<PAGE>
As filed with the Securities and Exchange Commission on May 12, 1999
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
Form S-4
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
----------------
SunGard Data Systems Inc.
(Exact name of registrant as specified in its charter)
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<S> <C> <C>
Delaware 7379 51-0267091
State or other jurisdiction of( (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
SunGard Data Systems Inc.
1285 Drummers Lane
Wayne, Pennsylvania 19087
610-341-8700
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
----------------
Lawrence A. Gross, Esquire
Vice President and General Counsel
SunGard Data Systems Inc.
1285 Drummers Lane
Wayne, Pennsylvania 19087
610-341-8700
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
Arthur H. Miller, Esquire David J. Friedman, Esquire
Francis E. Dehel, Esquire Skadden, Arps, Slate, Meagher & Flom LLP
Blank Rome Comisky & McCauley LLP 919 Third Avenue
One Logan Square New York, NY 10022-3897
Philadelphia, PA 19103 Facsimile No. (212) 735-2000
Facsimile No. (215) 569-5555
Approximate date of commencement of proposed sale of the securities to the
public: As soon as practicable following the effectiveness of this Registration
Statement.
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(b) 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. [_]
CALCULATION OF REGISTRATION FEE
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<CAPTION>
Proposed
Proposed maximum
Title of each class of Amount maximum aggregate Amount of
securities to be to be offering price offering registration
registered registered(1) per share(2) price(2) fee(3)
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<S> <C> <C> <C> <C>
Common Stock, par value
$0.01 per share....... 6,300,000 See footnote (2) $129,965,614 $36,131
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(1) The amount of common stock of the Registrant to be registered has been
determined based upon the estimated maximum number of shares which are
issuable in the arrangement and related transactions described herein.
(2) Pursuant to Rule 457(f)(1) under the Securities Act of 1933, as amended,
the proposed maximum offering price is based upon the market value of the
ordinary shares of Oshap Technologies Ltd. being acquired in the proposed
arrangement determined using the average of the high and low sale prices
per share of the Oshap ordinary shares as reported on the Nasdaq National
Market on May 10, 1999.
(3) Pursuant to Rule 0-11 under the Securities Exchange Act of 1934, as
amended, $27,598 of such fee was paid on April 21, 1999 in connection with
the filing of the Registrant's preliminary proxy statement/prospectus on
Schedule 14A in connection with the proposed arrangement.
----------------
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>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this proxy statement/prospectus is not complete and may be +
+changed. We may not sell these securities until the registration statement +
+filed with the Securities and Exchange Commission is effective. This proxy +
+statement/prospectus is not an offer to sell these securities and is not +
+soliciting an offer to buy these securities in any state where the offer or +
+sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PROPOSED ARRANGEMENT -- YOUR VOTE IS VERY IMPORTANT
SUNGARD DATA SYSTEMS INC. OSHAP TECHNOLOGIES LTD.
The boards of directors of SunGard Data Systems Inc. and Oshap Technologies
Ltd. have approved the acquisition of Oshap by SunGard through an arrangement
transaction in which all of the issued and outstanding ordinary shares of Oshap
will be exchanged for SunGard common stock. An aggregate of approximately 4.5
million to 5.5 million shares of SunGard common stock will be issued to Oshap
shareholders in the arrangement. In addition, SunGard will issue shares of
SunGard common stock in exchange for Oshap stock options and stock and options
of Oshap's subsidiaries.
In the arrangement, shareholders of Oshap will receive 0.386293 of a share of
SunGard common stock in exchange for each ordinary share of Oshap. The exchange
ratio will be fixed as long as the average closing price of SunGard common
stock is between $34.1063 and $46.1438 per share for the 10 trading day period
ending two days prior to the closing of the arrangement. In this event, Oshap
shareholders would receive a fraction of a share of SunGard common stock with a
value of between $13.1750 and $17.8250 for each Oshap ordinary share. Outside
of that range of SunGard average closing prices, the exchange ratio is subject
to downward and upward adjustment, with a minimum exchange ratio of 0.351526
and a maximum exchange ratio of 0.431360. SunGard's common stock is traded on
the New York Stock Exchange under the symbol "SDS."
The arrangement cannot be completed unless Oshap shareholders approve the
arrangement. Oshap has scheduled an extraordinary general meeting for Oshap
shareholders to vote on the arrangement. Your vote is very important.
Whether or not you plan to attend the extraordinary general meeting, please
take the time to vote by completing and mailing the enclosed proxy card to
Oshap. If you sign, date and mail your proxy card without indicating how you
want to vote, your proxy will be counted as a vote in favor of the proposal
submitted at the extraordinary general meeting.
Only holders of record of Oshap ordinary shares as of May 3, 1999 are
entitled to attend and vote at the extraordinary general meeting. The date,
time and place of the extraordinary general meeting is as follows:
June 16, 1999
4:00 p.m., local time
Delta House
16 Hagalim Avenue
Herzliya 46733, Israel
This document provides you with detailed information about the proposed
arrangement. We encourage you to read this entire document carefully. Please
pay particular attention to the matters referred to under "Risk Factors"
beginning on page 13.
In addition, you may obtain information about our companies from documents
that we have filed with the Securities and Exchange Commission. See "Where To
Find More Information" on page 67.
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Neither the Securities and Exchange Commission nor any state securities
regulator has approved the SunGard common stock to be issued in the arrangement
or determined if this document is accurate or adequate. Any representation to
the contrary is a criminal offense.
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Proxy statement/prospectus dated May 13, 1999, and first mailed to shareholders
on or about May 17, 1999.
<PAGE>
[LOGO OF OSHAP TECHNOLOGIES LTD.]
Delta House
16 Hagalim Avenue
Herzliya 46733, Israel
NOTICE OF EXTRAORDINARY GENERAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 16, 1999
To Our Shareholders:
You are cordially invited to attend an extraordinary general meeting of
shareholders of Oshap Technologies Ltd. to be held at 4:00 p.m., local time, on
June 16, 1999 at Delta House, 16 Hagalim Avenue, Herzliya 46733, Israel. At the
meeting, shareholders will be asked to vote on a proposal to approve the
arrangement contemplated by the agreement, dated March 9, 1999, by and between
Oshap and SunGard Data Systems Inc. Under the arrangement, each outstanding
Oshap ordinary share would be exchanged for a fraction of a share of SunGard
common stock equal to the exchange ratio, as set forth in the agreement, and
Oshap would become a subsidiary of SunGard.
The arrangement is governed by Section 233 of the Israeli Companies
Ordinance, [New Version] 5743-1983. Under the Israeli Companies Ordinance, the
Tel Aviv-Jaffa District Court in Israel has authorized Oshap to call the
extraordinary general meeting to adopt the arrangement.
As part of the arrangement, the articles of association of Oshap will be
amended to reflect that Oshap will become a private company following
completion of the arrangement.
Only shareholders of record as of the close of business on May 3, 1999 are
entitled to notice of and to vote at the extraordinary general meeting or any
adjournment or postponement of the extraordinary general meeting.
To ensure your representation at the extraordinary general meeting, please
sign, date and promptly return your proxy in the enclosed envelope whether or
not you plan to attend the extraordinary general meeting. If you do attend the
extraordinary general meeting you may vote in person if you wish, whether or
not you have already executed and returned your proxy card. You may revoke your
proxy at any time before it is voted. Please review the document accompanying
this notice for more complete information regarding the extraordinary general
meeting and the matter proposed for your consideration at the extraordinary
general meeting.
The members of your board of directors recommend that you vote "FOR"
approval of the arrangement.
Herzliya, Israel By order of the Board of Directors
May 13, 1999
Avi Zeevi
Chief Financial Officer
<PAGE>
Table of Contents
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Page
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Questions and Answers about the SunGard/Oshap Arrangement................. 1
Summary................................................................... 2
Selected Historical Financial Information of SunGard.................... 8
Selected Historical Financial Information of Oshap...................... 9
Market Price Information................................................ 10
Comparative Per Share Data.............................................. 12
Risk Factors.............................................................. 13
Risks Relating to the Arrangement....................................... 13
Risks Relating to SunGard............................................... 14
Recent Developments....................................................... 16
The Oshap Extraordinary General Meeting................................... 18
The Arrangement and Related Transactions.................................. 22
Background of the Arrangement........................................... 22
SunGard's Reasons for the Arrangement................................... 24
Oshap's Reasons for the Arrangement..................................... 25
Opinions of Oshap's Financial Advisors.................................. 27
Interests of Oshap's Directors and Executive Officers in the
Arrangement............................................................ 37
Voting Agreements....................................................... 38
Nondisclosure and Noncompetition Agreements............................. 38
Resale Restrictions..................................................... 39
</TABLE>
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Page
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No Appraisal Rights.................................................... 39
Tax Consequences....................................................... 39
Accounting Treatment................................................... 43
Regulatory Matters..................................................... 44
New York Stock Exchange Listing........................................ 44
Offer to Purchase Stock and Options of MINT and Decalog................ 44
The Agreement............................................................ 46
Information Concerning Oshap............................................. 54
Comparison of Capital Stock.............................................. 59
Comparison of Rights of Holders of SunGard Common Stock and Holders of
Oshap Ordinary Shares................................................... 60
Experts.................................................................. 66
Legal Matters............................................................ 67
Where to Find More Information........................................... 67
Unaudited Pro Forma Financial Information................................ 69
</TABLE>
Appendix A--The Agreement
Appendix B--Opinion of Salomon Smith Barney Inc.
Appendix C--Opinion of BancBoston Robertson Stephens Inc.
Appendix D--Articles of Association of Oshap
This document incorporates important business and financial information
about SunGard and Oshap that is not included in or delivered with this
document. Copies of this information are available to any person to whom this
document is delivered, upon written or oral request. Requests for documents
relating to SunGard should be directed to Lawrence A. Gross, Vice President and
General Counsel of SunGard, at 610-341-8700. Requests for documents relating to
Oshap should be directed to Avi Zeevi, Chief Financial Officer of Oshap, at
011-972-9-959-4894. In order to ensure timely delivery of the documents
requests should be made by June 9, 1999.
<PAGE>
Questions and Answers about the SunGard/Oshap Arrangement
Q: Why is Oshap agreeing to the arrangement with SunGard?
A: The Oshap board of directors believes that the arrangement is fair to, and
in the best interests of, Oshap and its shareholders. To review Oshap's
reasons for the arrangement, see pages 25 through 27.
Q: What will happen to the shares of Oshap in the arrangement?
A: In the arrangement, Oshap shareholders will receive a fraction of a share
of SunGard common stock in exchange for each of their Oshap ordinary
shares. This fraction is referred to as the exchange ratio. No fractional
shares of SunGard common stock will be issued. Cash will be issued in lieu
of SunGard fractional shares.
Q: When will the arrangement be completed?
A: We are working towards completing the arrangement as quickly as possible.
In addition to shareholder approvals, we must obtain court and regulatory
approvals. The parties have agreed that the arrangement will be completed
following the later of July 1, 1999 and the satisfaction of all conditions
to closing.
Q: What should I do now?
A: You should mail your completed and signed proxy card in the enclosed
postage paid envelope as soon as possible so that your shares will be
represented at the extraordinary general meeting.
Q: Can I change my vote after I have mailed in a signed proxy card?
A: Yes. You can change your vote in one of the following ways at any time
before your proxy is voted at the extraordinary general meeting. You can
revoke your proxy by submitting a later dated signed proxy with respect to
the same shares or by delivering a written revocation to Oshap's Chief
Financial Officer. Alternatively, you can attend the extraordinary general
meeting in person, revoke your proxy and vote your shares at the meeting.
Attendance at the meeting will not in and of itself constitute a revocation
of a proxy.
Q: If my shares are held in "street name" by my broker, will my broker vote my
shares for me?
A: Your broker will vote your shares only if you provide instructions on how
to vote. You should follow the directions provided by your broker regarding
how to instruct your broker to vote your shares. If you do not return your
proxy, your shares will not be voted on the proposed arrangement.
Q: What other matters will be voted on at the extraordinary general meeting?
A: We do not expect to ask Oshap shareholders to vote on any matter other than
approval of the arrangement.
Q: Should I send in my share certificates now?
A: No. After the arrangement is completed, you will be sent written
instructions for sending in your share certificates and receiving the
SunGard common stock and cash, if any, to which you are entitled.
Q: When will I receive shares of SunGard common stock in the arrangement?
A: If the arrangement is completed, SunGard will issue common stock to Oshap
shareholders who have returned their Oshap share certificates together with
a completed letter of transmittal supplied by SunGard's exchange agent,
Norwest Bank N.A.
Q: Whom should I call with questions and to obtain additional copies of this
document?
A: You should call Innisfree M & A Incorporated at 1-888-750-5834 (toll free
in the United States) or 1-212-750-5833 (call collect).
<PAGE>
Summary
This summary highlights selected information from this document and does not
contain all of the information that may be important to you. To understand the
arrangement fully and for a more complete description of the legal terms of the
arrangement, you should read carefully this entire document and the documents
to which we have referred you. See "Where To Find More Information" on page 67.
We have included page references parenthetically to direct you to a more
complete discussion of the topics presented in this summary. All references to
"$" are to United States dollars. Unless the context otherwise requires, all
references to SunGard mean SunGard and its subsidiaries and all references to
Oshap mean Oshap and its subsidiaries and affiliated companies.
The Companies
SunGard Data Systems Inc.
1285 Drummers Lane
Wayne, Pennsylvania 19807
610-341-8700
SunGard provides computer services, principally proprietary processing
services and software to the financial services industry, and computer disaster
recovery services.
Oshap Technologies Ltd.
Delta House
16 Hagalim Avenue
Herzliya 46733, Israel
011-972-9-959-4894
Oshap is a growth oriented software group with independent operating
subsidiaries and affiliates. Oshap's principal holdings are a 98% interest in
MINT Software Technologies Ltd., a leading provider to the financial services
industry of software solutions that enable the integration of disparate
applications and networks, and a 77% interest in Decalog N.V., a provider of
comprehensive software solutions that enable global asset management
organizations to automate critical steps in the investment management process.
Oshap is also the owner of 18% of the shares of Tecnomatix Technologies Ltd.
Tecnomatix is a leader in the market for computer-aided production engineering,
referred to as CAPE, software products.
The Oshap Extraordinary General Meeting (page 18)
An extraordinary general meeting of Oshap shareholders will be held at Delta
House, 16 Hagalim Avenue, Herzliya 46733, Israel on June 16, 1999 at 4:00 p.m.,
local time. In addition, shareholders of Oshap that are entitled to vote at the
meeting may participate in the meeting through video conferencing that will be
facilitated at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, 919
Third Avenue, New York, New York, 10022, at 9:00 a.m., local time. Those
shareholders planning to participate by videoconference, should present
themselves to the receptionist on the 33rd floor. The purpose of the Oshap
extraordinary general meeting is to vote upon the proposal to approve the
arrangement.
Who is Entitled to Vote; What Vote is Required (page 18)
You are entitled to vote any Oshap ordinary shares held by you at the close
of business on May 3, 1999, the record date, at the Oshap extraordinary general
meeting. On the record date, there were 12,836,110 outstanding Oshap ordinary
shares, each of which will be entitled to one vote.
The presence of at least two shareholders holding at least 67% of the
outstanding Oshap ordinary shares entitled to vote in person or by proxy, at
the meeting will constitute a quorum. Approval of the arrangement will require
the affirmative vote of shareholders constituting a majority of the
shareholders present at the meeting and voting in person or by proxy and
holding at least 75% of the shares voting at the meeting.
Exchange of Oshap Ordinary Shares (page 46)
If the shareholders of Oshap approve the arrangement and SunGard and Oshap
complete the arrangement, you will receive SunGard common stock in exchange for
your Oshap ordinary shares. The exact number of shares of SunGard common stock
you receive will be based upon an exchange ratio that will not be fixed until
two days prior to the effective date of the arrangement. The exchange
2
<PAGE>
ratio represents the fraction of a share of SunGard common stock that Oshap
shareholders will receive for each Oshap ordinary share. The exchange ratio
will be based on the average of the closing sale prices of SunGard common
stock over a 10 trading day period ending two days prior to the effective date
of the arrangement as follows:
. If the average closing price of SunGard common stock is equal to or greater
than $34.1063 but less than or equal to $46.1438, the exchange ratio will
be 0.386293;
. If the average closing price of SunGard common stock is greater than
$46.1438 but less than or equal to $50.7074, the exchange ratio will be
equal to $17.8250 divided by the average closing price of SunGard common
stock;
. If the average closing price of SunGard common stock is greater than
$50.7074, the exchange ratio will be 0.351526;
. If the average closing price of SunGard common stock is less than $34.1063,
but greater than or equal to $30.5429, the exchange ratio will be equal to
$13.1750 divided by the average closing price of SunGard common stock; and
. If the average closing price of SunGard common stock is less than $30.5429,
the exchange ratio will be 0.431360.
Please note that because the exchange ratio will be based upon the average
closing price of SunGard's common stock and because the market price of the
shares of SunGard common stock may fluctuate, Oshap shareholders cannot be
sure as of the date of the extraordinary general meeting of the market value
of the shares of SunGard common stock they will receive.
Assuming that the average closing price of SunGard common stock for
determining the exchange ratio was $29.5625 (the closing price per share of
SunGard common stock on May 11, 1999), Oshap shareholders would receive
0.431360 of a share of SunGard common stock for each Oshap ordinary share.
No fractional shares of SunGard common stock will be issued. Each Oshap
shareholder who otherwise would be entitled to a fraction of a share of
SunGard common stock will instead receive cash for the fraction of a share
based upon the average closing price of SunGard common stock during the 10 day
measurement period.
Treatment of Oshap Stock Options (page 47)
Each option to purchase Oshap ordinary shares under Oshap's stock option
plans outstanding on the effective date of the arrangement will be canceled in
exchange for shares of SunGard common stock. The number of SunGard shares to
be issued in the exchange will have a market value, based upon the average
closing price of SunGard common stock during the 10 day measurement period,
equal to the value of the options determined using the Black-Scholes pricing
formula as described in the agreement, including a discount based upon the
vesting schedule for unvested options.
Tax Consequences (page 39)
United States Federal Income Tax Consequences
SunGard and Oshap each received from its outside counsel an opinion that
the arrangement will constitute a "reorganization" within the meaning of the
Internal Revenue Code of 1986. This means that, as a general matter, Oshap
shareholders will not be subject to tax as a result of the exchange of Oshap
ordinary shares solely for SunGard common stock in the arrangement. Oshap
shareholders also will not be able to take into account any losses on their
Oshap ordinary shares. Oshap's shareholders may be taxed to the extent they
receive cash for fractional shares at a gain.
Israeli Tax Consequences
Israeli law generally imposes a capital gains tax on the sale of capital
assets by both residents and non-residents of Israel. Nevertheless, holders of
Oshap's ordinary shares who have acquired their shares at the time of the
initial public offering of Oshap, or any time thereafter, will not be subject
to Israel capital gains tax in connection with the exchange of Oshap's
ordinary shares for SunGard's common stock pursuant to the arrangement, unless
trading in securities is their business, as defined under Israeli law.
3
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No Appraisal Rights (page 19)
Under Israeli law, holders of Oshap's ordinary shares are not entitled to
formal appraisal rights. Objections to the arrangement may be filed with the
Tel Aviv-Jaffa District Court. The court, at its discretion, may provide a
remedy to any person who so objects.
Recommendation of the Oshap Board of Directors
The board of directors of Oshap determined that the arrangement is fair to
and in the best interests of Oshap and its shareholders. Therefore, the board
of directors of Oshap recommends that Oshap shareholders vote to approve the
arrangement.
Opinions of Oshap's Financial Advisors (page 27)
In connection with the arrangement, the Oshap board received separate
written opinions from Oshap's financial advisors, Salomon Smith Barney Inc. and
BancBoston Robertson Stephens Inc., as to the fairness, from a financial point
of view, of the exchange ratio to the holders of Oshap ordinary shares. The
full text of the written opinions of Salomon Smith Barney Inc. and BancBoston
Robertson Stephens Inc. dated March 9, 1999 are attached to the back of this
document as Appendices B and C, and should be read carefully in their entirety
for a description of the assumptions made, matters considered and limitations
on the review undertaken. The opinions of Salomon Smith Barney Inc. and
BancBoston Robertson Stephens Inc. are directed to the Oshap board and do not
constitute a recommendation to any shareholder with respect to any matter
relating to the proposed arrangement.
The Arrangement
The agreement providing for the arrangement is attached as Appendix A to
this document. The terms of the plan of arrangement are set forth as Exhibit A
to the agreement. We encourage you to read the agreement and the plan of
arrangement because they are the legal documents that govern the arrangement.
Conditions to the Arrangement (page 52)
SunGard and Oshap will complete the arrangement only if the conditions to
the arrangement that SunGard and Oshap have agreed to are either satisfied or
waived. These conditions include, among other things, that:
. the arrangement has been approved by the Oshap shareholders;
. the independent auditors for Oshap have delivered to SunGard a letter to the
effect that to the best of their knowledge after due inquiry, no condition
exists that would preclude Oshap's ability to be a party in a business
combination to be accounted for as a pooling of interests and the
independent accountants for SunGard have delivered a letter to SunGard to
the effect that SunGard may account for the arrangement as a pooling of
interests;
. all necessary governmental consents will have been obtained and no
governmental agency or court has prohibited or challenged the consummation
of the arrangement.
Termination of the Arrangement; Termination Fees (page 53)
SunGard and Oshap can jointly agree to terminate the arrangement at any
time. In addition, either company can terminate the arrangement if:
. the arrangement is not completed by December 31, 1999;
. Oshap shareholder approval is not obtained;
. the other company breaches the agreement or if the other company's
representations or warranties become inaccurate, and that breach is not
cured within 15 business days and that breach would cause the conditions to
closing not to be satisfied; or
. a judgment, order, law or other legal restraint or prohibition is in effect
preventing the consummation of the arrangement and is final and
nonappealable.
In addition, either company may terminate the arrangement prior to the date
Oshap shareholder approval is obtained if:
. there is a change in the business, operations or financial condition of the
other company between the date of the agreement and the date Oshap
shareholder approval is obtained which would have a material adverse effect
on that
4
<PAGE>
other company. A decline in SunGard's common stock price will not, in and of
itself, trigger Oshap's right to terminate the agreement.
In addition, SunGard may terminate the arrangement if:
. Oshap's board of directors withdraws its recommendation of the arrangement
to its shareholders or modifies its recommendation in a manner adverse to
SunGard;
. Oshap enters into any letter of intent or agreement relating to an
alternative acquisition proposal; or
. Oshap fails to, within 10 business days of the commencement of a tender or
exchange offer for Oshap securities, recommend to its shareholders rejection
of the tender or exchange offer.
If the agreement is terminated by SunGard for any of the reasons listed
immediately above, Oshap is required to pay SunGard within two business days of
termination, a non-refundable termination fee of $6 million.
If SunGard or Oshap terminates the agreement as a result of Oshap
shareholders not approving the arrangement and Oshap consummates an alternative
acquisition transaction at any time prior to March 9, 2000, then Oshap is
required to pay to SunGard a non-refundable fee of $8 million upon closing of
the alternative acquisition transaction.
Regulatory Matters (page 44)
United States
The United States Hart-Scott-Rodino Antitrust Improvements Act of 1976 does
not require that a filing be made with respect to the arrangement. The
Antitrust Division of the Department of Justice and the Federal Trade
Commission, however, have the authority to challenge the arrangement on
antitrust grounds before or after the arrangement is completed.
Israel
The arrangement will be effected pursuant to Section 233 of the Israeli
Companies Ordinance and will be subject to the approval by the court in Israel.
Israeli law required that Oshap apply to an Israeli court for approval to hold
its extraordinary general meeting of shareholders relating to the arrangement.
Oshap applied to the Israeli court and on April 11, 1999 received approval to
hold its shareholder meeting. After the shareholders of Oshap approve the
arrangement by the requisite majority, Oshap will be required to apply to the
court to obtain a final court order approving the arrangement. In order to
effect the arrangement, Oshap will file the final court order approving the
arrangement with the Registrar of Companies in Israel. The court has broad
discretion in considering the approval of the arrangement. The date of filing
with the Registrar of Companies is sometimes referred to in this document as
the effective date of the arrangement.
Israeli law further requires approvals in connection with the arrangement by
the Israel Investment Center and the Office of Chief Scientist of the Ministry
of Industry and Trade of Israel. The Investment Center has issued its approval
in connection with the arrangement, and Oshap has requested the approval of the
Office of Chief Scientist. In addition, in connection with the arrangement
SunGard is exempt from the prospectus delivery requirements under Israeli
securities law with respect to SunGard common stock issued to Oshap
shareholders and optionholders who are residents of Israel.
Germany
German law requires that the parties file a notification with the German
Federal Cartel Office, which the parties expect to make promptly. The initial
review period is one month from notification. If the Federal Cartel Office has
concerns regarding the consequences of the transaction on competition in
Germany, it can extend the review period up to an additional period of four
months. Until clearance is received or the review period expires without
extension, the parties are barred from completing the arrangement, unless the
Federal Cartel Office grants a derogation.
Accounting Treatment (page 43)
SunGard and Oshap expect that the arrangement will be accounted for as a
pooling of interests, meaning that the companies will be treated as if they had
always been combined for accounting and financial reporting purposes. It is a
condition to the arrangement that SunGard obtains from both
5
<PAGE>
Oshap's and SunGard's independent accountants letters addressing the
qualification of the arrangement for pooling-of-interests accounting treatment.
Voting Agreements (page 38)
Oshap shareholders who own approximately 32% of the Oshap ordinary shares
outstanding on the record date have entered into voting agreements with SunGard
in which these shareholders have agreed to vote their Oshap shares in favor of
the arrangement.
Security Ownership of Management (page 21)
On the record date, directors and executive officers of Oshap and their
affiliates had voting control over 4,216,579 Oshap ordinary shares or
approximately 33% of the Oshap ordinary shares outstanding on the record date.
This number includes the shares covered by the voting agreements described
above.
Interests of Oshap's Directors and Executive Officers in the Arrangement (page
37)
There are directors and executive officers of Oshap who may be deemed to
have interests in the arrangement that are in addition to the interests of
Oshap shareholders generally. In particular, directors and executive officers
of Oshap will receive shares of SunGard common stock in consideration for the
cancellation of their outstanding options to purchase Oshap ordinary shares,
based on the value of such options at the effective time of the arrangement. In
addition, there are directors and executive officers of Oshap and affiliates of
directors of Oshap who will receive shares of SunGard common stock in
consideration for the cancellation of then outstanding options to purchase
shares of MINT and Decalog owned by them and also in exchange for shares of
MINT and Decalog owned by them. You should also be aware that affiliates of a
director and of an executive officer of Oshap will receive termination payments
in connection with the termination of consulting agreements and all directors
and executive officers of Oshap will receive insurance and indemnification
benefits. The Oshap board of directors was aware of these interests at the time
the arrangement was approved.
Effects of the Arrangement on the Rights of Oshap's Shareholders (page 60)
When the arrangement is completed, Oshap's shareholders will become
stockholders of SunGard. SunGard is a company governed by Delaware law and
SunGard's existing charter and bylaws. As a result, the rights of Oshap's
shareholders will change.
Offer to Purchase Stock and Options of MINT and Decalog (page 44)
The agreement requires SunGard to offer to purchase outstanding shares of
MINT and Decalog which are owned by minority shareholders of those companies at
a price per share of $13.15 for MINT shares and $9.26 for Decalog shares. The
agreement also requires SunGard to offer to purchase outstanding stock options
of MINT and Decalog which are exercisable as of the effective date at the same
respective price, less, in each case, the exercise price of the option. The
purchase price will be paid in cash on the effective date of the arrangement;
however, with respect to any MINT or Decalog shareholder or optionholder who is
an affiliate of Oshap within the meaning of SEC Rule 145, the purchase price
will be paid in shares of SunGard common stock valued at the average closing
price of SunGard common stock during the 10 day measurement period.
SunGard also will offer to cancel each option to purchase MINT or Decalog
shares outstanding on the effective date of the arrangement, which is not then
exercisable and which is held by an affiliate of Oshap, in exchange for shares
of SunGard common stock. The number of SunGard shares to be issued in the
exchange will have a market value, based upon the average closing price of
SunGard common stock during the 10 day measurement period, equal to the value
of the MINT or Decalog options determined using a Black-Scholes pricing
formula, including a discount based upon the vesting schedule for unvested
options.
The agreement also requires SunGard to offer to assume outstanding stock
options of MINT and Decalog which are not exercisable as of the effective date
and which are not held by affiliates of Oshap. If agreed to by an optionholder,
on the effective date of the arrangement, non-exercisable options of MINT and
Decalog will become options to purchase a number of shares of SunGard common
stock,
6
<PAGE>
rounded to the nearest share, equal to the number of MINT or Decalog shares
subject to the option multiplied by the option exchange ratio. The option
exchange ratio will be determined by dividing (a) $13.15 per share in the case
of MINT options or $9.26 per share in the case of Decalog options by (b) the
average closing price of SunGard common stock during the 10 day measurement
period, with the result rounded to the nearest millionth. The exercise price
for each SunGard option will equal the current exercise price under the MINT or
Decalog options divided by the option exchange ratio, rounded to the nearest
cent.
7
<PAGE>
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 document.
<TABLE>
<CAPTION>
As of or for the Year Ended December 31,
----------------------------------------------
1998 1997 1996 1995 1994
---------- -------- -------- -------- --------
(In thousands, except per share amounts)
<S> <C> <C> <C> <C> <C>
Historical Income Statement Data:
Revenues............................ $1,159,748 $925,030 $711,857 $557,366 $449,785
Income from operations............ 202,846 142,644 68,284 85,753 72,450
Net income........................ 118,933 83,975 40,306 50,845 44,728
Net income per share:
Basic........................... 1.14 0.84 0.43 0.59 0.54
Diluted......................... 1.10 0.81 0.41 0.55 0.50
Historical Balance Sheet Data:
Total assets........................ $1,075,321 $856,948 $739,622 $592,582 $494,625
Total short-term and long-term
debt............................... 12,046 20,076 40,267 10,518 10,783
Stockholders' equity................ 760,891 610,221 505,063 428,058 362,406
</TABLE>
8
<PAGE>
Selected Historical Financial Information of Oshap
The following table sets forth selected historical financial data of Oshap,
which have been derived from Oshap's audited consolidated financial statements.
The Selected Consolidated Financial Information should be read in conjunction
with "Management's Discussion and Analysis of Financial Condition and Results
of Operations" and the consolidated financial statements and related notes
thereto of Oshap, incorporated by reference in this document. As described in
the "Management's Discussion and Analysis of Financial Condition and Results of
Operations," during the three-year period ended December 31, 1997, there were
significant changes in the percentage owned by Oshap in certain of its
subsidiaries and affiliates, which affected the manner in which Oshap
consolidated the results of these subsidiaries and affiliates. These changes
primarily reflect a decrease in Oshap's interest in Tecnomatix during the
second quarter of 1996 from approximately 51% to approximately 28%.
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------------------
1998 1997 1996 1995 1994
---------- ---------- ---------- --------- ---------
US dollars in thousands (except share data)
<S> <C> <C> <C> <C> <C>
Statement of operations data:
Revenues..................... $ 32,319 $ 19,403 $ 20,834 $ 38,233 $ 27,620
Operating income (loss)...... (1,667) (996) (1,045) 1,604 (2,558)
Income (loss) after taxes on
income...................... (1,026) (316) 20,732 1,648 697
Share in results of
affiliates and joint venture
company, net................ (636) 883 1,670 (1,064) (237)
Income (loss) before
extraordinary item.......... (1,902) 402 21,915 (1,656) 1,026
Net income (loss)............ $ 1,172 $ 402 $ 21,915 $ (1,656) $ (528)
Earnings (loss) per share:
Basic:
Income (loss) before
extraordinary item.......... $ (0.15) $ 0.03 $ 1.76 $ (0.18) $ 0.15
Extraordinary income (loss).. 0.24 -- -- -- (0.23)
---------- ---------- ---------- --------- ---------
Net income (loss)............ $ 0.09 $ 0.03 $ 1.76 $ (0.18) $ (0.08)
========== ========== ========== ========= =========
Diluted:
Income (loss) before
extraordinary item.......... $ (0.15) $ 0.03 $ 1.75 $ (0.18) $ 0.15
Extraordinary income (loss).. 0.24 -- -- -- (0.23)
---------- ---------- ---------- --------- ---------
Net income (loss)............ $ 0.09 $ 0.03 $ 1.75 $ (0.18) $ (0.08)
========== ========== ========== ========= =========
Shares used in computing
earnings (loss) per ordinary
share:
Basic........................ 12,648,575 12,548,298 12,436,960 9,225,000 6,854,136
Diluted...................... 12,648,575 12,895,766 12,502,140 9,225,000 6,854,136
<CAPTION>
December 31,
--------------------------------------------------------
1998 1997 1996 1995 1994
---------- ---------- ---------- --------- ---------
US dollars in thousands (except share data)
<S> <C> <C> <C> <C> <C>
Balance sheet data:
Working capital.............. $ 1,009 $ 12,278 $ 14,702 $ 24,852 $ 19,350
Total assets................. 46,043 51,805 49,413 54,209 48,116
Long-term debt............... 3,500 4,606 5,608 6,748 7,640
Shareholders' equity......... 25,868 35,942 35,796 14,207 9,705
</TABLE>
9
<PAGE>
Market Price Information
Since June 4, 1997, SunGard common stock has been listed and traded on the
New York Stock Exchange under the symbol "SDS." Previously, SunGard common
stock was listed on the Nasdaq Stock Market and the London Stock Exchange under
the symbol "SNDT." Oshap ordinary shares are listed on the Nasdaq Stock Market
under the symbol "OSHSF."
The following tables set forth, for the periods indicated, the reported high
and low sale prices of SunGard common stock as reported on the New York Stock
Exchange since June 4, 1997 and on the Nasdaq Stock Market prior to June 4,
1997 and the high and low sale prices of Oshap ordinary shares as reported on
the Nasdaq Stock Market. Neither SunGard nor Oshap has paid any regular
quarterly dividends. Oshap paid a one-time dividend in October 1998.
<TABLE>
<CAPTION>
High Low
--------- ---------
<S> <C> <C>
SunGard
Fiscal Year Ended December 31, 1997:
First Quarter.......................................... $25 3/8 $18 1/2
Second Quarter......................................... 24 3/4 20 3/4
Third Quarter.......................................... 27 1/8 23
Fourth Quarter......................................... 31 7/16 22 1/2
Fiscal Year Ended December 31, 1998:
First Quarter.......................................... 37 3/8 28 1/16
Second Quarter......................................... 40 31 7/16
Third Quarter.......................................... 40 31 1/4
Fourth Quarter......................................... 39 11/16 21 11/16
Fiscal Year Ending December 31, 1999:
First Quarter.......................................... 41 15/16 32 7/8
Second Quarter (through May 11, 1999).................. 39 15/16 27 9/16
Oshap
Fiscal Year Ended December 31, 1997:
First Quarter.......................................... 6 7/16 4 3/4
Second Quarter......................................... 7 1/2 4 7/8
Third Quarter.......................................... 10 5/8 7 3/16
Fourth Quarter......................................... 11 3/4 7 3/8
Fiscal Year Ended December 31, 1998:
First Quarter.......................................... 10 7/8 7 3/4
Second Quarter......................................... 10 1/18 6 7/16
Third Quarter.......................................... 9 7/16 4 1/8
Fourth Quarter......................................... 7 1/2 3
Fiscal Year Ending December 31, 1999:
First Quarter.......................................... 14 6 1/2
Second Quarter (through May 11, 1999).................. 13 1/8 9 3/4
</TABLE>
On March 8, 1999, the last full trading day prior to the execution of the
agreement, the reported high sale prices on the New York Stock Exchange of
SunGard common stock was $41.6875 and the reported low sale prices on the New
York Stock Exchange of SunGard common stock was $39.9375. Also, on that date,
the high sales price of the Oshap ordinary shares on the Nasdaq Stock Market
was $9.625 and the low sales price of the ordinary shares on the Nasdaq Stock
Market was $9.00. Also, on that date, the last reported sale price on the New
York Stock Exchange of SunGard common stock was $40.25 per share and of the
Oshap ordinary shares on the Nasdaq Stock Market was $9.50.
10
<PAGE>
The following table sets forth the closing sale price per share of SunGard
common stock as reported on the New York Stock Exchange and the equivalent per
share price of one Oshap ordinary share on March 8, 1999, the last trading day
preceding the execution of the agreement, and on May 11, 1999, the most recent
date for which prices were available prior to printing this document:
<TABLE>
<CAPTION>
SunGard Equivalent
Common Oshap Per
Stock Share Price
-------- -----------
<S> <C> <C>
March 8, 1999........................................... $ 40.25 $15.55
May 11, 1999............................................ 29.5625 12.75
</TABLE>
The equivalent per share price of each Oshap ordinary share, which is the
value of the SunGard common stock which Oshap shareholders would receive for
each Oshap ordinary share exchanged in the arrangement, was calculated by
multiplying the closing sale price per share of SunGard common stock reflected
in the table by the exchange ratio that would be used in the arrangement if the
average stock price on which the exchange ratio is based equaled the closing
sale prices reflected in the table. The equivalent Oshap per share prices
reflect the value in SunGard common stock that Oshap shareholders would receive
if the average stock price of SunGard common stock on which the exchange ratio
is based equals the closing sale prices of SunGard common stock reflected in
the table.
Because the market price of SunGard common stock may fluctuate, the market
price per share of the shares of SunGard common stock that holders of Oshap
ordinary shares will receive in the arrangement may increase or decrease prior
to the arrangement. See "Risk Factors" on page 13.
11
<PAGE>
Comparative Per Share Data
The following table presents historical and pro forma per share data for
SunGard and historical and equivalent pro forma per share data for Oshap. This
information is provided for illustrative purposes only and assumes that the
arrangement had occurred as of the beginning of each of the periods presented.
Estimated costs of the arrangement of approximately $5 million are excluded
from the pro forma information. The pro forma information should not be relied
upon as necessarily indicative of the historical results that would have been
obtained if the companies had been combined during those periods or the results
that will be obtained in the future. The equivalent pro forma per share amounts
for Oshap are calculated by multiplying the SunGard combined pro forma per
share amounts by the maximum exchange ratio of 0.431360. The historical book
value per share is computed by dividing total stockholders' equity by the
number of shares outstanding at the end of the period. The pro forma book value
per share is computed by dividing pro forma stockholders' equity by the pro
forma number of shares outstanding as of the end of each of the periods
presented.
This information should be read in conjunction with the historical financial
statements and the related notes of SunGard and Oshap, all of which are
incorporated by reference in this document. See "Unaudited Pro Forma Financial
Information" beginning on page 69.
<TABLE>
<CAPTION>
As of or for the Year
Ended December 31,
------------------------
1998 1997 1996
------- ------- -------
(In thousands, except
per share amounts)
<S> <C> <C> <C>
Historical -- SunGard:
Diluted net income per common share............. $ 1.10 $ 0.81 $ 0.41
Book value per common share..................... 7.20 5.98 5.21
Historical -- Oshap:
Diluted net income per ordinary share before ex-
traordinary item............................... (0.15) 0.03 1.75
Diluted net income per ordinary share after ex-
traordinary item............................... 0.09 0.03 1.75
Book value per ordinary share................... 2.02 2.86 2.85
Pro Forma Combined Per SunGard Share:
Diluted net income per common share before ex-
traordinary item............................... 0.99 0.73 0.55
Diluted net income per common share after ex-
traordinary item............................... 1.01 0.73 0.55
Book value per common share..................... 7.26 6.20 5.49
Oshap Per Share Equivalents:
Diluted net income per ordinary share before ex-
traordinary item............................... 0.43 0.31 0.24
Diluted net income per ordinary share after ex-
traordinary item............................... 0.44 0.31 0.24
Book value per ordinary share................... 3.13 2.67 2.37
</TABLE>
12
<PAGE>
Risk Factors
In determining whether you should vote in favor of the arrangement you
should consider carefully the risks associated with the arrangement and with
ownership of SunGard common stock following the arrangement. These risks are
described below.
Risks Relating to the Arrangement
The exchange ratio in the arrangement is based on the market prices of
SunGard common stock over a period of time prior to the effective date of the
arrangement and will fluctuate within a specified range. Oshap shareholders
will not know the final value of the SunGard common stock they will receive
until the effective date of the arrangement.
The exchange ratio, which is the fraction of a share of SunGard common stock
that Oshap shareholders will receive for each Oshap ordinary share, is based on
the average of the closing prices of SunGard common stock over a period of time
prior to the effective date of the arrangement, subject to a maximum of
0.431360 and a minimum of 0.351526.
Oshap shareholders will not know the final exchange ratio and the final
value of the SunGard common stock they will receive until the effective date of
the arrangement. The market prices of SunGard common stock and Oshap ordinary
shares as of various recent dates are set forth in the Summary under "Market
Price Information." Oshap shareholders should obtain recent market quotations
for SunGard common stock and Oshap ordinary shares. SunGard common stock
historically has been subject to price volatility. No assurance can be given as
to the market price of SunGard common stock at any time.
The consummation of the arrangement is subject to the approval of an Israeli
court. The Israeli court has broad discretion in considering the arrangement.
The consummation of the arrangement is subject to the approval by the court
in Israel. There can be no assurance that the court will approve the
arrangement even if the arrangement is approved at the extraordinary general
shareholder meeting by the requisite majority. Under Section 233 of the Israeli
Companies Ordinance, the court has broad discretion in considering and
approving the arrangement. The court may, in its discretion, either approve or
reject the arrangement or approve it with conditions. Persons objecting to the
arrangement may submit their objections to the court. Among other factors, the
court considers the fairness of the arrangement to the shareholders of Oshap
and any objections filed by objecting parties.
Oshap could lose customers due to the arrangement.
Some of Oshap's existing customers, particularly customers that are in the
same business as SunGard, may take the opportunity following a change of
control of Oshap to review their contractual relationships. These reviews could
result in delayed or lost sales to either SunGard or Oshap.
The arrangement is intended to qualify for pooling-of-interests accounting
treatment. If the arrangement fails to qualify for pooling-of-interests
accounting treatment, the combined financial results of SunGard and Oshap could
be adversely affected.
The arrangement is intended to qualify for pooling-of-interests treatment
under generally accepted accounting principles. It is a condition to closing
that SunGard receive the opinion of PricewaterhouseCoopers LLP to this effect.
However, if the arrangement at any time is determined to not qualify for
pooling-of-interests treatment, the combined financial results of SunGard and
Oshap could be adversely affected.
Under pooling-of-interests treatment, the accounts of SunGard will be
combined with those of Oshap at their historical carrying amounts and SunGard's
financial statements for all prior periods will be restated, if material, to
reflect the accounts of SunGard as if the two companies had been combined for
all periods. If the
13
<PAGE>
arrangement does not qualify for pooling-of-interests treatment, the purchase
method of accounting may be applied. Under the purchase method, the fair market
value of the SunGard common stock issued in the arrangement would be recorded
as the cost of acquiring Oshap's business. That cost would be allocated to the
individual assets of Oshap that were acquired and liabilities of Oshap's that
were assumed according to their respective fair values. The fair market value
of the SunGard common stock to be issued in the transaction is in excess of the
amounts at which the net assets are carried in Oshap's accounts. A portion of
the excess could be charged to expense immediately and the remainder would be
amortized.
Future sales of shares issued in the arrangement could adversely affect
SunGard's stock price.
Depending upon the exchange ratio, an aggregate of approximately 4.9 million
shares (assuming an average price per share of SunGard common stock of
$50.7074) to 6.2 million shares (assuming an average price per share of SunGard
common stock of $30.5429) of SunGard common stock will be issued in the
arrangement and related transactions. These shares will be immediately freely
tradeable in the market except for shares issued to affiliates of Oshap which
will become freely tradeable after SunGard has published financial results
covering at least 30 days of combined operations. In addition, SunGard will
issue approximately 500,000 options to purchase SunGard common stock in
exchange for options to purchase ordinary shares of MINT and Decalog. Sales of
a substantial number of shares of SunGard common stock could adversely affect
the market price of SunGard common stock.
Risks Relating to SunGard
SunGard's growth strategy depends in part on acquisitions. If SunGard is
unable to acquire businesses on favorable terms or successfully integrate and
manage the businesses acquired, SunGard's business and financial results may
suffer.
SunGard intends to grow by expanding its existing businesses and by
acquiring similar or complementary businesses, including acquisitions that are
intended to qualify for pooling-of-interests accounting treatment. This growth
strategy is subject to a number of risks which could adversely affect SunGard's
business and financial results, including:
. SunGard may not be able to find suitable businesses to acquire on
affordable terms;
. competition from other acquirors and stock market fluctuations may make
it more difficult for SunGard to find and complete acquisitions;
. SunGard may have to raise money in the debt or equity markets to finance
future acquisitions;
. one or more acquisitions may not qualify for pooling-of-interests
accounting treatment; and
. at any given time, a large number of shares of SunGard common stock
issued to acquire businesses may become freely tradeable in the market.
The businesses acquired by SunGard may perform worse than expected or may be
more difficult to integrate and manage than expected. If that happens, SunGard
may suffer a number of adverse consequences, including:
. SunGard may have to devote unanticipated financial and management
resources to the acquired businesses;
. SunGard may not be able to realize expected operating efficiencies; and
. SunGard may have to write off goodwill or other intangible assets if the
acquisition was accounted for as a purchase.
SunGard's success depends in part on adapting its computer services and
software to changes in technology and changes in its customers' businesses. If
SunGard does not successfully update its services and software, or if its new
products or services are not timely delivered or well received by customers,
SunGard's business and financial results may suffer.
14
<PAGE>
SunGard's ability to successfully update its services and software and
timely develop and deliver new products and services required by its customers
is subject to a number of risks which could adversely affect SunGard's business
and financial results, including:
. SunGard may find it difficult to update its services and software and
timely develop and deliver its new products and services in a cost-
effective manner, especially when faced with rapid technological changes
that are hard to predict; and
. SunGard may find it difficult to update its services and software to
keep pace with business, regulatory and other developments in the
financial services industry in which most of SunGard's customers
operate.
SunGard's business is dependent largely on the financial services industry.
If that industry does poorly, SunGard's business and financial results may
suffer.
SunGard sells most of its computer services and software to banks, mutual
funds, brokers, insurance companies and other financial services firms. If the
financial services industry or SunGard's customers in the financial services
industry experience problems, SunGard's business and financial results could be
adversely affected. For example, SunGard may suffer if securities trading
activity declines, the number or value of managed portfolios decreases, or
there is continued consolidation among firms in the financial services
industry.
The advent of year 2000, including any failure by SunGard to make its
products year 2000 compliant or to fulfill year 2000 commitments to customers,
may adversely affect SunGard's business and financial results.
SunGard has made many of its products year 2000 compliant so that they can
handle dates in the year 2000 and beyond. However, SunGard is still working on
making some of its most important products year 2000 compliant. In addition,
SunGard has made commitments to some customers that need to convert off non-
year 2000 compliant systems, and as a result, SunGard must meet significant
development obligations and complete conversions prior to the end of 1999.
SunGard's year 2000 compliance efforts are subject to a number of risks which
could adversely affect SunGard's business and financial results, including:
. SunGard may not be able to make all of its important products year 2000
compliant;
. SunGard may not be able to timely meet its year 2000 commitments to
customers;
. SunGard may have to add personnel and buy new software and hardware
earlier than planned to complete its year 2000 compliance efforts, which
could cause an unexpected increase in expenses;
. SunGard's expenses may increase faster than expected because year 2000
issues are causing a shortage in the availability of experienced
programmers; and
. SunGard may encounter unanticipated year 2000 problems, like a problem
with another company's software or hardware that interacts with
SunGard's products or that is used by SunGard.
SunGard believes that year 2000 compliance issues have caused some
acceleration of software buying and conversion activity. As a result, SunGard's
rate of internal growth may decline in the second half of 1999 or in the year
2000, which could adversely affect SunGard's business and financial results.
Forward-looking statements may prove inaccurate.
This document contains or incorporates by reference forward-looking
statements made by SunGard and Oshap that are subject to risks and
uncertainties and that may change at any time and differ from actual results.
Forward-looking statements include information about possible or assumed future
financial results of SunGard and Oshap and usually contain words such as
"believes," "expects," "anticipates," or similar expressions. SunGard and Oshap
derive most of their forward-looking statements from their operating budgets
and forecasts,
15
<PAGE>
which are based upon many detailed assumptions. While SunGard and Oshap believe
that their assumptions are reasonable, they caution that there are inherent
difficulties in predicting certain important factors such as:
. the timing and magnitude of software sales and services;
. the effect of year 2000 issues on software and services buying
decisions;
. the timing and scope of technological advances and year 2000 compliance;
. the integration and performance of acquired businesses;
. the effects of competitive pressures;
. the prospects for future acquisitions; and
. the overall condition of the financial services industry.
These and other factors, some of which are discussed in this section or
elsewhere in this document and some of which are discussed in the documents
incorporated by reference, could affect the future financial results of SunGard
and Oshap and could cause those results to differ materially from those
expressed in any forward-looking statements contained in or incorporated by
reference in this document.
Recent Developments
SunGard
First Quarter Results
On April 15, 1999, SunGard announced its results for the quarter ended March
31, 1999. SunGard reported that revenue for the first quarter of 1999 was
$319,581,000, an increase of 21% compared to originally reported first quarter
1998 revenue of $264,553,000. On a restated basis, first quarter 1999 revenue
increased 16%.
Net income and diluted net income per share for the first quarter of 1999,
before merger costs and an extraordinary gain, were $37,146,000 and $0.31,
respectively, increases of 38% and 24% over originally reported first quarter
1998 net income and diluted net income per share of $26,844,000 and $0.25
respectively.
The results for the first quarter of 1999 exclude the effect of $81,400,000
in merger charges related primarily to the acquisitions of Automated Securities
Clearance, Ltd. and Sterling Wentworth Corp. (including a one-time noncash
compensation charge of $71,459,000 associated with ASC), and a $10,371,000
after-tax gain from the sale of Med Data Systems Inc. and Intelus Corporation.
Pro forma net loss and pro forma diluted net loss per share for the first
quarter of 1999 including such items were $6,949,000 and $0.06, respectively.
On a pro forma combined basis with Oshap, assuming the arrangement had been
completed on January 1, 1999 using the maximum exchange ratio, pro forma net
loss and pro forma diluted net loss per share for the first quarter of 1999,
including such items and Oshap's one-time charge of $3.52 million, would have
been $11,349,000 and $0.09, respectively. Excluding all merger costs,
extraordinary items and other one-time charges, 1999 first quarter pro forma
diluted net income per share would have been $0.29.
Recent Acquisitions
On April 28, 1999, SunGard completed the acquisition of FDP Corp. in a
merger transaction. In this merger, SunGard issued approximately 2.84 million
shares of SunGard common stock for all of the common stock of FDP. FDP develops
and sells a variety of application software systems that facilitate the
marketing and administrative functions for the life insurance and employee
benefit industries.
On March 1, 1999, SunGard completed the acquisition of Automated Securities
Clearance, Ltd., referred to as ASC, by exchanging approximately 7.3 million
shares of SunGard common stock for all of the shares of common stock of ASC.
ASC is a provider of an automated order-routing and trade execution system used
by broker/dealers, an electronic communications network that provides direct
access to the NASDAQ marketplace, and a wireless technology for straight-
through processing of trades on the New York Stock Exchange. Under the terms of
a pre-existing employment agreement with ASC relating to a change in control, a
member of
16
<PAGE>
ASC's executive management team received approximately 25% of SunGard common
stock issued in the acquisition. The fair value of those shares on the date of
the acquisition, approximately $70.0 million, will be recorded as a one-time
noncash compensation expense during the first quarter of 1999. ASC was an "S"
corporation prior to acquisition; therefore, all income passed through directly
and all income taxes were paid directly by the previous shareholder of ASC.
On February 18, 1999, SunGard completed the acquisition of Sterling
Wentworth Corporation, referred to as SWC, by exchanging shares of SunGard
common stock for all of the common stock of SWC. SWC provides enterprise sales
productivity solutions for the financial services industry.
The acquisition of FDP, ASC and SWC will be each accounted for as a pooling
of interests, which requires all historical financial information to be
restated. Furthermore, because ASC had been an "S" corporation prior to its
acquisition, pro-forma federal income taxes will be computed on ASC's
historical earnings as if ASC had been a "C" corporation and will be reflected
in SunGard's restated income statement.
In connection with the FDP, ASC and SWC acquisitions, all outstanding stock
options of those companies have been converted into options to acquire
approximately 1.8 million shares of SunGard common stock. Estimated merger
costs in connection with the ASC, SWC and FDP acquisitions, excluding the
compensation expense described above, are approximately $10.0 million.
The following estimated pro-forma combined results of operations (in
thousands, except for per-share amounts) is provided for illustrative purposes
only and assumes that the acquisitions described above had occurred as of the
beginning of each of the periods presented. All merger costs, including the
one-time non-cash compensation expense described above, are excluded from the
estimated pro-forma information. The estimated following pro-forma information
should not be relied upon as necessary being indicative of the historical
results that would have been obtained if the companies had actually been
combined during those periods or the results that may be obtained in the
future.
<TABLE>
<CAPTION>
1998 1997 1996
---------- -------- --------
<S> <C> <C> <C>
Revenues:
As reported.................................. $1,159,748 $925,030 $711,857
Combined (pro-forma)......................... 1,253,265 996,277 765,979
Net income:
As reported.................................. 118,933 83,975 40,306
Combined (pro-forma)......................... 128,337 91,651 47,803
Basic earnings per share:
As reported.................................. 1.14 0.84 0.43
Combined (pro-forma)......................... 1.12 0.84 0.46
Diluted earnings per share:
As reported.................................. 1.10 0.81 0.41
Combined (pro-forma)......................... 1.07 0.80 0.43
</TABLE>
Oshap
On May 6, 1999, Oshap announced its results for the quarter ended March 31,
1999. Oshap reported an increase in revenues to $10.6 million compared to $6.43
million for the first quarter in 1998 and net income, absent one-time charges,
of $221,000 or $.02 per diluted share, compared with $463,000 or $.04 per
diluted share for the first quarter of 1998. For comparison purposes, it should
be noted that, after the first quarter of 1998, Oshap reduced its holdings in
Tecnomatix from 31% to 18%, and acquired 41% of iKnowledge. Oshap incurred one-
time charges of $2.02 million as its share in the expenses incurred in
connection with its decision to discontinue efforts to pursue initial public
offerings of Decalog and MINT and $1.5 million as its proportional share of a
number of one-time charges recorded by Tecnomatix. Including the foregoing one-
time charges, Oshap's reported net loss for the first quarter of 1999 was
$3,303,000, or $0.26 per diluted share. A
17
<PAGE>
more detailed description of Oshap's first quarter results can be found in
Oshap's press release dated May 6, 1999 which was filed as part of Oshap's
Report of Foreign Issuer on Form 6-K dated May 7, 1999.
The Oshap Extraordinary General Meeting
Purpose of the Meeting
The purpose of the extraordinary general meeting of the shareholders of
Oshap is to approve the arrangement, pursuant to which, at the effective time
of the arrangement:
. each outstanding Oshap ordinary share will be exchanged for a fraction
of a share of SunGard common stock equal to the exchange ratio,
. each outstanding option to purchase Oshap ordinary shares will be
cancelled in consideration for an amount of SunGard common stock equal
to the value of the option as determined using the Black-Scholes pricing
formula as described in the agreement, including a discount based upon
the vesting schedule for unvested options,
. Oshap will become a wholly-owned subsidiary of SunGard and
. amendments to Oshap's articles of association will be adopted.
The obligations of Oshap and SunGard to consummate the arrangement are
subject to various conditions. One of these conditions is that the shareholders
of Oshap vote to approve the arrangement. The requirements of this vote are set
forth in Israeli law and in the articles of association of Oshap, as described
below.
As part of the arrangement, the amendments to Oshap's existing articles of
association, which are described elsewhere under the section entitled
"Amendments to Oshap Articles of Association," will change the status of Oshap
under Israeli law from a public company to a private company.
Date, Time and Place
The meeting will be held on June 16, 1999 at, Delta House, 16 Hagalim
Avenue, Herzliya 46733, Israel, commencing at 4:00 p.m., local time. In
addition, shareholders of Oshap that are entitled to vote at the meeting may
participate in the meeting through video conferencing that will be facilitated
at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, 919 Third Avenue,
New York, New York, 10022, at 9:00 a.m., local time. Those shareholders
planning to participate by videoconference, should present themselves to the
receptionist on the 33rd floor.
Record Date; Shares Entitled to Vote
Oshap's board has fixed the close of business on May 3, 1999 as the record
date for the determination of shareholders entitled to receive notice of and to
vote at the meeting and any postponement or adjournment of the meeting. On the
record date, there were 12,836,110 Oshap ordinary shares issued and outstanding
and entitled to vote.
Voting and Revocation of Proxies; Solicitation of Proxies
The proxy accompanying this document is solicited on behalf of Oshap's board
for use at the meeting. Oshap shareholders are requested to complete, date and
sign the accompanying proxy and return it promptly. All proxies that are
properly executed and returned will be voted at the meeting in accordance with
any directions noted thereon. If no direction is indicated, proxies will be
voted FOR approval and adoption of the arrangement. Proxies will be voted in
the discretion of the holders of the proxy with respect to any other business
that may properly come before the meeting and all matters incidental to the
conduct of the meeting. It is not expected that any other matter will be
brought before the meeting.
18
<PAGE>
Any Oshap shareholder signing and delivering a proxy may revoke it at any
time before it is voted by submitting a later dated proxy with respect to the
same shares or by delivering a written revocation to Oshap's Chief Financial
Officer. Any Oshap shareholder attending the meeting in person may also revoke
his or her proxy and vote his or her shares at the meeting. Attendance at the
meeting will not in and of itself constitute a revocation of a proxy.
The cost of soliciting proxies will be paid by Oshap. Proxies may be
solicited without extra compensation by certain directors, officers and regular
employees of Oshap by mail, telegram or personally. Brokers, nominees,
fiduciaries and other custodians will be requested to forward soliciting
materials to the beneficial owners of Oshap ordinary shares and will be
reimbursed by Oshap for their reasonable expenses in forwarding such materials.
Oshap may use the services of Innisfree M & A Incorporated and E. Shalev Ltd.
to solicit proxies pursuant to customary contractual terms, with total
estimated fees of approximately $7,000 and $8,000, respectively, plus
reimbursement of expenses.
Quorum; Vote Required
Oshap's shareholders are entitled to one vote per share on all matters to be
considered at the meeting. The presence of at least two shareholders holding at
least 67% of the outstanding Oshap ordinary shares entitled to vote in person
or by proxy, at the meeting will constitute a quorum. Approval of the
arrangement will require the affirmative vote of shareholders constituting a
majority of the shareholders present at the meeting and voting in person or by
proxy and holding at least 75% of the shares voting at the meeting.
Concurrently with the execution of the agreement, a number of Oshap's
directors, executive officers and their affiliates, including Shlomo Dovrat,
Aharon Dovrat, Societe Regionale d'Investissement de Wallonie S.A., certain
investment funds managed by SVM Star Ventures Management GmbH Nr. 3, Cramer,
Rosenthal & McGlynn and Avi Zeevi executed voting agreements with SunGard in
which they agreed to vote all Oshap ordinary shares "beneficially owned" by
them in favor of the arrangement and granted SunGard a proxy to vote these
shares at the meeting. As of the record date, these shareholders beneficially
owned and had the right to vote an aggregate of 4,150,782 Oshap ordinary
shares, constituting approximately 32% of the outstanding Oshap ordinary
shares.
Under Israeli law and the current articles of association of Oshap, any
amendment to Oshap's articles must be effected by a special resolution of the
shareholders of Oshap, as defined under Israeli law. This special resolution
must be adopted at a shareholders meeting by the holders of not less than 75%
of the voting power of Oshap's ordinary shares represented, in person or by
proxy, at the meeting. Thus, the vote required to approve the arrangement meets
the requirements for the adoption of the amendments to Oshap's articles.
No Appraisal Rights
Under Israeli law, holders of Oshap's ordinary shares are not entitled to
formal appraisal rights. Objections to the arrangement may be filed with the
Tel Aviv-Jaffa District Court. The Tel Aviv-Jaffa District Court, at its
discretion, may provide a remedy to any person who so objects.
Broker Non-Votes; Abstentions
Shares represented by "broker non-votes," if any, will be counted for
purposes of determining the presence of a quorum but will not be counted for
purposes of determining the number of votes present and voting. "Broker non-
votes" are shares held by brokers or nominees which are represented at a
meeting but with respect to which the broker or nominee has not received
instructions from the beneficial owners or persons entitled to vote and the
broker or nominee does not have the discretionary voting power on a particular
matter. For purposes of determining whether the arrangement has been approved,
broker non-votes will be excluded from the number of shares deemed to have
voted on such matter at the meeting. Accordingly, broker non-votes will not
affect the voting on the arrangement.
19
<PAGE>
Oshap ordinary shares that are represented in person or by proxy at the
meeting and that are voted "abstain" will be counted for purposes of
determining the presence of a quorum and will be included in the aggregate
number of shares voted at the meeting and will therefore affect the number of
shares required to be voted "for" the arrangement in order to approve the
arrangement in accordance with Israeli law. Accordingly, shares that are voted
"abstain" will have the effect of a vote "against" the arrangement.
Adjournment
If within thirty minutes of the time the meeting is called for, a quorum of
shareholders with the required voting power is not present, the meeting will be
adjourned either to the same day in the next week, at the same time and place,
or to a day, time and place determined by the Oshap board and notified to the
shareholders.
Amendments to Oshap Articles of Association
The amended articles of association of Oshap will be substantially identical
to the existing articles of association of Oshap with the following changes:
. upon consummation of the arrangement, Oshap will become a private
company;
. Oshap shares will only be transferable if the Oshap board approves the
transfer;
. written resolutions of the board must be unanimous in order to have
effect;
. the articles will no longer authorize any series of preferred shares and
Oshap's authorized share capital shall consist solely of ordinary
shares; and
. the maximum number of directors on the board of directors of Oshap will
be decreased from 10 to 7.
The proposed revisions to Oshap's articles are designed to reflect the
change in Oshap's status upon consummation of the arrangement. Israeli law
recognizes two types of companies, public and private. Following the
consummation of the arrangement, Oshap will become a private company. Since
Oshap will become a wholly-owned subsidiary of SunGard and a private company,
it was deemed appropriate that Oshap's shares only be transferable if its board
approves the transfer and that written resolutions of the board be unanimous.
Similarly, a reduction in the maximum number of directors on the Oshap board
was deemed appropriate. SunGard, as the sole shareholder of Oshap, will have
the power to nominate all of the directors of Oshap. The proposed elimination
of preferred shares also reflects the conversion of Oshap into a wholly-owned
subsidiary of SunGard.
A copy of the proposed amendments is attached as Annex I to the plan of
arrangement which is attached as Exhibit A to the agreement. The agreement is
attached as Appendix A to this document.
20
<PAGE>
Security Ownership of Oshap's Principal Shareholders and Directors and Officers
The following table sets forth certain information, as of the date of this
document, with respect to:
. each person or entity known by Oshap to be the beneficial owner of more
than 10% of the outstanding Oshap ordinary shares; and
. all directors and executive officers of Oshap as a group.
<TABLE>
<CAPTION>
Oshap Ordinary Shares
-------------------------
Identity of Person or Group Number Percent
--------------------------- ------------- -----------
<S> <C> <C>
Shlomo Dovrat(1)................................... 4,063,282 31.7%
Schaenen Fox Capital Management, LLC............... 1,449,635 11.5%
All executive officers and directors as a group (8
persons)(1)(2).................................... 4,340,579 33.5%
</TABLE>
- --------
(1) Includes 1,149,180 Oshap ordinary shares held by Societe Regionale d'
Investissement de Wallonie, S.A., Cramer, Rosenthal & McGlynn, and Mr.
Aharon Dovrat, the voting power of which is shared by Mr. Shlomo Dovrat,
pursuant to a shareholders agreement dated July 15, 1991 and which may be
deemed to be, by virtue of the 1991 shareholders agreement, beneficially
owned by Mr. Shlomo Dovrat. Also includes 583,075 Oshap ordinary shares
held by various SVM Star Ventures entities, the voting power of which is
shared by Shlomo Dovrat pursuant to a shareholders agreement, dated October
27, 1996 and which may be deemed to be, by virtue of the 1996 shareholders
agreement, beneficially owned by Mr. Shlomo Dovrat. Mr. Shlomo Dovrat
disclaims beneficial ownership of such shares.
(2) Includes options to purchase 124,000 Oshap ordinary shares which are
exercisable within sixty days and therefore are deemed to be beneficially
owned by the directors and officers to whom they were granted.
Oshap shareholders should not forward any certificates representing Oshap
ordinary shares with their proxy cards. In the event the arrangement is
completed, certificates should be delivered in accordance with instructions set
forth in a letter of transmittal which will be sent to the Oshap shareholders
promptly after the completion of the arrangement.
21
<PAGE>
The Arrangement and Related Transactions
Background of the Arrangement
In early 1998, Oshap's management determined that since Oshap's shares had
been, in management's opinion, continuously undervalued by the public markets,
Oshap should explore strategic alternatives to increase shareholder value. On
April 7, 1998, Oshap retained Salomon Smith Barney to assist Oshap in a
strategic review of its financial and business plans and strategic alternatives
available to Oshap, including the possible sale or public offering of shares of
Oshap's non-public subsidiaries.
