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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO
SECTION 14(D)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. 1)
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SYSTEMIX, INC.
(Name of Subject Company)
SYSTEMIX, INC.
(Name of Person(s) Filing Statement)
COMMON STOCK, PAR VALUE $.01 PER SHARE
(Title of Class of Securities)
871872 10 7
(CUSIP Number of Class of Securities)
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IRIS BREST, ESQ.
GENERAL COUNSEL
SYSTEMIX, INC.
3155 PORTER DRIVE
PALO ALTO, CALIFORNIA 94303
(415) 856-4901
(Name, address and telephone number of person authorized
to receive notices and communications on behalf
of the person(s) filing statement)
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WITH A COPY TO:
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MORRIS J. KRAMER, ESQ. JEFFRY HOFFMAN, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP SHEREFF, FRIEDMAN, HOFFMAN & GOODMAN LLP
919 THIRD AVENUE 919 THIRD AVENUE
NEW YORK, NEW YORK 10022 NEW YORK, NEW YORK 10022
(212) 735-3000 (212) 891-9260
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This Amendment No. 1 to the Solicitation/Recommendation Statement on
Schedule 14D-9 filed by SyStemix, Inc. (the "Company"), a Delaware corporation,
(this "Amendment") relates to the offer by Novartis Biotech Holding Corp., a
Delaware corporation ("Purchaser") and an indirect wholly owned subsidiary of
Novartis, Inc., a company organized under the laws of Switzerland ("Parent"),
to purchase all outstanding shares of Common Stock, par value $.01 per share
(the "Common Stock"), of the Company (the "Shares"), at a price of $19.50 per
Share, net to the seller in cash, upon the terms and subject to the
conditions set forth in Purchaser's Offer to Purchase dated January 17, 1997
and in the related Letter of Transmittal.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
Item 8 is hereby amended to add the following:
The Company and the other defendants have entered into a Memorandum
of Understanding, dated January 28, 1997 (the "Memorandum of Understanding")
with the plaintiffs to settle the consolidated action captioned In Re
SyStemix, Inc. Shareholder Litigation, Consolidated C.A. 15014. If this
agreement is accepted and approved by the Delaware Chancery Court, the case
would be dismissed with prejudice. As a part of such a settlement and
dismissal, the Company and the other defendants would not object to a court
award of attorneys' fees and expenses to counsel for plaintiffs of $385,000
or less.
The above summary does not purport to be complete and is qualified in
its entirety by reference to the full text of the Memorandum of
Understanding, which is attached as Exhibit 29 hereto and which is hereby
incorporated herein by reference.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 29 Memorandum of Understanding, dated January 28, 1997
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Statement is true, complete and
correct.
Dated: January 30, 1997
/s/ John J. Schwartz
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John J. Schwartz, Ph.D.
President and Chief Executive Officer
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EXHIBIT INDEX
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NUMBER DOCUMENT DESCRIPTION NUMBER
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Exhibit 29 --Memorandum of Understanding, dated January 28, 1997
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MEMORANDUM OF UNDERSTANDING
WHEREAS, there is now pending a putative class action lawsuit in the Court
of Chancery of the State of Delaware, in and for New Castle County (the "Court)
entitled In Re SyStemix Inc. Shareholders Litigation Consolidated C.A. No. 15014
(the "Action");
WHEREAS, in the Action, plaintiffs challenge the procedural and substantive
fairness of a proposal by defendant Sandoz, Ltd. ("Sandoz") to acquire the
outstanding shares of the common stock of SyStemix, Inc. ("SyStemix" or the
"Company") which it does not already own for $17 cash per share (the
"Acquisition Proposal"); and
WHEREAS, the Acquisition Proposal could not be approved without the consent
of certain directors of SyStemix unaffiliated with Sandoz (the "Unaffiliated
Directors");
WHEREAS, Sandoz acknowledges that on dates after it made the Acquisition
Proposal it became aware that the Unaffiliated Directors and plaintiffs' counsel
in the Action took the position that the Acquisition Proposal at $17 per
SyStemix share was inadequate; and
WHEREAS, after the Unaffiliated Directors had rejected the Acquisition
Proposal, as initially proposed, Sandoz proposed to increase the cash
consideration in the Acquisition Proposal and, on or about January 10, 1997, the
SyStemix board of directors approved the Acquisition Proposal at $19.50 per
SyStemix share; and
WHEREAS, Sandoz acknowledges that in increasing the financial consideration
to be paid to the Company's public shareholders, Sandoz took into account the
position of the Unaffiliated Directors and the desirability of satisfactorily
addressing the claims asserted in the Action.
