<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or 240.14a-12
Datalogix International Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
[X] Fee computed on table below per Exchange Act Rule 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
Common Stock
---------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
11,183,527
---------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
Merger Consideration of $8.00 per share
---------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
$89,468,216
---------------------------------------------------------------
5) Total fee paid:
$17,894
---------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
<PAGE>
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid: ...................................................
2) Form, Schedule or Registration Statement No.: .............................
3) Filing Party: ............................................................
4) Date Filed: ..............................................................
<PAGE>
[DATALOGIX LOGO]
100 SUMMIT LAKE DRIVE
VALHALLA, NEW YORK 10595
November __, 1996
Dear Shareholder:
You are cordially invited to attend a Special Meeting of Shareholders of
Datalogix International Inc. (the "Special Meeting") to be held at the
________________________________ ____________________________, on __________,
[December] __, 1996, at [10:00 a.m.], local time.
At the Special Meeting you will be asked to consider and vote upon a
proposal to approve and adopt an Agreement and Plan of Merger, dated as of
September 24, 1996 (as amended as of October 8, 1996, the "Merger Agreement"),
pursuant to which Delphi Acquisition Corporation ("Acquisition Sub"), a Delaware
corporation and a wholly-owned subsidiary of Oracle Corporation ("Oracle"), will
be merged (the "Merger") with and into Datalogix International Inc. (the
"Company"). The Company will be the surviving corporation in the Merger and the
entire equity interest in the Company will be owned by Oracle. If the Merger is
consummated, each outstanding common share, par value $0.01 per share, of the
Company (together with the associated Preferred Share Purchase 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, as amended as of
September 24, 1996, referred to as the "Common Shares"), except those shares
owned by Oracle or the Company (the "Public Shares," and the holders thereof,
the "Public Shareholders") or by shareholders who perfect their dissenters'
rights in accordance with the New York Business Corporation Law, will be
converted into the right to receive $8.00 per Common Share in cash, without
interest.
Enclosed with this letter is a Notice of Special Meeting, Proxy
Statement, Proxy Card and return envelope. I urge you to read the enclosed
material carefully.
<PAGE>
YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MERGER, AND
RECOMMENDS THAT YOU VOTE FOR APPROVAL AND ADOPTION OF THE MERGER AGREEMENT.
In arriving at its recommendation, your Board of Directors gave careful
consideration to a number of factors described in the accompanying Proxy
Statement, including, among other things, the opinion of Robertson, Stephens &
Company LLC, the financial advisor to the Board of Directors in connection with
the Merger, that the consideration to be paid in the proposed Merger is fair,
from a financial point of view, to Datalogix and its shareholders. THE FULL TEXT
OF SUCH OPINION IS ATTACHED AS ANNEX B TO THE PROXY STATEMENT AND SHAREHOLDERS
ARE URGED TO READ IT IN ITS ENTIRETY.
Pursuant to the New York Business Corporation Law, the affirmative vote
of holders of at least 66 2/3% of all of the outstanding Common Shares is
required to approve the Merger. Oracle, which as of the date hereof, owns
approximately 13.4% of the outstanding Common Shares, has agreed to vote for the
Merger.
YOUR VOTE IS IMPORTANT. Whether or not you plan to attend the Special
Meeting, please complete, sign and date the accompanying Proxy Card and return
it in the enclosed prepaid envelope as soon as possible. If you attend the
Special Meeting, you may vote your shares in person, even if you have previously
submitted a Proxy Card.
If the Merger becomes effective, a Letter of Transmittal with
instructions will be mailed to all shareholders of record to use in surrendering
their certificates representing Common Shares. PLEASE DO NOT SEND YOUR
CERTIFICATES UNTIL YOU RECEIVE THE LETTER OF TRANSMITTAL.
Your continued support of and interest in Datalogix International Inc.
is greatly appreciated.
Sincerely,
Raymond V. Sozzi
President, Chief Operating Officer
and Acting Chief Executive Officer
<PAGE>
[DATALOGIX INTERNATIONAL INC. LOGO]
100 SUMMIT LAKE DRIVE
VALHALLA, NEW YORK 10595
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON December __, 1996
To the Shareholders of Datalogix International Inc.:
Notice is hereby given that a Special Meeting of Shareholders of
Datalogix International Inc. (the "Company") will be held at the _____________
____________________________ __________________________, on ________________,
[December] __, 1996 at [10:00] a.m., local time (the "Special Meeting"), for the
following purposes:
1. To consider and vote upon a proposal to approve and adopt an
Agreement and Plan of Merger, dated as of September 24, 1996 (as amended
as of October 8, 1996, the "Merger Agreement"), pursuant to which
Delphi Acquisition Corporation ("Acquisition Sub"), a Delaware
corporation and a wholly owned subsidiary of Oracle Corporation, a
Delaware corporation ("Oracle"), will be merged with and into the
Company (the "Merger"). The Company will be the surviving corporation in
the Merger and the entire equity interest in the Company will be owned
by Oracle. As a result of the Merger, each outstanding common share, par
value $0.01 per share, of the Company (together with the associated
Preferred Share Purchase 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, as amended as of September 24, 1996,
referred to as the "Common Shares"), except those shares owned by Oracle
or the Company and by shareholders who perfect their dissenters' rights
in accordance with the New York Business Corporation Law (the "NYBCL"),
would be converted into the right to receive $8.00 in cash, without
interest, all as more fully described in the accompanying Proxy
Statement.
2. To transact such other business as may properly be brought
before the Special Meeting or any adjournments or postponements thereof.
Only holders of the Common Shares of record at the close of business on
[October __,] 1996 are entitled to notice of and to vote at the Special Meeting.
Each Common Share outstanding on such date is entitled to one vote at the
Special Meeting.
If the Merger is consummated, the shareholders of the Company who
dissent from the proposed Merger and comply with the requirements of Section 623
of the NYBCL will have the right to
<PAGE>
receive payment in cash of the fair value of their Common Shares. See "The
Merger -- Dissenters' Rights" in the accompanying Proxy Statement and Annex C
thereto for a statement of the rights of dissenting shareholders and a
description of the procedures required to be followed to obtain the fair value
of the Common Shares.
Pursuant to the NYBCL, the affirmative vote of holders of at least 66
2/3% of all of the outstanding Common Shares is required to approve the Merger.
Oracle, which as of the date hereof, owns approximately 13.4% of the outstanding
Common Shares, has agreed to vote for the Merger.
By Order of the Board of Directors,
----------------------
Barbara Arnold
Assistant Secretary
Valhalla, New York
November __, 1996
YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF COMMON SHARES YOU
OWN. WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE COMPLETE,
SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED PREPAID ENVELOPE
WITHOUT DELAY. ANY SHAREHOLDER PRESENT AT THE SPECIAL MEETING MAY VOTE
PERSONALLY ON EACH MATTER BROUGHT BEFORE THE SPECIAL MEETING AND ANY PROXY GIVEN
BY A SHAREHOLDER MAY BE REVOKED AT ANY TIME BEFORE IT IS EXERCISED.
PLEASE DO NOT SEND ANY CERTIFICATES FOR YOUR SHARES
AT THIS TIME.
<PAGE>
[DATALOGIX INTERNATIONAL INC. LOGO]
100 SUMMIT LAKE DRIVE
VALHALLA, NEW YORK 10595
---------------------
PROXY STATEMENT FOR SPECIAL MEETING OF
SHAREHOLDERS TO BE HELD ON DECEMBER __, 1996
---------------------
INTRODUCTION
This Proxy Statement is being furnished to the shareholders of Datalogix
International Inc., a New York corporation ("Datalogix" or the "Company"), in
connection with the solicitation of proxies by the Board of Directors of the
Company (the "Board of Directors") from holders of outstanding common shares,
par value $0.01 per share, of the Company (together with the associated
Preferred Share Purchase Rights (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, as amended as of September 24, 1996,
referred to as the "Common Shares"), for use at a Special Meeting of
Shareholders of the Company to be held on _____________, December __, 1996 at
[10:00 a.m.], local time, at the
__________________________________________________________________________
_______________________, and at any adjournments or postponements thereof (the
"Special Meeting"). This Proxy Statement and the related proxy card are first
being mailed to shareholders on or about November __, 1996.
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE FAIRNESS OR
MERITS OF SUCH TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION
CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
THE SPECIAL MEETING
At the Special Meeting, holders of Common Shares will consider and vote
upon a proposal to approve and adopt an Agreement and Plan of Merger, dated as
of September 24, 1996 (as amended as of October 8, 1996, the "Merger
Agreement"), pursuant to which: (a) Delphi Acquisition Corporation ("Acquisition
Sub"), a Delaware corporation and a wholly owned subsidiary of Oracle
Corporation, a Delaware corporation ("Oracle"), will be merged with and into the
Company (the "Merger"), and the entire equity interest in the Company, as the
surviving corporation in the Merger, will be owned by Oracle; and (b) each
Common Share that is outstanding at the effective time
(i)
<PAGE>
of the Merger (the "Effective Time"), other than Common Shares held by Oracle or
the Company (the "Public Shares," and the holders thereof, the "Public
Shareholders") or Public Shares in respect of which dissenters' rights have been
perfected, will be converted into the right to receive $8.00 per share in cash,
without interest (the "Merger Consideration"). Common Shares held by Oracle will
be cancelled without consideration. The Board of Directors has unanimously
approved and adopted the Merger Agreement. The Board of Directors unanimously
recommends that shareholders vote FOR approval and adoption of the Merger
Agreement.
RECORD DATE; QUORUM; REQUIRED VOTE
The close of business on October __, 1996 (the "Record Date") has been
fixed as the record date for determining holders of Common Shares entitled to
vote at the Special Meeting. Each Common Share outstanding on such date is
entitled to one vote at the Special Meeting. As of the Record Date, ___________
Common Shares were outstanding and held of record by approximately ________
holders. The presence, in person or by proxy, of the holders of a majority of
the outstanding Common Shares entitled to vote at the Special Meeting is
necessary to constitute a quorum for the transaction of business at the Special
Meeting. Abstentions and broker non-votes (where a broker or other holder
submits a proxy but does not have authority to vote a customer's Common Shares)
will be considered present for purposes of establishing a quorum.
Pursuant to the New York Business Corporation law (the "NYBCL"), the
affirmative vote of holders of at least 66 2/3% of all of the outstanding
Common Shares is required to approve and adopt the Merger Agreement. Oracle,
which as of the date of this Proxy Statement, owns approximately 13.4% of the
outstanding Common Shares, has agreed to vote for the Merger. Although there
is no agreement to do so, the Company believes that each of the directors and
executive officers of the Company will vote his Common Shares or Common
Shares over which he controls the voting power, representing in the aggregate
less than 1% of the Common Shares entitled to vote at the Special Meeting, in
favor of approval and adoption of the Merger Agreement. Although the Merger
has not been structured to require the approval of at least a majority of the
unaffiliated shareholders of the Company, the effect of the 66 2/3% vote
required under the NYBCL is to require the vote of holders of in excess of a
majority of the Public Shares to approve and adopt the Merger Agreement.
Any holder of Common Shares on the Record Date who objects to the Merger
may dissent from the Merger and demand in writing that the Company pay to such
shareholder in cash the fair value of all of his Common Shares as of the day
prior to the voting by
(ii)
<PAGE>
the shareholders of the Company on the Merger, in lieu of receiving the Merger
Consideration under the Merger Agreement. This right to dissent and to receive
payment is available pursuant to Section 910 of the NYBCL, provided that the
shareholder strictly complies with Section 623 of the NYBCL. All references to,
and summaries of, Sections 623 and 910 of the NYBCL in this Proxy Statement are
qualified in their entirety by reference to the texts thereof which are annexed
to this Proxy Statement as Annex C hereto. See "The Merger--Dissenters' Rights."
PROXIES
Common Shares represented by properly executed proxies received at or
prior to the Special Meeting and which have not been revoked will be voted in
accordance with the instructions indicated thereon. If no instructions are
indicated on a properly executed proxy, such proxies will be voted FOR approval
and adoption of the Merger Agreement.
A shareholder who has given a proxy may revoke such proxy at any time
prior to its exercise at the Special Meeting by (i) giving written notice of
revocation to the Assistant Secretary of the Company, (ii) properly submitting
to the Company a duly executed proxy bearing a later date, or (iii) attending
the Special Meeting and voting in person. Attendance at the Special Meeting will
not in and of itself revoke a proxy. All written notices of revocation and other
communications with respect to revocation of proxies should be addressed as
follows: Datalogix International Inc., 100 Summit Lake Drive, Valhalla, NY
10595, Attention: Barbara Arnold, Assistant Secretary.
If the Special Meeting is adjourned or postponed for any purpose, at any
subsequent reconvening of the Special Meeting, all proxies will be voted in the
same manner as such proxies would have been voted at the original convening of
the meeting (except for any proxies which have theretofore effectively been
revoked or withdrawn), notwithstanding that they may have been effectively voted
on the same or any other matter at a previous meeting.
SHAREHOLDERS SHOULD NOT SEND ANY SHARE CERTIFICATES WITH THEIR PROXY
CARDS. IF THE MERGER IS CONSUMMATED, THE PROCEDURE FOR THE EXCHANGE OF
CERTIFICATES REPRESENTING COMMON SHARES WILL BE AS SET FORTH IN THIS PROXY
STATEMENT. SEE "THE MERGER -- GENERAL -- SURRENDER OF SHARE CERTIFICATES."
The cost of solicitation of the shareholders of the Company will be paid
by the Company. Such cost will include the reimbursement of banks, brokerage
firms, nominees, fiduciaries and custodians for the expenses of forwarding
solicitation materials to beneficial owners of shares. In addition to the
solicitation of proxies by use of mail, the directors, officers
(iii)
<PAGE>
and employees of the Company may solicit proxies personally or by telephone,
telegraph or facsimile transmission. Such directors, officers and employees
will not be additionally compensated for such solicitation but may be
reimbursed for out-of-pocket expenses incurred in connection therewith. In
addition, the Company has retained First National Bank of Boston to assist in
soliciting proxies and to provide materials to banks, brokerage firms,
nominees, fiduciaries and other custodians. For such services the Company
will pay to [__________________] a fee of approximately [$_______], plus
expenses.
NO PERSONS HAVE BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROXY STATEMENT IN CONNECTION
WITH THE SOLICITATION OF PROXIES MADE HEREBY, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR ANY OTHER PERSON.
All information contained in this Proxy Statement relating to Oracle,
Acquisition Sub and their affiliates (other than the Company) has been supplied
by Oracle for inclusion herein and has not been independently verified by the
Company.
The Board of Directors knows of no additional matters that will be
presented for consideration at the Special Meeting. Execution of the
accompanying proxy, however, confers on the designated proxyholders
discretionary authority to vote the Common Shares covered thereby in accordance
with their best judgment on such other business, if any, that may properly come
before, and all matters incident to the conduct of, the Special Meeting or any
adjournments or postponements thereof.
---------------------
The date of this Proxy Statement is [November] __, 1996 and the
approximate date it will first be mailed to shareholders is [November] __, 1996.
(iv)
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
----
<S> <C>
INTRODUCTION.................................................................................i
The Special Meeting..................................................................i
Record Date; Quorum; Required Vote..................................................ii
Proxies............................................................................iii
SUMMARY......................................................................................1
The Special Meeting..................................................................1
Special Factors......................................................................2
The Merger...........................................................................4
Market Prices Of And Dividends On The Common Shares..................................6
Selected Consolidated Financial Data Of The Company..................................8
The Parties.........................................................................11
SPECIAL FACTORS.............................................................................12
Background Of The Merger............................................................12
Purpose And Structure Of The Merger.................................................17
Recommendation Of The Board Of Directors Of The Company; Fairness Of The Merger.....17
Opinion Of Financial Advisor; Summary of Financial Analyses.........................19
Perspective of Oracle on the Merger.................................................24
Plans For The Company After The Merger..............................................24
Certain Effects Of The Merger.......................................................25
Interest Of Certain Persons In The Merger...........................................26
Certain U.S. Federal Income Tax Consequences........................................31
Sources and Uses of Funds...........................................................32
Initial Public Offering of Common Stock.............................................33
Regulatory Approvals................................................................33
THE MERGER..................................................................................33
General.............................................................................33
Conditions to the Merger, Waiver....................................................37
Termination.........................................................................38
Fees and Expenses...................................................................39
Representations and Warranties......................................................39
Conduct of Business Pending the Merger..............................................41
No Solicitation.....................................................................43
Access to Information...............................................................44
Legal Compliance....................................................................45
Indemnification of Directors and Officers...........................................45
Accounting Treatment................................................................45
Payment for Public Shares; Sources Of Funds.........................................45
Dissenters' Rights..................................................................46
DESCRIPTION OF CAPITAL STOCK OF DATALOGIX...................................................47
Common Stock........................................................................47
Preferred Stock.....................................................................48
Registration Rights of Certain Holders..............................................48
MARKET PRICES AND DIVIDENDS.................................................................49
SELECTED CONSOLIDATED FINANCIAL DATA OF THE COMPANY.........................................51
OWNERSHIP OF COMMON SHARES..................................................................54
Security Ownership of Certain Beneficial Owners.....................................54
TRANSACTIONS BY CERTAIN PERSONS IN COMMON SHARES............................................56
MANAGEMENT OF ORACLE, ACQUISITION SUB AND THE COMPANY.......................................56
Directors and Executive Officers of Oracle..........................................56
Directors and Executive Officers of Acquisition Sub.................................59
Directors and Executive Officers of The Company.....................................59
Certain Proceedings.................................................................62
</TABLE>
(v)
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INDEPENDENT PUBLIC ACCOUNTANTS..............................................................62
MISCELLANEOUS...............................................................................63
PROXY SOLICITATION..........................................................................63
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.............................................63
AVAILABLE INFORMATION.......................................................................64
ADDITIONAL INFORMATION......................................................................65
SHAREHOLDER PROPOSALS.......................................................................66
FINANCIAL STATEMENTS.......................................................................F-1
ANNEX A--Agreement and Plan of Merger......................................................A-1
ANNEX B--Opinion of Financial Advisor......................................................B-1
ANNEX C--Sections of the New York Business Corporation Law.................................C-1
</TABLE>
(vi)
<PAGE>
SUMMARY
The following is a brief summary of certain information contained
elsewhere in this Proxy Statement. This summary is not intended to be a complete
description of the matters covered in this Proxy Statement and is subject to and
qualified in its entirety by reference to the more detailed information
contained elsewhere in this Proxy Statement, including the Annexes hereto and
the documents incorporated by reference herein. Capitalized terms used but not
defined in this Summary shall have the meanings ascribed to them elsewhere in
this Proxy Statement. Shareholders are urged to read carefully the entire Proxy
Statement, including the Annexes.
THE SPECIAL MEETING
Time, Date and Place. A Special Meeting of shareholders of the Company
will be held on ________, [December] __, 1996 at [10:00 a.m.], local time, at
the ________________________________________ ________________________________
(the "Special Meeting").
Purpose of the Special Meeting. The purpose of the Special Meeting is to
consider and vote upon a proposal to approve and adopt the Merger Agreement, a
copy of which is attached to this Proxy Statement as Annex A. See "Introduction
- -- The Special Meeting."
Record Date; Quorum. The close of business on October __, 1996 (the
"Record Date") has been fixed as the record date for determining holders of
Common Shares entitled to vote at the Special Meeting. Each Common Share
outstanding on such date is entitled to one vote at the Special Meeting. As of
the Record Date, _____________ Common Shares were outstanding and held of record
by _______ holders. The presence, in person or by proxy, of the holders of a
majority of the Common Shares entitled to vote at the Special Meeting is
necessary to constitute a quorum for the transaction of business at the Special
Meeting. Abstentions and broker non-votes (where a broker or other holder
submits a proxy but does not have authority to vote a customer's Common Shares)
will be considered present for purposes of establishing a quorum. See
"Introduction -- Record Date; Quorum; Required Vote."
Required Vote. Pursuant to the New York Business Corporation Law (the
"NYBCL"), the affirmative vote of holders of at least 66 2/3% of all of the
Common Shares is required to approve and adopt the Merger Agreement. Oracle,
which as of the date of this Proxy Statement, owns approximately 13.4% of the
outstanding Common Shares, has agreed to vote for the Merger. Although there is
no agreement to do so, the Company believes that each of the directors and
executive officers of the Company
<PAGE>
will vote his Common Shares or Common Shares over which he controls the
voting power, representing in the aggregate less than 1% of the Common Shares
entitled to vote at the Special Meeting, in favor of approval and adoption of
the Merger Agreement. Although the Merger has not been structured to require
the approval of at least a majority of the unaffiliated shareholders of the
Company, the effect of the 66 2/3% vote required under the NYBCL is to
require the vote of holders of in excess of a majority of the Public Shares
to approve and adopt the Merger Agreement. See "Introduction -- Record Date;
Quorum; Required Vote."
Proxies. A proxy card is enclosed for use at the Special Meeting. A
proxy may be revoked at any time prior to its exercise at the Special Meeting.
Common Shares represented by properly executed proxies received at or prior to
the Special Meeting and which have not been revoked will be voted in accordance
with the instructions indicated therein. If no instructions are indicated on a
properly executed proxy, such proxy will be voted FOR approval and adoption of
the Merger Agreement. See "Introduction -- Proxies."
SPECIAL FACTORS
Background of the Merger. For a description of the events leading to the
approval and adoption of the Merger Agreement by the Company's Board of
Directors, see "Special Factors -- Background of the Merger."
Purpose and Structure of the Merger. Oracle's purpose for the Merger is
to acquire all of the remaining equity interest in the Company not currently
owned by it for the reasons described in "Special Factors -- Purpose and
Structure of the Merger." The acquisition of the equity interest represented by
the Common Shares outstanding as of the Effective Time (as hereinafter defined)
and not currently owned by Oracle or the Company (the "Public Shares") from the
holders of such shares (the "Public Shareholders") is structured as a cash
merger in order to transfer ownership of that equity interest to Oracle in a
single transaction and provides the Public Shareholders with prompt payment in
cash in exchange for the Public Shares. See "Special Factors -- Purpose and
Structure of the Merger."
Recommendation of the Board of Directors; Fairness of the Merger. The
Board of Directors of the Company (the "Board of Directors") concluded that the
terms of the Merger are fair to, and in the best interests of, the Public
Shareholders. Accordingly, the Board of Directors has unanimously approved and
adopted the Merger Agreement. The Board of Directors recommends a vote FOR
approval and adoption of the Merger Agreement. For a discussion of the factors
considered by the Board of Directors in making its recommendation, see "Special
Factors -- Recommendation
-2-
<PAGE>
of the Board of Directors of the Company; Fairness of the Merger."
Opinion of Financial Advisor. Robertson Stephens & Company LLC
("Robertson Stephens") delivered its oral opinion to the Board of Directors
on September 19, 1996, confirmed in writing by a written opinion dated
September 23, 1996, to the effect that, as of such dates, the consideration
payable in the Merger is fair, from a financial point of view, to Datalogix
and its shareholders. The full text of the written opinion of Robertson
Stephens, which sets forth assumptions made, matters considered and
limitations on the review undertaken in connection with the opinion, is
attached hereto as Annex B and is incorporated herein by reference. Holders
of Public Shares are urged to, and should, read such opinion in its entirety.
See "Special Factors -- Opinion of Financial Advisor; Summary of Financial
Analyses."
Interest of Certain Persons in the Merger. In considering the
recommendation of the Board of Directors with respect to the Merger, the Public
Shareholders should be aware that certain officers and directors have certain
interests summarized below that present actual or potential conflicts of
interest in connection with the Merger. For a more detailed discussion of such
interests, see "Special Factors -- Interest of Certain Persons in the Merger."
The Board of Directors was aware of potential or actual conflicts of interest
and considered them along with other matters described under "Special Factors --
Recommendation of the Board of Directors of the Company; Fairness of the
Merger."
As of the date of this Proxy Statement, Oracle owned an aggregate of
1,566,287 Common Shares, representing approximately 13.4% of the outstanding
Common Shares on that date. As of September 30, 1996, the current directors
and executive officers of the Company beneficially owned an aggregate of
439,541 Public Shares (including options to acquire Common Shares),
constituting less than 4% of all Common Shares beneficially owned. See
"Ownership of Common Shares -- Security Ownership of Certain Beneficial
Owners."
For a description of current relationships and certain transactions
between Oracle and the Company, see "Special Factors -- Interest of Certain
Persons in the Merger." For a discussion of certain agreements by Oracle with
respect to indemnification of directors and officers of the Company, see "The
Merger -- Indemnification of Directors and Officers."
