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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. _________)*
DATALOGIX INTERNATIONAL INC.
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(Name of Issuer)
COMMON STOCK
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(Title of Class of Securities)
237923107
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(CUSIP Number)
Raymond L. Ocampo Jr.
Senior Vice President, General Counsel and Secretary
Oracle Corporation
500 Oracle Parkway
Redwood City, California 94065
(415) 506-7000
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(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
September 24, 1996
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [X].
Check the following box if a fee is being paid with the statement [_]. (A fee is
not required only if the reporting person: (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act.
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SCHEDULE 13D
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CUSIP NO. 237923107
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
ORACLE CORPORATION
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [X]*
(b) [_]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO [X]
ITEMS 2(d) or 2(e)
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
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7 SOLE VOTING POWER
NUMBER OF 1,566,287*
SHARES ------------------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
-0-
OWNED BY
------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 1,566,287*
PERSON ------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
WITH
-0-
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,566,287*
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [_]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13.37%* (as of September 24, 1996)
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14 TYPE OF REPORTING PERSON
CO
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SCHEDULE 13D
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CUSIP NO. 237923107
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
DELPHI ACQUISITION CORPORATION
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [X]*
(b) [_]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO [_]
ITEMS 2(d) or 2(e)
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
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7 SOLE VOTING POWER
NUMBER OF *
SHARES ------------------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
-0-
OWNED BY
------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING *
PERSON ------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
WITH
-0-
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
*
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [_]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
*
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14 TYPE OF REPORTING PERSON
CO
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*On September 24, 1996, Oracle Corporation ("Oracle") and Delphi Acquisition
Corporation ("Acquisition Sub") entered into an Agreement and Plan of Merger
(the "Merger Agreement") with Datalogix International Inc. (the "Company"),
pursuant to which Acquisition Sub will be merged with and into the Company, the
separate corporate existence of Acquisition Sub will cease, and the Company will
continue as the surviving corporation and wholly owned subsidiary of Oracle.
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ITEM 1. SECURITIES AND ISSUER
This statement relates to the shares of Common Stock, $.01 par value
(including the associated Preferred Share Purchase Rights (the "Rights") issued
pursuant to the Rights Agreement dated as of August 27, 1996 between Datalogix
International Inc., a New York corporation (the "Company") and The First
National Bank of Boston, collectively, the "Shares"), of the Company. The
Company's principal executive offices are located at 100 Summit Lake Drive,
Valhalla, New York 10595.
ITEM 2. IDENTITY AND BACKGROUND
This statement is being filed by Oracle Corporation, a Delaware corporation
("Oracle"), and Delphi Acquisition Corporation, a Delaware corporation and
wholly owned subsidiary of Oracle Corporation ("Acquisition Sub"). Acquisition
Sub was formed for the purpose of effecting the proposed merger (the "Merger")
pursuant to the Agreement and Plan of Merger dated as of September 24, 1996,
among Acquisition Sub, Oracle and the Company (the "Merger Agreement"), whereby
Acquisition Sub will be merged with and into the Company, the separate corporate
existence of Acquisition Sub will cease and the Company will continue as the
surviving corporation and wholly owned subsidiary of Oracle. Oracle's and
Acquisition Sub's principal executive offices are located at 500 Oracle Parkway,
Redwood City, California 94065. Oracle is the world's leading independent
supplier of software for information management.
The names, business addresses and present principal occupations of the
directors and executive officers of Oracle and Acquisition Sub are set forth in
the attached Appendix I, which is incorporated by reference. To the best of
Oracle's and Acquisition Sub's knowledge, all directors and executive officers
of Oracle and Acquisition Sub are citizens of the United States.
Except as set forth below, neither Oracle or Acquisition Sub nor, to the
best of Oracle's and Acquisition Sub's knowledge, any director or executive
officer of Oracle or Acquisition Sub listed on the attached Appendix I has been,
during the last five years, (a) convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors) or (b) a party to a civil proceeding
of a judicial or administrative body of competent jurisdiction and as a result
of such proceeding was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities subject
to, federal or state securities laws or finding any violation with respect to
such laws.
On September 24, 1993, the Securities and Exchange Commission (the "SEC")
concluded a private investigation into disclosure, accounting, and trading
issues at Oracle by filing a complaint in the United States District Court,
Northern District of California. The complaint alleged violations of Sections
13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and Rules 12b-20 and 13a-13 promulgated
thereunder, which impose certain financial disclosure and internal recordkeeping
obligations on Oracle. The SEC alleged that Oracle issued inaccurate financial
reports during the period from August 1989 through November 1990 due to
inadequate internal accounting controls. The complaint did not allege fraud or
intentional wrongdoing.
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Without admitting any wrongdoing, Oracle agreed to conclude the matter by
consenting to entry of a final judgment, enjoining future violations of those
sections and rules, and imposing a civil penalty of $100,000. The penalty was
paid on October 27, 1993. The final judgment was approved and entered by the
Court on October 20, 1993.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Approximately $81,000,000 (the "Purchase Price") will be required in order
to pay the holders of all of the outstanding Shares (including the associated
Rights) of the Company (excluding amounts in excess of $8.00, if any, paid to
shareholders exercising dissenters rights), other than shares of Common Stock
held by Oracle or any of its subsidiaries. The funds for the entire Purchase
Price will come from Oracle's working capital.
ITEM 4. PURPOSE OF TRANSACTION.
The purpose of the acquisition of the Shares by Acquisition Sub is to
enable Oracle to acquire the entire equity interest in the Company by means of a
merger of Acquisition Sub with and into the Company. Pursuant to the terms of
the Merger Agreement, all of the shareholders of the Company (other than Oracle,
any of its subsidiaries and shareholders exercising appraisal rights pursuant to
the New York Business Corporation Law ("NYBCL")) will be paid a cash
consideration of $8.00 per Share (the "Merger Consideration") in accordance with
the terms of the Merger Agreement. The transaction is structured as a merger in
order to ensure the acquisition by Oracle and its affiliates of all of the
outstanding shares of Common Stock. Following the Merger, the Company will
continue as the surviving corporation and will be a wholly owned subsidiary of
Oracle (the "Surviving Corporation"). Upon consummation of the Merger (the
"Effective Time"), the Company's shareholders (other than Oracle and any of its
subsidiaries) will no longer have an equity interest in the Company and instead
will have only the right to receive the Merger Consideration or to exercise
statutory appraisal rights.
The directors and officers of Acquisition Sub at the Effective Time shall
be the initial directors and officers, respectively, of the Surviving
Corporation. The Certificate of Incorporation and Bylaws of the Company in
effect at the Effective Time shall the Certificate of Incorporation and Bylaws
of the Surviving Corporation until amended in accordance with applicable law.
The Company would, as a result of the Merger, become a privately held
company. The Company's Common Stock would cease trading entirely, the
registration of the Company's Common Stock under the Exchange Act would
terminate and the Company would cease filing reports with the SEC. Moreover,
the Company would be relieved of the obligation to comply with the proxy rules
of Regulation 14A under Section 14 of the Exchange Act and its officers,
directors and 10% shareholders would be relieved of the reporting requirements
and restrictions on insider trading under Section 16 of the Exchange Act.
Accordingly, less information would be required to be made publicly available
regarding the Company than presently is the case.
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ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) As of September 19, 1996, Oracle was the beneficial owner (as defined
in Rule 13d-3 under the Exchange Act) of 1,566,287 Shares, representing 13.37%
of all outstanding Shares, based on information furnished to Oracle by the
Company that 11,711,776 Shares were outstanding as of September 19, 1996. To
the best knowledge of Oracle, no Shares are beneficially owned by any of its
executive officers or directors.
(b) Oracle has the sole power to vote or direct the vote, and to dispose
or direct the disposition of, the 1,566,287 Shares listed as beneficially owned
by Oracle in Item 5(a).
(c) Oracle had no transactions in Shares during the past 60 days, other
than transactions in connection with the Merger. To the best of Oracle's
knowledge, no director or executive officer of Oracle has engaged in any
transactions in Shares during the past 60 days.
(d) Not applicable.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
THE AGREEMENT AND PLAN OF MERGER
The following summary does not purport to be complete and is qualified in
its entirety by reference to the full text of the Merger Agreement, attached to
this Schedule as Exhibit 1 and incorporated herein by reference. Certain
capitalized terms used in this description and not elsewhere defined are defined
in the Merger Agreement and used with the meaning provided therein.
GENERAL
The Merger. The Merger Agreement provides for the merger of Acquisition
Sub with and into the Company. The Company will be the surviving corporation
(the "Surviving Corporation") and it will continue its corporate existence under
the laws of the State of New York. At the Effective Time (as defined below),
the separate corporate existence of Acquisition Sub shall cease. The Surviving
Corporation shall possess all the rights, privileges, immunities, powers and
purposes of the Company and Acquisition Sub, and the Surviving Corporation shall
assume and become liable for all liabilities, obligations and penalties of the
Company and Acquisition Sub. Notwithstanding the foregoing, Oracle, at its sole
election, may substitute any direct or indirect wholly owned subsidiary of
Oracle for Acquisition Sub. Further, Oracle may elect, at any time prior to the
Effective Time, that the Company shall be merged with and into Acquisition Sub.
Effective Time of Merger. The effective time of the Merger will occur upon
the filing of the Certificate of Merger with the Delaware Secretary of State and
the Department of State of the State of New York (the "Effective Time"). The
Certificate of Merger will be filed no later than the
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<PAGE>
second business day after satisfaction or waiver of all the conditions precedent
to the Merger including obtaining the requisite approval and adoption of the
Merger Agreement and the Merger by the shareholders of the Company at the
special meeting of shareholders to be held by the Company in connection with the
Merger (the "Special Meeting").
Directors and Officers; Certificate of Incorporation; Bylaws. Pursuant to
the Merger Agreement, the directors and officers of Acquisition Sub at the
Effective Time shall be the initial directors and officers, respectively, of the
Surviving Corporation. The Certificate of Incorporation of the Company in
effect at the Effective Time shall be the Certificate of Incorporation of the
Surviving Corporation until amended in accordance with applicable law. The
Bylaws of the Company in effect at the Effective Time shall be the Bylaws of the
Surviving Corporation until amended in accordance with applicable law.
Treatment of Shares in the Merger. At the Effective Time: (a) each Share
outstanding immediately prior to the Effective Time, except for (i) Shares then
owned by Oracle or any of its subsidiaries, (ii) Shares then owned by the
Company or any of its subsidiaries and (iii) Shares held by holders exercising
dissenters rights (the "Dissenting Shares"), shall, by virtue of the Merger and
without any action on the part of the holder thereof, be converted into the
right to receive $8.00 in cash (the "Merger Consideration"), without interest,
upon surrender of the certificate representing such Share; and (b) each Share
outstanding immediately prior to the Effective Time which is then owned by
Oracle, the Company or any of their respective subsidiaries shall, by virtue of
the Merger and without any action on the part of the holder thereof, be canceled
and retired and cease to exist, without any conversion thereof.
Holders of Shares who do not vote in favor of the Merger at the Special
Meeting and who shall have properly elected to dissent in the manner provided in
Section 623 of the NYBCL shall be entitled to payment of the fair value of their
Shares in accordance with the provisions of Section 623.
Each Acquisition Sub common share issued and outstanding immediately prior
to the Effective Time shall, by virtue of the Merger and without any action on
the part of the holder thereof, be converted into and exchangeable for one fully
paid and nonassessable common share of the Surviving Corporation.
Oracle will designate a third party to act as the paying agent (the "Paying
Agent") under the Merger Agreement. Prior to the Effective Time, Oracle shall,
from time to time, make available to the Paying Agent cash in an aggregate
amount equal to the product of: (x) the number of Shares outstanding
immediately prior to the Effective Time (other than Shares owned by Oracle, the
Company or any of their respective subsidiaries and Dissenting Shares); and (y)
the Merger Consideration (such amount being hereinafter referred to as the
"Exchange Fund"). The Paying Agent shall, pursuant to irrevocable instructions,
make the payments provided for under the Merger Agreement out of the Exchange
Fund.
Promptly after the Effective Time, the Paying Agent shall mail to each
holder of record as of the Effective Time (other than Oracle, the Company or any
of their respective subsidiaries) of an outstanding certificate or certificates
for Shares (the "Certificates"), a letter of transmittal and
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instructions for use in effecting the surrender of such certificates for payment
in accordance with the Merger Agreement. Upon the surrender to the Paying Agent
of a Certificate, together with a duly executed letter or transmittal, the
holder thereof shall be entitled to receive cash in an amount equal to the
product of the number of Shares represented by such Certificate and the Merger
Consideration, less any applicable withholding tax, and such Certificate shall
then be canceled.
Until surrendered pursuant to the procedures described above, each
Certificate (other than Certificates representing Shares owned by Oracle, the
Company or any of their respective subsidiaries and Certificates representing
Dissenting Shares) shall represent for all purposes the right to receive the
Merger Consideration in cash multiplied by the number of Shares evidenced by
such Certificate, without any interest thereon, subject to any applicable
withholding obligations.
After the Effective Time, there shall be no transfers on the stock transfer
books of the Surviving Corporation of Shares which were outstanding immediately
prior to the Effective Time. If, after the Effective Time, Certificates are
presented to the Surviving Corporation, they shall be canceled and exchanged for
an amount in cash equal to the Merger Consideration multiplied by the number of
Shares evidenced by such Certificate, without any interest thereon, subject to
any applicable withholding obligations.
Any portion of the Exchange Fund which remains unclaimed by the
shareholders of the Company for one year after the Effective Time (including any
interest, dividends, earnings or distributions received with respect thereto)
shall be repaid to the Surviving Corporation, upon demand. Any shareholders of
the Company who have not theretofore complied with the procedures set forth
above shall thereafter look only to the Surviving Corporation for payment of
their claim for the Merger Consideration per Share, without any interest
thereon, but shall have no greater rights against the Surviving Corporation than
may be accorded to general creditors of the Surviving Corporation under New York
law. Notwithstanding the foregoing, neither the Paying Agent nor any party to
the Merger Agreement shall be liable to any holder of certificates formerly
representing Shares for any amount to be paid to a public official pursuant to
any applicable abandoned property, escheat or similar law.
Treatment of Employee Stock Plans.
Amended and Restated 1992 Incentive Stock Plan; 1986 Key Employees Stock
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Option Plan. The Merger Agreement provides that each outstanding option to
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purchase Shares issued pursuant to the Company's Amended and Restated 1992
Incentive Stock Plan and the 1986 Key Employees Stock Option Plan of Datalogix
Formula Systems, Inc. (collectively, the "Option Plans"), whether vested or
unvested, shall be assumed by Oracle. Each such option assumed by Oracle shall
be exercisable upon the same terms and conditions as under the applicable Option
Plan and option agreement, except that (i) the option shall be exercisable for
such number of shares of Common Stock of Oracle equal to the product of (x) the
number of Shares for which such option was exercisable and (y) the Merger
Consideration divided by the average closing price of Oracle's Common Stock on
the Nasdaq National Market for the five consecutive trading days prior to the
Effective Time (the "Conversion Number") and (ii) the exercise price of such
option shall be equal to the exercise price of such option divided by the
Conversion Number.
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1995 Director Option Plan. The Merger Agreement provides that each
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outstanding option to purchase Shares issued pursuant to the Company's 1995
Director Option Plan (the "Directors Plan"), whether vested or unvested, shall
be assumed by Oracle. Each such option assumed by Oracle shall be exercisable
upon the same terms and conditions as under the Directors Plan and the
applicable option agreement, except that the consideration payable upon exercise
in respect of each Share covered by such option shall be the Merger
Consideration.
1995 Employee Stock Purchase Plan. Pursuant to the Merger Agreement the
---------------------------------
Company has agreed to take all actions reasonably necessary to cause the last
day of the "Offering Period" (as such term is used in the Company's 1995
Employee Stock Purchase Plan ("ESPP")), to be the date immediately prior to the
closing date of the Merger (the "Final Purchase Date"), and apply the funds
within each participant's withholdings account on the Final Purchase Date to the
purchase of whole Shares in accordance with the terms of the ESPP.
CONDITIONS TO THE MERGER; WAIVER
Conditions to Each Party's Obligations. Pursuant to the Merger Agreement,
the respective obligations of each party to consummate the Merger are subject to
the satisfaction or waiver (to the extent permitted by law), on or prior to the
Closing Date (as defined in the Merger Agreement) of the following conditions:
(i) the adoption and approval of the Merger Agreement by the requisite vote of
the shareholders of the Company; (ii) no statute, rule, order, decree or
regulation shall have been enacted or promulgated that prohibits the
consummation of the Merger; (iii) no order or injunction shall preclude,
restrain, enjoin or prohibit the consummation of the Merger; and (iv) any
applicable waiting period required under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act") shall have expired or been
terminated.
Additional Conditions to Obligations of the Company. Pursuant to the
Merger Agreement, the obligation of the Company to effect the Merger is also
subject to the satisfaction or waiver of the following conditions: (i) the
representations and warranties of Oracle and Acquisition Sub shall be true and
correct as of the Effective Time, unless the failure to be true and correct
could not reasonably be expected to cause a Material Adverse Effect (as such
term is defined below) on Oracle and its subsidiaries taken as a whole; and (ii)
Oracle and Acquisition Sub shall have performed or complied in all material
respects with all agreements and covenants required by the Agreement to be
performed or complied with by them prior to the Effective Time.
Additional Conditions to Obligations of Oracle and Acquisition Sub.
Pursuant to the Merger Agreement, the obligation of Oracle and Acquisition Sub
to effect the Merger is also subject to the satisfaction or waiver of the
following conditions: (i) the representations and warranties of the Company
shall be true and correct as of the Effective Time, unless the failure to be
true and correct could not reasonably be expected to cause a Material Adverse
Effect (as defined below) on the Company and its subsidiaries taken as a whole;
(ii) the Company shall have performed or complied in all material respects with
all agreements, conditions and covenants required by the Agreement to be
performed or complied with prior to the Effective Time; (iii) after the date of
the Merger Agreement there shall not be threatened or instituted and continuing,
any action, suit or proceeding against the Company, Oracle or Acquisition Sub or
any Indemnified Person (as defined in the Merger Agreement) by a governmental
agency or any other person (x) related to the Merger or the transactions
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contemplated by the Merger Agreement, (y) who is or was a shareholder of the
Company, whether on behalf of such shareholder or in a derivative action on
behalf of the Company, or (z) which, individually, or in the aggregate, could
reasonably be expected to have a Material Adverse Effect on the Company and its
subsidiaries taken as a whole; (iv) Oracle shall have received an opinion as to
certain matters from the Company's counsel, and in the event that such counsel
is unable to provide an opinion to the effect that certain contracts to which
the Company is a party do not require the consent of the respective
counterparties thereto in order for such counterparties to be bound thereby
after the Merger has been consummated, then the written consent of such third
parties will have been obtained; (v) no event shall have occurred which could
reasonably be expected to have a Material Adverse Effect on the Company and its
subsidiaries, taken as a whole; and (vi) the aggregate number of Dissenting
Shares shall not be equal to or exceed 10% of the Shares outstanding immediately
prior to the Effective Time.
TERMINATION
The Merger Agreement may be terminated at any time prior to the Effective
Time, whether before or after shareholder approval of the terms of the Merger
Agreement by the shareholders of the Company; (i) by mutual written consent of
Oracle and the Company; (ii) by either Oracle or the Company if any governmental
entity shall have issued an order, decree or ruling prohibiting the Merger and
such ruling shall have become final and nonappealable; (iii) by Oracle or the
Company if the Merger shall not have been consummated by January 31, 1997;
provided, however, that such date shall be February 28, 1997 if the sole
condition that the Company has not satisfied is the existence of certain
litigation that has been threatened or instituted after the date of the Merger
Agreement (provided that such party's failure to perform its obligations under
the Merger Agreement has not caused the failure of the Merger to occur); (iv) by
Oracle or Acquisition Sub in the event of a breach by the Company of any
representation, warranty, covenant or other agreement contained in the Merger
Agreement which has not been cured within 15 days of notice thereof and which
could reasonably be expected to have a Material Adverse Effect on the Company
and its subsidiaries taken as a whole; (v) by Oracle or Acquisition Sub if the
Company's Board of Directors (x) has withdrawn, modified or amended its
recommendation of the Merger Agreement or the Merger, (y) has approved or
recommended a Takeover Proposal (as defined under "-- No Solicitation" below),
or (z) has entered into an agreement with a third party with respect to any
Takeover Proposal, or the Company's Board of Directors shall have resolved to
take any of such actions; (vi) by the Company in connection with entering into a
Takeover Proposal, provided it has complied with all of its obligations provided
thereunder, including the notice provisions therein, and that it makes
simultaneous payment of the Expenses (as defined in the Merger Agreement) and
the Termination Fee (as defined under "-- Fees and Expenses" below); or (vii) by
the Company, if Acquisition Sub or Oracle shall have breached in any material
respect any of their respective representations, warranties, covenants or other
agreements contained in the Merger Agreement which has not been cured within 15
days of notice thereof. The Merger Agreement provides that in the event of its
termination, no party thereto will have any liability or further obligation to
any other party to the Merger Agreement, provided that any termination shall be
without prejudice to the rights of any party to the Merger Agreement arising out
of breach by any other party of any representation, covenant or agreement
contained in the Merger Agreement, and provided further, that certain
obligations under the Merger Agreement shall survive any termination, including
the obligation to pay the Termination Fee as described below.
-7-
<PAGE>
FEES AND EXPENSES
Each party to the Merger Agreement has agreed to pay its own fees and
expenses, except as stated below. The Company has agreed to pay the sum of (a)
the lesser of the amount of Oracle's Expenses or $1,000,000, and (b) $3,000,000
(the "Termination Fee") upon demand if (i) Oracle or Acquisition Sub terminates
the Merger Agreement as a result of actions described in (v) above; (ii) the
Company terminates the Merger Agreement as a result of actions described in (vi)
above; or (iii) prior to any termination of this Merger Agreement (other than
pursuant to (i), (ii) or (vii) above, or by the Company pursuant to (iii)
above), the Company breaches its covenant with respect to Takeover Proposals or
a Takeover Proposal shall have been made and within 12 months of such
termination, a transaction constituting a Takeover Proposal is consummated or
the Company enters into an agreement with respect to, approves or recommends or
takes any action to facilitate such Takeover Proposal.
REPRESENTATIONS AND WARRANTIES
The Merger Agreement contains various representations and warranties of the
Company to Oracle and Acquisition Sub, including with respect to the following
matters: (i) the due organization and valid existence of the Company and its
subsidiaries, and similar corporate matters; (ii) the capitalization of the
Company and its subsidiaries; (iii) the due authorization, execution and
delivery of the Merger Agreement, its binding effect on the Company, and the
Board of Directors' recommendation of the Merger to the Company's shareholders;
(iv) regulatory filings and approvals, and the lack of conflicts between the
Merger Agreement and the transactions contemplated thereby with the Company's
Certificate of Incorporation or Bylaws, any contract to which it or its
subsidiaries are parties, or any law, rule, regulation, order, writ, injunction
or decree binding upon the Company or its subsidiaries; (v) the accuracy of the
Company's SEC filings, its financial statements and the absence of undisclosed
liabilities; (vi) the vote required to approve the Merger under the NYBCL; (vii)
the absence of pending or threatened litigation; (viii) the absence of defaults
or violations of the Company's Certificate of Incorporation or Bylaws, certain
agreements, laws, rules, regulations, orders, judgments or decrees; (ix) the
status of the Company's intellectual property; (x) certain tax matters; (xi) the
Company's title to its properties; (xii) the status of the Company's employee
benefit plans; (xiii) labor matters; (xiv) environmental matters; (xv) specified
Company contracts; (xvi) the accuracy of the information provided by the Company
for inclusion in the Company's Proxy Statement filed in connection with the
Merger (the "Proxy Statement"); (xvii) the opinion of Robertson, Stephens &
Company, the Company's financial advisor ("Robertson, Stephens"); (xviii) the
absence of any brokers or finders (other than Robertson, Stephens); and (xix)
various other matters. Such representations and warranties are subject, in
certain cases, to specified exceptions and qualifications, including without
limitation, those exceptions that are disclosed in writing to Oracle (the
"Company Disclosure Schedule"). In many instances the representations and
warranties given by the Company are subject to the qualification that the
applicable representation or warranty would not fail to be true and correct
unless it would have a Material Adverse Effect. For purposes of the Merger
Agreement, "Material Adverse Effect" means any individual material adverse
effect, or adverse effects in the aggregate (whether or not related and whether
or not any individual effect is material) which are material, on the business,
operations, properties (including intangible properties), condition (financial
or otherwise), prospects, assets or liabilities of the Company and its
subsidiaries taken as a whole.
-8-
<PAGE>
Such term includes without limitation (i) any individual adverse effect, or
adverse effects in the aggregate (whether or not related and whether or not any
individual effect is material) which result in liability to the Company or its
subsidiaries, or could reasonably be expected to result in liability to the
Company or its subsidiaries, of in excess of $1,500,000, individually, or
$2,500,000, in the aggregate, except that for certain purposes, including
whether or not for purposes of determining whether the Company's representations
and warranties are true as if made as of the Effective Time, such amounts will
be $3,000,000, individually, and $5,000,000, in the aggregate, (ii) any
judgment, injunction, order or decree that is binding upon the Company or any of
its subsidiaries which obligates the Company or any of its subsidiaries to take
or refrain from taking any action and which was issued in connection with
litigation instituted after the date of the Merger Agreement that either (x)
relates to the transactions contemplated by the Merger Agreement or (y) was
brought by a shareholder or former shareholder of the Company whether
individually or in a derivative action on behalf of the Company.
The Merger Agreement also contains representations and warranties of Oracle
and Acquisition Sub to the Company, including with respect to the following
matters: (i) the due organization and valid existence of each of Oracle and
Acquisition Sub and similar corporate matters; (ii) the due authorization,
execution and delivery of the Merger Agreement by Oracle and Acquisition Sub,
and its binding effect on such parties; (iii) regulatory filings and approvals,
and the absence of conflicts of the Merger Agreement and the transactions
contemplated thereby with the certificate of incorporation or bylaws (or
equivalent documents) of each of Oracle and Acquisition Sub, or with any
contract binding upon Oracle or Acquisition Sub, or with any law, rule,
regulation, order, writ, injunction or decree binding upon any of such parties;
(iv) Oracle's and Acquisition Sub's access to cash funds sufficient to
consummate the transactions contemplated by the Merger Agreement; (v) the
formation and absence of prior activities of Acquisition Sub; (vi) the accuracy
of the information provided by Oracle or Acquisition Sub for inclusion in the
Proxy Statement; (vii) the absence of brokers and finders; and (viii) the
absence of litigation that would prohibit the Merger. Such representations and
warranties are subject, in certain cases, to specified exceptions and
qualifications.