In an attempt to increase shareholder value, Oshap decided in September 1998
to prepare MINT and Decalog for initial public offerings, while continuing to
evaluate possibilities for the sale of either MINT, Decalog or both. In October
1998, MINT retained BancBoston Robertson Stephens as a financial advisor in
order to identify potential strategic partners or acquirors. In November 1998,
with the authorization of Oshap, representatives of BancBoston Robertson
Stephens contacted Richard Tarbox, Vice-President -- Corporate Development of
SunGard and provided SunGard with background information on MINT. However, no
discussions were held between SunGard and MINT or Oshap.
Between November 1998 and February 1999, Oshap began preparations for
initial public offerings of the shares of MINT and Decalog, including the
selection of underwriters and preparation of registration statements for these
offerings. During this period, Oshap also evaluated interests expressed in an
acquisition of Decalog.
On November 4, 1998, Shlomo Dovrat, Chief Executive Officer, President and a
member of the Board of Directors of Oshap, and Brian Owen, Chief Executive
Officer and a member of the board of directors of Decalog, met with Richard
Tarbox to discuss SunGard's potential interest in Decalog. However, this
meeting did not lead to further discussions with respect to the acquisition of
Decalog.
In late January 1999, Cristobal Conde, Executive Vice President of SunGard,
contacted Hagay Shefi, President of MINT's U.S. subsidiary, to discuss a
possible joint venture and OEM relationship between MINT and Infinity, a
SunGard subsidiary. On January 29, 1999, MINT demonstrated its products to
Infinity. On February 1, 1999, Cristobal Conde contacted Hagay Shefi and
expressed SunGard's possible interest in exploring a transaction with both MINT
and Decalog, and requested that such possible interest be communicated to
Oshap.
Following conversations between Shlomo Dovrat and Richard Tarbox, on
February 5, 1999, Oshap and SunGard executed a mutual non-disclosure agreement.
The parties also agreed to continue discussions concerning the feasibility of a
possible transaction.
On February 11, 1999, a meeting was held in New York between Shlomo Dovrat
and Avi Zeevi, Chief Financial Officer of Oshap, and Cristobal Conde and
Richard Tarbox to discuss potential financial terms for a transaction. In that
meeting, the parties discussed a possible share for share exchange qualifying
for "pooling-of-interests" accounting treatment.
On February 16, 1999, a meeting was held in Philadelphia between Shlomo
Dovrat and James Mann, Chairman of the Board, President and Chief Executive
Officer of SunGard to discuss the possible transaction.
On February 17, 1999, a meeting was held in New York among Shlomo Dovrat,
Avi Zeevi, a representative of Salomon Smith Barney and Richard Tarbox. At the
meeting, the parties continued to discuss the potential commercial terms for a
transaction, including the terms for a share for share exchange which would
have an initial value of $15.50 and the potential adjustments to this exchange
ratio. In addition, on the same day, due diligence presentations with respect
to Decalog were made to representatives of SunGard by Brian Owen and due
diligence presentations with respect to MINT were made to representatives of
SunGard by Asher Kutner, the Chief Executive Officer of MINT.
22
<PAGE>
On February 17, 1999, a special meeting of the Board of Directors of Oshap
was held. At the meeting, Shlomo Dovrat presented to the Board the key terms of
the transaction being discussed with SunGard and reviewed the other
alternatives being considered by Oshap with respect to MINT and Decalog,
including the interests expressed by other parties in acquiring Decalog.
Following discussion among the directors, it was the consensus of the directors
that the potential transaction with SunGard, assuming terms for a definitive
agreement could be realized, was the best alternative available for Oshap and
its shareholders. Accordingly, the Board unanimously resolved to authorize the
management of Oshap to continue the discussions with SunGard on the basis of
the terms reviewed at the meeting.
Following the Board meeting, the parties instructed their respective legal,
financial and accounting advisors to commence the work necessary for a possible
transaction. Oshap and its legal advisors began organizing a data room and
facilitating SunGard's due diligence review of Oshap. Oshap also agreed to
delay for a limited period the commencement of a possible road show for the
initial public offering of MINT and the preparation of the initial public
offering of Decalog and the evaluation of other alternatives for Decalog in
order to determine whether a definitive agreement between Oshap and SunGard
could be achieved. On February 23, 1999, representatives of SunGard and its
legal advisors commenced their due diligence review with respect to a possible
acquisition of Oshap.
On February 23, 1999, Oshap's legal counsel provided a draft of the
agreement to SunGard and its legal counsel.
At a regularly scheduled quarterly meeting of its board of directors on
February 26, 1999, James Mann presented management's recommendation that
SunGard pursue the acquisition of Oshap. After significant discussions of many
matters relating to the acquisition, the SunGard board of directors approved
the key terms of the transaction and authorized management to take the steps
necessary to complete the acquisition, subject to a final report to the board
of directors of the results of final negotiations of the transaction and
management's due diligence investigation of Oshap and its operating
subsidiaries.
Commencing on March 4, 1999 and continuing through March 9, 1999,
representatives of Oshap and SunGard and their respective legal and financial
advisors proceeded to negotiate the terms of the agreement and the various
ancillary agreements.
On March 7, 1999, a special meeting of the Oshap board was held in New York
in order to consider SunGard's proposed business combination with Oshap and
related matters. At such meeting, members of Oshap's management and its legal
counsel and auditors made presentations regarding various aspects of the
proposed transaction. Representatives of Oshap's United States and Israeli
counsel reviewed:
. the legal duties of directors,
. the terms of the draft agreement, and
. the legal process necessary to effect such a transaction.
A representative of Oshap's independent auditors next discussed the expected
accounting treatment for the transaction. Representatives of Salomon Smith
Barney and BancBoston Robertson Stephens then reviewed with the Oshap board the
financial analyses performed by Salomon Smith Barney and BancBoston Robertson
Stephens in connection with their evaluation of the exchange ratio from a
financial point of view. Following discussions in the Board meeting and
consideration of the alternatives available to Oshap, including the sale of
Decalog or initial public offerings of MINT and Decalog, the Oshap board
authorized management to complete the negotiations concerning the transaction
and scheduled a further meeting for March 9, 1999.
On March 9, 1999, a special meeting of SunGard's board of directors was held
to report to the board of directors the results of SunGard's management's due
diligence investigation of Oshap and its operating subsidiaries and to review
the terms of the proposed transaction with Oshap. At the conclusion of the
meeting,
23
<PAGE>
the SunGard board of directors acknowledged that the conditions to the approval
of the transaction established at the February 26, 1999 meeting had been
satisfied.
On March 9, 1999, a special meeting of the Oshap board was held in order to
consider the approval of the proposed transaction. At such meeting, members of
Oshap's management and its legal counsel updated the board on the final
negotiations. In addition, Salomon Smith Barney and BancBoston Robertson
Stephens each rendered to the board oral opinions, which opinions were
subsequently confirmed by delivery of written opinions, dated March 9, 1999, to
the effect that, as of that date and based upon and subject to the matters
stated in their respective opinions, the exchange ratio was fair, from a
financial point of view, to the holders of Oshap ordinary shares. Following
discussion, the board, by the unanimous vote of the members of the board
present, resolved to authorize and approve the agreement and the arrangement.
Subsequent to the respective meetings of the boards of directors of Oshap
and SunGard, the parties executed the agreement on March 9, 1999 and issued
press releases announcing the transaction.
SunGard's Reasons for the Arrangement
The SunGard board of directors has unanimously determined that the terms of
the agreement and the arrangement 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 arrangement will be beneficial to SunGard and its
stockholders:
. SunGard seeks to grow both internally and through the acquisition of
complementary businesses. The products of Oshap's operating
subsidiaries, MINT and Decalog, provide customers with leading-edge
software solutions for commercial banks, brokerages and asset management
institutions. These products will complement and broaden SunGard's
existing product lines in its investment support systems businesses;
. SunGard sells computer services and software to the financial services
industry and believes that the products of Oshap's subsidiaries, MINT
and Decalog, will enhance SunGard's position as a technology leader to
the financial services industry. Enterprise application integration is a
major issue facing financial institutions. SunGard believes that MINT
addresses the critical challenge of information flow that financial
institutions face by providing intelligent transformation and routing
middleware software that makes it easier to implement business processes
and work-flow. SunGard also believes that Decalog, which provides an
application product suite that automates the investment process,
including portfolio management, performance measurement and attribution,
order management, and trade execution, should help to establish SunGard
as a leading provider worldwide of decision-support applications for
asset managers. In addition, SunGard will benefit from the existing and
future customer base of MINT and Decalog;
. The business strategy of Oshap's operating subsidiaries 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. MINT and
Decalog's products are characterized by an open systems, client/server
architecture running on leading relational database management systems;
. The combination of the technologies and product development resources of
SunGard and Oshap should enable SunGard to respond more effectively to
the rapid technological change and continuing emergence of systems for
the financial services industry;
. SunGard believes there is a significant potential enhancement of the
strategic and market position of the combined entity beyond that
achievable by SunGard alone.
24
<PAGE>
In addition to the reasons set forth above, in the course of its
deliberations concerning the arrangement, the SunGard board of directors
consulted with SunGard's management, legal counsel and accountants and reviewed
a number of other factors relevant to the arrangement, including:
. Information concerning the business, assets, operations, properties,
management, financial condition, operating results, competitive position
and prospects of SunGard and Oshap;
. The historical market prices and trading information with respect to
SunGard common stock and Oshap ordinary shares;
. The expected tax and accounting treatment of the arrangement;
. 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 arrangement, including:
. The possibility of management disruption associated with the arrangement
and the risk that key technical and management personnel of Oshap might
not continue with Oshap or SunGard;
. The possibility that the arrangement might adversely affect Oshap's or
SunGard's relationship with certain of their respective customers and
business partners; and
. The risk that the potential benefits of the arrangement might not be
realized.
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 consider it practicable to
quantify or otherwise assign relative weight to the specific factors.
Oshap's Reasons for the Arrangement
At a meeting of the Oshap board held on March 9, 1999, after careful
consideration, the Oshap board, by the unanimous vote of all directors present,
. approved and adopted the agreement and the arrangement, including the
amendments to Oshap's articles of association contemplated by the
arrangement;
. determined that the arrangement is fair to, and in the best interests
of, Oshap and its shareholders;
. directed Oshap to commence proceedings to approve the arrangement in
accordance with Section 233 of the Israeli Companies Ordinance; and
. recommended that shareholders vote FOR approval and adoption of the
arrangement.
In reaching its decision to approve the arrangement and the agreement and to
recommend approval and adoption of the arrangement by Oshap shareholders, the
Oshap board considered, at meetings held on March 7 and March 9, 1999, among
other things, the following material factors:
. the complementary nature of the respective businesses of MINT and
Decalog and SunGard and the potential benefits to Oshap resulting from
MINT and Decalog becoming part of SunGard;
. the access to SunGard's experienced and wide distribution network in the
United States and around the world;
. the fact that the arrangement will allow holders of Oshap ordinary
shares to receive a significant premium for their shares, while at the
same time being able to continue to participate in a larger and more
diversified company, with a history of strong and predictable growth;
25
<PAGE>
. the fact that the arrangement will allow holders of Oshap ordinary
shares to realize, indirectly through an exchange of their Oshap
ordinary shares for SunGard common stock, the value of Oshap's private
subsidiaries, MINT and Decalog, which the board believed was
preferential to the risks, uncertainties and costs, including the
related tax consequences, involved in the separate dispositions of MINT
and Decalog through public offerings or private sale transactions;
. the fact that the exchange ratio represented, as of the signing of the
agreement, consideration having a value, based upon a price of $40.125
per share of SunGard common stock, of $15.50 per Oshap ordinary share
representing a premium of approximately 63% over $9.50, the closing
price per Oshap ordinary share on March 8, 1999, the trading day
preceding the date of the public announcement of the agreement and a
premium of approximately 122% over the average closing prices of Oshap's
ordinary shares in the 90 trading days preceding the date of the public
announcement of the agreement and that, within the previous 12 month
period, Oshap shares had traded as high as $10.875 and as low as $3.00
per share;
. the financial presentation of Salomon Smith Barney and BancBoston
Robertson Stephens, including the oral opinions of each of Salomon Smith
Barney and BancBoston Robertson Stephens, subsequently confirmed by
delivery of written opinions dated March 9, 1999, to the effect that, as
of that date and based upon and subject to the matters stated in their
respective opinions, the exchange ratio was fair, from a financial point
of view, to the holders of Oshap ordinary shares;
. the fact that as holders of SunGard common stock, Oshap shareholders
would likely have greater liquidity for their shares; and
. the recommendation of Oshap's management and the managements of its
operating subsidiaries that the arrangement be approved;
In connection with the approval of the agreement and the arrangement and
recommendation to the Oshap shareholders, the Oshap board also considered,
among others, the following factors, including a number of potentially negative
factors:
. the terms and conditions of the agreement and proposed arrangement and
related agreements, including, among other things, the willingness of
significant Oshap shareholders to commit to vote in favor of the
proposed transaction;
. the review of, and discussions with, Oshap's senior management,
financial and legal advisors and accountants, regarding certain
business, financial, legal and accounting aspects of the arrangement and
the results of business due diligence;
. the impact of the arrangement on the customers and employees of Oshap's
operating subsidiaries and the fact that the proposed transaction was
supported by the managements of each of Oshap's operating subsidiaries;
. the possibility that the proposed arrangement might adversely affect the
relationships between Oshap's operating subsidiaries and affiliates and
certain of their respective customers and the risk that key management
and technical personnel might leave Oshap and its subsidiaries and
affiliates and the resulting effect on both the prospects of
consummating the arrangement and the business of Oshap, if the
arrangement is not consummated;
. SunGard's ability to integrate Oshap and its operating subsidiaries and
SunGard's record of successfully integrating companies acquired by it;
. the likelihood of the arrangement being approved by the appropriate
regulatory authorities, and the risk that the arrangement will not be
consummated;
. the opportunities and alternatives available to Oshap if the arrangement
were not to be undertaken;
. the possibility that certain provisions of the agreement, including the
no solicitation and certain other provisions in the agreement, might
have the effect of discouraging other persons potentially interested in
acquiring Oshap from pursuing such an opportunity; and
. other matters described under "Risk Factors."
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<PAGE>
The foregoing discussion of the information and factors considered by the
Oshap board is not intended to be exhaustive. In view of the variety of factors
considered in connection with its evaluation of the arrangement, the Oshap
board did not find it practicable to and did not quantify or otherwise assign
relative weights to the specific factors considered in reaching its
determination. In addition, individual members of the Oshap board may have
given different weight to different factors. For a discussion of the interests
of certain members of Oshap management and the Oshap board in the arrangement,
see "Interests of Oshap's Directors and Executive Officers in the Arrangement."
Opinions of Oshap's Financial Advisors
Opinion of Salomon Smith Barney
Salomon Smith Barney was retained by Oshap to act as co-financial advisor in
connection with the proposed arrangement. In connection with its engagement,
Oshap requested that Salomon Smith Barney evaluate the fairness, from a
financial point of view, to the holders of Oshap ordinary shares of the
exchange ratio provided for in the arrangement. On March 9, 1999, at a meeting
of the Oshap board held to evaluate the proposed arrangement, Salomon Smith
Barney delivered to the Oshap board an oral opinion, which opinion was
subsequently confirmed by delivery of a written opinion dated March 9, 1999, to
the effect that, as of that date and based upon and subject to the matters
stated in the opinion, the exchange ratio was fair, from a financial point of
view, to the holders of Oshap ordinary shares.
In arriving at its opinion, Salomon Smith Barney:
. reviewed the agreement and the plan of arrangement;
. held discussions with senior officers, directors and other
representatives and advisors of Oshap and senior officers of SunGard
concerning the businesses, operations and prospects of Oshap and
SunGard;
. examined certain publicly available business and financial information
relating to Oshap and SunGard, as well as certain financial forecasts
and other information and data for Oshap and SunGard which were provided
to or discussed with Salomon Smith Barney by the respective managements
of Oshap and SunGard, including information relating to strategic
implications and operational benefits anticipated to result from the
arrangement, and, in the case of SunGard, its publicly available 1999
growth rate and earnings per share outlook and publicly available
estimates of research analysts with respect to SunGard which were
discussed with Salomon Smith Barney by the management of SunGard;
. reviewed the financial terms of the arrangement as described in the
agreement and the plan of arrangement in relation to, among other
things, current and historical market prices and trading volumes of
Oshap ordinary shares and SunGard common stock, the historical and
projected earnings and other operating data of Oshap and SunGard, and
the capitalization and financial condition of Oshap and SunGard;
. considered, to the extent publicly available, the financial terms of
other transactions recently effected which Salomon Smith Barney
considered relevant in evaluating the arrangement;
. analyzed certain financial, stock market and other publicly available
information relating to the businesses of other companies whose
operations Salomon Smith Barney considered relevant in evaluating those
of Oshap and SunGard;
. evaluated the potential pro forma financial impact of the arrangement on
SunGard; and
. conducted other analyses and examinations and other financial, economic
and market criteria as Salomon Smith Barney deemed appropriate in
arriving at its opinion.
In rendering its opinion, Salomon Smith Barney assumed and relied, without
independent verification, upon the accuracy and completeness of all financial
and other information and data publicly available or
27
<PAGE>
furnished to or otherwise reviewed by or discussed with Salomon Smith Barney.
With respect to the financial forecasts and other information and data provided
by Oshap and SunGard, the managements of Oshap and SunGard advised Salomon
Smith Barney that they were reasonably prepared on bases reflecting the best
currently available estimates and judgments of the managements of Oshap and
SunGard as to the future financial performance of Oshap and SunGard and the
strategic implications and operational benefits anticipated to result from the
arrangement. Salomon Smith Barney was not provided with internal financial
projections or forecasts relating to future operations or prospects of SunGard
other than SunGard's publicly available 1999 growth rate and earnings per share
outlook. Salomon Smith Barney therefore also reviewed publicly available
estimates of research analysts with respect to SunGard which, based on
discussions with the management of SunGard, Salomon Smith Barney also assumed
were prepared on bases reflecting reasonable estimates and judgments as to the
future financial performance of SunGard.
Salomon Smith Barney assumed, with the consent of Oshap, that the
arrangement will be treated as a tax-free reorganization for U.S. federal
income tax purposes and as a pooling of interests in accordance with U.S.
generally accepted accounting principles. Salomon Smith Barney also assumed,
with the consent of Oshap, that the proposed transactions between SunGard and
the holders of the shares and options of MINT and Decalog will be effected in
accordance with their terms and, to the extent relevant to Salomon Smith
Barney's analysis, evaluated SunGard after giving effect to the MINT and
Decalog transactions assuming the consideration payable in those transactions
consisted solely of cash.
Salomon Smith Barney's opinion relates to the relative values of Oshap and
SunGard. Salomon Smith Barney did not express any opinion as to what the value
of the SunGard common stock actually will be when issued to Oshap shareholders
pursuant to the arrangement or the price at which the SunGard common stock will
trade subsequent to the arrangement. Salomon Smith Barney's opinion also did
not compare the consideration to be received by holders of Oshap ordinary
shares in the arrangement with the consideration to be received by minority
holders in the MINT and Decalog transactions. In addition, Salomon Smith Barney
did not make and was not provided with an independent evaluation or appraisal
of the assets or liabilities, contingent or otherwise, of Oshap or SunGard nor
did Salomon Smith Barney make any physical inspection of the properties or
assets of Oshap or SunGard.
In connection with its opinion, Salomon Smith Barney was not requested to,
and did not, solicit third party indications of interest in the possible
acquisition of Oshap nor was Salomon Smith Barney requested to consider, and
its opinion does not address, the relative merits of the arrangement as
compared to any alternative business strategies that might exist for Oshap or
the effect of any other transaction in which Oshap might engage. Salomon Smith
Barney noted that its opinion was necessarily based upon information available,
and financial, stock market and other conditions and circumstances existing and
disclosed, to Salomon Smith Barney as of the date of its opinion. Although
Salomon Smith Barney evaluated the exchange ratio from a financial point of
view, Salomon Smith Barney was not asked to and did not recommend the specific
consideration payable in the arrangement, which was determined through
negotiation between Oshap and SunGard. No other instructions or limitations
were imposed by Oshap on Salomon Smith Barney with respect to the
investigations made or procedures followed by Salomon Smith Barney in rendering
its opinion.
The full text of Salomon Smith Barney's written opinion dated March 9, 1999,
which describes the assumptions made, matters considered and limitations on the
review undertaken, is attached to this document as Appendix B and should be
read carefully in its entirety. Salomon Smith Barney's opinion is directed to
the Oshap board and relates only to the fairness of the exchange ratio from a
financial point of view, does not address any other aspect of the arrangement
or related transactions and does not constitute a recommendation to any
shareholder with respect to any matter relating to the proposed arrangement.
The summary of Salomon Smith Barney's opinion included in this document is
qualified in its entirety by reference to the full text of the opinion.
In preparing its opinion, Salomon Smith Barney performed a variety of
financial and comparative analyses, including those described below. The
summary of these analyses is not a complete description of the
28
<PAGE>
analyses underlying Salomon Smith Barney's opinion. The preparation of a
fairness opinion is a complex analytic process involving various determinations
as to the most appropriate and relevant methods of financial analysis and the
application of those methods to the particular circumstances and, therefore, a
fairness opinion is not readily susceptible to summary description.
Accordingly, Salomon Smith Barney believes that its analyses must be considered
as a whole and that selecting portions of its analyses and factors or focusing
on information presented in tabular format, without considering all analyses
and factors or the narrative description of the analyses, could create a
misleading or incomplete view of the processes underlying its analyses and
opinion.
In its analyses, Salomon Smith Barney considered industry performance,
general business, economic, market and financial conditions and other matters
existing as of the date of its opinion, many of which are beyond the control of
Oshap and SunGard. No company, transaction or business used in its analyses as
a comparison is identical to Oshap, SunGard or the proposed arrangement, nor is
an evaluation of those analyses entirely mathematical; rather, the analyses
involve complex considerations and judgments concerning financial and operating
characteristics and other factors that could affect the merger, public trading
or other values of the companies, business segments or transactions being
analyzed. The estimates contained in Salomon Smith Barney's analyses and the
valuation ranges resulting from any particular analysis are not necessarily
indicative of actual values or predictive of future results or values, which
may be significantly more or less favorable than those suggested by its
analyses. In addition, analyses relating to the value of businesses or
securities do not purport to be appraisals or to reflect the prices at which
businesses or securities actually may be sold. Accordingly, Salomon Smith
Barney's analyses and estimates are inherently subject to substantial
uncertainty.
Salomon Smith Barney's opinion and analyses were only one of the factors
considered by the Oshap board in its evaluation of the arrangement and should
not be viewed as determinative of the views of the Oshap board or management
with respect to the exchange ratio or the proposed arrangement.
Opinion of Robertson Stephens
Robertson Stephens was retained by Oshap to act as co-financial advisor in
connection with the proposed arrangement. In connection with its engagement,
Oshap requested that Robertson Stephens evaluate the fairness, from a financial
point of view, to the the holders of Oshap ordinary shares of the exchange
ratio provided for in the arrangement. On March 9, 1999, at a meeting of the
Oshap board of directors held to evaluate the proposed arrangement, Robertson
Stephens delivered to the Oshap board an oral opinion, which opinion was
subsequently confirmed by delivery of a written opinion dated March 9, 1999, to
the effect that, as of that date, and based upon and subject to the assumptions
made, matters considered and limitations on the review undertaken, the exchange
ratio was fair, from a financial point of view, to holders of Oshap ordinary
shares.
The exchange ratio was determined through negotiations between the
managements of Oshap and SunGard. Although Robertson Stephens assisted the
management of Oshap in those negotiations, it was not asked by, and did not
recommend to, Oshap that any specific exchange ratio constituted the
appropriate exchange ratio for the arrangement. Robertson Stephens was not
requested to, and did not, solicit third parties regarding the possible
acquisition of Oshap. No other instructions or limitations were imposed by the
Oshap board on Robertson Stephens with respect to the investigations made or
procedures followed by it in furnishing its opinion.
The full text of the written opinion of Robertson Stephens, which describes,
among other things, the assumptions made, matters considered and limitations on
the review undertaken, is attached to this document as Appendix C and is
incorporated herein by reference. Holders of Oshap ordinary shares are urged to
read the opinion of Robertson Stephens in its entirety. The opinion of
Robertson Stephens was prepared for the benefit and use of the Oshap board in
its consideration of the arrangement and does not constitute a recommendation
to any shareholder of Oshap as to how such shareholder should vote, or take any
other action, on matters relating to the arrangement. The opinion of Robertson
Stephens did
29
<PAGE>
not address the relative merits of the arrangement and the other business
strategies that the Oshap board had considered or may have been considering,
nor did it address the decision of the Oshap board to proceed with the
arrangement. The summary of the opinion of Robertson Stephens included in this
document is qualified in its entirety by reference to the full text of the
opinion attached as Appendix C.
The opinion of Robertson Stephens is limited to the fairness, from a
financial point of view and as of the date of the opinion, of the exchange
ratio to the holders of Oshap ordinary shares. Robertson Stephens did not
express any opinion as to the value of any employee agreement or other
arrangement entered into in connection with the arrangement, any tax or other
consequences that might result from the arrangement or the price at which the
shares of SunGard common stock that are issued pursuant to the arrangement may
be traded in the future. The opinion of Robertson Stephens did not compare the
consideration to be received by holders of Oshap ordinary shares in the
arrangement with the consideration to be received by the minority holders in
the transactions between SunGard and the holders of shares and options of MINT
and Decalog. The opinion of Robertson Stephens also did not take into account
the particular tax status or position of any shareholder of Oshap. In
furnishing its opinion, Robertson Stephens was not engaged as an agent or
fiduciary of Oshap's shareholders or any other third party.
In arriving at its opinion, Robertson Stephens, among other things:
. reviewed certain financial information relating to Oshap and SunGard,
including certain financial analyses, forecasts and projections for
Oshap prepared by the management of Oshap, publicly available 1999
growth rate and earnings per share outlook prepared by the management of
SunGard and publicly available estimates of research analysts with
respect to SunGard which were discussed with Robertson Stephens by the
management of SunGard;
. reviewed certain publicly available information relating to Oshap and
SunGard;
. held discussions with the managements of Oshap and SunGard concerning
the businesses, past and current operations, financial condition and
future prospects of both Oshap and SunGard, independently and combined,
including discussions with the managements of Oshap and SunGard
concerning their views regarding the strategic rationale for the
arrangement;
. reviewed the financial terms and conditions set forth in the agreement;
. reviewed the stock prices and trading histories of Oshap and SunGard;
. reviewed the contribution by each company to pro forma combined
revenues, earnings before interest, taxes, depreciation and
amortization, earnings before income and taxes, and net income;
. reviewed the valuations of publicly traded companies that Robertson
Stephens deemed comparable to Oshap and SunGard;
. compared the financial terms of the arrangement with the financial
terms, to the extent publicly available, of other transactions that
Robertson Stephens deemed relevant;
. analyzed the pro forma earnings per share of the combined company; and
. made other studies and inquiries, and reviewed other data, as Robertson
Stephens deemed relevant.
In its review and analysis, and in arriving at its opinion, Robertson
Stephens assumed and relied upon the accuracy and completeness of all of the
financial and other information provided to it (including information furnished
to Robertson Stephens orally or otherwise discussed with Robertson Stephens by
the managements of Oshap and SunGard) or publicly available and neither
attempted to verify, nor assumed responsibility for verifying, any of the
information. Robertson Stephens relied upon the assurances of the managements
of Oshap and SunGard that they were not aware of any facts that would make the
information inaccurate or misleading in any material respect. In addition,
Robertson Stephens did not obtain or make, or assume any responsibility for
obtaining or making, any independent evaluation or appraisal of any of the
properties, assets or liabilities, contingent or otherwise, of Oshap or
SunGard, nor was Robertson Stephens furnished with any such evaluation or
appraisal.
30
<PAGE>
With respect to the financial forecasts prepared by Oshap and SunGard and
the underlying assumptions and bases for Oshap and SunGard that Robertson
Stephens reviewed, upon the advice of the managements of Oshap and SunGard,
Robertson Stephens assumed that the forecasts and projections were reasonably
prepared in good faith on the basis of reasonable assumptions, and reflected
the best currently available estimates and judgments of the managements of
Oshap and SunGard as to the future financial condition and performance of Oshap
and SunGard, respectively. Robertson Stephens was not provided with internal
financial projections or forecasts relating to future operations or prospects
of SunGard other than SunGard's publicly available 1999 growth rate and
earnings per share outlook. Robertson Stephens therefore also reviewed publicly
available estimates of research analysts with respect to SunGard which, based
on discussions with the management of SunGard, Robertson Stephens also assumed
were prepared on bases reflecting reasonable estimates and judgments as to the
future financial performance of SunGard. Robertson Stephens further assumed
that the projections and forecasts will be realized in the amounts and in the
time periods currently estimated. In this regard, Robertson Stephens noted that
each of Oshap and SunGard face exposure to the year 2000 problem and are
currently undergoing year 2000 projects. Robertson Stephens did not undertake
any independent analysis to evaluate the reliability or accuracy of the
assumptions made by the managements of Oshap and SunGard with respect to the
potential effect that the year 2000 problem might have on the forecasts.
Robertson Stephens assumed that the historical financial statements of each of
Oshap and SunGard reviewed by Robertson Stephens were prepared and fairly
presented in accordance with U.S. generally accepted accounting principles, or
auditing standards substantially identical to those for U.S. generally accepted
accounting principles, consistently applied.
Robertson Stephens assumed that the arrangement will be consummated upon the
terms described in the agreement without material alteration and that the MINT
and Decalog transactions will be effected in accordance with the terms
contemplated by the agreement. To the extent relevant to its analyses,
Robertson Stephens evaluated SunGard after giving effect to the MINT and
Decalog transactions assuming the consideration payable in those transactions
consisted solely of cash. Robertson Stephens relied as to all legal matters
relevant to rendering its opinion on the advice of counsel.
The opinion of Robertson Stephens is necessarily based upon market, economic
and other conditions as in effect on, and information made available to
Robertson Stephens as of, the date of its opinion. It should be understood that
subsequent developments may affect the conclusion expressed in the opinion of
Robertson Stephens and that Robertson Stephens disclaims any undertaking or
obligation to advise any person of any change in any matter affecting the
opinion which may come or be brought to the attention of Robertson Stephens
after the date of its opinion.
In preparing its opinion, Robertson Stephens performed a variety of
financial and comparative analyses, including those described below. The
summary of these analyses is not a comprehensive description of all analyses
and factors considered by Robertson Stephens. The preparation of a fairness
opinion is a complex process that involves various determinations as to the
most appropriate and relevant methods of financial analysis and the application
of these methods to the particular circumstances and, therefore, a fairness
opinion is not readily susceptible to summary description.
Robertson Stephens believes that its analyses must be considered as a whole
and that selecting portions of its analyses and of the factors considered by it
or focusing on information presented in tabular format, without considering all
analyses and factors or the narrative description of the analyses, could create
a misleading or incomplete view of the evaluation process underlying its
opinion. Several analytical methodologies were employed and no one method of
analysis should be regarded as critical to the overall conclusion reached by
Robertson Stephens. Each analytical technique has inherent strengths and
weaknesses, and the nature of the available information may further affect the
value of particular techniques. The conclusion reached by Robertson Stephens is
based on all analyses and factors taken as a whole and also on application of
the experience and judgment of Robertson Stephens, which conclusion may involve
significant elements of subjective judgment and qualitative analysis. Robertson
Stephens therefore gives no opinion as to the value or merit standing alone of
any one or more parts of the analyses it performed.
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In performing its analyses, Robertson Stephens considered industry
performance, general business, economic, market and financial conditions and
other matters existing as of the date of its opinion, many of which are beyond
the control of Oshap and SunGard. No company, transaction or business used in
its analyses as a comparison is identical to Oshap, SunGard or the proposed
arrangement, nor is an evaluation of those analyses entirely mathematical;
rather, the analyses involve complex considerations and judgments concerning
financial and operating characteristics and other factors that could affect the
arrangement, public trading or other values of the companies, business segments
or transactions being analyzed. Any estimates contained in these analyses are
not necessarily indicative of actual values or predictive of future results,
which may be significantly more or less favorable than those suggested by the
analyses. Accordingly, analyses relating to the value of a business do not
purport to be appraisals or to reflect the prices at which the business
actually may be purchased.
Joint Financial Analyses of Oshap's Financial Advisors
The following is a summary of the material financial analyses underlying the
respective opinions of Salomon Smith Barney and Robertson Stephens dated March
9, 1999 rendered to the Oshap board in connection with the arrangement. Certain
of the financial analyses summarized below include information presented in
tabular format. In order to fully understand these financial analyses, the
tables must be read together with the text of each summary. The tables alone do
not constitute a complete description of the financial analyses. Considering
the data set forth below without considering the full narrative description of
the financial analyses, including the methodologies and assumptions underlying
the analyses, could create a misleading or incomplete view of the financial
analyses of Salomon Smith Barney and Robertson Stephens.
Introduction
The financial advisors derived an equity reference range for Oshap by adding
the implied equity value of Oshap's minority interest in Tecnomatix, the
implied equity reference ranges for Oshap's ownership in Decalog and MINT and
Oshap's net cash. The financial advisors calculated the implied equity value of
Oshap's minority interest in Tecnomatix based on the closing stock price of
Tecnomatix on March 5, 1999 and derived implied equity reference ranges for
Oshap's ownership in Decalog and MINT based on a selected companies analysis
and a selected transactions analysis described further below.
Based on the analyses described above, the financial advisors derived an
implied aggregate equity reference range for Oshap of approximately $138.9
million to $213.5 million, or approximately $10.32 to $15.87 per fully diluted
share, as compared to the equity value implied by the exchange ratio of
approximately $15.50 per share based on the approximate average closing stock
price of SunGard common stock for the 10 trading day period ending March 5,
1999.
The financial advisors also performed a selected companies analysis for
SunGard, as well as an exchange ratio analysis, a pro forma merger analysis and
a contribution analysis, and considered other factors which are described
further below.
Tecnomatix
The financial advisors calculated the implied equity value of Oshap's
minority interest in Tecnomatix by multiplying the number of shares of
Tecnomatix owned by Oshap by the per share closing price of Tecnomatix common
stock on March 5, 1999. This calculation yielded an implied equity value for
Oshap's minority interest in Tecnomatix of approximately $22.1 million.
32
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Decalog
Selected Companies Analysis. Using publicly available information, the
financial advisors analyzed the market values and trading multiples of the
following six publicly traded companies in the financial software industry:
. Advent Software, Inc.
. DST Systems, Inc.
. Sanchez Computer Associates, Inc.
. SS&C Technologies, Inc.
. SunGard
. Transaction Systems Architects, Inc.
The financial advisors compared, among other things, market values as a
multiple of estimated calendar year 1999 net income, and adjusted market values
as a multiple of latest 12 months revenues. All multiples were based on closing
stock prices on March 5, 1999. Net income estimates for the selected companies
were based on research analysts' estimates and net income estimates for Decalog
were based on internal estimates of the management of Decalog.
Selected Transactions Analysis. Using publicly available information, the
financial advisors analyzed the implied transaction valuation multiples paid or
proposed to be paid in the following 15 selected transactions in the financial
software industry:
Acquiror Target
. SunGard . FDP Corp.
. Misys plc . C-ATS Software Inc.
. Arbor Software Corporation . Hyperion Software Corporation
. PLATINUM Technology, Inc. . Logic Works, Inc.
. Baan Company N.V. . CODA Group PLC
. The Sage Group plc . State of the Art, Inc.
. Research Institute of America . Computer Language Research, Inc.
. Harbinger Corporation . Premenos Technology Corp.
. SunGard . Infinity Financial Technology,
. Baan Company N.V. Inc.
. Oracle Corporation . Aurum Software, Inc.
. Computer Sciences Corporation . Datalogix International, Inc.
. The Continuum Company, Inc. . The Continuum Company, Inc.
. First Data Corporation . Hogan Systems, Inc.
. International Business . First Financial Management
Machines Corporation Corporation
. Lotus Development Corporation
. Software AG Systems, Inc.
. TSI International Software Ltd.
The financial advisors compared the transaction values paid or proposed to
be paid in the selected transactions as a multiple of, among other things,
latest 12 months revenues. All multiples for the selected transactions were
based on financial information available at the time of the relevant
transaction.
Aggregate Reference Range. Applying a range of selected multiples for the
selected companies of estimated calendar year 1999 net income and latest 12
months revenues and a range of selected multiples for the selected transactions
of latest 12 months revenues to corresponding financial data of Decalog
resulted in an implied aggregate equity reference range for Oshap's 69%
ownership interest in Decalog on a fully diluted basis approximately $41.3
million to $61.9 million, after taking into account the pre-money filing
valuation for Decalog in its initial public offering process.
33
<PAGE>
MINT
Selected Companies Analysis. Using publicly available information, the
financial advisors analyzed the market values and trading multiples of the
following eight publicly traded companies in the financial software industry:
. BEA Systems, Inc.
. ILOG S.A.
. Inprise Corporation
. Iona Technologies plc
. Level 8 Systems, Inc.
. New Era of Networks Inc.
. Software AG Systems, Inc.
. TSI International Software Ltd.
The financial advisors compared, among other things, market values as a
multiple of estimated calendar year 1999 net income, and adjusted market values
as a multiple of latest 12 months and estimated calendar year 1999 revenues.
All multiples were based on closing stock prices on March 5, 1999. Net income
estimates for the selected companies were based on research analysts' estimates
and net income estimates of MINT were based on internal estimates of the
management of MINT.
Selected Transactions Analysis. Using publicly available information, the
financial advisors analyzed the implied transaction valuation multiples paid or
proposed to be paid in the following 23 selected transactions in the financial
software industry:
Acquiror Target
. Micro Focus Group PLC . Intersolv, Inc.
. PLATINUM Technology, Inc. . Logic Works, Inc.
. Xerox Corporation . XLConnect Solutions, Inc.
. Siebel Systems, Inc. . Scopus Technology, Inc.
. BMC Software, Inc. . BGS Systems, Inc.
. TRW Inc. . BDM International, Inc.
. Fiserv, Inc. . CUSA Technologies, Inc.
. HBO & Company . HPR Inc.
. Affiliated Computer Services, Inc. . Computer Data Systems, Inc.
. Tivoli Systems, Inc. . Unison Software, Inc.
. Misys plc . Medic Computer Systems, Inc.
. DataWorks Corporation . Interactive Group, Inc.
. CGIP . Cap Gemini Sogeti SA
. IDX Systems Corporation . PHAMIS Inc
. HBO & Company . AMISYS Managed Care Systems,
. Investor Group Inc.
. Pure Software Inc. . Triad Systems Corporation
. International Business . Atria Software, Inc.
Machines Corporation . Tivoli Systems, Inc.
Acquiror Target
. CompuWare Corporation . Technalysis Corporation
. The Continuum Company, Inc. . Hogan Systems, Inc.
. Mentor Graphics Corporation . Microtec Research, Inc.
. MCI Communications Corporation . SHL Systemhouse, Inc.
. Computer Associates International Inc. . Legent Corporation
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<PAGE>
The financial advisors compared the transaction values in the selected
transactions as a multiple of, among other things, latest 12 months revenues.
All multiples for the selected transactions were based on financial information
available at the time of the relevant transaction.
Aggregate Reference Range. Applying a range of selected multiples for the
selected companies of estimated calendar year 1999 net income and latest 12
months and estimated calendar year 1999 revenues and a range of selected
multiples for the selected transactions of latest 12 months revenues to
corresponding financial data of MINT resulted in an implied aggregate equity
reference range for Oshap's 83% ownership in MINT on a fully diluted basis of
approximately $74.6 million to $128.5 million, after taking into account the
pre-money filing valuation for MINT in its initial public offering process.
SunGard
Selected Companies Analysis. Using publicly available information, the
financial advisors analyzed the market values and trading multiples of the
following seven publicly traded companies in the financial software industry:
. Advent Software, Inc.
. Automated Data Processing
. DST Systems, Inc.
. Fiserv, Inc.
. Sanchez Computer Associates, Inc.
. SS&C Technologies, Inc.
. Transaction Systems Architects, Inc.
The financial advisors compared, among other things, market values as a
multiple of estimated calendar years 1999 and 2000 price to earnings. All
multiples were based on closing stock prices on March 5, 1999. Price to
earnings estimates for the selected companies and SunGard were based on
research analysts' estimates. This analysis indicated the following range of
implied market value multiples for the selected companies, as compared to the
implied market value multiples for SunGard:
<TABLE>
<CAPTION>
Implied Multiples for Implied Multiples
Selected Companies for SunGard
--------------------- -----------------
<S> <C> <C>
Estimated calendar year 1999 price to
earnings............................. 23.7x-35.1x 28.6x
Estimated calendar year 2000 price to
earnings............................. 15.7x-30.5x 24.1x
</TABLE>
Exchange Ratio Analysis. The financial advisors compared the exchange ratio
in the arrangement based on the approximate average closing price of SunGard
common stock for the 10 trading day period ending March 5, 1999, with the
historical ratio of the daily closing prices of Oshap ordinary shares and
SunGard common stock over the 10-day, 20-day, 30-day, 60-day, 90-day and 12-
month periods ending March 5, 1999 and on March 5, 1999. This analysis
indicated the following average historical exchange ratios during these
periods:
<TABLE>
<CAPTION>
Average Historical
Period Exchange Ratio
------ ------------------
<S> <C>
10-day................................................. 0.230
20-day................................................. 0.219
30-day................................................. 0.215
60-day................................................. 0.202
90-day................................................. 0.194
12-month............................................... 0.205
March 5, 1999.......................................... 0.220
</TABLE>
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Pro Forma Merger Analysis. The financial advisors analyzed the pro forma
effects of the arrangement on the projected earnings per share of SunGard for
the fiscal years ending 1999 and 2000 based, in the case of SunGard, on
research analysts' estimates discussed with SunGard and, in the case of Oshap,
on internal estimates of the management of Oshap. The results of the pro forma
merger analysis suggested that the arrangement could be dilutive to SunGard's
earnings per share in each of the fiscal years analyzed before giving effect to
potential cost savings and other synergies anticipated by the management of
SunGard to result from the arrangement. The actual results achieved by the
combined company may vary from projected results and the variations may be
material.
Contribution Analysis. The financial advisors analyzed the respective
contributions of SunGard and Oshap to various operational measures of the
combined company, including the estimated calendar year 1998 revenues, earnings
before interest, taxes, depreciation and amortization, earnings before interest
and taxes and estimated calendar years 1999 and 2000 net income of the combined
company. Financial data for this analysis were based, in the case of SunGard,
on research analysts' estimates discussed with SunGard and, in the case of
Oshap, on internal estimates of the management of Oshap. This analysis
indicated that Oshap would contribute in the aggregate approximately 0.0% to
5.7% of these operational measures, as compared to the equity ownership of the
holders of Oshap ordinary shares in the pro forma combined company of
approximately 4.2%, based on the exchange ratio in the arrangement derived from
the approximate average closing stock price of SunGard common stock for the 10
trading day period ending March 5, 1999.
Other Factors
In rendering its opinion, the financial advisors considered other factors,
including:
. historical and projected financial results of Oshap and SunGard;
. the history of trading prices and volume for Oshap ordinary shares,
SunGard common stock and Tecnomatix common stock;
. the relationship between movements in the common stock of the Decalog
selected companies, the common stock of the MINT selected companies,
Tecnomatix selected companies and SunGard common stock;
. the relative stock price performance of Oshap ordinary shares and
SunGard common stock; and
. selected published analysts' reports on Oshap and SunGard, including
analysts' estimates as to the earnings per share of Oshap and SunGard.
Miscellaneous
Pursuant to the terms of their engagement, Oshap has agreed to pay Salomon
Smith Barney and Robertson Stephens upon completion of the arrangement an
aggregate financial advisory fee equal to 1.5% of the aggregate consideration
payable in connection with the arrangement. Oshap has also agreed to reimburse
Salomon Smith Barney and Robertson Stephens for reasonable travel and other
out-of-pocket expenses incurred by them in performing their services, including
the reasonable fees and expenses of legal counsel, and to indemnify Salomon
Smith Barney, Robertson Stephens and related persons against liabilities,
including liabilities under the federal securities laws, arising out of their
engagement.
Salomon Smith Barney has advised Oshap that, in the ordinary course of
business, Salomon Smith Barney and its affiliates may actively trade or hold
the securities of Oshap and SunGard for their own account or for the account of
customers and, accordingly, may at any time hold a long or short position in
those securities. Salomon Smith Barney has in the past provided investment
banking services to Oshap unrelated to the proposed arrangement, for which
services Salomon Smith Barney has received compensation. Salomon Smith Barney
also provided investment banking services to Decalog in early 1999 in
connection with the possible initial public offering or sale of Decalog. In
addition, Salomon Smith Barney and its affiliates, including Citigroup Inc. and
its affiliates, may maintain relationships with Oshap, SunGard and their
respective subsidiaries and affiliates.
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Salomon Smith Barney is an internationally recognized investment banking
firm and was selected by Oshap based on its experience, expertise and
familiarity with Oshap and its business. Salomon Smith Barney regularly engages
in the valuation of businesses and their securities in connection with mergers
and acquisitions, negotiated underwritings, competitive bids, secondary
distributions of listed and unlisted securities, private placements and
valuations for estate, corporate and other purposes.
Robertson Stephens was retained by Oshap based on the experience of
Robertson Stephens as a financial advisor in connection with mergers and
acquisitions and in securities valuation generally, as well as the investment
banking relationship and familiarity of Robertson Stephens with Oshap.
Robertson Stephens has in the past provided investment banking services to MINT
and Decalog, including, in late 1998 and early 1999, acting as potential lead
underwriter in connection with possible initial public offerings for MINT and
Decalog and as financial advisor in connection with a possible sale of Oshap's
controlling interest in MINT. Oshap has agreed to reimburse Robertson Stephens
upon completion of the arrangement for expenses that Robertson Stephens
incurred in connection with these proposed initial public offerings. Robertson
Stephens maintains a market in the ordinary shares of Tecnomatix. Robertson
Stephens may actively trade the securities of Oshap, SunGard or Tecnomatix for
its own account and for the accounts of its customers and, accordingly, may at
any time hold a long or short position in those securities.
Robertson Stephens is an internationally recognized investment banking firm
and, as part of its investment banking business, is frequently engaged in the
valuation of businesses and their securities in connection with mergers and
acquisitions, negotiated underwritings, secondary distributions of securities,
private placements and other purposes.
Interests of Oshap's Directors and Executive Officers in the Arrangement
General. There are directors and executive officers of Oshap who may be
deemed to have interests in the arrangement that are in addition to the
interests of Oshap shareholders generally. These interests are discussed below.
The Oshap board of directors was aware of these interests at the time the
arrangement was approved.
Oshap Options. The total number of Oshap options held by the executive
officers and directors of Oshap and their affiliates is 491,000. Assuming an
average closing price of SunGard common stock during the 10 day measurement
period of $40.125, the closing price per share of SunGard common stock on March
8, 1999, and based on the value of the options on such date, such options would
be exchanged in the arrangement for shares of SunGard common stock having an
aggregate value of approximately $5.5 million. The value of the Oshap options
will be determined at the effective date of the arrangement using the Black-
Scholes formula as described in the agreement, including a discount for
unvested options, which will be applied on the same basis for all Oshap stock
options.
MINT and Decalog Options. Mr. Shlomo Dovrat, the President, Chief Executive
Officer and a director of Oshap, and Mr. Avi Zeevi, the Chief Financial Officer
of Oshap, hold options to purchase a total of 274,883 shares of MINT and
options to purchase a total of 225,000 shares of Decalog. SunGard will offer to
cancel all options of MINT and Decalog held by Messrs. Dovrat and Zeevi in
exchange for shares of SunGard common stock. As a result, the MINT and Decalog
options held by Messrs. Dovrat and Zeevi will be exchanged for shares of
SunGard common stock having an aggregate value of approximately $3.9 million.
MINT and Decalog Shares. Mr. Zeevi owns 37,500 shares of MINT. Entities
affiliated with SVM Star Ventures, an affiliate of Meir Barel, a director of
Oshap, own a total of 1,044,873 shares of Decalog. SunGard has agreed to
purchase all shares of MINT and Decalog that are held by parties other than
Oshap. As a result, the MINT shares held by Mr. Zeevi and the Decalog shares
that will be held by SVM Star Ventures as of the effective date will be
purchased by SunGard for consideration consisting of shares of SunGard common
stock having an aggregate value of approximately $0.5 million in the case of
Mr. Zeevi, and consisting of shares of
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<PAGE>
SunGard common stock having an aggregate value of approximately $9.4 million in
the case of the SVM Star Ventures entities.
Termination Payments in Connection with Termination of Consulting
Agreements. It is presently contemplated that the consulting agreements between
Oshap and YTD Dovrat Management Services (1998) Ltd., an affiliate of Shlomo
Dovrat, and Zeevi Management Services Ltd., an affiliate of Avi Zeevi, will
each be terminated by Oshap at the effective time of the arrangement. As a
result, YTD Dovrat will receive a termination payment of $375,000 and an
additional payment of $275,000 representing severance for previously provided
services, and Zeevi Management will receive a termination payment of $115,000.
Indemnification; Insurance. SunGard agreed that all rights to
indemnification existing in favor of the persons serving as directors or
officers of Oshap as of the date of the agreement for acts and omissions
occurring prior to the effective time of the arrangement will survive the
effective time of the arrangement. After the arrangement, SunGard will cause
Oshap to indemnify and hold harmless from all losses any persons who were
directors or officers of Oshap, to the fullest extent such person could have
been indemnified under applicable law, indemnification agreements or the
governing documents of Oshap or its subsidiaries, for a period of seven years
from the effective time of the arrangement. In addition, SunGard agreed to
maintain for not less than seven years from the effective time of the
arrangement the directors' and officers' liability insurance policies currently
maintained by Oshap and its subsidiaries.
Voting Agreements
In connection with the arrangement, Oshap shareholders who own 4,150,782
Oshap ordinary shares constituting approximately 32% of the Oshap ordinary
shares outstanding on the record date have entered into voting agreements with
SunGard in which these shareholders have agreed to vote their Oshap shares in
favor of the arrangement.
Each Oshap shareholder who executed a voting agreement also delivered to
SunGard an irrevocable proxy to vote their shares in favor of the arrangement.
In addition, each Oshap shareholder who executed the voting agreement with
respect to shares owned beneficially, but not of record, agreed to use their
reasonable best efforts to cause the record owner of the shares they
beneficially owned to execute and deliver to SunGard an irrevocable proxy to
vote their shares in favor of the arrangement.
Nondisclosure and Noncompetition Agreements
In connection with the arrangement, Shlomo Dovrat, Avi Zeevi and the chief
executive officer of each of MINT and Decalog have entered into nondisclosure
and noncompetition agreements with SunGard. Each of Messrs. Dovrat and Zeevi
have agreed with SunGard that during the later of the period which ends three
years after the effective date of the arrangement or the period which ends two
years after their employment with SunGard terminates, he will not:
. communicate with or solicit any person who is a customer, formal
prospect, supplier, employee, salesman, agent or representative of, or
consultant to the Oshap business in an effort to obtain the person as a
customer, supplier, employee, salesman, agent or representative of or
consultant to, any other person that is competitive with or similar to
the Oshap business;
. market or sell any software, technology, product or service that is
competitive with any proprietary software, technology, product or
services of the Oshap business, or if employed by any SunGard company
following the completion of the arrangement, the part of the SunGard
group with which he was directly and significantly involved;
. establish, own, manage, operate, finance or control, or participate in
the establishment, ownership, management, operation, financing or
control of, or be a director, officer, employee, salesman, agent or
representative of, or consultant to any business that competes with or
is similar to the Oshap business;
38
<PAGE>
The Oshap business means the business conducted or proposed to be conducted
by the majority owned subsidiaries of Oshap as of the effective date of the
arrangement.
They have also agreed not to disclose or use any confidential or proprietary
information of the Oshap business.
The chief executive officer of each of MINT and Decalog have agreed in their
respective nondisclosure and noncompetition agreements to similar restrictions
with respect to the business of their company.
Resale Restrictions
The SunGard common stock issued in connection with the arrangement will be
freely transferable, except that shares issued to any Oshap shareholder who is
an affiliate of Oshap or who becomes an affiliate of SunGard are subject to a
number of restrictions on resale. An affiliate is defined generally as
including directors, executive officers and other persons who control a
company. Oshap shareholders who may be deemed affiliates have executed
affiliate agreements which:
. prohibit the affiliate from selling or otherwise reducing his risk in
any capital stock or options of Oshap, MINT or Decalog, and
. prohibit the affiliate from selling or otherwise reducing his risk in
any capital stock or options of SunGard
during the period which begins 30 days prior to consummation of the arrangement
and ends on the earlier of:
. the date on which financial results covering at least 30 days of post-
arrangement combined operations of SunGard and Oshap have been published
by SunGard, and
. the date the agreement is terminated.
In addition, the affiliate agreements further prohibit the sale, transfer or
other disposition of SunGard common stock received by the affiliates in the
arrangement at any time after the restricted period referred to above unless
the sale, transfer or other disposition complies with the requirements of the
federal securities laws. The purpose of the affiliate agreements is to comply
with the requirements of federal securities laws and pooling-of-interests
accounting rules.
No Appraisal Rights
Under Israeli law, holders of Oshap's ordinary shares are not entitled to
formal appraisal rights. Objections to the arrangement may be filed with the
Tel Aviv-Jaffa District Court. The Tel Aviv-Jaffa District Court, at its
discretion, may provide a remedy to any person who so objects.
Tax Consequences
United States Federal Income Tax Consequences
The following discussion summarizes the material U.S. federal income tax
consequences of the arrangement that will apply to holders of Oshap ordinary
shares who hold their Oshap ordinary shares as capital assets. This discussion
is based on current provisions of the Internal Revenue Code of 1986, referred
to as the Code, existing and proposed Treasury Regulations and current
administrative rulings and court decisions, all of which are subject to change.
Any change, whether or not retroactive, could alter the tax consequences
described below.
Oshap shareholders should be aware that this discussion does not deal with
all U.S. federal income tax considerations that may be relevant to a particular
Oshap shareholder in light of that shareholder's particular circumstances or to
a shareholder who is subject to special rules, such as a shareholder who is a
dealer in
39
<PAGE>
securities, who is subject to the alternative minimum tax provisions of the
Code, who acquired shares in connection with a stock option or stock purchase
plan or other compensatory transaction, who owns 10% or more of the voting
power of Oshap, or who holds the ordinary shares of Oshap as part of a hedging,
straddle or other risk reduction strategy. In addition, the following
discussion does not address the tax consequences of the arrangement under
state, local or foreign tax laws.
Each Oshap shareholder is urged to consult that shareholder's own tax
adviser as to the specific consequences of the arrangement to that shareholder
under applicable federal, state, local and foreign tax laws.
In connection with the filing of the registration statement, SunGard has
received an opinion of Blank Rome Comisky & McCauley LLP and Oshap has received
an opinion of Skadden, Arps, Slate, Meagher & Flom LLP, referred to in this
document as the Tax Opinions, addressing the U.S. federal income tax
consequences of the arrangement described below. The Tax Opinions have been
rendered on the basis of facts, representations, including representations in
certificates delivered by the respective managements of SunGard and Oshap, and
assumptions set forth in the Tax Opinions, which are consistent with the
expected state of facts existing as of the day of the closing. The Tax Opinions
are to the effect that, for U.S. federal income tax purposes:
. the arrangement will be treated as a "reorganization" within the meaning
of section 368(a) of the Code;
. no gain or loss will be recognized by SunGard or Oshap as a result of
the arrangement; and
. no gain or loss will be recognized by the shareholders of Oshap solely
as a result of the receipt of SunGard common stock at the effective time
in exchange for their Oshap ordinary shares pursuant to the arrangement.
SunGard's obligation to consummate the arrangement is conditioned upon the
receipt of a further opinion of Blank Rome Comisky & McCauley LLP and Oshap's
obligation to consummate the arrangement is conditioned upon the receipt of a
further opinion of Skadden, Arps, Slate, Meagher & Flom LLP, also referred to
in this document as the Tax Opinions, each dated as of the day of closing,
rendered on the basis of facts, representations, including representations in
certificates delivered by the respective managements of SunGard and Oshap, and
assumptions set forth in the Tax Opinions, which are consistent with the state
of facts existing as of the day of the closing, and opining to the same U.S.
federal income tax consequences discussed in the immediately preceding
paragraph.
The Tax Opinions are not binding on the IRS or the courts, and neither
SunGard nor Oshap has requested, or intends to request, a ruling from the IRS
with respect to any of the U.S. federal income tax consequences of the
arrangement. Therefore, there can be no assurance that the IRS will not
challenge the qualification of the arrangement as a reorganization or that any
such challenge will not be sustained by a court.
Tax Consequences of the Arrangement to U.S. Holders
In addition to the tax consequences of the arrangement described above, this
portion of the discussion will describe the U.S. federal income tax
consequences of the arrangement to U.S. Holders. For purposes of this
discussion, a "U.S. Holder" is any person who is:
. a citizen or resident of the U.S.;
. a corporation or other entity taxable as a corporation organized under
the laws of the U.S. or of any state thereof or the District of
Columbia;
. an estate the income of which is included in gross income for U.S.
federal income tax purposes regardless of source; or
. a trust, if a U.S. court is able to exercise primary supervision over
its administration and one or more U.S. persons have the authority to
control all of its substantial decisions.
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<PAGE>
As a result of the status of the arrangement as a reorganization:
. the aggregate tax basis of the SunGard common stock received in exchange
for Oshap ordinary shares in the arrangement will equal the aggregate
tax basis of the surrendered Oshap ordinary shares, decreased by the
amount of any tax basis allocable to the SunGard fractional shares for
which cash is received;
. a U.S. Holder who receives cash in lieu of SunGard fractional shares
will be treated as having received such fractional shares and then as
having received cash in redemption of such SunGard fractional shares. In
general, the U.S. Holder will recognize capital gain or loss equal to
the difference between the amount of cash received and the U.S. Holder's
tax basis allocable to the SunGard fractional shares.
. such gain or loss will be long term capital gain or loss if the Oshap
ordinary shares were held by the exchanging U.S. Holder for more than
one year on the day of the closing.
. the holding period for the SunGard common stock received in exchange for
Oshap ordinary shares pursuant to the arrangement will include the
period during which the surrendered ordinary shares were held by the
U.S. Holder.
Information Reporting Requirements
Any U.S. Holder who receives SunGard common stock in exchange for Oshap
ordinary shares will be required to file a notice with the IRS on or before the
last day for filing the federal income tax return for the U.S. Holder's taxable
year in which the arrangement is consummated. The notice must contain certain
information specifically enumerated in the United States Treasury regulations
promulgated under section 367(b) of the Code. U.S. Holders are advised to
consult their tax advisors for assistance in preparing such notice.
If a U.S. Holder of Oshap ordinary shares fails to give the notice described
in the preceding paragraph, and fails to establish a reasonable cause for the
failure, the IRS will be required to determine whether the exchange of Oshap
ordinary shares for SunGard common stock by such U.S. Holder is eligible for a
nonrecognition treatment. In making this determination the IRS may conclude
that:
. the exchange is eligible for nonrecognition treatment, despite the
noncompliance;
. the exchange is eligible for nonrecognition treatment provided that
certain conditions imposed by the Treasury regulations are satisfied; or
. the exchange is not eligible for nonrecognition treatment, in which case
the exchanging U.S. Holder will be subject to U.S. federal income tax on
the exchange. Nevertheless, the failure of any U.S. Holder to comply
with the notice requirement will not affect the tax treatment to other
U.S. Holders of Oshap ordinary shares who do comply with such notice
requirement.
Backup Withholding
A U.S. Holder who participates in the arrangement may be subject to U.S.
back-up withholding tax at a rate of 31%. U.S. backup withholding tax will be
allowed as a credit against the U.S. Holder's federal income tax liability or
alternatively, the U.S. Holder may be eligible for a refund of any excess
amounts withheld under the backup withholding rules, in either case provided
that certain required information is furnished to the IRS. To avoid back-up
withholding, each U.S. Holder who participates in the arrangement should
complete the Form W-9 or substitute form, or otherwise provide a U.S. taxpayer
identification number and certify that such person is not subject to back-up
withholding.
Tax Consequences of the Arrangement to Non-U.S. Holders
The following summary is applicable to holders of Oshap ordinary shares that
are not U.S. Holders, referred to as non-U.S. Holders in this document.
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As described above, no gain or loss will be recognized by a non-U.S. Holder
on the receipt of SunGard common stock for Oshap ordinary shares pursuant to
the arrangement if the arrangement qualifies as a reorganization. In addition,
no gain or loss will be recognized by a non-U.S. Holder on the receipt of cash
in lieu of SunGard fractional shares pursuant to the arrangement or on the
subsequent sale or exchange of the SunGard common stock, unless:
. the gain is effectively connected with the conduct of a trade or
business of the non-U.S. Holder in the United States, or, if a tax
treaty applies, is attributable to a permanent establishment maintained
by the non-U.S. Holder in the United States;
. the non-U.S. Holder is an individual who is present in the United States
for 183 days or more in the taxable year of disposition, and certain
other conditions are met; or
. the non-U.S. Holder is subject to tax under certain provisions of the
Code that apply to U.S. expatriates.
Dividends Paid by SunGard
Dividends paid by SunGard, if any, will be subject to withholding of U.S.
federal income tax at a 30% rate, a 25% rate if the recipient is eligible for
the benefits of the Convention Between the Government of the United States of
America and the Government of Israel with Respect to Taxes on Income, referred
to as the U.S.--Israel Tax Treaty, or a lower rate as may be specified by any
other applicable income tax treaty unless: the dividend is effectively
connected with the conduct of a trade or business of the non-U.S. Holder within
the United States; or if a tax treaty applies, it is attributable to a
permanent establishment of the non-U.S. Holder. In this event, the dividends
will be subject to ordinary U.S. federal income tax rates.
A non-U.S. Holder may be required to satisfy certain certification
requirements in order to claim treaty benefits or otherwise claim a reduction
of, or exemption from, the withholding described above.
Backup Withholding
The receipt of SunGard common stock in exchange for Oshap ordinary shares
and the receipt of cash in lieu of SunGard fractional shares in the arrangement
may be subject to backup withholding at a 31% rate. In addition, the receipt of
dividends with respect to SunGard common stock may be also subject to backup
withholding at a 31% rate. Non-U.S. Holders of Oshap ordinary shares will be
exempt from U.S. backup withholding with respect to the receipt of the SunGard
common stock in the arrangement and with respect to dividends paid in respect
of the SunGard common stock received in the arrangement, respectively, if such
persons certify as to their foreign status on a properly completed Form W-8 or
substitute form.
Israeli Tax Consequences
The following is a summary discussion of the material Israeli tax
considerations in connection with the arrangement. The following summary is
based upon the Israeli Income Tax Ordinance [New Version] 1961, as amended, and
other laws and regulations, all as in effect as of the date hereof. No
assurance can be given that future legislation, regulations or interpretations
will not significantly change the tax considerations described below, and any
such change may apply retroactively. This summary does not discuss all aspects
of Israeli tax consequences which may apply to particular holders of Oshap
ordinary shares in light of their particular circumstances, such as investors
subject to special tax rules or other investors referred to below. Holders of
Oshap ordinary shares should consult their own tax advisors as to the Israeli
tax consequences of the arrangement applicable to them.
In general, under the Israeli Income Tax Ordinance, the exchange of shares
of an Israeli company for shares of another company is deemed to be a sale of
capital assets.
Israeli law generally imposes a capital gains tax on the sale of capital
assets located in Israel by both residents and non-residents of Israel unless a
treaty between Israel and the country of the non-resident provides
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otherwise. Nevertheless, as set forth below, holders of Oshap's ordinary shares
who acquired their shares at the time of the initial public offering of Oshap,
or any time thereafter ("Qualified Holders"), will not be subject to Israeli
capital gains tax in connection with the exchange of Oshap's ordinary shares
for SunGard's common stock pursuant to the arrangement unless trading in
securities is their business, as defined under Israeli law. The foregoing
exemption does not apply to Israeli corporations that are subject to the
Inflationary Adjustments Law--1984.
Regulatory Exemption
Regulations promulgated under the Israeli Income Tax Ordinance currently
provide for an exemption from Israeli capital gains tax on gains derived from
the sale by qualifying sellers of shares of certain "Industrial Companies" or
"Industrial Holding Companies" which are traded in certain United States
securities markets (including NASDAQ). Oshap believes that it is currently an
"Industrial Holding Company," and that, as a result, the exchange of the Oshap
ordinary shares in the arrangement by Qualified Holders will qualify for that
exemption. The exchange of Oshap's ordinary shares by Qualified Holders will
qualify for such exemption provided that Oshap constitutes an "Industrial
Holding Company" on the effective date of the arrangement. The determination of
an "Industrial Holding Company" status is made by a company each year and is
reviewed by the tax authorities only upon the conduct of a tax audit. There can
be no assurance that the Israeli tax authorities will not deny Oshap's status
as an industrial holding company after the date of this document or
retroactively after the completion of the arrangement. It is believed that the
Israeli tax authorities may currently be re-evaluating the criteria for the
determination of the "Industrial Company" and "Industrial Holding Company"
status under Israeli law. As a result of such re-evaluation, the tax
authorities may deny Oshap's status as an "Industrial Holding Company."