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NOW, THEREFORE, as a result of the foregoing and the negotiations among
counsel to the parties, the parties to the Action have agreed in principle that:
1. The parties to the Action agree that the increased cash
consideration of $19.50 per SyStemix share which Sandoz has agreed to pay to
acquire the publicly owned shares of SyStemix constitutes fair, adequate and
reasonable consideration for the settlement of all claims which were raised or
could have been raised by plaintiffs in the Action. The parties to the Action
further agree that Sandoz took into account the desirability of satisfactorily
addressing the claims asserted in the Action in agreeing to the increased
consideration to be paid to the Company's public stockholders.
2. The parties to the Action will attempt in good faith to agree
upon and to execute as soon as practicable an appropriate stipulation of
settlement (the "Stipulation") of all claims asserted in the complaints filed in
the Action and all other claims, if any, arising out of or relating to the
Sandoz Acquisition Proposal, and such other documentation as may be required in
order to obtain any and all necessary or appropriate court approvals of the
Stipulation, upon and consistent with the terms set forth in this Memorandum of
Understanding, including the dismissal of all such claims with prejudice and
without costs to any party (except as set forth in paragraph 5 below). The
Stipulation will also expressly provide, INTER ALIA: (1) for settlement purposes
only, class certification pursuant to Delaware Chancery Court Rules 23(b)(1) and
23(b)(2) of a class consisting of all persons (other than defendants) who owned
common stock of SyStemix on May 24, 1996 and their successors in interest and
transferees immediate and remote, through and including the consummation of the
Acquisition Proposal, including the first-step tender offer and the second-step
merger for any untendered
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shares (the "Class"); (2) that all defendants have denied, and continue to deny,
that they have committed any violations of law and that they are entering into
the Stipulation solely because the proposed settlement would eliminate the
burden and expense of further litigation; (3) a release of all claims of the
stockholders of SyStemix against defendants or any of their present or former
officers, directors, employees, agents, attorneys, accountants, financial
advisors, commercial bank lenders, investment bankers, representatives,
affiliates, associates, parents, subsidiaries, general and limited partners and
partnerships, heirs, executors, administrators, successors and assigns, whether
under state or federal law, and whether directly, derivatively, representatively
or arising in any other capacity, in connection with, or that arise out of the
subject matter of the Action, the Acquisition Proposal, the first-step tender
offer, the second-step merger, the negotiation and consideration of the tender
offer and the merger, and the fiduciary or disclosure obligations of any of the
defendants (or persons to be released) with respect to any of the foregoing,
except for statutory appraisal rights (the "Settled Claims"); (4) that
defendants in the Action are entering into this Memorandum of Understanding and
will enter into the Stipulation of Settlement solely because the proposed
settlement would eliminate the distraction, burden and expense of further
litigation; (5) that plaintiffs' counsel, having made a thorough investigation
of the facts, believe that the proposed settlement is fair, reasonable, adequate
and in the best interests of plaintiffs and all members of the proposed Class;
and (6) if approved and ordered by the Order of the Court of Chancery, pending
final determination of whether the Settlement provided for in the Stipulation of
Settlement should be approved, that plaintiffs and all members of the Class, or
any of them, are barred and enjoined from commencing, prosecuting,
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instigating or in any way participating in the commencement or prosecution of
any of the Settled Claims against any of the persons or entitles to be released
in the settlement other than as provided herein.
3. The parties to the Action will present the settlement to the Court for
hearing and approval as soon as practicable following appropriate notice to the
members of the Class and will use their best efforts to obtain final Court
approval of the settlement, and release and dismissal of the Action with
prejudice as against plaintiffs and the Class and without awarding costs to any
party (except as provided for in paragraph 5 below). It is expressly
acknowledged that the tender offer and the merger may be consummated prior to
final Court approval of the settlement. As used in this Memorandum of
Understanding, "final Court approval" of the settlement means that the Court has
entered an Order approving the settlement in accordance with the Stipulation and
that Order is finally affirmed on appeal or is no longer subject to appeal.
4. Th parties shall conduct as expeditiously as possible such reasonable
additional discovery as the parties agree is appropriate and necessary to
confirm the fairness and reasonableness of the terms of the settlement.
Plaintiffs reserve the right to withdraw from the terms of this Memorandum of
Understanding and the proposed settlement in the event such discovery reveals
information materially inconsistent with the documents previously produced to
plaintiffs' counsel, indicating that the settlement is not fair and reasonable.
