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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 14, 2000
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
AMENDMENT NO. 1
SOLICITATION/RECOMMENDATION STATEMENT
UNDER SECTION 14(D)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
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BAAN COMPANY N.V.
(NAME OF SUBJECT COMPANY)
BAAN COMPANY N.V.
(NAME OF PERSON FILING STATEMENT)
COMMON SHARES, PAR VALUE NLG 0.06 PER SHARE
(TITLE OF CLASS OF SECURITIES)
N08044104
(CUSIP NUMBER OF CLASS OF SECURITIES)
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ROBERT RUIJTER
BAAN COMPANY N.V.
BARON VAN NAGELLSTRAAT 89
3771 LK BARNEVELD
THE NETHERLANDS
011-31-342-42-8888
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON
AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS
ON BEHALF OF THE PERSON FILING STATEMENT)
WITH COPIES TO:
<TABLE>
<S> <C>
ROBERT E. GOUDIE, ESQ. JOHN C. KENNEDY, ESQ.
SENIOR VICE PRESIDENT, GENERAL COUNSEL AND ROBERT B. SCHUMER, ESQ.
SECRETARY PAUL, WEISS, RIFKIND, WHARTON & GARRISON
BAAN COMPANY N.V. 1285 AVENUE OF THE AMERICAS
2191 FOX MILL ROAD, SUITE 500 NEW YORK, NEW YORK 10019-6064
HERNDON, VIRGINIA 20171 (212) 373-3000
(703) 234-6000
</TABLE>
[ ] Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
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ITEM 1. SUBJECT COMPANY INFORMATION
(a) NAME AND ADDRESS. The name of the subject company is Baan Company
N.V., a corporation organized under the laws of The Netherlands (the
"Company"). The address and telephone number of the principal executive
offices of the Company are: Baron van Nagellstraat 89, 3771 LK
Barneveld, The Netherlands, telephone 31-342-42-8888.
(b) SECURITIES. The title of the class of equity securities to which this
Statement relates is common shares, par value NLG 0.06 per share, of
the Company (the "Shares"). As of May 31, 2000, there were 267,337,252
Shares outstanding.
ITEM 2. IDENTITY AND BACKGROUND OF FILING PERSON
(a) NAME AND ADDRESS. This Solicitation/Recommendation Statement (this
"Statement") is being filed by the Company. The address and telephone
number of the principal executive offices of the Company are set forth
in Item 1, above.
(b) OFFER TO PURCHASE. This Statement relates to the offer to purchase by
Invensys Holdings Limited (the "Offeror"), a private limited company
organized under the laws of England and Wales. Offeror is a
wholly-owned subsidiary of Invensys plc ("Parent" or "Invensys"), a
public limited company organized under the laws of England and Wales.
The offer is disclosed in a Schedule TO (the "Schedule TO"), dated June
14, 2000, filed by Parent and Offeror, offering to purchase all of the
outstanding Shares at a price of (euro)2.85 per Share, net to the
seller in cash (the "Offer Price"), upon the terms and subject to the
conditions set forth in the Offer to Purchase (the "Offer to
Purchase"), dated June 14, 2000, and the related Letter of Transmittal
and transmittal documents (which, together with the Offer to Purchase,
are the "Offer"). The address of Parent and Offeror as set forth in the
Schedule TO is Invensys House, Carlisle Place, London SW1P 1BX,
England.
The Offer is being made under an Offer Agreement, dated as of May 31,
2000 (the "Offer Agreement"), by and between the Company and Parent (on
behalf of itself and two of its subsidiaries that were then intended to
be formed). Subsequent to entering into the Offer Agreement, Parent
assigned some of the rights and delegated some of the obligations
relating to the Offer under the Offer Agreement to Offeror. A copy of
the Offer Agreement is filed as Exhibit (b) to this Statement and is
incorporated in this Statement by reference.
On May 30, 2000 the Supervisory Board of the Company unanimously
approved the resolutions unanimously adopted by the Management Board of
the Company (together with the Supervisory Board, the "Boards"), which
approved the Offer Agreement and the transactions contemplated by it,
including the Offer, and determined that the terms of the Offer are
fair to and in the best interests of the Company and its shareholders.
The Boards unanimously recommend that the shareholders accept the Offer
and tender their Shares in the Offer. On June 14, 2000, the Company
received positive advice from the Central Works Council with regard to
the Offer.
ITEM 3. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS
(a) CONFLICTS OF INTERESTS. Except as set forth in this Item 3, to the
knowledge of the Company, there are no material agreements,
arrangements or understandings and no actual or potential conflicts of
interest between the Company or its affiliates and (i) the Company's
executive officers, directors or affiliates or (ii) Parent, Offeror or
their respective executive officers, directors or affiliates.
SEVERANCE AGREEMENTS
In January 2000, the Company lost its two most senior executives (Mary
Coleman, the Chief Executive Officer, and James Mooney, the Chief Financial
Officer). At this time, other members of the Management Board and senior
leadership also indicated they would be leaving the Company. Therefore, the
Boards believed it was imperative for the Company to implement compensation
schemes that would give it a greater chance of
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retaining other senior executives and obtaining the services of replacements for
departing senior executives. As a result, during the first quarter of 2000, the
Company, with the recommendation of its financial advisor, Lazard Freres & Co.
LLC ("Lazard"), entered into retention and incentive agreements with its senior
management.
Under some of those agreements, certain senior executives were granted
options whose vesting would accelerate in the event of a change of control of
the Company. However, in all cases these options were granted at exercise prices
that were higher than (euro)2.85 per share. These options are discussed in
greater detail below.
In retention and incentive agreements with approximately 35 of the top
executive officers in the Company, these officers were granted the right to
receive a severance payment in the event the executive loses his or her job in
connection with a change of control of the Company. Those executives include
Pierre Everaert (Interim Chief Executive Officer), Rob Ruijter (Chief Financial
Officer), Robert Goudie (Senior Vice President and General Counsel), Peter Aird
(Executive Vice President, Customer Service and Support), Laurens van der Tang
(Executive Vice President, Research and Development), Gerrit van Munster (Senior
Vice President, Human Resources), Mike Shinya (Executive Vice President, Sales),
Charles Callahan (Senior Vice President, Global Consulting) and Katrina Roche
(Chief Marketing Officer). The payment would equal between 100% to 300% of the
individual's annual total compensation (depending on the executive) upon a
termination of the executive without cause within 12 months after a "change of
control" of the Company. The successful completion of the Offer would be a
"change of control" for purposes of the retention agreements; but, as described
above, any severance payments are conditioned on a loss of employment in
connection with the change in control (except in the cases of Messrs. Everaert,
Ruijter, and Goudie, each of whom in virtually all circumstances would
automatically qualify for the payment regardless of the employment status after
completion of the Offer).
VESTING OF OPTIONS UPON COMPLETION OF THE OFFER
As part of the retention agreements the Company entered into with certain
of its senior executive officers all unvested options held by the executive vest
upon a "change of control" of the Company. As of May 31, 2000, the senior
executives held unvested options to purchase an aggregate of 2,127,879 Shares
with a weighted-average exercise price of $8.54 per Share, all of which would
vest upon the completion of the Offer. None of those options that would vest
however, has an exercise price below (euro)2.85 per Share.
Under the terms of the 1995 Director Option Plan, in the event of any
merger, sale of assets or other transaction involving a change in control of the
Company, all options outstanding under the Plan will become exercisable in full,
and the option is required to be assumed or an equivalent option substituted by
Parent or Offeror. As of May 31, 2000, Messrs. William O. Grabe, David C.
Hodgson, Hans Wortmann and Pierre J. Everaert held unvested options under the
1995 Director Option Plan to purchase an aggregate of 344,750 Shares at a
weighted-average exercise price of $10.45, all of which would vest upon the
completion of the Offer. None of those options that would vest, however, has an
exercise price below (euro)2.85 per Share.
STOCK OPTION PLANS
As of the date of this Statement, Invensys had not made any public
statements regarding the continuation of the existing stock option plans of the
Company or the options outstanding under those plans.
1993 Stock Plan. The 1993 Stock Plan was initially adopted by the
Management Board and approved by the shareholders in December 1993, and
subsequent amendments increased the aggregate number of shares reserved for
issuance thereunder from 28,000,000 in 1993 to 47,000,000 in 2000. The 1993
Stock Plan will terminate in December 2003 unless terminated earlier by the
Management Board upon the authority of the Supervisory Board. The 1993 Stock
Plan provides for grants of options to employees and consultants (including
officers and directors) of the Company and its affiliates. The 1993 Stock Plan
may be administered by the Management Board or Supervisory Board of the Company,
or both, or by a committee appointed by
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either or both such Boards in a manner that satisfies the legal requirements
relating to the administration of stock plans under all applicable laws (the
"Administrator"). The current Administrator is the Baan Option Committee.
The 1993 Stock Plan includes appendices setting forth specific provisions
providing for the grant of options to employees in certain countries to address
certain securities and tax laws in such respective countries, including
provisions governing options intended to qualify as incentive stock options
within the meaning of Section 422 of the U.S. Internal Revenue Code of 1986, as
amended (the "Code").
The exercise price of options granted under the 1993 Stock Plan is
determined by the Administrator. With respect to incentive stock options granted
under the 1993 Stock Plan, the exercise price must be at least equal to the fair
market value per share of the Shares on the date of grant, and the exercise
price of any incentive stock option granted to a participant who owns more than
10% of the voting power of all classes of the Company's outstanding share
capital must be equal to at least 110% of fair market value of the Shares on the
date of grant.
The maximum term of an option granted under the 1993 Stock Plan may not
exceed ten years from the date of grant (five years in the case of a participant
who owns more than 10% of the voting power of all classes of the Company's
outstanding share capital). In the event of termination of an optionee's
employment options may only be exercised, to the extent vested as of the date of
termination, for a period not to exceed 90 days (12 months, in the case of
termination as a result of death or disability) following the date of
termination, but in no event later than the expiration date of each option as
set forth in the optionee's option agreement. Options may not be sold or
transferred other than by will or the laws of descent and distribution, and may
be exercised during the life of the optionee only by the optionee.
Options outstanding under the 1993 Stock Plan generally vest and become
exercisable, assuming continued service as an employee or consultant, for
non-Dutch employees at the rate of 25% of the shares subject to an option on the
first anniversary of the commencement of vesting date and 1/48th of the shares
each month thereafter, and for Dutch employees at a rate of 1/8th of the shares
after (and for each) six months following the commencement of vesting date and
3/48ths of the shares each quarter thereafter, such that in each case all shares
under an option vest in full four years from the commencement of the vesting
date assuming continued service as an employee or consultant. Options
outstanding under the 1993 Stock Plan generally have a term of five years.
In the event of a merger of the Company with or into another corporation,
all outstanding options may be assumed or equivalent options substituted by the
successor corporation or its parent or subsidiary, unless the Administrator
determines, in the exercise of its sole discretion, that each optionee shall
have the right to exercise his or her options. In the absence of such assumption
or substitution, to the extent not exercised, all options shall terminate as of
the closing of the merger.
As a result of the Company's acquisitions of Berclain Group, Inc., Aurum
Software, Inc., Beologic A/S and CODA, the Company assumed the outstanding
options (as at the date of each acquisition) issued under the option plans of
these companies. These options are governed by the terms of the 1993 Stock Plan.
1995 Director Option Plan. As of May 31, 2000, the Company had reserved an
aggregate of 1,600,000 Shares for issuance under its 1995 Director Option Plan
(the "Director Plan"). The Director Plan was adopted by the members of the
Management Board and approved by the shareholders of the Company in March 1995.
The Director Plan (as amended) provides for automatic and nondiscretionary
grants of nonstatutory stock options to the members of the Supervisory Board in
the following amounts: (i) an initial grant of 50,000 Shares for the members of
the Supervisory Board and 65,000 Shares for the chairman of the Supervisory
Board, vesting at the rate of one-fourth of the total on the anniversary date of
the grant (i.e., a four-year vesting schedule); and (ii) a subsequent grant
equal to one-fourth of the initial grant for each year of service on the
Supervisory Board, granted on the anniversary date of appointment and vesting
four years thereafter. In all events, the exercise price of options granted to
the members of the Supervisory Board will be 100% of the fair market value of
the Shares on the date of grant as measured by the closing trading price on
Nasdaq for the day. In the event of any merger, sale of assets or other
transaction involving a change in control
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of the Company, all options outstanding under the Director Plan will become
exercisable in full, and the option will be assumed or an equivalent option
substituted by the successor corporation or its parent or subsidiary. Options
for a total of 733,500 Shares have been granted as of March 31, 2000 under the
Director Plan. The Director Plan will expire in the year 2005.