Certain Effects of the Merger. Upon consummation of the Merger, each
Public Share, other than shares as to which dissenters' rights have been
perfected under the NYBCL ("Dissenting Shares"), will be converted into the
right to
-3-
<PAGE>
receive $8.00 in cash, without interest. The Public Shareholders will cease to
have any ownership interest in the Company or rights as shareholders of the
Company. The Public Shareholders will no longer benefit from any increases in
the value of the Company and will no longer bear the risk of any decreases in
value of the Company. See "Special Factors -- Certain Effects of the Merger."
Following the Merger, Oracle, which currently owns approximately 13.4%
of the outstanding Common Shares, will own 100% of the surviving corporation's
outstanding Common Shares. Oracle will have complete control over the management
and conduct of the Company's business, all income generated by the Company and
any future increase in the Company's value. Similarly, Oracle will also bear the
risk of any losses incurred in the operation of the Company and any decrease in
the value of the Company.
As a result of the Merger, the Company will be privately held and
there will be no public market for the Common Shares. Upon consummation of
the Merger, the Common Shares will cease to be quoted on the Nasdaq National
Market System, the registration of the Common Shares under the Exchange Act
will be terminated and the Company will cease filing reports with the
Commission. Moreover, the Company will 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 will be
relieved of the reporting requirements and restrictions on insider trading
under Section 16 of the Exchange Act. Accordingly, less information will be
required to be made publicly available than presently is the case. See
"Special Factors -- Certain Effects of the Merger."
Certain U.S. Federal Income Tax Consequences. The receipt of cash for
Public Shares pursuant to the Merger will be a taxable transaction for U.S.
federal income tax purposes and may be a taxable transaction for foreign, state
and local income tax purposes as well. Public Shareholders should consult their
own tax advisors regarding the U.S. federal income tax consequences of the
Merger, as well as any tax consequences under the laws of any state or other
jurisdiction. The Company will not recognize any gain or loss as a result of the
Merger for U.S. federal income tax purposes. See "Special Factors -- Certain
Federal Income Tax Consequences."
THE MERGER
General. Upon consummation of the Merger, Acquisition Sub will be
merged with and into the Company and the Company will be the surviving
corporation (the "Surviving Corporation"). The Surviving Corporation will
succeed to all the rights and
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<PAGE>
obligations of the Company and Acquisition Sub. See "The Merger -- General."
Effective Time of Merger. Pursuant to the Merger Agreement, the
Effective Time will occur upon the filing of a certificate of merger with the
Delaware Secretary of State and by the New York Department of State. See "The
Merger -- General -- Effective Time of Merger."
Treatment of Shares in the Merger. At the Effective Time: (a) each
Common Share outstanding immediately prior to the Effective Time, except for (i)
Common Shares then owned by Oracle, (ii) Common Shares then owned by the Company
and (iii) Dissenting Shares, shall be converted into the right to receive $8.00
in cash, payable to the holder thereof, without interest thereon, upon surrender
of the certificate representing such Common Share and (b) each Common Share
outstanding immediately prior to the Effective Time which is then owned by
Oracle 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.
Each Acquisition Sub common share 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
non-assessable common share of the Surviving Corporation. See "The Merger --
General -- Treatment of Shares in the Merger" and "-- Dissenters' Rights."
Surrender of Share Certificates. Promptly after the Effective Time, the
Surviving Corporation shall cause [The First National Bank of Boston], as Paying
Agent (the "Paying Agent"), to mail to each holder of record as of the Effective
Time (other than Oracle) of an outstanding certificate or certificates for
Common Shares, a letter of transmittal and instructions for use in effecting the
surrender of such certificates for payment in accordance with the Merger
Agreement. Upon surrender to the Paying Agent of a certificate, together with a
duly executed letter of transmittal, the holder thereof shall be entitled to
receive cash in an amount equal to the product of the number of Common Shares
represented by such certificate and $8.00 in cash, without interest thereon (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 Common Shares owned by Oracle
and certificates representing Dissenting Shares), shall represent for all
purposes solely the right to receive the Merger Consideration multiplied by the
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number of Common Shares evidenced by such certificate. See "The Merger --
General -- Exchange of Share Certificates."
SHAREHOLDERS OF THE COMPANY SHOULD NOT SEND ANY SHARE CERTIFICATES WITH
THEIR PROXY CARDS. TRANSMITTAL MATERIALS AND INSTRUCTIONS RELATING TO STOCK
CERTIFICATES WILL BE MAILED TO SHAREHOLDERS AS SOON AS PRACTICABLE AFTER THE
EFFECTIVE TIME. SEE "THE MERGER."
Conditions to the Merger. The obligations of the parties to consummate
the Merger are subject to the approval of the Merger Agreement by the
shareholders of the Company, and compliance with other covenants and conditions.
See "The Merger -- Conditions to the Merger, Waiver."
Sources of Funds. It is currently expected that approximately $81
million will be required to pay the Merger Consideration to the Public
Shareholders (assuming no such holder exercises dissenters' rights) and
approximately $665,000 will be required to pay the expenses of Oracle and
Acquisition Sub in connection with the Merger, and that such funds will be
furnished from available general funds of Oracle. It is currently expected
that approximately _________________ will be required to pay the expenses of
the Company and that such funds will be furnished from available general
funds of the Company. See "The Merger -- Payment of Public Shares; Sources of
Funds" and "Special Factors -- Fees and Expenses."
Accounting Treatment. The Merger will be accounted for as a "purchase"
as such term is used under generally accepted accounting principles for
accounting and financial reporting purposes. See "The Merger -- Accounting
Treatment."
Dissenters' Rights. In connection with the Merger, the Public
Shareholders will be entitled to seek payment in cash of the fair value of their
Common Shares under Sections 623 and 910 of the NYBCL, subject to their
satisfaction of the conditions for dissenters' rights established by Sections
623. Sections 623 and 910 are set forth in full in Annex C hereto. Any deviation
from the requirements of Section 623 may result in a forfeiture of appraisal
rights. See "The Merger -- Dissenters' Rights."
MARKET PRICES OF AND DIVIDENDS ON THE COMMON SHARES
The Common Shares are traded on the Nasdaq National Market System under
the symbol "DLGX."
The following table sets forth, for the fiscal periods indicated, the
high and low closing sales prices per Common Share, as quoted on the Nasdaq
National Market System:
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<TABLE>
<CAPTION>
HIGH LOW
-------- --------
<S> <C> <C>
1995:
Fourth Quarter (commencing June 15,
1995)........................................ $25 1/4 $23 5/8
1996:
First Quarter................................... $26 $14 1/4
Second Quarter.................................. 16 8 5/8
Third Quarter................................... 16 10
Fourth Quarter.................................. 9 3/4 6 7/8
1997:
First Quarter................................... $ 8 $ 4 3/8
Second Quarter (through November __,
1996)........................................
</TABLE>
On September 23, 1996, the day before the Merger Agreement was
publicly announced, the closing sales price of the Common Shares on the
Nasdaq National Market System was $6.25 per share. On November __, 1996, the
closing price of the Common Shares on the Nasdaq National Market System was
$_____ per share. HOLDERS OF COMMON SHARES ARE URGED TO OBTAIN A CURRENT
MARKET QUOTATION FOR THEIR SHARES.
The Company has never paid a cash dividend on the Common Shares and does not
anticipate paying one in the foreseeable future.
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SELECTED CONSOLIDATED FINANCIAL DATA OF THE COMPANY
Certain selected consolidated historical financial data of the
Company is set forth below and under "Selected Consolidated Financial Data of
the Company." The selected consolidated financial data should be read in
conjunction with the Consolidated Financial Statements of the Company and
related Notes included elsewhere in this Proxy Statement, and with other
financial information incorporated by reference into this Proxy Statement.
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<PAGE>
<TABLE>
<CAPTION>
FOR THE FISCAL YEARS ENDED JUNE 30,
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
(IN THOUSANDS, EXCEPT FOR PER SHARE DATA AND RATIOS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
License fees........................... $ 23,515 $ 26,852 $ 14,189 $ 8,106 $ 6,035
Services............................... 25,668 16,326 10,559 9,978 9,384
---------- ------ ------ ----- -----
Total revenues....................... 49,183 43,178 24,748 18,084 15,419
---------- ------ ------ ------ ------
Operating expenses:
Cost of license fees................... 7,862 5,618 2,077 1,975 950
Cost of services....................... 18,109 10,334 6,024 6,543 6,251
Sales and marketing.................... 16,418 13,670 8,589 8,551 9,563
Research and development............... 9,386 6,271 4,554 7,308 4,342
General and administrative 7,218 4,433 2,097 2,498 2,718
Nonrecurring item (1).................. -- -- -- -- 5,291
---------- ------ ------ ------ ------
Total operating expenses............ 58,993 40,326 23,341 26,875 29,115
---------- ------ ------ ------ ------
Income (loss) from operations........... (9,810) 2,852 1,407 (8,791) (13,696)
Interest income (expense), net............ 1,828 73 (92) (177) (54)
---------- ------ ------ ------ ------
Income (loss) before taxes................ (7,982) 2,925 1,315 (8,968) (13,750)
Provision (benefit) for income taxes (2).. 50 (2,405) -- -- --
---------- ---------- --------- -------- ---------
Net income (loss)......................... $ (8,032) $ 5,330 $ 1,315 $ (8,968) $ (13,750)
=========== =========== ========== ========== ===========
Earnings (loss) per share................. $ (0.70) $ 0.59 $ 0.16
============ =========== ===========
Weighted average number of common and
common equivalent shares outstanding (3)
11,426 9,048 8,313
========== ========== =========
Ratio of earnings to fixed charges........ (A) 6.9x
---------- ----------
Book value per share...................... $ 3.70
</TABLE>
<TABLE>
<CAPTION>
AS OF JUNE 30,
-------------------------------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................. $34,019 $43,762 $ 4,050 $ 4,981 $ 609
Working capital (deficiency).............. 32,336 44,795 312 42 (10,969)
Total assets.............................. 57,904 65,051 17,596 15,715 12,626
Total assets less deferred research and
development charges.................... 55,021 62,769 15,746 14,166 6,001
Long-term liabilities..................... 269 551 1,865 2,815 1,289
Redeemable convertible preferred stock.... -- -- 28,477 28,477 5,014
Shareholders' equity (deficit)............ 41,275 49,291 (26,882) (28,145) (13,107)
</TABLE>
The above selected historical consolidated financial information
of the Company is qualified by reference to and should be read in conjunction
with the consolidated financial statements and notes thereto included elsewhere
herein and with "Management's Discussion and Analysis of Financial Condition and
Results of Operations" included in the Company's Annual Report on Form 10-K for
the year ended June 30, 1996, which is incorporated herein by reference. In
fiscal 1996, the Company restated its first and second quarters and made certain
adjustments of approximately $5,900 in the fourth quarter. See Note 12 of notes
to consolidated financial statements.
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<PAGE>
(1) In fiscal 1992, the Company recorded a charge which related to costs
associated with a reduction in the Company's workforce, costs related to
redundancies in certain management positions and certain nonrecurring
costs attendant to the development and introduction of GEMMS. The charge
includes $1,224 of severance and related costs for workforce reductions,
$3,100 in estimated settlement costs with customers and $967 in other
product related costs. All costs but the settlement costs resulted in cash
outlays in fiscal 1993. The matters for which settlement costs were
estimated and provided for in fiscal 1992 were substantially settled in
fiscal 1993 and 1994. Payment terms associated with settlement costs
varied, extending as long as three years. As of June 30, 1996 there were
no obligations outstanding for settlement of these costs.
(2) See Note 10 of notes to consolidated financial statements.
(3) See Note 2 of notes to consolidated financial statements.
(A) As a result of the loss incurred for the fiscal year ended June 30, 1996,
earnings were insufficient to cover fixed charges in the amount of $545
during such period.
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<PAGE>
THE PARTIES
Datalogix.
Incorporated in New York in 1981, Datalogix provides open, client/server
software for managing the manufacturing, logistics, and financial operations of
process manufacturing companies worldwide. The Company provides two
comprehensive software solutions, GEMMS and CIMPRO, which perform
mission-critical functions for process manufacturing companies. GEMMS (Global
Enterprise Manufacturing Management System) and CIMPRO (Computer Integrated
Manufacturing for PROcess) each consists of a series of integrated applications
modules that can be combined to meet customer-specific needs. These modules
include, among others, Formula Management, Production Management, Production
Scheduling, Inventory Management, Product Costing, Laboratory Management,
Regulatory Management and financial management applications. The Company also
provides a broad range of client services including implementation and
consulting services, education, training and customer support. The Company's
products are used by over 350 customers worldwide that manufacture consumer
packaged goods (food, beverage, health and beauty aids) and industrial products
(chemical, pharmaceutical and petroleum), including many of the world's most
successful process manufacturing companies.
Oracle.
Oracle is the world's leading independent supplier of software for
information management. In 1979, Oracle introduced the first commercially
available relational database management system for the storing, manipulating
and sharing of information. Oracle's primary information management products can
be categorized in three primary product families: Server Technologies
(distributed database servers, connectivity products and gateways), Application
Development and Business Intelligence Tools (application design, application
development, and data access tools) and Client Server Business Applications
(modules for finance and administration, discrete manufacturing, distribution
and human resources). Oracle's principal product is a multimedia, relational
database management system ("DBMS") that runs on a broad range of computers,
including massively parallel, clustered, symmetrical multi-processing,
minicomputers, workstations, personal computers and laptop computers and over 85
different operating systems, primarily UNIX, Digital, VAX, Windows NT and
Netware. Oracle7(R) relational DBMS is a key component of Oracle(R) Universal
Server(R), a database server for relational video, audio, text, messaging,
spatial and other types of data. Oracle's Application Development and Business
Intelligence Tools and Client Server Business Applications also run on a broad
range of operating systems including UNIX, Windows and Windows NT. Oracle also
offers consulting, education, support and systems integration services in
support of its customers' use of Oracle's software products.
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<PAGE>
Oracle was incorporated on October 29, 1986 in connection with a
reincorporation of Oracle's predecessor in Delaware, which was completed on
March 12, 1987. Oracle's primary operating subsidiary, Oracle Corporation, a
California corporation, was incorporated in June 1977. In May 1995, Oracle
Corporation was merged into Oracle Systems Corporation, a Delaware corporation,
whose name was changed to Oracle Corporation. Unless the context otherwise
requires, "Oracle" refers to Oracle Corporation, its predecessor and its
subsidiaries. Oracle maintains its executive offices and principal facilities at
500 Oracle Parkway, Redwood Shores, California 94065. Its telephone number is
(415) 506-7000.
Delphi Acquisition Corporation.
Acquisition Sub is a Delaware corporation organized on September 20,
1996 in connection with the Merger. Acquisition Sub's principal executive
offices are located at 500 Oracle Parkway, Redwood Shores, California 94065.
Oracle is the sole stockholder of Acquisition Sub. The sole director of
Acquisition Sub is David J. Roux. The executive officers of Acquisition Sub
are David J. Roux and Thomas Theodores. Mr. Roux's principal occupation is to
serve as the Executive Vice President, Corporate Development of Oracle. Mr.
Theodores' principal occupation is to serve as Vice President, Corporate
Legal, and Assistant Secretary of Oracle. For additional information
regarding Mr. Roux and Mr. Theodores, see the section entitled "Management of
Oracle, Acquisition Sub and the Company -- Directors and Executive Officers
of Oracle"; and "-- Directors and Officers of Acquisition Sub."
Prior to the Merger, Acquisition Sub will not have any significant
assets or liabilities (other than its rights and obligations in connection with
the Merger Agreement) and will not engage in any activities other than those
incident to its formation and the transactions contemplated by the Merger
Agreement. Pursuant to the terms of the Merger Agreement, at the consummation of
the Merger, Acquisition Sub will be merged with and into the Company, and
Acquisition Sub will cease to exist.
SPECIAL FACTORS
BACKGROUND OF THE MERGER
The first contacts between the Company and Oracle arose in the context
of exploring a relationship between the Company and Oracle for purposes of
marketing and distributing the Company's products. Discussions in respect
thereof took place between representatives of both companies commencing in May
1994. On September 6, 1994, the Company entered into formal contractual
arrangements with Oracle pursuant to which Oracle became authorized to market
the Company's GEMMS product under the name
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<PAGE>
"Oracle GEMMS" as Oracle's preferred solution for process manufacturing
software. Oracle believed that the Company's GEMMS product complemented
Oracle's discrete manufacturing software products to provide a more complete
offering to Oracle's customers. Concurrently therewith, the Company sold
Oracle shares of its Preferred Stock which 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 Common Stock at $3.75 per share of Common Stock. On
the same date, the Company sold to Oracle for $1,000 a warrant to purchase
890,426 shares (as adjusted to reflect the Stock Split) of Common Stock with
an exercise price equal to $5.62 per share.
On June 15, 1995, the Preferred Stock of the Company held by Oracle was
automatically converted into Common Stock, and Oracle exercised its warrant
and sold 230,415 shares of Common Stock as a selling shareholder in the
Company's initial public offering of Common Stock.
In the fall of 1995, representatives of Robertson Stephens had a number
of conversations with senior management concerning strategic alternatives
Datalogix might consider pursuing, including potential acquisitions. Such
discussions were general in nature and did not result in any formal actions or
consideration by Datalogix's Board of Directors.
On March 27, 1996, representatives of Robertson Stephens met with
Richard Giordanella, the Company's then President, Chief Executive Officer and
Chairman of the Board, to discuss strategic alternatives to the Company's
business operations. At this meeting, the participants explored potential
acquisitions, either of or by the Company, as well as business combinations and
strategic alliances. These discussions focused on the advantages to the Company
that would exist if the Company could offer a total software solution rather
than software that addressed only a part of a customer's software needs.
On May 20, 1996, Mr. Giordanella signed a letter on behalf of
Datalogix engaging Robertson Stephens to provide financial advisory and
investment banking services to the Company in connection with a possible sale
of, or business combination or arrangement involving, the Company or some
portion of its assets. In light of the termination of Mr. Giordanella's
employment in July 1996, Raymond Sozzi, the Company's current President,
Chief Operating Officer and Acting Chief Executive Officer, signed a similar
letter of engagement dated August 23, 1996.
On May 30, 1996, Robertson Stephens presented to the Company's Board
of Directors an assessment of potential partners and an overview of tactical
considerations in pursuing the sale of the Company. At the request of the
Board of Directors, Robertson Stephens began to contact a select group of
potential partners to ascertain their interest in a strategic combination.
Robertson Stephens, after consulting with the Board of Directors, contacted
other potential partners before approaching Oracle. This
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<PAGE>
approach was deliberate and intended to provide the Board of Directors with
detailed information in respect of market interest prior to pursuing discussions
with Oracle which, at the time, the Board of Directors and Robertson Stephens
believed was the most viable and likely candidate for a strategic combination
with the Company given the nature of their existing contractual relationships
with each other as well as with their mutual customers. None of the discussions
during the ensuing several weeks between the Company and those potential
strategic business partners resulted either in an acceptable acquisition
proposal or a proposal for a business combination which would result in a
financial or business arrangement better than that then enjoyed by shareholders
in the Company on a stand-alone basis. Neither the Company nor Robertson
Stephens had as yet contacted Oracle about a potential strategic combination.
On August 22, 1996, David Roux, Oracle's Executive Vice President of
Corporate Development, contacted David Hathaway, a member of the Company's
Board of Directors, and indicated that there was interest on the part of
Oracle in discussing a potential acquisition of the Company. Mr. Hathaway
suggested that Mr. Roux contact Mr. Sozzi, and on August 23, 1996, Mr. Roux
contacted Mr. Sozzi to discuss a potential acquisition of the Company.
On August 28, 1996, a representative of Robertson Stephens contacted
Mr. Roux to inform him that Robertson Stephens had been retained by the
Company and that the Company wanted to continue to pursue discussions with
Oracle regarding a potential acquisition even though the Company had adopted
a shareholders rights plan on August 27, 1996. The representative of
Robertson Stephens proposed that the parties meet.
On September 5, 1996, a meeting was held at Robertson Stephens' offices
in New York City, among representatives of Robertson Stephens, Mr. Roux, Mr.
Sozzi and Mr. Hathaway, during which meeting Mr. Roux indicated that Oracle
would be interested in acquiring the Company at a price of between $7.00 and
$7.50 per share.
Immediately following the meeting with Mr. Roux, the other members of
the Board of Directors were apprised by Mr. Sozzi and representatives of
Robertson Stephens of the discussions with Oracle. On September 6, 1996, the
Board of Directors authorized representatives of Robertson Stephens to
respond to Mr. Roux's offer with a $9.50 per share counteroffer.
On September 6, 1996, Mr. Sozzi and representatives of Robertson
Stephens met with the Chairman of a potential partner and its financial
advisor to discuss the merits of a potential combination. This conversation
was general in nature and no specific proposals were made. Subsequently, a
representative of this financial advisor contacted Thomas Eddy of Robertson
Stephens and indicated that they
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<PAGE>
were not prepared to make any specific proposals at that time. Robertson
Stephens and the Board of Directors believed it was significantly more likely
that the Company could negotiate a more advantageous transaction with Oracle as
compared with this potential partner and, therefore, decided not to continue
negotiations with this potential partner. As a result, these discussions were
terminated by the Company.
On September 9, 1996, representatives of Robertson Stephens conveyed
to Mr. Roux the counteroffer of $9.50 per share. On September 12, 1996, Mr.
Roux responded that Oracle was not willing to offer more than $8.00 per share.
On September 12, 1996, the Company's Board of Directors held a meeting
by telephone conference. At the meeting, representatives of Robertson Stephens
informed the Board that they had received an offer from Mr. Roux of $8.00 per
share. Based upon this offer, the Board of Directors authorized the Company to
continue to explore the proposed terms of a potential acquisition of the Company
by Oracle and to arrange for Oracle to conduct a due diligence examination of
the Company. Robertson Stephens was also instructed to continue to determine
whether any other potential acquirors would be interested in pursuing
discussions relating to an acquisition of, or other business combination with,
the Company.
On September 13, 1996, representatives from the Company, its legal
advisors, Robertson Stephens, Oracle and its legal advisors held a telephone
conference at which possible structures of a business combination, form of
consideration, due diligence and general scheduling were discussed.
On September 14, 1996, the Board of Directors held a meeting by
telephone conference at which the Board discussed at length the relative merits
of a sale of the Company for cash as opposed to receiving the equivalent value
in shares of Oracle's common stock as of the closing of the transaction. Based
upon a number of factors, including the relatively high tax basis in the
Company's shares held by a large number of its shareholders, as well as the
desire to structure the sale of the Company in a manner that would be the most
expedient, the Board of Directors determined to pursue discussions with Oracle
that would result in a cash tender offer being made by Oracle.
On September 14, 1996, after the September 14, 1996 Board meeting,
Oracle informed Robertson Stephens and the Company's legal advisors that if it
were to make a cash tender offer it would require as a condition to that offer
that at least 90% of the Company's shareholders tender in the offer.
On September 16, 1996, a meeting was held at Oracle's offices which was
attended by Mr. Roux and Thomas Theodores, Vice President, Corporate Legal, of
Oracle, Oracle's legal advisors,
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<PAGE>
Mr. Sozzi, the Company's legal advisors and Mr. Eddy. At this meeting, Oracle
reiterated its requirement that its offer to structure the transaction as a
cash tender offer be conditioned upon a 90% tender by the Company's
shareholders. Thereafter, on that same day the Board of Directors held a
meeting by telephone conference, at which Mr. Sozzi, Robertson Stephens and
the Company's legal advisors were present, and determined that this condition
would create too much uncertainty and, therefore, a cash merger, which would
require the affirmative vote of 66 2/3% of the Company's shareholders, should
be pursued. Immediately thereafter a cash merger was proposed to Oracle and
its legal advisors by the Company and, after discussion among those parties,
Mr. Sozzi, Robertson Stephens and the Company's legal advisors, Oracle agreed
to pursue the negotiations in respect of a cash merger.
During the week of September 16, 1996, Oracle representatives commenced
an examination of the business and affairs of the Company. A draft merger
agreement, together with related documents, was prepared, circulated and
revised.
On September 19, 1996, the Board of Directors held a meeting at which
the proposed terms of the Merger were fully discussed. Robertson Stephens then
presented its detailed financial analysis of the Merger and rendered its oral
opinion to the effect that the Merger Consideration, as of September 19, 1996,
was fair, from a financial point of view, to the Company and its shareholders.
