SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, For Use of the Commission only (as permitted
by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or
Rule 14a-12
ARDENT SOFTWARE, INC.
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(Name of Registrant as Specified in its Charter)
ARDENT SOFTWARE, INC.
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(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/ / No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
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(2) Aggregate number of securities to which transaction
applies:
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(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/X/ Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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[ARDENT SOFTWARE, INC. LOGO]
------------------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON FEBRUARY 29, 2000
------------------------
To the Stockholders of
ARDENT SOFTWARE, INC.:
NOTICE IS HEREBY GIVEN that a special meeting of stockholders of Ardent
Software, Inc. will be held on Tuesday, February 29, 2000 at 11:00 a.m., local
time, at Ardent's offices at 50 Washington Street, Westboro, Massachusetts to
consider and vote on the following proposals:
1. To adopt the Agreement and Plan of Reorganization, dated as of
November 30, 1999, among Informix Corporation, Iroquois Acquisition
Corporation, a wholly-owned subsidiary of Informix, and Ardent, and to
approve the merger of Informix and Ardent. After the merger, Ardent will
be a wholly-owned subsidiary of Informix. A copy of this Agreement and
Plan of Reorganization, which is referred to as the merger agreement, is
attached as Appendix A to the joint proxy statement/ prospectus
accompanying this notice.
2. To transact such other business as may properly come before the Ardent
meeting, including any motion to adjourn to a later date to permit
further solicitation of proxies if necessary to establish a quorum or to
obtain additional votes in favor of the transactions contemplated by the
merger agreement, or any adjournments or postponement thereof.
The merger agreement, the proposed merger, and other related matters are
more fully described in the attached joint proxy statement/prospectus.
Stockholders of record at the close of business on January 20, 2000 are
entitled to notice of, and to vote at, the special meeting and any adjournments
or postponements thereof.
THE ARDENT BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE IN FAVOR
OF THE FIRST PROPOSAL LISTED ABOVE.
All Ardent stockholders are cordially invited to attend the special meeting
in person. Whether or not you expect to attend, WE URGE YOU TO SIGN AND DATE THE
ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENVELOPE PROVIDED.
By Order of the Board of Directors,
/s/ PETER GYENES
Peter Gyenes
CHAIRMAN OF THE BOARD OF DIRECTORS,
PRESIDENT
AND CHIEF EXECUTIVE OFFICER
Westboro, Massachusetts
January 28, 2000
TO ENSURE THAT YOUR SHARES ARE REPRESENTED AT THE SPECIAL MEETING, PLEASE
COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE
POSTAGE-PAID ENVELOPE PROVIDED, WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL
MEETING. YOU CAN REVOKE YOUR PROXY AT ANY TIME BEFORE IT IS VOTED.
[INFORMIX LOGO] [ARDENT SOFTWARE, INC. LOGO]
JOINT PROXY STATEMENT/PROSPECTUS
PROXY STATEMENT/PROSPECTUS PROXY STATEMENT OF
OF INFORMIX CORPORATION ARDENT SOFTWARE, INC.
The board of directors of Informix and Ardent have each approved and
recommend to you the merger of Informix and Ardent. After the merger, Ardent
will operate as a wholly-owned subsidiary of Informix. In the merger, Informix
will issue to Ardent stockholders 3.5 shares of Informix common stock for each
share of outstanding Ardent common stock. Based on the capitalization of the two
companies as of January 20, 2000, an aggregate of approximately 70,000,000
shares of Informix common stock will be issued to Ardent stockholders in
connection with the merger, representing approximately 25% of the outstanding
shares of Informix common stock after the merger, excluding shares issuable upon
the exercise of options and warrants.
Special meetings are scheduled for Informix and Ardent stockholders to vote
on the matters described in this joint proxy statement/prospectus. Stockholders
of Ardent are being asked to adopt the merger agreement and approve the merger.
Stockholders of Informix are being asked to approve the issuance of Informix
common stock necessary to complete the merger.
