SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No.)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(z))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant (S) 240.14a-11(c) or (S) 240.14a-12
FDP Corp.
..................................................................
(Name of Registrant as Specified in Its Charter)
..................................................................
(Name of Person (s) filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box)
[ ] No fee required.
[X] Fee computed on table below per Exchange Act Rules 14a-16(i)(4) and
0-11.
1) Title of each class of securities to which transaction applies:
SunGard Data Systems Inc. Common Stock, par value $.01 per
share
..................................................................
2) Aggregate number of securities to which transaction applies:
3,308,934 (maximum)
..................................................................
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined.):
$40.875 per share (equal to the closing price per share of
SunGard Data Systems Inc. Common Stock March 22 1999)
...................................................
(4) Proposed maximum aggregate value of transaction:
$135,252,678
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(5) Total fee paid:
$27,050.54
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[_] Fee paid previously with preliminary materials.
[x] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
$21,982.29
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(2) Form, Schedule or Registration Statement No.:
Confidential Preliminary Filing on Schedule 14A
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(3) Filing Party:
FDP Corp.
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(4) Date Filed:
January 15, 1999
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Notes:
MERGER PROPOSED--YOUR VOTE IS VERY IMPORTANT
SUNGARD DATA SYSTEMS INC. FDP CORP.
The boards of directors of FDP Corp. and SunGard Data Systems Inc. have
approved the acquisition of FDP by SunGard through a merger by which FDP will
become a wholly-owned subsidiary of SunGard.
In the merger, shareholders of FDP will receive shares of SunGard common
stock in exchange for their shares of FDP common stock. An aggregate of
approximately 2,462,830 to 2,873,502 shares of SunGard common stock will be
issued in the merger. SunGard's common stock is traded on the New York Stock
Exchange under the symbol "SDS."
The merger cannot be completed unless FDP shareholders approve the merger.
FDP has scheduled a special meeting for FDP shareholders to vote on this
proposal. Your vote is very important.
Whether or not you plan to attend the special meeting, please take the time
to vote by completing and mailing the enclosed proxy card to FDP. If you sign,
date and mail your proxy card without indicating how you want to vote, your
proxy will be counted as a vote in favor of the proposal submitted at the
special meeting. If you fail to return the card,
the effect will be a vote against the merger, unless you attend the special
meeting and vote in favor of the proposal.
Only shareholders of record of FDP common stock as of March 15, 1999 are
entitled to attend and vote at the special meeting. The date, time and place of
the special meeting are as follows:
April 28, 1999
10:00 a.m.
The Grand Bay Hotel
2669 South Bayshore Drive
Coconut Grove, Florida
This proxy statement/prospectus provides you with detailed information about
the proposed merger. We encourage you to read this entire document carefully.
Please pay particular attention to the matters referred to under "Risk Factors"
beginning on page .
In addition, you may obtain information about our companies from documents
that we have filed with the Securities and Exchange Commission. See "Where To
Find More Information."
Neither the Securities and Exchange Commission nor any state securities
regulator has approved the SunGard common stock to be issued in the merger
or determined if this proxy statement/prospectus is accurate or adequate.
Any representation to the contrary is a criminal offense.
Proxy statement/prospectus dated March 30, 1999, and first mailed to
shareholders on or about March 30, 1999.
March 30, 1999
FDP CORP.
2140 South Dixie Highway
Miami, Florida 33133
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 28, 1999
TO THE SHAREHOLDERS OF FDP CORP.:
NOTICE IS HEREBY GIVEN that a special meeting of shareholders of FDP Corp.,
a Florida corporation, will be held on April 28, 1999, at 10:00 a.m., local
time, at The Grand Bay Hotel, 2669 South Bayshore Drive, Coconut Grove,
Florida, for the following purposes:
1. To consider and vote upon a proposal to (i) approve the agreement and
plan of reorganization, dated as of January 15, 1999, among FDP, SunGard Data
Systems Inc., a Delaware Corporation, and Development Corp., a Florida
corporation and wholly owned subsidiary of SunGard, and (ii) approve the merger
of Development Corp. with and into FDP pursuant to which FDP will become a
wholly owned subsidiary of SunGard.
2. To transact such other business as may properly be brought before the FDP
special meeting, or any adjournments or postponements to the FDP special
meeting.
Information relating to the above proposal is set forth in the attached
proxy statement/prospectus. Shareholders of record at the close of business on
March 15, 1999 are entitled to notice of, and to vote at, the FDP special
meeting and any adjournments or postponements of the special meeting. Approval
of the merger described above will require the affirmative vote of the holders
of a majority of the shares of FDP common stock outstanding on the record date.
All shareholders are cordially invited to attend the FDP special meeting in
person.
By order of the Board of Directors
Cindy Goldberg
Secretary
Miami, Florida
March 30, 1999
Whether or not you expect to attend the FDP special meeting, please
complete, date and sign the enclosed proxy card and mail it promptly in the
enclosed envelope in order to ensure representation of your shares. No postage
needs to be affixed if the proxy card is mailed in the United States.
TABLE OF CONTENTS
Page
QUESTIONS AND ANSWERS ABOUT THE SUNGARD/FDP MERGER.......................... 1
SUMMARY..................................................................... 2
Selected Historical Financial Information................................... 6
Market Price Information.................................................... 8
RISK FACTORS................................................................ 11
Risks Relating to the Merger............................................... 11
Risks Relating to SunGard.................................................. 12
RECENT DEVELOPMENTS......................................................... 14
THE FDP SPECIAL MEETING..................................................... 16
General.................................................................... 16
Purpose of the FDP Special Meeting......................................... 16
Record Date and Outstanding Shares......................................... 16
Voting of Proxies.......................................................... 16
Vote Required.............................................................. 17
Board Recommendation....................................................... 17
Quorum; Abstentions........................................................ 17
Solicitation of Proxies; Expenses.......................................... 17
THE MERGER AND RELATED TRANSACTIONS......................................... 18
Background of The Merger................................................... 18
FDPs Reasons for the Merger................................................ 20
SunGards Reasons for the Merger............................................ 21
Opinion of Broadview Int'l LLC............................................. 22
Page
Interests of Persons in the Merger......................................... 27
Voting Agreement........................................................... 28
Affiliate Agreements....................................................... 28
Noncompetition Agreements.................................................. 28
Federal Income Tax Consequences............................................ 28
Anticipated Accounting Treatment........................................... 30
Regulatory Matters......................................................... 30
Absence of Dissenters' Rights.............................................. 30
Resale of SunGard Common Stock............................................. 30
THE REORGANIZATION AGREEMENT................................................ 31
UNAUDITED PRO FORMA FINANCIAL INFORMATION................................... 38
EXPERTS..................................................................... 55
LEGAL MATTERS............................................................... 55
REPRESENTATIVES OF INDEPENDENT AUDITORS..................................... 55
WHERE TO FIND MORE INFORMATION.............................................. 55
Appendix A Agreement and Plan of Reorganization
Appendix B Opinion of Broadview Int'l LLC
This proxy statement/prospectus incorporates important business and
financial information about SunGard and FDP that is not included in or
delivered with this proxy statement/prospectus. Copies of this information are
available to any person to whom this proxy statement/prospectus is delivered,
upon written or oral request. Requests for documents relating to SunGard should
be directed to Lawrence A. Gross, Vice President and General Counsel of
SunGard, at 610-341-8700. Requests for documents relating to FDP should be
directed to Mark S. Silverman, Chief Financial Officer of FDP, at 305-858-8200.
In order to ensure timely delivery of the documents requests should be made by
April 14, 1999.
This proxy statement/prospectus is accompanied by a copy of FDP's Annual
Report on Form 10-K for the year ended November 30, 1998.
QUESTIONS AND ANSWERS ABOUT THE SUNGARD/FDP MERGER
Q: Why is FDP agreeing to merge with SunGard?
A: The FDP board of directors believes that the merger is in the best interests
of FDP and its shareholders. To review the reasons for the merger in greater
detail, see pages 20 through 21.
Q: What will happen to the stock of FDP in the merger?
A: In the merger, FDP shareholders will receive shares of SunGard common stock
in exchange for their shares of FDP common stock. Cash will be paid for
fractional shares.
Q: When will the merger take effect?
A: FDP and SunGard expect that the merger will become effective promptly after
shareholders of FDP approve the merger, provided that the other conditions
to the merger have been satisfied. A special meeting of FDP shareholders is
scheduled for April 28, 1999.
Q: What should I do now?
A: You should mail your completed and signed proxy card in the enclosed postage
paid envelope as soon as possible so that your shares will be represented at
the special meeting.
Q: Can I change my vote after I have mailed in a signed proxy card?
A: Yes. You can change your vote in one of the following ways at any time
before your proxy is voted at the special meeting. First, you can revoke
your proxy by written notice. Second, you can submit a new, later dated
proxy card. Third, you can attend the special meeting and vote in person. In
addition, you may alter the instructions as to how your proxy is to be voted
by giving notice of the alteration to the Secretary of FDP before the vote
is taken.
Q: If my shares are held in "street name" by my broker, will my broker vote my
shares for me?
A: Your broker will vote your shares only if you provide instructions on how to
vote. You should follow the directions provided by your broker regarding how
to instruct your broker to vote your shares. If you do not return your
proxy, your shares will not be voted on the proposed merger, which will have
the same effect as voting against the proposed merger.
Q: What other matters will be voted on at the special meeting?
A: We do not expect to ask FDP shareholders to vote on any matter other than
approval of the merger.
Q: Should I send in my share certificates now?
A: No. After the merger is completed, you will be sent written instructions for
sending in your share certificates and receiving the SunGard common stock
and cash, if any, to which you are entitled.
Q: Whom should I call with questions and to obtain additional copies of the
proxy statement/prospectus?
A: You should call Mark S. Silverman, Chief Financial Officer of FDP, at (305)
858-8200.
1
SUMMARY
This summary highlights selected information from this document and does
not contain all of the information that may be important to you. To understand
the merger fully and for a more complete description of the legal terms of the
merger, you should read carefully this entire document and the documents to
which we have referred you. See "Where To Find More Information" on page 55.
We have included page references parenthetically to direct you to a more
complete discussion of the topics presented in this summary.
The Companies
SunGard Data Systems Inc.
1285 Drummers Lane
Wayne, Pennsylvania 19807
610-341-8700
SunGard provides computer services, principally proprietary processing
services and software to the financial services industry, and computer
disaster recovery services.
FDP Corp.
2140 South Dixie Highway
Miami, Florida 33133
305-858-8200
FDP develops and sells a variety of application software systems that
facilitate the marketing and administrative functions for the life insurance
and employee benefit industries. Support services such as design,
installation, customization, maintenance, consulting and training are
routinely performed. Information services are provided to clients for
calculating certain values within life insurance policies, pension contracts
and sales illustrations.
Merger Consideration (page 31)
If the shareholders of FDP approve the merger and FDP and SunGard complete
the merger, you will be entitled to receive shares of SunGard common stock in
exchange for your shares of FDP common stock. The exact number of shares of
SunGard common stock you receive will be based upon an exchange ratio that
will not be fixed until the effective date of the merger. The exchange ratio
will be determined by reference to the average of the closing sale prices of
SunGard common stock over a 20 day period ending two days prior to the
effective date of the merger.
. If the average stock price of SunGard common stock is between $30 and $35
the exchange ratio will be set at a ratio that will give you $14.40 in value
of SunGard common stock for each of your FDP shares.
. If the average stock price of SunGard common stock is $30 or less the
exchange ratio will be fixed at .48 and you could receive for each share of
FDP common stock shares of SunGard common stock having a value that is less
than $14.40.
. If the average stock price of SunGard common stock is $35 or more the
exchange ratio will be fixed at .4114 and you could receive for each share
of FDP common stock shares of SunGard common stock having a value that is
greater than $14.40.
Please note that because the exchange ratio will be based upon the average
stock price of SunGard's common stock and the market price of the shares of
SunGard common stock you will receive may fluctuate, FDP shareholders cannot
be sure of the market value of the shares of SunGard common stock they will
receive.
Assuming that March 22, 1999 was the effective date of the merger, the
average stock price for determining the exchange ratio would be $40.12. Should
the average stock price that is actually used in calculating the exchange
ratio be equal to this price, the exchange ratio would be .4114 and FDP
shareholders would receive SunGard common shares having a value of $16.50 for
each share of FDP common stock.
Treatment of Stock Options in the Merger (page 31)
Each option outstanding and unexercised under FDP's 1984 Non-Qualified
Stock Option Plan and 1994 Employee Stock Option Plan will be converted upon
completion of the merger into options to acquire SunGard common stock under
the terms of these option plans. Since each option will be adjusted to reflect
the exchange ratio, the number of
2
shares for which an option will be exercisable will decrease and the exercise
price of the option will increase. The adjustments are intended to give to
option holders upon exercise of their options the right to acquire the same
number of shares of SunGuard common stock that they would have been entitled to
receive in the merger had they exercised their options immediately prior to the
merger and the FDP common stock they would have received upon this exercise
were exchanged in the merger for SunGard common stock. Also, the adjustments
allow the aggregate consideration payable upon exercise of the options after
the merger to be the same which would have been paid upon exercise of the
options prior to the merger.
Opinion of Financial Advisor (page 22)
The FDP board of directors received and considered the opinion of its
financial advisor, Broadview Int'l LLC, that the merger consideration was, as
of the date of the opinion, fair from a financial point of view to the holders
of FDP common stock. Broadview's opinion is subject to important qualifications
and assumptions. The opinion is attached as Appendix B to this document. FDP
shareholders should read this opinion carefully.
Reasons for the Merger (page 20)
In reaching its decision to approve the merger, the FDP board of directors
considered a number of factors, including the following:
. the results of operations, financial condition, competitive position and
prospects of FDP and SunGard, both on a historical and future basis and as
separate and combined entities;
. the opinion of Broadview Int'l LLC that the merger consideration is fair to
the FDP shareholders from a financial point of view;
. the analyses of Broadview which supported the FDP board of directors'
conclusion that the merger consideration is fair from a financial point of
view to FDP shareholders;
. the relative trading prices and volumes as well as prospects for future
growth in value of FDP common stock;
. the opportunity for FDP's shareholders to become stockholders of SunGard,
which the FDP board of directors believes is a leading computer services and
software application company;
. the strength of SunGard common stock and the comparative price stability and
relatively low volatility of SunGard common stock, in contrast to the greater
volatility and risk to holders of FDP common stock;
. the benefits to FDP's employees of the merger of FDP's business with
SunGard's business; and
. the structure of the merger, which will generally permit FDP shareholders to
exchange their FDP common stock for SunGard common stock on a tax-free basis
if certain conditions are satisfied.
Recommendation of the Board of Directors (page 17)
A special independent committee appointed by the board of directors of FDP
concluded that the merger is fair and is in the best interests of FDP and its
shareholders and recommended that the FDP board of directors approve the
merger. The board of directors of FDP also determined that the merger is fair
and is in the best interests of FDP and its shareholders. Therefore, the board
of directors of FDP recommends that FDP shareholders vote to approve the
merger.
Anticipated Closing of the Merger
We currently anticipate that the merger will be closed by April 28, 1999.
Termination of the Merger (page 36)
SunGard and FDP can jointly agree to terminate the merger at any time. In
addition, either company can terminate the merger if:
. the merger is not completed by May 31, 1999;
. a governmental authority or court permanently prohibits the merger;
. the FDP shareholders do not vote the required number of shares in favor of
the merger;
. the other company breaches any of its representations or warranties or its
obligations under the reorganization agreement, resulting in
3
the inability to satisfy a condition to the completion of the merger, if that
breach is not cured within 30 business days.
In addition, SunGard may terminate the merger if:
. FDP's board of directors withdraws or adversely modifies its recommendation
of the merger to its shareholders;
. FDP enters into any letter of intent or contract relating to an alternative
acquisition proposal; or
. FDP fails to recommend to its shareholders rejection of any tender or
exchange offer for FDP's common stock which may have commenced.
If the reorganization agreement is terminated for any of the above reasons
FDP is required to pay to SunGard, in cash, a nonrefundable fee of $2.8
million.
If FDP or SunGard terminates the reorganization agreement as a result of the
FDP shareholders not approving the merger and FDP consummates an alternative
acquisition transaction or announces a proposed alternative acquisition
transaction at any time prior to January 15, 2000, then FDP is required to pay
to SunGard, in cash, a nonrefundable fee of $2.8 million.
Conditions to the Merger (page 35)
SunGard and FDP will complete the merger only if the conditions to the
merger that SunGard and FDP have agreed to are either satisfied or waived.
These conditions include, among other things:
. the merger has been approved by the FDP shareholders;
. no governmental agency or court has prohibited consummation of the merger;
. counsel to SunGard has delivered an opinion to SunGard regarding certain
federal income tax consequences of the merger and counsel to FDP has
delivered a similar opinion to FDP;
. the independent auditors for FDP have delivered to SunGard a letter addressed
to FDP to the effect that they are not aware of any condition relating to FDP
that would preclude the merger from qualifying for pooling of interests
accounting treatment and the independent accountants for SunGard have
delivered a letter to SunGard to the effect that the merger may be accounted
for as a pooling of interests;
. there is no material adverse change in the business operations or financial
condition of either company; and
. SunGard has completed its purchase of the real property located at 2000, 2140
and 2150 South Dixie Highway, Miami, Florida 33133, from which FDP operates.
Regulatory Approvals (page 30)
FDP and SunGard are prohibited from completing the merger under U.S.
antitrust laws until they have furnished information and materials to the
Antitrust Division of the Department of Justice and the Federal Trade
Commission and a required waiting period has ended. The required notification
and report forms were filed by SunGard and FDP and early termination of the
waiting period was granted on February 5, 1999. The Department of Justice and
the Federal Trade Commission will continue to have the authority to challenge
the merger on antitrust grounds before or after the merger is completed even
though the waiting period ended.
Accounting Treatment (page 30)
FDP and SunGard expect that the merger will be accounted for as a pooling of
interests, meaning that the companies will be treated as if they had always
been combined for accounting and financial reporting purposes. It is a
condition to the merger that SunGard obtains from both FDP and its independent
accountants letters addressing the qualification of the merger for pooling of
interests accounting treatment.
Federal Income Tax Considerations (page 28)
FDP and SunGard each expect to receive from its outside counsel an opinion
that the merger will constitute a "reorganization" within the meaning of the
Internal Revenue Code. This means that, as a
4
general matter, FDP shareholders will not be taxed as a result of the exchange
of FDP common stock solely for SunGard common stock in the merger. FDP's
shareholders will be taxed to the extent they receive cash for fractional
shares.
Appraisal Rights (page 30)
FDP shareholders do not have dissenter's rights of appraisal or other rights
to demand fair value in cash by reason of the merger.
Certain Effects of the Merger on the Rights of FDP's Shareholders (page 50)
When the merger is completed, FDP's shareholders will become shareholders of
SunGard. SunGard is a company governed by Delaware law and SunGard's existing
charter and bylaws. As a result, the rights of FDP's shareholders will change.
The FDP Special Meeting (page 16)
A special meeting of FDP shareholders will be held at The Grand Bay Hotel,
2669 South Bayshore Drive, Coconut Grove, Florida on April 28, 1999 at 10:00
a.m., local time. The purpose of the FDP special meeting is to vote upon the
proposal to approve the merger.
Who is Entitled to Vote; What Vote is Required (pages 16, 17)
You are entitled to vote any shares of FDP common stock held by you at the
close of business on March 15, 1999, the record date, at the FDP special
meeting. On the record date, there were
6,290,212 outstanding shares of FDP common stock, each of which will be
entitled to one vote. Shareholders holding at least a majority of the shares of
FDP common stock outstanding as of the record date must vote in favor of the
proposal submitted for approval in order for FDP to proceed with the merger.
Voting Agreement (page 28)
FDP shareholders who beneficially own approximately 47.9% of the shares of
FDP common stock outstanding on the record date have in a voting agreement with
SunGard agreed to vote their FDP shares in favor of the merger.
Share Ownership of Management (page 17)
On the record date, directors and executive officers of FDP and their
affiliates had voting control over 3,076,576 shares of FDP common stock or
approximately 48.9% of the FDP common stock outstanding on the record date.
This number includes the shares covered by the voting agreement described
above. The directors and executive officers who are not parties to the voting
agreement have indicated that they intend to vote their FDP common stock in
favor of the merger.
Interests of Certain Persons in the Merger (page 27)
There are members of FDP's management and board of directors who may be
deemed to have interests in the merger that are in addition to their interests
as shareholders of FDP generally. As a condition to the consummation of the
merger, SunGard has agreed to purchase the real estate leased by FDP from an
entity of which Michael C. Goldberg, FDP's President and Chief Executive
Officer, and Cindy Goldberg, FDP's Secretary and a director, are the
principals. The purchase of the real estate is required under applicable
accounting rules in order for the merger to be accounted for as a pooling-of-
interests. In addition, there are officers of FDP who are entitled to severance
benefits in the event their employment is terminated following the change in
control of FDP which will occur upon completion of the merger. The FDP board of
directors was aware of these interests and concluded that these interests did
not detract from the fairness of the merger to the FDP shareholders.
5
Selected Historical Financial Information of SunGard
The following selected historical consolidated financial data of SunGard
should be read in conjunction with the consolidated financial statements of
SunGard that are incorporated by reference in this proxy statement/prospectus.
The years ended December 31, 1997, 1996 and 1995 include one-time charges for
purchased in-process research and development, merger and other costs of
$12,808,000, $51,083,000 and $4,238,000, respectively ($8,995,000, $33,468,000
and $4,238,000 after-tax, or $0.10, $0.39 and $0.04 per diluted share,
respectively). The nine months ended September 30, 1998 and 1997 include one-
time charges for purchased in-process research and development, merger and
other costs of $11,487,000 and $10,817,000 respectively ($10,158,000 and
$6,694,000 after-tax, or $0.09 and $0.06 per diluted share, respectively). All
shares have been adjusted for the two-for-one stock splits which occurred in
September 1997 and July 1995.
As of or for the
Nine Months Ended
September 30, As of or for the Year Ended December 31,
------------------- --------------------------------------------
1998 1997 1997 1996 1995 1994 1993
---------- -------- -------- -------- -------- -------- --------
(In thousands, except per share amounts)
Historical Income
Statement Data:
Revenues.............. $ 838,882 $655,766 $925,030 $711,857 $557,366 $449,785 $387,155
Income from
operations........... 137,860 101,615 142,644 68,284 85,753 72,450 60,625
Net income............ 80,705 60,353 83,975 40,306 50,845 44,728 39,191
Net income per share:
Basic................ $ 0.78 $ 0.61 0.84 0.43 0.59 0.54 0.50
Diluted.............. $ 0.75 $ 0.59 0.81 0.41 0.55 0.50 0.47
Historical Balance Sheet
Data:
Total assets.......... $1,007,364 $805,106 $856,948 $739,622 $592,582 $494,625 $421,162
Total short-term and
long-term debt....... 14,125 24,649 20,077 40,267 10,518 10,783 6,529
Stockholders' equity.. 720,043 573,288 610,221 505,063 428,058 362,406 317,560
6
Selected Historical Financial Information of FDP
The following selected historical financial data of FDP should be read in
conjunction with the consolidated financial statements of FDP that are
incorporated by reference in this proxy statement/prospectus.
As of or for the Fiscal Year Ended
November 30,
---------------------------------------
1998 1997 1996 1995 1994
------- ------- ------- ------- -------
(In thousands, except per share
amounts)
Historical Income Statement Data:
Revenues............................. $40,934 $32,817 $26,445 $19,389 $18,371
Income from operations............... 4,468 3,343 2,191 1,069 427
Net income........................... 3,832 2,980 2,225 1,468 652
Net income per share:
Basic.............................. 0.65 0.53 0.41 0.28 0.13
Diluted............................ 0.62 0.50 0.39 0.27 0.13
Historical Balance Sheet Data:
Total assets......................... $39,667 $33,088 $29,112 $23,660 $21,520
Stockholders' equity................. 32,886 27,471 23,562 20,062 18,240
7
Market Price Information
Since June 4, 1997, SunGard common stock has been listed and traded on the
New York Stock Exchange under the symbol "SDS." Previously, SunGard common
stock was listed on the Nasdaq National Market and listed and traded on the
London Stock Exchange under the symbol "SNDT." FDP common stock is listed on
the Nasdaq National Market under the symbol "FDPC."
The following tables set forth, for the periods indicated, the reported high
and low sale prices of SunGard common stock as reported on the New York Stock
Exchange since June 4, 1997 and on the Nasdaq National Market prior to June 4,
1997 and the high and low sale prices of FDP common stock as reported on the
Nasdaq National Market.
High Low
---- ----
SunGard
Fiscal Year Ended December 31, 1997
First Quarter...................................... $25 3/8 $18 1/2
Second Quarter..................................... 24 3/4 20 3/4
Third Quarter...................................... 27 1/8 23
Fourth Quarter..................................... 31 7/16 22 1/2
Fiscal Year Ended December 31, 1998
First Quarter...................................... 37 3/8 28 1/16
Second Quarter..................................... 40 31 7/16
Third Quarter...................................... 40 31 1/4
Fourth Quarter..................................... 39 11/16 21 11/16
Fiscal Year Ending December 31, 1999
First Quarter (through March 22, 1999).............. 41 5/16 40 9/16
FDP
Fiscal Year Ended November 30, 1997
First Quarter...................................... 10 6 1/8
Second Quarter..................................... 7 7/8 5 3/4
Third Quarter...................................... 8 5/8 6 7/8
Fourth Quarter..................................... 11 3/8 7 3/4
Fiscal Year Ended November 30, 1998
First Quarter...................................... 11 3/8 10
Second Quarter..................................... 14 1/4 9 3/8
Third Quarter...................................... 13 1/2 9 1/2
Fourth Quarter..................................... 11 8 3/8
Fiscal Year Ending November 30, 1999
First Quarter ..................................... 17 1/16 9 5/8
Second Quarter (through March 22, 1999)............ 16 3/4 15 1/4
- --------
On January 15, 1999, the last full trading day prior to the public
announcement of the merger, the reported high and low sale prices on the New
York Stock Exchange of SunGard common stock were $39 and $38 1/2, respectively,
and of FDP common stock on the Nasdaq National Market were $12 1/8 and $11 5/8,
respectively. On this date, the last reported sale price on the New York Stock
Exchange of SunGard common stock was $38 11/16 per share and of FDP common
stock on the Nasdaq National Market was $12 1/ 8.
8
The following table sets forth the closing sale price per share of SunGard
common stock as reported on the New York Stock Exchange and the equivalent per
share price of FDP common stock on January 15, 1999, the last trading day
preceding the public announcement of the merger, and on March 22, 1999:
Equivalent
SunGard FDP Per
Common Share
Stock Price
-------- ----------
January 15, 1999...................................... $38.6875 $15.92
March 22, 1999........................................ $40.875 $16.82
The equivalent per share price of a share of FDP common stock, which is the
value of the SunGard common stock which FDP shareholders would receive for each
share of FDP common stock exchanged in the merger, was calculated by
multiplying the closing sale price per share of SunGard common stock reflected
in the table by .4114, the exchange ratio that would be used in the merger if
the average stock price on which the exchange ratio is based equaled the
closing sale prices reflected in the table. The equivalent FDP per share prices
reflect the value in SunGard common stock that FDP shareholders would receive
if the average stock price of SunGard common stock on which the exchange ratio
is based equals the closing sale prices of SunGard common stock reflected in
the table.
Because the market price of SunGard common stock may fluctuate, the market
price per share of the shares of SunGard common stock that holders of FDP
common stock will receive in the merger may increase or decrease prior to the
merger.
9
SunGard Data Systems Inc. and FDP Corp.
Comparative Per Share Data
The following table presents historical and pro forma per share data for
SunGard and historical and equivalent pro forma per share data for FDP. The
equivalent pro forma per share amounts for FDP exclude merger costs which are
estimated to be approximately $1.5 million and are calculated by multiplying
the SunGard combined pro forma per share amounts by the maximum exchange ratio
of 0.48. The historical book value per share of common stock is computed by
dividing total stockholders' equity by the number of shares of common stock
outstanding at the end of the period. The pro forma book value per share is
computed by dividing pro forma stockholders' equity by the pro forma number of
shares of common stock outstanding as of the end of each of the periods
presented. In the table, the data for the years ended December 31, 1997, 1996
and 1995 includes one-time charges for purchased in-process research and
development, merger and other costs of $12,808, $51,083, and $4,238,
respectively ($8,995,000, $33,468,000 and $4,238,000 after-tax, or $0.10, $0.39
and $0.04 per diluted share, respectively). The data for the nine months ended
September 30, 1998 and 1997 includes one-time charges for purchased in-process
research and development, merger and other costs of $11,847,000 and $10,817,000
respectively ($10,158.000 and $6,694,000 after-tax, or $0.09 and $0.06 per
diluted share, respectively). For purposes of the pro forma financial
information, FDP's fiscal year and quarterly financial information has been
combined with SunGard's fiscal year financial information. FDP's fiscal year
ends as of November 30th and SunGard's fiscal year is a calendar year. The one-
month difference in fiscal years does not have a material effect on pro forma
financial information. All per share amounts reflected in the table have been
adjusted for the SunGard two-for-one stock splits which occurred in September
1997 and July 1995.
As of or for
the Nine As of or for the
Months Ended Year Ended
September 30, December 31,
------------- -----------------
1998 1997 1997 1996 1995
------ ------ ----- ----- -----
(In thousands,
except per share amounts)
Historical--SunGard:
Diluted net income per common share........... $ 0.75 $ 0.59 $0.81 $0.41 $0.55
Book value per common share................... 6.83 5.75 5.98 5.21 4.53
Historical FDP:
Diluted net income per common share........... 0.44 0.34 0.50 0.39 0.27
Book value per common share................... 5.26 4.59 4.76 4.27 3.86
Pro Forma Combined Per SunGard Share:
Diluted net income per common share........... 0.75 0.59 0.82 0.42 0.55
Book value per common share................... 6.93 5.84 6.08 5.31 4.62
FDP Per Share Equivalents
Diluted net income per common share........... 0.36 0.28 0.39 0.20 0.27
Book value per common share................... 3.33 2.80 2.92 2.55 2.22
10
RISK FACTORS
In determining whether you should vote in favor of the merger you should
consider carefully the risks associated with the merger and with ownership of
SunGard common stock following the merger. These risks are described below.
Risks Relating to the Merger
The exchange ratio in the merger is based on the market prices of SunGard
common stock over a period of time prior to the effective date of the merger
and will fluctuate within a specified range. FDP shareholders will not know the
final value of the SunGard common stock they will receive until the effective
date of the merger.
The exchange ratio, which is the fraction of a share of SunGard common stock
that FDP shareholders will receive for each share of FDP common stock, is based
on the average of the closing prices of SunGard common stock over a period of
time prior to the effective date of the merger, subject to a maximum of .4800
and a minimum of .4114. If the average of the closing prices is between $30 and
$35, the exchange ratio will be set to provide to FDP shareholders $14.40 in
value of SunGard common stock. If the average of the closing prices of SunGard
common stock is less than $30 the exchange ratio would be fixed at .4800. If
this were to happen, FDP shareholders could receive for each share of FDP
common stock SunGard common stock with a value of less than $14.40.
FDP shareholders will not know the final exchange ratio and the final value
of the SunGard common stock they will receive until the effective date of the
merger. The market prices of SunGard common stock and FDP common stock as of
various recent dates are set forth in the Summary under "Market Price
Information." FDP shareholders should obtain recent market quotations for
SunGard common stock and FDP common stock. SunGard common stock and FDP common
stock historically have been subject to price volatility. No assurance can be
given as to the market price of SunGard common stock at any time.
FDP could lose customers or strategic partners due to the merger.
Some of FDP's existing customers or strategic partners may take the
opportunity following a change of control of FDP to review their contractual
relationships. These reviews could result in delayed or lost sales to either
SunGard or FDP.
The merger is intended to qualify for pooling-of-interests accounting
treatment. If the merger fails to qualify for pooling of interests accounting
treatment, the combined financial results of SunGard and FDP could be adversely
affected.
The merger is intended to qualify for pooling-of-interests treatment under
generally accepted accounting principles. However, SunGard cannot be sure the
merger will qualify. If the merger does not qualify for pooling-of-interests
treatment the combined financial results of SunGard and FDP could be adversely
affected.
Under pooling-of-interests treatment, the accounts of SunGard will be
combined with those of FDP at their historical carrying amounts and SunGard's
financial statements for all prior periods will be restated, if material, to
reflect the accounts of SunGard as if the two companies had been combined for
all periods. If the merger does not qualify for pooling-of-interests treatment,
the purchase method of accounting may be applied. Under that method, the fair
market value of the SunGard common stock issued in the merger would be recorded
as the cost of acquiring FDP's business. That cost would be allocated to the
individual assets of FDP that were acquired and liabilities of FDP that were
assumed according to their respective fair values. The fair market value of the
SunGard common stock to be issued in the transaction is in excess of the
amounts at which the net asset are carried in FDP's accounts. A portion of the
excess could be charged to expense immediately and the remainder would be
amortized.
11
Future sales of shares issued in the merger could adversely affect SunGard's
stock price.
Based on the closing price of SunGard common stock on the New York Stock
Exchange on March 22, 1999, up to 2,836,032 shares of SunGard common stock will
be issued in the merger. Of these shares, 1,186,545 shares will be immediately
freely tradeable in the market. The remaining 1,649,487 shares, which will be
issued to affiliates of FDP, will become freely tradeable after SunGard has
published financial results covering at least 30 days of combined operations.
Sales of a substantial number of shares of SunGard common stock could adversely
affect the market price of SunGard common stock.
Risks Relating to SunGard
SunGard's growth strategy depends on acquisitions. If SunGard is unable to
acquire businesses on favorable terms or successfully integrate and manage the
businesses acquired, SunGard's business and financial results may suffer.
SunGard intends to grow by expanding its existing businesses and by
acquiring similar or complementary businesses, including acquisitions that are
intended to qualify for pooling-of-interests accounting treatment. This growth
strategy is subject to a number of risks which could adversely affect SunGard's
business and financial results, including:
. SunGard may not be able to find suitable businesses to acquire on
affordable terms;
. Competition from other acquirors and stock market fluctuations may make
it more difficult for SunGard to find and complete acquisitions;
. SunGard may have to raise money in the debt or equity markets to finance
future acquisitions;
. One or more acquisitions may not qualify for pooling-of-interests
accounting treatment;
. At any given time, a large number of shares of SunGard common stock
issued to acquire businesses may become freely tradeable in the market.
The businesses acquired by SunGard may perform worse than expected or may be
more difficult to integrate and manage than expected. If that happens, SunGard
may suffer a number of adverse consequences, including:
. SunGard may have to devote unanticipated financial and management
resources to the acquired businesses;
. SunGard may not be able to realize expected operating efficiencies;
. SunGard may have to write off goodwill or other intangible assets if the
acquisition was accounted for as a purchase.
SunGard's success depends in part on adapting its computer services and
software to changes in technology and changes in the customers' businesses. If
SunGard does not successfully update its services and software, or its new
products or services are not timely delivered or well received by customers,
SunGard's business and financial results may suffer.
SunGard's ability to successfully update its services and software and
timely develop and deliver new products and services required by its customers
is subject to a number of risks which could adversely affect SunGard's business
and financial results, including:
. SunGard may find it difficult to update its services and software and
timely develop and deliver its new products and services in a cost-
effective manner, especially when faced with rapid technological changes
that are hard to predict.
. SunGard may find it difficult to update its services and software to
keep pace with business, regulatory and other developments in the
financial services industry in which most of SunGard's customers
operate.
12
SunGard's business is dependent largely on the financial services industry.
If that industry does poorly, SunGard's business and financial results may
suffer.
SunGard sells most of its computer services and software to banks, mutual
funds, brokers, insurance companies and other financial services firms. If the
financial services industry or SunGard's customers in the financial services
industry experience problems, SunGard's business and financial results could be
adversely affected. For example, SunGard may suffer if securities trading
activity declines, the number or value of managed portfolios decreases, or
there is continued consolidation among firms in the financial services
industry.
The advent of year 2000, including any failure by SunGard to make its
products year 2000 compliant or to fulfill year 2000 commitments to customers,
may adversely affect SunGard's business and financial results.
SunGard has made many of its products year 2000 compliant so that they can
handle dates in the year 2000 and beyond. However, SunGard is still working on
making some of its most important products year 2000 compliant. In addition,
SunGard has made commitments to some customers that need to convert off non-
year 2000 compliant systems, and as a result, SunGard must meet significant
development obligations and complete conversions before the end of 1999.
SunGard's year 2000 compliance efforts are subject to a number of risks which
could adversely affect SunGard's business and financial results, including:
. SunGard may not be able to make its important products year 2000
compliant;
. SunGard may not be able to timely meet its year 2000 commitments to
customers;
. SunGard may have to add personnel and buy new software and hardware
earlier than planned to complete its year 2000 compliance efforts, which
could cause an unexpected increase in expenses;
. SunGard may encounter unanticipated year 2000 problems, like a problem
with another company's software or hardware that interacts with
SunGard's products or that is used by SunGard.
The advent of year 2000 may also impact the timing of software buying
decisions and a shortage in the availability of experienced programmers, which
could adversely affect SunGard's business and financial results in the second
half of 1999 and in the year 2000.
Forward-looking Statements May Prove Inaccurate
This proxy statement/prospectus contains forward-looking statements made by
SunGard and FDP that are subject to risks and uncertainties and that may change
at any time. Forward-looking statements include information about possible or
assumed future financial results of SunGard and FDP and usually contain words
such as "believes," "expects," "anticipates," or similar expressions. Many
factors, some of which are discussed elsewhere in this document, including
under the caption "Risk Factors," and some of which are discussed in the
documents incorporated by reference, could affect the future financial results
of SunGard and FDP and could cause those results to differ materially from
those expressed in any forward-looking statements contained in or incorporated
by reference in this document.
