EXHIBIT (b)(2)
27TH JANUARY 1998
THE SAGE GROUP PLC
J. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & CO. LIMITED
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VENDOR PLACING AGREEMENT
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FRESHFIELDS
CONTENTS
CLAUSE PAGE
1. Definitions................................................... 1
2. Conditions.................................................... 3
3. Placing....................................................... 4
4. Delivery of documents......................................... 5
5. Allotment, Payment and registration........................... 6
6. Fees, Commissions and Expenses................................ 7
7. Further assurances of the Company............................. 8
8. Warranties and undertakings of the Company.................... 10
9. Indemnity..................................................... 14
10. Undertakings and Acknowledgement............................... 15
11. Termination and continuing provisions......................... 16
12. Notices....................................................... 16
13. Miscellaneous................................................. 17
AN AGREEMENT made on 27 JANUARY 1998
BETWEEN
THE SAGE GROUP PLC whose registered office is at ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇-▇▇▇▇-▇▇▇▇, ▇▇▇ ▇▇▇ (the COMPANY); and
J. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & CO. LIMITED whose registered office is at ▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ (SCHRODERS)
WHEREAS
(A) By an agreement dated the same date as this Agreement (the MERGER
AGREEMENT), made between State of the Art Inc (SOTA), Sage Acquisition Corp.
(BIDCO) and the Company, Bidco has agreed to offer, by means of the Tender Offer
Documentation, to acquire from the Vendors all shares of the issued and
outstanding common stock, no par value, of SOTA (the STOCK) and proposes to
satisfy part of the consideration for such acquisition by the allotment and
issue to the persons nominated by Schroders or to Schroders (as the case may be)
of 7,826,694 new ordinary shares in the capital of the Company (the PLACING
SHARES), credited as fully paid (such shares to rank, upon issue, in all
respects pari passu with the existing issued ordinary shares of the Company,
save that they will not rank for any final dividend in respect of the year ended
30 September 1997 declared in respect of such ordinary shares).
(B) Schroders is willing to procure investors (other than the Vendors) to
accept the allotment of or, to the extent that it does not do so, itself as
principal to accept the allotment of the Placing Shares in accordance with the
provisions of this Agreement (the PLACING) on terms that the aggregate value of
the Placing Shares will be used to enable Bidco to fulfil its obligations under
the Merger Agreement and the Tender Offer Documentation.
IT IS AGREED as follows:
DEFINITIONS
1.1 In this Agreement (including the Recitals and the Schedule) the following
expressions shall, except where the context requires otherwise, have the
following meanings:
ACQUISITION means the proposed acquisition by Bidco of the Stock pursuant to the
Tender Offer Documentation;
ACT means the Companies ▇▇▇ ▇▇▇▇;
ADMISSION means the admission of the Placing Shares to the Official List of the
London Stock Exchange;
ADMISSION CONDITION means the condition set out in clause 2.1(d);
BIDCO has the meaning set out in Recital (A);
CONDITIONS has the meaning set out in clause 2.1;
DEALING DAY means any day on which the London Stock Exchange is open for
business in London;
DIRECTORS means the directors for the time being of the Company;
EXISTING SHARES means the ordinary shares of 1 ▇▇▇▇▇ each in the capital of the
Company in issue at the date of this Agreement;
FSA means the Financial Services ▇▇▇ ▇▇▇▇;
GROUP has the meaning given in clause 8.1(d) and, for the avoidance of doubt,
will not be taken to include any entities acquired pursuant to the Acquisition;
LISTING RULES means the listing rules made by the London Stock Exchange pursuant
to Part IV of the FSA (as amended from time to time);
LONDON STOCK EXCHANGE means the London Stock Exchange Limited;
MERGER AGREEMENT means the agreement referred to in Recital (A);
ORDINARY SHARES means ordinary shares of 1 ▇▇▇▇▇ each in the capital of the
Company;
PLACING has the meaning set out in Recital (B);
PLACEES has the meaning set out in clause 3.1;
PLACING LETTER means the agreed form of letter to be despatched by Schroders (or
their agent) to the Placees inviting them to agree to acquire the Placing
Shares;
PLACING LIST has the meaning set out in clause 3.3;
PLACING PRICE means the price per Placing Share (which shall be not less than
900 p per share) at which those Placing Shares for which Schroders shall have
procured investors pursuant to clause 3.1(a) are to be issued as determined by
Schroders following the tender process and to be set out in the Placing Letters;
PLACING SHARES has the meaning set out in Recital (A);
PRESS ANNOUNCEMENTS means the press announcements to be issued in the United
Kingdom (the UK PRESS ANNOUNCEMENT) and the United States respectively, in the
form of the agreed drafts;
STOCK has the meaning set out in Recital (A);
TENDER OFFER means the US tender offer by Bidco to acquire the Stock;
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TENDER OFFER DOCUMENTATION means the Schedule 14-D-1 document and the associated
letter of transmittal to be issued by Bidco in connection with the Acquisition;
VENDORS means the holders of the Stock; and
WARRANTIES means the representations, warranties and undertakings set out in
clause 8.