(b) AGREEMENTS WITH PARENT AND OFFEROR AND THEIR AFFILIATES. A summary of
the material provisions of (1) the Offer Agreement, (2) the Assignment
and Assumption Agreement among Parent, Offeror and certain other
parties, dated as of June 2, 2000, (3) the Share Purchase Agreements
between certain significant shareholders of the Company on the one hand
and Parent (on behalf of itself and a contemplated subsidiary) on the
other, each dated as of May 31, 2000, (4) the Termination and
Standstill Agreement between the Company and Fletcher International
Limited, dated as of May 29, 2000 and (5) the Assignment and Assumption
Agreement between the Company and Parent, dated as of May 31, 2000, is
set forth below and also included in the Offer to Purchase under
Section 12 of the Offer to Purchase, a copy of which is included as
Exhibit (a)(1)(A) to the Schedule TO. Each of the agreements listed
above in items (2) through (5) is referred to in this Statement as an
"Ancillary Agreement" and collectively as the "Ancillary Agreements."
The summary does not purport to be complete and is qualified in its
entirety by reference to the complete text of each relevant agreement.
Copies of the Offer Agreement and the Ancillary Agreements are included
as Exhibits (b)(1) through (b)(8) to this Statement and are
incorporated in this Statement by this reference.
THE OFFER AGREEMENT
The following is a summary of the material terms of the Offer Agreement.
This summary is not a complete description of the terms and conditions thereof
and is qualified in its entirety by reference to the full text thereof, which is
incorporated herein by reference and a copy of which has been filed with the
Securities and Exchange Commission (the "SEC") in connection with the Offer as
an exhibit to the Schedule TO. The Offer Agreement may be examined, and copies
thereof may be obtained, as set forth in Section 8 of Invensys's Offer to
Purchase.
The Offer. The Offer Agreement provides for Offeror to make the Offer on
the terms described in "Introduction" and Section 1, "Terms of the Offer;
Expiration Date" of Invensys's Offer to Purchase. Offeror's obligation to accept
for payment and pay for Shares tendered in the Offer is subject to the
conditions described in Section 14, "Certain Conditions of the Offer" of
Invensys's Offer to Purchase. Offeror may provide for a "subsequent offering
period" as provided in Rule 14d-11 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act") after the purchase of Shares pursuant to the Offer.
Board Representation. The Offer Agreement provides that, promptly upon the
purchase of Shares representing not less than 51% of the outstanding Shares
pursuant to the Offer, the Company will convene an extraordinary general meeting
of shareholders in accordance with applicable law for the election of such
number of directors, rounded up to the next whole number, to serve on the Boards
as will give Offeror, subject to compliance with Section 14(f) of the Exchange
Act, representation on the Boards equal to the product of (i) the total number
of members of each of the Boards (giving effect to the election of any
additional members pursuant to this section) and (ii) the percentage that the
number of Shares beneficially owned by Parent and/or Offeror (including Shares
accepted for payment in the Offer) bears to the number of Shares outstanding.
The Company will exercise its best efforts to secure the resignations of such
number of members of the Boards as is necessary to enable Offeror's designees to
be elected and will cause Offeror designees to be so elected. The Company shall
take all action required pursuant to Section 14(f) of the Exchange Act and Rule
14(f)-1 under the Exchange Act in order to fulfill its obligations under this
provision and shall include in this Statement or otherwise timely mail to its
shareholders all necessary information to comply therewith. Prior to the mailing
of this Statement to the Company's shareholders, Parent will supply to the
Company in writing and be solely responsible for any information with respect to
itself and its nominees, officers, directors and affiliates required by Section
14(f) and Rule 14(f)-1 under the Exchange Act.
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Following the election or appointment of Offeror's designees as described
above and until Parent, directly or indirectly, owns at least 95% of the
outstanding Shares of the Company, each of the Boards shall have at least six
members of which at least two members shall be persons who are members on the
date of the Offer Agreement (the "Continuing Members"). In the event that the
number of Continuing Members are reduced below two for any reason whatsoever,
the remaining Continuing Member will be entitled to designate persons to fill
such vacancies who will be deemed to be Continuing Members. The approval of the
Continuing Members will be required to authorize (and such authorization will
constitute the authorization of the respective Boards on which the Continuing
Members serve and no other action on the part of the Company, including any
action by any other member of the Boards, will be required to authorize) any
termination of the Offer Agreement by the Company, any amendment of the Offer
Agreement requiring action by the Supervisory Board and/or the Management Board,
any amendment of the governing instruments of the Company which would adversely
affect the rights of the Company or its shareholders under the Offer Agreement,
any extension of time for performance of any obligation or action under the
Offer Agreement by Parent, Offeror or their affiliates and any enforcement of or
any waiver of compliance with any of the agreements or conditions contained in
the Offer Agreement for the benefit of the Company.
Shareholder Informational Meeting. In connection with the Offer, the
Company will convene an informational extraordinary shareholders meeting
pursuant to the laws of The Netherlands, including the SER-Besluit
Fusiegedragsregels 1975 (the "Dutch Merger Code") and the notes and regulations
of the AEX ("Dutch Law"). This meeting will be held on June 29, 2000.
Representations and Warranties. The Offer Agreement contains various
representations and warranties of the parties thereto. These include
representations and warranties by the Company with respect to (i) the due
organization, existence and, subject to certain limitations, the qualification,
good standing, corporate or other power and authority of the Company and its
subsidiaries, (ii) the due authorization, execution, and delivery of the Offer
Agreement and the consummation of transactions contemplated thereby, the
validity and enforceability thereof and the absence of any additional required
corporate actions (other than the holding of the informational meeting prior to
the closing of the Offer or any shareholder vote required by a transaction
contemplated by the Offer Agreement) for authorization of the Offer Agreement
and the transaction contemplated thereby, (iii) subject to certain exceptions
and limitations, the compliance by the Company and its subsidiaries with all
applicable laws, statutes, ordinances, rules, regulations, orders, judgments,
and decrees ("Laws") of any national, federal, provincial, state or local
judicial, legislative, executive, administrative or regulatory body or
authority, or any court, arbitration, board or tribunal whether of The
Netherlands, the United States or another country ("Governmental Entity"), (iv)
the capitalization of the Company, including the number of Shares of the Company
outstanding, the number of Shares reserved for issuance on the exercise of
options and similar rights to purchase Shares, (v) the identity, ownership and
jurisdiction of organization of each of the Company's principal operating
subsidiaries and ownership by the Company and its principal operating
subsidiaries of interests or investments in entities other than subsidiaries of
the Company or its principal operating subsidiaries, (vi) subject to certain
exceptions and limitations, the absence of any violations, conflicts or breaches
under the organization documents of the Company or its principal operating
subsidiaries or under contracts of the Company or its subsidiaries that would
result from compliance by the Company with any provision of the Offer Agreement
or the consummation by the Company of any of the transactions contemplated
thereby, (vii) subject to certain exceptions and limitations, compliance with
the Securities Act of 1933, as amended (the "Securities Act") and the Exchange
Act in connection with each report, schedule, form, statement (information,
registration or otherwise) and document prepared by it since June 30, 1998
(including exhibits and any amendments thereto) and filed with the SEC
(including the financial statements included therein), (viii) the absence of
material misstatements or omissions from this Statement or any schedule required
to be filed by the Company with the SEC or the Stichting Toezicht
Effectenverkeer, this Statement, the information statement, if any, filed by the
Company in connection with the Offer, (ix) the Company's status as a "foreign
private issuer," as defined in the Exchange Act, of whom U.S. holders do not
hold more than 40% of the Shares as determined by Rule 14d-1(d) under the
Exchange Act, (x) subject to certain exceptions and limitations, the absence of
pending or (to the knowledge of the Company) threatened claims, actions, suits,
proceedings, arbitrations, investigations or audits (collectively,
"Litigation"), (xi) subject to certain exceptions and limitations, the absence
of certain changes or effects,
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(xii) certain tax matters, (xiii) certain employee benefit and Employee
Retirement Income Security Act of 1974, as amended ("ERISA") matters, (xiv)
certain labor and employment matters, (xv) certain fees in connection with the
transactions contemplated by the Offer Agreement, (xvi) certain matters relating
to the Company's intellectual property, (xvii) subject to certain limitations,
the possession by the Company and its subsidiaries of necessary franchises,
grants, authorizations, licenses, permits, easements, variances, exceptions,
consents, certificates, approvals and orders of any court, governmental or
regulatory authority, (xviii) certain environmental matters, (xix) subject to
certain exceptions and limitations, title to assets, (xx) certain insurance
policy matters, (xxi) subject to certain limitations, material contracts of the
Company and its subsidiaries including contracts (a) for borrowed money or
guarantees involving a current outstanding principal amount in excess of
U.S.$1,000,000 (or any other currency equivalent), (b) containing material
non-compete covenants by the Company, (c) with any of Fletcher International
Limited, any holder of 5% or more of the outstanding Shares, and their
affiliates, and any officer, director or affiliate of the Company (d) with
members of the Baan family, Vanenburg Group B.V. or Vanenburg Business Systems
or their affiliates, (e) with ten of the most significant customers of the
Company, and (f) relating to or providing for the issuance of any equity
securities of the Company since March 31, 2000, (xxii) the fairness opinion of
the financial advisor to the Company, (xxiii) anti-takeover statutes, (xxiv) the
absence of any required vote of shareholders of the Company to adopt the Offer
Agreement or approve the Offer, and (xxv) year 2000 and euro conversion
compliance.
Parent and Offeror have jointly and severally made certain representations
and warranties, including with respect to (i) the due incorporation, existence,
good standing and, subject to certain limitations, corporate power and authority
of Parent and Offeror, (ii) the due authorization, execution and delivery of the
Offer Agreement and the consummation of the transactions contemplated thereby,
and the validity and enforceability thereof, (iii) subject to certain exceptions
and limitations, the absence of consents and approvals necessary for
consummation by Parent and Offeror and the absence of any violations, breaches
or defaults which would result from compliance by Parent and Offeror with any
provision of the Offer Agreement, (iv) the sufficiency of funds available to
Parent and Offeror for the consummation of the Offer and (v) the absence of
material misstatements or omissions in the Schedule TO and the related offer
documents.
Interim Operations. The Company has agreed that from the date of the Offer
Agreement to the earlier of (x) the date of initial purchase by Offeror of
Shares pursuant to the Offer and (y) the date of termination of the Offer
Agreement, with certain exceptions, unless Offeror has consented thereto (which
consent shall not be unreasonably withheld or delayed), the Company shall, and
shall cause each of its subsidiaries: (i) to the extent not inconsistent with
the Company's obligations under the Offer Agreement or any ancillary document,
conduct its operations according to its ordinary course of business consistent
with past practice, (ii) to the extent not inconsistent with the Company's
obligations under the Offer Agreement or any ancillary document, use its
commercially reasonable efforts to preserve intact its business organizations
and goodwill, keep available the services of its officers and employees and
maintain satisfactory relationships with those persons having business
relationships with them, (iii) upon the discovery thereof, promptly notify
Offeror of the existence of any breach of any representation or warranty
contained in the Offer Agreement (or, in the case of any representation and
warranty that makes no reference to Material Adverse Effect (as defined in the
Offer Agreement), any breach of such representation and warranty in any material
respect) or the occurrence of any event that would cause any representation or
warranty contained in the Offer Agreement no longer to be true and correct (or,
in the case of any representation and warranty that makes no reference to
Material Adverse Effect, to no longer be true and correct in any material
respect), (iv) to promptly deliver to Offeror true and correct copies of any
report, statement or schedule filed with the SEC subsequent to the date of the
Offer Agreement and (v) prior to consummation of the Offer, cause (A) all
indebtedness for borrowed money due and payable to the Company or any of its
subsidiaries from any officers, directors or affiliates thereof to be repaid and
(B) all related notes and instruments of indebtedness to be cancelled and
terminated without any cost or penalty to the Company or its subsidiaries.
