of Directors was
aware of these interests and considered them, among other matters, in approving
the Reorganization Agreement and the transactions contemplated thereby.
Indemnification and Insurance. The Reorganization Agreement provides that all
rights to indemnification existing in favor of the persons serving as directors
and officers of Infinity as of the date of the Reorganization Agreement for
acts or omissions occurring prior to the Effective Time, as provided in
Infinity's Bylaws and in certain indemnification agreements between Infinity
and such directors and officers, will survive the Merger, and that SunGard will
cause the Surviving Corporation to perform its obligations arising thereunder
for at least six years from the Effective Time. Subject to certain limitations,
SunGard has also agreed to cause the Surviving Corporation to maintain in
effect for three years after the Effective Time a policy of directors' and
officers' liability insurance in existence at the date of the Reorganization
Agreement for the benefit of persons serving as directors and officers of
Infinity as of such date.
Acceleration of Certain Stock Options and Repurchase Rights. Pursuant to the
terms of existing stock option agreements, certain unvested stock options
granted by Infinity and held by two officers of Infinity will become
immediately exercisable as of the Effective Time. In addition, pursuant to the
terms of existing agreements, Infinity's right to repurchase certain shares
held by two officers of Infinity will lapse as of the Effective Time.
Employment/Severance Arrangement. SunGard expects to enter into an agreement
with Michael A. Laven, President and Chief Operating Officer of Infinity, which
is expected to provide for the full-time employment of Mr. Laven after the
Effective Time, with compensation to be specified in such agreement. The
employment agreement with Mr. Laven is also expected to provide that if Mr.
Laven's employment is terminated without "cause" prior to the third anniversary
of the date on which the Merger becomes effective, Mr. Laven will be paid an
amount equal to his annual base salary in effect at the time of such
termination; provided, however, that if less than one year of the three-year
restriction period set forth in his Noncompetition Agreement with SunGard
remains unexpired pursuant to the terms of such Noncompetition Agreement, his
annual base salary in effect at the time of such termination shall be prorated
to reflect the remaining unexpired portion of such restriction period. See
"Approval of the Merger and Related Transactions--Interests of Certain Persons
in the Merger."
VOTING AGREEMENTS
Pursuant to the SunGard Voting Agreements, Terry H. Carlitz, Chief Financial
Officer and Vice President, Finance of Infinity, James Dorrian, Director of
Infinity, Till M. Guldimann, Executive Vice President and Director of Infinity,
Roger A. Lang, Jr., Chairman of the Board and Chief Executive Officer of
Infinity, Michael A. Laven, President, Chief Operating Officer and Director of
Infinity, Douglas M. Leone, Director of Infinity and a general partner of
several Sequoia Capital partnerships which have general partners who are
general partners of Sequoia Capital Growth Fund and Sequoia Technology Partners
III, John C. Lewis, Director of Infinity, Sequoia Capital Growth Fund and
Sequoia Technology Partners III (individually, a "Voting Agreement Stockholder"
and, collectively, the "Voting Agreement Stockholders"), who owned in the
aggregate issued and outstanding shares of Infinity Common Stock representing
approximately 45.9% of the shares of Infinity Common Stock issued and
outstanding as of the Record Date, have agreed that, prior to the Expiration
Date, they will vote their shares of Infinity Common Stock in favor of: (i) the
Merger; (ii) the execution and delivery by Infinity of the Reorganization
Agreement; (iii) the adoption and approval of the terms of the Reorganization
Agreement; and (iv) each of the other actions contemplated by the
Reorganization Agreement and any action required in furtherance thereof. The
Voting Agreement Stockholders have also delivered to SunGard irrevocable
proxies with respect to such matters. See "Approval of the Merger and Related
Transactions--Voting Agreements."
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AFFILIATE AGREEMENTS
Certain stockholders of Infinity who may be deemed to be affiliates of
Infinity for purposes of Rule 145 under the Securities Act have executed
agreements that restrict the sale, transfer or other disposition of SunGard
Common Stock received by such stockholders in the Merger in order to comply
with the requirements of certain federal securities laws and certain pooling of
interests accounting rules. See "Approval of the Merger and Related
Transactions--Affiliate Agreements" and "--Resale of SunGard Common Stock."
NONCOMPETITION AGREEMENTS
Till M. Guldimann, Roger A. Lang, Jr. and Michael A. Laven have each entered
into a Noncompetition Agreement with SunGard that contains provisions
restricting such employees from engaging in certain activities that are
competitive with SunGard or Infinity for a period of from two or three years
(depending upon the individual agreement) following the Effective Time. See
"Approval of the Merger and Related Transactions--Noncompetition Agreements."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The Merger is expected to be a tax-free reorganization for federal income tax
purposes, so that no gain or loss will be recognized by the Infinity
stockholders on the exchange of Infinity Common Stock for SunGard Common Stock,
except to the extent that Infinity stockholders receive cash in lieu of
fractional shares. The Reorganization Agreement does not require the parties to
obtain a ruling from the Internal Revenue Service as to the tax consequences of
the Merger. As a condition to Infinity's and SunGard's obligations to
consummate the Merger, Infinity and SunGard are to receive opinions from their
respective legal counsel that, based on certain assumptions and certifications,
the Merger will be treated as a tax-free reorganization for federal income tax
purposes. INFINITY STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS
TO THE SPECIFIC TAX CONSEQUENCES OF THE MERGER, INCLUDING THE APPLICABLE
FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES. See "Approval of the Merger
and Related Transactions--Certain Federal Income Tax Consequences."
ANTICIPATED ACCOUNTING TREATMENT
The Merger is intended to be accounted for as a pooling of interests for
financial reporting purposes in accordance with generally accepted accounting
principles. SunGard's obligation to consummate the Merger is conditioned upon
receipt of (i) a letter from Ernst & Young LLP, Infinity's independent
auditors, regarding Ernst & Young LLP's concurrence with Infinity management's
conclusion that no conditions exist related to Infinity that would preclude
SunGard from accounting for the Merger as a pooling of interests, and (ii) a
letter from Coopers & Lybrand LLP, SunGard's independent public accountants, to
the effect that Coopers & Lybrand LLP concurs with SunGard management's
conclusion that SunGard may account for the Merger as a pooling of interests.
See "Approval of the Merger and Related Transactions--Anticipated Accounting
Treatment."
REGULATORY MATTERS
Under the HSR Act, and the rules promulgated thereunder by the Federal Trade
Commission (the "FTC"), the Merger may not be consummated until notifications
have been given and certain information has been furnished to the FTC and the
Antitrust Division of the Department of Justice (the "Antitrust Division"), and
specified waiting period requirements have been satisfied or early termination
of the waiting period is granted at the request of SunGard and Infinity.
SunGard and Infinity filed notification and report forms under the HSR Act with
the FTC and the Antitrust Division on November 3, 1997. These filings commenced
a 30-day waiting period under the HSR Act. If, prior to the expiration of such
period, the FTC or the Antitrust Division should request additional information
or documentary material under the HSR Act, consummation of the Merger could be
delayed until after the companies have substantially complied with the request.
There can be no assurance that a challenge to the Merger on antitrust grounds
will not be made, or if such a challenge is made, that SunGard or
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Infinity would prevail or would not be required to terminate the Reorganization
Agreement. See "Approval of the Merger and Related Transactions--Regulatory
Matters."
ABSENCE OF APPRAISAL RIGHTS
In accordance with Section 262 of the DGCL, holders of Infinity Common Stock
are not entitled to appraisal rights in connection with the Merger. See
"Approval of the Merger and Related Transactions--Absence of Appraisal Rights."
RISK FACTORS
The Merger and an investment in securities of SunGard involve certain risks
and uncertainties, including risks relating to the integration of SunGard and
Infinity, risks associated with a fixed Exchange Ratio, risks relating to the
respective businesses of SunGard and Infinity and other risks and uncertainties
discussed under "Risk Factors" and elsewhere in this Proxy Statement/Prospectus
and in the documents incorporated herein by reference. See "Risk Factors."
MARKETS AND MARKET PRICES
SunGard Common Stock is traded on the NYSE under the symbol "SDS." On October
16, 1997, the last trading day before the announcement by SunGard and Infinity
that they had entered into the Reorganization Agreement, the closing sale price
of SunGard Common Stock as reported on the NYSE was $24.0625 per share.
Following the Merger, SunGard Common Stock will continue to be traded on the
NYSE under the symbol "SDS." On November 24, 1997, the closing sale price of
SunGard Common Stock as reported on the NYSE was $24.875. There can be no
assurance as to the actual price of SunGard Common Stock prior to, at or at any
time following the Effective Time.
Infinity Common Stock is traded on the Nasdaq National Market under the
symbol "INFN." On October 16, 1997, the last trading day before the
announcement by SunGard and Infinity that they had entered into the
Reorganization Agreement, the closing sale price of Infinity Common Stock as
reported by the Nasdaq National Market was $13.75 per share. Following the
Merger, Infinity Common Stock will cease to be traded on the Nasdaq National
Market. On November 24, 1997, the closing sale price of Infinity Common Stock
as reported by the Nasdaq National Market was $16.375. There can be no
assurance as to the actual price of Infinity Common Stock prior to or at the
Effective Time. See "Risk Factors--Risks Associated with Exchange Ratio" and
"Comparative Per Share Market Price Data."
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SELECTED HISTORICAL AND PRO FORMA FINANCIAL INFORMATION
SELECTED HISTORICAL FINANCIAL INFORMATION OF SUNGARD
The following selected historical consolidated financial data of SunGard
should be read in conjunction with the consolidated financial statements of
SunGard that are incorporated by reference in this Proxy Statement/Prospectus.
<TABLE>
<CAPTION>
AS OF OR FOR
THE NINE MONTHS
ENDED SEPTEMBER 30,
(UNAUDITED) AS OF OR FOR THE YEAR ENDED DECEMBER 31,
------------------- --------------------------------------------
1997 1996 1996 1995 1994 1993 1992
--------- --------- -------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
HISTORICAL INCOME
STATEMENT DATA:(1)
Revenues.............. $ 609,557 $ 477,012 $670,309 $532,628 $437,190 $381,372 $324,570
Income from
operations........... 94,280 34,249 59,786 80,076 70,326 59,645 50,336
Net income............ 54,978 20,386 34,901 48,672 43,087 38,474 25,808
Net income per
share:(2)
Primary............. 0.62 0.24 0.41 0.61 0.56 0.54 0.41
Fully diluted....... 0.62 0.24 0.41 0.61 0.56 0.52 0.40
HISTORICAL BALANCE
SHEET DATA:
Total Assets.......... $ 737,341 $ 613,791 $679,318 $579,734 $485,740 $418,135 $365,580
Total short term and
long term debt....... 23,884 7,269 39,346 10,002 10,567 6,523 89,790
Stockholders' equity.. 525,823 447,612 464,638 422,292 359,292 316,960 189,899
</TABLE>
- --------
(1) The years ended December 31, 1996 and 1995 include one-time charges for
purchased in-process research and development, merger and other costs of
$51,083 and $4,238, respectively ($33,468 and $4,238 after-tax, or $0.39
and $0.05 per share, respectively). The nine months ended September 30,
1997 and 1996 include one-time charges for purchased in-process research
and development, merger and other costs of $9,956 and $44,032, respectively
($6,143 and $28,287 after-tax, or $0.07 and 0.33 per share, respectively).
The year ended December 31, 1993 includes after-tax gain on sale of product
line of $3,371 ($0.04 per share).
(2) Adjusted retroactively to reflect the two-for-one stock splits which
occurred in July 1995 and September 1997.
12
<PAGE>
SELECTED HISTORICAL FINANCIAL INFORMATION OF INFINITY
The following selected historical consolidated financial data of Infinity
should be read in conjunction with the consolidated financial statements of
Infinity that are incorporated by reference in this Proxy Statement/Prospectus.
<TABLE>
<CAPTION>
AS OF OR FOR
THE NINE MONTHS
ENDED SEPTEMBER 30,
(UNAUDITED) AS OF OR FOR THE YEAR ENDED DECEMBER 31,
---------------------- ----------------------------------------------
1997 1996 1996 1995 1994 1993 1992
--------- --------- -------- -------- -------- ----------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
HISTORICAL INCOME
STATEMENT DATA:
Revenues.............. $ 46,209 $ 28,564 $ 41,548 $ 24,738 $ 12,595 $ 5,783 $ 2,597
Income from
operations........... 7,334 6,074 8,499 5,676 2,124 980 43
Net income
attributable to
common stockholders.. 5,375(2) 3,777 5,405 2,173(1) 1,641 717 46
Net income per share:
Primary............. 0.26 0.20 0.28 0.12(1) 0.10 0.06 0.00
Fully diluted....... 0.26 0.20 0.28 0.12(1) 0.09 0.05 0.00
HISTORICAL BALANCE SHEET
DATA:
Total Assets.......... $ 67,765 $ 24,455 $ 60,304 $ 12,848 $ 8,885 $ 3,027 $ 1,719
Long term portion of
capital lease
obligations and other
long term
liabilities.......... 463 253 553 370 107 6 17
Stockholders' equity
(net capital
deficiency).......... 47,465 10,022 40,425 5,766 3,114 600 (144)
</TABLE>
- --------
(1) Reflects the redemption of the Series B Preferred Stock of $1,276. Net
income and net income per share before redemption was $3,449 and $0.19,
respectively.
(2) Includes one-time charge for purchased in-process research and development
of $861 ($551 after tax).
13
<PAGE>
SUNGARD DATA SYSTEMS INC. AND INFINITY FINANCIAL TECHNOLOGY, INC.
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL DATA
SunGard expects that the Merger will be accounted for as a pooling of
interests, which means that for accounting and financial reporting purposes
SunGard will treat SunGard and Infinity as if they had always been combined.
The pro forma information is provided for illustrative purposes only and should
not be relied upon as necessarily being indicative of the historical results
that SunGard and Infinity would have had if the companies actually had always
been combined, or the results which may be obtained in the future.
The Unaudited Pro Forma Combined Condensed Financial Data should be read
along with the historical financial statements and the related notes of SunGard
and Infinity, all of which are incorporated by reference in this Proxy
Statement/Prospectus. See "Unaudited Pro Forma Combined Condensed Financial
Statements" beginning on page 50.
<TABLE>
<CAPTION>
AS OF OR FOR THE
NINE MONTHS
ENDED AS OF OR FOR THE YEAR ENDED DECEMBER 31,
SEPTEMBER 30, -----------------------------------------
1997 1996 1995 1994
---------------- ------------- ------------- -------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Revenues................ $655,766 $ 711,857 $ 557,366 $ 449,785
Operating income........ 101,614 68,285 85,752 72,450
Fully diluted net income
per common share....... 0.59 0.41 0.55 0.50
Book value per common
share.................. 5.75 5.21 4.53 4.29
Total assets............ 805,106 739,622
Long term debt.......... 3,500 4,967
</TABLE>
14
<PAGE>
SUNGARD DATA SYSTEMS INC. AND INFINITY FINANCIAL TECHNOLOGY, INC.
COMPARATIVE PER SHARE DATA
<TABLE>
<CAPTION>
AS OF OR FOR THE
AS OF OR FOR THE NINE YEAR ENDED DECEMBER 31,
MONTHS ENDED -----------------------
SEPTEMBER 30, 1997 1996 1995 1994
--------------------- ------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
HISTORICAL--SUNGARD:
Fully diluted net income per
common share(1)................ 0.62 0.41 0.61 0.56
Book value per common share(2).. 6.06 5.50 5.04 4.81
HISTORICAL--INFINITY:
Fully diluted net income per
common share(3)................ 0.26 0.28 0.12 0.09
Book value per common share(2).. 2.48 2.23 0.37 0.22
PRO FORMA COMBINED PER SUNGARD
SHARE(4)(5):
Fully diluted net income per
common share................... 0.59 0.41 0.55 0.50
Book value per common share(2).. 5.75 5.21 4.53 4.29
INFINITY PER SHARE
EQUIVALENTS(4)(6):
Fully diluted net income per
common share................... 0.40 0.28 0.37 0.34
Book value per common share(2).. 3.91 3.54 3.08 2.92
</TABLE>
- --------
(1) The years ended December 31, 1996 and 1995 include one-time charges for
purchased in-process research and development, merger and other costs of
$51,083 and $4,236, respectively ($33,468 and $4,238 after-tax, or $0.39
and $0.05 per share, respectively), and the nine months ended September 30,
1997 and 1996 include one-time charges for purchased in-process research
and development, merger and other costs of $9,956 and $44,032, respectively
($6,143 and $28,287 after-tax, or $0.07 and $0.33 per share, respectively).
(2) The historical book value per common share is computed by dividing total
stockholders' equity by the number of shares of common stock outstanding at
the end of the period, except that the historical book value per common
share as of December 31, 1995 and December 31, 1994 with respect to
Infinity is computed by dividing total stockholders' equity as of such
dates by the number of shares of common stock that would have been
outstanding if Infinity's convertible preferred stock was converted into
common stock. In addition, the historical book value per common share with
respect to Infinity has been adjusted to give effect to the redemption of
Infinity's Series B preferred stock. The pro forma book value per share is
computed by dividing pro forma stockholders' equity by the pro forma number
of shares of common stock as of each of the periods presented.
(3) The nine months ended September 30, 1997 includes a one-time charge for
purchased in-process research and development of $861 ($551 after-tax, or
$0.03 per share). The year ended December 31, 1995 includes reduction of
$1,276 from net income, or $0.07 per share, in connection with the
redemption of Series B preferred stock.
(4) Excludes merger costs estimated to be approximately $4,000 which will be
charged to combined operations during the period in which the Merger is
consummated.
(5) All shares have been adjusted retroactively for the two-for-one stock
splits which occurred in July 1995 and September 1997.
(6) The Infinity Per Share Equivalents are calculated by multiplying the
SunGard combined pro forma per share amounts by the Exchange Ratio.
15
<PAGE>
RISK FACTORS
This Proxy Statement/Prospectus contains forward-looking statements
(including those set forth or referenced in "Approval of the Merger and
Related Transactions--Background of the Merger," "--Infinity's Reasons for the
Merger," "--SunGard's Reasons for the Merger" and "--Opinion of Deutsche
Morgan Grenfell Inc.") that involve risks and uncertainties. SunGard's and
Infinity's actual results may differ materially from those anticipated in
these forward-looking statements as a result of certain risks and
uncertainties, including risks relating to: (a) the integration of SunGard and
Infinity; (b) the respective businesses of SunGard and Infinity, including
risks relating to the timing and magnitude of software sales, the timing and
scope of technological advances and the overall condition of the financial
services industry; and (c) other matters set forth in this section and
elsewhere in this Proxy Statement/Prospectus and in the documents incorporated
herein by reference. In addition to the other information in this Proxy
Statement/Prospectus, the following risk factors should be considered
carefully by Infinity stockholders in determining whether or not to vote in
favor of the adoption and the approval of the Reorganization Agreement and
approval of the Merger.
RISKS RELATING TO THE MERGER
Uncertainty Relating to Integration. The Merger involves the integration of
two companies that have previously operated independently. Such integration
will require significant effort from each company, including the coordination
of their research and development and sales and marketing efforts. There can
be no assurance that SunGard will integrate the respective operations of
SunGard and Infinity without encountering difficulties or experiencing the
loss of Infinity or SunGard personnel or that the benefits expected from such
integration will be realized. The diversion of the attention of management and
any difficulties encountered in the transition process (including the
interruption of, or a loss of momentum in, Infinity's activities, problems
associated with integration of management information and reporting systems,
and delays in implementation of consolidation plans) could have an adverse
impact on SunGard's ability to realize anticipated synergies from the Merger.
Risks Associated with Fixed Exchange Ratio. As a result of the Merger, each
outstanding share of Infinity Common Stock will be converted into the right to
receive 0.68 of a share of SunGard Common Stock (subject to adjustment as
appropriate to reflect any stock split, stock dividend, reverse stock split,
reclassification, recapitalization or other similar transaction involving the
SunGard Common Stock or the Infinity Common Stock between the date of the
Reorganization Agreement and the effective time of the Merger). Because the
Exchange Ratio is fixed and will not increase or decrease due to fluctuations
in the market price of either SunGard or Infinity Common Stock, the specific
value of the consideration to be received by Infinity stockholders in the
Merger will depend on the market price of SunGard Common Stock at the
Effective Time. In the event that the market price of SunGard Common Stock
decreases or increases prior to the Effective Time, the market value at the
Effective Time of SunGard Common Stock to be received by Infinity stockholders
in the Merger would correspondingly decrease or increase. The market prices of
SunGard Common Stock and Infinity Common Stock as of a recent date are set
forth herein under "Summary--Market Price and Data," and "Comparative Per
Share Market Price Data and Dividend Policy." Infinity stockholders are
advised to obtain recent market quotations for SunGard Common Stock and
Infinity Common Stock. SunGard Common Stock and Infinity Common Stock
historically have been subject to price volatility. No assurance can be given
as to the market prices of SunGard Common Stock or Infinity Common Stock at
any time. See "Summary--Market Price and Data," and "Comparative Per Share
Market Price Data and Dividend Policy."
Effect of Merger on Operating Results, Customers and Partners. Infinity
derives a significantly larger portion of its revenues from software license
fees than does SunGard. Since there are inherent difficulties in predicting
the timing and magnitude of software sales, the potential for fluctuations in
quarterly revenues and income will be higher for the combined operations after
the Merger than for SunGard alone before the Merger. Certain of Infinity's
existing customers or strategic partners may view themselves as competitors of
SunGard, and therefore determine that the Merger is competitively
disadvantageous to them. As a consequence, Infinity's
16
<PAGE>
relationship with these customers or strategic partners could be adversely
affected. In addition, SunGard's relationships with certain of its customers
may be adversely affected by the Merger. Such adverse impact could result in
delayed or lost sales to either SunGard or Infinity, resulting in material
adverse financial impact.
Rights of Holders of Infinity Common Stock Following the Merger. Following
the Merger, holders of Infinity Common Stock outstanding as of the Effective
Time will become holders of SunGard Common Stock. Certain differences exist
between the rights of stockholders of Infinity under Infinity's Amended and
Restated Certificate of Incorporation and Infinity's Bylaws and the rights of
stockholders of SunGard under SunGard's Restated Certificate of Incorporation
and SunGard's Bylaws. See "Comparison of Rights of Holders of SunGard Common
Stock and Holders of Infinity Common Stock."
RISKS RELATING TO SUNGARD'S BUSINESS
Acquisitions. SunGard seeks to grow both internally and through the
acquisition of complementary businesses. SunGard's growth, in part, depends
upon the availability of suitable acquisition candidates and whether
acquisitions can be completed on acceptable terms. Competition from other
acquirors and the alternative of a public equity offering may adversely affect
both the availability and terms of future acquisitions. Further acquisitions
by SunGard may require the use of debt or equity financing. There can be no
assurance that any acquired business will perform as expected. Poor
performance by an acquired business could adversely affect SunGard's results
and cause impairment of part of SunGard's goodwill and other intangible assets
related to acquisitions accounted for as a purchase.
Technological Changes. SunGard's success, in part, depends upon continued
adaptation of its proprietary software and recovery services to new computer
and telecommunications technology on a timely and cost effective basis. In
particular, rapid technological developments, which cannot be predicted, could
have a material adverse effect on SunGard's business and prospects.
Product Development. SunGard must continually enhance and evolve its
proprietary software to keep pace with developments in the financial services
and healthcare industries. There can be no assurance that SunGard will be able
to update its software or develop new systems without experiencing unforeseen
delays or that newly developed products will be successfully marketed and
sold.
Financial Services Industry. SunGard sells most of its computer services and
software to the financial services industry and is generally dependent upon
the continued vitality of that industry. A material adverse change in the
condition of the financial services industry, such as a significant decline in
securities or derivatives trading activities or in the number or value of
managed portfolios, could have a material adverse effect on SunGard's business
and prospects.
New Business Line. In 1995, SunGard established its Healthcare Information
Systems Group by acquiring two providers of work-flow management and document-
imaging systems to the healthcare industry. Recently, SunGard acquired another
company in the healthcare information systems market. Although SunGard has
experience managing software businesses, prior to 1995, SunGard had no
experience in the healthcare information systems market. In addition, a number
of SunGard's competitors in this market have substantially greater financial,
technological and marketing resources than SunGard.
RISKS RELATING TO INFINITY'S BUSINESS
Infinity's business is subject to numerous risks, including risks that
quarterly operating results will vary from expectations due to unexpected
revenue shortfalls, changes in gross margins or other factors, risks related
to the evolving market for financial trading and risk management software,
risks related to the rapid technological change in the market for Infinity's
products and risks related to competition. In September 1997, Infinity entered
into a license agreement with Yamaichi Securities Co. Ltd., and in December
1996, Infinity entered into a license agreement with Yamaichi Information
Systems Co., Ltd. In September 1997, Infinity licensed certain products
17
<PAGE>
to Yamaichi Securities Co. Ltd. and Yamaichi Information Systems Co., Ltd.
under such agreements. For the quarter ended September 30, 1997, Infinity
recognized $1,100,000 of revenue and related receivables under such license
agreements. Yamaichi Securities Co. Ltd. recently filed with the Japanese
Ministry of Finance to cease most of its business operations. At the present
time, Infinity is unable to determine the extent to which the collectibility of
the receivables from both companies may be impaired. A full discussion of these
risks and other risks associated with Infinity's business may be found in
Infinity's Registration Statement on Form S-1 (No. 333-8647), Annual Report on
Form 10-K for the year ended December 31, 1996 and Infinity's Quarterly Reports
on Form 10-Q for the quarterly periods ended March 31, 1997, June 30, 1997 and
September 30, 1997.
18
<PAGE>
THE INFINITY SPECIAL MEETING
PURPOSE OF THE INFINITY SPECIAL MEETING
The purpose of the Infinity Special Meeting is to vote upon a proposal to
adopt and approve the Reorganization Agreement and to approve the Merger.
DATE, TIME AND PLACE OF MEETING
The Infinity Special Meeting will be held at the principal executive offices
of Infinity located at 640 Clyde Court, Mountain View, California 94043 on
December 30, 1997, at 9:00 a.m., local time.
RECORD DATE AND OUTSTANDING SHARES
Holders of record of Infinity Common Stock at the close of business on the
Record Date are entitled to notice of, and to vote at, the Infinity Special
Meeting. As of the Record Date, there were approximately 108 stockholders of
record holding an aggregate of approximately 19,349,556 shares of Infinity
Common Stock. See "Infinity Principal Stockholders." Except for the
stockholders identified herein under "Infinity Principal Stockholders," as of
the Record Date, to the knowledge of Infinity, no other person beneficially
owns more than 5% of the outstanding Infinity Common Stock.
This Proxy Statement/Prospectus was mailed to all Infinity stockholders of
record as of the Record Date and constitutes notice of the Infinity Special
Meeting in conformity with the requirements of the DGCL.
VOTING OF PROXIES
All properly executed proxies that are not revoked will be voted at the
Infinity Special Meeting in accordance with the instructions contained
therein. If a proxy is signed and returned without indicating any voting
instructions, the shares of Infinity Common Stock represented by the proxy
will be voted FOR the proposal to adopt and approve the Reorganization
Agreement and FOR approval of the Merger in accordance with the recommendation
of the Infinity Board of Directors and FOR adjournment or postponement of the
Infinity Special Meeting if an adjournment or postponement, in the discretion
of the proxy holders, is determined to be necessary or desirable. A
stockholder who has executed and returned a proxy may revoke it at any time
before it is voted at the Infinity Special Meeting by (i) executing and
returning a proxy bearing a later date, (ii) filing written notice of such
revocation with the Corporate Secretary of Infinity stating that the proxy is
being revoked or (iii) attending the Infinity Special Meeting and voting in
person. All written notices of revocation and other communications with
respect to revocation of Infinity proxies should be addressed to: Infinity
Financial Technology, Inc., 640 Clyde Court, Mountain View, CA 94043,
Attention: Corporate Secretary. Attendance at the Infinity Special Meeting, in
and of itself, will not constitute a revocation of a proxy.
VOTE REQUIRED
Adoption and approval of the Reorganization Agreement and approval of the
Merger require the affirmative vote of holders of a majority of the shares of
Infinity Common Stock outstanding as of the Record Date. Each stockholder of
record of Infinity Common Stock on the Record Date is entitled to cast one
vote per share, exercisable in person or by properly executed proxy, on each
matter properly submitted for the vote of the stockholders of Infinity at the
Infinity Special Meeting.
Pursuant to the SunGard Voting Agreements, the Voting Agreement
Stockholders, who owned in the aggregate issued and outstanding shares of
Infinity Common Stock representing approximately 45.9% of the shares of
Infinity Common Stock issued and outstanding as of the Record Date, have
agreed that, prior to the Expiration Date, they will vote their shares of
Infinity Common Stock in favor of: (i) the Merger; (ii) the execution and
delivery by Infinity of the Reorganization Agreement; (iii) the adoption and
approval of the terms of the Reorganization Agreement; and (iv) each of the
other actions contemplated by the Reorganization
19
<PAGE>
Agreement and any action required in furtherance thereof. The Voting Agreement
Stockholders have also delivered to SunGard irrevocable proxies with respect
to the matters covered by the SunGard Voting Agreements. In addition, subject
to certain exceptions, the Voting Agreement Stockholders have agreed not to
sell, contract to sell, pledge, grant any option to purchase or otherwise
dispose of or transfer ("Transfer") any of the Subject Securities (as defined
below) unless and until the other party to the Transfer (the "Transferee")
shall have (i) executed a counterpart of the SunGard Voting Agreement and the
corresponding irrevocable proxy and (ii) agreed to hold such Subject
Securities (or interest in such Subject Securities) subject to all of the
terms and conditions of the SunGard Voting Agreement. For purposes of the
SunGard Voting Agreement, the term "Subject Securities" means (i) all
securities of Infinity (including shares of Infinity Common Stock and all
options, warrants and other rights to acquire shares of Infinity Common Stock)
owned by the Voting Agreement Stockholder as of the date of the SunGard Voting
Agreement; and (ii) all additional securities of Infinity (including all
additional shares of Infinity Common Stock and all additional options,
warrants, and other rights to acquire shares of Infinity Common Stock) of
which the Voting Agreement Stockholder acquires ownership during the period
from the date of the SunGard Voting Agreement through the Expiration Date. See
"Approval of the Merger and Related Transactions--Voting Agreements."
BOARD RECOMMENDATION
THE INFINITY BOARD OF DIRECTORS HAS UNANIMOUSLY ADOPTED AND APPROVED THE
REORGANIZATION AGREEMENT AND APPROVED THE MERGER, AND RECOMMENDS A VOTE FOR
ADOPTION AND APPROVAL OF THE REORGANIZATION AGREEMENT AND FOR APPROVAL OF THE
MERGER BY THE STOCKHOLDERS OF INFINITY.
QUORUM; ABSTENTIONS
The presence, in person or by properly executed proxy, of the holders of a
majority of the outstanding shares of Infinity Common Stock entitled to vote
at the Infinity Special Meeting is necessary to constitute a quorum.
Abstentions will be counted for purposes of determining a quorum, but will
have the effect of a vote against approval of the matters being voted upon. If
an executed proxy is returned by a broker holding shares in street name which
indicates that the broker does not have discretionary authority as to certain
shares to vote on one or more matters, such shares will be considered
represented at the Infinity Special Meeting for purposes of determining a
quorum, but will not be considered to be represented at the Infinity Special
Meeting for purposes of calculating the vote with respect to such matter.
SOLICITATION OF PROXIES; EXPENSES
Regardless of whether the Merger is consummated, each of Infinity and
SunGard will pay its own costs and expenses incurred in connection with the
Reorganization Agreement and the transactions contemplated by the
Reorganization Agreement, except that fees and expenses (other than attorneys'
fees) incurred in connection with (i) the printing, filing and mailing of the
Registration Statement and this Proxy Statement/Prospectus and (ii) the filing
of the premerger notification and report forms relating to the Merger under
the HSR Act, will be shared equally by Infinity and SunGard.
Subject to the foregoing, the cost of the solicitation of proxies and all
related costs will be borne by Infinity. In addition, Infinity may reimburse
brokerage firms and other persons representing beneficial owners of shares for
their expenses in forwarding solicitation materials to such beneficial owners.
Original solicitation of proxies by mail may be supplemented by telephone,
facsimile or personal solicitation, without payment of additional
compensation, by certain directors, officers or other employees of Infinity.
20
<PAGE>
INFINITY PRINCIPAL STOCKHOLDERS
The following table sets forth certain information with respect to the
beneficial ownership of Infinity Common Stock as of November 14, 1997, by (i)
each director of Infinity, (ii) Infinity's Chief Executive Officer and each of
the four other most highly compensated executive officers of Infinity during
the fiscal year ended December 31, 1996, (iii) all directors and executive
officers of Infinity as a group, and (iv) all those known by Infinity to be
beneficial owners of more than five percent of outstanding shares of Infinity
Common Stock. This table is based on information provided to Infinity or filed
with the Commission by Infinity's directors, executive officers and principal
stockholders. Unless otherwise indicated in the footnotes below, and subject
to community property laws where applicable, each of the named persons has
sole voting and investment power with respect to the shares shown as
beneficially owned.
<TABLE>
<CAPTION>
AMOUNT AND PERCENTAGE OF
NATURE OF OUTSTANDING
BENEFICIAL COMMON
OWNERSHIP OF STOCK
BENEFICIAL OWNER COMMON STOCK(1) OWNED(2)
- ---------------- --------------- -------------
<S> <C> <C>
Roger A. Lang(3)................................ 4,897,000 25.3%
Till M. Guldimann(4)............................ 917,165 4.7%
Douglas M. Leone(5)............................. 2,833,334 14.6%
John C. Lewis................................... 140,000 *
James A. Dorrian(6)............................. 24,523 *
Michael A. Laven(7)............................. 95,499 *
Terry H. Carlitz(8)............................. 215,833 1.1%
Sequoia Capital (9)............................. 2,783,334 14.4%
All executive officers and directors as a group
(7 persons)(10)................................ 6,340,020 32.4%
</TABLE>
- --------
* Less than one percent
(1) Beneficial ownership is determined in accordance with the rules of the
Commission. In computing the number of shares beneficially owned by a
person and the percentage ownership of that person, shares of Infinity
Common Stock subject to options held by that person that are currently
exercisable or exercisable within 60 days of November 14, 1997 are deemed
outstanding. Such shares, however, are not deemed outstanding for the
purpose of computing the percentage ownership of each other person. To
Infinity's knowledge, except as set forth in the footnotes to this table
and subject to applicable community property laws, each person named in
the table has sole voting and investment power with respect to the shares
set forth opposite such person's name.
(2) Percentage beneficially owned is based on 19,349,556 shares of Infinity
Common Stock outstanding as of November 14, 1997.
(3) Includes (a) 57,142 shares held by Roger Allen Lang Jr. and Cynthia
Hunter Lang, Trustees 1996 Generation Skipping Trust fbo Roger Lloyd Lang
and (b) 57,142 shares held by Roger Allen Lang Jr. and Cynthia Hunter
Lang, Trustees 1996 Generation Skipping Trust fbo Christopher Allen Lang.
(4) Includes 116,665 shares subject to options exercisable within 60 days of
November 14, 1997.
(5) Comprised of 50,000 shares owned directly by Mr. Leone, 2,616,334 shares
held by Sequoia Capital Growth Fund and 167,000 shares held by Sequoia
Technology Partners III. Mr. Leone is a general partner of several
Sequoia Capital partnerships which have general partners who are general
partners of Sequoia Capital Growth Fund and of Sequioa Technology
Partners III.
(6) Includes 14,999 shares subject to options exercisable within 60 days of
November 14, 1997.
(7) Includes 94,999 shares subject to options exercisable within 60 days of
November 14, 1997.
(8) Includes 100,000 shares held by Terry H. Carlitz and Michael Carlitz,
Trustees of The Carlitz Charitable Unitrust and includes 15,833 shares
subject to options exercisable within 60 days of November 14, 1997.
(9) Comprised of 2,616,334 shares held by Sequoia Capital Growth Fund and
167,000 shares held by Sequoia Technology Partners III.
(10) Includes 242,496 shares subject to options exercisable within 60 days of
November 14, 1997.
21
<PAGE>
COMPARATIVE PER SHARE MARKET PRICE DATA AND DIVIDEND POLICY
Since June 4, 1997, the SunGard Common Stock has been listed and traded on
the NYSE under the symbol "SDS." Previously, the SunGard Common Stock was
listed and traded on the Nasdaq National Market and the London Stock Exchange
under the symbol "SNDT." The table below sets forth, for the quarters
indicated, the reported high and low sale prices of SunGard Common Stock as
reported on the NYSE since June 4, 1997 and the reported high and low sale
prices reported on the Nasdaq National Market prior to June 4, 1997. All
prices of SunGard Common Stock reflect SunGard's July 1995 and September 1997
two-for-one stock splits. Infinity Common Stock commenced trading on the
Nasdaq National Market under the symbol "INFN" on October 25, 1996. The table
below sets forth, for the quarters indicated, the reported high and low sale
prices of Infinity Common Stock as reported on the Nasdaq National Market.
