<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14D-1
TENDER OFFER STATEMENT
PURSUANT TO SECTION 14(d)(1) OF THE SECURITIES EXCHANGE ACT OF 1934
AND
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
C-ATS SOFTWARE INC.
(Name of Subject Company)
MOXIE ACQUISITION CORP.
KIRSTY, INC.
MISYS PLC
(Bidders)
Common Stock, Par Value $0.001 per Share
(Title of Class of Securities)
124778-10-1
(CUSIP Number of Class of Securities)
ROSS K. GRAHAM
MISYS PLC
BURLEIGH HOUSE
SALFORD PRIORS
EVESHAM, WORCS WR11 5SH
ENGLAND
011-44-138-687-1373
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications On Behalf of Bidders)
COPY TO:
PAUL H. WILSON, JR., ESQ.
DEBEVOISE & PLIMPTON
875 THIRD AVENUE
NEW YORK, NY 10022
(212) 909-6000
December 14, 1998
(Date of Event which Requires Filing Statement on Schedule 13D)
CALCULATION OF FILING FEE
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<CAPTION>
Transaction Valuation* Amount of Filing Fee
- ---------------------- --------------------
<S> <C>
$66,870,953 $13,374
</TABLE>
* For purposes of calculating amount of filing fee only. The amount assumes
the purchase of 8,916,127 shares of Common Stock, par value $0.001 per
share. Such number of shares represents all the shares of Common Stock
outstanding as of December 11, 1998, plus the number of shares of Common
Stock issuable upon the exercise of all outstanding options and warrants
to purchase Common Stock, in each case as represented by the Company.
/ / Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
Amount Previously Paid: None Filing Party: N/A
Form or Registration No.: N/A Date Filed: N/A
<PAGE> 2
CUSIP No. 124778-10-1 14D-1 and 13D
- --------------------------------------------------------------------------------
1. Names of Reporting Persons Misys plc
I.R.S. Identification Nos. of Above Persons
- --------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a (a) / /
Group
-------------------------
(b) /x/
(See Instructions)
- --------------------------------------------------------------------------------
3. SEC Use Only
- --------------------------------------------------------------------------------
4. Sources of Funds (See Instructions) BK, WC
- --------------------------------------------------------------------------------
5. Check if Disclosure of Legal Proceedings is / /
Required Pursuant to Items 2(e) or 2(f)
- --------------------------------------------------------------------------------
6. Citizenship or Place of Organization United Kingdom
- --------------------------------------------------------------------------------
7. Aggregate Amount Beneficially Owned by 3,465,375*
Each Reporting Person
- --------------------------------------------------------------------------------
8. Check if the Aggregate Amount in Row (7) / /
Excludes Certain Shares (See Instructions)
- --------------------------------------------------------------------------------
9. Percent of Class Represented by Amount in 38%
Row (7)
- --------------------------------------------------------------------------------
10. Type of Reporting Person (See Instructions) CO
- --------------------------------------------------------------------------------
- --------
* On December 14, 1998, Moxie Acquisition Corporation (the "Purchaser"),
Kirsty, Inc. ("USA Sub"), and Misys plc ("Parent") entered into
Stockholders Agreements (the "Stockholder Agreements") with certain
stockholders ("Certain Stockholders") of C-ATS Software Inc. (the
"Company"), pursuant to which, upon the terms set forth therein, the
Certain Stockholders have agreed to tender, in accordance with the terms
of the tender offer described in this statement (the "Offer"), 1,587,783
shares of common stock, par value $0.001 per share (the "Common Stock"),
owned beneficially by the Certain Stockholders, plus 460,000 shares of
Common Stock subject to options exercisable within 60 days of the date
hereof. Pursuant to the Stockholders Agreements, the Certain Stockholders
have also agreed to tender, granted an option to purchase, and an
irrevocable proxy with respect to Shares not currently beneficially owned
by the Certain Shareholders, including any Shares acquired by the Certain
Stockholders on the open market; such shares are not included in Rows 7
and 9 in each of the tables above. The Stockholders Agreements are
described in more detail in Section 12 of the Offer to Purchase dated
December 18, 1998. In addition, pursuant to the Merger Agreement (as
defined herein), the Company has granted Parent the option to purchase
approximately 1,417,582 newly issued shares of Common Stock (19.9% of the
total shares of Common Stock then outstanding), under certain
circumstances (the "Top-Up Option Shares"). Parent, USA Sub and the
Purchaser disclaim beneficial ownership of the Top-Up Option Shares.
2
<PAGE> 3
CUSIP NO. 124778-10-1 14D-1 and 13D
- --------------------------------------------------------------------------------
1. Names of Reporting Persons Kirsty, Inc.
I.R.S. Identification Nos. of Above Persons
- --------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a (a) / /
Group
-------------------------
(b) /x/
(See Instructions)
- --------------------------------------------------------------------------------
3. SEC Use Only
- --------------------------------------------------------------------------------
4. Sources of Funds (See Instructions) AF
- --------------------------------------------------------------------------------
5. Check if Disclosure of Legal Proceedings is / /
Required Pursuant to Items 2(e) or 2(f)
- --------------------------------------------------------------------------------
6. Citizenship or Place of Organization Delaware
- --------------------------------------------------------------------------------
7. Aggregate Amount Beneficially Owned by 3,465,375**
Each Reporting Person
- --------------------------------------------------------------------------------
8. Check if the Aggregate Amount in Row (7) / /
Excludes Certain Shares (See Instructions)
- --------------------------------------------------------------------------------
9. Percent of Class Represented by Amount in 38%
Row (7)
- --------------------------------------------------------------------------------
10. Type of Reporting Person (See Instructions) CO
- --------------------------------------------------------------------------------
- --------
** See footnote on page 2.
3
<PAGE> 4
CUSIP No. 124778-10-1 14D-1 and 13D
- --------------------------------------------------------------------------------
1. Names of Reporting Persons Moxie Acquisition Corp.
I.R.S. Identification Nos. of Above Persons
- --------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a (a) / /
Group
-------------------------
(b) /x/
(See Instructions)
- --------------------------------------------------------------------------------
3. SEC Use Only
- --------------------------------------------------------------------------------
4. Sources of Funds (See Instructions) AF
- --------------------------------------------------------------------------------
5. Check if Disclosure of Legal Proceedings is / /
Required Pursuant to Items 2(e) or 2(f)
- --------------------------------------------------------------------------------
6. Citizenship or Place of Organization Delaware
- --------------------------------------------------------------------------------
7. Aggregate Amount Beneficially Owned by 3,465,375**
Each Reporting Person
- --------------------------------------------------------------------------------
8. Check if the Aggregate Amount in Row (7) / /
Excludes Certain Shares (See Instructions)
- --------------------------------------------------------------------------------
9. Percent of Class Represented by Amount in 38%
Row (7)
- --------------------------------------------------------------------------------
10. Type of Reporting Person (See Instructions) CO
- --------------------------------------------------------------------------------
- --------
** See footnote on page 2.
4
<PAGE> 5
This Tender Offer Statement on Schedule 14D-1 also constitutes a Statement
on Schedule 13-D with respect to the acquisition by the Purchaser, USA Sub and
Parent of beneficial ownership of the shares subject to the Stockholder
Agreement. The item numbers and responses thereto below are in accordance with
the requirements of Schedule 14D-1.
ITEM 1. SECURITY AND SUBJECT COMPANY
(a) The name of the subject company is C-ATS Software, Inc., a Delaware
corporation (the "Company"), and the address of its principal executive offices
is at 1870 Embarcadero Road, Palo Alto, California, 94303.
(b) This Schedule 14D-1 relates to the offer by Moxie Acquisition Corp.
(the "Purchaser") to purchase all outstanding shares of Common Stock, par value
$.001 per share (the "Shares"), of the Company at a price of $7.50 per Share,
net to the seller in cash, upon the terms and subject to the conditions set
forth in the Offer to Purchase dated December 18, 1998 (the "Offer to Purchase")
and in the related Letter of Transmittal (which, together with any amendments
and supplements thereto, collectively constitute the "Offer"), copies which are
attached hereto as Exhibits (a)(1) and (a)(2), respectively. Information
concerning the number of outstanding Shares is set forth in "Introduction" of
the Offer to Purchase and is incorporated herein by reference.
(c) Information concerning the principal markets in which the Shares are
traded, and the high and low last sales prices of the Shares for each quarterly
period during the past two years is set forth in Section 6 ("Price Range of the
Shares; Dividends on the Shares") of the Offer to Purchase and is incorporated
herein by reference.
ITEM 2. IDENTITY AND BACKGROUND
This Schedule 14D-1 is being filed by the Purchaser, a Delaware
corporation and a wholly-owned subsidiary of Kirsty, Inc., a Delaware
corporation ("USA Sub") and an indirect wholly-owned subsidiary of Misys plc, a
public limited company organized under the laws of England ("Parent").
Information concerning the principal business and the address of the principal
offices of the Purchaser, USA Sub and Parent is set forth in Section 9 ("Certain
Information Concerning the Purchaser, USA Sub and Parent") of the Offer to
Purchase and is incorporated herein by reference. The name, citizenship,
business address, present principal occupation or employment and five-year
employment history of each of the directors and executive
5
<PAGE> 6
officers of the Purchaser, USA Sub and Parent is set forth in Schedule I to the
Offer to Purchase and is incorporated herein by reference.
During the last five years, none of the Purchaser, USA Sub or Parent, or,
to the best knowledge of the Purchaser, USA Sub or Parent, any of their
respective executive officers or directors, has been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors), nor has any
of them been a party to a civil proceeding of a judicial or administrative body
of competent jurisdiction and as a result of such proceeding was or is subject
to a judgment, decree or final order enjoining future violations of, or
prohibiting activities subject to, federal or state securities laws or finding
any violation of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY
(a) and (b) The information set forth in Section 11 ("Contacts and
Transactions with the Company; Background of the Offer") and Section 12
("Purpose of the Offer; the Merger Agreement; Other Agreements; Plans for the
Company") of the Offer to Purchase is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
(a) and (b) The information set forth in Section 10 ("Source and Amount of
Funds") of the Offer to Purchase is incorporated herein by reference.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER
(a)-(e) The information set forth in Section 12 ("Purpose of the Offer;
The Merger Agreement; Other Agreements; Plans for the Company") of the Offer to
Purchase is incorporated herein by reference.
(f) and (g) The information set forth in Section 7 ("Effect of the Offer
on the Market for the Shares; Stock Quotation; Exchange Act Registration; Margin
Regulations") of the Offer to Purchase is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY
(a) and (b) The information set forth in "Introduction," Section 9
("Certain Information Concerning the Purchaser, USA Sub and Parent"), Section 11
("Contacts and
6
<PAGE> 7
Transactions with the Company; Background of the Offer") and Section 12
("Purpose of the Offer; The Merger Agreement; Other Agreements; Plans for the
Company") of the Offer to Purchase is incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SUBJECT COMPANY'S SECURITIES
The information set forth in "Introduction," Section 9 ("Certain
Information Concerning the Purchaser, USA Sub and Parent"), Section 11
("Contacts and Transactions with the Company; Background of the Offer") and
Section 12 ("Purpose of the Offer; The Merger Agreement; Other Agreements; Plans
for the Company") of the Offer to Purchase attached hereto are incorporated
herein by reference. The parties to the Stockholders Agreements are the
Purchaser, USA Sub, Parent, the Rod A. Beckstrom Trust, David and Diedra
Gilbert, Robert Geske, Jerry Bock, and the Rod A. and Patrice V. Beckstrom
Charitable Remainder Trust.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED
The information set forth in "Introduction" and in Section 16 ("Fees and
Expenses") of the Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS
Because the only consideration in the Offer and Merger (as defined in the
Offer to Purchase) is cash, and in view of the amount of consideration payable
in relation to the financial capability of Parent and its affiliates, the
Purchaser, USA Sub and Parent believe the financial condition of Parent and its
affiliates is not material to a decision by a holder of Shares whether to sell,
tender or hold Shares pursuant to the Offer.
ITEM 10. ADDITIONAL INFORMATION
(a) The information set forth in Section 12 ("Purpose of the Offer; The
Merger Agreement; Other Agreements; Plans for the Company") of the Offer to
Purchase is incorporated herein by reference.
(b) and (c) The information set forth in Section 15 ("Certain Legal
Matters") of the Offer to Purchase is incorporated herein by reference.
7
<PAGE> 8
(d) The information set forth in Section 7 ("Effect of the Offer on the
Market for the Shares; Stock Quotation; Exchange Act Registration; Margin
Regulations") of the Offer to Purchase is incorporated herein by reference.
(e) None.
(f) The information set forth in the Offer to Purchase, the Letter of
Transmittal, the Agreement and Plan of Merger dated as of December 14, 1998,
among the Purchaser, Parent and the Company, and the Stockholders Agreements,
copies of which are attached hereto as Exhibits (a)(1), (a)(2), (c)(1), (c)(2)
and (c)(3), respectively, is incorporated herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS
(a)(1) Offer to Purchase.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Banks, Trust Companies and Other
Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Banks, Trust
Companies and Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7) Form of Summary Advertisement dated December 14, 1998.
(a)(8) Text of joint Press Release dated December 14, 1998, issued by
Misys plc and the Company.
(a)(9) Text of Press Release dated December 14, 1998, issued by Misys
plc.
(b) Amended and Restated Agreement dated 6 November 1998 relating to
a Credit Agreement dated 5 September 1997 (as amended by a
Supplemental Credit Agreement dated 24 November 1997 and a Second
Supplemental Agreement dated 19 June 1998) among Parent, ING
Barings and Lloyds Bank plc Capital Markets as Arrangers, the
Banks and Financial Institutions named therein, Lloyds Bank plc
as Overdraft Facility Bank, and Lloyds Bank plc Capital Markets
as Agent.
(c)(1) Agreement and Plan of Merger dated as of December 14, 1998, among
the Purchaser, USA Sub, Parent and the Company.
(c)(2) Stockholders Agreement dated as of December 14, 1998, among the
Purchaser, USA Sub, Parent, the Rod A. Beckstrom Trust, David and
Diedra Gilbert, Robert Geske, and Jerry Bock.
(c)(3) Stockholder Agreement dated as of December 14, 1998, among the
Purchaser, USA Sub, Parent and the Rod A. and Patrice V.
Beckstrom Charitable Remainder Trust.
(c)(4) Employment Agreement, dated December 14, 1998 between the Company
and Mr. Rod Beckstrom.
8
<PAGE> 9
(c)(5) Employment Agreement, dated December 14, 1998 between the Company
and Mr. David Gilbert.
(c)(6) Long Term Incentive Plan Term Sheet.
(d) None.
(e) Not applicable.
(f) None.
9
<PAGE> 10
SIGNATURE
After due 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: December 18, 1998
MOXIE ACQUISITION CORP.,
By /s/ Ross K. Graham
-----------------------------------
Name: Ross K. Graham
Title: Secretary
KIRSTY, INC.,
By /s/ Ross K. Graham
-----------------------------------
Name: Ross K. Graham
Title: Vice President
MISYS PLC,
By /s/ Ross K. Graham
-----------------------------------
Name: Ross K. Graham
Title: Secretary
10
<PAGE> 11
EXHIBIT INDEX
(a)(1) Offer to Purchase.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Banks, Trust Companies and Other
Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Banks, Trust Companies
and Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7) Form of Summary Advertisement dated December 18, 1998.
(a)(8) Text of Press Release dated December 14, 1998, issued by Misys plc
and the Company.
(a)(9) Text of Press Release dated December 14, 1998, issued by Misys, plc.
(b) Amended and Restated Agreement dated 6 November 1998 relating to a
Credit Agreement dated 5 September 1997 (as amended by a Supplemental
Credit Agreement dated 24 November 1997 and a Second Supplemental
Agreement dated 19 June 1998) among Parent, ING Barings and Lloyds
Bank plc Capital Markets as Arrangers, the Banks and Financial
Institutions named therein, Lloyds Bank plc as Overdraft Facility
Bank, and Lloyds Bank plc Capital Markets as Agent.
(c)(1) Agreement and Plan of Merger dated as of December 14, 1998, among the
Purchaser, USA Sub, Parent and the Company.
(c)(2) Stockholders Agreement dated as of December 14, 1998, among the
Purchaser, USA Sub, Parent, the Rod A. Beckstrom Trust, David and
Diedra Gilbert, Robert Geske, and Jerry Bock.
(c)(3) Stockholder Agreement dated as of December 14, 1998, among the
Purchaser, USA Sub, Parent and the Rod A. and Patrice V. Beckstrom
Charitable Remainder Trust.
(c)(4) Employment Agreement, dated December 14, 1998 between the Company and
Mr. Rod Beckstrom.
(c)(5) Employment Agreement, dated December 14, 1998 between the Company and
Mr. David Gilbert.
(c)(6) Long Term Incentive Plan Term Sheet.
(d) None.
(e) Not applicable.
(f) None.
11
<PAGE> 1
EXHIBIT (A)(1)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
C-ATS SOFTWARE INC.
AT
$7.50 NET PER SHARE
BY
MOXIE ACQUISITION CORP.
A WHOLLY-OWNED SUBSIDIARY OF
KIRSTY, INC.
AN INDIRECT WHOLLY-OWNED SUBSIDIARY OF
MISYS PLC
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME, ON TUESDAY, JANUARY 19, 1999,
UNLESS THE OFFER IS EXTENDED.
THE BOARD OF DIRECTORS OF C-ATS SOFTWARE INC. (THE "COMPANY") HAS UNANIMOUSLY
APPROVED THE OFFER AND THE MERGER REFERRED TO HEREIN AND DETERMINED THAT THE
TERMS OF THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE
STOCKHOLDERS OF THE COMPANY AND RECOMMENDS THAT THE STOCKHOLDERS ACCEPT THE
OFFER AND TENDER THEIR SHARES (AS DEFINED HEREIN) PURSUANT TO THE OFFER.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (A) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT NUMBER OF
SHARES WHICH, WHEN COMBINED WITH ANY SHARES ALREADY OWNED BY MISYS PLC OR ITS
AFFILIATES AND SHARES SUBJECT TO THE STOCKHOLDERS AGREEMENTS (AS DEFINED HEREIN)
AND NOT TENDERED INTO THE OFFER, WOULD CONSTITUTE MORE THAN 50% OF THE
OUTSTANDING SHARES ON A FULLY DILUTED BASIS AND (B) ANY WAITING PERIOD UNDER THE
HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED, APPLICABLE TO
THE PURCHASE OF SHARES PURSUANT TO THE OFFER HAVING EXPIRED OR BEEN TERMINATED.
IN CONNECTION WITH THE OFFER, HOLDERS OF 1,587,783 SHARES, OR APPROXIMATELY 22%
OF THE OUTSTANDING SHARES AS OF DECEMBER 11, 1998, HAVE AGREED TO TENDER SUCH
SHARES PURSUANT TO THE OFFER. SEE "INTRODUCTION" AND SECTION 12.
------------------------
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
Shares should either (i) complete and sign the Letter of Transmittal (or a
facsimile thereof) in accordance with the instructions in the Letter of
Transmittal, have such stockholder's signature thereon guaranteed if required by
Instruction 1 to the Letter of Transmittal, mail or deliver the Letter of
Transmittal (or such facsimile), or, in the case of a book-entry transfer
effected pursuant to the procedure set forth in Section 2, an Agent's Message
(as defined herein), and any other required documents to the Depositary and
either deliver the certificates for such Shares to the Depositary along with the
Letter of Transmittal (or a facsimile thereof) or deliver such Shares pursuant
to the procedure for book-entry transfer set forth in Section 2 or (ii) request
such stockholder's broker, dealer, bank, trust company or other nominee to
effect the transaction for such stockholder. A stockholder having Shares
registered in the name of a broker, dealer, bank, trust company or other nominee
must contact such broker, dealer, bank, trust company or other nominee if such
stockholder desires to tender such Shares.
If a stockholder desires to tender Shares and such stockholder's
certificates for Shares are not immediately available or the procedure for
book-entry transfer cannot be completed on a timely basis, or time will not
permit all required documents to reach the Depositary prior to the expiration of
the Offer, such stockholder's tender may be effected by following the procedure
for guaranteed delivery set forth in Section 2.
Questions and requests for assistance or for additional copies of this
Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed
Delivery may be directed to the Information Agent or to the Dealer Manager at
their respective addresses and telephone numbers set forth on the back cover of
this Offer to Purchase.
------------------------
The Dealer Manager for the Offer is:
GREENHILL & CO., LLC
December 18, 1998
<PAGE> 2
TABLE OF CONTENTS
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PAGE
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INTRODUCTION................................................ 1
THE TENDER OFFER............................................ 3
1. Terms of the Offer................................... 3
2. Procedure for Tendering Shares....................... 4
3. Withdrawal Rights.................................... 7
4. Acceptance for Payment and Payment................... 8
5. Certain Federal Income Tax Consequences.............. 9
6. Price Range of the Shares; Dividends on the Shares... 10
7. Effect of the Offer on the Market for the Shares;
Stock Quotation; Exchange Act Registration; Margin
Regulations.......................................... 10
8. Certain Information Concerning the Company........... 11
9. Certain Information Concerning the Purchaser, USA Sub
and Parent........................................... 13
10. Source and Amount of Funds........................... 16
11. Contacts and Transactions with the Company;
Background of the Offer................................ 16
12. Purpose of the Offer; the Merger Agreement; Other
Agreements; Plans for the Company.................... 18
13. Dividends and Distributions.......................... 30
14. Certain Conditions of the Offer...................... 30
15. Certain Legal Matters................................ 32
16. Fees and Expenses.................................... 33
17. Miscellaneous........................................ 34
Schedule I -- Directors and Executive Officers.............. I-1
</TABLE>
<PAGE> 3
To the Holders of Shares of
C-ATS Software Inc.:
INTRODUCTION
Moxie Acquisition Corp., a Delaware corporation (the "Purchaser") and a
wholly-owned subsidiary of Kirsty, Inc., a Delaware corporation ("USA Sub") and
an indirect wholly-owned subsidiary of Misys plc, a public limited company
organized under the laws of England ("Parent"), hereby offers to purchase all
outstanding shares of Common Stock, par value $0.001 per share (the "Shares"),
of C-ATS Software Inc., a Delaware corporation (the "Company"), at $7.50 per
Share (the "Offer Price"), net to the seller in cash, without interest thereon,
upon the terms and subject to the conditions set forth in this Offer to Purchase
and in the related Letter of Transmittal (which, together with any amendments or
supplements hereto or thereto, collectively constitute the "Offer").
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, transfer taxes on the purchase of Shares pursuant to the Offer.
Parent will pay all fees and expenses of Greenhill & Co., LLC ("Greenhill"),
which is acting as Dealer Manager (the "Dealer Manager"), BankBoston, N.A.,
which is acting as the Depositary (the "Depositary"), and Corporate Investor
Communications, Inc., which is acting as Information Agent (the "Information
Agent"), incurred in connection with the Offer. See Section 16.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD") HAS UNANIMOUSLY
APPROVED THE OFFER AND THE MERGER (AS DEFINED BELOW) AND DETERMINED THAT THE
TERMS OF THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE
STOCKHOLDERS OF THE COMPANY AND RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS
ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER. THE FACTORS
CONSIDERED BY THE BOARD IN ARRIVING AT ITS DECISION TO APPROVE THE OFFER AND THE
MERGER AND TO RECOMMEND THAT STOCKHOLDERS OF THE COMPANY ACCEPT THE OFFER AND
TENDER THEIR SHARES ARE DESCRIBED IN THE COMPANY'S SOLICITATION/RECOMMENDATION
STATEMENT ON SCHEDULE 14D-9 (THE "SCHEDULE 14D-9"), WHICH IS BEING MAILED TO
STOCKHOLDERS OF THE COMPANY HEREWITH.
THE COMPANY HAS ADVISED PARENT AND THE PURCHASER THAT EACH MEMBER OF THE
BOARD AND EACH OF THE COMPANY'S EXECUTIVE OFFICERS INTENDS TO TENDER ALL SHARES
OWNED BY SUCH PERSONS PURSUANT TO THE OFFER, EXCEPT TO THE EXTENT OF ANY
RESTRICTIONS CREATED BY SECTION 16(B) OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED (THE "EXCHANGE ACT") AND EXCEPT THAT MR. ROD BECKSTROM MAY TRANSFER UP
TO 300,000 SHARES TO CHARITABLE INSTITUTIONS. IN ADDITION, SIMULTANEOUSLY WITH
THE EXECUTION AND DELIVERY OF THE MERGER AGREEMENT (AS HEREINAFTER DEFINED),
PARENT, USA SUB AND THE PURCHASER, ON THE ONE HAND, AND THE ROD A. BECKSTROM
TRUST, DAVID AND DIEDRA GILBERT, ROBERT GESKE, JERRY BOCK AND THE ROD A. AND
PATRICE V. BECKSTROM CHARITABLE REMAINDER TRUST (COLLECTIVELY, THE "CERTAIN
STOCKHOLDERS"), ON THE OTHER HAND, ENTERED INTO STOCKHOLDERS AGREEMENTS, EACH
DATED AS OF DECEMBER 14, 1998 (THE "STOCKHOLDERS AGREEMENTS"). THE STOCKHOLDERS
AGREEMENTS RELATE TO 1,587,783 SHARES OWNED BY THE CERTAIN STOCKHOLDERS, AS WELL
AS 460,000 SHARES SUBJECT TO STOCK OPTIONS (AS HEREINAFTER DEFINED). PURSUANT TO
THE STOCKHOLDERS AGREEMENTS, EACH CERTAIN STOCKHOLDER HAS AGREED, AMONG OTHER
THINGS, TO TENDER INTO THE OFFER, AND NOT TO WITHDRAW THEREFROM, THE 1,587,783
SHARES OWNED BY THE CERTAIN STOCKHOLDERS (EXCEPT TO THE EXTENT MR. BECKSTROM
MAKES CHARITABLE CONTRIBUTIONS AS DESCRIBED ABOVE), AS WELL AS ANY OTHER SHARES
ACQUIRED PRIOR TO THE EXPIRATION OF THE OFFER INCLUDING PURSUANT TO THE EXERCISE
OF STOCK OPTIONS, ANY WARRANTS OR SIMILAR INSTRUMENTS, AND HAS GRANTED TO THE
PURCHASER THE RIGHT TO PURCHASE ALL SHARES SUBJECT TO THE STOCKHOLDERS
AGREEMENTS IN THE EVENT THEY HAVE NOT BEEN TENDERED INTO THE OFFER FOR ANY
REASON, PROVIDED THAT THE PURCHASER SHALL HAVE ACCEPTED SHARES FOR PAYMENT UNDER
THE OFFER AND THE MINIMUM CONDITION SHALL HAVE BEEN SATISFIED. SEE SECTION 12.
THE COMPANY'S FINANCIAL ADVISOR, BROADVIEW INTERNATIONAL LLC, HAS DELIVERED
ITS OPINION TO THE BOARD DATED DECEMBER 9, 1998 THAT, AS OF SUCH DATE, AND
SUBJECT TO THE CONDITIONS AND LIMITATIONS SET FORTH THEREIN, THE CONSIDERATION
TO BE RECEIVED BY HOLDERS OF SHARES IN THE OFFER AND THE MERGER IS FAIR, FROM A
FINANCIAL POINT OF VIEW. SUCH OPINION IS SET FORTH IN FULL AS AN EXHIBIT TO THE
SCHEDULE 14D-9.
<PAGE> 4
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (a) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT NUMBER OF
SHARES WHICH, WHEN COMBINED WITH ANY SHARES ALREADY OWNED BY MISYS PLC OR ITS
AFFILIATES AND SHARES SUBJECT TO THE STOCKHOLDERS AGREEMENTS AND NOT TENDERED
INTO THE OFFER, WOULD REPRESENT MORE THAN 50% OF ALL OUTSTANDING SHARES ON A
FULLY DILUTED BASIS (THE "MINIMUM CONDITION") AND, (b) ANY WAITING PERIOD UNDER
THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED (THE "HSR
ACT"), APPLICABLE TO THE PURCHASE OF SHARES PURSUANT TO THE OFFER HAVING EXPIRED
OR BEEN TERMINATED (THE "HSR ACT CONDITION"). THE OFFER IS ALSO SUBJECT TO
CERTAIN OTHER TERMS AND CONDITIONS. FOR PURPOSES HEREOF, SHARES ON A FULLY
DILUTED BASIS MEANS ALL OUTSTANDING SECURITIES ENTITLED GENERALLY TO VOTE IN THE
ELECTION OF DIRECTORS OF THE COMPANY ON A FULLY DILUTED BASIS, AFTER GIVING
EFFECT TO THE EXERCISE OR CONVERSION OF ALL OPTIONS, WARRANTS, RIGHTS AND
SECURITIES EXERCISABLE OR CONVERTIBLE INTO SUCH VOTING SECURITIES. THE OFFER
WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON TUESDAY, JANUARY 19, 1999,
UNLESS EXTENDED. SEE SECTIONS 1 AND 14.
The Company has informed the Purchaser that, as of December 11, 1998, there
were 7,123,577 Shares outstanding and 1,792,550 Shares authorized for issuance
pursuant to the exercise of outstanding options to purchase Shares ("Stock
Options"). As a result, as of such date, the Minimum Condition would be
satisfied if the Purchaser acquired 4,458,064 Shares. Pursuant to the
Stockholders Agreements, the Certain Stockholders have agreed to tender
1,587,783 Shares in the Offer as well as any other Shares acquired prior to the
expiration of the Offer including pursuant to the exercise of stock options, any
warrants or similar instruments.
The Offer is being made pursuant to the Agreement and Plan of Merger dated
as of December 14, 1998 (the "Merger Agreement"), among Parent, USA Sub, the
Purchaser and the Company pursuant to which, as soon as practicable following
the consummation of the Offer and the satisfaction or waiver of certain
conditions, the Purchaser will be merged with and into the Company (the
"Merger"), with the Company (the "Surviving Corporation") surviving the Merger
as an indirect wholly-owned subsidiary of Parent. At the effective time of the
Merger (the "Effective Time"), each outstanding Share (other than Shares held by
stockholders who perfect their appraisal rights under Delaware law, Shares owned
by the Company as treasury stock and Shares owned by Parent or any direct or
indirect wholly-owned subsidiary of Parent or of the Company) will be converted
into the right to receive $7.50 in cash (the "Per Share Merger Consideration"),
without interest. The Merger is subject to a number of conditions, including the
adoption of the Merger Agreement by stockholders of the Company, if required by
applicable law. In the event the Purchaser acquires 90% or more of the
outstanding Shares pursuant to the Offer or otherwise, the Purchaser would be
able to, and intends to, effect the Merger pursuant to the short-form merger
provisions of the Delaware General Corporation Law (the "DGCL"), without prior
notice to, or any action by, the Board or any other stockholder of the Company.
The Company has granted the Purchaser an option (the "Top-Up Option") to acquire
sufficient Shares from the Company (up to a maximum number of Shares equal to
19.9% of the Shares then issued and outstanding) so that, if the Purchaser
purchases Shares pursuant to the Offer and the Minimum Condition is satisfied,
and subject to certain additional conditions, the Purchaser may increase its
percentage ownership of the Shares to 90.1%. See Section 12.
The Merger Agreement provides that, promptly upon the purchase by the
Purchaser of Shares pursuant to the Offer, the Purchaser shall be entitled,
subject to compliance with Section 14(f) of the Exchange Act, to designate up to
such number of directors, rounded up to the next whole number, on the Board as
shall give the Purchaser representation on the Board equal to the product of the
total number of directors on the Board (giving effect to the directors elected
pursuant to this sentence) multiplied by the percentage that the aggregate
number of Shares beneficially owned by Parent, the Purchaser or any of their
affiliates at such time bears to the total number of Shares then outstanding
(provided that, if Parent, the Purchaser and their affiliates beneficially own
in the aggregate at least a majority of the Shares, the Purchaser shall in any
event be entitled to designate at least a majority of the directors on the
Board), and the Company shall, at such time, promptly take all actions necessary
to cause the Purchaser's designees to be elected as directors of the Company.
However, until the Effective Time, the Board shall have at least one director
who is a director of the Company on the date of this Agreement and who is not an
officer of the Company or any of its subsidiaries. The Merger Agreement is more
fully described in Section 12.
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No appraisal rights are available in connection with the Offer. However,
stockholders may have appraisal rights in connection with the Merger, regardless
of whether the Merger is consummated with or without a vote of the Company's
stockholders. See Section 12.
Certain United States federal income tax consequences of the sale of Shares
pursuant to the Offer are described in Section 5.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION THAT SHOULD BE READ BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
THE TENDER OFFER
1. TERMS OF THE OFFER
Upon the terms and subject to the conditions of the Offer, the Purchaser
will accept for payment and pay for all Shares validly tendered prior to the
Expiration Date and not theretofore withdrawn in accordance with Section 3. The
term "Expiration Date" means 12:00 midnight, New York City time, on January 19,
1999, unless and until the Purchaser shall have extended the period of time
during which the Offer is open, in which event the term "Expiration Date" shall
mean the latest time and date at which the Offer, as so extended by the
Purchaser, will expire.
Pursuant to the terms of the Merger Agreement, the Purchaser may not waive
the Minimum Condition without the consent of the Company. The Purchaser,
however, expressly reserves the right to modify the other terms of the Offer,
except that, without the consent of the Company, the Purchaser shall not (a)
reduce the number of Shares to be subject to the Offer, (b) reduce the Offer
Price, (c) impose additional conditions to the Offer, (d) extend the Offer,
except as provided in the next paragraph, (e) change the form of consideration
payable in the Offer, (f) extend the expiration date of the Offer (except as set
forth below) or (g) otherwise amend the Offer in any manner adverse to the
holders of Shares.
Notwithstanding the foregoing, the Purchaser may, without the consent of
the Company, extend the expiration date of the Offer (a) as required to comply
with any rule, regulation or interpretation of the Securities and Exchange
Commission (the "SEC"), (b) if at the scheduled or extended expiration date of
the Offer any of the conditions to the Offer have not been satisfied or waived,
until such time as all such conditions are satisfied or waived or, (c) provided
that at least 90% of the Shares have not been tendered, for one or more times
for a total number of days in the aggregate pursuant to this clause (c) not to
exceed 20 for any reason other than those specified in the immediately preceding
clauses (a) and (b). In addition, Parent and the Purchaser have agreed in the
Merger Agreement that if all of the conditions to the Offer are not satisfied on
any scheduled expiration date of the Offer then, provided that all such
conditions are reasonably capable of being satisfied by the commercially
reasonable best efforts of Parent, the Purchaser and the Company, the Purchaser
shall extend the Offer from time to time until such conditions are satisfied or
waived, provided that the Purchaser shall not be required by the Company to
extend the Offer for a total of 20 days beyond the initial expiration date of
the Offer.
Subject to the terms of the Merger Agreement and applicable rules and
regulations of the SEC, the Purchaser reserves the right, in its sole
discretion, at any time and from time to time, and regardless of whether or not
any of the events or facts set forth in Section 14 hereof shall have occurred,
to (a) extend the period of time during which the Offer is open and thereby
delay acceptance for payment of and the payment for any Shares, by giving oral
or written notice of such extension to the Depositary and (b) except as set
forth above, amend the Offer in any other respect by giving oral or written
notice of such amendment to the Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST
BE PAID ON THE PURCHASE PRICE FOR TENDERED SHARES, WHETHER OR NOT THE PURCHASER
EXERCISES ITS RIGHT TO EXTEND THE OFFER.
If by 12:00 midnight, New York City time, on Tuesday, January 19, 1999 (or
any date or time then set as the Expiration Date), any of or all the conditions
to the Offer have not been satisfied or waived, the Purchaser reserves the right
(but shall not be obligated), subject to the terms and conditions contained in
the Merger
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<PAGE> 6
Agreement and to the applicable rules and regulations of the SEC, to (a)
terminate the Offer and not accept for payment or pay for any Shares and return
all tendered Shares to tendering stockholders, (b) except as set forth above
with respect to the Minimum Condition, waive all the unsatisfied conditions and
accept for payment and pay for all Shares validly tendered prior to the
Expiration Date and not theretofore withdrawn, (c) extend the Offer and, subject
to the right of stockholders to withdraw shares until the Expiration Date,
retain the Shares that have been tendered during the period or periods for which
the Offer is extended or (d) amend the Offer.
There can be no assurance that the Purchaser will exercise its right to
extend the Offer. Any extension, amendment or termination will be followed as
promptly as practicable by public announcement. In the case of an extension,
Rule 14e-1(d) under the Exchange Act requires that the announcement be issued no
later than 9:00 a.m., New York City time, on the next business day after the
previously scheduled Expiration Date in accordance with the public announcement
requirements of Rule 14d-4(c) under the Exchange Act. Subject to applicable law
(including Rules 14d-4(c) and 14d-6(d) under the Exchange Act, which require
that any material change in the information published, sent or given to
stockholders in connection with the Offer be promptly disseminated to
stockholders in a manner reasonably designed to inform stockholders of such
change), and without limiting the manner in which the Purchaser may choose to
make any public announcement, the Purchaser will not have any obligation to
publish, advertise or otherwise communicate any such public announcement other
than by making a release to the Dow Jones News Service.
If the Purchaser extends the Offer or if the Purchaser is delayed in its
acceptance for payment of or payment for Shares (whether before or after its
acceptance for payment of Shares) or it is unable to accept for payment or pay
for Shares pursuant to the Offer for any reason, then, without prejudice to the
Purchaser's rights under the Offer (but subject to compliance with Rule 14e-1(c)
under the Exchange Act, which requires that a tender offeror pay the
consideration offered or return the tendered securities promptly after
termination or withdrawal of a tender offer, and the terms of the Merger
Agreement), the Depositary may nevertheless, on behalf of the Purchaser, retain
tendered Shares, and such Shares may not be withdrawn except to the extent
tendering stockholders are entitled to exercise, and duly exercise, withdrawal
rights as described in Section 3.
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer,
the Purchaser will disseminate additional tender offer materials and extend the
Offer to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the
Exchange Act. The minimum period during which an offer must remain open
following material changes in the terms of the Offer or information concerning
the Offer, other than a change in price or a change in the percentage of
securities sought, will depend upon the facts and circumstances then existing,
including the relative materiality of the changed terms or information. With
respect to a change in price or a change in the percentage of securities sought,
a minimum period of 10 business days is generally required to allow for adequate
dissemination to stockholders.
The Company has provided the Purchaser with the Company's stockholder list
and security position listing for the purpose of disseminating the Offer to
holders of Shares. This Offer to Purchase, the related Letter of Transmittal and
other relevant materials will be mailed by the Purchaser to record holders of
Shares and will be furnished to brokers, dealers, banks, trust companies and
similar persons whose names, or the names of whose nominees, appear on the
Company's stockholder list, or, if applicable, who are listed as participants in
a clearing agency's security position listing, for subsequent transmittal to
beneficial owners of Shares.
2. PROCEDURE FOR TENDERING SHARES
Valid Tender. For a stockholder validly to tender Shares pursuant to the
Offer, either (a) a properly completed and duly executed Letter of Transmittal
(or a facsimile thereof), together with any required signature guarantees and
any other required documents, must be received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase prior to the
Expiration Date and either certificates for tendered Shares must be received by
the Depositary at one of such addresses or such Shares must be delivered
pursuant to the procedures for book-entry transfer set forth below (and a
confirmation of
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<PAGE> 7
such delivery, including an Agent's Message (as defined below), must be received
by the Depositary), in each case prior to the Expiration Date or (b) the
tendering stockholder must comply with the guaranteed delivery procedures set
forth below.
The Depositary will establish an account with respect to the Shares at The
Depository Trust Company (the "Book-Entry Transfer Facility") for purposes of
the Offer within two business days after the date of this Offer to Purchase. Any
financial institution that is a participant in the Book-Entry Transfer
Facility's systems may make book-entry delivery of Shares by causing the
Book-Entry Transfer Facility to transfer such Shares into the Depositary's
account in accordance with the Book-Entry Transfer Facility's procedures for
such transfer. However, although delivery of Shares may be effected through
book-entry transfer into the Depositary's account at the Book-Entry Transfer
Facility, the Letter of Transmittal (or a facsimile thereof), properly completed
and duly executed, with any required signature guarantees, or an Agent's Message
(as defined below), and any other required documents, must, in any case, be
transmitted to, and received by, the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase prior to the Expiration Date,
or the tendering stockholder must comply with the guaranteed delivery procedures
described below. The confirmation of a book-entry transfer of Shares into the
Depositary's account at the Book-Entry Transfer Facility as described above is
referred to herein as a "Book-Entry Confirmation." DELIVERY OF DOCUMENTS TO THE
BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH SUCH BOOK-ENTRY TRANSFER
FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that the Book-Entry Transfer Facility has
received an express acknowledgment from the participant in the Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Purchaser may enforce such agreement against the participant.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY,
IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. SHARES WILL BE DEEMED
DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE
OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal (a) if the Letter of Transmittal is signed by the registered
holder(s) of Shares (which term, for purposes of this Section, includes any
participant in any of the Book-Entry Transfer Facility's systems whose name
appears on a security position listing as the owner of the Shares) tendered
therewith and such registered holder has not completed either the box entitled
"Special Delivery Instructions" or the box entitled "Special Payment
Instructions" on the Letter of Transmittal or (b) if such Shares are tendered
for the account of a firm that is a participant in the Security Transfer Agents
Medallion Program or the New York Stock Exchange Guarantee Program or the Stock
Exchange Medallion Program or by any other "eligible guarantor institution", as
such term is defined in Rule 17Ad-15 under the Exchange Act (each, an "Eligible
Institution"). In all other cases, all signatures on the Letter of Transmittal
must be guaranteed by an Eligible Institution. See Instructions 1 and 5 to the
Letter of Transmittal. If the certificates for Shares are registered in the name
of a person other than the signer of the Letter of Transmittal, or if payment is
to be made or certificates for Shares not tendered or not accepted for payment
are to be returned to a person other than the registered holder of the
certificates surrendered, the tendered certificates for such Shares must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name or names of the registered holders or owners appear on the
certificates, with the signatures on the certificates or stock powers guaranteed
in the manner described above. See Instructions 1 and 5 to the Letter of
Transmittal.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's certificates for Shares are not immediately
available or the procedures for book-entry transfer cannot be completed on a
timely basis or time will not permit all required documents to reach the
Depositary prior to the Expiration Date, such stockholder's tender may be
effected if all the following conditions are met:
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<PAGE> 8
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Purchaser, is received
by the Depositary, as provided below, prior to the Expiration Date; and
(iii) the certificates for all tendered Shares, in proper form for
transfer (or a Book-Entry Confirmation with respect to all such Shares),
together with a properly completed and duly executed Letter of Transmittal
(or a facsimile thereof), with any required signature guarantees, or, in
the case of a book-entry transfer, an Agent's Message, and any other
required documents are received by the Depositary within three trading days
after the date of execution of such Notice of Guaranteed Delivery. A
"trading day" is any day on which the Nasdaq National Market (the "Nasdaq
National Market") operated by the National Association of Securities
Dealers, Inc. (the "NASD") is open for business.
The Notice of Guaranteed Delivery may be delivered by hand to the
Depositary or transmitted by telegram, facsimile transmission or mail to the
Depositary and must include a guarantee by an Eligible Institution in the form
set forth in such Notice of Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of (a) certificates for (or a timely Book-Entry
Confirmation with respect to) such Shares, (b) a Letter of Transmittal (or a
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or, in the case of a book-entry transfer, an Agent's
Message, and (c) any other documents required by the Letter of Transmittal.
Accordingly, tendering stockholders may be paid at different times depending
upon when certificates for Shares or Book-Entry Confirmations with respect to
such Shares are actually received by the Depositary. UNDER NO CIRCUMSTANCES WILL
ANY INTEREST BE PAID ON THE PURCHASE PRICE OF THE SHARES, REGARDLESS OF ANY
EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
The valid tender of Shares pursuant to one of the procedures described
above will constitute a binding agreement between the tendering stockholder and
the Purchaser upon the terms and subject to the conditions of the Offer.
Appointment. By executing a Letter of Transmittal as set forth above, the
tendering stockholder will irrevocably appoint designees of the Purchaser as
such stockholder's attorneys-in-fact and proxies in the manner set forth in the
Letter of Transmittal, each with full power of substitution, to the full extent
of such stockholder's rights with respect to the Shares tendered by such
stockholder and accepted for payment by the Purchaser and with respect to any
and all other Shares or other securities or rights issued or issuable in respect
of such Shares. All such proxies will be considered coupled with an interest in
the tendered Shares. Such appointment will be effective when, and only to the
extent that, the Purchaser accepts for payment Shares tendered by such
stockholder as provided herein. Upon such appointment, all prior powers of
attorney, proxies and consents given by such stockholder with respect to such
Shares or other securities or rights will, without further action, be revoked
and no subsequent powers of attorney, proxies, consents or revocations may be
given (and, if given, will not be deemed effective). The designees of the
Purchaser will thereby be empowered to exercise all voting and other rights with
respect to such Shares and other securities or rights in respect of any annual,
special or adjourned meeting of the Company's stockholders, actions by written
consent in lieu of any such meeting or otherwise, as they in their sole
discretion deem proper. The Purchaser reserves the right to require that, in
order for Shares to be deemed validly tendered, immediately upon the Purchaser's
acceptance for payment of such Shares, the Purchaser must be able to exercise
full voting, consent and other rights with respect to such Shares and other
securities or rights, including voting at any meeting of stockholders.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of any tender of Shares
will be determined by the Purchaser in its sole discretion, which determination
will be final and binding. The Purchaser reserves the absolute right to reject
any or all tenders determined by it not to be in proper form or the acceptance
for payment of or payment for which may, in the opinion of the Purchaser's
counsel, be unlawful. The Purchaser also reserves the absolute right to waive
any defect or irregularity in the tender of any Shares of any particular
stockholder whether or not similar defects or
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<PAGE> 9
irregularities are waived in the case of other stockholders. No tender of Shares
will be deemed to have been validly made until all defects or irregularities
relating thereto have been cured or waived. None of the Purchaser, Parent, USA
Sub, the Depositary, the Information Agent, the Dealer Manager or any other
person will be under any duty to give notification of any defects or
irregularities in tenders or incur any liability for failure to give any such
notification. The Purchaser's interpretation of the terms and conditions of the
Offer (including the Letter of Transmittal and the instructions thereto) will be
final and binding.
Backup Withholding. In order to avoid "backup withholding" on payments of
cash pursuant to the Offer or the Merger (including cash paid pursuant to the
exercise of appraisal rights), a stockholder surrendering Shares in the Offer or
the Merger must, unless an exemption applies, provide the Depositary with such
stockholder's correct taxpayer identification number ("TIN") on a Substitute
Form W-9 and certify under penalties of perjury that such TIN is correct and
that such stockholder is not subject to backup withholding. If a stockholder
does not provide such stockholder's correct TIN or fails to provide the
certifications described above, the Internal Revenue Service (the "IRS") may
impose a penalty on such stockholder and payment of cash to such stockholder
pursuant to the Offer or the Merger may be subject to backup withholding of 31%.
All stockholders surrendering Shares pursuant to the Offer should complete and
sign the Substitute Form W-9 included as part of the Letter of Transmittal to
provide the information and certification necessary to avoid backup withholding
(unless an applicable exemption exists and is proved in a manner satisfactory to
the Purchaser and the Depositary). Certain stockholders (including, among
others, all corporations and certain non-U.S. individuals and entities) are not
subject to backup withholding. Non-U.S. stockholders should complete and sign a
Form W-8, Certificate of Foreign Status, a copy of which may be obtained from
the Depositary, in order to avoid backup withholding. See Instruction 9 to the
Letter of Transmittal.
3. WITHDRAWAL RIGHTS
Except as otherwise provided in this Section 3, tenders of Shares are
irrevocable. Shares tendered pursuant to the Offer may be withdrawn pursuant to
the procedures set forth below at any time prior to the Expiration Date and,
unless theretofore accepted for payment and paid for by the Purchaser pursuant
to the Offer, may also be withdrawn at any time after Tuesday, February 16,
1999.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase and
must specify the name of the person having tendered the Shares to be withdrawn,
the number of Shares to be withdrawn and the name of the registered holder of
the Shares to be withdrawn, if different from the name of the person who
tendered the Shares. If certificates for Shares have been delivered or otherwise
identified to the Depositary, then, prior to the physical release of such
certificates, the serial numbers shown on such certificates must be submitted to
the Depositary and, unless such Shares have been tendered by an Eligible
Institution, the signatures on the notice of withdrawal must be guaranteed by an
Eligible Institution. If Shares have been delivered pursuant to the procedure
for book-entry transfer as set forth in Section 2, any notice of withdrawal must
also specify the name and number of the account at the Book-Entry Transfer
Facility to be credited with the withdrawn Shares and otherwise comply with such
Book-Entry Transfer Facility's procedures. Withdrawals of tenders of Shares may
not be rescinded, and any Shares properly withdrawn will thereafter be deemed
not validly tendered for purposes of the Offer. However, withdrawn Shares may be
retendered by again following one of the procedures described in Section 2 at
any time prior to the Expiration Date.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser in its sole
discretion, which determination will be final and binding. None of the
Purchaser, Parent, USA Sub, the Depositary, the Information Agent, the Dealer
Manager or any other person will be under any duty to give notification of any
defects or irregularities in any notice of withdrawal or incur any liability for
failure to give any such notification.
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<PAGE> 10
4. ACCEPTANCE FOR PAYMENT AND PAYMENT
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), the Purchaser will accept for payment and will pay for all Shares
validly tendered prior to the Expiration Date, and not properly withdrawn in
accordance with Section 3, promptly after the Expiration Date. All questions as
to the satisfaction of such terms and conditions will be determined by the
Purchaser in its sole discretion, which determination will be final and binding.
See Sections 1 and 14. The Purchaser expressly reserves the right, in its sole
discretion, to delay acceptance for payment of or payment for Shares in order to
comply in whole or in part with any applicable law, including, without
limitation, the HSR Act. Any such delays will be effected in compliance with
Rule 14e-1(c) under the Exchange Act, which requires that a tender offeror pay
the consideration offered or return the tendered securities promptly after
termination or withdrawal of a tender offer.
On December 14, 1998, Parent filed a Notification and Report Form with
respect to the Offer under the HSR Act. The waiting period under the HSR Act
with respect to the Offer will expire at 11:59 p.m., New York City time, on
December 29, 1998, unless early termination of the waiting period is granted.
However, the Antitrust Division of the Department of Justice (the "Antitrust
Division") or the Federal Trade Commission (the "FTC") may extend the waiting
period by requesting additional information or documentary material from Parent.
If such a request is made, such waiting period will expire at 11:59 p.m., New
York City time, on the 10th day after substantial compliance by Parent with such
request. See Section 15.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (a) certificates for
(or a timely Book-Entry Confirmation with respect to) such Shares, (b) a Letter
of Transmittal (or a facsimile thereof), properly completed and duly executed,
with any required signature guarantees, or, in the case of a book-entry
transfer, an Agent's Message, and (c) any other documents required by the Letter
of Transmittal. The per Share consideration paid to any stockholder pursuant to
the Offer will be the highest per Share consideration paid to any other holder
of Shares pursuant to the Offer.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment, and thereby purchased, Shares properly tendered to the Purchaser
and not withdrawn as, if and when the Purchaser gives oral or written notice to
the Depositary of the Purchaser's acceptance for payment of such Shares. Payment
for Shares accepted for payment pursuant to the Offer will be made by deposit of
the purchase price therefor with the Depositary, which will act as agent for
tendering stockholders for the purpose of receiving payment from the Purchaser
and transmitting payment to tendering stockholders. UNDER NO CIRCUMSTANCES WILL
INTEREST BE PAID ON THE PURCHASE PRICE OF ANY SHARES TO BE PAID BY THE
PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH
PAYMENT.
If the Purchaser extends the Offer or if the Purchaser is delayed in its
acceptance for payment of or payment for Shares (whether before or after its
acceptance for payment of Shares) or it is unable to accept for payment or pay
for Shares pursuant to the Offer for any reason, then, without prejudice to the
Purchaser's rights under the Offer (but subject to compliance with Rule 14e-1(c)
under the Exchange Act, which requires that a tender offeror pay the
consideration offered or return the tendered securities promptly after
termination or withdrawal of a tender offer, and the terms of the Merger
Agreement), the Depositary may, nevertheless, on behalf of the Purchaser, retain
tendered Shares, and such Shares may not be withdrawn except to the extent
tendering stockholders are entitled to exercise, and duly exercise, withdrawal
rights as described in Section 3.
If any tendered Shares are not purchased pursuant to the Offer for any
reason, certificates for any such Shares will be returned without expense to the
tendering stockholder (or, in the case of Shares delivered by book-entry
transfer of such Shares into the Depositary's account at a Book-Entry Transfer
Facility pursuant to the procedure set forth in Section 2, such Shares will be
credited to an account maintained at the Book-Entry Transfer Facility) as
promptly as practicable after the expiration or termination of the Offer.
The Purchaser reserves the right to transfer or assign, in whole or from
time to time in part, to Parent, or to an affiliate of Parent, the right to
purchase Shares tendered pursuant to the Offer, but any such transfer or
8
<PAGE> 11
assignment will not relieve the Purchaser of its obligations under the Offer and
will in no way prejudice the rights of tendering stockholders to receive payment
for Shares validly tendered and accepted for payment pursuant to the Offer.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a general discussion of certain United States federal
income tax consequences of the receipt of cash pursuant to the Offer or the
Merger by a U.S. Holder of Shares. This discussion is based upon existing United
States federal income tax law, including legislation, regulations,
administrative rulings and court decisions, as in effect on the date of this
Offer to Purchase, all of which are subject to change, possibly with retroactive
effect. For purposes of this discussion, a "U.S. Holder" means a beneficial
holder of Shares that is (i) an individual citizen or resident of the United
States, (ii) a corporation created or organized in or under the laws of the
United States, any state thereof or the District of Columbia or (iii) a
partnership, trust or estate treated, for United States federal income tax
purposes, as a domestic partnership, trust or estate. This discussion does not
discuss all aspects of United States federal income taxation that may be
relevant to all U.S. Holders in light of their particular circumstances, such as
U.S. Holders whose stock was acquired pursuant to the exercise of an employee
stock option or otherwise as compensation, U.S. Holders who are subject to
special treatment under the United States federal income tax laws (for example,
financial institutions, insurance companies, tax-exempt organizations and
broker-dealers) or to holders of Shares that are not U.S. Holders. This
discussion also does not address any aspects of state, local or non-United
States tax law.
The receipt of cash for Shares pursuant to the Offer or the Merger
(including any cash received pursuant to the exercise of appraisal rights) will
be a taxable transaction for United States federal income tax purposes.
Generally, for United States federal income tax purposes, a U.S. Holder will
recognize gain or loss equal to the difference between the amount of cash
received by the U.S. Holder pursuant to the Offer or the Merger and the U.S.
Holder's aggregate tax basis in the Shares surrendered. Gain or loss will be
calculated separately for each block of Shares (i.e., Shares acquired at the
same time and price) so surrendered.
Assuming the U.S. Holder holds its Shares as a capital asset, gain or loss
will generally be capital gain or loss. Capital gains of individuals, estates
and trusts generally are subject to a maximum United States federal income tax
rate of 20% if the U.S. Holder's holding period for such Shares exceeds 12
months. Shares held for less than 12 months may be subject to ordinary income
tax rates of up to 39.6% for individuals. Capital gains of corporations
generally are taxed at the United States federal income tax rates applicable to
corporate ordinary income. In addition, under present law, the ability to use
capital losses to offset ordinary income is limited.
A stockholder that exchanges Shares pursuant to the Offer or the Merger may
be subject to 31% backup withholding unless the stockholder provides its TIN and
certifies that such TIN is correct or properly certifies that it is awaiting a
TIN, or unless an exemption applies. A stockholder that does not furnish its TIN
may be subject to a penalty imposed by the IRS. See "-- Backup Withholding"
under Section 2.
If backup withholding applies to a stockholder, the Depositary is required
to withhold 31% from payments to such stockholder. Backup withholding is not an
additional tax. Rather, the amount of the backup withholding can be credited
against the United States federal income tax liability of the person subject to
the backup withholding, provided that the required information is given to the
IRS. If backup withholding results in an overpayment of tax, a refund can be
obtained by the stockholder upon filing an income tax return.
EACH U.S. HOLDER IS STRONGLY ADVISED TO CONSULT HIS OR HER OWN TAX ADVISERS
AS TO THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE OFFER AND THE
MERGER, INCLUDING THE PARTICULAR FACTS AND CIRCUMSTANCES THAT MAY BE UNIQUE TO
SUCH U.S. HOLDER, AND AS TO ANY ESTATE, GIFT, STATE, LOCAL OR NON-UNITED STATES
TAX CONSEQUENCES OF THE OFFER AND THE MERGER.
9
<PAGE> 12
6. PRICE RANGE OF THE SHARES; DIVIDENDS ON THE SHARES
The Shares are quoted on the Nasdaq National Market under the symbol
"CATX".
The following table sets forth, for each of the periods indicated, the high
and low last sales prices per Share, as reported in published financial sources.
<TABLE>
<CAPTION>
PRICES OF SHARES
----------------
CALENDAR YEAR HIGH LOW
- ------------- ------ ------
<S> <C> <C>
1996
First Quarter............................................. $7.875 $5.875
Second Quarter............................................ 7.500 5.625
Third Quarter............................................. 6.250 4.875
Fourth Quarter............................................ 5.125 4.375
1997
First Quarter............................................. 5.875 4.375
Second Quarter............................................ 5.125 4.125
Third Quarter............................................. 7.375 4.500
Fourth Quarter............................................ 6.000 5.000
1998
First Quarter............................................. 5.500 4.250
Second Quarter............................................ 7.500 5.125
Third Quarter............................................. 5.875 3.875
Fourth Quarter (through December 17, 1998)................ 7.375 3.438
</TABLE>
On December 11, 1998, the last full trading day before the first public
announcement of the execution of the Merger Agreement, the last reported sales
price of the Shares on the Nasdaq National Market was $4.686 per Share. On
December 17, 1998, the last full trading day before the commencement of the
Offer, the last reported sales price of the Shares on the Nasdaq National Market
was $7.219 per Share.
The Purchaser has been advised by the Company that the Company has never
paid any cash dividends on the Shares.
STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE SHARES.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; STOCK QUOTATION; EXCHANGE
ACT REGISTRATION; MARGIN REGULATIONS
Market for the Shares.
The purchase of Shares pursuant to the Offer will reduce the number of
holders of Shares and the number of Shares that might otherwise trade publicly
and could adversely affect the liquidity and market value of the remaining
Shares held by the public.
Stock Quotation.
Depending upon the number of Shares purchased pursuant to the Offer, the
Shares may no longer meet the requirements of the NASD for continued inclusion
in the Nasdaq National Market, which among other things require that an issuer
have either (i) at least 750,000 publicly held shares, held by at least 400
stockholders of round lots, with a market value of at least $5,000,000 and net
tangible assets of at least $4,000,000 and at least two registered and active
market makers for the shares or (ii) at least 1,100,000 publicly held shares,
held by at least 400 stockholders of round lots, with a market value of at least
$15,000,000, and either (x) a market capitalization of at least $50,000,000 or
(y) total assets and total revenue of at least $50,000,000 each for the most
recently completed fiscal year or two of the last three most recently completed
fiscal years and at least four registered and active market markers. The Shares
might nevertheless continue to be included in the NASD's Nasdaq Stock Market
(the "Nasdaq Stock Market") with quotations
10
<PAGE> 13
published in the Nasdaq "additional list" or in one of the "local lists", but if
the number of holders of the Shares were to fall below 300, or if the number of
publicly held Shares were to fall below 100,000 or there were not at least two
registered and active market makers for the Shares, the NASD's rules provide
that the Shares would no longer be "qualified" for Nasdaq Stock Market reporting
and the Nasdaq Stock Market would cease to provide any quotations. Shares held
directly or indirectly by directors, officers or beneficial owners of more than
10% of the Shares are not considered as being publicly held for this purpose.
If, as a result of the purchase of Shares pursuant to the Offer or otherwise,
the Shares no longer meet the requirements of the NASD for continued inclusion
in the Nasdaq National Market or in any other tier of the Nasdaq Stock Market
and the Shares are no longer included in the Nasdaq National Market or in any
other tier of the Nasdaq Stock Market, as the case may be, the market for Shares
could be adversely affected.
In the event that the Shares no longer meet the requirements of the NASD
for continued inclusion in any tier of the Nasdaq Stock Market, it is possible
that the Shares would continue to trade in the over-the-counter market and that
price quotations would be reported by other sources. The extent of the public
market for the Shares and the availability of such quotations would, however,
depend upon the number of holders of Shares remaining at such time, the interest
in maintaining a market in Shares on the part of securities firms, the possible
termination of registration of the Shares under the Exchange Act, as described
below, and other factors.
Exchange Act Registration.
The Shares are currently registered under the Exchange Act. Registration of
the Shares under the Exchange Act may be terminated upon application of the
Company to the SEC if the Shares are not listed on a national securities
exchange, quoted on an automated inter-dealer quotation system or held by 300 or
more holders of record. Termination of registration of the Shares under the
Exchange Act would substantially reduce the information required to be furnished
by the Company to its stockholders and to the SEC and would make certain
provisions of the Exchange Act no longer applicable to the Company, such as the
short-swing profit recovery provisions of Section 16(b) of the Exchange Act, the
requirement of furnishing a proxy statement pursuant to Section 14(a) of the
Exchange Act in connection with stockholders' meetings and the related
requirement of furnishing an annual report to stockholders and the requirements
of Rule 13e-3 under the Exchange Act with respect to "going private"
transactions. Furthermore, the ability of "affiliates" of the Company and
persons holding "restricted securities" of the Company to dispose of such
securities pursuant to Rule 144 or 144A promulgated under the Securities Act of
1933, as amended (the "Securities Act"), may be impaired or eliminated. The
Purchaser intends to seek to cause the Company to apply for termination of
registration of the Shares under the Exchange Act as soon after the completion
of the Offer as the requirements for such termination are met.
If public quotation and registration of the Shares is not terminated prior
to the Merger, then the Shares will no longer be quoted and the registration of
the Shares under the Exchange Act will be terminated following the consummation
of the Merger.
Margin Regulations.
The Shares are currently "margin securities" under the regulations of the
Board of Governors of the Federal Reserve System (the "Federal Reserve Board"),
which has the effect, among other things, of allowing brokers to extend credit
on the collateral of the Shares. Depending upon factors similar to those
described above regarding listing and market quotations, it is possible that,
following the Offer, the Shares would no longer constitute "margin securities"
for the purposes of the margin regulations of the Federal Reserve Board and
therefore could no longer be used as collateral for loans made by brokers. In
any event, the Shares will cease to be "margin securities" if registration of
the Shares under the Exchange Act is terminated.
8. CERTAIN INFORMATION CONCERNING THE COMPANY
The Company is a Delaware corporation with its principal offices at 1870
Embarcadero Road, Palo Alto, CA 94303. The Company and its subsidiaries are
principally engaged in supplying client/server software
11
<PAGE> 14
products for financial risk management, including capital markets software for
derivatives risk management and enterprise risk management, to the worldwide
financial services industry.
Set forth below is certain selected consolidated financial information with
respect to the Company and its subsidiaries excerpted from the information
contained in the Company's Annual Reports on Form 10-K for the fiscal years
ended December 31, 1997 and 1996 and the Company's Report on Form 10-Q for the
nine months ended September 30, 1998. More comprehensive financial information
is included in such reports and other documents filed by the Company with the
SEC, and the following summary is qualified in its entirety by reference to such
reports and such other documents and all the financial information (including
any related notes) contained therein. Such reports and such other documents
should be available for inspection and copies thereof should be obtainable in
the manner set forth below under "-- Available Information."
C-ATS SOFTWARE INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
($ MILLIONS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------------ --------------------------
1998 1997 1997 1996 1995
------- ------- ------ ------ ------
<S> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS INFORMATION:
Total Revenues................................ $ 15.1 $ 13.7 $18.5 $20.1 $ 22.3
Operating Income (Loss)....................... (0.9) (2.8) (3.5) (7.1) 4.4
Income (Loss) Before Provision for Income
Taxes....................................... (0.1) (2.1) (2.6) (6.2) 5.4
Net Income (Loss)............................. (0.6) (2.1) (2.6) (6.2) 3.5
Net Income (Loss) Per Share (Basic)........... (0.09) (0.32) (0.38) (0.95) 0.64
</TABLE>
<TABLE>
<CAPTION>
AT SEPTEMBER 30, AT DECEMBER 31,
---------------- --------------------------
1998 1997 1997 1996 1995
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET INFORMATION:
Working Capital............................... $17.1 $17.5 $17.2 $19.8 $ 21.6
Total Assets.................................. 29.2 30.8 30.6 33.0 38.5
Total Liabilities............................. 9.8 10.7 11.0 11.1 15.6
Total Stockholders' Equity.................... 19.4 20.1 19.7 21.9 22.9
</TABLE>
Available Information. The Company is subject to the informational
requirements of the Exchange Act and, in accordance therewith, is required to
file reports relating to its business, financial condition and other matters.
Information as of particular dates concerning the Company's directors and
officers, their remuneration, stock options and other matters, the principal
holders of the Company's securities and any material interest of such persons in
transactions with the Company is required to be disclosed in proxy statements
distributed to the Company's stockholders and filed with the SEC. Such reports,
proxy statements and other information should be available for inspection at the
public reference facilities of the SEC at 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the regional offices of the SEC located at Seven World Trade
Center, 13th Floor, New York, NY 10048 and Citicorp Center, 500 West Madison
Street (Suite 1400), Chicago, IL 60661. Copies of such information should be
obtainable, by mail, upon payment of the SEC's customary charges, by writing to
the SEC's principal office at 450 Fifth Street, N.W., Washington, D.C. 20549.
Such material should also be available for inspection at the offices of Nasdaq
Operations, 1735 K Street, N.W., Washington, D.C. 20006. The SEC maintains a web
site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the SEC. Such
reports, proxy and information statements and other information may be found on
the SEC's web site address, http://www.sec.gov.
Except as otherwise stated in this Offer to Purchase, the information
concerning the Company contained herein has been taken from or based upon
publicly available documents on file with the SEC and other publicly available
information. Although the Purchaser, Parent and USA Sub do not have any
knowledge that
12
<PAGE> 15
any such information is untrue, none of the Purchaser, Parent or USA Sub takes
any responsibility for the accuracy or completeness of such information or for
any failure by the Company to disclose events that may have occurred and may
affect the significance or accuracy of any such information.
Other Financial Information. During the course of the discussions between
Parent and the Company that led to the execution of the Merger Agreement, the
Company provided Parent with certain information about the Company and its
financial performance which is not publicly available. This information included
forecasts of potential financial performance of the Company (without regard to
the impact on the Company of a transaction with Parent). Subsequent to the time
such information was provided to Parent, the Company advised Parent that the
Company's financial performance for the remainder of its current fiscal year is
expected to be below that which was previously forecasted, that the assumptions
made in preparing such forecasts are no longer applicable and that the forecasts
are no longer operative.
9. CERTAIN INFORMATION CONCERNING THE PURCHASER, USA SUB AND PARENT
The Purchaser, a Delaware corporation, was recently incorporated for the
purpose of acquiring the Company and has not conducted any unrelated activities
since its incorporation. The principal executive office of the Purchaser is
located at 45 Broadway, New York, New York 10006. All outstanding shares of
common stock of Purchaser are owned by USA Sub.
The principal executive office of USA Sub, a Delaware corporation, is
located at 45 Broadway, New York, New York 10006. USA Sub is a holding company
that holds the stock of a large proportion of Parent's businesses operating in
the United States. All outstanding shares of common stock of Parent are owned,
directly or indirectly, by Parent.
Parent is a public limited company organized under the laws of England with
its principal executive office at Burleigh House, Chapel Oak, Salford Priors,
Worcestershire WR11 5SH. Parent, its subsidiaries and associated companies are
principally engaged in the provision of computer systems, software products and
related services, as well as transaction processing services, to the financial
services and healthcare industries internationally.
The name, citizenship, business address, present principal occupation or
employment and five-year employment history of each of the directors and
executive officers of the Purchaser, Parent and USA Sub is set forth in Schedule
I hereto.
Pursuant to the Stockholders Agreements and the Top-Up Option, Parent may
be deemed to beneficially own 3,465,375 Shares constituting approximately 38% of
the total outstanding Shares (assuming the exercise of the Top-Up Option and
460,000 Stock Options that are subject to the Stockholders Agreements). Each of
the Purchaser, USA Sub and Parent disclaims beneficial ownership to all Shares
subject to the Top-Up Option. Except as described in this Offer to Purchase,
none of the Purchaser, Parent or USA Sub (together, the "Corporate Entities")
or, to the best knowledge of the Corporate Entities, any of the persons listed
in Schedule I or any associate or majority-owned subsidiary of the Corporate
Entities or any of the persons so listed, beneficially owns any equity security
of the Company, and none of the Corporate Entities or, to the best knowledge of
the Corporate Entities, any of the other persons referred to above, or any of
the respective directors, executive officers or subsidiaries of any of the
foregoing, has effected any transaction in any equity security of the Company
during the past 60 days.
Except as described in this Offer to Purchase, (a) there have not been any
contacts, transactions or negotiations between the Corporate Entities, any of
their respective subsidiaries or, to the best knowledge of the Corporate
Entities, any of the persons listed in Schedule I, on the one hand, and the
Company or any of its directors, officers or affiliates, on the other hand, that
are required to be disclosed pursuant to the rules and regulations of the SEC
and (b) none of the Corporate Entities or, to the best knowledge of the
Corporate Entities, any of the persons listed in Schedule I has any contract,
arrangement, understanding or relationship with any person with respect to any
securities of the Company.
Because the only consideration in the Offer and Merger is cash, and
obtaining financing is not a condition to the Offer, and in view of the amount
of consideration payable in relation to the financial capability of Parent
13
<PAGE> 16
and its affiliates, the Purchaser, Parent and USA Sub believe the financial
condition of Parent and its affiliates is not material to a decision by a holder
of Shares whether to sell, tender or hold Shares pursuant to the Offer. The
stock of Parent is listed on the London Stock Exchange.
None of Parent, USA Sub or the Purchaser is subject to the information
filing requirements of the Exchange Act, and, accordingly, none of Parent, USA
Sub or the Purchaser files reports of other information with the SEC relating to
its business, financial condition or other matters. Set forth below is certain
selected consolidated financial information relating to Parent and its
subsidiaries for the fiscal years ended May 31, 1998, 1997 and 1996. The
selected consolidated financial information is denominated in pounds sterling
and prepared in accordance with generally accepted accounting principles in the
United Kingdom ("UK GAAP"). UK GAAP differs in certain significant respects from
generally accepted accounting principles in the United States ("US GAAP").
Immediately following the summary consolidated financial information of Parent
and its subsidiaries set forth below is a brief summary of certain differences
between UK GAAP and US GAAP. Parent has not examined whether adjustments
necessary to conform its financial statements to US GAAP would be material. On
December 17, 1998, The Wall Street Journal reported that, as of December 16,
1998, one U.K. pound sterling equaled 1.6702 U.S. dollars.
MISYS PLC
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(L MILLIONS)
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
----------------------------
1998 1997 1996
------ ------ ------
<S> <C> <C> <C>
PROFIT AND LOSS:
Turnover.................................................... L447.7 L325.5 L279.9
Operating Profit............................................ 97.8 64.5 52.6
Profit Before Taxation...................................... 51.7 62.5 50.4
Profit Attributable to Shareholders......................... 29.2 45.9 36.8
</TABLE>
<TABLE>
<CAPTION>
AT MAY 31,
-----------------------------
1998 1997 1996
------- ------- -------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Fixed Assets................................................ L 30.8 L 21.8 L 21.4
Creditors................................................... 309.5 191.5 114.0
Equity Shareholders' Deficit................................ (353.1) (198.2) (117.8)
</TABLE>
This financial information does not constitute Parent's statutory accounts
within the meaning of section 240 of the Companies Act 1985 of Great Britain
(the "Companies Act"). The information for the three years ended May 31, 1998 is
extracted from the published audited consolidated financial statements of Parent
for the three years ended May 31, 1998. Parent's auditors made reports under
section 235 of the Companies Act on each of the financial statements for the
three years ended May 31, 1998 and the statutory accounts have been delivered to
the Registrar of Companies of England for each of those years. Each such report
was unqualified and did not contain a statement under section 237(2) to (4) of
the Companies Act.
Certain Differences Between UK GAAP and US GAAP. UK GAAP differs in
certain significant respects from US GAAP. The principal differences, which
management of Parent believes may have a material impact on Parent and its
subsidiaries, are summarized below. Given the inherent differences between UK
GAAP and US GAAP, the financial statements presented under UK GAAP may not be
presented fairly, in all material respects, under US GAAP. Parent has not
quantified these differences, nor prepared consolidated financial statements
under US GAAP, nor undertaken a reconciliation of UK GAAP and US GAAP financial
statements. Had Parent undertaken any such quantification or preparation or
reconciliation, other potentially significant accounting and disclosure
differences might have come to its attention, which are not identified below.
Accordingly, Parent can provide no assurance that the identified differences in
the summary below represent all the principal differences relating to Parent and
its subsidiaries. Further, no attempt has been
14
<PAGE> 17
made to identify future differences between UK GAAP and US GAAP as the result of
prescribed changes in accounting standards. Regulatory bodies that promulgate UK
GAAP and US GAAP have significant ongoing projects that would affect future
comparisons such as this one. Finally, no attempt has been made to identify all
future differences between UK GAAP and US GAAP that may affect the financial
statements as a result of transactions or events that may occur in the future.
Although UK GAAP differs in certain significant respects from US GAAP, Parent
believes that the differences are not material to a decision by a holder of
Shares whether to sell, tender or hold any Shares because the Offer is for cash
and any such difference would not affect the ability of or the Purchaser to pay
for the Shares to be acquired pursuant to the Offer. In this regard, Parent has
sufficient funds in its working capital accounts and credit facilities to pay
for the Shares to be acquired pursuant to the Offer and the Merger.
Goodwill and other intangible assets
Under UK GAAP, goodwill, representing the excess of the fair value of the
purchase consideration over the fair value of the net assets (liabilities)
acquired, is written off against reserves at the time of the acquisition. Within
net assets (liabilities) acquired, Parent has not placed values on intangible
assets. Additionally, UK GAAP requires that on disposal of a previously acquired
business any goodwill taken directly to reserves is then charged to the profit
and loss account.
Under US GAAP, goodwill represents the excess of purchase cost over the
fair value of identifiable net assets acquired and acquired in-process
technology. Goodwill and other intangible assets are capitalized and then
amortized through the statement of operations over the estimated useful lives.
Acquired in-process technology
Under US GAAP, a portion of the purchase price should be allocated to the
research and development (R&D) projects in process that have value, but for
which technological feasibility has not been achieved (acquired in-process
technology); the amount allocated to such R&D projects should be expensed as
research and development if the project does not have an alternative future use.
Under UK GAAP, Parent does not allocate any purchase price to acquired
in-process technology.
Contingent consideration
Under UK GAAP, Parent recognizes contingent consideration at the
acquisition date based upon a reasonable estimate of the fair value of amounts
expected to be payable in the future. The cost of acquisition is adjusted when
the ultimate amount is known.
Under US GAAP, contingent consideration is not recorded until the
contingency is resolved. Upon the resolution of the contingency, the purchase
price may be adjusted, resulting in a new allocation to the identifiable net
assets acquired and an adjustment to goodwill (and subsequent amortization).
Software development costs
Under UK GAAP, software development costs are included in research and
development and are expensed as incurred.
Under US GAAP, certain software development costs are capitalized once
technological feasibility is achieved up to the time the software becomes
generally available for sale or license. Technological feasibility is achieved
when all planning, designing, coding and testing activities are completed. To
date, the costs incurred in the period between achieving technological
feasibility and the general availability of such software have not been
significant.
Deferred taxation
Under US GAAP, deferred tax is provided on all differences between the
financial and tax bases of assets and liabilities using currently enacted tax
rates. The value allocated to intangible assets under US GAAP also
15
<PAGE> 18
results in a related deferred taxation liability; however, no such liability is
created in respect of goodwill and acquired in-process technology. The deferred
tax liabilities relating to intangible assets are then released to the income
statement proportional to the amortization of the assets. A valuation allowance
is made against deferred tax assets where it is more likely than not that some
portion of the asset will not be recovered.
Under UK GAAP, deferred tax liabilities are only recognized to the extent
that it is probable they will crystallize, and assets are only recognized where
they are expected to be recoverable without replacement by equivalent debit
balances.
Stock based compensation
Under UK GAAP, Parent recognizes no compensation expense related to
subscription share option schemes.
US GAAP requires that companies with stock-based compensation plans either
recognize compensation expense based on a fair value method or the intrinsic
value method. Where the intrinsic value method is used, the pro forma effect on
net income and earnings per share assuming the use of the fair value method is
required.
Ordinary dividends
Under UK GAAP, dividends are provided for in the year to which they relate.
Under US GAAP, dividends are recorded in the period in which the dividends are
formally declared.
Discontinued operations
Under UK GAAP, discontinued operations include operations where a sale has
a material effect on the nature of operations and represents a material
reduction in operations resulting from a withdrawal from a particular market.
Discontinued operations under US GAAP may relate only to a significant business
segment.
10. SOURCE AND AMOUNT OF FUNDS
The Purchaser estimates that the amount of funds required to purchase all
outstanding Shares on a fully diluted basis pursuant to the Offer and to pay
fees and expenses related to the Offer will be approximately $62 million. The
Purchaser will obtain such funds in the form of capital contributions. Such
funds will be obtained by Parent from borrowings under Parent's existing Credit
Agreement, dated September 5, 1997 (as amended and restated, the "Credit
Agreement"), among Parent, ING Barings and Lloyds Bank plc Capital Markets, as
arrangers, and certain other banks and financial institutions. The maximum
amount of borrowings that may be outstanding pursuant to the Credit Agreement is
$390 million through November 24, 2000, $385 million through November 24, 2001
and $276 million through November 24, 2002. All amounts borrowed pursuant to the
Credit Agreement are unsecured and will become due and payable on November 24,
2002. All amounts drawn down pursuant to the Credit Agreement would bear
interest at a rate equal to the aggregate of (a) the London inter-bank offered
rate, (b) a margin of 0.45%-0.85% (depending upon the performance of Parent with
respect to certain financial ratios) and (c) certain mandatory costs. The Credit
Agreement contains customary covenants and events of default. At present, there
are no plans to refinance any borrowings made pursuant to the Credit Agreement,
which are expected to be repaid from cash generated from operations.
11. CONTACTS AND TRANSACTIONS WITH THE COMPANY; BACKGROUND OF THE OFFER
The Company engages in certain lines of business that are complementary to
those of Midas-Kapiti International, Ltd. ("MKI"), which is an indirect
wholly-owned subsidiary of Parent. In March, 1998, Mr. Rod Beckstrom, Chief
Executive Officer of the Company, met with Mr. John Graham, the Director of
Business Development of Parent, and Mr. Rupert Soames, Chief Executive Officer
of MKI, to discuss possibilities for joint marketing efforts. Representatives of
the Company and MKI met from time to time since
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April, 1998, in connection with the preparation of proposals to customers that
combine the products and services offered by MKI and the Company. Pursuant to
these discussions, MKI and the Company have jointly marketed their products to
certain prospective customers.
From July 22 through July 24, 1998, Mr. Soames and Mr. Stephen Gowers,
Product Development Director of MKI, met in Palo Alto with Mr. David Gilbert,
President and Chief Operating Officer of the Company, to discuss the possibility
of combining the Company's risk operations with MKI's Global Manager/ Risk
Vision business. Messrs. Soames and Gowers indicated they would discuss the
matter further with representatives of Parent.
On July 31, 1998, Mr. Soames sent a letter to Mr. Beckstrom indicating that
Parent was interested in a possible combination and discussing next steps.
On August 11 and again on September 11, 1998, Mr. Soames met with Messrs.
Beckstrom and Gilbert to consider how the combined businesses might be organized
and operated. On September 2, 1998, Mr. Soames forwarded a letter to Mr.
Beckstrom outlining the terms of confidentiality that would pertain to future
discussions regarding a "potential business partnership".
On October 12, 1998, Mr. Strone Macpherson, Deputy Chairman of Parent, met
in Palo Alto with Messrs. Beckstrom and Gilbert to discuss potential non-price
transaction terms. Representatives of the two companies held a number of
telephone conversations during the following weeks. On October 15 and 16, 1998,
Mr. Soames reviewed with Messrs. Gilbert and Beckstrom by telephone the outcome
of the meetings held with Mr. Macpherson and discussed ways to progress towards
a potential transaction.
On October 16, 1998, Mr. Soames and Mr. Ross Graham, Corporate Development
Director and Secretary of Parent, held discussions in London with Mr. Gilbert
during which Messrs. Soames, R. Graham and Gilbert discussed the basic framework
of a potential transaction and Parent's representatives provided Mr. Gilbert
with an outline of non-price transaction terms.
On October 19, 1998, representatives of Parent indicated preliminarily to
the Company's representatives that it would be willing to pay a price in the
range of $6.50-$7.50 per Share, subject to the satisfactory completion of due
diligence and definitive documentation. On October 19, Parent's representatives
confirmed the price to be $7.00 per Share. On October 29, Mr. Gilbert informed
Mr. Macpherson that the $7.00 offer was too low and that a third party had
orally indicated its interest in potentially acquiring the Company in a stock
for stock transaction. Messrs. Macpherson, R. Graham and Gilbert held additional
discussions by telephone on October 30, 1998 to further explore the Company's
position.
On November 11, 1998, further to a telephone conversation held on November
10, 1998, between Messrs. Macpherson and Gilbert, Mr. Macpherson sent a letter
to Mr. Gilbert expressing Parent's formal interest in acquiring the Company and
attaching a term sheet indicating a price range of $7.50-$8.00 per Share, but
stating that based on the data it had at the time $7.50 was the appropriate
price.
Between November 16, 1998 and December 7, 1998, the Parent, MKI and its
legal and financial advisors conducted their due diligence review of the
Company.
On November 18, 1998, Messrs. Beckstrom and Gilbert met in New York with
Mr. Soames and Mr. John Sussens, Managing Director of Parent, to discuss how the
risk businesses of the Company and MKI could be jointly developed.
On November 23, 1998, Mr. Gilbert and counsel to the Company met in New
York with Mr. R. Graham, Ms. Tazim Essani, Vice President, Corporate Development
of Parent, and Parent's legal and financial advisors to negotiate the terms of
the agreements. Negotiations of the Merger Agreement, the Stockholders
Agreements and related documents continued by telephone during the subsequent
weeks. On December 3, 1998, the board of directors of Parent convened and
approved the transaction, subject to final resolution of outstanding matters and
negotiation of definitive documentation. A committee of Parent's board was
appointed to review the transaction prior to execution of the documents.
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On December 9, 1998, the Board unanimously approved and adopted the Merger
Agreement and the transactions contemplated thereby, subject to final resolution
of outstanding matters and negotiation of definitive documentation.
On December 10, 1998, Mr. Gilbert and Mr. Graham met in New York to resolve
outstanding issues. On December 10 and 11, the parties and their respective
legal counsel made final changes to the Merger Agreement and the various related
agreements and ancillary documents. On the evening of December 12, 1998, the
committee of Parent's board convened by telephone and approved the transaction
and documentation.
On December 14, 1998, the parties executed the agreements and the
transaction was publicly announced.
12. PURPOSE OF THE OFFER; THE MERGER AGREEMENT; OTHER AGREEMENTS; PLANS FOR THE
COMPANY
Purpose. The purpose of the Offer is to acquire control of, and the entire
equity interest in, the Company. Following the Offer, the Purchaser and Parent
intend to acquire any remaining equity interest in the Company not acquired in
the Offer by consummating the Merger.
The Merger Agreement. The following is a summary of the material
provisions of the Merger Agreement. The summary is qualified in its entirety by
reference to the Merger Agreement which is incorporated herein by reference and
a copy of which has been filed with the SEC as an exhibit to the Schedule 14D-1.