The Board of Directors next discussed at length the viability of the Company
continuing to operate in its present stand-alone capacity and concluded for a
number of reasons that the sale of the Company was the best alternative. See
"Recommendation of the Board of Directors of the Company; Fairness of the
Merger." At this point, the Board of Directors instructed its representatives to
continue negotiating with Oracle to obtain the best possible terms and
conditions for definitive documentation.
On September 21, 1996, the Board of Directors held a meeting by
telephone conference at which the Company's lawyers presented in great detail a
list of legal and business issues in respect of the proposed definitive
documentation. The Board of Directors instructed its representatives to continue
negotiations on a number of outstanding points.
On September 22, 1996, the Board of Directors held a meeting by
telephone conference at which the negotiated terms of the transaction were
presented and fully discussed. Presentations were made by Robertson Stephens and
the Company's legal representatives, and contractual issues were fully reviewed.
At the end of these presentations, and following detailed discussions among the
Board members and their financial and legal representatives, the Board of
Directors unanimously approved the Merger and the Merger Agreement subject to
confirmation on the
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<PAGE>
next day that the terms finally agreed with Oracle were substantially similar to
those presented to the Board of Directors. The Board appointed a committee of
Messrs. Barris, Hathaway and Weiler to receive a report from Mr. Sozzi and the
Company's lawyers in respect of the final terms as agreed during the course of
negotiations on September 23.
On September 23, 1996, Robertson Stephens delivered its written opinion
to the Board of Directors that the Merger Consideration, as of September 23,
1996, was fair from a financial point of view to the Company and its
shareholders. Upon receiving confirmation from Mr. Sozzi that the terms as
finally agreed with Oracle were substantially the same as those presented to the
full Board of Directors at its meeting on September 22, the committee designated
by the Board of Directors on that day approved execution of definitive
agreements.
On September 24, 1996, the Amendment to the Company's Rights Agreement
was executed by the Company and the Rights Agent thereunder, and the Merger
Agreement was executed by the Company, Oracle and Acquisition Sub. On October 8,
1996, Amendment No. 1 to the Merger Agreement clarifying certain technical
matters was executed by the Company, Oracle and Acquisition Sub.
PURPOSE AND STRUCTURE OF THE MERGER
Oracle determined to enter into discussions with the Company regarding
the acquisition of the Company in August 1996 as a result of Oracle's belief
that Oracle would benefit from its ability to control and advance the
development of the Company's products and the integration of such products into
Oracle's own product line in order to provide a more complete manufacturing
process application software solution for Oracle's customers.
The primary benefit to the Company's Public Shareholders is the
opportunity to sell all of their Common Shares at a price which represents a
substantial premium over recent trading prices. The structure of the transaction
as a cash merger provides a prompt cash payment to all holders of outstanding
Public Shares and an orderly transfer of ownership of the equity interest
represented by Public Shares to Oracle, thereby enabling the Public Shareholders
to obtain such benefit at the earliest possible time. The structure of the
Merger also ensures the acquisition by Oracle and its affiliates of all the
outstanding Public Shares.
RECOMMENDATION OF THE BOARD OF DIRECTORS OF THE COMPANY; FAIRNESS OF THE MERGER
At a meeting held on September 22, 1996, the Board of Directors
unanimously determined to approve and adopt the Merger Agreement and to
recommend to the Public Shareholders that such shareholders vote to approve and
adopt the Merger Agreement and
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<PAGE>
unanimously determined that the terms of the Merger are fair to, and in the best
interests of, the Public Shareholders. See "--Background of the Merger."
In determining to approve and adopt the Merger Agreement, and in
determining the fairness of the terms of the Merger, the Board of Directors
considered the following factors, each of which, in the Board of Directors'
view, supported the determination to recommend the Merger:
(i) the financial condition, assets, results of operations, business
and prospects of the Company, and the risks inherent in achieving those
prospects, including the belief of management of the Company, as
expressed to the Board of Directors and which the Board of Directors
found to be reasonable, that the future revenue growth and operating
performance of the Company would be subject to numerous uncertainties
due to, among other things, (1) the fact that the Company's target
market of process manufacturing companies was shifting away from focused
manufacturing "point" solutions (i.e., GEMMS) to broader, fully
integrated "supply chain management" solutions that are able to manage
information with vendors, customers and partners across the supply
chain, often on a global basis, (2) the increased complexity and breadth
of this new generation of information products favored larger systems
vendors, including Oracle, with fully integrated software solutions and
worldwide services and support, (3) the difficulties inherent in
geographic expansion, and (4) an inability to attract and retain
qualified key personnel;
(ii) the terms and conditions of the Merger Agreement, including the
amount and form of consideration and the nature of the parties'
representations, warranties, covenants and agreements;
(iii) the history of the negotiations with respect to the Merger
Consideration that, among other things, led to an increase in Oracle's
offer from between $7.00 and $7.50 to $8.00 per Share, and the belief of
the members of the Board of Directors that $8.00 per Share was the best
price that could be obtained from Oracle;
(iv) the fact that the $8.00 per share price to be received by the
Public Shareholders in the Merger represented a premium of approximately
42.0% over the reported average closing price of the Shares during the
30-trading-day period ending on September 23, 1996, the last full
trading day before the public announcement of the proposed Merger;
(v) the opinion of Robertson Stephens as to the fairness of the
$8.00 per share price to be received by the
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Public Shareholders and the analyses presented to the Board of Directors
by Robertson Stephens (see "-- Opinion of Financial Advisor; Summary of
Financial Analyses");
(vi) the stock price of the Common Shares;
(vii) the lack of other prospective candidates for a purchase,
merger or other business combination that could reasonably be
expected to result in as favorable an outcome for the Company's
Shareholders as the proposed transaction with Oracle; and
(viii) the availability of dissenters' rights under the NYBCL to
dissenting shareholders in the Merger.
In light of the number and variety of factors the Board of Directors
considered in connection with its evaluation of the Merger, the Board of
Directors did not find it practicable to assign relative weights to the
foregoing factors and, accordingly, the Board of Directors did not do so.
The Board of Directors necessarily consulted with Robertson Stephens
during the course of its work and analysis of the financial evaluation of the
Company and of the Merger. The Board of Directors believed that Robertson
Stephens' analysis was reasonable.
The Board of Directors believes that the Merger is procedurally fair
because (i) the Board of Directors consisted of disinterested directors able to
represent the interests of, and to negotiate on an arm's length basis with
Oracle on behalf of, the Public Shareholders, (ii) the Board of Directors
retained and was advised by independent legal counsel, and (iii) the Board of
Directors retained Robertson Stephens as independent financial advisor to assist
it in evaluating the Merger.
OPINION OF FINANCIAL ADVISOR; SUMMARY OF FINANCIAL ANALYSES
Datalogix retained Robertson Stephens to act as its financial advisor in
connection with the Merger and to render an opinion as to the fairness, from a
financial point of view, to Datalogix and its shareholders of the consideration
to be paid in the proposed merger. At the September 19, 1996 meeting of
Datalogix's Board of Directors, Robertson Stephens delivered an oral opinion,
which was subsequently confirmed in writing by a written opinion, dated
September 23, 1996, that as of such date and based on the matters described
therein, the Merger Consideration was fair, from a financial point of view, to
Datalogix and its shareholders.
THE COMPLETE TEXT OF THE WRITTEN OPINION OF ROBERTSON STEPHENS, DATED
SEPTEMBER 23, 1996, WHICH SETS FORTH THE ASSUMPTIONS MADE, PROCEDURES FOLLOWED,
MATTERS CONSIDERED AND SCOPE OF THE REVIEW UNDERTAKEN BY ROBERTSON STEPHENS IN
RENDERING ITS OPINION, IS ATTACHED HERETO AS ANNEX B. DATALOGIX
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SHAREHOLDERS ARE URGED TO READ ROBERTSON STEPHENS' OPINION IN ITS ENTIRETY.
Robertson Stephens did not recommend to the Datalogix Board of Directors
that any specific amount of consideration constituted the appropriate
consideration for the Merger. No limitations were imposed by the Datalogix Board
of Directors on Robertson Stephens with respect to the investigations made or
procedures followed by it in rendering its opinion. Robertson Stephens' opinion
to the Datalogix Board addresses only the fairness from a financial point of
view of the consideration to be paid in the merger, and does not constitute a
recommendation to any Datalogix shareholder as to how such shareholder should
vote at the Special Meeting. Robertson Stephens expressed no opinion as to the
tax consequences of the Merger, and Robertson Stephens' opinion as to the
fairness of the consideration to be paid does not take into account the
particular tax status or position of any Datalogix shareholder. In rendering its
opinion, Robertson Stephens was not engaged as an agent or fiduciary of
Datalogix shareholders or any other third party. The summary of the opinion of
Robertson Stephens set forth in this Proxy Statement is qualified in its
entirety by reference to the full text of such opinion.
In connection with the preparation of its opinion dated September 23,
1996, Robertson Stephens, among other things: (i) reviewed certain financial
information of Datalogix furnished to Robertson Stephens by Datalogix, including
certain internal financial analyses and forecasts prepared by the management of
Datalogix; (ii) reviewed certain publicly available information; (iii) held
discussions with the management of Datalogix concerning the past and current
business operations, financial condition and future prospects of Datalogix,
independently and combined; (iv) reviewed the Merger Agreement; (v) reviewed the
stock price and trading history of Datalogix; (vi) reviewed the valuations of
publicly traded companies which Robertson Stephens deemed comparable to
Datalogix; (vii) compared the financial terms of the Merger with other
transactions which Robertson Stephens deemed relevant; (viii) prepared a
discounted cash flow analysis of Datalogix; (ix) made such other studies and
inquiries, and reviewed such other data, as Robertson Stephens deemed relevant.
The following paragraphs summarize the material quantitative and
qualitative analyses performed by Robertson Stephens in arriving at its opinion
and all such analyses reviewed with the Datalogix Board of Directors but does
not purport to be a complete description of the analyses performed by Robertson
Stephens. Robertson Stephens used information on the financial condition of
Datalogix as of a date or dates shortly before the Merger Agreement was executed
on September 24, 1996 and stock price information through the close of the
market on September 20, 1996.
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Stock Price and Trading Analysis. Robertson Stephens reviewed the
trading activity, including share price and trading volume, of Datalogix Common
Stock for the period September 21, 1995 to September 20, 1996. Robertson
Stephens noted that, since September 21, 1995, the daily closing prices of
Datalogix Common Stock ranged from a high of $20.50 on September 22, 1995 to a
low of $4.375 on August 5, 1996. Robertson Stephens also noted that the average
closing price for the 30 calendar days, 60 calendar days, 90 calendar days and
120 calendar days up to and including September 20, 1996 was $5.636, $5.654,
$6.168 and $6.831, respectively.
Comparable Company Analysis. Robertson Stephens compared certain
financial data and multiples of historical and projected income statement
parameters for the twelve months ended June 30, 1996 and the projected 1996 and
1997 calendar years accorded to companies Robertson Stephens deemed comparable
to Datalogix. These companies included: Marcam Corporation, Ross Systems, Inc.
and System Software Associates, Inc. (the "Comparable Companies"). Financial
data compared included equity value, aggregate value (equity value less cash and
equivalents plus debt), revenues, operating income, net income, earnings per
share, operating margin, net margin and projected earnings per share growth rate
as reported by Robertson, Stephens & Company Institutional Research and third
party sources. Multiples compared included aggregate value to revenue.
Based on aggregate value to revenue multiples of approximately 0.7 to
1.4x for the twelve months ended June 30, 1996, approximately 1.0 to 1.6x for
projected calendar 1996 and approximately 0.9 to 1.3x for projected calendar
1997 for the Comparable Companies and after adjusting for Datalogix's net cash
and equivalents, Datalogix's public market implied equity valuation ranged from
$67 million to $102 million, or $5.50 to $8.39 per share.
Robertson Stephens also valued Datalogix by applying a 0% and 30%
acquisition premium to the above noted two public market valuations derived from
the Comparable Companies. Based on those premiums, the public market implied
equity valuation based on aggregate value to revenue multiples ranged from $67
million to $132 million, or $5.50 to $10.91 per share.
Precedent Transaction Analysis. Robertson Stephens analyzed publicly
available information for selected pending or completed acquisitions and mergers
Robertson Stephens deemed comparable to the Merger. In examining these
transactions, Robertson Stephens analyzed certain financial parameters of the
acquired company relative to the consideration offered. Financial indicators
compared included the equity consideration plus net debt assumed ("aggregate
consideration") to latest twelve months revenue, equity consideration to latest
twelve months net income, premiums implied by the offer price per share compared
to one day and one
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week prior to announcement, latest twelve months revenue growth and latest
twelve months operating margin. The acquisitions reviewed were: Open Environment
Corporation/Borland International, Inc.; Cray Research, Inc./Silicon Graphics,
Inc.; Hogan Systems, Inc./The Continuum Company, Inc.; Convex Computer
Corporation/Hewlett-Packard Company; Saber Software Corporation/McAfee
Associates, Inc.; KnowledgeWare, Inc./Sterling Software, Inc.; Aldus
Corporation/Adobe Systems; ChipSoft, Inc./Intuit, Inc.; and MIPS Computer
Systems/Silicon Graphics, Inc. (the "Precedent Transactions").
Based on aggregate consideration offered to latest twelve months revenue
multiples of approximately 1.1 to 1.8x for the Precedent Transactions,
Datalogix's implied equity value ranged from $86 million to $118 million, or
$7.05 to $9.75 per share.
Discounted Cash Flow Analysis Related to Datalogix. Robertson Stephens
performed a discounted cash flow analysis to estimate the present value of the
stand-alone unlevered (before interest expense) after-tax cash flows of
Datalogix financial projections prepared by the management of Datalogix.
Robertson Stephens first discounted the projected, unlevered after-tax cash
flows through 2001 using a range of discount rates from 15% to 25%. Datalogix's
unlevered after-tax cash-flows were calculated as the after-tax operating
earnings of Datalogix adjusted for the add-back of non-cash expenses and the
deduction of uses of cash not reflected in the income statement. Robertson
Stephens then added to the present value of the cash flows the terminal value of
Datalogix in the fiscal year 2001, discounted back at the same discount rate.
The terminal value was computed by multiplying Datalogix's projected operating
income in the fiscal year 2001 by terminal multiples ranging from 15.0 to 25.0x.
The discounted cash flow valuation indicated implied equity valuations from $53
million to $85 million, or $4.37 to $6.97 per share.
The preparation of fairness opinions involves various determinations as
to the most appropriate and relevant quantitative and qualitative methods of
financial analyses and the application of those methods to the particular
circumstances; therefore, such opinions are not readily susceptible to summary
description. In arriving at its opinion, Robertson Stephens did not attribute
any particular weight to any analysis or factor considered by it, but rather
made qualitative judgments as to the significance and relevance of each analysis
and factor. Accordingly, Robertson Stephens believes its analyses must be
considered as a whole and that considering any portion of such analyses and
current factors could create a misleading or incomplete view of the process
underlying the preparation of fairness opinions. In its analyses, Robertson
Stephens made numerous assumptions with respect to industry performance, general
business and other conditions and matters, many of which are beyond the control
of Datalogix and Oracle. Any estimates contained in these analyses are not
necessarily indicative of
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actual values or predictive of future results or values, which may be
significantly more or less favorable than as set forth therein. In addition,
analyses relating to the value of businesses do not purport to be appraisals or
to reflect the prices at which businesses actually may be sold.
Based on past activities, Robertson Stephens has a substantial degree of
familiarity with Datalogix. In addition, in the course of its engagement,
Robertson Stephens conducted further investigation of Datalogix. In arriving at
its opinion, however, Robertson Stephens did not independently verify any of the
foregoing information and relied on all such information being complete and
accurate in all material respects. Furthermore, Robertson Stephens did not
obtain any independent appraisal of the properties or assets of Datalogix. With
respect to the financial and operating forecasts (and the assumptions and bases
therefor), estimates and analyses provided to Robertson Stephens by Datalogix,
Robertson Stephens assumed that such projections, estimates and analyses were
reasonably prepared in good faith and represent the best currently available
estimates and judgments of Datalogix management as to the future financial
performance of Datalogix. Robertson Stephens noted, among other things, that its
opinion is necessarily based upon market, economic and other conditions existing
as of the date of the opinion, and information available to Robertson Stephens
as of the date thereof.
Robertson Stephens was retained based on Robertson Stephens' experience
as a financial advisor in connection with mergers and acquisitions and in
securities valuations generally as well as Robertson Stephens' investment
banking relationship and familiarity with Datalogix. Robertson Stephens has
provided financial advisory and investment banking services to Datalogix from
time to time, including acting as lead underwriter for the initial public
offering of Datalogix. Robertson Stephens was compensated for such services in
the form of underwriting discounts and commissions. In addition, Robertson
Stephens maintains a market in shares of Datalogix Common Stock.
Robertson Stephens, as part of its investment banking business, is
continually engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings, competitive
bidding, capital markets activities, private placements, and valuations for
estate, corporate and other purposes.
Datalogix initially engaged Robertson Stephens by means of an engagement
letter dated May 20, 1996, and subsequently executed a second engagement letter,
dated August 23, 1996. The August 23rd letter provides that, for its services,
Robertson Stephens is to be paid a transaction fee equal to $450,000 plus one
percent (1.0%) of the aggregate transaction value in excess of $10 million for
acting as financial advisor in connection with
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the Merger, including the rendering of its fairness opinion. Payment of $450,000
was due and payable upon delivery of Robertson Stephens' fairness opinion to the
Datalogix Board of Directors and execution of the Merger Agreement. The
remainder is due and payable upon the consummation of the Merger. Datalogix has
also agreed to indemnify Robertson Stephens for certain liabilities relating to
or arising out of services provided by Robertson Stephens as financial advisor
to Datalogix.
PERSPECTIVE OF ORACLE ON THE MERGER
The determination of the $8.00 per Common Share merger consideration
resulted from extensive arms-length negotiation between the Company and Oracle
and their respective representatives. See "-- Background of the Merger." As part
of the negotiation process, Oracle offered to acquire the Company at a price of
$8.00 per Common Share after calculating the average closing price of the
Company's Common Stock on the Nasdaq National Market System for the thirty (30)
consecutive trading days prior to September 10, 1996 (two days prior to the date
Oracle offered to acquire the Company for $8.00 per Share), which average
equaled $5.41, and by adding an approximate 50% premium. In addition, Oracle
analyzed the potential effect of the Merger on the projected combined
consolidated income statement of Oracle and the Company for Oracle's 1997, 1998
and 1999 fiscal years, giving effect to possible synergies in the Merger. Based
on this analysis Oracle concluded that, except for one-time write-offs in
connection with the Merger, the Merger would not increase or decrease, in any
material respect, Oracle's projected earnings per share for its 1997, 1998 and
1999 fiscal years.
Oracle did not undertake any formal or informal evaluation of its own
as to the fairness of the Merger Consideration to the Datalogix shareholders.
Based solely upon the opinion of Robertson Stephens, the financial advisor to
the Datalogix Board of Directors as to the fairness of the Merger
Consideration to Datalogix and its shareholders from a financial point of
view, and the determination by the Datalogix Board of Directors that the
Merger is fair to, and in the best interests of the Public Shareholders,
Oracle believes that the Merger Consideration is fair to the Public
Shareholders from a financial point of view. Oracle did not attach specific
weights to any factors in reaching its belief as to fairness.
PLANS FOR THE COMPANY AFTER THE MERGER
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Oracle anticipates that, after the Merger, the development, sales,
marketing and certain administrative functions of the Company will be
integrated into Oracle's existing corporate structure, which would result in
the closing of the Company's existing branch locations. Oracle expects to
achieve operating cost savings through the consolidation of such operations
and the elimination of duplicative expenses. At this time Oracle does not
intend to close the Company's corporate headquarters located in Valhalla, New
York. Effective upon consummation of the Merger, the director of Acquisition
Sub shall be the initial director of the surviving corporation. Management of
Oracle may cause the Company to make additional changes as are deemed
appropriate, such as the transfer of assets from the Company to Oracle or the
merger of the Company into Oracle or a subsidiary of Oracle, and intends to
continue to review the Company and its assets, businesses, operations,
properties, policies, corporate structure, capitalization and management and
consider if any changes would be desirable in light of the circumstances then
existing. In addition, Oracle intends to continue to review the business of
the Company and identify synergies and cost savings. See "-- Interest of
Certain Persons in the Merger."
The employee benefits of the Company's employees will be maintained at
levels similar to those provided under Oracle's benefit plans. The Company's
stock option plans and purchase plan, will be terminated. All of the outstanding
options issued under the Company's stock option plans will be assumed by Oracle.
See "The Merger -- General -- Treatment of Employee Stock Plans" for detail
regarding the terms of the assumed options.
CERTAIN EFFECTS OF THE MERGER
As a result of the Merger, the entire equity interest of the Company
will be owned by Oracle. Therefore, following the Merger, the Public
Shareholders will no longer benefit from any increases in the value of the
Company and will no longer bear the risk of any decreases in the value of the
Company. Following the Merger, Oracle and its affiliates will own 100% of the
Company and will have complete control over the management and conduct of the
Company's business, all income generated by the Company and any future increase
in the Company's value. Similarly, Oracle will also bear the risk of any losses
incurred in the operation of the Company and any decrease in the value of the
Company.
The Public Shareholders will have no continuing interest in the
Company following the Merger. As a result, the Common Shares will no longer
meet the requirements of the Nasdaq National Market System for continued
listing and will, therefore, be deleted from the Nasdaq National Market
System.
According to published guidelines, the Common Shares will no longer be
eligible for listing on the Nasdaq National Market System
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when, among other things, the number of record holders of at least 100 Common
Shares falls below 1,200, the number of publicly held Common shares (exclusive
of holdings of officers, directors and their families and other concentrated
holdings of 10% or more ("Nasdaq National Market Excluded Holdings")) falls
below 600,000 or the aggregate market value of publicly held Common Shares
(exclusive of Nasdaq National Market Excluded Holdings) falls below $5,000,000.
The Common Shares currently constitute "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which has the effect, among other things, of allowing
brokers to extend credit on the collateral of the Common Shares. As a result of
the Merger, the Common Shares will no longer constitute "margin securities" for
purposes of the margin regulations of the Federal Reserve Board and therefore
will no longer constitute eligible collateral for credit extended by brokers.
The Common Shares are currently registered as a class of securities
under the Exchange Act. Registration of the Common Shares under the Exchange Act
may be terminated upon application of the Company to the Commission if the
Common Shares are not listed on a national securities exchange or quoted on the
Nasdaq National Market System and there are fewer than 300 record holders of the
Public Shares. Termination of registration of the Public Shares under the
Exchange Act would substantially reduce the information required to be furnished
by the Company to its shareholders and to the Commission and would make certain
provisions of the Exchange Act, such as the short-swing trading provisions of
Section 16(b), the requirement of furnishing a proxy statement in connection
with shareholders' meetings pursuant to Section 14(a), and the requirements of
Rule 13e-3 under the Exchange Act with respect to "going private" transactions,
no longer applicable to the Company. If registration of the Common Shares under
the Exchange Act is terminated, the Common Shares would no longer be eligible
for Nasdaq National Market listing. In addition, "affiliates" of the Company and
persons holding "restricted securities" of the Company may be deprived of the
ability to dispose of such securities pursuant to Rule 144 promulgated under the
Securities Act of 1933, as amended. It is the present intention of the Oracle to
seek to cause the Company to make an application for the termination of the
registration of the Common Shares under the Exchange Act as soon as practicable
after the Effective Time of the Merger.
INTEREST OF CERTAIN PERSONS IN THE MERGER
In considering the recommendation of the Board of Directors of the
Company, the shareholders of the Company should be aware that certain officers
and directors of the Company have certain
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interests in the Merger, including those referred to below, that present
actual or potential conflicts of interest in connection with the Merger. The
members of the Board of Directors of the Company were aware of these
potential or actual conflicts of interest and considered them along with
other matters described under "-- Recommendation of the Board of Directors of
the Company; Fairness of the Merger."