CONDUCT OF BUSINESS PENDING THE MERGER
The Company has agreed that, except as expressly contemplated in the Merger
Agreement, as set forth in the Company Disclosure Schedule, or as agreed to by
Oracle, during the period from the date of the Merger Agreement and continuing
until the earlier of termination of the Merger Agreement or the Effective Time,
the business of the Company and its subsidiaries will be conducted only in the
ordinary and usual course and, to the extent consistent therewith, each of the
Company and its subsidiaries will use its reasonable commercial efforts to
preserve intact its business organizations and maintain its existing
relationships with customers, suppliers, employees, creditors and business
partners. The Company has further agreed that during such period, the Company
will not, and will not permit its subsidiaries to, among other things: (i)
amend its or its subsidiaries' certificate of incorporation or bylaws or similar
organizational documents; (ii) declare, set aside or pay any dividend or other
distribution in respect of any of its capital stock or that of its subsidiaries;
(iii) redeem, purchase or otherwise acquire any shares of capital stock of the
Company or its subsidiaries; (iv) issue, sell, pledge, dispose of or encumber
any additional shares of, or securities convertible into or exchangeable for, or
options, warrants, calls, commitments or
-9-
<PAGE>
rights of any kind to acquire, any shares of capital stock of any class of the
Company or its subsidiaries (other than the issuance of Shares upon the exercise
of outstanding Company stock options); (v) split, combine or reclassify the
outstanding capital stock of the Company or its subsidiaries; (vi) acquire or
agree to acquire any material assets either by purchase, merger, consolidation,
sale of shares in its subsidiaries or otherwise; (vii) transfer, lease, license,
sell, mortgage, pledge, dispose of or encumber any intellectual property or any
material assets other than pursuant to grants of nonexclusive end-user licenses
in the ordinary course of business consistent with past practice; (viii) grant
any increase in the compensation payable by the Company or its subsidiaries to
any of its executive officers or key employees (other than regularly scheduled
pay increases of not more than 10% per annum); (ix) adopt, amend or accelerate
the payment or vesting of the amounts payable under any existing, bonus,
incentive compensation, deferred compensation, severance, profit sharing, stock
option, stock purchase, insurance, pension, retirement or other employee benefit
plan except as expressly contemplated by the Merger Agreement; (x) enter into or
modify any employment or severance agreement with or, except in accordance with
the existing Company policies or as required by applicable law, grant any
severance or termination pay to any officer, director or employee of the Company
or its subsidiaries, or enter into any collective bargaining agreement, (xi)
materially modify, amend or, without Oracle's prior written consent (which
consent shall not be unreasonably withheld), terminate any of its material
contracts or waive, release or assign any material rights or claims; (xii) incur
or assume any indebtedness in amounts not consistent with past practice, or
materially modify any indebtedness or other liability; (xiii) assume, guarantee,
endorse or otherwise become liable for the obligations of any other person,
other than immaterial amounts, in the ordinary course of business consistent
with past practice and other than for any subsidiary; (xiv) make any loans,
advances or capital contributions to, or investments in, any other person; (xv)
enter into any material commitment or transaction; (xvi) change any of the
accounting methods used by it unless required by GAAP; (xvii) make or agree to
make any new capital expenditures in excess of $100,000 in the aggregate;
(xviii) make any material tax election (unless required by law) or settle or
compromise any material income tax liability; (xix) pay, discharge or satisfy
any actions, suits, proceedings or claims, other than the payment, discharge or
satisfaction in each case in complete satisfaction, and with a complete release,
of such matter with respect to all parties, of actions, suits, proceedings or
claims that do not result in, individually or in the aggregate, a Material
Adverse Effect; provided, however, if the Company determines to make such
payment or satisfaction, the Company will give Oracle advance written notice of
such determination prior to making any such payment, and if Oracle instructs the
Company within 15 days of such notice not to make or commit to make such payment
or satisfaction, then the Company will not make such payment; provided, further,
that if Oracle provides such instruction, and the proposed resolution of such
matter does not or would not result in a Material Adverse Effect, and is in
complete satisfaction, and includes full release with respect to all parties to
such matter without any payment or obligation of Oracle, (A) for purposes of the
condition to the Merger regarding litigation, such matter will not be considered
a threatened, or instituted and continuing, action, suit or proceeding and (B)
for purposes of the conditions to the Merger regarding representations and
warranties and adverse changes, any adverse effect against the Company in any
such matter will not be considered or aggregated in determining whether a
Material Adverse Effect has occurred; provided, further, that any such proposed
payment or satisfaction will be considered or aggregated in determining whether
a Material Adverse Effect has occurred; (xx) waive the benefits of, or agree to
modify in
-10-
<PAGE>
any material manner, any confidentiality, standstill or similar agreement to
which the Company or any of its subsidiaries is a party; (xxi) commence a
lawsuit, except as provided for in the Merger Agreement; (xxii) make any payment
or incur any liability or obligation to obtain any third party consent to the
transactions contemplated under the Merger Agreement, except as provided in the
Merger Agreement; (xxiii) take, or agree to take, any action that would make any
representation or warranty of the Company contained in the Merger Agreement
inaccurate in any respect; or (xxiv) enter into an agreement, contract,
commitment or arrangement to do any of the foregoing, or authorize, recommend,
propose or announce an intention to do any of the foregoing.
NO SOLICITATION
Pursuant to the Merger Agreement, the Company has agreed that the Company
and its officers, directors, employees, representatives and agents will
terminate any ongoing discussions or negotiations with respect to a Takeover
Proposal (as hereinafter defined). The Company has agreed that it will not
authorize or permit any of its officers, directors or employees or any
investment banker, financial advisor, attorney, accountant or other
representative retained by it or its subsidiaries to (i) solicit, initiate or
encourage (including by way of furnishing information), or take any other action
to facilitate, any inquiries or the making of any proposal which constitutes, or
may reasonably be expected to lead to, any Takeover Proposal or (ii) participate
in any discussions or negotiations regarding any Takeover Proposal. For
purposes of the Merger Agreement, "Takeover Proposal" means any inquiry,
proposal or offer from any person relating to any direct or indirect acquisition
or purchase of a substantial amount of assets of the Company or any of its
subsidiaries or of over 20% of any class of equity securities of the Company or
any of its subsidiaries, any tender offer or exchange offer that if consummated
would result in any person beneficially owning 20% or more of any class of
equity securities of the Company or any of its subsidiaries, any merger,
consolidation, business combination, sale of substantially all the assets,
recapitalization, liquidation, dissolution or similar transaction involving the
Company or any of its subsidiaries, other than the transactions contemplated by
the Merger Agreement.
Notwithstanding the foregoing, if at any time prior to the Effective Time,
the Board of Directors of the Company determines in good faith, based on the
written opinion of its legal counsel, that it is necessary to do so in order to
comply with its fiduciary duties to the Company's shareholders under applicable
law, the Company may, in response to an unsolicited Takeover Proposal, and
subject to compliance with the Merger Agreement, (i) furnish information with
respect to the Company to any person pursuant to a confidentiality agreement in
a form approved by Oracle (such approval not to be unreasonably withheld) and
(ii) participate in negotiations regarding such Takeover Proposal. The Company
has agreed that neither the Board of Directors of the Company nor any committee
thereof shall (a) withdraw or modify, or propose to withdraw or modify, in a
manner adverse to Oracle, the approval or recommendation by such Board of
Directors or such committee of the Merger Agreement or the Merger, (b) approve
or recommend, or propose to approve or recommend, any Takeover Proposal or (c)
cause the Company to enter into any agreement with respect to any Takeover
Proposal. Notwithstanding the foregoing, in the event that prior to the
Effective Time the Board of Directors of the Company determines in good faith,
based on the written opinion of its legal counsel, that it is necessary to do so
in order to comply with its fiduciary duties to the Company's shareholders under
applicable law, the Board of Directors may withdraw or modify its approval or
recommendation of the Merger Agreement or
-11-
<PAGE>
the Merger, approve or recommend any Superior Proposal (as defined below) or
cause the Company to enter into an agreement with respect to a Superior
Proposal, but in each case only at a time that is after the second business day
following Oracle's receipt of written notice advising Oracle that the Board of
Directors of the Company has received a Superior Proposal, specifying the
material terms and conditions of such Superior Proposal and identifying the
person making the Superior Proposal. In addition, if the Company enters into an
agreement with respect to any Superior Proposal, it shall concurrently with
entering into such an agreement pay, or cause to be paid, to Oracle the Expenses
and the Termination Fee. For purposes of the Merger Agreement, a "Superior
Proposal" means any bona fide Takeover Proposal to acquire, directly or
indirectly, for consideration consisting of cash and/or securities, more than
50% of the Shares then outstanding or all or substantially all the assets of the
Company and otherwise on terms which the Board of Directors of the Company
determines in its good faith judgment (based on the advice of a financial
advisor of nationally recognized reputation) to be more favorable to the
Company's shareholders than the Merger.
ACCESS TO INFORMATION
The Company has agreed to afford Oracle and its representatives access
during normal business hours prior to the Effective Time to the properties,
books, contracts, insurance policies, commitments and records of the Company and
its subsidiaries, and during such period promptly to furnish Oracle with such
other information concerning its business, properties and personnel as Oracle
may reasonably request.
LEGAL COMPLIANCE
Subject to the terms and conditions in the Merger Agreement, each of the
parties to the Merger Agreement has agreed to use all reasonable efforts to
take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the Merger and the other transactions contemplated
by the Merger Agreement. Pursuant to the Merger Agreement, each of the Company,
Oracle and Acquisition Sub has agreed to take all reasonable actions necessary
to comply promptly with all legal requirements that may be imposed on it with
respect to the Merger Agreement and the transactions contemplated thereby and to
cooperate with, and furnish information to, each other in connection with any
such requirements imposed upon any of them or any of their subsidiaries in
connection with the Merger Agreement and the transactions contemplated thereby.
INDEMNIFICATION
Oracle has agreed in the Merger Agreement, subject to certain limitations,
that all rights to indemnification with respect to matters occurring through the
Effective Time, existing in favor of
-12-
<PAGE>
directors, officers or employees of the Company as provided in the Company's
Certificate of Incorporation, By-Laws or certain existing indemnification
agreements between the Company and such parties, shall survive the Merger and
shall continue in full force and effect for a period of not less than six years
from the Effective Time. Effective upon the Effective Time, to the fullest
extent permitted by law, Oracle will guarantee the Company's and the Acquisition
Sub's performance of the foregoing obligations of the Company and Acquisition
Sub for a period of six years after the Effective Time. The Company's
Certificate of Incorporation, Bylaws and such existing indemnification
agreements provide for indemnification of the Company's directors and officers
under certain circumstances for actions taken on behalf of the Company.
PURCHASE AGREEMENT; REGISTRATION RIGHTS AGREEMENT
The following summary of certain provisions of the Purchase Agreement and
Registration Rights Agreement does not purport to be complete and is qualified
in its entirety by reference to the Purchase Agreement and the Registration
Rights Agreement, copies of which are attached hereto as Exhibits 2 and 3,
respectively, and are incorporated herein by reference.
On September 6, 1994, Oracle entered into a Purchase Agreement (the
"Purchase Agreement") with the Company pursuant to which the Company issued
2,401,280 shares of Series F Preferred Stock ("Series F Stock") to Oracle, which
shares were convertible into 1,200,640 shares (as adjusted to reflect a 1-for-2
reverse stock split in April 1995, the "Stock Split")) of the Company's Common
Stock, at an aggregate purchase price of $4,500,000 (or approximating $3.75 per
share of Common Stock). Pursuant to the Purchase Agreement, the Company also
sold Oracle a warrant for $1,000 (the "Oracle Warrant") to purchase 890,426 (as
adjusted to reflect the Stock Split) shares of Common Stock with an exercise
price of $5.62 (as adjusted to reflect the Stock Split) per share. In
connection with the purchase of the Series F Stock and the Oracle Warrant,
Oracle became a party to a Registration Rights Agreement dated October 29, 1992,
as amended and restated as of June 30, 1993 and as of September 6, 1994,
pursuant to which Oracle was granted certain registration rights with respect to
the shares of Common Stock of the Company issuable upon conversion or exercise
of the Series F Stock and the Oracle Warrant.
Upon the closing of the Company's initial public offering ("IPO") on June
15, 1995, the Series F Stock was converted into 1,200,640 shares of Common Stock
and the Oracle Warrant was exercised into 596,062 shares of Common Stock. The
exercise of the Oracle Warrant was effected through a cashless exercise as a
result of Oracle's election to receive Common Stock equal in value to the
difference between the aggregate exercise price for all the shares subject to
the Oracle Warrant and the aggregate fair market value for all of the shares
subject to the Oracle Warrant (which was assumed to have been the June 15, 1995
IPO price of $17.00 per share). In connection with the IPO, Oracle also sold
230,415 shares of Common Stock as a selling shareholder.
Except as set forth in this Schedule 13D, to the best of Oracle's
knowledge, no other contracts, arrangements, understandings or relationships
(legal or otherwise) exist among the persons named in Item 2 or between such
persons and any other person with respect to any securities of the Company,
including but not limited to, the transfer or voting of any such securities,
finder's fees, joint ventures, loan or option arrangements, puts or calls,
guarantees of profits, the division of profits or loss or the giving or
withholding of proxies.
-13-
<PAGE>
ITEM 7. MATERIALS TO BE FILED AS EXHIBITS.
Exhibit Description
------- -----------
1. Agreement and Plan of Merger dated as of September 24, 1996, among
Datalogix International Inc., Oracle Corporation and Delphi
Acquisition Corporation.
2. Purchase Agreement dated as of September 6, 1994, between Datalogix
International Inc. and Oracle Corporation.
3. Registration Rights Agreement dated October 29, 1992, as amended and
restated as of June 30, 1993 and as of September 6, 1994, by and
among Datalogix International Inc. and certain of its shareholders.
-14-
<PAGE>
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
October 3, 1996
ORACLE CORPORATION
By: /s/ RAYMOND L. OCAMPO JR
---------------------------
Name: Raymond L. Ocampo Jr.
Title: Senior Vice President, General Counsel
and Secretary
DELPHI ACQUISITION CORPORATION
By: /s/ THOMAS THEODORES
----------------------
Name: Thomas Theodores
Title: Vice President and Secretary
-15-
<PAGE>
EXHIBITS TO SCHEDULE 13D
<TABLE>
<CAPTION>
Exhibit Description Page
- ------- ----------- ----
<S> <C> <C>
1 Agreement and Plan of Merger dated as of September 24,
1996, among Datalogix International Inc., Oracle
Corporation and Delphi Acquisition Corporation.
2 Purchase Agreement dated as of September 6, 1994,
between Datalogix International Inc. and Oracle
Corporation.
3 Registration Rights Agreement dated October 29, 1992,
as amended and restated as of June 30, 1993 and as of
September 6, 1994, by and among Datalogix International
Inc. and certain of its shareholders.
</TABLE>
<PAGE>
APPENDIX I
EXECUTIVE OFFICERS AND DIRECTORS OF ORACLE CORPORATION
Set forth below are the names and present principal occupation or
employment of each executive officer and director of Oracle Corporation
("Oracle"). The business address of each of the persons listed below is the
same as that set forth in Item 2 for Oracle.
<TABLE>
<CAPTION>
Executive Officers Present and Principal Occupation
------------------ --------------------------------
<S> <C>
Lawrence J. Ellison Chief Executive Officer and Chairman of
the Board
Raymond J. Lane President, Chief Operating Officer and
Director
Jeffrey O. Henley Executive Vice President, Chief Financial
Officer and Director
Dirk A. Kabcenell Executive Vice President, Product
Division
David J. Roux Executive Vice President, Corporate
Development
Raymond L. Ocampo Jr. Senior Vice President, General Counsel and
Corporate Secretary
Thomas A. Williams Vice President and Corporate Controller
</TABLE>
<PAGE>
APPENDIX I (CONTINUED)
<TABLE>
<CAPTION>
Directors (who are not also
Executive Officers of Oracle) Present and Principal Occupation
- ----------------------------- --------------------------------
<S> <C>
James A. Abrahamson Senior Advisor, Galway Partners
Chairman and Chief Executive Officer of
International Air Safety
Donald L. Lucas Venture Capitalist
Delbert W. Yocam Independent Consultant
Michael J. Boskin Tully M. Friedman Professor of Economics
and Senior Fellow
Hoover Institution
Stanford University
</TABLE>
EXECUTIVE OFFICER AND DIRECTOR OF DELPHI ACQUISITION CORPORATION
Set forth below is the name and present principal occupation or employment
of the executive officers and director of Delphi Acquisition Corporation. The
business addresses of such individuals are the same as that set forth in Item 2
for Oracle Corporation.
<TABLE>
<CAPTION>
Executive Officer/Director Present Principal Occupation
- -------------------------- ----------------------------
<S> <C>
David J. Roux Executive Vice President, Corporate
Development of Oracle Corporation;
President and Chief Financial Officer of
Delphi Acquisition Corporation
Thomas Theodores Vice President, Legal and
Assistant Secretary of Oracle Corporation;
Vice President and Secretary of Delphi
Acquisition Corporation
</TABLE>
<PAGE>
EXHIBIT 1
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of September 24, 1996, by and among
Oracle Corporation, a Delaware corporation ("PARENT"), Delphi Acquisition
Corporation, a Delaware corporation and a wholly owned subsidiary of Parent
("PURCHASER"), and Datalogix International Inc., a New York corporation (the
"COMPANY").
RECITALS:
WHEREAS, the Boards of Directors of the Company and Parent have each
determined that it is in the best interests of their respective stockholders for
Parent to acquire the Company upon the terms and subject to the conditions set
forth herein; and
WHEREAS, also in furtherance of such acquisition, the Boards of Directors
of the Company and Parent have each approved and adopted this Agreement and the
Merger (as hereinafter defined) of Purchaser with the Company in accordance with
the New York Business Corporation Law and the Delaware General Corporation Law,
as appropriate, and upon the terms and subject to the conditions set forth
herein; and
WHEREAS, the Board of Directors of the Company has resolved to recommend
approval, authorization and adoption of this Agreement and the Merger to the
holders of shares of the Company's Common Stock, $0.01 par value per share (the
"SHARES"), and has determined that the consideration to be paid for each Share
in the Merger is fair to the holders of such Shares;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby, the
Company, Parent and Purchaser hereby agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger.
----------
(a) Subject to the terms and conditions of this Agreement, at the Effective
Time (as defined in Section 1.2 hereof), the Company and Purchaser shall
consummate a merger (the "MERGER") pursuant to which Purchaser shall be merged
with and into the Company in accordance with the relevant provisions of the New
York Business Corporation Law ("NYBCL") and the Delaware General Corporation Law
("DGCL"), the separate corporate existence of Purchaser (except as may be
continued by operation of law) shall cease, and the Company shall continue as
the surviving corporation in the Merger (the Company, or if Parent makes the
election in Section 1.1(b), Purchaser, is sometimes referred to as the
"SURVIVING CORPORATION"; Parent, Purchaser and the
<PAGE>
Company are referred to as the "CONSTITUENT CORPORATIONS"). Notwithstanding the
foregoing, at the election of Parent, Parent may substitute any direct or
indirect wholly owned subsidiary of Parent or Purchaser as a Constituent
Corporation. To the extent that Parent exercises its election to substitute a
direct or indirect wholly owned subsidiary of Parent or Purchaser as a
Constituent Corporation, or elects to have the Company merged with and into
Purchaser as provided in Section 1.1(b) below, then the parties hereto shall
promptly enter into an amendment to this Agreement necessary or desirable to
provide for such elections, without any need for approval, authorization or
adoption by the Board of Directors or shareholders of the Company.
(b) Notwithstanding any other provision of this Agreement, Parent may
elect, at any time prior to the Effective Time, that the Company shall be merged
with and into Purchaser.
Section 1.2 Effective Time. As soon as practicable after satisfaction or
--------------
waiver of the conditions set forth in Article VI, or at such other time as the
parties shall agree, the parties shall file a certificate of merger or other
appropriate documents (in any such case, the "CERTIFICATE OF MERGER") executed
in accordance with the relevant provisions of the NYBCL and the DGCL and shall
make all other filings or recordings required under the NYBCL and the DGCL. The
Merger shall become effective at the time when the Certificate of Merger has
been duly filed with the Delaware Secretary of State and by the Department of
State of the State of New York, or such time as is agreed upon by the parties
and specified in the Certificate of Merger, and such time is hereinafter
referred to as the "EFFECTIVE TIME."
Section 1.3 Closing. The closing of the Merger (the "CLOSING") shall take
-------
place (i) at 10:00 a.m., local time, on a date to be specified by the parties,
which shall be no later than the second business day after satisfaction or
waiver of all of the conditions set forth in Article VI hereof, at the offices
of Venture Law Group, A Professional Corporation, 2800 Sand Hill Road, Menlo
Park, California 94025, or (ii) at such other time and place as Purchaser and
the Company shall agree (the "CLOSING DATE").
Section 1.4 Directors and Officers of the Surviving Corporation. The
---------------------------------------------------
directors and officers of Purchaser at the Effective Time shall be the initial
directors and officers, respectively, of the Surviving Corporation.
Section 1.5 Certificate of Incorporation. The certificate of
----------------------------
incorporation of the Company in effect at the Effective Time shall be the
certificate of incorporation of the Surviving Corporation until amended in
accordance with applicable law.
Section 1.6 Bylaws. The bylaws of the Company in effect at the Effective
------
Time shall be the bylaws of the Surviving Corporation until amended in
accordance with applicable law.
Section 1.7 Effect of the Merger. At the Effective Time, the effect of the
--------------------
Merger shall be as provided in the applicable provisions of the NYBCL and DGCL,
-2-
<PAGE>
including, without limitation, Section 906 of the NYBCL. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time all the
property, rights, privileges, powers and franchises of the Company and Purchaser
shall vest in the Surviving Corporation, and all debts, liabilities and duties
of the Company and Purchaser shall become the debts, liabilities and duties of
the Surviving Corporation.
Section 1.8 Shareholders' Meeting; Other Company Matters.
--------------------------------------------
(a) The Company, acting through its Board of Directors, shall, in
accordance with applicable law:
(i) duly call, give notice of, convene and hold a special meeting of
its shareholders (the "SPECIAL MEETING") as promptly as practicable following
the date hereof for the purpose of considering and taking action upon the
approval of the Merger and the authorization and adoption of this Agreement;
(ii) after consultation with Parent and its legal counsel, exercise
its best efforts to prepare and file with the Securities and Exchange Commission
(the "SEC") within 10 days after the date hereof (but in no event later than 14
days after the date hereof), a preliminary proxy or information statement
relating to the Merger and this Agreement and use commercially reasonable
efforts (x) to obtain and furnish the information required to be included by the
SEC in the Proxy Statement (as hereinafter defined) and, after consultation with
Parent and its counsel, to respond promptly to any comments made by the SEC with
respect to the preliminary proxy or information statement and cause a definitive
proxy or information statement, including any amendment or supplement thereto
(the "PROXY STATEMENT") to be mailed to its shareholders, provided that no
amendment or supplement to the Proxy Statement will be made by the Company
without consultation with Parent and its counsel and (y) to obtain the necessary
approvals of the Merger and authorization and adoption of this Agreement by its
shareholders;
(iii) prepare and revise the Proxy Statement so that, at the date
mailed to Company shareholders and at the time of the meeting of Company
shareholders to be held in connection with the Merger, the Proxy Statement will
(x) not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order that the
statements made therein, in light of the circumstances under which they are
made, not misleading (except that the Company shall not be responsible under
this clause (iii) with respect to statements made therein based on information
supplied by Parent or Purchaser expressly for inclusion in the Proxy Statement),
and (y) comply in all material respects with the provisions of the Exchange Act
and the rules and regulations thereunder; and
(iv) subject to the provisions of Section 5.5, make at the Special
Meeting, and include in the Proxy Statement, the recommendation of the Board
that shareholders of the Company vote in favor of the approval of the Merger and
the authorization and adoption of this Agreement.
-3-
<PAGE>
(b) Parent shall furnish to the Company, and revise, written information
concerning itself and Purchaser expressly for inclusion in the Proxy Statement,
including without limitation information required pursuant to Rule 13e-3 under
the Securities Exchange Act of 1934, as amended ( the "EXCHANGE ACT"). Such
Parent-furnished information will not, at both the date mailed to Company
shareholders and at the time of the meeting of Company shareholders to be held
in connection with the Merger, contain any untrue statement of a material fact
or omit to state any material fact required to be stated in Parent-furnished
information or necessary in order to make the statements made in Parent-
furnished information, in light of the circumstances under which they are made,
not misleading.
(c) Parent shall vote, or cause to be voted, all of the Shares then owned
by it, Purchaser, and any of its other subsidiaries in favor of the approval of
the Merger and the authorization and adoption of this Agreement.
(d) The Company has been advised by each of its executive officers and each
of its Directors that each such person (to the extent such persons own Shares
and will be entitled to vote thereon) intends to vote in favor of the Merger.
(e) The Company hereby waives the provisions of Sections 3 and 5 of the
Purchase Agreement dated September 6, 1994 between the Company and Parent.
(f) Within five days following the date hereof Parent shall provide to the
Company a draft of the information relating to Parent and Purchaser required to
be included in the Proxy Statement and shall update and modify such information
prior to the tenth day after the date hereof to be complete and accurate in all
material respects.
ARTICLE II
CONVERSION OF SECURITIES
Section 2.1 Conversion of Capital Stock. As of the Effective Time, by
---------------------------
virtue of the Merger and without any action on the part of the holders of any
Shares or any shares of capital stock of Purchaser:
(a) Purchaser Capital Stock. Each issued and outstanding share of capital
-----------------------
stock of Purchaser shall be converted into and become one fully paid and
nonassessable share of common stock of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Purchaser Owned Stock. All Shares
--------------------------------------------------------
(and the associated Preferred Share Purchase Rights (collectively, the "RIGHTS")
issued pursuant to a Rights Agreement dated as of August 27, 1996 between the
Company and The First National Bank of Boston, as Rights Agent (the "RIGHTS
AGREEMENT")) that are owned by the Company or any subsidiary of the Company and
any Shares (and associated Rights) owned by Purchaser or any subsidiary of
Purchaser shall be canceled and retired and shall cease to exist and no
consideration shall be delivered in exchange therefor.
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<PAGE>
(c) Exchange of Shares. Each issued and outstanding Share (and associated
------------------
Right)(other than Shares (and associated Rights) to be canceled in accordance
with Section 2.1(b) and any dissenting Shares (and associated Rights) which are
held by shareholders exercising appraisal rights pursuant to the NYBCL
("DISSENTING SHAREHOLDERS")) shall be converted into the right to receive $8.00
per Share (and associated Right), payable to the holder thereof, without
interest (the "MERGER CONSIDERATION"), upon surrender of the certificate
formerly representing such Share in the manner provided in Section 2.2. All such
Shares (and associated Rights), when so converted, shall no longer be
outstanding and shall automatically be canceled and retired and shall cease to
exist, and each holder of a certificate representing any such Shares (and
associated Rights) shall cease to have any rights with respect thereto, except
the right to receive the Merger Consideration therefor upon the surrender of
such certificate in accordance with Section 2.2, without interest, or, in the
case of Dissenting Shareholders, the right, if any, to receive payment from the
Surviving Corporation of the fair value of such Shares as determined in
accordance with the NYBCL.