The Offer. The Merger Agreement provides that so long as (a) the Merger
Agreement has not been terminated in accordance with the provisions described
below under "-- Termination of the Merger Agreement" and (b) none of the events
or circumstances set forth below in paragraphs (a)-(f) of Section 14 have
occurred or are existing, the Purchaser will commence the Offer by the fifth
business day after the first public announcement of the execution of the Merger
Agreement or on such earlier date as is reasonably practicable. In the Merger
Agreement, the Purchaser expressly reserves the right to waive any condition to
the Offer (other than the Minimum Condition), to increase the price per Share
payable in the Offer, and to make any other changes in the terms and conditions
of the Offer, provided that no change may be made without the consent of the
Company which is adverse to the holders of Shares, decreases the price per Share
payable in the Offer, changes the form of consideration to be paid in the Offer,
reduces the maximum number of Shares to be purchased in the Offer, imposes
conditions to the Offer in addition to those set forth in Section 14 below or
extends the expiration date of the Offer (except that the Purchaser, without the
consent of the Company, may extend the expiration date of the Offer, subject to
the Company's rights of termination, (a) as required to comply with any rule,
regulation or interpretation of the SEC, (b) if at the scheduled or extended
expiration date of the Offer any of the conditions set forth in Section 14 have
not been satisfied or waived, until such time as all such conditions are
satisfied or waived, or (c) provided that at least 90% of the Shares have not
been tendered, for one or more times for a total number of days in the aggregate
pursuant to this clause (c) not to exceed 20 for any reason other than those
specified in the immediately preceding clauses (a) and (b)). In the Merger
Agreement, Parent, the US Parent and the Purchaser agree that if all of the
conditions described below in Section 14 are not satisfied on any scheduled
expiration date of the Offer then, provided that all such conditions are
reasonably capable of being satisfied by the commercially reasonable best
efforts of the parties to the Merger Agreement, the Purchaser shall extend the
Offer from time to time until such conditions are satisfied or waived, provided
that the Purchaser shall not be required to extend the Offer for a total of more
than 20 days beyond the initial expiration date of the Offer.
The Merger. The Merger Agreement provides that following the satisfaction
of the conditions described below under "-- Conditions to the Merger," the
Purchaser will be merged with and into the Company, and each outstanding Share
(other than Shares held by stockholders who perfect their appraisal rights under
Delaware law, Shares owned by the Company as treasury stock and Shares owned by
Parent or any direct or indirect wholly-owned subsidiary of Parent or of the
Company) will be converted into the right to receive an amount per Share equal
to the price per Share actually paid in the Offer (the "Merger Consideration"),
without interest.
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Vote Required to Approve Merger. The DGCL requires, among other things,
that the adoption of any plan of merger or consolidation of the Company must be
approved by the Board and generally by a majority of the holders of the
Company's outstanding voting securities. The Board has approved the Offer and
the Merger. Consequently, the only additional action of the Company that may be
necessary to effect the Merger is approval by such stockholders if the
"short-form" merger procedure described below is not available. Under the DGCL,
the affirmative vote of holders of a majority of the outstanding Shares
(including any Shares owned by the Purchaser), is generally required to approve
the Merger. If the Purchaser acquires, through the Offer or otherwise, voting
power with respect to at least a majority of the outstanding Shares (which would
be the case if the Minimum Condition were satisfied and the Purchaser were to
accept for payment Shares tendered pursuant to the Offer), it would have
sufficient voting power to effect the Merger without the vote of any other
stockholder of the Company. However, the DGCL also provides that if a parent
company owns at least 90% of each class of stock of a subsidiary, the parent
company can effect a short-form merger with that subsidiary without the action
of the other stockholders of the subsidiary. Accordingly, if, as a result of the
Offer, the exercise of the Top-Up Option, as described below, or otherwise, the
Purchaser acquires or controls the voting power of at least 90% of the
outstanding Shares, the Purchaser could, and intends to, effect the Merger
without prior notice to, or any action by, any other stockholder of the Company.
In the event the Purchaser purchases Shares pursuant to the Offer but fails
to acquire or control the voting power of at least 90% of the outstanding
Shares, the Company has agreed in the Merger Agreement, as soon as practicable
following the purchase of Share pursuant to the Offer, to take all steps
necessary to hold a meeting of its stockholders for the purpose of adopting and
approving the Merger Agreement and the Merger. Parent and the Purchaser have
agreed in the Merger Agreement that, at any such meeting, all of the Shares
beneficially owned by Parent, the Purchaser or any of their subsidiaries will be
voted in favor of the approval and adoption of the Merger Agreement and the
Merger. The Company has further agreed in the Merger Agreement that it will use
its reasonable best efforts to obtain the approval of the Company's stockholders
of the Merger Agreement and the Merger and will recommend to such stockholders
that they vote in favor of approval and adoption of the Merger Agreement and the
Merger.
Top-Up Option. Pursuant to the Merger Agreement, the Company has granted
the Purchaser an irrevocable option (the "Top-Up Option") to purchase from the
Company for cash that number of Shares equal to the Top-Up Share Amount (as
defined below). The purchase price per Share subject to the Top-Up Option is
equal to the Offer Price. In the Merger Agreement, the "Top-Up Share Amount" is
defined as that number of Shares that, when added to the number of Shares owned
by the Purchaser and its affiliates immediately prior to the exercise of the
Top-Up Option, shall constitute 90.1% of the Shares then outstanding (assuming
the issuance of Shares pursuant to the Top-Up Option). The Top-Up Option shall
expire if not exercised prior to the earlier of the Effective Time and 12:00
midnight, Eastern time, on the date that is 10 business days after termination
of the Offer (the "Top-Up Expiration Date"). The Top-Up Option may be exercised
by the Purchaser, in whole but not in part, at any one time following the
satisfaction of the conditions set forth below, provided that the Top-Up
Expiration Date has not occurred. Notwithstanding the occurrence of the Top-Up
Expiration Date, the Purchaser shall be entitled to purchase Shares pursuant to
the exercise of the Top-Up Option if it has exercised the Top-Up Option in
accordance with the terms hereof prior to such occurrence, and the occurrence of
the Top-Up Expiration Date shall not affect any rights under the section of the
Merger Agreement granting the Top-Up Option which by their terms do not
terminate or expire prior to or as of such date. The Merger Agreement provides
that the Purchaser shall not be entitled to exercise the Top-Up Option, and the
Company shall have no obligation to deliver Shares pursuant to the exercise of
the Top-Up Option, unless all of the following conditions have been satisfied:
(a) the Purchaser shall have accepted Shares for payment pursuant to the Offer,
(b) the Minimum Condition shall have been satisfied, (c) the Top-Up Share Amount
does not exceed the number of Shares authorized by the Company for issuance but
not issued or reserved for issuance, and (d) the Top-Up Share Amount does not
exceed 19.9% of the Shares issued and outstanding at the time of exercise of the
Top-Up Option (without giving effect to the issuance of Shares pursuant to the
Top-Up Option).
Conditions to the Merger. The Merger Agreement provides that the
respective obligations of Parent, the US Purchaser, the Purchaser and the
Company to effect the Merger are subject to the satisfaction at or prior
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to the Effective Time of the following conditions: (a) the Purchaser shall have
purchased all Shares duly tendered and not withdrawn pursuant to the terms of
the Offer and subject to the terms thereof, provided that the obligations of
Parent and the Purchaser to effect the Merger shall not be conditioned on the
ful fillment of this condition if the failure of the Purchaser to purchase the
Shares pursuant to the Offer con stituted a breach of the Offer or of the Merger
Agreement, (b) there shall not be in effect any statute, rule or regulation
enacted, promulgated or deemed applicable by any Governmental Entity (as defined
in the Merger Agreement) of competent jurisdiction that makes consummation of
the Merger illegal, and no temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction or other
legal restraint or prohibition preventing the consummation of the Merger shall
be in effect, provided that the party seeking to avoid its obligations shall
have used all reasonable best efforts to prevent the entry of any such
injunction or other order and to appeal as promptly as possible any such
injunction or order that may be entered, (c) if required under applicable law,
the Merger Agreement shall have been approved and adopted by the affirmative
vote of the holders of the requisite number of Shares in accordance with the
Certificate of Incorporation and By-laws of the Company and the DGCL, and (d)
any waiting period (and any extension thereof) applicable to the consummation of
the Merger under the HSR Act shall have expired or been terminated. The Merger
Agreement further provides that the respective obligations of Parent, the US
Parent and the Purchaser to effect the Merger are subject to the fulfillment at
or prior to the Effective Time of the condition that the Purchaser shall have
received such affidavits or certifications in form and substance reasonably
satisfactory to the Purchaser as are necessary to exempt the Merger from the
provisions of section 1445 of the Code.
No Solicitation. Pursuant to the Merger Agreement, the Company has agreed
that it will not, and will not permit any of its subsidiaries, or any of its or
their officers, directors, employees, representatives, or advisors, including
any investment banker, attorney or accountant retained by the Company or any of
its subsidiaries (collectively, "Representatives"), to, directly or indirectly
(a) solicit, initiate, or encourage (including by way of furnishing
information), or take any other action to facilitate, any inquiries or the
making of any proposal that constitutes, or may reasonably be expected to lead
to, an Acquisition Proposal (as hereinafter defined), or (b) participate in any
discussions or negotiations with any person regarding an Acquisition Proposal,
and the Company has agreed to notify promptly Parent and the Purchaser of any
such inquiries and proposals received by the Company; provided however, that
nothing contained in the Merger Agreement shall prohibit the Board at any time
prior to the adoption of the Merger Agreement by the stockholders of the Company
from furnishing nonpublic information (pursuant to a customary and reasonable
confidentiality agreement) to, or participating in negotiations with, any person
in response to an Acquisition Proposal of such person that was unsolicited and
that did not otherwise result from a breach of the Merger Agreement, and that
constitutes a Superior Proposal (as hereinafter defined), if the Board
determines in good faith, after consultation with outside legal counsel to the
Company, that failure to do so would result in a breach of the fiduciary duty of
the Board to the stockholders of the Company under applicable law. The Merger
Agreement also provides that any violation of the restrictions set forth in this
paragraph by any Representative, whether or not acting on behalf of the Company
or any of its subsidiaries, shall be deemed a breach of the provisions of this
paragraph by the Company.
The Merger Agreement provides further that, except as described below,
neither the Board nor any committee thereof shall (a) withdraw or modify, or
propose to withdraw or modify, in a manner adverse to Parent or the Purchaser,
the approval or recommendation by the Board or such committee of the Offer, the
Merger Agreement or the Merger, unless there is a Superior Offer outstanding,
(b) approve or recommend, or propose to approve or recommend, any Acquisition
Proposal, unless such Acquisition Proposal is a Superior Proposal, or (c) cause
the Company to enter into any letter of intent, agreement in principle,
acquisition agreement or other agreement (each, an "Acquisition Agreement") with
respect to an Acquisition Proposal unless such Acquisition Proposal is a
Superior Proposal, and unless, in each case, the Board shall have (a) determined
in good faith, after consultation with outside legal counsel to the Company,
that failure to do so would constitute a breach of its fiduciary duties to the
Company's stockholders under applicable law, and (b) terminated the Merger
Agreement pursuant to clause (e)(iv) under "-- Termination of the Merger
Agreement" below.
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In addition, under the Merger Agreement the Company has agreed to advise
promptly Parent, orally and in writing, of any Acquisition Proposal or any
inquiry regarding the making of an Acquisition Proposal, including any request
for information, the material terms and conditions of such request, Acquisition
Proposal or inquiry, and the identity of the person making such request,
Acquisition Proposal or inquiry. The Company will to the extent reasonably
practicable keep Parent and the Purchaser fully informed of the status and
details (including amendments or proposed amendments) of any such request,
Acquisition Proposal or inquiry.
Nothing contained in the Merger Agreement shall prohibit the Company from
at any time taking and disclosing to its stockholders a position contemplated by
Rule 14e-2(a) promulgated under the Exchange Act or from making any disclosure
to the Company's stockholders if, in the good faith judgment of the Board, after
consultation with outside legal counsel to the Company, failure so to disclose
would constitute a breach of its fiduciary duties to the Company's stockholders
under applicable law; provided that neither the Company, the Board nor any
committee thereof may, except as described above, withdraw or modify, or propose
to withdraw or modify, its position with respect to the Merger or the Merger
Agreement, or proposes to approve or recommend, an Acquisition Proposal;
provided, further, that the taking of a position by the Company pursuant to Rule
14e-2(a)(2) or (3) of the Exchange Act in respect of an Acquisition Proposal
shall not be deemed a withdrawal, a modification or a proposal to do either, of
its position with respect to the Merger.
In the Merger Agreement, "Acquisition Proposal" is defined as any proposal
or offer from any person relating to any direct or indirect acquisition or
purchase of 10% or more of the assets of the Company or any of its subsidiaries
(including intellectual property) or the direct or indirect acquisition or
purchase of any shares of any class of outstanding equity securities of the
Company or any of its subsidiaries (except as may be explicitly permitted by the
Merger Agreement), any tender offer or exchange offer that if consummated would
result in any person beneficially owning 10% or more of any class of equity
securities of the Company or any of its subsidiaries or any merger,
consolidation, business combination, sale of substantially all the assets,
recapitalization, liquidation, dissolution or similar transaction involving the
Company or any of its subsidiaries, other than the transactions contemplated by
the Merger Agreement. In the Merger Agreement, "Superior Proposal" is defined as
any bona fide proposal made by a third party to acquire, directly or indirectly,
for consideration consisting of cash and/or securities, 100% of the voting power
of the common stock of or all or substantially all the assets of the Company and
its subsidiaries and otherwise on terms which the Company Board determines in
good faith (based on the written opinion of Broadview International LLC or
another financial advisor of nationally recognized standing (which opinion shall
be provided to the Purchaser)) to be more favorable to the Company's
stockholders than the Offer and the Merger and for which any necessary financing
is then committed or which, in the good faith judgment of the Board, is
reasonably capable of being obtained by such third party.
Termination of the Merger Agreement. The Merger Agreement may be
terminated at any time prior to the Effective Time, whether before or after
approval by the stockholders of the Company: (a) by mutual consent of the Board
of Directors of Parent and the Board, (b) by action of the Board of Directors of
Parent or action of the Board if at least that number of Shares required by the
Minimum Condition to be tendered shall not have been purchased in the Offer on
or before the date that is 90 days after the date of the Merger Agreement,
provided that the right to terminate the Merger Agreement pursuant to this
provision shall not be available to any party whose failure to fulfill any
material obligation under the Merger Agreement in all material respects has been
the cause of, or resulted in, the failure of the Offer or the Merger, as the
case may be, to occur on or before the aforesaid dates, (c) by either Parent or
the Company if the Offer shall expire or terminate in accordance with its terms
without any Shares having been purchased thereunder and, in the case of
termination by Parent, the Purchaser shall not have been required by the terms
of the Offer or the Merger Agreement to purchase any Shares pursuant to the
Offer, (d) by either Parent, the Purchaser or the Company, if any court of
competent jurisdiction in the United States or the United Kingdom or other
Governmental Entity of competent jurisdiction shall have issued an order, decree
or ruling or taken any other action restraining, permanently enjoining or
otherwise prohibiting the consummation of the Offer or the Merger, and such
order, decree, ruling or other action shall have become final and
non-appealable, (e) by the Company if (i) Parent or the Purchaser shall have
failed to commence the Offer or failed to pay for Shares pursuant to the Offer
in each case in accordance with the terms of the Merger Agreement, provided that
(in
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the case of failure to pay for Shares) the conditions to the Offer set forth in
paragraphs (a)-(f) of Section 14 shall have been satisfied, (ii) any of the
respective representations and warranties of Parent or the Purchaser that are
qualified as to materiality shall not have been true and correct or any such
representations and warranties that are not so qualified shall not have been
true and correct in all material respects, in each case as of the date of the
Merger Agreement, which failure to be true and correct in all material respects
is not reasonably capable of being cured by the commercially reasonable best
efforts of Parent or the Purchaser within 10 days of the receipt by Parent of
written notice thereof, (iii) Parent or the Purchaser shall have failed to
perform in any material respect any obligation or to comply in any material
respect with any agreement or covenant applicable thereto to be performed or
complied with by it prior to the time of determination which failure is not
reasonably capable of being cured by the commercially reasonable best efforts of
Parent or the Purchaser within 10 days of the receipt by Parent of written
notice thereof, or (iv) the Company takes the actions described above in the
second paragraph under "-- No Solicitation," provided, in the case of this
clause (iv), that (A) the Company has notified Parent or the Purchaser in
writing of its intent to take any such action five days prior to the termination
of this Agreement, and the relevant Acquisition Proposal continues to be a
Superior Proposal notwithstanding any modification by Parent and the Purchaser
of the terms of the Offer and the Merger, (B) the Company has complied with the
provisions of the second and third paragraphs above under "-- No Solicitation,"
and (C) such termination shall not be effective until the Company has paid to
Parent or deposited with a mutually acceptable escrow agent an amount equal to
the sum of the maximum Parent Expenses (as defined below) and the Termination
Fee (as defined below), (f) by Parent or the Purchaser if (i) the Offer has
expired and the Purchaser is neither required to accept and pay for the Shares
tendered into the Offer nor to extend the expiration date of the Offer or if any
of the events or circumstances described in Section 14 shall have occurred and
shall not be reasonably capable of being cured by the commercially reasonable
best efforts of the parties hereto prior to the last date to which Parent and
the Purchaser are required to extend the Offer pursuant, or (ii) the Company
shall have taken any of the actions described in the second paragraph under
"-- No Solicitation" or if the Board shall have resolved to take any such
action.
Fees and Expenses. Except under the circumstances described below, the
Merger Agreement provides that each of the parties to the Merger Agreement will
bear its own fees and expenses in connection with the Merger Agreement, except
that printing and mailing costs and expenses associated with this Offer to
Purchase and certain related documents will be shared equally by Parent and the
Company.
The Merger Agreement provides that if the Agreement is terminated pursuant
to the provisions described above under clauses (b), (e)(iv), or (f)(i) under
"-- Termination of the Merger Agreement" (but, with respect to clause (f)(i),
only as a result of the existence of any of the conditions set forth in
paragraphs (e) or (f) of Section 14 below), or clause (f)(ii) under
"-- Termination of Merger Agreement," the Company shall promptly reimburse
Parent for all Parent Expenses (as defined below) incurred by Parent and its
affiliates. The term "Parent Expenses" is defined in the Merger Agreement as all
documented reasonable out-of-pocket expenses incurred by Parent and its
affiliates up to a maximum of $750,000, in connection with or arising out of the
Offer, the Merger, the Merger Agreement and the transactions contemplated
thereby (including, without limitation, amounts paid or payable to investment
bankers, lending banks, dealer-managers and information agents, fees and
expenses of counsel, accountants and consultants, underwriting and all printing
and mailing costs), regardless of when those expenses were incurred. In
addition, if the Merger Agreement is terminated pursuant to clauses (b), (e)(iv)
or (f)(ii) under "-- Termination of the Merger Agreement," and within one year
of such termination the Company consummates an Acquisition Proposal or enters
into an Acquisition Agreement with respect to an Acquisition Proposal that is
subsequently consummated, the Company shall pay Parent $1,500,000 (the
"Termination Fee") in addition to any payment due or made with respect to Parent
Expenses. The Company has agreed to pay such amount immediately upon
consummation of such Acquisition Proposal, in same-day funds, and (c) in the
event that the Company fails to pay any Parent Expenses or the Termination Fee
when due, "Parent Expenses" and the "Termination Fee" shall be deemed to include
the costs and expenses actually incurred or accrued by Parent, the US Parent and
the Purchaser (including, without limitation, fees and expenses of counsel) in
connection with the collection under and enforcement of these provisions,
together with interest on such unpaid Parent Expenses or Termination Fee,
commencing on the date that such Parent Expenses or Termination Fee became due,
at a
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rate equal to the rate of interest publicly announced by Citibank, N.A., from
time to time, in the City of New York, as such bank's Base Rate plus 1.00%.
Conduct of Business of the Company; Covenants. Pursuant to the Merger
Agreement, the Company has agreed that, prior to the Effective Time, unless
otherwise expressly contemplated by the Merger Agreement, it and each of its
subsidiaries will: (a) conduct its operations according to its ordinary and
usual course consistent with past practices, (b) use reasonable best efforts to
preserve intact its business organization, maintain its rights and franchises
and to maintain satisfactory relationships with customers and other having
business relationships with it, and (c) make its officers reasonably available
to confer on a regular and frequent basis with representatives of Parent to
report upon the status of operations. Under the Merger Agreement, the Company
has further agreed that, except as expressly contemplated by the Merger
Agreement, or otherwise consented to in writing by Parent, from the date of the
Merger Agreement until the Effective Time, it and its subsidiaries will not do
any of the following: (a) amend its Certificate of Incorporation or By-laws (or
equivalent instruments), (b) authorize for issuance, issue, sell, deliver or
agree or commit to issue, sell or deliver (whether through the issuance or
granting of additional options, warrants, commitments, subscriptions, rights to
purchase or otherwise) any shares of capital stock of any class or any
securities convertible into shares of capital stock of any class, except as
required by any Plan (as defined in the Merger Agreement) or Stock Option Plan
(as defined in the Merger Agreement) existing as of the date of the Merger
Agreement, (c) split, combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution (whether in cash,
stock or property or any combination thereof) in respect of its capital stock,
or redeem or otherwise acquire any shares of its capital stock, provided that
any of the Company's wholly-owned subsidiaries may declare, set aside or pay any
dividend or other distribution with respect to their capital stock, (d) (i)
except under current borrowing facilities in the ordinary course of business in
accordance with past practice, create, incur or assume any long-term debt
(including obligations in respect of capital leases), (ii) except in the
ordinary course of business and consistent with past practices, assume,
guarantee, endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any person other than any
subsidiary of the Company, or (iii) make any loans, advances or capital
contributions to, or investments in, any person other than any of the
subsidiaries of the Company, except for loans or advances to employees or
customers in the ordinary course of business and consistent with past practices,
(e) except in the ordinary course of business consistent with past practice or
as otherwise described in the Merger Agreement, sell, transfer or otherwise
dispose of, any business, subsidiary, or assets (including without limitation,
receivables, leasehold interests or Intellectual Property (as defined in the
Merger Agreement)) that are material to the Company and its subsidiaries taken
as a whole, or fixed assets that are sold, transferred or otherwise disposed of,
either individually or in the aggregate, with a book value in excess of
$250,000, (f) make any capital or research and development expenditures in the
aggregate for the Company and its subsidiaries in excess of the amounts
specified in the Company's 1999 expense plan for capital or research and
development expenditures, a copy of which was made available to Parent prior to
the execution of the Merger Agreement, other than increases over such plan in
amounts that are in the aggregate immaterial, (g) except in the ordinary course
of business consistent with past practice or as otherwise described in the
Merger Agreement, license or permit any third party to use any Intellectual
Property, (h) without the written consent of Parent (which shall not be
unreasonably withheld or delayed), settle or compromise any pending or
threatened suit, action, tax audit or claim in which the amount involved is
greater than $250,000 or which is material to the Company and its subsidiaries
taken as a whole, (i) waive or amend any term or condition of any
confidentiality or "standstill" agreement to which the Company is a party, (j)
except with respect to agreements which are terminable at will by the Company or
any of its subsidiaries without any material penalty to the Company or any of
its subsidiaries, enter into or amend any legally binding employment, severance,
consulting or salary continuation agreements with any officers, directors or
employees or grant any increases in compensation or benefits to employees other
than increases to officers and employees in the ordinary course of business
consistent with the past practice of the Company and its subsidiaries, (k) enter
into, renew or agree to any modification or amendment to any Contract (as
defined in the Merger Agreement) unless the Contract (i) expressly provides that
the Company's aggregate exposure thereunder (including any exposure described in
clause (iii) below) to the other party to the Contract (the "Licensee") or to
any other third party does not exceed the greater of (A) $2,000,000 and (B) the
aggregate amount actually paid by the
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Licensee to the Company under such Contract through the date on which the
determination of the Company's liability is made, (ii) expressly excludes any
consequential damages (including loss of profits) of the Licensee or other third
parties from any liability of the Company, (iii) expressly provides that the
Company's potential liability in respect of infringement claims relating to the
Company's Intellectual Property does not exceed the aggregate amount actually
paid by the Licensee to the Company under such Contract through the date on
which the determination of the Company's liability is made, (iv) only obligates
the Company to provide a package of standard products and services or to provide
non-standard products and services that do not, in the aggregate, exceed 20% of
the value of the Contract or to provide other services on a "time and materials"
basis, and (v) does not require or obligate the Company to perform services or
provide non-standard products in the future at an aggregate cost to the Company
of more than $1,000,000, (l) make any material tax election or permit any
material insurance policy naming it as a beneficiary or a loss payable payee to
be canceled or terminated, (m) except for bonuses payable for 1998 in an
aggregate amount not to exceed $1,250,000 and annual salary reviews and
increases (which shall not exceed 5% on average) grant any material increase in
the compensation payable or to become payable to any of its officers or to its
employees as a whole or establish, adopt, enter into, make any new grants or
awards under, or amend, any collective bargaining (except as required by law),
bonus, profit sharing, thrift, compensation, stock option or other equity,
pension, retirement, incentive or deferred compensation, employment, retention,
termination, severance, health, life or other welfare, fringe or other plan,
agreement, trust, fund, policy or arrangement for the benefit of any current
directors, officers or employees, or grant or pay any material benefit not
required by any existing plan or arrangement, (n) (i) adopt or terminate any
material Plan or (ii) amend any Plan in any material respect (except in each
case as expressly contemplated by the Merger Agreement), (o) except in the
ordinary course of business, enter into (i) any agreements with distributors,
brokers, or sales agents other than agreements terminable without penalty on
less than 30 days' notice, (ii) any agreements to distribute products for others
or which restrict the ability of the Company or its subsidiaries to compete, or
(iii) any other agreements, other than agreements relating to product
promotions, that would be Material Contracts (as defined in the Merger
Agreement); or amend in any respect materially adverse to the Company any of the
foregoing agreements as they existed on the date of the Merger Agreement, (p)
declare, set aside or pay any dividend or make any other distribution or payment
with respect to any shares of Common Stock or other capital stock or ownership
interests (other than such payments by a wholly-owned subsidiary to the Company
or another wholly-owned subsidiary), (q) directly or indirectly redeem, purchase
or otherwise acquire any shares of its capital stock or the capital stock of any
of its Subsidiaries, (r) settle or compromise any pending or threatened
Litigation without Parent's consent (which consent will not be unreasonably
withheld or delayed), other than settlements of Litigations which involve solely
the payment of money (without admission of liability) not to exceed $50,000 in
any one case or $100,000 in the aggregate, (s) waive, relinquish, release,
assign or terminate any material right or claim, including any such right or
claim under any Material Contract in any respect that is materially adverse to
the Company, (t) except as required by GAAP, make any change to any of the
accounting principles, practices or methods used by it, (u) acquire any business
(by merger, purchase of capital stock, purchase of assets, consolidation or
otherwise) or (v) agree to do any of the foregoing.
Board of Directors. The Merger Agreement provides that promptly upon the
purchase by the Purchaser of Shares pursuant to the Offer, the Purchaser shall
be entitled, subject to compliance with Section 14(f) of the Exchange Act, to
designate up to such number of directors, rounded up to the next whole number,
on the Board as shall give the Purchaser representation on the Board equal to
the product of the total number of directors on the Board (giving effect to the
directors elected pursuant to this sentence) multiplied by the percentage that
the aggregate number of Shares beneficially owned by Parent, the Purchaser or
any of their affiliates at such time bears to the total number of Shares then
outstanding (provided that, if Parent, the Purchaser and their affiliates
beneficially own in the aggregate at least a majority of the Shares, the
Purchaser shall in any event be entitled to designate at least a majority of the
directors on the Board), and the Company shall, at such time, promptly take all
actions necessary to cause the Purchaser's designees to be elected as directors
of the Company, including increasing the size of the Board or securing the
resignations of incumbent directors or both; provided, however, that in the
event that the Purchaser's designees are elected to the Board, until the
Effective Time, the Board shall have at least one director who was a director of
the Company on the date of the Merger Agreement and who was not an officer of
the Company or any of its subsidiaries (each, an
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"Independent Director") and, provided, further, that, if no Independent
Directors then remain, the other directors of the Company on the date of the
Merger Agreement shall designate one person to fill such vacancy who shall not
be an officer or affiliate of the Company or any of its subsidiaries, or officer
or affiliate of Parent or any of its subsidiaries, and any such person is deemed
to be an Independent Director for purposes of the Merger Agreement. At such
times, the Company has agreed to use reasonable best efforts to cause persons
designated by the Purchaser to constitute the same percentage as persons
designated by the Purchaser shall constitute of the Board with respect to (a)
each committee of the Board, (b) each board of directors of each subsidiary of
the Company, and (c) each committee of each such board, to the extent permitted
by applicable law. The Merger Agreement provides that, following the election or
appointment of designees of the Purchaser pursuant to the terms of the Merger
Agreement and prior to the Effective Time, any amendment of the Merger Agreement
or the constituent documents of the Company, any termination of the Merger
Agreement by the Company, any extension by the Company of the time for the
performance of any of the obligations or other acts of the Purchaser or waiver
of any of the Company's rights under the Merger Agreement shall require the
concurrence of a majority of the Independent Directors.
Stock Options. The Merger Agreement provides that each option to purchase
Shares granted to any employee, consultant or director of the Company or any of
its subsidiaries pursuant to any of the Company stock option plans that,
immediately prior to the Effective Time, was outstanding, whether vested or not
vested shall be canceled in exchange for the right to receive a cash payment
equal to the product (such product, the "Option Consideration") of (a) the
excess of (i) the Merger Consideration over (ii) the exercise price per share of
such option multiplied by (b) the number of Shares covered by such option, which
cash payment shall be reduced by any applicable withholding taxes and be without
interest. In the case of options subject to the Company's 1988 Incentive Stock
Option Plan and all other options vested as of such date, payment shall be made
as soon as practicable after the Effective Time. In the case of all other
options, such payment shall be made on June 1, 1999, provided that the holder of
such option continues to be employed by the Company or its successor on such
date. Notwithstanding the foregoing, any options that become vested prior to
June 1, 1999 shall receive such payment as soon as practicable following the
date of such vesting. The Company has agreed to use its reasonable best efforts
to obtain all necessary consents of the holders of options to the cancellation
of the options.
Indemnification and Insurance. In the Merger Agreement, Parent has agreed
that for a period of three years after the Effective Time, Parent shall, and
that it shall cause the Surviving Corporation to, indemnify, defend and hold
harmless the present and former officers, directors, employees and agents of the
Company and its subsidiaries (collectively, the "Indemnified Parties") from and
against, and pay or reimburse the Indemnified Parties for, all losses,
obligations, expenses, claims, damages or liabilities resulting from or arising
out of actions or omissions occurring on or prior to the Effective Time to the
full extent permitted or required under applicable law and, in the case of
indemnification by the Surviving Corporation, to the extent permitted under the
provisions of the Certificate of Incorporation and the By-laws of the Company,
each as in effect at the date of the Merger Agreement (which provisions shall
not be amended in any manner which adversely affects any Indemnified Party, for
a period of three years), provided that in the event any claim or claims are
asserted or made within such three-year period, all rights to indemnification in
respect of each such claim shall continue until final disposition of such claim.
In any case in which approval by the Surviving Corporation is required to
effectuate any indemnification, Parent has agreed to cause the Surviving
Corporation to direct, at the election of the Indemnified Party, that the
determination of any such approval shall be made by independent counsel selected
by the Indemnified Party. In the event that Parent, the Surviving Corporation or
any of their successors or assigns (a) consolidates with or merges into any
other person and is not the continuing or surviving corporation or entity of
such consolidation or merger or (b) transfers or conveys all or substantially
all of its properties and assets to any person, then, and in each such case,
proper provision will be made so that the successors and assigns of Parent or
the Surviving Corporation, as the case may be, shall assume the indemnification
obligations set forth in the Merger Agreement. In the event that the Surviving
Corporation transfers any material portion of its assets, in a single
transaction or in a series of transactions, Parent has agreed that it will
either guarantee its indemnification obligations or take such other action to
insure that the ability of the Surviving Corporation, legal and financial, to
satisfy such indemnification obligations will not be diminished in any material
respect. Parent and the Purchaser have further agreed, for a
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period not less than three years after the Effective Time, to use their
reasonable best efforts maintain in effect directors' and officers' liability
insurance covering the Indemnified Parties who are currently covered by the
Company's existing directors' and officers' liability insurance, on terms and
conditions no less favorable to such directors and officers than those in effect
on the date hereof, provided that in no event shall Parent be required to expend
in any one year an amount in excess of 200% of the annual premiums currently
paid by the Company for such insurance; and, provided, further, that if the
annual premiums of such insurance coverage exceed such amount, Parent shall be
obligated to obtain a policy with the greatest coverage available for a cost not
exceeding such amount.
Reasonable Best Efforts. The Merger Agreement provides that, subject to
the terms of the Merger Agreement, each of the parties has agreed to use all
reasonable best efforts to take, or cause to be taken, all action, and to do, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to ensure that the conditions set forth in "-- Conditions
to the Merger" are satisfied and to consummate and make effective in the most
expeditious manner practicable, the transactions contemplated by the Merger
Agreement, including the Merger.
Directors and Officers. Pursuant to the Merger Agreement, the directors of
the Purchaser immediately prior to the Effective Time shall be the directors of
the Surviving Corporation, and the officers of the Company immediately prior to
the Effective Time shall be the officers of the Surviving Corporation, in each
case until the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
Employees and Employment Benefit Plans. In the Merger Agreement, Parent
expressed its intention to cause the Surviving Corporation and its subsidiaries
to maintain employee compensation policies and benefit plans for their
respective employees from and for a period of twelve months after the Effective
Time that, in the aggregate, are substantially comparable, in the aggregate, to
the compensation policies and Plans as of the date of the Merger Agreement. In
the Merger Agreement, from and after the Effective Time, Parent has agreed to
cause the Surviving Corporation and its subsidiaries to honor all existing
employment agreements in accordance with the terms thereof as in effect on the
date of the Merger Agreement or as the same may be amended with the consent of
the employee party thereto and Parent. To the extent that employees of the
Surviving Corporation or its subsidiaries become eligible to participate in any
employee benefit plan of Parent after the Effective Time, Parent has agreed to
recognize the service of such employees with the Company or its subsidiaries
completed prior to the Effective Time for all purposes of eligibility to
participate and vesting in its benefit plans.
Representations and Warranties. The Merger Agreement contains various
customary representations and warranties.
The Stockholders Agreements.
The following is a summary of the material provisions of the Stockholders
Agreements. The summary is qualified in its entirety by reference to the
Stockholders Agreements which are incorporated by reference and copies of which
have been filed with the SEC as exhibits to the Schedule 14D-1.
Pursuant to the Stockholders Agreements, each of the Certain Stockholders
has agreed unconditionally to tender all Subject Shares (as defined in the
Stockholders Agreements) held by such Certain Stockholder into the Offer and not
to withdraw any Subject Shares so tendered. If, for any reason, any of such
Subject Shares are not tendered into the Offer (or are tendered but are not
accepted), each Certain Stockholder has agreed to sell such Subject Shares to
the Purchaser, and the Purchaser has agreed to acquire such Subject Shares at
the Offer Price, provided that the Purchaser has accepted Shares for payment
under the Offer and the Minimum Condition has been satisfied.
Each of the Certain Stockholders has agreed that if the Merger Agreement
shall have been terminated under circumstances where Parent or any of its
affiliates is entitled, or may become entitled, to receive a Termination Fee,
and within one year of such termination (a) the Company enters into an
Acquisition Agreement with respect to any Acquisition Proposal that is
subsequently consummated or (b) an Acquisition Proposal is consummated, each
Certain Stockholder shall pay to Parent on demand, at the time such
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Acquisition Proposal is consummated, an amount equal to all Profit (as defined
below) of such Certain Stockholder. For purposes of the Stockholders Agreements,
the "Profit" of any Certain Stockholder from any Acquisition Proposal means (x)
the aggregate consideration that would have been received by such Certain
Stockholder pursuant to such Acquisition Proposal if such Certain Stockholder
held the same number of Subject Shares at the consummation of such Acquisition
Proposal as he held at the time the Merger Agreement was terminated (including
any consideration that would have been received in respect of any unexercised
stock options or warrants or similar instruments held at the time the Merger
Agreement was terminated), valuing any noncash consideration (including any
residual interest in the Company) at its fair market value on the date of such
consummation less (y) the fair market value of the aggregate consideration that
would have been issuable or payable to such Certain Stockholder (assuming all
stock options, warrants or similar instruments held by such Certain Stockholder
were exercised) if he had received the Merger Consideration (as defined in the
Stockholders Agreements) pursuant to the Merger Agreement as originally executed
(without giving effect to any increase in such Merger Consideration).
In addition, each Certain Stockholder has severally agreed that: (a) at any
meeting of stockholders of the Company called to vote upon the Merger and the
Merger Agreement or at any adjournment thereof or in any other circumstances
upon which a vote, consent or other approval (including by written consent) with
respect to the Merger and the Merger Agreement is sought, such Certain
Stockholder shall vote (or cause to be voted) the Subject Shares in favor of the
Merger, the adoption by the Company of the Merger Agreement and the approval of
the terms thereof and each of the other transactions contemplated by the Merger
Agreement; (b) at any meeting of stockholders of the Company or at any
adjournment thereof or in any other circumstances upon which a vote, consent or
other approval (including by written consent) of such Certain Stockholder is
sought, such Certain Stockholder shall vote (or cause to be voted) the Subject
Shares against (i) any Acquisition Proposal or (ii) any amendment of the
Company's certificate of incorporation or by-laws or other proposal or
transaction involving the Company, which amendment or other proposal or
transaction would be reasonably likely to impede, frustrate, prevent or nullify
the Merger, the Merger Agreement or any of the other transactions contemplated
by the Merger Agreement or change in any manner the voting rights of the
Company's common stock; (c) with certain exceptions, such Certain Stockholder
shall not, prior to the earliest of (i) the Effective Time and (ii) the
termination of the Merger Agreement in accordance with its terms, (x) sell,
transfer, give, pledge, assign or otherwise dispose of (including by gift)
(collectively, "Transfer"), or consent to any Transfer of, any or all of such
Subject Shares or any interest therein or enter into any contract, option or
other arrangement (including any profit sharing arrangement) with respect to the
Transfer of, the Subject Shares to any person other than pursuant to the terms
of the Offer or the Merger (except that Mr. Beckstrom may transfer up to 300,000
Subject Shares to charitable institutions, subject to the approval of Parent) or
(y) enter into any voting arrangement, whether by proxy, voting agreement or
otherwise, in connection with, directly or indirectly, any Acquisition Proposal
and agrees not to commit or agree to take any of the foregoing actions; and (d)
during the term of the Stockholders Agreements, such Certain Stockholder shall
not, nor shall it permit any investment banker, financial advisor, attorney or
accountant retained by, or other advisor or representative of, such Certain
Stockholder to, directly or indirectly (i) solicit, initiate or encourage
(including by way of furnishing non-public information), or take any other
action to facilitate, any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, an Acquisition Proposal
or (ii) participate in any discussions or negotiations regarding an Acquisition
Proposal. The Stockholders Agreements provide that each Certain Stockholder has
executed the Stockholders Agreements in his capacity as a stockholder of the
Company, and nothing therein shall limit or affect any actions taken by such
Certain Stockholder in his capacity as an officer or director of the Company.
Each Certain Stockholder has in the Stockholders Agreements irrevocably
granted to, and has appointed, Parent and Messrs. Strone Macpherson and Ross
Graham, in their respective capacities as officers of Parent, and any individual
who shall hereafter succeed to any such office of Parent, and each of them
individually, such Certain Stockholder's proxy and attorney-in-fact (with full
power of substitution), for and in the name, place and stead of such Certain
Stockholder, to vote such Certain Stockholder's Subject Shares, or grant a
consent or approval in respect of such Subject Shares, in connection any and all
of the matters described in clauses (a) and (b) of the immediately preceding
paragraph.
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Employment Agreements.
In connection with the Offer and the Merger, the Company has entered into
employment agreements (the "Employment Agreements"), each dated the date of the
Merger Agreement, with Messrs. Gilbert and Beckstrom to secure their continued
employment following the Merger. The following is a summary of the material
provisions of the Employment Agreements. The summary is qualified in its
entirety by reference to the Employment Agreements which are incorporated by
reference and copies of which have been filed with the SEC as exhibits to the
Schedule 14D-1.
Under the Employment Agreements, Messrs. Gilbert and Beckstrom will be
employed for a term commencing on the Effective Time of the Merger and ending on
the third anniversary thereof (the "Initial Term"). Following the Initial Term,
the Employment Agreements will be renewable for successive six month terms.
During the term of the Employment Agreements, each of Messrs. Gilbert and
Beckstrom will be paid a base salary of $250,000, subject to annual review on
each May 31 (beginning May 31, 2000). In the event of the termination of Mr.
Gilbert's or Mr. Beckstrom's employment during the Initial Term, without cause
by the Surviving Corporation or by either of them for good reason (in each case,
as defined in the Employment Agreements), such terminated executive will receive
six months' continuation of base salary payments and medical benefits. As an
additional incentive provided to Messrs. Gilbert and Beckstrom for continued
service and as motivation for superior performance, each of them shall be
entitled to participate in the Surviving Corporation's Long Term Incentive Plan.
See "-- Long Term Incentive Plan". The Employment Agreements also contain
post-employment restrictions on competition and solicitation of employees and
clients and other customary provisions.
The Company plans to enter into similar employment agreements with certain
other executive employees (each, an "Executive Employee" and collectively, the
"Executive Employees") in order to secure their continued employment following
the Merger as well.
Long Term Incentive Plan.
Subsequent to the Merger, the Surviving Corporation plans to implement a
Long Term Incentive Plan (the "LTIP") for Messrs. Gilbert and Beckstrom and such
other Executive Employees as may be selected by the Board of Directors of the
Surviving Corporation, with Parent's consent. The following is a summary of the
material provisions of the LTIP. The summary is qualified in its entirety by
reference to the Long Term Incentive Plan Term Sheet which is incorporated by
reference and a copy of which has been filed with the SEC as an exhibit to the
Schedule 14D-1.
Pursuant to the LTIP, long-term awards ("Awards") will be payable for the
three year period (the "Performance Period") from June 1, 1999, through May 31,
2002, based on certain performance objectives. Pursuant to the terms of the
LTIP, an Incentive Pool will be established for the purpose of administering
payments under the LTIP in the form of Awards to the LTIP Participants. Up to
$19.2 million will be reserved for possible credit to the Incentive Pool, the
exact size of which will be determined by the compounded annual profit growth
achieved by the Surviving Corporation during the Performance Period.
An aggregate of $1.6 million will be credited to the Incentive Pool if the
Surviving Corporation's "Profits" (to be defined in the LTIP) during the first
year of the Performance Period equal or exceed a specified dollar amount to be
determined by Parent in consultation with the Surviving Corporation (the "Base
Amount"). Following the second and third years of the Performance Period, the
aggregate amount credited to the Incentive Pool (inclusive of all prior years'
credits, if any) will equal $1.6 million if the compounded annual rate of Profit
growth ("Profits CAGR") over the Performance Period (measured against the Base
Amount, regardless of whether the actual Profits CAGR for Year 1 is less than or
greater than such Base Amount) equals 30%. To the extent that such Profits CAGR
for Years 2 and 3 exceeds 30%, the amount credited to the Incentive Pool will
increase, on a linear basis, up to an aggregate credit of $3.2 million if the
Profits CAGR equals 90%. If the Profits CAGR exceeds 90%, the amount credited to
the Incentive Pool will be determined as follows: (i) $4.8 million if the
Profits CAGR equals 120%; (ii) $8 million if the Profits CAGR equals 150%; (iii)
$12.8 million if the Profits CAGR equals 180%; (iv) $19.2 million if the Profits
CAGR equals or
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exceeds 210%; and (v) a pro-rata amount, calculated on a linear basis, if the
actual Profits CAGR falls between any of the above listed targets.
After determining the adjusted maximum size of the Incentive Pool as
described above, such amounts will be allocable to the Participants depending on
certain vesting requirements. The portion of the Incentive Pool that will become
vested and available to fund awards granted to Participants shall be determined
as follows: (A) following Year 1 of the Performance Period, 20% of the amount
(if any) credited to the Pool will become vested; (B) following Year 2, the
aggregate vested portion of the Pool (inclusive of the amount vested after Year
1) will equal the greater of (i) the amount vested after Year 1 or (ii) 40% of
the amount credited to the Incentive Pool following Year 2; (C) following Year
3, the aggregate vested portion of the Pool (inclusive of the amount vested
after Year 2) will equal the greater of (i) the amount vested after Year 2 or
(ii) 100% of the amount credited to the Incentive Pool following Year 3. The
vested portions of the Incentive Pool will be nonforfeitable. However, each LTIP
Participant must generally remain employed by the Surviving Corporation through
the final day of each Performance Year during the Performance Period in order to
be entitled to his or her applicable percentage of the LTIP accrual for such
Performance Year.
Payments under the LTIP in satisfaction of the awards granted to
Participants will be made in cash, with interest thereon at a simple annual rate
of 5% (payable from June 1, 1999). An LTIP Participant may cash out his or her
LTIP Award at any time, based on the vested portion of the Incentive Pool at
such time. However, by cashing out the LTIP Award, the Participant will forfeit
all rights to subsequent LTIP accruals. LTIP Awards will be automatically paid
out upon a Participant's termination of employment (other than due to a
termination "without cause" by the Surviving Corporation or a termination for
"good reason" by the Participant). In all cases, the LTIP Awards will be paid
out no later than October 31, 2004.
Commencing on June 1, 2003 as to 50% of a Participant's LTIP Award, and
June 1, 2004 as to the remaining 50%, a Participant will have the right to
redeem his or her LTIP Award (excluding any simple interest that may have
accrued thereon) for a cash payment based on a portion of the appreciation of
Misys Ordinary Shares since the closing date of the Tender Offer (the "SAR").
The base price for the SAR will equal 125% of the closing price of a Misys
Ordinary Share as of the closing date of the Tender Offer, expressed in Pounds
Sterling (the "Base Price"). Upon exercise of the SAR, a Participant will
receive a cash payment equal to the product of (A) the quotient of (x) the
dollar value (absent the SAR) of the portion of the LTIP Award being so redeemed
and (y) the Base Price, and (B) the closing price (in Pounds Sterling) of a
Misys Ordinary Share as of the exercise date. With respect to each Participant,
the SAR will terminate on the earlier of October 31, 2004 or the date on which
the participant terminates employment (other than due to a termination "without
cause" by the Surviving Corporation or a termination for "good reason" by the
participant).
The terms of the LTIP may be modified from the above description if
advantageous tax results may be achieved without materially changing the
economics of the LTIP.
Appraisal Rights. Holders of Shares do not have dissenters' rights as a
result of the Offer. However, if the Merger is consummated, holders of Shares
will have certain rights pursuant to the provisions of Section 262 of the DGCL
to dissent and demand appraisal of, and to receive payment in cash of the fair
value of, their Shares. If the statutory procedures were complied with, such
rights could lead to a judicial determination of the fair value required to be
paid in cash to such dissenting holders for their Shares. Any such judicial
determination of the fair value of Shares could be based upon considerations
other than or in addition to the Offer Price or the market value of the Shares,
including asset values and the investment value of the Shares. The fair value so
determined could be more or less than the Offer Price or the Per Share Merger
Consideration.
If any holder of Shares who demands appraisal under Section 262 of the DGCL
fails to perfect, or effectively withdraws or loses his right to appraisal, as
provided in the DGCL, the Shares of such holder will be converted into the Per
Share Merger Consideration in accordance with the Merger Agreement.
The foregoing discussion is not a complete statement of law pertaining to
appraisal rights under the DGCL and is qualified in its entirety by the full
text of Section 262 of the DGCL.
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FAILURE TO FOLLOW THE STEPS REQUIRED BY SECTION 262 OF THE DGCL FOR
PERFECTING APPRAISAL RIGHTS MAY RESULT IN THE LOSS OF SUCH RIGHTS.
Going Private Transactions. The Merger would have to comply with any
applicable Federal law operative at the time of its consummation. Rule 13e-3
under the Exchange Act is applicable to certain "going private" transactions.
The Purchaser does not believe that Rule 13e-3 will be applicable to the Merger
unless the Merger is consummated more than one year after the termination of the
Offer. If applicable, Rule 13e-3 would require, among other things, that certain
financial information concerning the Company and certain information relating to
the fairness of the Merger and the consideration offered to minority
shareholders be filed with the SEC and disclosed to minority shareholders prior
to consummation of the Merger.
Plans for the Company. Parent intends to conduct a detailed review of the
Company and its assets, corporate structure, dividend policy, capitalization,
operations, properties, policies, management and personnel and to consider,
subject to the terms of the Merger Agreement, what, if any, changes would be
desirable in light of the circumstances then existing, and reserves the right to
take such actions or effect such changes as it deems desirable. Such changes
could include changes in the Company's business, corporate structure,
capitalization, management or dividend policy.
Except as otherwise described in this Offer to Purchase, none of the
Purchaser, Parent or USA Sub has any current plans or proposals that would
relate to, or result in, any extraordinary corporate transaction involving the
Company or any of its subsidiaries, such as a merger, reorganization or
liquidation involving the Company, a sale or transfer of a material amount of
assets of the Company or any of its subsidiaries, any change in the Company's
capitalization or dividend policy or any other material change in the Company's
business, corporate structure or personnel.
13. DIVIDENDS AND DISTRIBUTIONS
The Merger Agreement provides that neither the Company nor any of its
subsidiaries will, without the written consent of Parent, (a) authorize for
issuance, issue, sell, deliver or agree or commit to issue, sell or deliver
(whether through the issuance or granting of additional options, warrants,
commitments, subscriptions, rights to purchase or otherwise) any shares of
capital stock of any class or any securities convertible into shares of capital
stock of any class, except as required by any Plan (as defined in the Merger
Agreement) or Stock Option Plan (as defined in the Merger Agreement) existing as
of the date of the Merger Agreement; or (b) split, combine or reclassify any
shares of its capital stock, declare, set aside or pay any dividend or other
distribution (whether in cash, stock or property or any combination thereof) in
respect of its capital stock, or redeem or otherwise acquire any shares of its
capital stock, provided that any of the Company's wholly-owned subsidiaries may
declare, set aside or pay any dividend or other distribution with respect to
their capital stock. See Section 12.
14. CERTAIN CONDITIONS OF THE OFFER
The Merger Agreement provides that notwithstanding any other provision of
the Offer, the Purchaser shall not be required to accept for payment, or,
subject to any applicable rules and regulations of the SEC, including Rule
14e-1(c) under the Exchange Act, to pay for any Shares not theretofore accepted
for payment or paid for, and the Purchaser may amend or terminate the Offer as
to such Shares not theretofore accepted for payment or paid for (subject to any
such applicable rules and regulations of the SEC) (i) unless the Minimum
Condition has been satisfied or waived, (ii) if any waiting period under the HSR
Act applicable to the purchase of Shares pursuant to the Offer shall not have
expired or been terminated, or (iii) if at any time on or after the date of the
Merger Agreement and at or before the time that the Shares are accepted for
payment any of the following conditions exists and is continuing:
(a) there shall be threatened or pending any action or proceeding by
any Governmental Entity or any order or temporary, preliminary or permanent
injunction or restraining order entered in any action or proceeding before
any Governmental Entity located or having jurisdiction within the United
States, the United Kingdom or any country or economic region in which
either the Company or Parent, directly or indirectly, has material assets
or operations, or any statute, rule, regulation, legislation,
interpretation,
30
<PAGE> 33
judgment or order enacted, entered, enforced, promulgated, amended, issued
or deemed applicable to the Purchaser, the Company or any subsidiary or
affiliate of the Purchaser or the Company or the Offer or the Merger, by
any Governmental Entity located or having jurisdiction within the United
States, the United Kingdom or any country or economic region in which
either the Company or Parent, directly or indirectly, has material assets
or operations, which would reasonably be expected to have the effect of (i)
making illegal, or otherwise directly or indirectly prohibiting,
challenging or materially restraining the making of the Offer, the
acceptance for payment of, payment for, or ownership, directly or
indirectly, of more than 90% of the Shares by Parent or the Purchaser, the
consummation of the Merger or the Offer, materially delaying the Merger or
making the aggregate cost of acquiring the Shares materially higher, (ii)
seeking to prohibit or limit the ownership or operation by the Company or
any of its subsidiaries that owns a material portion of the business and
assets of the Company and its subsidiaries taken as a whole, or by Parent
or the Purchaser of all or any material portion of the business or assets
of the Company and its subsidiaries taken as a whole or Parent and its
subsidiaries taken as a whole, or compelling the Purchaser or Parent to
dispose of or hold separate all or any material portion of the business or
assets of the Company and its subsidiaries taken as a whole or Parent and
its subsidiaries taken as a whole, as a result of the transactions
contemplated by the Merger Agreement, (iii) seeking to impose limitations
on the ability of the Purchaser or Parent effectively to acquire or hold or
to exercise full rights of ownership of Shares including, without
limitation, the right to vote any Shares acquired or owned by Parent or the
Purchaser on all matters properly presented to the stockholders of the
Company, including, without limitation, the adoption and approval of the
Merger Agreement and the Merger or the right to vote any shares of capital
stock of any subsidiary (other than immaterial subsidiaries) directly or
indirectly owned by the Company, or (iv) seeking to require divestiture by
Parent or the Purchaser, directly or indirectly, of any Shares or assets of
Parent, the Purchaser, the Company or their respective affiliates;
(b) there shall have occurred any event, change, effect or development
that, individually or in the aggregate, has had or would be reasonably
expected to have, a material adverse effect on the business, operations,
results of operations, prospects, assets or financial condition of the
Company and its subsidiaries taken as a whole (except for any such effect
that is caused principally by the announcement or pendency of the Offer or
the Merger);
(c) there shall have occurred (i) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States or the United Kingdom, or (ii) a currency moratorium on the exchange
markets in London or New York City with respect to the English pound
sterling or the United States dollar;
(d) the Merger Agreement shall have been terminated in accordance with
its terms or the Offer shall have been terminated with the consent of the
Company;
(e) any of the representations and warranties of the Company set forth
in the Merger Agreement that are qualified as to materiality shall not have
been true and correct or any such representations and warranties that are
not so qualified shall not have been true and correct in all material
respects, in each case as of the date of the Merger Agreement and
immediately prior to the consummation of the offer as if made on such date
(other than representations and warranties made as of a specified date)
which failure to be true and correct or true and correct in all material
respects is not reasonably capable of being cured by the commercially
reasonable best efforts of the Company within 10 days of the receipt by the
Company of written notice thereof; or
(f) the Company shall have failed to perform in any material respect
any obligation or to comply in any material respect with any agreement or
covenant of the Company to be performed or complied with by it under the
Merger Agreement prior to the time of such determination which failure is
not reasonably capable of being cured by the commercially reasonable best
efforts of the Company within 10 days of the receipt by the Company of
written notice thereof;
which, in the good faith sole judgment of the Purchaser with respect to each and
every matter referred to above and regardless of the circumstances giving rise
to any such condition, makes it inadvisable to proceed with the Offer or with
such acceptance for payment of or payment for Shares or to proceed with the
Merger.
31
<PAGE> 34
Pursuant to the Merger Agreement, the foregoing conditions are for the sole
benefit of the Purchaser and may be asserted by the Purchaser regardless of the
circumstances giving rise to any such condition or may (except of the Minimum
Condition) be waived by the Purchaser in whole or in part at any time and from
time to time in its sole discretion. The failure by the Purchaser at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any such
right, the waiver of any such right with respect to particular facts and other
circumstances shall not be deemed a waiver with respect to any other facts and
circumstances, and each such right shall be deemed an ongoing right that may be
asserted at any time and from time to time.
15. CERTAIN LEGAL MATTERS
Except as described in this Section 15, based on a review of publicly
available filings made by the Company with the SEC and other publicly available
information concerning the Company, none of the Purchaser, Parent or USA Sub is
aware of any license or regulatory permit that appears to be material to the
business of the Company and its subsidiaries, taken as a whole, that might be
adversely affected by the Purchaser's acquisition of Shares (and the indirect
acquisition of the stock of the Company's subsidiaries) as contemplated herein
or of any approval or other action by any governmental entity that would be
required for the acquisition or ownership of Shares by the Purchaser as
contemplated herein. Should any such approval or other action be required, the
Purchaser, Parent and USA Sub currently contemplate that such approval or other
action will be sought, except as described below under "-- State Takeover Laws."
While, except as otherwise expressly described in this Section 15, the Purchaser
does not presently intend to delay the acceptance for payment of or payment for
Shares tendered pursuant to the Offer pending the outcome of any such matter,
there can be no assurance that any such approval or other action, if needed,
would be obtained or would be obtained without substantial conditions or that
failure to obtain any such approval or other action might not result in
consequences adverse to the Company's business or that certain parts of the
Company's business might not have to be disposed of if such approvals were not
obtained or such other actions were not taken or in order to obtain any such
approval or other action. If certain types of adverse action are taken with
respect to the matters discussed below, the Purchaser could, subject to the
terms and conditions of the Merger Agreement, decline to accept for payment or
pay for any Shares tendered. See Section 14 for certain conditions to the Offer.
State Takeover Laws. A number of states throughout the United States have
enacted takeover statutes that purport, in varying degrees, to be applicable to
attempts to acquire securities of corporations that are incorporated or have
assets, stockholders, executive offices or places of business in such states. In
Edgar v. MITE Corp., the Supreme Court of the United States held that the
Illinois Business Takeover Act, which involved state securities laws that made
the takeover of certain corporations more difficult, imposed a substantial
burden on interstate commerce and therefore was unconstitutional. In CTS Corp.
v. Dynamics Corp. of America, however, the Supreme Court of the United States
held that a state may, as a matter of corporate law and, in particular, those
laws concerning corporate governance, constitutionally disqualify a potential
acquiror from voting on the affairs of a target corporation without prior
approval of the remaining stockholders, provided that such laws were applicable
only under certain circumstances. Subsequently, a number of Federal courts ruled
that various state takeover statutes were unconstitutional insofar as they apply
to corporations incorporated outside the state of enactment.
Section 203 of the DGCL limits the ability of a Delaware corporation to
engage in business combinations with "interested stockholders" (defined
generally as any beneficial owner of 15% or more of the outstanding voting stock
of the corporation) for a period of three years from the time such interested
stockholders became the holders of 15% or more of such Shares unless, among
other things, the corporation's board of directors has given its prior approval
to either the business combination or the transaction which resulted in the
stockholder becoming an "interested stockholder". The Board has approved the
Merger Agreement and the Stockholders Agreements and the Purchaser's acquisition
of Shares pursuant to the Offer and, therefore, Section 203 of the DGCL is
inapplicable to the Merger.
Except as described herein, the Purchaser has not attempted to comply with
any state takeover statutes in connection with the Offer. The Purchaser reserves
the right to challenge the validity or applicability of any state law allegedly
applicable to the Offer and nothing in this Offer to Purchase nor any action
taken in
32
<PAGE> 35
connection with the Offer or the Merger is intended as a waiver of that right.
In the event that any state takeover statute is found applicable to the Offer or
the Merger, the Purchaser might be unable to accept for payment or pay for
Shares tendered pursuant to the Offer or be delayed in continuing or
consummating the Offer or the Merger. In such case, the Purchaser might not be
obligated to accept for payment or pay for any Shares tendered. See Section 14.
Antitrust. Under the provisions of the HSR Act applicable to the Offer,
the acquisition of Shares under the Offer may be consummated following the
expiration of a 15-calendar day waiting period following the filing by Parent of
a Notification and Report Form with respect to the Offer, unless Parent receives
a request for additional information or documentary material from the Antitrust
Division or the FTC or unless early termination of the waiting period is
granted. Parent made such filing on December 14, 1998, and the 15-calendar day
waiting period will expire on December 29, 1998. If, within the initial 15-day
waiting period, either the Antitrust Division or the FTC requests additional
information or material from Parent concerning the Offer, the waiting period
will be extended and would expire at 11:59 p.m., New York City time, on the
tenth calendar day after the date of substantial compliance by Parent with such
request. Only one extension of the waiting period pursuant to a request for
additional information is authorized by the HSR Act. Thereafter, such waiting
period may be extended only by court order or with the consent of Parent. In
practice, complying with a request for additional information or material can
take a significant amount of time. In addition, if the Antitrust Division or the
FTC raises substantive issues in connection with a proposed transaction, the
parties frequently engage in negotiations with the relevant governmental agency
concerning possible means of addressing those issues and may agree to delay
consummation of the transaction while such negotiations continue. Expiration or
termination of the applicable waiting period under the HSR Act is a condition to
the Purchaser's obligation to accept for payment and pay for Shares tendered
pursuant to the Offer.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the Purchaser's proposed acquisition
of the Company. At any time before or after the Purchaser's acquisition of
Shares pursuant to the Offer, the Antitrust Division or the FTC could take such
action under the antitrust laws as it deems necessary or desirable in the public
interest, including seeking to enjoin the purchase of Shares pursuant to the
Offer or the consummation of the Merger or seeking the divestiture of Shares
acquired by the Purchaser or the divestiture of substantial assets of the
Company or its subsidiaries or Parent or its subsidiaries. Private parties may
also bring legal action under the antitrust laws under certain circumstances.
Based upon a preliminary examination of information provided by the Company
relating to the businesses in which Parent and the Company are engaged, Parent
and the Purchaser believe that the acquisition of Shares by Purchaser will not
violate the antitrust laws. Nevertheless, there can be no assurance that a
challenge to the Offer on antitrust grounds will not be made or, if such a
challenge is made, of the result thereof.
Other Foreign Laws. The Company has informed the Purchaser that the
Company and certain of its subsidiaries conduct business in certain other
foreign countries where regulatory filings or approvals may be required in
connection with the consummation of the Offer. Certain of such filings, if
required, may not be completed and certain of such approvals, if required, may
not be obtained, prior to the expiration of the Offer. However, there is no
present intention to delay the acceptance for payment of or the payment for
Shares pursuant to the Offer pending the completion of such filings and the
obtaining of such approvals. There is no assurance that any such approvals would
be obtained or that adverse consequences to Parent's or the Company's business
might not result from a failure to obtain such approvals or conditions that
might be imposed in connection therewith.
16. FEES AND EXPENSES
Greenhill is acting as Dealer Manager in connection with the Offer and is
acting as financial advisor to Parent in connection with the Offer and the
Merger. Pursuant to an engagement letter (the "Engagement Letter") between
Parent and Greenhill, Parent has agreed to pay Greenhill as compensation for
such services, a Transaction Fee equal to the lower of (a) $600,000, or (b) 1.0%
of the Transaction Value (as defined in the Engagement Letter), payable in cash
upon Parent's achieving majority ownership of the Company. Parent has also
agreed to reimburse Greenhill for its reasonable out-of-pocket expenses,
including the reasonable fees and
33
<PAGE> 36
expenses of its counsel and any other professional advisor retained by Greenhill
in connection with its engagement and to indemnify Greenhill and certain related
persons against certain liabilities and expenses, including certain liabilities
and expenses under the Federal securities laws.
Parent has retained Corporate Investor Communications, Inc. to act as the
Information Agent and BankBoston, N.A. to serve as the Depositary in connection
with the Offer. The Information Agent and the Depositary each will receive
reasonable and customary compensation for their services, be reimbursed for
certain reasonable out-of-pocket expenses and be indemnified against certain
liabilities and expenses in connection therewith, including certain liabilities
and expenses under the Federal securities laws.
None of the Purchaser, Parent or USA Sub will pay any fees or commissions
to any broker or dealer or other person (other than the Dealer Manager and the
Information Agent) in connection with the solicitation of tenders of Shares
pursuant to the Offer. Brokers, dealers, banks and trust companies will be
reimbursed by the Purchaser upon request for customary mailing and handling
expenses incurred by them in forwarding material to their customers.
17. MISCELLANEOUS
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the laws of such
jurisdiction. To the extent the Purchaser, Parent or USA Sub becomes aware of
any state law that would limit the class of offerees in the Offer, the Purchaser
reserves the right to amend the Offer and, depending on the timing of such
amendment, if any, will extend the Offer to provide adequate dissemination of
such information to holders of Shares prior to the expiration of the Offer. In
any jurisdiction the securities, blue sky or other laws of which require the
Offer to be made by a licensed broker or dealer, the Offer is being made on
behalf of the Purchaser by the Dealer Manager or one or more registered brokers
or dealers licensed under the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER, PARENT OR USA SUB NOT CONTAINED IN
THIS OFFER TO PURCHASE OR IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED.
The Purchaser, Parent and USA Sub have filed with the SEC the Schedule
14D-1 pursuant to Rule 14d-3 under the Exchange Act, together with exhibits,
furnishing certain additional information with respect to the Offer, and may
file amendments thereto. In addition, the Company has filed the Schedule 14D-9
pursuant to Rule 14d-9 under the Exchange Act, together with exhibits, setting
forth its recommendation with respect to the Offer and the reasons for such
recommendation and furnishing such additional related information. Such
Schedules and any amendments thereto, including exhibits, should be available
for inspection and copies should be obtainable in the manner set forth in
Section 8 (except that such material will not be available at the regional
offices of the SEC).
MOXIE ACQUISITION CORP.
December 18, 1998
34
<PAGE> 37
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF
PARENT, USA SUB AND THE PURCHASER
DIRECTORS AND EXECUTIVE OFFICERS OF PARENT
The following table sets forth the name, business address, present
principal occupation or employment and five-year employment history of each of
the directors and executive officers of Misys plc. All of the directors and
officers listed below are citizens of the United Kingdom, except Mr. Farr, who
is a citizen of the United States. Directors are indicated by an asterisk.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT AND FIVE-YEAR
NAME AND BUSINESS ADDRESS EMPLOYMENT HISTORY
- ------------------------- --------------------------------------------
<S> <C>
KEVIN LOMAX*................................ Executive Chairman, Misys plc (1985 to
present).
Misys plc
Burleigh House
Chapel Oak
Salford Priors
Worcestershire
WR11 5SH (England)
STRONE MACPHERSON*.......................... Deputy Chairman, Misys plc (1989 to
present).
Misys plc
14 Floral Street
London
WC2E 9DH (England)
HOWARD EVANS*............................... Finance Director, Misys plc (January, 1998 to
Misys plc present); Finance Director, Courtaulds plc
Burleigh House (1994-1997); Partner, Price Waterhouse,
Chapel Oak Accountants (1984-1994).
Salford Priors
Worcestershire
WR11 5SH (England)
ROSS K. GRAHAM*............................. Corporate Development Director and Company
Misys plc Secretary, Misys plc (January, 1998 to present);
Burleigh House Finance Director, Misys plc (1987 to January,
Chapel Oak 1998).
Salford Priors
Worcestershire
WR11 5SH (England)
MICHAEL K. O'LEARY*......................... Chief Executive Officer, Medic Computer
Medic Computer Systems Inc. Systems Inc. (February, 1998 to present); Chief
8601 Six Forks Road Executive Officer, Insurance Division, Misys plc
Suite 300 (1992-1998).
Raleigh, North Carolina
27615 (United States)
</TABLE>
I-1
<PAGE> 38
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT AND FIVE-YEAR
NAME AND BUSINESS ADDRESS EMPLOYMENT HISTORY
- ------------------------- --------------------------------------------
<S> <C>
JOHN G. SUSSENS*............................ Managing Director, Misys plc (1989 to
present);
Misys plc Chief Executive, Banking Division, Misys plc
Burleigh House (1985-1998); Chief Executive Officer,
Insurance
Chapel Oak and Information Systems Divisions
(1989-1995).
Salford Priors
Worcestershire
WR11 5SH (England)
ANTHONY G. L. ALEXANDER*.................... Chairman, Marley plc (1997 to present); Vice
Crafnant Chairman, Imperial Tobacco Group plc
(August,
Gregories Farm Lane 1996 to present); Chief Operating Officer,
UK,
Beaconsfield Hanson plc (1986-1996).
Bucks
HP9 1HJ (England)
DR. GEORGE GRAY*............................ Chairman, Serco Group plc (1982 to present).
19 Lakeside Grange
Weybridge
Surrey KT13 9ZE (England)
GEORGE ("CHUCK") FARR*...................... Retired (1998 to present); Vice Chairman of
69 Vineyard Lane American Express (1995-1998); Director,
Greenwich, CT 06831 (United States) McKinsey & Company (1968-1995).
</TABLE>
DIRECTORS AND EXECUTIVE OFFICERS OF KIRSTY, INC.
The following table sets forth the name, business address, present
occupation or employment and five-year employment history of each of the
directors and executive officers of Kirsty, Inc. All of the directors and
officers listed below are citizens of the United Kingdom. Directors are
indicated by an asterisk.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT AND FIVE-YEAR
NAME AND BUSINESS ADDRESS EMPLOYMENT HISTORY
- ------------------------- --------------------------------------------
<S> <C>
CHARLES JOHN COLWELL*....................... President, Secretary and Treasurer, Kirsty,
Inc.;
Summit Systems Inc Chief Financial Officer, Summit Systems,
Inc.
22 Cortlandt Street (1998 to present); Regional Financial
Controller,
New York, NY 10007 (United States) Midas-Kapiti International Ltd (1995-1998);
Internal Auditor, Misys plc (1993-1995).
ROSS K. GRAHAM.............................. Vice President, Kirsty, Inc.; Corporate
Misys plc Development Director and Company Secretary,
Burleigh House Misys plc (January, 1998 to present);
Finance
Chapel Oak Director, Misys plc (1987 to January, 1998).
Salford Priors
Worcestershire
WR11 5SH (England)
</TABLE>
DIRECTORS AND EXECUTIVE OFFICERS OF MOXIE ACQUISITION CORP.
The following table sets forth the name, business address, present
occupation or employment and five-year employment history of each of the
directors and executive officers of Moxie Acquisition Corp. All of the directors
and officers listed below are citizens of the United Kingdom. Directors are
indicated by an asterisk.
I-2
<PAGE> 39
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT AND FIVE-YEAR
NAME AND BUSINESS ADDRESS EMPLOYMENT HISTORY
- ------------------------- --------------------------------------------
<S> <C>
JOHN G. SUSSENS*............................ President, Moxie Acquisition Corp.; Managing
Misys plc Director, Misys plc (1989 to present); Chief
Burleigh House Executive, Banking Division, Misys plc (1985-
Chapel Oak 1998); Chief Executive Officer, Insurance and
Salford Priors Information Systems Divisions (1989-1995).
Worcestershire
WR11 5SH (England)
Vice President and Treasurer, Moxie
RUPERT C. SOAMES*........................... Acquisition
Midas-Kapiti International Ltd Corp.; Chief Executive Officer, Midas-Kapiti
1 St George's Road International Limited (1997 to present);
Wimbledon Managing Director, Avery Berkel UK (1995-
London 1997); Assistant Commercial Director, GEC
SW 19 4DR (England) Group (1991-1995).
ROSS K. GRAHAM*............................. Secretary, Moxie Acquisition Corp.;
Misys plc Corporate Development Director and Company Secretary,
Burleigh House Misys plc (January, 1998 to present);
Chapel Oak Finance Director, Misys plc (1987 to January, 1998).
Salford Priors
Worcestershire
WR11 5SH (England)
</TABLE>
I-3
<PAGE> 40
Manually signed facsimile copies of the Letter of Transmittal will be
accepted. The Letter of Transmittal, certificates for Shares and any other
required documents should be sent or delivered by each stockholder of the
Company or such stockholder's broker, dealer, bank, trust company or other
nominee to the Depositary at one of its addresses set forth below.
The Depositary for the Offer is:
BANKBOSTON, N.A.
<TABLE>
<S> <C> <C>
By First Class Mail: By Hand: By Overnight Courier or Certified Mail:
BankBoston, N.A. Securities Transfer & BankBoston, N.A.
Attn: Corporate Reporting Services, Inc. Attn: Corporate Reorganization
Reorganization c/o EquiServe LP 150 Royall Street
P.O. Box 8029 100 Williams Street Canton, MA 02021
Boston, MA 02266-8029 Galleria
New York, NY 10038
</TABLE>
Questions and requests for assistance or for additional copies of this
Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed
Delivery may be directed to the Information Agent or the Dealer Manager at their
respective addresses and telephone numbers listed below. You may also contact
your broker, dealer, bank, trust company or other nominee for assistance
concerning the Offer.
The Information Agent for the Offer is:
[CIC LOGO WITH ADDRESS]
The Dealer Manager for the Offer is:
GREENHILL & CO., LLC
31 West 52nd Street
New York, NY 10019
(212) 408-0660
<PAGE> 1
EXHIBIT (A)(2)
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
C-ATS SOFTWARE INC.
PURSUANT TO THE OFFER TO PURCHASE
DATED DECEMBER 18, 1998
BY
MOXIE ACQUISITION CORP.
A WHOLLY-OWNED SUBSIDIARY OF
KIRSTY, INC.
AN INDIRECT WHOLLY-OWNED SUBSIDIARY OF
MISYS PLC
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON TUESDAY, JANUARY 19, 1999, UNLESS THE OFFER IS EXTENDED.
The Depositary:
BANKBOSTON, N.A.
<TABLE>
<S> <C> <C>
By First Class Mail: By Hand: By Overnight Courier or Certified
Mail:
BankBoston, N.A Securities Transfer & BankBoston, N.A.
Attn: Corporate Reorganization Reporting Services, Inc. Attn: Corporate Reorganization
P.O. Box 8029 c/o EquiServe LP 150 Royall Street
Boston, MA 02266-8029 100 Williams Street Canton, MA 02021
Galleria
New York, NY 10038
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS, OR TRANSMISSION OF
INSTRUCTIONS VIA A FACSIMILE NUMBER, OTHER THAN AS SET FORTH ABOVE DOES NOT
CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF
TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS
COMPLETED.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
- ------------------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK,
EXACTLY AS NAME(S) APPEAR(S) ON SHARES(S) TENDERED
SHARE CERTIFICATE(S)) (ATTACH ADDITIONAL LIST IF NECESSARY)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SHARE TOTAL NUMBER OF
CERTIFICATE SHARES REPRESENTED BY NUMBER OF SHARES
NUMBER(S)(*) SHARE CERTIFICATE(S)(*) TENDERED (**)
---------------------------------------------------------------------
---------------------------------------------------------------------
---------------------------------------------------------------------
---------------------------------------------------------------------
---------------------------------------------------------------------
TOTAL SHARES
- -----------------------------------------------------------------------------------------------------------------------------
* Need not be completed by Book-Entry Stockholders.
** Unless otherwise indicated, it will be assumed that all Shares described above are being tendered. See instruction 4.
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 2
This Letter of Transmittal is to be used either if certificates for Shares
(as defined below) are to be forwarded herewith or, unless an Agent's Message
(as defined in the Offer to Purchase (as defined below)) is utilized, if
delivery of Shares is to be made by book-entry transfer to an account maintained
by the Depositary at the Book-Entry Transfer Facility (as defined in and
pursuant to the procedures set forth in Section 2 of the Offer to Purchase).
Stockholders who deliver Shares by book-entry transfer are referred to herein as
"Book-Entry Stockholders" and other stockholders are referred to herein as
"Certificate Stockholders." Stockholders whose certificates for shares are not
immediately available or who cannot deliver either the certificates for, or a
Book-Entry Confirmation (as defined in the Offer to Purchase) with respect to,
their Shares and all other documents required hereby to the Depositary prior to
the Expiration Date (as defined in the Offer to Purchase) must tender their
Shares in accordance with the guaranteed delivery procedures set forth in
Section 2 of the Offer to Purchase. See Instruction 2.
DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE
DELIVERY TO THE DEPOSITARY.
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH THE BOOK-ENTRY
TRANSFER FACILITY AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN THE
BOOK-ENTRY TRANSFER FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution:
- --------------------------------------------------------------------------------
Account Number:
- ----------------------------------- Transaction Code Number:
- -----------------------------------
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Owner(s):
- --------------------------------------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
----------------------------------------------------------------
Name of Institution that Guaranteed Delivery:
-----------------------------------------------------------------------
If delivered by book-entry transfer check box:
[ ] BankBoston, N.A.
Account Number:
- ----------------------------------- Transaction Code Number:
- -----------------------------------
<PAGE> 3
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to Moxie Acquisition Corp., a Delaware
corporation (the "Purchaser") and a wholly-owned subsidiary of Kirsty, Inc., a
Delaware corporation and an indirect wholly-owned subsidiary of Misys plc, a
public limited company organized under the laws of England, the above-described
shares of Common Stock, par value $0.001 per share (the "Shares"), of C-ATS
Software Inc., a Delaware corporation (the "Company"), upon the terms and
subject to the conditions set forth in the Purchaser's Offer to Purchase dated
December 18, 1998 (the "Offer to Purchase"), and this Letter of Transmittal
(which, together with any amendments or supplements thereto or hereto,
collectively constitute the "Offer"), receipt of which is hereby acknowledged.
Upon the terms of the Offer, subject to, and effective upon, acceptance for
payment of, and payment for, the Shares tendered herewith in accordance with the
terms of the Offer, the undersigned hereby sells, assigns and transfers to, or
upon the order of, the Purchaser all right, title and interest in and to all the
Shares that are being tendered hereby (and any and all other Shares or other
securities or rights issued or issuable in respect thereof), and irrevocably
constitutes and appoints BankBoston, N.A. (the "Depositary"), the true and
lawful agent and attorney-in-fact of the undersigned, with full power of
substitution (such power of attorney being deemed to be an irrevocable power
coupled with an interest), to the full extent of the undersigned's rights with
respect to such Shares (and any such other Shares or securities or rights), (a)
to deliver certificates for such Shares (and any such other Shares or securities
or rights) or transfer ownership of such Shares (and any such other Shares or
securities or rights) on the account books maintained by the Book-Entry Transfer
Facility together, in any such case, with all accompanying evidences of transfer
and authenticity to, or upon the order of, the Purchaser, (b) to present such
Shares (and any such other Shares or securities or rights) for transfer on the
Company's books, and (c) to receive all benefits and otherwise exercise all
rights of beneficial ownership of such Shares (and any such other Shares or
securities or rights), all in accordance with the terms of the Offer.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the tendered
Shares (and any and all other Shares or other securities or rights issued or
issuable in respect of such Shares) and, when the same are accepted for payment
by the Purchaser, the Purchaser will acquire good title thereto, free and clear
of all liens, restrictions, claims and encumbrances, and the same will not be
subject to any adverse claim. The undersigned will, upon request, execute any
additional documents deemed by the Depositary or the Purchaser to be necessary
or desirable to complete the sale, assignment and transfer of the tendered
Shares (and any and all such other Shares or securities or rights).
All authority conferred or agreed to be conferred pursuant to this Letter
of Transmittal shall be binding upon the successors, assigns, heirs, executors,
administrators and legal representatives of the undersigned and shall not be
affected by, and shall survive, the death or incapacity of the undersigned.
Except as stated in the Offer to Purchase, this tender is irrevocable.
The undersigned hereby irrevocably appoints Ross Graham and Strone
Macpherson, and each of them, and any other designees of the Purchaser, the
attorneys-in-fact and proxies of the undersigned, each with full power of
substitution, to vote at any annual, special or adjourned meeting of the
Company's stockholders or otherwise in such manner as each such attorney-in-fact
and proxy or his or her substitute shall in his or her sole discretion deem
proper with respect to, to execute any written consent concerning any matter as
each such attorney-in-fact and proxy or his or her substitute shall in his or
her sole discretion deem proper with respect to, and to otherwise act as each
such attorney-in-fact and proxy or his or her substitute shall in his or her
sole discretion deem proper with respect to, the Shares tendered hereby that
have been accepted for payment by the Purchaser prior to the time any such
action is taken and with respect to which the undersigned is entitled to vote
(and any and all other Shares or other securities or rights issued or issuable
in respect of such Shares). This appointment is effective when, and only to the
extent that, the Purchaser accepts for payment such Shares as provided in the
Offer to Purchase. This power of attorney and proxy are irrevocable and are
granted in consideration of the acceptance for payment of such Shares in
accordance with the terms of the Offer. Upon such acceptance for payment, all
prior powers of attorney, proxies and consents given by the undersigned with
respect to such Shares (and any such other Shares or securities or rights) will,
without further action, be revoked and no subsequent powers of attorney,
proxies, consents or revocations may be given (and, if given, will not be deemed
effective) by the undersigned.
The undersigned understands that the valid tender of Shares pursuant to any
of the procedures described in Section 2 of the Offer to Purchase and in the
Instructions hereto will constitute a binding agreement between the undersigned
and the Purchaser upon the terms and subject to the conditions of the Offer.
<PAGE> 4
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the purchase price and/or return any certificates for
Shares not tendered or accepted for payment in the name(s) of the registered
holder(s) appearing under "Description of Shares Tendered." Similarly, unless
otherwise indicated under "Special Delivery Instructions," please mail the check
for the purchase price and/or return any certificates for Shares not tendered or
accepted for payment (and accompanying documents, as appropriate) to the
address(es) of the registered holder(s) appearing under "Description of Shares
Tendered." In the event that both "Special Delivery Instructions" and "Special
Payment Instructions" are completed, please issue the check for the purchase
price and/or return any certificates for Shares not tendered or accepted for
payment (and any accompanying documents, as appropriate) in the name of, and
deliver such check and/or return such certificates (and any accompanying
documents, as appropriate) to, the person or persons so indicated. Please credit
any Shares tendered herewith by book-entry transfer that are not accepted for
payment by crediting the account at the Book-Entry Transfer Facility designated
above. The undersigned recognizes that the Purchaser has no obligation pursuant
to "Special Payment Instructions" to transfer any Shares from the name of the
registered holder thereof if the Purchaser does not accept for payment any of
the Shares so tendered.
<PAGE> 5
[ ] CHECK HERE IF ANY OF THE CERTIFICATES REPRESENTING SHARES THAT YOU OWN
HAVE BEEN LOST OR DESTROYED AND SEE INSTRUCTION 11.
Number, class and series of Shares represented by the lost or destroyed
certificates:
- ------------------------------------
------------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 5, 6 AND 7)
To be completed ONLY if certificates for Shares not tendered or not
accepted for payment and/or the check for the purchase price of Shares
accepted for payment are to be issued in the name of someone other than
the undersigned.
Issue [ ] Check [ ] Certificate(s) to:
Name
----------------------------------------------------
(PLEASE PRINT)
Address
--------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
(INCLUDE ZIP CODE)
------------------------------------------------------
(TAXPAYER IDENTIFICATION OR
SOCIAL SECURITY NUMBER)
------------------------------------------------------------
------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 5, 6, AND 7)
To be completed ONLY if certificates for Shares not tendered or not
accepted for payment and/or the check for the purchase price of Shares
accepted for payment are to be sent to someone other than the undersigned,
or to the undersigned at an address other than that above.
Mail [ ] Check [ ] Certificate(s) to:
Name
----------------------------------------------------
(PLEASE PRINT)
Address
--------------------------------------------------
------------------------------------------------------------
------------------------------------------------------------
------------------------------------------------------------
(INCLUDE ZIP CODE)
------------------------------------------------------------
(TAXPAYER IDENTIFICATION OR
SOCIAL SECURITY NUMBER)
------------------------------------------------------------
<PAGE> 6
SIGN HERE
(ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW)
(arrow) (arrow)
- --------------------------------------------------------------------------------
(arrow) (arrow)
- --------------------------------------------------------------------------------
(SIGNATURE(S) OF STOCKHOLDER(S))
Dated:
- --------------------------------------------------------------------------------
(Must be signed by registered holder(s) as name(s) appear(s) on the
certificate(s) for the Shares or on a security position listing or by person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by trustees, executors, administrators,
guardians, attorneys-in-fact, officers of corporations or others acting in a
fiduciary or representative capacity, please provide the following information
and see Instruction 5.)
Name(s)
- --------------------------------------------------------------------------------
------------------------------------------------------------------------
(PLEASE PRINT)
Capacity (Full title)
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
-------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Daytime Area Code and Telephone No.
- ----------------------------------------------------------------------------
Employer Identification or Social Security Number
- ----------------------------------------------------------------
(SEE SUBSTITUTE FORM W-9)
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED -- SEE INSTRUCTIONS 1 AND 5)
Authorized Signature
- --------------------------------------------------------------------------------
Name
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Name of Firm
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
-------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Daytime Area Code and Telephone No.
- ----------------------------------------------------------------------------
Dated:
- --------------------------------------------------------------------------------
<PAGE> 7
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee is required on this
Letter of Transmittal (a) if this Letter of Transmittal is signed by the
registered holder(s) (which term, for purposes of this Section, includes any
participant in the Book-Entry Transfer Facilities' systems whose name appears on
a security position listing as the owner of the Shares) of Shares tendered
herewith, unless such registered holder(s) has completed either the box entitled
"Special Payment Instructions" or the box entitled "Special Delivery
Instructions" on this Letter of Transmittal, or (b) if such Shares are tendered
for the account of a firm that is a participant in the Security Transfer Agents
Medallion Program or the New York Stock Exchange Guarantee Program or the Stock
Exchange Medallion Program or by any other "eligible guarantor institution," as
such term is defined in Rule 17Ad-15 under the Securities Exchange Act of 1934,
as amended (each an "Eligible Institution"). In all other cases, all signatures
on this Letter of Transmittal must be guaranteed by an Eligible Institution. See
Instruction 5.
