<PAGE>
As filed with the Securities and Exchange Commission on November 14, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
AMENDMENT NO. 1
SCHEDULE 13E-3
RULE 13E-3 TRANSACTION STATEMENT
(PURSUANT TO SECTION 13(E) OF THE SECURITIES EXCHANGE ACT OF 1934)
DATALOGIX INTERNATIONAL INC.
(Name of Issuer)
-------------------
DATALOGIX INTERNATIONAL INC.
DELPHI ACQUISITION CORPORATION
ORACLE CORPORATION
(Name of Person(s) Filing Statement)
-------------------
COMMON STOCK, PAR VALUE $0.01 PER SHARE
(Title of Class of Securities)
-------------------
237923107
(CUSIP Number of Class of Securities)
-------------------
RAYMOND L. OCAMPO JR. RAYMOND V. SOZZI
SENIOR VICE PRESIDENT, PRESIDENT, CHIEF OPERATING OFFICER AND
GENERAL COUNSEL AND SECRETARY ACTING CHIEF EXECUTIVE OFFICER
ORACLE CORPORATION DATALOGIX INTERNATIONAL INC.
500 ORACLE PARKWAY 100 SUMMITT LAKE DRIVE
REDWOOD CITY, CALIFORNIA 94065 VALHALLA, NY 10595
-------------------
(Name, Address and Telephone Number of Person Authorized to Receive Notice
and Communications on Behalf of Person(s) Filing Statement)
-------------------
COPIES TO:
DONALD M. KELLER, JR. CHRISTOPHER E. MANNO
VENTURE LAW GROUP WILLKIE FARR & GALLAGHER
A PROFESSIONAL CORPORATION ONE CITICORP CENTER
2800 SAND HILL ROAD 153 53RD STREET
MENLO PARK, CALIFORNIA 94025 NEW YORK, NY 10022-4677
(415) 854-4488 (212) 821-8000
-------------------
This statement is filed in connection with (check appropriate box):
a. /X/ The filing of solicitation materials or an information statement
subject to Regulation 14A, Regulation 14C or Rule 13e-3(c) under
the Securities Exchange Act of 1934.
b. / / The filing of a registration statement under the Securities Act of
1933.
c. / / A Tender Offer
d. / / None of the above.
Check the following box if the soliciting materials or information statement
referred to in check box (a) are preliminary copies: /X/
<PAGE>
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
TRANSACTION VALUATION (1) AMOUNT OF FILING FEE (1)
$89,468,216 $17,894
- --------------------------------------------------------------------------------
(1) ESTIMATED SOLELY FOR PURPOSES OF CALCULATING THE FILING FEE AND BASED,
PURSUANT TO RULE 0-11 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
(THE "ACT"), UPON THE PURCHASE OF 11,183,527 SHARES OF COMMON STOCK
OUTSTANDING AS OF SEPTEMBER 19, 1996 (CONSISTING OF 10,145,489 SHARES
ISSUED AND OUTSTANDING (EXCLUDING 1,566,287 SHARES HELD BY ORACLE
CORPORATION), 1,015,038 SHARES RESERVED FOR ISSUANCE UPON EXERCISE OF
OUTSTANDING OPTIONS, AND 23,000 SHARES TO BE ISSUED UNDER THE COMPANY'S
1995 EMPLOYEE STOCK PURCHASE PLAN), AT A PURCHASE PRICE OF $8.00 PER SHARE.
ALSO IN ACCORDANCE WITH RULE 0-11 UNDER THE ACT, THE FILING FEE IS
DETERMINED BY MULTIPLYING THE TRANSACTION VALUATION BY ONE-FIFTIETH OF ONE
PERCENT.
/X/ CHECK BOX IF ANY PART OF THE FEE IS OFFSET AS PROVIDED BY RULE O-11(A)(2)
AND IDENTIFY THE FILING WITH WHICH THE OFFSETTING FEE WAS PREVIOUSLY PAID.
IDENTIFY THE PREVIOUS FILING BY REGISTRATION STATEMENT NUMBER, OR THE FORM
OR SCHEDULE AND THE DATE OF ITS FILING.
Amount Previously Paid: $17,894 Filing Party: Datalogix International Inc.
Form or Registration No.: Proxy
Statement File No. 000-26000 Date Filed: October 10, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
SCHEDULE 13E-3
INTRODUCTION
This Rule 13e-3 Transaction Statement is being filed in connection with the
proposed merger (the "Merger") of Delphi Acquisition Corporation, a Delaware
corporation ("Acquisition Sub"), and wholly owned subsidiary of Oracle
Corporation, a Delaware corporation ("Oracle"), with and into Datalogix
International Inc., a New York corporation (the "Company"), pursuant to the
terms and conditions of the Agreement and Plan of Merger dated as of September
24, 1996, among Acquisition Sub, Oracle and the Company (as amended as of
October 8, 1996, the "Merger Agreement"), a copy of which is attached hereto as
Exhibit (c)(1). Upon consummation of the Merger, the separate corporate
existence of Acquisition Sub will cease, and the Company will continue as the
surviving corporation and wholly owned subsidiary of Oracle. Upon completion of
the Merger, each share (together with the associated Preferred Share Purchase
Right issued pursuant to the 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) of Common Stock, par value $.01 per share (the
"Shares"), of the Company (other than Shares held by Oracle or any subsidiary of
Oracle, and Shares held by shareholders exercising appraisal rights pursuant to
Sections 623 and 910 of the New York Business Corporation Law) will be converted
into the right to receive in cash $8.00 per Share, without interest, upon the
terms and conditions set forth in the Merger Agreement.
The Cross Reference Sheet is being supplied pursuant to General Instruction
F to Schedule 13E-3 and shows the location in the Company's preliminary proxy
statement (the "Proxy Statement") concurrently being filed with the Securities
and Exchange Commission (the "SEC") in connection with the proposed Merger,
which contains information required to be included in response to items of this
Statement. A copy of the Proxy Statement is attached hereto as Exhibit (d)(1).
The information in the Proxy Statement, including all exhibits thereto, is
hereby expressly incorporated herein by reference and the responses to each item
are qualified in their entirety by the provisions of the Proxy Statement. All
information in, or incorporated by reference in, the Proxy Statement or this
Statement concerning the Company or its advisors, or actions or events with
respect to any of them, was provided by the Company, and all information in, or
incorporated by reference in, the Proxy Statement or this Statement concerning
Oracle or its affiliates, or actions or events with respect to them, was
provided by Oracle. The Proxy Statement incorporated by reference in this filing
is in preliminary form and is subject to completion or amendment. Capitalized
terms used but not defined in this Statement shall have the respective
meanings given them in the Proxy Statement.
As of September 24, 1996, Oracle owned 1,566,287 shares of Common Stock
of the Company, representing approximately 13.37% 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 and both Oracle and
Acquisition Sub deny being affiliates 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 under the Securities Exchange
Act of 1934, as amended, as a result of the proposed Merger.
<PAGE>
CROSS REFERENCE SHEET
(PURSUANT TO GENERAL INSTRUCTION F TO SCHEDULE 13E-3)
ITEM NUMBER AND CAPTION LOCATION IN PROXY STATEMENT
1. ISSUER AND CLASS OF SECURITY
SUBJECT TO THE TRANSACTION.
(a)....................... Front Cover Page and "SUMMARY--The Parties"
sections of the Proxy Statement are
incorporated herein by this reference.
(b)....................... "INTRODUCTION--Record Date; Quorum; Required
Vote;" "SUMMARY--The Special Meeting" and
"DESCRIPTION OF CAPITAL STOCK OF DATALOGIX"
sections of the Proxy Statement are
incorporated herein by this reference.
(c), (d).................. "SUMMARY--Market Prices of and Dividends on
The Common Stock" and "MARKET PRICES AND
DIVIDENDS" sections of the Proxy Statement
are incorporated herein by this reference.
(e)....................... "SPECIAL FACTORS--Initial Public Offering of
Common Stock" section of the Proxy
Statement is incorporated herein by this
reference.
(f)....................... "SPECIAL FACTORS--Interest of Certain Persons
in the Merger--Certain Agreements" section of
the Proxy Statement is incorporated herein by
this reference.
2. IDENTITY AND BACKGROUND.
This Statement is being jointly filed by Datalogix International Inc. (the
"Company") (the issuer of the class of equity securities which is the
subject of the transaction, Oracle Corporation (a 13.4% shareholder of the
Company), and Delphi Acquisition Corporation (a wholly owned subsidiary of
Oracle).
(a)-(d), (g).............. "SUMMARY--The Parties" and "MANAGEMENT OF
ORACLE, ACQUISITION SUB AND THE COMPANY"
sections of the Proxy Statement are
incorporated herein by this reference.
(e), (f).................. To the best of the undersigneds' knowledge,
except as described under "MANAGEMENT OF
ORACLE, ACQUISITION SUB AND THE COMPANY--
Certain Proceedings" section of the Proxy
Statement which is incorporated herein by
this reference, none of the persons with
respect to whom information is provided in
response to this Item was during the last
five years (i) convicted in a criminal
proceeding (excluding traffic violations or
similar misdemeanors) or (ii) a party to a
civil proceeding of a judicial or
administrative body of competent jurisdiction
and as a result of such proceeding was or is
subject to a judgment, decree or final order
enjoining further violations of, or
prohibiting activities subject to, federal or
state securities laws or finding any
violation of such laws.
2
<PAGE>
CROSS REFERENCE SHEET
(PURSUANT TO GENERAL INSTRUCTION F TO SCHEDULE 13E-3)
3. PAST CONTACTS, TRANSACTIONS
OR NEGOTIATIONS.
(a)(1).................... "SPECIAL FACTORS--Background of the Merger;"
Interest of Certain Persons in the Merger--
Certain Agreements" and "THE MERGER" sections
of the Proxy Statement are incorporated herein
by this reference.
(a)(2), (b)............... "SUMMARY--Special Factors;" "SPECIAL FACTORS-
-Background of the Merger;" "--Purpose and
Structure of the Merger;" "--Recommendation of
the Board of Directors of the Company;
Fairness of the Merger;" "--Opinion of
Financial Advisor; Summary of Financial
Analyses;" "--Interest of Certain Persons in
the Merger;" "THE MERGER" and "ANNEX A--
Agreement and Plan of Merger" sections of the
Proxy Statement are incorporated herein by
this reference.
4. TERMS OF THE TRANSACTION.
(a)....................... "INTRODUCTION--The Special Meeting;"
"SUMMARY--The Merger;" "THE MERGER" and
"ANNEX A--Agreement and Plan of Merger"
sections of the Proxy Statement are
incorporated herein by this reference.
(b)....................... "SUMMARY--Special Factors --Interest of
Certain Persons in the Merger;" "SPECIAL
FACTORS--Interest of Certain Persons in the
Merger;" "THE MERGER--Indemnification of
Directors and Officers" and
"--General--Treatment of Company Stock
Plans" sections of the Proxy Statement are
incorporated herein by this reference.
5. PLANS OR PROPOSALS OF THE
ISSUER OR AFFILIATE.
(a), (b), (d), (e)........ None
(c), (f), (g)............. "SUMMARY--Special Factors;" "SPECIAL
FACTORS--Plans for the Company After the
Merger;" "--Purpose and Structure of the
Merger;" "--Interest of Certain Persons in
the Merger" and "--Certain Effects of the
Merger" sections of the Proxy Statement are
incorporated herein by this reference.
3
<PAGE>
CROSS REFERENCE SHEET
(PURSUANT TO GENERAL INSTRUCTION F TO SCHEDULE 13E-3)
6. SOURCE AND AMOUNT OF FUNDS
OR OTHER CONSIDERATION.
(a), (b).................. "INTRODUCTION--Proxies;" "SUMMARY--The
Merger --Sources of Funds;" "PROXY
SOLICITATION;" "THE MERGER--Fees and
Expenses"; "SPECIAL FACTORS--Sources and
Uses of Funds" and "--Opinion of Financial
Advisor; Summary of Financial Analyses"
sections of the Proxy Statement are
incorporated herein by this reference.
(c), (d).................. Not applicable
7. PURPOSE(S), ALTERNATIVES,
REASONS AND EFFECTS.
(a)-(c)................... "SUMMARY--Special Factors;" "SPECIAL
FACTORS--Background of the Merger;"
"--Purpose and Structure of the Merger;"
"--Recommendation of the Board of Directors
of the Company; Fairness of the Merger" and
"--Certain Effects of the Merger" sections of
the Proxy Statement are incorporated herein
by this reference.
(d)....................... "SUMMARY--The Merger;" "--Special Factors;"
"SPECIAL FACTORS--Certain Effects of the
Merger;" "--Purpose and Structure of the
Merger;" "--Perspective of Oracle on the
Merger;" "--Plans for the Company After the
Merger;" "--Interest of Certain Persons in
the Merger;" "--Certain U.S. Federal Income
Tax Consequences" and "THE MERGER" sections
of the Proxy Statement are incorporated
herein by this reference.
8. FAIRNESS OF THE TRANSACTION.
(a), (b).................. "SUMMARY--Special Factors;" "SPECIAL
FACTORS--Background of the Merger;"
"--Purpose and Structure of the Merger;"
"--Recommendation of the Board of Directors
of the Company; Fairness of the Merger;"
"--Opinion of Financial Advisor; Summary of
Financial Analyses;" "--Interest of Certain
Persons in the Merger;" "--Perspective of
Oracle on the Merger" and "ANNEX B--Opinion
of Financial Advisor" sections of the Proxy
Statement are incorporated herein by this
reference.
(c)....................... "INTRODUCTION--Record Date; Quorum; Required
Vote" and "SUMMARY--The Special Meeting"
sections of the Proxy Statement are
incorporated herein by this reference.
(d)....................... "SUMMARY--Special Factors--Opinion of
Financial Advisor;" "SPECIAL FACTORS--Opinion
of Financial Advisor"; "Summary of Financial
Analyses" and "ANNEX B-- Opinion of Financial
Advisor" sections of the Proxy Statement are
incorporated herein by this reference.