The Company has agreed that from the date of the Offer Agreement to the
earlier of (x) the date of initial purchase by Offeror of Shares pursuant to the
Offer and (y) the date of termination of the Offer Agreement, with certain
exceptions, unless Offeror has consented thereto (which consent shall not be
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unreasonably withheld or delayed), the Company shall not, and shall not permit
any of its subsidiaries to, (i) amend its articles of association, certificate
of incorporation or other organizational documents, (ii) issue, sell or pledge
any of its capital shares or other ownership interest in the Company (other than
issuances of Shares in respect of any exercise of share options or conversion of
convertible notes, in either case, outstanding on the date of the Offer
Agreement and disclosed to Offeror) or any of its subsidiaries, or any
securities convertible into or exchangeable for any such shares or ownership
interest, or any rights, warrants or options to acquire or with respect to any
such capital shares, ownership interest, or convertible or exchangeable
securities (or derivative securities in respect of the foregoing), (iii) effect
any share split or otherwise change its capitalization as it exists on the date
of the Offer Agreement, (iv) grant, confer or award any option, warrant,
convertible security or other right to acquire any of its capital shares or take
any action to cause to be exercisable any otherwise unexercisable option under
any existing share option plan (except as otherwise required by the terms of
such unexercisable options), (v) declare, set aside or pay any dividend or make
any other distribution or payment with respect to any of its capital shares or
other ownership interests (other than such payments by any subsidiary of the
Company to another subsidiary of the Company or to the Company), (vi) directly
or indirectly redeem, purchase or otherwise acquire any of the Company's capital
shares or capital shares of its subsidiaries which are not owned by the Company
or its subsidiaries, (vii) sell, lease or otherwise dispose of any of its assets
(including capital stock of subsidiaries), except the sale or disposition of
inventory or the license of the Company's products in the ordinary course of
business or the sale, lease or other disposition of assets that, individually or
in the aggregate, are obsolete or not material to the Company and its
subsidiaries, taken as a whole, (viii) acquire by merger, purchase or any other
manner, any business or entity or otherwise acquire any assets that would be
material, individually or in the aggregate, to the Company and its subsidiaries
taken as a whole, except for purchases of inventory, supplies or capital
equipment in the ordinary course of business consistent with past practice, (ix)
incur or assume any long-term or short-term debt aggregating in excess of
U.S.$1,000,000, (x) assume, guarantee or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the debt or other obligations
of any other person except obligations of its subsidiaries or parent entity
incurred in the ordinary course of business, (xi) make or forgive any loans,
advances or capital contributions to, or investments in, any other person other
than its subsidiary or any parent entity, (xii) grant any share-related or
equity performance awards, (xiii) except as contractually obligated on the date
of the Offer Agreement (but only to the extent a copy of such contractual
commitment, if written, or a written summary of such contractual commitment, if
oral, has been previously provided to Parent) or as otherwise required by
applicable Law, enter into any new employment, severance, consulting or salary
continuation agreements with any officers, directors or employees or, except as
contractually obligated on the date of the Offer Agreement (but only to the
extent written copies or written summaries of oral contracts have been
previously provided to Parent) or as otherwise required by applicable Law, grant
any increases in compensation, benefits or non-equity performance awards, except
for normal merit bonuses or salary increases for non-officer employees
consistent with past practices, (xiv) except to the extent required by Law,
adopt or amend in any material respect any material employee benefit plan or
arrangement, (xv) permit any material insurance policy naming the Company or any
subsidiary of the Company as a beneficiary or a loss payee to be cancelled or
terminated other than in the ordinary course of business, (xvi) settle or
compromise any pending or threatened Litigation for an amount in excess of
U.S.$1,000,000 for any single matter of Litigation, or U.S.$5,000,000 in the
aggregate for all such matters settled or compromised, (xvii) make any tax
election or settle any tax liability other than settlements involving solely the
payment of money (without admission of liability) not to exceed U.S.$1,000,000
or (xviii) agree in writing or otherwise to take any of the foregoing actions;
provided that the Company or any of its subsidiaries will not be prohibited from
agreeing to take any of the foregoing if the agreement's effectiveness is
contingent upon the termination of the Offer Agreement.
Access to Information. From the date of the Offer Agreement until the
consummation of the Offer, the Company shall, and shall cause its subsidiaries
to, upon reasonable advance notice to the Company, during ordinary business
hours, to the extent legally permitted, (i) give Offeror and its authorized
representatives full access to all books, records, personnel, offices and other
facilities and properties of the Company and its subsidiaries and their
accountants and accountants' work papers, (ii) permit Offeror to make such
copies and inspections thereof as Offeror may reasonably request and (iii)
furnish Offeror with such financial and
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<PAGE> 9
operating data and other information with respect to the business and properties
of the Company and its subsidiaries as Offeror may from time to time reasonably
request; provided that no investigation or information furnished pursuant to the
Offer Agreement shall affect any representations or warranties made by the
Company in the Offer Agreement or the conditions to the obligations of Offeror
to consummate the transactions contemplated thereby. All information provided
pursuant to the Offer Agreement will be subject to the confidentiality agreement
between Parent and the Company, dated March 24, 2000.
No Solicitation. The Company has agreed in the Offer Agreement (a) that
from the date of the Offer Agreement to the consummation of the Offer, neither
it nor any of its subsidiaries shall, and it shall direct and use its best
efforts to cause its officers, directors, managing directors, employees, agents
and representatives (including, without limitation, any investment banker,
attorney or accountant retained by it or any of its subsidiaries) (collectively,
"Representatives") not to, initiate, solicit or encourage, directly or
indirectly, any inquiries or the making or implementation of any proposal or
offer (including, without limitation, any proposal or offer to its shareholders)
with respect to a merger, acquisition, consolidation, recapitalization, business
combination or similar transaction involving, or any purchase of all or any
significant portion of the assets or any equity securities of, the Company or
any of its subsidiaries (any such proposal or offer being hereinafter referred
to as an "Alternative Proposal") or engage in any negotiations concerning, or
provide any confidential information or data to, afford access to the
properties, books or records of the Company or any of its subsidiaries to, or
have any discussions with, any person relating to an Alternative Proposal, or
otherwise facilitate any effort or attempt to make or implement an Alternative
Proposal or any agreement or arrangement requiring the Company to abandon,
terminate or delay the consummation of the Offer or other transactions
contemplated by the Offer Agreement; (b) that it will immediately cease and
cause to be terminated any existing activities, discussions or negotiations with
any parties conducted heretofore with respect to any of the foregoing, and it
will take the necessary steps to inform such parties of the obligations
undertaken under the Offer Agreement; and (c) that it will notify Offeror
promptly of the identity of the potential acquiror and the terms of such
person's or entity's proposal if any such inquiries or proposals are received
by, any such information is requested from, or any such negotiations or
discussions are sought to be initiated or continued with, the Company; provided,
however, that these provisions shall not prohibit the Boards from (i) prior to
the acceptance for payment of Shares by Offeror pursuant to the Offer,
furnishing information to, or entering into discussions or negotiations with,
any person or entity that makes an unsolicited bona fide proposal to acquire the
Company pursuant to a merger, consolidation, share exchange, purchase of
substantially all of the assets of the Company, a business combination or other
similar transaction, if, and only to the extent that, (A) such proposal was not
initially solicited, encouraged or knowingly facilitated by the Company, its
subsidiaries or their Representatives in violation of the Offer Agreement, (B)
if each of the Boards determines in good faith, after receiving the advice of
its outside advisors, including outside counsel and others, (i) that such
Alternative Proposal is more favorable from a financial point of view as
compared to the Offer and (ii) failure to furnish such information or enter into
such discussions or negotiations with such person would violate the Boards'
fiduciary duties, (C) the Boards determine in good faith in the exercise of
reasonable business judgment that such proposal is likely to be successfully
financed if accepted by shareholders, and (D) prior to furnishing information
to, or entering into discussions or negotiations with, such person or entity,
the Company enters into a confidentiality agreement with such person or entity
no less favorable to the Company than the confidentiality agreement between
Parent and the Company, dated March 24, 2000, and provides written notice to
Offeror to the effect that it is furnishing information to, or entering into
discussions or negotiations with, such person or entity (additionally, the Offer
Agreement requires the Company to keep Offeror reasonably informed of the status
of any such discussions or negotiations permitted pursuant to the previous
sentence (including the identity of such person or entity and the terms of any
proposal)) and to the extent applicable, complying with Rule 14e-2(a) under the
Exchange Act or applicable Dutch Law with regard to an Alternative Proposal.
Nothing in the provision of the Offer Agreement described above will permit the
Company to terminate the Offer Agreement (except as described under the heading
"-- Termination" below), enter into any agreement with respect to an Alternative
Proposal during the term of the Offer Agreement or affect any other obligation
of the Company under the Offer Agreement.
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<PAGE> 10
Other Agreements. The Offer Agreement provides that, subject to the terms
and conditions provided in the Offer Agreement, the Company, Parent and Offeror
shall: (a) use their reasonable best efforts to cooperate with one another in
(i) determining which filings are required to be made prior to the expiration
date of the Offer or the consummation of the Offer with, and which consents,
approvals, permits or authorizations are required to be obtained prior to the
consummation of the Offer from, Governmental Entities or other third parties in
connection with the execution and delivery of the Offer Agreement and the
ancillary documents and the consummation of the transactions contemplated
thereby and (ii) timely making all such filings and timely seeking all such
consents, approvals, permits, authorizations and waivers; and (b) use their
reasonable best efforts to take, or cause to be taken, all other action and do,
or cause to be done, all other things necessary, proper or appropriate to
consummate and make effective the transactions contemplated by the Offer
Agreement.
In the event the Works Councils of the Company shall give negative advice
with respect to the recommendation of the Boards in connection with the Offer
and has initiated legal proceedings in the relevant Dutch courts that prevent
the consummation of the transactions contemplated by the Offer Agreement, Parent
and the Company shall use good faith efforts for a period of one month to
convert the Works Councils' negative advice to positive advice. In the event
that the Works Councils shall not have so converted their advice to positive
advice during such one month period, the Company shall be entitled to withdraw
or modify its approval or recommendation in favor of the Offer Agreement and so
advise the Company's shareholders and to terminate the Offer Agreement.
On June 14, 2000, the Company received positive advice from the Central
Works Council.
Termination. The Offer Agreement may be terminated at any time prior to
the consummation of the Offer:
(a) by mutual written consent of Offeror and the Company;
(b) by Offeror or the Company:
(i) if the consummation of the Offer shall not have occurred on or
before December 31, 2000 (provided that the right to terminate the Offer
Agreement pursuant to this clause (i) shall not be available to any
party whose failure to fulfill any obligation under the Offer Agreement
has been the cause of or resulted in the failure of the consummation of
the Offer to occur on or before such date);
(ii) if there shall be any Law that makes consummation of the Offer
illegal or prohibited, or if any court of competent jurisdiction or
other Governmental Entity shall have issued an order, judgment, decree
or ruling, or taken any other action restraining, enjoining or otherwise
prohibiting consummation of the Offer and such order, judgment, decree,
ruling or other action shall have become final and non-appealable; or
(iii) if the Offer terminates or expires on account of the failure
of any condition specified in Section 14 of the Offer Agreement without
Offeror having purchased any Shares thereunder (provided that the right
to terminate the Offer Agreement pursuant to this clause (iii) shall not
be available to any party whose failure to fulfill any obligation under
the Offer Agreement has been the cause of or resulted in the failure of
any such condition);
(c) by the Company if there is an Alternative Proposal which the
Boards in good faith determine after receiving the advice of its outside
advisors, including outside counsel and others that (i) such Alternative
Proposal is more favorable from a financial point of view as compared to
the Offer and (ii) the failure to accept such Alternative Proposal and
terminate the Offer Agreement would violate the Boards' fiduciary duties;
provided, however, that the right to terminate the Offer Agreement in such
event shall not be available (i) if the Company has breached in any
material respect its obligations with respect to Alternative Proposals, or
(ii) if prior to or concurrently with any purported termination pursuant to
this clause (c), the Company shall not have paid the "Termination Fee" (as
defined below), or (iii) if the Company has not provided Offeror with five
business days' prior written notice of its intent to terminate the Offer
Agreement and has not delivered to Offeror a copy of the written agreement
embodying the
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<PAGE> 11
Alternative Proposal in its then most definitive form; and provided further
that the Company may not approve or recommend approval of an Alternative
Proposal unless it complies with its obligations under the Offer Agreement
and terminates the Offer Agreement pursuant to the provision described in
this clause (c); or
(d) by Offeror if either of the Boards shall have failed to recommend,
or shall have withdrawn, modified or amended its approval or recommendation
of the Offer, or shall have approved or recommended acceptance of any
Alternative Proposal or shall have resolved to do any of the foregoing.
