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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): March 7, 1999
---------------------
BMC SOFTWARE, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 0-17136 74-21226120
(State or other jurisdiction (Commission File Number) (I.R.S. Employer Identification
of incorporation or No.)
organization)
</TABLE>
<TABLE>
<S> <C>
2101 CITYWEST BOULEVARD
HOUSTON, TEXAS 77042-2827
(Address of principal executive offices) (Zip code)
</TABLE>
Registrant's telephone number, including area code: (713) 918-8800
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ITEM 5. OTHER EVENTS.
I. NEW DIMENSION SOFTWARE LTD.
A. TENDER AGREEMENT AND RELATED AGREEMENTS
On March 8, 1999, BMC Software, Inc., a Delaware corporation (the
"Company"), issued a press release announcing the execution of a Share Purchase
and Tender Agreement, dated March 7, 1999 (the "Tender Agreement"), by and
between the Company and New Dimension Software Ltd., an Israeli corporation
("New Dimension"). Pursuant to the Tender Agreement, the Company will offer
$52.50 in cash (the "Offer Price") for each outstanding ordinary share, par
value NIS 0.01 per share (collectively, the "Shares"), of New Dimension in
accordance with the Offer (as defined therein). New Dimension has also agreed to
acquire and cancel all options to purchase shares of New Dimension and its
subsidiary for an amount in cash equal to the positive difference between the
Offer Price and the exercise price of such options, subject to adjustment in the
case of options to purchase shares of New Dimension's subsidiary. In addition,
the Company has agreed to issue stock options to purchase an aggregate of
500,000 shares of common stock of the Company to employees of New Dimension
after completion of the Offer. The Offer is conditioned upon, among other
things, there being validly tendered and not withdrawn prior to the expiration
of the Offer a number of Shares constituting at least 90% of the then issued and
outstanding Shares not owned by the Company and its subsidiaries (the "90%
Condition").
If the Company is successful in acquiring through the Offer at least 90% of
the Shares not then owned by the Company or its subsidiaries within four months
of the date the Offer commences, the Company has agreed in the Tender Agreement,
in accordance with Section 236 of the Companies Ordinance (New Version) 5743-
1983 of the State of Israel, to declare by notice to the remaining shareholders
of New Dimension that it is unilaterally acquiring (the "Compulsory
Acquisition") the remaining Shares not yet held by it on the terms set forth in
the Offer.
A description of the Tender Agreement is contained in the March 8, 1999
press release by the Company, filed herewith as Exhibit 99.1 and incorporated
herein by reference. The Tender Agreement is also filed herewith as Exhibit 2.1
and is incorporated herein by reference.
In connection with the Offer contemplated by the Tender Agreement, the
Company entered into shareholder agreements, dated as of March 7, 1999 (the
"Shareholder Agreements"), with (i) Einav Computer Systems Ltd., an Israeli
corporation ("ECS"), and Roni A. Einav and Dalia Prashker-Katzman, the sole
shareholders of ECS, and (ii) Yossie Hollander (each a "Principal Shareholder"
and collectively, the "Principal Shareholders"). Pursuant to the Shareholder
Agreements, (a) the Principal Shareholders have agreed to tender into the Offer
all of their Shares, which, on the date of the Tender Agreement, represented an
aggregate of 7,482,500, or approximately 61%, of the issued and outstanding
Shares, (b) the Principal Shareholders have granted to the Company an
irrevocable option to purchase all of such Shares in certain circumstances, and
(c) each Principal Shareholder has granted to the Company an irrevocable proxy
to vote such Principal Shareholder's Shares with respect to matters relating to
the Tender Agreement, the Offer or matters inconsistent with the Offer. The
Shareholder Agreements are filed herewith as Exhibits 99.2 and 99.3 and are
incorporated herein by reference.
As an inducement to the Company's execution of the Tender Agreement and
concurrently therewith, New Dimension agreed to enter into a third amendment
(the "Third Amendment") to the distribution agreement between New Dimension and
Boole & Babbage Europe, an Irish corporation ("Distributor") and a wholly owned
subsidiary of Boole & Babbage, Inc., a Delaware corporation ("Boole"), dated
October 28, 1994, as amended April 24 and October 31, 1997 (the "Distribution
Agreement"). The Third Amendment, effective as of March 6, 1999, excludes the
Offer from the provisions of the Distribution Agreement, which provides that a
"change of control" of New Dimension would provide the Distributor the right to
terminate the Distribution Agreement and receive a termination payment from New
Dimension. The Third Amendment is filed herewith as Exhibit 99.4 and is
incorporated herein by reference.
In addition to the Third Amendment, the Company and New Dimension entered
into a letter agreement, dated March 7, 1999 (the "Letter Agreement"), which
provides that New Dimension will not exercise its right to terminate the
Distribution Agreement by reason of the Company's acquisition of Boole pursuant
to the
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Agreement and Plan of Reorganization, dated October 31, 1998, by and between the
Company and Boole (the "Merger Agreement"), until April 10, 1999. The Letter
Agreement further provides that upon completion of the Company's acquisition of
Boole, the Company and the Distributor will enter into a fourth amendment (the
"Fourth Amendment") to the Distribution Agreement, which will provide for the
extension of the period during which New Dimension has the right to terminate
the Distribution Agreement as a result of the Company's acquisition of Boole
until December 31, 1999; provided, that New Dimension does not give notice of
its intent to terminate the Distribution Agreement in connection with the
Company's acquisition of Boole until the earlier of the day first succeeding (i)
the termination of the Offer or (ii) July 12, 1999, and that such termination
notice will become effective within 60 days of the receipt thereof by the
Distributor. The Letter Agreement is filed herewith as Exhibit 99.5 and is
incorporated herein by reference.
B. FINANCING.
The total amount of funds required by the Company to consummate the Offer
(including cash payments related to the cancellation of outstanding New
Dimension options) and the Compulsory Acquisition and to pay related fees and
expenses is estimated to be approximately $700 million.
The consideration for the Shares to be purchased pursuant to the Offer and
the Compulsory Acquisition is expected to be funded from the Company's working
capital and loans from U.S. banks. The Company is currently negotiating with
three major commercial banks (the "Proposed Lenders") to obtain a credit
facility in an aggregate amount of $500,000,000 (the "Proposed Credit
Facility"). On March 10, 1999, the Company received commitments from each of the
Proposed Lenders, which are filed herewith as Exhibit 99.2 and are incorporated
herein by reference. The following is a summary of the principal terms of the
Proposed Credit Facility.
The Proposed Credit Facility will consist of $500,000,000 of availability
under: (a) a 364-day revolving credit facility for general corporate purposes,
including the funding of the Offer, with renewal options by the Proposed Lenders
and with a one-year option granted to the Company, which will enable the Company
to convert the revolving loans into a one-year term loan, and (b) a competitive
bid facility which will enable the Company to request bids from the Proposed
Lenders for loans on a negotiated basis up to the existing availability under
the Proposed Credit Facility. If the Company elects to convert revolving
borrowings to a term loan, such term loan must be repaid within one year with
interest payable at specified margin levels above LIBOR.
Interest rates for loans under the Proposed Credit Facility are based upon
a margin above LIBOR within current market parameters and certain financial
ratios of the Company.
The Proposed Credit Facility will include, among others, covenants
regarding the maintenance by the Company of: (a) at least $300,000,000 in cash
and marketable securities and (b) certain financial ratios. The Proposed Credit
Facility will also contain other typical and customary covenants as well as
customary events of default.
The Proposed Credit Facility requires the Company to pay an arrangement fee
on the aggregate commitment of the Proposed Lenders together with a facility fee
(ranging from 10 to 20 basis points) on the drawn and undrawn portion of the
aggregate commitments of the Proposed Lenders.
Any loans under the Proposed Credit Facility will be repaid over time from
a variety of potential sources including, but not limited to, funds generated
internally by the Company and its subsidiaries. The Offer is not conditioned on
consummation of the Proposed Credit Facility.
C. FINANCIAL INFORMATION
The financial information provided in this Section C is being included in
this Form 8-K to provide additional information solely for the purpose of
illustrating how the New Dimension transaction might affect the Company and
Boole as a combined company from a financial point of view. The acquisition of
New Dimension is subject to numerous significant conditions, including the 90%
Condition. As a result of the 90% Condition, the acquisition of New Dimension by
the Company is uncertain. There can be no assurance that
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the Company will succeed in its acquisition of New Dimension. The following
estimated financial information may not reflect the actual financial results of
the Company, Boole and New Dimension as a combined company. In addition, the
Company has made various assumptions in its preparation of these estimates.
These assumptions and estimated financial information consist of forward looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). These statements are identified as forward looking statements
in this discussion. Important factors, risks and uncertainties that could cause
the Company's, Boole's and New Dimension's actual results to differ materially
from the results implied by these forward looking statements are also discussed.
1. SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The unaudited pro forma financial information is derived from historical
financial information for the three companies, but includes assumptions and
adjustments to reflect the proposed combination of the three companies. The
descriptions of these assumptions and adjustments include forward looking
statements that contemplate future events, calculations or determinations. These
forward looking statements are subject to various risks and uncertainties that
could cause actual pro forma financial information for the three companies to
differ materially from those set forth below, including the following items:
- Different Fiscal Year Ends. The fiscal year ends for the Company, Boole
and New Dimension occur at different dates. The Company's fiscal year end
is March 31, Boole's is September 30, and New Dimension's is December 31.
In order to present the unaudited pro forma combined results on a
comparable basis, certain adjustments were made to Boole's and New
Dimension's results of operations for certain periods to conform to those
of the Company. The selected unaudited pro forma condensed combined
financial information for the years ended March 31, 1996 and 1997 are
based on the consolidated financial statements of the Company for the
years ended March 31, 1996 and 1997, Boole for the years ended September
30, 1995 and 1996, and New Dimension for the years ended December 31,
1995 and 1996. The selected unaudited pro forma condensed combined
financial information for the year ended March 31, 1998 is based on the
consolidated financial statements of the Company for the year ended March
31, 1998; Boole for the year ended September 30, 1997 reduced by the
unaudited consolidated statement of income of Boole for the six months
ended March 31, 1997 and increased by the unaudited consolidated
statement of income of Boole for the six months ended March 31, 1998; and
New Dimension for the year ended December 31, 1998. The selected
unaudited pro forma condensed combined financial information for the nine
months ended December 31, 1997 and 1998 are based on the unaudited
consolidated financial statements of the Company for the nine months
ended December 31, 1997 and 1998; the consolidated financial statements
of Boole for the years ended September 30, 1997 and 1998 reduced by the
unaudited consolidated statements of income of Boole for the six months
ended March 31, 1997 and 1998, respectively and increased by the
unaudited consolidated statements of income of Boole for the three months
ended December 31, 1997 and 1998, respectively; and the audited
consolidated financial statements of New Dimension for the year ended
December 31, 1997 and the unaudited consolidated financial statements for
the year ended December 31, 1998 reduced by the unaudited consolidated
financial statements of income of New Dimension for the three months
ended March 31, 1997 and 1998, respectively. As a result of the
adjustments to conform Boole's fiscal year end to the year ended March
31, 1998, Boole's results of operations for the six months ended March
31, 1997, which include total revenues of $96,212,000 and a net loss of
$386,000 have not been included in the selected unaudited pro forma
condensed combined statements of income for the periods presented. The
unaudited pro forma condensed combined total assets amount is based on
the balance sheets of the Company, Boole and New Dimension at December
31, 1998.
- Purchase Price. The unaudited pro forma financial information assumes a
total purchase price for New Dimension of approximately $700 million,
including transaction costs of approximately $15 million. The purchase
price also includes approximately $2.26 million representing Boole's
basis in approximately 452,800 shares of New Dimension common stock owned
by Boole prior to the combination of the three companies. The shares of
New Dimension common stock held by Boole are
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reflected in Boole's unaudited historical financial information at current
market value which, as of December 31, 1998, approximated $48.125 per share. The
shares of New Dimension common stock held by Boole have been assumed to be owned
by the Company prior to the tender offer, and therefore are not deemed to
be outstanding as of the tender offer and not subject to the tender offer
price of $52.50 per share for purposes of calculating the purchase price.
- Purchase Price Allocation. The purchase price allocation for acquired
in-process research and development is assumed to be approximately $132.3
million, net of income taxes. The purchase price allocation for goodwill
and other intangibles is assumed to be approximately $428 million.
Amortization of goodwill and other intangibles is assumed to occur over a
four year life, resulting in an annual noncash amortization expense of
$70 million, net of income taxes, in each year following the acquisition.
The final purchase price allocation will not be known until an
independent appraisal is complete. The relative allocations of portions
of the purchase price to acquired in-process research and development and
the period over which goodwill and other intangibles will be amortized
and the resulting amortization charge will be based upon determinations
by the Company and its independent appraisers and will be subject to
review by its auditors and by the Securities and Exchange Commission. The
actual amount of any write-off of acquired in-process research and
development, remaining amortized goodwill, the actual amortization period
and the amount of annual amortization of goodwill and intangibles may
vary significantly from these assumptions.
- No Cost Savings or Revenue Enhancements. The unaudited pro forma
financial information also does not reflect the effect of cost savings
and revenue enhancements, if any, which may be realized after
consummation of the transactions.
- Elimination of Distributor Payments. The unaudited pro forma financial
information eliminates distributor payments between Boole and New
Dimension of $8.3 million, $11.3 million and $15.2 million for the years
ended March 31, 1996, 1997 and 1998, respectively. The information also
eliminates distributor payments between Boole and New Dimension of $10.5
million and $10.1 million for the nine months ended December 31, 1997 and
1998.
- Interest. The unaudited pro forma financial information assumes interest
expense related to short term borrowings of $500 million at 6.0% per
annum and reduced interest income associated with the use of $176 million
cash and investments with an approximate return of 6.0% per annum. These
adjustments include assumptions about anticipated borrowing amounts, cost
of funds and return on investment that could prove inaccurate.
- Costs Associated with Proposed Combination of the Company and Boole. The
unaudited pro forma financial information reflects an accrual, made only
to the unaudited pro forma condensed combined balance sheet, of
approximately $25.0 million (or $16.25 million, net of income taxes) for
estimated transaction fees, certain identified restructuring charges and
costs incident to the proposed merger between the Company and Boole.
Actual results incurred in connection with the proposed merger could
differ significantly from these estimates.
- Conversion of Outstanding Shares of Boole's Common Stock. The unaudited
pro forma financial information reflects the issuance of 0.675 of a share
of the Company's common stock for each share of Boole common stock
outstanding at December 31, 1998, pursuant to the terms of the Merger
Agreement. Therefore, the historical combined common stock,
paid-in-capital and retained earnings balances have been adjusted to
reflect the number of shares assumed to be issued, the difference in par
value per common share of the Company and Boole and the cancellation of
Boole treasury stock. These adjustments are based on the historical
outstanding share amounts. Actual shares outstanding on the date the
proposed merger is consummated and, therefore, the actual impact of the
conversion of outstanding shares of Boole's common stock on the
historical combined common stock, paid-in-capital and retained earnings
balances might differ from this estimate.
The following table sets forth selected unaudited pro forma condensed
combined financial information derived from the historical financial information
of the Company, Boole and New Dimension and is based on
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the assumptions and adjustments discussed above to reflect the expected
combination of the three companies. The unaudited pro forma combined income
statement data for the nine months ended December 31, 1997 and 1998 and for the
years ended March 31, 1996, 1997 and 1998 assume the merger with Boole and the
acquisition of New Dimension were both effected as of April 1, 1995. The
unaudited pro forma balance sheet data as of December 31, 1998 assumes the
merger with Boole and the acquisition of New Dimension were both effected as of
December 31, 1998.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED MARCH 31, DECEMBER 31,
-------------------------------- ---------------------
1996 1997 1998 1997 1998
-------- -------- ---------- -------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
COMPANY, BOOLE AND NEW DIMENSION
COMBINED INCOME STATEMENT DATA:
Total revenues..................... $666,373 $824,208 $1,045,300 $752,919 $ 982,255
======== ======== ========== ======== ==========
Net earnings....................... $ 29,941 $ 93,339 $ 121,078 $ 64,989 $ 205,500
======== ======== ========== ======== ==========
Diluted earnings per share......... $ 0.13 $ 0.39 $ 0.49 $ 0.27 $ 0.83
COMPANY, BOOLE AND NEW DIMENSION
COMBINED BALANCE SHEET DATA:
Total assets....................... $2,467,443
Short term borrowings.............. $ 500,000
Stockholder's equity............... $1,065,827
</TABLE>
2. ANALYSIS OF IMPACT OF NEW DIMENSION TRANSACTION ON CERTAIN PRO FORMA
ESTIMATES OF FUTURE FINANCIAL RESULTS
The Company has prepared these calculations solely to illustrate the
estimated financial impact of the New Dimension transaction on the Company and
Boole as a combined company. If the New Dimension transaction is completed, the
Company expects the New Dimension transaction to close in the first or second
quarter of its March 31, 2000 fiscal year. The Company has made the following
assumptions in preparing the following pro forma financial information. These
assumptions and the pro forma financial information are forward looking
statements. Certain risks and uncertainties could cause the Company's future
operating results to differ materially from those indicated by any of these
forward looking statements, including those described below.
- Revenue and Earnings Estimates of the Company and Boole are not Estimates
by the Company or Boole and are Being Provided Solely for Illustrative
Purposes. Combined earnings estimates for the Company and Boole for
fiscal 2000 are based upon published financial estimates of SG Cowen &
Co. dated January 25, 1999 for the Company and Boole on a combined basis.
For fiscal 2001, the Company has assumed an earnings growth rate of 25%
and applied this growth rate to the SG Cowen estimate for fiscal 2000.
The use of the SG Cowen estimates and the assumed 25% growth rate are
solely for the illustrative purpose of estimating the impact of the New
Dimension transaction on the Company and Boole as a combined company. The
Company is not adopting the SG Cowen estimates or the 25% fiscal 2001
growth rate as accurate or indicative of the Company's internal
estimates, nor is the Company giving guidance that it expects revenues,
net earnings or earnings per share to equal or exceed these assumed
amounts in fiscal 2000 or 2001.
- New Dimension Revenue and Earnings Estimates are not Estimates by the
Company or New Dimension and are Being Provided Solely for Illustrative
Purposes. BMC and New Dimension are on different fiscal years. BMC's
fiscal year ends on March 31, and New Dimension's ends on December 31. In
preparing this analysis for BMC's fiscal year ending March 31, 2000 and
2001, BMC has used estimates for New Dimension's fiscal year ending
December 31, 1999 and 2000, respectively. This is consistent with the
method of reconciling the two different fiscal year ends used in
preparing the information provided above under the heading "Selected
Unaudited Pro Forma Condensed Combined Financial Information." Earnings
estimates for New Dimension's fiscal year ending December 31, 1999 and
2000 are based upon published estimates of Goldman, Sachs & Co. dated
February 24, 1999. The use of the Goldman, Sachs estimates are solely for
the illustrative purpose of estimating the
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impact of the New Dimension transaction on the Company and Boole as a combined
company. The Company is not adopting the Goldman, Sachs estimates as accurate or
indicative of the Company's or New Dimension's internal estimates, nor is the
Company giving guidance that it expects revenues, net earnings or earnings
per share of New Dimension to equal or exceed these assumed amounts in
fiscal 2000 or 2001.
- Estimated Outstanding Shares are not Estimates by the Company and are
Being Provided Solely for Illustrative Purposes. Estimated shares
outstanding for fiscal 2000 are from the SG Cowen January 25, 1999
report. Estimated shares outstanding for fiscal 2001 were calculated by
increasing the fiscal 2000 amount by 4%. The Company is presenting these
estimates solely for the purpose of this calculation. The amount of
shares outstanding could be significantly increased by stock option
grants, stock option exercises and acquisitions for stock, which increase
the number of shares used to calculate earnings per share on a diluted
basis.
- Purchase Price Allocation; Amortization of Intangible Assets. The
purchase price allocation for acquired research and development is
assumed to be approximately $132.3 million, net of income taxes. The
purchase price allocation for goodwill and other intangibles is assumed
to be approximately $428 million. Amortization of goodwill and other
intangibles is assumed to occur over a four year life, resulting in an
annual noncash amortization expense of $70 million, net of income taxes,
in each year following the acquisition. The net earnings and earnings per
share amounts for fiscal 2000 and 2001 reflect amortization of intangible
assets acquired in the New Dimension transaction. The net earnings and
earnings per share amounts for fiscal 2000 reflect the anticipated
write-off of acquired in-process research and development of
approximately $132.3 million, net of income taxes. The net earnings and
earnings per share amounts for fiscal 2000 and 2001 reflect the annual
amortization of intangibles expense of $70 million, net of income taxes.
Excluding these non-charges, the net earnings and earnings per share
amounts in this presentation would be as follows:
- The net earnings and earnings per share amounts for fiscal 2000
excluding the anticipated write-off of acquired research and
development would be $439 million and $1.69.
- The net earnings and earnings per share amounts for fiscal 2000
excluding the anticipated write-off of acquired research and
development and amortization of intangibles would be $508 million and
$1.95.
- The net earnings and earnings per share amounts for fiscal 2001
excluding the amortization of intangibles would be $644 million and
$2.38.
The final purchase price allocation will not be known until an
independent appraisal is complete. The relative allocations of portions
of the purchase price to acquired in-process research and development and
the period over which goodwill and other intangibles will be amortized
and the resulting amortization charge will be based upon determinations
by the Company, its auditors and its independent appraisers and will be
subject to review by the Securities and Exchange Commission. The actual
amount of any write-off of acquired in-process research and development,
remaining amortized goodwill, the actual amortization period and the
amount of annual amortization of goodwill and intangibles may vary
significantly from these assumptions.
- Other Risks. The financial results and operations of the Company, Boole,
and the Company and Boole as a combined company are subject to numerous
risks and uncertainties including those set forth in the Company's
Registration Statement on Form S-4 dated February 23, 1999 under the
heading "Risk Factors" and additional risks and uncertainties applicable
to the Company's financial results and operations set forth in the
Company's Quarterly Reports on Form 10-Q and Annual Report on Form 10-K
under the heading "Certain Risks and Uncertainties that Could Affect
Future Operating Results."
The following table sets forth certain pro forma estimates of future
financial results of the New Dimension transaction on the Company and Boole as a
combined company and is based on the assumptions and adjustments discussed
above. The data further assumes that the New Dimension transaction will close on
April 1, 1999.
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<TABLE>
<CAPTION>
YEARS ENDING
MARCH 31,
----------------------
2000 2001
--------- ---------
(IN THOUSANDS,
EXCEPT PER SHARE DATA)
<S> <C> <C>
COMPANY AND BOOLE COMBINED INCOME STATEMENT DATA:
Net earnings.............................................. $508,000 $635,000
======== ========
Net earnings per share.................................... $ 1.95 $ 2.35
Shares used in calculating net earnings per share......... 260,000 270,000
COMPANY, BOOLE AND NEW DIMENSION COMBINED INCOME STATEMENT
DATA:
Net earnings.............................................. $306,700 $574,000
======== ========
Net earnings per share.................................... $ 1.18 $ 2.12
Shares used in calculating net earnings per share......... 260,000 270,000
</TABLE>
II. NEW LITIGATION
On March 9, 1999, a class action complaint was filed in the United States
District Court for the Southern District of Texas, Houston Division, styled
Rickey Hartman v. BMC Software, Inc., Max P. Watson, William M. Austin, M.
Brinkley Morse and Kevin Klausmeyer, No. B-99-0715, against the Company and four
senior executives of the Company alleging violations of Sections 10(b) and 20(a)
of the Exchange Act in connection with the Company's financial statement
presentation following its acquisition of BGS Systems, Inc. ("BGS") in March
1998 in a pooling-of-interests transaction. The lawsuit was filed following the
Company's announcement that it was restating its historical financial results to
include BGS's financial results in the Company's financial statements as a
condition to the Securities and Exchange Commission declaring effective the
Company's registration statement on Form S-4 for its pending acquisition of
Boole. The complaint alleges that the Company and the individual defendants
artificially inflated the Company's stock price by failing to include the
historical results of BGS in the Company's historical financial statements
thereby reporting inflated revenue and income growth rates during the first
three quarters of fiscal 1999 ended December 31, 1998. The plaintiffs seek an
unspecified amount of compensatory damages, interest and costs, including legal
fees.
The Company denies the allegations of wrongdoing in connection with the
matters set forth in the complaint and intends to vigorously defend the action.
An unfavorable judgment or settlement, however, could have a material adverse
effect on the financial results of the Company.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
2.1 -- Share Purchase and Tender Agreement, dated as of March 7,
1999, by and between the Company and New Dimension.
99.1 -- Press Release of the Company, dated as of March 8, 1999,
reporting on the execution of the Share Purchase and
Tender Agreement, dated as of March 7, 1999.
99.2 -- Commitment Letters, dated as of March 10, 1999, to the
Company from Proposed Lenders.
99.3 -- Shareholder Agreement, dated as of March 7, 1999, by and
among the Company, Einav Computer Systems Ltd., an
Israeli corporation, Roni A. Einav and Dalia
Prashker-Katzman.
99.4 -- Shareholder Agreement, dated as of March 7, 1999, by and
between the Company and Yossie Hollander.
99.5 -- Third Amendment to Distribution Agreement by and between
New Dimension and Distributor dated October 28, 1994, as
amended on April 24 and October 31, 1997, effective as of
March 6, 1999.
99.6 -- Letter Agreement regarding Fourth Amendment to
Distribution Agreement by and between the Company and New
Dimension, dated as of March 7, 1999.
99.7 -- Letter to Boole shareholders transmitting the Current
Report on Form 8-K.
</TABLE>
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BMC SOFTWARE, INC.
By: /s/ M. BRINKLEY MORSE
----------------------------------
Name: M. Brinkley Morse
Title: Senior Vice President
Date: March 18, 1999
<PAGE> 11
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
2.1 -- Share Purchase and Tender Agreement, dated as of March 7,
1999, by and between the Company and New Dimension.
99.1 -- Press Release of the Company, dated as of March 8, 1999,
reporting on the execution of the Share Purchase and
Tender Agreement, dated as of March 7, 1999.
99.2 -- Commitment Letters, dated as of March 10, 1999, to the
Company from Proposed Lenders.
99.3 -- Shareholder Agreement, dated as of March 7, 1999, by and
among the Company, Einav Computer Systems Ltd., an
Israeli corporation, Roni A. Einav and Dalia
Prashker-Katzman.
99.4 -- Shareholder Agreement, dated as of March 7, 1999, by and
between the Company and Yossie Hollander.
99.5 -- Third Amendment to Distribution Agreement by and between
New Dimension and Distributor dated October 28, 1994, as
amended on April 24 and October 31, 1997, effective as of
March 6, 1999.
99.6 -- Letter Agreement regarding Fourth Amendment to
Distribution Agreement by and between the Company and New
Dimension, dated as of March 7, 1999.
99.7 -- Letter to Boole shareholders transmitting the Current
Report on Form 8-K.
</TABLE>
<PAGE> 1
EXHIBIT 2.1
SHARE PURCHASE AND TENDER AGREEMENT
by and between
BMC SOFTWARE, INC.
and
NEW DIMENSION SOFTWARE LTD.
Dated as of March 7, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
ARTICLE I THE OFFER.......................................................................................2
1.1. The Offer.......................................................................................2
1.2. Company Actions.................................................................................3
1.3. Shareholder Lists...............................................................................4
1.4. Directors.......................................................................................4
ARTICLE II OTHER AGREEMENTS RELATING TO THE OFFER..........................................................4
2.1. Options and Other Purchase Rights...............................................................4
2.2. Compulsory Acquisition..........................................................................5
2.3. Reservation of Right to Revise Structure........................................................5
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY...................................................5
3.1. Organization and Standing.......................................................................5
3.2. Agreement Authorized and its Effect on Other Obligations........................................6
3.3. Capitalization..................................................................................6
3.4. Subsidiaries....................................................................................6
3.5. Reports and Financial Statements................................................................7
3.6. Liabilities.....................................................................................8
3.7. Additional Company Information..................................................................8
3.8. Certain Agreements..............................................................................8
3.9. No Undisclosed Contracts or Defaults............................................................9
3.10. Absence of Certain Changes and Events...........................................................9
3.11. Taxes...........................................................................................9
3.12. Intellectual Property..........................................................................11
3.13. Software Contracts.............................................................................13
3.14. Title to Properties............................................................................14
3.15. Environmental Compliance.......................................................................14
3.16. Compliance with Other Laws; Permits............................................................15
3.17. Finder's Fee; Transaction Expenses.............................................................16
3.18. Compliance with ERISA..........................................................................16
3.19. Consents; Litigation...........................................................................17
3.20. Product Warranty...............................................................................18
3.21. Investment Company.............................................................................18
3.22. Inapplicability of Certain Statutes............................................................18
3.23. Banking Arrangements...........................................................................18
3.24. Relationships with Related Persons.............................................................18
3.25. Restrictions on Business Activities............................................................18
3.26. Offer Documents; Schedule 14D-9................................................................19
3.27. Grants, Incentives and Subsidies...............................................................19
3.28. Industrial Company.............................................................................19
</TABLE>
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<PAGE> 3
<TABLE>
<S> <C> <C>
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER....................................................20
4.1. Organization and Qualification.................................................................20
4.2. Authorization and Validity of Agreement........................................................20
4.3. Consents and Approvals.........................................................................20
4.4. No Violation...................................................................................20
4.5. Litigation.....................................................................................21
4.6. Offer Documents; Schedule 14D-9................................................................21
4.7. Brokers and Finders............................................................................21
4.8. Ownership of Shares............................................................................21
ARTICLE V COVENANTS......................................................................................22
5.1. Conduct of Business Pending the Closing Date...................................................22
5.2. Access; Confidentiality........................................................................23
5.3. Notice of Certain Matters......................................................................23
5.4. Non-Solicitation...............................................................................24
5.5. Takeover Statutes..............................................................................24
5.6. Cooperation....................................................................................24
5.7. Public Announcements...........................................................................25
5.8. Acquisition Proposals..........................................................................25
5.9. D&O Indemnification............................................................................26
5.10. Purchaser Plans................................................................................27
5.11. Purchaser Stock Options........................................................................28
5.12. Israeli Operations.............................................................................28
5.13. Boole & Babbage Shares.........................................................................28
ARTICLE VI TERMINATION....................................................................................28
6.1. Termination....................................................................................28
6.2 Effect of Termination..........................................................................29
6.3. Fees and Expenses..............................................................................30
ARTICLE VII MISCELLANEOUS........................................................................................30
7.1. No Survival....................................................................................30
7.2. Notices........................................................................................30
7.3. Certain Definitions............................................................................31
7.4. Entire Agreement...............................................................................32
7.5. Assignment; Binding Effect.....................................................................32
7.6. Amendments.....................................................................................32
7.7. Waivers........................................................................................32
7.8. Captions.......................................................................................32
7.9. Counterparts...................................................................................33
7.10. Validity.......................................................................................33
7.11. Governing Law..................................................................................33
7.12. New Offer......................................................................................33
</TABLE>
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<PAGE> 4
EXHIBITS:
Exhibit A - Conditions to the Offer
Exhibit 1.2 - Form of Amendment to Articles of Association
Exhibit B - Form of Option Cancellation Agreement
-iii-
<PAGE> 5
SHARE PURCHASE AND TENDER AGREEMENT
THIS SHARE PURCHASE AND TENDER AGREEMENT is dated as of March 7, 1999
by and between New Dimension Software Ltd., an Israeli corporation (the
"Company"), and BMC Software, Inc., a Delaware corporation ("Purchaser").