You may vote at your special meeting if you own shares as of the close of
business on January 20, 2000, the record date. The dates, times and places of
the special meetings are set forth in the accompanying notices. YOUR VOTE IS
VERY IMPORTANT. Whether or not you plan to attend your special meeting, please
take the time to vote by completing and mailing the enclosed proxy card. If you
sign, date and mail your proxy card without indicating how you want to vote,
your proxy will count as a vote in favor of the proposals.
Informix common stock trades on the Nasdaq National Market, which is
referred to as Nasdaq, under the symbol "IFMX." Ardent common stock trades on
Nasdaq under the symbol "ARDT."
WE STRONGLY URGE YOU TO READ AND CONSIDER CAREFULLY THIS JOINT PROXY
STATEMENT/PROSPECTUS IN ITS ENTIRETY, INCLUDING THE MATTERS REFERRED TO UNDER
"RISK FACTORS" BEGINNING ON PAGE 15.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THE SECURITIES TO BE ISSUED UNDER THIS
JOINT PROXY STATEMENT/PROSPECTUS OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS
JOINT PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
This joint proxy statement/prospectus is dated January 28, 2000 and was
first mailed to stockholders on or about January 28, 2000.
This document incorporates important business and financial information
about Informix and Ardent that is not included in or delivered with this
document. You may obtain documents that are filed with the Securities and
Exchange Commission and incorporated by reference in this document without
charge by making an oral or written request from Informix and Ardent at the
following addresses:
INFORMIX CORPORATION ARDENT SOFTWARE, INC.
4100 Bohannon Drive 50 Washington Street
Menlo Park, California 94025 Westboro, Massachusetts 01581
Attn: Investor Relations Attn: Investor Relations
(650) 926-6300 (508) 366-3888
IF YOU WOULD LIKE TO REQUEST DOCUMENTS FROM INFORMIX OR ARDENT, PLEASE DO SO
BY FIVE DAYS BEFORE THE DATE OF YOUR STOCKHOLDER MEETING, OR FEBRUARY 24, 2000,
IN ORDER TO RECEIVE THEM BEFORE THE DATE OF THE ARDENT AND INFORMIX SPECIAL
MEETINGS.
TABLE OF CONTENTS
PAGE
--------
Frequently Asked Questions About the Informix/
Ardent Merger.................................. 3
Summary.......................................... 5
The Companies.................................. 5
Where You Can Find a More Detailed Description
of the Merger Agreement...................... 5
Reasons for the Merger......................... 6
Special Meeting of the Informix Stockholders... 7
Vote Required at the Informix Meeting.......... 7
Recommendation of Informix's Board of
Directors.................................... 7
Special Meeting of the Ardent Stockholders..... 7
Vote Required at the Ardent Meeting............ 7
Recommendation of Ardent's Board of
Directors.................................... 7
What Ardent Securityholders Will Receive in the
Merger....................................... 8
Ownership of Informix Following the Merger..... 8
Interests of Executive Officers and Directors
of Ardent in the Merger...................... 8
Board of Directors and Management of Informix
and Ardent Following the Merger.............. 9
Material Federal Income Tax Consequences of the
Merger....................................... 9
Informix and Ardent Received Opinions from
their Financial Advisors..................... 10
Conditions to the Merger....................... 10
Voting Agreements.............................. 11
Affiliate Agreements........................... 11
Stock Option Agreement......................... 11
Noncompetition Agreements...................... 12
Termination of the Merger Agreement............ 12
No Other Negotiations Involving Ardent......... 12
Expenses and Termination Fee................... 13
Material Differences between the Rights of
Securityholders of Informix and Ardent....... 13
Accounting Treatment of the Merger............. 13
No Appraisal Rights............................ 14
Regulatory Approvals........................... 14
Markets and Market Prices...................... 14
PAGE
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Risk Factors..................................... 15
Risks Related to the Merger.................... 15
Risks Related to the Business and Operations of
Informix and Ardent.......................... 18
The Companies.................................... 32
Business of Informix........................... 32
Business of Ardent............................. 33
Selected Historical and Pro Forma Consolidated
Financial Information.......................... 34
Informix Selected Supplemental and Historical
Consolidated Financial Data.................. 35
Ardent Selected Historical Consolidated
Financial Data............................... 36
Selected Unaudited Pro Forma Financial Data.... 37
Comparative Per Share Data....................... 38
Comparative Market Price Data.................... 39
Special Meeting of the Informix Stockholders..... 40
When and Where the Meeting Will Be Held........ 40
Purpose of the Meeting......................... 40
Recommendation of Informix's Board of