Fees and Expenses. Whether or not the Offer is consummated, all fees,
costs and expenses incurred in connection with the Offer Agreement and the
transactions contemplated by the Offer Agreement shall be paid by the party
incurring such fees, costs and expenses.
The Offer Agreement provides that, under certain circumstances, the Company
shall pay to Offeror a fee equal to (euro)22,800,000 (the "Termination Fee").
The Company is obligated to pay the Termination Fee under the following
circumstances:
(1) immediately if (i) a corporation, entity, "group" or "person"
(each as defined in the Exchange Act), other than Offeror, shall have
acquired beneficial ownership of a majority of the outstanding Shares and
Offeror or the Company terminates the Offer Agreement without Offeror
having purchased any Shares under the Offer; or (ii) the Company terminates
the Offer Agreement because there is an Alternative Proposal which the
Boards determine, in good faith after receiving the advice of its outside
advisors, including outside counsel and others that such Alternative
Proposal is more favorable from a financial point of view as compared to
the Offer and the failure to accept such Alternative Proposal would violate
the Boards' fiduciary duties; and
(2) if an Alternative Proposal is made known to the Company or has
been made directly to shareholders of the Company generally or is otherwise
publicly known or any person has publicly announced an intention (whether
or not conditional) to make an Alternative Proposal and thereafter
(i) Offeror terminates the Offer Agreement because either of the
Boards has failed to recommend, or have withdrawn, modified or amended
its approval or recommendation of the Offer, or approved or recommended
acceptance of any Alternative Proposal, or resolved to do any of the
foregoing,
(ii) Offeror or the Company terminates the Offer Agreement because
(x) the Offer has not been consummated on or before December 31, 2000
(provided that such party has the right to terminate the Offer
Agreement) or (y) failure to satisfy the condition that the total number
of Shares held by Parent or its affiliates, together with those tendered
in the Offer, represent at least 95% of the outstanding Shares prior to
the expiration of the Offer, unless in the case of (x) and (y) more than
51% of the outstanding Shares have been tendered and not withdrawn or
held by Parent or its affiliates, or
(iii) the Company terminates the Offer Agreement in the event that
the Works Councils at the Company and/or its subsidiaries have given
negative advice with respect to the recommendation of the Boards in
connection with the Offer and after one month such negative advice has
not been converted to positive advice;
provided that no such Termination Fee will be payable under this clause (2)
unless an Alternative Proposal is consummated within 12 months of such
termination.
Indemnification. Following the consummation of the Offer, Parent and
Offeror all cause the governing instruments of the Company to contain provisions
with respect to indemnification substantially to the same effect as those set
forth in the governing instruments of the Company on the date of the Offer
Agreement, which provisions shall not be amended, modified or otherwise repealed
for a period of six years after the consummation of the Offer in any manner that
would adversely affect the rights thereunder as of the date of consummation of
the Offer of individuals who on the date of consummation of the Offer were
members of the
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<PAGE> 12
Boards, officers, employees or agents of the Company, unless such modification
is required after the date of consummation of the Offer by applicable Law.
Parent has also agreed to cause the Company, to the fullest extent
permitted under applicable Law or under the Company's governing instruments or
any indemnification agreement in effect as of the date hereof, to indemnify and
hold harmless, each present and former member of the Boards, officer or employee
of the Company or any of its subsidiaries (collectively, the "Indemnified
Parties") against any costs or expenses (including attorneys' fees), judgments,
fines, losses, claims, damages, liabilities and amounts paid in settlement in
connection with any claim, action, suit, proceeding or investigation, whether
civil, criminal, administrative or investigative, (x) arising out of or
pertaining to the transactions contemplated by the Offer Agreement or (y)
otherwise with respect to any acts or omissions occurring at or prior to the
date of consummation of the Offer, to the same extent as provided in the
Company's governing instruments or any applicable contract or agreement as in
effect on the date hereof, in each case for a period of six years after the date
hereof. In the event of any such claim, action, suit, proceeding or
investigation (whether arising before or after the date of consummation of the
Offer) and subject to the specific terms of any indemnification contract, (i)
after the date of consummation of the Offer, the Company shall pay the
reasonable fees and expenses of any counsel retained by the Indemnified Parties,
promptly after statements therefore are received and (ii) the Company shall
cooperate in the defense of any such matter; provided, however, that in the
event that any claim or claims for indemnification are asserted or made within
such six-year period, all rights to indemnification in respect of any such claim
or claims shall continue until the disposition of any and all such claims; and,
provided, further, that any determination to be made with respect to whether an
Indemnified Party's conduct complies with the standards set forth under
applicable Law, the Company's governing instruments or any such agreement, as
the case may be, shall be made by independent legal counsel, which shall be
selected by such Indemnified Party and reasonably acceptable to Parent.
In addition, the Offer Agreement provides that the Company will provide,
for a period of not less than six years after the date of consummation of the
Offer, the Company's current directors and officers insurance and
indemnification policy that provides coverage for events occurring at or prior
to the date of consummation of the Offer (the "D&O Insurance") that is no less
favorable than the existing policy or, if substantially equivalent insurance
coverage is unavailable, the best available coverage; provided, however, that
the Company shall not be required to pay an annual premium for the D&O Insurance
in excess of one hundred seventy-five percent (175%) of the annual premium
currently paid by the Company for such insurance, but in the case the Company is
required to expend amounts for annual premiums in excess of the Company's
current expenditures, it shall, subject to such 175% limitation, purchase as
much of such coverage as possible for such amount; in no event, however, shall
the Company be required to provide coverage in excess of current coverage.
Amendment. To the extent permitted by applicable law, the Offer Agreement
may be amended by action taken by or on behalf of its Boards and Parent and
Offeror jointly at any time. The Offer Agreement may not be amended except by an
instrument in writing signed on behalf of all of the parties. From the
completion of such Offer, until Parent owns directly or indirectly, 95% of the
outstanding Shares, termination and certain amendments of and waivers under the
Offer Agreement will require the approval of the Continuing Members. See
"-- Board Representation" above.
THE SHARE PURCHASE AGREEMENTS
The following is a summary of the material terms of various share purchase
agreements between Parent and certain major holders of Shares (the "Share
Purchase Agreements"). This summary is not a complete description of the terms
and conditions of the Share Purchase Agreements and is qualified in its entirety
by reference to the full text thereof, which is incorporated herein by reference
and copies of which have been filed with the SEC as an exhibit to the Schedule
TO. The rights and obligations to purchase Shares under the agreements described
above were assigned by Parent to Offeror prior to completion of such purchases
and Offeror completed all such purchases described below. Any statements below
as to the status of the transfers of the Shares or the agreements themselves are
based on information provided to the Company by Parent.
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Jan Baan. Jan Baan and Parent (on behalf of itself and a contemplated
subsidiary), entered into a Share Purchase Agreement dated as of May 31, 2000
(the "Baan Purchase Agreement"). Pursuant to the Baan Purchase Agreement, Jan
Baan agreed to sell to Parent 256,410 Shares at the Offer Price. Jan Baan
represented and warranted that, at the closing of the transactions contemplated
under the Baan Purchase Agreement, he held free and clear title to such Shares
and all necessary authorizations had taken place to transfer such Shares to
Parent. The transfer of 256,410 Shares pursuant to the Baan Purchase Agreement
occurred on June 5, 2000.
Stichting Oikonomos. Stichting Oikonomos and Parent (on behalf of itself
and a contemplated subsidiary), entered into a Share Purchase Agreement dated as
of May 31, 2000 (the "Oikonomos Purchase Agreement"). Pursuant to the Oikonomos
Purchase Agreement, Stichting Oikonomos agreed to sell to Parent 386,542 Shares
at the Offer Price. Stichting Oikonomos represented and warranted that, at the
closing of the transactions contemplated under the Oikonomos Purchase Agreement,
it held free and clear title to such Shares. The transfer of 386,542 Shares
pursuant to the Oikonomos Purchase Agreement occurred on June 5, 2000.
Vanenburg Group B.V. Vanenburg Group B.V. and Parent (on behalf of itself
and a contemplated subsidiary), entered into a Share Purchase Agreement dated as
of May 31, 2000 and amended on June 2, 2000 (the "Vanenburg Purchase
Agreement"). Pursuant to the Vanenburg Purchase Agreement, Vanenburg Group B.V.
agreed to sell to Offeror 14,817,528 Shares at the Offer Price. Vanenburg Group
B.V. represented and warranted that, at the closing of the transactions
contemplated under the Vanenburg Purchase Agreement, it held free and clear
title to such Shares. Transfer of 13,812,028 Shares pursuant to the Vanenburg
Purchase Agreement occurred on June 5, 2000 and transfer of 1,005,500 Shares
occurred on June 8, 2000. Based on the annual accounts of 1998, economic
interest in Vanenburg Group B.V. is held by Stichting Oikonomos, however the
ultimate voting control in respect of such interest rests with Jan Baan and J.G.
Paul Baan.
General Atlantic Partners. General Atlantic Partners II, L.P., General
Atlantic Partners V, L.P., General Atlantic Partners 10, L.P., GAP Coinvestment
Partners, L.P. (together, the "GAP Sellers") and Parent entered into a Share
Purchase Agreement dated as of May 30, 2000 (the "GAP Purchase Agreement").
Pursuant to the GAP Purchase Agreement, the GAP Sellers agreed to sell to
Offeror 5,105,570 Shares at the U.S. dollar equivalent of the Offer Price. The
GAP Sellers represented and warranted that, at the Closing of the transactions
contemplated under the GAP Purchase Agreement, they held free and clear title to
such Shares. Transfer of the 5,105,570 Shares pursuant to the GAP Purchase
Agreement occurred at closings occurring on June 2, 2000 and on June 5, 2000.
Fletcher International Limited. The Company and Fletcher International
Limited ("Fletcher") entered into a Termination and Standstill Agreement dated
as of May 29, 2000 (the "Fletcher Agreement"). Company and Fletcher had
previously entered into a Share Rights Agreement dated as of December 31, 1998
(as amended on November 24, 1999, the "Share Rights Agreement") under which
Fletcher agreed to make an equity investment in the Company. In exchange, the
Company issued to Fletcher rights to purchase Shares. Under the Share Rights
Agreement, Fletcher was permitted to purchase Shares from the Company from time
to time at prices based on historical trading prices. Pursuant to the Fletcher
Agreement (i) Fletcher covenanted that it would not, until the earlier of (a)
December 31, 2000 and (b) the date that the Company publicly announces it is no
longer pursuing strategic alternatives involving a sale or other disposition of
the Company and no person shall have publicly announced that a proposed
"Transaction" (as defined below) is pending (the earlier of such dates is the
"Fletcher Expiration Date"), exercise any of its rights or acquire any Shares
under the Share Rights Agreement or otherwise, and (ii) Fletcher agreed to sell
to the Company 8,121,236 Shares held by Fletcher at the U.S. dollar equivalent
price of the Offer Price. The Company and Fletcher also agreed that if a
Transaction is consummated prior to the Fletcher Expiration Date, then the
Company will pay Fletcher the sum of (a) U.S.$10,000,000 in exchange for
extinguishing its unexercised rights and (b) U.S.$16,623,392.48 (plus interest
at 8.5% per year after May 29, 2000) in repayment of monies already advanced to
the Company but not yet converted into Shares. Fletcher and the Company agreed
that, upon such payment, the Share Rights Agreement shall be terminated and that
the Shares Rights Agreement and all rights granted thereunder shall be null and
void and of no further force or effect. Fletcher represented and warranted to
the Company that as of the date of the Fletcher Agreement it held free and clear
title to its
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<PAGE> 14
Shares other than an identified lien that was released prior to the Share
purchase. The Company and Parent entered into an Assignment and Assumption
Agreement regarding the Fletcher Agreement dated as of May 31, 2000 (the
"Assignment Agreement"). Pursuant to the Assignment Agreement, the Company
transferred and assigned to Parent all of its rights to purchase Shares pursuant
to the Fletcher Agreement. Parent subsequently assigned these rights to Offeror.