4
<PAGE>
CROSS REFERENCE SHEET
(PURSUANT TO GENERAL INSTRUCTION F TO SCHEDULE 13E-3)
(e)....................... "SUMMARY--Special Factors--Recommendation of
the Board of Directors; Fairness of the
Merger" and "SPECIAL FACTORS--Recommendation
of the Board of Directors of the Company;
Fairness of the Merger" sections of the Proxy
Statement are incorporated herein by this
reference.
(f)....................... "SPECIAL FACTORS--Background of the Merger"
section of the Proxy Statement is
incorporated herein by this reference.
9. REPORTS, OPINIONS,
APPRAISALS AND CERTAIN
NEGOTIATIONS.
(a)-(c)................... "SUMMARY--Special Factors--Opinion of
Financial Advisor;" "SPECIAL FACTORS--Opinion
of Financial Advisor; Summary of Financial
Analyses;" "--Background of the Merger" and
"ANNEX B--Opinion of Financial Advisor"
sections of the Proxy Statement are
incorporated herein by this reference.
10. INTEREST IN SECURITIES OF
THE ISSUER.
(a)....................... "SUMMARY--Special Factors--Interest of
Certain Persons in the Merger" and "OWNERSHIP
OF COMMON SHARES" sections of the Proxy
Statement are incorporated herein by this
reference.
(b)....................... "TRANSACTIONS BY CERTAIN PERSONS IN COMMON
SHARES" section of the Proxy Statement is
incorporated herein by this reference.
11. CONTRACTS, ARRANGEMENTS OR "SUMMARY--Special Factors;" "--the Merger;"
UNDERSTANDINGS WITH "SPECIAL FACTORS--Background of the Merger;"
RESPECT TO THE ISSUER'S "--Recommendation of the Board of Directors;
SECURITIES. Fairness of the Merger;" "--Opinion of
Financial Advisor; Summary of Financial
Analyses;" "--Interest of Certain Persons
in the Merger;" "THE MERGER;" "DESCRIPTION
OF CAPITAL STOCK OF DATALOGIX--Common
Stock" and "OWNERSHIP OF COMMON SHARES"
sections of the Proxy Statement are
incorporated herein by this reference.
12. PRESENT INTENTION AND
RECOMMENDATION OF CERTAIN
PERSONS WITH REGARD TO THE
TRANSACTION.
(a), (b).................. "INTRODUCTION--The Special Meeting;"
"--Record Date; Quorum; Required Vote;"
"SUMMARY--The Special Meeting--Required
Vote;" "--Special Factors--Recommendations of
the Board of Directors; Fairness of the
Merger" and "SPECIAL FACTORS--Recommendation
of the Board of Directors of the Company;
Fairness of the Merger" sections of the Proxy
Statement are incorporated herein by this
reference.
5
<PAGE>
CROSS REFERENCE SHEET
(PURSUANT TO GENERAL INSTRUCTION F TO SCHEDULE 13E-3)
13. OTHER PROVISIONS OF THE
TRANSACTION.
(a)....................... "SUMMARY--The Merger--Dissenters' Rights;"
"THE MERGER--Dissenters' Rights" and "ANNEX
C--Sections of the New York Business
Corporation Law" sections of the Proxy
Statement are incorporated herein by this
reference.
(b)....................... None
(c)....................... Not Applicable
14. FINANCIAL INFORMATION.
(a)....................... The Company's audited financial statements
for the years ended June 30, 1995 and 1996,
which are contained in the Company's 1996
Annual Report on Form 10-K (the "Form 10-K"),
are attached under the Financial Statement
section of the Proxy Statement and are
incorporated herein by this reference. The
Company has not been required to file a
Quarterly Report on Form 10-Q since the Form
10-K. "SUMMARY--Selected Consolidated
Financial Data of the Company" and "SELECTED
CONSOLIDATED FINANCIAL DATA OF THE COMPANY"
sections of the Proxy Statement are also
incorporated herein by this reference.
(b)....................... Not applicable
15. PERSONS AND ASSETS
EMPLOYED, RETAINED OR
UTILIZED.
(a), (b).................. "INTRODUCTION--Proxies;" "SUMMARY--Special
Factors--Opinion of Financial Advisor;"
"--The Merger--Treatment of Shares in the
Merger;" "--The Merger --Sources of Funds;"
"PROXY SOLICITATION;" "SPECIAL
FACTORS--Opinion of Financial Advisor;
Summary of Financial Analyses;" "--Sources
and Uses of Funds;" "THE MERGER--General--
Treatment of Shares in the Merger;"
"--Payment for Public Shares; Sources of
Funds" and "--Fees and Expenses" sections
of the Proxy Statement are incorporated
herein by this reference.
16. ADDITIONAL INFORMATION. See text of the Proxy Statement.
6
<PAGE>
CROSS REFERENCE SHEET
(PURSUANT TO GENERAL INSTRUCTION F TO SCHEDULE 13E-3)
17. MATERIAL TO BE FILED AS EXHIBIT.
(a)....................... Not applicable
(b)....................... Exhibit (b)(1) Opinion of Financial Advisor
(incorporated by reference to ANNEX B to the
Proxy Statement attached hereto as Exhibit
(d)(1))*
Exhibit (b)(2) Robertson Stephens materials
dated September 5, 1996**
Exhibit (b)(3) Robertson Stephens
presentation dated September 5, 1995**
(c)....................... Exhibit (c)(1) Agreement and Plan of Merger
dated September 24, 1996, among Datalogix
International Inc., Oracle Acquisition
Corporation and Oracle Corporation, as
amended by Amendment No. 1 thereto dated as
of October 8, 1996 (incorporated by reference
to ANNEX A to the Proxy Statement attached
hereto as Exhibit (d)(1))*
Exhibit (c)(2) Purchase Agreement dated
September 6, 1994 between Oracle Corporation
and Datalogix International Inc.
(incorporated by reference to the
Registration Statement of Datalogix
International Inc. on Form S-1 (File No.
33-91746) as declared effective by the
Securities and Exchange Commission on June
15, 1995).*
Exhibit (c)(3) Registration Rights Agreement
dated October 29, 1992, as amended and
restated as of June 30, 1993 and as of
September 6, 1994, among Datalogix
International Inc. and certain of its
shareholders (incorporated by reference to
the Registration Statement of Datalogix
International Inc. on Form S-1 (File No.
33-91746) as declared effective by the
Securities and Exchange Commission on June
15, 1995).*
Exhibit (c)(4) Employment Agreement dated as
of June 28, 1996, as amended on July 30, 1996
and on September 13, 1996 between Datalogix
International Inc. and Raymond V. Sozzi.*
Exhibit (c)(5) The Rights Agreement dated as
of August 27, 1996 between Datalogix
International Inc. and The First National
Bank of Boston, as Rights Agent, as amended
by Amendment No. 1 thereto dated as of
September 24, 1996 (incorporated by reference
to the Current Reports on Form 8-K filed by
Datalogix International Inc. with the
Securities and Exchange Commission on August
28, 1996 and September 26, 1996).*
(d)....................... Exhibit (d)(1) Preliminary copy of Letter to
Stockholders, Notice of Special Meeting of
Stockholders, Proxy Statement and form of
Proxy for the Special Meeting of Stockholders
of Datalogix International Inc. to be held on
_________, 1996
7
<PAGE>
CROSS REFERENCE SHEET
(PURSUANT TO GENERAL INSTRUCTION F TO SCHEDULE 13E-3)
(e)....................... Exhibit (e)(1) Sections of the New York
Business Corporation Law (incorporated by
reference to ANNEX C to the Proxy Statement
attached hereto as Exhibit (d)(1))*
(f)....................... Not applicable
- -------------------
* Previously filed
** Filed in paper format pursuant to a temporary hardship exemption on Form SE.
8
<PAGE>
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
November 14, 1996 ORACLE CORPORATION
By: /s/ David J. Roux
----------------------------
Name: David J. Roux
Title: Executive Vice President,
Corporate Development
November 14, 1996 DELPHI ACQUISITION CORPORATION
By: /s/ Thomas Theodores
----------------------------
Name: Thomas Theodores
Title: Vice President and Secretary
November 14, 1996 DATALOGIX INTERNATIONAL INC.
By: /s/ Raymond V. Sozzi
--------------------------------
Name: Raymond V. Sozzi
Title: President, Chief Operating
Officer and Acting Chief
Executive Officer
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER EXHIBIT PAGE NUMBER
-------- ------- -------------
(a).......... Not applicable
(b).......... Exhibit (b)(1) Opinion of Financial Advisor
(incorporated by reference to ANNEX B to the
Proxy Statement attached hereto as Exhibit
(d)(1))*
Exhibit (b)(2) Robertson Stephens materials
dated September 5, 1996**
Exhibit (b)(3) Robertson Stephens presentation
dated September 5, 1996**
(c).......... Exhibit (c)(1) Agreement and Plan of Merger
dated September 24, 1996, among Datalogix
International Inc., Oracle Acquisition
Corporation and Oracle Corporation, as
amended by Amendment No. 1 thereto dated as
of October 8, 1996 (incorporated by reference
to ANNEX A to the Proxy Statement attached
hereto as Exhibit (d)(1))*
Exhibit (c)(2) Purchase Agreement dated
September 6, 1994 between Oracle Corporation
and Datalogix International Inc. (incorporated
by reference to the Registration Statement
of Datalogix International Inc. on Form S-1
(File No. 33-91746) as declared effective by
the Securities and Exchange Commission on
June 15, 1995).*
Exhibit (c)(3) Registration Rights Agreement
dated October 29, 1992, as amended and
restated as of June 30, 1993 and as of
September 6, 1994, among Datalogix
International Inc. and certain of its
shareholders (incorporated by reference to the
Registration Statement of Datalogix
International Inc. on Form S-1 (File No.
33-91746) as declared effective by the
Securities and Exchange Commission on
June 15, 1995.*
Exhibit (c)(4) Employment Agreement dated as of
June 28, 1996, as amended on July 30, 1996 and
on September 13, 1996 between Datalogix
International Inc. and Raymond V. Sozzi.*
Exhibit (c)(5) The Rights Agreement dated as
of August 27, 1996 between Datalogix
International Inc. and The First National Bank
of Boston, as Rights Agent, as amended by
Amendment No. 1 thereto dated as of
September 24, 1996 (incorporated by reference
to the Current Reports on Form 8-K filed by
Datalogix International Inc. with the
Securities and Exchange Commission on
August 28, 1996 and September 26, 1996).*
(d).......... Exhibit (d)(1) Preliminary copy of Letter to
Stockholders, Notice of Special Meeting of
Stockholders, Proxy Statement and form of
Proxy for the Special Meeting of Stockholders
of Datalogix International Inc. to be held
on _________, 1996
<PAGE>
EXHIBIT
NUMBER EXHIBIT PAGE NUMBER
-------- ------- -------------
(e).......... Exhibit (e)(1) Sections of the New York
Business Corporation Law (incorporated by
reference to ANNEX C to the Proxy Statement
attached hereto as Exhibit (d)(1))*
(f).......... Not applicable
- -------------------
* Previously filed.
** Filed in paper format pursuant to a temporary hardship exemption on Form SE.
<PAGE>
AMENDMENT NO. 1
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)
/ / 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
-----------------------------------------------------------------------
/X/ Fee paid previously with preliminary materials.
/ / 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>
[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.
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 the Company 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>
[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 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>
[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 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 November 11, 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
i
<PAGE>
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 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."
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<PAGE>
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 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 Corporate Investor
Communications, Inc. 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 Corporate Investor Communications, Inc. a fee
of approximately $3,500, 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.
iii
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
INTRODUCTION............................................................................................... i
The Special Meeting...................................................................................... i
Record Date; Quorum; Required Vote....................................................................... i
Proxies.................................................................................................. ii
SUMMARY.................................................................................................... 1
The Special Meeting...................................................................................... 1
Special Factors.......................................................................................... 1
The Merger............................................................................................... 3
Market Prices Of And Dividends On The Common Shares...................................................... 5
Selected Consolidated Financial Data Of The Company...................................................... 6
The Parties.............................................................................................. 8
SPECIAL FACTORS............................................................................................ 10
Background Of The Merger................................................................................. 10
Purpose And Structure Of The Merger...................................................................... 13
Recommendation Of The Board Of Directors Of The Company; Fairness Of The Merger.......................... 14
Opinion Of Financial Advisor; Summary of Financial Analyses.............................................. 16
Perspective of Oracle on the Merger...................................................................... 19
Plans For The Company After The Merger................................................................... 19
Certain Effects Of The Merger............................................................................ 20
Interest Of Certain Persons In The Merger................................................................ 21
Certain U.S. Federal Income Tax Consequences............................................................. 25
Sources and Uses of Funds................................................................................ 25
Initial Public Offering of Common Stock.................................................................. 26
Regulatory Approvals..................................................................................... 26
THE MERGER................................................................................................. 27
General.................................................................................................. 27
Conditions to the Merger, Waiver......................................................................... 29
Termination.............................................................................................. 30
Fees and Expenses........................................................................................ 30
Representations and Warranties........................................................................... 30
Conduct of Business Pending the Merger................................................................... 32
No Solicitation.......................................................................................... 33
Access to Information.................................................................................... 34
Legal Compliance......................................................................................... 34
Indemnification of Directors and Officers................................................................ 34
Accounting Treatment..................................................................................... 35
Payment for Public Shares; Sources Of Funds.............................................................. 35
Dissenters' Rights....................................................................................... 35
DESCRIPTION OF CAPITAL STOCK OF DATALOGIX.................................................................. 37
Common Stock............................................................................................. 37
Preferred Stock.......................................................................................... 37
Registration Rights of Certain Holders................................................................... 37
MARKET PRICES AND DIVIDENDS................................................................................ 39
SELECTED CONSOLIDATED FINANCIAL DATA OF THE COMPANY........................................................ 40
OWNERSHIP OF COMMON SHARES................................................................................. 42
Security Ownership of Certain Beneficial Owners.......................................................... 42
TRANSACTIONS BY CERTAIN PERSONS IN COMMON SHARES........................................................... 43
</TABLE>
iv
<PAGE>
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
MANAGEMENT OF ORACLE, ACQUISITION SUB AND THE COMPANY...................................................... 44
Directors and Executive Officers of Oracle............................................................... 44
Directors and Executive Officers of Acquisition Sub...................................................... 47
Directors and Executive Officers of The Company.......................................................... 47
Certain Proceedings...................................................................................... 50
INDEPENDENT PUBLIC ACCOUNTANTS............................................................................. 51
MISCELLANEOUS.............................................................................................. 51
PROXY SOLICITATION......................................................................................... 51
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE............................................................ 51
AVAILABLE INFORMATION...................................................................................... 52
ADDITIONAL INFORMATION..................................................................................... 52
SHAREHOLDER PROPOSALS...................................................................................... 53
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>
v
<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 November 11, 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 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."