U.S.-Israel Tax Treaty Exemption
In addition to the exemption from capital gains tax described above, the
U.S.--Israel Tax Treaty will exempt persons who qualify under this treaty as
residents of the United States, referred to as the Treaty U.S. Residents, from
Israeli capital gains tax in connection with the disposition of the shares in
the arrangement provided that such Treaty U.S. Resident has not held, directly
or indirectly, shares representing 10% or more of the voting power of Oshap at
any time during the twelve-month period preceding the arrangement.
Accounting Treatment
The arrangement 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 complete the arrangement is
conditioned upon its receipt of:
. a letter from Oshap's independent auditors that to the best of their
knowledge after due inquiry, no condition exists that would preclude
Oshap's ability to be a party in a business combination to be accounted
for as a pooling of interests; and
. a letter from SunGard's independent accountants that SunGard may account
for the arrangement as a pooling of interests.
SunGard has the right to waive the condition that the arrangement be
accounted for as a pooling of interests. If the arrangement is consummated but
fails to qualify for pooling-of-interests accounting treatment, then the
transaction may be accounted for as a purchase. Under that method, the fair
market value of the SunGard common stock issued in the arrangement would be
recorded as the cost of acquiring Oshap's business. That cost would be
allocated to the individual assets of Oshap that were acquired and liabilities
of Oshap that were assumed according to their respective fair values. The fair
market value of the SunGard common stock to be issued in the arrangement is in
excess of the amounts at which the net assets are carried in Oshap's accounts.
A portion of the excess could be charged to expense immediately and the
remainder would be amortized. As a result, if the arrangement fails to qualify
for pooling-of-interests accounting treatment, and the transaction is accounted
for under the purchase method, the combined financial results of SunGard and
Oshap could be adversely affected.
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Regulatory Matters
United States
The United States Hart-Scott-Rodino Antitrust Improvements Act of 1976 does
not require that a filing be made with respect to the arrangement. The
Antitrust Division of the Department of Justice and the Federal Trade
Commission, however, have the authority to challenge the arrangement on
antitrust grounds before or after the arrangement is completed.
Israeli
The consummation of the arrangement is subject to Section 233 of the Israel
Companies Ordinance, referred to as Section 233. On March 30, 1999, Oshap filed
a motion under Section 233, referred to as the First Motion, with the Tel Aviv-
Jaffa District Court, referred to as the Court, requesting that the Court issue
an order, referred to as the First Order, authorizing Oshap to hold the Oshap
extraordinary general meeting relating to the arrangement. The First Order was
granted on April 11, 1999. Following approval of the arrangement by Oshap's
shareholders Oshap must file with the Court a second motion requesting the
Court to issue an order, referred to as the Final Court Order, approving the
arrangement unconditionally. As soon as possible subsequent to the issuance of
the Final Court Order and the satisfaction of all closing conditions to the
agreement, Oshap will consummate the arrangement by filing the Final Court
Order with the Registrar of Companies in Israel.
Approvals in connection with the arrangement by the Israel Investment Center
and the Office of the Chief Scientist of the Ministry of Industry and Trade are
also required. The Investment Center has issued its approval in connection with
the arrangement, and Oshap has requested the approval of the Office of Chief
Scientist. In addition, SunGard is exempt from the Israeli Security Authority
from the requirement to publish a prospectus in Israel pursuant to the
prevailing laws of Israel.
Germany
German law requires that the parties file a notification with the German
Federal Cartel Office, which the parties expect to make promptly. The initial
review period is one month from notification. If the Federal Cartel Office has
concerns regarding the consequences of the transaction on competition in
Germany, it can extend the review period up to an additional period of four
months. Until clearance is received or the review period expires without
extension, the parties are barred from completing the arrangement, unless the
Federal Cartel Office grants a derogation.
New York Stock Exchange Listing
SunGard will cause the shares of SunGard common stock to be issued in
connection with the arrangement to be listed on the New York Stock Exchange
upon the effective date of the arrangement.
Offer to Purchase Stock and Options of MINT and Decalog
The agreement requires SunGard to offer to purchase outstanding shares of
MINT and Decalog which are owned by minority shareholders of those companies at
a price per share of $13.15 for MINT shares and $9.26 for Decalog shares. The
agreement also requires SunGard to offer to purchase outstanding stock options
of MINT and Decalog which are exercisable as of the effective date at the same
respective price, less, in each case, the exercise price of the option. The
purchase price will be paid in cash on the effective date of the arrangement;
however, with respect to any MINT or Decalog shareholder or optionholder who is
an affiliate of Oshap, within the meaning of SEC Rule 145, the purchase price
will be paid in shares of SunGard common stock based on the average closing
price of SunGard common stock during the 10 day measurement period.
SunGard also will offer to cancel each option to purchase MINT or Decalog
shares outstanding on the effective date of the arrangement, which is not then
exercisable and which is held by an affiliate of Oshap, in
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exchange for shares of SunGard common stock. The number of SunGard shares to be
issued in the exchange will have a market value, based upon the average closing
price of SunGard common stock during the 10 day measurement period, equal to
the value of the MINT or Decalog options determined using a Black-Scholes
pricing formula, including a discount based upon the vesting schedule for
unvested options.
SunGard is required to file a registration statement under the Securities
Act as soon as practicable after the effective date with respect to any shares
of SunGard common stock so issued and to use its reasonable best efforts to
have such registration statement declared effective as soon as practicable and
to maintain the effectiveness of such registration statement for two years.
The agreement also requires SunGard to offer to assume and roll over
outstanding stock options of MINT and Decalog which are not exercisable as of
the effective date and which are not held by affiliates of Oshap. If agreed to
by an optionholder, on the effective date of the arrangement, non-exercisable
options of MINT and Decalog will become an option to purchase a number of
shares of SunGard common stock, rounded to the nearest share, equal to the
number of MINT or Decalog shares subject to the option multiplied by the option
exchange ratio. The option exchange ratio will be determined by dividing (a)
$13.15 per share in the case of MINT options or $9.26 per share in the case of
Decalog options by (b) the average closing price of SunGard common stock during
the 10 day measurement period, with the result rounded to the nearest
millionth. The exercise price for each SunGard option will equal the current
exercise price under the MINT or Decalog options divided by the option exchange
ratio, rounded to the nearest cent. All other terms of the MINT or Decalog
options, including vesting schedules and expiration dates, will remain
unchanged, except that the options will be administered by SunGard's board of
directors and compensation committee. Promptly following the effective date,
SunGard will file a registration statement under the Securities Act registering
any shares of SunGard common stock that may become issuable upon exercise of
the SunGard options.
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The Agreement
The following is a summary of the material provisions of the agreement. A
copy of the agreement is attached as Appendix A to this document. The agreement
is incorporated into this document by reference, and you are urged to read it
carefully.
The agreement provides for the shareholders and optionholders of Oshap to
enter into an arrangement governed by Section 233 of the Israeli Companies
Ordinance [New Version] 5743-1983. As a result of the arrangement, SunGard
common stock will be issued in exchange for all of the issued and outstanding
ordinary shares of Oshap and all of the issued and outstanding options to
purchase Oshap ordinary shares.
The arrangement will become effective upon the filing of the Final Court
Order with the Registrar of Companies in Israel. See "The Arrangement and
Related Transactions--Regulatory Matters--Israeli." Following the consummation
of the arrangement, the corporate existence of Oshap shall continue unaffected
and unimpaired and Oshap will become a wholly owned subsidiary of SunGard
either directly or through a wholly owned subsidiary of SunGard. The parties
have agreed that the arrangement will be completed following the later of July
1, 1999 and the satisfaction of all conditions to closing.
Exchange of Oshap Ordinary Shares
At the effective time, by virtue of the filing of the Final Court Order
approving the arrangement with the Israeli Registrar of Companies in Israel,
each Oshap ordinary share will be deemed converted into and exchanged for a
fraction of a share of SunGard common stock equal to the exchange ratio. The
exact number of shares of SunGard common stock each Oshap shareholder will
receive will be based upon an exchange ratio that will not be fixed until two
days prior to the effective date of the arrangement. The exchange ratio
represents the fraction of a share of SunGard common stock that Oshap
shareholders will receive for each Oshap ordinary share. The exchange ratio
will be determined by reference to the average of the closing sale prices of
SunGard common stock over a 10 trading day period ending two days prior to the
effective date of the arrangement, as follows.
. If the average closing price of SunGard common stock is equal to or
greater than $34.1063 but less than or equal to $46.1438, the exchange
ratio will be 0.386293;
. If the average closing price of SunGard common stock is greater than
$46.1438 but less than or equal to $50.7074, the exchange ratio will be
equal to $17.8250 divided by the average closing price of SunGard common
stock;
. If the average closing price of SunGard common stock is greater $50.7074,
the exchange ratio will be 0.351526;
. If the average closing price of SunGard common stock is less than
$34.1063, but greater than or equal to $30.5429, the exchange ratio will
be equal to $13.1750 divided by the average closing price of SunGard
common stock; and
. If the average closing price of SunGard common stock is less than
$30.5429, the exchange ratio will be 0.431360.
The exchange ratios set forth above will be automatically adjusted to
reflect any stock split, stock dividend or other similar transaction by SunGard
between the date of the agreement and the effective date of the arrangement.
No fractional shares of SunGard common stock will be issued in connection
with the arrangement. In lieu of fractional shares, any holder of Oshap
ordinary shares who would otherwise be entitled to receive a fraction of a
share of SunGard common stock will instead be paid in cash an amount determined
by multiplying the average closing price of SunGard common stock during the 10
day measurement period by the fractional interest of SunGard common stock to
which the holder would be entitled.
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Treatment of Oshap Stock Options
Each option to purchase Oshap ordinary shares under Oshap's stock option
plans outstanding on the effective date of the arrangement will be cancelled in
exchange for shares of SunGard common stock. The number of SunGard shares to be
issued in the exchange will have a market value, based upon the average closing
price of SunGard common stock during the 10 day measurement period, equal to
the value of the options determined using the Black-Scholes pricing formula as
described in the agreement, including a discount based upon the vesting
schedule for unvested options.
Stock Ownership Following the Arrangement
Based on the number of shares of Oshap ordinary shares and options to
purchase Oshap ordinary shares issued and outstanding as of the record date and
assuming an average stock price of SunGard common stock of $29.5625 (the
closing per share sale price of SunGard common stock on May 11, 1999), an
aggregate of up to approximately 6.2 million shares of SunGard common stock
will be issued to Oshap shareholders and optionholders and holders of minority
interests and options of MINT and Decalog. Based on 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 arrangement, the former shareholders of Oshap
would hold approximately 5% of SunGard's total issued and outstanding shares.
In addition, SunGard will issue approximately 500,000 options to purchase
SunGard common stock in exchange for options to purchase ordinary shares of
MINT and Decalog.
Procedures for Exchange of Certificates
Soon after completion of the arrangement, Norwest Bank, N.A., the exchange
agent for the transaction, will mail to the registered holders of Oshap
ordinary shares a letter of transmittal and instructions for use of the letter
of transmittal in effecting the surrender of Oshap share certificates in
exchange for SunGard stock certificates. Upon surrender of an Oshap share
certificate to the exchange agent for exchange, together with a duly executed
letter of transmittal and any other required documents, each holder of an Oshap
share certificate will be entitled to receive a certificate representing the
whole number of shares of SunGard common stock that the holder has the right to
receive. No certificates for fractional shares of SunGard common stock will be
issued in connection with the arrangement.
Oshap shareholders should not surrender their Oshap share certificates for
exchange until they receive the letter of transmittal.
Effect on Certificates
Upon completion of the arrangement, all of the issued and outstanding
ordinary shares of Oshap will be deemed transferred to SunGard and all options
to purchase Oshap ordinary shares will be deemed canceled, in exchange for
shares of SunGard common stock. All holders of Oshap stock certificates will
cease to have any rights as shareholders of Oshap, except for the right to
receive shares of SunGard common stock.
Representations and Warranties
The agreement contains statements and promises, called representations and
warranties, made by SunGard and Oshap. SunGard's representations and warranties
relate to the following:
. organization and qualification;
. capitalization;
. authority relative to the agreement;
. no violations, etc.
. SEC filings; financial statements;
. absence of changes or events;
. proxy statement;
. board approval;
. finders or brokers; and
. disclosure.
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Oshap's representations and warranties relate to the following:
. organization and qualification;
. capital stock of subsidiaries;
. capitalization;
. authority relative to the agreement;
. no violations, etc.
. SEC filings; financial statements; books and records;
. absence of undisclosed liabilities;
. absence of changes or events;
. proxy statement and other filings;
. litigation;
. title to properties;
. certain contracts;
. labor and independent contractor matters;
. compliance with law;
. grants, incentives and subsidies;
. intellectual property rights;
. taxes;
. employee benefit plans; ERISA;
. environmental matters;
. finders or brokers;
. board recommendation;
. opinions of financial advisors;
. related party and affiliate transactions;
. insurance;
. questionable payments; and
. disclosure.
None of the representations and warranties made by SunGard or Oshap in the
agreement will survive the closing of the arrangement. To review all of the
representations and warranties contained in the agreement you should read the
agreement which is attached as Appendix A.
Covenants
The agreement includes several covenants and agreements of SunGard and Oshap
which govern their actions until the arrangement is completed. Some of
SunGard's covenants and agreements require that SunGard and its significant
subsidiaries will:
. use all commercially reasonable efforts to preserve intact its business
organization;
. take no action which would materially adversely affect the ability of
SunGard to consummate the transactions contemplated by this Agreement, or
the timing thereof;
. use its reasonable best efforts to cause the SunGard common stock to be
issued in connection with the arrangement to be approved for listing on
the NYSE;
. use its reasonable best efforts to obtain an exemption from the Israeli
Securities Authority from the Israeli prospectus delivery requirements
under Israeli law or comply with Israeli prospectus requirements provided
that SunGard shall not be required to make public disclosures which are
material under U.S. federal securities laws and are not being or required
to be disclosed to SunGard's shareholders under the U.S. federal
securities laws; and
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. file and use its reasonable best efforts to have declared effective, a
registration statement on Form S-3 registering for resale the SunGard
common stock issued to persons who have signed voting agreements with
SunGard.
In addition, SunGard agreed that it will not nor will it permit any of its
subsidiaries to:
. amend SunGard's charter documents in a manner which would adversely
change the rights or privileges of the SunGard common stock;
. during the ten day period in which SunGard common stock average is
determined, declare, set aside or pay any dividend or other distribution
of cash or assets in respect of SunGard capital stock or purchase, redeem
or otherwise acquire any shares of SunGard capital stock or of any of its
subsidiaries, except as otherwise provided in the agreement;
. take or cause to be taken, whether before or after the effective time,
any action that would disqualify the arrangement:
.as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, or
.as a pooling of interests for accounting purposes; and
. acquire or agree to acquire, by merging or consolidating with, by
purchasing an equity interest in or a portion of the assets of, or by any
other manner, any business or any corporation, partnership, association
or other business organization or division thereof, or otherwise acquire
or agree to acquire any assets of any other person, or dispose of any
assets, which, in any such case, would prevent the consummation of the
arrangement or the other transactions contemplated by this agreement.
Some of Oshap's covenants and agreements require that Oshap and its
subsidiaries will:
. conduct their respective operations in accordance with its ordinary
course of business consistent with past practice;
. use all commercially reasonable efforts to preserve intact its business
organization;
. keep available the services of its officers and employees;
. maintain satisfactory relationships with suppliers, distributors,
customers and others having a business relationship with it;
. take no action which would materially adversely affect the ability of the
parties to consummate the transactions contemplated by the agreement or
the timing thereof;
. consult with SunGard on important business issues affecting Oshap and its
subsidiaries;
. give SunGard and its authorized representatives after reasonable prior
notice reasonable access during normal business hours to all facilities,
personnel and operations and to all of their respective books and
records;
. use its reasonable best efforts to deliver to SunGard upon closing the
resignations of specified directors of Oshap;
. use its reasonable best efforts to cause to be delivered to SunGard a
letter of Deloitte & Touche LLP, dated no more than two business days
before the date on which the Form S-4 becomes effective, and satisfactory
in form and substance to SunGard), 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;
. terminate upon closing the consulting agreements between Oshap and YTD
Dovrat and between Oshap and Zeevi Management Services in accordance with
the terms of such agreements; and
. use its reasonable best efforts to terminate upon closing the allocation
of expenses agreement between Oshap and Tecnomatix.
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In addition, Oshap agreed that without SunGard's prior written consent,
Oshap will not nor will it permit any of its subsidiaries to:
. amend its charter documents or governing documents;
. authorize for issuance, issue, sell, deliver, grant any options for or
otherwise agree or commit to issue, sell or deliver any shares of any
class of its capital stock or any securities convertible into or
exercisable for shares of any class of its capital stock, other than in
accordance with the terms of currently outstanding convertible
securities, warrants and options;
. split, combine or reclassify any shares of its capital stock, declare,
set aside or pay any dividend or other distribution (whether in cash,
stock or property or any combination thereof) in respect of its capital
stock or purchase, redeem or otherwise acquire any shares of its own
capital stock or of any of its subsidiaries;
. other than in the ordinary course of business consistent with past
practice incur or assume long-term or short-term debt or issue debt
securities other than for borrowings under existing lines of credit;
. other than in the ordinary and usual course of business assume,
guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the material obligation of any
other person, other than subsidiaries of Oshap;
. other than in the ordinary and usual course of business, make any
material loans, advances, capital contributions to, or investments in,
any other person, other than subsidiaries of Oshap
. except in the ordinary course of business consistent with past practice,
increase in any manner the compensation of:
. any employee; or
. any of its directors or officers
. pay or agree to pay any pension, retirement allowance or other employee
benefit not required, or enter into or amend or agree to enter into or
amend any agreement or arrangement with a director or officer or
employee, whether past or present, relating to any pension, retirement
allowance or other employee benefit, except as required under currently
existing agreements, plans or arrangements or with respect to employees,
in the ordinary course of business consistent with past practice;
. grant any severance or termination pay to, or enter into or amend any
employment, severance, or change in control agreement with, any employee
or any of its directors or officers except as required by applicable law
or in the ordinary course of business consistent with past practice;
. except as may be required to comply with applicable law or with
collective bargaining agreements that become applicable to Oshap by
operation of law, become obligated under any new pension plan, welfare
plan, multiemployer plan, employee benefit plan, benefit arrangement, or
similar plan or arrangement, which was not in existence on the March 9,
1999, including any bonus, incentive, deferred compensation, stock
purchase, stock option, stock appreciation right, group insurance,
severance pay, retirement or other benefit plan, agreement or
arrangement, or employment or consulting agreement with or for the
benefit of any person, or amend any of such plans or any of such
agreements in existence on the date hereof; provided, however, that this
clause will not prohibit Oshap from renewing any plan, agreement or
arrangement already in existence on terms no more favorable to the
parties to the plan, agreement or arrangement;
. acquire, sell, lease, license or dispose of any assets which in the
aggregate are material to Oshap and its subsidiaries taken as a whole,
except as may be required or contemplated by the agreement;
. authorize or commit to make any material capital expenditures in excess
of $500,000;
. make any change in the accounting methods or accounting practices
followed by Oshap, except as required by generally accepted accounting
principles or applicable law;
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. settle any action, suit, claim, investigation or proceeding (legal,
administrative or arbitrative) in excess of $100,000;
. make any material election under the Internal Revenue Code of 1986 or
Israeli tax law not consistent with their past practices;
. take or cause to be taken any action that would:
. disqualify the arrangement as a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code of 1986, or
. disqualify the arrangement as a pooling of interests for accounting
purposes; and
. enter into any third party distribution agreements or material contracts
(other than contracts with customers).
In addition, some of the covenants and agreements of both SunGard and Oshap
include:
. SunGard will use its reasonable best efforts to obtain an opinion of
PricewaterhouseCoopers LLP to the effect that the arrangement may be
accounted for as a pooling of interests and Oshap will use its reasonable
best efforts to obtain an opinion of Deloitte & Touche LLP to the effect
that, to the best of their knowledge after due inquiry, no condition
exists that would preclude Oshap's ability to be a party in a business
combination to be accounted for as a pooling of interests;
. SunGard and Oshap will not, and will not permit any of their respective
representatives to, issue or cause the publication of any press release
or make any other public announcement with respect to the transactions
contemplated by the agreement without the consent of the other party,
which consent shall not be unreasonably withheld;
. each of SunGard and Oshap will use its respective best efforts to cause
the arrangement to qualify as a reorganization under the provisions of
Section 368(a) of the Internal Revenue Code of 1986.
To review all of the covenants and agreements contained in the agreement,
you should read the agreement which is attached as Appendix A.
Non-Solicitation
In the agreement, Oshap has agreed that neither it nor its subsidiaries will
solicit, initiate, encourage, induce or participate in any discussions or
negotiations with any third parties with respect to proposals concerning any
merger, consolidation, exchange of shares or other business combination, sale
or issuance of shares of capital stock, sale, lease, exchange, transfer or
license of assets, tender offer or exchange offer or similar transaction
involving Oshap or its subsidiaries. The restriction described in the previous
sentence is subject to exceptions which would permit Oshap to engage in such
activities following receipt of an acquisition proposal if the Oshap board of
directors determines in good faith that failure to do so will violate the
board's fiduciary duties under applicable law. You should read the agreement
which is attached as Appendix A for a more complete discussion of the non-
solicitation provision.
Indemnification; Insurance
The agreement provides that all rights to indemnification existing in favor
of the persons serving as directors or officers of Oshap as of the date of the
agreement for acts and omissions occurring prior to the effective time of the
arrangement will survive the effective time of the arrangement. After the
arrangement, SunGard will cause Oshap to indemnify and hold harmless from all
losses any persons who were directors or officers of Oshap, to the fullest
extent such person would have been indemnified under applicable law,
indemnification agreements or the governing documents of Oshap or its
subsidiaries, for a period of seven years from the effective time of the
arrangement. In addition, SunGard agreed to maintain for not less than seven
years from the effective time of the arrangement the directors' and officers'
liability insurance policies currently
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maintained by Oshap and its subsidiaries. The right to indemnification and
insurance described above is subject to exceptions. You should read the
agreement which is attached as Appendix A for a more complete discussion of the
indemnification and insurance provisions.
Conditions to the Arrangement
The completion of the arrangement depends upon the satisfaction or waiver of
certain conditions, including, among other things:
. approval of the arrangement by the Oshap shareholders;
. approval of the arrangement by the Oshap optionholders or execution and
delivery to SunGard of the option exchange agreements by all of the Oshap
optionholders;
. expiration or termination of any waiting period under the Hart-Scott-
Rodino Antitrust Improvements Act of 1976;
. no governmental agency or court has prohibited or challenged the
consummation of the arrangement;
. the registration statement on Form S-4, of which this prospectus is a
part, having become effective in accordance with the provisions of the
Securities Act, and no stop order having been issued by the SEC with
respect to the registration statement on Form S-4;
. approval of the listing of the shares of SunGard common stock to be
issued in the arrangement for listing on the New York Stock Exchange;
. delivery by the independent auditors for Oshap to SunGard of a letter to
the effect that, to the best of their knowledge after due inquiry, no
condition exists that would preclude Oshap's ability to be a party in a
business combination to be accounted for as a pooling of interests and
delivery by the independent accountants for SunGard of a letter to
SunGard to the effect that SunGard may account for the arrangement as a
pooling of interests;
. all necessary governmental consents will have been obtained;
. that the representations and warranties of the parties are true and
correct as of the date of the agreement and as of the effective date of
the arrangement, except where the failure of representations and
warranties does not have, individually or in the aggregate, a material
adverse effect on the company making the representations and warranties;
. the issuance of the Final Court Order in Israel approving the arrangement
including the exchange ratio but without giving effect to appeal periods;
. approvals of the Investment Center and the Office of the Chief Scientist
of the Israeli Ministry of Industry and Trade for the change in control
of MINT and Decalog;
. the parties will have performed in all material respects all obligations
required to be performed by them under the agreement;
. counsel to SunGard has delivered an opinion to SunGard regarding certain
federal income tax consequences of the arrangement and counsel to Oshap
has delivered a similar opinion to Oshap; and
. SunGard will have received the resignations of Oshap's directors.
To review all of the conditions to the arrangement, you should read the
agreement attached as Appendix A.
Termination
SunGard and Oshap can jointly agree to terminate the arrangement at any
time. In addition, either company can terminate the arrangement if:
. the arrangement is not completed by December 31, 1999, unless the failure
to complete the arrangement is because of a failure by the terminating
party to perform any of its obligations under the agreement;
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. Oshap shareholder approval is not obtained;
. Oshap optionholder approval is not obtained and all of the Oshap
optionholders have not executed exchange agreements;
. the other company breaches the agreement or if the other company's
representations or warranties become inaccurate, and that breach is not
cured within 15 business days and that breach would cause the conditions
to closing not to be satisfied; or
. a judgment, order or other legal restraint or prohibition is in effect
preventing the consummation of the arrangement and is final and
nonappealable.
In addition, either company may terminate the arrangement prior to the date
Oshap shareholder approval is obtained if:
. there is a change in the business, operations or financial condition of
the other company between the date of the agreement and the date Oshap
shareholder approval is obtained which would have a material adverse
effect on that company. A decline in SunGard's common stock price will
not, in and of itself, trigger Oshap's right to terminate the agreement.
In addition, SunGard may terminate the arrangement if:
. Oshap's board of directors withdraws or adversely modifies its
recommendation of the arrangement to its shareholders;
. Oshap enters into any letter of intent or agreement relating to an
alternative acquisition proposal; or
. Oshap fails to within 10 business days of the commencement of a tender or
exchange offer, recommend to its shareholders and, if applicable,
optionholders rejection of the any tender or exchange offer.
Expenses and Termination Fee
All fees and expenses incurred in connection with the agreement and the
transactions contemplated by the agreement will be paid by the party incurring
those expenses, whether or not the arrangement is completed. However, SunGard
will pay all fees and expenses incurred in connection with the filing, printing
and mailing of the registration statement on Form S-4 and this document.
If the agreement is terminated by SunGard because:
. Oshap's board of directors withdraws or adversely modifies its
recommendation of the arrangement to its shareholders;
. Oshap enters into any letter of intent or agreement relating to an
alternative acquisition proposal; or
. Oshap fails to within 10 business days of the commencement of a tender or
exchange offer, recommend to its shareholders and, if applicable,
optionholders rejection of the tender or exchange offer
then Oshap must pay to SunGard, via wire transfer, within two business days
after the termination of the agreement, a nonrefundable fee in the amount of $6
million.
If the agreement is terminated by SunGard or Oshap as a result of Oshap
shareholders not approving the agreement and Oshap consummates an alternative
acquisition transaction at any time prior to March 9, 2000, then Oshap is
required to pay to SunGard, via wire transfer, a nonrefundable fee in the
amount of $8 million upon closing of the alternative acquisition transaction.
For a complete description of the circumstances under which the termination
fee is payable by Oshap, we urge you to review the agreement attached as
Appendix A.
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Amendment
The agreement may be amended at any time before or after approval of the
arrangement by the shareholders of Oshap. However, after obtaining Oshap
approval, no amendment may be made which by law requires further approval by
Oshap shareholders or the Israeli court without the further approval of Oshap's
shareholders or the Israeli court. The agreement may not be amended except by
an instrument in writing signed on behalf of each of the parties.
Controlling Law
The agreement is governed by the laws of the Commonwealth of Pennsylvania
provided that matters affecting validity of corporate action taken by Oshap
will be governed by the laws of the State of Israel.
Information Concerning Oshap
Business of Oshap
Oshap, a growth oriented software group with independent operating
subsidiaries and affiliates, focuses on software companies offering high-end
software products to emerging global corporate market niches with potential
leadership positions in such markets.
Oshap's business strategy is to take a major stake in the companies it
invests in and become their main financial and strategic partner, playing an
active role in nurturing their growth. Utilizing its extensive experience in
worldwide software markets and its track record in participating in and
contributing to the growth of software companies, Oshap works closely with its
companies to build independent management teams with proven track records, to
develop growth-oriented strategies, to establish strong worldwide marketing and
sales networks and to create focused development plans. Close attention is also
paid to development of strategic alliances and to establishing strong financial
control systems.
Oshap owns, directly and indirectly, a 98% interest (83% interest on a
fully-diluted basis) in MINT and a 77% interest (69% interest on a fully-
diluted basis) in Decalog. MINT is a leading provider to the financial services
industry of software solutions that enable integration of disparate
applications and networks. Decalog is a leading provider of comprehensive
software solutions that enable large global asset management organizations to
automate critical steps in the investment management process. Oshap also
founded, and now holds 18% of the shares of, Tecnomatix, a world leader in the
market for computer aided production engineering or CAPE software products.
Tecnomatix is an Israeli company whose shares are traded on the Nasdaq Stock
Market System. In June 1998, Oshap acquired 41% of the shares of iKnowledg
Inc., a newly incorporated Delaware corporation which will provide software
solutions for electronic publication of corporate knowledge.
Oshap was incorporated in Israel in December, 1981. Oshap's ordinary shares
have been traded on Nasdaq under the symbol OSHSF since 1985.
Business of MINT
Overview
MINT is a leading provider to the financial services industry of software
solutions that enable integration of disparate applications and networks, a
process commonly known as enterprise application integration or EAI. MINT's
unique approach to application integration empowers business users in financial
institutions to drive application integration processes to meet rapidly
changing business needs. The MINT suite of products accomplishes seamless
application integration though dynamic routing, validation, reformatting and
enrichment of inter-application messages based on their content and user-
defined business rules. MINT's products provide
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an easy to use environment in which business users, rather than software
programmers, can define and update business rules using business terminology
and MINT's financial knowledge base. MINT's solutions allow financial
institutions to streamline operations, improve customer service, reduce time to
market of new products and services, reduce information technology costs,
effectively integrate distributed operations and enhance risk management.
MINT targets its products to financial institutions, including commercial
and investment banks, asset management firms, custodians, financial information
and clearing services providers, and corporate treasury departments.
Products
MINT's products create an infrastructure that enables seamless integration
of disparate applications and networks through dynamic routing, validation,
reformatting and enrichment of inter-application messages based on their
content and user-defined business rules. MINT's products are modular, scalable
and flexible and may be rapidly deployed in various configurations to address
the specific requirements of MINT's customers. MINT Message Broker serves as
the centralized message hub to this infrastructure, enabling inter-application
and network connectivity and a platform for the execution of business rules.
The business rules for routing, validation, reformatting and enrichment are
created using the MINT Rule Manager which provides an environment in which
business users can define and update business rules using business terminology
and MINT's embedded library of financial knowledge. The MINT financial
libraries contain a knowledge base of various financial message types and
standards. MINT's network connectivity products and adapters enable financial
institutions to connect to external value-added networks (e.g., S.W.I.F.T.,
CREST) as well as various middleware transportation platforms and operating
systems. MINT complements its product suite with MINT Disaster Recovery for
transaction level backup capabilities.
Sales and Marketing
MINT's sales and marketing strategy is based on direct sales complemented
with sales through distribution and marketing alliances. MINT has established a
direct sales force operating out of its offices in the U.S., the U.K.,
Switzerland, Germany and Israel.
To date, most of MINT's revenues have been generated from sales to European
customers. In 1997, MINT opened its sales and support office in New York in
order to further penetrate the U.S. market. In 1997 and 1998, MINT increased
its direct sales force and marketing operations both in Europe and the U.S. and
MINT intends to expand these operations in the future, primarily in the U.S.
In addition, MINT has recently established marketing, promotion and
distribution alliances with middleware vendors, systems integrators and
professional service organizations.
Competition
MINT operates in markets that are intensely competitive and are expected to
become more competitive as current competitors expand their product offerings
and new competitors enter the market. MINT's current competitors include a
number of companies offering solutions to the application integration market,
as well as financial network connectivity solutions, some of which are directly
competitive with MINT's products.
MINT competes with internal information technology departments of current
and potential customers that have developed or may develop solutions that may
substitute for some or all of those offered by MINT. MINT faces competition
from software vendors targeting the general application integration market
through various technologies and solutions. Other vendors offer financial
network connectivity solutions. MINT's principal competitors include, among
others: New Era of Networks, Inc., Software Technologies Corporation and Braid
Systems.
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MINT also competes with systems integrators and professional services
organizations that design and develop custom systems and perform custom
integration of systems and applications.
Business of Decalog
Overview
Decalog is a provider of comprehensive software solutions that enable global
asset management organizations to automate critical steps in the investment
management process. Using Decalog's solutions, its customers can streamline the
investment management process and thereby improve productivity, more
effectively manage risks, reduce costs and provide better customer service.
The current lack of automation software to support portfolio managers,
traders and compliance personnel results in an investment process which is
error-prone, costly and slow. Consequently, investment management personnel
must devote valuable time to processing tasks rather than to investment
analysis, decision making and trade execution. Furthermore, without proper
tools to check compliance with internal, regulatory and investor rules and
requirements before a trade is executed, asset management organizations are
exposed to significant risks and potential costs associated with non-compliant
trades.
Currently, many of the critical tasks involved in the investment management
process are primarily performed manually. Decalog seeks to allow multibillion
dollar top-tier asset management organizations to bridge this "automation gap"
in the investment management process through the use of its IDEE product suite
and related maintenance and professional services. Decalog's IDEE product suite
facilitates improved returns on assets through more informed decision-making
and assists portfolio managers by providing real-time information regarding
positions and transactions. The IDEE product suite also provides portfolio
managers with advanced portfolio modeling and simulation capabilities. It
provides traders with electronic trading capabilities and a single integrated
environment in which to manage orders and perform trade execution tasks. The
IDEE product suite permits compliance officers to ensure the monitoring and
evaluation of compliance with internal, regulatory and investor rules and
requirements before trade execution. The IDEE product suite is a set of tightly
integrated applications that use a powerful common data repository. The product
suite is designed to enable Decalog's customers to purchase the most
appropriate solution, from a single application module for a few users in a
specific department up to a large-scale enterprise-wide implementation of the
entire suite.
Products and Services
Decalog offers the IDEE suite of software products and related maintenance
and professional services to meet the requirements of its target customers. The
product suite consists of four main application modules: IDEE Manager, IDEE
Trader, IDEE Compliance and IDEE Performance. These modules can be integrated
with customer-developed and third-party software applications as well as with
external information sources. The IDEE product suite is built around a single,
integrated data repository, providing a high degree of interoperability and
scalability. IDEE's application modules may be used independently or together
as an enterprise solution. The IDEE product suite is complemented by an
experienced professional services organization that assists in product
implementation.
The IDEE Product Suite
The IDEE product suite is comprised of the following application modules:
. IDEE Manager provides real-time support for analyzing portfolio holdings,
valuations, cash flow projections and simulations.
. IDEE Trader supports real-time trading and order management, including
electronic communication between the portfolio manager and trader.
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. IDEE Compliance enables investment management professionals to check
trades against pre-defined compliance rules before trades are executed.
. IDEE Performance enables a portfolio manager to evaluate the performance
of a portfolio or a group of portfolios against various benchmarks for
any time period.
Decalog Professional Services
The IDEE suite of software products is complemented by Decalog's
professional services organization. The professional services offered by
Decalog include project management, consulting, requirements analysis, systems
implementation and integration, development and training. Decalog's services
professionals assist customers with process definition and reengineering in
order to optimize each customer's use of the IDEE application modules.
Decalog also provides professional information technology consulting
services in Europe through its Cadextan subsidiary. Cadextan's consulting
services include analyzing needs, writing software specifications, coding,
testing, developing interfaces, training and project management. Decalog holds
a 43.4% interest in OTC Conseil, a French company that prior to October 1997
was a majority owned subsidiary of Decalog. OTC Conseil provides non-IDEE
related strategic consulting services to large financial management
organizations in areas related to fixed income, foreign exchange, equities and
derivatives on issues relating to risk management, decision support, strategic
planning, regulatory reporting and data distribution.
Sales and Marketing
Decalog markets its products through a direct sales organization with
operations in the United States and Europe. Decalog generates new business
leads through its direct sales and marketing staff, as well as through
referrals from current customers and industry consultants. As of December 31,
1998, Decalog had sales and pre-sales staff located in Boston, New York, Paris
and London, and marketing staff in New York and Paris.
Competition
The market for third-party asset management automation software is highly
fragmented and served by numerous organizations. Decalog currently faces
competition from providers of niche applications, primarily trading and
compliance, such as Merrin Information Services, Inc.; LongView Group; The
MacGregor Group, Inc.; Charles River Development, Inc.; and Bloomberg L.P., any
of which could expand their product offerings in the future to compete more
broadly with the IDEE product suite. There are also several large companies
currently offering primarily accounting solutions as well as other products,
some of which may compete with the IDEE product suite to a limited extent, such
as the Thomson Financial division of the Thomson Corporation; ACT Financial
Systems Ltd., a subsidiary of Misys, plc; Advent Software, Inc. and DST
Systems, Inc., any of which could decide to develop and offer products that
compete more directly with the IDEE product suite.
Tecnomatix
Tecnomatix is a leader in the market for computer-aided production
engineering (CAPE) software products. Tecnomatix develops, markets and supports
software tools to fully computerize the industrial process and achieve seamless
transition from design to production. Tecnomatix's CAPE products allow
production engineers to create virtual machines and production equipment
models, arrange them as a virtual manufacturing line and manipulate them to
perform on-screen manufacturing activities. These products enable production
engineers to: (a) evaluate the feasibility of manufacturing newly designed
products; (b) design, visualize, simulate and optimize automated and manual
manufacturing systems; and (c) create and debug programs for robots and other
machines using virtual machine models. Tecnomatix's CAPE products can create an
integrated computer model of a complete manufacturing plant which is scaleable
from the level of the factory down to
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individual production operations such as welding, assembly and inspection.
Tecnomatix's products allow manufacturers to accelerate the introduction of new
products, reduce engineering and manufacturing costs, minimize production
downtime and increase productivity and product quality.
Tecnomatix targets manufacturing industries such as automotive, aerospace,
heavy machinery and electronics, and sells its products primarily through its
direct sales force. Tecnomatix's customers include most of the world's major
automotive manufacturers including BMW, Fiat, Ford, General Motors, Honda,
Mazda, Renault, Rover, Toyota, Volkswagen and Volvo; major aerospace
manufacturers including Aerospatiale, Boeing, General Electric and Pratt &
Whitney; heavy machinery manufacturers such as GEC Alsthom, Komatsu and
Mitsubishi Heavy Industries; and electronics manufacturers such as Alcatel,
Intel, Motorola and U.S. Robotics.
Tecnomatix is a publicly reporting company whose shares are traded on the
Nasdaq Stock Market System under the symbol TCNOF. Additional information about
Tecnomatix can be found in Tecnomatix' filings with the Securities and Exchange
Commission.
Oshap Software Industries Ltd.
Oshap Software Industries Ltd. is a wholly-owned Israeli software subsidiary
of Oshap. Formerly known as Oshap Israel (1985) Ltd., Oshap Software was
incorporated in Israel in 1985 and is engaged in the development of software
products and other software projects primarily for other companies in the Oshap
group. Oshap Software specializes in the development of core basic modules
which can be used by a variety of financial applications and by other vendors.
iKnowledge Inc.
In June 1998, TP Technologies, an indirect, wholly-owned subsidiary of
Oshap, invested $3.15 million for a 41% share in iKnowledge Inc., a newly
formed Delaware corporation which provides software solutions for electronic
publication of corporate knowledge. iKnowledge is headquartered in the U.S.
and, through its wholly-owned Canadian subsidiary, has acquired the Nereus and
Focalbase software divisions of Vicom Multimedia Inc., based in Edmonton,
Canada, with sales offices located in Washington, D.C. and California.
Proprietary Technology
Oshap's success is dependent, in significant part, on its proprietary
technologies. Oshap and its subsidiaries and affiliates rely on a combination
of trade secret, copyright and trademark laws and nondisclosure agreements and
technical measures to protect their proprietary rights. There can be no
assurance that the steps taken by Oshap and its subsidiaries and affiliates to
protect their proprietary rights will be adequate to prevent misappropriation
of their technology or portions of their technology or independent third-party
development of similar technologies. In addition, Oshap and its subsidiaries
and affiliates have no patents and recognizes that existing copyrights as well
as other measures taken by them provide only limited protection. Moreover, not
all countries in which Oshap and its subsidiaries and affiliates have
operations provide legal protection of proprietary technology to the same
extent as the United States.
Employees
As of December 31, 1998, Oshap and its subsidiaries and affiliates had 821
full-time employees. Oshap believes that its relations with its employees are
satisfactory.
Facilities
Oshap's corporate headquarters, together with Tecnomatix's and MINT's
headquarters as well as one of Decalog's research and development facilities
are located in Herziliya, Israel. Oshap, together with Tecnomatix,
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MINT and Decalog lease approximately 38,000 square feet of office space in that
location. The lease for most of this space as well as for additional space
expires in September 2001.
Decalog leases approximately 19,100 square feet of office space in the
United States and France.
Tecnomatix, MINT and Decalog also lease research and development, sales and
support premises in the United States, Belgium, Germany, France, Switzerland,
Sweden, Italy, Spain, the United Kingdom, Japan and Korea.
Legal Proceedings
Oshap and its subsidiaries are not party to any material litigation and are
not aware of any pending or threatened litigation that would have a material
adverse effect on Oshap's or its subsidiaries' business, financial condition or
results of operations.
Comparison of Capital Stock
Description of SunGard Capital Stock
The authorized capital stock of SunGard consists of 320,000,000 shares of
SunGard common stock, and 5,000,000 shares of preferred stock, $0.01 par value.
SunGard Common Stock. As of April 30, 1999, there were approximately
118,680,529 shares of SunGard common stock outstanding, held of record by
approximately 4,300 stockholders. SunGard common stock is listed and traded 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
dividends, if any, declared from time to time by the SunGard board of directors
out of funds legally available for dividends. 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 arrangement 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 Oshap Ordinary Shares
Oshap's total authorized share capital consists of 20,018,460 ordinary
shares. As of the record date, 12,836,110 ordinary shares were issued and
outstanding, held of record by approximately 64 shareholders.
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Holders of Oshap ordinary shares have no redemption, sinking fund or conversion
privileges. Each Oshap ordinary share is entitled to one vote on any matter
submitted to the Oshap shareholders and to equal rights in the assets of Oshap
upon liquidation, subject to the prior rights on liquidation of creditors.
The Oshap ordinary shares have non-cumulative voting rights, which means
that the holders of Oshap ordinary shares accounting for the remaining shares
will not be able to elect any of the directors.
The holders of Oshap ordinary shares are entitled to receive dividends when
and as declared by Oshap. Except for a dividend consisting of cash and shares
of Tecnomatix distributed in October 1998, Oshap has not paid any dividends to
date and anticipates that for the foreseeable future any earnings will be
retained for use in its business and will not be distributed as dividends.
Comparison of Rights of Holders of SunGard
Common Stock and Holders of Oshap Ordinary Shares
Upon completion of the arrangement, the holders of Oshap ordinary shares
will become holders of SunGard common stock. There are certain material
differences between the rights and privileges of the holders of Oshap ordinary
shares and the holders of SunGard common stock.
SunGard is incorporated under the laws of the State of Delaware and Oshap is
incorporated under the laws of the State of Israel. As a result, the rights of
stockholders of SunGard are governed by the Delaware General Corporation Law,
referred to as the DGCL, the restated certificate of incorporation of SunGard
and the amended and restated bylaws of SunGard, and the rights of shareholders
of Oshap are governed by the Israeli Companies Ordinance, referred to as the
Israeli Companies Ordinance, the Oshap articles of association and the Oshap
memorandum of association. If the arrangement is consummated, the shareholders
of Oshap will become stockholders of SunGard. The following is a summary of the
material differences between the rights of holders of Oshap ordinary shares and
the rights of holders of SunGard common stock. These differences arise from
differences between the DGCL and the Israeli Companies Ordinance, as well as
from differences between the corporate governing instruments of SunGard and
Oshap. This summary does not purport to identify all of the differences that
may be material to Oshap shareholders and is subject to the detailed provisions
of the relevant laws and governing instruments. This summary should be read in
conjunction with "Comparison of Capital Stock."
Percentage of Voting Stock; Influence Over Affairs
Upon completion of the arrangement, the percentage ownership of SunGard by
each former Oshap shareholder will be substantially less than the Oshap
shareholder's current percentage ownership of Oshap. Accordingly, former Oshap
shareholders will have a significantly smaller voting influence over the
affairs of SunGard than they currently enjoy over the affairs of Oshap.
Dividends
SunGard. Under the DGCL, a corporation may pay dividends out of surplus,
defined as the excess of net assets over capital. If no such surplus exists,
dividends may be paid out of its net profits for the fiscal year, provided that
dividends may not be paid out of net profits if the capital of such corporation
is less than the aggregate amount of capital represented by the outstanding
stock of all classes having a preference upon distribution of assets.
SunGard's certificate provides that when and as dividends are declared on
the common stock, the holders of common stock are entitled to share equally,
share for share, in the dividends. Under SunGard's certificate, holders of
preferred stock will be entitled to dividends as designated by the board of
directors.
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Oshap. The Israeli Companies Ordinance does not define the sources from
which dividends may be paid, although Israeli common law has been generally
interpreted to require that dividends be paid solely out of profits. Under the
Oshap articles, dividends may be paid solely out of the profits of Oshap.
Neither SunGard nor Oshap currently pays dividends to their respective
stockholders. Oshap has paid a one time dividend of cash and Tecnomatix shares
in October 1998.
Preemptive Rights
SunGard. Under the DGCL, no stockholder has a preemptive right to subscribe
to additional issues of a corporation's stock unless, and to the extent that,
this right is expressly granted to these stockholders by the corporation's
certificate of incorporation. SunGard's certificate provides that no holder of
any of the shares of any class or series of stock or of options, warrants or
other rights to purchase shares of any class or series of stock or of other
securities will have any preemptive right to subscribe to an additional issue
of stock of any class or series or to any securities of SunGard convertible
into stock.
Oshap. The Oshap articles currently provide that if new shares are offered
to shareholders of Oshap in a private offer and in consideration for cash (as
opposed to assets), all the shareholders of Oshap are entitled to such offer in
proportion to the paid up sum of the nominal value of their shares. The
foregoing provision does not apply to offers to Oshap's employees in their
capacity as such.
Voting Rights of Capital Stock
SunGard. Under the DGCL, unless a corporation's certificate of incorporation
provides something else, each share of capital stock of a corporation is
entitled to one vote. Whether or not the certificate of incorporation grants
voting rights to a particular class of stock, under the DGCL, the holders of
outstanding shares of a class of capital stock of a corporation are entitled to
vote, as a class, on any amendment to the corporation's certificate of
incorporation which would (a) increase or decrease the par value of the shares
of the class, or (b) alter the powers, preferences or special rights of the
shares of the class so as to affect them adversely. Although the DGCL specifies
the vote required for certain types of corporate action, the DGCL permits a
corporation to require, in its certificate of incorporation, the vote of a
larger portion of the stock, or of any class or series of the stock, than is
required under the DGCL.
SunGard's certificate provides that holders of SunGard common stock are
entitled to one vote per share on all matters voted upon by the stockholders.
Under SunGard's certificate, holders of shares of SunGard preferred stock have
the voting rights designated by its board of directors.
Oshap. Each share of Oshap is entitled to one vote on matters submitted to a
vote of shareholders.
Board of Directors
SunGard. SunGard's bylaws provide that its board of directors will not
consist of less than two nor more than eight directors, with the exact number
to be determined by the board of directors. The number of directors is
currently fixed at eight. Directors are elected at each annual meeting of
stockholders and serve until the next annual meeting of stockholders or until
their directors are duly elected and qualified.
Oshap. Under the Israeli Companies Ordinance, a public company must have at
least two directors. The Oshap articles specify that the Oshap board size shall
be determined by ordinary resolution of the Oshap shareholders and shall be no
less than two and no more than ten. The current number of directors is seven.
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Classification of Directors
SunGard. SunGard does not have a classified board. Each SunGard director is
elected at the annual meeting of stockholders and holds office until the next
annual meeting of stockholders and until their successors are elected and
qualified.
Oshap. Oshap has no staggered terms of office. Each Oshap director is
elected to serve until the annual meeting subsequent to the general meeting at
which such director was elected, or until his or her earlier removal.
Cumulative Voting
SunGard. Because SunGard's certificate does not provide for cumulative
voting for directors, each stockholder who is entitled to vote at an election
of directors has the right to vote the number of shares owned by him or her for
as many persons as there are directors to be elected, but may not cumulate his
or her votes for directors.
Oshap. Oshap shareholders do not have cumulative voting rights in the
election of directors.
Nomination of Directors
SunGard. The SunGard bylaws provide that all nominations for directors to
be elected at an annual meeting of shareholders must be submitted to the
secretary of SunGard in writing no later than the close of business on the 30th
calendar day immediately preceding the date of the meeting. Prior to the
election of directors at the annual meeting, if any nominee becomes unavailable
for election of director, the board of directors may designate a substitute
nominee.
Oshap. The Oshap articles and memorandum do not contain any specific
provisions on nomination procedures.
Removal of Directors
SunGard. Because SunGard does not have a classified board, its directors may
be removed, either with or without cause, by the holders of a majority of the
shares entitled to vote at the election of directors.
Oshap. The Oshap articles provide that a director or the entire Oshap board
may be removed by the holders of a majority of Oshap ordinary shares
represented at a general meeting in person or by proxy. The office of a
director shall automatically be terminated if such director is declared
bankrupt or lunatic, or upon such director's demise or upon liquidation of
Oshap. Any director may resign his or her office by providing a written notice
of resignation to Oshap.
Filling of Vacancies on the Board of Directors
SunGard. SunGard's bylaws provide that any vacancy on the board of
directors or newly created directorship may be filled by the vote of a majority
of the remaining directors then in office, even if less than a quorum.
Appointed directors serve until the next annual meeting of stockholders or
until their successors are elected.
Oshap. Vacant director positions may be filled by the Oshap board. If in
filling vacant director positions, the directors then in office constitute less
than the legal quorum, the Oshap board may only act in an emergency to fill a
vacant director position in order to obtain the minimum number of directors or
to call an
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Oshap shareholders meeting. The Oshap articles also provide a procedure for
the appointment of alternate directors.
Limitation on Directors Liability; Indemnification of Officers and Directors
SunGard. The DGCL provides, in substance, that Delaware corporations 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 such action, suit
or proceedings.
SunGard's bylaws provide for indemnification to the fullest extend
permitted by the Delaware General Corporation Law.
As permitted by the DGCL, SunGard's certificate eliminates the personal
liability of its directors to SunGard and its stockholders, in certain
circumstances, for monetary damages arising from a breach of the director's
duty of care. Additionally, SunGard has entered into indemnification
agreements (in the form approved by SunGard'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
DGCL. The agreements do not provide indemnification for, among other things,
conduct that is adjudged to be fraud, deliberate dishonesty or willful
misconduct.
SunGard has obtained directors' and officers' liability insurance that
covers certain liabilities, including liabilities to SunGard and its
stockholders, in the amount of $20 million.
Oshap. The Israeli Companies Ordinance permits a company's articles of
association to provide that:
. a company may obtain an insurance policy for an executive officer or
similar position without regard to the corporate title with respect to
liabilities incurred by such person as a result of a breach of his duty
of care or fiduciary duty to the company to the extent that he acted in
good faith and reasonably believed that the act would not prejudice the
company, as well as for monetary liabilities charged against him as a
result of an act or omission that he committed in connection with his
serving as an office holder of a company; and
. a company may indemnify an office holder for monetary liability incurred
pursuant to a judgment from an action brought against him by a third
party, or as a result of a criminal charge of which he was acquitted.
A company may not indemnify an office holder as a result of the following:
. a breach of fiduciary duty, except for a breach of fiduciary duty to the
company while acting in good faith and having reasonable cause to assume
that such act would not prejudice the interests of the company;
. a willful breach of the duty of care or reckless disregard for the
circumstances or the consequences of a breach of the duty of care;
. an intentional, unlawful act to realize a personal gain; or
. a fine imposed for an offense;
The Oshap articles provide for the insurance and indemnification as
described above and Oshap carries such insurance.
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Call of Special and Extraordinary Meetings of Shareholders
SunGard. SunGard's bylaws provide that a special meeting of its
stockholders may be called at any time by the board, the chairman of the board
or the president, and must be called upon written request from the holders of a
majority of the outstanding shares of capital stock of SunGard entitled to vote
at the meeting.
Oshap. Under Section 109 of the Israeli Companies Ordinance, an
extraordinary general meeting of shareholders may be called by the board of
directors or by a request of the shareholders holding at least one-tenth of the
paid-up capital of the company carrying voting rights at general meetings.
Under Oshap's articles, an extraordinary general meeting of the shareholders
may be called by a majority of the Oshap board or by shareholder request in
accordance with Section 109 of the Israeli Companies Ordinance.
Action of Shareholders Without a Meeting
SunGard. SunGard's bylaws provide that any action required to or which may
be taken at an annual or special meeting may be taken without a meeting by a
consent in writing by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to take the action at a meeting
at which all shares entitled to vote thereon were present and voted.
Oshap. The Oshap articles do not address the issue of action of shareholders
without a meeting.
Duration of Proxies
SunGard. The DGCL and SunGard's bylaws provide that proxies are valid for no
more than three years unless a different period is specified in the proxy.
Oshap. The Oshap articles provide that a proxy which is limited in time is
valid for 12 months from the date of its execution.
Amendments to Certificate of Incorporation or Memorandum of Association
SunGard. Under the DGCL, unless the certificate of incorporation imposes a
higher voting requirement, the approval of the holders of a majority of the
stock entitled to vote, and a majority of each class entitled to vote as a
class, is required in order to amend any provision of a corporation's
certificate of incorporation. SunGard's certificate does not impose any higher
voting requirement with respect to the amendment of its certificate of
incorporation.
Oshap. Under the Israeli Companies Ordinance, an Israeli company may not
amend its memorandum of association, except to the extent allowed under the
explicit instructions in the Israeli Companies Ordinance, or under other
limited circumstances in accordance with Israeli law.
Amendments to Bylaws or Articles of Association
SunGard. SunGard's bylaws may be altered, amended or repealed, in whole or
in part, by the affirmative vote of a majority of the members of SunGard's
board or by the affirmative vote of the holders of a majority of the
outstanding shares of capital stock of SunGard entitled to vote.
Oshap. Under the Israeli Companies Ordinance, an Israeli company may,
subject to its memorandum of association, amend or supplement its articles of
association by a "Special Resolution." Under the Israeli Companies Ordinance, a
"Special Resolution" requires the approval, at a general meeting, by holders
participating in person or by proxy holding seventy-five percent (75%) of the
shares present and voting.
64
<PAGE>
Conflict of Interest
SunGard. Under the DGCL, a transaction between a corporation and one or
more of its directors or officers who have a financial interest in that
transaction will not be void or voidable solely due to the interest or solely
because any such director or officer is present at or participates in the
meeting of the board or committee which authorized the transaction, or solely
because any such director's or officer's votes are counted for such purpose,
if:
. the disinterested directors are aware of the material facts and authorize
the transaction even if the disinterested directors are less than a
quorum, or
. the shareholders are aware of the relationship or interest and in good
faith approve such transaction, or
. the transaction is fair to the corporation at the time of authorization
by either the board of directors, a committee or the shareholders
Oshap. Under the Israeli Companies Ordinance, certain extraordinary
transactions of a company, defined as transactions not in the ordinary course
of business, or not on market terms or apt to substantially affect the
corporation, in which an office holder of the company has a personal interest,
must be approved by the company's audit committee and its board of directors
and, in certain cases or for certain companies, its shareholders.
The Oshap articles provide that a director may hold another paid position or
function in any other company of which Oshap is a shareholder or in which Oshap
has an interest. Under the Israeli Companies Ordinance, in the event that a
director has any personal interest in any issue discussed by the board the
nature of the interest, as well as any material fact or document, must be
disclosed by him at the meeting of the board of directors at which the contract
or arrangement is first considered.
Certain Business Combinations
SunGard. The DGCL provides that, subject to certain limited exceptions, the
approval of the holders of a majority of the stock entitled to vote is required
for any merger or consolidation of a Delaware corporation with another
corporation or the sale, lease or exchange of all or substantially all of that
corporation's assets. SunGard's certificate does not impose any higher voting
requirements for the approval of these actions.
Section 203 of the DGCL also restricts certain transactions between a
corporation organized under Delaware law (or its majority-owned subsidiaries)
and any person holding 15% or more of the corporation's outstanding voting
stock, who together with his, her or its affiliates or associates is defined as
an "Interested Stockholder." Section 203 prevents, for a period of three years
following the date that a person becomes an Interested Stockholder, the
following types of transactions between the corporation and the Interested
Stockholder (unless certain conditions, described below, are met):
. mergers or consolidations;
. sales, leases, exchanges or other transfers of 10% or more of the
aggregate assets of the corporation;
. issuances or transfers by the corporation of any stock of the corporation
which would have the effect of increasing the Interested Stockholder's
proportionate share of the stock of any class or series of the
corporation;
. any other transaction which has the effect of increasing the
proportionate share of the stock of any class or series of the
corporation which is owned by the Interested Stockholder; and
. receipt by the Interested Stockholder of the benefit (except
proportionately as a stockholder) of loans, advances, guarantees, pledges
or other financial benefits provided by the corporation.
The three-year ban does not apply if either the proposed transaction or the
transaction by which the Interested Stockholder became an Interested
Stockholder is approved by the board of directors of the
65
<PAGE>
corporation prior to the date the person becomes an Interested Stockholder.
Additionally, an Interested Stockholder may avoid the statutory restriction
if, upon the consummation of the transaction where the stockholder becomes an
Interested Stockholder, the stockholder owns at least 85% of the outstanding
voting stock of the corporation without regard to those shares owned by the
corporation's officers and directors and certain employee stock plans.
Business combinations are also permitted within the three-year period if
approved by the board of directors and authorized at an annual or special
meeting of stockholders by the holders of at least 66 2/3% of the outstanding
voting stock not owned by the Interested Stockholder. In addition, any
transaction is exempt from the statutory ban if it is proposed at a time when
the corporation has proposed, and a majority of certain continuing directors
of the corporation have approved, a transaction with a party who is not an
Interested Stockholder of the corporation (or who becomes such with board
approval) if the proposed transaction involves:
. certain mergers or consolidations involving the corporation;
. a sale or other transfer of over 50% of the aggregate assets of the
corporation; or
. a tender or exchange offer for 50% or more of the outstanding voting
stock of the corporation.
Section 203 does not apply to corporations which do not have a class of
voting stock that is listed on a national securities exchange, authorized for
quotation with a registered national securities association, or held of record
by more than 2,000 shareholders. Otherwise, section 203 applies automatically
to Delaware corporations unless the corporation's original certificate of
incorporation contains a provision expressly electing not to be governed by
section 203 or the corporation has amended its certificate of incorporation or
bylaws in accordance with section 203 to provide that the corporation will not
be governed by section 203. SunGard has not adopted an amendment to its
certificate or bylaws exempting it from section 203, which accordingly applies
to SunGard.
Oshap. Under the Israeli Companies Ordinance, settlements and arrangements
between a company and any class of its shareholders, or any class of its
creditors, involving certain types of mergers, reorganizations, sales of
assets and dissolutions require:
(a) the approval at an extraordinary meeting of each of the classes of
security holders and creditors affected by the proposed arrangement or
settlement by a vote of a majority of the class members present and voting
thereon and representing 75% of the value present and voting in such
meeting; and
(b) the sanction of the Israeli District Court.
Once so approved and sanctioned, all the members of the different classes
are bound by the arrangement.
Stock Exchange Rules
The SunGard common stock is traded on the NYSE. The Oshap ordinary shares
are currently listed on the Nasdaq Stock Market and will continue to be listed
on the Nasdaq Stock Market until completion of the arrangement. There are
material differences between the corporate governance rules of the NYSE and
the Nasdaq Stock Market.
Experts
The consolidated balance sheets of SunGard and subsidiaries as of December
31, 1998 and 1997 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, 1998, incorporated in this document and in the
registration statement by reference to the Annual Report on Form 10-K of
SunGard for the year ended December 31, 1998, have been so incorporated in
reliance upon the report of PricewaterhouseCoopers LLP, independent
accountants, given on the authority of that firm as experts in accounting and
auditing.
66
<PAGE>
The consolidated balance sheets of Oshap and subsidiaries as of December 31,
1998 and 1997 and the related consolidated statements of operations, changes in
shareholders' equity and cash flows for each of the years in the three-year
period ended December 31, 1998 incorporated in this document and in the
registration statement by reference to the Report of Foreign Issuer on Form 6-K
of Oshap dated April 14, 1999, have been so incorporated in reliance upon the
report of Brightman Almagor & Co., certified public accounts (Israel), given on
the authority of that firm as experts in accounting and auditing.
Legal Matters
The validity of the shares of SunGard common stock offered by this document
will be passed upon for SunGard by SunGard's General Counsel.
Where to Find More Information
SunGard filed a registration statement on Form S-4 to register with the SEC
the SunGard common stock to be issued to Oshap shareholders in the arrangement.
This document is a part of that registration statement and constitutes a
prospectus of SunGard in addition to a proxy statement of Oshap for the Oshap
extraordinary general meeting. As allowed by the SEC, this document does not
contain all the information that can be found in the registration statement or
the exhibits to the registration statement. SunGard files annual, quarterly and
special reports, proxy statements and other information and Oshap files annual
reports and other information with the SEC. You can read and copy any reports,
statements or other information we file at the SEC's Public Reference Rooms at
450 Fifth Street, N.W., Washington, D.C., 20549. Please call the SEC at 1-800-
SEC-0330 for further information on the Public Reference Room. Our SEC filings
are also available to the public from commercial document retrieval services
and at the web site maintained by the SEC at http://www.sec.gov.
The SEC allows us to "incorporate by reference" information into this
document, which means that we can disclose important information to you by
referring you to another document filed separately with the SEC. The
information incorporated by reference is deemed to be part of this document,
except for any information superseded by information in this document. This
document incorporates by reference the documents set forth below that we have
previously filed with the SEC. These documents contain important information
about our companies and their finances.
<TABLE>
<CAPTION>
SunGard SEC Filings
(File No. 1-12989) Period
------------------- --------------------------------------------
<S> <C>
Annual Report on Form 10-K....... Year ended December 31, 1998
Current Report on Form 8-K....... Filed on January 16, 1998
Registration Statement on
Form 8-A........................ Filed on May 14, 1997
<CAPTION>
Oshap SEC Filings
(File No. 0-14890) Period
------------------ --------------------------------------------
<S> <C>
Annual Report on Form 20-F....... Fiscal year ended December 31, 1997
Report of Foreign Issuer on Filed on January 8, 1998, July 2, 1998, July
Form 6-K........................ 9, 1998, September 22, 1998, September 22,
1998, September 22, 1998, September 22,
1998, October 2, 1998, March 11, 1999, March
9, 1999, March 22, 1999, April 14, 1999,
April 22, 1999 and May 7, 1999.
</TABLE>
We are also incorporating by reference additional documents that we may file
with the SEC between the date of this document and the date of the Oshap
extraordinary general meeting.
SunGard has supplied all information contained or incorporated by reference
in this document relating to SunGard and Oshap has supplied all this
information relating to Oshap.
67
<PAGE>
You should rely only on the information contained or incorporated by
reference in this document to vote on the arrangement. We have not authorized
anyone to provide you with information that is different from what is contained
in this document. This document is dated May 13, 1999. You should not assume
that the information contained in this document is accurate as of any date
other than May 13, 1999, and neither the mailing of the document to
shareholders nor the issuance of SunGard common stock in the arrangement shall
create any implication to the contrary.
68
<PAGE>
Unaudited Pro Forma Financial Information
SunGard expects that the arrangement will be accounted for as a pooling of
interests, which means that for accounting and financial reporting purposes
SunGard will treat SunGard and Oshap 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 Oshap 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 Oshap which are incorporated by reference in this document.
69
<PAGE>
SunGard Data Systems Inc.
Pro Forma Combined Condensed Balance Sheet
December 31, 1998
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Historical Historical Pro Forma Pro Forma
SunGard Oshap Adjustments Combined
---------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Assets:
Cash, cash equivalents
and short-term
investments............ $ 258,035 $ 6,165 $(25,064)(1) $ 239,136
Accounts receivable,
net.................... 276,911 8,222 -- 285,133
Prepaid expenses and
other current assets... 28,074 1,517 -- 29,591
Deferred income taxes... 21,296 -- (2,994)(1) 18,302
---------- ------- -------- ----------
Total current assets.. 584,316 15,904 (28,058) 572,162
Property and equipment,
net.................... 132,509 2,867 -- 135,376
Intangible and other
long-term assets....... 358,496 27,272 51,805 (1) 437,573
---------- ------- -------- ----------
Total assets.......... $1,075,321 $46,043 $ 23,747 $1,145,111
========== ======= ======== ==========
Liabilities and
Stockholders' Equity:
Short-term and current
portion of long-term
debt................... $ 9,230 $ 1,920 $ -- $ 11,150
Accounts payable........ 14,931 2,472 -- 17,403
Accrued compensation and
benefits............... 83,486 2,570 -- 86,056
Other accrued expenses.. 67,749 4,788 -- 72,537
Deferred revenues....... 136,218 3,145 -- 139,363
---------- ------- -------- ----------
Total current
liabilities.......... 311,614 14,895 -- 326,509
Long-term debt.......... 2,816 3,500 -- 6,316
Minority interests and
other.................. -- 1,780 (1,098)(1) 682
---------- ------- -------- ----------
314,430 20,175 (1,098) 333,507
---------- ------- -------- ----------
Stockholders' Equity:
Preferred stock....... -- -- -- --
Common stock.......... 1,057 7 54 (2) 1,118
Capital in excess of
par value............ 271,036 20,446 24,791 (1)(2) 316,273
Notes receivable from
stockholders......... -- (968) -- (968)
Restricted stock plans
and deferred
compensation......... (1,591) -- -- (1,591)
Retained earnings..... 497,322 6,749 -- 504,071 (3)
Accumulated other
comprehensive income
(loss)............... (6,933) (366) -- (7,299)
---------- ------- -------- ----------
760,891 25,868 24,845 811,604
Treasury stock.......... -- -- -- --
---------- ------- -------- ----------
Total stockholders'
equity............... 760,891 25,868 24,845 811,604
---------- ------- -------- ----------
Total liabilities and
stockholders'
equity............... $1,075,321 $46,043 $ 23,747 $1,145,111
========== ======= ======== ==========
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
Statements.
