United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________
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) August 31, 1999
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CATALYST INTERNATIONAL, INC.
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(Exact name of Registration as Specified in Its Charter)
Delaware
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(State or Other Jurisdiction of Incorporation)
0-27138 39-1415889
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(Commission File Number) (IRS Employer Identification No.)
8989 North Deerwood Drive, Milwaukee, WI 53223
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (414) 362-6800
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Page 1
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ITEM 5. OTHER EVENTS
On September 1, 1999, Catalyst International, Inc. ("Catalyst") and SAP
America, Inc. announced that SAP America, Inc. acquired a 9.7 percent
stake in Catalyst and that Catalyst and SAP AG (the parent company of SAP
America, Inc.) have entered into an advanced strategic alliance. In
connection with the strategic alliance, SAP America, Inc., acquired
759,485 shares of Catalyst's common stock at a price of $17 per share.
Catalyst expects to incur a one-time charge of between $4 million and $4.5
million relating to the discontinuance of the current Windows NT product
development and the restructuring of its business operations for the
strategic alliance with SAP AG.
ITEM 7.FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibit
4 Subscription Agreement
SIGNATURES
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.
CATALYST INTERNATIONAL, INC.
Date: September 10, 1999 By: /s/ Sean P. McGowan
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Sean P. McGowan
President and Chief Executive
Officer
Page 2
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EXHIBIT INDEX
Sequentially
Numbered
Page Number
(c) Exhibit
4 Subscription Agreement 4
Page 3
<PAGE>
EXHIBIT 4
SUBSCRIPTION AGREEMENT
AMONG
SAP AMERICA, INC.,
SAP AKTIENGESELLSCHAFT
AND
CATALYST INTERNATIONAL, INC.
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Dated as of August 31, 1999
<PAGE>
SUBSCRIPTION AGREEMENT
TABLE OF CONTENTS
Page
ARTICLE I PURCHASE AND SALE
Section 1.1. Purchase and Sale
Section 1.2. Certificates
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 2.1. Organization; Capitalization
Section 2.2. Authority
Section 2.3. No Breach
Section 2.4. SEC Filings
Section 2.5. Absence of Certain Events and Changes
Section 2.6. Intellectual Property
Section 2.7. Litigation
Section 2.8. Governmental Approvals
Section 2.9. Compliance With Applicable Law
Section 2.10. Licenses; Permits
Section 2.11. Taxes
Section 2.12. Investment Company
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PURCHASER AND PARENT
Section 3.1. Organization
Section 3.2. Authority
Section 3.3. No Breach
Section 3.4. Governmental Approvals
Section 3.5. Investment Intent
Section 3.6. Disclosure of Information
Section 3.7. Accredited Investor Status
Section 3.8. Restricted Shares
SECTION 3.9. Financial Warranty
ARTICLE IV COVENANTS
Section 4.1. Covenants of Purchaser and Parent
Section 4.2. Covenants of the Company
Section 4.3. Director Nominee
Section 4.4. Public Announcements
Section 4.5. Further Action
ARTICLE V SURVIVAL
Section 5.1. Survival
ARTICLE VI ASSIGNMENT; PARTIES IN INTEREST; AMENDMENT; WAIVER
Section 6.1. Assignment
Section 6.2. Parties in Interest
Section 6.3. Amendment
Section 6.4. Waiver
ARTICLE VII GENERAL PROVISIONS
Section 7.1. Effect of Investigation
Section 7.2. Fees and Expenses
Section 7.3. Notices
Section 7.4. Brokers; Fee Schedule
Section 7.5. Captions, Currency
Section 7.6. Entire Agreement
Section 7.7. Specific Performance
Section 7.8. Severability
Section 7.9. Governing Law
Section 7.10. Counterparts
<PAGE>
SUBSCRIPTION AGREEMENT
SUBSCRIPTION AGREEMENT dated as of August 31, 1999 among SAP
AMERICA, INC., a Delaware corporation ("Purchaser"), SAP
AKTIENGESELLSCHAFT, a stock corporation incorporated under the laws of the
Federal Republic of Germany ("Parent"), and CATALYST INTERNATIONAL, INC.,
a Delaware corporation (the "Company");
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Purchaser desires to purchase from the Company, and the
Company desires to issue and sell to Purchaser, 759,485 shares of Common
Stock, $0.10 par value (the "Common Stock"), of the Company (the "Shares")
upon the terms and conditions hereinafter set forth; and
WHEREAS, concurrently with the execution and delivery of this
Agreement, Parent and the Company have entered into (i) the Software
Implementation, Support and Joint-Marketing Cooperation Agreement dated as
of the date hereof (the "Cooperation Agreement") with respect to certain
commercial arrangements between the parties and (ii) the Joint Development
Agreement dated as of the date hereof (the "Development Agreement") with
respect to the joint development of an advanced interface between certain of
the parties' software products;
NOW, THEREFORE, in consideration of the premises and of the
mutual agreements hereinafter contained, the parties hereto do hereby
agree as follows:
ARTICLE I
PURCHASE AND SALE
SECTION 1.1. Purchase and Sale. Subject to all of the terms and
conditions of this Agreement, the Company hereby issues and sells to
Purchaser, and Purchaser hereby subscribes for and purchases from the
Company, the Shares at a purchase price of $17 per share, for an aggregate
purchase price of $12,911,245 (the "Purchase Price") to be paid by wire
transfer of immediately available funds against delivery of the
certificate or certificates for the Shares.
SECTION 1.2. Certificates. (a) On the date hereof, the Company
shall deliver to Purchaser, against the payment of the Purchase Price, a
certificate or certificates evidencing the Shares. Each certificate shall
bear the following legend:
"THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE (A) HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
APPLICABLE STATE SECURITIES LAWS AND MUST BE REGISTERED UNDER SAID ACT AND
LAWS OR DISPOSED OF PURSUANT TO AN EXEMPTION FROM SUCH REGISTRATION AND
(B) THE TRANSFER, SALE, GIFT, ASSIGNMENT, PLEDGE, ENCUMBRANCE, CONVEYANCE
OR OTHER DISPOSITION OF THE SHARES OF COMMON STOCK REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO THE TERMS OF THE SUBSCRIPTION AGREEMENT DATED
AS OF AUGUST 31, 1999, AMONG SAP AMERICA, INC., SAP AKTIENGESELLSCHAFT AND
CATALYST INTERNATIONAL, INC., A COPY OF WHICH IS ON FILE AT THE OFFICE OF
CATALYST INTERNATIONAL, INC."
(b)(i) Upon the expiration of the Restricted Period (as defined in
Section 4.1(a)) and surrender of the certificate or certificates
evidencing the Shares, Purchaser may request, and the Company shall
upon such request issue in exchange for such certificate or
certificates surrendered, a new certificate or certificates for the
same number of Shares bearing the following legend:
"THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
APPLICABLE STATE SECURITIES LAWS AND MUST BE REGISTERED UNDER SAID
ACT AND LAWS OR DISPOSED OF PURSUANT TO AN EXEMPTION FROM SUCH
REGISTRATION."
(ii) Until the expiration of the Restricted Period, in connection
with a Transfer (as defined in Section 4.1(a)) of Shares permitted
pursuant to Section 4.1(a)(ii), 4.1(a)(iii) or 4.1(a)(iv), upon
surrender of the certificate or certificates evidencing such Shares
permitted to be Transferred, the Company shall issue in exchange for
such certificate or certificates surrendered (A) a new certificate or
certificates evidencing such number of Shares as Purchaser is
permitted to Transfer pursuant to Section 4.1(a)(ii), 4.1(a)(iii) or
4.1(a)(iv) bearing the legend set forth in Section 1.2(b)(i) and (B)
an additional certificate or certificates evidencing the balance, if
any, of Shares remaining subject to the restrictions on Transfer of
Section 4.1(a)(i) bearing the legend set forth in Section 1.2(a).