13
RECENT DEVELOPMENTS
On March 1, 1999, SunGard completed the acquisition of Automated Securities
Clearance, Ltd. ("ASC") by exchanging SunGard common stock for all of the
shares of common stock of ASC. ASC is a provider of an automated order-routing
and trade execution system used by broker/dealers, an electronic communications
network that provides direct access to the NASDAQ marketplace, and a wireless
technology for straight-through processing of trades on the New York Stock
Exchange. Under the terms of a pre-existing employment agreement with ASC
relating to a change in control, a member of ASC's executive management team
received approximately 25% of SunGard common stock issued in the acquisition.
The fair value of those shares on the date of the acquisition (approximately
$70.0 million) will be recorded as a one-time non cash compensation expense
during the first quarter of 1999. ASC was an "S" corporation prior to
acquisition; therefore, all income passed through directly and all income taxes
were paid directly by the previous shareholder of ASC.
On February 18, 1999, SunGard completed the acquisition of Sterling
Wentworth Corporation ("SWC") by exchanging shares of the common stock of
SunGard for all of the shares of common stock of SWC. SWC provides enterprise
sales productivity solutions for the financial services industry.
The acquisition of ASC and SWC will be each accounted for as a pooling of
interests, which requires all historical financial information to be restated.
Furthermore, because ASC had been an "S" Corporation prior to its acquisition,
pro-forma federal income taxes will be computed on ASC's historical earnings as
if ASC had been a "C" Corporation and will be reflected in SunGard's restated
income statement.
A total of approximately 10.3 million shares of SunGard's common stock will
be issued in connection with the ASC, SWC and FDP acquisitions and all issued
and outstanding options to acquire common stock will be converted into options
to acquire approximately 1.8 million shares of SunGard common stock. Estimated
merger costs in connection with the ASC, SWC and FDP acquisitions, excluding
the compensation expense described above, are approximately $10.0 million.
14
The following estimated pro forma combined results of operations (in
thousands, except for per-share amounts) is provided for illustrative purposes
only and assumes that the mergers described above had occurred as of the
beginning of each of the periods presented. All merger costs, including the
one-time non-cash compensation expense described above, are excluded from the
estimated pro-forma information. The estimated following pro-forma information
should not be relied upon as necessary being indicative of the historical
results that would have been obtained if the companies had actually been
combined during those periods or the results that may be obtained in the
future.
1998 1997 1996
----------- --------- ---------
Revenues:
As reported.................................. $ 1,159,748 $ 925,030 $ 711,857
Combined (pro forma)......................... 1,253,265 996,277 765,979
Net income:
As reported.................................. 118,933 83,975 40,306
Combined (pro forma)......................... 128,337 91,651 47,803
Basic earnings per share:
As reported.................................. 1.14 0.84 0.43
Combined (pro forma)......................... 1.12 0.84 0.46
Diluted earnings per share:
As reported.................................. 1.10 0.81 0.41
Combined (pro forma)......................... 1.07 0.80 0.43
In addition to the recent acquisitions completed by SunGard, SunGard entered
into a definitive agreement on March 9, 1999 to acquire Oshap Technologies Ltd.
("Oshap") by exchanging SunGard common stock for all of the shares of Oshap
ordinary shares and certain options to acquire Oshap ordinary shares. Oshap is
an Israeli-based group of technology software firms whose principal holdings
are a 98% ownership of MINT Technologies Ltd. and a 77% ownership of Decalog
NV. In connection with the acquisition of Oshap, SunGard will offer to acquire
the minority interests of MINT and Decalog.
The agreement between SunGard and Oshap provides that each share of Oshap
will be exchanged for between .3515 and .4314 of a share of SunGard common
stock, depending on the average closing price of SunGard common stock prior to
the closing. Based upon the closing price of SunGard common stock on March 8,
1999, the shares of SunGard common stock to be issued in the transaction have a
current value of approximately $210 million.
15
THE FDP SPECIAL MEETING
General
This proxy statement/prospectus is being furnished to holders of FDP common
stock in connection with the solicitation of proxies by the FDP board of
directors for use at a special meeting of FDP's shareholders to be held on
April 28, 1999, at The Grand Bay Hotel, 2669 South Bayshore Drive, Coconut
Grove, Florida, commencing at 10:00 a.m., local time, and at any adjournment or
postponement of the special meeting.
This proxy statement/prospectus and the accompanying form of proxy are first
being mailed to FDP shareholders on or about March 30, 1999.
Purpose of the FDP Special Meeting
The purpose of the FDP special meeting is to consider and vote upon a
proposal to approve the merger. A vote in favor of the merger also constitutes
a vote to adopt and approve the reorganization agreement and plan of merger
which govern the merger. These documents are attached to this proxy
statement/prospectus as Appendix A.
Record Date and Outstanding Shares
The close of business on March 15, 1999 has been fixed by the FDP board of
directors as the record date for the determination of holders of shares
entitled to notice of, and to vote at, the FDP special meeting. As of the
record date, there were approximately 100 shareholders of record holding an
aggregate of approximately 6,290,212 shares of FDP common stock.
This proxy statement/prospectus was mailed to all FDP shareholders of record
as of the record date and constitutes notice of the FDP special meeting in
conformity with the requirements of the Florida Business Corporation Act.
Voting of Proxies
All properly executed proxies that are not revoked will be voted at the FDP
special meeting in accordance with the instructions contained in the proxy. If
a proxy is signed and returned without indicating any voting instructions, the
shares of FDP common stock represented by the proxy will be voted FOR the
proposal to approve the merger in accordance with the recommendation of the FDP
board of directors and FOR adjournment or postponement of the FDP special
meeting if an adjournment or postponement, in the discretion of the proxy
holders, is determined to be necessary or desirable. A shareholder who has
executed and returned a proxy may revoke it at any time before it is voted at
the FDP special meeting by:
. executing and returning a proxy bearing a later date;
. filing written notice of the revocation with the Corporate Secretary of
FDP stating that the proxy is being revoked; or
. attending the FDP special meeting and voting in person.
All written notices of revocation and other communications with respect to
revocation of FDP proxies should be addressed to: FDP Corp., 2140 South Dixie
Highway, Miami, Florida 33133, Attention: Corporate Secretary. Attendance at
the FDP special meeting, in and of itself, will not constitute a revocation of
a proxy.
The enclosed proxy confers discretionary authority to vote with respect to
any and all of the following matters that may properly come before the FDP
special meeting:
. matters which FDP does not know a reasonable time before the meeting are
to be presented at the FDP special meeting;
16
. approval of the minutes of a prior meeting of shareholders, if this
approval does not amount to ratification of the action taken at the
meetings; and
. matters incident to the conduct of the FDP special meeting.
In connection with these matters, the persons designated as proxies will vote
in accordance with their best judgment.
Vote Required
Approval of the merger requires the affirmative vote of holders of a
majority of the shares of FDP common stock outstanding as of the record date.
Each shareholder of record of FDP common stock on the record date is entitled
to cast one vote per share, exercisable in person or by properly executed
proxy, on each matter properly submitted for the vote of the shareholders of
FDP at the FDP special meeting.
Directors, officers and other affiliates of FDP who owned in the aggregate
3,013,431 shares, representing approximately 47.9% of the issued and
outstanding FDP common stock on the record date, have agreed with SunGard that
they will vote the shares of FDP common stock they own in favor of the merger.
They have also delivered to SunGard irrevocable proxies with respect to the
matters covered by their voting agreement with SunGard and have agreed not to
transfer any of their FDP common stock unless the transferee enters into the
same voting agreement with SunGard. See "Approval of the Merger and Related
Transactions--Voting Agreement."
On the record date, directors and executive officers of FDP and their
affiliates had voting control over 3,076,576 outstanding shares of FDP common
stock (including the shares covered by the voting agreement described above),
or approximately 48.9% of the FDP common stock outstanding on the record date.
The directors and executive officers of FDP who owned the remaining 63,145
shares have indicated that they intend to vote or direct the vote of all shares
of FDP common stock over which they have voting control for approval of the
merger.
Board Recommendation
The FDP board of directors has approved the merger, and recommends a vote
FOR approval of the merger by the shareholders of FDP.
Quorum; Abstentions
The presence, in person or by properly executed proxy, of the holders of a
majority of the outstanding shares of FDP common stock entitled to vote at the
FDP special meeting is necessary to constitute a quorum. Abstentions will be
counted for purposes of determining a quorum, but will have the effect of a
vote against approval of the matters being voted upon. If an executed proxy is
returned by a broker holding shares in street name which indicates that the
broker does not have discretionary authority as to certain shares to vote on
one or more matters, these shares will be considered represented at the FDP
special meeting for purposes of determining a quorum, but will not be
considered to be represented at the FDP special meeting for purposes of
calculating the vote with respect to the matter.
Solicitation of Proxies; Expenses
Regardless of whether the merger is consummated, each of FDP and SunGard
will pay its own costs and expenses incurred in connection with the
reorganization agreement and the transactions contemplated by the
reorganization agreement, except that fees and expenses (other than attorneys'
fees) incurred in connection with the printing, filing and mailing of this
proxy statement/prospectus, and the filing of the premerger notification and
report forms relating to the merger under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (the "HSR Act") will be shared equally by FDP and
SunGard.
17
Except as stated above, the cost of the solicitation of proxies and all
related costs will be borne by FDP. In addition, FDP may reimburse brokerage
firms and other persons representing beneficial owners of shares for their
expenses in forwarding solicitation materials to such beneficial owners.
Original solicitation of proxies by mail may be supplemented by telephone,
facsimile or personal solicitation, without payment of additional compensation,
by certain directors, officers or other employees of FDP.
THE MERGER AND RELATED TRANSACTIONS
Background of the Merger
Since becoming an independent company in the early 1980's, a key element of
SunGard's stated corporate growth strategy has been the active pursuit of
business acquisitions that would complement or expand SunGard's business. Both
SunGard and FDP are participants in different portions of the broad market of
providing application software solutions to the financial services industry. On
April 22, 1998, T. Ray Davis, President of SunGard's Employee Benefits Systems
division, which provides systems for employee benefit plan recordkeeping, and
Donald Mackanos, President of the SunGard subsidiary Corbel & Co., which
provides systems for the preparation of pension plans, visited FDP's offices to
meet with Michael C. Goldberg, Chief Executive Officer, and Mark Silverman,
Chief Financial Officer, of FDP. FDP's Pension Partner Division, which
represents approximately 12% of its overall business, provides systems to
compute and illustrate pension and employee benefit plans. A general discussion
of the pension and employee benefit plan systems and businesses of each company
took place during this meeting. The primary purpose of SunGard's request for
the meeting was to determine FDP's interest in exploring potential business
relationships with SunGard with respect to the companies' respective pension
and employee benefit systems operations. Also during this meeting, Mr. Davis
briefly explained SunGard's actual acquisition history and inquired of FDP its
potential interest in considering acquisition discussions with SunGard. Mr.
Goldberg indicated an openness to entertaining such discussions.
On May 18, 1998, Richard Tarbox, Vice President-Corporate Development of
SunGard, met with Messrs. Goldberg and Silverman in FDP's offices for a general
discussion of both SunGard's and FDP's businesses and strategies. In this
meeting, Mr. Tarbox explained SunGard's acquisition program and history of
acquisition transactions. As part of this meeting, there also was a discussion
of the steps that would need to be taken to determine how any perceived
benefits of a potential combination between the companies could be assessed and
what other steps might be taken to pursue such discussions further.
As a result of the May 18th meeting, Messrs. Goldberg and Silverman and
James Mann, Chief Executive Officer of SunGard, met in New York City on June 8,
1998. The purpose of this meeting was to discuss the respective business
strategies and operating philosophies and strategic fit of SunGard and FDP, as
well as to discuss on a preliminary basis SunGard's view of various valuation
methodologies for publicly traded companies such as FDP.
On June 16 and 17, 1998, Mr. Tarbox together with Michael Ruane, Chief
Financial Officer of SunGard, again met with Messrs. Goldberg and Silverman in
FDP's offices. The purpose of this meeting was to conduct a general overview of
the historical financial results and current business objectives of the
separate FDP operating divisions.
At a regularly scheduled quarterly meeting of its board of directors on
August 14, 1998, certain members of SunGard's senior management informed the
SunGard board of the preliminary acquisition discussions between SunGard and
FDP. After significant discussion of many matters relating to such an
acquisition, SunGard's board of directors authorized management to pursue
continued discussions with FDP.
On September 1, 1998, Mr. Tarbox and Michael Muratore, Senior Vice President
of SunGard, met with Messrs. Goldberg and Silverman in FDP's offices. During
this meeting, Messrs. Tarbox and Muratore proposed the acquisition of FDP by
SunGard at an exchange ratio of 0.40 of a share of SunGard common stock for
each
18
share of FDP common stock. As part of this proposal, Messrs. Tarbox and
Muratore stressed the importance to SunGard of a fixed exchange ratio and
having Mr. Goldberg and Cindy Goldberg agree to sign agreements to vote their
shares of FDP common stock together with the shares held in trust under their
control (collectively the "Goldberg Shares") in favor of the proposed merger.
On September 9, 1998, Mr. Ruane and Joseph Slattery, Chief Executive Officer
of SunGard's Financial Systems Group, met with Mr. Silverman in FDP's offices
to discuss information relating to FDP's results of operations and financial
condition. On September 22, 1998, Messrs. Muratore and Slattery, together with
Greg Webber, president of SunGard's Insurance Systems division, met with Mr.
Silverman and Richard Fleischman, senior vice president of FDP's Home Office
Division, and Scott Price, senior vice president of FDP's Agency Systems
Division, to discuss matters pertaining to FDP's financial results and its
sales and marketing and product development activities. On October 1 and 2,
1998, Joseph Degnan, Director of Internal Audit for SunGard, met with Messrs.
Fleischman and Price to review operational matters relating to FDP's business.
During early October 1998, SunGard experienced a significant drop in the
trading price of its common stock. Around this time, Mr. Goldberg expressed to
Mr. Tarbox in a series of telephone discussions that pursuing acquisition
discussions with SunGard based upon SunGard's proposal of September 1, 1998 did
not seem to be in the best interests of FDP's shareholders. Further discussions
between the parties ceased at this time.
By early November 1998, the range of trading prices of SunGard's common
stock had returned to the trading range experienced prior to the price drop in
early October. Based upon a telephone call made to Mr. Silverman by Mr. Tarbox,
FDP decided to recommence acquisition discussions with SunGard. On November 11,
1998, Messrs. Tarbox and Muratore met with Messrs. Goldberg and Silverman at
FDP's offices and discussed proposed terms of a possible acquisition of FDP by
SunGard. Among the matters discussed were the importance to FDP that the
exchange ratio in the proposed transaction be structured to float based upon
the average price of SunGard's common stock prior to closing and the importance
to SunGard of receiving voting agreements with respect to the shares of FDP
common stock owned or controlled by Mr. and Mrs. Goldberg.
On December 2 and 3, 1998, Messrs. Muratore and Slattery met with Mr.
Silverman to discuss the financial operations of certain of FDP's divisions and
to perform a due diligence review of FDP's near-term operations and 1999
business outlook.
On December 17, 1998, at a special meeting of SunGard's board of directors,
Mr. Mann presented management's recommendation that SunGard pursue the
acquisition of FDP. After significant discussions of many matters relating to
the acquisiton, the SunGard board of directors approved a range of acceptable
exchange ratios for the acquisition and authorized management to continue to
negotiate the terms of and, subject to SunGard management's satisfactory
completion of its investigation of FDP, to take steps necessary to complete the
acquisition.
On December 23, 1998, SunGard's legal counsel, Blank Rome Comisky & McCauley
LLP, delivered a draft of the reorganization agreement to FDP and its legal
counsel, Greenberg Traurig, P.A. SunGard and its legal and financial advisors
then commenced a general due diligence review of FDP.
On January 5 and 6, 1999, Mr. Tarbox and SunGard's legal counsel met with
Messrs. Goldberg and Silverman and FDP's legal counsel to negotiate and
finalize the terms of the reorganization agreement. Among the terms proposed
were a "break-up" fee equal to 6% of the transaction value payable to SunGard
under certain conditions if the transaction were not to close. As a result of
negotiations, the parties agreed to a termination fee equal to approximately
3.0% of the transaction value.
A special committee, comprised of FDP directors Cesar L. Alvarez and Albert
J. Schiff, was appointed by the FDP board of directors at a meeting held on
January 14, 1999 to review the terms of the reorganization agreement and to
report to the FDP board of directors regarding the fairness of the merger to
FDP and its
19
shareholders. As a result of its review and discussion of the fairness opinion
described below, the special committee concluded that the merger is fair to and
in the best interest of FDP and its shareholders. The special committee then
recommended to the FDP board of directors that it approve the merger. The FDP
board of directors (other than Mr. Michael C. Goldberg and Cindy Goldberg, who
abstained from the vote on the merger) reviewed and considered the terms of the
reorganization agreement and the fairness opinion, concluded that the merger is
fair to and in the best interest of FDP and its shareholders and then
unanimously approved the merger and recommended that FDP's shareholders approve
the merger. The special committee and the FDP board of directors, in reaching
their respective decisions, considered a number of factors, including the
written opinion of Broadview Int'l LLC, an investment banking firm engaged by
the FDP board of directors as its exclusive financial advisor, that the
consideration received in connection with the merger is fair to FDP's
shareholders from a financial point of view. See "The Merger and Related
Transactions--FDP's Reasons for the Merger" and "--Opinion of Broadview Int'l
LLC."
The reorganization agreement was executed on behalf of SunGard and FDP after
the close of business on January 15, 1999.
FDP's Reasons for the Merger
The special committee concluded that the merger is fair to and in the best
interests of FDP's shareholders and recommended that the FDP board of directors
approve the merger. At a special meeting held on January 14, 1999, the FDP
board of directors, with the assistance of FDP's outside financial and legal
advisors, considered the legal, financial and other terms of the merger. The
FDP board of directors concluded that the merger is fair to and in the best
interests of FDP and its shareholders. In reaching their decisions, the special
committee and the FDP board of directors considered the following factors:
. The results of operations, financial condition, competitive position and
prospects of FDP and SunGard, both on an historical and future basis and
as separate and combined entities;
. The strategic fit of FDP's products and services with SunGard's financial
and other resources to develop and promote such products and services;
. Broadview's opinion that the consideration to be paid in the merger is
fair to the shareholders of FDP from a financial point of view. See "--
Opinion of Broadview Int'l LLC;"
. The FDP board of directors belief that the analyses of Broadview
supported the FDP board of directors conclusion that the merger
consideration is fair to the FDP shareholders from a financial point of
view. See "--Opinion of Broadview Int'l LLC;"
. The relative trading prices and volumes as well as prospects for future
growth in value of FDP common stock;
. The opportunity for FDP's shareholders to become stockholders of SunGard,
which the FDP board of directors believes is a leading computer services
and software application company;
. The strength of SunGard common stock and the comparative price stability
and relatively low volatility of SunGard common stock in contrast to the
greater volatility of FDP common stock and the attendant risk of that
volatility;
. The benefits to FDP's employees of the merger of FDP's business with
SunGard's business; and
. The structure of the merger, which will generally permit FDP shareholders
to exchange their FDP common stock for SunGard common stock on a tax-free
basis if certain conditions are satisfied. See "--Certain Federal Income
Tax Consequences."
This discussion of the information and factors considered by the FDP board
of directors is not intended to be exhaustive but is believed to include all
material factors considered by the FDP board of directors. In view of the wide
variety of factors considered by the FDP board of directors, the FDP board of
directors did not find
20
it practicable to quantify or otherwise assign relative weight to the specific
factors considered. However, after taking into account all of the factors set
forth above, the FDP board of directors concluded that the merger was fair to,
and in the best interests of, FDP and its shareholders and that FDP should
proceed with the merger.
SunGard's Reasons for the Merger
The SunGard board of directors has unanimously determined that the terms of
the reorganization agreement and the merger are fair to, and in the best
interests of, SunGard and its stockholders. In reaching its determination, the
SunGard board of directors consulted with SunGard's management, as well as its
legal counsel and accountants, and gave significant consideration to a number
of factors bearing on its decision. The following are the reasons the SunGard
board of directors believes the merger will be beneficial to SunGard and its
stockholders:
. SunGard seeks to grow both internally and through the acquisition of
complementary businesses. FDP provides customers with leading-edge
software solutions for life insurance companies, employee benefits
organizations and financial institutions. These products will complement
and broaden SunGard's existing product lines in SunGard's investment
support systems businesses;
. SunGard sells computer services and software to the life insurance
industry and believes that FDP's products will enhance SunGard's ability
to service that industry. The demand for life insurance policy
administration systems has grown significantly over the past several
years. Life insurance companies worldwide have increasingly invested
financial and other resources in the development and acquisition of such
systems. SunGard believes that FDP's most successful product recently,
FDP/Compass, should position SunGard to take advantage of this trend and
should help establish SunGard as a leading provider of group pension
administration systems;
. FDP's business strategy is consistent with SunGard's goal to continue
product unification and enhancement efforts to provide customers with
access to multiple systems and data through common graphical interfaces
and shared databases. FDP's products are characterized by an open
systems, client/server architecture running on UNIX and Windows Operating
Systems and on leading relational database management systems;
. The combination of the technologies and product development resources of
SunGard and FDP should enable SunGard to respond more effectively to the
rapid technological change and continuing emergence of systems for the
life insurance and employee benefit industry; and
. SunGard believes there is a significant potential for enhancement of the
strategic and market position of the combined entity beyond that
achievable by SunGard alone.
In addition to the reasons stated above, in the course of its deliberations
concerning the merger, the SunGard board of directors consulted with SunGard's
management, legal counsel and accountants and reviewed a number of other
factors relevant to the merger, including:
. Information concerning the business, assets, operations, properties,
management, financial condition, operating results, competitive position
and prospects of SunGard and FDP;
. The historical market prices and trading information with respect to
SunGard common stock and FDP common stock;
. The expected tax and accounting treatment of the merger; and
. SunGard's belief that the management styles and corporate cultures of the
two companies would be complementary.
The SunGard board of directors also considered a number of potentially
negative factors in its deliberations concerning the merger, including:
. The possibility of management disruption associated with the merger and
the risk that key technical and management personnel of FDP or SunGard
might not continue with FDP or SunGard;
21
. The possibility that the merger might adversely affect FDP's or SunGard's
relationship with certain of their respective customers; and
. The risk that the potential benefits of the merger might not be realized.
The SunGard board of directors concluded, however, that the benefits of the
transaction to SunGard and its stockholders outweighed the risks associated
with the foregoing factors.
This discussion of the information and factors considered by the SunGard
board of directors is not intended to be exhaustive but is believed to include
all material factors considered by the SunGard board of directors. In view of
the wide variety of factors considered by the SunGard board of directors, the
SunGard board of directors did not find it practicable to quantify or otherwise
assign relative weight to the specific factors considered. However, after
taking into account all of the factors set forth above, the SunGard board of
directors unanimously agreed that the merger was fair to, and in the best
interests of, SunGard and its stockholders and that SunGard should proceed with
the merger.
Opinion of Broadview Int'l LLC
FDP retained Broadview to review the terms of the merger and deliver a
fairness opinion in connection with the merger. Broadview was selected by the
FDP board of directors based on Broadview's qualifications, expertise and
reputation.
The following is a summary explanation of the various sources of information
and valuation methodologies used by Broadview to value FDP in rendering its
fairness opinion regarding the proposed transaction with SunGard. To determine
the fairness of the transaction, Broadview employed analyses based on the
following:
. public company comparables;
. transaction comparables;
. transaction premiums paid;
. stock price performance; and
. present value of projected share price.
Public Company Comparables Analysis--A number of companies are comparable to
FDP based on market focus, business model and financial performance. Broadview
reviewed, from a financial point of view, five public company comparables in
the enterprise applications software segment of the Information Technology
("IT") market providing software for financial institutions, with Trailing
Twelve Month ("TTM") revenue less than $200 million, with positive operating
margins, and with TTM revenue growth less than or equal to 50%. The public
company comparables were selected from the Broadview Barometer, a proprietary
database of publicly-traded IT companies maintained by Broadview and broken
down by industry segment.
Total Market Capitalization/Revenue ("TMC/R"), Total Market
Capitalization/Earnings Before Interest and Taxes ("TMC/EBIT") and
Price/Earnings ("P/E") multiples indicate the value public markets place on
companies in a particular market segment. Broadview employed a TMC valuation in
this analysis because it enables two critical balance sheet items, cash and
debt, to be factored directly into the valuation. The formula for the TMC is as
follows:
((market value of equity) + (short term debt + long term debt) - (cash
and equivalents)).
To determine value using this approach, the first step is to calculate the
appropriate TMC/R or TMC/EBIT ratio. Next, the revenue or EBIT of the company
is multiplied by the appropriate TMC/R or TMC/EBIT ratio
determined in step 1. This provides a total "entity" value which represents the
company's value based on its
22
operating performance, i.e., excluding the effects of capitalization. The final
step is to subtract all short term and long term debt from the total entity
value and then add back cash and equivalents. The result is one measure of the
fair market value of a company's equity.
Broadview reviewed each company's: TTM Revenue; TTM Revenue Growth; TTM EBIT
Margin; Equity Market Capitalization; TTM TMC/R ratio; TTM TMC/EBIT ratio; TTM
P/E ratio; TMC/Projected Calendar 1999 Revenue ratio ("Forward 1999 TMC/R");
and Price/Projected Calendar 1999 Earnings ratio ("Forward 1999 P/E").
In order of descending TTM TMC/R, the public company comparables consist of:
1) Advent Software, Inc.;
2) SS&C Technologies, Inc.;
3) Delphi Information Systems, Inc.;
4) CCC Information Services Group, Inc.; and
5) CFI ProServices, Inc.
The low, high and median financial ratios for the comparable public
companies are listed in the table below:
Multiple Low High Median
-------- ----- ------ ------
Trailing Twelve Month Total Market
Capitalization/Revenue................................ 0.78 4.44 2.64
Trailing Twelve Month Total Market
Capitalization/EBIT................................... 6.69 40.84 22.71
Trailing Twelve Month Price/Earnings................... 12.37 37.75 30.93
Forward Calendar Year 1999 Total Market
Capitalization/Revenue................................ 0.63 3.10 1.75
Forward Calendar Year 1999 Price/Earnings.............. 9.84 26.06 20.23
Because of the significant difference between management projections and
those used by external research analysts, Broadview incorporated both sets of
projections in its analyses. The FDP equity value per share implied by each
financial ratio's low, high and median are listed in the table below:
Multiple Low High Median
-------- ----- ------ ------
Trailing Twelve Month Total Market
Capitalization/Revenue................................ $7.68 $29.22 $18.64
Trailing Twelve Month Total Market
Capitalization/EBIT................................... $7.70 $31.15 $18.70
Trailing Twelve Month Price/Earnings................... $7.79 $23.78 $19.49
Forward Calendar Year 1999 Total Market
Capitalization/Revenue--analyst expectations.......... $7.90 $26.60 $16.36
Forward Calendar Year 1999 Total Market
Capitalization/Revenue--management projections........ $8.29 $28.51 $17.44
Forward Calendar Year 1999 Price/Earnings--analyst
expectations.......................................... $7.62 $20.20 $15.69
Forward Calendar Year 1999 Price/Earnings--management
projections........................................... $9.74 $25.80 $20.04
Evaluation of SunGard Equity--Broadview compared selected valuation multiples
for public companies deemed comparable to SunGard based upon business model,
market focus and product offering, with the multiples implied by SunGard's
January 13, 1999 share price of $38.25. Broadview reviewed, from a financial
point of view, six public companies in the financial enterprise applications
software industry with TTM revenue greater than $300 million. In order of
descending TTM TMC/R, the public company comparables consist of:
1) SEI Investments Company
2) Fiserv, Inc.
3) Policy Management Systems Corp.
4) First Data Corp.;
5) The Bisys Group; and
6) DST Systems Inc.
23
Transaction Comparables Analysis--Valuation statistics from transaction
comparables indicate the Adjusted Price/Revenue ("P/R") multiple acquirers have
paid for comparable companies in a particular market segment. Broadview
reviewed fifteen comparable public and private company merger and acquisition
("M&A") transactions from January 1, 1996 through the present involving sellers
sharing many characteristics with FDP including products offered, business
model and market focus. Transactions were selected from Broadview's proprietary
database of published and confidential M&A transactions in the IT industry.
These transactions represent fifteen sellers in the enterprise applications
software segments of the IT market providing software to financial
institutions, with TTM revenue between $10 million and $200 million.
In order of descending P/R multiple, the fifteen public and private company
transactions used are the acquisition of:
1) Confidential by Confidential;
2) Summit Systems, Inc. by Misys plc;
3) Infinity Financial Technology, Inc. by SunGard Data Systems Inc.;
4) Interlinq Software Corp. by W.R. Hambrecht & Co.;
5) Servantis Systems Holdings, Inc. by Checkfree Corp.;
6) The Frustrum Group, Inc. by Misys plc;
7) Checkfree Corp. (Mortgage Products Division) by London Bridge Software
Holdings plc;
8) C*ATS Software, Inc. by Misys plc;
9) National Computer Systems, Inc. (NCS Financial Systems Inc.) by SunGard
Data Systems Inc.;
10) Leverage Group by Policy Management Systems Corp. (Cybertek Corp.);
11) Peerless Group, Inc. by Jack Henry & Associates Inc.;
12) EPG Insurance Systems Ltd. By Rebus Group plc;
13) Teleglobe, Inc. (Insurance Systems Group) by CGI Group;
14) CUSA Technologies, Inc. by Fiserv, Inc.; and
15) Confidential by Confidential
The low, high and median Price/Revenue ratios of the fifteen comparable
public and private company transactions are listed in the table below:
Analysis Low High Median
-------- ----- ------ ------
Public and Private Seller Comparable Price/Revenue
Multiple........................................... 0.71 5.77 1.84
The low, high and median FDP equity value per share implied by the
Price/Revenue ratios of the fifteen public and private seller transactions are
listed in the table below:
Analysis Low High Median
-------- ----- ------ ------
Public and Private Seller Comparable
Price/Revenue...................................... $7.27 $37.03 $13.90
Transaction Premiums Paid Analysis--Premiums paid in comparable public seller
transactions typically indicate the amount of consideration acquirers are
willing to pay above the seller's equity market capitalization. In this
analysis, the value of consideration paid in transactions involving stock is
computed using the buyer's stock price immediately prior to announcement, while
the seller's equity market capitalization is measured one day prior and twenty
trading days prior to the announcement of the transaction. Broadview reviewed
42 comparable M&A transactions involving selected software companies from
January 1, 1997 to the present with total consideration between $25 million and
$250 million. Transactions were selected from Broadview's proprietary database
of published and confidential M&A transactions in the IT industry. In order of
descending premium paid based on the seller's stock price 20 trading days prior
to announcement, the selected software transactions used were the acquisition
of:
1) FullTime Software, Inc. by Legato Systems, Inc. (pending);
2) Sulcus Hospitality Technologies Corp. by Eltrax Systems, Inc. (pending);
24
3) US Servis, Inc. by HBO & Company;
4) Consilium, Inc. by Applied Materials;
5) Concentra Corp. by Oracle Corp. (pending);
6) Cybermedia, Inc. by Network Associates (pending);
7) TeleBackup Systems, Inc. by VERITAS Software Corp. (pending);
8) National Health Enhancement Systems, Inc. by HBO & Company;
9) Visigenic, Inc. by Borland International, Inc.;
10) C*ATS Software, Inc. by Misys plc (pending);
11) Technology Modeling Associates, Inc. by Avant! Corp.;
12) Interactive Group by Dataworks Corp.;
13) Logic Works, Inc. by PLATINUM technology, inc.;
14) Accugraph Corp. by Architel Systems Corp.;
15) Award Software International, Inc. by Phoenix Technologies Ltd.;
16) Kurzweil Applied Intelligence, Inc. by Lernout & Hauspie Speech Products
NV;
17) Software Artistry, Inc. by IBM Corp.;
18) Walsh International, Inc. by Cognizant Corp.;
19) The ForeFront Group by CBT Group plc.;
20) Amisys Managed Care Systems, Inc. by HBO & Company;
21) Globalink, Inc. by Lernout and Hauspie Speech Products NV;
22) Maxis, Inc. by Electronic Arts, Inc.;
23) Learmonth & Burchett Management Systems, Inc. by PLATINUM technology,
Inc.;
24) Prism Solutions, Inc. by Ardent Software, Inc. (pending);
25) Medicus Systems Corp. by Quadramed Corp.;
26) PHAMIS, Inc. by IDX Systems Corp.;
27) IQ Software Corp. by Information Advantage Software, Inc.;
28) State Of The Art, Inc. by Sage Group plc;
29) Quarterdeck Corp. by Symantec Corp. (pending);
30) Innovative Technologies Systems, Inc. by Peregrine Systems, Inc.;
31) Interlinq Software Corp. by W.R. Hambrecht & Co. (pending);
32) Andyne Computing Ltd. by Hummingbird Communications Ltd.;
33) Unison Software, Inc. by IBM Corp.;
34) Premenos Corp. by Harbinger Corp;
35) DataWorks Corp. by Platinum Software Corp.;
36) Simulations Sciences, Inc. by Siebe plc;
37) Enterprise Systems, Inc. by HBO & Company;
38) Xcellenet, Inc. by Sterling Commerce, Inc.;
39) Red Brick Systems, Inc. by Informix Corp.
40) Fractal Design Corp. by MetaTools, Inc.;
41) Orcad, Inc. by Summit Design; and
42) FTP Software, Inc. by NetManage, Inc.
Based upon Broadview's analysis of premiums paid in selected software
comparable transactions, the low, high and median premiums (discounts) paid to
sellers' share prices (using the buyer's share price on the day prior to the
announcement date of the transaction to calculate consideration in stock
transactions) for the 20 trading days prior and one trading day prior are
listed in the table below:
Metric Low High Median
------ ----- ----- ------
Premium Paid--20 trading days prior................. (26.5)% 326.7% 39.2%
Premium Paid--One trading day prior................. (31.7)% 186.7% 24.8%
25
The low, high and median FDP equity values per share implied by the premiums
paid to the share price 20 trading days prior to announcement and one day prior
to announcement are listed in the table below:
Metric Low High Median
------ ----- ------ ------
Premium Paid--20 trading days prior.................. $7.17 $41.60 $13.57
Premium Paid--One trading day prior.................. $8.03 $33.69 $14.67
Stock Performance Analysis--Broadview examined the following:
1) FDP's actual share price and trading volume from January 2, 1998 to
January 13, 1999;
2) SunGard's actual share price and trading volume from January 2, 1998 to
January 13, 1999;
3) Ratio of FDP/SunGard share prices for the 2-year period ended January 13,
1999;
Pro Forma Combination Analyses--A pro forma merger analysis calculates the EPS
accretion or dilution of the pro forma combined entity taking into
consideration various financial effects which will result from a consummation
of the merger. This analysis relies upon financial and operating assumptions
provided by equity research analysts and publicly available data about FDP and
SunGard. Broadview examined a pooling-of-interests scenario under an assumption
of no synergies.
Based on this scenario and analysts' estimates for FDP and SunGard, the pro
forma pooling model indicates EPS accretion (dilution) to SunGard of 0.6 c, or
0.5%, excluding acquisition expenses, for the fiscal year ending December 31,
1999.
Present Value of Projected Share Price Analysis--Broadview calculated the
present value of the potential future share price of FDP common stock on a
standalone basis using analyst expectations as well as management projections
for the twelve months ending November 30, 1999 discounted to today at discount
rates ranging from 10.0% to 25.0% and including the discount rate calculated
using the Capital Asset Pricing Model ("CAPM") and the median capital-structure
adjusted beta. The potential future share price is calculated based on earnings
estimates for the twelve months ending November 30, 1999 and assumes a TTM P/E
multiple of 30.9, the median TTM P/E multiple for FDP's public company
comparable set, and a TTM P/E multiple of 19.7, the current TTM P/E multiple
implied by FDP's share price.
Because of the significant difference between management projections and
those used by external research analysts, Broadview incorporated both sets of
projections in its analyses. The FDP per share valuation range implied by the
present value of the future share prices, using the cost of equity implied by
the FDP set of public company comparables calculated using the previously
mentioned CAPM, is:
Analysis Low High
-------- ------ ------
Present Value of Projected Share Price--analyst
expectations.............................................. $11.21 $18.59
Present Value of Projected Share Price--management
projections............................................... $15.75 $26.12
Consideration of the Discounted Cash Flows Valuation Methodology--While
discounted cash flows analysis is a commonly used valuation methodology,
Broadview did not employ such an analysis for the
26
purposes of its opinion. Discounted cash flows analysis is most appropriate for
companies which exhibit relatively steady or somewhat predictable streams of
future cash flows. Given the uncertainty in estimating both FDP future cash
flows and sustainable long-term growth rate, Broadview considered a discounted
cash flows analysis inappropriate for valuing FDP.
Summary of Valuation Analyses--Taken together, the information and analyses
employed by Broadview lead to Broadview's overall opinion that the
consideration to be received in the merger is fair, from a financial point of
view, to FDP shareholders.
At the meetings of the special comittee and the board of directors on
January 14, 1999, Broadview rendered its opinion, that, as of such date, based
upon and subject to the various considerations set forth in the Broadview
opinion, the merger consideration was fair from a financial point of view to
the holders of FDP common stock.