70
<PAGE>
SunGard Data Systems Inc.
Pro Forma Combined Condensed Balance Sheet
December 31, 1997
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Historical Historical Pro Forma Pro Forma
SunGard Oshap Adjustments Combined
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Assets:
Cash, cash equivalents and
short-term investments.... $106,155 $15,020 $(25,064)(1) $ 96,111
Accounts receivable, net... 224,708 6,230 -- 230,938
Prepaid expenses and other
current assets............ 24,269 1,277 -- 25,546
Deferred income taxes 21,163 -- (2,994)(1) 18,169
-------- ------- -------- --------
Total current assets..... 376,295 22,527 (28,058) 370,764
Property and equipment,
net....................... 123,261 1,609 -- 124,870
Intangible and other long-
term assets............... 357,392 27,669 51,805 (1) 436,866
-------- ------- -------- --------
Total assets............. $856,948 $51,805 $ 23,747 $932,500
======== ======= ======== ========
Liabilities and Stockhold-
ers' Equity:
Short-term and current
portion of long-term
debt...................... $ 16,996 $ 2,175 $ -- $ 19,171
Accounts payable........... 19,105 1,502 -- 20,607
Accrued compensation and
benefits.................. 58,592 1,507 -- 60,099
Other accrued expenses..... 37,288 2,924 -- 40,212
Deferred revenues.......... 111,666 2,141 -- 113,807
-------- ------- -------- --------
Total current
liabilities............. 243,647 10,249 -- 253,896
Long-term debt............. 3,080 4,606 -- 7,686
Minority interests and
other..................... -- 1,008 (384)(1) 624
-------- ------- -------- --------
246,727 15,863 (384) 262,206
-------- ------- -------- --------
Stockholders' Equity:
Preferred stock.......... -- -- -- --
Common stock............. 1,021 6 55 (2) 1,082
Capital in excess of par
value................... 228,333 17,766 24,076 (1)(2) 270,175
Notes receivable from
stockholders............ (500) (564) -- (1,064)
Restricted stock plans
and deferred compensa-
tion.................... (1,532) -- -- (1,532)
Retained earnings........ 389,545 18,973 -- 408,518 (3)
Accumulated other compre-
hensive income (loss)... (6,646) (239) -- (6,885)
-------- ------- -------- --------
610,221 35,942 24,131 670,294
Treasury stock -- -- -- --
-------- ------- -------- --------
Total stockholders'
equity.................. 610,221 35,942 24,131 670,294
-------- ------- -------- --------
Total liabilities and
stockholders' equity.... $856,948 $51,805 $ 23,747 $932,500
======== ======= ======== ========
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
Statements.
71
<PAGE>
SunGard Data Systems Inc.
Pro Forma Combined Condensed Statement of Income
For the year ended December 31, 1998
(Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Historical Historical Pro Forma Pro Forma
SunGard Oshap Adjustments Combined
---------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Revenues................... $1,159,748 $32,319 $ -- $1,192,067
Operating expenses,
excluding merger and
restructuring costs....... 945,055 33,986 4,004 (1) 983,045
---------- ------- ------- ----------
214,693 (1,667) (4,004) 209,022
Merger and restructuring
costs..................... 11,847 -- -- 11,847
---------- ------- ------- ----------
Operating income (loss).... 202,846 (1,667) (4,004) 197,175
Net interest income
(expense)................. 5,382 641 (877)(1) 5,146
---------- ------- ------- ----------
Income before income
taxes..................... 208,228 (1,026) (4,881) 202,321 (3)
Income taxes............... 89,295 -- (433)(1) 88,862
---------- ------- ------- ----------
118,933 (1,026) (4,448) 113,459
Equity in earnings of
unconsolidated
subsidiaries.............. -- (636) -- (636)
Minority interests......... -- (240) -- (240)
---------- ------- ------- ----------
118,933 (1,902) (4,448) 112,583
Share in extraordinary
income of affiliate -- 3,074 -- 3,074
---------- ------- ------- ----------
Net income (loss) $ 118,933 $ 1,172 $(4,448) $ 115,657 (3)
========== ======= ======= ==========
Basic net income per common
share, before
extraordinary item........ 1.14 (0.15) -- 1.02
Basic net income per common
share, after extraordinary
item...................... $ 1.14 $ 0.09 -- $ 1.05
Shares used to compute
basic net income per
common share.............. 104,167 12,649 (6,605)(2) 110,211
Diluted net income per
common share, before
extraordinary item........ 1.10 (0.15) -- 0.99
Diluted net income per
common share, after
extraordinary item........ $ 1.10 $ 0.09 -- $ 1.01
Shares used to compute
diluted net income per
common share.............. 108,073 12,649 (6,605)(2) 114,117
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
Statements.
72
<PAGE>
SunGard Data Systems Inc.
Pro Forma Combined Condensed Statement of Income
For the year ended December 31, 1997
(Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Historical Historical Pro Forma Pro Forma
SunGard Oshap Adjustments Combined
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Revenues..................... $925,030 $19,403 $ -- $944,433
Operating expenses, excluding
merger and restructuring
costs....................... 768,717 20,399 4,004 (1) 793,120
-------- ------- ------- --------
156,313 (996) (4,004) 151,313
Merger and restructuring
costs....................... 13,669 -- -- 13,669
-------- ------- ------- --------
Operating income (loss)...... 142,644 (996) (4,004) 137,644
Net interest income
(expense)................... 1,106 796 (877)(1) 1,025
-------- ------- ------- --------
Income before income taxes... 143,750 (200) (4,881) 138,669 (3)
Income taxes................. 59,775 116 (433)(1) 59,458
-------- ------- ------- --------
83,975 (316) (4,448) 79,211
Equity in earnings of
unconsolidated
subsidiaries................ -- 883 -- 883
Minority interests........... -- (165) -- (165)
-------- ------- ------- --------
Net income (loss).......... $ 83,975 $ 402 $(4,448) $ 79,929 (3)
======== ======= ======= ========
Basic net income per common
share....................... $ 0.84 $ 0.03 -- $ 0.76
Shares used to compute basic
net income per common
share....................... 99,555 12,548 (6,548)(2) 105,555
Diluted net income per common
share....................... $ 0.81 $ 0.03 $ -- $ 0.73
Shares used to compute
diluted net income per
common share................ 103,596 12,896 (6,746)(2) 109,746
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
Statements.
73
<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 Oshap Adjustments Combined
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Revenues..................... $711,857 $20,834 $ -- $732,691
Operating expenses, excluding
merger and restructuring
costs....................... 592,490 21,879 4,004 (1) 618,373
-------- ------- ------- --------
119,367 (1,045) (4,004) 114,318
Merger and restructuring
costs 51,083 $ -- $ -- 51,083
-------- ------- ------- --------
Operating income (loss)...... 68,284 (1,045) (4,004) 63,235
Net interest and other income
(expense)................... 4,001 21,850 (877)(1) 24,974
-------- ------- ------- --------
Income before income taxes 72,285 20,805 (4,881) 88,209 (3)
Income taxes................. 31,979 73 (433)(1) 31,619
-------- ------- ------- --------
40,306 20,732 (4,448) 56,590
Equity in earnings of
unconsolidated
subsidiaries................ -- 1,670 -- 1,670
Minority interests........... -- (487) -- (487)
-------- ------- ------- --------
Net income (loss).......... $ 40,306 $21,915 $(4,448) $ 57,773 (3)
======== ======= ======= ========
Basic net income per common
share....................... $ 0.43 $ 1.76 -- $ 0.57
Shares used to compute basic
net income per common
share....................... 94,549 12,437 (6,485)(2) 100,501
Diluted net income per common
share....................... $ 0.41 $ 1.75 $ -- $ 0.55
Shares used to compute
diluted net income per
common share................ 99,433 12,502 (6,522)(2) 105,413
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
Statements.
74
<PAGE>
SunGard Data Systems Inc.
Notes to Unaudited Pro Forma Combined Condensed Financial Statements
(Unaudited)
Note 1--Purchase of minority interests of MINT and Decalog
Under the agreement, SunGard will offer to purchase outstanding shares of
MINT and Decalog owned by minority shareholders of those companies at a price
of $13.15 per share for MINT and $9.26 per share for Decalog. SunGard will
offer to affiliates of Oshap shares of SunGard Common Stock in exchange for all
ownership interests in MINT and Decalog based on the fair value of their
ownership interests. For non-affiliates of Oshap, the agreement requires
SunGard to offer to cancel outstanding stock options on MINT and Decalog which
are vested and exercisable as of the effective date of the arrangement, in
consideration for a cash payment of equivalent value, less applicable exercise
prices. In addition, non-affiliates of Oshap will receive an offer from SunGard
to convert all outstanding stock options of MINT and Decalog which are not
vested and exercisable as of the effective date of the arrangement, into
options to purchase SunGard Common Stock, at the applicable exchange ratios.
The pro forma adjustments reflect the estimated cash and fair value of stock to
be paid to minority shareholders, the creation of intangible assets resulting
from the purchase of minority interests, amortization of intangible assets, and
lost interest income.
Note 2--Exchange Ratio
Under the agreement, each outstanding Oshap ordinary share will be converted
into a maximum of 0.431360 shares of SunGard Common Stock. The actual exchange
ratio will range from 0.351526 and 0.431360, depending upon the average closing
price of SunGard Common Stock during the 10 trading day period ending 2 days
prior to the effective date of the arrangement. All options to purchase Oshap
ordinary shares will be exchanged for shares of SunGard Common Stock at fair
value.
The maximum exchange ratio was used in computing shares and per share
amounts in the accompanying unaudited pro forma combined condensed financial
information.
Note 3--Merger Costs
All pro forma information excludes merger costs, estimated to be
approximately $5.0 million. These costs are principally comprised of investment
advisory, legal, accounting and printing costs.
75
<PAGE>
APPENDIX A
AGREEMENT
By and Between
SUNGARD DATA SYSTEMS INC.
and
OSHAP TECHNOLOGIES LTD.
----------------
----------------
March 9, 1999
----------------
----------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
ARTICLE I
Arrangement
<C> <S> <C>
1.1. The Arrangement................................................... A-1
1.2. Filing............................................................ A-2
1.3. Effective Time of the Arrangement................................. A-2
1.4. Reservation of Right to Revise Structure.......................... A-2
ARTICLE II
Consideration; Conversion or Cancellation of Shares and Company Options
2.1. Share Consideration; Conversion or Cancellation of Shares......... A-2
2.2. Exchange of Shares................................................ A-3
2.3. Fractional Shares................................................. A-4
2.4. Transfer of Shares After the Effective Time....................... A-4
ARTICLE III
Representations and Warranties of the Company
3.1. Organization and Qualification.................................... A-4
3.2. Capital Stock of Subsidiaries..................................... A-5
3.3. Capitalization.................................................... A-6
3.4. Authority Relative to This Agreement.............................. A-6
3.5. No Violations, etc. .............................................. A-7
3.6. Commission Filings; Financial Statements; Books and Records....... A-7
3.7. Absence of Undisclosed Liabilities................................ A-8
3.8. Absence of Changes or Events...................................... A-8
3.9. Proxy Statement and Other Filings................................. A-9
3.10. Litigation........................................................ A-9
3.11. Title to Properties............................................... A-9
3.12. Certain Contracts................................................. A-10
3.13. Labor and Independent Contractor Matters.......................... A-11
3.14. Compliance with Law............................................... A-11
3.15. Grants, Incentives and Subsidies.................................. A-11
3.16. Intellectual Property Rights...................................... A-12
3.17. Taxes............................................................. A-13
3.18. Employee Benefit Plans; ERISA..................................... A-14
3.19. Environmental Matters............................................. A-15
3.20. Finders or Brokers................................................ A-15
3.21. Board Recommendation.............................................. A-15
3.22. Opinions of Financial Advisors.................................... A-15
3.23. Related Party and Affiliate Transactions.......................... A-16
3.24. Insurance......................................................... A-16
3.25. Questionable Payments............................................. A-16
3.26. Disclosure........................................................ A-16
</TABLE>
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<TABLE>
<CAPTION>
Page
----
ARTICLE IV
Representations and Warranties of S Company
<C> <S> <C>
4.1. Organization and Qualification.................................. A-16
4.2. Capitalization.................................................. A-17
4.3. Authority Relative to This Agreement............................ A-17
4.4. No Violations, etc. ............................................ A-17
4.5. Commission Filings; Financial Statements........................ A-18
4.6. Absence of Changes or Events.................................... A-19
4.7. Proxy Statement................................................. A-19
4.8. Board Approval.................................................. A-19
4.9. Finders or Brokers.............................................. A-19
4.10. Disclosure...................................................... A-19
ARTICLE V
Required Approvals and Closing
5.1. Shareholders and Court Approvals................................ A-19
5.2. Additional Agreements; Cooperation.............................. A-21
ARTICLE VI
Conduct of Business of the Company and S Company Pending the Effective Time
6.1. Conduct of Business of the Company Pending the Arrangement...... A-22
6.2. Conduct of Business of S Company Pending the Arrangement........ A-23
ARTICLE VII
Covenants and Agreements
7.1. Purchase of Non-O Company Shares and Options of M Company and D A-24
Company.........................................................
7.2. Preparation of the Form S-4 and the Proxy Statement; A-25
Shareholders Meetings...........................................
7.3. Pooling Accounting Letters...................................... A-26
7.4. Other Matters................................................... A-26
7.5. Publicity....................................................... A-26
7.6. No Solicitation................................................. A-26
7.7. Access to Information........................................... A-27
7.8. Resignation of Directors........................................ A-28
7.9. Indemnification................................................. A-28
7.10. Fees and Expenses............................................... A-28
7.11. Affiliates...................................................... A-28
7.12. NYSE Listing.................................................... A-29
7.13. Israeli Prospectus.............................................. A-29
7.14. Tax Treatment................................................... A-29
7.15. Letters of Accountants.......................................... A-29
7.16. Registration Rights............................................. A-29
7.17. Consulting Agreements........................................... A-29
</TABLE>
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<TABLE>
<CAPTION>
Page
ARTICLE VIII
Conditions to Closing
<C> <S> <C>
8.1. Conditions to Each Party's Obligation to Effect the Arrangement............... A-29
8.2. Conditions to Obligations of S Company........................................ A-30
8.3. Conditions to Obligations of the Company...................................... A-32
ARTICLE IX
Termination
9.1. Termination................................................................... A-32
9.2. Effect of Termination......................................................... A-33
ARTICLE X
Miscellaneous
10.1. Nonsurvival of Representations and Warranties................................. A-34
10.2. Closing and Waiver............................................................ A-34
10.3. Notices....................................................................... A-35
10.4. Counterparts.................................................................. A-36
10.5. Interpretation................................................................ A-36
10.6. Amendment..................................................................... A-36
10.7. No Third Party Beneficiaries.................................................. A-36
10.8. Controlling Law............................................................... A-36
10.9. Jurisdiction and Process...................................................... A-36
10.10. Entire Agreement.............................................................. A-37
10.11. Validity...................................................................... A-37
10.12. Construction.................................................................. A-37
</TABLE>
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<PAGE>
SCHEDULES AND EXHIBITS
<TABLE>
<C> <S>
2.1(b) Black-Sholes Valuation Formula
3.2 Capital Stock of Subsidiaries
3.3 Capitalization
3.5 No Violations, etc.
3.6 Commission Filings
3.7 Absence of Undisclosed Liabilities
3.8 Absence of Changes or Events
3.10 Litigation
3.11 Title to Properties
3.12 Certain Contracts
3.13 Labor and Independent Contractor Matters
3.15 Grants, Incentives and Subsidies
3.16 Intellectual Property Rights
3.17 Taxes
3.18 Employee Benefit Plans; ERISA
3.20 Finders or Brokers.
3.23 Related Party and Affiliate Transactions
6.1(c) Other Matters
7.4 Other Matters
Exhibit A Plan of Arrangement
Exhibit B Form of Affiliate Agreement
Exhibit C Form of Voting Agreement
Exhibit D Form of Nondisclosure and Noncompete Agreement
Exhibit E Form of M and D Company Stock Purchase Agreement
Exhibit F Form of Company Officer's Certificate
Exhibit G Form of S Company Officer's Certificate
Audited 1998 Financial Statements of the Company, D Company and M
Appendix I Company
</TABLE>
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<PAGE>
AGREEMENT
AGREEMENT, dated as of March 9, 1999, by and between SunGard Data Systems
Inc., a Delaware corporation ("S Company"), and Oshap Technologies Ltd., a
corporation formed under the laws of the State of Israel (the "Company").
WITNESSETH:
WHEREAS, the Board of Directors of the Company deems it desirable and in the
best interests of the Company that the Company and its shareholders and
optionholders enter into an arrangement in the form of Exhibit A hereto
pursuant to Section 233 of the Companies Ordinance (New Version) 5743-1983
("Section 233"), whereby all of the issued and outstanding ordinary shares, par
value NIS 0.001 per share, of the Company (the "Company Ordinary Shares") shall
be deemed transferred to S Company in exchange for, and all options to purchase
Company Ordinary Shares (the "Company Options") shall be deemed cancelled in
consideration for, newly issued shares of common stock, par value $.01 per
share, of S Company ("S Company Shares") and certain amendments to the
Company's Articles of Association will be adopted, upon the terms and subject
to the conditions set forth herein (the "Arrangement"); and
WHEREAS, the Board of Directors of S Company deems it desirable and in the
best interests of S Company and its shareholders that S Company and the Company
enter into this Agreement, pursuant to which all the issued and outstanding
Company Ordinary Shares shall be deemed transferred to S Company in exchange
for S Company Shares, on the terms and conditions set forth herein; and
WHEREAS, this Agreement is intended to be and is adopted as plan of
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code"); and
WHEREAS, for accounting purposes, it is intended that the transactions
contemplated by this Agreement shall be accounted for as a pooling of
interests; and
WHEREAS, concurrently with the execution of this Agreement, and as a
condition and inducement to S Company's willingness to enter into this
Agreement: (i) each affiliate of the Company identified in Schedule 3.23 is
entering into an Affiliate Agreement attached hereto as Exhibit B; (ii) certain
shareholders of the Company are entering into a Voting Agreement substantially
in the form attached hereto as Exhibit C; and (iii) certain shareholders of the
Company and MINT Software Technologies Ltd. ("M Company") and Decalog NV ("D
Company") are entering into a Nondisclosure and Noncompete Agreement
substantially in the form attached hereto as Exhibit D.
NOW, THEREFORE, in consideration of the premises and of the mutual covenants
and agreements herein contained, the parties hereto, intending to be legally
bound, agree as follows:
ARTICLE I
Arrangement
1.1. The Arrangement. At the Effective Time (as hereinafter defined), by
virtue of the filing described in Section 1.2 and with no further action on
behalf of the shareholders of the Company, all issued and outstanding Company
Ordinary Shares outstanding as of the Effective Time shall be deemed
transferred to S Company, free of any lien, pledge, encumbrance or any right of
third party, in exchange for newly-issued S Company Shares, in the aggregate
amount and in the manner set forth in Article II below. Thereupon, the
corporate existence of the Company, with all its purposes, powers and objects,
shall continue unaffected and unimpaired by the Arrangement under the laws of
the State of Israel.
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1.2. Filing. As soon as practicable after the fulfillment or waiver of the
conditions set forth in Sections 8.1, 8.2 and 8.3 or such later date as may be
mutually agreed to between S Company and the Company or such other date as set
forth in the final court order approving the Arrangement (the "Final Court
Order") the Company will, immediately after receipt of confirmation from the
Exchange Agent (as hereinafter defined) that the Exchange Fund (as hereinafter
defined) has been transferred to the Exchange Agent, cause to be filed with the
Registrar of Companies in Israel, the Final Court Order, as described in
Article V.
1.3. Effective Time of the Arrangement. The Arrangement shall be effective
at the time of the filing of the Final Court Order with the Registrar of
Companies in Israel, or at such later time specified by such Final Court Order,
which time is herein referred to as the "Effective Time" and the date thereof
is herein referred to as the "Effective Date." The parties shall use their
respective reasonable best efforts to cause the Effective Date to occur on or
before June 30, 1999. The foregoing notwithstanding, if the Effective Date does
not occur on or prior to June 30, 1999, the parties shall use their respective
reasonable best efforts to cause the Effective Date to occur as soon as
practicable thereafter.
1.4. Reservation of Right to Revise Structure. At S Company's election, the
Arrangement may alternatively be structured so that the issued and outstanding
Company Ordinary Shares transferred to S Company under Section 1.1 hereof,
shall be transferred to a wholly-owned United States subsidiary of S Company;
provided, however, that no such change shall alter or change the Exchange Ratio
(as hereinafter defined), delay in any material respect consummation of the
Arrangement or adversely affect the ability of the parties to satisfy the
conditions to the Closing (as hereinafter defined) or the anticipated tax
consequences of the Arrangement. In the event of such an election by S Company,
the parties agree to execute the appropriate documents to reflect such an
election. Any such modification contemplated by this Section 1.4 shall not
affect S Company's obligations under this Agreement.
ARTICLE II
Consideration; Conversion or
Cancellation of Shares and Company Options
2.1. Share Consideration; Conversion or Cancellation of Shares. Subject to
the provisions of this Article II, at the Effective Time, by virtue of the
Arrangement and without any action on the part of the holders thereof, the
Company Ordinary Shares shall be deemed converted and exchanged for, and the
Company Options shall be deemed cancelled in consideration for, S Company
Shares as follows:
(a) (i) Each Company Ordinary Share issued and outstanding immediately
prior to the Effective Time (other than shares owned by S Company) shall be
converted into a fraction of a validly issued, fully paid and nonassessable
S Company Share (the "Arrangement Consideration"), such fraction to be in
the ratio (rounded to the nearest one millionth) provided below (the
"Exchange Ratio"). If the S Company Share Average (as defined below):
(1) is equal to or greater than $34.1063 but less than or equal to
$46.1438, the Exchange Ratio shall be fixed at 0.386293;
(2) is greater than $46.1438 but less than or equal to $50.7074, the
Exchange Ratio shall be equal to $17.8250 divided by S Company Share
Average;
(3) is greater than $50.7074, the Exchange Ratio shall be equal to
0.351526.
(4) is less than $34.1063, but greater than or equal to $30.5429,
the Exchange Ratio shall be equal to $13.1750 divided by S Company
Share Average; and
(5) is less than $30.5429, the Exchange Ratio shall be equal to
0.431360.
(ii) The "S Company Share Average" means the average of the Per Share
Closing Prices for the 10 consecutive trading days ending on the second
trading day prior to the Effective Date. The "Per Share
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<PAGE>
Closing Price" for any trading day means the final closing price per share
on the New York Stock Exchange, Inc. ("NYSE") of S Company Shares (as
reported in the NYSE Composite Transaction Tape) for that day.
(iii) The provisions of this Section 2.1(a), including the determination
of the Exchange Ratio, shall be automatically equitably adjusted to reflect
any stock split, stock dividend or other similar transaction involving S
Company Shares between the date of this Agreement and the Effective Date.
(b) Each Company Option which shall not be exercisable at the Effective
Time (an "Unexercisable Option") or which shall be exercisable at the
Effective Time (an "Exercisable Option") shall be cancelled in exchange for
the number of S Company Shares rounded to the nearest whole share, having
an aggregate market value (based upon the S Company Share Average) at the
Effective Time equal to the value of such Unexercisable Option or
Exercisable Option, as the case may be, as determined pursuant to the terms
of the Black-Scholes formula utilizing the same numerical values for
"Sigma" and "r" stated on Schedule 2.1(b) and an "Offer Price" equal to the
product of (i) the Exchange Ratio and (ii) S Company Share Average. An
example of such determination utilizing a value for "Offer Price" equal to
$15.50 is set forth on Schedule 2.1(b). S Company shall pay cash to the
holders of Unexercisable Options and Exercisable Options, as the case may
be, in lieu of issuing fractional S Company Shares unless, in the
reasonable judgment of S Company based upon the advice of its independent
public accountants, such payment would adversely affect the ability to
account for the Arrangement as a pooling of interests in accordance with
U.S. generally accepted accounting principles. S Company shall register
under the Securities Act (as hereinafter defined) on an appropriate form
all S Company Shares issuable in consideration for the Company Options
pursuant to the Exchange Agreements (as hereafter defined). S Company shall
file such registration statement as soon as practicable after the Effective
Date and shall use its reasonable best efforts to have such registration
statement declared effective as soon as practicable following the Effective
Time, and to maintain the effectiveness of such registration statement for
two (2) years.
(c) The Company shall use its reasonable best efforts to procure from
each holder of Company Options a stock option exchange agreement in a form
mutually acceptable to the Company and S Company (the "Exchange Agreement")
under which such holder of Company Options agrees to the treatment of
Company Options as provided under this Section 2.1. In the event that prior
to the date of the Optionholders Meeting (as defined in Section 5.1(a)) all
holders of Company Options have duly executed an Exchange Agreement, the
Optionholders Meeting shall be cancelled and the treatment of Company
Options shall be effected by virtue of such Exchange Agreements and the
Arrangement shall be adjusted accordingly.
2.2. Exchange of Shares. The manner of the exchange of shares in the
Arrangement shall be as follows:
(a) At or prior to the Effective Time, S Company shall deliver to
Norwest Bank N.A. or another exchange agent selected by S Company and
reasonably acceptable to the Company (the "Exchange Agent"), for the
benefit of those persons who immediately prior to the Effective Time were
the holders of Company Ordinary Shares, a sufficient number of certificates
representing S Company Shares and cash in lieu of fractional shares
required to effect the delivery of the aggregate Arrangement Consideration
required to be issued pursuant to Section 2.1 (the certificates
representing S Company Shares and cash comprising such aggregate
Arrangement Consideration being hereinafter referred to as the "Exchange
Fund"). The Exchange Agent shall, pursuant to irrevocable instructions from
S Company, deliver the S Company Shares contemplated to be issued pursuant
to Section 2.1 and cash in respect of any fractional shares as provided for
in Section 2.3 out of the Exchange Fund. The Exchange Fund shall not be
used for any other purpose.
(b) Promptly after the Effective Time, the Exchange Agent shall mail to
each holder of record (other than S Company) of a certificate or
certificates which immediately prior to the Effective Time represented
outstanding Company Ordinary Shares (the "Certificates") (i) a form of
letter of transmittal (which shall specify that delivery shall be effected,
and the risk of loss and title to the Certificates shall pass, only upon
proper delivery of the Certificates to the Exchange Agent) and (ii)
instructions for use in effecting the
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<PAGE>
surrender of the Certificates for payment therefor. Upon surrender of
Certificates for cancellation to the Exchange Agent, together with such
letter of transmittal duly executed and any other required documents, the
holder of such Certificates shall be entitled to receive for each of the
Company Ordinary Shares formerly represented by such Certificates the
Arrangement Consideration and the Certificates so surrendered shall
forthwith be canceled. Until so surrendered, Certificates shall represent
solely the right to receive the Arrangement Consideration and any cash in
lieu of fractional S Company Shares as contemplated by Section 2.3 with
respect to each of the shares formerly represented thereby. No dividends or
other distributions that are declared after the Effective Time on S Company
Shares and payable to the holders of record thereof after the Effective
Time will be paid to persons entitled by reason of the Arrangement to
receive S Company Shares until such persons surrender their Certificates.
Upon such surrender, there shall be paid to the person in whose name the S
Company Shares are issued any dividends or other distributions on such S
Company Shares that shall have a record date after the Effective Time and
prior to such surrender and a payment dated after such surrender and such
payment shall be made on such payment date. In no event shall the persons
entitled to receive such dividends or other distributions be entitled to
receive interest on such dividends or other distributions, except to the
extent so paid to all shareholders of S Company. If any cash or any
certificate representing S Company Shares is to be paid to or issued in a
name other than that in which the Certificate surrendered in exchange
therefor is registered, it shall be a condition of such exchange that the
Certificate so surrendered shall be properly endorsed and otherwise in
proper form for transfer and that the person requesting such exchange shall
pay to the Exchange Agent any transfer or other taxes required by reason of
the issuance of certificates for such S Company Shares in a name other than
that of the registered holder of the Certificate surrendered, or shall
establish to the satisfaction of the Exchange Agent that such tax has been
paid or is not applicable. Notwithstanding the foregoing, neither the
Exchange Agent nor any party hereto shall be liable to a holder of Company
Ordinary Shares for any S Company Shares or dividends thereon or, in
accordance with Section 2.3, proceeds of the sale of fractional interests,
delivered to a public official pursuant to applicable escheat, abandoned
property or similar law. The Exchange Agent shall not be entitled to vote
or exercise any rights of ownership with respect to S Company Shares held
by it from time to time hereunder, except that it shall receive and hold
all dividends or other distributions paid or distributed with respect to
such S Company Shares for the account of the persons entitled thereto.
(c) Any portion of the Exchange Fund that remains unclaimed by the
former shareholders of the Company for one year after the Effective Time
shall be delivered by the Exchange Agent to S Company, upon demand of S
Company, and any former shareholders of the Company shall thereafter look
only to S Company for payment of their claim for the Arrangement
Consideration in respect of Company Ordinary Shares or for any cash in lieu
of fractional shares of S Company Shares.
2.3. Fractional Shares. No fraction of S Company Shares shall be issued in
the Arrangement. In lieu of any such fractional securities, S Company shall pay
to each former shareholder of the Company who otherwise would be entitled to
receive a fractional S Company Share an amount in cash determined by
multiplying (i) S Company Share Average by (ii) the fractional interest of an S
Company Share to which such holder would otherwise be entitled.
2.4. Transfer of Shares After the Effective Time. No transfers of Company
Ordinary Shares shall be made on the share transfer books of the Company after
the close of business on the day prior to the Effective Date. If, after the
Effective Time, certificates are presented to S Company, they shall be
cancelled and exchanged as provided in this Article II.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to S Company as follows:
3.1. Organization and Qualification. Each of the Company and its
subsidiaries is a corporation duly organized, validly existing, duly registered
and, with respect to any subsidiaries incorporated in the U.S., in
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good standing under the laws of the jurisdiction of its organization and each
such corporation has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as now being conducted.
Each of the Company and its subsidiaries is duly qualified or licensed to carry
on its business as it is now being conducted, and is qualified to do business,
in each jurisdiction where the character of its properties owned or leased or
the nature of its activities makes such qualification necessary, except for
failures to be so qualified that would not, individually or in the aggregate,
have a Company Material Adverse Effect. "Company Material Adverse Effect" means
any effect, change or event that, when taken together with all other effects,
changes or events occurring or existing at or about the same time: (i) has a
material adverse effect on the business, assets, operations or financial
condition of D Company and M Company taken as a whole, or the Company and its
subsidiaries taken as a whole; or (ii) has a material adverse effect on the
Company's ability to perform its obligations under this Agreement, or to
consummate the Arrangement or the other transactions contemplated by this
Agreement; provided, however, that, the effects, changes or events which do not
affect the Company and its subsidiaries in a materially disproportionate manner
that are generally applicable to (A) industries and markets in which the
Company and its subsidiaries operate, (B) economies of the countries in which
the Company and its subsidiaries operate or (C) the United States and other
securities markets shall be excluded from the determination of Company Material
Adverse Effect; and provided, further, that any adverse direct or indirect
effect on the Company and its subsidiaries resulting from the execution of this
Agreement and the announcement or performance of this Agreement and the
transactions contemplated hereby shall also be excluded from the determination
of and shall not be deemed to create a Company Material Adverse Effect. Neither
the Company nor any of its subsidiaries is in violation of any of the
provisions of its Memorandum of Association, Certificate of Incorporation or
other applicable charter document (any such document of any corporation
hereinafter referred to as its "Charter Document") or its Articles of
Association, By-Laws, or other applicable governing document (any such
documents of any corporation hereinafter referred to as its "Governing
Document"). The Company has made available to S Company copies of the
respective Charter Documents and Governing Documents, as currently in effect,
of each of the Company, D Company and M Company.
3.2. Capital Stock of Subsidiaries. Except as set forth in Schedule 3.2,
neither the Company nor any of its subsidiaries owns, controls or holds with
the power to vote, directly or indirectly, of record, beneficially or
otherwise, any capital stock or any equity or ownership interest in any
corporation, partnership, association, joint venture or other entity. Except
for M Company and D Company, the Company directly or indirectly owns 100% of
the capital stock of each of its subsidiaries. Schedule 3.2 also sets forth
with respect to the outstanding stock of D Company and M Company held by
persons other than the Company or any subsidiary, the names of the holders of
record and the class and number of shares held. Except as set forth in Schedule
3.2, the Company is directly or indirectly the sole record and beneficial owner
of all of the outstanding shares of capital stock of each of its subsidiaries,
there are no proxies with respect to such shares, and no equity securities of
any such subsidiaries are or may be required to be issued, transferred or sold
by reason of any options, warrants, rights to subscribe for, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into or exchangeable for, shares of any capital stock of any such
subsidiary, and there are no contracts, commitments, understandings or
arrangements by which the Company or any such subsidiary is bound to issue,
transfer or sell any shares of such capital stock or securities convertible
into or exchangeable for such shares. Other than as set forth in Schedule 3.2,
all of such shares so owned by the Company are validly issued, fully paid and
nonassessable and are owned by it free and clear of any claim, lien or
encumbrance of any kind with respect thereto. Except as set forth in Schedule
3.2, neither the Company nor any of its subsidiaries has agreed or is obligated
to make, or is bound by any contract, agreement, arrangement or understanding
under which it may become obligated to make, any future equity or similar
investment in or capital contribution to, or loan or guarantee of the
obligations of, any other person, including iKnowledge, Inc., OTC Conseil and
Tecnomatix Technologies Ltd. Neither the Company nor any of its subsidiaries
has, at any time, been a general partner of any general partnership, limited
partnership or other person. Schedule 3.2 sets forth, with respect to each of
iKnowledge, Inc., OTC Conseil and Tecnomatix Technologies Ltd. (i) the number
and class of shares of such entity directly or indirectly owned by the Company,
all of which shares are owned free and clear of all liens of any kind (except
as set forth in clause (ii)), and (ii) any investment, voting or similar
agreements to which the Company is a party relating to any such shares.
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3.3. Capitalization.
(a) The authorized share capital of the Company consists of 20,018,460
Company Ordinary Shares. As of the date hereof, 12,836,110 Company Ordinary
Shares are issued and outstanding. All of such issued and outstanding shares
are validly issued, fully paid and nonassessable. No Company Ordinary Shares
are owned by the Company or any of its subsidiaries.
(b) As of the date hereof, 676,000 Company Ordinary Shares are reserved for
issuance upon exercise of outstanding Company Options, all of which options are
listed and described in Schedule 3.3. Other than the 1992 Directors Stock
Option Plan, the 1994 Stock Option Plan and the 1996 Stock Option Plan
(collectively, the "Company Option Plans"), the Company has no other plan which
provides for the grant of options, warrants or rights to purchase Company
Ordinary Shares, share appreciation or similar rights or share awards. Schedule
3.3 sets forth the following information with respect to each Company Option or
option to purchase shares of M Company or D Company outstanding as of the date
of this Agreement: (i) the particular plan pursuant to which such option was
granted; (ii) the name of the optionee; (iii) the number of shares subject to
such option; (iv) the exercise price; and (v) the dates on which such option
was granted, becomes exercisable and/or vested and terminates. The Company has
made available to S Company accurate and complete copies of all stock option
plans pursuant to which the Company (or any of its subsidiaries) has
outstanding stock options, and the forms of all stock option agreements or
notifications utilized in connection with such plans. Except as set forth
above, there are not now, and at the Effective Time, except for Company
Ordinary Shares issued after the date hereof upon the exercise of Company
Options outstanding on the date hereof, there will not be, any Company Ordinary
Shares issued or outstanding or any subscriptions, options, warrants, calls,
claims, rights (including without limitation any share appreciation or similar
rights), convertible securities or other agreements or commitments of any
character obligating the Company to issue, transfer or sell any of its
securities.
(c) All issuances and grants of all outstanding Company Options, and all
offerings, sales and issuances by the Company and each of its subsidiaries of
any shares of capital stock, including the Company Ordinary Shares, were
conducted in compliance in all material respects with all applicable laws and
all requirements set forth in all applicable agreements or plans.
(d) There is no shareholder rights plan (or similar plan commonly referred
to as a "poison pill") or similar agreement or plan under which the Company or
any of its subsidiaries is or may become obligated to sell or otherwise issue
any shares of its capital stock or any other securities.
(e) Schedule 3.3(e) contains a copy of the list of record shareholders of
the Company as of March 5, 1999 obtained from the transfer agent for the
Company's Ordinary Shares.
3.4. Authority Relative to This Agreement. The Company has requisite
corporate power and authority to execute and deliver this Agreement and,
subject to obtaining the necessary approval of its shareholders and the Final
Court Order, to consummate the Arrangement and the other transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the Arrangement and other transactions contemplated hereby have
been duly and validly authorized by the Board of Directors of the Company and
no other corporate proceedings on the part of the Company are necessary to
authorize this Agreement or to consummate the Arrangement or other transactions
contemplated hereby (other than the approval and adoption of this Agreement and
the Arrangement by the Company's shareholders, and the issuance and filing of
the Final Court Order). This Agreement has been duly and validly executed and
delivered by the Company and, assuming the due authorization, execution and
delivery hereof by S Company, constitutes a valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms, except
to the extent that its enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws affecting the enforcement
of creditors' rights generally or by general equitable principles.
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3.5. No Violations, etc.
(a) Assuming that all filings, permits, authorizations, consents and
approvals or waivers thereof have been duly made or obtained as contemplated by
Section 3.5(b), neither the execution and delivery of this Agreement by the
Company nor the consummation of the Arrangement or other transactions
contemplated hereby nor compliance by the Company with any of the provisions
hereof will (i) violate, conflict with, or result in a breach of any provision
of, or constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) under, or result in the termination or
suspension of, or accelerate the performance required by, or result in a right
of termination or acceleration under, or result in the creation of any lien,
security interest, charge or encumbrance upon, or give to any third party any
interest in, any of the properties, assets or business of the Company or any of
its subsidiaries under, any of the terms, conditions or provisions of (x) their
respective Charter Documents or Governing Documents, or (y) except as set forth
in Schedule 3.5, any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which the Company or any
such subsidiary is a party or to which they or any of their respective
properties or assets may be subject, or (ii) violate any judgment, ruling,
order, writ, injunction, decree, statute, rule or regulation applicable to the
Company or any of its subsidiaries or any of their respective properties or
assets, except, in the case of clauses (i)(y) and (ii) above, for such
violations, conflicts, breaches, defaults, terminations, suspensions,
accelerations, rights of termination or acceleration or creations of liens,
security interests, charges or encumbrances which would not, individually or in
the aggregate, have a Company Material Adverse Effect.
(b) No filing or registration with or notification to and no permit,
authorization, consent or approval of any governmental entity (including,
without limitation, any federal, state or local regulatory authority or agency
of Israel, the United States or any other applicable jurisdiction) is required
to be obtained or made by or given by the Company or any subsidiary in
connection with the execution and delivery of this Agreement or the
consummation by the Company of the Arrangement or other transactions
contemplated hereby except (i) in connection with the applicable requirements
of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), (ii) the issuance of the Final Court Order and its filing with the
Registrar of Companies in Israel, (iii) the approval of the Company's
shareholders pursuant to Israeli law, (iv) filings with the Securities and
Exchange Commission (the "SEC"), (v) filings with and approval of the Israel
Investment Center of the Israeli Ministry of Industry & Trade ("Investment
Center"), (vi) filings with and approval of the Chief Scientist of the Israeli
Ministry of Industry & Trade (the "OCS"), (vii) filings with and the approval
of the Israeli Commissioner of Restrictive Trade Practices, (viii) filings with
the antitrust or other regulatory authorities in countries in which the Company
does business, if required, and (ix) such other filings, registrations,
notifications, permits, authorizations, consents or approvals the failure of
which to be obtained, made or given would not, individually or in the
aggregate, have a Company Material Adverse Effect.
(c) Except as set forth in Schedule 3.5, neither the Company nor any of its
subsidiaries, nor, to the knowledge of the Company, any other party thereto, is
in violation of or default under any note, bond, mortgage, indenture, deed of
trust, license, lease, agreement or other instrument or obligation to which the
Company or any of its subsidiaries is a party or to which the Company or any of
its subsidiaries or any of their respective properties, assets or business may
be subject, except for such violations or defaults which would not,
individually or in the aggregate, have a Company Material Adverse Effect.
Except as set forth in Schedule 3.5, neither the Company nor any subsidiary has
given or received written notice of a material default or notice of termination
with respect to any contract listed in Schedule 3.12.
(d) The Company is not aware of any reason why the Arrangement cannot
qualify as a "pooling of interests" for accounting purposes.
3.6. Commission Filings; Financial Statements; Books and Records.
(a) The Company has filed all forms, reports, schedules, statements and
other documents required to be filed by it since January 1, 1997 to the date of
this Agreement, and D Company and M Company have made
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certain filings as set forth on Schedule 3.6(a) (all such filings collectively,
as supplemented and amended since the time of filing, the "Company SEC
Reports") with the SEC, all of which (other than the filings set forth in
Schedule 3.6(a)) complied when filed in all material respects with all
applicable requirements of the U.S. Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder (the "Securities Act") and to the
extent applicable, the U.S. Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder (the "Exchange Act"), as the
case may be. The Company has provided to S Company a true and correct copy of
each of the filings listed on Schedule 3.6(a). The audited consolidated
financial statements and unaudited consolidated financial statements of the
Company included or incorporated by reference in the Company SEC Reports, (i)
comply as to form, in all material respects, with the published rules and
regulations of the SEC, (ii) have been prepared in accordance with United
States generally accepted accounting principles applied on a consistent basis
during the periods involved (except as may be indicated in the notes thereto)
and (iii) present fairly, in all material respects, the financial position and
results of operations and cash flows of the Company and its subsidiaries on a
consolidated basis at the respective dates and for the respective periods
indicated (except, in the case of interim financial statements, for normal
year-end adjustments and the absence of notes). Except as set forth on Schedule
3.6(a), the Company SEC Reports filed after the date of this Agreement and
prior to the Effective Time (which will include, when filed, the Company's
Report on Form 20-F for the period ended December 31, 1998), (i) will be
prepared in compliance in all material respects with all applicable
requirements of the Securities Act and the Exchange Act and (ii) will not at
the time they will be filed, 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 light of the circumstances under which
they were made, not misleading.
(b) Attached as Appendix I hereto are the audited consolidated financial
statements of the Company, M Company and D Company as of December 31, 1998 and
1997 for each of the years in the three-year period ended December 31, 1998
(collectively, the "1998 Financial Statements"). The 1998 Financial Statements
(i) have been prepared in accordance with U.S. generally accepted accounting
principles applied on a consistent basis during the periods involved (except as
may be indicated in the notes thereto) and (ii) present fairly, in all material
respects, the financial position and results of operations and cash flows of
the Company and its subsidiaries on a consolidated basis, D Company and M
Company, as the case may be, at the respective dates and for the respective
periods indicated.
(c) The books and records of the Company and its subsidiaries fairly reflect
in all material respects the transactions to which it is a party or by which
its properties are subject or bound. Such books and records have been properly
kept maintained and are in compliance in all material respects with all
applicable legal and accounting requirements. The minute books of the Company
and the minute books of D Company and M Company since January 1, 1996 contain
records which are accurate in all material respects of all corporate actions of
the respective shareholders and Board of Directors of the Company and D Company
and M Company during such period.
3.7. Absence of Undisclosed Liabilities. Except as set forth in Schedule
3.7, neither the Company nor any of its subsidiaries has any debt, liabilities
or obligations of any nature, whether absolute, accrued, unmatured, contingent,
known or unknown or otherwise, or any unsatisfied judgments or any leases of
personalty or realty or unusual or extraordinary commitments that are required
to be disclosed under U.S. generally accepted accounting principles
consistently applied, except the liabilities recorded on the Company's
consolidated balance sheet at December 31, 1998 ("Company 1998 Balance Sheet")
and except for liabilities or obligations incurred in the ordinary course of
business and consistent with past practice since January 1, 1999 and not in
breach of any of the representations and warranties of Section 3.8(iii).
3.8. Absence of Changes or Events. Except as set forth in Schedule 3.8
(including financial statements attached thereto) and in any Company SEC Report
filed by the Company or M Company or D Company with the SEC since January 1,
1999 and prior to the date hereof (all of such filings together, the "Company
Current SEC Filings"), since January 1, 1999 to the date hereof: (i) there has
been no change in the business,
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operations, financial condition of the Company or any of its subsidiaries that
has had or is reasonably likely to have, individually or in the aggregate, a
Company Material Adverse Effect, (ii) the Company and its subsidiaries have
conducted their businesses in the ordinary course of business and in a manner
consistent within past practice in all material respects, and (iii) neither the
Company nor any of its subsidiaries has taken any of the actions or done any of
the things described in clauses (a) through (l) of Section 6.1.
3.9. Proxy Statement and Other Filings.
(a) None of the information supplied or to be supplied by or on behalf of
the Company for inclusion or incorporation by reference in the registration
statement to be filed with the SEC by S Company in connection with the issuance
of S Company Shares in the Arrangement (the "Form S-4") will, at the time the
Form S-4 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 to make the statements therein, in light of the
circumstances under which they were 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 proxy statement, in definitive
form, relating to the Company Shareholders Meeting (as hereinafter defined) and
Optionholders Meeting, or in the related proxy and notice of meeting, or
soliciting material used in connection therewith (referred to herein
collectively as the "Proxy Statement") will, at the dates mailed to
shareholders and, if applicable, the optionholders, and at the time of the
Company Shareholder Meeting and, if applicable, Optionholders 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 light of the circumstances under which they are made, not
misleading. No representation is made hereby with respect to statements made in
the Proxy Statement based on information supplied by S Company for inclusion
therein.
(b) None of the information supplied or to be supplied by or on behalf of
any of the Company and its subsidiaries for inclusion or incorporation by
reference in the filings described in or contemplated by this Agreement will,
at the date filed, 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 light of the circumstances under which they are
made, not misleading. No representation is made hereby with respect to
statements made in such filings based on information supplied by S Company for
inclusion therein.
3.10. Litigation. Except as set forth in Schedule 3.10 and except for such
matters as are not reasonably likely to result in liability to the Company or
any of its subsidiaries in excess of $100,000, individually, or $250,000 in the
aggregate, as of the date of this Agreement, there is no (i) claim, action,
suit or proceeding pending or, to the knowledge of the Company, threatened
against the Company or any of its subsidiaries before any court or governmental
or regulatory entity or arbitration tribunal, or (ii) outstanding judgment,
order, writ, injunction or decree, or application, request or motion therefor,
of any court or governmental or regulatory entity or arbitration tribunal in a
proceeding to which the Company or any subsidiary of the Company was or is a
party.
3.11. Title to Properties.
(a) The Company and its subsidiaries own no real property and, except as set
forth in Schedule 3.11 or the Company Current SEC Filings, have good and valid
title to all of their respective material property and assets (except for
leased property or assets), including those reflected on the Company 1998
Balance Sheet, except for property since sold or otherwise disposed of in the
ordinary course of business and consistent with past practice, free and clear
of any claim, lien or encumbrance, except for (i) such defects of title that do
not materially adversely affect the use of the properties or assets subject
thereto or affected thereby, (ii) liens, claims or encumbrances set forth in
the Company 1998 Balance Sheet, (iii) liens, claims or encumbrances securing
taxes, all of which are due but not delinquent or are being contested in good
faith, or (iv) liens, claims or encumbrances set forth on Schedule 3.7. The
Company and each of its subsidiaries possess all of their respective material
assets and property that are leased from other persons under valid and
enforceable contracts. The Company and its subsidiaries have all assets
necessary to operate, or which are material to the operation
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of, its respective business. The property and assets of the Company and its
subsidiaries, wherever located, are generally in good condition, ordinary wear
and tear excepted.
3.12. Certain Contracts.
(a) Except as set forth in Schedule 3.12 and except for agreements,
indentures, arrangements and contracts which are exhibits to the Company's Form
20-F for the year ended December 31, 1997, as of the date of this Agreement,
neither the Company nor any of its subsidiaries is a party to, is bound by,
owns properties subject to, or receives benefits under:
(i) any agreement, arrangement or contract not made in the ordinary
course of business that (x) would currently be required to be filed as an
exhibit to a Form 20-F under the Exchange Act or (y) is or may reasonably
be expected to be material to the financial condition, business or results
of operations of M Company and D Company, taken as a whole or the Company
and its subsidiaries, taken as a whole;
(ii) any agreement, indenture or other contract relating to the
borrowing of money by the Company or any of its subsidiaries or the
guarantee by the Company or any of its subsidiaries of any such obligation
in each case, in an amount in excess of $150,000 currently outstanding or
guaranteed or relating to future amounts which could exceed $150,000 (other
than agreements and instruments relating to transactions between the
Company and any of its subsidiaries or between the subsidiaries);
(iii) any agreement, arrangement or commitment relating to the
employment, election or retention of any present or former (with respect to
which there exist pending or future obligations) director, officer or any
key employee with a total annual compensation in excess of $200,000 of the
Company or any of its subsidiaries or providing for severance, termination
or similar payments (other than amounts required by applicable law) to any
such persons; or
(iv) any agreement containing covenants that limit, in any respect
material to the Company and its subsidiaries, the ability of the Company or
any of its subsidiaries to compete in any line of business or with any
person, or that involve any restriction on the geographic area in which, or
method by which, the Company or any of its subsidiaries may carry on its
business, other than standard agency or distribution agreements that
provide for exclusive geographic territories;
(v) software license contracts, software maintenance contracts, service
contracts and other customer contracts involving an amount in excess of
$150,000 pursuant to which the Company or its subsidiaries provides
software, products or services and under which the Company or any of its
subsidiaries has any ongoing obligations other than any such contract
solely between the Company and any of its subsidiaries or between the
Company's subsidiaries;
(vi) contracts for the purchase, lease and/or maintenance of computer
equipment and other equipment, contracts involving an amount in excess of
$150,000 for the purchase, license, lease and/or maintenance of software
under which any of the Company or any of its subsidiaries is the purchaser,
licensee, lessee or user, and other supplier contracts involving an amount
in excess of $150,000, in each case, under which the Company or any of its
subsidiaries has any ongoing obligations;
(vii) consulting, sales representative, sales agency and sales
distribution contracts involving an amount in excess of $150,000 under
which the Company or any of its subsidiaries has any ongoing obligations;
(viii) contracts under which any rights in and/or ownership of any
material software, product, technology or other intangible of the Company
or any of its subsidiaries, or any prior version thereof, or any material
part of the customer base, business or assets of any of the Company or any
of its subsidiaries, or any shares or other ownership interests in any of
the Company or any of its subsidiaries (or any of their predecessors) was
acquired, other than purchases of additional equity stakes in D Company and
M Company after they became subsidiaries of the Company;
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(ix) contracts for the purchase, lease, sublease or occupancy of real
property or otherwise concerning real property and involving an amount in
excess of $150,000 under which the Company or any of its subsidiaries has
any ongoing obligations; and
(x) any other agreement, arrangement or contract under which the Company
or any of its subsidiaries has any ongoing obligations that contemplates or
involves the payment or delivery of cash or other consideration in an
amount or having a value in excess of $150,000 in the aggregate, or
contemplates or involves the performance of services having a value in
excess of $150,000 in the aggregate under which the Company or any of its
subsidiaries has any ongoing obligations.
3.13. Labor and Independent Contractor Matters. Each of the Company and its
subsidiaries is in compliance in all material respects with all applicable laws
respecting employment and employment practices, terms and conditions of
employment and wages and hours, and neither the Company nor any of its
subsidiaries is engaged in any unfair labor practice, except for any non-
compliance or practice that would not have a Company Material Adverse Effect.
There is no labor strike, slowdown or stoppage pending (or, to the knowledge of
the Company, any labor strike or stoppage threatened) against or affecting the
Company or any of its subsidiaries. Except as set forth on Schedule 3.13 and
except for agreements that are applicable by operation of law, neither the
Company nor any of its subsidiaries has ever been a party to or bound by any
union or collective bargaining contract, nor is any such contract currently in
effect or being negotiated by or on behalf of any of the Company or any of its
subsidiaries. Attached to Schedule 3.13 is a copy of the standard form of
employee agreement used by M Company in Israel and the U.S. and D Company in
France, U.K., Israel and the U.S. Except as disclosed on Schedule 3.13,
substantially all of the current employees of the Company and its subsidiaries
in such respective countries have signed an employee agreement substantially
identical to the respective forms attached to Schedule 3.13. Except as set
forth on Schedule 3.13, each of the current and past consultants or contractors
of the Company and its subsidiaries has signed an agreement with the Company or
one of its subsidiaries containing restrictions that adequately protect the
proprietary and confidential information of the Company or its subsidiary and
vest in the Company or its subsidiary the full ownership of items developed by
such consultant or contractor. Except as indicated on Schedule 3.13, since
September 1, 1998 and through the day immediately prior to the date of this
Agreement, no key employee of the Company or any subsidiary has indicated an
intention to terminate or has terminated his or her employment with such
company.
3.14. Compliance with Law. All activities of the Company and its
subsidiaries have been, and are currently being, conducted in compliance, in
all material respects, with all applicable Israeli, U.S. federal, state and
local and other foreign laws, ordinances, regulations, judgments, decrees,
injunctions, permits, licenses, certificates, orders and other similar items of
any court or other governmental entity or any non-governmental self-regulatory
agency. The Company and its subsidiaries have all material permits, licenses
and franchises from governmental agencies required to conduct their businesses
as now being conducted, all of which are in full force and effect, and neither
the Company nor any of its subsidiaries is in material violation of any such
permit, license or franchise.
3.15. Grants, Incentives and Subsidies. Schedule 3.15 hereto provides a
correct and complete list of the aggregate amount of pending and outstanding
grants from each agency of the government of the State of Israel, or from any
foreign governmental or administrative agency, to the Company or any of its
subsidiaries ("Grants"), net of royalties paid, including, without limitation,
(i) Approved Enterprise Status from the Investment Center and (ii) Grants from
the OCS. The Company has made available to S Company, prior to the date hereof,
correct and complete copies of all letters of approval, and supplements
thereto, granted to the Company or any of its subsidiaries relating to Approved
Enterprise Status from the Investment Center and Grants under which royalties
are owed or, the Company believes will be owed to the OCS. Except for
undertakings set forth in such letters of approval and undertakings under
applicable laws and regulations, there are no material undertakings of the
Company or any of its subsidiaries given in connection with the Grants. The
Company and each of its subsidiaries are in compliance, in all material
respects, with the terms and
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conditions of such grants and, except as disclosed in Schedule 3.15 hereto,
have duly fulfilled, in all material respects, all the undertakings relating
thereto.
3.16. Intellectual Property Rights. Set forth on Schedule 3.16 is an
accurate and complete list and description of all (i) (a) Software (as defined
below) currently marketed to customers by, or required to be supported pursuant
to existing agreements of, the Company or any of its subsidiaries ("Marketed
Software"), (b) Software licensed from third parties and incorporated into the
Marketed Software, and (c) all other material Software; (ii) registered and
material unregistered trademarks, trade names and service marks owned by the
Company or any of its subsidiaries; (iii) registered copyrights owned by the
Company or any of its subsidiaries; and (iv) patents owned by the Company or
any of its subsidiaries, and, in the case of Marketed Software, a general
product description, the language in which it is written and the type of
operating system(s) on which it runs.
Except as explained on Schedule 3.16(v), the Company or one of its
subsidiaries has good and valid title to, or has the valid right to use in
accordance with its license agreements with third parties, all of the Software
and Intangibles (as defined below), free and clear of any claim, lien or
encumbrance. Except as set forth on Schedule 3.16(v), the Company or one of its
subsidiaries has all third party rights which are necessary to market, license,
sell, modify, update, and/or create derivative works of the Software or
Intangibles listed on Schedule 3.16 in the manner conducted by the Company or
subsidiaries for a period of two years prior to the Effective Date.
Except as set forth on Schedule 3.16(vi), all of the Owned Software (as
defined below) and Owned Intangibles (as defined below) (a) were created as a
work made for hire by employees of the Company or its subsidiaries (the
foregoing concepts as used in U.S. copyright law); or (b) to the extent that
any author or developer of any Owned Software or Owned Intangibles was not an
employee of the Company or a subsidiary at the time such person contributed to
such Owned Software or Owned Intangibles, such author or developer has assigned
to the Company or its subsidiaries in writing all copyrights and other
proprietary rights in such person's work on the Owned Software or Owned
Intangibles.
With respect to the Owned Software listed on Schedule 3.16(vii), (a) the
Company or its subsidiaries maintain machine-readable master-reproducible
copies, source code listings, technical documentation and user manuals for the
most current releases or versions thereof and for all earlier releases or
versions thereof currently being supported by them, except as would not
individually or in the aggregate reasonably be expected to have a Company
Material Adverse Effect; (b) in each case, the machine-readable copy
substantially conforms to the corresponding source code listing; (c) such Owned
Software provides in all material respects the functionality described in the
user manuals therefor without material operating defects; (d) in each case,
each component of such Owned Software that creates, accepts, displays, stores,
retrieves, accesses, recognizes, distinguishes, compares, sorts, manipulates,
processes, calculates, converts or otherwise uses any data denominated in the
currency known as the "Euro" which was introduced pursuant to the Maastricht
Treaty on January 1, 1999, does so accurately, consistent with its processing
of data denominated in national currencies, without any material operating
defect.
Except as set forth on Schedule 3.16(viii) or as disclosed in the
Questionnaire (as defined below), with respect to the Owned Software, and to
the Company's knowledge or the knowledge of any of its subsidiaries, with
respect to the Software licensed from third parties, each component of such
Software as currently used in the business of Company or any of its
subsidiaries, creates, accepts, displays, stores, retrieves, accesses,
recognizes, distinguishes, compares, sorts, manipulates, processes, calculates,
converts or otherwise uses dates or date-related data, will do so accurately,
without any operating defects, loss of functionality or degradation in
performance or volume capacity using dates in the twentieth and twenty-first
centuries, and will not be adversely affected by the advent of the year 2000,
the advent of the twenty-first century, or the transition from the twentieth
century through the year 2000 and into the twenty-first century. Excluding
Software that was discontinued by the Company or one of its subsidiaries as set
forth in Schedule 3.16, the Company or its
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subsidiaries have tested the Marketed Software to the extent necessary for such
Software's full operation and functionality by using dates in the twentieth and
twenty-first centuries and as described in the Year 2000 Questionnaire
("Questionnaire") and, except as set forth in the Questionnaire, believe that
there are no unresolved material: (a) problems with the accuracy of any
component of such Software that creates, accepts, displays, stores, retrieves,
accesses, recognizes, distinguishes, compares, sorts, manipulates, processes,
calculates, converts, or otherwise uses dates or date-related data, (b)
operating defects, or (c) losses of functionality or degradation in performance
or volume capacity related to year 2000 issues, as more fully described herein.
Except as set forth on Schedule 3.16(ix), none of the Owned Software or
Owned Intangibles, or their respective past or current uses, including the
preparation, distribution, marketing or licensing thereof, has violated or
infringed upon, or is violating or infringing upon, any Software, technology,
patent, copyright, trade secret or other Intangible of any person. The Company
and its subsidiaries have adequately maintained all trade secrets and
copyrights with respect to the Software. To the Company's knowledge or the
knowledge of any of its subsidiaries, no person is violating or infringing
upon, or has violated or infringed upon at any time, any of the Owned Software
or Owned Intangibles.
None of the Owned Software or Owned Intangibles is registered in the name of
any current or former owner, shareholder, director, executive, officer,
employee, salesman, agent, customer, representative or contractor of the
Company or any of its subsidiaries, nor does any such person have any interest
therein or right thereto, including the right to royalty payments.
The Company's responses to the Questionnaire, both as orally disclosed to S
Company and in writing, are correct and complete in all material respects.
"Software" means any computer program, operating system, applications
system, firmware or software of any nature, whether operational, or under
development, including all object code, source code, technical manuals, user
manuals and other documentation therefor, whether in machine-readable form,
programming language or any other language or symbols, and whether stored,
encoded, recorded or written on disk, tape, film, memory device, paper or other
media of any nature used by the Company or any of its subsidiaries in the
course of the business of the Company or of its subsidiaries. "Owned Software"
means any Software owned by the Company or one of its subsidiaries.
"Intangible" means any corporate name, fictitious name, trademark, trademark
application, service mark, service mark application, trade name, brand name,
product name, trade secret, know-how, patent, patent application, copyright,
copyright application, design, logo, formula, invention, technology or other
intangible asset of any nature, whether currently in use, under development or
design by the Company or any of its subsidiaries in connection with the
business of the Company or of its subsidiaries. "Owned Intangible" means any
Intangible owned by the Company or one of its subsidiaries.
3.17. Taxes. "Tax" or "Taxes" shall mean all Israeli or United States
federal, state or local or foreign taxes and any other applicable taxes,
duties, levies, charges and assessments of any nature, including social
security payments and deductibles relating to wages, salaries and benefits and
payments to subcontractors (to the extent required under applicable Tax law),
and also including all interest, penalties and additions imposed with respect
to such amounts. "Tax Return" shall mean any report, return, document,
declaration or other information or filing required to be supplied to any
taxing authority or jurisdiction (foreign or domestic) with respect to Taxes.
Except as set forth in Schedule 3.17: (i) the Company and its subsidiaries have
properly prepared and timely filed with the appropriate governmental agencies
all material Tax Returns required to be filed for any period ending on or
before the Effective Date, taking into account any extension of time to file
granted to or obtained on behalf of the Company and/or its subsidiaries; (ii)
all material Taxes of the Company and its subsidiaries required to be paid in
respect of all taxable periods ending on or before the Effective Date ("Pre-
Closing Period") have been paid in full to the proper authorities, other than
such Taxes that are being contested in good faith by appropriate proceedings
and that are adequately reserved for in accordance with U.S. generally accepted
accounting principles; (iii) no deficiency has been asserted or assessed
against the Company or any of its subsidiaries, and no examination of the
Company or any of its subsidiaries is pending or, to the
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knowledge of the Company, is threatened for any material amount of Tax by any
taxing authority; (iv) no extension of the period for assessment or collection
of any material Tax is currently in effect and no extension of time within
which to file any material Tax Return has been requested, which Tax Return has
not since been filed; (v) no material Tax liens have been filed with respect to
any Taxes, which liens are not disclosed in the Company 1998 Balance Sheet,
except for liens for Taxes not yet due and payable and liens for Taxes that are
being contested in good faith; (vi) since January 1, 1999, the Company and each
of its subsidiaries have not made any voluntary adjustments by reason of a
change in their accounting methods for any Pre-Closing Period and (vii) the
Company and its subsidiaries are not parties to any Tax sharing or Tax
allocation agreement. Neither the Company nor any of its subsidiaries has made
any material payments, is obligated to make any material payments, or is a
party to any agreement that under certain circumstances could obligate it to
make any material payments that will not be deductible under Code (S)280G.
Neither the Company nor any of its subsidiaries has any liability for the taxes
of any person (other than any of the Company or any of its subsidiaries) under
Reg. (S)1.1502-6 (or any similar provision of state, local, or foreign law), as
a transferee or successor, by contract, or otherwise.
3.18. Employee Benefit Plans; ERISA. Except as set forth in Schedule 3.18:
(a) There are no "employee pension benefit plans" as defined in Section 3(2)
of the United States Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), maintained or contributed to by the Company or any of its
ERISA Affiliates, or with respect to which the Company or any of its ERISA
Affiliates contributes or is being obligated to make payments thereunder or
otherwise may have any liability ("Pension Benefits Plans"). For purposes of
this Agreement, "ERISA Affiliate" shall mean any person (as defined in Section
3(9) of ERISA) that is a member of any group of persons described in Section
414(b), (c), (m) or (o) of the Code of which the Company or a subsidiary of the
Company is a member.
(b) The Company has made, or will make within 14 days of the date of this
Agreement, available to S Company all "welfare benefit plans" (as defined in
Section 3(1) of ERISA), maintained or contributed to by the Company or any of
its subsidiaries or with respect to which the Company or any of its
subsidiaries otherwise may have any liability ("Welfare Plans"), all stock
bonus, stock option, restricted stock, stock appreciation right, stock
purchase, bonus, incentive, deferred compensation, severance and vacation or
other employee benefit plans, programs or arrangements that are not Pension
Benefit Plans or Welfare Plans maintained or contributed to by the Company or a
subsidiary or with respect to which the Company or any subsidiary otherwise may
have any liability ("Other Plans").