Pending the negotiation and execution of the Stipulation of Settlement, all
proceedings in the Action, except for settlement-related proceedings pursuant to
this Memorandum of Understanding, including the additional discovery
contemplated by this paragraph, shall be suspended.
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5. Provided that a Stipulation of Settlement has been executed and final
Court approval of the settlement (including class release) and dismissal of the
Action by the Court with prejudice has been obtained in accordance with the
Stipulation of Settlement, plaintiffs' counsel of record in the Action will
jointly apply to the Court for an award of attorneys' fees and expenses not to
exceed in the aggregate $385,000. Defendants will not object to an application
for attorneys' fees and expenses which does not exceed $385,000. Subject to the
conditions set forth in this paragraph and any Order of the Court and
consummation of the tender offer and the merger, any such attorneys' fees and
expenses awarded by the Court to plaintiffs' counsel shall be paid by SyStemix
or its successor in interest within ten days after final Court approval of the
settlement (as defined in paragraph 3 hereof) and dismissal of the Action with
prejudice and without costs or fees (except as otherwise set forth in this
paragraph). SyStemix or its successor in interest shall also cause the
dissemination of notice of the settlement to the Class and shall pay all costs
and expenses incurred in providing such notice to the members of the Class.
6. The consummation of the settlement is subject to the completion by
plaintiffs of the discovery as provided for in paragraph 4 above, the drafting
and execution of the Stipulation in form satisfactory to the parties and such
other documentation as may be required to obtain final Court Approval of the
settlement, including the class certification contemplated therein. The
settlement contemplated by this Memorandum of Understanding will not be binding
upon any party until such discovery has been completed, and the Stipulation is
executed. This Memorandum of Understanding shall be null and void and of no
force and effect should: (a) any of these
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conditions not be met, (b) plaintiffs' counsel determine that, based upon
discovery of information materially inconsistent with documents previously
produced to plaintiffs' counsel, the settlement is not fair and reasonable, (c)
the settlement not obtain final Court approval for any reason, or (d) the tender
offer or merger are not consummated, and, in any such event, this Memorandum of
Understanding shall not be deemed to prejudice in any way the respective
positions of the parties with respect to the Action. In such event, neither the
existence of this Memorandum of Understanding nor its contents shall be
admissible in evidence or shall be referred to for any purpose in this
litigation or in any other litigation or proceeding.
7. This Memorandum of Understanding may be executed in counterpart by any
of the signatories hereto, including by telecopier, and as so executed shall
constitute one agreement.
8. This Memorandum of Understanding and the settlement contemplated by it
shall be governed by, and construed in accordance with, the laws of the State of
Delaware, without regard to Delaware's conflict of law rules.
9. This Memorandum of Understanding may be modified or amended only by a
writing signed by the signatories hereto.
10. This Memorandum of Understanding shall be binding upon and inure to
the benefit of the parties and their respective agents, executors, heirs,
successors and assigns.
11. Plaintiffs and their counsel represent and warrant that none of the
plaintiffs' claims or causes of action referred to in this Memorandum of
Understanding have been assigned, encumbered or in any manner transferred in
whole or in part.
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12. The named plaintiffs and their counsel in the Action represent and
warrant that the named plaintiffs are each a shareholder of SyStemix, were
shareholders at all times relevant hereto and, thus, are members of the proposed
Class.
13. The named plaintiffs and their counsel in the Action represent and
warrant that they have not filed any other litigation challenging any of the
Settled Claims, and are not aware of any such litigation.
DATED: January 28, 1997
----------------- ROSENTHAL, MONHAIT, GROSS
& GODDESS, P.A.
BY /s/ J.A. Poucil
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Suite 1401, Mellon Bank Center
P.O. Box 1070
Wilmington, DE 19899
LIAISON COUNSEL FOR PLAINTIFFS
MORRIS, NICHOLS, ARSHT & TUNNELL
By /s/ Martin P. Tully
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1201 N. Market Street
P.O. Box 1347
Wilmington, DE 19899
RICHARDS, LAYTON & FINGER
BY /s/ David A. Dresband
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One Rodney Square
P.O. Box 551
Wilmington, DE 19899
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SKADDEN, APRS, SLATE, MEAGHER & FLOM
By /s/ Edward R. Ubel
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One Rodney Square
P.O. Box 636
Wilmington, DE 19899
ATTORNEYS FOR DEFENDANTS