Section 2.2 Exchange of Certificates.
------------------------
(a) Paying Agent. Prior to the Effective Time, Parent shall designate a
------------
bank or trust company to act as agent for the holders of the Shares in
connection with the Merger (the "PAYING AGENT") to receive the funds to which
holders of the Shares shall become entitled pursuant to Section 2.1(c). Parent
shall, from time to time, make available to the Paying Agent funds in amounts
and at times necessary for the payment of the Merger Consideration in the
amounts and at the times provided herein. All interest earned on such funds
shall be paid to Parent.
(b) Exchange Procedures. As soon as reasonably practicable after the
-------------------
Effective Time, the Paying Agent shall mail to each holder of record of a
certificate or certificates, which immediately prior to the Effective Time
represented outstanding Shares (the "CERTIFICATES"), whose Shares were converted
pursuant to Section 2.1(c) into the right to receive the Merger Consideration
(i) a letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
delivery of the Certificates to the Paying Agent and shall be in such form and
have such other provisions as Parent and the Company may reasonably specify) and
(ii) instructions for use in effecting the surrender of the Certificates in
exchange for payment of the Merger Consideration. Upon surrender of a
Certificate for cancellation to the Paying Agent or to such other agent or
agents as may be appointed by Parent, together with such letter of transmittal,
duly executed, the holder of such Certificate shall be entitled to receive in
exchange therefor the Merger Consideration for each Share formerly represented
by such Certificate and the Certificate so surrendered shall forthwith be
canceled. If payment of the Merger Consideration is to be made to a person other
than the person in whose name the surrendered Certificate is registered, it
shall be a condition of payment that the Certificate so surrendered shall be
properly endorsed or shall be otherwise in proper form for transfer and that the
person requesting such payment shall have paid any transfer and other taxes
required by reason of the payment of the Merger Consideration to a person other
than the registered holder of the Certificate surrendered
-5-
<PAGE>
or shall have established to the satisfaction of the Surviving Corporation that
such tax either has been paid or is not applicable. Until surrendered as
contemplated by this Section 2.2, each Certificate shall be deemed at any time
after the Effective Time to represent only the right to receive the Merger
Consideration in cash as contemplated by this Section 2.2. The right of any
shareholder to receive the Merger Consideration shall be subject to and reduced
by any applicable withholding obligation.
(c) Transfer Books; No Further Ownership Rights in the Shares. At the
---------------------------------------------------------
Effective Time, the stock transfer books of the Company shall be closed and
thereafter there shall be no further registration of transfers of the Shares on
the records of the Company. From and after the Effective Time, the holders of
Certificates evidencing ownership of the Shares outstanding immediately prior to
the Effective Time shall cease to have any rights with respect to such Shares,
except as otherwise provided for herein or by applicable law. If, after the
Effective Time, Certificates are presented to the Surviving Corporation for any
reason, they shall be canceled and exchanged as provided in this Article II.
(d) Termination of Fund; No Liability. At any time following twelve months
---------------------------------
after the Effective Time, the Surviving Corporation shall be entitled to require
the Paying Agent to deliver to it any funds (including any interest received
with respect thereto) which had been made available to the Paying Agent and
which have not been disbursed to holders of Certificates, and thereafter such
holders shall be entitled to look to the Surviving Corporation (subject to
abandoned property, escheat or other similar laws) only as general creditors
thereof with respect to the Merger Consideration payable upon due surrender of
their Certificates, without any interest thereon. Notwithstanding the foregoing,
none of Parent, the Surviving Corporation or the Paying Agent shall be liable to
any holder of a Certificate for Merger Consideration delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
Section 2.3 Dissenting Shares. Notwithstanding any other provision of
-----------------
this Agreement to the contrary, Shares held by a holder who has not voted such
Shares in favor of the authorization, approval and adoption of this Agreement
and the Merger or consented thereto in writing and with respect to which
dissenters' rights shall have been demanded and perfected in accordance with
Sections 623 and 910 of the NYBCL (the "DISSENTING SHARES") and as of the
Effective Time not withdrawn shall not be converted into the right to receive
cash at or after the Effective Time, but such Shares shall become the right to
receive such consideration as may be determined to be due to holders of
Dissenting Shares pursuant to the laws of the State of New York unless and until
the holder of such Dissenting Shares withdraws his or her demand for such
appraisal or becomes ineligible for such appraisal. If a holder of Dissenting
Shares shall withdraw his or her demand for such appraisal or shall become
ineligible for such appraisal (through failure to perfect or otherwise), then,
as of the Effective Time or the occurrence of such event, whichever last occurs,
such holder's Dissenting Shares shall automatically be converted into and
represent the right to receive the Merger Consideration, without interest, as
provided in Section 2.1(c). The Company shall give Parent (i) prompt notice of
any demands for appraisal of Shares received by the Company and (ii) the
opportunity
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<PAGE>
to participate in and direct all negotiations and proceedings with respect to
any such demands. The Company shall not, without the prior written consent of
Parent, make any payment with respect to, or settle, offer to settle or
otherwise negotiate, any such demands.
Section 2.4 Company Stock Plans.
-------------------
(a) Each outstanding option to purchase Shares issued to employees, non-
employee directors and consultants of the Company pursuant to the Company's
Amended and Restated 1992 Incentive Stock Plan and the 1986 Key Employees Stock
Option Plan of Datalogix Formula Systems, Inc. (collectively, the "OPTION
PLANS") whether vested or unvested (each an "EMPLOYEE STOCK OPTION"), shall
remain outstanding after the Effective Time and shall be assumed by Parent. The
parties intend that Parent's assumption of the Employee Stock Options shall be
treated as "assuming a stock option in a transaction to which Section 424(a)
applies" within the meaning of Section 424 of the Code (as defined in Section
3.11 below) and this subsection (a) shall be interpreted and applied consistent
with such intent. Each Employee Stock Option assumed by Parent shall be
exercisable upon the same terms and conditions as under the applicable Option
Plan and option agreement issued thereunder, except that (i) such option shall
be exercisable for that number of shares of common stock of Parent equal to the
product of (x) the number of Shares for which such option was exercisable and
(y) the Merger Consideration divided by the average closing price of Parent's
Common Stock on the NASDAQ National Market for the five consecutive trading days
prior to the Effective Time (the "CONVERSION NUMBER"), and (ii) the exercise
price of such option shall be equal to the exercise price of such option as of
the date hereof divided by the Conversion Number.
(b) Each outstanding option to purchase Shares issued to a non-employee
director pursuant to the Company's 1995 Director Option Plan (a "DIRECTOR STOCK
OPTION"), whether vested or unvested, shall remain outstanding after the
Effective Time and shall be assumed by Parent. Each Director Stock Option
assumed by Parent shall be exercisable upon the same terms and conditions as
under the Company's 1995 Director Option Plan and the applicable option
agreement issued thereunder, except that the consideration payable upon exercise
in respect of each Share covered by such option shall be the Merger
Consideration.
(c) As soon as practicable after the Effective Time, Parent shall deliver
to the holders of Employee Stock Options and Director Stock Options appropriate
notices setting forth such holders' rights pursuant to the Option Plans and the
1995 Director Option Plan and the agreements evidencing the grants of such
Employee Stock Options and Director Stock Options shall continue in effect on
the same terms and conditions (subject to the adjustments required by this
Section 2.4 after giving effect to the Merger).
(d) Parent shall register under the Securities Act of 1933, as amended (the
"SECURITIES ACT"), all shares of Parent Common Stock subject to options that
were formerly Employee Stock Options as of the Effective Time.
-7-
<PAGE>
(e) The Company shall take all actions reasonably necessary to cause the
last day of the "OFFERING PERIOD" (as such term is used in the Company's 1995
Employee Stock Purchase Plan (the "1995 ESPP") to be the date immediately prior
to the Closing Date (the "FINAL PURCHASE DATE"), and apply on the Final Purchase
Date the funds within each participant's withholdings account on the Final
Purchase Date to the purchase on the Final Purchase Date of whole Shares in
accordance with the terms of the 1995 ESPP.
(f) Prior to the Effective Time, the Company shall take all actions
required to cause the exercise price on all options to purchase Shares that are
then outstanding and that have an exercise price in excess of $8.00 per Share to
be changed to become $8.00 per Share.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Purchaser as follows:
Section 3.1 Organization.
------------
(a) Each of the Company and its subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has the requisite corporate power and
authority and any necessary governmental authority to own, operate or lease the
properties that it purports to own, operate or lease and to carry on its
business as it is now being conducted, and, except as set forth in Section 3.1
of the Company Disclosure Schedule (as defined below), is duly qualified as a
foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of its properties owned, operated or leased or
the nature of its activities makes such qualification necessary, except for such
failure which, when taken together with all other such failures, would not have
a Material Adverse Effect (as defined below in this Section 3.1) on the Company
and its subsidiaries, taken as a whole. A true and complete list of all the
Company's subsidiaries, together with the jurisdiction of incorporation of each
subsidiary and the percentage of each subsidiary's outstanding capital stock
owned by the Company or another subsidiary, is set forth in Section 3.1 of the
Company Disclosure Schedule delivered to Parent and Purchaser on or before the
date hereof (the "COMPANY DISCLOSURE SCHEDULE"). The Company is not subject to
Section 2115 of the California General Corporation Law.
(b) When used in connection with the Company and its subsidiaries, the term
"MATERIAL ADVERSE EFFECT" means any individual material adverse effect, or
adverse effects in the aggregate (whether or not related and whether or not any
individual effect is material) which are material, on the business, operations,
properties (including intangible properties), condition (financial or
otherwise), prospects, assets or liabilities of the Company and its subsidiaries
taken as a whole. The term Material Adverse Effect shall include without
limitation: (i) any individual adverse effect, or adverse effects in the
aggregate (whether or not related and whether or not any individual effect is
material),
-8-
<PAGE>
which result in liability to the Company or its subsidiaries, or could
reasonably be expected to result in liability to the Company or its
subsidiaries, of in excess of $1,500,000, in the case of any individual effect,
or $2,500,000, in the case of all such adverse effects in the aggregate, except
that with respect to Section 6.3 (a) (for purposes of determining whether any
representations and warranties are true and correct as if made on and as of the
Effective Time) and Sections 6.3 (d), 6.3 (e) and 7.1 (d), such amounts will be
$3,000,000, in the case of any individual effect, or $5,000,000, in the case of
all adverse effects in the aggregate; and (ii) any judgment, injunction, order
or decree binding upon the Company or any of its subsidiaries obligating the
Company or any such subsidiary to take or refrain from taking any action, omit
or refrain from omitting to take any action required to be taken, perform or
refrain from performing any activity or conduct or refrain from conducting any
business, in each case which results from actions, suits or proceedings of the
types described in Section 6.3 (d) (i) or (ii). For the purposes of determining
whether a Material Adverse Effect has occurred or could reasonably be expected
to occur there shall be included as adverse effects, without limitation, any
payments made, and the value of any other consideration provided, or which could
reasonably be expected to be made or provided (i) to pay, discharge or satisfy
any actions, suits, proceedings or claims; (ii) to obtain consents from any
third party to the transactions contemplated hereby; and (iii) to pay, discharge
or satisfy any obligation to indemnify or hold harmless any Indemnified Person
(as defined in Section 6.3 (d) below). Notwithstanding the foregoing, (a) all
dollar amounts set forth in this Section 3.1 (b) are net of (i) amounts of
insurance proceeds received by the Company or its subsidiaries or specifically
acknowledged by the insurer in writing as being payable by the insurer, and (ii)
specifically applicable reserves set forth and provided for in the draft
consolidated financial statements set forth in Section 5.3 of the Company
Disclosure Schedule, and (b) no individual adverse effect shall be included in
the calculation of Material Adverse Effect if the sole impact of such individual
adverse effect is a payment obligation which could not reasonably be expected to
result in a liability to the Company or its subsidiaries of more than $50,000.
Section 3.2 Capitalization.
--------------
(a) Capitalization. The authorized capital stock of the Company consists
--------------
of 40,000,000 Shares, par value $.01 per Share and 5,000,000 shares of Preferred
Stock, par value $0.01 per share. As of September 19, 1996, (i) 11,711,776
Shares were issued and outstanding, all of which were validly issued and are
fully paid and nonassessable, (ii) 96,116 Shares were held in the treasury of
the Company or by subsidiaries of the Company, (iii) 1,015,038 Shares were
reserved for issuance upon exercise of outstanding options under the Option
Plans and the Company's Director Option Plan, and (iv) 250,000 Shares were
reserved for issuance under the 1995 ESPP, up to 23,000 of which may be issued
in the Offering Period that ends on the day prior to the Closing Date. Section
3.2 of the Company Disclosure Schedule sets forth a true and correct list as of
September 20, 1996 of all holders of options to purchase Shares, the number of
such options outstanding as of such date and the exercise price per option. All
of the outstanding Shares have been duly authorized and validly issued and are
fully paid and nonassessable and free of preemptive rights. Subsequent to
September 19, 1996, no Shares have been issued by the
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<PAGE>
Company except upon the exercise of outstanding options described in this
Section 3.2 (a). Except as set forth in Section 3.1(b) of the Company Disclosure
Schedule, each of the outstanding options described in this Section 3.2 allows
the optionee to purchase Shares which have been authorized to be issued by the
Company's Board of Directors and shareholders under the Option Plans or the 1995
Director Stock Option Plan. Except as set forth in Section 3.2 of the Company
Disclosure Schedule, there are no other options, warrants or other rights,
convertible debt, agreements, arrangements or commitments of any character
obligating the Company or any of its subsidiaries to issue or sell any shares of
capital stock of or other equity interests in the Company or any of its
subsidiaries. The Company is not obligated to redeem, repurchase or otherwise
reacquire any of its capital stock or other securities. For purposes of this
Agreement, "FULLY DILUTED BASIS" shall mean the sum of (x) all Shares issued and
outstanding at any one time plus (y) all Shares issuable upon the exercise of
any outstanding options, warrants or convertible or exchangeable securities.
(b) Except as set forth in Section 3.2 of the Company Disclosure Schedule,
all of the outstanding shares of the capital stock of each subsidiary of the
Company are beneficially owned by the Company, directly or indirectly, and all
such shares have been duly authorized, validly issued and are fully paid and
nonassessable and are owned by either the Company or one of its subsidiaries
free and clear of all liens, security interests, charges, claims or encumbrances
of any nature whatsoever. There are no existing options, calls or commitments
of any character relating to the issued or unissued capital stock or other
securities of any subsidiary. Except as set forth in Section 3.2 of the Company
Disclosure Schedule, the Company does not directly or indirectly own or have a
right to acquire an equity interest in any other corporation, partnership,
joint venture or other business association or entity.
Section 3.3 Authorization; Validity of Agreement; Company Action. The
----------------------------------------------------
Company has full corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby, subject to
obtaining shareholder approval as described in the last sentence of this Section
3.3. The Board of Directors of the Company, at a meeting duly called and held
on September 22, 1996 at which all of the Directors were present, duly and
unanimously approved, authorized and adopted this Agreement and its execution,
delivery and performance and the transactions contemplated hereby, recommended
that the shareholders of the Company authorize and adopt this Agreement and the
transactions contemplated hereby, including the Merger, and determined that this
Agreement and the transactions contemplated hereby, including the Merger, are
fair to and in the best interests of the shareholders of the Company; provided,
however, such recommendation may be withdrawn, modified or amended to the extent
permitted by Section 5.5 of this Agreement. No other corporate action on the
part of the Company is necessary to authorize the execution and delivery by the
Company of this Agreement and the consummation by it of the transactions
contemplated hereby (except as described in the last sentence of this Section
3.3). This Agreement has been duly executed and delivered by the Company and,
assuming due and valid authorization, execution and delivery hereof by Parent
and Purchaser, is a valid and binding obligation of the Company enforceable
against the Company in accordance with its terms. The affirmative vote of the
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holders of not less than two-thirds (2/3) of the outstanding Shares are the only
votes of the holders of any class or series of the Company's capital stock
necessary to approve, adopt and authorize this Agreement and the transactions
contemplated hereby.
Section 3.4 Consents and Approvals; No Violations. Except for the filings
-------------------------------------
or the consents, authorizations or approvals under the agreements set forth on
Section 3.4 of the Company Disclosure Schedule and the filings, permits,
authorizations, consents and approvals as may be required under, and other
applicable requirements of, the Exchange Act, the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR ACT"), state securities or blue
sky laws, and the filing and recordation of a certificate of merger under the
NYBCL or the DGCL, neither the execution, delivery or performance of this
Agreement by the Company nor the consummation by the Company of the transactions
contemplated hereby nor compliance by the Company with any of the provisions
hereof will (i) conflict with or result in any breach of any provision of the
certificate of incorporation or the bylaws of the Company or of any of its
subsidiaries, (ii) require any filing with, or permit, authorization, consent or
approval of, any court, arbitration tribunal, administrative agency or
commission or other governmental or other regulatory authority or agency,
domestic or foreign (a "GOVERNMENTAL ENTITY"), on the part of the Company or any
subsidiary, (iii) require the consent of any person under, result in a violation
or breach of, or constitute (with or without due notice or lapse of time or
both) a default (or give rise to any right of termination, amendment,
cancellation or acceleration) under, any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, lease, license, contract, agreement or
other instrument or obligation to which the Company or any of its subsidiaries
is a party or by which any of them or any of their properties or assets may be
bound, the lack of which consent, or which violation, breach or default,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect on the Company and its subsidiaries, taken as a whole
(the "SPECIFIED AGREEMENTS"), or (iv) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to the Company, any of its
subsidiaries or any of their properties or assets.
Section 3.5 SEC Reports and Financial Statements.
------------------------------------
(a) The Company has timely filed with the SEC, and has delivered to
Purchaser, true and complete copies of, all forms, reports, schedules,
statements and other documents required to be filed by it since June 1, 1995
under the Securities Act or the Exchange Act (collectively, the "SEC
DOCUMENTS"). Except as set forth in Section 3.5 of the Company Disclosure
Schedule, the SEC Documents (i) were prepared in accordance with the
requirements of the Securities Act or the Exchange Act, as the case may be,
including without limitation the applicable accounting requirements thereunder
and the published rules and regulations of the SEC with respect thereto, (ii)
when filed did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, and (iii) taken as a whole, do not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the
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<PAGE>
circumstances under which they were made, not misleading. None of the Company's
subsidiaries is required to file any statements or reports with the SEC pursuant
to Sections 13(a) or 15(d) of the Exchange Act.
(b) Except as set forth in Section 3.5 of the Company Disclosure Schedule,
the consolidated financial statements of the Company included in the SEC
Documents have been prepared from, and accord with, the books and records of the
Company and its subsidiaries, have been prepared in accordance with United
States generally accepted accounting principles ("GAAP") applied on a consistent
basis during the periods involved (except as may be indicated in the notes
thereto) and fairly present the consolidated financial position and the
consolidated results of operations and cash flows (and changes in financial
position, if any) of the Company and its consolidated subsidiaries as of the
respective dates and for the respective periods thereof, except that the
unaudited interim quarterly financial statements were or are subject to normal
and recurring year-end adjustments which were or are not expected to be material
in amount. Except as set forth in Section 3.5 of the Company Disclosure
Schedule, the Company is not aware of any facts or circumstances which would
require the Company to amend or restate any of the SEC Documents, including
without limitation the financial information included therein.
(c) The Company's reserves for product claims and warranty costs used in
preparing the draft consolidated financial statements set forth in Section 5.3
of the Company Disclosure Schedule are adequate to cover the Company's and its
subsidiaries' existing product claims and warranty costs, including without
limitation the product claims and warranty costs arising out of the matters
described in Section 3.7 of the Company Disclosure Schedule and the warranties
provided by the Comapany and its subsidiaries described in Section 3.24 (d) of
the Company Disclosure Schedule.
Section 3.6 Absence of Certain Changes. Since June 30, 1995, except as
--------------------------
contemplated in this Agreement and set forth on Section 3.6 of the Company
Disclosure Schedule, there has not been:
(a) any Material Adverse Effect on the Company and its subsidiaries, taken
as a whole;
(b) any strike, picketing, work slowdown or other labor disturbance;
(c) any material damage, destruction or loss (whether or not covered by
insurance) with respect to any of the material assets of the Company or any of
its subsidiaries;
(d) any redemption or other acquisition of capital stock by the Company or
any of its subsidiaries or any declaration or payment of any dividend or other
distribution in cash, stock or property with respect to capital stock;
(e) any stock split, reverse stock, combination, reclassification or other
similar action with respect to capital stock;
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<PAGE>
(f) any entry into any material commitment or transaction (including,
without limitation, any borrowing or capital expenditure) other than in the
ordinary course of business as contemplated by this Agreement;
(g) any transfer of, or rights granted under, any licenses, agreements,
patents, trademarks, trade names or copyrights other than nonexclusive end user
licenses granted in the ordinary course of business and consistent with past
practice;
(h) any mortgage, pledge, security interest or imposition of lien or other
encumbrance on any material asset of the Company or any of its subsidiaries; or
(i) any change by the Company in accounting principles or methods except
insofar as may have been required by a change in generally accepted accounting
principles and disclosed in the SEC Documents and except as set forth in Section
3.5 of the Company Disclosure Schedule.
Except as set forth in Section 3.6 of the Company Disclosure Schedule,
since June 30, 1995 the Company and its subsidiaries have conducted their
business only in the ordinary course and in a manner consistent with past
practice and have not made any material change in the conduct of the business or
operations of the Company and its subsidiaries taken as a whole. Except as set
forth in Section 3.6 of the Company Disclosure Schedule, no person has or will
have the right to receive any severance, bonus, other payment, increase or
change in benefits or vesting of stock options, shares or other benefits as a
result of any of the transactions contemplated by this Agreement.
Section 3.7 No Undisclosed Liabilities. Except as set forth in Section
--------------------------
3.7 of the Company Disclosure Schedule, and except as reflected or reserved
against in the consolidated financial statements contained in the SEC Documents,
the Company and its subsidiaries have no liabilities of any nature (whether
accrued, absolute, contingent or otherwise), except those liabilities incurred
in the ordinary course of business which could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Company and its subsidiaries, taken as a whole.
Section 3.8 Litigation. Except as disclosed in the SEC Documents or in
----------
Section 3.8 of the Company Disclosure Schedule, there is no suit, claim, action,
proceeding or investigation pending before any Governmental Entity or, to the
best knowledge of the Company, threatened against the Company or any of its
subsidiaries. Except as disclosed in the SEC Documents or in Section 3.8 of the
Company Disclosure Schedule, neither the Company nor any of its subsidiaries is
subject to any outstanding order, writ, injunction or decree.
Section 3.9 No Default; Compliance with Applicable Laws. Except as
-------------------------------------------
disclosed in Section 3.9 of the Company Disclosure Schedule, the business of the
Company and each of its subsidiaries is not being conducted in default or
violation of any term, condition or provision of (i) its respective certificate
of incorporation or bylaws, (ii) any Specified Agreement or (iii) any federal,
state, local or foreign statute, law, ordinance,
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rule, regulation, judgment, decree, order, concession, grant, franchise, permit
or license or other governmental authorization or approval applicable to the
Company or any of its subsidiaries, excluding from the foregoing clauses (ii)
and (iii), defaults or violations which could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Company and its subsidiaries, taken as a whole. Except as disclosed in Section
3.9 of the Company Disclosure Schedule, as of the date of this Agreement, no
investigation or review by any Governmental Entity or other entity with respect
to the Company or any of its subsidiaries is pending or, to the best knowledge
of the Company, threatened, nor has any Governmental Entity or other entity
indicated an intention to conduct the same. Each of the Company and its
subsidiaries has in effect all Federal, state, local and foreign governmental
approvals, authorizations, certificates, filings, franchises, licenses, notices,
permits and rights ("PERMITS") necessary for it to own, lease or operate its
properties and assets and to carry on its business as now conducted, and there
has occurred no default under any such Permit, except for the absence of Permits
and for defaults under Permits which absence or defaults, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect on
the Company and its subsidiaries, taken as a whole.
Section 3.10 Intellectual Property.
---------------------
(a) Except as set forth in Section 3.10 (a) of the Company's Disclosure
Schedule, each of the Company and its subsidiaries owns or has the exclusive
right to use, make, sell, license, or sublicense and bring actions for
infringement of all Company Products (as defined below) and Intellectual
Property Rights (as defined below) developed by or for the Company or any of the
Company's subsidiaries or that are used or currently proposed to be used in the
business of the Company or any of the Company's subsidiaries as currently
conducted or proposed to be conducted. All Company Products and Company
Intellectual Property Rights are owned by the Company and its subsidiaries free
and clear of any rights or claims of any former employees, consultants, officers
and directors of the Company or any subsidiary and former employers of all
current and former employees, consultants, officers and directors of the Company
or any subsidiary. The source codes for the Company Products constitute trade
secrets of the Company that are presently valid and protectable. Except as set
forth in Section 3.10 (a) of the Company's Disclosure Schedule, all taxes and
fees, including, without limitation, patent and trademark registration and
prosecution fees and all professional fees in connection therewith pertaining to
the Company Intellectual Property Rights, due and payable on or before the date
hereof, have been paid by the Company.
(b) Each of the Company's and its subsidiaries' current products and
products under development are listed on the Company Disclosure Schedule
(collectively, "COMPANY PRODUCTS"). Except as set forth in Section 3.10(b) of
the Company Disclosure Schedule, no person has a license to use or the right to
acquire a license to use any future version of any Company Product or any
Company Product that is under development, and no agreement to which the Company
or any subsidiary is a party will restrict the Surviving Corporation or Parent
from charging customers for any such new version. No person has any rights under
any source code escrow agreement relating to the
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<PAGE>
Company Products or Company Intellectual Property Rights. Except as set forth in
Section 3.10(b) of the Company Disclosure Schedule, no person other than the
Company and its subsidiaries has had access to or the right of access to source
code for the Company's Products or will have the right to such access as a
result of any of the transactions contemplated by this Agreement.
(c) No person has a right to receive a royalty or similar payment in
respect of any Company Product or any Company Intellectual Property Rights
whether or not pursuant to any contractual arrangements entered into by the
Company or any subsidiary. Except for End-User Licenses and except as set forth
in Section 3.10(c) of the Company Disclosure Schedule, each of the Company and
its subsidiaries has no licenses granted, sold or otherwise transferred by or to
it nor other agreements to which it is a party, relating in whole or in part to
any Company Product or Company Intellectual Property Rights.
(d) The execution, delivery and performance of this Agreement and the
consummation of the other transactions contemplated hereby (including without
limitation the continued conduct by Parent or Surviving Corporation after the
Effective Time of the Company's and its subsidiaries' businesses as presently
conducted and the incorporation of any Company Product or Company Intellectual
Property Right in any product of Parent or the Surviving Corporation) will not
breach, violate or conflict with any instrument or agreement and will not cause
the forfeiture or termination or give rise to a right of forfeiture or
termination of any such Company Product or Company Intellectual Property Right
or in any way impair the right of Parent or the Surviving Corporation to use,
sell, license or dispose of, either as part or all of a Company Product or as
part or all of a product of Parent or the Surviving Corporation, or to bring any
action for the infringement of, any such Company Product or Company Intellectual
Property Right or portion thereof.