1
<PAGE>
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 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
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."
2
<PAGE>
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 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
3
<PAGE>
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
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--Sources and Uses of
Funds." If the Merger Agreement is terminated prior to the Effective Time, under
certain circumstances, the Company will be required to pay to Oracle 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) a "Termination Fee" in the amount of
$3,000,000. See "The Merger--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."
4
<PAGE>
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:
<TABLE>
<CAPTION>
FISCAL PERIOD HIGH LOW
- ----------------------------------------------------------------------------- --- ---
<S> <C> <C>
1995:
Fourth Quarter (commencing June 15, 1995).................................. $ 251/4 $ 235/8
1996:
First Quarter.............................................................. $ 26 $ 141/4
Second Quarter............................................................. 16 85/8
Third Quarter.............................................................. 16 10
Fourth Quarter............................................................. 93/4 67/8
1997:
First Quarter.............................................................. $ 8 $ 43/8
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.
5
<PAGE>
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.
<TABLE>
<CAPTION>
THREE MONTHS ENDED FOR THE FISCAL YEARS ENDED JUNE 30,
---------------------------- -----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
SEPTEMBER 30, SEPTEMBER 30,
1996 1995 1996 1995 1994 1993 1992
------------- ------------- --------- --------- --------- --------- ---------
<CAPTION>
(IN THOUSANDS, EXCEPT FOR PER SHARE DATA AND RATIOS)
<S> <C> <C> <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>
THREE MONTHS ENDED AS OF JUNE 30,
---------------------------- -----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
SEPTEMBER 30, SEPTEMBER 30,
1996 1995 1996 1995 1994 1993 1992
------------- ------------- --------- --------- --------- --------- ---------
<CAPTION>
(IN THOUSANDS)
<S> <C> <C> <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>
6
<PAGE>
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.
- ------------------------
(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.
7
<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-Registered Trademark- relational DBMS is a key component of
Oracle-Registered Trademark- Universal Server-Registered Trademark-, 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.
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
8
<PAGE>
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.
9
<PAGE>
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 "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 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 in
any acquisition proposal. 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
10
<PAGE>
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. At this meeting, Robertson Stephens made a brief presentation regarding
the Company, Oracle and the potential acquisition using a written outline and
distributed a preliminary report containing analysts' estimates prepared by
Robertson Stephens and historical financial information.
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 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.
11
<PAGE>
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, 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, which also
distributed an updated written report of its financial analyses, and by 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 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.
12
<PAGE>
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. Oracle would have sufficient financial and technical
resources to support the enhancement and development of the Company's products
and would not be subject to the Company's financial and technical constraints.
Oracle would also benefit from the integration of such products into Oracle's
own product line in order to provide a more complete and integrated
manufacturing process application software solution for Oracle's customers. For
example, the Company's GEMMS products, when integrated with Oracle's products,
would provide Oracle with an immediate solution for the process segment of the
manufacturing market; the Company's employees would have the expertise necessary
for Oracle to merge the GEMMS product functionality with Oracle's manufacturing
applications, as well as to sell and support such products; and Oracle would
benefit from the sales and profit potential that GEMMS products would have when
combined with Oracle's products. The detriments of the Merger to Oracle are that
Oracle will bear the risk of any losses incurred in the operation of the Company
and any decrease in the value of the Company.
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 trading prices in effect immediately prior to the announcement of
the Merger. The structure of the transaction as a cash merger provides a cash
payment at a premium price to all holders of outstanding Public Shares and an
orderly transfer of ownership of the equity interest represented by Public
Shares to Oracle. The structure of the Merger also ensures the acquisition by
Oracle and its affiliates of all the outstanding Public Shares. In addition,
given the uncertainty as to the future revenue growth and operating performance
of the Company, the Board of Directors believed, and based upon the factors
discussed below under "--Recommendation of the Board of Directors of the
Company; Fairness of the Merger" and under "--Opinion of Financial Advisor,
Summary Financial Analyses," that an internal restructuring of the Company's
operations in order to enhance its profitability would not yield as favorable a
result to the Company's Public Shareholders as the proposed transaction with
Oracle.
Although the Company's stock had historically traded at levels near the
$8.00 per share offered by Oracle, following a series of disappointing quarterly
results, the shares had consistently traded below $10.00 per share since early
April 1996. The average closing prices for the Company's stock for the 30, 60,
90 and 120-calendar-day periods prior to the announcement of the Merger were
$5.636, $5.654, $6.168 and $6.831 and reflected a decline in the market price of
the Common Stock which was considered by the Company. The $8.00 per share price
to be received by the Public Shareholders represents a premium of approximately
42.0% over the reported average closing price of the Shares during the
30-trading-day period prior to the announcement of the Merger. The primary
detriment of the Merger to the Company's Public Shareholders is that, due to the
lack of prospective candidates for a purchase, merger or other business
combination that would be likely to result in as favorable an outcome for the
Company's Public Shareholders as the proposed transaction with Oracle, the
Company was unable to negotiate a higher premium over trading prices in effect
prior to the announcement of the Merger for the Common Shares than that offered
by Oracle. After considering the factors described below in "--Recommendation of
the Board of Directors of the Company; Fairness of the Merger" and the analyses
undertaken by Robertson Stephens described in "--Opinion of Financial Advisor;
Summary of Financial Analyses," the Board of Directors believes that the market
price of the Company's stock during recent months reflects fairly the value of
the stock during that period.
13
<PAGE>
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 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 (such as GEMMS) to broader, fully integrated "supply
chain management" solutions provided by vendors such as Oracle, that are
able to manage information with vendors, customers and partners along the
entire supply chain, often on a global basis;
(2) the increased complexity and breadth of the new generation of
information products favored larger systems vendors, including Oracle,
with fully integrated software solutions and worldwide services and
support. Manufacturers now seek an integration of systems along the
entire supply chain, including not only the manufacturing process but
also accounting systems, forecasting, customer order entry, warehousing
and distributions;
(3) the fact that there were functionality and performance gaps in
earlier, less mature versions of GEMMS and delays in product releases
which in some cases were critical factors in securing new sales. While
the Company has worked aggressively to provide satisfactory solutions to
affected customers and product improvements in subsequent releases of
GEMMS address many of these issues, restoring customer confidence and
regaining positive references in these cases is a slow process;
(4) the difficulties in managing and executing an optimal
international expansion strategy. Selling to and supporting customers
across numerous countries with different languages, time zones, and
manufacturing conventions created a difficult challenge for a relatively
small company with minimal physical presence outside the United States.
The Company employed only approximately thirty people at its facilities
in Europe and in Asia/Pacific, making it largely dependent on
distribution agreements with various third parties, including Oracle.
While software revenues from international sources during the past three
years increased ($1,508,000 in fiscal 1994, $2,367,000 in 1995 and
$4,873,000 in fiscal 1996), the Company believes that it lacks the
resources to adequately exploit the much greater potential that exists
internationally; (5) the increasing difficulty in attracting and
retaining qualified key personnel, particularly in the sales department.
With the Company's difficulties in the marketplace becoming increasingly
apparent and sales prospects diminishing, several key sales personnel
left the Company during the recent months.
14
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In connection with items (1), (2) and (3) above, sales of GEMMS
software, having increased substantially during fiscal 1994 and fiscal
1995, began to decline during fiscal 1996, as shown in the following
table.
<TABLE>
<CAPTION>
GEMMS SOFTWARE REVENUES
(IN THOUSANDS) TOTAL
Q1 Q2 Q3 Q4 YEAR
<S> <C> <C> <C> <C> <C>
FY 1994 $ 970 $ 1,451 $ 3,084 $ 4,267 $ 9,722
FY 1995 3,238 5,253 6,265 7,321 22,077
FY 1996 1,894 8,078 3,156 5,800 18,928
FY 1997 948 N/A N/A N/A N/A
</TABLE>
The recent losses reported in fiscal 1996 and during the first
quarter of fiscal 1997 were largely attributable to the above factors,
and the Board believed that there could be no assurance that the Company
could reverse this trend and regain and sustain an acceptable level of
profitability in the near term;
(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, as well as the
historical average closing prices of $5.654, $6.168 and $6.831 for the 60,
90 and 120-calendar-day periods prior to the announcement of the Merger;
(v) the opinion of Robertson Stephens as to the fairness of the $8.00
per share price to be received by the 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 considered the fact that book value of shareholders' equity
at June 30, 1996 was $41.3 million, or $3.70 per share, which is significantly
less than the $8.00 per share offered by Oracle. Since the Company's assets are
primarily cash and other assets possessing no unique sale value over book value,
the Board did not believe that a liquidation of the Company, as opposed to a
sale of all or part of the Company as a going concern, would result in
shareholder value being maximized, and believed that a liquidation of the
Company would have resulted in shareholders receiving less than $8.00 per share.
In light of the considerations described under clause (i) above, the Company
believed its going concern value to have been less than the $8.00 per share
offered by Oracle.
15
<PAGE>
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 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
16
<PAGE>
Stephens. Robertson Stephens provided the Board of Directors with a preliminary
written report of its financial analyses on September 5, 1996 and with an
updated written report of its financial analyses on September 22, 1996.
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.
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 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.
17
<PAGE>
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 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.
18
<PAGE>
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 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.
Robertson Stephens received fees of approximately $1.8 million in connection
with the initial public offering of the Company's stock in June 1995.
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." At the
conclusion of the negotiation process, Oracle offered to acquire the Company at
a price of $8.00 per Common Share. In determining such price, 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 and potential increases
in revenue growth and margins. Based on this analysis Oracle concluded that,
except for one-time write-offs in connection with the Merger, the Merger at
$8.00 per share would not increase or decrease, in any material respect,
Oracle's projected earnings per share for its 1997, 1998 and 1999 fiscal years.
Under Oracle's analyses, a purchase price greater than $8.00 per share would
have been dilutive to Oracle's earnings per share. Oracle also calculated the
average closing price of the Company's Common Stock on the Nasdaq National
Market System for the 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) to be equal to $5.41 per share. This average closing price took account
for day-to-day fluctuations in the market price and was considered a reasonable
estimate of the current market value of the Common Stock. Oracle's $8.00 offer
represented what it considered to be a fair premium of approximately 48% over
the then-prevailing market price.
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 and adopts the conclusions of Robertson Stephens contained in its
opinion. Oracle did not attach specific weights to any factors in reaching its
belief as to fairness.
PLANS FOR THE COMPANY AFTER THE MERGER
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, the sale of certain assets of the
Company to a third party 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,
19
<PAGE>
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 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 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.
20
<PAGE>
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 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 and executive officers 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 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. The aggregate value of
consideration paid to holders of the Company's Common Shares will be calculated
by multiplying $8.00 by the sum of the number of common shares outstanding at
the Effective Date of the Merger, plus the number of common stock equivalents
represented by outstanding stock options as calculated using the treasury stock
method, less the number of shares owned by Oracle. This aggregate value is
expected to approximate $84,000,000, and Mr. Sozzi's cash bonus will equal 1% of
that amount less $125,000, or approximately $715,000. 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.
Mr. Sozzi initially entered into an Employment Agreement with the Company on
June 28, 1996, pursuant to which he began his employment with the Company on
July 8, 1996 as the Company's President and Chief Operating Officer. On July 30,
1996, Mr. Giordanella's employment as the Chief Executive Officer of the Company
was terminated and, subsequently, Mr. Sozzi was asked to act as an interim Chief
21
<PAGE>
Executive Officer. Mr. Sozzi's employment agreement was amended on July 30th in
order to reflect his position with the Company as Acting Chief Executive
Officer. The understanding at that time was that if ultimately Mr. Sozzi became
the Company's Chief Executive Officer, he would become entitled to additional
stock options. Due primarily to disagreements between Mr. Sozzi and the
Company's Board of Directors as to Mr. Sozzi's autonomy in managing the affairs
of the Company, Mr. Sozzi resigned on September 3, 1996. However, discussions
transpired the next day between Mr. Sozzi and members of the Board of Directors
and Mr. Sozzi rescinded his resignation. On September 13, 1996, Mr. Sozzi signed
an amendment to his employment agreement in order to formalize such recission
and to document the agreement described below that was reached between the
Company and Mr. Sozzi regarding compensation. By that time, it had become
apparent that an acquisition of the Company was more likely than had been
previously anticipated. Therefore, in lieu of receiving only additional stock
options, as had earlier been agreed, the Board of Directors and Mr. Sozzi agreed
that Mr. Sozzi would receive stock options subject to forfeiture upon a change
of control and, in lieu thereof, would receive a cash bonus upon completion of a
change of control transaction.
Richard J. Willemin is currently employed by the Company as Chief Financial
Officer. Mr. Willemin was retained on consulting basis from August 30, 1996
through September 26, 1996 based on an oral agreement. During this period, the
Company offered Mr. Willemin a full time position as the Company's Chief
Financial Officer, but negotiating the terms of such employment was delayed, as
management's attention was focused on negotiating the Merger Agreement with
Oracle until September 23, 1996, and Mr. Willemin's Employment Agreement was not
signed until September 26, 1996. Pursuant to this Employment Agreement, 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.
