EXHIBIT 2
PURCHASE AGREEMENT
------------------
Datalogix International Inc. (the "Company") and the Investor identified on
the signature page of this Purchase Agreement (this "Agreement") agree as
follows:
Section 1. Purchase of Shares and Warrant. Concurrently with the
------------------------------
execution of this Agreement, the Company is selling and the Investor is
purchasing: (a) the number of shares of the Company's Series F Convertible
Preferred Stock identified on Exhibit A to this Agreement at the aggregate price
there indicated (all such shares of Series F Convertible Preferred Stock being
purchased by the Investor are herein collectively called the "Shares") and (b) a
warrant (the "Warrant") to purchase the number of shares of the Company's Common
Shares, par value $.01 per share ("Common Stock") identified on Exhibit A to
this Agreement at the aggregate price there indicated.
Section 2. Representations and Warranties of the Company. The Company
---------------------------------------------
represents and warrants to the Investor that, except as set forth in Exhibit B
to this Agreement:
(a) Organization, Standing, etc. The Company is a corporation duly
----------------------------
organized, validly existing and in good standing under the laws of the
jurisdiction indicated on the signature page of this Agreement, and has all
requisite power and authority to carry on its business as currently conducted
and as proposed m be conducted, to own its properties, and to enter into and
perform this Agreement. The copies of the Certificate of Incorporation, as
amended, and By-Laws of the Company delivered to the Investor together with a
Certificate of the President of the Company on the date hereof are true and
complete and have not, since the date of such Certificate of Incorporation and
By-Laws been further amended or repealed. The Company is duly qualified as a
foreign corporation in good standing in each jurisdiction in which the conduct
of its business or its ownership or leasing of properly makes such qualification
necessary.
(b) Capital Stock. The authorized capital stock and the outstanding
-------------
capital stock, of the Company consists in each case as of the date hereof solely
of the shares indicated on Exhibit C to this Agreement. All of the outstanding
shares have been duly authorized, are fully paid and nonassessable, and were
issued in compliance with all applicable securities laws. An accurate list of
the Company's shareholders and their holdings is set forth in Exhibit D to this
Agreement. No one is entitled to preemptive or similar statutory or contractual
rights with respect to any securities of the Company, except as set forth (i) in
Section 4(d) of this Agreement, (ii) in Section 4(m) of the Purchase Agreement
dated October 29, 1992 ("Series E Agreement") regarding the sale by the Company
of its Series E Convertible Preferred Stock, (iii) in Section 4(l) of the
Purchase Agreement dated June 30, 1993 regarding the sale by the Company of its
Series E Convertible Preferred Stock ("Series E II Agreement"), and (iv) under
Section 6 of the Amended and Restated Stockholders Agreement dated November 19,
1990 ("Prior Stockholders Agreement"). All necessary and appropriate waivers of
shareholders have been obtained. Except as disclosed in Exhibit E to this
Agreement, there are no outstanding warrants, options, convertible securities
other than the Series A, Series B, Series C, Series D and Series E Convertible
Preferred Stock listed in Exhibit C to this Agreement, or other agreements or
arrangements of any character under which the Company or any subsidiary is or
may be obligated to issue any equity securities of any kind, or to transfer any
equity securities of any kind owned by them, and neither the Company nor any
subsidiary has any present plan or intention to issue any equity securities of
any kind, or to transfer any equity securities of any kind owned by them.
Except as disclosed in Exhibit F, the Company does not know of any voting
agreements, buy-sell agreements, option or right of first refusal or other
agreements of any kind among any of the security holders of the Company or of
any subsidiary relating to the securities held by them. Neither the Company nor
any subsidiary has agreed, or has any present intention, to register any of its
securities under the Securities Act of 1933, as amended (the "Securities Act"),
except as provided in the Registration Rights Agreement dated October 29, 1992,
as amended June 30, 1993 and on the date of this Agreement, a copy of which is
attached hereto as Exhibit G (the "Registration Rights Agreement") or as
provided in warrants referred to in Item 2 of Exhibit E which have piggy-back
rights to the Registration Rights Agreement. The voting powers, designations,
preferences and relative, participating, optional and other rights of the
Shares, and the qualifications, limitations or restrictions thereof are as fully
set forth in the Restated Certificate of Incorporation of the Company, as
amended (the "Certificate").
(c) Corporate Proceedings. The execution, delivery and performance of
---------------------
this Agreement have been duly authorized by all requisite action on the part of
the officers, directors and the holders of the capital stock of the Company and
no other action is necessary for the due authorization of such execution,
delivery and performance. True and complete copies of the relevant resolutions
have been delivered to the Investor, and such resolutions have not been amended
or repealed. This Agreement constitutes the valid and binding obligation of the
Company, enforceable in accordance with its terms, except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws of general application relating to or affecting the enforcement of
creditors rights; and (ii) that no representation or warranty is made as to the
enforceability of the provisions in Paragraph 3(e) of the Registration Rights
Agreement regarding indemnification for violations of federal securities laws,
or as to the availability of the remedy of specific performance. The Shares are
duly authorized, validly issued, fully paid, nonassessable and free and clear of
any encumbrances and restrictions, except for restrictions on transfer imposed
by applicable securities laws or by this Agreement and have been issued in
compliance with all applicable securities laws. The Company has reserved a
sufficient number of shares of its Common Stock for issuance upon exercise of
the Warrant and the conversion of the Shares, and such shares of Common Stock,
when issued upon exercise of the Warrant or upon conversion of the Shares, will
he duly authorized, validly issued, fully paid, nonassessable and free and clear
of all encumbrances and restriction, except for restrictions on transfer imposed
by applicable securities laws or by this Agreement.