(e) Neither the development, manufacture, marketing, license, sale or use
of any Company Product violates or will violate any license or agreement to
which the Company or any of its subsidiaries is a party or infringes any
Intellectual Property Right of any other party; there is no pending or, to the
knowledge of the Company, threatened claim or litigation contesting the
validity, ownership or right to use, sell, license or dispose of any
Intellectual Property Right necessary or required for, or used in, the conduct
of the business of the Company or any subsidiary as presently conducted nor, to
the knowledge of the Company, is there any basis for any such claim, nor has the
Company or any subsidiary received any notice asserting that any such
Intellectual Property Right or the proposed use, sale, license or disposition
thereof conflicts or will conflict with the rights of any other party, nor, to
the knowledge of the Company, is there any basis for any such assertion. To the
Company's knowledge, there is no infringement on the part of any third party of
the Company's Intellectual Property Rights.
(f) Each of the Company and its subsidiaries has taken reasonable and
practicable steps (including, without limitation, entering into confidentiality
and non-disclosure agreements with all officers and employees of and consultants
to the Company
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and its subsidiaries with access to or knowledge of the Company's Intellectual
Property Rights, except as set forth in Section 3.10 (f) of the Company
Disclosure Schedule) to maintain the secrecy and confidentiality of, and its
proprietary rights in, all Intellectual Property Rights necessary or required
for, or used in, the conduct of the Company's and its subsidiaries businesses.
All employees, consultants, officers, directors and shareholders of the Company
or any subsidiary that have participated in the development of or have had
access to any material portion of the Company Intellectual Property Rights are
parties to a written agreement ("PROPRIETARY INFORMATION AND INVENTIONS
AGREEMENT"), under which each such person or entity (i) is obligated to disclose
and transfer to the Company or any subsidiary, without the receipt by such
person of any additional value therefor (other than normal salary or fees for
consulting services), all inventions, developments and discoveries which, during
the period of employment with or performance of services for the Company or any
subsidiary, he makes or conceives of either solely or jointly with others, and
(ii) is obligated to maintain the confidentiality of proprietary information of
the Company and its subsidiaries. To the Company's knowledge, none of the
Company's or any subsidiary's employees, consultants, officers or directors is
obligated under any contract (including licenses, covenants or commitments of
any nature) or other agreement, or subject to any judgment, decree or order of
any Governmental Entity, that would conflict with their obligation to use their
best efforts to promote the interests of the Company and its subsidiaries in the
Company's and its subsidiaries' businesses or that would conflict with the
Company's and its subsidiaries' businesses. It is currently not necessary nor
will it be necessary for the Company or any subsidiary to utilize in the
Company's or any of its subsidiaries' businesses nor will the Company or any
subsidiary utilize in the Company's or any of its subsidiaries' businesses any
inventions of any of such persons or entities (or people it currently intends to
hire) made or owned prior to their employment by or affiliation with the Company
or any subsidiary, nor is it or will it be necessary to utilize any other assets
or rights of any such persons or entities (or people it currently intends to
hire) made or owned prior to their employment with or engagement by the Company
or any subsidiary, in violation of any Intellectual Property Rights of any such
person or entity or any other limitations or restrictions to which any such
person or entity is a party or to which any of such assets or rights may be
subject. To the best of the Company's knowledge, none of the Company's or any
subsidiary's employees, consultants, officers, directors or shareholders that
has had knowledge of or access to information relating to the Company's or any
of its subsidiaries' businesses has taken, removed or made use of any
proprietary documentation, manuals, products, materials, or any other tangible
item from his previous employer relating to the business as conducted of such
previous employer which has resulted in the Company's or any subsidiary's access
to or use of such proprietary items in the Company's or any of its subsidiaries'
businesses, and the Company and its subsidiaries will not gain access to or make
use of any such proprietary items in the Company's or any of its subsidiaries'
businesses.
(g) Section 3.10 of the Company Disclosure Schedule also sets forth a
complete list of all licenses, sublicenses and other agreements as to which the
Company or any subsidiary is a party and pursuant to which the Company or any
subsidiary or any other person is authorized to use, license, sublicense, sell
or distribute any Intellectual
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<PAGE>
Property Right (excluding End-User Licenses). Neither the Company nor any
subsidiary is in violation of any license, sublicense or agreement described on
such list except such violations as do not materially impair the Company's or
any subsidiary's rights under such license, sublicense or agreement. Section
3.10 of the Company Disclosure Schedule separately identifies each exclusive
arrangement between the Company or any subsidiary and any third party to use,
license, sublicense, sell or distribute any Company Intellectual Property Right
or any Company Product.
(h) Section 3.10 of the Company Disclosure Schedule contains a complete and
accurate list of all applications, filings and other formal actions made or
taken pursuant to federal, state, local and foreign laws by the Company or any
subsidiary to perfect or protect its interest in the Company Intellectual
Property Rights, including, without limitation, all patents, patent
applications, trademarks, trademark applications and registrations, service
marks, service mark applications and registrations and copyright applications
and registrations. As used herein, the term "INTELLECTUAL PROPERTY RIGHTS" means
all intellectual property rights, including, without limitation, domestic and
foreign patents, patent applications, patent rights, trademarks, trademark
registrations, trademark applications, trade names, service marks, service mark
applications and registrations, copyrights, copyright applications and
registrations, licenses, know-how, trade secrets, trade rights, proprietary
processes and formulae, inventions, development tools, designs, plans,
specifications, technical information and other proprietary rights, whether or
not registered, and all documentation and media relating to the above, and the
term "COMPANY INTELLECTUAL PROPERTY RIGHTS" shall mean Intellectual Property
Rights owned by or granted exclusively or nonexclusively to the Company or any
subsidiary.
Section 3.11 Taxes.
-----
(a) For purposes of this Section 3.11 and other provisions of this
Agreement relating to Taxes, the following definitions shall apply:
(i) The term "TAXES" shall mean all taxes, however denominated,
including any interest, penalties or other additions to tax that may become
payable in respect thereof, (A) imposed by any federal, territorial, state,
local or foreign government or any agency or political subdivision of any such
government, which taxes shall include, without limiting the generality of the
foregoing, all income or profits taxes (including but not limited to, federal
income taxes and state income taxes), payroll and employee withholding taxes,
unemployment insurance, social security taxes, sales and use taxes, ad valorem
taxes, excise taxes, franchise taxes, gross receipts taxes, business license
taxes, occupation taxes, real and personal property taxes, stamp taxes,
environmental taxes, transfer taxes, workers' compensation, Pension Benefit
Guaranty Corporation premiums and other governmental charges, and other
obligations of the same or of a similar nature to any of the foregoing, which
are required to be paid, withheld or collected, (B) any liability for the
payment of amounts referred to in (A) as a result of being a member of any
affiliated, consolidated, combined or unitary group, or (C) any liability for
amounts referred to in (A) or (B) as a result of any obligations to indemnify
another person.
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<PAGE>
(ii) The term "RETURNS" shall mean all reports, estimates,
declarations of estimated tax, information statements and returns relating to,
or required to be filed in connection with, any Taxes, including information
returns or reports with respect to backup withholding and other payments to
third parties.
(iii) The term "CODE" shall mean the Internal Revenue Code of 1986, as
amended.
(b) Except as set forth in Section 3.11 of the Company Disclosure Schedule,
and except as could not, either individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on the Company and its subsidiaries,
taken as a whole, (i) all Returns required to be filed by or on behalf of the
Company and each of its subsidiaries have been duly filed on a timely basis and
such Returns are true, complete and correct, (ii) all Taxes shown to be payable
on such Returns or on subsequent assessments with respect thereto, and all
payments of estimated Taxes required to be made by or on behalf of the Company
and each of its subsidiaries under Section 6655 of the Code or comparable
provisions of state, local or foreign law, have been paid in full on a timely
basis or have been accrued on the Financial Statements, and no other Taxes are
payable by the Company or any of its subsidiaries with respect to items or
periods covered by such Returns (whether or not shown on or reportable on such
Returns) or with respect to any period prior to the date of this Agreement,
(iii) the Company and each of its subsidiaries has withheld and paid over all
Taxes required to have been withheld and paid over, and complied with all
information reporting and backup withholding requirements, including maintenance
of required records with respect thereto, in connection with amounts paid or
owing to any employee, creditor, independent contractor, or other third party,
(iv) there are no liens on any of the assets of the Company or any of its
subsidiaries with respect to Taxes, other than liens for Taxes not yet due and
payable or for Taxes that the Company or such subsidiary is contesting in good
faith through appropriate proceedings and for which appropriate reserves have
been established, (v) the amount of the Company's and its subsidiaries'
liability for unpaid Taxes (whether actual or contingent) for all periods
through the date of the Financial Statements does not, in the aggregate, exceed
the amount of the current liability accruals for Taxes reflected on the
Financial Statements, and the Financial Statements properly accrue in accordance
with GAAP all liabilities for Taxes payable after the date of the Financial
Statements attributable to transactions and events occurring prior to such date,
and (vi) no liability for Taxes of the Company or any of its subsidiaries has
been incurred (or prior to Closing will be incurred) since such date other than
in the ordinary course of business.
(c) Except as set forth in Section 3.11(c) of the the Company Disclosure
Schedule, the Company has made available to Purchaser true and complete copies
of (i) relevant portions of income tax audit reports, statements of
deficiencies, closing or other agreements received by or on behalf of the
Company or any of its subsidiaries relating to Taxes, and (ii) all federal and
state income or franchise tax returns and state sales and use tax Returns for or
including the Company or any of its subsidiaries for the periods ending on and
after June 30, 1993, June 30, 1994 and June 30, 1995, excluding from the
foregoing such returns with respect to Taxes the nonpayment of which,
individually or in
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<PAGE>
the aggregate, could not reasonably be expected to cause a Material Adverse
Effect. Neither the Company nor any of its subsidiaries does business in or
derives income from any state other than states for which Returns have been duly
filed and made available to Purchaser.
(d) Except as disclosed in Section 3.11 of the Company Disclosure Schedule,
(i) the Returns of or including the Company and its subsidiaries have never been
audited by a government or taxing authority, nor is any such audit in process,
threatened or, to the Company's knowledge, pending (either in writing or
verbally, formally or informally), (ii) no deficiencies exist or have been
asserted (either in writing or verbally, formally or informally) or are expected
to be asserted with respect to Taxes of the Company or any of its subsidiaries,
and neither the Company nor any such subsidiary has received notice (either in
writing or verbally, formally or informally) nor expects to receive notice that
it has not filed a Return or paid Taxes required to be filed or paid, (iii)
neither the Company nor any of its subsidiaries is a party to any action or
proceeding for assessment or collection of Taxes, nor has such event been
asserted or threatened (either in writing or verbally, formally or informally)
against the Company, any of its subsidiaries, or any of their assets, and (iv)
no waiver or extension of any statute of limitations is in effect with respect
to Taxes or Returns of the Company of its subsidiaries, excluding from the
foregoing any such audit, threat of audit, deficiency, proposed deficiency,
action, proceeding for assessment or collection, waiver or extension with
respect to which the amount in controversy is less than $50,000.
(e) Neither the Company nor any subsidiary has entered into any
compensatory agreements with respect to the performance of services which
payment thereunder would result in a nondeductible expense to the Company or
such subsidiary pursuant to Section 280G of the Code or an excise tax to the
recipient of such payment pursuant to Section 4999 of the Code.
Section 3.12 Certificate of Incorporation and Bylaws. The Company has
---------------------------------------
heretofore furnished to Purchaser a complete and correct copy of the certificate
of incorporation and the bylaws or equivalent organizational documents, each as
amended to the date hereof, of the Company and made available to Purchaser such
documents with respect to all subsidiaries. Such certificate of incorporation,
bylaws and equivalent organizational documents are in full force and effect.
Neither the Company nor any of its subsidiaries is in violation of any of the
provisions of its certificate of incorporation or bylaws or equivalent
organizational documents.
Section 3.13 Title to Property.
-----------------
(a) Except as disclosed in Section 3.13 to the Company Disclosure Schedule,
the Company and its subsidiaries have good and marketable title, or valid
leasehold rights in the case of leased property, to all real property and all
personal property purported to be owned or leased by them, free and clear of all
material liens, security interests, claims, encumbrances and charges, excluding
(i) immaterial liens for fees, taxes, levies, imposts, duties or governmental
charges of any kind which are not yet delinquent or are being
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contested in good faith by appropriate proceedings which suspend the collection
thereof, (ii) immaterial liens for mechanics, materialmen, laborers, employees,
suppliers or other liens arising by operation of law for sums which are not yet
delinquent or are being contested in good faith by appropriate proceedings,
(iii) purchase money liens on office, computer and related equipment and
supplies incurred in the ordinary course of business, and (iv) liens or defects
in title or leasehold rights that, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect on the Company and its
subsidiaries, taken as a whole
(b) Except as set forth in Section 3.13 (b) of the Company Disclosure
Schedule, consummation of the Merger will not result in any breach of or
constitute a default (or an event with which notice or lapse of time or both
would constitute a default) under, or give to others any rights of termination
or cancellation of, or require the consent of others under, any lease in which
the Company or any of its subsidiaries is a lessee, except for breaches or
defaults which, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect on the Company and its subsidiaries,
taken as a whole
Section 3.14 Employee Benefit Plans. The Company has disclosed in
----------------------
Section 3.14 of the Company Disclosure Schedule a list of all material employee
welfare benefit plans (as defined in Section 3(1) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")), employee pension benefit
plans (as defined in Section 3(2) of ERISA) and all other bonus, stock option,
stock purchase, benefit, profit sharing, savings, retirement, disability,
insurance, incentive, deferred compensation and other similar fringe or employee
benefit plans, programs or arrangements for the benefit of, or relating to, any
employee of, or independent contractor or consultant to, the Company or any of
its subsidiaries (together, the "EMPLOYEE PLANS"). The Company has made
available to Parent true and complete copies of all Employee Plans, as in
effect, together with all amendments thereto which will become effective at a
later date, as well as the latest Internal Revenue Service determination letters
obtained with respect to any Employee Plan qualified under Section 401(a) or
501(a) of the Code. Also with respect to each Employee Plan, true and complete
copies of the (i) three most recent annual actuarial valuation report, if any,
(ii) three last filed Form 5500 together with Schedule A or B thereto or both,
(iii) summary plan description (as defined in ERISA), if any, and all
modifications thereto communicated to employees, and (iv) three most recent
annual and periodic accounting of related plan assets, if any, have been, or
will be, made available to Purchaser and are, or will be, correct in all
material respects. All of the foregoing are legal, valid, binding, in full
force and effect and there are no defaults thereunder, and no rights of the
Company or any of the Company's subsidiaries will be impaired by the execution
delivery and performance of this Agreement or the consummation of the
transactions contemplated hereby. Neither the Company nor any of its
subsidiaries nor any of their respective directors, officers, employees or
agents, nor, to the best knowledge of the Company and its subsidiaries, any
"party in interest" or "disqualified person", as such terms are defined in
Section 3 of ERISA and Section 4975 of the Code has, with respect to any
Employee Plan, engaged in or been a party to any "prohibited transaction", as
such term is defined in Section 4975 of the Code or Section 406 of ERISA, which
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could result in the imposition of either a penalty assessed pursuant to Section
502(i) of ERISA or a tax imposed by Section 4975 of the Code, in each case
applicable to the Company, any of its subsidiaries or any Employee Plan. All
Employee Plans are in compliance in all material respects with the currently
applicable requirements prescribed by all statutes, orders, or governmental
rules or regulations currently in effect with respect to such Employee Plans,
including, but not limited to, ERISA and the Code and, to the best knowledge of
the Company, there are no pending or threatened claims, lawsuits or arbitrations
(other than routine claims for benefits) which have been asserted or instituted
against the Company, any of its subsidiaries, any Employee Plan or the assets of
any trust for any Employee Plan. Each Employee Plan which is a group health plan
(within the meaning of Section 5000(b)(i) of the Code) complies with and has
been maintained and operated in accordance with each of the requirements of
Section 162(k) of the Code as in effect for years beginning prior to 1989,
Section 4980B of the Code for years beginning after December 31, 1988 and Part 6
of Subtitle B of Title I of ERISA. Each Employee Plan intended to qualify under
Section 401(a) of the Code does so qualify, and the trusts created thereunder
are exempt from tax under the provisions of Section 501(a) of the Code. Each
Employee Plan that has been terminated by the Company or any of its subsidiaries
which was intended to qualify under Section 401(a) of the Code has received a
final determination of such qualification from the Internal Revenue Service.
All contributions or payments required to be made or accrued before the
Effective Time under the terms of any Employee Plan will have been made or
accrued by the Company or by its subsidiaries, as applicable, by the Effective
Time. No Employee Plan subject to Section 412 of the Code has incurred any
"accumulated funding deficiency" (as defined in ERISA), whether or not waived.
Neither the Company nor any of its subsidiaries has incurred or reasonably
expects to incur any liability to the Pension Benefit Guaranty Corporation with
respect to any Employee Plan. Neither the Company nor any of its subsidiaries
has incurred or reasonably expects to incur any withdrawal liability with
respect to any "multiemployer plan" (as defined in Section 3(37) of ERISA).
There have been no changes in the operation or interpretation of any of the
Employee
Plans since the most recent annual report or actual report which would have
any material effect on the cost of operating or maintaining such Employee Plans.
Section 3.15 Labor Matters.
-------------
(a) Section 3.15(a) to the Company Disclosure Schedule sets forth a list of
all Employees of the Company and its subsidiaries and their respective position,
salaries and other compensation owed, payable or to be paid to them.
(b) Except as set forth in Section 3.15(b) to the Company Disclosure
Schedule (i) neither the Company nor any of its subsidiaries is a party to any
outstanding employment agreements or contracts with directors, officers,
employees or consultants that are not terminable at will, or that provide for
the payment of any bonus or commission; (ii) neither the Company nor any of its
subsidiaries is a party to any agreement, policy or practice that requires it to
pay termination or severance pay to salaried, non-exempt or hourly employees
(other than as required by law); (iii) neither the Company nor any of its
subsidiaries is a party to any collective bargaining agreement or other labor
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union contract applicable to persons employed by the Company or its
subsidiaries, nor does the Company or any of its subsidiaries know of any
activities or proceedings of any labor union to organize any such employees.
(c) Except as set forth in Section 3.15(c) to the Company Disclosure
Schedule: (i) the Company and all of its subsidiaries are in compliance in all
material respects with all applicable laws relating to employment and employment
practices, wages, hours, and terms and conditions of employment; (ii) there is
no unfair labor practice charge or complaint pending before the National Labor
Relations Board ("NLRB"); (iii) there is no labor strike, material slowdown or
material work stoppage or lockout actually pending or, to the Company's
knowledge, threatened against or affecting the Company or any of its
subsidiaries, and neither the Company nor any of its subsidiaries has
experienced any strike, material slowdown or material work stoppage or lockout
since June 30, 1995; (iv) there is no representation claim or petition pending
before the NLRB and no question concerning representation exists relating to the
employees of the Company or any of its subsidiaries; (v) there are no charges
with respect to or relating to the Company or any of its subsidiaries pending
before the Equal Employment Opportunity Commission or any state, local or
foreign agency responsible for the prevention of unlawful employment practices;
(vi) neither the Company nor any of its subsidiaries has formal notice from any
Federal, state, local or foreign agency responsible for the enforcement of labor
or employment laws of an intention to conduct an investigation of the Company or
any of its subsidiaries and no such investigation is in progress.
Section 3.16 Proxy Statement. The Proxy Statement will comply in all
---------------
material respects with the applicable requirements of the Exchange Act and the
rules and regulations thereunder except that no representation or warranty is
being made by the Company with respect to any information supplied to the
Company by Parent or Purchaser specifically for inclusion in the Proxy
Statement. The Proxy Statement will not, at the time the Proxy Statement (or
any amendment or supplement thereto) is filed with the SEC or first sent to
shareholders, at the time of the Company Shareholders' Meeting or at the
Effective Time, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
Section 3.17 Brokers. No broker, finder or investment banker (other than
-------
Robertson, Stephens & Company) is entitled to any brokerage, finder's or other
fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by and on behalf of the Company. The
Company has heretofore furnished to Purchaser true and complete information
concerning the financial arrangements between the Company and Robertson,
Stephens & Company pursuant to which such firm would be entitled to any payment
as a result of the transactions contemplated hereunder.
Section 3.18 Environmental Laws.
------------------
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(a) The operations of the Company and its subsidiaries comply in all
material respects with all applicable federal, state and local environmental
laws, statutes and regulations.
(b) The operations of the Company and its subsidiaries are not the
subject of any judicial or administrative proceeding alleging the violation of
any federal, state or local environmental law, statute or regulation.
(c) The operations of the Company and its subsidiaries are not the
subject of any federal or state investigation pursuant to which the Company or
any subsidiary has been ordered to respond to a release of any hazardous or
toxic waste or substance into the environment in violation of law.
(d) Each of the Company and its subsidiaries has not filed any notice
under federal or state law indicating past or present treatment, storage or
disposal requiring a Part B permit or designation of "interim status" as defined
under 40 C.F.R. Parts 260-270 or any state equivalent of a hazardous or toxic
waste or substance as defined therein or reporting a spill or release of a
hazardous or toxic waste or substance into the environment except in accordance
with applicable law.
(e) Each of the Company and its subsidiaries has not released, as
defined in the Comprehensive Environmental Response Compensation and Liability
Act (42 U.S.C. (S)9601 et seq.), any hazardous substance as defined therein into
-- ---
the environment, except where such release could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Company and its subsidiaries, taken as a whole;
(f) None of the operations of the Company or any subsidiary involve
the generation, transportation, treatment or disposal as defined under 40 C.F.R.
Parts 260-270 or any state equivalent of hazardous waste as defined therein
requiring a Part B permit or designation of "interim status".
(g) No underground storage tanks are on the premises of the Company or
any subsidiary.
(h) No lien in favor of any governmental authority for (i) any
liability under federal or state environmental laws or regulations, or (ii)
damages arising from or costs incurred by such governmental authority in
response to a release of a hazardous or toxic waste or substance into the
environment has been filed or attached to the premises currently owned or leased
by the Company or any subsidiary.
(i) All material permits necessary for the continued conduct of the
business of the Company and its subsidiaries for the transportation, transfer,
recycling, storage, use, treatment, manufacture, investigation or removal of any
hazardous or toxic waste or substance have been obtained by the Company or any
subsidiary. All such permits are valid and in full force and effect. Each of
the Company and the its subsidiaries
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<PAGE>
has complied in all material respects with all covenants and conditions of any
permits and no circumstances exist which could cause any permit to be revoked,
modified or rendered non-renewable upon the payment of the permit fee or, to the
best of the Company's knowledge, which could impose upon the Company, any of the
Company's subsidiaries or the Surviving Corporation the obligation to obtain any
additional permits for such activities, absent a change in operations.
(j) Neither the Company nor any subsidiary has exposed any persons in
a material manner to, nor received notice of any claim of injury due to exposure
of any person to, hazardous or toxic wastes or substances manufactured, stored,
used, distributed, disposed of, released or controlled by the Company or any
subsidiary.
(k) No hazardous or toxic wastes or substances are present on any
property which has been owned, leased or occupied by the Company or any
subsidiary, for the conduct of its business which could reasonably be expected
to result in a Material Adverse Effect on the Company and its subsidiaries taken
as a whole.
(l) No claim, complaint, or administrative proceeding has been brought
and is currently pending against the Company or any subsidiary relating to any
liability of the Company or any subsidiary existing or threatened with respect
to the release of hazardous or toxic wastes or substances or as to the
investigation or remediation of hazardous or toxic wastes or substances.
As used herein "FEDERAL, STATE AND LOCAL ENVIRONMENTAL LAWS, STATUTES OR
REGULATIONS" means any and all applicable laws, rules, regulations, orders,
treaties, statutes and codes promulgated by any local, state, federal or
international governmental authority or agency which has jurisdiction over the
environment and any portion of the current operations of the Company and its
subsidiaries, and which prohibits, regulates or controls any hazardous material
or the transportation, storage, transfer, recycling, use, treatment,
manufacture, investigation, removal, remediation, release, sale or distribution
of hazardous materials including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. (S)9601 et
--
seq.), the Hazardous Material Transportation Act (49 U.S.C. (S)1801 et seq.),
- --- -- ---
the Resource Conservation and Recovery Act (42 U.S.C. (S)6901 et seq.), the
-- ---
Federal Water Pollution Control Act (33 U.S.C. (S)1251 et seq.), the Clean Air
-- ---
Act (42 U.S.C. (S)7401 et seq.), the Toxic Substances Control Act, as amended
-- ---
(15 U.S.C. (S)2601 et seq.), as these laws have been amended or supplemented to
-- ---
date and any analogous state or local statutes and the regulations promulgated
to date pursuant thereto.
As used herein, "HAZARDOUS OR TOXIC WASTE OR SUBSTANCE" means those
substances which are regulated by or form the basis of liability under any
federal, state and local environmental laws, statutes or regulations because
they are radioactive, toxic or hazardous, including, without limitation: (a)
asbestos, (b) oil and petroleum products, (c) explosives, (d) radioactive
substances, pollutants or wastes, (e) urea formaldehyde-containing building
materials, (f) polychlorinated biphenyls, (g) radon gas, and (h) ultra-hazardous
or toxic substances, pollutants or wastes.
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Section 3.19 Disclosure. The Company has provided or made available to
----------
Parent copies of all documents and information requested by Parent pursuant to
Parent's diligence request lists dated (or provided pursuant to cover letters
dated) September 12, 13 and 20, 1996, to the extent the items on such lists are
applicable to the Company or any of its subsidiaries. Except as described in
Section 3.19 of the Company Disclosure Schedule, the Company has made available
to Parent true and correct copies of the Company's Certificate of Incorporation,
bylaws and all minutes of meetings or actions by written consent of the Board of
Directors (including without limitation all committees thereof) and shareholders
of the Company and its subsidiaries, which minutes and actions by written
consent reflect all actions taken by the Board of Directors (including without
limitation all committees thereof ) and shareholders of the Company and its
subsidiaries. To the extent Section 3.19 of the Company Disclosure Schedules
lists minutes not made available to Parent, Section 3.19 of the Company
Disclosure Schedule sets forth all actions taken at such meetings and all
material matters discussed at such meetings.
Section 3.20 Insurance. Section 3.20 to the Company Disclosure Schedule
---------
sets forth a true and complete list of all insurance policies in force at the
date hereof, with respect to the assets, properties or operations of each of the
Company and its subsidiaries, together with a summary description of the
premiums currently paid thereon, the hazards insured against and the dollar
amount of coverage (indicating deductibles, if any). True and complete copies
of all such insurance policies will be made available to Purchaser by the
Company. Such policies will not be terminated as a result of the Merger and
will be effective as policies of the Surviving Corporation, subject to payment
of applicable premiums. Such policies also are in full force and effect with
reputable insurers in such amounts and insure against such losses and risks
(including product liability) as are adequate to protect the properties and
businesses of each of the Company and its subsidiaries. All such insurance is
of like character and amount as is carried by like businesses similarly
situated.
