EXHIBIT 1
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of September 24, 1996, by and among
Oracle Corporation, a Delaware corporation ("PARENT"), Delphi Acquisition
Corporation, a Delaware corporation and a wholly owned subsidiary of Parent
("PURCHASER"), and Datalogix International Inc., a New York corporation (the
"COMPANY").
RECITALS:
WHEREAS, the Boards of Directors of the Company and Parent have each
determined that it is in the best interests of their respective stockholders for
Parent to acquire the Company upon the terms and subject to the conditions set
forth herein; and
WHEREAS, also in furtherance of such acquisition, the Boards of Directors
of the Company and Parent have each approved and adopted this Agreement and the
Merger (as hereinafter defined) of Purchaser with the Company in accordance with
the New York Business Corporation Law and the Delaware General Corporation Law,
as appropriate, and upon the terms and subject to the conditions set forth
herein; and
WHEREAS, the Board of Directors of the Company has resolved to recommend
approval, authorization and adoption of this Agreement and the Merger to the
holders of shares of the Company's Common Stock, $0.01 par value per share (the
"SHARES"), and has determined that the consideration to be paid for each Share
in the Merger is fair to the holders of such Shares;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby, the
Company, Parent and Purchaser hereby agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger.
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(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.
Section 1.2 Effective Time. As soon as practicable after satisfaction or
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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
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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, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, 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
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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
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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
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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
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Merger shall be as provided in the applicable provisions of the NYBCL and DGCL,
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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.
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(a) The Company, acting through its Board of Directors, shall, in
accordance with applicable law:
(i) duly call, give notice of, convene and hold a special meeting of
its shareholders (the "SPECIAL MEETING") as promptly as practicable following
the date hereof for the purpose of considering and taking action upon the
approval of the Merger and the authorization and adoption of this Agreement;
(ii) after consultation with Parent and its legal counsel, exercise
its best efforts to prepare and file with the Securities and Exchange Commission
(the "SEC") within 10 days after the date hereof (but in no event later than 14
days after the date hereof), a preliminary proxy or information statement
relating to the Merger and this Agreement and use commercially reasonable
efforts (x) to obtain and furnish the information required to be included by the
SEC in the Proxy Statement (as hereinafter defined) and, after consultation with
Parent and its counsel, to respond promptly to any comments made by the SEC with
respect to the preliminary proxy or information statement and cause a definitive
proxy or information statement, including any amendment or supplement thereto
(the "PROXY STATEMENT") to be mailed to its shareholders, provided that no
amendment or supplement to the Proxy Statement will be made by the Company
without consultation with Parent and its counsel and (y) to obtain the necessary
approvals of the Merger and authorization and adoption of this Agreement by its
shareholders;
(iii) prepare and revise the Proxy Statement so that, at the date
mailed to Company shareholders and at the time of the meeting of Company
shareholders to be held in connection with the Merger, the Proxy Statement will
(x) not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order that the
statements made therein, in light of the circumstances under which they are
made, not misleading (except that the Company shall not be responsible under
this clause (iii) with respect to statements made therein based on information
supplied by Parent or Purchaser expressly for inclusion in the Proxy Statement),
and (y) comply in all material respects with the provisions of the Exchange Act
and the rules and regulations thereunder; and
(iv) subject to the provisions of Section 5.5, make at the Special
Meeting, and include in the Proxy Statement, the recommendation of the Board
that shareholders of the Company vote in favor of the approval of the Merger and
the authorization and adoption of this Agreement.
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(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
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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
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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
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(and the associated Preferred Share Purchase Rights (collectively, the "RIGHTS")
issued pursuant to a Rights Agreement dated as of August 27, 1996 between the
Company and The First National Bank of Boston, as Rights Agent (the "RIGHTS
AGREEMENT")) that are owned by the Company or any subsidiary of the Company and
any Shares (and associated Rights) owned by Purchaser or any subsidiary of
Purchaser shall be canceled and retired and shall cease to exist and no
consideration shall be delivered in exchange therefor.
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(c) Exchange of Shares. Each issued and outstanding Share (and associated
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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.
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(a) Paying Agent. Prior to the Effective Time, Parent shall designate a
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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
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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
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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
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Effective Time, the stock transfer books of the Company shall be closed and
thereafter there shall be no further registration of transfers of the Shares on
the records of the Company. From and after the Effective Time, the holders of
Certificates evidencing ownership of the Shares outstanding immediately prior to
the Effective Time shall cease to have any rights with respect to such Shares,
except as otherwise provided for herein or by applicable law. If, after the
Effective Time, Certificates are presented to the Surviving Corporation for any
reason, they shall be canceled and exchanged as provided in this Article II.
(d) Termination of Fund; No Liability. At any time following twelve months
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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
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this Agreement to the contrary, Shares held by a holder who has not voted such
Shares in favor of the authorization, approval and adoption of this Agreement
and the Merger or consented thereto in writing and with respect to which
dissenters' rights shall have been demanded and perfected in accordance with
Sections 623 and 910 of the NYBCL (the "DISSENTING SHARES") and as of the
Effective Time not withdrawn shall not be converted into the right to receive
cash at or after the Effective Time, but such Shares shall become the right to
receive such consideration as may be determined to be due to holders of
Dissenting Shares pursuant to the laws of the State of New York unless and until
the holder of such Dissenting Shares withdraws his or her demand for such
appraisal or becomes ineligible for such appraisal. If a holder of Dissenting
Shares shall withdraw his or her demand for such appraisal or shall become
ineligible for such appraisal (through failure to perfect or otherwise), then,
as of the Effective Time or the occurrence of such event, whichever last occurs,
such holder's Dissenting Shares shall automatically be converted into and
represent the right to receive the Merger Consideration, without interest, as
provided in Section 2.1(c). The Company shall give Parent (i) prompt notice of
any demands for appraisal of Shares received by the Company and (ii) the
opportunity
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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.
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(a) Each outstanding option to purchase Shares issued to employees, non-
employee directors and consultants of the Company pursuant to the Company's
Amended and Restated 1992 Incentive Stock Plan and the 1986 Key Employees Stock
Option Plan of Datalogix Formula Systems, Inc. (collectively, the "OPTION
PLANS") whether vested or unvested (each an "EMPLOYEE STOCK OPTION"), shall
remain outstanding after the Effective Time and shall be assumed by Parent. The
parties intend that Parent's assumption of the Employee Stock Options shall be
treated as "assuming a stock option in a transaction to which Section 424(a)
applies" within the meaning of Section 424 of the Code (as defined in Section
3.11 below) and this subsection (a) shall be interpreted and applied consistent
with such intent. Each Employee Stock Option assumed by Parent shall be
exercisable upon the same terms and conditions as under the applicable Option
Plan and option agreement issued thereunder, except that (i) such option shall
be exercisable for that number of shares of common stock of Parent equal to the
product of (x) the number of Shares for which such option was exercisable and
(y) the Merger Consideration divided by the average closing price of Parent's
Common Stock on the NASDAQ National Market for the five consecutive trading days
prior to the Effective Time (the "CONVERSION NUMBER"), and (ii) the exercise
price of such option shall be equal to the exercise price of such option as of
the date hereof divided by the Conversion Number.
(b) Each outstanding option to purchase Shares issued to a non-employee
director pursuant to the Company's 1995 Director Option Plan (a "DIRECTOR STOCK
OPTION"), whether vested or unvested, shall remain outstanding after the
Effective Time and shall be assumed by Parent. Each Director Stock Option
assumed by Parent shall be exercisable upon the same terms and conditions as
under the Company's 1995 Director Option Plan and the applicable option
agreement issued thereunder, except that the consideration payable upon exercise
in respect of each Share covered by such option shall be the Merger
Consideration.
(c) As soon as practicable after the Effective Time, Parent shall deliver
to the holders of Employee Stock Options and Director Stock Options appropriate
notices setting forth such holders' rights pursuant to the Option Plans and the
1995 Director Option Plan and the agreements evidencing the grants of such
Employee Stock Options and Director Stock Options shall continue in effect on
the same terms and conditions (subject to the adjustments required by this
Section 2.4 after giving effect to the Merger).
(d) Parent shall register under the Securities Act of 1933, as amended (the
"SECURITIES ACT"), all shares of Parent Common Stock subject to options that
were formerly Employee Stock Options as of the Effective Time.
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(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.
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(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),
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which result in liability to the Company or its subsidiaries, or could
reasonably be expected to result in liability to the Company or its
subsidiaries, of in excess of $1,500,000, in the case of any individual effect,
or $2,500,000, in the case of all such adverse effects in the aggregate, except
that with respect to Section 6.3 (a) (for purposes of determining whether any
representations and warranties are true and correct as if made on and as of the
Effective Time) and Sections 6.3 (d), 6.3 (e) and 7.1 (d), such amounts will be
$3,000,000, in the case of any individual effect, or $5,000,000, in the case of
all adverse effects in the aggregate; and (ii) any judgment, injunction, order
or decree binding upon the Company or any of its subsidiaries obligating the
Company or any such subsidiary to take or refrain from taking any action, omit
or refrain from omitting to take any action required to be taken, perform or
refrain from performing any activity or conduct or refrain from conducting any
business, in each case which results from actions, suits or proceedings of the
types described in Section 6.3 (d) (i) or (ii). For the purposes of determining
whether a Material Adverse Effect has occurred or could reasonably be expected
to occur there shall be included as adverse effects, without limitation, any
payments made, and the value of any other consideration provided, or which could
reasonably be expected to be made or provided (i) to pay, discharge or satisfy
any actions, suits, proceedings or claims; (ii) to obtain consents from any
third party to the transactions contemplated hereby; and (iii) to pay, discharge
or satisfy any obligation to indemnify or hold harmless any Indemnified Person
(as defined in Section 6.3 (d) below). Notwithstanding the foregoing, (a) all
dollar amounts set forth in this Section 3.1 (b) are net of (i) amounts of
insurance proceeds received by the Company or its subsidiaries or specifically
acknowledged by the insurer in writing as being payable by the insurer, and (ii)
specifically applicable reserves set forth and provided for in the draft
consolidated financial statements set forth in Section 5.3 of the Company
Disclosure Schedule, and (b) no individual adverse effect shall be included in
the calculation of Material Adverse Effect if the sole impact of such individual
adverse effect is a payment obligation which could not reasonably be expected to
result in a liability to the Company or its subsidiaries of more than $50,000.
Section 3.2 Capitalization.