(d) Subsidiaries. The Company's subsidiaries, if any, are listed in
------------
Exhibit H to this Agreement. Except for those subsidiaries, the Company has no
direct or indirect ownership interest in any other corporation, partnership,
association, firm or business. Each subsidiary is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction
indicated in Exhibit H, has all requisite power and authority to carry on its
business and to own its properties and is duly qualified as a foreign
corporation in good standing in each jurisdiction in which the conduct of its
business or its ownership or leasing of property makes such qualification
necessary. All of the outstanding capital stock of each subsidiary has been
duly
-2-
authorized, is fully paid and nonassessable and is owned by the Company,
free and clear of all encumbrances and restrictions, except for restrictions on
transfer imposed by applicable securities laws.
(e) Financial Statements. True and complete copies of the financial
--------------------
statements listed in Exhibit I to this Agreement have been delivered by the
Company to the Investor. Those financial statements (i) are in accordance with
the books and records of the Company and any subsidiaries included in those
statements, (ii) present fairly the consolidated financial position of the
Company and any such subsidiaries at the dates, and the consolidated results of
their operations for the periods, indicated in those statements, and (iii) have
been prepared in accordance with generally accepted accounting principles
consistency applied; provided, however, that the Company's unaudited balance
-------- -------
sheet as of March 31, 1994 does not include normal year end adjustments.
Specifically, but not by way of limitation, each balance sheet included in those
statements reflects as of its date, and provides adequate reserves in respect
of, all of the debts, liabilities and obligations of a kind customarily
reflected in a balance sheet prepared in accordance with generally accepted
accounting principles. As of the date of the balance sheet listed in Exhibit I,
neither the Company nor any of its subsidiaries had any debts, liabilities or
obligations, whether absolute, accrued, contingent or otherwise, which are not
fully reflected in such balance sheet, other than those which, in any one case
or in the aggregate, would not have a materially adverse effect on the business,
assets, liabilities, condition (financial or otherwise), affairs or operations
of the Company or any of its subsidiaries as of such date.
(f) Litigation. Except as disclosed in Exhibit J to this Agreement,
----------
there are no legal actions, suits, arbitrations or other legal, administrative
or governmental proceedings pending or, to the Company's knowledge, threatened
against the Company or any subsidiary, or against the assets or business of the
Company or any subsidiary, or against any employee, officer, director or
shareholder of the Company or of any subsidiary in his capacity as such person
or relating to any of his past employment relationships with any employer or to
his activities with the Company or any subsidiary, and the Company is not aware
of any facts that might result in or form the basis for any such action, suit,
arbitration or other proceeding. Except as set forth in Exhibit J to this
Agreement, the Company does not have pending, and has no present intention to
bring, any legal actions, suits, arbitration, or other legal, administrative or
governmental proceedings against any other person or entity or the property or
rights of any other person or entity.
(g) Title to Assets. Except as disclosed in the notes to the
---------------
financial statements listed in Exhibit I to this Agreement, the Company and its
subsidiaries have good and marketable title to their respective assets,
including, without limitation, those reflected in the balance sheet listed on
Exhibit I (other than those since disposed of in the ordinary course of
business), free and clear of all security interests, liens, charges and other
encumbrances, except for (i) liens for taxes not yet due and payable or being
contested in good faith by appropriate proceedings, (ii) encumbrances that are
incidental to the conduct of their businesses or their ownership of property,
not incurred in connection with the borrowing of money or the obtaining of
credit and which do not in the aggregate materially detract from the value of
the assets affected thereby or materially impair the use thereof by the Company
or its subsidiaries, and (iii) liens on assets of the Company and its subsidiary
in favor of Silicon Valley Bank ("Silicon") under the Line of Credit
-3-
from Silicon to the Company guaranteed by Datalogix Development Corp. dated
January 15, 1994. With respect to the assets of the Company which are leased,
the Company is in compliance with all material provision of such leases, such
leases are valid and binding, and the Company holds its leasehold interest in
such assets free and clear of all security interests, liens, charges and other
encumbrances except encumbrances which, in the aggregate, do not materially
detract from the value of the leased assets affected thereby or materially
impair the use thereof by the company or its subsidiaries.
(h) Accounts Receivable; Inventories, Condition of Assets.
-----------------------------------------------------
(i) The accounts receivable shown in the balance sheet listed in
Exhibit I or acquired since the date of such balance sheet have been collected
or are (or will be) collectible in amounts not less than the aggregate amount
thereof (net of allowance for doubtful accounts established in accordance with
prior practice) carried (or to be carried) on the books of the Company and its
subsidiaries.
