SUBSCRIPTION AGREEMENT
Dated as of June 29, 1998
Between
ILOG S.A.
and
SAP Aktiengesellschaft
TABLE OF CONTENTS
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SECTION 1................................................Subscription for Ordinary Shares 1
1.1 Sale of Ordinary Shares......................................................1
1.2 Closing Date.................................................................1
1.3 Delivery.....................................................................1
1.4 Legend.......................................................................2
SECTION 2...................................Representations and Warranties of the Company 2
2.1 Organization.................................................................2
2.2 Capitalization...............................................................2
2.3 Authorization................................................................3
2.4 No Conflict..................................................................3
2.5 Accuracy of Reports..........................................................4
2.6 Governmental Consents, etc...................................................4
2.7 Litigation...................................................................4
2.8 Disclosure...................................................................4
2.9 No Material Loss.............................................................4
2.10 Intellectual Property........................................................4
2.11 Title to Property............................................................5
2.12 Compliance with Law, etc.....................................................5
2.13 Material Agreements..........................................................5
SECTION 3.................................Representations and Warranties of the Purchaser 6
3.1 Subscription for Own Account.................................................6
3.2 Disclosure of Information....................................................6
3.3 Accredited-Investor Status...................................................6
3.4 Restricted Shares............................................................6
3.5 Organization.................................................................6
3.6 Authority....................................................................7
3.7 No Conflict..................................................................7
3.8 Governmental Consents, etc...................................................7
SECTION 4................................Conditions Precedent to Obligations of Purchaser 7
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4.1 Closing.......................................................................7
SECTION 5...................................Conditions Precedent to Obligations of Company 8
5.1 Closing.......................................................................8
SECTION 6.........................................................Covenants of the Company 9
6.1 Other Strategic Investors.....................................................9
6.2 Right to Maintain............................................................11
6.3 Shareholder Meeting Approval.................................................11
6.4 Preemptive Rights............................................................11
6.5 Piggy Back Rights............................................................11
SECTION 7.......................................................Covenants of the Purchaser 12
7.1 Limitation on Ownership of Voting Stock......................................12
7.2 Voting.......................................................................12
7.3 Acts in Concert with Others..................................................13
7.4 Confidential Information.....................................................13
7.5 Approval of Supervisory Board................................................13
SECTION 8....................................................................Miscellaneous 14
8.1 Termination of Agreement.....................................................14
8.2 Governing Law................................................................14
8.3 Survival.....................................................................14
8.4 Successors and Assigns.......................................................14
8.5 Entire Agreement; Amendment..................................................14
8.6 Notice And Dates.............................................................15
8.7 Further Assurances...........................................................16
8.8 Counterparts.................................................................16
8.9 Severability.................................................................16
8.10 Captions.....................................................................17
8.11 Public Statements............................................................17
8.12 Brokers......................................................................17
8.13 Attorney's Fees..............................................................17
8.14 Costs and Expenses...........................................................17
8.15 No Third Party Rights........................................................17
8.16 Competing Business Interests.................................................17
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TABLE OF CONTENTS
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TABLE OF CONTENTS
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EXHIBITS
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Exhibit A Bulletin de Souscription
Exhibit B Ordre de Mouvement
Exhibit C List of Documents Filed with the SEC
Exhibit D ILOG Press Releases Published from January 1997
Exhibit E Draft Form of SSMD&G's Opinion Letter
Exhibit F Draft Form of WSGR's Opinion Letter
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Exhibit 3
SUBSCRIPTION AGREEMENT
THIS SUBSCRIPTION AGREEMENT (this "Agreement") is made as of June 29,
1998, between ILOG S.A., a French societe anonyme ("ILOG" or the "Company"), and
SAP Aktiengesellschaft, a German corporation (the "Purchaser").
SECTION 1
Subscription for Ordinary Shares
1.1 Sale of Ordinary Shares. Subject to the terms and conditions and in
reliance on the representations and warranties set forth herein, the Company
agrees to issue 685,064 shares (the "Shares") of the Company's ordinary shares,
par value 4.00 French Francs per share to the Purchaser, and the Purchaser will
subscribe and pay for the Shares at a subscription price determined as set forth
below at the Closing, as defined below. The Shares will be deposited by and at
the expense of the Company pursuant to the Depositary Agreement referred to in
Section 4.1(g) below and delivered to the Purchaser in the form of American
Depositary Shares (the "ADSs"). The total subscription price shall be payable in
French Francs equivalent to U.S.$10,490,042.50, determined at the noon exchange
rate in effect on the business day preceding the Closing Date as quoted by the
Federal Reserve Bank of New York. The subscription price per share will be such
French Franc equivalent, divided by 685,064 and rounded up to the nearest
centime.
1.2 Closing Date. The closing of the subscription for the Shares (the
"Closing") will be held at the registered office of the Company, 9 rue de
Verdun, 94253 Gentilly, France, at 11:30 a.m. on June 29, 1998 following the
satisfaction of all closing conditions set forth in Sections 4 and 5 hereof, or
at such other time and place as the Company and the Purchaser shall mutually
agree but in no event later than June 30, 1998 (the date of the Closing is
hereinafter referred to as the "Closing Date").
1.3 Delivery. On the Closing Date, the Purchaser will execute a
subscription form ("bulletin de souscription") in the form provided under
Exhibit A and will pay by way of wire transfer to the account of the Company at
Societe Generale, Agence Paris Madeleine, 11 Boulevard Malesherbes, 75008 Paris,
France, to the attention of Madame Marie-Claire Caillez, Code Banque 30003, Code
Guichet 03030, Numero de Compte 00243090272, RIB 08, (the "Bank"), acting as
depositary in respect of the issue of the Shares, the total subscription price
in French Francs. Upon evidence of such wire transfer and issuance by the Bank
of the corresponding "certificat du depositaire des fonds," the Company will
register the Shares in book-entry form in the name of the Purchaser, and the
Purchaser by executing a transfer form provided under Exhibit B, and the
Company, as required, will take such actions to permit the Shares to be
deposited with the Depositary in the name of the Purchaser, in the form of ADSs.