2. REQUIREMENTS OF TENDER. This Letter of Transmittal is to be completed
by stockholders either if certificates are to be forwarded herewith or, unless
an Agent's Message (as defined below) is utilized, if delivery of Shares is to
be made pursuant to the procedures for book-entry transfer set forth in Section
2 of the Offer to Purchase. For a stockholder validly to tender Shares pursuant
to the Offer, either (a) a Letter of Transmittal (or a facsimile thereof),
properly completed and duly executed, together with any required signature
guarantees, or, in the case of a book-entry transfer, an Agent's Message, and
any other required documents, must be received by the Depositary at one of its
addresses set forth herein prior to the Expiration Date (as defined in the Offer
to Purchase) and either certificates for tendered Shares must be received by the
Depositary at one of such addresses or Shares must be delivered pursuant to the
procedures for book-entry transfer set forth herein (and a Book-Entry
Confirmation (as defined in the Offer to Purchase) received by the Depositary),
in each case prior to the Expiration Date, or (b) the tendering stockholder must
comply with the guaranteed delivery procedures set forth below and in Section 2
of the Offer to Purchase.
Stockholders whose certificates for Shares are not immediately available or
who cannot deliver their certificates and all other required documents to the
Depositary or complete the procedures for book-entry transfer prior to the
Expiration Date may tender their Shares by properly completing and duly
executing the Notice of Guaranteed Delivery pursuant to the guaranteed delivery
procedures set forth in Section 2 of the Offer to Purchase. Pursuant to such
procedures, (a) such tender must be made by or through an Eligible Institution,
(b) a properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form provided by the Purchaser, must be received by the
Depositary prior to the Expiration Date, and (c) the certificates for all
tendered Shares in proper form for transfer (or a Book-Entry Confirmation with
respect to all such Shares), together with a Letter of Transmittal (or a
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or, in the case of a book-entry transfer, an Agent's
Message, and any other required documents, must be received by the Depositary
within three trading days after the date of execution of such Notice of
Guaranteed Delivery as provided in Section 2 of the Offer to Purchase. A
"trading day" is any day on which the Nasdaq National Market operated by the
National Association of Securities Dealers, Inc. is open for business.
"Agent's Message" means a message transmitted by the Book-Entry Transfer
Facility to, and received by, the Depositary and forming a part of a Book-Entry
Confirmation, which states that such Book-Entry Transfer Facility has received
an express acknowledgment from the participant in the Book-Entry Transfer
Facility tendering the Shares that such participant has received and agrees to
be bound by the terms of the Letter of Transmittal and that the Purchaser may
enforce such agreement against such participant.
THE METHOD OF DELIVERY OF SHARES, THIS LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY,
IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. SHARES WILL BE DEEMED
DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE
OF THE BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering stockholders, by execution of
this Letter of Transmittal (or a facsimile hereof), waive any right to receive
any notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares should be listed on a separate
schedule attached hereto.
<PAGE> 8
4. PARTIAL TENDERS (APPLICABLE TO CERTIFICATE STOCKHOLDERS ONLY). If
fewer than all the Shares evidenced by any certificate submitted are to be
tendered, fill in the number of Shares that are to be tendered in the box
entitled "Number of Shares Tendered." In any such case, new certificate(s) for
the remainder of the Shares that were evidenced by the old certificate(s) will
be sent to the registered holder, unless otherwise provided in the appropriate
box on this Letter of Transmittal, as soon as practicable after the acceptance
for payment of, and payment for, the Shares tendered herewith. All Shares
represented by certificates delivered to the Depositary will be deemed to have
been tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder of the Shares
tendered hereby, the signature must correspond with the name as written on the
face of the certificate(s) without any change whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal as there are different registrations of certificates.
If this Letter of Transmittal or any certificates or stock powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and proper evidence
satisfactory to the Purchaser of their authority so to act must be submitted.
When this Letter of Transmittal is signed by the registered owner(s) of the
Shares listed and transmitted hereby, no endorsements of certificates or
separate stock powers are required unless payment is to be made to, or
certificates for Shares not tendered or accepted for payment are to be issued
to, a person other than the registered owner(s). Signatures on such certificates
or stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered owner(s) of the certificates listed, the certificates must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name or names of the registered owner or owners appear on the
certificates. Signatures on such certificates or stock powers must be guaranteed
by an Eligible Institution.
6. STOCK TRANSFER TAXES. Except as provided below, the Purchaser will pay
any stock transfer taxes with respect to the transfer and sale of Shares to it
or its order pursuant to the Offer. If, however, payment of the purchase price
is to be made to, or if certificates for Shares not tendered or accepted for
payment are to be registered in the name of, any person(s) other than the
registered owner(s), or if tendered certificates are registered in the name(s)
of any person(s) other than the person(s) signing this Letter of Transmittal,
the amount of any stock transfer taxes (whether imposed on the registered
owner(s) or such person(s)) payable on account of the transfer to such person(s)
will be deducted from the purchase price unless satisfactory evidence of the
payment of such taxes or exemption therefrom is submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR TRANSFER
TAX STAMPS TO BE AFFIXED TO THE CERTIFICATES LISTED IN THIS LETTER OF
TRANSMITTAL.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check is to be issued
in the name of, and/or certificates for Shares not accepted for payment are to
be returned to, a person other than the signer of this Letter of Transmittal or
if a check is to be sent and/or such certificates are to be returned to a person
other than the signer of this Letter of Transmittal or to an address other than
that shown above, the appropriate boxes on this Letter of Transmittal must be
completed.
8. WAIVER OF CONDITIONS. The Purchaser reserves the absolute right
(subject to the provisions of the Merger Agreement) in its reasonable discretion
to waive any of the specified conditions of the Offer, in whole or in part in
the case of any Shares tendered.
9. 31% BACKUP WITHHOLDING. In order to avoid backup withholding of
federal income tax on payments of cash pursuant to the Offer, a stockholder
tendering Shares in the Offer must, unless an exemption applies, provide the
Depositary with such stockholder's correct taxpayer identification number (i.e.,
social security number or employer identification number) ("TIN") on Substitute
Form W-9 below in this Letter of Transmittal and certify under penalties of
perjury that such TIN is correct and that such stockholder is not subject to
backup withholding. If a stockholder does not provide such stockholder's correct
TIN or fails to provide the certifications described above, the Internal Revenue
Service (the "IRS") may impose a $50 penalty on such stockholder and payment of
cash to such stockholder pursuant to the Offer may be subject to backup
withholding of 31%.
Backup withholding is not an additional income tax. Rather, the amount of
the backup withholding may be credited against the federal income tax liability
of the person subject to the backup withholding, provided that the required
information is given to the IRS. If backup withholding results in an overpayment
of tax, a refund may be obtained by the stockholder upon filing an income tax
return.
<PAGE> 9
The stockholder is required to give the Depositary the TIN of the record
holder of the Shares. If the Shares are held in more than one name or are not in
the name of the actual owner, consult the enclosed "Guidelines for Certification
of Taxpayer Identification Number on Substitute Form W-9" for additional
guidance on which number to report.
The box in Part 3 of Substitute Form W-9 may be checked if the tendering
stockholder has not been issued a TIN and has applied for a TIN or intends to
apply for a TIN in the near future. If the box in Part 3 is checked, the
stockholder or other payee must also complete the Certificate of Awaiting
Taxpayer Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 3 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Depositary will
withhold 31% on all payments made prior to the time a properly certified TIN is
provided to the Depositary. However, such amounts will be refunded to such
stockholder if a TIN is provided to the Depositary within 60 days.
Certain stockholders (including, among others, all corporations and certain
non-U.S. individuals) are not subject to backup withholding but U.S.
stockholders should nonetheless complete Substitute Form W-9 to avoid possible
erroneous backup withholding. Noncorporate foreign stockholders must complete
and sign a Form W-8, Certificate of Foreign Status, a copy of which may be
obtained from the Depositary, in order to avoid backup withholding. See the
enclosed "Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9" for more instructions.
10. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests
for assistance or additional copies of the Offer to Purchase, this Letter of
Transmittal, the Notice of Guaranteed Delivery and the Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 may be
directed to the Information Agent or the Dealer Manager at their respective
addresses set forth below.
11. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate
representing Shares has been lost, destroyed or stolen, the stockholder should
promptly notify the Depositary by checking the box immediately preceding the
special payment/special delivery instructions and indicating the number of
Shares so lost, destroyed or stolen. The stockholder will then be instructed by
the Depositary as to the steps that must be taken in order to replace the
certificate. This Letter of Transmittal and related documents cannot be
processed until the procedures for replacing lost, destroyed or stolen
certificates have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE THEREOF), TOGETHER
WITH ANY REQUIRED SIGNATURE GUARANTEES, OR, IN THE CASE OF A BOOK-ENTRY
TRANSFER, AN AGENT'S MESSAGE, AND ANY OTHER REQUIRED DOCUMENTS, MUST BE RECEIVED
BY THE DEPOSITARY PRIOR TO THE EXPIRATION DATE AND EITHER CERTIFICATES FOR
TENDERED SHARES MUST BE RECEIVED BY THE DEPOSITARY
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
PAYER'S NAME: BANKBOSTON, N.A.
- ---------------------------------------------------------------------------------------------------------------------------
SUBSTITUTE PART 1 -- Please provide your TIN in the box at Social Security Number(s)
FORM W-9 right and certify by signing and dating below. or
DEPARTMENT OF THE TREASURY Employer Identification Number(s)
INTERNAL REVENUE SERVICE -------------------------------
------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
PAYER'S REQUEST FOR TAXPAYER PART 2 -- CERTIFICATION -- Under penalty of perjury, I certify that:
IDENTIFICATION NUMBER (1) the number shown on this form is my correct Taxpayer Identification Number (or I
("TIN") am waiting for a number to be issued for me) and
(2) I am not subject to backup withholding because (a) I am exempt from backup
withholding or (b) I have not been notified by the Internal Revenue Service ("IRS")
that I am subject to backup withholding as a result of a failure to report all
interest or dividends or (c) the IRS has notified me that I am no longer subject
to backup withholding.
---------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C>
PART 3 -- Awaiting TIN [ ] PART 4 -- Exempt [ ]
- ----------------------------------------------------------------------------------------------------------------------------------
CERTIFICATION INSTRUCTIONS -- You must cross out item (2) in Part 2 above if you have been notified by the IRS that you are
subject to backup withholding because of under reporting interest or dividends on your tax returns. However, if after being
notified by the IRS that you were subject to backup withholding you received another notification from the IRS stating that you
are no longer subject to backup withholding, do not cross out such item (2). If you are exempt from backup withholding, check the
box in Part 4 above.
SIGNATURE:
---------------------------------- DATE:
----------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 10
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3
OF SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalty of perjury that a taxpayer identification number has not
been issued to me, and either (a) I have mailed or delivered an application to
receive a taxpayer identification number to the appropriate Internal Revenue
Service Center or Social Security Administration Office, or (b) I intend to mail
or deliver an application in the near future. I understand that, if I do not
provide a taxpayer identification number to the Depositary, 31% of all
reportable payments made to me will be withheld, but will be refunded if I
provide a certified taxpayer identification number within 60 days.
Signature:
- ------------------------------------------------- Date:
- ---------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS SUBSTITUTE FORM W-9 MAY RESULT IN
BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER.
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL INFORMATION.
The Information Agent for the Offer is:
The Dealer Manager for the Offer is:
GREENHILL & CO., LLC
31 West 52nd Street
New York, NY 10019
(212) 408-0660
<PAGE> 1
EXHIBIT (A)(3)
NOTICE OF GUARANTEED DELIVERY
FOR TENDER OF
SHARES OF COMMON STOCK
OF
C-ATS SOFTWARE INC.
As set forth in Section 2 of the Offer to Purchase (as defined below), this
form or one substantially equivalent hereto must be used to accept the Offer (as
defined below) if certificates representing shares of Common Stock, par value
$0.001 per share (the "Shares"), of C-ATS Software Inc., a Delaware corporation
(the "Company"), are not immediately available or if the procedures for
book-entry transfer cannot be completed on a timely basis or time will not
permit all required documents to reach the Depositary prior to the Expiration
Date (as defined in the Offer to Purchase). This form may be delivered by hand
to the Depositary or transmitted by telegram, facsimile transmission or mail to
the Depositary and must include a guarantee by an Eligible Institution (as
defined in the Offer to Purchase). See Section 2 of the Offer to Purchase.
The Depositary:
BANKBOSTON, N.A.
<TABLE>
<S> <C> <C>
By First Class Mail: By Hand: By Overnight Courier or Certified
BankBoston, N.A. Securities Transfer & Mail:
Attn: Corporate Reorganization Reporting Services, Inc. BankBoston, N.A.
P.O. Box 8029 c/o EquiServe LP Attn. Corporate Reorganization
Boston, MA 02266-8029 100 Williams Street 150 Royall Street
Galleria Canton, MA 02021
New York, NY 10038
By Facsimile Transmission:
(for Eligible Institutions Only)
(781) 575-2233/2232
Confirm by Telephone:
(781) 575-3120
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS, OR TRANSMISSION OF INSTRUCTIONS
VIA A FACSIMILE NUMBER, OTHER THAN AS SET FORTH ABOVE, DOES NOT CONSTITUTE A
VALID DELIVERY.
THIS FORM IS NOT TO BE USED TO GUARANTEE SIGNATURES. IF A SIGNATURE ON A
LETTER OF TRANSMITTAL IS REQUIRED TO BE GUARANTEED BY AN ELIGIBLE INSTITUTION
UNDER THE INSTRUCTIONS THERETO, SUCH SIGNATURE GUARANTEE MUST APPEAR IN THE
APPLICABLE SPACE PROVIDED IN THE SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to Moxie Acquisition Corp., a Delaware
corporation (the "Purchaser") and a wholly-owned subsidiary of Kirsty, Inc., a
Delaware corporation and an indirect wholly-owned subsidiary of Misys plc, a
public limited company organized under the laws of England, upon the terms and
subject to the conditions set forth in the Purchaser's Offer to Purchase dated
December 18, 1998 (the "Offer to Purchase"), and in the related Letter of
Transmittal (which, together with any amendments or supplements thereto,
collectively constitute the "Offer"), receipt of which is hereby acknowledged,
the number of Shares set forth below, all pursuant to the guaranteed delivery
procedures set forth in Section 2 of the Offer to Purchase.
<TABLE>
<S> <C>
Number of Shares: Name(s) of Record Holder(s):
- ------------------------------------------------ ------------------------------------------------
- ------------------------------------------------ ------------------------------------------------
(PLEASE PRINT)
Certificate Nos. (if available): Address(es):
- ------------------------------------------------ ---------------------------------------------
(Check box if Shares will be ------------------------------------------------
tendered by book-entry transfer) ZIP CODE
[ ] BankBoston, N.A. Daytime Area Code and Tel. No.:
Account Number: -----------------------
- ---------------------------------------- Signature(s):
---------------------------------------------
------------------------------------------------
Dated:
------------------------------------------------
</TABLE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm that is a participant in the Security Transfer
Agents Medallion Program or the New York Stock Exchange Guarantee Program or the
Stock Exchange Medallion Program or an "eligible guarantor institution," as such
term is defined in Rule 17Ad-15 under the Securities Exchange Act of 1934, as
amended, hereby guarantees to deliver to the Depositary either the certificates
representing the Shares tendered hereby, in proper form for transfer, or a
Book-Entry Confirmation (as defined in the Offer to Purchase) with respect to
such Shares, in any such case together with a properly completed and duly
executed Letter of Transmittal (or a facsimile thereof), with any required
signature guarantees, or an Agent's Message (as defined in the Offer to
Purchase), and any other required documents, within three trading days (as
defined in the Letter of Transmittal) after the date hereof.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares to the Depositary within the time period shown herein.
Failure to do so could result in a financial loss to such Eligible Institution.
- ------------------------------------------------------------
NAME OF FIRM
- ------------------------------------------------------------
ADDRESS
- ------------------------------------------------------------
ZIP CODE
Area Code and Tel. No.:
- --------------------------------
- ------------------------------------------------------------
AUTHORIZED SIGNATURE
- ------------------------------------------------------------
NAME
- ------------------------------------------------------------
PLEASE PRINT
Title:
- ------------------------------------------------------
Dated:
- -----------------------------------------------------
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. CERTIFICATES FOR
SHARES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
<PAGE> 1
EXHIBIT (A)(4)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
C-ATS SOFTWARE INC.
AT
$7.50 NET PER SHARE
BY
MOXIE ACQUISITION CORP.
A WHOLLY-OWNED SUBSIDIARY OF
KIRSTY, INC.
AN INDIRECT WHOLLY-OWNED SUBSIDIARY OF
MISYS PLC
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON TUESDAY, JANUARY 19, 1999, UNLESS THE OFFER IS EXTENDED.
December 18, 1998
To Brokers, Dealers, Banks,
Trust Companies and Other Nominees:
We have been engaged by Moxie Acquisition Corp., a Delaware corporation
(the "Purchaser") and a wholly-owned subsidiary of Kirsty, Inc., a Delaware
corporation ("USA Sub") and an indirect wholly-owned subsidiary of Misys plc, a
public limited company organized under the laws of England ("Parent"), to act as
Dealer Manager in connection with the Purchaser's offer to purchase all
outstanding shares of Common Stock, par value $0.001 per share (the "Shares"),
of C-ATS Software Inc., a Delaware corporation (the "Company"), at $7.50 per
Share (the "Offer Price"), net to the seller in cash, without interest thereon,
upon the terms and subject to the conditions set forth in the Purchaser's Offer
to Purchase dated December 18, 1998 (the "Offer to Purchase"), and in the
related Letter of Transmittal (which, together with any amendments or
supplements thereto, collectively constitute the "Offer"). Please furnish copies
of the enclosed materials to those of your clients for whom you hold Shares
registered in your name or in the name of your nominee.
Enclosed herewith are copies of the following documents:
1. Offer to Purchase dated December 18, 1998;
2. Letter of Transmittal to be used by stockholders of the Company in
accepting the Offer;
3. The Letter to Stockholders of the Company from the Chairman of the
Board of the Company accompanied by the Company's
Solicitation/Recommendation Statement on Schedule 14D-9;
4. A printed form of letter that may be sent to your clients for
whose account you hold Shares in your name or in the name of a nominee,
with space provided for obtaining such clients' instructions with regard to
the Offer;
5. Notice of Guaranteed Delivery with respect to Shares;
6. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
7. Return envelope addressed to BankBoston, N.A., the Depositary.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (A) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT NUMBER OF
SHARES WHICH, WHEN COMBINED WITH ANY SHARES ALREADY OWNED BY PARENT OR ITS
AFFILIATES AND SHARES SUBJECT TO THE STOCKHOLDERS AGREEMENTS (AS DEFINED IN THE
OFFER TO PURCHASE) AND NOT TENDERED INTO THE OFFER WOULD CONSTITUTE MORE THAN
50% OF ALL OUTSTANDING SHARES ON A FULLY DILUTED BASIS, (B) ANY WAITING PERIOD
UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED,
APPLICABLE TO THE PURCHASE OF SHARES PURSUANT TO THE OFFER HAVING EXPIRED OR
BEEN TERMINATED.
We urge you to contact your clients promptly. Please note that the Offer
and withdrawal rights will expire at 12:00 midnight, New York City time, on
Tuesday, January 19, 1999, unless extended.
<PAGE> 2
The Board of Directors of the Company has unanimously approved the Offer
and the Merger and determined that the terms of the Offer and the Merger are
fair to, and in the best interests of, the stockholders of the Company and
recommends that stockholders of the Company accept the Offer and tender their
Shares.
The Offer is being made pursuant to the Agreement and Plan of Merger dated
as of December 14, 1998, (the "Merger Agreement"), among Parent, USA Sub, the
Purchaser and the Company pursuant to which, as soon as practicable following
the consummation of the Offer and the satisfaction or waiver of certain
conditions, the Purchaser will be merged with and into the Company (the
"Merger"), with the Company surviving the merger as an indirect wholly-owned
subsidiary of Parent. At the effective time of the Merger, each outstanding
Share (other than Shares held by stockholders who perfect their appraisal rights
under Delaware law, Shares owned by the Company as treasury stock and Shares
owned by Parent or any direct or indirect wholly-owned subsidiary of Parent or
of the Company) will be converted into the right to receive $7.50 in cash,
without interest, as set forth in the Merger Agreement and described in the
Offer to Purchase.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (a) certificates for
(or a timely Book-Entry Confirmation (as defined in the Offer to Purchase) with
respect to) such Shares, (b) a Letter of Transmittal (or a facsimile thereof),
properly completed and duly executed, with any required signature guarantees,
or, in the case of a book-entry transfer effected pursuant to the procedure set
forth in Section 2 of the Offer to Purchase, an Agent's Message (as defined in
the Offer to Purchase), and (c) any other documents required by the Letter of
Transmittal. Accordingly, tendering stockholders may be paid at different times
depending upon when certificates for Shares or Book-Entry Confirmations with
respect to Shares are actually received by the Depositary. Under no
circumstances will interest be paid on the purchase price of the Shares to be
paid by the Purchaser, regardless of any extension of the Offer or any delay in
making such payment.
None of the Purchaser, USA Sub or Parent will pay any fees or commissions
to any broker or dealer or other person (other than the Dealer Manager and the
Information Agent as described in the Offer to Purchase) in connection with the
solicitation of tenders of Shares pursuant to the Offer. You will be reimbursed
upon request for customary mailing and handling expenses incurred by you in
forwarding the enclosed offering materials to your customers.
Questions and requests for additional copies of the enclosed material may
be directed to the Information Agent or to the Dealer Manager at their
respective addresses and telephone numbers set forth on the back cover of the
enclosed Offer to Purchase.
Very truly yours,
GREENHILL & CO., LLC
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL RENDER YOU OR
ANY OTHER PERSON THE AGENT OF THE PURCHASER, USA SUB, PARENT, THE DEPOSITARY,
THE INFORMATION AGENT OR THE DEALER MANAGER OR AUTHORIZE YOU OR ANY OTHER PERSON
TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION ON BEHALF OF ANY OF THEM WITH
RESPECT TO THE OFFER NOT CONTAINED IN THE OFFER TO PURCHASE OR THE LETTER OF
TRANSMITTAL.
<PAGE> 1
EXHIBIT (A)(5)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
C-ATS SOFTWARE INC.
AT
$7.50 NET PER SHARE
BY
MOXIE ACQUISITION CORP.
A WHOLLY-OWNED SUBSIDIARY OF
KIRSTY, INC.
AN INDIRECT WHOLLY-OWNED SUBSIDIARY OF
MISYS PLC
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON TUESDAY, JANUARY 19, 1999, UNLESS THE OFFER IS EXTENDED.
December 18, 1998
To Our Clients:
Enclosed for your consideration is an Offer to Purchase dated December 18,
1998 (the "Offer to Purchase"), and the related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute the
"Offer") relating to the offer by Moxie Acquisition Corp., a Delaware
corporation (the "Purchaser") and a wholly-owned subsidiary of Kirsty, Inc., a
Delaware corporation ("USA Sub") and an indirect wholly-owned subsidiary of
Misys plc, a public limited company organized under the laws of England
("Parent"), to purchase all outstanding shares of Common Stock, par value $0.001
per share (the "Shares"), of C-ATS Software Inc., a Delaware corporation (the
"Company"), upon the terms and subject to the conditions set forth in the Offer.
Also enclosed is the Letter to Stockholders of the Company from the
Chairman of the Board of the Company accompanied by the Company's
Solicitation/Recommendation Statement on Schedule 14D-9.
WE ARE THE HOLDER OF RECORD OF SHARES HELD BY US FOR YOUR ACCOUNT. A TENDER
OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO
YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR
INFORMATION ONLY AND CANNOT BE USED TO TENDER SHARES HELD BY US FOR YOUR
ACCOUNT.
We request instructions as to whether you wish to tender any of or all the
Shares held by us for your account pursuant to the terms and conditions set
forth in the Offer.
<PAGE> 2
Your attention is directed to the following:
1. The offer price is $7.50 per Share, net to the seller in cash,
without interest thereon, upon the terms and subject to the conditions of
the Offer.
2. The Offer is being made for all outstanding Shares.
3. THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE
OFFER AND THE MERGER (AS DEFINED BELOW) AND DETERMINED THAT THE TERMS OF
THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE
STOCKHOLDERS OF THE COMPANY AND RECOMMENDS THAT THE STOCKHOLDERS OF THE
COMPANY ACCEPT THE OFFER AND TENDER THEIR SHARES.
4. The Offer is being made pursuant to the Agreement and Plan of
Merger dated as of December 14, 1998 (the "Merger Agreement"), among
Parent, USA Sub, the Purchaser and the Company pursuant to which, as soon
as practicable following the consummation of the Offer and the satisfaction
or waiver of certain conditions, the Purchaser will be merged with and into
the Company, with the Company surviving the merger as an indirect wholly-
owned subsidiary of Parent (the "Merger"). At the effective time of the
Merger, each outstanding Share (other than Shares held by stockholders who
perfect their appraisal rights under Delaware law, Shares owned by the
Company as treasury stock and Shares owned by Parent or any direct or
indirect wholly-owned subsidiary of Parent or of the Company will be
converted into the right to receive $7.50 in cash, without interest, as set
forth in the Merger Agreement and described in the Offer to Purchase.
5. The Offer and withdrawal rights expire at 12:00 midnight, New York
City time, on Tuesday, January 19, 1999 (the "Expiration Date"), unless the
Offer is extended by the Purchaser, in which event the term "Expiration
Date" shall mean the latest time at which the Offer, as so extended by the
Purchaser, will expire.
6. The Offer is conditioned upon, among other things, (a) there being
validly tendered and not withdrawn prior to the Expiration Date that number
of Shares which, when combined with any shares already owned by Parent or
its affiliates, and shares subject to the Stockholders Agreements (as
defined in the Offer), would represent more than 50% of the outstanding
Shares on a fully diluted basis, and (b) any waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
applicable to the purchase of Shares pursuant to the Offer having expired
or been terminated.
7. Any stock transfer taxes applicable to a sale of Shares to the
Purchaser will be borne by the Purchaser, except as otherwise provided in
Instruction 6 of the Letter of Transmittal.
Your instructions to us should be forwarded promptly to permit us to submit
a tender on your behalf prior to the Expiration Date.
If you wish to have us tender any of or all the Shares held by us for your
account, please so instruct us by completing, executing, detaching and returning
to us the instruction form on the detachable part hereof. An envelope to return
your instructions to us is enclosed. If you authorize the tender of your Shares,
all such Shares will be tendered unless otherwise specified on the detachable
part hereof. YOUR INSTRUCTIONS SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT
US TO SUBMIT A TENDER ON YOUR BEHALF PRIOR TO THE EXPIRATION DATE.
Payment for Shares accepted for payment pursuant to the Offer will in all
cases be made only after timely receipt by BankBoston, N.A. (the "Depositary")
of (a) certificates for (or a timely Book-Entry Confirmation (as defined in the
Offer to Purchase) with respect to) such Shares, (b) a Letter of Transmittal (or
a facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or, in the case of a book-entry transfer effected pursuant
to the procedure set forth in Section 2 of the Offer to Purchase, an Agent's
Message, and (c) any other documents required by the Letter of Transmittal.
Accordingly, tendering stockholders may be paid at different times depending
upon when certificates for Shares or Book-Entry Confirmations with respect to
Shares are actually received by the Depositary.
UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE OF THE
SHARES TO BE PAID BY THE PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR
ANY DELAY IN MAKING SUCH PAYMENT.
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the laws of such
jurisdiction. To the extent the Purchaser, USA Sub or Parent becomes aware of
any state law that would limit the class of offerees in the Offer, the Purchaser
reserves the right to amend the Offer and, depending on the timing of such
amendment, if any, will extend the Offer to provide adequate dissemination of
such information to holders of Shares prior to the expiration of the Offer. In
any jurisdiction where the securities, blue sky or other laws require the Offer
to be made by a licensed broker or dealer, the Offer is being made on behalf of
the Purchaser by Greenhill & Co., LLC, the Dealer Manager for the Offer, or one
or more registered brokers or dealers that are licensed under the laws of such
jurisdiction.
<PAGE> 3
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
C-ATS SOFTWARE INC.
The undersigned acknowledge(s) receipt of your letter, the Offer to
Purchase of Moxie Acquisition Corp. dated December 18, 1998 (the "Offer to
Purchase"), and the related Letter of Transmittal relating to shares of Common
Stock, par value $0.001 per share (the "Shares"), of C-ATS Software Inc.
This will instruct you to tender the number of Shares indicated below held
by you for the account of the undersigned, on the terms and subject to the
conditions set forth in the Offer to Purchase and related Letter of Transmittal.
Number of Shares to Be Tendered:
----------------------------------------- Shares*
SIGN HERE
Account Number:
- ------------------------------------------- Signature:
- -------------------------------------------
Dated:
- -------------------------------------------------------
- --------------------------------------------------------------------------------
PLEASE PRINT NAME(S) AND ADDRESS(ES)
- --------------------------------------------------------------------------------
DAYTIME AREA CODE AND TEL. NO.
- --------------------------------------------------------------------------------
TAXPAYER IDENTIFICATION NO. OR SOCIAL SECURITY NO.
* Unless otherwise indicated, it will be assumed that all your Shares are to be
tendered.
<PAGE> 1
EXHIBIT (A)(6)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER. -- Social Security numbers have nine digits separated by two hyphens:
i.e. 000-00-0000. Employer identification numbers have nine digits separated by
only one hyphen: i.e. 00-0000000. The table below will help determine the number
to give the payer.
------------------------------------------------------------------
<TABLE>
<S> <C> <C>
GIVE THE SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF --
- ---------------------------------------------------------------------
1. An individual's account The individual
2. Two or more individuals The actual owner (joint ac-
count) of the account or, if
combined funds, any one of
the individuals(1)
3. Husband and wife (joint account) The actual owner of the ac-
count or, if joint funds,
either person(1)
4. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
5. Adult and minor (joint account) The adult or, if the minor
is the only contributor, the
minor(1)
6. Account in the name of guardian The ward, minor, or incompe-
or committee for a designated tent person(3)
ward, minor, or incompetent
person
7. a. The usual revocable savings The grantor-trustee(1)
trust account (grantor is also
trustee)
b. So-called trust account that The actual owner(1)
is not a legal or valid trust
under State law
8. Sole proprietorship account The owner(4)
- ---------------------------------------------------------------------
GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION NUMBER OF --
- ---------------------------------------------------------------------
9. A valid trust, estate, or The legal entity (Do not
pension trust furnish the identifying
number of the personal
representative or trustee
unless the legal entity
itself is not designated in
the account title.)(5)
10. Corporate account The corporation
11. Religious, charitable or The organization
educational organization account
12. Partnership account held in the The partnership
name of the business
13. Association, club, or other The organization
tax-exempt organization
14. A broker or registered nominee The broker or nominee
15. Account with the Department of The public entity
Agriculture in the name of a
public entity (such as a State
or local government, school
district, or prison) that
receives agricultural program
payments
</TABLE>
------------------------------------------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
------------------------------------------------------------------
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
- - A corporation.
- - A financial institution.
- - An organization exempt from tax under section 501(a), or an individual
retirement plan.
- - The United States or any agency or instrumentality thereof.
- - A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
- - A foreign government, a political subdivision of a foreign government, or any
agency or instrumentality thereof.
- - An international organization or any agency, or instrumentality thereof.
- - A registered dealer in securities or commodities registered in the U.S. or a
possession of the U.S.
- - A real estate investment trust.
- - A common trust fund operated by a bank under section 584(a).
- - An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
- - An entity registered at all times under the Investment Company Act of 1940.
- - A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- - Payments to nonresident aliens subject to withholding under section 1441.
- - Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
- - Payments of patronage dividends where the amount received is not paid in
money.
- - Payments made by certain foreign organizations.
- - Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
- - Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and is paid in
the course of the payer's trade or business and you have not provided your
correct taxpayer identification number to the payer.
- - Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
- - Payments described in section 6049(b)(5) to nonresident aliens.
- - Payments on tax-free covenant bonds under section 1451.
- - Payments made by certain foreign organizations.
- - Payments made to a nominee.
EXEMPT PAYEES DESCRIBED ABOVE SHOULD FILE FORM W-9 TO AVOID POSSIBLE ERRONEOUS
BACKUP WITHHOLDING. File this form with the payer, furnish your taxpayer
identification number, write "exempt" on the face of the form, and return it to
the payer. If the payments are interest, dividends, or patronage dividends, also
sign and date the form.
Certain payments other than interest dividends, and patronage dividends, that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
PRIVACY ACT NOTICE. -- Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Beginning January 1, 1984, payers must generally
withhold 31% of taxable interest, dividend, and certain other payments to a
payee who does not furnish a taxpayer identification number to a payer. Certain
penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER. -- If you
fail to furnish your taxpayer identification number to a payer, you are subject
to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS. -- If you fail to
include any portion of an includible payment for interest, dividends, or
patronage dividends in gross income, such failure will be treated as being due
to negligence and will be subject to a penalty of 5% on any portion of an
underpayment attributable to that failure unless there is clear and convincing
evidence to the contrary.
(3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. -- If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION. -- Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX
CONSULTANT OR THE INTERNAL REVENUE SERVICE.
<PAGE> 1
EXHIBIT (a)(7)
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares. The Offer is made solely by the Offer to Purchase dated December
18, 1998, and the related Letter of Transmittal and is not being made to (nor
will tenders be accepted from or on behalf of) holders of Shares in any
jurisdiction in which the making of the Offer or the acceptance thereof would
not be in compliance with the laws of such jurisdiction. In any jurisdiction the
securities, blue sky or other laws of which require the Offer to be made by a
licensed broker or dealer, the Offer shall be deemed made on behalf of the
Purchaser by the Dealer Manager or one or more registered brokers or dealers
licensed under the laws of such jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
C-ATS SOFTWARE INC.
AT
$7.50 NET PER SHARE
BY
MOXIE ACQUISITION CORP.
A WHOLLY-OWNED SUBSIDIARY OF
KIRSTY, INC.
AN INDIRECT WHOLLY-OWNED SUBSIDIARY OF
MISYS PLC
Moxie Acquisition Corp., a Delaware corporation (the "Purchaser") and a
wholly-owned subsidiary of Kirsty, Inc., a Delaware corporation ("USA Sub") and
an indirect wholly-owned subsidiary of Misys plc, a public limited company
organized under the laws of England ("Parent"), is offering to purchase all
outstanding shares of Common Stock, par value $0.001 per share (the "Shares"),
of C-ATS Software Inc., a Delaware corporation (the "Company"), at $7.50 per
Share (the "Offer Price"), net to the seller in cash, without interest thereon,
upon the terms and subject to the conditions set forth in the Offer to Purchase
dated December 18, 1998, and in the related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute the
"Offer").
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON TUESDAY, JANUARY 19, 1999, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
The Offer is conditioned upon, among other things, (a) there being validly
tendered and not withdrawn prior to the Expiration Date that number of Shares
which, when combined with any Shares already owned by Parent or its affiliates,
and Shares subject to the Stockholders Agreements (as defined below) and
not tendered into the Offer, would represent more than 50% of the outstanding
Shares on a fully diluted basis, and (b) any waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, applicable to
the purchase of Shares pursuant to the Offer having expired or been terminated.
The Offer is being made pursuant to the Agreement and Plan of Merger dated
as of December 14, 1998 (the "Merger Agreement"), among Parent, USA Sub, the
Purchaser and the Company pursuant to which, as soon as practicable following
the consummation of the Offer and the satisfaction or waiver of certain
conditions, the Purchaser will be merged with and into the Company, with the
Company surviving the merger as an indirect wholly-owned subsidiary of Parent
(the "Merger"). At the effective time of the Merger, each outstanding Share
<PAGE> 2
(other than Shares held by stockholders who perfect their appraisal rights under
Delaware law, Shares owned by the Company as treasury stock and Shares owned by
Parent or any direct or any indirect wholly-owned subsidiary of Parent or of the
Company) will be converted into the right to receive $7.50 in cash, without
interest, as set forth in the Merger Agreement and described in the Offer to
Purchase.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE OFFER AND
THE MERGER AND DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE FAIR
TO, AND IN THE BEST INTERESTS OF, THE STOCKHOLDERS OF THE COMPANY AND RECOMMENDS
THAT STOCKHOLDERS OF THE COMPANY ACCEPT THE OFFER AND TENDER THEIR SHARES.
Parent, USA Sub and the Purchaser, on the one hand, and certain members of
the Board of Directors of the Company, certain members of the Company's
management, and certain related parties on the other hand (the "Certain
Stockholders") entered into Stockholders Agreements each dated as of December
14, 1998 (the "Stockholders Agreements"). The Stockholders Agreements relate to
1,587,783 Shares owned by the Certain Stockholders, as well as 460,000 Shares
subject to stock options. Pursuant to the Stockholders Agreements, each Certain
Stockholder has agreed, among other things, to tender into the Offer, and not to
withdraw therefrom, the 1,587,783 Shares owned by the Certain Stockholders
(except that one stockholder may make charitable donations of up to 300,000
Shares as described in the Offer), as well as any other Shares acquired prior to
the expiration of the Offer including pursuant to the exercise of stock options,
any warrants or similar instruments.
For purposes of the Offer, the Purchaser will be deemed to have accepted for
payment Shares properly tendered to the Purchaser and not withdrawn as, if and
when the Purchaser gives oral or written notice to the Depositary of the
Purchaser's acceptance for payment of such Shares. Upon the terms and subject to
the conditions of the Offer, payment for Shares accepted for payment pursuant to
the Offer will be made by deposit of the purchase price therefor with the
Depositary, which will act as agent for tendering stockholders for the purpose
of receiving payment from the Purchaser and transmitting payment to tendering
stockholders. In all cases, payment for Shares accepted for payment pursuant to
the Offer will be made only after timely receipt by the Depositary of (a)
certificates for such Shares or timely confirmation of book-entry transfer of
such Shares into the Depositary's account at the Book-Entry Transfer Facility
(as defined in the Offer) pursuant to the procedures set forth in Section 2 of
the Offer to Purchase, (b) a Letter of Transmittal (or a facsimile thereof),
properly completed and duly executed, with any required signature guarantees,
or, in the case of a book-entry transfer, an Agent's Message (as defined in the
Offer to Purchase), and (c) any other documents required by the Letter of
Transmittal. Under no circumstances will interest be paid on the purchase price
of the Shares to be paid by the Purchaser, regardless of any extension of the
Offer or any delay in making such payment.
The term "Expiration Date" means 12:00 Midnight, New York City time, on
Tuesday, January 19, 1999, unless and until the Purchaser shall have extended
the period of time during which the Offer is open, in which event the term
"Expiration Date" shall mean the latest time and date at which the Offer, as so
extended by the Purchaser, will expire. Subject to the terms of the Merger
Agreement and applicable rules and regulations of the Securities and Exchange
Commission, the Purchaser reserves the right, in its sole discretion, at any
time and from time to time and regardless of whether or not any of the events or
facts set forth in Section 14 of the Offer to Purchase shall have occurred, to
extend the period of time during which the Offer is open and thereby delay
acceptance for payment of, and the payment for, any Shares, by giving oral or
written notice of such extension to the Depositary. Under no circumstances will
interest be paid on the purchase price for tendered Shares,
2
<PAGE> 3
whether or not the Purchaser exercises its right to extend the Offer. There can
be no assurance that the Purchaser will exercise its right to extend the Offer.
Any such extension will be followed by a public announcement thereof no later
than 9:00 a.m., New York City time, on the next business day after the
previously scheduled Expiration Date. During any such extension, all Shares
previously tendered and not withdrawn will remain subject to the Offer, subject
to the right of a tendering stockholder to withdraw such stockholder's Shares.
Except as otherwise provided below, tenders of Shares are irrevocable.
Shares tendered pursuant to the Offer may be withdrawn at any time prior to the
Expiration Date and, unless theretofore accepted for payment and paid for by the
Purchaser pursuant to the Offer, may also be withdrawn at any time after
Tuesday, February 16, 1999. For a withdrawal to be effective, a written,
telegraphic or facsimile transmission notice of withdrawal must be timely
received by the Depositary at one of its addresses set forth on the back cover
of the Offer to Purchase and must specify the name of the person having tendered
the Shares to be withdrawn, the number of Shares to be withdrawn and the name of
the registered holder of the Shares to be withdrawn, if different from the name
of the person who tendered the Shares. If certificates for Shares have been
delivered or otherwise identified to the Depositary, then, prior to the physical
release of such certificates, the serial numbers shown on such certificates must
be submitted to the Depositary and, unless such Shares have been tendered by an
Eligible Institution (as defined in the Offer to Purchase), the signatures on
the notice of withdrawal must be guaranteed by an Eligible Institution. If
Shares have been delivered pursuant to the procedure for book-entry transfer as
set forth in Section 2 of the Offer to Purchase, any notice of withdrawal must
also specify the name and number of the account at the Book-Entry Transfer
Facility to be credited with the withdrawn Shares and otherwise comply with the
Book-Entry Transfer Facility's procedures. Withdrawals of tenders of Shares may
not be rescinded, and any Shares properly withdrawn will thereafter be deemed
not validly tendered for purposes of the Offer. However, withdrawn Shares may be
retendered by again following one of the procedures described in Section 2 of
the Offer to Purchase at any time prior to the Expiration Date. All questions as
to the form and validity (including time of receipt) of notices of withdrawal
will be determined by the Purchaser, in its sole discretion, which determination
will be final and binding.
The Offer to Purchase and the related Letter of Transmittal and other
relevant materials will be mailed to record holders of Shares and furnished to
brokers, dealers, banks, trust companies and similar persons whose names, or the
names of whose nominees, appear on the Company's stockholder lists, or, if
applicable, who are listed as participants in a clearing agency's security
position listing, for subsequent transmittal to beneficial owners of Shares.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) under the
Securities Exchange Act of 1934, as amended, is contained in the Offer to
Purchase and is incorporated herein by reference.
THE OFFER TO PURCHASE AND LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH RESPECT TO
THE OFFER.
Requests for copies of the Offer to Purchase, the Letter of Transmittal and
all other tender offer materials may be directed to the Information Agent or the
Dealer Manager as set forth below, and copies will be furnished promptly at the
Purchaser's expense. No fees or commissions will be payable to brokers, dealers
or other persons (other than the Dealer Manager and the Information Agent) for
soliciting tenders of Shares pursuant to the Offer.
3
<PAGE> 4
The Information Agent for the Offer is:
CORPORATE INVESTOR COMMUNICATIONS, INC.
111 Commerce Road
Carlstadt, New Jersey 07072-2586
Bankers and Brokers Call: (800) 346-7885
All Others Call Toll-Free: (888) 206-3387
The Dealer Manager for the Offer is:
GREENHILL & CO., L.L.C.
31 West 52nd Street
New York, New York 10019
(212) 408-0685
4
<PAGE> 1
EXHIBIT (a)(8)
FOR IMMEDIATE RELEASE
CONTACT:
Kristen Fuller, VP Corporate Marketing
C-ATS Software Inc.
(650) 354-0419
David Gilbert, President
C-ATS Software Inc.
(650) 321-3000
C-ATS SOFTWARE INC. ANNOUNCES
AGREEMENT TO BE ACQUIRED BY MISYS plc
PALO ALTO, CA, DECEMBER 14, 1998 - C-ATS Software Inc. (NASDAQ: CATX) and Misys
plc, a company publicly traded on the London Stock Exchange, jointly announced
today that they have signed a merger agreement pursuant to which Misys intends
to acquire all of the outstanding stock of C-ATS at $7.50 per share, or
approximately $60 million. This purchase price represents a premium of 60% over
the closing price of C-ATS' shares on December 11, 1998. To implement the
agreement Misys will commence a cash tender offer within five business days. The
completion of the offer is subject to a number of customary conditions.
C-ATS Software provides specialist risk management products for financial
institutions worldwide. C-ATS' CARMA(R) product provides risk management
functions which enable financial institutions to measure and predict firm-wide
exposure to market, credit and liquidity risk. Misys plans to integrate the
CARMA product with Misys' existing risk management products, Global Manager/Risk
Vision (GM/RV), to enable it to offer an integrated risk analytics and credit
limits management package. C-ATS also offers the C-atalyst product which
provides front office solutions for structuring, pricing, trading and simulating
complex derivative instruments and back office capabilities for processing,
settlement, accounting and reporting.
C-ATS' business complements the existing products sold through Misys'
subsidiary, Midas-Kapiti International Limited (MKI). The combination of C-ATS
and MKI's existing risk management operations into a single business will create
one of the largest enterprise risk
(more)
<PAGE> 2
C-ATS Software Inc. Announces Agreement to be Acquired by Misys/2
management businesses in the world, incorporating market leading products in
data warehousing, market, liquidity and counterparty credit risk management for
financial institutions worldwide. This market is predicted to be one of the
fastest growing segments of the market for banking information technology
products.
Kevin Lomax, Chairman of Misys, said today, "The acquisition of C-ATS will
enhance Misys' capability to provide multi-product, linked information
technology solutions to the banking industry. The combination of C-ATS' products
with MKI's existing risk management products will enable Misys to offer the
most advanced enterprise risk management software product suite to a marketplace
which is predicted to have excellent growth potential. C-ATS' products will also
complement Misys' other existing banking packages and furthermore should benefit
significantly from the enhanced distribution prospects that Misys can provide
through its international branch network of 31 offices. We are very excited by
the prospects for C-ATS within the Misys group."
Consummation of the merger is conditioned on, among other things, the tender of
at least a majority of the outstanding stock of C-ATS in the tender offer which
will expire on or about January 19, 1999. Documents relating to the tender offer
are expected to be sent to shareholders on or before December 21, 1998. Shares
not purchased in the tender offer will be acquired in a subsequent merger at the
same price as soon as practicable after completion of the tender. On completion
of the acquisition, C-ATS Software Inc. will become a wholly owned indirect
subsidiary of Misys plc. Shareholders owning approximately 22% of the
outstanding stock of C-ATS have entered into binding agreements to tender their
shares.
This press release may contain forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, including statements with respect
to the completion of the acquisition by Misys plc. Actual results could differ
materially from those projected in the forward-looking statements.
###
CARMA is a registered trademark of C-ATS Software Inc.
<PAGE> 1
EXHIBIT (a)(9)
MISYS
-----
TO: CITY EDITORS 14 December 1998
EMBARGOED UNTIL 0730
Misys plc
Acquisition of C-ATS Software Inc.
Misys plc ("Misys") announces that it has signed a merger agreement pursuant to
which it intends to commence a tender offer to acquire the issued share capital
of C-ATS Software Inc. ("C-ATS"), a provider of specialist risk management
software solutions. The consideration for the acquisition will be approximately
$60 million (pound sterling 36 million) in cash which will be satisfied from
the Misys group's existing resources and bank facilities. Additionally, as is
Misys' usual practice, appropriate incentive arrangements will be put in place
for C-ATS' management team.
C-ATS is listed on NASDAQ and provides specialist risk management products for
financial institutions worldwide. C-ATS' CARMA product provides risk management
functions which enable financial institutions to measure and predict firm-wide
exposure to market, credit and liquidity risk. Misys plans to integrate the
CARMA product with Misys' existing risk management products Global Manager/Risk
Vision ("GM/RV") to enable it to offer an integrated risk analytics and credit
limit management package. C-ATS also offers the C-ATALYST product which
provides front office software solutions for structuring, pricing, trading and
simulating complex derivative instruments and back office software for
processing, settlement, accounting and reporting.
C-ATS' business complements the existing products sold through Misys's
subsidiary, Midas-Kapiti International Limited ("MKI"). The combination of
C-ATS and MKI's existing risk management operations in a single business will
create one of the largest enterprise risk management businesses in the world
incorporating market leading products in data warehousing, market, liquidity
and counterparty risk management for financial institutions. This market is
predicted to be one of the fastest growing segments of the market for banking
information technology products.
For the year ended 31st December 1997 C-ATS reported a net loss before income
taxes of $2.6 million (pound sterling 1.5 million) on total net revenues of
$18.5 million (pound sterling 11.0 million). For the nine months to 30th
September 1998, C-ATS reported unaudited net losses before income taxes of $0.1
million (pound sterling 0.1 million) on revenues of $15.1 million (pound
sterling 9.0 million). At 31st December 1997 C-ATS had audited net assets of
$19.7 million (pound sterling 11.7 million) including net cash of $20.1 million
(pound sterling 12.0 million). At 30th September 1998 C-ATS had unaudited net
assets of $19.4 million (pound sterling 11.5 million) including net cash of
$20.4 million (pound sterling 12.1 million).
The acquisition will be effected by way of a tender offer to be made by Misys
for all of the issued and to be issued shares in C-ATS. Greenhill & Co., LLC
will act as dealer manager for the tender offer. Irrevocable commitments to
accept the tender offer have been received in respect of all of the shares held
by the management members of the C-ATS board and certain others, representing
22.6% of the existing issued share capital. The tender offer will be commenced
on or before 18th December 1998. Completion of the tender offer is expected to
take place in January 1999. Further details of the tender offer, including full
terms and
<PAGE> 2
conditions, will be detailed in the tender offer document which will be sent to
C-ATS shareholders on or before 21st December 1998. On completion of the
acquisition, C-ATS will become a wholly owned indirect subsidiary of Misys.
Kevin Lomax, Chairman of Misys, said today:
"The acquisition of C-ATS will enhance Misys' capability to provide
multi-product, linked information technology solutions to the banking industry.
The combination of C-ATS' products with MKI's existing risk management products
will enable Misys to offer the most advanced enterprise risk management software
product suite to a marketplace which is predicted to have excellent growth
potential. C-ATS' products will also complement Misys' other existing banking
packages and furthermore should benefit significantly from the enhanced
distribution prospects that Misys can provide through its international branch
network of 31 offices. We are very excited by the prospects for C-ATS within the
Misys group."
Note: All illustrative translations from $ amounts in this announcement have
been made at the rate of (pound sterling)1 = $1.68
ENQUIRIES:
<TABLE>
<CAPTION>
<S> <C> <C>
MISYS PLC Kevin Lomax, Chairman 01386 871373
GREENHILL & CO., LLC Simon Borrows 0171 440 0400
GAVIN ANDERSON Deborah Walter 0171 457 2345
</TABLE>
Greenhill & Co., LLC, which is regulated by The Securities and Futures
Authority, is acting as financial adviser to Misys plc in relation to the
acquisition of C-ATS and will not regard any other person as its customer or be
responsible to any one other than Misys plc for providing the protections
afforded to customers of Greenhill & Co., LLC nor for providing advice in
relation to such matter.
2
<PAGE> 3
NOTES FOR EDITORS
MISYS PLC
Misys is the UK's largest independent computer solutions group and one of the
ten largest applications software products companies in the world. Principal
activities are the development and licensing of application software products to
customers in well defined vertical markets, together with transaction processing
and professional services. Since flotation on the London Stock Exchange in 1987
the Group's turnover, profits and dividends have grown significantly. Annual
sales, which were pound sterling 5m in 1987, now run at approximately pound
sterling 600m, 30% within the UK, 37% in the US and 33% in the rest of the
world. Misys' financial services activities, which comprise International
Banking, Securities and Insurance, account for some three quarters of the
Group's profits. The new Healthcare Division, formed following the acquisition
of Medic Computer Systems in late 1997, contributes a further quarter and adds
an important second leg to Misys' core activities. Misys is a market leader in
all its core businesses.
Misys employs nearly 6,000 staff around the world. Some 40% are in the UK, 30%
in the US, and the remainder in the Group's 31 offices in the rest of the
world. Misys' philosophy is based on enhancing shareholder value, measured by
the growth and stability of long term cash flows.
The Misys Banking & Securities Division is the world's largest independent
supplier of software products to the sector. It has a run rate of sales of
around pound sterling 300m, supplying applications and services to over 1,900
customers at 4,000 sites in 120 countries. Midas-Kapiti International ("MKI") is
the largest business within the division employing 1,700 staff located in 26
countries. Its products cover core banking solutions for retail banks, corporate
banking and treasury and capital markets activities.
C-ATS SOFTWARE INC.
C-ATS (NASDAQ symbol: CATX) develops and delivers risk management solutions
around the world, employs over 100 people and is headquartered in Palo Alto,
California, USA. The Company has provided products for front-to-back office
risk management and trading solutions since 1986 and has provided credit risk
management solutions since 1992. C-ATS' products include CARMA, which provides
comprehensive integrated market, credit, and liquidity risk management, and
C-ATALYST, a fully integrated, front-to-back office trading and treasury
application. C-ATS also provides consulting and training services to aid
clients in implementing enterprise-wide risk management systems.
THE MARKET FOR ENTERPRISE-WIDE RISK MANAGEMENT (ERM) SYSTEMS
The market for ERM systems is one of the fastest-growing parts of the banking
systems market, as improved risk management becomes an ever more important
priority for banks. Recent events such as LTCM and the Russian Bond crises have
reinforced the need for banks to have robust risk management systems that are
able to calculate and analyse at very high speed a bank's exposure to markets
and counterparties. Bank regulators, led by the Bank of
3
<PAGE> 4
International Settlements, have consistently been raising the standard they
require of banks in their processes for quantifying and managing risk.
The Directors believe, based on research, that banks are currently spending some
$0.9 billion a year on risk management systems. The same research forecasts that
this spending level will approximately double by 2002 and, importantly, that the
portion of this expenditure devoted to third party software vendors will grow
from approximately 20% to closer to 50% in that time.
There are, broadly, four different types of risk that banks have to manage:
- - Market Risk, which is identifying the spread of possible values of an asset
or liability at some point in the future and the probability of such values
occurring;
- - Liquidity Risk, which is identifying over what period of time, and at what
price, a position can be closed;
- - Counterparty Risk, which is analysing the probability of default of the
counterparty to a deal and, in the event of default, identifying the likely
recovery rate; and
- - Operational Risk, which is analysing how losses through fraud, malfeasance
or operational error can be avoided.
Whilst in a well-managed financial institution the risk probability of incurring
a loss is small, when losses due to poor risk management do arise, they can be
very large. Many cases have cost well in excess of $1 billion -- examples
include Sumitomo, Orange County, Barings, Kasima Oil and Metallgesellschaft.
-ENDS-
4
<PAGE> 1
EXHIBIT (b)
CONFORMED COPY
AMENDMENT AND RESTATEMENT AGREEMENT
dated 6 November 1998
relating to a
Credit Agreement dated 5 September 1997
(as amended by a Supplemental Credit Agreement
dated 24 November 1997 and a Second Supplemental Agreement dated
19 June 1998)
MISYS PLC
as Borrower
THE GUARANTORS NAMED HEREIN
ING BARINGS
LLOYDS BANK PLC CAPITAL MARKETS
as Arrangers
THE BANKS AND FINANCIAL INSTITUTIONS
NAMED HEREIN
LLOYDS BANK PLC
as Overdraft Facility Bank
LLOYDS BANK PLC CAPITAL MARKETS
as Agent
Ref: JMS/JLM
<PAGE> 2
THIS AMENDMENT AND RESTATEMENT AGREEMENT is made on 6 November 1998 between
(1) MISYS PLC (the "BORROWER")
(2) THE COMPANIES listed as Guarantors in Schedule 4 of this
Agreement (each a "GUARANTOR", together the "GUARANTORS")
(3) BARING BROTHERS LIMITED trading as ING BARINGS and LLOYDS BANK
PLC trading as LLOYDS BANK PLC CAPITAL MARKETS as arrangers (the
"ARRANGERS")
(4) THE BANKS AND FINANCIAL INSTITUTIONS listed as Acquisition
Facility Banks at the end of this Agreement (the "ACQUISITION
FACILITY BANKS")
(5) THE BANKS AND FINANCIAL INSTITUTIONS listed as Revolving Credit
Facility Banks at the end of this Agreement (the "REVOLVING
CREDIT FACILITY BANKS")
(6) LLOYDS BANK PLC as the bank providing the Overdraft Facility
(the "OVERDRAFT FACILITY BANK")
(7) LLOYDS BANK PLC trading as LLOYDS BANK PLC CAPITAL MARKETS as
agent for the Banks (the "AGENT").
BACKGROUND
(A) The parties to this Amendment and Restatement Agreement are
parties to a credit agreement dated 5 September 1997 (as
amended by a Supplemental Credit Agreement dated 24 November
1997 and a Second Supplemental Credit Agreement dated 19 June
1998) (the "CREDIT AGREEMENT"), pursuant to which the
Acquisition Facility Banks made available to the Borrower a
Dollar acquisition facility of $200,000,000 (as reduced) and
the Revolving Credit Facility Banks made available a Dollar
revolving credit facility of up to $190,000,000 and the
Overdraft Facility Bank made available to the Borrower an
overdraft and ancillary facilities.
(B) The Borrower wishes to amend the Credit Agreement on the terms
below to (inter alia) amalgamate the existing acquisition
facility and revolving credit facility into a new revolving
credit facility.
(C) The parties to this Amendment and Restatement Agreement have
agreed to restate the Credit
1
<PAGE> 3
Agreement to reflect the changes required.
It is agreed as follows:
1 INTERPRETATION
1.1 Definitions: In this Amendment and Restatement Agreement,
except where the context otherwise requires, words and
expressions defined and references construed in the Credit
Agreement (but not defined or construed in this Amendment and
Restatement Agreement) shall have the same meaning, and, in
addition:
"EFFECTIVE DATE" means the date determined in accordance with
Clause 3.1 of this Amendment and Restatement Agreement
"RESTATED CREDIT AGREEMENT" means the Credit Agreement as
restated and amended in the terms of Schedule 3.
1.2 Headings: Headings shall be ignored in construing this
Amendment and Restatement Agreement.
2 AMENDMENT
Provided that no notice has been given under Clause 21.2 of the
Credit Agreement before the Agent gives the confirmation
referred to in the first sentence of Clause 3 of this Amendment
and Restatement Agreement then, on and with effect from the
Effective Date, the Credit Agreement shall be amended and
restated as set out in Schedule 3 so that the rights and
obligations of the parties to this Amendment and Restatement
Agreement shall be governed by the terms of the Restated Credit
Agreement. For the avoidance of doubt, with effect on and from
the Effective Date, the Borrower shall be liable for any
Advances then outstanding, and any interest, commitment or
other sum then accrued but unpaid, under the Credit Agreement.
3 CONDITIONS
3.1 CONDITIONS PRECEDENT: The Effective Date of this Amendment and
Restatement Agreement shall be the date on which the Agent has
confirmed to the Borrower that the Agent has received documents
appearing to comply with the requirements of Schedule 1. The
Agent shall promptly notify the Borrower and the Banks when it
has received all those documents and has found that they appear
to comply with those requirements.
3.2 CONDITIONS SUBSEQUENT: THE Borrower will procure that each
Guarantor will, and in any event each Guarantor will, deliver
to the Agent, in a form satisfactory to it, resolutions of, or
other evidence from, each Guarantor constituting or evidencing
all corporate action necessary on the part
2
<PAGE> 4
of the relevant Guarantor to authorise the signing of this Amendment
and Restatement Agreement and the giving of any communications
and/or taking of any other action required under or in connection
with this Amendment and Restatement Agreement, within 50 Business
Days of the date of this Amendment and Restatement Agreement.
4 REPRESENTATIONS AND WARRANTIES
The Borrower and the Guarantors jointly and severally represent to
and for the benefit of each other party to this Amendment and
Restatement Agreement that the representations and warranties
contained in Clause 17 of the Restated Credit Agreement which are
stated to be repeated in accordance with Clause 17.1.18 of the
Restated Credit Agreement (except, as to matters of law only, the
representation and warranty in Clause 17.1.5 of the Restated Credit
Agreement shall be subject to the qualifications in paragraphs 5 and
6 of the opinion of Linklaters & Paines) are complied with and would
be correct in all respects if repeated on the date of this Amendment
and Restatement Agreement by reference to the circumstances now
existing and will be complied with and would be correct in all
respects if repeated on the Effective Date by reference to the
circumstances then existing (but, in each case, as if references in
those representations and warranties to the Restated Credit
Agreement were instead to this Amendment and Restatement Agreement).
5 GENERAL
Clause 16 (Payments), Clause 26 (Expenses and Stamp Duty), Clause 29
(Remedies, Waivers, Amendments and Consents), Clause 30
(Communications), Clause 31 (Partial Invalidity), Clause 33
(Counterparts) and Clause 34 (Governing Law and Jurisdiction) of the
Restated Credit Agreement shall apply, with any necessary
consequential amendments, to this Amendment and Restatement
Agreement.
6 CREDIT AGREEMENT
Save as expressly provided in this Amendment and Restatement
Agreement, the Credit Agreement remains and shall continue in full
force and effect. Without limiting the provisions of the first
sentence of this Clause 6, the Guarantors expressly confirm that the
guarantee and indemnity as set out in Clause 23 of the Restated
Credit Agreement will apply in relation to the obligations of the
Borrower under the Restated Credit Agreement.
3
<PAGE> 5
SCHEDULE 1
CONDITIONS PRECEDENT
1 Certificate from the Borrower dated on or after the date of
this Agreement in substantially the form set out in Schedule 2,
duly executed by a Director of the Borrower, together with the
documents stated by the certificate as being delivered with it
and
2 Legal opinion dated on or after the date of this Agreement,
from Linklaters & Paines, English legal advisers to the Agent,
Arrangers and Banks.
4
<PAGE> 6
SCHEDULE 2
CERTIFICATE OF BORROWER
To: Lloyds Bank Plc Capital Markets
as Agent for the Banks
[Date]
I refer to the Credit Agreement dated 5 September 1997 (the "CREDIT
AGREEMENT") (as amended by a Supplemental Credit Agreement dated 24
November 1997 and a Second Supplemental Agreement dated 19 June
1998), and as amended and restated by an amendment and restatement
agreement dated [-] 1998 (the "AMENDMENT AND RESTATEMENT AGREEMENT")
between MISYS plc (the "BORROWER"), the Arrangers and the Banks
named in it and yourselves as Agent. Terms defined and references
construed in the Amendment and Restatement Agreement have the same
meaning and construction in this Certificate which is given as
contemplated by paragraph 1 of Schedule 1 to the Amendment and
Restatement Agreement.
I am a Director of the Borrower and hereby certify as follows:
1 AUTHORITY: I am duly authorised to give this Certificate.
2 Powers: Delivered with this Certificate and signed or initialled by
me for the purpose of identification is EITHER (1) a true, complete
and up-to-date copy of the Certificate of Incorporation and the
Memorandum and Articles of Association of the Borrower as in effect
when it signed the Amendment and Restatement Agreement and on the
date of this Certificate OR (2) a confirmation from the Borrower,
confirming that no changes have occurred since the delivery of the
Certificate of the Borrower under the Credit Agreement. The Borrower
is carrying on a business authorised under its Memorandum of
Association. Neither the entry into the Amendment and Restatement
Agreement or the Credit Agreement, as amended by the Amendment and
Restatement Agreement, by the Borrower, nor the exercise of its
rights and/or performance of or compliance with its obligations
under the Amendment and Restatement Agreement or the Credit
Agreement, as amended by the Amendment and Restatement Agreement,
does or will violate, or exceed any borrowing or other power or
restriction granted or imposed by, its Memorandum or Articles of
Association.
3 DUE AUTHORISATION: Delivered with this Certificate and signed or
initialled by me for the purpose of identification is a true and
complete extract of all relevant parts of the Minutes of a duly
convened meeting of the Board of Directors of the Borrower duly held
on - 1998 at which a duly constituted quorum of Directors was
present and voting throughout and at which the resolutions set
5
<PAGE> 7
out in the extract were duly passed. Each of the resolutions remain
in full force and effect without modification. The resolutions
constitute all corporate action necessary on the part of the
Borrower to authorise the
signing of the Amendment and Restatement Agreement and the giving of
any communications and/or taking of any other action required under
or in connection with the Amendment and Restatement Agreement or the
Credit Agreement, as amended by the Amendment and Restatement
Agreement, on behalf of the Borrower.
4 DUE EXECUTION: The Amendment and Restatement Agreement has been
unconditionally signed by the Borrower. The person who signed the
Amendment and Restatement Agreement on behalf of the Borrower was
duly authorised to do so. Delivered with this Certificate and signed
or initialled by me for the purpose of identification is EITHER (1)
a list of the names and titles, and specimens of the signatures, of
the persons who (either individually or with others, as provided in
the resolutions referred to in 3 above) signed the Amendment and
Restatement Agreement and/or are authorised to sign and/or despatch
all documents and notices by the Borrower under or in connection
with the Amendment and Restatement Agreement or the Credit Agreement
as amended by the Amendment and Restatement Agreement on behalf of
the Borrower OR (2) a confirmation from the Borrower, that the same
persons who signed and/or were authorised to sign the Credit
Agreement (together, if applicable, with a certificate of any other
person who is authorised in accordance with (1) of this paragraph 4)
signed (or such different person now authorised signed) the
Amendment and Restatement Agreement and/or are authorised to sign
and/or dispatch all documents and notices by the Borrower under or
in connection with the Amendment and Restatement Agreement and/or
the Credit Agreement as amended by the Amendment and Restatement
Agreement on behalf of the Borrower.
....................................
DIRECTOR OF
MISYS PLC
6
<PAGE> 8
SCHEDULE 3
RESTATED CREDIT AGREEMENT
THIS AGREEMENT is made on 5 September 1997 (as amended by the
Supplemental Credit Agreement dated 24 November 1997 and the Second
Supplemental Credit Agreement dated 19 June 1998 and as amended and
restated by an Amendment and Restatement Agreement dated - 1998)
BETWEEN
(1) MISYS PLC (the "BORROWER")
(2) BARING BROTHERS LIMITED trading as ING BARINGS and LLOYDS BANK
PLC trading as LLOYDS BANK CAPITAL MARKETS as arrangers (the
"ARRANGERS")
(3) THE BANKS AND FINANCIAL INSTITUTIONS shown at the end of this
Agreement as having Revolving Credit Commitments (the "REVOLVING
CREDIT FACILITY BANKS")
(4) LLOYDS BANK PLC as the bank providing the Overdraft Facility
(the "OVERDRAFT FACILITY BANK")
(5) LLOYDS BANK PLC trading as LLOYDS BANK CAPITAL MARKETS as agent
for the Banks (the "AGENT").
BACKGROUND
As a result of arrangements by the Arrangers, the Revolving Credit
Facility Banks are willing to grant to the Borrower a revolving
credit facility of up to U.S.$390,000,000 (or equivalent) and the
Overdraft Facility Bank is willing to grant to the Borrower an
overdraft and ancillary facilities. Such facilities are to be
guaranteed by the Guarantors.
IT IS AGREED as follows:
1 INTERPRETATION
1.1 DEFINITIONS: In this Agreement, except to the extent that the
context requires otherwise:
"ACCOUNTANT'S REPORT" means the report of Deloitte & Touche
regarding historic financial information of Decimal and addressed to
the Arrangers, the Banks and the Borrower in the form of a draft
dated 1 September 1997 as such draft may be amended but in the case
of any amendments which are in any respect materially adverse to the
interests of the Banks with the prior consent of the Banks to such
amendment
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<PAGE> 9
"ACQUISITION" means the acquisition of Decimal by way of the Merger
as described in the Circular
"ADJUSTED EBITDA" means, in relation to any period, EBITDA for such
period adjusted by crediting EBITDA for such period (on an
annualised basis) for any Subsidiaries acquired during such period
and debiting EBITDA for such period (on an annualised basis) for any
Subsidiaries disposed of during such period and, where amounts are
denominated in a currency other than Sterling, using the exchange
rate applying on the relevant Test Date
"ADMISSION" means the admission of the Stock and the New Shares to
the Official List of the London Stock Exchange
"ADVANCE" means an advance made or to be made by the Revolving
Credit Facility Banks under the Revolving Credit Facility or, as the
case may be, the outstanding principal amount of any such advance
"AMENDMENT AND RESTATEMENT AGREEMENT" means the agreement dated -
1998 between the parties hereto, to which the form of this Agreement
is scheduled
"APPLICABLE ACCOUNTING PRINCIPLES" means those accounting
principles, standards and practices on which the preparation of the
audited consolidated accounts of the Group as at 31 May 1997 and for
the financial year ended on that date were based and those
accounting policies which were used in the preparation of those
accounts
"APPLICABLE MARGIN" means a rate per annum determined by reference
to the table below:
RATIO OF NET BORROWINGS TO ADJUSTED EBITDA MARGIN
(i) 2.5:1 or greater 0.85%
(ii) Greater than 2.0:1 but less than 2.5:1 0.65%
(iii) 2.0:1 or less 0.45%
the ratio shall be measured semi-annually by reference to the last
two half-years (in respect of which accounts, delivered pursuant to
Clauses 18.2 and 18.3 are prepared) and shall have effect from the
date which falls five Business Days after delivery of any set of
accounts for the Borrower to the Agent pursuant to Clause 18.2 and
18.3 until (but excluding) the effective date for any subsequent
change in the Applicable Margin in accordance with this definition,
provided however that for the period from the date hereof until 24
November 1998, the Applicable Margin will be 0.85%
"AVAILABLE REVOLVING CREDIT FACILITY COMMITMENT" means, in relation
to a Revolving Credit Facility Bank, its Revolving Credit Facility
Commitment less its share of the Dollar Amounts of the outstanding
Advances
"AVAILABLE REVOLVING CREDIT FACILITY" means the total amount of the
Available Revolving Credit Facility Commitments
"BANKS" means the Overdraft Facility Bank and the Revolving Credit
Facility Banks and "BANK" means any one of them
8
<PAGE> 10
"BRIDGE FACILITY" means the U.S.$530,000,000 Bridge Facility dated
24 November 1997 between the Borrower, Decimal Music Corporation,
the Arrangers, the Agents and the Banks named therein
"BORROWINGS" means, as at any particular time but without double
counting, the aggregate outstanding principal, capital or nominal
amount of the Borrowed Money (determined on a consolidated basis and
calculated using the exchange rate applying on the relevant Test
Date) of members of the Group, and shall in any event include:
(i) the outstanding amount of any bills of exchange or
promissory notes on which any member of the Group is
liable as drawer (but only if the relevant bill is
not beneficially owned by it), acceptor, issuer,
endorser or otherwise (but excluding any bill or note
drawn, accepted or issued by that member of the Group
in the ordinary course of trading and which is
payable at sight or not more than 90 days after sight
or has a final maturity of not more than 90 days from
the date thereof and is not refinancing another bill
or note relating to the same underlying transaction)
(ii) to the extent paid up or credited as paid up, the
nominal amount of any issued share capital (other
than (a) equity share capital and (b) irredeemable
shares) of any member of the Group not for the time
being beneficially owned by the Borrower or a
wholly-owned Subsidiary
(iii) any fixed or minimum premium payable on redemption
or repayment of any Borrowed Money and
(iv) the amount of any Indebtedness consisting of
deferred consideration but only where the amount
payable can be determined at such time or, where the
amount cannot be determined at such time but the
Indebtedness consisting of deferred consideration
will not be less than an amount which can be
determined, the amount so determined
but:
(a) moneys borrowed or raised which are on a
particular day outstanding or repayable in a
currency other than Sterling shall on that day
be taken into account (1) if that day is a date
as at which an audited consolidated balance
sheet of the Group has been prepared, in their
Sterling equivalent at the rate of exchange used
for the purpose of preparing that balance sheet
and (2) in any other case in their Sterling
equivalent as at 11 a.m. on the last Business
Day of the previous month and
(b) any moneys borrowed from any member of the Group
by the trustee of an employee share option
scheme for the benefit of employees of any
member of the
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<PAGE> 11
Group required to be recognised as a liability of any
member of the Group by Financial Reporting Standard 5
"REPORTING THE SUBSTANCE OF TRANSACTIONS" shall be
disregarded
"BUSINESS DAY" means a day on which:
(1) deposits in U.S. Dollars or, as the case may be,
Sterling may be dealt in on the Inter- bank Market and
(2) banks and foreign exchange markets are open for
business in New York City and
(3) additionally, in relation to:
(a) any payment in a currency other than U.S.
Dollars or Sterling to be made on that day, or
(b) any amount in a currency other than U.S. Dollars
or Sterling in respect of which a rate of
interest is to be determined on that day, or
(c) any amount in any currency in respect of which
an equivalent in another currency is to be
determined on that day,
banks and foreign exchange markets are open for
business in the place where that payment is to be
made or, as the case may be, in the principal
financial centre of the country of each currency
concerned and
(4) determined, as the case may be, by reference to
Schedule 13
"CANCELLATION DATE" means the date on which the Merger Agreement is
terminated or ceases
"CASH AND CASH EQUIVALENTS" means at any time:
(i) the then current market value of marketable debt
securities issued or guaranteed by the government of
the United States of America or the United Kingdom,
(ii) deposits for a term of 3 months or less and money at
call with the Agent or a recognised bank, building
society or financial institution incorporated or
established in the OECD having a rating of at least A
granted by Standard & Poor's Rating Services, a
division of McGraw-Hill Company, Inc. or at least A2
by Moody's Investors Service Inc., except to the
extent they constitute Excluded Cash,
(iii) the then current market value of any certificate of
deposit the term of which has 3 months or less
remaining to maturity issued by the Agent or a
recognised bank, building society or financial
institution incorporated or established in the OECD
having a rating of A granted by Standard & Poor's
Rating Services, a division of
10
<PAGE> 12
McGraw-Hill Company, Inc., or at least A2 by Moody's
Investors Service Inc., and
(iv) any cash in hand or cash at bank, except to the extent
they constitute Excluded Cash
"CIRCULAR" means the circular letter (incorporating listing
particulars and a prospectus) in the form of a draft dated 4
September 1997 expected to be despatched on or after 5 September
1997 by the Borrower to its shareholders giving details of the
Merger and of the Rights Issue as such draft may be amended but in
the case of any amendments which are in any respect materially
adverse to the interests of the Banks with the prior consent of the
Banks to such amendment
"DECIMAL" means Medic Computer Systems Inc.
"DEPOSIT AGREEMENT" means the agreement between the Borrower and the
Banks named therein dated 24 November 1997 in respect of the
proceeds of the Rights Issue
"DISPOSAL" means a sale, transfer, leasing out, lending or other
disposal of assets (whether by a single transaction or a number of
related transactions and whether at one time or over a period of
time)
"DISPOSAL PROCEEDS" means, in relation to a Disposal, the gross
consideration receivable by the relevant member or members of the
Group in respect of or in connection with such Disposal and shall
include any Indebtedness in respect of Borrowed Money assumed by the
purchaser (or as the case may be transferee, lessee, borrower or
other person) in connection with such Disposal
"DOLLARS", "U.S. DOLLARS", "U.S.$" and "$" mean lawful currency of
the United States of America
"DOLLAR AMOUNT" means, in relation to an Advance:
(a) if the notice requesting that Advance requested that it
be denominated in U.S. Dollars, the amount specified in
that notice or
(b) if the notice requesting that Advance requested that it
be denominated in an Optional Currency, the U.S. Dollar
equivalent (calculated by the Agent as at or about the
Relevant Time) of the amount specified in that notice
except that, if all or part of that Advance is not made or is repaid
or prepaid, the Dollar Amount of that Advance shall be
correspondingly reduced
"EBITDA" means, in relation to any period, PBIT plus all
depreciation and amortisation deducted in establishing PBIT, in each
case, for that period
"EFFECTIVE TIME" has the meaning attributed thereto in the Merger
Agreement
"ENVIRONMENTAL LAWS" means any and all national, state, local or
municipal laws, rules, orders,
11
<PAGE> 13
regulations, statutes, ordinances, codes, decrees, requirements of
any quasi-government or government authority and all common law
requirements, rules and bases of liability regulating, relating to
or imposing liability or standards of conduct concerning pollution
or protection of human health or the environment, as now or may at
any time hereafter be in effect and any order, judgment, injunction,
declaration, notice or demand issued thereunder
"ESCROW LETTER" means the letter in the form set out in Schedule 12
with such changes as may be agreed between the Borrower and the
Banks
"EVENT OF DEFAULT" means one of the events mentioned in Clause 20.1
"EXCLUDED CASH" means, in respect of any member of the Group, the
amount (if any) of any cash in hand or cash at bank or other form of
deposit or certificate of deposit, in each case, of that member held
outside the U.K. which or the proceeds of which, in accordance with
all applicable foreign exchange laws or other laws, is or are not
permitted at that time to be applied to meet any indebtedness
included in the calculation of Borrowings or to be remitted to the
U.K.
"EXISTING CREDIT FACILITIES" means the credit agreement dated 22
November 1996 between the Borrower, the Agent Bank and Lloyds Bank
Plc and ING Bank N.V., London Branch as lenders and the revolving
loan facility between the Borrower and Lloyds Bank Plc as set out in
a letter dated 3 April 1996
"FACILITY OFFICE" means, in relation to a Bank at any particular
time, the office through which it is then acting for the purpose of
this Agreement
"FINANCIAL YEAR" means the financial year of the Borrower ending on
31 May
"GAAP" means accounting principles, concepts, bases and policies
generally adopted and accepted in the jurisdiction of each Obligor's
incorporation
"GROUP" means, at any particular time, the Borrower and all its
Subsidiaries and, for the purposes of Clauses 17.1.9, 17.1.10, 19.5
and 19.7 and the definitions of Applicable Accounting Principles,
Borrowings, EBITDA, Interest Payable, Interest Receivable, Net
Interest Payable, PBIT and Principal Subsidiary, all its Subsidiary
Undertakings (and "MEMBER OF THE GROUP" shall be construed
accordingly)
"GUARANTORS" means any company that is incorporated in a country in
the OECD and which has executed a Guarantor Accession Deed and
"GUARANTOR" means any one of them
"GUARANTOR ACCESSION DEED" means a deed to be delivered by any
Guarantor to the Agent substantially in the form set out in Schedule
8A or, in the case of a Guarantor incorporated in France,
substantially in the form set out in Schedule 8B or, in the case of
a Guarantor incorporated in Germany, substantially in the form set
out in Schedule 8C or in such other form as the Majority Banks may
reasonably require to guarantee the obligations of the Borrower
under the Agreement
"INFORMATION MEMORANDUM" means the information memorandum containing
certain information regarding (among other things) the Borrower and
which, on behalf of and subject to the agreement of the Borrower
(such agreement not to be unreasonably withheld or delayed), has
been or may be prepared in connection with this transaction and
distributed as part of the Syndication
12
<PAGE> 14
"INFORMATION PACKAGE" means the documents listed in Schedule 1
"INTER-BANK MARKET" means the London inter-bank market
"INTEREST PAYABLE" means, in relation to any period, all interest
payable and similar charges determined on a consolidated basis of
the Group including (without limitation) all commissions, fees,
premia, prepayment costs and penalties and discount or acceptance
fees payable or deducted in connection with any Borrowed Money or
any other indebtedness to a bank or financial institution and any
other costs, expenses and deductions of a similar nature (including,
without limitation, the interest element of finance leases, hire
purchase, credit or conditional sales and deferred payment
arrangements)
"INTEREST PAYMENT DATE" means the last day of an Interest Period
"INTEREST PERIOD" means a period by reference to which interest is
calculated on an Advance or overdue sum
"INTEREST RECEIVABLE" means, in relation to any period, all interest
receivable determined on a consolidated basis of the Group including
all amounts in the nature of interest received under hedging
arrangements
"LIBOR" in respect of any Interest Period means the rate which is
quoted for that Interest Period on the relevant page on the Telerate
Monitor (or such other service as may replace it for the purpose of
displaying London inter-bank offered rates of leading reference
banks for deposits in the relevant currency) as of 11 a.m. on the
Rate Fixing Day as being the interest rate offered in the Inter-bank
Market for deposits in the relevant currency for the same period as
the relevant Interest Period (or, if the periods are not the same,
such period, if any, as the Agent reasonably determines to be
substantially the same) but:
(i) if the offered rate so appearing is replaced by the
corresponding rates of more than one bank, the rate
shall be the arithmetic mean (rounded, if necessary,
to 4 decimal places) of the respective rates so
appearing and
(ii) if for any other reason such offered rate does not
so appear, or if the relevant page is unavailable,
the rate shall be the arithmetic mean (rounded as
mentioned above) of the respective rates (as quoted
to the Agent at its request) at which each Reference
Bank is offering deposits in the relevant currency
for the relevant Interest Period to prime banks in
the Inter-bank Market at or about 11 a.m. on the Rate
Fixing Day for that Interest Period
Until replaced, the relevant Telerate Monitor pages are "3750" or
"3740" as appropriate, depending on the particular currency, or, in
the case of a currency the rate for which is not shown on pages 3750
or 3740, such other page as is notified by the Agent to the Borrower
before the relevant Advance is made in that particular currency
"LLOYDS LIBOR" means the overnight rate at which Lloyds Bank Plc is
offering deposits in the
13
<PAGE> 15
relevant currency to prime banks in the Inter-bank Market
"MAJORITY BANKS" means Revolving Credit Facility Banks whose
Advances together exceed 66 2/3% of the total Advances (or, if there
are no Advances, Banks whose Revolving Credit Facility Commitments
together exceed 66 2/3% of the total Revolving Credit Facility
Commitments)
"MANDATORY COSTS" means, in relation to any Interest Period (or part
of an Interest Period) relating to an Advance or overdue sum, the
percentage rate per annum determined by the Agent in accordance with
Schedule 2
"MARGIN REGULATIONS" means Regulations G, T, U and X of the Board of
Governors of the United States Federal Reserve System, as in effect
from time to time, and any successor regulations
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (i) the
ability of the Obligors taken together to perform the payment
obligations under this Agreement, or (ii) the business, Assets or
financial condition of the Group taken as a whole
"MATURITY DATE" means the fifth anniversary of the date on which the
first drawdown is made
"MERGER" means the merger of Decimal Music Corporation with and into
Decimal pursuant to the Merger Agreement
"MERGER AGREEMENT" means the agreement and plan of merger between
Decimal Music Corporation, Kirsty Inc., the Borrower and Decimal in
the form of a draft dated 2 September 1997 providing for the merger
of Decimal Music Corporation with and into Decimal as described
therein as such draft may be amended but in the case of any
amendments which are in any respect materially adverse to the
interests of the Banks with the prior consent of the Banks to such
amendment
"NET BORROWINGS" means, at any time, Borrowings at such time less
the lower of (i) Cash and Cash Equivalents at such time and (ii) the
Applicable Amount and for this purpose "APPLICABLE AMOUNT" means
U.S.$100,000,000 in respect of the first Test Date and
U.S.$60,000,000 thereafter
"NET DISPOSAL PROCEEDS" means, in relation to a Disposal, the
Disposal Proceeds after deducting all costs and expenses reasonably
and properly incurred in conjunction with and duties and taxes
reasonably attributable to such disposal
"NET EXTERNAL DEBT" means Borrowings less Cash and Cash Equivalents
(without limit on Cash and Cash Equivalents)
"NET INTEREST PAYABLE" means, in respect of a period, Interest
Payable less Interest Receivable, in each case, for that period
"NEW BANK" means a bank or financial institution to which a Bank
seeks to novate (or, as the case may be, has novated) all or part of
its rights and/or obligations in accordance with Clause 28.3
"NEW SHARES" has the meaning attributed thereto in the Rights Issue
Underwriting Agreement
"NON-STANDARD DURATION" means, in relation to an Interest Period, a
duration other than one, two
14
<PAGE> 16
three or six months
"NOVATION NOTICE" means a notice substantially in the form set out
in Schedule 3
"OBLIGORS" means the Borrower and the Guarantors from time to time
and "OBLIGOR" means any one of them
"OPTIONAL CURRENCY" means a currency (other than U.S. Dollars) which
is freely available, transferable and convertible into U.S. Dollars
and deposits of which are dealt in on the Inter-bank Market and,
after 1 January 1999, euros (as defined in Schedule 13)
"OVERDRAFT FACILITY" means the overdraft and ancillary facilities
granted by the Overdraft Facility Bank to the Borrower under Clause
2.1.2
"OVERDRAFT FACILITY LETTER" means the letter between the Borrower
and the Overdraft Facility Bank dated 2 September 1997 relating to
the Overdraft Facility
"PBIT" means, in relation to any period, consolidated profit of the
Group for that period from continuing operations but before tax and
excluding:
(i) any exceptional or extraordinary items and
(ii) Net Interest Payable for that period
and adjusted to ensure that such consolidated profit
conforms with the definitions of "HEADLINE EARNINGS" as
described in paragraphs 21 and 22 of the Statement of
Investment Practice No. 1 published by the Institute of
Investment Management and Research (including, for the
avoidance of doubt, adjustments to exclude any profits or
losses arising on the termination or sale of any
discontinued operation and adjustments to exclude any
profits or losses arising on the sale of fixed assets or
businesses or on their permanent diminution or write-off
(including the write-off and amortisation of goodwill))
"PLACE OF PAYMENT" means the principal financial centre of the
country of the currency to be paid (or, if there is more than one
such centre, one of those centres as selected by the Agent) or such
other financial centre as the Borrower, with the consent of the
Agent (such consent not to be unreasonably withheld), may select
"POTENTIAL EVENT OF DEFAULT" means any event or circumstance which,
if it continued after the giving of any notice, the expiry of any
grace period, and/or (as the case may be) the making of any
determination by the Majority Banks, provided for in Clause 20.1,
would become an Event of Default
"PRINCIPAL SUBSIDIARY" means, at any particular time, a member of
the Group (other than the Borrower) whose gross revenues or
operating profits attributable to the Borrower (having regard to its
direct and/or indirect beneficial interest in the shares, or the
like, of that member of the
15
<PAGE> 17
Group) represent at least 5% of the consolidated gross revenues or,
as the case may be, operating profits of the Group. For this
purpose:
(i) in the case of a member of the Group which itself has
Subsidiaries and/or Subsidiary Undertakings, the
calculation shall be made by comparing the consolidated
gross revenues or, as the case may be, operating profits
of it and its Subsidiaries and Subsidiary Undertakings
(if any) to those of the Group
(ii) revenues which arise from transactions between members
of the Group and which would be eliminated in the
consolidated accounts of the Group shall be excluded
(iii) the gross revenues or operating profits of a member of
the Group shall be calculated by reference to:
(a) the accounts of that member of the Group (or,
as the case may be, a consolidation of the
accounts of it and its Subsidiaries and
Subsidiary Undertakings (if any)) used for the
purpose of the then latest audited consolidated
accounts of the Group referred to in Clause
17.1.9 (or, as the case may be, delivered to
the Agent under Clause 18) or
(b) if the Person became a member of the Group
after the end of the financial period to which
those consolidated accounts of the Group
relate, the then latest audited accounts of
that member of the Group (or, as the case may
be, a consolidation of the then latest audited
accounts of it and its Subsidiaries and
Subsidiary Undertakings (if any))
(iv) the gross revenues or operating profits of the Group
shall be calculated by reference to the then latest
audited consolidated accounts of the Group referred to
in Clause 17.1.9 (or, as the case may be, delivered to
the Agent under Clause 18), adjusted as appropriate to
reflect the gross revenues or operating profits of any
Person which has become or ceased to be a member of the
Group after the end of the financial period to which
those accounts relate
(v) on a Principal Subsidiary transferring all or
substantially all of its Assets to another member of the
Group, the transferor (if it is not the holding company
of the transferee) shall cease to be a Principal
Subsidiary and (if the transferee is not the Borrower or
a Principal Subsidiary) the transferee shall become a
Principal Subsidiary
(vi) a member of the Group shall (if not already a Principal
Subsidiary) become a Principal Subsidiary on completion
of any other intra-Group transfer or reorganisation if
it would fulfil any of the tests in the first paragraph
of this definition, were all relevant accounts to be
prepared as at the completion of that
16
<PAGE> 18
transfer or reorganisation on the basis of the then
latest audited consolidated accounts of the Group
referred to in Clause 17.1.9 (or, as the case may be,
delivered to the Agent under Clause 18), adjusted as
appropriate to reflect the matters referred to in (iv)
above and to reflect all such transfers or
reorganisations after the date of those then latest
audited consolidated accounts of the Group.