The full text of the Broadview opinion, which sets forth, among other
things, assumptions made, procedures followed, matters considered, and
limitations on the scope of the review undertaken by Broadview in rendering the
Broadview opinion, is attached as Appendix B to this proxy
statement/prospectus. FDP shareholders are urged to read the Broadview opinion
carefully and in its entirety. Broadview did not recommend to FDP that any
specific exchange ratio constituted the appropriate exchange ratio for the
merger. The Broadview opinion addresses only the fairness of the merger
consideration from a financial point of view to the holders of FDP common stock
as of the date of the Broadview opinion, and does not constitute a
recommendation to any shareholder as to how such shareholder should vote at the
FDP special meeting.
Interests of Persons in the Merger
Officers and Directors of FDP. There are members of FDP's management and
board of directors who may be deemed to have interests in the merger that are
in addition to their interests as shareholders of FDP generally. As a condition
to the completion of the merger, SunGard has agreed to purchase from Key
Investments Ltd., of which Michael C. Goldberg is general partner and Cindy
Goldberg is a limited partner, the real estate owned by it and currently leased
to FDP for the consideration of $11.35 million in SunGard common stock. In
addition, there are officers and employees of FDP who may be entitled to
receive severance benefits in the event of termination of their employment
following a change in control of FDP. These officers and employees are entitled
to receive a lump sum severance payment equal to two times the individual's
annual compensation upon termination by FDP, other than because of death,
disability, or for cause. Completion of the merger will be deemed a change of
control event under these severance agreements. The FDP board of directors and
the special committee were aware of these interests and considered them, among
other matters, in approving the reorganization agreement and the transactions
contemplated by the reorganization agreement.
Indemnification and Insurance. The reorganization agreement provides that
all rights to indemnification existing in favor of the persons serving as
directors and officers of FDP as of the date of the reorganization agreement
for acts or omissions occurring prior to the effective time of the merger, as
provided in FDP's articles of incorporation and/or bylaws, will survive the
merger, and that SunGard will cause the corporation surviving the merger to
perform all obligations arising with respect to these indemnification rights
for at least five years from the effective time of the merger. See "The
Reorganization Agreement--Indemnification and Insurance."
Options under the FDP Stock Option Plans. Upon completion of the merger, all
options granted under FDP's stock option plans will be assumed by SunGard.
These options will continue to have, and be subject to, the same terms and
conditions set forth in the stock option plan under which they were issued and
the stock option agreements by which they are evidenced (subject to appropriate
adjustments to the exercise price and number of shares subject to the options
based upon the merger exchange ratio).
27
Officer and Directors of SunGard. No officer or director of SunGard has any
interest in the merger that is in addition to his or her interest as a
stockholder of SunGard generally.
Voting Agreement
Michael C. Goldberg, Cindy Goldberg and the Michael & Cindy Goldberg
Charitable Remainder Trust, who beneficially own approximately 47.9% of the
issued and outstanding shares of FDP common stock as of the record date,
entered into a voting agreement with SunGard. These FDP shareholders have
agreed that they will vote the shares of FDP common stock they own in favor of
the merger. These shareholders have also delivered to SunGard irrevocable
proxies with respect to the matters covered by the voting agreement and have
agreed not to transfer any FDP common stock owned by them unless the transferee
enters into the same voting agreement with Sungard.
Affiliate Agreements
As a condition to the completion of the merger each person who could
reasonably be determined to be an affiliate (as defined in Rule 145 under the
Securities Act) of FDP is required to enter into an affiliate agreement. The
affiliate agreement prohibits the affiliate from selling or otherwise reducing
his risk in any capital stock or options of FDP or SunGard during the period
which begins 30 days prior to consummation of the merger and ends on the date
on which financial results covering at least 30 days of post-merger combined
operations of SunGard and FDP have been published by SunGard.
Noncompetition Agreements
In connection with the merger, Michael C. Goldberg and Cindy Goldberg have
agreed with SunGard that for the later of the period which ends five years
after the effective time of the merger or the period which ends two years after
their employment with SunGard terminates that they will not:
. establish, own, manage, operate, finance or control any business that is
competitive with or similar to all or any part of FDP's business, as
engaged in by FDP or as proposed to be engaged in by FDP before the
effective time of the merger;
. become an officer, director, employee, salesman, representative, agent
or consultant of or to any business that competes with or is similar to
FDP's business;
. market or sell any software, technology, products or services that are
similar to or competitive with any proprietary software, technology,
products or services of FDP other than in the furtherance of the
business interests of SunGard; or
. communicate with or solicit any person who is a customer, supplier,
employee, salesman, agent or representative of, or consultant to,
SunGard in an effort to obtain the person as a customer, supplier,
employee, salesman, agent or representative of or consultant to, any
other person that is competitive with or similar to FDP's business.
They have also agreed not to disclose or use any confidential or proprietary
information of FDP.
Federal Income Tax Consequences
In the opinion of Greenberg Traurig, PA and Blank Rome Comisky & McCauley
LLP, respective counsels to FDP and SunGard, the following information is a
discussion of the material federal income tax consequences of the merger. This
discussion is based on current provisions of the Internal Revenue Code of 1986,
existing and proposed Treasury Regulations and current administrative rulings
and court decisions, all of which are subject to change. Any change, which may
or may not be retroactive, could alter the tax consequences described below.
FDP shareholders should be aware that this discussion does not deal with all
U.S. federal income tax considerations that may be relevant to a particular FDP
shareholder in light of that shareholder's particular
28
circumstances, such as a shareholder who is a dealer in securities, who is
subject to the alternative minimum tax provisions of the Code, who is a foreign
person, who acquired shares in connection with a stock option or stock purchase
plan or other compensatory transaction or who holds shares as a hedge or as
part of a hedging, straddle or other risk reduction strategy. In addition, the
following discussion does not address the tax consequences of the merger under
state, local or foreign tax laws.
Each FDP shareholder is urged to consult that shareholder's own tax adviser
as to the specific consequences of the merger to that shareholder under
applicable federal, state, local and foreign tax laws.
Neither SunGard nor FDP has requested a ruling from the IRS with regard to
any of the U.S. federal income tax consequences of the merger. Greenberg
Traurig, P.A., counsel to FDP, and Blank Rome Comisky & McCauley LLP, counsel
to SunGard, have each rendered a tax opinion that the merger will constitute a
reorganization under Section 368(a) of the Code. As a condition to the
completion of the merger, both counsel also must render tax opinions at the
closing that the merger will constitute a reorganization. Those opinions will
not be binding on the IRS and will not preclude the IRS from adopting a
contrary position. The discussion below assumes that the merger will qualify as
a reorganization under Section 368(a) of the Code.
The tax opinions of counsel state that:
. A FDP shareholder will not recognize any gain or loss realized on the
exchange of FDP common stock for Sungard common stock pursuant to the
merger (except in respect of cash received in lieu of a fractional share
of SunGard common stock, as discussed below);
. The aggregate tax basis of the SunGard common stock that a FDP
shareholder receives pursuant to the merger (including any fractional
share of SunGard common stock deemed to be received and then redeemed,
as discussed below) will be the same as the aggregate tax basis of the
FDP common stock surrendered in exchange therefor;
. The holding period of the SunGard common stock that a FDP shareholder
receives pursuant to the merger will include the period during which the
FDP common stock surrendered was considered to be held, so long as that
the FDP common stock surrendered is held as a capital asset at the
effective time of the merger;
. Cash that a FDP shareholder receives in lieu of a fractional share of
FDP common stock will be treated as if that fractional share had been
issued in the merger and then redeemed by SunGard. A FDP shareholder
receiving cash generally will recognize gain or loss upon that
constructive exchange, measured by the difference, if any, between the
amount of cash received and the basis in the fractional share. That gain
or loss should be capital gain or loss provided the fractional share of
FDP common stock is held as a capital asset at the effective time of the
merger; and
. Neither SunGard nor FDP will recognize any gain or loss solely as a
result of the merger.
The tax opinions are based on the truth and accuracy of representations of
fact contained in certificates delivered to counsel by the respective
managements of SunGard and FDP.
If the merger does not qualify as a reorganization under Section 368(a) of
the Code, a FDP shareholder would recognize gain or loss with respect to each
share of FDP common stock surrendered equal to the difference between the
shareholder's basis in that share and the sum of the fair market value, on the
closing date of the merger, of the SunGard common stock and the amount of cash,
if any, received in lieu of a fractional share of SunGard common stock received
in exchange. In that event, a shareholder's basis in each
29
share of SunGard common stock received would equal its fair market value on the
closing date, and the shareholder's holding period for that stock would begin
the day after the closing date.
Anticipated Accounting Treatment
The merger is intended to be accounted for as a pooling of interests for
financial reporting purposes in accordance with generally accepted accounting
principles. SunGard's obligation to complete the merger is conditioned upon its
receipt of a letter from FDP's independent auditors that they concur with FDP
management's conclusion that there is nothing related to FDP that would
preclude SunGard from accounting for the merger as a pooling-of-interests; and
a letter from SunGard's independent accountants that SunGard may account for
the merger as a pooling-of-interests. SunGard has the right to waive the
condition that the merger be accounted for as a pooling-of-interests. If the
merger is consummated but fails to qualify for pooling of interests accounting
treatment, then the transaction would be accounted for as a purchase. Under
that method, the fair market value of the SunGard common stock issued in the
merger would be recorded as the cost of acquiring FDP's business. That cost
would be allocated to the individual assets of FDP that were acquired and
liabilities of FDP that were assumed according to their respective fair values.
The fair market value of the SunGard common stock to be issued in the
transaction is in excess of the amounts at which the net assets are carried in
FDP's accounts. A portion of the excess could be charged to expense immediately
and the remainder would be amortized. As a result, if the merger fails to
qualify for pooling of interests accounting treatment, the combined financial
results of SunGard and FDP could be adversely affected.
Regulatory Matters
SunGard and FDP have filed notification and report forms with the Federal
Trade Commission and the Antitrust Division of the Department of Justice in
connection with the merger as required by the HSR Act. These filings commenced
a 30-day waiting period under the HSR Act which must elapse before FDP and
SunGard may complete the merger. Early termination of the waiting period was
granted on February 9, 1999. The Department of Justice and the Federal Trade
Commission will continue to have the authority to challenge the merger on
antitrust grounds before or after the merger is completed even though the
waiting period ended. There can be no assurance that a challenge to the merger
on antitrust grounds will not be made, or if a challenge is made, that SunGard
and FDP would prevail or would not be required to terminate the reorganization
agreement, divest assets, license proprietary technology to third parties or
accept conditions in order to complete the merger. SunGard does not have any
obligation under the reorganization agreement to dispose of any assets or make
any changes to its operations or make any commitments to any governmental
agency even if these actions might facilitate the completion of the merger.
Absence of Dissenters' Rights
Holders of FDP common stock are not entitled to dissenters' rights in
connection with the merger because FDP common stock is designated as a national
market system security by the Nasdaq National Market.
Resale of SunGard Common Stock
The SunGard common stock issued in connection with the merger will be freely
transferable, except that shares issued to any FDP shareholder who is an
affiliate of FDP or who becomes an affiliate of SunGard are subject to certain
restrictions on resale. An affiliate is defined generally as including
directors, executive officers and certain other persons who control a company.
FDP shareholders who may be deemed affiliates have executed agreements that
prohibit the sale, transfer or other disposition of SunGard common stock
received by them in the merger in order to comply with the requirements of the
federal securities laws and the pooling of interests requirements. See
"Approval of the Merger and Related Transactions--Affiliate Agreements."
30
THE REORGANIZATION AGREEMENT
General
The following is a summary of the material provisions of the reorganization
agreement. A copy of the reorganization agreement is attached as Appendix A to
this proxy statement/prospectus. The reorganization agreement is incorporated
into this proxy statement/prospectus by reference, and you are urged to read it
carefully.
The reorganization agreement provides for the merger of a newly-formed,
wholly-owned subsidiary of SunGard with and into FDP. As a result of the
merger, the SunGard subsidiary will cease to exist, FDP will become a wholly
owned subsidiary of SunGard and the FDP shareholders will become stockholders
of SunGard. FDP will continue as the surviving corporation of the merger and
will retain all of its separate corporate existence, with all its rights and
powers unaffected by the merger. The merger will become effective upon the
filing of articles of merger with the Florida Secretary of State or at any
later time that may be specified in the articles of merger. The filing of the
articles of merger is anticipated to take place as soon as practicable after
the adoption and approval of the merger by the FDP shareholders, if the other
conditions to the merger are satisfied or waived. We currently anticipate that
the merger will be completed, and the merger will be effective, shortly after
the meeting of FDP shareholders to approve the merger. There can be no
assurance, however, that the conditions to the merger will be satisfied by that
time, or at all, or that the reorganization agreement will not be terminated.
See "--Conditions to the Merger" and "Approval of the Merger and Related
Transactions--Regulatory Matters."
Merger Consideration
FDP Common Stock. Subject to the provisions contained in the reorganization
agreement relating to the payment of cash in lieu of fractional shares, and
except for shares held by any of the parties, each outstanding share of FDP
common stock will be converted into the right to receive SunGard common stock.
The number of shares of SunGard common stock into which each share of FDP
common stock will be convertible will vary based upon the average of the
closing sale prices of SunGard common stock over a 20 day period ending two
days prior to the effective date of the merger. If the average stock price is
between $30 and $35, the rate at which each share of FDP common stock will be
converted into the right to receive SunGard common stock will be determined by
dividing $14.40 by the average stock price. If the average stock price is $30
or less, each share of FDP common stock will be converted into the right to
receive .48 of a share of SunGard common stock and if the average stock price
is $35 or more, each share of FDP common stock will be converted into the right
to receive .4114 of a share of SunGard common stock.
No Fractional Shares. No fractional shares of SunGard common stock will be
issued in connection with the merger. In lieu of fractional shares, any holder
of FDP common stock who would otherwise be entitled to receive a fraction of a
share of SunGard common stock will, upon surrender of his stock certificate(s)
representing FDP common stock to the exchange agent, be paid in cash the dollar
amount without interest, determined by multiplying that fraction by the closing
price of a share of SunGard common stock on the date the merger becomes
effective.
Stock Options and Contingent Rights to Acquire FDP Common Stock
Upon completion of the merger, all rights with respect to FDP common stock
under each FDP option to acquire FDP common stock then outstanding will be
converted into and become rights to acquire SunGard common stock, and SunGard
will assume each FDP option in accordance with the terms of the stock option
plan under which it was issued and the stock option agreement by which it is
evidenced. As of the record date, there were options outstanding to purchase a
total of 640,900 shares of FDP common stock. Upon completion of the merger:
. each FDP option assumed by SunGard will only be exercisable for shares
of SunGard common stock;
31
. the number of shares of SunGard common stock subject to each FDP option
will be equal to the number of shares of FDP common stock subject to
each FDP option immediately prior to the completion of the merger,
multiplied by the exchange ratio, rounded down to the nearest whole
share, with cash, less the applicable exercise price, paid for any
fraction of a share;
. the exercise price per share under each FDP option will be adjusted by
dividing the exercise price per share under the FDP option by the
exchange ratio and rounding up to the nearest cent; and
. any restriction on the exercise of an FDP option will continue in full
force and effect and the term, exercisability, vesting schedule and
other provisions of each FDP option will otherwise remain unchanged.
The options will be subject to adjustment as appropriate to reflect any stock
split, stock dividend, reverse stock split, reclassification, recapitalization
or other similar transaction subsequent to the completion of the merger.
FDP is a party to an acquisition agreement dated December 21, 1995 where
certain individuals have acquired contingent rights to receive FDP common stock
under the earn-out provisions of the acquisition agreement. Upon completion of
the merger, these contingent rights will be converted into and become
contingent rights to receive SunGard common stock. The number of shares of
SunGard common stock issuable under these rights will be equal to the number of
shares of FDP common stock subject to the earn-out provisions of the
acquisition agreement immediately before the merger is effective multiplied by
the exchange ratio, rounding down to the nearest whole share, with cash paid
for any fraction of a share.
Stock Ownership Following the Merger
Based on the number of shares of FDP common stock issued and outstanding as
of the record date and assuming an average stock price of $40.12 (the average
stock price if the effective date of the merger was March 22, 1999), an
aggregate of approximately 2,587,793 shares of SunGard common stock will be
issued to FDP shareholders. Based on the number of shares of SunGard common
stock issued and outstanding as of the record date, and after giving effect to
the additional shares of SunGard common stock that are proposed to be issued in
the merger, assuming no exercise of outstanding options to purchase SunGard
common stock or FDP common stock, the former shareholders of FDP would hold
approximately 2.25% of SunGard's total issued and outstanding shares.
Conversion of Shares; Procedures for Exchange of Certificates; No Fractional
Shares
Soon after completion of the merger, Norwest Bank Minnesota, N.A., the
exchange agent, will mail to the registered holders of FDP common stock (i) a
letter of transmittal and (ii) instructions for use of the letter of
transmittal in effecting the surrender of FDP stock certificates in exchange
for SunGard stock certificates. Upon surrender of an FDP stock certificate to
the exchange agent for exchange, together with a duly executed letter of
transmittal and any other required documents, each holder of an FDP stock
certificate will be entitled to receive a certificate representing the whole
number of shares of SunGard common stock that the holder has the right to
receive. No fractional shares of SunGard common stock will be issued in
connection with the merger, and no certificates for any fractional shares will
be issued.
If any FDP stock certificate has been lost, stolen or destroyed, SunGard may
require the owner of that lost, stolen or destroyed FDP stock certificate to
provide an appropriate affidavit and to deliver a bond, in an amount reasonably
requested by SunGard, as indemnity against any claim that may be made against
the exchange agent, SunGard or FDP with respect to the FDP stock certificate.
FDP shareholders should not surrender their FDP stock certificates for
exchange until they receive a letter of transmittal.
32
Effect on Certificates
Upon completion of the merger, all outstanding shares of FDP common stock
will automatically be canceled and retired and will cease to exist, and all
holders of FDP stock certificates will cease to have any rights as shareholders
of FDP except the right to receive shares of SunGard common stock. No further
transfer of any shares of FDP common stock will be made on FDP's stock transfer
books after the merger. If, after the merger, an FDP stock certificate is
presented to the exchange agent (or to FDP or SunGard), that stock certificate
will be canceled and will be exchanged as described above under the caption "--
Conversion of Shares; Procedure for Exchange of Certificates; No Fractional
Shares."
Representations and Warranties
The reorganization agreement contains statements and promises, called
representations and warranties, made by FDP and SunGard. Some of FDP's
representations and warranties relate to the following:
.due organization of FDP and its subsidiaries;
.charter documents and bylaws;
.capitalization;
.filings with the SEC and financial statements;
.absence of certain changes;
.title to assets;
.real property and leaseholds;
.proprietary assets;
.contracts;
.liabilities;
.compliance with legal requirements;
.certain business practices;
.tax matters;
.employee and labor matters and benefit plans;
.environmental matters;
.insurance;
.legal proceedings and orders;
.authority and binding nature of the reorganization agreement;
.no existing discussions;
.accounting matters;
.vote required;
.non-contravention and consents;
.fairness opinion;
.brokers, finders, investment bankers or other fees or commissions;
.absence of dissenters' rights; and
33
.full disclosure.
Some of SunGard's representations and warranties relate to the following:
.organization, standing and power;
.capitalization;
.filings with the SEC and financial statements;
.absence of certain changes;
.authority and binding nature of the reorganization agreement;
.accounting matters;
.full disclosure;
.litigation; and
.shareholder voting requirement.
None of the representations and warranties made by FDP or SunGard in the
reorganization agreement survive the merger. To review all of the
representations and warranties contained in the reorganization agreement you
should read the reorganization agreement which is attached as Appendix A.
Covenants
The reorganization agreement includes several covenants and agreements of
FDP and SunGard which govern their actions until the merger is completed. These
covenants and agreements include the following which require that:
. FDP provide SunGard with reasonable access to its personnel, facilities,
assets, existing books, records, tax returns, work papers and other
documents and permit and assist SunGard to contact its customers,
prospects and suppliers;
. FDP conduct its business in a diligent manner and not make any material
change in its business practices;
. FDP preserve intact its current business organization, keep available
the services of its current officers, employees, salesmen, agents and
representatives and maintain its goodwill with all suppliers, customers,
and other persons or entities;
. FDP consult regularly with SunGard as to the management of its business
and affairs;
. FDP:
. maintain its real property and tangible property in good condition
and repair,
. maintain its insurance policies and permits in full force and
effect,
. repair, restore or replace any of its assets that are damaged,
destroyed, lost or stolen,
. comply with all applicable contracts, permits and laws,
. properly file all tax returns, annual reports and other returns and
reports required to be filed by it, and
. fully pay when due all taxes and fees;
. FDP maintain its corporate existence and good standing in its
jurisdiction of incorporation and its good standing in each jurisdiction
where it is currently qualified as a foreign corporation, and not amend
its articles of incorporation or bylaws;
34
. without SunGard's prior written consent, FDP will not:
. act other than in the ordinary course of its business consistent
with its past practices;
. even in the ordinary course of its business consistent with past
practices, incur any obligation or enter into any other transaction,
involving, in any single case, an amount exceeding $100,000 or, in
the aggregate, an amount exceeding $500,000;
. permit or cause a breach or default under any agreement;
. alter its capitalization; or
. enter into any contract that commits it to take any action
inconsistent with any of the provisions of the reorganization
agreement;
. SunGard maintain its corporate existence and good standing in the State
of Delaware, and not amend its charter or bylaws in any manner that
would be inconsistent with its obligations under the reorganization
agreement; and
. SunGard not enter into any contract that commits it to take any action
that would be inconsistent with any of the provisions of the
reorganization agreement.
In addition to the above covenants, the reorganization agreement requires
SunGard and FDP to use all reasonable efforts to take all actions necessary to
complete the merger and make effective the other transactions contemplated by
the reorganization agreement.
To review all of the covenants and agreements contained in the
reorganization agreement, you should read the reorganization agreement which is
attached as Appendix A.
Non-Solicitation
In the reorganization agreement, FDP has agreed that it will not solicit,
initiate, encourage, induce or participate in any discussions or negotiations
with any third parties with respect to proposals concerning any merger,
consolidation or similar transaction, any bulk sale of its or its subsidiaries'
assets or any sale of its or its subsidiaries' capital stock. The restriction
described in the previous sentence is subject to exceptions. You should read
the reorganization agreement which is attached as Appendix A for a more
complete discussion of the nonsolicitation provision.
Indemnification
The reorganization agreement provides that all rights to indemnification
existing in favor of the persons serving as directors or officers of FDP as of
the date of the reorganization agreement for acts and omissions occurring prior
to the merger, as provided in FDP's articles and/or bylaws, will survive the
merger, and after the merger, SunGard will cause FDP to perform all of its
obligations arising under FDP's articles and bylaws for a period of not less
than five years from the completion of the merger.
Conditions to the Merger
The completion of the merger depends upon the satisfaction or waiver of
certain conditions, including, among other things:
. that the representations and warranties of the parties are accurate in
all material respects as of the date of the reorganization agreement and
as of the date of the completion of the merger;
. all of the terms and conditions of the reorganization agreement must be
substantially satisfied or performed;
35
. the registration statement must become effective in accordance with the
provisions of the Securities Act, and no stop order may be issued by the
SEC with respect to the registration statement;
. the merger must be approved by FDP's shareholders;
. all consents required to be obtained in connection with the merger must
be obtained and in full force and effect;
. there may not be any change in the business, capitalization, operations
or financial condition of FDP or SunGard since the date of the
reorganization agreement which has had or would reasonably be expected
to have a material adverse effect on FDP or SunGard;
. the waiting period under the HSR Act must have expired or been
terminated, which has already occurred;
. the shares of SunGard common stock to be issued in the merger must be
approved for listing on the New York Stock Exchange;
. no temporary restraining order, preliminary or permanent injunction or
other order preventing the consummation of the merger shall have been
issued by any court of competent jurisdiction and remain in effect, and
there may not be any legal requirement enacted or deemed applicable to
the merger that makes completion of the merger illegal;
. there may not be pending or threatened any legal proceeding in which a
governmental body is or is threatened to become a party which seeks to
restrain or prohibit the consummation of the merger or seeks to obtain
with respect to the merger damages which are material to SunGard or
which could materially and adversely affect the right of SunGard to own
the assets or operate the business of FDP;
. there may not be pending any legal proceeding in which there is a
reasonable probability of an outcome that would have a material adverse
effect on FDP or SunGard; and
. the sale to SunGard of the facilities located at 2000, 2140 and 2150
South Dixie Highway, Miami, FL 33133, from which FDP operates, must be
completed.
To review all of the conditions to the merger, you should read the
reorganization agreement attached as Appendix A.
Termination
The reorganization agreement may be terminated prior to the completion of
the merger, whether before or after approval of the merger by the shareholders
of FDP:
. by mutual written consent of FDP and SunGard;
. by either FDP or SunGard if the merger is not completed by May 31, 1999,
unless the failure to complete the merger is because of a failure by the
terminating party to perform any material obligation required to be
performed by that party;
. by either FDP or SunGard if a court of competent jurisdiction or other
governmental body issues a final and nonappealable order, decree or
ruling, or takes any other action, having the effect of permanently
restraining, enjoining or otherwise prohibiting the merger;
. by either FDP or SunGard following a breach of any covenant or agreement
of the other party or if any representation or warranty of the other
party is or becomes inaccurate. However, the reorganization agreement
may not be terminated if the breach or inaccuracy is curable, and the
breaching party continues to exercise reasonable efforts to cure the
breach or inaccuracy;
36
. by SunGard, if:
. FDP's board of directors withdraws, amends or modifies in a manner
adverse to SunGard its unanimous recommendation in favor of the
approval of the merger;
. FDP fails to include in this proxy statement/prospectus the
unanimous recommendation of its board of directors in favor of the
approval of the merger;
. FDP enters into any letter of intent or contract relating to any
alternative acquisition proposal;
. a tender or exchange offer relating to securities of FDP is
commenced and FDP does not send to its securityholders, within ten
business days after the commencement of the tender or exchange
offer, a statement disclosing that FDP recommends rejection of the
tender or exchange offer; or
. by either FDP or SunGard if FDP's special meeting is held and the merger
is not approved by FDP's shareholders.
Expenses and Termination Fee
All fees and expenses incurred in connection with the reorganization
agreement and the transactions contemplated by the reorganization agreement
will be paid by the party incurring those expenses, whether or not the merger
is completed. However, the parties will share equally all fees and expenses,
other than attorneys' fees, incurred in connection with the filing, printing
and mailing of this proxy statement/prospectus and the filing of the premerger
notification and report forms relating to the merger under the HSR Act.
If the reorganization agreement is terminated by SunGard because FDP's board
of directors withdraws or adversely modifies its recommendation to
shareholders, FDP enters into any letter of intent or contract relating to an
alternative acquisition proposal or if FDP fails to recommend to its
shareholders rejection of any tender or exchange offer for FDP's common stock
which may have commenced, then FDP must pay to SunGard, in cash, within one
business day after the termination of the reorganization agreement, a
nonrefundable fee in the amount of $2.8 million. If the reorganization
agreement is terminated by SunGard or FDP as a result of FDP shareholders not
approving the reorganization agreement and FDP consummates an alternative
acquisition transaction at any time prior to January 15, 2000, then,
contemporaneously with the earlier of the consummation of the alternative
acquisition transaction or the announcement regarding a proposed alternative
acquisition transaction, FDP is required to pay to SunGard, in cash, a
nonrefundable fee in the amount of $2.8 million. For a complete description of
the circumstances under which the termination fee is payable by FDP, you should
read the reorganization agreement attached as Appendix A.
Amendment; Waiver
The reorganization agreement may be amended with the approval of the
parties' boards of directors at any time before or after approval of the merger
by the shareholders of FDP. After approval of the merger by FDP's shareholders,
no amendment may be made which could result in a decrease in the exchange ratio
or have a material adverse effect on the shareholders of FDP without the
further approval of FDP's shareholders. The reorganization agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties. Failure on the part of any party to the reorganization agreement to
exercise any right, power or remedy under the reorganization agreement, and any
delay on the part of any party to the reorganization agreement in exercising
any right, power or remedy under the reorganization agreement, will not operate
as a waiver of that right, power or remedy; and no single or partial exercise
of any right, power or remedy will preclude any other or further exercise of
that right, power or remedy or of any other right, power or remedy. No waiver
under the reorganization agreement will be enforceable unless it is expressly
set forth in a written instrument and signed by the party against whom the
enforcement of that waiver is being sought.
37
UNAUDITED PRO FORMA FINANCIAL INFORMATION
SunGard expects that the merger will be accounted for as a pooling of
interests, which means that for accounting and financial reporting purposes
SunGard will treat SunGard and FDP as if they had always been combined. The pro
forma information is provided for illustrative purposes only and should not be
relied upon as necessarily being indicative of the historical results that
SunGard and FDP would have had if the companies actually had always been
combined, or the results which may be obtained in the future.
The Unaudited Pro Forma Combined Condensed Financial Data should be read
along with the historical financial statements and the related notes of SunGard
and FDP which are incorporated by reference in this proxy statement/prospectus.
38
SunGard Data Systems Inc.
Pro Forma Combined Condensed Balance Sheet
September 30, 1998
(Unaudited)
(In thousands)
Historical Historical Pro Forma Pro Forma
SunGard(1) FDP(2) Adjustments Combined
---------- ---------- ----------- ----------
Assets:
Cash, cash equivalents
and short-term
investments............. $ 193,431 $ 9,225 -- $ 202,656
Accounts receivable,
net..................... 269,386 9,675 -- 279,061
Prepaid expenses and
other current assets.... 27,217 1,325 -- 28,542
Deferred income taxes.... 25,291 226 -- 25,517
---------- ------- ------ ----------
Total current assets... 515,325 20,451 -- 535,776
Property and equipment,
net..................... 131,540 5,509 $3,334 (3) 140,383
Intangible and other
long-term assets........ 360,499 11,637 -- 372,136
---------- ------- ------ ----------
Total assets........... $1,007,364 $37,597 $3,334 $1,048,295
========== ======= ====== ==========
Liabilities and
Stockholders' Equity
Short-term and current
portion of long-term
debt.................... $ 11,123 -- -- $ 11,123
Accounts payable......... 14,889 $ 167 -- 15,056
Accrued compensation and
benefits................ 66,744 2,269 -- 69,013
Other accrued expenses... 53,809 2,671 -- 56,480
Deferred revenues........ 137,754 397 -- 138,151
---------- ------- ------ ----------
Total current
liabilities........... 284,319 5,504 -- 289,823
Long-term debt........... 3,002 -- $4,274 (3) 7,276
Deferred income taxes.... -- 635 -- 635
---------- ------- ------ ----------
287,321 6,139 4,274 297,734
---------- ------- ------ ----------
Stockholders' Equity:
Preferred stock........ -- -- -- --
Common stock........... 1,054 60 $ (31)(3)(4) 1,083
Capital in excess of
par value............. 267,256 11,994 $ (909)(3)(4) 278,341
Notes receivable from
stockholders.......... -- -- -- --
Restricted stock plans
and deferred
compensation.......... (1,796) -- -- (1,796)
Retained earnings...... 459,094 19,404 -- 478,498 (5)
Foreign currency
translation
adjustment............ (5,565) -- -- (5,565)
---------- ------- ------ ----------
720,043 31,458 (940) 750,561
Treasury stock........... -- -- -- --
---------- ------- ------ ----------
Total stockholders'
equity................ 720,043 31,458 (940) 750, 561
---------- ------- ------ ----------
Total liabilities and
stockholders' equity.. $1,007,364 $37,597 $3,334 $1,048,295
========== ======= ====== ==========
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
Statements
39
SunGard Data Systems Inc.
Pro Forma Combined Condensed Balance Sheet
September 30, 1997
(Unaudited)
(In thousands)
Pro
Historical Historical Pro Forma Forma
SunGard(1) FDP(2) Adjustments Combined
---------- ---------- ----------- --------
Assets:
Cash, cash equivalents and
short-term investments..... $ 73,921 $ 9,283 -- $ 83,204
Accounts receivable, net.... 211,165 6,959 -- 218,124
Prepaid expenses and other
current assets............. 20,925 892 -- 21,817
Deferred income taxes....... 21,515 337 -- 21,852
-------- ------- ------ --------
Total current assets...... 327,526 17,471 -- 344,997
Property and equipment,
net........................ 120,141 3,080 $3,093 (3) 126,314
Intangible and other long-
term assets................ 357,439 11,222 -- 368,661
-------- ------- ------ --------
Total assets.............. $805,106 $31,773 $3,093 $839,972
======== ======= ====== ========
Liabilities and
Stockholders' Equity:
Short-term and current
portion of long-term debt.. $ 21,149 -- -- $ 21,149
Accounts payable............ 15,822 $ 354 -- 16,176
Accrued compensation and
benefits................... 44,222 2,021 -- 46,243
Other accrued expenses...... 37,435 2,180 -- 39,615
Deferred revenues........... 109,690 354 -- 110,044
-------- ------- ------ --------
Total current
liabilities.............. 228,318 4,909 -- 233,227
Long-term debt.............. 3,500 -- $4,367 (3) 7,867
Deferred income taxes....... -- 532 -- 532
-------- ------- ------ --------
231,818 5,441 4,367 241,626
-------- ------- ------ --------
Stockholders' Equity:
Preferred stock........... -- -- -- --
Common stock.............. 1,000 57 (28)(3)(4) 1,029
Capital in excess of par
value.................... 215,116 10,238 (1,246)(3)(4) 224,108
Notes receivable from
stockholders............. (534) -- -- (534)
Restricted stock plans and
deferred compensation.... (1,672) -- -- (1,672)
Retained earnings......... 364,871 16,037 -- 380,908 (5)
Foreign currency
translation adjustment... (5,403) -- -- (5,403)
-------- ------- ------ --------
573,378 26,332 (1,274) 598,436
Treasury stock.............. (90) -- -- (90)
-------- ------- ------ --------
Total stockholders'
equity................... 573,288 26,332 (1,274) 598,346
-------- ------- ------ --------
Total liabilities and
stockholders' equity..... $805,106 $31,773 $3,093 $839,972
======== ======= ====== ========
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
Statements
40
SunGard Data Systems Inc.
Pro Forma Combined Condensed Balance Sheet
December 31, 1997
(Unaudited)
(In thousands)
Pro
Historical Historical Pro Forma Forma
SunGard(1) FDP(2) Adjustments Combined
---------- ---------- ----------- --------
Assets:
Cash, cash equivalents and
short-term investments..... $106,155 $ 8,934 -- $115,089
Accounts receivable, net.... 224,708 7,741 -- 232,449
Prepaid expenses and other
current assets............. 24,269 885 -- 25,154
Deferred income taxes....... 21,163 246 -- 21,409
-------- ------- ------ --------
Total current assets...... 376,295 17,806 -- 394,101
Property and equipment,
net........................ 123,261 3,848 $3,592 (3) 130,701
Intangible and other long-
term assets................ 357,392 11,434 -- 368,826
-------- ------- ------ --------
Total assets.............. $856,948 $33,088 $3,592 $893,628
======== ======= ====== ========
Liabilities and
Stockholders' Equity:
Short-term and current
portion of long-term debt.. $ 16,996 -- -- $ 16,996
Accounts payable............ 19,105 $ 185 -- 19,290
Accrued compensation and
benefits................... 58,592 2,065 -- 60,657
Other accrued expenses...... 37,288 2,244 -- 39,532
Deferred revenues........... 111,666 513 -- 112,179
-------- ------- ------ --------
Total current
liabilities.............. 243,647 5,007 -- 248,654
Long-term debt.............. 3,080 -- $4,323 (3) 7,403
Deferred income taxes....... -- 610 -- 610
-------- ------- ------ --------
246,727 5,617 4,323 256,667
-------- ------- ------ --------
Stockholders' Equity:
Preferred stock........... -- -- -- --
Common stock.............. 1,021 58 (29)(3)(4) 1,050
Capital in excess of par
value.................... 228,333 10,500 (702)(3)(4) 238,131
Notes receivable from
stockholders............. (500) -- -- (500)
Restricted stock plans and
deferred compensation.... (1,532) -- -- (1,532)
Retained earnings......... 389,545 16,913 -- 406,458 (5)
Foreign currency
translation adjustment... (6,646) -- -- (6,646)
-------- ------- ------ --------
610,221 27,471 (731) 636,961
Treasury stock.............. -- -- -- --
-------- ------- ------ --------
Total stockholders'
equity................... 610,221 27,471 (731) 636,961
-------- ------- ------ --------
Total liabilities and
stockholders' equity..... $856,948 $33,088 $3,592 $893,628
======== ======= ====== ========
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
Statements
41
SunGard Data Systems Inc.