RECITALS
WHEREAS, the respective Boards of Directors of the Company and
Purchaser have approved the acquisition of the Company by Purchaser, upon the
terms and subject to the conditions set forth herein;
WHEREAS, the Board of Directors of the Company deems it desirable and
in the best interests of the Company and its shareholders that the Company enter
into this Agreement which provides for a cash tender offer for Shares (as
defined below) pursuant to Section 236 of the Companies Ordinance (New Version)
5743-1983 of the State of Israel (the "Companies Ordinance"), whereby, among
other things, all of the issued and outstanding ordinary shares, par value NIS
0.01 per share, of the Company ("Shares") that are validly tendered pursuant to
such offer, shall be purchased by Purchaser in exchange for an amount of cash
equal to the Per Share Amount (defined below), upon the terms and subject to the
conditions set forth herein and in accordance with the laws of the State of
Israel;
WHEREAS, Purchaser is unwilling to enter into this Agreement (and
effect the transactions contemplated hereby) unless, contemporaneously with the
execution and delivery hereof, certain beneficial and record holders of the
Shares enter into Shareholder Agreements under which such holders have, among
other things, agreed to tender their Shares into the Offer (the "Shareholder
Agreements") and, in order to induce Purchaser to enter into this Agreement,
such holders are executing and delivering concurrently herewith the Shareholder
Agreements;
WHEREAS, as a material inducement for Purchaser to enter into this
Agreement, the Company has agreed to amend the Distribution Agreement dated
October 26, 1997, as previously amended, between the Company and Boole & Babbage
Europe effective as of the date of this Agreement; and
WHEREAS, as a condition to entering into this Agreement, Purchaser has
required the Company to settle all claims with members of its Board of Directors
for a maximum settlement amount and, as part of such requirement, certain
directors of the Company have agreed to release all claims against the Company
relating to their relationship with the Company prior to the Closing Date (as
defined below) pursuant to those certain Releases dated as of the date of this
Agreement (the "Director Releases"); and
NOW, THEREFORE, in consideration of the foregoing and of the respective
representations, warranties, covenants and agreements set forth in this
Agreement, the parties hereto hereby agree as follows:
<PAGE> 6
ARTICLE I
THE OFFER
1.1. The Offer.
(a) As promptly as practicable (but in no event later than five
business days following the public announcement of the execution hereof),
Purchaser shall commence (within the meaning of Rule 14d-2 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")), an offer to purchase all
of the Company's outstanding Shares, at a price of $52.50 per Share (as such
amount may be increased, the "Per Share Amount"), net to the seller in cash (as
such offer may be amended in accordance with the terms of this Agreement, the
"Offer"), subject to the conditions set forth in Exhibit A hereto and all
provisions under the laws and regulations of the State of Israel.
Notwithstanding the foregoing, the directors of the Company will not have the
right to tender their Shares unless the Company's shareholders shall have
approved such right in accordance with Section 1.2(b). If, between the date of
this Agreement and the date on which Shares are accepted for payment pursuant to
the Offer (the "Closing Date"), the outstanding Shares are changed into a
different number or class of shares by reason of any stock split, stock
dividend, reverse stock split, reclassification, recapitalization or other
similar transaction, then the Per Share Amount shall be appropriately adjusted.
Purchaser expressly reserves the right to amend or modify the terms of the Offer
at any time prior to acceptance of Shares for payment pursuant to the Offer,
except that the Purchaser shall not, without the prior written consent of the
Company, (i) decrease or change the form of the consideration payable in the
Offer, (ii) impose additional conditions to the Offer, (iii) change the
conditions to the Offer, except that Purchaser in its sole discretion may waive
any of the conditions to the Offer, or (iv) make any other change in the terms
or conditions of the Offer that is adverse to the holders of Shares. Purchaser
will, on the terms and subject to the prior satisfaction or waiver of the
conditions to the Offer, accept for payment and pay for all Shares validly
tendered and not withdrawn pursuant to the Offer promptly after expiration of
the Offer. The Offer shall be open for an initial period of 20 business days
from the date of commencement thereof; provided that, Purchaser may, in
accordance with applicable law, extend the Offer if the conditions to the Offer
have not been satisfied. The Company agrees that no Shares held by the Company
will be tendered to Purchaser pursuant to the Offer; provided, that Shares held
beneficially or of record by any plan, program or arrangement sponsored or
maintained for the benefit of employees of the Company shall not be deemed to be
held by the Company, regardless of whether the Company has, directly or
indirectly, the power to vote or control the disposition of such Shares. The
obligations of Purchaser to commence the Offer and to accept for payment and to
pay for Shares validly tendered on or prior to the expiration of the Offer and
not withdrawn shall be subject only to the conditions set forth in Exhibit A
hereto. As long as the Company or its Board of Directors shall not have asserted
any of their rights pursuant to Section 5.8(b), Purchaser shall at the request
of the Company extend the Offer if at any scheduled expiration date of the Offer
any of the conditions to Purchaser's obligations to purchase Shares shall not be
satisfied; provided, however, that Purchaser shall not be required to extend the
Offer beyond July 12, 1999.
(b) On the date of commencement of the Offer, Purchaser shall file with
the Securities and Exchange Commission (the "SEC") a Tender Offer Statement on
Schedule 14D-1 (together with all amendments thereto, the "Schedule 14D-1") with
respect to the Offer, which shall contain the offer to purchase and related
letter of transmittal and other ancillary offer documents and instruments
-2-
<PAGE> 7
pursuant to which the Offer will be made (collectively, together with any
supplements or amendments thereto, the "Offer Documents"). Purchaser will
disseminate the Offer Documents to holders of Shares. Each of Purchaser and the
Company will promptly correct any information provided by it for use in the
Offer Documents that becomes false or misleading in any material respect and
Purchaser will take all steps necessary to cause the Offer Documents as so
corrected to be filed with the SEC and to be disseminated to holders of Shares,
in each case as and to the extent required by applicable law. The Company and
its counsel shall be given a reasonable opportunity to review and comment on the
Offer Documents prior to their filing with the SEC. Purchaser agrees to provide
the Company with any comments that may be received from the SEC or its staff
with respect to the Offer Documents promptly after receipt thereof and to
further provide the Company with a reasonable opportunity to participate in all
substantive communications with the SEC and its staff relating to the Offer
Documents, the Offer or the transactions contemplated thereby.
1.2. Company Actions.
(a) The Company hereby consents to the Offer and represents and
warrants that its Board of Directors (at a meeting or meetings duly called and
held) has (a) unanimously determined as of the date hereof that the Offer is
fair to and in the best interests of the shareholders of the Company and (b)
resolved, subject to the directors of the Company not having the right to tender
their Shares or the right to receive any compensation for services provided to
the Company pursuant to the Director Releases, unless the Company's shareholders
shall have approved such right in accordance with Section 1.2(b), to recommend
acceptance of the Offer and approval of the matters set forth in Section 1.2(b)
by the shareholders of the Company. The Company further represents that CIBC
Oppenheimer Corp. has rendered to the Board of Directors of the Company its
opinion, dated as of the date hereof, to the effect that the Per Share Amount is
fair to the holders of the Shares from a financial point of view. As soon as
practicable after the commencement of the Offer, the Company shall file or cause
to be filed with the SEC a Solicitation/Recommendation Statement on Schedule
14D-9 (the "Schedule 14D-9") containing the unanimous recommendation of the
Board of Directors in favor of the Offer and shall permit the inclusion in the
Schedule 14D-1 of such recommendation. Each of the Company and Purchaser will
promptly correct any information provided by it for use in the Schedule 14D-9
that becomes false or misleading in any material respect and the Company will
take all steps necessary to cause the Schedule 14D-9 as so corrected to be filed
with the SEC and to be disseminated to holders of Shares, in each case as and to
the extent required by applicable law. Purchaser and its counsel shall be given
a reasonable opportunity to review and comment on the Schedule 14D-9 prior to
its filing with the SEC. The Company agrees to provide Purchaser with any
comments that may be received from the SEC or its staff with respect to the
Schedule 14D-9 promptly after receipt thereof and to further provide Purchaser
with a reasonable opportunity to participate in all substantive communications
with the SEC and its staff relating to the Schedule 14D-9, the Offer or the
transactions contemplated thereby.
(b) The Company agrees, as soon as practicable after the date of this
Agreement, to duly call, give notice of, convene and hold an extraordinary
general meeting of its shareholders (the "Special Meeting") for the purpose of
submitting for approval by the Company's shareholders proposals to (i) approve
the right of the directors of the Company to sell their Shares to the Purchaser
pursuant to the Offer and the transactions contemplated thereby and the right to
receive any compensation for services provided to the Company from the Company
pursuant to the Director
-3-
<PAGE> 8
Releases, and (ii) approve, by special resolution, an amendment to the Company's
Articles of Association to provide that the holders of at least 60% of the
issued and outstanding Shares of the Company shall be entitled to appoint and
remove any and all members of the Board of Directors of the Company, by means of
a written notice signed by such holders to the Company (collectively, the
"Shareholder Approvals"). The Company further agrees to use its best efforts to
solicit proxies in favor of and to take all other actions necessary to obtain
the Shareholder Approvals at the Special Meeting. The amendment to the Articles
of Association shall be in the form attached hereto as Exhibit 1.2(b). The
Company will provide Purchaser with a reasonable opportunity to review and
approve all proxy or other materials to be sent to shareholders in connection
with the Special Meeting.
1.3. Shareholder Lists. In connection with the Offer, the Company shall
promptly furnish or cause to be furnished to Purchaser mailing labels and
security position listings and any available listing or computer file containing
the names and addresses of the record holders of Shares as of a recent date and
shall furnish Purchaser with such information reasonably available to the
Company and such assistance as Purchaser or its agents may reasonably request in
communicating the Offer to the record and beneficial holders of Shares. Subject
to the requirements of applicable law and except for such steps as are necessary
to disseminate the Offer Documents and any other documents necessary to
consummate the Offer, Purchaser and its affiliates will hold in confidence such
listings and other information, shall use such information only in connection
with the Offer and, if this Agreement is terminated, shall, and shall cause its
agents or other representatives to, promptly deliver to the Company all copies
of all such information (and extracts or summaries thereof) then in their
possession.
1.4. Directors. Subject to obtaining the Shareholder Approvals,
promptly upon the purchase by Purchaser pursuant to the Offer of such number of
Shares as represents at least 60% of the outstanding Shares and from time to
time thereafter, Purchaser shall be entitled to designate the entire Board of
Directors of the Company, and the Company shall, upon request of Purchaser, take
all actions necessary to enable such Purchaser designees to be so elected or
appointed.
ARTICLE II
OTHER AGREEMENTS RELATING TO THE OFFER
2.1. Options and Other Purchase Rights.
(a) The Company shall use its best efforts to obtain from each holder
of options ("Company Options") granted under the stock option plans of the
Company or any subsidiary of the Company ("Company Option Plans") an agreement
in the form of Exhibit B hereto pursuant to which on the Closing Date the
Company will cancel such Company Options and make the payments described below.
On the Closing Date, each Company Option for which an agreement from the holder
thereof has been obtained pursuant to this Section 2.1(a) that is outstanding
immediately prior to the Closing Date, whether or not then exercisable or
vested, will be canceled by the Company effective on the Closing Date, and the
holders thereof shall be entitled to receive, for each Share subject to such
Company Option, in settlement and cancellation thereof, an amount in cash equal
to the positive difference, if any, between the Per Share Amount and the
exercise price per share of such Company Option, which amount shall be paid by
the Company at the time the Company Option
-4-
<PAGE> 9
is canceled; provided, however, that for purposes of calculating the amount of
cash to be paid in respect of the cancellation of Company Options that are
options to purchase shares of EagleEye Control Software Ltd. capital stock
rather than Shares of the Company, the Per Share Amount used in the foregoing
calculation shall be multiplied by 9.085. All applicable withholding taxes
attributable to the payments made hereunder or to distributions contemplated
hereby shall be deducted from the amounts payable under this Section 2.1(a) and
all such taxes attributable to the cancellation of Company Options shall be
withheld from the proceeds received in connection with the cancellation thereof.
(b) To the extent permitted by the Company Option Plans, the Company
Option Plans shall terminate on the Closing Date and any rights under any
provisions in any other plan, program or arrangement providing for the issuance
or grant by the Company of any interest in respect of the capital stock of the
Company shall be canceled as of the Closing Date.
(c) Purchaser shall make available to the Company all funds required to
make the payments to the holders of Company Options as set forth in Section
2.1(a) above.
2.2. Compulsory Acquisition. If Purchaser is successful in acquiring
pursuant to the Offer at least 90% of the Shares not owned by Purchaser or its
subsidiaries within four months after the date the Offer commences (the "Initial
Period"), Purchaser shall, pursuant to Section 236 of the Companies Ordinance,
declare by notice to the remaining shareholders (the "Notice of Acquisition")
that it is unilaterally acquiring (the "Compulsory Acquisition") the remaining
Shares not yet held by it on the same terms as those set forth in the Offer. The
Notice of Acquisition will be delivered at any time during the two month period
following the Initial Period. The Offer will serve as a "Plan" or "Contract"
under Section 236 of the Companies' Ordinance.
2.3. Reservation of Right to Revise Structure. At Purchaser's election,
the Offer may alternatively be structured so that the issued and outstanding
Shares transferred to Purchaser shall be transferred to a newly formed, wholly
owned subsidiary of Purchaser provided that no such change shall alter or change
the Per Share Amount. In the event of such an election by Purchaser, the parties
agree to execute the appropriate documents to reflect such an election.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The Company represents and warrants subject to the exceptions
specifically described in writing in the respective sections of the disclosure
schedule delivered by the Company to Purchaser and dated the date hereof (the
"Company Disclosure Schedule") as follows:
3.1. Organization and Standing. The Company is a corporation duly
organized, validly existing under the laws of the State of Israel, has full
requisite corporate power and authority to carry on its business as it is
currently conducted, and to own and operate the properties currently owned and
operated by it, and is duly qualified or licensed to do business and is in good
standing as a foreign corporation authorized to do business in all jurisdictions
in which the character of the properties owned or the nature of the business
conducted by it would make such qualification or
-5-
<PAGE> 10
licensing necessary, except where the failure to be so qualified or licensed
would not reasonably be expected to have a Material Adverse Effect.
3.2. Agreement Authorized and its Effect on Other Obligations. The
consummation of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action on the part of the Company other
than the Shareholder Approvals, and this Agreement is a valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms, except as enforceability may be limited by (i) bankruptcy, insolvency,
reorganization, debtor relief or similar laws affecting the rights of creditors
generally, and (ii) general principles of equity. The purchase of Shares
pursuant to the Offer will not conflict with or result in a violation or breach
of any term or provision of, nor constitute a default under, (i) the Memorandum
of Association or Articles of Association of the Company or (ii) any indenture,
mortgage, deed of trust, lease, contract or other agreement to which the Company
or any of its subsidiaries is a party or by which the Company or any of its
subsidiaries or their properties are bound, other than such violations, breaches
or defaults as would not reasonably be expected to have a Material Adverse
Effect. Section 3.2 of the Company Disclosure Schedule lists all holders of any
material indebtedness for borrowed money of the Company as of the date of this
Agreement, the lessors of any material property leased by Company and the other
parties to any Material Contract (as defined in Section 3.9) to which Company is
a party as of the date of this Agreement in each case whose consent to the Offer
or the Compulsory Acquisition is required.
3.3. Capitalization. The authorized capitalization of the Company
consists of 20,000,000 ordinary shares, par value NIS 0.01 per share, of which
as of the date hereof 12,258,898 Shares were issued and outstanding, and an
additional 950,705 Shares were reserved for issuance in conjunction with various
employee benefit plans. All of such outstanding shares are validly issued, fully
paid and nonassessable, and were not issued in violation of any preemptive
rights of any shareholder. Section 3.3 of the Company Disclosure Schedule sets
forth a complete list as of the date of this Agreement of all outstanding
options, warrants or obligations of any kind to issue any shares of capital
stock of Company or any subsidiary thereof, the owners thereof and the amounts
owned.
3.4. Subsidiaries. Section 3.4 of the Company Disclosure Schedule lists
the subsidiary corporations of the Company existing as of the date hereof, and
shows as to each of such subsidiary corporations the percentage of the total
outstanding stock thereof which is owned by the Company at such date. All
outstanding shares of stock of the subsidiary corporations owned by the Company
are validly issued, fully paid, and nonassessable, and the Company has good and
valid title thereto free and clear of any mortgage, pledge, lien, charge,
security interest, option, right of first refusal, preferential purchase right,
defect, encumbrance or other right or interest of any other person
(collectively, an "Encumbrance"), except for shares of capital stock or other
similar ownership interests of certain subsidiaries of the Company that are
owned by certain nominee equity holders as required by the applicable law of the
jurisdiction of organization of such subsidiaries. Each such subsidiary is a
corporation duly organized, validly existing, and in good standing (or
equivalent concept with respect to jurisdictions that do not recognize such
concept) under the laws of the jurisdiction under which it is incorporated and
has full requisite corporate power and authority to own its property and carry
on its business as presently conducted by it and is, or on the Closing Date will
be, duly qualified or licensed to do business and is, or on the Closing Date
will be, in good standing (or equivalent concept with respect to jurisdictions
that do not recognize such concept) as
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<PAGE> 11
a foreign corporation authorized to do business in all jurisdictions in which
the character of the properties owned or the nature of the business conducted by
such subsidiary makes such qualification or licensing necessary, except where
the failure to be so qualified or licensed would not reasonably be expected to
have a Material Adverse Effect on the Company. As hereinafter used in this
Article III, the term "Company" also includes any and all of its directly and
indirectly held subsidiaries, except where the context indicates to the
contrary; provided, however, that for purposes of Sections 3.7(a) and 3.18, the
term "Company" further includes any corporation, trade, business or entity under
common control with the Company within the meaning of Section 414(b), (c), (m)
or (o) of the Internal Revenue Code of 1986, as amended (the "Code") or Section
4001 of ERISA.
3.5. Reports and Financial Statements.
(a) The Company has previously furnished to Purchaser true and complete
copies of (a) all annual reports filed by Company with the SEC pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), since December
31, 1995, (b) all other reports filed with the SEC since December 31, 1995, and
(c) any registration statements (other than Form S-8s) of Company declared
effective by the SEC since December 31, 1995. The consolidated financial
statements of Company and its subsidiaries included in the Company's most recent
report on Form 20-F and any other reports filed with the SEC by the Company
under the Exchange Act subsequent thereto (collectively, the "Company Reports")
were, or (if filed after the date hereof) will be, prepared in accordance with
United States generally accepted accounting principles applied on a consistent
basis during the periods involved and fairly present, or will fairly present,
the consolidated financial position for Company and its subsidiaries as of the
dates thereof and the consolidated results of their operations and changes in
financial position for the periods then ended (except with respect to interim
period financial statements, for normal year-end adjustments which are not
material and for the absence of footnotes). The Company Reports did not at the
time each of the Company Reports was filed with the SEC (or, if amended or
superseded by a subsequent filing, then on the date of such filing), and (if
filed after the date hereof) will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under whey they
were made, not misleading. Since December 31, 1995, the Company has filed with
the SEC all reports required to be filed by the Company under the Exchange Act
and the rules and regulations of the SEC.
(b) Included in Section 3.5(b) of the Company Disclosure Schedule are
preliminary unaudited consolidated financial statements of the Company and its
subsidiaries for the year ended December 31, 1998 (the "1998 Preliminary
Statements"). As soon as they become available and prior to the Closing Date,
the Company will deliver to the Purchaser audited financial statements of
Company and its subsidiaries for the year ended December 31, 1998 (the "1998
Audited Statements"). The 1998 Preliminary Statements were, and the 1998 Audited
Statements will be, prepared in accordance with United States generally accepted
accounting principles applied on a consistent basis during the periods involved
and fairly present, or will fairly present, the consolidated financial position
for Company and its subsidiaries as of the date thereof and the consolidated
results of their operations and changes in financial position for the period
then ended. Except as set forth in Section 3.5(b) of the Company Disclosure
Schedule, the 1998 Preliminary Statements and the 1998 Audited Statements will
not differ in any material respect.
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<PAGE> 12
3.6. Liabilities. Company has no liabilities of the type required to be
disclosed in the consolidated financial statements of Company prepared in
accordance with United States generally accepted accounting principles applied
on a consistent basis, except for: (i) liabilities disclosed in the financial
statements (including any related notes) contained in the Company Reports and
(ii) liabilities incurred in the ordinary course of business.
3.7. Additional Company Information. Set forth in Section 3.7 of the
Company Disclosure Schedule are true, complete and correct lists of the
following items, and Company agrees that upon the request of Purchaser, it will
furnish to Purchaser true, complete and correct copies of any documents referred
to in such lists:
(a) Employee Compensation Plans. All bonus, incentive compensation,
stock option, deferred compensation, profit-sharing, retirement, pension,
welfare, severance pay, supplemental income, group insurance, death benefit, or
other fringe benefit plans, arrangements or trust agreements that are in effect
as of the date of this Agreement covering active, former or retired employees of
the Company (collectively, "Company Plans"), together with copies of the most
recent Internal Revenue Service determination letters that have been received,
if any, with respect to such plans;
(b) Certain Salaries. The names and salary rates as of the date of this
Agreement of all officers and employees of the Company as of the date of this
Agreement whose regular annual base salary rate as of the date of this Agreement
is $125,000 (or the equivalent in foreign currency) or more, together with any
bonuses paid or payable to such persons for the fiscal year ended December 31,
1998, or since that date, and, to the extent existing on the date of this
Agreement, all arrangements with respect to any bonuses to be paid to such
employees from and after the date of this Agreement;
(c) Employee Agreements. Any collective bargaining agreements of the
Company as of the date of this Agreement with any labor union or other similar
representative of employees, including amendments, supplements, and
understandings, and all employment and consulting agreements of the Company as
of the date of this Agreement with employees whose regular annual base salary
exceeds $125,000 (or the equivalent in foreign currency) and with consultants
(excluding regular outside legal counsel and independent auditors) whose annual
compensation from the Company exceeds $125,000 (or the equivalent in foreign
currency); and
(d) Guaranties. All material third party indebtedness, liabilities and
commitments of others as to which the Company is a guarantor, endorser,
co-maker, surety, or accommodation maker (excluding liabilities as an endorser
of checks and the like in the ordinary course of business) and all letters of
credit, whether stand-by or documentary, issued by any third party.
3.8. Certain Agreements. The consummation of the transactions
contemplated by this Agreement will not cause or result in the acceleration or
vesting of any benefits, payments or rights covering active, former or retired
employees of the Company under (i) any Company Plans or (ii) any other
agreements to which the Company is a party.
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3.9. No Undisclosed Contracts or Defaults. Except as may be specified
in the Company Reports, the Company is not a party as of the date of this
Agreement, to, or bound as of the date of this Agreement by, any material
contract or arrangement of a nature required to be filed as an exhibit to an
annual report filed by the Company under the Exchange Act which is to be
performed after the Closing Date (a "Material Contract"), nor is the Company in
default in any material obligation or covenant on its part to be performed under
any lease or other contract that is material to the business of the Company and
its subsidiaries taken as a whole.
3.10. Absence of Certain Changes and Events. Except as set forth in the
Company Reports or Section 3.10 of the Company Disclosure Schedule, other than
as a result of the transactions contemplated by this Agreement, between December
31, 1997 and the date of this Agreement, there has not been:
(a) Financial Change. Any adverse change in the financial condition,
backlog, operations or business of the Company which could reasonably be
expected to have a Material Adverse Effect;
(b) Property Damage. Any damage, destruction, or loss to the business
or properties of the Company (whether or not covered by insurance) that could
reasonably be expected to have a Material Adverse Effect;
(c) Dividends. Any declaration, setting aside, or payment of any
dividend or other distribution in respect of the Shares, or any direct or
indirect redemption, purchase or any other acquisition by the Company of any
Shares;
(d) Labor Disputes. Any labor dispute (other than routine grievances);
or
(e) Employment Arrangements. Any increase in compensation, bonus,
deferred compensation, stock options or other consideration of any employee or
director other than in the ordinary course of business consistent with past
practice.
3.11. Taxes.
(a) Tax Returns Filed; Taxes Paid. Except with respect to failures
which, in the aggregate, could not reasonably be expected to have a Material
Adverse Effect and except as set forth in Section 3.11(a) of the Company
Disclosure Schedule, (i) all returns and reports ("Tax Returns") of or with
respect to any and all taxes, charges, fees, levies, assessments, duties or
other amounts payable to any federal, state, local or foreign taxing authority
or agency, including, without limitation, (x) income, franchise, profits, gross
receipts, minimum, alternative minimum, estimated, ad valorem, value added,
sales, use, service, real or personal property, capital stock, license, payroll,
withholding, disability, employment, social security, workers compensation,
unemployment compensation, utility, severance, excise, stamp, windfall profits,
transfer and gains taxes, (y) customs, duties, imposts, charges, levies or other
similar assessments of any kind, and (z) interest, penalties and additions to
tax imposed with respect thereto ("Tax" or "Taxes") which are required to be
filed on or before the Closing by or with respect to the Company have been or
will be duly and timely filed, (ii) all Taxes which have become or will become
due with respect to the period
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<PAGE> 14
covered by each such Tax Return have been or will be timely paid in full, (iii)
all withholding Tax requirements imposed on or with respect to the Company on or
before the Closing have been or will be satisfied in full in all respects, and
(iv) no penalty, interest or other charge is or will become due with respect to
the late filing of any such Tax Return or late payment of any such Tax.
(b) Open Returns Disclosed. All federal and state income and franchise
Tax Returns of or with respect to the Company with unexpired or extended
statutes of limitations which have been audited by the applicable governmental
authority are set forth in Section 3.11 of the Company Disclosure Schedule.
(c) Extensions Disclosed. As of the date of this Agreement, except as
set forth in Section 3.11(c) of the Company Disclosure Schedule, there is not in
force any extension of time with respect to the due date for the filing of any
federal or state income or franchise Tax Return of or with respect to the
Company or any waiver or agreement for any extension of time for the assessment
or payment of any federal or state income or franchise Tax of or with respect to
the Company.
(d) Claims Disclosed. There is no claim against the Company for any
Taxes, and no assessment, deficiency or adjustment has been asserted or proposed
in writing with respect to any Tax Return of or with respect to the Company
other than those which could not reasonably be expected to have a Material
Adverse Effect.
(e) Scheduled Tax Liabilities Sufficient. The total amounts set up as
liabilities for current and deferred Taxes in the financial statements referred
to in Section 3.5 of this Agreement are sufficient to cover in all material
respects the payment of all Taxes, whether or not assessed or disputed, which
are, or are hereafter found to be, or to have been, due by or with respect to
the Company up to and through the periods covered thereby.
(f) Tax Allocation Agreements. There are no Tax allocation or sharing
agreements other than between or among the Company and its wholly owned
subsidiaries.
(g) No Tax Liens. Except for statutory liens for current Taxes not yet
due, no material liens for Taxes exist upon the assets of the Company.
(h) Change of Accounting Method. The Company will not be required to
include any amount in income for any taxable period beginning after December 31,
1997 as a result of a change in accounting method for any taxable period or
pursuant to any agreement with any Tax authority with respect to any such
taxable period.
(i) Partnerships. As of the date of this Agreement, none of the
property of the Company is held in an arrangement for which partnership Tax
Returns are being filed.
(j) Safe Harbor Leases; Tax-Exempt Use Property. As of the date of this
Agreement, none of the property of the Company is subject to a safe-harbor lease
(pursuant to section 168(f)(8) of the Internal Revenue Code of 1954 as in effect
after the Economic Recovery Tax Act of 1981 and before the Tax Reform Act of
1986) or is "tax-exempt use property" (within the meaning of
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<PAGE> 15
section 168(h) of the Code) or "tax-exempt bond financed property" (within the
meaning of section 168(g)(5) of the Code).
(k) Section 341(f) Election. The Company has not made an election under
section 341(f) of the Code.
(l) Tax Incentives. Section 3.11(l) of the Company Disclosure Schedule,
together with the Company's annual report on Form 20-F for the year ended
December 31, 1997, lists each tax incentive to which the Company is entitled
under the laws of the State of Israel, the period for which such tax incentive
applies, and the nature of such tax incentive. The Company has complied with all
material requirements of Israeli law to be entitled to claim any tax incentive.
Subject to the receipt of the approvals set forth in Section 3.19 below, except
as disclosed in Section 3.11(l) of the Company Disclosure Schedule, the
consummation of the Offer and the Compulsory Acquisition will not adversely
affect the remaining duration of the incentive or require any recapture of any
previously claimed incentive, and no consent or approval of any governmental
authority is required, other than as contemplated by Section 3.19, prior to
consummation of the Offer or Compulsory Acquisition in order to preserve the
entitlement of the Company to any such incentive. Except as set forth on Section
3.11(l) of the Company Disclosure Schedule, no subsidiary of the Company is
entitled to any benefit of the type described in this Section 3.11(l).
3.12. Intellectual Property. For purposes of this Section 3.12 and
Section 3.13, "Third Party Distributed Software" means the third party software
programs currently being distributed by the Company, whether as integrated or
bundled with any of the Company's software products or as a separate stand-alone
product, and "Internally Developed Software" means all software programs
developed for or on behalf of the Company and currently being distributed by the
Company and all software products or programs under development by the Company
but not currently distributed, other than Third Party Distributed Software.
Third Party Distributed Software and Internally Developed Software shall
collectively be referred to as the "Software Programs."
(a) Ownership. The Company exclusively owns all Internally Developed
Software, including without limitation those Software Programs listed on Section
3.12(a) of the Company Disclosure Schedule, free and clear of all mortgages,
pledges, liens, security interests, conditional sales agreements, encumbrances
or charges of any kind (other than object code end-user licenses in the ordinary
course of business and Marketing Agreements (as defined below)). The Company
exclusively owns all material patents, trademarks, service marks, trade names
and copyrights (including registrations, licenses and applications pertaining
thereto) and all other material intellectual property rights, trade secrets and
other confidential or proprietary information, processes and formulae embodied
in the Internally Developed Software (the "Intellectual Property"), free and
clear of all mortgages, pledges, liens, security interests, conditional sales
agreements, encumbrances or charges of any kind (other than object code end-user
licenses in the ordinary course of business and Marketing Agreements). Section
3.12 of the Company Disclosure Schedule contains a complete list of all
registered trademarks and service marks, all reserved trade names, all
registered copyrights and all filed patent applications and issued patents
relating to the Internally Developed Software.
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<PAGE> 16
(b) Notices. In no instance has the eligibility of the Internally
Developed Software for protection under applicable copyright law been forfeited
to the public domain by omission of any required notice or any other action.