The transfer of 8,121,236 Shares to Offeror pursuant to the Fletcher Agreement
occurred on June 5, 2000.
As used above, the term "Transaction" means a transaction or series of
transactions in which a party or group acting in concert, other than Fletcher or
any of its affiliates, purchases or otherwise acquires more than 50% of the then
outstanding Shares, or (ii) all or substantially all of the assets of the
Company are sold, leased or otherwise transferred to one or more parties other
than Fletcher or any of its affiliates or (iii) the Company is merged with
and/or into another entity in which the shareholders of the Company as of the
date of the Fletcher Agreement do not hold more than 50% of the voting power of
the resulting entity.
ITEM 4. THE SOLICITATION OR RECOMMENDATION
(a) SOLICITATION OR RECOMMENDATION. At meetings held on May 30, 2000, the
Boards unanimously approved the Offer Agreement and the transactions
contemplated thereby, including the Offer, and determined that the
terms of the Offer are fair to, and in the best interests of, the
Company and its shareholders.
The Boards recommend that the shareholders accept the Offer and tender
their Shares pursuant to the Offer. A letter to the Company's
shareholders communicating the Boards' recommendation and a press
release announcing the execution of the Offer Agreement are filed with
this Statement as Exhibits 1 and 2, respectively, and are incorporated
in this Statement by this reference.
(b) REASONS FOR THE RECOMMENDATION OF THE BOARDS.
BACKGROUND TO THE OFFER
On January 4, 2000, the Company announced that it had undergone a strategic
reorganization during the fourth quarter of 1999 to focus its operations on
providing open, integrated and E-enabled enterprise solutions. The Company also
announced that as part of the reorganization, it expected to record write-downs
of certain capitalized software, equipment and intangible assets not related to
its core strategy, restructuring charges and increases in investments and other
reserves and allowances totaling approximately $200 million during the fourth
quarter of 1999. As a result, on February 3, 2000, the Company reported a fourth
quarter 1999 net loss of $236.2 million, or $1.06 per diluted Share.
As part of the reorganization, the Company committed to close 14 offices
and reduce headcount by approximately 4%. Simultaneously, the Company also
announced the resignation of Mary Coleman, its Chief Executive Officer and the
appointment of Pierre Everaert (who was then the Chairman of the Company's
Supervisory Board) as interim Chief Executive Officer. On January 14, 2000,
James Mooney resigned as Chief Financial Officer of the Company. The trading
price of the Shares at the beginning of 2000 was approximately $14.00. By the
end of January 2000, the trading price was approximately $7.00.
On January 31, 2000, the Company retained Lazard to examine the financial
position of the Company, review strategic options to maximize shareholder value
(including a possible sale of the Company) and explore other transactions to
raise equity for the Company. At the time of the appointment of Lazard, and at
several points thereafter, spokespeople for the Company indicated that it was
management's preference that the Company continue as an independent company; but
that, in light of the challenging circumstances confronting the Company,
management would examine all options, including a sale of the Company or
strategic reorganization.
In its February 3, 2000 earnings press release, the Company reported
positive shareholders' equity of approximately $9 million as of December 31,
1999. The listing standards of the Amsterdam Exchanges (the "AEX") require that
listed companies maintain positive shareholders' equity or be subject to
"special listing
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<PAGE> 15
conditions." Concerned by the Company's level of shareholders' equity at
year-end, the AEX contacted the Company in January to discuss this issue. On
February 17, 2000, at the request of the AEX, the Company publicly gave guidance
on the status of its equity position and announced certain initiatives to
increase shareholders' equity. The Company also agreed to update the AEX monthly
during the first quarter of 2000 on its ongoing plans to raise additional
equity.
During the first quarter, the Company was thus faced with a series of
challenges, including: (1) increasing difficulty in making new sales and
retaining existing customers because of concerns about the viability of the
Company, (2) a positive equity of only $9.0 million that was under scrutiny by
the AEX and (3) a declining Share price following the January announcements.
This meant that in the first quarter of 2000 (as described below), the
management of the Company was forced to devote significant resources to an
effort to stabilize the Company's financial situation.
During January and February 2000, Pierre Everaert contacted several major
customers of the Company to determine interest in investing individually or
forming a group to invest in the Company. These discussions did not proceed past
the preliminary stage.
In February 2000, Lazard contacted, on a preliminary basis, several
financial investors, including investment and venture-capital funds, to provide
equity capital. At the same time, Lazard also made preliminary contact with a
number of potential strategic partners, including software companies and other
technology companies. The discussions centered around strategic partnerships
with the Company, mergers with the Company, acquisitions of the Company and
sales of the Company's assets. Non-disclosure agreements were signed with
interested parties.
During March 2000, the Company completed a series of transactions aimed at
raising cash and equity capital in order to meet the AEX requirement for
positive shareholders' equity. During March 2000, the Company reached agreements
with certain holders of its 4.5% Convertible Subordinated Notes due 2001 (the
"Convertible Notes") under which some of the Convertible Notes were exchanged
for Shares at a price that was lower than the conversion price provided in the
Convertible Notes. The Company also temporarily lowered the conversion price
(originally $22.00 per Share) to $6.25 per Share for its remaining Convertible
Notes for a 61-day period, which ended on May 29, 2000. As a result, a total of
$50.3 million aggregate principal amount of Convertible Notes were either
converted into or exchanged for Shares during this period, resulting in the
issuance of approximately 8 million Shares. Also, on March 12, 2000, the Company
sold its minority interest in Meta4 to generate additional cash of approximately
$40 million and additional equity of approximately $20 million. After
discussions with several financial institutions about a possible equity
investment in the Company, on March 29, 2000, the Company entered into an equity
Put Option Agreement (the "Bear Stearns Agreement") with Bear, Stearns
International Limited ("Bear Stearns") under which the Company had the right to
request Bear Stearns to purchase up to E150.0 million worth of Shares over an
18-month period based on the market price for the Shares, subject to volume and
minimum price limitations. As consideration for entering into the Put Option
Agreement, the Company issued 1.5 million Shares to Bear Stearns at par value
(NLG 0.06). Finally, on March 31, 2000, the Company sold its CODA business (an
asset that was not a part of the integrated product strategy) to Science System
for approximately $49.3 million in cash, resulting in an equity gain of
approximately $30 million.
The Company, therefore, had taken the necessary steps to maintain positive
shareholders' equity during the first quarter of 2000. With the Bear Stearns
Agreement in place, based on the then-current market prices and trading activity
for the Shares, the Company believed it was in position to maintain positive
equity for the second quarter of 2000. Indeed, the AEX issued a press release on
or around March 14, 2000 indicating that, in light of the actions taken in the
first quarter, it saw no reasons to take any listing action with respect to the
Company and that periodic meetings on the equity issue were no longer necessary,
pending release of the Company's first quarter earnings report.
The earnings press release was issued on April 20, 2000, reflecting an
operating loss of $74.6 million. Following the issuance of that release, the
environment significantly changed. The trading price of the Shares, which had
been between $4.00 and $5.00, dropped in the weeks following the announcement to
between $1.00 and $2.00. Furthermore, average trading volumes in the Shares on
the AEX dropped as well. These changes
14
<PAGE> 16
meant that the Bear Stearns Agreement alone would likely be inadequate to
maintain positive equity for the second quarter. Customer concerns about the
Company's viability grew and continued to hamper revenue generation.
Thus, the Company, which had already been considering some realignment of
its business to survive as an independent company, was left with little choice
but to pursue a much more fundamental restructuring. In March 2000, the
PricewaterhouseCoopers Information Technology Strategy Group ("PwC") had been
retained to assist the Company in developing a revised business plan. In its
original formulation (which was presented to the Management Board at a March 24,
2000 meeting in Amsterdam), the plan focused on possible sales or spin-offs of
businesses or research and development units. After announcement of the
Company's first quarter results on April 20, 2000, and the resulting erosion of
the Share price, the plan was amended to contemplate a potentially significant
restructuring of the business. Some of the options under consideration were the
sale or outsourcing of the Company's consulting and education businesses, moving
to a completely (or near completely) indirect sales model and significant
headcount reductions. The revised plan under consideration in May 2000
contemplated reductions in the annual cost structure of the business from
approximately $720 million per annum to between $300 and $400 million per annum.
In furtherance of the Company's exploration of a possible realignment of
its business strategy, in mid-March 2000, the Company, assisted by Lazard, had
discussions with a major business hardware and software company regarding a
potential sale of the Company's consulting and education businesses. Discussions
progressed during the next several weeks. The Boards ultimately decided not to
pursue this sale because the consideration being discussed was inadequate. In
addition, discussions with other strategic partners continued (stimulated in
part by the drop in the trading price of the Shares). It became apparent that
the sale of the consulting and education businesses could jeopardize certain of
these discussions, since a number of potential partners wished to acquire the
businesses being considered for sale.
From March through the end of May, the Company's management, assisted by
Lazard, made various contacts and presentations to several potential strategic
partners that had been identified by Lazard. The potential strategic partners
included software companies, information technology companies, other technology
companies and investment funds. Subjects covered by the presentations included
the Company's financial situation, proposed restructuring plan, products and
strategic value.
On March 24, 2000, Invensys signed a non-disclosure agreement with the
Company in advance of an initial meeting on April 7, 2000.
On April 7, 2000, Pierre Everaert and other members of the Company's
management met with representatives of Invensys in The Netherlands, including
James Mueller, its Chief Operating Officer. Invensys expressed its interest in
continuing discussions with the Company and outlined its views regarding the
potential strategic fit of the Company and Invensys. Representatives of Lazard
were also present.
On April 17, 2000, representatives of Lazard met in Paris with
representatives of Invensys and Goldman Sachs ("Goldman Sachs" comprises Goldman
Sachs International and its affiliates, including Goldman, Sachs & Co.), the
financial advisor to Invensys, to discuss the recent historical financial
performance of the Company, including non-public information regarding the
Company's preliminary operating results for the quarter ended March 31, 2000.
On April 19, 2000, representatives of the Company met with representatives
of Invensys in Barneveld, The Netherlands, to discuss the status of the
Company's products and technology. Representatives of Lazard and Goldman Sachs
were also present.
On April 20, 2000, the Company released its results for the first quarter
ended March 31, 2000, announcing an operating loss of $74.6 million, a slight
reduction in shareholders' equity to $8.8 million and a more than $35.5 million
reduction in the Company's cash and marketable securities, to approximately
$161.1 million. The Company also announced a net loss of $25.7 million for the
quarter, or $0.11 per diluted share, as calculated under generally accepted
accounting principles in The Netherlands. Such losses would be higher under
generally accepted accounting principles in the U.S. Revenues for the first
quarter of 2000 fell to
15
<PAGE> 17
$106.1 million, compared with $175.8 million for the first quarter of 1999. The
Company's Share price dropped in the days that followed to under $2.00 per
Share.
On May 2, 2000, Pierre Everaert and Allen Yurko met over dinner. During the
meeting, Mr. Yurko expressed Invensys's potential interest in pursuing an
acquisition of the Company subject to further due diligence. Representatives of
Lazard and Goldman Sachs were also present. From May 3, 2000 until the date the
Offer Agreement was executed, Invensys and its legal counsel and financial
advisors were in regular contact with representatives of the Company in
connection with their legal, financial, operational and technical due diligence
process.
On May 10, 2000, representatives of the Company and Lazard met with an
information technology services company and a financial investor as a follow-up
to earlier discussions and to provide more detailed financial information and
discussed potential transaction structures. They discussed a possible
going-private transaction with the financial investor, but on May 15, 2000, the
financial investor indicated that it was no longer interested in pursuing the
transaction. The technology company expressed interest about a possible
investment in the Company but never made a formal offer.
On May 11, 2000, Lazard was contacted by representatives of another
information technology services company regarding a possible acquisition of the
Company. Lazard met with representatives of that company that same day.
Discussions did not lead to a formal offer.