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Purchaser as follows:
SECTION 2.1. Organization; Capitalization. (a) The Company is
a corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware with all requisite corporate power and
authority to own its properties and to carry on its business as presently
conducted. The Company is duly qualified and in good standing to transact
business as a foreign corporation in each jurisdiction in which the
conduct or nature of its business or the ownership, leasing or holding of
its properties makes such qualification necessary, except where the
failure to be so qualified would not have, individually or in the
aggregate, a Material Adverse Effect (as defined below). For purposes of
this Agreement, "Material Adverse Effect" shall mean a material adverse
effect on the business, condition (financial or otherwise), assets,
liabilities, properties, operations or results of operations of the
Company and its subsidiaries, taken as a whole, or on the ability of the
Company to consummate the transactions contemplated by this Agreement, the
Cooperation Agreement or the Development Agreement.
(b) The authorized capital stock of the Company consists of
27,000,000 shares, divided into (i) 2,000,000 shares of Preferred Stock,
none of which are issued and outstanding or held in the treasury of the
Company, and (ii) 25,000,000 shares of Common Stock, $0.10 par value, of
which prior to the sale of the Shares hereunder 7,073,416 shares are
issued and outstanding, 1,822,753 shares are held in the treasury of the
Company, 1,884,833 shares are reserved for issuance upon exercise of
outstanding stock options granted pursuant to the Company's 1993 Stock
Option Plan and the Company's 1997 Director Stock Option Plan
(collectively, the "Stock Option Plans"), and the remainder are unissued
and not reserved. All the outstanding shares of Common Stock are duly
authorized, validly issued, fully paid and nonassessable and the Shares
are duly authorized and, when issued, will be validly issued, fully paid
and nonassessable, except as to nonassessability as provided in Wisconsin
Statutes Section 180.0622(2)(b) and the cases decided thereunder. Under
the Stock Option Plans, options granted by the Company to purchase
1,884,833 shares of Common Stock are outstanding on the date hereof and
options granted by the Company to purchase 906,740 shares of Common Stock
are exercisable on the date hereof. Except for (A) such options and the
agreements entered into in connection with the issuances thereof and (B) a
warrant to purchase 10,000 shares of Common Stock held by Mark T. Ehrmann
(the "Warrant"), (1) there are no outstanding securities or obligations
convertible into or exchangeable for, or options, warrants, scrip, rights
to subscribe for or acquire, calls or commitments of any character
whatsoever relating to, or contracts, understandings or arrangements with
respect to the issuance or sale of, any shares of the capital stock of the
Company or any other securities of the Company, or arrangements or
contracts with respect to the purchase, repurchase, sale, redemption,
acquisition, conversion, exchange, registration, transfer or voting of
shares of its capital stock and (2) the Company is not obligated, now or
in the future, contingently or otherwise, to issue Common Stock or any other
of its securities to any person or entity. The Company has
outstanding no bonds, debentures, notes or other obligations the holders
of which have the right to vote (or which are convertible or exchangeable
into or exercisable for securities having the right to vote) with the
shareholders of the Company on any matter.
SECTION 2.2. Authority. The Company has all requisite
corporate power and authority to execute, deliver and perform this
Agreement, the Cooperation Agreement and the Development Agreement and to
consummate the transactions contemplated hereby and thereby. The
execution, delivery and performance of this Agreement, the Cooperation
Agreement and the Development Agreement by the Company and the
consummation of the transactions contemplated hereby and thereby have been
duly authorized by all necessary corporate action on the part of the
Company. This Agreement, the Cooperation Agreement and the Development
Agreement have been duly executed and delivered by the Company and
constitute the valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms, except as such
enforceability may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or similar laws relating to or
affecting the enforcement of creditors' rights in general and by general
principles of equity.
SECTION 2.3. No Breach. The execution, delivery and
performance of this Agreement, the Cooperation Agreement and the
Development Agreement by the Company do not, and the consummation of the
transactions contemplated hereby and thereby and compliance with the
provisions hereof and thereof will not, with or without the giving of
notice or the lapse of time, or both, (a) conflict with, or result in a
breach or violation of or a default under, or give rise to a right of
amendment, termination, cancellation or acceleration of any obligation or
to a loss of a material benefit under (i) the Restated Certificate of
Incorporation or By-laws of the Company or the certificates of
incorporation or the by-laws (or the equivalent thereof) of any of its
subsidiaries, or (ii) any contract, agreement, note, bond, mortgage,
indenture, lease, license, franchise, permit, concession, instrument,
obligation, commitment, covenant, understanding or arrangement to which
the Company or any of its subsidiaries is a party or by which any of their
respective properties or assets may be affected (a "Contract"), or (iii)
any order, ruling, decree, judgment, arbitration award, statute, law,
ordinance, rule, regulation or stipulation to which the Company or any of
its subsidiaries or their respective properties or assets is subject, or
(b) result in the creation of any restriction on voting or transfer, ledge,
claim, lien, charge, encumbrance or security interest of any kind
(a "Lien") upon any of the properties or assets of the Company or any of
its subsidiaries, except, in the case of items (a)(ii) and (iii) above and
any such Liens, for those which would not have, individually or in the
aggregate, a Material Adverse Effect.
SECTION 2.4. SEC Filings. (a) The Company has filed all
reports, schedules, forms, statements and other documents required to be
filed with the Securities and Exchange Commission (the "SEC") under the
Securities Act of 1933, as amended (the "Securities Act"), and the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), since
the date on which the Company became subject to such requirements (the
"SEC Filings"). As of its filing date, each SEC Filing filed (i) complied
in all material respects with the applicable requirements of the
Securities Act or the Exchange Act, as applicable, and the rules and
regulations thereunder and (ii) did not, at the time it was filed (and at
the effective date thereof, in the case of a registration statement),
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading. Except to the extent that information contained in
any SEC Filing has been revised, corrected or superseded by a later filed
SEC Filing, as of the date hereof, none of the SEC Filings contains any
untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
(b) The financial statements of the Company included in the SEC
Filings comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC
and with generally accepted accounting principles (except, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC) applied on a
consistent basis during the periods involved (except as may be indicated
in the notes thereto). Each of the consolidated balance sheets included
in or incorporated by reference into the SEC Filings (including any
related notes and schedules) fairly presents in all material respects the
consolidated financial position of the Company and its subsidiaries as of
its date and each of the consolidated statements of income, cash flows and
stockholders' equity included in or incorporated by reference into the SEC
Filings (including any related notes and schedules) fairly presents in all
material respects the consolidated results of operations, retained
earnings and cash flows, as the case may be, of the Company and its
subsidiaries for the periods set forth therein (subject, in the case of
unaudited statements, to normal year-end adjustments and the absence of
footnotes), in each case in accordance with generally accepted accounting
principles.
SECTION 2.5. Absence of Certain Events and Changes. Since June
30, 1999, neither the Company nor any of its subsidiaries has incurred any
liabilities or obligations other than those arising from operations in the
ordinary course of business consistent with past practice. Since December
31, 1998, the Company and its subsidiaries have conducted their respective
businesses only in the ordinary course consistent with past practice and,
except as disclosed in the SEC Filings filed with the SEC and publicly
available prior to the date hereof, there has been no change in or
development with respect to the business, condition (financial or
otherwise), assets, liabilities, properties, operations or results of
operations of the Company and its subsidiaries except changes in and
developments with respect to the ordinary course of business of the
Company consistent with past practice which have not had or may not
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.
SECTION 2.6. Intellectual Property.