(c) Protection. The source code and related technical system
documentation for the Internally Developed Software are protected by the Company
as trade secrets in accordance with trade secret protections sufficient to
maintain trade secret status under applicable law. Except as set forth in
Section 3.12(c) of the Company Disclosure Schedule, the source code and related
technical system documentation for the Internally Developed Software have been
disclosed by the Company only to (i) employees and contractors who have had a
"need to know" the contents thereof in connection with the performance of their
duties to the Company and who have executed nondisclosure agreements
substantially in the form provided by the Company to Purchaser, and (ii) third
parties under source code escrow agreements.
(d) Personnel. The Company has maintained a policy in accordance with
customary software industry standards whereby its personnel who during the three
years prior to the date hereof have been employees, agents, consultants and
contractors of the Company and who (on behalf of the Company) have contributed
to or participated in the conception and development of Internally Developed
Software and related technical documentation that is material to the operation
of the Company's business have executed nondisclosure and noncompetition
agreements substantially in the form provided by the Company to Purchaser. All
personnel who have contributed to or participated in the conception or
development of Internally Developed Software have no rights to any such
Internally Developed Software or related technical documentation and all such
Internally Developed Software and related technical documentation is exclusively
owned by the Company by operation of Israeli law.
(e) Third-Party Software. Section 3.12(e) of the Company Disclosure
Schedule contains a complete list of material Third Party Distributed Software.
Section 3.12(e) of the Company Disclosure Schedule lists all license agreements
for the use of all such material Third Party Software and, if any such software
is not licensed, the basis of the use of such software by the Company. The
Company has not taken any action that could, or failed to take any action, the
failure of which could, reasonably be expected to (i) give rise to the
termination by a licensor of the Company's license to distribute any material
Third Party Distributed Software or (ii) materially restrict the Company's right
of use of any material Third Party Distributed Software under any license
agreement or other right of use, in each case subject to any right Company may
have to receive notice of and/or cure or remedy such action or failure to act.
(f) No Infringement. The Internally Developed Software and, to the
Company's knowledge as of the date of this Agreement, the Third Party
Distributed Software do not infringe and will not infringe any copyright or
trade secret of any person or entity, and, to the Company's knowledge, no part
of the Internally Developed Software nor the use thereof for their intended
purposes (and to the Company's knowledge as of the date of this Agreement, no
part of the Third Party Distributed Software nor the use thereof for their
intended purposes) infringes or will infringe any valid and subsisting patent or
other exclusionary right of any third party. As of the date of this Agreement,
no written claims have been asserted against the Company by any person or entity
as to the use of any of the Intellectual Property.
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<PAGE> 17
(g) Integrity. Except with respect to demonstration or trial copies, no
portion of the Internally Developed Software or, to the Company's knowledge as
of the date of this Agreement, the Third Party Distributed Software contains any
"back door," "time bomb," "Trojan horse," "worm," "drop dead device," "virus" or
other software routines or hardware components designed to permit unauthorized
access or to disable or erase software, hardware, or data without the consent of
the user.
(h) Year 2000 Compliance. All Software Programs designated with a
"check" in the table (the "Y2K Compliance Table") with the heading "B. Release
Information" at the third through sixth pages of Exhibit 3.12(h) to the Company
Disclosure Schedule are Year 2000 Compliant. All Software Programs that are not
designated with a "check" as currently being Year 2000 Compliant will be Year
2000 Compliant on the date indicated in the Y2K Compliance Table. As used in
this Section 3.12(h), "Year 2000 Compliant" means such Software Programs will
handle correctly:
o storage and retrieval of date values
o arithmetic calculations which involve date values
o comparison and sorting of date fields
o calendar management
o execution in the 20th and 21st centuries, and real time
transition from the former to the latter
o common and concurrent manipulation of date values from both
the 20th and the 21st century
o unambiguous association of any 2-digit year value with a
century value
o avoidance of extended semantics. All values (including "00"
and "99") in any year- field represent only the associated
year
"Year 2000 Compliant" further means such Software Programs:
o will manage and manipulate data involving dates, including
single-century formulas and multi-century formulas and not
cause an abnormally ending scenario within the application or
result in the generation of incorrect values involving such
dates
o ensure that all date-related user interface functionality and
data fields include the indication of century
o ensure that all date-related functions will include the
indication of century.
(i) Notification. The Company has notified each of its customers
(excluding customers licensed through distributors) which releases of the
Software Programs licensed by such customer will and will not be Year 2000
Compliant.
(j) Migration Path. The implementation of the Year 2000 Compliant
version of each Software Program will be independent of the version of the
Software Program from which the customer is migrating.
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<PAGE> 18
3.13. Software Contracts.
(a) End-User Agreements. Section 3.13(a) of the Company Disclosure
Schedule sets forth a complete example of each of the Company's current standard
end user license agreements with respect to the Internally Developed Software
(the "Standard Licenses"). Section 3.13(a) of the Company Disclosure Schedule
accurately identifies each license transaction (with customer name redacted if
desired) which generated $200,000 (or the equivalent in foreign currency) or
more of revenues for the Company during the fiscal year ended December 31, 1998.
(b) Marketing Agreements. Section 3.13(b) of the Company Disclosure
Schedule sets forth a complete list of all contracts, agreements, licenses, or
other commitments or arrangements in effect with respect to the marketing,
remarketing, distribution, licensing or promotion of the Software Programs or
any other technical documentation or the Intellectual Property by any
independent salesperson, distributor, sublicensor or other remarketer or sales
organization (the "Marketing Agreements"), which generated 5% or more of the
Company's revenues during the preceding four fiscal quarters.
3.14. Title to Properties. With minor exceptions, which in the
aggregate are not material, and except for merchandise and other property and
assets sold, used or otherwise disposed of in the ordinary course of business
for fair value or no longer necessary for the operation of the Company's
business, the Company has good and valid title to or valid leasehold interests
in all its properties, interests in properties and assets, real and personal,
reflected in the most recent balance sheet of the Company included in the
Company Reports, free and clear of any Encumbrance of any nature whatsoever,
except (i) liens and Encumbrances reflected in the most recent balance sheet of
the Company included in the Company Reports, (ii) liens for current taxes or
other governmental charges or levies not yet due and payable, (iii) Encumbrances
that are created, arise or exist under or in connection with any leases or other
contracts or other matters referred to in the Company Disclosure Schedule, (iv)
Encumbrances that relate to or are created, arise or exist in connection with,
any legal proceeding that is being contested in good faith, and (v) such
imperfections of title, easements and Encumbrances, if any, as do not and will
not materially detract from the value of the property subject thereto or
affected thereby, or otherwise materially impair business operations. All leases
pursuant to which the Company leases (whether as lessee or lessor) any
substantial amount of real or personal property are in good standing, valid and
effective, except as validity or effectiveness may be limited by (i) bankruptcy,
insolvency, reorganization, debtor relief or similar laws affecting the rights
of creditors generally, and (ii) general principles of equity; and there is not,
under any such leases, any existing or prospective default or event of default
or event which with notice or lapse of time, or both, would constitute a default
by the Company and in respect to which the Company has not taken reasonable
steps to prevent a default from occurring. The buildings and premises of the
Company that are used in its business are in good and sufficient operating
condition and repair for the continued conduct of the Company's business on a
basis consistent with past practice, subject to ordinary wear and tear. All
major items of equipment of the Company are in good and sufficient operating
condition and in a state of reasonable maintenance and repair for the continued
conduct of the Company's business on a basis consistent with past practice,
ordinary wear and tear excepted, and are free from any known defects except as
may be repaired by routine maintenance and such minor defects as do not
substantially interfere with the continued use thereof in the conduct of normal
operations.
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3.15. Environmental Compliance.
(a) Environmental Conditions. There are no materials or substances that
are regulated by Applicable Environmental Laws (as defined in Section 3.15(c))
on any real property owned by the Company as a result of the actions of the
Company or, to its knowledge, of any third party or otherwise, that would
reasonably be expected to have a Material Adverse Effect on the Company.
(b) Permits, etc. The Company has in full force and effect all
environmental permits, licenses, approvals and other authorizations required
under Applicable Environmental Laws to conduct its operations and is operating
in material compliance thereunder.
(c) Compliance. The Company's operations and use of its assets do not
violate any applicable federal, state, foreign or local law, statute, ordinance,
rule, regulation, order or notice requirement pertaining to (a) the condition or
protection of air, groundwater, surface water, soil, or other environmental
media, (b) the environment, including natural resources or any activity which
affects the environment, or (c) the regulation of any pollutants, contaminants,
waste, substances (whether or not hazardous or toxic), including, without
limitation, the Comprehensive Environmental Response Compensation and Liability
Act (49 U.S.C. Section 9601 et seq.), the Hazardous Materials Transportation Act
(49 U.S.C. Section 1801 et seq.), the Resource Conservation and Recovery Act (42
U.S.C. Section 1609 et seq.), the Clean Water Act (33 U.S.C. 1251 et seq.), the
Clean Air Act (42 U.S.C. Section 7401 et seq.), the Toxic Substances Control Act
(17 U.S.C. Section. 2601 et seq.), the Safe Drinking Water Act (42 U.S.C.
Section. 201 and Section. 300f et seq.), the Rivers and Harbors Act (33 U.S.C.
Section. 401 et seq.), the Oil Pollution Act (33 U.S.C. Section. 2701 et seq.)
and analogous state, foreign and local provisions, as any of the foregoing may
have been amended or supplemented from time to time (collectively the
"Applicable Environmental Laws"), except for violations which, either singly or
in the aggregate, could not reasonably be expected to have a Material Adverse
Effect.
(d) Environmental Claims. No written notice has been served on the
Company from any entity, governmental agency or individual regarding any
existing, pending or threatened investigation or inquiry related to alleged
violations under any Applicable Environmental Laws, or regarding any claims for
remedial obligations or contribution under any Applicable Environmental Laws,
other than any of the foregoing which, either singly or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect or which have been
cured or corrected in all material respects.
(e) Renewals. The Company does not know of any reason it would not be
able to renew any of the permits, licenses, or other authorizations required
pursuant to any Applicable Environmental Laws to operate and use any of the
Company's assets for their current purposes and uses.
(f) Environmental Documents. There are no environmental orders or
decrees material to current operations conducted by the Company and there have
not been any environmental audits, assessments, investigations or reviews
conducted within the last five years on any property owned or, to the knowledge
of the Company, used by the Company.
3.16. Compliance with Other Laws; Permits. Except as set forth in the
Company Reports, the Company is not in violation of or in default with respect
to the Occupational Safety and Health Act (29 U.S.C. Section 651 et seq.) as
amended ("OSHA"), or any other applicable law or any applicable rule,
regulation, or any writ or decree of any court or any governmental commission,
board, bureau,
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<PAGE> 20
agency, or instrumentality, or delinquent with respect to any report required to
be filed with any governmental commission, board, bureau, agency or
instrumentality, except for violations or defaults which, either singly or in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect. The Company has all permits, licenses, orders, approvals, franchises and
other rights and privileges ("Permits") necessary in order for it to carry on
its business as presently conducted, except such Permits which no governmental
authority has demanded be obtained, or of which the company is unaware, or which
the failure to obtain, if required, would not have a Material Adverse Effect,
except as set forth in the Company Disclosure Schedule. Section 3.16 of the
Company Disclosure Schedule sets forth a list of all such material Permits from
all governmental and regulatory bodies wherever located held by the Company and
its subsidiaries, including all Permits for the export or import of encryption.
3.17. Finder's Fee; Transaction Expenses.
(a) All negotiations relative to this Agreement and the transactions
contemplated hereby have been carried on by the Company and its counsel directly
with Purchaser and its counsel, without the intervention on behalf of the
Company of any other person as the result of any act of the Company, and so far
as is known to the Company, without the intervention on behalf of the Company of
any other person in such manner as to give rise to any valid claim against any
of the parties hereto for a brokerage commission, finder's fee or any similar
payments, other than financial advisory fees to be paid by the Company to
Compass Partners International, L.L.C. and CIBC Oppenheimer Corp. in connection
with the transaction under financial arrangements disclosed to Purchaser.
(b) Section 3.17 of the Company Disclosure Schedule sets forth a
complete list of all expenses to be paid by the Company in connection with the
transactions contemplated by this Agreement to any legal, financial, investment
banking, accounting or other professional advisor, including any agreements
relating to the foregoing.
3.18. Compliance with ERISA. The Company has made available to
Purchaser a copy of each Company Plan, any related summary plan description,
trust agreement and annuity or insurance contract, if any, and each plan's most
recent annual report filed with the Internal Revenue Service, if any, and: (i)
each Company Plan has been maintained and administered in material compliance
with its terms and with the requirements prescribed by any and all applicable
statutes, orders, rules and regulations, and is, to the extent required by
applicable law or contract, fully funded without having any deficit or unfunded
actuarial liability; (ii) all required contributions under any such plans have
been made and the applicable funds have been funded in accordance with the terms
thereof and no past service funding liabilities exist thereunder; (iii) each
Company Plan that is required or intended to be qualified under applicable law
or registered or approved by a governmental agency or authority has been so
qualified, registered or approved by the appropriate governmental agency or
authority, and, to the knowledge of the Company, nothing has occurred since the
date of the last qualification, registration or approval to materially and
adversely affect, or cause, the appropriate governmental agency or authority to
revoke such qualification, registration or approval; (iv) to the extent
applicable, the Company Plans comply, in all material respects, with the
requirements of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and the Code, and any Company Plan intended to be qualified under
Section 401(a) of the Code has been determined by
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<PAGE> 21
the Internal Revenue Service to be so qualified and, to the knowledge of the
Company, nothing has occurred to cause the loss of such qualified status; (v) no
Company Plan is covered by Title IV of ERISA or Section 412 of the Code; (vi)
there are no pending or, to the knowledge of the Company, anticipated material
claims against or otherwise involving any of the Company Plans and no suit,
action or other litigation (excluding claims for benefits incurred in the
ordinary course of Company Plan activities) has been brought against or with
respect to any Company Plan; (vii) all material contributions, reserves or
premium payments, required to be made as of the date hereof to the Company Plans
have been made or provided for; (viii) the Company has not incurred any
liability under subtitle C or D of Title IV of ERISA with respect to any
"single-employer plan," within the meaning of Section 4001(a)(15) of ERISA,
currently or formerly maintained by the Company; (ix) the Company has not
incurred any withdrawal liability under Subtitle E of Title IV of ERISA with
respect to any "multiemployer plan," within the meaning of Section 4001(a)(3) of
ERISA; (x) the Company has substantially performed all obligations, whether
arising by law or by contract, required to be performed by it in connection with
the Company Plans; (xi) to the knowledge of the Company, no act, omission or
transaction has occurred which would result in imposition on the Company of (a)
a civil penalty assessed pursuant to subsections (c), (i) or (l) of Section 502
of ERISA, (b) breach of fiduciary duty liability damages under Section 409 of
ERISA or (c) a tax imposed pursuant to Chapter 43 of Subtitle D of the Code;
(xii) in connection with the consummation of the transactions contemplated by
this Agreement, no payments have or will be made hereunder, under the Company
Plans or otherwise by the Company which, in the aggregate, would result in
imposition of the sanctions imposed under Sections 280G and 4999 of the Code;
and (xiii) the Company has no obligations for retiree health and life benefits
under any Company Plan, except as set forth on Section 3.18 of the Company
Disclosure Schedule, and there are no restrictions on the rights of the Company
to amend or terminate any such Company Plan without incurring any liability
thereunder.
3.19. Consents; Litigation. No consent, approval, order or
authorization of, or registration, declaration or filing with, any court,
administrative agency or commission or other governmental authority or
instrumentality ("Governmental Entity"), is required by or with respect to the
Company or any of its subsidiaries in connection with the execution and delivery
of this Agreement or the consummation of the transactions contemplated hereby,
except (a) in connection, or in compliance, with the provisions of the
Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended ("HSR Act"),
other applicable anti-trust regulations and the Exchange Act, (b) applicable
requirements, if any, of The Nasdaq Stock Market, (c) filings with the SEC, (d)
filings with the Israeli Investment Center of the Israeli Ministry of Trade &
Industry (the "Investment Center"), (e) filings with the Office of the Chief
Scientist of the Israeli Ministry of Trade & Industry ("OCS"), (f) filings with
and the approval of the Israeli Commissioner of Restrictive Trade Practices, if
necessary, (g) filings with the Israeli Securities Authority and (h) such other
consents, approvals, orders, authorizations, registrations, declarations and
filings, the failure of which to be obtained or made would not have,
individually or in the aggregate, a Material Adverse Effect. Except as set forth
in the Company Reports and on Section 3.19 of the Company Disclosure Schedule,
as of the date of this Agreement, there is no action, suit or proceeding pending
or, to the company's knowledge, threatened against or affecting the Company at
law or in equity, or before any federal, state, foreign, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
which either individually or in the aggregate, could reasonably be expected to
have a Material Adverse Effect or prevent consummation of the transactions
contemplated hereby.
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3.20. Product Warranty. There are no existing liabilities or, to the
knowledge of the Company, likely liabilities, arising from claims regarding the
performance or design of the products and services sold by the Company either in
the past or at present for which adequate reserves have not been established on
the most recent balance sheet in the Company Reports that in the aggregate could
reasonably be expected to have a Material Adverse Effect.
3.21. Investment Company. The Company is not an "investment company,"
or an "affiliated person of" or "promoter" or "principal underwriter" of an
investment company, as those terms are defined in the Investment Company Act of
1940, as amended (the "Investment Company Act").
3.22. Inapplicability of Certain Statutes. The Company is not subject
to any takeover law that might apply to the Offer or the Compulsory Acquisition
or any of the other transactions contemplated by this Agreement, other than
Section 236 of the Companies' Ordinance and the Exchange Act.
3.23. Banking Arrangements. Section 3.23 of the Company Disclosure
Schedule sets forth the name of each bank in or with which the Company or a
subsidiary has an account, credit line or safety deposit box and the names of
all persons presently authorized to draw thereon or have access thereto, and a
brief statement describing the purpose of each such account.
3.24. Relationships with Related Persons. Except as disclosed in the
Company Reports filed with the SEC prior to the date hereof and except as set
forth and identified on Section 3.24 of the Company Disclosure Schedule and
except for this Agreement and the transactions contemplated hereby, there are
no, and since December 31, 1997 have not been any, undischarged contracts or
agreements or other material transactions between the Company or any of its
subsidiaries, on the one hand, and any director or executive officer of the
Company or any of their respective Related Persons (as defined below), on the
other hand, and no director or executive officer of the Company or any of their
respective Related Persons have any interest in any of the assets of the Company
or any of its subsidiaries. No executive officer, director of the Company or any
of their respective Related Persons has any claim, charge, action or cause of
action against the Company or any of its subsidiaries, except for claims for
accrued vacation pay, accrued benefits under the Benefit Plans (as hereinafter
defined), claims for compensation, expense reimbursement and similar obligations
and similar matters and agreements, which have been disclosed in the Company
Disclosure Schedule.
For purposed hereof, the term "Related Persons" shall mean:
(a) each other member of such individual's Family; and
(b) any person or entity that is directly or indirectly controlled by
any one or more members of such individual's Family. For purposes of this
definition, the "Family" of an individual includes (i) such individual, (ii) the
individual's spouse, siblings, or ancestors (iii) any lineal descendent of such
individual, or their siblings, or ancestors or (iv) a trust for the benefit of
any of the foregoing.
3.25. Restrictions on Business Activities. Except as set forth in the
Company Disclosure Schedule, there is no agreement, judgment, injunction, order
or decree binding upon the Company
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or its subsidiaries or their properties (including, without limitation, their
Intellectual Property) which has or could reasonably be expected to have the
effect of prohibiting or materially impairing any material acquisition of
property by the Company or any of its subsidiaries or the conduct of the
business by the Company or any of its subsidiaries including any exclusive
distribution or licensing agreements which cannot be terminated on less than 30
days notice without any cost or expense to the Company or its subsidiaries.
3.26. Offer Documents; Schedule 14D-9. Neither the Schedule 14D-9 nor
any other document filed or to be filed by or on behalf of the Company with the
SEC or any other governmental entity in connection with the transactions
contemplated by this Agreement nor any information supplied by or on behalf of
the Company specifically for inclusion in the Offer Documents will, at the
respective times filed with the SEC or other governmental entity, or at any time
thereafter when the information included therein is required to be updated
pursuant to applicable law, 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 made therein, in light of the circumstances under
which they were made, not misleading. The Schedule 14D-9 will, when filed by the
Company with the SEC or other governmental entity, comply as to form in all
material respects with the provisions of the Exchange Act and the rules and
regulations thereunder. Notwithstanding the foregoing, the Company makes no
representation or warranty with respect to the statements made in the foregoing
documents based on information supplied by or on behalf of the Purchaser or any
of its affiliates specifically for inclusion therein.
3.27. Grants, Incentives and Subsidies. Section 3.27 of the Company
Disclosure Schedule provides a complete list of all pending and outstanding
grants, incentives and subsidies (collectively, "Grants") from the Government of
the State of Israel or any agency thereof, or from any foreign governmental or
administrative agency, to the Company, including, without limitation, (i)
Approved Enterprise Status from the Investment Center and (ii) grants from the
OCS. The Company has made available to Purchaser, prior to the date hereof,
correct copies of all applications for Grants submitted by the Company and of
all letters of approval, and supplements thereto, granted to the Company.
Section 3.27 of the Company Disclosure Schedule details all material
undertakings of the Company given in connection with the Grants. Without
limiting the generality of the above, Section 3.27 of the Company Disclosure
Schedule includes the aggregate amounts of each Grant, and the aggregate
outstanding obligations thereunder of the Company with respect to royalties, or
the outstanding amounts to be paid by the OCS to the Company and the composition
of such obligations or amount by the product or product family to which it
relates. The Company is in compliance, in all material respects, with the terms
and conditions of their respective Grants and, except as disclosed in Section
3.27 of the Company Disclosure Schedule hereto, have duly fulfilled, in all
material respects, all the undertakings relating thereto. The Company is not
aware of any event or other set of circumstances which might lead to the
revocation or material modification of any of the Grants.
3.28. Industrial Company. The Company is an "industrial company" as
defined in the Law for the Encouragement of Industry (Taxes) of the State of
Israel, and has been an "industrial company" in each of the years since the
initial public offering of the Company. The founding shareholders of the
Company, Einav Computer Systems, Ltd., an Israeli corporation, and Yossie
Hollander have held their respective Shares in the Company for a period
beginning prior to the Company's initial public offering and ending more than
five years from the date thereof.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PURCHASER
Purchaser hereby represents and warrants to the Company as follows:
4.1. Organization and Qualification. Purchaser (a) is duly organized,
validly existing and in good standing under the laws of the state of Delaware,
(b) has all requisite corporate power to carry on its business as it is now
being conducted and (c) is in good standing and duly qualified to do business in
each jurisdiction in which the transaction of its business makes such
qualification necessary, except where the failure to be in good standing or so
qualified would not have a material adverse effect on Purchaser.
4.2. Authorization and Validity of Agreement. Purchaser has all
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby in accordance with the
terms hereof. The Board of Directors of Purchaser has duly authorized the
execution, delivery and performance of this Agreement by Purchaser, and no other
corporate proceedings on the part of Purchaser are necessary to authorize this
Agreement or the transactions contemplated hereby. This Agreement has been duly
executed and delivered by Purchaser and, assuming this Agreement constitutes the
legal, valid and binding obligation of the Company, constitutes the legal, valid
and binding obligation of Purchaser, enforceable against each Purchaser in
accordance with its terms, except as may be limited by any bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or other similar
laws affecting the enforcement of creditors' rights generally or by general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
4.3. Consents and Approvals. Neither the execution and delivery of this
Agreement by Purchaser nor the consummation by Purchaser of the transactions
contemplated hereby will require any consent, approval, authorization or permit
of, or filing with or notification to, any governmental or regulatory authority
by reason of Purchaser's status or (as applicable) operations, except (a) in
connection with the applicable requirements of the HSR Act, (b) pursuant to the
applicable requirements of the Securities Act of 1933, as amended, the Exchange
Act, and the rules and regulations promulgated thereunder, (c) state securities
or "blue sky" laws and state takeover laws, (d) the applicable requirements of
the laws and regulations of the State of Israel and (e) where the failure to
obtain such consent, approval, authorization or permit, or to make such filing
or notification, would not have a material adverse effect on Purchaser or
prevent the consummation of the transactions contemplated hereby.
4.4. No Violation. Neither the execution and delivery of this Agreement
by Purchaser nor the consummation by Purchaser of the transactions contemplated
hereby will conflict with or violate the Certificate of Incorporation or Bylaws
of Purchaser, result in a violation or breach of, constitute (with or without
notice or lapse of time or both) a default under, give rise to any right of
termination, cancellation or acceleration of, or result in the imposition of any
lien, charge or other encumbrance on any material assets or property of
Purchaser pursuant to, any note, bond, mortgage, indenture, contract, agreement,
lease, license or other instrument or obligation to which Purchaser is a party
or
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by which Purchaser or any of its assets or properties are bound, except for such
violations, breaches and defaults (or rights of termination, cancellation or
acceleration or lien or other charge or encumbrance) as to which consents have
been obtained or which would not have a material adverse effect on Purchaser or
prevent the consummation of the transactions contemplated hereby or assuming the
consents, approvals, authorizations or permits and filings or notifications
referred to in Section 4.3 are duly and timely obtained or made, violate any
order, writ, injunction, decree, statute, rule or regulation applicable to
Purchaser or any of its assets or properties, except for such violations which
would not have a material adverse effect on Purchaser or prevent the
consummation of the transactions contemplated hereby.
4.5. Litigation. Except as set forth in the documents filed by
Purchaser with the SEC, there are no claims, actions, proceedings or
governmental investigations pending or, to the knowledge of Purchaser,
threatened against Purchaser or any of its subsidiaries before any court or
other governmental or regulatory body, which, if adversely determined, would
impair, interfere with, or otherwise adversely affect the ability of Purchaser
to consummate the transactions contemplated hereby in any material respect. As
of the date hereof, no action or proceeding has been instituted or, to the
knowledge of Purchaser, threatened before any court or other governmental or
regulatory body by any Person seeking to restrain or prohibit or to obtain
damages with respect to the execution, delivery or performance of this Agreement
or the consummation of the transactions contemplated hereby.
4.6. Offer Documents; Schedule 14D-9. Neither the Offer Documents nor
any other document filed or to be filed by or on behalf of Purchaser with the
SEC or any other governmental entity in connection with the transactions
contemplated by this Agreement nor any information supplied by or on behalf of
Purchaser specifically for inclusion in the Schedule 14D-9 will, at the
respective times filed with the SEC or other governmental entity, or at any time
thereafter when the information included therein is required to be updated
pursuant to applicable law, 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 made therein, in light of the circumstances under
which they were made, not misleading. The Offer Documents will, when filed by
Purchaser with the SEC or other governmental entity, comply as to form in all
material respects with the provisions of the Exchange Act and the rules and
regulations thereunder. Notwithstanding the foregoing, Purchaser makes no
representation or warranty with respect to the statements made in the foregoing
documents based on information supplied by or on behalf of the Company or any of
its affiliates specifically for inclusion therein.
4.7. Brokers and Finders. No broker, finder or investment bank has
acted directly or indirectly for Purchaser, nor has Purchaser incurred any
obligation to pay any brokerage, finder's or other fee or commission in
connection with the transactions contemplated hereby, other than Goldman, Sachs
& Co.
4.8. Ownership of Shares. As of the date of this Agreement, Purchaser
and its subsidiaries do not own any Shares.
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ARTICLE V
COVENANTS
5.1. Conduct of Business Pending the Closing Date. From the date hereof
until the Closing Date, except as otherwise required or contemplated hereunder
or as required by applicable law or as set forth in Section 5.1 of the Company
Disclosure Schedule, the Company shall, and shall cause its subsidiaries to:
(a) use all commercially reasonable efforts to conduct its business and
the business of its subsidiaries in all material respects only in the ordinary
course of business and consistent with past practice;
(b) not amend its Articles of Association or Memorandum of Association
or other organizational or governing documents or declare, set aside or pay any
dividend or other distribution or payment in cash, stock or property in respect
of its capital stock or acquire, directly or indirectly, any of its capital
stock;
(c) not issue, grant, sell or pledge or agree or authorize the
issuance, grant, sale or pledge of any shares of, or rights of any kind to
acquire any shares of, its capital stock other than Shares issuable upon the
exercise of stock options outstanding on the date hereof;
(d) not acquire, sell, transfer, lease or encumber any material assets
except in the ordinary course of business and consistent with past practice;
(e) use all commercially reasonable efforts to preserve intact its
business organizations and the business organizations of its subsidiaries, and
to keep available the services of its present key officers and employees;
provided, however, that to satisfy the foregoing obligation, the Company shall
not be required to make any payments or enter into or amend any contractual
arrangements or understandings, except in the ordinary course of business and
consistent with past practice and that this provision shall not restrict the
Company in any way from terminating the employment of its employees, other than
its present key officers and employees;
(f) not adopt a plan of complete or partial liquidation or adopt
resolutions providing for the complete or partial liquidation, dissolution,
consolidation, amalgamation, merger, restructuring or recapitalization of the
Company or any of it subsidiaries;
(g) not grant any severance or termination pay (otherwise than pursuant
to policies in effect on the date hereof) to, or enter into any employment
agreement with, any of its executive officers or directors;
(h) not, except in the ordinary course of business consistent with past
practice or pursuant to obligations imposed by collective bargaining agreements,
increase the compensation payable or to become payable to its officers or
employees, enter into any contract or other binding commitment in respect of any
such increase with any of its directors, officers or other employees or any
director, officer or other employee of its subsidiaries, and not establish,
adopt, enter into, make any new grants or awards under or amend, any collective
bargaining agreement or Company Plan, except as
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<PAGE> 27
required by applicable law, including any obligation to engage in good faith
collective bargaining, to maintain tax-qualified status or as may be required by
any Company Plan as of the date hereof;
(i) not settle or compromise any material claims or litigation or,
except in the ordinary course of business, modify, amend or terminate any of its
material contracts or waive, release or assign any material rights or claims, or
make any payment, direct or indirect, of any material liability before the same
becomes due and payable in accordance with its terms;
(j) not take any action, other than reasonable and usual actions in the
ordinary course of business and consistent with past practice with respect to
accounting policies or procedures (including tax accounting policies and
procedures), except as may be required by the SEC or the Financial Accounting
Standards Board;
(k) not make any material tax election or permit any material insurance
policy naming it as a beneficiary or a loss payable payee to be canceled or
terminated without notice to Purchaser, except in the ordinary course of
business consistent with past practice;
(l) not incur or pay or agree to pay any fees or expenses that would be
required to be included in Section 3.17 of the Company Disclosure Schedule that
are not so included;
(m) not amend the Director Releases or incur or pay or agree to pay any
amount in excess of $7.5 million (including all legal fees and other expenses of
such directors) in the aggregate plus value added tax as prescribed by law
against a duly issued value added tax invoice, less any amounts required to be
withheld pursuant to applicable tax regulations, pursuant to the Director
Releases; and
(n) not authorize or enter into an agreement to do any of the
foregoing.