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(a) Capitalization. The authorized capital stock of the Company consists
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of 40,000,000 Shares, par value $.01 per Share and 5,000,000 shares of Preferred
Stock, par value $0.01 per share. As of September 19, 1996, (i) 11,711,776
Shares were issued and outstanding, all of which were validly issued and are
fully paid and nonassessable, (ii) 96,116 Shares were held in the treasury of
the Company or by subsidiaries of the Company, (iii) 1,015,038 Shares were
reserved for issuance upon exercise of outstanding options under the Option
Plans and the Company's Director Option Plan, and (iv) 250,000 Shares were
reserved for issuance under the 1995 ESPP, up to 23,000 of which may be issued
in the Offering Period that ends on the day prior to the Closing Date. Section
3.2 of the Company Disclosure Schedule sets forth a true and correct list as of
September 20, 1996 of all holders of options to purchase Shares, the number of
such options outstanding as of such date and the exercise price per option. All
of the outstanding Shares have been duly authorized and validly issued and are
fully paid and nonassessable and free of preemptive rights. Subsequent to
September 19, 1996, no Shares have been issued by the
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Company except upon the exercise of outstanding options described in this
Section 3.2 (a). Except as set forth in Section 3.1(b) of the Company Disclosure
Schedule, each of the outstanding options described in this Section 3.2 allows
the optionee to purchase Shares which have been authorized to be issued by the
Company's Board of Directors and shareholders under the Option Plans or the 1995
Director Stock Option Plan. Except as set forth in Section 3.2 of the Company
Disclosure Schedule, there are no other options, warrants or other rights,
convertible debt, agreements, arrangements or commitments of any character
obligating the Company or any of its subsidiaries to issue or sell any shares of
capital stock of or other equity interests in the Company or any of its
subsidiaries. The Company is not obligated to redeem, repurchase or otherwise
reacquire any of its capital stock or other securities. For purposes of this
Agreement, "FULLY DILUTED BASIS" shall mean the sum of (x) all Shares issued and
outstanding at any one time plus (y) all Shares issuable upon the exercise of
any outstanding options, warrants or convertible or exchangeable securities.
(b) Except as set forth in Section 3.2 of the Company Disclosure Schedule,
all of the outstanding shares of the capital stock of each subsidiary of the
Company are beneficially owned by the Company, directly or indirectly, and all
such shares have been duly authorized, validly issued and are fully paid and
nonassessable and are owned by either the Company or one of its subsidiaries
free and clear of all liens, security interests, charges, claims or encumbrances
of any nature whatsoever. There are no existing options, calls or commitments
of any character relating to the issued or unissued capital stock or other
securities of any subsidiary. Except as set forth in Section 3.2 of the Company
Disclosure Schedule, the Company does not directly or indirectly own or have a
right to acquire an equity interest in any other corporation, partnership,
joint venture or other business association or entity.
Section 3.3 Authorization; Validity of Agreement; Company Action. The
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Company has full corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby, subject to
obtaining shareholder approval as described in the last sentence of this Section
3.3. The Board of Directors of the Company, at a meeting duly called and held
on September 22, 1996 at which all of the Directors were present, duly and
unanimously approved, authorized and adopted this Agreement and its execution,
delivery and performance and the transactions contemplated hereby, recommended
that the shareholders of the Company authorize and adopt this Agreement and the
transactions contemplated hereby, including the Merger, and determined that this
Agreement and the transactions contemplated hereby, including the Merger, are
fair to and in the best interests of the shareholders of the Company; provided,
however, such recommendation may be withdrawn, modified or amended to the extent
permitted by Section 5.5 of this Agreement. No other corporate action on the
part of the Company is necessary to authorize the execution and delivery by the
Company of this Agreement and the consummation by it of the transactions
contemplated hereby (except as described in the last sentence of this Section
3.3). This Agreement has been duly executed and delivered by the Company and,
assuming due and valid authorization, execution and delivery hereof by Parent
and Purchaser, is a valid and binding obligation of the Company enforceable
against the Company in accordance with its terms. The affirmative vote of the
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holders of not less than two-thirds (2/3) of the outstanding Shares are the only
votes of the holders of any class or series of the Company's capital stock
necessary to approve, adopt and authorize this Agreement and the transactions
contemplated hereby.
Section 3.4 Consents and Approvals; No Violations. Except for the filings
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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 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended (the "HSR ACT"), state securities or blue
sky laws, and the filing and recordation of a certificate of merger under the
NYBCL or the DGCL, neither the execution, delivery or performance of this
Agreement by the Company nor the consummation by the Company of the transactions
contemplated hereby nor compliance by the Company with any of the provisions
hereof will (i) conflict with or result in any breach of any provision of the
certificate of incorporation or the bylaws of the Company or of any of its
subsidiaries, (ii) require any filing with, or permit, authorization, consent or
approval of, any court, arbitration tribunal, administrative agency or
commission or other governmental or other regulatory authority or agency,
domestic or foreign (a "GOVERNMENTAL ENTITY"), on the part of the Company or any
subsidiary, (iii) require the consent of any person under, result in a violation
or breach of, or constitute (with or without due notice or lapse of time or
both) a default (or give rise to any right of termination, amendment,
cancellation or acceleration) under, any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, lease, license, contract, agreement or
other instrument or obligation to which the Company or any of its subsidiaries
is a party or by which any of them or any of their properties or assets may be
bound, the lack of which consent, or which violation, breach or default,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect on the Company and its subsidiaries, taken as a whole
(the "SPECIFIED AGREEMENTS"), or (iv) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to the Company, any of its
subsidiaries or any of their properties or assets.
Section 3.5 SEC Reports and Financial Statements.
------------------------------------
(a) The Company has timely filed with the SEC, and has delivered to
Purchaser, true and complete copies of, all forms, reports, schedules,
statements and other documents required to be filed by it since June 1, 1995
under the Securities Act or the Exchange Act (collectively, the "SEC
DOCUMENTS"). Except as set forth in Section 3.5 of the Company Disclosure
Schedule, the SEC Documents (i) were prepared in accordance with the
requirements of the Securities Act or the Exchange Act, as the case may be,
including without limitation the applicable accounting requirements thereunder
and the published rules and regulations of the SEC with respect thereto, (ii)
when filed did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, and (iii) taken as a whole, do not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the
-11-
circumstances under which they were made, not misleading. None of the Company's
subsidiaries is required to file any statements or reports with the SEC pursuant
to Sections 13(a) or 15(d) of the Exchange Act.
(b) Except as set forth in Section 3.5 of the Company Disclosure Schedule,
the consolidated financial statements of the Company included in the SEC
Documents have been prepared from, and accord with, the books and records of the
Company and its subsidiaries, have been prepared in accordance with United
States generally accepted accounting principles ("GAAP") applied on a consistent
basis during the periods involved (except as may be indicated in the notes
thereto) and fairly present the consolidated financial position and the
consolidated results of operations and cash flows (and changes in financial
position, if any) of the Company and its consolidated subsidiaries as of the
respective dates and for the respective periods thereof, except that the
unaudited interim quarterly financial statements were or are subject to normal
and recurring year-end adjustments which were or are not expected to be material
in amount. Except as set forth in Section 3.5 of the Company Disclosure
Schedule, the Company is not aware of any facts or circumstances which would
require the Company to amend or restate any of the SEC Documents, including
without limitation the financial information included therein.
(c) The Company's reserves for product claims and warranty costs used in
preparing the draft consolidated financial statements set forth in Section 5.3
of the Company Disclosure Schedule are adequate to cover the Company's and its
subsidiaries' existing product claims and warranty costs, including without
limitation the product claims and warranty costs arising out of the matters
described in Section 3.7 of the Company Disclosure Schedule and the warranties
provided by the Comapany and its subsidiaries described in Section 3.24 (d) of
the Company Disclosure Schedule.
Section 3.6 Absence of Certain Changes. Since June 30, 1995, except as
--------------------------
contemplated in this Agreement and set forth on Section 3.6 of the Company
Disclosure Schedule, there has not been:
(a) any Material Adverse Effect on the Company and its subsidiaries, taken
as a whole;
(b) any strike, picketing, work slowdown or other labor disturbance;
(c) any material damage, destruction or loss (whether or not covered by
insurance) with respect to any of the material assets of the Company or any of
its subsidiaries;
(d) any redemption or other acquisition of capital stock by the Company or
any of its subsidiaries or any declaration or payment of any dividend or other
distribution in cash, stock or property with respect to capital stock;
(e) any stock split, reverse stock, combination, reclassification or other
similar action with respect to capital stock;
-12-
(f) any entry into any material commitment or transaction (including,
without limitation, any borrowing or capital expenditure) other than in the
ordinary course of business as contemplated by this Agreement;
(g) any transfer of, or rights granted under, any licenses, agreements,
patents, trademarks, trade names or copyrights other than nonexclusive end user
licenses granted in the ordinary course of business and consistent with past
practice;
(h) any mortgage, pledge, security interest or imposition of lien or other
encumbrance on any material asset of the Company or any of its subsidiaries; or
(i) any change by the Company in accounting principles or methods except
insofar as may have been required by a change in generally accepted accounting
principles and disclosed in the SEC Documents and except as set forth in Section
3.5 of the Company Disclosure Schedule.
Except as set forth in Section 3.6 of the Company Disclosure Schedule,
since June 30, 1995 the Company and its subsidiaries have conducted their
business only in the ordinary course and in a manner consistent with past
practice and have not made any material change in the conduct of the business or
operations of the Company and its subsidiaries taken as a whole. Except as set
forth in Section 3.6 of the Company Disclosure Schedule, no person has or will
have the right to receive any severance, bonus, other payment, increase or
change in benefits or vesting of stock options, shares or other benefits as a
result of any of the transactions contemplated by this Agreement.
Section 3.7 No Undisclosed Liabilities. Except as set forth in Section
--------------------------
3.7 of the Company Disclosure Schedule, and except as reflected or reserved
against in the consolidated financial statements contained in the SEC Documents,
the Company and its subsidiaries have no liabilities of any nature (whether
accrued, absolute, contingent or otherwise), except those liabilities incurred
in the ordinary course of business which could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Company and its subsidiaries, taken as a whole.
Section 3.8 Litigation. Except as disclosed in the SEC Documents or in
----------
Section 3.8 of the Company Disclosure Schedule, there is no suit, claim, action,
proceeding or investigation pending before any Governmental Entity or, to the
best knowledge of the Company, threatened against the Company or any of its
subsidiaries. Except as disclosed in the SEC Documents or in Section 3.8 of the
Company Disclosure Schedule, neither the Company nor any of its subsidiaries is
subject to any outstanding order, writ, injunction or decree.
