Exhibit 10.3
AMENDMENT TO RIGHTS AGREEMENT
BETWEEN TEMPLATE SOFTWARE, INC. AND
FIRST UNION NATIONAL BANK
This Amendment To Rights Agreement (this "Amendment") is made this 19th day
of October, 1999, by and between Template Software, Inc., a Virginia corporation
(the "Company"), and First Union National Bank, a national banking corporation
(the "Rights Agent").
Whereas, the Company is entering into an Agreement and Plan of Merger (as
the same may be amended from time to time, the "Merger Agreement"), among the
Company, Level 8 Systems, Inc. (the "Parent"), and TSAC, Inc., a Delaware
corporation and wholly-owned subsidiary of Parent (the "Merger Sub"), pursuant
to which the Company will merge with and into the Merger Sub and the Merger Sub
will survive as a wholly-owned subsidiary of Parent, and the former shareholders
of the Company will receive a combination of cash and shares of common stock of
Parent;
Whereas, the Company and the Rights Agent are parties to that certain
Rights Agreement, dated as of July 3, 1998 (the "Rights Agreement");
Whereas, the Company desires to amend the Rights Agreement in connection
with the execution and delivery of the Merger Agreement; and
Whereas, the Board of Directors of the Company has approved this Amendment
and authorized its appropriate officers to execute and deliver the same to the
Rights Agent.
Now, Therefore, in accordance with the procedures for amendment of the
Rights Agreement set forth in Section 27 thereof, and in consideration of the
foregoing and the mutual agreements herein set forth, the parties hereby agree
as follows:
1. Capitalized terms that are not otherwise defined herein shall have the
meanings ascribed to them in the Rights Agreement.
2. The definition of "Acquiring Person" set forth in Section 1(a) of the
Rights Agreement is amended by adding the following sentence to the end of that
section:
Notwithstanding the foregoing, no Person shall be or become an
Acquiring Person by reason of (i) the execution and delivery of the
Agreement and Plan of Merger, dated as of October 19, 1999, among Level 8
Systems, Inc., a Delaware corporation (the "Parent"), TSAC, Inc., a
Delaware corporation and a wholly owned subsidiary of Parent (the "Merger
Sub") and the Company (the "Merger Agreement") or the execution of any
amendment thereto, (ii) the execution and delivery of the Stockholders
Agreement (as such term is defined in the Merger Agreement) or the
execution of any amendment thereto, (iii) the merger of the Company with
and into Merger Sub or (iv) the
1.
consummation of any other transaction contemplated by the Merger Agreement,
as it may be amended from time to time.
3. The definition of "Distribution Date" set forth in Section 1(h) of the
Rights Agreement is hereby amended by adding the following sentence to the end
of that section:
Notwithstanding anything else set forth in this Agreement, no
Distribution Date shall be deemed to have occurred by reason of (a) the
execution and delivery or amendment of the Merger Agreement or the
Stockholders Agreement, (b) the merger of the Company with and into Merger
Sub or (c) the consummation of any other transaction contemplated by the
Merger Agreement.
4. The definition of "Expiration Date" set forth in Section 1(l) of the
Rights Agreement is hereby amended to read as follows:
"Expiration Date" shall mean the earliest of (i) the close of business
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on the Final Expiration Date, (ii) the time at which the Rights are
redeemed as provided in Section 23 hereof, (iii) the Exchange Date or (iv)
the moment in time immediately prior to the Effective Time (as such term is
defined in the Merger Agreement).
5. The definition of "Stock Acquisition Date" set forth in Section l(u) of
the Rights Agreement is hereby amended by adding the following sentence to the
end of that section:
Notwithstanding anything else set forth in this Agreement, a Stock
Acquisition Date shall not be deemed to have occurred by reason of (i) the
execution and delivery or amendment of the Merger Agreement or the
Stockholders Agreement, (ii) the merger of the Company with and into Merger
Sub or (iii) the consummation of any other transaction contemplated by the
Merger Agreement.
6. Section 11(a)(ii) is hereby amended by adding the following sentence to
the end of that section:
Notwithstanding anything else set forth in this Agreement, no event
requiring an adjustment under this Section 11(a)(ii) shall be deemed to
have occurred by reason of (i) the execution and delivery or amendment of
the Merger Agreement or the Stockholders Agreement, (ii) the merger of the
Company with and into Merger Sub or (iii) the consummation of any other
transaction contemplated by the Merger Agreement.
7. Sections 13(a)(w), (x), (y) and (z) are amended to read as follows:
(a) In the event that, following the Stock Acquisition Date, directly
or indirectly (w) the Company shall consolidate with, or merge with and
into, any other Person (other than a Subsidiary of the Company in a
transaction that complies with Section 11(m) hereof), (y) any Person (other
than a Subsidiary of the Company in a transaction that complies with
Section 11(m) hereof) shall consolidate with, or merge with or into, the
Company, and the Company shall be the continuing or surviving corporation
of such
2.
merger and, in connection with such consolidation or merger, all or
part of the outstanding shares of Common Stock shall be changed into or
exchanged for stock or other securities of any other person or cash or any
other property (other than, in the case of either transaction described in
(w) or (x), the merger of the Company with and into Merger Sub), (y) the
Company shall be a party to a statutory share exchange with any other
Person (other than a Subsidiary of the Company in a transaction that
complies with Section 11(m) hereof) after which the Company is a Subsidiary
of any other Person, or (z) the Company shall sell or otherwise transfer
(or one or more of its Subsidiaries shall sell or otherwise transfer), in
one transaction or a series of related transactions, assets or earning
power aggregating more than 50% of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to any Person or Persons
(other than (a) the Company or any Subsidiary of the Company in one or more
transactions each of which complies with Section 11(m) hereof and (b) the
merger of the Company with and into Merger Sub), then, and in each such
case, proper provision shall be made so that:
The remaining portion of Section 13(a) shall be unchanged and shall remain in
full force and effect.