Pro Forma Combined Condensed Balance Sheet
December 31, 1996
(Unaudited)
(In thousands)
Pro
Historical Historical Pro Forma Forma
SunGard(1) FDP(2) Adjustments Combined
---------- ---------- ----------- --------
Assets:
Cash, cash equivalents and
short-term investments..... $ 83,024 $11,665 -- $ 94,689
Accounts receivable, net.... 177,048 6,211 -- 183,259
Prepaid expenses and other
current assets............. 18,844 573 -- 19,417
Deferred income taxes....... 14,519 327 -- 14,846
-------- ------- ------ --------
Total current assets...... 293,435 18,776 -- 312,211
Property and equipment,
net........................ 112,419 2,719 $4,547 (3) 119,685
Intangible and other long-
term assets................ 333,768 7,617 -- 341,385
-------- ------- ------ --------
Total assets.............. $739,622 $29,112 $4,547 $773,281
======== ======= ====== ========
Liabilities and
Stockholders' Equity:
Short-term and current
portion of long-term debt.. $ 35,300 -- -- $ 35,300
Accounts payable............ 15,270 $ 133 -- 15,403
Accrued compensation and
benefits................... 45,540 1,714 -- 47,254
Other accrued expenses...... 32,738 1,292 -- 34,030
Deferred revenues........... 100,744 1,914 -- 102,658
-------- ------- ------ --------
Total current
liabilities.............. 229,592 5,053 -- 234,645
Long-term debt.............. 4,967 -- $4,494 (3) 9,461
Deferred income taxes....... -- 497 -- 497
-------- ------- ------ --------
234,559 5,550 4,494 244,603
-------- ------- ------ --------
Stockholders' Equity:
Preferred stock........... -- -- -- --
Common stock.............. 553 55 (26)(3)(4) 582
Capital in excess of par
value.................... 208,014 9,282 79 (3)(4) 217,375
Notes receivable from
stockholders............. (1,385) -- -- (1,385)
Restricted stock plans and
deferred compensation.... (2,043) -- -- (2,043)
Retained earnings......... 301,686 14,225 -- 315,911 (5)
Foreign currency
translation adjustment... (287) -- -- (287)
-------- ------- ------ --------
506,538 23,562 53 530,153
Treasury stock.............. (1,475) -- -- (1,475)
-------- ------- ------ --------
Total stockholders'
equity................... 505,063 23,562 53 528,678
-------- ------- ------ --------
Total liabilities and
stockholders' equity..... $739,622 $29,112 $4,547 $773,281
======== ======= ====== ========
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
Statements
42
SunGard Data Systems Inc.
Pro Forma Combined Condensed Statement of Income
For the nine months ended September 30, 1998
(Unaudited)
(In thousands except per share data)
Pro
Historical Historical Pro Forma Forma
SunGard(1) FDP(2) Adjustments Combined
---------- ---------- ----------- --------
Revenues...................... $838,882 $29,131 -- $868,013
Operating expenses, excluding
merger and restructuring
costs........................ 689,175 25,818 $ (210)(3) 714,783
-------- ------- ------ --------
149,707 3,313 210 153,230
Merger and restructuring
costs........................ 11,847 -- -- 11,847
-------- ------- ------ --------
Operating income.............. 137,860 3,313 210 141,383
Net interest income
(expense).................... 3,517 868 (210)(3) 4,175
-------- ------- ------ --------
Income before income taxes.... 141,377 4,181 -- 145,558(5)
Income taxes.................. 60,672 1,465 -- 62,137
-------- ------- ------ --------
Net income.................. $ 80,705 $ 2,716 -- $ 83,421(5)
======== ======= ====== ========
Basic net income per common
share........................ $ 0.78 $ 0.46 -- $ 0.78
Shares used to compute basic
net income per common share.. 103,712 5,920 (3,078)(4) 106,554
Diluted net income per common
share........................ $ 0.75 $ 0.44 -- $ 0.75
Shares used to compute diluted
net income per common share.. 107,748 6,222 (3,235)(4) 110,735
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
Statements
43
SunGard Data Systems Inc.
Pro Forma Combined Condensed Statement of Income
For the nine months ended September 30, 1997
(Unaudited)
(In thousands except per share data)
Pro
Historical Historical Pro Forma Forma
SunGard(1) FDP(2) Adjustments Combined
---------- ---------- ----------- --------
Revenues...................... $655,766 $23,440 -- $679,206
Operating expenses, excluding
merger and restructuring
costs........................ 543,334 21,281 $ (216)(3) 564,399
-------- ------- ------ --------
112,432 2,159 216 114,807
Merger and restructuring
costs........................ 10,817 -- -- 10,817
-------- ------- ------ --------
Operating income.............. 101,615 2,159 216 103,990
Net interest income
(expense).................... 422 952 (216)(3) 1,158
-------- ------- ------ --------
Income before income taxes.... 102,037 3,111 -- 105,148(5)
Income taxes.................. 41,684 1,089 -- 42,773
-------- ------- ------ --------
Net income.................. $ 60,353 $ 2,022 -- $ 62,375(5)
======== ======= ====== ========
Basic net income per common
share........................ $ 0.61 $ 0.36 -- $ 0.61
Shares used to compute basic
net income per common share.. 98,840 5,588 (2,906)(4) 101,552
Diluted net income per common
share........................ $ 0.59 $ 0.34 -- $ 0.59
Shares used to compute diluted
net income per common share.. 102,883 5,919 (3,078)(4) 105,724
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
Statements
44
SunGard Data Systems Inc.
Pro Forma Combined Condensed Statement of Income
For the year ended December 31, 1997
(Unaudited)
(In thousands except per share data)
Pro
Historical Historical Pro Forma Forma
SunGard(1) FDP(2) Adjustments Combined
---------- ---------- ----------- --------
Revenues...................... $925,030 $32,817 -- $957,847
Operating expenses, excluding
merger and restructuring
costs........................ 768,717 29,474 $ (287)(3) 797,904
-------- ------- ------ --------
156,313 3,343 287 159,943
Merger and restructuring
costs........................ 13,669 -- -- 13,669
-------- ------- ------ --------
Operating income.............. 142,644 3,343 287 146,274
Net interest income
(expense).................... 1,106 1,241 (287)(3) 2,060
-------- ------- ------ --------
Income before income taxes.... 143,750 4,584 -- 148,334(5)
Income taxes.................. 59,775 1,604 -- 61,379
-------- ------- ------ --------
Net income.................. $ 83,975 $ 2,980 -- $ 86,955(5)
======== ======= ====== ========
Basic net income per common
share........................ $ 0.84 $ 0.53 -- $ 0.85
Shares used to compute basic
net income per common share.. 99,555 5,631 (2,928)(4) 102,259
Diluted net income per common
share........................ $ 0.81 $ 0.50 -- $ 0.82
Shares used to compute diluted
net income per common share.. 103,596 5,938 (3,088)(4) 106,445
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
Statements
45
SunGard Data Systems Inc.
Pro Forma Combined Condensed Statement of Income
For the year ended December 31, 1996
(Unaudited)
(In thousands except per share data)
Historical Historical Pro Forma Pro Forma
SunGard(1) FDP(2) Adjustments Combined
---------- ---------- ----------- ---------
Revenues.................... $711,857 $26,445 $738,302
Operating expenses,
excluding merger and
restructuring costs........ 592,490 24,254 $ (298)(3) 616,446
-------- ------- ------ --------
119,367 2,191 298 121,856
Merger and restructuring
costs...................... 51,083 -- -- 51,083
-------- ------- ------ --------
Operating income............ 68,284 2,191 298 70,773
Net interest income
(expense).................. 4,001 1,070 (298)(3) 4,773
-------- ------- ------ --------
Income before income taxes.. 72,285 3,261 -- 75,546(5)
Income taxes................ 31,979 1,036 -- 33,015
-------- ------- ------ --------
Net Income................ $ 40,306 $ 2,225 -- $ 42,531(5)
======== ======= ====== ========
Basic net income per common
share...................... $ 0.43 $ 0.41 $ 0.44
Shares used to compute basic
net income per common
share...................... 94,549 5,386 (2,801)(4) 97,134
Diluted net income per
common share............... $ 0.41 $ 0.39 $ 0.42
Shares used to compute
diluted net income per
common share 99,433(1) 5,751 (2,991)(4) 102,192
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
Statements
46
SunGard Data Systems Inc.
Pro Forma Combined Condensed Statement of Income
For the year ended December 31, 1995
(Unaudited)
(In thousands except per share data)
Historical Historical Pro Forma Pro Forma
SunGard(1) FDP(2) Adjustments Combined
---------- ---------- ----------- ---------
Revenues.................. $557,366 $19,389 -- $576,755
Operating expenses,
excluding merger and
restructuring costs...... 467,375 18,320 $ (309)(3) 485,386
-------- ------- ------ --------
89,991 1,069 309 91,369
Merger and restructuring
costs.................... 4,238 -- -- 4,238
-------- ------- ------ --------
Operating income.......... 85,753 1,069 309 87,131
Net interest income
(expense)................ 5,066 961 (309)(3) 5,718
-------- ------- ------ --------
Income before income
taxes.................... 90,819 2,030 -- 92,849 (5)
Income taxes.............. 38,698 562 -- 39,260
-------- ------- ------ --------
Net Income.............. 52,121 1,468 -- 53,589 (5)
Preferred stock
redemption............... $ (1,276) -- -- (1,276)
-------- ------- ------ --------
Net income attributable to
common stockholders...... $ 50,845 $ 1,468 -- $ 52,313
======== ======= ====== ========
Basic net income per
common share............. $ 0.59 $ 0.28 -- $ 0.59
Shares used to compute
basic net income per
common share 86,852 5,166 (2,686)(4) 89,331
Diluted net income per
common share............. $ 0.55 $ 0.27 -- $ 0.55
Shares used to compute
diluted net income per
common share 92,121 (1) 5,385 (2,800)(4) 94,705
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
Statements
47
SunGard Data Systems Inc.
Notes to Unaudited Pro Forma Combined Condensed Financial Statements
(Unaudited)
Note 1--SunGard Historical Financial Information
SunGard historical financial information has been restated for the merger
with Infinity Financial Technology, Inc. (Infinity), which occurred on January
2, 1998, and was accounted for as a pooling-of-interests.
Note 2--FDP Historical Financial Information
FDP has a fiscal year which ends November 30. For purposes of pro-forma
financial information, FDP's fiscal year and quarterly financial information
has been combined with SunGard's fiscal year (which is a calendar year)
financial information. The one-month difference in fiscal year's does not have
a material effect on pro-forma financial information.
Note 3--Facilities
Under the reorganization agreement, facilities currently leased by FDP and
owned by a partnership controlled by Michael C. Goldberg will be sold to
SunGard upon consummation of the merger between SunGard and FDP. Also, the debt
directly associated with the facilities will be assumed by SunGard. Additional
shares of SunGard common stock will be issued to the partnership based on the
fair market value of the facilities, as determined by an independent appraisal,
less the fair market value of the debt directly related to the facilities. The
number of SunGard shares to be issued to the partnership is currently estimated
to be approximately 200,000 shares. The issuance of these additional shares is
not material to the pro forma financial information presented. The pro forma
adjustments represent the approximate book value of the facilities, debt,
interest, depreciation, taxes and operating costs, offset by rent expense paid
by FDP to the partnership.
Note 4--Exchange Ratio
Under the reorganization agreement, each outstanding share of FDP common
stock will be converted into a maximum of 0.48 shares of SunGard common stock.
Also, all options to purchase shares of FDP common stock will be converted into
options to purchase shares of SunGard common stock, using the same exchange
ratio. This exchange ratio was used in computing shares and per share amounts
for the accompanying unaudited pro forma combined condensed financial
information. In addition, approximately 200,000 shares will be issued for
facilities owned by a partnership controlled by Michael C. Goldberg (See Note
3).
Note 5--Merger Costs
All pro forma information excludes merger costs, estimated to be
approximately $1.5 million. These costs are principally comprised of investment
advisory, legal, accounting and printing costs.
48
COMPARISON OF CAPITAL STOCK
Description of SunGard Capital Stock
The authorized capital stock of SunGard consists of 320,000,000 shares of
SunGard common stock, and 5,000,000 shares of preferred stock, $0.01 par value.
SunGard Common Stock. As of March 15, 1999 there were approximately
114,823,776 shares of SunGard common stock outstanding, held of record by
approximately 4,200 stockholders. SunGard common stock is listed and traded on
the NYSE under the symbol "SDS." Holders of SunGard common stock are entitled
to one vote per share on all matters to be voted upon by the stockholders. The
stockholders may not cumulate votes in connection with the election of
directors. The holders of SunGard common stock are entitled to receive ratably
dividends, if any, declared from time to time by the SunGard board of directors
out of funds legally available for dividends. In the event of a liquidation,
dissolution or winding up of SunGard, the holders of SunGard common stock are
entitled to share ratably in all assets remaining after payment of liabilities.
The SunGard common stock has no preemptive or conversion rights or other
subscription rights. There are no redemption or sinking fund provisions
applicable to the SunGard common stock. All outstanding shares of SunGard
common stock are fully paid and non-assessable, and the shares of SunGard
common stock to be outstanding upon completion of the merger will be fully paid
and non-assessable.
SunGard Preferred Stock. SunGard has 5,000,000 shares of SunGard preferred
stock authorized and no shares are outstanding. The SunGard board of directors
has the authority to issue up to 5,000,000 shares of SunGard preferred stock in
one or more series and to fix the rights, preferences, privileges and
restrictions granted to or imposed upon any unissued and undesignated shares of
SunGard preferred stock and to fix the number of shares constituting any series
and the designations of such series, without any further vote or action by the
stockholders. Although it presently has no intention to do so, the SunGard
board of directors, without stockholder approval, can issue SunGard preferred
stock with voting and conversion rights which could adversely affect the voting
power or other rights of the holders of SunGard common stock. The issuance of
SunGard preferred stock may have the effect of delaying, deferring or
preventing a change in control of SunGard.
SunGard Transfer Agent and Registrar. The transfer agent and registrar for
the SunGard common stock is Norwest Bank Minnesota, N.A., Shareholder Services
Administration, 161 N. Concorde Exchange, P.O. Box 738, South St. Paul, MN
55075 and its telephone number is (612) 450-4064.
Description of FDP Capital Stock
The authorized capital stock of FDP consists of 30,000,000 shares of FDP
common stock, and 10,000,000 shares of preferred stock, $.01 par value.
FDP Common Stock. As of March 15, 1999, there were approximately 6,290,212
shares of FDP common stock outstanding, held of record by approximately 100
shareholders. The holders of FDP common stock are entitled to one vote per
share on all matters to be voted upon by the shareholders. The holders of FDP
common stock are entitled to receive ratably dividends if any, declared from
time to time by the FDP board of directors out of funds legally available for
dividends. In the event of the liquidation, dissolution or winding up of FDP,
the holders of FDP common stock are entitled to share ratably in all assets
remaining after payment of liabilities subject to prior distribution rights of
FDP preferred stock, if any, then outstanding. The FDP common stock has no
preemptive or conversion rights or other subscription rights. All outstanding
shares of FDP common stock are fully paid and nonassessable.
FDP Preferred Stock. FDP has 10,000,000 shares of FDP preferred stock
authorized, of which no shares are outstanding. The FDP board of directors has
the authority to issue up to 10,000,000 shares of FDP
49
preferred stock, in one or more series and to fix the rights, preferences,
privileges and restrictions granted to or imposed upon any unissued and
undesignated shares of FDP preferred stock and to fix the number of shares
constituting any series and the designations of such series, without any
further vote or action by the shareholders. Although it presently has no
intention to do so, the FDP board of directors, without shareholder approval,
can issue FDP preferred stock with voting and conversion rights which could
adversely affect the voting power or other rights of the holders of FDP common
stock. The issuance of FDP preferred stock may have the effect of delaying,
deferring or preventing a change in control of FDP.
FDP Transfer Agent and Registrar. The transfer agent and registrar for the
FDP common stock is American Stock Transfer & Trust Company, 40 Wall Street,
New York, NY 10005, and its telephone number is (718) 921-8206.
COMPARISON OF RIGHTS OF HOLDERS OF SUNGARD
COMMON STOCK AND HOLDERS OF FDP COMMON STOCK
Upon completion of the merger, the holders of FDP common stock will become
holders of SunGard common stock. There are certain material differences between
the rights and privileges of the holders of FDP common stock and the holders of
SunGard common stock.
SunGard is incorporated under the laws of the State of Delaware and FDP is
incorporated under the laws of the State of Florida. As a result, the rights of
stockholders of SunGard are governed by the Delaware General Corporation Law
(the "DGCL"), the restated certificate of incorporation of SunGard and the
amended and restated bylaws of SunGard, and the rights of shareholders of FDP
are governed by the Florida Business Corporation Act (the "FBCA"), the amended
and restated articles of incorporation of FDP and the bylaws of FDP. If the
merger is consummated, the shareholders of FDP will become stockholders of
SunGard. The following is a summary of the material differences between the
rights of holders of FDP common stock and the rights of holders of SunGard
common stock. These differences arise from differences between the DGCL and
FBCA, as well as from differences between the corporate governing instruments
of SunGard and FDP.
Percentage of Voting Stock; Influence Over Affairs
Upon completion of the merger, the percentage ownership of SunGard by each
former FDP shareholder will be substantially less than the FDP shareholder's
current percentage ownership of FDP. Accordingly, former FDP shareholders will
have a significantly smaller voting influence over the affairs of SunGard than
they currently enjoy over the affairs of FDP.
Preemptive Rights
SunGard. Under the DGCL, no stockholder has a preemptive right to subscribe
to additional issues of a corporation's stock unless, and to the extent that,
this right is expressly granted to these stockholders by the corporation's
certificate of incorporation. SunGard's certificate provides that no holder of
any of the shares of any class or series of stock or of options, warrants or
other rights to purchase shares of any class or series of stock or of other
securities will have any preemptive right to subscribe to an additional issue
of stock of any class or series or to any securities of SunGard convertible
into stock.
FDP. Under the FBCA, no shareholder has a preemptive right to acquire
unissued or treasury shares of the corporation or securities convertible into
shares except, and to the extent, provided in the corporation's articles of
incorporation. FDP's articles of incorporation do not provide its shareholders
with preemptive rights.
Voting Rights of Capital Stock
SunGard. Under the DGCL, unless a corporation's certificate of incorporation
provides something else, each share of capital stock of a corporation is
entitled to one vote. Whether or not the certificate of incorporation grants
voting rights to a particular class of stock, under the DGCL, the holders of
outstanding
50
shares of a class of capital stock of a corporation are entitled to vote, as a
class, on any amendment to the corporation's certificate of incorporation which
would (i) increase or decrease the par value of the shares of the class, or
(ii) alter the powers, preferences or special rights of the shares of the class
so as to affect them adversely. Although the DGCL specifies the vote required
for certain types of corporate action, the DGCL permits a corporation to
require, in its certificate of incorporation, the vote of a larger portion of
the stock, or of any class or series of the stock, than is required under the
DGCL.
SunGard's certificate provides that holders of SunGard common stock are
entitled to one vote per share on all matters voted upon by the stockholders.
Under SunGard's certificate, holders of shares of SunGard preferred stock have
the voting rights designated by its board of directors.
FDP. Under the FBCA, unless a corporation's articles of incorporation
provide something else, each share of capital stock of a corporation is
entitled to one vote on each matter submitted to a vote of the shareholders.
FDP's articles do not provide that FDP's shareholder are entitled to more than
or less than one vote on any matters. Although the FBCA specifies the vote
required for certain types of corporate actions, the FBCA, like the DGCL,
permits the articles of incorporation to require the vote or concurrence of a
greater proportion of the shares, or of any class or series of the shares, than
is required under the FBCA.
Board of Directors
SunGard. SunGard's bylaws provide that its board of directors will not
consist of less than two nor more than eight directors, with the exact number
to be determined by the board of directors. The number of directors is
currently fixed at eight. Directors are elected at each annual meeting of
stockholders and serve until the next annual meeting of stockholders or until
their directors are duly elected and qualified.
FDP. FDP's articles provide that its board of directors will not consist of
less than one director, with the exact number to be specified in the FDP's
bylaws, which provide that the FDP's board of directors will not consist of
less than three directors nor more than 12 directors, with the exact number to
be fixed from time to time by resolution adopted by a majority of the entire
board. The number of directors is currently fixed at five.
Cumulative Voting
SunGard. Since SunGard's certificate does not provide for cumulative voting
for directors, each stockholder who is entitled to vote at an election of
directors has the right to vote the number of shares owned by him or her for as
many persons as there are directors to be elected, but may not cumulate his or
her votes for directors.
FDP. Similarly, FDP's articles do not provide for cumulative voting for
directors, so each shareholder who is entitled to vote at an election of
directors has the right to vote the number of shares owned by him or her for as
many persons as there are directors to be elected, but may not cumulate his or
her votes for directors.
Removal of Directors
SunGard. Since SunGard does not have a classified board, its directors may
be removed, either with or without cause, by the holders of a majority of the
shares entitled to vote at the election of directors.
FDP. FDP's bylaws also provide that any of its directors may be removed,
either with or without cause, by the holders of a majority of the shares
entitled to vote at the election of directors.
Filling of Vacancies on the Board of Directors
SunGard and FDP. SunGard's bylaws and FDP's bylaws provide that any vacancy
on their board of directors or newly created directorship may be filled by the
vote of a majority of the remaining directors then in office, even if less than
a quorum. Appointed directors serve until the next annual meeting of
stockholders or until their successors are elected.
51
Call of Special Meetings of Shareholders
SunGard. SunGard's bylaws provide that a special meeting of its stockholders
may be called at any time by the board, the chairman of the board or the
president, and must be called upon written request from the holders of a
majority of the outstanding shares of capital stock of SunGard entitled to vote
at the meeting.
FDP. FDP's bylaws provide that special meetings of its shareholders must be
held when called by the chairman of the board, the vice-chairman of the board,
the president, or a majority of the board of directors. Under the FBCA, special
meetings must also be held when requested in writing by the holders of not less
than 10% of all the shares entitled to vote at the meeting, unless a greater
percentage not to exceed 50% is required by the articles of incorporation.
FDP's articles do not require a greater percentage.
Duration of Proxies
SunGard. The DGCL and SunGard's bylaws provide that proxies are valid for no
more than three years unless a different period is specified in the proxy.
FDP. The FBCA provides that proxies are valid for an eleven-month period
unless a longer period is expressly provided for in the appointment form.
Amendments to Certificate or Articles of Incorporation
SunGard. Under the DGCL, unless the certificate of incorporation imposes a
higher voting requirement, the approval of the holders of a majority of the
stock entitled to vote, and a majority of each class entitled to vote as a
class, is required in order to amend any provision of a corporation's
certificate of incorporation. SunGard's certificate does not impose any higher
voting requirement with respect to the amendment of its certificate of
incorporation.
FDP. The FBCA provides that articles of incorporation may be amended by the
affirmative vote of the holders of a majority of the shares entitled to vote on
an amendment to the articles.
Amendments to Bylaws
SunGard. SunGard's bylaws may be altered, amended or repealed, in whole or
in part, by the affirmative vote of a majority of the members of SunGard's
board or by the affirmative vote of the holders of a majority of the
outstanding shares of capital stock of SunGard entitled to vote.
FDP. Under the FBCA, the board of directors may amend or repeal a
corporation's bylaws unless the articles of incorporation or the FBCA reserves
this power exclusively to the shareholders. FDP's articles do not reserve this
power to FDP's shareholders.
Certain Business Combinations
SunGard. The DGCL provides that, subject to certain limited exceptions, the
approval of the holders of a majority of the stock entitled to vote is required
for any merger or consolidation of a Delaware corporation with another
corporation or the sale, lease or exchange of all or substantially all of that
corporation's assets. SunGard's certificate does not impose any higher voting
requirements for the approval of these actions.
Section 203 of the DGCL also restricts certain transactions between a
corporation organized under Delaware law (or its majority-owned subsidiaries)
and any person holding 15% or more of the corporation's outstanding voting
stock, who together with his, her or its affiliates or associates is defined as
an "Interested Stockholder." Section 203 prevents, for a period of three years
following the date that a person becomes an Interested Stockholder, the
following types of transactions between the corporation and the Interested
Stockholder (unless certain conditions, described below, are met):
52
. mergers or consolidations;
. sales, leases, exchanges or other transfers of 10% or more of the
aggregate assets of the corporation;
. issuances or transfers by the corporation of any stock of the
corporation which would have the effect of increasing the Interested
Stockholder's proportionate share of the stock of any class or series of
the corporation;
. any other transaction which has the effect of increasing the
proportionate share of the stock of any class or series of the
corporation which is owned by the Interested Stockholder; and
. receipt by the Interested Stockholder of the benefit (except
proportionately as a stockholder) of loans, advances, guarantees,
pledges or other financial benefits provided by the corporation.
The three-year ban does not apply if either the proposed transaction or the
transaction by which the Interested Stockholder became an Interested
Stockholder is approved by the board of directors of the corporation prior to
the date the person becomes an Interested Stockholder. Additionally, an
Interested Stockholder may avoid the statutory restriction if, upon the
consummation of the transaction where the stockholder becomes an Interested
Stockholder, the stockholder owns at least 85% of the outstanding voting stock
of the corporation without regard to those shares owned by the corporation's
officers and directors and certain employee stock plans. Business combinations
are also permitted within the three-year period if approved by the board of
directors and authorized at an annual or special meeting of stockholders by the
holders of at least 66 2/3% of the outstanding voting stock not owned by the
Interested Stockholder. In addition, any transaction is exempt from the
statutory ban if it is proposed at a time when the corporation has proposed,
and a majority of certain continuing directors of the corporation have
approved, a transaction with a party who is not an Interested Stockholder of
the corporation (or who becomes such with board approval) if the proposed
transaction involves
. certain mergers or consolidations involving the corporation;
. a sale or other transfer of over 50% of the aggregate assets of the
corporation; or
. a tender or exchange offer for 50% or more of the outstanding voting
stock of the corporation.
Section 203 does not apply to corporations which do not have a class of
voting stock that is listed on a national securities exchange, authorized for
quotation with a registered national securities association, or held of record
by more than 2,000 shareholders. Otherwise, section 203 applies automatically
to Delaware corporations unless the corporation's original certificate of
incorporation contains a provision expressly electing not to be governed by
section 203 or the corporation has amended its certificate of incorporation or
bylaws in accordance with section 203 to provide that the corporation will not
be governed by section 203. SunGard has not adopted an amendment to its
certificate or bylaws exempting it from section 203, which accordingly applies
to SunGard.
FDP. Under the FBCA and subject to limited exceptions (not applicable to the
merger), any merger or consolidation of FDP with another corporation or the
sale, lease or exchange of all or substantially all of FDP's assets requires
the approval of a majority of the shares entitled to vote on those actions.
Section 607.0901 of the FBCA requires that, in addition to any vote required
by the FBCA and the corporation's articles of incorporation and subject to the
exceptions described below, any "Affiliated Transaction" between a Florida
corporation and any beneficial owner of 10% or more of the corporation's voting
shares, including shares held by any associate or affiliate of such a person
(defined as an "Interested Shareholder") be approved by the vote of the holders
of two-thirds of the voting shares of the corporation's stock, excluding any
shares held by the Interested Shareholder. An "Affiliated Transaction" is
defined as
. any merger or consolidation of the corporation or any of its
subsidiaries with an Interested Shareholder or an associate or affiliate
of an Interested Shareholder;
. any sale, lease, exchange or other disposition of assets of the
corporation to an Interested Shareholder or an associate or affiliate of
an Interested Shareholder, having an aggregate market value equal to
53
5% or more of the consolidated assets of the corporation or 5% or more
of the aggregate market value of all of the outstanding shares of the
corporation, or representing 5% or more of the earning power or net
income of the corporation;
. the issuance or transfer to the Interested Shareholder or an associate
or affiliate of the Interested Shareholder, by the corporation, of
shares of the corporation or any of its subsidiaries which have an
aggregate market value equal to 5% or more of the aggregate market value
of all of the outstanding shares of the corporation;
. the adoption of any plan of liquidation or dissolution of the
corporation proposed by, or pursuant to an agreement, arrangement or
understanding with, the Interested Shareholder or any associate or
affiliate of the Interested Shareholder;
. any reclassification, recapitalization or other transaction which has
the effect of increasing by more than 5% the percentage of outstanding
voting shares of the corporation or any subsidiary of the corporation
beneficially owned by the Interested Shareholder; or
. any receipt by the Interested Shareholder or any associate or affiliate
of the Interested Shareholder of the benefit of any loans or other types
of specified financial assistance from the corporation.
The voting requirements of section 607.0901 do not apply, however, to an
Affiliated Transaction if, among other things:
. the Affiliated Transaction has been approved by a majority of the
disinterested directors on the corporation's board of directors;
. the Interested Shareholder has been the beneficial owner of at least 80%
of the corporation's outstanding voting shares for at least five years;
. the Interested Shareholder is the beneficial owner of at least 90% of
the outstanding voting shares of the corporation, exclusive of shares
acquired from the corporation in a transaction not approved by a
majority of the disinterested directors;
. certain fair price requirements have been met; or
. the corporation has not had more than 300 shareholders of record at any
time during the three years preceding the date of the first general
public announcement of a proposed Affiliated Transaction.
The provisions of section 607.0901 do not apply if the corporation's
original articles of incorporation contain a provision, or the corporation's
articles or bylaws have been amended, in each case by the vote of a majority of
the outstanding shares of the corporation's voting shares (excluding any shares
held by an Interested Shareholder), to include a provision, expressly electing
that the corporation not be governed by section 607.0901. FDP's articles and
bylaws do not contain a provision electing not to be governed by section
607.0901. Although FDP is subject to section 607.0901, the proposed merger is
not subject to the statute because SunGard is not an Interested Shareholder for
purposes of section 607.0901.
The FBCA also includes a statutory provision governing control-share
acquisitions. As a condition to SunGard's execution and delivery of the
reorganization agreement and as permitted under the FBCA, the parties have
agreed that they and the members of their respective boards of directors will
grant the approvals and take the actions which are reasonably necessary for the
transactions contemplated by the reorganization agreement to be consummated as
promptly as practicable on the terms contemplated by the reorganization
agreement and otherwise act to eliminate or minimize the effects of any statute
or regulation on these transactions.
Stock Exchange Rules
The FDP common stock is currently listed on the Nasdaq National Market and
will continue to be listed on the Nasdaq National Market until completion of
the merger. The SunGard common stock is traded on the NYSE. There are material
differences between the corporate governance rules of the Nasdaq National
Market and the NYSE.
54
EXPERTS
The consolidated balance sheets of SunGard and subsidiaries as of December
31, 1997 and 1996 and the related consolidated statements of income,
stockholders' equity and cash flows for each of the years in the three-year
period ended December 31, 1997, incorporated in this proxy statement/prospectus
and in the registration statement by reference to the Annual Report on Form 10-
K of SunGard for the year ended December 31, 1997, have been so incorporated in
reliance upon the report of PricewaterhouseCoopers LLP, independent
accountants, given on the authority of that firm as experts in accounting and
auditing.
The consolidated financial statements and schedule of FDP Corp. and
subsidiaries as of November 30, 1998 and 1997 and for each of the years in the
three year period ended November 30, 1998 have been incorporated by reference
herein in reliance upon the report of KPMG LLP, independent Certified Public
Accountants incorporated by reference herein, and upon the authority of such
firm as experts in accounting and auditing.
LEGAL MATTERS
The validity of the shares of SunGard common stock offered by this proxy
statement/prospectus will be passed upon for SunGard by SunGard's General
Counsel. Certain legal matters in connection with the merger will be passed
upon for FDP by Greenberg Traurig, P.A., Miami, Florida.
REPRESENTATIVES OF INDEPENDENT AUDITORS
Representatives of KPMG LLP expect to be present at the FDP special meeting.
While such representatives have stated that they do not plan to make a
statement at such meeting, they will be available to respond to appropriate
questions from shareholders in attendance.
WHERE TO FIND MORE INFORMATION
SunGard filed a registration statement on Form S-4 to register with the SEC
the SunGard common stock to be issued to FDP shareholders in the merger. This
proxy statement/prospectus is a part of that registration statement and
constitutes a prospectus of SunGard in addition to a proxy statement of FDP for
the FDP special meeting. As allowed by the SEC, this proxy statement/prospectus
does not contain all the information that can be found in the registration
statement or the exhibits to the registration statement. FDP and SunGard file
annual, quarterly and special reports, proxy statements and other information
with the SEC. You can read and copy any reports, statements or other
information we file at the SEC's public reference rooms in Washington D.C., New
York, New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for
further information on the public reference rooms. Our SEC filings are also
available to the public from commercial document retrieval services and at the
web site maintained by the SEC at http://www.sec.gov.
55
The SEC allows us to "incorporate by reference" information into this proxy
statement/prospectus, which means that we can disclose important information to
you by referring you to another document filed separately with the SEC. The
information incorporated by reference is deemed to be part of this proxy
statement/prospectus, except for any information superseded by information in
this proxy statement/prospectus. This proxy statement/prospectus incorporates
by reference the documents set forth below that we have previously filed with
the SEC. These documents contain important information about our companies and
their finances.
SunGard SEC Filings (File No. 1-12989) Period
-------------------------------------- ------
Annual Report on Form 10-K............. Year ended December 31, 1997
Quarterly Reports on Form 10-Q......... Quarters ended March 31, 1998, June 30,
1998 and September 30, 1998
Current Report on Form 8-K............. Filed on January 16, 1998
Registration Statement on Form 8-A..... Filed on May 14, 1997
FDP SEC Filings (File No. 0-11770) Period
---------------------------------- ------
Annual Report on Form 10-K............. Fiscal year ended November 30, 1998
We are also incorporating by reference additional documents that we may file
with the SEC between the date of this proxy statement/prospectus and the date
of the FDP special meeting.
SunGard has supplied all information contained or incorporated by reference
in this proxy statement/prospectus relating to SunGard and FDP has supplied all
this information relating to FDP.
You should rely only on the information contained or incorporated by
reference in this proxy statement/prospectus to vote on the merger. We have not
authorized anyone to provide you with information that is different from what
is contained in this proxy statement/prospectus. This proxy
statement/prospectus is dated March 30, 1999. You should not assume that the
information contained in this proxy statement/prospectus is accurate as of any
date other than March 30, 1999, and neither the mailing of the proxy
statement/prospectus to shareholders nor the issuance of SunGard common stock
in the merger shall create any implication to the contrary.
56
APPENDIX A
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF REORGANIZATION
among
SunGard Data Systems Inc.,
a Delaware corporation;
Development Corp.,
a Florida corporation;
and
FDP Corp.
a Florida corporation
----------------
Dated as of January 15, 1999
----------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF REORGANIZATION
Table of Contents
Page
----
Section 1: Defined Terms...... A-1
Section 2: The Merger......... A-5
Section 3: Representations of
Company...................... A-5
3.1 Organization....... A-5
3.2 Effect of
Agreement.............. A-6
3.3 Capital Stock and
Ownership.............. A-6
3.4 Financial and
Corporate Records...... A-7
3.5 Compliance with
Law.................... A-8
3.6 SEC Filings........ A-8
3.7 Assets ............ A-8
3.8 Obligations........ A-9
3.9 Operations Since
August 31, 1998........ A-9
3.10 Accounts
Receivable............. A-10
3.11 Tangible Property.. A-10
3.12 Real Property ..... A-10
3.13 Environmental ..... A-11
3.14 Software and Other
Intangibles............ A-12
3.15 Contracts.......... A-13
3.16 Employees and
Independent
Contractors............ A-14
3.17 Employee Benefit
Plans.................. A-14
3.18 Customers,
Prospects and
Suppliers.............. A-15
3.19 Taxes.............. A-15
3.20 Proceedings and
Judgments.............. A-16
3.21 Insurance.......... A-16
3.22 Questionable
Payments............... A-16
3.23 Related Party and
Affiliate
Transactions........... A-17
3.24 Brokerage Fees..... A-17
3.25 Acquisition
Discussions............ A-17
3.26 State Antitakeover
Laws Not Applicable, No
Other Restrictions .... A-17
3.27 Accounting
Matters................ A-17
3.28 Vote Required...... A-18
3.29 Fairness Opinion... A-18
3.30 Absence of
Dissenters' Rights..... A-18
3.31 Hart-Scott-Rodino.. A-18
3.32 Full Disclosure.... A-18
Section 4: Representations of
Acquiror and Newco........... A-19
4.1 Organization....... A-19
4.2 Agreement.......... A-19
4.3 Acquiror's Stock... A-19
4.4 SEC Filings........ A-19
4.5 Absence of Certain
Changes or Events...... A-20
4.6 Accounting
Matters................ A-20
4.7 Full Disclosure.... A-20
4.8 Litigation......... A-20
4.9 No Shareholder Vote
Required............... A-21
i
Page
----
Section 5: Certain Obligations of the Company Pending Closing............. A-21
5.1 Access and Investigation....................................... A-21
5.2 Conduct of Company's Business.................................. A-21
5.3 No Solicitation................................................ A-22
5.4 Advice of Changes.............................................. A-23
Section 6: Certain Obligations of Acquiror and Newco Pending Closing...... A-23
6.1 Corporate Status............................................... A-23
6.2 Advice of Changes.............................................. A-24
Section 7: Additional Covenants of the Parties............................ A-24
7.1 Registration Statement; Prospectus/Proxy Statement............. A-24
7.2 Company Shareholders' Meeting.................................. A-24
7.3 Regulatory Approvals........................................... A-25
7.4 Stock Options, Company Stock Option Plans and Contingent Rights
to Stock .......................................................... A-26
7.5 Indemnification of Officers and Directors...................... A-26
7.6 Pooling of Interests........................................... A-27
7.7 Additional Agreements.......................................... A-27
7.8 Disclosure..................................................... A-27
7.9 Tax Matters.................................................... A-27
7.10 Letter of Company's Accountants................................ A-28
7.11 NYSE Listing................................................... A-28
7.12 Resignation of Officers and Directors.......................... A-28
7.13 Takeover Statutes.............................................. A-28
Section 8: Conditions Precedent to Acquiror's and Newco's Closing
Obligations.............................................................. A-28
8.1 Accuracy of Representations.................................... A-28
8.2 Company's Performance.......................................... A-28
8.3 Effectiveness of Registration Statement........................ A-28
8.4 Shareholder Approval........................................... A-28
8.5 Consents....................................................... A-29
8.6 Absence of Material Adverse Effect............................. A-29
8.7 Hart-Scott-Rodino.............................................. A-29
8.8 Listing........................................................ A-29
8.9 No Restraints.................................................. A-29
8.10 No Governmental Proceeding..................................... A-29
8.11 No Other Proceeding............................................ A-29
8.12 Real Estate Closing............................................ A-29
Section 9: Conditions Precedent to Company's Closing Obligations.......... A-29
9.1 Accuracy of Representations.................................... A-29
9.2 Acquiror's and Newco's Performance............................. A-30
9.3 Effectiveness of Registration Statement........................ A-30
9.4 Shareholder Approval........................................... A-30
9.5 Absence of Material Adverse Effect............................. A-30
9.6 Hart-Scott-Rodino.............................................. A-30
9.7 Listing........................................................ A-30
9.8 No Restraints.................................................. A-30
9.9 No Governmental Proceeding..................................... A-30
Section 10: Closing....................................................... A-30
10.1 Company's Obligations at Closing............................... A-30
10.2 Acquiror's and Newco's Obligations at Closing.................. A-31
Section 11: Termination................................................... A-32
11.1 Termination.................................................... A-32
11.2 Effect of Termination.......................................... A-33
ii
Page
----
11.3 Expenses; Termination Fee....................................... A-33
Section 12: Other Provisions............................................... A-33
12.1 Notices........................................................ A-33
12.2 Survival....................................................... A-33
12.3 Interpretation of Representations.............................. A-33
12.4 Reliance by Acquiror and Newco................................. A-34
12.5 Entire Understanding........................................... A-34
12.6 Amendment...................................................... A-34
12.7 Parties in Interest............................................ A-34
12.8 Waivers........................................................ A-34
12.9 Severability................................................... A-34
12.10 Counterparts................................................... A-34
12.11 Section Headings............................................... A-34
12.12 References..................................................... A-34
12.13 Controlling Law................................................ A-34
12.14 Jurisdiction and Process....................................... A-35
12.15 Post-Closing Actions by Acquired Companies..................... A-35
12.16 No Third-Party Beneficiaries................................... A-35
12.17 Bankruptcy Qualification....................................... A-35
12.18 Cooperation.................................................... A-35
12.19 Construction................................................... A-35
iii
AGREEMENT AND PLAN OF REORGANIZATION
Parties: FDP Corp.
a Florida corporation (the "Company")
2140 South Dixie Highway
Miami, Florida 33133
SunGard Data Systems Inc.
a Delaware corporation ("Acquiror")
1285 Drummers Lane
Wayne, PA 19087
Development Corp.
a Florida corporation ("Newco")
1285 Drummers Lane
Wayne, PA 19087
Date: January 15, 1999
Background: The Company is in the business of designing, developing,
selling, marketing, licensing, supporting and maintaining proprietary software
systems and related services and products which facilitate the sales,
marketing, administrative functions and other needs of the life insurance and
employee benefit industry and are used by actuaries, life insurance companies
and agents, pension consultants, employee benefit professionals, attorneys,
bankers, accountants, financial planners and other Persons. The parties desire
that Newco be merged with and into the Company (the "Merger") on the terms and
subject to the conditions set forth in this Agreement and Plan of
Reorganization (the "Agreement") and the Agreement and Plan of Merger dated
this date and designated as Exhibit A hereto (the "Plan"). The parties intend
that the Merger (i) qualify as a tax-free reorganization within the meaning of
Section 368(a) of the Code, and (ii) be accounted for as a "pooling of
interests" for financial accounting purposes.