<TABLE>
<CAPTION>
SUNGARD INFINITY
COMMON STOCK COMMON STOCK
------------------ ---------------
HIGH LOW HIGH LOW
-------- --------- ------- -------
<S> <C> <C> <C> <C>
1995
First Quarter............................. $12 3/16 $ 8 7/8 -- --
Second Quarter............................ 13 3/8 10 13/16 -- --
Third Quarter............................. 15 7/8 13 1/16 -- --
Fourth Quarter............................ 16 1/4 12 5/8 -- --
1996
First Quarter............................. $19 $13 3/4 -- --
Second Quarter............................ 20 1/2 15 5/8 -- --
Third Quarter............................. 23 3/8 17 11/16 -- --
Fourth Quarter............................ 23 3/4 19 1/8 19 1/2 15 3/4
1997
First Quarter............................. $25 3/8 $18 1/2 24 1/2 16
Second Quarter............................ 24 3/4 20 3/4 18 1/4 9 1/8
Third Quarter............................. 27 1/8 23 18 1/4 11 1/4
Fourth Quarter (through November 24,
1997).................................... 27 1/8 22 1/2 17 7/8 12
</TABLE>
As of the Record Date, there were approximately 3,161 record holders of
SunGard Common Stock and approximately 108 record holders of Infinity Common
Stock. Neither SunGard nor Infinity has ever paid cash dividends on their
respective common stock. The policies of SunGard and Infinity are to retain
earnings for use in their respective businesses.
The following table sets forth the closing sale price per share of SunGard
Common Stock as reported on the NYSE and the equivalent per share price (as
explained below) of Infinity Common Stock on October 16, 1997, the last
trading day preceding the public announcement of the Merger, and on November
24, 1997:
<TABLE>
<CAPTION>
SUNGARD EQUIVALENT INFINITY
COMMON STOCK PER SHARE PRICE
------------ -------------------
<S> <C> <C>
October 16, 1997............................ $24.0625 $16.3625
November 24, 1997........................... $24.875 $16.915
</TABLE>
The equivalent per share price of a share of Infinity Common Stock
represents sixty-eight hundredths (0.68) of the price of one share of SunGard
Common Stock.
INFINITY STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE
SUNGARD COMMON STOCK AND THE INFINITY COMMON STOCK.
22
<PAGE>
APPROVAL OF THE MERGER AND RELATED TRANSACTIONS
BACKGROUND OF THE MERGER
Since becoming an independent company in the early 1980s, a key element of
SunGard's corporate growth strategy has been the pursuit of business
acquisitions that would complement or expand SunGard's existing business
lines. Both SunGard and Infinity provide trading and risk management software
applications to financial institutions. Cristobal Conde, Chief Executive
Officer of SunGard's Trading Systems Group, and Roger A. Lang, Jr., Chief
Executive Officer of Infinity, have been acquainted with each other for a
number of years through common industry trade events. On June 4, 1997, Mr.
Conde met with Mr. Lang for a general discussion of their businesses. At that
meeting, Mr. Conde suggested that the two companies explore the possible
benefits of a merger.
On June 20 and 23, 1997, Mr. Conde met again with Mr. Lang to discuss the
possible synergies that could be achieved from a merger involving SunGard and
Infinity, and the possible benefits that such a merger would have for the
companies' respective stockholders, customers and employees. At those
meetings, Messrs. Conde and Lang discussed the steps that would need to be
taken to determine whether the perceived benefits of a combination involving
the companies could be quantified.
During a telephone conversation on July 9, 1997, Messrs. Conde and Lang
agreed that further discussions relating to a possible merger involving
SunGard and Infinity would be postponed until late August 1997 because during
July and August 1997, SunGard and Infinity both would be engaged in the
process of preliminary business and budgetary planning for 1998 for their
respective businesses.
In mid August 1997, certain members of SunGard's senior management informed
certain members of the SunGard Board of Directors of the preliminary merger
discussions between SunGard and Infinity. Thereafter, from time to time, the
members of the SunGard Board of Directors were informally advised of the
progress of the discussions with Infinity.
On August 22, 1997, Mr. Conde and Michael A. Laven, President and Chief
Operating Officer of Infinity, met to discuss the specific potential financial
synergies that might be derived from a merger involving SunGard and Infinity.
At a regularly scheduled meeting of the Infinity Board of Directors held on
August 26, 1997, Mr. Lang led a discussion of strategic alternatives and the
Board discussed at length the current activity within the industry towards
consolidation and the need to provide more broadly integrated solutions to
Infinity's customer base. The Infinity Board of Directors further discussed
the roles of Infinity and SunGard in this consolidation and the benefits and
risks associated with various acquisition and strategic partner strategies.
On September 4, 1997, Messrs. Conde and Laven met to discuss further
potential financial synergies that might be derived from a combination of
SunGard and Infinity and financial models related thereto. On September 19,
1997, Messrs. Conde, Lang and Laven and Richard Tarbox, Vice President--
Corporate Development of SunGard, met to review the analysis of such potential
financial synergies.
On September 24, 1997, James Mann, Chief Executive Officer of SunGard, and
Messrs. Conde and Tarbox met with Messrs. Lang and Laven to discuss, among
other matters, the potential benefits of a possible merger, the perceived
potential impact of a merger on SunGard and Infinity and their respective
stockholders and matters relating to the valuation of Infinity. At the
conclusion of the meeting, Mr. Mann indicated that SunGard would review
further the potential synergies of the combination of the two companies and
would then contact Infinity to discuss the results of such review.
On October 7, 1997, Mr. Mann discussed with Mr. Lang proposed terms of a
possible merger involving SunGard and Infinity. Among the matters discussed
were the importance to SunGard that the exchange ratio in the proposed
transaction be structured as a fixed exchange ratio and that the executive
officers and directors of Infinity sign agreements to vote their shares of
Infinity in favor of the merger.
23
<PAGE>
On October 8, 1997, the Infinity Board of Directors engaged DMG as
Infinity's financial advisor in connection with merger discussions with
SunGard. From October 9, 1997 through October 12, 1997, Mr. Tarbox and George
Boutros, of DMG, had a number of conversations regarding SunGard's proposal to
acquire Infinity. During these conversations, issues relating to, among other
matters, the valuation of Infinity and the voting agreements with Infinity's
executive officers and directors were discussed.
On October 13, 1997, Messrs. Mann and Lang had a telephone conversation
concerning a possible exchange ratio proposed by SunGard, as well as several
issues with respect to employee integration and retention. Also on October 13,
1997, a special meeting of the Infinity Board of Directors was held, during
which meeting the exchange ratio proposed by SunGard was discussed.
Representatives of Morrison & Foerster LLP, Infinity's outside legal counsel,
and representatives of DMG participated in this meeting.
On October 14, 1997, the SunGard Board of Directors held a special meeting
at which Mr. Mann presented management's recommendation that SunGard pursue a
merger with Infinity. After significant discussion of many matters relating to
such a merger, the SunGard Board of Directors unanimously approved a range of
acceptable exchange ratios for the merger and authorized SunGard's management
to continue to negotiate the terms of, and subject to SunGard's management's
satisfactory completion of its investigation of Infinity, to take steps
necessary to complete, such a merger. Subsequent to the SunGard Board of
Directors meeting, Mr. Mann had a telephone conversation with Mr. Lang during
which a possible exchange ratio and certain issues relating to the proposed
voting agreements were discussed. At the conclusion of such conversation,
Messrs. Mann and Lang agreed to continue to pursue a merger.
On October 15, 1997, Cooley Godward LLP, SunGard's outside legal counsel
engaged for this transaction, delivered a draft reorganization agreement to
outside legal counsel to Infinity. In addition, SunGard's legal and financial
advisors continued their investigation of Infinity.
Also on October 15, 1997, the Infinity Board of Directors held another
special meeting to consider the SunGard proposal to enter into a merger
transaction involving Infinity. The discussion of the Infinity Board of
Directors focused on the merits and risks associated with the SunGard proposal
and the value to Infinity's stockholders of the proposed terms of the merger.
The Infinity Board of Directors also discussed other issues relating the
proposed merger, including the structure and timing thereof.
On October 16, 1997, Mr. Tarbox, Lawrence Gross, SunGard's Vice President
and General Counsel, and representatives of SunGard's outside legal counsel,
met with representatives of DMG and representatives of Infinity's outside
legal counsel, to negotiate and finalize the terms of the proposed
reorganization agreement. Among the terms discussed were a "break-up" fee
equal to approximately $12,000,000 payable to SunGard under certain conditions
if the transaction were not to close, a stock option agreement to be entered
into by certain stockholders of Infinity giving SunGard the right to purchase
each such stockholder's shares of Infinity Common Stock under certain
circumstances and the voting agreements with the executive officers and
directors of Infinity. As a result of such negotiations, SunGard agreed that a
stock option agreement would not be necessary and that a "break-up" fee of
$9,500,000 would be acceptable. Also on October 16, 1997, DMG and Terry H.
Carlitz, Chief Financial Officer and Vice President, Finance of Infinity
discussed with representatives of SunGard certain information relating to
SunGard's results of operations and financial condition.
In addition, on October 16, 1997, the Infinity Board of Directors held
another special meeting to discuss the status of continuing negotiations with
SunGard. Following the discussion of such negotiations, Mr. Boutros of DMG
gave a presentation of DMG's financial review with respect to SunGard. The
Infinity Board of Directors then discussed the merits and risks of the merger
and received a presentation by Mr. Boutros regarding the terms of the merger.
At the conclusion of such presentation, DMG provided the Infinity Board of
Directors with its oral fairness opinion, which opinion was later confirmed in
writing in the DMG Opinion. Also on October 16, 1997, SunGard held a special
meeting of the SunGard Board of Directors to report to the SunGard Board of
Directors the results of SunGard's management's investigation of Infinity and
to review the terms of the proposed
24
<PAGE>
merger with Infinity. At the conclusion of that meeting, the SunGard Board of
Directors reapproved the proposed merger involving SunGard and Infinity.
On October 17, 1997, the Infinity Board of Directors held another special
meeting to review the terms of the Reorganization Agreement. After a review
and discussion of the terms of the Reorganization Agreement, and discussions
regarding the financial and other effects the proposed merger would have on
Infinity's stockholders, employees and customers, the Infinity Board of
Directors unanimously approved the Merger and authorized the officers of
Infinity to finalize and execute the Reorganization Agreement.
The definitive Reorganization Agreement was executed on behalf of SunGard,
Infinity and Merger Sub before the commencement of the business day on October
17, 1997.
INFINITY'S REASONS FOR MERGER
The Infinity Board of Directors believes that, despite its success to date,
increasing competition and industry consolidation would make it increasingly
difficult for Infinity to grow its business as a relatively small independent
company competing with larger companies with substantially greater resources
and broader, integrated product offerings. Infinity's management has
considered the alternatives of either acquiring smaller companies that could
extend the product offering and enhance the distribution of Infinity products
and services, or merging with a larger company. In the industry environment
referred to above, the Infinity Board of Directors identified several
potential benefits for the Infinity stockholders, employees and customers that
it believes would result from the Merger. These potential benefits include:
-- The potential synergy and compatibility between Infinity and SunGard,
based on the compatibility of the companies' product lines;
-- The benefits of an integration strategy in the financial services
software industry;
-- The financial strength of SunGard that would enable the combined company
to commit greater resources to both current and emerging product
development efforts and to fund the future growth of the combined
company's business;
-- The ability to leverage SunGard's extensive sales network to increase
sales of Infinity's products; and
-- The opportunity for Infinity, as part of the combined company, to
compete more effectively in the increasingly competitive and rapidly
changing financial services software industry.
In the course of its deliberations during the Infinity Board of Directors
meetings, held on October 13, October 15, October 16 and October 17, 1997, the
Infinity Board of Directors reviewed with Infinity's management a number of
additional factors relevant to the Merger, including the strategic overview
and prospects for Infinity, its products and its finances. The Infinity Board
of Directors also considered, among other matters:
-- Information concerning SunGard's and Infinity's respective businesses,
prospects, financial performance and condition, operations, technology,
product lines, management and competitive position;
-- The financial condition, results of operations and businesses of SunGard
and Infinity before and after giving effect to the Merger;
-- Current financial market conditions and historical market prices,
volatility and trading information with respect to SunGard Common Stock
and Infinity Common Stock;
-- The consideration to be received by Infinity stockholders in the Merger
and the fact that the market value of the SunGard Common Stock to be
issued in exchange for each share of Infinity Common Stock represented a
significant premium over the recent price range of the Infinity Common
Stock (the Merger consideration represented a premium of approximately
19% over the closing sales price of $13.75 per share of Infinity Common
Stock on October 16, 1997, the last trading day prior to the
announcement of the Merger);
25
<PAGE>
-- A comparison of selected recent acquisition and merger transactions in
the industry;
-- The belief that the terms of the Reorganization Agreement, including the
parties' mutual representations, warranties and covenants, are
reasonable and the fact that the Reorganization Agreement did not
contain any extraordinary conditions on SunGard's obligations to
consummate the Merger;
-- The ability of the Infinity Board of Directors to enter into discussions
with a person or entity in response to a Superior Offer (as defined
under "The Reorganization Agreement--Additional Covenants of the
Parties") that is submitted by such person or entity if, among other
things, the Infinity Board of Directors believes in good faith, based
upon the advice of its outside legal counsel, that such action is
required in order for the Infinity Board of Directors to comply with its
fiduciary obligations to Infinity's stockholders under applicable law;
-- The expected tax and accounting treatment of the Merger;
-- The DMG Opinion rendered at the October 17, 1997 meeting of the Infinity
Board of Directors that, based upon and subject to the various
conditions set forth in the DMG Opinion, the Exchange Ratio was fair to
holders of Infinity Common Stock from a financial point of view as of
October 17, 1997;
-- The impact of the Merger upon Infinity's customers and employees; and
-- Reports from management, financial advisors and legal advisors as to the
results of their investigation of SunGard.
The Infinity Board of Directors also considered a number of potentially
negative factors in its deliberations concerning the Merger, including, but
not limited to:
-- The loss of control over the future operations of Infinity following the
Merger;
-- The risk that the benefits sought to be achieved in the Merger will not
be achieved;
-- The fixed nature of the Exchange Ratio and the resulting risk that it
will not adjust for subsequent price fluctuations; and
-- The other risks described above under "Risk Factors."
The Infinity Board of Directors discussed with management the prospects for
combinations with companies other than SunGard and the possibility that the
benefits described above could be achieved through any such combinations, as
well as the risks and benefits of a stand-alone strategy.
The foregoing discussion of information and factors considered by the
Infinity Board of Directors is not intended to be exhaustive but is believed
to include all material factors considered by the Infinity Board of Directors.
In view of the wide variety of factors considered by the Infinity Board of
Directors, the Infinity Board of Directors did not find it practicable to
quantify or otherwise assign relative weight to the specific factors
considered. However, after taking into account all of the factors set forth
above, the Infinity Board of Directors unanimously agreed that the
Reorganization Agreement and the consummation of the Merger were fair to, and
in the best interests of, Infinity and its stockholders and that Infinity
should proceed with the Merger.
SUNGARD'S REASONS FOR THE MERGER
The SunGard Board of Directors has unanimously determined that the terms of
the Reorganization Agreement and the Merger are fair to, and in the best
interests of, SunGard and its stockholders. In reaching its determination, the
SunGard Board of Directors consulted with SunGard's management, as well as its
legal counsel and accountants, and gave significant consideration to a number
of factors bearing on its decision. The following are the reasons the SunGard
Board of Directors believes the Merger will be beneficial to SunGard and its
stockholders:
-- SunGard seeks to grow both internally and through the acquisition of
complementary businesses. Infinity's products, which provide customers
with a foundation to rapidly develop, deploy and modify trading and risk
management systems, will complement and broaden SunGard's existing
product lines in the investment support systems businesses.
26
<PAGE>
-- SunGard sells its computer services and software to the financial
services industry and believes that Infinity's products will enhance
SunGard's ability to service that industry. The demand for trading and
risk management systems by the financial services industry has grown
significantly over the past several years; financial institutions
worldwide have increasingly invested financial and other resources in
the development and acquisition of trading and risk management
technology. SunGard believes that Infinity's primary product, the
Infinity Platform, should position SunGard to take advantage of this
trend and should help establish SunGard as a leading provider of trading
and risk management platform and solutions software.
-- Infinity's business strategy is consistent with SunGard's goal to
continue product unification and enhancement efforts to provide
customers with access to multiple systems and data through common
graphical interfaces and shared databases. Infinity products are
characterized by an open systems, client/server architecture running on
the UNIX and Windows NT Operating Systems and on leading relational
database management systems.
-- The combination of the technologies and product development resources of
SunGard and Infinity should enable SunGard to respond more effectively
to the rapid technological change and continuing emergence of trading
and risk management systems.
-- SunGard believes there is a significant potential enhancement of the
strategic and market position of the combined entity beyond that
achievable by SunGard alone.
In addition to the reasons set forth above, in the course of its
deliberations concerning the Merger, the SunGard Board of Directors consulted
with SunGard's management, legal counsel and accountants and reviewed a number
of other factors relevant to the Merger, including:
-- Information concerning the business, assets, operations, properties,
management, financial condition, operating results, competitive position
and prospects of SunGard and Infinity;
-- The historical market prices and trading information with respect to
SunGard Common Stock and Infinity Common Stock;
-- The expected tax and accounting treatment of the Merger;
-- Reports from legal counsel on specific terms of the Reorganization
Agreement and the voting agreements executed by certain directors,
officers and other affiliates of Infinity; and
-- SunGard's belief that the management styles and corporate cultures of
the two companies would be complementary.
The SunGard Board of Directors also considered a number of potentially
negative factors in its deliberations concerning the Merger, including:
-- The possibility of management disruption associated with the Merger and
the risk that key technical and management personnel of Infinity or
SunGard might not continue with Infinity or SunGard;
-- The possibility that the Merger might adversely affect Infinity's or
SunGard's relationship with certain of their respective customers;
-- The risk that the potential benefits of the Merger might not be
realized; and
-- The fixed nature of the Exchange Ratio and the resulting risk that it
will not adjust for subsequent price fluctuations.
The SunGard Board of Directors concluded, however, that the benefits of the
transaction to SunGard and its stockholders outweighed the risks associated
with the foregoing factors.
The foregoing discussion of the information and factors considered by the
SunGard Board of Directors is not intended to be exhaustive but is believed to
include all material factors considered by the SunGard Board of Directors. In
view of the wide variety of factors considered by the SunGard Board of
Directors, the SunGard Board of Directors did not find it practicable to
quantify or otherwise assign relative weight to the specific factors
27
<PAGE>
considered. However, after taking into account all of the factors set forth
above, the SunGard Board of Directors unanimously agreed that the
Reorganization Agreement and the consummation of the Merger were fair to, and
in the best interests of, SunGard and its stockholders and that SunGard should
proceed with the Merger.
OPINION OF DEUTSCHE MORGAN GRENFELL INC.
Infinity retained DMG to act as its financial advisor in connection with the
Merger. DMG was selected by the Infinity Board of Directors to act as
Infinity's financial advisor based on DMG's qualifications, expertise and
reputation and relationship with Infinity.
At the meeting of the Infinity Board of Directors on October 16, 1997, DMG
rendered its oral opinion, subsequently confirmed in writing on October 17,
1997, that, as of such date, based upon and subject to the various
considerations set forth in the DMG Opinion, the Exchange Ratio was fair from
a financial point of view to the holders of Infinity Common Stock.
The full text of the DMG Opinion, which sets forth, among other things,
assumptions made, procedures followed, matters considered, and limitations on
the scope of the review undertaken by DMG in rendering the DMG Opinion, is
attached as Appendix B to this Proxy Statement/Prospectus. Infinity
stockholders are urged to read the DMG Opinion carefully and in its entirety.
DMG did not recommend to Infinity that any specific exchange ratio constituted
the appropriate exchange ratio for the Merger. The DMG Opinion addresses only
the fairness of the Exchange Ratio from a financial point of view to the
holders of Infinity Common Stock as of the date of the DMG Opinion, and does
not constitute a recommendation to any stockholder as to how such stockholder
should vote at the Infinity Special Meeting. The summary of the DMG Opinion
set forth in this Proxy Statement/Prospectus is qualified in its entirety by
reference to the full text of the DMG Opinion.
In rendering the DMG Opinion, DMG, among other things: (i) analyzed certain
publicly available financial statements and other information of SunGard and
Infinity, respectively; (ii) analyzed certain internal financial statements
and other financial and operating data concerning Infinity prepared by the
management of Infinity; (iii) analyzed certain financial projections relating
to Infinity prepared by the managements of Infinity and SunGard; (iv)
discussed the past and current operations and financial condition and the
prospects of Infinity with senior executives of Infinity; (v) analyzed certain
internal financial statements and other financial and operating data
concerning SunGard prepared by the management of SunGard; (vi) discussed the
past and current operations and financial condition and the prospects of
SunGard with senior executives of SunGard; (vii) analyzed the pro forma impact
of the Merger on the earnings per share and consolidated capitalization of
SunGard; (viii) reviewed the reported prices and trading activity for the
Infinity Common Stock; (ix) compared the financial performance of Infinity and
the prices and trading activity of the Infinity Common Stock with that of
certain other comparable publicly-traded companies and their securities; (x)
reviewed the reported prices and trading activity for the SunGard Common
Stock; (xi) compared the financial performance of SunGard and the prices and
trading activity of the SunGard Common Stock with that of certain other
comparable publicly-traded companies and their securities; (xii) reviewed the
financial terms, to the extent publicly available, of certain comparable
merger and acquisition transactions; (xiii) reviewed and discussed with the
senior management of Infinity (a) the strategic rationale for the Merger and
their assessment of the synergies and other benefits expected to be derived
from the Merger and (b) certain alternatives to the Merger; (xiv) participated
in discussions and negotiations among representatives of Infinity and SunGard
and their respective legal advisors; (xv) reviewed the Reorganization
Agreement, and certain related agreements; and (xvi) performed such other
analyses and considered such other factors as DMG deemed appropriate.
In rendering the DMG Opinion, DMG assumed and relied upon, without
independent verification, the accuracy and completeness of the information
reviewed by it for the purposes of the DMG Opinion. DMG was not provided with,
and therefore did not review, any internal financial projections or forecasts
relating to future operations or prospects of SunGard, and therefore, upon the
advice of SunGard, DMG assumed that the publicly available estimates of
research analysts were a reasonable basis upon which to evaluate and analyze
the future financial performance of SunGard. DMG assumed that the financial
projections for Infinity were reasonably
28
<PAGE>
prepared on bases reflecting the best currently available estimates and
judgments of the future financial performance of Infinity. DMG has not made
any independent valuation or appraisal of the assets, liabilities or
technology of SunGard or Infinity, respectively, nor has DMG been furnished
with any such appraisals. DMG has assumed that the Merger will be accounted
for as a pooling of interests business combination in accordance with U.S.
Generally Accepted Accounting Principles and will be consummated in accordance
with the terms set forth in the Reorganization Agreement. The DMG opinion is
necessarily based on economic, market and other conditions as in effect on,
and the information made available to DMG as of, the date of the DMG Opinion.
The following is a summary of the analysis performed by DMG in preparation
of the DMG Opinion and reviewed with the Infinity Board of Directors at
meetings held on October 13, 1997 and October 16, 1997.
Comparative Stock Price Performance. As part of its analysis, DMG reviewed
the recent stock price performance of the SunGard Common Stock and the
Infinity Common Stock and compared such performance with that of other
companies involved in client/server software used primarily in the financial
services industry and with that of the Nasdaq composite and the S&P 500. DMG
observed that during the period from October 25, 1996 (the date of the Initial
Public Offering for Infinity (the "Infinity IPO")) to October 10, 1997, the
market price of the Infinity Common Stock decreased 17.8%, compared with
increases of 42.2% for the Nasdaq composite, 40.5% for the S&P 500 index,
16.2% for C-ATS Software Inc. ("C-ATS"), and 15.2% for SunGard, and decreases
of 9.3% for PegaSystems Inc. ("PegaSystems") and 9.8% for Advent Software,
Inc. ("Advent"). DMG noted that over such period, the Infinity Common Stock
underperformed relative to the common stock of C-ATS, SunGard, PegaSystems,
Advent and relative to the Nasdaq composite and the S&P 500 index. In
addition, DMG reviewed the stock price performance of the SunGard Common Stock
and compared it to the stock price performance of other companies which DMG
deemed comparable based on their revenue stream and growth history. DMG
observed that during the period from January 1, 1990 to October 10, 1997, the
SunGard Common Stock price increased 314.7% compared to an increase of 481.0%
for Cadence Design Systems, Inc., 347.8% for Automatic Data Processing, Inc.
(assuming reinvestment of dividends paid), 282.4% for the Nasdaq index and
239.0% for the S&P 500.
Historical Exchange Ratio Analysis. DMG reviewed the historical trading
prices for the Infinity Common Stock and the SunGard Common Stock, separately,
and in comparison to each other. DMG also reviewed the ratios of the daily
closing prices of the Infinity Common Stock to the SunGard Common Stock for
each day over various periods, starting at October 25, 1996 (the date of the
Infinity IPO) and ending October 16, 1997 (the date of DMG's presentation of
the DMG Opinion to the Infinity Board of Directors) and computed the premiums
represented by the Exchange Ratio over the average of these ratios. The
average of the ratios of the daily closing stock prices of the Infinity Common
Stock to the SunGard Common Stock for the various periods ending on October
16, 1997 were 0.720 for the period since October 25, 1996; 0.669 for the
previous 180 trading days; 0.582 for the previous 90 trading days; 0.528 for
the previous 60 trading days; 0.515 for the previous 45 trading days; 0.521
for the previous 30 trading days; 0.571 for the previous 10 trading days; and
0.571 for October 16, 1997. DMG observed that the Exchange Ratio represented a
premium/(discount) of (5.6%), 1.7%, 16.9%, 28.8%, 32.0%, 30.6%, 19.0% and
19.0%, respectively, over the aforementioned ratios of the prices of the
Infinity Common Stock and the SunGard Common Stock.
Premium Analysis. DMG reviewed four stock-for-stock acquisition transactions
involving companies in the enterprise software sector, 25 other stock-for-
stock acquisition transactions involving companies in the software sector and
36 other stock-for-stock acquisition transactions involving companies in the
technology sector since 1987, none of which were deemed directly comparable to
the Merger. For the four stock-for-stock transactions involving companies in
the enterprise software sector, such analysis showed transaction exchange
ratios resulting in average premiums/(discounts) of approximately (10.1%),
6.2%, 12.4%, 20.7%, 20.1% and 20.6% over the average of the ratios of the
closing stock prices of the companies involved in such mergers over the one
year, 90 day, 60 day, 30 day, 10 day and one day periods ending the day
preceding the public announcement of these transactions, respectively. For the
25 other stock-for-stock acquisition transactions in the software sector, DMG
observed transaction exchange ratios resulting in average premiums of
approximately 21.0%, 31.8%, 36.0%, 41.1%, 40.3% and 34.3% over the average of
the ratios of the closing stock prices of the
29
<PAGE>
companies involved in such mergers over the aforementioned periods,
respectively. For the 36 other stock-for-stock acquisition transactions in the
technology sector, DMG observed transaction exchange ratios resulting in
average premiums of approximately 17.3%, 31.2%, 36.3%, 37.5%, 33.9% and 27.8%
over the average of the ratios of the closing stock prices of the companies
involved in such mergers over the aforementioned periods, respectively. DMG
observed that the Exchange Ratio represented average premiums/(discounts) of
approximately (5.6%), 16.9%, 28.8%, 30.6%, 19.0% and 19.0% over the average of
the ratios of the daily closing stock prices of the Infinity Common Stock to
the SunGard Common Stock for the respective comparable periods ending on
October 16, 1997.
Contribution Analysis. DMG analyzed the pro forma contribution by each of
SunGard and Infinity to the total revenue, gross profit, operating income and
net income of the combined company (adjusted to reflect the companies'
respective net cash balances) if the Merger were to be consummated. DMG
observed that for the 1997 and 1998 calendar years, based upon research
analyst estimates for both companies, Infinity would contribute approximately
8.5% and 10.2% of total revenue, respectively; 11.4% and 13.8% of gross
profit, respectively; 8.7% and 10.7% of operating income, respectively; and
10.6% and 13.4% of net income, respectively, of the combined company. DMG
observed that the median of these contribution percentages was 10.6% which
implied an exchange ratio of 0.498. These figures compared to the pro forma
fully diluted ownership of the Infinity stockholders in the combined company
(assuming the Merger were to be consummated) of 14.0% based on the Exchange
Ratio. DMG observed that the contribution analysis does not take into account
the different multiples of revenue or operating income that the market
ascribes to SunGard and Infinity.
Peer Group Comparison. DMG compared certain information relating to Infinity
and SunGard with a group of companies involved in the application
software/tools industry and the information/data processing industry. Such
information included, among other things, market valuation, stock price as a
multiple of earnings per share, aggregate market capitalization as a multiple
of revenues and stock price as a multiple of projected earnings per share over
forecasted long-term growth rate ("PEG"). The multiples are based on a
compilation of publicly available information and consensus forecasts by
securities research analysts. In particular, such comparison showed that as of
October 10, 1997, Infinity and SunGard traded at 26.2 times and 21.7 times
projected calendar year 1998 earnings, respectively; 4.7 times and 1.4 times
latest twelve months revenue, respectively; and 0.58 times and 1.21 times
calendar year 1998 PEG, respectively. As of October 10, 1997, the group of
companies involved in the application software/tools industry traded at a
median of 32.7 times projected calendar year 1998 earnings, 5.8 times latest
twelve months revenue and 0.95 times calendar year 1998 PEG. As of October 10,
1997, the group of companies involved in the information/data processing
industry traded at a median of 25.0 times projected calendar year 1998
earnings, 3.4 times latest twelve months revenue and 1.11 times calendar year
1998 PEG.
Selected Precedent Transactions. DMG reviewed 17 acquisition transactions
involving companies in the enterprise software sector and 93 acquisition
transactions involving companies in the software industry (including the
enterprise software sector). DMG observed that in the enterprise software
sector, for the 17 transactions (all of which had information publicly
available) the median of the range of multiples of aggregate value to latest
twelve months revenue and operating income was 4.3 times and 29.0 times,
respectively and the median price to next twelve months earnings multiple was
31.0 times. DMG observed that in the software industry, for the 70
transactions for which such information was publicly available, the median of
the range of multiples of aggregate value to latest twelve months revenue and
operating income was 3.7 times and 30.5 times, respectively and the median
price to next twelve months earnings multiple was 31.5 times. DMG compared
these multiples to the multiples implied by the Merger of aggregate value to
latest twelve months revenue and operating income of 5.8 times and 32.5 times,
respectively and price to calendar year 1997 and 1998 earnings multiples of
43.4 times and 30.9 times, respectively.
Potential Future Share Price Analysis. DMG computed equivalent per share
values for Infinity on a standalone basis. Such analysis was based on a range
of earnings estimates for Infinity based upon publicly available securities
analyst estimates as well as a sensitivity case assuming discounted earnings.
The analysis was also based on a range of one-year forward price to earnings
multiples of 15 to 30 times. Equivalent share
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prices were then computed for Infinity one and two years from the date of the
analysis which were then discounted back to the present at discount rates of
0.0%, 18.0% and 25.0%. Based on a range of forecasted Infinity standalone
earnings, this analysis resulted in a present value per share to holders of
Infinity Common Stock ranging from $7.90 to $33.43. In addition, DMG computed
earnings and revenue that would be required by Infinity on a standalone basis
to achieve the value implied by the Merger. For a range of prices implied by
the Merger, ranging from $16.00 to $18.00 and a range of growth rates ranging
from 16% to 20% for stock of the combined company, DMG computed 1999 stock
price values for the Infinity Common Stock. Based on these 1999 stock prices,
and forward EPS multiples of 20.0 times and 25.9 times and operating margins
of 17.0% and 18.0%, DMG computed the required Infinity calendar year 2000
earnings and implied revenue to achieve the 1999 stock prices. Based on the
range of assumptions, the calendar year 2000 EPS and revenue required ranged
from $0.83 to $1.30 and $174.1 million to $287.9 million, respectively.
Pro Forma Analysis of the Merger. DMG analyzed certain pro forma effects of
the Merger on the earnings and capitalization of SunGard. Such analysis was
based on First Call consensus estimates for SunGard and Infinity. Based on
such analysis, DMG observed that, based on the Exchange Ratio and assuming
that the Merger was treated as a pooling of interests business combination for
accounting purposes (and assuming no cost or revenue synergies), the Merger
would result in earnings per share dilution for SunGard of (4.4%) and (2.3%)
for the calendar years 1998 and 1999, respectively. The analysis was also
performed assuming a range of cost and revenue synergies. Based on such
analysis and similar assumptions, DMG observed that the Merger would result in
earnings per share (dilution) / accretion for calendar year 1998 ranging from
(4.4%) to 3.3%.
In connection with the review of the Merger by the Infinity Board of
Directors, DMG performed a variety of financial and comparative analyses for
purposes of the DMG Opinion. While the foregoing summary describes all
material analyses and factors reviewed by DMG with the Infinity Board of
Directors, it does not purport to be a complete description of the
presentations by DMG to the Infinity Board of Directors or the analyses
performed by DMG in arriving at the DMG Opinion. The preparation of a fairness
opinion is a complex process and is not necessarily susceptible to partial
analysis or summary description. DMG believes that its analyses must be
considered as a whole and that selecting portions of its analyses and of the
factors considered by it, without considering all analyses and factors, could
create a misleading view of the processes underlying the DMG Opinion. In
performing its analyses, DMG made numerous assumptions with respect to
industry performance, general business and economic conditions and other
matters, many of which are beyond the control of SunGard or Infinity. Any
estimates contained therein are not necessarily indicative of future results
or actual values, which may be significantly more or less favorable than those
suggested by such estimates. Furthermore, the analyses performed by DMG are
not necessarily indicative of actual values or actual future results, which
may be significantly more or less favorable than suggested by such analyses.
In addition, analyses relating to the value of businesses or assets do not
purport to be appraisals or to necessarily reflect the prices at which
businesses or assets may actually be sold. The analyses performed were
prepared solely as part of DMG's analysis of the fairness of the Exchange
Ratio, from a financial point of view, to the holders of Infinity Common Stock
and were provided to the Infinity Board of Directors in connection with the
delivery of the DMG Opinion.
DMG is an internationally recognized investment banking and advisory firm.
DMG, as part of its investment banking business, is continuously engaged in
the valuation of businesses and securities in connection with mergers and
acquisitions, negotiated underwritings, competitive biddings, secondary
distributions of listed and unlisted securities, private placements and
valuations for corporate and other purposes. In the ordinary course of its
business, DMG may actively trade the securities and loans of Infinity and
SunGard for its own account and for the accounts of its customers and,
accordingly, may at any time hold a long or short position in such securities
and loans.
Infinity has agreed to pay DMG a fee for its financial advisory services in
connection with the Merger, including, among other things, rendering the DMG
Opinion and making the presentation referred to above. Pursuant to a letter
agreement between Infinity and DMG dated August 25, 1997, Infinity has agreed
to pay DMG (i) in the event the Merger is consummated, a transaction fee of
$3.1 million or (ii) in the event the Merger is not consummated, an advisory
fee of between $50,000 and $75,000. In addition, Infinity has agreed to
reimburse
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DMG for its reasonable out-of-pocket expenses (including fees and expenses of
its legal counsel) incurred in connection with its engagement, and to
indemnify DMG and certain related persons against certain liabilities and
expenses arising out of or in conjunction with its rendering of services under
its engagement, including certain liabilities under the federal securities
laws.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Officers and Directors of Infinity. Certain members of Infinity's management
and Board of Directors may be deemed to have certain interests in the Merger
that are in addition to their interests as stockholders of Infinity generally.
The Infinity Board of Directors was aware of these interests and considered
them, among other matters, in approving the Reorganization Agreement and the
transactions contemplated thereby.
Indemnification and Insurance. The Reorganization Agreement provides that
all rights to indemnification existing in favor of the persons serving as
directors and officers of Infinity as of the date of the Reorganization
Agreement for acts or omissions occurring prior to the Effective Time, as
provided in Infinity's Bylaws and in certain indemnification agreements
between Infinity and such directors and officers, will survive the Merger, and
that SunGard will cause the Surviving Corporation to perform its obligations
arising thereunder for at least six years from the Effective Time. Subject to
certain limitations, SunGard has also agreed to cause the Surviving
Corporation to maintain in effect for three years after the Effective Time the
policy of directors' and officers' liability insurance in existence at the
date of the Reorganization Agreement for the benefit of persons serving as
directors and officers of Infinity as of such date. See "The Reorganization
Agreement--Indemnification and Insurance."
Options under the Infinity Stock Option Plans; Repurchase Rights. At the
Effective Time, each outstanding Infinity Option issued pursuant to the
Infinity Stock Option Plans will be assumed by SunGard. Each Infinity Option
so assumed will continue to have, and be subject to, the same terms and
conditions set forth in the stock option plan under which it was issued and
the stock option agreement by which it is evidenced (subject to appropriate
adjustments to the exercise price and number of shares subject thereto based
upon the Exchange Ratio). Mr. Guldimann and Mr. Laven hold options to purchase
200,000 and 240,000 shares, respectively, of Infinity Common Stock pursuant to
stock option agreements which provide for the acceleration of certain of such
options upon the occurrence of a change of control of Infinity. The Merger
will constitute such a change of control. Assuming that the Merger is
consummated on December 30, 1997, 20,834 and 25,000 of such options held
respectively by Mr. Guldimann and Mr. Laven, which would not have been vested
if a change of control of Infinity were not to occur, will become immediately
exercisable as of the Effective Time. Ms. Carlitz and Mr. Guldimann hold
200,000 and 500,000 shares, respectively, which are subject to a right of
repurchase that lapses over time, subject to acceleration upon the occurrence
of a change of control of Infinity. The Merger will constitute such a change
of control. Assuming that the Merger is consummated on December 30, 1997,
16,666 and 52,090 of such shares, held by Ms. Carlitz and Mr. Guldimann,
respectively, for which such right of repurchase would not have lapsed as of
December 30, 1997 if a change of control of Infinity were not to occur, will
no longer be subject to Infinity's right to repurchase as of the Effective
Time.