(a)(i) The Company and its subsidiaries own or have the right to use
under license or otherwise all of the Intellectual Property (as
defined below), free from any Liens and free from any requirement of
any past, present or future payments (other than maintenance and
similar payments), charges or fees or conditions, rights or
restrictions, except for royalties or license fees for licensed
Intellectual Property;
(ii) to the knowledge of the Company and its subsidiaries, no
Intellectual Property or any service rendered by the Company or any
subsidiary, or any product, process or material used by the Company
or any subsidiary, infringes upon any intellectual property rights of
any other person or entity;
(iii)(A) with respect to Intellectual Property owned by the Company
and its subsidiaries there is neither pending nor, to the knowledge
of the Company and its subsidiaries, threatened, and (B) with respect
to licensed Intellectual Property, to the knowledge of the Company
and its subsidiaries, there is neither pending nor threatened, any
claim or litigation against the Company or its subsidiaries with
respect to the ownership, validity, infringement, enforceability or
use of any Intellectual Property;
(iv) no Intellectual Property owned by the Company or its
subsidiaries is subject to any outstanding order, ruling, decree,
judgment or stipulation by any arbitrator, court or other
Governmental Entity, nor is there any pending or, to the knowledge of
the Company and its subsidiaries, threatened proceeding relating
thereto;
(v) to the knowledge of the Company and its subsidiaries, there is no
infringement or misappropriation of the Intellectual Property by any
other person or entity; and
(vi) no person or entity has any licenses under any of the
Intellectual Property owned by the Company or its subsidiaries
(including any rights or licenses, or options to acquire such rights
and licenses, which survive any agreements or licenses that have
terminated or expired prior to the date hereof),
except in each of clauses (i)-(vi) above such as would not have a Material
Adverse Effect.
(b) The Company and its subsidiaries have taken reasonable steps
(including measures to protect secrecy and confidentiality) to protect its
right, title and interest in and to the Intellectual Property. All
employees, agents, consultants and other representatives of the Company
and its subsidiaries who have access to confidential or proprietary
information of the Company and its subsidiaries incorporated in the
Intellectual Property have entered into confidentiality agreements with
the Company and the Company believes that such agreements are enforceable.
For purposes of this Agreement, "Intellectual Property" shall
mean all of the following owned or used by the Company and its
subsidiaries: (1) all inventions (whether patentable or unpatentable and
whether or not reduced to practice), all improvements thereto, and all
patents, patent applications, and patent or invention disclosures,
together with all reissuances, continuations, continuations-in-part,
divisions, revisions, extensions and re-examinations thereof; (2) all
copyrightable works, all copyrights and all applications, registrations
and renewals in connection therewith; (3) all trade secrets and confidential
business and technical information (including ideas, research
and development, know-how, technical data, designs, engineering notebooks,
software and specifications); (4) all computer software, both source code
and object code (including data and related documentation, flow charts,
diagrams, descriptive texts and programs, computer print-outs, underlying
tapes, computer databases and similar items); (5) all trademarks, service
marks, trade names, trade dress, logos, business and product names,
slogans, and registrations and applications for registration thereof; (6)
all rights to sue for and remedies against past, present and future
infringements of any or all of the foregoing and rights of priority and
protection of interests therein under the laws of any jurisdiction
worldwide; (7) all copies and tangible embodiments of any or all of the
foregoing (in whatever form or medium, including without limitation
electronic media); and (8) all other proprietary, intellectual property
and other rights relating to any or all of the foregoing.
SECTION 2.7. Litigation. Except as set forth in the SEC
Filings, there are no claims, actions, suits, proceedings or
investigations pending or, to the knowledge of the Company and its
subsidiaries, threatened against the Company or any of its subsidiaries,
or any properties or rights owned or leased by the Company or any of its
subsidiaries (including any such claims, actions, suits, proceedings or
investigations relating to environmental matters), before any court,
administrative, governmental or regulatory authority or body, arbitration
panel or other Governmental Entity (as defined in Section 2.8), which,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect (whether or not covered by insurance) or which
relate to the transactions contemplated by this Agreement, the Cooperation
Agreement or the Development Agreement, and neither the Company nor any of
its subsidiaries knows, after reasonable inquiry of its senior management,
of any basis for any such claim, action, suit, proceeding or
investigation. Neither the Company nor any of its subsidiaries nor any
property owned or leased by them is subject to any order, judgment,
injunction or decree which could reasonably be expected to have a Material
Adverse Effect.
SECTION 2.8. Governmental Approvals. Except for applicable
requirements of the Exchange Act and the rules and regulations thereunder
and of the Nasdaq Stock Market, Inc. ("Nasdaq") no approval, order or
authorization of, or filing or registration with, allowance by, or consent
of or notification to any federal, state or local government or any court,
administrative or regulatory agency or commission or other governmental
authority or agency, domestic or foreign (a "Governmental Entity"), is
required to be obtained or made by the Company or any of its subsidiaries
in connection with the execution and delivery of this Agreement, the
Cooperation Agreement and the Development Agreement, the performance of
obligations of the Company hereunder or thereunder or the consummation by
the Company of the transactions contemplated hereby or thereby or for
preventing the termination of any material right, privilege or contract of
the Company or any of its subsidiaries.
SECTION 2.9. Compliance With Applicable Law. (a) The Company
and its subsidiaries are in compliance with all applicable laws,
ordinances and regulations of any Governmental Entity, including those
relating to environmental, occupational health and safety, fair employment
and equal opportunity, (b) no claims or complaints from any Governmental
Entities or other parties have been asserted or received by the Company or
any of its subsidiaries during the past three years, and, to the knowledge
of the Company and its subsidiaries, no claims or complaints are
threatened, alleging that the Company or any of its subsidiaries is in
violation of any such law, ordinance or regulation, and (c) neither the
Company nor any of its subsidiaries has received notice from any
Governmental Entity of any pending proceedings to take all or any part of
the properties of the Company or any of its subsidiaries (whether
leased or owned) by condemnation or right of eminent domain and, to the
knowledge of the Company and its subsidiaries, no such proceedings are
threatened, except, in each such case, for such noncompliance, claims,
complaints or proceedings which would not have, individually or in the
aggregate, a Material Adverse Effect.
SECTION 2.10. Licenses; Permits. (a) The Company has all
licenses, permits, approvals and other authorizations ("Permits") from all
Governmental Entities as are necessary for the conduct of the business or
operations of the Company and its subsidiaries, in a manner consistent
with good business practice and in compliance with all laws applicable to
such business operations and (b) all such Permits are validly held by the
Company or the relevant subsidiary, are in full force and effect and the
same will not be subject to suspension, modification, revocation or
nonrenewal as a result of the execution, delivery and performance of this
Agreement, the Cooperation Agreement or the Development Agreement or the \
consummation of the transactions contemplated hereby or thereby, except in
the case of clauses (a) and (b) where such failure to hold such Permits
would not have, individually or in the aggregate, a Material Adverse
Effect.
SECTION 2.11. Taxes. The Company has filed all tax returns,
reports and forms (including statements of estimated taxes owed) required
to be filed within the applicable periods for such filings and has paid
all taxes required to be paid, and has established adequate reserves (net
of estimated tax payments already made) for the payment of all taxes
payable in respect to the period subsequent to the last periods covered by
such returns. All such tax returns, reports and forms are true, correct
and complete in all material respects. No deficiencies for any tax are
currently assessed against the Company, and, to the knowledge of the
Company, there is no audit of the Company's tax returns pending or
contemplated. Proper and adequate amounts have been withheld by the
Company from its employees and other persons for all periods in compliance
in all material aspects with the tax, social security and unemployment and
other withholding provisions of all federal, state, local and foreign
laws. There is no tax lien, whether imposed by any federal, state or
local taxing authority, outstanding against the assets, properties or
business of the Company. For the purposes of this agreement, the term
"tax" shall include all Federal, state, local and foreign taxes, including
income, franchise, property, sales, use, gross receipts, excise,
withholding, payroll and employment taxes and other similar assessments of
any kind whatsoever, including all interest, penalties and additions
imposed with respect to such amounts.
SECTION 2.12. Investment Company. The Company is not an
"investment company" or a person directly or indirectly controlled by or
acting on behalf of an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF PURCHASER AND PARENT
Purchaser and Parent hereby jointly and severally represent and
warrant to the Company as follows:
SECTION 3.1. Organization. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware. Parent is a corporation duly organized and validly
existing under the laws of the Federal Republic of Germany.