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
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<PAGE>
"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 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 $6.3 million in commissions in connection
with the Marketing Agreement, and Oracle paid the Company approximately $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
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(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 fees and approximately $0.9 million in service revenue 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 October 16, 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) 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
expires on January 1, 1997. Since commencement of the VAR Agreement in May 1991,
through June 1996, the Company paid Oracle an aggregate of approximately $8.9
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.
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<PAGE>
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 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>
SOURCES OF FUNDS
- ------------------------------------------------------------------------------
<S> <C>
Oracle cash................................................................... $ [81,000,000]
Datalogix cash................................................................ []
--------------
Total sources........................................................... $
--------------
--------------
<CAPTION>
USES OF FUNDS
- ------------------------------------------------------------------------------
<S> <C>
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................................................. $ 3,500
Paying Agent fees.............................................................
Miscellaneous expenses........................................................ 25,000
--------------
Total Uses.............................................................. $
--------------
--------------
</TABLE>
25
<PAGE>
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."
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.
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<PAGE>
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 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 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
27
<PAGE>
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 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 and executive officers 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
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<PAGE>
agreement, except that the consideration payable upon exercise in respect of
each Share covered by such option shall be the Merger Consideration.
1995 EMPLOYEE STOCK PURCHASE PLAN. Pursuant to the Merger Agreement the
Company has agreed to take all actions reasonably necessary to cause the last
day of the "Offering Period" (as such term is used in the Company's 1995
Employee Stock Purchase Plan ("ESPP")), to be the date immediately prior to the
closing date of the Merger (the "Final Purchase Date"), and apply the funds
within each participant's withholdings account on the Final Purchase Date to the
purchase of whole Shares in accordance with the terms of the ESPP.
CONDITIONS TO THE MERGER, WAIVER
CONDITIONS TO EACH PARTY'S OBLIGATIONS. Pursuant to the Merger Agreement,
the respective obligations of each party to consummate the Merger are subject to
the satisfaction or waiver (to the extent permitted by law), on or prior to the
Closing Date 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 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.
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<PAGE>
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 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,
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<PAGE>
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 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 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.
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<PAGE>
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 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
32
<PAGE>
matter will not be considered a threatened, or instituted and continuing,
action, suit or proceeding and (B) for purposes of the conditions to the Merger
regarding representations and warranties and adverse changes, any adverse effect
against the Company in any such matter will not be considered or aggregated in
determining whether a Material Adverse Effect has occurred; provided, further,
that any such proposed payment or satisfaction will be considered or aggregated
in determining whether a Material Adverse Effect has occurred; (xx) waive the
benefits of, or agree to modify in any material manner, any confidentiality,
standstill or similar agreement to which the Company or any of its subsidiaries
is a party; (xxi) commence a lawsuit except as provided for in the Merger
Agreement; (xxii) make any payment or incur any liability or obligation to
obtain any third party consent to the transactions contemplated under the Merger
Agreement, except as provided in the Merger Agreement; (xxiii) take, or agree to
take, any action that would make any representation or warranty of the Company
contained in the Merger Agreement inaccurate in any respect; or (xxiv) enter
into an agreement, contract, commitment or arrangement to do any of the
foregoing, or authorize, recommend, propose or announce an intention to do any
of the foregoing.
NO SOLICITATION
Pursuant to the Merger Agreement, the Company has agreed that the Company
and its officers, directors, employees, representatives and agents will
terminate any ongoing discussions or negotiations with respect to a Takeover
Proposal (as hereinafter defined). The Company has agreed that it will not
authorize or permit any of its officers, directors or employees or any
investment banker, financial advisor, attorney, accountant or other
representative retained by it or its subsidiaries to (i) solicit, initiate or
encourage (including by way of furnishing information), or take any other action
to facilitate, any inquiries or the making of any proposal which constitutes, or
may reasonably be expected to lead to, any Takeover Proposal or (ii) participate
in any discussions or negotiations regarding any Takeover Proposal. For purposes
of the Merger Agreement, "Takeover Proposal" means any inquiry, proposal or
offer from any person relating to any direct or indirect acquisition or purchase
of a substantial amount of assets of the Company or any of its subsidiaries or
of over 20% of any class of equity securities of the Company or any of its
subsidiaries, any tender offer or exchange offer that if consummated would
result in any person beneficially owning 20% or more of any class of equity
securities of the Company or any of its subsidiaries, any merger, consolidation,
business combination, sale of substantially all the assets, recapitalization,
liquidation, dissolution or similar transaction involving the Company or any of
its subsidiaries, other than the transactions contemplated by the Merger
Agreement.
Notwithstanding the foregoing, if at any time prior to the Effective Time,
the Board of Directors of the Company determines in good faith, based on the
written opinion of its legal counsel, that it is necessary to do so in order to
comply with its fiduciary duties to the Company's shareholders under applicable
law, the Company may, in response to an unsolicited Takeover Proposal, and
subject to compliance with the Merger Agreement, (i) furnish information with
respect to the Company to any person pursuant to a confidentiality agreement 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
33
<PAGE>
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 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.
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<PAGE>
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 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 and
mailing of such written objection shall constitute delivery thereof. 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 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
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<PAGE>
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.
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<PAGE>
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 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 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
37
<PAGE>
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.
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<PAGE>
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
----------------------
<S> <C> <C>
FISCAL PERIODS HIGH LOW
- ----------------------------------------------------------------------------- ---------- ----------
1995
Fourth Quarter (commencing June 15, 1995).................................. $ 251/4 $ 235/8
1996
First Quarter.............................................................. $ 26 $ 141/4
Second Quarter............................................................. 16 85/8
Third Quarter.............................................................. 16 10
Fourth Quarter............................................................. 93/4 67/8
1997
First Quarter.............................................................. $ 8 $ 43/8
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 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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<PAGE>
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.
<TABLE>
<CAPTION>
FOR THE FISCAL YEARS ENDED JUNE 30,
------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1996 1995 1994 1993 1992
--------- --------- --------- --------- ----------
<CAPTION>
(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,
-----------------------------------------------------
<S> <C> <C> <C> <C> <C>
1996 1995 1994 1993 1992
--------- --------- --------- --------- ---------
<CAPTION>
(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>
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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.
- ------------------------
(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.
41
<PAGE>
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>
AMOUNT OF
NAME AND ADDRESS 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.
(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.
42
<PAGE>
(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 40,000 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 40,000 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 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 40,000 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."
43
<PAGE>
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 the Board director of Oracle since he founded Oracle in May 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 Officer
President, Chief Operating Officer and Director since July 1996. Mr. Lane served as Executive Vice
President of Oracle and President of Worldwide
Operations from October 1993 to June 1996, and has been
a director since 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.
</TABLE>
44
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
- -------------------------------------------------------- --------------------------------------------------------
<S> <C>
Jeffrey O. Henley....................................... Mr. Henley has been Executive Vice President and Chief
Executive Vice President, Chief Financial Officer and Financial Officer of Oracle since March 1991 and has
Director been 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 President of the
Executive Vice President, Product Division Product Division since November 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 of Corporate
Executive Vice President, Corporate Development Development since March 1996, and 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.
Raymond L. Ocampo Jr.................................... Mr. Ocampo has been Senior Vice President, General
Senior Vice President, General Counsel and Corporate Counsel and Corporate Secretary of Oracle since October
Secretary 1992. He was Vice President, 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.
</TABLE>
45
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
- -------------------------------------------------------- --------------------------------------------------------
<S> <C>
Thomas A. Williams...................................... Mr. Williams has been a Vice President of Oracle since
Vice President and Corporate Controller October 1990 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 Company since March
Director 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 Company and has
Director 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>
46
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
- -------------------------------------------------------- --------------------------------------------------------
<S> <C>
Michael J. Boskin....................................... Dr. Boskin has been a director of the Company since May
Director 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.
</TABLE>
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>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
- -------------------------------------------------------- --------------------------------------------------------
<S> <C>
David J. Roux........................................... See the information set forth under "--Directors and
Director; President and Chief Financial Officer Executive Officers of Oracle" with respect to Mr. Roux.
Thomas Theodores........................................ Mr. Theodores has been Vice President, Corporate Legal
Vice President and Secretary 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 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.
47
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
- -------------------------------------------------------- --------------------------------------------------------
<S> <C>
Raymond V. Sozzi........................................ Mr. Sozzi has been President and Chief Operating Officer
President, Chief Operating Officer and Acting Chief since July 1996 and has been acting Chief Executive
Executive Officer 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 Officer since
Chief Financial Officer 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.
Ronald D. Nall.......................................... Mr. Nall has been Senior Vice President, Product
Senior Vice President, Product Research, Marketing and Research, Marketing and Development since February 1996.
Development and MIS He served as Vice President, GEMMS Research and
Development and MIS 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.
</TABLE>
48
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
- -------------------------------------------------------- --------------------------------------------------------
<S> <C>
Peter B. Sobiloff....................................... Mr. Sobiloff has served as President, Field Operations
President, Worldwide Field Operations since February 1996. He served as Vice President of
Worldwide Field 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, CIMPRO
General Manager, CIMPRO Business Systems Business Systems since February 1996. He served as Vice
President, Client Services and CIMPRO Business Unit from
February 1993 to February 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, Product
Vice President, Product Marketing Marketing since July 1995. He served as Vice President,
Marketing from March 1995 to July 1995, 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 President, Oracle
Vice 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 Company since
Director 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.
</TABLE>
49
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
- -------------------------------------------------------- --------------------------------------------------------
<S> <C>
George B. Beitzel....................................... Mr. Beitzel has served as a director of the Company
Director 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 President, and where he was a member of the
Board of Directors.
David R. Hathaway....................................... Mr. Hathaway has served as a director of the Company
Director 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 Company since
Director 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.
50
<PAGE>
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 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. Corporate Investor
Communications, Inc. has been engaged to solicit proxies on behalf of the
Company for a fee of $3,500 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 29, 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 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,
51
<PAGE>
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 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 and both
Oracle and Acquisition Sub deny being affiliates 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. 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.
52
<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
By: /s/ RAYMOND V. SOZZI
-----------------------------------------
Raymond V. Sozzi
PRESIDENT, CHIEF OPERATING OFFICER
AND ACTING CHIEF EXECUTIVE OFFICER
53
<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.........................
Net income............................. 17
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.
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)
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 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.
F-9
<PAGE>
DATALOGIX INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
NOTE 5--NOTES PAYABLE AND OTHER OBLIGATIONS: (CONTINUED)
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
- -------------------------------------------------------------------------------------
<S> <C>
1997................................................................................. $ 2,112
1998................................................................................. 2,296
1999................................................................................. 1,187
2000 and thereafter.................................................................. 102
---------
Total minimum lease payments..................................................... $ 5,697
---------
---------
</TABLE>
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
F-10
<PAGE>
DATALOGIX INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
NOTE 7--CAPITAL STOCK: (CONTINUED)
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
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>
F-11
<PAGE>
DATALOGIX INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
NOTE 8--STOCK OPTION PLANS: (CONTINUED)
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.
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
--------- ---------
$ (2,732)
Net deferred tax asset.................................................... 16)
--------- ---------
--------- ---------
</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.
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.
F-14
<PAGE>
DATALOGIX INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
NOTE 12--QUARTERLY FINANCIAL INFORMATION (UNAUDITED): (CONTINUED)
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 13,410
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
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
F-15
<PAGE>
DATALOGIX INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
NOTE 13--SUBSEQUENT EVENTS: (CONTINUED)
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 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.
A-1
<PAGE>
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,
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,
A-2
<PAGE>
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.
(b) Parent shall furnish to the Company, and revise, written information
concerning itself and Purchaser expressly for inclusion in the Proxy Statement,
including without limitation information required pursuant to Rule 13e-3 under
the Securities Exchange Act of 1934, as amended ( the "EXCHANGE ACT"). Such
Parent-furnished information will not, at both the date mailed to Company
shareholders and at the time of the meeting of Company shareholders to be held
in connection with the Merger, contain any untrue statement of a material fact
or omit to state any material fact required to be stated in Parent-furnished
information or necessary in order to make the statements made in
Parent-furnished information, in light of the circumstances under which they are
made, not misleading.
(c) Parent shall vote, or cause to be voted, all of the Shares then owned by
it, Purchaser, and any of its other subsidiaries in favor of the approval of the
Merger and the authorization and adoption of this Agreement.
(d) The Company has been advised by each of its executive officers and each
of its Directors that each such person (to the extent such persons own Shares
and will be entitled to vote thereon) intends to vote in favor of the Merger.
(e) The Company hereby waives the provisions of Sections 3 and 5 of the
Purchase Agreement dated September 6, 1994 between the Company and Parent.
(f) Within five days following the date hereof Parent shall provide to the
Company a draft of the information relating to Parent and Purchaser required to
be included in the Proxy Statement and shall update and modify such information
prior to the tenth day after the date hereof to be complete and accurate in all
material respects.
ARTICLE II
CONVERSION OF SECURITIES
Section 2.1 CONVERSION OF CAPITAL STOCK. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holders of any
Shares or any shares of capital stock of Purchaser:
(a) PURCHASER CAPITAL STOCK. Each issued and outstanding share of capital
stock of Purchaser shall be converted into and become one fully paid and
nonassessable share of common stock of the Surviving Corporation.
(b) CANCELLATION OF TREASURY STOCK AND PURCHASER OWNED STOCK. All Shares
(and the associated Preferred Share Purchase Rights (collectively, the "RIGHTS")
issued pursuant to a Rights Agreement dated as of August 27, 1996 between the
Company and The First National Bank of Boston, as Rights Agent (the "RIGHTS
AGREEMENT")) that are owned by the Company or any subsidiary of the Company and
any Shares (and associated Rights) owned by Purchaser or any subsidiary of
Purchaser shall be canceled and retired and shall cease to exist and no
consideration shall be delivered in exchange therefor.