The Company shall cause Morgan Guaranty Trust Company of New York (the
"Depositary") to furnish to the Purchaser on the Closing Date an ADR certificate
satisfactory to Purchaser evidencing the fact that the Shares have been
deposited with it in the form of ADSs pursuant to the deposit agreement dated as
of February 13, 1997, between the Company and the Depositary (the "Depositary
Agreement").
1.4 Legend. The certificate for the ADSs representing the Shares shall
be subject to a legend restricting transfer under the United States' Securities
Act of 1933 (the "Securities Act"), such legend to be substantially as follows:
"The shares represented by this certificate have been
acquired for investment and have not been registered under the
Securities Act of 1933 (the "Securities Act") in reliance on
the exemption from registration provided by Section 4(2) of
the Securities Act and Regulation D promulgated thereunder.
Such shares may not be sold or transferred in the absence of
such registration or an opinion of counsel satisfactory to the
Company as to the availability of an exemption from
registration."
SECTION 2
Representations and Warranties of the Company
2.1 Organization. The Company and its subsidiaries are corporations
duly organized and validly existing under the laws of their jurisdictions of
organization and are in good standing under such laws. The Company and its
subsidiaries have requisite corporate power and authority to own, lease and
operate their properties and assets, and to carry on their businesses as
presently conducted and as presently proposed to be conducted. The Company and
its subsidiaries are qualified to do business as foreign corporations in each
jurisdiction in which the ownership of their properties or the nature of their
businesses require such qualification, except where failure to so qualify would
not have a material adverse effect on the Company and its subsidiaries taken as
a whole.
2.2 Capitalization. The issued and outstanding capital stock of ILOG
consists, as of the close of business on May 31, 1998, of 13,027,260 ordinary
shares, 4.00 French Francs par value per share. Since the close of business on
May 31, 1998, no ordinary shares of ILOG capital stock have been issued except
pursuant to the exercise of options outstanding under the ILOG Stock Option Plan
(as defined below) and except under the ILOG Employee Stock Plans (as defined
below). As of the close of business on May 31, 1998, there were no other
outstanding commitments to issue any shares of capital stock or voting
securities of ILOG or options, warrants, calls, rights, conversion privileges or
other similar contractual rights to purchase or otherwise acquire any ordinary
shares or other securities other than up to 200,000 ordinary shares which may be
issued in connection with two acquisitions currently under discussion and other
than pursuant to the exercise of options outstanding as of May 31, 1998 under
the 1996 Stock Option Plan of ILOG (the "ILOG Stock Option Plan") and pursuant
to the 1996 International Employee Stock Purchase Plan and the 1996 French
Employee Savings Plan (collectively, the "ILOG Employee Stock Plans"). All
outstanding ordinary shares of ILOG have been duly authorized, validly issued,
fully paid and are free of any liens or encumbrances other than any liens or
encumbrances imposed upon the holders thereof by operation of law. As of the
close of business on May 31, 1998, ILOG has reserved 3,567,356 shares for
issuance to employees, directors and independent contractors pursuant to the
ILOG Stock Option
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Plan, net of exercises, cancellations, repurchases and expiration of options of
which, as of the close of business on May 31, 1998, 2,976,741 ordinary shares
were subject to outstanding, unexercised options and 590,615 ordinary shares
remained available for future grant. Other than pursuant to this Agreement, the
ILOG Stock Option Plan and the ILOG Employee Stock Plans or with respect to the
acquisitions currently under discussion as set forth above, there are no other
options, warrants, calls, rights, commitments, conversion privileges or
agreements of any character to which ILOG is a party or by which ILOG is bound
obligating ILOG to issue, deliver, sell, repurchase or redeem, or cause to be
issued, delivered, sold, repurchased or redeemed directly or indirectly, any
ordinary shares of stock of ILOG or obligating ILOG to grant, extend or enter
into any such option, warrant, call, right, commitment or agreement.
2.3 Authorization. The Company has all corporate rights, power and
authority to enter into this Agreement and subject to the Shareholder Meeting
Approval and Acknowledgment (as defined below) to consummate the transactions
contemplated hereby. As of the date hereof, all corporate action on the part of
the Company, its directors and shareholders necessary for the authorization,
execution, delivery and performance of this Agreement by the Company, the
authorization, issuance and delivery of the Shares and the performance of the
Company's obligations hereunder has been taken other than (i) the authorization
to increase the share capital and to waive the shareholders' pre-emptive rights
(droits preferentiels de souscription) in favor of SAP and consequently to issue
the Shares, which authorization and waiver must be granted at a meeting of
shareholders (the "Shareholder Meeting Approval"), and (ii) the acknowledgment
of the final subscription price in French Francs by the Board of Directors (the
"Acknowledgment"). This Agreement has been duly executed and delivered by the
Company and, upon the obtaining of the Shareholder Meeting Approval and the
Acknowledgment, will constitute a legal, valid and binding obligation of the
Company enforceable in accordance with its terms, subject to laws of general
application relating to bankruptcy or insolvency. Upon receiving the Shareholder
Meeting Approval, the Acknowledgment and the "certificat du depositaire des
fonds," and the issuance and delivery of the Shares and the ADSs pursuant to
this Agreement, the Shares and the ADSs will be validly issued, fully paid and
free and clear of any liens or encumbrances other than the restrictions on
transfer provided for in Section 1.4 hereof. Upon obtaining the Shareholder
Meeting Approval and the Acknowledgment, the issuance of the Shares will not
violate or give rise to any preemptive rights or rights of first refusal on
behalf of any person.