Section 3.9 No Default; Compliance with Applicable Laws. Except as
-------------------------------------------
disclosed in Section 3.9 of the Company Disclosure Schedule, the business of the
Company and each of its subsidiaries is not being conducted in default or
violation of any term, condition or provision of (i) its respective certificate
of incorporation or bylaws, (ii) any Specified Agreement or (iii) any federal,
state, local or foreign statute, law, ordinance,
-13-
rule, regulation, judgment, decree, order, concession, grant, franchise, permit
or license or other governmental authorization or approval applicable to the
Company or any of its subsidiaries, excluding from the foregoing clauses (ii)
and (iii), defaults or violations which could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Company and its subsidiaries, taken as a whole. Except as disclosed in Section
3.9 of the Company Disclosure Schedule, as of the date of this Agreement, no
investigation or review by any Governmental Entity or other entity with respect
to the Company or any of its subsidiaries is pending or, to the best knowledge
of the Company, threatened, nor has any Governmental Entity or other entity
indicated an intention to conduct the same. Each of the Company and its
subsidiaries has in effect all Federal, state, local and foreign governmental
approvals, authorizations, certificates, filings, franchises, licenses, notices,
permits and rights ("PERMITS") necessary for it to own, lease or operate its
properties and assets and to carry on its business as now conducted, and there
has occurred no default under any such Permit, except for the absence of Permits
and for defaults under Permits which absence or defaults, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect on
the Company and its subsidiaries, taken as a whole.
Section 3.10 Intellectual Property.
---------------------
(a) Except as set forth in Section 3.10 (a) of the Company's Disclosure
Schedule, each of the Company and its subsidiaries owns or has the exclusive
right to use, make, sell, license, or sublicense and bring actions for
infringement of all Company Products (as defined below) and Intellectual
Property Rights (as defined below) developed by or for the Company or any of the
Company's subsidiaries or that are used or currently proposed to be used in the
business of the Company or any of the Company's subsidiaries as currently
conducted or proposed to be conducted. All Company Products and Company
Intellectual Property Rights are owned by the Company and its subsidiaries free
and clear of any rights or claims of any former employees, consultants, officers
and directors of the Company or any subsidiary and former employers of all
current and former employees, consultants, officers and directors of the Company
or any subsidiary. The source codes for the Company Products constitute trade
secrets of the Company that are presently valid and protectable. Except as set
forth in Section 3.10 (a) of the Company's Disclosure Schedule, all taxes and
fees, including, without limitation, patent and trademark registration and
prosecution fees and all professional fees in connection therewith pertaining to
the Company Intellectual Property Rights, due and payable on or before the date
hereof, have been paid by the Company.
(b) Each of the Company's and its subsidiaries' current products and
products under development are listed on the Company Disclosure Schedule
(collectively, "COMPANY PRODUCTS"). Except as set forth in Section 3.10(b) of
the Company Disclosure Schedule, no person has a license to use or the right to
acquire a license to use any future version of any Company Product or any
Company Product that is under development, and no agreement to which the Company
or any subsidiary is a party will restrict the Surviving Corporation or Parent
from charging customers for any such new version. No person has any rights under
any source code escrow agreement relating to the
-14-
Company Products or Company Intellectual Property Rights. Except as set forth in
Section 3.10(b) of the Company Disclosure Schedule, no person other than the
Company and its subsidiaries has had access to or the right of access to source
code for the Company's Products or will have the right to such access as a
result of any of the transactions contemplated by this Agreement.
(c) No person has a right to receive a royalty or similar payment in
respect of any Company Product or any Company Intellectual Property Rights
whether or not pursuant to any contractual arrangements entered into by the
Company or any subsidiary. Except for End-User Licenses and except as set forth
in Section 3.10(c) of the Company Disclosure Schedule, each of the Company and
its subsidiaries has no licenses granted, sold or otherwise transferred by or to
it nor other agreements to which it is a party, relating in whole or in part to
any Company Product or Company Intellectual Property Rights.
(d) The execution, delivery and performance of this Agreement and the
consummation of the other transactions contemplated hereby (including without
limitation the continued conduct by Parent or Surviving Corporation after the
Effective Time of the Company's and its subsidiaries' businesses as presently
conducted and the incorporation of any Company Product or Company Intellectual
Property Right in any product of Parent or the Surviving Corporation) will not
breach, violate or conflict with any instrument or agreement and will not cause
the forfeiture or termination or give rise to a right of forfeiture or
termination of any such Company Product or Company Intellectual Property Right
or in any way impair the right of Parent or the Surviving Corporation to use,
sell, license or dispose of, either as part or all of a Company Product or as
part or all of a product of Parent or the Surviving Corporation, or to bring any
action for the infringement of, any such Company Product or Company Intellectual
Property Right or portion thereof.
(e) Neither the development, manufacture, marketing, license, sale or use
of any Company Product violates or will violate any license or agreement to
which the Company or any of its subsidiaries is a party or infringes any
Intellectual Property Right of any other party; there is no pending or, to the
knowledge of the Company, threatened claim or litigation contesting the
validity, ownership or right to use, sell, license or dispose of any
Intellectual Property Right necessary or required for, or used in, the conduct
of the business of the Company or any subsidiary as presently conducted nor, to
the knowledge of the Company, is there any basis for any such claim, nor has the
Company or any subsidiary received any notice asserting that any such
Intellectual Property Right or the proposed use, sale, license or disposition
thereof conflicts or will conflict with the rights of any other party, nor, to
the knowledge of the Company, is there any basis for any such assertion. To the
Company's knowledge, there is no infringement on the part of any third party of
the Company's Intellectual Property Rights.
(f) Each of the Company and its subsidiaries has taken reasonable and
practicable steps (including, without limitation, entering into confidentiality
and non-disclosure agreements with all officers and employees of and consultants
to the Company
-15-
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
-16-
Property Right (excluding End-User Licenses). Neither the Company nor any
subsidiary is in violation of any license, sublicense or agreement described on
such list except such violations as do not materially impair the Company's or
any subsidiary's rights under such license, sublicense or agreement. Section
3.10 of the Company Disclosure Schedule separately identifies each exclusive
arrangement between the Company or any subsidiary and any third party to use,
license, sublicense, sell or distribute any Company Intellectual Property Right
or any Company Product.
(h) Section 3.10 of the Company Disclosure Schedule contains a complete and
accurate list of all applications, filings and other formal actions made or
taken pursuant to federal, state, local and foreign laws by the Company or any
subsidiary to perfect or protect its interest in the Company Intellectual
Property Rights, including, without limitation, all patents, patent
applications, trademarks, trademark applications and registrations, service
marks, service ▇▇▇▇ 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 ▇▇▇▇
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.
-17-
(ii) The term "RETURNS" shall mean all reports, estimates,
declarations of estimated tax, information statements and returns relating to,
or required to be filed in connection with, any Taxes, including information
returns or reports with respect to backup withholding and other payments to
third parties.
(iii) The term "CODE" shall mean the Internal Revenue Code of 1986, as
amended.
(b) Except as set forth in Section 3.11 of the Company Disclosure Schedule,
and except as could not, either individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on the Company and its subsidiaries,
taken as a whole, (i) all Returns required to be filed by or on behalf of the
Company and each of its subsidiaries have been duly filed on a timely basis and
such Returns are true, complete and correct, (ii) all Taxes shown to be payable
on such Returns or on subsequent assessments with respect thereto, and all
payments of estimated Taxes required to be made by or on behalf of the Company
and each of its subsidiaries under Section 6655 of the Code or comparable
provisions of state, local or foreign law, have been paid in full on a timely
basis or have been accrued on the Financial Statements, and no other Taxes are
payable by the Company or any of its subsidiaries with respect to items or
periods covered by such Returns (whether or not shown on or reportable on such
Returns) or with respect to any period prior to the date of this Agreement,
(iii) the Company and each of its subsidiaries has withheld and paid over all
Taxes required to have been withheld and paid over, and complied with all
information reporting and backup withholding requirements, including maintenance
of required records with respect thereto, in connection with amounts paid or
owing to any employee, creditor, independent contractor, or other third party,
(iv) there are no liens on any of the assets of the Company or any of its
subsidiaries with respect to Taxes, other than liens for Taxes not yet due and
payable or for Taxes that the Company or such subsidiary is contesting in good
faith through appropriate proceedings and for which appropriate reserves have
been established, (v) the amount of the Company's and its subsidiaries'
liability for unpaid Taxes (whether actual or contingent) for all periods
through the date of the Financial Statements does not, in the aggregate, exceed
the amount of the current liability accruals for Taxes reflected on the
Financial Statements, and the Financial Statements properly accrue in accordance
with GAAP all liabilities for Taxes payable after the date of the Financial
Statements attributable to transactions and events occurring prior to such date,
and (vi) no liability for Taxes of the Company or any of its subsidiaries has
been incurred (or prior to Closing will be incurred) since such date other than
in the ordinary course of business.
(c) Except as set forth in Section 3.11(c) of the the Company Disclosure
Schedule, the Company has made available to Purchaser true and complete copies
of (i) relevant portions of income tax audit reports, statements of
deficiencies, closing or other agreements received by or on behalf of the
Company or any of its subsidiaries relating to Taxes, and (ii) all federal and
state income or franchise tax returns and state sales and use tax Returns for or
including the Company or any of its subsidiaries for the periods ending on and
after June 30, 1993, June 30, 1994 and June 30, 1995, excluding from the
foregoing such returns with respect to Taxes the nonpayment of which,
individually or in
-18-
the aggregate, could not reasonably be expected to cause a Material Adverse
Effect. Neither the Company nor any of its subsidiaries does business in or
derives income from any state other than states for which Returns have been duly
filed and made available to Purchaser.
(d) Except as disclosed in Section 3.11 of the Company Disclosure Schedule,
(i) the Returns of or including the Company and its subsidiaries have never been
audited by a government or taxing authority, nor is any such audit in process,
threatened or, to the Company's knowledge, pending (either in writing or
verbally, formally or informally), (ii) no deficiencies exist or have been
asserted (either in writing or verbally, formally or informally) or are expected
to be asserted with respect to Taxes of the Company or any of its subsidiaries,
and neither the Company nor any such subsidiary has received notice (either in
writing or verbally, formally or informally) nor expects to receive notice that
it has not filed a Return or paid Taxes required to be filed or paid, (iii)
neither the Company nor any of its subsidiaries is a party to any action or
proceeding for assessment or collection of Taxes, nor has such event been
asserted or threatened (either in writing or verbally, formally or informally)
against the Company, any of its subsidiaries, or any of their assets, and (iv)
no waiver or extension of any statute of limitations is in effect with respect
to Taxes or Returns of the Company of its subsidiaries, excluding from the
foregoing any such audit, threat of audit, deficiency, proposed deficiency,
action, proceeding for assessment or collection, waiver or extension with
respect to which the amount in controversy is less than $50,000.
(e) Neither the Company nor any subsidiary has entered into any
compensatory agreements with respect to the performance of services which
payment thereunder would result in a nondeductible expense to the Company or
such subsidiary pursuant to Section 280G of the Code or an excise tax to the
recipient of such payment pursuant to Section 4999 of the Code.
Section 3.12 Certificate of Incorporation and Bylaws. The Company has
---------------------------------------
heretofore furnished to Purchaser a complete and correct copy of the certificate
of incorporation and the bylaws or equivalent organizational documents, each as
amended to the date hereof, of the Company and made available to Purchaser such
documents with respect to all subsidiaries. Such certificate of incorporation,
bylaws and equivalent organizational documents are in full force and effect.