Except as provided in (v) above, once a Person has become a
Principal Subsidiary, it shall remain one until it has been
demonstrated to the reasonable satisfaction of the Majority Banks
that it has ceased to fulfil the requirements of this definition
"QUALIFYING LENDER" means any Person:
(a) who:
(i) is a bank within the meaning of Section 840A of
the Income and Corporation Taxes Act 1988;
(ii) is beneficially entitled to the principal
amount of and all interest received by it on an
Advance; and
(iii) brings within the charge to United Kingdom
corporation tax all such interest received by
it
except that, if Section 840A or Section 349 of the Income and
Corporation Taxes Act 1988 is repealed, modified, extended or
re-enacted the Agent may at any time and from time to time (after
consultation with the Borrower and the Banks) amend this paragraph
(a) in such manner as it may reasonably determine to be appropriate
by giving notice of the amended paragraph (a) to the Borrower and
the Banks or
(b) is resident (as such term is defined in the
appropriate double taxation treaty) in a country
with which the United Kingdom has a double taxation
treaty giving residents of that country complete
exemption from the imposition of any withholding or
deduction for or on account of United Kingdom Tax on
interest (and which does not carry on business in
the United Kingdom through a permanent establishment
with which the indebtedness under this Agreement in
respect of which the interest is paid is effectively
connected) (a "TREATY LENDER") and for this purpose
"DOUBLE TAXATION TREATY" means any convention or
agreement between the government of the United
Kingdom and any other government for the avoidance
of double taxation and the prevention of fiscal
evasion with
17
<PAGE> 19
respect to taxes on income and capital gains and is
beneficially entitled to the principal amount of and all
interest received by it on an Advance
"RATE FIXING DAY" means:
(a) in the case of Sterling, the first day of the relevant
Interest Period or
(b) in the case of any other currency, the second Business
Day before the first day of the relevant Interest Period
or, as the case may be, determined in accordance with
Schedule 13
"REDUCTION DATE" has the meaning given to it in Clause 6.2
"REFERENCE BANKS" means subject to Clause 28.5.1, the principal
London office of the Agent, ING Bank N.V., London Branch, the
principal London office of The Royal Bank of Scotland plc and such
other Bank or Banks as may be agreed between the Agent (acting on
the instructions of the Majority Banks) and the Borrower from time
to time (or, in the absence of such agreement, as the Agent (acting
on the instructions of the Majority Banks) shall designate by notice
to the Borrower)
"REGULATION D COSTS" means any costs under Regulation D of the Board
of Governors of the United States Federal Reserve System
"REQUIRED AMOUNT" means:
(a) in the case of U.S. Dollars, a minimum of U.S.$15,000,000
and a whole multiple of U.S.$5,000,000 (or such other
amount as may be agreed by the Borrower and the Agent)
(b) in the case of Sterling, a minimum of pound
sterling10,000,000 and a whole multiple of pound
sterling5,000,000 (or such other amount as may be agreed
by the Borrower and the Agent)
(c) in the case of an Optional Currency, such amount as is
from time to time agreed by the Borrower and the Agent or,
failing agreement, the equivalent (calculated as at or
about the Relevant Time and rounded on such basis as may
reasonably be determined by the Agent and notified to the
Borrower) of the Required Amount for U.S. Dollars
"RESTATEMENT DATE" means the date on which the Amendment and
Restatement Agreement becomes effective
18
<PAGE> 20
"REVOLVING CREDIT FACILITY" means the revolving credit facility
granted by the Revolving Credit Facility Banks to the Borrower under
Clause 2.1.1
"REVOLVING CREDIT FACILITY COMMITMENT" means, in relation to a
Revolving Credit Facility Bank and subject as provided in this
Agreement, the amount set opposite its name under the heading
"REVOLVING CREDIT FACILITY COMMITMENT" at the end of this Agreement
"REVOLVING CREDIT FACILITY REPAYMENT DATE" means, in relation to an
Advance, the last day of the Interest Period for that Advance
"RIGHTS ISSUE" means the rights issue of Stock to be fully
underwritten by the Underwriter pursuant to the Rights Issue
Underwriting Agreement whose terms and conditions are set out in the
Circular
"RIGHTS ISSUE UNDERWRITING AGREEMENT" means the underwriting
agreement in the form of a draft dated 1 September 1997 between the
Borrower, Music (Jersey) Limited and the Underwriter in respect of
the Rights Issue as such draft may be amended but in the case of any
amendments which are in any respect materially adverse to the
interests of the Banks with the prior consent of the Banks to such
amendment
"SHAREHOLDERS' AGREEMENT" means the agreement between the Borrower,
Decimal Music Corporation, Kirsty Inc. and certain shareholders of
Decimal in the form of a draft dated 2 September 1997 under which
those shareholders have agreed to vote in favour of the Merger at
the Decimal shareholder meeting convened to approve the Merger as
such draft may be amended but in the case of any amendments which
are in any respect materially adverse to the interests of the Banks
with the prior consent of the Banks to such amendment
"STERLING" and "Pound sterling" mean the lawful currency of the
United Kingdom for the time being
"STOCK" means the convertible redeemable unsecured loan stock of
Music (Jersey) Limited to be issued in connection with the Rights
Issue, having the rights and being subject to the restrictions
summarised in the Circular
"STOCK OPTION AGREEMENT" means the agreement between the Borrower
and Decimal in the form of a draft dated 2 September 1997 under
which Decimal has granted to the Borrower an irrevocable option to
purchase certain shares of Decimal as such draft may be amended but
in the case of any amendments which are in any respect materially
adverse to the interests of the Banks with the prior consent of the
Banks to such amendment
"STOCK OPTIONS" means the Options referred to in article 4.2(d) of
the Merger Agreement
"SUBSIDIARY" means in relation to any Person (its "HOLDING
COMPANY"), at any particular time, any other Person which is then a
subsidiary (as defined in Sections 736 and 736A of the Companies Act
1985) of that Person or which is a partnership having separate legal
personality which is wholly owned (directly or indirectly) by the
Borrower
"SUBSIDIARY UNDERTAKING" means, in relation to any Person at any
particular time, any other Person which is then a subsidiary
undertaking (as defined in Section 258 of the Companies Act 1985) of
that Person
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"SYNDICATION" means the syndication of the Facilities by the
Arrangers to Qualifying Lenders in accordance with Clause 28.3
"TAKEOVER DOCUMENTS" means the Merger Agreement, the Rights Issue
Underwriting Agreement, the Shareholders' Agreement and the Stock
Option Agreement
"TEST DATE" is defined in Clause 19.6.2
"TREATY LENDER" is defined in paragraph (b) of the definition of
Qualifying Lender
"UNDERWRITER" means Baring Brothers International Limited of 60
London Wall, London EC2M 5TQ.
1.2 Construction of Certain References: Except to the extent that the
context requires otherwise, any reference in this Agreement to:
an Act of Parliament or any Section of or other provision of an Act
of Parliament shall be construed, at any particular time, as
including a reference to any modification, extension or re-enactment
thereof then in force and all instruments, orders and regulations
then in force and made under or deriving validity from the relevant
Act or provision
"ACTING IN CONCERT" shall have the meaning attributed to that term
in the City Code on Takeovers and Mergers
an "AFFILIATE" of any Person means any Subsidiary or holding company
of that Person, or any Subsidiary of any such holding company, or
any other Person in which that first Person or any such holding
company or Subsidiary owns at least 20% of the equity share capital
or the like
an "AGENCY" of a state includes any agency, authority, central bank,
department, government, legislature, minister, ministry, official,
or public or statutory Person (whether autonomous or not) of, or of
the government of, that state
a document in an "AGREED FORM" means that document in the form
initialled by or on behalf of the Borrower and the Agent (with such
additions or alterations as may be agreed between the Agent and the
Borrower in writing)
this "AGREEMENT" includes this Agreement as from time to time
amended, supplemented, novated, restated or replaced and any
document which amends, supplements, novates, restates or replaces
this Agreement, in accordance with Clause 28.3 or 29.2
the "ASSETS" of any Person means all or any part of its business,
undertaking, property, assets, revenues (including any right to
receive revenues) and uncalled capital, wherever situated
"BORROWED MONEY" means any Indebtedness (a) for or in respect of
money borrowed or raised (whether or not for cash), by whatever
means (including acceptances, deposits, discounting, factoring,
finance leases, hire purchase, sale-and-lease back,
sale-and-repurchase and any form of off-balance sheet financing),
(b) under any interest rate swap or currency exchange transaction,
forward foreign exchange transaction, cap, collar or option
transaction or any other transaction
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entered into in connection with the management of risks relating to
any of the other items comprised in Borrowed Money (determined,
where applicable, having regard for any netting provisions), (c) for
the purchase price of Assets or services deferred for more than 90
days after the date those Assets or services (or the benefit of
them) are acquired (other than goods or services obtained on normal
commercial terms in the ordinary course of trading) or (d) any
Guarantee in respect of any Indebtedness falling within
(a), (b) or (c) above
"CONSENT" also includes an approval, authorisation, exemption,
filing, licence, order, permission, recording or registration (and
references to obtaining Consents shall be construed accordingly)
a "DIRECTIVE" includes any present or future directive, regulation,
request, requirement, rule or credit restraint programme of any
Agency of any state or of any self-regulating organisation (whether
or not having the force of law (but if not having the force of law,
only if compliance with the Directive is in accordance with the
general practice of Persons to whom the Directive is intended to
apply))
the "EQUIVALENT" in any currency (the "FIRST CURRENCY") of any
amount in another currency (the "SECOND CURRENCY") shall be
construed as a reference to the amount in the first currency which
could be purchased with that amount in the second currency at the
spot rate of exchange at which the Agent would have been prepared
and able to purchase that amount in the first currency for the
second currency in the London foreign exchange market for value as
at the relevant time on the relevant date specified in this
Agreement (or, where no such time and date is specified, for value
at such time and on such date as the Agent may from time to time
reasonably determine to be appropriate in the circumstances)
a "GUARANTEE" also includes an indemnity, and any other obligation
(whatever called) of any Person to pay, purchase, provide funds
(whether by the advance of money, the purchase of or subscription
for shares or other securities, the purchase of Assets or services,
or otherwise) for the payment of, indemnify against the consequences
of default in the payment of, or otherwise be responsible for, any
Indebtedness of any other Person (and "GUARANTEED" and "GUARANTOR"
shall be construed accordingly)
"INDEBTEDNESS" includes any obligation (whether present or future,
actual or contingent, secured or unsecured, as principal, surety or
otherwise) for the payment or repayment of money
a "LAW" includes common or customary law and any constitution,
decree, judgment, legislation, order, ordinance, regulation,
statute, treaty or other legislative measure, in each case of any
jurisdiction whatever (and "LAWFUL" and "UNLAWFUL" shall be
construed accordingly)
any "OBLIGATION" of any Person under this Agreement or any other
agreement or document shall be construed as a reference to an
obligation expressed to be assumed by or imposed on it under this
Agreement or, as the case may be, that other agreement or document
(and "DUE", "OWING", "PAYABLE" and "RECEIVABLE" shall be similarly
construed)
a "PERSON" includes any individual, company, corporation, firm,
partnership, joint venture, undertaking, association, organisation,
trust, state or Agency of a state (in each case, whether or not
having separate legal personality)
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the "RELEVANT TIME" for any action means the time and the date
specified in Schedule 7 for that action
"SECURITY" includes any mortgage, pledge, lien, hypothecation,
security interest or other charge or encumbrance and any other
agreement or arrangement having substantially the same economic
effect (including any "FLAWED ASSET" arrangement but excluding
finance leases) (and "SECURED" shall be construed accordingly)
"TAX(ES)" includes any present or future tax, levy, impost, duty,
charge, fee, deduction or withholding of any nature and whatever
called, by whomsoever, on whomsoever and wherever imposed, levied,
collected, withheld or assessed
"TAX ON OVERALL NET INCOME" of a Person shall be construed as a
reference to Tax (other than Tax deducted or withheld from any
payment) imposed on that Person by the jurisdiction in which its
principal office (and/or, in the case of a Bank, its Facility
Office) is located by reference to (a) the net income, profits or
gains of that Person worldwide or (b) such of its net income,
profits or gains as arise in or relate to that jurisdiction
a "TIME OF THE DAY" is to London time unless otherwise stated
the "WINDING-UP" of a Person also includes the amalgamation,
reconstruction, administration, dissolution, liquidation, merger or
consolidation of that Person, and any equivalent or analogous
procedure under the law of any jurisdiction.
1.3 Calculation of Financial Covenants: Borrowings, EBITDA, Interest
Payable, Interest Receivable, Net Interest Payable and PBIT shall be
calculated and interpreted in accordance with Applicable Accounting
Principles and shall be expressed in Sterling.
1.4 Headings: Headings shall be ignored in construing this Agreement.
2 THE FACILITIES
2.1 AMOUNT:
2.1.1 The Revolving Credit Facility Banks grant to the Borrower an
amortising revolving credit facility of up to U.S.$390,000,000
available in U.S. Dollars and/or Optional Currencies and
2.1.2 The Overdraft Facility Bank grants to the Borrower an
overdraft and ancillary facilities incorporating an
uncommitted money market line in accordance with the terms of
the Overdraft Facility Letter.
2.2 PRO RATA PARTICIPATION IN ADVANCES:
Each Revolving Credit Facility Bank will participate through its
Facility Office in each Advance to be made under the Revolving
Credit Facility in the proportion borne by its Available Revolving
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Credit Facility Commitment to the Available Revolving Credit
Facility when the Agent receives the notice requesting that Advance
(unless between then and the time for making that Advance, its
Available Revolving Credit Facility Commitment is reduced to zero,
in which case the amount of that Advance will be reduced
accordingly).
2.3 PURPOSE: The Borrower shall use the entire proceeds of each Advance
and the Overdraft Facility for its general corporate purposes but
neither the Agent, the Arrangers, the Overdraft Facility Bank nor
any Revolving Credit Facility Bank need check that it does use any
of the Revolving Credit Facility or the Overdraft Facility for any
such purpose.
2.4 CALCULATION OF AVAILABLE REVOLVING CREDIT FACILITY COMMITMENT: In
order to calculate the amount of the Available Revolving Credit
Facility and each Bank's Available Revolving Credit Facility
Commitment in connection with a proposed Advance (whether for the
purpose of Clause 2.2 or 4.1.2):
2.4.1 any Advances with Revolving Credit Facility Repayment Dates on
or before the proposed date of that Advance shall be deemed to
have been repaid and
2.4.2 if any other requests are outstanding for Advances to be made
on or before the proposed date of that Advance, all Advances
to which those requests relate shall be deemed to be
outstanding.
3 CONDITIONS PRECEDENT
3.1 Conditions Precedent to each Advance: Advances will be made by the
Banks to and as requested by the Borrower if the additional
conditions set out in Clauses 3.1.1 to 3.1.3 and 4 are fulfilled.
3.1.1 No event mentioned in Clause 14 occurs or has occurred and is
continuing in relation to that Advance.
3.1.2 All representations and warranties in Clause 17 (except to any
extent waived in accordance with Clause 29.2) are correct on
the date of this Agreement and, in the case of those to be
repeated under Clauses 17.1.18 and 17.3.5, would be correct if
repeated on the proposed date of that Advance by reference to
the circumstances then existing.
3.1.3 No Event of Default or Potential Event of Default has occurred
on or before that date, or will occur as a result of making
that Advance, other than any waived in accordance with Clause
29.2.
3.2 CONDITIONS PRECEDENT TO UTILISATION OF OVERDRAFT FACILITY: The
obligation of the Overdraft Facility Bank to provide the overdraft
is subject to the further condition precedent that the Overdraft
Facility Bank receives from the Borrower the Overdraft Facility
Letter duly executed by
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the Borrower and the Overdraft Facility Bank.
4 DRAWDOWN OF REVOLVING CREDIT FACILITY
4.1 DRAWDOWN REQUEST: Not later than the Relevant Time (or, as the case
may be, such later time as may be acceptable to the Agent and the
Revolving Credit Facility Banks for the purpose of the relevant
request), the Agent has received from the Borrower a notice
substantially in the form set out in Schedule 4 specifying:
4.1.1 the proposed date of that Advance, which must be a Business
Day falling one month or more before the Maturity Date
4.1.2 its amount which must be or produce a Dollar Amount equal to
or less than the Available Revolving Credit Facility, and if
less must be a Required Amount
4.1.3 its Interest Period, which must be in accordance with Clause
8.1
4.1.4 its currency, which must be U.S. Dollars, Sterling or an
Optional Currency
4.1.5 details of the bank (which must be in the Place of Payment for
the relevant currency) and account (if different from that
specified in Clause 16.3.2) to which the Borrower wishes the
proceeds of that Advance to be made available by the Agent.
4.2 NOTIFICATION OF DRAWDOWN REQUESTS: The Agent shall promptly notify
each Revolving Credit Facility Bank of the details of, and the
amount of that Bank's share of, each Advance.
4.3 LIMIT ON NUMBER OF ADVANCES/CURRENCIES: Not more than 5 Advances may
be outstanding at any one time. The Advances may not be denominated
in more than 4 currencies at any one time.
5 OVERDRAFT FACILITY
5.1 UTILISATION: The Overdraft Facility may be used by the Borrower in
accordance with the terms of the Overdraft Facility Letter and shall
include a Sterling overdraft (the "STERLING OVERDRAFT") and an
uncommitted money market line (the "MONEY MARKET LINE") in the
normal way, but the Overdraft Facility Bank shall not be obliged to
permit any, or any further, utilisation of the Overdraft Facility if
an Event of Default or Potential Event of Default has occurred at or
before that time, or will occur as a result of that utilisation,
other than one which has been waived in accordance with Clause 29.2.
5.2 INTEREST: Interest shall accrue on a daily basis on the amount of
the Sterling Overdraft and the Money Market Line utilised at the
beginning of that day at the rate per annum calculated as follows:
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5.2.1 Sterling Overdraft - The aggregate of:
(i) the Overdraft Facility Bank's base rate and
(ii) 1% per annum
5.2.2 Money Market Line - The aggregate of:
(i) Lloyds LIBOR
(ii) the Applicable Margin and
(iii) Mandatory Costs.
Interest shall be debited by the Overdraft Facility Bank to the
relevant current account of the Borrower on the dates which the
Overdraft Facility Bank debits interest on overdrafts in accordance
with the terms of the Overdraft Facility Letter and on the date on
which the Overdraft Facility becomes repayable in accordance with
the terms of the Overdraft Facility Letter.
5.3 CHARGES: The Overdraft Facility Bank shall from time to time, and in
any event on the date on which the Overdraft Facility becomes
repayable, debit to the relevant current account of the Borrower
bank charges in accordance with the terms of the Overdraft Facility
Letter.
5.4 TERMINATION AND REPAYMENT: The Overdraft Facility Bank may terminate
and cancel the Overdraft Facility in accordance with the terms of
the Overdraft Facility Letter. Upon termination and cancellation the
Borrower shall repay the Overdraft Facility together with all unpaid
interest and bank charges due or accrued in respect of the Overdraft
Facility.
5.5 PAYMENTS: On each date on which any sum is due from the Borrower to
the Overdraft Facility Bank in respect of the Overdraft Facility,
the Borrower shall make that sum available to the Overdraft Facility
Bank so as to be received by the Overdraft Facility Bank in Sterling
and in immediately available cleared funds in accordance with the
terms of the Overdraft Facility Letter.
5.6 Interpretation: In the event of any inconsistency between the terms
of this Agreement and the Overdraft Facility Letter in relation to
the Overdraft Facility, the terms of the Overdraft Facility Letter
shall prevail.
6 REPAYMENT AND PREPAYMENT
6.1 REPAYMENT OF ADVANCES: The Borrower shall repay each Advance on its
Revolving Credit Facility Repayment Date, together with all unpaid
interest accrued on that Advance. However, as the facility is
revolving, any amount repaid before the Maturity Date will remain
available for reborrowing on the terms and conditions of this
Agreement.
6.2 REDUCTION OF REVOLVING CREDIT FACILITY: Subject to Clause 7.1, the
Revolving Credit Facility Commitments shall be reduced on the
following dates (the "REDUCTION DATES") by the amount set
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opposite such date below:
REDUCTION DATE REDUCTION
24 November 2000 U.S.$5,000,000
24 November 2001 U.S.$109,000,000
24 November 2002 U.S.$276,000,000
The Borrower shall ensure that the aggregate of the Dollar Amounts
of all Advances outstanding at the close of business in London on
each such Reduction Date do not exceed the Revolving Credit Facility
Commitments as so reduced on each such date. Any such reduction
shall reduce the Revolving Credit Facility Commitment of each
Revolving Credit Facility Bank rateably.
6.3 PREPAYMENT OF ALL BANKS: The Borrower may prepay any Advance or any
part of it in a Required Amount without premium or penalty, in each
case if such Borrower gives to the Agent not less than 10 Business
Days' notice of the Advance to be prepaid and the date and amount of
the prepayment. Any such prepayment must be accompanied by accrued
interest on the amount prepaid and, if made otherwise than on an
Interest Payment Date, by any other sum then due under Clause 22.1
or any other provision of this Agreement. Any amount so prepaid
shall remain available for reborrowing on the terms and subject to
the conditions set out in this Agreement.
6.4 PREPAYMENT OF CERTAIN BANKS: If:
6.4.1 the Borrower becomes obliged to pay any Tax or other amount
for the account of any Bank under Clause 11.2 or 13 and
6.4.2 the Borrower gives to that Bank not less than 10 Business
Days' notice of the date of prepayment, the Borrower may
prepay all (but not part only) of that Bank's share of all
(but not some only) Advances without premium or penalty on the
date of prepayment specified in that notice. Any such
prepayment must be accompanied by all unpaid accrued interest
on that Bank's Advances, all unpaid fees accrued to that Bank
and any other sum then due to that Bank under Clause 22.2 or
any other provision of this Agreement.
6.5 MISCELLANEOUS: Any notice of prepayment given by the Borrower under
this Agreement will oblige the Borrower to prepay in accordance with
that notice. Except as expressly provided in this Agreement, the
Borrower may not repay or prepay all or any part of an Advance.
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7 CANCELLATION
7.1 OF ALL REVOLVING CREDIT FACILITY BANKS: The Borrower may cancel the
Available Revolving Credit Facility, or any part of it which is
U.S.$10,000,000 or a higher whole multiple of U.S.$5,000,000,
without premium or penalty at any time before the Maturity Date by
giving to the Agent not less than 10 Business Days' notice of the
date and amount of the cancellation. Any such partial cancellation
shall reduce each Revolving Credit Facility Bank's Revolving Credit
Facility Commitment rateably.
7.2 OF CERTAIN BANKS: If the events specified in Clauses 6.4.1 and 6.4.2
occur, the relevant Revolving Credit Facility Bank's Commitment
shall be cancelled (without premium or penalty) upon the Agent
receiving the relevant notice under Clause 6.4.2. In addition, if
any event specified in Clause 6.4.1 occurs, the Borrower may cancel
all (but not part only) of that Revolving Credit Facility Bank's
Commitment without premium or penalty at any time before the
Revolving Credit Facility Commitment Termination Date by giving to
that Revolving Credit Facility Bank not less than 10 Business Days'
notice of the date of the cancellation.
7.3 LIMITATION OF CANCELLATION RIGHTS: The Borrower may not cancel all
or any part of the Revolving Credit Facility Commitments except as
expressly provided in this Agreement.
8 INTEREST
8.1 REVOLVING CREDIT FACILITY INTEREST PERIODS: Interest shall be
calculated on each Advance by reference to the Interest Period for
that Advance. Each Interest Period shall be of one, two, three or
six month duration or a Non-standard duration as selected by the
Borrower in the notice of drawdown relating to that Advance, except
as follows:
8.1.1 The Borrower may not select an Interest Period ending after
the Maturity Date.
8.1.2 The selection by the Borrower of an Interest Period of a
Non-standard duration of
(i) less than 6 months shall not be effective if, before the
Relevant Time, the Agent receives from the Majority
Banks a notice to the effect that they do not expect to
be able to fund their share of the Advance for that
Interest Period by obtaining a matching deposit in the
relevant currency in the Inter-bank market at the
relevant time. As soon as practicable after that
deadline, the Agent shall notify the Borrower and the
Majority Banks whether that selection is effective. If
it is not, that Interest Period shall, subject to these
exceptions, be of the alternative duration (if any)
selected by the Borrower in its notice or
(ii) more than 6 months shall not be effective if, before the
Relevant Time, the Agent
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receives from any Bank a notice to the effect that it
does not expect to be able to fund its share of the
Advance for that Interest Period by obtaining a matching
deposit in the relevant currency in the Inter-bank
market at the relevant time. As soon as practicable
after that deadline, the Agent shall notify the Borrower
and the Banks whether that selection is effective. If it
is not, that Interest Period shall, subject to these
exceptions, be of the alternative duration (if any)
selected by the Borrower in its notice.
8.1.3 The Borrower shall select Interest Periods of only 1 month's
duration in the period from the time the date of this
Agreement to the earlier of (i) the date falling three months
after first drawdown and (ii) close of the Syndication and
shall consult with the Arrangers prior to selecting Interest
Periods during such period in the event that a shorter
Interest Period is appropriate to facilitate the Syndication.
8.2 NORMAL INTEREST RATE: The rate of interest applicable to an Advance
for all or any part of a particular Interest Period shall be the
rate per annum (as determined by the Agent) equal to the sum of:
8.2.1 the Applicable Margin
8.2.2 LIBOR and
8.2.3 the Mandatory Costs.
8.3 NOTIFICATION OF INTEREST PERIODS AND RATES: The Agent shall promptly
notify (i) the Banks of the duration of each Interest Period
(including any Interest Period selected by the Agent under Clause
21) and (ii) the Borrower and the Banks of each rate of interest
determined in accordance with Clause 8.2 or 21.
8.4 PAYMENT OF INTEREST: On the last day of each Interest Period, the
Borrower shall pay the unpaid interest accrued during that Interest
Period on the Advance or overdue sum to which it relates at the
rate(s) applicable for that Interest Period and, in the case of an
Interest Period of more than six months, the interest accrued during
the period ending six months after drawdown (and each successive
period of six months during that Interest Period, as the case may
be) shall be paid on the last day of each such six-month period.
9 MULTICURRENCY OPTION
9.1 REVOLVING CREDIT FACILITY REQUEST FOR AN OPTIONAL CURRENCY: Not
later than 4 p.m. on the third Business Day before the first day of
any Interest Period in relation to which the Borrower so requests
that an Advance be denominated in an Optional Currency other than
Sterling, a Revolving Credit Facility Bank may notify the Agent
that:
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9.1.1 that Revolving Credit Facility Bank expects to be unable to
obtain deposits in the relevant currency to fund its share of
the relevant Advance in the London inter-bank market at the
relevant time or
9.1.2 it is impossible, impracticable, unlawful or contrary to a
Directive for that Revolving Credit Facility Bank's share of
that Advance to be denominated in that Optional Currency
during that Interest Period
If the Agent receives any such notice, it shall promptly notify the
Borrower and the Revolving Credit Facility Banks.
9.2 FALLBACK CURRENCY: If in relation to any Interest Period relating to
an Advance in an Optional Currency other than Sterling, the Agent
receives a notice from any Revolving Credit Facility Bank in
accordance with Clause 9.1 that Advance shall during that Interest
Period instead be denominated in U.S. Dollars and in the Dollar
Amount of that Advance.
9.3 AMOUNT OF CURRENCY TO BE MADE AVAILABLE:
The amount to be made available by a particular Bank in response to
a particular notice requesting an Advance shall be:
9.3.1 if the relevant Advance is to be made in Dollars, that Bank's
proportion (determined in accordance with Clause 2) of the
Dollar Amount of that Advance or
9.3.2 if that Advance is to be made in an Optional Currency, that
Bank's proportion (determined in accordance with Clause 2) of
the amount of the relevant Optional Currency specified in that
notice.
10 FEES
10.1 UNDERWRITING AND ARRANGEMENT FEE: The Borrower shall pay to the
Arrangers an underwriting and arrangement fee as stated in a letter
of today's date from the Arrangers to, and countersigned by, the
Borrower.
10.2 AGENCY FEE: The Borrower shall pay to the Agent for its own account
an agency fee as stated in a letter of today's date from the Agent
to, and countersigned by, the Borrower.
10.3 COMMITMENT FEE: The Borrower shall pay in U.S. Dollars a commitment
fee calculated on a daily basis at the rate equal to half the
Applicable Margin on the Dollar Amount of each Revolving Credit
Facility Bank's Available Revolving Credit Facility Commitment on
the amount outstanding on each day during the period beginning on
the date of this Agreement and ending on the Maturity Date. That fee
shall be payable quarterly in arrear from the date of this Agreement
and on the Maturity Date or any earlier date on which that Bank's
Revolving Credit Facility Commitment first
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equals zero.
11 TAXES
11.1 PAYMENTS TO BE FREE AND CLEAR: All sums payable by any of the
Obligors under this Agreement shall be paid free of any restriction
or condition and (except to the extent required by law) free and
clear of and without any deduction or withholding, whether for or on
account of Tax, by way of set-off or otherwise.
11.2 GROSSING-UP OF PAYMENTS:
11.2.1 If any of the Obligors or any other Person (whether or not a
party to, or on behalf of a party to, this Agreement) is
required by law at any time to deduct or withhold any Tax or
other amount from any sum paid or payable by, or received or
receivable from, such Obligor under this Agreement, that
Obligor shall at the same time pay such additional amount as
is necessary to ensure that the Agent or, as the case may be,
the Bank to which that sum is due receives and retains (free
from any liability other than Tax on its own Overall Net
Income) a net sum equal to what it would have received and so
retained had no such deduction or withholding been required or
made. However, if:
(i) on the due date of a payment of interest to a Bank on an
Advance, that Bank is not a Qualifying Lender and
(ii) as a result, such Obligor is required to deduct or
withhold United Kingdom income tax from that payment of
interest or
(iii) in the case of a Treaty Lender, it has failed to
promptly take all necessary steps to obtain the benefit
of such double taxation treaty
that Obligor shall not be so required to pay an additional
amount in respect of any such deduction or withholding unless
it results from the introduction of or any change in, or in
the interpretation or application of, any relevant law or any
relevant practice of the Inland Revenue after this Agreement
is entered into.
11.2.2 If any of the Obligors or the Agent or any Bank (whether or
not a party to, or on behalf of a party to, this Agreement)
must at any time pay any Tax or other amount on, or calculated
by reference to, any sum received or receivable (including any
sum received or receivable under this Clause 11.2.2) by the
Agent or, as the case may be, any Bank under this Agreement
(except for a payment by the Agent or a Bank of Tax on its own
Overall Net Income), that Obligor shall pay or procure the
payment of that Tax or other amount before any interest or
penalty becomes payable or, if that Tax or other amount is
payable and paid by the Agent or any Bank, shall reimburse it
on demand for the
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amount paid by it.
11.2.3 Within 30 days after paying any sum from which it is required
by law to make any deduction or withholding, and within 30
days after the due date of payment of any Tax or other amount
which it is required by Clause 11.2.2 to pay, any of the
Obligors shall deliver to the Agent evidence reasonably
satisfactory to the Agent or, as the case may be, the relevant
Bank of that deduction, withholding or payment and (where
remittance is required) of the remittance thereof to the
relevant taxing or other authority.
11.2.4 As soon as any of the Obligors is aware that any such
deduction, withholding or payment is required (or of any
change in any such requirement), it shall notify the Agent.
11.3 REFUND OF TAX CREDITS: If:
11.3.1 any of the Obligors makes a payment under Clause
11.2.1 or Clause 11.2.2 (a "TAX PAYMENT") in respect of a
payment to a Bank under this Agreement and
11.3.2 that Bank determines that it has obtained a refund
of Tax or obtained and used a credit against Tax on its
Overall Net Income (a "TAX CREDIT") which that Bank is
able to identify as attributable to that Tax Payment
then, if in its absolute discretion it can do so without any adverse
consequences for itself, that Bank shall reimburse that Obligor such
amount as that Bank determines to be such proportion of that Tax
Credit as will leave that Bank (after that reimbursement) in no
better or worse position in respect of its worldwide Tax liabilities
than it would have been in if no Tax Payment had been required. A
Bank shall have an absolute discretion as to whether to claim any
Tax Credit (and, if it does claim, the extent, order and manner in
which it does so) and whether any amount is due from it under this
Clause 11.3 (and, if so, what amount and when). No Bank shall be
obliged to disclose any information regarding its Tax affairs and
computations.
11.4 TAX WARRANTY BY BANKS: Each Bank severally warrants to the Agent
that, in the case of a Bank which is a Bank on the date of this
Agreement, on the date of this Agreement and, in the case of a Bank
which becomes a Bank after the date of this Agreement, on the date
it becomes a Bank it is a Qualifying Lender and shall notify the
Agent promptly on its becoming aware of this warranty ceasing to be
correct.
12 ILLEGALITY
If at any time any Bank determines that it is or will become
unlawful or contrary to any Directive for it to allow all or part of
its Revolving Credit Facility Commitment to remain outstanding, to
make, fund or have outstanding all or part of its Advances and/or to
carry out all or any of its other obligations under this Agreement
then:
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12.1 upon that Bank notifying the Borrower, its Revolving Credit Facility
Commitment (if any) shall be cancelled and
12.2 the Borrower shall prepay that Bank's share of each Advance on the
next Interest Payment Date of that Advance or on such earlier date
(if any) as that Bank shall certify to be necessary to comply with
the relevant law or Directive with all unpaid accrued interest
thereon, all unpaid fees accrued to that Bank and any other sum then
due to that Bank under Clause 22.2 or any other provision of this
Agreement.
13 INCREASED COSTS
13.1 INDEMNITy: If the Agent or, as the case may be, any Bank determines
that, as a result of the introduction of or any change in, or in the
interpretation or application of, any law or Directive or the
introduction of a new currency in substitution for another currency
after the date of this Agreement:
13.1.1 it incurs a cost in maintaining all or any part of its
Revolving Credit Facility Commitment and/or in making,
maintaining or funding all or any part of its share of any
Advance or any overdue sum and/or maintaining the Overdraft
Facility and/or
13.1.2 any sum received or receivable by it under this Agreement or
the effective return to it under this Agreement or the overall
return on its capital is reduced (except on account of Tax on
its Overall Net Income) and/or
13.1.3 it makes any payment (except on account of Tax on its Overall
Net Income) or forgoes any interest or other return on or
calculated by reference to the amount of any sum received or
receivable by it under this Agreement the Borrower shall
indemnify it against that cost, reduction, payment or forgone
interest or other return (except to the extent that it results
from a deduction or withholding of Tax) and, accordingly,
shall from time to time on demand (whenever made) pay to the
Agent for its own account or, as the case may be, for the
account of that Bank the amount certified by it to be
necessary so to indemnify it. For the avoidance of doubt, the
indemnification referred to in the preceding sentence shall
apply to such Regulation D costs, if any, as may be applied to
the Agent or any Bank from time to time.
13.2 CAPITAL ADEQUACY: Under Clause 13.1 but subject to Clause 13.3, a
Bank shall be entitled to claim indemnification not only for a cost,
reduction, payment or forgone interest or other return directly
attributable to this Agreement, its Revolving Credit Facility
Commitment, its share of any Advance or any overdue sum, but also
for that proportion of any cost, reduction, payment or forgone
interest or other return which that Bank determines to be fairly
allocable to this Agreement, its Revolving Credit Facility
Commitment, its share of any Advance or any overdue sum in relation
to any law or Directive applicable to that Bank or affecting the
conduct of that Bank's business or a type of
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business or the manner in which or the extent to which that Bank
allocates capital resources.
13.3 EXCEPTION: Clause 13.1 shall not oblige the Borrower to compensate
any Bank for any cost, reduction, payment or forgone interest or
other return which results from the implementation, as contemplated
on the signing of this Agreement, of the matters set out in the July
1988 report of the Basle Committee on Banking Regulations and
Supervisory Practices entitled "INTERNATIONAL CONVERGENCE OF CAPITAL
MEASUREMENT AND CAPITAL STANDARDS", the Directive of the Council of
the European Communities on a Solvency Ratio for Credit Institutions
(89/647/EEC of 18 December 1989), the Directive of the Council of
the European Communities on Own Funds of Credit Institutions
(89/299/EEC of 17 April 1989) and/or the Directive of the Council of
the European Communities on the Capital Adequacy of Investment Firms
and Credit Institutions (93/6/EEC), in each case as amended before
the date of this Agreement, unless it results from any change after
the signing of this Agreement in, or in the interpretation or
application of, such matters as contemplated on the signing of this
Agreement.
14 CHANGE IN MARKET CONDITIONS
14.1 TRIGGERING EVENTS: If in relation to any Interest Period:
14.1.1 the Agent is unable to determine LIBOR or
14.1.2 the Agent is notified by the Majority Banks that (a) they are
or expect to be unable to obtain matching deposits in the
Inter-bank Market at or about 11 a.m. on the second Business
Day before the proposed date of that Advance in sufficient
amounts to fund their respective shares of that Advance or (b)
the LIBOR fixed for the Interest Period of that Advance does
not reflect the cost to those Banks of obtaining such deposits
the Agent shall promptly notify the Borrower and the Banks and
that Advance shall not be made.
14.2 NEGOTIATION: The Borrower and the Agent (on behalf of and after
consultation with the Banks) shall then negotiate until not more
than 25 days after the Agent gives that notification with a view to
agreeing an alternative basis for calculating the interest payable
on and/or funding Advances. Any alternative basis agreed in writing
by the Agent (on behalf of and with the consent of the Banks) and
the Borrower within that 25 day period shall take effect in
accordance with its terms.
14.3 SUBSTITUTE INTEREST RATE: If an alternative basis for calculating
the interest payable is not agreed in writing pursuant to Clause
14.2, each Bank's share of any outstanding Advance(s) to which that
Interest Period relates shall during that Interest Period bear
interest at the rate per annum equal to the sum of the Applicable
Margin, the Mandatory Costs and the cost to it (expressed as a rate
per annum) of funding its share during that Interest Period by
whatever means it determines to be appropriate. Each Bank shall
certify that cost to the Borrower as soon as practical after the
Agent's
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notification of the event in question (but in any event at least 2
Business Days before the end of that Interest Period).
15 MITIGATION
If any circumstances arise which result, or would on the giving of
notice result, in the Borrower having to make a payment to or for
the account of a Bank under Clause 11.2.1, 11.2.2, 12.2 or 13 or in
a Bank's Revolving Credit Facility Commitment being cancelled under
Clause 12.1, then without in any way limiting, reducing or otherwise
qualifying any of the obligations of the Borrower under Clauses 11
to 14:
15.1 promptly after an officer of that Bank with responsibility for its
participation in this facility becomes aware of the relevant
circumstances and their results, that Bank shall notify the Borrower
and
15.2 in consultation with the Borrower and the Agent, that Bank shall
take all such steps as it determines are reasonably open to it and
as are acceptable to the Borrower and the Agent to mitigate the
effect of those circumstances (such as changing its Facility Office,
restructuring its participation in the facility and/or novating or
assigning some or all of its rights or obligations under this
Agreement to another Person acceptable to the Borrower and willing
to take that novation or assignment).
However, no Bank shall be obliged to take any such steps which in
its opinion would or might reasonably be expected to have an adverse
effect on that Bank.
16 PAYMENTS
16.1 CURRENCY OF PAYMENTS: Each amount to be made available by a Bank in
respect of an Advance shall be made in the currency in which that
Advance is to be made or, as the case may be, denominated during the
relevant Interest Period.
Any payment by any Obligor in respect of principal shall be made in
the currency in which the relevant Advance was made. Any payment in
respect of interest shall be made in the currency in which the sum
on which that interest is payable was denominated during the
Interest Period in respect of which it is payable. The agency fee is
payable in Sterling.
16.2 PAYMENTS THROUGH AGENT: All payments by any Obligor or any Bank
shall be made through the Agent in the relevant currency:
16.2.1 if in U.S. Dollars, in New York same day funds on the due
date by crediting the Agent's account (number: 890-0047-003)
with Bank of New York, New York or such other account and/or
with such other bank in New York City as the Agent shall have
specified
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from time to time to the Person by whom the relevant payment
is to be made and
16.2.2 if in Sterling or an Optional Currency, in immediately
available cleared and freely transferable funds by such time
on the due date, and by crediting such account of the Agent
with such bank in the Place of Payment of the relevant
currency, as the Agent may from time to time designate.
16.3 DISTRIBUTION AND DISBURSEMENT:
16.3.1 DISTRIBUTION TO BANKS: The Agent shall make available to each
Bank before close of business in the Place of Payment on that
date its pro rata share (if any) of any sum so received by the
Agent from an Obligor in the same currency and funds as
received by the Agent to such account of that Bank with such
bank in the Place of Payment of the country of that currency
as it shall have designated to the Agent for that purpose. If
any sum is received by the Agent from an Obligor later than
required by Clause 16.2, the Agent shall make each Bank's
share (if any) available to it as soon as practicable
thereafter.
16.3.2 DISTRIBUTION TO BORROWER: The Agent shall make the amounts
received by it from the Banks available to the Borrower before
close of business in the Place of Payment on that date in the
same currency and funds as received by the Agent as follows:
(i) if Dollars - Misys plc - Account Number 11111019, Lloyds
Bank Plc, PO Box 44, 25 Colmore Row, Birmingham BR3 3AD
(ii) if Sterling - Misys plc, Treasury Account - Account
Number 01022359, Lloyds Bank Plc, 125 Colmore Row,
Birmingham, Sort Code 30-00-03
(iii) if an Optional Currency - an account notified to the
Agent in the Place of Payment of the relevant currency.
16.4 NETTING OF PAYMENTS: Notwithstanding Clauses 4.1.5 and 16.1 to 16.3
or any other provision of this Agreement, if on any date an amount
in a currency (the "FIRST AMOUNT") is to be advanced by a Bank under
this Agreement and an amount in the same currency (the "SECOND
AMOUNT") is due from an Obligor to that Bank under this Agreement,
that Bank shall apply the first amount in or towards payment of the
second amount. The relevant Bank shall remain obliged to advance any
excess (or, as the case may be, the Obligor shall remain obliged to
pay any shortfall) in accordance with this Clause 16. Nothing in
this Clause 16.4 shall be effective to create a charge.
16.5 ORDER OF DISTRIBUTION: If the amount received by the Agent from an
Obligor on any date is less than the total sum remaining and/or
becoming due under this Agreement on that date, the Agent shall
apply that amount in or towards payment of the following sums in the
following order:
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16.5.1 first, in or towards payment of any sums then due to the
Agent in its capacity as such
16.5.2 secondly, in or towards payment pro rata of any sums (other
than principal of or interest on the Advances) then due to the
Banks (or any of them)
16.5.3 thirdly, in or towards payment pro rata of any interest then
due on the Advances
16.5.4 fourthly, in or towards payment pro rata of any principal
then due.
Any such applications shall override any purported appropriation by
any Person.
16.6 REFUNDING OF PAYMENTS: The Agent shall not be obliged to (but may)
make available to any Person any sum which it is expecting to
receive for the account of that Person until it has been able to
establish that it has received that sum. However, it may do so if it
wishes. If and to the extent that it does so but it transpires that
it had not then received the sum which it paid out:
16.6.1 the Person to whom the Agent made that sum available shall on
demand refund it to the Agent and
16.6.2 that Person or (at the option of the Agent) the Person by
whom that sum should have been made available shall on demand
pay to the Agent the amount (as certified by the Agent) which
will indemnify the Agent against any funding or other cost,
loss, expense or liability sustained or incurred by it as a
result of paying out that sum before receiving it but without
prejudice to the rights of any party hereto against such
defaulting party.
16.7 NON-BUSINESS DAYS:
16.7.1 If any Interest Payment Date, any Reduction Date, the
Maturity Date or any Revolving Credit Facility Repayment Date
would otherwise fall on a non-Business Day, it shall instead
fall on the next Business Day in the same calendar month (if
there is one) or the preceding Business Day (if there is not).
16.7.2 Any payment to be made by the Borrower (otherwise than on an
Interest Payment Date or the Maturity Date) and which would
otherwise be due on a non-Business Day shall instead be due on
the next Business Day.
17 REPRESENTATIONS AND WARRANTIES
17.1 BY THE OBLIGORS: Each Obligor represents and warrants in
relation to itself, and the Borrower represents and
warrants in relation to each Obligor, to and for the
benefit of each other party to this Agreement as
follows:
17.1.1 STATUS:
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(i) The Borrower is a limited liability company duly
incorporated and validly existing under the
Companies Acts 1948 to 1976 and 1985 and has the
power and authority to own its Assets and to
conduct the business which it conducts.
(ii) Each of the Guarantors is a limited liability
company duly incorporated and validly existing
under the laws of its jurisdiction of
incorporation with the power and authority to own
its own Assets and to conduct the business which
it now conducts.
17.1.2 POWERS: It has the power to enter into and exercise its
rights and perform and comply with its obligations under
this Agreement and the Takeover Documents to which it is
a party.
17.1.3 AUTHORISATION AND CONSENTS: All actions, conditions and
things required to be taken, fulfilled and done
(including the obtaining of any necessary Consents, the
making of registrations and the like) at the time this
representation is made or deemed to be made in order:
(i) to enable it lawfully to enter into, exercise its
rights and perform and comply with its obligations
under this Agreement
(ii) to ensure that those obligations are valid,
legally binding and enforceable
(iii) to ensure that those obligations rank and will at
all times rank in accordance with Clause 19.1
(iv) to make this Agreement admissible in evidence in
the courts of England and
(v) to enable each of the Borrower and Decimal Music
Corporation lawfully to enter into, exercise its
rights and perform and comply with its obligations
under the Takeover Documents to which it is a
party, to ensure that those obligations are
legally binding
have been taken, fulfilled and done.
17.1.4 NON-VIOLATION ETC.:
(i) The entry into, exercise of its rights and/or
performance of or compliance with its obligations
under this Agreement by any Obligor do not and
will not violate, or exceed any borrowing or other
power or restriction granted or imposed by:
(a) any law to which any of them is subject
(b) its constitutional documents or
(c) (to an extent or in a manner which has or
might reasonably be expected
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to have a Material Adverse Effect on any
Obligor) any agreement to which any member
of the Group is a party or which is binding
on any member of the Group or its Assets,
or result in the existence of, or oblige any member of
the Group to create, any Security over its Assets.
(ii) The entry into, exercise of its rights and/or the
performance of or compliance with its obligations
under the Takeover Documents to which it is a
party does not and will not violate (a) any law to
which either the Borrower and Decimal Music
Corporation is subject, or (b) any of the
documents constituting either of them, or (c) any
agreement to which either of them is a party or
which is binding on either of them or their
respective Assets and does not and will not result
in the existence of, or oblige either of them to
create, any Security over those Assets.
17.1.5 OBLIGATIONS BINDING: The obligations of each Obligor
under this Agreement are valid, binding and enforceable.
The obligations of each of the Borrower and Decimal
Music Corporation under the Takeover Documents to which
it is a party are valid, binding and enforceable.
17.1.6 NO DEFAULT: No Event of Default or Potential Event of
Default has occurred, or will occur as a result of
making any Advance, other than any waived in accordance
with Clause 29.2. No member of the Group is in breach of
or default under any agreement relating to Borrowed
Money nor, to an extent or in a manner which has or
could have a Material Adverse Effect, any other
agreement.
17.1.7 EXISTING SECURITY: No Security exists on or over its
Assets or those of any other member of the Group except
as permitted by Clause 19.2.
17.1.8 RANKING OF OBLIGATIONS: The payment obligations of each
Obligor under this Agreement rank at least equally and
rateably in all respects with all its other unsecured
Indebtedness except for such unsecured Indebtedness as
would, by virtue only of the operation of law, be
preferred in the event of its Winding-up.
17.1.9 ACCOUNTS: The Borrower's audited accounts and
consolidated accounts as at 31 May 1997 and the related
directors' and auditors' reports):
(i) include such financial statements as are required
by the laws of England and accounting principles,
standards and practices generally accepted in
England and, save as stated in the notes thereto,
were prepared and audited in accordance with
accounting principles, standards and practices
generally accepted in the United Kingdom and
consistently applied and in accordance with the
Companies Act 1985
(ii) together with those notes, give a true and fair
view of its financial condition and
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operations (or, in the case of consolidated
accounts, the consolidated financial condition and
operations of the Group) as at that date and for
the financial year then ended.
17.1.10 NO MATERIAL ADVERSE CHANGE: To the best of its
knowledge and belief, after due enquiry, there has been
no material adverse change in its financial condition or
operations since 31 May 1997, nor in the consolidated
financial condition or operations of the Group since
that date.
17.1.11 LITIGATION: So far as it is aware and save as
disclosed in the Circular, no litigation, arbitration or
administrative proceeding is current, pending or
threatened:
(i) to restrain the entry into, exercise of any of its
rights under and/or performance or enforcement of
or compliance with any of its obligations under
this Agreement or
(ii) which is reasonably likely to be determined
adversely and if so determined would have a
Material Adverse Effect
(iii) against it, Decimal Music Corporation, Music
(Jersey) Limited, Kirsty Inc., the Banks, the
Arrangers or the Agents in connection with the
Acquisition or that might reasonably be expected
to affect the validity of the Takeover Documents.
17.1.12 WINDING-UP: No meeting has been convened for
Winding-up any Obligor, no such step is intended by it
and, so far as it is aware, no petition, application or
the like is outstanding for Winding-up any Obligor
17.1.13 INFORMATION: As at the date hereof and, except insofar
as expressly disclosed in writing by the Borrower to the
Agent prior thereto, immediately prior to the Effective
Time
(i) All statements of fact relating to any member of
the Group contained in the Information Package are
or will be true and accurate in all material
respects and not misleading in any material
respect (in each case as at the date they are or
will be made or expressed to be made) and all
expressions of opinion, intention and expectation
relating to any such member of the Group contained
in the Information Package are or will be fair and
honestly held and made after due and careful
enquiry and consideration (in each case as at the
date they are or will be held or made or expressed
to be held or made).
(ii) To the best of the knowledge, information and
belief of the directors of the Borrower (a) all
statements of fact relating to Decimal, its
directors and its Subsidiaries contained in the
Information Package, are or will be true and
accurate in all material respects and not
misleading in any material respect (in each case
as at the date they are or will be made or
expressed to be made) and (b) all
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expressions of opinion, intention and expectation
of the Borrower relating to Decimal, its directors
and its Subsidiaries and all assumptions relating
to any financial projections contained in the
Information Package, are or will be fair and
honestly held and made after due and careful
enquiry and consideration (in each case as at the
date they are or will be made or expressed to be
made) taking into account the due diligence
exercise undertaken by the Borrower in relation to
Decimal and its Subsidiaries.
(iii) The Borrower is not aware of any material facts or
circumstances relating to the Group or in relation
to Decimal and its Subsidiaries (by reason of its
due diligence exercise or otherwise) which have
not been disclosed in the Information Package and
which, if disclosed, could reasonably be expected
materially and adversely to affect the willingness
of a Person to lend money to the Group.
17.1.14 INTELLECTUAL PROPERTY: To the best of its knowledge
and belief all material intellectual property rights,
licences, consents, exemptions, clearances, filings,
registrations and authorisations which are necessary to
enable each Obligor to carry on its business are in full
force and effect.
17.1.15 COMPLIANCE WITH ENVIRONMENTAL LAWS: Each member of the
Group:
(i) conducts and maintains its business operations so
as to comply with all applicable Environmental Law
(ii) has not given, nor does it have any obligation to
give, nor has it received, any notice or claim or
communication regarding any past, present, planned
or threatened treatment, storage, disposal,
presence, release or spill of any contaminant at,
on, under or from any of its real properties,
including any notice pursuant to any Environmental
Law in each case to the extent that failure to
comply with sub-paragraph (i) above would, or with
sub-paragraph (ii) would not have a Material
Adverse Effect.
17.1.16 TAXES: Each of the Borrower and its Subsidiaries has
filed or caused to be filed all tax returns which, to
the knowledge of the Borrower, are required to be filed
and has paid all taxes shown to be due and payable on
said returns or on any assessments made against it or
any of its property by a government authority (other
than any amount the validity of which is currently being
contested in good faith by appropriate proceedings and
with respect to which reserves in conformity with
Applicable Accounting Principles have been provided in
the books of the Borrower or its Subsidiaries, as the
case may be) to the extent that failure to comply with
this Clause 17.1.16 would have a Material Adverse
Effect.
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17.1.17 PRINCIPAL SUBSIDIARIES: As at the date of this Agreement,
there are no Principal Subsidiaries of the Borrower other than
those set out in Schedule 5.
17.1.18 REPETITION: Each of the representations and warranties in
Clauses 17.1.1 to 17.1.14 (other than 17.1.6, to the extent it
refers to a Potential Event of Default, 17.1.7, 17.1.8,
17.1.9, 17.1.10, 17.1.11, 17.1.12 and 17.1.13) will be correct
and complied with on each date on which an Advance is
requested or made and on the first day of each Interest Period
as if repeated then by reference to the then existing
circumstances.
17.2 QUALIFICATIONS TO WARRANTIES: The representation and warranty in Clause
17.1.5 shall (where applicable) be subject, as to matters of law only,
to the qualifications in paragraphs 5 and 6 of the form of opinion of
Linklaters & Paines set out in Schedule 10 and, in respect of Obligors
incorporated outside of England and Wales, to the similar
qualifications in the legal opinion delivered in respect of such
Obligor under this Agreement.
17.3 UNITED STATES: The Borrower represents and warrants to and for the
benefit of each other party to this Agreement as follows:
17.3.1 COMPLIANCE WITH ERISA:
(i) It and each Subsidiary and ERISA Affiliate of it has
fulfilled all its material contribution obligations
under the minimum funding standards of the USA
Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and the USA Internal Revenue Code
of 1986, as amended (the "CODE"), with respect to any
employee pension benefit plan covered by Title IV of
ERISA or subject to the minimum funding standards
under Section 412 of the Code maintained by it, that
Subsidiary or ERISA Affiliate or to which it, that
Subsidiary or ERISA Affiliate makes contributions,
has within the previous five years made contributions
or has an obligation to make contributions (a
"PLAN");.
(ii) Each Plan is in compliance in all material respects
with the presently applicable provisions of ERISA and
the Code, and neither it nor any Subsidiary or ERISA
Affiliate of it has incurred or expects to incur any
material liability to the Pension Benefit Guaranty
Corporation (or any entity succeeding to any or all
of its functions under ERISA) or a Plan under Title
IV of ERISA.
(iii) Neither it nor any of its Subsidiaries or ERISA
Affiliates has incurred any material liability to or
on account of a Plan pursuant to the penalty
provisions of Title I or Title IV of ERISA or expects
to incur any such material liability thereunder with
respect to any such Plan.
For the purposes of this Clause 17.3.1:
"ERISA AFFILIATE" means any person (as defined in Section 3(9)
of ERISA) which
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together with any other person, is treated as a "SINGLE
EMPLOYER" within the meaning of Section 414(b) or (c) of the
Code.
17.3.2 INVESTMENT COMPANY ACT: Neither it nor any of its
Subsidiaries is an "INVESTMENT COMPANY" or a "COMPANY
CONTROLLED BY AN INVESTMENT COMPANY" within the
meaning of the United States Investment Company Act
of 1940, as amended.
17.3.3 PUBLIC UTILITY HOLDING COMPANY ACT: Neither it nor
any of its Subsidiaries is a "HOLDING COMPANY" or an
"AFFILIATE" of a "HOLDING COMPANY" within the meaning
of the United States Public Utility Holding Company
Act of 1935, as amended.
17.3.4 USE OF PROCEEDS; MARGIN REGULATIONS: All proceeds of
any Advance shall be used by it for the purposes set
out in this Agreement, and no part of the proceeds of
any Advance will be used for any purpose which
violates, or which would be inconsistent with, the
provisions of the Margin Regulations, to purchase or
carry any Margin Stock or to extend credit to others
for the purpose of purchasing or carrying any Margin
Stock.
For the purposes of this Clause 17.3.4, "MARGIN
STOCK" shall have the meaning provided in Regulation
U of the Board of Governors of the United States
Federal Reserve System.
17.3.5 REPETITION: Each of the representations and
warranties in Clauses 17.3.1 to 17.3.4 will be
correct and complied with on each date on which an
Advance is requested or made and on the first day of
each Interest Period as if repeated then by reference
to the then existing circumstances.
18 INFORMATION
The Borrower undertakes that, so long as any sum remains to be lent or
remains payable under this Agreement:
18.1 PREPARATION OF ACCOUNTS: It will ensure that all accounts to be
delivered by it under this Agreement are prepared in such manner that
Clause 17.1.9 would be complied with if applied to those accounts by
Clause 17.1.18.
18.2 AUDITED ACCOUNTS: As soon as available and in any event within 120 days
after the end of each Financial Year (beginning with the current one),
it will deliver to the Agent enough copies for the Banks of each
Obligor's annual report and audited accounts (both consolidated and
unconsolidated) as at the end of and for that Financial Year, together
with copies of the related directors' and auditors' reports. If any
Obligor is resident in a country where it is not required to produce
audited accounts or where it is not customary for it to do so, that
Obligor may instead produce unaudited accounts and no directors' or
auditors' reports will be required in such circumstances.
18.3 SEMI-ANNUAL INFORMATION: As soon as available and in any event within
90 days after the end of
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the first six months of each of its Financial Years (beginning with the
current one), it will deliver to the Agent enough copies for the Banks
of each Obligor's unaudited interim consolidated accounts as at the end
of and for that six month period.
18.4 INFORMATION TO SHAREHOLDERS OR CREDITORS: As soon as practicable
following the time at which the same is sent to its shareholders (or
any class of its shareholders) or creditors, it will deliver to the
Agent enough copies for the Banks of any circular, document or other
written information sent to its shareholders (or any class of its
shareholders) or creditors as such.
18.5 LITIGATION: It will as soon as practicable deliver to the Agent for
distribution to the Banks details of any litigation, arbitration or
administrative proceeding which is to its knowledge current or pending:
18.5.1 to restrain the entry into, exercise of any of its rights
under and/or performance or enforcement of or compliance with
any of its obligations under this Agreement or
18.5.2 which is reasonably likely to be adversely determined and if
so determined would have a Material Adverse Effect on the
Borrower.
18.6 EVENTS OF DEFAULT: It will notify the Agent of the occurrence of any
Event of Default or Potential Event of Default (and of any action taken
or proposed to be taken to remedy it) promptly after becoming aware of
it. With each financial statement delivered by it under Clause 18.2 or
18.3 and as soon as practicable after any request made by the Agent
(acting reasonably) from time to time, it will deliver to the Agent a
certificate signed on its behalf by a Director confirming that, so far
as it is aware and (if applicable) except as previously notified to the
Agent or waived in accordance with Clause 29.2, no Event of Default or
Potential Event of Default has occurred or (as the case may be) setting
out details of any which has occurred and has not been so notified or
waived and of which it is aware and of any action taken or proposed to
be taken to remedy it.
18.7 COMPLIANCE WITH FINANCIAL RATIOS: With each set of accounts delivered
by it under Clause 18.2 and 18.3 it will deliver to the Agent a
certificate signed on its behalf by a Director substantially in the
form set out in Schedule 11 or in such other form as the Agent may
require.
18.8 PRINCIPAL SUBSIDIARIES: With each set of accounts delivered by it under
Clause 18.2 (and within 14 days after any request made by the Agent
(acting reasonably) from time to time), it will deliver to the Agent a
certificate signed on its behalf by a Director:
18.8.1 listing the Principal Subsidiaries as at the end of the
relevant financial year (or, as the case may be, as at the
date specified in the Agent's request, which date must be not
less than 15 nor more than 45 days before the date of the
request) and
18.8.2 setting out in reasonable detail and in a form satisfactory to
the Agent the computations necessary to justify the inclusions
in, and exclusions from, that list.
18.9 MERGER: It will provide to the Agent:
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18.9.1 details as to the progress of the Merger, and shall, at the
request of the Agent, provide the Agent with such information
in respect of the Merger that the Agent may reasonably request
18.9.2 as soon as practicable upon becoming aware of the same, any
information which is relevant to the Merger or which means
that it is reasonably likely that any condition to the Merger
will not be satisfied.
18.10 OTHER INFORMATION: It will promptly deliver to the Agent for
distribution to the Banks such other information relating to the
financial condition, business, financing or trading position of the
Group or any member of the Group as the Agent (or any Bank through the
Agent) may from time to time reasonably request.
18.11 DISPOSALS: It will notify the Agent promptly on becoming aware of any
Disposal that shall produce Disposal Proceeds in excess of
U.S.$15,000,000.
19 UNDERTAKINGS
The Borrower undertakes that, so long as any sum remains to be lent or
remains payable under this Agreement:
19.1 RANKING OF OBLIGATIONS: Each Obligor's payment obligations under this
Agreement rank and will at all times rank at least equally and rateably
in all respects with all its other unsecured Indebtedness except for
such unsecured Indebtedness as would, by virtue only of the operation
of law, be preferred in the event of its Winding-up.
19.2 NEGATIVE PLEDGE: It will not, and will ensure that no other member of
the Group will, create or have outstanding any Security on or over its
Assets, except for:
19.2.1 (a) an existing cash deposit of A$4.88m with Westpac Banking
Corporation deposited by CHA Computer Solutions Pty Limited
("CHA") as security for a performance bond issued in
connection with a contract between CHA and Unipower Limited
(for The Australian Universities Board) entered into in July
1993 and (b) an existing cash deposit of IRpound sterling1.9m
with Barclays Bank PLC, Dublin Branch as security for loan
notes issued by ACT Group plc on 1 December 1992 (but, in each
case, except with the prior consent of the Majority Banks, the
principal, capital or nominal amount secured by each such
deposit may not be increased beyond the amount secured by that
deposit at the date of this Agreement)
19.2.2 Security existing by virtue of (a) any omnibus guarantee and
set-off agreement entered into by any member of the Group with
Lloyds Bank plc or (b) any right over any account of any
member of the Group with any bank pursuant to which that bank
is entitled to set-
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off against balances standing to the credit of such account
debit balances on accounts of other members of the Group with
that bank, so long as interest charged by that bank in respect
of those debit balances is calculated net of any credit
balances on any account against which that bank has those
rights of set-off
19.2.3 liens arising solely by operation of law (or by an agreement
evidencing the same) in the ordinary course of its business in
respect of Indebtedness which either (a) has been due for less
than 30 days or (b) is being contested in good faith and by
appropriate means
19.2.4 pledges of goods, the related documents of title and/or other
related documents arising or created in the ordinary course of
its business as security only for Indebtedness to a bank or
financial institution directly relating to the goods or
documents on or over which that pledge exists
19.2.5 except where the supplier is another member of the Group,
Security arising out of title retention provisions in a
supplier's standard conditions of supply of goods acquired by
the relevant Person in the ordinary course of its business
19.2.6 any Security existing at the time of acquisition on or over
any Asset acquired by it (otherwise than from another member
of the Group) after the date of this Agreement and not created
in contemplation of or in connection with that acquisition
(but, except with the prior consent of the Majority Banks, the
principal, capital or nominal amount secured by any such
Security and outstanding at the time of acquisition may not be
increased) provided that (except with the prior consent of the
Majority Banks, such consent not to be unreasonably withheld)
any such Security is fully and finally discharged within 9
months after the time of that acquisition unless the Borrower
has demonstrated to the Agent that:
(i) such Subsidiary is not contractually entitled to
repay the Indebtedness secured by such Security and
(ii) it has used reasonable endeavours to procure the full
and final discharge of such Security
19.2.7 in the case of a Person which becomes a member of the Group
after the date of this Agreement, any Security existing on or
over its Assets when it becomes a member of the Group and not
created in contemplation of or in connection with it becoming
a member of the Group (but, except with the prior consent of
the Majority Banks, (a) the principal, capital or nominal
amount secured by any such Security and outstanding when the
relevant Person becomes a member of the Group may not be
increased except by reason of any fluctuation in the amount
outstanding under, and within the limits and in accordance
with the terms of, facilities which exist and are secured by
the relevant Security when it becomes a member of the Group
and (b) no Indebtedness may be secured by any such Security
which is not secured by the relevant Security when the
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relevant Person becomes a member of the Group) provided that
(except with the prior consent of the Majority Banks, such
consent not to be unreasonably withheld) any such Security is
fully and finally discharged within 9 months after the time at
which that Person became a member of the Group unless the
Borrower has demonstrated to the Agent that:
(i) such Subsidiary is not contractually entitled to
repay the Indebtedness secured by such Security and
(ii) it has used reasonable endeavours to procure the full
and final discharge of such Security
19.2.8 any Security created in connection with escrow arrangements
for source codes agreed with the Borrower's customers in the
ordinary course of business
19.2.9 any other Security created or outstanding with the prior
consent of the Majority Banks
19.2.10 any other Security created or outstanding on or over Assets of
any member of the Group provided that the aggregate
outstanding principal, capital or nominal amount secured by
all Security created or outstanding under this exception on or
over Assets of members of the Group must not at any time
exceed pound sterling1,000,000 or its equivalent (as
reasonably determined by the Agent)
19.2.11 Security existing by virtue of the Deposit Agreement
19.3 DISPOSALS:
19.3.1 It will not, and will ensure that no other member of the Group
will, (whether by a single transaction or a number of related
or unrelated transactions and whether at one time or over a
period of time) sell, transfer, lease out, lend or otherwise
dispose of (whether outright, by a sale-and-repurchase or
sale-and-leaseback arrangement, or otherwise and whether to
another member of the Group or any other Person) all or
substantially all of its Assets nor of any part of its Assets
the disposal of which (either alone or when aggregated with
all other disposals required to be taken into account under
this Clause 19.3.1) has or might reasonably be expected to
have a Material Adverse Effect on the Borrower.
19.3.2 The following disposals shall not be taken into account under
Clause 19.3.1:
(i) Disposals in the ordinary course of trading.
(ii) Disposals at arm's length and on normal commercial
terms
(iii) The payment of cash as consideration for the
acquisition of any Asset at arm's length and on
normal commercial terms.
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(iv) The disposal (for a consideration not exceeding a
normal commercial consideration) of Assets by any
member of the Group to the Borrower, or by one
wholly-owned Subsidiary to another, or (provided that
the interest of the Borrower in the transferee is no
less than its interest in the transferor) by any
other Subsidiary to another.
(v) The payment of cash dividends by the Borrower to its
ordinary shareholders from its distributable profits
and reserves in the usual and ordinary course of its
business.
(vi) Disposals of Assets having an aggregate market value
(as reasonably determined by the Agent) of pound
sterling1,000,000 (or its equivalent, as reasonably
determined by the Agent).
(vii) Any disposal which the Majority Banks shall have
agreed shall not be taken into account.
19.4 CHANGE OF BUSINESS: It will ensure that there is no material change in
the nature of its business, or the business of the Group (whether by a
single transaction or a number of related or unrelated transactions,
whether at one time or over a period of time and whether by disposal,
acquisition or otherwise).
19.5 GUARANTEES AND LOANS: It will not, and will ensure that no other member
of the Group will, give any Guarantee of any of the Indebtedness of any
Person (other than a member of the Group or to the extent comprised in
any arrangement referred to in Clause 19.2.2 (a) or (b)) for or in
respect of Borrowed Money or become a creditor in respect of any
Borrowings of any Person (other than a member of the Group or any
trustee of an employee share option scheme provided in the ordinary
course of business for the benefit of employees of any member of the
Group) except in the ordinary course of trading or where the aggregate
principal, nominal or capital amount of such Indebtedness and such
Borrowings does not exceed pound sterling250,000. It will ensure that
no Person gives any Guarantee of or Security for any of the Borrower's
Indebtedness for or in respect of Borrowed Money (other than to the
extent comprised in any arrangement referred to in Clause 19.2.2(a) or
(b)).
19.6 FINANCIAL RATIOS:
19.6.1 At the end of each, and of the first six months of each,
Financial Year of the Borrower the ratio of PBIT to Net
Interest Payable for the twelve month period then ending will
not be less than 4 to 1.
19.6.2 On the date (the "TEST DATE") at the end of each Financial
Year and each financial half-year of the Borrower commencing
with the current one the ratio of Net Borrowings on that date
to Adjusted EBITDA for the twelve month period then ending
will not exceed 3.5 to 1 for the period from first drawdown
until 30 November 1998 and 3 to 1 thereafter.
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19.6.3 If any financial statement delivered or to be delivered to the
Agent under Clause 18.2 or 18.3 is not to be or, as the case
may be, has not been prepared in accordance with the Companies
Act 1985 (as in effect on the date of this Agreement) and
Applicable Accounting Principles:
(i) The Borrower and the Agent (on behalf of and after
consultation with all the Banks) shall, on the
request of the Agent, negotiate in good faith with a
view to agreeing such amendments to the above
financial ratios and/or the definitions of the terms
used in them as are necessary to give the Banks
comparable protection to that contemplated at the
date of this Agreement.
(ii) If amendments are agreed by the Borrower and the
Majority Banks within 25 days, those amendments shall
take effect in accordance with the terms of that
agreement.
(iii) If such amendments are not so agreed within 25 days,
the Borrower shall:
(a) within 30 days after the end of that 25 day
period and
(b) with all subsequent financial statements to
be delivered to the Agent under Clause 18.2
or 18.3
deliver to the Agent, in reasonable detail and in a
form satisfactory to the Agent, details of all such
adjustments as need be made to the relevant financial
statement to bring it into line with the Companies
Act 1985 (as in effect on the date of this Agreement)
and Applicable Accounting Principles.
19.7 ACQUISITIONS:
19.7.1 It will not, and will ensure that no other member of the Group
will, during any Financial Year, (whether by a single
transaction or a number of related or unrelated transactions
and whether at one time or over a period of time) acquire
whether by subscription or otherwise any Assets of any Person
(including, without limitation, any business or interest in an
unincorporated firm, undertaking, joint venture, association
or partnership, or any shares or securities convertible into
shares (or any interest therein)) if consolidated Net External
Debt of the Group would increase by more than U.S.$400,000,000
(or its equivalent) at the time of the acquisition or in
aggregate when looking at all other such acquisitions in any
Financial Year of the Borrower without the prior written
consent of the Agent (given on behalf of and after
consultation with all the Banks).
19.7.2 At the time of any acquisition contemplated by this Clause
19.7, the Borrower shall deliver to the Agent a certificate
substantially in the form set out in Schedule 14, signed by a
director of the Borrower, stating that the requirements of
this Clause 19.7 will not
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be breached.
19.7.3 Nothing in this Clause 19.7 shall apply to the Acquisition or
to any transaction contemplated by Clause 19.3.2(iv).
19.8 HEDGING ARRANGEMENTS: It shall consult with the Arrangers regarding
hedging arrangements in respect of ongoing interest rate exposures.
19.9 OFFER PRICE: It shall not offer or pay more than the price per share
specified in a letter dated the date of this Agreement from the Banks
to the Borrower and accepted by the Borrower to any shareholder in
Decimal.
19.10 RIGHTS ISSUE UNDERWRITING AGREEMENT: Except with the prior consent of
the Majority Banks, there will be no amendment, supplement, consent,
agreement under, waiver or breach of any provision of, the Rights Issue
Underwriting Agreement that is material to the interests of the Banks.
It will perform and comply with its obligations under the Rights Issue
Underwriting Agreement.
19.11 COMPLETION OF MERGER: It shall use all reasonable endeavours to ensure
that the Merger is completed in accordance with the Merger Agreement on
or following the date of first drawdown.
19.12 PRIOR APPROVAL OF REFERENCES TO BANKS ETC.: It shall ensure that,
before the issue of any public document or the making of any public
announcement, any reference therein to the Revolving Credit Facility or
all or any of the Banks, the Arrangers or the Agent shall have been
approved by the Arrangers such approval not to be unreasonably
withheld.
19.13 INFORMATION MEMORANDUM AND SYNDICATION: It will cooperate with the
Arrangers or such of its offices/branches as it shall request in the
preparation of the Information Memorandum for the purposes of
syndicating the Facilities and will make available executive management
of the Group at the request of the Arrangers to meet with and make
presentations to prospective participants in the syndication and, once
the Information Memorandum is in final form, it shall be deemed to make
the same representation and warranty in respect of the Information
Memorandum as it has done in respect of the Information Package in
Clause 17.1.13 but where all references in that Clause to the
Information Package shall be read as references to the Information
Memorandum.
19.14 MERGER AGREEMENT: Neither it nor Decimal Music Corporation will grant
any waiver, make any amendment or exercise any other right (other than
termination) under the terms of the Merger Agreement which is material
to the interests of the Banks without the prior consent of the Majority
Banks (such consent not to be unreasonably withheld or delayed).
19.15 ADDITIONAL GUARANTORS: Unless the Borrower demonstrates to the
reasonable satisfaction of the Agent that it is unlawful for a company
to enter into a Guarantor Accession Deed, it will procure that (i) each
company which becomes a member of the Group after the Restatement Date
or (ii) each group of companies which become members of the Group after
the Restatement Date, in each case which results in an increase in
consolidated Net External Debt of the Group of U.S.$200,000,000 (or
equivalent) or more at the time it or they (as the case may be) become
members of the Group, promptly and in any event within 50 Business Days
of becoming a member or members (as the case may be) of the Group,
enters into a Guarantor Accession Deed.
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19.16 LIMIT OF DEBT: It will procure that the aggregate amount of
consolidated Net External Debt of members of the Group that are not
Guarantors does not exceed U.S.$50,000,000 (or equivalent) in aggregate
on the Test Dates. In the event that a Person becomes a member of the
Group by virtue of an acquisition, the Net External Debt of that Person
shall not be included in the aggregate total of Net External Debt of
all members of the Group that are not Guarantors for the purposes of
this Clause 19.16 for a period of 6 months from the date that Person is
acquired.
19.17 AUDITORS: It will ensure that the Group's auditors from time to time
are an internationally recognised firm of independent auditors.
19.18 COMPLIANCE WITH LAWS: It will ensure that each member of the Group will
at all times:
19.18.1 comply in all material respects with all laws and regulations
applicable to it (including Environmental Laws) and which are
necessary for the conduct of its business, trade and ordinary
activities generally
19.18.2 obtain, effect and maintain in full force and effect all
material governmental and regulatory consents, licences,
exemptions, clearances, filings, registrations and
authorisations necessary for the conduct of its business,
trade and ordinary activities generally.
19.19 ACCOUNTING REFERENCE DATE: It will not change its accounting reference
date without the consent of the Agent, such consent not to be
unreasonably withheld.
19.20 INSURANCE: It will maintain and ensure that each of its Subsidiaries
maintains insurances on and in relation to its business and Assets
against such risks and to such extent as it reasonably considers good
business practice for companies carrying on a business such as that
carried on by the relevant Person (including in particular product
liability insurance).
19.21 RIGHTS ISSUE: It will ensure that the proceeds of the Rights Issue net
of costs and expenses will be deposited with Lloyds Bank Plc and used
to settle the foreign exchange options and/or contracts referred in
Clause 11.1.3 of the Bridge Facility and to the extent that there is a
surplus, the balance will be used towards the payment of any costs and
expenses incurred in connection with the Acquisition and then towards
its general corporate purposes.
19.22 CONDITIONS SUBSEQUENT: It will ensure that it, and each Guarantor, has
complied with Clause 3.2 of the Amendment and Restatement Agreement.
20 DEFAULT
20.1 EVENTS OF DEFAULT: The following are Events of Default:
20.1.1 NON-PAYMENT: Any Obligor does not pay in the manner provided
in this Agreement (a) any principal payable under it when due,
unless that Obligor satisfies the Agent that non-payment is
due solely to administrative error (whether by that Obligor or
a bank
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involved in transferring funds to the Agent) and payment is
made within 2 Business Days after notice of that non-payment
has been given to it by the Agent or (b) any other sum payable
under it within 3 Business Days after notice of that
non-payment has been given to it by the Agent.
20.1.2 BREACH OF REPRESENTATION OR WARRANTY: Any representation,
warranty or statement by any Obligor in this Agreement or in
any document delivered under it is not complied with or is or
proves to have been incorrect in any material respect, when
made or deemed repeated.
20.1.3 BREACH OF UNDERTAKING: Clauses 2.3 or 19.2 to 19.7, 19.9,
19.10, 19.14, 19.15 and 19.16 are not complied with or any
condition attached to any waiver or consent given under this
Agreement is not fulfilled.
20.1.4 BREACH OF OTHER OBLIGATION: Any Obligor does not perform or
comply with any one or more of its other obligations under
this Agreement and, if that default is capable of remedy
within 30 days, it is not remedied within 30 days after notice
of that default has been given to it by the Agent.
20.1.5 CROSS DEFAULT: Any other Indebtedness of any Obligor or any
Principal Subsidiary for or in respect of Borrowed Money, or
any other Indebtedness of any of them to a bank or financial
institution, is or is declared to be or is capable of being
rendered due and payable before its normal maturity by reason
of any actual or potential default, event of default or the
like (however described) or is not paid when due nor within
any applicable grace period in any agreement relating to that
Indebtedness or, as a result of any actual or potential
default, event of default or the like (however described) any
facility relating to any such Indebtedness is or is declared
to be or is capable of being cancelled or terminated before
its normal expiry date or any Person otherwise entitled to use
any such facility is not so entitled. However, no Event of
Default will occur under this Clause 20.1.5 unless and until
the aggregate principal, nominal or capital amount of the
Indebtedness (whether of one or more Persons) in respect of
which one or more of the events mentioned above in this Clause
20.1.5 has/have occurred equals or exceeds pound
sterling1,000,000 or its equivalent (as reasonably determined
by the Agent).
20.1.6 INSOLVENCY: Any Obligor or any Principal Subsidiary is (or is,
or could be, deemed by law or a court to be) insolvent or
unable to pay its debts, stops, suspends or threatens to stop
or suspend payment of all or a material part of (or of a
particular type of) its Indebtedness, begins negotiations or
takes any other step with a view to the deferral, rescheduling
or other readjustment of all of (or all of a particular type
of) its Indebtedness (or of any part which it will or might
otherwise be unable to pay when due), proposes or makes a
general assignment or an arrangement or composition with or
for the benefit of the relevant creditors or a moratorium is
agreed or declared in respect of or affecting all or a
material part of (or of a particular type of) the Indebtedness
of that Obligor or any Principal Subsidiary.
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20.1.7 ENFORCEMENT PROCEEDINGS: A distress, attachment, execution or
other legal process is levied, enforced or sued out on or
against the Assets of any Obligor or any Principal Subsidiary
and is not discharged or stayed within 14 days.
20.1.8 SECURITY ENFORCEABLE: Any Security on or over the Assets of
any Obligor or any Principal Subsidiary becomes enforceable.
However, the exercise of a lien arising solely by operation of
law (or by an agreement evidencing the same) in the ordinary
course of business shall not constitute an Event of Default if
the indebtedness in respect of which that lien is being
exercised either (a) has been due for less than 30 days or (b)
is being contested in good faith by appropriate means.
20.1.9 WINDING-UP: Any step (not being merely vexatious or frivolous
and not discharged or stayed within 7 days of first being
taken) is taken by any Person with a view to, or any order is
made or resolution passed for, the Winding-up of any Obligor
or any Principal Subsidiary, or any of them ceases or
threatens to cease to carry on all or a material part of its
business, except for the purpose of and followed by a
reconstruction, amalgamation, reorganisation, merger or
consolidation on terms approved by the Majority Banks before
that step is taken.
20.1.10 CHANGE OF CONTROL: Control (as defined in Section 416(2) of
the Income and Corporation Taxes Act 1988) of the Borrower is
acquired (or is deemed by Section 416(2) to be held) by any
Person, or any group of connected persons (within the meaning
of Section 839 of that Act), or any Persons acting in concert,
which at the date of this Agreement do(es) not have (and would
not be so deemed to have) such control.
20.1.11 CONSENTS: Any action, condition or thing (including the
obtaining of any necessary Consent) at any time required to be
taken, fulfilled or done for any of the purposes stated in
Clause 17.1.3 is not taken, fulfilled or done, or any such
Consent ceases to be in full force and effect without
modification or any condition in or relating to any such
Consent is not complied with (unless that Consent or condition
is no longer required or applicable).
20.1.12 ILLEGALITY: It is or will become unlawful for the Obligors to
perform or comply with any one or more of its obligations
under this Agreement (unless the Majority Banks determine that
the UNLAWFULNESS OF THE RELEVANT OBLIGATION(S) IS IMMATERIAL).
20.1.13 GUARANTEE: ANY GUARANTEE OF A GUARANTOR IS NOT (OR IS CLAIMED
BY ANY OBLIGOR NOT TO BE) IN FULL FORCE AND EFFECT.
20.1.14 LITIGATION: Any litigation, arbitration or administrative
proceeding has commenced which is reasonably likely to be
determined adversely and if so determined would have a
Material Adverse Effect on the Borrower.