2.4 No Conflict. The execution of this Agreement does not, and the
consummation of the transactions contemplated hereby will not, conflict with, or
result in any violation of, or default (with or without notice or lapse of time,
or both), or give rise to a right of termination, cancellation or acceleration
of any obligation or to a loss of a material benefit, under, any provision of
the Statuts of the Company or its subsidiaries or any mortgage, indenture, lease
or other agreement or instrument, license, judgment, order, decree, statute,
law, ordinance, rule or regulation applicable to the Company or its
subsidiaries, or any of their respective properties or assets, the effect of
which would have a material adverse effect on the Company and its subsidiaries,
taken as a whole, or materially impair or restrict the Company's power to
perform its obligations as contemplated hereby.
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2.5 Accuracy of Reports. All reports required to be filed by the
Company on or after January 1, 1997 under the Securities Act or the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), have been duly filed,
were in substantial compliance with the requirements of their respective forms,
were complete and correct in all material respects as of the dates at which the
information was furnished, and contained (as of such dates) no untrue statement
of a material fact nor omitted to state a material fact necessary in order to
make the statements made therein in light of the circumstances under which they
were made not misleading. The financial statements contained in such reports are
complete and correct, are in accordance with the books and records of the
Company, present fairly the financial condition and results of operations of the
Company and its subsidiaries, as at the dates and for the periods indicated, and
have been prepared in accordance with generally accepted accounting principles
in the United States of America, applied on a consistent basis throughout the
periods involved. Attached as Exhibit C is a list of all reports filed under the
Securities Act or the Exchange Act by the Company on or after January 1, 1997.
2.6 Governmental Consents, etc. No consent, approval or authorization
of or designation, declaration or filing with any governmental authority on the
part of the Company is required in connection with the valid execution and
delivery of this Agreement, or the offer or issuance of the Shares, or the
consummation of any other transaction contemplated hereby.
2.7 Litigation. There is not pending or, to the best of the Company's
knowledge, threatened, any lawsuit, administrative proceeding, arbitration,
labor dispute or governmental investigation ("Litigation") to which the Company
is a party or by which any material portion of its assets taken as a whole may
be bound, and which Litigation if adversely determined would have a material
adverse effect on the Company or which challenges or relates in any way to the
transactions contemplated by this Agreement.
2.8 Disclosure. No representation or warranty of the Company contained
in this Agreement or in any press release issued by the Company after January 1,
1997 and listed on Exhibit D attached hereto (the "Press Releases")
(individually or when read together and taken as a whole), contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained herein or therein in light of the
circumstances under which they were made not misleading.
2.9 No Material Loss. Other than as disclosed in its Press Releases, or
in reports filed by the Company under the Securities Act or the Exchange Act,
since June 30, 1997, neither the Company nor any of its subsidiaries has
sustained any material loss to or adverse change in its business, nor has there
occurred any development or event which involves or would involve a prospective
material adverse change in, or which affects or would affect the condition
(financial or otherwise), earnings, properties, shareholders' equity, results of
operations, business or prospects of the Company and its subsidiaries, taken as
a whole, since June 30, 1997.
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2.10 Intellectual Property. The Company and its subsidiaries each own,
or have the right to use under any licensing agreements and any confidentiality
agreements, all patents, patent applications, trademarks, service marks,
trademark and service mark applications, trade names and copyright registrations
presently used by the Company or any of its subsidiaries or necessary for the
conduct of the Company's or any of its subsidiaries' respective businesses as
conducted and as presently proposed to be conducted (the "Intellectual Property
Rights") and have taken, to the best of their knowledge, all actions reasonably
necessary to protect their Intellectual Property Rights. To the knowledge of the
Company, the businesses conducted by the Company or any of its subsidiaries have
not caused and do not cause the Company or any of its subsidiaries to infringe
or violate any of the patents, trademarks, service marks, trade names,
copyrights, licenses, trade secrets or other intellectual property rights of any
other person or entity. For purposes of this Section 2.10, the Purchaser
acknowledges that the Company's knowledge is based on current actual knowledge
after due inquiry.
2.11 Title to Property. The Company and its subsidiaries have good and
marketable title, as legal owner, to all real property and good and marketable
title to all personal property owned by them, except where the failure to have
good and marketable title to such real and personal property would not have a
material adverse effect on the financial position, shareholders' equity, results
of operations, business or prospects of the Company and its subsidiaries, taken
as a whole, in each case free and clear of all liens, encumbrances and defects
except such as do not materially affect the value of such property and do not
interfere in any material respect with the use made and proposed to be made of
such property by the Company or its subsidiaries, as the case may be; and any
real property and buildings held under lease by the Company or its subsidiaries
are held by them under valid, subsisting and enforceable leases with such
exceptions as are not material to the Company and its subsidiaries, taken as a
whole, and do not interfere in any material respect with the use made and
proposed to be made of such property and buildings by the Company or its
subsidiaries, as the case may be.
2.12 Compliance with Law, etc. The Company and each of its subsidiaries
have, in all material respects, complied with all material laws, regulations and
orders applicable to their respective present businesses and have all material
permits and licenses required thereby. There is no term or provision of any
mortgage, indenture, contract, agreement or instrument to which the Company or
any of its subsidiaries is a party or by which any of them is bound, or any
provision of any state or federal judgment, decree, order, statute, rule or
regulation applicable to or binding upon the Company or any of its subsidiaries,
which in their opinion materially adversely affects the business, assets or
condition, financial or otherwise, of the Company and its subsidiaries, taken as
a whole.