Neither the Company nor any of its subsidiaries is in violation of any of the
provisions of its certificate of incorporation or bylaws or equivalent
organizational documents.
Section 3.13 Title to Property.
-----------------
(a) Except as disclosed in Section 3.13 to the Company Disclosure Schedule,
the Company and its subsidiaries have good and marketable title, or valid
leasehold rights in the case of leased property, to all real property and all
personal property purported to be owned or leased by them, free and clear of all
material liens, security interests, claims, encumbrances and charges, excluding
(i) immaterial liens for fees, taxes, levies, imposts, duties or governmental
charges of any kind which are not yet delinquent or are being
-19-
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
-20-
could result in the imposition of either a penalty assessed pursuant to Section
502(i) of ERISA or a tax imposed by Section 4975 of the Code, in each case
applicable to the Company, any of its subsidiaries or any Employee Plan. All
Employee Plans are in compliance in all material respects with the currently
applicable requirements prescribed by all statutes, orders, or governmental
rules or regulations currently in effect with respect to such Employee Plans,
including, but not limited to, ERISA and the Code and, to the best knowledge of
the Company, there are no pending or threatened claims, lawsuits or arbitrations
(other than routine claims for benefits) which have been asserted or instituted
against the Company, any of its subsidiaries, any Employee Plan or the assets of
any trust for any Employee Plan. Each Employee Plan which is a group health plan
(within the meaning of Section 5000(b)(i) of the Code) complies with and has
been maintained and operated in accordance with each of the requirements of
Section 162(k) of the Code as in effect for years beginning prior to 1989,
Section 4980B of the Code for years beginning after December 31, 1988 and Part 6
of Subtitle B of Title I of ERISA. Each Employee Plan intended to qualify under
Section 401(a) of the Code does so qualify, and the trusts created thereunder
are exempt from tax under the provisions of Section 501(a) of the Code. Each
Employee Plan that has been terminated by the Company or any of its subsidiaries
which was intended to qualify under Section 401(a) of the Code has received a
final determination of such qualification from the Internal Revenue Service.
All contributions or payments required to be made or accrued before the
Effective Time under the terms of any Employee Plan will have been made or
accrued by the Company or by its subsidiaries, as applicable, by the Effective
Time. No Employee Plan subject to Section 412 of the Code has incurred any
"accumulated funding deficiency" (as defined in ERISA), whether or not waived.
Neither the Company nor any of its subsidiaries has incurred or reasonably
expects to incur any liability to the Pension Benefit Guaranty Corporation with
respect to any Employee Plan. Neither the Company nor any of its subsidiaries
has incurred or reasonably expects to incur any withdrawal liability with
respect to any "multiemployer plan" (as defined in Section 3(37) of ERISA).
There have been no changes in the operation or interpretation of any of the
Employee
Plans since the most recent annual report or actual report which would have
any material effect on the cost of operating or maintaining such Employee Plans.
Section 3.15 Labor Matters.
-------------
(a) Section 3.15(a) to the Company Disclosure Schedule sets forth a list of
all Employees of the Company and its subsidiaries and their respective position,
salaries and other compensation owed, payable or to be paid to them.
(b) Except as set forth in Section 3.15(b) to the Company Disclosure
Schedule (i) neither the Company nor any of its subsidiaries is a party to any
outstanding employment agreements or contracts with directors, officers,
employees or consultants that are not terminable at will, or that provide for
the payment of any bonus or commission; (ii) neither the Company nor any of its
subsidiaries is a party to any agreement, policy or practice that requires it to
pay termination or severance pay to salaried, non-exempt or hourly employees
(other than as required by law); (iii) neither the Company nor any of its
subsidiaries is a party to any collective bargaining agreement or other labor
-21-
union contract applicable to persons employed by the Company or its
subsidiaries, nor does the Company or any of its subsidiaries know of any
activities or proceedings of any labor union to organize any such employees.
(c) Except as set forth in Section 3.15(c) to the Company Disclosure
Schedule: (i) the Company and all of its subsidiaries are in compliance in all
material respects with all applicable laws relating to employment and employment
practices, wages, hours, and terms and conditions of employment; (ii) there is
no unfair labor practice charge or complaint pending before the National Labor
Relations Board ("NLRB"); (iii) there is no labor strike, material slowdown or
material work stoppage or lockout actually pending or, to the Company's
knowledge, threatened against or affecting the Company or any of its
subsidiaries, and neither the Company nor any of its subsidiaries has
experienced any strike, material slowdown or material work stoppage or lockout
since June 30, 1995; (iv) there is no representation claim or petition pending
before the NLRB and no question concerning representation exists relating to the
employees of the Company or any of its subsidiaries; (v) there are no charges
with respect to or relating to the Company or any of its subsidiaries pending
before the Equal Employment Opportunity Commission or any state, local or
foreign agency responsible for the prevention of unlawful employment practices;
(vi) neither the Company nor any of its subsidiaries has formal notice from any
Federal, state, local or foreign agency responsible for the enforcement of labor
or employment laws of an intention to conduct an investigation of the Company or
any of its subsidiaries and no such investigation is in progress.
Section 3.16 Proxy Statement. The Proxy Statement will comply in all
---------------
material respects with the applicable requirements of the Exchange Act and the
rules and regulations thereunder except that no representation or warranty is
being made by the Company with respect to any information supplied to the
Company by Parent or Purchaser specifically for inclusion in the Proxy
Statement. The Proxy Statement will not, at the time the Proxy Statement (or
any amendment or supplement thereto) is filed with the SEC or first sent to
shareholders, at the time of the Company Shareholders' Meeting or at the
Effective Time, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
Section 3.17 Brokers. No broker, finder or investment banker (other than
-------
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & 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 ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ & 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.
------------------
-22-
(a) The operations of the Company and its subsidiaries comply in all
material respects with all applicable federal, state and local environmental
laws, statutes and regulations.
(b) The operations of the Company and its subsidiaries are not the
subject of any judicial or administrative proceeding alleging the violation of
any federal, state or local environmental law, statute or regulation.
(c) The operations of the Company and its subsidiaries are not the
subject of any federal or state investigation pursuant to which the Company or
any subsidiary has been ordered to respond to a release of any hazardous or
toxic waste or substance into the environment in violation of law.
(d) Each of the Company and its subsidiaries has not filed any notice
under federal or state law indicating past or present treatment, storage or
disposal requiring a Part B permit or designation of "interim status" as defined
under 40 C.F.R. Parts 260-270 or any state equivalent of a hazardous or toxic
waste or substance as defined therein or reporting a spill or release of a
hazardous or toxic waste or substance into the environment except in accordance
with applicable law.
(e) Each of the Company and its subsidiaries has not released, as
defined in the Comprehensive Environmental Response Compensation and Liability
Act (42 U.S.C. (S)9601 et seq.), any hazardous substance as defined therein into
-- ---
the environment, except where such release could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Company and its subsidiaries, taken as a whole;
(f) None of the operations of the Company or any subsidiary involve
the generation, transportation, treatment or disposal as defined under 40 C.F.R.
Parts 260-270 or any state equivalent of hazardous waste as defined therein
requiring a Part B permit or designation of "interim status".
(g) No underground storage tanks are on the premises of the Company or
any subsidiary.
(h) No lien in favor of any governmental authority for (i) any
liability under federal or state environmental laws or regulations, or (ii)
damages arising from or costs incurred by such governmental authority in
response to a release of a hazardous or toxic waste or substance into the
environment has been filed or attached to the premises currently owned or leased
by the Company or any subsidiary.
(i) All material permits necessary for the continued conduct of the
business of the Company and its subsidiaries for the transportation, transfer,
recycling, storage, use, treatment, manufacture, investigation or removal of any
hazardous or toxic waste or substance have been obtained by the Company or any
subsidiary. All such permits are valid and in full force and effect. Each of
the Company and the its subsidiaries
-23-
has complied in all material respects with all covenants and conditions of any
permits and no circumstances exist which could cause any permit to be revoked,
modified or rendered non-renewable upon the payment of the permit fee or, to the
best of the Company's knowledge, which could impose upon the Company, any of the
Company's subsidiaries or the Surviving Corporation the obligation to obtain any
additional permits for such activities, absent a change in operations.
(j) Neither the Company nor any subsidiary has exposed any persons in
a material manner to, nor received notice of any claim of injury due to exposure
of any person to, hazardous or toxic wastes or substances manufactured, stored,
used, distributed, disposed of, released or controlled by the Company or any
subsidiary.
(k) No hazardous or toxic wastes or substances are present on any
property which has been owned, leased or occupied by the Company or any
subsidiary, for the conduct of its business which could reasonably be expected
to result in a Material Adverse Effect on the Company and its subsidiaries taken
as a whole.
(l) No claim, complaint, or administrative proceeding has been brought
and is currently pending against the Company or any subsidiary relating to any
liability of the Company or any subsidiary existing or threatened with respect
to the release of hazardous or toxic wastes or substances or as to the
investigation or remediation of hazardous or toxic wastes or substances.
As used herein "FEDERAL, STATE AND LOCAL ENVIRONMENTAL LAWS, STATUTES OR
REGULATIONS" means any and all applicable laws, rules, regulations, orders,
treaties, statutes and codes promulgated by any local, state, federal or
international governmental authority or agency which has jurisdiction over the
environment and any portion of the current operations of the Company and its
subsidiaries, and which prohibits, regulates or controls any hazardous material
or the transportation, storage, transfer, recycling, use, treatment,
manufacture, investigation, removal, remediation, release, sale or distribution
of hazardous materials including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. (S)9601 et
--
seq.), the Hazardous Material Transportation Act (49 U.S.C. (S)1801 et seq.),
--- -- ---
the Resource Conservation and Recovery Act (42 U.S.C. (S)6901 et seq.), the
-- ---
Federal Water Pollution Control Act (33 U.S.C. (S)1251 et seq.), the Clean Air
-- ---
Act (42 U.S.C. (S)7401 et seq.), the Toxic Substances Control Act, as amended
-- ---
(15 U.S.C. (S)2601 et seq.), as these laws have been amended or supplemented to
-- ---
date and any analogous state or local statutes and the regulations promulgated
to date pursuant thereto.
As used herein, "HAZARDOUS OR TOXIC WASTE OR SUBSTANCE" means those
substances which are regulated by or form the basis of liability under any
federal, state and local environmental laws, statutes or regulations because
they are radioactive, toxic or hazardous, including, without limitation: (a)
asbestos, (b) oil and petroleum products, (c) explosives, (d) radioactive
substances, pollutants or wastes, (e) urea formaldehyde-containing building
materials, (f) polychlorinated biphenyls, (g) radon gas, and (h) ultra-hazardous
or toxic substances, pollutants or wastes.