(ii) The plants, buildings, structures, machinery, tools, equipment
and other tangible assets of the Company and its subsidiaries are in good
operating condition and in a state of reasonable maintenance and repair.
(i) Tax Returns and Audits and Other Tax Matters. All required tax
--------------------------------------------
returns of the Company and its subsidiaries have been accurately prepared and
duly and timely filed, and all taxes required to be paid with respect to the
periods or transactions covered by such returns have been duly and timely paid.
Neither the Company nor any subsidiary is delinquent in the payment of any tax,
assessment or governmental charge, has had any tax deficiency proposed or
assessed against it, or has executed any waiver still in effect of any statute
of limitations on the assessment or collection of any tax. None of the federal
or state income tax returns or state franchise tax returns of the Company or any
subsidiary has ever been audited by governmental authorities. The amounts
accrued on the financial statements of the Company are sufficient with respect
to all unpaid federal, state, county, local and foreign taxes for all periods
ending prior to the date of this Agreement.
(j) Adverse Changes. Since the date of the balance sheet listed in
---------------
Exhibit I to this Agreement, neither the Company nor any subsidiary has:
(i) incurred, or discharged or satisfied, any debts, obligations or
liabilities, whether absolute, accrued, contingent or otherwise, except for the
routine occurrence, discharge or satisfaction of (x) current liabilities in the
ordinary course of business and (y) obligations under contracts entered into in
the ordinary course of business;
(ii) declared or made any dividend or other payment or distribution to
its stockholders as such, or purchased or redeemed any of its securities;
(iii) sold, leased or otherwise disposed of any of its assets except
routine dispositions made in the ordinary course of business;
-4-
(iv) suffered any material physical damage, destruction or loss
(whether or not covered by insurance);
(v) encountered any labor difficulties or labor union organizing
activities;
(vi) made or granted any increases in wages or salaries or in employee
benefits, except for routine increases that were made in the ordinary course of
business and were consistent with past practice;
(vii) entered into any transaction other than in the ordinary
course of business; or
(viii) suffered or experienced any change in, or event or condition
affecting, its business, assets, liabilities, condition (financial or
otherwise), affairs or operations, other than changes, events or conditions in
the ordinary course of business, none of which (either when taken by itself or
when token in conjunction with all such other changes, events or conditions) has
been materially adverse, or might reasonably be expected to be materially
adverse in the future.
(k) Compliance with Laws and other Instruments. The business and
------------------------------------------
operations of the Company and its subsidiaries have been and are being conducted
in all material respects in accordance with all applicable laws, rules,
regulations, judgments and decrees and the Certificate and By-Laws of the
Company. Neither the execution, delivery or performance of this Agreement, nor
the offer, issuance, sale or delivery of the Shares to the Investor, nor the
issuance of shares of Common Stock upon exercise of the Warrant (the "Warrant
Shares"), nor the issuance of shares of Common Stock upon conversion of the
Shares ("Conversion Shares"), with or without the giving of notice or passage of
time, or both, will violate, or result in any breach of, or constitute a default
under, or result in the imposition of any encumbrance upon any asset of the
Company or of any subsidiary pursuant to, any provision of any corporate
charter, by-law, contract, law, rule, regulation, judgment, decree or other
document or instrument or, to the best of the Company's knowledge, will cause
the Company or any subsidiary to lose the benefit of any right or privilege it
presently enjoys or any person who normally does business with the Company or
any subsidiary to discontinue to do so on the same basis.
(l) Governmental Consents; Offering of Shares. No consent,
-----------------------------------------
authorization, approval, permit or order of, or declaration to or filing with,
any governmental or regulatory authority is required in connection with the
execution, delivery and performance of this Agreement or the offer, issuance,
sale or delivery of the Shares, the Conversion Shares, the Warrant or the
Warrant Shares (the Shares, the Conversion Shares, the Warrant and the Warrant
Shares are hereinafter collectively referred to as the "Securities"). The
issuance of the Securities in conformity with the terms of this Agreement
constitute transactions exempt from the registration requirements of Section 5
of the Securities Act, and from all applicable state registration and
qualification requirements. Neither the Company nor any agent acting on its
behalf has, directly or indirectly, sold or offered for sale, or solicited any
offers to buy, any securities, or otherwise approached or negotiated with any
person or persons, so as to subject the
-5-
offer or sale of the Securities to the Investor to the provisions of Section 5
of the Securities Act, and the Company agrees that neither it nor any agent
acting on its behalf will take any action that would subject the offer or sale
of the Securities to those provisions.