Directors.................................... 40
Record Date and Outstanding Shares............. 40
Voting of Proxies.............................. 40
Vote Required to Approve the Issuance of
Informix Common Stock........................ 41
Quorum; Abstentions; Broker Non-Votes.......... 41
How to Change Your Vote........................ 41
Appraisal Rights............................... 41
Solicitation of Proxies and Expenses........... 41
Independent Auditors........................... 41
Special Meeting of the Ardent Stockholders....... 42
When and Where the Meeting Will Be Held........ 42
Purpose of the Meeting......................... 42
Recommendation of Ardent's Board of
Directors.................................... 42
Record Date and Outstanding Shares............. 42
Vote Required to Adopt the Merger Agreement.... 42
Quorum; Abstentions; Broker Non-Votes.......... 43
Voting of Proxies.............................. 43
Revocability of Proxies........................ 43
1
PAGE
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Appraisal Rights............................... 43
Solicitation of Proxies and Expenses........... 43
Independent Auditors........................... 43
Security Ownership of Certain Beneficial Owners
and Management of Informix..................... 44
Security Ownership of Certain Beneficial Owners
and Management of Ardent....................... 46
The Merger and Related Transactions.............. 47
Background of the Merger....................... 47
Joint Reasons for the Merger................... 49
Informix's Reasons for the Merger and Board
Considerations............................... 50
Ardent's Reasons for the Merger and Board
Considerations............................... 52
Opinion of Informix's Financial Advisor........ 52
Opinion of Ardent's Financial Advisor.......... 58
Recommendations of the Boards of Directors..... 65
The Merger Structure........................... 65
Effective Time of the Merger................... 66
Conversion of Ardent Securities................ 66
401(k) Plan.................................... 67
Interests of Executive Officers and Directors
of Ardent in the Merger...................... 67
Material Federal Income Tax Consequences of the
Merger....................................... 70
Appraisal Rights............................... 71
Restrictions on Resale of Informix Common
Stock........................................ 71
Accounting Treatment........................... 72
Stock Exchange Listing of Informix Common
Stock........................................ 72
Other Provisions of the Merger Agreement......... 72
Representations and Warranties................. 72
Other Covenants and Agreements................. 73
Conditions to the Merger....................... 77
Regulatory Approvals Required.................. 78
Termination; Break-up Fee...................... 79
Waiver and Amendment........................... 80
Expenses....................................... 81
Surrender of Ardent Common Stock
Certificates................................. 81
Unaudited Pro Forma Combined Condensed Financial
Information.................................... 82
Unaudited Pro Forma Combined Condensed Balance
Sheet as of September 30, 1999............... 83
PAGE
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Unaudited Pro Forma Combined Condensed
Statement of Operations for the Nine Months
Ended September 30, 1999..................... 84
Unaudited Pro Forma Combined Condensed
Statement of Operations for the Nine Months
Ended September 30, 1998..................... 85
Unaudited Pro Forma Combined Condensed
Statement of Operations for the Year Ended
December 31, 1998............................ 86
Unaudited Pro Forma Combined Condensed
Statement of Operations for the Year Ended
December 31, 1997............................ 87
Unaudited Pro Forma Combined Condensed
Statement of Operations for the Year Ended
December 31, 1996............................ 88
Notes to Unaudited Pro Forma Combined Condensed
Financial Statements......................... 89
Comparison of Rights of Holders of Ardent Common
Stock and Informix Common Stock................ 90
Stockholder Proposals............................ 94
Adjournment of Special Meetings.................. 94
Experts.......................................... 94
Legal Matters.................................... 95
Trademarks....................................... 95
Forward-Looking Statements....................... 95
Where You Can Find More Information.............. 96
APPENDICES
APPENDIX A: Agreement and Plan of
Reorganization................................. A-1
APPENDIX B: Form of Voting Agreement............. B-1
APPENDIX C: Form of Company Affiliate Agreement.. C-1
APPENDIX D: Form of Stock Option Agreement....... D-1
APPENDIX E: Opinion of Merrill Lynch, Pierce,
Fenner & Smith Incorporated.................... E-1
APPENDIX F: Opinion of SG Cowen Securities
Corporation.................................... F-1
2
FREQUENTLY ASKED QUESTIONS ABOUT THE
INFORMIX/ARDENT MERGER
Q: WHEN DO YOU EXPECT THE MERGER TO BE COMPLETED?