The Board of Directors of the Company has unanimously determined that the
Merger and the other transactions contemplated by this Agreement and the Plan
(collectively the "Transactions") are in the best interests of the Company and
its shareholders. The respective Boards of Directors of Acquiror and Newco, a
wholly owned subsidiary of Acquiror, have determined that the Transactions are
in the best interests of Acquiror and Newco and their respective shareholders.
Concurrently with the execution of this Agreement, and as a condition and
inducement to Acquiror's willingness to enter into this Agreement: (i) each
affiliate shareholder of the Company identified in Schedule 3.23 is entering
into an Affiliate Agreement attached hereto as Exhibit B; and (ii) certain
shareholders of the Company are entering into a Voting and Cooperation
Agreement substantially in the form attached hereto as Exhibit C and a
Nondisclosure and Noncompete Agreement substantially in the form attached
hereto as Exhibit E.
Intending to be legally bound, in consideration of the foregoing and the
mutual agreements contained herein and subject to the satisfaction of the terms
and conditions set forth herein, the parties hereto agree as follows:
Section 1: Defined Terms
Certain defined terms used in this Agreement and not specifically defined in
context are defined in this Section 1, as follows:
1.1 "Accounts Receivable" means (a) any right to payment for goods sold,
leased or licensed or for services rendered, whether or not it has been
earned by performance, whether billed or unbilled, and
A-1
whether or not it is evidenced by any Contract (as defined in Section
1.12); (b) any note receivable; or (c) any other receivable or right to
payment of any nature.
1.2 "Acquired Companies" means the Company and each of its subsidiaries.
1.3 "Acquiror Stock" means shares of common stock, $0.01 par value per
share, of Acquiror.
1.4 "Acquisition Proposal" means any offer, proposal or inquiry (other
than an offer or proposal by Acquiror) contemplating or otherwise relating
to any Acquisition Transaction.
1.5 "Acquisition Transaction" means any transaction or series of
transactions involving:
(a) any merger, consolidation, share exchange, business combination,
issuance of securities, acquisition of securities, tender offer,
exchange offer or other similar transaction (i) in which any of the
Acquired Companies is a constituent corporation, (ii) in which a Person
or "group" (as defined in the Exchange Act and the rules promulgated
thereunder) of Persons directly or indirectly acquires any of the
Acquired Companies or more than 50% of any of the Acquired Companies'
business or directly or indirectly acquires beneficial or record
ownership of securities representing more than 20% of the outstanding
securities of any class of voting securities of any of the Acquired
Companies, or (iii) in which any of the Acquired Companies issues
securities representing more than 20% of the outstanding securities of
any class of voting securities of Company;
(b) any sale, lease, exchange, transfer, license, acquisition or
disposition of more than 50% of the assets of any of the Acquired
Companies other than the sale by any Acquired Company of Software
licenses to its customers in the ordinary course of business; or
(c) any liquidation or dissolution of any of the Acquired Companies.
1.6 "Asset" means any real, personal, mixed, tangible or intangible
property of any nature, including Cash Assets (as defined in Section 1.7),
prepayments, deposits, escrows, Accounts Receivable, Tangible Property (as
defined in Section 1.42), Real Property (as defined in Section 1.36),
Software (as defined in Section 1.40), Contract Rights (as defined in
Section 1.13), Intangibles (as defined in Section 1.25) and goodwill, and
claims, causes of action and other legal rights and remedies.
1.7 "Cash Asset" means any cash on hand, cash in bank or other accounts,
readily marketable securities, and other cash-equivalent liquid assets of
any nature.
1.8 "Code" means the Internal Revenue Code of 1986, as amended.
1.9 "Company Common Stock" means the common stock, $.01 par value per
share, of the Company.
1.10 "Company Preferred Stock" means preferred stock, $.01 par value per
share, of the Company.
1.11 "Consent" means any consent, approval, order or authorization of,
or any declaration, filing or registration with, or any application, notice
or report to, or any waiver by, or any other action (whether similar or
dissimilar to any of the foregoing) of, by or with, any Person (as defined
in Section 1.33), which is necessary in order to take a specified action or
actions in a specified manner and/or to achieve a specified result.
1.12 "Contract" means any written or oral contract, agreement,
instrument, order, arrangement, commitment or understanding of any nature,
including sales orders, purchase orders, leases, subleases, data processing
agreements, maintenance agreements, license agreements, sublicense
agreements, loan agreements, promissory notes, instruments, security
agreements, pledge agreements, deeds, mortgages, guaranties, indemnities,
warranties, employment agreements, consulting agreements, sales
representative agreements, joint venture agreements, buy-sell agreements,
options or warrants.
1.13 "Contract Right" means any right, power or remedy of any nature
under any Contract, including rights to receive property or services or
otherwise derive benefits from the payment, satisfaction
A-2
or performance of another party's Obligations (as defined in Section 1.31),
rights to demand that another party accept property or services or take any
other actions, and rights to pursue or exercise remedies or options.
1.14 "Employee Benefit Plan" means any employee benefit plan as defined
in Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and any other plan, program, policy or arrangement for
or regarding bonuses, commissions, incentive compensation, severance,
vacation, deferred compensation, pensions, profit sharing, retirement,
payroll savings, stock options, stock purchases, stock awards, stock
ownership, phantom stock, stock appreciation rights, medical/dental expense
payment or reimbursement, disability income or protection, sick pay, group
insurance, self insurance, death benefits, employee welfare or fringe
benefits of any nature; but not including employment Contracts with
individual employees.
1.15 "Encumbrance" means any lien, superlien, security interest, pledge,
right of first refusal, mortgage, easement, covenant, restriction,
reservation, conditional sale, prior assignment, or other encumbrance,
claim, burden or charge of any nature.
1.16 "Environmental Laws" means all applicable Laws (including consent
decrees and administrative orders) relating to the public health and safety
and protection of the environment, including those governing the use,
generation, handling, storage and disposal or cleanup of Hazardous
Substances, all as amended.
1.17 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
1.18 "FBCA" means the Florida Business Corporation Act, as amended.
1.19 "Form S-4 Registration Statement" means the registration statement
on Form S-4 to be filed with the SEC (as defined in Section 1.38) by
Acquiror in connection with the issuance of Acquiror Stock in the Merger,
as said registration statement may be amended prior to the time it is
declared effective by the SEC.
1.20 "GAAP" means generally accepted accounting principles under current
United States accounting rules and regulations, consistently applied
throughout the periods covered.
1.21 "Governmental Body" means any nation, state, commonwealth,
province, territory, county, municipality, district or other jurisdiction
of any nature; federal, state, local, municipal, foreign or other
government; or governmental or quasi-governmental authority of any nature
(including any governmental division, department, agency, commission,
instrumentality, official, organization, unit, body or other entity and any
court or other tribunal).
1.22 "Hazardous Substances" means all substances, wastes, contaminants,
pollutants and materials defined, designated or regulated as hazardous,
dangerous or toxic pursuant to any Law of any state in which any Real
Property is located or any United States Law, and asbestos, polychlorinated
biphenyls ("PCB's"), petroleum, petroleum products and urea formaldehyde.
1.23 "including" means including but not limited to.
1.24 "Insurance Policy" means any public liability, product liability,
general liability, comprehensive, property damage, vehicle, life, hospital,
medical, dental, disability, worker's compensation, key man, fidelity bond,
theft, forgery, errors and omissions, directors' and officers' liability,
or other insurance policy of any nature.
1.25 "Intangible" means any name, corporate name, fictitious name,
trademark, trademark application, service mark, service mark application,
trade name, brand name, product name, slogan, trade secret, know-how,
patent, patent application, copyright, copyright application, design, logo,
formula, invention, product right, technology or other intangible asset of
any nature, whether in use, under development or design, or inactive.
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1.26 "Judgment" means any order, writ, injunction, citation, award,
decree or other judgment of any nature of any foreign, federal, state or
local court, governmental body, administrative agency, regulatory authority
or arbitration tribunal.
1.27 "to the knowledge of the Company" means that none of the directors
or executive officers of any of the Acquired Companies has any actual
knowledge, implied knowledge or belief that the statement made is
incorrect. For this purpose, "implied knowledge" means all information
available in the books, records and files of any of the Acquired Companies
and all information that any of the directors or officers of any of the
Acquired Companies should have known in the course of operating and
managing the business and affairs of any of the Acquired Companies.
1.28 "Law" means any provision of any foreign, federal, state or local
law, statute, ordinance, charter, constitution, treaty, code, rule,
regulation or guidelines (including those of self-regulatory organizations
such as the New York Stock Exchange, Inc. and the NASD (as defined in
Section 1.30)).
1.29 "Material Adverse Effect" means with respect to a Person any
adverse effect on the financial condition, financial performance, business,
prospects or capitalization of such Person or any of the Assets or
Obligations of such Person, which adverse effect is or will be material
under either GAAP or applicable legal principles.
1.30 "NASD" means the National Association of Securities Dealers, Inc.
1.31 "Obligation" means any debt, liability or obligation of any nature,
whether secured, unsecured, recourse, nonrecourse, liquidated,
unliquidated, accrued, absolute, fixed, contingent, ascertained,
unascertained, known, unknown or otherwise.
1.32 "Permit" means any license, permit, approval, waiver, order,
authorization, right or privilege of any nature, granted, issued, approved
or allowed by any foreign, federal, state or local governmental body,
administrative agency or regulatory authority.
1.33 "Person" means any individual, sole proprietorship, joint venture,
corporation, limited liability company, partnership, association,
cooperative, trust, estate, Governmental Body or other entity of any
nature.
1.34 "Proceeding" means any demand, claim, suit, action, litigation,
investigation, arbitration, administrative hearing or other proceeding of
any nature.
1.35 "Prospectus/Proxy Statement" means the proxy statement to be sent
to the Company's shareholders in connection with the Company's
Shareholders' Meeting (as hereinafter defined).
1.36 "Real Property" means any real estate, land, building, condominium,
town house, structure or other real property of any nature, all shares of
stock or other ownership interests in cooperative or condominium
associations or other forms of ownership interest through which interests
in real estate may be held, all leasehold estates with respect to any of
the foregoing, and all appurtenant and ancillary rights thereto, including
easements, covenants, water rights, sewer rights and utility rights.
1.37 "Representatives" means a Person's officers, directors, agents,
attorneys, accountants and advisers.
1.38 "SEC" means the United States Securities and Exchange Commission.
1.39 "Securities Act" means the Securities Act of 1933, as amended.
1.40 "Software" means any computer program, operating system,
applications system, firmware or software of any nature, whether
operational, under development or inactive, including all object code,
source code, technical manuals, user manuals and other documentation
therefor, whether in machine-readable form, programming language or any
other language or symbols, and whether stored, encoded, recorded or written
on disk, tape, film, memory device, paper or other media of any nature.
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1.41 "Superior Offer" means an unsolicited, bona fide written offer made
by a third party to purchase more than 50% of the outstanding shares of
Company Common Stock on terms that the board of directors of the Company
determines, in its reasonable judgment, based upon the written advice of
its financial advisor, to be more favorable from a financial point of view
to Company's shareholders than the terms of the Merger; provided, however,
that any such offer shall not be deemed to be a "Superior Offer" if any
financing required to consummate the transaction contemplated by such offer
is not committed and is not likely to be obtained by such third party on a
timely basis.
1.42 "Tangible Property" means any furniture, fixtures, leasehold
improvements, vehicles, office equipment, computer equipment, other
equipment, machinery, tools, forms, supplies or other tangible personal
property of any nature.
1.43 "Tax" means (a) any foreign, federal, state or local income,
earnings, profits, gross receipts, franchise, capital stock, net worth,
sales, use, value added, occupancy, general property, real property,
personal property, intangible property, transfer, fuel, excise, payroll,
withholding, unemployment compensation, social security, retirement or
other tax of any nature; (b) any foreign, federal, state or local
organization fee, qualification fee, annual report fee, filing fee,
occupation fee, assessment, sewer rent or other fee or charge of any
nature; or (c) any deficiency, interest or penalty imposed with respect to
any of the foregoing.
Section 2: The Merger
Subject to the terms and conditions of this Agreement and the Plan, Newco
shall be merged with and into the Company (the "Surviving Corporation") in
accordance with the provisions of this Agreement, the provisions of the Plan
and the FBCA. The closing of the Merger and the other Transactions shall take
place at a mutually agreeable time and place on a date to be designated by
Acquiror (the "Closing Date"), which shall be no later than the second business
day after the satisfaction or waiver of the conditions set forth in Sections 8
and 9. Contemporaneously with or as promptly as practicable after the Closing,
the parties hereto shall cause the Plan and properly executed Articles of
Merger conforming to the requirements of the FBCA (the "Articles of Merger") to
be filed with the proper officers of the state of Florida, and the parties
shall take such further actions as may be required by the state of Florida, and
any other applicable Law, in connection with the consummation of the Merger.
The Merger shall take effect at the time such filing is made with the state of
Florida or at such later time as may be specified in the Articles of Merger
(the "Effective Date").
Section 3: Representations of Company
Knowing that Acquiror and Newco rely thereon, the Company represents and
warrants to Acquiror and Newco and covenants with Acquiror and Newco, as set
forth below in this Section 3.
3.1 Organization. Each of the Acquired Companies is a corporation or limited
liability company, as applicable, duly organized, validly existing and in good
standing under the Laws of the jurisdiction of its formation. Each of the
Acquired Companies possesses the full power and authority to own its Assets and
to conduct its business as and where presently conducted, except where the lack
of such power and authority would not, individually or in the aggregate, have a
Material Adverse Effect on any of the Acquired Companies. Each of the Acquired
Companies is duly qualified or registered to do business in each jurisdiction
where such qualification or registration is required by applicable Law, except
for such failures to be so qualified or registered that would not, individually
or in the aggregate, have a Material Adverse Effect on any of the Acquired
Companies. Except as set forth on Schedule 3.1, the Company has no subsidiaries
and does not own any securities of any corporation or any other interest in any
Person. None of the Acquired Companies has any predecessors other than as set
forth on Schedule 3.1. Schedule 3.1 states, for each of the Acquired Companies
(a) its exact legal name; (b) its corporate business form and jurisdiction and
date of formation; (c) its federal employer identification number; (d) its
headquarters address, telephone number and facsimile number; (e) its directors
and officers; (f) all fictitious, assumed or other names of any type that are
registered or used by it or
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under which it has done business at any time since such company's date of
incorporation; and (g) any name changes, recapitalizations, mergers,
reorganizations or similar events since its date of formation. None of the
Acquired Companies has agreed or is obligated to make, or is bound by any
Contract under which it may become obligated to make, any future equity or
similar investment in or capital contribution to any other Person. None of the
Acquired Companies has, at any time, been a general partner of any general
partnership, limited partnership or other Person. Except for Financial Data
Planning Corp., Actuarial Research and Development Corp. ("Actuarial Corp."),
and FDP Leasing [Corp.] ("Leasing Corp.") (collectively, the "Identified FDP
Companies"), accurate and complete copies of articles or certificates of
incorporation, bylaws and other organization and related documents, each as
amended to date, and all Contracts relating to the acquisition of each of the
Acquired Companies (or their affiliates or predecessors) have been delivered to
Acquiror and Newco (all of such documents collectively, the "Organic
Documents"). The Organic Documents of the Identified FDP Companies do not
contain any provisions that are unusual, onerous or burdensome. Actuarial Corp.
and Leasing Corp. do not currently own any Assets, or have any Obligations
other than intercompany accounts and do not engage in, and since January 1,
1991 have not engaged in, any material business activity.
3.2 Effect of Agreement.
(a) The Company has the absolute and unrestricted right, power and authority
to enter into and to perform its obligations under this Agreement. The Board of
Directors of the Company (at a meeting duly called and held) has (a)
unanimously determined that the Merger and the other Transactions are advisable
and fair and in the best interests of the Company and its shareholders, (b)
unanimously authorized and approved the execution, delivery and performance of
this Agreement by the Company and unanimously approved the Merger and the other
Transactions, and (c) unanimously recommended the approval of this Agreement,
the Merger and the other Transactions by the holders of Company Common Stock
and directed that this Agreement, the Merger and the other Transactions be
submitted for consideration by the Company's shareholders at the Company
Shareholders' Meeting (as defined in Section 7.2). This Agreement, assuming the
due authorization, execution and delivery by Acquiror and Newco, constitutes
the legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms.
(b) The execution, delivery and performance of this Agreement by the Company
and the consummation of the Transactions by the Company, (i) do not constitute
a violation of or default under the articles of incorporation, bylaws and/or
other organizational documents of any of the Acquired Companies, (ii) do not
constitute a default or breach (immediately or after the giving of notice,
passage of time or both) under any Contract involving an individual amount in
excess of $50,000 or under Contracts involving an aggregate amount in excess of
$250,000 to which any of the Acquired Companies is a party or by which any of
the Acquired Companies is bound, (iii) do not constitute a material violation
of any law or violation of any Judgment that is applicable or any of the
Acquired Companies, or to the business or Assets of any of the Acquired
Companies, or to the Transactions, (iv) do not accelerate or otherwise modify
any Obligation of any of the Acquired Companies, (v) do not result in the
creation of any Encumbrance upon, or give to any third party any interest in,
any of the business or Assets, or any of the capital stock of or interests in,
any of the Acquired Companies, and (vi) except as may be required under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR"
Act"), the Exchange Act, the FBCA and the NASD Bylaws (as they relate to the S-
4 Registration Statement and the Prospectus/Proxy Statement) or as stated on
Schedule 3.2, do not require the Consent of any Person. Except as stated on
Schedule 3.2, there exists no right of first refusal or other preemptive right
with respect to any of the Acquired Companies or the stock, business or Assets
of any of the Acquired Companies.
3.3 Capital Stock and Ownership.
(a) The authorized capital stock of Company consists of: (i) 30,000,000
shares of Company Common Stock, of which 5,986,462 shares are issued and
outstanding and of which no shares are held by Company in its treasury as of
January 15, 1999; and (ii) 10,000,000 shares of Company Preferred Stock of
which no shares
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are issued or outstanding. The authorized capital stock and number of shares
issued and outstanding for each of the other Acquired Companies is set forth on
Schedule 3.3. The Company is the sole record and beneficial owner of all of the
shares of capital stock of each of the other Acquired Companies as indicated on
Schedule 3.3, and it has good and marketable title to such shares, free and
clear of any Encumbrance. There are no shares of Company Common Stock held by
any of the other Acquired Companies. Except as set forth on Schedule 3.3 and
except in respect of the Company Options (as defined below): (i) none of the
outstanding shares of Company Common Stock is entitled or subject to any
preemptive right, right of participation, right of maintenance or any similar
right; (ii) none of the outstanding shares of Company Common Stock is subject
to any right of first refusal in favor of the Company; and (iii) there is no
Contract to which any of the Acquired Companies is a party or by which any of
the Acquired Companies or any of their business or Assets is bound relating to
the voting or registration of, or restricting any Person from purchasing,
selling, pledging or otherwise disposing of (or granting any option or similar
right with respect to), any shares of Company Common Stock. None of the
Acquired Companies is under any obligation, or is bound by any Contract
pursuant to which it may become obligated, to repurchase, redeem or otherwise
acquire any outstanding shares of Company Common Stock.
(b) As of January 15, 1999: (i) 907,150 shares of Company Common Stock are
subject to issuance pursuant to the exercise of outstanding options; and (ii)
41,068 shares of Company Common Stock are reserved for future grants of options
pursuant to the Company's 1984 Non-Qualified Stock Option Plan and 1994
Employee Stock Option Plan (the "Company's Stock Option Plans"). (Stock options
granted by the Company pursuant to the Company's Stock Option Plans are
referred to in this Agreement as "Company Options.") Schedule 3.3 sets forth
the following information with respect to each Company Option outstanding as of
the date of this Agreement: (i) the particular plan pursuant to which such
Company Option was granted; (ii) the name of the optionee; (iii) the number of
shares of Company Stock subject to such Company Option; (iv) the exercise price
of such Company Option; (v) the date on which such Company Option was granted;
and (vi) the date on which such Company Option expires. The Company has
delivered to Acquiror and Newco accurate and complete copies of all stock
option plans pursuant to which Company (or any of the Acquired Companies) has
ever granted stock options, and the forms of all stock option agreements
evidencing such options.
(c) Except as set forth on Schedule 3.3 and for the Company Options, there
are no: (i) outstanding subscription, option, call, warrant or right (whether
or not currently exercisable) to acquire any shares of the capital stock or
other securities of Company (or any of the Acquired Companies); (ii)
outstanding security, instrument or obligation that is or may become
convertible into or exchangeable for any shares of the capital stock or other
securities of Company (or any of the Acquired Companies); or (iii) shareholder
rights plan (or similar plan commonly referred to as a "poison pill") or
Contract under which Company (or any of the Acquired Companies) is or may
become obligated to sell or otherwise issue any shares of its capital stock or
any other securities. All of the issued and outstanding shares of capital stock
of the Company and each of the other Acquired Companies have been duly
authorized and validly issued, and are fully paid and nonassessable, with no
liability attaching to the ownership thereof. All issuances and grants of all
outstanding Company Options, and all offerings, sales and issuances by the
Company and each of the other Acquired Companies of any shares of capital
stock, including the Company Common Stock, were conducted in compliance with
all applicable Laws and all requirements set forth in all applicable Contracts.
3.4 Financial and Corporate Records. The books and records of each of the
Acquired Companies are and have been properly prepared and maintained in form
and substance adequate for preparing audited financial statements in accordance
with GAAP, and such books and records fairly and accurately reflect all of the
Assets and Obligations of each of the Acquired Companies and all Contracts and
other transactions to which each of the Acquired Companies is or was a party or
by which each of the Acquired Companies or the business or Assets of each of
the Acquired Companies is or was affected. Accurate and complete copies of the
contents of the minute books and stock books of each of the Acquired Companies
have been delivered to Acquiror and Newco. Such minute books and stock books
include (a) minutes of all meetings of the shareholders, board of directors and
any committees of the board of directors at which any material action was
taken, which minutes
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accurately record all material actions taken at such meetings, (b) accurate and
complete written statements of all actions taken by the shareholders, members,
board of directors and any committees of the board of directors or members
without a meeting, and (c) accurate and complete records of the subscription,
issuance, transfer and cancellation of all shares of capital stock or other
interests and all other securities since the date of incorporation or
formation, except with respect to the Company, in which case the stock records
are held and maintained by the Company's transfer agent. None of the
shareholders, members, board of directors or any committee of the board or
members has taken any material action other than those actions reflected in the
records referenced in clauses (a) and (b) of the preceding sentence. Schedule
3.4 is an accurate and complete list of all bank accounts, other accounts,
certificates of deposit, marketable securities, other investments, safe deposit
boxes, lock boxes and safes of each of the Acquired Companies, and the names of
all officers, employees or other individuals who have access thereto or are
authorized to make withdrawals therefrom or dispositions thereof.
3.5 Compliance with Law. The operations of each of the Acquired Companies,
the conduct of the business of each of the Acquired Companies, as and where
such business has been or presently is conducted, and the ownership, possession
and use of the Assets of each of the Acquired Companies have complied and
currently do comply with all applicable Laws, except where the failure to
comply would not, individually and in the aggregate, result in a Material
Adverse Effect on any of the Acquired Companies. Each of the Acquired Companies
has obtained and holds all Permits required for the lawful operation of its
business as and where such business is presently conducted, except for such
Permits, the absence of which would not, individually and in the aggregate,
result in a Material Adverse Effect on any of the Acquired Companies. All
Permits held by the Acquired Companies are listed on Schedule 3.5, and copies
of such Permits have been delivered to Acquiror and Newco.
3.6 SEC Filings.
(a) The Company has delivered to Acquiror and Newco accurate and complete
copies of all registration statements, definitive proxy statements and other
statements, reports, schedules, forms and other documents (and all amendments
or supplements thereto) filed by Company with the SEC since January 1, 1995
through the date hereof (the "Company SEC Documents"). All statements, reports,
schedules, forms and other documents required to have been filed by Company
with the SEC have been so filed and in a timely manner. As of the time it was
filed with the SEC (or, if amended, supplemented or superseded by a filing
prior to the date of this Agreement, then on the date of such filing): (i) each
of the Company SEC Documents complied in all material respects with the
applicable requirements of the Securities Act or the Exchange Act (as the case
may be); and (ii) none of the Company SEC Documents contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(b) The consolidated financial statements (including any related notes)
contained in the Company SEC Documents: (i) complied as to form in all material
respects with the published rules and regulations of the SEC applicable
thereto; (ii) were prepared in accordance with GAAP (except as may be indicated
in the notes to such financial statements or, in the case of unaudited
statements, as permitted by Form 10-Q of the SEC, and except that the unaudited
financial statements may not contain footnotes and are subject to normal and
recurring year-end adjustments which will not, individually or in the
aggregate, be material in amount), and (iii) fairly present the consolidated
financial position of Company as of the respective dates thereof and the
consolidated results of operations and cash flows of Company for the periods
covered thereby. The unaudited consolidated balance sheet of the Company and
its subsidiaries as of August 31, 1998 included in the Company's Quarterly
Report for the quarter ended August 31, 1998 is sometimes referred to as the
"August 1998 Balance Sheet".
3.7 Assets. Schedule 3.7 includes detailed lists of all Assets of each of
the Acquired Companies as reflected on the August 1998 Balance Sheet, including
(a) Cash Assets, itemized by bank or other account, showing cost and market
value if different from cost; (b) Accounts Receivable, showing customer names,
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individual invoice dates, individual invoice amounts and allowances for
doubtful accounts, or, in the case of earned but not billed receivables,
customer names and individual dates on which the receivables are billable; (c)
other current Assets, itemized by category and with appropriate explanation;
(d) Tangible Property, grouped as to type, showing cost, accumulated
depreciation and net book value; (e) Software and Intangibles, showing cost or
amount capitalized, accumulated amortization and net book value; and (f) Real
Property. Each of the Acquired Companies has good and marketable title to all
of its respective Assets and has the right to transfer all rights, title and
interest in such Assets, free and clear of any material Encumbrance other than
(i) Encumbrances set forth in the August 1998 Balance Sheet, (ii) Encumbrances
securing taxes, all of which are due but not delinquent or are being contested
in good faith, or (iii) Encumbrances set forth on Schedule 3.7. Each of the
Acquired Companies has all Assets necessary to operate, or which are material
to the operation of, its respective business.
3.8 Obligations. Schedule 3.8 includes detailed lists of all Obligations of
each of the Acquired Companies reflected on the August 1998 Balance Sheet,
itemized by balance sheet account, and with aggregate net balances equal to the
balances on the August 1998 Balance Sheet, including (a) accounts payable, (b)
accrued expenses and reserves, itemized by category and with appropriate
explanation, (c) deferred revenues, itemized by customer and time periods, and
(d) other current and long-term liabilities. None of the Acquired Companies has
any material Obligations other than (i) Obligations reflected on the August
1998 Balance Sheet, (ii) Obligations set forth in Schedule 3.8, (iii)
Obligations under Contracts of the type listed or not required to be listed on
Schedule 3.15, provided that as of November 30, 1998, no such Obligation
consisted of or resulted from a default under or violation of any such
Contract, and (iv) Obligations incurred since August 31,1998 and not in breach
of any of the representations and warranties made in Section 3.9. Except as
described on Schedule 3.8, none of the Obligations of any of the Acquired
Companies are guaranteed by any Person.
3.9 Operations Since August 31, 1998. Except as set forth on Schedule 3.9,
from August 31, 1998 to the date of this Agreement:
(a) Except in the ordinary course of their respective businesses
consistent with its past practices, none of the Acquired Companies has (i)
created or assumed any Encumbrance upon any of its business or Assets, (ii)
incurred any Obligation, (iii) made any loan or advance to any Person, (iv)
assumed, guaranteed or otherwise become liable for any Obligation of any
Person, (v) committed for any capital expenditure; (vi) purchased, leased,
sold, abandoned or otherwise acquired or disposed of any business or
Assets, (vii) waived any right or canceled any debt or claim, (viii)
assumed or entered into any Contract other than this Agreement and the Plan
(and any other Contract contemplated herein), (ix) increased, or authorized
an increase in, the compensation or benefits paid or provided to any of
their directors, officers, employees, salesmen, agents or representatives,
or (x) done anything else outside the ordinary course of business, whether
or not specifically described in any of the foregoing clauses.
(b) Even in the ordinary course of their respective businesses
consistent with their respective past practices, none of the Acquired
Companies has: (i) incurred any Obligation, made any loan to any Person,
acquired or disposed of any business or Assets, entered into any Contract
(other than customer contracts) or other transaction, or done any of the
other things described in Section 3.9(a), involving an amount exceeding
$100,000 in any single case or $500,000 in the aggregate, or (ii) sold,
issued or granted, or authorized the issuance of, (A) any capital stock or
other security (except for Company Common Stock issued upon the exercise of
outstanding Company Options), (B) any option, warrant or right to acquire
any capital stock or any other security (except for Company Options
described in Schedule 3.3), or (C) any instrument convertible into or
exchangeable for any capital stock or other security;
(c) There has been no event or change or casualty loss that would have
a Material Adverse Effect on any of the Acquired Companies.
(d) None of the Acquired Companies or any of their Representatives has
received any Acquisition Proposal.
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(e) None of the other Acquired Companies has, (i) permitted or caused a
material breach or default by any of the Acquired Companies under any of
their respective Contracts, Insurance Policies, licenses or Permits, (ii)
adopted or entered into any new Employee Benefit Plan, modified or waived
any right under any existing Employee Benefit Plan or any Contract or award
under any existing Employee Benefit Plan, (iii) participated in any merger,
consolidation, reorganization, share exchange, business combination,
recapitalization, reclassification of shares, stock split, reverse stock
split or similar transaction, (iv) began to engage in any new type of
business, (v) acquired the business or any bulk assets of any other Person,
(vi) completely or partially liquidated or dissolved, (vii) terminated any
part of their respective businesses, (viii) changed any of their methods of
accounting or accounting practices in any respect, (ix) made any Tax
election, or (x) commenced any Proceeding or settled any Proceeding.
(f) None of the Acquired Companies has, (i) redeemed, retired or
purchased, or created, sold, granted or issued any capital stock or other
security, any options, warrants or other Contracts or Contract Rights with
respect to, any shares of capital stock or other securities, or created,
sold, granted or issued any stock options, stock appreciation rights,
phantom shares or other similar rights (except for the issuance of Company
Common Stock upon the valid exercise of Company Options); (ii) declared,
accrued, set aside or paid any dividend or made any distribution with
respect to any shares of capital stock other than the payment of cash
dividends on the Company's Common Stock once per fiscal quarter, in an
amount equal to $.0125 per share; (iii) formed any subsidiary or acquired
any equity or other interest in any Person; (iv) amended their certificates
of incorporation or bylaws; (v) bought, sold or engaged in any other
transaction involving Acquiror Stock, other securities of Acquiror or any
equity interests in Acquiror, other than the Merger and the other
Transactions; or (vi) entered into any Contract that commits or committed
any of them to take any action or omit to take any action that is or will
be inconsistent with any of the provisions of this Agreement or the Plan.
3.10 Accounts Receivable. All Accounts Receivable of each of the Acquired
Companies arose in the ordinary course of business and are proper and valid
accounts receivable. There are no refunds, discounts, rights of setoff or
assignment affecting any such Accounts Receivable. Proper amounts of deferred
revenues appear on the books and records of each of the Acquired Companies, in
accordance with GAAP, with respect to all of the Acquired Companies' (a) billed
but unearned Accounts Receivable; (b) previously billed and collected Accounts
Receivable still unearned; and (c) unearned customer deposits.
3.11 Tangible Property. Each of the Acquired Companies has good and
marketable title to all of its Tangible Property, free and clear of any
Encumbrances except as set forth in Section 3.7 or Schedule 3.7. Except as set
forth on Schedule 3.11, all of the Tangible Property of each of the Acquired
Companies is located at the offices or facilities of the Acquired Companies,
and each of the Acquired Companies has the full and unqualified right to
require the immediate return of any of its Tangible Property which is not
located at its offices or facilities. All Tangible Property of each of the
Acquired Companies, wherever located, is in good condition, ordinary wear and
tear excepted, and is sufficient for the operations and business of each of the
Acquired Companies as presently conducted.
3.12 Real Property. None of the Acquired Companies owns any Real Property
and none of the Acquired Companies (or any of their predecessors or former
subsidiaries) have ever owned any Real Property. Schedule 3.12 is a detailed
list of all Real Property leased by any of the Acquired Companies ("Company
Real Property") and the leases relating thereto, showing, as applicable, the
demised premises. Each of the Acquired Companies has good and marketable
leasehold title to all Real Property leased by it, free and clear of any
Encumbrance except current property taxes accrued but not yet due. All of the
Company Real Property is structurally sound and in good condition, ordinary
wear and tear excepted, and is sufficient for the current operations of the
Acquired Companies. Accurate and complete copies of all leases, and
nondisturbance agreements for properties leased by the Acquired Companies have
been delivered to Acquiror and Newco. Neither the Company, nor the possession,
occupancy, maintenance or use by the Acquired Companies of the Company Real
Property, is in violation of, or breach or default under, any Contract or Law,
in any material respect, and no notice or threat from any lessor, Governmental
Body or other Person has been received by any
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of the Acquired Companies or served upon any such Company Real Property
claiming any violation of, or breach, default or liability under, any Contract
or Law, or requiring or calling attention to the need for any work, repairs,
construction, alteration, installations or environmental remediation.
3.13 Environmental. Except as set forth in Schedule 3.13:
(a) (i) The Acquired Companies have not caused or permitted any
Hazardous Substances to be manufactured, refined, treated, discharged,
disposed of, deposited or otherwise released in, on, under or from any of
the Company Real Property or any Real Property previously owned, leased,
occupied, operated, managed, possessed or otherwise held by any of the
Acquired Companies ("Former Company Real Property"); and
(ii) To the Company's Knowledge, before their ownership or lease of any
of the Company Real Property or Former Company Real Property, no Hazardous
Substances have been manufactured, refined, treated, discharged, disposed
of, deposited or otherwise released therein, thereon or therefrom.