(m) Patents and Trademarks. The Company has sufficient title and
----------------------
ownership of all patents, trademarks, service marks, trade names, copyrights,
trade secrets, information, proprietary rights and processes necessary for its
business as now conducted and as proposed to be conducted without any conflict
with or infringement of the rights of others. Other than license and
distribution agreements entered into in the ordinary course of business, there
are no outstanding options, licenses, or agreements of any kind relating to the
foregoing, nor is the Company bound by or a party to any options, licenses or
agreements of any kind with respect to the patents, trademarks, service marks,
trade names, copyrights, trade secrets, licenses, information, proprietary
rights and processes of any other person or entity, except as set forth in
Exhibit K. The Company has not received any communications alleging that the
Company has violated, or by conducting its business as proposed, would violate
any of the patents, trademarks, service marks, trade names, copyrights or trade
secrets or other proprietary rights of any other person or entity. The Company
is not aware that any of its employees or consultants is obligated under any
contract (including licenses, covenants or commitments of any nature) or other
agreement, or subject to any judgment, decree or order of any court or
administrative agency, that would interfere with the use of its best efforts to
promote the interests of the Company or that would conflict with the Company's
business as now conducted and as proposed to be conducted. Neither the
execution nor delivery of this Agreement, nor the carrying on of the Company's
business by the employees and consultants of the Company as now conducted, nor
the conduct of the Company's business as proposed, will, to the Company's
knowledge, conflict with or result in a breach of the terms, conditions or
provisions of, or constitute a default under, any contract, covenant or
instrument under which any of such employees or consultants is now obligated.
The Company does not believe it is or will be necessary to utilize any
inventions of any of its employees or consultants (or persons it currently
intends to hire) made prior to their employment by the Company.
(n) No Defaults; Contracts. The Company and its subsidiaries have in
----------------------
all material respects performed all obligations required to be performed by
them, and are not in default in any material respect, under any material
contract, commitment or instrument, and no event or condition has occurred
which, with the giving of notice or passage of time, or both, would constitute
such a default. Neither the Company nor any subsidiary is under any obligation
that cannot readily be performed by it on time and without undue or unusual
expenditure of money or effort. All parties having material contracts or
commitments with the Company or any subsidiary are in compliance therewith in
all material respects. Exhibit K to this Agreement contains an accurate list of
all contracts or commitments, oral or written, of the Company and its
subsidiaries, other than (x) licensing agreements entered into by the Company
with its customers in the ordinary course of business and (y) license agreements
that provide for the use by the Company of the licensors' software to be
routinely used and incorporated in the Company's product, that either (i) may
involve the expenditure by the Company or any subsidiary of more than $50,000
over the term of such contract or commitment or (ii) are not subject to
termination by the Company or the appropriate subsidiary without penalty.
-6-
(o) Insurance Coverage. Exhibit L to this Agreement contains an
------------------
accurate list of the insurance coverage maintained by the Company and its
subsidiaries. Such coverage, is sufficient in amount (subject to reasonable
deductibles) to allow it to replace any of its properties that might be damaged
or destroyed.
(p) Employee Matters. Except as disclosed in Exhibit M to this
----------------
Agreement or described herein, neither the Company nor any subsidiary has in
effect or has any present intention to put into effect any employment
agreements, consulting arrangements, deferred compensation, pension or
retirement agreements or arrangements, bonus, incentive or profit-sharing plans
or arrangements, or labor or collective bargaining agreements, written or oral,
whether legally binding or in the nature of informal understandings. Except as
set forth in Exhibit M, there are no existing or proposed loans, leases,
licenses or other such agreements or arrangements between the Company or any
subsidiary and any officer, director or security holder of the Company or any
subsidiary. The Company has no knowledge that any of the officers or other key
employees or consultants of the Company or any subsidiary has any present
intention to terminate his employment, or that any employee or consultant of the
Company or any subsidiary is bound by any agreement or arrangement with any
other employer (past or present) that in any way affects adversely or threatens
hereafter to affect adversely the performance of his duties as an employee or
consultant of the Company or any subsidiary or the ability of the Company or any
subsidiary to conduct its business. Attached as Exhibit N is an accurate
summary of the policies followed by the Company and its subsidiaries regarding
confidentiality of sensitive information and ownership of patents, know-how and
other such matters relating to the businesses of the Company and its
subsidiaries. The Company, after reasonable investigation, is not aware that
any of its employees or consultants is in violation of the policies summarized
in Exhibit N, and the Company will use its best efforts to prevent any such
violation.
(q) Brokers and Finders. No person or firm has, or will have, any
-------------------
right, interest or valid claim against the Company, any subsidiary or the
Investor, for any commission, fee or other compensation as a finder or broker or
in any similar capacity as a result of any act or omission by the Company, any
subsidiary or anyone acting on behalf of the Company or any subsidiary.
(r) Disclosure. This Agreement (including the Exhibits) does not
----------
contain any untrue statement of a material fact or omit to state any material
fact required to make the statements herein or therein not misleading in the
light of the circumstances under which those statements where made. There is no
fact known to the Company that materially adversely affects or threatens in the
future to materially adversely affect, the business, assets, liabilities,
condition (financial or otherwise), affairs or operations or the Company or any
subsidiary which has not been disclosed by the Company in writing to the
Investor.