2.13 Material Agreements. Other than as already disclosed in reports
filed by the Company under the Securities Act, the Exchange Act or in the
Company's Press Releases, there is no: (a) agreement between the Company and any
stockholder, officer or director of the Company; (b) material agreement relating
to the Intellectual Property Rights; or (c) any other agreement which is
material to the businesses of the Company and its subsidiaries which would be
required to be disclosed in reports to be filed by the Company under the
Securities Act, the Exchange Act or in
5
Press Releases. All of the agreements so disclosed are valid, binding and in
full force and effect, and the Company is not in default under, or in violation
of any material term of, any such agreement.
SECTION 3
Representations and Warranties of the Purchaser
The Purchaser hereby represents and warrants to the Company as follows:
3.1 Subscription for Own Account. The Shares to be subscribed for by
Purchaser hereunder will be subscribed for investment for such Purchaser's own
account, not as a nominee or agent, and not with a view to the public resale or
distribution thereof within the meaning of the Securities Act, and Purchaser has
no present intention of selling, granting any participation in, or otherwise
distributing the same. Purchaser also represents that it has not been formed for
the specific purpose of subscribing for the Shares.
3.2 Disclosure of Information. Purchaser has received or has had full
access to all the information it considers necessary or appropriate to make an
informed investment decision with respect to the Shares to be subscribed for by
Purchaser under this Agreement. Purchaser further has had an opportunity to ask
questions and receive answers from the Company regarding the terms and
conditions of the offering of the Shares and to obtain additional information
(to the extent the Company possessed such information or could acquire it
without unreasonable effort or expense) necessary to verify any information
furnished to Purchaser or to which Purchaser had access. The foregoing, however,
does not in any way limit or modify the representations and warranties made by
the Company in Section 2.
3.3 Accredited-Investor Status. Purchaser is an "accredited investor"
within the meaning of Regulation D promulgated under the Securities Act.
3.4 Restricted Shares. Purchaser understands that the Shares are
characterized as "restricted securities" under the Securities Act in that they
are being acquired from the Company in a transaction not involving a public
offering and that under the Securities Act and applicable regulations thereunder
such Shares may be resold without registration under the Securities Act only in
certain limited circumstances. Without limiting the foregoing, Purchaser
understands that the Shares are not being subscribed for by it in reliance on
Regulation S promulgated pursuant to the Securities Act, and that the resale
restrictions provided for in Regulation S will not be applicable to the resale
of the Shares. In this connection, Purchaser represents that it is familiar with
Rule 144 of the U.S. Securities and Exchange Commission, as presently in effect,
and understands the resale limitations imposed thereby and by the Securities
Act. Purchaser understands that the Company is under no obligation to register
any of the Shares sold hereunder except as set forth in Section 6.5 hereof.
3.5 Organization. The Purchaser is a corporation duly organized and
validly existing and in good standing under the laws of the jurisdiction of its
organization, with all requisite corporate
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power and authority to own, lease and operate its properties and assets and to
carry on its business as presently conducted and as proposed to be conducted.
3.6 Authority. The Purchaser has all corporate rights, power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. Subject to the approval of the Purchaser's Supervisory
Board, the execution and delivery of this Agreement by the Purchaser and the
consummation by the Purchaser of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on behalf of the Purchaser.
Subject to the approval of the Purchaser's Supervisory Board, this Agreement has
been duly executed and delivered by the Purchaser and constitutes a legal, valid
and binding obligation of the Purchaser, enforceable in accordance with its
terms, subject to laws of general application relating to bankruptcy, insolvency
and the relief of debtors and rules of law governing specific performance,
injunctive relief or other equitable remedies.
3.7 No Conflict. The execution and delivery of this Agreement does not,
and the consummation of the transactions contemplated hereby will not, conflict
with, or result in any violation of or default (with or without notice, lapse of
time or both) of any obligation under any provision of the articles of
incorporation or by-laws (or corresponding instruments) of the Purchaser or any
mortgage, indenture, lease or other agreement or instrument, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to
Purchaser or its properties or assets.
3.8 Governmental Consents, etc. No consent, approval or authorization
of or designation, declaration or filing with any governmental authority on the
part of the Purchaser is required in connection with the valid execution and
delivery of this Agreement, or the purchase of the Shares, or the consummation
of any transaction contemplated hereby.
SECTION 4
Conditions Precedent to Obligations of Purchaser
4.1 Closing. The Purchaser's obligation to subscribe for the Shares at
the Closing is subject to the fulfillment on or prior to the Closing Date of the
following conditions:
(a) Representations and Warranties Correct. The representations
and warranties made by the Company in Section 2 hereof shall be true and
correct in all material respects when made, and shall be true and correct in
all material respects on the Closing Date with the same force and effect as
if they had been made on and as of said date.
(b) Covenants. All covenants, agreements and conditions
contained in this Agreement to be performed by the Company on or prior to the
Closing Date shall have been performed or complied with in all material
respects.
(c) Opinion of Company's Counsel. The Purchaser shall have
received from Stibbe Simont Monahan Duhot & Giroux, French counsel to the
Company, an opinion addressed to
7
it, dated the Closing Date, in substantially the form of Exhibit E and from
Wilson Sonsini Goodrich & Rosati, United States counsel to the Company, an
opinion addressed to it, dated the Closing Date, in substantially the form of
Exhibit F.
(d) No Order Pending. There shall not then be in effect any
order enjoining or restraining the transactions contemplated by this
Agreement.