1.2 References to the Recitals, clauses and the Schedule are to the Recitals
to, clauses of and Schedule to, this Agreement (except where the context
otherwise requires).
1.3 The expressions HOLDING COMPANY, SUBSIDIARY and SUBSIDIARY UNDERTAKING
shall have the meanings given to those terms by the Act.
1.4 Any reference to an "agreed draft" or "agreed form" is to the form of the
relevant document agreed by or on behalf of the Company and, for the purposes of
its commitments hereunder, by or on behalf of Schroders and initialled by them
or on their behalf (in each case with such amendments as may be agreed by or on
behalf of the Company and Schroders).
1.5 Any reference to an enactment is a reference to it as from time to time
amended, consolidated or re-enacted (with or without modification) and includes
all instruments or orders made thereunder.
1.6 Words denoting the singular include the plural and vice versa. Words
importing gender shall include all genders and words denoting persons shall
include corporations, unincorporated associations and partnerships.
1.7 References in this Agreement to the word MATERIAL shall mean material in
the context of the Placing or the underwriting of the Placing.
CONDITIONS
2.1 Schroders' obligations under clause 3.1 are conditional upon each of the
following conditions (the CONDITIONS) having been satisfied:
(a) the Tender Offer having closed in accordance with its terms (including in
circumstances where Bidco accepts for purchase 49.9999% of the Stock);
(b) the release of the UK Press Announcement in accordance with clause 7.1;
(c) the Company having allotted the Placing Shares in accordance with clause 5
(conditional only upon satisfaction of the Admission Condition); and
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(d) the Admission of the Placing Shares becoming effective in accordance with
paragraph 7.1 of the Listing Rules by not later than 9.00 a.m. on any day
until and including 27 March 1998.
Schroders may, in its absolute discretion, agree to extend the time for
satisfaction of any of the Conditions to not later than 9.00 am on 27 March 1998
(in which case, references to such Condition in this Agreement shall be to such
Condition as so varied) or to waive the satisfaction of any of the Conditions
(except for the Admission Condition).
Schroders agrees that it shall waive the Condition in clause 2.1(a) (which
waiver shall be subject to the Admission Condition being satisfied) if all the
other Conditions have been satisfied on or by the required times or dates
therefor, provided that the Company and/or Bidco (as appropriate) shall have
undertaken in writing to Schroders to give an irrevocable and unconditional
instruction (in the agreed form) immediately following Admission that the Stock
be accepted for purchase.
2.2 The Company will use all reasonable endeavours to procure the satisfaction
of the Conditions by the specified times and dates.
2.3 If any of the Conditions is not satisfied or (except for the Admission
Condition) waived by Schroders in its absolute discretion on or by the required
times or dates therefor (including any extension pursuant to clause 2.1), the
obligations of Schroders under this Agreement shall cease and determine.
PLACING
3.1 Schroders hereby undertakes, subject to the Conditions and in reliance upon
the representations, undertakings, covenants and warranties of the Company set
out in this Agreement (including the Warranties):
(a) as agent for the Company to procure investors (to such extent as Schroders
shall in its absolute discretion determine) to acquire the Placing Shares
(PLACEES) in accordance with a tender process discussed with the Company,
and on the terms and conditions set out in the Placing Letter; and
(b) to the extent it does not procure such investors who have agreed to acquire
the Placing Shares at not less than 900p per share, itself to acquire as
principal such Placing Shares at 900p per Placing Share,
in all cases free of all stamp duty, stamp duty reserve tax and other expenses.
3.2 The Company authorises Schroders, as its agent, to issue or cause to be
issued copies of the UK Press Announcement together with Placing Letters to such
persons as Schroders shall in its absolute discretion determine for the purpose
of arranging the Placing on the terms and conditions set out in the Placing
Letter.
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3.3 Schroders shall give the Company written notice, by 10.00 a.m. on 2 March
1998, listing the name and registration details of each Placee and the number of
Placing Shares to be allotted to each Placee (the PLACING LIST). For the
avoidance of doubt, Schroders may (at its absolute discretion) nominate itself
in the Placing List to be a Placee at the Placing Price in respect of some or
all of the Placing Shares.