5.2. Access; Confidentiality.
(a) From the date of this Agreement until the Closing Date, upon
reasonable prior notice to the Company, the Company shall give Purchaser and its
authorized representatives reasonable access during normal business hours to its
executive officers and such other officers or other representatives of the
Company approved in advance by the Company (which approval shall not be
unreasonably withheld), properties, books and records, and shall furnish
Purchaser and its authorized representatives with such financial and operating
data and other information concerning the business and properties of the Company
as Purchaser may from time to time reasonably request.
(b) Purchaser will hold and treat, and will cause its affiliates,
agents and other representatives to hold and treat, all documents and
information concerning the Company furnished to Purchaser or its respective
representatives in connection with the transactions contemplated by this
Agreement confidential in accordance with the Confidentiality Agreement dated
January 6, 1999, between the Company and Purchaser, which Confidentiality
Agreement shall remain in full force and effect in accordance with its terms.
5.3. Notice of Certain Matters. The Company shall give prompt notice to
Purchaser, and Purchaser shall give prompt notice to the Company, of (a) the
occurrence or nonoccurrence of any
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<PAGE> 28
event that would be likely to cause (i) any representation or warranty contained
in this Agreement to be untrue or inaccurate in any material respect or (ii) any
covenant, condition or agreement contained in this Agreement not to be complied
with or satisfied in all material respects and (b) any failure of the Company or
of Purchaser, as the case may be, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder in any
material respect.
5.4. Non-Solicitation. Without the prior written consent of the other
party, neither Purchaser nor the Company, will for a period of one year from the
date of this Agreement, solicit or cause to be solicited the employment of any
person who is employed by the other during such time, except as provided for
under the Distribution Agreement, as amended, to which the Company and Boole &
Babbage Europe are a party as of the date hereof.
5.5. Takeover Statutes. The Company and Purchaser will cooperate to
take reasonable steps to (a) exempt the Offer and the purchase of Shares
thereunder from the requirements of any applicable takeover law that would
prevent or delay or adversely impact the Offer or the purchase of Shares
thereunder and (b) assist in any challenge by any of the parties to the validity
or applicability to the Offer and the purchase of Shares thereunder of any such
takeover law.
5.6. Cooperation. Subject to the terms and conditions of this Agreement
and applicable law, each of the parties shall act in good faith and use
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, all things necessary, proper or advisable to consummate and
make effective the transactions contemplated by this Agreement as soon as
practicable, including such actions or things as any other party may reasonably
request in order to cause any of the conditions to such other party's obligation
to consummate the transactions contemplated by this Agreement to be fully
satisfied. Without limiting the foregoing, the parties shall (and shall cause
their respective subsidiaries, and use reasonable efforts to cause their
respective affiliates, directors, officers, employees, agents, attorneys,
accountants and representatives, to) consult and fully cooperate with and
provide assistance to each other in (a) the preparation and filing with the SEC
of the Offer Documents and the Schedule 14D-9; (b) obtaining all necessary
consents, approvals, waivers, licenses, permits, authorizations, registrations,
qualifications, or other permissions or actions by, and giving all necessary
notices to and making all necessary filings with and applications and
submissions to, any Governmental Entity or other Person as soon as reasonably
practicable after filing, including without limitation (i) the OCS, (ii) the
Investment Center and (iii), if required, the Commissioner of Restrictive Trade
Practices of Israel; (c) seeking early termination of any waiting period under
the HSR Act; (d) providing all such information concerning such party, its
subsidiaries and its officers, directors, partners and affiliates and making all
applications and filings as may be necessary or reasonably requested in
connection with any of the foregoing; (e) in general, consummating and making
effective the transactions contemplated hereby; and (f) in the event and to the
extent required, amending this Agreement so that this Agreement and the Offer
complies with applicable law. The parties shall (and shall cause their
respective affiliates, directors, officers, employees, agents, attorneys,
accountants and representatives to) use their reasonable efforts to cause the
lifting of any permanent or preliminary injunction or restraining order or other
similar order issued or entered by any court or other Governmental Entity
preventing or restricting consummation of the transactions contemplated hereby
in the manner provided for herein. Prior to making any application to or filing
with any Governmental Entity or other Person in connection with this
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Agreement (other than filing under the HSR Act), each party shall provide the
other party with drafts thereof and afford the other party a reasonable
opportunity to comment on such drafts.
5.7. Public Announcements. No party hereto shall or shall permit any of
its subsidiaries to (and each party shall use commercially reasonable efforts to
cause its affiliates, directors, officers, employees, agents or representatives
not to) issue any press release or make any public statement concerning this
Agreement or any of the transactions contemplated hereby, without the prior
written consent of the other parties hereto; provided, however, that a party
may, without the prior written consent of the other party hereto, issue such a
press release or make such a public statement to the extent required by
applicable law or any listing agreement with a national securities exchange by
which such party is bound if it has used commercially reasonable efforts to
consult with the other parties and to obtain such parties' consent but has been
unable to do so in a timely manner.
5.8. Acquisition Proposals.
(a) Subject to Section 5.8(b) below, the Company shall not (and shall
not permit any of its subsidiaries to, and shall use its best efforts to cause
its officers, directors and employees and any investment banker, attorney,
accountant, or other agent retained by it or any of its subsidiaries not to)
directly or indirectly (i) solicit, initiate, facilitate or knowingly encourage
(including by way of furnishing information) any inquiry or the making of any
proposal which constitutes, or may reasonably be expected to lead to, any
acquisition or purchase by a third party (other than Purchaser or an affiliate
of Purchaser) of a substantial amount of assets of, or any equity interest in,
the Company or any merger, consolidation, business combination, sale of
securities, recapitalization, liquidation, dissolution or similar transaction
involving the Company (collectively, "Company Transaction Proposals") or agree
to or endorse any Company Transaction Proposal or (ii) propose, enter into or
participate in any discussions or negotiations regarding any Company Transaction
Proposal, or furnish to another person (other than Purchaser or a representative
of Purchaser) any information with respect to its business, properties or assets
for the purpose of facilitating any Company Transaction Proposal. Subject to
Section 5.8(b) below, the Board of Directors of the Company will not change its
recommendation of the Offer referred to in Section 1.2 (a).
(b) Nothing contained in this Section 5.8 or elsewhere in this
Agreement shall prohibit the Company from (i) furnishing information pursuant to
an appropriate confidentiality letter concerning the Company and its businesses,
properties or assets to a third party who has made a Superior Proposal (as
defined below), (ii) engaging in discussions or negotiations with a third party
who has made a Superior Proposal or (iii) following receipt of a Superior
Proposal, taking and disclosing to its shareholders a position (including a
positive recommendation) with respect thereto or changing, withdrawing or
withholding the approval or recommendation by the Company's Board of Directors
of the Offer, but in each case referred to in the foregoing clauses (i) through
(iii) only after the Board of Directors of the Company concludes in good faith
following advice of its independent counsel, evidenced by a written opinion,
that such action is necessary in order for the Board of Directors of the Company
to comply with its fiduciary obligations to the Company's shareholders under
applicable Israeli law. If the Board of Directors of the Company receives a
Company Transaction Proposal, then the Company shall immediately inform
Purchaser of the terms and conditions of such proposal and the identity of the
person making it and shall keep Purchaser fully informed of the status and
details of any such Company Transaction Proposal and of all steps
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<PAGE> 30
it is taking in response to such Company Transaction Proposal. For purposes of
this Agreement, the term "Superior Proposal" shall mean a bona fide Company
Transaction Proposal that the Board of Directors of the Company determines in
good faith after consultation with (and based in part on the advice of) its
independent financial advisors to be more favorable to the Company and the
Company's shareholders than the Offer, which Company Transaction Proposal is not
subject to any material contingencies relating to financing.
(c) If (i) this Agreement is terminated by Purchaser pursuant to
Section 6.1(e)(ii) hereof or by the Company pursuant to Section 6.1(f) hereof,
or (ii) (A) prior to the Closing Date, there is publicly announced by a third
party (other than Purchaser or an affiliate of Purchaser) a proposal for an
Alternative Company Transaction (as defined below); (B) the Offer is terminated
or expires as a result of the failure of a condition specified in Exhibit A
hereto; and (C) either the Company's Board of Directors recommends or approves
an acquisition agreement which provides for an Alternative Company Transaction
or an Alternative Company Transaction is consummated, in each case with any
third party which after the date of this Agreement and before termination of
this Agreement has publicly announced a proposal for Alternative Company
Transaction, in either case prior to twelve months after the date of termination
of this Agreement, then, in any such event unless this Agreement has been
terminated by the Company pursuant to Section 6.1(h), the Company shall pay to
Purchaser simultaneously with termination by the Purchaser in the case of the
occurrence of any of the events specified in clause (i) above, and immediately
upon the first to occur of the entering into an agreement providing for, or the
consummation of, an Alternative Company Transaction in the case of clause (ii)
above (by wire transfer of immediately available funds to an account designated
by Purchaser for such purpose), a fee (the "Break-Up Fee") in an amount equal to
$25.0 million. For purposes of this Paragraph 5.8(c), the term "Alternative
Company Transaction" shall mean any transaction pursuant to which (i) any
person, entity or group (within the meaning of Section 13(d)(3) of the Exchange
Act) (other than Purchaser or any affiliate of Purchaser) (each, a "Third
Party") acquires 50% or more of the outstanding Shares, (ii) a Third Party
acquires 25% or more of the total assets of the Company taken as a whole, (iii)
a Third Party merges, consolidates or combines in any other way with the Company
other than in a transaction in which holders of Shares continue to own at least
75% of the equity of the surviving corporation, or (iv) the Company distributes
or transfers to its shareholders, by dividend or otherwise, assets constituting
25% or more of the market value or earning power of the Company on a
consolidated basis (it being understood that stock of subsidiaries constitute
assets of the Company for purposes of this Paragraph 5.8(c)).
5.9. D&O Indemnification.
(a) From the Closing Date through the later of (i) the sixth
anniversary of the Closing Date and (ii) the expiration of any statute of
limitations applicable to any claim, action, suit, proceeding or investigation
referred to below, the Company shall indemnify and hold harmless each present
and former director and officer of the Company and its subsidiaries, determined
on the Closing Date (the "Indemnified Parties"), against any claims, losses,
liabilities, damages, judgments, fines, fees, costs or expenses, including
without limitation attorneys' fees and disbursements (collectively, "Costs"),
incurred in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative, arising
out of or pertaining to matters existing or occurring on or prior to the Closing
Date, whether asserted or claimed prior to, on or after the Closing Date, to the
fullest extent that the Company or such subsidiary would have
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<PAGE> 31
been permitted, under applicable law, indemnification agreements existing on the
date hereof, the Articles of Association or Memorandum of Association of the
Company or such subsidiary in effect on the date hereof, to indemnify such
Person (and the Company shall also advance expenses as incurred to the fullest
extent permitted under applicable law provided the person to whom expenses are
advanced provides an undertaking to repay such advances if it is ultimately
determined that such person is not entitled to indemnification).
(b) Any Indemnified Party wishing to claim indemnification under this
Section 5.9, upon learning of any such claim, action, suit, proceeding or
investigation, shall promptly notify the Company thereof, but the failure to so
notify shall not relieve the Company of any liability or obligation it may have
to such Indemnified Party except, and only to the extent, that such failure
materially prejudices the Company. In the event of any such claim, action, suit,
proceeding or investigation (whether arising before, on or after the Closing
Date), the Company shall have the right to assume the defense thereof and the
Company shall not be liable to such Indemnified Parties for any legal expenses
of other counsel or any other expenses subsequently incurred by such Indemnified
Parties in connection with the defense thereof, except that if the Company
elects not to assume such defense or counsel for the Indemnified Parties advises
that there are issues that raise conflicts of interest between the Company and
the Indemnified Parties, the Indemnified Parties may retain counsel satisfactory
to them, and the Company shall pay all reasonable fees and expenses of such
counsel for the Indemnified Parties promptly as statements therefor are
received. If such indemnity is not available with respect to any Indemnified
Party, then the Company and the Indemnified Party shall contribute to the amount
payable in such proportion as is appropriate to reflect relative faults and
benefits. In the event that any claim or claims are asserted or made within the
aforesaid six-year period, all rights to indemnification in respect of any such
claim or claims shall continue until the final disposition of any and all such
claims.
(c) Notwithstanding anything herein to the contrary, if any claim,
action, suit, proceeding or investigation (whether arising before, on or after
the Closing Date) is made against any present or former director or officer of
the Company, on or prior to the sixth anniversary of the Closing Date, the
provisions of this Section 5.9 shall continue in effect until the final
disposition of such claim, action, suit, proceeding or investigation.
(d) This covenant is intended to be for the benefit of, and shall be
enforceable by, each of the Indemnified Parties and their respective heirs and
legal representatives. The indemnification provided for herein shall not be
deemed exclusive of any other rights to which an Indemnified Party is entitled,
whether pursuant to law, contract or otherwise.
(e) To the extent that the Company fails to perform any of its
obligations pursuant to this Section 5.9, Purchaser shall assume the obligations
and rights of the Company under this Section 5.9.
5.10. Purchaser Plans.
(a) Following the Closing Date, Purchaser shall cause the Company to
provide to persons who were employees of the Company or any of its subsidiaries
prior to the Closing Date (the "Company Personnel") employee benefit plans,
programs and arrangements (the "Purchaser Plans")
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which in the aggregate are substantially comparable to those employee benefit
plans, programs and arrangements generally provided to similarly situated
employees of Purchaser from time to time.
(b) Following the Closing Date, Purchaser shall cause the Purchaser
Plans to recognize any prior accrued service, compensation credit, credit toward
satisfying deductible expense requirements, out-of-pocket expense limits and
maximum lifetime benefit limits of such Company Personnel and/or such Company
Personnel's eligible dependents, to the extent such prior service, credits and
limits were recognized under the comparable employee benefit plans, programs or
arrangements of the Company on the Closing Date, for all purposes under the
Purchaser Plans (including, but not limited to, participation, eligibility,
vesting and the calculation of benefits), and Purchaser shall cause the
Purchaser Plans to waive any preexisting condition, exclusion or limitation
under any such Plan to the extent such condition, exclusion or limitation would
be covered by the comparable plan, program or arrangement of the Company on the
Closing Date.
(c) Each of the employment agreements, the employment security
agreements and severance agreements for the benefit of Company Personnel
identified in Section 5.10 of the Company Disclosure Schedule shall be continued
by the Company on the Closing Date on the same terms and subject to the same
conditions as in effect under such agreements immediately prior to the Closing
Date.
5.11. Purchaser Stock Options. Immediately after the Closing Date,
Purchaser will issue, to senior management and key employees of the Company, as
shall be mutually agreed between the senior officers of the Company and
Purchaser, stock options to purchase an aggregate of 500,000 shares of Purchaser
common stock under its stock option plan, vesting ratably over five years, under
agreements in customary form utilized for Purchaser's employees.
5.12. Israeli Operations. Following the Closing Date, Purchaser intends
that the Company will continue as a legal entity, with the same name, engaged in
the development, production, marketing and distribution of the software products
of the Company and that the business operations and facilities of the Company
(including its research and development activities) remain in Israel.
5.13. Boole & Babbage Shares. Purchaser shall use its reasonable
efforts to cause Boole & Babbage, Inc. to tender any shares held by it into the
Offer.
ARTICLE VI
TERMINATION
6.1. Termination. This Agreement may be terminated and the Offer may be
abandoned at any time, prior to the Closing Date:
(a) by mutual written consent of the Company and Purchaser;
(b) by either the Company or Purchaser, if the Closing Date shall not
have occurred on or before September 12, 1999; provided, that either the Company
or the Purchaser may terminate this Agreement if (i) the Closing Date shall not
have occurred on or before July 12, 1999, and (ii) within 10 days of expiration
of the initial Offer hereunder, Purchaser has not elected to commence
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<PAGE> 33
a new Offer pursuant to Section 7.12 hereof; and provided, further that the
right to terminate this Agreement under this clause (b) shall not be available
to any party whose misrepresentation in this Agreement or whose failure to
perform any of its covenants and agreements or to satisfy any obligation under
this Agreement has been the cause of or resulted in the failure of the Closing
Date to occur on or before the applicable dates specified herein;
(c) by either the Company or Purchaser, if any federal or state court
of competent jurisdiction or other federal or state governmental or regulatory
body shall have issued any judgment, injunction, order or decree prohibiting,
enjoining or otherwise restraining the transactions contemplated by this
Agreement and such judgment, injunction, order or decree shall have become final
and nonappealable (provided, however, that the party seeking to terminate this
Agreement pursuant to this clause (c) shall have used commercially reasonable
efforts to remove such judgment, injunction, order or decree) or if any statute,
rule, regulation or executive order promulgated or enacted by any federal or
state governmental authority after the date of this Agreement which prohibits
the consummation of the Offer shall be in effect;
(d) by the Company, if (i) Purchaser fails to commence the Offer as
provided in Section 1.1 other than as a result of any action by the Company in
violation of this Agreement, (ii) the Offer expires or is terminated without any
Shares being purchased thereunder and Purchaser does not commence a new Offer
pursuant to Section 7.12 or (iii) Purchaser fails to purchase validly tendered
Shares in violation of the terms and conditions of the Offer or this Agreement;
(e) by Purchaser, if (i) the Offer is not commenced as provided in
Section 1.1 directly as a result of actions or inaction by the Company in
violation of this Agreement, (ii) the Company's Board of Directors shall have
withdrawn, withheld or modified in a manner adverse to Purchaser its approval of
this Agreement or the Offer pursuant to Section 5.8 or (iii) the Offer is
terminated or expires as a result of the failure of a condition specified in
Exhibit A hereto without the purchase of any Shares thereunder, unless such
termination or expiration has been caused by or resulted from the failure of
Purchaser to perform any covenants and agreements of Purchaser contained in this
Agreement;
(f) by the Company, if its Board of Directors shall have withdrawn,
withheld or modified in a manner adverse to Purchaser its approval of this
Agreement or the Offer in accordance with Section 5.8 and paid to Purchaser the
Break-Up Fee;
(g) by Purchaser, if there shall have been a material breach of any
representation, warranty or material covenant or agreement on the part of the
Company, which is incurable or which is not cured after thirty days' written
notice by Purchaser to the Company; or
(h) by the Company, if there shall have been a material breach of any
representation, warranty or material covenant or agreement on the part of
Purchaser, which is incurable or which is not cured after thirty days' written
notice by the Company to Purchaser.
6.2 Effect of Termination. In the event of any termination of this
Agreement pursuant to Section 6.1, this Agreement forthwith shall become void
and of no further force or effect, and no party hereto (or any of its
affiliates, directors, officers, agents or representatives) shall have any
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<PAGE> 34
liability or obligation hereunder, except in any such case (a) as provided in
Sections 5.2(b) (Confidentiality), 5.4 (Non-Solicitation), 5.7 (Public
Announcements), and 6.3 (Fees and Expenses), which shall survive any such
termination and (b) to the extent such termination results from the breach by
such party of any of its representations, warranties, covenants or agreements
contained in this Agreement.
6.3. Fees and Expenses. Whether or not the Offer or is consummated, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby (including, without limitation, fees and
disbursements of counsel, financial advisors and accountants) shall be borne by
the party which incurs such cost or expense.
ARTICLE VII
MISCELLANEOUS
7.1. No Survival. None of the representations, warranties, covenants or
agreements contained in this Agreement or in any certificate or other instrument
delivered pursuant to this Agreement shall survive the Closing Date, except for
the covenants and agreements contained in Sections 5.9 (D&O Indemnification and
Insurance), 5.10 (Company Plans), and 5.11 (Purchaser Stock Options.)
7.2. Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made as of the date delivered, mailed or transmitted, and shall be effective
upon receipt, if delivered personally, mailed by registered or certified mail
(postage prepaid, return receipt requested) or sent by facsimile (with immediate
confirmation) or nationally recognized overnight courier service, as follows:
(a) if to Purchaser, to:
BMC Software, Inc.
2101 CityWest Blvd.
Houston, Texas
Attention: Brinkley Morse
Fax: (713) 918-8000
with a copy to:
John S. Watson
Vinson & Elkins L.L.P.
2300 First City Tower
Houston, Texas 77002
Fax: (713) 758-2346
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<PAGE> 35
Yaakov Neeman
Herzog, Fox & Neeman
Asia House
4 Weizmann Street
Tel-Aviv 64 239
Israel
Fax: 972-3-696-6464
(b) if to the Company, to:
New Dimension Software, Ltd.
ATIDIM, Building 7
POB 85168
Tel Aviv 61 581
Israel
Fax: 972-3-645-1100
with a copy to:
David Fox
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Fax: (212) 735-2000
Michael Spigelman
Dan Cohen, Spigelman & Co.
103 Hahashmonaim St.
Israel
Fax: 972-3-561-0624
or to such other Person or address or facsimile number as any party shall
specify by like written notice to the other parties hereto (any such notice of a
change of address to be effective only upon actual receipt thereof).
7.3. Certain Definitions. The following terms, when used in this
Agreement, shall have the following respective meanings:
(a) "affiliate" shall have the meaning assigned to such term in Rule
12(b)-2 of the Exchange Act.
(b) "business day" shall have the meaning set forth in Rule 14d-1(e)(6)
under the Exchange Act.
(c) "dollars" or "$" means United States dollars.
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<PAGE> 36
(d) "Material Adverse Effect" means, any change or effect that is
materially adverse to the business or financial condition, assets, liabilities
or results of operations of the Company and its subsidiaries taken as a whole.
(e) "Person" means any natural person, corporation, limited liability
company, partnership, unincorporated organization or other entity.
(f) "subsidiary" of any Person means any other corporation or entity of
which such Person owns, directly or indirectly, stock or other equity interests
having a majority of the votes entitled to be cast in the election of directors
of such corporation or entity under ordinary circumstances or of which such
Person owns a majority beneficial interest.
7.4. Entire Agreement. This Agreement (including the schedules,
exhibits and other documents referred to herein), together with the
Confidentiality Agreement referred to in Section 5.2(b), constitutes the entire
agreement between and among the parties hereto and supersedes all prior
agreements and understandings, oral and written, between or among any of the
parties with respect to the subject matter hereof.
7.5. Assignment; Binding Effect. Neither this Agreement nor any of the
rights, benefits or obligations hereunder may be assigned, in whole or in part,
by any party (whether by operation of law or otherwise) without the prior
written consent of the other parties hereto. Subject to the preceding sentence,
this Agreement shall be binding upon, inure to the benefit of and be enforceable
by the parties and their respective successors and assigns. Nothing in this
Agreement, expressed or implied, is intended to confer on any person other than
the parties or their respective successors and assigns, any rights, remedies,
obligations or liabilities under or by reason of this Agreement, other than
rights conferred upon Indemnified Parties under Section 5.9.
7.6. Amendments. This Agreement may be amended by the parties at any
time prior to the Closing Date.
7.7. Waivers. At any time prior to the Closing Date, Purchaser or the
Company may, to the extent legally allowed, extend the time specified herein for
the performance of any of the obligations or other acts of the other, waive any
inaccuracies in the representations and warranties of the other contained herein
or in any document delivered pursuant hereto, or waive compliance by the other
with any of the agreements or covenants of such other party or parties (as the
case may be) contained herein. Any such extension or waiver shall be valid only
if set forth in a written instrument signed on behalf of the party or parties to
be bound thereby. No such extension or waiver shall constitute a waiver of, or
estoppel with respect to, any subsequent or other breach or failure to strictly
comply with the provisions of this Agreement. The failure of any party to insist
on strict compliance with this Agreement or to assert any of its rights or
remedies hereunder or with respect hereto shall not constitute a waiver of such
rights or remedies.
7.8. Captions. The Table of Contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
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<PAGE> 37
7.9. Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original, and all of which together shall be
deemed to be one and the same instrument.
7.10. Validity. The invalidity or unenforceability of any provisions 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.
7.11. Governing Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of Delaware, without regard to
any applicable principles of conflicts of law; provided, however, that matters
relating to the duties of the directors of the Company and issues governed by
the Companies Ordinance shall be governed by the laws of the State of Israel.
7.12. New Offer. In the event the original Offer expires as a result of
any or all of the conditions to the Offer set forth in paragraphs (1), (2), (3),
(4), (5), (6)(a) and (6)(b) of Exhibit A not being been fulfilled, Purchaser
shall have the right to commence a new Offer within 10 days of such expiration.
Such new Offer shall be conducted on the same terms as the original Offer, and
the terms of this Agreement shall in all respects apply to such new Offer in the
same manner as it applied to the original Offer except where the context
indicates otherwise.
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<PAGE> 38
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
NEW DIMENSION SOFTWARE LTD.
[NEW DIMENSION SOFTWARE LOGO] By: /s/ RONI A. EINAV
-------------------------------------
Name: Roni A. Einav
Title: Chairman
By: /s/ DAN BARNEA
-------------------------------------
Name: Dan Barnea
Title: CEO
BMC SOFTWARE, INC.
By:/s/ M. BRINKLEY MORSE
-------------------------------------
Name: M. Brinkley Morse
Title: Senior Vice President
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<PAGE> 39
EXHIBIT A
CONDITIONS TO THE OFFER
Capitalized terms used in this Exhibit A shall have the meanings
assigned to them in the Agreement to which it is attached (the "Tender
Agreement").
Purchaser shall not be required to accept for payment, purchase or pay
for any Shares tendered and Purchaser may terminate or, subject to the terms and
conditions of the Tender Agreement, amend the Offer as to any Shares not then
accepted for payment, shall not be required to accept for payment or pay for any
Shares, or may delay the acceptance for payment of Shares tendered, if:
(1) at the expiration of the Offer, the number of Shares validly
tendered and not withdrawn shall not constitute at least 90% of the then
outstanding Shares not owned by Purchaser determined in accordance with Section
236 of the Companies Ordinance;
(2) at the expiration of the Offer, all material filings required to be
made prior to the Closing Date with, and all material consents, approvals,
permits and authorizations required to be obtained prior to the Closing Date
from, governmental and regulatory authorities in connection with the Offer and
the consummation of the other transactions contemplated hereby which are listed
in Section 3.19 of the Tender Agreement shall not have been made or obtained, as
the case may be, or the expiration of any applicable waiting periods required by
the governmental or regulatory authorities listed in Section 3.19 of the Tender
Agreement shall not have occurred;
(3) the Shareholder Approvals shall not have been obtained at the
Special Meeting;
(4) the Company shall not have obtained agreements from the holders of
all Company Options in accordance with Section 2.1(a) of the Tender Agreement
permitting the cancellation of such Company Options on the Closing Date in
accordance with Section 2.1(a) thereof; provided, however, that the foregoing
shall not require the Company to have obtained such an agreement from any holder
of a Company Option (other than a holder of an option to purchase capital stock
of any subsidiary of the Company) who is not employed by the Company or its
subsidiaries at the Closing Date;
(5) the Director Releases shall not have become effective in accordance
with their terms; or
(6) at any time after the date of the Tender Agreement and prior to the
acceptance for payment of Shares, any of the following events shall occur:
(a) there shall have been any action or proceeding brought by
any governmental authority before any court, or any order or
preliminary or permanent injunction entered in any action or proceeding
before any court or governmental, administrative or regulatory
authority or agency, located or having jurisdiction within the United
States or State of Israel, or any other action taken, proposed or
threatened, or statute, rule, regulation, legislation, interpretation,
judgment or order proposed, sought, enacted, entered, enforced,
promulgated,
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<PAGE> 40
amended, issued or deemed applicable to Purchaser, the Company or any
subsidiary or affiliate of Purchaser or the Company or the Offer, by
any legislative body, court, government or governmental, administrative
or regulatory authority or agency located or having jurisdiction within
the United States or the State of Israel, which could reasonably be
expected to have the effect of: (i) making illegal, materially delaying
or otherwise restraining or prohibiting the Offer or the acquisition by
Purchaser of any Shares or the Compulsory Acquisition; (ii) prohibiting
or materially limiting the ownership or operation by Purchaser or its
affiliates of any material portion of the business or assets of the
Company or compelling Purchaser to dispose of or hold separate all or
any material portion of the business or assets of the Company, in each
case as a result of the transactions contemplated by the Tender
Agreement; (iii) imposing material limitations on the ability of
Purchaser or any of its affiliates to exercise full rights of ownership
of the Shares, including, without limitation, the right to vote any
Shares purchased by them on all matters properly presented to the
shareholders of the Company; or (iv) preventing Purchaser or any of its
affiliates from acquiring, or to require divestiture by Purchaser or
any of its affiliates of, any Shares in the Offer; or
(b) there shall have occurred (i) any general suspension of,
or limitation on prices for, trading in securities on any national
securities exchange or in the over-the-counter market in the United
States, (ii) the declaration of any banking moratorium or any
suspension of payments in respect of banks or any limitation (whether
or not mandatory) on the extension of credit by lending institutions in
the United States, or (iii) the commencement of a war, material armed
hostilities or any other material international or national calamity
involving the United States or the State of Israel and, in the case of
armed hostilities involving Israel, having, or which could reasonably
be expected to have, a substantial continuing general effect on
business and financial conditions in Israel; or
(c) any Person, entity or "group" (as such term is used in
Section 13(d)(3) of the Exchange Act) other than Purchaser or any of
its affiliates shall have become the beneficial owner (as that term is
used in Rule 13d-3 under the Exchange Act) of more than 50% of the
outstanding Shares; or
(d) (i) the Company shall have breached or failed to comply in
any material respect with any of its obligations under the Tender
Agreement (which breach, if curable, has not been cured within thirty
(30) days following receipt of written notice thereof by Purchaser
specifying in reasonable detail the basis of such alleged breach), (ii)
or any representation or warranty of the Company contained in the
Tender Agreement shall not have been true and correct as of such time,
except (x) for changes specifically permitted or contemplated by the
Tender Agreement; or (y) where the failure of representations and
warranties (without giving effect to any limitation based on
materiality or Material Adverse Effect or words of similar effect set
forth therein) to be true and correct would not, in the aggregate,
reasonably be expected to have a Material Adverse Effect; or
(e) there shall have occurred a Material Adverse Effect, other
than as a result of the transactions specifically contemplated by the
Tender Agreement; or
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<PAGE> 41
(f) the Tender Agreement shall have been terminated pursuant
to its terms or amended pursuant to its terms to provide for such
termination of the Offer;
which, in the good faith judgment of Purchaser makes it inadvisable to proceed
with the Offer or with acceptance for payment or payment for Shares.
The foregoing conditions are for the sole benefit of Purchaser and may
be asserted or waived by Purchaser in whole or in part at any time or from time
to time in its discretion subject to the terms and conditions of the Tender
Agreement. The failure of Purchaser at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right and each such right shall
be deemed an ongoing right which may be asserted at any time and from time to
time. The Company will deliver to the Purchaser such evidence as Purchaser shall
reasonably request to evidence satisfaction of any of the conditions set forth
above, including certificates executed by officers of the Company.