-24-
Section 3.19 Disclosure. The Company has provided or made available to
----------
Parent copies of all documents and information requested by Parent pursuant to
Parent's diligence request lists dated (or provided pursuant to cover letters
dated) September 12, 13 and 20, 1996, to the extent the items on such lists are
applicable to the Company or any of its subsidiaries. Except as described in
Section 3.19 of the Company Disclosure Schedule, the Company has made available
to Parent true and correct copies of the Company's Certificate of Incorporation,
bylaws and all minutes of meetings or actions by written consent of the Board of
Directors (including without limitation all committees thereof) and shareholders
of the Company and its subsidiaries, which minutes and actions by written
consent reflect all actions taken by the Board of Directors (including without
limitation all committees thereof ) and shareholders of the Company and its
subsidiaries. To the extent Section 3.19 of the Company Disclosure Schedules
lists minutes not made available to Parent, Section 3.19 of the Company
Disclosure Schedule sets forth all actions taken at such meetings and all
material matters discussed at such meetings.
Section 3.20 Insurance. Section 3.20 to the Company Disclosure Schedule
---------
sets forth a true and complete list of all insurance policies in force at the
date hereof, with respect to the assets, properties or operations of each of the
Company and its subsidiaries, together with a summary description of the
premiums currently paid thereon, the hazards insured against and the dollar
amount of coverage (indicating deductibles, if any). True and complete copies
of all such insurance policies will be made available to Purchaser by the
Company. Such policies will not be terminated as a result of the Merger and
will be effective as policies of the Surviving Corporation, subject to payment
of applicable premiums. Such policies also are in full force and effect with
reputable insurers in such amounts and insure against such losses and risks
(including product liability) as are adequate to protect the properties and
businesses of each of the Company and its subsidiaries. All such insurance is
of like character and amount as is carried by like businesses similarly
situated.
Section 3.21 Rights Agreement. The Company has provided Parent with a
----------------
complete and correct copy of the Rights Agreement. The amendment to the Rights
Agreement attached hereto as Section 3.21 of the Company Disclosure Schedule has
been duly authorized by the Board of Directors of the Company and has been duly
executed by the Company, and, accordingly, the execution of this Agreement, the
announcement or making of the Offer, the acquisition of Shares pursuant to the
Merger and the other transactions contemplated by this Agreement will not cause
the Rights to become exercisable or result in either Parent or Purchaser or any
of their affiliates to become an "Acquiring Person" (as defined in the Rights
Agreement) or the occurrence of a "Distribution Date", a "Section 11(a)(ii)
Event", or a "Section 13 Event" (as such terms are defined in the Rights
Agreement).
Section 3.22 State Takeover Statutes. The Board of Directors of the
-----------------------
Company has approved the Merger and this Agreement (and the transactions
contemplated hereby), and such approval is sufficient to render inapplicable to
the Merger, this Agreement and the transactions contemplated hereby Section 912
of the NYBCL. No other "business combination," "fair price," "moratorium,"
"control share acquisition," or other anti-
-25-
takeover statute or similar statute or regulations, applies or purports to apply
to the Offer, the Merger, this Agreement or any of the transactions contemplated
hereby.
Section 3.23 Contracts and Commitments.
-------------------------
(a) Except as disclosed in Section 3.23 of the Company Disclosure Schedule,
neither the Company nor any of its subsidiaries is a party or subject to:
(i) any plan, contract or arrangement which requires aggregate
payments by the Company or any of its subsidiaries in excess of $50,000, written
or oral, providing for bonuses, pensions, deferred compensation, severance pay
or benefits, retirement payments, profit-sharing, or the like;
(ii) any joint marketing, joint development or joint venture
contract or arrangement or any other agreement which has involved or is expected
to involve a sharing of profits with other persons;
(iii) any existing OEM agreement, distribution agreement, volume
purchase agreement, or other similar agreement in which the annual amount
involved in 1995 exceeded or is expected to exceed in 1996 $50,000 in aggregate
amount or pursuant to which the Company or any of its subsidiaries has granted
or received most favored customer provisions or exclusive marketing rights
related to any product, group of products or territory;
(v) any lease for real or personal property in which the amount of
payments which the Company or any of its subsidiaries is required to make on an
annual basis exceeds $25,000;
(vi) any agreement, contract, mortgage, indenture, lease,
instrument, license, franchise, permit, concession, arrangement, commitment or
authorization which may be, by its terms, terminated or breached by reason of
the execution of this Agreement, the Merger, or the consummation of the
transactions contemplated hereby or thereby;
(vii) except for trade indebtedness incurred in the ordinary course
of business, any instrument evidencing or related in any way to indebtedness in
excess of $50,000 incurred in the acquisition of companies or other entities or
indebtedness in excess of $50,000 for borrowed money by way of direct loan, sale
of debt securities, purchase money obligation, conditional sale, guarantee,
indemnification or otherwise;
(viii) any license agreement, either as licensor or licensee
(excluding nonexclusive object code software licenses granted to end-users in
the ordinary course of business that permit use of software products by a
limited number of users without a right to modify, distribute or sublicense the
same ("END-USER LICENSES"));
(ix) any contract containing covenants purporting to limit the
Company's freedom or that of any of its subsidiaries to compete in any line of
business or in any geographic area or with any third party;
-26-
(x) any agreement, contract or commitment relating to capital
expenditures and involving future obligations in excess of $50,000; or
(xi) any other agreement, contract or commitment which is material
to the Company and its subsidiaries taken as a whole.
(b) Except as disclosed in Section 3.23 (b) of the Company Disclosure
Schedule, each agreement, contract, mortgage, indenture, plan, lease,
instrument, permit, concession, franchise, arrangement, license and commitment
listed in Section 3.23 of the Company Disclosure Schedule is valid and binding
on the Company or its subsidiaries, as applicable and assuming due and valid
authorization, execution and delivery by all counter parties, and is in full
force and effect, and neither the Company nor any of its subsidiaries, nor to
the knowledge of the Company, any other party thereto, has breached any material
provision of, or is in material default under the terms of, any such agreement,
contract, mortgage, indenture, plan, lease, instrument, permit, concession,
franchise, arrangement, license or commitment.
(c) There is no agreement, judgment, injunction, order or decree binding
upon the Company or any of its subsidiaries which has or could reasonably be
expected to have the effect of prohibiting or materially impairing any material
current business practice of the Company or its subsidiaries, any acquisition of
material property by the Company or its subsidiaries or the conduct of business
by the Company or its subsidiaries as currently conducted or as proposed to be
conducted by the Company or its subsidiaries.
(d) Each agreement or arrangement under which the Company or any of its
subsidiaries will incur legal, accounting or financial advisor expenses as a
result of the transactions contemplated by this Agreement, and the maximum
liability of the Company or any such subsidiary under each such agreement or
arrangement, is described in Section 3.23 of the Company Disclosure Schedule.
Section 3.24 Support Agreements.
------------------
(a) As part of Section 3.24 of the Company Disclosure Schedule, the Company
has provided to Parent a list, which is complete in all materials respects, of
all customers that are parties to agreements or other arrangements pursuant to
which the Company is obligated to provide support services with respect to the
Company Products (such agreements, as supplemented below, are referred to
collectively as the "LICENSE AGREEMENTS"). Except as set forth in Section 3.24
of the Company Disclosure Schedule, none of the License Agreements contains
terms that, individually or in the aggregate with the other License Agreements,
could reasonably be expected to cause a Material Adverse Effect. The versions
of the Company Products currently supported by the Company or any of its
subsidiaries are set forth in Section 3.24 of the Company Disclosure Schedule.
(b) Except as set forth in Section 3.24(b) of the Company Disclosure
Schedule, neither the Company nor any of its subsidiaries has granted any third
party the
-27-
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
-28-
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. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & Company
----------------------------
(the "FINANCIAL ADVISOR") has rendered to the Board of Directors of the Company
a written opinion dated as of September 23, 1996, a copy of which has been
provided to Purchaser, to the effect that the consideration to be received by
the shareholders of the Company pursuant to the Merger is fair to such
shareholders from a financial point of view. Such opinion was delivered orally
to the Company's Board of Directors not later than the time that consummation of
the transactions contemplated hereby was authorized, approved and adopted by the
Company's Board of Directors, and was delivered in writing to the Company's
Board of Directors prior to the execution of this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Parent and Purchaser represent and warrant to the Company as follows:
Section 4.1 Organization. Each of Parent and Purchaser is a corporation
------------
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has the requisite corporate power and
authority and any necessary governmental approvals to own, operate or lease the
properties that it purports to own, operate or lease and to carry on its
business as it is now being conducted, except for such failure which, when taken
together with all other such failures, could not reasonably be expected to have
a Material Adverse Effect (as defined below) on Parent and Purchaser. When used
in connection with Purchaser and Parent, the term "MATERIAL ADVERSE EFFECT"
means any material adverse effect on the business, operations, properties
(including tangible properties), condition (financial or otherwise), assets or
liabilities of Parent and Purchaser taken as a whole.
Section 4.2 Authorization; Validity of Agreement; Necessary Action. Each
------------------------------------------------------
of Parent and Purchaser has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution, delivery and performance by Parent and Purchaser of this
Agreement, and the consummation of the Merger and of the transactions
contemplated hereby, have been duly authorized by the Boards of Directors of
Parent and Purchaser and by Parent as the sole shareholder of Purchaser and no
other corporate or shareholder action on the part of Parent and Purchaser is
necessary to authorize the execution and delivery by Parent and Purchaser of
this Agreement and the consummation of the transactions contemplated hereby.
This Agreement has been duly executed and delivered by Parent and Purchaser, as
the case may be, and, assuming due and valid authorization, execution and
delivery hereof
-29-
by the Company, and is a valid and binding obligation of each of Parent and
Purchaser, as the case may be, enforceable against each of them in accordance
with its respective terms.
Section 4.3 Consents and Approvals; No Violations. Except for the filings
-------------------------------------
set forth on Section 4.3 of the Purchaser Disclosure Schedule delivered to the
Company on or before the date hereof (the "PURCHASER DISCLOSURE SCHEDULE") and
the filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the HSR Act, foreign laws governing
competition or antitrust matters, state securities or blue sky laws, and the
NYBCL or the DGCL, neither the execution, delivery or performance of this
Agreement by Parent or Purchaser nor the consummation by Parent or Purchaser of
the transactions contemplated hereby nor compliance by Parent or Purchaser with
any of the provisions hereof will (i) conflict with or result in any breach of
any provision of the Certificate of Incorporation or the bylaws of Parent or
Purchaser, (ii) require any filing with, or permit, authorization, consent or
approval of, any Governmental Entity on the part of Parent or Purchaser, (iii)
result in a violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
amendment, cancellation or acceleration) under, any of the terms, conditions or
provisions of any agreement to which Parent or Purchaser is a party, or (iv)
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to Parent or Purchaser, any of its subsidiaries or any of their
properties or assets, excluding from the foregoing clauses (ii), (iii) and (iv)
such violations, breaches, rights of termination, amendment, cancellation or
acceleration or defaults which could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on Parent and
Purchaser, taken as a whole, and which will not materially impair the ability of
Parent or Purchaser to consummate the transactions contemplated hereby.