A: We are working to complete the merger by February 29, 2000.
Q: AS AN ARDENT STOCKHOLDER, WHAT WILL I RECEIVE IN THE MERGER?
A: If the merger is consummated, you will receive 3.5 shares of Informix
common stock in exchange for each share of Ardent common stock that you own. For
example, if you own 1,000 shares of Ardent common stock, you will receive 3,500
shares of Informix common stock in the merger. You will receive only whole
shares and will receive cash for any fractional shares.
Q: WHEN ARE THE SPECIAL STOCKHOLDER MEETINGS RELATING TO THE MERGER AND WHAT
SPECIFIC PROPOSALS WILL I BE ASKED TO CONSIDER?
A: The Ardent meeting will take place on Tuesday, February 29, 2000 at
11:00 a.m., local time. At the Ardent meeting, Ardent stockholders will be asked
to adopt the merger agreement among Informix, Iroquois Acquisition Corporation,
a wholly-owned subsidiary of Informix, and Ardent, and approve the merger. The
Ardent board of directors unanimously recommends that you vote in favor of this
proposal.
The Informix meeting will take place on Tuesday, February 29, 2000 at
8:00 a.m., local time. At the Informix meeting, Informix stockholders will be
asked to approve the issuance of shares of Informix common stock necessary to
complete the merger. The Informix board of directors recommends that you vote in
favor of this proposal.
Q: IF I AM NOT GOING TO ATTEND MY STOCKHOLDER MEETING, SHOULD I RETURN MY
PROXY CARD?
A: Yes. Please fill out and sign your proxy card and return it in the
enclosed envelope as soon as possible. Returning your proxy card ensures that
your shares will be represented at your stockholder meeting.
Q: IF MY SHARES ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER VOTE
MY SHARES FOR ME?
A: Your broker will only vote your shares if you provide instructions on how
to vote. Without instructions, your shares will not be voted. You should
instruct your broker to vote your shares by following the directions provided by
your broker. If you are an Ardent stockholder and you do not instruct your
broker to vote your shares, this will have the effect of a vote against the
proposal relating to adoption of the merger agreement and approval of the
merger.
Q: AS AN ARDENT STOCKHOLDER, WHAT DO I DO IF I WANT TO CHANGE MY VOTE?
A: Send in a later-dated, signed proxy card to the Secretary of Ardent
before the Ardent special meeting or attend the Ardent special meeting and vote
in person.
Q: AS AN INFORMIX STOCKHOLDER, WHAT DO I DO IF I WANT TO CHANGE MY VOTE?
A: Send in a later-dated, signed proxy card to the Secretary of Informix
before the Informix special meeting or attend the Informix special meeting and
vote in person.
Q: AS AN ARDENT STOCKHOLDER, SHOULD I SEND IN MY STOCK CERTIFICATES NOW?
A: No. After the merger is completed, Informix's exchange agent will send
you written instructions for exchanging your stock certificates. Ardent
stockholders should not surrender their Ardent stock
3
certificates until after the merger and until they receive a letter of
transmittal from the exchange agent. For more information on exchanging shares
see "Surrender of Ardent Common Stock Certificates" on page 81.