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<PAGE> 42
EXHIBIT 1.2(B)
FORM OF AMENDMENT TO ARTICLES OF ASSOCIATION
"To amend the Company's Articles of Association by adding, after
Article 39, a new Article marked 39A with the following language:
39A. Without derogating from the provisions of Article 39 and
in addition thereto, the holders of no less than 60% (sixty percent) of
all the issued and outstanding Ordinary shares of the Company, may
appoint and remove the Directors of the Company, by a written notice to
the Company, and Directors appointed by such a written notice of the
holders of no less than 60% (sixty percent) of all the issued and
outstanding Ordinary shares of the Company, shall be deemed elected at
the most Recent General Meeting of shareholders held prior to such
appointment by a written notice provided for above, and the provisions
of Article 39 shall apply mutatis mutandis."
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<PAGE> 43
EXHIBIT B
FORM OF OPTION CANCELLATION
AND RELEASE AGREEMENT
This Option Cancellation and Release Agreement (the "Agreement") is
entered into effective as of the date set forth below by and between New
Dimension Software Ltd., an Israeli corporation (the "Company"), and the
individual named on the signature page hereof ("Employee").
W I T N E S S E T H:
WHEREAS, effective ___________, 199__, the Company established its
[Stock Option Plan][Revise as appropriate for EagleEye Plan] (the "Plan"); and
WHEREAS, pursuant to the Plan and the stock option agreement or
agreements (and, if applicable, amendments thereto) entered into by and between
the Company and Employee, copies of which are attached hereto as Exhibit A and
incorporated by reference herein (the "Stock Option Agreements"), Employee has
been granted the option to purchase ordinary shares, par value NIS 0.01 per
share ("Shares") of the Company [revise as appropriate for EagleEye options],
subject to the satisfaction of certain events and conditions as set forth in the
Stock Option Agreements; and
WHEREAS, the Company and BMC Software, Inc., a Delaware corporation
("Purchaser"), have entered into a Stock Purchase and Tender Agreement (the
"Tender Agreement"), which provides for, among other things, the acquisition by
Purchaser of Shares by means of a cash tender offer (the "Offer") being made by
means of an Offer to Purchase dated March 7, 1999, a copy of which has been
delivered to Employee; and
WHEREAS, in connection with the Offer, Purchaser, the Company and
Employee desire to provide for cancellation of the options held by Employee
subject to and effective upon the purchase by Purchaser of Shares pursuant to
the Offer (the "Closing Time") in exchange for the cash payment described
herein;
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises contained herein, the parties, intending to be legally bound hereby,
agree as follows:
1. Options. The parties acknowledge that Employee has been granted the
option to purchase shares of the common stock of the Company as set forth on the
signature page hereof, subject to the satisfaction of certain events and
conditions as set forth in the respective Stock Option Agreements (the
"Options").
2. Payment in Exchange for Cancellation of Options.
(a) Subject to and effective as of the Closing Time, the Company
agrees to make a payment (the "Payment") to Employee in settlement and
cancellation of all of the Options held by Employee as of the Closing Time,
which Payment shall be in cash in U.S. dollars in an amount equal
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<PAGE> 44
to, for each Share subject to such Options, regardless of whether such Option
has vested or is then exercisable with respect to such Share, the positive
difference, if any, between the Per Share Amount (as defined in the Tender
Agreement, which means $52.50 per Share as may be adjusted upward in connection
with the Offer pursuant to the Tender Agreement) and the exercise price per
share of such Options specified on the signature page hereof. [Note - to be
adjusted appropriately in the case of EagleEye options in accordance with
Section 2.1(a) of the Tender Agreement]
(b) The Payment to Employee as described herein shall be reduced by all
applicable withholding taxes, which shall mean all taxes required by any
governmental entity to be withheld by the Company.
(c) If the Tender Agreement is terminated or the Closing Time does not
occur prior to September 12, 1999, then this Agreement shall terminate and be of
no further force and effect.
3. Release. Employee hereby releases, acquits and forever discharges
the Company, its subsidiaries, and all officers, directors, shareholders,
agents, affiliates, subsidiaries, employees, attorneys, successors and assigns
of the foregoing from all actions, causes of action, suits, debts, liens,
contracts, agreements, obligations, promises, liabilities, claims of any nature,
whatsoever (whether in tort, contract, under laws or statutes), rights, demands,
damages, losses, costs and expenses (including attorneys' fees, court costs or
other costs or expenses actually incurred) of any nature whatsoever, known or
unknown, suspected or unsuspected, fixed or contingent, that have accrued or
which may accrue on account of, arising out of, or in any way related to the
Options canceled hereunder.
4. Israeli Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Israel, without giving effect to the
principles of conflicts of law thereof.
5. Entirety. This Agreement contains the entire Agreement of the
parties and supersedes all prior negotiations and understandings with respect to
the subject matter hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as of the date set forth below.
NEW DIMENSION SOFTWARE LTD.
By:
----------------------------------
Name:
Title:
EMPLOYEE
-------------------------------------
Printed name:
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<PAGE> 45
Date:
---------------------------
Number of Shares subject to Options:
----------
Exercise Price:
---------------------
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<PAGE> 46
Exhibit A
to Option Cancellation and Release Agreement
Stock Option Agreements
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<PAGE> 1
EXHIBIT 99.1
BMC Software to Acquire New Dimension Software
HOUSTON, TX - (March 8, 1999) - BMC Software (Nasdaq: BMCS), the leader in
providing Application Service Assurance (ASA(TM)) solutions that improve the
availability, performance and recovery of business-critical applications,
announced today that it has signed a Share Purchase and Tender Agreement to
acquire New Dimension Software, Inc. (Nasdaq:DDDDF) for $52.50 per share. New
Dimension Software is an industry leader in enterprise management, specializing
in job scheduling, managing computer generated output and documents, and
security and user administration. The acquisition complements BMC Software's
pending merger with Boole & Babbage, Inc., which is expected to be completed on
March 30. Boole & Babbage is currently the exclusive European distributor of
New Dimension Software's products.
As a result of these strategic acquisitions, BMC Software accelerates the
delivery of solutions that significantly reduce the complexity of managing large
enterprises through innovative products, an extensive worldwide distribution
network and superior technical expertise. BMC Software will gain a significant
presence in Israel, home of New Dimension Software's worldwide headquarters and
a major center for software development and technical expertise. BMC Software
intends to maintain and expand New Dimension Software's operations in Israel.
"The acquisition of New Dimension Software is a perfect fit for BMC Software's
global strategy of providing Application Service Solutions from the back office
to the front office and beyond. This acquisition, along with our merger with
Boole & Babbage, positions BMC Software as a top-tier player in the enterprise
management industry focused on rapidly delivering value to a business, said Max
Watson, chairman, president and CEO of BMC Software. "Today, there is already a
significant degree of product integration between the companies which is good
for our customers who gain focused, best-of-breed solutions that address their
critical issues. This combination establishes a new center for technology
building on strong skills and resources in Israel, which is renowned for its
high degree of technical skills and superior technology workforce. We will be
joining IBM, Intel, Microsoft and other leading high technology firms who have
established significant operations in Israel."
"This transaction is a win-win for all parties: New Dimension Software, BMC
Software, our customers and the industry as a whole. The unique combination of
our companies' product sets, coupled with our existing distribution arrangement
with Boole & Babbage, will enable the new BMC Software to provide
state-of-the-art solutions to manage the entire enterprise," said Dan Barnea,
CEO of New Dimension Software. "Our employees are looking forward to becoming
part of the BMC Software family, one that has a global reputation for excellence
and investment in the companies it acquires."
The transaction is a cash purchase valued at more than $650 million. BMC
Software anticipates an in-process research and development charge of up to 30
percent of the purchase price, with amortization of identifiable intangible
assets over four to five years. Because New Dimension Software is a non-U.S.
corporation, BMC Software expects to treat the acquisition as an asset purchase
for federal income tax purposes, which significantly improves anticipated
earnings and cash flow. BMC Software will effect the acquisition through a cash
tender offer for all outstanding New Dimension Software shares. BMC Software has
entered into option agreements with two holders of more than 60 percent of the
outstanding shares. The agreements give BMC Software the right to purchase these
shares at the tender offer price for a stipulated period of time and require the
shareholders to tender their shares to BMC Software.
"We are paying cash because we believe our stock is greatly undervalued and
prefer to use cash as our acquisition currency," said Bill Austin, senior vice
president and chief financial officer of BMC Software. "We will also avoid the
significant delays associated with stock-based pooling transactions. We hope to
close this transaction within the next 45 days, so that we begin our fiscal 2000
with both Boole & Babbage and New Dimension Software as part of BMC Software's
operations."
When the New Dimension Software and Boole & Babbage transactions are completed,
BMC Software will employ approximately 5,000 people in 26 countries. Trailing
annual revenues of the combined companies will be approximately $1.4 billion.
<PAGE> 2
BMC Software's ASA product lines ensure that key business applications are
available, perform optimally and can be rapidly recovered in the event of an
outage. This enhances the service delivered to the business by the information
technology (IT) organization and significantly improves business productivity
and return on investment in IT assets.
The company's combined product line will provide customers the ability to manage
all components of the enterprise which affect application availability and the
ability to solve unique application availability problems. Customers will
realize these benefits:
o Across all major platforms (OS/390, UNIX, NT, Internet)
o Across database, middleware, mail and messaging, custom and
packaged applications, Internet and Web servers
o Across all major functional areas: event management,
performance analysis, capacity planning, backup and recovery,
job scheduling, output management and security administration
COMPANY BACKGROUNDS
BMC SOFTWARE, INC. is the leader in delivering Application Service Assurance
(ASA) solutions - enterprise-level software that supports and improves the
availability, performance and recovery of critical applications and data in
complex computing environments. BMC Software is the world's 12th largest
independent software vendor and an S&P 500 company, with calendar 1998 revenues
exceeding $955 million. The company is headquartered in Houston, Texas, with
offices worldwide. For more information, please call 800 841-2031 or 713
918-8800 or visit BMC Software on the Web at www.bmc.com.
NEW DIMENSION SOFTWARE is a premier developer of systems management software for
complex distributed systems. With the Company's tightly integrated family of
products, all aspects of enterprise production, output and security can be
effectively managed. By managing the flow of information between applications,
systems, end users and administrators, New Dimension Software products allow
organizations to achieve their business goals. Founded in 1983, the Company is
based in Tel Aviv, with its North American subsidiary's headquarters in Irvine,
Calif. and regional offices throughout the United States, Canada, Mexico and
Australia. The Company's products are currently licensed to over 2,350 customers
in more than 40 countries. For more information, please visit New Dimension
Software on the Web at www.ndsoft.com.
This news release contains both historical information and forward-looking
information. For example, statements in this discussion regarding BMC Software's
future financial and operating results, the development of and anticipated
markets for BMC Software's products, BMC Software's operating strategies,
anticipated acquisition benefits and other statements that are not statements of
historical fact are forward looking statements. Actual results could differ
materially from any expectation, estimate or projection conveyed by these
statements and there can be no assurance that any such expectation, estimate or
projection will be met. Numerous important factors, risks and uncertainties
affect BMC Software's operating results and could cause actual results to differ
from the results implied by these or any other forward looking statements. These
factors include, but are not limited to, the following: 1) BMC Software's
revenues and earnings are subject to a number of factors, including the
significant percentage of quarterly sales typically closed at the end of each
quarter, that make estimation of operating results prior to the end of a quarter
extremely uncertain; 2) competition for BMC Software's products is increasing
for both the open systems and the mainframe database utility products; 3)
international results have been volatile over the last two years; 4) BMC
Software continues to increasingly depend on large enterprise license
transactions as an integral part of its core mainframe and distributed systems
businesses; 5) the uncertainties of whether new software products and product
strategies will be successful; 6) the high degree of difficulty of integrating
different software products and technologies and the general risks associated
with mergers of high technology companies, including the potential loss of key
personnel and cultural conflicts; and 7) the additional risks and important
factors described in BMC Software's, New Dimension Software's and Boole &
Babbage's Annual Report to Stockholders on Forms 10-K and 10-Q and other filings
with the SEC.
<PAGE> 3
NOTE TO INTERESTED PARTIES: BMC Software has scheduled a conference call for
8:00 a.m. CST today to discuss the acquisition. Interested parties may
participate by calling (847) 413-2900. You may also access the conference call
over the Internet through Vcall at www.vcall.com. To listen to the live call,
please go the web site at least fifteen minutes early to register, download, and
install any necessary audio software.
EDITORS NOTE: BMC Software will be conducting additional conference calls for
industry analysts and members of the media. Please see separate media alert for
details.
BMC Software and the BMC Software logo are registered trademarks or trademarks
of BMC Software, Inc. in the USA and in other select countries. New Dimension
and the New Dimension logo are registered trademarks or trademarks of New
Dimension, Inc. in the USA and in other select countries. Boole & Babbage and
the Boole & Babbage logo are registered trademarks or trademarks of Boole &
Babbage, Inc. in the USA and in other select countries. (R) and (TM) indicate
USA registration or USA trademark. Other logos and product/trade names mentioned
are registered trademarks or trademarks of their respective companies. BMC
Software, New Dimension Software and Boole & Babbage are Equal Opportunity
Employers.
MEDIA RELATIONS CONTACTS:
BMC Software: Blanc & Otus: (For BMC Software)
Pam Austin Jim McManus
(713) 663-4812 or (617) 834-7180 (617) 225-9990
[email protected] [email protected]
INVESTOR RELATIONS CONTACTS:
BMC Software: New Dimension Software:
John Cox Laurie Weller Itzik Zion
(713) 918-4291 (714) 757-4300 x392 972-3-645-1188
[email protected] [email protected] [email protected]
Copyright (C) 1999 BMC Software, Inc. All rights reserved.
Legal and Privacy Worldwide Locations
<PAGE> 1
EXHIBIT 99.2
[CHASE LOGO]
BMC Software, Inc.
Senior Credit Facility
Commitment Letter
March 8, 1999
BMC Software, Inc.
2101 CityWest Blvd.
Houston, Texas 77042
Attention: Michael Shryock
You (the "Borrower") have requested that Chase Securities Inc. ("CSI")
agree to structure, arrange and syndicate a senior revolving credit facility in
an aggregate amount of up to $500,000,000 (the "Facility"), and that Chase Bank
of Texas, National Association ("Chase"), commit to provide the entire
principal amount of the Facility and to serve as administrative agent for the
Facility.
CSI is pleased to advise you that it is willing to act as exclusive
advisor, lead arranger, and book manager for the Facility.
Furthermore, Chase is pleased to advise you of (a) its commitment to
provide the entire amount of the Facility upon the terms and subject to the
conditions set forth or referred to in this commitment letter (the "Commitment
Letter") and in the Summary of Terms and Conditions attached hereto as Exhibit
A (the "Term Sheet").
It is agreed that Chase will act as the sole and exclusive Administrative
Agent, and that CSI will act as the sole and exclusive advisor, lead arranger,
and book manager (in such capacity, the "Arranger"), for the Facility, and each
will, in such capacities, perform the duties and exercise the authority
customarily performed and exercised by it in such roles. You agree that no
other agents, co-agents or arrangers will be appointed, no other titles will be
awarded and no compensation (other than that expressly contemplated by the Term
Sheet and the Fee Letter referred to below) will be paid in connection with the
Facility unless you and we shall so agree.
We intend to syndicate the Facility to a group of financial institutions
(together with Chase, the "Lenders") identified by us in consultation with you.
CSI intends to commence syndication efforts promptly upon the execution of this
Commitment Letter, and you agree actively to assist CSI in completing a
syndication satisfactory to it. Such assistance shall include (a) your using
commercially reasonable efforts to ensure that the syndication efforts benefit
materially from your existing lending relationships, (b) direct contact between
senior management and advisors of the Borrower and the proposed Lenders, (c)
assistance in the preparation of a Confidential Information Memorandum and
other marketing materials to be used in connection with the syndication and (d)
the hosting, with CSI, of one or more meetings of prospective Lenders.
As the Arranger, CSI will manage all aspects of the syndication, including
decisions as to the selection of institutions to be approached and when they
will be approached, when their commitments will be accepted, which institutions
will participate, the allocations of the commitments among the Lenders and the
amount and distribution of fees among the Lenders. In acting as the Arranger,
CSI will have no responsibility other than to arrange the syndication. To
assist CSI in its syndication efforts, you agree
<PAGE> 2
BMC Software, Inc.
March 5, 1999
Page 2
promptly to prepare and provide to CSI and Chase all information with respect
to the Borrower and the transactions contemplated hereby, including all
financial information and projections (the "Projections"), as we may reasonably
request in connection with the arrangement and syndication of the Facility. You
hereby represent and covenant that (a) all information other than the
Projections (the "Information") that has been or will be made available to
Chase or CSI by you or any of your representatives is or will be, when
furnished, complete and correct in all material respects and does not or will
not, when furnished, contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements contained
therein not materially misleading in light of the circumstances under which
such statements are made and (b) the Projections that have been or will be made
available to Chase or CSI by you or any of your representatives have been or
will be prepared in good faith based upon reasonable assumptions. You
understand that in arranging and syndicating the Facility we may use and rely
on the Information and Projections without independent verification thereof.
As consideration for Chase's commitment hereunder and CSI's agreement to
perform the services described herein, you agree to pay to Chase the
nonrefundable fees in the Fee Letter dated the date hereof and delivered
herewith (the "Fee Letter").
Chase and CSI shall be entitled, after consultation with you and with your
consent, such consent not to be unreasonably withheld, to change the structure,
terms, amount or pricing of the Facility if the syndication has not been
completed and if Chase and CSI determine that such changes are advisable in
order to ensure a successful syndication of the Facility. Chase's commitment
hereunder is subject to the agreements in this paragraph.
Chase's commitment hereunder and CSI's agreement to perform the services
described herein are subject to (a) there not occurring or becoming known to us
any material adverse condition or material adverse change in or affecting the
business, operations, property, condition (financial or otherwise) or prospects
of the Borrower and its subsidiaries, taken as a whole, (b) our completion of
and satisfaction in all respects with a due diligence investigation of the
Borrower and the acquisition candidate contemplated with this Facility, (c) our
not becoming aware after the date hereof of any information or other matter
affecting the Borrower or the transactions contemplated hereby which is
inconsistent in a material and adverse manner with any such information or other
matter disclosed to us prior to the date hereof, (d) there not having occurred a
material disruption of or material adverse change in financial, banking or
capital market conditions that, in our judgment, could materially impair the
syndication of the Facility, (e) our satisfaction that prior to and during the
syndication of the Facility there shall be no competing offering, placement or
arrangement of any debt securities or bank financing by or on behalf of the
Borrower or any affiliate thereof, (f) the negotiation, execution and delivery
on or before May 7, 1999 of definitive documentation with respect to the
Facility satisfactory to Chase and its counsel and (h) the other conditions set
forth or referred to in the Term Sheet. The terms and conditions of Chase's
commitment hereunder and of the Facility are not limited to those set forth
herein and in the Term Sheet. Those matters that are not covered by the
provisions hereof and of the Term Sheet are subject to the approval and
agreement of Chase, CSI and the Borrower.
You agree to indemnify and hold harmless Chase, CSI, the other Lenders,
their respective affiliates and their respective officers, directors, employees,
advisors, and agents (each, an "indemnified person") from and against any and
all losses, claims, damages and liabilities to which any such indemnified person
may become subject arising out of or in connection with this Commitment Letter,
the Facility, the use of the proceeds thereof or any related transaction or any
claim, litigation, investigation or proceeding relating to any of the foregoing,
regardless of whether any indemnified person is a party thereto, and to
reimburse each indemnified person upon demand for any legal or other expenses
incurred in connection with investigating or defending any of the foregoing,
provided that the foregoing indemnity will not, as to any indemnified person,
apply to losses, claims, damages, liabilities or related expenses to the extent
they arise from the willful misconduct, unlawful conduct or gross negligence of
such indemnified person. YOU AGREE THAT THE INDEMNITY CONTAINED IN THE PRECEDING
SENTENCE
<PAGE> 3
BMC Software, Inc.
March 5, 1999
Page 3
EXTENDS TO AND IS INTENDED TO COVER LOSSES AND RELATED EXPENSES ARISING OUT OF
THE ORDINARY, SOLE OR CONTRIBUTORY NEGLIGENCE OF ANY INDEMNIFIED PERSON. You
also agree to reimburse Chase, CSI and their affiliates on demand for all
out-of-pocket expenses (including syndication expenses, travel expenses, and
reasonable fees, charges and disbursements of counsel) incurred in connection
with the Facility and any related documentation (including this Commitment
Letter, the Term Sheet, the Fee Letter and the definitive financing
documentation) or the administration, amendment, modification or waiver
thereof. No indemnified person shall be liable for any damages arising from the
use by others of Information or other materials obtained through electronic,
telecommunications or other information transmission systems or for any
special, indirect, consequential or punitive damages in connection with the
Facilities.
This Commitment Letter shall not be assignable by you without the prior
written consent of Chase and CSI (and any purported assignment without such
consent shall be null and void), is intended to be solely for the benefit of the
parties hereto and is not intended to confer any benefits upon, or create any
rights in favor of, any person other than the parties hereto. This Commitment
Letter may not be amended or waived except by an instrument in writing signed by
you, Chase and CSI. This Commitment Letter may be executed in any number of
counterparts, each of which shall be an original, and all of which, when taken
together, shall constitute one agreement. Delivery of an executed signature page
of this Commitment Letter by facsimile transmission shall be effective as
delivery of manually executed counterpart hereof. This Commitment Letter and the
Fee Letter are the only agreements that have been entered into among us with
respect to the Facility and set forth the entire understanding of the parties
with respect thereto. This Commitment Letter shall be governed by, and construed
in accordance with, the laws of the State of Texas.
This Commitment Letter is delivered to you on the understanding that
neither this Commitment Letter, the Term Sheet or the Fee Letter nor any of
their terms or substance shall be disclosed, directly or indirectly, to any
other person except (a) to your officers, agents and advisors who are directly
involved in the consideration of this matter or (b) as may be compelled in a
judicial or administrative proceeding or as otherwise required by law (in which
case you agree to inform us promptly thereof), provided, that the foregoing
restrictions shall cease to apply (except in respect of the Fee Letter and its
terms and substance) after this Commitment Letter has been accepted by you.
You acknowledge that CSI and Chase may be providing debt financing,
equity capital or other services (including financial advisory services) to
other companies in respect of which you may have conflicting interests regarding
the transactions described herein and otherwise. Neither CSI nor Chase will use
confidential information obtained from you by virtue of the transactions
contemplated by this letter or their other relationships with you in connection
with the performance by CSI or Chase of services for other companies, and
neither CSI nor Chase will furnish any such information to other companies. You
also acknowledge that CSI and Chase have no obligation to use in connection with
the transactions contemplated by this letter, or to furnish to you, confidential
information obtained from other companies.
The reimbursement, indemnification and confidentiality provisions
contained herein and in the Fee Letter shall remain in full force and effect
regardless of whether definitive financing documentation shall be executed and
delivered and notwithstanding the termination of this Commitment Letter or
Chase's commitment hereunder.
THIS COMMITMENT LETTER, THE ATTACHED TERM SHEET, THE FEE LETTER AND ALL
EXHIBITS, SCHEDULES AND OTHER ATTACHMENTS HERETO AND THERETO CONSTITUTE A "LOAN
AGREEMENT" FOR PURPOSES OF SECTION 26.02 OF THE TEXAS BUSINESS AND COMMERCE CODE
AND REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
<PAGE> 4
BMC Software, Inc.
March 5, 1999
Page 4
If the foregoing correctly sets forth our agreement, please indicate your
acceptance of the terms hereof and of the Term Sheet and the Fee Letter by
returning to us executed counterparts hereof and of the Fee Letter not later
than 5:00 p.m., Central Standard Time, on March 10, 1999. Chase's commitment and
CSI's agreements herein will expire at such time in the event Chase has not
received such executed counterparts in accordance with the immediately preceding
sentence.
Chase and CSI are pleased to have been given the opportunity to assist you
in connection with this important financing.
Very truly yours,
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION
By: /s/ MICHAEL A. CERDA
------------------------
Name: Michael A. Cerda
Title: Vice President
CHASE SECURITIES INC.
By: /s/ GREGORY M. SPIER
------------------------
Name: Gregory M. Spier
Title: Managing Director
Accepted and agreed to as of
the date first written above by:
BMC SOFTWARE, INC.
By: /s/ STEPHEN SOLCHER
---------------------
Name: Stephen Solcher
Title: Treasurer
<PAGE> 5
EXHIBIT A
MARCH 8, 1999
SUMMARY OF TERMS AND CONDITIONS
Borrower: BMC Software, Inc.
Facilities: Up to $500,000,000; 364-Day Revolving Credit Facility,
with one year term out option. Facility to include a
Competitive Bid Option for the Borrower to request
Competitive Bids. Four (4) days advance notice to
Agent required via telephone with written
confirmation. Typical Competitive Bid procedures shall
apply.
Maturity: 364 days from Closing. Additionally, at the option of
the Borrower, the ability to term out the outstandings
under the revolver at maturity, payable within one
year from the date of the term out request.
Minimum Initial
Commitment Per
Institution: $200,000,000 for each Primary Institution
Required Lenders: 51% of Commitments
Commitment Date: March 9, 1999
Closing Date: Closing and Funding to occur on or before April 7,
1999.
Purpose: For general corporate purposes including working
capital, capital expenditures and acquisitions.
Interest Rate: Performance Pricing tied to a Funded Debt to EBITDA
ratio.
<TABLE>
<CAPTION>
- -----------------------------------------------------------
Funded Debt/EBITDA LIBOR Margin* Facility Fee**
- -----------------------------------------------------------
<S> <C> <C>
>2.25X 92.5 b.p.s. 20.0 b.p.s.
- -----------------------------------------------------------
>1.50X 72.5 b.p.s. 15.0 b.p.s.
- -----------------------------------------------------------
>0.75X 62.5 b.p.s. 12.5 b.p.s.
- -----------------------------------------------------------
<0.75X 52.5 b.p.s. 10.0 b.p.s.
-
- -----------------------------------------------------------
</TABLE>
* If the Borrower elects the one year term option, the LIBOR Margin will
Increase by 12.5 bps across all grid points. Additionally, in anticipation of
receiving a rating from both S&P and Moody's, a ratings grid will be
incorporated into the documentation reflecting drawn pricing of 50 bps for a
BBB+/Baa1 senior, unsecured debt rating. The other grid points to be determined.
** The Facility Fee will be paid on the commitment amount regardless of usage.
<PAGE> 6
Underwriting Fee: An underwriting fee as set forth in the fee letter
on allocated underwritten commitment. Payable
on the funding date of the facility, to be reduced by
amount of fees necessary for secondary syndication.
Facility Fee: A facility fee shall be paid to each Lender on the
basis of such Lenders allocated share of the
Commitments (both drawn and undrawn portion) in the
amount of applicable Facility Fee (as shown on the
table for same).
Agent Titles: To be determined on 3/10/99.
Financial Covenants: o The Total funded Debt to EBITDA shall not exceed 2.5X
EBITDA based upon a rolling four quarter basis and
including historical EBITDA of the acquired companies.
o Borrower and its Subsidiaries shall at all times
maintain ownership (free and clear of all encumbrances)
of at least $300,000,000 in cash and/or marketable
securities.
Documentation: The Credit Documentation shall contain representations,
warranties, covenants and events of default customary
for financings of this type and other terms deemed
appropriate by the Lenders, including, without
limitation:
Representations and Warranties: Financial statements;
no material adverse change; corporate existence;
compliance with law; corporate power and authority;
enforceability of Credit Documentation; no conflict
with law or contractual obligations; no material
litigation; no default; ownership of property;
intellectual property; taxes; Federal Reserve
regulations: ERISA; Investment Company Act; Year 2000
matters; accuracy of disclosure.
Affirmative Covenants: Delivery of financial
statements, reports accountants' letters, projections,
officers' certificates and other information reasonably
requested by the Lenders; continuation of business and
maintenance of existence and material rights and
privileges; compliance with laws and material
contractual obligations; maintenance of property and
insurance; maintenance of books and records; right of
the Lenders to inspect property and books and records;
and notices of defaults, litigation and other material
events.
2
<PAGE> 7
Negative Covenants: Limitations on: liens; mergers,
consolidations, sales of assets; transactions with
affiliates; sale and leasebacks; and changes in lines of
business.
Events of Default: Nonpayment of principal when due;
nonpayment of interest, fees or other; material
inaccuracy of representations and warranties; violation
of covenants (subject, in the case of certain
affirmative covenants, to a grace period to be agreed
upon); cross-default; bankruptcy events; certain ERISA
events; material judgments; and a change of control (the
definition of which is to be agreed).
Conditions: to be mutually agreed upon between
Administrative Agent and Borrower.
Syndication Sell-Down
Strategy: Every dollar raised during the syndication process will
reduce the Primary Lender's positions until each Primary
Lender's position reaches $50,000,000. No Primary
Lender's position will be reduced below $50,000,000
until every Primary Lender's position is reduced to
$50,000,000.
Indemnification: The Administrative Agent, the Arranger, the Agents and
the Lenders (and their affiliates and their respective
officers, directors, employees, advisors and agents)
will have no liability for, and will be indemnified and
held harmless against, any loss, liability, cost or
expense incurred in respect of the financing
contemplated hereby or the use or the proposed use of
proceeds thereof (except to the extent resulting from
the gross negligence or willful misconduct of the
indemnified party).
Governing Law
and Forum: State of Texas.
3
<PAGE> 8
March 9, 1999
BMC Software, Inc.
2101 Citywest Blvd.
Houston, TX 77042
Attention: Mike Shryock
Re: $500,000,000 Facility
Ladies and Gentlemen:
NationsBank, N.A. ("NationsBank") is pleased to offer its commitment to lend up
to $500,000,000 of the Facility, upon and subject to the terms and conditions of
this letter and the Summary of Terms and Conditions attached hereto (the
"Summary of Terms"). NationsBanc Montgomery Securities LLC ("NMS") is pleased to
advise you of its willingness, as Lead Arranger and Book Manager for the
Facility, to use its best efforts to form a syndicate of financial institutions
(the "Lenders") reasonably acceptable to you for the Facility.
The commitment of NationsBank hereunder and the agreement of NMS to provide the
services described herein are subject to the satisfaction of each of the
following conditions precedent in a manner acceptable to us in our sole
discretion: (a) each of the terms and conditions set forth herein and in the
Summary of Terms; (b) the completion of all due diligence with respect to the
Borrower and its subsidiaries in scope and determination satisfactory to us in
our sole discretion; (c) the negotiation, execution and delivery of definitive
documentation for the Facility consistent with the Summary of Terms and
otherwise satisfactory to us; (d) since the date hereof, no material adverse
change in or material disruption of conditions in the financial, banking or
capital markets which we, in our sole discretion, deem material in connection
with the syndication of the Facility shall have occurred and be continuing; (e)
no change, occurrence or development that could, in our opinion, have a material
adverse effect on the business, assets, liabilities (actual or contingent),
operations, condition (financial or otherwise) or prospects of the Borrower and
its subsidiaries taken as a whole shall have occurred or become known to us; and
(f) our not becoming aware after the date hereof of any information or other
matter which in our judgment is inconsistent in a material and adverse manner
with any information or other matter disclosed to us prior to the date hereof.