(s) Real Property Holding Corporation. The Company is not and has not
---------------------------------
been at any time a "United States real property holding corporation" (as that
term is defined in Treasury Regulation Section 1.897-2(b)). If at any time in
the future the Company shall become a "United States real property holding
corporation" the Company shall, as promptly as practicable, notify each foreign
investor. Within thirty (30) days after receipt of a request from a foreign
investor, the Company shall prepare and deliver to such foreign investor the
statement required
-7-
under Treasury Regulation Section 1.897-2(h)(1)(IV) and subject to the
succeeding sentence either or both of the following documents: (i) an affidavit
in conformance with the requirements of Internal Revenue Code ("IRC") Section
1445(b)(3) or (ii) a notarized statement, executed by an officer having actual
knowledge of the facts, that the shares of Company stock held by such foreign
investor are of a class that is regularly traded on an established securities
market, within the meaning of IRC Section 1445(b)(6). If the Company is unable
to provide either of the documents described in (i) or (ii) above, if requested,
it shall promptly notify such foreign investor in writing of the reasons for
such inability. Finally, upon the request of a foreign investor and without
regard to whether either document described in (i) or (ii) above has been
requested, the Company shall reasonably cooperate with the efforts of such
foreign investor to obtain a "qualifying statement," within the meaning of IRC
Section 1445(b) (4) or such other documents as would excuse a transferee of a
foreign investor's interest from withholding of income tax imposed pursuant to
IRC Section 897(a).
The Company shall in a timely manner, after the date hereof, make all
necessary filings and shall take all other actions as are necessary to establish
that the Company is not a United States real property holding corporation.
(t) Audit Committee. The Company shall continue to have an audit
---------------
committee of its Board of Directors, which committee shall be comprised of no
fewer than two members of the Board of Directors, no member of which shall be an
employee of the Company.
(u) Compensation Committee. The Company shall continue to have a
----------------------
compensation committee of its Board of Directors, which committee shall be
comprised of no fewer than three members of the Board of Directors, and no more
than one member of which shall be an employee of the Company.
(v) Minute Books. The minute books of the Company provided to the
------------
Investor contain a complete summary of all meetings of directors and
stockholders since the time of incorporation and reflect all transactions
referred to in such minutes accurately in all material respects.
(w) Registration Rights. Except as set forth in the Registration
-------------------
Rights Agreement and as provided in the warrants referred to at Item 2 of
Exhibit E, the Company is not under any contractual obligation to register any
of its presently outstanding securities or any of its securities which may
hereafter be issued.
(x) Backlog. Exhibit P to this Agreement sets forth an accurate
-------
statement by product line of the amounts, as of the date there indicated, of
unfilled binding orders of the Company and its subsidiaries for sales (other
than intercompany sales) in the ordinary course of business of products and
services. None of such amounts had been recognized as revenues on the books of
the Company and its subsidiaries as of such date.
Section 3. Representations, Warranties and Agreements of the Investor.
----------------------------------------------------------
The Investor:
(a) Represents and warrants to the Company that:
-8-
(i) it is a corporation as indicated on the signature page of
this Agreement:
(ii) the execution, delivery and performance by it of this
Agreement have been duly authorized;
(iii) this Agreement constitutes a valid and binding obligation
of the Investor;
(iv) no person or firm has, or will have, as a result of any act or
omission by the Investor or anyone acting on behalf of the Investor, any right,
interest or valid claim against the Company or any subsidiary, for any
commission, fee or other compensation as a finder or broker or in any similar
capacity;
(v) the Investor is acquiring the Securities being purchased by it for
its own account for investment and not with a view to, or for sale in connection
with, distribution of any of the Securities; and
(vi) the Investor is an "accredited investor" as that term is defined
in Rule 501(A)(1), (2), (3) or (7) under the Securities Act and that it is able
to bear the economic risk of its investment.
(b) Agrees that it will not sell or otherwise transfer any of the
Securities, except in accordance with the Securities Act and all applicable
state securities laws, and that prior to any transfer (other than pursuant to an
effective registration under that Act) it will furnish to the Company a written
opinion of counsel, reasonably satisfactory in form and substance to the
Company, to the effect that registration under the Securities Act is not
required, and all requisite action has been taken, under all applicable state
securities laws, in connection with the proposed transfer. The Company will
promptly review any such opinion to determine whether it is reasonably
satisfactory in form and substance.
(c) Acknowledges that it is aware that it will not be entitled to make
any public offer or public sale of any of the Securities for an indefinite
period unless those Securities are then registered under the Securities Act.
Although it may be possible in the future to make limited public sales of the
Securities without registration in reliance on Rule 144 under that Act, Rule 144
is not now available and there is no assurance that it will become available for
this purpose. Accordingly, the Investor understands that it must bear the
economic risk of its investment in the Securities for an indefinite period.
(d) Acknowledges that it has been furnished access to the business
records of the Company (including any subsidiaries) and such additional
information and documents as the Investor has requested, and has been given the
opportunity to meet with Company officials and, to have such persons answer
questions regarding the Company's affairs and condition.
(e) Acknowledges its understanding that the certificates evidencing
the Securities (other than Securities that shall have been transferred pursuant
to an effective
-9-
registration statement) will bear legends substantially in the following form
until the Company's counsel determines that the legends are no longer advisable:
"[The shares evidenced by this certificate have] [This Warrant has]
not been registered under the Securities Act of 1933, as amended, and
must be held indefinitely unless [they are] [it is] transferred
pursuant to an effective registration statement under that Act,
pursuant to Rule 144 or l44A, or after receipt of an opinion of
counsel satisfactory to the Company that registration is not
required."
"[The shares evidenced by this certificate are] [This Warrant is]
subject to certain agreements contained in the Purchase Agreement
dated as of September 6, 1994 among the Company and [Investor], a copy
of which is on file with the Secretary of the Company."