SECTION 3.2. Authority. Purchaser has all requisite corporate
power and authority to execute, deliver and perform this Agreement and to
consummate the transactions contemplated hereby, and Parent has all
requisite corporate power and authority to execute, deliver and perform
this Agreement, the Cooperation Agreement and the Development Agreement
and to consummate the transactions contemplated hereby and thereby. The
execution, delivery and performance of this Agreement by Purchaser and
Parent and the consummation of the transactions contemplated hereby and
the execution, delivery and performance of the Cooperation Agreement and
the Development Agreement by Parent and the consummation of the
transactions contemplated thereby have been duly authorized by all
necessary corporate action on the part of Purchaser and/or Parent, as the
case may be. This Agreement, the Cooperation Agreement and the
Development Agreement have been duly executed and delivered by Purchaser
and/or Parent, as the case may be, and constitute the valid and binding
obligations of Purchaser and/or Parent, as the case may be, enforceable
against Purchaser and/or Parent, as the case may be, in accordance with
their terms, except as such enforceability may be limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or similar
laws relating to or affecting the enforcement of creditors' rights in
general and by general principles of equity.
SECTION 3.3. No Breach. The execution, delivery and performance
of this Agreement by Purchaser and the execution, delivery and performance
of this Agreement, the Cooperation Agreement or the Development Agreement
by Parent do not, and consummation of the transactions contemplated hereby
and thereby and compliance with the provisions hereof and thereof will
not, with or without the giving of notice or the lapse of time, or both,
(a) conflict with or result in a breach or violation of or a default
under, or give rise to a right of amendment, termination, cancellation or
acceleration of any obligation or to a loss of a material benefit under,
(i) the Certificate of Incorporation or By-laws of Purchaser or the
organizational documents of Parent, or (ii) any contract, agreement, note,
bond, mortgage, indenture, lease, license, franchise, permit, concession,
instrument, obligation, commitment, covenant, understanding or arrangement
to which Purchaser or Parent is a party or by which any of their
respective properties or assets may be affected, or (iii) any order,
ruling, decree, judgment, arbitration award, statute, law, ordinance,
rule, regulation or stipulation to which Purchaser or Parent or their
respective properties or assets is subject, or (b) result in the creation
of any Lien upon any of their respective properties or assets, except, in
the case of items (a)(ii) and (iii) above and any such Liens, for those
which would not have, individually or in the aggregate, a material adverse
effect on the ability of Purchaser and/or Parent, as the case may be, to
consummate the transactions contemplated by this Agreement, the
Cooperation Agreement or the Development Agreement.
SECTION 3.4. Governmental Approvals. Except for the applicable
requirements of the Exchange Act and the rules and regulations thereunder,
no approval, order or authorization of, or filing or registration with,
allowance by, or consent of or notification to any Governmental Entity is
required to be obtained or made by Purchaser or Parent in connection with
the execution and delivery of this Agreement, the Cooperation Agreement or
the Development Agreement, the performance of obligations of Purchaser or
Parent hereunder or thereunder or the consummation by Purchaser or Parent
of the transactions contemplated hereby or thereby.
SECTION 3.5. Investment Intent. The Shares to be subscribed for
by Purchaser hereunder will be subscribed for investment for such
Purchaser's own account, not as a nominee or agent, and not with a view
to the public resale or distribution thereof within the meaning of the
Securities Act, and Purchaser has no present intention of selling,
granting any participation in, or otherwise distributing the same.
Purchaser also represents that it has not been formed for the specific
purpose of subscribing for the Shares and that neither Purchaser, Parent
nor any of the Control Subsidiaries (as defined in Section 4.1(d)) owns or
has ever owned any shares of Common Stock.
SECTION 3.6. Disclosure of Information. Purchaser has received
or has had full access to all the information it considers necessary or
appropriate to make an informed investment decision with respect to the
Shares to be subscribed for by Purchaser under this Agreement. Purchaser
further has had an opportunity to ask questions and receive answers from
the Company regarding the terms and conditions of the offering of the
Shares and to obtain additional information (to the extent the Company
possessed such information or could acquire it without unreasonable effort
or expense) necessary to verify any information furnished to Purchaser or
to which Purchaser had access. The foregoing, however, does not in any
way limit or modify the representations and warranties made by the Company
in Article II.
SECTION 3.7. Accredited Investor Status. Purchaser is an
"accredited investor" within the meaning of Rule 501(a) of Regulation D
promulgated under the Securities Act.
SECTION 3.8. Restricted Shares. Purchaser is aware that the
Shares issued pursuant to this Agreement have not been registered under
the Securities Act or any applicable state securities laws, and agrees
that the Shares will not be offered or sold in the absence of registration
under the Securities Act and any applicable state securities laws or an
exemption from the registration requirements of the Securities Act and any
applicable state securities laws. Purchaser will not transfer any Shares
in violation of the provisions of any applicable federal or state
securities laws. In this connection, Purchaser represents that it is
familiar with SEC Rule 144 promulgated pursuant to the Securities Act
("Rule 144"), as presently in effect, and understands the resale
limitations imposed thereby and by the Securities Act. Purchaser
understands that the offering and sale of the Shares is intended to be
exempt from registration under the Securities Act, by virtue of Section
4(2) of the Securities Act and, if applicable, the provisions of
Regulation D promulgated thereunder, based, in part, upon the
representations, warranties and agreements contained in this Agreement.
SECTION 3.9. Financial Warranty. Purchaser has been in existence
for at least 18 months and has a tangible net worth on a consolidated
basis of $10 million or more.
ARTICLE IV
COVENANTS
SECTION 4.1. Covenants of Purchaser and Parent.
(a) Restrictions on Transfer. (i) Except as permitted by
Sections 4.1(a)(ii), 4.1(a)(iii), 4.1(a)(iv) and 4.1(b), Purchaser,
Parent and any subsidiary controlled by Purchaser or Parent (a
"Control Subsidiary") shall not Transfer (as defined below) any of
the Shares prior to the expiration of the Restricted Period (as
defined below) without the prior written approval of the Company.
Any attempted Transfer of Shares other than in accordance with this
Agreement shall be null and void and the Company shall refuse to
recognize any such Transfer and shall not reflect on its records
any change in record ownership of Shares pursuant to any such
Transfer.
(ii) Unless the Restricted Period has previously expired,
during the period beginning on the third anniversary of the date
hereof and ending upon the expiration of the Restricted Period,
Purchaser, Parent and their Control Subsidiaries may Transfer, in the
aggregate, not more than that number of Shares equal to 10% of the
largest number of shares of Common Stock held by Purchaser, Parent
and their Control Subsidiaries, collectively, at any point during
such period.
(iii) Notwithstanding the provisions of Sections 4.1(a)(i) and
4.1(a)(ii), (A) in the event of a tender, exchange or other offer by
a third party and/or its affiliates for all or at least 20% of the
then outstanding shares of Common Stock at any time during the
Restricted Period, Purchaser, Parent and their Control Subsidiaries
may tender any of the Shares in such tender, exchange or other offer
and upon consummation of such tender, exchange or other offer,
Transfer the Shares tendered to the purchaser and (B) Purchaser,
Parent and their Control Subsidiaries may tender any of the Shares to
the Company at any time in connection with a tender, exchange or
other offer by the Company for shares of Common Stock (a "Company
Tender") and upon consummation of such Company Tender, Transfer the
Shares tendered to the Company.
(iv) Notwithstanding the provisions of Sections 4.1(a)(i) and
4.1(a)(ii), in the event that the Company terminates the Cooperation
Agreement pursuant to Section 8.4 of the Cooperation Agreement (a
"Competitive Transaction Termination") at any time prior to the
expiration of the Restricted Period, during the period beginning on
the effective date of such Competitive Transaction Termination and
ending upon the expiration of the Restricted Period, Purchaser,
Parent and their Control Subsidiaries may Transfer, in the aggregate,
not more than that number of Shares per year equal to 25% of the
largest number of shares of Common Stock held by Purchaser, Parent
and their Control Subsidiaries, collectively, at any point during the
such period.
For purposes of this Agreement, a "Transfer" by Purchaser or Parent means
any transfer, sale, gift, assignment, pledge, encumbrance, conveyance or
other disposition by Purchaser or Parent to any person or entity (other
than Purchaser, Parent or a subsidiary of Parent); provided, however, that
the term "Transfer" shall not include Purchaser's, Parent's or a Control
Subsidiary's voting in favor of a merger transaction.