Section 3.21 Rights Agreement. The Company has provided Parent with a
----------------
complete and correct copy of the Rights Agreement. The amendment to the Rights
Agreement attached hereto as Section 3.21 of the Company Disclosure Schedule has
been duly authorized by the Board of Directors of the Company and has been duly
executed by the Company, and, accordingly, the execution of this Agreement, the
announcement or making of the Offer, the acquisition of Shares pursuant to the
Merger and the other transactions contemplated by this Agreement will not cause
the Rights to become exercisable or result in either Parent or Purchaser or any
of their affiliates to become an "Acquiring Person" (as defined in the Rights
Agreement) or the occurrence of a "Distribution Date", a "Section 11(a)(ii)
Event", or a "Section 13 Event" (as such terms are defined in the Rights
Agreement).
Section 3.22 State Takeover Statutes. The Board of Directors of the
-----------------------
Company has approved the Merger and this Agreement (and the transactions
contemplated hereby), and such approval is sufficient to render inapplicable to
the Merger, this Agreement and the transactions contemplated hereby Section 912
of the NYBCL. No other "business combination," "fair price," "moratorium,"
"control share acquisition," or other anti-
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<PAGE>
takeover statute or similar statute or regulations, applies or purports to apply
to the Offer, the Merger, this Agreement or any of the transactions contemplated
hereby.
Section 3.23 Contracts and Commitments.
-------------------------
(a) Except as disclosed in Section 3.23 of the Company Disclosure Schedule,
neither the Company nor any of its subsidiaries is a party or subject to:
(i) any plan, contract or arrangement which requires aggregate
payments by the Company or any of its subsidiaries in excess of $50,000, written
or oral, providing for bonuses, pensions, deferred compensation, severance pay
or benefits, retirement payments, profit-sharing, or the like;
(ii) any joint marketing, joint development or joint venture
contract or arrangement or any other agreement which has involved or is expected
to involve a sharing of profits with other persons;
(iii) any existing OEM agreement, distribution agreement, volume
purchase agreement, or other similar agreement in which the annual amount
involved in 1995 exceeded or is expected to exceed in 1996 $50,000 in aggregate
amount or pursuant to which the Company or any of its subsidiaries has granted
or received most favored customer provisions or exclusive marketing rights
related to any product, group of products or territory;
(v) any lease for real or personal property in which the amount of
payments which the Company or any of its subsidiaries is required to make on an
annual basis exceeds $25,000;
(vi) any agreement, contract, mortgage, indenture, lease,
instrument, license, franchise, permit, concession, arrangement, commitment or
authorization which may be, by its terms, terminated or breached by reason of
the execution of this Agreement, the Merger, or the consummation of the
transactions contemplated hereby or thereby;
(vii) except for trade indebtedness incurred in the ordinary course
of business, any instrument evidencing or related in any way to indebtedness in
excess of $50,000 incurred in the acquisition of companies or other entities or
indebtedness in excess of $50,000 for borrowed money by way of direct loan, sale
of debt securities, purchase money obligation, conditional sale, guarantee,
indemnification or otherwise;
(viii) any license agreement, either as licensor or licensee
(excluding nonexclusive object code software licenses granted to end-users in
the ordinary course of business that permit use of software products by a
limited number of users without a right to modify, distribute or sublicense the
same ("END-USER LICENSES"));
(ix) any contract containing covenants purporting to limit the
Company's freedom or that of any of its subsidiaries to compete in any line of
business or in any geographic area or with any third party;
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(x) any agreement, contract or commitment relating to capital
expenditures and involving future obligations in excess of $50,000; or
(xi) any other agreement, contract or commitment which is material
to the Company and its subsidiaries taken as a whole.
(b) Except as disclosed in Section 3.23 (b) of the Company Disclosure
Schedule, each agreement, contract, mortgage, indenture, plan, lease,
instrument, permit, concession, franchise, arrangement, license and commitment
listed in Section 3.23 of the Company Disclosure Schedule is valid and binding
on the Company or its subsidiaries, as applicable and assuming due and valid
authorization, execution and delivery by all counter parties, and is in full
force and effect, and neither the Company nor any of its subsidiaries, nor to
the knowledge of the Company, any other party thereto, has breached any material
provision of, or is in material default under the terms of, any such agreement,
contract, mortgage, indenture, plan, lease, instrument, permit, concession,
franchise, arrangement, license or commitment.
(c) There is no agreement, judgment, injunction, order or decree binding
upon the Company or any of its subsidiaries which has or could reasonably be
expected to have the effect of prohibiting or materially impairing any material
current business practice of the Company or its subsidiaries, any acquisition of
material property by the Company or its subsidiaries or the conduct of business
by the Company or its subsidiaries as currently conducted or as proposed to be
conducted by the Company or its subsidiaries.
(d) Each agreement or arrangement under which the Company or any of its
subsidiaries will incur legal, accounting or financial advisor expenses as a
result of the transactions contemplated by this Agreement, and the maximum
liability of the Company or any such subsidiary under each such agreement or
arrangement, is described in Section 3.23 of the Company Disclosure Schedule.
Section 3.24 Support Agreements.
------------------
(a) As part of Section 3.24 of the Company Disclosure Schedule, the Company
has provided to Parent a list, which is complete in all materials respects, of
all customers that are parties to agreements or other arrangements pursuant to
which the Company is obligated to provide support services with respect to the
Company Products (such agreements, as supplemented below, are referred to
collectively as the "LICENSE AGREEMENTS"). Except as set forth in Section 3.24
of the Company Disclosure Schedule, none of the License Agreements contains
terms that, individually or in the aggregate with the other License Agreements,
could reasonably be expected to cause a Material Adverse Effect. The versions
of the Company Products currently supported by the Company or any of its
subsidiaries are set forth in Section 3.24 of the Company Disclosure Schedule.
(b) Except as set forth in Section 3.24(b) of the Company Disclosure
Schedule, neither the Company nor any of its subsidiaries has granted any third
party the
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<PAGE>
right to furnish support or maintenance services with respect to any Company
Products to any other third party.
(c) Except as set forth in Section 3.24(c) of the Company Disclosure
Schedule, no agreement for support or maintenance of the Company Products by the
Company obligates the Company or any of its subsidiaries, and no agreement would
obligate Parent after the Closing Date, to provide any change in functionality
or other alteration in the performance of the Company Products or to provide new
products or technology. Except as set forth in Section 3.24(c) of the Company
Disclosure Schedule, no agreement pursuant to which the Company or any of its
subsidiaries has licensed the use of the Company Products to any third party
obligates the Company or any of its subsidiaries to provide any change in
functionality or other alteration in the performance of the Company Products or
to provide new products or technology.
(d) Except as set forth in Section 3.24 of the Company Disclosure Schedule,
each of the Company and its subsidiaries has not provided any warranties,
express or implied, with respect to the Company Products. Each of the Company
and its subsidiaries is in compliance in all material respects with all
warranties described in Section 3.24 of the Company Disclosure Schedule.
Section 3.25 Interests of Officers and Directors. To the best of the
-----------------------------------
Company's knowledge, no officer or director of the Company has had, either
directly or indirectly, a material interest in: (i) any person or entity which
purchases from or sells, licenses or furnishes to the Company or any of its
subsidiaries any goods, property, technology or intellectual or other property
rights or services; (ii) any contract or agreement to which the Company or any
of its subsidiaries is a party or by which it may be bound or affected; or (iii)
any property, real or personal, tangible or intangible, used in or pertaining to
its business or that of its subsidiaries, including any interest in the Company
Intellectual Property Rights.
Section 3.26 Restrictions on Business Activities. Except as set forth in
-----------------------------------
Section 3.26 of the Company Disclosure Schedule, there is no material agreement,
judgment, injunction, order or decree binding upon the Company or any of its
subsidiaries which has or could reasonably be expected to have the effect of
prohibiting or materially impairing any business practice of the Company or any
of its subsidiaries, any acquisition of property by the Company or any of its
subsidiaries or the conduct of business by the Company or any of its
subsidiaries.
Section 3.27 Questionable Payments. Neither the Company nor any of its
---------------------
subsidiaries nor to its knowledge any director, officer, agent or other employee
of the Company or any of its subsidiaries has: (i) made any payments or
provided services or other favors in the United States of America or in any
foreign country in order to obtain preferential treatment or consideration by
any Governmental Entity with respect to any aspect of the business of the
Company or any of its subsidiaries; or (ii) made any political contributions
which would not be lawful under the laws of the United States or the foreign
country in which such payments were made. Neither the Company nor any of its
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<PAGE>
Subsidiaries nor to its knowledge any director, officer, agent or other employee
of the Company or any of its subsidiaries has been the subject of any inquiry or
investigation by any Governmental Entity in connection with payments or benefits
or other favors to or for the benefit of any governmental or armed services
official, agent, representative or employee with respect to any aspect of the
business of the Company or its subsidiaries or with respect to any political
contribution.
Section 3.28 Opinion of Financial Advisor. Robertson, Stephens & Company
----------------------------
(the "FINANCIAL ADVISOR") has rendered to the Board of Directors of the Company
a written opinion dated as of September 23, 1996, a copy of which has been
provided to Purchaser, to the effect that the consideration to be received by
the shareholders of the Company pursuant to the Merger is fair to such
shareholders from a financial point of view. Such opinion was delivered orally
to the Company's Board of Directors not later than the time that consummation of
the transactions contemplated hereby was authorized, approved and adopted by the
Company's Board of Directors, and was delivered in writing to the Company's
Board of Directors prior to the execution of this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Parent and Purchaser represent and warrant to the Company as follows:
Section 4.1 Organization. Each of Parent and Purchaser is a corporation
------------
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has the requisite corporate power and
authority and any necessary governmental approvals to own, operate or lease the
properties that it purports to own, operate or lease and to carry on its
business as it is now being conducted, except for such failure which, when taken
together with all other such failures, could not reasonably be expected to have
a Material Adverse Effect (as defined below) on Parent and Purchaser. When used
in connection with Purchaser and Parent, the term "MATERIAL ADVERSE EFFECT"
means any material adverse effect on the business, operations, properties
(including tangible properties), condition (financial or otherwise), assets or
liabilities of Parent and Purchaser taken as a whole.
Section 4.2 Authorization; Validity of Agreement; Necessary Action. Each
------------------------------------------------------
of Parent and Purchaser has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution, delivery and performance by Parent and Purchaser of this
Agreement, and the consummation of the Merger and of the transactions
contemplated hereby, have been duly authorized by the Boards of Directors of
Parent and Purchaser and by Parent as the sole shareholder of Purchaser and no
other corporate or shareholder action on the part of Parent and Purchaser is
necessary to authorize the execution and delivery by Parent and Purchaser of
this Agreement and the consummation of the transactions contemplated hereby.
This Agreement has been duly executed and delivered by Parent and Purchaser, as
the case may be, and, assuming due and valid authorization, execution and
delivery hereof
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<PAGE>
by the Company, and is a valid and binding obligation of each of Parent and
Purchaser, as the case may be, enforceable against each of them in accordance
with its respective terms.
Section 4.3 Consents and Approvals; No Violations. Except for the filings
-------------------------------------
set forth on Section 4.3 of the Purchaser Disclosure Schedule delivered to the
Company on or before the date hereof (the "PURCHASER DISCLOSURE SCHEDULE") and
the filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the HSR Act, foreign laws governing
competition or antitrust matters, state securities or blue sky laws, and the
NYBCL or the DGCL, neither the execution, delivery or performance of this
Agreement by Parent or Purchaser nor the consummation by Parent or Purchaser of
the transactions contemplated hereby nor compliance by Parent or Purchaser with
any of the provisions hereof will (i) conflict with or result in any breach of
any provision of the Certificate of Incorporation or the bylaws of Parent or
Purchaser, (ii) require any filing with, or permit, authorization, consent or
approval of, any Governmental Entity on the part of Parent or Purchaser, (iii)
result in a violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
amendment, cancellation or acceleration) under, any of the terms, conditions or
provisions of any agreement to which Parent or Purchaser is a party, or (iv)
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to Parent or Purchaser, any of its subsidiaries or any of their
properties or assets, excluding from the foregoing clauses (ii), (iii) and (iv)
such violations, breaches, rights of termination, amendment, cancellation or
acceleration or defaults which could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on Parent and
Purchaser, taken as a whole, and which will not materially impair the ability of
Parent or Purchaser to consummate the transactions contemplated hereby.
Section 4.4 Financing Arrangements. At the Effective Time, Parent will
----------------------
have and will make available to Purchaser all funds necessary to satisfy all of
Purchaser's and Parent's obligations under this Agreement and in connection with
the transactions contemplated hereby, including without limitation, the
obligations to purchase all outstanding Shares pursuant to the Merger.
Section 4.5 No Prior Activities. Except for obligations or liabilities
-------------------
incurred in connection with its incorporation or organization or the negotiation
and consummation of this Agreement and the transactions contemplated hereby
(including any financing), Purchaser has not incurred any obligations or
liabilities, and has not engaged in any business or activities of any type or
kind whatsoever or entered into any agreements or arrangements with any person
or entity. Purchaser is a wholly owned subsidiary of Parent.
Section 4.6 Brokers. No broker, finder or investment banker is entitled
-------
to any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by and
on behalf of Parent or Purchaser.
Section 4.7 Offer Documents. None of the information supplied in writing
---------------
by Parent or Purchaser (the "PURCHASER INFORMATION") for inclusion in the Proxy
Statement,
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or in any amendments thereof or supplements thereto, will on the date the Proxy
Statement is first mailed to shareholders contain any statement which, at such
time and in light of the circumstances under which it will be made, be false or
misleading with respect to any material fact, or omit to state any material fact
necessary in order to make the statements therein not false or misleading.
Parent and Purchaser will timely file with the SEC a Schedule 13e-3 relating to
the transactions contemplated hereby, and such Schedule 13e-3 will comply in all
material respects with the requirements of the Exchange Act and the rules and
regulations thereunder. Notwithstanding the foregoing, Parent and Purchaser do
not make any representation or warranty with respect to any information that is
supplied by the Company or its accountants, counsel or other authorized
representatives for use in the Proxy Statement or the Schedule 13e-3.
Section 4.8. Litigation. There are no claims, actions, suits, proceedings
----------
or investigations pending or, to the best knowledge of Parent or Purchaser,
threatened against Parent or any of its subsidiaries, or any properties or
rights of Parent or any of its subsidiaries, before any court, administrative,
governmental or regulatory authority or body, domestic or foreign, which would
prevent or delay the performance of this Agreement.
ARTICLE V
COVENANTS
Section 5.1 Interim Operations of the Company. The Company covenants and
---------------------------------
agrees that, except (i) as expressly contemplated by this Agreement, (ii) as set
forth in Section 5.1 of the Company Disclosure Schedule or (iii) as agreed in
writing by Purchaser, after the execution and delivery of this Agreement and
continuing until the earlier of the termination of this Agreement or the
Effective Time:
(a) the business of the Company and its subsidiaries shall be conducted
only in the ordinary and usual course and, to the extent consistent therewith,
each of the Company and its subsidiaries shall use its reasonable commercial
efforts to preserve its business organization intact and maintain its existing
relations with customers, suppliers, employees, creditors and business partners;
(b) the Company shall not, directly or indirectly, amend its or any of its
subsidiaries' certificate of incorporation or bylaws or similar organizational
documents;
(c) the Company shall not, and it shall not permit its subsidiaries to:
(i)(A) declare, set aside or pay any dividend or other distribution payable in
cash, stock or property with respect to the Company's capital stock or that of
its subsidiaries, or (B) redeem, purchase or otherwise acquire directly or
indirectly any of the Company's capital stock (or options, warrants, calls,
commitments or rights of any kind to acquire any shares of capital stock) or
that of its subsidiaries; (ii) issue, sell, pledge, dispose of or encumber any
additional shares of, or securities convertible into or exchangeable for, or
options, warrants, calls, commitments or rights of any kind to acquire, any
shares of capital stock
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<PAGE>
of any class of the Company or its subsidiaries, other than Shares issued upon
the exercise of Options outstanding on the date hereof in accordance with the
Option Plans as in effect on the date hereof; or (iii) split, combine or
reclassify the outstanding capital stock of the Company or of its subsidiaries;
(d) the Company shall not, and it shall not permit its subsidiaries to,
acquire or agree to acquire, or dispose of or agree to dispose of, any material
assets, either by purchase, merger, consolidation, sale of shares in any of its
subsidiaries or otherwise;
(e) the Company shall not, and it shall not permit its subsidiaries to,
transfer, lease, license, sell, mortgage, pledge, dispose of, or encumber any of
the Company Intellectual Property or any material assets, other than pursuant to
grants of nonexclusive End-User Licenses in the ordinary course of business
consistent with past practice;
(f) neither the Company nor its subsidiaries shall: (i) grant any increase
in the compensation payable or to become payable by the Company or any of its
subsidiaries to any of its officers, directors or key employees, other than
regularly scheduled pay increases of not more than 10% per annum; or (ii)(A)
adopt any new, or (B) except as contemplated by Section 2.4, amend or otherwise
increase, or accelerate the payment or vesting of the amounts payable or to
become payable under any existing, bonus, incentive compensation, deferred
compensation, severance, profit sharing, stock option, stock purchase,
insurance, pension, retirement or other employee benefit plan, agreement or
arrangement; or (iii) enter into or modify or amend any employment or severance
agreement with or, except in accordance with the existing policies of the
Company set forth in Section 5.1 of the Company Disclosure Schedule or as
required by applicable law, grant any severance or termination pay to any
officer, director or employee of the Company or any of its subsidiaries; or (iv)
enter into any collective bargaining agreement;
(g) neither the Company nor any of its subsidiaries shall materially
modify, amend or, without Parent's prior written consent, which consent shall
not be withheld unreasonably, terminate any of its material contracts or waive,
release or assign any material rights or claims;
(h) neither the Company nor any of its subsidiaries shall: (i) incur or
assume any indebtedness in amounts not consistent with past practice; (ii)
materially modify any indebtedness or other liability; (iii) assume, guarantee,
endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other person, other than
immaterial amounts in the ordinary course of business consistent with past
practice and other than for any subsidiary; (iv) make any loans, advances or
capital contributions to, or investments in, any other person (other than to
wholly owned subsidiaries of the Company or customary advances to employees in
accordance with past practice); or (v) enter into any material commitment or
transaction;
(i) neither the Company nor any of its subsidiaries shall change any of the
accounting methods, practices or policies used by it unless required by GAAP;
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(j) the Company shall not, and it shall not permit its subsidiaries to,
make or agree to make any new capital expenditures in excess of $100,000 in the
aggregate;
(k) the Company shall not, and it shall not permit its subsidiaries to,
make any material tax election (unless required by law) or settle or compromise
any material income tax liability;
(l) the Company shall not, and it shall not permit its subsidiaries to (i)
waive the benefits of, or agree to modify in any material manner, any
confidentiality, standstill or similar agreement to which the Company or any of
its subsidiaries is a party, or (ii) pay, discharge or satisfy any actions,
suits, proceedings or claims, other than the payment, discharge or satisfaction,
in each case in complete satisfaction, and with a complete release, of such
matter with respect to all parties to such matter, of actions, suits,
proceedings or claims that do not result in or create, individually or in the
aggregate, a Material Adverse Effect; provided, however, that if the Company
determines to make any such payment, discharge or satisfaction, prior to
committing to make any such payment, discharge or satisfaction the Company shall
give Parent advance written notice of such determination specifying the amount
to be paid and any other terms and conditions thereof, and if Parent, within 15
days of such notice, shall instruct the Company not to make or commit to make
such payment, discharge or satisfaction, then the Company shall not make or
commit to make such payment, discharge or satisfaction; provided, further,
however, that, if Parent provides any such instructions, and the proposed
resolution of such matter does not or would not by itself result in a Material
Adverse Effect, and is in complete satisfaction, and includes a full release, of
such matter, with respect to all parties to such matter, without any payment or
other obligation of Parent or Purchaser, for purposes of Section 6.3(d), such
matter shall not be considered a threatened, or instituted and continuing,
action, suit or proceeding, and for purposes of Sections 6.3(a) and (e) any
adverse effect against the Company in any such matter shall not be considered or
aggregated in determining whether a Material Adverse Effect has occurred;
provided, further, however, that, any such proposed payment, discharge or
satisfaction shall be considered or aggregated in determining whether a Material
Adverse Effect has occurred;
(m) the Company shall not, and it shall not permit its subsidiaries to,
commence a lawsuit other than (i) for the routine collection of bills or (ii) in
such cases where the Company in good faith determines that the failure to
commence suit would result in a material impairment of a valuable aspect of the
Company's business, provided that the Company consults with Parent prior to
filing such suit;
(n) the Company shall not, and it shall not permit its subsidiaries to,
make any payment or incur any liability or obligation for the purpose of
obtaining any consent from any third party to the transactions contemplated
hereby, other than any payment, obligation or liability that does not create,
individually or in the aggregate, a Material Adverse Effect; and
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(o) neither the Company nor any of its subsidiaries will enter into an
agreement, contract, commitment or arrangement to do any of the foregoing, or to
authorize, recommend, propose or announce an intention to do any of the
foregoing.
Section 5.2 Access; Confidentiality. The Company shall (and shall cause
-----------------------
each of its subsidiaries to) (a) afford to the officers, employees, accountants,
counsel, and other representatives of Parent, reasonable access to and the right
to inspect and observe, during normal business hours during the period prior to
the Effective Time, all its personnel, accountants, representatives, properties,
books, contracts, insurance policies, commitments and records, offices, plants
and other facilities, (b) make available promptly to Parent (i) a copy of each
report, schedule, registration statement and other document filed or received by
it during such period pursuant to the requirements of federal securities laws
and (ii) all other information concerning its business, properties and personnel
(including, without limitation, insurance policies) as Parent may reasonably
request. Parent will treat any such information in accordance with the
provisions of a letter agreement dated September 13, 1996 between the Company
and Parent (the "CONFIDENTIALITY AGREEMENT"). No investigation conducted by
Parent shall impact any representation or warranty given by the Company to
Parent hereunder.
Section 5.3 Additional Agreements. Subject to the terms and conditions
---------------------
herein provided, each of the parties hereto shall use all reasonable commercial
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations, or to remove any injunctions or other impediments or delays, legal
or otherwise, to consummate and make effective the Merger and the other
transactions contemplated by this Agreement. The Company also agrees to timely
file all SEC Documents, including without limitation its Annual Report on Form
10-K for the fiscal year ended June 30, 1996, which Form 10-K shall include
consolidated financial statements that (a) are prepared from, and accord with,
the books and records of the Company and its subsidiaries, have been prepared in
accordance with United States generally accepted accounting principles applied
on a consistent basis during the periods involved (except as may be indicated in
the notes thereto) and fairly present the consolidated financial position and
the consolidated results of operations and cash flows (and changes in financial
position, if any) of the Company and its consolidated subsidiaries as of the
respective dates and for the respective periods thereof, and (b) are consistent
in all material respects with the draft consolidated financial statements (and
related notes thereto) set forth in Section 5.3 of the Company Disclosure
Schedule. The Company also will pay all premiums or other payments required to
be made with respect to the insurance policies set forth in Section 3.20 of the
Company Disclosure Schedule, and shall renew any such policy if any such policy
will otherwise terminate prior to the Effective Time.
Section 5.4 Consents and Approvals; HSR Act.
-------------------------------
(a) Each of the Company, Parent and Purchaser will take all reasonable
actions necessary to comply promptly with all legal requirements which may be
imposed on it with respect to this Agreement and the transactions contemplated
hereby (which actions shall include, without limitation, furnishing all
information required under the HSR Act and in
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connection with approvals of or filings with any other Governmental Entity) and
will promptly cooperate with and furnish information to eachother in connection
with any such requirements imposed upon any of them or any of their subsidiaries
in connection with this Agreement and the transactions contemplated hereby. Each
of the Company, Parent and Purchaser will, and will cause its subsidiaries to,
take all reasonable actions necessary to obtain (and will cooperate with each
other in obtaining) any consent, authorization, order or approval of, or any
exemption by, any Governmental Entity or other public or private third party
required to be obtained or made by Parent, Purchaser, the Company or any of
their subsidiaries in connection with the Merger or the taking of any action
contemplated thereby or by this Agreement. Each party shall promptly inform the
other party of any communication with, and any proposed understanding,
undertaking, or agreement with, any Governmental Entity regarding any such
filings or any such transaction. Neither party shall participate in any meeting
with any Governmental Entity in respect of any such filings, investigation, or
other inquiry without giving the other party notice of the meeting and, to the
extent permitted by such Governmental Entity, the opportunity to attend and
participate. Notwithstanding the foregoing, it is expressly understood and
agreed that Parent, Purchaser and the Company shall have no obligation to
litigate or contest any administrative or judicial action or proceeding or any
Order beyond January 31, 1997.
(b) Notwithstanding anything to the contrary in this Agreement, including
without limitation Section 5.4(a), as a result of filings made with
Governmental Entities pursuant to this Agreement, neither Parent nor any of its
subsidiaries, nor the Company, shall be required to divest any of their
respective businesses, product lines or assets, or agree to any other limitation
with respect to its business.
(c) In connection with any action, suit or proceeding of the types
described in Section 6.3(d), Parent, Purchaser and the Company agree to consult
with each other in formulating strategies, including without limitation the
retention of counsel in situations involving multiple defendants, and in taking
any other action material to the outcome of any such action, suit or proceeding.
Section 5.5 No Solicitation.
---------------
(a) The Company and its officers, directors, employees, representatives and
agents shall immediately and as of the date hereof cease any discussions or
negotiations with any parties that may be ongoing with respect to a Takeover
Proposal (as hereinafter defined). The Company shall not authorize or permit
any of its officers, directors or employees or any investment banker, financial
advisor, attorney, accountant or other representative retained by it or any of
its subsidiaries to (i) solicit, initiate or encourage (including by way of
furnishing information), or take any other action to facilitate, any inquiries
or the making of any proposal which constitutes, or may reasonably be expected
to lead to, any Takeover Proposal or (ii) participate in any discussions or
negotiations regarding any Takeover Proposal; provided, however, that, if at any
time prior to the Effective Time, the Board of Directors of the Company
determines in good faith, based on the written opinion of its legal counsel as
to legal matters, that it is necessary to do so in order to comply with its
fiduciary duties to the Company's shareholders under applicable
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law, the Company may, in response to an unsolicited Takeover Proposal, and
subject to compliance with Section 5.5(c), (x) furnish information with respect
to the Company to any person pursuant to a confidentiality agreement and (y)
participate in negotiations regarding such Takeover Proposal. Without limiting
the foregoing, it is understood that any violation of the restrictions set forth
in the preceding sentence by any director or executive officer of the Company or
any of its subsidiaries or any investment banker, financial advisor, attorney,
accountant or other representative of the Company or any of its subsidiaries
shall be deemed to be a breach of this Section 5.5(a) by the Company. For
purposes of this Agreement, "TAKEOVER PROPOSAL" means any inquiry, proposal or
offer from any person relating to any direct or indirect acquisition or purchase
of a substantial amount of assets of the Company or any of its subsidiaries or
of over 20% of any class of equity securities of the Company or any of its
subsidiaries, any tender offer or exchange offer that if consummated would
result in any person beneficially owning 20% or more of any class of equity
securities of the Company or any of its subsidiaries, or any merger,
consolidation, business combination, sale of substantially all the assets,
recapitalization, liquidation, dissolution or similar transaction involving the
Company or any of its subsidiaries, other than the transactions contemplated by
this Agreement.