20.1.15 ANALOGOUS EVENTS: Any event occurs which, under the law of any
relevant jurisdiction, has an analogous or equivalent effect
to any event mentioned in Clause 20.1.6, 20.1.7 or 20.1.9.
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20.1.16 ERISA: (i) Any Plan which is covered by Title IV of ERISA but
which is not a multiemployer plan (as that term is defined in
Section 4001(a)(3) of ERISA) shall terminate under s.4001(c)
or s.4002 of ERISA, (ii) any Obligor or any entity, whether or
not incorporated, which is under common control with any other
Obligor within the meaning of Section 4001 (a)(14) of ERISA)
shall, or is, in the reasonable opinion of the Majority Banks,
likely to, incur any liability in connection with a withdrawal
from, or the insolvency or reorganisation (as those terms are
defined in Section 4245 and Section 4241 respectively of
ERISA) of, a multiemployer plan or (iii) any other event or
condition shall occur or exist with respect to a Plan; and in
each case in clauses (i), (ii) and (iii) above, such event or
condition, together with all other such events or conditions,
if any, would have a Material Adverse Effect.
20.1.17 BREACH OF TAKEOVER DOCUMENTS: The Borrower does not perform or
comply with any one or more of its obligations under the
Takeover Documents.
20.1.18 MATERIAL ADVERSE CHANGE: Any event(s) occur(s) or
circumstances arise as a consequence of which the Obligors
taken together will or might reasonably be expected to not (or
will or might reasonably be expected to be unable to) perform
or comply with any one or more of its obligations under this
Agreement.
20.2 CANCELLATION/ACCELERATION: If at any time and for any reason (and
whether within or beyond the control of any party to this Agreement)
any Event of Default has occurred (other than any Event of Default
which the Borrower has demonstrated to the Majority Banks has been
remedied) then at any time thereafter, whether or not any Event of
Default is continuing, the Agent, if so instructed by the Majority
Banks, shall by notice to the Borrower declare:
20.2.1 the Revolving Credit Facility Commitments to be cancelled,
whereupon they shall be cancelled; and/or
20.2.2 all Advances, all unpaid accrued interest and fees and any
other sum then payable under this Agreement to be immediately
due and payable, whereupon they shall become so due and
payable; and/or
20.2.3 demand that all or part of the Advances be payable on demand,
whereupon they shall immediately become payable on demand.
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21 DEFAULT INTEREST
21.1 INTEREST ON OVERDUE SUMS: If the Borrower does not pay any sum payable
under this Agreement when due, it shall pay interest on the amount from
time to time outstanding in respect of that overdue sum for the period
beginning on its due date and ending on the date of its receipt by the
Agent (both before and after judgment) in accordance with this Clause
21. For the purpose of this Clause 21, if any payment is received by
the Agent on the due date, but too late to be made available by the
Agent on that due date to the Person(s) entitled to it under Clause
16.3, that payment shall be deemed to be received on the next Business
Day (but the Agent will give credit to the Borrower for any interest
earned by the Agent on the relevant sum pending distribution to such
Person(s)).
21.2 DEFAULT INTEREST PERIODS AND RATES: Interest under this Clause 21 shall
be calculated by reference to successive Interest Periods, each of
which (other than the first, which shall begin on the due date) shall
begin on the last day of the previous one. Each such Interest Period
shall be of 3 months or such shorter period as the Agent may from time
to time select and the rate of interest applicable for all or any part
of a particular Interest Period shall be the rate per annum equal to
the sum of 1% and the rate which would be applicable to that overdue
sum for (or, as the case may be, for that part of) that Interest Period
under Clause 8.4 if that overdue sum were a non-overdue Advance, except
as follows:
21.2.1 Subject to Clauses 21.2.2 and 21.2.3, until the third Business
Day after the Agent first becomes aware of the relevant
default, the Agent may require that each Interest Period
relating to the relevant overdue sum shall be an "OVERNIGHT"
period beginning on one Business Day and ending on the next.
The rate of interest for a particular "OVERNIGHT" period shall
be the rate per annum equal to the sum of 1%, the Applicable
Margin, the Mandatory Costs and LIBOR for that Interest
Period.
21.2.2 If the overdue sum is of principal of an Advance and becomes
due before the Revolving Credit Facility Repayment Date (as
appropriate) of that Advance, the first Interest Period
applicable to that overdue sum shall end on that Repayment
Date and the rate of interest applicable to that sum for that
Interest Period shall be the rate per annum equal to the sum
of 1% and the rate applicable to it immediately before it
became due.
21.2.3 If any event mentioned in Clause 14.1 occurs in relation to
any Interest Period applicable to an overdue sum, the rate of
interest payable on each Person's share of that sum for all or
any part of that Interest Period shall be the sum of 1%, the
Applicable Margin, the Mandatory Costs and the cost to that
Person (as certified by it and expressed as a rate per annum)
of funding its share during that Interest Period by whatever
means it determines to be appropriate.
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21.2.4 Any Interest Period which would otherwise end on a
non-Business Day shall instead end on the next Business Day in
the same calendar month (if there is one) or the preceding
Business Day (if there is not).
21.3 PAYMENT AND COMPOUNDING OF DEFAULT INTEREST: Interest accrued under
this Clause 21 shall be due
on demand by the Agent but, if not previously demanded, shall be paid
when due in accordance with Clause 8.4 If not paid when due, the
interest shall be added to the overdue sum and itself bear interest
accordingly.
22 INDEMNITIES
22.1 MISCELLANEOUS INDEMNITIES: The Borrower shall on demand indemnify the
Agent and each Bank against any funding or other cost, loss, expense or
liability sustained or incurred by it as a result of:
22.1.1 an Advance not being made or the Overdraft Facility not being
made available by reason of non-fulfilment of any of the
conditions in Clause 3 and 4, as the case may be, or the
Borrower purporting to revoke a notice requesting an Advance
22.1.2 the occurrence or continuance of any Event of Default or
Potential Event of Default
22.1.3 the receipt or recovery by any party (or the Agent on its
behalf) of all or any part of an Advance or overdue sum
otherwise than on the Revolving Credit Facility Repayment
Date, as the case may be, Repayment Date of that Advance or
the last day of an Interest Period relating to that overdue
sum or
22.1.4 any Bank's Revolving Credit Facility Commitment being
cancelled as provided in the first sentence of Clause 7.2.
22.2 BROKEN FUNDING COSTS: In the case of Clauses 22.1.1 and 22.1.3 above,
the amount payable shall in any event include the amount (if any) by
which:
22.2.1 the amount of interest which the relevant Person is able to
obtain by placing an amount equal to its share of the relevant
Advance or overdue sum on deposit in the Inter-bank Market,
for the remainder of the relevant Interest Period, as soon as
reasonably practicable after it becomes aware that the
relevant Advance is not being made or (as the case may be) of
the relevant event referred to in Clause 22.1.1 or 22.1.3
is less than:
22.2.2 the amount of interest which, in accordance with the expressed
terms of this Agreement, would otherwise be payable to that
Person on its share of that Advance for its Interest Period
(as the case may be) on the relevant amount for the remainder
of the relevant
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Interest Period.
22.3 CURRENCY INDEMNITY:
22.3.1 In respect of any sum payable by the Borrower under or in
connection with this Agreement including damages, the currency
specified in Clause 16.1 in respect of that sum (the "CURRENCY
OF ACCOUNT") shall be the sole currency of account and
payment.
22.3.2 Any amount received or recovered in a currency other than the
relevant Currency of Account (whether as a result of, or of
the enforcement of, a judgment or order of a court of any
jurisdiction, in the Winding-up of the Borrower or otherwise)
by the Agent or any Bank in respect of any sum expressed to be
due to it from the Borrower under this Agreement shall only
discharge the Borrower to the extent of the amount in that
Currency of Account which the recipient is able, in accordance
with its usual practice, to purchase with the amount so
received or recovered in that other currency on the date of
that receipt or recovery (or, if it is not practicable to make
that purchase on that date, on the first date on which it is
practicable to do so).
22.3.3 If that amount in that Currency of Account is less than the
amount expressed to be due to the recipient under this
Agreement, the Borrower shall indemnify it against any loss
sustained by it as a result. In any event, the Borrower shall
indemnify the recipient against the cost of making any such
purchase. For the purpose of this Clause 22.3, it will be
sufficient for the Agent or Bank, as the case may be, to
demonstrate that it would have suffered a loss had an actual
exchange or purchase been made.
22.4 TRANSACTION INDEMNITY:
22.4.1 The Borrower agrees to indemnify and hold the Arrangers, the
Banks and the Agent and their respective directors, officers
and agents (the "INDEMNIFIED PARTIES") harmless from and
against any and all claims, damages, liabilities, taxes, costs
and expenses (including reasonable and proper legal fees,
travel and other expenses and disbursements) which may be
incurred by or asserted against the Indemnified Parties in
connection with or arising out of any investigation,
litigation or proceeding relating to this Agreement or the
financing of the Merger (except for any arising out of such
Indemnified Party's gross negligence or wilful default)
whether or not the Indemnified Parties are parties thereto,
and will pay all costs and expenses of the Indemnified Parties
(including all reasonable legal and proper fees, expenses and
disbursements) incurred or sustained by the Indemnified
Parties in connection with the same whether or not the
Facilities are utilised or the Merger is completed.
22.4.2 Any party that proposes to assert the right to be indemnified
under this Clause 22.4 will, promptly after receipt of notice
of commencement of any action, suit or proceeding
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against such party in respect of which a claim is to be made
against the Borrower under this Clause 22.4 notify the
Borrower of the commencement of such action, suit or
proceeding, enclosing a copy of all papers served, but the
omission so to notify the Borrower of any such action, suit or
proceeding shall not relieve the Borrower from any liability
that it may have to any Indemnified Party unless the Borrower
is effectively precluded from exercising any of its material
rights to contest such claim as a result of such omission to
notify.
22.4.3 In case any such action, suit or proceeding shall be brought
against any Indemnified Party and notification has been made
to the Borrower of the commencement thereof, the Borrower
shall be entitled to participate in such action, suit or
proceeding.
22.5 INDEMNITIES SEPARATE: Each of the indemnities in this Agreement
constitutes a separate and independent obligation from the other
obligations in this Agreement, shall give rise to a separate and
independent cause of action, shall apply irrespective of any indulgence
granted by the Agent and/or any Bank and shall continue in full force
and effect despite any judgment, order, claim or proof for a liquidated
amount in respect of any sum due under this Agreement or any other
judgment or order.
23 GUARANTEE
23.1 GUARANTEE: Each Guarantor unconditionally and irrevocably guarantees
that, if for any reason the Borrower does not pay any sum payable by it
under this Agreement by the time, on the date and otherwise in the
manner specified in this Agreement (whether on the normal due date, on
acceleration or otherwise), that Guarantor will pay that sum before
close of business in the Place of Payment for the relevant currency on
that date.
23.2 GUARANTOR AS PRINCIPAL DEBTOR: As between each Guarantor and (apart
from the Borrower) the other parties to this Agreement but without
affecting the Borrower's obligations, each Guarantor shall be liable
under this Clause 23 as if it were the sole principal debtor and not
merely a surety. Accordingly, each Guarantor shall not be discharged,
nor shall its liability be affected, by anything which would not
discharge it or affect its liability if it were the sole principal
debtor including:
23.2.1 any time, indulgence, concession, waiver or consent at any
time given to the Borrower or any other Person
23.2.2 any amendment or supplement to any other Clause of this
Agreement or to any Security or other Guarantee
23.2.3 the making or absence of any demand on the Borrower or any
other Person for payment
23.2.4 the enforcement or absence of enforcement of this Agreement or
of any Security or other
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Guarantee
23.2.5 the taking, existence or release of any Security or other
Guarantee
23.2.6 the Winding-up of the Borrower or any other Person, or any
step being taken for any such Winding-up or
23.2.7 the illegality, invalidity or unenforceability of, or any
defect in, any provision of this Agreement or any Security or
other Guarantee or any of the obligations of any of the
parties under or in connection with this Agreement or any
Security or other Guarantee.
23.3 GUARANTOR'S OBLIGATIONS CONTINUING: Each Guarantor's obligations under
this Agreement are and will remain in full force and effect by way of
continuing security until no sum remains to be lent under this
Agreement and the Agent and Banks have irrevocably received or
recovered all sums payable under this Agreement. Furthermore, those
obligations of the Guarantors are additional to, and not instead of,
any Security or other Guarantee at any time existing in favour of any
Person, whether from the Guarantors or otherwise, and may be enforced
without first having recourse to the Borrower, any other Person, any
Security or any other Guarantee. Each Guarantor irrevocably waives all
notices and demands of any kind.
23.4 EXERCISE OF GUARANTOR'S RIGHTS: So long as any sum remains to be lent
or remains payable under this Agreement:
23.4.1 any right of each Guarantor, by reason of the performance of
any of its obligations under this Clause 23, to be indemnified
by the Borrower, to prove in respect of any liability in the
Winding-up of the Borrower or to take the benefit of or
enforce any Security or other Guarantee shall (and shall only)
be exercised and enforced in such manner and on such terms as
the Agent (acting on instructions from the Majority Banks) may
require and
23.4.2 any amount received or recovered by a Guarantor (a) as a
result of any exercise of any such right or (b) in the
Winding-up of the Borrower shall be held in trust for the
Agent, and the Banks and immediately paid to the Agent
provided that nothing in this Clause 23.4.2 shall be effective
to create a charge.
23.5 AVOIDANCE OF PAYMENTS: Each Guarantor shall on demand indemnify the
Agent, and each Bank against any funding or other cost, loss, expense
or liability (including loss of Applicable Margin) sustained or
incurred by the Agent or, as the case may be, that Bank as a result of
it being required for any reason (including any bankruptcy, insolvency,
Winding-up or similar law of any jurisdiction) to refund all or part of
any amount received or recovered by it in respect of any sum payable by
the Borrower under this Agreement and shall in any event pay to the
Agent or, as the case may be, the relevant Bank on demand the amount so
refunded by it.
23.6 SUSPENSE ACCOUNTS: For the purpose of enabling the Agent or any Bank to
maximise its recoveries
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in any actual or potential Winding-up, any amount received or recovered
by the Agent or any Bank (otherwise than as a result of a payment by
the Borrower to the Agent) in respect of any sum payable by the
Borrower under this Agreement may be placed by the recipient in an
interest bearing suspense account. That amount may be kept there (with
any interest earned being credited to that account) unless and until
the recipient is satisfied that it is not obliged to pay any further
sum under this Agreement and that it has irrevocably received or
recovered its share of the Advances, all interest accrued thereon and
any other sums payable to it under this Agreement.
23.7 INDEMNITY: As separate, independent and alternative stipulations, each
Guarantor unconditionally and irrevocably agrees:
23.7.1 that any sum which, although expressed to be payable by the
Borrower under this Agreement, is for any reason (whether or
not now existing and whether or not now known or becoming
known to any party to this Agreement) not recoverable from
that Guarantor on the basis of a guarantee shall nevertheless
be recoverable from it as if it were the sole principal debtor
and shall be paid by it to the Agent on demand and
23.7.2 as a primary obligation to indemnify the Agent and each Bank
against any loss suffered by it as a result of any sum
expressed to be payable by the Borrower under this Agreement
not being paid by the time, on the date and otherwise in the
manner specified in this Agreement or any payment obligation
of the Borrower under this Agreement being or becoming void,
voidable or unenforceable for any reason (whether or not now
existing and whether or not now known or becoming known to any
party to this Agreement), the amount of that loss being the
amount expressed to be payable by the Borrower in respect of
the relevant sum.
23.8 ADDITIONAL GUARANTORS: The Borrower may nominate any of its
Subsidiaries incorporated in an OECD country as a Guarantor for the
purposes of this Agreement by so notifying the Agent in writing. Upon
receipt by the Agent of a Guarantor Accession Deed duly executed by a
Guarantor and upon the Agent notifying the Borrower in writing that it
has received documentation complying with Schedule 8 in respect of a
Guarantor, such Guarantor shall acquire all the rights and assume all
the obligations of a Guarantor hereunder and thereafter shall be
treated as a Guarantor for all purposes under this Agreement.
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24 THE AGENT
24.1 Appointment of Agent: Each Bank irrevocably appoints the Agent to act
as its agent for the purpose of this Agreement and authorises it to
perform the functions specifically delegated to it by this Agreement
and such other functions as are reasonably incidental. However, the
Agent may not begin any legal action or proceeding in the name of a
Bank without its consent. The relationship between the Agent and the
Banks is of agent and principal only. The Agent shall not be a trustee
or fiduciary for any Bank, nor an agent, trustee or fiduciary for the
Borrower under or in relation to this Agreement.
24.2 AGENT'S DUTIES: The Agent shall:
24.2.1 promptly send to each Bank details of each communication
received by it from the Borrower under this Agreement, except
that details of any communication relating to a particular
Bank shall be sent to that Bank only
24.2.2 promptly send to each Bank a copy of any legal opinion
delivered under this Agreement and of any document or
information received by it under Clause 18
24.2.3 subject to the other provisions of this Clause 24, act in
accordance with any instructions from the Majority Banks and
24.2.4 have only those obligations and responsibilities, of a solely
mechanical and administrative nature, expressly specified in
this Agreement.
24.3 AGENT'S RIGHTS: The Agent may:
24.3.1 perform any of its functions under this Agreement by or
through its personnel or agents
24.3.2 refrain from exercising any right, power or discretion under
this Agreement until it has received instructions from the
Majority Banks as to whether (and, if so, how) it is to be
exercised and shall in all cases be fully protected when
acting, or (if so instructed) refraining from acting, in
accordance with instructions from the Majority Banks
24.3.3 treat (a) the Bank which makes available any share of an
Advance as the Person entitled to repayment of that share
unless all or part of it has been novated (or the Agent has
received notice of assignment of all or part of it) in
accordance with Clause 28.3 and (b) the office notified by a
Bank to the Agent for this purpose before the signing of this
Agreement (or, as the case may be, set out in the relevant
Novation Notice or notice of assignment) as its Facility
Office unless the Agent has received from that Bank a notice
of change of Facility Office in accordance with Clause 28.4.
The Agent may act on any such notice until it is superseded by
a further notice
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24.3.4 refrain from disclosing any document or information if such
disclosure (and may refrain from doing anything else which)
would or might in its opinion be contrary to any law or
Directive, be a breach of any duty of secrecy or
confidentiality or otherwise render it liable to any Person
and may do anything which is in its opinion necessary to
comply with any law or Directive
24.3.5 assume that no Event of Default or Potential Event of Default
has occurred unless an officer of the Agent, in performing the
Agent's functions under this Agreement, acquires actual
knowledge to the contrary and
24.3.6 refrain from taking any step (or further step) to protect or
enforce the rights of any Person under this Agreement until it
has been indemnified (or received confirmation that it will be
so indemnified) and/or secured to its satisfaction against any
and all costs, losses, expenses or liabilities (including
legal fees) which it would or might sustain or incur as a
result.
24.4 RIGHTS OF AGENT AND ARRANGERS: The Agent and each Arranger (and, in the
case of Clauses 24.4.4 and 24.4.5, each of its Affiliates) may:
24.4.1 rely on any communication or document believed by it to be
genuine
24.4.2 rely as to any matter of fact which might reasonably be
expected to be within the knowledge of the Borrower on a
statement by or on behalf of the Borrower
24.4.3 obtain and pay for such legal or other expert advice or
services as may to it seem necessary or desirable and rely on
any such advice
24.4.4 retain for its own benefit and without liability to account
any fee or other sum receivable by it for its own account and
24.4.5 accept deposits from, lend money to, provide any advisory or
other services to or engage in any kind of banking or other
business with any party to this Agreement or any Affiliate of
any party (and, in each case, may do so without liability to
account). Without prejudice to the generality of this Clause
24.4.5, neither the Agent nor any of its Affiliates shall have
any duty to disclose or act on or take into account any
document or information of which any of them has knowledge or
notice or otherwise becomes aware in the course of doing
anything permitted by this Clause 24.4.5 and, in performing
its duties, obligations and responsibilities as Agent, the
Agent shall be entitled to ignore any such document or
information which is not publicly available.
24.4.6 act as agent or trustee or in a fiduciary or other capacity on
behalf of any other group of banks or financial institutions
providing facilities to any member or members of the Group or
any associated company of any such member without regard to
the effect of exercising or omitting to exercise its rights
discretions powers and duties in such capacity in the
interests of the Banks and to act or omit to act in such
capacity as freely in all respects as if the Agent had not
been appointed to act as agent for the Banks and
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24.4.7 subscribe for, hold or be or become beneficially entitled to,
or dispose of, shares or securities, or options or other
rights to and interests in shares or securities in any member
or members of the Group or any associated company of any such
member (and, in each case, may do so without liability to
account).
24.5 EXONERATION OF AGENT AND ARRANGERS: Neither the Agent nor the Arrangers
nor any of their personnel or agents shall be:
24.5.1 responsible for the adequacy, accuracy, completeness or
reasonableness of any representation, warranty, statement,
projection, assumption or information in any Information
Memorandum, this Agreement or any notice or other document
delivered under or in connection with this Agreement whether
given orally or in writing
24.5.2 responsible for the execution, delivery, validity, legality,
adequacy, enforceability or admissibility in evidence of this
Agreement or any such notice or other document
24.5.3 obliged to enquire as to the occurrence or continuation of an
Event of Default or Potential Event of Default or
24.5.4 liable for anything done or not done by it or any of them
under or in connection with this Agreement save in the case of
its or their own gross negligence or wilful misconduct.
24.6 AGENT/ARRANGERS AS BANK: The Agent and each Arranger shall have the
same rights and powers with respect to its Revolving Credit Facility
Commitment and share of the Advances (if any) as any other Bank and may
exercise those rights and powers as if it were not also acting as Agent
and/or Arranger.
24.7 NON-RELIANCE ON AGENT/ARRANGERS: Each Bank confirms that it has itself
been, and will at all times continue to be, solely responsible for
making its own independent investigation and appraisal of the business,
financial condition, prospects, creditworthiness, status and affairs of
the Borrower, the Group or any member of the Group and has not relied,
and will not at any time rely, on the Agent and/or the Arrangers and/or
any other Bank:
24.7.1 to provide it with any information relating to the business,
financial condition, prospects, creditworthiness, status or
affairs of the Borrower, the Group, any member of the Group or
any other Person, whether coming into its possession before or
after the making of any Advance (except, in the case of the
Agent, as stated in Clause 24.2) or
24.7.2 to check or enquire into the adequacy, accuracy, completeness
or reasonableness of any representation, warranty, statement,
projection, assumption or information at any time provided by
or on behalf of the Borrower, the Group, any member of the
Group or any other Person under or in connection with this
Agreement (whether or not that information has been or is at
any time circulated to it by the Agent), including any
contained in any Information Memorandum or
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24.7.3 to assess or keep under review the business, financial
condition, prospects, creditworthiness, status or affairs of
the Borrower, the Group, any member of the Group or any other
Person.
24.8 INDEMNITY TO ARRANGERS AND AGENT: To the extent that the Borrower does
not do so on demand or is not obliged to do so, each Bank shall on
demand indemnify the Arrangers and the Agent in the proportion borne by
its Advances to all the Advances at the relevant time (or, if there are
then no Advances, in the proportion borne by its Revolving Credit
Facility Commitment to the total Revolving Credit Facility Commitments
or, if its Revolving Credit Facility Commitment has been cancelled, in
the proportion borne by its Revolving Credit Facility Commitment to the
total Revolving Credit Facility Commitments immediately before being
cancelled) against any cost, expense or liability mentioned in Clause
27 or sustained or incurred by the Agent in complying with any
instructions from the Majority Banks or otherwise sustained or incurred
by the Arrangers and the Agent in connection with this Agreement or its
duties, obligations and responsibilities under this Agreement
(including any costs and expenses incurred by the Arrangers and the
Agent in connection with the preparation, printing, negotiation, entry
into or advertising of any Information Memorandum and this Agreement).
24.9 RESIGNATION OF AGENT: Notwithstanding the irrevocable appointments in
Clauses 24.1 and 24.10, the Agent may resign at any time (after
consultation with the Borrower) if it gives at least 7 days' notice to
the Borrower and the Banks. However, no resignation shall be effective
until the successor has been appointed and accepted its appointment in
accordance with this Clause 24.9. The Agent may in its notice of
resignation appoint any of its Affiliates with an office in London as
its successor. If it does not do so, the Majority Banks may appoint a
successor. If the relevant successor has not been so appointed and
accepted its appointment within 15 days after the date of the notice of
resignation, the resigning Agent may appoint any reputable bank or
financial institution with an office in London (whether or not an
Affiliate of the Agent) to be its successor. Any appointment of a
successor must be in writing, signed by the Person(s) appointing that
successor and delivered to that successor. Any acceptance of such
appointment must be in writing, signed by the Person appointed and
delivered to the Person(s) appointing that successor. The other parties
to this Agreement shall be promptly informed of the acceptance by a
successor Agent. Upon the successor accepting its appointment, the
resigning Agent shall be automatically discharged from any further
obligation under this Agreement and its successor and each of the other
parties to this Agreement shall have the same rights and obligations
among themselves as they would have had if the successor had been the
original Agent party to this Agreement. The resigning Agent shall
provide its successor with (or with copies of) such of its records as
its successor requires to carry out its functions under this Agreement.
24.10 NOVATION NOTICE: The Borrower, each Obligor and each Arranger and Bank
(except for a Bank voluntarily seeking the relevant novation in
accordance with Clause 28.3) irrevocably authorise the Agent to sign
each Novation Notice on their behalf.
24.11 CONFIDENTIAL INFORMATION:
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24.11.1 In acting as Agent for the Banks, the Capital Markets unit of
Lloyds Bank Plc shall be treated as a separate entity from any
other of the divisions of the Agent or its subsidiaries and,
without detracting from the generality of the foregoing, in
the event that any of the
Agent's divisions (including its Capital Markets unit) or
similar units or subsidiaries should act for the Borrower or
any member of the Group in any capacity whether as bankers or
otherwise in relation to any other matter, any information
given by the Borrower or member of the Group to such
divisions, similar units or subsidiaries shall be treated as
confidential and the Agent shall as between itself and the
Banks not be obliged to disclose the same to any Bank or any
other person.
24.11.2 Notwithstanding anything to the contrary expressed or implied
herein and without prejudice to the generality of Clause
24.11.1 the Agent shall as between itself and the Banks not be
obliged to disclose to any Bank or other person any
information supplied by the Borrower or member of the Group to
it in its capacity as Agent for the Banks which is identified
by the Borrower or that member of the Group at the time of
supply as being confidential and supplied solely for the
purpose of evaluating in consultation with the Agent whether
any waiver or amendment might be required to any of the
provisions contained herein provided that nothing in this
Clause 24.11.2 shall apply to any information supplied by the
Borrower pursuant to Clause 18.
24.11.3 For the purposes of this Agreement the Agent shall be deemed
not to have any actual knowledge or actual notice of the
contents of any information obtained by it or supplied to it
by or on behalf of the Borrower or any member of the Group
other than the contents of information obtained or supplied to
it as Agent for the Banks under this Agreement and which
information the Agent is not obliged to keep confidential
pursuant to Clause 24.11.1.
25 SET-OFF/PRO RATA SHARING
25.1 SET-OFF: Each of the Obligors authorises any other party to this
Agreement to apply (without prior notice) any credit balance (whether
or not then due) to which it is at any time beneficially entitled on
any account at, any sum held to its order by and/or any liability to it
of, any office of that party in or towards satisfaction of any sum then
due from it to that party under this Agreement and unpaid and, for that
purpose, to convert one currency into another (but so that nothing in
this Clause 25.1 shall be effective to create a charge). No party shall
be obliged to exercise any of its rights under this Clause, which shall
be without prejudice and in addition to any right of set-off,
combination of accounts, lien or other right to which it is at any time
otherwise entitled (whether by operation of law, contract or
otherwise).
25.2 PRO RATA SHARING: If at any time the proportion received or recovered
(whether by direct payment,
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by exercise of any right of set-off, combination of accounts or lien,
or otherwise) by any Bank in respect of the total sum which has become
due to it from an Obligor under this Agreement before that time exceeds
the proportion received or recovered by the Bank(s) receiving or
recovering the smallest proportion (if any), then:
25.2.1 within 2 Business Days after receiving a request from the
Agent, that Bank shall pay to the Agent an amount equal to the
excess
25.2.2 the Agent shall promptly distribute that payment as if it were
made by the Borrower and
25.2.3 as between that Obligor, and the Banks, that excess amount
shall be treated as having been paid to the Banks to which
(and in the proportions in which) it is distributed under
Clause 25.2.2, rather than as having been paid to that Bank.
Within 2 Business Days after any Bank receives or recovers any such sum
(except for a sum received or recovered in respect of the Overdraft
Facility) otherwise than by payment through the Agent, that Bank shall
notify the Agent of the amount and currency so received or recovered,
how it was received or recovered and whether it represents principal,
interest or other sums. If all or part of any amount so received or
recovered by that Bank has to be refunded by it (with or without
interest), each Bank to whom any part of that amount has been
distributed shall (within 2 Business Days after receiving a request
from that Bank) in turn pay to that Bank its proportionate share of the
amount to be refunded and of any interest required to be paid by that
Bank on that amount in respect of all or any part of the period from
the date of the relevant distribution to the date of that payment to
that Bank.
Any amount received or recovered by a Bank under a novation,
assignment, sub-participation (or the like) shall be ignored for the
purpose of this Clause 25.2 (except to the extent, if any, that such
amount is received or recovered from or is, to that Bank's knowledge,
funded by the Obligor, or any other member of the Group). Furthermore,
a Bank shall not be obliged to share any amount which it has received
or recovered as a result of taking legal proceedings with any other
Bank which had an opportunity to participate in those legal proceedings
but did not do so and did not take separate legal proceedings.
26 EXPENSES AND STAMP DUTY
26.1 EXPENSES AND STAMP DUTY: Whether or not any Advance is made, the
Borrower shall pay:
26.1.1 Initial Expenses: on demand, all reasonable costs and expenses
(including Taxes thereon and legal fees) properly incurred by
the Agent or the Arrangers in connection with the preparation,
printing, negotiation, entry into or advertising of the
Information Memorandum, the Syndication and this Agreement
and/or any amendment of, supplement to or waiver or consent in
respect of this Agreement requested by or on
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behalf of the Borrower (whether or not entered into or given)
26.1.2 Enforcement Expenses: on demand, all costs and expenses
(including Taxes thereon and legal fees) incurred by the Agent
in the administration of, or by the Agent or any Bank in
protecting or enforcing (or attempting to protect or enforce)
any right under, this Agreement and/or any such amendment,
supplement, waiver or consent and
26.1.3 STAMP DUTY: promptly, and in any event before any interest or
penalty becomes payable, any stamp, documentary, registration
or similar Tax payable in connection with the entry into,
registration, performance, enforcement or admissibility in
evidence of this Agreement and/or any such amendment,
supplement, waiver or consent, and shall indemnify the Agent
and the Banks against any liability with respect to or
resulting from any delay in paying or omission to pay any such
Tax.
26.2 OTHER EXPENSES: The Borrower shall also, from time to time on demand of
the Agent, reimburse it, at such hourly and/or daily rates as it shall
from time to time notify to the Borrower, in respect of management time
and/or other resources used by it in connection with any such
amendment, supplement, waiver or consent, or complying with any
instructions from the Majority Banks, or the protection or enforcement
or attempted protection or enforcement of any right under this
Agreement and/or any such amendment, supplement, waiver or consent.
27 CALCULATIONS AND EVIDENCE
27.1 BASIS OF CALCULATION: All interest shall accrue from day to day and
shall be calculated on the basis of a year of 360 days (or 365 days in
the case of Sterling) and the actual number of days elapsed.
27.2 LOAN ACCOUNTS: The entries made in the accounts maintained by each Bank
in accordance with its usual practice shall be prima facie evidence of
the existence and amounts of the obligations of the Borrower recorded
in them.
27.3 CERTIFICATES: A certificate by the Agent, either Arranger, the
Overdraft Facility Bank or any Bank as to any sum payable to it under
this Agreement, and any other certificate, determination, notification
or the like of the Agent, either Arranger, the Overdraft Facility Bank
or any Bank or the Majority Banks provided for in this Agreement, shall
be conclusive save for manifest error. Any such certificate as to any
sum shall set out the basis of computation of that sum in reasonable
detail but shall not be required to disclose any information reasonably
considered to be confidential.
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28 NOVATION
28.1 BENEFIT AND BURDEN OF THIS AGREEMENT: This Agreement shall benefit and
bind the parties, any New Bank in respect of which a Novation Notice
becomes effective in accordance with Clause 28.3, their permitted
assignees and their respective successors. Any reference in this
Agreement to any party shall be construed accordingly.
28.2 BORROWER: The Borrower may not assign or transfer all or part of its
rights or obligations under this Agreement.
28.3 BANKS:
28.3.1 Any Bank may at any time novate all or part of its share of an
Advance or its Revolving Credit Facility Commitment to any
Qualifying Lender which is an Affiliate of that Bank without
the consent of any party or to any other Qualifying Lender
with the consent of the Borrower (which consent shall be
deemed to have been given unless, within 7 days of being
requested to consent, the Borrower refuses its consent on
reasonable grounds stated in its refusal). However, no consent
shall be needed after any notice is sent under Clause 20.2.1
or 20.2.2. Any such novation shall be made by delivering to
the Agent a duly completed and executed Novation Notice
whereupon, subject to the terms of that Novation Notice:
(i) to the extent that in that Novation Notice the
relevant Bank seeks to novate its share of an Advance
and/or its Revolving Credit Facility Commitment, the
Borrower and that Bank shall each be released from
further obligations to each other and their
respective rights against each other shall be
cancelled (such rights and obligations being referred
to as "DISCHARGED RIGHTS AND OBLIGATIONS")
(ii) the Borrower and the relevant New Bank shall each
assume new obligations towards each other and/or
acquire new rights against each other which differ
from the discharged rights and obligations only
insofar as the Borrower and that New Bank have
assumed and acquired the same in place of the
Borrower and that Bank and
(iii) the New Bank and the other parties to this Agreement
(other than the Borrower) shall acquire the same
rights and assume the same obligations between
themselves as at the date of novation as they would
have acquired and assumed had that New Bank been an
original party to this Agreement as a Bank with the
rights and/or obligations acquired or assumed by it
as a result of that novation (and, to that extent,
the original Bank and those other parties shall each
be released from further obligations to each other).
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<PAGE> 69
28.3.2 Each Novation Notice or notice of assignment sent to the Agent
shall be accompanied by a transfer fee payable to the Agent by
the Bank seeking the novation or, as the case may be, making
the assignment. Until further notice, that fee (which will be
subject to review by the Agent from time to time) will be
pound sterling 950 for each novation or assignment.
28.4 FACILITY OFFICES: The initial Facility Office of each Bank has been
notified by that Bank to the Agent. Any Bank may at any time change its
Facility Office in relation to all or a specified part of its Revolving
Credit Facility Commitment and/or Advances by notifying the Agent of
the fax number and address of its new Facility Office. The Facility
Office must be in the United Kingdom.
28.5 REFERENCE BANKS:
28.5.1 If a Reference Bank ceases to have a London office or novates
or assigns all its rights and obligations under this Agreement
or if the Revolving Credit Facility Commitment of any
Reference Bank is cancelled under Clause 7.2 or if its
Advances are prepaid under Clause 6.4 or 12, it shall be
replaced as a Reference Bank by such other Bank with an office
in London as the Agent (after consultation with the Borrower)
shall designate by notice to the Borrower and the Banks.
28.5.2 If a Reference Bank does not supply a quotation required from
it in order to determine LIBOR pursuant to this Agreement,
LIBOR shall be determined on the basis of the quotations
supplied by the remaining Reference Banks.
28.6 DISCLOSURE OF INFORMATION: The Agent or any Bank may disclose to an
actual or potential New Bank, assignee approved by the Borrower for the
purposes of Clause 28.3.1, sub-participant or the like or any other
Person approved by the Borrower (such approval not to be unreasonably
withheld or delayed) such information about the Borrower or any other
Person as it may think fit
28.7 CONFIDENTIALITY: The Agent, the Arrangers and each Bank agree to
maintain the confidentiality of any information (other than information
which is publicly available other than by a breach of this provision)
received by it under this Agreement about any member of the Group and
shall only disclose such information to another Person (other than the
Agent or another Bank) if that Person agrees to maintain the
confidentiality of any such information by an agreement in writing
addressed to the Borrower, except where the Agent, such Arranger, such
Bank or such Person is required to disclose that information:
28.7.1 in connection with any legal proceedings arising out of or in
connection with this Agreement; or
28.7.2 if required to do so by an order of a court of competent
jurisdiction whether in pursuance of any procedure for
discovering documents or otherwise; or
28.7.3 pursuant to any law or regulation in accordance with which
that Bank is required to act;
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<PAGE> 70
or
28.7.4 to any governmental, banking or taxation authority of
competent jurisdiction; or
28.7.5 to its auditors or legal or other professional advisers.
29 REMEDIES, WAIVERS, AMENDMENTS AND CONSENTS
29.1 NO IMPLIED WAIVERS, REMEDIES CUMULATIVE: No failure on the part of the
Agent or any Bank to exercise, and no delay on its part in exercising,
any right or remedy under this Agreement will operate as a waiver
thereof, nor will any single or partial exercise of any right or remedy
preclude any other or further exercise of that or any other right or
remedy. The rights and remedies provided in this Agreement are
cumulative and not exclusive of any other rights or remedies (whether
provided by law or otherwise).
29.2 AMENDMENTS, WAIVERS AND CONSENTS: Any provision of this Agreement may
be amended or supplemented only if the Borrower and the Majority Banks
so agree in writing and any Event of Default, Potential Event of
Default, provision or breach of any provision of this Agreement may be
waived before or after it occurs only if the Majority Banks so agree in
writing but:
29.2.1 an amendment, supplement or waiver which puts one or more
Banks in a better or worse position than one or more other
Banks or changes or relates to (a) the amount of the Available
Revolving Credit Facility or any Bank's Revolving Credit
Facility Commitment or Available Revolving Credit Facility
Commitment (b) the Maturity Date, (c) the amount or currency
of the Advances, (d) the amount or date of any repayment, (e)
the length of Interest Periods, (f) a reduction in the amount
or a change in the date(s) of payment of any fee payable under
Clause 11, (g) the currency of any payment, (h) the definition
of "APPLICABLE MARGIN", "LIBOR" or "MAJORITY BANKS", (i) any
provision expressed to require the consent of all the Banks
(whether or not containing any other exceptions) or (j) this
Clause 29.2, shall require the agreement of all the Banks and
(in the case of an amendment or supplement) the Borrower also
and
29.2.2 an amendment, supplement or waiver which changes or relates to
the rights and/or obligations of the Agent shall require its
agreement also.
Any consent by the Agent or any Bank or the Majority Banks under this
Agreement must also be in writing. Any such waiver or consent may be
given subject to any conditions thought fit by the Person giving it and
shall be effective only in the instance and for the purpose for which
it is given.
29.3 Single European Currency: Paragraphs 2 to 12 of Schedule 13 (Single
European Currency) shall come into effect on the Commencement Date (as
defined in that Schedule). However, to the extent that any provision in
those paragraphs relates to any state (or currency of a state) which is
not a
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<PAGE> 71
participating member state on the Commencement Date, that provision
shall come into effect on the date on which that state becomes a
participating member state.
30 COMMUNICATIONS
30.1 ADDRESSES: Each communication under this Agreement shall be made by fax
or otherwise in writing. Each communication or document to be delivered
to any party under this Agreement shall be sent to it at the fax number
or address, and marked for the attention, if any, from time to time
designated by it to the Agent (or, in the case of the Agent, by it to
each other party) for the purpose of this Agreement. The initial fax
number, address and marking (if any) so designated by each Obligor and
the Agent are set out under its name at the end of this Agreement. Any
communication or document from or to each Obligor shall be sent to, by
or through the Agent.
30.2 DEEMED DELIVERY: Any communication from an Obligor shall be
irrevocable, and shall not be effective until received by the Agent.
Any other communication to any Person shall be conclusively deemed to
be received by that Person:
30.2.1 if sent by fax between 9 a.m. and 5 p.m. (local time in the
place to which it is sent) on a working day in that place,
when sent or, if sent by fax at any other time, at 9 a.m.
(local time in the place to which it is sent) on the next
working day in that place or
30.2.2 in any other case, when left at the address required by Clause
30.1 or within 2 such working days after being put in the post
postage prepaid and addressed to it at that address.
For this purpose, working days are days other than Saturdays, Sundays
and bank holidays.
31 PARTIAL INVALIDITY
The illegality, invalidity or unenforceability of any provision of this
Agreement under the law of any jurisdiction shall not affect its
legality, validity or enforceability under the law of any other
jurisdiction nor the legality, validity or enforceability of any other
provision.
32 NATURE OF RIGHTS AND OBLIGATIONS
32.1 LIABILITY SEVERAL: The liability of the Banks is several. No
party to this Agreement shall be responsible for the
obligations of any other party. The failure of a Bank to
perform its obligations shall not release any other party from
its obligations.
32.2 RIGHTS SEVERAL: The rights of the Banks are also several. The
amount at any time owing by the Borrower to any party under
this Agreement shall be a separate and independent debt from
the
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<PAGE> 72
amount owing to any other party.
32.3 CONTINUATION OF CERTAIN OBLIGATIONS: The obligations of any party under
or in respect of Clauses 11, 13, 21, 22, 24.8, 25, 26, 28.6 and 28.7
shall continue even after all the Revolving Credit Facility Commitments
have terminated and all the Advances have been repaid or prepaid.
33 COUNTERPARTS
This Agreement may be signed in any number of counterparts, all of
which taken together and when delivered to the Agent shall constitute
one and the same instrument. Any party may enter into this Agreement by
signing any such counterpart.
34 GOVERNING LAW AND JURISDICTION
34.1 GOVERNING LAW: This Agreement shall be governed by and construed in
accordance with the laws of England.
34.2 ENGLISH COURTS: For the benefit of the Agent, the Arrangers, the
Overdraft Facility Bank and each Bank, all the parties irrevocably
agree that the courts of England are to have jurisdiction to settle any
disputes which may arise out of or in connection with this Agreement
and that, accordingly, any legal action or proceedings arising out of
or in connection with this Agreement ("PROCEEDINGS") may be brought in
those courts and each Obligor irrevocably submits to the jurisdiction
of those courts.
34.3 U.S. COURTS: Without prejudice to Clause 34.2, each Obligor further
irrevocably agrees that any Proceedings may be brought in any New York
State or United States Federal court sitting in New York City and
submits to the non-exclusive jurisdiction of each such court.
34.4 OTHER COMPETENT JURISDICTION: Nothing in this Clause 34 shall limit the
right of the Agent, the Arrangers, the Overdraft Facility Bank and/or
any Bank to take Proceedings against an Obligor in any other court of
competent jurisdiction nor shall the taking of Proceedings in one or
more jurisdictions preclude the Agent, the Arrangers, the Overdraft
Facility Bank and/or any Bank from taking Proceedings in any other
jurisdiction, whether concurrently or not.
34.5 VENUE: Each Obligor irrevocably waives any objection which it may at
any time have to the laying of the venue of any Proceedings in any
court referred to in this Clause 34 and any claim that any such
Proceedings have been brought in an inconvenient forum. Each party
irrevocably waives all right to trial by jury in any Proceedings.
34.6 SERVICE OF PROCESS:
34.6.1 Each Obligor irrevocably appoints Kirsty Inc. and its
successors (of 45 Broadway, 2nd Floor, New York, N.Y. 10006,
U.S.A.) to receive, for it and on its behalf, service of
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<PAGE> 73
process in any Proceedings in New York. Each Obligor not
incorporated in England irrevocably appoints the Borrower to
receive for it and on its behalf service of process in any
proceedings in England. Such service shall be deemed completed
on delivery to the relevant process agent (whether or not it
is forwarded to and received by the Borrower). If for any
reason Kirsty Inc. ceases to be able to act as such or no
longer has an address New York, as the case may be, each
Obligor irrevocably agrees to appoint a substitute process
agent acceptable to the Agent, and to deliver to the Agent a
copy of the new agent's acceptance of that appointment, within
30 days.
34.6.2 Each Obligor irrevocably consents to any process in any
Proceedings anywhere being served by mailing a copy by
registered or certified prepaid airmail post to it in
accordance with Clause 30. Such service shall become effective
28 days after mailing.
34.6.3 Nothing shall affect the right to serve process in any other
manner permitted by law.
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SCHEDULE 1
INFORMATION PACKAGE
Accountant's Report
Circular
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<PAGE> 75
SCHEDULE 2
MANDATORY COSTS
1 Mandatory Costs in relation to any Interest Period (or part of an
Interest Period) relating to any particular Advance or overdue sum will
be determined by the Agent on the basis of calculations made by each
Reference Bank as at 11 a.m. on the first day of that Interest Period.
2 Mandatory Costs will be the percentage rate per annum determined by the
Agent to be the arithmetic mean (rounded up to 4 decimal places) of the
respective rates notified by each Reference Bank to the Agent at its
request as the rate resulting from the application of whichever of the
following formulae is appropriate:
in relation to Advances or overdue sums denominated in Sterling:
in relation to Advances or overdue sums denominated in any other
currency:
where on the day of application of a formula:
X is the percentage of Eligible Liabilities (in excess of any
stated minimum) by reference to which such Reference Bank is
required under or pursuant to the Bank of England Act 1998
(the "ACT") to maintain cash ratio deposits with the Bank of
England
L is the percentage rate per annum at which Sterling deposits
for the relevant period are offered by such Reference Bank to
leading banks in the London inter-bank market at or about 11
a.m. on that day
F is the rate of charge payable by such Reference Bank to the
Financial Services Authority (the "FSA") pursuant to the
relevant paragraph of the Fees Regulations (but where, for
this purpose, the figure at the relevant paragraph shall be
deemed to be zero) and expressed in pounds per pound
sterling 1 million of the Fee Base of such Reference Bank
S is the level of Special Deposits, expressed as a percentage
of Eligible Liabilities, which such Reference Bank is
required to maintain by the Bank of England (or any other
United Kingdom Agency)
D is the percentage rate per annum payable by the Bank of
England to such Reference Bank on Special Deposits
X, L, S and D are to be expressed in the formula as numbers and not as
percentages. A negative result obtained from subtracting D from L shall
be counted as zero.
3 For the purposes of this Schedule:
"ELIGIBLE LIABILITIES" and "SPECIAL DEPOSITS" have the meanings given
to them under or pursuant to the Act, or by the Bank of England (as may
be appropriate), on the day of application of the formula.
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<PAGE> 76
"FEE BASE" has the meaning given to it for the purposes of, and shall
be calculated in accordance with, the Fees Regulations.
"FEES REGULATIONS" means, as appropriate, either:
(a) the Banking Supervision (Fees) Regulations 1998 or
(b) such regulations as are from time to time in force, relating
to the payment of fees for banking supervision, in respect of
periods subsequent to 31 March 1999.
4 Each Reference Bank shall use reasonable endeavours to supply to the
Agent on request the percentage rate per annum so calculated by it on
any date. If any Reference Bank does not do so on request of the Agent,
the Agent shall determine the relevant Mandatory Costs on the basis of
the quotations supplied by the remaining Reference Banks. If no
Reference Bank supplies a quotation on request of the Agent, then the
Agent, in consultation with the Borrower, shall select suitable Banks
to supply quotations, if no, or only one suitable Bank supplies a
quotation then instead of Mandatory Costs being payable in respect of
the relevant period, each Bank shall be entitled to claim compensation
under Clause 13 (Increased Costs).
5 If there is any change in circumstance (including the introduction of
alternative or additional requirements and/or any change in the
interpretation or application of any requirement) which in the
reasonable opinion of the Agent renders or will render the method of
calculating Mandatory Costs wholly or partly inappropriate or
inapplicable, the Agent may (after consultation with the Borrower and
the Banks) vary the method of calculating Mandatory Costs by notifying
the Borrower and the Banks of the new method. Any such variation shall,
save for manifest error, be conclusive and binding on all parties and
shall apply from the date specified in that notification.
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SCHEDULE 3
NOVATION NOTICE
To: Lloyds Bank Plc
St. George's House
PO Box 787
6-8 Eastcheap
London EC2M 1LL
Attention: [ ]
MISYS PLC CREDIT AGREEMENT
DATED 5 September 1997 (the "AGREEMENT")
1 This Novation Notice relates to the Agreement. Terms defined in the
Agreement have the same meaning in this Novation Notice.
2 The undersigned Existing Bank:
2.1 confirms that, to the extent details appear below under the heading
"RIGHTS AND/OR OBLIGATIONS TO BE NOVATED", those details accurately
summarise the rights and/or obligations which are to be novated and
which are, upon delivery of this Novation Notice to the Agent (but
subject to 3 below), cancelled and discharged in accordance with Clause
28.3 of the Agreement and
2.2 confirms that any consent of the Borrowers required in accordance with
Clause 28.3 of the Agreement has been obtained to this novation.
3 The undersigned New Bank agrees that it assumes and acquires new rights
and/or obligations in accordance with Clause 28.3 of the Agreement on
and with effect from - 199- [subject only to the Agent's having
received tested telex confirmation from - that the sum of - has been
credited to the Existing Bank's account with - for value that date].
4 The undersigned New Bank:
4.1 confirms that it is a Qualifying Lender
4.2 confirms that, until further notice, its Facility Office and details
for communications are as set out below
4.3 agrees to perform and comply with the obligations expressed to be
imposed on it by Clause 28.3 of the Agreement as a result of this
Novation Notice taking effect and
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<PAGE> 78
4.4 if not already a Bank, irrevocably appoints the Agent to act as its
agent as provided in the Agreement and agrees to be bound by the
Agreement (including, but not limited to, Clause 24 and particularly,
but not limited to, Clauses 24.5, 24.7 and 24.8).
5 The above confirmations and agreements are given to and for the benefit
of and made with each of the other parties to the Agreement.
6 This Novation Notice shall be governed by and construed in accordance
with the laws of England.
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<PAGE> 79
EXISTING BANK
Name:
By:
Authorised Signatory
Date: 19
NEW BANK
Name:
By:
Authorised Signatory
Date: 19
FACILITY OFFICE
Address:
Fax No:
Telex No:
Attention:
RIGHTS AND/OR OBLIGATIONS TO BE NOVATED
1 Existing Bank's Revolving Credit Facility Commitment to be novated:
U.S.$
2 Existing Bank's share(s) of Advance(s) to be novated:
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SCHEDULE 4
NOTICE REQUESTING ADVANCE
To: Lloyds Bank Plc
Attention: [Insert name of relevant Department or title of relevant
officer]
CREDIT AGREEMENT DATED 5 SEPTEMBER 1997
We refer to the above Agreement between, among others, ourselves and
Banks and yourselves as Agent. Terms defined in that Agreement have the
same meaning in this notice.
We give you notice that we wish an Advance to be made as follows:
Amount:
Currency:
Date: (or, if that is not a Business Day, the next Business Day)
INTEREST [one][two][three][six][other][or, if election not effective, - months]
PERIOD
The proceeds of the Advance are to be made available by credit to [the
account of -] at -.
[No Event of Default or Potential Event of Default has occurred and is
continuing, or will occur as a result of making this Advance. All
representations and warranties in Clause 17.1 of the Agreement (except
those not to be repeated in accordance with their respective terms
pursuant to Clauses 17.1.18 and 17.3.5) have been complied with and
would be correct in all material respects if repeated today by
reference to the circumstances now existing.]
Dated -
By:
Authorised signatory
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<PAGE> 81
SCHEDULE 5
PRINCIPAL SUBSIDIARIES
Kindle Banking Systems Ltd
Midas Kapiti International Limited
Misys Financial Systems Limited
Kapiti Limited
Midas Kapiti International PTE Ltd
ACT Financial Systems Limited
Kindle Group Ltd
Misys International SA
Misys Overseas Limited
Misys Holdings Limited
Countrywide Holding (UK) plc
Midas Kapiti Germany GmbH
Midas Kapiti International Limited (Hong Kong)
Quotient SA
FIT SNC
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SCHEDULE 6
BORROWER'S CONFIRMATION OF UNCONDITIONALITY
I refer to the Credit Agreement dated 5 September 1997 between Misys plc
(the "BORROWER"), the Arrangers and Banks named in it and yourselves as
Agent (the "AGREEMENT"). Terms defined and references construed in the
Agreement have the same meaning and construction in this Certificate.
To: Lloyds Bank Plc - 1997
as Agent for the Banks
I am a Director of Misys plc and hereby certify as follows:
1 I am duly authorised to give this Certificate.
2 Admission of the Stock: I confirm that Admission of the Stock occurred
on [ ] 1997
3 Closing of the Merger Agreement: Misys plc is not aware of any reason
that would prohibit or delay the consummation of the Merger Agreement
or why the Effective Time will not occur tomorrow. All conditions other
than Article 8.2(e) to the Merger Agreement have been satisfied and the
filing of the certificates of Merger with the Secretary of the State of
North Carolina is expected to be made tomorrow.
This Certificate may be relied on by the Agent, the Arrangers and each
Bank.
......................................................................
DIRECTOR
FOR AND ON BEHALF
OF MISYS PLC
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SCHEDULE 7
TIMETABLES
Under "RELEVANT TIME", numbers indicate numbers of Business Days. See
Clause 1 for meaning.
The activity described under "ACTION" is a summary only. Reference
should be made to the relevant Clause, which will prevail in the case
of any inconsistency.
References to time are to London time, except where otherwise
indicated:
"D" = Date on which the Advance is to be made
"B" = Borrower
"A" = Agent
"BK" = Bank
A Drawdown under Revolving Credit Facility in Sterling
<TABLE>
<CAPTION>
RELEVANT TIME ACTION CLAUSE REFERENCES
<S> <C> <C>
D - 1 Drawdown request to A 4.1
10 a.m.
D - 2 A calculates Dollar Amount as 1.1 (definition of "DOLLAR
11.00 a.m. a.m. on D-2 AMOUNT")
D - 1 A notifies Bks of request 4.2
12 p.m.
D - 1 Bks may object to Term other 8.1.51,
3 p.m. 2, 3 or 6 months
D - 1 A notifies B and Bks of any of any 8.1.5
5 p.m. objections
D LIBOR set 1.1 (definition of "RATE FIXING
11 a.m. DAY")
Bks put A in funds 16.2
D A makes funds available to B 16.3.2
Close of business
</TABLE>
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<PAGE> 84
D Drawdown under Revolving Credit Facility in Dollars or an Optional Currency
<TABLE>
<CAPTION>
RELEVANT TIME ACTION CLAUSE REFERENCES
<S> <C> <C>
D - 3 Drawdown request to A 4.1 and 9.3
10 a.m.
D - 3 If Optional Currency, A calcu1ates 1.1 (definition of "REQUIRED
11.00 a.m. Dollar Amount AMOUNT")
D - 3 A notifies Bks of request 4.2
12 p.m.
D - 3 Bks may object to Optional Currency 9.3
3 p.m. requested by B
D - 3 A notifies B and Bks of any objection 9.3
5 p.m.
D - 2 LIBOR set 1.1 (definition of "RATE FIXING
11 a.m. DAY")
D Bks put A in funds 16.2.1
11 a.m. New York
City time
(for Dollars)
Customary time in 16.2.2
Place of Payment
(for Optional
Currency)
D A makes funds available to B 16.3.2
Close of business
(in Place of
Payment)
</TABLE>
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<PAGE> 85
SCHEDULE 8A
FORM OF GUARANTOR ACCESSION DEED
To: Lloyds Bank Plc
From: [Subsidiary] - 1997
Dear Sirs
1 We refer to the agreement (as from time to time amended, varied,
novated or supplemented, the "CREDIT AGREEMENT") dated 5 September 1997
and made between Misys plc (the "BORROWER"), as borrower, Baring
Brothers Limited (trading as ING Barings) and Lloyds Bank Plc (trading
as Lloyds Bank Capital Markets) as arrangers, Lloyds Bank Plc as agent
and the financial institutions named therein as Banks. Terms defined in
the Credit Agreement shall have the same meaning in this deed. This
deed is supplemental to the Credit Agreement.
2 [Subsidiary] hereby agrees to be a Guarantor pursuant to Clause 19.15
of the Credit Agreement and accordingly undertakes henceforth to
perform all the obligations expressed to be undertaken under the Credit
Agreement by a Guarantor in all respects as if it had been an original
party thereto.
3 [Subsidiary's] administrative details are as follows:
Address:
Telephone No:
Telex No:
Telefax No:
4 This deed shall be governed by and construed in all respects in
accordance with English law.
IN WITNESS WHEREOF this deed has been executed the day and year first
before written.
THE COMMON SEAL of
[Subsidiary]
was hereunto affixed
84
<PAGE> 86
in the presence of:
[or Executed as a deed
Director
Director/Secretary]
85
<PAGE> 87
SCHEDULE 8B
FORM OF GUARANTOR ACCESSION DEED (FRENCH GUARANTOR)
To: Lloyds Bank Plc
From: [Subsidiary] - 1997
Dear Sirs
1 We refer to the agreement (as from time to time amended, varied,
novated or supplemented, the "CREDIT AGREEMENT") dated 5 September 1997
and made between Misys plc (the "BORROWER"), as borrower, Baring
Brothers Limited (trading as ING Barings) and Lloyds Bank Plc (trading
as Lloyds Bank Capital Markets) as arrangers, Lloyds Bank Plc as agent
and the financial institutions named therein as Banks. Terms defined in
the Credit Agreement shall have the same meaning in this deed. This
deed is supplemental to the Credit Agreement.
2 Subject to paragraph 3 below [Subsidiary] hereby agrees to be a
Guarantor pursuant to Clause 19.15 of the Credit Agreement and
accordingly undertakes henceforth to perform all the obligations
expressed to be undertaken under the Credit Agreement by a Guarantor in
all respects as if it had been an original party thereto.
3 "The liability of [Subsidiary] under the guarantee under Clause 23 of
the Credit Agreement is limited to the amount constituting 70% of the
net asset value of [Subsidiary] as shown in its most recent audited
accounts on the date of implementation of such guarantee.
4 [Subsidiary's] administrative details are as follows:
Address:
Telephone No:
Telex No:
Telefax No:
5 This deed shall be governed by and construed in all respects in
accordance with English law.
IN WITNESS WHEREOF this deed has been executed the day and year first
before written.
THE COMMON SEAL of
86
<PAGE> 88
[Subsidiary]
was hereunto affixed
in the presence of:
[or Executed as a deed
Director
Director/Secretary]
87
<PAGE> 89
SCHEDULE 8C
Form of Guarantor Accession Deed (German Guarantor)
To: Lloyds Bank Plc
From: [Subsidiary] - 1997
Dear Sirs
1 We refer to the agreement (as from time to time amended, varied,
novated or supplemented, the "Credit Agreement") dated 5 September 1997
and made between Misys plc (the "BORROWER"), as borrower, Baring
Brothers Limited (trading as ING Barings) and Lloyds Bank Plc (trading
as Lloyds Bank Capital Markets) as arrangers, Lloyds Bank Plc as agent
and the financial institutions named therein as Banks. Terms defined in
the Credit Agreement shall have the same meaning in this deed. This
deed is supplemental to the Credit Agreement.
2 [Subsidiary] hereby agrees to be a Guarantor pursuant to Clause 19.15
of the Credit Agreement and accordingly undertakes henceforth to
perform all the obligations expressed to be undertaken under the Credit
Agreement by a Guarantor in all respects as if it had been an original
party thereto to the extent not violating sections 30 and 31 of the Act
on Limited Liability Companies (Gesetz betreffend die Gesellschaften
mit besehrankter Haftung)
3 [Subsidiary's] administrative details are as follows:
Address:
Telephone No:
Telex No:
Telefax No:
4 This deed shall be governed by and construed in all respects in
accordance with English law.
IN WITNESS WHEREOF this deed has been executed the day and year first
before written.
THE COMMON SEAL of
[Subsidiary]
88
<PAGE> 90
was hereunto affixed
in the presence of:
[or Executed as a deed
Director
Director/Secretary]"
89
<PAGE> 91
SCHEDULE 9
DOCUMENTS TO ACCOMPANY FORM OF GUARANTOR ACCESSION DEED
1 A copy, certified a true copy by a duly authorised officer of the
proposed Guarantor, of the [Memorandum and Articles of Association]
[constitutional documents] of such proposed Guarantor.
2 A copy, certified a true copy by a duly authorised officer of the
proposed Guarantor, of a Board Resolution and a Shareholder Resolution
of such proposed Guarantor approving the execution and delivery of a
Guarantor Accession Deed, the accession of such proposed Guarantor to
this Agreement and the performance of its obligations under this
Agreement and authorising a person or persons (specified by name or
office) on behalf of such proposed Guarantor to sign such Guarantor
Accession Deed and any other documents to be delivered by such proposed
Guarantor pursuant thereto.
3 A certificate of a duly authorised officer of the proposed Guarantor
setting out the names and signatures of the person or persons mentioned
in the resolution referred to in paragraph (2) above.
4 A copy of its latest financial statements.
5 Legal opinion of legal counsel in a form satisfactory to the Agent.
90
<PAGE> 92
SCHEDULE 10
FORM OF LINKLATERS & PAINES OPINION
Lloyds Bank Plc
St. George's House
PO Box 787
6-8 Eastcheap
London EC3M 1LL
(the "AGENT")
Baring Brothers Limited
60 London Wall
London
EC2M 5TQ
(together with Lloyds Bank Plc, the "ARRANGERS")
and
ING Bank N.V., London Branch
60 London Wall
London
EC2M 5TQ
(together with Lloyds Bank Plc, the "BANKS")
- September 1997
Dear Sirs
1 We have acted as your English legal advisers in connection with a
credit agreement dated 5 September 1997 (the "AGREEMENT") between Misys
plc (the "BORROWER"), the Arrangers, the Agent and the Banks named in
it and have taken instructions solely from you. Terms defined in the
Agreement have the same meaning in this opinion.
2 This opinion is limited to English law as applied by the English courts
and is given on the basis that it will be governed by and construed in
accordance with English law.
3 For the purpose of this opinion, we have examined the documents listed
in the Schedule to this letter. We have assumed that the Agreement has
been validly signed and delivered by the Borrower and is within the
capacity and powers of, and has been validly authorised, signed and
delivered by,
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<PAGE> 93
each party other than the Borrower.
4 In our opinion:
(a) The Borrower is a company incorporated in England under the
Companies Acts 1948 to 1976 and 1985.
(b) The Borrower has corporate power to enter into and to perform
its obligations under the Agreement and has taken all
necessary corporate action (other than an increase in the
borrowing powers of the Borrower contained in a special
resolution of the Borrower referred to in paragraph 6(g)
below) to authorise borrowings under the Agreement and to
authorise its signing, delivery and performance of the
Agreement.
(c) The Agreement constitutes valid, binding and enforceable
obligations of the Borrower.
5 The term "ENFORCEABLE" as used above means that the obligations assumed
by the Borrower under the Agreement are of a type which the English
courts enforce. It does not mean that those obligations will
necessarily be enforced in all circumstances in accordance with their
terms. In particular:
(d) Enforcement may be limited by bankruptcy, insolvency,
liquidation, reorganisation and other laws of general
application relating to or affecting the rights of creditors.
(e) Enforcement may be limited by general principles of equity -
for example, equitable remedies may not be available where
damages are considered by the court to be an adequate remedy.
(f) Claims may become barred under the Limitation Act 1980 or may
be or become subject to set-off or counterclaim.
(g) Where obligations are to be performed in a jurisdiction
outside England, they may not be enforceable in England to the
extent that performance would be illegal under the laws of
that jurisdiction.
(h) An agreement to negotiate (such as that in Clause 14.2 of the
Agreement) is unenforceable, but this does not affect the
enforceability of those
92
<PAGE> 94
provisions of the Agreement as to the consequences of any
failure to negotiate or agree on the relevant matter.
6 This opinion is subject to the following qualifications:
(a) So far as they relate to United Kingdom stamp duties, the
undertakings and indemnities given by the Borrower in Clause
26.1.3 of the Agreement may be void under Section 117 of the
Stamp Act 1891. However, no United Kingdom stamp duty is
payable in respect of the signing and delivery of the
Agreement.
(b) A certificate, determination, notification, opinion or the
like might be held by the English courts not to be conclusive
if it could be shown to have an unreasonable or arbitrary
basis or in the event of manifest error despite any provision
in the Agreement to the contrary.
(c) Any term of an agreement may be amended orally by the parties
despite provisions such as Clause 29.2 of the Agreement.
(d) Interest provided for under Clause 21 of the Agreement may not
be recoverable if it amounts to a penalty under English law.
(e) An English court may refuse to give effect to Clause 26.1.2 of
the Agreement in respect of the costs of unsuccessful
litigation brought before an English court or where the court
has itself made an order for costs.
(f) Clause 31 of the Agreement may not be effective - it depends
on the nature of the illegality, invalidity or
unenforceability in question.
(g) We express no opinion as to compliance or otherwise with the
financial limitations on borrowings by the Borrower contained
in Article 87 of the Borrower's Articles of Association.
However, we note that a special resolution is to be proposed
at an extraordinary general meeting of the Borrower to be held
on [22] September 1997 to authorise borrowings under the
Agreement.
7 This opinion is addressed to you solely for the benefit of you and the
Banks and solely in connection with the Agreement. It is not to be
transmitted to anyone else nor is it to be relied upon by anyone else
or for any other purpose or quoted or referred to in any public
document or filed
93
<PAGE> 95
with anyone without our express consent.
Yours faithfully
Linklaters & Paines
94
<PAGE> 96
SCHEDULE 1
1 A signed copy of the Agreement.
2 A certificate of the Borrower dated - September 1997, together with the
documents stated in paragraphs 2, 3 and 4 of that certificate as being
delivered with it.
95
<PAGE> 97
SCHEDULE 11
FORM OF COMPLIANCE CERTIFICATE
To: Lloyds Bank Plc
(as Agent for the Banks
participating in the Credit
Agreement referred to
below)
Director's Certificate
[Date]
I refer to the agreement (as from time to time amended, varied, novated
or supplemented, the "CREDIT AGREEMENT") dated 5 September 1997 and
made between Misys plc (the "BORROWER"), as borrower, Baring Brothers
Limited (trading as ING Barings) and Lloyds Bank Plc (trading as Lloyds
Bank Capital Markets) as arrangers, Lloyds Bank Plc as agent and the
financial institutions named therein as Banks. Terms defined in the
Credit Agreement shall have the same meaning herein and references to
Clauses are to Clauses in the Credit Agreement. The financial
information given below is derived from the [audited accounts] [interim
accounts] [management accounts] for the period [-].
1 FINANCIAL INFORMATION
I confirm that as at the Test Date dated [ ]
(a) Reported consolidated operating profit before tax for the most
recently completed twelve month period was [pound sterling-]
(b) Exceptional items in accordance with Financial Reporting
Standard 3 for the most recently completed twelve month period
were; positive [pound sterling-] and negative [pound
sterling-]
(c) Net Interest payable was [pound sterling-]
(d) Adjustments to ensure that consolidated profit conforms with
the definition of "HEADLINE EARNINGS" as described in
paragraphs 21 and 22 of the Statement of Investment Practice
No. 1 published by the Institute of Investment Management and
Research were - and therefore PBIT for the most recently
completed twelve month period was [pound sterling-]
96
<PAGE> 98
(e) Depreciation and amortisation for the most recently completed
twelve month period was [pound sterling-] and therefore EBITDA
was [pound sterling-]
(f) EBITDA (on an annualised basis) for Subsidiaries acquired
during the most recent twelve month period was [pound
sterling-], EBITDA (on an annualised basis) for Subsidiaries
disposed of during the most recent twelve month period was
[pound sterling-] and therefore Adjusted EBITDA for the most
recently completed twelve month period was [pound sterling-];
Earnings denominated in currencies other than Sterling were
translated in accordance with paragraph (g) below
(g) The exchange rates on the Test Date for the purpose of
Adjusted EBITDA were -
(h) Borrowings at the Test Date were [pound sterling-]
(i) Cash and Cash Equivalents at the Test Date was [pound
sterling-]
(j) Excluded Cash at the Test Date was [pound sterling-]
(k) Net Borrowings at the Test Date were [pound sterling-]
(l) Interest Payable for the most recently completed twelve month
period was [pound sterling-]
(m) Interest Receivable for the most recently completed twelve
month period was [pound sterling-]
(n) Net Interest Payable for the most recently completed twelve
month period was [pound sterling-]
(o) A reconciliation between the profit before interest and tax
figure in the relevant accounts and PBIT is attached
(p) A reconciliation between the profit before interest and tax
figure in the relevant accounts and EBITDA is attached
(q) The amount of Indebtedness referred to in paragraph (iv) of
the definition of "BORROWINGS" is [pound sterling-].
2 RATIOS
97
<PAGE> 99
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
(i) CURRENT PERIOD (ii) PREVIOUS PERIOD
- ------------------------------------------------------------------------------
Covenant Actual Covenant Actual
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PBIT to Net Interest Payable
(Clause 19.6.1)
- ------------------------------------------------------------------------------
Net Borrowings to Adjusted
EBITDA (Clause 19.6.2)
- ------------------------------------------------------------------------------
Net Borrowings to Adjusted
EBITDA (Applicable Margin)
- ------------------------------------------------------------------------------
</TABLE>
Signed:_______________________________
Director
98
<PAGE> 100
SCHEDULE 12
FORM OF ESCROW LETTER
[On the letterhead of ING Barings/Lloyds Bank]
Misys plc
Burleigh House
Chapel Oak
Salford Priors
Worcestershire
WR11 5SH
and
[Paying Agent]
(the "PAYING AGENT")
- 1997
Dear Sirs
We refer to the Credit Agreement (the "AGREEMENT") dated 5 September
1997 between Misys plc (the "BORROWER"), Baring Brothers Limited
(trading as ING Barings) and Lloyds Bank Plc (trading as Lloyds Bank
Capital Markets) as Arrangers, Lloyds Bank Plc as Agent and ING Bank
N.V., London Branch and Lloyds Bank Plc (the "BANKS").
For the purpose of this letter the "EFFECTIVE TIME" means the time of
filing the Articles of Merger referred to in [-] with the Secretary of
State of North Carolina in accordance with the North Carolina Business
Corporation Act as notified to you by [-].
1 The Borrower agrees that it will drawdown funds under the Agreement
amounting to U.S.$[-] (the "FUNDS") on the date the Effective Time is
expected to occur (the "RELEVANT DATE") but prior to the occurrence of
the Effective Time and that these will be paid to the Paying Agent at
[account details].
2 The Paying Agent agrees that:
99
<PAGE> 101
(a) upon receipt it will hold the Funds in a separate designated
account;
(b) if the Effective Time occurs before 12 noon (New York City
time) on the business day following the Relevant Date, the
Funds will be held to the Borrower's order; and
(c) if the Effective Time does not occur by 12 noon (New York City
time) on the business day following the Relevant Date, the
Funds will be held to the Banks' order and paid on such
business day to:
[Lloyds Bank Plc]
[account details]
Please indicate your acceptance by countersigning the enclosed copy of
this letter.
100
<PAGE> 102
Yours faithfully
ING BANK N.V., LONDON BRANCH LLOYDS BANK PLC
By: By:
Agreed:
Misys plc
By:
Date:
Agreed:
[Paying Agent]
By:
Date:
101
<PAGE> 103
SCHEDULE 13
SINGLE EUROPEAN CURRENCY
1 EMU DEFINITIONS: FOR THE PURPOSES OF THIS SCHEDULE AND CLAUSE 29.3:
"COMMENCEMENT DATE" means the date of commencement of the third stage
of EMU (currently expected to be 1 January 1999) or on which
circumstances arise which (in the opinion of the Agent) have
substantially the same effect and result in substantially the same
consequences as commencement of the third stage of EMU as contemplated
by the Treaty on European Union
"EMU" means Economic and Monetary Union as contemplated by the Treaty
on European Union.
"EMU LEGISLATION" means legislative measures of the Council of the
European Union for the introduction of, changeover to or operation of a
single or unified European currency (whether or not known as the euro),
being in part the implementation of the third stage of EMU
"EURO" means the single currency of participating member states to be
introduced on the Commencement Date
"EURO UNIT" means the currency unit of the euro as defined in the EMU
legislation
"NATIONAL CURRENCY UNIT" means the unit of currency (other than the
euro unit) of a participating member state
"PARTICIPATING MEMBER STATE" means each state so described in any EMU
legislation and
"TREATY ON EUROPEAN UNION" means the Treaty of Rome of 25 March 1957,
as amended by the Single European Act 1986 and the Maastricht Treaty of
7 February 1992.
2 Redenomination: Each obligation under this Agreement denominated in a
national currency unit shall be redenominated into the euro unit in
accordance with EMU legislation.
3 Advances: Any new Advance in the currency of a participating member
state shall be denominated in the euro unit. For the avoidance of
doubt, the Borrower may continue to request Advances to be made in
national currency units until such time as such currencies cease to be
freely available in the London inter-bank market.
4 Business Days: In relation to any amount denominated or to be
denominated in the euro unit or a national currency unit, any reference
to a Business Day shall be construed as a reference to a day (other
than a Saturday or Sunday) on which:
(i) such clearing or settlement system as the Agent may from time
to time nominate for the purpose of clearing or settling
payments in euro under
102
<PAGE> 104
this Agreement is operating and
(ii) banks are open for business generally (including dealings in
foreign exchange and foreign currency deposits) in the euro
unit in London and on which the Trans-European Automated
Real-time Gross Express Transfer system (TARGET) is operating.
5 Rate Fixing Days: In relation to any period for which an interest rate
is to be determined under this Agreement in respect of an amount
denominated or to be denominated in the euro unit or a national
currency unit, "RATE FIXING DAY" means the day on which quotations
would ordinarily be provided in the London inter-bank market for
deposits in the relevant unit for delivery on the first day of that
period. If for any such period quotations would ordinarily be provided
on more than one day, the Rate Fixing Day for that period shall be
whichever of those days is from time nominated by the Agent after
consultation with the Borrower if reasonably practicable and (having
regard to any convention or practice in the London inter-bank market).
6 Basis of Calculation: In relation to the currency of any state which
becomes a participating member state, if the basis of calculation of
interest or commitment fee specified in this Agreement (the "SPECIFIED
BASIS") is determined by the Agent (acting reasonably) to be
inconsistent with any convention or practice in the London inter-bank
market for the calculation of interest or, as the case may be, that fee
in respect of the euro, the specified basis shall be replaced by that
convention or practice (as determined by the Agent (acting reasonably))
with effect from the date on which that state becomes a participating
member state. However, if any Advance is outstanding in the currency of
that state immediately prior to that date, such replacement shall only
take effect in relation to that Advance in respect of any period after
its then current Interest Period.
7 Place of Payment: In relation to a payment in the euro unit or a
national currency unit, the "PLACE OF PAYMENT" shall be such financial
centre in such participating member state (or in London) as the Agent
(acting reasonably) shall from time to time nominate for this purpose.
8 Payments by the Agent to the Banks: Any amount payable by the Agent to
any Bank under this Agreement in the currency of a participating member
state shall be paid in the euro unit to such account with such bank in
the Place of Payment as that Bank shall from time to time nominate for
this purpose.
9 Payments System and the Agent: In relation to any payment by the Agent
in the euro unit (whether it has received or expects to receive payment
in the euro unit or a national currency unit), the Agent shall not be
liable to any Obligor or any Bank for any delay, or the consequences of
any delay, in the crediting to any account of any amount required by
this Agreement to be paid by the Agent if the Agent shall have taken
all relevant steps to achieve, on the date required by this Agreement,
the payment of that amount in immediately available, freely
transferable, cleared funds in the euro unit to the account with such
bank in the Place of Payment as the relevant Obligor or Bank shall have
103
<PAGE> 105
nominated for this purpose. In this paragraph 9, "ALL RELEVANT STEPS"
means all such steps as may be prescribed from time to time by the
regulations or operating procedures of such clearing or settlement
system as the Agent may from time to time nominate for the purpose of
clearing or settling payments in euro under this Agreement.
10 Rounding and other Consequential Changes: Without prejudice and in
addition to any method of conversion or rounding prescribed by any EMU
legislation:
(i) each reference in this Agreement to a minimum amount (or an
integral multiple of any amount) in a national currency unit
to be paid to or by the Agent (including in relation to the
amount of an Advance, a cancellation or a prepayment) shall be
replaced by a reference to such reasonably comparable and
convenient amount in the euro unit as the Agent may from time
to time specify and
(ii) save as expressly provided in this Schedule, this Agreement
(including the timetables in Schedule 7 shall be subject to
such changes as the Agent may from time to time specify to be
necessary to reflect the introduction of, changeover to or
operation of the euro in any participating member state and/or
to reflect any convention or practice in the London inter-bank
market,
but nothing in this paragraph 10, nor any change pursuant to paragraph
10(ii), shall reduce or increase any actual or contingent liability of
any party under this Agreement.
11 Increased Costs: The Borrower shall from time to time on demand
(whenever made) pay to the Agent for its own account or, as the case
may be, for the account of the Arranger or the relevant Bank the amount
certified by it to be necessary to indemnify it against any cost,
reduction, payment or forgone interest or other return which:
(i) is of a type referred to in Clause 13.1.1, 13.1.2 or 13.1.3
(Increased Costs Indemnity) and
(ii) results from the introduction of, changeover to or operation
of the euro in any participating member state
except as provided in Clause 13.2 (Exceptions) and except to the extent
that it is compensated for by Mandatory Costs.
12 EMU Legislation: Despite paragraphs 2 (Redenomination) and 8 (Payments
by the Agent to the
104
<PAGE> 106
Banks), if and to the extent that any EMU legislation provides that an
amount which is:
(i) denominated either in the euro unit or in the national
currency unit of a participating member state and
(ii) payable within that participating member state by crediting an
account of the creditor
can be paid by the debtor either in the euro unit or in that national
currency unit, any party to this Agreement due to make such a payment
may pay any such amount either in the euro unit or in that national
currency unit.
105
<PAGE> 107
SCHEDULE 14
FORM OF CERTIFICATE RELATING TO ACQUISITIONS
To: Lloyds Bank Plc
(as Agent for the banks
participating in the Credit Agreement
referred to below)
Certificate[Date]
I refer to the agreement (as from time to time amended, varied,
restated or supplemented (the "CREDIT AGREEMENT") dated 5 September
1997 and made between Misys plc (the "BORROWER") as borrower, Baring
Brothers Limited (trading as ING Barings) and Lloyds Bank Plc (trading
as Lloyds Bank Capital Markets) as arrangers, Lloyds Bank Plc as agent
and the financial institutions and banks referred as Banks therein.
Terms defined in the Credit Agreement shall have the same meaning
herein and references to Clauses are to Clauses in the Credit
Agreement.
I confirm that the requirements of Clause 19.7 of the Credit Agreement
will not be breached as a result of the acquisition(s) contemplated at
the date of this certificate
Signed:
..........................................
Director
106
<PAGE> 108
This Agreement has been entered into on the date stated at the
beginning.
MISYS PLC
as Borrower
Burleigh House
Chapel Oak
Salford Priors
Worcestershire
WR11 5SH
Fax No: 01386 871045
Attention: Group Treasurer
BARING BROTHERS LIMITED
as Arranger
60 London Wall
London EC2M 5TQ
Fax No: 0171 767 7157
Attention: Director, Acquisition Finance and Debt Advisory Group
LLOYDS BANK PLC
as Arranger
St George's House
PO Box 787
6-8 Eastcheap
London EC3M 1LL
Fax No: 0171 661 4677
Attention: Capital Markets Group
107
<PAGE> 109
LLOYDS BANK PLC
as Agent
Loans Administration Department
Bank House
Wine Street
Bristol
B51 2AN
Fax No: 0117 923 3317
Telex No: 888301
Attention: Loans Administration
LLOYDS BANK PLC
as Overdraft Facility Bank
Loans Administration Department
Bank House
Wine Street
Bristol
B51 2AN
Fax No: 0117 923 3317
Telex No: 888301
Attention: Loans Administration
THE REVOLVING CREDIT FACILITY BANKS
<TABLE>
<CAPTION>
REVOLVING CREDIT FACILITY
COMMITMENT
<S> <C>
ING Bank N.V., London Branch U.S.$46,271,186.43
</TABLE>
108
<PAGE> 110
<TABLE>
<S> <C>
Lloyds Bank Plc U.S.$ 46,271,186.43
Bank of Montreal U.S.$ 33,050,847.47
Banque Paribas U.S.$ 26,440,677.96
Bayerische Landesbank U.S.$ 33,050,847.47
The Chase Manhattan Bank U.S.$ 26,440,677.96
COMMERZBANK AG U.S.$ 26,440,677.96
NATIONSBANK N.A. U.S.$ 26,440,677.96
NATIONAL WESTMINSTER BANK PLC U.S.$ 33,050,847.47
THE ROYAL BANK OF SCOTLAND U.S.$ 33,050,847.47
PLC
SCOTIABANK EUROPE PLC U.S.$ 33,050,847.47
WACHOVIA BANK, N.A. U.S.$ 26,440,677.96
- ------- -------------------
Totals U.S.$390,000,000
</TABLE>
109
<PAGE> 111
SCHEDULE 4
GUARANTORS
Kindle Banking Systems Ltd
Midas Kapiti International Limited
Misys Financial Systems Limited
Kapiti Limited
Midas Kapiti International PTE Limited
ACT Financial Systems Limited
Midas Kapiti International SA
Countrywide Insurance Marketing Limited
Midas Kapiti Germany GmbH
Midas Kapiti International Ltd
Quotient SA
The Frustrum Group Inc.
Medic Computer Systems Inc.
Midas Kapiti International Pty Limited
110
<PAGE> 112
This Agreement has been entered into on the date stated at the
beginning.
THE BORROWER
MISYS PLC
Burleigh House
Chapel Oak
Salford Priors
Worcestershire WR11 5SH
Fax No: 01386 871 045
Attention: Group Treasurer
By: H. EVANS
The Guarantors
KINDLE BANKING SYSTEMS LTD
By: H. EVANS
MIDAS KAPITI INTERNATIONAL LIMITED
By: H. EVANS
MISYS FINANCIAL SYSTEMS LIMITED
By: H. EVANS
KAPITI LIMITED
By: H. EVANS
MIDAS KAPITI INTERNATIONAL PTE LIMITED
By: H. EVANS
ACT FINANCIAL SYSTEMS LIMITED
By: H. EVANS
MIDAS KAPITI INTERNATIONAL SA
By: H. EVANS
COUNTRYWIDE INSURANCE MARKETING
LIMITED
By: H. EVANS
111
<PAGE> 113
MIDAS KAPITI GERMANY GMBH
By: H. EVANS
MIDAS KAPITI INTERNATIONAL LTD
By: H. EVANS
QUOTIENT SA
By: H. EVANS
THE FRUSTRUM GROUP INC.
By: H. EVANS
MEDIC COMPUTER SYSTEMS INC.
By: H. EVANS
MIDAS KAPITI INTERNATIONAL PTY LIMITED
By: H. EVANS
The Arrangers
BARING BROTHERS LIMITED
60 London Wall
London EC2M 5TQ
Fax No: 0171 767 7071
Attention: Director, Acquisition Finance
By: JAMES ROWE
LLOYDS BANK PLC CAPITAL MARKETS
St George's House
PO Box 787
6-8 Cheapside
London EC3M 1LL
Fax No: 0171 661 4677
Attention: Capital Markets Group
By: M.J.E. DUTFIELD
112
<PAGE> 114
THE ACQUISITION FACILITY BANKS AND THE REVOLVING
CREDIT FACILITY BANKS
ING BANK N.V., LONDON BRANCH
By: JAMES ROWE
LLOYDS BANK PLC
By: M.J.E. DUTFIELD
BANK OF MONTREAL
By: ALEX HERBERT
BANQUE PARIBAS
By: M.J.E. DUTFIELD
BAYERISCHE LANDESBANK
By: M.J.E. DUTFIELD
THE CHASE MANHATTAN BANK
By: KATHRYN JEPSON
COMMERZBANK AG
By: NICHOLAS SIMMONDS
BERND MEIST
NATIONSBANK N.A.
By: J. WADE
NATIONAL WESTMINSTER BANK PLC
By: M.J.E. DUTFIELD
THE ROYAL BANK OF SCOTLAND PLC
By: J.H.M. HARE
SCOTIABANK EUROPE PLC
By: P. SHANLEY
WACHOVIA BANK, N.A.