For purposes of this Agreement, "Restricted Period" shall mean the period
beginning on the date hereof and ending on the earliest to occur of (i)
the fourth anniversary of the date hereof, (ii) the termination of the
Cooperation Agreement (A) by the Company pursuant to Section 8.2 of the
Cooperation Agreement or (B) by Parent pursuant to Section 8.2 or 8.3 of
the Cooperation Agreement or (C) by mutual agreement of the Company and
Parent or (iii) a Control Event (as defined below).
For purposes of this Agreement, "Control Event" shall mean the occurrence
of any of the following events: (i) a merger of the Company following
which a majority of the outstanding shares of Common Stock (or the
outstanding capital stock of the surviving corporation, if not the
Company) immediately after the merger is held by persons who (together
with their affiliates), as of the date hereof, are not holders of more
than 5% of the outstanding shares of Common Stock as of the date hereof
(as reported in Schedules 13D and 13G with respect to the Common Stock
filed with the SEC prior to the date hereof) ("5% Holders"); (ii) a sale
of all or substantially all the assets of the Company; (iii) a change in a
majority of the members of the Board of Directors of the Company, except
where any such change occurs as a result of the election to the Board of
Directors of persons who were nominated by the incumbent Board of
Directors; (iv) the consummation of a tender, exchange or other offer by a
third party and/or its affiliates resulting in the acquisition by such
third party and/or its affiliates of at least 30% of the then outstanding
shares of Common Stock of the Company; (v) the acquisition of shares of
Common Stock by a third party and/or its affiliates who, as of the date
hereof, are not 5% Holders resulting in such third party and/or its
affiliates holding 30% or more of the then outstanding shares of Common
Stock; (vi) the acquisition or tender offer by a competitor of Purchaser
or Parent in the enterprise resource planning (ERP) or supply chain
management market and/or its affiliates (collectively, a "Competitor") of
or for 10% or more of the then outstanding shares of Common Stock; or
(vii) the dissolution or liquidation of the Company, the institution of
any proceeding by or against the Company under the provisions of any
insolvency or bankruptcy law which is not dismissed within 30 days, the
appointment of a receiver of any of the assets or property of the Company,
or the issuance of an order for an execution on a material portion of the
property of the Company pursuant to a judgment which is not dismissed
within 30 days.
(b) Right of First Refusal. Unless the Restricted Period has previously
expired, Purchaser, Parent or a Control Subsidiary may propose to Transfer
any of the Shares (x) during the period beginning on the third anniversary
of the date hereof and ending upon the expiration of the Restricted
Period, to the extent permitted by Section 4.1(a)(ii), and (y) during the
period beginning on the effective date of a Competitive Transaction
Termination and ending upon the expiration of the Restricted Period, to
the extent permitted by Section 4.1(a)(iv), in each case, only upon
compliance with the terms and conditions of this Section 4.1(b); provided,
however, that this Section 4.1(b) shall not apply to a Transfer of any
Shares by Purchaser, Parent or a Control Subsidiary made with the prior
written approval of the Company, a tender by Purchaser, Parent or a
Control Subsidiary of any Shares permitted by Section 4.1(a)(iii) or in
connection with a merger of the Company.
(i) Purchaser or Parent, as the case may be, shall deliver to
the Company a written notice (an "Offer Notice") setting forth the
terms and conditions under which Purchaser, Parent or a Control
Subsidiary, as the case may be, would be willing to Transfer the
Shares, specifying the number of Shares Purchaser, Parent or a
Control Subsidiary, as the case may be, is willing to Transfer and
the consideration to be paid for such Shares. The Company shall have
thirty (30) days from the date of delivery of such Offer Notice to
negotiate with Purchaser or Parent, as the case may be, the Transfer
of such Shares or to reject Purchaser's or Parent's offer, as the
case may be, in writing (a "Rejection Notice"). Upon the earlier of
the delivery of a Rejection Notice by the Company and the expiration
of such 30-day period, if such Shares have not been purchased by the
Company, for a period of 180 days thereafter Purchaser, Parent or a
Control Subsidiary, as the case may be, shall have the right to offer
or sell the number of the Shares specified in the Offer Notice to a
third party for consideration that shall be not less than and on
terms and conditions that are no more favorable than the
consideration and the terms and conditions specified in the Offer
Notice. In the event that Purchaser, Parent or a Control Subsidiary,
as the case may be, does not Transfer such Shares to a third party
within such 180-day period, the Offer Notice shall expire and be of
no further force or effect.
(ii) (A) In the event that during the 180-day period specified
in Section 4.1(b)(i) Purchaser, Parent or a Control Subsidiary, as
the case may be, receives and desires to accept a bona fide offer to
purchase the number of Shares specified in the Offer Notice for
consideration that is less than or on terms and conditions that are
more favorable than the consideration and the terms and conditions
specified in the Offer Notice, then Purchaser or Parent, as the case
may be, shall deliver a written notice of the proposed transfer (the
"Transfer Notice") to the Company, which notice shall describe the
proposed transaction and the terms thereof, including the name of
each person to whom or in favor of whom the proposed transfer shall
be made (the "Transferee"), the number of Shares proposed to be
transferred and the amount of consideration to be received upon
transfer of such Shares and such notice shall constitute an offer to
sell the Shares in accordance with the terms of this Section
4.1(b)(ii) to the Company, at a price equal to 104% of the
consideration specified in the Transfer Notice (the "Company
Consideration") and otherwise on the same terms and conditions as
those provided in the Transfer Notice. The Company shall have thirty
(30) days from the date of delivery of the Transfer Notice to
exercise its rights hereunder to accept the offer subject to terms of
this Section 4.1(b)(ii) by delivering within such 30-day period to
Purchaser or Parent, as the case may be, a written acceptance notice
stating that the Company is agreeing to purchase the number of Shares
specified in the Transfer Notice for the Company Consideration.
(B) In the event that the Company does not deliver such
acceptance notice within such 30-day period, Purchaser, Parent or the
Control Subsidiary, as the case may be, shall have the right to
proceed with the sale of the number of the Shares specified in the
Transfer Notice and make a bona fide Transfer of such Shares to the
Transferee named in the Transfer Notice, but only in strict
accordance with the consideration, terms and conditions stated in the
Transfer Notice.
(C) The closing of any Transfer of Shares to the Company
pursuant to this Section 4.1(b)(ii) shall occur within forty-five
(45) days after the date of delivery of the Transfer Notice. If the
Company does not pay Purchaser, Parent or the Control Subsidiary, as
the case may be, the Company Consideration for the Shares within such
45-day period, then Purchaser, Parent or the Control Subsidiary, as
the case may be, may Transfer such Shares to the Transferee in
accordance with Section 4.1(b)(ii)(B).
(D) If, within sixty (60) days after the date on which
Purchaser, Parent or the Control Subsidiary, as the case may be, is
free to make the Transfer to the Transferee pursuant to Section
4.1(b)(ii)(B) or (C), a closing has not occurred, the transfer
restrictions in Section 4.1(b)(i) shall be reinstated.
Notwithstanding the expiration of the Restricted Period by reason of an
acquisition by a Competitor described in clause (vi) of the definition of
"Control Event" through purchases of Common Stock in the open market, this
Section 4.1(b) shall apply until the earlier of (A) the first anniversary
of the expiration of the Restricted Period and (B) the fourth anniversary
of the date hereof, provided that such Competitor has not acquired 20% or
more of the then outstanding shares of Common Stock and, within two
business days of becoming aware of such acquisition, the Board of
Directors of the Company has taken affirmative steps to discourage such
acquisition by such Competitor and provided further that no other Control
Event has occurred or is continuing.
(c) Right of First Negotiation. During the period beginning on
the expiration of the Restricted Period and ending upon the second
anniversary of such expiration, Purchaser, Parent or a Control Subsidiary
may propose to Transfer any of the Shares only upon compliance with the
terms and conditions of this Section 4.1(c); provided, however, that this
Section 4.1(c) shall not apply to (1) a Transfer of any Shares by
Purchaser, Parent or a Control Subsidiary made with the prior written
approval of the Company, (2) a Transfer or Transfers of Shares in each of
the two one-year periods within such two-year period in an amount not to
exceed, in the aggregate, 10% of the largest number of shares of Common
Stock held by Purchaser, Parent and their Control Subsidiaries,
collectively, at any point during such one-year period, (3) a tender by
Purchaser, Parent or a Control Subsidiary of any Shares permitted by
Section 4.1(a)(iii) or (4) in connection with a merger of the Company.