A-3
<PAGE>
(c) EXCHANGE OF SHARES. Each issued and outstanding Share (and associated
Right)(other than Shares (and associated Rights) to be canceled in accordance
with Section 2.1(b) and any dissenting Shares (and associated Rights) which are
held by shareholders exercising appraisal rights pursuant to the NYBCL
("DISSENTING SHAREHOLDERS")) shall be converted into the right to receive $8.00
per Share (and associated Right), payable to the holder thereof, without
interest (the "MERGER CONSIDERATION"), upon surrender of the certificate
formerly representing such Share in the manner provided in Section 2.2. All such
Shares (and associated Rights), when so converted, shall no longer be
outstanding and shall automatically be canceled and retired and shall cease to
exist, and each holder of a certificate representing any such Shares (and
associated Rights) shall cease to have any rights with respect thereto, except
the right to receive the Merger Consideration therefor upon the surrender of
such certificate in accordance with Section 2.2, without interest, or, in the
case of Dissenting Shareholders, the right, if any, to receive payment from the
Surviving Corporation of the fair value of such Shares as determined in
accordance with the NYBCL.
Section 2.2 EXCHANGE OF CERTIFICATES.
(a) PAYING AGENT. Prior to the Effective Time, Parent shall designate a
bank or trust company to act as agent for the holders of the Shares in
connection with the Merger (the "PAYING AGENT") to receive the funds to which
holders of the Shares shall become entitled pursuant to Section 2.1(c). Parent
shall, from time to time, make available to the Paying Agent funds in amounts
and at times necessary for the payment of the Merger Consideration in the
amounts and at the times provided herein. All interest earned on such funds
shall be paid to Parent.
(b) EXCHANGE PROCEDURES. As soon as reasonably practicable after the
Effective Time, the Paying Agent shall mail to each holder of record of a
certificate or certificates, which immediately prior to the Effective Time
represented outstanding Shares (the "CERTIFICATES"), whose Shares were converted
pursuant to Section 2.1(c) into the right to receive the Merger Consideration
(i) a letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
delivery of the Certificates to the Paying Agent and shall be in such form and
have such other provisions as Parent and the Company may reasonably specify) and
(ii) instructions for use in effecting the surrender of the Certificates in
exchange for payment of the Merger Consideration. Upon surrender of a
Certificate for cancellation to the Paying Agent or to such other agent or
agents as may be appointed by Parent, together with such letter of transmittal,
duly executed, the holder of such Certificate shall be entitled to receive in
exchange therefor the Merger Consideration for each Share formerly represented
by such Certificate and the Certificate so surrendered shall forthwith be
canceled. If payment of the Merger Consideration is to be made to a person other
than the person in whose name the surrendered Certificate is registered, it
shall be a condition of payment that the Certificate so surrendered shall be
properly endorsed or shall be otherwise in proper form for transfer and that the
person requesting such payment shall have paid any transfer and other taxes
required by reason of the payment of the Merger Consideration to a person other
than the registered holder of the Certificate surrendered 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.
A-4
<PAGE>
(d) TERMINATION OF FUND; NO LIABILITY. At any time following twelve months
after the Effective Time, the Surviving Corporation shall be entitled to require
the Paying Agent to deliver to it any funds (including any interest received
with respect thereto) which had been made available to the Paying Agent and
which have not been disbursed to holders of Certificates, and thereafter such
holders shall be entitled to look to the Surviving Corporation (subject to
abandoned property, escheat or other similar laws) only as general creditors
thereof with respect to the Merger Consideration payable upon due surrender of
their Certificates, without any interest thereon. Notwithstanding the foregoing,
none of Parent, the Surviving Corporation or the Paying Agent shall be liable to
any holder of a Certificate for Merger Consideration delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
Section 2.3 DISSENTING SHARES. Notwithstanding any other provision of this
Agreement to the contrary, Shares held by a holder who has not voted such Shares
in favor of the authorization, approval and adoption of this Agreement and the
Merger or consented thereto in writing and with respect to which dissenters'
rights shall have been demanded and perfected in accordance with Sections 623
and 910 of the NYBCL (the "DISSENTING SHARES") and as of the Effective Time not
withdrawn shall not be converted into the right to receive cash at or after the
Effective Time, but such Shares shall become the right to receive such
consideration as may be determined to be due to holders of Dissenting Shares
pursuant to the laws of the State of New York unless and until the holder of
such Dissenting Shares withdraws his or her demand for such appraisal or becomes
ineligible for such appraisal. If a holder of Dissenting Shares shall withdraw
his or her demand for such appraisal or shall become ineligible for such
appraisal (through failure to perfect or otherwise), then, as of the Effective
Time or the occurrence of such event, whichever last occurs, such holder's
Dissenting Shares shall automatically be converted into and represent the right
to receive the Merger Consideration, without interest, as provided in Section
2.1(c). The Company shall give Parent (i) prompt notice of any demands for
appraisal of Shares received by the Company and (ii) the opportunity 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.
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(c) As soon as practicable after the Effective Time, Parent shall deliver to
the holders of Employee Stock Options and Director Stock Options appropriate
notices setting forth such holders' rights pursuant to the Option Plans and the
1995 Director Option Plan and the agreements evidencing the grants of such
Employee Stock Options and Director Stock Options shall continue in effect on
the same terms and conditions (subject to the adjustments required by this
Section 2.4 after giving effect to the Merger).
(d) Parent shall register under the Securities Act of 1933, as amended (the
"SECURITIES ACT"), all shares of Parent Common Stock subject to options that
were formerly Employee Stock Options as of the Effective Time.
(e) The Company shall take all actions reasonably necessary to cause the
last day of the "OFFERING PERIOD" (as such term is used in the Company's 1995
Employee Stock Purchase Plan (the "1995 ESPP") to be the date immediately prior
to the Closing Date (the "FINAL PURCHASE DATE"), and apply on the Final Purchase
Date the funds within each participant's withholdings account on the Final
Purchase Date to the purchase on the Final Purchase Date of whole Shares in
accordance with the terms of the 1995 ESPP.
(f) Prior to the Effective Time, the Company shall take all actions required
to cause the exercise price on all options to purchase Shares that are then
outstanding and that have an exercise price in excess of $8.00 per Share to be
changed to become $8.00 per Share.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Purchaser as follows:
Section 3.1 ORGANIZATION.
(a) Each of the Company and its subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has the requisite corporate power and
authority and any necessary governmental authority to own, operate or lease the
properties that it purports to own, operate or lease and to carry on its
business as it is now being conducted, and, except as set forth in Section 3.1
of the Company Disclosure Schedule (as defined below), is duly qualified as a
foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of its properties owned, operated or leased or
the nature of its activities makes such qualification necessary, except for such
failure which, when taken together with all other such failures, would not have
a Material Adverse Effect (as defined below in this Section 3.1) on the Company
and its subsidiaries, taken as a whole. A true and complete list of all the
Company's subsidiaries, together with the jurisdiction of incorporation of each
subsidiary and the percentage of each subsidiary's outstanding capital stock
owned by the Company or another subsidiary, is set forth in Section 3.1 of the
Company Disclosure Schedule delivered to Parent and Purchaser on or before the
date hereof (the "COMPANY DISCLOSURE SCHEDULE"). The Company is not subject to
Section 2115 of the California General Corporation Law.
(b) When used in connection with the Company and its subsidiaries, the term
"MATERIAL ADVERSE EFFECT" means any individual material adverse effect, or
adverse effects in the aggregate (whether or not related and whether or not any
individual effect is material) which are material, on the business, operations,
properties (including intangible properties), condition (financial or
otherwise), prospects, assets or liabilities of the Company and its subsidiaries
taken as a whole. The term Material Adverse Effect shall include without
limitation: (i) any individual adverse effect, or adverse effects in the
aggregate (whether or not related and whether or not any individual effect is
material), 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
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Effective Time) and Sections 6.3 (d), 6.3 (e) and 7.1 (d), such amounts will be
$3,000,000, in the case of any individual effect, or $5,000,000, in the case of
all adverse effects in the aggregate; and (ii) any judgment, injunction, order
or decree binding upon the Company or any of its subsidiaries obligating the
Company or any such subsidiary to take or refrain from taking any action, omit
or refrain from omitting to take any action required to be taken, perform or
refrain from performing any activity or conduct or refrain from conducting any
business, in each case which results from actions, suits or proceedings of the
types described in Section 6.3 (d) (i) or (ii). For the purposes of determining
whether a Material Adverse Effect has occurred or could reasonably be expected
to occur there shall be included as adverse effects, without limitation, any
payments made, and the value of any other consideration provided, or which could
reasonably be expected to be made or provided (i) to pay, discharge or satisfy
any actions, suits, proceedings or claims; (ii) to obtain consents from any
third party to the transactions contemplated hereby; and (iii) to pay, discharge
or satisfy any obligation to indemnify or hold harmless any Indemnified Person
(as defined in Section 6.3 (d) below). Notwithstanding the foregoing, (a) all
dollar amounts set forth in this Section 3.1 (b) are net of (i) amounts of
insurance proceeds received by the Company or its subsidiaries or specifically
acknowledged by the insurer in writing as being payable by the insurer, and (ii)
specifically applicable reserves set forth and provided for in the draft
consolidated financial statements set forth in Section 5.3 of the Company
Disclosure Schedule, and (b) no individual adverse effect shall be included in
the calculation of Material Adverse Effect if the sole impact of such individual
adverse effect is a payment obligation which could not reasonably be expected to
result in a liability to the Company or its subsidiaries of more than $50,000.
Section 3.2 CAPITALIZATION.
(a) CAPITALIZATION. The authorized capital stock of the Company consists
of 40,000,000 Shares, par value $.01 per Share and 5,000,000 shares of Preferred
Stock, par value $0.01 per share. As of September 19, 1996, (i) 11,711,776
Shares were issued and outstanding, all of which were validly issued and are
fully paid and nonassessable, (ii) 96,116 Shares were held in the treasury of
the Company or by subsidiaries of the Company, (iii) 1,015,038 Shares were
reserved for issuance upon exercise of outstanding options under the Option
Plans and the Company's Director Option Plan, and (iv) 250,000 Shares were
reserved for issuance under the 1995 ESPP, up to 23,000 of which may be issued
in the Offering Period that ends on the day prior to the Closing Date. Section
3.2 of the Company Disclosure Schedule sets forth a true and correct list as of
September 20, 1996 of all holders of options to purchase Shares, the number of
such options outstanding as of such date and the exercise price per option. All
of the outstanding Shares have been duly authorized and validly issued and are
fully paid and nonassessable and free of preemptive rights. Subsequent to
September 19, 1996, no Shares have been issued by the 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
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options, calls or commitments of any character relating to the issued or
unissued capital stock or other securities of any subsidiary. Except as set
forth in Section 3.2 of the Company Disclosure Schedule, the Company does not
directly or indirectly own or have a right to acquire an equity interest in any
other corporation, partnership, joint venture or other business association or
entity.
Section 3.3 AUTHORIZATION; VALIDITY OF AGREEMENT; COMPANY ACTION. The
Company has full corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby, subject to
obtaining shareholder approval as described in the last sentence of this Section
3.3. The Board of Directors of the Company, at a meeting duly called and held on
September 22, 1996 at which all of the Directors were present, duly and
unanimously approved, authorized and adopted this Agreement and its execution,
delivery and performance and the transactions contemplated hereby, recommended
that the shareholders of the Company authorize and adopt this Agreement and the
transactions contemplated hereby, including the Merger, and determined that this
Agreement and the transactions contemplated hereby, including the Merger, are
fair to and in the best interests of the shareholders of the Company; PROVIDED,
HOWEVER, such recommendation may be withdrawn, modified or amended to the extent
permitted by Section 5.5 of this Agreement. No other corporate action on the
part of the Company is necessary to authorize the execution and delivery by the
Company of this Agreement and the consummation by it of the transactions
contemplated hereby (except as described in the last sentence of this Section
3.3). This Agreement has been duly executed and delivered by the Company and,
assuming due and valid authorization, execution and delivery hereof by Parent
and Purchaser, is a valid and binding obligation of the Company enforceable
against the Company in accordance with its terms. The affirmative vote of the
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
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set forth in Section 3.5 of the Company Disclosure Schedule, the SEC Documents
(i) were prepared in accordance with the requirements of the Securities Act or
the Exchange Act, as the case may be, including without limitation the
applicable accounting requirements thereunder and the published rules and
regulations of the SEC with respect thereto, (ii) when filed did not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, and (iii)
taken as a whole, do not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the 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 Company and its subsidiaries described in Section 3.24 (d) of
the Company Disclosure Schedule.
Section 3.6 ABSENCE OF CERTAIN CHANGES. Since June 30, 1995, except as
contemplated in this Agreement and set forth on Section 3.6 of the Company
Disclosure Schedule, there has not been:
(a) any Material Adverse Effect on the Company and its subsidiaries, taken
as a whole;
(b) any strike, picketing, work slowdown or other labor disturbance;
(c) any material damage, destruction or loss (whether or not covered by
insurance) with respect to any of the material assets of the Company or any of
its subsidiaries;
(d) any redemption or other acquisition of capital stock by the Company or
any of its subsidiaries or any declaration or payment of any dividend or other
distribution in cash, stock or property with respect to capital stock;
(e) any stock split, reverse stock, combination, reclassification or other
similar action with respect to capital stock;
(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;
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(h) any mortgage, pledge, security interest or imposition of lien or other
encumbrance on any material asset of the Company or any of its subsidiaries; or
(i) any change by the Company in accounting principles or methods except
insofar as may have been required by a change in generally accepted accounting
principles and disclosed in the SEC Documents and except as set forth in Section
3.5 of the Company Disclosure Schedule.
Except as set forth in Section 3.6 of the Company Disclosure Schedule, since
June 30, 1995 the Company and its subsidiaries have conducted their business
only in the ordinary course and in a manner consistent with past practice and
have not made any material change in the conduct of the business or operations
of the Company and its subsidiaries taken as a whole. Except as set forth in
Section 3.6 of the Company Disclosure Schedule, no person has or will have the
right to receive any severance, bonus, other payment, increase or change in
benefits or vesting of stock options, shares or other benefits as a result of
any of the transactions contemplated by this Agreement.