3.4 The Company hereby irrevocably and unconditionally appoints Schroders as
its agent for the purpose of effecting the Placing under clause 3.1(a) on the
terms and subject to the conditions set out in this Agreement and the Placing
Letter and solely on the basis of the information contained in the UK Press
Announcement and other information published by the Company. Schroders hereby
accepts such appointment. The Company hereby confirms that this appointment
confers on Schroders all powers, authorities and discretions on behalf of the
Company which are reasonably necessary for, or reasonably incidental to, the
Placing and the Company hereby agrees to ratify and confirm everything which
Schroders may lawfully do in the exercise of that appointment and those powers,
authorities and discretions.
DELIVERY OF DOCUMENTS
4.1 The Company shall deliver to Schroders forthwith upon its execution of this
Agreement:
(a) a certified copy of the minutes of a meeting of the Directors (or a duly
authorised committee thereof) in the agreed form approving and authorising,
inter alia, the execution by the Company of this Agreement and the Merger
Agreement, the signing of a London Stock Exchange form of application for
listing in respect of the Placing Shares on behalf of the Company and the
issue of the Press Announcements;
(b) a certified copy of the minutes of the meeting of the Directors at which
any committee referred to in clause 4.1(a) was appointed;
(c) a certified copy of the resolution of the members of the Company
authorising the Directors to allot, inter alia, the Placing Shares; and
(d) copies of the Press Announcements and the Merger Agreement in the agreed
forms, signed for the purpose of identification by a Director or other
person duly authorised to do so as stated in the minutes.
4.2 The Company shall, from time to time, procure to be communicated or
delivered to Schroders all such information and documents (signed by the
appropriate person where so required) as Schroders may reasonably require to
enable it to discharge its obligations hereunder or pursuant to the Placing or
as may be required to comply with the requirements of the London Stock Exchange.
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ALLOTMENT, PAYMENT AND REGISTRATION
5.1 The Company shall deliver to Schroders before 8.00 a.m. on the day of
Admission (or such later time and/or date as the Company and Schroders may agree
in writing) a certified copy of the minutes of a meeting of the Directors (or of
the duly authorised committee referred to at clause 4.1(a)) in the agreed form
allotting the Placing Shares to the Placees and at the price(s) stated, and in
the proportions specified, in the Placing List, subject only to the satisfaction
of the Admission Condition.
5.2 The Placing Shares shall be allotted and issued fully paid up and free from
all claims, charges, liens, equities, encumbrances and other third party rights
of any nature whatsoever and shall rank pari passu in all respects with the
Existing Shares including the right to receive dividends and other distributions
hereafter declared, paid or made in respect of such shares save that they shall
not rank for the proposed final dividend of 1.93p (net) per share in respect of
the year ended 30 September 1997.
5.3 Following allotment by the Company of the Placing Shares in accordance with
clause 5, Schroders shall on behalf of the Company inform the London Stock
Exchange that the Placing Shares have been allotted subject only to the
satisfaction of the Admission Condition and request the London Stock Exchange to
undertake all such steps as are necessary for Admission to occur as soon as
practicable thereafter and in any event by 8.30 a.m. on the day of allotment of
the Placing Shares (or such later time and/or the date as the Company and
Schroders may agree in writing).
5.4 On the day of Admission (or such later date as may be agreed between
Schroders and the Company), subject to the Admission Condition having been
satisfied, Schroders shall make or procure payment to the account of the Company
(acting as trustee for the benefit of Sage (South Gosforth) Limited and at such
bank account as the Company shall notify to Schroders) of (less any deductions
permitted to be made under clause 6.2):
(a) an amount equal to the Placing Price multiplied by the number of Placing
Shares for which Schroders procures investors pursuant to clause 3.1(a);
and
(b) an amount equal to 900p multiplied by the number of Placing Shares which
Schroders itself is obliged to acquire pursuant to clause 3.1(b).
The receipt of such amounts in such account shall be an absolute discharge of
Schroders' obligations hereunder, and the obligations of the Placees, in respect
of all amounts payable (whether to the Vendors or otherwise) in respect of the
allotment and issue of the Placing Shares and the Company acknowledges that it
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shall have no right or interest whatsoever in any amounts received subsequently
by Schroders from the Placees. Schroders acknowledges that it shall have no
recourse against the Company if it fails to receive the relevant amounts from
the Placees.
5.5 The Company shall procure that its registrars shall as soon as reasonably
practicable following Admission (without a registration fee being payable by
Schroders and/or the Placees) register Schroders and/or those Placees procured
by it as holders of the Placing Shares with effect from Admission and shall as
soon as reasonably practicable following Admission, and in any event by not
later than the second dealing day following Admission deliver to Schroders or as
it shall direct fully paid share certificates in respect of the Placing Shares
and shall, pending such delivery, certify all transfers of the Placing Shares
against the Company's register of members.