The terms of this letter, the Summary of Terms and the fee letter among you and
us (the "Fee Letter") are confidential and, except for disclosure on a
confidential basis to your accountants, attorneys and other professional
advisors retained by you in connection with the Facility or as may be
required by law, may not be disclosed in whole or in part to any other person
or entity without our prior written consent. We hereby consent to your
disclosure of a copy of this letter and the Summary of Terms (but not the Fee
Letter), provided that any information relating to pricing, fees and expenses
is omitted.
This letter and the Fee Letter shall be governed by laws of the State of Texas.
This offer will expire at 5:00 p.m. central time on March 12, 1999.
<PAGE> 9
BMC Software, Inc.
March 9, 1999
Page 2
We are pleased to have the opportunity to work with you in connection with this
important financing.
Very truly yours,
NATIONSBANK, N.A.
By: /s/ DAN KILLIAN
----------------------------------
Title: Vice President
NATIONSBANC MONTGOMERY SECURITIES LLC
By: /s/ JOSEPH SIEGEL
----------------------------------
Title: Managing Director
Accepted and Agreed to
as of March 10, 1999:
BMC SOFTWARE, INC.
By: /s/ STEPHEN SOLCHER
----------------------------------
Title: Treasurer
<PAGE> 10
Confidential BMC Software, Inc.
- --------------------------------------------------------------------------------
SUMMARY OF TERMS AND CONDITIONS
BMC SOFTWARE, INC.
$500,000,000 FACILITY
BORROWER: BMC Software, Inc., (the "Borrower").
AGENTS, LEAD ARRANGERS
AND BOOK MANAGERS: Financial institutions reasonably acceptable to the
Borrower, NationsBank and NMS, to be determined on March
10, 1999.
FACILITY: An aggregate principal amount of up to $500,000,000 will
be available upon the terms and conditions hereinafter
set forth:
Revolving Credit Facility: $500 million 364 day
revolving credit facility (the "Facility"). Facility to
include a Competitive Bid Option for the Borrower to
request Competitive Bids. Four (4) days advance notice
to Agent required via telephone with written
confirmation. Typical competitive Bid procedures shall
apply.
PURPOSE: The proceeds of the Facility shall be used for general
corporate purposes including for working capital,
capital expenditures, and other lawful corporate
purposes and acquisitions.
CLOSING: The execution of definitive loan documentation and
funding by NationsBank, to occur on or before April 7,
1999 ("Closing").
INTEREST RATES: As set forth in Addendum I.
MATURITY: The Revolving Facility shall terminate and all amounts
outstanding thereunder shall be due and payable 364 days
from Closing. Provided that no event of default under
the Facility or incipient default has occurred and is
then continuing, the outstanding principal amount of
loans under the Revolving Facility on such maturity date
may, at the Borrower's election, be converted to a term
loan which will be repayable in a single payment one (1)
year from such maturity date.
CONDITIONS PRE-
CEDENT TO CLOSING: The Closing (and the initial funding) of the Facility
will be subject to satisfaction of the conditions
precedent to be mutually agreed upon by the Borrower,
Agents and the Lenders.
DOCUMENTATION: The Credit Documentation shall contain representations
warranties, covenants and events of default customary
for financings of this type and other terms deemed
appropriate by the Lenders, to be mutually agreed upon
by the Borrower, Agents and the Lenders.
REPRESENTATIONS
AND WARRANTIES: Usual and customary for transactions of this type, to
include without limitation: correctness of financial
statements; no material adverse change; corporate
existence and status; corporate power and authority;
enforceability of Credit Documentation; compliance with
law or contractual obligations; no material litigation;
no default; ownership of property; intellectual
property; no required governmental or third party
approvals; use of proceeds/compliance with margin
regulations; status under Investment Company Act; ERISA
matters; environmental
- --------------------------------------------------------------------------------
[BANK OF AMERICA LOGO] Page 1 March 9, 1999
<PAGE> 11
Confidential BMC Software, Inc.
- --------------------------------------------------------------------------------
matters; payment of taxes; accuracy of disclosure; and
Year 2000 preparedness.
COVENANTS: Affirmative Covenants: Delivery of financial
statements, reports accountants' letters, projections,
officers' certificates and other information reasonable
requested by the Lenders; continuation of business and
maintenance of existence and material rights and
privileges; compliance with laws and material
contractual obligations; maintenance of property and
insurance; maintenance of books and records; right of
the Lenders to inspect property and books and records,
and; notices of defaults, litigation and other material
events.
Negative Covenants: Limitations on liens; mergers,
consolidations, sales of assets; transactions with
affiliates; sale and leasebacks; and changes in lines
of business.
Financial covenants:
o The Total Funded Debt to EBITDA shall not exceed
2.5 to 1.0.
o Borrower and its Subsidiaries shall at all times
maintain ownership (free and clear of all
encumbrances) of at least $300,000,000 in cash
and/or marketable securities.
EVENTS OF DEFAULT: Nonpayment of principal when due; nonpayment of
interest, fees or other; material inaccuracy of
representations and warranties; violation of covenants
(subject, in the case of certain affirmative covenants,
to a grace period to be agreed upon); cross-default;
bankruptcy events; certain ERISA events; material
judgements; and a change of control (the definition of
which is to be agreed).
REQUIRED LENDERS: Amendments and waivers of the provisions of the loan
agreement and other definitive credit documentation
will require the approval of Lenders holding loans and
commitments representing more than 50% of the aggregate
amount of loans (excluding Competitive Bid Loans) and
commitments under the Facility, except that the consent
of all the Lenders affected thereby shall be required
with respect to (i) increases in the commitment of such
Lenders, (ii) reductions of principal, interest or
fees, and (iii) extensions of scheduled maturities or
times for payment.
GOVERNING LAW AND FORUM: State of Texas.
FEES/EXPENSES: As set forth in Addendum 1.
OTHER: This Summary of Terms is intended as an outline of
certain of the material terms of the Facility and does
not purport to summarize all of the conditions,
covenants, representations, warranties and other
provisions which would be contained in definitive
documentation for the Facility contemplated hereby. The
Borrower and the Guarantors shall each waive its right
to a trial by jury.
SYNDICATION SELL-DOWN Every dollar raised during the Syndication process will
STRATEGY reduce the primary Lender's positions until each
Primary Lender's position will be reduced below
$50,000,000. No Primary Lender's position will be
reduced below $50,000,000 until every Primary Lender's
position is reduced to $50,000,000.
- --------------------------------------------------------------------------------
[BANK OF AMERICA LOGO] Page 2 March 9, 1999
<PAGE> 12
CONFIDENTIAL
- --------------------------------------------------------------------------------
ADDENDUM 1
FEES AND EXPENSES
FACILITY FEE: The Borrower will pay a fee (the "Facility Fee"),
on each Lender's allocated share of the Commitments
(both drawn and undrawn portion), in the amount of
applicable Facility Fee determined in accordance
with the attached Pricing Grid. The Facility Fee is
payable quarterly in arrears.
INTEREST RATES: At the Borrower's option, any loan under the
Facility that is made to it will bear interest at a
rate equal to the Applicable Margin, as determined
in accordance with the attached Pricing Grid, plus
one of the following indexes: (i) LIBOR, or (ii) the
Alternate Base Rate (to be defined as the higher of
(a) the Administrative Agent's prime rate and (b)
the Federal Funds rate plus .50%). If the Borrower
shall elect the conversion of any loan under the
Facility to a one year Term Loan the Applicable
Margin will be equal to the sum of the Applicable
Margin for LIBOR Loans, the Facility Fee plus 12.5
basis points.
COST AND YIELD
PROTECTION: Customary for transactions and facilities of this
type, including, without limitation, in respect of
breakage or redeployment costs incurred in
connection with prepayments, changes in capital
adequacy and capital requirements or their
interpretation, illegality, unavailability, reserves
without proration or offset and payments free and
clear of withholding or other taxes.
The Facility Fee, the Applicable Margin for any fiscal quarter, shall be the
applicable rate per annum set forth in the table below opposite the ratio of
Funded Debt to EBITDA determined as of the last day of the immediately
preceding fiscal quarter.
<TABLE>
<CAPTION>
FACILITY PRICING GRID
================================================================================
APPLICABLE APPLICABLE
MARGIN FOR MARGIN FOR ABR FACILITY
LEVEL TOTAL DEBT/EBITDA LIBOR LOANS LOANS FEE
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
I >2.25x 92.5bps 0.0bps 20.0bps
- --------------------------------------------------------------------------------
II > = 1.50x but <2.25x 72.5bps 0.0bps 15.0bps
- --------------------------------------------------------------------------------
III* > = 0.75x but <1.50x 82.5bps 0.0bps 12.5bps
- --------------------------------------------------------------------------------
IV <0.75x 52.5bps 0.0bps 10.0bps
- --------------------------------------------------------------------------------
V BBB+/Baa1 40.0bps 0.0bps 10.0bps
================================================================================
</TABLE>
* Anticipated Initial LIBOR margin and Facility Fee.
- --------------------------------------------------------------------------------
[BANK OF AMERICA LOGO] Page 3 MARCH 9, 1998
<PAGE> 13
[ABN-AMRO BANK LETTERHEAD]
March 9, 1999
BMC Software, Inc.
2101 City West Blvd.
Houston, Texas 77042
Attn: Stephen Solcher, Vice President and Treasurer
Mike Shryock, Finance Manager
Re: Proposed $500,000,000 Revolving Credit Facility (the "Facility")
Dear Stephen and Mike:
We, ABN AMRO Bank N.V. ("ABN AMRO"), hereby issue our commitment to the
Facility in a principal amount of $125,000,000 based on the terms and
conditions outlined in the revised Summary of Terms and Conditions dated March
8, 1999 (the "Term Sheet") sent to us by BMC Software, Inc. as amended by Mike
Shryock's letter to ABN AMRO dated March 9, 1999. Our commitment to this
financing is subject to the negotiation and execution of documentation
satisfactory to ABN AMRO.
The commitment offered by ABN AMRO herein is to underwrite the aggregate amount
of $125,000,000. If BMC accepts this commitment offer, ABN AMRO undertakes to
syndicate the Facility; provided, however, that the inability of ABN AMRO to
complete such syndication shall not affect the commitment of ABN AMRO or the
obligations of BMC hereunder.
BMC agrees to provide ABN AMRO with all information and take such other actions
as ABN AMRO may reasonably request to facilitate the syndication of the
Facility by ABN AMRO. ABN AMRO agrees to treat all confidential information
provided to it by BMC on a confidential basis in accordance with customary
banking practices subject to customary exceptions. ABN AMRO may provide such
information to potential syndicate banks and financial institutions provided
such banks and financial institutions similarly agree to maintain such
confidentiality.
This letter is not meant to encompass, nor shall it be construed as
encompassing, all of the terms and conditions of the Facility. It is intended
to outline the principal points of business understandings concerning the
Facility. The commitment of ABN AMRO hereunder is subject to completion by ABN
AMRO of satisfactory due diligence and the execution of a definitive lease
agreement and other lease documentation in form and substance satisfactory to
ABN AMRO. If ABN AMRO and BMC are unable to agree upon such documentation, they
shall have no further obligations to each other hereunder
<PAGE> 14
[ABN-AMRO BANK LOGO]
except that BMC shall be obligated to reimburse ABN AMRO for its out-of-pocket
fees, costs and expenses as provided herein.
In consideration of the commitments provided by ABN AMRO hereunder, BMC agrees
to indemnify and hold harmless each of ABN AMRO and its officers, directors,
employees, agents, advisors and affiliates for all claims, damages, losses,
liabilities and expenses (including, without limitation, reasonable fees and
disbursements of counsel) incurred by any of them in connection with this
commitment letter, the Facility, the use by BMC of the Facility or the proceeds
thereof, the collateral for the Facility, the lease documents, any related
document, instrument or agreement or any transaction contemplated hereby or
thereby whether or not such transactions are consummated, except for the portion
of such claims, damages, losses, liabilities and expenses caused by such party's
gross negligence or willful misconduct.
The commitment set forth in this letter is personal to BMC and may not be
transferred or assigned to any other party without the prior written consent of
ABN AMRO. Except as otherwise required by law, neither this letter nor any part
hereof may, without the prior written consent of ABN AMRO, be disclosed or
exhibited to any other party except BMC's accountants, attorneys and other
advisors, and then, in each case, only in connection with the transactions
contemplated hereby and on a confidential basis.
If the commitment offered herein is satisfactory, please indicate BMC's
acceptance by having an authorized officer of BMC sign and date each of the
enclosed copies of this letter and the attached fee agreement letter and
delivering the executed copies of each, to ABN AMRO. ABN AMRO reserves the
right to terminate the commitment offer set forth herein at any time prior to
receipt by ABN AMRO of such executed copies. Unless so accepted or otherwise
terminated by ABN AMRO on or prior to March 15, 1999, the offer set forth
herein will expire on that date.
Upon the acceptance by BMC of the commitment offer set forth in this letter, ABN
AMRO will commence its due diligence and instruct its counsel to commence
documentation. By accepting this offer, BMC agrees to reimburse ABN AMRO for all
reasonable fees, costs and expenses (whether incurred before or after the date
hereof), including, without limitation, audit fees, out-of-pocket syndication
expenses, and fees and disbursements of counsel for ABN AMRO, incurred by ABN
AMRO in connection with its due diligence, the syndication of the Facility and
the negotiation, preparation, execution, delivery and enforcement of the lease
documents, whether or not any money is advanced by ABN AMRO under the Facility,
any of the transactions contemplated hereby are consummated or any documents are
agreed to and executed. If BMC accepts this offer, ABN AMRO's commitment
hereunder shall continue until September 30, 1999, on which date such commitment
shall expire unless final documents have been executed by ABN AMRO, BMC and the
other parties thereto on or prior to such date.
This letter shall be governed by and construed in accordance with the laws of
the State of California without regard to conflicts of law principles.
Closing and funding by ABN-AMRO to occur on or before April 7th, 1999.
<PAGE> 15
[ABN-AMRO BANK LOGO]
We look forward to working with you on this transaction. Please let us know if
you have any questions.
Very truly yours,
ABN AMRO BANK N.V.
By: /s/ JAMIE DILLON By: /s/ MATHEW HARVEY
-------------------------------- ---------------------------------
Name: Jamie Dillon Name: Mathew Harvey
Title: Vice President and Director Title: Vice President
ACCEPTED AND AGREED
BMC SOFTWARE, INC.
By: /s/ STEPHEN SOLCHER
--------------------------------
Name: STEPHEN SOLCHER
Title: TREASURER
Date: 3/10/99
<PAGE> 1
EXHIBIT 99.3
SHAREHOLDER AGREEMENT
THIS SHAREHOLDER AGREEMENT, dated as of March 7, 1999 (this
"Agreement"), is made and entered into among BMC Software, Inc., a Delaware
corporation ("Purchaser") Einav Computer Systems Ltd., an Israeli corporation
("ECS"), and Roni A. Einav and Dalia Prashker-Katzman, shareholders of ECS (each
an "Owner" and collectively, the "Owners"). For purposes of this Shareholder
Agreement, ECS and the Owners are collectively referred to as the "Shareholder
Group."
WITNESSETH
WHEREAS, concurrently herewith, Purchaser and New Dimension Software
Ltd., an Israeli corporation (the "Company"), are entering into a Share Purchase
and Tender Agreement (as such agreement may hereafter be amended from time to
time, the "Tender Agreement"); and
WHEREAS, as an inducement and a condition to entering into the Tender
Agreement, Purchaser has required that Shareholder Group agree, and Shareholder
Group has agreed, to enter into this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements contained herein and the
benefits to be received by the parties under the terms of the Tender Agreement,
the parties hereto, intending to be legally bound, hereby agree as follows:
ARTICLE I
DEFINITIONS
(a) Capitalized terms used and defined herein shall have the respective
meanings ascribed to them in the Tender Agreement. For purposes of this
Agreement:
(i) "Alternative Disposition" shall have the meaning ascribed
to such term in Article IV.
(ii) "Alternative Transaction Consideration" shall mean all
cash, securities, settlement or termination amounts, notes or other debt
instruments, and other consideration received or to be received, directly or
indirectly, by Shareholder Group and its affiliates in connection with or as a
result of an Alternative Disposition or any agreements or arrangements
(including, without limitation, any employment agreement, consulting agreement,
non-competition agreement, confidentiality agreement, settlement agreement or
release agreement) entered into, directly or indirectly, by Shareholder Group or
its affiliates (excluding officers and directors of Company other than the
Owners) as a part of or in connection with the Alternative Disposition or
Company Transaction Proposal.
<PAGE> 2
(iii) "Applicable Shares " means all Shares that are
Beneficially Owned by Shareholder Group or that become Beneficially Owned by
Shareholder Group prior to the Termination Date (in each case, including all
Shares Beneficially Owned by ECS and/or the Owners in their individual
capacities).
(iv) "Beneficially Own" or "Beneficial Ownership" with respect
to any securities shall mean bearing "beneficial ownership" of such securities
(as determined pursuant to Rule 13d-3 under the Exchange Act), including
pursuant to any agreement, arrangement or understanding, whether or not in
writing. Without duplicative counting of the same securities by the same holder,
securities Beneficially Owned by a Person shall include (i) securities
Beneficially Owned by all other Persons (who are affiliates of such Person
excluding officers and directors of Company) who together with such Person would
constitute a "group" within the meaning of Section 13(d)(3) of the Exchange Act
and (ii) securities Beneficially Owned by that Person's spouse and children.
(v) "90% Condition" shall be such condition as set forth in
paragraph (1) of Exhibit A to the Tender Agreement.
(vi) "Offer Termination Date" shall mean the date the Offer
terminates or expires without the purchase of Shares thereunder; provided,
however, that if Purchaser initiates a new Offer under the terms of the Tender
Agreement on or before midnight, central time in the United States on the 10th
day following such date, the Offer Termination Date shall mean the date such
subsequent Offer terminates or expires without the purchase of Shares
thereunder; provided, however, that the Offer Termination Date will not be later
than the date of termination of the Tender Agreement.
(vii) "Per Share Amount" shall mean the price per Share of the
Offer as set forth in Section 1.1 of the Tender Agreement, as such price may be
increased in accordance with the Tender Agreement.
(viii) "Purchase Option" shall have the meaning ascribed to
such term in Section 3.1.
(ix) "Termination Date" shall mean the date ending on the
first to occur of:
(1) the Closing Date;
(2) the Offer Termination Date; or
(3) midnight, central time in the United States, on
the date all of the conditions to the Offer set forth in Exhibit A to the Tender
Agreement have been satisfied, except for the conditions set forth in paragraphs
(6)(d)(ii) or (6)(e), and Purchaser elects to terminate the Tender Agreement
without the purchase of Shares thereunder;
2
<PAGE> 3
provided, however, that, notwithstanding subparagraphs (2) and (3) above, if
after the date of this Agreement (x) any person, entity or group (within the
meaning of Section 13(d)(3) of the Exchange Act) (other than the Purchaser or
any affiliate of Purchaser) acquires more than 5% or more of the outstanding
Shares and fails to tender such Shares in the Offer and continues to hold such
Shares and the Offer is terminated as a result of the failure of the
90%Condition to be satisfied, the Termination Date shall be the date 150 days
after the Offer Termination Date, or (y) there is a public announcement of, or
the disclosure to the management, board of directors, shareholders or advisors
of the Company of, a Company Transaction Proposal, and the board of directors of
the Company rejects such Company Transaction Proposal and continues to recommend
the Offer and the Offer is terminated as a result of the failure of the
90%Condition to be satisfied, the Termination Date shall be the date 120 days
after the Offer Termination Date, or (z) there is a public announcement of, or
the disclosure to the management, board of directors, shareholders or advisors
of the Company of, a Company Transaction Proposal, and the board of directors of
the Company withdraws, withholds or modifies in a manner adverse to Purchaser
its approval of the Tender Agreement or the Offer pursuant to Section 5.8 of the
Tender Agreement, and the Offer is terminated as a result of the failure of the
90%Condition to be satisfied, the Termination Date shall be the date 150 days
after the Offer Termination Date.
(x) "Underlying Shares" shall mean the Shares issuable to
Shareholder Group upon the exercise by Shareholder Group of Company Options, if
any, Beneficially Owned by it (in each case, including all Company Options
Beneficially Owned by ECS and/or the Owners in their individual capacities).
ARTICLE II
VOTING AND TENDER
MATTERS
2.1 Voting and Tender Matters.
(a) From and after the date of this Agreement and ending as of
the Termination Date, at any meeting of the holders of Shares however called, or
in any other circumstance upon which the vote, consent or other approval of
holders of Shares is sought, Shareholder Group shall vote (or cause to be voted)
its issued and outstanding Applicable Shares:
(i) against any action or agreement that would result
in a breach in any material respect of any covenant, representation or warranty
or any other material obligation or agreement of Company under the Tender
Agreement or this Agreement;
(ii) against the following actions (other than the
transactions contemplated by the Tender Agreement):
(A) any Company Transaction Proposal, and
3
<PAGE> 4
(B) to the extent that such (1) are intended
to, or could reasonably be expected to, impede, interfere with, delay, postpone,
or materially adversely affect the Offer, or the transactions contemplated by
the Tender Agreement or this Agreement or (2) are intended to, or could
reasonably be expected to, implement or lead to any Company Transaction
Proposal: (x) any change in a majority of the persons who constitute the board
of directors of Company; (y) any change in the present capitalization of Company
or any amendment of Company's Memorandum and Articles of Association (other than
as expressly contemplated by the Tender Agreement); or (z) any other material
change in Company's corporate structure or business; and
(iii) for the proposals to:
(A) approve the right of the directors of
the Company to sell their Shares to the Purchaser pursuant to the Offer and the
transactions contemplated thereby,
(B) approve an amendment to the Company's
Articles of Association to provide that the holders of at least 60% of the
issued and outstanding Shares of the Company shall be entitled to appoint and
remove any and all members of the Board of Directors of the Company, by means of
a written notice signed by such holders of the Company, and
(C) approve any and all other matters
contemplated by the Tender Agreement and presented at the Special Meeting.
(b) Shareholder Group hereby grants to, and appoints,
Purchaser and any nominee thereof, its proxy and attorney-in-fact (with full
power of substitution), from and after the date of this Agreement and ending as
of the Termination Date, to vote its Applicable Shares, or to grant a consent or
approval in respect of its Applicable Shares on any and all matters relating to
the Tender Agreement, the Offer or any Company Transaction Proposal. Shareholder
Group intends such proxy to be irrevocable and coupled with an interest and will
take such further action or execute such other instruments as may be necessary
to effectuate the intent of this proxy and hereby revokes any proxy previously
granted by Shareholder Group with respect to its Applicable Shares.
(c) From and after the date of this Agreement and ending as of
the Termination Date, Shareholder Group shall not take any action (including the
tender of any Shares) that could reasonably be expected to, implement or lead to
any Company Transaction Proposal.
2.2 Tender Agreement and Company Options.
(a) Shareholder Group hereby agrees that it shall (i) tender
all of its Applicable Shares into the Offer promptly, and in any event no later
than the third business day following the commencement of the Offer, and (ii)
not withdraw any Applicable Shares so tendered prior to the Offer Termination
Date.
4
<PAGE> 5
(b) In the event that (i) the 90% Condition is not satisfied,
(ii) Purchaser notifies Shareholder Group that Purchaser is prepared to close
the Offer but for the fact that the 90% Condition is not satisfied, and (iii)
the tender by Shareholder Group of the Underlying Shares, either alone or when
aggregated with other Company Options, would cause the 90% Condition to be
satisfied, then Shareholder Group hereby agrees that, at any time prior to the
Termination Date, immediately upon the request of Purchaser, it shall exercise
all Company Options Beneficially Owned by it and immediately tender the
Underlying Shares received upon such exercise into the Offer (and not withdraw
such Underlying Shares so tendered). Purchaser shall advance to Shareholder
Group the funds necessary to pay the exercise price of such Options, and
Shareholder Group shall repay Purchaser the amount of such advance, without
interest, immediately upon receipt of the Per Share Amount by it for its
Underlying Shares.
(c) Except as may be required by Section 2.2(b), Shareholder
Group hereby agrees that it shall not exercise any Company Options that it
Beneficially Owns.
ARTICLE III
PURCHASE OPTION
3.1 Grant of the Purchase Option. Shareholder Group hereby grants to
Purchaser an irrevocable option (the "Purchase Option") to purchase, on the
terms and subject to the conditions set forth herein, at the Per Share Amount
all its Applicable Shares.
3.2 Exercise of the Purchase Option.
(a) Subject to the conditions set forth in Section 3.3, the
Purchase Option may be exercised in whole at any time, and in part from time to
time, from and after the Offer Termination Date and ending as of the Termination
Date; provided, however, that in the event Purchaser exercises its Purchase
Option hereunder it shall exercise its Purchase Option in a proportionate amount
under that certain Shareholder Agreement with Yossie Hollander of even date
herewith entered into in connection with the Tender Agreement.
(b) In the event Purchaser wishes to exercise the Purchase
Option, Purchaser will send a written notice to Shareholder Group specifying a
place, date (not less than two business days nor more than 10 calendar days
after the date such notice is given) and time for the closing of the purchase of
such Shares (the "Closing").
(c) The purchase price payable to Shareholder Group with
respect to any exercise of the Purchase Option will be the product of (i) the
Per Share Amount and (ii) the number of Applicable Shares to be purchased upon
such exercise.
5
<PAGE> 6
3.3 Closing.
(a) At the Closing, Shareholder Group will deliver to
Purchaser a certificate or certificates representing the Shares being purchased,
duly endorsed for transfer or accompanied by appropriate stock powers duly
executed in blank, and Purchaser will pay the purchase price in immediately
available funds by wire transfer to an account designated by Shareholder Group.
Transfer taxes, if any, imposed as a result of the exercise of the Purchase
Option and the transfer of any Applicable Shares will be paid by Shareholder
Group.
(b) The obligation of Purchaser and Shareholder Group to
consummate the purchase and sale of the Applicable Shares pursuant to this
Article III will be subject to the fulfillment of the following conditions:
(i) the expiration or termination of the waiting
period applicable to the consummation of such transactions under the HSR Act and
any other applicable antitrust laws; and
(ii) none of the parties hereto shall be subject to
any order or injunction of a court of competent jurisdiction which prohibits the
consummation of such transactions.
(c) The obligations of Shareholder Group pursuant to this
Article III shall also be subject to Purchaser not violating any of its material
obligations under the Tender Agreement.
Each of the parties hereto will promptly make and will use all reasonable
efforts to cause each of their respective affiliates to make, all such filings
and take all such actions as may be reasonably required in order to permit the
lawful exercise of the Purchase Option, as promptly as possible. The date of any
Closing may be extended, if required, to the next business day following (1) the
date that any applicable waiting period(s) under the HSR Act and any other
applicable antitrust laws shall have expired or been earlier terminated, (2) the
date that all other necessary governmental approvals for the sale of the Shares
for which the Purchase Option shall have been exercised shall have been
obtained, and (3) the satisfaction of any other condition to the Closing under
the Tender Agreement.
ARTICLE IV
CAPTURE
4.1 Capture. In the event that the Applicable Shares of
Shareholder Group are sold, transferred, exchanged, canceled or disposed of in
connection with or as a result of any Company Transaction Proposal that is in
existence on, or that has been otherwise made prior to the Termination Date (an
"Alternative Disposition") then, within five business days after the closing of
such Alternative Disposition, Shareholder Group shall tender and pay to, or
shall cause to be tendered and paid to, Purchaser (or its designee), in
immediately available funds, the Profit realized from such Alternative
Disposition, less any withholdings.
4.2 Profit. As used in this Article IV, "Profit" shall mean an
amount equal to the excess, if any, of (a) the Alternative Transaction
Consideration over (b) the Per Share Amount multiplied by Shareholder Group's
Applicable Shares sold, transferred, exchanged, canceled or
6
<PAGE> 7
disposed of in such Alternative Disposition. For purposes of determining Profit,
(i) all non-cash items shall be valued based upon the fair market value thereof
as determined by an independent expert selected by Purchaser and who is
reasonably acceptable to Shareholder Group, (ii) all deferred payments or
consideration shall be discounted to reflect a market rate of net present value
thereof as determined by the above-referenced independent expert, and (iii) all
contingent payments will be assumed to have been paid. In the event any
contingent payments included in the determination of Profit ultimately are not
paid pursuant to an Alternative Disposition, then Purchaser shall promptly
reimburse Shareholder Group for any amounts paid to Purchaser hereunder in
respect of such uncollected contingent payments promptly after receipt of
written notice of such non-payment.
ARTICLE V
ESCROW
5.1 Escrow Agreement. As further set forth in the Escrow Agreement
attached hereto as Exhibit 5.1, Shareholder Group and Purchaser agree that the
Applicable Shares shall be placed with Dan Cohen, Spigelman & Co. as escrow
agent within five business days of the date hereof and ending on the Termination
Date, to be disbursed as set forth below.
5.2 Release and Delivery. The Applicable Shares shall be released and
delivered during the term hereof at any time or from time to time, (i) to
Purchaser in connection with the purchase of such Shares pursuant to this
Agreement or the Offer and (ii) unless otherwise distributed to Purchaser, to
Shareholder Group on the Termination Date. All Applicable Shares tendered in the
Offer and withdrawn or not purchased in the Offer prior to the Termination Date
shall be returned to the Escrow Agent.
ARTICLE VII
RELEASE
(a) AS OF THE CLOSING DATE ECS AND THE OWNERS DO HEREBY FOR
THEMSELVES, AND IN THE CASE OF THE OWNERS, THEIR HEIRS, EXECUTORS,
ADMINISTRATORS AND LEGAL REPRESENTATIVES REMISE, RELEASE, ACQUIT AND FOREVER
DISCHARGE COMPANY AND EACH OF ITS SUBSIDIARIES OF AND FROM ANY AND ALL CLAIMS,
DEMANDS, LIABILITIES, RESPONSIBILITIES, DISPUTES, CAUSES OF ACTION AND
OBLIGATIONS OF EVERY NATURE WHATSOEVER, LIQUIDATED OR UNLIQUIDATED, KNOWN OR
UNKNOWN, MATURED OR UNMATURED, FIXED OR CONTINGENT, WHICH ECS OR SUCH OWNER NOW
HAS, OWNS OR HOLDS OR HAS AT ANY TIME PREVIOUSLY HAD, OWNED OR HELD AGAINST
COMPANY OR ITS SUBSIDIARIES INCLUDING WITHOUT LIMITATION ALL LIABILITIES CREATED
AS A RESULT OF THE NEGLIGENCE, GROSS NEGLIGENCE AND WILLFUL ACTS OF COMPANY OR
ITS SUBSIDIARIES AND ITS EMPLOYEES AND AGENTS, AND ALL LIABILITIES RELATING TO
COMPENSATION IN ANY FORM OR MANNER EXISTING AS OF THE DATE HEREOF OR RELATING TO
ANY MATTER THAT OCCURRED ON OR PRIOR
7
<PAGE> 8
TO THE CLOSING DATE; PROVIDED, HOWEVER, THAT ANY CLAIMS, LIABILITIES, DEBTS OR
CAUSES OF ACTION THAT MAY ARISE IN CONNECTION WITH THE FAILURE OF ANY OF THE
PARTIES HERETO TO PERFORM ANY OF THEIR OBLIGATIONS HEREUNDER OR UNDER ANY OTHER
AGREEMENT RELATING TO THE TRANSACTIONS CONTEMPLATED HEREBY, INCLUDING, WITHOUT
LIMITATIONS, SECTION 5.9. OF THE TENDER AGREEMENT, OR FROM ANY BREACHES BY ANY
OF THEM OF ANY REPRESENTATIONS OR WARRANTIES HEREIN OR IN CONNECTION WITH ANY OF
SUCH OTHER AGREEMENTS SHALL NOT BE RELEASED OR DISCHARGED PURSUANT TO THIS
AGREEMENT.