Section 3.7 NO UNDISCLOSED LIABILITIES. Except as set forth in Section 3.7
of the Company Disclosure Schedule, and except as reflected or reserved against
in the consolidated financial statements contained in the SEC Documents, the
Company and its subsidiaries have no liabilities of any nature (whether accrued,
absolute, contingent or otherwise), except those liabilities incurred in the
ordinary course of business which could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on the Company and its
subsidiaries, taken as a whole.
Section 3.8 LITIGATION. Except as disclosed in the SEC Documents or in
Section 3.8 of the Company Disclosure Schedule, there is no suit, claim, action,
proceeding or investigation pending before any Governmental Entity or, to the
best knowledge of the Company, threatened against the Company or any of its
subsidiaries. Except as disclosed in the SEC Documents or in Section 3.8 of the
Company Disclosure Schedule, neither the Company nor any of its subsidiaries is
subject to any outstanding order, writ, injunction or decree.
Section 3.9 NO DEFAULT; COMPLIANCE WITH APPLICABLE LAWS. Except as
disclosed in Section 3.9 of the Company Disclosure Schedule, the business of the
Company and each of its subsidiaries is not being conducted in default or
violation of any term, condition or provision of (i) its respective certificate
of incorporation or bylaws, (ii) any Specified Agreement or (iii) any federal,
state, local or foreign statute, law, ordinance, 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
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are used or currently proposed to be used in the business of the Company or any
of the Company's subsidiaries as currently conducted or proposed to be
conducted. All Company Products and Company Intellectual Property Rights are
owned by the Company and its subsidiaries free and clear of any rights or claims
of any former employees, consultants, officers and directors of the Company or
any subsidiary and former employers of all current and former employees,
consultants, officers and directors of the Company or any subsidiary. The source
codes for the Company Products constitute trade secrets of the Company that are
presently valid and protectable. Except as set forth in Section 3.10 (a) of the
Company's Disclosure Schedule, all taxes and fees, including, without
limitation, patent and trademark registration and prosecution fees and all
professional fees in connection therewith pertaining to the Company Intellectual
Property Rights, due and payable on or before the date hereof, have been paid by
the Company.
(b) Each of the Company's and its subsidiaries' current products and
products under development are listed on the Company Disclosure Schedule
(collectively, "COMPANY PRODUCTS"). Except as set forth in Section 3.10(b) of
the Company Disclosure Schedule, no person has a license to use or the right to
acquire a license to use any future version of any Company Product or any
Company Product that is under development, and no agreement to which the Company
or any subsidiary is a party will restrict the Surviving Corporation or Parent
from charging customers for any such new version. No person has any rights under
any source code escrow agreement relating to the Company Products or Company
Intellectual Property Rights. Except as set forth in Section 3.10(b) of the
Company Disclosure Schedule, no person other than the Company and its
subsidiaries has had access to or the right of access to source code for the
Company's Products or will have the right to such access as a result of any of
the transactions contemplated by this Agreement.
(c) No person has a right to receive a royalty or similar payment in respect
of any Company Product or any Company Intellectual Property Rights whether or
not pursuant to any contractual arrangements entered into by the Company or any
subsidiary. Except for End-User Licenses and except as set forth in Section
3.10(c) of the Company Disclosure Schedule, each of the Company and its
subsidiaries has no licenses granted, sold or otherwise transferred by or to it
nor other agreements to which it is a party, relating in whole or in part to any
Company Product or Company Intellectual Property Rights.
(d) The execution, delivery and performance of this Agreement and the
consummation of the other transactions contemplated hereby (including without
limitation the continued conduct by Parent or Surviving Corporation after the
Effective Time of the Company's and its subsidiaries' businesses as presently
conducted and the incorporation of any Company Product or Company Intellectual
Property Right in any product of Parent or the Surviving Corporation) will not
breach, violate or conflict with any instrument or agreement and will not cause
the forfeiture or termination or give rise to a right of forfeiture or
termination of any such Company Product or Company Intellectual Property Right
or in any way impair the right of Parent or the Surviving Corporation to use,
sell, license or dispose of, either as part or all of a Company Product or as
part or all of a product of Parent or the Surviving Corporation, or to bring any
action for the infringement of, any such Company Product or Company Intellectual
Property Right or portion thereof.
(e) Neither the development, manufacture, marketing, license, sale or use of
any Company Product violates or will violate any license or agreement to which
the Company or any of its subsidiaries is a party or infringes any Intellectual
Property Right of any other party; there is no pending or, to the knowledge of
the Company, threatened claim or litigation contesting the validity, ownership
or right to use, sell, license or dispose of any Intellectual Property Right
necessary or required for, or used in, the conduct of the business of the
Company or any subsidiary as presently conducted nor, to the knowledge of the
Company, is there any basis for any such claim, nor has the Company or any
subsidiary received any notice asserting that any such Intellectual Property
Right or the proposed use, sale, license or disposition thereof conflicts or
will conflict with the rights of any other party, nor, to the knowledge of the
Company, is there any basis for any such assertion. To the Company's knowledge,
there is no infringement on the part of any third party of the Company's
Intellectual Property Rights.
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(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 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.
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(h) Section 3.10 of the Company Disclosure Schedule contains a complete and
accurate list of all applications, filings and other formal actions made or
taken pursuant to federal, state, local and foreign laws by the Company or any
subsidiary to perfect or protect its interest in the Company Intellectual
Property Rights, including, without limitation, all patents, patent
applications, trademarks, trademark applications and registrations, service
marks, service mark applications and registrations and copyright applications
and registrations. As used herein, the term "INTELLECTUAL PROPERTY RIGHTS" means
all intellectual property rights, including, without limitation, domestic and
foreign patents, patent applications, patent rights, trademarks, trademark
registrations, trademark applications, trade names, service marks, service mark
applications and registrations, copyrights, copyright applications and
registrations, licenses, know-how, trade secrets, trade rights, proprietary
processes and formulae, inventions, development tools, designs, plans,
specifications, technical information and other proprietary rights, whether or
not registered, and all documentation and media relating to the above, and the
term "COMPANY INTELLECTUAL PROPERTY RIGHTS" shall mean Intellectual Property
Rights owned by or granted exclusively or nonexclusively to the Company or any
subsidiary.
Section 3.11 TAXES.
(a) For purposes of this Section 3.11 and other provisions of this Agreement
relating to Taxes, the following definitions shall apply:
(i) The term "TAXES" shall mean all taxes, however denominated,
including any interest, penalties or other additions to tax that may become
payable in respect thereof, (A) imposed by any federal, territorial, state,
local or foreign government or any agency or political subdivision of any
such government, which taxes shall include, without limiting the generality
of the foregoing, all income or profits taxes (including but not limited to,
federal income taxes and state income taxes), payroll and employee
withholding taxes, unemployment insurance, social security taxes, sales and
use taxes, ad valorem taxes, excise taxes, franchise taxes, gross receipts
taxes, business license taxes, occupation taxes, real and personal property
taxes, stamp taxes, environmental taxes, transfer taxes, workers'
compensation, Pension Benefit Guaranty Corporation premiums and other
governmental charges, and other obligations of the same or of a similar
nature to any of the foregoing, which are required to be paid, withheld or
collected, (B) any liability for the payment of amounts referred to in (A)
as a result of being a member of any affiliated, consolidated, combined or
unitary group, or (C) any liability for amounts referred to in (A) or (B) as
a result of any obligations to indemnify another person.
(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
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with respect thereto, in connection with amounts paid or owing to any employee,
creditor, independent contractor, or other third party, (iv) there are no liens
on any of the assets of the Company or any of its subsidiaries with respect to
Taxes, other than liens for Taxes not yet due and payable or for Taxes that the
Company or such subsidiary is contesting in good faith through appropriate
proceedings and for which appropriate reserves have been established, (v) the
amount of the Company's and its subsidiaries' liability for unpaid Taxes
(whether actual or contingent) for all periods through the date of the Financial
Statements does not, in the aggregate, exceed the amount of the current
liability accruals for Taxes reflected on the Financial Statements, and the
Financial Statements properly accrue in accordance with GAAP all liabilities for
Taxes payable after the date of the Financial Statements attributable to
transactions and events occurring prior to such date, and (vi) no liability for
Taxes of the Company or any of its subsidiaries has been incurred (or prior to
Closing will be incurred) since such date other than in the ordinary course of
business.
(c) Except as set forth in Section 3.11(c) of the the Company Disclosure
Schedule, the Company has made available to Purchaser true and complete copies
of (i) relevant portions of income tax audit reports, statements of
deficiencies, closing or other agreements received by or on behalf of the
Company or any of its subsidiaries relating to Taxes, and (ii) all federal and
state income or franchise tax returns and state sales and use tax Returns for or
including the Company or any of its subsidiaries for the periods ending on and
after June 30, 1993, June 30, 1994 and June 30, 1995, excluding from the
foregoing such returns with respect to Taxes the nonpayment of which,
individually or in 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 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
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asserted or instituted against the Company, any of its subsidiaries, any
Employee Plan or the assets of any trust for any Employee Plan. Each Employee
Plan which is a group health plan (within the meaning of Section 5000(b)(i) of
the Code) complies with and has been maintained and operated in accordance with
each of the requirements of Section 162(k) of the Code as in effect for years
beginning prior to 1989, Section 4980B of the Code for years beginning after
December 31, 1988 and Part 6 of Subtitle B of Title I of ERISA. Each Employee
Plan intended to qualify under Section 401(a) of the Code does so qualify, and
the trusts created thereunder are exempt from tax under the provisions of
Section 501(a) of the Code. Each Employee Plan that has been terminated by the
Company or any of its subsidiaries which was intended to qualify under Section
401(a) of the Code has received a final determination of such qualification from
the Internal Revenue Service. All contributions or payments required to be made
or accrued before the Effective Time under the terms of any Employee Plan will
have been made or accrued by the Company or by its subsidiaries, as applicable,
by the Effective Time. No Employee Plan subject to Section 412 of the Code has
incurred any "accumulated funding deficiency" (as defined in ERISA), whether or
not waived. Neither the Company nor any of its subsidiaries has incurred or
reasonably expects to incur any liability to the Pension Benefit Guaranty
Corporation with respect to any Employee Plan. Neither the Company nor any of
its subsidiaries has incurred or reasonably expects to incur any withdrawal
liability with respect to any "multiemployer plan" (as defined in Section 3(37)
of ERISA). There have been no changes in the operation or interpretation of any
of the Employee Plans since the most recent annual report or actual report which
would have any material effect on the cost of operating or maintaining such
Employee Plans.
Section 3.15 LABOR MATTERS.
(a) Section 3.15(a) to the Company Disclosure Schedule sets forth a list of
all Employees of the Company and its subsidiaries and their respective position,
salaries and other compensation owed, payable or to be paid to them.
(b) Except as set forth in Section 3.15(b) to the Company Disclosure
Schedule (i) neither the Company nor any of its subsidiaries is a party to any
outstanding employment agreements or contracts with directors, officers,
employees or consultants that are not terminable at will, or that provide for
the payment of any bonus or commission; (ii) neither the Company nor any of its
subsidiaries is a party to any agreement, policy or practice that requires it to
pay termination or severance pay to salaried, non-exempt or hourly employees
(other than as required by law); (iii) neither the Company nor any of its
subsidiaries is a party to any collective bargaining agreement or other labor
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.
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Section 3.16 PROXY STATEMENT. The Proxy Statement will comply in all
material respects with the applicable requirements of the Exchange Act and the
rules and regulations thereunder except that no representation or warranty is
being made by the Company with respect to any information supplied to the
Company by Parent or Purchaser specifically for inclusion in the Proxy
Statement. The Proxy Statement will not, at the time the Proxy Statement (or any
amendment or supplement thereto) is filed with the SEC or first sent to
shareholders, at the time of the Company Shareholders' Meeting or at the
Effective Time, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
Section 3.17 BROKERS. No broker, finder or investment banker (other than
Robertson, Stephens & Company) is entitled to any brokerage, finder's or other
fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by and on behalf of the Company. The
Company has heretofore furnished to Purchaser true and complete information
concerning the financial arrangements between the Company and Robertson,
Stephens & Company pursuant to which such firm would be entitled to any payment
as a result of the transactions contemplated hereunder.
Section 3.18 ENVIRONMENTAL LAWS.
(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.
(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
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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 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
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made available to Parent, Section 3.19 of the Company Disclosure Schedule sets
forth all actions taken at such meetings and all material matters discussed at
such meetings.
Section 3.20 INSURANCE. Section 3.20 to the Company Disclosure Schedule
sets forth a true and complete list of all insurance policies in force at the
date hereof, with respect to the assets, properties or operations of each of the
Company and its subsidiaries, together with a summary description of the
premiums currently paid thereon, the hazards insured against and the dollar
amount of coverage (indicating deductibles, if any). True and complete copies of
all such insurance policies will be made available to Purchaser by the Company.
Such policies will not be terminated as a result of the Merger and will be
effective as policies of the Surviving Corporation, subject to payment of
applicable premiums. Such policies also are in full force and effect with
reputable insurers in such amounts and insure against such losses and risks
(including product liability) as are adequate to protect the properties and
businesses of each of the Company and its subsidiaries. All such insurance is of
like character and amount as is carried by like businesses similarly situated.
Section 3.21 RIGHTS AGREEMENT. The Company has provided Parent with a
complete and correct copy of the Rights Agreement. The amendment to the Rights
Agreement attached hereto as Section 3.21 of the Company Disclosure Schedule has
been duly authorized by the Board of Directors of the Company and has been duly
executed by the Company, and, accordingly, the execution of this Agreement, the
announcement or making of the Offer, the acquisition of Shares pursuant to the
Merger and the other transactions contemplated by this Agreement will not cause
the Rights to become exercisable or result in either Parent or Purchaser or any
of their affiliates to become an "Acquiring Person" (as defined in the Rights
Agreement) or the occurrence of a "Distribution Date", a "Section 11(a)(ii)
Event", or a "Section 13 Event" (as such terms are defined in the Rights
Agreement).