On May 17, 2000, the Company's Management Board met in Amsterdam and
discussed the revised stand-alone reorganization plan, the goal of which was to
restore the Company to break-even by the first quarter of 2001. As suggested
above, the reorganization plan contemplated a dramatic reduction in quarterly
costs from approximately $180.0 million to approximately $75.0 million, moving
to a sales model that was almost completely indirect as well as the divestiture
or spin-off of certain assets. The Management Board expressed concerns that the
stand-alone plan would not maximize shareholder value for the reasons described
in this Statement under the caption "Reasons for the Recommendation." Moreover,
two additional challenges to the Company's viability as an independent company
arose. First, in discussions with the Company concerning a possible timetable
for completing and filing the 1999 audited financial statements, the Company's
independent accountants stated that they expect to express substantial doubt
about the Company's ability to continue as a going concern during the twelve
months following the date the 1999 audited financial statements are to be filed
with the SEC unless a restructuring plan and adequate financing are in place as
of the date of that filing. Discussions between the Company and its independent
accountants about the Company's ability to continue as a going concern had been
going on since the beginning of 2000. While the Company was in discussions with
respect to a number of possible financing or other alternatives, the outcome of
those discussions was uncertain, and a "going concern" reference by the
Company's independent accountants is a genuine possibility. Second, due to
further decreases in the trading price of the Shares, the Company would not be
able to generate the required equity under the Bear Stearns Agreement to
maintain positive equity for the second quarter, and the risk of being placed on
"special listing conditions" by the AEX was growing.
On May 18 and 19, 2000, Pierre Everaert and other representatives of the
Company met in New York with a software development company regarding a possible
tender offer for the Company by that company. That company gave a verbal
proposal for substantially less than the Offer Price, which the Company deemed
inadequate.
On May 19, 2000, Allen Yurko telephoned Pierre Everaert to indicate
Invensys's willingness to make an offer for all of the Shares, subject to
reaching agreement on the terms of the transaction and negotiation of definitive
documentation. Representatives of Lazard and Goldman Sachs also participated.
On May 22, 2000, Pierre Everaert and other representatives of the Company,
assisted by Lazard, began meetings in London with Invensys's management,
assisted by Goldman Sachs, regarding the terms of an offer, the need for a
mutually satisfactory definitive offer agreement, the valuation range and timing
issues. Discussions regarding further due diligence and cooperation by the major
shareholders of the Company were commenced.
16
<PAGE> 18
On May 24, 2000, a letter agreement with Invensys was signed, providing
for, among other things, a period of negotiations limited to only Invensys and
certain other parties that had already contacted the Company that was to last
until May 31, 2000.
On May 24, 2000, an initial draft of the Offer Agreement was distributed.
Negotiations relating to the Offer Agreement and the Ancillary Agreements began
among representatives of the Company, Invensys, Lazard, Goldman Sachs, Paul,
Weiss, Rifkind, Wharton & Garrison (U.S. outside counsel for the Company),
Stibbe Simont Monahan Duhot (Dutch outside counsel for the Company), Fried,
Frank, Harris, Shriver & Jacobson (U.S. outside counsel to Invensys) and De
Brauw Blackstone Westbroek (Dutch outside counsel for Invensys). Negotiations
continued through May 30, 2000.
On May 25, 2000, Lazard began negotiations with Fletcher International
Limited regarding the standstill and termination of its rights to purchase
Shares under the Share Rights Agreement between Fletcher and the Company, dated
as of December 31, 1998 and amended on November 24, 1999. The Termination and
Standstill Agreement was executed by Fletcher and the Company as of May 29,
2000.
Negotiations with other significant shareholders proceeded from May 29,
2000 through May 30, 2000.
On May 30, 2000, the Boards met at 12:00 noon, London time to review the
status of the negotiations and to consider the transaction. The Company's inside
counsel gave an overview of the legal documentation relating to the Offer,
including discussing the termination fee, the condition that the Offeror receive
at least 95% of the Shares, the conduct of the business during the pendency of
the Offer and other conditions to the Offer. Lazard made a preliminary
presentation regarding the possible price range of the Offer.
In the afternoon, London time, on May 30, 2000, discussions between the
Company and Invensys regarding price continued.
At 5:00 p.m., London time, on May 30, 2000, the Boards met again
telephonically to discuss the transaction.
In the evening, London time, Invensys proposed an Offer Price of E2.85 per
Share in cash.
At 9:00 p.m., London time, on May 30, 2000, the Boards met again by
telephone to consider the Offer Price of E2.85 proposed by Invensys. Lazard made
a presentation regarding the Offer and the Offer Price and provided a written
opinion to the Boards that, as of May 30, 2000, the Offer Price to be paid to
the shareholders in the Offer was fair to the shareholders of the Company from a
financial point of view, subject to the assumptions and qualifications set forth
in the opinion. The Offer and the Offer Agreement were entered into by the
Management Board upon approval of the Supervisory Board.
At 2:00 a.m., London time, on May 31, 2000, the Offer Agreement was
executed by the Company and Invensys. Simultaneously, the Ancillary Agreements
were executed and delivered.
Prior to the time markets opened in London on May 31, 2000, the Company and
Invensys announced that they had entered into the Offer Agreement.
REASONS FOR THE RECOMMENDATION
In entering into or approving, respectively, the Offer Agreement, the Offer
and the other transactions contemplated by the Offer Agreement and recommending
that the Company's shareholders tender their Shares pursuant to the Offer, the
Boards considered a variety of factors, including but not limited to the
following:
i. The Boards determined that the Company's prospects as an independent
company were uncertain in light of the difficult challenges it faced
in generating revenue and the Company's financial condition and
results of operations. Particularly, the Boards considered the
difficulties the Company had encountered during the first quarter of
2000 (and continuing into the second quarter of 2000) in generating
revenue from sales of its products because of customer concerns about
the Company's
17
<PAGE> 19
future viability. The Boards also considered the seven quarters of
operating losses incurred by the Company, which were expected to
continue for the foreseeable future.
ii. The stand-alone restructuring plan under review by management would
require a fundamental reorientation and restructuring of the Company.
In order for the Company to return to a break-even position in the
face of significant current operating losses, growing customer
concerns about the viability of the Company and a declining Share
price, the restructuring the Company would be forced to undergo would
likely require moving to an almost entirely indirect sales model,
significant budget reductions in research and development
(historically a strength of the Company), a dramatic scaling-back or
outright sale of the consulting and education businesses, and
significant reductions in headcount. The Boards determined that the
proposed restructuring would be difficult to finance by raising either
equity or debt because of the Company's Share price performance and
challenging financial situation. The Company's financial situation was
made even more challenging by the fact that $138.0 million aggregate
principal amount of Convertible Notes are due in December 2001. While
Invensys would also likely pursue a restructuring of the Company upon
completion of the Offer, the Boards believed that, because of
synergies resulting from the combination, the restructuring Invensys
would undertake would better preserve the Company's commitment to
research and development, the services businesses and multiple sales
channels than would the independent restructuring plan that was under
consideration at the time Invensys made the Offer.
iii. Although the Boards realized that, in the event the Invensys offer
was not completed, there were (and still are) alternatives to
financing the restructuring of the Company as well as other potential
buyers for all or some of the Company's assets, the Boards had no
reason to believe that any of those alternatives would be
economically superior to the Offer and could present certain other
disadvantages for current shareholders and the Company (including
substantial dilution and restrictive covenants).
iv. The Company also confronted the prospect of being placed on "special
listing conditions" by the AEX as a result of being in a negative
shareholders' equity position. With significant operating losses
expected for the second quarter of 2000, the Company was principally
dependent on the Bear Stearns Agreement to maintain positive equity
through the sale of new Shares. The significant drop in the Company's
Share price at the beginning of the second quarter of 2000 (dropping
below E3.00 per Share) had several real and potentially negative
effects on the Company's ability to raise equity under the Bear
Stearns Agreement: (1) Bear Stearns has the discretion, if the Share
price is below E3.00, to reject individual exercises by the Company;
(2) the drop in Share price required the Company to issue greater
numbers of Shares in order to obtain sufficient equity under the
Agreement, creating additional dilution for shareholders; and (3) in
any event, the maximum number of Shares issuable under the Bear
Stearns Agreement was capped at 20% of the Company's total issued and
outstanding share capital as of March 28, 2000. Because of these
limitations, the Company was unlikely to be able to sell sufficient
Shares under the Bear Stearns Agreement to maintain positive equity at
the end of the second quarter of 2000. If the Company failed to
maintain positive equity, the Shares would be subject to "special
listing conditions" on the AEX, which would likely raise additional
customers' concerns regarding the Company's viability and hamper the
Company's ability to raise other equity or debt financing. Indeed, on
June 6, 2000, the Company announced that (based on preliminary
reviews) it was likely to end the second quarter of 2000 in a negative
equity position. That same day, AEX issued a press release stating
that it would not impose special listing conditions because of the
announcement and pendency of the Offer. The press release went on to
state that the position of the AEX was subject to the Offer becoming
unconditional within eight weeks after the date of the press release.
v. The independent accountants had informed the Company that they expect
to express substantial doubt about the Company's ability to continue
as a going concern during the twelve-month period following the date
of filing of the 1999 audited financial statements with the SEC unless
a restructuring plan and adequate financing are in place as of the
date of that filing. Although the Company was in discussions with
potential buyers and investors who were interested in providing
18
<PAGE> 20
financing to the Company, the outcome of those discussions was
uncertain. It is therefore possible that the Company's accountants
will express in their opinion to the 1999 audited financial statements
substantial doubt about the Company's ability to continue as a going
concern, which would likely exacerbate customers' concerns about the
Company's viability.
vi. The Boards received the opinion of Lazard that, based upon and subject
to the assumptions and qualifications stated in its opinion, the E2.85
per Share to be paid to shareholders of the Company in the Offer was,
as of May 30, 2000, fair to all shareholders from a financial point of
view and also received a verbal report and analysis in connection with
that opinion. A copy of the opinion of Lazard, which sets forth the
assumptions made, the matters considered and the limitations of the
review undertaken by Lazard, is attached to this Statement as Annex A,
and shareholders are urged to read the opinion of Lazard in its
entirety.
vii. The Boards considered the historical market prices and recent trading
activity of the Shares, including the fact that the Offer Price
represented a premium of approximately 20.4% over the 30-day volume
weighted-average price on the AEX of the Shares as of May 30, 2000
(the trading day prior to the announcement of the Offer).
viii. The Boards considered the various alternative transactions presented
by management, assisted by Lazard and PwC, including asset sales,
spinoffs, investments by major customers, strategic transactions with
various parties and acquisitions by various parties and determined
that the Offer would maximize shareholder value. Though parties
contacted were provided with financial and other information by the
Company, aside from the Offeror, only one party made a formal offer
to enter into a transaction with the Company. The per share price
consideration proposed by that offer was substantially less than the
Offer Price.
ix. Since the announcement of the Offer, no other party has formally
presented the Company with an alternative proposal.
x. The Boards considered the terms of the Offer Agreement, including that:
- Under the Offer Agreement, the Boards are permitted to change its
recommendation of the Offer, furnish information to, negotiate with
and enter into a business combination transaction with a potential
acquiror relating to an unsolicited alternative offer, if, after
receiving the advice of its advisors, the Boards determine in good
faith that (1) the alternative offer is more favorable as compared
with the Offer, from a financial point of view; and (2) failure to
furnish the information or enter into discussions or negotiations
with the potential acquiror would violate the Boards' fiduciary
duties; and (3) the alternative offer is likely to be successfully
financed if accepted by the shareholders;
- Although the Company must pay the Offeror a termination fee in order
to accept and complete a transaction proposed by an alternative
offer (and certain other circumstances), and that fee would increase
the cost to the potential acquiror in such a transaction, the fee
would not preclude a potential acquiror from making an alternative
offer or completing such a transaction; and
- Although the Offer is conditioned upon 95% of the outstanding Shares
being tendered or being held by Offeror, the Boards recognized that
the condition was customary for transactions like the Offer under
Dutch Law and that Parent would not enter into the Offer Agreement
without the condition.
xi. The Boards noted that the consideration for the Shares would be paid
entirely in cash and that the Offer is not conditioned upon the
availability of financing because Offeror currently has the financial
resources to consummate the Offer expeditiously.