Under the Merger Agreement, executive officers and directors of the
Company owning an aggregate of 64,615 Common Shares will be entitled to
receive $8.00 per share in cash for each Common Share held by them. In
addition, as of September 30, 1996, the executive officers and directors of
the Company held options to acquire an aggregate of 671,266 Common Shares, a
portion of which were subject to future vesting requirements. Upon
consummation of the Merger, (i) 447,266 of such options ("Converted
Options") will be converted into options to acquire shares of common stock
of Oracle, (ii) 200,000 of such options held by Mr. Sozzi will be forfeited
pursuant to the terms of his employment agreement (see "-- Employment
Agreements of Certain Executive Officers" below) and (iii) 24,000 of such
options which are held by directors of the Company will, if exercised, be
entitled to receive $8.00 per share; however, such directors' options are not
expected to be exercised because the cash proceeds payable upon exercise
($8.00 per share) do not exceed the exercise price of such options. See "The
Merger -- General -- Treatment of Company Stock Plans" and "Ownership of
Common Shares -- Security Ownership of Certain Beneficial Owners."
Pursuant to the Merger Agreement, the Company has agreed to reprice
options held by Company employees, executive officers and directors with an
exercise price in excess of $8.00 per share. The exercise price of such
options will be reduced to $8.00 per share. As a result, 98,000 Converted
Options held by executive officers and directors will be repriced on that
basis.
Employment Agreements of Certain Executive Officers. Raymond V. Sozzi
is currently employed by the Company as President, Chief Operating Officer
and Acting Chief Executive Officer. Mr. Sozzi's Employment Agreement with the
Company which is dated as of June 28, 1996 and was amended on July 30, 1996
and on September 13, 1996, provides that, in the event that a third party
acquires more than 50% of the stock or assets of the Company during the term
of Mr. Sozzi's employment with the Company, all of the stock options granted
to Mr. Sozzi under his Employment Agreement will be canceled, Mr. Sozzi will
receive from the Company a cash bonus equal to 1% of the aggregate value of
the consideration paid to the holders of the Company's Common Shares, less
$125,000, and the Company will be relieved of any obligation to pay severance
to Mr. Sozzi upon termination of his employment for any reason. In the event
that Mr. Sozzi has exercised any of his stock options prior to consummation
of such a transaction, the amount of his cash bonus will be reduced by any
gain realized by Mr. Sozzi upon such exercise. Mr. Sozzi's Employment
Agreement also provides that in the event of a third party
acquisition and if requested by the acquiring party, Mr. Sozzi will continue
to perform services for the Company or its successor for a period of up to
four months following the Effective Time.
Richard J. Willemin is currently employed by the Company as Chief
Financial Officer. Pursuant to his Employment Agreement, dated as of
September 26, 1996, in the event the Merger is consummated during the term of
Mr. Willemin's employment with the Company, Mr. Willemin will receive a cash
bonus of $100,000 upon consummation of the Merger. Mr. Willemin's Employment
Agreement also provides that if requested by Oracle, Mr. Willemin will
continue to perform services for the Company or its successor for a period of
up to three months following the Effective Time.
Directors and Officers. Pursuant to the Merger Agreement, the
directors and officers of Acquisition Sub will become the directors and
officers, respectively, of the Surviving Corporation.
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Indemnification of Directors and Officers. Oracle has also 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 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
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. See "The
Merger -- General -- Indemnification of Directors and Officers."
Certain Agreements. Oracle and certain of its affiliates are parties
to various contractual arrangements with the Company and certain of the
Company's affiliates. These agreements were the result of arm's length
negotiations among independent parties. Set forth below are summaries of these
arrangements.
Series F Preferred Stock Purchase Agreement
-------------------------------------------
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 (the "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 approximately
$3.75 (as adjusted to reflect the Stock Split) 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 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. No other shares of Preferred
Stock of the Company were purchased in the first quarter of fiscal year ended
June 30, 1995.
Upon the closing of the Company's initial public offering ("IPO")
on June 15, 1995, the Series F Stock was
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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 initial public
offering price of $17.00 per share). In connection with the IPO, Oracle also
sold 230,415 shares of Common Stock as a selling shareholder.
Joint Marketing Agreement and International Distribution Agreement
------------------------------------------------------------------
On September 6, 1994, the Company and Oracle entered into a Joint
Marketing Agreement (the "Marketing Agreement") and an International
Distribution Agreement (the "International Agreement"). Under these
arrangements, Oracle markets the Company's products known as the Global
Enterprise Manufacturing Management System (the "Products") as Oracle's
preferred solution for process manufacturing software.
Pursuant to the Marketing Agreement, Oracle was appointed by
the Company as an authorized representative and distributor to promote,
market, reproduce and sublicense the Company's Products in the United States.
In exchange for Oracle's sales and marketing support, the Company pays Oracle
a commission equal to (i) thirty percent (30%) of the Net Revenues (as
defined in the Marketing Agreement) received by the Company from sales of the
Products in the United States for use on Oracle's database platform and (ii)
thirty percent (30%) of the first-year maintenance fees received by the
Company for the Products if the customer purchases such maintenance services
within 45 days of the sale of the Products. The commission percentages are
subject to adjustment under certain specified circumstances. In exchange for
Oracle's sublicensing rights, Oracle pays the Company a fee of seventy
percent (70%) of the fees received by Oracle in connection with any
sublicense of the Products granted by Oracle or Oracle's distributors. The
Marketing Agreement has a term of four years, and thereafter will continue
for one-year terms unless terminated by either party upon ninety (90) days
prior written notice. The Marketing Agreement is also subject to termination
(i) upon termination of the International Agreement or (ii) by the Company if
Net Revenues generated from the distribution or marketing by Oracle and the
Company under the Marketing Agreement and International Agreement have not
met certain specified minimum annual revenue levels. Since commencement of
the Marketing Agreement in September 1994, through June 1996, the Company
paid Oracle an aggregate of approximately $6.6 million in commissions in
connection with the Marketing Agreement, and Oracle paid the Company
approximately
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$2.0 million in fees in connection with its sublicensing rights under the
Marketing Agreement.
Pursuant to the International Agreement, the Company granted
Oracle (i) a nonexclusive license to reproduce and grant sublicenses of the
Products anywhere in the world outside the United States and (ii) the right
to appoint distributors (provided such distributor has a license to
distribute Oracle's application products) and to sublicense such distributors
the right to reproduce and grant sublicenses of the Products anywhere in the
world outside the United States. In addition, Oracle has agreed to train and
maintain sales and technical staff as agreed upon by Oracle and the Company
(but in no event less than ten people). In exchange for Oracle's
international distribution rights, Oracle pays the Company a royalty equal to
the lesser of (i) forty percent (40%) of the Company's then current U. S.
list price for the Products and (ii) forty percent (40%) of Oracle's Net
Revenues from the sale of the Products; provided, however, that the Company
will not receive less than twenty percent (20%) of the U.S. list price for
the Products. Such royalty fee percentages may be increased under certain
specified circumstances. For each customer that obtains maintenance and
support services from Oracle or Oracle's distributor, Oracle pays the Company
an annual maintenance fee equal to the lesser of (i) forty percent (40%) of
the Company's then current U. S. list price for such service and (ii) forty
percent (40%) of the Net Revenues received by Oracle for such service. The
International Agreement also provides that, under certain circumstances, the
Company will pay Oracle a commission between fifteen percent (15%) and thirty
percent (30%) of the Company's Net Revenues related to certain Product sales.
The International Agreement has a term of four years, and thereafter will
continue for one-year terms unless terminated by either party upon ninety
(90) days prior written notice. The International Agreement is also subject
to termination upon termination of the Marketing Agreement. Since
commencement of the International Agreement in September 1994, through June
1996, Oracle paid the Company an aggregate of approximately $2.7 million in
royalty and maintenance fees under the International Agreement, and the
Company has paid Oracle no commissions under the International Agreement.
VAR Agreement
-------------
On May 31, 1991, the Company and Oracle entered into a VAR
Agreement (as amended through June 28, 1996, the "VAR Agreement"), pursuant to
which Oracle granted the Company certain nonexclusive, worldwide development,
marketing, distribution and sublicensing rights in connection with the bundling
of certain Oracle products with certain specified products of the Company.
Pursuant to the VAR Agreement, the Company pays Oracle a development license fee
for each subsequent development license ordered by the Company. In addition, the
Company pays Oracle (i)
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a sublicense fee equal to a specified percentage of the then-current Oracle
standard full use initial level license fee and (ii) a technical support fee
based upon a percentage of the sublicense fee and, under certain
circumstances, the then-current standard initial level license fee. Oracle
pays the Company a commission based on Oracle's revenues from full use
programs licensed to the Company's customers located in the United States
resulting directly from the Company's marketing efforts. The VAR Agreement
has expired. Since commencement of the VAR Agreement in May 1991, through
June 1996, the Company paid Oracle an aggregate of approximately $9.9
million in development license fees, sublicense fees and technical support
fees under the VAR Agreement. For accounting purposes, these payments are
directly offset by corresponding amounts received from end-user customers
utilizing the Oracle modules. The receipts and payments are recorded on a
"passthrough" basis with no impact on the Company's income statement.
Development Agreement
---------------------
On June 28, 1996, the Company and Oracle entered into a letter
agreement (the "Letter Agreement") with respect to certain development
activities. The Letter Agreement provides for the payment by Oracle to the
Company of up to $1,400,000 for such development. Oracle has paid an initial
installment of $200,000 to the Company and subsequent payments will be paid
upon the completion of additional development by the Company.
CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES
The following is a general summary of the material federal income tax
consequences of the Merger to the holders of the Public Shares and to the
Company under the law in effect as of the date hereof. The following discussion
is for general information only, and may not apply to particular categories of
holders, such as financial institutions, broker-dealers and tax-exempt entities
foreign persons or shareholders who acquired their shares upon exercise of stock
options or in other compensatory transactions. Furthermore, no foreign, state or
local tax considerations are addressed, nor are federal tax considerations other
than income tax considerations. The discussion is based on current federal
income tax law, which is subject to change at any time (possibly with
retroactive effect). ALL HOLDERS OF THE PUBLIC SHARES SHOULD CONSULT THEIR OWN
TAX ADVISORS AS TO THE TAX CONSEQUENCES OF THE MERGER TO THEM WITH SPECIFIC
REFERENCE TO THEIR PARTICULAR TAX SITUATIONS, INCLUDING SUCH TAX CONSEQUENCES
UNDER STATE, LOCAL AND FOREIGN TAX LAWS.
The exchange of Public Shares for cash in connection with the Merger
will be a taxable transaction to the holders of such Public Shares for
federal income tax purposes. In general, such Public Shareholders will
recognize gain or loss in an amount equal
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to the difference between the cash received and such Public Shareholder's tax
basis in such Public Shares. Such gain or loss will be a capital gain or loss if
such Public Shareholder has held such Public Shares as capital assets within the
meaning of Section 1221 of the Internal Revenue Code of 1986, as amended. Such
capital gain or loss will be a long-term capital gain or loss if such Public
Shareholder has held such Public Shares for more than one year as of the date of
exchange. There are certain limitations on the deductibility of capital losses.
Cash received in exchange for Public Shares in the Merger may be subject
to a backup withholding tax at a rate of 31%, unless the relevant Public
Shareholder is an exempt recipient or complies with certain identification
procedures.
The Company will not recognize gain or loss as a result of the Merger
for federal income tax purposes.
SOURCES AND USES OF FUNDS
The sources and uses of the funds constituting the financing and the
estimated fees and expenses incurred or to be incurred by the Company in
connection with the Merger are approximately as follows:
<TABLE>
<CAPTION>
<S> <C>
Sources of Funds
---------------
Oracle cash .............................................. $[81,000,000]
Datalogix cash ........................................... [ ]
-------------
Total sources...................................... $
-------------
-------------
Uses of Funds
-------------
Purchase of Common Shares................................. $[81,000,000]
Investment banking fees and expenses...................... 1,300,000
Legal fees and expenses................................... 750,000
Accounting fees and expenses.............................. 50,000
Commission filing fee..................................... [17,900]
Printing and mailing fees.................................
Proxy Solicitation Agent fees.............................
Paying Agent fees.........................................
Miscellaneous expenses.................................... 25,000
-------------
Total Uses...................................... $
-------------
-------------
</TABLE>
For information regarding Robertson Stephens' engagement by the Board of
Directors, see "-- Opinion of Financial Advisor; Summary of Financial Analyses."
Certain of the Company's officers will receive certain payments if the Merger is
consummated. See "-- Interest of Certain Persons in the Merger."
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Estimated fees and expenses incurred or to be incurred by Oracle in
connection with the Merger are legal fees and expenses of $500,000 and
miscellaneous fees of $165,000.
Neither Oracle nor the Company will pay any fees or commissions to any
broker or dealer or any other person (other than Robertson Stephens, the Proxy
Solicitation Agent, and the Paying Agent) for soliciting Public Shares pursuant
to the Merger. Brokers, dealers, commercial banks and trust companies will, upon
request, be reimbursed by the Company for reasonable and necessary costs and
expenses incurred by them in forwarding materials to their customers.
INITIAL PUBLIC OFFERING OF COMMON STOCK
On June 15, 1995, the Company completed an underwritten public offering
("IPO") of 3,798,000 shares of its Common Stock, at an initial public offering
price to the public of $17.00, which was registered on a Registration Statement
on Form S-1 under the Securities Act of 1993, as amended. The offering was
comprised of 2,495,000 newly issued shares by the Company and 1,300,000 shares
offering by selling shareholders, 230,415 shares of which were offered by
Oracle. The Company retained net proceeds of $38,012,000 after deducting
underwriting commissions and discounts of $2,969,000 and other costs of
$1,434,000. Oracle obtained net proceeds of $3,642,862 after deducting
underwriting commissions and discounts of $274,193.
REGULATORY APPROVALS
No federal or state regulatory approvals are required to be obtained,
nor any regulatory requirements complied with, in connection with consummation
of the Merger by any party to the Merger Agreement, except for (i) the filing by
Oracle and the Company of a Premerger Notification and Report Form pursuant to
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), (ii) the requirements of the NYBCL in connection with stockholder
approvals and consummation of the Merger and (iii) the requirements of federal
securities law.
THE 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 Proxy Statement as Annex A 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
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the Surviving Corporation and it will continue its corporate existence under the
laws of the State of New York. At the Effective Time, the separate corporate
existence of Acquisition Sub shall cease. The Surviving Corporation shall
possess all the rights, privileges, immunities, powers and purposes of
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 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 Certificate of Merger will be
filed no later than the 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. See "-- Conditions to the Merger,
Waiver."
Treatment of Shares in the Merger. At the Effective Time: (a) each
Common Share outstanding immediately prior to the Effective Time, except for (i)
Common Shares then owned by Oracle, (ii) Common Shares then owned by the Company
and (iii) 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, without interest, upon surrender of the certificate representing
such Common Share; and (b) each Common Share outstanding immediately prior to
the Effective Time which is then owned by Oracle 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 Common 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 Public Shares in accordance with the provisions of Sections 623
and 910 of the NYBCL. See "-- Dissenters' Rights."
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 non-assessable common share of the Surviving Corporation.
Surrender of Share Certificates. Oracle has designated ______________
_______________________ to act as the Paying Agent under the Merger Agreement.
Prior to the Effective Time, Oracle shall
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from time to time make available to the Paying Agent cash in an aggregate amount
equal to the product of: (x) the number of Common Shares outstanding immediately
prior to the Effective Time (other than Common Shares owned by Oracle,
Acquisition Sub or the Company or 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 or Acquisition Sub)
of an outstanding certificate or certificates for Common Shares (the
"Certificates"), a letter of transmittal and 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 of transmittal, the holder thereof shall be entitled
to receive cash in an amount equal to the product of the number of Common 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 Common Shares owned by Oracle
and Certificates representing Dissenting Shares) shall represent for all
purposes the right to receive the Merger Consideration in cash multiplied by the
number of Common Shares evidenced by such Certificate, without any interest
thereon, subject to any applicable withholding obligation.
After the Effective Time, there shall be no transfers on the stock
transfer books of the Surviving Corporation of Common 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 Common Shares evidenced by such Certificate, without
any interest thereon, subject to any withholding obligation.
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 Common Share, without any interest
thereon, but shall have no greater rights against the Surviving Corporation
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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 Common Shares for any amount to be paid to a public official
pursuant to any applicable abandoned property, escheat or similar law.
Treatment of Company Stock Plans.
Amended and Restated 1992 Incentive Stock Plan; 1986 Key Employees Stock
------------------------------------------------------------------------
Option Plan. The Merger Agreement provides that each outstanding option to
- -----------
purchase Common 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 the (x) number of Common Shares of the Company for which such option
was exercisable and (y) the Merger Consideration divided by the average closing
price of the Oracle's Common Stock on the Nasdaq National Market System for
the five consecutive trading days prior to the Effective Time (the "Conversion
Number"), rounded down to the nearest whole share and (ii) the exercise price
of such option shall be equal to the exercise price of such option divided by
the Conversion Number.
Pursuant to the Merger Agreement, the Company has agreed to reprice
options granted to Company employees, executive officers and directors with
an exercise price in excess of $8.00 per share. The exercise price of such
options will be reduced to $8.00 per share.
1995 Director Option Plan. The Merger Agreement provides that each
-------------------------
outstanding option to purchase Common 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.
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<PAGE>
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 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 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 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 by a governmental agency or any other person (x) related to the Merger or
the transactions 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
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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 Common 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 or if the sole condition that the Company shall not have satisfied is
the existence of certain litigation that has been threatened or instituted after
the date of the Merger Agreement, February 28, 1997 (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 described 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 and the Termination Fee; 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
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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 under "-- Fees and Expenses."
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 (as defined in the Merger
Agreement) 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 clause (v) under "--Termination" above; (ii) the Company
terminates the Merger Agreement as a result of actions described in clause (vi)
under "--Termination" above; or (iii) prior to any termination of this Merger
Agreement (other than pursuant to clauses (i), (ii) or (vii) under
"--Termination" above, or by the Company pursuant to clause (iii) under
"--Termination" above), the Company breaches its obligations to Oracle under the
Merger Agreement 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 Public 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 By-Laws, 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 Commission 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
By-laws, certain agreements, laws, rules, regulations, orders, judgments or
decrees; (ix) the status of the Company's
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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 this Proxy Statement; (xvii) the opinion of 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 to Oracle in the written disclosure schedule delivered by the
Company to Oracle pursuant to the Merger Agreement (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
effect 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. 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
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of conflicts of the Merger Agreement and the transactions contemplated thereby
with the certificate of incorporation or by-laws (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; (v) Oracle's and Acquisition Sub's
access to cash funds sufficient to consummate the transactions contemplated by
the Merger Agreement; (vi) the formation and absence of prior activities of
Acquisition Sub; (vii) the accuracy of the information provided by Oracle or
Acquisition Sub for inclusion in this Proxy Statement; (viii) the absence of
brokers and finders and (ix) 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, and
subject to the same exceptions, 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 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
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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, 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
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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 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
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pursuant to a confidentiality agreement 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 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 (as defined hereinafter). 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.
Pursuant to the Merger Agreement, the Company, Oracle and Acquisition
Sub will together prepare and file the Schedule 13E-3 under the Exchange Act.
Oracle, Acquisition Sub and the Company will each furnish all information
concerning it, its affiliates and certain other persons required to be included
in the Proxy Statement and the Schedule 13E-3 and respond promptly to any
comments made by the Commission with respect thereto.
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
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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 the subsidiaries in
connection with the Merger Agreement and the transactions contemplated thereby.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
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 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 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.
ACCOUNTING TREATMENT
The Merger will be accounted for under the "purchase" method of
accounting whereby the purchase price will be allocated among the Company's
assets and liabilities based on the fair market value of the assets acquired and
liabilities assumed.
PAYMENT FOR PUBLIC SHARES; SOURCES OF FUNDS
Approximately $81 million will be required to pay the Merger
Consideration to the holders of all Public Shares outstanding at
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the Effective Time (assuming no such holder perfects its dissenters' rights) and
it is expected that approximately $665,000 million will be required to pay the
expenses of Oracle and Acquisition Sub in connection with the Merger. Such funds
will be furnished from available general funds of Oracle. It is currently
expected that approximately $___ million will be required to pay the expenses of
the Company. Such funds will be furnished from available general funds of the
Company. See "Special Factors -- Fees and Expenses."
DISSENTERS' RIGHTS
Shareholders who do not vote in favor of approval and adoption of the
Merger Agreement may in accordance with Section 910 have the right to seek
payment in cash of the fair value of their Common Shares by complying with the
requirements of Sections 623 and 910 of the NYBCL. Failure of a shareholder to
strictly adhere to the requirements of Sections 623 and 910 of the NYBCL will
result in the loss of such shareholder's dissenter's rights.
A dissenting shareholder must, before the taking of the vote on the
Merger Agreement, file with the Company a written objection. The objection must
include: a notice of the dissenting shareholder's election to dissent; the
shareholder's name and residence address; the number of shares as to which the
shareholder dissents; and a demand for payment of the fair value of such shares
if the Merger is effected. The written objection should be delivered to
Datalogix International Inc., 100 Summit Lake Drive, Valhalla, NY 10595,
Attention: Barbara Arnold, Assistant Secretary, prior to the Special Meeting. To
effectively exercise dissenters' rights, such shareholder may not vote any of
his, her or its shares for the Merger Agreement. Within 10 days after the vote
of shareholders authorizing the Merger Agreement and the Merger, the Company
must give written notice of such authorization to each dissenting shareholder.
Within 20 days after the giving of such notice, any shareholder who elects to
dissent must file with the Company a written notice of such election, stating
such shareholder's name and residence address, the number of Common Shares as to
which dissent is made and a demand for payment of the fair value of such shares.
Such dissenting shareholder may not dissent as to less than all Common Shares
beneficially owned by the shareholder. Upon consummation of the Merger, a
dissenting shareholder shall cease to have any of the rights of a shareholder,
except the right to be paid the fair value of the dissenting shareholder's
shares, and any other rights under Section 623. At the time of filing the notice
of election to dissent or within one month thereafter, such shareholder must
submit certificates representing all such Common Shares to the Company or its
transfer agent. Failure to submit the certificates may result in the loss of
such shareholder's dissenter's rights. Within 15 days after the expiration of
the period within which shareholders may file their notices of
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election to dissent, or within 15 days after consummation of the Merger,
whichever is later (but not later than 90 days after the shareholders' vote
authorizing the Merger), the Company must make a written offer (which, if the
Merger has not been consummated within such 90 day period, may be conditioned
upon such consummation) to each such dissenting shareholder who has filed such
notice of election to pay for the Common Shares at a specified price which the
Company considers to be their fair value. If the Company and the dissenting
shareholder are unable to agree as to such fair value, Section 623 provides for
judicial determination of fair value. A vote AGAINST approval and adoption of
the Merger Agreement does not constitute the written objection required to be
filed by a dissenting shareholder. Failure by a shareholder to vote AGAINST
approval and adoption of the Merger Agreement, however, will not constitute a
waiver of rights under Section 623 provided that a written objection has been
properly filed and such shareholder has not voted any of his, her or its shares
FOR the approval and adoption of the Merger Agreement.
The foregoing does not purport to be a complete statement of the
provisions of Section 623 and is qualified in its entirety by reference to such
section, which is reproduced in full as Annex C to this Proxy Statement.
THE PROVISIONS OF SECTION 623 ARE COMPLEX AND TECHNICAL IN NATURE.
SHAREHOLDERS DESIRING TO EXERCISE DISSENTERS' RIGHTS MAY WISH TO CONSULT
COUNSEL, SINCE THE FAILURE TO COMPLY STRICTLY WITH THESE PROVISIONS WILL RESULT
IN THE LOSS OF THEIR DISSENTERS' RIGHTS.
DESCRIPTION OF CAPITAL STOCK OF DATALOGIX
The authorized capital stock of the Company consists of 40,000,000
shares of Common Stock, $0.01 par value, and 5,000,000 shares of Preferred
Stock, no par value.
COMMON STOCK
The holders of Common Stock are entitled to one vote per share on all
matters to be voted upon by the shareholders. Subject to preferences that may be
applicable to any outstanding Preferred Stock, the holders of Common Stock are
entitled to receive ratably such dividends, if any, as may be declared from time
to time by the Board of Directors out of funds legally available therefor. In
the event of a liquidation, dissolution or winding up of the Company, the
holders of Common Stock are entitled to share ratably in all assets remaining
after payment of liabilities, subject to prior rights of Preferred Stock, if
any, then outstanding. The Common Stock has no preemptive or conversion rights
or other subscription rights. There are no redemption or sinking fund provisions
available to the Common Stock. All outstanding shares of Common Stock are fully
paid and
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<PAGE>
non-assessable, and the shares of Common Stock to be issued upon completion of
this offering will be fully paid and non-assessable.