Section 3.22 STATE TAKEOVER STATUTES. The Board of Directors of the
Company has approved the Merger and this Agreement (and the transactions
contemplated hereby), and such approval is sufficient to render inapplicable to
the Merger, this Agreement and the transactions contemplated hereby Section 912
of the NYBCL. No other "business combination," "fair price," "moratorium,"
"control share acquisition," or other anti-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
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breached by reason of the execution of this Agreement, the Merger, or the
consummation of the transactions contemplated hereby or thereby;
(vii) except for trade indebtedness incurred in the ordinary course of
business, any instrument evidencing or related in any way to indebtedness in
excess of $50,000 incurred in the acquisition of companies or other entities
or indebtedness in excess of $50,000 for borrowed money by way of direct
loan, sale of debt securities, purchase money obligation, conditional sale,
guarantee, indemnification or otherwise;
(viii) any license agreement, either as licensor or licensee (excluding
nonexclusive object code software licenses granted to end-users in the
ordinary course of business that permit use of software products by a
limited number of users without a right to modify, distribute or sublicense
the same ("END-USER LICENSES"));
(ix) any contract containing covenants purporting to limit the Company's
freedom or that of any of its subsidiaries to compete in any line of
business or in any geographic area or with any third party;
(x) any agreement, contract or commitment relating to capital
expenditures and involving future obligations in excess of $50,000; or
(xi) any other agreement, contract or commitment which is material to
the Company and its subsidiaries taken as a whole.
(b) Except as disclosed in Section 3.23 (b) of the Company Disclosure
Schedule, each agreement, contract, mortgage, indenture, plan, lease,
instrument, permit, concession, franchise, arrangement, license and commitment
listed in Section 3.23 of the Company Disclosure Schedule is valid and binding
on the Company or its subsidiaries, as applicable and assuming due and valid
authorization, execution and delivery by all counter parties, and is in full
force and effect, and neither the Company nor any of its subsidiaries, nor to
the knowledge of the Company, any other party thereto, has breached any material
provision of, or is in material default under the terms of, any such agreement,
contract, mortgage, indenture, plan, lease, instrument, permit, concession,
franchise, arrangement, license or commitment.
(c) There is no agreement, judgment, injunction, order or decree binding
upon the Company or any of its subsidiaries which has or could reasonably be
expected to have the effect of prohibiting or materially impairing any material
current business practice of the Company or its subsidiaries, any acquisition of
material property by the Company or its subsidiaries or the conduct of business
by the Company or its subsidiaries as currently conducted or as proposed to be
conducted by the Company or its subsidiaries.
(d) Each agreement or arrangement under which the Company or any of its
subsidiaries will incur legal, accounting or financial advisor expenses as a
result of the transactions contemplated by this Agreement, and the maximum
liability of the Company or any such subsidiary under each such agreement or
arrangement, is described in Section 3.23 of the Company Disclosure Schedule.
Section 3.24 SUPPORT AGREEMENTS.
(a) As part of Section 3.24 of the Company Disclosure Schedule, the Company
has provided to Parent a list, which is complete in all materials respects, of
all customers that are parties to agreements or other arrangements pursuant to
which the Company is obligated to provide support services with respect to the
Company Products (such agreements, as supplemented below, are referred to
collectively as the "LICENSE AGREEMENTS"). Except as set forth in Section 3.24
of the Company Disclosure Schedule, none of the License Agreements contains
terms that, individually or in the aggregate with the other License Agreements,
could reasonably be expected to cause a Material Adverse Effect. The versions of
the Company Products currently supported by the Company or any of its
subsidiaries are set forth in Section 3.24 of the Company Disclosure Schedule.
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(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 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.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Parent and Purchaser represent and warrant to the Company as follows:
Section 4.1 ORGANIZATION. Each of Parent and Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has the requisite corporate power and
authority and any necessary governmental approvals to own, operate or lease the
properties that it purports to own, operate or lease and to carry on its
business as it is now being conducted, except for such failure which, when taken
together with all other such failures, could not reasonably be expected to have
a Material Adverse Effect (as defined below) on Parent and Purchaser. When used
in connection with Purchaser and Parent, the term "MATERIAL ADVERSE EFFECT"
means any material adverse effect on the business, operations, properties
(including tangible properties), condition (financial or otherwise), assets or
liabilities of Parent and Purchaser taken as a whole.
Section 4.2 AUTHORIZATION; VALIDITY OF AGREEMENT; NECESSARY ACTION. Each
of Parent and Purchaser has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution, delivery and performance by Parent and Purchaser of this
Agreement, and the consummation of the Merger and of the transactions
contemplated hereby, have been duly authorized by the Boards of Directors of
Parent and Purchaser and by Parent as the sole shareholder of Purchaser and no
other corporate or shareholder action on the part of Parent and Purchaser is
necessary to authorize the execution and delivery by Parent and Purchaser of
this Agreement and the consummation of the transactions contemplated hereby.
This Agreement has been duly executed and delivered by Parent and Purchaser, as
the case may be, and, assuming due and valid authorization, execution and
delivery hereof 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.
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Section 4.5 NO PRIOR ACTIVITIES. Except for obligations or liabilities
incurred in connection with its incorporation or organization or the negotiation
and consummation of this Agreement and the transactions contemplated hereby
(including any financing), Purchaser has not incurred any obligations or
liabilities, and has not engaged in any business or activities of any type or
kind whatsoever or entered into any agreements or arrangements with any person
or entity. Purchaser is a wholly owned subsidiary of Parent.
Section 4.6 BROKERS. No broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by and
on behalf of Parent or Purchaser.
Section 4.7 OFFER DOCUMENTS. None of the information supplied in writing
by Parent or Purchaser (the "PURCHASER INFORMATION") for inclusion in the Proxy
Statement, or in any amendments thereof or supplements thereto, will on the date
the Proxy Statement is first mailed to shareholders contain any statement which,
at such time and in light of the circumstances under which it will be made, be
false or misleading with respect to any material fact, or omit to state any
material fact necessary in order to make the statements therein not false or
misleading. Parent and Purchaser will timely file with the SEC a Schedule 13e-3
relating to the transactions contemplated hereby, and such Schedule 13e-3 will
comply in all material respects with the requirements of the Exchange Act and
the rules and regulations thereunder. Notwithstanding the foregoing, Parent and
Purchaser do not make any representation or warranty with respect to any
information that is supplied by the Company or its accountants, counsel or other
authorized representatives for use in the Proxy Statement or the Schedule 13e-3.
Section 4.8. LITIGATION. There are no claims, actions, suits, proceedings
or investigations pending or, to the best knowledge of Parent or Purchaser,
threatened against Parent or any of its subsidiaries, or any properties or
rights of Parent or any of its subsidiaries, before any court, administrative,
governmental or regulatory authority or body, domestic or foreign, which would
prevent or delay the performance of this Agreement.
ARTICLE V
COVENANTS
Section 5.1 INTERIM OPERATIONS OF THE COMPANY. The Company covenants and
agrees that, except (i) as expressly contemplated by this Agreement, (ii) as set
forth in Section 5.1 of the Company Disclosure Schedule or (iii) as agreed in
writing by Purchaser, after the execution and delivery of this Agreement and
continuing until the earlier of the termination of this Agreement or the
Effective Time:
(a) the business of the Company and its subsidiaries shall be conducted only
in the ordinary and usual course and, to the extent consistent therewith, each
of the Company and its subsidiaries shall use its reasonable commercial efforts
to preserve its business organization intact and maintain its existing relations
with customers, suppliers, employees, creditors and business partners;
(b) the Company shall not, directly or indirectly, amend its or any of its
subsidiaries' certificate of incorporation or bylaws or similar organizational
documents;
(c) the Company shall not, and it shall not permit its subsidiaries to:
(i)(A) declare, set aside or pay any dividend or other distribution payable in
cash, stock or property with respect to the Company's capital stock or that of
its subsidiaries, or (B) redeem, purchase or otherwise acquire directly or
indirectly any of the Company's capital stock (or options, warrants, calls,
commitments or rights of any kind to acquire any shares of capital stock) or
that of its subsidiaries; (ii) issue, sell, pledge, dispose of or encumber any
additional shares of, or securities convertible into or exchangeable for, or
options, warrants, calls,
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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 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;
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PROVIDED, HOWEVER, that if the Company determines to make any such payment,
discharge or satisfaction, prior to committing to make any such payment,
discharge or satisfaction the Company shall give Parent advance written notice
of such determination specifying the amount to be paid and any other terms and
conditions thereof, and if Parent, within 15 days of such notice, shall instruct
the Company not to make or commit to make such payment, discharge or
satisfaction, then the Company shall not make or commit to make such payment,
discharge or satisfaction; PROVIDED, FURTHER, HOWEVER, that, if Parent provides
any such instructions, and the proposed resolution of such matter does not or
would not by itself result in a Material Adverse Effect, and is in complete
satisfaction, and includes a full release, of such matter, with respect to all
parties to such matter, without any payment or other obligation of Parent or
Purchaser, for purposes of Section 6.3(d), such matter shall not be considered a
threatened, or instituted and continuing, action, suit or proceeding, and for
purposes of Sections 6.3(a) and (e) any adverse effect against the Company in
any such matter shall not be considered or aggregated in determining whether a
Material Adverse Effect has occurred; PROVIDED, FURTHER, HOWEVER, that, any such
proposed payment, discharge or satisfaction shall be considered or aggregated in
determining whether a Material Adverse Effect has occurred;
(m) the Company shall not, and it shall not permit its subsidiaries to,
commence a lawsuit other than (i) for the routine collection of bills or (ii) in
such cases where the Company in good faith determines that the failure to
commence suit would result in a material impairment of a valuable aspect of the
Company's business, provided that the Company consults with Parent prior to
filing such suit;
(n) the Company shall not, and it shall not permit its subsidiaries to, make
any payment or incur any liability or obligation for the purpose of obtaining
any consent from any third party to the transactions contemplated hereby, other
than any payment, obligation or liability that does not create, individually or
in the aggregate, a Material Adverse Effect; and
(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
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changes in financial position, if any) of the Company and its consolidated
subsidiaries as of the respective dates and for the respective periods thereof,
and (b) are consistent in all material respects with the draft consolidated
financial statements (and related notes thereto) set forth in Section 5.3 of the
Company Disclosure Schedule. The Company also will pay all premiums or other
payments required to be made with respect to the insurance policies set forth in
Section 3.20 of the Company Disclosure Schedule, and shall renew any such policy
if any such policy will otherwise terminate prior to the Effective Time.
Section 5.4 CONSENTS AND APPROVALS; HSR ACT.
(a) Each of the Company, Parent and Purchaser will take all reasonable
actions necessary to comply promptly with all legal requirements which may be
imposed on it with respect to this Agreement and the transactions contemplated
hereby (which actions shall include, without limitation, furnishing all
information required under the HSR Act and in connection with approvals of or
filings with any other Governmental Entity) and will promptly cooperate with and
furnish information to eachother in connection with any such requirements
imposed upon any of them or any of their subsidiaries in connection with this
Agreement and the transactions contemplated hereby. Each of the Company, Parent
and Purchaser will, and will cause its subsidiaries to, take all reasonable
actions necessary to obtain (and will cooperate with each other in obtaining)
any consent, authorization, order or approval of, or any exemption by, any
Governmental Entity or other public or private third party required to be
obtained or made by Parent, Purchaser, the Company or any of their subsidiaries
in connection with the Merger or the taking of any action contemplated thereby
or by this Agreement. Each party shall promptly inform the other party of any
communication with, and any proposed understanding, undertaking, or agreement
with, any Governmental Entity regarding any such filings or any such
transaction. Neither party shall participate in any meeting with any
Governmental Entity in respect of any such filings, investigation, or other
inquiry without giving the other party notice of the meeting and, to the extent
permitted by such Governmental Entity, the opportunity to attend and
participate. Notwithstanding the foregoing, it is expressly understood and
agreed that Parent, Purchaser and the Company shall have no obligation to
litigate or contest any administrative or judicial action or proceeding or any
Order beyond January 31, 1997.
(b) Notwithstanding anything to the contrary in this Agreement, including
without limitation Section 5.4(a), as a result of filings made with Governmental
Entities pursuant to this Agreement, neither Parent nor any of its subsidiaries,
nor the Company, shall be required to divest any of their respective businesses,
product lines or assets, or agree to any other limitation with respect to its
business.
(c) In connection with any action, suit or proceeding of the types described
in Section 6.3(d), Parent, Purchaser and the Company agree to consult with each
other in formulating strategies, including without limitation the retention of
counsel in situations involving multiple defendants, and in taking any other
action material to the outcome of any such action, suit or proceeding.
Section 5.5 NO SOLICITATION.
(a) The Company and its officers, directors, employees, representatives and
agents shall immediately and as of the date hereof cease any discussions or
negotiations with any parties that may be ongoing with respect to a Takeover
Proposal (as hereinafter defined). The Company shall not authorize or permit any
of its officers, directors or employees or any investment banker, financial
advisor, attorney, accountant or other representative retained by it or any of
its subsidiaries to (i) solicit, initiate or encourage (including by way of
furnishing information), or take any other action to facilitate, any inquiries
or the making of any proposal which constitutes, or may reasonably be expected
to lead to, any Takeover Proposal or (ii) participate in any discussions or
negotiations regarding any Takeover Proposal; PROVIDED, HOWEVER, that, if at any
time prior to the Effective Time, the Board of Directors of the Company
determines in good faith, based on the written opinion of its legal counsel as
to legal matters, that it is necessary to do so in order to comply with its
fiduciary duties to the Company's shareholders under applicable law, the Company
may, in response to an unsolicited Takeover Proposal, and subject to compliance
with Section 5.5(c), (x) furnish
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information with respect to the Company to any person pursuant to a
confidentiality agreement and (y) participate in negotiations regarding such
Takeover Proposal. Without limiting the foregoing, it is understood that any
violation of the restrictions set forth in the preceding sentence by any
director or executive officer of the Company or any of its subsidiaries or any
investment banker, financial advisor, attorney, accountant or other
representative of the Company or any of its subsidiaries shall be deemed to be a
breach of this Section 5.5(a) by the Company. For purposes of this Agreement,
"TAKEOVER PROPOSAL" means any inquiry, proposal or offer from any person
relating to any direct or indirect acquisition or purchase of a substantial
amount of assets of the Company or any of its subsidiaries or of over 20% of any
class of equity securities of the Company or any of its subsidiaries, any tender
offer or exchange offer that if consummated would result in any person
beneficially owning 20% or more of any class of equity securities of the Company
or any of its subsidiaries, or any merger, consolidation, business combination,
sale of substantially all the assets, recapitalization, liquidation, dissolution
or similar transaction involving the Company or any of its subsidiaries, other
than the transactions contemplated by this Agreement.