The appropriate stop-transfer orders will be noted on the Company's stock and
warrant records with respect to all Securities so legended with the first
legend.
(f) Agrees that it shall hold in confidence any confidential
information about the Company that the Investor has received or hereafter
receives pursuant to any provision of this Agreement under circumstances
indicating the confidentiality of such information unless (i) such information
shall have been publicly disclosed other than as a result of any wrongful action
of Investor, or (ii) Investor independently develops or is aware of such
information.
(g) (i) Agrees for itself, its affiliates and any transferee of
Investor which is obligated under this Section 3(g)(i), that without the prior
written consent of the Company, it will not directly or indirectly increase its
holdings of capital stock of the Company or any security convertible into or
exercisable or exchangeable for capital stock of the Company ("Capital
Holdings") such that, after giving effect to the increase in such holdings, the
Investor will hold securities representing a number of Common Stock Equivalents
(as hereinafter defined) greater than 25% of the Common Stock Equivalents
represented by securities then outstanding (the "Holding Limit"); provided,
--------
however, that the Investor may increase its holdings above the foregoing limit
-------
as a result of an acquisition of securities of the Company pursuant to a merger
or a purchase of securities made pursuant to a plan of merger or an offer
simultaneously made by the Investor to acquire the Company pursuant to a merger
or to purchase all of the capital stock held by all holders of capital stock of
the Company which in either case is accepted by the holders of securities
representing two-thirds of the Common Stock Equivalents then outstanding (which
for purposes of said computation shall include the Common Stock Equivalents held
by the Investor). Notwithstanding the foregoing restriction, the Investor may
increase its Capital Holdings above 25% upon exercise of the Warrant solely and
to the extent that at the date of exercise of the Warrant the outstanding Common
Stock Equivalents against which the 25% limitation is calculated are less than
16,027,668 by reason that from the date hereof through the date of exercise
either (i) the Company has repurchased or redeemed Common Stock Equivalents, or
(ii) vested options outstanding on the date hereof shall not have been exercised
or (iii) both of (i) and (ii).
-10-
(ii) The agreement set forth in Section 3(g)(i) shall expire upon the
earlier of the tenth anniversary of the date of this Agreement or the second
anniversary of the date on which the Company shall have first issued its
securities upon the consummation of an initial public offering made pursuant to
a registration statement declared effective under the Securities Act (an "IPO");
provided, however, that if the Investor (or any transferee of securities which
-------- -------
is bound by the provisions of Section 3(g)(i)) shall transfer securities of the
Company and such transferee is bound by the provisions of Section 3(g)(i), then,
as to such transferee the agreements set forth in Section 3(g)(i) shall expire
on the earlier of the tenth anniversary of the date of this Agreement or on the
date the Company first issues its equity securities in an IPO.
(iii) For purposes of this Agreement the term "Common Stock
Equivalents" shall mean Common Stock and securities which are then (without
payment of any additional consideration other than the tender of the security)
convertible into or exchangeable for Common Stock. Each share of Common Stock
shall represent one Common Stock Equivalent. The number of Common Stock
Equivalents represented by other securities shall be the maximum number of
shares of Common Stock which may then be issued upon conversion or exchange
thereof based upon the terms thereof (including any conversion or exchange
rates, as adjusted from time to time in accordance with the terms of such
security).
(h) Agrees that it and for so long as it holds 5% or more of the
outstanding voting stock of the Company, it shall be present in person or
represented by proxy at all meetings of voting securityholders of the Company
(or to be available to sign consents of securityholders) so that all of the
voting securities then owned by it may be counted for the purpose of determining
the presence of a quorum at any such meeting (or for the purpose of determining
of the requisite percentage of securityholders having signed a consent).
(i) Agrees that, for so long as the obligations under Section 3(g)(i)
have not expired, it will not in one or more transactions transfer securities
representing more than an aggregate of 800,000 Common Stock Equivalents to (A)
any person which is not an affiliate of the Investor or (B) any group of
persons, each member of which either (x) is affiliated with at least one other
member or (y) would, directly or indirectly, through any contractual
arrangement, understanding or relationship, have or share voting power or
investment power with one or more other members of the group with respect to
such securities, but of which group no member is an affiliate of the Investor,
unless such transferee or transferees agree(s) in writing to be subject to the
terms of Section 3(g) of this Agreement; provided, however, that such condition
-------- -------
shall not apply in the case of any transferee which as of the date of this
Agreement is a holder of any shares of Series A, Series B, Series C, Series D or
Series E Convertible Preferred Stock. The Company agrees that any transferee of
the Investor, that is not described in clause (A) or (B) of the foregoing
sentence, that acquires less than 800,000 Common Stock Equivalents shall not be
bound by Section 3(g)(i). The Company shall not be obligated to recognize any
transfer made in violation of this Section 3(i).
(j) Notwithstanding the provisions of paragraph (b) above, no such
registration statement or opinion of counsel shall be necessary for a transfer
by the Investor to any affiliate of the Investor, if the transferee agrees in
writing to be subject to the terms hereof to the same extent as if it were the
original Investor hereunder.