By: M.J.E. DUTFIELD
113
<PAGE> 115
THE OVERDRAFT FACILITY BANK
LLOYDS BANK PLC
Loans Administration Department
Commercial Banking,
Corporate Office,
Victoria Square House
Birmingham
Fax No: 0121 625 3607
Attention: Jane Smith
By: M.J.E. DUTFIELD
The Agent
LLOYDS BANK PLC CAPITAL MARKETS
Loans Administration Department
Bank House
Wine Street
Bristol BS1 2AN
Fax No: 0117 923 3317
Attention: Loans Administration
By: M.J.E. DUTFIELD
114
<PAGE> 116
CREDIT AGREEMENT
dated 5 September 1997
(as amended by the Supplemental Credit Agreement
dated 24 November 1997 and the Second Supplemental Credit
Agreement dated 19 June 1998)
as further amended and restated on - 1998
MISYS PLC
as Borrower
ING BARINGS
LLOYDS BANK CAPITAL MARKETS
as Arrangers
THE BANKS AND FINANCIAL INSTITUTIONS
NAMED HEREIN
LLOYDS BANK PLC
as Overdraft Facility Bank
LLOYDS BANK CAPITAL MARKETS
as Agent
Ref: JMS/JLM
115
<PAGE> 117
TABLE OF CONTENTS
<TABLE>
<S> <C>
1 Interpretation 10
2 The Facilities 22
3 Conditions Precedent 23
4 Drawdown of Revolving Credit Facility 23
5 Overdraft Facility 24
6 Repayment and Prepayment 25
7 Cancellation 26
8 Interest 26
9 Multicurrency Option 27
10 Fees 28
11 Taxes 28
12 Illegality 29
13 Increased Costs 30
14 Change in Market Conditions 31
15 Mitigation 31
</TABLE>
116
<PAGE> 118
<TABLE>
<S> <C>
16 Payments 32
17 Representations and Warranties 33
18 Information 38
19 Undertakings 39
20 Default 44
21 Default Interest 47
22 Indemnities 48
23 Guarantee 49
24 The Agent 51
25 Set-Off/Pro Rata Sharing 55
26 Expenses and Stamp Duty 56
27 Calculations and Evidence 56
28 Novation 57
29 Remedies, Waivers, Amendments and Consents 58
</TABLE>
117
<PAGE> 119
<TABLE>
<S> <C>
30 Communications 59
31 Partial Invalidity 59
32 Nature of Rights and Obligations 59
33 Counterparts 60
34 Governing Law and Jurisdiction 60
</TABLE>
SCHEDULE 1
Information Package 62
SCHEDULE 2
Mandatory Costs 63
SCHEDULE 3
Novation Notice 65
SCHEDULE 4
Notice requesting Advance 67
SCHEDULE 5
Principal Subsidiaries 68
SCHEDULE 6
Borrower's Confirmation of Unconditionality 69
SCHEDULE 7
Timetables 70
SCHEDULE 8A
Form of Guarantor Accession Deed 72
SCHEDULE 8B
Form of Guarantor Accession Deed (French Guarantor) 73
SCHEDULE 8C
118
<PAGE> 120
Form of Guarantor Accession Deed (German Guarantor) 74
SCHEDULE 9
Documents to Accompany Form of Guarantor Accession Deed 75
SCHEDULE 10
Form of Linklaters & Paines Opinion 76
SCHEDULE 11
Form of Compliance Certificate 79
SCHEDULE 12
Form of Escrow Letter 81
SCHEDULE 13
Single European Currency 83
SCHEDULE 14
Form of Certificate relating to acquisitions 86
119
<PAGE> 1
EXHIBIT (c)(1)
CONFORMED COPY
AGREEMENT AND PLAN OF MERGER
AMONG
MISYS PLC
KIRSTY, INC.
MOXIE ACQUISITION CORP.
AND
C-ATS SOFTWARE INC.
Dated as of December 14, 1998
<PAGE> 2
AGREEMENT AND PLAN OF MERGER
TABLE OF CONTENTS
Page
ARTICLE I
THE TENDER OFFER
1.1. The Offer................................................................2
1.2. Company Action...........................................................4
1.3. Board of Directors.......................................................5
ARTICLE II
THE MERGER
2.1. The Merger...............................................................6
2.2. Closing..................................................................7
2.3. Effective Time...........................................................7
2.4. Effects of the Merger....................................................7
2.5. Certificate of Incorporation and By-Laws.................................7
2.6. Directors................................................................7
2.7. Officers.................................................................7
ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
3.1. Effect on Capital Stock..................................................8
3.2. Exchange of Certificates Representing Common Stock.......................9
3.3. Adjustment of Offer Price and Merger Consideration......................11
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
4.1. Existence; Good Standing; Corporate Authority...........................11
i
<PAGE> 3
4.2. Authorization, Validity and Effect of Agreements........................12
4.3. Compliance with Laws....................................................12
4.4. Capitalization..........................................................12
4.5. Subsidiaries............................................................13
4.6. No Violation............................................................14
4.7. Company Reports; Undisclosed Liabilities................................15
4.8. Litigation..............................................................15
4.9. Absence of Certain Changes..............................................16
4.10. Taxes...................................................................16
4.11. Employee Benefit Plans..................................................17
4.12. Labor and Employment Matters............................................19
4.13. Brokers and Finders.....................................................20
4.14. Opinion of Financial Advisor............................................20
4.15. State Anti-takeover Laws................................................20
4.16. Voting Requirements.....................................................20
4.17. Material Contracts......................................................20
4.18. Intellectual Property; Technology.......................................21
4.19. Calendar Function.......................................................24
4.20. Material Delaying Event.................................................24
4.21. Environmental Matters...................................................24
4.22. Insurance...............................................................25
4.23. Product Liability; Warranties...........................................26
4.24. Disclosures; Information Supplied.......................................26
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF THE PARENT, THE PURCHASER AND THE US PARENT
5.1. Existence; Good Standing; Corporate Authority...........................27
5.2. Authorization, Validity and Effect of Agreements........................27
5.3. Litigation..............................................................27
5.4. No Violation............................................................27
5.5. Information Supplied....................................................27
5.6. Ownership of Shares....................................................28
5.7. Interim Operations of the Purchaser.....................................28
ARTICLE VI
COVENANTS
ii
<PAGE> 4
6.1. Conduct of the Business of the Company..................................28
6.2. Access to Information...................................................32
6.3. Stockholder Approvals...................................................32
6.4. Reasonable Best Efforts.................................................33
6.5. Consents................................................................33
6.6. Public Announcements....................................................34
6.7. Consent of the US Parent................................................34
6.8. No Solicitation.........................................................34
6.9. Indemnification; Insurance..............................................36
6.10. Employees and Employee Benefit Plans....................................37
6.11. Notification of Certain Matters.........................................38
6.12. Anti-takeover Statutes..................................................38
6.13. Top-Up Option...........................................................38
ARTICLE VII
CLOSING CONDITIONS
7.1. Conditions to the Obligations of the Parent, the US Parent, the
Purchaser and the Company..............................................40
7.2. Condition to the Obligations of the Parent, the US Parent and the
Purchaser..............................................................41
ARTICLE VIII
TERMINATION AND ABANDONMENT
8.1. Termination.............................................................41
8.2. Procedure and Effect of Termination.....................................43
8.3. Fees and Expenses.......................................................43
ARTICLE IX
MISCELLANEOUS
9.1. Amendment and Modification..............................................44
9.2. Waiver of Compliance; Consents..........................................45
9.3. Nonsurvival of Representations and Warranties...........................45
9.4. Notices.................................................................45
9.5. Assignment; Parties in Interest.........................................46
9.6. Specific Performance....................................................47
9.7. Governing Law...........................................................47
iii
<PAGE> 5
9.8. Counterparts............................................................47
9.9. Entire Agreement........................................................47
9.10. Investigations..........................................................47
9.11. Severability............................................................48
9.12. Interpretation; Definitions.............................................48
ANNEX A-- Conditions to the Offer
iv
<PAGE> 6
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of December 14, 1998,
among MISYS PLC, a public limited company organized under the laws of England
(the "Parent"), KIRSTY, INC. a Delaware corporation that is an indirect wholly
owned subsidiary of the Parent (the "US Parent"), MOXIE ACQUISITION CORP., a
Delaware corporation that is a wholly owned subsidiary of the US Parent (the
"Purchaser"), and C-ATS SOFTWARE INC., a Delaware corporation (the "Company")
(the "Agreement" or the "Merger Agreement").
WHEREAS, the respective Boards of Directors of the Parent, the
US Parent, the Purchaser and the Company have approved the acquisition of the
Company by the Parent and its subsidiaries on the terms and subject to the
conditions set forth in this Agreement;
WHEREAS, in furtherance of such acquisition, the Parent
proposes to cause the Purchaser to make a tender offer to purchase all the
outstanding shares of Common Stock, par value $0.001 per share, of the Company
(the "Common Stock"; all the outstanding shares of Common Stock being
hereinafter collectively referred to as the "Shares") at a purchase price of
$7.50 per Share (the "Offer Price"), net to the seller in cash, without interest
thereon, upon the terms and subject to the conditions set forth in this
Agreement (as such tender offer may be amended from time to time as permitted
under this Agreement, the "Offer"); and the Board of Directors of the Company
has adopted resolutions declaring the advisability of and approving the Offer
and the Merger, recommending that the Company's stockholders accept the Offer
and approving the acquisition of Shares by the Purchaser pursuant to the Offer
and the Stockholders Agreement;
WHEREAS, the respective Boards of Directors of the Parent, the
Purchaser, the US Parent and the Company have each approved the merger of the
Purchaser and the Company (the "Merger"), upon the terms and subject to the
conditions set forth in this Agreement, whereby each Share, other than Shares
owned directly or indirectly by the Parent or the Company and Dissenting Shares,
will be converted in the Merger into the right to receive cash in an amount
equal to the price per Share paid in the Offer;
WHEREAS, concurrently with the execution of this Agreement and
as an inducement to the Parent to enter into this Agreement, the Parent, the
Purchaser and certain stockholders of the Company are entering into Stockholders
Agreements (the "Stockholders Agreements") pursuant to which such stockholders
have, among other things, agreed severally to sell all of their Shares to the
Purchaser at a cash price per Share
<PAGE> 7
equal to the Offer Price upon the terms and subject to the conditions set forth
in the Stockholders Agreement; and
WHEREAS, the Parent, the Purchaser, the US Parent and the
Company wish to make certain representations, warranties, covenants and
agreements in connection with the Offer and the Merger and also to prescribe
various conditions to the Offer and the Merger.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements herein contained, and intending to be legally
bound hereby, the Parent, the Purchaser, the US Parent and the Company hereby
agree as follows:
ARTICLE I
THE TENDER OFFER
1.1. The Offer. (a) Provided that (i) this Agreement shall not
have been terminated in accordance with Section 8.1 and (ii) none of the events
or circumstances set forth in paragraphs (a) - (f) of Annex A hereto shall have
occurred or be existing, the Purchaser agrees to commence the Offer by the fifth
business day after the first public announcement of the execution hereof or on
such earlier date as is reasonably practicable. The initial expiration date for
the Offer shall be twenty (20) business days after the commencement of the
Offer. The obligation of the Purchaser to accept for payment and pay for Shares
tendered pursuant to the Offer shall be subject to the condition (the "Minimum
Condition") that the number of Shares validly tendered and not withdrawn prior
to the expiration of the Offer, combined with any Shares already owned by the
Parent, the US Parent, the Purchaser or any of their affiliates and Shares
subject to the Stockholders Agreements and not tendered in the Offer, constitute
more than 50% of the Shares outstanding on a fully diluted basis at the
expiration of the Offer and also shall be subject to the satisfaction of the
other conditions set forth in Annex A. The Purchaser expressly reserves the
right to waive any such condition (other than the Minimum Condition), to
increase the price per Share payable in the Offer, and to make any other changes
in the terms and conditions of the Offer, provided that no change may be made
without the consent of the Company which is adverse to the holders of Shares,
decreases the price per Share payable in the Offer, changes the form of
consideration to be paid in the Offer, reduces the maximum number of Shares to
be purchased in the Offer, imposes conditions to the Offer in addition to those
set forth in Annex A hereto or extends the expiration date of the Offer (except
that the Purchaser, without the consent of the Company, may extend the
expiration date of the Offer, subject to the Company's rights of termination
pursuant to Section 8.1, (a) as required to comply with any rule, regulation or
2
<PAGE> 8
interpretation of the Securities and Exchange Commission (the "SEC"), (b) if at
the scheduled or extended expiration date of the Offer any of the conditions set
forth in Annex A have not been satisfied or waived, until such time as all such
conditions are satisfied or waived or, (c) provided that at least 90% of the
Shares have not been tendered, for one or more times for a total number of days
in the aggregate pursuant to this clause (c) not to exceed 20 for any reason
other than those specified in the immediately preceding clauses (a) and (b)).
The Parent, the US Parent and the Purchaser agree that if all of the conditions
set forth in Annex A hereto are not satisfied on any scheduled expiration date
of the Offer then, provided that all such conditions are reasonably capable of
being satisfied by the commercially reasonable best efforts of the parties
hereto, the Purchaser shall extend the Offer from time to time until such
conditions are satisfied or waived, provided that the Purchaser shall not be
required to extend the Offer for a total of more than 20 days beyond the initial
expiration date of the Offer. The Offer Price shall, subject to applicable
withholding of taxes, be net to the seller in cash, upon the terms and subject
to the conditions of the Offer. Subject to the terms and conditions of the
Offer, the Purchaser agrees to pay, and the Parent agrees to cause the Purchaser
to pay, as promptly as practicable after the expiration of the Offer, for all
Shares validly tendered and not withdrawn.
(b) As soon as reasonably practicable on the date of
commencement of the Offer, the Parent and the Purchaser will file with the SEC a
Tender Offer Statement on Schedule 14D-1 (together with all amendments and
supplements thereto, the "Schedule 14D-1") with respect to the Offer, which
shall have been provided to the Company such that the Company shall have a
reasonable opportunity to comment thereon and to which the Company shall not
have reasonably objected. The Schedule 14D-1 will contain or will incorporate by
reference an offer to purchase (the "Offer to Purchase") and forms of the
related letter of transmittal and any related summary advertisement (the
Schedule 14D-1, the Offer to Purchase and such other documents, together with
all supplements and amendments thereto, being referred to herein collectively as
the "Offer Documents"). Each of the Parent, the Purchaser and the Company agrees
to correct promptly any information provided by it for use in the Offer
Documents which shall have become false or misleading, and the Parent and the
Purchaser further agree to take all steps necessary to cause the Schedule 14D-1
as appropriately corrected to be filed with the SEC and the other Offer
Documents as so corrected to be disseminated to holders of Shares, in each case
as and to the extent required by applicable federal securities laws. The Parent,
the US Parent and the Purchaser agree to provide to the Company and its counsel
any comments the Parent, the US Parent, the Purchaser or their counsel may
receive from the SEC or its staff with respect to the Offer Documents promptly
after the receipt of such comments.
3
<PAGE> 9
(c) The Parent shall provide or cause to be provided to the
Purchaser on a timely basis the funds necessary to accept for payment and pay
for any Shares that the Purchaser becomes obligated to accept for payment
pursuant to the Offer.
1.2. Company Action. (a) The Company hereby approves of and
consents to the Offer and represents that the Company Board, at a meeting duly
called and held, has unanimously (i) determined that this Agreement and the
transactions contemplated hereby, including the Offer and the Merger, as of the
date of such meeting, were advisable and fair to and in the best interests of
the stockholders of the Company, (ii) approved and adopted this Agreement and
the transactions contemplated hereby, and, for purposes of exempting the
Stockholders Agreements and the transactions contemplated thereby from the
provisions of Section 203 of the General Corporation Law of the State of
Delaware, as amended (the "DGCL"), approved and adopted the Stockholders
Agreements and the transactions contemplated thereby, the approvals described in
this clause (ii) constituting approval of the foregoing for purposes of Section
203 of the DGCL, and (iii) recommended that the stockholders of the Company
accept the Offer and tender their Shares pursuant to the Offer and approve and
adopt this Agreement and the Merger (if required). The Company hereby consents
to the inclusion in the Offer Documents of reference to the recommendation of
the Company Board described in the immediately preceding sentence. The Company
represents to the Purchaser and the Parent that the Company has been advised by
each of its directors and executive officers that they intend either to tender
or cause to be tendered all Shares beneficially owned by them to the Purchaser
pursuant to the Offer.
(b) As soon as reasonably practicable on the date of
commencement of the Offer, the Company agrees that it will file with the SEC a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with all
amendments and supplements thereto, the "Schedule 14D-9") containing the
recommendation of the Company Board described in Section 1.2(a) and shall
disseminate the Schedule 14D-9 to the extent required by Rule 14d-9 promulgated
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
any other applicable federal securities laws. The Company shall provide the
Schedule 14D-9 to the Parent such that the Parent shall have a reasonable
opportunity to comment thereon, and the Company shall not file the Schedule
14D-9 if the Parent has reasonably objected thereto. The Company, the Parent and
the Purchaser each agrees to correct promptly any information provided by the
Company, the Parent or the Purchaser, as the case may be, for use in the
Schedule 14D-9 which shall have become false or misleading, and the Company
further agrees to take all steps necessary to cause the Schedule 14D-9 as
appropriately corrected to be filed with the SEC and disseminated to holders of
Shares, in each case as and to the extent required by applicable federal
securities laws. The Company agrees to provide the Parent and its counsel any
comments
4
<PAGE> 10
the Company or its counsel may receive from the SEC or its staff with respect to
the Schedule 14D-9 promptly after the receipt of such comments.
(c) The Company agrees promptly to furnish the Purchaser with
mailing labels containing the names and addresses of all record holders of
Shares and with security position listings of Shares held in stock depositories,
each as of a recent date, together with all other available listings and
computer files containing names, addresses and security position listings of
record holders and beneficial owners of Shares. The Company agrees to furnish
the Purchaser with such additional information, including, without limitation,
updated listings and computer files of stockholders, mailing labels and security
position listings, and such other assistance as the Parent, the Purchaser or
their agents may reasonably request in connection with communicating the Offer
to the stockholders of the Company and consummating the Merger. Subject to the
requirements of applicable law, and except for such steps as are necessary to
disseminate the Offer Documents and any other documents necessary to consummate
the Offer, the Parent, the Purchaser and their affiliates shall hold in
confidence the information contained in such labels, listings, files and all
other information delivered pursuant to this Section 1.2(c), shall use such
information only in connection with the Offer, and, if this Agreement shall be
terminated in accordance with Section 8.1, shall deliver to the Company all
copies, extracts and summaries of such information then in their possession or
the possession of their agents.
1.3. Board of Directors. (a) Promptly upon the purchase by the
Purchaser of Shares pursuant to the Offer, and from time to time thereafter, the
Purchaser shall be entitled, subject to compliance with Section 14(f) of the
Exchange Act, to designate up to such number of directors, rounded up to the
next whole number, on the Board of Directors of the Company (the "Company
Board") as shall give the Purchaser representation on the Company Board equal to
the product of the total number of directors on the Company Board (giving effect
to the directors elected pursuant to this sentence) multiplied by the percentage
that the aggregate number of Shares beneficially owned by the Parent, the
Purchaser or any of their affiliates at such time bears to the total number of
Shares then outstanding (provided that, if the Parent, the Purchaser and their
affiliates beneficially own in the aggregate at least a majority of the Shares,
the Purchaser shall in any event be entitled to designate at least a majority of
the directors on the Company Board), and the Company shall, at such time,
promptly take all actions necessary to cause the Purchaser's designees to be
elected as directors of the Company, including increasing the size of the
Company Board or securing the resignations of incumbent directors or both;
provided, however, that in the event that the Purchaser's designees are elected
to the Company Board, until the Effective Time, the Company Board shall have at
least one director who is a director of the Company on the date of this
Agreement and who is not an officer of the Company or any of its subsidiaries
(each, an "Independent Director") and, provided, further, that, if no
Independent Directors then
5
<PAGE> 11
remain, the other directors of the Company on the date hereof shall designate
one person to fill such vacancy who shall not be an officer or affiliate of the
Company or any of its subsidiaries, or officer or affiliate of the Parent or any
of its subsidiaries, and such person shall be deemed to be an Independent
Director for purposes of this Agreement. At such times, the Company shall use
reasonable best efforts to cause persons designated by the Purchaser to
constitute the same percentage as persons designated by the Purchaser shall
constitute of the Company Board with respect to (i) each committee of the
Company Board, (ii) each board of directors of each subsidiary of the Company
and (iii) each committee of each such board, in each case only to the extent
permitted by applicable law.
(b) The Company shall promptly take all actions required
pursuant to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder in order to fulfill its obligations under this Section 1.3 and shall
include the Information Statement containing such information with respect to
the Company and its officers and directors as is required under Section 14(f)
and Rule 14f-1 (the "Information Statement") as an annex to the Schedule 14D-9
to fulfill such obligations. The Purchaser shall supply to the Company and be
solely responsible for any information with respect to either of them and their
nominees, officers, directors and affiliates required by such Section 14(f) and
Rule 14f-1.
(c) Following the election or appointment of designees of the
Purchaser pursuant to this Section 1.3 (the "Purchaser Designees") and prior to
the Effective Time, any amendment of this Agreement or the Constituent Documents
of the Company, any termination of this Agreement by the Company, any extension
by the Company of the time for the performance of any of the obligations or
other acts of the Purchaser or waiver of any of the Company's rights hereunder
shall require the concurrence of a majority of the Independent Directors.
ARTICLE II
THE MERGER
2.1. The Merger. Upon the terms and subject to the
satisfaction or waiver, if permissible, of the conditions set forth in Article
VII hereof, as promptly as practicable following the consummation of the Offer,
in accordance with the provisions of this Agreement and the DGCL, the parties
hereto shall cause the Purchaser to be merged with and into the Company, and the
Company shall be the surviving corporation (hereinafter sometimes called the
"Surviving Corporation") and shall continue its corporate existence under the
laws of the State of Delaware. At the Effective Time, the separate existence of
the Purchaser shall cease.
6
<PAGE> 12
2.2. Closing. The closing of the Merger will take place at
10:00 a.m. (New York City time) on a date to be specified by the Parent or the
Purchaser, which shall be no later than the second business day after
satisfaction or waiver of the conditions set forth in Article VII (the "Closing
Date"), at the offices of Debevoise & Plimpton, 875 Third Avenue, New York, New
York 10022, unless another date, time or place are agreed to in writing by the
parties hereto.
2.3. Effective Time. Subject to the provisions of this
Agreement, as soon as practicable on or after the Closing Date, the parties
shall file a certificate of merger or other appropriate documents (in any such
case, the "Certificate of Merger") executed in accordance with the relevant
provisions of the DGCL and shall make all other filings or recordings required
under the DGCL and other applicable law. The Merger shall become effective at
such time as the Certificate of Merger is duly filed with the Delaware Secretary
of State, or at such other time specified in the Certificate of Merger as the
Purchaser and the Company shall agree (the time the Merger becomes effective
being hereinafter referred to as the "Effective Time").
2.4. Effects of the Merger. The Merger shall have the effects
set forth in Section 259 of the DGCL.
2.5. Certificate of Incorporation and By-Laws. (a) The
Certificate of Incorporation of the Company (the "Certificate of
Incorporation"), as in effect immediately prior to the Effective Time, shall be
the certificate of incorporation of the Surviving Corporation until thereafter
changed or amended as provided therein or by applicable law.
(b) The by-laws of the Company (the "By-laws"), as in effect
immediately prior to the Effective Time, shall be the by-laws of the Surviving
Corporation, until thereafter changed or amended as provided therein or by
applicable law.
2.6. Directors. The directors of the Purchaser immediately
prior to the Effective Time shall be the directors of the Surviving Corporation,
until the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
2.7. Officers. The officers of the Company immediately prior
to the Effective Time shall be the officers of the Surviving Corporation, until
the earlier of their resignation or removal or until their respective successors
are duly elected and qualified, as the case may be.
7
<PAGE> 13
ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
3.1. Effect on Capital Stock. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
Shares or any shares of capital stock of the Purchaser:
(a) Capital Stock of the Purchaser. Each issued and
outstanding share of capital stock of the Purchaser shall be converted into and
become one fully paid and nonassessable share of common stock, par value $0.001
per share, of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent Owned Stock.
Each Share that is owned by the Company and each Share that is owned by the
Parent, the Purchaser, the US Parent or any other direct or indirect wholly
owned subsidiary of Parent shall automatically be canceled and retired and shall
cease to exist, and no consideration shall be delivered in exchange therefor.
(c) Conversion of Company Common Stock. Subject to Section
3.1(d), each issued and outstanding Share (other then Shares to be canceled in
accordance with Section 3.1(b)) shall be converted into the right to receive
from the Surviving Corporation in cash, without interest, the price per Share
actually paid in the Offer (the "Merger Consideration"). As of the Effective
Time, all such Shares shall no longer be outstanding and shall automatically be
canceled and retired and shall cease to exist, and each holder of a certificate
representing any such Shares shall cease to have any rights with respect
thereto, except the right to receive the Merger Consideration as to such Shares,
less any applicable withholding tax, without interest, as provided herein.
(d) Shares of Dissenting Stockholders. Notwithstanding
anything in this Agreement to the contrary, any issued and outstanding Shares
held by a person (a "Dissenting Stockholder") who has neither voted in favor of
the Merger nor consented in writing thereto and otherwise complies with all the
applicable provisions of the DGCL concerning the right of holders of Common
Stock to dissent from the Merger and require appraisal of their Shares
("Dissenting Shares") shall not be converted as described in Section 3.1(c) but
shall become the right to receive such consideration as may be determined to be
due to such Dissenting Stockholder pursuant to the laws of the State of
Delaware. If, after the Effective Time, such Dissenting Stockholder withdraws
his demand for appraisal or fails to perfect or otherwise loses his right of
appraisal, in any case pursuant to the DGCL, his Shares shall be deemed to be
converted as of the Effective
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Time into the right to receive the Merger Consideration. The Company shall give
the Parent (i) prompt notice of any demands for appraisal of Shares received by
the Company and (ii) if and after the Purchaser shall have accepted for payment
Shares pursuant to and subject to the conditions of the Offer, the opportunity
to participate in and direct all negotiations and proceedings with respect to
any such demands. The Company shall not, without the prior written consent of
the Parent, make any payment with respect to, or settle, offer to settle or
otherwise negotiate, any such demands.
(e) Stock Options. Each option to purchase Shares granted to
any employee, consultant or director of the Company or any of its subsidiaries
pursuant to any of the Company Stock Option Plans that, immediately prior to the
Effective Time, is outstanding, whether vested or not vested (each, an "Option"
and, collectively, the "Options") shall be canceled in exchange for the right to
receive a cash payment equal to the product (such product, the "Option
Consideration") of (i) the excess of (x) the Merger Consideration over (y) the
exercise price per share of such Option multiplied by (ii) the number of Shares
covered by such Option, which cash payment shall be reduced by any applicable
withholding Taxes and be without interest. In the case of Options subject to the
C-ATS 1988 Incentive Stock Option Plan and all other Options vested as of such
date, such payment shall be made as soon as practicable following the
consummation of the Merger. In the case of all other Options, such payment shall
be made on June 1, 1999, provided that the holder of such Option continues to be
employed by the Company or the Surviving Corporation on such date.
Notwithstanding the foregoing, any Options that become vested prior to June 1,
1999 shall receive such payment as soon as practicable following the date of
such vesting. The Company shall use its reasonable best efforts to obtain all
necessary consents of the holders of Options to the cancellation of the Options
in accordance with this Section 3.1(e).
3.2. Exchange of Certificates Representing Common Stock. (a)
Prior to the Effective Time, the Purchaser and the Parent shall appoint a
commercial bank or trust company having net capital of not less than
$100,000,000 and which is reasonably satisfactory to the Company, to act as
paying agent hereunder (the "Paying Agent") for payment of the Merger
Consideration upon surrender of certificates representing Shares
("Certificates"). The Purchaser and the Parent shall, or shall cause the
Surviving Corporation to provide the Paying Agent with cash in amounts necessary
to pay for all the shares of Common Stock pursuant to Section 3.1(c) and to make
all payments in connection with the Options as to which payments are due
pursuant to Section 3.1(e), as and when such amounts are needed by the Paying
Agent. Such amounts shall hereinafter be referred to as the "Exchange Fund."
(b) Promptly after the Effective Time, the Purchaser and the
Parent shall cause the Paying Agent to mail to each holder of record of Shares
immediately prior to the
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Effective Time (i) a letter of transmittal which shall specify that delivery
shall be effected, and risk of loss and title to such Certificates shall pass,
only upon delivery of the Certificates to the Paying Agent and which letter
shall be in customary form and have such other provisions as the Purchaser or
the Parent may reasonably specify and (ii) instructions for effecting the
surrender of such Certificates in exchange for the Merger Consideration
applicable thereto. Upon surrender of a Certificate to the Paying Agent together
with such letter of transmittal, duly executed and completed in accordance with
the instructions thereto, and such other documents as may reasonably be required
by the Paying Agent, the holder of such Certificate shall be entitled to receive
in exchange therefor the amount of cash into which shares of Common Stock
theretofore represented by such Certificate shall have been converted pursuant
to Section 3.1, net of applicable withholding Taxes, and the Shares represented
by the Certificate so surrendered shall forthwith be canceled. No interest will
be paid or will accrue on the cash payable upon surrender of any Certificate. In
the event of a transfer of ownership of Shares which is not registered in the
transfer records of the Company, payment may be made with respect to such Shares
to such a transferee if the Certificate representing such shares of Shares is
presented to the Paying Agent, accompanied by all documents required to evidence
and effect such transfer and to evidence that any applicable stock transfer
Taxes have been paid.
(c) At and after the Effective Time, there shall be no
transfers on the share transfer books of the Company of the Shares which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation, they shall be
canceled and exchanged as provided in this Article III.
(d) Any portion of the Exchange Fund (including the proceeds
of any interest and other income received by the Paying Agent in respect of all
such funds) that remains unclaimed by the former stockholders of the Company six
months after the Effective Time shall be delivered to the Surviving Corporation.
Any former stockholders of the Company who have not theretofore complied with
this Article III shall thereafter look only to the Surviving Corporation for
payment of any Merger Consideration that may be payable upon surrender of any
Certificates such stockholder holds, as determined pursuant to this Agreement,
without any interest thereon.
(e) None of the Purchaser, the Parent, the Company, the
Surviving Corporation, the Paying Agent or any other person shall be liable to
any former holder of Shares for any amount properly delivered to a public
official pursuant to applicable abandoned property, escheat or similar laws.
(f) If any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if required by the
Surviving Corporation or the Paying Agent, the
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posting by such person of a bond in such reasonable amount as the Surviving
Corporation or the Paying Agent may direct as indemnity against any claim that
may be made against it with respect to such Certificate, the Paying Agent will
issue in exchange for such lost, stolen or destroyed Certificate the Merger
Consideration payable in respect thereof pursuant to this Agreement.
(g) The Paying Agent shall invest the cash in the Exchange
Fund on a daily basis, as instructed by the Purchaser. Any interest and other
income resulting from such investments shall be paid to the Purchaser before the
Effective Time and to the Surviving Corporation thereafter.
3.3. Adjustment of Offer Price and Merger Consideration. In
the event of any reclassification, recapitalization, stock split, stock dividend
or similar transaction with respect to the Common Stock (or if a record date
with respect to any of the foregoing shall occur) prior to the Effective Time,
appropriate and proportionate adjustments, if any, shall be made to the amount
of the Offer Price and Merger Consideration, and all references to the Merger
Consideration in this Agreement shall be deemed to be to the Offer Price or the
Merger Consideration as so adjusted.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
As of the date hereof, except as set forth in the Disclosure
Letter, the Company represents and warrants to the Parent and the Purchaser and
agrees as follows:
4.1. Existence; Good Standing; Corporate Authority. Each of
the Company and its subsidiaries is (a) a corporation duly incorporated, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and (b) is duly licensed or qualified to do business as a foreign
corporation and is in good standing under the laws of any other jurisdiction in
which the character of the properties owned or leased by it or in which the
transaction of its business makes such licensure, qualification or good standing
necessary, except where the failure to be so in good standing or to be so
licensed or qualified, individually or in the aggregate, would not have, or
would not reasonably be expected to result in, a material adverse effect on the
business, operations, results of operations, prospects, assets or financial
condition of the Company and its subsidiaries taken as a whole (except for any
such effect that is caused principally by the announcement or pendency of the
Offer or the Merger) (a "Material Adverse Effect"). Each of the Company and its
subsidiaries has the requisite corporate power and authority to own, operate and
lease its properties and carry on its business as now conducted. The
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<PAGE> 17
Company has heretofore delivered or made available to the Parent true and
correct copies of the Certificate of Incorporation and By-laws of the Company
(the "Constituent Documents") and the organizational documents of each
subsidiary, in each case as currently in effect.
4.2. Authorization, Validity and Effect of Agreements. The
Company has all requisite corporate power and authority to execute and deliver
this Agreement and, subject to obtaining the Company Stockholder Approval, to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby have been duly and validly authorized by the
Company Board, and no other corporate proceedings on the part of the Company
(other than the Company Stockholder Approval) are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby. This Agreement
has been duly and validly executed and delivered by the Company, and (assuming
this Agreement constitutes the valid and binding obligation of the Purchaser,
the Parent and the US Parent) constitutes the valid and binding obligation of
the Company, enforceable against the Company in accordance with its terms.
4.3. Compliance with Laws. Except as set forth on Schedule 4.3
of the Disclosure Letter (each "Schedule" hereinafter referred to shall mean a
Schedule of the Disclosure Letter), neither the Company nor any of its
subsidiaries is in violation of any federal, state, local or foreign law,
statute, ordinance, rule, regulation, order, judgment, ruling or decree ("Laws")
of any federal, state, local or foreign judicial, legislative, executive,
administrative or regulatory body or authority or any court, arbitration, board
or tribunal (each such entity, a "Governmental Entity") applicable to the
Company or any of its subsidiaries or any of their respective properties or
assets, except for violations which, individually or in the aggregate, would not
have, or would not reasonably be expected to result in, a Material Adverse
Effect. No action, demand, requirement or investigation by any Governmental
Entity with respect to the Company or its subsidiaries is pending and has been
served upon the Company or, to the knowledge of the Company, is threatened, with
respect to any of the foregoing.
4.4. Capitalization. The authorized capital stock of the
Company consists of 40,000,000 shares of Common Stock and 8,097,660 shares of
Preferred Stock ("Preferred Stock"), par value $0.001 per share. As of December
11, 1998 (a) 7,123,577 shares of Common Stock were issued and outstanding and no
shares of Preferred Stock were outstanding, (b) Options to purchase an aggregate
of 1,792,550 shares of Common Stock were outstanding, 1,792,550 shares of Common
Stock were reserved for issuance upon the exercise of outstanding Options and
2,815,714 shares of Common Stock were reserved for future grants under the Stock
Option Plans, and there were no stock appreciation rights or limited stock
appreciation rights outstanding other than those
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attached to such Options, and (c) no shares of Common Stock of the Company were
held by the Company's subsidiaries. Schedule 4.4 sets forth a list of all
Options, the name of the holders of such Options and the exercise price, the
first date of exercisability and the vesting schedule for each such Option. As
of the date hereof, except for the Options, the Company has no outstanding
shares of preferred stock, bonds, debentures, notes or other obligations or
securities entitling the holders thereof to vote (or which are convertible into
or exercisable for securities having the right to vote) with the stockholders of
the Company on any matter. All issued and outstanding shares of Common Stock are
duly authorized, validly issued, fully paid, nonassessable and free of
preemptive rights. As of the date hereof, except as set forth in this Section
4.4 or on Schedule 4.4, there are no preemptive or similar rights on the part of
any holders of any class of securities of the Company, and there are no other
shares of capital stock of the Company, no securities of the Company convertible
or exchangeable for shares of capital stock or voting securities of the Company,
and no existing options, warrants, calls, subscriptions, convertible securities,
or other rights, agreements or commitments which obligate the Company or any of
its subsidiaries to issue, transfer on its behalf or sell any shares of capital
stock of, or equity interests in, the Company or any of its subsidiaries. There
are no outstanding obligations of the Company or any subsidiary of the Company
to repurchase, redeem or otherwise acquire any shares of capital stock of the
Company. After the Effective Time, the Surviving Corporation will have no
obligation created by the Company prior to the date hereof to issue, transfer on
its behalf or sell any shares of capital stock of the Company or the Surviving
Corporation. Except as contemplated hereby, there are no voting trusts or other
agreements or understandings to which the Company or any of its subsidiaries is
a party with respect to the voting of capital stock of the Company or any of its
subsidiaries.
4.5. Subsidiaries. The Company owns, directly or indirectly
through a subsidiary, all of the outstanding shares of capital stock (or other
ownership interests having by their terms ordinary voting power to elect
directors or others performing similar functions with respect to such
subsidiary) of each of the Company's subsidiaries. All outstanding shares of
capital stock of each of the Company's subsidiaries are duly authorized, validly
issued, fully paid and nonassessable, and are owned, directly or indirectly, by
the Company free and clear of all liens, pledges, security interests, claims or
other encumbrances ("Encumbrances"), except for Permitted Liens. There are no
outstanding securities of any of the Company's subsidiaries convertible or
exchangeable for shares of capital stock or voting securities of such
subsidiary. Schedule 4.5 sets forth for each subsidiary of the Company: (i) its
name and jurisdiction of incorporation or organization; (ii) its authorized
capital stock or share or equity capital; (iii) the number of issued and
outstanding shares of capital stock or share or equity capital; and (iv) the
holder or holders of such shares. Except for interests in the Company's
subsidiaries or as set forth in Schedule 4.5, neither the Company nor any of its
subsidiaries owns directly or
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indirectly any ownership interest or investment in any corporation, partnership,
joint venture, business, trust or other entity.
4.6. No Violation. Neither the execution and delivery by the
Company of this Agreement nor the consummation by the Company of the
transactions contemplated hereby will: (a) violate, conflict with or result in a
breach of any provisions of the Certificate of Incorporation or By-laws (or
comparable constituent documents) of the Company or any of its subsidiaries; (b)
violate, conflict, in any material respect, with, or result in a material breach
of, constitute a material default (or an event which, with notice or lapse of
time or both, would constitute a material default) under, result in the
termination or in a right of termination of, accelerate the performance required
by or benefit obtainable under, result in the vesting, triggering or
acceleration of any material payment or other material obligations pursuant to,
result in the creation of any Encumbrance (other than Permitted Liens) upon any
of the material properties of the Company or its subsidiaries under, or result
in there being declared void, voidable, subject to withdrawal, or without
further binding effect, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed of trust or any license, franchise, Permit,
lease, contract, agreement or other instrument, commitment or obligation to
which the Company or any of its subsidiaries is a party, by which the Company or
any of its subsidiaries or any of their respective properties is bound, or under
which the Company or any of its subsidiaries or any of their respective
properties is entitled to a benefit (each of the foregoing, to the extent the
same have any continuing force or effect, a "Contract" and collectively,
"Contracts"); (c) other than the filings provided for in Section 2.3 or Schedule
4.6, the filings required under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976 (the "HSR Act"), any filings under the Exchange Act, or filings in
connection with the maintenance of qualification to do business in other
jurisdictions (the filings disclosed in Schedule 4.6 in response to this clause
(c), the other filings referred to in this clause (c) and Consents required or
permitted to be made or obtained, collectively, the "Regulatory Filings"),
require any consent, approval or authorization of, or declaration, filing or
registration with, any Governmental Entity, except for those consents,
approvals, authorizations, declarations, filings or registrations the failure of
which to obtain or make individually or in the aggregate would not have, or
would not be reasonably expected to result in, a Material Adverse Effect; or (d)
violate any Laws material to the business of the Company, any of its
subsidiaries or any of their respective assets.
4.7. Company Reports; Undisclosed Liabilities. The Company has
made available to the Parent each registration statement, report, proxy
statement or information statement (as defined under the Exchange Act) prepared
by it for filing with the SEC since December 31, 1993, each in the form
(including exhibits and any amendments thereto) filed with the SEC
(collectively, the "Company Reports"). As of their respective dates, the Company
Reports (a) complied as to form in all material respects with the applicable
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requirements of the Securities Act of 1933, as amended, and the rules and
regulations thereunder (the "Securities Act") or the Exchange Act, as the case
may be, and (b) did not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading. Each of the consolidated balance sheets of the Company
included in or incorporated by reference into the Company Reports (including the
related notes and schedules) fairly presented the consolidated financial
position of the Company and its consolidated subsidiaries as of its date, and
each of the consolidated statements of earnings and cash flows of the Company
included in or incorporated by reference into the Company Reports (including any
related notes and schedules) fairly presented the results of operations,
earnings or cash flows, as the case may be, of the Company and its subsidiaries
for the periods set forth therein, in each case in accordance with generally
accepted accounting principles consistently applied during the periods involved,
except as may be noted therein and subject, in the case of unaudited statements,
to normal year-end audit adjustments (consisting only of normal recurring
accruals). Neither the Company nor any of its subsidiaries has any liabilities
or obligations, contingent or otherwise, except liabilities and obligations (i)
in the respective amounts reflected on or reserved against in the Company's
consolidated balance sheet of September 30, 1998 included in the Company
Reports, (ii) not required by GAAP to be reflected in such consolidated balance
sheet (other than any such liabilities and obligations which were not reflected
or reserved against because they were contingent at September 30, but which
would be reflected or reserved against in such a balance sheet prepared in
accordance with GAAP because they are no longer contingent as of the date
hereof) and (iii) liabilities and obligations incurred in the ordinary course of
business since that date which would not be prohibited by this Agreement.
4.8. Litigation. Except as set forth in Schedule 4.8, as of
the date hereof there are no claims, actions, suits, proceedings, arbitrations,
investigations or audits (collectively, "Litigation") by a third party
(including a Governmental Entity) pending or, to the knowledge of the Company,
threatened against the Company (or any Plan) or any of its subsidiaries, at law
or in equity, other than those which individually or in the aggregate would not
in the good faith judgment of the Company be reasonably expected to have or
result in a Material Adverse Effect.
4.9. Absence of Certain Changes. Except as set forth in
Schedule 4.9, since September 30, 1998 until the date hereof, the Company and
its subsidiaries have conducted their business only in the ordinary course of
such business consistent with past practices, and there has not been (a) any
Material Adverse Effect (or any event or condition that would reasonably be
expected to result in a Material Adverse Effect) suffered by the Company or any
of its subsidiaries; (b) any declaration, setting aside or payment of any
dividend or other distribution with respect to the capital stock of the
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Company or its subsidiaries (other than wholly owned subsidiaries) or, except as
required by the Company's benefit plans, any repurchase, redemption or any other
acquisition by the Company or its subsidiaries of any outstanding shares of
capital stock or other securities of, or other ownership interests in, the
Company or its subsidiaries; (c) any change in accounting principles, practices
or methods; (d) any increase or commitment to increase the remuneration
(including salary, incentive compensation or benefits) of any director or
employee of or consultant to the Company or any of its subsidiaries, whether
directly or indirectly (including by amendment, implementation or the entering
into of any employment or employee benefit or compensation agreement, plan or
arrangement), by any amount constituting an increase in excess of 5% (or, in the
case of any executive officer of the Company or any such subsidiary, by any
amount) other than any changes required by the current terms of any existing
plan or agreement or pursuant to this Agreement or changes in the ordinary
course of business consistent with past practice; (e) any revaluation by the
Company or any of its subsidiaries of any of their respective assets, other than
normal recurring adjustments made in the ordinary course of business, including,
without limitation, write-downs of inventory or write-offs of accounts
receivable; (f) any transaction or commitment made by the Company or any of its
subsidiaries to buy or sell any assets of Company's business, other than sales
in the ordinary course of business consistent with past practice; or (g) any
other event or condition which, had it occurred subsequent to the date hereof,
would constitute a breach of Section 6.1.
4.10. Taxes. (a) Except as set forth on Schedule 4.10, the
Company and each of its subsidiaries have (or will have by the Effective Time)
timely filed all Tax Returns required to be filed by any of them. All such Tax
Returns are true, correct and complete in all material respects. All Taxes of
the Company and its subsidiaries which are (i) shown as due on such Tax Returns,
(ii) to the knowledge of the Company, otherwise due and payable or (iii) claimed
or asserted by any taxing authority to be due, have been paid, except for those
Taxes being contested in good faith and for which adequate reserves have been
established in the financial statements included in the most recent Company
Report in accordance with GAAP. The Company and each subsidiary has either
withheld and paid over to the relevant taxing authority or set aside in accounts
an amount equal to all Taxes required to have been withheld and paid in
connection with payments to employees, independent contractors, creditors,
stockholders or other third parties.
(b) Except as set forth in Schedule 4.10, (i) there are no
material Encumbrances for Taxes upon the assets of the Company or any of its
subsidiaries except Encumbrances for Taxes not yet due; (ii) there are no
material outstanding deficiencies for any Taxes threatened, proposed, asserted
or assessed against the Company or any subsidiary which are not adequately
provided for in the financial statements included in the most recent Company
Report; (iii) there are no federal, state, local or foreign audits or
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other administrative proceedings or judicial proceedings presently pending with
regard to any Taxes or Tax Returns required to be filed by or with respect to
the Company or any of its subsidiaries; (iv) the Company has filed a
consolidated Tax Return for federal income tax purposes on behalf of itself and
all of its domestic subsidiaries as the common parent corporation of an
"affiliated group" (within the meaning of Section 1504(a) of the Internal
Revenue Code of 1986, as amended (the "Code")) of which such subsidiaries are
"includible corporations" in such affiliated group within the meaning of Section
1504(c)(2) of the Code; (v) none of the Company or any of its subsidiaries has
been a member of an "affiliated group" (as defined above), or any similar
affiliated, combined or consolidated group for state, local or foreign tax
purposes (other than a group the common parent of which is the Company), or has
any liability for the Taxes of any person (other than the Company or its current
subsidiaries) under Treasury Regulation Section 1.1502-6 or any similar
provision of state, local or foreign law or as a transferee, successor, by
contract or otherwise; and (vi) neither the Company nor any of its subsidiaries
is a party to any tax sharing, tax indemnity or other agreement or arrangement
with respect to Taxes with any entity not included in the financial statements
included in the Company Report.
(c) The Company is not a "U.S. real property holding company"
as defined in Section 897 of the Code.
4.11. Employee Benefit Plans. (a) Absence of Changes in
Benefits Plans. Schedule 4.11(a) contains a complete and correct list, as of the
date hereof, of (i) all material severance and employment agreements of the
Company or its subsidiaries with any current employee, officer, independent
contractor, or director, (ii) all material severance programs, policies and
practices of each of the Company and each of its subsidiaries, (iii) all
material plans or arrangements of the Company and each of its subsidiaries
relating to its current employees, officers, independent contractors, or
directors which contain change in control provisions, including in all cases any
and all amendments entered on or prior to the date hereof, and (iv) all material
Plans. For purposes of this Agreement, "Plan" shall mean collective bargaining
agreement, employment agreement, consulting agreement, severance agreement or
any bonus, pension, post-retirement benefit, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock purchase, stock
option, phantom stock, retirement, vacation, severance, disability, death
benefit, hospitalization, medical, dental or other plan, arrangement or
understanding providing material benefits to any current employee, officer,
independent contractor, or director of the Company or any of its subsidiaries.
Since January 1, 1997, until the date hereof, there has not been any adoption or
amendment in any respect by the Company or any of its subsidiaries of any Plan,
nor has there been any material change in any actuarial or other assumptions
used to calculate funding obligations with respect to any material Plan, or any
change in the manner in which such contributions
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are determined which, individually or in the aggregate, would result in a
material increase in the Company's or its subsidiaries' liabilities thereunder.
(b) Stock Options. All of the Options have been granted in
compliance with all the terms and provisions of the Company Stock Option Plans,
any awards made thereunder and all applicable law.
(c) ERISA Compliance. (i) With respect to Plans, no event has
occurred and there exists no condition or set of circumstances, in connection
with which the Company or any of its subsidiaries could be subject to any
liability under the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), the Code or any other applicable law that individually or in the
aggregate would have, or would reasonably be expected to result in, a Material
Adverse Effect on the Company or any of its subsidiaries.
(ii) Each Plan has been administered substantially in
accordance with its terms and all the Plans have been operated, and are in
material compliance with the applicable provisions of ERISA, the Code and all
other applicable laws and the terms of all applicable collective bargaining
agreements. The IRS has issued a favorable determination letter with respect to
the qualification of each Plan that constitutes an "employee pension benefit
plan" as defined in ERISA, and, as of the date hereof, to the knowledge of the
Company, the IRS has not taken any action to revoke any such letter.
(iii) Neither the Company nor any trade or business, whether
or not incorporated (an "ERISA Affiliate"), which together with the Company
would be deemed a "single employer" within the meaning of Section 4001(b) of
ERISA, has incurred any material unsatisfied liability under Title IV of ERISA
in connection with any Plan and no condition exists that presents a material
risk to the Company or any ERISA Affiliate of incurring any such liability
(other than liability for premiums to the Pension Benefit Guaranty Corporation
("PBGC") arising in the ordinary course). No Plan has incurred an "accumulated
funding deficiency" within the meaning of Section 302 of ERISA or Section 412 of
the Code, whether or not waived.
(iv) As of the date hereof, except as set forth in Schedule
4.11(c), no Plan (A) is subject to Title IV of ERISA; (B) is a "multiemployer
plan" within the meaning of Section 3(37) of ERISA; (C) is a "multiple employer
plan" within the meaning of Section 413(c) of the Code; or (D) is or at any time
was funded through a "welfare benefit fund" within the meaning of Section 419(e)
of the Code and no benefits under a Plan are or at any time have been provided
through a voluntary employees' beneficiary association within the meaning of
Section 501(c)(9) of the Code or a supplemental unemployment benefit plan within
the meaning of Section 501(c)(17) of the Code.
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(v) Except as set forth in Schedule 4.11(c), no Plan provides
medical benefits (whether or not insured), with respect to current or former
employees after retirement or other termination of service (other than (x)
coverage mandated by applicable law or (y) benefits the full cost of which is
borne by the current or former employee).
(vi) Each Plan which is a welfare benefit plan as defined in
Section 3(1) of ERISA (including any such plan covering former employees of the
Company or any of its subsidiaries) and each Plan which is a pension benefit
plan as defined in Section 3(2) of ERISA (including any such plan covering
former employees of the Company or any of its subsidiaries) may be amended or
terminated by the Company or such subsidiary at any time.
(vii) All amounts payable under Plans are deductible for
federal income tax purposes. The consummation of the transactions contemplated
by this Agreement will not, either alone or in combination with another event
undertaken by the Company or any of its subsidiaries prior to the date hereof,
(A) entitle any current or former employee, agent, independent contractor or
officer of the Company or any ERISA Affiliate to severance pay, unemployment
compensation or any other payment, except as expressly provided in this
Agreement, (B) accelerate the time of payment or vesting, or increase the amount
of compensation due any such employee, agent, independent contractor or officer,
(C) constitute a "change in control" causing a material increase or acceleration
of benefits under any Plan, and the Company and the Company Board have taken all
required actions to effect the foregoing.
(viii) There is no pending or threatened assessment,
complaint, proceeding, or investigation of any kind in any court or government
agency with respect to any Plan (other than routine claims for benefits).
4.12. Labor and Employment Matters. Except as set forth in
Schedule 4.12, as of the date hereof, (a) neither the Company nor any of its
subsidiaries is a party to, or bound by, any collective bargaining agreement or
other contracts or understanding with a labor union or labor organization and no
collective bargaining agreement is being negotiated by the Company or any of its
subsidiaries; and (b) there is no (i) unfair labor practice, labor dispute
(other than routine individual grievances) or labor arbitration proceeding
pending or, to the knowledge of the Company, threatened against the Company or
any of its subsidiaries, (ii) to the knowledge of the Company, any activity or
proceeding by a labor union or representative thereof to organize any employees
of the Company or any of its subsidiaries, or (iii) lockouts, strikes or
slowdowns, work stoppages or similar labor activities or, to the knowledge of
the Company, threats thereof by or with respect to any such employees.
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4.13. Brokers and Finders. Except for Broadview International
LLC, no broker, dealer or financial advisor is entitled to receive from the
Company or any of its subsidiaries any broker's, finder's or investment banking
fee in connection with this Agreement or the transactions contemplated hereby.
4.14. Opinion of Financial Advisor. The Company Board has
received the opinion of Broadview International LLC, to the effect that, as of
the date of this Agreement, the consideration to be received by holders of
Shares (other than the Parent and its affiliates) in the Offer and the Merger is
fair from a financial point of view to such holders.
4.15. State Anti-takeover Laws. Section 203 of the DGCL is
inapplicable to the Offer, the Merger, this Agreement, the Stockholders
Agreements and the transactions contemplated hereby and thereby. Section 2115 of
the California General Corporation Law ("CGCL"), is inapplicable to the Company,
and no "fair price," "moratorium," "control share acquisition" or other
anti-takeover provision of the CGCL is or will be applicable to the Offer, the
Merger, this Agreement, the Stockholders Agreements or the transactions
contemplated hereby and thereby. To the knowledge of the Company, no "fair
price," moratorium," "control share acquisition" or other anti-takeover statute
of any other state will be applicable to the Offer, the Merger, this Agreement,
the Stockholders Agreements or the transactions contemplated hereby and thereby.
4.16. Voting Requirements. The affirmative vote of the holders
of a majority of the voting power of all outstanding shares of Common Stock,
voting as a single class, at the Company Stockholder Meeting to adopt this
Agreement and the Merger (the "Company Stockholder Approval") is the only vote
of the holders of any class or series of the capital stock of the Company
necessary to approve and adopt this Agreement and the transactions contemplated
hereby. No action by the Company or vote of its stockholders generally is
required for the valid execution and performance of the Stockholders Agreements
(other than pursuant to Section 203 of the DGCL).
4.17. Material Contracts. Schedule 4.17 sets forth a list as
of the date hereof of all of the following Contracts that contain material
obligations that have not yet been performed: (a)(i) all Contracts for borrowed
money or guarantees thereof with any banking or financial institution, and (ii)
all other Contracts for borrowed money or guarantees thereof other than (with
respect to this subclause (ii)) Contracts entered into in the ordinary course of
business consistent with the past practice of the Company or Contracts between
the Company and any of its wholly owned subsidiaries or between any of the
Company's wholly owned subsidiaries, (b) Contracts containing covenants by the
Company or any subsidiary of the Company restricting its ability or the ability
of any of
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the subsidiaries of the Company to engage in any line of business, (c) Contracts
to purchase supplies or other assets, other than purchase orders entered into in
the ordinary course of business consistent with the past practice of the Company
and other Contracts involving obligations of less than $25,000 individually and
$250,000 in the aggregate, (d) Contracts with distributors, brokers, or sales
agents for the distribution of the products or services of the Company, (e)
Contracts to purchase or acquire advertising or other product promotion or brand
support other than spot orders purchased in the ordinary course of business or
involving commitments by the Company of less than $25,000, (f) Contracts
involving the investment, including by way of capital contribution, loan or
advance, by the Company or any of its subsidiaries of more than $25,000 in any
other person, firm or entity (other than wholly owned subsidiaries), other than
investments no longer owned by the Company or its subsidiaries, (g) Contracts
regarding the license or lease of Company Intellectual Property, (h) Contracts
regarding the provision of consulting or maintenance services, and (i) other
Contracts under which the obligation of the Company and its subsidiaries is
$500,000 or more in the twelve months following the date hereof (all Contracts
described in each of the categories (a) through (i) above, "Material
Contracts"). All Material Contracts are, with respect to the Company and its
subsidiaries, valid and binding, in full force and effect and enforceable
against the Company or its subsidiaries, as the case may be, in accordance with
their respective terms. To the Company's knowledge, (x) as of the date hereof,
all Material Contracts are, with respect to the other parties thereto, valid and
binding, in full force and effect and enforceable against such parties in
accordance with their respective terms, and (y) all Material Contracts are, with
respect to the other parties thereto, valid and binding, in full force and
effect and enforceable against such parties in accordance with their respective
terms, except, with respect to this clause (y) only, where failure to be valid
and binding, in full force and effect or enforceable would not, individually or
in the aggregate, be material and adverse to the Company and its subsidiaries,
taken as a whole. There is not under any such Contract, any existing default, or
event, which after notice or lapse of time, or both, would constitute a default,
by the Company or any of its subsidiaries, or to the Company's knowledge, any
other party, other than any such defaults or events which, individually or in
the aggregate, would not have a Material Adverse Effect.
4.18. Intellectual Property; Technology. (a) Schedule 4.18
sets forth a complete and correct list of all material Intellectual Property
that (i) is owned or (ii) is used or held for use, in each case, by the Company
or any subsidiary in connection with, or that is material to, the business
currently conducted or proposed to be conducted by the Company and its
subsidiaries (the "Company Intellectual Property"), except that Schedule 4.18
does not need to set forth inventions, processes, formulae, trade secrets,
know-how or confidential information that are not reduced to tangible form or
that are not susceptible to legal protection by filing or registration with any
Governmental Entity.
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(b) The Company and its subsidiaries own, or have the valid
right and license to use, and the Surviving Corporation will, immediately after
the Closing, own or have the valid right and license to use, all of the
Intellectual Property material to the conduct of the business of the Company and
its subsidiaries as currently conducted. The Company and the subsidiaries own
all of their rights in and to the Company Intellectual Property, free and clear
of any material Encumbrances (except for Permitted Liens).
(c) The conduct of the business of the Company and its
subsidiaries does not, to the knowledge of the Company, infringe any patent
rights of any Person, and does not infringe any other Intellectual Property or
other rights of any Person. To the knowledge of the Company, as of the date
hereof, none of the Company Intellectual Property is being infringed,
misappropriated or otherwise used or available for use by any Person without
written authority from the Company, except in each case for any infringements
that, individually or in the aggregate, would not reasonably be expected to be
material.
(d) No claim or demand of any Person has been made or, to the
knowledge of the Company, threatened, nor is there any litigation that is
pending or, to the knowledge of the Company, threatened, that (i) challenges the
rights of the Company or any of its subsidiaries in respect of any material
Company Intellectual Property or (ii) asserts that the Company or any of its
subsidiaries is infringing or otherwise in conflict with, or is required to pay
any material royalty, license fee, charge or other material amount with regard
to, any material Company Intellectual Property. None of the Company Intellectual
Property is subject to any material outstanding order, ruling, decree, judgment
or stipulation by or with any court, tribunal, arbitrator or other Governmental
Entity.
(e) Schedule 4.18 sets forth a complete list of Company
Intellectual Property that is owned by the Company and that is registered with,
filed in or issued by, as the case may be, the United States Patent and
Trademark Office, the United States Copyright Office or other filing offices,
domestic or foreign, and such registrations, filings, issuances and other
actions remain in full force and effect. The Company and its subsidiaries have
taken all reasonable and customary actions to ensure full protection of the
material Company Intellectual Property and to maintain the confidentiality of
all confidential Intellectual Property, in each case under any applicable Law.
(f) To the knowledge of the Company, the Company or a
subsidiary has valid licenses to all copies of all Software that is utilized by
it in connection with the conduct of its business and that it does not own
("Commercial Software"), and the
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use by the Company or such subsidiary of such Commercial Software, including
without limitation all modifications and enhancements thereto (whether created
by the Company or by a third party) is in material compliance with the terms and
provisions of such licenses. To the knowledge of the Company, none of the
software marketed or licensed by the Company to its customers (the "Company
Software"), and no use thereof by the Company or any subsidiary or permitted use
by the Company's or any of its subsidiaries' licensees, infringes upon or
violates any patent, copyright, trade secret or other Intellectual Property
right of any person or entity, and no claim or demand with respect to any such
infringement or violation has been made or, to the best knowledge of the
Company, threatened. To the knowledge of the Company, there are no defects in
the Company Software that would prevent such Software from performing in all
material respects the tasks and functions that it was intended to perform except
those which can be cured without a Material Adverse Effect. True and correct
copies of all material licenses and arrangements (including amendments,
supplements, waivers and other modifications) for any and all Company
Intellectual Property that is not owned by the Company (including but not
limited to any and all material Commercial Software) have been delivered to the
Purchaser. All royalties, license fees, charges and other amounts payable by, on
behalf of, to or for the account of any of the Company or its subsidiaries in
respect of any Intellectual Property (including but not limited to Software) are
reflected in the financial statements contained in or referenced by the Company
Reports.
(g) Schedule 4.18 sets forth a complete list of all
agreements, arrangements, commitments and contracts, including, but not limited
to, escrow agreements, license agreements, and product service agreements, which
provide for the conditional release or transfer of, or give any customer the
right to possess, any source code to or relating to Company Software in any form
or medium. Except as set forth in Schedule 4.18, no condition or default exists
which would cause or with lapse of time would result in the release or transfer
of, or give any customer the right to possess, any source code to or relating to
Company Software in any form or medium under all such agreements, arrangements,
commitments and contracts.
(h) "Intellectual Property" means the United States and
foreign trademarks, service marks, trade names, trade dress, copyrights, and
similar rights, including registrations and applications to register or renew
the registration of any of the foregoing, the United States and foreign letters
patent and patent applications, and inventions, processes, designs, formulae,
trade secrets, know-how, confidential information, Software, data and
documentation, and all similar intellectual property rights, tangible
embodiments of any of the foregoing (in any form or medium including electronic
media), and licenses of any of the foregoing.
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(i) "Software" means all computer programs, including all
source code and object code versions thereof, in any and all forms and media,
whether recorded on paper, magnetic media or other electronic or non-electronic
media, and all documentation relating thereto, including, but not limited to,
user manuals and training materials.
4.19. Calendar Function. The Company has conducted an
inventory of all computer software programs owned or licensed by it as well as
the hardware and embedded microcontrollers in non-computer equipment used by the
Company in connection with and material to the operation of its business
(collectively, the "Computer Systems") in order to determine which parts of the
Computer Systems are not Year 2000 Compatible (as defined below) and to estimate
the cost of rendering such Computer Systems Year 2000 Compatible prior to
January 1, 2000. Based on the above-referenced inventory, the Company represents
and warrants that the Computer Systems are either Year 2000 Compatible or that
it is the reasonable expectation of the Company that they will be Year 2000
Compatible prior to July 1, 1999; the estimated remaining cost of rendering the
Computer Systems Year 2000 Compatible is $30,000. "Year 2000 Compatible" means
that the Computer Systems to the extent required for their particular use (i)
correctly perform date data century recognition, and calculations that
accommodate same century and multi-century formulas and date values; (ii)
operate or are expected to operate on a basis comparable to their current
operation during and after calendar year 2000 A.D., including but not limited to
leap years; and (iii) shall not end abnormally or provide invalid or incorrect
results as a result of date data which represents or references different
centuries or more than one century.
4.20. Material Delaying Event. To the knowledge of the
Company, there is no existing event, circumstance or condition that would have,
or be reasonably expected to result in, a Material Delaying Effect. A "Material
Delaying Effect" is an effect that would prevent or delay the consummation of
the Offer beyond the relevant Long-Stop Date.
4.21. Environmental Matters. (a) The Company and its
subsidiaries have at all times complied with all applicable Environmental Laws,
including compliance with all Permits and authorizations required pursuant to
all applicable Environmental Laws. No material violation by the Company or any
of its subsidiaries has at any time been alleged of any applicable Environmental
Law.
(b) Except as disclosed in Schedule 4.21, the Company and its
subsidiaries are not subject to any litigation related to any Environmental Law
with respect to any of the current or past operations of the Company or any of
its subsidiaries, or any of the currently or formerly owned, leased or used
property or assets of the Company or any of its subsidiaries.
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(c) Neither the Company nor any of its subsidiaries, nor, to
the knowledge of the Company, any other person, has caused or taken any action
that will result in, and neither the Company nor any of its subsidiaries is
subject to, any liability or obligation on the part of the Company or any of its
subsidiaries relating to (i) the environmental conditions on, under, or about
the real property or other properties or assets currently or formerly owned,
leased, operated or used by the Company or any of its subsidiaries or (ii) the
past or present use, management, handling, transport, treatment, generation,
storage, disposal, or release of any Hazardous Materials.
(d) Except as disclosed in Schedule 4.21, neither the Company
nor any of its subsidiaries is subject to any outstanding order from, or
contractual or other obligation with, any Governmental Entity or other person in
respect of which the Company or any of its subsidiaries may be required to incur
costs arising from the release or threatened release of a Hazardous Material and
neither the Company nor any of its subsidiaries has entered into any contractual
or other obligation with any Governmental Entity or other person pursuant to
which the Company or any of its subsidiaries assumed responsibility for the
remediation of any condition arising from or relating to the release or
threatened release of Hazardous Materials.
(e) The Company and its subsidiaries have made available to
the Purchaser all information, including, without limitation, all studies,
analyses and test results, in its possession, custody or control or otherwise
known to the Company or any of its subsidiaries relating to (i) the
environmental conditions on, under or about the real property owned or leased by
the Company or any of its subsidiaries or other properties or assets currently
or formerly owned, leased, operated or used by the Company or any of its
subsidiaries and (ii) any Hazardous Materials used, handled, transported,
generated, discharged, or otherwise released by the Company or any of its
subsidiaries or any other person on, under, about or from any of the real
property owned or leased by the Company or any of its subsidiaries and the
properties currently or formerly owned, leased, or used by Company or its
subsidiaries.
4.22. Insurance. Schedule 4.22 contains a complete and correct
list and summary description of all insurance policies maintained (including
Directors' and Officers' insurance) by or on behalf of the Company and its
subsidiaries. The Company has made available to the Parent complete and correct
copies of all such policies together with all riders and amendments thereto.
Such policies are in full force and effect in all material respects, and all
premiums due thereon have been paid. The Company and its subsidiaries have
complied in all material respects with the terms and provisions of such
policies.
4.23. Product Liability; Warranties. Except as set forth in
Schedule 4.23, there are no liabilities of the Company or any of its
subsidiaries, fixed or contingent,
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asserted or, to the knowledge of the Company, unasserted, (a) with respect to
any product liability or any similar claim that relates to any Company Software
or other product or service of the Company or any of its subsidiaries, or (b)
with respect to any claim for the breach of any express or implied product
warranty or any other similar claim with respect to any Company Software or
other products or services of the Company or any of its subsidiaries, other than
standard warranty obligations (to replace, repair or refund) made by the Company
or any of its subsidiaries in the ordinary course of business to buyers of the
respective Company Software or other products, and except, in each case, where
such liabilities are not, individually or in the aggregate, reasonably likely to
have a Material Adverse Effect.
4.24. Disclosures; Information Supplied. None of the
information supplied or to be supplied (and not subsequently retracted) by the
Company for inclusion or incorporation by reference in the Offer Documents, the
Schedule 14D-9 or the Information Statement will, at the respective times the
Offer Documents, the Schedule 14D-9 and the Information Statement are filed with
the SEC or first published, sent or given to the Company's stockholders, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Schedule 14D-9 and the Information Statement will comply as to
form in all material respects with the requirements of the Exchange Act and the
rules and regulations thereunder, except that no representation or warranty is
made by the Company with respect to statements made or incorporated by reference
therein based on information supplied by the Parent or the Purchaser for
inclusion or incorporation by reference therein.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF THE PARENT, THE PURCHASER AND THE US PARENT
As of the date hereof and as of the Effective Date, the
Parent, the Purchaser and the US Parent each jointly and severally represents
and warrants to the Company and agrees as follows:
5.1. Existence; Good Standing; Corporate Authority. Each of
the Purchaser, the Parent and the US Parent is a corporation duly incorporated,
validly existing and in good standing under the laws of its jurisdiction of
incorporation.
5.2. Authorization, Validity and Effect of Agreements. Each of
the Purchaser, the US Parent and the Parent has the requisite corporate power
and authority
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to execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation by the Purchaser, the US Parent and the Parent of the transactions
contemplated hereby have been duly and validly authorized by the respective
Boards of Directors of the Purchaser, the US Parent and the Parent, as
applicable, and by the stockholders of the Purchaser, and no other corporate
proceedings on the part of the Purchaser, the US Parent or the Parent are
necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by the Purchaser, the US Parent and the Parent, and (assuming this
Agreement constitutes the valid and binding obligation of the Company)
constitutes the valid and binding obligation of each of the Purchaser, the US
Parent and the Parent, enforceable against the Purchaser, the US Parent and the
Parent in accordance with its terms.
5.3. Litigation. There is no judgment, decree or order pending
or, to the knowledge of the Purchaser, the US Parent, the Parent or any of their
directors or officers, threatened against the Purchaser, the US Parent or the
Parent that would have a Material Delaying Effect.
5.4. No Violation. Neither the execution and delivery of this
Agreement by the Purchaser, the US Parent and the Parent nor the consummation by
them of the transactions contemplated hereby will (a) violate, conflict with or
result in any breach of any provision of the Articles of Incorporation or
By-Laws of the Purchaser or the US Parent or the Memorandum and Articles of
Association, in each case as amended, of the Parent; (b) other than the
Regulatory Filings, require any consent, approval or authorization of, or
declaration, filing or registration with, any Governmental Entity, the lack of
which individually or in the aggregate would have a Material Delaying Effect or
(c) violate any Laws applicable to the Purchaser, the US Parent or the Parent or
any of their respective assets, except for violations which individually or in
the aggregate would not have a Material Delaying Effect.
5.5. Information Supplied. None of the information supplied or
to be supplied (and not subsequently retracted) by the Parent or the Purchaser
for inclusion or incorporation by reference in the Offer Documents, the Schedule
14D-9, the Information Statement or the Proxy Statement will, in the case of the
Offer Documents, the Schedule 14D-9 and the Information Statement, at the
respective times the Offer Documents, the Schedule 14D-9 and the Information
Statement are filed with the SEC or first published, sent or given to the
Company's stockholders, or, in the case of the Proxy Statement, at the date the
Proxy Statement is first mailed to the Company's stockholders held to vote on
approval and adoption of this Agreement, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not
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misleading. The Offer Documents will comply as to form in all material respects
with the requirements of the Exchange Act and the rules and regulations
promulgated thereunder, except that no representation or warranty is made by the
Purchaser, the Parent or the US Parent with respect to statements made or
incorporated by reference therein based on information supplied by the Company
for inclusion or incorporation by reference therein.
5.6. Ownership of Shares. Neither the Purchaser, the US
Parent, the Parent nor any of their respective affiliates is the beneficial
owner of any shares of Common Stock of the Company, except pursuant to the
Stockholders Agreement.
5.7. Interim Operations of the Purchaser. The Purchaser was
formed solely for the purpose of engaging in the transactions contemplated
hereby, has engaged in no other business activities and has conducted its
operations only as contemplated hereby.
ARTICLE VI
COVENANTS
6.1. Conduct of the Business of the Company. Except as
contemplated by this Agreement or as set forth in Schedule 6.1, during the
period from the date of this Agreement to the Effective Time, the Company and
its subsidiaries will each conduct its operations according to its ordinary and
usual course of business, and will use reasonable best efforts to preserve
intact its business organization and to maintain satisfactory relationships with
customers and others having business relationships with it. The Company will
make its officers reasonably available to confer on a regular and frequent basis
with representatives of the Parent to report upon the status of operations.
Without limiting the generality of the foregoing, and except as otherwise
expressly contemplated by this Agreement or as set forth in Schedule 6.1, prior
to the Effective Time, neither the Company nor any of its subsidiaries will,
without the prior written consent of the Parent:
(a) amend its Certificate of Incorporation or By-laws (or
equivalent instruments);
(b) authorize for issuance, issue, sell, deliver or agree or
commit to issue, sell or deliver (whether through the issuance or
granting of additional options, warrants, commitments, subscriptions,
rights to purchase or otherwise) any shares of capital stock of any
class or any securities convertible into shares of capital stock of any
class, except as required by any Plan or Stock Option Plan existing as
of the date hereof;
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(c) split, combine or reclassify any shares of its capital
stock, declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in
respect of its capital stock, or redeem or otherwise acquire any shares
of its capital stock, provided that any of the Company's wholly owned
subsidiaries may declare, set aside or pay any dividend or other
distribution with respect to their capital stock;
(d) (i) except under current borrowing facilities in the
ordinary course of business in accordance with past practice, create,
incur or assume any long-term debt (including obligations in respect of
capital leases); (ii) except in the ordinary course of business and
consistent with past practices, assume, guarantee, endorse or otherwise
become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any person other than any subsidiary
of the Company; or (iii) make any loans, advances or capital
contributions to, or investments in, any person other than any of the
subsidiaries of the Company, except for loans or advances to employees
or customers in the ordinary course of business and consistent with
past practices;
(e) except in the ordinary course of business consistent with
past practice or as otherwise described in Schedule 6.1(e), sell,
transfer or otherwise dispose of, any business, subsidiary, or assets
(including without limitation, receivables, leasehold interests or
Intellectual Property) that are material to the Company and its
subsidiaries taken as a whole, or fixed assets that are sold,
transferred or otherwise disposed of, either individually or in the
aggregate, with a book value in excess of $250,000;
(f) make any capital or research and development expenditures
in the aggregate for the Company and its subsidiaries in excess of the
amounts specified in the Company's 1999 expense plan for capital or
research and development expenditures, previously made available to the
Parent, other than increases over such plan in amounts that are in the
aggregate immaterial;
(g) except in the ordinary course of business consistent with
past practice or as otherwise described in Schedule 6.1(g), license or
permit any third party to use any Intellectual Property;
(h) without the written consent of the Parent (which shall not
be unreasonably withheld or delayed), settle or compromise any pending
or threatened suit, action, Tax audit or claim in which the amount
involved is greater than $250,000 or which is material to the Company
and its subsidiaries taken as a whole;
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(i) waive or amend any term or condition of any
confidentiality or "standstill" agreement to which the Company is a
party;
(j) except with respect to agreements which are terminable at
will by the Company or any of its subsidiaries without any material
penalty to the Company or any of its subsidiaries, enter into or amend
any legally binding employment, severance, consulting or salary
continuation agreements with any officers, directors or employees or
grant any increases in compensation or benefits to employees other than
increases to officers and employees in the ordinary course of business
consistent with the past practice of the Company and its subsidiaries;
(k) enter into, renew or agree to any modification or
amendment to any Contract unless the Contract (I) expressly provides
that the Company's aggregate exposure thereunder (including any
exposure described in clause (iii) below) to the other party to the
Contract (the "Licensee") or to any other third party does not exceed
the greater of (A) $2,000,000 and (B) the aggregate amount actually
paid by the Licensee to the Company under such Contract through the
date on which the determination of Company's liability is made, (ii)
expressly excludes any consequential damages (including loss of
profits) of the Licensee or other third parties from any liability of
the Company, (iii) expressly provides that the Company's potential
liability in respect of infringement claims relating to the Company's
Intellectual Property does not exceed the aggregate amount actually
paid by the Licensee to the Company under such Contract through the
date on which the determination of Company's liability is made, (iv)
only obligates the Company to provide a package of standard products
and services or to provide non-standard products and services that do
not, in the aggregate, exceed 20% of the value of the Contract or to
provide other services on a "time and materials" basis, and (v) does
not require or obligate the Company to perform services or provide
non-standard products in the future at an aggregate cost to the Company
of more than $1,000,000;
(l) make any material Tax election or permit any material
insurance policy naming it as a beneficiary or a loss payable payee to
be canceled or terminated;
(m) except for bonuses payable for 1998 in the aggregate
amount not to exceed $1,250,000, and annual salary reviews and
increases (which shall not exceed 5% on average), grant any material
increase in the compensation payable or to become payable to any of its
officers or to its employees as a whole or establish, adopt, enter
into, make any new grants or awards under, or amend, any collective
bargaining (except as required by law), bonus, profit sharing, thrift,
compensation, stock option or other equity, pension, retirement,
incentive or deferred
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compensation, employment, retention, termination, severance, health,
life or other welfare, fringe or other plan, agreement, trust, fund,
policy or arrangement for the benefit of any current directors,
officers or employees, or grant or pay any material benefit not
required by any existing plan or arrangement;
(n) (x) adopt or terminate any material Plan or (y) amend any
Plan in any material respect (except in each case as expressly
contemplated by this Agreement);
(o) except in the ordinary course of business, enter into (i)
any agreements with distributors, brokers, or sales agents other than
agreements terminable without penalty on less than 30 days' notice,
(ii) any agreements to distribute products for others or which restrict
the ability of the Company or its subsidiaries to compete or (iii) any
other agreements, other than agreements relating to product promotions,
that would be Material Contracts; or amend in any respect materially
adverse to the Company any of the foregoing agreements as they exist on
the date hereof;
(p) declare, set aside or pay any dividend or make any other
distribution or payment with respect to any shares of Common Stock or
other capital stock or ownership interests (other than such payments by
a wholly owned subsidiary to the Company or another wholly owned
subsidiary);
(q) directly or indirectly redeem, purchase or otherwise
acquire any shares of its capital stock or the capital stock of any of
its subsidiaries;
(r) settle or compromise any pending or threatened Litigation
without the Parent's consent (which consent will not be unreasonably
withheld or delayed), other than settlements of Litigations which
involve solely the payment of money (without admission of liability)
not to exceed $50,000 in any one case or $100,000 in the aggregate;
(s) waive, relinquish, release, assign or terminate any
material right or claim, including any such right or claim under any
Material Contract in any respect that is materially adverse to the
Company;
(t) except as required by GAAP, make any change to any of the
accounting principles, practices or methods used by it;
(u) acquire any business (by merger, purchase of capital
stock, purchase of assets, consolidation or otherwise); or
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(v) agree to do any of the foregoing.
6.2. Access to Information. From the date hereof to the
Effective Time, subject to applicable confidentiality agreements creating
obligations to others, the Company shall, and shall cause its subsidiaries,
officers, directors, employees, auditors and other agents to, afford the
officers, employees, auditors and other agents of the Parent, and
representatives of and advisors to financing sources, reasonable access during
normal business hours to its officers, employees, agents, properties, offices,
plants and other facilities and to all books, records and contracts, and shall
furnish the Parent and such financing sources with all financial, operating and
other data and information as the Parent, through its officers, employees or
agents, or such financing sources may from time to time reasonably request. The
Company will promptly furnish to the Parent, at the Parent's expense, a copy of
each material document filed or received by it pursuant to the Federal
securities laws or Federal or state tax laws or any Environmental Laws, and of
such other documents as the Parent may reasonably request. Except as required by
Law, the Parent will hold, and will cause its officers, employees, accountants,
counsel, financial advisers and other representatives and affiliates to hold,
any and all information received from the Company, directly or indirectly, in
confidence, according to the terms of the Confidentiality Agreement.
6.3. Stockholder Approvals. (a) If required by applicable law
in connection with the consummation of the Merger, as soon as practicable
following the purchase of the Shares pursuant to the Offer, the Company, acting
through the Company Board shall, in accordance with applicable law, take all
steps necessary to duly call, set a record date for, give notice of, convene and
hold a meeting of its stockholders (the "Company Stockholder Meeting") as soon
as practicable for the purpose of adopting and approving this Agreement and the
Merger. At such meeting, the Parent and the Purchaser will each vote, or cause
to be voted, all Shares acquired in the Offer or otherwise beneficially owned by
it or any of its subsidiaries on the record date for such meeting, in favor of
the approval and adoption of this Agreement and the Merger.
(b) The Company will, if required by law in connection with
the consummation of the Merger, as soon as practicable following the expiration
of the Offer, prepare and file a preliminary Proxy Statement with the SEC, and
shall use all reasonable best efforts to obtain and furnish the information
required to be included by it in the Proxy Statement and, after consultation
with the Parent, to respond promptly to any comments made by the SEC with
respect to the Proxy Statement and any preliminary version thereof and cause the
Proxy Statement to be mailed to its stockholders at the earliest practicable
time following the purchase of the Shares pursuant to the Offer. The Proxy
Statement will contain the recommendations of the Company Board as set forth in
Section 1.2(a), and the Company Board will use all reasonable best efforts to
obtain the Company Stockholder
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Approval. Notwithstanding the foregoing, the Company will not mail any Proxy
Statement, or any amendment or supplement thereto, to which the Parent
reasonably objects, provided that the Parent shall identify its objections and
fully cooperate with the Company to create a mutually satisfactory Proxy
Statement.
(c) Notwithstanding the foregoing, if after the expiration of
the Offer the Purchaser shall be the owner of at least 90 percent of the
outstanding Shares, the parties hereto shall take all necessary and appropriate
action to cause the Merger to become effective, as soon as practicable after the
expiration of the Offer and compliance with any applicable rules of the SEC,
without a meeting of shareholders of the Company, if practicable, in accordance
with Section 253 of the DGCL.
6.4. Reasonable Best Efforts. Subject to the terms and
conditions herein provided and without limiting in any way the rights of the
Company under Section 6.8 hereof, after consultation with outside counsel of
nationally recognized standing ("Outside Counsel"), each of the parties hereto
agrees to use all reasonable best efforts consistent with applicable legal
requirements to take, or cause to be taken, all action, and to do, or cause to
be done, all things necessary or proper and advisable under applicable laws and
regulations to ensure that the conditions set forth in Annex A hereto and
Article VII hereof are satisfied and to consummate and make effective, in the
most expeditious manner practicable, the transactions contemplated by this
Agreement, including the Merger.
6.5. Consents. The Company shall use all reasonable best
efforts to obtain all material consents of third parties and governmental
authorities ("Consents") and to make all governmental filings necessary to the
consummation of the transactions contemplated by this Agreement. The Company,
the Parent and the Purchaser shall as promptly as practicable file Pre-Merger
Notification and Report Forms under the HSR Act with the Federal Trade
Commission (the "FTC") and the Antitrust Division of the Department of Justice
(the "Antitrust Division") and shall use all reasonable best efforts to respond
as promptly as practicable to all inquiries received from the FTC or the
Antitrust Division for additional information or documentation.
6.6. Public Announcements. The Parent and the Company will
attempt in good faith to consult with each other before issuing any press
release or otherwise making any public statements with respect to the Offer or
the Merger and shall not issue any such press release or make any such public
statement prior to such consultation, except as may be required by law or by
obligations pursuant to any listing agreement with any securities exchange.
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6.7. Consent of the US Parent. The US Parent, as the sole
shareholder of the Purchaser, by executing this Agreement, consents to the
execution and delivery of this Agreement by the Purchaser and the consummation
of the Merger and the other transactions contemplated hereby and such consent
shall be treated for all purposes as a vote duly cast at a meeting of the
stockholders of the Purchaser held for such purpose.
6.8. No Solicitation. (a) The Company and its subsidiaries
shall, and shall direct and use reasonable best efforts to cause their
respective officers, directors or employees, and any investment banker,
financial advisor, attorney, accountant retained by, or other advisor or
representative of, it to immediately cease any discussions or negotiations with
any parties other than the Purchaser and the Parent that may be ongoing with
respect to an Acquisition Proposal. The Company and its subsidiaries shall not,
and shall not authorize or permit any of their respective officers, directors or
employees or any investment banker, financial advisor, attorney, accountant
retained by, or other advisor or representative of, it to, directly or
indirectly, (i) solicit, initiate or encourage (including by way of furnishing
nonpublic information), or take any other action to facilitate, any inquiries or
the making of any proposal that constitutes, or may reasonably be expected to
lead to, an Acquisition Proposal or (ii) participate in any discussions or
negotiations regarding an Acquisition Proposal; provided, however, that if, at
any time prior to the adoption of this Agreement by the holders of Common Stock,
the Company Board determines in good faith, after consultation with Outside
Counsel, that failure to do so would constitute a breach of its fiduciary duties
to the Company's stockholders under applicable law, the Company, subject to
compliance with Section 6.8(c), in response to an Acquisition Proposal that (I)
was unsolicited and that did not otherwise result from a breach of this Section
6.8(a), and (II) constitutes a Superior Proposal, may (x) furnish nonpublic
information with respect to the Company and its subsidiaries to the person who
made such Acquisition Proposal pursuant to a customary and reasonable
confidentiality agreement and (y) participate in negotiations regarding such
Acquisition Proposal. Without limiting the foregoing, it is understood that any
violation of the restrictions set forth in the preceding sentence by any
director or officer of the Company or any of its subsidiaries or any investment
banker, financial advisor, attorney, accountant or other representative of the
Company or any of its subsidiaries, whether or not acting on behalf of the
Company or any of its subsidiaries, shall be deemed to be a breach of this
Section 6.8(a) by the Company. For purposes of this Agreement, "Acquisition
Proposal" means any proposal or offer from any person relating to any direct or
indirect acquisition or purchase of 10% or more of the assets of the Company or
any of its subsidiaries (including Intellectual Property) or the direct or
indirect acquisition or purchase of any shares of any class of outstanding
equity securities of the Company or any of its subsidiaries (except as may be
explicitly permitted by this Agreement), any tender offer or exchange offer that
if consummated would result in any person beneficially owning 10% or more of any
class of equity securities of the Company or any of its subsidiaries or any
merger, consolidation,
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business combination, sale of substantially all the assets, recapitalization,
liquidation, dissolution or similar transaction involving the Company or any of
its subsidiaries, other than the transactions contemplated by this Agreement.