(c) The Company and each of its subsidiaries, and each of the Pension
Benefit Plans, Welfare Plans and Other Plans (collectively, the "Plans"), are
in compliance with the applicable provisions of ERISA, the Code and other
applicable laws except where the failure to comply would not, individually or
in the aggregate, have a Company Material Adverse Effect.
(d) All contributions to, and payments from, the Plans which are required to
have been made in accordance with the Plans have been timely made except where
the failure to make such contributions or payments on a timely basis would not,
individually or in the aggregate, have a Company Material Adverse Effect.
(e) There are (i) no investigations, audits or examinations pending, or to
the best knowledge of the Company, threatened by any governmental entity
involving any of the Plans, (ii) no termination proceedings involving the Plans
and (iii) no pending or, to the of the knowledge of the Company, threatened
claims (other than routine claims for benefits), suits or proceedings against
any Plan, against the assets of any of the trusts under any Plan or against any
fiduciary of any Plan with respect to the operation of such plan or asserting
any rights or claims to benefits under any Plan or against the assets of any
trust under such plan, which would, in the case of clause (i), (ii) or (iii) of
this paragraph (e), give rise to any liability which would, individually or in
the aggregate, have a Company Material Adverse Effect, nor, to the knowledge of
the Company, are there any facts which would give rise to any liability which
would, individually or in the aggregate, have a Company Material Adverse Effect
in the event of any such investigation, audit, examination, claim, suit or
proceeding.
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(f) None of the Company, any of its subsidiaries or any employee of the
foregoing, nor, to the knowledge of the Company, any trustee, administrator,
other fiduciary or any other "party in interest" or "disqualified person" with
respect to the Welfare Plans, has engaged in a "prohibited transaction" (within
the meaning of Section 4975 of the Code or Section 406 of ERISA) which presents
a material risk of resulting in a tax, penalty or other liability on or to the
Company or any of its subsidiaries under Section 4975 of the Code or Section
502(i) of ERISA which would, individually or in the aggregate, have a Company
Material Adverse Effect.
(g) With respect to each of the Plans, copies of the following documents
have been made available to S Company or will be made available within 14 days
of the date hereof: (i) the current plans and related trust documents,
including amendments thereto, (ii) any current summary plan descriptions, (iii)
the most recent Forms 5500 (if any) filed with respect to each such Plan, (iv)
the most recent financial statements and actuarial reports, if applicable, (v)
the most recent IRS determination letter, if applicable; (vi) if any
application for an IRS determination letter is pending, copies of all such
applications for determination (including attachments, exhibits and schedules
thereto, (vii) all material agreements (including settlement agreements or
other similar agreements relating to any Plan); and (viii) all material
correspondence between the Company and any of its subsidiaries and the IRS,
PBGC, Department of Labor or any other governmental entity relating to any of
the Plans.
(h) Except as disclosed in Schedule 3.18, the consummation of the
transactions contemplated by this Agreement will not either alone or in
connection with an employee's termination of employment or other event result
in an increase in the amount of compensation or benefits or accelerate the
vesting or timing of payment of any benefits or compensation payable to or in
respect of any employee of the Company or any of its subsidiaries.
3.19. Environmental Matters. The Company and its subsidiaries are in
compliance in all material respects, with all applicable health, safety and
environmental laws. The Company and each of its subsidiaries have obtained all
material permits and authorizations which are required under all applicable
health, safety and environmental laws and are in compliance in all material
respects with such permits and authorizations. There is no environmental matter
which could expose the Company or any of its subsidiaries to a material claim
to clean-up or remedy any pollution or damage at any of the properties utilized
in the businesses of the Company and its subsidiaries.
3.20. Finders or Brokers. Except for Salomon Smith Barney Inc. and
BancBoston Robertson Stephens Inc., whose fees are set forth in the engagement
letters included in Schedule 3.20 and will be paid by the Company, no agent,
investment banker, broker, finder, intermediary or other person acting on
behalf of any of the Company or any of its subsidiaries, is or shall be
entitled to any brokerage, or finder's or other similar fee or commission in
connection with the Arrangement and the other transactions contemplated by this
Agreement. The Company has made available to S Company copies of all
commitments, agreements or other documentation in respect of which fees,
commissions or other amounts may become payable to, and all indemnification and
other contracts related to the engagement of, Salomon Smith Barney Inc. and
BancBoston Robertson Stephens Inc.
3.21. Board Recommendation. The Board of Directors of the Company, at a
meeting duly called and held, has (a) approved and adopted this Agreement, the
Arrangement and the other transactions contemplated hereby, (b) determined that
the Arrangement is fair to the shareholders of the Company, and (c) recommended
that the shareholders and optionholders of the Company approve and adopt the
Arrangement and directed that the Arrangement be submitted for consideration of
the Company's shareholders at the Company Shareholders Meeting and the
Company's optionholders at the Optionholders Meeting.
3.22. Opinions of Financial Advisors. The Board of Directors of the Company
has received the opinion of each of Salomon Smith Barney Inc. and BancBoston
Robertson Stephens Inc. to the effect that as of the date of such opinions, the
Exchange Ratio is fair from a financial point of view to the holders of Company
Ordinary Shares.
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3.23. Related Party and Affiliate Transactions. Except as described on
Schedule 3.23 or in the Company SEC Reports, and except for any employment and
consulting contracts listed on Schedule 3.12, there are no loans, guarantees,
contracts, transactions, understandings or other arrangements of any nature
outstanding between or among the Company or any of its subsidiaries, on the one
hand, and any 5% or greater shareholder, or any current or former director,
officer or controlling person of the Company or any subsidiary (excluding any
agreements between the Company and its subsidiaries), on the other hand. Except
as set forth on Schedule 3.23 or in the Company SEC Reports, since the date of
the Company's last Form 20-F 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. Schedule 3.23 identifies each person who
is an "affiliate" (as that term is used in Rule 145 under the Securities Act)
of Company as of the date of this Agreement.
3.24. Insurance. The Company and its subsidiaries are covered by valid and
currently effective insurance policies issued in favor of the Company or its
subsidiaries that are customary for companies of similar size and financial
condition. All such policies are in full force and effect, all premiums due
thereon have been paid and the Company has complied in all material respects
with the provisions of such policies. The Company has not been advised in
writing within the two years prior to the date of this Agreement of any defense
to coverage in connection with any claim to coverage asserted or noticed by the
Company under or in connection with any of its existing insurance policies. The
Company has not within the six months prior to the date of this Agreement
received any written notice from or on behalf of any insurance carrier issuing
policies or binders relating to or covering the Company and its subsidiaries
that there will be a cancellation or non-renewal of existing policies or
binders.
3.25. Questionable Payments. To the knowledge of the Company, within the
last two years no current or former director, executive, officer,
representative, agent or employee of the Company or any of its subsidiaries
(when acting in such capacity or otherwise on behalf of the Company or any of
its subsidiaries or any of their predecessors), (a) has used or is using any
corporate funds for any illegal contributions, gifts, entertainment or other
unlawful expenses relating to political activity; (b) has used or is using any
corporate funds for any direct or indirect unlawful payments to any foreign or
domestic government officials or employees; (c) has violated or is violating
any provision of the Foreign Corrupt Practices Act of 1977, (d) has established
or maintained, or is maintaining, any unlawful or unrecorded fund of corporate
monies or other properties; (e) has made at any time since January 1, 1993, any
false or fictitious entries on the books and records of any of the Company or
any of its subsidiaries; (f) has made any bribe, rebate, payoff, influence
payment, kickback or other unlawful payment of any nature using corporate funds
or otherwise on behalf of the Company or any of its subsidiaries; or (g) made
any material favor or gift that is not deductible for federal income tax
purposes using corporate funds or otherwise on behalf of the Company or any of
its subsidiaries.
3.26. Disclosure. Article III and the Schedules relating thereto do 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 or warranties contained therein (in the light
of the circumstances under which such representations or warranties are being
made) not false or misleading.
ARTICLE IV
Representations and Warranties of S Company
S Company represents and warrants to the Company that:
4.1. Organization and Qualification. S Company is a corporation duly
organized, validly existing, duly registered and in good standing under the
laws of the jurisdiction of its organization and each such corporation has all
requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted. S Company is
duly qualified or licensed to carry on its business as it is now being
conducted, and is qualified to do business, in each jurisdiction where the
character of its properties
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owned or leased or the nature of its activities makes such qualification
necessary, except for failures to be so qualified which would not, individually
or in the aggregate, have a S Company Material Adverse Effect. "S Company
Material Adverse Effect" means any effect, change or event that when taken
together with all other effects, changes or events occurring or existing at or
about the same time; (i) has a material adverse effect on the business, assets,
operations or financial condition of S Company and its subsidiaries taken as a
whole; or (ii) has a material adverse effect on S Company's ability to perform
its obligations under this Agreement, or to consummate the Arrangement or the
other transactions contemplated by this Agreement, provided, however, that, the
effects, changes or events which do not affect S Company and its subsidiaries
in a materially disproportionate manner that are generally applicable to (A)
the industries and markets in which S Company and its subsidiaries operate, (B)
the economies of the countries in which S Company and its subsidiaries operate
or (C) the United States and other securities markets shall be excluded from
the determination of S Company Material Adverse Effect; and provided, further,
that any adverse direct or indirect effect on S Company and its subsidiaries
resulting from the execution of this Agreement and the announcement or
performance of this Agreement and the transactions contemplated hereby shall
also be excluded from the determination of and shall not be deemed to create a
S Company Material Adverse Effect. In any event, a decline in S Company's stock
price shall not, in and of itself, constitute a S Company Material Adverse
Effect. S Company is not in violation of any of the provisions of its Charter
Documents or Governing Documents. S Company has made available to the Company
copies of the Charter Documents and Governing Documents, as currently in
effect, of S Company.
4.2. Capitalization. The authorized capital stock of S Company consists of
320,000,000 shares of Common Stock, par value $.01 per share and 5,000,000
shares of preferred stock, par value $.01 per share. As of March 1, 1999,
approximately 114,627,380 S Company Shares were issued and outstanding. As of
December 31, 1998, approximately 12,827,000 S Company Shares were reserved for
issuance upon exercise of options or rights pursuant to its stock option plans
and employee stock purchase plan. All of such issued and outstanding shares
are, and all of the S Company Shares to be issued as the Arrangement
Consideration or to holders of Company Options and, as applicable, holders of
shares and options of D Company and M Company under this Agreement will be,
when issued in accordance with this Agreement and the Arrangement, validly
issued, fully paid and nonassessable and free of preemptive rights and shall
have all the rights and privileges attached to the S Company Shares as set
forth in its Governing Documents and Charter Documents. The options to purchase
S Company Shares as contemplated in Section 7.1(c) hereof shall be duly
authorized and any S Company Shares issued upon exercise thereof and payment of
the exercise payment therefor in accordance with the terms of the relevant
option and the relevant option plan under which they were issued shall be, when
issued, duly and validly issued, fully paid and nonassessable.
4.3. Authority Relative to This Agreement. S Company has requisite corporate
power and authority to execute and deliver this Agreement and to consummate the
Arrangement and other transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the Arrangement and other
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors of S Company and no other corporate proceedings on the part
of S Company are necessary to authorize this Agreement or to consummate the
Arrangement or other transactions contemplated hereby (other than the issuance
and filing of the Final Court Order). This Agreement has been duly and validly
executed and delivered by S Company and, assuming the due authorization,
execution and delivery hereof by the Company, constitutes a valid and binding
agreement of S Company, enforceable against S Company in accordance with its
terms, except to the extent that its enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws
affecting the enforcement of creditors' rights generally or by general
equitable or fiduciary principles.
4.4. No Violations, etc.
(a) Assuming that all filings, permits, authorizations, consents and
approvals or waivers thereof have been duly made or obtained as contemplated by
Section 4.5(b) hereof, neither the execution and delivery of this Agreement by
S Company nor the consummation of the Arrangement or other transactions
contemplated
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<PAGE>
hereby nor compliance by S Company with any of the provisions hereof will (i)
violate, conflict with, or result in a breach of any provision of, or
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under, or result in the termination or suspension
of, or accelerate the performance required by, or result in a right of
termination or acceleration under, or result in the creation of any lien,
security interest, charge or encumbrance upon any of the properties or assets
of S Company or any of its significant subsidiaries under, any of the terms,
conditions or provisions of (x) their respective Charter Documents or Governing
Documents, (y) any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which S Company or such
significant subsidiary is a party or to which they or any of their respective
properties or assets may be subject, or (ii) violate any judgment, ruling,
order, writ, injunction, decree, statute, rule or regulation applicable to S
Company or any significant subsidiary or any of their respective properties or
assets, except, in the case of clauses (i)(y) and (ii) above, for such
violations, conflicts, breaches, defaults, terminations, suspensions,
accelerations, rights of termination or acceleration or creations of liens,
security interests, charges or encumbrances which would not, individually or in
the aggregate, have an S Company Material Adverse Effect.
(b) No filing or registration with, notification to and no permit,
authorization, consent or approval of any governmental entity is required to be
obtained, made or given by S Company or any of its significant subsidiaries in
connection with the execution and delivery of this Agreement or the
consummation by S Company of the Arrangement or other transactions contemplated
hereby, except (i) in connection with the applicable requirements of the HSR
Act, if any, (ii) the issuance of the Final Court Order and its filing with the
Registrar of Companies, (iii) filings with the SEC and state securities
commissions, (iv) filings with and receipt of a permit or exemption from the
Israeli Securities Authority ("ISA"), (v) filings with and approval of the
Investment Center, (vi) filings with and approval of the OCS, (vii) filings
with the antitrust or other regulatory authorities in countries in which the
Company does business, if applicable, (viii) filings with and the approval of
the Israeli Controller of Restrictive Trade Practices, and (ix) such other
filings, registrations, notifications, permits, authorizations, consents or
approvals the failure of which to be obtained, made or given would not
individually or in the aggregate, have an S Company Material Adverse Effect.
(c) S Company is not aware of any reason why the Arrangement cannot qualify
as a "pooling of interests" for accounting purposes.
4.5. Commission Filings; Financial Statements.
(a) S Company has filed all forms, reports, schedules, statements and other
documents required to be filed by it since January 1, 1997 to the date hereof
(as supplemented and amended since the time of filing, collectively, the "S
Company SEC Reports") with the SEC, all of which complied when filed in all
material respects with all applicable requirements of the Securities Act and
the Exchange Act as the case may be. The audited consolidated financial
statements and unaudited consolidated interim financial statements of S Company
and its subsidiaries included or incorporated by reference in the S Company SEC
Reports were prepared in accordance with United States generally accepted
accounting principles applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto) and present fairly, in all
material respects, the financial position and results of operations and cash
flows of S Company and its subsidiaries on a consolidated basis at the
respective dates and for the respective periods indicated (except, in the case
of all such financial statements that are interim financial statements, for
normal year-end adjustments the absence of notes). The S Company SEC Reports,
including all such reports filed after the date of this Agreement and prior to
the Effective Time (i) were or will be prepared in compliance in all material
respects with all applicable requirements of the Securities Act and the
Exchange Act, as the case may be and (ii) did not at the time they were filed
or will not at the time they will be filed, 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 light of the
circumstances under which they were made, not misleading.
(b) None of the information supplied or to be supplied by or on behalf of S
Company for inclusion or incorporation by reference in the filings described in
or contemplated by this Agreement will, at the date filed,
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<PAGE>
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 light of the circumstances under which they are made, not
misleading. No representation is made hereby with respect to statements made in
such filings based on information supplied by the Company for inclusion
therein.
4.6. Absence of Changes or Events. Except as set forth in S Company's Form
10-K for the fiscal year ended December 31, 1997, as filed with the SEC, or in
any other filing made by S Company with the SEC since January 1, 1998 and prior
to the date hereof (together, the "S Company Current SEC Filings") since
September 30, 1998 to the date hereof, there has not been any change in the
business, financial condition or results of operations of S Company or any of
its subsidiaries which has had an S Company Material Adverse Effect.
4.7. Proxy Statement. None of the information supplied or to be supplied by
or on behalf of S Company for inclusion or incorporation by reference in the
Form S-4 will, at the time the Form S-4 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 to make the statements
therein, in light of the circumstances under which they were made, not
misleading. None of the information supplied or to be supplied by or on behalf
of S Company for inclusion or incorporation by reference in the Proxy Statement
will, at the dates mailed to shareholders and at the times of the Company
Shareholder 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 light of the circumstances under which they are
made, not misleading. The Form S-4 (except for information relating solely to
the Company) will comply as to form in all material respects with the
provisions of the Securities Act and the Exchange Act and the rules and
regulations promulgated thereunder.
4.8. Board Approval. The Board of Directors of S Company, at a meeting duly
called and held, approved the Arrangement and the other transactions
contemplated by this Agreement (including, without limitation, the issuance of
S Company Shares in the Arrangement and to holders of Company Options and, as
applicable, holders of shares and options of D Company and M Company).
4.9. Finders or Brokers. No agent, investment banker, broker, finder,
intermediary or other person acting on behalf of any of S Company or its
subsidiaries, is or shall be entitled to any brokerage, or finder's or other
similar fee or commission in connection with the Arrangement and the other
transactions contemplated by this Agreement.
4.10. Disclosure. Article IV does 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
or warranties contained therein (in the light of the circumstances under which
such representations and warranties are being made) not false or misleading.
ARTICLE V
Required Approvals and Closing
5.1. Shareholders and Court Approvals.
(a) The Company shall take any and all necessary or appropriate action as
soon as practicable and in any event within fifteen days after the execution of
this Agreement to file a motion (the "First Motion") with the Tel Aviv-Jaffa
District court or any other competent court in Israel (the "Court") requesting
the Court to order that a special meeting of the Company's shareholders (the
"Company Shareholders Meeting") and a meeting of the holders of Company Options
(the "Optionholders Meeting") be convened at the earliest practicable date for
the purpose of considering and approving (if they deem fit) the Arrangement.
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Subsequent to approval of the First Motion by the Court, the Company shall
take any and all action necessary or appropriate to convene the Company
Shareholders Meeting and, subject to Section 2.1(c), the Optionholders Meeting,
in accordance with the Court's instructions, the provisions of applicable law
and the Company's Charter Documents. The Company will convene the Company
Shareholders Meeting and, subject to Section 2.1(c), the Optionholders Meeting,
as promptly as practicable and in any event use its reasonable best efforts to
convene such meetings within 45 days after the Form S-4 is declared effective
by the SEC and after Court approval of the First Motion. If the Company
Shareholder Meeting or the Optionholders Meeting or any respective adjournment
or postponement thereof does not approve the Arrangement in accordance with
applicable law, the Company and S Company may mutually agree to convene a
second Company Shareholders Meeting or a second Optionholders Meeting to
consider and approve the Arrangement.
Subsequent to approval of the Arrangement at the Company Shareholders
Meeting ("Company Shareholder Approval"), and, subject to Section 2.1(c), the
approval of the Arrangement at the Optionholders Meeting (the "Optionholders
Approval"), in each case, by the requisite vote required under Section 233, the
Company shall as soon as practicable and in any event within ten days file with
the Court a motion (the "Second Motion") requesting that the Court issue the
Final Court Order approving the Arrangement.
As soon as possible subsequent to the issuance of the Final Court Order or
at such other date set forth in the Final Court Order or such other date as
agreed between the Company and S Company and, in each case, the satisfaction or
waiver of all Closing conditions, but without waiting for the expiration of any
appeal period, the Company shall, immediately after receipt of confirmation
from the Exchange Agent that the Exchange Fund has been transferred to the
Exchange Agent, file the Final Court Order with the Registrar of Companies in
Israel (the "Filing").
The First Motion, the Second Motion and any related motions and the
description of the Arrangement which are to be filed by the Company with the
Court shall be prepared by the Company together with representatives of S
Company. The Company shall consult with S Company regarding the conduct of the
court proceedings, shall advise S Company of the dates of any hearings or
conferences and, upon request of S Company, permit S Company to participate
therein.
In connection with the Company Shareholders Meeting and, if applicable, the
Optionholders Meeting, the Company will duly solicit the vote of the
shareholders and, if applicable, the optionholders of the Company for their
approval, as set forth above in this Section 5.1, by mailing or delivering to
each such shareholder and optionholder the Proxy Statement in the form included
in the Form S-4, as soon as practicable and in any event within five days after
the date the Form S-4 is declared effective by the SEC and after Court approval
of the First Motion.
(b) Subject to Section 5.1(c): (i) the board of directors of the Company
shall recommend that the Company's shareholders and, if applicable, the
optionholders vote in favor of and adopt and approve the Arrangement at the
Company Shareholders Meeting and, if applicable, the Optionholders Meeting;
(ii) the Prospectus and Proxy Statement shall include a statement to the effect
that the board of directors of the Company has recommended that the Company's
shareholders and, if applicable, optionholders vote in favor of and adopt and
approve the Arrangement at the Company Shareholders Meeting and, if applicable,
the Optionholders 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 S Company, the
recommendation of the board of directors of the Company that Company's
shareholders and, if applicable, optionholders vote in favor of and adopt and
approve the Arrangement.
(c) Nothing in this Section 5.1 shall prevent the board of directors of the
Company from withdrawing, amending or modifying its recommendation in favor of
the Arrangement at any time prior to the adoption and approval of the
Arrangement by the Company Shareholder Meeting and, if applicable, the
Optionholders Meeting, if (i) a Superior Proposal (as defined in Section
7.6(c)) is made to the Company, (ii) neither the Company nor any representative
of the Company or any of its subsidiaries shall have caused the Superior
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Proposal to be made in violation any of the restrictions set forth in Section
7.5, and (iii) the board of directors of the Company concludes in good faith
after taking into account advice of its outside Israeli legal counsel, that, in
light of such Superior Proposal, 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 under
applicable law. Nothing contained in this Section 5.1(c) shall limit the
Company's obligation to call, give notice of, convene and hold the Company
Shareholders Meeting or the Optionholders Meeting, if applicable (regardless of
whether the recommendation of the board of directors of the Company shall have
been withdrawn, amended or modified).
5.2. Additional Agreements; Cooperation.
(a) Subject to the terms and conditions herein provided, each of the parties
hereto agrees to use its reasonable best efforts to take, or cause to be taken,
all action and to do, or cause to be done, all things necessary, proper or
advisable to consummate and make effective as promptly as practicable the
transactions contemplated by this Agreement, and to cooperate with each other
in connection with the foregoing, including using its reasonable best efforts
(i) to obtain all necessary waivers, consents and approvals from other parties
to loan agreements, material leases and other material contracts, (ii) to
obtain all necessary consents, approvals and authorizations as are required to
be obtained under any Israeli, U.S. federal or state, or foreign law or
regulations, (iii) to defend all lawsuits or other legal proceedings
challenging this Agreement or the consummation of the transactions contemplated
hereby, (iv) to lift or rescind any injunction or restraining order or other
order adversely affecting the ability of the parties to consummate the
transactions contemplated hereby, (v) to effect all necessary registrations and
filings, including, but not limited to, filings under the HSR Act, if any, and
submissions of information requested by governmental authorities, (vi) provide
all necessary information for the Proxy Statement and the Form S-4 and (vii) to
fulfill all conditions to this Agreement.
(b) Each of the parties hereto agrees to furnish to each other party hereto
such necessary information and reasonable assistance as such other party may
request in connection with its preparation of necessary filings or submissions
to any regulatory or governmental agency or authority, including, without
limitation, any filing necessary under the provisions of the HSR Act, if any,
the Israeli Restrictive Practices Act, or any other Israeli, United States
federal or state, or foreign statute or regulations. Each of the parties 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 entity in connection with
antitrust or related matters. Each of the parties shall (1) give the other
party prompt notice of the commencement of any claim, action, suit or
proceeding by or before any governmental entity with respect to the Arrangement
or any of the transactions contemplated by this Agreement, (2) keep the other
party informed as to the status of any such claim, action, suit or 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
entity regarding the Arrangement or the transactions contemplated by this
Agreement. Each of the parties 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 claim, action, suit or
proceeding under or relating to the HSR Act or any other federal or state
antitrust or fair trade law. In addition, except as may be prohibited by any
governmental entity or by any applicable Israeli, United States, federal, state
and local and foreign laws, ordinances or regulations, in connection with any
claim, action, suit or proceeding under or relating to the HSR Act or any other
federal or state antitrust or fair trade law or any other similar claim,
action, suit or proceeding, each of the parties will permit authorized
representatives of the other party to be present, to the extent reasonably
practicable, at each meeting or conference relating to any such claim, action,
suit or proceeding and to have access to and be consulted in connection with
any document, opinion or proposal made or submitted to any governmental entity
in connection with any such claim, action, suit or proceeding.
(c) Notwithstanding anything to the contrary contained in this Agreement, S
Company shall not have any obligation under this Agreement: (i) to dispose or
cause any of its subsidiaries to dispose of any assets, or to
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commit to cause Company or any of its subsidiaries to dispose of any assets;
(ii) to discontinue or cause Company or any of its subsidiaries to discontinue
offering any product, or to commit to cause Company or any of its subsidiaries
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 persons, any technology, intellectual property, software or
other intangible assets, or to commit to cause Company or any of its
subsidiaries to license or otherwise make available to any person any
technology, intellectual property, software or other intangible assets 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 Effective Date), or to commit to cause Company or any of its subsidiaries
to hold separate any assets or operations; or (v) to make or cause any of its
subsidiaries to make any commitment (to any governmental entity or otherwise)
regarding its future operations or the future operations of any of Company or
any of its subsidiaries, if any such action would materially interfere with S
Company's anticipated benefits from the transactions contemplated hereby or
have a material adverse effect on S Company.
ARTICLE VI
Conduct of Business of the Company
and S Company Pending the Effective Time
6.1. Conduct of Business of the Company Pending the Arrangement. Except as
contemplated by this Agreement or as expressly agreed to in writing by S
Company, during the period from the date of this Agreement to the Effective
Time, each of the Company and its subsidiaries will conduct their respective
operations according to its ordinary course of business consistent with past
practice, and will use all commercially reasonable efforts to preserve intact
its business organization, to keep available the services of its officers and
employees and to maintain satisfactory relationships with suppliers,
distributors, customers and others having business relationships with it and
will take no action which would materially adversely affect the ability of the
parties to consummate the transactions contemplated by this Agreement, or the
timing thereof. The Company and S Company shall consult with each other
concerning important business matters affecting the Company and its
Subsidiaries and the Company and S Company will discuss in good faith entering
into mutually beneficial strategic business relationships on an arms length
basis. Without limiting the generality of the foregoing, and except as
otherwise expressly provided in this Agreement, prior to the Effective Time,
the Company will not nor will it permit any of its subsidiaries to (and with
respect to clause (k)(ii) will use its reasonable best efforts to attempt to
ensure that the affiliates will not), without the prior written consent of S
Company which consent shall not be unreasonably withheld or delayed with
respect to clauses (f), (g), (i) and (l) below:
(a) amend its Charter Document or Governing Document;
(b) authorize for issuance, issue, sell, deliver, grant any options for,
or otherwise agree or commit to issue, sell or deliver any shares of any
class of its capital stock or any securities convertible into or
exercisable for shares of any class of its capital stock except pursuant to
and in accordance with the terms of currently outstanding convertible
securities, warrants and options described in Schedule 3.2 or Schedule 3.3;
(c) except as disclosed on Schedule 6.1(c), split, combine or reclassify
any shares of its capital stock, declare, set aside or pay any dividend or
other distribution (whether in cash, stock or property or any combination
thereof) in respect of its capital stock or purchase, redeem or otherwise
acquire any shares of its own capital stock or of any of its subsidiaries;
(d) (i) incur or assume any long-term or short-term debt or issue any
debt securities except for borrowings under existing lines of credit or in
the ordinary course of business consistent with past practice (ii) assume,
guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the material obligations of any
other person (other than subsidiaries of the Company), except in the
ordinary and usual course of business; or (iii) make any material loans,
advances or capital
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contributions to, or investments in, any other person (other than to
subsidiaries of the Company), other than in the ordinary and usual course
of business;
(e) except as otherwise expressly contemplated by this Agreement, (i)
increase in any manner the compensation of (x) any employee except in the
ordinary course of business consistent with past practice or (y) any of its
directors or officers except in the ordinary course of business, consistent
with past practice; (ii) pay or agree to pay any pension, retirement
allowance or other employee benefit not required, or enter into or amend or
agree to enter into or amend any agreement or arrangement with such
director or officer or employee, whether past or present, relating to any
such pension, retirement allowance or other employee benefit, except as
required under currently existing agreements, plans or arrangements or with
respect to employees, in the ordinary course of business consistent with
past practice; (iii) grant any severance or termination pay to, or enter
into or amend any employment, severance, or change in control agreement
with, any employee or any of its directors or officers except as required
by applicable law or in the ordinary course of business consistent with
past practice; or (iv) except as may be required to comply with applicable
law or with collective bargaining agreements that become applicable to the
Company by operation of law, become obligated under any new pension plan,
welfare plan, multiemployer plan, employee benefit plan, benefit
arrangement, or similar plan or arrangement, which was not in existence on
the date hereof, including any bonus, incentive, deferred compensation,
stock purchase, stock option, stock appreciation right, group insurance,
severance pay, retirement or other benefit plan, agreement or arrangement,
or employment or consulting agreement with or for the benefit of any
person, or amend any of such plans or any of such agreements in existence
on the date hereof; provided, however, that this clause (iv) shall not
prohibit the Company from renewing any such plan, agreement or arrangement
already in existence on terms no more favorable to the parties to such
plan, agreement or arrangement;
(f) acquire, sell, lease, license or dispose of any assets which in the
aggregate are material to the Company and its subsidiaries taken as a
whole, except as may be required or contemplated by this Agreement;
(g) authorize or commit to make any material capital expenditures in
excess of $500,000;
(h) make any change in the accounting methods or accounting practices
followed by the Company, except as required by generally accepted
accounting principles or applicable law;
(i) settle any action, suit, claim, investigation or proceeding (legal,
administrative or arbitrative) in excess of $100,000;
(j) make any material election under the Code or Israeli tax law not
consistent with their past practices;
(k) take or cause to be taken, whether before or after the Effective
Time, any action that would (i) disqualify the Arrangement as a
"reorganization" within the meaning of Section 368(a) of the Code or
Israeli tax law, or (ii) disqualify the Arrangement as a "pooling of
interests" for accounting purposes;
(l) enter into any third party distribution agreements or material
contracts (other than contracts with customers);
(m) agree to do any of the foregoing.
6.2. Conduct of Business of S Company Pending the Arrangement. Except as
contemplated by this Agreement or as expressly agreed to in writing by the
Company, during the period from the date of this Agreement to the Effective
Time, each of S Company and its significant subsidiaries will use all
commercially reasonable efforts to preserve intact its business organization
and will take no action which would materially adversely affect the ability of
S Company to consummate the transactions contemplated by this Agreement, or the
timing thereof. During the period from the date of this Agreement to the
Effective Time, S Company will not nor will it permit any of its subsidiaries
to (and with respect to clause (c)(ii) will use its reasonable best efforts to
attempt to ensure that its affiliates will not):
(a) amend S Company's Charter Document in a manner which would adversely
change the rights or privileges of the S Company Shares;
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(b) during the ten day period in which S Company Share Average is
determined, declare, set aside or pay any dividend or other distribution of
cash or assets in respect of S Company capital stock or purchase, redeem or
otherwise acquire any shares of S Company capital stock or of any of its
subsidiaries, except as otherwise provided in this Agreement;
(c) take or cause to be taken, whether before or after the Effective
Time, any action that would disqualify (i) the Arrangement as a
"reorganization" within the meaning of Section 368(a) of the Code, or (ii)
disqualify the Arrangement as a "pooling of interests" for accounting
purposes;
(d) acquire or agree to acquire, by merging or consolidating with, by
purchasing an equity interest in or a portion of the assets of, or by any
other manner, any business or any corporation, partnership, association or
other business organization or division thereof, or otherwise acquire or
agree to acquire any assets of any other person, or dispose of any assets,
which, in any such case, would prevent the consummation of the Arrangement
or the other transactions contemplated by this Agreement; or
(e) agree to do any of the foregoing.
ARTICLE VII
Covenants and Agreements
7.1. Purchase of Non-O Company Shares and Options of M Company and D
Company.
(a) As soon as practicable after the date of this Agreement, S Company shall
offer to each shareholder, other than the Company, of M Company and D Company
(such shareholders, the "Non-Company Shareholders") to enter into an agreement
in the form attached hereto as Exhibit E (the "M and D Company Stock Purchase
Agreement"), pursuant to which S Company will, subject to the terms and
conditions of such agreement, purchase, as of the Effective Time, all of the
shares owned by such shareholder of capital stock in each such entity as of the
Effective Date at a price in U.S. dollars of $13.15 per share of M Company
shares and $9.26 per share of D Company shares (the "Subsidiary Per Share
Purchase Price"). Such price will be paid in S Company Shares based on the S
Company Share Average to each Non-Company Shareholder who is an affiliate of
the Company and in cash to each Non-Company Shareholder who is not an affiliate
of the Company.
(b) As soon as practicable after the date of this Agreement, S Company shall
offer to each holder of an option to purchase shares of D Company or M Company
("Non-Company Options") issued by D Company or M Company that is outstanding as
of the Effective Date and is, or will be upon consummation of the transactions
contemplated hereby, exercisable ("Exercisable Non-Company Options") to cancel
his or her Exercisable Non-Company Option in consideration for a payment equal
to the product of (x) the difference between the respective Subsidiary Per
Share Purchase Price and the exercise price per share of the option and (y) the
number of shares subject to the option. Such payment will be paid in S Company
Shares based on the S Company Share Average to each Non-Company Shareholder who
is an affiliate of the Company and in cash to each Non-Company Shareholder who
is not an affiliate of the Company.
(c) Prior to the Effective Date, S Company will offer to holders of Non-
Company Options which are not, and will not become as a result of the
transactions contemplated hereby, exercisable ("Non-exercisable Non-Company
Options") to roll over these options such that each such option would become an
option, on substantially the same terms and conditions as were applicable under
Non-Exercisable Non-Company Options, to purchase a number of S Company Shares
(rounded to the nearest share) equal to the number of M Company or D Company
shares subject to the option multiplied by the Option Exchange Ratio. The
"Option Exchange Ratio" shall be determined by dividing (i) the appropriate
Subsidiary Per Share Purchase Price by (ii) the S Company Share Average,
rounded to the nearest millionth. The exercise price per S Company Share shall
equal the current exercise price per M Company or D Company share divided by
the Option Exchange Ratio, rounded to the nearest cent. All other terms of such
options, including, without limitation, vesting schedules and expiration dates,
shall remain unchanged, except that such options shall be administered by S
Company's
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Board of Directors and Compensation Committee. Promptly following the Effective
Date, S Company shall file a registration statement on Form S-8 registering any
S Company Shares that may become issuable upon exercise of the option.
(d) S Company shall register under the Securities Act for resale on an
appropriate form all S Company Shares issuable in connection with Sections
7.1(a) and 7.1(b). S Company shall file such registration statement as soon as
practicable after the Effective Date and shall use its reasonable best efforts
to have such registration statement declared effective as soon as practicable
following the Effective Time and to maintain the effectiveness of such
registration statement for two (2) years.
(e) S Company will apply to qualify the options to purchase S Company Shares
issued under Section 7.1(c) to optionholders who are residents of Israel under
Section 102 of the Israeli Income Tax Ordinance or another similar provision of
the Israeli Income Tax Ordinance including, if applicable, Section 3(9)
thereof, and use commercially reasonable efforts to obtain confirmation from
the Israeli Tax Authorities that the assumption and conversion of options under
Section 7.1(c) is not a taxable event and that the tacking of the holding
period shall be allowed with respect to the two-year holding period required
under Section 102 for such periods in which the Non-Exercisable Non-Company
Options were held before such assumption and conversion.
7.2. Preparation of the Form S-4 and the Proxy Statement; Shareholders
Meetings. As soon as practicable following the date of this Agreement, the
Company and S Company shall prepare the Prospectus and Proxy Statement and the
S Company shall prepare and file with the SEC the Form S-4, in which the Proxy
Statement will be included as a prospectus; provided, however, that
notwithstanding anything to the contrary contained in this Section 7.2, if (and
to the extent) S Company so elects and is permitted by applicable law: (i) the
Prospectus and 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 S Company); (ii) until it
is reasonably likely that the SEC will declare the Form S-4 (in which the
Prospectus and Proxy Statement will be included as a prospectus) effective
under the Securities Act, all amendments to the Prospectus and 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) S
Company shall not be obligated to file the Form S-4 (in which the Prospectus
and 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 effective
under the Securities Act. Each of the Company and S Company shall use their
respective reasonable best efforts to have the Form S-4 declared effective
under the Securities Act as promptly as practicable after such filing. In
accordance with the First Motion, the Company's Governing Documents and
applicable law, the Company will use its reasonable best efforts to cause the
Proxy Statement to be mailed to the Company's shareholders and, if applicable,
the Company's optionholders, as promptly as practicable after the Form S-4 is
declared effective under the Securities Act. S Company shall also take any
action required to be taken under any applicable state securities laws in
connection with the issuance of S Company Shares in the Arrangement to
shareholders and optionholders of the Company; provided, however, that S
Company 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. No filing of,
or amendment or supplement to, the Form S-4 or the Proxy Statement will be made
by S Company without providing the Company the opportunity to review and
comment thereon. Each of the parties will advise the other party, promptly
after it receives notice thereof, of the time when the Form S-4 has become
effective or any supplement or amendment has been filed, the issuance of any
stop order, the suspension of the qualification of the Company's Shares
issuable in connection with the Arrangement for offering or sale in any
jurisdiction, or any request by the SEC for amendment of the Proxy Statement or
the Form S-4 or comments thereon and responses thereto or requests by the SEC
for additional information. If at any time prior to the Effective Time any
information relating to the Company or S Company, or any of their respective
affiliates, officer or directors, should be discovered by the Company or S
Company which should be set forth in an amendment or supplement to any of the
Form S-4 of the Proxy Statement, so that any of such documents would not
include any misstatement of a material fact or omit to state any material fact
necessary to make the statements therein, in light of the circumstances under
which they were
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made, not misleading, the party which discovers such information shall promptly
notify the other parties hereto and an appropriate amendment or supplement
describing such information shall be promptly filed with the SEC and, to the
extent required by law, disseminated to the shareholders of the Company.
7.3. Pooling Accounting Letters. S Company shall use its reasonable best
efforts to obtain an opinion of PricewaterhouseCoopers LLP to the effect that S
Company may account for the Arrangement as a pooling of interests in accordance
with generally accepted accounting principles, Account Principles Board Opinion
No. 16 and published rules, regulations and policies of the SEC, and the
Company shall use its reasonable best efforts to obtain an opinion of Deloitte
& Touche LLP to the effect that, to the best of their knowledge after due
inquiry, no condition exists that would preclude the Company's ability to be a
party in a business combination to be accounted for as a pooling of interests.
7.4. Other Matters. (a) S Company acknowledges that the Arrangement will be
deemed a change in control for purposes of each of the contracts listed on
Schedule 7.4.
(b) S Company presently intends to continue to operate in the State of
Israel the businesses of M Company and D Company currently conducted in the
State of Israel.
7.5. Publicity. Except as otherwise required by law or the rules of any
applicable securities exchange or national market system, so long as this
Agreement is in effect, S Company and the Company will not, and will not permit
any of their respective representatives to, issue or cause the publication of
any press release or make any other public announcement with respect to the
transactions contemplated by this Agreement without the consent of the other
party, which consent shall not be unreasonably withheld. S Company and the
Company will cooperate with each other in the development and distribution of
all press releases and other public announcements with respect to this
Agreement and the transactions contemplated hereby, and will furnish the other
with drafts of any such releases and announcements as far in advance as
possible.
7.6. No Solicitation.
(a) The Company and its subsidiaries will not, and will not authorize or
permit their respective officers, directors, employees and investment bankers,
attorneys or other agents retained by or acting on behalf of the Company or any
of its subsidiaries to directly or indirectly, (i) initiate, solicit or induce
any inquiries or the making of any proposal that constitutes an Acquisition
Proposal (as hereinafter defined), (ii) except as permitted below, engage in
negotiations or discussions with, or furnish any information or data to, any
third party relating to an Acquisition Proposal, or (iii) except as permitted
below, enter into any agreement or letter of intent with respect to any
Acquisition Proposal or approve, endorse or recommend an Acquisition Proposal
(each such action shall be included within the meaning of the approval of an
Acquisition Proposal). Notwithstanding anything to the contrary contained in
this Section 7.6 or in any other provision of this Agreement, prior to the
approval of the Arrangement by the Company's shareholders and optionholders,
the Company and its Board of Directors may participate in discussions or
negotiations with or furnish information to any third party making an
unsolicited Acquisition Proposal (a "Potential Acquirer") or approve an
unsolicited Acquisition Proposal if: (A) the Board determines in good faith,
after taking into account advice from its financial advisor, that a Potential
Acquirer has submitted to the Company an Acquisition Proposal that may result
in a Superior Proposal (as hereinafter defined) or, with respect to the
approval of an unsolicited Acquisition Proposal, is a Superior Proposal, (B)
the Board determines in good faith, after taking into account advice from its
outside Israeli legal counsel, that the failure to participate in such
discussions or negotiations or to furnish such information or approve an
Acquisition Proposal will violate the Board's fiduciary duties under applicable
law, (C) prior to or at the time of furnishing any such information or entering
into such discussions or negotiations, the Company shall inform S Company in
writing as to the fact such information is to be provided and shall furnish to
S Company the identity of the recipient of such information and/or the
Potential Acquirer and the terms of such Acquisition Proposal, and the Company
receives from the Potential Acquiror an executed confidentiality agreement
containing limitations no less restrictive than the limitations imposed on S
Company pursuant to the Confidentiality Agreement between the Company and S
Company (the "Confidentiality Agreement"), and (D) the Company
contemporaneously furnishes to or notifies S Company of
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the availability of such written information to S Company (to the extent such
information has not been previously furnished by the Company to S Company), and
(E) neither the Company nor any of its subsidiaries, or any of their respective
officers, directors, employees, investment bankers, attorneys or other agents,
has caused the Superior Proposal to be made in violation any of the
restrictions set forth in this Section 7.6. Without limiting the generality of
the foregoing, the Company acknowledges and agrees that any violation of the
restrictions set forth in the preceding sentence by any officer, director,
employee, investment banker, attorney or agent of the Company or any of its
subsidiaries shall be deemed to constitute a breach of this Section 7.6 by the
Company. The Company agrees that it will immediately cease and cause to be
terminated any existing discussions with any person that relate to any
Acquisition Proposal. The Company shall keep S Company timely informed of any
Acquisition Proposal that is made by any person and any material modification
or proposed modification of any such proposal. Nothing contained in this
Section 7.6(a) or Section 5.1 shall prohibit the Company or the Board of
Directors of the Company from taking and disclosing to the Company's
shareholders and the Court a position with respect to a tender offer by a third
party or making such other disclosure to the Company's shareholders and the
Court that, in the judgment of the Board, after taking into account advice from
its outside Israeli or U.S. legal counsel (as the case may be), may be required
under applicable law.
(b) For the purposes of this Agreement, "Acquisition Proposal" shall mean
any proposal, whether in writing or otherwise, made by a third party to acquire
beneficial ownership (as defined under Rule 13(d) of the Exchange Act) of all
or a material portion of the assets of, or any material equity interest in, the
Company or its subsidiaries pursuant to a merger, consolidation, exchange of
shares or other business combination, sale or issuance of shares of capital
stock, sale, lease, exchange, transfer or license of assets, tender offer or
exchange offer or similar transaction involving the Company or its subsidiaries
(other than the transactions contemplated by this Agreement).
(c) The term "Superior Proposal" means any bona fide written proposal to
acquire, directly or indirectly, for consideration consisting of cash and/or
securities, more than a majority of the Company Ordinary Shares then
outstanding or all or substantially all the assets of the Company, that the
Board of Directors of the Company determines in good faith, after taking into
account advice from its financial advisor, to be more favorable from a
financial point of view to the Company and its shareholders than the
Arrangement.
7.7. Access to Information.
(a) From the date of this Agreement until the Effective Time, the Company
and each of its subsidiaries will give S Company and its authorized
representatives (including counsel, environmental and other consultants,
accountants and auditors) after reasonable prior notice reasonable access
during normal business hours to all facilities, personnel and operations and to
all books and records of it and its subsidiaries, will permit S Company to make
such inspections as it may reasonably require and will cause its officers and
those of its subsidiaries to furnish the other party with such financial and
operating data with respect to its business and properties as such party may
from time to time reasonably request.
(b) Each of the parties hereto will hold and will cause its consultants and
advisors to hold in strict confidence on the terms and conditions set forth in
the Confidentiality Agreement all documents and information furnished to the
other in connection with the transactions contemplated by this Agreement as if
each of the parties hereto and such consultant or advisor was a party thereto,
and this provision shall survive any termination of this Agreement.
(c) Prior to the Effective Date, the Company will provide to S Company a
list setting forth with respect to each Grant under which royalties are owed,
or the Company believes will be owed, to the OCS, the aggregate amount of each
such Grant, the aggregate amount of each such Grant remaining to be paid by the
OCS to the Company or any subsidiary, the aggregate outstanding obligation with
respect to royalties and the composition of the obligation to pay royalties by
the product or product family to which it relates.
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7.8. Resignation of Directors. At or prior to the Effective Time and subject
to applicable law, the Company shall use its reasonable best efforts to deliver
to S Company the resignations of such directors of the Company as S Company
shall at least ten days prior to the Effective Date specify, effective at the
Effective Time.
7.9. Indemnification.
(a) As of the date of this Agreement and for a period of seven years
following the Effective Time of the Arrangement, S Company will cause the
Company to indemnify and hold harmless from and against all claims, damages,
losses, obligations or liabilities ("Losses") any persons who were directors or
officers of the Company or a subsidiary of the Company prior to the Effective
Time of the Arrangement (the "Indemnified Persons") to the fullest extent such
person could have been indemnified for such Losses under applicable law,
indemnification agreements or under the Articles of Association of the Company
or the Charter Document or Governing Document of any subsidiary of the Company
in effect immediately on or prior to the Effective Time, with respect to any
act or failure to act by any such Indemnified Person on or prior to the
Effective Time; provided, however, that S Company shall have no financial
obligation with respect to the indemnification obligations under this Section
7.9 and provided further that S Company agrees that it will not decrease the
net worth of the Company to an amount below the net worth of the Company as of
December 31, 1998 by withdrawing or otherwise removing assets from the Company.
(b) The provisions of this Section 7.9 are for the benefit of the
Indemnified Persons, any of whom shall have all rights at law and in equity to
enforce the rights hereunder.
(c) In the event that S Company or any of its successors or assigns (i)
consolidates with or merges into any other person, and S Company or such
successor or assign is not the continuing or surviving corporation or entity of
such consolidation or merger, or (ii) transfers all or substantially all of its
properties and assets to any person, then, and in each case, proper provision
shall be made so that such person or the continuing or surviving corporation
assumes the obligations set forth in this Section 7.9 and none of the actions
described in clauses (i) and (ii) above shall be taken until such provision is
made.
(d) S Company shall maintain in effect for not less than seven years from
the Effective Time the current policies of directors' and officers' liability
insurance maintained by the Company and its subsidiaries (provided that S
Company may substitute therefor policies of at least the same coverage and
amounts and containing terms and conditions which are no less advantageous to
the Indemnified Persons in all material respects, but the deductible thereunder
may be increased to no more than $1 million, so long as no lapse in coverage
occurs as a result of such substitution); provided that S Company shall not be
obligated to make annual premium payments for such insurance to the extent such
premiums exceed $200,000 (provided that in such case S Company shall purchase
as much coverage as possible for $200,000).
(e) S Company shall cause the Company to fulfill its obligations under all
of its existing indemnification agreements in accordance with their respective
terms for all claims brought no later than a period of seven years following
the Effective Time of this Arrangement.
7.10. Fees and Expenses. Whether or not the Arrangement is consummated, the
Company and S Company shall bear their respective expenses incurred in
connection with the Arrangement, including, without limitation, the
preparation, execution and performance of this Agreement and the transactions
contemplated hereby, and all fees and expenses of investment bankers, finders,
brokers, agents, representatives, counsel and accountants, except that S
Company shall pay all costs and expenses incurred in connection with (1) the
filing, printing and mailing of the Form S-4 and the Proxy Statement (including
SEC filing fees) and (2) any filings of the premerger notification and report
forms under the HSR Act (including filing fees), if any.
7.11. Affiliates. Contemporaneously with the execution of this Agreement,
the Company has delivered to S Company a written agreement substantially in the
form attached as Exhibit B hereto, signed by each person
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who is an "affiliate" of the Company for purposes of Rule 145 under the
Securities Act or for purposes of qualifying the Arrangement for pooling of
interests accounting treatment under Opinion 16 of the Accounting Principles
Board and applicable SEC rules and regulations. Following the execution of this
Agreement, S Company shall take all action which may be necessary or
appropriate such that each person who is an "affiliate" of S Company does not
take any action that would disqualify the Arrangement for pooling of interests
accounting treatment under Opinion 16 of the Accounting Principles Board and
applicable SEC rules and regulations.
7.12. NYSE Listing. S Company shall use its reasonable best efforts to cause
the S Company Shares to be issued in connection with the Arrangement and under
any other transactions contemplated in this Agreement to be approved for
listing on the NYSE, subject to official notice of issuance, as promptly as
practicable after the date hereof, and in any event prior to the Effective
Date.
7.13. Israeli Prospectus. S Company shall use its reasonable best efforts to
either (a) obtain an exemption from the ISA from any prospectus requirements
with respect to the exchange of Company Ordinary Shares, Company Options and
Non-exercisable Non-Company Options held by Israeli residents or (b) comply
with respect to the foregoing with the prospectus requirements of the Israel
Securities Law of 1968 and the regulations adopted thereunder, as such
requirements may be modified by the ISA, provided that nothing contained herein
shall require S Company to make public disclosures which are material under
U.S. federal securities laws and are not being, or required to be, disclosed to
S Company Shareholders under such laws and have not been otherwise publicly
disclosed by S Company.
7.14. Tax Treatment. Each of S Company and the Company shall use its
respective best efforts to cause the Arrangement to qualify as a reorganization
under the provisions of Section 368(a) of the Code. S Company shall deliver on
the Effective Date a certificate substantially in the form of Exhibit G, signed
by an authorized officer, and the Company shall deliver on the Effective Date a
certificate substantially in the form of Exhibit F, signed by an authorized
officer.
7.15. Letters of Accountants. The Company shall use its reasonable best
efforts to cause to be delivered to S Company a letter of Deloitte & Touche
LLP, dated no more than two business days before the date on which the Form S-4
becomes effective (and satisfactory in form and substance to S Company), 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.
7.16. Registration Rights. Promptly following the Effective Time, S Company
shall file and use its reasonable best efforts to have declared effective, a
registration statement on Form S-3 (or other appropriate form) registering for
resale the S Company Shares issued pursuant to this Agreement to persons (or
affiliates of such persons) who have signed voting agreements with S Company. S
Company shall use reasonable efforts to maintain the effectiveness of the
registration statement until the second anniversary of the Effective Date.
7.17. Consulting Agreements. On the Effective Date, the Company shall
terminate the consulting agreements between the Company and YTD Dovrat Ltd. and
between the Company and Zeevi Management and Holding Services Ltd. in
accordance with the terms of such agreements. On the Effective Date, the
Company shall use its reasonable best efforts to terminate the allocation of
expenses agreement between the Company and Tecnomatix Technologies Ltd.
ARTICLE VIII
Conditions to Closing
8.1. Conditions to Each Party's Obligation to Effect the Arrangement. The
respective obligation of each party to effect the Arrangement is subject to the
satisfaction or waiver on or prior to the Effective Date of the following
conditions:
(a) Shareholder Approval. The Company Shareholder Approval shall have
been obtained.
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(b) Optionholders Approval. Either the Optionholders Approval shall have
been obtained or all holders of Company Options shall have duly executed
and delivered Exchange Agreements.
(c) HSR Act. Any waiting period (and any extension thereof) applicable
to the Arrangement under the HSR Act shall have been terminated or shall
have expired.
(d) No Injunctions or Restraints. No judgment, order, decree, statute,
law, ordinance, rule or regulation entered, enacted, promulgated, enforced
or issued by any court or other governmental entity of competent
jurisdiction or other legal restraint or prohibition (collectively,
"Restraints") shall be in effect preventing the consummation of the
Arrangement.
(e) Form S-4. The Form S-4 shall have become effective under the
Securities Act and shall not be the subject of any stop order or
proceedings seeking a stop order and no stop order or similar restraining
order shall be threatened or entered by the SEC or any state securities
administration preventing the Arrangement.
(f) NYSE Listing. The S Company Shares issuable to the Company's
shareholders and Company Option holders and, if applicable, to Non-Company
Shareholders and optionholders, other than the Company, of M Company and D
Company, as contemplated by this Agreement shall have been approved for
listing on the NYSE, subject to official notice of issuance.
(g) Pooling Letters. The Company and S Company shall have received
letters from the independent accountants of each of S Company and the
Company dated as of the Closing Date (as hereinafter defined), as
contemplated by Section 7.3.
(h) Governmental Consents. The following consents and approvals shall
have been obtained:
(i) the issuance of Final Court Order in Israel approving the
Arrangement in the form attached hereto, including the Exchange Ratio,
but without giving effect to any appeal period;
(ii) the approval of the OCS for change in control of D Company and
M Company;
(iii) the approval of the Investment Center for change in control of
D Company and M Company;
(iv) (a) an exemption from the ISA from any prospectus requirements
with respect to the exchange of Company Ordinary Shares, Company
Options and Non-Exercisable Non-Company Options held by Israeli
residents, or (b) compliance by S Company with respect to the foregoing
with the prospectus requirements of the Israel Securities Law of 1968
and all regulations adopted thereunder, as such requirements may be
modified by the ISA, provided that nothing contained herein shall
require S Company to make public disclosures which are material under
U.S. federal securities laws and are not being, or required to be,
disclosed to S Company Shareholders under such laws; and
(v) the approval of the Israeli Commissioner of Restrictive
Practices or the expiration of the 30-day waiting period under the
Restrictive Trade Practices Law-1968, without giving effect to any
appeal period.
8.2. Conditions to Obligations of S Company. The obligation of S Company to
effect the Arrangement is further subject to satisfaction or waiver of the
following conditions:
(a) Representations and Warranties. The representations and warranties
of the Company set forth herein shall be true and correct both as of the
date of the Agreement and at and as of the Effective Date, as if made at
and as of the Effective Date (except to the extent expressly made as of a
specified date, in which case as of such date), except where the failure of
such representations and warranties (other than the representations and
warranties in Section 3.3) to be so true and correct (without giving effect
to any limitation as to "materiality" or "material adverse effect" set
forth therein) does not have, individually or in the aggregate, a Company
Material Adverse Effect and the representations and warranties in Section
3.3 shall be true and correct in all material respects both as of the date
of the Agreement and at and as of the
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Effective Date, as if made at and as of the Effective Date (except to the
extent expressly made as of a specified date, in which case as of such
date.)
(b) Performance of Obligations of the Company. The Company shall have
performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Effective Date. The Company
shall deliver to S Company a certificate of its Chief Executive Officer,
solely in his capacity as such, as to the satisfaction of the conditions in
Sections 8.2(a) and 8.2(b).
(c) No Governmental Proceeding. There shall not be pending any action,
suit or proceeding in which a governmental entity is (or is threatened to
become) a party (a) challenging or seeking to restrain or prohibit the
consummation of the Arrangement or any of the other transactions
contemplated by this Agreement; (b) relating to the Arrangement and seeking
to obtain from S Company or any of its subsidiaries any material damages;
(c) seeking to prohibit or limit in any material respect S Company's
ability to vote, receive dividends with respect to or otherwise exercise
ownership rights with respect to the capital stock of the Company; or (d)
which would materially and adversely affect the right of S Company, the
Company or any subsidiary of S Company to own the assets or operate the
business of the Company provided, that S Company shall use reasonable
efforts to resolve such matters.
(d) No Other Proceeding. There shall not be pending any action, suit or
proceeding which will have a Company Material Adverse Effect or an S
Company Material Adverse Effect (a) challenging or seeking to restrain or
prohibit the consummation of the Arrangement; (b) relating to the
Arrangement and seeking to obtain from S Company or any of its subsidiaries
damages; (c) seeking to prohibit or limit in any material respect S
Company's ability to vote, receive dividends with respect to or otherwise
exercise ownership rights with respect to the capital stock of the Company;
or (d) which would affect adversely the right of S Company, the Company or
any subsidiary of S Company to own the assets or operate the business of
Company; provided, however, that to the extent that any damages payable in
connection with any such claim, action, suit or proceeding will be fully
reimbursed by insurance coverage pursuant to insurance policies held by
Company or S Company, such damages shall be disregarded in determining the
Material Adverse Effect of such claim, action, suit or proceeding on the
policy holder.
(e) Tax Opinion. S Company shall have received an opinion of Blank Rome
Comisky & McCauley LLP ("S Company's Counsel"), in form and substance
reasonably satisfactory to it dated the Effective Date, substantially to
the effect that, on the basis of facts, representations and assumptions set
forth in such opinion which are consistent with the state of facts existing
on the Effective Date, the Arrangement will be treated as a reorganization
within the meaning of Section 368(a) of the Code and that accordingly for
U.S. federal income tax purposes:
(i) No gain or loss will be recognized by S Company or the Company
as a result of the Arrangement; and
(ii) No gain or loss will be recognized by the shareholders of the
Company solely as a result of the receipt of S Company Shares at the
Effective Time in exchange for their Company Ordinary Shares pursuant
to the Arrangement.
In rendering such opinion, S Company's Counsel may require and rely upon
representations and covenants of officers of S Company and the Company,
including those contained in the certificates referred to in Section 7.14.
(f) Resignation of Directors. S Company shall have received the
resignations of the directors of the Company designated by S Company
pursuant to Section 7.8.
(g) Letter of the Company's Accountants. S Company shall have received a
letter from Deloitte & Touche LLP, dated as of the Effective Date,
addressed to S Company, reasonably satisfactory in form and substance
(insofar as it relates to financial information in the S-4) to S Company,
updating the letter referred to in Section 7.15.
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8.3. Conditions to Obligations of the Company. The obligation of the Company
to effect the Arrangement is further subject to satisfaction or waiver of the
following conditions:
(a) Representations and Warranties. The representations and warranties
of S Company set forth herein shall be true and correct both as of the date
of this Agreement and at and as of the Effective Date, as if made at and as
of the Effective Date (except to the extent expressly made as of a
specified date, in which case as of such date), except where the failure of
such representations and warranties to be so true and correct (without
giving effect to any limitation as to "materiality" or "material adverse
effect" set forth therein) does not have individually or in the aggregate,
a S Company Material Adverse Effect.
(b) Performance of Obligations of S Company. S Company shall have
performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Closing Date. S Company shall
deliver to the Company a certificate of one of its executive officers,
solely in his capacity as such, as to the satisfaction of the conditions in
Section 8.3(a) and 8.3(b).
(c) Tax Opinions. The Company shall have received an opinion of Skadden,
Arps, Slate, Meagher & Flom LLP ("Company's Counsel"), in form and
substance reasonably satisfactory to it dated the Effective Date,
substantially to the effect that, on the basis of facts, representations
and assumptions set forth in such opinion which are consistent with the
state of facts existing on the Effective Date, the Arrangement will be
treated as a reorganization within the meaning of Section 368(a) of the
Code and that accordingly for U.S. federal income tax purposes:
(i) No gain or loss will be recognized by S Company or the Company
as a result of the Arrangement; and
(ii) No gain or loss will be recognized by the shareholders the
Company solely as a result of the receipt of S Company Shares at the
Effective Time in exchange for their Company Ordinary Shares pursuant
to the Arrangement.
In rendering such opinion, the Company's Counsel may require and rely upon
representations and covenants of officers of S Company and the Company,
including those contained in the certificates referred to in Section 7.14.
ARTICLE IX
Termination
9.1. Termination. This Agreement may be terminated at any time prior to the
Effective Time, whether before or after and approval of this Agreement by
either the Company's shareholders or S Company's shareholders.
(a) by mutual written consent of the Company and S Company;
(b) by either the Company or S Company:
(i) if the Arrangement shall not have been consummated by December
31, 1999; provided, however, that the right to terminate this Agreement
pursuant to this Section 9.1(b)(i) shall not be available to any party
whose failure to perform any of its obligations under this Agreement
results in the failure of the Arrangement to be consummated by such
time;
(ii) if the Company Shareholder Approval shall not have been
obtained at a Company Shareholders Meeting duly convened therefor or at
any adjournment or postponement thereof or, if a subsequent Company
Shareholders Meeting is to be convened, at such subsequent Company
Shareholders Meeting duly convened; or
(iii) if the Optionholders Approval shall not have been obtained at
an Optionholders Meeting duly convened therefor or at any adjournment
or any postponement thereof or, if a subsequent Optionholders Meeting
is to be convened, at such subsequent Optionholders Meeting duly
convened and not all Optionholders have executed Exchange Agreements.
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(iv) if any Restraint having any of the effects set forth in Section
8.1(d) shall be in effect and shall have become final and
nonappealable; or
(c) by the Company:
(i) upon the breach of any representation, warranty, covenant or
other agreement of S Company contained in this Agreement, or if any
representation or warranty of S Company shall be or shall have become
inaccurate, in either case such that S Company fails to cure such
breach within 15 business days after receiving notice of such breach
(but only if such breach is capable of being cured) and such breach
would cause any of the conditions set forth in Section 8.3(a) or 8.3(b)
not to be satisfied at the time of such breach or at the time such
representation or warranty was or shall have become inaccurate or, if
capable of being cured, at the end of such cure period.
(ii) if there is a change in the business, operations or financial
condition of S Company since the date of this Agreement but prior to
the date that Company Shareholder Approval shall have been obtained
("Shareholder Approval Date") that has had or will be reasonably
expected to have an S Company Material Adverse Effect (it being
understood that a decline in S Company stock price shall not, in and of
itself, constitute a change that has had or will have an S Company
Material Adverse Effect for purposes of this clause (ii)), provided
that the right to terminate this Agreement pursuant to this clause (ii)
may only be exercised prior to the Shareholder Approval Date.
(d) by S Company
(i) upon the breach of any representation, warranty, covenant or
other agreement of the Company contained in this Agreement, or if any
representation or warranty of the Company shall be or shall become
inaccurate, in either case such that the Company fails to cure such
breach within 15 business days after receiving notice of such breach
(but only if such breach is capable of being cured) and such breach
would cause any of the conditions set forth in Section 8.2(a) or 8.2(b)
not to be satisfied at the time of such breach or at the time such
representation or warranty was or shall have become inaccurate, or, if
capable of being cured, at the end of such cure period;
(ii) if (a) the Board of Directors of Company shall have failed to
recommend, or shall for any reason have withdrawn or shall have amended
or modified in a manner adverse to S Company its recommendation in
favor of, the adoption and approval of the Arrangement; (b) the Company
shall have failed to include in the Prospectus and Proxy Statement the
recommendation of the Board of Directors of Company in favor of the
adoption and approval of the Arrangement; (c) the Company shall have
entered into any letter of intent or similar document or any agreement,
commitment or understanding relating to any Acquisition Proposal; or
(d) a tender or exchange offer relating to securities of Company shall
have been commenced and Company shall not have sent to its shareholders
and, if applicable, optionholder, within ten business days after the
commencement of such tender or exchange offer, a statement disclosing
that Company recommends rejection of such tender or exchange offer.
(iii) if there is a change in the business, operations or financial
condition of the Company or any of its subsidiaries since the date of
this Agreement but prior to the Company Shareholder Approval Date that
has had or will have a Company Material Adverse Effect; provided that
the right to terminate this Agreement pursuant to this clause (iii) may
only be exercised prior to the Shareholder Approval Date.
9.2. Effect of Termination.
(a) The termination of this Agreement shall become effective upon delivery
to the other party of written notice thereof. In the event of the termination
of this Agreement pursuant to the foregoing provisions of this Article IX, this
Agreement shall be of no further force or effect, with no liability on the part
of any party or its shareholders or directors or officers in respect of this
Agreement, except for liability of a party under Section 7.10 or this Section
9.2 and except for liability that S Company or the Company might have arising
from a breach of this Agreement.
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(b) In the event of a termination of this Agreement by S Company pursuant to
Section 9.1(d)(ii), then the Company shall within two business days of such
termination pay S Company by wire transfer of immediately available funds to an
account specified by S Company a non-refundable termination fee of $6 million
which includes reimbursement for expenses.
(c) If this Agreement is terminated by S Company or Company pursuant to
Section 9.1(b)(ii) and a transaction of the type contemplated in the definition
of Acquisition Proposal is consummated at any time prior to the first
anniversary date of this Agreement, then, contemporaneously with the
consummation of such transaction, the Company shall pay to S Company by wire
transfer of immediately available funds to an account specified by S Company, a
nonrefundable fee in the amount of $8 million which includes reimbursement for
expenses.
ARTICLE X
Miscellaneous
10.1. Nonsurvival of Representations and Warranties. All representations,
warranties and covenants made by any party in this Agreement or pursuant hereto
shall survive the date of this Agreement but shall terminate upon the Effective
Date. This Section 10.1 shall not limit any covenant or agreement of the
parties which by its terms contemplates performance after the Effective Time.