FEES, COMMISSIONS AND EXPENSES
6.1 The Company shall pay to Schroders for its services hereunder:
(a) whether or not Schroders' obligations under clause 3.1 become unconditional
or this Agreement is terminated by Schroders in accordance with its terms,
a commitment commission of one half of one per cent. of a sum equal to the
Placing Price multiplied by the number of Placing Shares in respect of the
first thirty days of Schroders' commitment hereunder (such period
commencing on the date of this Agreement) or if less the period commencing
on the date of this Agreement up to and including the date on which
Schroders' obligations hereunder shall cease and determine;
(b) whether or not Schroders' obligations under clause 3.1 become unconditional
or this Agreement is terminated by Schroders in accordance with its terms,
an additional commitment commission of 1/8th of one per cent. of a sum
equal to the Placing Price multiplied by the number of Placing Shares for
each and every period of seven days or part thereof (if any) commencing on
the day next following the expiry of the thirty day period referred to in
paragraph (a) above, up to and including the earlier of (i) the date on
which the Admission Condition is satisfied and (ii) the date on which
Schroders' obligations hereunder shall cease and determine; and
(c) an advisory and underwriting fee as provided in the engagement letter
between Schroders and the Company dated 27 January 1998,
together in each case with value added tax thereon, if any.
Any fees and commissions payable to Placees shall be paid by Schroders. For the
avoidance of doubt, the Company agrees that Schroders shall not be responsible
for the payment of any fees payable to NatWest Securities Limited by the Company
in respect of services to be provided by NatWest Securities Limited in relation
to the Placing.
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6.2 In addition to the commissions referred to in Clause 6.1, the Company shall
pay all other costs and expenses (excluding fees and/or commissions payable to
Placees) of, and in connection with, the Merger Agreement, the Tender Offer
Documentation, this Agreement, the allotment and issue of the Placing Shares,
the Placing and securing Admission including (but not limited to) the London
Stock Exchange listing fees, printing and advertising costs, postage, its own
and Schroders' legal expenses, Schroders' out-of-pocket expenses, all
accountancy and other professional fees and all stamp duty and stamp duty
reserve tax and other duties and taxes in relation to the acquisition of Placing
Shares by Schroders or persons procured to acquire Placing Shares pursuant to
this Agreement. The Company shall promptly following a request by Schroders pay
or reimburse the amount of any costs and expenses incurred by Schroders which
are to be borne by the Company and which Schroders has paid on behalf of the
Company. The Company hereby authorises Schroders to deduct from any sums
payable by it to the Company the commissions, fees and expenses (and related
value added tax, if any) payable by the Company pursuant to this Clause 6.
6.3 Where, pursuant to this Agreement, a sum is reimbursed to Schroders, the
Company shall, in addition, pay to Schroders in respect of value added tax:
(a) where the payment (or any part of it) constitutes the consideration (or
part of it) for any supply of services by Schroders to the Company, such
amount as equals any value added tax payable thereon and on such
irrecoverable value added tax, if any, as is referred to in (b) below;
(b) (except where the payment falls within (c) below), such amount as equals
any value added tax charged to Schroders in respect of any cost, charge,
duty, tax or expense which gives rise to the payment and which is not
recoverable by Schroders by repayment or credit; and
(c) on any reimbursement of or other payment to Schroders in respect of or
indemnification for costs, charges, duties, taxes or expenses incurred by
Schroders as agent for the Company, such amount as equals the amount
included in the costs, charges, duties, taxes or expenses in respect of
value added tax.
6.4 The commissions and fee referred to in clause 6.1 (together with any value
added tax thereon) shall be paid (where applicable), if Admission occurs, by
deducting such amounts from the payments to be made by Schroders under clause
5.4 or, if earlier, not later than two dealing days after the date on which
Schroders' obligations under this Agreement cease and determine pursuant to
clause 2 or are terminated pursuant to clause 11.
FURTHER ASSURANCES OF THE COMPANY
7.1 The Company undertakes to Schroders at the Company's expense:
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(a) to procure publication of the UK Press Announcement through the Regulatory
News Service (as defined in the Listing Rules) by 8.00 a.m. today;
(b) to deliver to the London Stock Exchange all such further documents as and
when required by the London Stock Exchange in connection with the Company's
application for the Admission of the Placing Shares in accordance with its
rules and requirements;
(c) to supply all such information, pay such fees, give such undertakings and
do or procure to be done all such acts or things as may be required by the
London Stock Exchange to procure Admission;
(d) to procure that the Tender Offer Documentation is despatched to the Vendors
on 2 February 1998; and
(e) to execute and/or provide or procure to be executed or provided all such
documents and to do or procure to be done all such other acts and things as
are necessary to cause the Placees to receive the entire right, title and
interest to and in the Placing Shares pursuant to this Agreement and the
Placing and to enable the provisions of this Agreement and the Placing to
be carried out and given full force and effect.