(e) No Law Prohibiting or Restricting the Subscription of the
Shares or Delivery of ADSs. There shall not be in effect any law, rule or
regulation prohibiting or restricting the subscription for the Shares or the
delivery thereof in the form of ADSs or requiring any consent or approval of
any person which shall not have been obtained to issue or purchase the Shares
or to deliver the ADSs.
(f) Compliance Certificate. The Company shall have delivered to
the Purchaser a certificate, executed on behalf of the Company by an officer
of the Company, dated the Closing Date, and certifying to the fulfillment of
the conditions specified in Sections 4.1(a) and 4.1(b).
(g) Shareholder Meeting Approval and Acknowledgment. The
Shareholder Meeting Approval shall have been obtained from the shareholders
of the Company at a meeting of the shareholders of the Company and the
Acknowledgment shall have been obtained from the Board of Directors of the
Company pursuant to the statuts of the Company and in accordance with French
law and the Purchaser shall have received a certified copy of each of the
following documents: (1) the minutes of the meeting of the Board of Directors
which decided to submit to the shareholders the proposed capital increase,
and call an extraordinary meeting of the shareholders, (2) the report of the
Board of Directors to the shareholders, (3) the report of the statutory
auditors to the shareholders, (4) the minutes of the extraordinary meeting of
the shareholders containing the Shareholder Meeting Approval, (5) the minutes
of the meeting of the Board of Directors held to acknowledge the final
subscription price in French Francs, (6) the complementary report of the
Board of Directors to the shareholders , and (7) the complementary report of
the statutory auditors to the shareholders.
(h) Supervisory Board Approval. The approval of the Supervisory
Board of the Purchaser of the transactions contemplated hereby shall have
been obtained.
(i) Constituent Documents. The Purchaser shall have received a
certified copy of (i) the articles of association (statuts) of the Company as
in effect on the Closing Date, and (ii) excerpts from the French register of
commerce (extraits K-bis) for the Company dated not more than three months
prior to the Closing Date.
SECTION 5
Conditions Precedent to Obligations of Company
5.1 Closing. The Company's obligation to issue the Shares at the
Closing is subject to the fulfillment on or prior to the Closing Date of the
following conditions:
8
(a) Representations and Warranties Correct. The representations
and warranties made by the Purchaser in Section 3 hereof shall be true and
correct in all material respects on the Closing Date with the same force and
effect as if they had been made on and as of said date.
(b) Covenants. All covenants, agreements and conditions
contained in this Agreement to be performed by the Purchaser on or prior to
the Closing Date shall have been performed or complied with in all material
respects.
(c) No Order Pending. There shall not then be in effect any
order enjoining or restraining the transactions contemplated by this
Agreement.
(d) No Law Prohibiting or Restricting the Subscription of the
Shares or Delivery of the ADSs. There shall not be in effect any law, rule or
regulation prohibiting or restricting the subscription for the Shares or the
delivery thereof in the form of ADSs or requiring any consent or approval of
any person which shall not have been obtained to issue or purchase the Shares
or to deliver the ADSs.
(e) Compliance Certificate. The Purchaser shall have delivered
to the Company a certificate, executed on behalf of the Purchaser by an
officer of the Purchaser, dated the Closing Date, and certifying to the
fulfillment of the conditions specified in Sections 5.1(a) and 5.1(b) of this
Agreement.
(f) Shareholder Meeting Approval and Acknowledgment. The
Shareholder Meeting Approval shall have been obtained from the shareholders
of the Company at a meeting of the shareholders of the Company pursuant to
the statuts of the Company and in accordance with French law. The
Acknowledgment shall have been decided by the Board of Directors of the
Company pursuant to the statuts of the Company and in accordance with French
law.
(g) Supervisory Board Approval. The approval of the Supervisory
Board of the Purchaser of the transactions contemplated hereby shall have
been obtained.
SECTION 6
Covenants of the Company
6.1 Other Strategic Investors.
(a) Subject to Section 6.1(c), until the termination of this
Agreement in accordance with Section 8.1 hereof and so long as the Purchaser
holds at least two percent (2%) of the outstanding shares of the Company, in
the event that the Company receives or makes a proposal for a Covered
Transaction, the Company shall promptly and in any event at least ten (10)
calendar days prior to accepting such proposal or entering into any
agreement, letter of intent or similar
9
understanding relating to a Covered Transaction, send a Covered Transaction
Notice to the Purchaser. During such ten (10) calendar day period, the Company
will (a) negotiate in good faith with the Purchaser in connection with any good
faith competing proposal that the Purchaser may determine to make, (b) make
available to the Purchaser, within three (3) calendar days following the
Purchaser's written request, such information relating to the Company and its
subsidiaries as the Purchaser shall reasonably request in connection with a good
faith competing proposal, which information shall include, without limitation,
all of the information furnished to any of the Other Parties, and (c) advise the
Purchaser promptly of any material changes in the financial terms of the Covered
Transaction with the Other Parties provided that such notification of material
changes shall not be deemed to trigger a new Covered Transaction Notice
requirement. The management and the Board of Directors of the Company will
consider the Purchaser's counter-proposal or counter-proposals in their
reasonable business judgment and in the exercise of their fiduciary duties
provided, however, that the provisions of this Section 6 shall not in any
respect be deemed to constitute a right of first refusal and the Company's
management and Board of Directors shall be free in their sole discretion to
accept whichever proposal they consider to be in the best interests of the
Company or not to accept any proposal. In addition, it is agreed that any
publicly announced take-over bid shall not constitute a proposal for a Covered
Transaction for the purposes of this Section 6 and that, consequently in such
circumstances, the Company will be under no obligation towards the Purchaser
pursuant to this Section 6.
(b) From and after the date that the Company sends the Covered
Transaction Notice, the provisions of Sections 6.2, 7.1(a) and 7.2 hereof may
be waived by the Company's Board of Directors in its sole discretion by
written notice to the Purchaser.