(B) ECS AND THE OWNERS REPRESENT AND WARRANT THAT THEY HAVE
NOT PREVIOUSLY ASSIGNED OR TRANSFERRED, OR PURPORTED TO ASSIGN OR TRANSFER, TO
ANY PERSON OR ENTITY WHATSOEVER ALL OR ANY PART OF THE CLAIMS, DEMANDS,
LIABILITIES, RESPONSIBILITIES, DISPUTES, CAUSES OF ACTION OR OBLIGATIONS
RELEASED HEREIN. ECS AND THE OWNERS COVENANT AND AGREE THAT THEY WILL NOT ASSIGN
OR TRANSFER TO ANY PERSON OR ENTITY WHATSOEVER ALL OR ANY PART OF THE CLAIMS,
DEMANDS, LIABILITIES, RESPONSIBILITIES, DISPUTES, CAUSES OF ACTION OR
OBLIGATIONS TO BE RELEASED HEREIN. ECS AND THE OWNERS REPRESENT AND WARRANT THAT
THEY HAVE READ AND UNDERSTANDS ALL OF THE PROVISIONS OF THIS ARTICLE VI AND THAT
THEY HAVE BEEN REPRESENTED BY LEGAL COUNSEL OF THEIR OWN CHOOSING IN CONNECTION
WITH THE NEGOTIATION, EXECUTION AND DELIVERY OF THIS AGREEMENT.
ARTICLE VII
COVENANTS, REPRESENTATIONS AND WARRANTIES
7.1 Shareholder Group hereby represents, warrants and covenants to
Purchaser as follows:
(a) Ownership. Shareholder Group is either (i) the record and
Beneficial Owner of, or (ii) the Beneficial Owner but not the record holder of,
the number of issued and outstanding Shares set forth on Part I of Schedule A
hereto and the Company Options set forth on Part II of Schedule A hereto. As of
the date of this Agreement, the Shares set forth on Part I of Schedule A hereto
constitute all of the issued and outstanding Shares owned of record or
Beneficially Owned by Shareholder Group. Except as otherwise set forth in Part I
to Schedule A hereto, Shareholder Group has sole power of disposition, sole
power of conversion, and sole power to agree to all of the matters set forth in
this Agreement, in each case with respect to all of the Shares set forth on Part
I of Schedule A hereto, with no material limitations, qualifications or
restrictions on such rights, subject to applicable securities laws and the terms
of this Agreement.
(b) Power; Binding Agreement. Shareholder Group has the legal
capacity, power and authority to enter into and perform all of Shareholder
Group's obligations under this Agreement.
8
<PAGE> 9
This Agreement has been duly and validly authorized by all necessary action,
executed and delivered by Shareholder Group and constitutes a valid and binding
agreement of Shareholder Group, enforceable against Shareholder Group in
accordance with its terms. There is no beneficiary or holder of a voting trust
certificate or other interest of any trust of which Shareholder Group is trustee
whose consent is required for the execution and delivery of this Agreement or
the consummation by Shareholder Group of the transactions contemplated hereby.
If either Owner is married and such Owner's interest in Shareholder Group's
Shares constitute community property, this Agreement has been duly authorized,
executed and delivered by, and constitutes a valid and binding agreement of,
Owner's spouse, enforceable against such person in accordance with its terms.
The Owners are the sole owners of ECS.
(c) No Conflicts. Except for the filing of an amendment to
Shareholder Group's Schedule 13D or 13G, if any, no filing with, and no permit,
authorization, consent or approval of, any state or federal public body or
authority is necessary for the execution of this Agreement by Shareholder Group
and the consummation by Shareholder Group of the transactions contemplated
hereby, except where the failure to obtain such consent, permit, authorization,
approval or filing would not interfere with Shareholder Group's ability to
perform its obligations hereunder, and none of the execution and delivery of
this Agreement by Shareholder Group, the consummation by Shareholder Group of
the transactions contemplated hereby or compliance by Shareholder Group with any
of the provisions hereof shall (i) result in a violation or breach of, or
constitute (with or without notice or lapse of time or both) a default (or give
rise to any third party right of termination, cancellation, material
modification or acceleration) under any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, license, contract, commitment,
arrangement, understanding, agreement or other instrument or obligation of any
kind to which Shareholder Group is a party or by which Shareholder Group or any
of its properties or assets may be bound, or (ii) violate any order, writ,
injunction, decree, judgment, order, statute, rule or regulation applicable to
Shareholder Group or any of its properties or assets, in each such case except
to the extent that any conflict, breach, default or violation would not
interfere with the ability of Shareholder Group to perform its obligations
hereunder. All arrangements, understandings, agreements and other instruments
relating to Shareholder Group's ability to dispose of, tender, vote or grant a
proxy with respect to its Applicable Shares or enter into this Agreement have
been validly terminated.
(d) No Encumbrances. Except as required herein, at all times
during the term hereof, all of Shareholder Group's Shares or Company Options as
set forth on Part I and II, respectively, of Schedule A hereto will be held by
Shareholder Group, an affiliate of Shareholder Group, or by a nominee or
custodian for the benefit of Shareholder Group, free and clear of all liens,
claims, security interests, proxies, voting trusts or agreements, understandings
or arrangements or any other encumbrances whatsoever, except for any liens,
claims, understandings or arrangements that do not limit or impair Shareholder
Group's ability to perform its obligations under this Agreement.
9
<PAGE> 10
(e) No Solicitation. Shareholder and the Owners shall comply,
and shall cause each of their respective affiliates who Beneficially Own any of
Shareholder Group's Applicable Shares to comply, with the terms of Section 5.8
of the Tender Agreement.
(f) Restriction on Transfer, Proxies and Non-Interference.
Except as expressly contemplated hereby, from and after the date of this
Agreement and ending as of the Termination Date, Shareholder Group shall not,
and shall cause each of its affiliates who Beneficially Own any of Shareholder
Group's Applicable Shares or Company Options not to, directly or indirectly,
without the consent of Purchaser: (i) offer for sale, sell, transfer, tender,
pledge, encumber, assign or otherwise dispose of, or enter into any contract,
option or other arrangement or understanding with respect to or consent to the
offer for sale, sale, transfer, tender, pledge, encumbrance, assignment or other
disposition of, any or all of its Applicable Shares or Company Options, or any
interest therein, (ii) grant any proxies or powers of attorney, deposit any or
all of its Applicable Shares or Company Options into a voting trust or enter
into a voting agreement with respect to its Applicable Shares or Company
Options, (iii) enter into any agreement or arrangement providing for any of the
actions described in clause (i) or (ii) above, or (iv) take any action that
could reasonably be expected to have the effect of preventing or disabling
Shareholder Group from performing its obligations under this Agreement. From and
after the date of this Agreement and ending as of the Termination Date,
Shareholder Group shall not enter into any agreement or understanding with any
Person or entity the effect of which would be inconsistent with or violate the
provisions and agreements contained in this Section 7.1
(g) Further Assurances. From time to time, at Purchaser's
request and without further consideration, Shareholder Group shall execute and
deliver such additional documents as may be necessary or desirable to consummate
and make effective, in the most expeditious manner practicable, the transactions
contemplated by this Agreement.
7.2 Purchaser hereby represents, warrants and covenants to Shareholder
Group as follows:
(a) Organization, Standing and Corporate Power. Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, with adequate corporate power and authority to own its
properties and carry on its business as presently conducted. Purchaser has the
corporate power and authority to enter into and perform all of its obligations
under this Agreement and to consummate the transactions contemplated hereby.
(b) No Conflicts. No filing with, and no permit,
authorization, consent or approval of, any state or federal public body or
authority is necessary for the execution of this Agreement by Purchaser and the
consummation by Purchaser of the transactions contemplated hereby, except where
the failure to obtain such consent, permit, authorization, approval or filing
would not interfere with its ability to perform its obligations hereunder, and
none of the execution and delivery of this Agreement by Purchaser, the
consummation by Purchaser of the transactions contemplated hereby or compliance
by Purchaser with any of the provisions hereof shall (i) conflict with or result
in any breach of any applicable organizational documents applicable to
Purchaser,
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<PAGE> 11
(ii) result in a violation or breach of, or constitute (with or without notice
or lapse of time or both) a default (or give rise to any third party right of
termination, cancellation, material modification or acceleration) under any of
the terms, conditions or provisions of any note, bond, mortgage, indenture,
license, contract, commitment, arrangement, understanding, agreement or other
instrument or obligation of any kind to which Purchaser is a party or by which
Purchaser or any of Purchaser's properties or assets may be bound, or (iii)
violate any order, writ, injunction, decree, judgment, order, statute, rule or
regulation applicable to Purchaser or any of Purchaser's properties or assets,
in each such case except to the extent that any conflict, breach, default or
violation would not interfere with the ability of Purchaser to perform its
obligations hereunder.
(c) Execution, Delivery and Performance by Purchaser. The
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by the Board of
Directors of Purchaser, and Purchaser has taken all other actions required by
law, its certificate of incorporation and its by-laws to consummate the
transactions contemplated by this Agreement. This Agreement constitutes the
valid and binding obligations of Purchaser and is enforceable in accordance with
its terms, except as enforceability may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
creditors' rights generally.
7.3 Purchaser will perform its obligations under the Tender Agreement.
ARTICLE VIII
MISCELLANEOUS
8.1 Stop Transfer. From and after the date of this Agreement and ending
as of the Termination Date, Shareholder Group will not request that Company
register the transfer (book-entry or otherwise) of any certificate or
uncertificated interest representing any of Shareholder Group's Applicable
Shares or Company Options, except as otherwise contemplated hereby.
8.2 Recapitalization. In the event of a stock dividend or distribution,
or any change in the Shares by reason of any split-up, recapitalization,
combination, exchange of shares or the like, the term "Shares" shall include,
without limitation, all such stock dividends and distributions and any
securities into which or for which any or all of the Applicable Shares may be
changed or exchanged as may be appropriate to reflect such event.
8.3 Shareholder Group Capacity. Except as set forth in Section 7.3,
neither Owner makes any agreement or understanding herein in his or her capacity
as a director or officer of Company and nothing herein shall limit or affect any
action taken by either Owner in such capacity. Nothing herein shall in any way
restrict or limit either Owner from taking any action in his or her capacity as
a director or officer of Company or otherwise fulfilling his or her fiduciary
obligations as a director and officer of Company. Subject to the foregoing, all
obligations of the Shareholder Group set forth in this Agreement shall apply to
the Owners and ECS in their individual capacities as well.
11
<PAGE> 12
8.4 Tender Agreement and Company Options. Shareholder Group hereby
consent and agree to the treatment of Company Options Beneficially Owned by
Shareholder Group or its affiliates as set forth in the Tender Agreement.
8.5 Entire Agreement. This Agreement 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.
8.6 Amendments, Waivers, Etc. This Agreement may not be amended,
changed, supplemented, waived or otherwise modified or terminated, except upon
the execution and delivery of a written agreement executed by the parties
hereto.
8.7 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telegram, telex
or telecopy, or by mail (registered or certified mail, postage prepaid, return
receipt requested) or by any courier service, such as Federal Express, providing
proof of delivery. All communications hereunder shall be delivered to the
respective parties at the following addresses:
(a) if to Purchaser, to:
BMC Software, Inc.
2101 CityWest Blvd.
Houston, Texas 77042
Attn: M. Brinkley Morse
Telecopy: (713) 918-8000
with a copy to:
Vinson & Elkins LLP
2300 First City Tower
Houston, Texas 77002-6760
Attn: John S. Watson
Telecopy: (713) 615-5236
(b) if to the Shareholder Group, to:
c/o Dan Cohen, Spigelman & Co.
103 Hahashmonaim St.
Israel
Attn: Michael Spigelman
Telecopy: 972-3-561-0624
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<PAGE> 13
with a copy to:
Dan Cohen, Spigelman & Co.
103 Hahashmonaim St.
Israel
Attn: Michael Spigelman
Telecopy: 972-3-561-0624
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
8.8 Severability. Whenever possible, each provision or portion of any
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
8.9 Specific Performance. Each of the parties hereto recognizes and
acknowledges that a breach by ECS or either Owner of any covenants or agreements
contained in this Agreement will cause the Purchaser to sustain damages for
which they would not have an adequate remedy at law for money damages, and
therefore each of the parties hereto agrees that in the event of any such breach
the Purchaser shall be entitled to the remedy of specific performance, without
the requirement of posting any bond, of such covenants and agreements and
injunctive and other equitable relief in addition to any other remedy to which
it may be entitled, at law or in equity.
8.10 Remedies Cumulative. All rights, powers and remedies provided
under this Agreement or otherwise available in respect hereof at law or in
equity shall be cumulative and not alternative, and the exercise of any thereof
by any party shall not preclude the simultaneous or later exercise of any other
such right, power or remedy by such party.
8.11 No Waiver. The failure of any party hereto to exercise any right,
power or remedy provided under this Agreement or otherwise available in respect
hereof at law or in equity, or to insist upon compliance by any other party
hereto with its obligations hereunder, and any custom or practice of the parties
at variance with the terms hereof, shall not constitute a waiver by such party
of its right to exercise any such or other right, power or remedy or to demand
such compliance.
8.12 No Third Party Beneficiaries. This Agreement is not intended to be
for the benefit of, and shall not be enforceable by, any person or entity who or
which is not a party hereto; provided that, in the event of either Owner's
death, the benefits and obligations of such Owner hereunder shall inure to his
or her successors and heirs.
13
<PAGE> 14
8.13 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware, without giving effect to the
principles of conflicts of law thereof.
8.14 Descriptive Headings. The descriptive headings used herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
8.15 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original, but all of which, taken together,
shall constitute one and the same Agreement. This Agreement shall not be
effective as to any party hereto until such time as this Agreement or a
counterpart thereof has been executed and delivered by each party hereto.
8.16 Trust Funds. In the event that any party hereto should receive any
funds that are to be paid to another party pursuant to the terms of this
Agreement, then the receiving party shall hold such funds in trust for the
benefit of the party entitled to receive such funds and shall promptly pay such
funds to the party entitled to receive such funds in accordance with this
Agreement.
14
<PAGE> 15
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed on this 7th day of March, 1999.
PURCHASER
By: /s/ M. BRINKLEY MORSE
---------------------------------------
Name: M. Brinkley Morse
-------------------------------------
Title: Senior Vice President
------------------------------------
ECS
By: /s/ DALIA PRASHKER
---------------------------------------
Name: Dalia Prashker
-------------------------------------
Title: Co-Chairman
------------------------------------
By: /s/ RONI A. EINAV
---------------------------------------
Name: Roni A. Einav
-------------------------------------
Title: Chairman
------------------------------------
OWNERS
/s/ RONI A. EINAV
------------------------------------------
Roni A. Einav
/s/ DALIA PRASHKER
------------------------------------------
Dalia Prashker
15
<PAGE> 16
ACKNOWLEDGMENT AND CONSENT OF SPOUSE
Matia Einav, the spouse of Owner, hereby joins in the execution of
this Agreement for the purpose of acknowledging that any ownership interest she
may have in the Shares and Company Options Beneficially Owned by Shareholder
Group is subject to the terms of this Agreement to the same extent as if she
were a "Owner" hereunder, and hereby consents to the foregoing.
/s/ MATIA EINAV
-----------------
Matia Einav
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<PAGE> 17
ACKNOWLEDGMENT AND CONSENT OF SPOUSE
Yossie Prashker, the spouse of Owner, hereby joins in the execution of
this Agreement for the purpose of acknowledging that any ownership interest she
may have in the Shares and Company Options Beneficially Owned by Shareholder
Group is subject to the terms of this Agreement to the same extent as if she
were a "Owner" hereunder, and hereby consents to the foregoing.
/s/ YOSSIE PRASHKAR
---------------------
Yossie Prashkar
17
<PAGE> 18
SCHEDULE A
<TABLE>
PART I
<S> <C>
Shares Beneficially Owned of Record
ECS 3,741,250
Roni A. Einav 0
Dalia Prashker-Katzman 0
Shares Beneficially Owned Not of Record
ECS 0
Roni A. Einav 0
Dalia Prashker-Katzman 0
PART II
Company Options Beneficially Owned
ECS 0
Roni A. Einav 23,000
Dalia Prashker-Katzman 0
</TABLE>
<PAGE> 1
EXHIBIT 99.4
SHAREHOLDER AGREEMENT
THIS SHAREHOLDER AGREEMENT, dated as of March 7, 1999 (this
"Agreement"), is made and entered into between BMC Software, Inc., a Delaware
corporation ("Purchaser") and Yossie Hollander (the "Shareholder").
WITNESSETH
WHEREAS, concurrently herewith, Purchaser and New Dimension Software
Ltd., an Israeli corporation (the "Company"), are entering into a Share Purchase
and Tender Agreement (as such agreement may hereafter be amended from time to
time, the "Tender Agreement"); and
WHEREAS, as an inducement and a condition to entering into the Tender
Agreement, Purchaser has required that Shareholder agree, and Shareholder has
agreed, to enter into this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements contained herein and the
benefits to be received by the parties under the terms of the Tender Agreement,
the parties hereto, intending to be legally bound, hereby agree as follows:
ARTICLE I
DEFINITIONS
(a) Capitalized terms used and defined herein shall have the respective
meanings ascribed to them in the Tender Agreement. For purposes of this
Agreement:
(i) "Alternative Disposition" shall have the meaning ascribed
to such term in Article IV.
(ii) "Alternative Transaction Consideration" shall mean all
cash, securities, settlement or termination amounts, notes or other debt
instruments, and other consideration received or to be received, directly or
indirectly, by Shareholder and his affiliates in connection with or as a result
of an Alternative Disposition or any agreements or arrangements (including,
without limitation, any employment agreement, consulting agreement,
non-competition agreement, confidentiality agreement, settlement agreement or
release agreement) entered into, directly or indirectly, by Shareholder or his
affiliates (excluding officers and directors of Company) as a part of or in
connection with the Alternative Disposition or Company Transaction Proposal.
(iii) "Applicable Shares " means all Shares that are
Beneficially Owned by the Shareholder or that become Beneficially Owned by the
Shareholder prior to the Termination Date.
<PAGE> 2
(iv) "Beneficially Own" or "Beneficial Ownership" with respect
to any securities shall mean bearing "beneficial ownership" of such securities
(as determined pursuant to Rule 13d-3 under the Exchange Act), including
pursuant to any agreement, arrangement or understanding, whether or not in
writing. Without duplicative counting of the same securities by the same holder,
securities Beneficially Owned by a Person shall include (i) securities
Beneficially Owned by all other Persons (who are affiliates of such Person
excluding officers and directors of Company) who together with such Person would
constitute a "group" within the meaning of Section 13(d)(3) of the Exchange Act
and (ii) securities Beneficially Owned by that Person's spouse and children.
(v) "90% Condition" shall be such condition as set forth in
paragraph (1) of Exhibit A to the Tender Agreement.
(vi) "Offer Termination Date" shall mean the date the Offer
terminates or expires without the purchase of Shares thereunder; provided,
however, that if Purchaser initiates a new Offer under the terms of the Tender
Agreement on or before midnight, central time in the United States on the 10th
day following such date, the Offer Termination Date shall mean the date such
subsequent Offer terminates or expires without the purchase of Shares
thereunder; provided, however, that the Offer Termination Date will not be later
than the date of termination of the Tender Agreement.
(vii) "Per Share Amount" shall mean the price per Share of the
Offer as set forth in Section 1.1 of the Tender Agreement, as such price may be
increased in accordance with the Tender Agreement.
(viii) "Purchase Option" shall have the meaning ascribed to
such term in Section 3.1.
(ix) "Termination Date" shall mean the date ending on the
first to occur of:
(1) the Closing Date;
(2) the Offer Termination Date; or
(3) midnight, central time in the United States, on
the date all of the conditions to the Offer set forth in Exhibit A to the Tender
Agreement have been satisfied, except for the conditions set forth in paragraphs
(6)(d)(ii) or (6)(e), and Purchaser elects to terminate the Tender Agreement
without the purchase of Shares thereunder; provided, however, that,
notwithstanding subparagraphs (2) and (3) above, if after the date of this
Agreement (x) any person, entity or group (within the meaning of Section
13(d)(3) of the Exchange Act) (other than the Purchaser or any affiliate of
Purchaser) acquires more than 5% or more of the outstanding Shares and fails to
tender such Shares in the Offer and continues to hold such Shares and the Offer
is terminated as a result of the failure of the 90%Condition to be satisfied,
the Termination Date shall be the date 150 days after the Offer Termination
Date, or (y) there is a public
2
<PAGE> 3
announcement of, or the disclosure to the management, board of directors,
shareholders or advisors of the Company of, a Company Transaction Proposal, and
the board of directors of the Company rejects such Company Transaction Proposal
and continues to recommend the Offer and the Offer is terminated as a result of
the failure of the 90%Condition to be satisfied, the Termination Date shall be
the date 120 days after the Offer Termination Date, or (z) there is a public
announcement of, or the disclosure to the management, board of directors,
shareholders or advisors of the Company of, a Company Transaction Proposal, and
the board of directors of the Company withdraws, withholds or modifies in a
manner adverse to Purchaser its approval of the Tender Agreement or the Offer
pursuant to Section 5.8 of the Tender Agreement, and the Offer is terminated as
a result of the failure of the 90%Condition to be satisfied, the Termination
Date shall be the date 150 days after the Offer Termination Date.
(x) "Underlying Shares" shall mean the Shares issuable to
Shareholder upon the exercise by Shareholder of Company Options, if any,
Beneficially Owned by him.
ARTICLE II
VOTING AND TENDER
MATTERS
2.1 Voting and Tender Matters.
(a) From and after the date of this Agreement and ending as of
the Termination Date, at any meeting of the holders of Shares however called, or
in any other circumstance upon which the vote, consent or other approval of
holders of Shares is sought, Shareholder shall vote (or cause to be voted) his
issued and outstanding Applicable Shares:
(i) against any action or agreement that would result
in a breach in any material respect of any covenant, representation or warranty
or any other material obligation or agreement of Company under the Tender
Agreement or this Agreement;
(ii) against the following actions (other than the
transactions contemplated by the Tender Agreement):
(A) any Company Transaction Proposal, and
(B) to the extent that such (1) are intended
to, or could reasonably be expected to, impede, interfere with, delay, postpone,
or materially adversely affect the Offer, or the transactions contemplated by
the Tender Agreement or this Agreement or (2) are intended to, or could
reasonably be expected to, implement or lead to any Company Transaction
Proposal: (x) any change in a majority of the persons who constitute the board
of directors of Company; (y) any change in the present capitalization of Company
or any amendment of Company's Memorandum and Articles of Association (other than
as expressly contemplated by the Tender Agreement); or (z) any other material
change in Company's corporate structure or business; and
3
<PAGE> 4
(iii) for the proposals to:
(A) approve the right of the directors of
the Company to sell their Shares to the Purchaser pursuant to the Offer and the
transactions contemplated thereby,
(B) approve an amendment to the Company's
Articles of Association to provide that the holders of at least 60% of the
issued and outstanding Shares of the Company shall be entitled to appoint and
remove any and all members of the Board of Directors of the Company, by means of
a written notice signed by such holders of the Company, and
(C) approve any and all other matters
contemplated by the Tender Agreement and presented at the Special Meeting.
(b) Shareholder hereby grants to, and appoints, Purchaser and
any nominee thereof, its proxy and attorney-in-fact (with full power of
substitution), from and after the date of this Agreement and ending as of the
Termination Date, to vote his Applicable Shares, or to grant a consent or
approval in respect of his Applicable Shares on any and all matters relating to
the Tender Agreement, the Offer or any Company Transaction Proposal. Shareholder
intends such proxy to be irrevocable and coupled with an interest and will take
such further action or execute such other instruments as may be necessary to
effectuate the intent of this proxy and hereby revokes any proxy previously
granted by Shareholder with respect to his Applicable Shares.
(c) From and after the date of this Agreement and ending as of
the Termination Date, Shareholder shall not take any action (including the
tender of any Shares) that could reasonably be expected to, implement or lead to
any Company Transaction Proposal.
2.2 Tender Agreement and Company Options.
(a) Shareholder hereby agrees that he shall (i) tender all of
his Applicable Shares into the Offer promptly, and in any event no later than
the third business day following the commencement of the Offer, and (ii) not
withdraw any Applicable Shares so tendered prior to the Offer Termination Date;
provided, however, that Shareholder may delay the tender of up to 75,000 of his
Shares until notified by Purchaser that such tender is required by Purchaser.
(b) In the event that (i) the 90% Condition is not satisfied,
(ii) Purchaser notifies Shareholder that Purchaser is prepared to close the
Offer but for the fact that the 90% Condition is not satisfied, and (iii) the
tender by Shareholder of the Underlying Shares, either alone or when aggregated
with other Company Options, would cause the 90% Condition to be satisfied, then
Shareholder hereby agrees that, at any time prior to the Termination Date,
immediately upon the request of Purchaser, he shall exercise all Company Options
Beneficially Owned by him and immediately tender the Underlying Shares received
upon such exercise into the Offer (and not withdraw such Underlying Shares so
tendered). Purchaser shall advance to Shareholder the funds
4
<PAGE> 5
necessary to pay the exercise price of such Options, and Shareholder shall repay
Purchaser the amount of such advance, without interest, immediately upon receipt
of the Per Share Amount by him for his Underlying Shares.
(c) Except as may be required by Section 2.2(b), Shareholder
hereby agrees that he shall not exercise any Company Options that he
Beneficially Owns.
ARTICLE III
PURCHASE OPTION
3.1 Grant of the Purchase Option. Shareholder hereby grants to
Purchaser an irrevocable option (the "Purchase Option") to purchase, on the
terms and subject to the conditions set forth herein, at the Per Share Amount
all his Applicable Shares.
3.2 Exercise of the Purchase Option.
(a) Subject to the conditions set forth in Section 3.3, the
Purchase Option may be exercised in whole at any time, and in part from time to
time, from and after the Offer Termination Date and ending as of the Termination
Date; provided, however, that in the event Purchaser exercises its Purchase
Option hereunder it shall exercise its Purchase Option in a proportionate amount
under that certain Shareholder Agreement with Einav Computer Systems Ltd., Roni
A. Einav and Dalia Prashker-Katzman of even date herewith entered into in
connection with the Tender Agreement.
(b) In the event Purchaser wishes to exercise the Purchase
Option, Purchaser will send a written notice to Shareholder specifying a place,
date (not less than two business days nor more than 10 calendar days after the
date such notice is given) and time for the closing of the purchase of such
Shares (the "Closing").
(c) The purchase price payable to Shareholder with respect to
any exercise of the Purchase Option will be the product of (i) the Per Share
Amount and (ii) the number of Applicable Shares to be purchased upon such
exercise.
3.3 Closing.
(a) At the Closing, Shareholder will deliver to Purchaser a
certificate or certificates representing the Shares being purchased, duly
endorsed for transfer or accompanied by appropriate stock powers duly executed
in blank, and Purchaser will pay the purchase price in immediately available
funds by wire transfer to an account designated by Shareholder. Transfer taxes,
if any, imposed as a result of the exercise of the Purchase Option and the
transfer of any Applicable Shares will be paid by Shareholder.
5
<PAGE> 6
(b) The obligation of Purchaser and Shareholder to consummate
the purchase and sale of the Applicable Shares pursuant to this Article III will
be subject to the fulfillment of the following conditions:
(i) the expiration or termination of the waiting
period applicable to the consummation of such transactions under the HSR Act and
any other applicable antitrust laws; and
(ii) none of the parties hereto shall be subject to
any order or injunction of a court of competent jurisdiction which prohibits the
consummation of such transactions.
(c) The obligations of Shareholder pursuant to this Article
III shall also be subject to Purchaser not violating any of its material
obligations under the Tender Agreement.
Each of the parties will promptly make and will use all reasonable efforts to
cause each of their respective affiliates to make, all such filings and take all
such actions as may be reasonably required in order to permit the lawful
exercise of the Purchase Option, as promptly as possible. The date of any
Closing may be extended, if required, to the next business day following (1) the
date that any applicable waiting period(s) under the HSR Act and any other
applicable antitrust laws shall have expired or been earlier terminated, (2) the
date that all other necessary governmental approvals for the sale of the Shares
for which the Purchase Option shall have been exercised shall have been
obtained, and (3) the satisfaction of any other condition to the Closing under
the Tender Agreement.
ARTICLE IV
CAPTURE
4.1 Capture. In the event that the Applicable Shares of
Shareholder are sold, transferred, exchanged, canceled or disposed of in
connection with or as a result of any Company Transaction Proposal that is in
existence on, or that has been otherwise made prior to the Termination Date (an
"Alternative Disposition") then, within five business days after the closing of
such Alternative Disposition, Shareholder shall tender and pay to, or shall
cause to be tendered and paid to, Purchaser (or its designee), in immediately
available funds, the Profit realized from such Alternative Disposition, less any
withholdings.
4.2 Profit. As used in this Article IV, "Profit" shall mean an
amount equal to the excess, if any, of (a) the Alternative Transaction
Consideration over (b) the Per Share Amount multiplied by Shareholder's
Applicable Shares sold, transferred, exchanged, canceled or disposed of in such
Alternative Disposition. For purposes of determining Profit, (i) all non-cash
items shall be valued based upon the fair market value thereof as determined by
an independent expert selected by Purchaser and who is reasonably acceptable to
Shareholder, (ii) all deferred payments or consideration shall be discounted to
reflect a market rate of net present value thereof as determined by the
above-referenced independent expert, and (iii) all contingent payments will be
assumed to have been paid. In the event any contingent payments included in the
determination of Profit ultimately are not paid pursuant to an Alternative
Disposition, then Purchaser shall promptly
6
<PAGE> 7
reimburse Shareholder for any amounts paid to Purchaser hereunder in respect of
such uncollected contingent payments promptly after receipt of written notice of
such non-payment.
ARTICLE V
ESCROW
5.1 Escrow Agreement. As further set forth in the Escrow Agreement
attached hereto as Exhibit 5.1, Shareholder and Purchaser agree that the
Applicable Shares (less up to 75,000 Applicable Shares which need not be placed
with the Escrow Agent) shall be placed with Meitar, Liquornik, Geva & Co. as
escrow agent within five business days of the date hereof and ending on the
Termination Date, to be disbursed as set forth below.
5.2 Release and Delivery. The Applicable Shares shall be released and
delivered during the term hereof at any time or from time to time, (i) to
Purchaser in connection with the purchase of such Shares pursuant to this
Agreement or the Offer and (ii) unless otherwise distributed to Purchaser, to
Shareholder on the Termination Date. All Applicable Shares tendered in the Offer
and withdrawn or not purchased in the Offer prior to the Termination Date shall
be returned to the Escrow Agent.