(b) Except as set forth in this Section 5.5, neither the Board of Directors
of the Company nor any committee thereof shall (x) withdraw or modify, or
propose to withdraw or modify, in a manner adverse to Parent, the approval or
recommendation by such Board of Directors or such committee of this Agreement or
the Merger, (y) approve or recommend, or propose to approve or recommend, any
Takeover Proposal or (z) cause the Company to enter into any agreement with
respect to any Takeover Proposal. Notwithstanding the foregoing, in the event
that prior to the Effective Time the Board of Directors of the Company
determines in good faith, based on the written opinion of its legal counsel as
to legal matters, that it is necessary to do so in order to comply with its
fiduciary duties to the Company's shareholders under applicable law, the Board
of Directors of the Company may withdraw or modify its approval or
recommendation of this Agreement and the Merger, approve or recommend a Superior
Proposal (as defined below) or cause the Company to enter into an agreement with
respect to a Superior Proposal, but in each case only at a time that is after
the second business day following Parent's receipt of written notice (a "NOTICE
OF SUPERIOR PROPOSAL") advising Parent that the Board of Directors of the
Company has received a Superior Proposal, specifying the material terms and
conditions of such Superior Proposal and identifying the person making such
Superior Proposal. For purposes of this Agreement, a "SUPERIOR PROPOSAL" means
any bona fide Takeover Proposal to acquire, directly or indirectly, for
consideration consisting of cash and/or securities, more than 50% of the Shares
then outstanding or all or substantially all the assets of the Company and
otherwise on terms which the Board of Directors of the Company determines in its
good faith judgment (based on the advice of a financial advisor of nationally
recognized reputation) to be more favorable to the Company's shareholders than
the Merger.
(c) In addition to the obligations of the Company set forth in paragraphs
(a) and (b) of this Section 5.5, the Company shall immediately advise Parent
orally and in writing of any request for information or of any Takeover
Proposal, or any inquiry with 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
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warranty contained in this Agreement to be untrue or inaccurate in any material
respect at or prior to the Effective Time and (ii) any material failure of the
Company, Parent or Purchaser, as the case may be, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder; PROVIDED, HOWEVER, that the delivery of any notice pursuant to this
Section 5.7 shall not limit or otherwise affect the remedies available hereunder
to the party receiving such notice. The Company also shall give prompt notice to
Parent, and Parent or Purchaser shall give prompt notice to the Company, of:
(i) any notice or other communication from any person alleging that the
consent of such person is or may be required in connection with the
transactions contemplated by this Agreement;
(ii) any notice or other communication from any Governmental Entity in
connection with the transactions contemplated by this Agreement;
(iii) any actions, suits, claims, investigations or proceedings
commenced or, to the best of its knowledge, threatened against, relating to
or involving or otherwise affecting it or any of its subsidiaries or which
relate to the consummation of the transactions contemplated by this
Agreement; and
(iv) any occurrence of any event having, or which could reasonably be
expected to have, a Material Adverse Effect on the Company and its
subsidiaries taken as a whole.
Section 5.8 RIGHTS AGREEMENT. Except as otherwise provided in Section
3.23, the Company shall not redeem the Rights or amend or terminate the Rights
Agreement prior to the earlier to occur of the Effective Time or the termination
of this Agreement, unless required to do so by a court of competent
jurisdiction.
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.
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Section 5.11 BENEFIT PLANS AND OTHER EMPLOYEE ARRANGEMENTS. For a period
of at least one year after the Effective Time, Parent shall either (i) maintain
or cause the Company (or its successors or assigns) to maintain the Company's
Employee Plans at benefit levels not materially less favorable than those in
effect on the date of this Agreement or (ii) provide or cause the Company (or
its successors or assigns) to provide benefits to employees of the Company and
its subsidiaries that are not materially less favorable to such employees than
those provided under Parent benefit plans (as they may be amended from time to
time) to similarly situated employees of Parent. With respect to any Parent
benefit plan which is an "employee benefit plan" as defined in Section 3(3) of
ERISA, solely for purposes of determining eligibility to participate, vesting,
and entitlement to benefits but not for purposes of accrual of pension benefits,
service with the Company or any Company subsidiary shall be treated as service
with Parent, provided, however, that such service shall not be recognized to the
extent that such recognition would result in a duplication of benefits (or is
not otherwise recognized for such purposes or permitted under the Parent Benefit
Plans). Nothing in this paragraph provides any employee with a right to
continuing employment or with any right to participate in any Parent benefit
plan under which participation by an employee is within the discretion of
Parent, such as any Parent benefit plan which provides for the grant of options
to purchase capital stock.
Section 5.12 WARRANT. The Company agrees to use its best efforts to cause
the warrant referenced in Section 3.2(a) of the Company Disclosure Schedule to
be exercised or terminated prior to the Effective Time. Parent agrees to provide
reasonable assistance to the Company in connection with the Company's
obligations under this Section 5.12.
ARTICLE VI
CONDITIONS
Section 6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligation of each party to effect the Merger shall be
subject to the satisfaction on or prior to the Effective Time of each of the
following conditions, any and all of which may be waived in whole or in part by
the Company, Parent or Purchaser, as the case may be, to the extent permitted by
applicable law:
(a) SHAREHOLDER APPROVAL. This Agreement shall have been approved and
adopted by the requisite vote of the shareholders of the Company, if required by
applicable law or the Certificate of Incorporation of the Company, in order to
consummate the Merger;
(b) STATUTES. No statute, rule, order, decree or regulation shall have
been enacted or promulgated by any Governmental Entity which prohibits the
consummation of the Merger;
(c) INJUNCTIONS. There shall be no order or injunction of a court or other
governmental authority of competent jurisdiction in effect precluding,
restraining, enjoining or prohibiting consummation of the Merger; and
(d) HSR ACT. Any applicable waiting period under the HSR Act relating to
the Merger shall have expired or been terminated.
Section 6.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF THE COMPANY. The
obligation of the Company to effect the Merger is also subject to the
fulfillment of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties of
Parent and Purchaser contained in this Agreement shall be true and correct on
the date hereof and shall also be true and correct on and as of the Effective
Time, with the same force and effect as if made on and as of the Effective Time,
unless the failure of such representations and warranties to be true and correct
could not reasonably be expected to cause, individually or in the aggregate, a
Material Adverse Effect on Parent; and
(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.
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Section 6.3 ADDITIONAL CONDITIONS TO OBLIGATIONS OF PARENT AND
PURCHASER. The obligations of Parent and Purchaser to effect the Merger are
also subject to the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties of
the Company contained in this Agreement shall be true and correct on the date
hereof and shall also be true and correct on and as of the Effective Time, with
the same force and effect as if made on and as of the Effective Time, unless the
failure of such representations and warranties to be true and correct as of such
dates could not reasonably be expected to cause, individually or in the
aggregate, a Material Adverse Effect (as applied to such dates) on the Company
and its subsidiaries, taken as a whole;
(b) AGREEMENTS, CONDITIONS AND COVENANTS. The Company shall have performed
or complied in all material respects with all agreements, conditions and
covenants required by this Agreement to be performed or complied with by it on
or before the Effective Time;
(c) DISSENTING SHARES. The aggregate number of Shares held by Dissenting
Shareholders shall not be equal to or exceed ten percent of the outstanding
Shares immediately prior to the Effective Time;
(d) NO LITIGATION. After the date hereof there shall not be threatened, or
instituted and continuing, any action, suit or proceeding against the Company,
Parent, Purchaser or any Indemnified Person (as defined below), by any
Governmental Entity or any other person or persons, (i) directly or indirectly
relating to the Merger or any other transactions contemplated by this Agreement;
(ii) who is or was a shareholder or shareholders of the Company, whether on
behalf of such shareholder or shareholders, or in a derivative action on behalf
of the Company; or (iii) which individually or in the aggregate could reasonably
be expected to have a Material Adverse Effect on the Company and its
subsidiaries, taken as a whole; "INDEMNIFIED PERSON" shall mean any director,
officer, employee, consultant or other person that the Company is obligated to
indemnify or hold harmless, whether under any law, rule, regulation, the
Company's certificate of incorporation or bylaws, any agreement or otherwise;
(e) NO ADVERSE CHANGE. No event or events shall have occurred which have
caused or could reasonably be expected to cause a Material Adverse Effect on the
Company and its subsidiaries, taken as a whole; and
(f) OPINION. Parent shall have received an opinion dated as of the Closing
Date from Willkie Farr & Gallagher, counsel to the Company, substantially in the
form attached hereto as EXHIBIT 6.3(f); PROVIDED, HOWEVER, that if such counsel
is unable to 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
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<PAGE>
has not been met or waived is Section 6.3 (d); PROVIDED, FURTHER, HOWEVER, that
the right to terminate this Agreement pursuant to this Section 7.1(c) shall not
be available to any party whose failure (or the failure of the affiliates of
which) to perform any of its obligations under this Agreement has been the cause
of, or resulted in, the failure of the Merger to occur on or before such date;
(d) by Parent or Purchaser, in the event of a breach by the Company of any
representation, warranty, covenant or other agreement contained in this
Agreement which cannot be or has not been cured within 15 days after the giving
of written notice to the Company and which, individually or in the aggregate,
has had or could reasonably be expected to have, a Material Adverse Effect on
the Company and its subsidiaries, taken as a whole;
(e) by Parent or Purchaser, if the Company's Board of Directors shall have
withdrawn, modified or amended in any respect its recommendation of the Merger
Agreement or the Merger or shall have approved or recommended a Takeover
Proposal, or shall have entered into an agreement with a third party with
respect to any Takeover Proposal, or the Board of Directors of the Company or
any committee thereof shall have resolved to take any of the foregoing actions;
(f) by the Company, in connection with entering into an agreement for a
Takeover Proposal in accordance with Section 5.5, provided it has complied with
all provisions thereof, including the notice provisions therein, and that it
makes simultaneous payment of the Expenses and the Termination Fee; or
(g) by the Company, if Purchaser or Parent shall have breached in any
material respect any of their respective representations, warranties, covenants
or other agreements contained in this Agreement, which failure to perform is
incapable of being cured or has not been cured within 15 days after the giving
of written notice to Parent or Purchaser, as applicable.
Section 7.2 EFFECT OF TERMINATION. In the event of a termination of this
Agreement by either the Company or Parent as provided in Section 7.1, this
Agreement shall forthwith become void and there shall be no liability or
obligation on the part of Parent, Purchaser or the Company or their respective
officers or directors, except with respect to Sections 1.8(e), 3.17, 4.6, 5.2,
8.1, this Section 7.2 and Article VIII; PROVIDED, HOWEVER,that nothing herein (
including without limitation the provisions of Section 8.1) shall relieve any
party for liability for any breach hereof.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 FEES AND EXPENSES.
(a) Except as provided below in this Section 8.1, all fees and expenses
incurred in connection with the Merger, this Agreement and the transactions
contemplated by this Agreement shall be paid by the party incurring such fees or
expenses, whether or not the Merger is consummated.
(b) The Company shall pay, or cause to be paid, in same day funds to Parent
the sum of (x) the lesser of the amount of Parent's Expenses (as hereinafter
defined) or $1,000,000, and (y) $3,000,000 (the "TERMINATION FEE") upon demand
if (i) Parent or Purchaser terminates this Agreement under Section 7.1(e); (ii)
the Company terminates this Agreement pursuant to Section 7.1(f); or (iii) prior
to any termination of this Agreement (other than pursuant to Section 7.1 (a),
(b) or (g) or by the Company pursuant to Section 7.1 (c)), the Company breaches
the provisions of Section 5.5 of this Agreement or a Takeover Proposal shall
have been made and within 12 months of such termination a transaction
constituting a Takeover Proposal is consummated or the Company enters into an
agreement with respect to, approves or recommends or takes any action to
facilitate such Takeover Proposal. "EXPENSES" shall mean documented
out-of-pocket fees and expenses incurred or paid by or on behalf of Parent or
Purchaser in connection with the Merger or the consummation of any of the
transactions contemplated by this Agreement, including all fees and expenses of
counsel, commercial banks, investment banking firms, accountants, experts and
consultants to Parent.
A-31
<PAGE>
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:
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
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<PAGE>
"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, 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.
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.
<TABLE>
<S> <C> <C>
ORACLE CORPORATION
By: /s/ David J. Roux
---------------------------------------------
Name: David J. Roux
---------------------------------------------
Title: Executive Vice President, Corporate
Development
---------------------------------------------
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C>
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
---------------------------------------------
</TABLE>
A-34
<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:
"(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."
1
<PAGE>
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.
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
2
<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 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
B-1
<PAGE>
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 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 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
B-2
<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.
(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
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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, 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 proposed corporate action,
whichever is later, upon the surrender of the certificates for any such shares
represented by certificates.
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(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 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.
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(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 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 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).
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(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 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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<PAGE>
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.
<TABLE>
<S> <C> <C>
FOR AGAINST ABSTAIN
/ / / / / /
</TABLE>
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"