(b) (i) The Acquired Companies have not caused or permitted any
Hazardous Substances to have been stored, used, generated, transported,
handled or otherwise present on any of the Company Real Property or Former
Company Real Property, and no Hazardous Substances currently are stored,
used, generated, transported, handled or otherwise present thereon, except
for (A) any concentrations or quantities that occur naturally thereon or
that are present in construction materials, office equipment or other
office furnishings used in the existing improvements thereon, and (B)
normal quantities of those Hazardous Substances customarily used in the
conduct of general administrative and executive office activities and use
and maintenance of computer systems (e.g. copier fluids and cleaning
supplies), in accordance with applicable Law. Notwithstanding the foregoing
exceptions, no asbestos-containing materials, PCBs, urea formaldehyde or
underground storage tanks are present in or on any of the Company Real
Property; and
(ii) To the Company's Knowledge, before their ownership or lease of any
of the Company Real Property or Former Company Real Property, no Hazardous
Substances were stored, used, generated, transported, handled or otherwise
present thereon except for any concentrations or quantities that occur
naturally thereon and no underground storage tanks were present thereon in
material violation of Environmental Laws.
(c) All of the Former Company Real Property and the operations of the
Acquired Companies thereon were operated by the Acquired Companies in
compliance in all material respects with applicable Environmental Laws, and
all of the Company Real Property and the operations of the Acquired
Companies thereon have been and currently are being operated in compliance
in all material respects with applicable Environmental Laws. To the
Company's knowledge, there is not any radon, asbestos or PCB's or any
condition with respect to surface soil, subsurface soil, ambient air,
surface waters, groundwaters, leachate, run-on or run-off, stream or other
sediments, wetlands or similar environmental media on, in, under, above or
off any of the Company Real Property or Former Company Real Property, which
radon, asbestos, PCB's or condition does or may (a) require investigation
and/or remedial or corrective action on or off such Company Real Property
or Former Company Real Property by the Acquired Companies or other owner
thereof, (b) require compliance by the Acquired Companies with permit
requirements, standards or Environmental Laws, and/or (c) result in any
claim for personal injury, property damage or natural resources damage or
any other Proceeding against Acquiror, Newco or any of their affiliates by
any Governmental Body or other Person (any such radon, asbestos, PCB's or
condition is referred to as an "Company Environmental Condition"). None of
the Acquired Companies has taken any action or omitted to take any action
that has caused or will cause an Company Environmental Condition to exist.
(d) None of the Acquired Companies has received any written notice that
any part of the Company Real Property or the Former Company Real Property
or the operations of the Acquired Companies is the subject of any
Proceeding or Judgment, and, to the Company's knowledge, no part of the
Company Real Property or the Former Company Real Property or the operations
of the Acquired Companies is the
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subject of any Proceeding or Judgment. None of the Acquired Companies has
received any written notice from any Governmental Body or other Person
regarding any material violation of environmental, health or safety
matters.
(e) No Proceeding has been started, no Judgment has been issued and no
Encumbrance has been created against or affecting any of the Acquired
Companies or any of the Company Real Property or Former Company Real
Property regarding any Company Environmental Condition or arising from any
Environmental Law, nor is any such Proceeding, Judgment or Encumbrance
pending or, to the Company's Knowledge, anticipated.
(f) No information request has been issued to any of the Acquired
Companies pursuant to Section 104 of the Comprehensive Environmental
Response, Compensation and Liability Act, as amended, 42 U.S.C. 9601 et
seq. or any other Environmental Laws with regard to the Company Real
Property or Former Company Real Property or any activities conducted
thereon, including off-site waste disposal.
3.14 Software and Other Intangibles. Set forth on Schedule 3.14 is an
accurate and complete list and description of all Software and Intangibles
owned, marketed, licensed, supported, maintained, used or under development by
the Acquired Companies, and, in the case of Software, a product description,
the language in which it is written and the type of hardware platform(s) on
which it runs . No other Software or Intangible is used to operate the business
of each of the Acquired Companies. Except as explained on Schedule 3.14, each
of the Acquired Companies has good and marketable title to, and has the full
right to use, all of the Software and Intangibles listed on Schedule 3.14, free
and clear of any Encumbrance. Except as set forth on Schedule 3.14, no rights
of any third party are necessary to market, license, sell, modify, update,
and/or create derivative works for the Software or Intangibles listed on
Schedule 3.14. Except as set forth on Schedule 3.14, all of such Software and
Intangibles was created as a work for hire (as defined under U.S. copyright
law) by regular full time employees of the Acquired Companies. To the extent
that any author or developer of any Software or Intangibles was not a regular
full-time salaried employee of the Acquired Companies at the time such person
contributed to such Software or Intangibles, such author or developer has
irrevocably assigned to the Acquired Companies in writing all copyrights and
other proprietary rights in such person's work on the Software or Intangibles.
With respect to the Software listed on Schedule 3.14, (a) the Acquired
Companies maintain machine-readable master-reproducible copies, source code
listings, technical documentation and user manuals for the most current
releases or versions thereof and for all earlier releases or versions thereof
currently being supported by them; (b) in each case, the machine-readable copy
substantially conforms to the corresponding source code listing; (c) it is
written in the language set forth on Schedule 3.14, for use on the hardware set
forth on Schedule 3.14 with standard operating systems; (d) it can be
maintained and modified by reasonably competent programmers familiar with such
language, hardware and operating systems; (e) in each case, it operates in
accordance with the user manual therefor without material operating defects;
(f) in each case, each component of such Software that creates, accepts,
displays, stores, retrieves, accesses, recognizes, distinguishes, compares,
sorts, manipulates, processes, calculates, converts or otherwise uses dates or
date-related data, will do so accurately, without any operating defects, loss
of functionality or degradation in performance or volume capacity, using dates
in the twentieth and twenty-first centuries, and will not be adversely affected
by the advent of the year 2000, the advent of the twenty-first century, or the
transition from the twentieth century through the year 2000 and into the
twenty-first century; and (g) in each case, each component of such Software
that creates, accepts, displays, stores, retrieves, accesses, recognizes,
distinguishes, compares, sorts, manipulates, processes, calculates, converts or
otherwise uses any data denominated in the currency known as the "Euro" which
was introduced pursuant to the Maastricht Treaty on January 1, 1999, does so
accurately, consistent with its processing of data denominated in national
currencies and in compliance with the Maastricht Treaty, without any operating
defect, loss of functionality or degradation in performance or volume capacity.
None of the Software or Intangibles listed on Schedule 3.14, or their
respective past or current uses, including the preparation, distribution,
marketing or licensing, has violated or infringed upon, or is violating or
infringing upon, any Software, technology, patent, copyright, trade secret or
other Intangible of any Person. The Acquired Companies have adequately
maintained all trade secrets and copyrights with respect to the Software. To
the Company's knowledge, no Person is violating or infringing upon, or has
violated or infringed upon at any time, any of the Software or Intangibles
listed on Schedule 3.14. None of the Software or Intangibles listed on
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Schedule 3.14 is owned by or registered in the name of any current or former
owner, shareholder, director, executive, officer, employee, salesman, agent,
customer, representative or contractor of any of the Acquired Companies, nor
does any such Person have any interest therein or right thereto, including the
right to royalty payments.
3.15 Contracts. Schedule 3.15 is an accurate and complete list of all of the
following types of Contracts to which any of the Acquired Companies is a party
or by which any of the Acquired Companies is bound (collectively, the
"Specified Contracts"), grouped into the following categories and, where
applicable, subdivided by product line or division: (a) Software license,
remote processing, time sharing, and Software maintenance Contracts, service
Contracts and other customer Contracts pursuant to which Company provides
Software, products or services other than Contracts relating to the following
products and/or services of the Acquired Companies: FDP/PEN products and the
direct sales to agents of FINPAK and Contact Partner (the "Designated
Products"); (b) Contracts for the purchase or lease, sublease or occupancy of
Real Property or otherwise concerning Real Property owned or used by any of the
Acquired Companies; (c) loan agreements, mortgages, notes, guarantees and other
financing Contracts; (d) Contracts for the purchase, lease and/or maintenance
of computer equipment and other equipment, Contracts for the purchase, license,
lease and/or maintenance of Software under which any of the Acquired Companies
is the purchaser, licensee, lessee or user, and other supplier Contracts
involving an amount in excess of $50,000; (e) employment, consulting and sales
representative Contracts (excluding Contracts which constitute Employee Benefit
Plans listed on Schedule 3.17, and excluding oral Contracts with employees for
"at will" employment); (f) Contracts under which any rights in and/or ownership
of any material Software product, technology or other Intangible of any of the
Acquired Companies, or any prior version thereof, or any part of the customer
base, business or Assets of any of the Acquired Companies, or any shares or
other ownership interests in any of the Acquired Companies (or any of their
predecessors) was acquired; and (g) other material Contracts (excluding
Contracts which constitute Insurance Policies listed on Schedule 3.21 and
excluding this Agreement and all other Contracts entered into between any of
the Acquired Companies and Acquiror, or among any of the Acquired Companies,
Acquiror and other parties in connection herewith). A description of each oral
Specified Contract is included on Schedule 3.15, and copies of each written
Specified Contract have been delivered to Acquiror and Newco. Except as set
forth on Schedule 3.15, each of the customers of the Acquired Companies that
has purchased or uses a Designated Product has signed and is bound by a written
Contract that is identical to one of the form agreements that are attached as
part of Schedule 3.15, and the provisions of each customer Contract set forth
in Schedule 3.15, including provisions regarding proprietary protection and
limitations on liability, are binding on the customer and enforceable by the
Acquired Companies. With respect to each applicable customer Contract involving
an amount in excess of $50,000, Schedule 3.15 will include, as of November 30,
1998, a complete description of all work remaining to be performed under such
Contracts together with an estimate of the number of person hours required to
complete such work, and all credits granted to or other adjustments made for
the customer to be applied against future payments or purchases. The Acquired
Companies may terminate any and all of the ADV and Pension timesharing
Contracts to which they are parties without material liability to the Acquired
Companies taken as a whole. Except as provided on Schedule 3.15, all customers
have accepted the Software, products and/or services described in their
respective customer Contracts. Except as set forth on Schedule 3.15, with
respect to each of the Specified Contracts, none of the Acquired Companies is
in default thereunder nor would be in default thereunder with the passage of
time, the giving of notice, or both. Except as set forth on Schedule 3.15, to
the Company's knowledge, none of the other parties to any Specified Contract is
in default thereunder or would be in default thereunder with the passage of
time, the giving of notice or both. Except as set forth on Schedule 3.15, none
of the Acquired Companies has given or received any notice of default or notice
of termination with respect to any Specified Contract, and each Specified
Contract is in full force and effect in accordance with its terms. The
Specified Contracts are all the Contracts necessary and sufficient to operate
the business of each of the Acquired Companies. Except as set forth on Schedule
3.15, there are no currently outstanding proposals or offers submitted by any
of the Acquired Companies to any customer, prospect, supplier or other Person
which, if accepted, would result in a legally binding Contract of such company
involving an amount or commitment exceeding $100,000 in any single case or an
aggregate amount or commitment exceeding $500,000 in the aggregate.
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3.16 Employees and Independent Contractors. Schedule 3.16 is a list as of
the date hereof of all of the employees of the Acquired Companies and (a) their
titles or responsibilities; (b) their social security numbers and principal
residence address; (c) their dates of hire; (d) their current salaries or wages
and all bonuses, commissions and incentives paid at any time during the past
twelve months; (e) their last compensation changes and the dates on which such
changes were made; (f) any specific bonus, commission or incentive plans or
agreements for or with them; and (g) any outstanding loans or advances made to
them. Schedule 3.16 is a list of all sales representatives and independent
contractors engaged by the Acquired Companies and (a) their tax identification
numbers and state or country of residence; (b) their payment arrangements (if
not set forth in a Contract listed or described on Schedule 3.15); and (c)
brief description of their jobs or projects currently in progress. Each of the
Acquired Companies is in full compliance with all Laws respecting employment
practices in all material respects. Except as limited by any employment
Contracts listed on Schedule 3.15 or Contracts specified on Schedule 3.16, and
except for any limitations of general application which may be imposed under
applicable employment Laws, each of the Acquired Companies has the right to
terminate the employment of each of its employees at will and to terminate the
engagement of any of its independent contractors without payment to such
employee or independent contractor other than for services rendered through
termination and without incurring any penalty or liability other than liability
for severance pay in accordance with such company's disclosed severance pay
policy. None of the Acquired Companies has ever been a party to or bound by any
union or collective bargaining Contract, nor is any such Contract currently in
effect or being negotiated by or on behalf of any of the Acquired Companies.
Since the respective incorporation or formation dates of each of the Acquired
Companies, none of the Acquired Companies has experienced any labor problem
that was or is material to it. Each of the Acquired Companies' relations with
its employees are currently on a good and normal basis. Schedule 3.16 sets
forth each of the Acquired Companies' current and past employees who have
signed an agreement which contains restrictions relating to proprietary and
confidential information of the Acquired Companies and/or other restrictive
covenants and, in each case, references the respective agreement. Except as set
forth on Schedule 3.16, each of the Acquired Companies' current and past
contractors has signed agreements with the Acquired Companies containing
restrictions that adequately protect the proprietary and confidential
information of the Acquired Companies and vest in the Acquired Companies the
full ownership of items developed by such contractor. Except as indicated on
Schedule 3.16, since January 1, 1997, no employee of any of the Acquired
Companies having an annual salary of $75,000 or more has indicated an intention
to terminate or has terminated his or her employment with such company. To
Company's knowledge, the Transactions will not adversely affect relations with
any employees of the Acquired Companies.
3.17 Employee Benefit Plans. Schedule 3.17 sets forth an accurate and
complete list of all of Company's Employee Benefit Plans (collectively referred
to as "Company's Employee Benefit Plans"). Except as set forth on Schedule
3.17, none of the Acquired Companies has (a) established, maintained or
contributed to (or has been obligated to contribute to) any Employee Benefit
Plans, (b) proposed any Employee Benefit Plans which it plans to establish or
maintain or to which it plans to contribute, or (c) proposed any changes to any
Employee Benefit Plans now in effect. Accurate and complete copies and
descriptions of all of Company's Employee Benefit Plans, all employees affected
or covered by Company's Employee Benefit Plans, and all Liabilities and
Obligations thereunder have been delivered to Acquiror and Newco. If permitted
and/or required by applicable Law, the Acquired Companies have properly
submitted all of Company's Employee Benefit Plans in good faith to meet the
applicable requirements of ERISA and/or the Code to the Internal Revenue
Service (the "IRS") for its approval within the time prescribed therefor under
applicable federal regulations. Favorable letters of determination of such tax-
qualified status from the IRS have been delivered to Acquiror and Newco. With
respect to Company's Employee Benefit Plans, the Acquired Companies will have
made, on or before the Closing Date, all payments required to be made by them
on or before the Closing Date and will have accrued (in accordance with GAAP)
as of the Closing Date all payments due but not yet payable as of the Closing
Date, so there will not have been, nor will there be, any Accumulated Funding
Deficiencies (as defined in ERISA or the Code) or waivers of such deficiencies.
The Company has delivered to Acquiror and Newco an accurate and complete copy
of the most current Form 5500 and any other form or filing required to be
submitted to any governmental agency with regard to any of Company's Employee
Benefit Plans and the most current actuarial report with regard to any of
Company's Employee Benefit Plans. All of the Company's
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Employee Benefit Plans are, and have been, operated in material compliance with
their provisions and with all applicable Laws including ERISA and the Code and
the regulations and rulings thereunder. The Acquired Companies and all
fiduciaries of the Company's Employee Benefit Plans have complied in all
material respects with the provisions of Company's Employee Benefit Plans and
with all applicable Laws including ERISA and the Code and the regulations and
rulings thereunder. There have been no Reportable Events (as defined in ERISA),
no events described in Sections 4062, 4063 or 4064 of ERISA, and no termination
or partial termination (including any termination or partial termination
attributable to this sale) of any of Company's Employee Benefit Plans. There
would be no Obligation of any of the Acquired Companies under Title IV of ERISA
if any of Company's Employee Benefit Plans were terminated as of the Closing
Date. None of the Acquired Companies has incurred, nor will incur, any
withdrawal liability, nor do any of the Acquired Companies have any contingent
withdrawal liability, under ERISA to any Multiemployer Plan (as defined in
ERISA or the Code). None of the Acquired Companies has incurred, or will incur,
any Obligation to the Pension Benefit Guaranty Corporation (or any successor
thereto). Except as set forth on Schedule 3.17, neither the execution and
delivery of this Agreement nor the consummation of the Transactions will (x)
result in any payment (including any severance, unemployment compensation or
golden parachute payment) becoming due from any of the Acquired Companies under
any of Company's Employee Benefit Plans or under any Contract to which any of
the Acquired Companies is a party, (y) increase any benefits otherwise payable
under any of Company's Benefit Plans or under any Contract to which any of the
Acquired Companies is a party, or (z) result in the acceleration of the time of
payment or vesting of any such benefits to any extent. There are no pending
Proceedings that have been asserted or instituted against any of Company's
Employee Benefit Plans, the Assets of any of the trusts under such plans, the
plan sponsor, the plan administrator or any fiduciary of any such plan (other
than routine benefit claims), and, to the Company's knowledge, there are no
facts which could form the basis for any such Proceeding. There are no
investigations or audits of any of Company's Employee Benefit Plans, any trusts
under such plans, the plan sponsor, the plan administrator or any fiduciary of
any such plan that have been instituted or, to the Company's knowledge,
threatened, and, to the Company's knowledge, there are no facts which could
form the basis for any such investigation or audit. Except as disclosed in
Schedule 3.17, no event has occurred nor will occur which will result in any of
the Acquired Companies having an Obligation in connection with any Employee
Benefit Plan established, maintained, contributed to or to which there has been
an obligation to contribute (currently or previously) by it or by any other
entity which, together with any of the Acquired Companies, constitute elements
of either (i) a controlled group of corporations (within the meaning of Section
414(b) of the Code), (ii) a group of trades or businesses under common control
(within the meaning of Sections 414(c) of the Code or 4001 of ERISA), (iii) an
affiliated service group (within the meaning of Section 414(m) of the Code), or
(iv) another arrangement covered by Section 414(o) of the Code.
3.18 Customers, Prospects and Suppliers. Each material customer of the
Acquired Companies is listed in the list of customers included as part of
Schedule 3.15. Schedule 3.18 is a complete list of all current material
prospects and suppliers of each of the Acquired Companies. Except as set forth
on Schedule 3.18, since January 1, 1998, none of the customers or suppliers of
any of the Acquired Companies has given notice or otherwise indicated to such
company that it will or intends to terminate or not renew its Contract with
such company before the scheduled expiration date or otherwise terminate its
relationship with such company. Except as set forth on Schedule 3.18, the
relationship of each of the Acquired Companies with their respective customers
is currently on a good and normal basis. For the purposes of this Section 3.18
only, the term "material" as used with respect to the customers and suppliers
of each of the Acquired Companies refers to those customers and suppliers whose
business with the Acquired Companies involves an amount or commitment exceeding
$50,000 per year in any single case and $250,000 per year in the aggregate. To
the Company's knowledge, the Transactions will not adversely affect relations
with any of the customers or suppliers of any of the Acquired Companies. The
Company has delivered to Acquiror and Newco an accurate and complete copy of
the most recent customer surveys of each of the Acquired Companies.
3.19 Taxes. Schedule 3.19 is an accurate and complete list of all federal,
state, local, foreign and other Tax returns and reports (including information
returns) (collectively "Returns") filed by each of the Acquired Companies with
respect to its last three (3) fiscal years. Accurate and complete copies of all
federal, state, local
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and foreign income, sales and use Tax Returns filed by each of the Acquired
Companies with respect to its last three (3) fiscal years are attached to
Schedule 3.19, and accurate and complete copies of all other Tax Returns listed
thereon have been delivered to Acquiror and Newco. Except as explained on
Schedule 3.19, (a) Each of the Acquired Companies has properly and timely filed
all Tax Returns required to be filed by it, all of which were accurately
prepared and completed; (b) each of the Acquired Companies has properly
withheld from payments to its employees, agents, representatives, contractors
and suppliers all amounts required by Law to be withheld for Taxes; (c) each of
the Acquired Companies has paid all Taxes required to be paid by it; (d) no
audit of any of the Acquired Companies by any governmental taxing authority has
ever been conducted, is currently pending or, to the Company's knowledge, is
threatened; (e) no notice of any proposed Tax audit, or of any Tax deficiency
or adjustment, has been received by any of the Acquired Companies, and there is
no reasonable basis for any Tax deficiency or adjustment to be assessed against
any of the Acquired Companies; and (f) there are no agreements or waivers
currently in effect that provide for an extension of time for the assessment of
any Tax against any of the Acquired Companies. The Company has not, in the past
ten (10) years, acquired Assets from another corporation in a transaction in
which Company's Tax basis for the acquired Assets was determined, in whole or
in part, by reference to the Tax basis of the acquired Assets (or any other
property) in the hands of the transferor. None of the Acquired Companies has
made any payments, is obligated to make any payments or is a party to any
agreement that could obligate it to make any payments that would not be
deductible under (S) 280G of the Code. None of the Acquired Companies (A) has
been a member of an affiliated group filing a consolidated federal income Tax
Return (other than a group the common parent of which was Company) or (B) has
any liability for the Taxes of any Person (other than any of the Acquired
Companies) under Reg. (S) 1.1502-6 (or any similar provision of state, local,
or foreign law), as a transferee or successor, by contract, or otherwise.
3.20 Proceedings and Judgments. Except as described on Schedule 3.20 or in
the Company SEC Documents, (a) no Proceeding is currently pending or, to the
Company's knowledge, threatened, nor has any Proceeding occurred at any time
since January 1, 1995, to which any of the Acquired Companies is or was a
party, or by which any of the Acquired Companies or any Assets or business of
any of the Acquired Companies is or was affected; (b) no Judgment is currently
outstanding, nor has any Judgment been outstanding at any time since January 1,
1995, against any of the Acquired Companies, or by which any of the Acquired
Companies or any Assets or business of any of the Acquired Companies is or was
affected; and (c) no material breach of contract, breach of warranty, tort,
negligence, infringement, product liability, discrimination, wrongful discharge
or other claim of any nature has been asserted or, to the Company's knowledge,
threatened by or against any of the Acquired Companies at any time since
January 1, 1995, and there is no basis for any such claim. As to each matter
described on Schedule 3.20 or in the Company SEC Documents, accurate and
complete copies of all pertinent pleadings, judgments, orders, correspondence
and other legal documents have been delivered to Acquiror and Newco.
3.21 Insurance. Schedule 3.21 is an accurate and complete list and
description of all Insurance Policies (excluding Insurance Policies that
constitute the Company's Employee Benefit Plans described on Schedule 3.17)
currently owned or maintained by any of the Acquired Companies. Except as
indicated on Schedule 3.21, all such Insurance Policies currently owned or
maintained by any of the Acquired Companies or owned or maintained by the
Acquired Companies or any of their predecessors at any time since January 1,
1995, are or were on an "occurrence" rather than a "claims made" basis. None of
the Acquired Companies has received notice of cancellation with respect to any
such current Insurance Policy, and there is no basis for the insurer thereunder
to terminate any such current Insurance Policy. Except as indicated on Schedule
3.21, accurate and complete copies of all such current Insurance Policies
described on Schedule 3.21 (including Company's directors' and officers'
liability insurance policy) have been delivered to Acquiror and Newco. Each
such current or former Insurance Policy is or was in full force and effect
during their respective period(s) of coverage. Except as described on Schedule
3.21, there are no claims that are pending under any of the Insurance Policies
described on Schedule 3.21.
3.22 Questionable Payments. To the knowledge of the Company, no current or
former director, executive, officer, representative, agent or employee of any
of the Acquired Companies (when acting in such capacity or
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otherwise on behalf of any of the Acquired Companies or any of their
predecessors), (a) has used or is using any corporate funds for any illegal
contributions, gifts, entertainment or other unlawful expenses relating to
political activity; (b) has used or is using any corporate funds for any direct
or indirect unlawful payments to any foreign or domestic government officials
or employees; (c) has violated or is violating any provision of the Foreign
Corrupt Practices Act of 1977, (d) has established or maintained, or is
maintaining, any unlawful or unrecorded fund of corporate monies or other
properties; (e) has made at any time since January 1, 1993, any false or
fictitious entries on the books and records of any of the Acquired Companies;
(f) has made any bribe, rebate, payoff, influence payment, kickback or other
unlawful payment of any nature using corporate funds or otherwise on behalf of
any of the Acquired Companies; or (g) made any material favor or gift that is
not deductible for federal income tax purposes using corporate funds or
otherwise on behalf of any of the Acquired Companies.
3.23 Related Party and Affiliate Transactions. Except as described on
Schedule 3.23 or in the Company SEC Documents, and except for any employment
Contracts listed on Schedule 3.15, there are no real estate leases, personal
property leases, loans, guarantees, Contracts, transactions, understandings or
other arrangements of any nature between or among any of the Acquired Companies
and Majority Shareholder, or any current or former director, officer or
controlling Person of any of the Acquired Companies (or any of their respective
predecessors) or any other Person affiliated with any of the Acquired Companies
(or any of their respective predecessors). Except as set forth on Schedule 3.23
or in the Company SEC Documents, since the date of the Company's last proxy
statement filed with the SEC, no event has occurred that would be required to
be reported by Company pursuant to Item 404 of Regulation S-K promulgated by
the SEC. Schedule 3.23 identifies each person who is an "affiliate" (as that
term is used in Rule 145 under the Securities Act) of Company as of the date of
this Agreement.
3.24 Brokerage Fees. Except for Broadview Associates, no Person acting on
behalf of any of the Acquired Companies, is or shall be entitled to any
brokerage, or finder's or other similar fee or commission in connection with
the Transactions. The Company has furnished to Acquiror and Newco accurate and
complete copies of all agreements under which any such fees, commissions or
other amounts have been paid or may become payable to, and all indemnification
and other agreements related to the engagement of Broadview Associates.
3.25 Acquisition Discussions. Except as set forth on Schedule 3.25, since
January 1, 1998, none of the Acquired Companies has, directly or indirectly,
solicited, initiated or responded to any inquiries or proposals from, or
participated in any discussions or negotiations with, or provided any non-
public information to, any Person or group (other than Acquiror and its
Representatives) concerning any Acquisition Proposal.
3.26 State Antitakeover Laws Not Applicable, No Other Restrictions. As of
the date hereof and at all times on or prior to the Effective Date, the
restrictions applicable to business combinations contained in Sections 901 and
902, respectively, of the FBCA are, and will be, inapplicable to the execution,
delivery and performance of this Agreement and to the Transactions. No other
state takeover statute or similar statute or regulation of the State of Florida
(or, to the Company's knowledge, of any other state or jurisdiction) applies or
purports to apply to this Agreement or the Transactions. No provision of the
Articles of Incorporation, Bylaws or other governing instruments of the Company
or any of the other Acquired Companies or the terms of any rights plan or
agreement of the Company would, directly or indirectly, restrict or impair the
ability of Acquiror to vote, or otherwise to exercise the rights of a
shareholder with respect to, securities of the Company and the other Acquired
Companies that may be acquired or controlled by Acquiror by virtue of this
Agreement or the Transactions.
3.27 Accounting Matters. To the Company's knowledge, neither the Company nor
any affiliate (as that term is used in Rule 145 under the Securities Act) of
any of the Acquired Companies has taken or agreed to take, or plans to take,
any action that could prevent Acquiror from accounting for the merger as a
"pooling of interests." KPMG Peat Marwick has confirmed in a letter dated the
date of this Agreement and addressed to the Company, an executed copy of which
has been delivered to Acquiror, that KPMG Peat Marwick concurs with the
Company's management's conclusion that, as of the date of such letter, no
condition exists that would preclude Acquiror from accounting for the Merger as
a "pooling of interests."
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3.28 Vote Required. The affirmative vote of the holders of a majority of the
shares of Company Common Stock outstanding on the record date for the Company
Shareholders' Meeting (the "Required Company Shareholder Vote") is the only
vote of the holders of any class or series of the Company capital stock
necessary to approve the Transactions.
3.29 Fairness Opinion. The Company's board of directors has received the
written opinion of Broadview Associates, financial advisor to the Company,
dated the date of this Agreement, to the effect that the consideration to be
received by the shareholders of the Company in the Merger is fair to the
shareholders of the Company from a financial point of view. The Company has
furnished an accurate and complete copy of said written opinion to Acquiror.
3.30 Absence of Dissenters' Rights. Section 1302 of the FBCA does not apply
to the Transactions, and no Shareholder of the Company is entitled to
dissenters' or appraisal rights in connection with the Merger.
3.31 Hart-Scott-Rodino. Michael and Cindy Goldberg are the "ultimate parent"
of the Company as such term is defined in the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended ("HSR"). Except for Michael and Cindy
Goldberg, no other Person is an "ultimate parent" of the Company. Except as set
forth on Schedule 3.31, upon consummation of the transactions provided for
herein, no shareholder of the Company will hold an aggregate total amount of
the Acquiror's voting securities in excess of $15,000,000. Except as set forth
on Schedule 3.31, no Person is required to file a Premerger Notification and
Report Form pursuant to HSR in connection with the Transactions.
3.32 Full Disclosure.
(a) No representation or warranty made by the Company in this Agreement or
pursuant hereto (a) contains any untrue statement of material fact; or (b)
omits to state any material fact that is necessary to make the statements made,
in light of the circumstances under which they are made, not false or
misleading in any respect. The copies of documents attached as Schedules to
this Agreement or otherwise delivered to Acquiror and Newco in connection with
the Transactions, are accurate and complete, and are not missing any
amendments, modifications, correspondence or other related papers which would
be pertinent to Acquiror's or Newco's understanding thereof in any respect. To
the Company's knowledge, there is no fact that has not been disclosed to
Acquiror and Newco in the Schedules to this Agreement, in the Company SEC
Documents or otherwise in writing, that has had or is having or, so far as the
Company can reasonably foresee, will have a Material Adverse Effect on any of
the Acquired Companies or the ability of the Company to perform their
obligations under this Agreement.
(b) None of the information supplied or to be supplied by or on behalf of
Company for inclusion or incorporation by reference in the Form S-4
Registration Statement will, at the time the Form S-4 Registration Statement
becomes effective under the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they are made, not misleading. None of the
information supplied or to be supplied by or on behalf of Company for inclusion
or incorporation by reference in the Prospectus/Proxy Statement will, at the
time the Prospectus/Proxy Statement is mailed to the shareholders of Company or
at the time of the Company Shareholders' Meeting, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in the light of
the circumstances under which they are made, not misleading. The
Prospectus/Proxy Statement will comply as to form in all material respects with
the provisions of the Exchange Act and the rules and regulations promulgated by
the SEC thereunder.
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Section 4: Representations of Acquiror and Newco
Knowing that Company relies thereon, Acquiror and Newco, jointly and
severally, represent and warrant to Company, and covenant with Company, as
follows:
4.1 Organization. Acquiror and Newco each is a corporation that is duly
organized, validly existing and in good standing under the Laws of the State of
Delaware and Florida, respectively. Acquiror and Newco each possess the full
corporate power and authority to own its Assets, conduct its business as and
where such business is presently conducted, and enter into this Agreement. All
of the issued and outstanding shares of capital stock of Newco are owned by one
or more wholly owned subsidiaries of Acquiror.
4.2 Agreement. Each of Acquiror's and Newco's execution, delivery and
performance of this Agreement, and its consummation of the Transactions, (a)
have been duly authorized by all necessary corporate actions by their
respective boards of directors; (b) do not constitute a violation of or default
under their respective charters or bylaws; (c) do not constitute a default or
breach (immediately or after the giving of notice, passage of time or both)
under any Contract to which Acquiror or Newco is a party or by which Acquiror
or Newco is bound; (d) do not constitute a violation of any Law or Judgment
that is applicable to it or to their respective businesses or Assets, or to the
Transactions; and (e) except as may be required under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR" Act"), the Exchange
Act, the FBCA and the NASD Bylaws (as they relate to the S-4 Registration
Statement and the Prospectus/Proxy Statement) or as stated on Schedule 4.2, do
not require the Consent of any Person. This Agreement constitutes the valid and
legally binding agreement of each of Acquiror and Newco, enforceable against
each of them in accordance with its terms.
4.3 Acquiror's Stock. The authorized capital stock of Acquiror is
320,000,000 shares of Acquiror Stock, of which approximately 105,369,000 shares
were issued and outstanding as of September 30, 1998, and 5,000,000 shares of
preferred stock, $0.01 par value per share, none of which is issued or
outstanding. All of the outstanding shares of Acquiror Stock and capital stock
of Newco have been duly authorized and validly issued, and are fully paid and
nonassessable. The shares of Acquiror Stock to be issued in the Merger will,
when issued in accordance with this Agreement and the Plan, be validly issued,
fully paid and nonassessable.
(a) As of September 30, 1998: (i) 7,478,777 shares of Acquiror Stock are
subject to issuance pursuant to outstanding options to purchase shares of
Acquiror Stock; and (ii) 1,478,531 shares of Acquiror Stock are reserved for
future issuance pursuant to Acquiror's Employee Stock Purchase Plan. (Stock
options granted by Acquiror pursuant to Acquiror's stock option plans are
referred to in this Agreement as "Acquiror Options.")
(b) Except for the Acquiror Options and Acquiror's Employee Stock Purchase
Plan (and rights related thereto), as of the date of this Agreement, there is
no: (i) outstanding subscription, option, call, warrant or right (whether or
not currently exercisable) to acquire any shares of capital stock or other
securities of Acquiror; (ii) outstanding security, instrument or obligation
that is or may become convertible into or exchangeable for any shares of
capital stock or other securities of Acquiror; (iii) shareholder rights plan
(or similar plan commonly referred to as a "Poison Pill") or Contract under
which Acquiror is or may become obligated to sell or otherwise issue any shares
of its capital stock or any other securities.
(c) All outstanding shares of Acquiror Stock and all outstanding Acquiror
Options have been, and all shares of Acquiror Stock to be issued in the Merger
will be, issued and granted in compliance with: (i) all applicable Laws; and
(ii) all requirements set forth in applicable Contracts.
4.4 SEC Filings.
(a) Acquiror has delivered to the Company accurate and complete copies
(excluding exhibits) of all registration statements (on a form other than Form
S-8), definitive proxy statements and other statements, reports, schedules,
forms and other documents filed by Acquiror with the SEC since January 1, 1997
(the "Acquiror SEC Documents"). All statements, reports, schedules, forms and
other documents required to have
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been filed by Acquiror with the SEC have been so filed and in a timely manner.
As of the time it was filed with the SEC (or, if amended or superseded by a
filing prior to the date of this Agreement, then on the date of such filing):
(i) each of the Acquiror SEC Documents complied in all material respects with
the applicable requirements of the Securities Act or the Exchange Act (as the
case may be); and (ii) none of the Acquiror SEC Documents contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(b) The consolidated financial statements (including any related notes)
contained in the Acquiror SEC Documents: (i) complied as to form in all
material respects with the published rules and regulations of the SEC
applicable thereto; (ii) were prepared in accordance with GAAP (except as may
be indicated in the notes to such financial statements or, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC, and except that the
unaudited financial statements may not contain footnotes), and (iii) fairly
present the consolidated financial position of Acquiror as of the respective
dates thereof and the consolidated results of operations and cash flows of
Acquiror for the periods covered thereby.
4.5 Absence of Certain Changes or Events. Between September 30, 1998 and the
date of this Agreement there has not been any event that has had a Material
Adverse Effect on Acquiror.
4.6 Accounting Matters. To the knowledge of Acquiror neither Acquiror nor
any of its affiliates has taken or agreed to, or plans to, take any action that
could prevent Acquiror from accounting for the Merger as a "pooling of
interests." Acquiror has received a letter dated the date of this Agreement,
from PricewaterhouseCoopers LLP, a copy of which has been delivered to the
Company, regarding PricewaterhouseCoopers' belief (subject to the
qualifications contained in such letter) that the Merger should be treated as a
"pooling of interests" in conformity with generally accepted accounting
principles, as described in Accounting Principles Board Opinion No. 16 and the
applicable rules and regulations of the SEC.
4.7 Full Disclosure.
(a) No representation or warranty made by Acquiror in this Agreement or
pursuant hereto (a) contains any untrue statement of material fact; or (b)
omits to state any material fact that is necessary to make the statements made,
in light of the circumstances under which they are made, not false or
misleading in any respect. The copies of documents attached as Schedules to
this Agreement or otherwise delivered to the Company by Acquiror in connection
with the Transactions, are accurate and complete, and are not missing any
amendments, modifications, correspondence or other related papers which would
be pertinent to the Company's understanding thereof in any respect.
(b) None of the information to be supplied by or on behalf of Acquiror for
inclusion in the Form S-4 Registration Statement will, at the time the Form S-4
Registration Statement becomes effective under the Securities Act, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they are made, not misleading. None
of the information to be supplied by or on behalf of Acquiror for inclusion in
the Prospectus/Proxy Statement will, at the time the Prospectus/Proxy Statement
is mailed to the shareholders of the Company or at the time of the Company
Shareholders' Meeting, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in the light of the circumstances under which
they are made, not misleading. The Prospectus/Proxy Statement will comply as to
form in all material respects with the provisions of the Exchange Act and the
rules and regulations promulgated by the SEC thereunder, except that no
representation or warranty is made by Acquiror with respect to statements made
or incorporated by reference therein based on information supplied by the
Company for inclusion or incorporation by reference in the Prospectus/Proxy
Statement.
4.8 Litigation. Except as set forth in the Acquiror SEC Documents, there is
no (i) claim, action, suit or proceeding pending or, to the best knowledge of
the Acquiror, threatened against or relating to the Acquiror or
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any of its affiliates before any court or governmental or regulatory authority
or body or arbitration tribunal, or (ii) outstanding judgment, order, writ,
injunction or decree, or application, request or motion therefor, of any court,
governmental agency or arbitration tribunal in a proceeding to which Acquiror,
any of its affiliates or any of their respective assets was or is a party
except, in the case of clauses (i) and (ii) above, such as would not,
individually and in the aggregate, either impair Acquiror's ability to
consummate the Merger or the other transactions contemplated hereby or have a
Material Adverse Effect on the Acquiror.