-11-
(k) Notwithstanding the provisions of paragraph (b) above, no such
registration statement or opinion of counsel shall be necessary for a transfer
by the Investor pursuant to Rule 144, if the Investor makes the factual
representations reasonably requested by the Company indicating the availability
of the exemption provided by Rule 144.
Section 4. Covenants of the Company.
------------------------
(a) Financial Statements; Inspection. From and after the date hereof,
--------------------------------
the Company shall prepare or cause to be prepared, and shall furnish to each
holder of any Securities, the financial statements and related data specified in
Exhibit O, which financial statements and related data shall be acceptable to
each such holder, and shall permit each such holder to inspect at the holder's
expense any of the properties or books and records of the Company and its
subsidiaries, to make copies of extracts from such book and records and to
discuss the affairs and condition of the Company and its subsidiaries with
representatives of the Company and its subsidiaries, all to such reasonable
extent and at such reasonable times and intervals as such holder may reasonably
request. If the holder is a person or entity other than the Investor, the right
to inspect the properties or books or records of the Company granted under this
paragraph (b) may be exercised only with the consent of the Company, which
consent shall not be unreasonably withheld. Any holder (including the Investor)
who exercises the right to inspection shall, at the request of the Company, sign
an agreement to hold in confidence any confidential information about the
Company received as a result of such inspection under circumstances indicating
the confidentiality of such information unless (i) such information shall have
been publicly disclosed other than as a result of wrongful action of Investor,
or (ii) Investor independently develops or is aware of such information.
(b) Intellectual Property. The Company will use its best efforts to
---------------------
keep all intellectual property which is material to the Company's business or
prospects confidential and, to that end, the Company will enter into appropriate
contractual arrangements with each of its employees and such of its consultants,
agents, distributors, licensees, vendors and customers as the Company considers
appropriate.
(c) Proprietary Interest in Patents, Trademarks, etc. The Company
-------------------------------------------------
will use its best efforts to enter into contractual arrangements with each of
its employees so that the Company shall have sufficient title and ownership of
all patents, trademarks, service marks, trade names, copyrights, trade secrets,
information, proprietary rights and processes as are or may become necessary for
the conduct of its business.
(d) Right of First Refusal. Until such time as the Shares shall be
----------------------
deemed automatically converted into shares of Common Stock under paragraph
4(d)(ii) of the Certificate, each holder of Series F Preferred, so long as such
holder shall own at least an aggregate 100,000 shares of Series F Preferred or
shares of Common Stock issuable upon conversion of such shares of Series F
Preferred or shares of Common Stock which have been acquired upon the exercise
of the Warrant, as the case may be (a "Preferred Holder"), shall have the right
if the Company shall offer (the "Offer") to sell to any other person or entity
other than a holder of Preferred Stock with a contractual right of first refusal
under, the Series E Agreement, the Series E II Agreement or the Prior
Stockholders Agreement ("Other Purchaser") any voting security of the Company
except
-12-
Permitted Shares as defined in paragraph 4(d)(iii)(A) of the Certificate, or any
securities convertible or exchangeable into or exercisable for voting securities
of the Company, to purchase on the same terms and conditions as such securities
are being offered for sale to the Other Purchasers, up to that number of such
securities that would, after the completion of the sale of all of such
securities (assuming the conversion, exchange or exercise of all securities
which are convertible or exchangeable into or exercisable for voting
securities), result in such Preferred Holder having the same percentage interest
in the voting securities of the Company (based upon the number of votes) as such
holder had prior to such sale. The Company shall provide written notice to each
Preferred Holder of any offer, which notice shall contain the terms and
conditions of the Offer. Each Preferred Holder shall have a period equal to the
longer of (i) 14 days from the date such Preferred Holder receives such notice
from the Company, or (ii) the period of time that Other Purchasers will be
permitted to accept the Offer, to exercise such Preferred Holder's right to
purchase securities under this Section 4(d). Such Preferred Holder shall
exercise the right by providing written notice to the Company of such Preferred
Holder's intent to purchase and the number of shares which such Preferred Holder
intends to purchase. Thereafter, each Preferred Holder shall have a period equal
to the longer of (i) 30 days from the date such Preferred Holder gives notice to
the Company of such Preferred Holder's intent to purchase, or (ii) the period of
time that Other Purchasers are permitted to purchase and pay for securities
pursuant to the Offer, to purchase and pay for the securities pursuant to this
Section 4(d). This right to purchase securities may not be assigned or otherwise
transferred by any Preferred Holder; provided, however, the right of each
-------- -------
Preferred Holder to purchase securities may be apportioned in such a manner as
each Preferred Holder deems appropriate among the affiliates, partners or
retired partners of such Preferred Holder and further provided, however, that
------- -------- -------
should any Preferred Holder not purchase the full number of securities permitted
under this Section 4(d), each other Preferred Holder shall have the right to
purchase a pro rata portion of such securities.