7.2 Schroders undertakes to give the Company all reasonable assistance (at the
expense of the Company) in connection with clause 7.1 and obtaining Admission.
7.3 The Company further undertakes that it will not, except as previously
agreed in writing by Schroders:
(a) agree to any (i) alteration, revision or amendment of any of the terms or
conditions of the Merger Agreement or the Tender Offer Documentation or
waive, vary, compromise or release any obligation or condition (except with
respect to the Minimum Condition and the Revised Minimum Number, each as
defined in the Merger Agreement) or grant any other time for performance or
completion thereof or other indulgence thereunder which, in any such case,
is material in the context of the Placing; or (ii) alteration to or
increase in the consideration payable to the Vendors under the Tender
Offer; or
(b) proceed to completion of the Merger Agreement or the Acquisition prior to
the satisfaction of all of the terms and conditions set out in the Merger
Agreement and the Tender Offer Documentation which are material in the
context of the Placing; or
(c) should it be aware prior to Admission that it is entitled to rescind or
terminate the Merger Agreement or the Acquisition, exercise its right to
proceed with completion of, or to terminate, the Merger Agreement or the
Acquisition.
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7.4 The Company's obligations under clause 7.3 shall cease to apply in the
event of Schroders terminating its obligations under this Agreement.
WARRANTIES AND UNDERTAKINGS OF THE COMPANY
8.1 The Company represents, warrants and undertakes to Schroders that:
(a) application will be made by the Company to the London Stock Exchange in
accordance with section 143 of the Financial Services ▇▇▇ ▇▇▇▇ for
admission of the Placing Shares to the Official List of the London Stock
Exchange;
(b) the information (other than expressions of opinion, intention or
expectation) contained in each of the Press Announcements is true and
accurate in all material respects, is in accordance with the facts and is
not misleading and each expression of opinion, intention or expectation
(including any forecast or estimate of profits or dividends) contained in
each of the Press Announcements is fairly based and honestly held by each
of the Directors and has been made reasonably and on reasonable grounds
after due and careful consideration and there are no other facts known, or
which could on reasonable enquiry have been known, to the Company or to its
Directors which are not disclosed in each of the Press Announcements the
omission of which would make any such statement of fact or expression of
opinion, intention or expectation false or misleading or which would affect
the import of any information contained therein or which, in the context of
the Placing, is or would be material for disclosure to Schroders or to a
Placee;
(c) following the issue of the UK Press Announcement in accordance with clause
7.1(a), all information which it is necessary for the Company to notify to
comply with the FSA and the Listing Rules will have been notified to the
Company Announcements Office of the London Stock Exchange and all
statements of fact so notified will have been true and accurate in all
material respects at that time and not misleading at that time (whether by
omission or otherwise) and all expressions of opinion, intention or
expectation so notified will have been made on reasonable grounds and will
have been fairly based and honestly held; the Company is not aware of any
circumstances (other than in connection with the Tender Offer or the Merger
Agreement) now subsisting or proposed or likely to come about which are
likely to lead to any obligation on the Company to make any announcement
through or notification to the London Stock Exchange within a period of one
month commencing on the date of Admission;
(d) the audited consolidated balance sheet of the Company and its subsidiary
undertakings (GROUP) as at 30 September 1997, the audited consolidated
profit and loss account of the Group for the financial year ended on such
date and the statement of cash flows of the Group for such financial year
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and the notes to such financial statements (together with the remainder of
the annual report and accounts of the Company for that year being referred
to herein as the ACCOUNTS) give a true and fair view of the assets,
liabilities (including contingent liabilities whether for taxation or
otherwise), reserves, profits (or losses) and state of affairs of the Group
as at such date and the financial year ended on that day and the Accounts
have been prepared in accordance with the Act and all applicable statements
of standard accounting practice and with generally accepted accounting
principles and practice consistently applied; that all statements of fact
contained in the Accounts concerning the financial or trading position or
prospects of the Group were at the date of approval of the Accounts by the
board of directors of the Company true and accurate in all material
respects and were not at the date of approval of the Accounts by the board
of directors of the Company misleading in any material respect; that all
expressions of opinion, intention or expectation on the part of the
directors of the Company contained in the Accounts concerning the financial
or trading position or prospects of the Group were at that date made on
reasonable grounds and were fairly based and honestly held and that since
such date and, save as disclosed in the Accounts or any document (PRIOR
DOCUMENT) issued or announcement (PRIOR ANNOUNCEMENT) made to the public or
the press or the London Stock Exchange by the Company since that date, the
operations of the Group have been carried on in the ordinary and usual