ARTICLE VII
RELEASE
(a) AS OF THE CLOSING DATE SHAREHOLDER DOES HEREBY FOR HIMSELF
OR HIS HEIRS, EXECUTORS, ADMINISTRATORS AND LEGAL REPRESENTATIVES REMISE,
RELEASE, ACQUIT AND FOREVER DISCHARGE COMPANY AND EACH OF ITS SUBSIDIARIES OF
AND FROM ANY AND ALL CLAIMS, DEMANDS, LIABILITIES, RESPONSIBILITIES, DISPUTES,
CAUSES OF ACTION AND OBLIGATIONS OF EVERY NATURE WHATSOEVER, LIQUIDATED OR
UNLIQUIDATED, KNOWN OR UNKNOWN, MATURED OR UNMATURED, FIXED OR CONTINGENT, WHICH
SUCH SHAREHOLDER NOW HAS, OWNS OR HOLDS OR HAS AT ANY TIME PREVIOUSLY HAD, OWNED
OR HELD AGAINST COMPANY OR ITS SUBSIDIARIES INCLUDING WITHOUT LIMITATION ALL
LIABILITIES CREATED AS A RESULT OF THE NEGLIGENCE, GROSS NEGLIGENCE AND WILLFUL
ACTS OF COMPANY OR ITS SUBSIDIARIES AND ITS EMPLOYEES AND AGENTS, AND ALL
LIABILITIES RELATING TO COMPENSATION IN ANY FORM OR MANNER EXISTING AS OF THE
DATE HEREOF OR RELATING TO ANY MATTER THAT OCCURRED ON OR PRIOR TO THE CLOSING
DATE; PROVIDED, HOWEVER, THAT ANY CLAIMS, LIABILITIES, DEBTS OR CAUSES OF ACTION
THAT MAY ARISE IN CONNECTION WITH THE FAILURE OF ANY OF THE PARTIES HERETO TO
PERFORM ANY OF THEIR OBLIGATIONS HEREUNDER OR UNDER ANY OTHER AGREEMENT RELATING
TO THE TRANSACTIONS CONTEMPLATED HEREBY, INCLUDING, WITHOUT LIMITATIONS, SECTION
5.9. OF THE TENDER AGREEMENT, OR FROM ANY BREACHES BY ANY OF THEM OF ANY
7
<PAGE> 8
REPRESENTATIONS OR WARRANTIES HEREIN OR IN CONNECTION WITH ANY OF
SUCH OTHER AGREEMENTS SHALL NOT BE RELEASED OR DISCHARGED
PURSUANT TO THIS AGREEMENT.
(b) SHAREHOLDER REPRESENTS AND WARRANTS THAT HE HAS NOT
PREVIOUSLY ASSIGNED OR TRANSFERRED, OR PURPORTED TO ASSIGN OR TRANSFER, TO ANY
PERSON OR ENTITY WHATSOEVER ALL OR ANY PART OF THE CLAIMS, DEMANDS, LIABILITIES,
RESPONSIBILITIES, DISPUTES, CAUSES OF ACTION OR OBLIGATIONS RELEASED HEREIN.
SHAREHOLDER COVENANTS AND AGREES THAT HE WILL NOT ASSIGN OR TRANSFER TO ANY
PERSON OR ENTITY WHATSOEVER ALL OR ANY PART OF THE CLAIMS, DEMANDS, LIABILITIES,
RESPONSIBILITIES, DISPUTES, CAUSES OF ACTION OR OBLIGATIONS TO BE RELEASED
HEREIN. SHAREHOLDER REPRESENTS AND WARRANTS THAT HE HAS READ AND UNDERSTANDS ALL
OF THE PROVISIONS OF THIS ARTICLE VI AND THAT HE HAS BEEN REPRESENTED BY LEGAL
COUNSEL OF HIS OWN CHOOSING IN CONNECTION WITH THE NEGOTIATION, EXECUTION AND
DELIVERY OF THIS AGREEMENT.
ARTICLE VII
COVENANTS, REPRESENTATIONS AND WARRANTIES
7.1 Shareholder hereby represents, warrants and covenants to Purchaser
as follows:
(a) Ownership. Shareholder is either (i) the record and
Beneficial Owner of, or (ii) the Beneficial Owner but not the record holder of,
the number of issued and outstanding Shares set forth on Part I of Schedule A
hereto and the Company Options set forth on Part II of Schedule A hereto. As of
the date of this Agreement, the Shares set forth on Part I of Schedule A hereto
constitute all of the issued and outstanding Shares owned of record or
Beneficially Owned by Shareholder. Except as otherwise set forth in Part I to
Schedule A hereto and with respect to encumbrances on up to 75,000 Shares,
Shareholder has sole power of disposition, sole power of conversion, and sole
power to agree to all of the matters set forth in this Agreement, in each case
with respect to all of the Shares set forth on Part I of Schedule A hereto, with
no material limitations, qualifications or restrictions on such rights, subject
to applicable securities laws and the terms of this Agreement.
(b) Power; Binding Agreement. Shareholder has the legal
capacity, power and authority to enter into and perform all of Shareholder's
obligations under this Agreement. This Agreement has been duly and validly
authorized by all necessary action, executed and delivered by Shareholder and
constitutes a valid and binding agreement of Shareholder, enforceable against
Shareholder in accordance with its terms. There is no beneficiary or holder of a
voting trust certificate or other interest of any trust of which Shareholder is
trustee whose consent is required for the execution and delivery of this
Agreement or the consummation by Shareholder of the transactions contemplated
hereby. If Shareholder is married and Shareholder's Shares constitute
8
<PAGE> 9
community property, this Agreement has been duly authorized, executed and
delivered by, and constitutes a valid and binding agreement of, Shareholder's
spouse, enforceable against such person in accordance with its terms.
(c) No Conflicts. Except for the filing of an amendment to
Shareholder's Schedule 13D or 13G, if any, no filing with, and no permit,
authorization, consent or approval of, any state or federal public body or
authority is necessary for the execution of this Agreement by Shareholder and
the consummation by Shareholder of the transactions contemplated hereby, except
where the failure to obtain such consent, permit, authorization, approval or
filing would not interfere with Shareholder's ability to perform his obligations
hereunder, and none of the execution and delivery of this Agreement by
Shareholder, the consummation by Shareholder of the transactions contemplated
hereby or compliance by Shareholder with any of the provisions hereof shall (i)
result in a violation or breach of, or constitute (with or without notice or
lapse of time or both) a default (or give rise to any third party right of
termination, cancellation, material modification or acceleration) under any of
the terms, conditions or provisions of any note, bond, mortgage, indenture,
license, contract, commitment, arrangement, understanding, agreement or other
instrument or obligation of any kind to which Shareholder is a party or by which
Shareholder or any of his properties or assets may be bound, or (ii) violate any
order, writ, injunction, decree, judgment, order, statute, rule or regulation
applicable to Shareholder or any of his properties or assets, in each such case
except to the extent that any conflict, breach, default or violation would not
interfere with the ability of Shareholder to perform his obligations hereunder.
All arrangements, understandings, agreements and other instruments relating to
the Shareholder's ability to dispose of, tender, vote or grant a proxy with
respect to his Applicable Shares or enter into this Agreement have been validly
terminated, except that the Purchaser acknowledges that Shareholder has
encumbered up to 75,000 Shares, which shall be released from such encumbrance on
demand by Purchaser.
(d) No Encumbrances. Except as required herein, at all times
during the term hereof, all of Shareholder's Shares or Company Options as set
forth on Part I and II, respectively, of Schedule A hereto will be held by
Shareholder, an affiliate of Shareholder, or by a nominee or custodian for the
benefit of Shareholder, free and clear of all liens, claims, security interests,
proxies, voting trusts or agreements, understandings or arrangements or any
other encumbrances whatsoever, except for any liens, claims, understandings or
arrangements that do not limit or impair Shareholder's ability to perform his
obligations under this Agreement; provided, however, that Shareholder may
encumber up to 75,000 Shares during the term hereof and Shareholder agrees to
cause such Shares to be released from any such encumbrance on demand by
Purchaser.
(e) No Solicitation. Shareholder shall comply, and shall cause
each of his affiliates who Beneficially Own any of Shareholder's Applicable
Shares to comply, with the terms of Section 5.8 of the Tender Agreement.
(f) Restriction on Transfer, Proxies and Non-Interference.
Except as expressly contemplated hereby, from and after the date of this
Agreement and ending as of the Termination Date, Shareholder shall not, and
shall cause each of his affiliates who Beneficially Own any of
9
<PAGE> 10
Shareholder's Applicable Shares or Company Options not to, directly or
indirectly, without the consent of Purchaser: (i) offer for sale, sell,
transfer, tender, pledge, encumber, assign or otherwise dispose of, or enter
into any contract, option or other arrangement or understanding with respect to
or consent to the offer for sale, sale, transfer, tender, pledge, encumbrance,
assignment or other disposition of, any or all of his Applicable Shares or
Company Options, or any interest therein, (ii) grant any proxies or powers of
attorney, deposit any or all of his Applicable Shares or Company Options into a
voting trust or enter into a voting agreement with respect to his Applicable
Shares or Company Options, (iii) enter into any agreement or arrangement
providing for any of the actions described in clause (i) or (ii) above, or (iv)
take any action that could reasonably be expected to have the effect of
preventing or disabling Shareholder from performing his obligations under this
Agreement. From and after the date of this Agreement and ending as of the
Termination Date, Shareholder shall not enter into any agreement or
understanding with any Person or entity the effect of which would be
inconsistent with or violate the provisions and agreements contained in this
Section 7.1
(g) Further Assurances. From time to time, at Purchaser's
request and without further consideration, Shareholder shall execute and deliver
such additional documents as may be necessary or desirable to consummate and
make effective, in the most expeditious manner practicable, the transactions
contemplated by this Agreement.
7.2 Purchaser hereby represents, warrants and covenants to Shareholder
as follows:
(a) Organization, Standing and Corporate Power. Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, with adequate corporate power and authority to own its
properties and carry on its business as presently conducted. Purchaser has the
corporate power and authority to enter into and perform all of its obligations
under this Agreement and to consummate the transactions contemplated hereby.
(b) No Conflicts. No filing with, and no permit,
authorization, consent or approval of, any state or federal public body or
authority is necessary for the execution of this Agreement by Purchaser and the
consummation by Purchaser of the transactions contemplated hereby, except where
the failure to obtain such consent, permit, authorization, approval or filing
would not interfere with its ability to perform its obligations hereunder, and
none of the execution and delivery of this Agreement by Purchaser, the
consummation by Purchaser of the transactions contemplated hereby or compliance
by Purchaser with any of the provisions hereof shall (i) conflict with or result
in any breach of any applicable organizational documents applicable to
Purchaser, (ii) result in a violation or breach of, or constitute (with or
without notice or lapse of time or both) a default (or give rise to any third
party right of termination, cancellation, material modification or acceleration)
under any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, contract, commitment, arrangement, understanding, agreement
or other instrument or obligation of any kind to which Purchaser is a party or
by which Purchaser or any of Purchaser's properties or assets may be bound, or
(iii) violate any order, writ, injunction, decree, judgment, order, statute,
rule or regulation applicable to Purchaser or any of Purchaser's properties or
assets, in each
10
<PAGE> 11
such case except to the extent that any conflict, breach, default or violation
would not interfere with the ability of Purchaser to perform its obligations
hereunder.
(c) Execution, Delivery and Performance by Purchaser. The
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by the Board of
Directors of Purchaser, and Purchaser has taken all other actions required by
law, its certificate of incorporation and its by-laws to consummate the
transactions contemplated by this Agreement. This Agreement constitutes the
valid and binding obligations of Purchaser and is enforceable in accordance with
its terms, except as enforceability may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
creditors' rights generally.
7.3 Purchaser will perform its obligations under the Tender Agreement.
ARTICLE VIII
MISCELLANEOUS
8.1 Stop Transfer. From and after the date of this Agreement and ending
as of the Termination Date, Shareholder will not request that Company register
the transfer (book-entry or otherwise) of any certificate or uncertificated
interest representing any of Shareholder's Applicable Shares or Company Options,
except as otherwise contemplated hereby.
8.2 Recapitalization. In the event of a stock dividend or distribution,
or any change in the Shares by reason of any split-up, recapitalization,
combination, exchange of shares or the like, the term "Shares" shall include,
without limitation, all such stock dividends and distributions and any
securities into which or for which any or all of the Applicable Shares may be
changed or exchanged as may be appropriate to reflect such event.
8.3 Shareholder Capacity. Except as set forth in Section 7.3,
Shareholder does not make any agreement or understanding herein in his capacity
as a director or officer of Company and nothing herein shall limit or affect any
action taken by Shareholder in such capacity. Nothing herein shall in any way
restrict or limit Shareholder from taking any action in his capacity as a
director or officer of Company or otherwise fulfilling his fiduciary obligations
as a director and officer of Company.
8.4 Tender Agreement and Company Options. Shareholder hereby consents
and agrees to the treatment of Company Options Beneficially Owned by Shareholder
or his affiliates as set forth in the Tender Agreement.
8.5 Entire Agreement. This Agreement 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.
11
<PAGE> 12
8.6 Amendments, Waivers, Etc. This Agreement may not be amended,
changed, supplemented, waived or otherwise modified or terminated, except upon
the execution and delivery of a written agreement executed by the parties
hereto.
8.7 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telegram, telex
or telecopy, or by mail (registered or certified mail, postage prepaid, return
receipt requested) or by any courier service, such as Federal Express, providing
proof of delivery. All communications hereunder shall be delivered to the
respective parties at the following addresses:
(a) if to Purchaser, to:
BMC Software, Inc.
2101 CityWest Blvd.
Houston, Texas 77042
Attn: M. Brinkley Morse
Telecopy: (713) 918-8000
with a copy to:
Vinson & Elkins LLP
2300 First City Tower
Houston, Texas 77002-6760
Attn: John S. Watson
Telecopy: (713) 615-5236
(b) if to Shareholder, to:
c/o Meitar, Liquornik, Geva & Co.
16 Abba Hillel Silver Road
Ramat-Gan
Israel 52506
Attn: Dan Geva
Telecopy: 972-3-610-3100
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
8.8 Severability. Whenever possible, each provision or portion of any
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity,
12
<PAGE> 13
illegality or unenforceability will not affect any other provision or portion of
any provision in such jurisdiction, and this Agreement will be reformed,
construed and enforced in such jurisdiction as if such invalid, illegal or
unenforceable provision or portion of any provision had never been contained
herein.
8.9 Specific Performance. Each of the parties hereto recognizes and
acknowledges that a breach by a Shareholder of any covenants or agreements
contained in this Agreement will cause the Purchaser to sustain damages for
which they would not have an adequate remedy at law for money damages, and
therefore each of the parties hereto agrees that in the event of any such breach
the Purchaser shall be entitled to the remedy of specific performance, without
the requirement of posting any bond, of such covenants and agreements and
injunctive and other equitable relief in addition to any other remedy to which
it may be entitled, at law or in equity.
8.10 Remedies Cumulative. All rights, powers and remedies provided
under this Agreement or otherwise available in respect hereof at law or in
equity shall be cumulative and not alternative, and the exercise of any thereof
by any party shall not preclude the simultaneous or later exercise of any other
such right, power or remedy by such party.
8.11 No Waiver. The failure of any party hereto to exercise any right,
power or remedy provided under this Agreement or otherwise available in respect
hereof at law or in equity, or to insist upon compliance by any other party
hereto with its obligations hereunder, and any custom or practice of the parties
at variance with the terms hereof, shall not constitute a waiver by such party
of its right to exercise any such or other right, power or remedy or to demand
such compliance.
8.12 No Third Party Beneficiaries. This Agreement is not intended to be
for the benefit of, and shall not be enforceable by, any person or entity who or
which is not a party hereto; provided that, in the event of Shareholder's death,
the benefits and obligations of Shareholder hereunder shall inure to his
successors and heirs.
8.13 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware, without giving effect to the
principles of conflicts of law thereof.
8.14 Descriptive Headings. The descriptive headings used herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
8.15 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original, but all of which, taken together,
shall constitute one and the same Agreement. This Agreement shall not be
effective as to any party hereto until such time as this Agreement or a
counterpart thereof has been executed and delivered by each party hereto.
13
<PAGE> 14
8.16 Trust Funds. In the event that any party hereto should receive any
funds that are to be paid to another party pursuant to the terms of this
Agreement, then the receiving party shall hold such funds in trust for the
benefit of the party entitled to receive such funds and shall promptly pay such
funds to the party entitled to receive such funds in accordance with this
Agreement.
14
<PAGE> 15
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed on this 7th day of March, 1999.
PURCHASER
By: /s/ M. BRINKLEY MORSE
-----------------------------------------
Name: M. Brinkley Morse
Title: Senior Vice President
SHAREHOLDER
/s/ YOSSIE HOLLANDER
--------------------------------------------
Yossie Hollander
15
<PAGE> 16
ACKNOWLEDGMENT AND CONSENT OF SPOUSE
DANA HOLLANDER, the spouse of Shareholder, hereby joins in the
execution of this Agreement for the purpose of acknowledging that any ownership
interest she may have in the Shares and Company Options Beneficially Owned by
Shareholder is subject to the terms of this Agreement to the same extent as if
she were a "Shareholder" hereunder, and hereby consents to the foregoing.
/s/ DANA HOLLANDER
16
<PAGE> 17
SCHEDULE A
<TABLE>
<S> <C>
PART I
Shares Beneficially Owned of Record 3,488,250 (1)
-------------
Shares Beneficially Owned Not of Record 253,000 (2)
-------------
PART II
Company Options Beneficially Owned 0
-------------
</TABLE>
(1) 22,000 of those shares may be pledged.
(2) 53,000 of those shares are pledged.
17
<PAGE> 1
EXHIBIT 99.5
THIRD AMENDMENT
TO DISTRIBUTION AGREEMENT DATED OCTOBER 28, 1994
AS AMENDED ON APRIL 24, 1997 AND OCTOBER 31, 1997
This Amendment is made and entered into as of this 6th day of March, 1999.
Among
NEW DIMENSION SOFTWARE LTD.
a corporation organized and existing under the laws
of Israel with its principal place of business at
Bldg. 7, Alaim Industrial Park, P.O. Box 43227, Tel
Aviv, Israel 61430 (hereinafter referred to as: the
"Company")
and
BOOLE & BABBAGE EUROPE
a corporation organized and existing under the laws
of the Republic of Ireland with its principal place
of business at Sadyford Business Centre, Burtonhall
Road, Faxrock Dublin 19, Ireland (hereinafter
referred to as: the "Distributor")
WHEREAS on October 26, 1994, the Company and the Distributor entered into
a distribution agreement (hereinafter: "the 1994 Distribution
Agreement") whereby the Distributor was granted exclusive
distribution rights in certain territories with respect to certain
proprietary Software Products of the Company; and
WHEREAS the 1994 Distribution Agreement has been amended by the Company
and Distributor on April 24, 1997 (hereinafter: the "First
Amendment") and on October 31, 1997 (hereinafter: the "Second
Amendment") and the Company, Distributor and Boole & Babbage,
Inc., the parent company of Distributor ("Boole"), have entered
into that certain letter agreement dated December 22, 1998, which
provides for additional agreements between the Company and
Distributor with respect to the Company's right to notify
Distributor of its termination of the Distribution Agreement in
connection with the announcement by BMC Software, Inc. ("BMC") of
its acquisition of Boole (the "Letter Agreement"); and
WHEREAS the Company and Distributor wish to amend certain provisions of
the 1994 Distribution Agreement, the First Amendment, the Second
Amendment and the Letter Agreement, subject to and in accordance
with the provisions and conditions herein.
<PAGE> 2
NOW, THEREFORE, in consideration of the mutual promises and covenants contained
herein, the parties hereby agree as follows:
1. Preamble, Schedules and Captions
The Preamble to this Third Amendment constitutes an integral part hereof.
This Third Amendment's captions are provided for the sake of convenience
and shall not be used to constitute the provisions hereof.
2. Definition, Terms and Provisions of the 1994 Distribution Agreement, First
Amendment, Second Amendment and the Letter Agreement
Except as expressly provided for herein, all the definitions, terms and
provisions of the 1994 Distribution Agreement, the First Amendment, the
Second Amendment and the Letter Agreement shall apply hereto mutatis
mutandis.
3. Sections 7.1 and 7.2 of the 1994 Distribution Agreement are hereby amended
to read in their entirety as follows:
"7.1 In the event of a Change of Control (other than a Change of Control
by the Company where BMC Software, or a subsidiary of BMC Software
is the Merging Party) by either party or by BBI, both the Company
and the Distributor (hereinafter: the "Terminating Party") shall
have the right (but not the obligation) to terminate the Agreement
as of the date a public announcement concerning such Business
Transaction (by an official press release or otherwise) has been
made (hereinafter: the "Triggering Event"), in accordance with the
following provisions:
4. Effective Date
The effective date of this Third Amendment is March 6, 1999.
5. General
5.1 Other than as expressly stated and amended hereinabove the 1994
Distribution Agreement as amended in the First Amendment and the
Second Amendment, and the terms and provisions therein, shall
continue to exist and bind the parties and nothing contained herein
shall be deemed to derogate from or change the 1994 Distribution
Agreement, and the First Amendment and the Second Amendment thereof
or any of the parties' rights and obligations in accordance
therewith other than as expressly provided for herein and in the
Letter Agreement. However, should any provision herein contradict
any provision of the 1994 Distribution Agreement, the First
Amendment, the Second Amendment or the Letter Agreement, this Third
Amendment shall prevail.
-2-
<PAGE> 3
5.2 The provisions contained herein set forth the entire amendment of the
1994 Distribution Agreement as amended in the First Amendment and the
Second Amendment with respect to the subject matter hereof and
supersedes all previous communications, representations or agreements
(excluding the Letter Agreement), whether oral written with respect to
the subject matter hereof.
5.3 Subject to any legal duty to which both parties, being public
companies, are subject, the contents and timing of any public
announcement or press release regarding this Third Amendment are to be
approved in advance by the designated officer is the Company's Chief
Executive Officer and in case of the Distributor the designated officer
is the Chief financial Officer of Boole & Babbage Inc.
IN WITNESS WHEREOF, the parties have executed this Third Amendment.
New Dimension Software Ltd. Boole & Babbage Europe
[NEW DIMENSION SOFTWARE LTD. LOGO]
By: /s/ RONI A. EINAV By: /s/ PAUL E. NEWTON
------------------------------ -----------------------------------------
Name: Roni A. Einav Name: President & CEO, Boole & Babbage, Inc.
---------------------------- ---------------------------------------
Title: CHAIRMAN Title: Paul E. Newton
--------------------------- --------------------------------------
By: /s/ DAN BARNEA
------------------------------
Name: Dan Barnea
----------------------------
Title: CEO
---------------------------
<PAGE> 1
EXHIBIT 99.6
March 7, 1999
BMC Software, Inc.
2101 CityWest Blvd.
Houston, Texas 77042
Re: Distribution Agreement (the "Distribution Agreement") by and
among New Dimension Software Ltd. (the "Company"), Boole &
Babbage Europe (the "Distributor") and Boole & Babbage, Inc.
("BBI") dated October 28, 1994, as amended through the date
hereof.
Gentlemen:
In consideration for you entering into that certain Share Purchase and
Tender Agreement dated on even date herewith, the Company hereby agrees not to
give a Termination Notice to the Distributor in connection with its Business
Transaction with you before April 10, 1999.
In addition, each of the Company and you, on behalf of BBI and the
Distributor, agree that as soon as practicable after the consummation of the
Business Transaction between you and BBI we shall enter into the Fourth
Amendment to the Distribution Agreement, which shall be in substantially the
form attached hereto as Exhibit A.
All terms not otherwise defined herein shall have the same meaning
afforded in the Distribution Agreement.
New Dimension Software, Inc.
By: /s/ RONI A. EINAV
---------------------------------------
Name: Roni A. Einav
-------------------------------------
Title: Chairman
------------------------------------
By: /s/ DAN BARNEA
---------------------------------------
Name: Dan Barnea
-------------------------------------
Title: CEO
------------------------------------
Agreed and Accepted this
7th day of March, 1999:
BMC Software, Inc.
By: /s/ M. BRINKLEY MORSE
----------------------------------
Name: M. Brinkley Morse
Title: Senior Vice President
<PAGE> 2
EXHIBIT A
FOURTH AMENDMENT
TO
DISTRIBUTION AGREEMENT
DATED OCTOBER 28, 1994 AS AMENDED ON
APRIL 24, 1997, OCTOBER 31, 1997 AND MARCH , 1999
This Amendment is made and entered into as of this ____ day of __________, 1999.
Among
NEW DIMENSION SOFTWARE LTD.
a corporation organized and existing under the laws of Israel
with its principal place of business at Bldg. 7, Alaim
Industrial Park, P. O. Box 43227, Tel Aviv, Israel 61430
(hereinafter referred to as: the "Company")
and
BOOLE & BABBAGE EUROPE
a corporation organized and existing under the laws of the
Republic of Ireland with its principal place of business at
Sadyford Business Centre, Burtonhall Road, Faxrock Dublin 19,
Ireland (hereinafter referred to as: the "Distributor")
WHEREAS on October 26, 1994, the Company and the Distributor entered
into a distribution agreement (hereinafter: "the 1994
Distribution Agreement") whereby the Distributor was granted
exclusive distribution rights in certain territories with
respect to certain proprietary Software Products of the
Company; and
WHEREAS the 1994 Distribution Agreement has been amended by the
Company and Distributor on April 24, 1997 (hereinafter: the
"First Amendment"), on October 31, 1997 (hereinafter: the
"Second Amendment") and on March ___, 1999 (hereinafter: the
"Third Amendment") and the Company, Distributor and Boole &
Babbage, Inc., the parent company of Distributor ("Boole"),
have entered into that certain letter agreement dated December
22, 1998, which provides for additional agreements between the
Company and Distributor with respect to the Company's right to
notify Distributor of its termination of the Distribution
Agreement in connection with the announcement by BMC Software,
Inc. ("BMC") of its acquisition of Boole (the "Letter
Agreement"); and
-1-
<PAGE> 3
WHEREAS the Company and Distributor wish to amend certain provisions
of the 1994 Distribution Agreement, the First Amendment, the
Second Amendment, the Third Amendment and the Letter
Agreement, subject to and in accordance with the provisions
and conditions herein.
NOW, THEREFORE, in consideration of the mutual promises and covenants contained
herein, the parties hereby agree as follows:
1. Preamble, Schedules and Captions
The Preamble to this Fourth Amendment constitutes an integral part
hereof. This Fourth Amendment's captions are provided for the sake of
convenience and shall not be used to construe the provisions hereof.
2. Definition, Terms and Provisions of the 1994 Distribution Agreement,
First Amendment, Second Amendment, Third Amendment and the Letter
Agreement
Except as expressly provided for herein, all the definitions, terms and
provisions of the 1994 Distribution Agreement, the First Amendment, the
Second Amendment, Third Amendment and the Letter Agreement shall apply
hereto mutatis mutandis.
3. Sections 7.2 and 7.3 of the 1994 Distribution Agreement are hereby
amended to read in their entirety as follows:
"7.2 The Terminating Party may terminate the Agreement, should it
elect to do so at its sole and exclusive discretion, during a
period of 10 (ten) months as of the last day of the quarter in
which the Triggering Event has occurred (or, in the event of a
Business Transaction by the Distributor with BMCS, occurring
at any time between the effective date of the Second Amendment
(October 31, 1997) and up to December 31, 1999) by giving the
other party a written notice of its intention to so terminate
the Agreement (hereinafter: the "Termination Notice");
provided, that the Company shall not give a Termination Notice
to the Distributor in connection with its Business Transaction
with BMC Software before the day first succeeding the
termination of BMC Software's tender offer to acquire ordinary
shares NIS 0.01 of the Company.
7.3 If a Termination Notice has been given by the Terminating
Party to the other party hereof, the Agreement shall be
terminated within 60 days as of the receipt of such
Termination Notice (hereinafter the "Effective Termination
Date")."
4. Effective Date
The effective date of this Fourth Amendment is ______________, 1999.
5. General
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5.1 Other than as expressly stated and amended hereinabove the
1994 Distribution Agreement as amended in the First Amendment,
the Second Amendment and the Third Amendment and the Letter
Agreement, and the terms and provisions therein, shall
continue to exist and bind the parties and nothing contained
herein shall be deemed to derogate from or change the 1994
Distribution Agreement, and the First Amendment, the Second
Amendment and the Third Amendment and the Letter Agreement
thereof or any of the parties' rights and obligations in
accordance therewith other than as expressly provided for
herein and in the Letter Agreement. However, should any
provision herein contradict any provision of the 1994
Distribution Agreement, the First Amendment, the Second
Amendment, the Third Amendment or the Letter Agreement, this
Fourth Amendment shall prevail.
5.2 The provisions contained herein set forth the entire amendment
of the 1994 Distribution Agreement as amended in the First
Amendment, the Second Amendment and the Third Amendment with
respect to the subject matter hereof and supersedes all
previous communications, representations or agreements
(excluding the Letter Agreement), whether oral or written with
respect to the subject matter hereof.
5.3 Subject to any legal duty to which both parties, being public
companies, are subject, the contents and timing of any public
announcement or press release regarding this Third Amendment
are to be approved in advance by the designated officers of
the parties hereto. In case of the Company the designated
officer is the Company's Chief Executive Officer and in case
of the Distributor the designated officer is the Chief
Financial Officer of Boole & Babbage Inc.
IN WITNESS WHEREOF, the parties have executed this Fourth Amendment.
New Dimension Software Ltd. Boole & Babbage Europe
By: By:
------------------------------ ------------------------------
Name: Name:
---------------------------- ----------------------------
Title: Title:
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EXHIBIT 99.7
BOOLE & BABBAGE, INC.
March 18, 1999
To the Stockholders of
Boole & Babbage, Inc.
You should have previously received a notice of special meeting dated February
26, 1999 and a proxy statement/prospectus relating to a special meeting of the
stockholders of Boole & Babbage, Inc. to be held on March 30, 1999 at 12:00 p.m.
at the principal executive offices of Boole located at 3131 Zanker Road, San
Jose, California. As you know, at the special meeting, the Boole stockholders
will be asked to adopt the merger agreement among Boole, BMC Software, Inc. and
Ranger Acquisition Corp., and approve the merger described in the merger
agreement.
For your information, we are enclosing with this letter a Current Report on Form
8-K that BMC recently filed with the Securities and Exchange Commission. The
enclosed Form 8-K includes information relating to the proposed acquisition by
BMC of New Dimension Software Ltd., and certain litigation recently filed
against BMC.
As we mentioned in the proxy statement/prospectus, your Board of Directors has
determined that the merger is fair to stockholders and is in your best
interests. Your vote on the merger is very important. Therefore, we urge you to
vote as soon as possible if you have not already done so.
Sincerely,
/s/ Arthur F. Knapp, Jr.
Arthur F. Knapp, Jr.
Secretary