(i) Purchaser or Parent, as the case may be, shall deliver to
the Company a written notice of the proposed Transfer, which notice
shall describe the number of Shares proposed to be Transferred. The
Company shall have thirty (30) days from the date of delivery of such
notice to exercise its rights hereunder to offer to purchase the
number of Shares specified in Purchaser's or Parent's notice, as the
case may be, by delivering within such 30-day period to Purchaser or
Parent, as the case may be, a written offer notice stating that the
Company is offering to purchase the number of Shares specified in
Purchaser's or Parent's notice, as the case may be, for the
consideration set forth in such offer notice.
(ii) During such 30-day period Purchaser or Parent, as the case
may be, shall negotiate with the Company for the Transfer of the
Shares specified in Purchaser's or Parent's notice; provided,
however, Purchaser or Parent, as the case may be, shall have no
obligation to accept any offer made by the Company.
(iii) Following the expiration of such 30-day period, Purchaser
or Parent, as the case may be, shall have the right to proceed with
an offer or sale of the number of Shares specified in Purchaser's or
Parent's notice, as the case may be, and to make a bona fide Transfer
of such Shares on such terms and conditions as Purchaser or Parent,
as the case may be, shall determine in its discretion.
(d) Limitations on Ownership of Common Stock.
(i) Subject to Section 4.1(d)(ii) and Section 4.1(d)(iii),
during the Restricted Period, Purchaser or Parent shall not, and
shall not permit any Control Subsidiary, directly or indirectly, to
purchase or otherwise acquire beneficial ownership of any shares of
Common Stock, any securities convertible or exchangeable for shares
of Common Stock, or any rights to acquire shares of Common Stock
(except, in any case, by way of stock dividends or other
distributions or offerings made available to holders of Common Stock
generally or pursuant to acquisitions of Common Stock permitted by
Section 4.2(a)) or announce or make a tender, exchange or other offer
for shares of Common Stock, in each case, without the prior written
approval of the Company if such transaction would result in
Purchaser, Parent and their Control Subsidiaries together owning more
than 9.7% of the total number of shares of Common Stock then
outstanding; provided, however, that the limitations of this Section
4.1(d) shall not prohibit Purchaser, Parent or a Control Subsidiary
from acquiring the stock of or other equity interests in any
corporation, partnership or other person which holds, directly or
indirectly, any shares of capital stock of the Company representing
less than 10% of the total assets of such corporation, partnership or
person.
(ii) Notwithstanding the foregoing, upon the occurrence of an
event (a "Threat Event") that Purchaser or Parent in good faith
reasonably believes could result in (A) a merger of the Company
following which a majority of the then outstanding shares of Common
Stock (or the outstanding capital stock of the surviving corporation,
if not the Company) immediately after the merger being held by
persons who (together with their affiliates), as of the date hereof,
are not 5% Holders; (B) a sale of all or substantially all the assets
of the Company, (C) a change in a majority of the members of the
Board of Directors of the Company, except where any such change
occurs as a result of the election to the Board of Directors of
persons who were nominated by the incumbent Board of Directors, (D) a
tender, exchange or other offer by a third party and/or its
affiliates for all or at least 20% of the outstanding shares of
Common Stock of the Company, (E) the acquisition of shares of Common
Stock by a third party and/or its affiliates who, as of the date
hereof, are not 5% Holders resulting in such third party and/or its
affiliates holding 20% or more of the then outstanding shares of
Common Stock or (F) the acquisition or tender offer by a Competitor
of or for 10% or more of the then outstanding shares of Common Stock,
upon delivery by Purchaser, Parent or any Control Subsidiary of
notice to the Company setting forth the reasons for such belief, the
restrictions of Section 4.1(d)(i) shall not apply to Purchaser,
Parent or any Control Subsidiary; provided, however, that if neither
Purchaser nor Parent has affirmatively commenced any action to
purchase or otherwise acquire additional shares of Common Stock or
has not announced or commenced a tender, exchange or other offer for
shares of Common Stock within the period commencing on the date of
delivery by Purchaser or Parent of the notice of a Threat Event and
ending on the earlier of (1) the definitive abandonment or the
completion of any of the transactions specified in the definition of
"Threat Event" or (2) 120 days thereafter, then the Company shall
have the right to reinstate the limitations of Section 4.1(d)(i) upon
30 days' prior written notice to Purchaser and Parent unless within
such 30-day period, Purchaser or Parent objects in writing to such
reinstatement.
(iii) Notwithstanding anything to the contrary contained in
this Agreement and subject to the provisions of Section 4.1(e) in the
event of a Major Competitor Transaction (as defined in the
Cooperation Agreement), upon delivery by Purchaser, Parent or a
Control Subsidiary of a notice of a Threat Event with respect to a
transaction involving the Company that the Company has notified
Purchaser and Parent is to be accounted for as a pooling of
interests: (1) with a Competitor, then the restrictions of Sections
4.1(a),(b), (c) and (d)(i) shall not apply to Purchaser, Parent or
any Control Subsidiary, provided that any acquisition or purchase of
additional shares of Common Stock by Purchaser, Parent and/or their
Control Subsidiaries would be pursuant to a plan in which Purchaser,
Parent and/or their Control Subsidiaries would obtain control over at
least 19% of the then outstanding shares of Common Stock, and (2)
with a person or entity other than a Competitor, then (x) the
restrictions of Section 4.1(d)(i) shall not apply to Purchaser,
Parent or any Control Subsidiary and (y) if Purchaser, Parent or
their Control Subsidiaries purchases or acquires additional shares of
Common Stock (other than pursuant to Section 4.2(a)), each of
Purchaser, Parent and their Control Subsidiaries will waive any
appraisal rights it may have in connection with such pooling of
interests transaction, it being understood that the provisions of the
proviso to Section 4.1(d)(ii) shall continue to apply in any event.
(e) Major Competitor Transaction. In the event of a Major
Competitor Transaction, (i) each of Purchaser, Parent and their Control
Subsidiaries will waive any appraisal rights it may have in connection
with any transaction thereafter entered into involving the Company that
the Company has notified Purchaser and Parent is to be accounted for as a
pooling of interests and the restrictions of Section 4.1(d)(iii) with
respect to the acquisition of additional shares of Common Stock by
Purchaser, Parent or any of their Control Subsidiaries shall not apply and
(ii) the rights of Parent and Purchaser to acquire additional shares of
Common Stock pursuant to Section 4.2(a) shall terminate.
SECTION 4.2. Covenants of the Company.
(a) Preemptive Rights. Subject to the provisions of Section
4.1(e), except in connection with (i) the exercise by holders of options
granted under any of the Company's Stock Option Plans, (ii) the exercise
of the Warrant or (iii) a stock split or stock dividend with respect to
the Common Stock, the Company shall not issue or sell any shares of Common
Stock in an amount representing more than 30% of the then outstanding
shares of Common Stock during any 18-month period (including the issue or
sale of shares of Common Stock as all or a part of the consideration paid
by the Company in a merger, an acquisition of assets of a third party or
an acquisition of shares of a third party) unless prior to the issuance or
sale of such shares of Common Stock, Purchaser and Parent are notified in
writing of such sale and are given an opportunity to purchase, (i) if the
sale is for cash, on the same terms as such shares of Common Stock are
proposed to be sold or (ii) if the sale is for other consideration, at the
then current market price per share of the Common Stock, the same
proportion of the shares of Common Stock to be issued or offered for sale
by the Company as the number of shares of Common Stock held of record by
Purchaser, Parent or any Control Subsidiary, as the case may be, bears to
all of the issued and outstanding shares of Common Stock immediately prior
to such offer and sale. Purchaser and Parent shall have thirty (30) days
to exercise their rights under this Section 4.2(a).
(b) Registration Rights.