10.2. Closing and Waiver.
(a) Unless this Agreement shall have been terminated in accordance with the
provisions of Section 9.1 hereof, a closing (the "Closing" and the date and
time thereof being the "Closing Date") will be held at 10:00 A.M. local time on
the Effective Date. The Closing will be held at the offices of Goldfarb, Levy,
Eran & Co., 2 Ibn Gvirol Street, Tel Aviv, Israel, or at such other places as
the parties may agree.
(b) At any time prior to the Effective Date, any party hereto may (i) extend
the time for the performance of any of the obligations or other acts of any
other party hereto, (ii) waive any inaccuracies in the representations and
warranties of the other party contained herein or in any document delivered
pursuant hereto, and (iii) waive compliance with any of the agreements of any
other party or with any conditions to its own obligations contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall
be valid only if set forth in an instrument in writing duly authorized by and
signed on behalf of such party.
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10.3. Notices.
(a) Any notice or communication to any party hereto shall be duly given if
in writing and delivered in person or mailed by first class mail (registered or
certified, return receipt requested), facsimile or overnight air courier
guaranteeing next day delivery, to such other party's address.
If to S Company:
SunGard Data Systems Inc.
1285 Drummers Lane
Wayne, PA 19087-1586
Facsimile No: 610-341-8115
Attention: General Counsel
with a copy to:
Blank Rome Comisky & McCauley LLP
One Logan Square
Philadelphia, PA 19103
Facsimile No.: (215) 569-5555
Attention: Arthur H. Miller
and to:
Goldfarb, Levy, Eran & Co.
Eliahu House
2 Ibn Gvirol Street
Tel Aviv 64077 Israel
Facsimile No.: 011-972-3-695-4344
Attention: Yehuda M. Levy
If to the Company:
Oshap Technologies Ltd.
Delta House, 16 Hagalim Avenue
Herzeliya 46733, Israel
Facsimile No.: 972-9-959-4898
Attention: President
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Facsimile No.: (212) 735-2000
Attention: David J. Friedman
and to:
Meitar, Liquornik, Geva & Co.
16 Abba Hillel Silver Rd.
Ramat-Gan 52506, Israel
Facsimile No.: 972-3-610-3111
Attention: Dan Shamgar
and to:
Yossi Avraham & Co.
8 Shaul Hamelech Blvd
Tel Aviv, Israel
Facsimile No: 972-3-696-3801
Attention: Yossi Avraham
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(b) All notices and communications will be deemed to have been duly given:
at the time delivered by hand, if personally delivered; five business days
after being deposited in the mail, if mailed; when sent, if sent and confirmed
electronically by facsimile; and two business days after timely delivery to the
courier, if sent by overnight air courier guaranteeing two day delivery.
10.4. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10.5. Interpretation.
(a) The headings of articles and sections herein are for convenience of
reference, do not constitute a part of this Agreement, and shall not be deemed
to limit or affect any of the provisions hereof. As used in this Agreement,
"person" means any individual, corporation, limited or general partnership,
joint venture, association, joint stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof;
"subsidiary" of any person means (i) a corporation more than 50% of the
outstanding voting stock of which is owned, directly or indirectly, by such
person or by one or more other subsidiaries of such person or by such person
and one or more subsidiaries thereof or (ii) any other person (other than a
corporation) in which such person, or one or more other subsidiaries of such
person or such person and one or more other subsidiaries thereof, directly or
indirectly, have at least a majority ownership and voting power relating to the
policies, management and affairs thereof; and "voting stock" of any person
means capital stock of such person which ordinarily has voting power for the
election of directors (or persons performing similar functions) of such person.
For purposes of this Agreement "Knowledge" shall not be deemed a subsidiary of
the Company or any of the Company's subsidiaries. All dollar amounts referred
to in this Agreement refer to United States dollars.
(b) Each representation and warranty made in this Agreement or pursuant
hereto is independent of all other representations and warranties made by the
same parties, whether or not covering related or similar matters, and must be
independently and separately satisfied.
10.6. Amendment. This Agreement may be amended by the parties at any time
before or after any required approval of matters presented in connection with
the Arrangement by each of the shareholders of the Company and S Company;
provided, however, that after any such approval, there shall not be made any
amendment that by law requires further approval by such shareholders or the
Israeli Court without the further approval of such shareholders or the Israeli
Court. This Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties.
10.7. No Third Party Beneficiaries. Except for the provisions of Section 7.9
(which is intended to be for the benefit of the persons referred to therein,
and may be enforced by such persons) nothing in this Agreement shall confer any
rights upon any person or entity which is not a party or permitted assignee of
a party to this Agreement.
10.8. Controlling Law. This Agreement shall be construed and governed by the
laws of the Commonwealth of Pennsylvania applicable to agreements made and to
be performed entirely in that jurisdiction; provided, however, that matters
affecting the validity of corporate action taken by the Company or matters
relating to the Arrangement shall be governed by the laws of the State of
Israel.
10.9. Jurisdiction and Process. In any action between or among any of the
parties, whether arising out of this Agreement or otherwise, (a) each of the
parties irrevocably consents to the exclusive jurisdiction and venue of the
federal and state 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 Commonwealth of Pennsylvania, (c) each of the parties
irrevocably waives the right to trial by jury, (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
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accordance with Section 10.3, and (e) the prevailing parties shall be entitled
to recover their reasonable attorneys' fees and court costs from the other
parties.
10.10. Entire Agreement. This Agreement and the Confidentiality Agreement,
together with the Exhibits and Schedules hereto, constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all other prior agreements and understandings, both written and
oral, between the parties with respect to the subject matter hereof.
10.11. Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
10.12. Construction. 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 or
any agreements delivered in connection with the transactions contemplated
herein.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers all as of the day and year first
above written.
SUNGARD DATA SYSTEMS INC.
/s/ Cristobal I. Conde
By: _________________________________
Name: Cristobal I. Conde
Title: Executive Vice President
OSHAP TECHNOLOGIES LTD.
/s/ Shlomo Dovrat
By: _________________________________
Name: Shlomo Dovrat
Title: President and Chief
Executive Officer
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EXHIBIT A
PLAN OF ARRANGEMENT
Among: Oshap Technologies Ltd. (the "Company")
And: All the holders of the ordinary shares par value NIS 0.001 per
share of the Company (the "Company Ordinary Shares")
In this Arrangement the following terms shall have the meanings assigned to
them respectively hereunder:
The "Arrangement": This Plan of Arrangement, as set forth herein.
The "Agreement": The Agreement, dated March 9, 1999, between the Company
and S Company attached as Exhibit A hereto.
The "Board": The Board of Directors of the Company.
The "Companies Ordinance": The Companies Ordinance [New Version] 5743-1983.
The "Court": The Tel-Aviv-Jaffa District Court or any other court in Israel
of competent jurisdiction.
The "Effective Time": The time of the Filing.
The "Exchange Ratio": the Exchange Ratio as defined in Section 2.1 of the
Agreement.
The "Extraordinary General Meeting": The Extraordinary General Meeting of
the Company's shareholders, and any adjournments or postponements thereof, in
which the Company's shareholders will be requested to approve this
Arrangement.
The "Filing": The filing of the Final Court Order with the Registrar of
Companies in accordance with Section 233 of the Companies Ordinance.
The "Final Court Order": The order of the Court approving this Arrangement.
The "Nasdaq": The National Association of Securities Dealers, Inc.
Automated Quotation System/National Market, in the United States.
The "NYSE": The New York Stock Exchange, Inc.
"S Company": SunGard Data Systems Inc., a Delaware corporation.
"S Company Shares": The common stock, par value U.S. $.01 per share of S
Company.
WHEREAS, the company has an authorized share capital of NIS 20,018.46
consisting of 20,018,460 Company Ordinary Shares, of which 12,836,110 shares
were issued and outstanding as of March 30, 1999; and
WHEREAS, the Company Ordinary Shares are listed for trading on the Nasdaq;
and
WHEREAS, the Board deems it desirable and in the best interests of the
Company and its shareholders that the Company and all its shareholders enter
into the Arrangement, pursuant to which, at the Effective Time by virtue of
the Filing and with no further action on behalf of the shareholders of the
Company (i) each Company Ordinary Share issued and outstanding as of the
Effective Time shall be deemed transferred to S Company, free of any lien,
pledge, encumbrance or right of third party, in exchange for a fraction of a
validly issued, fully paid and nonassessable S Company Share, such fraction
being equal to the Exchange Ratio
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and (ii) certain amendments will be made to the Company's Articles of
Association including its share capital as set forth in Annex I hereto; and
WHEREAS, under the Agreement, S Company agreed that (i) at the Effective
Time by virtue of the Filing and with no further action on behalf of the
shareholders of the Company, all Company Ordinary Shares issued and outstanding
as of the effective Time shall be deemed transferred to S Company in exchange
for S Company Shares as provided in the Agreement; and (ii) at the Effective
Time, all such S Company Shares shall be listed for trading on the NYSE; and
WHEREAS, on March 9, 1999, the Board received an opinion of Salomon Smith
Barney Inc. and BancBoston Robertson Stephens Inc., the Company's financial
advisors in connection with the Arrangement, to the effect that, as of the date
of such opinions, the Exchange Rate was fair to the holders of Company Ordinary
Shares from a financial point of view; and
WHEREAS, the Board at such meeting approved the Arrangement, and determined
by such vote, based among other things, on the opinions of its financial
advisors (i) that the terms of the Agreement and the Arrangement are in the
best interests of, the Company and its shareholders; and (ii) that the Company
commence proceedings under Section 233 of the Companies Ordinance, under which
the court would be requested to convene the Extraordinary General Meeting and
to approve the Arrangement.
NOW THEREFORE, it as agreed between the parties, as follows:
1. The preamble and Annexes of this Arrangement constitute an integral
part hereof.
2. At the Effective Time by virtue of the Filing and with no further
action on behalf of the shareholders of the Company, (i) each Company
Ordinary Share issued and outstanding as of the Effective Time shall be
deemed transferred, free of any lien, pledge, encumbrance or right of third
party to S Company, in exchange for a fraction of a validly issued, fully
paid and nonassessable S Company Share, such fraction being equal to the
Exchange Ratio, in accordance with the terms and conditions of the
Agreement and (ii) certain amendments will be made to the Company's
Articles of Association including its share capital as set forth in Annex I
hereto.
3. The above constitutes one integral Arrangement, is not separable, and
cannot be partially performed.
4. This Arrangement will become effective upon the Filing.
5. The Company is entitled to agree, on behalf of the Company and the
holders of the Company Ordinary Shares, to any amendment or revision of, or
supplement to, this Arrangement, or to any term or condition that the Court
will deem fit to determine or require; provided that no amendment, revision
or supplement of any kind shall be made unless S Company shall agree in
writing thereto.
A-39
<PAGE>
ANNEX I
PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF
OSHAP TECHNOLOGIES LTD.
The following sets forth the proposed amendments proposed to be made to the
Articles of Association of Oshap Technologies Ltd.:
1. The following changes shall be made to Article 2:
1.1 The definition of Companies Ordinance shall be added after the
definition of "The company" as follows:
"The Companies Ordinance--the Companies Ordinance (New Version),
5743-1983, or any statutory reenactment or modification thereof for the
time being in force. Any reference to any section or provision of the
Companies Ordinance shall be deemed to include reference to any
statutory reenactment or modification for the time being in force
thereof."
1.2 The definition of "The Law" shall be replaced with the following
definition:
"The Law--shall mean the Companies Ordinance, the Securities Law
5728-1968 and any other law with respect to companies applying to the
company, as they shall be in effect from time to time."
1.3 The definition of "The director" shall be replaced with the following
definition:
"The board of directors--shall mean the board of directors of the
company."
1.4 The definition of "Writing" shall be replaced with the following
definition:
"Writing--shall mean handwriting, typewriter, print, via facsimile
or electronic mail or produced by any visible substitute for writing."
2. Article 5 shall be replaced in its entirety by the following:
"5. Private Company
The company is a private company and accordingly:
(a) the number of members for the time being of the company (exclusive
of persons who are in the employment of the company and of persons
who having been formerly in the employment of the company were,
while in such employment, and have continued after termination of
such employment to be, members of the company), shall not exceed
fifty (50), but where two or more persons jointly own one or more
shares in the company, they shall, for the purpose of this Articles
be treated as a single member; and
(b) any invitation to the public to subscribe for any shares or
debentures or debenture stock of the company is prohibited; and
(three) the right to transfer shares in the company shall be restricted as
hereinafter provided."
3. Article 6 shall be replaced in its entirety with the following Article 6:
"THE CAPITAL
6.
(One) The capital of the company is 20,018.46 (Twenty thousand and
eighteen New Israeli Shekel and forty six agorot) divided into
20,018,460 Ordinary Shares, par value NIS 0.001 each.
(Two) Each one of the Ordinary Shares having a par value of NIS. 0.001
(one tenth of an Agora) shall entitle its owner to one vote at all
votes at the general meeting of the shareholders of the company.
I-1
<PAGE>
(Three) The right to dividend shall be pursuant to article 99.
(Four) In the event of distribution of remaining property to the
shareholders, at the time of liquidation, or at any other time, the
property shall be divided, among all shareholders holding Ordinary
Shares, in a pro-rata rate to the nominal value of their
shareholdings, and if the nominal value has not been paid in full,
in a pro-rata rate to the amount paid on account of the nominal
value."
4. The existing Articles 6, 7, 8, 9, 10, 11, 12, and 13 shall become Articles
7, 8, 9, 10, 11, 12, 13 and 14, respectively.
5. The existing Article 14 (Bearer Shares) shall be deleted in its entirety.
6. The first paragraph of Article 21 shall be replaced with the following
paragraph:
"21. No transfer of shares in the company, and no assignment of an option
to acquire such shares from the company, shall be effective unless the
transfer or assignment has been approved by the board of directors.
7. The existing Article 22 shall be replaced in its entirety with a new Article
22 as follows:
"22. The deed of share transfer shall be signed both by the transferor and
transferee, and the transferor shall be deemed to remain a holder of
the share until the name of the transferee is entered into the
Register in respect thereof."
8. The existing Article 23 shall be deleted in its entirety the language
appearing therein shall be replaced with the language "[cancelled]".
9. In Article 49, first line, the words "except for those applying to bearer
shares" shall be deleted.
10. In Article 52(b), forth line the word "therein" shall be replaced with the
words "as such".
11. In Article 68, sixth line, the words "with a par value of one shakel" shall
be deleted.
12. In Article 78(e), forth line, the numbers "(1), (2), (3) and (5)" shall be
replaced with "(i), (ii), (iii) or (v)".
13. The existing Article 94 shall be replaced in its entirety with a new
Article 94 as follows:
"94. A resolution in writing signed by all the members of the board of
directors, or of a committee, or such a resolution that all members of
the board of directors or members of a committee have agreed to in
writing or by telegram or telex or facsimile shall be valid for every
purpose as a resolution adopted at a board of directors' or committee
meeting, as the case may be, that was duly convened and held. In place
of a director the aforesaid resolution may be signed and delivered by
his substitute or his attorney or his substitute's attorney."
I-2
<PAGE>
Appendix B
[LETTERHEAD OF SALOMON SMITH BARNEY INC.]
March 9, 1999
The Board of Directors
Oshap Technologies Ltd.
16 Hagalim Avenue
Herzliya 46733 Israel
Members of the Board:
You have requested our opinion as to the fairness, from a financial point of
view, to the holders of ordinary shares of Oshap Technologies Ltd. ("Oshap") of
the consideration to be received by such holders pursuant to the terms and
subject to the conditions set forth in the Agreement, dated as of March 9, 1999
(the "Agreement"), by and between SunGard Data Systems Inc. ("SunGard") and
Oshap, including the Plan of Arrangement attached as Exhibit A thereto (the
"Plan of Arrangement"). As more fully described in the Agreement and the Plan
of Arrangement, Oshap and its shareholders will enter into an arrangement
whereby, among other things, all outstanding ordinary shares, par value NIS
0.001 per share, of Oshap (the "Oshap Ordinary Shares") will be deemed
transferred to SunGard (the "Arrangement") in exchange for that number of shares
(the resulting number, the "Exchange Ratio") of the common stock, par value
$0.01 per share, of SunGard (the "SunGard Common Stock") determined as follows:
(i) if the average per share closing price of SunGard Common Stock on the New
York Stock Exchange for the ten consecutive days ending on the second trading
day prior to the effective date of the Arrangement (the "SunGard Share Average")
is equal to or greater than $34.1063 but less than or equal to $46.1438, then
the Exchange Ratio will be fixed at 0.386293, (ii) if the SunGard Share Average
is greater than $46.1438 but less than or equal to $50.7074, the Exchange Ratio
will be equal to $17.8250 divided by the SunGard Share Average; (iii) if the
SunGard Share Average is greater than $50.7074, the Exchange Ratio will be equal
to 0.31526; (iv) if the SunGard Share Average is less than $34.1063 but greater
than or equal to $30.5429, the Exchange Ratio will be equal to $13.1750 divided
by the SunGard Share Average; and (v) if the SunGard Share Average is less than
$30.5429, the Exchange Ratio will be equal to 0.431360. The Agreement further
provides that, as soon as practicable after the date of the Agreement, SunGard
will offer to enter into an agreement with each shareholder and option holder,
other than Oshap (collectively, the "Minority Holders"), of Oshap's majority-
owned subsidiaries, MINT Software Technologies Ltd. ("MINT") and Decalog N.V.
("Decalog"), pursuant to which SunGard will offer to purchase all outstanding
shares of the capital stock of MINT and Decalog, cancel all outstanding
exercisable options to purchase such shares and roll-over all outstanding non-
exercisable options to purchase such shares, held by Minority Holders in
exchange for cash or shares of SunGard Common Stock or options to purchase such
shares, as more fully described in the Agreement (the "Subsidiary
Transactions").
In arriving at our opinion, we reviewed the Agreement and the Plan of
Arrangement, and held discussions with certain senior officers, directors and
other representatives and advisors of Oshap and certain senior officers and
other representatives and advisors of SunGard concerning the businesses,
operations and prospects of Oshap and SunGard. We examined certain publicly
available business and financial information relating to Oshap and SunGard as
well as certain financial forecasts and other information and data for Oshap and
SunGard which were provided to or otherwise discussed with us by the respective
managements of Oshap and SunGard, including information relating to certain
strategic implications and operational benefits anticipated to result from the
Arrangement. We reviewed the financial terms of the Arrangement as set forth in
the Agreement and the Plan of Arrangement in relation to, among other things:
current and historical market prices and trading volumes of the Oshap Ordinary
Shares and SunGard Common Stock; the historical and projected earnings and other
operating data of Oshap and SunGard; and the capitalization and financial
condition of Oshap and SunGard. We considered, to the extent publicly
<PAGE>
The Board of Directors
Oshap Technologies Ltd.
March 9, 1999
Page 2
available, the financial terms of other transactions recently effected which we
considered relevant in evaluating the Arrangement and analyzed certain
financial, stock market and other publicly available information relating to the
businesses of other companies whose operations we considered relevant in
evaluating those of Oshap and SunGard. We also evaluated the potential pro
forma financial impact of the Arrangement on SunGard. In addition to the
foregoing, we conducted such other analyses and examinations and considered such
other financial, economic and market criteria as we deemed appropriate in
arriving at our opinion.
In rendering our opinion, we have assumed and relied, without independent
verification, upon the accuracy and completeness of all financial and other
information and data publicly available or furnished to or otherwise reviewed by
or discussed with us. With respect to financial forecasts and other information
and data provided to or otherwise reviewed by or discussed with us, we have been
advised by the managements of Oshap and SunGard that such forecasts and other
information and data were reasonably prepared on bases reflecting the best
currently available estimates and judgments of the managements of Oshap and
SunGard as to the future financial performance of Oshap and SunGard and the
strategic implications and operational benefits anticipated to result from the
Arrangement. We have assumed, with your consent, that the Arrangement will be
treated as a tax-free reorganization for U.S. federal income tax purposes and as
a pooling of interests in accordance with U.S. generally accepted accounting
principles. We also have assumed, with your consent, that the Subsidiary
Transactions will be effected in accordance with the terms contemplated thereby
and, to the extent relevant to our analysis, have evaluated SunGard after giving
effect to such Subsidiary Transactions. Our opinion, as set forth herein,
relates to the relative values of Oshap and SunGard. We are not expressing any
opinion as to what the value of the SunGard Common Stock actually will be when
issued to Oshap shareholders pursuant to the Arrangement or the price at which
the SunGard Common Stock will trade subsequent to the Arrangement. Our opinion
also does not compare the consideration to be received by holders of Oshap
Ordinary Shares in the Arrangement with the consideration to be received by
Minority Holders in the Subsidiary Transactions. We have not made or been
provided with an independent evaluation or appraisal of the assets or
liabilities (contingent or otherwise) of Oshap or SunGard nor have we made any
physical inspection of the properties or assets of Oshap or SunGard. In
connection with our engagement, we were not requested to, and we did not,
solicit third party indications of interest in the possible acquisition of
Oshap. We were not asked to consider, and our opinion does not address, the
relative merits of the Arrangement as compared to any alternative business
strategies that might exist for Oshap or the effect of any other transaction in
which Oshap might engage. Our opinion is necessarily based upon information
available to us, and financial, stock market and other conditions and
circumstances existing and disclosed to us, as of the date hereof.
Salomon Smith Barney Inc. has acted as financial advisor to Oshap in connection
with the proposed Arrangement and will receive a fee for such services
contingent upon the consummation of the Arrangement. We have in the past
provided investment banking services to Oshap unrelated to the proposed
Arrangement, for which services we have received compensation. We also provided
investment banking services to Decalog in early 1999 in connection with the
possible initial public offering or sale of Decalog. In the ordinary course of
our business, we and our affiliates may actively trade or hold the securities of
Oshap and SunGard for our own account or for the account of our customers and,
accordingly, may at any time hold a long or short position in such securities.
As you are aware, a director of Citigroup Inc., which is an affiliate of Salomon
Smith Barney Inc., also is a director of Oshap. In addition, we and our
affiliates (including Citigroup Inc. and its affiliates) may maintain
relationships with Oshap, SunGard and their respective affiliates.
Our advisory services and the opinion expressed herein are provided for the
information of the Board of Directors of Oshap in its evaluation of the proposed
Arrangement, and our opinion is not intended to be and
<PAGE>
The Board of Directors
Oshap Technologies Ltd.
March 9, 1999
Page 3
does not constitute a recommendation to any shareholder as to how such
shareholder should vote on any matters relating to the proposed Arrangement.
Based upon and subject to the foregoing, our experience as investment bankers,
our work as described above and other factors we deemed relevant, we are of the
opinion that, as of the date hereof, the Exchange Ratio is fair, from a
financial point of view, to the holders of Oshap Ordinary Shares.
Very truly yours,
SALOMON SMITH BARNEY INC.
<PAGE>
Appendix C
[LETTERHEAD OF BANCBOSTON ROBERTSON STEPHENS INC.]
MARCH 9, 1999
Board of Directors
Oshap Technologies Ltd.
16 Hagalim Avenue
Herzliya 46733 Israel
Members of the Board:
You have asked our opinion with respect to the fairness to the holders of
Oshap Ordinary Shares, from a financial point of view and as of the date hereof,
of the Exchange Ratio (as defined below).
Under the terms set forth in the Agreement dated March 9, 1999 (including the
Plan of Arrangement attached as an exhibit thereto, the "Agreement") between
Oshap Technologies Ltd. ("Oshap") and SunGard Data Systems Inc. ("SunGard"),
Oshap and its shareholders will enter into an arrangement whereby, among other
things, all outstanding shares, par value NIS 0.001 per share, of Oshap (the
"Oshap Ordinary Shares"), will be deemed transferred to SunGard (the
"Arrangement") in exchange for that number of shares (the resulting number, the
"Exchange Ratio") of the common stock, par value $0.01 per share, of SunGard
(the "SunGard Common Stock") determined as follows: (i) if the average per
share closing price of SunGard Common Stock on the New York Stock Exchange for
the ten consecutive days ending on the second trading day prior to the effective
date of the Arrangement (the "SunGard Share Average") is equal to or greater
than $34.1063, but less than or equal to $46.1438, the Exchange Ratio will be
equal to 0.386293; (ii) if the SunGard Share Average is greater than $46.1438,
but less than or equal to $50.7074, the Exchange Ratio will be equal to $17.8250
divided by the SunGard Share Average; (iii) if the SunGard Share Average is
greater than $50.7074, the Exchange Ratio will be equal to 0.351526; (iv) if the
SunGard Share Average is less than $34.1063, but greater than or equal to
$30.5429, the Exchange Ratio will be equal to $13.1750 divided by the SunGard
Share Average; and (v) if the SunGard Share Average is less than $30.5429, the
Exchange Ratio will be equal to 0.431360. The Agreement further provides that,
as soon as practicable after the date of the Agreement, SunGard will offer to
enter into an agreement with each shareholder and each option holder (in each
case, other than Oshap, and collectively, the "Minority Holders") of Oshap's
majority-owned subsidiaries MINT Software Technologies Ltd. ("MINT") and Decalog
N.V. ("Decalog"), pursuant to which SunGard will offer to purchase all
outstanding shares of the capital stock of MINT and Decalog, cancel all
outstanding exercisable options to purchase such shares and roll-over all
outstanding non-exercisable options to purchase such shares, held by Minority
Holders in exchange for cash or shares of SunGard Common Stock or options to
purchase such shares, as more fully described in the Agreement (the "Subsidiary
Transactions"). The Agreement states that the parties intend, and we have
assumed, that the Arrangement will qualify as a tax-free reorganization within
the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended,
and be accounted for as a pooling transaction pursuant to U.S. Generally
Accepted Accounting Principles ("GAAP"). The terms and conditions of the
Arrangement are set out more fully in the Agreement.
For purposes of this opinion we have, among other things, (i) reviewed certain
financial information relating to Oshap and SunGard furnished to us by the
respective companies, including certain internal financial analyses, forecasts
and projections for Oshap and SunGard prepared by the respective
<PAGE>
Board of Directors
Oshap Technologies Ltd.
March 9, 1999
Page 2
managements of Oshap and SunGard; (ii) reviewed certain publicly available
information relating to Oshap and SunGard; (iii) held discussions with the
respective managements of Oshap and SunGard concerning the businesses, past and
current operations, financial condition and future prospects of both Oshap and
SunGard, independently and combined, including discussions with the managements
of Oshap and SunGard concerning their views regarding the strategic rationale
for the Arrangement; (iv) reviewed the financial terms and conditions set forth
in the Agreement; (v) reviewed the respective stock price and trading histories
of Oshap and SunGard; (vi) reviewed the contribution by each company to pro
forma combined revenue, EBITDA, EBIT and net income; (vii) reviewed the
valuations of publicly traded companies that we deemed comparable to Oshap and
SunGard; (viii) compared the financial terms of the Arrangement with the
financial terms, to the extent publicly available, of other transactions that we
deemed relevant; (ix) analyzed the pro forma earnings per share of the combined
company; and (x) made such other studies and inquiries, and reviewed such other
data, as we deemed relevant.
In our review and analysis, and in arriving at our opinion, we have assumed
and relied upon the accuracy and completeness of all of the financial and other
information provided to us (including information furnished to us orally or
otherwise discussed with us by management of Oshap and SunGard) or publicly
available and have neither attempted to verify, nor assumed responsibility for
verifying, any of such information. We have relied upon the assurances of
management of Oshap and SunGard that they are not aware of any facts that would
make such information inaccurate or misleading. Furthermore, we did not obtain
or make, or assume any responsibility for obtaining or making, any independent
evaluation or appraisal of the properties, assets or liabilities (contingent or
otherwise) of Oshap or SunGard, nor were we furnished with any such evaluation
or appraisal. With respect to the financial forecasts and projections (and the
assumptions and bases therefor) for each of Oshap and SunGard that we have
reviewed, upon the advice of the managements of Oshap and SunGard, we have
assumed that such forecasts and projections have been reasonably prepared in
good faith on the basis of reasonable assumptions and reflect the best currently
available estimates and judgments of the managements of Oshap and SunGard as to
the future financial condition and performance of Oshap and SunGard,
respectively, and we have further assumed that such projections and forecasts
will be realized in the amounts and in the time periods currently estimated by
the respective managements of Oshap and SunGard. In this regard, we note that
each of Oshap and SunGard face exposure to the Year 2000 problem and are
currently undergoing Year 2000 projects. We have not undertaken any independent
analysis to evaluate the reliability or accuracy of the assumptions made by the
managements of Oshap and SunGard with respect to the potential effect that the
Year 2000 problem might have on their respective forecasts. We have assumed
that the historical financial statements of each of Oshap and SunGard reviewed
by us have been prepared and fairly presented in accordance with U.S. GAAP (or
auditing standards substantially identical thereto) consistently applied.
Further, we have assumed that the Arrangement will be consummated upon the terms
set forth in the Agreement without material alteration thereof and that the
Subsidiary Transactions will be effected in accordance with the terms
contemplated in the Agreement. To the extent relevant to our analysis, we have
evaluated SunGard after giving effect to the Subsidiary Transactions. We have
relied as to all legal matters relevant to rendering our opinion on the advice
of counsel.
This opinion is necessarily based upon market, economic and other conditions
as in effect on, and information made available to us as of, the date hereof.
It should be understood that subsequent developments may affect the conclusion
expressed in this opinion and that we disclaim any undertaking or obligation to
advise any person of any change in any matter affecting this opinion which may
come or be brought to our attention after the date of this opinion. Our opinion
is limited to the fairness, from a financial point of view and as to the date
hereof, to the holders of Oshap Ordinary Shares of the Exchange Ratio. We do
not express any opinion as to (i) the value of any employee agreement or other
arrangement entered into in connection with the Arrangement, (ii) any tax or
other consequences that might result from the Arrangement or (iii) the price at
which the shares of SunGard Common Stock that are issued pursuant to the
Arrangement may be traded in the future. Our opinion does not compare the
consideration to be received by holders of Oshap Ordinary Shares in the
Arrangement with the consideration to be received by the Minority Holders in the
Subsidiary Transactions. Our opinion does not address the relative merits of
the Arrangement
<PAGE>
Board of Directors
Oshap Technologies Ltd.
March 9, 1999
Page 3
and the other business strategies that the Board of Directors of Oshap has
considered or may be considering, nor does it address the decision of the Board
of Directors of Oshap to proceed with the Arrangement.
We are acting as a financial advisor to Oshap in connection with the
Arrangement and will receive a fee that is contingent upon the consummation of
the Arrangement. In addition, Oshap has agreed to indemnify us for certain
liabilities arising out of our engagement. In the past, we have provided
certain investment banking services to MINT and Decalog, including, in late 1998
and early 1999, acting as (i) potential lead underwriter in connection with
possible initial public offerings for MINT and Decalog and (ii) as financial
advisor in connection with possible sales of controlling interests in MINT and
Decalog. Oshap has agreed to reimburse us for certain expenses that we incurred
in connection with the proposed initial public offerings upon consummation of
the Arrangement. We maintain a market in the shares of common stock of
Tecnomatix Technologies Ltd. ("Tecnomatix"), a company in which Oshap holds a
minority interest. In the ordinary course of business, we may trade Oshap,
SunGard or Tecnomatix securities for our own account and the account of our
customers and, accordingly, may at any time hold a long or short position in
Oshap, SunGard or Tecnomatix securities.
Our opinion expressed herein is provided for the information of the Board of
Directors of Oshap in connection with its evaluation of the Arrangement. Our
opinion is not intended to be and does not constitute a recommendation to any
shareholder of Oshap as to how such shareholder should vote, or take any other
action, with respect to the Arrangement or any matters relating to the
Arrangement. This opinion may not be summarized, described or referred to or
furnished to any party except with our express prior written consent.
Based upon and subject to the foregoing considerations, it is our opinion
that, as of the date hereof, the Exchange Ratio is fair to the holders of Oshap
Ordinary Shares from a financial point of view.
Very truly yours,
BANCBOSTON ROBERTSON STEPHENS INC.
<PAGE>
APPENDIX D
COMPANIES ORDINANCE
COMPANY LIMITED BY SHARES
ARTICLES OF ASSOCIATION
OF
OSHAP TECHNOLOGIES LIMITED
PRELIMINARY
1. The regulations in the Second Addition to the Companies Ordinance shall not
apply to the company.
2. In these regulations, unless the context otherwise requires:
The company - shall mean Oshap Technologies Ltd.
The Law - shall mean the Companies Ordinance (New Version), the Securities
Law 5728 B 1968 and any other law with respect to companies applying to the
company, as they shall be in effect from time to time.
The Director - shall mean the Board of Directors.
The Office - shall mean the registered office of the company as it shall be
from time to time.
The Register - shall mean the register of members that is to be kept
pursuant to section 61 of the Companies Ordinance or if the company shall
keep branch register(s) B any such branch register, as the case may be.
Writing - shall mean handwriting, typewriter, print, lithographic printing
and every other form of affixing letters.
These articles - shall mean the Articles of Association of the company as
shall be in force from time to time.
Words and expressions defined in the Memorandum of Association of the
company shall have the meanings defined therein.
In these articles, subject to this article and unless the context otherwise
requires, expressions defined in the Companies Ordinance, or any
modification thereof in force at the date at which these articles become
binding on the company, shall have the meanings so defined; and words
importing the singular shall include the plural, and vice versa, and words
importing the masculine gender shall include the female, and words
importing persons shall include incorporated entities. Titles of an article
or of a chapter containing a number of articles are not part of the
article.
In the event that an article has been added to these articles which
contradicts an original article found in these articles - the article so
added shall take precedence.
BUSINESS
3. The Directors shall be permitted to commence to engage in any business in
accordance with the Memorandum and Articles of Association of the company,
or to discontinue such engagement, at any time that they shall deem
appropriate.
4. The registered office of the company shall be at such place as the directors
shall from time to time appoint.
D-1
<PAGE>
THE CAPITAL
5. (One) The capital of the company is 20,018,460 (Twenty million eighteen
thousand four hundred and sixty shekels) divided into 20,000,000
Ordinary Shares, par value 1 shekel each.
1846 Convertible Preference Shares, par value 10 shekels each and
divided into the following classes:
308 Class A Convertible Preference Shares par value 10 shekels each
513 Class B Convertible Preference Shares par value 10 shekels each
513 Class C Convertible Preference Shares par value 10 shekels each
512 Class D Convertible Preference Shares par value 10 shekels each
(Two) Each one of the Ordinary Shares having a par value of IS. 1 (one
shekel) shall entitle its owner to one vote in a vote at the
general meeting.
(Three) The right to dividend shall be pursuant to article 99.
(Four) In the event of distribution of remaining property to the
shareholders, at the time of liquidation, or at any other time, the
property shall be divided subject to preferential rights, if any,
of shares of other classes, among all shareholders holding Ordinary
Shares, in a pro-rata rate to the nominal value of their
shareholdings, and if the nominal value has not been paid in full,
in a pro-rata rate to the amount paid on account of the nominal
value.
(Five) Holders of Convertible Preference Stock are not entitled to vote on
any matters submitted to a vote of the stockholders of the Company,
except as required by law. In the event of any distribution of
capital assets, whether voluntary or involuntary, holders of any of
the outstanding Convertible Preference Stock are entitled to
receive IS 10 per share, after creditors have been paid in full and
prior to any distribution to holders of the Ordinary Shares. The
holders of the Convertible Preference Stock will not be entitled to
receive dividends.
Each share of Convertible Preference Stock will be convertible at
the option of the holder thereof into 1,000 Ordinary Shares if the
Company's consolidated income per share after provision for income
taxes but exclusive of any extraordinary earnings and certain
capital losses ("Net Profit"), as certified by the Company's
independent public accountants in accordance with U.S. GAAP, meets
certain specified levels in the fiscal years specified below. The
following table lists, as to each class of Convertible Preference
Stock, the number of shares issued and outstanding, the minimum Net
Profit per share in the relevant fiscal year upon which conversion
is conditioned:
<TABLE>
<CAPTION>
Convertible Number Minimum Net In Fiscal
Preference of Profit Year Ending
Stock Shares Per Share (1) December 31
----------- ------ --------------- ------------
<S> <C> <C> <C>
A 308 $ .26 1986(2)
B 513 $ .55(3) 1987
C 513 $ .90 1988
D 512 $1.71(4) 1986-1988
</TABLE>
- --------
(1) Shares outstanding shall be calculated on a fully diluted basis, assuming
(a) conversion into Ordinary Shares of all Class A Convertible Preference
Stock in fiscal 1987 and all Class A and Class B Preference Stock in fiscal
1988; (b) exercise of all outstanding Class A Warrants in fiscal 1987 and
1988 and all outstanding Class B Warrants in fiscal 1988; and (c) exercise
of any other outstanding options, warrants or other securities to purchase
Ordinary Shares, including those issued under the Company's Stock Option
Plan; and shall be subject to pro rata adjustment in the event of any stock
split or similar event.
(2) Including the last quarter of 1985, which three month period may be
reviewed by the Company's independent auditors.
D-2
<PAGE>
(3) The Class B Convertible Preference Stock may also be converted if the
Minimum Net Profit in fiscal year 1988 amounts to at least $.90 per share.
(4) The Class D Convertible Preference Stock may be converted only if the
cumulative Net Profit in fiscal years 1986 (including the last quarter of
1985) through 1988 amounts to at least $1.74 per share and Net Profit is
not less than 90% of $.29, $.55 and $.90 per share in 1986, 1987 and 1988,
respectively.
If the Minimum Net Profit for any class of Convertible Preference Stock has
not been realized in the relevant fiscal year, each of the shares of such
class will be redeemed by the Company for one Ordinary Share and placed in
the Company's treasury for cancellation.
SHARES
6. The shares which the signatories of the memorandum have subscribed for shall
be issued by the directors. Except for the aforesaid the shares shall be in
the charge of the directors who shall have the right to issue them - subject
to the provision of article 52 - to persons under the conditions and in the
manner and time they shall deem proper.
7. The company may issue shares having the same rights as the existing shares
or having preferred or deferred rights or rights of redemption or restricted
rights or other special rights whether in regard to distribution of
dividends, voting rights, appointment or dismissal of directors, return of
share capital, distribution of company property or otherwise as the company
may from time to time by special resolution determine.
8. No monies belonging to the company may be used for the purpose of acquiring
shares in the company or for granting loans that will be secured by shares
in the company, however nothing herein contained shall prohibit redemption
of redeemable shares or the transactions referred to in section 139 of the
Companies Ordinance.
9. The company shall be permitted to pay any person a commission in
consideration of his subscribing or agreeing to subscribe (whether
absolutely or conditionally) for shares in the company, provided however
such commission does not exceed ten percent of the price of the shares
issued.
10. In case of issuance of shares for the purposes of financing the payment of
cost of erection of installations or structures or equipment which is
expected to generate no profit during an extended period of time, the
company shall be permitted to pay interest on the paid-up portion of such
share capital for that period, under the conditions and restrictions
mentioned in section 140 of the Companies Ordinance, and to charge the
amount paid as interest on the capital as part of the price paid for the
erection of the installation, structure or plant equipment.
11.(One) If two or more are registered as joint holders of a share they shall
be jointly and severally liable for any calls or any other liability
with respect to such share. However with respect to voting, power of
attorney and furnishing notices, the one registered first in the
register of members, insofar as all the registered joint holders
shall not notify the company in writing to relate to another one of
them as the sole owner of the share, as aforesaid, shall be deemed to
be the sole owner of the share.
(Two) In the case that two or more persons are registered together as
holders of a share, each one of them shall be permitted to give
receipts binding all the joint holders for dividends or other monies
in connection with the share and the company shall be permitted to
pay all the dividend or other monies due with respect to the share to
one or more of the joint holders, as it shall choose.
12. The company shall not recognize, except by an order of the courts, the
holder of a share as a trustee, and shall not be obligated to recognize a
right based upon the rules of equity or a right dependent
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upon a condition or a future right or a partial rights in a share, or any
other right whatsoever with respect to the share, except for the absolute
right of the registered holder with respect to the share.
13. (One) A member shall be entitled to receive from the company without
payment, one certificate that shall contain that number of shares,
their serial numbering and the amount paid on account of their par
value. However, in the event of partners holding a share, the
company shall not be obligated to issue more than one certificate
to all of the joint holders, and the transmission of such a
certificate to one of the joint holders shall be deemed to be a
transmission to all of the partners.
(Two) Each certificate shall carry the signature or signatures of those
persons appointed by the board of directors for this purpose and
the stamp or seal of the company.
(Three) If a share certificate is defaced, lost or destroyed, it may be
renewed on payment of such fee, if any, not exceeding one Israel
shekel and on such terms, if any, as to evidence and indemnity as
the directors think fit.
BEARER SHARES
14. (One) The Company may, regarding each fully paid-up share, issue a
certificate of bearer-share; and, accordingly, the directors may,
after the registered shareholder of the said share presents a
written application and all required proof of the identity of the
signor of the request, and after receipt of the share-certificate
(if issued), together with the required stamp duties for a bearer
share certificate, issue a stamped bearer share certificate, in
the Company's seal and bearing the necessary stamps required by
law, in recognition that the said bearer holds the shares
mentioned therein.
A bearer-share certificate provides its holder with the right to
the shares included therein. The said shares shall be transferable
by means of transfer of the bearer-share certificate from one
person to another. The provisions of the Company's Articles of
Association concerning the transfer and delivery of shares will
not apply to the shares listed in the bearer-share certificate.
(Two) The directors may determine the manner of payment of dividends
regarding bearer shares; and they may determine the procedure
governing issue of new bearer share certificates in place of any
that were destroyed, defaced, lost or spoiled.
The directors shall be entitled, upon request by the holder of a
bearer share and upon his submission to the Company of a bearer-
share certificate for its cancellation, to register his name as a
member in the Register of Members, regarding the shares listed in
the bearer share certificate.
(Three) The holder of a bearer share shall be entitled to deposit the
certificate in the central office or in a bank. So long as the
certificate will be deposited in the manner abovementioned, the
depositor will retain the right to participate and vote in any
meeting conducted, upon two days after said deposit, and to
execute any other right imparted to a shareholder as stated in
these articles, as if he is registered in the Register as the
holder of the share indicated in the deposited certificate
abovementioned. In the event of deposit of the bearer share
certificate in a bank, the shareholder shall present confirmation
that the certificate was in fact deposited thereby. No more than
one person shall be recognized as a depositor of a bearer share
certificate. Subject to the aforementioned, the holder of a bearer
share certificate will not be entitled to appear or to vote in a
meeting of the Company, or to receive notices from same.
REDEEMABLE SHARES
15. The company may, subject to the provisions in this respect in the
Memorandum of Association of the company and in the Companies Ordinance, or
any modification thereof, issue and redeem redeemable preference shares.
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MODIFICATION OF SHARE RIGHTS
16. If at any time the share capital is divided into different classes of
shares (unless otherwise provided for by the terms of issue of the shares
of that class) it shall be permitted to change, convert, broaden, add or
vary in any other manner the rights, advantages, restrictions and the
provisions connected or not connected at that time with one or more of the
classes, after receipt of the consent in writing of the issued shares of
that class, passed at an extraordinary general meeting of the holders of
the shares of the class. To every such extraordinary general meeting, the
provisions of these articles relating to general meetings shall mutatis
mutandis apply. Any holder of shares of that class present, either
personally or by proxy, may request a secret ballot.
PLEDGE
17. The company shall have a lien and first pledge on all the shares, not fully
paid, registered in the name of any member (whether registered in his name
only or together with another or others) for any amount still outstanding
with respect to that share, whether presently payable or not. Such a pledge
shall exist whether the dates of payment or fulfilment or execution of the
obligations, debts or commitments have become due or not, and shall apply
to all dividends that shall be decided upon from time to time in connection
with these shares. No benefit shall be created with respect to this share
based upon the rules of equity which shall frustrate this pledge, however
the directors may declare at any time with respect to any share, that it is
released, wholly or in part, temporarily or permanently, from the
provisions of this article. Registration by the company of a share transfer
shall be deemed to be a waiver by the company of its pledge (if at all) on
those shares.
18. The company may sell, in such manner and at such time as the directors
think fit, any of the pledged shares, but no sale shall be made unless the
date of payment of the monies or a part thereof has arrived, or the date of
fulfilment and performance of the obligations and commitments in
consideration of which the pledge exists has arrived, and after a written
request has been furnished to the member or person who has acquired a right
in the shares, which sets out the amount or obligation or commitment due
from him and which demands their payment, fulfilment or execution, and
which informs the person of the directors' desire to sell the shares in the
event of non-fulfilment of the notice, and the person has not fulfilled his
obligation pursuant to the notice within seven days after the notice had
been sent to him.
19. The net proceeds of such sale shall be applied in payment of such sum due
to the company or to the fulfilment of the obligation or commitment, and
the remainder (if there shall be any) shall be paid to the member or to the
person who has acquired a right in the share sold, pursuant to the above.
20. After execution of a sale as aforesaid, the directors shall be permitted to
sign or to appoint someone to sign a deed of transfer of the sold shares
and to register the buyer's name in the register of members as the owner of
the sold shares and it shall not be the obligation of the buyer to
supervise the application of monies nor will his right in the shares be
affected by a defect or illegality in the sale proceedings after his name
has been registered in the register of members with respect to those
shares.
The sole remedy of one who has been damaged by the sale shall be only to
sue the company for the damage caused.
TRANSFER OF SHARES AND THE MANAGEMENT THEREOF
21. The shares of the company are transferable upon the restrictions contained
in these articles. However each transfer shall be made in writing in the
form appearing hereinbelow, or in a similar form, or in any form as to be
determined upon by the directors from time to time, such form shall be
transmitted to the office together with the transferred share certificates
and any other proof the directors shall require, if they shall so require,
in order to prove the title of the transferor. The deed of share transfer
that shall have been registered, or a photostatic copy thereof, as shall be
decided by the directors, shall remain with the company. However any deed
of transfer that the directors shall refuse to register shall be returned,
upon demand, to the person who furnished it together with the share
certificate (if furnished).
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Deed of Transfer of Shares
I,___________ of_________________ in consideration of the sum of IS
( Shekels) paid to me by_______________ of________ (hereinafter
called "the said transferee") do hereby transfer to the said ___________
transferee ___ share (or shares) having a par value of IS _____each one
numbered_____until_____ inclusive in the undertaking called the company,
Limited; to hold unto the said transferee, his executors, administrators
and assigns, subject to the several conditions on which I held the same at
the time of the execution thereof; and I, the said transferee do hereby
agree to take the said share (or shares) subject to the conditions
aforesaid.
As witness we have hereunto set our hands the day of , 19 .
------------------------------- -------------------------------
Transferee Transferor
------------------------------- -------------------------------
Address & Profession Address & Profession
------------------------------- -------------------------------
Witness to the Transferee's Witness to the Transferee's
Signature Signature
------------------------------- -------------------------------
Address of Witness Address of Witness
22. The deed of share transfer shall be signed both by the transferor and
transferee, and the transferor shall be deemed to remain a holder of the
share until the name of the transferee is entered into the Register of
members in respect thereof. The deed of share transfer with respect to a
share that has been fully paid may be signed by the transferor only.
23. The directors may, subject to these articles, in their absolute discretion
and without furnishing any reason, refuse to approve of the registration
of any transfer of share to a person whom they do not wish as a member. If
the directors shall make use of their powers in accordance with this
article and refuse to register a transfer of shares, they must inform the
transferee of their refusal, within 60 days of the day the deed of
transfer had been furnished to the company.
"Any transfer or attempt to transfer the shares issued to SOCIETE REGIONALE
D'INVESTISSEMENT DE WALLONIE pursuant to the Share Exchange Agreement dated
July 5, 1991, (a copy of which is attached to these Articles) which does not
fully and strictly comply with the provisions of said agreement shall be
deemed null and void and shall not be recognized by the Company".
24. It shall be permitted to demand a levy for registration of transfer, in a
reasonable rate as to be determined by the directors from time to time.
25. The register shall be closed for a period of fourteen days before every
ordinary general meeting of the company and at other dates and for such
other periods as determined by the directors from time to time, upon the
condition that the register shall not be closed for a period of more than
30 days every year.
26. Upon the death of a member the surviving partners (in the event that the
deceased was a partner in a share) or the administrators or executors or
heirs of the deceased (in the event the deceased was the sole holder of
the share or was the only one of the joint holders of the share to remain
alive) shall be recognised by the company as the sole holders of any title
to the shares of the deceased. However nothing aforesaid shall release the
estate of a joint holder of a share from any obligation with respect to
the share that he held in partnership.
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27. Any person becoming entitled to a share in consequence of the death or
bankruptcy or liquidation of a member shall, upon such evidence being
produced as may from time to time be required by the directors, have the
right, either to be registered as a member in respect of the share upon the
consent of the directors or, instead of being registered himself, to
transfer such share to another person, subject to the provisions contained
in these articles with respect to transfers.
28. A person becoming entitled to a share because of the death of a member
shall be entitled to receive, and to give receipts for, dividends or other
payments paid with respect to the share.
29. A person becoming entitled to a share as a result of the death of a member
shall not be entitled to receive notices with respect to company meetings
or to participate or vote therein with respect to that share, or aside from
the aforesaid, to use any right of a member, until he has been accepted as
a member with respect to that share.
CALLS
30. A member shall not be entitled to receive dividends nor to use any other
right a member has, unless he has paid all the calls that shall be made
from time to time, with respect to money unpaid on all of his shares,
whether he is the sole holder or holds the shares together with another
person, in addition to interest and expenses if there shall be any.
31. The directors may, subject to the provisions of these articles, make calls
upon the members from time to time in respect of any moneys unpaid on their
shares, as they shall determine proper, upon the condition that there shall
be given prior notice of fourteen days on every call and each member shall
be entitled to pay the sum amount requested from him, the installment on
account of the call (if there shall so be) at the times and places to be
determined by the directors.
32. The calls for payment shall be deemed to have been requested from the date
the directors shall have decided upon the calls for payment.
33. The joint holders of a share shall be jointly and severally liable to pay
the calls for payment in full and the installment on account, in connection
with such calls.
34. If a sum called in respect of a share is not paid the holders of the share
or the person to whom it has been issued shall be liable to pay interest
upon the amount of the call or the payments on account, at the rate to be
determined by the board of directors commencing from the day appointed for
the payment thereof to the time of actual payment, but the directors shall
be at liberty to waive payment of that interest, wholly or in part.
35. Any amount that according to the condition of issuance of a share must be
paid at the time of issuance or at a fixed date, whether on account of the
sum of the share or premium, shall be deemed for the purposes of these
articles to be a call of payment that was made duly and the date of payment
shall be the date appointed for payment. In the event of non-payment of
this amount all of the articles herein dealing with payment of interest,
expenses, forfeiture, pledge and the like and all the other articles
connected therewith, shall cease to apply, as if this sum had been duly
requested and notice had been given, as aforesaid.
36. The directors may make arrangements at the time of issue of shares for a
difference between the holders with respect to the amount of calls to be
paid and the times of payment, and the rate of interest.
37. The directors may, if they think fit, receive from any member willing to
pay in advance all of the monies or a part thereof that shall be due on
account of his shares, in addition to any amounts that the payment in fact
has been requested and they shall be permitted to pay him interest at the
rate the directors and member shall agree upon, for the amounts paid in
advance as aforesaid, or upon the part thereof which is in excess of the
amounts whose payment was at the time requested on account of his shares in
connection with which the payments have been made in advance, in addition
to paying dividends that will be paid for that part of the share which has
been paid in advance.
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FORFEITURE OF SHARES
38. If a member fails to pay any call or installment of a call on the day
appointed for payment thereof, the directors may, at any time thereafter
during such time as any part of such call or installment remain unpaid,
serve a notice on him requiring payment of so much of the call or
installment as is unpaid, together with any interest which may have accrued
and any expenses that were incurred as a result of such non-payment.
39. The notice shall name a further day, not earlier than the expiration of
seven days from the date of the notice, on or before which the amount of
the call or installment or a part thereof is to be made together with
interest and any expenses incurred as a result of such non-payment. The
notice shall also state the place the payment is to be made and that in the
event of non-payment, at or before the time appointed, the shares in
respect of which the call was made will be liable to be forfeited.
40. If the requirements of any such notice as aforesaid are not complied with,
any share in respect of which the notice has been given may at any time
thereafter, before the payment required by the notice has been made, be
forfeited by a resolution of the directors to that effect. The forfeiture
shall include those dividends that were declared but not yet distributed,
with respect to the forfeited shares.
41. A share so forfeited shall be deemed to be the property of the company and
can be sold or otherwise disposed of, in such terms and in such manner as
the directors think fit. At any time before a sale or disposition the
forfeiture may be cancelled on such terms as the directors think fit.
42. A person whose shares have been forfeited shall cease to be a member in
respect of the forfeited shares, but shall notwithstanding remain liable to
pay to the company all monies which, at the date of forfeiture, were
presently payable by him to the company in respect of the shares, but his
liability shall cease if and when the company receives payment in full of
the nominal amount of the shares.
43. The forfeiture of a share shall cause, at the time of forfeiture, the
cancellation of all rights in the company or any claim or demand against it
with respect to that share and the other rights and obligations between the
share owner and the company accompanying the share, except for those rights
and obligations not included in such a cancellation according to these
articles or that the Law imposes upon former members.
44. A sworn declaration in writing, in accordance with the Evidence Ordinance,
that the declarant is a director of the company and that a share in the
company has been duly forfeited on the date stated in the declaration,
shall be conclusive evidence of the facts therein stated against all
persons claiming to be entitled to the share, and that declaration, and the
receipt of the company for the consideration given for the share, if any,
on the sale or disposition thereof specifying the place of payment of the
consideration shall constitute a good title to the share, and the person to
whom the share is sold or disposed of shall be registered as the holder of
the share and shall not be bound to see to the application of the purchase
money, if any, nor shall his title to the share be affected by any
irregularity or invalidity in the proceedings in reference to the
forfeiture, sale or disposal of the share.
45. The provisions of these articles as to forfeiture shall apply in the case
of non-payment of any such which, by the terms of issue of a share, becomes
payable at a fixed time, whether on account of the amount of the share, or
by way of premium, as if the same had been payable by virtue of a call duly
made and notified.
CONVERSION OF SHARES INTO STOCK
46. The directors may, with the approval of the company previously given by
special resolution in general meeting, reconvert any stock into paid-up
shares of any class.
47. The holders of stock may transfer the same, or any part thereof, in the
same manner, and subject to the same regulations, as, and subject to which,
the shares from which the stock arose might previously to conversion have
been transferred, or as near thereto as circumstances admit; but the
directors may from time to time fix the minimum amount of stock
transferable, and restrict or forbid the transfer of fractions of that
minimum, but the minimum shall not exceed the nominal amount of the shares
from which the stock arose.
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48. The holders of stock shall, according to the amount of the stock held by
them, have the same rights, privileges, and advantages as regards
dividends, voting at meetings of the company, and other matters as if they
held the shares from which the stock arose, but no such privilege of
advantage, except participation in the dividends and profits of the
company, shall be conferred by any such aliquot part of stock as would not,
if existing in shares, have conferred that privilege or advantage.
49. Articles applicable to paid-up shares except for those applying to bearer
shares, shall apply to stock, and the words "share" and "shareholder"
therein shall include "stock" and "stockholder".
MODIFICATION OF CAPITAL
50. The company may, from time to time, by special resolution:
(One) consolidate and divide its share capital or a part thereof into
shares of larger amount than its existing shares;
(Two) cancel any shares which have not been taken or agreed to be taken
by any person;
(Three) by subdivision of its existing shares, or any of them, divide the
whole, or any part, of its share capital into shares of smaller
amounts than is fixed by the Memorandum of Association subject,
nevertheless, to the provisions of paragraph (4) of section 144 of
the Companies Ordinance and in a manner that with respect to the
shares created as a result of the division it will be possible
within the resolution of division to grant to one or more shares a
preferable right or advantage with respect to dividend, capital,
voting or otherwise over the remaining share or other similar
shares;
(Four) to reduce its share capital and any fund reserved for capital
redemption reserve fund in the manner that it shall deem to be
correct, and in particular to use the rights, all or a part
thereof, contained in section 151 of the Companies Ordinance or
any modification thereof.
51. The company shall be permitted from time to time, by a special resolution
to increase its share capital - whether or not all its shares have been
issued, or whether the shares issued have been paid in full - by creation
of new shares. This new capital shall be in such an amount, divided into
shares in such amounts and have such preferable or deferred or other
special rights (subject always to the special rights conferred upon an
existing class of share) subject to any condition and restrictions with
respect to dividends, return of capital, voting or otherwise, all as shall
be directed by the general meeting in its resolution sanctioning the
increase of the share capital.
52. (One) The company has the right, in general meeting, to determine
general provisions regarding the issue of shares and their
division. In the absence of such decision, the directors shall
dispose of the issued shares or shares to be issued, as they deem
correct. The directors will not be bound to offer to any members
in any order and/or in any proportion whatsoever, shares already
offered or to be offered.
(Two) Notwithstanding any of the aforementioned, in the event that new
shares shall be offered to a shareholder or shareholders of the
company (except for an offer to company employees in their
capacity therein) through a private offer and against cash, as
opposed to assets, all of the shareholders shall be entitled to
such offer in proportion to the paid-up sum of the nominal value
of their shares. The shares offered in the manner abovementioned
will be of the same class held by the said shareholders and which
impart to them rights to the issued shares, or of a single class
offered by the company B all in accordance with the decisions of
the directors.
(Three) The company shall have the right in a general meeting to set out
regulations with respect to issuance and allotment of other types
of securities, aside from shares, including but without derogating
from the generality of the above, debentures, options and rights
and to determine that the aforesaid shall be convertible at a rate
or some other predetermined formula.
(Four) The company may bring about the registration of other of its
shares and securities that are tradable on the Security Exchange.
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53. Subject to any decision to the contrary in the resolution sanctioning the
increase in share capital, pursuant to these articles, the new share
capital shall be deemed to be part of the original share capital of the
company and shall be subject to the same provisions with reference to
payment of calls, liens, title, forfeiture, transfer and otherwise as
apply to the original share capital.
GENERAL MEETINGS
54. A general meeting shall be held at least once in every year at such time,
not being more than fifteen months after the last preceding general
meeting, and place as determined by the directors. Such general meetings
shall be called ordinary meetings. All other general meetings shall be
called extraordinary general meetings.
55. The directors may convene an extraordinary general meeting, whenever they
think fit; a requisition in writing as provided for in Section 109 of the
Companies Ordinance will be required. Every such requisition shall
include the objects for which a meeting should be convened, shall be
signed by the requisitioners and shall be sent to the registered office
of the company. The request may contain a number of documents in a
similar wording each of which is signed by one or more requisitioners. If
the board of directors do not attend to convene a meeting within 21 days
from the date of the submission of the requisition as aforesaid, the
requisitioners - or a part thereof representing more than one half of the
voting rights of all of them - may convene by themselves a meeting.
However, the meeting which was so convened shall not be held after three
months have passed since the date of the submission of the requisition.
56. Subject to the provisions of these articles with respect to special
resolutions, a prior notice of 14 days at least shall be given with
respect to the place, date and hour of the meeting, and in the event that
a special item shall be discussed - a general description of the nature
of that matter. The notice shall be given as hereinbelow provided for to
the members entitled pursuant to these articles to receive notices from
the company. In the event that a special resolution is to be proposed a
prior notice of 21 days shall be given with respect to the meeting
convened to pass that resolution. If by chance a notice as aforesaid was
not given or not received by a member this shall not amount to a
disqualification of the resolution passed or a disqualification of the
proceedings held at that meeting With the consent of all the members who
are entitled, at that time, to receive notices, it shall be permitted to
convene all meetings and to resolve all types of resolutions, in a more
brief notice or without any notice and in such manner, generally, as
shall be approved by the members.
PROCEEDINGS AT GENERAL MEETINGS
57. Subject to the provisions of these articles the function of the general
meeting shall be to receive and to deliberate with respect to the profit
and loss statements, the balance sheets, the ordinary reports and
accounts of the directors and auditors; to declare dividends, to appoint
auditors and to fix their salaries as well as to choose directors, except
insofar as the right to appoint or elect directors is reserved to the
owners of a certain amount or certain class of shares. Every other matter
shall be deemed to be special and shall be discussed at an extraordinary
general meeting.
Except for a special resolution, and subject to the provisions of the
Companies Ordinance, a resolution shall be considered to be approved in
general meeting upon its approval by majority vote of the shareholders
attending the general meeting and participating in the vote.
58. Every member entitled to be present and to vote at a meeting shall be
permitted to propose to the general meeting any such resolution connected
with the objects for which the meeting was convened upon the condition
that he shall submit to the company, within the period allotted before
the day of the meeting, a notice in writing signed by him containing the
proposed resolution and indicating his intention to submit it. The
aforesaid allotted time shall be such that between the day the proposal
was submitted or deemed to be submitted and the date of the meeting there
shall pass not less than seven days and not more than fourteen.
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59. Upon receipt of the notice referred to in the article above, in the event
that the notice of intention to propose a resolution is received before
the notice of the meeting is sent, that notice shall include the notice of
intention to propose a resolution, and if the notice of intention to
propose a resolution is received after the notice of the meeting is sent,
a new notice shall be sent as quickly as possible to the members entitled
to receive a notice of meeting, to the effect that such a resolution will
be proposed.
60. "No deliberation shall be commenced with respect to any matter at the
General Meeting unless there shall be present a quorum at the time when
the general meeting proceeds to deliberate. A quorum shall be formed when
there are present, personally or by proxy, at least two shareholders, who
hold or represent together 33 1/3% of the share capital of the company
issued and outstanding and entitled to vote thereat."
61. If within half an hour from the time appointed for the meeting a quorum is
not present, the meeting, if convened upon the requisition of the members
in accordance with sections 109 and 110 of the Companies Ordinance, shall
be dissolved; in any other case, it shall stand adjourned to the same day
in the next week at the same place and time, or any other day and/or any
other hour and/or any other place as the directors shall notify the
shareholders, and, if at the second meeting a quorum is not present within
half an hour from the time appointed for the meeting any two members
present personally or by proxy shall be a quorum and shall be entitled to
deliberate and to resolve in respect of the matters for which the meeting
was convened.
62. The Chairman of the board of directors shall preside as chairman at all
general meetings. If there is no chairman or he is not present within 15
minutes from the time appointed for the meeting or if he shall refuse to
preside at the meeting, the members present shall elect one of the
directors to act as chairman, and if only one director is present he shall
act as chairman. If no directors are present or if they all refuse to
preside at the meeting the members present shall elect one of the members
present to preside at the meeting.
63. The chairman may, with the consent of any meeting at which a quorum is
present, and shall if so directed by the meeting, adjourn the meeting from
time to time and from place to place, as the meeting shall decide. If the
meeting shall be adjourned for ten days or more a notice shall be given of
the adjourned meeting as in the case of an original meeting. Except as
aforesaid no member shall be entitled to receive any notice of an
adjournment or of the business to be transacted at the adjourned meeting.
At an adjourned meeting no matters shall be discussed except for those
permissible to be discussed at that meeting which decided upon the
adjournment.
64. At every meeting a resolution put to the vote of the meeting shall be
decided upon by a show of hands, unless before or upon the declaration of
the result of the show of hands a secret ballot in writing be demanded by
the chairman (if he is entitled to vote) or by at least two members
present, or by a member or members present and holding at least one
twentieth of the voting rights of the share capital issued by the company.
Except if a secret vote is demanded as aforesaid, the declaration of the
chairman that the resolution has been carried or carried unanimously or by
a particular majority, or lost, or not carried by a particular majority,
shall be final, and an entry to that effect in the minute book of the
company, shall be conclusive evidence of the fact without the necessity of
proving the number of proportion of the votes recorded in favour or
against such a resolution. Except with respect to a special resolution and
subject to any provision in this regard in the Companies Ordinance, a
resolution shall be deemed to be passed at a general meeting if it
received an ordinary majority of votes.
65. If a secret ballot is duly demanded, it shall be taken in such manner as
the chairman directs, whether immediately or after an adjournment or in a
postponed manner or otherwise, and the results of the ballot shall be
deemed to be a resolution of the meeting wherein the secret ballot was
demanded. Those requesting a secret ballot can withdraw their request at
any time before the secret ballot is held.
66. A secret ballot demanded on the election of a chairman, or on a question
of adjournment shall be taken forthwith. A secret ballot demanded on any
other question shall be taken at such time as the chairman of the meeting
directs.
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67. A demand for a secret ballot shall not prevent the continuation of the
meeting with respect to the transaction of any other business, except for
the matter with respect to which the secret ballot was demanded.
VOTES OF MEMBERS
68. Subject to and without derogating from the right or surplus rights or
restrictions existent at that time with respect to a certain class of
shares forming part of the capital of the company, each member present at
a meeting, personally or by proxy, shall be entitled, whether at a vote by
show of hands or by secret ballot, to one vote for each ordinary share
with a par value of one shekel held by him, provided that no member shall
be permitted to vote at a general meeting or appoint a proxy to vote
therein except if he has paid all calls for payment and all moneys due to
the company from him with respect to his shares.
69. In the case of joint holders the vote of the senior who tenders a vote,
whether in person or by proxy, shall be accepted to the exclusion of the
votes of the other joint holders; and for the purpose of this article
seniority shall be determined by the order in which the names stand in the
register of members.