Q: WHAT ARE THE TAX CONSEQUENCES TO ARDENT STOCKHOLDERS OF THE MERGER?
A: The merger is intended to qualify as a tax-free reorganization for
federal income tax purposes for the companies and their stockholders. In
general, Ardent stockholders will not recognize gain or loss on the exchange of
their stock, other than on account of cash received for a fractional share. To
review the tax consequences of the merger in greater detail, see "The Merger and
Related Transactions--Material Federal Income Tax Consequences of the Merger" on
page 70.
Q: WHO CAN ANSWER MY QUESTIONS?
A: If you have more questions about the merger, you should contact:
For Informix: For Ardent:
Investor Relations James K. Walsh, Esq.
Department...................
(650) 926-6300 Vice President and General Counsel
(508) 366-3888
4
SUMMARY
THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION FOUND IN GREATER DETAIL
ELSEWHERE IN THIS JOINT PROXY STATEMENT/PROSPECTUS. THIS SUMMARY DOES NOT
CONTAIN ALL OF THE INFORMATION THAT IS IMPORTANT TO YOU. BEFORE YOU DECIDE HOW
TO VOTE, WE URGE YOU TO READ THIS ENTIRE DOCUMENT, INCLUDING THE MERGER
AGREEMENT AND THE OTHER APPENDICES, AS WELL AS THE DOCUMENTS WHICH INFORMIX AND
ARDENT HAVE INCORPORATED BY REFERENCE FROM THEIR SEC FILINGS.
THE COMPANIES
INFORMIX CORPORATION
4100 Bohannon Drive
Menlo Park, California 94025
(650) 926-6300
Informix is a leading supplier of information management software and
solutions to governments and enterprises worldwide. Informix designs, develops,
manufactures, markets and supports relational database management systems,
object-relational database management systems, connectivity interfaces and
gateways, and graphical and character-based application development tools for
building database applications that allow customers to access, retrieve and
manipulate business data. Informix also offers complete solutions, which include
database management software, its own and third party software, and its
consulting services, to help customers design and deploy data warehousing,
Web-based enterprise repository and electronic commerce applications. Informix's
customers include businesses ranging from small corporations to Fortune 100
companies, principally in the manufacturing, financial services,
telecommunications, media, retail/wholesale, hospitality and government services
sectors. For further information on Informix, see "Where You Can Find More
Information" on page 96.
ARDENT SOFTWARE, INC.
50 Washington Street
Westboro, Massachusetts 01581
(508) 366-3888
Ardent is a data management software company. Ardent designs, develops and
markets easy-to-use and highly compatible products that enable businesses to
extract, transform and load increasingly large amounts of information. Ardent's
principal products include DataStage, a software product that simplifies the
creation of large storage units of data known as data marts and data warehouses,
and two extended relational database management systems known as UniVerse and
UniData. Ardent markets and sells its products worldwide and provides technical
support, consulting and education services to its customers. For more
information on Ardent, see "Where You Can Find More Information" on page 96.
IROQUOIS ACQUISITION CORPORATION
4100 Bohannon Drive
Menlo Park, California 94025
(650) 926-6300
Iroquois Acquisition Corporation was incorporated in Delaware in
November 1999 solely for the purpose of effecting the merger. Iroquois is a
wholly-owned subsidiary of Informix and is referred to in this document as
"Merger Sub."
WHERE YOU CAN FIND A MORE DETAILED DESCRIPTION OF THE MERGER AGREEMENT (SEE
PAGES 47 TO 81)
For a detailed description of the terms of the merger, see "The Merger and
Related Transactions" beginning on page 47 and "Other Provisions of the Merger
Agreement" beginning on page 72.
5
The merger agreement is attached as Appendix A, and is hereby incorporated
by reference to this joint proxy statement/prospectus. We encourage you to read
the merger agreement since it is the legal document governing the merger.