course and there has been no material adverse change in the financial or
trading position or prospects of the Group and no contracts or commitments
of an unusual or onerous nature (other than the Merger Agreement) have been
entered into by any member of the Group which are material in the context
of the Placing;
(e) the entry into of this Agreement and the Merger Agreement and the
publication of the Tender Offer Documentation by the Company and/or Bidco
(as the case may be) and the performance of the Company's and/or Bidco's
(as the case may be) obligations thereunder (including, without limitation,
the allotment and issue of the Placing Shares and the payment of the
commissions, fees and expenses) are within the powers of the Company and/or
Bidco and their respective directors without the need for any further
sanction or consent by members of the Company or any class of them or any
other person and will comply with all relevant requirements of the Act, the
rules and regulations of the London Stock Exchange, the FSA and all other
applicable laws, rules and regulations and with all agreements to which any
member of the Group is a party or by which it or any of them or its or any
of their property is bound and will not infringe any limits, restrictions,
obligations or commitments of any member of the Group howsoever arising and
the Placing Shares will, upon issue, be free from all claims, charges,
liens, encumbrances, equities and other third party rights of any nature
whatsoever and will on Admission rank pari passu in
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all respects with the Existing Shares including the right to receive
dividends and other distributions hereafter declared, paid or made in
respect of such shares save that they shall not rank for the proposed final
dividend of 1.93p (net) per share in respect of the year ended 30 September
1997;
(f) all authorisations, approvals, consents and licences required by the
Company and/or Bidco (as the case may be) for the entry into of this
Agreement and the Merger Agreement and the publication of the Tender Offer
Documentation have been unconditionally obtained and are in full force and
effect;
(g) the Merger Agreement has not been terminated or rescinded and is valid and
binding on the parties thereto; the Company is not aware of any
circumstance which is likely to result in the Merger Agreement or the
Tender Offer being terminated or rescinded, or any of the conditions to
that Agreement or the Tender Offer ceasing to be capable of fulfilment and
the Company is not aware of any reason why:
(i) the representations and warranties on the part of SOTA
contained in the Merger Agreement are not true in accordance
with their terms (subject to disclosures made prior to the
date hereof by SOTA); or
(ii) the undertakings on the part of SOTA contained in the Merger
Agreement are not capable of being, or are likely not to be,
performed in accordance with their terms;
(h) no member of the Group has (i) been notified in writing of any claims
outstanding against it or (ii) is engaged in, or has within the previous
twelve months been engaged in any litigation or arbitration proceedings or
similar proceedings or in any government, regulatory or similar
investigation or enquiry which, in any case, individually or collectively
may have or during the twelve months preceding the date hereof has had a
significant effect on the financial or trading position or prospects of the
Group or which individually or collectively are or may be material for
disclosure in the context of the Placing and no such litigation or
arbitration or similar proceedings or any such investigation or enquiry is
threatened nor, to the best of the knowledge, information and belief of the
Directors (having made all reasonable enquiries), are there any
circumstances which may give rise to any such litigation or arbitration
proceedings or similar proceedings or any such investigation or enquiry;
(i) except as disclosed in the Accounts, any Prior Document or any Prior
Announcement, and except for options under the Company's Inland Revenue
approved share option schemes, there are no arrangements
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which (contingently or otherwise) may give rise to an obligation on any
member of the Group to allot or issue any securities;
(j) no borrowing of any member of the Group has been declared payable before
its stated maturity which has not been satisfied in full and no
circumstances have arisen or, so far as the Company is aware, are about to
arise such that any person is entitled (or would, with the giving of notice
or lapse of time or fulfilment of any condition that is not within the
control of the Company or the making of any determination, become entitled)
to require payment before its stated maturity of, or to take any step to
enforce security over, any indebtedness in respect of borrowed moneys of
any member of the Group and the Company and its directors have complied
with all restrictions affecting their respective powers to borrow contained
in the Articles of Association of the Company or any other restriction on
such powers;
(k) no member of the Group has taken any action nor, so far as the Company is
aware, have any other steps been taken or legal proceedings started or
threatened against any of them for their winding up or dissolution, or for
any of them to enter into any arrangement or composition for the benefit of
creditors, or for the appointment of a receiver, administrator, trustee or
similar officer of any of them, or any of their respective properties,
revenues or assets in the previous 12 months; and
(l) all information supplied by the Company to Schroders in connection with
this Agreement or its advice given relating to the Acquisition is true and
accurate in all material respects and not misleading in any material
respect.