8. The first phrase of Section 13(c) of the Rights Agreement is hereby
amended to read as follows:
The Company shall not consummate any such consolidation, merger (other
than the merger of the Company with and into Merger Sub), statutory share
exchange, sale or transfer unless the Principal Party shall have a
sufficient number of authorized shares of its Common Stock that have not
been issued or reserved for issuance to permit the exercise in full of the
Rights in accordance with this Section 13, and unless prior thereto the
Company and each Principal Party shall have executed and delivered to the
Rights Agent a supplemental agreement providing for the terms set forth in
paragraphs (a) and (b) of this Section 13 and further providing that, as
soon as practicable after the date of any consolidation, merger, statutory
share exchange, or sale of assets mentioned in this paragraph (a) of this
Section 13, the Principal Party will: . . .
The remaining portion of Section 13(c) shall be unchanged and shall remain in
full force and effect.
9. Section 25 (a) (iv) of the Rights Agreement is hereby amended to read
as follows:
(iv) to effect any consolidation or merger into or with any other
Person (other than (a) a Subsidiary of the Company in a transaction that
complies with Section 11(m) hereof and (b) the merger of the Company with
and into Merger Sub), or to effect a statutory share exchange with any
Person (other than a Subsidiary of the Company in a transaction that
complies with Section 11(m) hereof), or to effect any sale or other
transfer (or to permit one or more of its Subsidiaries to effect any sale
or other transfer), in one transaction or a series of related transactions,
of more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as whole) to any other Person or Persons (other than
(a) a Subsidiary of the Company in one or more transactions each of which
complies with Section 11(m) hereof and (b) the merger of the Company with
and
3.
into Merger Sub),
10. Section 27 of the Rights Agreement is hereby amended by adding the
following sentence to the end of that section:
Notwithstanding any other provisions of this Agreement, no further
amendment or supplement to this Agreement shall become effective prior to
the termination of the Merger Agreement without the written consent of
Parent.
11. Section 30 of the Rights Agreement is hereby amended to read as
follows:
Nothing in this Agreement shall be construed to give to any person or
corporation other than the Company, the Rights Agent, and the registered
holders of the Rights Certificates and (prior to the Distribution Date) the
Common Stock, any legal or equitable right, remedy or claim under this
Agreement; but this Agreement shall be for the sole and exclusive benefit
of the Company, the Rights Agent, the registered holders of the Rights
Certificates (and, prior to the Distribution Date, the Common Stock), and
(with respect to Section 27 of the Rights Agreement, and prior to
termination of the Merger Agreement) Parent.
12. The Rights Agreement, as amended by this Amendment, shall remain in
full force and effect in accordance with its terms.
13. All the covenants and provisions of this Amendment by or for the
benefit of the Company or the Rights Agent shall bind and inure to the benefit
of their respective successors and assigns hereunder.
14. Nothing in this Amendment shall be construed to give to any person or
corporation other than the Company, the Rights Agent, the registered holders of
the Rights Certificates and (prior to the Distribution Date) the Common Stock,
and (with respect to Section 10 of this Amendment and Section 27 of the Rights
Agreement, and prior to termination of the Merger Agreement) Parent, any legal
or equitable right, remedy or claim under this Amendment; but this Amendment
shall be for the sole and exclusive benefit of the Company, the Rights Agent,
the registered holders of the Rights Certificates (and, prior to the
Distribution Date, the Common Stock) and (with respect to Section 10 hereof and
Section 27 of the Rights Agreement, and prior to termination of the Merger
Agreement) Parent.
15. If any term, provision, covenant or restriction of this Amendment is
held by a court of competent jurisdiction or other authority to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Amendment shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
16. This Amendment shall be deemed to be a contract made under the laws of
the Commonwealth of Virginia and for all purposes shall be governed by and
construed in accordance with the laws of such Commonwealth applicable to
contracts to be made and performed entirely within such Commonwealth.
4.
17. This Amendment may be executed in any number of counterparts and each
of such counterparts shall for all purposes be deemed to be an original, and all
such counterparts shall together constitute but one and the same instrument.
18. The Company hereby certifies to the Rights Agent that this Amendment is
in compliance with Section 27 of the Rights Agreement.
5.
In Witness Whereof, the parties herein have caused this Amendment to be
duly executed as of the date and year first above written.
Template Software, Inc.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇
Chairman of the Board and
Chief Executive Officer
First Union National Bank, a national
banking corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
6.