Section 4.4 Financing Arrangements. At the Effective Time, Parent will
----------------------
have and will make available to Purchaser all funds necessary to satisfy all of
Purchaser's and Parent's obligations under this Agreement and in connection with
the transactions contemplated hereby, including without limitation, the
obligations to purchase all outstanding Shares pursuant to the Merger.
Section 4.5 No Prior Activities. Except for obligations or liabilities
-------------------
incurred in connection with its incorporation or organization or the negotiation
and consummation of this Agreement and the transactions contemplated hereby
(including any financing), Purchaser has not incurred any obligations or
liabilities, and has not engaged in any business or activities of any type or
kind whatsoever or entered into any agreements or arrangements with any person
or entity. Purchaser is a wholly owned subsidiary of Parent.
Section 4.6 Brokers. No broker, finder or investment banker is entitled
-------
to any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by and
on behalf of Parent or Purchaser.
Section 4.7 Offer Documents. None of the information supplied in writing
---------------
by Parent or Purchaser (the "PURCHASER INFORMATION") for inclusion in the Proxy
Statement,
-30-
or in any amendments thereof or supplements thereto, will on the date the Proxy
Statement is first mailed to shareholders contain any statement which, at such
time and in light of the circumstances under which it will be made, be false or
misleading with respect to any material fact, or omit to state any material fact
necessary in order to make the statements therein not false or misleading.
Parent and Purchaser will timely file with the SEC a Schedule 13e-3 relating to
the transactions contemplated hereby, and such Schedule 13e-3 will comply in all
material respects with the requirements of the Exchange Act and the rules and
regulations thereunder. Notwithstanding the foregoing, Parent and Purchaser do
not make any representation or warranty with respect to any information that is
supplied by the Company or its accountants, counsel or other authorized
representatives for use in the Proxy Statement or the Schedule 13e-3.
Section 4.8. Litigation. There are no claims, actions, suits, proceedings
----------
or investigations pending or, to the best knowledge of Parent or Purchaser,
threatened against Parent or any of its subsidiaries, or any properties or
rights of Parent or any of its subsidiaries, before any court, administrative,
governmental or regulatory authority or body, domestic or foreign, which would
prevent or delay the performance of this Agreement.
ARTICLE V
COVENANTS
Section 5.1 Interim Operations of the Company. The Company covenants and
---------------------------------
agrees that, except (i) as expressly contemplated by this Agreement, (ii) as set
forth in Section 5.1 of the Company Disclosure Schedule or (iii) as agreed in
writing by Purchaser, after the execution and delivery of this Agreement and
continuing until the earlier of the termination of this Agreement or the
Effective Time:
(a) the business of the Company and its subsidiaries shall be conducted
only in the ordinary and usual course and, to the extent consistent therewith,
each of the Company and its subsidiaries shall use its reasonable commercial
efforts to preserve its business organization intact and maintain its existing
relations with customers, suppliers, employees, creditors and business partners;
(b) the Company shall not, directly or indirectly, amend its or any of its
subsidiaries' certificate of incorporation or bylaws or similar organizational
documents;
(c) the Company shall not, and it shall not permit its subsidiaries to:
(i)(A) declare, set aside or pay any dividend or other distribution payable in
cash, stock or property with respect to the Company's capital stock or that of
its subsidiaries, or (B) redeem, purchase or otherwise acquire directly or
indirectly any of the Company's capital stock (or options, warrants, calls,
commitments or rights of any kind to acquire any shares of capital stock) or
that of its subsidiaries; (ii) issue, sell, pledge, dispose of or encumber any
additional shares of, or securities convertible into or exchangeable for, or
options, warrants, calls, commitments or rights of any kind to acquire, any
shares of capital stock
-31-
of any class of the Company or its subsidiaries, other than Shares issued upon
the exercise of Options outstanding on the date hereof in accordance with the
Option Plans as in effect on the date hereof; or (iii) split, combine or
reclassify the outstanding capital stock of the Company or of its subsidiaries;
(d) the Company shall not, and it shall not permit its subsidiaries to,
acquire or agree to acquire, or dispose of or agree to dispose of, any material
assets, either by purchase, merger, consolidation, sale of shares in any of its
subsidiaries or otherwise;
(e) the Company shall not, and it shall not permit its subsidiaries to,
transfer, lease, license, sell, mortgage, pledge, dispose of, or encumber any of
the Company Intellectual Property or any material assets, other than pursuant to
grants of nonexclusive End-User Licenses in the ordinary course of business
consistent with past practice;
(f) neither the Company nor its subsidiaries shall: (i) grant any increase
in the compensation payable or to become payable by the Company or any of its
subsidiaries to any of its officers, directors or key employees, other than
regularly scheduled pay increases of not more than 10% per annum; or (ii)(A)
adopt any new, or (B) except as contemplated by Section 2.4, amend or otherwise
increase, or accelerate the payment or vesting of the amounts payable or to
become payable under any existing, bonus, incentive compensation, deferred
compensation, severance, profit sharing, stock option, stock purchase,
insurance, pension, retirement or other employee benefit plan, agreement or
arrangement; or (iii) enter into or modify or amend any employment or severance
agreement with or, except in accordance with the existing policies of the
Company set forth in Section 5.1 of the Company Disclosure Schedule or as
required by applicable law, grant any severance or termination pay to any
officer, director or employee of the Company or any of its subsidiaries; or (iv)
enter into any collective bargaining agreement;
(g) neither the Company nor any of its subsidiaries shall materially
modify, amend or, without Parent's prior written consent, which consent shall
not be withheld unreasonably, terminate any of its material contracts or waive,
release or assign any material rights or claims;
(h) neither the Company nor any of its subsidiaries shall: (i) incur or
assume any indebtedness in amounts not consistent with past practice; (ii)
materially modify any indebtedness or other liability; (iii) assume, guarantee,
endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other person, other than
immaterial amounts in the ordinary course of business consistent with past
practice and other than for any subsidiary; (iv) make any loans, advances or
capital contributions to, or investments in, any other person (other than to
wholly owned subsidiaries of the Company or customary advances to employees in
accordance with past practice); or (v) enter into any material commitment or
transaction;
(i) neither the Company nor any of its subsidiaries shall change any of the
accounting methods, practices or policies used by it unless required by GAAP;
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(j) the Company shall not, and it shall not permit its subsidiaries to,
make or agree to make any new capital expenditures in excess of $100,000 in the
aggregate;
(k) the Company shall not, and it shall not permit its subsidiaries to,
make any material tax election (unless required by law) or settle or compromise
any material income tax liability;
(l) the Company shall not, and it shall not permit its subsidiaries to (i)
waive the benefits of, or agree to modify in any material manner, any
confidentiality, standstill or similar agreement to which the Company or any of
its subsidiaries is a party, or (ii) pay, discharge or satisfy any actions,
suits, proceedings or claims, other than the payment, discharge or satisfaction,
in each case in complete satisfaction, and with a complete release, of such
matter with respect to all parties to such matter, of actions, suits,
proceedings or claims that do not result in or create, individually or in the
aggregate, a Material Adverse Effect; provided, however, that if the Company
determines to make any such payment, discharge or satisfaction, prior to
committing to make any such payment, discharge or satisfaction the Company shall
give Parent advance written notice of such determination specifying the amount
to be paid and any other terms and conditions thereof, and if Parent, within 15
days of such notice, shall instruct the Company not to make or commit to make
such payment, discharge or satisfaction, then the Company shall not make or
commit to make such payment, discharge or satisfaction; provided, further,
however, that, if Parent provides any such instructions, and the proposed
resolution of such matter does not or would not by itself result in a Material
Adverse Effect, and is in complete satisfaction, and includes a full release, of
such matter, with respect to all parties to such matter, without any payment or
other obligation of Parent or Purchaser, for purposes of Section 6.3(d), such
matter shall not be considered a threatened, or instituted and continuing,
action, suit or proceeding, and for purposes of Sections 6.3(a) and (e) any
adverse effect against the Company in any such matter shall not be considered or
aggregated in determining whether a Material Adverse Effect has occurred;
provided, further, however, that, any such proposed payment, discharge or
satisfaction shall be considered or aggregated in determining whether a Material
Adverse Effect has occurred;
(m) the Company shall not, and it shall not permit its subsidiaries to,
commence a lawsuit other than (i) for the routine collection of bills or (ii) in
such cases where the Company in good faith determines that the failure to
commence suit would result in a material impairment of a valuable aspect of the
Company's business, provided that the Company consults with Parent prior to
filing such suit;
(n) the Company shall not, and it shall not permit its subsidiaries to,
make any payment or incur any liability or obligation for the purpose of
obtaining any consent from any third party to the transactions contemplated
hereby, other than any payment, obligation or liability that does not create,
individually or in the aggregate, a Material Adverse Effect; and
-33-
(o) neither the Company nor any of its subsidiaries will enter into an
agreement, contract, commitment or arrangement to do any of the foregoing, or to
authorize, recommend, propose or announce an intention to do any of the
foregoing.
Section 5.2 Access; Confidentiality. The Company shall (and shall cause
-----------------------
each of its subsidiaries to) (a) afford to the officers, employees, accountants,
counsel, and other representatives of Parent, reasonable access to and the right
to inspect and observe, during normal business hours during the period prior to
the Effective Time, all its personnel, accountants, representatives, properties,
books, contracts, insurance policies, commitments and records, offices, plants
and other facilities, (b) make available promptly to Parent (i) a copy of each
report, schedule, registration statement and other document filed or received by
it during such period pursuant to the requirements of federal securities laws
and (ii) all other information concerning its business, properties and personnel
(including, without limitation, insurance policies) as Parent may reasonably
request. Parent will treat any such information in accordance with the
provisions of a letter agreement dated September 13, 1996 between the Company
and Parent (the "CONFIDENTIALITY AGREEMENT"). No investigation conducted by
Parent shall impact any representation or warranty given by the Company to
Parent hereunder.