At September 19, 1996, 11,711,776 shares of Common Stock were
outstanding and held of record by approximately 191 shareholders, and options
and warrants to purchase an aggregate of 1,021,288 shares of Common Stock were
also outstanding.
On August 27, 1996, the Company distributed a dividend of one Right for
each outstanding share of Common Stock. The Rights are not exercisable until(i)
ten days after a person or group acquires, or has the right to acquire,
beneficial ownership of 20% or more of the Company's Common Stock or (ii) ten
business days (or such later date as the Board shall determine) after a person
or group commences a tender or exchange offer for 20% or more of the Company's
Common Stock. Each Right entitles the holder to purchase a unit consisting
initially of one one-thousandth of a share of Series A Preferred Stock, par
value $.01 per share (the "Series A Preferred Stock"), for $30. The Rights Plan
pursuant to which such Rights were issued was amended on September 24, 1996, so
that the transaction contemplated by the Merger Agreement would not trigger the
exercisability of the Rights. The Rights will expire, unless previously redeemed
or exercised, on August 27, 2006. The Rights are automatically attached to, and
trade with, each share of Common Stock.
PREFERRED STOCK
The Company is authorized to issue up to 5,000,000 shares of Preferred
Stock with such designation, rights and preferences as may be determined from
time to time by the Board of Directors. Accordingly, the Board of Directors is
empowered, without shareholder approval, to issue Preferred Stock with dividend,
liquidation, conversion, voting or other rights that could adversely affect the
voting power or other rights of the holders of the Company's Common Stock. In
the event of issuance, the Preferred Stock could be utilized, under certain
circumstances, as a method of discouraging, delaying or preventing a change in
control of the Company. The Company has no present intention to issue any shares
of its authorized Preferred Stock.
REGISTRATION RIGHTS OF CERTAIN HOLDERS
The holders of approximately 3 million shares of Common Stock (the
"Registrable Securities"), including Oracle, or their transferees are entitled
to certain rights with respect to the registration of such shares under the
Securities Act. These rights are provided under the terms of an agreement
between the Company and the holders of Registrable Securities. Subject to
certain limitations in the agreement, the Company is required to use its best
efforts to register the Registrable Securities for resale, upon the request of
(i) the holders of at least 25% of
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the Registrable Securities or (ii) either J.P. Morgan Investment Corporation
("Morgan") or Oracle, on up to five occasions. If the Company registers any of
its Common Stock either for its own account or for the account of other security
holders, the holders of Registrable Securities are entitled to include their
shares of Common Stock in the registration. A holder's right to include shares
in an underwritten registration is subject to the right of the underwriters to
limit to a certain extent the number of shares included in the offering. The
holders of Registrable Securities may also require the Company to register all
or a portion of their Registrable Securities on Form S-3. All expenses other
than underwriting discounts and commission incurred in connection with up to two
such Form S-3 registrations must be borne by the Company.
MARKET PRICES AND DIVIDENDS
The Common Shares are traded on the Nasdaq National Market System under
the symbol "DLGX."
Although there can be no assurance as to whether the proposed
transaction will be effected, it is currently anticipated that the Merger will
be completed in the second half of December 1996.
The following table sets forth, for the calendar periods indicated, the
high and low closing sales prices per Common Share, as quoted on the Nasdaq
National Market System.
<TABLE>
<CAPTION>
SALES PRICES
PER COMMON
SHARE
-----
FISCAL PERIODS HIGH LOW
------------------------------------------------ ---- ---
<S> <C> <C>
1995
Fourth Quarter (commencing June 15, 1995)...................$ 25 1/4 $ 23 5/8
1996
First Quarter...............................................$ 26 $ 14 1/4
Second Quarter.............................................. 16 8 5/8
Third Quarter............................................... 16 10
Fourth Quarter.............................................. 9 3/4 6 7/8
1997
First Quarter..............................................$ 8 $ 4 3/8
Second Quarter (through November __, 1996).................
</TABLE>
On September 23, 1996, the last full trading day prior to the public
announcement that the parties had entered into the
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Merger Agreement providing for the Merger Consideration of $8.00 per Public
Share, the last reported sale price per Common Share on the Nasdaq National
Market System was $6.25. On November __, 1996, the last reported sale price
per Common Shares on the Nasdaq National Market System was $_____. HOLDERS OF
COMMON SHARES ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE COMMON
SHARES.
The Company has never paid a cash dividend on the Common Shares and does
not anticipate paying one in the foreseeable future.
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SELECTED CONSOLIDATED FINANCIAL DATA OF THE COMPANY
Certain selected consolidated historical financial data of the
Company is set forth below and under "Selected Consolidated Financial Data of
the Company." The selected consolidated financial data should be read in
conjunction with the Consolidated Financial Statements of the Company and
related Notes included elsewhere in this Proxy Statement, and with other
financial information incorporated by reference into this Proxy Statement.
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<TABLE>
<CAPTION>
FOR THE FISCAL YEARS ENDED JUNE 30,
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
(IN THOUSANDS, EXCEPT FOR PER SHARE DATA AND RATIOS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
License fees........................... $ 23,515 $ 26,852 $ 14,189 $ 8,106 $ 6,035
Services............................... 25,668 16,326 10,559 9,978 9,384
---------- ------ ------ ----- -----
Total revenues....................... 49,183 43,178 24,748 18,084 15,419
---------- ------ ------ ------ ------
Operating expenses:
Cost of license fees................... 7,862 5,618 2,077 1,975 950
Cost of services....................... 18,109 10,334 6,024 6,543 6,251
Sales and marketing.................... 16,418 13,670 8,589 8,551 9,563
Research and development............... 9,386 6,271 4,554 7,308 4,342
General and administrative 7,218 4,433 2,097 2,498 2,718
Nonrecurring item (1).................. -- -- -- -- 5,291
---------- ------ ------ ------ ------
Total operating expenses............ 58,993 40,326 23,341 26,875 29,115
---------- ------ ------ ------ ------
Income (loss) from operations........... (9,810) 2,852 1,407 (8,791) (13,696)
Interest income (expense), net............ 1,828 73 (92) (177) (54)
---------- ------ ------ ------ ------
Income (loss) before taxes................ (7,982) 2,925 1,315 (8,968) (13,750)
Provision (benefit) for income taxes (2).. 50 (2,405) -- -- --
---------- ---------- --------- -------- ---------
Net income (loss)......................... $ (8,032) $ 5,330 $ 1,315 $ (8,968) $ (13,750)
=========== =========== ========== ========== ===========
Earnings (loss) per share................. $ (0.70) $ 0.59 $ 0.16
============ =========== ===========
Weighted average number of common and
common equivalent shares outstanding (3)
11,426 9,048 8,313
========== ========== =========
Ratio of earnings to fixed charges........ (A) 6.9x
---------- ---------- ---------
Book value per share...................... $ 3.70
----------
</TABLE>
<TABLE>
<CAPTION>
AS OF JUNE 30,
-------------------------------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................. $34,019 $43,762 $ 4,050 $ 4,981 $ 609
Working capital (deficiency).............. 32,336 44,795 312 42 (10,969)
Total assets.............................. 57,904 65,051 17,596 15,715 12,626
Total assets less deferred research and
development charges.................... 55,021 62,769 15,746 14,166 6,001
Long-term liabilities..................... 269 551 1,865 2,815 1,289
Redeemable convertible preferred stock.... -- -- 28,477 28,477 5,014
Shareholders' equity (deficit)............ 41,275 49,291 (26,882) (28,145) (13,107)
</TABLE>
The above selected historical consolidated financial information
of the Company is qualified by reference to and should be read in conjunction
with the consolidated financial statements and notes thereto included elsewhere
herein and with "Management's Discussion and Analysis of Financial Condition and
Results of Operations" included in the Company's Annual Report on Form 10-K for
the year ended June 30, 1996, which is incorporated herein by reference. In
fiscal 1996, the Company restated its first and second quarters and made certain
adjustments of approximately $5,900 in the fourth quarter. See Note 12 of notes
to consolidated financial statements.
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(1) In fiscal 1992, the Company recorded a charge which related to costs
associated with a reduction in the Company's workforce, costs related to
redundancies in certain management positions and certain nonrecurring
costs attendant to the development and introduction of GEMMS. The charge
includes $1,224 of severance and related costs for workforce reductions,
$3,100 in estimated settlement costs with customers and $967 in other
product related costs. All costs but the settlement costs resulted in cash
outlays in fiscal 1993. The matters for which settlement costs were
estimated and provided for in fiscal 1992 were substantially settled in
fiscal 1993 and 1994. Payment terms associated with settlement costs
varied, extending as long as three years. As of June 30, 1996 there were
no obligations outstanding for settlement of these costs.
(2) See Note 10 of notes to consolidated financial statements.
(3) See Note 2 of notes to consolidated financial statements.
(A) As a result of the loss incurred for the fiscal year ended June 30, 1996,
earnings were insufficient to cover fixed charges in the amount of $545
during such period.
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OWNERSHIP OF COMMON SHARES
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information regarding the
beneficial ownership of the Company's Common Stock as of the Record Date by (i)
each shareholder known to the Company to be a beneficial owner of more than 5%
of the Company's Common Stock, (ii) each director, (iii) the former Chief
Executive Officer and the four other most highly paid executive officers ("Named
Executive Officers"), and (iv) all executive officers and directors of the
Company as a group. Unless otherwise indicated, officers and directors can be
reached at the Company's principal executive offices.
<TABLE>
<CAPTION>
Name and Address of Amount of Beneficial Percent of
Beneficial Owner Ownership(1) Class
---------------- ------------ -----
<S> <C> <C>
Oracle Corporation
500 Oracle Parkway
Redwood Shores, CA 94065............... 1,566,287 13.4%
J.P. Morgan Investment Corporation
60 Wall Street
New York, NY 10260-0060................ 1,100,587 9.4%
Entities affiliated with Putnam
Investments, Inc.(2)
One Post Office Square
Boston, MA 02109....................... 658,000 5.6%
Richard C. Giordanella(3)................. 475,709(4) 4.1%
Peter B. Soboloff......................... 105,125(5) *
Joseph Grispo............................. 66,019(6) *
George Beitzel............................ 65,294(7) *
John F. Cingari........................... 52,000(8) *
David R. Hathaway......................... 44,863(9) *
Ronald D. Nall............................ 18,560(10) *
Robert Weiler............................. 11,000(11) *
Peter J. Barris........................... 8,580(12) *
Rick L. Smith(13)......................... 0 *
All directors and executive officers as a
group (11 persons)........................ 865,250(14) 7.2%(15)
</TABLE>
-----------------
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and includes voting and investment
power with respect to shares. Each individual has sole power to vote and
sole power to dispose of his common shares, unless otherwise indicated.
(2) Consists of shares owned by Putnam Investments, Inc. ("PI"), Putnam
Investment Management, Inc. ("PIM") and The Putnam Advisory Company, Inc.
("PAC"). PIM and PAC are registered investment advisors and wholly owned
subsidiaries of PI. In reports filed with the Commission, PI disclaims
beneficial ownership of shares owned by PIM and PAC and reports that it
has no power to vote or dispose of these shares.
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<PAGE>
(3) Mr. Giordanella was the Chief Executive Officer of the Company until July
29, 1996, when his employment was terminated.
(4) Based on the most recent publicly available information.
(5) Consists of 129,911 shares issuable upon the exercise of options
exercisable within sixty days after the Record Date.
(6) Includes 60,019 shares issuable upon the exercise of options exercisable
within sixty days after the Record Date.
(7) Includes 10,986 shares held by family trusts of which Mr. Beitzel is the
voting trustee, 24,661 shares issuable upon the exercise of options
exercisable within sixty days after the Record Date and 18,661 shares
issuable upon the exercise of options held by family trusts of which Mr.
Beitzel is the voting trustee exercisable within sixty days after the
Record Date.
(8) Consists of 52,000 shares issuable upon the exercise of options
exercisable within sixty days after the Record Date.
(9) Includes 8,400 shares issuable upon the exercise of options exercisable
within sixty days after the Record Date.
(10) Consists of 18,560 shares issuable upon the exercise of options
exercisable within sixty days after the Record Date.
(11) Consists of 11,000 shares issuable upon the exercise of options
exercisable within sixty days after the Record Date.
(12) Includes 8,400 shares issuable upon the exercise of options exercisable
within sixty days after the Record Date. Mr. Barris disclaims beneficial
ownership of 412,025 shares held by New Enterprise Associates V, except
for his pecuniary interest therein. Mr. Barris is a limited partner of New
Enterprise Associates V.
(13) Mr. Smith was an executive officer of the Company until April 29, 1996,
when he resigned from the Company.
(14) Includes the 475,709 Common Shares owned by Mr. Giordanella. Does not
include 50,000 shares issuable to Raymond V. Sozzi upon the exercise of
options exercisable within sixty days after the Record Date. Mr. Sozzi
was hired by the Company as President and Chief Operating Officer in
July, 1996 and currently serves as the Company's President, Chief
Operating Officer and Acting Chief Executive Officer. In the event the
Company is acquired by Oracle Corporation, Mr. Sozzi forfeits all
outstanding stock options, vested and unvested, and receives a
percentage of the proceeds of the sale in accordance with his
Employment Agreement. See "Special Factors -- Interest of Certain
Persons in the Merger -- Employment Agreements of Certain Executive
Officers".
(15) If the 50,000 shares referred to in footnote 14 were included in this
percentage, the percentage of Common Shares held by directors and officers
would be approximately 7.6%.
* Less than 1%.
An aggregate of 2,005,828 Common Shares are beneficially owned
by Oracle and the current executive officers and directors of the
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Company (representing 16.6% of the outstanding Common Shares calculated in
accordance with the Commission's rules). Of this amount, executive officers
and directors beneficially held 439,541 Common Shares, consisting of (i)
64,615 Common Shares, (ii) options to acquire 374,926 Common Shares
(exercisable within 60 days), of which 50,000 of such options held by Mr.
Sozzi, will be forfeited upon consummation of the Merger. See "Special
Factors -- Interest of Certain Persons in the Merger -- Employment Agreements
of Certain Executive Officers."
TRANSACTIONS BY CERTAIN PERSONS IN COMMON SHARES
During the past 60 days, no transactions in Common Shares were effected
by the persons named in the table set forth above.
The only purchases of Common Shares made by Oracle or any affiliate
of Oracle since June 30, 1994 are those made pursuant to the Purchase
Agreement described in "Special Factors -- Interest of Certain Persons in the
Merger -- Certain Agreements."
MANAGEMENT OF ORACLE, ACQUISITION SUB AND THE COMPANY
DIRECTORS AND EXECUTIVE OFFICERS OF ORACLE
Set forth below is the name of each person who is a director or
executive officer of Oracle, the present principal occupation or employment of
each such person and the name, of the corporation or other organization in which
such occupation or employment of each such person is conducted and the material
occupations, positions, offices and employment and the name and address of any
corporation or other organization in which any material occupation, position,
office or employment of each such person was held during the last five years.
Unless otherwise indicated, each occupation set forth under an individual's name
refers to employment with Oracle. All of the directors and executive officers of
Oracle are United States citizens. Unless otherwise indicated, the address of
each such person is that of Oracle at 500 Oracle Parkway, Redwood Shores, CA
94065.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
- ------------------------------------------ ---------------------------------------------------
<S> <C>
Lawrence J. Ellison Mr. Ellison has been Chief Executive Officer and a
Chief Executive Officer and Chairman of director of Oracle since he founded Oracle in May
the Board 1977, and was President until June 1996. Mr.
Ellison has been Chairman of the Board since June
1995 and was Chairman of the Board from April 1990
until September 1992. He has been a member of the
Executive Committee since 1986. Mr. Ellison is
also a director of NeXT Computer, Inc., is
Co-Chairman of California's Council on Information
Technology and is a member of President Clinton's
Export Council.
Raymond J. Lane Mr. Lane has been President and Chief Operating
President, Chief Operating Officer and Officer since July 1996. Mr. Lane served as
Director Executive Vice President of Oracle and President
of Worldwide Operations from October 1993 to June
1996, and has been a director since
</TABLE>
-56-
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
June 1995. He served as a Senior Vice President of Oracle
and President of Oracle USA from June 1992 to September
1993. Before joining Oracle, Mr. Lane was a Senior Vice
President and Managing Partner of the Worldwide Information
Services Group at Booz-Allen & Hamilton from July 1986 to
May 1992. He served on the Booz-Allen & Hamilton Executive
Committee from April 1987 to May 1992, and on its Board of
Directors from April 1991 to May 1992. Mr. Lane is also a
member of the Board of Trustees of Carnegie-Mellon
University.
Jeffrey O. Henley Mr. Henley has been Executive Vice President and Chief
Executive Vice President, Financial Officer of Oracle since March 1991 and has been
Chief Financial Officer and Director a Director since June 1995. Prior to joining Oracle, he
served as Executive Vice President and Chief Financial
Officer of Pacific Holding Company, a privately held
company with diversified interests in manufacturing and
real estate, from August 1986 to February 1991. Mr.
Henley is also a director of Tricord Systems, Inc., a
computer hardware company.
Dirk A. Kabcenell Mr. Kabcenell has been Executive Vice
Executive Vice President, President of the Product Division since November
Product Division 1994. He served as Senior Vice President of
Server Technologies from September 1993 to October
1994. From December 1992 to September 1993, he
served as a Senior Vice President of the Database
and Languages Division for Oracle and from June
1990 to December 1992, he served as Vice President
of relational DBMS Development. Mr. Kabcenell is
also a member of the Board of Managers of Post N
Mail, a Texas limited liability corporation, doing
business as E-Stamp.
David J. Roux Mr. Roux has been Executive Vice President
Executive Vice President, of Corporate Development since March 1996, and
Corporate Development Senior Vice President of Corporate Development of
Oracle since September 1994. Before joining
Oracle, Mr. Roux served as Senior Vice President,
Marketing at Central Point Software from April
1992 to July 1994. From October 1991 to April 1992,
he served as Senior Vice President of the Portable
Computing Group at Lotus Development Corporation and
from June 1990 to October 1991, he served as Vice
President of Business Development at Lotus
Development Corporation. Mr. Roux is also a director
of Voxware, Inc. and the Western NIS Enterprise
Fund.
</TABLE>
-57-
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Raymond L. Ocampo Jr. Mr. Ocampo has been Senior Vice President,
Senior Vice President, General Counsel and Corporate Secretary of Oracle
General Counsel since October 1992. He was Vice President,
and Corporate Secretary General Counsel and Corporate Secretary from
September 1990 to September 1992.
He served as General Counsel, Legal
Operations from July 1989 to August
1990, and as Associate General
Counsel from July 1986 to June
1989.
Thomas A. Williams Mr. Williams has been a Vice President of
Vice President Oracle since October 1990 and Corporate Controller
and Corporate Controller since May 1989. Prior to joining Oracle, Mr.
Williams held various positions in
the Audit Division of Arthur
Andersen LLP, an international
public accounting firm, including
Partner from September 1987 to May
1989.
Donald L. Lucas Mr. Lucas has been a director of the
Director Company since March 1980. He has been Chairman of
the Executive Committee since 1986 and Chairman of
the Finance and Audit Committee since 1987. Mr.
Lucas has been a member of the Compensation
Committee since 1989. He was Chairman of the
Board from October 1980 through March 1990. He
has been a venture capitalist since 1960. He is
also a director of Cadence Design Systems, Inc.,
Amati Communications Corporation, Macromedia,
Inc., Racotek, Inc., Transcend Services, Inc. and
Tricord Systems, Incorporated.
Delbert W. Yocam Mr. Yocam has been a director of the
Director Company and has been a member of the Finance and
Audit Committee since March 1992. He has been a
member of the Compensation Committee since May
1993. Mr. Yocam has been an independent
consultant from November 1994 to the present. Mr.
Yocam was President, Chief Operating Officer and a
director of Tektronix, Inc. from September 1992
until November 1994. He was an independent
consultant from November 1989 until September
1992. Mr. Yocam was with Apple Computer, Inc.
from November 1979 through November 1989, serving
in a variety of executive management positions
including Chief Operating Officer from August 1986
to August 1988 and President of Apple Pacific,
Inc., a subsidiary of Apple Computer, Inc., from
August 1988 to November 1989. Mr. Yocam is also a
director of Adobe Systems Incorporated, Castelle,
Inc., Integrated Measurement Systems, Inc. and
Sapiens International Corp.
</TABLE>
-58-
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Michael J. Boskin Dr. Boskin has been a director of the
Director Company since May 1994. He has been a member of
the Finance and Audit Committee since July 1994
and a member of the Compensation Committee since
July 1995. Dr. Boskin has been a professor of
economics at Stanford University since 1971 and
principal of Boskin & Co., a consulting firm,
since 1980. He was Chairman of the President's
Council of Economic Advisers from February 1989
until January 1993. Dr. Boskin is also a director
of Exxon Corporation, HealthCare COMPARE Corp. and
Airtouch Communications, Inc.
DIRECTORS AND EXECUTIVE OFFICERS OF ACQUISITION SUB
Set forth below is the name of each person who is a director or
executive officer of Acquisition Sub, the present principal occupation or
employment of each such person and the material occupations, positions, offices
and employment held by each such persons during the last five years and the name
of any corporation or other organization in which such occupations and
employment was conducted. The address of each such person is that of Oracle at
500 Oracle Parkway, Redwood Shores, CA 94065. All of the directors and executive
officers of Acquisition Sub are United States citizens.
</TABLE>
<TABLE>
<CAPTION>
NAME PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND
FIVE-YEAR EMPLOYMENT HISTORY
- ------------------------------------------ ----------------------------------------------
<S> <C>
David J. Roux See the information set forth under
Director; President and Chief Financial "-- Directors and Executive Officers of Oracle"
Officer with respect to Mr. Roux.
Thomas Theodores Mr. Theodores has been Vice President,
Vice President and Secretary Corporate Legal and Assistant Secretary, of Oracle
since September, 1993, and Vice President, Legal,
U.S. and Intercontinental from June 1991 through
September 1993.
</TABLE>
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
Set forth below is the name of each person who is a director or
executive officer of the Company and, unless disclosed elsewhere herein, the
present principal occupation or employment of each such person and the name and
principal business of the corporation or other organization in which such
occupation or
-59-
<PAGE>
employment of each such person is conducted and the material occupation,
positions, offices and employment and the name and principal business of any
corporation or other organization in which any material occupational position,
office or employment of each such person was held during the last five years.
All of the directors and executive officers of the Company are United States
citizens. Unless otherwise indicated, the business address of each such person
is that of the Company at 100 Summit Lake Drive, Valhalla, NY 10595.
<TABLE>
<CAPTION>
NAME PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND
FIVE-YEAR EMPLOYMENT HISTORY
- ------------------------------------------ ----------------------------------------------
<S> <C>
Raymond V. Sozzi Mr. Sozzi has been President and Chief
President, Chief Operating Officer and Operating Officer since July 1996 and has been
Acting Chief Executive Officer acting Chief Executive Officer since July 30,
1996. Prior to joining the Company,
Mr. Sozzi served as Chief Executive
Officer, President and director of
DataImage, Inc., a software company
providing integration of imaging
systems, from November 1993 to April
1996. From November 1992 to November
1993, he served as Chief Executive
Officer, President, a director and
consultant of Insci Corp., a
software company that provides
electronic management information
systems. From November 1991 to
November 1992, he served as Chief
Executive Officer and President of
Northstar Technologies, Inc., a
supplier of Loran and satellite
navigation systems.
Richard J. Willemin Mr. Willemin has been Chief Financial
Chief Financial Officer Officer since September 26, 1996 and was a
consultant to the Company in that
capacity from August 30, 1996 to
September 26, 1996. Prior to joining
the Company, Mr. Willemin served as
Vice President and Chief Financial
Officer of NEIC, a transaction
processing company in the health
care industry, from June 1994 to
August 1996. From March 1992 to June
1994, he served as interim Chief
Financial Officer during periods of
transition for several companies,
including Saratoga Spring Water
Company, a beverage manufacturer and
distributor; Canyon Ranch Spa
Cuisine, a mail order health food
company; and Cosmetics Plus, a
health and beauty aid retailer. From
October 1985 to March 1992, he held
various financial positions at
CitiCorp, including Director,
Financial Planning and Analysis, at
CitiCorp POS, a database marketing
division.
</TABLE>
-60-
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Ronald D. Nall Mr. Nall has been Senior Vice President,
Senior Vice President, Product Research, Product Research, Marketing and Development since
Marketing and Development February 1996. He served as Vice President, GEMMS
Research and Development from July
1995 to February 1996. Prior to
joining the Company, he served as
Vice President, Research &
Development, of Computer Associates,
a provider of software, from 1986 to
July 1995.