Employment/Severance Arrangement. SunGard expects to enter into an agreement
with Michael A. Laven, President and Chief Operating Officer of Infinity,
which is expected to provide for the full-time employment of Mr. Laven after
the Effective Time, at a base salary of $235,000 per year. The employment
agreement with Mr. Laven is also expected to provide that if Mr. Laven's
employment is terminated without "cause" prior to the third anniversary of the
date on which the Merger becomes effective, Mr. Laven will be paid an amount
equal to his annual base salary in effect at the time of such termination;
provided, however, that if less than one year of the three-year restriction
period set forth in his Noncompetition Agreement with SunGard remains
unexpired pursuant to the terms of such Noncompetition Agreement, his annual
base salary in effect at the time of such termination shall be prorated to
reflect the remaining unexpired portion of such restriction period. See
"Approval of the Merger and Related Transactions--Noncompetition Agreements."
Officers and Directors of SunGard. No officer or director of SunGard has any
interest in the Merger that is in addition to his or her interest as a
stockholder of SunGard generally.
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VOTING AGREEMENTS
Pursuant to the SunGard Voting Agreements, the Voting Agreement Stockholders
who owned in the aggregate issued and outstanding shares of Infinity Common
Stock representing approximately 45.9% of the shares of Infinity Common Stock
issued and outstanding as of the Record Date, have agreed that, prior to the
Expiration Date, they will vote their shares of Infinity Common Stock in favor
of: (i) the Merger; (ii) the execution and delivery by Infinity of the
Reorganization Agreement; (iii) the adoption and approval of the terms of the
Reorganization Agreement; and (iv) each of the other actions contemplated by
the Reorganization Agreement and any action required in furtherance thereof.
The Voting Agreement Stockholders have also delivered to SunGard irrevocable
proxies with respect to the matters covered by the SunGard Voting Agreements.
In addition, subject to certain exceptions, the Voting Agreement Stockholders
have agreed not to Transfer any Subject Securities owned by them unless and
until the proposed transferee of such Subject Securities shall have (i)
executed a counterpart of the SunGard Voting Agreement and the corresponding
irrevocable proxy and (ii) agreed to hold such Subject Securities subject to
all of the terms and conditions of the SunGard Voting Agreement.
The Voting Agreement Stockholders have also agreed that, during the period
commencing on the date of the Voting Agreement and ending on the Expiration
Date, they will not, directly or indirectly, and will not authorize any of
their Representatives to: (i) solicit, initiate or encourage the making or
announcement of an Acquisition Proposal (as defined below) or take any action
that could reasonably be expected to lead to an Acquisition Proposal; (ii)
furnish any nonpublic information regarding Infinity or any of its
subsidiaries to any person in connection with an actual or potential
Acquisition Proposal; or (iii) engage in discussions with any person regarding
an Acquisition Proposal. The Voting Agreement Stockholders have also agreed to
cease any existing discussions with any person that relate to an Acquisition
Proposal.
Each SunGard Voting Agreement also provides that the Voting Agreement
Stockholder who is a party thereto will hold harmless and indemnify SunGard
from and against certain damages which are incurred by SunGard that arise from
any breach of any representation, warranty, covenant or obligation of the
Voting Agreement Stockholder contained therein.
An "Acquisition Proposal" is any offer, proposal or inquiry (other than an
offer, proposal or inquiry by SunGard) contemplating or otherwise relating to
any transaction or series of transactions (an "Acquisition Transaction")
involving: (i) any merger, consolidation, share exchange, business
combination, issuance of securities, acquisition of securities, tender offer,
exchange offer or other similar transaction (a) in which Infinity or any of
its subsidiaries is a constituent corporation, (b) in which an individual or
entity or "group" (as defined in the Exchange Act and the rules promulgated
thereunder) of individuals or entities directly or indirectly acquires
Infinity or more than 50% of Infinity's business or directly or indirectly
acquires beneficial or record ownership of securities representing more than
20% of the outstanding securities of any class of voting securities of
Infinity or any of its subsidiaries, or (c) in which Infinity or any of its
subsidiaries issues securities representing more than 20% of the outstanding
securities of any class of voting securities of Infinity; (ii) any sale,
lease, exchange, transfer, license, acquisition or disposition of more than
50% of the assets of Infinity; or (iii) any liquidation or dissolution of
Infinity.
AFFILIATE AGREEMENTS
It is a condition to consummation of the Merger that each person who could
reasonably be determined to be an "affiliate," as such term is defined in Rule
145 promulgated under the Securities Act, of Infinity ("Affiliate") execute an
agreement that prohibits, during the period from the date 30 days prior to the
date of consummation of the Merger through the date on which financial results
covering at least 30 days of post-Merger combined operations of SunGard and
Infinity have been published by SunGard (within the meaning of the applicable
pooling of interests accounting requirements): (i) the sale, transfer or other
disposition or reduction of such Affiliate's interest in or risk relating to
(A) any capital stock of Infinity, except pursuant to and upon consummation of
the Merger, or (B) any option or other right to purchase any shares of capital
stock of Infinity, except pursuant to and upon consummation of the Merger; and
(ii) the sale, transfer or other disposition or reduction of such Affiliate's
interest in or risk relating to (A) any shares of capital stock of SunGard or
(B) any option or other right to purchase any shares of capital stock of
SunGard.
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NONCOMPETITION AGREEMENTS
Till M. Guldimann, Roger A. Lang, Jr. and Michael A. Laven (the "Noncompete
Employees"), each have entered into a Noncompetition Agreement with SunGard (a
"Noncompetition Agreement"). The Noncompetition Agreements contain provisions
restricting such Noncompete Employees, for either two or three years
(depending on the individual agreement) following the Effective Time (the
"Restriction Period") from (i) engaging in any business that is competitive
with Infinity's business, as engaged in by Infinity or as proposed to be
engaged in by Infinity before the Effective Time (the "Infinity Business");
(ii) being or becoming an officer, director, stockholder, owner, partner,
employee, manager, salesman, representative, agent or consultant of or to, or
participating in the ownership, management, operation, control or financing
of, any entity that engages or plans or proposes to engage in any business
competitive with the Infinity Business; or (iii) marketing or selling, in any
manner other than in furtherance of the business and interests of SunGard or
other subsidiaries of SunGard engaged in the Infinity Business, any software
competitive with Infinity's software. In addition, the Noncompetition
Agreements restrict the Noncompete Employees from taking the following actions
during the Restriction Period: (i) soliciting employees of SunGard or any
subsidiary of SunGard to leave his or her employment with such companies; or
(ii) interfering or attempting to interfere with the relationship or the
commercial relationship of SunGard or any subsidiary of SunGard with any
person or entity that is or was expected to become a customer or client of
SunGard or any subsidiary thereof.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion summarizes the material federal income tax
considerations of the Merger that are generally applicable to holders of
Infinity Common Stock. This discussion is based on currently existing
provisions of the Internal Revenue Code of 1986, as amended (the "Code"),
existing and proposed Treasury Regulations thereunder and current
administrative rulings and court decisions, all of which are subject to
change. Any such change, which may or may not be retroactive, could alter the
tax consequences to SunGard, Infinity or Infinity stockholders as described
herein.
Infinity stockholders should be aware that this discussion does not deal
with all U.S. federal income tax considerations that may be relevant to
particular Infinity stockholders in light of their particular circumstances,
such as stockholders who are dealers in securities, who are subject to the
alternative minimum tax provisions of the Code, who are foreign persons, who
acquired their shares in connection with stock option or stock purchase plans
or in other compensatory transactions or who hold their shares as a hedge or
as part of a hedging, straddle or other risk reduction strategy. In addition,
the following discussion does not address the tax consequences of the Merger
under foreign, state or local tax laws or the tax consequences of transactions
effectuated prior to or after the Merger (whether or not such transactions are
in connection with the Merger).
INFINITY STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE
SPECIFIC CONSEQUENCES OF THE MERGER, INCLUDING THE APPLICABLE FEDERAL, STATE,
LOCAL AND FOREIGN TAX CONSEQUENCES TO THEM OF THE MERGER IN THEIR PARTICULAR
CIRCUMSTANCES.
Neither SunGard nor Infinity has requested a ruling from the Internal
Revenue Service (the "IRS") with regard to any of the U.S. federal income tax
consequences of the Merger. Morrison & Foerster LLP, counsel to Infinity, and
Cooley Godward LLP, counsel to SunGard, have each rendered an opinion
(collectively, the "Tax Opinions") that the Merger will constitute a
reorganization under Section 368(a) of the Code (a "Reorganization"). As a
condition to the consummation of the Merger, such counsel must also render tax
opinions at the Closing that the Merger will constitute a Reorganization. Such
opinions are, and will be, based on certain assumptions as well as
representations received from SunGard, Infinity and certain stockholders of
Infinity (including an assumption, based on representations, concerning the
"continuity of interest" requirement discussed below) and are, and will be,
subject to the limitations discussed below. Moreover, such opinions will not
be binding on the IRS nor preclude the IRS from adopting a contrary position.
The discussion below assumes that the Merger will qualify as a Reorganization,
based upon such opinions.
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Subject to the limitations and qualifications referred to herein, and as a
result of the Merger's qualifying as a Reorganization, the following U.S.
federal income tax consequences should result:
(i) No gain or loss will be recognized by the holders of Infinity Common
Stock upon the receipt of SunGard Common Stock solely in exchange for such
Infinity Common Stock in the Merger (except in respect of cash received in
lieu of fractional shares of SunGard Common Stock, as discussed below);
(ii) The aggregate tax basis of the SunGard Common Stock so received by
Infinity stockholders in the Merger (including any fractional share of
SunGard Common Stock deemed to be received and then redeemed, as discussed
below) will be the same as the aggregate tax basis of Infinity Common Stock
surrendered in exchange therefor;
(iii) The holding period of the SunGard Common Stock so received by each
Infinity stockholder in the Merger will include the period for which the
Infinity Common Stock surrendered in exchange therefor was considered to be
held, provided that the Infinity Common Stock so surrendered is held as a
capital asset at the Effective Time;
(iv) Cash payments received by holders of Infinity Common Stock in lieu
of a fractional share will be treated as if such fractional share of
SunGard Common Stock had been issued in the Merger and then redeemed by
SunGard. An Infinity stockholder receiving such cash will generally
recognize gain or loss upon such payment, measured by the difference (if
any) between the amount of cash received and the basis in such fractional
share. The gain or loss should be capital gain or loss provided that such
share of Infinity Common Stock was held as a capital asset at the Effective
Time; and
(v) Neither SunGard nor Infinity will recognize a gain solely as a result
of the Merger.
The Tax Opinions are subject to certain assumptions and qualifications and
are based on the truth and accuracy of certain representations of SunGard,
Infinity and certain stockholders of Infinity, including representations in
certain certificates delivered to counsel by the respective managements of
SunGard and Infinity and certain stockholders of Infinity. Of particular
importance are the assumptions and representations relating to the "continuity
of interest" requirement.
To satisfy the "continuity of interest" requirement, Infinity stockholders
must not, pursuant to a plan or intent existing at or prior to the Effective
Time, dispose of or transfer so much of either (i) their Infinity Common Stock
in anticipation of the Merger or (ii) the SunGard Common Stock to be received
in the Merger (collectively, "Planned Dispositions"), such that the Infinity
stockholders, as a group, would no longer have a significant equity interest
in the Infinity business being conducted by SunGard after the Merger. Infinity
stockholders will generally be regarded as having a significant equity
interest as long as the SunGard Common Stock received in the Merger (after
taking into account Planned Dispositions), in the aggregate, represents a
substantial portion of the entire consideration received by the Infinity
stockholders in the Merger. No assurance can be made that the "continuity of
interest" requirement will be satisfied, and if such requirement is not
satisfied, the Merger would not be treated as a Reorganization.
A successful IRS challenge to the Reorganization status of the Merger (as a
result of a failure of the "continuity of interest" requirement or otherwise)
would result in significant adverse tax consequences to the Infinity
stockholders. An Infinity stockholder would recognize gain or loss with
respect to each share of Infinity Common Stock surrendered equal to the
difference between the stockholder's basis in such share and the sum of the
fair market value, as of the Effective Time, of the SunGard Common Stock
received in exchange therefor and cash received in lieu of the SunGard Common
Stock. In such event, a stockholder's aggregate basis in the SunGard Common
Stock so received would equal its fair market value, and the stockholder's
holding period for such stock would begin the day after the Closing Date.
ANTICIPATED ACCOUNTING TREATMENT
The Merger is intended to be accounted for as a pooling of interests for
financial reporting purposes in accordance with generally accepted accounting
principles. SunGard's obligation to consummate the Merger is conditioned upon
receipt of: (a) a letter from Ernst & Young LLP, dated as of the Closing Date
and addressed to Infinity, reasonably satisfactory in form and substance to
SunGard and Coopers & Lybrand LLP, regarding Ernst & Young LLP's concurrence
with Infinity management's conclusion that no conditions exist related to
Infinity
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that would preclude SunGard from accounting for the Merger as a pooling of
interests; and (b) a letter from Coopers & Lybrand LLP, dated as of the
Closing Date and addressed to SunGard, reasonably satisfactory in form and
substance to SunGard, to the effect that Coopers & Lybrand LLP concurs with
SunGard management's conclusion that SunGard may account for the Merger as a
pooling of interests. SunGard has the right to waive the condition that the
Merger be accounted for as a pooling of interests. If the Merger is
consummated but fails to qualify for pooling of interests accounting
treatment, then the transaction would be accounted for as a purchase.
Accounting for the Merger as a purchase would require SunGard to record
significant intangible assets in connection with the acquisition and to record
significant charges against results of operations, which could materially and
adversely affect SunGard's future results of operations.
REGULATORY MATTERS
Under the HSR Act and the rules promulgated thereunder by the FTC, the
Merger may not be consummated until notifications have been given and certain
information has been furnished to the FTC and the Antitrust Division and
specified waiting period requirements have been satisfied or early termination
of the waiting period is granted at the request of SunGard and Infinity.
SunGard and Infinity filed notification and report forms under the HSR Act
with the FTC and the Antitrust Division on November 3, 1997. These filings
commenced a 30-day waiting period under the HSR Act. If, prior to the
expiration of such period, the FTC or the Antitrust Division should request
additional information or documentary material under the HSR Act, consummation
of the Merger could be delayed until after the companies have substantially
complied with the request. There can be no assurance that a challenge to the
Merger on antitrust grounds will not be made, or if such challenge is made,
that SunGard and Infinity would prevail or would not be required to terminate
the Reorganization Agreement, to divest certain assets, to license certain
proprietary technology to third parties or to accept certain conditions in
order to consummate the Merger. SunGard does not have any obligation under the
Reorganization Agreement to: (i) dispose or cause any of its subsidiaries to
dispose of any assets; (ii) discontinue or make any changes to its operations
or proposed operations or to the operations or proposed operations of any of
its subsidiaries; or (iii) make any commitment (to any governmental body or
otherwise) regarding its future operations, or the future operations of its
subsidiaries, or the future operations of Infinity or its subsidiaries, even
though the disposition of such assets or the making of such change or
commitment might facilitate the obtaining of a required governmental
authorization or might otherwise facilitate the consummation of the Merger.
ABSENCE OF APPRAISAL RIGHTS
Under Section 262 of the DGCL, stockholders who do not vote in favor of or
consent to a merger are not entitled to appraisal rights if the stock subject
to such merger is designated as a national market system security on an
interdealer quotation system by the National Association of Securities
Dealers, Inc. and the consideration to be received in such merger consists of
stock listed on a national securities exchange. Because the Nasdaq National
Market is designated as such a system and the Infinity Common Stock is quoted
on the Nasdaq National Market, and because the NYSE is a national securities
exchange and the SunGard Common Stock is listed on the NYSE, Infinity
stockholders are not entitled to appraisal rights with respect to the Merger.
RESALE OF SUNGARD COMMON STOCK
The SunGard Common Stock issued in connection with the Merger will be freely
transferable, except that shares issued to any Infinity stockholder who is an
Affiliate of Infinity or who becomes an Affiliate of SunGard are subject to
certain restrictions on resale. An Affiliate is defined generally as
including, without limitation, directors, certain executive officers and
certain other persons who control a company. Certain stockholders of Infinity
who may be deemed to be Affiliates have executed agreements that prohibit the
sale, transfer or other disposition of SunGard Common Stock received by such
stockholders in the Merger, except under certain circumstances, in order to
comply with the requirements of certain federal securities laws and certain
pooling of interests requirements. See "Approval of the Merger and Related
Transactions--Affiliate Agreements." Certain stockholders have also delivered
to SunGard certificates certifying that such stockholders have no present
intention to dispose of certain of the shares of SunGard Common Stock to be
received by such stockholders in the Merger in order to comply with the
requirements of certain U.S. federal tax laws. See "Approval of the Merger and
Related Transactions--Certain Federal Income Tax Consequences."
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THE REORGANIZATION AGREEMENT
GENERAL
The following is a summary of the material provisions of the Reorganization
Agreement, a copy of which is attached as Appendix A to this Proxy
Statement/Prospectus and is incorporated herein by reference. However, the
following is not a complete statement of all provisions of the Reorganization
Agreement and related agreements. Statements made in this Proxy
Statement/Prospectus with respect to the terms of the Reorganization Agreement
and such related agreements are qualified in their respective entireties by
reference to the more detailed information set forth in the Reorganization
Agreement and such related agreements.
The Reorganization Agreement provides for the merger of Merger Sub with and
into Infinity. As a result of the Merger, Merger Sub will cease to exist,
Infinity will become a wholly owned subsidiary of SunGard and the former
stockholders of Infinity will become stockholders of SunGard. Infinity will
continue as the surviving corporation of the Merger (the "Surviving
Corporation") and will retain all of its separate corporate existence, with
all its purposes, objects, rights, privileges, powers and franchises
unaffected by the Merger. Merger Sub has been formed solely for the purpose of
effecting the Merger, and there will be no other activity in Merger Sub. The
Merger will become effective upon the filing of a Certificate of Merger with
the Delaware Secretary of State or at such later time as may be specified in
the Certificate of Merger. Such filing is anticipated to take place as soon as
practicable after the adoption and approval of the Reorganization Agreement
and approval of the Merger by the Infinity stockholders and after expiration
or termination of the waiting period under the HSR Act, subject to the
satisfaction or waiver of the other conditions to the Merger. It is currently
anticipated that the Merger will be consummated, and the Effective Time will
occur, shortly after the Infinity Special Meeting. There can be no assurance,
however, that the conditions to the Merger will be satisfied by such date, or
at all, or that the Reorganization Agreement will not be terminated. See "--
Conditions to the Merger" and "Approval of the Merger and Related
Transactions--Regulatory Matters."
MERGER CONSIDERATION
Infinity Common Stock. Subject to the provisions contained in the
Reorganization Agreement relating to the payment of cash in lieu of fractional
shares, at the Effective Time, each share of Infinity Common Stock then
outstanding (except for any such shares held by Infinity as treasury stock and
any shares held by SunGard or any subsidiary of SunGard or Infinity) will be
converted into the right to receive SunGard Common Stock based on the Exchange
Ratio.
No Fractional Shares. No fractional shares of SunGard Common Stock will be
issued in connection with the Merger, and no certificates for any such
fractional shares will be issued. In lieu of such fractional shares, any
holder of Infinity Common Stock who would otherwise be entitled to receive a
fraction of a share of SunGard Common Stock (after aggregating all fractional
shares of SunGard Common Stock issuable to such holder) will, upon surrender
of such holder's stock certificate(s) representing Infinity Common Stock to
the Exchange Agent, be paid in cash the dollar amount (rounded to the nearest
whole cent), without interest, determined by multiplying such fraction by the
closing price of a share of SunGard Common Stock on the NYSE on the date the
Merger becomes effective.
STOCK OPTIONS; EMPLOYEE STOCK PURCHASE PLAN
Stock Options. At the Effective Time, all rights with respect to Infinity
Common Stock under each Infinity Option then outstanding shall be converted
into and become rights with respect to SunGard Common Stock, and SunGard shall
assume each such Infinity Option in accordance with the terms (as in effect as
of October 17, 1997) of the stock option plan under which it was issued and
the stock option agreement by which it is evidenced. From and after the
Effective Time, (i) each Infinity Option assumed by SunGard may be exercised
solely for shares of SunGard Common Stock, (ii) the number of shares of
SunGard Common Stock subject to each such Infinity Option shall be equal to
the number of shares of Infinity Common Stock subject to such Infinity Option
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immediately prior to the Effective Time multiplied by the Exchange Ratio,
rounded down to the nearest whole share (with cash, less the applicable
exercise price, being payable for any fraction of a share), (iii) the per
share exercise price under each such Infinity Option shall be adjusted by
dividing the per share exercise price under such Infinity Option by the
Exchange Ratio and rounding up to the nearest cent, and (iv) any restriction
on the exercise of any such Infinity Option shall continue in full force and
effect and the term, exercisability, vesting schedule and other provisions of
such Infinity Option shall otherwise remain unchanged (subject to adjustment
as appropriate to reflect any stock split, stock dividend, reverse stock
split, reclassification, recapitalization or other similar transaction
subsequent to the Effective Time). SunGard has agreed to file with the
Commission a Registration Statement on Form S-8 relating to the shares of
SunGard Common Stock issuable with respect to assumed Infinity Options no
later than 30 days after the Effective Time.
Employee Stock Purchase Plan. The Infinity Purchase Plan will be terminated
as of the Effective Time. The rights of participants in the Infinity Purchase
Plan with respect to any offering period then underway under the Infinity
Purchase Plan shall be determined by treating the last business day prior to
the Effective Time as the last day of such offering period and by making such
other pro rata adjustments as may be necessary to reflect the reduced offering
period but otherwise treating such offering period as a fully effective and
completed offering period for all purposes of the Infinity Purchase Plan.
STOCK OWNERSHIP FOLLOWING THE MERGER
Based upon the number of shares of Infinity Common Stock issued and
outstanding as of the Record Date, an aggregate of approximately 13,157,698
shares of SunGard Common Stock will be issued to holders of Infinity Common
Stock. Based upon the number of shares of SunGard Common Stock issued and
outstanding as of the Record Date, and after giving effect to the additional
shares of SunGard Common Stock that are proposed to be issued in the Merger
(and assuming no exercise of outstanding options to purchase SunGard Common
Stock or Infinity Common Stock), the former holders of Infinity Common Stock
would hold approximately 13.03% of SunGard's total issued and outstanding
shares.
CONVERSION OF SHARES; PROCEDURES FOR EXCHANGE OF CERTIFICATES.
As soon as reasonably practicable after the Effective Time, the Exchange
Agent will mail to the registered holders of Infinity Common Stock (i) the
Letter of Transmittal and (ii) instructions for use of the Letter of
Transmittal in effecting the surrender of Infinity Stock Certificates in
exchange for certificates representing SunGard Common Stock. Upon surrender of
an Infinity Stock Certificate to the Exchange Agent for exchange, together
with a duly executed Letter of Transmittal and such other documents as may be
reasonably required by the Exchange Agent or SunGard, the holder of such
Infinity Stock Certificate shall be entitled to receive in exchange therefor a
certificate representing the whole number of shares of SunGard Common Stock
that such holder has the right to receive. No fractional shares of SunGard
Common Stock will be issued in connection with the Merger, and no certificates
for any such fractional shares will be issued. See "-No Fractional Shares."
If any Infinity Stock Certificate has been lost, stolen or destroyed,
SunGard may require the owner of such lost, stolen or destroyed Infinity Stock
Certificate to provide an appropriate affidavit and to deliver a bond (in such
sum as SunGard may reasonably direct) as indemnity against any claim that may
be made against the Exchange Agent, SunGard or Infinity with respect to such
Infinity Stock Certificate.
INFINITY STOCKHOLDERS SHOULD NOT SURRENDER THEIR INFINITY STOCK CERTIFICATES
FOR EXCHANGE UNTIL THEY RECEIVE A LETTER OF TRANSMITTAL.
EFFECT ON CERTIFICATES
At the Effective Time, (i) all shares of Infinity Common Stock outstanding
immediately prior to the Effective Time will automatically be canceled and
retired and will cease to exist, and all holders of certificates representing
shares of Infinity Common Stock that were outstanding immediately prior to the
Effective Time
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will cease to have any rights as stockholders of Infinity, and (ii) the stock
transfer books of Infinity will be closed with respect to all shares of
Infinity Common Stock outstanding immediately prior to the Effective Time. No
further transfer of any such shares of Infinity Common Stock will be made on
such stock transfer books after the Effective Time. If, after the Effective
Time, an Infinity Stock Certificate is presented to the Exchange Agent (or to
Infinity or SunGard), such Infinity Stock Certificate will be canceled and
will be exchanged as provided above under the caption "--Conversion of Shares;
Procedure for Exchange of Certificates; No Fractional Shares."
CORPORATE MATTERS
As of the Effective Time, the Certificate of Incorporation of the Surviving
Corporation will be amended and restated to conform to the form of certificate
of incorporation attached to the Reorganization Agreement, and the Bylaws of
the Surviving Corporation will be amended and restated to conform to the
Bylaws of Merger Sub as in effect immediately prior to the Effective Time. The
Reorganization Agreement provides that concurrently with the Effective Time,
the directors and officers of Infinity will resign and the directors and
officers of the Surviving Corporation immediately after the Effective Time
shall be the respective individuals who are directors and officers of Merger
Sub immediately prior to the Effective Time.
REPRESENTATIONS AND WARRANTIES
The Reorganization Agreement contains certain representations and
warranties, including without limitation, representations and warranties by
Infinity as to: (i) due organization and subsidiaries; (ii) charter documents
and bylaws; (iii) capitalization; (iv) filings with the Commission and
financial statements; (v) absence of certain changes; (vi) title to assets;
(vii) real property and leaseholds; (viii) proprietary assets; (ix) contracts;
(x) liabilities; (xi) compliance with legal requirements; (xii) certain
business practices; (xiii) tax matters; (xiv) employee and labor matters and
benefit plans; (xv) environmental matters; (xvi) insurance; (xvii)
transactions with affiliates; (xviii) legal proceedings and orders; (xix)
authority and binding nature of the Reorganization Agreement; (xx)
inapplicability of Delaware law with respect to business combinations with
interested stockholders; (xxi) no existing discussions; (xxii) accounting
matters; (xxiii) vote required; (xxiv) non-contravention and consents; (xxv)
fairness opinion; (xxvi) brokers, finders, investment bankers or other fees or
commissions; (xxvii) absence of dissenters' rights; and (xxviii) full
disclosure.
The Reorganization Agreement contains further representations and warranties
by SunGard and Merger Sub as to: (i) organization, standing and power; (ii)
capitalization; (iii) filings with the Commission and financial statements;
(iv) accuracy and completeness of disclosure; (v) absence of certain changes;
(vi) vote required; (vii) authority and binding nature of the Reorganization
Agreement; (viii) non-contravention and consents; (ix) valid issuance of
SunGard Common Stock; (x) accounting matters; and (xi) full disclosure.
None of the representations and warranties of Infinity, SunGard or Merger
Sub contained in the Reorganization Agreement or in any certificate delivered
pursuant to the Reorganization Agreement shall survive the Merger.
COVENANTS
Certain Covenants of Infinity. The Reorganization Agreement requires that,
from the date of the execution of the Reorganization Agreement until the
Effective Time (the "Pre-Closing Period"):
(i) Infinity shall, and shall cause the Representatives of the Acquired
Corporations to, provide SunGard and SunGard's representatives with
reasonable access to the Acquired Corporations' Representatives, personnel,
assets, books, records, tax returns and other documents and information
relating to the Acquired Corporations and such copies of the existing
books, records, tax returns and other documents relating to the Acquired
Corporations as SunGard may reasonably request;
(ii) (a) Infinity shall ensure that each of the Acquired Corporations
conducts its business and operations (1) in the ordinary course and in
accordance with past practices and (2) in compliance in all
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material respects with certain applicable legal requirements and the
requirements of certain contracts; (b) Infinity shall use reasonable
efforts to ensure that each of the Acquired Corporations preserves intact
its current business organization, keeps available the services of its
current officers and employees and maintains its relations and goodwill
with all suppliers, customers, landlords, creditors, licensors, licensees,
employees and other persons or entities having business relationships with
the respective Acquired Corporations; (c) Infinity shall keep in full force
its insurance policies; (d) Infinity shall use reasonable efforts to
provide all notices, assurances and support required by any contract to
which either Acquired Corporation is a party relating to any material
proprietary asset of the Acquired Corporations in order to ensure that no
condition under any such contract occurs which would result in (1) any
transfer or disclosure by any Acquired Corporation of any source code
materials or other proprietary asset, or (2) a release from any escrow of
any source code materials or other proprietary asset which have been
deposited or are required to be deposited in escrow under the terms of such
contract; and (e) Infinity shall (to the extent reasonably requested by
SunGard) cause its officers to report regularly to SunGard concerning the
status of the business of Infinity;
(iii) Infinity shall not (without the prior written consent of SunGard),
and shall not permit any of the Acquired Corporations to:
(a) declare, accrue, set aside or pay any dividend or make any other
distribution in respect of any shares of capital stock, or repurchase,
redeem or otherwise reacquire any shares of capital stock or other
securities;
(b) sell, issue, grant or authorize the issuance or grant of (1) any
capital stock or other security, (2) any option, call, warrant or right
to acquire any capital stock or other security, or (3) any instrument
convertible into or exchangeable for any capital stock or other
security (except that (A) Infinity may issue Infinity Common Stock upon
the valid exercise of Infinity Options outstanding as of the date of
the Reorganization Agreement or pursuant to the Infinity Purchase Plan
(provided that such Infinity Purchase Plan is operated consistent with
past practice), and (B) Infinity may, in the ordinary course of
business and consistent with past practices, grant options under the
Infinity Stock Option Plans to purchase no more than a total of 50,000
shares of Infinity Common Stock to employees of Infinity);
(c) amend or waive any of its rights under, or accelerate the vesting
under, any provision of any of Infinity's stock option plans, any
provision of any agreement evidencing any outstanding stock option or
any restricted stock purchase agreement, or otherwise modify any of the
terms of any outstanding option, warrant or other security or any
related contract;
(d) amend or permit the adoption of any amendment to its Certificate
of Incorporation or Bylaws or other charter or organizational
documents, or effect or become a party to any merger, consolidation,
share exchange, business combination, recapitalization,
reclassification of shares, stock split, reverse stock split or similar
transaction;
(e) form any subsidiary or acquire any equity interest or other
interest in any other entity;
(f) make any capital expenditure (except that the Acquired
Corporations may make capital expenditures that, when added to all
other capital expenditures made on behalf of the Acquired Corporations
during the Pre-Closing Period, do not exceed $250,000 in the
aggregate);
(g) enter into or become bound by, or permit any of the assets owned
or used by it to become bound by, any material contract, or amend or
prematurely terminate, or waive or exercise any material right or
remedy, other than in the ordinary course of business consistent with
past practice;
(h) acquire, lease or license any right or other asset from any third
party or sell or otherwise dispose of, or lease or license, any right
or other asset to any third party (except in each case for assets
acquired, leased, licensed or disposed of by Infinity in the ordinary
course of business and consistent with past practices), or waive or
relinquish any material right;
(i) lend money to any third party, or incur or guarantee any
indebtedness;
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(j) establish, adopt or amend any employee benefit plan, pay any
bonus or make any profit-sharing or similar payment to, or increase the
amount of the wages, salary, commissions, fringe benefits or other
compensation or remuneration payable to, any of its directors, officers
or employees (other than salary increases in connection with employee
reviews or bonuses payable in accordance with existing bonus
obligations or plans);
(m) change any of its methods of accounting or accounting practices
in any respect;
(n) make any tax election;
(o) commence any legal proceeding or with certain exceptions, settle
any legal proceeding;
(p) take any other material action outside the ordinary course of
business inconsistent with past practices; or
(q) agree or commit to take any of the actions described in clauses
"(a)" through "(p)" of this paragraph; and
(iv) Infinity shall promptly notify SunGard in writing of the discovery
by Infinity of: (a) any event, condition, fact or circumstance that
occurred or existed on or prior to the date of the Reorganization Agreement
and that caused or constitutes a material inaccuracy in any representation
or warranty made by Infinity in the Reorganization Agreement; (b) any
event, condition, fact or circumstance that occurs, arises or exists after
the date of and that would cause or constitute a material inaccuracy in any
representation or warranty made by Infinity in the Reorganization Agreement
if (1) such representation or warranty had been made as of the time of the
occurrence, existence or discovery of such event, condition, fact or
circumstance, or (2) such event, condition, fact or circumstance had
occurred, arisen or existed on or prior to the date of the Reorganization
Agreement; (c) any material breach of any covenant or obligation of
Infinity; and (d) any event, condition, fact or circumstance that would
make the timely satisfaction of any of the conditions precedent to
obligations of SunGard, Merger Sub or Infinity pursuant to the
Reorganization Agreement impossible or unlikely or that has had or could
reasonably be expected to have a Material Adverse Effect (as defined below)
on the Acquired Corporations.
Additional Covenants of the Parties. The Reorganization Agreement also
contains certain additional covenants of the parties including covenants
relating to: (i) the preparation and filing of the Registration Statement;
(ii) Infinity's obligations with respect to the Infinity Special Meeting;
(iii) regulatory approvals; (iv) Infinity stock options and employee benefit
plans; (v) indemnification of officers and directors; (vi) actions regarding
pooling of interests accounting for the Merger; (vii) the preparation and
filing of filings and notices and obtaining approvals, consents,
ratifications, permissions, waivers and authorizations; (viii) press releases,
public statements and other disclosures regarding the Merger, the
Reorganization Agreement and the transactions contemplated thereby; (ix)
affiliate agreements; (x) tax opinion back-up certificates; (xi) delivery of a
letter from Ernst & Young LLP with respect to the Registration Statement;
(xii) listing of SunGard Common Stock on the NYSE; and (xiii) resignation of
Infinity officers and directors.
Infinity has agreed in the Reorganization Agreement (i) to take all action
necessary in accordance with all applicable law to call, give notice of,
convene and hold the Infinity Special Meeting, and (ii) not to withdraw, amend
or modify, or propose or resolve to withdraw, amend or modify, in a manner
adverse to SunGard, the unanimous recommendation of the Infinity Board of
Directors that the Infinity stockholders vote in favor of and adopt and
approve the Reorganization Agreement and approve the Merger; provided,
however, that nothing in the Reorganization Agreement will prevent the
Infinity Board of Directors from withdrawing, amending or modifying its
recommendation in favor of the Merger if (a) a "Superior Offer" (as defined
below) is made to Infinity and is not withdrawn, (b) neither Infinity nor any
of its Representatives shall have violated certain covenants, including the
covenants not to solicit, initiate, encourage or induce the making of an
Acquisition Proposal, and (c) the Infinity Board of Directors concludes in
good faith, based upon the advice of its outside counsel, in light of the
Superior Offer, that the withdrawal, amendment or modification of such
recommendation is required in order for it to comply with its fiduciary
obligations to Infinity's stockholders under applicable law.
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The Reorganization Agreement provides that nothing contained in the
Reorganization Agreement shall limit Infinity's obligation to call, give
notice of, convene and hold the Infinity Special Meeting (regardless of
whether the unanimous recommendation of the Infinity Board of Directors shall
have been withdrawn, amended or modified).
A "Superior Offer" is defined as an unsolicited, bona fide written offer
made by a third party to purchase more than 50% of the outstanding shares of
Infinity Common Stock on terms that the Infinity Board of Directors
determines, in its reasonable judgment, based upon the written advice of its
financial advisor, to be more favorable from a financial point of view to
Infinity's stockholders than the terms of the Merger; provided, however, that
any such offer shall not be deemed to be a "Superior Offer" if any financing
required to consummate the transaction contemplated by such offer is not
committed and is not likely to be obtained by such third party on a timely
basis.
Pursuant to the Reorganization Agreement, SunGard and Infinity have agreed
to use all reasonable efforts to take, or cause to be taken, all actions
necessary to consummate the Merger and make effective the other transactions
contemplated by the Reorganization Agreement; however, SunGard does not have
any obligation under the Reorganization Agreement to: (i) dispose or cause any
of its subsidiaries to dispose of any assets, or commit to cause any of the
Acquired Corporations to dispose of any assets; (ii) discontinue or cause any
of its subsidiaries to discontinue offering any product, or commit to cause
any of the Acquired Corporations to discontinue offering any product; (iii)
license or otherwise make available, or cause any of its subsidiaries to
license or otherwise make available, to any third party, any technology,
software or other proprietary asset, or commit to cause any of the Acquired
Corporations to license or otherwise make available to any third party any
technology, software or other proprietary asset; (iv) hold separate or cause
any of its subsidiaries to hold separate any assets or operations, or to
commit to cause any of the Acquired Corporations to hold separate any assets
or operations; or (v) make or cause any of its subsidiaries to make any
commitment regarding its future operations or the future operations of any of
the Acquired Corporations.