4.9 No Shareholder Vote Required. No vote by the holders of any class or
series of capital stock of the Acquiror is required to approve the Merger.
Section 5: Certain Obligations of the Company Pending Closing
5.1 Access and Investigation. Between the date of this Agreement and the
Closing Date, the Company shall, and shall cause its and the Acquired
Companies' respective Representatives to: (a) provide Acquiror and Acquiror's
Representatives with reasonable access to the Acquired Companies'
Representatives, personnel, facilities and assets and to all existing books,
records, Tax Returns, work papers and other documents and information relating
to the Acquired Companies; (b) permit and assist Acquiror and Acquiror's
Representatives to contact the Acquired Companies' customers, prospects and
suppliers; and (c) provide Acquiror and Acquiror's Representatives with such
copies of the existing books, records, Tax Returns, work papers and other
documents and information relating to the Acquired Companies, and with such
additional financial, operating and other data and information regarding the
Acquired Companies, as Acquiror may reasonably request.
5.2 Conduct of Company's Business. Between the date of this Agreement and
the Closing Date, except with the prior written consent of Acquiror:
(a) The Company shall, and the Company shall cause each of the other
Acquired Companies to, (i) conduct its business in a diligent manner, (ii)
not make any material change in its business practices, and (iii) use their
best efforts to preserve their business organization intact, keeping
available the services of their current officers, employees, salesmen,
agents and representatives, and maintaining the goodwill of their
customers, suppliers and other Persons having business relations with the
Acquired Companies. The Company shall regularly consult with Acquiror as to
the management of the business and affairs of the Acquired Companies.
(b) Except in the ordinary course of its business consistent with its
past practices, the Company shall not, and the Company shall not permit any
of the other Acquired Companies to, (i) create or assume any Encumbrances
upon any of their business or Assets, (ii) incur any Obligation, (iii) make
any loan or advance to any Person, (iv) assume, guarantee or otherwise
become liable for any Obligation of any Person, (v) commit for any capital
expenditure, (vi) purchase, lease, sell, abandon or otherwise acquire or
dispose of any business or Assets, (vii) waive any right or cancel any debt
or claim, (viii) assume or enter into any Contract other than this
Agreement and the Plan (and any other Contract contemplated herein), (ix)
increase, or authorize an increase in, the compensation or benefits paid or
provided to any of their directors, officers, employees, salesmen, agents
or representatives, or (x) do anything else outside the ordinary course of
their business consistent with its past practices, whether or not
specifically described in any of the foregoing clauses.
(c) Even in the ordinary course of their respective businesses
consistent with their past practices, the Company shall not, and the
Company shall not permit any of the other Acquired Companies to, incur any
obligation, make any loan to any Person, acquire or dispose of any business
or assets, enter into any Contract (excluding Customer Contracts and
related commitments entered into in the ordinary course of business
consistent with past practices) or other transaction, or do any of the
other things described in Section 5.2(b), involving, in any single case, an
amount exceeding $100,000 or, in the aggregate, an amount exceeding
$500,000.
(d) The Company shall not, and the Company shall not permit any of the
other Acquired Companies to, (i) permit or cause a material breach or
default by them under any of their Contracts, Insurance Policies, licenses
or Permits, (ii) adopt or enter into any new Employee Benefit Plan, modify
or waive any
A-21
right under any existing Employee Benefit Plan or any Contract or award
under any existing Employee Benefit Plan, (iii) participate in any merger,
consolidation, reorganization, share exchange, business combination,
recapitalization, reclassification of shares, stock split, reverse stock
split or similar transaction, (iv) begin to engage in any new type of
business, (v) acquire the business or any bulk assets of any other Person,
(vi) completely or partially liquidate or dissolve, (vii) terminate any
part of their business, (viii) change any of its methods of accounting or
accounting practices in any respect, (ix) make any Tax election, or (x)
commence any Proceeding or settle any Proceeding.
(e) The Company shall, and the Company shall cause each of the other
Acquired Companies to, (i) maintain their Real Property and Tangible
Property in good condition and repair, (ii) maintain their Insurance
Policies and Permits in full force and effect, (iii) repair, restore or
replace any of their Assets that are damaged, destroyed, lost or stolen,
(iv) comply with all applicable Contracts, Permits and Laws, (v) properly
file all Tax returns, annual reports and other returns and reports required
to be filed by them, and (vi) fully pay when due all Taxes and fees payable
by each of them.
(f) The Company shall, and the Company shall cause each of the other
Acquired Companies to, maintain their corporate existence and good standing
in their respective jurisdictions of incorporation and their good standing
in each jurisdiction where they are currently qualified as a foreign
corporation. The Company shall not, and the Company shall not permit any of
the other Acquired Companies to, amend their certificates or articles, as
the case may be, of incorporation or bylaws.
(g) The Company shall not, and the Company shall not permit any of the
other Acquired Companies to, (i) redeem, retire or purchase, or create,
sell, grant or issue any capital stock or other security, any options,
warrants or other Contracts or Contract Rights with respect to, any shares
of capital stock or other securities, or create, sell, grant or issue any
stock options, stock appreciation rights, phantom shares or other similar
rights; provided, however, Company may issue Company Common Stock upon the
valid exercise of Company Options outstanding as of the date of this
Agreement; (ii) declare, accrue, set aside or pay any dividend or make any
distribution with respect to any shares of capital stock, except that if
the Effective Date shall not have occurred prior to the date in any given
fiscal quarter that corresponds to the date in the same fiscal quarter of
the Company's immediately preceding fiscal year on which the Company's
regular quarterly cash dividend on its Common Stock was paid, the Company
may declare and pay a cash dividend on the Company's Common Stock for such
fiscal quarter in an amount not to exceed $.0125 per share; or (iii) form
any subsidiary or acquire any equity or other interest in any Person.
(h) The Company shall maintain all shares of the capital stock of the
other Acquired Companies owned or held by it free and clear of all
Encumbrances.
(i) The Company shall not, and the Company shall cause each of the other
Acquired Companies not to, buy, sell or engage in any other transaction
involving Acquiror Common Stock, other securities of Acquiror or any equity
interests in Acquiror, other than the Merger and the other Transactions.
(j) The Company shall not and the Company shall cause each of the
Acquired Companies not to, enter into any Contract that commits it or them
to take any action or omit to take any action that would be inconsistent
with any of the provisions of this Section 5.2 or any other provisions of
this Agreement or the Plan.
(k) The Company shall cause the Acquired Companies, on or before
February 15, 1999, to notify the customers that the Acquired Companies will
no longer provide or support their ADV or Pension timesharing service
unless such service shall comply with the standards set forth in clause (f)
of the sixth sentence of Section 3.14.
5.3 No Solicitation.
(a) The Company shall not directly or indirectly, and shall not authorize or
permit any of the other Acquired Companies or any of their respective
Representatives directly or indirectly to, (i) solicit, initiate,
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encourage or induce the making, submission or announcement of any Acquisition
Proposal or take any action that could reasonably be expected to lead to an
Acquisition Proposal, (ii) furnish any information regarding any of the
Acquired Companies to any Person in connection with or in response to an
Acquisition Proposal, (iii) engage in discussions or negotiations with any
Person with respect to any Acquisition Proposal, (iv) approve, endorse or
recommend any Acquisition Proposal, or (v) enter into any letter of intent or
similar document or any Contract contemplating or otherwise relating to any
Acquisition Transaction; provided, however, that: (A) nothing herein shall
prohibit the Company's board of directors from disclosing to the Company's
shareholders a position with respect to a tender offer pursuant to Rules 14d-9
and 14e-2 promulgated under the Exchange Act; and (B) prior to the adoption and
approval of this Agreement by the Company's shareholders, the Company shall not
be prohibited by this Section 5.3(a) from (x) furnishing nonpublic information
regarding the Acquired Companies to any Person in response to an Acquisition
Proposal that is submitted by such Person (and not withdrawn), or (y) entering
into discussions and negotiating with any Person in response to a Superior
Offer that is submitted by such Person (and not withdrawn) if, in either such
case: (1) neither Company nor any Representatives of any of the Acquired
Companies shall have violated any of the restrictions set forth in this Section
5.3, (2) the Board of Directors of Company believes in good faith, based upon
the advice of its outside legal counsel, that such action is required in order
for the board of directors of the Company to comply with its fiduciary
obligations to the Company's shareholders under applicable law, (3) prior to
furnishing any such nonpublic information to, or entering into discussions
with, such Person, the Company gives Acquiror written notice of the identity of
such Person and of the Company's intention to furnish nonpublic information to,
or enter into discussions with, such Person, and the Company receives from such
Person an executed confidentiality agreement containing limitations no less
restrictive than the limitations imposed on Acquiror pursuant to the
Confidentiality Agreement dated as of September 14, 1998 (the "Confidentiality
Agreement") by and between Acquiror and the Company, and (4) prior to
furnishing any such nonpublic information to such Person, the Company furnishes
such nonpublic information to Acquiror (to the extent such nonpublic
information has not been previously furnished by the Company to Acquiror).
Without limiting the generality of the foregoing, the Company acknowledges and
agrees that any violation of any of the restrictions set forth in the preceding
sentence by any Representatives of any of the Acquired Companies, whether or
not such person is purporting to act on behalf of any of the Acquired Companies
shall be deemed to constitute a breach of this Section 5.3 by the Company;
provided, however, that this sentence shall not limit the rights of any
Representative who is a shareholder of the Company to freely vote his stock and
to exercise all of his rights as a shareholder of the Company, subject to any
contractual restrictions that may apply.
(b) The Company shall promptly advise Acquiror orally and in writing of any
Acquisition Proposal (including the identity of the Person making or submitting
such Acquisition Proposal and the terms thereof) that is made or submitted by
any Person during the period between the date of this Agreement and the Closing
Date. The Company shall keep Acquiror fully informed with respect to the status
of any such Acquisition Proposal and any modification or proposed modification
thereto.
(c) The Company shall immediately cease and cause to be terminated any
existing discussions with any Person that relate to any Acquisition Proposal.
5.4 Advice of Changes. Between the date of this Agreement and the Closing
Date, the Company shall promptly advise Acquiror, in writing, of any fact of
which it obtains knowledge and that, if existing or known as of the date of
this Agreement, would have been required to be set forth or disclosed in or
pursuant to this Agreement (it being understood that such advice shall not be
deemed to modify the representations, warranties and covenants of the Company
contained in this Agreement).
Section 6: Certain Obligations of Acquiror and Newco Pending Closing
6.1 Corporate Status. Between the date of this Agreement and the Closing
Date:
(a) Acquiror and Newco each shall maintain their corporate existence and
good standing in the States of Delaware and Florida, respectively, and
shall not amend their charters or bylaws in any manner that would be
inconsistent with its obligations under this Agreement or the Plan.
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(b) Neither Acquiror nor Newco shall enter into any Contract that
commits them to take any action or omit to take any action that would be
inconsistent with any of the provisions of this Section 6.1 or any other
provisions of this Agreement or the Plan.
6.2 Advice of Changes. Between the date of this Agreement and the Closing
Date, Acquiror shall promptly advise the Company, in writing, of any fact of
which it obtains knowledge and that, if existing or known as of the date of
this Agreement, would have been required to be set forth or disclosed pursuant
to a representation or warranty in this Agreement (it being understood that
such advice shall not be deemed to modify the representations, warranties and
covenants of Acquiror and/or Newco contained in this Agreement).
Section 7: Additional Covenants of the Parties
7.1 Registration Statement; Prospectus/Proxy Statement.
(a) As promptly as practicable after the date of this Agreement, Acquiror
and the Company shall prepare and cause to be filed with the SEC the
Prospectus/Proxy Statement and Acquiror shall prepare and cause to be filed
with the SEC the Form S-4 Registration Statement (in which the Prospectus/Proxy
Statement will be included as a prospectus); provided, however, that
notwithstanding anything to the contrary contained in this Section 7.1(a), if
(and to the extent) Acquiror so elects: (i) the Prospectus/Proxy Statement
shall initially be filed with the SEC on a confidential basis as a proxy
statement of the Company under Section 14 of the Exchange Act (and not as a
registration statement of Acquiror); (ii) until it is reasonably likely that
the SEC will declare the Form S-4 Registration Statement (in which the
Prospectus/Proxy Statement will be included as a prospectus) effective under
the Securities Act, all amendments to the Prospectus/Proxy Statement shall be
filed with the SEC on a confidential basis as amendments to the proxy statement
of the Company under Section 14 of the Exchange Act; and (iii) Acquiror shall
not be obligated to file the Form S-4 Registration Statement (in which the
Prospectus/Proxy Statement will be included as a prospectus) with the SEC until
it is reasonably likely that the SEC will promptly declare the Form S-4
Registration Statement effective under the Securities Act. Each of Acquiror and
the Company shall use its reasonable best efforts to cause the Form S-4
Registration Statement and the Prospectus/Proxy Statement to comply with the
rules and regulations promulgated by the SEC, to respond promptly to any
comments of the SEC or its staff and to have the Form S-4 Registration
Statement declared effective under the Securities Act as promptly as
practicable after it is filed with the SEC. The Company will use all reasonable
best efforts to cause the Prospectus/Proxy Statement to be mailed to the
Company's shareholders as promptly as practicable after the Form S-4
Registration Statement is declared effective under the Securities Act. The
Company shall promptly furnish to Acquiror all information concerning the
Acquired Companies and the Company's shareholders that may be required or
reasonably requested in connection with any action contemplated by this Section
7.1. If any event relating to any of the Acquired Companies occurs, or if the
Company becomes aware of any information, that should be disclosed in an
amendment or supplement to the Form S-4 Registration Statement or the
Prospectus/Proxy Statement, then the Company shall promptly inform Acquiror
thereof and shall cooperate with Acquiror in filing such amendment or
supplement with the SEC and, if appropriate, in mailing such amendment or
supplement to the shareholders of the Company.
(b) Prior to the Effective Date, Acquiror shall use all reasonable best
efforts to obtain all regulatory approvals needed to ensure that the Acquiror
Stock to be issued in the Merger will be registered or qualified under the
securities law of every jurisdiction of the United States in which any
registered holder of Company Common Stock has an address of record on the
record date for determining the shareholders entitled to notice of and to vote
at the Company Shareholders' Meeting; provided, however, that Acquiror shall
not be required (i) to qualify to do business as a foreign corporation in any
jurisdiction in which it is not now qualified or (ii) to file a general consent
to service of process in any jurisdiction.
7.2 Company Shareholders' Meeting.
(a) The Company shall take all action necessary under all applicable Law to
call, give notice of, convene and hold a meeting of the holders of Company
Common Stock to consider, act upon and vote upon the
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adoption and approval of this Agreement and the approval of the Merger (the
"Company Shareholders' Meeting"). The Company Shareholders' Meeting will be
held as promptly as practicable and in any event within 45 days after the Form
S-4 Registration Statement is declared effective under the Securities Act. The
Company shall ensure that the Company Shareholders' Meeting is called, noticed,
convened, held and conducted, and that all proxies solicited in connection with
the Company Shareholders' Meeting are solicited, in compliance with all
applicable Law. The Company's obligation to call, give notice of, convene and
hold the Company Shareholders' Meeting in accordance with this Section 7.2(a)
shall not be limited or otherwise affected by the commencement, disclosure,
announcement or submission of any Superior Offer or other Acquisition Proposal,
or by any withdrawal, amendment or modification of the recommendation of the
board of directors of the Company with respect to the Merger.
(b) Subject to Section 7.2(c): (i) the board of directors of the Company
(with each of Michael and Cindy Goldberg abstaining) shall unanimously
recommend (subject only to the abstention of Michael and Cindy Goldberg) that
the Company's shareholders vote in favor of and adopt and approve this
Agreement and approve the Merger at the Company Shareholders' Meeting; (ii) the
Prospectus/Proxy Statement shall include a statement to the effect that the
board of directors of the Company has unanimously recommended that Company's
shareholders vote in favor of and adopt and approve this Agreement and approve
the Merger at the Company Shareholders' Meeting; and (iii) neither the board of
directors of the Company nor any committee thereof shall withdraw, amend or
modify, or propose or resolve to withdraw, amend or modify, in a manner adverse
to Acquiror, the unanimous recommendation of the board of directors of the
Company that Company's shareholders vote in favor of and adopt and approve this
Agreement and approve the Merger. For purposes of this Agreement, such
recommendation of the board of directors of the Company shall be deemed to have
been modified in a manner adverse to Acquiror if such recommendation shall no
longer be unanimous.
(c) Nothing in this Section 7.2 shall prevent the board of directors of the
Company from withdrawing, amending or modifying its unanimous recommendation
(subject only to the abstention of Michael and Cindy Goldberg) in favor of the
Merger at any time prior to the adoption and approval of this Agreement by the
Required Company Shareholder Vote if (i) a Superior Offer is made to the
Company and is not withdrawn, (ii) neither the Company nor any Representative
of any of the Acquired Companies shall have violated any of the restrictions
set forth in Section 5.3, and (iii) the board of directors of the Company
concludes in good faith, based upon the advice of its outside counsel, that, in
light of such Superior Offer, the withdrawal, amendment or modification of such
recommendation is required in order for the board of directors of the Company
to comply with its fiduciary obligations to the Company's shareholders under
applicable law. Nothing contained in this Section 7.2 shall limit the Company's
obligation to call, give notice of, convene and hold the Company Shareholders'
Meeting (regardless of whether the unanimous recommendation of the board of
directors of the Company shall have been withdrawn, amended or modified).
7.3 Regulatory Approvals. Each of the Company and Acquiror shall use its
reasonable best efforts to file, as soon as practicable after the date of this
Agreement, all notices, reports and other documents required to be filed with
any Governmental Body with respect to the Merger and the other transactions
contemplated by this Agreement, and to submit promptly any additional
information requested by any such Person. Without limiting the generality of
the foregoing, the Company and Acquiror shall, promptly after the date of this
Agreement, prepare and file the notifications required under the HSR Act in
connection with the Merger. The Company and Acquiror shall respond as promptly
as practicable to (i) any inquiries or requests received from the Federal Trade
Commission or the Department of Justice for additional information or
documentation and (ii) any inquiries or requests received from any state
attorney general or other Governmental Body in connection with antitrust or
related matters. Each of the Company and Acquiror shall (1) give the other
party prompt notice of the commencement of any Proceeding by or before any
Governmental Body with respect to the Merger or any of the other Transactions,
(2) keep the other party informed as to the status of any such Proceeding, and
(3) promptly inform the other party of any communication to or from the Federal
Trade Commission, the Department of Justice or any other Governmental Body
regarding the Merger. The Company and Acquiror will consult and cooperate with
one another, and will consider in good faith the views of one another, in
connection with any analysis, appearance, presentation, memorandum, brief,
argument, opinion or proposal made or
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submitted in connection with any Proceeding under or relating to the HSR Act or
any other federal or state antitrust or fair trade law. In addition, except as
may be prohibited by any Governmental Body or by any Law, in connection with
any Proceeding under or relating to the HSR Act or any other federal or state
antitrust or fair trade law or any other similar Proceeding, each of the
Company and Acquiror will permit authorized Representatives of the other party
to be present at each meeting or conference relating to any such Proceeding and
to have access to and be consulted in connection with any document, opinion or
proposal made or submitted to any Governmental Body in connection with any such
Proceeding.
7.4 Stock Options, Company Stock Option Plans and Contingent Rights to
Stock.
(a) Subject to Section 7.4(b), at the Effective Date, all rights with
respect to Company Common Stock under each Company Option then outstanding
shall be converted into and become rights with respect to Acquiror Common
Stock, and Acquiror shall assume each such Company Option in accordance with
the terms (as in effect as of the date of this Agreement) of the Company Stock
Option Plan under which it was issued and the stock option agreement by which
it is evidenced. From and after the Effective Date, (i) each Company Option
assumed by Acquiror may be exercised solely for shares of Acquiror Common
Stock, (ii) the number of shares of Acquiror Common Stock subject to each such
Company Option shall be equal to the number of shares of Company Common Stock
subject to such Company Option immediately prior to the Effective Date
multiplied by the Exchange Ratio (as defined in the Plan), rounding down to the
nearest whole share (with cash, less the applicable exercise price, being
payable for any fraction of a share), (iii) the per share exercise price under
each such Company Option shall be adjusted by dividing the per share exercise
price under such Company Option by the Exchange Ratio and rounding up to the
nearest cent and (iv) any restriction on the exercise of any such Company
Option shall continue in full force and effect and the term, exercisability,
vesting schedule and other provisions of such Company Option shall otherwise
remain unchanged; provided, however, that each Company Option assumed by
Acquiror in accordance with this Section 7.4(a) shall, in accordance with its
terms, be subject to further adjustment as appropriate to reflect any stock
split, stock dividend, reverse stock split, reclassification, recapitalization
or other similar transaction subsequent to the Effective Date. Acquiror shall
file with the SEC, no later than 30 days after the date on which the Merger
becomes effective, a registration statement on Form S-8 relating to the shares
of Acquiror Common Stock issuable with respect to Company Options assumed by
Acquiror in accordance with this Section 7.4(a).
(b) The Company shall take all action that may be necessary (under the plans
pursuant to which Company Options are outstanding and otherwise) to effectuate
the provisions of Section 7.4(a) and to ensure that, from and after the
Effective Date, holders of Company Options have no rights with respect thereto
other than those specifically provided in Section 7.4(a).
(c) At the Effective Date, the contingent rights of certain individuals to
receive Company Common Stock under the earn-out provision of that certain
Acquisition Agreement, dated as of December 21, 1995 (the "Existential
Agreement"), by and among the Company, SI Acquisition Corp., Existential
Systems, Inc. and Michael R. Bain (such rights hereinafter being referred to as
the "Existential Earn-Out") shall be converted into and become contingent
rights to receive Acquiror Common Stock. From and after the Effective Date, the
number of shares of Acquiror Common Stock subject to the Existential Earn-Out
shall be equal to the number of shares of Company Common Stock subject to the
Existential Earn-Out immediately prior to the Effective Date multiplied by the
Exchange Ratio (as defined in the Plan), rounding down to the nearest whole
share (with cash being payable for any fraction of a share). The Company shall
take all action that may be necessary to effectuate the provisions of this
Section 7.4(c), including but not limited to, obtaining an Amendment to the
Existential Agreement executed by all of the parties thereto and reasonably
acceptable to Acquiror (the "Existential Amendment").
7.5 Indemnification of Officers and Directors. All rights to indemnification
existing in favor of the current directors and officers of the Company for acts
and omissions occurring prior to the Effective Date, as provided in the
Company's Articles of Incorporation and/or Bylaws (as in effect as of the date
of this Agreement), shall survive the Merger, and Acquiror shall cause the
Surviving Corporation to perform all of its obligations arising thereunder for
a period of not less than five years from the Effective Date.
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7.6 Pooling of Interests. Each of the Company and Acquiror agrees (a) not to
take any action from the date of this Agreement to the Closing Date that would
adversely affect the ability of Acquiror to account for the Merger as a
"pooling of interests," and (b) to use its reasonable best efforts to attempt
to ensure that none of its "affiliates" (as that term is used in Rule 145 under
the Securities Act) takes any action that could adversely affect the ability of
Acquiror to account for the Merger as a "pooling of interests." The Company
agrees to provide to KPMG LLP and PricewaterhouseCoopers such letters as shall
be reasonably requested by KPMG LLP and PricewaterhouseCoopers with respect to
the letters referred to in Sections 3.27 and 4.6, 10.1(d) and 10.1(e).
7.7 Additional Agreements.
(a) Subject to Section 7.7(b) and in the case of the Company, subject to
Section 5.3, Acquiror and the Company shall use all reasonable efforts to take,
or cause to be taken, all actions necessary to consummate the Merger and make
effective the other Transactions. Without limiting the generality of the
foregoing, but subject to Section 7.7(b), each party to this Agreement (i)
shall make all filings (if any) and give all notices (if any) required to be
made and given by such party in connection with the Merger and the other
Transactions,(ii) shall use all reasonable efforts to obtain each Consent (if
any) required to be obtained (pursuant to any applicable Law or Contract, or
otherwise) by such party in connection with the Merger or any of the other
Transactions, and (iii) shall use all reasonable efforts to lift any restraint,
injunction or other legal bar to the Merger. The Company shall promptly deliver
to Acquiror a copy of each such filing made, each such notice given and each
such Consent obtained by the Company.
(b) Notwithstanding anything to the contrary contained in this Agreement,
Acquiror shall not have any obligation under this Agreement: (i) to dispose or
cause any of its subsidiaries to dispose of any assets, or to commit to cause
any of the Acquired Companies to dispose of any assets; (ii) to discontinue or
cause any of its subsidiaries to discontinue offering any product, or to commit
to cause any of the Acquired Companies to discontinue offering any product;
(iii) to license or otherwise make available, or cause any of its subsidiaries
to license or otherwise make available, to any Person, any technology, Software
or other Intangibles, or to commit to cause any of the Acquired Companies to
license or otherwise make available to any Person any technology, Software or
other Intangibles to the extent reasonably practicable; (iv) to hold separate
or cause any of its subsidiaries to hold separate any assets or operations
(either before or after the Closing Date), or to commit to cause any of the
Acquired Companies to hold separate any assets or operations; or (v) to make or
cause any of its subsidiaries to make any commitment (to any Governmental Body
or otherwise) regarding its future operations or the future operations of any
of the Acquired Companies.
7.8 Disclosure. The Company and Acquiror shall consult with each other
before issuing any press release or otherwise making any public statement with
respect to the Merger or any of the other Transactions. In addition, neither
the Company nor Acquiror shall, and neither shall permit any of its
Representatives to, make any disclosure regarding the Merger or any of the
other Transactions unless (a) such other party shall have approved such
disclosure or (b) such other party shall have been advised in writing by its
outside legal counsel that such disclosure is required by applicable law.
7.9 Tax Matters.
(a) At or prior to the filing of the S-4 Registration Statement, Acquiror
and Newco and the Company execute and deliver to Blank Rome Comisky & McCauley
LLP and to Greenberg Traurig, P.A. tax representation letters in the forms
attached as Exhibit D-1 and D-2, as applicable.
(b) Acquiror, Newco and the Company shall each confirm to Blank Rome Comisky
& McCauley LLP and to Greenberg Traurig, P.A. the accuracy and completeness as
of the Effective Date of the tax representation letters delivered pursuant to
Section 7.9(a).
(c) Acquiror, Newco and the Company shall use all reasonable efforts to
cause the Merger to qualify as a tax free reorganization under Section
368(a)(1) of the Code.
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(d) Following delivery of the tax representation letters pursuant to Section
7.9(a), each of Acquiror and the Company shall use its reasonable efforts to
cause Blank Rome Comisky & McCauley LLP and Greenberg Traurig, P.A.,
respectively, to deliver promptly to it a legal opinion satisfying the
requirements of Item 601 of Regulation S-K promulgated under the Securities
Act. In rendering such opinions, each of such counsel shall be entitled to rely
on the tax representation letters delivered pursuant to Section 7.9(a).
7.10 Letter of Company's Accountants. The Company shall use its reasonable
best efforts to cause to be delivered to Acquiror a letter of KPMG LLP, dated
no more than two business days before the date on which the Form S-4
Registration Statement becomes effective (and satisfactory in form and
substance to Acquiror), that is customary in scope and substance for letters
delivered by independent public accountants in connection with registration
statements similar to the Form S-4 Registration Statement.
7.11 NYSE Listing. Acquiror shall use its reasonable best efforts to cause
the shares of Acquiror Common Stock being issued in the Merger to be approved
for listing (subject to notice of issuance) on the New York Stock Exchange.
7.12 Resignation of Officers and Directors. The Company shall use its
reasonable best efforts to obtain and deliver to Acquiror prior to the Closing
the resignation of each officer and director of each of the Acquired Companies.
7.13 Takeover Statutes. If any "fair price," "moratorium," "control share
acquisition" or other form of antitakeover statute or regulation shall become
applicable to the Transactions, the parties hereto and the members of their
respective board of directors shall grant such approvals and take such actions
as are reasonably necessary so that the Transactions may be consummated as
promptly as practicable on the terms contemplated hereby and otherwise act to
eliminate or minimize the effects of such statute or regulation on the
Transactions.
Section 8: Conditions Precedent to
Acquiror's and Newco's Closing Obligations
Each obligation of Acquiror and Newco to be performed on the Closing Date
shall be subject to the satisfaction of each of the following conditions,
except to the extent that such satisfaction is waived by Acquiror in writing:
8.1 Accuracy of Representations. The representations and warranties of
the Company contained in this Agreement shall have been accurate in all
material respects as of the date of this Agreement and shall be accurate in
all material respects as of the Closing Date as if made on and as of the
Closing Date (except that those representations and warranties that address
matters only as of a particular date shall be accurate in a material
respects as of such date); provided, however, that any representations and
warranties qualified by "Material Adverse Effect" or other materiality
qualifications shall be accurate in all respects as of the date of this
Agreement and shall be accurate in all respects as of the Closing Date as
if made on and as of the Closing Date (except that those representations
and warranties that contain such a qualification and address matters only
as of a particular date shall be accurate in all respects as of such date).
8.2 Company's Performance. All of the terms and conditions of this
Agreement to be satisfied or performed by Company on or prior to the
Closing Date shall have been substantially satisfied or performed by
Company on or before the Closing Date.
8.3 Effectiveness of Registration Statement. The Form S-4 Registration
Statement shall have become effective in accordance with the provisions of
the Securities Act, and no stop order shall have been issued by the SEC
with respect to the Form S-4 Registration Statement.
8.4 Shareholder Approval. This Agreement shall have been duly adopted
and approved, and the Merger shall have been duly approved, by the Required
Company Shareholder Vote.
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8.5 Consents. All Consents required to be obtained in connection with
the Merger and the other transactions contemplated by this Agreement shall
have been obtained and shall be in full force and effect.
8.6 Absence of Material Adverse Effect. There shall have been no change
in the business, capitalization, operations or financial condition of any
of the Acquired Companies since the date of this Agreement which has had or
would reasonably be expected to have a Material Adverse Effect on the
Acquired Companies.
8.7 Hart-Scott-Rodino. The waiting period with respect to the
Transactions shall have expired or been terminated under the HSR Act.
8.8 Listing. The shares of Acquiror Stock to be issued in the Merger
shall have been approved for listing (subject to notice of issuance) on the
New York Stock Exchange
8.9 No Restraints. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the
Merger shall have been issued by any court of competent jurisdiction and
remain in effect, and there shall not be any Law enacted or deemed
applicable to the Merger that seeks to or does prohibit or restrain the
Merger or makes consummation of the Merger illegal.
8.10 No Governmental Proceeding. There shall not be pending or
threatened any Proceeding in which a Governmental Body is (or is threatened
to become) a party (a) challenging or seeking to restrain or prohibit the
consummation of the Merger or any of the other transactions contemplated by
this Agreement; (b) relating to the Merger and seeking to obtain from
Acquiror or any of its subsidiaries any damages that may be material to
Acquiror; (c) seeking to prohibit or limit in any material respect
Acquiror's ability to vote, receive dividends with respect to or otherwise
exercise ownership rights with respect to the stock of the Surviving
Corporation; or (d) which would materially and adversely affect the right
of Acquiror, the Surviving Corporation or any subsidiary of Acquiror to own
the assets or operate the business of Company.
8.11 No Other Proceeding. There shall not be pending any Proceeding in
which there is a reasonable probability of an outcome that would have a
Material Adverse Effect on the Acquired Companies or on Acquiror (a)
challenging or seeking to restrain or prohibit the consummation of the
Merger; (b) relating to the Merger and seeking to obtain from Acquiror or
any of its subsidiaries any damages that may be material to Acquiror; (c)
seeking to prohibit or limit in any material respect Acquiror's ability to
vote, receive dividends with respect to or otherwise exercise ownership
rights with respect to the stock of the Surviving Corporation; or (d) which
would affect adversely the right of Acquiror, the Surviving Corporation or
any subsidiary of Acquiror to own the assets or operate the business of
Company; provided, however, that to the extent that any damages payable in
connection with any such Proceeding will be fully reimbursed by insurance
coverage pursuant to insurance policies held by Company or Acquiror, such
damages shall be disregarded in determining the Material Adverse Effect of
such Proceeding on the policy holder.
8.12 Real Estate Closing. The Closing under the Agreement of Sale, dated
as of January 15, 1999, by and between Key Investments Ltd and Solution
Development Inc., relating to the sale of the facilities located at 2000,
2140 and 2150 South Dixie Highway shall have been consummated.
Section 9: Conditions Precedent to Company's Closing Obligations
The obligations of Company to be performed on the Closing Date shall be
subject to the satisfaction of each of the following conditions, except to the
extent that such satisfaction is waived by Company in writing:
9.1 Accuracy of Representations. The representations and warranties of
Acquiror and Newco contained in this Agreement shall have been accurate in
all material respects as of the date of this Agreement and shall be
accurate in all material respects as of the Closing Date as if made on and
as of the Closing Date (except that those representations and warranties
that address matters only as of a particular
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date shall be accurate in a material respect as of such date); provided,
however, that any representations and warranties qualified by "Material
Adverse Effect" or other materiality qualifications are accurate in all
respects as of the date of this Agreement and shall be accurate in all
respects as of the Closing Date as if made on and as of the Closing Date
(except that those representations that contain such a qualification and
address matters only as of a particular date shall be accurate in all
respects as of such date).
9.2 Acquiror's and Newco's Performance. All of the terms and conditions
of this Agreement to be satisfied or performed by Acquiror and/or Newco on
or before the Closing Date shall have been substantially satisfied or
performed by Acquiror and/or Newco on or before the Closing Date.
9.3 Effectiveness of Registration Statement. The Form S-4 Registration
Statement shall have become effective in accordance with the provisions of
the Securities Act, and no stop order shall have been issued by the SEC
with respect to the Form S-4 Registration Statement.
9.4 Shareholder Approval. This Agreement shall have been duly adopted
and approved, and the Merger shall have been duly approved, by the Required
Company Shareholder Vote.
9.5 Absence of Material Adverse Effect. There shall have been no change
in Acquiror's business, operations or financial condition since the date of
this Agreement which has had or would reasonably be expected to have a
Material Adverse Effect on Acquiror (it being understood that a decline in
Acquiror's stock price shall not, in and of itself, constitute a change
that has had or would reasonably be expected to have a Material Adverse
Effect on Acquiror for purposes of this Section 9.5).
9.6 Hart-Scott-Rodino. The waiting period with respect to the
Transactions shall have expired or been terminated under the HSR Act.
9.7 Listing. The shares of Acquiror Common Stock to be issued in the
Merger shall have been approved for listing (subject to notice of issuance)
on the New York Stock Exchange.
9.8 No Restraints. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the
Merger by Company shall have been issued by any court of competent
jurisdiction and remain in effect, and there shall not be any Law enacted
or deemed applicable to the Merger that seeks to or does prohibit or
restrain the Merger or makes consummation of the Merger by Company illegal.
9.9 No Governmental Proceeding. There shall not be pending or threatened
any Proceeding in which a Governmental Body is (or is threatened to become)
a party challenging or seeking to restrain or prohibit the consummation of
the Merger or any of the other transactions contemplated by this Agreement.
Section 10: Closing
10.1 Company's Obligations at Closing. At the Closing, Acquiror shall have
received the following:
(a) A certificate executed on behalf of Company by its Chief Executive
Officer confirming that the conditions set forth in Sections 8.1, 8.2, 8.4,
8.5 and 8.6 have been duly satisfied.
(b) Duly executed resignations, dated the Closing Date, of all directors
and officers of each of the Acquired Companies other than as specified by
Acquiror.
(c) A letter from KPMG LLP, dated as of the Closing Date and addressed
to Acquiror, reasonably satisfactory in form and substance to Acquiror,
updating the letter referred to in Section 7.10.
(d) A letter from KPMG LLP, dated as of the Closing Date and addressed
to Company, reasonably satisfactory in form and substance to Acquiror and
PricewaterhouseCoopers, to the effect that, KPMG LLP
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concurs with Company's management's conclusion that no conditions exist
related to Company that would preclude Acquiror from accounting for the
Merger as a "pooling of interests" in accordance with generally accepted
accounting principles, Accounting Principles Board Opinion No. 16 and all
published rules, regulations and policies of the SEC.
(e) A letter from Price Waterhouse Coopers, dated as of the Closing Date
and addressed to Acquiror, reasonably satisfactory in form and substance to
Acquiror, to the effect that Acquiror may account for the Merger as a
"pooling of interests" in accordance with generally accepted accounting
principles, Accounting Principles Board Opinion No. 16 and all published
rules, regulations and policies of the SEC.
(f) A legal opinion of Blank Rome Comisky & McCauley LLP, counsel to
Acquiror, dated as of the Closing Date and addressed to Acquiror, to the
effect that the Merger will constitute a reorganization within the meaning
of Section 368 of the Code.
(g) The original signed copies of all Consents listed on Schedule 3.2.
(h) Good standing certificates or equivalent for each of the Acquired
Companies, dated no earlier than ten (10) days before the Closing Date,
from the applicable jurisdiction of formation and from each other
jurisdiction in which it is qualified or registered to do business as a
foreign corporation.
(i) Evidence that all applicable waiting periods with respect to the
Transactions shall have expired under the HSR Act, and neither the Federal
Trade Commission nor the Antitrust Division of the Department of Justice
shall have (i) required any party to divest itself of any assets in order
to consummate such Transactions, or (ii) taken any actions to prohibit the
consummation of such Transactions.
(j) The Existential Amendment referred to in Section 7.4(c) hereof.
(k) The Organic Documents of the Identified Companies described in
Section 3.1.
(l) All other agreements, certificates, instruments, financial statement
certifications and documents reasonably requested by Acquiror in order to
fully consummate the Transactions and carry out the purposes and intent of
this Agreement.