(e) Rule 144A Information. For so Ions as any of the Securities are
---------------------
outstanding and are "restricted securities" within the meaning of Rule 144 (a)
(3) under the Act, the Company will provide to any holder of Securities and to
any prospective purchaser of Securities designated by a holder of such
Securities that is a "qualified institutional buyer" (as that term is defined
under Rule 144A), upon the request of such holder or prospective purchaser, the
information and the rights to information required to be provided to such holder
or prospective purchaser by Rule 144A(d)(4). The Company further agrees that
its obligations pursuant to this paragraph (i) shall extend to any person who
acquires any of the Securities in a transaction pursuant to Rule 144A.
Section 5. Drag Along Provision.
--------------------
(a) If at any time a written offer meeting the criteria described in
Section 5(b) (the "Offer") is made by a prospective buyer of securities of the
Company for the purchase by such prospective buyer of securities which, together
with Common Stock Equivalents represented by securities then owned by such
prospective buyer, represents two-thirds or more of the outstanding Common Stock
Equivalents (including Common Stock Equivalents represented by securities held
by the Investor) and a copy of such Offer is transmitted to the Investor, then
on and after the 11th day following the transmittal of the Offer to the
Investor, the Offer for the sale of such securities (including securities held
by the Investor) may he accepted by holders who in
-13-
the aggregate, together with the prospective buyer but excluding the Investor,
hold securities representing two-thirds or more of the outstanding Common Stock
Equivalents ("Control Holders"). In such event, the Investor agrees to sell
pursuant to the Offer all the securities owned by the Investor which are subject
to the Offer. The Investor further agrees to execute and deliver such documents
and perform all other actions as shall reasonably be requested by the
prospective buyer and the Control Holders in order to effectuate such sale in
accordance with the terms of the Offer and on a timely basis. Any transferee of
Securities of the Investor (other than an affiliate of the Investor) shall not
be bound by the provisions of this Section 5. This Section 5 shall terminate
upon the earlier of (i) the second anniversary of Company's initial public
offering of securities and (ii) the date on which the Company becomes subject to
the periodic reporting obligations of the Securities Exchange Act of 1934 with
respect to its Common Stock equivalents.
(b) Any Offer to which Section 5(a) shall apply shall provide that the
Investor (i) shall be paid not less for its Shares than it would have received
under Article 4(b) of the Certificate of Incorporation were the transaction
constituted as a merger and (ii) that the Investor shall be entitled to exercise
the Warrant simultaneously with consummation of the transaction contemplated by
the Offer and to be paid as a holder of Common Stock for such shares.
Section 6. Miscellaneous.
-------------
(a) Exhibits. The Exhibits attached to this Agreement constitute a
--------
part of this Agreement. They are incorporated herein by reference and shall
have the same force and effect as if set forth in full in the main body of this
Agreement.
(b) Survival of Warranties. All warranties, representations,
----------------------
covenants and agreements made in this Agreement shall survive the delivery of
the Shares to the Investor, regardless of any investigation made by any party.
(c) Assigns. This Agreement shall bind and inure to the benefit of
-------
the parties hereto and their respective heirs, executors, administrators,
successors and assigns.
(d) Governing Law. This Agreement shall be governed by the laws of
-------------
the State of New York.
(e) Notices. All communications provided for in this Agreement shall
-------
be in writing and shall be sent to the appropriate address shown on the
signature page or on Exhibit A to this Agreement or to such other address as the
addressee may from time to time designate to the sender and shall be sent by
certified mail, return receipt requested, or shall be personally delivered.
(f) Entire Agreement. This Agreement constitutes the entire agreement
----------------
among the parties regarding the transactions contemplated herein and may not be
amended except in writing.
(g) Headings. The headings contained in this Agreement are for
--------
reference purposes only and shall not affect in any way the interpretation of
this Agreement.
-14-
(h) Effect of Stock Splits. Whenever any rights under this Agreement
----------------------
are available only when at least a specified minimum number of Securities is
involved, such number shall be appropriately adjusted to reflect any stock
split, stock dividend, combination of securities into a smaller number of
securities or reclassification of stock.
(i) Amendments. This Agreement may be amended only by an instrument
----------
in writing, signed by the Company and by the Investor or by holders, on the date
of such amendment, of at least a majority of the Shares and/or Conversion Shares
issuable upon conversion of the Shares held by all of such holders.
(j) Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be an original, all of which together shall
constitute one instrument.
(k) Facsimile. This Agreement may be executed and thereafter
---------
transmitted by facsimile and the facsimile receipt shall constitute an original.
(l) Third Party Beneficiaries. Each of the holders of capital stock
-------------------------
of the Company shall be a third party beneficiary of this Agreement and may
enforce the obligations of the Investor hereunder.
-15-
IN WITNESS WHEREOF, we have set our hands as of the date hereinafter set forth.
Date: September 6, 1994
The Company:
DATALOGIX INTERNATIONAL INC.
A New York Corporation
By: /s/ X. XXXXXXXXXXX
-----------------------
Title: CEO
--------------------
000 Xxxxxx Xxxx Xxxxx
Xxxxxxxx, Xxx Xxxx 00000
The Investor:
ORACLE CORPORATION
By: /s/ XXXXXXX X. XXXXXX
------------------------
Title: CFO
---------------------
000 Xxxxxx Xxxxxxx
Xxxxxxx Xxxxxx, Xxxxxxxxxx 00000
-16-