NON-SOLICITATION
Pursuant to the Reorganization Agreement, Infinity has agreed that it will
not, directly or indirectly, and will not authorize or permit any of the other
Acquired Corporations or any Representative of any of the Acquired
Corporations, directly or indirectly to (i) solicit, initiate, encourage or
induce the making, submission or announcement of any Acquisition Proposal or
take any action that could reasonably be expected to lead to an Acquisition
Proposal, (ii) furnish any information regarding any of the Acquired
Corporations to any third party in connection with or in response to an
Acquisition Proposal, (iii) engage in discussions or negotiations with any
third party with respect to any Acquisition Proposal, (iv) approve, endorse or
recommend any Acquisition Proposal or (v) enter into any letter of intent or
similar document or any contract or other agreement contemplating or otherwise
relating to any Acquisition Transaction; provided, however, that: (A) such
provisions shall not prohibit the Infinity Board of Directors from disclosing
to Infinity's stockholders a position with respect to a tender offer pursuant
to Rules 14d-9 and 14e-2 promulgated under the Exchange Act; and (B) prior to
the adoption and approval of the Reorganization Agreement by the Required
Vote, such provisions shall not prohibit Infinity from (x) furnishing
nonpublic information regarding the Acquired Corporations to any third party
in response to an Acquisition Proposal that is submitted by such third party
(and not withdrawn), or (y) entering into discussions with any third party in
response to a Superior Offer that is submitted by such third party (and not
withdrawn) if, in either such case, (a) neither Infinity nor any
Representative of any of the Acquired Corporations has violated any of the
restrictions set forth above in this sentence, (b) the Infinity Board of
Directors believes in good faith, based upon the advice of outside legal
counsel, that such action is required in order for the Infinity Board of
Directors to comply with its fiduciary obligations to Infinity's stockholders
under applicable law, (c) prior to furnishing any such nonpublic information
to, or entering into discussions with, such third party, Infinity gives
SunGard written notice of the identity of such third party and of Infinity's
intention to furnish nonpublic information to, or enter into discussions with,
such third party, and Infinity receives from such third party an executed
confidentiality agreement containing limitations on the use and disclosure of
all nonpublic
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written and oral information furnished to such third party by or on behalf of
Infinity, and (d) prior to furnishing any such nonpublic information to such
third party, Infinity furnishes such nonpublic information to SunGard (to the
extent such nonpublic information has not been previously furnished by
Infinity to SunGard). Without limiting the generality of the foregoing,
pursuant to the Reorganization Agreement, Infinity has acknowledged and agreed
that any violation of any of the restrictions referenced in the preceding
sentence by any Representative of any of the Acquired Corporations, whether or
not such Representative is purporting to act on behalf of any of the Acquired
Corporations, shall be deemed to constitute a breach of Infinity's obligations
referenced in the preceding sentence; provided, however, that the limitations
described in the preceding sentence shall not limit the rights of any
Representative who is a stockholder of Infinity to freely vote his stock and
to exercise all of his rights as a stockholder of Infinity, subject to any
contractual restrictions that may apply. In addition, the Reorganization
Agreement requires Infinity to promptly advise SunGard orally and in writing
of any Acquisition Proposal (including the identity of the person making or
submitting such Acquisition Proposal and the terms thereof) that is made or
submitted by any person during the period between the date of the
Reorganization Agreement and until the Effective Time, to keep SunGard fully
informed with respect to the status of any such Acquisition Proposal and any
modification or proposed modification thereto and to immediately cease and
cause to be terminated any existing discussions with any person that relate to
any Acquisition Proposal.
INDEMNIFICATION AND INSURANCE
Pursuant to the Reorganization Agreement, all rights to indemnification
existing in favor of the persons serving as directors or officers of Infinity
as of the date of the Reorganization Agreement for acts and omissions
occurring prior to the Effective Time, as provided in Infinity's Bylaws (as in
effect as of the date of the Reorganization Agreement) and as provided in the
indemnification agreements between Infinity and said directors and officers
(as in effect as of the date of the Reorganization Agreement), shall survive
the Merger, and SunGard shall cause the Surviving Corporation to perform all
of its obligations arising thereunder for a period of not less than six years
from the Effective Time. The Reorganization Agreement also provides that from
the Effective Time until the third anniversary of the date on which the
Effective Time occurs, SunGard will cause the Surviving Corporation to
maintain in effect, for the benefit of the persons serving as directors and
officers of Infinity as of the date of the Reorganization Agreement with
respect to acts or omissions occurring prior to the Effective Time, the
existing policy of directors' and officers' liability insurance maintained by
Infinity as of the date of the Reorganization Agreement (the "Existing
Policy"); provided, however, that (i) the Surviving Corporation may substitute
for the Existing Policy a policy or policies of comparable coverage, and (ii)
the Surviving Corporation shall not be required to pay an annual premium for
the Existing Policy (or for any substitute policies) in excess of $225,000.
The Reorganization Agreement further provides that in the event any future
annual premium for the Existing Policy (or any substitute policies) exceeds
$225,000, the Surviving Corporation shall be entitled to reduce the amount of
coverage of the Existing Policy (or any substitute policies) to the amount of
coverage that can be obtained for a premium equal to $225,000.
CONDITIONS TO THE MERGER
SunGard and Merger Sub. The obligations of SunGard and Merger Sub to effect
the Merger and otherwise consummate the transactions contemplated by the
Reorganization Agreement are subject to the satisfaction, at or prior to the
consummation of the transactions contemplated by the Reorganization Agreement
(the "Closing"), of each of the following conditions:
(i) the representations and warranties of Infinity contained in the
Reorganization Agreement concerning the absence of dissenters' rights and
the representations and warranties of Infinity contained in the
Reorganization Agreement concerning the fully diluted capitalization of
Infinity shall have been accurate in all respects as of the date of the
Reorganization Agreement (it being understood that (a) certain
representations and warranties of Infinity relating to the fully-diluted
capitalization of Infinity shall be deemed to have been accurate as long as
the actual fully diluted capital of Infinity does not exceed the fully
diluted capitalization of Infinity as represented in the Reorganization
Agreement by more than 15,000 shares
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of Infinity Common Stock, and (b) for purposes of determining the accuracy
of the foregoing representations and warranties, (1) all "Material Adverse
Effect" qualifications and other materiality qualifications contained in
such representations and warranties shall be disregarded, and (2) any
update of or modification to the disclosure schedule provided by Infinity
made or purported to have been made after the date of the Reorganization
Agreement shall be disregarded).
(ii) the representations and warranties of Infinity contained in the
Reorganization Agreement other than those set forth above, shall have been
accurate in all respects as of the date of the Reorganization Agreement (it
being understood that, for purposes of determining the accuracy of such
representations and warranties: (a) any inaccuracies that, in the
aggregate, do not have a Material Adverse Effect (as defined below) on the
Acquired Corporations shall be disregarded, (b) all "Material Adverse
Effect" qualifications and other materiality qualifications contained in
such representations and warranties shall be disregarded, and (c) any
update of or modification to the disclosure schedule provided by Infinity
made or purported to have been made after the date of the Reorganization
Agreement shall be disregarded);
(iii) the representations and warranties of Infinity contained in the
Reorganization Agreement, except for any representation or warranty that
refers specifically to the date of the Reorganization Agreement or to any
date or period prior to the date of the Reorganization Agreement, shall be
accurate in all respects as of the Closing Date as if made on and as of the
Closing Date (it being understood that, for purposes of determining the
accuracy of such representations and warranties as of the Closing Date: (a)
any inaccuracies that, in the aggregate, do not have a Material Adverse
Effect on the Acquired Corporations shall be disregarded, (b) any
inaccuracy that results from general business, economic or industry
conditions that do not affect Infinity in a disproportionate manner shall
be disregarded, (c) any inaccuracy that results from taking of any action
required by the Reorganization Agreement or the announcement or pendency of
the transactions contemplated by the Reorganization Agreement shall be
disregarded, (d) all "Material Adverse Effect" qualifications and other
materiality qualifications contained in such representations and warranties
shall be disregarded, and (e) any update of or modification to the
disclosure schedule provided by Infinity made or purported to have been
made after the date of the Reorganization Agreement shall be disregarded);
(iv) each covenant or obligation that Infinity is required to comply with
or to perform at or prior to the Closing shall have been complied with and
performed in all material respects;
(v) the Registration Statement shall have become effective in accordance
with the provisions of the Securities Act, and no stop order shall have
been issued by the Commission with respect to the Registration Statement;
(vi) the Reorganization Agreement shall have been duly adopted and
approved and the Merger shall have been duly approved by the Required Vote;
(vii) all material consents required to be obtained in connection with
the Merger and the other transactions contemplated by the Reorganization
Agreement shall have been obtained and shall be in full force and effect
(except where the failure to obtain such consents has not had, and would
not reasonably be expected to have, a Material Adverse Effect on SunGard or
on Infinity);
(viii) SunGard and Infinity shall have received the following agreements
and documents (each of which shall be in full force and effect): (a)
Affiliate Agreements in the form attached to the Reorganization Agreement,
executed by each person who is reasonably determined to be an "affiliate"
of Infinity (as that term is used in Rule 145 promulgated under the
Securities Act), (b) Continuity of Interest Certificates in the form
attached to the Reorganization Agreement, executed by Roger A. Lang, Jr.,
Till M. Guldimann and Sequoia Capital Growth Fund (c) the Noncompetition
Agreements executed by Till M. Guldimann, Roger A. Lang, Jr. and Michael A.
Laven, (d) a letter from Ernst & Young LLP, dated as of the Closing Date
and addressed to SunGard, reasonably satisfactory in form and substance to
SunGard, updating the letter referred to in clause "(xi)" under "--
Covenants--Additional Covenants of the Parties", (e) a letter from Ernst &
Young LLP, dated as of the Closing Date and addressed to Infinity,
reasonably satisfactory in form and substance to SunGard and Coopers &
Lybrand LLP, regarding Ernst & Young LLP concurrence with Infinity
management's conclusion that no conditions exist related to Infinity that
would preclude SunGard
44
<PAGE>
from accounting for the Merger as a pooling of interests in accordance with
generally accepted accounting principles and Accounting Principles Board
Opinion No. 16, (f) a letter from Coopers & Lybrand LLP, dated as of the
Closing Date and addressed to SunGard, reasonably satisfactory in form and
substance to SunGard, to the effect that Coopers & Lybrand LLP concurs with
SunGard management's conclusion that SunGard may account for the Merger as
a pooling of interests in accordance with generally accepted accounting
principles, Accounting Principles Board Opinion No. 16 and all published
rules, regulations and policies of the Commission, (g) subject to the
receipt and reliance upon by Cooley Godward LLP of certain Continuity of
Interest Certificates and tax representation letters, a legal opinion of
Cooley Godward LLP, dated as of the Closing Date and addressed to SunGard,
to the effect that the Merger will constitute a reorganization within the
meaning of Section 368 of the Code, (h) a certificate executed on behalf of
Infinity by its Chief Executive Officer confirming that the conditions set
forth in clauses "(i)", "(ii)", "(iii)", "(iv)", "(vi)", "(vii)", and
"(ix)" of this paragraph have been duly satisfied; and (i) the written
resignations of all officers and directors of Infinity, effective as of the
Effective Time;
(ix) there shall have been no change in the business, capitalization,
operations or financial condition of any of the Acquired Corporations since
the date of the Reorganization Agreement which has had or would reasonably
be expected to have a Material Adverse Effect on the Acquired Corporations;
(x) the waiting period applicable to the consummation of the Merger under
the HSR Act shall have expired or been terminated;
(xi) the shares of SunGard Common Stock to be issued in the Merger shall
have been approved for listing (subject to notice of issuance) on the NYSE;
(xii) no temporary restraining order, preliminary or permanent injunction
or other order preventing the consummation of the Merger shall have been
issued by any court of competent jurisdiction and remain in effect, and
there shall not be any legal requirement enacted or deemed applicable to
the Merger that makes consummation of the Merger illegal;
(xiii) there shall not be pending or threatened any legal proceeding in
which a governmental body is or is threatened to become a party: (a)
challenging or seeking to restrain or prohibit the consummation of the
Merger or any of the other transactions contemplated by the Reorganization
Agreement; (b) relating to the Merger and seeking to obtain from SunGard or
any of its subsidiaries any damages that may be material to SunGard; (c)
seeking to prohibit or limit in any material respect SunGard's ability to
vote, receive dividends with respect to or otherwise exercise ownership
rights with respect to the stock of the Surviving Corporation; or (d) which
would materially and adversely affect the right of SunGard, the Surviving
Corporation or any subsidiary of SunGard to own the assets or operate the
business of Infinity; and
(xiv) there shall not be pending any legal proceeding in which there is a
reasonable probability of an outcome that would have a Material Adverse
Effect on the Acquired Corporations or on SunGard: (a) challenging or
seeking to restrain or prohibit the consummation of the Merger or any of
the other transactions contemplated by the Reorganization Agreement; (b)
relating to the Merger and seeking to obtain from SunGard or any of its
subsidiaries any damages that may be material to SunGard; (c) seeking to
prohibit or limit in any material respect SunGard's ability to vote,
receive dividends with respect to or otherwise exercise ownership rights
with respect to the stock of the Surviving Corporation; or (d) which would
affect adversely the right of SunGard, the Surviving Corporation or any
subsidiary of SunGard to own the assets or operate the business of
Infinity; provided, however, that to the extent that any damages payable in
connection with any such legal proceeding will be fully reimbursed by
insurance coverage pursuant to insurance policies held by Infinity or
SunGard, such damages shall be disregarded in determining the Material
Adverse Effect of such legal proceeding on the policy holder.
For purposes of the Reorganization Agreement, an event, violation, change,
failure, inaccuracy, circumstance or other matter will be deemed to have a
"Material Adverse Effect" on the Acquired Corporations if such event,
violation, change, failure, inaccuracy, circumstance or other matter
(considered together with all other matters that would constitute exceptions
to certain representations and warranties of Infinity referenced in the
Reorganization Agreement but for the presence of Material Adverse Effect or
other materiality qualifications,
45
<PAGE>
or any similar qualifications, in such representations and warranties) would
have a material adverse effect on (a) the business, capitalization, operations
or financial condition of the Acquired Corporations taken as a whole; (b) the
ability of Infinity to consummate the Merger or any of the other transactions
contemplated by the Reorganization Agreement or to perform any of its
obligations under the Reorganization Agreement, or (c) SunGard's ability to
vote, receive dividends with respect to or otherwise exercise ownership rights
with respect to the stock of the Surviving Corporation; provided, however,
that: (A) any material adverse effect that results from general economic,
business or industry conditions that do not affect Infinity in a
disproportionate manner shall be disregarded in determining whether there has
been a "Material Adverse Effect" on the Acquired Corporations; and (B) any
material adverse effect that results from the taking of any action required by
the Reorganization Agreement or from the announcement or pendency of the
transactions contemplated by the Reorganization Agreement shall be disregarded
in determining whether there has been a "Material Adverse Effect" on the
Acquired Corporations.
All the conditions to SunGard's and Merger Sub's obligation to effect the
Merger must either be satisfied or be waived prior to the consummation of the
Merger.
Infinity. The obligation of Infinity to effect the Merger and otherwise
consummate the transactions contemplated by the Reorganization Agreement is
subject to the satisfaction, at or prior to the Closing, of the following
conditions:
(i) the representations and warranties of SunGard and Merger Sub
contained in the Reorganization Agreement shall have been accurate in all
respects as of the date of the Reorganization Agreement (it being
understood that, for purposes of determining the accuracy of such
representations and warranties: (i) any inaccuracies that, in the
aggregate, do not have a Material Adverse Effect on SunGard shall be
disregarded; and (ii) all "Material Adverse Effect" qualifications and
other materiality qualifications contained in such representations and
warranties shall be disregarded);
(ii) the representations and warranties of SunGard and Merger Sub
contained in the Reorganization Agreement (except for any representation or
warranty that refers specifically to the date of the Reorganization
Agreement or to any specific date or period prior to the date of the
Reorganization Agreement) shall be accurate in all respects as of the
Closing Date as if made on and as of the Closing Date (it being understood
that, for purposes of determining the accuracy of such representations and
warranties as of the Closing Date: (a) any inaccuracies that, in the
aggregate, do not have a Material Adverse Effect on SunGard shall be
disregarded; (b) any inaccuracy that results from general business,
economic or industry conditions that do not affect SunGard in a
disproportionate manner shall be disregarded; (c) any inaccuracy that
results from the taking of any action required by the Reorganization
Agreement or the announcement or pendency of the transactions contemplated
by the Reorganization Agreement shall be disregarded; and (d) all "Material
Adverse Effect" qualifications and other materiality qualifications
contained in such representations and warranties shall be disregarded);
(iii) all of the covenants and obligations that SunGard and Merger Sub
are required to comply with or to perform at or prior to the Closing shall
have been complied with and performed in all material respects;
(iv) the Registration Statement shall have become effective in accordance
with the provisions of the Securities Act, and no stop order shall have
been issued by the Commission with respect to the Registration Statement;
(v) the Reorganization Agreement shall have been duly adopted and the
Merger shall have been duly approved by the Required Vote;
(vi) Infinity shall have received the following documents: (a) subject to
the receipt and reliance upon by Morrison & Foerster LLP of certain
Continuity of Interest Certificates and certain tax representation letters,
a legal opinion of Morrison & Foerster LLP, dated as of the Closing Date,
to the effect that the Merger will constitute a reorganization within the
meaning of Section 368 of the Code, and (b) a certificate executed on
behalf of SunGard by an executive officer of SunGard confirming that the
conditions set forth in under clause "(i)", "(ii)", "(iii)" and "(vii)" of
this paragraph have been duly satisfied;
46
<PAGE>
(vii) there shall have been no change in SunGard's business, operations
or financial condition since the date of the Reorganization Agreement which
has had or would reasonably be expected to have a Material Adverse Effect
on SunGard (it being understood that a decline in SunGard's stock price
shall not, in and of itself, constitute a change that has had or would
reasonably be expected to have a Material Adverse Effect on SunGard for
purposes of this clause "(vii)");
(viii) the waiting period applicable to the consummation of the Merger
under the HSR Act shall have expired or been terminated;
(ix) the shares of SunGard Common Stock to be issued in the Merger shall
have been approved for listing (subject to notice of issuance) on the NYSE;
and
(x) no temporary restraining order, preliminary or permanent injunction
or other order preventing the consummation of the Merger by Infinity shall
have been issued by any court of competent jurisdiction and remain in
effect, and there shall not be any legal requirement enacted or deemed
applicable to the Merger that makes consummation of the Merger by Infinity
illegal.
For purposes of the Reorganization Agreement, an event, violation, change,
failure, inaccuracy, circumstance or other matter will be deemed to have a
Material Adverse Effect on SunGard if such event, violation, change, failure,
inaccuracy, circumstance or other matter (considered together with all other
matters that would constitute exceptions to the representations and warranties
of SunGard and Merger Sub in the Reorganization Agreement but for the presence
of "Material Adverse Effect" or other materiality qualifications, or any
similar qualifications, in such representations and warranties) would have a
material adverse effect on the business, operations or financial condition of
SunGard and its subsidiaries taken as a whole; provided, however, that: (a)
any material adverse effect that results from general economic, business or
industry conditions that do not affect SunGard in a disproportionate manner
shall be disregarded in determining whether there has been a "Material Adverse
Effect" on SunGard; (b) any material adverse effect that results from the
taking of any action required by the Reorganization Agreement or from the
announcement or pendency of the transactions contemplated by the
Reorganization Agreement shall be disregarded in determining whether there has
been a "Material Adverse Effect" on SunGard; and (c) a decline in SunGard's
stock price shall not, in and of itself, constitute a "Material Adverse
Effect" on SunGard and shall be disregarded in determining whether there has
been a "Material Adverse Effect" on SunGard.
All the conditions to Infinity's obligation to effect the Merger must either
be satisfied or be waived prior to the consummation of the Merger.
TERMINATION
The Reorganization Agreement may be terminated prior to the Effective Time,
whether before or after approval of the Merger by the stockholders of
Infinity:
(i) by mutual written consent of SunGard and Infinity;
(ii) by either SunGard or Infinity if the Merger shall not have been
consummated by March 31, 1998 (unless the failure to consummate the Merger
is attributable to a failure on the part of the party seeking to terminate
the Reorganization Agreement to perform any material obligation required to
be performed by such party at or prior to the Effective Time);
(iii) by either SunGard or Infinity if a court of competent jurisdiction
or other governmental body shall have issued a final and nonappealable
order, decree or ruling, or shall have taken any other action, having the
effect of permanently restraining, enjoining or otherwise prohibiting the
Merger;
(iv) by SunGard, following a breach of any covenant or agreement of
Infinity contained in the Reorganization Agreement, or if any
representation or warranty of Infinity contained in the Reorganization
Agreement shall be or shall have become inaccurate, in either case such
that any of the conditions set forth in clauses "(i)," "(ii)," "(iii)," and
"(iv)" under "-Conditions to the Merger--SunGard and Merger Sub" would not
be satisfied as of the time of such breach or as of the time such
representation or warranty was or
47
<PAGE>
shall have become inaccurate; provided, however, that: (a) if such breach
or inaccuracy is curable by Infinity, then SunGard may not terminate the
Reorganization Agreement under the circumstances described in this clause
"(iv)" with respect to a particular breach or inaccuracy prior to or during
the 30-day period commencing upon delivery by SunGard of written notice to
Infinity of such breach or inaccuracy, provided Infinity continues to
exercise reasonable efforts to cure such breach or inaccuracy; and (b) the
right to terminate the Reorganization Agreement under the circumstances
described in this clause "(iv)" shall not be available to SunGard if
SunGard shall have committed a material uncured breach of the
Reorganization Agreement;
(v) by Infinity, following a breach of any covenant or agreement of
SunGard contained in the Reorganization Agreement, or if any representation
or warranty of SunGard contained in the Reorganization Agreement shall be
or shall have become inaccurate, in either case such that any of the
conditions set forth in clauses "(i)," "(ii)" and "(iii)" under "-
Conditions to the Merger -Infinity" would not be satisfied as of the time
of such breach or as of the time such representation or warranty was or
shall have become inaccurate; provided, however, that: (a) if such breach
or inaccuracy is curable by SunGard, then Infinity may not terminate the
Reorganization Agreement under the circumstances described in this clause
"(v)" with respect to a particular breach or inaccuracy prior to or during
the 30-day period commencing upon delivery by Infinity of written notice to
SunGard of such breach or inaccuracy, provided SunGard continues to
exercise reasonable efforts to cure such breach or inaccuracy; and (b) the
right to terminate the Reorganization Agreement under the circumstances
described in this clause "(v)" shall not be available to Infinity if
Infinity shall have committed a material uncured breach of the
Reorganization Agreement;
(vi) by SunGard, if: (a) the Infinity Board of Directors shall for any
reason have withdrawn or shall have amended or modified in a manner adverse
to SunGard its unanimous recommendation in favor of the adoption and
approval of the Reorganization Agreement or the approval of the Merger; (b)
Infinity shall have entered into any letter of intent or similar document
or any contract relating to any Acquisition Proposal; or (c) a tender or
exchange offer relating to securities of Infinity shall have been commenced
and Infinity shall not have sent to its securityholders, within ten
business days after the commencement of such tender or exchange offer, a
statement disclosing that Infinity recommends rejection of such tender or
exchange offer; or
(vii) by either SunGard or Infinity if (a) the Infinity Special Meeting
shall have been held and (b) the Reorganization Agreement and the Merger
shall not have been adopted and approved at such meeting by the Required
Vote.
EXPENSES AND TERMINATION FEE
Pursuant to the Reorganization Agreement, all fees and expenses incurred in
connection with the Reorganization Agreement and the transactions contemplated
by the Reorganization Agreement shall be paid by the party incurring such
expenses, whether or not the Merger is consummated; provided, however, that
SunGard and Infinity shall share equally all fees and expenses, other than
attorneys' fees, incurred in connection with the filing, printing and mailing
of the Registration Statement and the Proxy Statement/Prospectus and any
amendments or supplements thereto and the filing of the premerger notification
and report forms relating to the Merger under the HSR Act.
The Reorganization Agreement provides that if it is terminated by SunGard
pursuant to the termination provisions described in clause (vi) under
"Termination," then Infinity shall pay to SunGard, in cash, within one
business day after the termination of the Reorganization Agreement, a
nonrefundable fee in the amount of $9,500,000. The Reorganization Agreement
further provides that if (a) it is terminated by SunGard or Infinity because
the Infinity Special Meeting shall have been held and the Reorganization
Agreement and the Merger shall not have been approved at such meeting by the
Required Vote, (b) at or prior to the time of the termination of the
Reorganization Agreement, an Acquisition Proposal shall have been submitted,
announced or made, and (c) an Acquisition Transaction is consummated on or
prior to the date that is 270 days following the date of such termination,
then, contemporaneously with the consummation of such Acquisition Transaction
(and regardless of
48
<PAGE>
whether such Acquisition Transaction involves the person or persons that
submitted, announced or made the Acquisition Proposal referred to in clause
"(b)" of this sentence), Infinity shall pay to SunGard, in cash, a
nonrefundable fee in the amount of $9,500,000.
AMENDMENT; WAIVER
The Reorganization Agreement provides that: (a) the Reorganization Agreement
may be amended with the approval of the respective Boards of Directors of
Infinity and SunGard at any time before or after adoption and approval of the
Reorganization Agreement by the stockholders of Infinity; provided, however,
that after any such adoption and approval of the Reorganization Agreement and
the Merger by Infinity's stockholders, no amendment shall be made which by law
requires further approval of the stockholders of Infinity without the further
approval of such stockholders; (b) the Reorganization Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties thereto; (c) no failure on the part of any party to the Reorganization
Agreement to exercise any power, right, privilege or remedy under the
Reorganization Agreement, and no delay on the part of any party to the
Reorganization Agreement in exercising any power, right, privilege or remedy
under the Reorganization Agreement, shall operate as a waiver of such power,
right, privilege or remedy; and no single or partial exercise of any such
power, right, privilege or remedy shall preclude any other or further exercise
thereof or of any other power, right, privilege or remedy; and (c) no waiver
under the Reorganization Agreement will be effective unless it is expressly
set forth in a written instrument duly executed and delivered on behalf of the
party against whom the enforcement of such waiver is being sought.
49
<PAGE>
UNAUDITED PRO FORMA FINANCIAL INFORMATION
SunGard expects that the Merger will be accounted for as a pooling of
interests, which means that for accounting and financial reporting purposes
SunGard will treat SunGard and Infinity as if they had always been combined.
The pro forma information is provided for illustrative purposes only and
should not be relied upon as necessarily being indicative of the historical
results that SunGard and Infinity would have had if the companies actually had
always been combined, or the results which may be obtained in the future.
The Unaudited Pro Forma Combined Condensed Financial Data should be read
along with the historical financial statements and the related notes of
SunGard and Infinity, all of which are incorporated by reference in this Proxy
Statement/Prospectus.
50
<PAGE>
SUNGARD DATA SYSTEMS INC.
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
HISTORICAL HISTORICAL PRO FORMA PRO FORMA
SUNGARD INFINITY ADJUSTMENTS COMBINED
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Revenues........................ $609,557 $46,209 -- $655,766
Operating expenses, excluding
purchased in-process research
and development and merger
costs.......................... 505,321 38,014 -- 543,335
Purchased in-process research
and development and merger
costs.......................... 9,956 861 -- 10,817
-------- ------- ------ --------
Operating income................ 94,280 7,334 -- 101,614
Net interest income (expense)... (641) 1,064 -- 423
-------- ------- ------ --------
Income before income taxes...... 93,639 8,398 -- 102,037(3)
Income taxes.................... 38,661 3,023 -- 41,684
-------- ------- ------ --------
Net income...................... $ 54,978 $ 5,375 -- $ 60,353(3)
======== ======= ====== ========
Fully diluted net income per
common share................... $ 0.62 $ 0.26 -- $ 0.59
======== ======= ====== ========
Shares used to compute fully
diluted net income per common
share.......................... 88,620 20,990 (6,717)(2) 102,893
======== ======= ====== ========
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
Statements.
51
<PAGE>
SUNGARD DATA SYSTEMS INC.
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
HISTORICAL HISTORICAL PRO FORMA PRO FORMA
SUNGARD INFINITY ADJUSTMENTS COMBINED
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Revenues...................... $670,309 $41,548 -- $711,857
Operating expenses, excluding
purchased in-process research
and development and other
costs........................ 559,440 33,049 -- 592,489
Purchased in-process research
and development and merger
costs........................ 51,083 -- -- 51,083
-------- ------- ------ --------
Operating income.............. 59,786 8,499 -- 68,285
Net interest income........... 3,783 218 -- 4,001
-------- ------- ------ --------
Income before income taxes.... 63,569 8,717 -- 72,286(3)
Income taxes.................. 28,668 3,312 -- 31,980
-------- ------- ------ --------
Net income.................... $ 34,901 $ 5,405 -- $ 40,306(3)
======== ======= ====== ========
Fully diluted net income per
common share................. $ 0.41 $ 0.28 -- $ 0.41
======== ======= ====== ========
Shares used to compute fully
diluted net income per common
share........................ 86,122(1) 19,243 (6,158)(2) 99,207
======== ======= ====== ========
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
Statements.
52
<PAGE>
SUNGARD DATA SYSTEMS INC.
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1995
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
HISTORICAL HISTORICAL PRO FORMA PRO FORMA
SUNGARD INFINITY ADJUSTMENTS COMBINED
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Revenues.................... $532,628 $24,738 -- $557,366
Operating expenses,
excluding merger costs..... 448,314 19,062 -- 467,376
Merger costs................ 4,238 -- -- 4,238
-------- ------- ------ --------
Operating income............ 80,076 5,676 -- 85,752
Net interest income......... 5,036 31 -- 5,067
-------- ------- ------ --------
Income before income taxes.. 85,112 5,707 -- 90,819(3)
Income taxes................ 36,440 2,258 -- 38,698
-------- ------- ------ --------
Net income.................. 48,672 3,449 -- 52,121(3)
Preferred stock redemption.. -- (1,276) -- (1,276)
-------- ------- ------ --------
Net income attributable to
common stockholders........ $ 48,672 $ 2,173 -- $ 50,845(3)
======== ======= ====== ========
Fully diluted net income per
common share............... $ 0.61 $ 0.12 -- $ 0.55
======== ======= ====== ========
Shares used to compute fully
diluted net income per
share...................... 79,336(1) 18,382 (5,882)(2) 91,836
======== ======= ====== ========
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
Statements.
53
<PAGE>
SUNGARD DATA SYSTEMS INC.
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1994
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
HISTORICAL HISTORICAL PRO FORMA PRO FORMA
SUNGARD INFINITY ADJUSTMENTS COMBINED
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Revenues.................... $437,190 $12,595 -- $449,785
Operating expenses.......... 366,864 10,471 -- 377,335
-------- ------- ------ --------
Operating income............ 70,326 2,124 -- 72,450
Net interest income......... 2,202 15 -- 2,217
-------- ------- ------ --------
Income before income taxes.. 72,528 2,139 -- 74,667(3)
Income taxes................ 29,441 498 -- 29,939
-------- ------- ------ --------
Net income.................. $ 43,087 $ 1,641 -- $ 44,728(3)
======== ======= ====== ========
Fully diluted net income per
common share............... $ 0.56 $ 0.09 -- $ 0.50
======== ======= ====== ========
Shares used to compute fully
diluted net income per
common share............... 77,004(1) 17,866 (5,717)(2) 89,153
======== ======= ====== ========
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
Statements.
54
<PAGE>
SUNGARD DATA SYSTEMS INC.
PRO FORMA COMBINED CONDENSED BALANCE SHEET
SEPTEMBER 30, 1997
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL HISTORICAL PRO FORMA PRO FORMA
SUNGARD INFINITY ADJUSTMENTS COMBINED
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
ASSETS:
Cash and equivalents.......... $ 32,841 $41,080 -- $ 73,921
Accounts receivable, net...... 190,272 20,893 211,165
Prepaid expenses and other
current assets............... 20,415 510 -- 20,925
Deferred income taxes......... 20,628 887 -- 21,515
-------- ------- ------- --------
Total current assets........ 264,156 63,370 -- 327,526
Property and equipment, net... 116,673 3,468 -- 120,141
Intangible assets............. 356,512 927 -- 357,439
-------- ------- ------- --------
Total assets................ $737,341 $67,765 -- $805,106
======== ======= ======= ========
LIABILITIES AND STOCKHOLDERS'
EQUITY:
Short-term and current portion
of long-term debt............ $ 20,847 $ 302 -- $ 21,149
Accounts payable.............. 12,383 3,439 -- 15,822
Accrued compensation and
benefits..................... 39,428 4,794 -- 44,222
Other accrued expenses........ 34,907 2,528 -- 37,435
Deferred revenues............. 100,916 8,774 -- 109,690
-------- ------- ------- --------
Total current liabilities... 208,481 19,837 -- 228,318
Long-term debt................ 3,037 463 -- 3,500
Stockholders' Equity:
Preferred stock............. -- -- -- --
Common stock................ 868 33,368 (33,238)(2) 998
Capital in excess of par
value...................... 181,880 -- 33,238 (2) 215,118
Notes receivable from
stockholders............... (96) (438) -- (534)
Restricted stock plans and
deferred compensation...... (1,281) (391) -- (1,672)
Retained earnings........... 349,923 14,948 -- 364,871 (3)
Foreign currency translation
adjustment................. (5,381) (22) -- (5,403)
-------- ------- ------- --------
525,913 47,465 -- 573,378
Treasury stock................ (90) -- -- (90)
-------- ------- ------- --------
Total stockholders' equity.. 525,823 47,465 -- 573,288
-------- ------- ------- --------
Total liabilities and stock-
holders' equity............ $737,341 $67,765 -- $805,106
======== ======= ======= ========
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
Statements.
55
<PAGE>
SUNGARD DATA SYSTEMS INC.
PRO FORMA COMBINED CONDENSED BALANCE SHEET
DECEMBER 31, 1996
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL HISTORICAL PRO FORMA PRO FORMA
SUNGARD INFINITY ADJUSTMENTS COMBINED
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
ASSETS
Cash and equivalents.......... $ 46,072 $36,952 -- $ 83,024
Accounts receivable, net...... 158,246 18,802 -- 177,048
Prepaid expenses and other
current assets............... 18,507 337 -- 18,844
Deferred income taxes......... 13,632 887 -- 14,519
-------- ------- ------- --------
Total current assets........ 236,457 56,978 -- 293,435
Property and equipment, net... 109,523 2,896 -- 112,419
Intangible assets............. 333,338 430 -- 333,768
-------- ------- ------- --------
Total assets................ $679,318 $60,304 -- $739,622
======== ======= ======= ========
LIABILITIES AND STOCKHOLDERS'
EQUITY:
Short-term and current portion
of long-term debt............ $ 34,932 $ 368 -- $ 35,300
Accounts payable.............. 13,531 1,739 -- 15,270
Accrued compensation and
benefits..................... 41,581 3,959 -- 45,540
Other accrued expenses........ 29,877 2,861 -- 32,738
Deferred revenues............. 90,345 10,399 -- 100,744
-------- ------- ------- --------
Total current liabilities... 210,266 19,326 -- 229,592
Long-term debt................ 4,414 553 -- 4,967
Stockholders' Equity:
Preferred stock............. -- -- -- --
Common stock................ 423 32,207 (32,077)(2) 553
Capital in excess of par
value...................... 175,937 -- 32,077 (2) 208,014
Notes receivable from
stockholders............... (559) (826) -- (1,385)
Restricted stock plans and
deferred compensation...... (1,535) (508) -- (2,043)
Retained earnings........... 292,113 9,573 -- 301,686 (3)
Foreign currency translation
adjustment................. (266) (21) -- (287)
-------- ------- ------- --------
466,113 40,425 -- 506,538
Treasury stock................ (1,475) -- -- (1,475)
-------- ------- ------- --------
Total stockholders' equity.. 464,638 40,425 -- 505,063
-------- ------- ------- --------
Total liabilities and
stockholders' equity....... $679,318 $60,304 -- $739,622
======== ======= ======= ========
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
Statements.
56
<PAGE>
SUNGARD DATA SYSTEMS INC.
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1--STOCK SPLIT
The number of fully diluted shares used to calculate net income per common
share has been adjusted retroactively to reflect two-for-one stock splits
which occurred in July 1995 and September 1997.
NOTE 2--EXCHANGE RATIO
Under the Reorganization Agreement, subject to the provisions contained
therein relating to the payment of cash in lieu of fractional shares, each
outstanding share of Infinity Common Stock will be converted into the right to
receive 0.68 of a share of SunGard Common Stock (subject to adjustment as
appropriate to reflect any stock split, stock dividend, reverse stock split,
reclassification, recapitalization or other similar transaction involving the
SunGard Common Stock or the Infinity Common Stock between the date of the
Reorganization Agreement and the effective time of the Merger). Also, all
options to purchase shares of Infinity Common Stock will be converted into
options to purchase shares of SunGard Common Stock (subject to appropriate
adjustments to the exercise price and number of shares subject thereto based
upon the foregoing exchange ratio). This exchange ratio was used in computing
shares and per share amounts in the accompanying unaudited pro forma combined
condensed financial statements.
NOTE 3--MERGER COSTS
All pro forma information excludes merger costs, estimated to be
approximately $4.0 million. These costs are principally comprised of
investment advisory, legal, accounting and printing costs and will be charged
to expense in the period the Merger is consummated.
57
<PAGE>
COMPARISON OF CAPITAL STOCK
DESCRIPTION OF SUNGARD CAPITAL STOCK
The authorized capital stock of SunGard consists of 120,000,000 shares of
SunGard Common Stock, and 5,000,000 shares of Preferred Stock, $0.01 par value
("SunGard Preferred Stock").