For purposes of this Agreement, a "Superior Proposal" means any bona fide
proposal made by a third party to acquire, directly or indirectly, for
consideration consisting of cash and/or securities, 100% of the voting power of
the Common Stock of or all or substantially all the assets of the Company and
its subsidiaries and otherwise on terms which the Company Board determines in
good faith (based on the written opinion of Broadview International LLC or
another financial advisor of nationally recognized standing (which opinion shall
be provided to the Purchaser)) to be more favorable to the Company's
stockholders than the Offer and the Merger and for which any necessary financing
is then committed or which, in the good faith judgment of the Company Board, is
reasonably capable of being obtained by such third party.
(b) Neither the Company Board nor any committee thereof shall
(i) withdraw or modify, or propose to withdraw or modify, in a manner adverse to
the Parent or the Purchaser, the approval or recommendation by such Company
Board or such committee of this Agreement, the Offer or the Merger unless there
is a Superior Proposal outstanding, (ii) approve or recommend, or propose to
approve or recommend, an Acquisition Proposal unless such Acquisition Proposal
is a Superior Proposal or (iii) cause the Company to enter into any letter of
intent, agreement in principle, acquisition agreement or other agreement (an
"Acquisition Agreement") with respect to an Acquisition Proposal unless such
Acquisition Proposal is a Superior Proposal, and unless, in each case, the
Company Board shall have (x) determined in good faith, after consultation with
Outside Counsel, that failure to do so would constitute a breach of its
fiduciary duties to the Company's stockholders under applicable law, and (y)
terminated this Agreement pursuant to Section 8.1(e)(iv).
(c) The Company shall promptly (but in any event within one
day) advise the Parent and the Purchaser orally and in writing of any
Acquisition Proposal or any inquiry regarding the making of an Acquisition
Proposal including any request for information, the material terms and
conditions of such request, Acquisition Proposal or inquiry and the identity of
the person making such request, Acquisition Proposal or inquiry. The Company
will, to the extent reasonably practicable, keep the Parent and the Purchaser
fully informed of the status and details (including amendments or proposed
amendments) of any such request, Acquisition Proposal or inquiry.
(d) Nothing contained in this Section 6.8 shall prohibit the
Company from at any time taking and disclosing to its stockholders a position
contemplated by Rule 14e-2(a) promulgated under the Exchange Act or from making
any disclosure to the Company's stockholders if, in the good faith judgment of
the Company Board, after
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consultation with Outside Counsel, failure so to disclose would constitute a
breach of its fiduciary duties to the Company's stockholders under applicable
law; provided, however, that neither the Company nor its Board of Directors nor
any committee thereof shall, except as permitted by Section 6.8(b), withdraw or
modify, or propose to withdraw or modify, its position with respect to the
Merger or this Agreement or approve or recommend, or propose to approve or
recommend, an Acquisition Proposal; provided, further, that the taking of a
position by the Company pursuant to Rule 14e-2(a)(2) or (3) of the Exchange Act
in respect of an Acquisition Proposal shall not be deemed a withdrawal, a
modification or a proposal to do either, of its position with respect to the
Merger for purposes hereof.
6.9. Indemnification; Insurance. (a) For a period of three
years after the Effective Time, the Parent shall, and shall cause the Surviving
Corporation to, indemnify, defend and hold harmless the present and former
officers, directors, employees and agents of the Company and its subsidiaries
(collectively, the "Indemnified Parties") from and against, and pay or reimburse
the Indemnified Parties for, all losses, obligations, expenses, claims, damages
or liabilities (whether or not resulting from third-party claims and including
interest, penalties, out-of-pocket expenses and attorneys' fees incurred in the
investigation or defense of any of the same or in asserting any of their rights
hereunder) resulting from or arising out of actions or omissions occurring on or
prior to the Effective Time to the full extent permitted or required under
applicable law and, in the case of indemnification by the Surviving Corporation,
to the extent permitted under the provisions of the Certificate of Incorporation
and the By-laws of the Company, each as in effect at the date hereof (which
provisions shall not be amended in any manner which adversely affects any
Indemnified Party, for a period of three years), provided that in the event any
claim or claims are asserted or made within such three-year period, all rights
to indemnification in respect of each such claim shall continue until final
disposition of such claim. Without limiting the foregoing, in any case in which
approval by the Surviving Corporation is required to effectuate any
indemnification, the Parent shall cause the Surviving Corporation to direct, at
the election of the Indemnified Party, that the determination of any such
approval shall be made by independent counsel selected by the Indemnified Party.
(b) In the event that the Parent, the Surviving Corporation or
any of their successors or assigns (i) consolidates with or merges into any
other person and is not the continuing or surviving corporation or entity of
such consolidation or merger or (ii) transfers or conveys all or substantially
all of its properties and assets to any person, then, and in each such case,
proper provision will be made so that the successors and assigns of the Parent
or the Surviving Corporation, as the case may be, shall assume the obligations
set forth in this Section 6.9. In the event the Surviving Corporation transfers
any material portion of its assets, in a single transaction or in a series of
transactions, the Parent will
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either guarantee the indemnification obligations referred to in Section 6.9(a)
or take such other action to insure that the ability of the Surviving
Corporation, legal and financial, to satisfy such indemnification obligations
will not be diminished in any material respect.
(c) For not less than three years after the Effective Time,
the Parent and the Purchaser shall use its reasonable best efforts maintain in
effect directors' and officers' liability insurance covering the Indemnified
Parties who are currently covered by the Company's existing directors' and
officers' liability insurance, on terms and conditions no less favorable to such
directors and officers than those in effect on the date hereof, provided that in
no event shall the Parent be required to expend in any one year an amount in
excess of 200% of the annual premiums currently paid by the Company for such
insurance (the Company represents that the annual premium is currently
approximately $120,000); and, provided, further, that if the annual premiums of
such insurance coverage exceed such amount, the Parent shall be obligated to
obtain a policy with the greatest coverage available for a cost not exceeding
such amount.
6.10. Employees and Employee Benefit Plans. The Parent intends
to cause the Surviving Corporation and its subsidiaries to maintain employee
compensation policies and benefit plans for their respective employees from and
for a period of twelve months after the Effective Time that, in the aggregate,
are substantially comparable, in the aggregate, to the compensation policies and
Plans as of the date hereof. From and after the Effective Time, the Parent shall
cause the Surviving Corporation and its subsidiaries to honor all existing
employment agreements in accordance with the terms thereof as in effect on the
date hereof or as the same may be amended with the consent of the employee party
thereto and the Parent. To the extent that employees of the Surviving
Corporation or its subsidiaries become eligible to participate in any employee
benefit plan of the Parent after the Effective Time, the Parent shall recognize
the service of such employees with the Company or its subsidiaries completed
prior to the Effective Time for all purposes of eligibility to participate and
vesting in its benefit plans.
6.11. Notification of Certain Matters. The Company will give
prompt notice to the Parent and the Purchaser, and the Parent and the Purchaser
will give prompt notice to the Company, of the occurrence or non-occurrence of
any event likely to cause (a) any representation or warranty contained in this
Agreement to be untrue or inaccurate in any material respect, (b) any failure of
the Company, or of the Parent or the Purchaser, as the case may be, to comply
with or satisfy any covenant, condition or agreement to be complied with or
satisfied under this Agreement, and (c) any of the conditions specified in Annex
A or Article VIII to fail to be satisfied, provided that the delivery of any
notice pursuant to this Section 6.11 will not limit or otherwise affect the
remedies available under this Agreement to the party receiving such notice.
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6.12. Anti-takeover Statutes. If any "fair price,"
"moratorium," "control share acquisition" or other form of anti-takeover statute
(including Section 1101 of the CGCL) is or shall become applicable to the Offer,
Merger or other transactions contemplated hereby, the Company and the members of
the Company Board shall grant such approvals and, subject to the Company's
rights under Section 6.8, take such actions as are necessary (including amending
the Offer) so that the Offer, Merger and other transactions contemplated hereby
may be consummated as promptly as practicable on the terms contemplated hereby
and otherwise act to eliminate or minimize the effects of any such anti-takeover
statute on the transactions contemplated hereby.
6.13. Top-Up Option. (a) Grant of Top-Up Option. Subject to
the conditions set forth below in this Section 6.13, the Company hereby grants
to the Purchaser an irrevocable option (the "Top-Up Option") to purchase from
the Company for cash that number of Shares equal to the Top-Up Share Amount. The
purchase price per Share shall equal the Offer Price. The "Top-Up Share Amount"
means that number of Shares that, when added to the number of Shares owned by
the Purchaser and its affiliates immediately prior to the exercise of the Top-Up
Option, shall constitute 90.1% of the Shares then outstanding on a fully diluted
basis (assuming the issuance of Shares pursuant to the Top-Up Option). The
Top-Up Option shall expire if not exercised prior to the earlier of the
Effective Date and 12:00 midnight, Eastern time, on the date that is 10 business
days after termination of the Offer (the "Top-Up Expiration Date").
(b) Exercise of the Top-Up Option. The Top-Up Option may be
exercised by the Purchaser, in whole but not in part, at any one time following
the satisfaction of the conditions set forth in Section 6.13(c), provided that
the Top-Up Expiration Date has not occurred. The Purchaser shall exercise the
Top-Up Option by giving written notice to the Company specifying the number of
Shares it will purchase pursuant to such exercise and the place and date (not
later than ten business days from the date such notice was given) for the
closing of such purchase. Notwithstanding the occurrence of the Top-Up
Expiration Date, the Purchaser shall be entitled to purchase Shares pursuant to
the exercise of the Top-Up Option if it has exercised the Top-Up Option in
accordance with the terms hereof prior to such occurrence, and the occurrence of
the Top-Up Expiration Date shall not affect any rights under this Section 6.13
which by their terms do not terminate or expire prior to or as of such date.
(c) Conditions to the Exercise of the Top-Up Option. The
Purchaser shall not be entitled to exercise the Top-Up Option, and the Company
shall have no obligation to deliver Shares pursuant to the exercise of the
Top-Up Option, unless all of the following conditions have been satisfied:
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(i) the Purchaser shall have accepted Shares for
payment pursuant to the Offer;
(ii) the Minimum Condition shall have been satisfied;
(iii) the Top-Up Share Amount does not exceed the
number of Shares authorized by the Company for issuance but
not issued or reserved for issuance; and
(iv) the Top-Up Share Amount does not exceed 19.9% of
the Shares issued and outstanding at the time of exercise of
the Top-Up Option (without giving effect to the issuance of
Shares pursuant to the Top-Up Option).
(d) Closing. At the closing of the purchase of Shares pursuant
to the exercise of the Top-Up Option, (i) the Purchaser will make payment to the
Company of the full purchase price for such purchased Shares in same-day funds
in an amount equal to the product of the Offer Price multiplied by the number of
Shares being purchased at such closing, and (ii) the Company will deliver to the
Purchaser a duly executed certificate or certificates representing the number of
Shares so purchased, registered in the name of the Purchaser or its nominee
(designated by the Purchaser in its notice of exercise). The certificate or
certificates described in clause (ii) above may include legends legally required
including a legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE REOFFERED OR
SOLD ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE.
(e) Securities Act. The Purchaser represents that any Shares
purchased pursuant to this Section 6.13 will be acquired for investment only and
not with a view to any public distribution thereof, and the Purchaser will not
offer to sell or otherwise dispose of any Shares so acquired in violation of the
registration requirements of the Securities Act.
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ARTICLE VII
CLOSING CONDITIONS
7.1. Conditions to the Obligations of the Parent, the US
Parent, the Purchaser and the Company. The respective obligations of each party
to effect the Merger shall be subject to the fulfillment at or prior to the
Effective Time of the following conditions:
(a) The Purchaser shall have purchased all Shares duly
tendered and not withdrawn pursuant to the terms of the Offer and
subject to the terms thereof, provided that the obligation of the
Parent and the Purchaser to effect the Merger shall not be conditioned
on the fulfillment of the condition set forth in this subsection (a)
if the failure of the Purchaser to purchase the Shares pursuant to the
Offer shall have constituted a breach of the Offer or of this
Agreement.
(b) There shall not be in effect any statute, rule or
regulation enacted, promulgated or deemed applicable by any
Governmental Entity of competent jurisdiction that makes consummation
of the Merger illegal, and no temporary restraining order, preliminary
or permanent injunction or other order issued by any court of competent
jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger shall be in effect, provided that the party
seeking to avoid its obligations pursuant to this Section 7.1(b) shall
have used all reasonable best efforts to prevent the entry of any such
injunction or other order and to appeal as promptly as possible any
injunction or other order that may be entered.
(c) If required under applicable law, this Agreement shall
have been approved and adopted by the affirmative vote of the holders
of the requisite number of Shares in accordance with the Certificate of
Incorporation and By-laws of the Company and the DGCL.
(d) Any waiting period (and any extension thereof) applicable
to the consummation of the Merger under the HSR Act shall have expired
or been terminated.
7.2. Condition to the Obligations of the Parent, the US Parent
and the Purchaser. The respective obligations of the Parent, the US Parent and
the Purchaser to effect the Merger shall be subject to the fulfillment at or
prior to the Effective Time of the condition that the Purchaser and the US
Parent shall have received such affidavits or certifications in form and
substance reasonably satisfactory to the Purchaser and the US
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Parent as are necessary to exempt the Merger from the provisions of section 1445
of the Code.
ARTICLE VIII
TERMINATION AND ABANDONMENT
8.1. Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval by the
stockholders of the Company:
(a) by mutual consent of the Board of Directors of the Parent
and the Company Board;
(b) by action of the Board of Directors of the Parent or
action of the Company Board if at least that number of Shares required
by the Minimum Condition to be tendered shall not have been purchased
in the Offer on or before the date that is 90 days after the date
hereof, provided that the right to terminate this Agreement pursuant to
this Section 8.1(b) shall not be available to any party whose failure
to fulfill any material obligation under this Agreement in all material
respects has been the cause of, or resulted in, the failure of the
Offer or the Merger, as the case may be, to occur on or before the
aforesaid dates;
(c) by either the Parent or the Company if the Offer shall
expire or terminate in accordance with its terms without any Shares
having been purchased thereunder and, in the case of termination by the
Parent, the Purchaser shall not have been required by the terms of the
Offer or this Agreement to purchase any Shares pursuant to the Offer;
(d) by either the Parent, the Purchaser or the Company, if any
court of competent jurisdiction in the United States or the United
Kingdom or other Governmental Entity of competent jurisdiction shall
have issued an order, decree or ruling or taken any other action
restraining, permanently enjoining or otherwise prohibiting the
consummation of the Offer or the Merger, and such order, decree, ruling
or other action shall have become final and non-appealable;
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(e) by the Company:
(i) if the Parent or the Purchaser shall have failed
to commence the Offer or failed to pay for Shares pursuant to
the Offer in each case in accordance with Section 1.1(a),
provided that (in the case of failure to pay for Shares) the
conditions to the Offer set forth in paragraphs (a) - (f) of
Annex A shall have been satisfied;
(ii) if any of the respective representations and
warranties of the Parent or the Purchaser that are qualified
as to materiality shall not have been true and correct or any
such representations and warranties that are not so qualified
shall not have been true and correct in all material respects,
in each case as of the date of this Agreement, which failure
to be true and correct or true and correct in all material
respects is not reasonably capable of being cured by the
commercially reasonable best efforts of the Parent or the
Purchaser within 10 days of the receipt by the Parent of
written notice thereof;
(iii) if the Parent or the Purchaser shall have
failed to perform in any material respect any obligation or to
comply in any material respect with any agreement or covenant
applicable thereto to be performed or complied with by it
prior to the time of determination which failure is not
reasonably capable of being cured by the commercially
reasonable best efforts of the Parent or the Purchaser within
10 days of the receipt by the Parent of written notice
thereof; or
(iv) if the Company takes any of the actions
described in Section 6.8(b), provided, that (A) the Company
has notified the Parent or the Purchaser in writing of its
intent to take any such action five days prior to the
termination of this Agreement pursuant to this Section
8.1(e)(iv), and the relevant Acquisition Proposal continues to
be a Superior Proposal notwithstanding any modification by the
Parent and the Purchaser of the terms of the Offer and the
Merger; (B) the Company has complied with the provisions of
Sections 6.8(b) and (c); and (C) such termination under this
Section 8.1(e)(iv) shall not be effective until the Company
has paid to the Parent or deposited with a mutually acceptable
escrow agent an amount equal to the sum of the maximum Parent
Expenses and the Termination Fee.
(f) by the Parent or the Purchaser:
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(i) if the Offer has expired and the Purchaser is
neither required to accept and pay for the Shares tendered
into the Offer nor to extend the expiration date of the Offer
or if any of the events or circumstances set forth in Annex A
hereto shall have occurred and shall not be reasonably capable
of being cured by the commercially reasonable best efforts of
the parties hereto prior to the last date to which the Parent
and the Purchaser are required to extend the Offer pursuant to
Section 1.1; or
(ii) if the Company shall have taken any of the
actions described in Section 6.8(b) or if the Company Board
shall have resolved to take any such action.
8.2. Procedure and Effect of Termination. In the event of
termination and abandonment of the Merger by the Parent, the Purchaser or the
Company pursuant to Section 8.1, written notice thereof shall forthwith be
given to the other parties hereto, and this Agreement shall terminate and the
Merger shall be abandoned, without further action by any of the parties hereto.
The Purchaser and the US Parent agree that any termination by the Parent shall
be conclusively binding upon them, whether given expressly on their behalf or
not, and the Company shall have no further obligation with respect to them. If
this Agreement is terminated as provided herein, no party hereto shall have any
liability or further obligation to any other party to this Agreement, provided
that any termination shall be without prejudice to the rights of any party
hereto arising out of breach by any other party of any covenant or agreement
contained in this Agreement, and provided, further, that the obligations set
forth in the last sentence of Section 1.2(c), the last sentence of Section 6.2,
Sections 8.1, 8.2 and 8.3 and Article IX shall in any event survive any
termination.
8.3. Fees and Expenses. (a) Except as otherwise provided
herein and as provided below in this Section 8.3, all fees and expenses incurred
in connection with the Offer, the Merger, this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such fees or expenses,
whether or not the Offer or the Merger is consummated, except that printing and
mailing costs and expenses associated with the Offer Documents shall be shared
equally by the Parent and the Company.
(b) Notwithstanding any herein to the contrary, if this Agreement is
terminated pursuant to Section 8.1(b), Section 8.1(e)(iv), Section 8.1(f)(i)
(but only as a result of the existence of any of the conditions set forth in
Section (e) or (f) of Annex A), or Section 8.1(f)(ii), the Company shall
promptly reimburse the Parent for all Parent Expenses incurred by the Parent and
its affiliates. For purposes of this Agreement, the term "Parent Expenses" means
all documented reasonable out-of-pocket expenses incurred by the Parent and its
affiliates, up to a maximum of $750,000, in connection with or arising out
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<PAGE> 49
of the Offer, the Merger, this Agreement and the transactions contemplated
hereby (including, without limitation, amounts paid or payable to investment
bankers, lending banks, dealer-managers and information agents, fees and
expenses of counsel, accountants and consultants, underwriting and all printing
and mailing costs), regardless of when those expenses are incurred.
(c) If this Agreement is terminated pursuant to Section 8.1(b), Section
8.1(e)(iv) or Section 8.1(f)(ii), and within one year of such termination the
Company consummates an Acquisition Proposal or enters into an Acquisition
Agreement with respect to an Acquisition Proposal that is subsequently
consummated, the Company shall pay the Parent $1,500,000 (the "Termination Fee")
in addition to any payment due or made with respect to Parent Expenses. The
Company shall pay such amount immediately upon consummation of such Acquisition
Proposal, in same-day funds.
(d) The Company acknowledges that the agreements contained in this
Section 8.3 are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, the Purchaser and the Parent
would not enter this Agreement; accordingly, the Company agrees that in the
event that the Company shall fail to pay any Parent Expenses or the Termination
Fee when due, "Parent Expenses" and the Termination Fee shall be deemed to
include the costs and expenses actually incurred or accrued by the Parent, the
US Parent and the Purchaser (including, without limitation, fees and expenses of
counsel) in connection with the collection under and enforcement of this Section
8.3, together with interest on such unpaid Parent Expenses or Termination Fee,
commencing on the date that such Parent Expenses or Termination Fee became due,
at a rate equal to the rate of interest publicly announced by Citibank, N.A.,
from time to time, in the City of New York, as such bank's Base Rate plus 1.00%.
ARTICLE IX
MISCELLANEOUS
9.1. Amendment and Modification. Subject to applicable law and
to the provisions of Section 1.3(c), this Agreement may be amended, modified or
supplemented only by written agreement of the Parent, the US Parent, the
Purchaser and the Company at any time prior to the Effective Time with respect
to any of the terms contained herein, provided that after the Company
Stockholder Approval has been obtained, no such amendment or modification shall
be made that reduces the amount or changes the form of the Merger Consideration
or otherwise materially and adversely affects the rights of the Company's
stockholders hereunder, without the further approval of such stockholders.
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<PAGE> 50
9.2. Waiver of Compliance; Consents. Any failure of the Parent
or the Purchaser, on the one hand, or the Company, on the other hand, to comply
with any obligation, covenant, agreement or condition herein may be waived by
the Company or the Parent, respectively, only by a written instrument signed by
the party granting such waiver (and, in the case of the Company, approved in
accordance with the provisions of Section 1.3(c), if applicable), but such
waiver or failure to insist upon strict compliance with such obligation,
covenant, agreement or condition shall not operate as a waiver of, or estoppel
with respect to, any subsequent or other failure. Whenever this Agreement
requires or permits consent by or on behalf of any party hereto, such consent
shall be given in writing in a manner consistent with the requirements for a
waiver of compliance as set forth in this Section 9.2. The Purchaser hereby
agrees that any consent or waiver of compliance given by the Parent hereunder
shall be conclusively binding upon it, whether given expressly on its behalf or
not.
9.3. Nonsurvival of Representations and Warranties. None of
the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the acceptance for payment
of, and the payment for, Shares by the Purchaser pursuant to the Offer.
9.4. Notices. Any notice required to be given hereunder shall
be sufficient if in writing and sent by facsimile transmission (with a
confirmatory copy sent by overnight courier), by courier service (with proof of
service), hand delivery or certified or registered mail (return receipt
requested and first-class postage prepaid), addressed as follows:
If to the Purchaser, the US Parent or the If to the Company:
Parent:
Misys plc C-ATS Software Inc.
Burleigh House 1870 Embarcadero Road
Chapel Oak Palo Alto, CA 94303
Salford Priors
Worcestshire WR11 5SH
England
Telephone: 011-44-138-687-1373 Telephone: 650-354-0422
Facsimile: 011-44-138-687-1045 Facsimile: 650-496-1911
Attention: Ross K. Graham Attention: David Gilbert
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<PAGE> 51
With a copy to: With a copy to:
Debevoise & Plimpton Wilson Sonsini Goodrich & Rosati
875 Third Avenue 650 Page Mill Road
New York, New York 10022 Palo Alto, CA 94304
Telephone: (212) 909-6000 Telephone: (650) 493-9300
Facsimile: (212) 909-6836 Facsimile: (650) 493-6811
Attention: Paul H. Wilson, Jr., Esq. Attention: Michael J. Danaher, Esq.
or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date and time
of the confirmation of such telecommunication or the receipt of such personal
delivery or mailing. In addition, such notice shall be deemed delivered as of
the date communicated orally to the relevant person set forth above, provided
that messages of any kind shall not constitute valid notice, and provided
further that such oral communication shall constitute valid notice only if, and
only to the extent that, it is followed within six hours by a written
confirmation sent to the appropriate party by facsimile transmission.
9.5. Assignment; Parties in Interest. This Agreement and all
of the provisions hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns, but
neither this Agreement nor any of the rights, interests or obligations hereunder
shall be assigned by any of the parties hereto without the prior written consent
of the other parties (except that the Purchaser may assign to the Parent or any
other direct or indirect wholly owned subsidiary of the Parent any and all
rights and obligations of the Purchaser under this Agreement or the Purchaser's
right to purchase Shares pursuant to the Offer, provided that any such
assignment will not relieve the Parent or the Purchaser from any of its
obligations under this Agreement). Except for Section 1.3(c) which is intended
for the benefit of the Company's stockholders other than the Parent and its
affiliates, this Agreement is not intended to confer upon any other person
except the parties any rights or remedies under or by reason of this Agreement.
9.6. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.
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<PAGE> 52
9.7. Governing Law. This Agreement shall be governed by the
laws of the State of Delaware (regardless of the laws that might otherwise
govern under applicable principles of conflicts of law) as to all matters,
including but not limited to matters of validity, construction, effect,
performance and remedies. Each of the parties hereto irrevocably consents to the
jurisdiction of any state or federal court within the State of Delaware in
connection with any matter based upon or arising out of this Agreement or the
matters contemplated herein, agrees that process may be served upon it in any
manner authorized by the laws the State of Delaware for such persons and waives
and covenants not to assert or plead any objection which it might otherwise have
to such jurisdiction or such process.
9.8. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
9.9. Entire Agreement. This Agreement, including the annexes
and the exhibits and schedules to this Agreement, and the Confidentiality
Agreement, embody the entire agreement and understanding of the parties hereto
in respect of the subject matter contained herein and supersedes all prior
agreements and the understandings between the parties with respect to such
subject matter.
9.10. Investigations. No action taken pursuant to this
Agreement, including, without limitation, any investigation by or on behalf of
any party, shall be deemed to constitute a waiver by the party taking such
action of compliance with any representations, warranties, covenants or
agreements contained in this Agreement.
9.11. Severability. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in any other jurisdiction. If
any provision of this Agreement is so broad as to be unenforceable, the
provision shall be interpreted to be only so broad as is enforceable.
9.12. Interpretation; Definitions. (a) The article and section
headings contained in this Agreement are solely for the purpose of reference,
are not part of the agreement of the parties and shall not in any way affect the
meaning or interpretation of this Agreement. Unless the context otherwise
requires, words describing the singular number shall include the plural and vice
versa, and words denoting any gender shall include all genders. Wherever the
words "include," "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation."
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<PAGE> 53
As used in this Agreement, (i) the term "person" shall mean and include an
individual, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization and a government or any department or agency
thereof; (ii) the terms "affiliate" and "associate" shall have the meanings set
forth in Rule l2b-2 of the General Rules and Regulations promulgated under the
Exchange Act, except that it is expressly understood that the term "affiliate"
shall include all parties (other than the Parent and any of its subsidiaries)
who have executed and delivered the Stockholders Agreement; (iii) the term
"subsidiary" of any specified corporation shall mean any corporation of which
the outstanding securities having ordinary voting power to elect a majority of
the board of directors are directly or indirectly owned by such specified
corporation; (iv) the phrase "to the knowledge" of any specified corporation
shall refer to the actual knowledge of the directors or senior officers of such
corporation, after reasonable inquiry.
(b) The following terms shall have the following meanings
ascribed to them:
"Company Stock Option Plans" means the C-ATS 1988 Incentive
Stock Option Plan, the Amended and Restated 1995 Stock Plan and the 1995
Director Option Plan.
"Confidentiality Agreement" means the Confidential Disclosure
Agreement, dated as of November 23, 1998, between the Parent and the Company.
"Disclosure Letter" means that certain Letter dated the date
hereof delivered by the Company to the Parent.
"Environmental Law" means any foreign, federal, state or local
law, statute, regulation, rule, ordinance, decree, or any other requirement of
law (including common law) regulating or relating to the protection of human
health and safety or the environment, including, but not limited to, laws
relating to releases or threatened releases of Hazardous Materials into the
environment.
"GAAP" means United States generally accepted accounting
principles.
"Hazardous Materials" means any substance or material that is
classified or regulated as "hazardous" or "toxic" pursuant to any Environmental
Law, including, without limitation, asbestos, polychlorinated biphenyls,
petroleum and urea-formaldehyde insulation.
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<PAGE> 54
"Permits" means all franchises, approvals, permit
authorizations, licenses, orders, registrations, certificates, variances, and
other similar permits or rights obtained from any Governmental Entity and all
pending applications therefor.
"Permitted Lien" means (a) Encumbrances securing Taxes,
assessments, governmental charges or levies, all of which are not yet due and
payable or as to which adequate reserves have been established that are included
in the most recent consolidated financial statements included in the Company
Reports and that may thereafter be paid without penalty, (b) mechanics',
carriers', workmen's, repairmen's, and other similar Encumbrances incurred in
the ordinary course of business consistent with past practice, or (c) such other
liens which, individually and in the aggregate, do not and would not materially
detract from the value of any of the property or assets of the Company or its
subsidiaries or materially interfere with the use thereof.
"Tax" means any federal, state, local or foreign income, gross
receipts, property, sales, use, license, excise, franchise, employment, payroll,
premium, withholding, alternative or added minimum, ad valorem, transfer or
excise tax, or any other tax, custom, duty, governmental fee or other like
assessment or charge of any kind whatsoever, together with any interest or
penalty, imposed by any Governmental Entity.
"Tax Return" means any return, report or similar statement
required to be filed with respect to any Tax (including any attached schedules),
including, without limitation, any information return, claim for refund, amended
return or declaration of estimated Tax.
DEFINITIONS
Defined Term Section Reference
Acquisition Agreement 6.8(b)
Acquisition Proposal 6.8(a)
affiliate 9.12(a)
Agreement Preamble
Antitrust Division 6.5
By-laws 2.5(b)
Certificate of Incorporation 2.5(a)
Certificate of Merger 2.3
Certificates 3.2(a)
CGCL 4.15
Closing Date 2.2
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<PAGE> 55
Code 4.10(b)
Commercial Software 4.18(f)
Common Stock Recitals
Company Preamble
Company Board 1.3(a)
Company Intellectual Property 4.18
Company Reports 4.7
Company Software 4.18(f)
Company Stock Option Plan 9.12(b)
Company Stockholder Approval 4.16
Company Stockholder Meeting 6.3(a)
Computer Systems 4.19
Confidentiality Agreement 9.12(b)
Consents 6.5
Constituent Documents 4.1
Contract(s) 4.6
DGCL 1.2(a)
Disclosure Letter 9.12(b)
Dissenting Shares 3.1(d)
Dissenting Stockholder 3.1(d)
Effective Time 2.3
Encumbrances 4.5
Environmental Law 9.12(b)
ERISA 4.11(c)
ERISA Affiliate 4.11(c)(iii)
Exchange Act 1.2(b)
Exchange Fund 3.2(a)
FTC 6.5
GAAP 9.12(b)
Governmental Entity 4.3
Hazardous Materials 9.12(b)
HSR Act 4.6
Indemnified Parties 6.9(a)
Independent Director 1.3(a)
Information Statement 1.3(b)
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<PAGE> 56
Intellectual Property 4.18(h)
Laws 4.3
Licensee 6.1(k)
Litigation 4.8
Material Adverse Effect 4.1
Material Contracts 4.17
Material Delaying Effect 4.20
Merger Recitals
Merger Agreement Preamble
Merger Consideration 3.1(c)
Minimum Condition 1.1(a)
Offer Recitals
Offer Documents 1.1(b)
Offer Price Recitals
Offer to Purchase 1.1(b)
Option 3.1(e)
Option Consideration 3.1(e)
Outside Counsel 6.4
Parent Preamble
Parent Expenses 8.3(b)
Paying Agent 3.2(a)
PBGC 4.11(c)
Permits 9.12(b)
Permitted Lien 9.12(b)
Plan 4.11(a)
Preferred Stock 4.4
Purchaser Preamble
Purchaser Designees 1.3(c)
Regulatory Filings 4.6
Schedule 4.3
Schedule 14D-1 1.1(b)
Schedule 14D-9 1.2(b)
SEC 1.1(a)
Securities Act 4.7
Shares Recitals
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<PAGE> 57
Software 4.18(i)
Stockholders Agreements Recitals
subsidiary 9.12(a)
Superior Proposal 6.8(a)
Surviving Corporation 2.1
Tax 9.12(b)
Tax Return 9.12(b)
Termination Fee 8.3(c)
Top-Up Expiration Date 6.13(a)
Top-Up Option 6.13(a)
Top-Up Share Amount 6.13(a)
US Parent Preamble
Year 2000 Compatible 4.19
52
<PAGE> 58
IN WITNESS WHEREOF, the Parent, the US Parent, the Purchaser
and the Company have caused this Agreement to be signed by their respective duly
authorized officers as of the date first above written.
MISYS PLC
By /s/ Ross Graham
Name:Ross Graham
Title:Corporate Development Director and
Secretary
KIRSTY, INC.
By /s/ Ross Graham
Name: Ross Graham
Title: Vice President
MOXIE ACQUISITION CORP.
By /s/Ross Graham
Name:Ross Graham
Title: Secretary
C-ATS SOFTWARE INC.
By /s/ David Gilbert
Name:David Gilbert
Title: President
53
<PAGE> 59
ANNEX A
CONDITIONS TO THE OFFER
Notwithstanding any other provision of the Offer, the
Purchaser shall not be required to accept for payment, or, subject to any
applicable rules and regulations of the SEC, including Rule 14e-1(c) under the
Exchange Act (relating to the Purchaser's obligation to pay for or return
tendered shares after the termination or withdrawal of the Offer), to pay for
any Shares not theretofore accepted for payment or paid for, and the Purchaser
may amend or terminate the Offer as to such Shares not theretofore accepted for
payment or paid for (subject to any such applicable rules and regulations of the
SEC) (i) unless the Minimum Condition has been satisfied or waived, (ii) if any
waiting period under the HSR Act applicable to the purchase of Shares pursuant
to the Offer shall not have expired or been terminated, or (iii) if at any time
on or after the date of the Merger Agreement and at or before the time that the
Shares are accepted for payment any of the following conditions exists and is
continuing:
(a) there shall be threatened or pending any action or
proceeding by any Governmental Entity or any order or temporary,
preliminary or permanent injunction or restraining order entered in any
action or proceeding before any Governmental Entity located or having
jurisdiction within the United States, the United Kingdom or any
country or economic region in which either the Company or the Parent,
directly or indirectly, has material assets or operations, or any
statute, rule, regulation, legislation, interpretation, judgment or
order enacted, entered, enforced, promulgated, amended, issued or
deemed applicable to the Purchaser, the Company or any subsidiary or
affiliate of the Purchaser or the Company or the Offer or the Merger,
by any Governmental Entity located or having jurisdiction within the
United States, the United Kingdom or any country or economic region in
which either the Company or the Parent, directly or indirectly, has
material assets or operations, which would reasonably be expected to
have the effect of: (i) making illegal, or otherwise directly or
indirectly prohibiting, challenging or materially restraining the
making of the Offer, the acceptance for payment of, payment for, or
ownership, directly or indirectly, of more than 90% of the Shares by
the Parent or the Purchaser, the consummation of the Merger or the
Offer, materially delaying the Merger or making the aggregate cost of
acquiring the Shares materially higher; (ii) seeking to prohibit or
limit the ownership or operation by the Company or any of its
subsidiaries that owns a material portion of the business and assets of
the Company and its subsidiaries taken as a whole, or by the Parent or
the Purchaser of all or any material portion of the business or assets
of the Company and its subsidiaries taken as a whole or the Parent and
its subsidiaries taken as a whole, or compelling the Purchaser or the
Parent to dispose
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<PAGE> 60
of or hold separate all or any material portion of the business or
assets of the Company and its subsidiaries taken as a whole or the
Parent and its subsidiaries taken as a whole, as a result of the
transactions contemplated by the Merger Agreement; (iii) seeking to
impose limitations on the ability of the Purchaser or the Parent
effectively to acquire or hold or to exercise full rights of ownership
of Shares including, without limitation, the right to vote any Shares
acquired or owned by the Parent or the Purchaser on all matters
properly presented to the stockholders of the Company, including,
without limitation, the adoption and approval of the Merger Agreement
and the Merger or the right to vote any shares of capital stock of any
subsidiary (other than immaterial subsidiaries) directly or indirectly
owned by the Company; or (iv) seeking to require divestiture by the
Parent or the Purchaser, directly or indirectly, of any Shares or
assets of the Parent, the Purchaser, the Company or their respective
affiliates;
(b) there shall have occurred any event, change, effect or
development that, individually or in the aggregate, has had or would be
reasonably expected to have, a Material Adverse Effect;
(c) there shall have occurred (i) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the
United States or the United Kingdom, or (ii) a currency moratorium on
the exchange markets in London or New York City with respect to the
English pound sterling or the United States dollar;
(d) the Merger Agreement shall have been terminated in
accordance with its terms or the Offer shall have been terminated with
the consent of the Company;
(e) any of the representations and warranties of the Company
set forth in the Merger Agreement that are qualified as to materiality
shall not have been true and correct or any such representations and
warranties that are not so qualified shall not have been true and
correct in all material respects, in each case as of the date of the
Merger Agreement and immediately prior to the consummation of the offer
as if made on such date (other than representations and warranties made
as of a specified date), which failure to be true and correct or true
and correct in all material respects is not reasonably capable of being
cured by the commercially reasonable best efforts of the Company within
10 days of the receipt by the Company of written notice thereof; or
(f) the Company shall have failed to perform in any material
respect any obligation or to comply in any material respect with any
agreement or covenant of the Company to be performed or complied with
by it under the Merger Agreement
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<PAGE> 61
prior to the time of such determination, which failure is not
reasonably capable of being cured by the commercially reasonable best
efforts of the Company within 10 days of the receipt by the Company of
written notice thereof;
which, in the good faith sole judgment of the Purchaser with respect to each and
every matter referred to above and regardless of the circumstances giving rise
to any such condition, makes it inadvisable to proceed with the Offer or with
such acceptance for payment of or payment for Shares or to proceed with the
Merger.
The foregoing conditions are for the sole benefit of the
Purchaser and may be asserted by the Purchaser regardless of the circumstances
giving rise to any such condition or may (except of the Minimum Condition) be
waived by the Purchaser in whole or in part at any time and from time to time in
its sole discretion. The failure by the Purchaser at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such right, the waiver
of any such right with respect to particular facts and other circumstances shall
not be deemed a waiver with respect to any other facts and circumstances, and
each such right shall be deemed an ongoing right that may be asserted at any
time and from time to time.
Capitalized terms used but not defined in this Annex A shall
have the meanings set forth in the Merger Agreement of which this Annex A is a
part.
3
<PAGE> 1
EXHIBIT (c)(2)
CONFORMED COPY
STOCKHOLDERS AGREEMENT
AMONG
MISYS PLC
KIRSTY, INC.
MOXIE ACQUISITION CORP.
AND
The Stockholders of C-ATS SOFTWARE INC.
listed on Schedule A attached hereto
Dated as of December 14, 1998
<PAGE> 2
CONFORMED COPY
STOCKHOLDERS AGREEMENT
STOCKHOLDERS AGREEMENT dated as of December 14, 1998, among MISYS
PLC, a public limited company incorporated under the laws of England ("Parent"),
KIRSTY, INC., a Delaware corporation and indirect wholly owned subsidiary of
Parent ("US Parent"), MOXIE ACQUISITION CORP., a Delaware corporation and direct
wholly owned subsidiary of US Parent ("Purchaser") and the individuals and other
parties listed on Schedule A attached hereto (each, a "Stockholder" and,
collectively, the "Stockholders").
WHEREAS, Parent, US Parent, Purchaser and C-ATS Software Inc., a
Delaware corporation (the "Company"), propose to enter into an Agreement and
Plan of Merger dated as of the date hereof (as the same may be amended or
supplemented, the "Merger Agreement") providing for (i) the making of a cash
tender offer (as such offer may be amended from time to time as permitted under
the Merger Agreement, the "Offer") by Purchaser for all of the outstanding
shares of common stock, par value $0.001 per share, of the Company (the "Common
Stock") at a price of $7.50 per share (the "Offer Price"); and (ii) the merger
of Purchaser with and into the Company (the "Merger"), upon the terms and
subject to the conditions set forth in the Merger Agreement (the price per share
to be received in the Merger shall hereinafter be referred to as the "Merger
Consideration"); and
WHEREAS, each Stockholder owns the number of shares of Common Stock
(and the number of options to purchase shares of Common Stock) set forth
opposite his or its name on Schedule A attached hereto (such shares of Common
Stock, together with any other shares of capital stock of the Company acquired
by such Stockholders after the date hereof and during the term of this Agreement
(including, without limitation, through the exercise of any stock options,
warrants or similar instruments (including those stock options set forth on
Schedule A)), being collectively referred to herein as the "Subject Shares");
WHEREAS, as an essential condition and inducement to their
willingness to enter into the Merger Agreement, Parent, US Parent and Purchaser
have requested that each Stockholder enter into this Agreement, and each
Stockholder has agreed to do so; and
WHEREAS, capitalized terms used herein without definition shall have
the respective meanings specified therefor in the Merger Agreement.
<PAGE> 3
NOW, THEREFORE, to induce Parent, US Parent and Purchaser to enter
into, and in consideration of their entering into, the Merger Agreement, and in
consideration of the premises and the representations, warranties and agreements
contained herein, the parties agree as follows:
1. Representations and Warranties. (a) Of Each Stockholder. Each
Stockholder hereby, severally and not jointly, represents and warrants to
Parent, US Parent and Purchaser as of the date hereof in respect of himself or
itself as follows:
(i) Authority. The Stockholder has all requisite power and authority
to enter into this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly and validly authorized,
executed and delivered by the Stockholder and constitutes the valid and
binding obligation of the Stockholder enforceable against such Stockholder
in accordance with its terms. Neither the execution and delivery by the
Stockholder of this Agreement nor the consummation by the Stockholder of
the transactions contemplated hereby will violate or conflict in any
material respect with, result in a breach of any material provision of or
constitute a default under, any of the terms, conditions or provisions of
any note, bond, mortgage, indenture, deed of trust or any material
license, franchise, permit, lease, contract, agreement or other
instrument, commitment or obligation to which the Stockholder is a party
or by which the Stockholder is bound. No trust of which such Stockholder
is a trustee requires the consent of any beneficiary to the execution and
delivery of this Agreement or to the consummation of the transactions
contemplated hereby.
(ii) The Subject Shares. The Stockholder is the record and
beneficial owner of, or is trustee of a trust that is the record holder
of, and whose beneficiaries are the beneficial owners of, and has good and
marketable title to, the Subject Shares set forth opposite his or its name
on Schedule A attached hereto, free and clear of any claims, liens,
encumbrances and security interests whatsoever. The Stockholder does not
own, of record or beneficially, any shares of capital stock of the Company
other than the Subject Shares set forth opposite his or its name on
Schedule A attached hereto. The Stockholder has the sole right to vote
such Subject Shares, and none of such Subject Shares is subject to any
voting trust or other agreement, arrangement or restriction with respect
to the voting of such Subject Shares, except as contemplated by this
Agreement.
(b) Of Parent, US Parent and Purchaser. Parent, US Parent and
Purchaser each hereby represents and warrants to each Stockholder that it has
all requisite power and authority to enter into this Agreement and to consummate
the transactions contemplated hereby. This Agreement has been duly and validly
authorized, executed and
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<PAGE> 4
delivered by each of Parent, US Parent and Purchaser and constitutes the valid
and binding obligation of each of Parent, US Parent and Purchaser enforceable
against each of Parent, US Parent and Purchaser in accordance with its terms.
Neither the execution and delivery by each of Parent, US Parent and Purchaser of
this Agreement nor the consummation by each of Parent, US Parent and Purchaser
of the transactions contemplated hereby will: (a) violate or conflict in any
material respect with, result in a breach of any material provision of,
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under, result in the termination or in a right of
termination of, accelerate the performance required by or benefit obtainable
under, result in the vesting, triggering or acceleration of any payment or other
obligations pursuant to, or result in there being declared void, voidable,
subject to withdrawal, or without further binding effect, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, deed of trust
or any material license, franchise, permit, lease, contract, agreement or other
instrument, commitment or obligation to which each of Parent, US Parent and
Purchaser is a party, by which each of Parent, US Parent and Purchaser or any of
its properties is bound, or under which each of Parent, US Parent and Purchaser
or any of its properties is entitled to a benefit; (b) other than the filings
required under the HSR Act or any Exchange Act filings, require any consent,
approval or authorization of, or declaration, filing or registration with, any
Governmental Entity; or (c) violate in any material respect any Laws applicable
to each of Parent, US Parent and Purchaser.
2. Purchase and Sale of Shares. Each Stockholder hereby severally
agrees to tender all Subject Shares set forth opposite such Stockholder's name
on Schedule A hereto into the Offer and not withdraw any Subject Shares so
tendered. If, for any reason, any of such Subject Shares are not tendered into
the Offer (or are tendered but are not accepted), each Stockholder whose Subject
Shares have not been tendered or accepted agrees to sell to Purchaser (or an
affiliate), and Purchaser (or an affiliate) hereby agrees to purchase, all such
Subject Shares that have not been tendered or accepted, at a price per share
equal to the Offer Price; provided that such obligation to sell and such
obligation to purchase are subject to Purchaser (or an affiliate) having
accepted shares for payment under the Offer and subject to the Minimum Condition
having been satisfied. Any Subject Shares not purchased in the Offer will be
purchased at the same time as payment is made under the Offer.
3. Covenants of Each Stockholder. Until the termination of this
Agreement in accordance with Section 7, each Stockholder severally and not
jointly agrees as follows:
(a) At any meeting of Stockholders of the Company called to vote
upon the Merger and the Merger Agreement or at any adjournment thereof or
in any other circumstances upon which a vote, consent or other approval
(including by
3
<PAGE> 5
written consent) with respect to the Merger and the Merger Agreement is
sought, the Stockholder shall vote (or cause to be voted) the Subject
Shares in favor of the Merger, the adoption by the Company of the Merger
Agreement and the approval of the terms thereof and each of the other
transactions contemplated by the Merger Agreement. Any vote cast in
accordance with this Section 3(a) or in accordance with Section 3(b) shall
be cast in such manner as will insure that such vote is duly counted for
purposes of determining whether a quorum is present and for purposes of
determining the result of such vote.
(b) At any meeting of Stockholders of the Company or at any
adjournment thereof or in any other circumstances upon which the
Stockholder's vote, consent or other approval is sought, the Stockholder
shall vote (or cause to be voted) the Subject Shares against (i) any
Acquisition Proposal as such term is defined in Section 6.8(a) of the
Merger Agreement or (ii) any amendment of the Company's certificate of
incorporation or by-laws or other proposal or transaction involving the
Company, which amendment or other proposal or transaction would be
reasonably likely to impede, frustrate, prevent or nullify the Merger, the
Merger Agreement or any of the other transactions contemplated by the
Merger Agreement or change in any manner the voting rights of the Common
Stock. The Stockholder further agrees not to enter into any agreement
inconsistent with the foregoing.
(c) The Stockholder shall not, prior to the earliest of (i) the
Effective Time and (ii) the termination of the Merger Agreement in
accordance with its terms, (x) sell, transfer, give, pledge, assign or
otherwise dispose of (including by gift) (collectively, "Transfer"),
consent to any Transfer of, any or all of such Subject Shares or any
interest therein or enter into any contract, option or other arrangement
(including any profit sharing arrangement) with respect to the Transfer
of, the Subject Shares to any person other than pursuant to the terms of
the Offer or the Merger or (y) enter into any voting arrangement, whether
by proxy, voting agreement or otherwise, in connection with, directly or
indirectly, any Acquisition Proposal and agrees not to commit or agree to
take any of the foregoing actions. Notwithstanding the foregoing, at any
time prior to the expiration of the Offer, Mr. Rod Beckstrom may Transfer
up to 300,000 Subject Shares by gift, subject to the approval of Parent.
(d) Subject to the terms of Section 9, during the term of this
Agreement, the Stockholder shall not, nor shall it permit any investment
banker, financial advisor, attorney or accountant retained by, or other
advisor or representative of, such Stockholder to, directly or indirectly
(i) solicit, initiate or encourage (including by way of furnishing
non-public information), or take any other action
4
<PAGE> 6
to facilitate, any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, an Acquisition
Proposal or (ii) participate in any discussions or negotiations regarding
an Acquisition Proposal, provided, that it is understood that this Section
3(d) will not be deemed to have been violated if in response to an
unsolicited inquiry, the Stockholder states that he and the Subject Shares
are subject to the provisions of this Agreement. Without limiting the
foregoing, it is understood that any violation of the restrictions set
forth in the preceding sentence by an investment banker, financial
advisor, attorney or accountant retained by, or other adviser or
representative of, such Stockholder, whether or not such person is
purporting to act on behalf of such Stockholder, shall be deemed to be a
violation of this Section 3(d) by such Stockholder.
(e) Until after the Merger is consummated or the Merger Agreement is
terminated, the Stockholder shall use reasonable efforts to take, or cause
to be taken, all actions, and to do, or cause to be done, and to assist
and cooperate with the other parties in doing, all things necessary,
proper or advisable to consummate and make effective, in the most
expeditious manner practicable, the Merger and the other transactions
contemplated by the Merger Agreement.
(f) Such Stockholder, and any beneficiary of a revocable trust for
which such Stockholder serves as trustee, shall not take any action to
revoke or terminate such trust or take any other action which would
restrict, limit or frustrate in any way the transactions contemplated by
this Agreement. Each such beneficiary hereby acknowledges and agrees to be
bound by the terms of this Agreement applicable to it.
(g) (i) If the Merger Agreement shall have been terminated under
circumstances where Parent or any affiliate of Parent is entitled, or may
become entitled, to receive a Termination Fee, and within one year of such
termination (x) the Company enters into an Acquisition Agreement with
respect to an Acquisition Proposal that is subsequently consummated or (y)
an Acquisition Proposal is consummated, each Stockholder shall pay to
Parent on demand, at the time such Acquisition Proposal is consummated, an
amount equal to all Profit of such Stockholder, determined in accordance
with Section 3(g)(ii), from the consummation of any such Acquisition
Proposal.
(ii) For purposes of this Section 3(g), the "Profit" of any
Stockholder from any Acquisition Proposal shall equal (x) the aggregate
consideration that would have been received by such Stockholder pursuant to such
Acquisition Proposal if such Stockholder held the same number of Subject Shares
at the consummation of such Acquisition Proposal as he held at the time the
Merger Agreement was terminated (including any
5
<PAGE> 7
consideration that would have been received in respect of any unexercised stock
options or warrants or similar instruments held at the time the Merger Agreement
was terminated), valuing any noncash consideration (including any residual
interest in the Company) at its fair market value on the date of such
consummation less (y) the fair market value of the aggregate consideration that
would have been issuable or payable to such Stockholder (assuming all stock
options, warrants or similar instruments held by such Stockholder were
exercised) if he had received the Merger Consideration pursuant to the Merger
Agreement as originally executed (without giving effect to any increase in such
Merger Consideration).
(iii) For purposes of this Section 3(g), the fair market value of
any noncash consideration consisting of:
(x) securities listed on a national securities exchange or traded
on the NASDAQ/NMS shall be equal to the average closing price
per share of such security as reported on such exchange or
NASDAQ/NMS for the twenty trading days prior to the date of
determination; and
(y) consideration which is other than cash or securities of the
form specified in clause (A) of this Section 3(g)(iii) shall
be determined by a nationally recognized independent
investment banking firm mutually agreed upon by the parties
within 10 business days of the event requiring selection of
such banking firm; provided, however, that if the parties are
unable to agree within two business days after the date of
such event as to the investment banking firm, then the parties
shall each select one firm, and those firms shall select a
third investment banking firm, which third firm shall make
such determination, provided further, that the fees and
expenses of such investment banking firm shall be borne by
Parent. The determination of the investment banking firm shall
be binding upon the parties.
(iv) Any payment of profit under this Section 3(g) shall (x) if paid
in cash, be paid by wire transfer of same day funds to an account designated by
Parent and (y) if paid through a transfer of securities (with the method and
timing of such transfer to be mutually agreed), be paid as soon as practicable
through delivery of such securities, suitably endorsed for transfer, provided
that the Stockholder shall be required to pay cash under this Section 3(g) to
the extent cash is actually received by such Stockholder under circumstances
giving rise to the obligation of such Stockholder to make payment to Parent
under Section 3(g)(i).
6
<PAGE> 8
4. Further Assurances. Each Stockholder will, from time to time,
execute and deliver, or cause to be executed and delivered, such additional or
further consents, documents and other instruments as Parent may reasonably
request for the purpose of effectively carrying out the transactions
contemplated by this Agreement.
5. Certain Events. Each Stockholder agrees that this Agreement and
the obligations hereunder shall attach to such Stockholder's Subject Shares and
shall be binding upon any person or entity to which legal or beneficial
ownership of such Subject Shares shall pass, whether by operation of law or
otherwise, including without limitation such Stockholder's heirs, guardians,
administrators or successors. In the event of any stock split, stock dividend,
merger, reorganization, recapitalization or other change in the capital
structure of the Company affecting the Common Stock, or the acquisition of
additional shares of Common Stock or other voting securities of the Company by
any Stockholder, the number of Subject Shares listed in Schedule A beside the
name of such Stockholder shall be adjusted appropriately and this Agreement and
the obligations hereunder shall attach to any additional shares of Common Stock
or other voting securities of the Company issued to or acquired by such
Stockholder.
6. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
without the prior written consent of the other parties, except that Purchaser,
US Parent or Parent (or all of them) may assign, as contemplated by Section 9.5
of the Merger Agreement, in its sole discretion, any and all of its rights,
interests and obligations hereunder to any affiliate, provided that Purchaser,
US Parent or Parent will remain liable for its obligations hereunder in the
event of any assignment pursuant to this Section 6. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and assigns.
7. Termination. This Agreement, and all rights and obligations of
the parties hereunder, shall terminate upon the date upon which the Merger
Agreement is terminated in accordance with its terms, provided that if the
Merger Agreement has terminated under circumstances under which a Termination
Fee has become or could become payable, Sections 3(g), 4 (as it relates to the
other sections of this Agreement that survive such termination), 5, 6, 7, 8, 10
and 11 shall survive until such time as Parent could no longer be entitled to
receive a payment pursuant to Section 3(g).
8. General Provisions.
(a) Amendments. This Agreement may not be amended except by an
instrument in writing signed by each of the parties hereto.
7
<PAGE> 9
(b) Notice. All notices and other communications hereunder shall be
in writing and shall be deemed given if hand delivered or sent by
overnight courier (providing proof of delivery) to Parent, US Parent or
Purchaser in accordance with Section 9.4 of the Merger Agreement and to
the Stockholders at their respective addresses set forth on Schedule A
attached hereto (or at such other address for a party as shall be
specified by like notice).
(c) Interpretation. When a reference is made in this Agreement to
Sections, such reference shall be to a Section to this Agreement unless
otherwise indicated. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Wherever the words "include," "includes"
or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation."
(d) Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more of the counterparts have been
signed by each of the parties and delivered to the other party, it being
understood that each party need not sign the same counterpart.
(e) Entire Agreement; No Third-Party Beneficiaries. This Agreement
(including the documents and instruments referred to herein) (i)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to
the subject matter hereof and (ii) is not intended to confer upon any
person other than the parties hereto any rights or remedies hereunder.
(f) Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware regardless
of the laws that might otherwise govern under applicable principles of
conflicts of law thereof.
(g) Voidability. If prior to the execution hereof, the Board of
Directors of the Company shall not have duly and validly authorized and
approved this Agreement, the Merger Agreement and the transactions
contemplated hereby and thereby, so that the execution and delivery hereof
by Parent, US Parent or Purchaser would trigger the provisions of Section
203 of the Delaware General Corporation Law (the "DGCL"), then this
Agreement shall be void and unenforceable until such time as such
authorization and approval shall have been duly and validly obtained.
8
<PAGE> 10
9. Stockholder Capacity. No person executing this Agreement who is
or becomes during the term hereof a director or officer of the Company makes any
agreement or understanding herein in his capacity as such director or officer.
Each Stockholder signs solely in his capacity as the record holder and
beneficial owner of, or the trustee of a trust whose beneficiaries are the
beneficial owners of, such Stockholder's Subject Shares and nothing herein
(including, without limitation, the provisions of Section 3(d)) shall limit or
affect any actions taken by a Stockholder in his capacity as an officer or
director of the Company.
10. Enforcement. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the State of Delaware or in a Delaware state court, this being in
addition to any other remedy to which they are entitled at law or in equity. In
addition, each of the parties hereto (a) consents to submit such party to the
personal jurisdiction of any Federal court located in the State of Delaware or
any Delaware state court in the event any dispute arises out of this Agreement
or any of the transactions contemplated hereby, (b) agrees that such party will
not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court, (c) agrees that such party will not bring
any action relating to this Agreement or the transactions contemplated hereby in
any court other than a Federal court sitting in the state of Delaware or a
Delaware state court and (d) waives any right to trial by jury with respect to
any claim or proceeding related to or arising out of this Agreement or any of
the transactions contemplated hereby.
11. Public Announcements. Each Stockholder will consult with Parent
before issuing, and provide Parent with the opportunity to review and comment
upon, any press release or other public statements with respect to the
transactions contemplated by this Agreement and the Merger Agreement, and shall
not issue any such press release or make any such public statement prior to such
consultation, except as may be required by applicable law, court process or by
obligations pursuant to any listing agreement with any national securities
exchange (including, but not limited to, NASDAQ).
12. Legends. Each Stockholder will, promptly after executing and
delivering this Agreement, deliver to the Company (or its transfer agent, if so
directed by the Company) the certificates representing the Subject Shares, which
certificates (or replacements thereof) shall be returned to such Stockholder
with the following restrictive legend placed thereon:
9
<PAGE> 11
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
STOCKHOLDERS AGREEMENT DATED AS OF DECEMBER 14, 1998, AND, PURSUANT
TO THE TERMS THEREOF, MAY NOT BE SOLD, TRANSFERRED, GIVEN, PLEDGED,
ASSIGNED OR OTHERWISE DISPOSED OF, AND ARE SUBJECT TO FURTHER
RESTRICTIONS REGARDING, AMONG OTHER THINGS, VOTING RIGHTS AND
CERTAIN INDIRECT TRANSFERS AS SET FORTH IN SUCH STOCKHOLDERS
AGREEMENT"
13. Grant of Irrevocable Proxy; Appointment of Proxy. (a) Each
Stockholder hereby irrevocably grants to, and appoints, Parent and Strone
Macpherson and Ross K. Graham, in their respective capacities as officers of
Parent, and any individual who shall hereafter succeed to any such office of
Parent, and each of them individually, such Stockholder's proxy and
attorney-in-fact (with full power of substitution), for and in the name, place
and stead of such Stockholder, to vote such Stockholder's Subject Shares, or
grant a consent or approval in respect of such Subject Shares, in connection
with any and all of the matters described in Sections 3(a) and 3(b) of this
Agreement, in accordance with the terms of such Sections.
(b) Such Stockholder represents that any proxies heretofore given in
respect of such Stockholder's Subject Shares are not irrevocable, and that any
such proxies are hereby revoked.
(c) Such Stockholder hereby affirms that the irrevocable proxy set
forth in this Section 13 is given in connection with the execution of the Merger
Agreement, and that such irrevocable proxy is given to secure the performance of
the duties of the Stockholder under this Agreement. Such Stockholder hereby
further affirms that the irrevocable proxy is coupled with an interest and may
under no circumstances be revoked. Such Stockholder hereby ratifies and confirms
all that such irrevocable proxy may lawfully do or cause to be done by virtue
hereof. Such irrevocable proxy is executed and intended to be irrevocable in
accordance with the provisions of Section 212(e) of the DGCL.
10
<PAGE> 12
IN WITNESS WHEREOF, Parent, US Parent, the Purchaser and the
Stockholders have caused this Agreement to be duly executed and delivered as of
the date first written above.
MISYS PLC
By: /s/ Ross Graham
--------------------------------------
Name: Ross Graham
Title: Corporate Development Director
and Secretary
KIRSTY, INC.
By: /s/ Ross Graham
--------------------------------------
Name: Ross Graham
Title: Vice President
MOXIE ACQUISITION CORP.
By: /s/ Ross Graham
--------------------------------------
Name: Ross Graham
Title: Secretary
Rod A. Beckstrom Trust
By: /s/ Rod A. Beckstrom
--------------------------------------
/s/ David Gilbert
------------------------------------------
David Gilbert
/s/ Diedra Gilbert
------------------------------------------
Diedra Gilbert
/s/ Robert Geske
------------------------------------------
Robert Geske
/s/ Jerry Bock
------------------------------------------
Jerry Bock
<PAGE> 13
SCHEDULE A
<TABLE>
<CAPTION>
Name and Address Number of Subject Shares Number of Subject Shares
of of Subject to
Stockholder Owned of Record Options
----------- --------------- -------
<S> <C> <C>
Rod A. Beckstrom Trust 1,007,123 210,000
C-ATS Software Inc.
1870 Embarcadero Road
Palo Alto, CA 94303
David and Diedra Gilbert, 2,000 250,000
joint tenants
3 Wilmington Acres Court
Emerald Hills, CA 94602
Robert Geske 289,325 0
UCLA
Anderson Graduate School
of Management
Bldg. C, 4th Floor
Los Angeles, CA 90095
Jerry Bock 289,325 0
Economic Science Corp.
2120 University Ave.,
Suite 600
Berkeley, CA 94704
</TABLE>
<PAGE> 1
EXHIBIT (c)(3)
CONFORMED COPY
STOCKHOLDER AGREEMENT
AMONG
MISYS PLC
KIRSTY, INC.
MOXIE ACQUISITION CORP.
AND
THE ROD A. AND PATRICE V. BECKSTROM
CHARITABLE REMAINDER TRUST
Dated as of December 14, 1998
<PAGE> 2
CONFORMED COPY
STOCKHOLDER AGREEMENT
STOCKHOLDER AGREEMENT dated as of December 14, 1998, among MISYS
PLC, a public limited company incorporated under the laws of England ("Parent"),
KIRSTY, INC., a Delaware corporation and indirect wholly owned subsidiary of
Parent ("US Parent"), MOXIE ACQUISITION CORP., a Delaware corporation and direct
wholly owned subsidiary of US Parent ("Purchaser") and the ROD A. AND PATRICE V.
BECKSTROM CHARITABLE REMAINDER TRUST (the "Stockholder").
WHEREAS, Parent, US Parent, Purchaser and C-ATS Software Inc., a
Delaware corporation (the "Company"), propose to enter into an Agreement and
Plan of Merger dated as of the date hereof (as the same may be amended or
supplemented, the "Merger Agreement") providing for (i) the making of a cash
tender offer (as such offer may be amended from time to time as permitted under
the Merger Agreement, the "Offer") by Purchaser for all of the outstanding
shares of common stock, par value $0.001 per share, of the Company (the "Common
Stock") at a price of $7.50 per share (the "Offer Price"); and (ii) the merger
of Purchaser with and into the Company (the "Merger"), upon the terms and
subject to the conditions set forth in the Merger Agreement (the price per share
to be received in the Merger shall hereinafter be referred to as the "Merger
Consideration"); and
WHEREAS, the Stockholder owns the number of shares of Common Stock
(and the number of options to purchase shares of Common Stock) set forth
opposite its name on Schedule A attached hereto (such shares of Common Stock,
together with any other shares of capital stock of the Company acquired by the
Stockholder after the date hereof and during the term of this Agreement
(including, without limitation, through the exercise of any stock options,
warrants or similar instruments (including those stock options set forth on
Schedule A)), being collectively referred to herein as the "Subject Shares");
WHEREAS, as an essential condition and inducement to their
willingness to enter into the Merger Agreement, Parent, US Parent and Purchaser
have requested that the Stockholder enter into this Agreement, and the
Stockholder has agreed to do so; and
WHEREAS, capitalized terms used herein without definition shall have
the respective meanings specified therefor in the Merger Agreement.
NOW, THEREFORE, to induce Parent, US Parent and Purchaser to enter
into, and in consideration of their entering into, the Merger Agreement, and in
<PAGE> 3
consideration of the premises and the representations, warranties and agreements
contained herein, the parties agree as follows:
1. Representations and Warranties. (a) Of the Stockholder. The
Stockholder hereby represents and warrants to Parent, US Parent and Purchaser as
of the date hereof in respect of himself or itself as follows:
(i) Authority. The Stockholder has all requisite power and authority
to enter into this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly and validly authorized,
executed and delivered by the Stockholder and constitutes the valid and
binding obligation of the Stockholder enforceable against the Stockholder
in accordance with its terms. Neither the execution and delivery by the
Stockholder of this Agreement nor the consummation by the Stockholder of
the transactions contemplated hereby will violate or conflict in any
material respect with, result in a breach of any material provision of or
constitute a default under, any of the terms, conditions or provisions of
any note, bond, mortgage, indenture, deed of trust or any material
license, franchise, permit, lease, contract, agreement or other
instrument, commitment or obligation to which the Stockholder is a party
or by which the Stockholder is bound.
(ii) The Subject Shares. The Stockholder is the record and
beneficial owner of, or is trustee of a trust that is the record holder
of, and whose beneficiaries are the beneficial owners of, and has good and
marketable title to, the Subject Shares set forth opposite its name on
Schedule A attached hereto, free and clear of any claims, liens,
encumbrances and security interests whatsoever. The Stockholder does not
own, of record or beneficially, any shares of capital stock of the Company
other than the Subject Shares set forth opposite its name on Schedule A
attached hereto. The Stockholder has the sole right to vote such Subject
Shares, and none of such Subject Shares is subject to any voting trust or
other agreement, arrangement or restriction with respect to the voting of
such Subject Shares, except as contemplated by this Agreement.
(b) Of Parent, US Parent and Purchaser. Parent, US Parent and
Purchaser each hereby represents and warrants to the Stockholder that it has all
requisite power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
authorized, executed and delivered by each of Parent, US Parent and Purchaser
and constitutes the valid and binding obligation of each of Parent, US Parent
and Purchaser enforceable against each of Parent, US Parent and Purchaser in
accordance with its terms. Neither the execution and delivery by each of Parent,
US Parent and Purchaser of this Agreement nor the consummation by each of
2
<PAGE> 4
Parent, US Parent and Purchaser of the transactions contemplated hereby will:
(a) violate or conflict in any material respect with, result in a breach of any
material provision of, constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) under, result in the
termination or in a right of termination of, accelerate the performance required
by or benefit obtainable under, result in the vesting, triggering or
acceleration of any payment or other obligations pursuant to, or result in there
being declared void, voidable, subject to withdrawal, or without further binding
effect, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust or any material license, franchise, permit, lease,
contract, agreement or other instrument, commitment or obligation to which each
of Parent, US Parent and Purchaser is a party, by which each of Parent, US
Parent and Purchaser or any of its properties is bound, or under which each of
Parent, US Parent and Purchaser or any of its properties is entitled to a
benefit; (b) other than the filings required under the HSR Act or any Exchange
Act filings, require any consent, approval or authorization of, or declaration,
filing or registration with, any Governmental Entity; or (c) violate in any
material respect any Laws applicable to each of Parent, US Parent and Purchaser.
2. Purchase and Sale of Shares. The Stockholder hereby severally
agrees to tender all Subject Shares set forth opposite the Stockholder's name on
Schedule A hereto into the Offer and not withdraw any Subject Shares so
tendered. If, for any reason, any of such Subject Shares are not tendered into
the Offer (or are tendered but are not accepted), the Stockholder whose Subject
Shares have not been tendered or accepted agrees to sell to Purchaser (or an
affiliate), and Purchaser (or an affiliate) hereby agrees to purchase, all such
Subject Shares that have not been tendered or accepted, at a price per share
equal to the Offer Price; provided that such obligation to sell and such
obligation to purchase are subject to Purchaser (or an affiliate) having
accepted shares for payment under the Offer and subject to the Minimum Condition
having been satisfied. Any Subject Shares not purchased in the Offer will be
purchased at the same time as payment is made under the Offer.
3. Covenants of the Stockholder. Until the termination of this
Agreement in accordance with Section 7, the Stockholder severally and not
jointly agrees as follows:
(a) At any meeting of stockholders of the Company called to vote
upon the Merger and the Merger Agreement or at any adjournment thereof or
in any other circumstances upon which a vote, consent or other approval
(including by written consent) with respect to the Merger and the Merger
Agreement is sought, the Stockholder shall vote (or cause to be voted) the
Subject Shares in favor of the Merger, the adoption by the Company of the
Merger Agreement and the approval of the terms thereof and each of the
other transactions contemplated by the Merger Agreement. Any vote cast in
accordance with this Section 3(a) or in accordance
3
<PAGE> 5
with Section 3(b) shall be cast in such manner as will insure that such
vote is duly counted for purposes of determining whether a quorum is
present and for purposes of determining the result of such vote.
(b) At any meeting of stockholders of the Company or at any
adjournment thereof or in any other circumstances upon which the
Stockholder's vote, consent or other approval is sought, the Stockholder
shall vote (or cause to be voted) the Subject Shares against (i) any
Acquisition Proposal as such term is defined in Section 6.8(a) of the
Merger Agreement or (ii) any amendment of the Company's certificate of
incorporation or by-laws or other proposal or transaction involving the
Company, which amendment or other proposal or transaction would be
reasonably likely to impede, frustrate, prevent or nullify the Merger, the
Merger Agreement or any of the other transactions contemplated by the
Merger Agreement or change in any manner the voting rights of the Common
Stock. The Stockholder further agrees not to enter into any agreement
inconsistent with the foregoing.
(c) The Stockholder shall not, prior to the earliest of (i) the
Effective Time and (ii) the termination of the Merger Agreement in
accordance with its terms, (x) sell, transfer, give, pledge, assign or
otherwise dispose of (including by gift) (collectively, "Transfer"),
consent to any Transfer of, any or all of such Subject Shares or any
interest therein or enter into any contract, option or other arrangement
(including any profit sharing arrangement) with respect to the Transfer
of, the Subject Shares to any person other than pursuant to the terms of
the Offer or the Merger or (y) enter into any voting arrangement, whether
by proxy, voting agreement or otherwise, in connection with, directly or
indirectly, any Acquisition Proposal and agrees not to commit or agree to
take any of the foregoing actions.
(d) Subject to the terms of Section 9, during the term of this
Agreement, the Stockholder shall not, nor shall it permit any investment
banker, financial advisor, attorney or accountant retained by, or other
advisor or representative of, the Stockholder to, directly or indirectly
(i) solicit, initiate or encourage (including by way of furnishing
non-public information), or take any other action to facilitate, any
inquiries or the making of any proposal that constitutes, or may
reasonably be expected to lead to, an Acquisition Proposal or (ii)
participate in any discussions or negotiations regarding an Acquisition
Proposal, provided, that it is understood that this Section 3(d) will not
be deemed to have been violated if in response to an unsolicited inquiry,
the Stockholder states that he and the Subject Shares are subject to the
provisions of this Agreement. Without limiting the foregoing, it is
understood that any violation of the restrictions set forth in the
preceding sentence
4
<PAGE> 6
by an investment banker, financial advisor, attorney or accountant
retained by, or other adviser or representative of, the Stockholder,
whether or not such person is purporting to act on behalf of the
Stockholder, shall be deemed to be a violation of this Section 3(d) by the
Stockholder.
(e) Until after the Merger is consummated or the Merger Agreement is
terminated, the Stockholder shall use reasonable efforts to take, or cause
to be taken, all actions, and to do, or cause to be done, and to assist
and cooperate with the other parties in doing, all things necessary,
proper or advisable to consummate and make effective, in the most
expeditious manner practicable, the Merger and the other transactions
contemplated by the Merger Agreement.
(f) The Stockholder, and any beneficiary of a revocable trust for
which the Stockholder serves as trustee, shall not take any action to
revoke or terminate such trust or take any other action which would
restrict, limit or frustrate in any way the transactions contemplated by
this Agreement. Each such beneficiary hereby acknowledges and agrees to be
bound by the terms of this Agreement applicable to it.
(g) (i) If the Merger Agreement shall have been terminated under
circumstances where Parent or any affiliate of Parent is entitled, or may
become entitled, to receive a Termination Fee, and within one year of such
termination (x) the Company enters into an Acquisition Agreement with
respect to an Acquisition Proposal that is subsequently consummated or (y)
an Acquisition Proposal is consummated, the Stockholder shall pay to
Parent on demand, at the time such Acquisition Proposal is consummated, an
amount equal to all Profit of the Stockholder, determined in accordance
with Section 3(g)(ii), from the consummation of any such Acquisition
Proposal.
(ii) For purposes of this Section 3(g), the "Profit" of the
Stockholder from any Acquisition Proposal shall equal (x) the aggregate
consideration that would have been received by the Stockholder pursuant to such
Acquisition Proposal if the Stockholder held the same number of Subject Shares
at the consummation of such Acquisition Proposal as he held at the time the
Merger Agreement was terminated (including any consideration that would have
been received in respect of any unexercised stock options or warrants or similar
instruments held at the time the Merger Agreement was terminated), valuing any
noncash consideration (including any residual interest in the Company) at its
fair market value on the date of such consummation less (y) the fair market
value of the aggregate consideration that would have been issuable or payable to
the Stockholder (assuming all stock options, warrants or similar instruments
held by the Stockholder were exercised) if
5
<PAGE> 7
he had received the Merger Consideration pursuant to the Merger Agreement as
originally executed (without giving effect to any increase in such Merger
Consideration).
(iii) For purposes of this Section 3(g), the fair market value of
any noncash consideration consisting of:
(x) securities listed on a national securities exchange or traded
on the NASDAQ/NMS shall be equal to the average closing price
per share of such security as reported on such exchange or
NASDAQ/NMS for the twenty trading days prior to the date of
determination; and
(y) consideration which is other than cash or securities of the
form specified in clause (A) of this Section 3(g)(iii) shall
be determined by a nationally recognized independent
investment banking firm mutually agreed upon by the parties
within 10 business days of the event requiring selection of
such banking firm; provided, however, that if the parties are
unable to agree within two business days after the date of
such event as to the investment banking firm, then the parties
shall each select one firm, and those firms shall select a
third investment banking firm, which third firm shall make
such determination, provided further, that the fees and
expenses of such investment banking firm shall be borne by
Parent. The determination of the investment banking firm shall
be binding upon the parties.
(iv) Any payment of profit under this Section 3(g) shall (x) if paid
in cash, be paid by wire transfer of same day funds to an account designated by
Parent and (y) if paid through a transfer of securities (with the method and
timing of such transfer to be mutually agreed), be paid as soon as practicable
through delivery of such securities, suitably endorsed for transfer, provided
that the Stockholder shall be required to pay cash under this Section 3(g) to
the extent cash is actually received by the Stockholder under circumstances
giving rise to the obligation of the Stockholder to make payment to Parent under
Section 3(g)(i).
4. Further Assurances. The Stockholder will, from time to time,
execute and deliver, or cause to be executed and delivered, such additional or
further consents, documents and other instruments as Parent may reasonably
request for the purpose of effectively carrying out the transactions
contemplated by this Agreement.
6
<PAGE> 8
5. Certain Events. The Stockholder agrees that this Agreement and
the obligations hereunder shall attach to the Stockholder's Subject Shares and
shall be binding upon any person or entity to which legal or beneficial
ownership of such Subject Shares shall pass, whether by operation of law or
otherwise, including without limitation the Stockholder's heirs, guardians,
administrators or successors. In the event of any stock split, stock dividend,
merger, reorganization, recapitalization or other change in the capital
structure of the Company affecting the Common Stock, or the acquisition of
additional shares of Common Stock or other voting securities of the Company by
any Stockholder, the number of Subject Shares listed in Schedule A beside the
name of the Stockholder shall be adjusted appropriately and this Agreement and
the obligations hereunder shall attach to any additional shares of Common Stock
or other voting securities of the Company issued to or acquired by the
Stockholder.
6. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
without the prior written consent of the other parties, except that Purchaser,
US Parent or Parent (or all of them) may assign, as contemplated by Section 9.5
of the Merger Agreement, in its sole discretion, any and all of its rights,
interests and obligations hereunder to any affiliate, provided that Purchaser,
US Parent or Parent will remain liable for its obligations hereunder in the
event of any assignment pursuant to this Section 6. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and assigns.
7. Termination. This Agreement, and all rights and obligations of
the parties hereunder, shall terminate upon the date upon which the Merger
Agreement is terminated in accordance with its terms, provided that if the
Merger Agreement has terminated under circumstances under which a Termination
Fee has become or could become payable, Sections 3(g), 4 (as it relates to the
other sections of this Agreement that survive such termination), 5, 6, 7, 8, 10
and 11 shall survive until such time as Parent could no longer be entitled to
receive a payment pursuant to Section 3(g).
8. General Provisions.
(a) Amendments. This Agreement may not be amended except by an
instrument in writing signed by each of the parties hereto.
(b) Notice. All notices and other communications hereunder shall be
in writing and shall be deemed given if hand delivered or sent by
overnight courier (providing proof of delivery) to Parent, US Parent or
Purchaser in accordance with Section 9.4 of the Merger Agreement and to
the Stockholder at its address set
7
<PAGE> 9
forth on Schedule A attached hereto (or at such other address for a party
as shall be specified by like notice).
(c) Interpretation. When a reference is made in this Agreement to
Sections, such reference shall be to a Section to this Agreement unless
otherwise indicated. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Wherever the words "include," "includes"
or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation."
(d) Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more of the counterparts have been
signed by each of the parties and delivered to the other party, it being
understood that each party need not sign the same counterpart.
(e) Entire Agreement; No Third-Party Beneficiaries. This Agreement
(including the documents and instruments referred to herein) (i)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to
the subject matter hereof and (ii) is not intended to confer upon any
person other than the parties hereto any rights or remedies hereunder.
(f) Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware regardless
of the laws that might otherwise govern under applicable principles of
conflicts of law thereof.
(g) Voidability. If prior to the execution hereof, the Board of
Directors of the Company shall not have duly and validly authorized and
approved this Agreement, the Merger Agreement and the transactions
contemplated hereby and thereby, so that the execution and delivery hereof
by Parent, US Parent or Purchaser would trigger the provisions of Section
203 of the Delaware General Corporation Law (the "DGCL"), then this
Agreement shall be void and unenforceable until such time as such
authorization and approval shall have been duly and validly obtained.
9. Stockholder Capacity. No person executing this Agreement who is
or becomes during the term hereof a director or officer of the Company makes any
agreement or understanding herein in his capacity as such director or officer.
The
8
<PAGE> 10
Stockholder signs solely in his capacity as the record holder and beneficial
owner of, or the trustee of a trust whose beneficiaries are the beneficial
owners of, the Stockholder's Subject Shares and nothing herein (including,
without limitation, the provisions of Section 3(d)) shall limit or affect any
actions taken by a Stockholder in his capacity as an officer or director of the
Company.
10. Enforcement. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the State of Delaware or in a Delaware state court, this being in
addition to any other remedy to which they are entitled at law or in equity. In
addition, each of the parties hereto (a) consents to submit such party to the
personal jurisdiction of any Federal court located in the State of Delaware or
any Delaware state court in the event any dispute arises out of this Agreement
or any of the transactions contemplated hereby, (b) agrees that such party will
not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court, (c) agrees that such party will not bring
any action relating to this Agreement or the transactions contemplated hereby in
any court other than a Federal court sitting in the state of Delaware or a
Delaware state court and (d) waives any right to trial by jury with respect to
any claim or proceeding related to or arising out of this Agreement or any of
the transactions contemplated hereby.
11. Public Announcements. The Stockholder will consult with Parent
before issuing, and provide Parent with the opportunity to review and comment
upon, any press release or other public statements with respect to the
transactions contemplated by this Agreement and the Merger Agreement, and shall
not issue any such press release or make any such public statement prior to such
consultation, except as may be required by applicable law, court process or by
obligations pursuant to any listing agreement with any national securities
exchange (including, but not limited to, NASDAQ).
12. Legends. The Stockholder will, promptly after executing and
delivering this Agreement, deliver to the Company (or its transfer agent, if so
directed by the Company) the certificates representing the Subject Shares, which
certificates (or replacements thereof) shall be returned to the Stockholder with
the following restrictive legend placed thereon:
"THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO A STOCKHOLDER
AGREEMENT DATED AS OF DECEMBER 14, 1998,
9
<PAGE> 11
AND, PURSUANT TO THE TERMS THEREOF, MAY NOT BE SOLD, TRANSFERRED,
GIVEN, PLEDGED, ASSIGNED OR OTHERWISE DISPOSED OF, AND ARE SUBJECT
TO FURTHER RESTRICTIONS REGARDING, AMONG OTHER THINGS, VOTING RIGHTS
AND CERTAIN INDIRECT TRANSFERS AS SET FORTH IN THE STOCKHOLDER
AGREEMENT"
13. Grant of Irrevocable Proxy; Appointment of Proxy. (a) The
Stockholder hereby irrevocably grants to, and appoints, Parent and Strone
Macpherson and Ross K. Graham, in their respective capacities as officers of
Parent, and any individual who shall hereafter succeed to any such office of
Parent, and each of them individually, the Stockholder's proxy and
attorney-in-fact (with full power of substitution), for and in the name, place
and stead of the Stockholder, to vote the Stockholder's Subject Shares, or grant
a consent or approval in respect of such Subject Shares, in connection with any
and all of the matters described in Sections 3(a) and 3(b) of this Agreement, in
accordance with the terms of such Sections.
(b) The Stockholder represents that any proxies heretofore given in
respect of the Stockholder's Subject Shares are not irrevocable, and that any
such proxies are hereby revoked.
(c) The Stockholder hereby affirms that the irrevocable proxy set
forth in this Section 13 is given in connection with the execution of the Merger
Agreement, and that such irrevocable proxy is given to secure the performance of
the duties of the Stockholder under this Agreement. The Stockholder hereby
further affirms that the irrevocable proxy is coupled with an interest and may
under no circumstances be revoked. The Stockholder hereby ratifies and confirms
all that such irrevocable proxy may lawfully do or cause to be done by virtue
hereof. Such irrevocable proxy is executed and intended to be irrevocable in
accordance with the provisions of Section 212(e) of the DGCL.
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<PAGE> 12
IN WITNESS WHEREOF, Parent, US Parent, the Purchaser and the
Stockholder have caused this Agreement to be duly executed and delivered as of
the date first written above.
MISYS PLC
By: /s/ Ross Graham
--------------------------------------
Name: Ross Graham
Title: Corporate Development Director
and Secretary
KIRSTY, INC.
By: /s/ Ross Graham
--------------------------------------
Name: Ross Graham
Title: Vice President
MOXIE ACQUISITION CORP.
By: /s/ Ross Graham
--------------------------------------
Name: Ross Graham
Title: Secretary
Rod A. and Patrice V. Beckstrom
Charitable Remainder Trust
By: /s/ Rod A. Beckstrom
--------------------------------------
<PAGE> 13
SCHEDULE A
<TABLE>
<CAPTION>
Name and Address Number of Subject Shares Number of Subject Shares
of of Subject to
Stockholder Owned of Record Options
----------- --------------- -------
<S> <C> <C>
Rod A. and Patrice V. 10 0
Beckstrom Charitable
Remainder Trust
C-ATS Software Inc.
1870 Embarcadero Road
Palo Alto, CA 94303
</TABLE>
<PAGE> 1
EXHIBIT (c)(4)
CONFORMED COPY
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of December 14, 1998, by and
between C-ATS Software Inc., a Delaware corporation (the "Company"), and Rod A.
Beckstrom ("Executive").
W I T N E S S E T H:
WHEREAS, Executive is currently employed by the Company; and
WHEREAS, pursuant to the Merger Agreement, dated as of
December 14, 1998, by and among Misys plc, a public limited liability company
incorporated under the laws of England ("Misys"), Kirsty, Inc., a Delaware
corporation and indirect wholly owned subsidiary of Misys, Moxie Acquisition
Corp., a Delaware corporation and a direct wholly owned subsidiary of Kirsty,
Inc., and the Company (the "Merger Agreement"), Moxie Acquisition Corp. will be
merged with and into the Company with the Company as the surviving corporation
(the "Merger"); and
WHEREAS, the Company desires to secure the continued services
of Executive from and after the effective time of the Merger (the "Effective
Time") and to enter into this agreement setting forth the terms and conditions
of Executive's continued employment with the Company (the "Agreement"); and
WHEREAS, Executive desires to accept such continued employment
on the terms and conditions set forth in this Agreement; and
WHEREAS, during the course of his employment with the Company,
Executive has and will obtain confidential information concerning the business
and operations of the Company and its subsidiaries that could be used to compete
unfairly with the Company and/or its subsidiaries and could be of great value to
its and their competitors.