(b) Except as set forth in this Section 5.5, neither the Board of Directors
of the Company nor any committee thereof shall (x) withdraw or modify, or
propose to withdraw or modify, in a manner adverse to Parent, the approval or
recommendation by such Board of Directors or such committee of this Agreement or
the Merger, (y) approve or recommend, or propose to approve or recommend, any
Takeover Proposal or (z) cause the Company to enter into any agreement with
respect to any Takeover Proposal. Notwithstanding the foregoing, in the event
that prior to the Effective Time the Board of Directors of the Company
determines in good faith, based on the written opinion of its legal counsel as
to legal matters, that it is necessary to do so in order to comply with its
fiduciary duties to the Company's shareholders under applicable law, the Board
of Directors of the Company may withdraw or modify its approval or
recommendation of this Agreement and the Merger, approve or recommend a Superior
Proposal (as defined below) or cause the Company to enter into an agreement with
respect to a Superior Proposal, but in each case only at a time that is after
the second business day following Parent's receipt of written notice (a "NOTICE
OF SUPERIOR PROPOSAL") advising Parent that the Board of Directors of the
Company has received a Superior Proposal, specifying the material terms and
conditions of such Superior Proposal and identifying the person making such
Superior Proposal. For purposes of this Agreement, a "SUPERIOR PROPOSAL" means
any bona fide Takeover Proposal to acquire, directly or indirectly, for
consideration consisting of cash and/or securities, more than 50% of the Shares
then outstanding or all or substantially all the assets of the Company and
otherwise on terms which the Board of Directors of the Company determines in its
good faith judgment (based on the advice of a financial advisor of nationally
recognized reputation) to be more favorable to the Company's shareholders than
the Merger.
(c) In addition to the obligations of the Company set forth in paragraphs
(a) and (b) of this Section 5.5, the Company shall immediately advise Parent
orally and in writing of any request for information or of any Takeover
Proposal, or any inquiry with
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respect to or which could lead to any Takeover Proposal, the material terms and
conditions of such request, Takeover Proposal or inquiry and the identity of the
person making such request, Takeover Proposal or inquiry.
Section 5.6 Publicity. Each party's initial press release with respect to
---------
the execution of this Agreement has been previously approved by the other
parties. Following such initial press releases, so long as this Agreement is in
effect, neither the Company, Parent nor any of their respective affiliates shall
issue or cause the publication of any press release or other public announcement
with respect to the Merger, this Agreement or the other transactions between the
parties contemplated hereby without the prior consultation of the other party,
except as may be required by law or by any listing agreement with a national
securities exchange or trading market.
Section 5.7 Notification of Certain Matters. The Company shall give
-------------------------------
prompt notice to Parent and Purchaser, and Parent and Purchaser shall give
prompt notice to the Company, of (i) the occurrence or non-occurrence of any
event the occurrence or non-occurrence of which would cause any representation
or warranty contained in this Agreement to be untrue or inaccurate in any
material respect at or prior to the Effective Time and (ii) any material failure
of the Company, Parent or Purchaser, as the case may be, to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it hereunder; provided, however, that the delivery of any notice pursuant to
this Section 5.7 shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice. The Company also shall give
prompt notice to Parent, and Parent or Purchaser shall give prompt notice to the
Company, of:
(i) any notice or other communication from any person alleging that
the consent of such person is or may be required in connection with the
transactions contemplated by this Agreement;
(ii) any notice or other communication from any Governmental Entity in
connection with the transactions contemplated by this Agreement;
(iii) any actions, suits, claims, investigations or proceedings
commenced or, to the best of its knowledge, threatened against, relating to or
involving or otherwise affecting it or any of its subsidiaries or which relate
to the consummation of the transactions contemplated by this Agreement; and
(iv) any occurrence of any event having, or which could reasonably be
expected to have, a Material Adverse Effect on the Company and its subsidiaries
taken as a whole.
Section 5.8 Rights Agreement. Except as otherwise provided in Section
----------------
3.23, the Company shall not redeem the Rights or amend or terminate the Rights
Agreement prior to the earlier to occur of the Effective Time or the termination
of this Agreement, unless required to do so by a court of competent
jurisdiction.
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Section 5.9 Fair Price Structure. If any "business combination," "fair
--------------------
price," "control share acquisition" or "moratorium" statute or other similar
statute or regulation or any state "blue sky" or securities law statute shall
become applicable to the transactions contemplated hereby, the Company and the
Board of Directors of the Company shall, to the extent consistent with
applicable law and their fiduciary duties, grant such approvals and take such
actions as are reasonably necessary so that the transactions contemplated hereby
thereby may be consummated as promptly as practicable on the terms contemplated
hereby and otherwise act to minimize the effects of such statute or regulations
on the transactions contemplated hereby.
Section 5.10 Indemnification. Notwithstanding Section 8.7 hereof, Parent
---------------
agrees that all rights to indemnification existing in favor of directors,
officers or employees of the Company as provided in the Company's Certificate of
Incorporation, By-Laws or the indemnification agreements listed in Section 5.10
of the Company Disclosure Schedule, with respect to matters occurring through
the Effective Time, shall survive the Merger and shall continue in full force
and effect for a period of not less than six years from the Effective Time.
Effective upon the Effective Time, to the fullest extent permitted by law Parent
hereby guarantees the Company's and the Surviving Corporation's performance of
the Company's and the Surviving Corporation's obligations described in the prior
sentence for a period of six years after the Effective Time. If Parent, the
Surviving Corporation or any of either of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger or
(ii) transfers all or substantially all of its properties and assets to any
person, then and in each such case, proper provision shall be made so that the
successors and assigns of Parent and the Surviving Corporation assume the
obligations set forth in this Section 5.10.
Section 5.11 Benefit Plans and Other Employee Arrangements. For a period
---------------------------------------------
of at least one year after the Effective Time, Parent shall either (i) maintain
or cause the Company (or its successors or assigns) to maintain the Company's
Employee Plans at benefit levels not materially less favorable than those in
effect on the date of this Agreement or (ii) provide or cause the Company (or
its successors or assigns) to provide benefits to employees of the Company and
its subsidiaries that are not materially less favorable to such employees than
those provided under Parent benefit plans (as they may be amended from time to
time) to similarly situated employees of Parent. With respect to any Parent
benefit plan which is an "employee benefit plan" as defined in Section 3(3) of
ERISA, solely for purposes of determining eligibility to participate, vesting,
and entitlement to benefits but not for purposes of accrual of pension benefits,
service with the Company or any Company subsidiary shall be treated as service
with Parent, provided, however, that such service shall not be recognized to the
extent that such recognition would result in a duplication of benefits (or is
not otherwise recognized for such purposes or permitted under the Parent Benefit
Plans). Nothing in this paragraph provides any employee with a right to
continuing employment or with any right to participate in any Parent benefit
plan under which
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participation by an employee is within the discretion of Parent, such as any
Parent benefit plan which provides for the grant of options to purchase capital
stock.
Section 5.12 Warrant. The Company agrees to use its best efforts to cause
-------
the warrant referenced in Section 3.2(a) of the Company Disclosure Schedule to
be exercised or terminated prior to the Effective Time. Parent agrees to
provide reasonable assistance to the Company in connection with the Company's
obligations under this Section 5.12.
ARTICLE VI
CONDITIONS
Section 6.1 Conditions to Each Party's Obligation to Effect the Merger.
----------------------------------------------------------
The respective obligation of each party to effect the Merger shall be subject to
the satisfaction on or prior to the Effective Time of each of the following
conditions, any and all of which may be waived in whole or in part by the
Company, Parent or Purchaser, as the case may be, to the extent permitted by
applicable law:
(a) Shareholder Approval. This Agreement shall have been approved and
--------------------
adopted by the requisite vote of the shareholders of the Company, if required by
applicable law or the Certificate of Incorporation of the Company, in order to
consummate the Merger;
(b) Statutes. No statute, rule, order, decree or regulation shall have
--------
been enacted or promulgated by any Governmental Entity which prohibits the
consummation of the Merger;
(c) Injunctions. There shall be no order or injunction of a court or other
-----------
governmental authority of competent jurisdiction in effect precluding,
restraining, enjoining or prohibiting consummation of the Merger; and
(d) HSR Act. Any applicable waiting period under the HSR Act relating to
-------
the Merger shall have expired or been terminated.
Section 6.2 Additional Conditions to Obligations of the Company. The
---------------------------------------------------
obligation of the Company to effect the Merger is also subject to the
fulfillment of the following conditions:
(a) Representations and Warranties. The representations and warranties of
------------------------------
Parent and Purchaser contained in this Agreement shall be true and correct on
the date hereof and shall also be true and correct on and as of the Effective
Time, with the same force and effect as if made on and as of the Effective Time,
unless the failure of such representations and warranties to be true and correct
could not reasonably be expected to cause, individually or in the aggregate, a
Material Adverse Effect on Parent; and
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(b) Agreements, Conditions and Covenants. Parent and Purchaser shall have
------------------------------------
performed or complied in all material respects with all agreements, conditions
and covenants required by this Agreement to be performed or complied with by
them on or before the Effective Time.
Section 6.3 Additional Conditions to Obligations of Parent and Purchaser.
------------------------------------------------------------
The obligations of Parent and Purchaser to effect the Merger are also subject to
the following conditions:
(a) Representations and Warranties. The representations and warranties of
------------------------------
the Company contained in this Agreement shall be true and correct on the date
hereof and shall also be true and correct on and as of the Effective Time, with
the same force and effect as if made on and as of the Effective Time, unless the
failure of such representations and warranties to be true and correct as of such
dates could not reasonably be expected to cause, individually or in the
aggregate, a Material Adverse Effect (as applied to such dates) on the Company
and its subsidiaries, taken as a whole;
(b) Agreements, Conditions and Covenants. The Company shall have performed
------------------------------------
or complied in all material respects with all agreements, conditions and
covenants required by this Agreement to be performed or complied with by it on
or before the Effective Time;
(c) Dissenting Shares. The aggregate number of Shares held by Dissenting
-----------------
Shareholders shall not be equal to or exceed ten percent of the outstanding
Shares immediately prior to the Effective Time;
(d) No Litigation. After the date hereof there shall not be threatened, or
-------------
instituted and continuing, any action, suit or proceeding against the Company,
Parent, Purchaser or any Indemnified Person (as defined below), by any
Governmental Entity or any other person or persons, (i) directly or indirectly
relating to the Merger or any other transactions contemplated by this Agreement;
(ii) who is or was a shareholder or shareholders of the Company, whether on
behalf of such shareholder or shareholders, or in a derivative action on behalf
of the Company; or (iii) which individually or in the aggregate could reasonably
be expected to have a Material Adverse Effect on the Company and its
subsidiaries, taken as a whole; "INDEMNIFIED PERSON" shall mean any director,
officer, employee, consultant or other person that the Company is obligated to
indemnify or hold harmless, whether under any law, rule, regulation, the
Company's certificate of incorporation or bylaws, any agreement or otherwise;
(e) No Adverse Change. No event or events shall have occurred which have
-----------------
caused or could reasonably be expected to cause a Material Adverse Effect on the
Company and its subsidiaries, taken as a whole; and
(f) Opinion. Parent shall have received an opinion dated as of the Closing
-------
Date from Willkie Farr & Gallagher, counsel to the Company, substantially in the
form attached hereto as Exhibit 6.3(f); provided, however, that if such counsel
is unable to
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<PAGE>
provide the opinion set forth in paragraph 6(ii) of such opinion then, in lieu
of the delivery of such opinion in paragraph 6(ii), the written consent of the
third parties to the agreements referred to in paragraph 6(ii) of such opinion
to the assignment of such agreements to the Surviving Corporation and the
continuation of such agreements after the Merger without modification, in such
form as is reasonably acceptable to Parent, shall have been obtained.
ARTICLE VII
TERMINATION AND AMENDMENT
Section 7.1 Termination. This Agreement may be terminated at any time
-----------
prior to the Effective Time, whether before or after approval of the terms of
this Agreement by the shareholders of the Company:
(a) by mutual written consent of the Boards of Directors of Parent and the
Company;
(b) by either Parent or the Company if any Governmental Entity shall have
issued an order, decree or ruling or taken any other action permanently
enjoining, restraining or otherwise prohibiting the acceptance for payment of,
or payment for, Shares pursuant to the Merger and such order, decree or ruling
or other action shall have become final and nonappealable;
(c) by either Parent or the Company, if the Merger shall not have been
consummated by January 31, 1997; provided, however, that such date shall be
February 28, 1997 if the sole condition in Article VI that has not been met or
waived is Section 6.3 (d); provided, further, however, that the right to
terminate this Agreement pursuant to this Section 7.1(c) shall not be available
to any party whose failure (or the failure of the affiliates of which) to
perform any of its obligations under this Agreement has been the cause of, or
resulted in, the failure of the Merger to occur on or before such date;
(d) by Parent or Purchaser, in the event of a breach by the Company of any
representation, warranty, covenant or other agreement contained in this
Agreement which cannot be or has not been cured within 15 days after the giving
of written notice to the Company and which, individually or in the aggregate,
has had or could reasonably be expected to have, a Material Adverse Effect on
the Company and its subsidiaries, taken as a whole;
(e) by Parent or Purchaser, if the Company's Board of Directors shall have
withdrawn, modified or amended in any respect its recommendation of the Merger
Agreement or the Merger or shall have approved or recommended a Takeover
Proposal, or shall have entered into an agreement with a third party with
respect to any Takeover Proposal, or the Board of Directors of the Company or
any committee thereof shall have resolved to take any of the foregoing actions;
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<PAGE>
(f) by the Company, in connection with entering into an agreement for a
Takeover Proposal in accordance with Section 5.5, provided it has complied with
all provisions thereof, including the notice provisions therein, and that it
makes simultaneous payment of the Expenses and the Termination Fee; or
(g) by the Company, if Purchaser or Parent shall have breached in any
material respect any of their respective representations, warranties, covenants
or other agreements contained in this Agreement, which failure to perform is
incapable of being cured or has not been cured within 15 days after the giving
of written notice to Parent or Purchaser, as applicable.
Section 7.2 Effect of Termination. In the event of a termination of
---------------------
this Agreement by either the Company or Parent as provided in Section 7.1, this
Agreement shall forthwith become void and there shall be no liability or
obligation on the part of Parent, Purchaser or the Company or their respective
officers or directors, except with respect to Sections 1.8(e), 3.17, 4.6, 5.2,
8.1, this Section 7.2 and Article VIII; provided, however, that nothing herein
(including without limitation the provisions of Section 8.1) shall relieve any
party for liability for any breach hereof.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Fees and Expenses.
-----------------
(a) Except as provided below in this Section 8.1, all fees and expenses
incurred in connection with the Merger, this Agreement and the transactions
contemplated by this Agreement shall be paid by the party incurring such fees or
expenses, whether or not the Merger is consummated.
(b) The Company shall pay, or cause to be paid, in same day funds to Parent
the sum of (x) the lesser of the amount of Parent's Expenses (as hereinafter
defined) or $1,000,000, and (y) $3,000,000 (the "TERMINATION FEE") upon demand
if (i) Parent or Purchaser terminates this Agreement under Section 7.1(e); (ii)
the Company terminates this Agreement pursuant to Section 7.1(f); or (iii) prior
to any termination of this Agreement (other than pursuant to Section 7.1 (a),
(b) or (g) or by the Company pursuant to Section 7.1 (c)), the Company breaches
the provisions of Section 5.5 of this Agreement or a Takeover Proposal shall
have been made and within 12 months of such termination a transaction
constituting a Takeover Proposal is consummated or the Company enters into an
agreement with respect to, approves or recommends or takes any action to
facilitate such Takeover Proposal. "EXPENSES" shall mean documented out-of-
pocket fees and expenses incurred or paid by or on behalf of Parent or Purchaser
in connection with the Merger or the consummation of any of the transactions
contemplated by this Agreement, including all fees and expenses of counsel,
commercial banks, investment banking firms, accountants, experts and consultants
to Parent.
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Section 8.2 Amendment and Modification. Subject to applicable law, this
--------------------------
Agreement may be amended, modified and supplemented in any and all respects,
whether before or after any vote of the shareholders of the Company contemplated
hereby, by written agreement of the parties hereto, at any time prior to the
Closing Date with respect to any of the terms contained herein; provided,
however, that after the approval of this Agreement by the shareholders of the
Company, no such amendment, modification or supplement shall reduce the amount
or change the form of the Merger Consideration.
Section 8.3 Nonsurvival of Representations and Warranties. None of the
---------------------------------------------
representations and warranties in this Agreement or in any schedule, instrument
or other document delivered pursuant to this Agreement shall survive the
Effective Time, except for remedies that may be available for fraud.
Section 8.4 Notices. All notices and other communications hereunder shall
-------
be in writing and shall be deemed given upon receipt, and shall be given to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
(a) if to Parent or Purchaser, to:
Oracle Corporation
500 Oracle Parkway
Redwood City, CA 94065
Telephone No.: (415) 506-5100
Telecopy No.: (415) 506-7114
Attention: Thomas Theodores,
Vice President, Legal and Assistant Secretary
with copies to:
Venture Law Group
A Professional Corporation
2800 Sand Hill Road
Menlo Park, CA 94025
Attention: Donald M. Keller, Jr., Esq.
Telephone No.: (415) 854-4488
Telecopy No.: (415) 854-1121
(b) if to the Company, to:
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<PAGE>
Datalogix International, Inc.
100 Summit Lake Drive
Valhalla, NY 10595
Attention: Raymond Sozzi
Telephone No.: (914) 773-8615
Telecopy No.: (914) 747-4553
with copies to:
Willkie Farr & Gallagher
One Citicorp Center
153 53rd Street
New York, NY 10022-4677
Attention: Christopher E. Manno, Esq.
Telephone No.: (212) 821-8288
Telecopy No.: (212) 821-8111
Section 8.5 Interpretation. When a reference is made in this Agreement to
--------------
Sections, such reference hall be to a Section of this Agreement unless otherwise
indicated. Whenever the words "include", "includes" or "including" are used in
this Agreement they shall be deemed to be followed by the words "without
limitation". As used in this Agreement, the term "affiliate(s)" shall have the
meaning set forth in Rule 12b-2 of the Exchange Act. As used in this Agreement,
a "subsidiary" of any entity shall mean all corporations or other entities in
which such entity owns a majority of the issued and outstanding capital stock or
equity or similar interests.
Section 8.6 Counterparts. This Agreement may be executed in two or more
------------
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties.
Section 8.7 Entire Agreement; No Third Party Beneficiaries; Rights of
---------------------------------------------------------
Ownership. This Agreement and the Confidentiality Agreement (including the
- ---------
documents and the instruments referred to herein and therein): (a) constitute
the entire agreement and supersede all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof,
and (b) other than the provisions of Sections 5.10 and 5.11 hereof, nothing
expressed or implied in this Agreement is intended or will be construed to
confer upon or give to any person, firm or corporation other than the parties
hereto any rights or remedies under or by reason of this Agreement or any
transaction contemplated hereby.
Section 8.8 Severability. If any term, provision, covenant or restriction
------------
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void, unenforceable or against its regulatory policy,
the remainder of the terms, provisions,
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<PAGE>
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
Section 8.9 Governing Law. This Agreement and the legal relations between
-------------
the parties hereto will be governed by and construed in accordance with the laws
of the State of Delaware, without giving effect to the choice of law principles
thereof; provided, however, that the law governing the fiduciary duties of each
party hereto and their respective boards of directors and the law governing any
other matters of internal corporate governance of any of Parent, Purchaser or
the Company shall be the law of their respective jurisdictions of incorporation.
Section 8.10 Assignment. Neither this Agreement nor any of the rights,
----------
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties, except that Purchaser may assign, in its sole
discretion, any or all of its rights, interests and obligations hereunder to
Parent or to any direct or indirect wholly owned subsidiary of Parent. Subject
to the preceding sentence, this Agreement will be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors and
assigns.
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<PAGE>
IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized as
of the date first written above.
ORACLE CORPORATION
By: /s/ DAVID J. ROUX
Name: David J. Roux
Title: Executive Vice President
DELPHI ACQUISITION CORPORATION
By: /s/ DAVID J. ROUX
Name: David J. Roux
Title: Executive Vice President
DATALOGIX INTERNATIONAL, INC.
By: /s/ RAYMOND V. SOZZI
Name: Raymond V. Sozzi
Title: President and Chief
Operating Officer
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<PAGE>
EXHIBIT 2
PURCHASE AGREEMENT
------------------
Datalogix International Inc. (the "Company") and the Investor identified on
the signature page of this Purchase Agreement (this "Agreement") agree as
follows:
Section 1. Purchase of Shares and Warrant. Concurrently with the
------------------------------
execution of this Agreement, the Company is selling and the Investor is
purchasing: (a) the number of shares of the Company's Series F Convertible
Preferred Stock identified on Exhibit A to this Agreement at the aggregate price
there indicated (all such shares of Series F Convertible Preferred Stock being
purchased by the Investor are herein collectively called the "Shares") and (b) a
warrant (the "Warrant") to purchase the number of shares of the Company's Common
Shares, par value $.01 per share ("Common Stock") identified on Exhibit A to
this Agreement at the aggregate price there indicated.
Section 2. Representations and Warranties of the Company. The Company
---------------------------------------------
represents and warrants to the Investor that, except as set forth in Exhibit B
to this Agreement:
(a) Organization, Standing, etc. The Company is a corporation duly
----------------------------
organized, validly existing and in good standing under the laws of the
jurisdiction indicated on the signature page of this Agreement, and has all
requisite power and authority to carry on its business as currently conducted
and as proposed m be conducted, to own its properties, and to enter into and
perform this Agreement. The copies of the Certificate of Incorporation, as
amended, and By-Laws of the Company delivered to the Investor together with a
Certificate of the President of the Company on the date hereof are true and
complete and have not, since the date of such Certificate of Incorporation and
By-Laws been further amended or repealed. The Company is duly qualified as a
foreign corporation in good standing in each jurisdiction in which the conduct
of its business or its ownership or leasing of properly makes such qualification
necessary.
(b) Capital Stock. The authorized capital stock and the outstanding
-------------
capital stock, of the Company consists in each case as of the date hereof solely
of the shares indicated on Exhibit C to this Agreement. All of the outstanding
shares have been duly authorized, are fully paid and nonassessable, and were
issued in compliance with all applicable securities laws. An accurate list of
the Company's shareholders and their holdings is set forth in Exhibit D to this
Agreement. No one is entitled to preemptive or similar statutory or contractual
rights with respect to any securities of the Company, except as set forth (i) in
Section 4(d) of this Agreement, (ii) in Section 4(m) of the Purchase Agreement
dated October 29, 1992 ("Series E Agreement") regarding the sale by the Company
of its Series E Convertible Preferred Stock, (iii) in Section 4(l) of the
Purchase Agreement dated June 30, 1993 regarding the sale by the Company of its
Series E Convertible Preferred Stock ("Series E II Agreement"), and (iv) under
Section 6 of the Amended and Restated Stockholders Agreement dated November 19,
1990 ("Prior Stockholders Agreement"). All necessary and appropriate waivers of
shareholders have been obtained. Except as disclosed in Exhibit E to this
Agreement, there are no outstanding warrants, options, convertible securities
other than the Series A, Series B, Series C, Series D and Series E Convertible
Preferred Stock listed in Exhibit C to this Agreement, or other agreements or
<PAGE>
arrangements of any character under which the Company or any subsidiary is or
may be obligated to issue any equity securities of any kind, or to transfer any
equity securities of any kind owned by them, and neither the Company nor any
subsidiary has any present plan or intention to issue any equity securities of
any kind, or to transfer any equity securities of any kind owned by them.
Except as disclosed in Exhibit F, the Company does not know of any voting
agreements, buy-sell agreements, option or right of first refusal or other
agreements of any kind among any of the security holders of the Company or of
any subsidiary relating to the securities held by them. Neither the Company nor
any subsidiary has agreed, or has any present intention, to register any of its
securities under the Securities Act of 1933, as amended (the "Securities Act"),
except as provided in the Registration Rights Agreement dated October 29, 1992,
as amended June 30, 1993 and on the date of this Agreement, a copy of which is
attached hereto as Exhibit G (the "Registration Rights Agreement") or as
provided in warrants referred to in Item 2 of Exhibit E which have piggy-back
rights to the Registration Rights Agreement. The voting powers, designations,
preferences and relative, participating, optional and other rights of the
Shares, and the qualifications, limitations or restrictions thereof are as fully
set forth in the Restated Certificate of Incorporation of the Company, as
amended (the "Certificate").
(c) Corporate Proceedings. The execution, delivery and performance of
---------------------
this Agreement have been duly authorized by all requisite action on the part of
the officers, directors and the holders of the capital stock of the Company and
no other action is necessary for the due authorization of such execution,
delivery and performance. True and complete copies of the relevant resolutions
have been delivered to the Investor, and such resolutions have not been amended
or repealed. This Agreement constitutes the valid and binding obligation of the
Company, enforceable in accordance with its terms, except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws of general application relating to or affecting the enforcement of
creditors rights; and (ii) that no representation or warranty is made as to the
enforceability of the provisions in Paragraph 3(e) of the Registration Rights
Agreement regarding indemnification for violations of federal securities laws,
or as to the availability of the remedy of specific performance. The Shares are
duly authorized, validly issued, fully paid, nonassessable and free and clear of
any encumbrances and restrictions, except for restrictions on transfer imposed
by applicable securities laws or by this Agreement and have been issued in
compliance with all applicable securities laws. The Company has reserved a
sufficient number of shares of its Common Stock for issuance upon exercise of
the Warrant and the conversion of the Shares, and such shares of Common Stock,
when issued upon exercise of the Warrant or upon conversion of the Shares, will
he duly authorized, validly issued, fully paid, nonassessable and free and clear
of all encumbrances and restriction, except for restrictions on transfer imposed
by applicable securities laws or by this Agreement.
(d) Subsidiaries. The Company's subsidiaries, if any, are listed in
------------
Exhibit H to this Agreement. Except for those subsidiaries, the Company has no
direct or indirect ownership interest in any other corporation, partnership,
association, firm or business. Each subsidiary is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction
indicated in Exhibit H, has all requisite power and authority to carry on its
business and to own its properties and is duly qualified as a foreign
corporation in good standing in each jurisdiction in which the conduct of its
business or its ownership or leasing of property makes such qualification
necessary. All of the outstanding capital stock of each subsidiary has been
duly
-2-
<PAGE>
authorized, is fully paid and nonassessable and is owned by the Company,
free and clear of all encumbrances and restrictions, except for restrictions on
transfer imposed by applicable securities laws.