SunGard Common Stock. As of the Record Date, there were approximately
87,851,834 shares of SunGard Common Stock outstanding held of record by
approximately 3,161 stockholders. SunGard Common Stock is listed on the NYSE
under the symbol "SDS." Holders of SunGard Common Stock are entitled to one
vote per share on all matters to be voted upon by the stockholders. The
stockholders may not cumulate votes in connection with the election of
directors. The holders of SunGard Common Stock are entitled to receive ratably
such dividends, if any, as may be declared from time to time by the SunGard
Board of Directors out of funds legally available therefor. In the event of a
liquidation, dissolution or winding up of SunGard, the holders of SunGard
Common Stock are entitled to share ratably in all assets remaining after
payment of liabilities. The SunGard Common Stock has no preemptive or
conversion rights or other subscription rights. There are no redemption or
sinking fund provisions applicable to the SunGard Common Stock. All
outstanding shares of SunGard Common Stock are fully paid and non-assessable,
and the shares of SunGard Common Stock to be outstanding upon completion of
the Merger will be fully paid and non-assessable.
SunGard Preferred Stock. SunGard has 5,000,000 shares of SunGard Preferred
Stock authorized and no shares are outstanding. The SunGard Board of Directors
has the authority to issue up to 5,000,000 shares of SunGard Preferred Stock
in one or more series and to fix the rights, preferences, privileges and
restrictions granted to or imposed upon any unissued and undesignated shares
of SunGard Preferred Stock and to fix the number of shares constituting any
series and the designations of such series, without any further vote or action
by the stockholders. Although it presently has no intention to do so, the
SunGard Board of Directors, without stockholder approval, can issue SunGard
Preferred Stock with voting and conversion rights which could adversely affect
the voting power or other rights of the holders of SunGard Common Stock. The
issuance of SunGard Preferred Stock may have the effect of delaying, deferring
or preventing a change in control of SunGard.
SunGard Transfer Agent and Registrar. The Transfer Agent and Registrar for
the SunGard Common Stock is Norwest Bank Minnesota, N.A., Shareholder Services
Administration, 161 N. Concorde Exchange, P.O. Box 738, South St. Paul, MN
55075 and its telephone number is (612) 450-4064.
DESCRIPTION OF INFINITY CAPITAL STOCK
The authorized capital stock of Infinity consists of 50,000,000 shares of
Infinity Common Stock, and 5,000,000 shares of Preferred Stock, $0.001 par
value ("Infinity Preferred Stock").
Infinity Common Stock. As of the Record Date, there were approximately
19,349,556 shares of Infinity Common Stock outstanding held of record by
approximately 108 stockholders. The holders of Infinity Common Stock are
entitled to one vote per share on all matters to be voted upon by the
stockholders. The holders of Infinity Common Stock are entitled to receive
ratably such dividends if any, as may be declared from time to time by the
Infinity Board of Directors out of funds legally available therefor. In the
event of the liquidation, dissolution or winding up of Infinity, the holders
of Infinity Common Stock are entitled to share ratably in all assets remaining
after payment of liabilities subject to prior distribution rights of Infinity
Preferred Stock, if any, then outstanding. The Infinity Common Stock has no
preemptive or conversion rights or other subscription rights. All outstanding
shares of Infinity Common Stock are fully paid and nonassessable.
Infinity Preferred Stock. Infinity has 5,000,000 shares of Infinity
Preferred Stock authorized, of which no shares are outstanding. The Infinity
Board of Directors has the authority to issue up to 5,000,000 shares of
Infinity Preferred Stock, in one or more series and to fix the rights,
preferences, privileges and restrictions granted
58
<PAGE>
to or imposed upon any unissued and undesignated shares of Infinity Preferred
Stock and to fix the number of shares constituting any series and the
designations of such series, without any further vote or action by the
stockholders. Although it presently has no intention to do so, the Infinity
Board of Directors, without stockholder approval, can issue Infinity Preferred
Stock with voting and conversion rights which could adversely affect the
voting power or other rights of the holders of Infinity Common Stock. The
issuance of Infinity Preferred Stock may have the effect of delaying,
deferring or preventing a change in control of Infinity.
Infinity Transfer Agent and Registrar. The Transfer Agent and Registrar for
the Infinity Common Stock is Boston EquiServe and its telephone number is
(617) 575-3120.
COMPARISON OF RIGHTS OF HOLDERS OF SUNGARD
COMMON STOCK AND HOLDERS OF INFINITY COMMON STOCK
Upon consummation of the Merger, the holders of Infinity Common Stock will
become holders of SunGard Common Stock. There are certain material differences
between the rights and privileges of the holders of Infinity Common Stock and
the holders of SunGard Common Stock.
Percentage of Voting Stock; Influence Over Affairs. Upon completion of the
Merger, the percentage ownership of SunGard by each former Infinity
stockholder will be substantially less than such stockholder's current
percentage ownership of Infinity. Accordingly, former Infinity stockholders
will have a significantly smaller voting influence over the affairs of SunGard
than they currently enjoy over the affairs of Infinity.
Cumulative Voting. In an election of directors under cumulative voting, each
share of stock normally having one vote is entitled to the number of votes
equal to the number of directors to be elected. A stockholder may cast all
such votes for a single candidate or may allocate them among as many
candidates as the stockholder may choose. Under Delaware law, cumulative
voting in the election of directors is not available unless specifically
provided for in the certificate of incorporation. The Certificate of
Incorporation, as amended, of Infinity provides for cumulative voting, whereas
the Restated Certificate of Incorporation of SunGard does not provide for
cumulative voting and cumulative voting is therefore not available to the
SunGard Stockholders.
Power to Call Special Stockholders' Meetings. According to the Bylaws, as
amended, of Infinity, a special meeting of the Infinity stockholders may be
called only by the Chairman of the Board, the President or the Board of
Directors of Infinity. The Amended and Restated Bylaws of SunGard also provide
that special meetings of the SunGard stockholders may be called by the
Chairman of the Board, the President or the SunGard Board of Directors, but
further provide that such meetings shall be called by the Chairman of the
Board, the President or the SunGard Board of Directors if so requested in
writing by the SunGard stockholders holding of record at least 50% of the
outstanding shares of stock entitled to vote at such a meeting.
Stock Exchange Rules. The Infinity Common Stock is currently listed on the
Nasdaq National Market and will cease to trade on the Nasdaq National Market
upon consummation of the Merger. The SunGard Common Stock is traded on the
NYSE. There are material differences between the corporate governance rules of
the Nasdaq National Market and the NYSE.
59
<PAGE>
EXPERTS
The consolidated balance sheets of SunGard and subsidiaries as of December
31, 1996 and 1995 and the related consolidated statements of income,
stockholders' equity and cash flows for each of the years in the three-year
period ended December 31, 1996, incorporated in this Proxy
Statement/Prospectus and in the Registration Statement by reference to the
Annual Report on Form 10-K of SunGard for the year ended December 31, 1996,
have been so incorporated in reliance upon the report of Coopers & Lybrand
LLP, independent accountants, given on the authority of that firm as experts
in accounting and auditing.
The consolidated financial statements and schedule of Infinity and
subsidiaries appearing in Infinity's Annual Report on Form 10-K for the year
ended December 31, 1996, have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon included therein and
incorporated herein by reference in reliance upon such report, given the
authority of such firm as experts in accounting and auditing.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby will be passed
upon for SunGard by SunGard's General Counsel. Certain legal matters in
connection with the Merger will be passed upon for Infinity by Morrison &
Foerster LLP, Palo Alto, California.
REPRESENTATIVES OF INDEPENDENT AUDITORS
Representatives of Ernst & Young LLP expect to be present at the Infinity
Special Meeting. While such representatives have stated that they do not plan
to make a statement at such meeting, they will be available to respond to
appropriate questions from stockholders in attendance.
60
<PAGE>
APPENDIX A
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
AMONG:
SUNGARD DATA SYSTEMS INC.,
A DELAWARE CORPORATION;
INFORMATION DATA INC.,
A DELAWARE CORPORATION; AND
INFINITY FINANCIAL TECHNOLOGY, INC.,
A DELAWARE CORPORATION
---------------------
DATED AS OF OCTOBER 17, 1997
---------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
SECTION 1. DESCRIPTION OF TRANSACTION.................................. A-1
1.1 Merger of Merger Sub into the Company....................... A-1
1.2 Effect of the Merger........................................ A-1
1.3 Closing; Effective Time..................................... A-1
Certificate of Incorporation and Bylaws; Directors and
1.4 Officers.................................................... A-1
1.5 Conversion of Shares........................................ A-2
1.6 Closing of the Company's Transfer Books..................... A-2
1.7 Exchange of Certificates.................................... A-3
1.8 Tax Consequences............................................ A-4
1.9 Accounting Consequences..................................... A-4
1.10 Further Action.............................................. A-4
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY............... A-4
2.1 Due Organization; Subsidiaries; Etc......................... A-4
2.2 Certificate of Incorporation and Bylaws..................... A-4
2.3 Capitalization, Etc......................................... A-5
2.4 SEC Filings; Financial Statements........................... A-6
2.5 Absence of Changes.......................................... A-6
2.6 Title to Assets............................................. A-7
2.7 Real Property; Leaseholds................................... A-7
2.8 Proprietary Assets.......................................... A-8
2.9 Contracts................................................... A-9
2.10 Liabilities................................................. A-10
2.11 Compliance with Legal Requirements.......................... A-10
2.12 Certain Business Practices.................................. A-10
2.13 Tax Matters................................................. A-10
2.14 Employee and Labor Matters; Benefit Plans................... A-11
2.15 Environmental Matters....................................... A-12
2.16 Insurance................................................... A-12
2.17 Transactions with Affiliates................................ A-12
2.18 Legal Proceedings; Orders................................... A-12
2.19 Authority; Binding Nature of Agreement...................... A-12
2.20 Section 203 of the DGCL Not Applicable...................... A-12
2.21 No Existing Discussions..................................... A-13
2.22 Accounting Matters.......................................... A-13
2.23 Vote Required............................................... A-13
2.24 Non-Contravention; Consents................................. A-13
2.25 Fairness Opinion............................................ A-14
2.26 Financial Advisor........................................... A-14
2.27 Absence of Dissenters' Rights............................... A-14
2.28 Full Disclosure............................................. A-14
SECTION 3. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB..... A-15
3.1 Organization, Standing and Power............................ A-15
3.2 Capitalization.............................................. A-15
3.3 SEC Filings; Financial Statements........................... A-15
3.4 Disclosure.................................................. A-16
3.5 Absence of Certain Changes or Events........................ A-16
3.6 Authority; Binding Nature of Agreement...................... A-16
3.7 No Vote Required............................................ A-16
3.8 Non-Contravention; Consents................................. A-16
</TABLE>
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
3.9 Valid Issuance.............................................. A-17
3.10 Accounting Matters.......................................... A-17
3.11 Full Disclosure............................................. A-17
SECTION 4. CERTAIN COVENANTS OF THE COMPANY............................ A-17
4.1 Access and Investigation.................................... A-17
4.2 Operation of the Company's Business......................... A-17
4.3 No Solicitation............................................. A-19
SECTION 5. ADDITIONAL COVENANTS OF THE PARTIES......................... A-20
5.1 Registration Statement; Prospectus/Proxy Statement.......... A-20
5.2 Company Stockholders' Meeting............................... A-20
5.3 Regulatory Approvals........................................ A-21
5.4 Stock Options and Company Stock Option and Purchase Plans... A-22
5.5 Indemnification of Officers and Directors................... A-22
5.6 Pooling of Interests........................................ A-23
5.7 Additional Agreements....................................... A-23
5.8 Disclosure.................................................. A-23
5.9 Affiliate Agreements........................................ A-24
5.10 Tax Matters................................................. A-24
5.11 Letter of the Company's Accountants......................... A-24
5.12 NYSE Listing................................................ A-24
5.13 Resignation of Officers and Directors....................... A-24
SECTION 6. CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND MERGER SUB
TO CONSUMMATE TRANSACTIONS.................................. A-24
6.1 Accuracy of Representations................................. A-24
6.2 Performance of Covenants.................................... A-25
6.3 Effectiveness of Registration Statement..................... A-25
6.4 Stockholder Approval........................................ A-25
6.5 Consents.................................................... A-25
6.6 Agreements and Documents.................................... A-25
6.7 Absence of Material Adverse Effect.......................... A-26
6.8 HSR Act..................................................... A-26
6.9 Listing..................................................... A-26
6.10 No Restraints............................................... A-26
6.11 No Governmental Litigation.................................. A-26
6.12 No Other Litigation......................................... A-26
CONDITIONS PRECEDENT TO OBLIGATION OF THE COMPANY TO
SECTION 7. CONSUMMATE TRANSACTIONS..................................... A-26
7.1 Accuracy of Representations................................. A-27
7.2 Performance of Covenants.................................... A-27
7.3 Effectiveness of Registration Statement..................... A-27
7.4 Stockholder Approval........................................ A-27
7.5 Documents................................................... A-27
7.6 Absence of Material Adverse Effect.......................... A-27
7.7 HSR Act..................................................... A-27
7.8 Listing..................................................... A-27
7.9 No Restraints............................................... A-28
</TABLE>
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
SECTION 8. TERMINATION................................................... A-28
8.1 Termination................................................... A-28
8.2 Effect of Termination......................................... A-29
8.3 Expenses; Termination Fee..................................... A-29
SECTION 9. MISCELLANEOUS PROVISIONS...................................... A-29
9.1 Amendment..................................................... A-29
9.2 Waiver........................................................ A-29
9.3 No Survival of Representations and Warranties................. A-30
9.4 Entire Agreement; Counterparts................................ A-30
9.5 Applicable Law................................................ A-30
9.6 Disclosure Schedule........................................... A-30
9.7 Attorneys' Fees............................................... A-30
9.8 Assignability................................................. A-30
9.9 Notices....................................................... A-31
9.10 Cooperation................................................... A-31
9.11 Construction.................................................. A-31
</TABLE>
EXHIBITS
Exhibit A--Certain Definitions
Exhibit B--Form of Certificate of Incorporation of Surviving Corporation
Exhibit C--Persons Executing Voting Agreements
Exhibit D--Form of Affiliate Agreement
Exhibit E--Form of Continuity of Interest Certificate
Exhibit F--Form of Noncompetition Agreement
Exhibit G--Persons Executing Noncompetition Agreements
<PAGE>
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
THIS AGREEMENT AND PLAN OF MERGER AND REORGANIZATION ("Agreement") is made
and entered into as of October 17, 1997, by and among: SUNGARD DATA SYSTEMS
INC., a Delaware corporation ("Parent"); INFORMATION DATA INC., a Delaware
corporation and a wholly owned subsidiary of Parent ("Merger Sub"); and
INFINITY FINANCIAL TECHNOLOGY, INC., a Delaware corporation (the "Company").
Certain capitalized terms used in this Agreement are defined in Exhibit A.
RECITALS
A. Parent, Merger Sub and the Company intend to effect a merger of Merger
Sub into the Company in accordance with this Agreement and the Delaware
General Corporation Law (the "Merger"). Upon consummation of the Merger,
Merger Sub will cease to exist, and the Company will become a wholly owned
subsidiary of Parent.
B. It is intended that the Merger qualify as a tax-free reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code"). For financial reporting purposes, it is intended that
the Merger be accounted for as a "pooling of interests."
C. The respective boards of directors of Parent, Merger Sub and the Company
have approved this Agreement and approved the Merger.
AGREEMENT
The parties to this Agreement, intending to be legally bound, agree as
follows:
SECTION 1. DESCRIPTION OF TRANSACTION
1.1 MERGER OF MERGER SUB INTO THE COMPANY. Upon the terms and subject to the
conditions set forth in this Agreement, at the Effective Time (as defined in
Section 1.3), Merger Sub shall be merged with and into the Company, and the
separate existence of Merger Sub shall cease. The Company will continue as the
surviving corporation in the Merger (the "Surviving Corporation").
1.2 EFFECT OF THE MERGER. The Merger shall have the effects set forth in
this Agreement and in the applicable provisions of the Delaware General
Corporation Law (the "DGCL").
1.3 CLOSING; EFFECTIVE TIME. The consummation of the transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of Cooley Godward LLP at 10:00 a.m. on a date to be designated by Parent (the
"Closing Date"), which shall be no later than the second business day after
the satisfaction or waiver of the conditions set forth in Sections 6 and 7.
Contemporaneously with or as promptly as practicable after the Closing, the
parties hereto shall cause a properly executed certificate of merger
conforming to the requirements of the DGCL (the "Certificate of Merger") to be
filed with the Secretary of State of the State of Delaware. The Merger shall
take effect at the time the Certificate of Merger is filed with the Secretary
of State of the State of Delaware or at such later time as may be specified in
the Certificate of Merger (the "Effective Time").
1.4 CERTIFICATE OF INCORPORATION AND BYLAWS; DIRECTORS AND OFFICERS. Unless
otherwise determined by Parent prior to the Effective Time:
(a) the Certificate of Incorporation of the Surviving Corporation shall
be amended and restated as of the Effective Time to conform to Exhibit B;
A-1
<PAGE>
(b) the Bylaws of the Surviving Corporation shall be amended and restated
as of the Effective Time to conform to the Bylaws of Merger Sub as in
effect immediately prior to the Effective Time; and
(c) the directors and officers of the Surviving Corporation immediately
after the Effective Time shall be the respective individuals who are
directors and officers of Merger Sub immediately prior to the Effective
Time.
1.5 CONVERSION OF SHARES.
(a) Subject to Section 1.5(c), at the Effective Time, by virtue of the
Merger and without any further action on the part of Parent, Merger Sub, the
Company or any stockholder of the Company:
(i) any shares of Company Common Stock then held by the Company or any
subsidiary of the Company (or held in the Company's treasury) shall be
canceled and retired and shall cease to exist, and no consideration shall
be delivered in exchange therefor;
(ii) any shares of Company Common Stock then held by Parent, Merger Sub
or any other subsidiary of Parent shall be canceled and retired and shall
cease to exist, and no consideration shall be delivered in exchange
therefor;
(iii) except as provided in clauses "(i)" and "(ii)" above and subject to
Sections 1.5(b) and 1.5(c), each share of Company Common Stock then
outstanding shall be converted into the right to receive sixty-eight
hundredths (0.68) of a share of Parent Common Stock;
(iv) the Company's 1989 Stock Option Plan, the Company's 1993 Stock
Incentive Plan and the Company's 1996 Stock Incentive Plan (collectively,
the "Company Stock Option Plans") and all options to purchase Company
Common Stock then outstanding under the Company Stock Option Plans shall be
assumed by Parent in accordance with Section 5.4; and
(v) each share of the common stock, $.01 par value per share, of Merger
Sub then outstanding shall be converted into one share of common stock of
the Surviving Corporation.
(b) The fraction of a share of Parent Common Stock specified in Section
1.5(a)(iii) (as such fraction may be adjusted in accordance with this Section
1.5(b)) is referred to as the "Exchange Ratio." If, between the date of this
Agreement and the Effective Time, the outstanding shares of Company Common
Stock or Parent Common Stock are changed into a different number or class of
shares by reason of any stock split, stock dividend, reverse stock split,
reclassification, recapitalization or other similar transaction, then the
Exchange Ratio shall be appropriately adjusted.
(c) No fractional shares of Parent Common Stock shall be issued in
connection with the Merger, and no certificates or scrip for any such
fractional shares shall be issued. Any holder of Company Common Stock who
would otherwise be entitled to receive a fraction of a share of Parent Common
Stock (after aggregating all fractional shares of Parent Common Stock issuable
to such holder) shall, in lieu of such fraction of a share and, upon surrender
of such holder's Company Stock Certificate(s) (as defined in Section 1.6), be
paid in cash the dollar amount (rounded to the nearest whole cent), without
interest, determined by multiplying such fraction by the closing price of a
share of Parent Common Stock on the New York Stock Exchange ("NYSE") on the
date the Merger becomes effective.
1.6 CLOSING OF THE COMPANY'S TRANSFER BOOKS. At the Effective Time: (a) all
shares of Company Common Stock outstanding immediately prior to the Effective
Time shall automatically be canceled and retired and shall cease to exist as
provided in Section 1.5(a), and all holders of certificates representing
shares of Company Common Stock that were outstanding immediately prior to the
Effective Time shall cease to have any rights as stockholders of the Company;
and (b) the stock transfer books of the Company shall be closed with respect
to all shares of Company Common Stock outstanding immediately prior to the
Effective Time. No further transfer of any such shares of Company Common Stock
shall be made on such stock transfer books after the Effective Time. If, after
the Effective Time, a valid certificate previously representing any of such
shares of
A-2
<PAGE>
Company Common Stock (a "Company Stock Certificate") is presented to the
Exchange Agent (as defined in Section 1.7) or to the Surviving Corporation or
Parent, such Company Stock Certificate shall be canceled and shall be
exchanged as provided in Section 1.7.
1.7 EXCHANGE OF CERTIFICATES.
(a) On or prior to the Closing Date, Parent shall select a reputable bank or
trust company to act as exchange agent in the Merger (the "Exchange Agent").
Promptly after the Effective Time, Parent shall deposit with the Exchange
Agent (i) certificates representing the shares of Parent Common Stock issuable
pursuant to this Section 1, and (ii) cash sufficient to make payments in lieu
of fractional shares in accordance with Section 1.5(c). The shares of Parent
Common Stock and cash amounts so deposited with the Exchange Agent, together
with any dividends or distributions received by the Exchange Agent with
respect to such shares, are referred to collectively as the "Exchange Fund."
(b) As soon as reasonably practicable after the Effective Time, the Exchange
Agent will mail to the record holders of Company Stock Certificates (i) a
letter of transmittal in customary form and containing such provisions as
Parent may reasonably specify (including a provision confirming that delivery
of Company Stock Certificates shall be effected, and risk of loss and title to
Company Stock Certificates shall pass, only upon delivery of such Company
Stock Certificates to the Exchange Agent), and (ii) instructions for use in
effecting the surrender of Company Stock Certificates in exchange for
certificates representing Parent Common Stock. Upon surrender of a Company
Stock Certificate to the Exchange Agent for exchange, together with a duly
executed letter of transmittal and such other documents as may be reasonably
required by the Exchange Agent or Parent, (1) the holder of such Company Stock
Certificate shall be entitled to receive in exchange therefor a certificate
representing the number of whole shares of Parent Common Stock that such
holder has the right to receive pursuant to the provisions of Section 1.5 (and
cash in lieu of any fractional share of Parent Common Stock), and (2) the
Company Stock Certificate so surrendered shall be canceled. Until surrendered
as contemplated by this Section 1.7(b), each Company Stock Certificate shall
be deemed, from and after the Effective Time, to represent only the right to
receive shares of Parent Common Stock (and cash in lieu of any fractional
share of Parent Common Stock) as contemplated by Section 1. If any Company
Stock Certificate shall have been lost, stolen or destroyed, Parent may, in
its discretion and as a condition precedent to the issuance of any certificate
representing Parent Common Stock, require the owner of such lost, stolen or
destroyed Company Stock Certificate to provide an appropriate affidavit and to
deliver a bond (in such sum as Parent may reasonably direct) as indemnity
against any claim that may be made against the Exchange Agent, Parent or the
Surviving Corporation with respect to such Company Stock Certificate.
(c) No dividends or other distributions declared or made with respect to
Parent Common Stock with a record date after the Effective Time shall be paid
to the holder of any unsurrendered Company Stock Certificate with respect to
the shares of Parent Common Stock which such holder has the right to receive
upon surrender thereof until such holder surrenders such Company Stock
Certificate in accordance with this Section 1.7 (at which time such holder
shall be entitled, subject to the effect of applicable escheat or similar
laws, to receive all such dividends and distributions, without interest).
(d) Any portion of the Exchange Fund that remains undistributed to holders
of Company Stock Certificates as of the date 180 days after the date on which
the Merger becomes effective shall be delivered to Parent upon demand, and any
holders of Company Stock Certificates who have not theretofore surrendered
their Company Stock Certificates in accordance with this Section 1.7 shall
thereafter look only to Parent for satisfaction of their claims for Parent
Common Stock, cash in lieu of fractional shares of Parent Common Stock and any
dividends or distributions with respect to Parent Common Stock.
(e) Each of the Exchange Agent, Parent and the Surviving Corporation shall
be entitled to deduct and withhold from any consideration payable or otherwise
deliverable pursuant to this Agreement to any holder or former holder of
Company Common Stock such amounts as may be required to be deducted or
withheld therefrom under the Code or any provision of state, local or foreign
tax law or under any other applicable Legal
A-3
<PAGE>
Requirement. To the extent such amounts are so deducted or withheld, such
amounts shall be treated for all purposes under this Agreement as having been
paid to the Person to whom such amounts would otherwise have been paid.
(f) Neither Parent nor the Surviving Corporation shall be liable to any
holder or former holder of Company Common Stock or to any other Person with
respect to any shares of Parent Common Stock (or dividends or distributions
with respect thereto), or for any cash amounts, delivered to any public
official pursuant to any applicable abandoned property law, escheat law or
similar Legal Requirement.
1.8 TAX CONSEQUENCES. For federal income tax purposes, the Merger is
intended to constitute a reorganization within the meaning of Section 368 of
the Code. The parties to this Agreement hereby adopt this Agreement as a "plan
of reorganization" within the meaning of Sections 1.368-2(g) and 1.368-3(a) of
the United States Treasury Regulations.
1.9 ACCOUNTING CONSEQUENCES. For financial reporting purposes, the Merger is
intended to be accounted for as a "pooling of interests."
1.10 FURTHER ACTION. If, at any time after the Effective Time, any further
action is determined by Parent to be necessary or desirable to carry out the
purposes of this Agreement or to vest the Surviving Corporation with full
right, title and possession of and to all rights and property of Merger Sub
and the Company, the officers and directors of the Surviving Corporation and
Parent shall be fully authorized (in the name of Merger Sub, in the name of
the Company and otherwise) to take such action.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Merger Sub that, except as
set forth in the Company Disclosure Schedule:
2.1 DUE ORGANIZATION; SUBSIDIARIES; ETC.
(a) The Company has no Subsidiaries, except for the corporations identified
in Part 2.1(a)(i) of the Company Disclosure Schedule; and neither the Company
nor any of the other corporations identified in Part 2.1(a)(i) of the Company
Disclosure Schedule owns any capital stock of, or any equity interest of any
nature in, any other Entity, other than the Entities identified in Part
2.1(a)(ii) of the Company Disclosure Schedule. (The Company and each of its
Subsidiaries are referred to collectively in this Agreement as the "Acquired
Corporations".) None of the Acquired Corporations has agreed or is obligated
to make, or is bound by any Contract under which it may become obligated to
make, any future equity or similar investment in or capital contribution to
any other Entity. None of the Acquired Corporations has, at any time, been a
general partner of any general partnership, limited partnership or other
Entity.
(b) Each of the Acquired Corporations is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of
its incorporation and has all necessary power and authority: (i) to conduct
its business in the manner in which its business is currently being conducted;
(ii) to own and use its assets in the manner in which its assets are currently
owned and used; and (iii) to perform its obligations under all Contracts by
which it is bound.
(c) Each of the Acquired Corporations is qualified to do business as a
foreign corporation, and is in good standing, under the laws of all
jurisdictions where the nature of its business requires such qualification and
where the failure to be so qualified would have a Material Adverse Effect on
the Acquired Corporations.
2.2 CERTIFICATE OF INCORPORATION AND BYLAWS. The Company has delivered to
Parent accurate and complete copies of the certificate of incorporation,
bylaws and other charter and organizational documents of the respective
Acquired Corporations, including all amendments thereto.
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2.3 CAPITALIZATION, ETC.
(a) The authorized capital stock of the Company consists of: (i) 50,000,000
shares of Company Common Stock, of which 19,217,880 shares have been issued
and are outstanding and of which no shares are held by the Company in its
treasury as of October 15, 1997; and (ii) 5,000,000 shares of Preferred Stock,
$.001 par value per share, of which no shares are outstanding or are held by
the Company in its treasury. All of the outstanding shares of Company Common
Stock have been duly authorized and validly issued, and are fully paid and
nonassessable. As of the date of this Agreement, there are no shares of
Company Common Stock held by any of the other Acquired Corporations. Except as
set forth in Part 2.3(a)(i) of the Company Disclosure Schedule and except in
respect of the Company Options (as defined below): (i) none of the outstanding
shares of Company Common Stock is entitled or subject to any preemptive right,
right of participation, right of maintenance or any similar right; (ii) none
of the outstanding shares of Company Common Stock is subject to any right of
first refusal in favor of the Company; and (iii) there is no Acquired
Corporation Contract relating to the voting or registration of, or restricting
any Person from purchasing, selling, pledging or otherwise disposing of (or
granting any option or similar right with respect to), any shares of Company
Common Stock. None of the Acquired Corporations is under any obligation, or is
bound by any Contract pursuant to which it may become obligated, to
repurchase, redeem or otherwise acquire any outstanding shares of Company
Common Stock.
(b) As of October 15, 1997: (i) 2,707,244 shares of Company Common Stock are
subject to issuance pursuant to outstanding options to purchase shares of
Company Common Stock; and (ii) 1,084,534 shares of Company Common Stock are
reserved for future issuance pursuant to the Company's 1996 Employee Stock
Purchase Plan (the "ESPP") and the Company Stock Option Plans (exclusive of
shares of Company Common Stock subject to options described in the preceding
clause "(i)"). (Stock options granted by the Company pursuant to the Company's
stock option plans are referred to in this Agreement as "Company Options.")
Part 2.3(b)(i) of the Company Disclosure Schedule sets forth the following
information with respect to each Company Option outstanding as of the date of
this Agreement: (i) the particular plan pursuant to which such Company Option
was granted; (ii) the name of the optionee; (iii) the number of shares of
Company Common Stock subject to such Company Option; (iv) the exercise price
of such Company Option; (v) the date on which such Company Option was granted;
(vi) the applicable vesting schedules, and the extent to which such Company
Option is vested and exercisable as of the date set forth in the Company
Disclosure Schedule; and (vii) the date on which such Company Option expires.
The Company has delivered to Parent accurate and complete copies of all stock
option plans pursuant to which the Company has ever granted stock options, and
the forms of all stock option agreements evidencing such options.
(c) Except for the Company Options, there is no: (i) outstanding
subscription, option, call, warrant or right (whether or not currently
exercisable) to acquire any shares of the capital stock or other securities of
the Company; (ii) outstanding security, instrument or obligation that is or
may become convertible into or exchangeable for any shares of the capital
stock or other securities of the Company; or (iii) stockholder rights plan (or
similar plan commonly referred to as a "poison pill") or Contract under which
the Company is or may become obligated to sell or otherwise issue any shares
of its capital stock or any other securities.
(d) All outstanding shares of Company Common Stock, all outstanding Company
Options and all outstanding shares of capital stock of each subsidiary of the
Company have been issued and granted in compliance with (i) all applicable
securities laws and other applicable Legal Requirements, and (ii) all
requirements set forth in applicable Contracts.
(e) All of the outstanding shares of capital stock of the corporations
identified in Part 2.1(a)(i) of the Company Disclosure Schedule have been duly
authorized and are validly issued, are fully paid and nonassessable and are
owned beneficially and of record by the Company, free and clear of any
Encumbrances.
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2.4 SEC FILINGS; FINANCIAL STATEMENTS
(a) The Company has delivered to Parent accurate and complete copies of all
registration statements, definitive proxy statements and other statements,
reports, schedules, forms and other documents filed by the Company with the
SEC since July 23, 1996 (the "Company SEC Documents"), including the Company's
registration statement on Form S-1 filed with the SEC on July 23, 1996 (and
all amendments thereto). All statements, reports, schedules, forms and other
documents required to have been filed by the Company with the SEC have been so
filed. As of the time it was filed with the SEC (or, if amended or superseded
by a filing prior to the date of this Agreement, then on the date of such
filing): (i) each of the Company SEC Documents complied in all material
respects with the applicable requirements of the Securities Act or the
Exchange Act (as the case may be); and (ii) none of the Company SEC Documents
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(b) The consolidated financial statements (including any related notes)
contained in the Company SEC Documents: (i) complied as to form in all
material respects with the published rules and regulations of the SEC
applicable thereto; (ii) were prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
covered (except as may be indicated in the notes to such financial statements
or, in the case of unaudited statements, as permitted by Form 10-Q of the SEC,
and except that the unaudited financial statements may not contain footnotes
and are subject to normal and recurring year-end adjustments which will not,
individually or in the aggregate, be material in amount), and (iii) fairly
present the consolidated financial position of the Company and its
subsidiaries as of the respective dates thereof and the consolidated results
of operations and cash flows of the Company and its subsidiaries for the
periods covered thereby.
(c) The Company has delivered to Parent an unaudited consolidated balance
sheet of the Company and its subsidiaries as of September 30, 1997 (the
"Unaudited Interim Balance Sheet"), and the related unaudited consolidated
statement of operations, statement of stockholders' equity and statement of
cash flows of the Company and its subsidiaries for the nine months then ended.
The financial statements referred to in this Section 2.4(c): (i) were prepared
in accordance with generally accepted accounting principles applied on a basis
consistent with the basis on which the financial statements referred to in
Section 2.4(b) were prepared (except that such financial statements do not
contain footnotes and are subject to normal and recurring year-end adjustments
which will not, individually or in the aggregate, be material in amount), and
(ii) fairly present the consolidated financial position of the Company and its
subsidiaries as of September 30, 1997 and the consolidated results of
operations and cash flows of the Company and its subsidiaries for the periods
covered thereby.
2.5 ABSENCE OF CHANGES. Between September 30, 1997 and the date hereof:
(a) there has not been any material adverse change in the business,
operations, or financial condition of the Acquired Corporations taken as a
whole, and no event has occurred that would reasonably be expected to have
a Material Adverse Effect on the Acquired Corporations;
(b) there has not been any loss, damage or destruction to, or any
interruption in the use of, any of the assets of any of the Acquired
Corporations (whether or not covered by insurance) that has had or would
reasonably be expected to have a Material Adverse Effect of the Acquired
Corporations;
(c) none of the Acquired Corporations has (i) declared, accrued, set
aside or paid any dividend or made any other distribution in respect of any
shares of capital stock, or (ii) repurchased, redeemed or otherwise
reacquired any shares of capital stock or other securities;
(d) none of the Acquired Corporations has sold, issued or granted, or
authorized the issuance of, (i) any capital stock or other security (except
for Company Common Stock issued upon the exercise of outstanding Company
Options), (ii) any option, warrant or right to acquire any capital stock or
any other security (except
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for Company Options described in Part 2.3(b)(i) of the Company Disclosure
Schedule), or (iii) any instrument convertible into or exchangeable for any
capital stock or other security;
(e) the Company has not amended or waived any of its rights under, or
permitted the acceleration of vesting under, (i) any provision of any of
the Company's stock option plans, (ii) any provision of any agreement
evidencing any outstanding Company Option, or (iii) any restricted stock
purchase agreement;
(f) there has been no amendment to the certificate of incorporation,
bylaws or other charter or organizational documents of the Company, and
none of the Acquired Corporations has effected or been a party to any
merger, consolidation, share exchange, business combination,
recapitalization, reclassification of shares, stock split, reverse stock
split or similar transaction;
(g) none of the Acquired Corporations has received any Acquisition
Proposal;
(h) none of the Acquired Corporations has acquired any equity interest in
any other Entity for cash in excess of $100,000;
(i) none of the Acquired Corporations has made any capital expenditure
which, when added to all other capital expenditures made on behalf of the
Acquired Corporations since September 30, 1997 to the date hereof, exceeds
$250,000 in the aggregate;
(j) none of the Acquired Corporations has written off as uncollectible,
or established any extraordinary reserve with respect to, any account
receivable or other indebtedness in excess of $50,000;
(k) none of the Acquired Corporations has made any pledge of any of its
assets or otherwise permitted any of its assets to become subject to any
Encumbrance, except for pledges of immaterial assets made in the ordinary
course of business and consistent with past practices;
(l) none of the Acquired Corporations has (i) lent money to any Person,
or (ii) incurred or guaranteed any indebtedness for borrowed money;
(m) none of the Acquired Corporations has (i) established or adopted any
Plan, (ii) caused or permitted any Plan to be amended in any material
respect, or (iii) paid any bonus or made any profit-sharing or similar
payment to, or materially increased the amount of the wages, salary,
commissions, fringe benefits or other compensation or remuneration payable
to, any of its directors, officers or employees;
(n) none of the Acquired Corporations has changed any of its methods of
accounting or accounting practices in any material respect;
(o) none of the Acquired Corporations has made any material Tax election;
(p) none of the Acquired Corporations has commenced or settled any Legal
Proceeding;
(q) none of the Acquired Corporations has entered into any material
transaction or taken any other material action outside the ordinary course
of business or inconsistent with past practices; and
(r) none of the Acquired Corporations has agreed or committed to take any
of the actions referred to in clauses "(c)" through "(q)" above.
2.6 TITLE TO ASSETS. The Acquired Corporations own, and have good, valid and
marketable title to, all assets reflected on the Unaudited Interim Balance
Sheet (except for inventory sold or otherwise disposed of in the ordinary
course of business since the date of the Unaudited Interim Balance Sheet). All
of said assets are owned by the Acquired Corporations free and clear of any
Encumbrances, except for (1) any lien for current taxes not yet due and
payable, (2) minor liens that have arisen in the ordinary course of business
and that do not (in any case or in the aggregate) materially detract from the
value of the assets subject thereto or materially impair the operations of any
of the Acquired Corporations, (3) liens described in Part 2.6 of the Company
Disclosure Schedule, and (4) liabilities reflected in the liabilities column
of the Unaudited Interim Balance Sheet.