NOW, THEREFORE, in consideration of the mutual covenants
herein contained, the Company and Executive hereby agree as follows:
1. Employment.
a. Agreement to Continue Employment. Upon the terms and
subject to the conditions of this Agreement, the Company hereby agrees to
continue to employ Executive and Executive hereby accepts such continued
employment with the Company.
b. Term of Employment. The Company shall employ Executive
pursuant to the terms of this Agreement for the period commencing on the date
that includes the Effective Time (the "Commencement Date") and ending on the
third anniversary thereof (the "Initial Term"), subject to the early termination
provisions of Paragraph 5(a). The term will be extended for successive periods
of six months each, unless Executive or the Company provides a notice of
non-renewal to the other party at least 30 days prior to the
<PAGE> 2
expiration of the Initial Term or any renewal term. The period during which
Executive is employed pursuant to this Agreement shall be referred to as the
"Employment Period".
2. Position and Duties.
During the Employment Period, Executive shall serve as
Chairman of the Company's Board of Directors and in such position or positions
with the Company and its subsidiaries as the Chief Executive Officer of the
Company (the "CEO") shall from time to time reasonably specify, subject to the
approval of the Board of Directors of Misys (the "Misys Board"). During the
Employment Period, Executive shall have the duties, responsibilities and
obligations customarily assigned to individuals serving in the position or
positions in which Executive serves hereunder. Executive shall devote his full
business time to the services required of him hereunder except for vacation time
and reasonable periods of absence due to sickness, personal injury or other
disability, and shall use his best efforts, judgment, skill and energy to
perform such services in a manner consonant with the duties of his positions and
to improve and advance the business and interests of the Company and its
subsidiaries. A description of Executive's duties and responsibilities is
attached hereto as Exhibit A.
3. Compensation.
a. Base Salary. During the Employment Period, the Company
shall pay Executive a base salary at the annual rate of $250,000. The Board of
Directors of the Company (the "Company Board") shall review Executive's base
salary on each May 31 during the Employment Period, and may, subject to the
approval of the Misys Board (which approval may be withheld in the discretion of
the Misys Board), adjust such base salary upwards, but not downwards, in light
of the base salaries then paid to other Executives of the Company and the
performance of Executive. Executive's annual base salary payable hereunder is
referred to herein as "Base Salary". The Company shall pay Executive his Base
Salary in accordance with the Company's regular payroll practices as in effect
from time to time.
b. Long Term Incentive Compensation Plan. Executive is hereby
granted an Incentive Award with respect to the Incentive Pool of the Company's
Long Term Incentive Plan (the "LTIP"), at a Participation Level of 31.25%. The
terms of the LTIP, when finalized and adopted by the Company in consultation
with Executive, will substantially reflect the terms summarized and attached
hereto as Exhibit B.
4. Benefits, Perquisites and Expenses.
a. Benefits. During the Employment Period, Executive shall
participate in each pension and welfare benefit plan sponsored or maintained by
the Company to the extent Executive is eligible to participate in any such plan
under the generally applicable provisions thereof, including, without
limitation, each pension, profit sharing, retirement, deferred compensation or
savings, group life, medical, accident or disability insurance or similar plan
or program of the Company. Nothing herein shall limit the right of the Company
to amend or terminate any such plan in its discretion. Executive's years of
service with the Company and, if applicable, Lor/Geske Bock Associates, Inc.,
prior to the Commencement Date shall be credited for purposes of determining
Executive's eligibility and/or vesting under any Company benefit plan.
2
<PAGE> 3
b. Perquisites. During the Employment Period, Executive shall
be entitled to sick leave and five weeks of paid vacation annually, subject in
all respects to the generally applicable provisions of the Company's vacation
and sick leave policies.
c. Business Expenses. During the Employment Period, the
Company shall pay or reimburse Executive for all reasonable expenses incurred or
paid by Executive in the performance of Executive's duties hereunder, upon
presentation of expense statements or vouchers and such other information as the
Company may require and in accordance with the generally applicable policies and
procedures of the Company.
5. Termination of Employment.
a. Early Termination of the Employment Period. Notwithstanding
Paragraph 1(b), the Employment Period shall end upon the earliest to occur of
(i) the date of Executive's death, (ii) 30 days following delivery by the
Company of written notice to Executive of a Termination due to Disability, (iii)
immediately upon delivery by the Company of written notice to Executive of a
Termination for Cause, (iv) three months following the date of delivery by the
Company of written notice to Executive of a Termination Without Cause, provided
that, subject to the continued payment to Executive of installments of his Base
Salary for the period ending three months following the date the Company
delivers such notice of termination to Executive, the Company may elect to
direct Executive to refrain from reporting to employment as of any earlier date
specified in such notice, (v) the date specified in any written notice delivered
by Executive to the Company of a Termination for Good Reason, which date shall
be at least 30 days after the delivery of such notice, or (vi) three months
following the date of delivery by Executive of written notice to the Company of
the Executive's resignation from employment, other than a Termination for Good
Reason. The provisions of this Paragraph 5 shall not apply to any termination of
employment occurring after the Initial Term.
b. Payments Upon Any Terminations. In the event of the
termination of Executive's employment pursuant to Paragraph 5, the Company shall
pay to Executive, within 30 days of the Termination Date, any Base Salary
earned, but unpaid, for services rendered to the Company on or prior to such
date (other than Base Salary deferred pursuant to Executive's election). In
addition, Executive shall be entitled to receive all vested benefits accrued and
payable to Executive under the terms of or in accordance with any plan, policy
or program of the Company or its subsidiaries (other than any severance plan,
policy or program) that are payable at or subsequent to the date of his
termination without regard to the performance by Executive of further services
or the resolution of a contingency. Such vested accrued benefits shall be
payable in accordance with the terms of the plan, policy or program under which
such benefits have accrued, except as otherwise expressly modified by this
Agreement.
c. Additional Benefits Payable Upon Certain Terminations.
(I) Payments.
(A) In the event of a termination of Executive's
employment pursuant to Paragraph 5(a) due to a
Termination Without Cause or a Termination for Good
Reason, (i) the Company shall continue to pay to
Executive installments of his Base Salary (at the
annual rate in
3
<PAGE> 4
effect immediately prior to the Termination Date), in
accordance with the Company's regular payroll
practices as then in effect, and provide Executive
with medical benefits during the six month period
beginning on the Termination Date and (ii) with
respect to the Incentive Compensation Award granted
to Executive pursuant to Paragraph 3(b)(i), Executive
shall be entitled to receive any amounts that become
payable with respect to such Award in accordance with
and subject to the terms and conditions of the Long
Term Incentive Compensation Plan, it being understood
that there shall be no duplication of payments under
this Agreement and under such plan.
(B) In the event of the termination of Executive's
employment pursuant to Paragraph 5(a) due to a
Termination due to Disability or as a result of
Executive's death, Executive shall be entitled to
receive any amounts that become payable in accordance
with and subject to the terms and conditions of the
Long Term Incentive Compensation Plan with respect to
the Incentive Compensation Award granted to Executive
hereunder, it being understood that there shall be no
duplication of payments under this Agreement and
under such plan.
(II) Limitations. Notwithstanding the provisions of Paragraph
5(c)(I), if Executive materially breaches any of the provisions of any
of Paragraph 6, Executive shall forfeit all rights to receive, and the
Company shall be relieved of all obligations to pay, any and all
amounts then remaining to be paid to Executive pursuant to Paragraph
5(c)(I).
d. Definitions. For purposes of Paragraphs 5 and 6, the
following capitalized terms have the following meanings:
"Termination Date" means the effective date of any early
termination of the Employment Period pursuant to Paragraph 5(a), it
being understood that in the event of a Termination Without Cause, the
effective date of such termination shall be the three month anniversary
of the date the Company delivers notice of such termination to
Executive.
"Termination for Cause" means a termination of Executive's
employment by the Company due to (a) Executive's conviction of a felony
or the entering by Executive of a plea of nolo contendere to a felony,
(b) Executive's gross negligence, dishonesty (other than of a de
minimis nature), willful malfeasance or substantial misconduct in
connection with his employment with the Company, (c) a substantial or
continual refusal by Executive to perform the duties, responsibilities
or obligations reasonably assigned to him by the Company or (d) a
material breach by Executive of any covenant or obligation in any
written agreement with the Company or any of its subsidiaries,
including any breach of any of the provisions of Paragraph 6 hereof.
Notwithstanding the foregoing, a termination shall not be treated as a
Termination for Cause unless the Company shall have delivered a written
notice to Executive stating that it intends to terminate his employment
for Cause and specifying the factual basis for such termination, and
the event or events
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<PAGE> 5
that form the basis for the notice, if capable of being cured, shall
not have been cured within 10 days of the receipt of such notice.
"Termination due to Disability" means a termination of
Executive's employment by the Company because Executive has been
incapable of substantially fulfilling the positions, duties,
responsibilities and obligations of his employment because of physical,
mental or emotional incapacity resulting from injury, sickness or
disease for a period of at least six months in any twelve month period.
Any question as to the existence, extent or potentiality of Executive's
disability upon which Executive and the Company cannot agree shall be
determined by a qualified, independent physician selected by the
Company and approved by Executive (which approval shall not be
unreasonably withheld). The determination of any such physician shall
be final and conclusive for all purposes of this Agreement. Executive
or his legal representative or any adult member of his immediate family
shall have the right to present to such physician such information and
arguments as to Executive's disability as he, she or they deem
appropriate, including the opinion of Executive's personal physician.
"Termination for Good Reason" a termination of Executive's
employment by Executive within 30 days following (a) a material
reduction in Executive's aggregate compensation, (b) a material breach
by the Company of any covenant or obligation of the Company in any
written agreement with Executive, in any such case, without Executive's
written consent, (c) a material reduction in Executive's roles and
responsibilities with the Company or (d) the relocation of Executive's
principal place of business to a location more than 50 miles from
Executive's current principal place of business. Notwithstanding the
foregoing, a termination shall not be treated as a Termination for Good
Reason unless the Executive shall have delivered a written notice to
the Company stating that he intends to terminate his employment for
Good Reason and specifying the factual basis for such termination, and
the event or events that form the basis for the notice, if capable of
being cured, shall not have been cured within 10 days of the receipt of
such notice.
"Termination Without Cause" means any termination of
Executive's employment by the Company other than (i) a termination as a
result of Executive's death, (ii) a Termination due to Disability or
(iii) a Termination for Cause.
e. Full Discharge of Party's Obligations. Prior to Executive's
receipt of any amounts otherwise payable to Executive pursuant to Paragraph
5(c)(I)(A)(i) above, upon or following termination of his employment, and as a
condition to Executive's right to receive such amounts, Executive shall deliver
to the Company an acknowledgment that such amounts shall be in full and complete
satisfaction of Executive's rights under this Agreement and any other claims he
may have in respect of his employment by the Company or any of its subsidiaries.
Such amounts shall constitute liquidated damages with respect to any and all
such rights and claims and, upon Executive's receipt of such amounts, the
Company and its subsidiaries and "Affiliates" shall be released and discharged
from any and all liability to Executive in connection with this Agreement or
otherwise in connection with Executive's employment with the Company or any of
its subsidiaries. The acknowledgment shall constitute a general release of all
claims against the Company and its subsidiaries and Affiliates. If Executive
fails to deliver such
5
<PAGE> 6
acknowledgment within thirty days of the receipt by Executive of a request for
such acknowledgment, Executive shall not be entitled to any payments pursuant to
Paragraph 5(c)(I)(A)(i) above. For purposes of this Agreement, the term
"Affiliate" means any entity that controls, is controlled by or is under common
control with the Company.
6. Noncompetition and Confidentiality.
a. Noncompetition. During (i) the Employment Period and (ii)
the period ending six months following the Termination Date (the Employment
Period, together with the period under clause (ii) collectively, the
"Restriction Period"; provided however that, following the expiration of the
Initial Term, the Restriction Period shall not include the period under clause
(ii) above), Executive shall not engage in Competitive Activity. "Competitive
Activity" shall mean to be engaged in a business which at the time of
Executive's termination of employment is competing with the Company or any of
its subsidiaries and may reasonably be considered as being potentially harmful
to the profitability of the Company or any of its subsidiaries. In case of
doubt, Executive must, before engaging in the activity, seek written approval
from the Company's Chief Executive Officer, who shall decide, based on the
facts, whether the activity is likely to be competitive and exercise discretion
accordingly. Following any termination of employment occurring after the
expiration of the Initial Term, the Company may elect to continue paying
Executive's Base Salary, subject to Executive's continued compliance with this
Paragraph 6(a) and Paragraph 6(f) below.
b. Confidentiality. Without the prior written consent of the
Company Board, except to the extent required by an order of a court having
competent jurisdiction or under subpoena from a government agency, during the
Employment Period and the ten year period following any termination of
Executive's employment with the Company, Executive shall not disclose any trade
secrets, customer lists, drawings, designs, information regarding product
development, marketing plans, sales plans, manufacturing plans, management
organization information (including data and other information relating to
members of the Misys Board or the Company Board and management), operating
policies or manuals, business plans, financial records, packaging design or
other financial, commercial, business or technical information relating to the
Company or any of its subsidiaries or Affiliates or information designated as
confidential or proprietary that the Company or any of its subsidiaries or
Affiliates may receive belonging to suppliers, customers or others who do
business with the Company or any of its subsidiaries or Affiliates
(collectively, "Confidential Information") to any third person unless such
Confidential Information has been previously disclosed to the public by the
Company or is in the public domain (other than by reason of Executive's breach
of this Section 6(b)) or unless the disclosure of such confidential information
would not reasonably be likely to have a material adverse effect on the market
value, business, operations, results of operations, assets, financial conditions
or prospects of the Company or any of its subsidiaries.
c. Ownership of Intellectual Property Rights. Executive
acknowledges that all of Executive's work on and contributions to the business
of the Company and/or any of its subsidiaries or Affiliates, including, without
limitation, any and all ideas, processes, methods, systems, programs,
programming aids, manufacturing techniques, software, flowcharts, developments,
inventions, enhancements, modifications and improvements which contribute to the
business of the Company and/or any of its subsidiaries, whether patented,
patentable or unpatentable, created by Executive during his employment by the
6
<PAGE> 7
Company (collectively, the "Works") are within the scope of Executive's
employment with the Company, are a part of the services, duties and
responsibilities of Executive for the Company, are a result of the efforts of
the Company and is the property of the Company and not of Executive. All of
Executive's work on and contributions to the Works shall be rendered and made by
Executive for, at the instigation of, and under the overall direction of the
Company, and all of Executive's said work and contributions, as well as the
Works, are and at all times shall be regarded as "work made for hire" as that
term is used in the United States Copyright Laws. Without curtailing or limiting
these acknowledgments, Executive hereby assigns, grants and delivers exclusively
to the Company all rights, titles and interests in and to any such Works, and
all copies and versions, including all copyrights and renewals. At any time upon
reasonable request by the Company, Executive will execute and deliver to the
Company, or its successors and assigns, such other and further assignments,
instruments and documents as the Company (or such successors or assigns) from
time to time reasonably may request for the purpose of establishing,
registering, evidencing, and enforcing or defending its complete, exclusive,
perpetual and worldwide ownership of all rights, titles, interests and
copyrights, in and to the Works, and Executive hereby constitutes and appoints
the Company as his agent and attorney-in-fact, with full power of substitution,
to execute and deliver such assignments, instruments or documents as Executive
may fail or refuse to execute and deliver, within five business days of
Executive's receiving written request from the Company to execute said
assignment, instrument or document, this power and agency being coupled with an
interest and being irrevocable. Executive shall from time to time as the Company
may reasonably request communicate and make known to the Company all knowledge
possessed by him relating to the Works; provided, however, that nothing herein
shall be construed as requiring any such communication where the Work is
lawfully protected from disclosure as the trade secret of a third party. Every
Work shall be and remain the exclusive property of the Company, it being the
intention of the parties that the Company shall have sole and exclusive
ownership rights in and to the Works.
Executive shall keep such records in connection with his
employment as the Company may from time to time reasonably direct, and all such
records shall be the sole and exclusive property of the Company. At any time and
from time to time, promptly after the Company's request, Executive shall
surrender to the Company any and all documents, memoranda, computer programs,
codes, disks, diskettes, magnetic tapes, books, papers, letters, price lists,
notebooks, reports, logbooks, sales records, customer lists, activity reports,
video or audio recordings, and any and all copies thereof, relating to the
business of the Company or any of its subsidiaries, any Confidential Information
and all Works.
d. Company Property. Promptly following Executive's
termination of employment with the Company, Executive shall return to the
Company all property of the Company or any of its subsidiaries or Affiliates,
and all copies thereof, in whatever medium, in Executive's possession or under
his control.
e. Non-Solicitation of Employees. During the Employment Period
and for 12 months thereafter, except in connection with the performance of
Executive's duties hereunder during the Employment Period, Executive shall not,
and shall not encourage or assist any other person, firm, corporation or other
entity to, induce any employee of the Company or any of its subsidiaries or
Affiliates to terminate employment with such entity, and shall not directly or
indirectly, either individually or as owner, agent, employee,
7
<PAGE> 8
consultant or otherwise, employ or offer employment to any person who is or was
employed by the Company or any of its subsidiaries or Affiliates unless such
person shall have ceased to be employed by such entity for a period of at least
6 months.
f. Non-Solicitation of Customers. During the Restriction
Period, Executive shall not, and shall not encourage or assist any other person,
firm, corporation or other entity to, solicit or otherwise attempt to establish
for himself or any other person, firm or entity any business of a nature that is
competitive with the business or relationship of the Company or any of its
subsidiaries with any person, firm or corporation which during the twelve-month
period preceding the prohibited activity was a customer, client or distributor
of the Company or any of its subsidiaries, other than any such solicitation on
behalf of the Company during Executive's employment hereunder during the
Employment Period.
g. Injunctive Relief with Respect to Covenants. Executive
acknowledges and agrees that the covenants and obligations of Executive with
respect to noncompetition, "works made for hire," nonsolicitation,
confidentiality and Company property relate to special, unique and extraordinary
matters and that a violation or threatened violation of any of the terms of such
covenants or obligations will cause the Company and its subsidiaries and
Affiliates irreparable injury for which adequate remedies are not available at
law. Therefore, Executive agrees that the Company shall be entitled to an
injunction, restraining order or such other equitable relief (without the
requirement to post bond) restraining Executive from committing or threatening
to commit any violation of the covenants and obligations contained in this
Paragraph 6. These injunctive remedies are cumulative and are in addition to any
other rights and remedies the Company may have at law or in equity or pursuant
to this Agreement.
7. Miscellaneous.
a. Survival. Paragraphs 5 (relating to early termination), 6
(relating to noncompetition, "works made for hire," nonsolicitation and
confidentiality) and 7 (relating to miscellaneous provisions) shall survive the
termination hereof, whether such termination shall be by expiration of the
Employment Period or an early termination pursuant to Paragraph 5 hereof.
b. Binding Effect. This Agreement shall be binding on, and
shall inure to the benefit of, the Company and any person or entity that
succeeds to the interest of the Company (regardless of whether such succession
does or does not occur by operation of law) by reason of the sale of all or a
portion of the Company's stock, a merger, consolidation or reorganization
involving the Company or, unless the Company otherwise elects in writing, a sale
of the assets of the business of the Company (or portion thereof) in which
Executive performs a majority of his services. This Agreement shall also inure
to the benefit of Executive's heirs, executors, administrators and legal
representatives.
c. Assignment. Except as provided under Paragraph 7(b),
neither this Agreement nor any of the rights or obligations hereunder shall be
assigned or delegated by any party hereto without the prior written consent of
the other party.
d. Entire Agreement. This Agreement (together with Exhibit A
hereto) constitutes the entire agreement between the parties hereto with respect
to the matters
8
<PAGE> 9
referred to herein. No other agreement relating to the terms of Executive's
employment by the Company, oral or otherwise, shall be binding between the
parties unless it is in writing and signed by the party against whom enforcement
is sought. There are no promises, representations, inducements or statements
between the parties related to the subject matter hereof (or in any Exhibit
hereto) or otherwise relating to Executive's employment other than those that
are expressly contained herein. Executive acknowledges that he is entering into
this Agreement of his own free will and accord, and with no duress, that he has
been represented and fully advised by competent counsel in entering into this
Agreement, that he has read this Agreement and that he understands it and its
legal consequences. This Agreement supersedes all prior agreements between the
Company and Executive.
e. Severability; Reformation. In the event that one or more of
the provisions of this Agreement shall become invalid, illegal or unenforceable
in any respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not be affected thereby. In the event any
subparagraph of Paragraph 6 is not enforceable in accordance with its terms,
Executive and the Company agree that such subparagraph shall be reformed to make
such subparagraph enforceable in a manner which provides the Company the maximum
rights permitted at law.
f. Waiver. Waiver by any party hereto of any breach or default
by the other party of any of the terms of this Agreement shall not operate as a
waiver of any other breach or default, whether similar to or different from the
breach or default waived. No waiver of any provision of this Agreement shall be
implied from any course of dealing between the parties hereto or from any
failure by either party hereto to assert its or his rights hereunder on any
occasion or series of occasions.
g. Notices. Any notice required or desired to be delivered
under this Agreement shall be in writing and shall be delivered personally, by
courier service, by registered mail, return receipt requested, or by telecopy
and shall be effective upon actual receipt by the party to which such notice
shall be directed, and shall be addressed as follows (or to such other address
as the party entitled to notice shall hereafter designate in accordance with the
terms hereof):
9
<PAGE> 10
If to the Company:
1870 Embarcadero Road
Palo Alto, CA 94303
Attention: Chief Executive Officer
with a copy to:
Kirsty, Inc.
45 Broadway, 2nd Floor
New York, New York 10006
Attention: John Colwell
and
Misys plc
Burleigh House
Salford Priors
Evesham
WORCS, WR115SH
England
Attention: Company Secretary
If to Executive, to him at the address set forth on the
signature page hereof.
h. Amendments. This Agreement may not be altered, modified or
amended without the consent of the Purchasers and except by a written instrument
signed by each of the parties hereto.
i. Headings. Headings to paragraphs in this Agreement are for
the convenience of the parties only and are not intended to be part of or to
affect the meaning or interpretation hereof.
j. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
k. Withholding. Any payments provided for herein shall be
reduced by any amounts required to be withheld by the Company from time to time
under applicable Federal, State or local income or employment tax laws or
similar statutes or other provisions of law then in effect. All determinations
of the amount required to be withheld by the Company hereunder shall be
determined by the Company.
l. Governing Law. This Agreement shall be governed by the laws
of the State of California, without reference to principles of conflicts or
choice of law under which the law of any other jurisdiction would apply.
10
<PAGE> 11
IN WITNESS WHEREOF, the Company has caused this Agreement to
be executed by its duly authorized officer and Executive has hereunto set his
hand as of the day and year first above written.
C-ATS Software Inc.
By: /s/ David Gilbert
------------------------------------
David Gilbert
President
EXECUTIVE:
/s/ Rod A. Beckstrom
-----------------------------------------
Rod A. Beckstrom
Address:
161 Lowell Street
Palo Alto, CA 94301
11
<PAGE> 12
EXHIBIT A
PRESIDENT/CHIEF EXECUTIVE OFFICER
SUMMARY: Manages and directs the organization toward its primary objectives,
based on profit and return on capital, in accordance with the prevailing
business plans as approved by the Misys Board, performing the following duties
personally or through subordinate managers. Member of the MKI Risk Board of
Directors. Plans, coordinates, and controls the daily operation of the
organization through the organization's managers and consistent with the overall
framework of internal controls.
Establishes current and long range goals, objectives, plans and policies,
subject to approval by the Board of Directors.
Dispenses advice, guidance, direction, and authorization to carry out major
plans, standards and procedures, consistent with established policies and
Board approval.
Creates the structure and processes necessary to manage the organization's
current activities and its projected growth.
Directs other executives to ensure that operations, responsibilities,
authorities, and accountability are being executed in accordance with the
organization's policies.
Oversees the adequacy and soundness of the organization's financial structure.
Reviews operating results of the organization, compares them to established
objectives, and takes steps to ensure that appropriate measures are taken
to correct unsatisfactory results.
Establishes and maintains an effective system of communications throughout the
organization.
Ensures that all organization activities and operations are carried out in
compliance with local, state, and federal regulations and laws governing
business operations.
Represents the organization with major customers, the financial community, and
the public.
MANAGEMENT
Performs function in a manner that complies with company's commercial and
operating standards and upholds company values.
Ensures staffing levels and skills meet current and future business needs by
recruiting, developing and retaining superior talent.
Analyzes and controls expenditures of division to conform to budgetary
requirements.
Oversees the infrastructure to support responsibilities.
Directs the liaison between all other functional areas.
Represents company in activities of professional organizations serving as a
product champion and industry leader.
<PAGE> 13
EXHIBIT B
C*ATS - Long Term Incentive Plan ("LTIP") Term Sheet
Preamble - The LTIP will be based on the profitability of the
new entity, MKI Risk, to be created from the
combination of C*ATS and MKI's Global Manager/Risk
Vision operation.
- It is structured in the form of a deferred
compensation plan in which awards earned can increase
in value by reference to any rise in the Misys share
price, all within a favorable tax environment.
- The shaded line on the attached LTIP Award Chart
represents the expected level of Profits (as defined
below) during the three year Term of the Plan. It
follows that the anticipated pay-out from the plan is
$8 million but could be as much as $20 million (both
amounts struck before assuming credit from any
investment return).
- The LTIP Awards are separate from and in addition to
normal annual bonuses.
- The Plan is based on the Misys financial year ending
May 31. This will also reflect the time of salary
reviews which, save in exceptional circumstances,
will thereafter take place annually.
Eligible Participants Messrs. Beckstrom and Gilbert will participate in the
Pool and will select other key employees of C*ATS, with
the consent of Misys, who will also participate in the
Pool.
Term The amounts payable to the Pool under the LTIP will be
determined over the three year period commencing June 1,
1999 and ending May 31, 2002. Each June 1 through May 31
during such period constitutes one of three "Plan
Years". Actual payment of a Participant's Award,
however, may be deferred until October 31, 2004.
Awards Participants will be granted an "Award" with respect to
the Pool. The Award will set forth the Participant's
allocable percentage ("Participation Level") of the
vested portion of the Pool.
<PAGE> 14
Calculation of LTIP accruals will be determined based on the cumulative
Maximum LTIP Pool pre-tax "Profits" (as defined below) of the GMRV/C*ATS
Accruals business ("MKI Risk") for the relevant Plan Years. The
attached chart illustrates the different levels of
pay-out dependent on varying performance achievements.
- Following Plan Year 1, provided that Profits equal or
exceed $3,674,000 during Year 1, $1.6 million will be
credited to the Pool. No amount will be credited to the
Pool if Year 1 Profits fall below $3,674,000.
- Following Plan Years 2 and 3, the total amounts
credited to the LTIP Pool (inclusive of any prior year's
credit) will be the amounts set forth on the attached
chart under the "Maximum Payout" column, opposite where
the Cumulative Profits for such year falls (to be pro
rated on a linear basis in the case of actual Cumulative
Profits between such targets).
Vested Portion of - Following Year 1, 20% of the amount (if any) credited
LTIP Pools to the Pool (i.e., 20% of the Maximum Payout at 30%
Profits CAGR) will become vested.
- Following Year 2, the aggregate vested portion of the
Pool (inclusive of the amount vested after Year 1) will
equal the greater of (i) the amount vested after Year 1
or (ii) 40% of the amount under the "Maximum Payout"
column, opposite where the Cumulative Profits for Year 2
falls (to be appropriately pro rated in the case of
actual Cumulative Profits between the stated CAGR
targets).
- Following Year 3, the aggregate vested portion of the
Pool (inclusive of the amount vested after Year 2) will
equal the greater of (i) the amount vested after Year 2
or (ii) 100% of the amount under the "Maximum Payout"
column, opposite where the Cumulative Profits for Year 3
falls (to be pro rated on a linear basis in the case of
actual Cumulative Profits between the stated CAGR
targets).
- The vested portions of the Pool will be
nonforfeitable.
2
<PAGE> 15
Calculation of Profit Profit (i.e., EBIT) shall be calculated (in $U.S.) based
on Misys GAAP as soon as is reasonably practicable
following receipt by the C*ATS Board of the audited
financial statements for the applicable period. LTIP
Accruals will not be charged to Profits.
LTIP Payout - A Participant may cash out his or her LTIP Award at
any time, based on the vested portion of the Pool at
such time. However, by cashing out the LTIP Award,
he/she will forfeit all rights to any subsequent LTIP
accruals. A participant who cashes in his or her LTIP
accrual will also forfeit the SAR feature described
below.
- Generally, a Participant may not cash out a fractional
portion of his or her Award. However, such fractional
distributions may be permitted (at the sole discretion
of the C*ATS Board) in the case of a Participant's
demonstrated hardship and in such circumstances
subsequent LTIP accruals will not be forfeited.
- All LTIP Payouts will include 5% simple interest from
June 1, 1999 through the applicable payment date. Within
14 days following the determination of the final vested
portion of the LTIP Pool after Year 3, all accrued
interest will be paid out in cash. Thereafter, interest
on LTIP Awards will continue to be paid on each November
30 and May 31 so long as the Participant continues to
hold his Award.
- If not previously paid out (either directly, or upon
exercise of the SAR described below), all LTIP Awards
(including any unpaid interest) will be paid on October
31, 2004.
3
<PAGE> 16
Option following Year Commencing on June 1, 2003 as to 50% of a Participant's
Four to Redeem LTIP LTIP Award, and June 1, 2004 as to the remaining 50%, a
Accruals based on the Participant will have the right to redeem his or her
Appreciation of Misys LTIP Award (excluding any simple interest that may have
shares (the "SAR") accrued thereon) for a cash payment based on a portion
of the appreciation of Misys Ordinary Shares since the
closing date of the Tender Offer (the "SAR"). The base
price for the SAR will equal 125% of the closing price
of a Misys Ordinary Share as of the closing date of the
Tender Offer, expressed in Pounds Sterling (the "Base
Price"). Upon exercise of the SAR, a Participant will
receive a cash payment equal to the product of (A) the
quotient of (x) the dollar value (absent the SAR) of the
portion of the LTIP Award being so redeemed and (y) the
Base Price, and (B) the closing price (in Pounds
Sterling) of a Misys Ordinary Share as of the exercise
date. With respect to each Participant, the SAR will
terminate on the earlier of October 31, 2004 or the date
on which the participant terminates employment (other
than due to a termination "without cause" by the Company
or a termination for "good reason" by the participant).
Effect of Termination - Voluntary Termination (other than for Good Reason) and
of Employment Termination for Cause: Participants will be paid out
their vested LTIP Awards (including interest), based on
the amounts vested as of the end of the most recently
completed LTIP Year.
- All Other Terminations (i.e., Death, Disability,
Retirement, Termination without Cause; Termination with
Good Reason): Participants will be credited with the pro
rata portion of the LTIP accrual they would have
received for the year in which termination occurs (based
on months employed), in addition to their vested Award
from any completed LTIP Year. In the case of a
termination for Good Reason or without Cause, payment
will not be accelerated unless the participant so
elects, and participants will be permitted to continue
to defer receipt of payment and will continue to be
eligible for the SAR.
Basic Features: - Payments under the LTIP will be in addition to the
Company's regular annual bonus.
- The terms of the LTIP may be modified with the consent
of the Misys Board if advantageous tax results may be
achieved without changing the material provisions of the
LTIP.
4
<PAGE> 17
Beckstrom Provisions - If Beckstrom remains employed through the end of Year
1 (May 31, 2000), any subsequent termination by him
(other than for "Cause") will be deemed to be for "Good
Reason".
- If Beckstrom quits after Year 1, but before the end of
Year 2, he shall be deemed to have continued in
employment through the end of Year 2, except that his
Award shall only relate to 20% of the amount credited to
the Pool after Year 2 (rather than 40%).
Beckstrom and Gilbert - During the 3 year performance period, neither
bonuses and initial Beckstrom nor Gilbert will receive a separate annual
salaries bonus.
- The starting salaries for both Beckstrom and Gilbert
will be set at $250,000 to continue until May 31, 2000.
5
<PAGE> 18
EXAMPLES
1. A Participant remains employed through Year 3. The cumulative Profit
through Year 3 is $35,821,500. The total Pool accrual would be $8,000,000,
of which 100% is vested. The Participant's Award is equal to his
applicable percentage times the vested amount in the Pool.
2. Same case, except the cumulative Profit is $40,000,000. Since the results
fall between the "targets" of $35,821,500 and $42,765,360, the pool
accrual would be similarly pro rated between the $8,000,000 and
$12,800,000 Maximum Payouts (i.e., $10,888,422). [8,000,000 +
(40,000,000-35,821,500)/(42,765,360-35,821,500) X (12,800,000-8,000,000)
= 10,888,422.]
3. A Participant quits after Year 2 (but before the end of Year 3). The
vested percentage of the Pool is 40%. The cumulative Profits through Year
2 are $12,869,000. At that same level of performance through Year 3, the
LTIP pool accrual would have been $8,000,000. The participant would
receive his applicable percentage of $3,200,000 (40% of $8 million).
4. A Participant remains employed through Year 3. The cumulative Profits
through Year 2 were $16 million and the cumulative Profits through Year 3
were $24 million. Since the vested percentage in the Pool after Year 2
(40% x $19,200,000) exceeds the amount which would be vested after Year 3
(100% x $3,200,000), no additional amount has vested in Year 3.
Accordingly, the vested portion of the Pool after Year 3 remains $7.68
million. The Participant is entitled to his allocable percentage of that
amount.
5. David Gilbert quits after Year 2 (but before the end of Year 3). Year 1
Profits were $4 million and the cumulative Profits through Year 2 were $5
million. Since no amount was credited to the Pool with respect to Year 2,
the vested portion of the Pool remains $320,000 (the amount which was
vested after Year 1 (20% X $1,600,000)). David is entitled to his
applicable percentage of the Pool -- i.e., $100,000 (31.25% of $320,000).
6. Same as #5, except Rod Beckstrom is the Participant. Since the termination
is deemed to be for Good Reason, Rod will also be entitled to a pro-rata
portion of the Year 3 LTIP accrual (if any), based on the number of months
he was employed during Year 3 prior to termination.
6
<PAGE> 19
MOXIE - LONG TERM INCENTIVE PLAN ("LTIP") AWARD CHART
<TABLE>
<CAPTION>
Year 1 Year 2 Year 3
----------------- -------------------------------- --------------------------------
CAGR Annual/Cumulative Annual Cumulative Annual Cumulative MAXIMUM PAYOUT
----------------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Less than 30% $ -- $ -- $ -- $ -- $ -- $ --
30% $3,674,000.00 $ 4,776,200.00 $ 8,450,200.00 $ 6,209,060.00 $14,659,260.00 $ 1,600,000.00
60% $3,674,000.00 $ 5,878,400.00 $ 9,552,400.00 $ 9,405,440.00 $18,957,840.00 $ 2,400,000.00
90% $3,674,000.00 $ 6,980,600.00 $10,654,600.00 $13,263,140.00 $23,917,740.00 $ 3,200,000.00
120% $3,674,000.00 $ 8,082,800.00 $11,756,800.00 $17,782,160.00 $29,538,960.00 $ 4,800,000.00
150% $3,674,000.00 $ 9,185,000.00 $12,859,000.00 $22,962,500.00 $35,821,500.00 $ 8,000,000.00
180% $3,674,000.00 $10,287,200.00 $13,961,200.00 $28,804,160.00 $42,765,360.00 $12,800,000.00
210% or more $3,674,000.00 $11,389,400.00 $15,063,400.00 $35,307,140.00 $50,370,540.00 $19,200,000.00
</TABLE>
*** NOTE: ALL DOLLAR FIGURES LISTED ABOVE AS PROFITS TARGETS (AND REFERENCED IN
THE LTIP TERM SHEET) ARE FOR ILLUSTRATION PURPOSES ONLY SINCE THEY WERE
CALCULATED BASED ON CALENDER YEAR ASSUMPTIONS. THE ACTUAL PROFITS TARGETS FOR
PURPOSES OF THE LTIP WILL BE ADJUSTED TO REFLECT A MAY 31 FISCAL YEAR.
<PAGE> 1
EXHIBIT (c)(5)
CONFORMED COPY
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of December 14, 1998, by and
between C-ATS Software Inc., a Delaware corporation (the "Company"), and David
Gilbert ("Executive").
W I T N E S S E T H:
WHEREAS, Executive is currently employed by the Company; and
WHEREAS, pursuant to the Merger Agreement, dated as of
December 14, 1998, by and among Misys plc, a public limited liability company
incorporated under the laws of England ("Misys"), Kirsty, Inc., a Delaware
corporation and indirect wholly owned subsidiary of Misys, Moxie Acquisition
Corp., a Delaware corporation and a direct wholly owned subsidiary of Kirsty,
Inc., and the Company (the "Merger Agreement"), Moxie Acquisition Corp. will be
merged with and into the Company with the Company as the surviving corporation
(the "Merger"); and
WHEREAS, the Company desires to secure the continued services
of Executive from and after the effective time of the Merger (the "Effective
Time") and to enter into this agreement setting forth the terms and conditions
of Executive's continued employment with the Company (the "Agreement"); and
WHEREAS, Executive desires to accept such continued employment
on the terms and conditions set forth in this Agreement; and
WHEREAS, during the course of his employment with the Company,
Executive has and will obtain confidential information concerning the business
and operations of the Company and its subsidiaries that could be used to compete
unfairly with the Company and/or its subsidiaries and could be of great value to
its and their competitors.
NOW, THEREFORE, in consideration of the mutual covenants
herein contained, the Company and Executive hereby agree as follows:
1. Employment.
a. Agreement to Continue Employment. Upon the terms and
subject to the conditions of this Agreement, the Company hereby agrees to
continue to employ Executive and Executive hereby accepts such continued
employment with the Company.
b. Term of Employment. The Company shall employ Executive
pursuant to the terms of this Agreement for the period commencing on the date
that includes the Effective Time (the "Commencement Date") and ending on the
third anniversary thereof (the "Initial Term"), subject to the early termination
provisions of Paragraph 5(a). The term will be extended for successive periods
of six months each, unless Executive or the Company provides a notice of
non-renewal to the other party at least 30 days prior to the
<PAGE> 2
expiration of the Initial Term or any renewal term. The period during which
Executive is employed pursuant to this Agreement shall be referred to as the
"Employment Period".
2. Position and Duties.
During the Employment Period, Executive shall serve as
President and Chief Executive Officer of the Company and in such position or
positions with the Company and its subsidiaries as the Board of Directors of
Misys (the "Misys Board") shall from time to time reasonably specify. During the
Employment Period, Executive shall have the duties, responsibilities and
obligations customarily assigned to individuals serving in the position or
positions in which Executive serves hereunder. Executive shall devote his full
business time to the services required of him hereunder except for vacation time
and reasonable periods of absence due to sickness, personal injury or other
disability, and shall use his best efforts, judgment, skill and energy to
perform such services in a manner consonant with the duties of his positions and
to improve and advance the business and interests of the Company and its
subsidiaries. A description of Executive's duties and responsibilities is
attached hereto as Exhibit A.
3. Compensation.
a. Base Salary. During the Employment Period, the Company
shall pay Executive a base salary at the annual rate of $250,000. The Board of
Directors of the Company (the "Company Board") shall review Executive's base
salary on each May 31 during the Employment Period, and may, subject to the
approval of the Misys Board (which approval may be withheld in the discretion of
the Misys Board), adjust such base salary upwards, but not downwards, in light
of the base salaries then paid to other Executives of the Company and the
performance of Executive. Executive's annual base salary payable hereunder is
referred to herein as "Base Salary". The Company shall pay Executive his Base
Salary in accordance with the Company's regular payroll practices as in effect
from time to time.
b. Long Term Incentive Compensation Plan. Executive is hereby
granted an Incentive Award with respect to the Incentive Pool of the Company's
Long Term Incentive Plan (the "LTIP"), at a Participation Level of 31.25%. The
terms of the LTIP, when finalized and adopted by the Company in consultation
with Executive, will substantially reflect the terms summarized and attached
hereto as Exhibit B.
4. Benefits, Perquisites and Expenses.
a. Benefits. During the Employment Period, Executive shall
participate in each pension and welfare benefit plan sponsored or maintained by
the Company to the extent Executive is eligible to participate in any such plan
under the generally applicable provisions thereof, including, without
limitation, each pension, profit sharing, retirement, deferred compensation or
savings, group life, medical, accident or disability insurance or similar plan
or program of the Company. Nothing herein shall limit the right of the Company
to amend or terminate any such plan in its discretion. Executive's years of
service with the Company and, if applicable, Lor/Geske Bock Associates, Inc.,
prior to the Commencement Date shall be credited for purposes of determining
Executive's eligibility and/or vesting under any Company benefit plan.
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<PAGE> 3
b. Perquisites. During the Employment Period, Executive shall
be entitled to sick leave and five weeks of paid vacation annually, subject in
all respects to the generally applicable provisions of the Company's vacation
and sick leave policies.
c. Business Expenses. During the Employment Period, the
Company shall pay or reimburse Executive for all reasonable expenses incurred or
paid by Executive in the performance of Executive's duties hereunder, upon
presentation of expense statements or vouchers and such other information as the
Company may require and in accordance with the generally applicable policies and
procedures of the Company.
5. Termination of Employment.
a. Early Termination of the Employment Period. Notwithstanding
Paragraph 1(b), the Employment Period shall end upon the earliest to occur of
(i) the date of Executive's death, (ii) 30 days following delivery by the
Company of written notice to Executive of a Termination due to Disability, (iii)
immediately upon delivery by the Company of written notice to Executive of a
Termination for Cause, (iv) three months following the date of delivery by the
Company of written notice to Executive of a Termination Without Cause, provided
that, subject to the continued payment to Executive of installments of his Base
Salary for the period ending three months following the date the Company
delivers such notice of termination to Executive, the Company may elect to
direct Executive to refrain from reporting to employment as of any earlier date
specified in such notice, (v) the date specified in any written notice delivered
by Executive to the Company of a Termination for Good Reason, which date shall
be at least 30 days after the delivery of such notice, or (vi) three months
following the date of delivery by Executive of written notice to the Company of
the Executive's resignation from employment, other than a Termination for Good
Reason. The provisions of this Paragraph 5 shall not apply to any termination of
employment occurring after the Initial Term.
b. Payments Upon Any Terminations. In the event of the
termination of Executive's employment pursuant to Paragraph 5, the Company shall
pay to Executive, within 30 days of the Termination Date, any Base Salary
earned, but unpaid, for services rendered to the Company on or prior to such
date (other than Base Salary deferred pursuant to Executive's election). In
addition, Executive shall be entitled to receive all vested benefits accrued and
payable to Executive under the terms of or in accordance with any plan, policy
or program of the Company or its subsidiaries (other than any severance plan,
policy or program) that are payable at or subsequent to the date of his
termination without regard to the performance by Executive of further services
or the resolution of a contingency. Such vested accrued benefits shall be
payable in accordance with the terms of the plan, policy or program under which
such benefits have accrued, except as otherwise expressly modified by this
Agreement.
c. Additional Benefits Payable Upon Certain Terminations.
(I) Payments.
(A) In the event of a termination of Executive's
employment pursuant to Paragraph 5(a) due to a
Termination Without Cause or a Termination for Good
Reason, (i) the Company shall continue to pay to
Executive installments of his Base Salary (at the
annual rate in
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<PAGE> 4
effect immediately prior to the Termination Date), in
accordance with the Company's regular payroll
practices as then in effect, and provide Executive
with medical benefits during the six month period
beginning on the Termination Date and (ii) with
respect to the Incentive Compensation Award granted
to Executive pursuant to Paragraph 3(b)(i), Executive
shall be entitled to receive any amounts that become
payable with respect to such Award in accordance with
and subject to the terms and conditions of the Long
Term Incentive Compensation Plan, it being understood
that there shall be no duplication of payments under
this Agreement and under such plan.
(B) In the event of the termination of Executive's
employment pursuant to Paragraph 5(a) due to a
Termination due to Disability or as a result of
Executive's death, Executive shall be entitled to
receive any amounts that become payable in accordance
with and subject to the terms and conditions of the
Long Term Incentive Compensation Plan with respect to
the Incentive Compensation Award granted to Executive
hereunder, it being understood that there shall be no
duplication of payments under this Agreement and
under such plan.
(II) Limitations. Notwithstanding the provisions of Paragraph
5(c)(I), if Executive materially breaches any of the provisions of any
of Paragraph 6, Executive shall forfeit all rights to receive, and the
Company shall be relieved of all obligations to pay, any and all
amounts then remaining to be paid to Executive pursuant to Paragraph
5(c)(I).
d. Definitions. For purposes of Paragraphs 5 and 6, the
following capitalized terms have the following meanings:
"Termination Date" means the effective date of any early
termination of the Employment Period pursuant to Paragraph 5(a), it
being understood that in the event of a Termination Without Cause, the
effective date of such termination shall be the three month anniversary
of the date the Company delivers notice of such termination to
Executive.
"Termination for Cause" means a termination of Executive's
employment by the Company due to (a) Executive's conviction of a felony
or the entering by Executive of a plea of nolo contendere to a felony,
(b) Executive's gross negligence, dishonesty (other than of a de
minimis nature), willful malfeasance or substantial misconduct in
connection with his employment with the Company, (c) a substantial or
continual refusal by Executive to perform the duties, responsibilities
or obligations reasonably assigned to him by the Company or (d) a
material breach by Executive of any covenant or obligation in any
written agreement with the Company or any of its subsidiaries,
including any breach of any of the provisions of Paragraph 6 hereof.
Notwithstanding the foregoing, a termination shall not be treated as a
Termination for Cause unless the Company shall have delivered a written
notice to Executive stating that it intends to terminate his employment
for Cause and specifying the factual basis for such termination, and
the event or events
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<PAGE> 5
that form the basis for the notice, if capable of being cured, shall
not have been cured within 10 days of the receipt of such notice.
"Termination due to Disability" means a termination of
Executive's employment by the Company because Executive has been
incapable of substantially fulfilling the positions, duties,
responsibilities and obligations of his employment because of physical,
mental or emotional incapacity resulting from injury, sickness or
disease for a period of at least six months in any twelve month period.
Any question as to the existence, extent or potentiality of Executive's
disability upon which Executive and the Company cannot agree shall be
determined by a qualified, independent physician selected by the
Company and approved by Executive (which approval shall not be
unreasonably withheld). The determination of any such physician shall
be final and conclusive for all purposes of this Agreement. Executive
or his legal representative or any adult member of his immediate family
shall have the right to present to such physician such information and
arguments as to Executive's disability as he, she or they deem
appropriate, including the opinion of Executive's personal physician.
"Termination for Good Reason" a termination of Executive's
employment by Executive within 30 days following (a) a material
reduction in Executive's aggregate compensation, (b) a material breach
by the Company of any covenant or obligation of the Company in any
written agreement with Executive, in any such case, without Executive's
written consent, (c) a material reduction in Executive's roles and
responsibilities with the Company or (d) the relocation of Executive's
principal place of business to a location more than 50 miles from
Executive's current principal place of business. Notwithstanding the
foregoing, a termination shall not be treated as a Termination for Good
Reason unless the Executive shall have delivered a written notice to
the Company stating that he intends to terminate his employment for
Good Reason and specifying the factual basis for such termination, and
the event or events that form the basis for the notice, if capable of
being cured, shall not have been cured within 10 days of the receipt of
such notice.
"Termination Without Cause" means any termination of
Executive's employment by the Company other than (i) a termination as a
result of Executive's death, (ii) a Termination due to Disability or
(iii) a Termination for Cause.
e. Full Discharge of Party's Obligations. Prior to Executive's
receipt of any amounts otherwise payable to Executive pursuant to Paragraph
5(c)(I)(A)(i) above, upon or following termination of his employment, and as a
condition to Executive's right to receive such amounts, Executive shall deliver
to the Company an acknowledgment that such amounts shall be in full and complete
satisfaction of Executive's rights under this Agreement and any other claims he
may have in respect of his employment by the Company or any of its subsidiaries.
Such amounts shall constitute liquidated damages with respect to any and all
such rights and claims and, upon Executive's receipt of such amounts, the
Company and its subsidiaries and "Affiliates" shall be released and discharged
from any and all liability to Executive in connection with this Agreement or
otherwise in connection with Executive's employment with the Company or any of
its subsidiaries. The acknowledgment shall constitute a general release of all
claims against the Company and its subsidiaries and Affiliates. If Executive
fails to deliver such
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<PAGE> 6
acknowledgment within thirty days of the receipt by Executive of a request for
such acknowledgment, Executive shall not be entitled to any payments pursuant to
Paragraph 5(c)(I)(A)(i) above. For purposes of this Agreement, the term
"Affiliate" means any entity that controls, is controlled by or is under common
control with the Company.
6. Noncompetition and Confidentiality.
a. Noncompetition. During (i) the Employment Period and (ii)
the period ending six months following the Termination Date (the Employment
Period, together with the period under clause (ii) collectively, the
"Restriction Period"; provided however that, following the expiration of the
Initial Term, the Restriction Period shall not include the period under clause
(ii) above), Executive shall not engage in Competitive Activity. "Competitive
Activity" shall mean to be engaged in a business which at the time of
Executive's termination of employment is competing with the Company or any of
its subsidiaries and may reasonably be considered as being potentially harmful
to the profitability of the Company or any of its subsidiaries. In case of
doubt, Executive must, before engaging in the activity, seek written approval
from the Misys Board, which shall decide, based on the facts, whether the
activity is likely to be competitive and exercise discretion accordingly.
Following any termination of employment occurring after the expiration of the
Initial Term, the Company may elect to continue paying Executive's Base Salary,
subject to Executive's continued compliance with this Paragraph 6(a) and
Paragraph 6(f) below.
b. Confidentiality. Without the prior written consent of the
Company Board, except to the extent required by an order of a court having
competent jurisdiction or under subpoena from a government agency, during the
Employment Period and the ten year period following any termination of
Executive's employment with the Company, Executive shall not disclose any trade
secrets, customer lists, drawings, designs, information regarding product
development, marketing plans, sales plans, manufacturing plans, management
organization information (including data and other information relating to
members of the Misys Board or the Company Board and management), operating
policies or manuals, business plans, financial records, packaging design or
other financial, commercial, business or technical information relating to the
Company or any of its subsidiaries or Affiliates or information designated as
confidential or proprietary that the Company or any of its subsidiaries or
Affiliates may receive belonging to suppliers, customers or others who do
business with the Company or any of its subsidiaries or Affiliates
(collectively, "Confidential Information") to any third person unless such
Confidential Information has been previously disclosed to the public by the
Company or is in the public domain (other than by reason of Executive's breach
of this Section 6(b)) or unless the disclosure of such confidential information
would not reasonably be likely to have a material adverse effect on the market
value, business, operations, results of operations, assets, financial conditions
or prospects of the Company or any of its subsidiaries.
c. Ownership of Intellectual Property Rights. Executive
acknowledges that all of Executive's work on and contributions to the business
of the Company and/or any of its subsidiaries or Affiliates, including, without
limitation, any and all ideas, processes, methods, systems, programs,
programming aids, manufacturing techniques, software, flowcharts, developments,
inventions, enhancements, modifications and improvements which contribute to the
business of the Company and/or any of its subsidiaries, whether patented,
patentable or unpatentable, created by Executive during his employment by the
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<PAGE> 7
Company (collectively, the "Works") are within the scope of Executive's
employment with the Company, are a part of the services, duties and
responsibilities of Executive for the Company, are a result of the efforts of
the Company and is the property of the Company and not of Executive. All of
Executive's work on and contributions to the Works shall be rendered and made by
Executive for, at the instigation of, and under the overall direction of the
Company, and all of Executive's said work and contributions, as well as the
Works, are and at all times shall be regarded as "work made for hire" as that
term is used in the United States Copyright Laws. Without curtailing or limiting
these acknowledgments, Executive hereby assigns, grants and delivers exclusively
to the Company all rights, titles and interests in and to any such Works, and
all copies and versions, including all copyrights and renewals. At any time upon
reasonable request by the Company, Executive will execute and deliver to the
Company, or its successors and assigns, such other and further assignments,
instruments and documents as the Company (or such successors or assigns) from
time to time reasonably may request for the purpose of establishing,
registering, evidencing, and enforcing or defending its complete, exclusive,
perpetual and worldwide ownership of all rights, titles, interests and
copyrights, in and to the Works, and Executive hereby constitutes and appoints
the Company as his agent and attorney-in-fact, with full power of substitution,
to execute and deliver such assignments, instruments or documents as Executive
may fail or refuse to execute and deliver, within five business days of
Executive's receiving written request from the Company to execute said
assignment, instrument or document, this power and agency being coupled with an
interest and being irrevocable. Executive shall from time to time as the Company
may reasonably request communicate and make known to the Company all knowledge
possessed by him relating to the Works; provided, however, that nothing herein
shall be construed as requiring any such communication where the Work is
lawfully protected from disclosure as the trade secret of a third party. Every
Work shall be and remain the exclusive property of the Company, it being the
intention of the parties that the Company shall have sole and exclusive
ownership rights in and to the Works.
Executive shall keep such records in connection with his
employment as the Company may from time to time reasonably direct, and all such
records shall be the sole and exclusive property of the Company. At any time and
from time to time, promptly after the Company's request, Executive shall
surrender to the Company any and all documents, memoranda, computer programs,
codes, disks, diskettes, magnetic tapes, books, papers, letters, price lists,
notebooks, reports, logbooks, sales records, customer lists, activity reports,
video or audio recordings, and any and all copies thereof, relating to the
business of the Company or any of its subsidiaries, any Confidential Information
and all Works.
d. Company Property. Promptly following Executive's
termination of employment with the Company, Executive shall return to the
Company all property of the Company or any of its subsidiaries or Affiliates,
and all copies thereof, in whatever medium, in Executive's possession or under
his control.
e. Non-Solicitation of Employees. During the Employment Period
and for 12 months thereafter, except in connection with the performance of
Executive's duties hereunder during the Employment Period, Executive shall not,
and shall not encourage or assist any other person, firm, corporation or other
entity to, induce any employee of the Company or any of its subsidiaries or
Affiliates to terminate employment with such entity, and shall not directly or
indirectly, either individually or as owner, agent, employee,
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<PAGE> 8
consultant or otherwise, employ or offer employment to any person who is or was
employed by the Company or any of its subsidiaries or Affiliates unless such
person shall have ceased to be employed by such entity for a period of at least
6 months.
f. Non-Solicitation of Customers. During the Restriction
Period, Executive shall not, and shall not encourage or assist any other person,
firm, corporation or other entity to, solicit or otherwise attempt to establish
for himself or any other person, firm or entity any business of a nature that is
competitive with the business or relationship of the Company or any of its
subsidiaries with any person, firm or corporation which during the twelve-month
period preceding the prohibited activity was a customer, client or distributor
of the Company or any of its subsidiaries, other than any such solicitation on
behalf of the Company during Executive's employment hereunder during the
Employment Period.
g. Injunctive Relief with Respect to Covenants. Executive
acknowledges and agrees that the covenants and obligations of Executive with
respect to noncompetition, "works made for hire," nonsolicitation,
confidentiality and Company property relate to special, unique and extraordinary
matters and that a violation or threatened violation of any of the terms of such
covenants or obligations will cause the Company and its subsidiaries and
Affiliates irreparable injury for which adequate remedies are not available at
law. Therefore, Executive agrees that the Company shall be entitled to an
injunction, restraining order or such other equitable relief (without the
requirement to post bond) restraining Executive from committing or threatening
to commit any violation of the covenants and obligations contained in this
Paragraph 6. These injunctive remedies are cumulative and are in addition to any
other rights and remedies the Company may have at law or in equity or pursuant
to this Agreement.
7. Miscellaneous.
a. Survival. Paragraphs 5 (relating to early termination), 6
(relating to noncompetition, "works made for hire," nonsolicitation and
confidentiality) and 7 (relating to miscellaneous provisions) shall survive the
termination hereof, whether such termination shall be by expiration of the
Employment Period or an early termination pursuant to Paragraph 5 hereof.
b. Binding Effect. This Agreement shall be binding on, and
shall inure to the benefit of, the Company and any person or entity that
succeeds to the interest of the Company (regardless of whether such succession
does or does not occur by operation of law) by reason of the sale of all or a
portion of the Company's stock, a merger, consolidation or reorganization
involving the Company or, unless the Company otherwise elects in writing, a sale
of the assets of the business of the Company (or portion thereof) in which
Executive performs a majority of his services. This Agreement shall also inure
to the benefit of Executive's heirs, executors, administrators and legal
representatives.
c. Assignment. Except as provided under Paragraph 7(b),
neither this Agreement nor any of the rights or obligations hereunder shall be
assigned or delegated by any party hereto without the prior written consent of
the other party.
d. Entire Agreement. This Agreement (together with Exhibit A
hereto) constitutes the entire agreement between the parties hereto with respect
to the matters
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<PAGE> 9
referred to herein. No other agreement relating to the terms of Executive's
employment by the Company, oral or otherwise, shall be binding between the
parties unless it is in writing and signed by the party against whom enforcement
is sought. There are no promises, representations, inducements or statements
between the parties related to the subject matter hereof (or in any Exhibit
hereto) or otherwise relating to Executive's employment other than those that
are expressly contained herein. Executive acknowledges that he is entering into
this Agreement of his own free will and accord, and with no duress, that he has
been represented and fully advised by competent counsel in entering into this
Agreement, that he has read this Agreement and that he understands it and its
legal consequences. This Agreement supersedes all prior agreements between the
Company and Executive.
e. Severability; Reformation. In the event that one or more of
the provisions of this Agreement shall become invalid, illegal or unenforceable
in any respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not be affected thereby. In the event any
subparagraph of Paragraph 6 is not enforceable in accordance with its terms,
Executive and the Company agree that such subparagraph shall be reformed to make
such subparagraph enforceable in a manner which provides the Company the maximum
rights permitted at law.
f. Waiver. Waiver by any party hereto of any breach or default
by the other party of any of the terms of this Agreement shall not operate as a
waiver of any other breach or default, whether similar to or different from the
breach or default waived. No waiver of any provision of this Agreement shall be
implied from any course of dealing between the parties hereto or from any
failure by either party hereto to assert its or his rights hereunder on any
occasion or series of occasions.
g. Notices. Any notice required or desired to be delivered
under this Agreement shall be in writing and shall be delivered personally, by
courier service, by registered mail, return receipt requested, or by telecopy
and shall be effective upon actual receipt by the party to which such notice
shall be directed, and shall be addressed as follows (or to such other address
as the party entitled to notice shall hereafter designate in accordance with the
terms hereof):
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If to the Company:
1870 Embarcadero Road
Palo Alto, CA 94303
Attention: Chairman of the Board
with a copy to:
Kirsty, Inc.
45 Broadway, 2nd Floor
New York, New York 10006
Attention: John Colwell
and
Misys plc
Burleigh House
Salford Priors
Evesham
WORCS, WR115SH
England
Attention: Company Secretary
If to Executive, to him at the address set forth on the
signature page hereof.
h. Amendments. This Agreement may not be altered, modified or
amended without the consent of the Purchasers and except by a written instrument
signed by each of the parties hereto.
i. Headings. Headings to paragraphs in this Agreement are for
the convenience of the parties only and are not intended to be part of or to
affect the meaning or interpretation hereof.
j. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
k. Withholding. Any payments provided for herein shall be
reduced by any amounts required to be withheld by the Company from time to time
under applicable Federal, State or local income or employment tax laws or
similar statutes or other provisions of law then in effect. All determinations
of the amount required to be withheld by the Company hereunder shall be
determined by the Company.
l. Governing Law. This Agreement shall be governed by the laws
of the State of California, without reference to principles of conflicts or
choice of law under which the law of any other jurisdiction would apply.
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IN WITNESS WHEREOF, the Company has caused this Agreement to
be executed by its duly authorized officer and Executive has hereunto set his
hand as of the day and year first above written.
C-ATS Software Inc.
By: /s/ Rod A. Beckstrom
Rod A. Beckstrom
Chairman
EXECUTIVE:
/s/ David Gilbert
David Gilbert
Address:
3 Wilmington Acres Court
Emerald Hills, CA 94602
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EXHIBIT A
PRESIDENT/CHIEF EXECUTIVE OFFICER
SUMMARY: Manages and directs the organization toward its primary objectives,
based on profit and return on capital, in accordance with the prevailing
business plans as approved by the Misys Board, performing the following duties
personally or through subordinate managers. Member of the MKI Risk Board of
Directors. Plans, coordinates, and controls the daily operation of the
organization through the organization's managers and consistent with the overall
framework of internal controls.
Establishes current and long range goals, objectives, plans and policies,
subject to approval by the Board of Directors.
Dispenses advice, guidance, direction, and authorization to carry out major
plans, standards and procedures, consistent with established policies and
Board approval.
Creates the structure and processes necessary to manage the organization's
current activities and its projected growth.
Directs other executives to ensure that operations, responsibilities,
authorities, and accountability are being executed in accordance with the
organization's policies.
Oversees the adequacy and soundness of the organization's financial structure.
Reviews operating results of the organization, compares them to established
objectives, and takes steps to ensure that appropriate measures are taken
to correct unsatisfactory results.
Establishes and maintains an effective system of communications throughout the
organization.
Ensures that all organization activities and operations are carried out in
compliance with local, state, and federal regulations and laws governing
business operations.
Represents the organization with major customers, the financial community, and
the public.
MANAGEMENT
Performs function in a manner that complies with company's commercial and
operating standards and upholds company values.
Ensures staffing levels and skills meet current and future business needs by
recruiting, developing and retaining superior talent.
Analyzes and controls expenditures of division to conform to budgetary
requirements.
Oversees the infrastructure to support responsibilities.
Directs the liaison between all other functional areas.
Represents company in activities of professional organizations serving as a
product champion and industry leader.
<PAGE> 13
EXHIBIT B
C*ATS - Long Term Incentive Plan ("LTIP") Term Sheet
Preamble - The LTIP will be based on the profitability of the
new entity, MKI Risk, to be created from the
combination of C*ATS and MKI's Global Manager/Risk
Vision operation.
- It is structured in the form of a deferred
compensation plan in which awards earned can increase
in value by reference to any rise in the Misys share
price, all within a favorable tax environment.
- The shaded line on the attached LTIP Award Chart
represents the expected level of Profits (as defined
below) during the three year Term of the Plan. It
follows that the anticipated pay-out from the plan is
$8 million but could be as much as $20 million (both
amounts struck before assuming credit from any
investment return).
- The LTIP Awards are separate from and in addition to
normal annual bonuses.
- The Plan is based on the Misys financial year ending
May 31. This will also reflect the time of salary
reviews which, save in exceptional circumstances,
will thereafter take place annually.
Eligible Participants Messrs. Beckstrom and Gilbert will participate in the
Pool and will select other key employees of C*ATS, with
the consent of Misys, who will also participate in the
Pool.
Term The amounts payable to the Pool under the LTIP will be
determined over the three year period commencing June 1,
1999 and ending May 31, 2002. Each June 1 through May 31
during such period constitutes one of three "Plan
Years". Actual payment of a Participant's Award,
however, may be deferred until October 31, 2004.
Awards Participants will be granted an "Award" with respect to
the Pool. The Award will set forth the Participant's
allocable percentage ("Participation Level") of the
vested portion of the Pool.
<PAGE> 14
Calculation of LTIP accruals will be determined based on the cumulative
Maximum LTIP Pool pre-tax "Profits" (as defined below) of the GMRV / C*ATS
Accruals business ("MKI Risk") for the relevant Plan Years. The
attached chart illustrates the different levels of
pay-out dependent on varying performance achievements.
- Following Plan Year 1, provided that Profits equal or
exceed $3,674,000 during Year 1, $1.6 million will be
credited to the Pool. No amount will be credited to the
Pool if Year 1 Profits fall below $3,674,000.
- Following Plan Years 2 and 3, the total amounts
credited to the LTIP Pool (inclusive of any prior year's
credit) will be the amounts set forth on the attached
chart under the "Maximum Payout" column, opposite where
the Cumulative Profits for such year falls (to be pro
rated on a linear basis in the case of actual Cumulative
Profits between such targets).
Vested Portion of - Following Year 1, 20% of the amount (if any) credited
LTIP Pools to the Pool (i.e., 20% of the Maximum Payout at 30%
Profits CAGR) will become vested.
- Following Year 2, the aggregate vested portion of the
Pool (inclusive of the amount vested after Year 1) will
equal the greater of (i) the amount vested after Year 1
or (ii) 40% of the amount under the "Maximum Payout"
column, opposite where the Cumulative Profits for Year 2
falls (to be appropriately pro rated in the case of
actual Cumulative Profits between the stated CAGR
targets).
- Following Year 3, the aggregate vested portion of the
Pool (inclusive of the amount vested after Year 2) will
equal the greater of (i) the amount vested after Year 2
or (ii) 100% of the amount under the "Maximum Payout"
column, opposite where the Cumulative Profits for Year 3
falls (to be pro rated on a linear basis in the case of
actual Cumulative Profits between the stated CAGR
targets).
- The vested portions of the Pool will be
nonforfeitable.
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Calculation of Profit Profit (i.e., EBIT) shall be calculated (in $U.S.) based
on Misys GAAP as soon as is reasonably practicable
following receipt by the C*ATS Board of the audited
financial statements for the applicable period. LTIP
Accruals will not be charged to Profits.
LTIP Payout - A Participant may cash out his or her LTIP Award at
any time, based on the vested portion of the Pool at
such time. However, by cashing out the LTIP Award,
he/she will forfeit all rights to any subsequent LTIP
accruals. A participant who cashes in his or her LTIP
accrual will also forfeit the SAR feature described
below.
- Generally, a Participant may not cash out a fractional
portion of his or her Award. However, such fractional
distributions may be permitted (at the sole discretion
of the C*ATS Board) in the case of a Participant's
demonstrated hardship and in such circumstances
subsequent LTIP accruals will not be forfeited.
- All LTIP Payouts will include 5% simple interest from
June 1, 1999 through the applicable payment date. Within
14 days following the determination of the final vested
portion of the LTIP Pool after Year 3, all accrued
interest will be paid out in cash. Thereafter, interest
on LTIP Awards will continue to be paid on each November
30 and May 31 so long as the Participant continues to
hold his Award.
- If not previously paid out (either directly, or upon
exercise of the SAR described below), all LTIP Awards
(including any unpaid interest) will be paid on October
31, 2004.
3
<PAGE> 16
Option following Year Commencing on June 1, 2003 as to 50% of a Participant's
Four to Redeem LTIP LTIP Award, and June 1, 2004 as to the remaining 50%, a
Accruals based on the Participant will have the right to redeem his or her
Appreciation of Misys LTIP Award (excluding any simple interest that may have
shares (the "SAR") accrued thereon) for a cash payment based on a portion
of the appreciation of Misys Ordinary Shares since the
closing date of the Tender Offer (the "SAR"). The base
price for the SAR will equal 125% of the closing price
of a Misys Ordinary Share as of the closing date of the
Tender Offer, expressed in Pounds Sterling (the "Base
Price"). Upon exercise of the SAR, a Participant will
receive a cash payment equal to the product of (A) the
quotient of (x) the dollar value (absent the SAR) of the
portion of the LTIP Award being so redeemed and (y) the
Base Price, and (B) the closing price (in Pounds
Sterling) of a Misys Ordinary Share as of the exercise
date. With respect to each Participant, the SAR will
terminate on the earlier of October 31, 2004 or the date
on which the participant terminates employment (other
than due to a termination "without cause" by the Company
or a termination for "good reason" by the participant).
Effect of Termination - Voluntary Termination (other than for Good Reason) and
of Employment Termination for Cause: Participants will be paid out
their vested LTIP Awards (including interest), based on
the amounts vested as of the end of the most recently
completed LTIP Year.
- All Other Terminations (i.e., Death, Disability,
Retirement, Termination without Cause; Termination with
Good Reason): Participants will be credited with the pro
rata portion of the LTIP accrual they would have
received for the year in which termination occurs (based
on months employed), in addition to their vested Award
from any completed LTIP Year. In the case of a
termination for Good Reason or without Cause, payment
will not be accelerated unless the participant so
elects, and participants will be permitted to continue
to defer receipt of payment and will continue to be
eligible for the SAR.
Basic Features: - Payments under the LTIP will be in addition to the
Company's regular annual bonus.
- The terms of the LTIP may be modified with the consent
of the Misys Board if advantageous tax results may be
achieved without changing the material provisions of the
LTIP.
4
<PAGE> 17
Beckstrom Provisions - If Beckstrom remains employed through the end of Year
1 (May 31, 2000), any subsequent termination by him
(other than for "Cause") will be deemed to be for "Good
Reason".
- If Beckstrom quits after Year 1, but before the end of
Year 2, he shall be deemed to have continued in
employment through the end of Year 2, except that his
Award shall only relate to 20% of the amount credited to
the Pool after Year 2 (rather than 40%).
Beckstrom and Gilbert - During the 3 year performance period, neither
bonuses and initial Beckstrom nor Gilbert will receive a separate annual
salaries bonus.
- The starting salaries for both Beckstrom and Gilbert
will be set at $250,000 to continue until May 31, 2000.
5
<PAGE> 18
EXAMPLES
1. A Participant remains employed through Year 3. The cumulative Profit
through Year 3 is $35,821,500. The total Pool accrual would be $8,000,000,
of which 100% is vested. The Participant's Award is equal to his
applicable percentage times the vested amount in the Pool.
2. Same case, except the cumulative Profit is $40,000,000. Since the results
fall between the "targets" of $35,821,500 and $42,765,360, the pool
accrual would be similarly pro rated between the $8,000,000 and
$12,800,000 Maximum Payouts (i.e., $10,888,422). [8,000,000 +
(40,000,000-35,821,500)/(42,765,360-35,821,500) X (12,800,000-8,000,000)
= 10,888,422.]
3. A Participant quits after Year 2 (but before the end of Year 3). The
vested percentage of the Pool is 40%. The cumulative Profits through Year
2 are $12,869,000. At that same level of performance through Year 3, the
LTIP pool accrual would have been $8,000,000. The participant would
receive his applicable percentage of $3,200,000 (40% of $8 million).
4. A Participant remains employed through Year 3. The cumulative Profits
through Year 2 were $16 million and the cumulative Profits through Year 3
were $24 million. Since the vested percentage in the Pool after Year 2
(40% x $19,200,000) exceeds the amount which would be vested after Year 3
(100% x $3,200,000), no additional amount has vested in Year 3.
Accordingly, the vested portion of the Pool after Year 3 remains $7.68
million. The Participant is entitled to his allocable percentage of that
amount.
5. David Gilbert quits after Year 2 (but before the end of Year 3). Year 1
Profits were $4 million and the cumulative Profits through Year 2 were $5
million. Since no amount was credited to the Pool with respect to Year 2,
the vested portion of the Pool remains $320,000 (the amount which was
vested after Year 1 (20% X $1,600,000)). David is entitled to his
applicable percentage of the Pool -- i.e., $100,000 (31.25% of $320,000).
6. Same as #5, except Rod Beckstrom is the Participant. Since the termination
is deemed to be for Good Reason, Rod will also be entitled to a pro-rata
portion of the Year 3 LTIP accrual (if any), based on the number of months
he was employed during Year 3 prior to termination.
6
<PAGE> 19
MOXIE - LONG TERM INCENTIVE PLAN ("LTIP") AWARD CHART
<TABLE>
<CAPTION>
Year 1 Year 2 Year 3
----------------- -------------------------------- --------------------------------
CAGR Annual/Cumulative Annual Cumulative Annual Cumulative MAXIMUM PAYOUT
----------------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Less than 30% $ -- $ -- $ -- $ -- $ -- $ --
30% $3,674,000.00 $ 4,776,200.00 $ 8,450,200.00 $ 6,209,060.00 $14,659,260.00 $ 1,600,000.00
60% $3,674,000.00 $ 5,878,400.00 $ 9,552,400.00 $ 9,405,440.00 $18,957,840.00 $ 2,400,000.00
90% $3,674,000.00 $ 6,980,600.00 $10,654,600.00 $13,263,140.00 $23,917,740.00 $ 3,200,000.00
120% $3,674,000.00 $ 8,082,800.00 $11,756,800.00 $17,782,160.00 $29,538,960.00 $ 4,800,000.00
150% $3,674,000.00 $ 9,185,000.00 $12,859,000.00 $22,962,500.00 $35,821,500.00 $ 8,000,000.00
180% $3,674,000.00 $10,287,200.00 $13,961,200.00 $28,804,160.00 $42,765,360.00 $12,800,000.00
210% or more $3,674,000.00 $11,389,400.00 $15,063,400.00 $35,307,140.00 $50,370,540.00 $19,200,000.00
</TABLE>
*** NOTE: ALL DOLLAR FIGURES LISTED ABOVE AS PROFITS TARGETS (AND REFERENCED IN
THE LTIP TERM SHEET) ARE FOR ILLUSTRATION PURPOSES ONLY SINCE THEY WERE
CALCULATED BASED ON CALENDER YEAR ASSUMPTIONS. THE ACTUAL PROFITS TARGETS FOR
PURPOSES OF THE LTIP WILL BE ADJUSTED TO REFLECT A MAY 31 FISCAL YEAR.
<PAGE> 1
EXHIBIT (c)(6)
C*ATS - Long Term Incentive Plan ("LTIP") Term Sheet
Preamble - The LTIP will be based on the profitability of the
new entity, MKI Risk, to be created from the
combination of C*ATS and MKI's Global Manager/Risk
Vision operation.
- It is structured in the form of a deferred
compensation plan in which awards earned can increase
in value by reference to any rise in the Misys share
price, all within a favorable tax environment.
- The shaded line on the attached LTIP Award Chart
represents the expected level of Profits (as defined
below) during the three year Term of the Plan. It
follows that the anticipated pay-out from the plan is
$8 million but could be as much as $20 million (both
amounts struck before assuming credit from any
investment return).
- The LTIP Awards are separate from and in addition to
normal annual bonuses.
- The Plan is based on the Misys financial year ending
May 31. This will also reflect the time of salary
reviews which, save in exceptional circumstances,
will thereafter take place annually.
Eligible Participants Messrs. Beckstrom and Gilbert will participate in the
Pool and will select other key employees of C*ATS, with
the consent of Misys, who will also participate in the
Pool.
Term The amounts payable to the Pool under the LTIP will be
determined over the three year period commencing June 1,
1999 and ending May 31, 2002. Each June 1 through May 31
during such period constitutes one of three "Plan
Years". Actual payment of a Participant's Award,
however, may be deferred until October 31, 2004.
Awards Participants will be granted an "Award" with respect to
the Pool. The Award will set forth the Participant's
allocable percentage ("Participation Level") of the
vested portion of the Pool.
<PAGE> 2
Calculation of LTIP accruals will be determined based on the cumulative
Maximum LTIP Pool pre-tax "Profits" (as defined below) of the GMRV/C*ATS
Accruals business ("MKI Risk") for the relevant Plan Years. The
attached chart illustrates the different levels of
pay-out dependent on varying performance achievements.
- Following Plan Year 1, provided that Profits equal or
exceed $3,674,000 during Year 1, $1.6 million will be
credited to the Pool. No amount will be credited to the
Pool if Year 1 Profits fall below $3,674,000.
- Following Plan Years 2 and 3, the total amounts
credited to the LTIP Pool (inclusive of any prior year's
credit) will be the amounts set forth on the attached
chart under the "Maximum Payout" column, opposite where
the Cumulative Profits for such year falls (to be pro
rated on a linear basis in the case of actual Cumulative
Profits between such targets).
Vested Portion of - Following Year 1, 20% of the amount (if any) credited
LTIP Pools to the Pool (i.e., 20% of the Maximum Payout at 30%
Profits CAGR) will become vested.
- Following Year 2, the aggregate vested portion of the
Pool (inclusive of the amount vested after Year 1) will
equal the greater of (i) the amount vested after Year 1
or (ii) 40% of the amount under the "Maximum Payout"
column, opposite where the Cumulative Profits for Year 2
falls (to be appropriately pro rated in the case of
actual Cumulative Profits between the stated CAGR
targets).
- Following Year 3, the aggregate vested portion of the
Pool (inclusive of the amount vested after Year 2) will
equal the greater of (i) the amount vested after Year 2
or (ii) 100% of the amount under the "Maximum Payout"
column, opposite where the Cumulative Profits for Year 3
falls (to be pro rated on a linear basis in the case of
actual Cumulative Profits between the stated CAGR
targets).
- The vested portions of the Pool will be
nonforfeitable.
2
<PAGE> 3
Calculation of Profit Profit (i.e., EBIT) shall be calculated (in $U.S.) based
on Misys GAAP as soon as is reasonably practicable
following receipt by the C*ATS Board of the audited
financial statements for the applicable period. LTIP
Accruals will not be charged to Profits.
LTIP Payout - A Participant may cash out his or her LTIP Award at
any time, based on the vested portion of the Pool at
such time. However, by cashing out the LTIP Award,
he/she will forfeit all rights to any subsequent LTIP
accruals. A participant who cashes in his or her LTIP
accrual will also forfeit the SAR feature described
below.
- Generally, a Participant may not cash out a fractional
portion of his or her Award. However, such fractional
distributions may be permitted (at the sole discretion
of the C*ATS Board) in the case of a Participant's
demonstrated hardship and in such circumstances
subsequent LTIP accruals will not be forfeited.
- All LTIP Payouts will include 5% simple interest from
June 1, 1999 through the applicable payment date. Within
14 days following the determination of the final vested
portion of the LTIP Pool after Year 3, all accrued
interest will be paid out in cash. Thereafter, interest
on LTIP Awards will continue to be paid on each November
30 and May 31 so long as the Participant continues to
hold his Award.
- If not previously paid out (either directly, or upon
exercise of the SAR described below), all LTIP Awards
(including any unpaid interest) will be paid on October
31, 2004.
3
<PAGE> 4
Option following Year Commencing on June 1, 2003 as to 50% of a Participant's
Four to Redeem LTIP LTIP Award, and June 1, 2004 as to the remaining 50%, a
Accruals based on the Participant will have the right to redeem his or her
Appreciation of Misys LTIP Award (excluding any simple interest that may have
shares (the "SAR") accrued thereon) for a cash payment based on a portion
of the appreciation of Misys Ordinary Shares since the
closing date of the Tender Offer (the "SAR"). The base
price for the SAR will equal 125% of the closing price
of a Misys Ordinary Share as of the closing date of the
Tender Offer, expressed in Pounds Sterling (the "Base
Price"). Upon exercise of the SAR, a Participant will
receive a cash payment equal to the product of (A) the
quotient of (x) the dollar value (absent the SAR) of the
portion of the LTIP Award being so redeemed and (y) the
Base Price, and (B) the closing price (in Pounds
Sterling) of a Misys Ordinary Share as of the exercise
date. With respect to each Participant, the SAR will
terminate on the earlier of October 31, 2004 or the date
on which the participant terminates employment (other
than due to a termination "without cause" by the Company
or a termination for "good reason" by the participant).
Effect of Termination - Voluntary Termination (other than for Good Reason) and
of Employment Termination for Cause: Participants will be paid out
their vested LTIP Awards (including interest), based on
the amounts vested as of the end of the most recently
completed LTIP Year.
- All Other Terminations (i.e., Death, Disability,
Retirement, Termination without Cause; Termination with
Good Reason): Participants will be credited with the pro
rata portion of the LTIP accrual they would have
received for the year in which termination occurs (based
on months employed), in addition to their vested Award
from any completed LTIP Year. In the case of a
termination for Good Reason or without Cause, payment
will not be accelerated unless the participant so
elects, and participants will be permitted to continue
to defer receipt of payment and will continue to be
eligible for the SAR.
Basic Features: - Payments under the LTIP will be in addition to the
Company's regular annual bonus.
- The terms of the LTIP may be modified with the consent
of the Misys Board if advantageous tax results may be
achieved without changing the material provisions of the
LTIP.
4
<PAGE> 5
Beckstrom Provisions - If Beckstrom remains employed through the end of Year
1 (May 31, 2000), any subsequent termination by him
(other than for "Cause") will be deemed to be for "Good
Reason".
- If Beckstrom quits after Year 1, but before the end of
Year 2, he shall be deemed to have continued in
employment through the end of Year 2, except that his
Award shall only relate to 20% of the amount credited to
the Pool after Year 2 (rather than 40%).
Beckstrom and Gilbert - During the 3 year performance period, neither
bonuses and initial Beckstrom nor Gilbert will receive a separate annual
salaries bonus.
- The starting salaries for both Beckstrom and Gilbert
will be set at $250,000 to continue until May 31, 2000.
5
<PAGE> 6
EXAMPLES
1. A Participant remains employed through Year 3. The cumulative Profit
through Year 3 is $35,821,500. The total Pool accrual would be $8,000,000,
of which 100% is vested. The Participant's Award is equal to his
applicable percentage times the vested amount in the Pool.
2. Same case, except the cumulative Profit is $40,000,000. Since the results
fall between the "targets" of $35,821,500 and $42,765,360, the pool
accrual would be similarly pro rated between the $8,000,000 and
$12,800,000 Maximum Payouts (i.e., $10,888,422). [8,000,000 +
(40,000,000-35,821,500)/(42,765,360-35,821,500) X (12,800,000-8,000,000)
= 10,888,422.]
3. A Participant quits after Year 2 (but before the end of Year 3). The
vested percentage of the Pool is 40%. The cumulative Profits through Year
2 are $12,869,000. At that same level of performance through Year 3, the
LTIP pool accrual would have been $8,000,000. The participant would
receive his applicable percentage of $3,200,000 (40% of $8 million).
4. A Participant remains employed through Year 3. The cumulative Profits
through Year 2 were $16 million and the cumulative Profits through Year 3
were $24 million. Since the vested percentage in the Pool after Year 2
(40% x $19,200,000) exceeds the amount which would be vested after Year 3
(100% x $3,200,000), no additional amount has vested in Year 3.
Accordingly, the vested portion of the Pool after Year 3 remains $7.68
million. The Participant is entitled to his allocable percentage of that
amount.
5. David Gilbert quits after Year 2 (but before the end of Year 3). Year 1
Profits were $4 million and the cumulative Profits through Year 2 were $5
million. Since no amount was credited to the Pool with respect to Year 2,
the vested portion of the Pool remains $320,000 (the amount which was
vested after Year 1 (20% X $1,600,000)). David is entitled to his
applicable percentage of the Pool -- i.e., $100,000 (31.25% of $320,000).
6. Same as #5, except Rod Beckstrom is the Participant. Since the termination
is deemed to be for Good Reason, Rod will also be entitled to a pro-rata
portion of the Year 3 LTIP accrual (if any), based on the number of months
he was employed during Year 3 prior to termination.
6
<PAGE> 7
MOXIE - LONG TERM INCENTIVE PLAN ("LTIP") AWARD CHART
<TABLE>
<CAPTION>
Year 1 Year 2 Year 3
----------------- -------------------------------- --------------------------------
CAGR Annual/Cumulative Annual Cumulative Annual Cumulative MAXIMUM PAYOUT
----------------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Less than 30% $ -- $ -- $ -- $ -- $ -- $ --
30% $3,674,000.00 $ 4,776,200.00 $ 8,450,200.00 $ 6,209,060.00 $14,659,260.00 $ 1,600,000.00
60% $3,674,000.00 $ 5,878,400.00 $ 9,552,400.00 $ 9,405,440.00 $18,957,840.00 $ 2,400,000.00
90% $3,674,000.00 $ 6,980,600.00 $10,654,600.00 $13,263,140.00 $23,917,740.00 $ 3,200,000.00
120% $3,674,000.00 $ 8,082,800.00 $11,756,800.00 $17,782,160.00 $29,538,960.00 $ 4,800,000.00
150% $3,674,000.00 $ 9,185,000.00 $12,859,000.00 $22,962,500.00 $35,821,500.00 $ 8,000,000.00
180% $3,674,000.00 $10,287,200.00 $13,961,200.00 $28,804,160.00 $42,765,360.00 $12,800,000.00
210% or more $3,674,000.00 $11,389,400.00 $15,063,400.00 $35,307,140.00 $50,370,540.00 $19,200,000.00
</TABLE>
*** NOTE: ALL DOLLAR FIGURES LISTED ABOVE AS PROFITS TARGETS (AND REFERENCED IN
THE LTIP TERM SHEET) ARE FOR ILLUSTRATION PURPOSES ONLY SINCE THEY WERE
CALCULATED BASED ON CALENDER YEAR ASSUMPTIONS. THE ACTUAL PROFITS TARGETS FOR
PURPOSES OF THE LTIP WILL BE ADJUSTED TO REFLECT A MAY 31 FISCAL YEAR.