19
<PAGE> 21
The Boards did not consider the liquidation of the Company's assets to be
an acceptable course of action for the following reasons (among others):
- The Company has an installed base of approximately 7,000 customers using
its products worldwide, who depend on the Company to maintain and support
those products;
- The enterprise applications market continues to be attractive,
particularly the growing B2B e-commerce sector, for which the Company has
strong assets; and
- Proceeds from a liquidation were not likely to generate greater value for
shareholders than a strategic transaction such as the Offer, particularly
in light of the Company's outstanding debt obligations and potential
legal and other liabilities.
Therefore, no appraisal of liquidation values was sought for purposes of
evaluating the Offer.
The above discussion of information and factors considered and given weight
by the Boards is not intended to be exhaustive, but is believed to include all
of the material factors considered by the Boards. In view of the variety of
factors considered in connection with their evaluations of the Offer, the Boards
did not find it practicable to, and did not, quantify or otherwise assign
relative weights to the specific factors considered in reaching the
determinations and recommendations. In addition, individual members of the
Boards may have given different weights to different factors.
(c) INTENT TO TENDER. To the best knowledge of the Company, all of
its executive officers, directors, affiliates and subsidiaries intend to
tender pursuant to the Offer all Shares held of record or beneficially
owned by such persons (other than Shares issuable upon the exercise of
options), subject to and consistent with any fiduciary obligations of such
persons.
ITEM 5. PERSONS/ASSETS, RETAINED, EMPLOYED COMPENSATED OR USED
Lazard was retained by the Company pursuant to the terms of a letter
agreement, dated as of January 31, 2000 (the "Letter Agreement"), to act as
exclusive financial advisor to the Company. Pursuant to the Letter Agreement,
Lazard agreed to advise the Company on possible strategic transactions or
business combinations. The Letter Agreement also provides for Lazard to render a
fairness opinion in the case of a transforming transaction (the "Opinion"), if
requested by the Boards. The Opinion is attached hereto as Annex A.
Pursuant to the Letter Agreement, the Company agreed to pay Lazard (a) a
monthly fee of $75,000, payable upon execution of the Letter Agreement and
thereafter on the last day of each month until the earlier of the termination or
expiration of the Letter Agreement, which fee will be credited against any fee
paid pursuant to clause (b) or a fee paid in respect of a financing transaction;
and (b) a cash fee payable upon consummation of a "Change of Control
Transaction" (as such term is defined below), equal to one percent (1%) of the
aggregate consideration received in the Change of Control Transaction which
includes, among other things, the total amount of cash and the fair market value
(on the date of payment) of all other property paid or payable to the Company or
its security holders in connection with the Change of Control Transaction. The
Company has also agreed to reimburse Lazard for all reasonable out-of-pocket
expenses (including reasonable fees of outside counsel and other professional
advisors) and to indemnify Lazard and certain related parties against certain
liabilities, including liabilities under any applicable federal or state law,
relating to or arising out of Lazard's engagement. The term "Change of Control
Transaction," as used above, means the possible merger, combination or sale of
the Company, an interest in the Company or a subsidiary or division of the
Company with or into another corporation or other business entity which
transaction may take the form of a merger or sale of assets or equity securities
or other interests. The completion of the Offer will constitute a "Change of
Control Transaction."
Lazard and its affiliates have rendered various investment banking and
other advisory services to the Company and its affiliates in the past (including
for raising financing) for which Lazard received customary compensation. In the
ordinary course of business, Lazard and its affiliates may actively trade
securities of the Company, Parent and their affiliates for their own accounts
and for the accounts of customers and, accordingly, may at any time hold a long
or short position in such securities.
20
<PAGE> 22
Except as disclosed herein and in the Offer to Purchase, a copy of which is
attached as Exhibit (a)(1)(A) to the Schedule TO and portions of which are
incorporated in this Statement by reference, neither the Company nor any person
acting on its behalf has employed, retained or agreed to compensate any person
to make solicitations or recommendations to the shareholders concerning the
Offer.
A separate team from Lazard has been retained by Invensys and is assisting
Invensys with respect to the divestiture of a business unit unrelated to the
business of the Company. The fees paid to Lazard are customary for transactions
of that type.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY
(a) During the past 60 days, no transactions in Shares have been effected
by the Company or, to the best of the Company's knowledge, by any of
its executive officers, directors, affiliates or subsidiaries other
than the following:
(i) The Company has issued 22,417,017 Shares to Fletcher under the
Share Rights Agreement in the following transactions, all of which
were settled by the transfer of Shares in bearer form, in
Amsterdam:
<TABLE>
<CAPTION>
TOTAL
DATE NUMBER OF SHARES PRICE PER SHARE CONSIDERATION
------------ ---------------- --------------- --------------
<S> <C> <C> <C>
May 11, 2000 2,250,007 $2.2258 $ 5,008,065.58
May 11, 2000 4,171,754 2.2113 9,224,999.62
May 16, 2000 7,874,023 2.1656 17,051,984.21
May 30, 2000 8,121,233 1.2469 10,126,365.43
</TABLE>
(ii) The Company has issued an aggregate of 3,906,536 Shares to Bear
Stearns under the Bear Stearns Agreement in the following
transactions, all of which were settled by the transfer of Shares
in bearer form, payment upon delivery, in Amsterdam:
<TABLE>
<CAPTION>
TOTAL
DATE NUMBER OF SHARES PRICE PER SHARE CONSIDERATION
-------------- ---------------- --------------- ---------------------
<S> <C> <C> <C>
April 14, 2000 257,862 (euro)5.1496 (euro)1,327,886.16
April 17, 2000 468,685 4.8017 2,250,484.76
April 19, 2000 251,209 4.9340 1,239,465.21
April 29, 2000 761,026 3.7078 2,821,732.20
May 2, 2000 525,459 3.4657 1,821,083.26
May 4, 2000 1,642,295 2.5692 4,219,384.31
</TABLE>
(iii) Since March 31, 2000, the Company has issued to holders of the
Convertible Notes 1,508,800 Shares in respect of conversions of
the Convertible Notes.
(iv) Since March 31, 2000, Company has issued to its employees 615,859
Shares under its 1995 Employee Stock Purchase Plan.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY
(a) Except as set forth in this Statement, the Company is not engaged in
any negotiation in response to the Offer that relates to or would
result in (i) an extraordinary transaction, such as a merger,
reorganization or liquidation, involving the Company or any subsidiary
of the Company, (ii) a purchase, sale or transfer of a material amount
of assets by the Company or any subsidiary of the Company, (iii) a
tender offer for or other acquisition of securities by or of the
Company or (iv) any material change in the present dividend policy or
indebtedness or capitalization of the Company.
(b) Except as described in Item 3 above (the provisions of which are hereby
incorporated by reference), there are no transactions, Company Board
resolutions, agreements in principle or signed contracts in response to
the Offer that relate to or would result in one or more of the events
referred to in Item 7(a) above.
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<PAGE> 23
ITEM 8. ADDITIONAL INFORMATION
(a) THE STATUTORY BUY OUT PROCEDURE
At such time as the Offeror acquires 95% of the outstanding issued Shares,
the Offeror intends to pursue a statutory buy out procedure (the "Statutory Buy
Out Procedure") of any remaining minority Shares pursuant to the Dutch Civil
Code (the "DCC") and the Dutch Merger Code. Section 2:92a of the DCC contains a
procedure to compel minority shareholders of a naamloze vennootschap or
"N.V." -- a limited liability company such as the Company, to sell their Shares
to Offeror. As soon as Offeror and its affiliates, other than the Company, hold
for their own account at least 95% of the issued Shares of the Company, Offeror
and such affiliates intend to institute proceedings against the other
shareholders (the "Minority Shareholders") of the Company, in accordance with
Section 2:92a of the DCC, in order to force the Minority Shareholders to
transfer their Shares to Offeror. The Statutory Buy Out Procedure may be
initiated at any time upon fulfillment of the 95% ownership condition. The
proceedings are instituted by means of a writ of summons served upon each of the
Minority Shareholders in accordance with the provisions of the Dutch Code of
Civil Procedure. The proceedings are held before the Enterprise Division of the
Court of Appeals in Amsterdam, The Netherlands (the "Enterprise Division"). The
Enterprise Division may render the following judgments:
(i) deny the claim for compulsory acquisition in relation to all Minority
Shareholders if it is established that (a) one or more Minority
Shareholders will incur considerable financial loss by the forced
transfer of their Shares that would not be compensated by the fixed
price for their Shares, (b) one or more Minority Shareholders holds
one or more Shares in which, according to the Company's articles of
association (the "Articles"), a special control right regarding the
Company is vested, or (c) the plaintiffs have waived their rights to
institute these proceedings vis-a-vis one or more of the Minority
Shareholders; and
(ii) if the claim is not denied, (a) appoint one or three auditors to
advise the Enterprise Division as to the price to be paid for the
Minority Shareholders' Shares after which the Enterprise Division
will fix such prices or (b) fix the price to be paid for the Shares
of the Minority Shareholders if the Enterprise Division does not deem
it necessary to appoint auditors (for instance, if the plaintiffs
have already provided the Enterprise Division with sufficient
evidence that the price offered is reasonable); and
(iii) if the claim is not denied, award the claim for compulsory
acquisition by way of an order to the Minority Shareholders to
transfer their Shares, as well as an order to the plaintiffs to pay
the Minority Shareholders the price fixed (with interest) against
transfer of their unencumbered Shares.
If the Enterprise Division fixes the price to be paid for the Shares of the
Minority Shareholders, such price shall be increased by the statutory interest
rate applicable in The Netherlands (at present 6.00% per annum) for the period
from a date determined by the Enterprise Division to the date of payment of the
price. However, any dividends or other distributions made by the Company to its
shareholders during that period will be deemed to be partial payments towards
the price fixed.
The Minority Shareholders will be required to transfer their Shares,
against payment of the price set by the Enterprise Division, only once a final,
nonappealable judgment described in clause (iii) above has been obtained. The
plaintiffs will notify the Minority Shareholders of the date and place of
payment for the Shares and the price to be paid for the Shares by notification
sent directly to the Minority Shareholders whose addresses are known and by
means of an advertisement in a national daily newspaper in The Netherlands. The
plaintiffs may also pay the price for the Minority Shareholders' Shares,
inclusive of interest accrued thereon, in escrow to the State of The
Netherlands. By this payment, the plaintiffs become the holders of the Shares by
operation of law subject to the same notice obligations. Any encumbrance on any
Shares for which payment in escrow has been made will be released from such
Shares and will transfer to the funds paid for such Shares. At such time, the
Minority Shareholders would cease to have any rights in their Shares, including
with respect to
22
<PAGE> 24
voting thereof. Their only right will be the right to receive payment therefor
upon proper transfer of their Shares.
BECAUSE THE STATUTORY BUY OUT PROCEDURE WOULD REQUIRE A COURT PROCEEDING
AND POSSIBLY EXPERT VALUATION, RECEIPT OF FUNDS COULD BE SUBSTANTIALLY DELAYED,
AND THE PRICE PAID IN THE STATUTORY BUY OUT PROCEDURE MAY BE MORE OR LESS THAN
(EURO)2.85 PER SHARE.
Those shareholders who do not tender their Shares pursuant to the Offer are
not entitled to receive consideration for their Shares from Offeror unless
Offeror effects the Statutory Buy Out Procedure or otherwise agrees to acquire
such holder's Shares in accordance with applicable law.
In addition to the Statutory Buy Out Procedure, Offeror has informed the
Company that it currently intends, after completion of the Offer, to cause the
Company and one or more Dutch subsidiaries of Parent to effect a legal merger
within the meaning of Section 2:309 of the DCC, provided that the merger
consideration, if not payable in cash at the same price per Share as is payable
pursuant to the Offer shall provide equivalent value as the cash paid per Share
in the Offer.
Parent has informed the Company that it does not currently intend to amend
the Company's Articles before Offeror has acquired all of the outstanding Shares
of the Company. At that time, Parent has informed the Company that it may
consider amending the Company's articles of association to contain provisions
customary or appropriate for a subsidiary of Parent.
(b) EXCHANGE RATE INFORMATION
The Offer Price is stated in euros and certain other amounts are presented
in U.S. dollars and Dutch guilders. In this Offer to Purchase, references to
"euro," "EUR" or "(euro)" are to euros, references to "NLG" are to Dutch
guilders, references to "U.S. dollars", "U.S. $" or "$" are to United States
dollars and references to "(pound sterling)" are to British Pounds.