(c) Any information disclosed to the Purchaser under this
Section 6 shall be deemed strictly confidential and shall not be disclosed by
the Purchaser to any person except its directors, officers and professional
advisors and those of its subsidiaries who have been requested to evaluate
such information and who shall in turn be under the same obligations of
confidentiality as the Purchaser until the earlier of (i) the date upon which
such information becomes public knowledge through no fault of SAP, (ii) the
date such information is required to be disclosed by law or a court of
competent jurisdiction or rules of any stock exchange on which the securities
of ILOG or SAP are listed, or (iii) the fourth anniversary of the date of
disclosure. The Purchaser shall not and shall use its best endeavors to
ensure that the directors, officers or professional advisors to whom it has
disclosed information regarding the proposed Covered Transaction, as the case
may be, shall not trade directly or indirectly any shares or ADSs of the
Company as long as the relevant Covered Transaction is not public information
if applicable securities laws would prohibit such trading. Any material
breach of this Section 6.1(c) shall result in the immediate termination of
the provisions of this Section 6 and any rights the Purchaser has hereunder.
The Purchaser shall indemnify and hold each of the Company, its officers and
directors harmless in respect of any adverse consequence resulting for any of
the Company, its officers and directors from any such breach.
A "Covered Transaction" shall mean a transaction proposed directly by
or to or on behalf of an entity which (or whose affiliate) is a recognized
vendor of Enterprise Resource Planning Software ("ERP") or Advance Planning
Software ("APS") for an (a) acquisition of the Company's shares or
10
ADSs, and/or securities convertible or exercisable into shares or ADSs, and/or
other rights to acquire shares or ADSs, in each case whether from the Company,
or from shareholders of the Company such that such party or group owns or would
own upon conversion or exercise of any such right, directly or indirectly,
shares constituting 5% or more of the then outstanding shares and ADSs of the
Company, (b) an acquisition of all or substantially all of the assets or
business of the Company, or (c) a merger, consolidation or similar combination
with the Company in which the shareholders of the Company immediately prior to
such event do not own a majority of the outstanding shares of the surviving
corporation.
A "Covered Transaction Notice" shall mean a notice setting forth (a)
the name of each other party to the Covered Transaction, including the name of
each ERP or APS vendor with which any such party may be affiliated (collectively
the "Other Party") and (b) a description of the principal financial terms of the
proposed Covered Transaction.
6.2 Right to Maintain. After the date of this Agreement, and subject to
Section 7.1, the Purchaser shall be entitled to purchase on the open market or
otherwise from shareholders additional ordinary shares such that immediately
after such purchase, Purchaser's percentage ownership in the Total Voting Power
of the Company, as defined in Section 7.1(b) below, would not exceed 4.999% of
the Total Voting Power (the "Maximum Limit"), calculated based on the Total
Voting Power of the Company as disclosed in the most recent Company filing with
the SEC, provided that, prior to making any purchase pursuant to this Section
6.2, Purchaser obtains the prior written acknowledgment of the Company's Chief
Financial Officer, who shall respond promptly, that such purchase will not cause
the Purchaser's Total Voting Power (directly or indirectly, together with any
subsidiary or parent corporation) to exceed the Maximum Limit.
6.3 Shareholder Meeting Approval. Promptly following execution of this
Agreement, the Company shall take all steps necessary for the holding of a
shareholder's meeting for the purposes of authorizing the increase of the share
capital, waiving the pre-emptive rights (droits preferentiels de souscription)
of the shareholders, and consequently the issue of the Shares and the holding of
a meeting of the Board of Directors for the purposes of acknowledging the final
subscription price in French Francs of the Shares to be subscribed by the
Purchaser.
6.4 Preemptive Rights. Nothing in this Agreement shall be deemed to
constitute a waiver of any pre-emptive rights (droits preferentiels de
souscription) which the Purchaser has under applicable French law or under the
Company's Statuts.
6.5 Piggy Back Rights. Following the expiration of the period of one
(1) year from the date of closing of this Agreement, in the event that the
Company effects any registration of its shares in an offering involving the sale
of shares by holders of registration rights, the Company will use reasonable
efforts to seek the consent of the holders of registration rights to allow the
Purchaser proportional piggy back rights on the same terms and subject to the
same conditions as the holders in such registration of shares. The Purchaser
acknowledges that the Company may not be able to obtain the required consent of
the holders of registration rights in connection with this Section 6.5.
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SECTION 7
Covenants of the Purchaser
7.1 Limitation on Ownership of Voting Stock.
(a) Except as permitted under Sections 6.1 and 6.2 hereof,
unless it obtains the prior written consent of the Company as approved by the
Company's Board of Directors, the Purchaser shall not (and shall not permit
any subsidiary or parent corporation to directly or indirectly) acquire
beneficial ownership of any Voting Stock, any securities convertible into or
exchangeable for Voting Stock, or any other rights to acquire Voting Stock
(except, in any case, by way of stock dividends or other distributions or
offerings made available to holders of any Voting Stock generally) or
authorize or make a tender, exchange or other offer, if the effect of such
acquisition would be to increase the voting power of all Voting Stock then
owned by the Purchaser or which it has a right to acquire to more than the
greater of the following: (i) Total Voting Power of the Company held by the
Purchaser immediately prior to such acquisition; and (ii) 4.999% of the Total
Voting Power of the Company.
(b) For purposes of this Agreement:
(i) The term "Total Voting Power of the Company" means the
total number of votes which may be cast in the election of directors of the
Company at any meeting of shareholders of the Company if all securities
entitled to vote in the election of directors of the Company were present and
voted at such meeting.