2.7 REAL PROPERTY; LEASEHOLDS. None of the Acquired Corporations own any
real property or any interest in real property, except for the leaseholds
created under the real property leases identified in Part 2.7 of the Company
Disclosure Schedule.
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2.8 PROPRIETARY ASSETS.
(a) The Acquired Corporations own, or are licensed or otherwise possess
legally enforceable rights to use, all patents, trademarks, trade names,
service marks, copyrights, and any applications therefor, maskworks, net
lists, schematics, technology, know-how, trade secrets, inventory, ideas,
algorithms, processes, computer software programs or applications (in both
source code and object code form), and tangible or intangible proprietary
information or material ("Intellectual Property") that are used or proposed to
be used in the business of the Acquired Corporations as currently conducted or
as proposed to be conducted by the Acquired Corporations, except to the extent
that the failure to have such rights has not had and would not reasonably be
expected to have a Material Adverse Effect on the Acquired Corporations.
(b) Part 2.8(b) of the Company Disclosure Schedule lists (i) all patents and
patent applications and all registered and unregistered trademarks, trade
names and service marks, registered and unregistered copyrights, and
maskworks, which the Company considers to be material to its business and
included in the Intellectual Property, including the jurisdictions in which
each such Intellectual Property right has been issued or registered or in
which any application for such issuance and registration has been filed, (ii)
all material licenses, sublicenses and other agreements to which any of the
Acquired Corporations is a party and pursuant to which any Person is
authorized to use any Intellectual Property, and (iii) all material licenses,
sublicenses and other agreements to which any of the Acquired Corporations is
a party and pursuant to which any of the Acquired Corporations is authorized
to use any third party patents, trademarks or copyrights, including software
("Third Party Intellectual Property Rights") which are incorporated in, are,
or form a part of any product that is material to the Company's business.
(c) There is no material unauthorized use, disclosure, infringement or
misappropriation of any Intellectual Property rights of the Acquired
Corporations, any trade secret material to the Acquired Corporations, or any
Intellectual Property right of any third party to the extent licensed by or
through the Acquired Corporations by any third party, including any employee
or former employee of the Acquired Corporations. None of the Acquired
Corporations has entered into any agreement to indemnify any other Person
against any charge of infringement of any Intellectual Property, other than
indemnification provisions contained in purchase orders arising in the
ordinary course of business.
(d) None of the Acquired Corporations is, nor will be as a result of the
execution and delivery of this Agreement or the performance of its obligations
under this Agreement, in breach of any license, sublicense or other agreement
relating to any Intellectual Property or Third Party Intellectual Property
Rights, the breach of which would have a Material Adverse Effect on the
Acquired Corporations.
(e) All patents, registered trademarks, service marks and copyrights held by
the Acquired Corporations are valid and subsisting. Except for actions which
would not reasonably be expected to have a Material Adverse Effect on the
Acquired Corporations, none of the Acquired Corporations (i) is being sued in
any suit, action or proceeding which involves a claim of infringement of any
patents, trademarks, service marks, copyrights or violation of any trade
secret or other proprietary right of any third party and (ii) has brought any
action, suit or proceeding for infringement of Intellectual Property or breach
of any license or agreement involving Intellectual Property against any third
party, which action is continuing. The manufacture, marketing, licensing or
sale of the Company's products does not infringe any patent, trademark,
service mark, copyright, trade secret or other proprietary right of any third
party, except where such infringement would not have a Material Adverse Effect
on the Acquired Corporations.
(f) The Acquired Corporations have secured valid written assignments from
all consultants and employees who contributed to the creation or development
of Intellectual Property of the rights to such contributions that the Acquired
Corporations do not already own by operation of law, except where the failure
to do so would not have a Material Adverse Effect on the Acquired
Corporations.
(g) Except where the failure to do so would not reasonably be expected to
have a Material Adverse Effect on the Acquired Corporations: (i) the Acquired
Corporations have taken all reasonable and appropriate steps to
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protect and preserve the confidentiality of all Intellectual Property not
otherwise protected by patents, or patent applications or copyright
("Confidential Information"); (ii) all use, disclosure or appropriation of
Confidential Information owned by the Acquired Corporations by or to any third
party has been pursuant to the terms of a written agreement between the
Acquired Corporations and such third party; and (iii) all use, disclosure or
appropriation of Confidential Information not owned by the Acquired
Corporations has been pursuant to the terms of a written agreement between the
Acquired Corporations and the owner of such Confidential Information, or is
otherwise lawful.
(h) All software (and related Intellectual Property) that is licensed by any
of the Acquired Corporations to any third party ("Products") are designed to
be used prior to, during and after the year 2000 ("Year 2000"), and are Year
2000 Compliant (as defined below). For purposes of this Agreement, "Year 2000
Compliant" shall mean that the Products can, individually, and in combination
and in conjunction with all other systems, products or processes with which
they are required or designed to interface, continue to be used normally and
to operate successfully (both in functionality and performance) over the
transition into the twenty first century when used in accordance with the
documentation related to the Products, including being able to, before, on and
after January 1, 2000 substantially conform to the following (i) use logic
pertaining to dates which allow users to identify and/or use the century
portion of any date fields without special processing; and (ii) respond to all
date elements and date input so as to resolve any ambiguity as to century in a
disclosed defined and pre-determined manner and provide date information in
ways which are unambiguous as to century, either by permitting or requiring
the century to be specified or where the data element is represented without a
century, the correct century is unambiguous for all manipulations involving
that element.
2.9 CONTRACTS.
(a) Part 2.9 of the Company Disclosure Schedule identifies each Acquired
Corporation Contract that constitutes a "Material Contract" as of the date
hereof. (For purposes of this Agreement, each of the following shall be deemed
to constitute a "Material Contract":
(i) any Contract relating to the employment of, or the performance of
services by, any employee or consultant involving compensation in excess of
$75,000 per annum (other than oral Contracts with employees who are
terminable "at will"), and any Contract pursuant to which any of the
Acquired Corporations is or may become obligated to make any severance,
termination or similar payment (other than payments in respect of salary)
in excess of $75,000, to any current or former employee or director;
(ii) any Contract (A) that is of the type listed in Part 2.8 of the
Company Disclosure Schedule; (B) with any customer of any of the Acquired
Corporations involving payments in excess of $100,000; and (C) with respect
to the distribution or marketing of any product of any of the Acquired
Corporations;
(iii) any Contract which provides for indemnification of any officer,
director, employee or agent;
(iv) any Contract not otherwise listed pursuant to Part 2.9 of the
Company Disclosure Schedule imposing any restriction on the right or
ability of any Acquired Corporation (A) to compete with any other Person,
(B) to acquire any product or other asset or any services from any other
Person, to sell any product or other asset to or perform any services for
any other Person or to transact business or deal in any other manner with
any other Person, or (C) develop or distribute any technology, except in
each case where such restriction is not material to the business of the
Acquired Corporations taken as a whole;
(v) any Contract (A) relating to the acquisition, issuance, voting,
registration, sale or transfer of any securities, (B) providing any Person
with any preemptive right, right of participation, right of maintenance or
any similar right with respect to any securities, or (C) providing the
Company with any right of first refusal with respect to, or right to
repurchase or redeem, any securities;
(vi) any Contract requiring that the Company give any notice or provide
any information to any Person prior to accepting any Acquisition Proposal;
and
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(vii) any Contract that contemplates or involves the payment or delivery
of cash or other consideration in an amount or having a value in excess of
$250,000 in the aggregate, or contemplates or involves the performance of
services having a value in excess of $250,000 in the aggregate.
(b) Each Acquired Corporation Contract that constitutes a Material Contract
is valid and in full force and effect, and is enforceable in accordance with
its terms, subject to (i) laws of general application relating to bankruptcy,
insolvency and the relief of debtors, and (ii) rules of law governing specific
performance, injunctive relief and other equitable remedies, and except where
any invalidity or unenforceability would not have or would not reasonably be
expected to have a Material Adverse Effect on the Acquired Corporations.
(c) Except as set forth in Part 2.9 of the Company Disclosure Schedule: (i)
none of the Acquired Corporations has violated or breached, or committed any
default under, any Acquired Corporation Contract, except for defaults that
have not had and would not reasonably be expected to have a Material Adverse
Effect on the Acquired Corporations; and, to the knowledge of the Company, no
other Person has violated or breached, or committed any default under, any
Acquired Corporation Contract, except for defaults that have not had and would
not reasonably be expected to have a Material Adverse Effect on the Acquired
Corporations; and (ii) to the knowledge of the Company, no event has occurred,
and no circumstance or condition exists, that (with or without notice or lapse
of time) will, or would reasonably be expected to, (A) result in a violation
or breach of any of the provisions of any Acquired Corporation Contract, (B)
give any Person the right to declare a default or exercise any remedy under
any Acquired Corporation Contract, (C) give any Person the right to a rebate,
chargeback, penalty or change in delivery schedule under any Acquired
Corporation Contract, (D) give any Person the right to accelerate the maturity
or performance of any Acquired Corporation Contract, or (E) give any Person
the right to cancel, terminate or modify any Acquired Corporation Contract,
except in each such case for defaults, acceleration rights, termination rights
and other rights that have not had and would not reasonably be expected to
have a Material Adverse Effect on the Acquired Corporations.
2.10 LIABILITIES. None of the Acquired Corporations has any accrued,
contingent or other liabilities of any nature, either matured or unmatured
that is material to the Acquired Corporations taken as a whole, except for:
(a) liabilities identified as such in the "liabilities" column of the
Unaudited Interim Balance Sheet; (b) liabilities that have been incurred by
the Acquired Corporations since September 30, 1997 in the ordinary course of
business and consistent with past practices; and (c) liabilities not required
to be reflected in financial statements in accordance with generally accepted
accounting principles.
2.11 COMPLIANCE WITH LEGAL REQUIREMENTS. Each of the Acquired Corporations
is, and has at all times since December 31, 1995 been, in compliance with all
applicable Legal Requirements, except where the failure to comply with such
Legal Requirements has not had and would not reasonably be expected to have a
Material Adverse Effect on the Acquired Corporations.
2.12 CERTAIN BUSINESS PRACTICES. To the knowledge of the Company, none of
the Acquired Corporations nor any director, officer, agent or employee of any
of the Acquired Corporations has (i) used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses relating to
political activity, (ii) made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political parties
or campaigns or violated any provision of the Foreign Corrupt Practices Act of
1977, as amended, or (iii) made any other unlawful payment.
2.13 TAX MATTERS.
(a) All Tax Returns required to be filed by or on behalf of the respective
Acquired Corporations with any Governmental Body with respect to any taxable
period ending on or before the Closing Date (the "Acquired Corporation
Returns") (i) have been or will be filed on or before the applicable due date
(including any extensions of such due date), and (ii) have been, or will be
when filed, prepared in all material respects in compliance with all
applicable Legal Requirements. All amounts shown on the Acquired Corporation
Returns to be due on or before the Closing Date have been or will be paid on
or before the Closing Date.
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(b) To the knowledge of the Company, the Company Financial Statements fully
accrue all actual and contingent liabilities for Taxes with respect to all
periods through the dates thereof in accordance with generally accepted
accounting principles. Each Acquired Corporation will establish, in the
ordinary course of business and consistent with its past practices, reserves
reasonably adequate for the payment of all Taxes for the period from September
30, 1997 through the Closing Date.
(c) No claim or Legal Proceeding is pending or, to the knowledge of the
Company, has been threatened against or with respect to any Acquired
Corporation in respect of any material Tax. There are no unsatisfied
liabilities for material Taxes (including liabilities for interest, additions
to tax and penalties thereon and related expenses) with respect to any notice
of deficiency or similar document received by any Acquired Corporation with
respect to any material Tax (other than liabilities for Taxes asserted under
any such notice of deficiency or similar document which are being contested in
good faith by the Acquired Corporations and with respect to which adequate
reserves for payment have been established). There are no liens for material
Taxes upon any of the assets of any of the Acquired Corporations except liens
for current Taxes not yet due and payable. None of the Acquired Corporations
has entered into or become bound by any agreement or consent pursuant to
Section 341(f) of the Code. None of the Acquired Corporations has been, and
none of the Acquired Corporations will be, required to include any adjustment
in taxable income for any tax period (or portion thereof) pursuant to Section
481 or 263A of the Code or any comparable provision under state or foreign Tax
laws as a result of transactions or events occurring, or accounting methods
employed, prior to the Closing.
(d) To the knowledge of the Company, there is no agreement, plan,
arrangement or other Contract covering any employee or independent contractor
or former employee or independent contractor of any of the Acquired
Corporations that, considered individually or considered collectively with any
other such Contracts, will, or could reasonably be expected to, give rise
directly or indirectly to the payment of any amount that would not be
deductible pursuant to Section 280G or Section 162 of the Code. None of the
Acquired Corporations is a party to or bound by any tax indemnity agreement,
tax sharing agreement, tax allocation agreement or similar Contract.
2.14 EMPLOYEE AND LABOR MATTERS; BENEFIT PLANS.
(a) Part 2.14(a) of the Company Disclosure Schedule identifies each stock
purchase, stock option, profit-sharing, pension or retirement plan, program or
agreement sponsored, maintained, contributed to or required to be contributed
to by any of the Acquired Corporations for the benefit of any current or
former employee of any of the Acquired Corporations (other than those plans,
programs and agreements disclosed in the Company SEC Documents and other than
the Company's 401(k) profit sharing plan).
(b) Except as set forth in Part 2.14(a) of the Company Disclosure Schedule
(and except for the Company's 401(k) profit sharing plan), none of the
Acquired Corporations maintains, sponsors or contributes to, and none of the
Acquired Corporations has at any time in the past maintained, sponsored or
contributed to, any employee pension benefit plan (as defined in Section 3(2)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
whether or not excluded from coverage under specific Titles or Merger
Subtitles of ERISA) for the benefit of employees or former employees of any of
the Acquired Corporations.
(c) Each of the Plans intended to be qualified under Section 401(a) of the
Code has received a favorable determination from the Internal Revenue Service,
and the Company is not aware of any reason why any such determination letter
should be revoked.
(d) Except as disclosed in the Company SEC Documents, neither the execution,
delivery or performance of this Agreement, nor the consummation of the Merger
or any of the other transactions contemplated by this Agreement, will result
in any payment (including any bonus, golden parachute or severance payment) to
any current or former employee or director of any of the Acquired Corporations
(whether or not under any Plan), or materially increase the benefits payable
under any Plan, or result in any acceleration of the time of payment or
vesting of any such benefits.
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(e) Each of the Acquired Corporations is in compliance in all material
respects with all applicable Legal Requirements and Contracts relating to
employment, employment practices, wages, bonuses and terms and conditions of
employment, including employee compensation matters.
2.15 ENVIRONMENTAL MATTERS. To the knowledge of the Company, no current or
prior owner of any property leased or controlled by any of the Acquired
Corporations has received any notice or other communication (in writing or
otherwise), whether from a Government Body, citizens group, employee or
otherwise, that alleges that such current or prior owner or any of the
Acquired Corporations is not in compliance with any Environmental Law. To the
knowledge of the Company, all property that is leased to, controlled by or
used by the Company, and all surface water, groundwater and soil associated
with or adjacent to such property is in clean and healthful condition and is
free of any material environmental contamination of any nature. (For purposes
of this Section 2.17: (i) "Environmental Law" means any federal, state, local
or foreign Legal Requirement relating to pollution or protection of human
health or the environment (including ambient air, surface water, ground water,
land surface or subsurface strata), including any law or regulation relating
to emissions, discharges, releases or threatened releases of Materials of
Environmental Concern, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Materials of Environmental Concern; and (ii) "Materials of Environmental
Concern" include chemicals, pollutants, contaminants, wastes, toxic
substances, petroleum and petroleum products and any other substance that is
now or hereafter regulated by any Environmental Law or that is otherwise a
danger to health, reproduction or the environment.)
2.16 INSURANCE. The Company has delivered to Parent a copy of the Company's
directors' and officers' liability insurance policy. The premium with respect
to such policy for the period October 24, 1996 through April 24, 1998 is
$175,000.
2.17 TRANSACTIONS WITH AFFILIATES. Except as set forth in the Company SEC
Reports, since the date of the Company's last proxy statement filed with the
SEC, no event has occurred that would be required to be reported by the
Company pursuant to Item 404 of Regulation S-K promulgated by the SEC. Part
2.17 of the Company Disclosure Schedule identifies each person who is an
"affiliate" (as that term is used in Rule 145 under the Securities Act) of the
Company as of the date of this Agreement.
2.18 LEGAL PROCEEDINGS; ORDERS. There is no pending Legal Proceeding, and
(to the knowledge of the Company) no Person has threatened to commence any
Legal Proceeding that involves any of the Acquired Corporations or any of the
assets owned or used by any of the Acquired Corporations. There is no material
order, writ, injunction, judgment or decree to which any of the Acquired
Corporations, or any of the assets owned or used by any of the Acquired
Corporations, is subject.
2.19 AUTHORITY; BINDING NATURE OF AGREEMENT. The Company has the absolute
and unrestricted right, power and authority to enter into and to perform its
obligations under this Agreement. The Board of Directors of the Company (at a
meeting duly called and held) has (a) unanimously determined that the Merger
is advisable and fair and in the best interests of the Company and its
stockholders, (b) unanimously authorized and approved the execution, delivery
and performance of this Agreement by the Company and unanimously approved the
Merger, and (c) unanimously recommended the approval of this Agreement and the
Merger by the holders of Company Common Stock and directed that this Agreement
and the Merger be submitted for consideration by the Company's stockholders at
the Company Stockholders' Meeting (as defined in Section 5.2). This Agreement
constitutes the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, subject to (i)
laws of general application relating to bankruptcy, insolvency and the relief
of debtors, and (ii) rules of law governing specific performance, injunctive
relief and other equitable remedies.
2.20 SECTION 203 OF THE DGCL NOT APPLICABLE. As of the date hereof and at
all times on or prior to the Effective Time, the restrictions applicable to
business combinations contained in Section 203 of the DGCL are, and will be,
inapplicable to the execution, delivery and performance of this Agreement and
to the consummation
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of the Merger and the other transactions contemplated by this Agreement. Prior
to the execution of those certain Voting Agreements of even date herewith
between Parent and each of the individuals identified on Exhibit C, the Board
of Directors of the Company approved said Voting Agreements and the
transactions contemplated thereby.
2.21 NO EXISTING DISCUSSIONS. On the date hereof, none of the Acquired
Corporations, and no Representative of any of the Acquired Corporations, is
engaged, directly or indirectly, in any discussions or negotiations with any
other Person relating to any Acquisition Proposal.
2.22 ACCOUNTING MATTERS. To the knowledge of the Company, neither the
Company nor any affiliate (as that term is used in Rule 145 under the
Securities Act) of any of the Acquired Corporations has taken or agreed to
take, or plans to take, any action that could prevent Parent from accounting
for the Merger as a "pooling of interests." Ernst & Young LLP has confirmed in
a letter the date of this Agreement and addressed to the Company, an executed
copy of which has been delivered to Parent, that Ernst & Young LLP concurs
with the Company's management's conclusion that, as of the date of such
letter, no condition exists that would preclude Parent from accounting for the
Merger as a "pooling of interests."
2.23 VOTE REQUIRED. The affirmative vote of the holders of a majority of the
shares of Company Common Stock outstanding on the record date for the Company
Stockholders' Meeting (the "Required Company Stockholder Vote") is the only
vote of the holders of any class or series of the Company's capital stock
necessary to approve this Agreement, the Merger and the other transactions
contemplated by this Agreement.
2.24 NON-CONTRAVENTION; CONSENTS. Subject to obtaining the Consents referred
to in the last paragraph of this Section 2.24, neither (1) the execution,
delivery or performance of this Agreement or any of the other agreements
referred to in this Agreement, nor (2) the consummation of the Merger or any
of the other transactions contemplated by this Agreement, will directly or
indirectly (with or without notice or lapse of time):
(a) contravene, conflict with or result in a violation of (i) any of the
provisions of the certificate of incorporation, bylaws or other charter or
organizational documents of any of the Acquired Corporations, or (ii) any
resolution adopted by the stockholders, the board of directors or any
committee of the board of directors of any of the Acquired Corporations;
(b) contravene, conflict with or result in a violation of, or give any
Governmental Body or other Person the right to challenge the Merger or any
of the other transactions contemplated by this Agreement or to exercise any
remedy or obtain any relief under, any Legal Requirement or any order,
writ, injunction, judgment or decree to which any of the Acquired
Corporations, or any of the assets owned or used by any of the Acquired
Corporations, is subject, except for any contravention, conflict,
violation, challenge, remedy or relief which would not have, and would not
reasonably be expected to have, a Material Adverse Effect on the Acquired
Corporations;
(c) contravene, conflict with or result in a violation of any of the
terms or requirements of, or give any Governmental Body the right to
revoke, withdraw, suspend, cancel, terminate or modify, any Governmental
Authorization that is held by any of the Acquired Corporations or that
otherwise relates to the business of any of the Acquired Corporations or to
any of the assets owned or used by any of the Acquired Corporations, except
for any contravention, conflict, violation, revocation, withdrawal,
suspension, cancellation, termination or modification which would not have,
and would not reasonably be expected to have, a Material Adverse Effect on
the Acquired Corporations;
(d) contravene, conflict with or result in a violation or breach of, or
result in a default under, any provision of any Acquired Corporation
Contract that is or would constitute a Material Contract, or give any
Person the right to (i) declare a default or exercise any remedy under any
such Acquired Corporation Contract, (ii) a rebate, chargeback, penalty or
change in delivery schedule under any such Acquired Corporation Contract,
(iii) accelerate the maturity or performance of any such Acquired
Corporation Contract, or (iv) cancel, terminate or modify any term of such
Acquired Corporation Contract, except for any contravention, conflict,
violation, breach, default or other circumstance described in this
paragraph (d)
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which would not have, and would not reasonably be expected to have, a
Material Adverse Effect on the Acquired Corporations;
(e) result in the imposition or creation of any Encumbrance upon or with
respect to any asset owned or used by any of the Acquired Corporations
(except for minor liens and Encumbrances the imposition or creation of
which would not have, and would not reasonably be expected to have, a
Material Adverse Effect on the Acquired Corporations; or
(f) result in, or increase the likelihood of, the disclosure or delivery
to any escrowholder or other Person of the source code, or any portion or
aspect of the source code, or any proprietary information or algorithm
contained in or relating to any source code, of any material Intellectual
Property, or the transfer of any material asset of any of the Acquired
Corporations to any Person.
Except as may be required by the Exchange Act, the DGCL, the HSR Act and the
NASD Bylaws (as they relate to the Form S-4 Registration Statement and the
Prospectus/Proxy Statement) none of the Acquired Corporations was, is or will
be required to make any filing with or give any notice to, or to obtain any
Consent from, any Person in connection with (x) the execution, delivery or
performance of this Agreement or any of the other agreements referred to in
this Agreement, or (y) the consummation of the Merger, except for any notices
or Consents the failure of which to give or obtain would not have, and would
not reasonably be expected to have, a Material Adverse Effect on the Acquired
Corporations.
2.25 FAIRNESS OPINION. The Company's board of directors has received the
written opinion of Deutsche Morgan Grenfell Inc., financial advisor to the
Company, dated the date of this Agreement, to the effect that the
consideration to be received by the stockholders of the Company in the Merger
is fair to the stockholders of the Company from a financial point of view. The
Company has furnished and accurate and complete copy of said written opinion
to Parent.
2.26 FINANCIAL ADVISOR. Except for Deutsche Morgan Grenfell Inc., no broker,
finder or investment banker is entitled to any brokerage, finder's or other
fee or commission in connection with the Merger or any of the other
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of any of the Acquired Corporations. The Company has furnished to
Parent accurate and complete copies of all agreements under which any such
fees, commissions or other amounts have been paid or may become payable to,
and all indemnification and other agreements related to the engagement of,
Deutsche Morgan Grenfell Inc.
2.27 ABSENCE OF DISSENTERS' RIGHTS. The average of the property factor, the
payroll factor and the sales factor (within the meaning of Section 2115 of the
California Corporations Code) with respect to the Company was less than 50
percent during the Company's latest full income year. The Company is not
subject to Section 2115 of the California Corporations Code and no stockholder
of the Company is entitled to dissenters' or appraisal rights in connection
with the Merger.
2.28 FULL DISCLOSURE.
(a) Section 2 and the Company Disclosure Schedule do not, and the
certificate referred to in Section 6.6(h) will not, (i) contain any
representation, warranty or information that is false or misleading with
respect to any material fact, or (ii) omit to state any material fact
necessary in order to make the representations, warranties and information
contained and to be contained herein and therein (in the light of the
circumstances under which such representations, warranties and information are
being or will be made or provided) not false or misleading.
(b) None of the information supplied or to be supplied by or on behalf of
the Company for inclusion or incorporation by reference in the Form S-4
Registration Statement will, at the time the Form S-4 Registration Statement
becomes effective under the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they are made, not misleading. None of the
information supplied or to be supplied by or on behalf of the Company for
inclusion or incorporation by reference in the Prospectus/Proxy
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Statement will, at the time the Prospectus/Proxy Statement is mailed to the
stockholders of the Company or at the time of the Company Stockholders'
Meeting, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they are
made, not misleading. The Prospectus/Proxy Statement will comply as to form in
all material respects with the provisions of the Exchange Act and the rules
and regulations promulgated by the SEC thereunder.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub represent and warrant to the Company that, except as
set forth in the Parent SEC Documents (as defined in Section 3.3(a)):
3.1 ORGANIZATION, STANDING AND POWER. Each of Parent and Merger Sub is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has all necessary power and authority: (a)
to conduct its business in the manner in which its business is currently being
conducted; (b) to own and use its assets in the manner in which its assets are
currently owned and used; and (c) to perform its obligations under all
Contracts by which it is bound. Each of Parent and Merger Sub is duly
qualified to do business as a foreign corporation, and is in good standing,
under the laws of all jurisdictions where the nature of its business requires
such qualification and where the failure to be so qualified would have a
Material Adverse Effect on Parent.
3.2 CAPITALIZATION.
(a) The authorized capital stock of Parent consists of: (a) 120,000,000
shares of Parent Common Stock, of which 87,780,332 shares (excluding shares of
Parent Common Stock held in treasury) were outstanding as of October 16, 1997;
and (b) 5,000,000 shares of Preferred Stock, $.01 par value per share, of
which no shares are outstanding as of the date of this Agreement.
(b) All of the capital stock of Merger Sub ("Merger Sub Stock") is held by
Parent. All of the outstanding shares of Parent Common Stock and Merger Sub
Stock have been duly authorized and validly issued, and are fully paid and
nonassessable.
(c) As of the date of this Agreement: (i) 6,083,917 shares of Parent Common
Stock are subject to issuance pursuant to outstanding options to purchase
shares of Parent Common Stock; and (ii) 1,840,319 shares of Parent Common
Stock are reserved for future issuance pursuant to Parent's Employee Stock
Purchase Plan. (Stock options granted by Parent pursuant to Parent's stock
option plans are referred to in this Agreement as "Parent Options.")
(d) Except for the Parent Options and Parent's Employee Stock Purchase Plan
(and rights related thereto), as of the date of this Agreement, there is no:
(i) outstanding subscription, option, call, warrant or right (whether or not
currently exercisable) to acquire any shares of capital stock or other
securities of Parent; (ii) outstanding security, instrument or obligation that
is or may become convertible into or exchangeable for any shares of capital
stock or other securities of Parent; (iii) stockholder rights plan (or similar
plan commonly referred to as a "Poison Pill") or Contract under which Parent
is or may become obligated to sell or otherwise issue any shares of its
capital stock or any other securities.
(e) All outstanding shares of Parent Common Stock and all outstanding Parent
Options have been, and all shares of Parent Common Stock to be issued in the
Merger will be, issued and granted in compliance with: (i) all applicable
securities laws and other applicable Legal Requirements; and (ii) all
requirements set forth in applicable Contracts.
3.3 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Parent has delivered to the Company accurate and complete copies
(excluding copies of exhibits) of each report, registration statement (on a
form other than Form S-8) and definitive proxy statement filed by Parent
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with the SEC since January 1, 1997 (the "Parent SEC Documents"). All
statements, reports, schedules, forms and other documents required to have
been filed with the SEC have been so filed. As of the time it was filed with
the SEC (or, if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing): (i) each of the Parent SEC
Documents complied in all material respects with the applicable requirements
of the Securities Act or the Exchange Act (as the case may be); and (ii) none
of the Parent SEC Documents contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(b) The consolidated financial statements contained in the Parent SEC
Documents: (i) complied as to form in all material respects with the published
rules and regulations of the SEC applicable thereto; (ii) were prepared in
accordance with generally accepted accounting principles applied on a
consistent basis throughout the periods covered (except as may be indicated in
the notes to such financial statements and, in the case of unaudited
statements, as permitted by Form 10-Q of the SEC, and except that unaudited
financial statements may not contain footnotes and are subject to normal and
recurring year-end audit adjustments which will not, individually or in the
aggregate, be material in amount); and (iii) fairly present the consolidated
financial position of Parent and its subsidiaries as of the respective dates
thereof and the consolidated results of operations of Parent and its
subsidiaries for the periods covered thereby.
3.4 DISCLOSURE. None of the information to be supplied by or on behalf of
Parent for inclusion in the Form S-4 Registration Statement will, at the time
the Form S-4 Registration Statement becomes effective under the Securities
Act, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they are
made, not misleading. None of the information to be supplied by or on behalf
of Parent for inclusion in the Prospectus/Proxy Statement will, at the time
the Prospectus/Proxy Statement is mailed to the stockholders of the Company or
at the time of the Company Stockholders' Meeting, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in the light of
the circumstances under which they are made, not misleading. The
Prospectus/Proxy Statement will comply as to form in all material respects
with the provisions of the Exchange Act and the rules and regulations
promulgated by the SEC thereunder, except that no representation or warranty
is made by Parent with respect to statements made or incorporated by reference
therein based on information supplied by the Company for inclusion or
incorporation by reference in the Prospectus/Proxy Statement.
3.5 ABSENCE OF CERTAIN CHANGES OR EVENTS. Between September 30, 1997 and the
date of this Agreement: (i) there has not been any event that has had a
Material Adverse Effect on Parent; and (ii) Parent has not declared, accrued,
set aside or paid any dividend.
3.6 AUTHORITY; BINDING NATURE OF AGREEMENT. Parent and Merger Sub have the
absolute and unrestricted right, power and authority to perform their
obligations under this Agreement; and the execution, delivery and performance
by Parent and Merger Sub of this Agreement have been duly authorized by all
necessary action on the part of Parent and Merger Sub and their respective
boards of directors. This Agreement constitutes the legal, valid and binding
obligation of Parent and Merger Sub, enforceable against them in accordance
with its terms, subject to (i) laws of general application relating to
bankruptcy, insolvency and the relief of debtors, and (ii) rules of law
governing specific performance, injunctive relief and other equitable
remedies.
3.7 NO VOTE REQUIRED. No vote of the holders of Parent Common Stock is
required to authorize the Merger.
3.8 NON-CONTRAVENTION; CONSENTS. Neither the execution and delivery of this
Agreement by Parent and Merger Sub nor the consummation by Parent and Merger
Sub of the Merger will (a) conflict with or result in any breach of any
provision of the certificate of incorporation or bylaws of Parent or the
certificate of incorporation or bylaws of Merger Sub, (b) result in a default
by Parent or Merger Sub under any Contract to which Parent or Merger Sub is a
party, except for any default which has not had and will not have a Material
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Adverse Effect on Parent, or (c) result in a violation by Parent or Merger Sub
of any order, writ, injunction, judgment or decree to which Parent or Merger
Sub is subject, except for any violation which has not had and will not have a
Material Adverse Effect on Parent. Except as may be required by the Securities
Act, the Exchange Act, state securities or "blue sky" laws, the DGCL, the HSR
Act, the NASD Bylaws (as they relate to the S-4 Registration Statement and the
Prospectus/Proxy Statement) and the rules and regulations of the NYSE (as they
relate to the S-4 Registration Statement and the Prospectus/Proxy Statement),
Parent is not and will not be required to make any filing with or give any
notice to, or to obtain any Consent from, any Person in connection with the
execution, delivery or performance of this Agreement or the consummation of
the Merger.
3.9 VALID ISSUANCE. The Parent Common Stock to be issued in the Merger will,
when issued in accordance with the provisions of this Agreement, be validly
issued, fully paid and nonassessable.
3.10 ACCOUNTING MATTERS. To the knowledge of Parent, neither Parent nor any
of its affiliates has taken or agreed to, or plans to, take any action that
could prevent Parent from accounting for the Merger as a "pooling of
interests." Parent has received a letter dated the date of this Agreement,
from Coopers & Lybrand LLP, a copy of which has been delivered to the Company,
regarding Coopers & Lybrand's belief (subject to the qualifications contained
in such letter) that the Merger should be treated as a "pooling of interests"
in conformity with generally accepted accounting principles, as described in
Accounting Principles Board Opinion No. 16 and the applicable rules and
regulations of the SEC.
3.11 FULL DISCLOSURE. Section 3 does not, and the certificate referred to in
Section 7.5(b) will not, (i) contain any representation or warranty that is
false or misleading with respect to any material fact, or (ii) omit to state
any material fact necessary in order to make the representations and
warranties contained in Section 3 and to be contained in such certificate (in
light of the circumstances under which such representations and warranties are
being or will be made) not false or misleading.
SECTION 4. CERTAIN COVENANTS OF THE COMPANY
4.1 ACCESS AND INVESTIGATION. During the period from the date of this
Agreement through the Effective Time (the "Pre-Closing Period"), the Company
shall, and shall cause the respective Representatives of the Acquired
Corporations to: (a) provide Parent and Parent's Representatives with
reasonable access to the Acquired Corporations' Representatives, personnel and
assets and to all existing books, records, Tax Returns, work papers and other
documents and information relating to the Acquired Corporations; and (b)
provide Parent and Parent's Representatives with such copies of the existing
books, records, Tax Returns, work papers and other documents and information
relating to the Acquired Corporations, and with such additional financial,
operating and other data and information regarding the Acquired Corporations,
as Parent may reasonably request.
4.2 OPERATION OF THE COMPANY'S BUSINESS.
(a) During the Pre-Closing Period: (i) the Company shall ensure that each of
the Acquired Corporations conducts its business and operations (A) in the
ordinary course and in accordance with past practices and (B) in compliance in
all material respects with all applicable Legal Requirements and the
requirements of all Acquired Corporation Contracts that constitute Material
Contracts; (ii) the Company shall use reasonable efforts to ensure that each
of the Acquired Corporations preserves intact its current business
organization, keeps available the services of its current officers and
employees and maintains its relations and goodwill with all suppliers,
customers, landlords, creditors, licensors, licensees, employees and other
Persons having business relationships with the respective Acquired
Corporations; (iii) the Company shall keep in full force all insurance
policies to which any of the Acquired Corporations is a party as of the date
of this Agreement; (iv) the Company shall use reasonable efforts to provide
all notices, assurances and support required by any Acquired Corporation
Contract relating to any material Intellectual Property in order to ensure
that no condition under such Acquired Corporation Contract occurs which could
result in, or could increase the likelihood of, (A) any transfer or disclosure
by any Acquired Corporation of any source code materials or other material
Intellectual Property, or (B) a release from any escrow of any source code
material or material Intellectual Property which has been
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deposited or is required to be deposited in escrow under the terms of such
Acquired Corporation Contract; and (v) the Company shall (to the extent
requested by Parent) cause its officers to report regularly to Parent
concerning the status of the Company's business.
(b) During the Pre-Closing Period and except as expressly permitted by this
Agreement, the Company shall not (without the prior written consent of
Parent), and shall not permit any of the other Acquired Corporations to:
(i) declare, accrue, set aside or pay any dividend or make any other
distribution in respect of any shares of capital stock, or repurchase,
redeem or otherwise reacquire any shares of capital stock or other
securities;
(ii) sell, issue, grant or authorize the issuance or grant of (i) any
capital stock or other security, (ii) any option, call, warrant or right to
acquire any capital stock or other security, or (iii) any instrument
convertible into or exchangeable for any capital stock or other security
(except that: (A) the Company may issue Company Common Stock upon the valid
exercise of Company Options outstanding as of the date of this Agreement or
pursuant to the ESPP (provided that such ESPP is operated consistent with
past practices), and (B) the Company may, in the ordinary course of
business and consistent with past practices, and after consultation with
Ernst & Young LLP, grant options under its stock option plans, to purchase
no more than a total of 50,000 shares of Company Common Stock to employees
of the Company);
(iii) amend or waive any of its rights under, or accelerate the vesting
under, any provision of any of the Company's stock option plans, any
provision of any agreement evidencing any outstanding stock option or any
restricted stock purchase agreement, or otherwise modify any of the terms
of any outstanding option, warrant or other security or any related
Contract;
(iv) amend or permit the adoption of any amendment to its certificate of
incorporation or bylaws or other charter or organizational documents, or
effect or become a party to any merger, consolidation, share exchange,
business combination, recapitalization, reclassification of shares, stock
split, reverse stock split or similar transaction;
(v) form any subsidiary or acquire any equity interest or other interest
in any other Entity;
(vi) make any capital expenditure (except that the Acquired Corporations
may make capital expenditures that, when added to all other capital
expenditures made on behalf of the Acquired Corporations during the Pre-
Closing Period, do not exceed $250,000 in the aggregate);
(vii) enter into or become bound by, or permit any of the assets owned or
used by it to become bound by, any Material Contract, or amend or
terminate, or waive or exercise any material right or remedy under, any
Material Contract, other than in the ordinary course of business consistent
with past practices;
(viii) acquire, lease or license any right or other asset from any other
Person or sell or otherwise dispose of, or lease or license, any right or
other asset to any other Person (except in each case for immaterial assets
acquired, leased, licensed or disposed of by the Company in the ordinary
course of business and consistent with past practices), or waive or
relinquish any material right;
(ix) lend money to any Person, or incur or guarantee any indebtedness;
(x) establish, adopt or amend any employee benefit plan, pay any bonus or
make any profit-sharing or similar payment to, or increase the amount of
the wages, salary, commissions, fringe benefits or other compensation or
remuneration payable to, any of its directors, officers or employees (other
than salary increases in connection with employee reviews or bonuses
payable in accordance with existing bonus obligations or plans);
(xi) change any of its methods of accounting or accounting practices in
any respect;
(xii) make any Tax election;
(xiii) commence any Legal Proceeding or settle any Legal Proceeding other
than any Legal Proceeding arising from the claims disclosed in Part 2.18 of
the Company Disclosure Schedule);
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(xiv) take any other material action outside the ordinary course of
business inconsistent with past practices; or
(xv) agree or commit to take any of the actions described in clauses
"(i)" through "(xiv)" of this Section 4.2(b).