(i) Demand Registration. Following the expiration of the
Restricted Period and for so long as Purchaser, Parent and their
Control Subsidiaries together beneficially own at least 150,000
shares of Common Stock (subject to adjustment in the event of a stock
split or a stock dividend on, or other recapitalization of, the
Common Stock), in the event that the Company shall receive a written
notice from Purchaser or Parent requesting that the Company effect a
registration of all or a portion of the Shares under the Securities
Act, the Company shall, subject to the terms hereof, prepare and
file, within 45 days following delivery of such notice, a
registration statement covering the number of Shares specified in the
notice. The Company shall not be obligated to effect more than one
registration pursuant to this Section 4.2(b)(i); provided, however,
that a registration shall not be counted for this purpose if (A) the
Company elects to sell shares of its Common Stock pursuant to a
registration at the same time as the registration requested hereunder
and less than all the Shares specified in Purchaser's or Parent's
request are included or (B) the registration statement does not
become effective or is withdrawn prior to the sale of all the Shares
specified in Purchaser's or Parent's request.
(ii) Piggy-back Registration. Following the expiration of the
Restricted Period, in the event that the Company proposes to register
any shares of Common Stock, under the Securities Act, on any
registration form (other than Form S-8), not less than sixty (60)
days prior to effectiveness of each such registration the Company
shall give to Purchaser and Parent written notice of such proposal
which shall describe in detail the proposed registration and
distribution (including those jurisdictions where registration or
qualification under the securities or blue sky laws is intended) and,
upon the written request of Purchaser or Parent, as the case may be,
delivered within thirty (30) days after the date of any such notice
from the Company, proceed to include in such registration, such
shares of Common Stock as have been requested by Purchaser or Parent,
as the case may be, to be included in such registration. Purchaser
or Parent, as the case may be, shall in its request identify the
number of shares of Common Stock Purchaser or Parent, as the case may
be, desires to register. Notwithstanding anything contained herein,
if the lead underwriter of an underwritten offering involving a
registration pursuant to this Section 4.2(b)(ii) delivers a written
opinion to the Company that the success of such offering would be
materially and adversely affected by inclusion of all the shares of
Common Stock requested by Purchaser or Parent, as the case may be, to
be registered, then the number of shares of Common Stock of each
participant in the registration (including the Company) shall be
reduced in proportion to the number of shares of Common Stock
originally requested to be registered by each participant.
(iii) Registration. If Purchaser or Parent, as the case may
be, exercises its rights under either Section 4.2(b)(i) or (ii), the
Company shall use its reasonable best efforts to cause any and all
shares of Common Stock identified by Purchaser or Parent, as the case
may be, to be registered under the Securities Act and qualified under
the securities or blue sky laws of any jurisdiction requested by
Purchaser or Parent, as the case may be, to the extent necessary to
permit the sale or other disposition thereof; provided, however, that
the Company shall not be obligated to qualify as a foreign
corporation to do business under the laws of any jurisdiction in
which it is not then qualified. The Company will pay and bear all
expenses incident to each registration of Shares contemplated by this
Section 4.2(b); provided, however, that Purchaser or Parent, as the
case may be, will bear the fees and expenses of its own counsel,
accountants, investment bankers and advisors.(iv) Listing. In
connection with any registration of the Shares pursuant to this
Section 4.2(b), the Company shall promptly execute and file with
Nasdaq and any other exchange on which the Common Stock may be traded
an application or applications for the listing on the Nasdaq National
Market System and such other exchange of any Shares being registered,
file such other information and documents, enter into such agreements
with Nasdaq and such other exchange and take all such other actions
as may be required to effect such listing.
SECTION 4.3. Director Nominee.
(a) For so long as Purchaser, Parent and their Control
Subsidiaries together beneficially own at least 379,743 shares of Common
Stock (subject to adjustment in the event of a stock split or stock
dividend on, or other recapitalization of, the Common Stock), Purchaser
and Parent shall be entitled to (i) nominate one representative to the
Board of Directors of the Company, who shall serve as a Class III
Director, subject to the approval of the Company's Nominating Committee
(which approval shall not be unreasonably withheld), to serve in such
capacity in accordance with the Restated Certificate of Incorporation and
the By-Laws of the Company or (ii) be represented at meetings of the Board
of Directors of the Company by an observer during such times as there is
no Purchaser nominee on the Board of Directors.
(b) Notwithstanding the foregoing, Purchaser and Parent shall
have no obligation under this Agreement (i) to nominate a representative
to the Board of Directors, (ii) to have any such representative continue
to serve on the Board of Directors or (iii) to be represented at meetings
of the Board of Directors by an observer.
(c) If (i) the Cooperation Agreement is terminated by the
Company pursuant to Section 8.2 of the Cooperation Agreement and (ii)
there is no ongoing or unresolved dispute between Parent or Purchaser, on
the one hand, and the Company, on the other hand, with respect to the
validity or effectiveness of such termination of the Cooperation
Agreement, then the rights provided to Purchaser and Parent in Section
4.3(a) shall terminate and Purchaser and Parent shall cause their nominee
to resign from the Board of Directors.
d) In the event that Purchaser's or Parent's nominee is no
longer a senior executive of Purchaser or Parent or no longer has
responsibilities with Purchaser and Parent with respect to the commercial
relationship between the parties set forth in the Cooperation Agreement or
the Development Agreement, then Purchaser or Parent, as the case may be,
shall cause such nominee to resign from the Board of Directors and, if it
desires to fill such vacancy, shall name a person who is a senior
executive of Purchaser or Parent or who has responsibilities with
Purchaser or Parent with respect to the commercial relationship between
the parties set forth in the Cooperation Agreement or the Development
Agreement, subject to the approval of the Company's Nominating Committee
(which approval shall not be unreasonably withheld), to fill the vacancy
created by such resignation. Upon a request by the Company that
Purchaser's or Parent's nominee be removed from the Board of Directors
without cause, Purchaser will give reasonable consideration to such
request but shall not be obligated to take any action.
(e) In the event of a Major Competitor Transaction, the Company
may request in writing that Purchaser's or Parent's nominee pursuant to
this Section 4.3 be removed from the Board of Directors of the Company,
and Purchaser or Parent, as the case may be, shall cause such nominee to
resign from the Board of Directors of the Company.
SECTION 4.4. Public Announcements. Subject to applicable legal
requirements, each of Purchaser and the Company agrees that any press
release or other public announcement regarding the transactions
contemplated by this Agreement will be made only after consultation with
and the prior written approval of the other.
SECTION 4.5. Further Action. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to use its
reasonable efforts to take promptly all actions and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective, in the most expeditious
manner practicable, the transactions contemplated by this Agreement,
including using its reasonable efforts to obtain all necessary waivers,
consents and approvals, effecting all necessary registrations and filings,
and defending any lawsuits or other proceedings, whether judicial or
administrative, challenging this Agreement or the consummation of any of
the transactions contemplated hereby, including seeking to have any stay
or temporary restraining order entered by any court or other Governmental
Entity vacated or reversed. In connection with and without limiting the
foregoing, the Company and the Board of Directors of the Company shall (i)
take all action necessary to ensure that no state takeover statute or
similar statute or regulation is or becomes applicable to this Agreement
or any of the transactions contemplated hereby and (ii) if any state
takeover statute or similar statute or regulation becomes applicable to
this Agreement or any of the transactions contemplated hereby, take all
action necessary to ensure that the transactions contemplated by this
Agreement may be consummated as promptly as practicable on the terms
contemplated by this Agreement and otherwise to minimize the effect of
such statute or regulation on this Agreement and the transactions
contemplated hereby.
ARTICLE V
SURVIVAL
SECTION 5.1. Survival. The representations and warranties in
this Agreement or in any instrument or certificate delivered pursuant to
this Agreement shall survive the date hereof until 45 days following the
date on which the Company's annual report on Form 10-K for the year ended
December 31, 1999 is filed with the SEC; provided, however, that the
representations and warranties (a) of the Company in Sections 2.1, 2.2,
2.3, 2.8, and 2.12 of this Agreement and (b) of Purchaser and Parent in
Sections 3.1, 3.2, 3.3 and 3.4 shall survive the date hereof, without
limitation.