On January 1, 1999, the euro was introduced as a new currency in the
following eleven European Union member states (the "Participating Member
States"): Austria, Belgium, Finland, France, Germany, Ireland, Italy,
Luxembourg, The Netherlands, Portugal and Spain. The respective currencies of
the Participating Member States, including the Dutch guilder, will be nondecimal
subdivisions of the euro until January 1, 2002 and to up to six months
thereafter. The exchange rate at which the Dutch guilder has been irrevocably
fixed against the euro is EUR 1 = NLG 2.20371.
Fluctuations in the exchange rate between the euro and the U.S. dollar will
affect the U.S. dollar equivalent of the euro price of the Shares traded on the
AEX and, as a result, are likely to affect the market price of the Shares traded
on the Nasdaq/NMS in the United States. Such fluctuations will also affect any
U.S. dollar amounts received by holders of Shares registered in the U.S.
accepted for payment pursuant to the Offer.
The following table sets forth for the periods indicated the high, low,
average and period-end noon buying rate in New York City for cable transfers in
foreign currencies as certified for customs purposes by the Federal Reserve Bank
of New York, which are not materially different from the Midpoint Rate (the rate
settled each working day at 2:15 p.m. by the Dutch Central Bank). The average
rate means the average of the exchange rates on the last day of each month
during a year. The figures for the years 1995 through 1998 have been
recalculated using the exchange rate of EUR 1 = NLG 2.20371.
<TABLE>
<CAPTION>
PERIOD AVERAGE
CALENDAR PERIOD END RATE(1) HIGH LOW
--------------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
1995............................................ 1.374312 1.380525 1.450573 1.259695
1996............................................ 1.275960 1.305218 1.374312 1.254960
1997............................................ 1.086749 1.126474 1.275960 1.040615
1998............................................ 1.174060 1.113130 1.214701 1.054911
1999............................................ 1.007000 1.058775 1.181200 1.001600
2000 (through June 12, 2000).................... 0.932800 0.94782 1.033500 0.889100
</TABLE>
---------------
(1) The average of the Noon Buying Rates on the last day of each month during
the period
23
<PAGE> 25
ITEM 9. EXHIBITS
<TABLE>
<S> <C>
(a)(1)* Letter to Shareholders dated June 14, 2000.
(a)(2)* Press Release dated May 31, 2000 (incorporated by reference
to the Company's Current Report on Form 6-K, dated June 6,
2000).
(b)(1)* Offer Agreement, dated as of May 31, 2000, by and between
Parent and the Company (incorporated by reference to
Parent's Statement of Beneficial Ownership on Schedule 13D,
dated June 9, 2000).
(b)(2)* Assignment and Assumption Agreement, dated as of June 2,
2000 by and among Parent, Offeror and certain other parties
(incorporated by reference to the Schedule TO).
(b)(3)* Share Purchase Agreement, dated as of May 31, 2000, by and
between Parent and Mr. Jan Baan (incorporated by reference
to Parent's Statement of Beneficial Ownership on Schedule
13D, dated June 9, 2000).
(b)(4)* Share Purchase Agreement, dated as of May 31, 2000, by and
between Parent and Stichting Oikonomos (incorporated by
reference to Parent's Statement of Beneficial Ownership on
Schedule 13D, dated June 9, 2000).
(b)(5)* Share Purchase Agreement, dated as of May 31, 2000, by and
between Parent and Vanenburg Group B.V. and Amendment
Agreement, dated as of June 2, 2000, by and between the same
parties (incorporated by reference to Parent's Statement of
Beneficial Ownership on Schedule 13D, dated June 9, 2000).
(b)(6)* Share Purchase Agreement, dated as of May 31, 2000, by and
among Parent and General Atlantic Partners II, L.P., General
Atlantic Partners V, L.P., General Atlantic Partners 10,
L.P. and GAP Coinvestment Partners, L.P. (incorporated by
reference to Parent's Statement of Beneficial Ownership on
Schedule 13D, dated June 9, 2000).
(b)(7)* Termination and Standstill Agreement, dated as of May 29,
2000, by and between the Company and Fletcher International
Limited (incorporated by reference to Parent's Statement of
Beneficial Ownership on Schedule 13D, dated June 9, 2000).
(b)(8)* Assignment and Assumption Agreement, dated as of May 31,
2000, by and between the Company and Parent (incorporated by
reference to Parent's Statement of Beneficial Ownership on
Schedule 13D, dated June 9, 2000).
(c)(1)* Share Rights Agreement, dated as of December 31, 1998,
between the Company and Fletcher (incorporated by reference
to the Company's Annual Report on Form 20-F with respect to
the year ended December 31, 1998).
(c)(2)* Amendment to the Share Rights Agreement, dated as of
November 24, 1999, between the Company and Fletcher.
(d)* Fairness opinion of Lazard, dated May 30, 2000.
(e)* Shareholders' Informational Meeting Materials, dated June
14, 2000 (incorporated by reference to the Company's
Statement on Schedule 14D-9, dated June 9, 2000).
</TABLE>
---------------------
* Filed previously.
24
<PAGE> 26
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.
BAAN COMPANY N.V.
By: /s/ ROBERT GOUDIE
------------------------------------
Name: Robert Goudie
Title: Senior Vice President,
General Counsel and Secretary
Dated: June 14, 2000
25
<PAGE> 27
May 30, 2000
[LAZARD LOGO]
The Board of Managing Directors
and the Board of Supervisory Directors
Baan Company N.V.
Baron van Nagellstraat 89
3770 AC Barneveld
The Netherlands
Dear Members of the Board:
We understand that Baan Company N.V. (the "Company"), Invensys plc
("Parent"), B Acquisition B.V., i.o., a wholly-owned subsidiary of Parent (the
"Purchaser"), and B Offer Sub B.V., i.o., a wholly-owned subsidiary of the
Purchaser ("Offer Sub"), propose to enter into an Offer Agreement (the "Offer
Agreement") pursuant to which Offer Sub will commence an offer (the "Offer") to
purchase all the outstanding common shares, par value NLG 0.06 per share (the
"Common Shares"), of the Company at a price of 2.85 Euros per share, net to the
seller in cash (with a U.S. dollar equivalent option) (the "Consideration").
You have requested our opinion as to the fairness, from a financial point
of view, of the Consideration to be received by the holders of the Common Shares
in the Offer. In connection with this opinion, we have:
(i) reviewed the financial terms and conditions of the draft Offer
Agreement dated May 27, 2000 (which did not contain disclosure
schedules);
(ii) analyzed certain historical business and financial information
relating to the Company;
(iii) reviewed financial forecasts and other data provided to us by the
Company relating to its businesses for 2000, which did not contain
projected statements of cash flows (we have been informed by
representatives of the Company that no projected statements of cash
flows for 2000 exist and no projections for any year after 2000
exist);
(iv) held discussions with members of senior management of the Company
with respect to the businesses and prospects of the Company and its
strategic objectives;
(v) reviewed public information with respect to certain other companies
in lines of business we believe to be generally comparable to those
of the Company;
(vi) reviewed the financial terms of certain business combinations
involving companies in lines of business we believe to be generally
comparable to those of the Company;
(vii) reviewed the historical stock prices and trading volumes of the
Common Shares; and
(viii) conducted such other financial studies, analyses and investigations
as we deemed appropriate.
We have relied upon the accuracy and completeness of the foregoing
information and have not assumed any responsibility for any independent
verification of such information or any independent valuation or appraisal of
any of the assets or liabilities of Parent or the Company or concerning the
solvency of, or issues relating to solvency concerning, Parent or the Company.
With respect to financial forecasts, we have assumed that they have been
reasonably prepared on bases reflecting the best currently available estimates
and judgments of the management of the Company as to the future financial
performance of the Company. We assume no responsibility for and express no view
as to such forecasts or the assumptions on which they are based. We note that
management has not provided us with an estimate of synergies expected to result
from the transaction contemplated by the Offer Agreement.
Further, our opinion is necessarily based on economic, monetary, market and
other conditions as in effect on, and the information made available to us as
of, the date hereof. In rendering our opinion, we did not
A-1
<PAGE> 28
address the relative merits of the Offer, any alternative potential transaction
or the Company's underlying decision to enter into the Offer Agreement.
In rendering our opinion, we have assumed that the Offer will be
consummated on the terms described in the Offer Agreement, without any waiver of
any material terms or conditions. We have also assumed that the definitive Offer
Agreement will not differ in any material respect from the draft thereof
referred to in paragraph (i) above.
Lazard Freres & Co. LLC is acting as investment banker to the Company in
connection with the Offer and will receive a fee for our services, a substantial
portion of which is contingent upon the consummation of the Offer. We have in
the past provided investment banking services to the Company for which we
received usual and customary compensation. In addition, the Company has agreed
to indemnify us for certain liabilities that may arise out of the rendering of
this opinion. We are also currently advising Parent on a divestiture for which
we expect to be paid reasonable and customary fees. Lazard Freres & Co. LLC is
not regulated by any authority or body in the Netherlands, and is rendering this
opinion in accordance with customary practice in the United States. With your
consent, we have assumed that law, custom and practice in the Netherlands
relating to opinions such as the one being delivered hereby are not materially
different from those of the United States.
Our engagement and the opinion expressed herein are for the benefit of the
Company's Board of Directors and our opinion is rendered to the Company's Board
of Directors in connection with its consideration of the Offer to be commenced
by Offer Sub pursuant to the Offer Agreement. This opinion is not intended to
and does not constitute a recommendation to any holder of the Common Shares as
to whether such holder should tender such holder's Common Shares in the Offer.
This opinion does not address any transaction involving the Common Shares,
whether or not contemplated by the Offer Agreement, other than the Offer. It is
understood that this letter may not be disclosed or otherwise referred to
without our prior written consent, except as may otherwise be required by law or
by a court of competent jurisdiction. This opinion is given pursuant to the
engagement letter dated January 31, 2000 and is governed by New York law. It may
only be relied on with the express condition that it is governed by New York
law.
Based on and subject to the foregoing, we are of the opinion that the
Consideration to be received by the holders of the Common Shares pursuant to the
Offer is fair to the holders of the Common Shares from a financial point of
view.
Very truly yours,
LAZARD FRERES & CO. LLC
By /s/ LUIS E. RINALDINI
------------------------------------
Luis E. Rinaldini
Managing Director
A-2
<PAGE> 29
INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Administrator............................................... 3
Alternative Proposal........................................ 8
AEX......................................................... 13
Ancillary Agreements........................................ 4
Articles.................................................... 22
Assignment Agreement........................................ 13
Baan Purchase Agreement..................................... 11
Bear Stearns................................................ 14
Bear Stearns Agreement...................................... 14
Boards...................................................... 1
Change of Control Transaction............................... 20
Code........................................................ 3
Company..................................................... 1
Convertible Notes........................................... 14
Continuing Members.......................................... 5
D&O Insurance............................................... 11
DCC......................................................... 22
Director Plan............................................... 3
Dutch Law................................................... 5
Dutch Merger Code........................................... 5
Enterprise Division......................................... 22
ERISA....................................................... 6
Exchange Act................................................ 4
Fletcher.................................................... 12
Fletcher Agreement.......................................... 12
Fletcher Expiration Date.................................... 12
GAP Purchase Agreement...................................... 12
GAP Sellers................................................. 12
Goldman Sachs............................................... 15
Governmental Entity......................................... 5
Indemnified Parties......................................... 11
Invensys.................................................... 1
Laws........................................................ 5
Lazard...................................................... 2
Letter Agreement............................................ 20
Litigation.................................................. 5
Minority Shareholders....................................... 22
Offer....................................................... 1
Offer Agreement............................................. 1
Offer to Purchase........................................... 1
Offer Price................................................. 1
</TABLE>
I-1
<PAGE> 30
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Offeror..................................................... 1
Oikonomos Purchase Agreement................................ 12
Opinion..................................................... 20
PwC......................................................... 15
Parent...................................................... 1
Participating Member States................................. 23
Representatives............................................. 8
Schedule TO................................................. 1
SEC......................................................... 4
Securities Act.............................................. 5
Share Purchase Agreements................................... 11
Share Rights Agreement...................................... 12
Shares...................................................... 1
Statement................................................... 1
Statutory Buy Out Procedure................................. 22
Termination Fee............................................. 10
Transaction................................................. 13
Vanenburg Purchase Agreement................................ 12
</TABLE>
I-2