(c) During the Pre-Closing Period, the Company shall promptly notify Parent
in writing of: (i) the discovery by the Company of any event, condition, fact
or circumstance that occurred or existed on or prior to the date of this
Agreement and that caused or constitutes a material inaccuracy in any
representation or warranty made by the Company in this Agreement; (ii) any
event, condition, fact or circumstance that occurs, arises or exists after the
date of this Agreement and that would cause or constitute a material
inaccuracy in any representation or warranty made by the Company in this
Agreement if (A) such representation or warranty had been made as of the time
of the occurrence, existence or discovery of such event, condition, fact or
circumstance, or (B) such event, condition, fact or circumstance had occurred,
arisen or existed on or prior to the date of this Agreement; (iii) any
material breach of any covenant or obligation of the Company; and (iv) any
event, condition, fact or circumstance that would make the timely satisfaction
of any of the conditions set forth in Section 6 or Section 7 impossible or
unlikely or that has had or could reasonably be expected to have a Material
Adverse Effect on the Acquired Corporations. No notification given to Parent
pursuant to this Section 4.2(c) shall limit or otherwise affect any of the
representations, warranties, covenants or obligations of the Company contained
in this Agreement.
4.3 NO SOLICITATION.
(a) The Company shall not directly or indirectly, and shall not authorize or
permit any of the other Acquired Corporations or any Representative of any of
the Acquired Corporations directly or indirectly to, (i) solicit, initiate,
encourage or induce the making, submission or announcement of any Acquisition
Proposal or take any action that could reasonably be expected to lead to an
Acquisition Proposal, (ii) furnish any information regarding any of the
Acquired Corporations to any Person in connection with or in response to an
Acquisition Proposal, (iii) engage in discussions or negotiations with any
Person with respect to any Acquisition Proposal, (iv) approve, endorse or
recommend any Acquisition Proposal or (v) enter into any letter of intent or
similar document or any Contract contemplating or otherwise relating to any
Acquisition Transaction; provided, however, that: (A) nothing herein shall
prohibit the Company's board of directors from disclosing to the Company's
stockholders a position with respect to a tender offer pursuant to Rules 14d-9
and 14e-2 promulgated under the Exchange Act; and (B) prior to the adoption
and approval of this Agreement by the Required Company Stockholder Vote, the
Company shall not be prohibited by this Section 4.3(a) from (x) furnishing
nonpublic information regarding the Acquired Corporations to any Person in
response to an Acquisition Proposal that is submitted by such Person (and not
withdrawn), or (y) entering into discussions with any Person in response to a
Superior Offer that is submitted by such Person (and not withdrawn) if, in
either such case: (1) neither the Company nor any Representative of any of the
Acquired Corporations shall have violated any of the restrictions set forth in
this Section 4.3, (2) the Board of Directors of the Company believes in good
faith, based upon the advice of its outside legal counsel, that such action is
required in order for the board of directors of the Company to comply with its
fiduciary obligations to the Company's stockholders under applicable law, (3)
prior to furnishing any such nonpublic information to, or entering into
discussions with, such Person, the Company gives Parent written notice of the
identity of such Person and of the Company's intention to furnish nonpublic
information to, or enter into discussions with, such Person, and the Company
receives from such Person an executed confidentiality agreement containing
limitations no less restrictive than the limitations imposed on Parent
pursuant to the Confidentiality Agreement (as defined in Section 9.4), and (4)
prior to furnishing any such nonpublic information to such Person, the Company
furnishes such nonpublic information to Parent (to the extent such nonpublic
information has not been previously furnished by the Company to Parent).
Without limiting the generality of the foregoing, the Company acknowledges and
agrees that any violation of any of the restrictions set forth in the
preceding sentence by any Representative of any of the Acquired Corporations,
whether or not such Representative is purporting to act on behalf of any of
the Acquired Corporations, shall be deemed to constitute a breach of this
Section 4.3 by the Company; provided, however, that this sentence shall not
limit the
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rights of any Representative who is a stockholder of the Company to freely
vote his stock and to exercise all of his rights as a stockholder of the
Company, subject to any contractual restrictions that may apply.
(b) The Company shall promptly advise Parent orally and in writing of any
Acquisition Proposal (including the identity of the Person making or
submitting such Acquisition Proposal and the terms thereof) that is made or
submitted by any Person during the Pre-Closing Period. The Company shall keep
Parent fully informed with respect to the status of any such Acquisition
Proposal and any modification or proposed modification thereto.
(c) The Company shall immediately cease and cause to be terminated any
existing discussions with any Person that relate to any Acquisition Proposal.
SECTION 5. ADDITIONAL COVENANTS OF THE PARTIES
5.1 REGISTRATION STATEMENT; PROSPECTUS/PROXY STATEMENT.
(a) As promptly as practicable after the date of this Agreement, Parent and
the Company shall prepare and cause to be filed with the SEC the
Prospectus/Proxy Statement and Parent shall prepare and cause to be filed with
the SEC the Form S-4 Registration Statement (in which the Prospectus/Proxy
Statement will be included as a prospectus); provided, however, that
notwithstanding anything to the contrary contained in this Section 5.1(a), if
(and to the extent) Parent so elects: (i) the Prospectus/Proxy Statement shall
initially be filed with the SEC on a confidential basis as a proxy statement
of the Company under Section 14 of the Exchange Act (and not as a registration
statement of Parent); (ii) until it is reasonably likely that the SEC will
declare the Form S-4 Registration Statement (in which the Prospectus/Proxy
Statement will be included as a prospectus) effective under the Securities
Act, all amendments to the Prospectus/Proxy Statement shall be filed with the
SEC on a confidential basis as amendments to the proxy statement of the
Company under Section 14 of the Exchange Act; and (iii) Parent shall not be
obligated to file the Form S-4 Registration Statement (in which the
Prospectus/Proxy Statement will be included as a prospectus) with the SEC
until it is reasonably likely that the SEC will promptly declare the Form S-4
Registration Statement effective under the Securities Act. Each of Parent and
the Company shall use all reasonable efforts to cause the Form S-4
Registration Statement and the Prospectus/Proxy Statement to comply with the
rules and regulations promulgated by the SEC, to respond promptly to any
comments of the SEC or its staff and to have the Form S-4 Registration
Statement declared effective under the Securities Act as promptly as
practicable after it is filed with the SEC. The Company will use all
reasonable efforts to cause the Prospectus/Proxy Statement to be mailed to the
Company's stockholders as promptly as practicable after the Form S-4
Registration Statement is declared effective under the Securities Act. The
Company shall promptly furnish to Parent all information concerning the
Acquired Corporations and the Company's stockholders that may be required or
reasonably requested in connection with any action contemplated by this
Section 5.1. If any event relating to any of the Acquired Corporations occurs,
or if the Company becomes aware of any information, that should be disclosed
in an amendment or supplement to the Form S-4 Registration Statement or the
Prospectus/Proxy Statement, then the Company shall promptly inform Parent
thereof and shall cooperate with Parent in filing such amendment or supplement
with the SEC and, if appropriate, in mailing such amendment or supplement to
the stockholders of the Company.
(b) Prior to the Effective Time, Parent shall use reasonable efforts to
obtain all regulatory approvals needed to ensure that the Parent Common Stock
to be issued in the Merger will be registered or qualified under the
securities law of every jurisdiction of the United States in which any
registered holder of Company Common Stock has an address of record on the
record date for determining the stockholders entitled to notice of and to vote
at the Company Stockholders' Meeting; provided, however, that Parent shall not
be required (i) to qualify to do business as a foreign corporation in any
jurisdiction in which it is not now qualified or (ii) to file a general
consent to service of process in any jurisdiction.
5.2 COMPANY STOCKHOLDERS' MEETING.
(a) The Company shall take all action necessary under all applicable Legal
Requirements to call, give notice of, convene and hold a meeting of the
holders of Company Common Stock to consider, act upon and vote upon
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the adoption and approval of this Agreement and the approval of the Merger
(the "Company Stockholders' Meeting"). The Company Stockholders' Meeting will
be held as promptly as practicable and in any event within 45 days after the
Form S-4 Registration Statement is declared effective under the Securities
Act. The Company shall ensure that the Company Stockholders' Meeting is
called, noticed, convened, held and conducted, and that all proxies solicited
in connection with the Company Stockholders' Meeting are solicited, in
compliance with all applicable Legal Requirements. The Company's obligation to
call, give notice of, convene and hold the Company Stockholders' Meeting in
accordance with this Section 5.2(a) shall not be limited or otherwise affected
by the commencement, disclosure, announcement or submission of any Superior
Offer or other Acquisition Proposal, or by any withdrawal, amendment or
modification of the recommendation of the board of directors of the Company
with respect to the Merger.
(b) Subject to Section 5.2(c): (i) the board of directors of the Company
shall unanimously recommend that the Company's stockholders vote in favor of
and adopt and approve this Agreement and approve the Merger at the Company
Stockholders' Meeting; (ii) the Prospectus/Proxy Statement shall include a
statement to the effect that the board of directors of the Company has
unanimously recommended that the Company's stockholders vote in favor of and
adopt and approve this Agreement and approve the Merger at the Company
Stockholders' Meeting; and (iii) neither the board of directors of the Company
nor any committee thereof shall withdraw, amend or modify, or propose or
resolve to withdraw, amend or modify, in a manner adverse to Parent, the
unanimous recommendation of the board of directors of the Company that the
Company's stockholders vote in favor of and adopt and approve this Agreement
and approve the Merger. For purposes of this Agreement, said recommendation of
the board of directors of the Company shall be deemed to have been modified in
a manner adverse to Parent if said recommendation shall no longer be
unanimous.
(c) Nothing in Section 5.2(b) shall prevent the board of directors of the
Company from withdrawing, amending or modifying its unanimous recommendation
in favor of the Merger at any time prior to the adoption and approval of this
Agreement by the Required Company Stockholder Vote if (i) a Superior Offer is
made to the Company and is not withdrawn, (ii) neither the Company nor any of
its Representatives shall have violated any of the restrictions set forth in
Section 4.3, and (iii) the board of directors of the Company concludes in good
faith, based upon the advice of its outside counsel, that, in light of such
Superior Offer, the withdrawal, amendment or modification of such
recommendation is required in order for the board of directors of the Company
to comply with its fiduciary obligations to the Company's stockholders under
applicable law. Nothing contained in this Section 5.2 shall limit the
Company's obligation to call, give notice of, convene and hold the Company
Stockholders' Meeting (regardless of whether the unanimous recommendation of
the board of directors of the Company shall have been withdrawn, amended or
modified).
5.3 REGULATORY APPROVALS. The Company and Parent shall use all reasonable
efforts to file, as soon as practicable after the date of this Agreement, all
notices, reports and other documents required to be filed with any
Governmental Body with respect to the Merger and the other transactions
contemplated by this Agreement, and to submit promptly any additional
information requested by any such Governmental Body. Without limiting the
generality of the foregoing, the Company and Parent shall, promptly after the
date of this Agreement, prepare and file the notifications required under the
HSR Act in connection with the Merger. The Company and Parent shall respond as
promptly as practicable to (i) any inquiries or requests received from the
Federal Trade Commission or the Department of Justice for additional
information or documentation and (ii) any inquiries or requests received from
any state attorney general or other Governmental Body in connection with
antitrust or related matters. Each of the Company and Parent shall (1) give
the other party prompt notice of the commencement of any Legal Proceeding by
or before any Governmental Body with respect to the Merger or any of the other
transactions contemplated by this Agreement, (2) keep the other party informed
as to the status of any such Legal Proceeding, and (3) promptly inform the
other party of any communication to or from the Federal Trade Commission, the
Department of Justice or any other Governmental Body regarding the Merger. The
Company and Parent will consult and cooperate with one another, and will
consider in good faith the views of one another, in connection with any
analysis, appearance, presentation, memorandum, brief, argument, opinion or
proposal made or submitted in connection with any Legal Proceeding under or
relating to the HSR Act or any
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other federal or state antitrust or fair trade law. In addition, except as may
be prohibited by any Governmental Body or by any Legal Requirement, in
connection with any Legal Proceeding under or relating to the HSR Act or any
other federal or state antitrust or fair trade law or any other similar Legal
Proceeding, each of the Company and Parent will permit authorized
Representatives of the other party to be present at each meeting or conference
relating to any such Legal Proceeding and to have access to and be consulted
in connection with any document, opinion or proposal made or submitted to any
Governmental Body in connection with any such Legal Proceeding.
5.4 STOCK OPTIONS AND COMPANY STOCK OPTION AND PURCHASE PLANS.
(a) Subject to Section 5.4(b), at the Effective Time, all rights with
respect to Company Common Stock under each Company Option then outstanding
shall be converted into and become rights with respect to Parent Common Stock,
and Parent shall assume each such Company Option in accordance with the terms
(as in effect as of the date of this Agreement) of the Company Stock Option
Plan under which it was issued and the stock option agreement by which it is
evidenced. From and after the Effective Time, (i) each Company Option assumed
by Parent may be exercised solely for shares of Parent Common Stock, (ii) the
number of shares of Parent Common Stock subject to each such Company Option
shall be equal to the number of shares of Company Common Stock subject to such
Company Option immediately prior to the Effective Time multiplied by the
Exchange Ratio, rounding down to the nearest whole share (with cash, less the
applicable exercise price, being payable for any fraction of a share), (iii)
the per share exercise price under each such Company Option shall be adjusted
by dividing the per share exercise price under such Company Option by the
Exchange Ratio and rounding up to the nearest cent and (iv) any restriction on
the exercise of any such Company Option shall continue in full force and
effect and the term, exercisability, vesting schedule and other provisions of
such Company Option shall otherwise remain unchanged; provided, however, that
each Company Option assumed by Parent in accordance with this Section 5.4(a)
shall, in accordance with its terms, be subject to further adjustment as
appropriate to reflect any stock split, stock dividend, reverse stock split,
reclassification, recapitalization or other similar transaction subsequent to
the Effective Time. Parent shall file with the SEC, no later than 30 days
after the date on which the Merger becomes effective, a registration statement
on Form S-8 relating to the shares of Parent Common Stock issuable with
respect to the Company Options assumed by Parent in accordance with this
Section 5.4(a).
(b) The Company shall take all action that may be necessary (under the plans
pursuant to which Company Options are outstanding and otherwise) to effectuate
the provisions of this Section 5.4 and to ensure that, from and after the
Effective Time, holders of Company Options have no rights with respect thereto
other than those specifically provided in this Section 5.4.
(c) As of the Effective Time, the ESPP shall be terminated. The rights of
participants in the ESPP with respect to any offering period then underway
under the ESPP shall be determined by treating the last business day prior to
the Effective Time as the last day of such offering period and by making such
other pro-rata adjustments as may be necessary to reflect the reduced offering
period but otherwise treating such offering period as a fully effective and
completed offering period for all purposes of such Plan. Prior to the
Effective Time, the Company shall take all actions (including, if appropriate,
amending the terms of the ESPP) that are necessary to give effect to the
transactions contemplated by this Section 5.4(c).
5.5 INDEMNIFICATION OF OFFICERS AND DIRECTORS.
(a) All rights to indemnification existing in favor of the current directors
and officers of the Company for acts and omissions occurring prior to the
Effective Time, as provided in the Company's Bylaws (as in effect as of the
date of this Agreement) and as provided in the indemnification agreements
between the Company and said officers and directors (as in effect as of the
date of this Agreement), shall survive the Merger, and Parent shall cause the
Surviving Corporation to perform all of its obligations arising thereunder for
a period of not less than six years from the Effective Time.
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(b) From the Effective Time until the third anniversary of the date on which
the Effective Time occurs, Parent shall cause the Surviving Corporation to
maintain in effect, for the benefit of the current directors and officers of
the Company with respect to acts or omissions occurring prior to the Effective
Time, the existing policy of directors' and officers' liability insurance
maintained by the Company as of the date of this Agreement (the "Existing
Policy"); provided, however, that (i) the Surviving Corporation may substitute
for the Existing Policy a policy or policies of comparable coverage, and (ii)
the Surviving Corporation shall not be required to pay an annual premium for
the Existing Policy (or for any substitute policies) in excess of $225,000. In
the event any future annual premium for the Existing Policy (or any substitute
policies) exceeds $225,000, the Surviving Corporation shall be entitled to
reduce the amount of coverage of the Existing Policy (or any substitute
policies) to the amount of coverage that can be obtained for a premium equal
to $225,000.
5.6 POOLING OF INTERESTS. Each of the Company and Parent agrees (a) not to
take any action during the Pre-Closing Period that would adversely affect the
ability of Parent to account for the Merger as a "pooling of interests," and
(b) to use all reasonable efforts to attempt to ensure that none of its
"affiliates" (as that term is used in Rule 145 under the Securities Act) takes
any action that could adversely affect the ability of Parent to account for
the Merger as a "pooling of interests." The Company agrees to provide to Ernst
& Young llp and Coopers & Lybrand llp such letters as shall be reasonably
requested by Ernst & Young llp or Coopers & Lybrand llp with respect to the
letters referred to in Sections 2.22, 3.10, 6.6(e) and 6.6(f).
5.7 ADDITIONAL AGREEMENTS.
(a) Subject to Section 5.7(b), Parent and the Company shall use all
reasonable efforts to take, or cause to be taken, all actions necessary to
consummate the Merger and make effective the other transactions contemplated
by this Agreement. Without limiting the generality of the foregoing, but
subject to Section 5.7(b), each party to this Agreement (i) shall make all
filings (if any) and give all notices (if any) required to be made and given
by such party in connection with the Merger and the other transactions
contemplated by this Agreement, (ii) shall use all reasonable efforts to
obtain each Consent (if any) required to be obtained (pursuant to any
applicable Legal Requirement or Contract, or otherwise) by such party in
connection with the Merger or any of the other transactions contemplated by
this Agreement, and (iii) shall use all reasonable efforts to lift any
restraint, injunction or other legal bar to the Merger. The Company shall
promptly deliver to Parent a copy of each such filing made, each such notice
given and each such Consent obtained by the Company during the Pre-Closing
Period.
(b) Notwithstanding anything to the contrary contained in this Agreement,
Parent shall not have any obligation under this Agreement: (i) to dispose or
cause any of its subsidiaries to dispose of any assets, or to commit to cause
any of the Acquired Corporations to dispose of any assets; (ii) to discontinue
or cause any of its subsidiaries to discontinue offering any product, or to
commit to cause any of the Acquired Corporations to discontinue offering any
product; (iii) to license or otherwise make available, or cause any of its
subsidiaries to license or otherwise make available, to any Person, any
technology, software or other Intellectual Property, or to commit to cause any
of the Acquired Corporations to license or otherwise make available to any
Person any technology, software or other Intellectual Property to the extent
reasonably practicable; (iv) to hold separate or cause any of its subsidiaries
to hold separate any assets or operations (either before or after the Closing
Date), or to commit to cause any of the Acquired Corporations to hold separate
any assets or operations; or (v) to make or cause any of its subsidiaries make
any commitment (to any Governmental Body or otherwise) regarding its future
operations or the future operations of any of the Acquired Corporations.
5.8 DISCLOSURE. Parent and the Company shall consult with each other before
issuing any press release or otherwise making any public statement with
respect to the Merger or any of the other transactions contemplated by this
Agreement. Without limiting the generality of the foregoing, the Company shall
not, and shall not permit any of its Representatives to, make any disclosure
regarding the Merger or any of the other transactions contemplated by this
Agreement unless (a) Parent shall have approved such disclosure or (b) the
Company shall have been advised in writing by its outside legal counsel that
such disclosure is required by applicable law.
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<PAGE>
5.9 AFFILIATE AGREEMENTS. The Company shall use all reasonable efforts to
cause each Person identified in Part 2.17 of the Company Disclosure Schedule
and each other Person who is or becomes an "affiliate" (as that term is used
in Rule 145 under the Securities Act) of the Company to execute and deliver to
Parent, prior to the date of the mailing of the Prospectus/Proxy Statement to
the Company's stockholders, an Affiliate Agreement in the form of Exhibit D.
5.10 TAX MATTERS. The Company shall use all reasonable efforts to obtain and
deliver to Parent, as soon as practicable after the date of this Agreement,
Continuity of Interest Certificates in the form of Exhibit E signed by Roger
A. Lang, Jr., Till M. Guldimann and Sequoia Capital Growth Fund. At or prior
to the Closing, the Company and Parent shall execute and deliver to outside
counsel to Parent and to Morrison & Foerster llp tax representation letters in
customary form. Parent and the Company shall use all reasonable efforts prior
to the Effective Time to cause the Merger to qualify as a tax free
reorganization under Section 368(a)(1) of the Code.
5.11 LETTER OF THE COMPANY'S ACCOUNTANTS. The Company shall use all
reasonable efforts to cause to be delivered to Parent a letter of Ernst &
Young llp, dated no more than two business days before the date on which the
Form S-4 Registration Statement becomes effective (and reasonably satisfactory
in form and substance to Parent), that is customary in scope and substance for
letters delivered by independent public accountants in connection with
registration statements similar to the Form S-4 Registration Statement.
5.12 NYSE LISTING. Parent shall use reasonable efforts to cause the shares
of Parent Common Stock being issued in the Merger to be approved for listing
(subject to notice of issuance) on the NYSE.
5.13 RESIGNATION OF OFFICERS AND DIRECTORS. The Company shall use all
reasonable efforts to obtain and deliver to Parent prior to the Closing the
resignation of each officer and director of each of the Acquired Corporations.
SECTION 6. CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND MERGER SUB TO
CONSUMMATE TRANSACTONS
The obligations of Parent and Merger Sub to effect the Merger and otherwise
consummate the transactions contemplated by this Agreement are subject to the
satisfaction, at or prior to the Closing, of each of the following conditions:
6.1 ACCURACY OF REPRESENTATIONS.
(a) Without limiting the effect or independence of the conditions set forth
in Sections 6.1(b) and 6.1(c), the representations and warranties of the
Company contained in Sections 2.3(a), 2.3(b), 2.3(c) and 2.27 shall have been
accurate in all respects as of the date of this Agreement (it being understood
that (i) the representations and warranties of the Company contained in
Sections 2.3(a), 2.3(b) and 2.3(c) with respect the fully-diluted
capitalization of the Company shall be deemed to have been accurate as long as
the actual fully-diluted capitalization of the Company does not exceed the
fully-diluted capitalization of the Company as represented in Sections 2.3(a),
2.3(b) and 2.3(c) by more than 15,000 shares of Company Common Stock, and (ii)
for purposes of determining the accuracy of the representations and warranties
of the Company contained in Sections 2.3(a), 2.3(b), 2.3(c) and 2.27: (A) all
"Material Adverse Effect" qualifications and other materiality qualifications
contained in such representations and warranties shall be disregarded; and (B)
any update of or modification to the Company Disclosure Schedule made or
purported to have been made after the date of this Agreement shall be
disregarded).
(b) Without limiting the effect or independence of the conditions set forth
in Sections 6.1(a) and 6.1(c), the representations and warranties of the
Company contained in this Agreement (other than the representations and
warranties contained in Sections 2.3(a), 2.3(b), 2.3(c) and 2.27) shall have
been accurate in all respects as of the date of this Agreement (it being
understood that, for purposes of determining the accuracy of such
representations and warranties: (i) any inaccuracies that, in the aggregate,
do not have a Material Adverse Effect on the Acquired Corporations shall be
disregarded; (ii) all "Material Adverse Effect" qualifications and other
materiality qualifications contained in such representations and warranties
shall be disregarded; and (iii) any update of or
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<PAGE>
modification to the Company Disclosure Schedule made or purported to have been
made after the date of this Agreement shall be disregarded).
(c) Without limiting the effect or independence of the conditions set forth
in Sections 6.1(a) and 6.1(b), the representations and warranties of the
Company contained in this Agreement (except for any representation or warranty
that refers specifically to "the date of this Agreement" or to any specific
date or period prior to the date of this Agreement) shall be accurate in all
respects as of the Closing Date as if made on and as of the Closing Date (it
being understood that, for purposes of determining the accuracy of such
representations and warranties as of the Closing Date: (i) any inaccuracies
that, in the aggregate, do not have a Material Adverse Effect on the Acquired
Corporations shall be disregarded; (ii) any inaccuracy that results from
general business, economic or industry conditions that do not affect the
Company in a disproportionate manner shall be disregarded; (iii) any
inaccuracy that results from the taking of any action required by this
Agreement or the announcement or pendency of the transactions contemplated by
this Agreement shall be disregarded; (iv) all "Material Adverse Effect"
qualifications and other materiality qualifications contained in such
representations and warranties shall be disregarded; and (v) any update of or
modification to the Company Disclosure Schedule made or purported to have been
made after the date of this Agreement shall be disregarded).
6.2 PERFORMANCE OF COVENANTS. Each covenant or obligation that the Company
is required to comply with or to perform at or prior to the Closing shall have
been complied with and performed in all material respects.
6.3 EFFECTIVENESS OF REGISTRATION STATEMENT. The Form S-4 Registration
Statement shall have become effective in accordance with the provisions of the
Securities Act, and no stop order shall have been issued by the SEC with
respect to the Form S-4 Registration Statement.
6.4 STOCKHOLDER APPROVAL. This Agreement shall have been duly adopted and
approved, and the Merger shall have been duly approved, by the Required
Company Stockholder Vote.
6.5 CONSENTS. All Consents required to be obtained in connection with the
Merger and the other transactions contemplated by this Agreement shall have
been obtained and shall be in full force and effect (except where the failure
to obtain such Consents has not had, and would not reasonably be expected to
have, a Material Adverse Effect on Parent or the Company).
6.6 AGREEMENTS AND DOCUMENTS. Parent and the Company shall have received the
following agreements and documents, each of which shall be in full force and
effect:
(a) Affiliate Agreements in the form of Exhibit D, executed by each
Person who could reasonably be deemed to be an "affiliate" of the Company
(as that term is used in Rule 145 under the Securities Act);
(b) Continuity of Interest Certificates in the form of Exhibit E,
executed by Roger A. Lang, Jr., Till M. Guldimann and Sequoia Capital
Growth Fund;
(c) Noncompetition Agreements in the form of Exhibit F, executed by the
individuals identified on Exhibit G;
(d) a letter from Ernst & Young llp, dated as of the Closing Date and
addressed to Parent, reasonably satisfactory in form and substance to
Parent, updating the letter referred to in Section 5.11;
(e) a letter from Ernst & Young llp, dated as of the Closing Date and
addressed to the Company, reasonably satisfactory in form and substance to
Parent and Coopers & Lybrand llp, to the effect that, Ernst & Young llp
concurs with the Company's management's conclusion that no conditions exist
related to the Company that would preclude Parent from accounting for the
Merger as a "pooling of interests" in accordance with generally accepted
accounting principles, Accounting Principles Board Opinion No. 16 and all
published rules, regulations and policies of the SEC;
(f) a letter from Coopers & Lybrand llp, dated as of the Closing Date and
addressed to Parent, reasonably satisfactory in form and substance to
Parent, to the effect that Parent may account for the Merger
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as a "pooling of interests" in accordance with generally accepted
accounting principles, Accounting Principles Board Opinion No. 16 and all
published rules, regulations and policies of the SEC;
(g) a legal opinion of outside counsel to Parent, dated as of the Closing
Date and addressed to Parent, to the effect that the Merger will constitute
a reorganization within the meaning of Section 368 of the Code (it being
understood that, in rendering such opinion, such outside counsel may rely
upon the Continuity of Interest Certificates and tax representation letters
referred to in Section 5.10);
(h) a certificate executed on behalf of the Company by its Chief
Executive Officer confirming that the conditions set forth in Sections
6.1(a), 6.1(b), 6.1(c), 6.2, 6.4, 6.5 and 6.7 have been duly satisfied; and
(i) the written resignations of all officers and directors of the
Company, effective as of the Effective Time.
6.7 ABSENCE OF MATERIAL ADVERSE EFFECT. There shall have been no change in
the business, capitalization, operations or financial condition of any of the
Acquired Corporations since the date of this Agreement which has had or would
reasonably be expected to have a Material Adverse Effect on the Acquired
Corporations.
6.8 HSR ACT. The waiting period applicable to the consummation of the Merger
under the HSR Act shall have expired or been terminated.
6.9 LISTING. The shares of Parent Common Stock to be issued in the Merger
shall have been approved for listing (subject to notice of issuance) on the
NYSE.
6.10 NO RESTRAINTS. No temporary restraining order, preliminary or permanent
injunction or other order preventing the consummation of the Merger shall have
been issued by any court of competent jurisdiction and remain in effect, and
there shall not be any Legal Requirement enacted or deemed applicable to the
Merger that makes consummation of the Merger illegal.
6.11 NO GOVERNMENTAL LITIGATION. There shall not be pending or threatened
any Legal Proceeding in which a Governmental Body is (or is threatened to
become) a party: (a) challenging or seeking to restrain or prohibit the
consummation of the Merger or any of the other transactions contemplated by
this Agreement; (b) relating to the Merger and seeking to obtain from Parent
or any of its subsidiaries any damages that may be material to Parent; (c)
seeking to prohibit or limit in any material respect Parent's ability to vote,
receive dividends with respect to or otherwise exercise ownership rights with
respect to the stock of the Surviving Corporation; or (d) which would
materially and adversely affect the right of Parent, the Surviving Corporation
or any subsidiary of Parent to own the assets or operate the business of the
Company.
6.12 NO OTHER LITIGATION. There shall not be pending any Legal Proceeding in
which there is a reasonable probability of an outcome that would have a
Material Adverse Effect on the Acquired Corporations or on Parent: (a)
challenging or seeking to restrain or prohibit the consummation of the Merger;
(b) relating to the Merger and seeking to obtain from Parent or any of its
subsidiaries any damages that may be material to Parent; (c) seeking to
prohibit or limit in any material respect Parent's ability to vote, receive
dividends with respect to or otherwise exercise ownership rights with respect
to the stock of the Surviving Corporation; or (d) which would affect adversely
the right of Parent, the Surviving Corporation or any subsidiary of Parent to
own the assets or operate the business of the Company; provided, however, that
to the extent that any damages payable in connection with any such Legal
Proceeding will be fully reimbursed by insurance coverage pursuant to
insurance policies held by the Company or Parent, such damages shall be
disregarded in determining the Material Adverse Effect of such Legal
Proceeding on the policy holder.
SECTION 7. CONDITIONS PRECEDENT TO OBLIGATION OF THE COMPANY TO CONSUMMATE
TRANSACTIONS
The obligation of the Company to effect the Merger and otherwise consummate
the transactions contemplated by this Agreement are subject to the
satisfaction, at or prior to the Closing, of the following conditions:
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7.1 ACCURACY OF REPRESENTATIONS.
(a) Without limiting the effect or independence of the condition set forth
in Section 7.1(b), the representations and warranties of Parent and Merger Sub
contained in this Agreement shall have been accurate in all respects as of the
date of this Agreement (it being understood that, for purposes of determining
the accuracy of such representations and warranties: (i) any inaccuracies
that, in the aggregate, do not have a Material Adverse Effect on Parent shall
be disregarded; and (ii) all "Material Adverse Effect" qualifications and
other materiality qualifications contained in such representations and
warranties shall be disregarded).
(b) Without limiting the effect or independence of the condition set forth
in Section 7.1(a), the representations and warranties of Parent and Merger Sub
contained in this Agreement (except for any representation or warranty that
refers specifically to "the date of this Agreement" or to any specific date or
period prior to the date of this Agreement) shall be accurate in all respects
as of the Closing Date as if made on and as of the Closing Date (it being
understood that, for purposes of determining the accuracy of such
representations and warranties as of the Closing Date: (i) any inaccuracies
that, in the aggregate, do not have a Material Adverse Effect on Parent shall
be disregarded; (ii) any inaccuracy that results from general business,
economic or industry conditions that do not affect Parent in a
disproportionate manner shall be disregarded; (iii) any inaccuracy that
results from the taking of any action required by this Agreement or the
announcement or pendency of the transactions contemplated by this Agreement
shall be disregarded; and (iv) all "Material Adverse Effect" qualifications
and other materiality qualifications contained in such representations and
warranties shall be disregarded).
7.2 PERFORMANCE OF COVENANTS. All of the covenants and obligations that
Parent and Merger Sub are required to comply with or to perform at or prior to
the Closing shall have been complied with and performed in all material
respects.
7.3 EFFECTIVENESS OF REGISTRATION STATEMENT. The Form S-4 Registration
Statement shall have become effective in accordance with the provisions of the
Securities Act, and no stop order shall have been issued by the SEC with
respect to the Form S-4 Registration Statement.
7.4 STOCKHOLDER APPROVAL. This Agreement shall have been duly adopted and
approved, and the Merger shall have been duly approved, by the Required
Company Stockholder Vote.
7.5 DOCUMENTS. The Company shall have received the following documents:
(a) a legal opinion of Morrison & Foerster LLP, dated as of the Closing
Date, to the effect that the Merger will constitute a reorganization within
the meaning of Section 368 of the Code (it being understood that, in
rendering such opinion, Morrison & Foerster LLP may rely upon the
Continuity of Interest Certificates and tax representation letters referred
to in Section 5.10); and
(b) a certificate executed on behalf of Parent by an executive officer of
Parent, confirming that conditions set forth in Sections 7.1(a), 7.1(b),
7.2 and 7.6 have been duly satisfied.
7.6 ABSENCE OF MATERIAL ADVERSE EFFECT. There shall have been no change in
Parent's business, operations or financial condition since the date of this
Agreement which has had or would reasonably be expected to have a Material
Adverse Effect on Parent (it being understood that a decline in Parent's stock
price shall not, in and of itself, constitute a change that has had or would
reasonably be expected to have a Material Adverse Effect on Parent for
purposes of this Section 7.6).
7.7 HSR ACT. The waiting period applicable to the consummation of the Merger
under the HSR Act shall have expired or been terminated.
7.8 LISTING. The shares of Parent Common Stock to be issued in the Merger
shall have been approved for listing (subject to notice of issuance) on the
NYSE.
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7.9 NO RESTRAINTS. No temporary restraining order, preliminary or permanent
injunction or other order preventing the consummation of the Merger by the
Company shall have been issued by any court of competent jurisdiction and
remain in effect, and there shall not be any Legal Requirement enacted or
deemed applicable to the Merger that makes consummation of the Merger by the
Company illegal.
SECTION 8. TERMINATION
8.1 TERMINATION. This Agreement may be terminated prior to the Effective
Time (whether before or after approval of the Merger by the Required Company
Stockholder Vote):
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company if the Merger shall not have been
consummated by March 31, 1998 (unless the failure to consummate the Merger
is attributable to a failure on the part of the party seeking to terminate
this Agreement to perform any material obligation required to be performed
by such party at or prior to the Effective Time);
(c) by either Parent or the Company if a court of competent jurisdiction
or other Governmental Body shall have issued a final and nonappealable
order, decree or ruling, or shall have taken any other action, having the
effect of permanently restraining, enjoining or otherwise prohibiting the
Merger;
(d) by Parent, following a breach of any covenant or agreement of the
Company contained in this Agreement, or if any representation or warranty
of the Company contained in this Agreement shall be or shall have become
inaccurate, in either case such that any of the conditions set forth in
Sections 6.1(a), 6.1(b), 6.1(c) and 6.2 would not be satisfied as of the
time of such breach or as of the time such representation or warranty was
or shall have become inaccurate; provided, however, that: (A) if such
breach or inaccuracy is curable by the Company, then Parent may not
terminate this Agreement under this Section 8.1(d) with respect to a
particular breach or inaccuracy prior to or during the 30-day period
commencing upon delivery by Parent of written notice to the Company of such
breach or inaccuracy, provided the Company continues to exercise reasonable
efforts to cure such breach or inaccuracy; and (B) the right to terminate
this Agreement under this Section 8.1(d) shall not be available to Parent
if Parent shall have committed a material uncured breach of this Agreement;
(e) by the Company, following a breach of any covenant or agreement of
Parent contained in this Agreement, or if any representation or warranty of
Parent contained in this Agreement shall be or shall have become
inaccurate, in either case such that any of the conditions set forth in
Sections 7.1(a), 7.1(b) and 7.2 would not be satisfied as of the time of
such breach or as of the time such representation or warranty was or shall
have become inaccurate; provided, however, that: (A) if such breach or
inaccuracy is curable by Parent, then the Company may not terminate this
Agreement under this Section 8.1(e) with respect to a particular breach or
inaccuracy prior to or during the 30-day period commencing upon delivery by
the Company of written notice to Parent of such breach or inaccuracy,
provided Parent continues to exercise reasonable efforts to cure such
breach or inaccuracy; and (B) the right to terminate this Agreement under
this Section 8.1(e) shall not be available to the Company if the Company
shall have committed a material uncured breach of this Agreement;
(f) by Parent, if: (i) the Board of Directors of the Company shall have
failed to recommend, or shall for any reason have withdrawn or shall have
amended or modified in a manner adverse to Parent its unanimous
recommendation in favor of, the adoption and approval of the Agreement or
the approval of the Merger; (ii) the Company shall have failed to include
in the Prospectus/Proxy Statement the unanimous recommendation of the board
of directors of the Company in favor of the adoption and approval of the
Agreement and the approval of the Merger; (iii) the Company shall have
entered into any letter of intent or similar document or any Contract
relating to any Acquisition Proposal; or (iv) a tender or exchange offer
relating to securities of the Company shall have been commenced and the
Company shall not have sent to its securityholders, within ten business
days after the commencement of such tender or exchange offer, a statement
disclosing that the Company recommends rejection of such tender or exchange
offer; or
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(g) by either Parent or the Company if (i) the Company Stockholders'
Meeting shall have been held and (ii) this Agreement and the Merger shall
not have been approved at such meeting by the Required Company Stockholder
Vote.