(ii) The term "Voting Stock" means the ordinary shares of
the Company and any other securities issued by the Company having the
ordinary power to vote in the election of directors of the Company.
(iii) Following written notification to the Purchaser of
the acquisition of Voting Stock which results in 5.0% or more of the Total
Voting Power of the Company being held by a third party (other than a
financial investor, the principal business of which is the purchase, sale and
trading of securities), the provisions of Section 6.2 and 7.1(a) shall not
apply for so long as such third party holds 5.0% or more of the Total Voting
Power of the Company and until written notice is sent by the Company pursuant
to the next clause; for purposes of this sub-clause, the Company's Chief
Financial Officer shall be required to promptly notify the Purchaser of any
investor (other than a financial investor, the principal business of which is
the purchase, sale and trading of securities), who after the date of this
Agreement holds 5.0% or more of the Total Voting Power of the Company and of
any subsequent sale of Voting Stock by such third party which results in a
reduction below 5.0% of the Total Voting Power of the Company.
12
7.2 Voting. In the event that another party proposes to acquire
directly or indirectly all of the Voting Stock of the Company in a transaction
which is consented to by the Board of Directors of the Company and such
transaction is consented to by persons holding a majority of the Total Voting
Power of the Company, Purchaser will consent to such transaction and will tender
its Voting Stock pursuant to the terms of such transaction.
7.3 Acts in Concert with Others. Except as permitted under Section 6.2,
the Purchaser shall not directly or indirectly join a partnership, limited
partnership, syndicate or other group, or otherwise act in concert with any
third person, for the purpose of acquiring or holding Voting Stock.
7.4 Confidential Information. The Company may from time to time
pursuant to this Agreement disclose to the Purchaser certain technical and
non-technical business information which the Company deems to be confidential.
Notwithstanding any other provision of this Agreement, including provisions
regarding the termination of this Agreement or particular terms of this
Agreement, the Purchaser shall not disclose information provided to it and
designated as confidential to third parties until the earliest of (i) the date
upon which such information becomes public knowledge through no fault of the
Purchaser, (ii) the date upon which the Company discloses such information to a
third party on an unrestricted basis, (iii) the date upon which such information
becomes available to the Purchaser on a non-confidential basis from a source
other than the Company, provided that such source is not known by the Purchaser
to be bound by a confidentiality agreement with or for the benefit of the
Company, (iv) the date upon which such information has been acquired or
developed by the Purchaser or its affiliates independently of, and not derived
from, any such information received from the Company or any other source known
by the Purchaser to be bound by a confidentiality agreement with or for the
benefit of the Company, (v) the date such information is required to be
disclosed by law or a court of competent jurisdiction or rules of any stock
exchange on which securities of the Purchaser or the Company are listed, or (vi)
the fourth anniversary of the date of disclosure; provided, however, that the
Purchaser may disclose such information (y) to its attorneys, accountants,
consultants and other professionals to the extent necessary to obtain their
services in connection with its investment in the Company, or (z) to any
affiliate or subsidiary of the Purchaser, or any of the officers or
representatives thereof; provided that such persons agree to be bound by this
Section 7.4. The Purchaser further acknowledges and understands that any
information so obtained which may be considered "inside" nonpublic information
will not be utilized by the Purchaser in connection with purchases and/or sales
of the Company's securities except in compliance with applicable state and
federal securities laws.
7.5 Approval of Supervisory Board. Promptly following execution of this
Agreement, the Purchaser shall use its reasonable best efforts to obtain the
approval of its Supervisory Board for the transactions contemplated by this
Agreement which require such Supervisory Board's approval.
SECTION 8
Miscellaneous
8.1 Termination of Agreement.
13
(a) This Agreement shall have a term of ten (10) years from the
Closing Date. The Company may terminate its obligation to perform or observe
any of its covenants and agreements hereunder if the Purchaser violates any
of the covenants or agreements of the Purchaser under this Agreement, and the
Purchaser may terminate its obligations to perform or observe any of its
covenants and agreements hereunder if the Company violates or fails to
perform any of the covenants or agreements of the Company under this
Agreement; provided, however the Company or the Purchaser, as the case may
be, may not terminate any of its obligations under this Agreement pursuant to
this sentence unless it shall have delivered written notice of such default
to the other party and such default shall not have been cured within thirty
(30) calendar days after the delivery of such notice.
(b) From and after the termination of this Agreement, the
covenants, obligations and agreements of the parties set forth herein shall
be of no further force or effect and the parties shall be under no further
obligation with respect thereto.
(c) Notwithstanding the provisions of this Section 8.1, the
respective obligations of the Company and the Purchaser under Section 7.4 of
this Agreement (Confidential Information) shall survive any termination of
this Agreement.
8.2 Governing Law. This Agreement shall be governed in all respects by
the laws of the Republic of France as applied to contracts entered into solely
between residents of, and to be performed entirely within, such Republic, except
that the provisions relating to the securities laws of the United States shall
be governed by the laws of the United States.
8.3 Survival. The representations and warranties in Sections 3 and 4 of
this Agreement shall survive any investigation made by the Purchaser or the
Company and the Closing; provided that such representations and warranties shall
not be construed so as to constitute representations and warranties concerning
circumstances existing after the Closing Date.
8.4 Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns. Except as otherwise provided in this Agreement, this Agreement may
not be assigned by a party without the prior written consent of the other party
except by operation of law, in which case the assignee shall be subject to all
of the provisions of this Agreement.