Peter B. Sobiloff Mr. Sobiloff has served as President,
President, Field Operations Field Operations since February 1996. He served
as Vice President of Worldwide
Operations from August 1992 to
February 1996. Prior to joining the
Company, from 1981 to 1992, he
served in various positions at Ross
Systems, Inc., including Executive
Vice President, Field Operations in
1992.
Joseph J. Grispo Mr. Grispo has served as General Manager,
General Manager, CIMPRO Business CIMPRO Business Systems since March 1996. He
Systems served as Vice President, Client
Services and CIMPRO Business Unit
from February 1993 to March 1996.
Prior to joining the Company, he
served as Executive Vice President,
Client Services, of Ross Systems,
Inc., a provider of software, from
1990 to February 1993.
John F. Cingari Mr. Cingari has served as Vice President,
Vice President, Product Marketing Product Marketing since July 1995. He served as
Vice President, Marketing and
Development from March 1994 to March
1995 and as Vice President,
Marketing from June 1993 to March
1994. Prior to joining the Company,
he served as Director of Marketing
of Marcam Corporation, a provider of
software, from 1989 to June 1993.
Rick A. Marquardt Mr. Marquardt has served as Vice
Vice President, Oracle President, Oracle Relationship
Relationship since June 1994, when he joined
the Company. From October 1990 to
May 1994, he served as the Vice
President, Manufacturing Systems of
Ross Systems, Inc.
Peter J. Barris Mr. Barris has served as a director of the
Director Company since October 1992 and has been a member
of the Compensation Committee since
September 1995. He has been
associated with the New Enterprise
Associates partnerships, venture
capital funds, since October 1990
and is a general partner of New
Enterprise Associates VI. From 1989
to August 1990, he was President and
Chief Executive Officer at LEGENT
Corporation, a utilities and systems
software company.
George B. Beitzel Mr. Beitzel has served as a director of
Director the Company since 1991 and Chairman of the
Compensation Committee since 1993.
In 1987, he retired from
International Business Machines
Corporation where he had been
employed since 1955 in various
positions, most recently as a Senior
Vice
</TABLE>
-61-
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
President, and where he was a
member of the Board of Directors.
David R. Hathaway Mr. Hathaway has served as a director of
Director the Company since 1986. He has also served as
Chairman of the Audit Committee
since 1993 and has been a member of
the Compensation Committee since
1992. Mr. Hathaway is a general
partner of Venrock Associates, a
venture capital firm with which he
has been associated since 1980. From
February to July 1992, Mr. Hathaway
served as acting Chief Executive
Officer of the Company.
Robert K. Weiler Mr. Weiler has served as a director of the
Director Company since March 1995. He has served as
President of Software Business of Wang
Laboratories, Inc. since December 1995. From 1991
to 1995, he served as Senior Vice President of
Worldwide Sales and Marketing at Lotus Development
Corporation. From 1989 to 1991, he was President
and Chief Operating Officer of Interleaf, Inc.
</TABLE>
CERTAIN PROCEEDINGS
On September 24, 1993, the Commission 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 Exchange Act, and Rules 12b-20 and 13a-13 promulgated thereunder, which
impose certain financial disclosure and internal recordkeeping obligations on
Oracle. The Commission 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.
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.
INDEPENDENT PUBLIC ACCOUNTANTS
The consolidated financial statements and schedule included in the
Company's Annual Report on Form 10-K, incorporated by reference in this Proxy
Statement, have been audited by Price Waterhouse LLP, independent public
accountants, as stated in
-62-
<PAGE>
their reports with respect thereto. It is expected that representatives of Price
Waterhouse LLP will be present at the Special Meeting, both to respond to
appropriate questions of shareholders of the Company and to make a statement if
they desire.
MISCELLANEOUS
Where information contained in this Proxy Statement rests particularly
within the knowledge of a person other than the Company, the Company has relied
upon information furnished by such person or contained in filings made by such
person with the Commission.
PROXY SOLICITATION
Proxies are being solicited by and on behalf of the Board of Directors
of the Company. All expenses of this solicitation, including the cost or
preparing and mailing this Proxy Statement, will be borne by the Company. In
addition to solicitation by use of the mails, proxies may be solicited by
directors, officers and employees of the Company in person or by telephone,
telegram or other means of communication. Such directors, officers and employees
will not be additionally compensated, but may be reimbursed for out-of-pocket
expenses in connection with such solicitation. Arrangements will also be made
with custodians, nominees and fiduciaries for forwarding of proxy solicitation
material to beneficial owners of the Common Shares held of record by such
persons, and the Company may reimburse such custodians, nominees and fiduciaries
for reasonable expenses incurred in connection therewith. _______________ has
been engaged to solicit proxies on behalf of the Company for a fee of
$___________ plus reasonable out-of-pocket expenses.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Securities and Exchange
Commission (the "Commission") by the Company (File No. 000-26000) are
incorporated by reference in this Proxy Statement:
1. The Company's Annual Report on Form 10-K for the
fiscal year ended June 30, 1996, as amended on Form 10-K/A filed on
October __, 1996;
2. The Company's Current Reports on Form 8-K filed on
August 28, 1996 and on September 26, 1996.
All documents and reports filed by the Company with the Commission
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the
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<PAGE>
Securities Exchange Act of 1934, as amended (the "Exchange Act"), after the date
of this Proxy Statement and prior to the date of the Special Meeting shall be
deemed to be incorporated by reference in this Proxy Statement and to be a part
hereof from the respective dates of filing of such documents or reports.
Any statement contained in a document filed with the Commission prior to
the date hereof and incorporated by reference herein shall be deemed to be
modified or superseded for purposes hereof to the extent that a statement
contained herein (or in any other subsequently filed document which also is
incorporated by reference herein) modifies or supersedes such statement. The
modifying or superseding statement may, but need not, state that it has modified
or superseded a prior statement or include any other information set forth in
the document that is not so modified or superseded. The making of a modifying or
superseding statement shall not be deemed an admission that the modified or
superseded statement, when made, constituted an untrue statement of a material
fact, an omission to state a material fact necessary to make a statement not
misleading, or the employment of a manipulative, deceptive or fraudulent device,
contrivance, scheme, transaction, act, practice, course of business or artifice
to defraud, as those terms are used in the Securities Act of 1933, as amended
(the "Securities Act"), the Exchange Act or the rules and regulations
thereunder. Any statement so modified shall not be deemed in its unmodified form
to constitute a part hereof for purposes of the Exchange Act. Any statement so
superseded shall not be deemed to constitute a part hereof for purposes of the
Exchange Act.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Exchange
Act, and in accordance therewith, files reports, proxy statements and other
information with the Commission. Such reports, proxy statements and other
information can be inspected and copied at the public reference facilities of
the Commission at Room 1024, 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549 and at the regional offices of the Commission located at
7 World Trade Center, 13th Floor, Suite 1300, New York, New York 10048 and Suite
1400, CitiCorp Center, 14th Floor, 500 West Madison Street, Chicago, Illinois
60661. Copies of such material can also be obtained at prescribed rates by
writing to the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Judiciary Plaza, Washington, D.C. 20549. In addition, such reports, proxy
statements and other information can be inspected at the offices of the Nasdaq
National Market, 20 Broad Street, New York, New York 10005.
The Commission maintains a World Wide Web site on the Internet at
http://www.sec.gov that contains reports, proxy and information statements and
other information regarding
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<PAGE>
registrants, such as the Company, that file electronically with the Commission.
THIS PROXY STATEMENT INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT
PRESENTED HEREIN OR DELIVERED HEREWITH. SUCH DOCUMENTS (OTHER THAN EXHIBITS TO
SUCH DOCUMENTS, UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE
TO SUCH DOCUMENTS) ARE AVAILABLE, WITHOUT CHARGE, TO ANY PERSON, INCLUDING ANY
BENEFICIAL OWNER, TO WHOM THIS PROXY STATEMENT IS DELIVERED, ON WRITTEN OR ORAL
REQUEST TO DATALOGIX INTERNATIONAL INC., 100 SUMMIT LAKE DRIVE, VALHALLA, NEW
YORK 10595, ATTENTION: BARBARA ARNOLD, ASSISTANT SECRETARY, TELEPHONE: (914)
773-8000. IN ORDER TO ENSURE DELIVERY OF THE DOCUMENTS PRIOR TO THE SPECIAL
MEETING, REQUESTS MUST BE RECEIVED BY [DECEMBER __, 1996].
ADDITIONAL INFORMATION
This Proxy Statement includes information to be disclosed pursuant to
Rule 13e-3 under the Exchange Act, which governs so-called "going private"
transactions by certain issuers or their affiliates. As of September 24, 1996,
Oracle owned 1,566,287 Common Shares, representing approximately 13.4% of the
total outstanding capital stock of the Company. Neither the Company nor Oracle
believes that Oracle or Acquisition Sub is an affiliate of the Company.
Accordingly, the Company and Oracle do not believe that Oracle, Acquisition Sub
or the Company are subject to the requirements of Rule 13e-3 as a result of the
proposed Merger. Oracle, Acquisition Sub and the Company are, however, filing a
Rule 13e-3 Transaction Statement (the "Schedule 13E-3") to furnish information
with respect to the transactions described herein, although such entities
expressly disclaim any obligation to make this filing. This Proxy Statement does
not contain all of the information set forth in the Schedule 13E-3, parts of
which are omitted in accordance with the regulations of the Commission. The
Schedule 13E-3, and any amendments thereto, including exhibits filed as a part
thereof, will be available for inspection and copying at the offices of the
Commission at set forth above.
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<PAGE>
SHAREHOLDER PROPOSALS
If the Merger is not consummated, any shareholder who wishes to
present a proposal for inclusion in the Proxy Statement for action at future
Annual Meetings of Shareholders must comply with the rules and regulations of
the Commission then in effect. The date by which such proposals must be received
by the Company for inclusion in the Company's Proxy Statement for the 1997
Annual Meeting has not yet been determined. If the Merger is not consummated,
the Company will inform holders of the Common Shares of the date by which such
proposals must be received by the Company for inclusion in the Company's Proxy
Statement for the 1997 Annual Meeting of Shareholders.
By Order of the Board of Directors
/s/Raymond V. Sozzi
---------------------------------
Raymond V. Sozzi
President, Chief Operating Officer
and Acting Chief Executive Officer
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<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
Datalogix International Inc.
In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of operations, of cash flows and of shareholders' equity
present fairly, in all material respects, the financial position of Datalogix
International Inc. and its subsidiaries at June 30, 1996 and 1995, and the
results of their operations and their cash flows for each of the three years in
the period ended June 30, 1996, in conformity with generally accepted accounting
principles. These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements in
accordance with generally accepted auditing standards which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion expressed
above.
As discussed in Note 13, on September 24, 1996 the Company executed an
agreement and plan of merger with Oracle in which Oracle will acquire all of the
Company's outstanding common stock.
Price Waterhouse LLP
Stamford, Connecticut
September 24, 1996
F-1
<PAGE>
DATALOGIX INTERNATIONAL INC.
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
JUNE 30,
--------------------
<S> <C> <C>
1996 1995
--------- ---------
ASSETS
Current assets:
Cash and cash equivalents................................................................. $ 34,019 $ 43,762
Short-term investments.................................................................... -- 165
Accounts receivable, less allowance for doubtful accounts of
$2,025, and $736, respectively.......................................................... 13,930 13,484
Deferred income taxes..................................................................... -- 2,017
Prepaid expenses and other current assets................................................. 747 576
--------- ---------
Total current assets................................................................ 48,696 60,004
Fixed assets, net........................................................................... 3,356 2,207
Computer software development costs, less accumulated amortization
of $1,890 and $3,080, respectively........................................................ 2,883 2,282
Deferred income taxes....................................................................... 2,732 499
Other assets................................................................................ 237 59
--------- ---------
Total assets........................................................................ $ 57,904 $ 65,051
--------- ---------
--------- ---------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................................................... $ 2,632 $ 5,157
Accrued liabilities....................................................................... 5,162 3,516
Customer advances and unearned revenue.................................................... 3,900 5,712
Notes payable and other obligations....................................................... 4,666 824
--------- ---------
Total current liabilities........................................................... 16,360 15,209
Unearned revenue............................................................................ 269 404
Notes payable and other obligations......................................................... -- 147
Commitments and contingencies (Note 6 and 12)............................................... -- --
Shareholders' equity (deficit):
Preferred stock, $.01 par value; authorized 5,000,000 shares; none issued................. -- --
Common stock, $.01 par value; authorized--40,000,000 shares; issued and
outstanding--11,158,231 shares in 1996 and 10,864,130 shares in 1995.................... 112 109
Additional paid-in capital................................................................ 72,160 71,631
Accumulated deficit....................................................................... (29,903) (21,871)
Treasury stock, at cost; 96,116 shares in 1996 and 11,116 shares in 1995.................. (704) (71)
Cumulative translation adjustment......................................................... (293) (267)
Deferred compensation..................................................................... (97) (240)
--------- ---------
Total shareholders' equity.......................................................... 41,275 49,291
--------- ---------
Total liabilities and shareholders' equity.......................................... $ 57,904 $ 65,051
--------- ---------
--------- ---------
</TABLE>
See accompanying notes to consolidated financial statements.
F-2
<PAGE>
DATALOGIX INTERNATIONAL INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-------------------------------
<S> <C> <C> <C>
1996 1995 1994
--------- --------- ---------
Revenues:
License fees................................................................... $ 23,515 $ 26,852 $ 14,189
Services....................................................................... 25,668 16,326 10,559
--------- --------- ---------
Total revenues................................................................. 49,183 43,178 24,748
--------- --------- ---------
Operating expenses:
Cost of license fees........................................................... 7,862 5,618 2,077
Cost of services............................................................... 18,109 10,334 6,024
Sales and marketing............................................................ 16,418 13,670 8,589
Research and development....................................................... 9,386 6,271 4,554
General and administrative..................................................... 7,218 4,433 2,097
--------- --------- ---------
Total operating expenses....................................................... 58,993 40,326 23,341
--------- --------- ---------
Income (loss) from operations.................................................... (9,810) 2,852 1,407
Interest income................................................................ 1,950 186 57
Interest expense............................................................... (122) (113) (149)
--------- --------- ---------
Income (loss) before taxes....................................................... (7,982) 2,925 1,315
Provision (benefit) for income taxes............................................. 50 (2,405) --
--------- --------- ---------
Net income (loss)................................................................ $ (8,032) $ 5,330 $ 1,315
--------- --------- ---------
--------- --------- ---------
Earnings (loss) per share........................................................ $ (0.70) $ 0.59 $ 0.16
--------- --------- ---------
--------- --------- ---------
Weighted average number of common and common equivalent shares outstanding....... 11,426 9,048 8,313
--------- --------- ---------
--------- --------- ---------
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE>
DATALOGIX INTERNATIONAL INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-------------------------------
<S> <C> <C> <C>
1996 1995 1994
--------- --------- ---------
Cash flows from operating activities:
Net income (loss).............................................................. $ (8,032) $ 5,330 $ 1,315
Adjustments to reconcile net income (loss) to net cash provided by (used in)
operating activities:
Depreciation and amortization................................................ 2,821 1,456 1,128
Provision for bad debt on accounts receivable................................ 2,812 307 590
Loss on disposal of fixed assets............................................. 118 -- 6
Write-off of capitalized software costs...................................... 131 -- 120
Deferred income taxes........................................................ (216) (2,516) --
Changes in operating assets and liabilities:
Accounts receivable........................................................ (3,258) (4,259) (3,483)
Prepaid expenses and other assets.......................................... (239) 347 (35)
Accounts payable and accrued liabilities................................... 4,576 2,160 410
Customer advances and unearned revenue..................................... (1,947) (352) 286
--------- --------- ---------
Net cash provided by (used in) operating activities.................... (3,234) 2,473 337
--------- --------- ---------
Cash flows from investing activities:
Short-term investments, net.................................................... 55 (55) 272
Capital expenditures........................................................... (2,676) (1,884) (401)
Capitalized software costs..................................................... (1,896) (1,122) (1,008)
--------- --------- ---------
Net cash (used in) investing activities................................ (4,517) (3,061) (1,137)
--------- --------- ---------
Cash flows from financing activities:
Net repayments on financing arrangements....................................... (971) (2,780) (78)
Purchase of treasury shares.................................................... (633) -- --
Proceeds from sale of redeemable convertible preferred stock, net.............. -- 4,147 (38)
Payment of stock issuance costs................................................ (789) -- --
Proceeds from sale of common stock, net........................................ -- 38,743 --
Proceeds from exercise of stock options and warrants and employee stock
purchase..................................................................... 427 216 --
--------- --------- ---------
Net cash provided by (used in) financing activities.................... (1,966) 40,326 (116)
--------- --------- ---------
Effect of exchange rate changes on cash.......................................... (26) (26) (15)
--------- --------- ---------
Net increase (decrease) in cash and cash equivalents................... (9,743) 39,712 (931)
Cash and cash equivalents at beginning of year................................... 43,762 4,050 4,981
--------- --------- ---------
Cash and cash equivalents at end of year......................................... $ 34,019 $ 43,762 $ 4,050
--------- --------- ---------
Supplemental disclosures of cash flow information:
Interest paid.................................................................. $ 122 $ 113 $ 149
Interest received.............................................................. $ 1,856 -- --
Noncash investing and financing activities:
Accrual of deferred stock option compensation.................................. $ -- $ 257 $ --
Conversion of redeemable preferred stock to common stock....................... $ -- $ 32,977 $ --
Accrual of common stock issuance costs......................................... $ -- $ 731 $ --
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
DATALOGIX INTERNATIONAL INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL CUMULATIVE
---------------------- PAID-IN ACCUMULATED TREASURY TRANSLATION
SHARES AMOUNT CAPITAL (DEFICIT) STOCK ADJUSTMENT
--------- ----------- ----------- ------------ ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance, June 30, 1993.................. 213 $ 2 $ 275 $ (28,125) $ (71) $ (226)
Exercise of stock options............... 2 1
Preferred stock issuance costs.......... (38)
Net income.............................. 1,315
Translation adjustments................. (15)
--------- ----- ----------- ------------ ----- -----
Balance, June 30, 1994.................. 215 2 276 (26,848) (71) (241)
Preferred stock issuance costs.......... (353)
Initial public offering of common stock,
net................................... 2,495 25 37,987
Conversion of redeemable preferred
stock................................. 7,259 73 32,904
Cashless exercise of Oracle Warrant
(Note 7):
Exercise............................ 890 9 4,995
Reacquisition....................... (890) (9) (15,128)
Sale................................ 596 6 10,127
Exercise of stock options and
warrants.............................. 299 3 213
Deferred compensation on stock
options............................... 257
Amortization of deferred compensation...
Net income.............................. 5,330
Translation adjustments................. (26)
--------- ----- ----------- ------------ ----- -----
Balance, June 30, 1995.................. 10,864 109 71,631 (21,871) (71) (267)
Exercise of stock options and
warrants.............................. 282 3 296
Issuance under Stock Plans.............. 12 -- 128
Purchase of treasury shares............. (633)
Amortization of deferred compensation... 105
Net loss................................ (8,032)
Translation adjustments................. (26)
--------- ----- ----------- ------------ ----- -----
Balance, June 30, 1996.................. 11,158 $ 112 $ 72,160 $ (29,903) $ (704) $ (293)
--------- ----- ----------- ------------ ----- -----
--------- ----- ----------- ------------ ----- -----
<CAPTION>
DEFERRED
COMPENSATION
---------------
<S> <C>
Balance, June 30, 1993.................. $ --
Exercise of stock options...............
Preferred stock issuance costs..........
Net income..............................
Translation adjustments.................
-----
Balance, June 30, 1994.................. --
Preferred stock issuance costs..........
Initial public offering of common stock,
net...................................
Conversion of redeemable preferred
stock.................................
Cashless exercise of Oracle Warrant
(Note 7):
Exercise............................
Reacquisition.......................
Sale................................
Exercise of stock options and
warrants..............................
Deferred compensation on stock
options............................... (257)
Amortization of deferred compensation... 17
Net income..............................
Translation adjustments.................
-----
Balance, June 30, 1995.................. (240)
Exercise of stock options and
warrants..............................
Issuance under Stock Plans..............
Purchase of treasury shares.............
Amortization of deferred compensation... 143
Net loss................................
Translation adjustments.................
-----
Balance, June 30, 1996.................. $ (97)
-----
-----
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
DATALOGIX INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE DATA)
NOTE 1 -- THE COMPANY:
Datalogix International Inc. (the "Company") is a provider of open,
client/server software solutions for managing the manufacturing, logistics and
financial operations of process manufacturing companies worldwide.
The financial statements reflect the consolidated activities of the Company
and its subsidiaries. All intercompany balances and transactions have been
eliminated.
NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies followed by
the Company.
ACCOUNTING ESTIMATES:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reported
period. Actual results could differ from these estimates.
REVENUE RECOGNITION:
Revenues under the Company's noncancellable license agreements are
recognized upon delivery of the software and once all significant contractual
obligations have been satisfied. Royalty revenues are recognized as they are
reported to the Company by the third party licensing the Company's software.
Revenues from the Company's customer support services (i.e., telephone
support and product updates) are recognized on a PRO RATA basis over the life of
the service contract, generally one year. Revenues from consulting, programming,
training and software installation services are recognized as these services are
performed and delivered. Customer advances and unearned revenues include amounts
received or billed for customer support services to be rendered in the future.
Estimated warranty costs of the Company's noncancellable license agreements
are recognized upon the recognition of revenue related to these agreements. See
Note 12 for fourth quarter increase to the warranty reserve.
COMPUTER SOFTWARE DEVELOPMENT COSTS:
The Company's software development costs, which are primarily comprised of
salaries and related costs, are expensed until technological feasibility is
established and then capitalized until a marketable product is completed.
Capitalized software development costs are amortized over their estimated
economic life, principally three to five years. Amortization expense included in
cost of license fees for the years ended June 30 were $1,161 in 1996, $690 in
1995 and $596 in 1994. Included in research and development expenses were
previously capitalized software in the amounts of $131 and $120 in fiscal 1996
and 1994, respectively, which the Company determined would provide no future
benefit.
The Company periodically reviews its capitalized software development costs
to determine their net realizability based upon anticipated net future cash
flows of the applicable products.
F-6
<PAGE>
DATALOGIX INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
FIXED ASSETS:
Fixed assets are stated at cost less accumulated depreciation or
amortization. Depreciation of computer and office equipment is calculated using
the straight-line method over the estimated useful lives of the assets.
Amortization of leasehold improvements is calculated using the straight-line
method over the shorter of the life of the improvement or the related lease.
Depreciation and amortization expenses were $1,406, $749, and $532 in fiscal
1996, 1995 and 1994, respectively.
SHORT-TERM INVESTMENTS:
Short-term investments consist of bank deposits with maturities greater than
three months.
INCOME TAXES:
The Company accounts for income taxes using the asset and liability
approach. See Note 10 for further information.
STATEMENT OF CASH FLOWS:
For purposes of reporting cash flows, the Company considers all
interest-bearing securities having original maturities of three months or less
to be cash equivalents.
CONCENTRATIONS OF CREDIT RISKS:
The Company operates in one segment and its customers are concentrated
primarily in the consumer packaged goods (food, beverage, health and beauty
aids) and the industrial products (chemical, pharmaceutical and petroleum)
industries. The Company generally requires a cash deposit upon contract signing.
The Company establishes an allowance for doubtful accounts based upon factors
surrounding the credit risk of specific customers, historical trends and other
information.
In fiscal 1996, approximately 10% and 16% of total revenues were derived
from Oracle and another customer, respectively. The GEMMS license fees and
services comprised the principal component of the revenues from these customers.
No customer accounted for revenues in excess of 10% in fiscal 1995 or 1994.
The Company invests its excess cash principally in money market instruments,
short-term corporate obligations and certificates of deposit. Generally, the
investments mature within 90 days.
FOREIGN CURRENCY TRANSLATION:
Assets and liabilities denominated in foreign currencies are translated at
exchange rates on the balance sheet date, and revenues and expenses are
translated at average rates during the period. Translation adjustments are shown
separately as a component of shareholders' equity. The majority of international
revenues are denominated in U.S. dollars and pound sterling.