8.2 The Company shall immediately notify Schroders if it comes to the knowledge
of the Company or any of the Directors at any time prior to Admission that any
of the Warranties was untrue or inaccurate or misleading or would, if repeated
by reference to the facts and circumstances in existence at any time prior to
Admission, be untrue or inaccurate or misleading.
8.3 The Company hereby acknowledges that neither Schroders nor any subsidiary
undertaking or holding company thereof or subsidiary undertaking of any such
holding company (an AFFILIATE) has been requested by the Company to carry out
(a) any form of investigation or verification exercise relating to the accuracy
and fairness of any information contained in the Press Announcements or
otherwise published by or on behalf of the Company in connection with the
Placing or the Acquisition or (b) any evaluation of the terms of the Acquisition
or of the Company's investigations into SOTA.
Page 13
INDEMNITY
9.1 No claim shall be made against Schroders or any Affiliate or any of their
respective directors, officers, employees, agents and advisers (together with
Schroders hereinafter called the INDEMNIFIED PERSONS) to recover any loss,
liability, damage, cost, charge or expense which any member of the Group or
their respective directors, officers or agents may suffer or incur by reason of
or arising out of the carrying out by Schroders (or on its behalf) of its
obligations under this Agreement or in connection with the Acquisition save to
the extent that such loss, damage, liability, cost, charge or expense arises
from the negligence or wilful default of an Indemnified Person or from any
breach by an Indemnified Person of its duties and obligations under the FSA or
under the regulatory system (as defined in the Rules of the Securities and
Futures Authority) or from a breach by an Indemnified Person of Schroders'
obligations under this Agreement.
9.2 The Company hereby agrees and undertakes with Schroders to keep each and
every Indemnified Person indemnified against all actions, claims, demands,
proceedings or judgements (collectively INDEMNIFIED CLAIMS) and all losses,
liabilities, damages, costs, charges and expenses of whatever nature (including
costs, charges and expenses incurred in investigating or defending any
indemnified claim and in complying with any request made pursuant to clause 9.3
below (collectively INDEMNIFIED LOSSES)) made against or incurred by any
Indemnified Person directly or indirectly relating to or arising from the
carrying out or performance by or on behalf of Schroders of its obligations or
services under or in connection with this Agreement or in connection with the
Acquisition or the Placing PROVIDED THAT this indemnity shall not extend to such
claims or losses to the extent that they are attributable to the negligence or
wilful default of such Indemnified Person or persons or to a breach by an
Indemnified Person of Schroders' obligations under this Agreement or under the
FSA or under the regulatory system (as defined in the Rules of the Securities
and Futures Authority).
For the avoidance of doubt, the Company hereby acknowledges that any such
negligence, wilful default or breach by an Indemnified Person in relation to one
indemnified claim or indemnified loss shall not prejudice the rights of an
Indemnified Person to recover under this indemnity in relation to any other
indemnified claim or indemnified loss.
9.3 Any Indemnified Person against whom an indemnified claim is made shall be
entitled to defend, compromise, settle or deal with such indemnified claim as
Schroders may see fit after having considered all reasonable requests which the
Company may make and Schroders will, or will procure that the Indemnified Person
will, promptly notify the Company in writing of the fact that an indemnified
claim has been made and keep the Company informed on the conduct of any defence
to such claim and in relation to any settlement or compromise of it.
Page 14
9.4 If any amount becomes payable under the indemnity in this clause 9, the
Company shall pay such additional amount (if any) as is required to ensure that
the net amount received by the relevant Indemnified Person, after all deductions
and withholdings required by law or any taxation authority to be made from such
aggregate payment and all taxation suffered in respect of its receipt, will
equal the full amount which would have been received had no such deduction or
withholding been made and had no such taxation been suffered.
9.5 The benefit of this clause 9 shall survive any termination of the
arrangements contained in this Agreement and is in addition to any rights which
any Indemnified Person may have at common law or otherwise including, but not
limited to, any right of contribution.
9.6 Schroders shall have no liability to the Company in connection with this
Agreement save as a result of its negligence, wilful default or breach of its
obligations to the Company hereunder or under the FSA or its breach of any duty
owed to the Company under the rules of the Securities and Futures Authority.
UNDERTAKINGS AND ACKNOWLEDGEMENT
10.1 The Company undertakes to Schroders that it shall not, at any time between
the date hereof and one month after the date of Admission, enter into any
agreement or arrangement or do or (so far as it lies within its powers to
prevent) permit to be done any other act or thing which, in any case, would give
rise to any obligation to make an announcement to the London Stock Exchange in
accordance with the Listing Rules save for issuing the Press Announcements and
entering into and completing the Tender Offer Documentation as contemplated by
the Merger Agreement.