10.2 Acquiror's and Newco's Obligations at Closing. At the Closing, the
Company shall have received the following:
(a) A certificate executed on behalf of Acquiror by an executive officer
of Acquiror, confirming that conditions set forth in Sections 9.1, 9.2 and
9.5 have been duly satisfied.
(b) A legal opinion of Greenberg, Traurig, P.A., dated as of the Closing
Date, to the effect that the Merger will constitute a reorganization within
the meaning of Section 368 of the Code.
(c) Good standing certificates for Acquiror and Newco, dated no earlier
than ten (10) days before the Closing Date, from the State of Delaware and
the State of Florida, respectively.
(d) Evidence that all applicable waiting periods with respect to the
Transactions shall have expired under the HSR Act, and neither the Federal
Trade Commission nor the Antitrust Division of the Department of Justice
shall have (i) required any party to divest itself of any assets in order
to consummate such Transactions, or (ii) taken any actions to prohibit the
consummation of such Transactions.
(e) All other agreements, certificates, instruments and documents
reasonably requested by Company in order to fully consummate the
Transactions and carry out the purposes and intent of this Agreement.
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Section 11: Termination
11.1 Termination. This Agreement may be terminated prior to the Effective
Date (whether before or after approval of the Merger by the Required Company
Shareholder Vote):
(a) by mutual written consent of Acquiror and Company;
(b) by either Acquiror or Company if the Merger shall not have been
consummated by May 31, 1999 (unless the failure to consummate the Merger is
attributable to a failure on the part of the party seeking to terminate
this Agreement to perform any material obligation required to be performed
by such party at or prior to the Effective Date);
(c) by either Acquiror or Company if a court of competent jurisdiction
or other Governmental Body shall have issued a final and nonappealable
order, decree or ruling, or shall have taken any other action, having the
effect of permanently restraining, enjoining or otherwise prohibiting the
Merger;
(d) by Acquiror, following a breach of any covenant or agreement of
Company contained in this Agreement, or if any representation or warranty
of Company contained in this Agreement shall be or shall have become
inaccurate, in either case such that any of the conditions set forth in
Sections 8.1 and 8.2 would not be satisfied as of the time of such breach
or as of the time such representation or warranty was or shall have become
inaccurate; provided, however, that: (A) if such breach or inaccuracy is
curable by Company (as the case may be), then Acquiror may not terminate
this Agreement under this Section 11.1(d) with respect to a particular
breach or inaccuracy prior to or during the 30-day period commencing upon
delivery by Acquiror of written notice to Company of such breach or
inaccuracy, provided Company (as the case may be) continues to exercise
reasonable efforts to cure such breach or inaccuracy; and (B) the right to
terminate this Agreement under this Section 11.1(d) shall not be available
to Acquiror if Acquiror shall have committed a material uncured breach of
this Agreement;
(e) by Company, following a breach of any covenant or agreement of
Acquiror contained in this Agreement, or if any representation or warranty
of Acquiror contained in this Agreement shall be or shall have become
inaccurate, in either case such that any of the conditions set forth in
Sections 9.1 and 9.2 would not be satisfied as of the time of such breach
or as of the time such representation or warranty was or shall have become
inaccurate; provided, however, that: (A) if such breach or inaccuracy is
curable by Acquiror, then Company may not terminate this Agreement under
this Section 11.1(e) with respect to a particular breach or inaccuracy
prior to or during the 30-day period commencing upon delivery by Company of
written notice to Acquiror of such breach or inaccuracy, provided Acquiror
continues to exercise reasonable efforts to cure such breach or inaccuracy;
and (B) the right to terminate this Agreement under this Section 11.1(e)
shall not be available to Company if Company shall have committed a
material uncured breach of this Agreement;
(f) by Acquiror, if (i) the Board of Directors of Company shall have
failed to recommend, or shall for any reason have withdrawn or shall have
amended or modified in a manner adverse to Acquiror its unanimous
recommendation (subject to only the abstention of Michael Goldberg and
Cindy Goldberg) in favor of, the adoption and approval of the Agreement or
the approval of the Merger; (ii) Company shall have failed to include in
the Prospectus/Proxy Statement the unanimous recommendation of the board of
directors of Company in favor of the adoption and approval of the Agreement
and the approval of the Merger; (iii) Company shall have entered into any
letter of intent or similar document or any Contract relating to any
Acquisition Proposal; or (iv) a tender or exchange offer relating to
securities of Company shall have been commenced and Company shall not have
sent to its securityholders, within ten business days after the
commencement of such tender or exchange offer, a statement disclosing that
Company recommends rejection of such tender or exchange offer; or
(g) by either Acquiror or Company if (i) the Company Shareholders'
Meeting shall have been held and (ii) this Agreement and the Merger shall
not have been approved at such meeting by the Required Company Shareholder
Vote.
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11.2 Effect of Termination. In the event of the termination of this
Agreement as provided in Section 11.1, this Agreement shall be of no further
force or effect; provided, however, that (i) this Section 11.2, Section 11.3
and Section 12 shall survive the termination of this Agreement and shall remain
in full force and effect, and (ii) the termination of this Agreement shall not
relieve any party from any liability for any inaccuracy in or breach of any
representation, warranty or covenant contained in this Agreement.
11.3 Expenses; Termination Fee.
(a) Except as set forth in this Section 11.3, all fees and expenses incurred
in connection with this Agreement and the transactions contemplated by this
Agreement shall be paid by the party incurring such expenses, whether or not
the Merger is consummated; provided, however, that Acquiror and Company shall
share equally all fees and expenses, other than attorneys' fees, incurred in
connection with (i) the filing, printing and mailing of the Form S-4
Registration Statement and the Prospectus/Proxy Statement and any amendments or
supplements thereto and (ii) the filing of the premerger notification and
report forms relating to the Merger under the HSR Act. All legal fees and
accounting fees incurred by Company in negotiating and preparing this Agreement
(and all other Contracts and documents executed in connection herewith or
therewith) and in consummating the Transactions shall be reasonable and based
upon actual time spent on the Transactions at hourly rates not exceeding
standard rates.
(b) If this Agreement is terminated by Acquiror pursuant to Section 11.1(f),
then Company shall pay to Acquiror, in cash, within one business day after the
termination of this Agreement, a nonrefundable fee in the amount of $2.8
million.
(c) If this Agreement is terminated by Acquiror or Company pursuant to
Section 11.1(g) and an Acquisition Transaction is consummated or a proposed
Acquisition Transaction is publicly announced at any time prior to the first
anniversary date of this Agreement, then, contemporaneously with the earlier of
the consummation of such Acquisition Transaction or such announcement regarding
a proposed Acquisition Transaction, Company shall pay to Acquiror, in cash, a
nonrefundable fee in the amount of $2.8 million.
Section 12: Other Provisions
12.1 Notices. All notices, consents or other communications required or
permitted to be given under this Agreement shall be in writing and shall be
deemed to have been duly given when delivered personally or one (1) business
day after being sent by a nationally recognized overnight delivery service,
postage or delivery charges prepaid or five (5) business days after being sent
by registered or certified mail, return receipt requested, postage charges
prepaid. Notices also may be given by prepaid facsimile and shall be effective
on the date transmitted if confirmed within 48 hours thereafter by a signed
original sent in one of the manners provided in the preceding sentence. Notices
to Company shall be sent to its address stated on page one of this Agreement to
the attention of the Chairman, with a copy sent simultaneously to Greenberg
Traurig, P.A., 1221 Brickell Avenue, Miami, Florida 33133, attention Fern
Watts. Notices to Acquiror and/or Newco shall be sent to Acquiror's address
stated on page one of this Agreement to the attention of its General Counsel,
with a copy sent simultaneously to the same address to the attention of its
Chief Financial Officer. Any party may change its address for notice and the
address to which copies must be sent by giving notice of the new addresses to
the other parties in accordance with this Section 12.1, provided that any such
change of address notice shall not be effective unless and until received.
12.2 Survival. All representations, warranties and covenants made by any
party in this Agreement or pursuant hereto shall survive the date of this
Agreement but shall terminate upon the consummation of the Transactions.
12.3 Interpretation of Representations.. Each representation and warranty
made in this Agreement or pursuant hereto is independent of all other
representations and warranties made by the same parties, whether or
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not covering related or similar matters, and must be independently and
separately satisfied. Exceptions or qualifications to any such representation
or warranty shall not be construed as exceptions or qualifications to any other
representation or warranty.
12.4 Reliance by Acquiror and Newco. Notwithstanding the right of Acquiror
and Newco to investigate the business, Assets and financial condition of the
Acquired Companies, and notwithstanding any knowledge obtained or obtainable by
Acquiror and Newco as a result of such investigation, Acquiror and Newco have
the unqualified right to rely upon, and have relied upon, each of the
representations and warranties made by Company in this Agreement or pursuant
hereto.
12.5 Entire Understanding. This Agreement, together with the Exhibits and
Schedules hereto, the other agreements referred to herein [and the
Confidentiality Agreement], state the entire understanding among the parties
with respect to the subject matter hereof, and supersede all prior oral and
written communications and agreements, and all contemporaneous oral
communications and agreements, with respect to the subject matter hereof,
including all confidentiality letter agreements and letters of intent
previously entered into among some or all of the parties hereto.
12.6 Amendment. This Agreement may be amended with the approval of the
respective boards of directors of Company and Acquiror at any time (whether
before or after the adoption and approval of this Agreement and the approval of
the Merger by the shareholders of Company); provided, however, that after any
such adoption and approval of this Agreement and approval of the Merger by
Company's shareholders, no amendment which could result in a decrease in the
Exchange Ratio or have a material adverse effect on the shareholders of Company
may be made without the further approval of the Company's shareholders. This
Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.
12.7 Parties in Interest. This Agreement shall bind, benefit, and be
enforceable by and against Acquiror, Newco and Company and their respective
successors and permitted assigns. No party shall in any manner assign any of
its or his rights or obligations under this Agreement without the express prior
written consent of the other parties.
12.8 Waivers. Except as otherwise expressly provided herein, no waiver with
respect to this Agreement shall be enforceable unless in writing and signed by
the party against whom enforcement is sought. Except as otherwise expressly
provided herein, no failure to exercise, delay in exercising, or single or
partial exercise of any right, power or remedy by any party, and no course of
dealing between or among any of the parties, shall constitute a waiver of, or
shall preclude any other or further exercise of, any right, power or remedy.
12.9 Severability. If any provision of this Agreement is construed to be
invalid, illegal or unenforceable, then the remaining provisions hereof shall
not be affected thereby and shall be enforceable without regard thereto.
12.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be an original
hereof, and it shall not be necessary in making proof of this Agreement to
produce or account for more than one counterpart hereof.
12.11 Section Headings. Section and subsection headings in this Agreement
are for convenience of reference only, do not constitute a part of this
Agreement, and shall not affect its interpretation.
12.12 References. All words used in this Agreement shall be construed to be
of such number and gender as the context requires or permits.
12.13 Controlling Law. THIS AGREEMENT IS MADE UNDER, AND SHALL BE CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED SOLELY THEREIN, WITHOUT
GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.
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12.14 Jurisdiction and Process. In any action between or among any of the
parties, whether arising out of this Agreement or otherwise, (a) each of the
parties irrevocably consents to the exclusive jurisdiction and venue of the
federal and state courts located in the Commonwealth of Pennsylvania, (b) if
any such action is commenced in a state court, then, subject to applicable law,
no party shall object to the removal of such action to any federal court
located in the Commonwealth of Pennsylvania, (c) each of the parties
irrevocably waives the right to trial by jury, (d) each of the parties
irrevocably consents to service of process by first class certified mail,
return receipt requested, postage prepaid, to the address at which such party
is to receive notice in accordance with Section 12.2, and (e) the prevailing
parties shall be entitled to recover their reasonable attorneys' fees and court
costs from the other parties.
12.15 Post-Closing Actions by Acquired Companies. No action taken by any of
the Acquired Companies after the Closing, with respect to this Agreement or the
Transactions, including any waiver, consent or approval, shall be effective
unless approved in writing by a majority of the post-Closing Board of Directors
of Company.
12.16 No Third-Party Beneficiaries. Except as set forth in Section 7.5 with
respect to current officers and directors of the Company, no provision of this
Agreement is intended to or shall be construed to grant or confer any right to
enforce this Agreement, or any remedy for breach of this Agreement, to or upon
any Person other than the parties hereto, including any customer, prospect,
supplier, employee, contractor, salesman, agent or representative of any of the
Acquired Companies.
12.17 Bankruptcy Qualification. Each representation or warranty made in or
pursuant to this Agreement regarding the enforceability of any Contract shall
be qualified to the extent that such enforceability may be effected by
bankruptcy, insolvency and other similar Laws or equitable principles (but not
those concerning fraudulent conveyance) generally affecting creditors' rights
and remedies.
12.18 Cooperation. Each party agrees to cooperate fully with the other party
and to execute and deliver such further documents, certificates, agreements and
instruments and to take such other actions as may be reasonably requested by
the other party to evidence or reflect the transactions contemplated by this
Agreement and to carry out the intent and purposes of this Agreement.
12.19 Construction. The parties hereto agree that any rule of construction
to the effect that ambiguities are to be resolved against the drafting party
shall not be applied in the construction or interpretation of this Agreement or
any agreements delivered in connection with the Transactions.
[BALANCE OF PAGE INTENTIONALLY BLANK]
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In Witness Whereof, each of the undersigned has caused this Agreement and
plan of Reorganization to be signed by a duly authorized officer as of the date
first stated above.
SunGard Data Systems Inc. FDP Corp.
By: /s/ Richard C. Tarbox By: /s/ Michael C. Goldberg
------------------------------------- -----------------------------------
Name: Richard C. Tarbox Name: Michael C. Goldberg
Title: Vice President--Corporate Title: Chairman and President
Development
Development Corp.
By: /s/ Richard C. Tarbox
- -------------------------------------
Name: Richard C. Tarbox
Title: Vice President
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EXHIBIT A
AGREEMENT AND PLAN OF MERGER
Parties: FDP Corp.
a Florida corporation (the "Company")
2140 South Dixie Highway
Miami, Florida 33133
SunGard Data Systems Inc.
a Delaware corporation ("Acquiror")
1285 Drummers Lane
Wayne, PA 19087
Development Corp.
a Florida corporation ("Newco")
1285 Drummers Lane
Wayne, PA 19087
Date: January 15, 1999
Background: Newco is a wholly-owned subsidiary of Acquiror. The Company,
Acquiror and Newco have entered into an Agreement and Plan of Reorganization,
dated this date (the "Reorganization Agreement"), that contemplates the
consolidation and merger of Newco with and into The Company (the "Merger") in
accordance with the provisions of the Reorganization Agreement and the
provisions of this Agreement and Plan of Merger (this "Plan").
Intending To Be Legally Bound, in consideration of the foregoing and the
mutual agreements contained herein and in the Reorganization Agreement and
subject to the satisfaction of the terms and conditions set forth herein and in
the Reorganization Agreement, the parties hereto, agree as follows:
1. Merger. On the Effective Date (as defined below), Newco shall be merged
with and into the Company in accordance with the provisions of this Plan and in
compliance with the Florida Business Corporation Act (the "FBCA"), and the
Merger shall have the effect provided for in the FBCA Laws. The Company
(sometimes referred to as the "Surviving Corporation") shall be the surviving
corporation of the Merger and shall continue to exist and to be governed by the
laws of the State of Florida. The corporate existence and identity of the
Company, with its purposes and powers, shall continue unaffected and unimpaired
by the Merger, and the Company shall become a wholly owned subsidiary of
Acquiror after the Effective Date. On the Effective Date, the Company shall
succeed to and be fully vested with the corporate existence and identity of
Newco, and the separate corporate existence and identity of Newco shall cease.
2. Name. The name of the Surviving Corporation shall be "FDP Corp."
3. Charter. Immediately after the Merger, the Articles of Incorporation of
the Surviving Corporation shall be that of the Company immediately before the
Merger.
4. Bylaws. Immediately after the Merger, the Bylaws of the Surviving
Corporation shall be those of the Company immediately before the Merger.
5. Directors. Immediately after the Merger, the directors of the Surviving
corporation shall be the following persons, who shall serve in accordance with
the Bylaws of the Surviving Corporation:
Michael K. Muratore
Lawrence A. Gross
Michael J. Ruane
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6. Officers. Immediately after the Merger, the officers of the Surviving
Corporation shall be the following persons, who shall serve in accordance with
the Bylaws of the Surviving Corporation:
Michael K. Muratore, Chairman, Chief Executive Officer
Michael C. Goldberg, President
Lawrence A. Gross, Assistant Vice President, Secretary
Michael J. Ruane, Assistant Vice President, Assistant
Secretary
Andrew P. Bronstein, Assistant Vice President, Assistant
Secretary
7. Conversion of Newco Stock. On the Effective Date, each share of the total
of 1,000 shares of common stock of Newco,$1.00 par value per share, issued and
outstanding immediately before the Effective Date shall, by virtue of the
Merger and without any action on the part of the holder thereof, be
automatically converted into and become one share of common stock, $0.01 par
value per share, of the Surviving Corporation. It is the intention of the
parties that, immediately after the Merger, Acquiror shall own all of the
issued and outstanding capital stock of the Surviving Corporation.
8. Conversion of Company Common Stock. On the Effective Date, each share of
common stock of the Company, $0.01 par value per share ("Company Common
Stock"), issued and outstanding immediately before the Effective Date, other
than shares of Company Common Stock held by the Company or Acquiror as provided
in Sections 13 and 14 of this Plan, shall, by virtue of the Merger and without
any action on the part of the holder thereof, be automatically converted into
the right to receive a fraction (the "Exchange Ratio") of a share of common
stock of Acquiror, $0.01 par value per share ("Acquiror Common Stock"), which
Exchange Ratio shall be computed in accordance with Section 9.
9. Computation of Exchange Ratio. As used in this Plan, the "Market Value of
SunGard Stock" shall equal the arithmetic average of the last reported sale
prices of one share of SunGard Stock, as reported on The New York Stock
Exchange during the twenty (20) trading days ending on and including the
trading day two days before the Effective Date. Subject to possible adjustments
described in Section 10, the Exchange Ratio shall be determined as follows:
a. If the Market Value of SunGard Stock is less than or equal to $35.00
and greater than or equal to $30.00, then the Exchange Ratio shall equal
$14.40, divided by the Market Value of SunGard Stock, with the result rounded
off to four decimal places.
b. If the Market Value of SunGard Stock is greater than $35.00, then the
Exchange Ratio shall be equal to .4114.
c. If the Market Value of SunGard Stock is less than $30.00, then the
Exchange Ratio shall be equal to .4800.
10. Possible Adjustment due to Recapitalization. If, between the date of the
Reorganization Agreement and the Effective Date, there is a change in the
number of issued and outstanding shares of Acquiror Common Stock as a result of
a stock split, reverse stock split, stock dividend, reclassification, exchange
of shares or similar recapitalization, then the Exchange Ratio shall be
appropriately adjusted. The Exchange Ratio shall not be adjusted as a result of
any other changes in the number of issued and outstanding shares of Acquiror
Common Stock, such as changes resulting from acquisitions or offerings or
changes resulting from exercises of stock options, purchases or awards of
stock, or similar transactions under Acquiror's stock option, purchase and
award plans.
11. No Fractional Shares. No fractional shares of Acquiror Common Stock
shall be issued in connection with the Merger, and no certificates or scrip for
any such fractional shares shall be issued. Any holder of Company Common Stock
who would otherwise be entitled to receive a fraction of a share of Acquiror
Common Stock (after aggregating all fractional shares of Acquiror Common Stock
issuable to such holder) shall, in lieu of such fraction of a share and, upon
surrender of such holder's Company Stock Certificate(s) (as defined in Section
15 of this Plan), be paid in cash the dollar amount (rounded to the nearest
whole cent), without interest, determined by multiplying such fraction by the
closing price of a share of Acquiror Common Stock on the New York Stock
Exchange ("NYSE") on the date the Merger becomes effective.
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12. Stock Options. The Company's 1984 Non-Qualified Stock Option Plan and
1994 Employee Stock Option Plan (the "Stock Plans") and all options to acquire
shares of Company Common Stock that are issued and outstanding under the Stock
Plans immediately before the Effective Date (collectively, the "Options"),
shall continue in effect, as an option plan of Acquiror and as options issued
by Acquiror, respectively, in accordance with the terms and conditions by which
they are governed immediately before the Effective Date, subject to the
adjustments and conditions set forth in the Reorganization Agreement.
13. Company Common Stock held by Acquiror. On the Effective Date, any shares
of Company Common Stock that are held by Acquiror or any direct or indirect
wholly-owned subsidiary of Acquiror immediately before the Effective Date
shall, by virtue of the Merger and without any action on the part of the holder
thereof, be automatically canceled, and no consideration shall be exchanged
therefor.
14. Company Common Stock held by the Company. On the Effective Date, any
shares of Company Common Stock that are held by the Company or any direct or
indirect wholly-owned subsidiary of the Company (as treasury shares)
immediately before the Effective Date shall, by virtue of the Merger and
without any action on the part of the holder thereof, be automatically
canceled, and no consideration shall be exchanged therefor.
15. Closing of the Company's Transfer Books. At the Effective Date: (a) all
shares of Company Common Stock outstanding immediately prior to the Effective
Date shall automatically be canceled and retired and shall cease to exist as
provided in Section 8, and all holders of certificates representing shares of
Company Common Stock that were outstanding immediately prior to the Effective
Date shall cease to have any rights as stockholders of the Company; and (b) the
stock transfer books of the Company shall be closed with respect to all shares
of Company Common Stock outstanding immediately prior to the Effective Date. No
further transfer of any such shares of Company Common Stock shall be made on
such stock transfer books after the Effective Date. If, after the Effective
Date, a valid certificate previously representing any of such shares of Company
Common Stock (a "Company Stock Certificate") is presented to the Exchange Agent
(as defined in Section 16) or to the Surviving Corporation or Acquiror, such
Company Stock Certificate shall be canceled and shall be exchanged as provided
in Section 16.
16. Exchange of Certificates.
(a) On or prior to the Closing Date, Acquiror shall select a reputable
bank or trust company to act as exchange agent in the Merger (the "Exchange
Agent"). Promptly after the Effective Date, Acquiror shall deposit with the
Exchange Agent (i) certificates representing the shares of Acquiror Common
Stock issuable pursuant to this Plan, and (ii) cash sufficient to make
payments in lieu of fractional shares in accordance with Section 11. The
shares of Acquiror Common Stock and cash amounts so deposited with the
Exchange Agent, together with any dividends or distributions received by
the Exchange Agent with respect to such shares, are referred to
collectively as the "Exchange Fund."
(b) As soon as reasonably practicable after the Effective Date, the
Exchange Agent will mail to the record holders of Company Stock
Certificates (i) a letter of transmittal in customary form and containing
such provisions as Acquiror may reasonably specify (including a provision
confirming that delivery of Company Stock Certificates shall be effected,
and risk of loss and title to Company Stock Certificates shall pass, only
upon delivery of such Company Stock Certificates to the Exchange Agent),
and (ii) instructions for use in effecting the surrender of Company Stock
Certificates in exchange for certificates representing Acquiror Stock. Upon
surrender of a Company Stock Certificate to the Exchange Agent for
exchange, together with a duly executed letter of transmittal and such
other documents as may be reasonably required by the Exchange Agent or
Acquiror, (1) the holder of such Company Stock Certificate shall be
entitled to receive in exchange therefor a certificate representing the
number of whole shares of Acquiror Common Stock that such holder has the
right to receive pursuant to the provisions of this Plan (and cash in lieu
of any fractional share of Acquiror Common Stock), and (2) the Company
Stock Certificate so surrendered shall be canceled. Until surrendered as
contemplated by this Section 16, each Company Stock Certificate shall be
deemed, from and after the Effective Date, to represent only the right to
receive shares of Acquiror Common Stock (and cash in lieu of any fractional
share of Acquiror Common Stock);
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provided, however, that any such certificate that is not properly submitted
for exchange to Acquiror or the Exchange Agent within two years after the
Effective Date shall no longer evidence ownership of shares of Acquiror
Common Stock and all rights of the holder of such certificate, as a
stockholder of Acquiror with respect to the shares previously evidenced by
such certificate, shall cease. If any Company Stock Certificate shall have
been lost, stolen or destroyed, Acquiror may, in its discretion and as a
condition precedent to the issuance of any certificate representing
Acquiror Common Stock, require the owner of such lost, stolen or destroyed
Company Stock Certificate to provide an appropriate affidavit and to
deliver a bond (in such sum as Acquiror may reasonably direct) as indemnity
against any claim that may be made against the Exchange Agent, Acquiror or
the Surviving Corporation with respect to such Company Stock Certificate.
(c) No dividends or other distributions declared or made with respect to
Acquiror Common Stock with a record date after the Effective Date shall be
paid to the holder of any unsurrendered Company Stock Certificate with
respect to the shares of Acquiror Common Stock which such holder has the
right to receive upon surrender thereof until such holder surrenders such
Company Stock Certificate in accordance with this Section 16 (at which time
such holder shall be entitled, subject to the effect of applicable escheat
or similar laws, to receive all such dividends and distributions, without
interest).
(d) Any portion of the Exchange Fund that remains undistributed to
holders of the Company Stock Certificates as of the date 180 days after the
date on which the Merger becomes effective shall be delivered to Acquiror
upon demand, and any holders of Company Stock Certificates who have not
theretofore surrendered their Company Stock Certificates in accordance with
this Section 16 shall thereafter look only to Acquiror for satisfaction of
their claims for Acquiror Common Stock, cash in lieu of fractional shares
of Acquiror Common Stock and any dividends or distributions with respect to
Acquiror Common Stock.
(e) Each of the Exchange Agent, Acquiror and the Surviving Corporation
shall be entitled to deduct and withhold from any consideration payable or
otherwise deliverable pursuant to this Agreement to any holder or former
holder of Company Common Stock such amounts as may be required to be
deducted or withheld therefrom under the Code or any provision of state,
local or foreign tax law or under any other applicable law or regulation.
To the extent such amounts are so deducted or withheld, such amounts shall
be treated for all purposes under this Plan as having been paid to the
person or entity to whom such amounts would otherwise have been paid.
(f) Neither Acquiror nor the Surviving Corporation shall be liable to
any holder or former holder of Company Common Stock or to any other person
or entity with respect to any shares of Acquiror Common Stock (or dividends
or distributions with respect thereto), or for any cash amounts, delivered
to any public official pursuant to any applicable abandoned property law,
escheat law or similar law or regulation.
17. Tax Consequences. For federal income tax purposes, the Merger is
intended to constitute a reorganization within the meaning of Section 368 of
the Code. The parties to this Agreement hereby adopt this Agreement as a "plan
of reorganization" within the meaning of Sections 1.368-2(g) and 1.368-3(a) of
the United States Treasury Regulations.
18. Accounting Consequences. For financial reporting purposes, the Merger is
intended to be accounted for as a "pooling of interests."
19. Effective Date. As used in this Plan, the "Effective Date" shall mean
the date upon which this Plan and a proper Articles of Merger for the Merger
has been duly signed and filed with the proper officials of the State of
Florida.
20. Entire Understanding. This Plan, together with the Reorganization
Agreement (and the Exhibits and Schedules thereto), states the entire
understanding among the parties hereto with respect to the subject matter
hereof and supersedes all prior oral and written communications and agreements,
and all contemporaneous oral communications and agreements, with respect to the
subject matter hereof. No amendment or modification of this Plan, and no waiver
of any provision of this Plan, shall be effective unless in writing and signed
by the
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party against whom enforcement is sought. The Company may agree to any
amendment to this Plan, whether before or after the adoption and approval of
this Plan and the Reorganization Agreement and the approval of the Merger by
the Company's shareholders(as contemplated by the Reorganization Agreement);
provided, however, that after any such adoption and approval of this Plan and
the Reorganization Agreement and approval of the Merger by the Company's
shareholders, no amendment which would result in a decrease in the Exchange
Ratio or have a material adverse effect on the Company's shareholders may be
made without the further approval of the Company's shareholders. The
obligations of the parties under this Plan shall be subject to all of the terms
and conditions of the Reorganization Agreement. If the Reorganization Agreement
is terminated in accordance with its terms, then this Plan shall simultaneously
terminate, and the Merger shall be abandoned without further action by the
parties hereto.
21. Parties in Interest. This Plan shall bind, benefit and be enforceable by
and against the parties hereto and their respective successors and assigns. No
party hereto shall in any manner assign any of its rights or obligations under
this Plan without the express prior written consent of the other parties.
Nothing in this Plan or the Reorganization Agreement is intended to confer, or
shall be deemed to confer, any rights or remedies upon any persons other than
the parties hereto and their respective stockholders and directors.
22. Severability. If any provision of this Plan is construed to be invalid,
illegal or unenforceable, then the remaining provisions hereof shall not be
affected thereby and shall be enforceable without regard thereto.
23. Counterparts. This Plan may be executed in any number of counterparts,
each of which when so executed and delivered shall be an original hereof, and
it shall not be necessary in making proof of this Plan to produce or account
for more than one counterpart hereof.
24. Section Headings. Section and subsection headings in this Plan are for
convenience of reference only, do not constitute a part of this Plan, and shall
not affect its interpretation.
25. References. All words used in this Plan shall be construed to be of such
number and gender as the context requires or permits.
In Witness Whereof, each undersigned corporation has caused this Agreement
and Plan of Merger to be signed by a duly authorized officer as of the date
first stated above.
FDP Corp.
/s/ Michael C. Goldberg
By_________________________________
Name: Michael C. Goldberg
Title: Chairman of the Board & President
SunGard Data Systems Inc.
/s/ Richard C. Tarbox
By_________________________________
Name: Richard C. Tarbox
Title: Vice President--Corporate Development
Development Corp.
/s/ Richard C. Tarbox
By_________________________________
Name: Richard C. Tarbox
Title: Vice President
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APPENDIX B
January 14, 1999
CONFIDENTIAL
Board of Directors
FDP Corporation
2140 South Dixie Highway
Miami, FL 33133
Dear Members of the Board:
We understand that SunGard Data Systems Inc. ("SunGard" or the "Acquiror"),
FDP Acquisition Corp., a wholly owned subsidiary of SunGard ("Newco") and FDP
Corp. ("FDP" or the "Company") propose to enter into an Agreement and Plan of
Reorganization (the "Agreement") pursuant to which, in accordance with the
terms of an Agreement and Plan of Merger (the "Plan"), Newco will be merged
with and into the Company (the "Merger"). Pursuant to the Merger, each share of
FDP common stock ("FDP Common Stock") then outstanding shall be converted into
the right to receive shares of SunGard common stock ("SunGard Common Stock") in
accordance with the Exchange Ratio (as defined in the Plan). The Merger is
intended to be a tax-free reorganization within the meaning of Section 368 of
the United States Internal Revenue Code of 1986, as amended, and to be
accounted for as a pooling of interests pursuant to Opinion No. 16 of the
Accounting Principles Board. The terms and conditions of the above described
Merger are more fully detailed in the Agreement and Plan.
You have requested our opinion as to whether the Exchange Ratio is fair,
from a financial point of view, to FDP shareholders.
Broadview Int'l LLC ("Broadview") focuses on providing merger and
acquisition advisory services to information technology ("IT") companies. In
this capacity, we are continually engaged in valuing such businesses, and we
maintain an extensive database of IT mergers and acquisitions for comparative
purposes. We have been engaged for the purpose of rendering an opinion in
connection with the Merger and will receive a fee upon the delivery of this
opinion. We have not, however, in the course of our representation of the
Company, been asked to consider, and this opinion does not address, the
relative merits of the Merger as compared to other potential business
strategies which the Company could pursue.
In rendering our opinion, we have, among other things:
1.) reviewed the terms of the Agreement and the associated exhibits
(including the Plan) and schedules thereto in the form of the draft
dated January 8, 1999 furnished to us by legal counsel to the Company
on January 11, 1999 (which, for the purposes of this opinion, we have
assumed, with your permission, to be identical in all material
respects to the agreement to be executed);
2.) reviewed FDP's Form 10-K for its fiscal year ended November 30, 1997,
including the audited financial statements included therein, FDP's
Form 10-Q for the quarterly period ended August 31, 1998, including
the unaudited financial statements included therein and preliminary,
unaudited financial results for the fiscal year ended November 30,
1998 as provided by FDP's management;
3.) reviewed certain internal financial and operating information,
including projections for FDP for its fiscal year ending November 30,
1999 prepared and provided to us by FDP management;
4.) participated in discussions with FDP management concerning the
operations, business strategy, financial performance and prospects for
FDP;
5.) discussed with FDP management its view of the strategic rationale for
the Merger;
B-1
6.) reviewed the reported closing prices and trading activity for FDP
Common Stock;
7.) compared certain aspects of the financial performance of FDP with
public companies we deemed comparable;
8.) analyzed available information, both public and private, concerning
other mergers and acquisitions we believe to be comparable in whole or
in part to the Merger;
9.) reviewed SunGard's annual report and Form 10-K for its fiscal years
ended December 31, 1997, including the audited financial statements
included therein, and SunGard's Form 10-Q for the quarterly period
ended September 30, 1998, including the unaudited financial statements
included therein;
10.) participated in discussions with SunGard management concerning the
operations, business strategy, financial performance and prospects for
SunGard;
11.) discussed with SunGard management its view of the strategic rationale
for the Merger;
12.) reviewed the reported closing prices and trading activity for SunGard
Common Stock;
13.) compared certain aspects of the financial performance of SunGard with
public companies we deemed comparable;
14.) considered the total number of shares of SunGard Common Stock
outstanding and the average weekly trading volume of SunGard Common
Stock;
15.) reviewed recent equity analyst reports covering FDP and SunGard;
16.) analyzed the anticipated effect of the Merger on the future financial
performance of the consolidated entity;
17.) conducted other financial studies, analyses and investigations as we
deemed appropriate for purposes of this opinion.
In rendering our opinion, we have relied, without independent verification,
on the accuracy and completeness of all the financial and other information
(including without limitation the representations and warranties contained in
the Agreement) that was publicly available or furnished to us by FDP or
SunGard. With respect to the financial projections examined by us, we have
assumed that they were reasonably prepared and reflected the best available
estimates and good faith judgments of the management of FDP. We have not relied
upon, nor obtained, financial projections from SunGard. We have neither made
nor obtained an independent appraisal or valuation of any of FDP's or SunGard's
assets.
Based upon and subject to the foregoing, we are of the opinion that the
Exchange Ratio is fair, from a financial point of view, to FDP shareholders.
For purposes of this opinion, we have assumed that neither FDP nor SunGard
is currently involved in any material transaction other than the Merger and
those activities undertaken in the ordinary course of conducting their
respective businesses. Our opinion is necessarily based upon market, economic,
financial and other conditions as they exist and can be evaluated as of the
date of this opinion, and any change in such conditions may impact this
opinion. We express no opinion as to the price at which SunGard Common Stock
will trade at any time.
This opinion speaks only as of the date hereof. It is understood that this
opinion is for the information of the Board of Directors of FDP in connection
with its consideration of the Merger and does not constitute a recommendation
to any FDP shareholder as to how such shareholder should vote on the Merger.
This opinion may not be published or referred to, in whole or part, without our
prior written permission, which shall not be unreasonably withheld. Broadview
hereby consents to references to, and the inclusion of, this opinion in its
entirety in the Proxy Statement/Prospectus to be distributed to FDP
shareholders in connection with the Merger.
Sincerely,
Broadview Int'l LLC
B-2
PROXY PROXY
FDP CORP.
Solicited On Behalf of the Board of Directors
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS, APRIL 28, 1999
The undersigned hereby constitutes and appoints Michael C. Goldberg and Albert
J. Schiff, and each of them, as attorneys and proxies of the undersigned, with
full power of substitution, for and in the name, place and stead of the
undersigned, to appear at the special meeting of shareholders of FDP Corp. to be
held on the 26 day of February, 1999, and at any postponement or adjournment
thereof, and to vote all of the shares of FDP Corp. which the undersigned is
entitled to vote, with all the powers and authority the undersigned would
possess if personally present. The undersigned hereby directs that this proxy be
voted as marked on the reverse side hereof.
This Proxy will, when properly executed, be voted as directed. If no
directions to the contrary are indicated in the boxes provided, the persons
named herein intend to vote FOR the approval of the Agreement and Plan of
Reorganization and the merger, as described in the accompanying Proxy
Statement/Prospectus.
A majority of said attorneys and proxies present and acting at the meeting in
person or by their substitutes (or if only one is present and acting, then that
one) may exercise all the powers conferred hereby. Discretionary authority is
conferred hereby as to certain matters described in the Proxy
Statement/Prospectus.
(Continued and to be signed and dated on reverse side)
[X] Please mark your
votes as in this example.
The Board of Directors recommends a vote "FOR" proposal 1.
1. Approval of Agreement and Plan of Reorganization and merger pursuant to which
FDP Corp. will be merged with and into Development Corp., a wholly owned
subsidiary of SunGard Data Systems Inc., and shareholders of FDP Corp., would
receive common stock of SunGard Data Systems Inc., as more fully described in
the accompanying Proxy Statement/Prospectus.
FOR AGAINST ABSTAIN
[_] [_] [_]
2. To transact such other business as may properly come before the Special
Meeting.
Receipt of the Notice of Special Meeting of Shareholders and Proxy
Statement/Prospectus dated January [ ], 1999 is hereby acknowledged.
Please sign exactly as your name or names appear hereon, including any official
position or representative capacity.
Signature(s): __________ Date: ___________ Signature(s): ________ Date: ________
Please date and sign this proxy and return it promptly in the enclosed postage
paid envelope.