EARNINGS (LOSS) PER SHARE:
Earnings (loss) per share is determined by dividing net income (loss) by the
weighted average number of shares of common stock and common stock equivalents
outstanding during the period. Common stock
F-7
<PAGE>
DATALOGIX INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
equivalents include stock options, warrants and redeemable convertible preferred
stock prior to its conversion into common stock in June 1995, upon the closing
of the initial public offering of the Company's common stock.
RECENTLY ISSUED ACCOUNTING STANDARDS:
In October 1995, the Financial Accounting Standards Board issued SFAS 123, "
Accounting for Stock Based Compensation," which is effective in fiscal 1997 for
the Company. Under SFAS 123, companies can elect, but are not required, to
recognize compensation expense for all stock-based awards, using a fair value
methodology. The Company expects to implement in fiscal 1997 the disclosure only
provision, as permitted by SFAS 123.
RECLASSIFICATIONS:
Certain reclassifications have been made to prior period amounts to conform
with the current year presentation.
NOTE 3 -- ORACLE (A RELATED PARTY) AGREEMENTS:
In September 1994, the Company entered into a Joint Marketing Agreement and
an International Distribution Agreement with Oracle Corporation (the "Oracle
Agreements") to market and distribute the GEMMS product (under the name "Oracle
GEMMS") on a worldwide basis. Datalogix pays royalties of 30% to Oracle for
certain GEMMS sales in the United States. The Company reports the royalties paid
to Oracle as a cost of license fees. In exchange for its international
distribution rights, Oracle pays the Company a royalty equal to 40% or more of
the license fees and maintenance fees received by Oracle for certain sales
outside the United States. Oracle also pays the Company license fees for certain
sales in the United States where Oracle sells directly to the customer. The
Company includes these royalties and license fees in revenues. There is no
offsetting entry to cost of license fees that is attributable to the royalty and
license fee revenues earned by the Company. The Oracle Agreements are for a
four-year term and renew annually unless terminated by either party.
Royalties and license fees paid by Oracle to Datalogix were approximately
$4,342 and $411 and royalties paid by Datalogix to Oracle were approximately
$3,923 and $2,670 for fiscal 1996 and 1995, respectively. Services revenue paid
by Oracle to Datalogix were approximately $740 and $130 in fiscal 1996 and 1995,
respectively. At June 30, 1996 and 1995, the Company had receivables due from
Oracle in the amount of $1,576 and $164, respectively, which are included in
accounts receivable in the consolidated balance sheet. Also, at June 30, 1996
and 1995, the Company had payables due Oracle in the amount of $1,905 and
$2,877, respectively, which are included in accounts payable in the consolidated
balance sheet. See Note 7, 11 and 13 for other transactions with Oracle.
F-8
<PAGE>
DATALOGIX INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
NOTE 4 -- BALANCE SHEET COMPONENTS:
Fixed assets consisted of the following at:
<TABLE>
<CAPTION>
JUNE 30,
--------------------
<S> <C> <C>
1996 1995
--------- ---------
Computer equipment......................................................... $ 4,003 $ 3,608
Assets under capital lease................................................. -- 270
Office furniture, fixtures and other....................................... 2,169 1,297
--------- ---------
Total.................................................................... 6,172 5,175
LESS--Accumulated depreciation and amortization............................ 2,816 2,968
--------- ---------
$ 3,356 $ 2,207
--------- ---------
--------- ---------
</TABLE>
Accrued liabilities consisted of the following at:
<TABLE>
<CAPTION>
JUNE 30,
--------------------
<S> <C> <C>
1996 1995
--------- ---------
Commissions................................................................ $ 1,076 $ 1,136
Payroll and other compensation............................................. 1,957 352
Other...................................................................... 2,129 2,028
--------- ---------
$ 5,162 $ 3,516
--------- ---------
--------- ---------
</TABLE>
NOTE 5 -- NOTES PAYABLE AND OTHER OBLIGATIONS:
In January 1994, the Company secured a commitment for a short term credit
facility of $1,500. The facility was amended in December 1994 to include an
equipment line of credit of $1,000. These facilities bear interest at a rate of
0.75% to 1.25% above the lender's prime rate and are secured by the Company's
assets. The short term credit facility expired in April 1996. The equipment line
of credit facility expired in June 1995. No amounts were outstanding under
either the short term credit facility or the equipment line credit at June 30,
1996 or 1995.
The Company has other obligations relating to product claims and warranty
costs. In the fourth quarter of fiscal 1996, the Company increased its reserve
for such costs and obligations to approximately $4,700 as discussed in Note 12.
The Company has noncancelable operating leases for furniture, equipment,
office space and automobiles. Annual rental expense under operating leases was
$1,957, $1,920 and $1,758 in fiscal 1996, 1995, 1994, respectively.
At June 30, 1996, scheduled minimum future lease payments due under
noncancelable operating leases having initial or remaining terms of one year or
more are as follows:
<TABLE>
<CAPTION>
FISCAL YEAR
- --------------------------------------------------------------------
1997.............................................................. $ 2,112
<S> <C>
1998.............................................................. 2,296
1999.............................................................. 1,187
2000 and thereafter............................................... 102
---------
Total minimum lease payments........................................ $ 5,697
---------
---------
</TABLE>
F-9
<PAGE>
DATALOGIX INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
NOTE 6 -- COMMITMENTS AND CONTINGENCIES:
The Company has made commitments to its customers for the annual support and
maintenance of its products as well as other customer obligations. See Note 5
for the accrued liability for product claims and warranty costs.
The Company is a party to claims arising during the normal course of
business, the outcome of which, in the opinion of management, will not have a
material adverse effect on the Company's financial position or results of
operations. See Note 12 for discussion of quarterly restatements.
NOTE 7 -- CAPITAL STOCK:
AUTHORIZATION
In April 1995, the Board of Directors and shareholders approved a 1-for-2
reverse stock split of the common stock, authorized the issuance of 5,000,000
shares of preferred stock at $.01 par value and approved an increase in the
number of authorized common shares from 30,000,000 to 40,000,000 shares. The
reverse stock split has been reflected in all prior periods presented.
Accordingly, all previously reported common stock share, per share and stock
option data have been restated.
COMMON STOCK
On June 15, 1995, the Company completed an underwritten initial public
offering ("IPO") of 3,795,000 shares of its common stock, at an initial price to
the public of $17.00 per share. The offering was comprised of 2,495,000 newly
issued shares by the Company and 1,300,000 shares offered by selling
shareholders. The Company retained net proceeds of $37,954 after deducting
underwriting commissions and discounts of $2,969 and other costs of $1,492.
In connection with the Oracle Agreements in September 1994 (see Note 3),
2,401,280 shares of preferred stock were issued to Oracle for $1.874 per share.
The total amount of preferred shares issued to Oracle was converted into common
stock upon the closing of the Company's IPO on June 15, 1995. In addition,
Oracle was granted a warrant (the "Oracle Warrant") to purchase 890,426 shares
of the Company's common stock at $5.62 per share. The Oracle Warrant was also
exercised for the Company's common stock upon the closing of the Company's IPO
as part of a cashless exercise. As a result of these and other market
transactions, Oracle owns approximately 14% of the Company's outstanding common
stock at June 30, 1996.
NOTE 8 -- STOCK OPTION PLANS:
The Company has reserved shares of common stock to be issued in connection
with its key employee stock option plan. The employees' options to purchase
shares vest over a fifty-month period. The options terminate six years from the
date granted.
All outstanding options under existing employee option plans and all
warrants outstanding both prior to and since the April 1995 1-for-2 reverse
stock split are now deemed to be exercisable into that number of common shares
determined using the stock split multiple.
In April 1995, the Board of Directors and shareholders established the 1995
Director Option Plan and the 1995 Employee Stock Purchase Plan which provides
for the issuance of 100,000 and 250,000 shares of common stock, respectively. As
of June 30, 1996, 24,000 options were granted and 76,000 shares remained
F-10
<PAGE>
DATALOGIX INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
NOTE 8 -- STOCK OPTION PLANS: (CONTINUED)
available for future granting of options under the 1995 Director Option Plan.
Under the Employee Stock Purchase Plan, eligible employees may purchase shares
of the Company's common stock through payroll deductions not to exceed 10% of
compensation per pay period. The purchase price under this plan is an amount
equal to 85% of the lower of the fair market value of the stock on enrollment
date or on the exercise date. The plan purchased approximately 11,960 shares of
the Company's common stock during fiscal 1996. At June 30, 1996, there were
238,040 shares available for future offerings. No options or shares had been
granted or issued under these plans at June 30, 1995.
In November 1992, the Board of Directors and shareholders established the
1992 Stock Option Plan which provides for the issuance of 2,071,439 shares of
common stock.
Transactions under the Company's stock option plans, as retroactively
adjusted for stock splits, are summarized below (price approximates market value
at date of grant):
<TABLE>
<CAPTION>
OPTIONS PRICE PER SHARE
---------- -----------------
<S> <C> <C>
Options outstanding at June 30, 1993.......................... 1,139,248
Options granted............................................... 418,295 $0.80
Options exercised............................................. (1,573) $0.80
Options canceled.............................................. (77,598) $0.80
---------- -----------------
Options outstanding at June 30, 1994.......................... 1,478,372
Options granted............................................... 644,163 $ 0.80 - $13.00
Options exercised............................................. (268,848) $0.80
Options canceled.............................................. (183,777) $ 0.80 - $6.98
---------- -----------------
Options outstanding at June 30, 1995.......................... 1,669,910
Options granted............................................... 171,500 $ 11.75 - $12.25
Options exercised............................................. (272,141) $ 0.80 - $3.50
Options canceled.............................................. (95,024) $ 0.80 - $13.00
---------- -----------------
Options outstanding at June 30, 1996.......................... 1,474,245
---------- -----------------
---------- -----------------
</TABLE>
Stock options exercisable at June 30, 1996 were 906,199 with an exercise
price per share of $0.80-- $13.00. At June 30, 1996, 212,987 shares remained
available for future granting of options under the 1992 Plan. In fiscal 1996 and
1995, the Company recognized as compensation the excess of the deemed value for
accounting purposes of the common stock issuable upon exercise of certain
options over the exercise price of such options. The compensation expense is
amortized ratably over the period from the date of the grant through the vesting
date.
NOTE 9 -- EMPLOYEE RETIREMENT PLAN:
The Company sponsors a defined contribution 401(k) plan which covers
substantially all of its employees. The Company matches an amount equal to 25%
of the first 5% contributed by the employee. Employees are fully vested in their
own contribution and vest in the Company's contributions over a four-year
period. Contribution expenses of $134, $139 and $72 were incurred during fiscal
1996, 1995 and 1994, respectively.
F-11
<PAGE>
DATALOGIX INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
NOTE 10 -- PROVISION FOR INCOME TAXES:
The deferred tax provision was determined under the asset and liability
approach. Deferred tax assets and liabilities were recognized on differences
between the book and tax bases of assets and liabilities using presently enacted
tax rates. The provision (benefit) for income taxes is the sum of the amount of
income tax paid or payable for the year as determined by applying the provisions
of enacted tax laws to the taxable income for that year and the net change
during the year in the Company's deferred tax assets and liabilities.
In the third quarter of fiscal 1995, the Company, based upon its recent
operating results and the market acceptance of its GEMMS product, reduced its
valuation allowance to $698. The effect of this change in judgment regarding the
realizability of certain net operating losses was to offset the 1995 provision
for income taxes by $3,497, resulting in a net benefit for income taxes of
$2,405 for fiscal 1995. The valuation allowance was increased to $3,412 at June
30, 1996 primarily reflecting an allowance against additional loss carryforwards
generated in the current fiscal year. The Company believes it is more likely
than not that the deferred income taxes of $2,732 at June 30, 1996 will be
realized. However, it is reasonably possible that such valuation allowance could
increase significantly in the near term, depending on the Company's ability to
generate sufficient taxable income.
The provision (benefit) for taxes for the fiscal years ended June 30, 1996,
1995 and 1994 are as follows:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-------------------------------
<S> <C> <C> <C>
1996 1995 1994
--------- --------- ---------
Current provision
U.S. federal.................................................... $ -- $ 15 $ --
State........................................................... 50 66 --
Foreign......................................................... 216 30 --
--------- --------- ---------
Total current provision........................................... 266 111 --
Deferred benefit.................................................. (216) (2,516) --
Provision (benefit) for income taxes.............................. $ 50 $ (2,405) $ --
</TABLE>
F-12
<PAGE>
DATALOGIX INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
NOTE 10 -- PROVISION FOR INCOME TAXES: (CONTINUED)
Deferred tax liabilities (assets) are comprised of the following at:
<TABLE>
<CAPTION>
JUNE 30,
--------------------
<S> <C> <C>
1996 1995
--------- ---------
Software development cost amortization................................... $ 1,009 $ 799
Depreciation and other................................................... 165 223
--------- ---------
Gross deferred tax liabilities......................................... 1,174 1,022
--------- ---------
Loss carryforwards....................................................... (4,892) (3,548)
Contract refunds and other obligations................................... (1,633) (243)
Commissions.............................................................. (26) (65)
Bad debt expense......................................................... (709) (235)
Other.................................................................... (58) (145)
--------- ---------
Gross deferred tax assets.............................................. (7,318) (4,236)
--------- ---------
Deferred tax asset valuation allowance................................... 3,412 698
--------- ---------
Net deferred tax asset................................................. $ (2,732) $ (2,516)
--------- ---------
--------- ---------
</TABLE>
The provision (benefit) for income taxes differs from the amount of income
tax determined by applying the U.S. applicable income tax rate to (loss) income
before taxes is as follows:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-------------------------------
<S> <C> <C> <C>
1996 1995 1994
--------- --------- ---------
Tax (benefit) provision at statutory rate....................... $ (2,794) $ 1,024 $ 447
State income taxes, net of federal tax benefit.................. 33 43 --
Valuation allowance adjustment, net............................. 2,714 (3,497) (447)
Other........................................................... 97 25 --
--------- --------- ---------
Provision (benefit) for income taxes............................ $ 50 $ (2,405) $ --
--------- --------- ---------
--------- --------- ---------
</TABLE>
The Company has significant operating loss carryforwards which expire in
2008, 2009 and 2011. For tax purposes, there is a limitation on the utilization
of net operating losses resulting from certain changes in ownership due to prior
common and preferred stock transactions. As a result, the amount of net
operating loss carryforwards available to offset future taxable income is
approximately $14,000 as of June 30, 1996. Accordingly, the Company has recorded
a gross deferred tax asset for the amount of net operating loss carryforwards
available to offset future taxable income.
F-13
<PAGE>
DATALOGIX INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
NOTE 11 -- GEOGRAPHIC INFORMATION:
Financial information, summarized by geographic area, is as follows:
<TABLE>
<CAPTION>
CANADA AND
UNITED OTHER
STATES EUROPE INTERNATIONAL TOTAL
---------- --------- ------------- ---------
<S> <C> <C> <C> <C>
Year ended June 30, 1996:
Total revenues................................................... $ 40,042 $ 4,867 $ 4,274 $ 49,183
Income (loss) from operations.................................... $ (11,532) $ 55 $ 1,667 $ (9,810)
Identifiable assets.............................................. $ 55,783 $ 1,945 $ 176 $ 57,904
Year ended June 30, 1995:
Total revenues................................................... $ 38,289 $ 2,527 $ 2,362 $ 43,178
Income (loss) from operations.................................... $ 2,591 $ (723) $ 984 $ 2,852
Identifiable assets.............................................. $ 63,998 $ 1,035 $ 18 $ 65,051
Year ended June 30, 1994:
Total revenues................................................... $ 22,027 $ 1,481 $ 1,240 $ 24,748
Income (loss) from operations.................................... $ 1,222 $ (408) $ 593 $ 1,407
Identifiable assets.............................................. $ 16,438 $ 1,148 $ 10 $ 17,596
</TABLE>
Revenues received directly from Oracle approximates $5,082, $541 and $0 for
the year ended June 30, 1996, 1995, and 1994 respectively.
NOTE 12 -- QUARTERLY FINANCIAL INFORMATION (UNAUDITED):
Summarized quarterly financial data for the year ending June 30, 1996 and
1995 are as follows:
<TABLE>
<CAPTION>
PER THE QUARTER ENDED
---------------------------------------------------
<S> <C> <C> <C> <C>
SEPTEMBER 30, DECEMBER 31, MARCH 31, JUNE 30,
FISCAL YEAR 1996 1995* 1995* 1996 1996
- ------------------------------------------------------------- ------------- ------------ ----------- ---------
Total revenues............................................... $ 9,166 $ 14,870 $ 11,065 $ 14,082
Operating expenses........................................... 10,760 13,698 13,712 20,823
Income (loss) before taxes................................... (1,109) 1,625 (2,179) (6,319)
Net income (loss)............................................ (698) 1,023 (1,373) (6,984)
Earnings (loss) per share.................................... (.06) .08 (.12) (.60)
</TABLE>
- ------------------------
* The first and second quarters of fiscal 1996 have been restated from
originally reported amounts as disclosed below.
F-14
<PAGE>
DATALOGIX INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
NOTE 12 -- QUARTERLY FINANCIAL INFORMATION (UNAUDITED): (CONTINUED)
During August 1996, new management conducted a comprehensive review of major
customer accounts for the purpose of determining the adequacy of reserves and
allowances related to customer warranty costs, legal costs and accounts
receivable. As a result of this review, management increased its sales returns
and allowance and bad debt provision by approximately $1,700, its customer
warranty costs by approximately $3,400 and made certain other adjustments of
approximately $800. Management has no basis on which to allocate these costs to
prior periods; as such, these adjustments totaling approximately $5,900 have
been accounted for as changes in estimates in the fourth quarter.
The first and second quarters of fiscal 1996 were restated due to accounting
irregularities which necessitated the elimination of a reseller transaction that
was subsequently determined not to be in accordance with Company policies, the
reversal of a credit taken against royalties to Oracle and to record as
compensation certain expenses related to a former employee. As a result of these
restatements, the Company's Board of Directors has retained outside counsel to
conduct a review of the facts and circumstances surrounding these matters and in
addition the Company's business practices and procedures. The originally
reported amounts were as follows:
<TABLE>
<CAPTION>
PER THE QUARTER ENDED
---------------------------
<S> <C> <C>
SEPTEMBER 30, DECEMBER 31,
FISCAL YEAR 1996 -- AS PREVIOUSLY REPORTED 1995 1995
- ------------------------------------------------------------------------------------ ------------- ------------
Total revenues...................................................................... $ 10,126 $ 13,910
Operating expenses.................................................................. 10,072 3,410
Income before taxes................................................................. 539 953
Net income.......................................................................... 340 600
Earnings per share.................................................................. .03 .05
</TABLE>
The Company is unable to predict whether litigation resulting from the
publication of the restatements will be initiated against the Company, its
officers or its directors nor is it able to predict the outcome or the range of
potential loss, if any, which might result if such litigation is initiated.
Accordingly, no provision for any liability or other adjustments which may
result has been made in the financial statements at June 30, 1996.
<TABLE>
<CAPTION>
PER THE QUARTER ENDED
----------------------------------------------------
<S> <C> <C> <C> <C>
SEPTEMBER 30, DECEMBER 31, MARCH 31, JUNE 30,
FISCAL YEAR 1995 1994 1994 1995 1995
- ------------------------------------------------------------- ------------- ------------- ----------- ---------
Total revenues............................................... $ 7,115 $ 9,988 $ 12,004 $ 14,071
Operating expenses........................................... 7,095 9,602 11,258 12,371
Income before taxes.......................................... 22 398 758 1,747
Net income................................................... 22 398 3,809 1,101
</TABLE>
NOTE 13 -- SUBSEQUENT EVENTS:
The Company filed an 8-K dated August 27, 1996 and announced that its Board
of Directors adopted a shareholder rights plan in which preferred stock purchase
rights will be distributed as a dividend at a rate of one right for each share
of the Company's common stock. The Company adopted the plan to protect
shareholders against unsolicited attempts to acquire control of the Company that
would not offer what the Company believes is intended to enable all of the
Company's shareholders to realize the long-term value of their investment in the
Company. The rights do not preclude a takeover, but put on notice anyone seeking
F-15
<PAGE>
DATALOGIX INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
NOTE 13 -- SUBSEQUENT EVENTS: (CONTINUED)
to acquire the Company to negotiate with the Board prior to attempting a
takeover. The rights will be issued to shareholders of record on September 9,
1996 and will expire on August 27, 2006.
The plan provides for the issuance of one right for each one one-thousandth
of a newly issued share of Series A preferred stock of the Company at an
exercise price of $30. The rights will be exerciseable and transferable apart
from the Company's common stock only if a person or group acquires beneficial
ownership of 20% or more of common stock or commences a tender or exchange offer
upon consummation of which such person or group would beneficially own 20% or
more of the common stock. If a person or group becomes the beneficial owner of
20% or more of the Company's common stock, then each right not owned by a 20% or
more shareholder or certain related parties will entitle its holder to purchase,
at the right's then-current exercise price, shares of common stock (or, in
certain circumstances as determined by the Board, cash , other property, or
other securities) having a value twice the right's exercise price. The Company
will generally be entitled to redeem the rights at $.01 per right at any time
until a person or group has become the beneficial owner of 20% or more of the
Company's common stock.
If, after any person has become a 20% or more shareholder, the Company is
involved in a merger or other business combination with another person in which
its common stock is changed or converted, or sells 50% or more of its assets or
earning power to another person, each right will entitle its holder to purchase,
at the right's then-current exercise price, shares of common stock of such other
person having value of twice the right's exercise price.
The Company also announced that the Board of Directors had adopted
amendments to the Company's Bylaw's implementing notice procedures for
shareholder proposals and for nominations for the election of directors,
increasing the percentage of outstanding shares of stock required to call
special meetings of shareholders, and eliminating the ability of shareholders to
remove directors without cause.
On September 24, 1996 the Company executed an Agreement and Plan of Merger
with Oracle in which Oracle will acquire all of the Company's outstanding common
stock, excluding treasury, for a price of $8.00 per share or an aggregate of
approximately $81 million. Each share of the Company's common stock (and
associated preferred stock purchase rights) will be converted into the right to
receive $8.00 per share payable to the holder thereof, without interest.
Consummation of the merger is subject to certain closing conditions, including
shareholder consent and regulatory approval. In connection with the execution of
the Merger Agreement on September 24, 1996, the Company amended the plan to
exclude the Merger from triggering the exerciseability of such rights.
F-16
<PAGE>
ANNEX A
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
-4-
<PAGE>
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.
(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
-5-
<PAGE>
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 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
-6-
<PAGE>
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 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).
-7-
<PAGE>
(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.
(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
-8-
<PAGE>
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), 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,
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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 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
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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 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
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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
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;
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<PAGE>
(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;
(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
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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, 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.
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<PAGE>
(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
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
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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 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
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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 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,
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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.
(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.
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(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 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.
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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 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
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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 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.
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(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 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
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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.
(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. Section 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.
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(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 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. Section 9601 ET SEQ.), the Hazardous Material Transportation Act (49
U.S.C. Section 1801 ET SEQ.), the Resource Conservation and Recovery Act (42
U.S.C. Section 6901 ET SEQ.), the Federal Water Pollution Control Act (33
U.S.C. Section 1251 ET SEQ.), the Clean Air Act (42 U.S.C. Section 7401 ET
SEQ.), the Toxic Substances Control Act, as amended (15 U.S.C. Section 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
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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.
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).
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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-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
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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;
(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
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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 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
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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
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
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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 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.
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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, 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;
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(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 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
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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;
(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;
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(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
(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.
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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 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
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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 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
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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 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
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(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.
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
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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 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:
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(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
(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;
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<PAGE>
(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 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;
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<PAGE>
(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;
(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
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<PAGE>
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.
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,
Corporate Development
--------------------------
DELPHI ACQUISITION CORPORATION
By:/s/ David J. Roux
----------------------------
Name: David J. Roux
----------------------------
Title: President and Chief
Financial Officer
--------------------------
DATALOGIX INTERNATIONAL, INC.
By:/s/ Raymond V. Sozzi
------------------------------
Name: Raymond V. Sozzi
----------------------------
Title: President and Chief
Operating Officer
--------------------------
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<PAGE>
AMENDMENT NO. 1
TO
AGREEMENT AND PLAN OF MERGER
AMENDMENT NO. 1 dated as of October 8, 1996 (this "AMENDMENT") to the
Agreement and Plan of Merger dated as of September 24, 1996 (the "ORIGINAL
AGREEMENT") 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"). Terms used but not otherwise defined herein are
use herein as defined in the Original Agreement.