(e) Financial Statements. True and complete copies of the financial
--------------------
statements listed in Exhibit I to this Agreement have been delivered by the
Company to the Investor. Those financial statements (i) are in accordance with
the books and records of the Company and any subsidiaries included in those
statements, (ii) present fairly the consolidated financial position of the
Company and any such subsidiaries at the dates, and the consolidated results of
their operations for the periods, indicated in those statements, and (iii) have
been prepared in accordance with generally accepted accounting principles
consistency applied; provided, however, that the Company's unaudited balance
-------- -------
sheet as of March 31, 1994 does not include normal year end adjustments.
Specifically, but not by way of limitation, each balance sheet included in those
statements reflects as of its date, and provides adequate reserves in respect
of, all of the debts, liabilities and obligations of a kind customarily
reflected in a balance sheet prepared in accordance with generally accepted
accounting principles. As of the date of the balance sheet listed in Exhibit I,
neither the Company nor any of its subsidiaries had any debts, liabilities or
obligations, whether absolute, accrued, contingent or otherwise, which are not
fully reflected in such balance sheet, other than those which, in any one case
or in the aggregate, would not have a materially adverse effect on the business,
assets, liabilities, condition (financial or otherwise), affairs or operations
of the Company or any of its subsidiaries as of such date.
(f) Litigation. Except as disclosed in Exhibit J to this Agreement,
----------
there are no legal actions, suits, arbitrations or other legal, administrative
or governmental proceedings pending or, to the Company's knowledge, threatened
against the Company or any subsidiary, or against the assets or business of the
Company or any subsidiary, or against any employee, officer, director or
shareholder of the Company or of any subsidiary in his capacity as such person
or relating to any of his past employment relationships with any employer or to
his activities with the Company or any subsidiary, and the Company is not aware
of any facts that might result in or form the basis for any such action, suit,
arbitration or other proceeding. Except as set forth in Exhibit J to this
Agreement, the Company does not have pending, and has no present intention to
bring, any legal actions, suits, arbitration, or other legal, administrative or
governmental proceedings against any other person or entity or the property or
rights of any other person or entity.
(g) Title to Assets. Except as disclosed in the notes to the
---------------
financial statements listed in Exhibit I to this Agreement, the Company and its
subsidiaries have good and marketable title to their respective assets,
including, without limitation, those reflected in the balance sheet listed on
Exhibit I (other than those since disposed of in the ordinary course of
business), free and clear of all security interests, liens, charges and other
encumbrances, except for (i) liens for taxes not yet due and payable or being
contested in good faith by appropriate proceedings, (ii) encumbrances that are
incidental to the conduct of their businesses or their ownership of property,
not incurred in connection with the borrowing of money or the obtaining of
credit and which do not in the aggregate materially detract from the value of
the assets affected thereby or materially impair the use thereof by the Company
or its subsidiaries, and (iii) liens on assets of the Company and its subsidiary
in favor of Silicon Valley Bank ("Silicon") under the Line of Credit
-3-
<PAGE>
from Silicon to the Company guaranteed by Datalogix Development Corp. dated
January 15, 1994. With respect to the assets of the Company which are leased,
the Company is in compliance with all material provision of such leases, such
leases are valid and binding, and the Company holds its leasehold interest in
such assets free and clear of all security interests, liens, charges and other
encumbrances except encumbrances which, in the aggregate, do not materially
detract from the value of the leased assets affected thereby or materially
impair the use thereof by the company or its subsidiaries.
(h) Accounts Receivable; Inventories, Condition of Assets.
-----------------------------------------------------
(i) The accounts receivable shown in the balance sheet listed in
Exhibit I or acquired since the date of such balance sheet have been collected
or are (or will be) collectible in amounts not less than the aggregate amount
thereof (net of allowance for doubtful accounts established in accordance with
prior practice) carried (or to be carried) on the books of the Company and its
subsidiaries.
(ii) The plants, buildings, structures, machinery, tools, equipment
and other tangible assets of the Company and its subsidiaries are in good
operating condition and in a state of reasonable maintenance and repair.
(i) Tax Returns and Audits and Other Tax Matters. All required tax
--------------------------------------------
returns of the Company and its subsidiaries have been accurately prepared and
duly and timely filed, and all taxes required to be paid with respect to the
periods or transactions covered by such returns have been duly and timely paid.
Neither the Company nor any subsidiary is delinquent in the payment of any tax,
assessment or governmental charge, has had any tax deficiency proposed or
assessed against it, or has executed any waiver still in effect of any statute
of limitations on the assessment or collection of any tax. None of the federal
or state income tax returns or state franchise tax returns of the Company or any
subsidiary has ever been audited by governmental authorities. The amounts
accrued on the financial statements of the Company are sufficient with respect
to all unpaid federal, state, county, local and foreign taxes for all periods
ending prior to the date of this Agreement.
(j) Adverse Changes. Since the date of the balance sheet listed in
---------------
Exhibit I to this Agreement, neither the Company nor any subsidiary has:
(i) incurred, or discharged or satisfied, any debts, obligations or
liabilities, whether absolute, accrued, contingent or otherwise, except for the
routine occurrence, discharge or satisfaction of (x) current liabilities in the
ordinary course of business and (y) obligations under contracts entered into in
the ordinary course of business;
(ii) declared or made any dividend or other payment or distribution to
its stockholders as such, or purchased or redeemed any of its securities;
(iii) sold, leased or otherwise disposed of any of its assets except
routine dispositions made in the ordinary course of business;
-4-
<PAGE>
(iv) suffered any material physical damage, destruction or loss
(whether or not covered by insurance);
(v) encountered any labor difficulties or labor union organizing
activities;
(vi) made or granted any increases in wages or salaries or in employee
benefits, except for routine increases that were made in the ordinary course of
business and were consistent with past practice;
(vii) entered into any transaction other than in the ordinary
course of business; or
(viii) suffered or experienced any change in, or event or condition
affecting, its business, assets, liabilities, condition (financial or
otherwise), affairs or operations, other than changes, events or conditions in
the ordinary course of business, none of which (either when taken by itself or
when token in conjunction with all such other changes, events or conditions) has
been materially adverse, or might reasonably be expected to be materially
adverse in the future.
(k) Compliance with Laws and other Instruments. The business and
------------------------------------------
operations of the Company and its subsidiaries have been and are being conducted
in all material respects in accordance with all applicable laws, rules,
regulations, judgments and decrees and the Certificate and By-Laws of the
Company. Neither the execution, delivery or performance of this Agreement, nor
the offer, issuance, sale or delivery of the Shares to the Investor, nor the
issuance of shares of Common Stock upon exercise of the Warrant (the "Warrant
Shares"), nor the issuance of shares of Common Stock upon conversion of the
Shares ("Conversion Shares"), with or without the giving of notice or passage of
time, or both, will violate, or result in any breach of, or constitute a default
under, or result in the imposition of any encumbrance upon any asset of the
Company or of any subsidiary pursuant to, any provision of any corporate
charter, by-law, contract, law, rule, regulation, judgment, decree or other
document or instrument or, to the best of the Company's knowledge, will cause
the Company or any subsidiary to lose the benefit of any right or privilege it
presently enjoys or any person who normally does business with the Company or
any subsidiary to discontinue to do so on the same basis.
(l) Governmental Consents; Offering of Shares. No consent,
-----------------------------------------
authorization, approval, permit or order of, or declaration to or filing with,
any governmental or regulatory authority is required in connection with the
execution, delivery and performance of this Agreement or the offer, issuance,
sale or delivery of the Shares, the Conversion Shares, the Warrant or the
Warrant Shares (the Shares, the Conversion Shares, the Warrant and the Warrant
Shares are hereinafter collectively referred to as the "Securities"). The
issuance of the Securities in conformity with the terms of this Agreement
constitute transactions exempt from the registration requirements of Section 5
of the Securities Act, and from all applicable state registration and
qualification requirements. Neither the Company nor any agent acting on its
behalf has, directly or indirectly, sold or offered for sale, or solicited any
offers to buy, any securities, or otherwise approached or negotiated with any
person or persons, so as to subject the
-5-
<PAGE>
offer or sale of the Securities to the Investor to the provisions of Section 5
of the Securities Act, and the Company agrees that neither it nor any agent
acting on its behalf will take any action that would subject the offer or sale
of the Securities to those provisions.
(m) Patents and Trademarks. The Company has sufficient title and
----------------------
ownership of all patents, trademarks, service marks, trade names, copyrights,
trade secrets, information, proprietary rights and processes necessary for its
business as now conducted and as proposed to be conducted without any conflict
with or infringement of the rights of others. Other than license and
distribution agreements entered into in the ordinary course of business, there
are no outstanding options, licenses, or agreements of any kind relating to the
foregoing, nor is the Company bound by or a party to any options, licenses or
agreements of any kind with respect to the patents, trademarks, service marks,
trade names, copyrights, trade secrets, licenses, information, proprietary
rights and processes of any other person or entity, except as set forth in
Exhibit K. The Company has not received any communications alleging that the
Company has violated, or by conducting its business as proposed, would violate
any of the patents, trademarks, service marks, trade names, copyrights or trade
secrets or other proprietary rights of any other person or entity. The Company
is not aware that any of its employees or consultants is obligated under any
contract (including licenses, covenants or commitments of any nature) or other
agreement, or subject to any judgment, decree or order of any court or
administrative agency, that would interfere with the use of its best efforts to
promote the interests of the Company or that would conflict with the Company's
business as now conducted and as proposed to be conducted. Neither the
execution nor delivery of this Agreement, nor the carrying on of the Company's
business by the employees and consultants of the Company as now conducted, nor
the conduct of the Company's business as proposed, will, to the Company's
knowledge, conflict with or result in a breach of the terms, conditions or
provisions of, or constitute a default under, any contract, covenant or
instrument under which any of such employees or consultants is now obligated.
The Company does not believe it is or will be necessary to utilize any
inventions of any of its employees or consultants (or persons it currently
intends to hire) made prior to their employment by the Company.
(n) No Defaults; Contracts. The Company and its subsidiaries have in
----------------------
all material respects performed all obligations required to be performed by
them, and are not in default in any material respect, under any material
contract, commitment or instrument, and no event or condition has occurred
which, with the giving of notice or passage of time, or both, would constitute
such a default. Neither the Company nor any subsidiary is under any obligation
that cannot readily be performed by it on time and without undue or unusual
expenditure of money or effort. All parties having material contracts or
commitments with the Company or any subsidiary are in compliance therewith in
all material respects. Exhibit K to this Agreement contains an accurate list of
all contracts or commitments, oral or written, of the Company and its
subsidiaries, other than (x) licensing agreements entered into by the Company
with its customers in the ordinary course of business and (y) license agreements
that provide for the use by the Company of the licensors' software to be
routinely used and incorporated in the Company's product, that either (i) may
involve the expenditure by the Company or any subsidiary of more than $50,000
over the term of such contract or commitment or (ii) are not subject to
termination by the Company or the appropriate subsidiary without penalty.
-6-
<PAGE>
(o) Insurance Coverage. Exhibit L to this Agreement contains an
------------------
accurate list of the insurance coverage maintained by the Company and its
subsidiaries. Such coverage, is sufficient in amount (subject to reasonable
deductibles) to allow it to replace any of its properties that might be damaged
or destroyed.
(p) Employee Matters. Except as disclosed in Exhibit M to this
----------------
Agreement or described herein, neither the Company nor any subsidiary has in
effect or has any present intention to put into effect any employment
agreements, consulting arrangements, deferred compensation, pension or
retirement agreements or arrangements, bonus, incentive or profit-sharing plans
or arrangements, or labor or collective bargaining agreements, written or oral,
whether legally binding or in the nature of informal understandings. Except as
set forth in Exhibit M, there are no existing or proposed loans, leases,
licenses or other such agreements or arrangements between the Company or any
subsidiary and any officer, director or security holder of the Company or any
subsidiary. The Company has no knowledge that any of the officers or other key
employees or consultants of the Company or any subsidiary has any present
intention to terminate his employment, or that any employee or consultant of the
Company or any subsidiary is bound by any agreement or arrangement with any
other employer (past or present) that in any way affects adversely or threatens
hereafter to affect adversely the performance of his duties as an employee or
consultant of the Company or any subsidiary or the ability of the Company or any
subsidiary to conduct its business. Attached as Exhibit N is an accurate
summary of the policies followed by the Company and its subsidiaries regarding
confidentiality of sensitive information and ownership of patents, know-how and
other such matters relating to the businesses of the Company and its
subsidiaries. The Company, after reasonable investigation, is not aware that
any of its employees or consultants is in violation of the policies summarized
in Exhibit N, and the Company will use its best efforts to prevent any such
violation.
(q) Brokers and Finders. No person or firm has, or will have, any
-------------------
right, interest or valid claim against the Company, any subsidiary or the
Investor, for any commission, fee or other compensation as a finder or broker or
in any similar capacity as a result of any act or omission by the Company, any
subsidiary or anyone acting on behalf of the Company or any subsidiary.
(r) Disclosure. This Agreement (including the Exhibits) does not
----------
contain any untrue statement of a material fact or omit to state any material
fact required to make the statements herein or therein not misleading in the
light of the circumstances under which those statements where made. There is no
fact known to the Company that materially adversely affects or threatens in the
future to materially adversely affect, the business, assets, liabilities,
condition (financial or otherwise), affairs or operations or the Company or any
subsidiary which has not been disclosed by the Company in writing to the
Investor.
(s) Real Property Holding Corporation. The Company is not and has not
---------------------------------
been at any time a "United States real property holding corporation" (as that
term is defined in Treasury Regulation Section 1.897-2(b)). If at any time in
the future the Company shall become a "United States real property holding
corporation" the Company shall, as promptly as practicable, notify each foreign
investor. Within thirty (30) days after receipt of a request from a foreign
investor, the Company shall prepare and deliver to such foreign investor the
statement required
-7-
<PAGE>
under Treasury Regulation Section 1.897-2(h)(1)(IV) and subject to the
succeeding sentence either or both of the following documents: (i) an affidavit
in conformance with the requirements of Internal Revenue Code ("IRC") Section
1445(b)(3) or (ii) a notarized statement, executed by an officer having actual
knowledge of the facts, that the shares of Company stock held by such foreign
investor are of a class that is regularly traded on an established securities
market, within the meaning of IRC Section 1445(b)(6). If the Company is unable
to provide either of the documents described in (i) or (ii) above, if requested,
it shall promptly notify such foreign investor in writing of the reasons for
such inability. Finally, upon the request of a foreign investor and without
regard to whether either document described in (i) or (ii) above has been
requested, the Company shall reasonably cooperate with the efforts of such
foreign investor to obtain a "qualifying statement," within the meaning of IRC
Section 1445(b) (4) or such other documents as would excuse a transferee of a
foreign investor's interest from withholding of income tax imposed pursuant to
IRC Section 897(a).
The Company shall in a timely manner, after the date hereof, make all
necessary filings and shall take all other actions as are necessary to establish
that the Company is not a United States real property holding corporation.
(t) Audit Committee. The Company shall continue to have an audit
---------------
committee of its Board of Directors, which committee shall be comprised of no
fewer than two members of the Board of Directors, no member of which shall be an
employee of the Company.
(u) Compensation Committee. The Company shall continue to have a
----------------------
compensation committee of its Board of Directors, which committee shall be
comprised of no fewer than three members of the Board of Directors, and no more
than one member of which shall be an employee of the Company.
(v) Minute Books. The minute books of the Company provided to the
------------
Investor contain a complete summary of all meetings of directors and
stockholders since the time of incorporation and reflect all transactions
referred to in such minutes accurately in all material respects.
(w) Registration Rights. Except as set forth in the Registration
-------------------
Rights Agreement and as provided in the warrants referred to at Item 2 of
Exhibit E, the Company is not under any contractual obligation to register any
of its presently outstanding securities or any of its securities which may
hereafter be issued.
(x) Backlog. Exhibit P to this Agreement sets forth an accurate
-------
statement by product line of the amounts, as of the date there indicated, of
unfilled binding orders of the Company and its subsidiaries for sales (other
than intercompany sales) in the ordinary course of business of products and
services. None of such amounts had been recognized as revenues on the books of
the Company and its subsidiaries as of such date.
Section 3. Representations, Warranties and Agreements of the Investor.
----------------------------------------------------------
The Investor:
(a) Represents and warrants to the Company that:
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<PAGE>
(i) it is a corporation as indicated on the signature page of
this Agreement:
(ii) the execution, delivery and performance by it of this
Agreement have been duly authorized;
(iii) this Agreement constitutes a valid and binding obligation
of the Investor;
(iv) no person or firm has, or will have, as a result of any act or
omission by the Investor or anyone acting on behalf of the Investor, any right,
interest or valid claim against the Company or any subsidiary, for any
commission, fee or other compensation as a finder or broker or in any similar
capacity;
(v) the Investor is acquiring the Securities being purchased by it for
its own account for investment and not with a view to, or for sale in connection
with, distribution of any of the Securities; and
(vi) the Investor is an "accredited investor" as that term is defined
in Rule 501(A)(1), (2), (3) or (7) under the Securities Act and that it is able
to bear the economic risk of its investment.
(b) Agrees that it will not sell or otherwise transfer any of the
Securities, except in accordance with the Securities Act and all applicable
state securities laws, and that prior to any transfer (other than pursuant to an
effective registration under that Act) it will furnish to the Company a written
opinion of counsel, reasonably satisfactory in form and substance to the
Company, to the effect that registration under the Securities Act is not
required, and all requisite action has been taken, under all applicable state
securities laws, in connection with the proposed transfer. The Company will
promptly review any such opinion to determine whether it is reasonably
satisfactory in form and substance.
(c) Acknowledges that it is aware that it will not be entitled to make
any public offer or public sale of any of the Securities for an indefinite
period unless those Securities are then registered under the Securities Act.
Although it may be possible in the future to make limited public sales of the
Securities without registration in reliance on Rule 144 under that Act, Rule 144
is not now available and there is no assurance that it will become available for
this purpose. Accordingly, the Investor understands that it must bear the
economic risk of its investment in the Securities for an indefinite period.
(d) Acknowledges that it has been furnished access to the business
records of the Company (including any subsidiaries) and such additional
information and documents as the Investor has requested, and has been given the
opportunity to meet with Company officials and, to have such persons answer
questions regarding the Company's affairs and condition.
(e) Acknowledges its understanding that the certificates evidencing
the Securities (other than Securities that shall have been transferred pursuant
to an effective
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<PAGE>
registration statement) will bear legends substantially in the following form
until the Company's counsel determines that the legends are no longer advisable:
"[The shares evidenced by this certificate have] [This Warrant has]
not been registered under the Securities Act of 1933, as amended, and
must be held indefinitely unless [they are] [it is] transferred
pursuant to an effective registration statement under that Act,
pursuant to Rule 144 or l44A, or after receipt of an opinion of
counsel satisfactory to the Company that registration is not
required."
"[The shares evidenced by this certificate are] [This Warrant is]
subject to certain agreements contained in the Purchase Agreement
dated as of September 6, 1994 among the Company and [Investor], a copy
of which is on file with the Secretary of the Company."
The appropriate stop-transfer orders will be noted on the Company's stock and
warrant records with respect to all Securities so legended with the first
legend.
(f) Agrees that it shall hold in confidence any confidential
information about the Company that the Investor has received or hereafter
receives pursuant to any provision of this Agreement under circumstances
indicating the confidentiality of such information unless (i) such information
shall have been publicly disclosed other than as a result of any wrongful action
of Investor, or (ii) Investor independently develops or is aware of such
information.
(g) (i) Agrees for itself, its affiliates and any transferee of
Investor which is obligated under this Section 3(g)(i), that without the prior
written consent of the Company, it will not directly or indirectly increase its
holdings of capital stock of the Company or any security convertible into or
exercisable or exchangeable for capital stock of the Company ("Capital
Holdings") such that, after giving effect to the increase in such holdings, the
Investor will hold securities representing a number of Common Stock Equivalents
(as hereinafter defined) greater than 25% of the Common Stock Equivalents
represented by securities then outstanding (the "Holding Limit"); provided,
--------
however, that the Investor may increase its holdings above the foregoing limit
- -------
as a result of an acquisition of securities of the Company pursuant to a merger
or a purchase of securities made pursuant to a plan of merger or an offer
simultaneously made by the Investor to acquire the Company pursuant to a merger
or to purchase all of the capital stock held by all holders of capital stock of
the Company which in either case is accepted by the holders of securities
representing two-thirds of the Common Stock Equivalents then outstanding (which
for purposes of said computation shall include the Common Stock Equivalents held
by the Investor). Notwithstanding the foregoing restriction, the Investor may
increase its Capital Holdings above 25% upon exercise of the Warrant solely and
to the extent that at the date of exercise of the Warrant the outstanding Common
Stock Equivalents against which the 25% limitation is calculated are less than
16,027,668 by reason that from the date hereof through the date of exercise
either (i) the Company has repurchased or redeemed Common Stock Equivalents, or
(ii) vested options outstanding on the date hereof shall not have been exercised
or (iii) both of (i) and (ii).
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<PAGE>
(ii) The agreement set forth in Section 3(g)(i) shall expire upon the
earlier of the tenth anniversary of the date of this Agreement or the second
anniversary of the date on which the Company shall have first issued its
securities upon the consummation of an initial public offering made pursuant to
a registration statement declared effective under the Securities Act (an "IPO");
provided, however, that if the Investor (or any transferee of securities which
- -------- -------
is bound by the provisions of Section 3(g)(i)) shall transfer securities of the
Company and such transferee is bound by the provisions of Section 3(g)(i), then,
as to such transferee the agreements set forth in Section 3(g)(i) shall expire
on the earlier of the tenth anniversary of the date of this Agreement or on the
date the Company first issues its equity securities in an IPO.
(iii) For purposes of this Agreement the term "Common Stock
Equivalents" shall mean Common Stock and securities which are then (without
payment of any additional consideration other than the tender of the security)
convertible into or exchangeable for Common Stock. Each share of Common Stock
shall represent one Common Stock Equivalent. The number of Common Stock
Equivalents represented by other securities shall be the maximum number of
shares of Common Stock which may then be issued upon conversion or exchange
thereof based upon the terms thereof (including any conversion or exchange
rates, as adjusted from time to time in accordance with the terms of such
security).
(h) Agrees that it and for so long as it holds 5% or more of the
outstanding voting stock of the Company, it shall be present in person or
represented by proxy at all meetings of voting securityholders of the Company
(or to be available to sign consents of securityholders) so that all of the
voting securities then owned by it may be counted for the purpose of determining
the presence of a quorum at any such meeting (or for the purpose of determining
of the requisite percentage of securityholders having signed a consent).
(i) Agrees that, for so long as the obligations under Section 3(g)(i)
have not expired, it will not in one or more transactions transfer securities
representing more than an aggregate of 800,000 Common Stock Equivalents to (A)
any person which is not an affiliate of the Investor or (B) any group of
persons, each member of which either (x) is affiliated with at least one other
member or (y) would, directly or indirectly, through any contractual
arrangement, understanding or relationship, have or share voting power or
investment power with one or more other members of the group with respect to
such securities, but of which group no member is an affiliate of the Investor,
unless such transferee or transferees agree(s) in writing to be subject to the
terms of Section 3(g) of this Agreement; provided, however, that such condition
-------- -------
shall not apply in the case of any transferee which as of the date of this
Agreement is a holder of any shares of Series A, Series B, Series C, Series D or
Series E Convertible Preferred Stock. The Company agrees that any transferee of
the Investor, that is not described in clause (A) or (B) of the foregoing
sentence, that acquires less than 800,000 Common Stock Equivalents shall not be
bound by Section 3(g)(i). The Company shall not be obligated to recognize any
transfer made in violation of this Section 3(i).
(j) Notwithstanding the provisions of paragraph (b) above, no such
registration statement or opinion of counsel shall be necessary for a transfer
by the Investor to any affiliate of the Investor, if the transferee agrees in
writing to be subject to the terms hereof to the same extent as if it were the
original Investor hereunder.
-11-
<PAGE>
(k) Notwithstanding the provisions of paragraph (b) above, no such
registration statement or opinion of counsel shall be necessary for a transfer
by the Investor pursuant to Rule 144, if the Investor makes the factual
representations reasonably requested by the Company indicating the availability
of the exemption provided by Rule 144.
Section 4. Covenants of the Company.
------------------------
(a) Financial Statements; Inspection. From and after the date hereof,
--------------------------------
the Company shall prepare or cause to be prepared, and shall furnish to each
holder of any Securities, the financial statements and related data specified in
Exhibit O, which financial statements and related data shall be acceptable to
each such holder, and shall permit each such holder to inspect at the holder's
expense any of the properties or books and records of the Company and its
subsidiaries, to make copies of extracts from such book and records and to
discuss the affairs and condition of the Company and its subsidiaries with
representatives of the Company and its subsidiaries, all to such reasonable
extent and at such reasonable times and intervals as such holder may reasonably
request. If the holder is a person or entity other than the Investor, the right
to inspect the properties or books or records of the Company granted under this
paragraph (b) may be exercised only with the consent of the Company, which
consent shall not be unreasonably withheld. Any holder (including the Investor)
who exercises the right to inspection shall, at the request of the Company, sign
an agreement to hold in confidence any confidential information about the
Company received as a result of such inspection under circumstances indicating
the confidentiality of such information unless (i) such information shall have
been publicly disclosed other than as a result of wrongful action of Investor,
or (ii) Investor independently develops or is aware of such information.
(b) Intellectual Property. The Company will use its best efforts to
---------------------
keep all intellectual property which is material to the Company's business or
prospects confidential and, to that end, the Company will enter into appropriate
contractual arrangements with each of its employees and such of its consultants,
agents, distributors, licensees, vendors and customers as the Company considers
appropriate.
(c) Proprietary Interest in Patents, Trademarks, etc. The Company
-------------------------------------------------
will use its best efforts to enter into contractual arrangements with each of
its employees so that the Company shall have sufficient title and ownership of
all patents, trademarks, service marks, trade names, copyrights, trade secrets,
information, proprietary rights and processes as are or may become necessary for
the conduct of its business.