70. A member who is of unsound mind, or concerning whom a competent court has
issued a writ to that effect, is entitled to vote, whether by show of
hands or by secret ballot, only by means of his representative, guardian
or other person fulfilling the function of representative or guardian in
accordance with a court-order; any such representative, guardian or other
person may vote by proxy.
71. In every vote a member shall be entitled to vote either personally or by
proxy. A proxy present at a meeting shall also be entitled to request a
secret ballot. A proxy need not be a member of the company.
72. A vote pursuant to a proxy shall be valid notwithstanding the death of the
appointor or the appointor become of unsound mind or the cancellation of
the proxy or its expiration in accordance with any law, or the transfer of
the shares with respect to which the proxy was given, unless a notice in
writing was given of the death, becoming of unsound mind, cancellation or
transfer and was received at the office before the meeting took place.
However, in the event of a secret vote, a notice cancelling the
appointment of a proxy shall be valid if it is signed by the appointor and
was received in the company's office no later than one hour prior to
commencement of the vote.
73. A letter of appointment of a proxy or power of attorney or other
certificate (if there shall be such) pursuant to which the appointee is
acting, shall be in writing, and the signature of the appointor shall be
confirmed by an advocate or public notary or in any other manner
acceptable by the directors and such instrument or a copy thereof
confirmed as aforesaid, shall be deposited in the office, or in another
place in Israel or abroad - as the directors shall direct from time to
time generally or with respect to a particular case, at least forty eight
hours before the time appointed for the meeting or adjourned meeting
wherein the person referred to in the instrument is appointed to vote,
otherwise that person shall not be entitled to vote that share. An
instrument appointing a proxy and which is not limited in time shall not
be valid 12 months after the date of its execution.
If the appointment shall be for a limited period, the instrument shall be
valid for the period contained therein.
74. An instrument appointing a proxy (whether for a specific meeting or
otherwise) may be in the following form or in any other similar form which
the circumstances shall permit:
Letter of Appointment of Proxy
I ______________________ of _________________________ a member holding
shares in ________________________________ and entitled to __________ votes
hereby appoint ________________ of ________________________________________
or in his place _______________ of _______________ to vote in my name and
in my place at the general meeting (regular, extraordinary, adjourned - as
the case may be) of the company to be held on the _____ day of ___________
_____________________ and at any adjournment thereof.
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In witness whereof, I have hereby affixed my signature the day of __________.
_______________________
Appointor's Signature
I hereby confirm that the foregoing instrument was signed before me by the
appointor.
(name, profession and address)
75. (One) A corporation which is a member of the company is entitled to
appoint, according to the decision of its director or another body
directing it, a suitable person to be its representative in all
meetings of the company, which person shall be entitled to exercise
on behalf of the company the same powers that the company itself
would be able to exercise as a shareholder of the company, if it
were a natural person.
(Two) Voting in accordance with the provisions of an instrument appointing
power of attorney will be effective despite the death of the
appointor or the cancellation of the power of attorney or its lapse
pursuant to law or the transfer of the shares that were voted, unless
notice in writing of such death, cancellation or transfer is received
in the office of the company or by the chairman of the meeting before
the voting.
(Three) Opposition to the right of a member to vote in a General Meeting must
be raised at such meeting, or at an adjournment of such meeting in
which such member seeks to vote and every vote not disqualified at
the meeting as aforesaid will be valid in every matter. In the event
opposition is thus timely raised to the right of a member to vote,
the chairman of the meeting shall decide and his decision shall be
binding.
(Four) A member is entitled to vote by means of a power of attorney
pertaining to each and every share he holds, and every such power of
attorney shall be pursuant to a separate written letter of
appointment stating the registration numbers of the shares on the
basis of which the power of attorney confers the right to vote. If
such shares shall be included by their owner in more than one letter
of appointment, such shares shall not grant voting rights to anyone
on the basis of such letters of appointment.
DIRECTORS
76. The number of the members of the board of directors can be determined from
time to time by a general meeting of the company; until such a
determination is made the number of directors shall not be less than two
and not more than ten.
77. (One) All members of the board of directors shall be elected at the
ordinary general meeting of the company by an ordinary resolution.
All directors elected shall retire at the annual general meeting of
the company immediately following the annual general meeting at
which they were elected, at which meeting they may be re-elected.
(Two) Every member of the board of directors who serves as a member of the
board of directors upon the effective date of these Articles of
Association shall serve in his position until the conclusion of the
election of members of the board of directors in the first ordinary
general meeting that will take place after the effective date of
these Articles, unless the position is vacated before then in
accordance with these Articles.
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(Three) Notwithstanding the provisions of subsections (a) and (b) hereof, the
company will be entitled, at any time, by extraordinary resolution,
to discharge from his office any member of the board of directors
and/or to appoint a member to the board of directors.
(Four) The members of the board of directors are entitled to add an
additional member or members to the board of directors up to the
maximum number of directors permitted by these Articles. A member
of the board of directors who is added pursuant to this Article
shall serve in his position until the next election of members of
the board of directors in an ordinary general meeting after his
joining the board of directors, unless his position is vacated
before then in accordance with these Articles.
(Five) If no member is appointed to the board of directors or if the
position of a member in the board of directors is vacated, the
other members of the board of directors will be entitled to act in
every matter so long as their number is not less than the statutory
quorum fixed at that time for meetings of the board of directors.
If pursuant to section 81 of the Companies Ordinance their number
shall decrease below such statutory quorum, they will not be
entitled to act except in order to fill vacant positions on the
board of directors or to call a general meeting of the company.
(Six) Except with respect to a director whose term of service terminates
at the time of the meeting, or a person recommended for service as a
director by the other directors, no nomination at a general meeting of
the company for a directorship shall be made, unless, not less than 48
hours and not more than 4 days before the fixed time for the general
meeting, notice in writing is delivered to the office of the company,
which notification shall be signed by the member of the company (but
not by the nominee) who is entitled to participate and vote at the
meeting of which notice was sent, and which notification shall state
his intention to nominate such nominee for election to the position of
director. Attached to such notification will be the agreement in
writing of the nominee to be nominated.
78. (One) Any person whether or not a member of the board of directors may
serve as a substitute director (hereinafter -- "substitute"). One
person may serve as the substitute for a number of directors.
(Two) A substitute shall have -- in addition to his vote if he himself is
a member of the board of directors -- the number of votes equal to the
number of directors for whom he is serving as a substitute.
(Three) A substitute shall have, subject to the provisions of the instrument
by which he was appointed, all the powers and authorities that the
director for which he is serving as director, has, and in the event
the substitute is himself a director, such powers and authorities
shall be in addition to his powers as a member of the board of
directors and shall not in any way derogate therefrom.
(Four) The appointment or removal of a substitute director shall be done
in a written document signed by the director who appointed him. The
document shall be furnished to the company and the provisions of
this section shall apply to it, mutatis mutandis. The provision of
this article with respect to the appointment of a director shall
apply with respect to an appointment of a substitute.
(Five) The office of a substitute director shall be automatically vacated
if his appointment is terminated by the director who appointed him
in accordance with these regulations, or upon the happening to the
substitute of one of the events described in sections (1), (2), (3)
or (5) of article 79 or, if the office of the member of the board
of directors with respect to whom he serves as a substitute shall
be vacated for any reason whatsoever.
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79. Subject to the provisions of these articles or to the provisions of an
existing contract, the tenure of office of the director shall
automatically be terminated:
(Seven) if he is declared bankrupt;
(b) if he is declared lunatic;
(c) by sending a written notice of his resignation to the company;
(d) if his tenure of office ceases pursuant to article 77 above;
(e) upon his death;
(f) upon the liquidation of the company.
80. Members of the board of directors, not being employees of the company or
professionals providing special professional services for consideration to
its members - shall not receive a salary from funds of the company unless
the general meeting has so decided and in the amount that the general
meeting shall decide upon. The directors, their substitutes and attorneys
shall be entitled to receive expenses, in an acceptable rate, for travel
expenses, board and lodging that have been expended for or during the
performance of their duties as directors, and including travel expenses to
the directors' meetings and return. If as a result of an understanding
with the other directors or pursuant to a decision of the directors, one
of the directors shall perform services or tasks aside from his regular
duties as a director, whether as a result of his particular profession or
by a trip or stay abroad or otherwise, the directors may decide to pay him
a special wage in addition to his regular salary, and such a wage shall be
paid by way of salary, commission, participation in profits or otherwise
and this wage shall be in addition to his regular salary, if there shall
be any, or will be in place thereof, as shall be decided.
81. (One) The directors may from time to time appoint one or more persons,
whether or not he is a member of the board of directors, as the
managing director of the company, either for a fixed period of time
or without limiting the time that he or they will stay in office,
and they may from time to time (with reference to any provision in
any contract between him or them and the company) release him or
them from their office and appoint another or others in his or their
place.
(Two) The board of directors may from time to time grant and bestow upon
the managing director, at that time, those powers and authorities
that it exercises pursuant to these articles, as it shall deem fit,
and may grant those powers and authorities for such period, and to be
exercised for such objectives and purposes and in such time and
conditions, and on such restrictions, as it shall decide; and it may
grant such authorities whether concurrently with the board of
directors= authorities in that area, or in excess of them, or in
place thereof or any one of them, and it can from time to time
revoke, repeal or change any one or all of those authorities.
(Three) Notwithstanding the aforesaid in article 80 the compensation of
the managing director shall be determined from time to time by the
board of directors (with reference to any provision in any
contract between him and the company) and it may be paid by way of
a fixed salary or commission or dividends, or a percentage of
profits or the company profit turnover or of any other company
that the company has an interest in, or by participation in such
profits, or in one or more of the aforementioned methods.
POWERS AND DUTIES OF DIRECTORS
82. The business of the company shall be managed by the directors, and they
may pay all expenses incurred in founding or in connection with the
founding of the company, and registration of the company, as they shall
see fit. They shall be entitled to perform all the powers and authorities
that the company has and to perform in its name all the acts that it is
entitled to do according to its memorandum of association and/or
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articles and/or law except for those which are pursuant to law or the
articles not vested in the general meeting of the company, subject to any
provisions in the law or in these articles or the regulations that the
company shall adopt in its general meeting (insofar as they do not
contradict the law or these articles). However any article adopted by the
company in its general meeting shall not affect the legality of any prior
act of the directors that would be legal and valid, if not for such an
article.
83. A director shall not be required to hold qualifying shares.
84. (Cancelled).
85. A director may hold another paid position or function in the company or in
any other company that the company is a shareholder of or that it has some
other interest in, together with his position as a director (except an
auditor) upon those conditions with respect to salary and other matters as
shall be decided by the directors.
FUNCTIONS OF THE DIRECTORS.
86. (One) The directors may meet in order to transact business, to adjourn
their meetings or to organise them otherwise as they shall deem fit
and to determine the legal quorum necessary to conduct business.
(Two) If it shall not be otherwise decided the quorum shall be two
directors present personally or represented by their attorneys or
substitutes.
(Three) For the purposes of this article two directors or more may be
represented by the same substitute, and every such substitute
shall be entitled to one vote for each director that he
represents, in addition to any vote he might have himself (if he
has such a vote).
87. Subject to any contrary resolution adopted by the board of directors the
chairman of the board of directors or two directors may at any time call a
board of directors' meeting, and the secretary shall be required on the
request of such a member to convene a board of directors' meeting.
88. The directors may from time to time elect a chairman, and decide the
period of time he shall hold such an office, and he shall preside at the
meetings of the board of directors. However if such a chairman is not
elected or if he is not present at any meeting within thirty minutes after
the time appointed for the meeting, the directors may choose one of their
number to serve as chairman of that meeting.
89. Any notice of a board of directors' meeting can be given orally, by
telephone, in writing, or by telegram or telex provided that the notice is
given 72 hours before the time appointed for the meeting unless all the
members of the board of directors, having received a shorter notice, shall
agree to such a shorter notice.
90. (One) Issues raised before all meetings of the board of directors shall be
decided by the majority.
(Two) The chairman of a meeting of the board of directors, whether the
chairman of the board of directors or any other director chosen to
serve as chairman of the meeting, shall not have an additional or
casting vote.
91. (One) The board of directors may delegate any of their powers to
committees consisting of such member or members of their body as
they deem fit and may from time to time revoke such delegation.
(Two) In the exercise of any power delegated to it by the board of
directors all committees shall conform to any regulations that may be
imposed upon them by the directors if there shall be any such
regulation. If no such regulations are adopted by the board of
directors or if there are no complete and encompassing regulations
the committees shall act pursuant to these articles
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dealing with organisation of meetings, meetings and functions of the
board of directors and insofar as no provision of the board of
directors shall replace it pursuant to this article.
92. All actions performed in a bona fide fashion by the board of directors or
by a committee of the board of directors, or by any person acting as a
director or as a substitute shall be as valid, even if at a later date a
flaw shall be discovered in the appointment of such a director or such a
person acting as aforesaid, or that all or some of them were unfit as if
each and every one of those persons shall have been duly appointed and
valid and fit to serve as a director or substitute as the case may be.
93. (One) The directors shall cause minutes to be taken of all general
meetings of the company, of the appointments of officials of the
company, of board of directors' meetings and of committee meetings
that shall include the following items, if applicable:
(a) the names of the members present
(b) the matters discussed at the meeting
(c) the results of the vote
(d) resolutions adopted at the meeting
(e) instructions given by the directors to the committees.
(Two) The minutes of any meeting, signed or appearing to be signed by the
chairman of the meeting or by the chairman of the meeting held
immediately after that meeting, shall serve as a prima facie proof as
to the facts in the minutes.
94. A resolution in writing signed by at least two thirds of the members of
the board of directors, or of a committee, or such a resolution that two
thirds of the board of directors or members of a committee have agreed to
in writing or by telegram or telex shall be valid for every purpose as a
resolution adopted at a board of directors' or committee meeting, as the
case may be, that was duly convened and held. In place of a director the
aforesaid resolution may be signed and delivered by his substitute or his
attorney or his substitute's attorney.
95. (One) The directors shall cause the seal (if the company shall have a
seal) to be kept in safekeeping and it shall be forbidden to use
the seal unless prior permission of the board of directors is
given. If such permission is given, the seal shall be affixed in
the presence of whoever has been so appointed by the board of
directors, and he shall sign any document upon which the seal has
been affixed.
(Two) The company shall have at least one rubber stamp. The directors
shall ensure that such a stamp is kept in a safe place.
(Three) The board of directors may designate any person or persons (even
if they are not members of the board of directors) to act and to
sign in the name of the company, and the acts and signatures of
such a person or persons shall bind the company, insofar as such
person or persons have acted and signed within the limits of their
aforesaid authority.
(Four) The company may exercise the authorities granted to a company in
section 102 of the Companies Ordinance with respect to the keeping
of a seal for use outside of Israel, and such authorities shall be
granted to the board of directors.
(Five) The printing of the name of the company by a typewriter or by hand
next to the signatures of the authorised signatories of the
company, pursuant to sub-article (c) above shall be valid as if the
rubber stamp of the company was affixed.
LOCAL MANAGEMENTS
96. (One) The directors may organise from time to time arrangements for the
management of the company's business in any particular place,
whether in Israel or abroad, as they shall see fit, and
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the following provisions in the next section shall not derogate from
the general powers granted to the board of directors pursuant to this
article.
(Two) The board of directors may at any time and from time to time convene
any local management or agency to conduct the business of the
company in any particular place, whether in Israel or abroad, and
can appoint any person to be a member of such local management, or
to be a director or agent, and may decide his wages. The board of
directors can at any time and from time to time grant a person so
appointed any power, authority, or discretion that the board of
directors has at that time, and can authorise any person acting at
that time as a member of a local management to continue in his
position notwithstanding that some position has been vacated there,
and any such appointment or authorisation can be made upon such
conditions as the board of directors deem fit. The board of
directors can from time to time release any person so appointed or
revoke or change any such authorisation.
BRANCH REGISTERS
97. The company may, subject to the provisions of section 70(a) - (c)
inclusive of the Companies Ordinance and any order given or to be given
pursuant to those sections or any one of them, keep in every other
country where those provisions shall apply, a register or registers of
members living in that other country as aforesaid, and to exercise any
other powers referred to in the laws with respect to such branch
registers.
THE SECRETARY, OFFICERS AND ATTORNEYS
98. (One) The board of directors may appoint a secretary of the company upon
the conditions that they see fit. The directors may as well from
time to time appoint an associate secretary who shall be deemed to
be the secretary for the period of his appointment.
(Two) The board of directors may from time to time appoint to the company,
officers, workers, agents and functionaries to permanent, temporary
or special positions, as they shall from time to time see fit.
The directors may as well terminate the services of one or more of
the aforesaid persons at any time in their absolute discretion. The
directors may decide the powers and functions of the aforesaid
person, as well as the conditions of their employment and demand
securities in those cases and in such sums as they shall see fit.
(Three) The directors may at any time and from time to time authorise
any company, firm, person or group of people, whether this
authorisation is done by the directors directly or indirectly, to be
the attorneys in fact of the company for those purposes and with
those powers and discretions which shall not exceed those conferred
upon the board of directors or that the board of directors can
exercise pursuant to these articles - and for such a period of time
and upon such conditions as the directors deem proper, and every such
authorisation may contain such directives as the board of directors
deem proper for the protection and benefit of the persons dealing
with such attorneys. The board of directors may as well grant such an
attorney the right to transfer to others, in part or in whole, the
powers, authorities and discretions granted to him, and may terminate
and revoke the appointments or revoke all or any part of the powers
granted to them.
DIVIDEND
99. Subject to the provisions of these articles and subject to any rights or
conditions attached at that time to any share granting preferential,
special or deferred rights or not granting any rights with respect to
dividends, the profits of the company shall be distributable to the
members of the company according to
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the proportion of the nominal value paid upon on account of the shares
held by them at the date so appointed by the company, without regard to
the premium paid in excess of the nominal value, if any.
The board of directors may issue any share upon the condition that a
dividend shall be paid at a certain date or that a portion of the declared
dividend for a certain period shall be paid, or that the period for which
a dividend shall be paid shall commence at a certain date, or a similar
condition, all as decided by the board of directors. In every such case -
subject to the provision mentioned in the beginning of this article - the
dividend shall be paid in respect of such a share in accordance with such
a condition. No sum paid with respect to a share in advance, before
payment for which has been demanded and which incurs interests, shall not
be seen as paid on account of the share, for the purposes of this article.
100. At the time of declaration of a dividend the company may decide that such
a dividend shall be paid in part or in whole, by way of distribution of
certain properties, especially by way of distribution of fully paid up
shares or debentures or debenture stock of the company, or by way of
distribution of fully paid up shares or debentures or debenture stock of
any other company or in one or more of the aforesaid ways.
101. The directors may from time to time pay to the members on account of the
forthcoming dividend such interim dividend as shall be deemed just with
regard to the situation of the company.
102. The board of directors may put a lien on any dividend on which the
company has a charge, and it may use it to pay any debts, obligations or
commitments with respect to which the charge exists.
103. A transfer of shares shall not transfer the right to dividend which has
been declared after the transfer but before the registration of the
transfer. The person registered in the register as a member on the date
appointed by the company for that purpose shall be the one entitled to
receive a dividend.
104. The company may in a general meeting declare a dividend to be paid to the
members, according to their rights and benefits in the profits and to
decide the time of payment. A dividend in excess of that proposed by the
board of directors shall not be declared. However the company may declare
at a general meeting a smaller dividend.
105. A notice of the declaration of a dividend, whether an interim dividend or
otherwise, shall be given to the members registered in the register, in
the manner provided for in these articles.
106. Dividend may be paid by check or payment order to be mailed to the
registered address of a member or person entitled thereto in the register
or in the case of registered joint owners to the addresses of one of the
joint owners as registered in the register. Every such check shall be
made out to the person it is sent to. The receipt of the person who on
the date of declaration of dividend is registered as the holder of any
share or, in the case of joint holders, of one of the joint holders,
shall serve as a release with respect to payments made in connection with
that share. The directors are entitled to invest all of the dividends not
demanded following their declaration, or to make use of them in any other
manner they see fit for the benefit of the company until such demand. The
company will not pay interest for dividends or interest not paid.
107. (One) By a special resolution, every dividend may be paid, either in part
or in whole, by distribution of property, especially by
distribution of fully paid up shares, or debentures, or debenture
stock of the company or of another company or in one or more of the
aforesaid ways. Dividends, property, fully paid up shares,
debentures, distributed pursuant to this article, shall be
distributed according to the proportion described in article 99
above.
(Two) If at any time the share capital shall be divided into different
classes of shares, the distribution of fully paid up shares, from
funds pursuant to article 111 below, shall be made in one of the two
following manners as to be decided upon by the directors:
(i) in such a manner so that all holders of a share entitled to
fully paid up shares shall receive one uniform class of shares,
or
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(b) in such a manner so that each holder of shares entitled to fully
paid up shares as aforesaid shall receive shares of the class of
shares held by him and entitling him to fully paid up shares, as
aforesaid.
(Three) If the company has redeemed preferential redeemable shares, then
all funds reserved for redemption of capital resulting from the
redemption of such shares may be used, in whole or in part,
according to a resolution of the company, to pay in full or in
part any new share issues or any shares not yet issued, that shall
be issued to such members of the company or other persons, as
shall be decided upon by the board of directors, up to the sum
equal to the nominal value of the shares to be issued as
aforesaid.
(Four) In order to give effect to any resolution in connection with
distribution of dividends, or distribution of property, fully paid-
up shares or debentures, the board of directors may resolve any
difficulty that shall arise with distribution as it shall deem
necessary, especially to issue certificates for fractional shares
and to determine the value of certain property for purposes of
distribution, and to decide that payment in cash shall be made to the
member on the basis of the value decided for that purpose, or that
fractions the value of which is less than one Israeli shekel shall
not be taken into account for the purpose of co-ordinating the rights
of all the parties. The board of directors shall be permitted in this
regard to grant cash or property to trustees in escrow for the
benefit of persons entitled thereto, as the directors shall see
beneficial. Wherever required, an agreement shall be submitted to the
registrar of companies and the directors may appoint a person to
execute such an agreement in the name of the persons entitled to
dividend, property, fully paid up shares or debentures as aforesaid,
and such an appointment shall be valid.
(Five) The company shall not be obligated to pay interest on a dividend.
(Six) The board of directors may, with respect to all dividends not demand
within one year after their declaration, invest or use them in
another way for the benefit of the company, until they shall be
demanded. The company shall not pay interest for dividends or
interest not paid.
FUNDS
108. The directors may set aside from the profits of the company the sums they
deem proper, as a reserve fund or reserve funds for extraordinary uses,
or for special dividends or equalisation of dividends or other funds or
for the purpose of correcting, bettering or retaining any property of the
company and for those other purposes which shall in the absolute
discretion of the board of directors be beneficial to the company and it
may invest the various sums so invested in such investments as it finds
proper, and from time to time deal in such investments, change or
transfer them, in part or in whole for the benefit of the company. The
board of directors may as well divide any reserve liability fund to
special funds as it shall deem proper, transfer moneys from fund to fund
and use every fund or any part thereof in the business of the company,
without being required to keep such sums separate from the rest of the
company's property. The board of directors may, from time to time, also
transfer, to the next year, profits out of such sums which are, in its
absolute discretion, beneficial to the company. Generally the board of
directors may create funds as it deems necessary, either those resulting
from profits of the company or from re-evaluation of property, or from
premiums paid for shares or from any other source, and to use them in its
discretion as it deems fit insofar as that in the creation of such funds,
the changes or uses do not exceed the provision of the law or accepted
accounting principles.
109. All premiums received from the issue of shares shall be capital funds and
they shall be treated for every purpose as capital and not as profits
distributable as dividends. The board of directors may organise a reserve
capital liability account and transfer from time to time all such premiums
to the reserve capital liability account or use such premiums and monies
to cover depreciation or doubtful loss. All losses from sale of
investments or other property of the company shall be debited to the
reserve account, unless the
D-20
<PAGE>
directors decide to cover such losses from other funds of the company. The
board of directors may use any monies credited to the capital reserve
liability account in any manner that these articles or the law permits.
110. Any amounts transferred and credited to the account of income and expense
fund or general reserve liability account or capital liability reserve
account, may, until otherwise used in accordance with these articles, be
invested together with such other moneys of the company in the day to day
business of the company without having to differentiate between these
investments and the investment of the monies of the company.
CAPITALISATION OF RESERVE FUNDS
111. The company may at any time and from time to time resolve at a general
meeting that any sum, investment or property not required to pay such
fixed preferential dividend and (a) is standing credited at that time to
any fund or to any reserve liability account of the company, including
also premiums received from issuance of shares, debentures, or debenture
stock of the company or (b) net profits not distributed and remaining in
the company, shall be capitalised, and that such investment sum or
property be released for distribution and be distributed as capital among
the shareholders of the company according to the proportion that they
would be entitled to if such amount would have been distributed as
dividends on shares, in the manner so directed by such a resolution, and
such a resolution shall be valid. The board of directors shall use such
investment sum or property, according to such a resolution, for full
payment of such shares of the company's capital not issued for the
shareholders as aforesaid and to issue such shares and to distribute them
as fully paid up shares among those shareholders according to the pro
rata rate as aforesaid for payment of the value of the shares and their
rights in the amount capitalised, or to use such investment sum or
property or any part thereof for the aforesaid shareholders for full
payment of those shares not issued in proportion to such shares of the
company's capital issued and held by such shareholders, or use such
investment sum or property in another manner permitted by such a
resolution. If any difficulty shall arise with respect to such a
distribution the board of directors may organise the distribution as it
deems desirable. It shall particularly be permitted to issue fractional
certificates, to determine the value of the property or investment for
the purpose of distribution of all fully paid up shares, to pay money to
any such shareholder according to the value determined in this manner in
order to coordinate and adjust the rights, it shall also be permitted to
decide that parts the value of which is less than one Israeli shekel
shall not be taken into account in order to adjust the rights of all
parties, to give all such shares, cash or property to trustees to hold in
escrow for such persons entitled to part of the allocation and the
distribution in accordance with and against such securities as the
directors deem desirable. Where required an agreement pursuant to
sections 129 and 130 of the Companies Ordinance, for the allocation and
distribution of the shares distributed in the manner aforementioned shall
be submitted for registration. The board of directors may appoint a
person to sign such an agreement in the name of the persons entitled to
part of the allocation and distribution and such an appointment shall be
valid.
ACCOUNTS AND AUDIT
112. The directors shall cause correct accounts to be kept:
(One) of the assets and liabilities of the company;
(Two) of any amount of money received or expended by the company and the
matters for which such sum of money is expended or received;
(Three) of all purchases and sales made by the company.
The account books shall be kept in the office or at such other place as the
directors deem fit and they shall also be open for inspection by the
directors.
D-21
<PAGE>
113. The board of directors shall determine from time to time, in any specific
case or type of case, or generally, whether and to what extent and at what
times and places and under what conditions or regulations the accounts and
books of the company, or any of them, shall be open for inspection by the
members, and no member, not being a director, shall have any right of
inspecting any account book or document of the company except as conferred
by law or authorised by the board of directors or by the company in a
general meeting.
114. Not later than eighteen months after registration of the company and
thereafter not less than once a year, the directors shall submit before
the company at a general meeting a profit and loss account for the period
after the previous account, and if it is the first account for the period
after registration of the company, it shall be drafted at a date not more
than nine months before the date of the meeting and in accordance with the
relevant provisions of the Companies Ordinance, and the directors shall
submit a balance sheet that is correct as of the date of the profit and
loss account. To the balance sheet shall be attached a report of the
auditor and it shall be accompanied by a report from the directors with
respect to the situation of the company business and the amount they
propose as a dividend and the amount (if any) that they propose be set
aside for the fund accounts.
115. Auditors shall be appointed and their function shall be set out in
accordance with the law.
NOTICES
116. A notice or any other document may be served by the company upon any
member either personally, by post, or by sending it by telex or telegram,
whose duties were paid, and addressed to such member at his registered
address in Israel as appearing in the register of members.
117. All notices directed to be given to the members shall, with respect to any
share to which persons are jointly entitled, be given to one of the joint
holders, and any notice so given shall be sufficient notice to the holders
of such share.
118. Any member registered in the register who shall from time to time furnish
the company with an address in Israel at which notices may be served,
shall be entitled to receive all notices he is entitled to receive
according to these articles at that address. However, except for the
aforesaid, no member whose address is not registered in the register shall
be entitled to receive any notice from the company.
119. A notice may be given by the company to the persons entitled to a share in
consequence of the death or bankruptcy of a member by sending it through
the post in a prepaid letter addressed to them by name, at the address, if
any, in Israel furnished for the purpose by the persons claiming to be so
entitled, by giving the notice in any manner in which the same might have
been given if the death or bankruptcy had not occurred.
120. Any notice or other document if served or sent by post shall be deemed to
have been served or delivered at the time when the letter or postcard or
telegram or telex containing the same was delivered to the post or at such
time as the telex was sent, and in proving such service it shall be
sufficient to prove that the letter or postcard or telegram or telex
containing the notice was properly addressed and delivered at the post
office or sent by telex. Any list kept in the ordinary manner in any mail
list of the company or any copy of any telex in the company's possession
shall be prima facie proof of the delivery.
121. In addition to the furnishing of a notice pursuant to the above article,
the company may furnish a notice to the shareholders entitled to receive
notice, or to part of them, by publication of a notice in a newspaper
distributed in the area wherein the office is located, or any other place,
in Israel or abroad as the directors shall determine from time to time.
D-22
<PAGE>
REORGANISATION OF THE COMPANY
122. At the time of sale of the company's plant the board of directors may, or
at the time of liquidation, the liquidators may, if authorised by a
special resolution of the company, receive shares paid in full or in part,
debenture or other securities of any other company, whether already
existing at that time or whether about to be established for the purposes
of acquiring the property of the company, or a part thereof. The board of
directors (if the profits of the company so permit) or the liquidators (at
the time of liquidation) may distribute among the members the shares or
aforesaid securities or any other property of the company without
realising them, or deposit them with trustees for the members, and every
special resolution can resolve as to the distribution or the setting aside
of cash, the shares or other securities and the rights or property of the
company in a manner not entirely identical with the legal rights of the
members of the company, or its participants, and such a resolution may
value the securities or property aforesaid at such price and in such
manner as the meeting shall decide. All shareholders shall be required to
accept all valuation or distribution decided as aforesaid and to waive all
their rights in this regard, except, in the case where the company is at a
liquidation stage or in the process of liquidation, with respect to such
legal rights (if any) which according to the provisions of the law cannot
be altered or renounced.
INDEMNITY
123. (a) Subject to the provision of Section 96(44) of the Companies
Ordinance, the Company may enter into a contract for the insurance of
each office holder as defined in section 96(24) of the Companies
Ordinance (hereinafter an "Office Holder"), against the liability
that an Office Holder may incur as a result of:
1. A breach by the Office Holder of his duty of care toward the
Company or any other person.
2. A breach by the Office Holder of his fiduciary duty toward the
Company, provided that the Office Holder acted in good faith and
had reasonable grounds to believe that the action taken had not
been in contradiction of the Company's best interests.
3. A monetary liability imposed on the Office Holder in favour of a
third party as a result of any action taken by the Office Holder
in such capacity.
(b) Subject to Section 96(43) and 96(44) of the Companies Ordinance, the
Company may indemnify an Office Holder for:
1. A monetary liability imposed on the Office Holder in favour of a
third party according to a judgment, including a judgment given as
a result of a settlement or an arbitrator's award approved by the
court, as a result of an action taken by the Office Holder in such
capacity.
2. Reasonable litigation expenses, including attorneys fees,
incurred by the Office Holder or imposed on the Office Holder by
the court in a proceeding instituted against the Office Holder by
the Company or on its behalf, or by another person or in criminal
proceedings which resulted in the Office Holder's acquittal,
provided that such proceedings were initiated against the Office
Holder with respect to an action or actions taken by the Office
Holder in such capacity.
WINDING UP
124.(One) In the event of winding up of the company, the company's property
distributable among the members shall be distributed in the rate
proportionate to the sum paid on account of the nominal value of the
shares held by them, of any class, without taking into account
premiums paid in excess of the nominal value. Provisions of article
122, with regard to the possibility of a distribution not quite in
accordance with the legal rights shall apply to this distribution as
well.
D-23
<PAGE>
(Two) If the company is voluntarily wound up, the liquidators may, with
the confirmation of an extraordinary resolution, divide among the
members the property as is, and they shall be entitled with a
similar authorisation to deposit any part of the company's property
with trustees in escrow for the benefit of members, as they deem
correct. A resolution confirming such a distribution may confirm
also a distribution in a manner other than in accordance with the
legal rights of the members and it may grant special rights to any
class of members. However, in the event of the adoption of a
resolution enabling a distribution not in accordance with the legal
rights of the members, a member adversely affected thereby shall
have the same right to object and any right attached thereto as if
such a resolution was a special resolution passed pursuant to
Section 334 of the Companies Ordinance.
WINDING UP OF BUSINESS
125. In the event that at the time of liquidation of the company the company's
property available for distribution among the members shall not suffice
to return all the paid up capital and subject to, and without derogating
from, any rights or surplus rights or existing restrictions at that time
of any special class of shares forming part of the capital of the
company, such property shall be divided so that the losses shall as much
as possible be borne by the members in a pro-rata rate to the paid up
capital or that shall have been paid at the commencement of the
liquidation on the shares held by each of them. If at the time of
liquidation the company's property distribution among the members is in
excess of the amount necessary for the return of all capital paid up at
the beginning of the liquidation, it shall belong and be delivered to the
members pro rata to the amount paid on the nominal value of each share
held by each of them at the commencement of the liquidation.
D-24
<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 indemnification 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.
The agreement provides that for a period of seven years following the
effective time of the arrangement, the Registrant will cause Oshap to indemnify
and hold harmless any persons who were directors or officers of Oshap or any
Oshap subsidiary prior to the effective time from and against all claims,
damages, losses, obligations or liabilities to the fullest extent such person
could have been indemnified for such amounts under applicable law,
indemnification agreements or under the articles of association of Oshap or the
governing documents of any Oshap subsidiary in effect immediately on or prior
to the effective time, with respect to any act or failure to act by any such
indemnified person on or prior to the effective time; however, the Registrant
will have no financial obligation with respect to indemnification obligations
under the agreement. The Registrant also agreed that it will not decrease the
net worth of Oshap to an amount below the net worth of Oshap as of December 31,
1998 by withdrawing or otherwise removing assets from Oshap. The agreement also
provides that the Registrant will maintain the Oshap directors' and officers'
liability insurance policies in effect for seven years after the effective
time; however, the Registrant will not be required to pay annual insurance
premiums in excess of $200,000.
Item 21. Exhibits and Financial Statement Schedules.
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Exhibits
------- ---------------------------------------------------------------
<C> <S>
2.1 Agreement between the Registrant and Oshap Technologies Ltd.
(See Appendix A to the Proxy Statement/Prospectus).
5.1 Legal Opinion of the Registrant's General Counsel.
8.1 Tax Opinion of Blank Rome Comisky & McCauley LLP.
8.2 Tax Opinion of Skadden, Arps, Slate, Meagher & Flom LLP.
8.3 Tax Opinion of Goldfarb, Levy, Eran & Co.
23.1 Consent of PricewaterhouseCoopers LLP, independent accountants.
23.2 Consent of Brightman Almagor & Co., certified public
accountants (Israel).
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Exhibits
------- ---------------------------------------------------------------------
<C> <S>
23.3 Consent of Blank Rome Comisky & McCauley LLP (included in Exhibit 8.1).
23.4 Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in
Exhibit 8.2).
23.5 Consent of Goldfarb, Levy, Eran & Co. (included in Exhibit 8.3).
24.1 Power of Attorney (see page II-4).
99.1 Consent of Salomon Smith Barney Inc.
99.2 Consent of BancBoston Robertson Stephens Inc.
99.3 Form of Voting Agreement and Irrevocable Proxy.
99.4 Form of Affiliate Agreement.
99.5 Form of Stock Purchase Agreement for Mint and Decalog Shares.
99.6 Form of Nondisclosure and Noncompetition Agreement for Shlomo Dovrat
and Avi Zeevi.
99.7 Form of Oshap Proxy.
</TABLE>
(b) Financial Statement Schedules
No financial data schedules are required for the Registrant or Oshap.
(c) Item 4(b) Reports
See Appendix B and Appendix C 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.
(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.
II-2
<PAGE>
(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 AND POWER OF ATTORNEY
Pursuant to the Requirements of the Securities Act of 1933, the registrant
has duly caused this 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.
By: /s/ James L. Mann
----------------------------------
Date: May 11, 1999 James L. Mann
Chief Executive Officer,
President
and Chairman of the Board of
Directors
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated. Each person whose signature appears
below hereby authorizes James L. Mann and Michael J. Ruane and each of them, as
Attorney-in-Fact, to sign on his behalf individually and in each capacity
stated below, and to file, any amendments, including post-effective amendments,
to this registration statement.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ James L. Mann Chief Executive Officer, May 11, 1999
____________________________________ President, and Chairman of
James L. Mann the Board of Directors
(principal executive officer)
/s/ Michael J. Ruane Chief Financial Officer and May 11, 1999
____________________________________ Vice President--Finance
Michael J. Ruane (principal financial
officer)
/s/ Andrew P. Bronstein Vice President and Controller May 11, 1999
____________________________________ (principal accounting
Andrew P. Bronstein officer)
/s/ Gregory S. Bentley Director May 11, 1999
____________________________________
Gregory S. Bentley
/s/ Michael C. Brooks Director May 11, 1999
____________________________________
Michael C. Brooks
/s/ Albert A. Eisentat Director May 11, 1999
____________________________________
Albert A. Eisentat
/s/ Bernard Goldstein Director May 11, 1999
____________________________________
Bernard Goldstein
/s/ Michael Roth Director May 11, 1999
____________________________________
Michael Roth
/s/ Malcom I. Ruddock Director May 11, 1999
____________________________________
Malcolm I. Ruddock
/s/ Lawrence J. Schoenberg Director May 11, 1999
____________________________________
Lawrence J. Schoenberg
</TABLE>
II-4
<PAGE>
EXHIBIT 5.1
May 11, 1999
SunGard Data Systems Inc.
1285 Drummers Lane
Wayne, PA 19087
Gentlemen:
I am Vice President and General Counsel of SunGard Data Systems Inc.
("Company"). This opinion is being furnished in connection with a Registration
Statement on Form S-4 ("Registration Statement") to be filed by the Company
with the Securities Exchange Commission covering the offer and sale of up to
shares of the Company's common stock, par value $.01 per share ("Common Stock")
to be issued in connection with consummation of the arrangement and the other
transactions contemplated by the Agreement dated March 9, 1999 between the
Company and Oshap Technologies, Ltd. This opinion is furnished pursuant to the
requirement of item 601(b)(5) of Regulation S-K. Defined terms as used herein
shall have the meanings attributed to such terms in the Registration Statement
unless otherwise stated herein.
In rendering this opinion, we have examined the following documents: (i) the
Company's Certificate of Incorporation and By-laws, as amended and restated
since the inception of the Company, (ii) minutes of the meetings of the Board
of Directors (iii) the Registration Statement and (iv) such other documents,
legal opinions and precedents, corporate and other records of the Company, and
certificates of public officials and officers of the Company that we have
deemed necessary or appropriate to provide a basis for the below opinion. We
have assumed and relied, as to questions of fact and mixed questions of law and
fact, on the truth, completeness, authenticity and due authorization of all
documents and records examined and the genuineness of all signatures. This
opinion is limited to Delaware General Corporation Law.
Based upon and subject to the foregoing, in our opinion, the shares of Common
Stock of the Company which are being offered and sold by the Company pursuant
to the Registration Statement, when sold in the manner and for the
consideration contemplated by the Registration Statement, will be legally
issued, fully paid and non-assessable.
We consent to the filing of this opinion as an Exhibit to the Registration
Statement.
Sincerely,
/s/ Lawrence A. Gross
- ------------------
Lawrence A. Gross
<PAGE>
Exhibit 8.1
[LETTERHEAD OF BLANK ROME COMISKY & MCCAULEY LLP]
May 12, 1999
SunGard Data Systems Inc.
1285 Drummers Lane, Ste. 300
Wayne, PA 19087-1586
RE: ACQUISITION OF OSHAP TECHNOLOGIES, LTD
---------------------------------------
by SunGard Data Systems, Inc.
-----------------------------
Gentlemen:
You have requested our opinion concerning certain Federal income tax
consequences of the exchange of the outstanding Ordinary Shares of Oshap
Technologies Ltd. ("Oshap") an entity incorporated under the laws of the State
of Israel, for Common Stock of SunGard Data Systems Inc., a Delaware business
corporation ("SunGard"). The terms of the exchange are described in the Proxy
Statement/Prospectus contained in the Registration Statement From S-4 of SunGard
dated May 12, 1999 (the "Prospectus"). Our opinion is based upon our
understanding of the facts of and incident to the transaction, as are set forth
in the Prospectus, and upon the condition that those facts are true, correct and
complete, and will be true, correct, and complete as of the Closing Date.
Further, our opinion is issued in reliance upon the representation letters of
SunGard and Oshap delivered to us certifying to the truth, correctness and
completeness of the facts set forth in those representation letters and of the
facts set forth in the Prospectus, including the financial statements and
exhibits that are a part thereof. Those exhibits include the Agreement dated
March 9, 1999 by and between SunGard and Oshap (the "Agreement"). All
capitalized terms herein, unless otherwise specified, have the meanings assigned
thereto in the Agreement. The delivery of this opinion, dated as of the
Effective Date, is a condition to the Arrangement pursuant to Section 8.2 of
the Agreement.
In connection with our opinion, we have examined and are familiar with
originals or copies, certified or otherwise identified to our satisfaction, of
the
<PAGE>
SunGard Data Systems Inc.
May 12, 1999
Page 2
Agreement, the Prospectus and those other documents we have deemed necessary
or appropriate as a basis for the opinions set forth below. In our examination
we have assumed the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as certified or photostatic copies and the
authenticity of the originals of those latter documents. As to any facts
material to this opinion that we did not independently establish or verify, we
have relied upon statements and representations of officers and other
representatives of SunGard, Oshap and others.
In rendering our opinion, we have considered the applicable provisions of
the Internal Revenue Code of 1986 as amended (the "Code"),/1/ Treasury
Regulations and the pertinent judicial authorities and interpretive rulings of
the Internal Revenue Service (the "Service").
Based solely upon the foregoing, we are of the opinion that for U.S.
federal income tax purposes the Arrangement will be treated as a reorganization
within the meaning of Section 368(a) of the Code and that accordingly:
(1) No gain or loss will be recognized by SunGard or Oshap as a result
of the Arrangement; and
(2) No gain or loss will be recognized by the shareholders of Oshap
solely as a result of the receipt of SunGard Shares at the
Effective Time in exchange for their Oshap Ordinary Shares pursuant
to the Arrangement.
This opinion expresses our views only as to the specific issues addressed
above. No opinion is expressed concerning the Federal income tax treatment of
the transaction under any provision of the Code not specifically referenced
herein. No opinion is expressed with respect to foreign, state and local taxes,
foreign, Federal and state securities law, or any other foreign, Federal, state
or local law not expressly referenced herein.
- --------------
(1) Unless otherwise indicated, all section references are to sections of the
Code.
<PAGE>
SunGard Data Systems Inc.
May 12, 1999
Page 3
Our opinion sets forth our legal judgement, and is not binding on the
Service or any other person. Therefore, there can be no assurance that the
conclusions set forth herein would be sustained by a court if challenged.
Further, the opinion set forth represents our conclusions based upon the
documents reviewed by us and the facts presented to us. Any material amendments
to those documents or changes in any significant fact could affect the opinion
expressed herein.
This opinion is based upon the Federal income tax laws as of this date. No
assurance can be provided as to future changes in, or administrative or judicial
interpretations of, these laws, any of which could be retroactive.
This opinion is being delivered in connection with the filing of the
Prospectus. It is intended solely for the benefit of SunGard and may not be
relied upon or utilized for any other purposes or by any other person and may
not be made available to any other person without our prior written consent,
except that we consent to the filing of this opinion as Exhibit 8.1 of the
Prospectus.
Very truly yours,
BLANK ROME COMISKY & McCAULEY LLP
<PAGE>
Exhibit 8.2
[LETTERHEAD OF SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP]
919 THIRD AVENUE
NEW YORK 10022-3897
---
(212) 735-3000
Fax: (212) 735-2000
http://www.skadden.com
May 12, 1999
Oshap Technologies Ltd.
Delta House, 16 Hagalim Avenue
Herzliya 46733,
Israel
Ladies and Gentlemen:
We have acted as tax counsel to Oshap Technologies Ltd. ("Oshap"), an
Israeli corporation, in connection with the contemplated transfer of its stock
to SunGard Data Systems Inc. ("SunGard"), a Delaware corporation (the
"Arrangement"), pursuant to the Agreement dated as of March 9, 1999 by and
between SunGard and Oshap (the "Agreement"). At your request, in connection with
the Registration Statement on Form S-4 (the "Registration Statement") filed on
May 12, 1999 with the Securities and Exchange Commission under the Securities
Act of 1933, as amended (the "Securities Act") and in accordance with the
requirements of Item 601(b)(8) of Regulation S-K under the Securities Act, we
are rendering our opinion concerning certain United States federal income tax
consequences of the Arrangement.(1) The delivery of this opinion, dated as of
the Effective Date, is a condition to the Arrangement pursuant to Section 8.3(d)
of the Agreement.
In rendering our opinion, we have examined and relied upon the accuracy
and completeness of the facts, information, covenants and representations
- -------------
(1) Unless otherwise indicated, all defined terms used herein shall have the
meanings assigned to them in the Registration Statement.
<PAGE>
Oshap Technologies Ltd.
May 12, 1999
Page 2
contained in originals or copies, certified or otherwise identified to our
satisfaction, of the Agreement, the Registration Statement, and such other
documents as we have deemed necessary or appropriate as a basis for the opinion
set forth below. In addition, we have relied upon certain statements,
representations and agreements made by Oshap, SunGard and others, including
representations set forth in letters dated the date hereof from officers of
Oshap and SunGard (the "Representation Letters"). Our opinion is conditioned on,
among other things, the initial and continuing accuracy of the facts,
information, covenants and representations set forth in the documents referred
to above and the statements, representations and agreements made by Oshap and
SunGard, including those set forth in the Representation Letters. Furthermore,
we have assumed that the Representation Letters will be complete and accurate,
and will be re-executed by appropriate officers of Oshap and SunGard as of the
Effective Date.
In our examination we have assumed the genuineness of all signatures,
the legal capacity of natural persons, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified or photostatic copies and the
authenticity of the originals of such documents. We also have assumed that the
transactions related to the Arrangement or contemplated by the Agreement will be
consummated in accordance with the Agreement and as described in the
Registration Statement, and that none of the terms and conditions contained
therein will have been waived or modified in any respect.
In rendering our opinion, we have considered applicable provisions of
the Internal Revenue Code of 1986, as amended (the "Code"), Treasury Regulations
promulgated thereunder (the "Regulations"), pertinent judicial authorities,
rulings of the Internal Revenue Service and such other authorities as we have
considered relevant. It should be noted that such laws, Code, Regulations,
judicial decisions and administrative interpretations are subject to change at
any time and, in some circumstances, with retroactive effect. A change in any of
the authorities upon which our opinion is based could affect our conclusions
herein.
<PAGE>
Oshap Technologies Ltd.
May 12, 1999
Page 3
Opinion
- -------
Based solely upon the foregoing, we are of the opinion that for Unites
States federal income tax purposes the Arrangement will be treated as a
reorganization within the meaning of Section 368(a) of the Code and that
accordingly:
(1) No gain or loss will be recognized by SunGard or Oshap as a result
of the Arrangement; and
(2) No gain or loss will be recognized by the shareholders of Oshap
solely as a result of the receipt of SunGard Shares at the
Effective Time in exchange for their Oshap Ordinary Shares pursuant
to the Arrangement.
Except as set forth above, we express no opinion to any party as to
the tax consequences, whether federal, state, local or foreign, of the
Arrangement or of any transactions related thereto or contemplated by the
Agreement or the Registration Statement. We disclaim any undertaking to advise
you of any subsequent changes of the facts stated or assumed herein or any
subsequent changes in applicable law. This opinion is for your benefit and is
not to be used, circulated, quoted or otherwise referred to for any purpose,
except that we consent to the filing of this opinion as Exhibit 8.2 of the
Registration Statement. In giving such consent, we do not thereby admit that we
are in the category of persons whose consent is required under Section 7 of the
Securities Act.
Very truly yours,
Skadden, Arps, Slate, Meagher & Flom LLP
<PAGE>
EXHIBIT 8.3
[LETTERHEAD OF GOLDFARB, LEVY, ERAN & CO.]
May 12, 1999
SunGard Data Systems Inc.
1285 Drummers Lane
Wayne, Pennsylvania 19087
Ladies and Gentlemen:
You have requested our opinion concerning certain matters of Israeli tax
law in connection with the Agreement dated as of March 9, 1999 (the
"Agreement"), between SunGard Data Systems Inc. ("SunGard") and Oshap
Technologies Ltd., a corporation organized under the laws of the State of Israel
("Oshap"), and the Arrangement to be entered into between Oshap and its
shareholders (the "Arrangement") pursuant to the Agreement, and related
documents and agreements referenced in the Agreement (together with an
Agreement, the "Merger Agreements").
Except as otherwise provided, capitalized terms referred to herein have the
meanings set forth in the Merger Agreements.
We have acted as special Israeli counsel to SunGard in connection with the
Arrangement. As such, and for the purpose of rendering this opinion, we have
examined and are relying upon (without any independent investigation or review
thereof) the truth and accuracy, at all relevant times, of the statements,
covenants, representations and warranties contained in the following documents
(including all schedules and exhibits thereto):
1. The Agreement;
2. Representations made by Oshap, including those representations contained in
that certain Oshap Tax Certificate dated May 12, 1999;
3. The Proxy Statement prepared in connection with the Arrangement;
4. The Registration Statement on Form S-4 in connection with the Arrangement
(the "Registration Statement"); and
<PAGE>
2
5. Such other instruments and documents related to the formation, organization
and operation of Oshap and the transactions contemplated thereby as we have
deemed necessary or appropriate.
In connection with rendering this opinion, we have assumed or obtained
representations (and are relying thereon, without any independent investigation
or review thereof) that:
1. Original documents (including signatures) are authentic, documents submitted
to us as copies conform to the original documents, and there has been (or
will be by the Effective time) due execution and delivery of all documents
where due execution and delivery are prerequisites to the effectiveness
thereof;
2. Any representation or statement referred to above made "to the knowledge of"
or otherwise similarly qualified is correct without such qualification;
3. The Arrangement will be consummated pursuant to the Agreement in accordance
with the laws of the State of Israel;
4. Oshap qualifies and as of the effective date of the Arrangement will qualify
as an "industrial holding company" as such term is defined in the Income Tax
Order (Exemption from Capital Gains on Sale of Shares), 1981, of the State
of Israel; and
5. The Ordinary Shares of Oshap have been listed for trading on the Nasdaq
National Market since 1986, and will remain so listed through the Effective
Date.
We have reviewed the section of the Registration Statement entitled
"Israeli Tax Consequences." Based on our examination of the foregoing items and
subject to the assumptions, exceptions, limitations and qualifications set forth
herein, it is our opinion, as special Israeli counsel for SunGard, that the
description of the tax consequences of the Arrangement under Israeli law as set
forth in the said section of the prospectus is correct in all material respects.
In addition to the assumptions set forth above, this opinion is subject to
the exceptions, limitations and qualifications set forth below:
1. We are members of the Israel Bar and we express no opinion as to any matter
relating to the laws of any jurisdiction other than the laws of Israel. This
opinion represents and is based upon our judgment regarding the application
of the laws of the State of Israel specifically referred to in the
Registration Statement and which in our experience are normally applicable
to the type of transactions contemplated by the Arrangement and relevant
judicial decisions. This opinion is provided to you as a legal opinion only
and not as a guaranty or warranty of the matters addressed therein. This
opinion speaks only as of its date. It is based upon currently existing
statutes, rules, regulations and judicial decisions, and we disclaim any
obligation to advise you of any changes in any of these sources of law or
subsequent legal or factual developments which might affect any matters or
the opinion set forth herein, even though the change may affect the legal
analysis, a legal conclusion or an informational
<PAGE>
3
confirmation in this opinion. Our opinion is not binding upon the Income Tax
Authority of the State of Israel or the courts, and the Income Tax Authority
is not precluded from asserting a contrary position. Furthermore, no
assurance can be given that future legislative, judicial or administrative
charges, on either a prospective or a retroactive basis, would not adversely
affect the accuracy of the opinion expressed herein.
2. Our opinion concerning certain Israeli tax consequences of the Arrangement
is limited to the specific Israeli tax consequences presented above. No
opinion is expressed as to any transaction other than the Arrangement,
including any transaction undertaken in connection with the Arrangement or
any tax consequences of holding or disposing SunGard common stock. In
addition, this opinion does not address any other federal, estate, gift,
state, local or foreign tax consequences that may result from the
Arrangement. In particular, we express no opinion regarding:
(a) the tax consequences for any person whose individual tax situation is
different than that of shareholders who purchased their ordinary shares
in the public market only in the initial public offering of Oshap's
shares, or thereafter;
(b) the tax consequences of the Arrangement on persons who are "dealers" in
securities under Israeli law or otherwise deemed to have received
ordinary income under Israeli law in connection with the Arrangement;
(c) the tax consequences of the Arrangement on persons who held ordinary
shares of Oshap prior to the initial public offering of Oshap;
(d) the tax consequence for holders of options to purchase ordinary shares
of Oshap; and
(e) The tax consequences for entities subject to the Inflationary
Adjustments Law - 1984.
3. No opinion is expressed if the Arrangement is not consummated in accordance
with the terms of the Agreement and without waiver or breach of any material
provision thereof or if all of the representations, warranties, statements
and assumptions upon which we relied are not true and accurate at all
relevant times. In the event any one of the statements, representations,
warranties or assumptions upon which we have relied to issue this opinion is
incorrect, our opinion might be adversely affected and may not be relied
upon.
4. No ruling has been or will be requested from the Income Tax Authority of the
State of Israel concerning the Israeli income tax consequences of the
Arrangement on shareholders who purchased their Ordinary Shares of Oshap
since the date of the initial public offering of Oshap. In reviewing this
opinion, you should be aware that the opinion set forth above represents our
conclusions regarding the general application of existing Israeli income tax
law to the instant transaction. We note that the holders of Oshap shares
were put on notice in the section of the Registration Statement entitled
"Israeli Tax Consequences" to consult their own tax advisors as to
<PAGE>
4
the Israeli tax consequences of the Arrangement applicable to them. If the
facts vary from those relied upon (including if any representation,
covenant, warranty or assumption upon which we have relied is inaccurate,
incomplete, breached or ineffective), our opinion contained herein could be
inapplicable. You should be aware that an opinion of counsel represents only
counsel's best legal judgment, and has no binding effect or official
statutes of any kind, and that no assurance can be given that contrary
positions will not be taken by the Income Tax Authority or that a court
considering the issues would not hold otherwise.
5. We understand that counsel for Oshap, Meitar, Liquornik, Geva & Co., has
rendered a tax opinion substantially similar to this opinion.
6. This opinion is being delivered solely for your benefit in connection with
the filing of the prospectus. This opinion may not be relied upon or
utilized by any other person or entity, and may not be made available to any
other person or entity or quoted or otherwise referred to for any other
purpose, without our prior written consent. We do, however, consent to the
use of our name in the Registration Statement wherever it appears.
7. We hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement. In giving such consent, we do not thereby admit that
we come within the category of persons whose consent is required under
Section 7 of the Securities Act of 1933, as amended, or the Rules and
Regulations of the Securities and Exchange Commission thereunder.
Very truly yours,
/s/ Goldfarb, Levy, Eran & Co.
Goldfarb, Levy, Eran & Co.
<PAGE>
EXHIBIT 23.1
[LETTERHEAD OF PRICEWATERHOUSECOOPERS LLP]
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration statement
on Form S-4 of our report dated February 11, 1999, on our audits of the
consolidated financial statements of SunGard Data Systems Inc. as of
December 31, 1998 and 1997
and for each of the three years in the period ended December 31, 1998, which
report is included in Sungard Data Systems Inc.'s Annual Report on Form 10-K.
We also consent to the reference to our Firm under the heading "Experts" in the
registration statement.
/s/ PricewaterhouseCoopers LLP
- -------------------------------
PricewaterhouseCoopers LLP
2400 Eleven Penn Center
Philadelphia, Pennsylvania
May 12, 1999
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
As independent public accountants, we consent to the incorporation by reference
in this registration statement on Form S-4 of SunGard Data Systems Inc. of our
report dated March 8, 1999 relating to the consolidated balance sheets of Oshap
Technologies Ltd. and its subsidiaries as of December 31, 1998 and 1997 and the
related consolidated statements of operations, changes in shareholders' equity
and cash flows for each of the years in the three-year period ended December 31,
1998 incorporated in this document and the registration statement by reference
to the Report of Foreign Issuer on Form 6-K of Oshap dated April 14, 1999.
Brightman Almagor & Co.
Certified Public Accountants (Israel)
A member of Deloitte Touche Tohmatsu
Ramat-Gan, Israel
May 12, 1999
- -----------------
<PAGE>
EXHIBIT 99.1
[LETTERHEAD OF SALOMON SMITH BARNEY INC.]
The Board of Directors
Oshap Technologies Ltd.
16 Hagalim Avenue
Herzliya 46733 Israel
Members of the Board:
We hereby consent to the inclusion of our opinion letter dated March 9, 1999 as
Appendix B to, and to the reference thereto under the caption "The Arrangement
and Related Transactions -- Opinions of Oshap's Financial Advisors -- Opinion of
Salomon Smith Barney" in, the Proxy Statement/Prospectus of Oshap Technologies
Ltd. ("Oshap") and SunGard Data Systems Inc. ("SunGard") relating to the
proposed arrangement between Oshap and SunGard, which Proxy Statement/Prospectus
is part of the Registration Statement on Form S-4 of SunGard. By giving such
consent, we do not thereby admit that we are experts with respect to any part of
such Registration Statement within the meaning of the term "expert" as used in,
or that we come within the category of persons whose consent is required under,
the Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission promulgated thereunder.
By /s/ SALOMON SMITH BARNEY INC.
-------------------------------
SALOMON SMITH BARNEY INC.
New York, New York
May 12, 1999
<PAGE>
EXHIBIT 99.2
[LETTERHEAD OF BANCBOSTON ROBERTSON STEPHENS INC.]
CONSENT OF BANCBOSTON ROBERTSON STEPHENS INC.
We hereby consent to the inclusion of our opinion dated March 9, 1999 to the
Board of Directors of Oshap Technologies Ltd. ("Oshap") as Appendix C to, and to
the reference thereto under the caption "The Arrangement and Related
Transactions -- Opinions of Oshap's Financial Advisors -- Opinion of Robertson
Stephens" in, the proxy statement/prospectus (the "Proxy Statement/Prospectus")
of Oshap and SunGard Data Systems Inc. ("SunGard") relating to the arrangement
between Oshap and SunGard. In giving the foregoing consent, we do not admit that
we come within the category of persons whose consent is required under the
Securities Exchange Act of 1934, as amended, or the rules and regulations
promulgated thereunder, nor do we admit that we are experts with respect to any
part of the Proxy Statement/Prospectus within the meaning of the term "experts"
as used in the Securities Act of 1933, as amended, or the rules and regulations
promulgated thereunder.
May 12, 1999 BANCBOSTON ROBERTSON STEPHENS INC.
/s/ BANCBOSTON ROBERTSON STEPHENS INC.
--------------------------------------
<PAGE>
EXHIBIT 99.3
VOTING AGREEMENT
PARTIES: The Shareholder Listed on the Signature Page ("Shareholder")
SUNGARD DATA SYSTEMS INC.
a Delaware corporation ("S Company")
1285 Drummers Lane
Wayne, Pennsylvania 19807
DATE: March 9, 1999
BACKGROUND: Shareholder is a shareholder of Oshap Technologies Ltd., a
corporation formed under the laws of the State of Israel (the "Company"). S
Company and the Company have entered into an Agreement dated as of the date
hereof (the "Agreement"), which has attached thereto the related Plan of
Arrangement ("Plan"). The Agreement provides (subject to the conditions set
forth therein) for the exchange of S Company Shares for Company Ordinary Shares
as set forth in the Agreement (the "Arrangement"). The Agreement contemplates
that, upon consummation of the Arrangement, (i) holders of Company Ordinary
Shares will receive S Company Shares in exchange for their Company Ordinary
Shares and Company Options and (ii) the Company will become a wholly owned
subsidiary of S Company. It is accordingly contemplated that Shareholder will
receive S Company Shares in the Arrangement. As a condition to the willingness
of S Company and Company to enter into the Agreement, S Company has required
that the Shareholder enter into, and in order to induce S Company to enter into
the Agreement the Shareholder has agreed to enter into, this Voting Agreement
(the "Voting Agreement").
INTENDING TO BE LEGALLY BOUND, in consideration of the foregoing and
the mutual agreements contained herein and in the Agreement, the parties hereto
agree as follows:
1. Certain Definitions
(a) All capitalized terms used but not otherwise defined in
this Voting Agreement have the meanings ascribed to such terms in the Agreement.
(b) "Expiration Date" shall mean the earlier of (i) the date
upon which the Agreement is validly terminated pursuant to Section 9.1 thereof,
and (ii) the Effective Date.
(c) A Shareholder shall be deemed to "Own" or to have acquired
"Ownership" of a security if the Shareholder: (i) is a record owner of such
security; or (ii) is a "beneficial owner" (within the meaning of Rule 13d-3
under the Exchange Act) of such security unless such beneficial ownership is due
solely to an agreement between the Shareholder and another holder of Company
Ordinary Shares that grants to Shareholder voting power with respect to such
security on matters other than the Arrangement.
<PAGE>
(d) The "Record Date" for a particular matter shall be the date
fixed for persons entitled: (i) to receive notice of, and to vote at, a meeting
of the shareholders of the Company called for the purpose of voting on such
matter; or (ii) to take action by written consent of the shareholders of the
Company with respect to such matter.
(e) "Subject Securities" shall mean: (i) all securities of the
Company (including the Company Ordinary Shares and all options, warrants and
other rights to acquire Company Ordinary Shares) Owned by the Shareholder
(individually or jointly) as of the date of this Voting Agreement; and (ii) all
additional securities of the Company (including all additional Company Ordinary
Shares and all additional options, warrants and other rights to acquire Company
Ordinary Shares) of which the Shareholder (individually or jointly) acquires
Ownership during the period from the date of this Voting Agreement through the
Expiration Date.
(f) A person shall be deemed to have effected a "Transfer" of a
security if such person directly or indirectly; (i) sells, pledges, encumbers,
grants an option with respect to, transfers or disposes of such security or any
interest in such security including, without limitation, transfers of such
security to the shareholders, partners or equity holders of such person as a
dividend or other distribution; or (ii) enters into an agreement or commitment
contemplating the possible sale of, pledge of, encumbrance of, grant of an
option with respect to, transfer of or disposition of such security or any
interest therein including, without limitation, an agreement or commitment
contemplating the possible transfer of such security to the shareholders,
partners, or equity holders of such person as a dividend or distribution.
2. Transfer of Subject Securities
(a) Transferee of Subject Securities to be Bound by this Voting
Agreement. The Shareholder agrees that, during the period from the date of this
Voting Agreement through the Expiration Date, Shareholder shall not cause or
permit any Transfer of any of the Subject Securities Owned by Shareholder to be
effected unless each person to which any of such Subject Securities, or any
interest in any of such Subject Securities, is or may be transferred shall have:
(a) executed a counterpart of this Voting Agreement and a proxy in the form
attached hereto as Exhibit A; and (b) agreed in writing to hold such Subject
Securities (or interest in such Subject Securities) subject to all of the terms
and provisions of this Voting Agreement.
(b) Transfer of Voting Rights. Shareholder agrees that, during
the period from the date of this Voting Agreement through the Expiration Date,
Shareholder shall ensure that: (a) none of the Subject Securities Owned by
Shareholder is deposited into a voting trust; and (b) no proxy is granted, and
no agreement or similar agreement is entered into, with respect to any of the
Subject Securities Owned by Shareholder.
3. Voting of Shares.
(a) Agreement. Shareholder covenants and agrees that, during
the period from the date of this Voting Agreement through the Expiration Date,
at the Company Shareholders Meetings and the Optionholders Meetings, however
called, and at every
-2-
<PAGE>
adjournment or postponement thereof, and in any written action by consent of the
shareholders of the Company, unless otherwise directed in writing by S Company,
Shareholder shall (i) appear, or cause the holder of record as of the Record
Date to appear at such meetings for the purpose of establishing a quorum, and
(ii) vote or cause to be voted all issued and outstanding Subject Securities,
including Company Ordinary Shares, that are Owned by Shareholder (individually
or jointly) as of the Record Date: in favor of the Arrangement, the execution
and delivery by the Company of the Agreement and the Plan and the adoption and
approval of the terms thereof and in favor of the other related transactions and
each of the actions contemplated by the Agreement and the Plan and any action by
the Company reasonably required in furtherance thereof.