RECITALS:
WHEREAS, Parent, Purchaser and the Company entered into the Original
Agreement to provide for the merger of Purchaser with and into the Company such
that upon conservation of the Merger, the Company would be a wholly owned
subsidiary of Parent, and the holders of the Shares of the Company would receive
cash in exchange for their Shares; and
WHEREAS, the parties hereto wish to amend the Original Agreement in certain
respects in accordance with Section 8.2 of the Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements contained herein, and intending to be legally bound hereby, the
Company, Parent and Purchaser hereby agree as follows:
1. The second parenthetical contained in Section 1.8(a)(2) of the
Original Agreement which currently reads as follows:
"(but in no event later than 14 days after the date hereof)"
is amended in its entirety to read as follows:
"(but in no event later than 16 days after the date hereof)"
2. Section 1.8(f) of the Original Agreement is amended in its entirety to
read as follows:
"(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 twelfth day after the
date hereof to be complete and accurate in all material respects."
3. Section 2.1(b) of the Original Agreement is amended in its entirely to
read as follows:
<PAGE>
"(b) CANCELLATION OF TREASURY STOCK AND PARENT 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 Parent or any subsidiary of Parent
shall be canceled and retired and shall cease to exist and no
consideration shall be delivered in exchange therefor."
2. Section 2.4(a) of the Original Agreement is amended by adding at the
end thereof the following language:
"No fractional share of common stock of Parent shall be issued upon
exercise of any Employee Stock Option, and any and all fractional
shares shall therefore be cancelled."
3. This Amendment 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.
4. This Amendment 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.
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<PAGE>
IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused this
Amendment to be signed by their respective officers thereunto duly authorized as
of the date first written above.
ORACLE CORPORATION
By: /s/ Thomas Theodores
-------------------------------
Name: Thomas Theodores
Title: Vice President, Legal
DELPHI ACQUISITION CORPORATION
By: /s/ Thomas Theodores
-------------------------------
Name: Thomas Theodores
Title: Vice President and Secretary
DATALOGIX INTERNATIONAL INC.
By: /s/ Raymond V. Sozzi
-------------------------------
Name: Raymond V. Sozzi
Title: President and Acting Chief Executive Officer
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<PAGE>
ANNEX B
[ROBERTSON, STEPHENS & COMPANY LETTERHEAD]
September 23, 1996
PRIVILEGED AND CONFIDENTIAL
Board of Directors
Datalogix International Inc.
100 Summit Lake Drive
Valhalla, NY 10595
Members of the Board:
You have asked our opinion with respect to the fairness to Datalogix
International Inc. ("Datalogix") and its shareholders, from a financial point
of view and as of the date hereof, of the Consideration (as defined below) to
be paid in the proposed merger of Datalogix and a wholly-owned subsidiary of
Oracle Corporation ("Oracle"), pursuant to the Agreement and Plan of Merger,
dated as of September 23, 1996 (the "Agreement"). Under the terms of the
Agreement, a wholly-owned subsidiary of Oracle will merge with and into
Datalogix (the "Merger"), and upon consummation of the Merger, Datalogix will
become a wholly-owned subsidiary of Oracle. In the Merger, Oracle will pay
$8.00 in cash per share to acquire (the "Consideration") all outstanding
Datalogix common stock. Oracle will assume Datalogix's stock options within
the meaning of Section 424 of the Internal Revenue Code of 1986, as amended.
The Merger will be a taxable transaction and will be accounted for as a
"purchase." The terms and conditions of the Merger are set out more fully in
the Agreement.
For purposes of this opinion we have: (i) reviewed certain financial
information of Datalogix furnished to us by Datalogix, including certain
internal financial analyses and forecasts prepared by the management of
Datalogix; (ii) reviewed certain publicly available information; (iii) held
discussions with the management of Datalogix concerning the business, results
of operations, past and current business operations, financial condition and
future prospects of Datalogix, independently and combined; (iv) reviewed the
Agreement; (v) reviewed the stock price and trading history of Datalogix;
(vi) reviewed the valuations of publicly traded companies which we deemed
comparable to Datalogix; (vii) compared the financial terms of the Merger
with other transactions which we deemed relevant; (viii) prepared a
<PAGE>
Board of Directors
Datalogix International Inc.
September 23, 1996
Page 2
discounted cash flow analysis of Datalogix; and (ix) made such other studies
and inquiries, and reviewed such other data, as we deemed relevant.
In connection with our opinion, we have not, however, independently verified
any of the foregoing information and have relied on all such information
being complete and accurate in all material respects. Furthermore, we did
not obtain any independent appraisal of the properties or assets and
liabilities of Datalogix. With respect to the financial and operating
forecasts (and the assumptions and bases therefor) of Datalogix which we have
reviewed, we have assumed that such forecasts have been reasonably prepared
in good faith on the basis of reasonable assumptions, reflect the best
available estimates and judgments of Datalogix management and that such
projections and forecasts will be realized in the amounts and in the time
periods currently estimated by the management of Datalogix. In addition, we
have relied upon estimates and judgment of Datalogix's management as to the
future financial performance of Datalogix. While we believe that our review,
as described within, is an adequate basis for the opinion that we express,
this opinion is necessarily based upon market, economic and other conditions
that exist, and can be evaluated, as of the date of this letter, and on the
information that is available to us as of the date hereof.
Robertson, Stephens & Company has provided certain investment banking
services to Datalogix from time to time, including acting as the lead
underwriter for the initial public offering of Datalogix. In addition,
Robertson, Stephens & Company maintains a market in shares of the common
stock of Datalogix. Furthermore, Robertson, Stephens & Company has acted as
financial advisor to Datalogix in connection with the Merger for which a
portion of our fees is due and payable upon delivery of this opinion and the
remaining portion of our fees is due and payable contingent upon the closing
of the Merger.
Based upon and subject to the foregoing considerations, it is our opinion, as
investment bankers, that, as of the date hereof, the Consideration to be paid
is fair to Datalogix and its shareholders from a financial point of view.
This opinion is for the Board of Directors only and may be referred to and/or
included in the Registration Statement and/or Proxy Statement which may be
prepared, filed, and/or distributed in connection with the Merger. This
opinion is
<PAGE>
Board of Directors
Datalogix International Inc.
September 23, 1996
Page 3
not to be used, quoted or referred to otherwise without Robertson, Stephens &
Company consent.
Very truly yours,
ROBERTSON, STEPHENS & COMPANY LLC
By: Robertson, Stephens & Company Group, LLC
- ----------------------------------------------
Authorized Signatory
0182367.01
<PAGE>
ANNEX C
623. PROCEDURE TO ENFORCE SHAREHOLDER'S RIGHT
TO RECEIVE PAYMENT FOR SHARES
(a) A shareholder intending to enforce his right under a section of this
chapter to receive payment for his shares if the proposed corporate action
referred to therein is taken shall file with the corporation, before the
meeting of shareholders at which the action is submitted to a vote, or at
such meeting but before the vote, written objection to the action. The
objection shall include a notice of his election to dissent, his name and
residence address, the number and classes of shares as to which he dissents
and a demand for payment of the fair value of his shares if the action is
taken. Such objection is not required from any shareholder to whom the
corporation did not give notice of such meeting in accordance with this
chapter or where the proposed action is authorized by written consent of
shareholders without a meeting.
(b) Within ten days after the shareholders' authorization date, which term
as used in this section means the date on which the shareholders' vote
authorizing such action was taken, or the date on which such consent without
a meeting was obtained from the requisite shareholders, the corporation shall
give written notice of such authorization or consent by registered mail to
each shareholder who filed written objection or from whom written objection
was not required, excepting any shareholder who voted for or consented in
writing to the proposed action and who thereby is deemed to have elected not
to enforce his right to receive payment for his shares.
(c) Within twenty days after the giving of notice to him, any shareholder
from whom written objection was not required and who elects to dissent shall
file with the corporation a written notice of such election, stating his name
and residence address, the number and classes of shares as to which he
dissents and a demand for payment of the fair value of his shares. Any
shareholder who elects to dissent from a merger under section 905 (Merger of
subsidiary corporation) or paragraph (c) of section 907 (Merger or
consolidation of domestic and foreign corporations) or from a share exchange
under paragraph (g) of section 913 (Share exchanges) shall file a written
notice of such election to dissent within twenty days after the giving to him
of a copy of the plan of merger or exchange or an outline of the material
features thereof under section 905 or 913.
(d) A shareholder may not dissent as to less than all of the shares, as to
which he has a right to dissent, held by him of record, that he owns
beneficially. A nominee or fiduciary may not dissent on behalf of any
beneficial owner as to less than all of the shares of such owner, as to which
such nominee or fiduciary has a right to dissent, held of record by such
nominee or fiduciary.
<PAGE>
(e) Upon consummation of the corporate action, the shareholder shall cease
to have any of the rights of a shareholder except the right to be paid the
fair value of his shares and any other rights under this section. A notice of
election may be withdrawn by the shareholder at any time prior to his
acceptance in writing of an offer made by the corporation, as provided in
paragraph (g), but in no case later than sixty days from the date of
consummation of the corporate action except that if the corporation fails to
make a timely offer, as provided in paragraph (g), the time for withdrawing a
notice of election shall be extended until sixty days from the date an offer
is made. Upon expiration of such time, withdrawal of a notice of election
shall require the written consent of the corporation. In order to be
effective, withdrawal of a notice of election must be accompanied by the
return to the corporation of any advance payment made to the shareholder as
provided in paragraph (g). If a notice of election is withdrawn, or the
corporate action is rescinded, or a court shall determine that the
shareholder is not entitled to receive payment for his shares, or the
shareholder shall otherwise lose his dissenter's rights, he shall not have
the right to receive payment for his shares and he shall be reinstated to all
his rights as a shareholder as of the consummation of the corporate action,
including any intervening preemptive rights and the right to payment of any
intervening dividend or other distribution or, if any such rights have
expired or any such dividend or distribution other than in cash has been
completed, in lieu thereof, at the election of the corporation, the fair
value thereof in cash as determined by the board as of the time of such
expiration or completion, but without prejudice otherwise to any corporate
proceedings that may have been taken in the interim.
(f) At the time of filing the notice of election to dissent or within one
month thereafter the shareholder of shares represented by certificates shall
submit the certificates representing his shares to the corporation, or to its
transfer agent, which shall forthwith note conspicuously thereon that a
notice of election has been filed and shall return the certificates to the
shareholder or other person who submitted them on his behalf. Any shareholder
of shares represented by certificates who fails to submit his certificates
for such notation as herein specified shall, at the option of the corporation
exercised by written notice to him within forty-five days from the date of
filing of such notice of election to dissent, lose his dissenter's rights
unless a court, for good cause shown, shall otherwise direct. Upon transfer
of a certificate bearing such notation, each new certificate issued therefor
shall bear a similar notation together with the name of the original
dissenting holder of the shares and a transferee shall acquire no rights in
the corporation except those which the original dissenting shareholder had at
the time of transfer.
(g) Within fifteen days after the expiration of the period within which
shareholders may file their notices of election to dissent,
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<PAGE>
or within fifteen days after the proposed corporate action is consummated,
whichever is later (but in no case later than ninety days from the
shareholders' authorization date), the corporation or, in the case of a
merger or consolidation, the surviving or new corporation, shall make a
written offer by registered mail to each shareholder who has filed such
notice of election to pay for his shares at a specified price which the
corporation considers to be their fair value. Such offer shall be accompanied
by a statement setting forth the aggregate number of shares with respect to
which notices of election to dissent have been received and the aggregate
number of holders of such shares. If the corporate action has been
consummated, such offer shall also be accompanied by (1) advance payment to
each such shareholder who has submitted the certificates representing his
shares to the corporation, as provided in paragraph (f), of an amount equal
to eighty percent of the amount of such offer, or (2) as to each shareholder
who has not yet submitted his certificates a statement that advance payment
to him of an amount equal to eighty percent of the amount of such offer will
be made by the corporation promptly upon submission of his certificates. If
the corporate action has not been consummated at the time of the making of
the offer, such advance payment or statement as to advance payment shall be
sent to each shareholder entitled thereto forthwith upon consummation of the
corporate action. Every advance payment or statement as to advance payment
shall include advice to the shareholder to the effect that acceptance of such
payment does not constitute a waiver of any dissenters' rights. If the
corporate action has not been consummated upon the expiration of the ninety
day period after the shareholders' authorization date, the offer may be
conditioned upon the consummation of such action. Such offer shall be made at
the same price per share to all dissenting shareholders of the same class, or
if divided into series, of the same series and shall be accompanied by a
balance sheet of the corporation whose shares the dissenting shareholder
holds as of the latest available date, which shall not be earlier than twelve
months before the making of such offer, and a profit and loss statement or
statements for not less than a twelve month period ended on the date of such
balance sheet or, if the corporation was not in existence throughout such
twelve month period, for the portion thereof during which it was in
existence. Notwithstanding the foregoing, the corporation shall not be
required to furnish a balance sheet or profit and loss statement or
statements to any shareholder to whom such balance sheet or profit and loss
statement or statements were previously furnished, nor if in connection with
obtaining the shareholders' authorization for consent to the proposed
corporate action the shareholders were furnished with a proxy or information
statement, which included financial statements, pursuant to Regulation 14A or
Regulation 14C of the United States Securities and Exchange Commission. If
within thirty days after the making of such offer, the corporation making the
offer and any shareholder agree upon the price to be paid for his shares,
payment therefor shall be made within sixty days after the making of such
offer or the consummation of the
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<PAGE>
proposed corporate action, whichever is later, upon the surrender of the
certificates for any such shares represented by certificates.
(h) The following procedure shall apply if the corporation fails to make
such offer within such period of fifteen days, or if it makes the offer and
any dissenting shareholder or shareholders fail to agree with it within the
period of thirty days thereafter upon the price to be paid for their shares:
(1) The corporation shall, within twenty days after the expiration of
whichever is applicable of the two periods last mentioned, institute a
special proceeding in the supreme court in the judicial district in which
the office of the corporation is located to determine the rights of
dissenting shareholders and to fix the fair value of their shares. If, in
the case of merger or consolidation, the surviving or new corporation is a
foreign corporation without an office in this state, such proceeding shall
be brought in the county where the office of the domestic corporation,
whose shares are to be valued, was located.
(2) If the corporation fails to institute such proceeding within such
period of twenty days, any dissenting shareholder may institute such
proceeding for the same purpose not later than thirty days after the
expiration of such twenty day period. If such proceeding is not instituted
within such thirty day period, all dissenter's rights shall be lost unless
the supreme court, for good cause shown, shall otherwise direct.
(3) All dissenting shareholders, excepting those who, as provided in
paragraph (g), have agreed with the corporation upon the price to be paid
for their shares, shall be made parties to such proceeding, which shall
have the effect of an action quasi in rem against their shares. The
corporation shall serve a copy of the petition in such proceeding upon each
dissenting shareholder who is a resident of this state in the manner
provided by law for the service of a summons, and upon each nonresident
dissenting shareholder either by registered mail and publication, or in
such other manner as is permitted by law. The jurisdiction of the court
shall be plenary and exclusive.
(4) The court shall determine whether each dissenting shareholder, as to
whom the corporation requests the court to make such determination, is
entitled to receive payment for his shares. If the corporation does not
request any such determination or if the court finds that any dissenting
shareholder is so entitled, it shall proceed to fix the value of the
shares, which, for the purposes of this section, shall be the fair value as
of the close of business on the day prior to the shareholders'
authorization date. In fixing the fair value of the shares, the court
shall
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consider the nature of the transaction giving rise to the shareholder's
right to receive payment for shares and its effects on the corporation and
its shareholders, the concepts and methods then customary in the relevant
securities and financial markets for determining fair value of shares of a
corporation engaging in a similar transaction under comparable
circumstances and all other relevant factors. The court shall determine
the fair value of the shares without a jury and without referral to an
appraiser or referee. Upon application by the corporation or by any
shareholder who is a party to the proceeding, the court may, in its
discretion, permit pretrial disclosure, including, but not limited to,
disclosure of any expert's reports relating to the fair value of the shares
whether or not intended for use at the trial in the proceeding and
notwithstanding subdivision (d) of section 3101 of the civil practice law
and rules.
(5) The final order in the proceeding shall be entered against the
corporation in favor of each dissenting shareholder who is a party to the
proceeding and is entitled thereto for the value of his shares so
determined.
(6) The final order shall include an allowance for interest at such rate
as the court finds to be equitable, from the date the corporate action was
consummated to the date of payment. In determining the rate of interest,
the court shall consider all relevant factors, including the rate of
interest which the corporation would have had to pay to borrow money during
the pendency of the proceeding. If the court finds that the refusal of any
shareholder to accept the corporate offer of payment for his shares was
arbitrary, vexatious or otherwise not in good faith, no interest shall be
allowed to him.
(7) Each party to such proceeding shall bear its own costs and expenses,
including, the fees and expenses of its counsel and of any experts employed
by it. Notwithstanding the foregoing, the court may, in its discretion,
apportion and assess all or any part of the costs, expenses and fees
incurred by the corporation against any or all of the dissenting
shareholders who are parties to the proceeding, including any who have
withdrawn their notices of election as provided in paragraph (e), if the
court finds that their refusal to accept the corporate offer was arbitrary,
vexatious or otherwise not in good faith. The court may, in its
discretion, apportion and assess all or any part of the costs, expenses and
fees incurred by any or all of the dissenting shareholders who are parties
to the proceeding against the corporation if the court finds any of the
following: (A) that the fair value of the shares as determined materially
exceeds the amount which the corporation offered to pay; (B) that no offer
or required advance payment was made by the corporation; (C) that the
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corporation failed to institute the special proceeding within the period
specified therefor; or (D) that the action of the corporation in complying
with its obligations as provided in this section was arbitrary, vexatious
or otherwise not in good faith. In making any determination as provided in
clause (A), the court may consider the dollar amount or the percentage, or
both, by which the fair value of the shares as determined exceeds the
corporate offer.
(8) Within sixty days after final determination of the proceeding, the
corporation shall pay to each dissenting shareholder the amount found to be
due him, upon surrender of the certificates for any such shares represented
by certificates.
(i) Shares acquired by the corporation upon the payment of the agreed value
therefor or of the amount due under the final order, as provided in this
section, shall become treasury shares or be cancelled as provided in section
515 (Reacquired shares), except that, in the case of a merger or
consolidation, they may be held and disposed of as the plan of merger or
consolidation may otherwise provide.
(j) No payment shall be made to a dissenting shareholder under this section
at a time when the corporation is insolvent or when such payment would make
it insolvent. In such event, the dissenting shareholder shall, at his option:
(1) Withdraw his notice of election, which shall in such event be deemed
withdrawn with the written consent of the corporation; or
(2) Retain his status as a claimant against the corporation and, if it is
liquidated, be subordinated to the rights of creditors of the corporation,
but have rights superior to the non-dissenting shareholders, and if it is
not liquidated, retain his right to be paid for his shares, which right the
corporation shall be obliged to satisfy when the restrictions of this
paragraph do not apply.
(3) The dissenting shareholder shall exercise such option under
subparagraph (1) or (2) by written notice filed with the corporation within
thirty days after the corporation has given him written notice that payment
for his shares cannot be made because of the restrictions of this
paragraph. If the dissenting shareholder fails to exercise such option as
provided, the corporation shall exercise the option by written notice given
to him within twenty days after the expiration of such period of thirty
days.
(k) The enforcement by a shareholder of his right to receive payment for his
shares in the manner provided herein shall exclude the enforcement by such
shareholder of any other right to which he might otherwise be entitled by
virtue of share
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ownership, except as provided in paragraph (e), and except that this section
shall not exclude the right of such shareholder to bring or maintain an
appropriate action to obtain relief on the ground that such corporate action
will be or is unlawful or fraudulent as to him.
(l) Except as otherwise expressly provided in this section, any notice to be
given by a corporation to a shareholder under this section shall be given in
the manner provided in section 605 (Notice of meetings of shareholders).
(m) This section shall not apply to foreign corporations except as provided
in subparagraph (e)(2) of section 907 (Merger or consolidation of domestic
and foreign corporations).
SEC. 910. RIGHT OF SHAREHOLDER TO RECEIVE PAYMENT FOR SHARES UPON MERGER OR
CONSOLIDATION, OR SALE, LEASE, EXCHANGE OR OTHER DISPOSITION
OF ASSETS, OR SHARE EXCHANGE
(a) A shareholder of a domestic corporation shall, subject to and by
complying with Section 623 (Procedure to enforce shareholder's right to
receive payment for shares), have the right to receive payment of the fair
value of his shares and the other rights and benefits provided by such
section, in the following cases:
(1) Any shareholder entitled to vote who does not assent to the taking of an
action specified in subparagraphs (A), (B) and (C).
(A) Any plan of merger or consolidation to which the corporation is a party;
except that the right to receive payment of the fair value of his shares
shall not be available:
(i) To a shareholder of the parent corporation in a merger authorized by
section 905 (merger of parent and subsidiary corporations), or paragraph (c)
of section 907 (merger or consolidation of domestic and foreign
corporations); and
(ii) To a shareholder of the surviving corporation in a merger authorized by
this article, other than a merger specified in subparagraph (i), unless such
merger effects one or more of the changes specified in subparagraph (b)(6) of
section 806 (Provisions as to certain proceedings) in the rights of the
shares held by such shareholder.
(B) Any sale, lease, exchange or other disposition of all or substantially
all of the assets of a corporation which requires shareholder approval under
Section 909 (Sale, lease, exchange or other disposition of assets) other than
a transaction wholly for cash where the shareholders' approval thereof is
conditioned upon the dissolution of the corporation and the distribution of
substantially all its net assets to the shareholders in
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accordance with their respective interests within one year after the date of
such transaction.
(C) Any share exchange authorized by section 913 in which the corporation is
participating as a subject corporation; except that the right to receive
payment of the fair value of his shares shall not be available to a
shareholder whose shares have not been acquired in the exchange.
(2) Any shareholder of the subsidiary corporation in a merger authorized by
section 905 or paragraph (c) of section 907, or in a share exchange
authorized by paragraph (g) of section 913, who files with the corporation a
written notice of election to dissent as provided in paragraph (c) of section
623. (Last amended by Ch. 390, L. '91. eff. 7-15-91.)
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PROXY
DATALOGIX INTERNATIONAL INC.
SPECIAL MEETING OF SHAREHOLDERS
DECEMBER __, 1996
The undersigned hereby constitutes and appoints
_____________________________, and each of them, the attorneys and proxies of
the undersigned, with full power of substituiton, to vote on behalf of the
undersigned all of the Common Shares of Datalogix International Inc, (the
"Company") which the undersigned is entitled to vote at the Special Meeting of
Shareholders of the Company, to be held at __________________
_____________________________, on ____________, December __, 1996, at (10:00
a.m.), local time, and all adjournments thereof, upon the matters set forth on
the reverse side and upon all matters incident to the conduct of the Special
Meeting. This proxy revokes all prior proxies given by the undersigned. Receipt
of the Notice of Special Meeting and Proxy Statement is hereby
acknowledged.
(Continued and to be signed and dated on the other side)
<PAGE>
I plan to attend
the meeting
/ /
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE FOLLOWING PROPOSAL.
1. To approve and adopt the Agreement and Plan of Merger, dated as of
September 24, 1996, as amended as of October 8, 1996 by and among
Datalogix International Inc., a New York corporation (the "Company"),
Oracle Corporation, a Delaware corporation ("Oracle"), and Delphi
Acquisition Corporation ("Acquisition Sub"), a Delaware corporation and a
wholly owned subsidiary of Oracle, and the merger of Acquisition Sub with
and into the Company as contemplated thereby.
FOR AGAINST ABSTAIN
/ / / / / /
THIS PROXY WILL BE VOTED FOR THE ABOVE PROPOSAL UNLESS INSTRUCTIONS TO
THE CONTRARY ARE INDICATED. PLEASE NOTE THAT ALL ABSTAIN VOTES WILL BE COUNTED
IN DETERMINING THE EXISTENCE OF A QUORUM AT THE SPECIAL MEETING, BUT WILL NOT BE
VOTED FOR THE PROPOSAL.
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Dated: ___________________, 1996
---------------------------------
(Signature of Shareholder)
Please sign as name appears hereon.
When signing as attorney, executor,
administrator, trustee or guardian, please
give full title as such. Joint tenants
should both sign.
"PLEASE MARK INSIDE BLUE BOXES SO THAT DATA
PROCESSING EQUIPMENT WILL RECORD YOUR VOTES"