8.5 Entire Agreement; Amendment. This Agreement and the other documents
delivered pursuant hereto constitute the full and entire understanding and
agreement between the parties with regard to the subject matter hereof and
thereof and supersede all prior agreements and understandings among the parties
relating to the subject matter hereof. No party shall be liable or bound to any
other party in any manner by any warranties, representations or covenants except
as specifically set forth herein. Except as set forth in Section 8.1(a), neither
this Agreement nor any term hereof may be amended, waived, discharged or
terminated other than by a written instrument
14
signed by the party against whom enforcement of any such amendment, waiver,
discharge or termination is sought.
8.6 Notice And Dates. Any notice or other communication given under
this Agreement shall be sufficient if in writing and delivered by hand, by
messenger or by courier, or transmitted by confirmed facsimile, to a party at
its address set forth below (or at such other address as shall be designated for
such purpose by such party in a written notice to the other party hereto):
(a) if to the Company, to it at;
ILOG S.A.
9 rue de Verdun,
Gentilly, 94253 France
Attention: President
(Facsimile) 331-49083535
with a courtesy copy to:
Stibbe Simont Monahan Duhot & Giroux
154 rue de l'Universite
75007, Paris, France
Attention: Olivier Edwards
(Facsimile) 331-40622062
and to:
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304-1050
Attention: Francis S. Currie
(Facsimile) (650) 493-6811
(b) if to Purchaser, to it at:
SAP Aktiengesellschaft
Neurottstrasse 16
D-69190 Walldorf, Germany
Attention: Legal Department
(Facsimile) 49-6227-7-42060
15
with a courtesy copy to:
SAP America Legal Department
3999 Westchester Pike
Newton Square, PA 19073
Attention: General Counsel
(Facsimile) (610) 355-2506
Each such notice or other communication shall for all purposes of this
Agreement be treated as effective or having been given when delivered if
delivered personally, by messenger or by courier, or, if sent by facsimile, upon
confirmation of receipt by return facsimile.
8.7 Further Assurances. The parties hereto shall do and perform or
cause to be done and performed all such further acts and things and shall
execute and deliver all such other agreements, certificates, instruments or
documents as any other party may reasonably request from time to time in order
to carry out the intent and purposes of this Agreement and the consummation of
the transactions contemplated hereby. Neither the Company nor the Purchaser
shall voluntarily undertake any course of action inconsistent with the
satisfaction of the requirements applicable to them set forth in this Agreement
and each shall promptly do all such acts and take all such measures as may be
appropriate to enable them to perform as early as practicable the obligations
herein required to be performed by them.
8.8 Counterparts. This Agreement may be executed in any number of
counterparts, each of which may be executed by fewer than all of the parties,
each of which shall be enforceable against the parties actually executing such
counterparts, assuming that all parties have executed a counterpart, and all of
which together shall constitute one instrument.
8.9 Severability. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision which shall be replaced with an enforceable provision
closest in intent and economic effect as the severed provision.
8.10 Captions. Headings of the various sections of this Agreement have
been inserted for convenience of reference only and shall not be relied upon in
construing this Agreement. Use of any gender herein to refer to any person shall
be deemed to comprehend masculine, feminine, and neuter unless the context
clearly requires otherwise.
8.11 Public Statements. The Company and the Purchaser agree not to
issue any public statement with respect to their business relationship, or the
Purchaser's investment in the Company or the terms of any agreement or covenant
among them without the other party's reasonable prior written consent, which
consent shall not be unreasonably withheld, except such disclosures as may be
required under applicable law or under any applicable order, rule or regulation
or, in the case of the Company, except as necessary to pursue discussions with
other strategic investors.
16
8.12 Brokers.
(a) The Company has not engaged, consented to or authorized
any bank, broker, finder or intermediary, to act on its behalf, directly or
indirectly, as a bank, broker, finder or intermediary in connection with the
transactions contemplated by this Agreement. The Company hereby agrees to
indemnify and hold harmless the Purchaser from and against all fees, commissions
or other payments owing to any person or firm acting on behalf of the Company
hereunder.
(b) The Purchaser has not engaged, consented to or authorized
any broker, finder or intermediary, to act on its behalf directly or indirectly,
as a broker, finder or intermediary in connection with the transactions
contemplated by this Agreement. The Purchaser hereby agrees to indemnify and
hold harmless the Company from and against all fees, commissions or other
payments owning to any such person or firm acting on behalf of the Purchaser
hereunder.
8.13 Attorney's Fees. The prevailing party in any litigation between
Purchaser and the Company involving this Agreement shall be entitled to recover
from the other party its reasonable attorneys' fees and costs.
8.14 Costs and Expenses. Each party hereto shall pay its own costs
and expenses incurred in connection herewith, including the fees of its
counsel, auditors and other representatives, whether or not the transactions
contemplated herein are consummated.
8.15 No Third Party Rights. Nothing in this Agreement shall create
or be deemed to create any rights in any person or entity not a party to this
Agreement.
8.16 Competing Business Interests. The Company hereby acknowledges
that the Purchaser, its affiliates and certain companies and other entities
in which the Purchaser and its affiliates currently have ownership interests
or may invest in, acquire or otherwise enter into strategic relationships
with, may presently or in the future have businesses or otherwise undertake
activities that may or may not directly or indirectly compete with or provide
a strategic fit with the business of the Company as such business is
presently conducted or may be conducted in the future and may presently or in
the future independently develop or sell products which may directly or
indirectly compete with products developed or sold by the Company.
17
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective authorized officers as of the date first above
written.
ILOG S.A.
By:/s/Pierre Haren
___________________________
Name:Pierre Haren
_________________________
Title:Chief Executive Officer
________________________
SAP Aktiengesellschaft
By:/s/Claus Heinrich
___________________________
Name:Clause Heinrich
_________________________
Title:Member of the Board
________________________
By:/s/Mickael Junge
___________________________
Name:Mickael Junge
_________________________
Title:Head of Legal Department
________________________
18