(d) Right of First Refusal. Until such time as the Shares shall be
----------------------
deemed automatically converted into shares of Common Stock under paragraph
4(d)(ii) of the Certificate, each holder of Series F Preferred, so long as such
holder shall own at least an aggregate 100,000 shares of Series F Preferred or
shares of Common Stock issuable upon conversion of such shares of Series F
Preferred or shares of Common Stock which have been acquired upon the exercise
of the Warrant, as the case may be (a "Preferred Holder"), shall have the right
if the Company shall offer (the "Offer") to sell to any other person or entity
other than a holder of Preferred Stock with a contractual right of first refusal
under, the Series E Agreement, the Series E II Agreement or the Prior
Stockholders Agreement ("Other Purchaser") any voting security of the Company
except
-12-
<PAGE>
Permitted Shares as defined in paragraph 4(d)(iii)(A) of the Certificate, or any
securities convertible or exchangeable into or exercisable for voting securities
of the Company, to purchase on the same terms and conditions as such securities
are being offered for sale to the Other Purchasers, up to that number of such
securities that would, after the completion of the sale of all of such
securities (assuming the conversion, exchange or exercise of all securities
which are convertible or exchangeable into or exercisable for voting
securities), result in such Preferred Holder having the same percentage interest
in the voting securities of the Company (based upon the number of votes) as such
holder had prior to such sale. The Company shall provide written notice to each
Preferred Holder of any offer, which notice shall contain the terms and
conditions of the Offer. Each Preferred Holder shall have a period equal to the
longer of (i) 14 days from the date such Preferred Holder receives such notice
from the Company, or (ii) the period of time that Other Purchasers will be
permitted to accept the Offer, to exercise such Preferred Holder's right to
purchase securities under this Section 4(d). Such Preferred Holder shall
exercise the right by providing written notice to the Company of such Preferred
Holder's intent to purchase and the number of shares which such Preferred Holder
intends to purchase. Thereafter, each Preferred Holder shall have a period equal
to the longer of (i) 30 days from the date such Preferred Holder gives notice to
the Company of such Preferred Holder's intent to purchase, or (ii) the period of
time that Other Purchasers are permitted to purchase and pay for securities
pursuant to the Offer, to purchase and pay for the securities pursuant to this
Section 4(d). This right to purchase securities may not be assigned or otherwise
transferred by any Preferred Holder; provided, however, the right of each
-------- -------
Preferred Holder to purchase securities may be apportioned in such a manner as
each Preferred Holder deems appropriate among the affiliates, partners or
retired partners of such Preferred Holder and further provided, however, that
------- -------- -------
should any Preferred Holder not purchase the full number of securities permitted
under this Section 4(d), each other Preferred Holder shall have the right to
purchase a pro rata portion of such securities.
(e) Rule 144A Information. For so Ions as any of the Securities are
---------------------
outstanding and are "restricted securities" within the meaning of Rule 144 (a)
(3) under the Act, the Company will provide to any holder of Securities and to
any prospective purchaser of Securities designated by a holder of such
Securities that is a "qualified institutional buyer" (as that term is defined
under Rule 144A), upon the request of such holder or prospective purchaser, the
information and the rights to information required to be provided to such holder
or prospective purchaser by Rule 144A(d)(4). The Company further agrees that
its obligations pursuant to this paragraph (i) shall extend to any person who
acquires any of the Securities in a transaction pursuant to Rule 144A.
Section 5. Drag Along Provision.
--------------------
(a) If at any time a written offer meeting the criteria described in
Section 5(b) (the "Offer") is made by a prospective buyer of securities of the
Company for the purchase by such prospective buyer of securities which, together
with Common Stock Equivalents represented by securities then owned by such
prospective buyer, represents two-thirds or more of the outstanding Common Stock
Equivalents (including Common Stock Equivalents represented by securities held
by the Investor) and a copy of such Offer is transmitted to the Investor, then
on and after the 11th day following the transmittal of the Offer to the
Investor, the Offer for the sale of such securities (including securities held
by the Investor) may he accepted by holders who in
-13-
<PAGE>
the aggregate, together with the prospective buyer but excluding the Investor,
hold securities representing two-thirds or more of the outstanding Common Stock
Equivalents ("Control Holders"). In such event, the Investor agrees to sell
pursuant to the Offer all the securities owned by the Investor which are subject
to the Offer. The Investor further agrees to execute and deliver such documents
and perform all other actions as shall reasonably be requested by the
prospective buyer and the Control Holders in order to effectuate such sale in
accordance with the terms of the Offer and on a timely basis. Any transferee of
Securities of the Investor (other than an affiliate of the Investor) shall not
be bound by the provisions of this Section 5. This Section 5 shall terminate
upon the earlier of (i) the second anniversary of Company's initial public
offering of securities and (ii) the date on which the Company becomes subject to
the periodic reporting obligations of the Securities Exchange Act of 1934 with
respect to its Common Stock equivalents.
(b) Any Offer to which Section 5(a) shall apply shall provide that the
Investor (i) shall be paid not less for its Shares than it would have received
under Article 4(b) of the Certificate of Incorporation were the transaction
constituted as a merger and (ii) that the Investor shall be entitled to exercise
the Warrant simultaneously with consummation of the transaction contemplated by
the Offer and to be paid as a holder of Common Stock for such shares.
Section 6. Miscellaneous.
-------------
(a) Exhibits. The Exhibits attached to this Agreement constitute a
--------
part of this Agreement. They are incorporated herein by reference and shall
have the same force and effect as if set forth in full in the main body of this
Agreement.
(b) Survival of Warranties. All warranties, representations,
----------------------
covenants and agreements made in this Agreement shall survive the delivery of
the Shares to the Investor, regardless of any investigation made by any party.
(c) Assigns. This Agreement shall bind and inure to the benefit of
-------
the parties hereto and their respective heirs, executors, administrators,
successors and assigns.
(d) Governing Law. This Agreement shall be governed by the laws of
-------------
the State of New York.
(e) Notices. All communications provided for in this Agreement shall
-------
be in writing and shall be sent to the appropriate address shown on the
signature page or on Exhibit A to this Agreement or to such other address as the
addressee may from time to time designate to the sender and shall be sent by
certified mail, return receipt requested, or shall be personally delivered.
(f) Entire Agreement. This Agreement constitutes the entire agreement
----------------
among the parties regarding the transactions contemplated herein and may not be
amended except in writing.
(g) Headings. The headings contained in this Agreement are for
--------
reference purposes only and shall not affect in any way the interpretation of
this Agreement.
-14-
<PAGE>
(h) Effect of Stock Splits. Whenever any rights under this Agreement
----------------------
are available only when at least a specified minimum number of Securities is
involved, such number shall be appropriately adjusted to reflect any stock
split, stock dividend, combination of securities into a smaller number of
securities or reclassification of stock.
(i) Amendments. This Agreement may be amended only by an instrument
----------
in writing, signed by the Company and by the Investor or by holders, on the date
of such amendment, of at least a majority of the Shares and/or Conversion Shares
issuable upon conversion of the Shares held by all of such holders.
(j) Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be an original, all of which together shall
constitute one instrument.
(k) Facsimile. This Agreement may be executed and thereafter
---------
transmitted by facsimile and the facsimile receipt shall constitute an original.
(l) Third Party Beneficiaries. Each of the holders of capital stock
-------------------------
of the Company shall be a third party beneficiary of this Agreement and may
enforce the obligations of the Investor hereunder.
-15-
<PAGE>
IN WITNESS WHEREOF, we have set our hands as of the date hereinafter set forth.
Date: September 6, 1994
The Company:
DATALOGIX INTERNATIONAL INC.
A New York Corporation
By: /s/ R. GIORDANELLA
-----------------------
Title: CEO
--------------------
100 Summit Lake Drive
Valhalla, New York 10595
The Investor:
ORACLE CORPORATION
By: /s/ JEFFREY O. HENLEY
------------------------
Title: CFO
---------------------
500 Oracle Parkway
Redwood Shores, California 94065
-16-
<PAGE>
EXHIBIT 3
REGISTRATION RIGHTS AGREEMENT
AGREEMENT, dated October 29, 1992, as amended and restated as of June 30,
1993 and as of September 6, 1994, among Datalogix International Inc., a New York
corporation (the "Company"), and certain of the holders (the "Series A
Shareholders") of the shares of the Company's Series A Convertible Preferred
Stock, $1.00 par value per share (the "Series A Stock"), certain of the holders
(the "Series B Shareholders") of shares of the Company's Series B Convertible
Preferred Stock, $1.20 par value per share (the "Series B Stock"), certain of
the holders (the "Series C Shareholders") of shares of the Company's Series C
Convertible Preferred Stock, $2.00 par value per share (the "Series C Stock"),
certain of the holders of the Company's Series D Convertible Preferred Stock,
$1.00 par value per share (the "Series D Stock"), certain of the holders (the
"Series E Shareholders") of shares of the Company's Series E Convertible
Preferred Stock, $.10 par value per share (the "Series E Stock"), certain of the
holders (the "Series F Shareholders") of the shares of the Company's Series F
Convertible Preferred Stock, $.10 par value per share ("Series F Stock") and
certain holders of warrants ("Warrantholders") to acquire shares of the
Company's Common Stock, $.01 par value per share (the "Common Stock").
WHEREAS, the Company has granted to the Series A, Series B, Series C,
Series D and Series E Shareholders and the Warrantholders certain rights to
cause the registration under the Securities Act of 1933 (the "Act") of the
shares of the Common Stock, issuable upon conversion of the Series A, Series B,
Series C, Series D and Series E Stock or exercise of warrants; and
WHEREAS, the parties hereto have agreed to modify and amend the
registration rights previously granted to the Series A, Series B, Series C,
Series D and Series E Shareholders and certain of the Warrantholders and to
grant registration rights to the Series F Shareholders and to holders of certain
newly issued warrants.
NOW THEREFORE, for valuable consideration, receipt of which is hereby
acknowledged by each party, the parties hereto agree as follows:
As used herein, the term the "Act" refers to the Securities Act of 1933
(and any successor law), and the rules and regulations thereunder, all as
amended from time to time, and the term "Shares" refers to the shares of Common
Stock, the shares of Series A Stock, the shares of Series B Stock, the shares of
Series C Stock, the shares of Series D Stock, the shares of Series E Stock and
the Shares of Series F Stock owned or hereafter acquired by the signatories
hereto or by persons who shall hereafter join as parties hereto (and any other
shares or equity securities distributed on or in respect of or in substitution
for or upon conversion of such Shares), whether or not they have been sold or
transferred, other than any that shall have been sold or transferred pursuant to
an effective registration statement, or pursuant to Rule 144, under the Act.
1. Registration Upon Request. Promptly upon the written request by (i)
-------------------------
the holders of 25% of the Shares at the time outstanding (measured based upon
the number of Common Stock equivalents) or (ii) either of J.P. Morgan Investment
Corporation ("Morgan") or Oracle Corporation ("Oracle"), made at any time or
from time to time, and, in any event, within 60 days of such request, the
Company shall file a registration statement under the Act covering all Shares
<PAGE>
that any holders of Shares desire to register and shall use its best efforts to
cause such registration statement to become effective as soon as practicable.
The Company shall promptly notify any holders of Shares other than those
requesting the registration and afford them the opportunity of including in the
registration such Shares owned by them as they shall specify in a written notice
delivered to the Company within 30 days after their receipt of the Company's
notice of the proposed filing of the registration statement. No other persons
(including the Company) shall be entitled to include any securities in any
registration pursuant to this Paragraph 1 without the consent of a majority in
interest of the participating holders. Subject to the next sentence of this
paragraph, the Company shall not be required to effect more than four
registrations (exclusive of registrations on Form S-3, or a successor form)
pursuant to this Paragraph 1, and shall not be required to effect more than one
registration during any six month period pursuant to this Paragraph 1; provided,
--------
however, that unless 90% or more of the Shares which the holders thereof seek to
- -------
register pursuant to this paragraph 1 are registered in a particular
registration, such registration shall not be deemed a registration for purposes
of the limitation set forth in this sentence. The Company shall be required to
effect two registrations demanded by Morgan and two registrations demanded by
Oracle of which three may be counted toward the Company's obligation to effect
four registrations under the previous sentence of this paragraph. In addition,
the Company shall not be required to effect any registration pursuant to this
Paragraph 1 until the earlier to occur of (i) the completion by the Company of
at least one public offering of its securities (other than an offering solely to
employees of the Company and its subsidiaries) or (ii) October 1, 1995, provided
--------
that the proposed offering price of the Shares to be registered is at least
$1,500,000 (or $500,000 in the case of a registration on Form S-3, or a
successor form).
2. Incidental Registration. If the Company at any time proposes to
-----------------------
register any of its securities under the Act for its own account or the account
of any security-holders (other than any registration pursuant to Paragraph 1 or
any registration of an offering solely to employees of the Company and its
subsidiaries or any registration on Form S-4 or a successor form), it shall
promptly give written notice to each holder of Shares of its intention to do so,
and the Company shall include in such registration all Shares that the holders
thereof shall specify in a written notice delivered to the Company within 30
days after their receipt of the Company's notice of the proposed filing of the
registration statement. However, if the proposed registration is to be
underwritten (whether on a "best efforts" or a "firm commitment" basis), the
managing underwriter shall have the right to limit the Shares to be included in
such registration to not less than 30% of the total number of securities
included therein if the underwriter advises the Company in writing that such
exclusion is necessary to avoid interfering with the successful marketing of the
underwritten portion of the public offering (unless such registration is the
initial public offering of the Company's securities, in which case the
underwriter may limit or exclude the Shares entirely), provided that such
-------------
exclusion applies first to those securities which the Company proposes to
register for the account of any of its officers or employees and then on a
proportional basis to all other securities proposed to be included in any such
registration (including the Shares) other than those for which the Company
initiated such registration and which are being sold by the Company. Any
exclusions of the Shares shall be made pro rata among the affected holders in
proportion to the respective numbers of Shares for which they have requested
registration.
-2-
<PAGE>
3. Conditions Relating to Registration of Shares. Registrations of Shares
---------------------------------------------
pursuant to Paragraph 1 or 2 shall be subject to the following:
(a) Filing of Amendments. The Company shall file such amendments and
--------------------
supplements to the registration statement and the related prospectus and take
such other action as may be necessary to keep the registration statement
effective and to comply with the Act for such period, not exceeding six months
from the original effective date of the registration statement, as a majority in
interest of the participating holders of Shares may request.
(b) Blue Sky. The Company shall take such action under the securities
--------
laws of such states as any participating holder of Shares shall reasonably
request; provided, however, that the Company shall not be required to qualify to
do business as a foreign corporation, or to file any general consent to service
of process, in any state unless the Company is already subject to service in
such jurisdiction and except as may be required by the Act.
(c) Expenses. The Company shall bear the cost of all registrations,
--------
including, but not limited to, all registration and filing fees, printing
expenses, and fees, expenses and disbursements of counsel and accountants for
the Company (subject, however, to subparagraph (d) below), and reasonable fees
and disbursements of one counsel for selling shareholders, except that each
holder of Shares shall pay the fees and disbursements of any additional counsel
and the underwriting fees and selling commissions applicable to its Shares.
(d) Audits. The Company shall not be required to furnish any audited
------
financial statements at the request of any holder of Shares other than those
statements customarily prepared at the end of its fiscal year, unless (i) the
requesting holders shall agree to reimburse the Company for the out-of-pocket
costs incurred by the Company in the preparation of such other audited financial
statements shall be required by the Securities and Exchange Commission as a
condition to ordering a registration statement effective under the Act. The
Company shall, however, furnish without charge copies of all such unaudited
financial statements as any holder of Shares shall reasonably request for use in
any registration.
(e) Indemnification. The Company shall indemnify and hold harmless
---------------
each seller of Shares, each person who under the Act is deemed a controlling
person of such seller, and each underwriter for such seller against any losses,
claims, damages or liabilities to which any such seller, controlling person or
underwriter may become subject under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) shall
arise out of or be based upon any untrue or allegedly untrue statement of any
material fact contained in the registration statement, any related prospectus or
preliminary prospectus or any amendment or supplement to the registration
statement or any prospectus or preliminary prospectus or upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, any shall reimburse
any legal or other expenses reasonably incurred by any such seller, controlling
person or underwriter in connection with investigating or defending against any
such loss, claim, damage, liability or action; provided, however, that the
-------- -------
Company shall not be liable to any such seller, controlling person or
underwriter for any losses, claims, damages, liabilities or actions insofar as
the same shall arise out of or be based upon any such untrue statement or
omission made in reliance upon and in conformity with
-3-
<PAGE>
written information furnished by such seller, controlling person or underwriter
seeking indemnification hereunder to the Company for use in the registration
statement, prospectus, preliminary prospectus, amendment or supplement. Each
seller of Shares and each underwriter for such seller shall similarly indemnify
and hold harmless the Company and its controlling persons against any such
losses, claims, damages, liabilities or actions but only insofar as the same
shall arise out of or be based upon any untrue statement or omission made in
reliance upon and in conformity with written information furnished by such
indemnifying person to the Company for use in the registration statement,
prospectus, preliminary prospectus, amendment or supplement; provided that in no
--------
event shall any indemnity by a seller of Shares or any underwriter for such
Seller exceed the gross proceeds from the offering received by such Seller.
4. Reports Under Securities Exchange Act of 1934. With a view to making
---------------------------------------------
available to holders of the Shares the benefits of Rule 144 promulgated under
the Act and any other rule or regulation of the SEC that may at any time permit
a holder of Shares to sell securities of the Company to the public without
registration or pursuant to a registration on Form S-3, the Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in SEC Rule 144, at all times after 90 days after the
effective date of the first registration statement filed by the Company for the
offering of its securities to the general public,
(b) take such action, including the voluntary registration of its
Common Stock under Section 12 of the Securities and Exchange Act of 1934 (the
"1934 Act"), as is necessary to enable the holders of the Shares to utilize Form
S-3 for the sale of their Shares, such action to be taken as soon as practicable
after the end of the fiscal year in which the first registration statement filed
by the Company for the offering of its securities to the general public is
declared effective,
(c) file with the SEC in a timely manner all reports and other
documents required of the Company under the Act and the 1934 Act; and
(d) furnish to any holder of Shares forthwith upon request (i) a
written statement by the Company that it has complied with the reporting
requirements of SEC Rule 144 (at any time after 90 days after the effective date
of the first registration statement filed by the Company), the Act and the 1934
Act (at any time after it has become subject to such reporting requirements), or
that it qualifies as a registrant whose securities may be resold pursuant to
Form S-3 (at any time after it so qualifies), (ii) a copy of the most recent
annual or quarterly report of the Company and such other reports and documents
so filed by the Company, and (iii) such other information as may be reasonably
requested in availing such holder of any rule or regulation of the SEC which
permits the selling of any such securities of without registration or pursuant
to such form.
5. Form S-3 Registration. In case the Company receives from any holder of
---------------------
Shares a written request or requests that the Company effect a registration on
Form S-3 and any related qualification or compliance, with respect to all or a
part of the Shares owned by such holder, the Company will:
-4-
<PAGE>
(a) promptly give written notice of the proposed registration, and any
related qualification or compliance to all other holders of Shares;
(b) as soon as practicable, effect such registration and all such
qualifications and compliances as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of such holder's
Shares as are specified in such request, together with all or such portion of
the Shares of any holder or holders joining in such request as are specified in
a written request given within 15 days after receipt of written notice from the
Company as set forth in clause (a) of this Paragraph 5; provided, however, that
-------- -------
the Company shall not be obligated to effect any such registration,
qualification or compliance pursuant to this Paragraph 5: (1) if Form S-3 is
not available for such offering; (2) if the holders, together with the holders
of any other securities of the Company entitled to inclusion in such
registration, propose to sell Shares and such other securities (if any) at an
aggregate price to the public (net of any underwriters, discounts or commission)
of less than $250,000; or (3) if the Company has, within the twelve-month period
preceding the date of such request, already effected two registrations on Form
S-3 for the holders of Shares pursuant to this Paragraph 5; and
(c) Subject to the foregoing, the Company shall file a registration
statement covering the Shares and other securities so requested to be registered
as soon as practicable after receipt of the request or requests of the holders.
All expenses incurred in connection with up to two registrations requested
pursuant to Paragraph 5, including (without limitation) all registration,
filing, qualification, printer's and accounting fees and the reasonable fees and
disbursements of counsel for the selling holder or holders and counsel for the
Company, shall be borne by the Company, and all other such expenses incurred in
connection with any other registration requested pursuant to this paragraph 5
shall be borne pro rata by the holder or holders participating in such
registration. Registrations effected pursuant to this Paragraph 5 shall not be
counted as demands for registration or registrations effected pursuant to
Paragraph 1.
6. Assignment of Registration Rights. The rights to cause the Company to
---------------------------------
register the Shares may be assigned to a transferee or assignee of such
securities provided the Company is, within a reasonable time after such
transfer, furnished with written notice of the name and address of such
transferee or assignee and the securities with respect to which such
registration rights are being assigned; and provided, further, that such
-------- -------
assignment shall be effective only if immediately following such transfer the
further disposition of such securities by the transferee or assignee is
restricted under the Act.
7. Limitations on Subsequent Registration Rights. From and after the date
---------------------------------------------
of this Agreement, the Company shall not, without the prior written consent of
the holders of a majority of the Shares, enter into any agreement with any
holder or prospective holder of any securities of the Company which would allow
such holder or prospective holder (a) to include such securities in any
registration filed under Paragraph 1, or (b) to make a demand registration which
could result in such registration statement being declared effective prior to
the earlier of either of the dates set forth in Paragraph 1, or within 120 days
of the effective date of any registration effective pursuant to Paragraph 1.
-5-
<PAGE>
8. Amendment of Registration Rights; Additional Parties. Any provision of
----------------------------------------------------
these registration rights may be amended and the observance thereof may be
waived (either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the holders of
two-thirds (66 2/3%) of the Shares (measured based upon the number of common
stock equivalents); provided, however, that no amendment which adversely impacts
any holder of Shares in a manner different than all other holders of Shares may
not be made without the written consent of such holder. Any amendment of waiver
affected in accordance with this paragraph shall be binding upon each holder of
Shares at the time outstanding (including securities into which such securities
are convertible), each future holder of all such securities, and the Company.
The Company may permit additional holders of the capital stock of the Company to
become parties hereto upon execution of a joinder agreement; provided that all
such additional parties shall be granted rights hereunder with respect to no
more than 2,000,000 Shares (measured based upon the number of common stock
equivalents).
9. Miscellaneous.
-------------
(a) Governing Law. This Agreement shall be governed in all respects
-------------
by the laws of the State of New York.
(b) Entire Agreement. This Agreement constitutes the full and entire
----------------
understanding and agreement among the parties with regard to the subject matter
hereof.
(c) Notices, etc. All notices and other communications required or
-------------
permitted hereunder shall be in writing and shall be mailed by first-class mail,
postage prepaid, or delivered either by hand or by messenger, addressed to a
holder of Shares at the address maintained by the Company for such purposes or
as otherwise shall have furnished to the Company in writing.
(d) Titles and Subtitles. The titles of the Paragraphs and
--------------------
subparagraphs of this Agreement are for convenience of reference only and are
not to be considered in construing this Agreement.
(e) Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be an original, all of which together shall
constitute one instrument.
(f) Facsimile. This Agreement may be executed and thereafter
---------
transmitted by facsimile and the facsimile receipt shall constitute an original.
-6-
<PAGE>
IN WITNESS WHEREOF, we have set our hands as of the date first above
written.
DATALOGIX INTERNATIONAL INC.
By: /s/ R. GIORDANELLA
------------------------------------
VENROCK ASSOCIATES
By: /s/ VENROCK ASSOCIATES
----------------------------------------
ABS VENTURES III
LIMITED PARTNERSHIP
By: /s/ ABS VENTURES III LIMITED
----------------------------------------
PARTNERSHIP
----------------------------------------
IBJ SCHRODER BANKING CORPORATION
By: /s/ PAUL J. ECHAUSSE
----------------------------------------
Vice President
IBJS Capital Corporation, beneficial owner via
Plan of Merger
ATLAS VENTURE FUND L.P.
By: Atlas Venture Associates L.P.
as General Partner
By: /s/ ATLAS VENTURE ASSOCIATES, L.P.
----------------------------------------
ATLAS PARTICIPATIE II C.V.
By: /s/ MICHIEL A. DE HAAN
----------------------------------------
PARIBAS EUROPE INVESTMENT VOF
By:
----------------------------------------
-7-
<PAGE>
PARQUEST VENTURE PARTNERSHIP
By: /s/ PARQUEST VENTURE PARTNERSHIP
----------------------------------------
PARVEST EUROPE INVESTMENT CV
By:
----------------------------------------
AEXCEL CORPORATION
By: /s/ AEXCEL CORPORATION
----------------------------------------
/s/ GERALD F. O'CONNELL
--------------------------------------------
Gerald F. O'Connell
/s/ EDWARD HEDAYA
--------------------------------------------
Edward Hedaya
KENNETH ARNOLD ROLLOVER IRA
By:
----------------------------------------
Kenneth Arnold
/s/ BARBARA ARNOLD
--------------------------------------------
Barbara Arnold
/s/ RICHARD GIORDANELLA
--------------------------------------------
Richard Giordanella
/s/ THOMAS PALLANTE
--------------------------------------------
Thomas Pallante
-8-
<PAGE>
DUNEDIN BERKELEY DEVELOPMENT
CAPITAL LIMITED
By: /s/ KLEINWORT BENSON (JERSEY)
----------------------------------------
LIMITED, AS CUSTODIAN
----------------------------------------
Manager
SPI BERKELEY DEVELOPMENT
CAPITAL LIMITED
By: /s/ KLEINWORT BENSON (JERSEY)
----------------------------------------
LIMITED, AS CUSTODIAN
----------------------------------------
Manager
KB BERKELEY JAPAN DEVELOPMENT
CAPITAL LIMITED
By: /s/ KLEINWORT BENSON (JERSEY)
----------------------------------------
LIMITED, AS CUSTODIAN
----------------------------------------
Manager
SEQUOIA CAPITAL GROWTH FUND
By: /s/ SEQUOIA CAPITAL GROWTH FUND
----------------------------------------
General Partner
SEQUOIA TECHNOLOGY PARTNERS III
By: /s/ SEQUOIA TECHNOLOGY
----------------------------------------
PARTNERS III
----------------------------------------
General Partner
NEW ENTERPRISE ASSOCIATE V,
LIMITED PARTNERSHIP
By: NEA Partners V, Limited Partnership
Its General Partner
By: /s/ NEA PARTNERS V, LIMITED
----------------------------------------
PARTNERSHIP
----------------------------------------
-9-
<PAGE>
--------------------------------------------
Jeanne E. Amster
/s/ JUSTIN B. ARNOLD
--------------------------------------------
Justin B. Arnold
--------------------------------------------
George Beitzel,
individually and as trustee
BROWN TECHNOLOGY ASSOCIATES
LIMITED PARTNERSHIP
By:
----------------------------------------
MAYFIELD VI
By:
----------------------------------------
-10-
<PAGE>
MAYFIELD ASSOCIATES
By:
----------------------------------------
MAYFIELD SOFTWARE TECHNOLOGY
PARTNERS
By:
----------------------------------------
TECHNOLOGY FUNDING SECURED
INVESTORS III, AN INCOME AND
GROWTH PARTNERSHIP, L.P., A
CALIFORNIA LIMITED PARTNERSHIP
By: Technology Funding Inc.,
Managing General Partner
By:
----------------------------------------
Vice President
By:
----------------------------------------
Senior Investment Officer
J.P. MORGAN INVESTMENT CORPORATION
By:
----------------------------------------
DAVID A. DUFFIELD TRUST
U/A/D 7/14/88
By:
----------------------------------------
MARGARET L. TAYLOR
ORACLE CORPORATION, as a holder of
Series F Stock and as a Warrantholder
By: /s/ JEFFREY O. HENLEY
----------------------------------------
-11-