Section 5.3 Additional Agreements. Subject to the terms and conditions
---------------------
herein provided, each of the parties hereto shall use all reasonable commercial
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations, or to remove any injunctions or other impediments or delays, legal
or otherwise, to consummate and make effective the Merger and the other
transactions contemplated by this Agreement. The Company also agrees to timely
file all SEC Documents, including without limitation its Annual Report on Form
10-K for the fiscal year ended June 30, 1996, which Form 10-K shall include
consolidated financial statements that (a) are prepared from, and accord with,
the books and records of the Company and its subsidiaries, have been prepared in
accordance with United States generally accepted accounting principles applied
on a consistent basis during the periods involved (except as may be indicated in
the notes thereto) and fairly present the consolidated financial position and
the consolidated results of operations and cash flows (and changes in financial
position, if any) of the Company and its consolidated subsidiaries as of the
respective dates and for the respective periods thereof, and (b) are consistent
in all material respects with the draft consolidated financial statements (and
related notes thereto) set forth in Section 5.3 of the Company Disclosure
Schedule. The Company also will pay all premiums or other payments required to
be made with respect to the insurance policies set forth in Section 3.20 of the
Company Disclosure Schedule, and shall renew any such policy if any such policy
will otherwise terminate prior to the Effective Time.
Section 5.4 Consents and Approvals; HSR Act.
-------------------------------
(a) Each of the Company, Parent and Purchaser will take all reasonable
actions necessary to comply promptly with all legal requirements which may be
imposed on it with respect to this Agreement and the transactions contemplated
hereby (which actions shall include, without limitation, furnishing all
information required under the HSR Act and in
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connection with approvals of or filings with any other Governmental Entity) and
will promptly cooperate with and furnish information to eachother in connection
with any such requirements imposed upon any of them or any of their subsidiaries
in connection with this Agreement and the transactions contemplated hereby. Each
of the Company, Parent and Purchaser will, and will cause its subsidiaries to,
take all reasonable actions necessary to obtain (and will cooperate with each
other in obtaining) any consent, authorization, order or approval of, or any
exemption by, any Governmental Entity or other public or private third party
required to be obtained or made by Parent, Purchaser, the Company or any of
their subsidiaries in connection with the Merger or the taking of any action
contemplated thereby or by this Agreement. Each party shall promptly inform the
other party of any communication with, and any proposed understanding,
undertaking, or agreement with, any Governmental Entity regarding any such
filings or any such transaction. Neither party shall participate in any meeting
with any Governmental Entity in respect of any such filings, investigation, or
other inquiry without giving the other party notice of the meeting and, to the
extent permitted by such Governmental Entity, the opportunity to attend and
participate. Notwithstanding the foregoing, it is expressly understood and
agreed that Parent, Purchaser and the Company shall have no obligation to
litigate or contest any administrative or judicial action or proceeding or any
Order beyond January 31, 1997.
(b) Notwithstanding anything to the contrary in this Agreement, including
without limitation Section 5.4(a), as a result of filings made with
Governmental Entities pursuant to this Agreement, neither Parent nor any of its
subsidiaries, nor the Company, shall be required to divest any of their
respective businesses, product lines or assets, or agree to any other limitation
with respect to its business.
(c) In connection with any action, suit or proceeding of the types
described in Section 6.3(d), Parent, Purchaser and the Company agree to consult
with each other in formulating strategies, including without limitation the
retention of counsel in situations involving multiple defendants, and in taking
any other action material to the outcome of any such action, suit or proceeding.
Section 5.5 No Solicitation.
---------------
(a) The Company and its officers, directors, employees, representatives and
agents shall immediately and as of the date hereof cease any discussions or
negotiations with any parties that may be ongoing with respect to a Takeover
Proposal (as hereinafter defined). The Company shall not authorize or permit
any of its officers, directors or employees or any investment banker, financial
advisor, attorney, accountant or other representative retained by it or any of
its subsidiaries to (i) solicit, initiate or encourage (including by way of
furnishing information), or take any other action to facilitate, any inquiries
or the making of any proposal which constitutes, or may reasonably be expected
to lead to, any Takeover Proposal or (ii) participate in any discussions or
negotiations regarding any Takeover Proposal; provided, however, that, if at any
time prior to the Effective Time, the Board of Directors of the Company
determines in good faith, based on the written opinion of its legal counsel as
to legal matters, that it is necessary to do so in order to comply with its
fiduciary duties to the Company's shareholders under applicable
-35-
law, the Company may, in response to an unsolicited Takeover Proposal, and
subject to compliance with Section 5.5(c), (x) furnish information with respect
to the Company to any person pursuant to a confidentiality agreement and (y)
participate in negotiations regarding such Takeover Proposal. Without limiting
the foregoing, it is understood that any violation of the restrictions set forth
in the preceding sentence by any director or executive officer of the Company or
any of its subsidiaries or any investment banker, financial advisor, attorney,
accountant or other representative of the Company or any of its subsidiaries
shall be deemed to be a breach of this Section 5.5(a) by the Company. For
purposes of this Agreement, "TAKEOVER PROPOSAL" means any inquiry, proposal or
offer from any person relating to any direct or indirect acquisition or purchase
of a substantial amount of assets of the Company or any of its subsidiaries or
of over 20% of any class of equity securities of the Company or any of its
subsidiaries, any tender offer or exchange offer that if consummated would
result in any person beneficially owning 20% or more of any class of equity
securities of the Company or any of its subsidiaries, or any merger,
consolidation, business combination, sale of substantially all the assets,
recapitalization, liquidation, dissolution or similar transaction involving the
Company or any of its subsidiaries, other than the transactions contemplated by
this Agreement.
(b) Except as set forth in this Section 5.5, neither the Board of Directors
of the Company nor any committee thereof shall (x) withdraw or modify, or
propose to withdraw or modify, in a manner adverse to Parent, the approval or
recommendation by such Board of Directors or such committee of this Agreement or
the Merger, (y) approve or recommend, or propose to approve or recommend, any
Takeover Proposal or (z) cause the Company to enter into any agreement with
respect to any Takeover Proposal. Notwithstanding the foregoing, in the event
that prior to the Effective Time the Board of Directors of the Company
determines in good faith, based on the written opinion of its legal counsel as
to legal matters, that it is necessary to do so in order to comply with its
fiduciary duties to the Company's shareholders under applicable law, the Board
of Directors of the Company may withdraw or modify its approval or
recommendation of this Agreement and the Merger, approve or recommend a Superior
Proposal (as defined below) or cause the Company to enter into an agreement with
respect to a Superior Proposal, but in each case only at a time that is after
the second business day following Parent's receipt of written notice (a "NOTICE
OF SUPERIOR PROPOSAL") advising Parent that the Board of Directors of the
Company has received a Superior Proposal, specifying the material terms and
conditions of such Superior Proposal and identifying the person making such
Superior Proposal. For purposes of this Agreement, a "SUPERIOR PROPOSAL" means
any bona fide Takeover Proposal to acquire, directly or indirectly, for
consideration consisting of cash and/or securities, more than 50% of the Shares
then outstanding or all or substantially all the assets of the Company and
otherwise on terms which the Board of Directors of the Company determines in its
good faith judgment (based on the advice of a financial advisor of nationally
recognized reputation) to be more favorable to the Company's shareholders than
the Merger.
(c) In addition to the obligations of the Company set forth in paragraphs
(a) and (b) of this Section 5.5, the Company shall immediately advise Parent
orally and in writing of any request for information or of any Takeover
Proposal, or any inquiry with
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respect to or which could lead to any Takeover Proposal, the material terms and
conditions of such request, Takeover Proposal or inquiry and the identity of the
person making such request, Takeover Proposal or inquiry.
Section 5.6 Publicity. Each party's initial press release with respect to
---------
the execution of this Agreement has been previously approved by the other
parties. Following such initial press releases, so long as this Agreement is in
effect, neither the Company, Parent nor any of their respective affiliates shall
issue or cause the publication of any press release or other public announcement
with respect to the Merger, this Agreement or the other transactions between the
parties contemplated hereby without the prior consultation of the other party,
except as may be required by law or by any listing agreement with a national
securities exchange or trading market.
Section 5.7 Notification of Certain Matters. The Company shall give
-------------------------------
prompt notice to Parent and Purchaser, and Parent and Purchaser shall give
prompt notice to the Company, of (i) the occurrence or non-occurrence of any
event the occurrence or non-occurrence of which would cause any representation
or warranty contained in this Agreement to be untrue or inaccurate in any
material respect at or prior to the Effective Time and (ii) any material failure
of the Company, Parent or Purchaser, as the case may be, to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it hereunder; provided, however, that the delivery of any notice pursuant to
this Section 5.7 shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice. The Company also shall give
prompt notice to Parent, and Parent or Purchaser shall give prompt notice to the
Company, of:
(i) any notice or other communication from any person alleging that
the consent of such person is or may be required in connection with the
transactions contemplated by this Agreement;
(ii) any notice or other communication from any Governmental Entity in
connection with the transactions contemplated by this Agreement;
(iii) any actions, suits, claims, investigations or proceedings
commenced or, to the best of its knowledge, threatened against, relating to or
involving or otherwise affecting it or any of its subsidiaries or which relate
to the consummation of the transactions contemplated by this Agreement; and
(iv) any occurrence of any event having, or which could reasonably be
expected to have, a Material Adverse Effect on the Company and its subsidiaries
taken as a whole.
Section 5.8 Rights Agreement. Except as otherwise provided in Section
----------------
3.23, the Company shall not redeem the Rights or amend or terminate the Rights
Agreement prior to the earlier to occur of the Effective Time or the termination
of this Agreement, unless required to do so by a court of competent
jurisdiction.
-37-
Section 5.9 Fair Price Structure. If any "business combination," "fair
--------------------
price," "control share acquisition" or "moratorium" statute or other similar
statute or regulation or any state "blue sky" or securities law statute shall
become applicable to the transactions contemplated hereby, the Company and the
Board of Directors of the Company shall, to the extent consistent with
applicable law and their fiduciary duties, grant such approvals and take such
actions as are reasonably necessary so that the transactions contemplated hereby
thereby may be consummated as promptly as practicable on the terms contemplated
hereby and otherwise act to minimize the effects of such statute or regulations
on the transactions contemplated hereby.
Section 5.10 Indemnification. Notwithstanding Section 8.7 hereof, Parent
---------------
agrees that all rights to indemnification existing in favor of directors,
officers or employees of the Company as provided in the Company's Certificate of
Incorporation, By-Laws or the indemnification agreements listed in Section 5.10
of the Company Disclosure Schedule, with respect to matters occurring through
the Effective Time, shall survive the Merger and shall continue in full force
and effect for a period of not less than six years from the Effective Time.
Effective upon the Effective Time, to the fullest extent permitted by law Parent
hereby guarantees the Company's and the Surviving Corporation's performance of
the Company's and the Surviving Corporation's obligations described in the prior
sentence for a period of six years after the Effective Time. If Parent, the
Surviving Corporation or any of either of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger or
(ii) transfers all or substantially all of its properties and assets to any
person, then and in each such case, proper provision shall be made so that the
successors and assigns of Parent and the Surviving Corporation assume the
obligations set forth in this Section 5.10.