10.2 Without prejudice to the obligations of the Company under clause 10.3
and/or the Listing Rules, the Company hereby undertakes to Schroders that it
will not, at any time between the date hereof and one month after the date of
Admission or the date on which Schroders' obligations hereunder cease and
determine, make any public announcement or statement regarding the Placing or
otherwise relating to the financial condition or trading or prospects of the
Group, whether in response to enquiries or otherwise, without the prior consent
of Schroders, save for issuing the Press Announcements and entering into and
completing the Tender Offer Documentation as contemplated by the Merger
Agreement.
10.3 The Company hereby undertakes to Schroders that it will not at any time for
a period of one month from the date of Admission make any announcement,
statement or communication via the London Stock Exchange, without first
consulting with Schroders as to the content, form and manner of publication of
such announcement, statement or communication.
Page 15
10.4 The Company undertakes to make all such announcements concerning the
Placing and/or the Acquisition as shall be necessary to comply with the Listing
Rules and/or section 47 of the FSA and, in particular, the Company undertakes to
announce through the Regulatory News Service (as defined in the Listing Rules)
the Placing Price forthwith after its determination by Schroders and its
notification to the Company. Schroders reserves the right to make any such
announcement if the Company fails to fulfil its obligations under this clause
10.4.
10.5 The Company undertakes to do all such acts and things as are reasonably
necessary or desirable to enable the provisions of this Agreement and the
Placing to be carried out and given full force and effect.
TERMINATION AND CONTINUING PROVISIONS
11.1 If Schroders shall become aware, at any time prior to Admission, that:
(a) the Company is in breach of any of its obligations hereunder in a manner
which Schroders acting reasonably regards as material in the context of
the Placing; or
(b) any of the Warranties given by the Company hereunder is at the date of
this Agreement untrue, inaccurate or misleading in any respect which
Schroders acting reasonably regards as material in the context of the
Placing,
Schroders shall be entitled in its absolute discretion by notice in writing to
the Company given prior to Admission forthwith to terminate its obligations
hereunder.
11.2 Termination of Schroders' obligations in accordance with this clause 11
shall be without prejudice to, or to Schroders' rights under, clauses 6, 8, 9
and this clause 11 which shall continue in full force and effect for all
purposes.
11.3 The representations, warranties, undertakings and indemnities set out in
this Agreement and the Warranties shall remain in full force and effect
notwithstanding Admission and/or fulfilment by Schroders of its obligations
hereunder and shall be in addition to and shall not be construed to limit,
affect or prejudice any other right or remedy available to the person in whose
favour such representation, warranty, undertaking, indemnity or Warranty is
made.
NOTICES
12.1 Any notice to be given under this Agreement shall be in writing for the
attention of the person stated below and served personally or sent by pre-paid
registered mail to the respective addresses shown above or by facsimile as
stated below, or as the party required to receive the same may otherwise from
time to time notify to the other:
Page 16
THE COMPANY:
Facsimile Number: 0191 255 0306
Attention: The Company Secretary
SCHRODERS:
Facsimile Number: 0171 658 6459
Attention: ▇▇▇▇ ▇▇▇▇▇▇
12.2 Any such notice shall be deemed to have been served if delivered, at the
time of delivery; if sent by facsimile, at the time of effective transmission
unless the same shall be transmitted after 5.30 p.m. in which event it shall be
deemed to have been served at 10.00 a.m. on the next following business day; if
posted, at 10.00 a.m. on the second business day after it was put into the post.
MISCELLANEOUS
13. Without prejudice to Schroders' discretion under clause 2, time shall be of
the essence of this Agreement, both as regards the times, dates and any period
mentioned herein and as to any times, dates and periods which may, by agreement
in writing between the parties hereto, be substituted for them. All references
to business days shall mean days on which banks are generally open for business
in the City of London.
14. Any failure to exercise or delay in exercising a right or remedy provided
by this Agreement or by law does not constitute a waiver of the right or remedy
or a waiver of other rights or remedies. No single or partial exercise of a
right or remedy provided by this Agreement or by law prevents further exercise
of the right or remedy or the exercise of another right or remedy.
15. This Agreement shall be governed by and construed in all respects in
accordance with English law and the parties hereto irrevocably submit to the
exclusive jurisdiction of the courts of England.
AS WITNESS the hands of the duly authorised signatories of the parties the day
and year first before written
SIGNED by ▇▇▇▇ ▇▇▇▇▇▇ )
for and on behalf of ) ▇▇▇▇ ▇▇▇▇▇▇
THE SAGE GROUP PLC )
Page 17
SIGNED by ▇▇▇▇ ▇▇▇▇▇▇ )
for and on behalf of ) M Warham
J. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & CO. LIMITED )
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