8.2 EFFECT OF TERMINATION. In the event of the termination of this Agreement
as provided in Section 8.1, this Agreement shall be of no further force or
effect; provided, however, that (i) this Section 8.2, Section 8.3 and Section
9 shall survive the termination of this Agreement and shall remain in full
force and effect, and (ii) the termination of this Agreement shall not relieve
any party from any liability for any inaccuracy in or breach of any
representation, warranty or covenant contained in this Agreement.
8.3 EXPENSES; TERMINATION FEE.
(a) Except as set forth in this Section 8.3, all fees and expenses incurred
in connection with this Agreement and the transactions contemplated by this
Agreement shall be paid by the party incurring such expenses, whether or not
the Merger is consummated; provided, however, that Parent and the Company
shall share equally all fees and expenses, other than attorneys' fees,
incurred in connection with (i) the filing, printing and mailing of the Form
S-4 Registration Statement and the Prospectus/Proxy Statement and any
amendments or supplements thereto and (ii) the filing of the premerger
notification and report forms relating to the Merger under the HSR Act.
(b) If this Agreement is terminated by Parent pursuant to Section 8.1(f),
then the Company shall pay to Parent, in cash, within one business day after
the termination of this Agreement, a nonrefundable fee in the amount of
$9,500,000.
(c) If (i) this Agreement is terminated by Parent or the Company pursuant to
Section 8.1(g), (ii) at or prior to the time of the termination of this
Agreement, an Acquisition Proposal shall have been submitted, announced or
made, and (iii) an Acquisition Transaction is consummated on or prior to the
date that is 270 days following the date of such termination, then,
contemporaneously with the consummation of such Acquisition Transaction (and
regardless of whether such Acquisition Transaction involves the Person or
Persons that submitted, announced or made the Acquisition Proposal referred to
in clause "(ii)" of this sentence), the Company shall pay to Parent, in cash,
a nonrefundable fee in the amount of $9,500,000.
SECTION 9. MISCELLANEOUS PROVISIONS
9.1 AMENDMENT. This Agreement may be amended with the approval of the
respective boards of directors of the Company and Parent at any time (whether
before or after the adoption and approval of this Agreement and the approval
of the Merger by the stockholders of the Company); provided, however, that
after any such adoption and approval of this Agreement and approval of the
Merger by the Company's stockholders, no amendment shall be made which by law
requires further approval of the stockholders of the Company without the
further approval of such stockholders. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto.
9.2 WAIVER.
(a) No failure on the part of any party to exercise any power, right,
privilege or remedy under this Agreement, and no delay on the part of any
party in exercising any power, right, privilege or remedy under this
Agreement, shall operate as a waiver of such power, right, privilege or
remedy; and no single or partial exercise of any such power, right, privilege
or remedy shall preclude any other or further exercise thereof or of any other
power, right, privilege or remedy.
(b) No party shall be deemed to have waived any claim arising out of this
Agreement, or any power, right, privilege or remedy under this Agreement,
unless the waiver of such claim, power, right, privilege or remedy is
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expressly set forth in a written instrument duly executed and delivered on
behalf of such party; and any such waiver shall not be applicable or have any
effect except in the specific instance in which it is given.
9.3 NO SURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties contained in this Agreement or in any
certificate delivered pursuant to this Agreement shall survive the Merger.
9.4 ENTIRE AGREEMENT; COUNTERPARTS. This Agreement and the other agreements
referred to herein and the confidentiality agreement between Parent and the
Company dated as of October 15, 1997 (the "Confidentiality Agreement")
constitute the entire agreement and supersede all prior agreements and
understandings, both written and oral, among or between any of the parties
with respect to the subject matter hereof and thereof. This Agreement may be
executed in several counterparts, each of which shall be deemed an original
and all of which shall constitute one and the same instrument.
9.5 APPLICABLE LAW; JURISDICTION. Except and only to the extent that the
corporate law aspects of the Merger are governed by the corporate laws of the
State of Delaware, THIS AGREEMENT IS MADE UNDER, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED SOLELY THEREIN, WITHOUT
GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW. In any action between or
among any of the parties, whether arising out of this Agreement or otherwise:
(a) each of the parties irrevocably and unconditionally consents and submits
to the exclusive jurisdiction and venue of the state and federal courts
located in the Commonwealth of Pennsylvania; (b) if any such action is
commenced in a state court, then, subject to applicable law, no party shall
object to the removal of such action to any federal court located in the
Eastern District of the Commonwealth of Pennsylvania; (c) each of the parties
irrevocably waives the right to trial by jury; and (d) each of the parties
irrevocably consents to service of process by first class certified mail,
return receipt requested, postage prepaid, to the address at which such party
is to receive notice in accordance with Section 9.9.
9.6 DISCLOSURE SCHEDULE. The Company Disclosure Schedule shall be arranged
in separate parts corresponding to the numbered and lettered sections
contained in Section 2; provided, however, that any disclosure in the Company
Disclosure Schedule made as to any particular representation or warranty shall
be deemed to be made as to all other representations and warranties as to
which such disclosure would or might relate so long as the exception in the
Company Disclosure Schedule is made with reasonable particularity adequate to
identify such representations and warranties as to which it would or might
relate.
9.7 ATTORNEYS' FEES. In any action at law or suit in equity to enforce this
Agreement or the rights of any of the parties hereunder, the prevailing party
in such action or suit shall be entitled to receive a reasonable sum for its
attorneys' fees and all other reasonable costs and expenses incurred in such
action or suit.
9.8 ASSIGNABILITY. This Agreement shall be binding upon, and shall be
enforceable by and inure solely to the benefit of, the parties hereto and
their respective successors and assigns; provided, however, that neither this
Agreement nor any of the Company's rights hereunder may be assigned by the
Company without the prior written consent of Parent, and any attempted
assignment of this Agreement or any of such rights by the Company without such
consent shall be void and of no effect. Except as set forth in Section 5.5
with respect to the current directors and officers of the Company, nothing in
this Agreement, express or implied, is intended to or shall confer upon any
Person any right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement.
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9.9 NOTICES. Any notice or other communication required or permitted to be
delivered to any party under this Agreement shall be in writing and shall be
deemed properly delivered, given and received when delivered (by hand, by
registered mail, by courier or express delivery service or by facsimile) to
the address or facsimile telephone number set forth beneath the name of such
party below (or to such other address or facsimile telephone number as such
party shall have specified in a written notice given to the other parties
hereto):
IF TO PARENT:
SunGard Data Systems Inc.
1285 Drummers Lane
Wayne, PA 19087
Attn: Lawrence A. Gross
Fax: (610) 341-8851
IF TO MERGER SUB:
Information Data Inc.
c/o SunGard Data Systems Inc.
1285 Drummers Lane
Wayne, PA 19087
Attn: Lawrence A. Gross
Fax: (610) 341-8851
IF TO THE COMPANY:
Infinity Financial Technology, Inc.
640 Clyde Court
Mountain View, CA 94043-2239
Attn: President
Fax: (650) 964-9844
9.10 COOPERATION. The Company agrees to cooperate fully with Parent and to
execute and deliver such further documents, certificates, agreements and
instruments and to take such other actions as may be reasonably requested by
Parent to evidence or reflect the transactions contemplated by this Agreement
and to carry out the intent and purposes of this Agreement.
9.11 CONSTRUCTION.
(a) For purposes of this Agreement, whenever the context requires: the
singular number shall include the plural, and vice versa; the masculine gender
shall include the feminine and neuter genders; the feminine gender shall
include the masculine and neuter genders; and the neuter gender shall include
masculine and feminine genders.
(b) The parties hereto agree that any rule of construction to the effect
that ambiguities are to be resolved against the drafting party shall not be
applied in the construction or interpretation of this Agreement.
(c) As used in this Agreement, the words "include" and "including," and
variations thereof, shall not be deemed to be terms of limitation, but rather
shall be deemed to be followed by the words "without limitation."
(d) Except as otherwise indicated, all references in this Agreement to
"Sections" and "Exhibits" are intended to refer to Sections of this Agreement
and Exhibits to this Agreement.
(e) For purposes of this Agreement, any reference to the "knowledge" of a
party hereto shall mean the actual knowledge of any of its executive officers
or members of its Board of Directors of: (i) an actual inaccuracy in any
warranty or representation of such party that is subject to a "knowledge"
qualification; or (ii) facts or circumstances that would reasonably be
expected to constitute or to have given rise to an inaccuracy in any such
warranty or representation.
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(f) Where this Agreement requires that a "Material Adverse Effect"
qualification contained in a representation and warranty be disregarded: (i)
any reference to "Material Adverse Effect on the Acquired Corporations" that
is contained in such representation and warranty shall be deemed to be
replaced with a reference to "adverse effect on the business, capitalization,
operations or financial condition of any of the Acquired Corporations"; and
(ii) any reference to "Material Adverse Effect on Parent" that is contained in
such representation and warranty shall be deemed to be replaced with a
reference to "adverse effect on the business, capitalization, operations or
financial condition of Parent."
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as
of the date first above written.
SUNGARD DATA SYSTEMS INC.
By: /s/Michael J. Ruane
----------------------------------
Michael J. Ruane
Chief Financial Officer
INFORMATION DATA INC.
By: /s/Richard C. Tarbox
----------------------------------
Richard C. Tarbox
Vice President, Corporate
Development
INFINITY FINANCIAL TECHNOLOGY, INC.
By: /s/Roger A. Lang
----------------------------------
Roger A. Lang, Jr.
Chief Executive Officer
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EXHIBIT A
CERTAIN DEFINITIONS
For purposes of the Agreement (including this Exhibit A):
ACQUIRED CORPORATION CONTRACT. "Acquired Corporation Contract" shall mean
any Contract: (a) to which any of the Acquired Corporations is a party; (b) by
which any of the Acquired Corporations or any asset of any of the Acquired
Corporations is or may become bound or under which any of the Acquired
Corporations has, or may become subject to, any obligation; or (c) under which
any of the Acquired Corporations has or may acquire any right or interest.
ACQUISITION PROPOSAL. "Acquisition Proposal" shall mean any offer, proposal
or inquiry (other than an offer or proposal by Parent) contemplating or
otherwise relating to any Acquisition Transaction.
ACQUISITION TRANSACTION. "Acquisition Transaction" shall mean any
transaction or series of transactions involving:
(a) any merger, consolidation, share exchange, business combination,
issuance of securities, acquisition of securities, tender offer, exchange
offer or other similar transaction (i) in which any of the Acquired
Corporations is a constituent corporation, (ii) in which a Person or
"group" (as defined in the Exchange Act and the rules promulgated
thereunder) of Persons directly or indirectly acquires the Company or more
than 50% of the Company's business or directly or indirectly acquires
beneficial or record ownership of securities representing more than 20% of
the outstanding securities of any class of voting securities of any of the
Acquired Corporations, or (iii) in which any of the Acquired Corporations
issues securities representing more than 20% of the outstanding securities
of any class of voting securities of the Company;
(b) any sale, lease, exchange, transfer, license, acquisition or
disposition of more than 50% of the assets of the Company; or
(c) any liquidation or dissolution of the Company.
AGREEMENT. "Agreement" shall mean the Agreement and Plan of Merger and
Reorganization to which this Exhibit A is attached, together with this Exhibit
A, as such Agreement and Plan of Merger and Reorganization (including this
Exhibit A) may be amended from time to time.
COMPANY COMMON STOCK. "Company Common Stock" shall mean the Common Stock,
$0.001 par value per share, of the Company.
COMPANY DISCLOSURE SCHEDULE. "Company Disclosure Schedule" shall mean the
disclosure schedule that has been prepared by the Company in accordance with
the requirements of Section 9.6 of the Agreement and that has been delivered
by the Company to Parent on the date of the Agreement and signed by the
President of the Company.
CONSENT. "Consent" shall mean any approval, consent, ratification,
permission, waiver or authorization (including any Governmental
Authorization).
CONTRACT. "Contract" shall mean any written, oral or other agreement,
contract, subcontract, lease, understanding, instrument, note, option,
warranty, purchase order, license, sublicense, insurance policy, benefit plan
or legally binding commitment or undertaking of any nature.
ENCUMBRANCE. "Encumbrance" shall mean any lien, pledge, hypothecation,
charge, mortgage, security interest, encumbrance, claim, infringement,
interference, option, right of first refusal, preemptive right or community
property interest (including any restriction on the voting of any security,
any restriction on the
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transfer of any security or other asset, any restriction on the receipt of any
income derived from any asset, any restriction on the use of any asset and any
restriction on the possession, exercise or transfer of any other attribute of
ownership of any asset).
ENTITY. "Entity" shall mean any corporation (including any non-profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, company (including any limited
liability company or joint stock company), firm or other enterprise,
association, organization or entity.
EXCHANGE ACT. "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
FORM S-4 REGISTRATION STATEMENT. "Form S-4 Registration Statement" shall
mean the registration statement on Form S-4 to be filed with the SEC by Parent
in connection with issuance of Parent Common Stock in the Merger, as said
registration statement may be amended prior to the time it is declared
effective by the SEC.
GOVERNMENTAL AUTHORIZATION. "Governmental Authorization" shall mean any: (a)
permit, license, certificate, franchise, permission, variance, clearance,
registration, qualification or authorization issued, granted, given or
otherwise made available by or under the authority of any Governmental Body or
pursuant to any Legal Requirement; or (b) right under any Contract with any
Governmental Body.
GOVERNMENTAL BODY. "Governmental Body" shall mean any: (a) nation, state,
commonwealth, province, territory, county, municipality, district or other
jurisdiction of any nature; (b) federal, state, local, municipal, foreign or
other government; or (c) governmental or quasi-governmental authority of any
nature (including any governmental division, department, agency, commission,
instrumentality, official, organization, unit, body or Entity and any court or
other tribunal).
HSR ACT. "HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended.
LEGAL PROCEEDING. "Legal Proceeding" shall mean any action, suit,
litigation, arbitration, proceeding (including any civil, criminal,
administrative, investigative or appellate proceeding), hearing, inquiry,
audit, examination or investigation commenced, brought, conducted or heard by
or before, or otherwise involving, any court or other Governmental Body or any
arbitrator or arbitration panel.
LEGAL REQUIREMENT. "Legal Requirement" shall mean any federal, state, local,
municipal, foreign or other law, statute, constitution, principle of common
law, resolution, ordinance, code, edict, decree, rule, regulation, ruling or
requirement issued, enacted, adopted, promulgated, implemented or otherwise
put into effect by or under the authority of any Governmental Body.
MATERIAL ADVERSE EFFECT. An event, violation, change, failure, inaccuracy,
circumstance or other matter will be deemed to have a "Material Adverse
Effect" on the Acquired Corporations if such event, violation, change,
failure, inaccuracy, circumstance or other matter (considered together with
all other matters that would constitute exceptions to the representations and
warranties set forth in Section 2 of the Agreement but for the presence of
"Material Adverse Effect" or other materiality qualifications, or any similar
qualifications, in such representations and warranties) would have a material
adverse effect on (i) the business, capitalization, operations or financial
condition of the Acquired Corporations taken as a whole, (ii) the ability of
the Company to consummate the Merger or any of the other transactions
contemplated by the Agreement or to perform any of its obligations under the
Agreement, or (iii) Parent's ability to vote, receive dividends with respect
to or otherwise exercise ownership rights with respect to the stock of the
Surviving Corporation; provided, however, that: (A) any material adverse
effect that results from general economic, business or industry conditions
that do not affect the Company in a disproportionate manner shall be
disregarded in determining whether there has been a "Material Adverse Effect"
on the Acquired Corporations; and (B) any material adverse effect that results
from the taking of any action required by this Agreement or from the
announcement or pendency of the transactions contemplated by this Agreement
shall be disregarded in determining whether there has been a "Material Adverse
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Effect" on to the Acquired Corporations. An event, violation, change, failure,
inaccuracy, circumstance or other matter will be deemed to have a "Material
Adverse Effect" on Parent if such event, violation, change, failure,
inaccuracy, circumstance or other matter (considered together with all other
matters that would constitute exceptions to the representations and warranties
set forth in Section 3 of the Agreement but for the presence of "Material
Adverse Effect" or other materiality qualifications, or any similar
qualifications, in such representations and warranties) would have a material
adverse effect on the business, operations or financial condition of Parent
and its subsidiaries taken as a whole; provided, however, that: (A) any
material adverse effect that results from general economic, business or
industry conditions that do not affect Parent in a disproportionate manner
shall be disregarded in determining whether there has been a "Material Adverse
Effect" on Parent; (B) any material adverse effect that results from the
taking of any action required by this Agreement or from the announcement or
pendency of the transactions contemplated by this Agreement shall be
disregarded in determining whether there has been a "Material Adverse Effect"
on Parent; and (C) a decline in Parent's stock price shall not, in and of
itself, constitute a "Material Adverse Effect" on Parent and shall be
disregarded in determining whether there has been a "Material Adverse Effect"
on Parent.
PARENT COMMON STOCK. "Parent Common Stock" shall mean the Common Stock, $.01
par value per share, of Parent.
PERSON. "Person" shall mean any individual, Entity or Governmental Body.
PLAN. "Plan" shall mean any salary, bonus, deferred compensation, incentive
compensation, stock purchase, stock option, severance pay, termination pay,
hospitalization, medical, life or other insurance, supplemental unemployment
benefits, profit-sharing, pension or retirement plan, program or agreement.
PROSPECTUS/PROXY STATEMENT. "Prospectus/Proxy Statement" shall mean the
proxy statement to be sent to the Company's stockholders in connection with
the Company Stockholders' Meeting.
REPRESENTATIVES. "Representatives" shall mean officers, directors,
employees, agents, attorneys, accountants, advisors and representatives.
SEC. "SEC" shall mean the United States Securities and Exchange Commission.
SECURITIES ACT. "Securities Act" shall mean the Securities Act of 1933, as
amended.
SUBSIDIARY. An entity shall be deemed to be a "Subsidiary" of another Person
if such Person directly or indirectly owns, beneficially or of record, an
amount of voting securities of other interests in such Entity that is
sufficient to enable such Person to elect at leased a majority of the members
of such Entity's board of directors or other governing body.
SUPERIOR OFFER. "Superior Offer" shall mean an unsolicited, bona fide
written offer made by a third party to purchase more than 50% of the
outstanding shares of Company Common Stock on terms that the board of
directors of the Company determines, in its reasonable judgment, based upon
the written advice of its financial advisor, to be more favorable from a
financial point of view to the Company's stockholders than the terms of the
Merger; provided, however, that any such offer shall not be deemed to be a
"Superior Offer" if any financing required to consummate the transaction
contemplated by such offer is not committed and is not likely to be obtained
by such third party on a timely basis.
TAX. "Tax" shall mean any tax (including any income tax, franchise tax,
capital gains tax, gross receipts tax, value-added tax, surtax, excise tax, ad
valorem tax, transfer tax, stamp tax, sales tax, use tax, property tax,
business tax, withholding tax or payroll tax), levy, assessment, tariff, duty
(including any customs duty), deficiency or fee, and any related charge or
amount (including any fine, penalty or interest), imposed, assessed or
collected by or under the authority of any Governmental Body.
A-35
<PAGE>
TAX RETURN. "Tax Return" shall mean any return (including any information
return), report, statement, declaration, estimate, schedule, notice,
notification, form, election, certificate or other document or information
filed with or submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment, collection
or payment of any Tax or in connection with the administration, implementation
or enforcement of or compliance with any Legal Requirement relating to any
Tax.
A-36
<PAGE>
EXHIBIT B
FORM OF CERTIFICATE OF INCORPORATION
A-37
<PAGE>
EXHIBIT C
PERSONS EXECUTING VOTING AGREEMENTS
Terry H. Carlitz James Dorrian Till M. Guldimann Roger A. Lang, Jr. Michael A.
Laven Douglas M. Leone John C. Lewis Sequoia Capital Growth Fund Sequoia
Technology Partners III
A-38
<PAGE>
EXHIBIT D
FORM OF AFFILIATE AGREEMENT
A-39
<PAGE>
EXHIBIT E
FORM OF CONTINUITY OF INTEREST CERTIFICATE
A-40
<PAGE>
EXHIBIT F
FORM OF NONCOMPETITION AGREEMENT
A-41
<PAGE>
EXHIBIT G
PERSONS EXECUTING NONCOMPETITION AGREEMENTS
Till M. Guldimann Roger A. Lang, Jr. Michael A. Laven
A-42
<PAGE>
DEUTSCHE MORGAN GRENFELL LOGO
TECHNOLOGY GROUP
Deutsche Morgan Grenfell
Inc.
Technology Group
1550 El Camino Real
Suite 100
Menlo Park, California
94025
Telephone: (415) 614-
5000
Fax: (415) 614-5030
Appendix B
October 17, 1997
Board of Directors
Infinity Financial Technology, Inc.
640 Clyde Court
Mountain View, CA 94043
Members of the Board:
We understand that SunGard Data Systems Inc. ("SunGard"), Infinity Financial
Technology, Inc. ("Infinity"), and Information Data Inc. ("Merger Sub"), a
wholly-owned subsidiary of SunGard, have entered into an Agreement and Plan of
Merger and Reorganization, dated as of the date hereof (the "Merger
Agreement"), which provides, among other things, for the merger (the "Merger")
of Merger Sub with and into Infinity. Pursuant to the Merger, Infinity will
become a wholly-owned subsidiary of SunGard and each issued and outstanding
share of common stock, par value $0.001 per share, of Infinity (the "Infinity
Common Stock"), other than shares held in treasury or held by SunGard or any
subsidiary or affiliate of SunGard, shall be converted into the right to
receive 0.680 (the "Exchange Ratio") of a share of common stock, par value
$0.01 per share, of SunGard (the "SunGard Common Stock"). The terms and
conditions of the Merger are more fully set forth in the Merger Agreement.
You have asked for our opinion, as of the date hereof, as to whether the
Exchange Ratio pursuant to the Merger Agreement is fair from a financial point
of view to the holders of Infinity Common Stock.
For purposes of the opinion set forth herein, we have:
i. analyzed certain publicly available financial statements and other
information of SunGard and Infinity, respectively;
ii. analyzed certain internal financial statements and other financial and
operating data concerning Infinity prepared by the management of
Infinity;
iii. analyzed certain financial projections relating to Infinity prepared
by the managements of Infinity and SunGard;
iv. discussed the past and current operations and financial condition and
the prospects of Infinity with senior executives of Infinity;
v. analyzed certain internal financial statements and other financial and
operating data concerning SunGard prepared by the management of SunGard;
vii. analyzed the pro forma impact of the Merger on the earnings per share
and consolidated capitalization of SunGard;
viii. reviewed the reported prices and trading activity for the Infinity
Common Stock;
ix. compared the financial performance of Infinity and the prices and
trading activity of the Infinity Common Stock with that of certain
other comparable publicly traded companies and their securities;
x. reviewed the reported prices and trading activity for the SunGard Common
Stock;
xi. compared the financial performance of SunGard and the prices and
trading activity of the SunGard Common Stock with that of certain other
comparable publicly traded companies and their securities;
B-1
<PAGE>
DEUTSCHE MORGAN GRENFELL LOGO
TECHNOLOGY GROUP
xii. reviewed the financial terms, to the extent publicly available, of
certain comparable merger and acquisition transactions;
xiii. reviewed and discussed with the senior management of Infinity (i) the
strategic rationale for the Merger and their assessment of the
synergies and other benefits expected to be derived from the Merger
and (ii) certain alternatives to the Merger;
xiv. participated in discussions and negotiations among representatives of
Infinity and SunGard and their respective legal advisors;
xv. reviewed the Merger Agreement, and certain related agreements; and
xvi. performed such other analyses and considered such other factors as we
have deemed appropriate.
We have assumed and relied upon, without independent verification, the
accuracy and completeness of the information reviewed by us for the purposes
of this opinion. We have not been provided with, and therefore have not
reviewed, any internal financial projections or forecasts relating to future
operations or prospects of SunGard, and therefore, upon the advice of SunGard,
we have assumed that the publicly available estimates of research analysts are
a reasonable basis upon which to evaluate and analyze the future financial
performance of SunGard. With respect to the financial projections for
Infinity, we have assumed that they have been reasonably prepared on bases
reflecting the best currently available estimates and judgments of the future
financial performance of Infinity. We have not made any independent valuation
or appraisal of the assets, liabilities or technology of SunGard or Infinity,
respectively, nor have we been furnished with any such appraisals. We have
assumed that the Merger will be accounted for as a "pooling-of-interests"
business combination in accordance with U.S. Generally Accepted Accounting
Principles and will be consummated in accordance with the terms set forth in
the Merger Agreement. Our opinion in necessarily based on economic, market and
other conditions as in effect on, and the information made available to us as
of, the date hereof.
We have acted as financial advisor to the Board of Directors of Infinity in
connection with this transaction and will receive a fee for our services. In
the past, Deutsche Morgan Grenfell Inc. and its affiliates have provided
financing services for Infinity and have received fees for the rendering of
these services. In addition, in the ordinary course of our business, we may
actively trade the securities and loans of SunGard and Infinity for our own
account and for the accounts of our customers and, accordingly, may at any
time hold a long or short position in such securities and loans.
It is understood that this letter is for the information of the Board of
Directors of Infinity only and may not be used for any other purpose without
our prior written consent, except that this opinion may be included in its
entirety in any filing made by Infinity with the Securities and Exchange
Commission with respect to the transactions contemplated by the Merger
Agreement. Our opinion does not address the underlying strategic decision by
Infinity to engage in the Merger and does not constitute a recommendation or
opinion as to how any holder of Infinity Common Stock should vote at the
shareholders' meeting held in connection with the Merger. In rendering this
opinion, we are not expressing any opinion as to the price at which the
SunGard Common Stock or Infinity Common Stock will actually trade at any time.
Based upon and subject to the foregoing, we are of the opinion on the date
hereof that the Exchange Ratio pursuant to the Merger Agreement is fair from a
financial point of view to holders of Infinity Common Stock.
Very truly yours,
DEUTSCHE MORGAN GRENFELL INC.
By: /s/ George F. Boutros
___________________________________
George F. Boutros
Managing Director
By: /s/ David A. Popowitz
___________________________________
David A. Popowitz
Vice President
B-2
<PAGE>
1574-PS-97
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Delaware General Corporation Law provides, in substance, that Delaware
corporations shall have the power, under specified circumstances, to indemnify
their directors, officers, employees and agents in connection with actions,
suits or proceedings brought against them by third parties and in connection
with actions or suits by or in the right of the corporation, by reason of the
fact that they were or are such directors, officers, employees and agents,
against expenses (including attorney's fees) and, in the case of actions,
suits or proceedings brought by third parties, against judgments, fines and
amounts paid in settlement actually and reasonably incurred in any action,
suit or proceeding.
The Registrant's Bylaws provide for indemnifications to the fullest extent
permitted by the Delaware General Corporation Law. As permitted by the
Delaware General Corporation Law, the Registrant has adopted an amendment to
its Amended and Restated Certificate of Incorporation to eliminate the
personal liability of its directors to the Registrant and its stockholders, in
certain circumstances, for monetary damages arising from a breach of the
director's duty of care. Additionally, the Registrant has entered into
indemnification agreements (in the form approved by the Registrant's
stockholders at its 1987 Annual Meeting) with each of its directors and
officers. These agreements provide indemnification to the fullest extent
permitted by law and, in certain respects, provide greater protection than
that specifically provided by the Delaware General Corporation Law. The
agreements do not provide indemnification for, among other things, conduct
that is adjudged to be fraud, deliberate dishonesty or willful misconduct.
The Registrant has obtained directors' and officers' liability insurance
that covers certain liabilities, including liabilities to the Registrant and
its stockholders, in the amount of $20 million.
Pursuant to the Reorganization Agreement, all rights to indemnification
existing in favor of the persons serving as directors or officers of Infinity
as of the date of the Reorganization Agreement for acts and omissions
occurring prior to the Effective Time, as provided in Infinity's Bylaws (as in
effect as of the date of the Reorganization Agreement) and as provided in the
indemnification agreements between Infinity and said directors and officers
(as in effect as of the date of the Reorganization Agreement), shall survive
the Merger and the Registrant shall cause the Surviving Corporation to perform
all of its obligations arising thereunder for a period of not less than six
years from the Effective Time. The Reorganization Agreement also provides that
from the Effective Time until the third anniversary of the date on which the
Effective Time occurs, the Registrant will cause the Surviving Corporation to
maintain in effect, for the benefit of the persons serving as directors and
officers of Infinity as of the date of the Reorganization Agreement with
respect to acts or omissions occurring prior to the Effective Time, the
existing policy of directors' and officers' liability insurance maintained by
Infinity as of the date of the Reorganization Agreement (the "Existing
Policy"); provided, however, that (i) the Surviving Corporation may substitute
for the Existing Policy a policy or policies of comparable coverage, and (ii)
the Surviving Corporation shall not be required to pay an annual premium for
the Existing Policy (or for any substitute policies) in excess of $225,000.
The Reorganization Agreement further provides that in the event any future
annual premium for the Existing Policy (or any substitute policies) exceeds
$225,000, the Surviving Corporation shall be entitled to reduce the amount of
coverage of the Existing Policy (or any substitute policies) to the amount of
coverage that can be obtained for a premium equal to $225,000.
II-1
<PAGE>
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBITS
------- --------
<C> <S>
2.1 Agreement and Plan of Merger and Reorganization dated as of October
17, 1997, among the Registrant, Infinity Financial Technology, Inc.
("Infinity") and Information Data Inc. ("Merger Sub"). (See Appendix
A to the Proxy Statement/Prospectus.)
5.1* Legal Opinion of the Registrant's General Counsel.
8.1* Tax Opinion of Cooley Godward LLP.
8.2* Tax Opinion of Morrison & Foerster LLP.
23.1 Consent of Coopers & Lybrand LLP, independent accountants.
23.2 Consent of Ernst & Young LLP, independent auditors.
23.3* Consent of Deutsche Morgan Grenfell Inc.
23.4* Consent of Morrison & Foerster LLP (included in Exhibit 8.2).
23.5* Consent of Cooley Godward LLP (included in Exhibit 8.1).
24.1* Power of Attorney.
99.1* Form of Voting Agreement and Irrevocable Proxy.
99.2* Form of Affiliate Agreement.
99.3* Form of Certificate of Merger between Infinity and Merger Sub.
99.4* Infinity Form of Proxy.
</TABLE>
- --------
* Previously filed.
(b) Financial Statement Schedules
The information required to be set forth herein with respect to Infinity is
incorporated by reference from Infinity's Annual Report on Form 10-K for
the fiscal year ended December 31, 1996. No financial data schedules are
required for the Registrant.
(c) Item 4(b) Reports
See Appendix B to the Proxy Statement/Prospectus.
ITEM 22. UNDERTAKINGS.
(1) The Registrant hereby undertakes to respond to requests for information
that is incorporated by reference into the Proxy Statement/Prospectus pursuant
to Items 4, 10(b), 11 or 13 of Form S-4, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the Registration Statement through
the date of responding to the request.
(2) The Registrant hereby undertakes to supply by means of a post-effective
amendment all information concerning a transaction, and the company being
acquired involved therein, that was not the subject of and included in the
Registration Statement when it became effective.
(3) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
II-2
<PAGE>
(4) Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended (the "Act") may be permitted to directors, officers
and controlling persons of the Registrant pursuant to the Restated Certificate
of Incorporation (the "Certificate of Incorporation") and the Amended and
Restated Bylaws (the "Bylaws") of the Registrant and the Delaware General
Corporation Law, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer
or controlling person of the Registrant in a successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Registrant
will, unless in the opinion of its counsel the question has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question of whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
(5) (A) The undersigned Registrant hereby undertakes as follows: that prior
to any public reoffering of the securities registered hereunder through use of
a prospectus which is a part of this Registration Statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c),
the issuer undertakes that such reoffering prospectus will contain the
information called for by the applicable registration form with respect to
reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other items of the applicable form.
(B) The Registrant undertakes that every prospectus: (i) that is filed
pursuant to paragraph (A) immediately preceding, or (ii) that purports to meet
the requirements of Section 10(a)(3) of the Act and is used in connection with
an offering of securities subject to Rule 415, will be filed as a part of an
amendment to the Registration Statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
II-3
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN WAYNE,
PENNSYLVANIA, ON THE DATE INDICATED.
SunGard Data Systems Inc.
Date: November 26, 1997
By: /s/ Michael J. Ruane
_________________________________
MICHAEL J. RUANE, CHIEF FINANCIAL
OFFICER AND VICE PRESIDENT--
FINANCE
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 1 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING
PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
--------- -------- ----
<S> <C> <C>
James L. Mann* Chief Executive November 26, 1997
- ------------------------------------- Officer, President,
JAMES L. MANN and Chairman of the
Board of Directors
(principal
executive officer)
/s/ Michael J. Ruane Chief Financial November 26, 1997
- ------------------------------------- Officer and Vice
MICHAEL J. RUANE President--Finance
(principal
financial officer)
/s/ Andrew P. Bronstein Vice President and November 26, 1997
- ------------------------------------- Controller
ANDREW P. BRONSTEIN (principal
accounting officer)
Gregory S. Bentley* Director November 26, 1997
- -------------------------------------
GREGORY S. BENTLEY
Michael C. Brooks* Director November 26, 1997
- -------------------------------------
MICHAEL C. BROOKS
Albert A. Eisenstat* Director November 26, 1997
- -------------------------------------
ALBERT A. EISENSTAT
Bernard Goldstein* Director November 26, 1997
- -------------------------------------
BERNARD GOLDSTEIN
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
--------- -------- ----
<S> <C> <C>
Michael Roth* Director November 26, 1997
- -------------------------------------
MICHAEL ROTH
Malcolm I. Ruddock* Director November 26, 1997
- -------------------------------------
MALCOLM I. RUDDOCK
Lawrence J. Schoenberg* Director November 26, 1997
- -------------------------------------
LAWRENCE J. SCHOENBERG
</TABLE>
*By: /s/ Michael J. Ruane
----------------------------------
MICHAEL J. RUANE
ATTORNEY-IN-FACT
II-5
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBITS
------- --------
<C> <S>
2.1 Agreement and Plan of Merger and Reorganization dated as of October
17, 1997, among the Registrant, Infinity Financial Technology, Inc.
("Infinity") and Information Data Inc. ("Merger Sub"). (See Appendix A
to the Proxy Statement/Prospectus.)
5.1* Legal Opinion of the Registrant's General Counsel.
8.1* Tax Opinion of Cooley Godward LLP.
8.2* Tax Opinion of Morrison & Foerster LLP.
23.1 Consent of Coopers & Lybrand LLP, independent accountants.
23.2 Consent of Ernst & Young LLP, independent auditors.
23.3* Consent of Deutsche Morgan Grenfell Inc.
23.4* Consent of Morrison & Foerster LLP (included in Exhibit 8.2).
23.5* Consent of Cooley Godward LLP (included in Exhibit 8.1).
24.1* Power of Attorney.
99.1* Form of Voting Agreement and Irrevocable Proxy.
99.2* Form of Affiliate Agreement.
99.3* Form of Certificate of Merger between Infinity and Merger Sub.
99.4* Infinity Form of Proxy.
</TABLE>
- --------
* Previously filed.
<PAGE>
EXHIBIT 23.1
CONSENT OF COOPERS & LYBRAND LLP, INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration statement
on Form S-4 of our report dated February 13, 1997, on our audits of the
consolidated financial statements of SunGard Data Systems Inc. as of December
31, 1996 and 1995 and for each of the three years in the period ended December
31, 1996, which report is included in the Annual Report on Form 10-K. We also
consent to the reference to our firm under the heading "Experts."
/s/ Coopers & Lybrand LLP
- -------------------------------------
COOPERS & LYBRAND LLP
2400 Eleven Penn Center
Philadelphia, Pennsylvania
November 25, 1997
<PAGE>
EXHIBIT 23.2
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-4 No. 33-40053) of SunGard Data Systems Inc.
for the registration of 13,575,236 shares of its common stock and to the
incorporation by reference therein of our report dated January 21, 1997 with
respect to the consolidated financial statements and schedule of Infinity
Financial Technology, Inc. included in its Annual Report (Form 10-K) for the
year ended December 31, 1996, filed with the Securities and Exchange
Commission.
/s/ Ernst & Young LLP
_____________________________________
Ernst & Young LLP
Palo Alto, California
November 25, 1997