Section 5.11 Benefit Plans and Other Employee Arrangements. For a period
---------------------------------------------
of at least one year after the Effective Time, Parent shall either (i) maintain
or cause the Company (or its successors or assigns) to maintain the Company's
Employee Plans at benefit levels not materially less favorable than those in
effect on the date of this Agreement or (ii) provide or cause the Company (or
its successors or assigns) to provide benefits to employees of the Company and
its subsidiaries that are not materially less favorable to such employees than
those provided under Parent benefit plans (as they may be amended from time to
time) to similarly situated employees of Parent. With respect to any Parent
benefit plan which is an "employee benefit plan" as defined in Section 3(3) of
ERISA, solely for purposes of determining eligibility to participate, vesting,
and entitlement to benefits but not for purposes of accrual of pension benefits,
service with the Company or any Company subsidiary shall be treated as service
with Parent, provided, however, that such service shall not be recognized to the
extent that such recognition would result in a duplication of benefits (or is
not otherwise recognized for such purposes or permitted under the Parent Benefit
Plans). Nothing in this paragraph provides any employee with a right to
continuing employment or with any right to participate in any Parent benefit
plan under which
-38-
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
-39-
(b) Agreements, Conditions and Covenants. Parent and Purchaser shall have
------------------------------------
performed or complied in all material respects with all agreements, conditions
and covenants required by this Agreement to be performed or complied with by
them on or before the Effective Time.
Section 6.3 Additional Conditions to Obligations of Parent and Purchaser.
------------------------------------------------------------
The obligations of Parent and Purchaser to effect the Merger are also subject to
the following conditions:
(a) Representations and Warranties. The representations and warranties of
------------------------------
the Company contained in this Agreement shall be true and correct on the date
hereof and shall also be true and correct on and as of the Effective Time, with
the same force and effect as if made on and as of the Effective Time, unless the
failure of such representations and warranties to be true and correct as of such
dates could not reasonably be expected to cause, individually or in the
aggregate, a Material Adverse Effect (as applied to such dates) on the Company
and its subsidiaries, taken as a whole;
(b) Agreements, Conditions and Covenants. The Company shall have performed
------------------------------------
or complied in all material respects with all agreements, conditions and
covenants required by this Agreement to be performed or complied with by it on
or before the Effective Time;
(c) Dissenting Shares. The aggregate number of Shares held by Dissenting
-----------------
Shareholders shall not be equal to or exceed ten percent of the outstanding
Shares immediately prior to the Effective Time;
(d) No Litigation. After the date hereof there shall not be threatened, or
-------------
instituted and continuing, any action, suit or proceeding against the Company,
Parent, Purchaser or any Indemnified Person (as defined below), by any
Governmental Entity or any other person or persons, (i) directly or indirectly
relating to the Merger or any other transactions contemplated by this Agreement;
(ii) who is or was a shareholder or shareholders of the Company, whether on
behalf of such shareholder or shareholders, or in a derivative action on behalf
of the Company; or (iii) which individually or in the aggregate could reasonably
be expected to have a Material Adverse Effect on the Company and its
subsidiaries, taken as a whole; "INDEMNIFIED PERSON" shall mean any director,
officer, employee, consultant or other person that the Company is obligated to
indemnify or hold harmless, whether under any law, rule, regulation, the
Company's certificate of incorporation or bylaws, any agreement or otherwise;
(e) No Adverse Change. No event or events shall have occurred which have
-----------------
caused or could reasonably be expected to cause a Material Adverse Effect on the
Company and its subsidiaries, taken as a whole; and
(f) Opinion. Parent shall have received an opinion dated as of the Closing
-------
Date from ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, counsel to the Company, substantially in the
form attached hereto as Exhibit 6.3(f); provided, however, that if such counsel
is unable to
-40-
provide the opinion set forth in paragraph 6(ii) of such opinion then, in lieu
of the delivery of such opinion in paragraph 6(ii), the written consent of the
third parties to the agreements referred to in paragraph 6(ii) of such opinion
to the assignment of such agreements to the Surviving Corporation and the
continuation of such agreements after the Merger without modification, in such
form as is reasonably acceptable to Parent, shall have been obtained.
ARTICLE VII
TERMINATION AND AMENDMENT
Section 7.1 Termination. This Agreement may be terminated at any time
-----------
prior to the Effective Time, whether before or after approval of the terms of
this Agreement by the shareholders of the Company:
(a) by mutual written consent of the Boards of Directors of Parent and the
Company;
(b) by either Parent or the Company if any Governmental Entity shall have
issued an order, decree or ruling or taken any other action permanently
enjoining, restraining or otherwise prohibiting the acceptance for payment of,
or payment for, Shares pursuant to the Merger and such order, decree or ruling
or other action shall have become final and nonappealable;
(c) by either Parent or the Company, if the Merger shall not have been
consummated by January 31, 1997; provided, however, that such date shall be
February 28, 1997 if the sole condition in Article VI that has not been met or
waived is Section 6.3 (d); provided, further, however, that the right to
terminate this Agreement pursuant to this Section 7.1(c) shall not be available
to any party whose failure (or the failure of the affiliates of which) to
perform any of its obligations under this Agreement has been the cause of, or
resulted in, the failure of the Merger to occur on or before such date;
(d) by Parent or Purchaser, in the event of a breach by the Company of any
representation, warranty, covenant or other agreement contained in this
Agreement which cannot be or has not been cured within 15 days after the giving
of written notice to the Company and which, individually or in the aggregate,
has had or could reasonably be expected to have, a Material Adverse Effect on
the Company and its subsidiaries, taken as a whole;
(e) by Parent or Purchaser, if the Company's Board of Directors shall have
withdrawn, modified or amended in any respect its recommendation of the Merger
Agreement or the Merger or shall have approved or recommended a Takeover
Proposal, or shall have entered into an agreement with a third party with
respect to any Takeover Proposal, or the Board of Directors of the Company or
any committee thereof shall have resolved to take any of the foregoing actions;
-41-
(f) by the Company, in connection with entering into an agreement for a
Takeover Proposal in accordance with Section 5.5, provided it has complied with
all provisions thereof, including the notice provisions therein, and that it
makes simultaneous payment of the Expenses and the Termination Fee; or
(g) by the Company, if Purchaser or Parent shall have breached in any
material respect any of their respective representations, warranties, covenants
or other agreements contained in this Agreement, which failure to perform is
incapable of being cured or has not been cured within 15 days after the giving
of written notice to Parent or Purchaser, as applicable.
Section 7.2 Effect of Termination. In the event of a termination of
---------------------
this Agreement by either the Company or Parent as provided in Section 7.1, this
Agreement shall forthwith become void and there shall be no liability or
obligation on the part of Parent, Purchaser or the Company or their respective
officers or directors, except with respect to Sections 1.8(e), 3.17, 4.6, 5.2,
8.1, this Section 7.2 and Article VIII; provided, however, that nothing herein
(including without limitation the provisions of Section 8.1) shall relieve any
party for liability for any breach hereof.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Fees and Expenses.
-----------------
(a) Except as provided below in this Section 8.1, all fees and expenses
incurred in connection with the Merger, this Agreement and the transactions
contemplated by this Agreement shall be paid by the party incurring such fees or
expenses, whether or not the Merger is consummated.
(b) The Company shall pay, or cause to be paid, in same day funds to Parent
the sum of (x) the lesser of the amount of Parent's Expenses (as hereinafter
defined) or $1,000,000, and (y) $3,000,000 (the "TERMINATION FEE") upon demand
if (i) Parent or Purchaser terminates this Agreement under Section 7.1(e); (ii)
the Company terminates this Agreement pursuant to Section 7.1(f); or (iii) prior
to any termination of this Agreement (other than pursuant to Section 7.1 (a),
(b) or (g) or by the Company pursuant to Section 7.1 (c)), the Company breaches
the provisions of Section 5.5 of this Agreement or a Takeover Proposal shall
have been made and within 12 months of such termination a transaction
constituting a Takeover Proposal is consummated or the Company enters into an
agreement with respect to, approves or recommends or takes any action to
facilitate such Takeover Proposal. "EXPENSES" shall mean documented out-of-
pocket fees and expenses incurred or paid by or on behalf of Parent or Purchaser
in connection with the Merger or the consummation of any of the transactions
contemplated by this Agreement, including all fees and expenses of counsel,
commercial banks, investment banking firms, accountants, experts and consultants
to Parent.
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Section 8.2 Amendment and Modification. Subject to applicable law, this
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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
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
Vice President, Legal and Assistant Secretary
with copies to:
Venture Law Group
A Professional Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., Esq.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to the Company, to:
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Datalogix International, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
One Citicorp Center
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Section 8.5 Interpretation. When a reference is made in this Agreement to
--------------
Sections, such reference hall be to a Section of this Agreement unless otherwise
indicated. Whenever the words "include", "includes" or "including" are used in
this Agreement they shall be deemed to be followed by the words "without
limitation". As used in this Agreement, the term "affiliate(s)" shall have the
meaning set forth in Rule 12b-2 of the Exchange Act. As used in this Agreement,
a "subsidiary" of any entity shall mean all corporations or other entities in
which such entity owns a majority of the issued and outstanding capital stock or
equity or similar interests.
Section 8.6 Counterparts. This Agreement may be executed in two or more
------------
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties.
Section 8.7 Entire Agreement; No Third Party Beneficiaries; Rights of
---------------------------------------------------------
Ownership. This Agreement and the Confidentiality Agreement (including the
---------
documents and the instruments referred to herein and therein): (a) constitute
the entire agreement and supersede all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof,
and (b) other than the provisions of Sections 5.10 and 5.11 hereof, nothing
expressed or implied in this Agreement is intended or will be construed to
confer upon or give to any person, firm or corporation other than the parties
hereto any rights or remedies under or by reason of this Agreement or any
transaction contemplated hereby.
Section 8.8 Severability. If any term, provision, covenant or restriction
------------
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void, unenforceable or against its regulatory policy,
the remainder of the terms, provisions,
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covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
Section 8.9 Governing Law. This Agreement and the legal relations between
-------------
the parties hereto will be governed by and construed in accordance with the laws
of the State of Delaware, without giving effect to the choice of law principles
thereof; provided, however, that the law governing the fiduciary duties of each
party hereto and their respective boards of directors and the law governing any
other matters of internal corporate governance of any of Parent, Purchaser or
the Company shall be the law of their respective jurisdictions of incorporation.
Section 8.10 Assignment. Neither this Agreement nor any of the rights,
----------
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties, except that Purchaser may assign, in its sole
discretion, any or all of its rights, interests and obligations hereunder to
Parent or to any direct or indirect wholly owned subsidiary of Parent. Subject
to the preceding sentence, this Agreement will be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors and
assigns.
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IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized as
of the date first written above.
ORACLE CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Executive Vice President
DELPHI ACQUISITION CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Executive Vice President
DATALOGIX INTERNATIONAL, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President and Chief
Operating Officer
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