ARTICLE VI
ASSIGNMENT; PARTIES IN INTEREST; AMENDMENT; WAIVER
SECTION 6.1. Assignment. The parties to this Agreement shall
not convey, assign or otherwise transfer any of their rights or
obligations under this Agreement without the express written consent of
Purchaser and Parent or the Company, as the case may be, except that
Purchaser may assign its rights, interests or obligations to any direct or
indirect Control Subsidiary of Parent or Purchaser. Any such conveyance,
assignment or transfer without the express written consent of the other
party shall be void ab initio. No assignment of this Agreement shall
relieve the assigning party of its obligations hereunder.
SECTION 6.2. Parties in Interest. This Agreement is binding
upon and is for the benefit of the parties hereto and their respective
successors and permitted assigns. This Agreement is not made for the
benefit of any person, firm, corporation or other entity not a party
hereto, and no person, firm, corporation or other entity other than the
parties hereto or their respective successors and permitted assigns shall
acquire or have any right, remedy or claim under or by virtue of this
Agreement.
SECTION 6.3. Amendment. This Agreement cannot be amended or
modified except by a written agreement executed by the parties hereto.
SECTION 6.4. Waiver. Purchaser may extend the time for the
performance of or waive compliance with any of the obligations or other
acts of the Company contained herein or waive any inaccuracies in the
representations and warranties of the Company contained herein or in any
document delivered pursuant hereto, and the Company may extend the time
for the performance of or waive compliance with any of the obligations or
other acts of Purchaser contained herein or waive any inaccuracies in the
representations and warranties of Purchaser contained herein or in any
document delivered pursuant hereto. Any such extension or waiver shall be
valid only if set forth in an instrument in writing signed by the party to
be bound thereby. The failure of any party to this Agreement to assert
any of its rights under this Agreement or otherwise shall not constitute a
waiver of those rights.
ARTICLE VII
GENERAL PROVISIONS
SECTION 7.1. Effect of Investigation. All representations,
warranties, covenants and agreements made by the Company in this Agreement
or in any certificates, statements or other instruments delivered pursuant
to this Agreement shall be unaffected by any investigation made by or on
behalf of Purchaser or Parent or knowledge obtained as a result thereof or
otherwise. All representations, warranties, covenants and agreements made
by Purchaser or Parent in this Agreement or in any certificates,
statements or other instruments delivered pursuant to this Agreement shall
be unaffected by any investigation made by or on behalf of the Company or
knowledge obtained as a result thereof or otherwise.
SECTION 7.2. Fees and Expenses. Each of the parties hereto
agrees to pay, without right of reimbursement from the other, the costs
incurred by it incident to the performance of its obligations hereunder,
including, without limitation, the fees and disbursements of counsel,
accountants, financial advisors, experts and consultants employed by the
respective parties in connection with the transactions contemplated
hereby.
SECTION 7.3. Notices. Any notice, request, instruction or
other communication to be given hereunder by either party to the other
shall be in writing and shall be deemed to have been duly given (i) on the
date of delivery if delivered personally, or by telecopy or telefacsimile,
upon confirmation of receipt, (ii) on the first business day following the
date of dispatch if delivered by Federal Express or other nationally
reputable next-day courier service, or (iii) on the third business day
following the date of mailing if delivered by registered or certified
mail, return receipt requested, postage prepaid. All notices hereunder
shall be delivered as set forth below, or pursuant to such other
instructions as may be designated in writing by the party to receive such
notice.
(a) If to Purchaser or Parent:
SAP America, Inc.
Legal Department
3999 West Chester Pike
Newtown Square, Pennsylvania 19073
Attention: General Counsel
Facsimile: (610) 661-4016
and
SAP Aktiengesellschaft
Neurottstrasse 16
D-69190 Walldorf, Germany
Attention: Legal Department
Facsimile: 49-6227-7-42060
with a copy to:
Chadbourne & Parke LLP
30 Rockefeller Plaza
New York, New York 10112
Attention: Morton E. Grosz, Esq.
Facsimile: (212) 541-5369
(b) If to the Company:
Catalyst International, Inc.
8989 North Deerwood Drive
Milwaukee, Wisconsin 53223
Attention: General Counsel
Facsimile: (414) 365-2145
with a copy to:
Godfrey & Kahn, S.C.
780 North Water Street
Milwaukee, Wisconsin 53202
Attention: Mark T. Ehrmann, Esq.
Facsimile: 414-273-5198
SECTION 7.4. Brokers; Fee Schedule. The Company represents and
warrants that there are no claims (or any basis for any claims) for
brokerage commissions, finder's fees or like payments in connection with
this Agreement or the transactions contemplated hereby resulting from any
action taken by or on behalf of the Company, except for fees payable by
the Company to Broadview International LLC and Brean Murray. Purchaser
and Parent represent and warrant that there are no claims (or any basis
for any claims) for brokerage commissions, finder's fees or like payments
in connection with this Agreement or the transactions contemplated hereby
or thereby resulting from any action taken by or on behalf of it, except
for fees payable by Purchaser or Parent to Goldman Sachs Group Inc.
SECTION 7.5. Captions, Currency. The Article, Section and
paragraph captions herein are for convenience of reference only, do not
constitute part of this Agreement and shall not be deemed to limit or
otherwise affect any of the provisions hereof. Unless otherwise
specified, all references contained in this Agreement or in any instrument
or document delivered pursuant hereto to dollars shall mean United States
Dollars. Unless otherwise specified, all references herein to numbered
sections and articles are to sections and articles of this Agreement.
SECTION 7.6. Entire Agreement. This Agreement, the Cooperation
Agreement and the Development Agreement together constitute the entire
agreement among the parties with respect to the subject matter hereof and
this Agreement, the Cooperation Agreement and the Development Agreement
supersede all prior agreements or understandings of the parties relating
thereto.
SECTION 7.7. Specific Performance. In the event of any actual
or threatened default in, or breach of, any of the terms, conditions and
provisions of this Agreement, the party who is or is to be thereby
aggrieved shall have the right to seek specific performance and injunctive
relief giving effect to its rights under this Agreement, in addition to
any and all other rights and remedies at law or in equity, and all such
rights and remedies shall be cumulative. The parties agree that the
remedies at law for any breach or threatened breach, including monetary
damages, are inadequate compensation for any loss and that any defense in
any action for specific performance that a remedy at law would be adequate
is waived.
SECTION 7.8. Severability. If any provision of this Agreement
or the application thereof to any person or circumstance is determined by
a court of competent jurisdiction to be invalid, void or unenforceable,
the remaining provisions thereof, or the application of such provision to
persons or circumstances other than those as to which it has been held
invalid or unenforceable, shall remain in full force and effect and shall
in no way be affected, impaired or invalidated thereby, so long as the
economic or legal substance of the transactions contemplated thereby is
not affected in any manner adverse to any party. Upon any such
determination, the parties shall negotiate in good faith in an effort to
agree upon a suitable and equitable substitute provision to effect the
original intent of the parties.
SECTION 7.9. Governing Law. This Agreement shall be governed
by and construed in accordance with the internal laws of the State of
Delaware applicable to contracts made and to be performed entirely within
such State, without regard to the conflicts of law principles of such
State.
SECTION 7.10. Counterparts. For the convenience of the
parties, this Agreement may be executed in any number of separate
counterparts, each such counterpart being deemed to be an original
instrument, and all such counterparts shall together constitute the same
agreement. Receipt of facsimile copies of signature pages hereof shall
constitute delivery of such signature pages if followed up within two
business days with executed original signature pages.
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers of the parties hereto on the
date first hereinabove written.
SAP AMERICA, INC.
By: /s/ Kevin S. McKay
------------------------------
Name: Kevin S.McKay
Title: President & CEO
SAP AKTIENGESELLSCHAFT
By: /s/ Henning Kagemann
------------------------------
Name: Henning Kagemann
Title: Co-Chairman, Executive Board
By: /s/ Hasso Plattner
------------------------------
Name: Hasso Plattner
Title: Co-Chairman, Executive Board
CATALYST INTERNATIONAL, INC.
By: /s/ Sean P. McGowan
------------------------------
Name: Sean P. McGowan
Title: President & CEO