(b) Proxy. Contemporaneously with the execution of this Voting
Agreement, Shareholder shall deliver to S Company a proxy in the form attached
hereto as Exhibit A, which shall be irrevocable to the fullest extent permitted
by law, with respect to the Subject Securities, including Company Ordinary
Shares, referred to herein and held of record by Shareholder (the "Proxy"). As
soon as practicable after the execution of this Voting Agreement, Shareholder
shall use its reasonable best efforts to cause to be delivered to S Company an
additional proxy (in the form attached hereto as Exhibit A) executed on behalf
of the record owner of any issued and outstanding Subject Securities, including
Company Ordinary Shares, that are owned beneficially (but are not owned of
record) by Shareholder.
4. No Solicitation.
(a) Shareholder covenants and agrees that, during the period
commencing on the date of this Voting Agreement and ending on the Expiration
Date, Shareholder shall not, directly or indirectly, and Shareholder shall
ensure that no officer, director, employee and investment banker, attorney or
other agent retained by or acting on behalf of Shareholder, shall: (i) solicit,
initiate or induce the making, submission or announcement of any Acquisition
Proposal; (ii) furnish any information regarding the Company to any person in
connection with or in response to an Acquisition Proposal or potential
Acquisition Proposal; or (iii) engage in discussions with any person with
respect to any Acquisition Proposal.
(b) Shareholder shall immediately cease any existing discussions
with any person that relate to any Acquisition Proposal.
(c) Notwithstanding the restrictions set forth in this Section 4,
if Shareholder is a director or officer of the Company, this Section 4 shall not
prevent Shareholder from taking any action that is consistent with the terms of
the Agreement.
5. Representations and Warranties of Shareholder. Shareholder represents
and warrants to S Company as follows:
(a) Authorization. Shareholder has the full right, power, authority
and capacity to execute and deliver this Voting Agreement and the Proxy and to
perform his, her or its obligations hereunder and thereunder. This Voting
Agreement and the Proxy have been duly executed and delivered by Shareholder and
constitute legal, valid and binding obligations of Shareholder, enforceable
against Shareholder in accordance with its terms.
-3-
<PAGE>
(b) No Conflicts, Required Filings and Consents.
(i) The execution and delivery of this Voting Agreement and
the Proxy by Shareholder do not, and the performance of this Voting Agreement
and the Proxy, by Shareholder will not: (A) conflict with or violate any law,
order, decree or judgment applicable to Shareholder or by which he, she, it or
they or any of his, her, its or their properties are bound or affected; or (B)
result in any breach of or constitute a default or breach (immediately or after
the giving of notice, passage of time, or both) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, or result in
the creation of any lien, security interest, charge or encumbrance on any of the
Subject Securities pursuant to, any contract to which Shareholder is a party or
by which Shareholder or any of his, her or its properties is bound or affected.
The undersigned hereby consents to other shareholders of the Company entering
into agreements similar to this Voting Agreement.
(ii) The execution and delivery of this Voting Agreement and
the Proxy by Shareholder do not, and the performance of this Voting Agreement
and the Proxy by Shareholder will not, require any consent, approval or waiver
of any person.
(c) Title to Subject Securities. As of the date hereof, Shareholder
Owns in the aggregate (including shares owned of record and shares owned
beneficially) the number of issued and outstanding Company Ordinary Shares set
forth below Shareholder's name on the signature page hereof, and the number of
options, warrants and other rights to acquire Company Ordinary Shares set forth
below Shareholder's name on the signature page hereof, and does not directly or
indirectly own, any Company Ordinary Shares, or any option, warrant or other
right to acquire any Company Ordinary Shares, other than the shares and options,
warrants and other rights set forth below such Shareholder's name on the
signature page hereof.
(d) Accuracy of Representations. The representations and warranties
of Shareholder contained in this Voting Agreement are accurate in all respects
as of the date of this Voting Agreement, will be accurate in all respects at all
times through the Expiration Date and will be accurate in all respects as of the
date of the consummation of the Arrangement as if made on that date.
6. Miscellaneous.
(a) Non-Survival of Representations, Warranties and Agreements. All
representations, warranties and agreements made by the Shareholder in this
Voting Agreement shall terminate upon the Expiration Date; provided, however,
nothing in this Section 6(a) shall relieve the Shareholder from liability after
the Expiration Date for any breach on or prior to the Expiration Date of any
representation, warranty, or agreement made by the Shareholder in this Voting
Agreement.
(b) Expenses. All costs and expenses incurred in connection with
the transactions contemplated by this Agreement shall be paid by the party
incurring such costs and expenses.
-4-
<PAGE>
(c) Notices. All notices, consents or other communications required
or permitted to be given under this Voting Agreement shall be in writing and
shall be deemed to have been duly given when delivered personally or two (2)
business days after being sent by a nationally recognized overnight delivery
service, postage or delivery charges prepaid or five (5) business days after
being sent by registered or certified airmail, return receipt requested, postage
charges prepaid. Notices also may be given by prepaid facsimile and shall be
effective on the date transmitted if confirmed within 48 hours thereafter by a
signed original sent in one of the manners provided in the preceding sentence.
Notices to S Company shall be sent to its address stated on page one of this
Voting Agreement to the attention of S Company's General Counsel, with a copy
sent simultaneously to the same address to the attention of S Company's Chief
Financial Officer and to Blank Rome Comisky & McCauley LLP, One Logan Square,
Philadelphia, PA 19103, Facsimile No. 215-569-5628, Attention: Arthur H. Miller.
Notices to the Shareholder shall be sent to its address stated on the signature
page of this Voting Agreement, with a copy sent simultaneously to Meitar,
Liquornik, Geva & Co., 16 Abba Hillel Silver Rd., Ramat-Gan 52506, Israel,
Facsimile No.: 972-3-610-3111, Attention: Dan Shamgar except that, in the case
of the STAR Funds, to: Goldfarb, Levy, Eran & Co., Eliahu House, 2 Ibn Gvirol
Street, Tel Aviv 64077, Israel, Facsimile No.: 972-3-695-4344, Attention: Oded
Eran. Any party may change its address for notice and the address to which
copies must be sent by giving notice of the new addresses to the other parties
in accordance with this Section 6(c), provided that any such change of address
notice shall not be effective unless and until received.
(d) Entire Understanding. This Voting Agreement and the other
agreements referred to herein, state the entire understanding among the parties
with respect to the subject matter hereof, and supersede all prior oral and
written communications and agreements, and all contemporaneous oral
communications and agreements, with respect to the subject matter hereof. This
Voting Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.
(e) Waivers. Except as otherwise expressly provided herein, no waiver
with respect to this Voting Agreement shall be enforceable unless in writing and
signed by the party against whom enforcement is sought. Except as otherwise
expressly provided herein, no failure to exercise, delay in exercising, or
single or partial exercise of any right, power or remedy by any party, and no
course of dealing between or among any of the parties, shall constitute a waiver
of or shall preclude any other for further exercise of, any right, power or
remedy.
(f) Severability. If any provision of this Voting Agreement or any
part of any such provision is held under any circumstances to be invalid or
unenforceable in any jurisdiction, then (i) such provision or part thereof
shall, with respect to such circumstances and in such jurisdiction, be deemed
amended to conform to applicable laws so as to be valid and enforceable to the
fullest possible extent, (ii) the invalidity or unenforceability of such
provision or part thereof under such circumstances and in such jurisdiction
shall not affect the validity or enforceability of such provision or part
thereof under any other circumstances or in any other jurisdiction, and (iii)
the invalidity or unenforceability of such provision or part thereof shall not
affect the validity or enforceability of the remainder of such provision or the
validity or enforceability of any other provision of this Voting Agreement. Each
provision of this
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<PAGE>
Voting Agreement is separable from every other provision of this Voting
Agreement, and each part of each provision of this Voting Agreement is separable
from every other part of such provision.
(g) Counterparts. This Voting Agreement may be executed in any number
of counterparts, each of which when so executed and delivered shall be an
original hereof, and it shall not be necessary in making proof of this Voting
Agreement to produce or account for more than one counterpart hereof.
(h) Section Headings. Section and subsection headings in this Voting
Agreement are for convenience of reference only, do not constitute a part of
this Voting Agreement, and shall not affect its interpretation.
(i) References. All words used in this Voting Agreement shall be
construed to be of such number and gender as the context requires or permits.
(j) CONTROLLING LAW. EXCEPT FOR MATTERS GOVERNING THE GRANT OF A
PROXY WHICH SHALL BE GOVERNED BY THE LAWS OF THE STATE OF ISRAEL, THIS VOTING
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.
(k) Jurisdiction and Process. In any action between or among any of
the parties, whether arising out of this Voting Agreement or otherwise, (i) each
of the parties irrevocably consents to the exclusive jurisdiction and venue of
the federal and state courts located in the Commonwealth of Pennsylvania, (ii)
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 Commonwealth of Pennsylvania, (iii) each of the parties
irrevocably waives the right to trial by jury, (iv) each of the parties
irrevocably consents to service of process by first class certified airmail,
return receipt requested, postage prepaid, to the address at which such party is
to receive notice in accordance with Section 6(c), and (v) the prevailing
parties shall be entitled to recover their reasonable attorneys' fees and court
costs from the other parties.
(l) Non-exclusivity. The rights and remedies of S Company hereunder
are not exclusive of or limited by any other rights or remedies which S Company
may have, whether at law, in equity, by contract or otherwise, all of which
shall be cumulative (and not alternative).
(m) Bankruptcy Qualification. Each representation or warranty made in
or pursuant to this Voting Agreement regarding the enforceability of any
contract shall be qualified to the extent that such enforceability may be
effected by bankruptcy, insolvency and other similar laws or equitable
principles (but not those concerning fraudulent conveyance) generally affecting
creditors' rights and remedies.
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<PAGE>
(n) Construction. 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 Voting Agreement. As used in this Voting 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".
(o) Assignment; Binding Effect. Except as provided herein, neither
this Voting Agreement nor any of the rights, interests or obligations hereunder
shall be assigned by either of the parties hereto (whether by operation of law
or otherwise) without the prior written consent of the other party, except that
S Company may assign all or any of its rights hereunder to any wholly-owned
subsidiary of S Company (provided that such subsidiary remains a wholly-owned
subsidiary of S Company). Subject to the preceding sentence, this Voting
Agreement shall be binding upon Shareholder and his, her or its heirs,
successors and assigns, and shall inure to the benefit of S Company and its
successors and assigns. Without limiting any of the restrictions set forth in
Section 2 or elsewhere in this Voting Agreement, this Voting Agreement shall be
binding upon any person to whom any Subject Securities are transferred.
Notwithstanding anything contained in this Voting Agreement to the contrary,
nothing in this Voting Agreement, expressed or implied, is intended to confer on
any person other than the parties hereto or their respective heirs, successors
and assigns any rights, remedies, obligations or liabilities under or by reason
of this Voting Agreement.
(p) Specific Performance. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Voting
Agreement was not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that S Company shall be entitled to
an injunction or injunctions to prevent breaches of this Voting Agreement and to
enforce specifically the terms and provisions hereof in any court of proper
jurisdiction, this being in addition to any other remedy to which S Company is
entitled at law or in equity.
(q) Other Agreements and Independence of Obligations. Nothing in this
Voting Agreement shall limit any of the rights or remedies of S Company or any
of the obligations of Shareholder under any Affiliate Agreement between S
Company and Shareholder or under any other agreement. The covenants and
obligations of the Shareholder set forth in this Voting Agreement shall be
construed as independent of any other agreement or arrangement between
Shareholder, on the one hand, and the Company or S Company, on the other. The
existence of any claim or cause of action by Shareholder against the S Company
or the Company shall not constitute a defense to the enforcement of any of such
covenants or obligations against Shareholder.
(r) Attorneys' Fees. If any legal action or other legal proceeding
relating to this Voting Agreement or the enforcement of any provision of this
Agreement is brought against Shareholder, the prevailing party shall be entitled
to recover reasonable attorneys' fees, costs and disbursements (in additional to
any other relief to which the prevailing party may be entitled).
[BALANCE OF PAGE INTENTIONALLY BLANK]
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<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this Voting Agreement to
be executed as of the date first stated above.
SUNGARD DATA SYSTEMS INC.
By:
-------------------------------------
Name:
Title:
SHAREHOLDER:
----------------------------------------
Name:
Address:
----------------------------
----------------------------
Facsimile:
----------------------------
Number of issued and outstanding Company
Ordinary Shares owned of record as of
the date of this Voting Agreement: _____
Number of additional issued and
outstanding Company Ordinary Shares
owned beneficially (but not of record)
as of the date of this Voting Agreement:
_________
Number of options, warrants and other
rights to acquire Company Ordinary
Shares owned of record as of the date of
this Voting Agreement: ________
Number of additional options, warrants
and other rights to acquire Company
Ordinary Shares owned beneficially (but
not of record) as of the date of this
Voting Agreement: __________
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<PAGE>
EXHIBIT A
FORM OF IRREVOCABLE PROXY
IRREVOCABLE PROXY
The undersigned Shareholder of O Company, a corporation formed under
the laws of the State of Israel (the "Company"), hereby irrevocably (to the
fullest extent permitted by law) appoints and constitutes Lawrence A. Gross,
Michael J. Ruane, and SunGard Data Systems Inc., a Delaware corporation ("S
Company"), and each of them, the attorneys and proxies of the undersigned with
full power of substitution and resubstitution, to the full extent of the
undersigned's rights with respect to (i) the issued and outstanding Subject
Securities, including Company Ordinary Shares, owned of record by the
undersigned as of the date of this proxy, which shares are specified on the
final page of this proxy and (ii) any and all other Subject Securities,
including Company Ordinary Shares, which the undersigned (individually or
jointly) may acquire of record after the date hereof. Upon the execution hereof,
all prior proxies given by the undersigned with respect to any of the Subject
Securities, including Company Ordinary Shares, are hereby revoked, and no
subsequent proxies will be given with respect to any of the Subject Securities,
including Company Ordinary Shares.
This proxy is irrevocable, is coupled with an interest and is granted
in connection with the Voting Agreement, dated as of the date hereof, between S
Company and the undersigned (the "Voting Agreement"), and is granted in
consideration of S Company entering into the Agreement, dated as of the date
hereof, among S Company and the Company (the "Agreement"), which has attached
thereto the related Plan of Arrangement. Capitalized terms used but not
otherwise defined in this proxy have the meanings ascribed to such terms in the
Agreement or the Voting Agreement, as the case may be.
The attorneys and proxies named above will be empowered, and may
exercise this proxy, at any time during the period from the date hereof through
the Expiration Date at the Company Shareholders Meetings or Optionholders
Meetings, however called, and at every adjournment or postponement thereof, or
in any written action by consent of shareholders of the Company, to (i) appear,
or cause the holder of record as of the Record Date to appear, at the Company
Shareholders Meetings or Optionholders Meetings, or any adjournments or
postponements thereof, for the purpose of establishing a quorum, and (ii) vote
or cause to be voted the shares in favor of the Arrangement and the other
related transactions, the execution and delivery by the Company of the Agreement
and the Plan and the adoption and approval of the terms thereof and in favor of
the transactions and each of the other actions contemplated by the Agreement and
the Plan and any action by the Company reasonably required in furtherance
thereof.
This Proxy does not relate to, and the undersigned Shareholder remains
entitled to vote the Subject Securities, including Company Ordinary Shares on,
all other matters.
This proxy shall be binding upon the heirs, successors and assigns of
the undersigned (including any transferee of any of the Subject Securities,
including Company Ordinary Shares), except as provided in the Voting Agreement.
A-1
<PAGE>
Any term or provision of this proxy which is invalid or unenforceable
in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent
of such invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this proxy or affecting the
validity or enforceability of any of the terms or provisions of this proxy in
any other jurisdiction. If any provision of this proxy is so broad as to be
unenforceable, the provision shall be interpreted to be only so broad as is
enforceable.
This proxy shall terminate upon the Expiration Date.
Dated: ________________, 1999
SHAREHOLDER:
----------------------------------------
Name:
Number of Company Ordinary Shares owned
of record as of the date of this proxy:
------------
Number of options, warrants and other
rights to acquire Company Ordinary
Shares owned of record as of the date of
this Voting Agreement:
------------
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<PAGE>
EXHIBIT 99.4
AFFILIATE AGREEMENT
PARTIES: THE PERSON LISTED ON THE SIGNATURE PAGE AS THE SHAREHOLDER
("Shareholder")
SUNGARD DATA SYSTEMS INC.
a Delaware corporation ("S Company")
1285 Drummers Lane
Wayne, Pennsylvania 19087
OSHAP TECHNOLOGIES LTD.
an Israeli corporation (the "Company")
16 Hagalim Avenue
Herzeliya 46733, Israel
DATE: March 9, 1999
BACKGROUND: Shareholder is a shareholder and/or optionholder of, and/or is an
officer and/or director of, the Company. S Company and the Company have entered
into an Agreement dated as of the date hereof (the "Agreement"), which has
attached thereto the related Plan of Arrangement ("Plan"). The Agreement
provides for the exchange of S Company Shares for Company Ordinary Shares and
Company Options as set forth in the Agreement (the "Arrangement"). The Agreement
contemplates that, upon consummation of the Arrangement, (i) holders of Company
Ordinary Shares will receive S Company Shares in exchange for their Company
Ordinary Shares and Company Options, (ii) certain holders of shares, or options
to acquire shares, of capital stock of MINT Software Technologies Ltd. ("M
Company Shares") and/or Decalog N.V. ("D Company Shares") will receive S Company
Shares in exchange for such shares of capital stock or options, and (iii) the
Company will become a wholly owned subsidiary of S Company. It is accordingly
contemplated that Shareholder will receive S Company Shares in the Arrangement.
Shareholder understands that the S Company Shares being issued in the
Arrangement or otherwise will be issued pursuant to a registration statement on
Form S-4, and that Shareholder may be deemed an "affiliate" of the Company: (i)
as such term is defined for purposes of paragraphs (c) and (d) of Rule 145 under
the Securities Act of 1933, as amended (the "Act"); and (ii) for purposes of
determining S Company's eligibility to account for the Arrangement as a "pooling
of interests" under APB No. 16, Accounting Series Releases 130 and 135, as
amended, of the Securities and Exchange Commission (the "SEC"), and under other
applicable "pooling of interests" accounting requirements. All terms not defined
herein shall have the meaning set forth in the Agreement.
<PAGE>
INTENDING TO BE LEGALLY BOUND, in consideration of the foregoing and the
mutual agreements contained herein and in the Agreement, the parties hereto
agree as follows:
1. Representations and Warranties of Shareholder. Shareholder represents
and warrants to S Company and Company as follows:
(a) If Shareholder owns or holds any Company Ordinary Shares, M
Company Shares and/or D Company Shares (collectively, the "Existing Shares"),
Shareholder is the holder and "beneficial owner" (as defined in Rule 13d-3 under
the Securities Exchange Act of 1934, as amended) of such Existing Shares.
(b) Shareholder has carefully read this Affiliate Agreement and, to
the extent Shareholder felt necessary, has discussed with counsel the
limitations imposed on Shareholder's ability to sell, transfer or otherwise
dispose of the Existing Shares and the S Company Shares that Shareholder is to
receive in the Arrangement. Shareholder fully understands the limitations this
Affiliate Agreement places upon Shareholder's ability to sell, transfer or
otherwise dispose of the Existing Shares and the S Company Shares.
(c) Shareholder understands that the representations, warranties and
covenants set forth in this Affiliate Agreement will be relied upon by S Company
and the Company and their respective counsel and accountants for purposes of
determining S Company's eligibility to account for the Arrangement as a "pooling
of interests" and for purposes of determining whether S Company and the Company
should proceed with the Arrangement.
2. Representation and Warranty of S Company. S Company represents,
warrants to, and covenants with, Shareholder that it shall make available
adequate current public information as required by Rule 144(c) promulgated by
the SEC under the Act. From and after the time that financial results covering
at least 30 days of post-Arrangement combined operations of S Company and the
Company have been published by S Company (within the meaning of the applicable
"pooling of interests" accounting requirements), S Company shall confirm, at the
request of Shareholder, that such financial results have been so published.
3. Prohibitions Against Transfer.
(a) Shareholder agrees that, during the period from the date 30 days
prior to the date of consummation of the Arrangement through the earlier of (i)
the date on which financial results covering at least 30 days of
post-Arrangement combined operations of S Company and the Company have been
published by S Company (within the meaning of the applicable "pooling of
interests" accounting requirements) and (ii) the date the Agreement is
terminated in accordance with its terms:
(i) Shareholder shall not sell, transfer or otherwise dispose of,
or reduce Shareholder's interest in or risk relating to, (A) any capital stock
of the Company, M Company or D Company (including, without limitation, the
Existing Shares and any additional shares of capital stock of the Company, M
Company or D Company acquired by Shareholder, whether upon exercise of a stock
option or otherwise), except (x) pursuant to and upon
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<PAGE>
consummation of the Arrangement or the other transactions contemplated by the
Agreement, or (y) except in a manner consistent with pooling of interests
accounting treatment, after obtaining the consent of S Company, which such
consent shall not be unreasonably withheld or delayed, or (B) any option or
other right to purchase any Existing Shares, except (x) pursuant to and upon
consummation of the Arrangement or the other transactions contemplated by the
Agreement, or (y) except in a manner consistent with pooling of interests
accounting treatment, after obtaining the consent of S Company, which such
consent shall not be unreasonably withheld or delayed; and
(ii) Shareholder shall not sell, transfer or otherwise dispose
of, or reduce Shareholder's interest in or risk relating to, (A) any S Company
Shares (including without limitation the S Company Shares and any additional S
Company Shares acquired by Shareholder, whether upon exercise of a stock option
or otherwise), or (B) any option or other right to purchase any S Company
Shares.
(b) Shareholder agrees that Shareholder shall not effect any sale,
transfer or other disposition of any S Company Shares unless:
(i) such sale, transfer or other disposition is effected
pursuant to an effective registration statement under the Act;
(ii) such sale, transfer or other disposition is made in
conformity with the requirements of Rule 145 under the Act, as evidenced by a
broker's letter and a representation letter executed by Shareholder (reasonably
satisfactory in form and content to S Company) stating that such requirements
have been met;
(iii) counsel reasonably satisfactory to S Company shall have
advised S Company in a written opinion letter (reasonably satisfactory in form
and content to S Company), upon which S Company may rely, that such sale,
transfer or other disposition will be exempt from registration under the Act; or
(iv) an authorized representative of the SEC shall have rendered
written advice to Shareholder to the effect that the SEC would take no action,
or that the staff of the SEC would not recommend that the SEC take action, with
respect to such sale, transfer or other disposition, and a copy of such written
advice and all other related communications with the SEC shall have been
delivered to S Company.
4. Stop Transfer Instructions; Legend. Shareholder acknowledges and
agrees that (a) appropriate stop transfer instructions will be given to the S
Company's transfer agent with respect to the S Company Shares, and (b) each
certificate representing any of such shares shall bear a legend identical or
similar in effect to the following legend (together with any other legend or
legends required by applicable state securities laws or otherwise):
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145(d) OF THE SECURITIES ACT OF
1933 AND "POOLING OF INTERESTS" ACCOUNTING TREATMENT APPLY
AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
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<PAGE>
TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED EXCEPT IN
ACCORDANCE WITH THE PROVISIONS OF SUCH RULE, IN ACCORDANCE
WITH THE REQUIREMENTS FOR "POOLING OF INTERESTS" ACCOUNTING
TREATMENT AND IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT
DATED AS OF MARCH __, 1999, BETWEEN THE REGISTERED HOLDER
HEREOF AND THE ISSUER, A COPY OF WHICH IS ON FILE AT THE
PRINCIPAL OFFICES OF THE ISSUER."
At the request of Shareholder, S Company shall remove the legend at
any time that S Company Shares may be disposed under Rule 145 under the
Securities Act without restriction.
5. Miscellaneous Provisions.
(a) Survival of Representations, Warranties and Agreements. All
representations, warranties and agreements made by Shareholder in this Affiliate
Agreement shall survive the consummation of the Arrangement and the other
related transactions but not any termination of the Agreement; provided,
however, that nothing in this Section 5(a) shall relieve Shareholder from
liability after the termination of the Agreement for any breach on or prior to
the termination of the Agreement of any representation, warranty or agreement
made by Shareholder in this O Company Affiliate Agreement.
(b) Notices. All notices, consents or other communications required or
permitted to be given under this Affiliate Agreement shall be in writing and
shall be deemed to have been duly given when delivered personally or two (2)
business days after being sent by a nationally recognized overnight delivery
service, postage or delivery charges prepaid or five (5) business days after
being sent by registered or certified air mail, return receipt requested,
postage charges prepaid. Notices also may be given by prepaid facsimile and
shall be effective on the date transmitted if confirmed within 48 hours
thereafter by a signed original sent in one of the manners provided in the
preceding sentence. Notices to S Company shall be sent to its address as stated
on page one of this Agreement to the attention of S Company's General Counsel,
with a copy sent simultaneously to the attention of S Company's Chief Financial
Officer and to Blank Rome Comisky & McCauley LLP, One Logan Square,
Philadelphia, PA 19103-6998, Attention: Arthur H. Miller, Esquire. Notices to
Shareholder shall be sent to Shareholder's address as stated on the signature
page to this Agreement, with a copy sent simultaneously to Meitar, Liquornik,
Geva & Co., 16 Habba Hillel Silver Rd., Ramat-Gan 52506, Israel, Attention: Dan
Shamgar, except that in the case of the Star Funds, to Goldfarb, Levy, Eran &
Co., Eliahu House, 2 Ibn Gvirol Street, Tel Aviv 64077, Israel, Facsimile No.:
972-3-695-4344, Attention: Oded Eran. Any party may change its address for
notice and the address to which copies must be sent by giving notice of the new
addresses to the other parties in accordance with this Section 5(b), provided
that any such change of address notice shall not be effective unless and until
received.
(c) Entire Understanding. This Affiliate Agreement and the other
agreements referred to herein, state the entire understanding among the parties
with respect to the subject matter hereof, and supersede all prior oral and
written communications and agreements, and
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<PAGE>
all contemporaneous oral communications and agreements, with respect to the
subject matter hereof. This Affiliate Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
(d) Waivers. Except as otherwise expressly provided herein, no waiver
with respect to this Affiliate Agreement shall be enforceable unless in writing
and signed by the party against whom enforcement is sought. Except as otherwise
expressly provided herein, no failure to exercise, delay in exercising, or
single or partial exercise of any right, power or remedy by any party, and no
course of dealing between or among any of the parties, shall constitute a waiver
of or shall preclude any other for further exercise of, any right, power or
remedy.
(e) Severability. If any provision of this Affiliate Agreement or any
part of any such provision is held under any circumstances to be invalid or
unenforceable in any jurisdiction, then (i) such provision or part thereof
shall, with respect to such circumstances and in such jurisdiction, be deemed
amended to conform to applicable laws so as to be valid and enforceable to the
fullest possible extent, (ii) the invalidity or unenforceability of such
provision or part thereof under such circumstances and in such jurisdiction
shall not affect the validity or enforceability of such provision or part
thereof under any other circumstances or in any other jurisdiction, and (iii)
the invalidity or unenforceability of such provision or part thereof shall not
affect the validity or enforceability of the remainder of such provision or the
validity or enforceability of any other provision of this Affiliate Agreement.
Each provision of this Affiliate Agreement is separable from every other
provision of this Affiliate Agreement, and each part of each provision of this
Affiliate Agreement is separable from every other part of such provision.
(f) Counterparts. This Affiliate Agreement may be executed in any
number of counterparts, each of which when so executed and delivered shall be an
original hereof, and it shall not be necessary in making proof of this Affiliate
Agreement to produce or account for more than one counterpart hereof.
(g) Section Headings. Section and subsection headings in this
Affiliate Agreement are for convenience of reference only, do not constitute a
part of this Affiliate Agreement, and shall not affect its interpretation.
(h) References. All words used in this Affiliate Agreement shall be
construed to be of such number and gender as the context requires or permits.
(i) CONTROLLING LAW. THIS AFFILIATE 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.
(j) Jurisdiction and Process. In any action between or among any of
the parties, whether arising out of this Agreement or otherwise, (a) each of the
parties irrevocably consents to the exclusive jurisdiction and venue of the
federal and state courts located in the Commonwealth of Pennsylvania, (b) if any
such action is commenced in a state court, then,
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<PAGE>
subject to applicable law, no party shall object to the removal of such action
to any federal court located in the Commonwealth of Pennsylvania, (c) each of
the parties irrevocably waives the right to trial by jury, (d) each of the
parties irrevocably consents to service of process by first class certified air
mail, return receipt requested, postage prepaid, to the address at which such
party is to receive notice in accordance with Section 5(b), and (e) the
prevailing parties shall be entitled to recover their reasonable attorneys' fees
and court costs from the other parties.
(k) Non-exclusivity. The rights and remedies of S Company hereunder
are not exclusive of or limited by any other rights or remedies which S Company
may have, whether at law, in equity, by contract or otherwise, all of which
shall be cumulative (and not alternative).
(l) Bankruptcy Qualification. Each representation or warranty made in
or pursuant to this Affiliate Agreement regarding the enforceability of any
contract shall be qualified to the extent that such enforceability may be
effected by bankruptcy, insolvency and other similar Laws or equitable
principles (but not those concerning fraudulent conveyance) generally affecting
creditors' rights and remedies.
(m) Construction. 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 Affiliate Agreement. As used in this Affiliate 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".
(n) Assignment; Binding Effect. S Company may freely assign any or all
of its rights under this Affiliate Agreement, in whole or in part, to any other
person or entity without obtaining the consent or approval of Shareholder. This
Affiliate Agreement and all obligations of Shareholder hereunder are personal to
Shareholder and may not be transferred or delegated by Shareholder at any time.
Subject to the preceding sentence, this Affiliate Agreement will inure to the
benefit of S Company and its successors and assigns and will be binding upon
Shareholder and Shareholder's representatives, executors, administrators,
estate, heirs, successors and assigns.
(o) Specific Performance. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Affiliate
Agreement was not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that S Company shall be entitled to
an injunction or injunctions to prevent breaches of this Affiliate Agreement and
to enforce specifically the terms and provisions hereof in any court of proper
jurisdiction, this being in addition to any other remedy to which S Company is
entitled at law or in equity.
(p) Other Agreements and Independence of Obligations. Nothing in this
Affiliate Agreement shall limit any of the rights or remedies of S Company or
any of the obligations of Shareholder under any other agreement. The covenants
and obligations of Shareholder set forth in this Affiliate Agreement shall be
construed as independent of any
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<PAGE>
other agreement or arrangement between the Shareholder, on the one hand, and the
Company or S Company, on the other. The existence of any claim or cause of
action by Shareholder against the S Company shall not constitute a defense to
the enforcement of any of such covenants or obligations against Shareholder.
IN WITNESS WHEREOF, each of the undersigned has caused this O Company
Affiliate Agreement to be executed as of the date first stated above.
SUNGARD DATA SYSTEMS INC.
By:
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Name:
Title:
OSHAP TECHNOLOGIES LTD.
By:
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Name:
Title:
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SHAREHOLDER:
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Address:
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Facsimile:
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EXHIBIT 99.5
STOCK PURCHASE AGREEMENT
PARTIES: SUNGARD DATA SYSTEMS INC.
a Delaware corporation ("S Company")
1285 Drummers Lane
Wayne, Pennsylvania 19087
THE SHAREHOLDER LISTED ON THE SIGNATURE PAGE
(the "Shareholder")
DATE: ________, 1999
BACKGROUND: Shareholder is a shareholder of MINT Software Technologies Ltd., a
corporation formed under the laws of the State of Israel ("M Company") and/or
Decalog N.V., a corporation formed under the laws of the Netherlands ("D
Company") (M Company and D Company are sometimes referred to individually as a
"Subsidiary" and collectively as the "Subsidiaries"), and owns the number of
ordinary shares (the "Shares") of the respective Subsidiaries set forth under
the Shareholder's name on the signature page hereof. The Subsidiaries are
subsidiaries of Oshap Technologies Ltd., a corporation formed under the laws of
Israel (the "Company"). S Company and the Company have entered into an Agreement
dated as of March 9, 1999 hereof (the "Agreement"), which has attached thereto
the related Plan of Arrangement (the "Plan"). The Agreement which provides
(subject to the conditions set forth therein) for the exchange of S Company
Shares for Company Ordinary Shares as set forth in the Agreement (the
"Arrangement"). The Agreement contemplates that, upon consummation of the
Arrangement on the Effective Date, (i) holders of Company Ordinary Shares and
Company Options will receive S Company Shares in exchange for their Company
Ordinary Shares and (ii) the Company will become a wholly-owned subsidiary of S
Company. In connection with the Agreement, S Company and Shareholder desire to
enter into this Stock Purchase Agreement (the "Stock Purchase Agreement"). All
terms not defined herein shall have the meaning given such term in the
Agreement.
INTENDING TO BE LEGALLY BOUND, in consideration of the foregoing and
the mutual agreements contained herein, the parties hereto agree as follows:
1. Sale and Purchase of Shares
1.1 Sale of Shares. At the Closing (as defined in Section 4.1),
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Shareholder shall sell, transfer, assign and deliver, and S Company (or its
assignee) (referred to as the "Buyer") shall purchase and acquire, good and
valid title to the Shares, free and clear of all claims, liens, encumbrances,
security interests, pledges, options and rights of others of any nature
whatsoever. Shareholder agrees that in the event that Shareholder acquires any
additional ordinary shares of Subsidiaries prior to Closing, such additional
ordinary shares will be included in the Shares sold to
<PAGE>
Buyer at Closing.
1.2 Purchase Price. The purchase price for each Share of D Company
--------------
shall be $9.26 per share ("D Company Purchase Price Per Share"). The purchase
price for each Share of M Company shall be $13.15 per share ("M Company Purchase
Price Per Share"). The total purchase price ("Purchase Price") to be paid by
Buyer to Shareholder at Closing shall equal the sum of : (a) the D Company
Purchase Price Per Share multiplied by the number of Shares of D Company sold,
plus (b) the M Company Purchase Price Per Share multiplied by the number of
Shares of M Company sold.
1.3 Payment of Purchase Price. The Purchase Price shall be payable
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as follows:
(a) If Shareholder is an "affiliate"(as that term is used in
Rule 145 under the Securities Act) of the Company (an "Affiliate Shareholder")
as of the date hereof or as of the Closing, the Purchase Price shall be paid by
issuance to Shareholder of such number of shares of S Company common stock, par
value $0.01 per share ("S Company Shares"), as shall be obtained by dividing the
Purchase Price by the S Company Share Average determined pursuant to the
Agreement. No fractional S Company Shares shall be issued. In lieu of any such
fractional shares, such fractional S Company Shares shall be rounded up to the
next whole share.
(b) If Shareholder is not an Affiliate Shareholder, the Purchase
Price shall be paid in cash by wire transfer of immediately available U.S. funds
to an account designated by Shareholder.
(c) The parties shall each pay one-half of any
transfer,documentary or stamp taxes or fees which may be due upon the sale of
the Shares. Shareholder shall be responsible for any income or capital gain
taxes due as a result of the sale of the Shares. Except as provided in the
foregoing two sentences, all costs and expenses incurred in connection with the
transactions contemplated by this Stock Purchase Agreement shall be paid by the
party incurring such costs and expenses.
1.4 Registration Rights. S Company shall, promptly following the
-------------------
Effective Date, file and use its reasonable efforts to have declared effective,
a registration statement on Form S-3 (or other appropriate form) registering for
resale the S Company Shares issued pursuant to Section 1.3(a). S Company shall
use its reasonable efforts to maintain the effectiveness of the registration
statement until the second anniversary of the Closing.
2. Representations of Shareholder
Shareholder represents and warrants to S Company, as of the date
hereof and as of the date of Closing as if made on and as of the date of
Closing, as follows:
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2.1 Good Title. As of the date hereof, Shareholder is the record and
beneficial owner in the aggregate of the number of Shares set forth below such
Shareholder's name on the signature page hereof. Shareholder has, and will sell,
assign, transfer and deliver to Buyer at Closing, good and valid title to the
Shares, free and clear of all claims, liens, security interests, pledges,
options and rights of others of any nature whatsoever.
2.2 No Other Interests. Except for the number of Shares set forth
below such Shareholder's name on the signature page hereof, Shareholder does not
directly or indirectly own any ordinary shares, stock, securities or other
equity, capital or ownership interests in the Subsidiary, or any option, warrant
or other right to acquire any ordinary shares, stock, securities or other
equity, capital or ownership interests in the Subsidiary other than options to
purchase Shares, which options are or will be the subject of a Stock Option
Exchange Agreement between S Company and Shareholder. There are no options,
warrants, agreements, rights or other commitments of, or granted by, Shareholder
which entitles or, if exercised, could entitle any person or entity to purchase
any or all of the Shares.
2.3 Authority. Shareholder has the full right, power, authority and
capacity to execute and deliver this Stock Purchase Agreement and to perform
Shareholder's obligations hereunder. This Stock Purchase Agreement has been duly
executed and delivered by Shareholder and constitutes the legal, valid and
binding obligations of the Shareholder, enforceable against the Shareholder in
accordance with its terms.
2.4 No Conflicts. The execution and delivery of this Stock Purchase
Agreement by the Shareholder does not, and the performance of this Stock
Purchase Agreement by the Shareholder will not: (a) upon obtaining the approval
of the Office of the Chief Scientist of the Ministry of Industry and Trade in
Israel, conflict with or violate any law, order, decree or judgment applicable
to the Shareholder or by which Shareholder or any of Shareholder's properties
are bound or affected; or (b) result in any breach of or constitute a default or
breach (immediately or after the giving of notice, passage of time, or both)
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of liens, security interests, charges
or encumbrances on any of the Shares pursuant to, any contract to which
Shareholder is a party or by which Shareholder or any of Shareholder's
properties is bound or affected.
2.5 Brokerage Fees. No person acting on behalf of Shareholder is
entitled to any brokerage or finder's fee in connection with the transactions
contemplated by this Stock Purchase Agreement.
2.6 Investment Representation. If Shareholder is an Affiliate
Shareholder, shareholder makes the following representations and warranties. All
S Company Shares to be issued to Shareholder hereunder are being acquired for
Shareholder's own account and not on behalf of any other person, and all such S
Company Shares are being acquired by the Shareholder for investment purposes
only and not with a view to, or for sale in connection with, any resale or
distribution of such S Company Shares. Shareholder has had the opportunity to
examine S Company's Annual
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<PAGE>
Report on Form 10-K for the year ended December 31, 1997 and other filings made
with the SEC since January 1, 1998. Shareholder has had the opportunity to ask
questions and receive answers from S Company concerning S Company, and has been
furnished with all other information about S Company that it has requested.
Shareholder believes that Shareholder has sufficient knowledge and experience in
business and financial matters, that Shareholder is capable of evaluating the
merits and risks of an investment in the S Company Shares, and that Shareholder
has the capacity to protect Shareholder's own interests in connection with the
transactions contemplated hereby. Shareholder understands that the certificates
for the S Company Shares shall bear appropriate restrictive legends and S
Company shall have the right to place a stop order against such shares;
provided, however, that such legend and stop order shall be removed promptly
following the effectiveness of the registration statement provided for in
Section 1.4.
3. Representations of S Company
S Company represents and warrants to Shareholder, as of the date
hereof and as of the date of Closing as if made on and as of the date of
Closing, as follows:
3.1 Authority. S Company has the full right, power, authority and
capacity to execute and deliver this Stock Purchase Agreement and to perform its
obligations hereunder. This Stock Purchase Agreement has been duly executed and
delivered by S Company and constitutes the legal, valid and binding obligations
of S Company, enforceable against S Company in accordance with its terms.
3.2 S Company Shares. Any S Company Shares issued in payment of the
Purchase Price will be validly issued, fully paid and nonassessable.
3.3 Brokerage Fees. No person acting on S Company's behalf is
entitled to any brokerage or finder's fee in connection with the transactions
contemplated by this Stock Purchase Agreement.
3.4 Current Public Information. If Shareholder is an Affiliate
Shareholder, S Company represents and warrants to, and covenants with,
Shareholder that it shall make available adequate current public information as
required by Rule 144(c) promulgated by the SEC under the Securities Act. From
and after the time that financial results covering at least 30 days of post-
Arrangement combined operations of S Company and the Company have been published
by S Company (within the meaning of the applicable "pooling of interests"
accounting requirements), S Company shall confirm, at the request of an
Affiliate Shareholder, that such financial results have been so published.
4. Closing
4.1 Closing. The closing of the sale of the Shares (the "Closing")
shall take place at the offices of the S Company on the Effective Date of the
Arrangement as determined pursuant
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<PAGE>
to the Agreement. It shall be a condition precedent to the obligations of each
of the parties respective obligations hereunder that (i) the Arrangement shall
have been consummated contemporaneously with the Closing and (ii) the
representations and warranties of the other party in this Stock Purchase
Agreement shall be true and correct in all material respects as if made on and
as of the date of Closing.
4.2 Obligations of Shareholder at Closing. Shareholder shall deliver
to Buyer at Closing the following:
(a) Certificates representing the Shares, together with share
transfer deeds or other appropriate transfer documents.
(b) A certificate certifying that the representations and
warranties of Shareholder contained in Section 3 of this Stock Purchase
Agreement are true and correct on and as of the date of Closing.
(b) All other documents reasonably requested by Buyer in order
to vest in the Buyer full title to the Shares.
5.3 Obligations of Buyer at Closing. Buyer shall deliver to
Shareholder at Closing the following:
(a) The Purchase Price for the Shares in accordance with Section
1.3.
(b) A certificate certifying that the representations and
warranties of S Company contained in Section 4 of this Stock Purchase Agreement
are true and correct on and as of the date of Closing.
5. Termination. This Stock Purchase Agreement shall terminate (a) upon
the written agreement of S Company and Shareholder, or (b) upon the termination
of the Agreement pursuant to Section 9.1 of the Agreement. Upon the termination,
this Stock Purchase Agreement shall be of no further force or effect, with no
liability on the part of any party, except for any liability that a party may
have arising from a breach of this Stock Purchase Agreement.
6. Miscellaneous.
(a) Survival of Representations, Warranties and Agreements. All
representations, warranties and agreements made by the parties in this Stock
Purchase Agreement shall survive the consummation of the Stock Purchase
Agreement.
(b) Notices. All notices, consents or other communications required
or permitted to be given under this Stock Purchase Agreement shall be in writing
and shall be deemed to have been duly given when delivered personally or two (2)
business days after being sent by a nationally
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<PAGE>
recognized overnight delivery service, postage or delivery charges prepaid or
five (5) business days after being sent by registered or certified air mail,
return receipt requested, postage charges prepaid. Notices also may be given by
prepaid facsimile and shall be effective on the date transmitted if confirmed
within 48 hours thereafter by a signed original sent in one of the manners
provided in the preceding sentence. Notices to S Company shall be sent to its
address stated on page one of this Stock Purchase Agreement to the attention of
S Company's General Counsel, with a copy sent simultaneously to the same address
to the attention of S Company's Chief Financial Officer. Notices to the
Shareholder shall be sent to Shareholder's address stated on the signature page
of this Stock Purchase Agreement. Any party may change its address for notice
and the address to which copies must be sent by giving notice of the new
addresses to the other parties in accordance with this Section 6(b), provided
that any such change of address notice shall not be effective unless and until
received.
(c) Entire Understanding. This Stock Purchase Agreement and the other
agreements referred to herein, state the entire understanding among the parties
with respect to the subject matter hereof, and supersede all prior oral and
written communications and agreements, and all contemporaneous oral
communications and agreements, with respect to the subject matter hereof. This
Stock Purchase Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties hereto.
(d) Waivers. Except as otherwise expressly provided herein, no waiver
with respect to this Stock Purchase Agreement shall be enforceable unless in
writing and signed by the party against whom enforcement is sought. Except as
otherwise expressly provided herein, no failure to exercise, delay in
exercising, or single or partial exercise of any right, power or remedy by any
party, and no course of dealing between or among any of the parties, shall
constitute a waiver of or shall preclude any other for further exercise of, any
right, power or remedy.
(e) Severability. If any provision of this Stock Purchase Agreement
or any part of any such provision is held under any circumstances to be invalid
or unenforceable in any jurisdiction, then (i) such provision or part thereof
shall, with respect to such circumstances and in such jurisdiction, be deemed
amended to conform to applicable laws so as to be valid and enforceable to the
fullest possible extent, (ii) the invalidity or unenforceability of such
provision or part thereof under such circumstances and in such jurisdiction
shall not affect the validity or enforceability of such provision or part
thereof under any other circumstances or in any other jurisdiction, and (iii)
the invalidity or unenforceability of such provision or part thereof shall not
affect the validity or enforceability of the remainder of such provision or the
validity or enforceability of any other provision of this Stock Purchase
Agreement. Each provision of this Stock Purchase Agreement is separable from
every other provision of this Stock Purchase Agreement, and each part of each
provision of this Stock Purchase Agreement is separable from every other part of
such provision.
(f) Counterparts. This Stock Purchase Agreement may be executed in
any number of counterparts, each of which when so executed and delivered shall
be an original hereof,
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and it shall not be necessary in making proof of this Stock Purchase Agreement
to produce or account for more than one counterpart hereof.
(g) Section Headings. Section and subsection headings in this Stock
Purchase Agreement are for convenience of reference only, do not constitute a
part of this Stock Purchase Agreement, and shall not affect its interpretation.
(h) References. All words used in this Stock Purchase Agreement shall
be construed to be of such number and gender as the context requires or permits.
(i) CONTROLLING LAW. EXCEPT FOR MATTERS CONCERNING THE TRANSFER OF
SHARES WHICH SHALL BE GOVERNED BY THE LAWS OF ISRAEL (WITH RESPECT TO THE
TRANSFER OF M COMPANY SHARES) OR THE LAWS OF THE NETHERLANDS (WITH RESPECT TO
THE TRANSFER OF D COMPANY SHARES), THIS STOCK PURCHASE 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.
(j) Jurisdiction and Process. In any action between or among any of
the parties, whether arising out of this Stock Purchase Agreement or otherwise,
(i) each of the parties irrevocably consents to the exclusive jurisdiction and
venue of the federal and state courts located in the Commonwealth of
Pennsylvania, (ii) 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 Commonwealth of Pennsylvania, (iii) each of
the parties irrevocably waives the right to trial by jury, (iv) each of the
parties irrevocably consents to service of process by first class certified air
mail, return receipt requested, postage prepaid, to the address at which such
party is to receive notice in accordance with Section 6(b), and (v) the
prevailing parties shall be entitled to recover their reasonable attorneys' fees
and court costs from the other parties.
(k) Non-exclusivity. The rights and remedies of S Company hereunder
are not exclusive of or limited by any other rights or remedies which S Company
may have, whether at law, in equity, by contract or otherwise, all of which
shall be cumulative (and not alternative).
(l) Bankruptcy Qualification. Each representation or warranty made in
or pursuant to this Stock Purchase Agreement regarding the enforceability of any
contract shall be qualified to the extent that such enforceability may be
effected by bankruptcy, insolvency and other similar laws or equitable
principles (but not those concerning fraudulent conveyance) generally affecting
creditors' rights and remedies.
(m) Assignment; Binding Effect. Except as provided herein,
neither this Stock Purchase Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by
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either of the parties hereto (whether by operation of law or otherwise) without
the prior written consent of the other party, except that S Company may assign
all or any of its rights hereunder to any wholly-owned subsidiary of S Company;
provided, however, that any such assignment shall not relieve S Company of its
obligations hereunder. Subject to the preceding sentence, this Stock Purchase
Agreement shall be binding upon and inure to the benefit of the Shareholder and
Shareholder's heirs, successors and assigns, and shall inure to the benefit of S
Company and its successors and assigns. Notwithstanding anything contained in
this Stock Purchase Agreement to the contrary, nothing in this Stock Purchase
Agreement, expressed or implied, is intended to confer on any person other than
the parties hereto or their respective heirs, successors and assigns any rights,
remedies, obligations or liabilities under or by reason of this Stock Purchase
Agreement.
(n) Specific Performance. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Stock
Purchase Agreement was not performed in accordance with its specific terms or
was otherwise breached. It is accordingly agreed that S Company shall be
entitled to an injunction or injunctions to prevent breaches of this Stock
Purchase Agreement and to enforce specifically the terms and provisions hereof
in any court of proper jurisdiction, this being in addition to any other remedy
to which S Company is entitled at law or in equity.
IN WITNESS WHEREOF, each of the undersigned has caused this Stock Purchase
Agreement to be executed as of the date first stated above.
SUNGARD DATA SYSTEMS INC.
By:
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Name:
Title:
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[SIGNATURES TO STOCK PURCHASE AGREEMENT CONTINUED FROM PREVIOUS PAGE]
SHAREHOLDER:
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Name:
Address:
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Facsimile:
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SHARES:
Number of issued and outstanding Shares of M
Company owned of record as of the date of
this Stock Purchase Agreement: _______
Number of issued and outstanding Shares of D
Company owned of record as of the date of
this Stock Purchase Agreement: _________
9
<PAGE>
Exhibit 99.6
NONDISCLOSURE AND NONCOMPETITION AGREEMENT
PARTIES: [ ] ("Shareholder")
___________________
___________________
SUNGARD DATA SYSTEMS INC.
a Delaware corporation ("S Company")
1285 Drummers Lane
Wayne, PA 19087
DATE: March 9, 1999
BACKGROUND
S Company and Oshap Technologies Ltd., a corporation formed under the laws
of the State of Israel (the "Company"), have entered into an Agreement dated as
of the date hereof (the "Agreement") and attached thereto is the related Plan of
Arrangement ("Plan"), which provide (subject to the conditions set forth
therein) for the exchange of S Company Shares for Company Ordinary Shares as set
forth in the Agreement (the "Arrangement"). As contemplated by the Agreement,
the Company will become a wholly owned subsidiary of S Company on the effective
date (the "Effective Date") of the Arrangement, and will continue to carry on
the business being conducted by the Company before the Effective Date. The
Company has conducted its business, and after the Effective Date of the
Arrangement, the Company will continue to conduct its business, on a worldwide
basis.
As an employee, officer and shareholder of the Company, the Shareholder has
obtained and will obtain extensive and valuable knowledge and information
concerning the business of the Company and its subsidiaries (including
confidential information relating to the Company and its subsidiaries and their
respective operations, assets, software, contracts, customers, personnel, plans,
processes, techniques, and prospects).
In order to ensure that S Company receives the full value of the
Arrangement, S Company and the Shareholder agree to enter into this
Nondisclosure and Noncompetition Agreement. The entering into of this
Nondisclosure and Noncompetition Agreement is a condition to S Company's
willingness to enter into the Agreement and to consummate the Arrangement.
INTENDING TO BE LEGALLY BOUND, in order to induce S Company to consummate
the Arrangement and in consideration of the foregoing and the mutual agreements
contained herein and the Agreement, the parties agree as follows:
<PAGE>
1. ACKNOWLEDGMENTS BY THE SHAREHOLDER. The Shareholder acknowledges that:
(a) The promises and restrictive covenants that the Shareholder is
providing in this Nondisclosure and Noncompetition Agreement are reasonable and
necessary to the protection of S Company's business and S Company's legitimate
interests in the Company.
(b) In connection with the consummation of the Arrangement, the
Shareholder will receive S Company Shares in exchange for the Company Ordinary
Shares currently held by the Shareholder, as described in Article II of the
Agreement.
(c) As used in this Agreement, the "M&D Business" shall mean the business
engaged in or proposed to be engaged in as of the Effective Date by the majority
owned (either directly or indirectly) subsidiaries of the Company and includes
all work or efforts done by or on behalf of the Company for such subsidiaries.
The M&D Business is highly competitive, is marketed throughout the world, and
requires long sales "lead times" often exceeding one year.
(d) The Company expends, and after the Effective Date the Company and
possibly other subsidiaries of S Company engaged in the M&D Business
(collectively, "S Company Group") may expend substantial time and money, on an
ongoing basis, to train its employees, maintain and expand its customer base,
and improve and develop its Software and services.
(e) During his tenure as an owner and/or executive of the Company (or its
subsidiaries) Shareholder has had access to proprietary and confidential
property, knowledge and information regarding the M&D Business which, after the
Effective Date, shall be proprietary and confidential property, knowledge and
information of S Company Group; such property, knowledge and information must be
kept in strict confidence to protect the M&D Business and maintain S Company
Group's competitive positions in the marketplace; and such knowledge and
information could be useful to competitors for indefinite periods of time.
(f) The covenants of Shareholder in this Nondisclosure and Noncompetition
Agreement (the "Covenants") are supported by good and adequate consideration;
and the Covenants are reasonable and necessary to protect the legitimate
business interests of the S Company Group.
2. NONDISCLOSURE COVENANTS. At all times after the Effective Date, except
with S Company's prior written consent or except when required by legal process
(provided prior notice is provided to S Company sufficient to enable S Company
to object in court to such disclosure), or except in connection with the proper
performance of services for and as an employee of the S Company Group,
Shareholder shall not directly or indirectly, in any capacity:
(a) Communicate, publish or otherwise disclose to any person, or use for
the benefit of any person, any confidential or proprietary property, knowledge
or information of the M&D Business or concerning any of its business, Software,
assets or financial condition, no matter when or how such knowledge or
information was acquired, including without limitation (i) the identity of
customers and prospects, their specific requirements, and the
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names, addresses and telephone numbers of individual contacts at customers and
prospects, (ii) prices, renewal dates and other detailed terms of customer and
supplier contracts and proposals, (iii) pricing policies, marketing and sales
strategies, methods of delivering products and services, and product and service
development projects and strategies; (iv) source code, object code, formats,
user manuals, technical manuals and other documentation for Software products,
(v) screen designs, report designs and other designs, concepts and visual
expressions for Software products, (vi) designs, concepts, know-how, user
manuals, technical manuals and other documentation for Software products, (vii)
employment and payroll records, (viii) forecasts, budgets and other nonpublic
financial information, (ix) expansion plans, management policies, methods of
operation, and other business strategies and policies solely applicable to the
M&D Business, and (x) any confidential information concerning the assets or the
conduct and details of the M&D Business.
(b) Disclose, use or refer to any proprietary Software or other
confidential or proprietary knowledge or information of the M&D Business, no
matter when or how acquired, for any purpose.
3. NONCOMPETITION COVENANTS. During the Noncompete Period (as defined
below), except with S Company's prior written consent, Shareholder shall not
directly or indirectly, in any capacity, at any location worldwide:
(a) Communicate with or solicit any Restricted Person (as defined below)
in any manner which interferes or is intended to interfere with such Restricted
Person's relationship with the S Company Group, or in an effort to obtain any
such person as a employee, supplier, salesman, agent or representative of, or a
consultant to, any other person that conducts a business competitive with or
similar to (with respect to product functionality) all or any part of the M&D
Business.
(b) Market or sell, in any manner other than in furtherance of the
business and interests of the M&D Business, any Software, technology, product or
service that is competitive with any proprietary Software, technology, product
or service of the M&D Business, or if applicable because of post Effective
employment of Shareholder by the S Company Group, the part of the S Company
Group with which Shareholder has been directly and significantly involved).
(c) Establish, own, manage, operate, finance or control, or participate
in the establishment, ownership, management, operation, financing or control of,
or be a director, officer, employee, salesman, agent or representative of, or be
a consultant to, any person that conducts a business competitive with or similar
to (with respect to product functionality) all or any part of the M&D Business.
As used in this Agreement, "Restricted Person" is any Person who is (or during
Shareholder's employment with the S Company Group becomes) a customer, formal
prospect, supplier, employee, salesman, agent or representative of, or a
consultant to, the M&D Business (or if applicable because of post Effective Date
employment of Shareholder by the S Company Group, the part of the S Company
Group with whom Shareholder has been directly and significantly involved). As
used in this Agreement, the "Noncompete Period" shall mean the
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period beginning on the Effective Date and ending on the later of: (i) the third
anniversary of the Effective Date or (ii) two years after the termination of
Shareholder's employment with the S Company Group.
4. CERTAIN EXCLUSIONS. For purposes of this Nondisclosure and Noncompetition
Agreement, confidential and proprietary knowledge and information shall not
include any knowledge and information that is now known by or readily available
to the general public, or that becomes known by or readily available to the
general public other than as a result of any breach of this Nondisclosure and
Noncompetition Agreement. Provided that Shareholder's investment is purely
passive, the ownership by the Shareholder of not more than five percent of the
outstanding securities of any public company or solely through a private
investment company or venture fund shall not, by itself, constitute a breach of
the Covenants of Section 3, even if such public company or the investment by the
private investment company or venture fund competes with the M&D Business.
5. ENFORCEMENT OF COVENANTS. Shareholder expressly acknowledges that it
would be extremely difficult to measure the damages that might result from any
breach of the Covenants, and that any breach of the Covenants will result in
irreparable injury to the S Company Group for which money damages could not
adequately compensate. If a breach of the Covenants occurs, S Company shall be
entitled, in addition to all other rights and remedies that S Company may have
at law or in equity, to have an injunction issued by any competent court
enjoining and restraining the Shareholder and all other persons involved therein
from continuing such breach. If S Company must resort to litigation to enforce
any of the Covenants that has a fixed term, then such term shall be extended for
a period of time equal to the period during which a breach of such Covenant was
occurring, beginning on the date of a final court order (without further right
of appeal) holding that such a breach occurred or, if later, the last day of the
original fixed term of such Covenant.
6. SCOPE OF COVENANTS. If any Covenant, or any part thereof, or the
application thereof, is construed to be invalid, illegal or unenforceable, then
the other Covenants, or the other portions of such Covenant, or the application
thereof, shall not be affected thereby and shall be enforceable without regard
thereto. If any of the Covenants is determined to be unenforceable because of
its scope, duration, geographical area or other factor, then the court making
such determination shall have the power to reduce or limit such scope, duration,
area or other factor, and such Covenant shall then be enforceable in its reduced
or limited form.
7. OTHER AGREEMENTS AND INDEPENDENCE OF OBLIGATIONS. Nothing in this
Nondisclosure and Noncompetition Agreement shall limit any of the rights or
remedies of S Company or any of the rights or obligations of Shareholder under
the Voting Agreement or the Affiliate Agreement, each dated the date hereof, or
under any other agreement. The covenants and obligations of the Shareholder set
forth in this Nondisclosure and Noncompetition Agreement shall be construed as
independent of any other agreement or arrangement between the Shareholder, on
the one hand, and S Company, on the other. The existence of any claim or cause
of action that Shareholder or any other person may have against any member of
the S Company Group shall not constitute a defense or bar to the enforcement of
any of the Covenants or other obligations of Shareholder.
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<PAGE>
8. NON-EXCLUSIVITY. The rights and remedies of S Company hereunder are not
exclusive of or limited by any other rights or remedies which S Company may
have, whether at law, in equity, by contract or otherwise, all of which shall be
cumulative (and not alternative). Without limiting the generality of the
foregoing, the rights and remedies of S Company hereunder, and the obligations
and liabilities of the Shareholder hereunder, are in addition to their
respective rights, remedies, obligations and liabilities under the law.
9. OTHER PROVISIONS.
(a) NOTICES. All notices, consents or other communications required or
permitted to be given under this Nondisclosure and Noncompetition Agreement
shall be in writing and shall be deemed to have been duly given when delivered
personally or one (1) business day after being sent by a nationally recognized
overnight delivery service, postage or delivery charges prepaid or five (5)
business days after being sent by registered or certified mail, return receipt
requested, postage charges prepaid. Notices also may be given by prepaid
facsimile and shall be effective on the date transmitted if confirmed within 48
hours thereafter by a signed original sent in one of the manners provided in the
preceding sentence. Notices to S Company shall be sent to its address stated on
page one of this Nondisclosure and Noncompetition Agreement to the attention of
S Company's General Counsel, with a copy sent simultaneously to the same address
to the attention of S Company's Chief Financial Officer. Notices to the
Shareholder shall be sent to Shareholder's address stated on page one of this
Nondisclosure and Noncompetition Agreement, with a copy sent simultaneously to
Meitar, Liquornik, Geva & Co., 16 Abba Hillel Silver Rd., Ramat-Gan 52506,
Israel, Facsimile No.: 972-3-610-3111, Attention: Dan Shamgar. Any party may
change its address for notice and the address to which copies must be sent by
giving notice of the new addresses to the other parties in accordance with this
Section 9(a), provided that any such change of address notice shall not be
effective unless and until received.
(b) ENTIRE UNDERSTANDING. This Nondisclosure and Noncompetition
Agreement and the other agreements referred to herein, state the entire
understanding among the parties with respect to the subject matter hereof, and
supersede all prior oral and written communications and agreements, and all
contemporaneous oral communications and agreements, with respect to the subject
matter hereof. This Nondisclosure and Noncompetition Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
(c) WAIVERS. Except as otherwise expressly provided herein, no waiver
with respect to this Nondisclosure and Noncompetition Agreement shall be
enforceable unless in writing and signed by the party against whom enforcement
is sought. Except as otherwise expressly provided herein, no failure to
exercise, delay in exercising, or single or partial exercise of any right, power
or remedy by any party, and no course of dealing between or among any of the
parties, shall constitute a waiver of or shall preclude any other or further
exercise of, any right, power or remedy.
(d) SEVERABILITY. If any provision of this Nondisclosure and
Noncompetition Agreement is construed to be invalid, illegal or unenforceable,
then the remaining provisions hereof shall not be affected thereby and shall be
enforceable without regard thereto.
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<PAGE>
(e) COUNTERPARTS. This Nondisclosure and Noncompetition Agreement may be
executed in any number of counterparts, each of which when so executed and
delivered shall be an original hereof, and it shall not be necessary in making
proof of this Nondisclosure and Noncompetition Agreement to produce or account
for more than one counterpart hereof.
(f) SECTION HEADINGS. Section and subsection headings in this
Nondisclosure and Noncompetition Agreement are for convenience of reference
only, do not constitute a part of this Nondisclosure and Noncompetition
Agreement, and shall not affect its interpretation.
(g) REFERENCES. All words used in this Nondisclosure and Noncompetition
Agreement shall be construed to be of such number and gender as the context
requires or permits. Capitalized and non-capitalized terms used herein and
not otherwise defined shall have the respective meanings ascribed thereto
in the Agreement.
(h) CONTROLLING LAW. THIS NONDISCLOSURE AND NONCOMPETITION 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.
(i) JURISDICTION AND PROCESS. In any action between or among any of the
parties, whether arising out of this Nondisclosure and Noncompetition Agreement
or otherwise, (a) each of the parties irrevocably consents to the exclusive
jurisdiction and venue of the federal and state 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 Commonwealth of Pennsylvania,
(c) each of the parties irrevocably waives the right to trial by jury, (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(a), and (e)
the prevailing parties shall be entitled to recover their reasonable attorneys'
fees and court costs from the other parties.
(j) CONSTRUCTION. 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 Nondisclosure
and Noncompetition Agreement.
(k) ASSIGNMENT. This Nondisclosure and Noncompetition Agreement and all
obligations hereunder are personal to the Shareholder and may not be transferred
or assigned by the Shareholder at any time. S Company may assign its rights
under this Nondisclosure and Noncompetition Agreement to any purchaser or
successor in connection with any sale or transfer of all or substantially all of
S Company's assets to such entity.
(l) BINDING NATURE. This Nondisclosure and Noncompetition Agreement will
be binding upon the Shareholder and the Shareholder's representatives,
executors, administrators, estate, heirs and successors, and will inure to the
benefit of S Company and its successors and assigns.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Nondisclosure and
Noncompetition Agreement as of the date first stated above.
S COMPANY
By:
---------------------------------
- ------------------------------------
[SHAREHOLDER]
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<PAGE>
EXHIBIT 99.7
FORM OF OSHAP PROXY
OSHAP TECHNOLOGIES LTD.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
OSHAP TECHNOLOGIES LTD.
The undersigned, a holder of Ordinary Shares, par value NIS 0.001 per share
("Ordinary Shares"), of Oshap Technologies Ltd. ("Oshap"), acting with respect
to all Ordinary Shares held by the undersigned, hereby appoints Shlomo Dovrat
and Avi Zeevi, and each of them, as proxies for the undersigned, with full power
of substitution, to vote all Ordinary Shares of the undersigned, at the
Extraordinary General Meeting of the Shareholders of Oshap to be held on June
16, 1999, at 4:00 p.m., local time, at Delta House, 16 Hagalim Avenue, Herzliya
46733, Israel, and at any adjournments, postponements or reschedulings thereof,
hereby revoking any proxy previously given and ratifying all that said proxy or
proxies may do pursuant hereto. All shares held by the undersigned will be voted
by the proxies as directed on the reverse side of this Proxy card. In their
discretion, the proxies are authorized to vote upon such other business as may
properly come before the meeting.
(Continued and to be signed on reverse side)
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*FOLD AND DETACH HERE*
<PAGE>
Your Board of Directors Recommends a Vote "FOR" Item 1.
Please mark [X]
your vote as
demonstrated in
this example
Item 1. - A proposal recommended by the Board of Directors of Oshap to approve
the arrangement contemplated by the Agreement, dated as of March 9, 1999, by and
between Oshap and SunGard Data Systems Inc.
FOR AGAINST ABSTAIN
[_] [_] [_]
The undersigned hereby acknowledges receipt of the Notice of the Extraordinary
General Meeting and Proxy Statement/Prospectus dated May 13, 1999.
The shares represented by this proxy will be voted as directed by the
shareholder. If no direction is made, the shares will be voted "FOR" Item 1.
Signatures(s)____________________________________Date_____________________, 1999
NOTE: Please date and sign exactly as your name appears hereon. Each joint owner
should sign. When signing as attorney, executory, trustee, guardian or corporate
officer, please give full title as such. Corporations should indicate full
corporate name and title of duly authorized officer signing.
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- FOLD AND DETACH HERE -