REASONS FOR THE MERGER (SEE PAGE 49 TO 52)
The boards of directors of Informix and Ardent believe that the merger may
result in a number of benefits to Informix's and Ardent's stockholders,
including, among other potential benefits:
- The combined company would increase stockholder value by competing more
effectively in the rapidly growing market for software that facilitates
electronic commerce,
- The merger would provide the combined company with greater depth of
skilled personnel, strengthened research and development activity and
expanded distribution and support capacity,
- Customers of both companies would be able to choose from an enhanced set
of products,
- Customers of both companies would have access to expanded support and
professional services,
- The merger may provide the combined company with access to each company's
existing customer base and partners, and
- The creation of a larger customer base, a higher market profile and
greater financial strength would present greater opportunities for
marketing the products and services of the combined company.
In addition, the Informix board of directors believes that the merger may
result in a number of benefits to Informix and its stockholders, including,
among other potential benefits:
- The Ardent product offerings would enable Informix to offer a complete,
integrated software infrastructure solution for data processing, data
movement and analytics in electronic commerce,
- Informix's customers would have access to Ardent's data movement,
integration and meta data products,
- The merger potentially would provide Informix access to Ardent's partners
and installed customer base,
- Informix would have the potential to increase its revenue growth rates,
and
- The merger would provide Informix with the potential to enhance its sales,
research and development and support organizations.
In addition, the Ardent board of directors believes that the merger may
result in a number of benefits to Ardent and its stockholders, including, among
other benefits:
- The complementary fit between Informix's position in the Internet
infrastructure and business intelligence markets and Ardent's position in
the datawarehousing and enterprise information infrastructure markets,
including the complementary products, channels, partners, technology and
critical skills of the two companies,
- The merger consideration, as calculated on the date the merger agreement
was signed, represented a premium over the market price of Ardent stock
which the Ardent board of directors deemed to be appropriate in relation
to Ardent's growth potential, and
- The Ardent stockholders would receive stock in a company which is more
widely traded and has greater visibility and coverage in the investment
community.
To review the background and reasons for the merger in greater detail, as
well as the risks of the merger, see "The Merger and Related Transactions--Joint
Reasons for the Merger" beginning on
6
page 49, "--Informix's Reasons for the Merger and Board Considerations"
beginning on page 50, "--Ardent's Reasons for the Merger and Board
Considerations" beginning on page 52, "--Background of the Merger" beginning on
page 47, "--Opinion of Informix's Financial Advisor" beginning on page 52,
"--Opinion of Ardent's Financial Advisor" beginning on page 58 and "Risk
Factors--Risks Related to the Merger" beginning on page 15.
SPECIAL MEETING OF THE INFORMIX STOCKHOLDERS (SEE PAGE 40)
The Informix special meeting will be held at Hyatt Rickey's, located at 4219
El Camino Real, Palo Alto, California on Tuesday, February 29, 2000 at
8:00 a.m., local time. At the meeting, Informix will ask its stockholders to
approve the issuance of shares of Informix common stock necessary to complete
the merger. You are entitled to vote at the Informix meeting if you owned shares
of Informix as of the close of business on January 20, 2000, the record date. At
the close of business on the record date, 207,123,491 shares of Informix common
stock were outstanding and entitled to vote at the Informix meeting of which
less than 1% is held by executive officers and directors of Informix. You will
have one vote at the Informix meeting for each share of Informix common stock
you owned as of the record date. Notice of the Informix meeting was first mailed
to Informix stockholders on or about January 28, 2000.
VOTE REQUIRED AT THE INFORMIX MEETING (SEE PAGE 41)
The affirmative vote of a majority of the total votes cast on the proposal
in person or by proxy at the Informix meeting is required to approve the
issuance of shares of Informix common stock necessary to complete the merger.
RECOMMENDATION OF INFORMIX'S BOARD OF DIRECTORS (SEE PAGE 40)
The Informix board of directors believes that the merger is fair, from a
financial point of view, to Informix and in the best interests of both Informix
and its stockholders. The Informix board of directors recommends that Informix
stockholders vote "for" the proposal to approve the issuance of shares of
Informix common stock necessary to complete the merger.
SPECIAL MEETING OF THE ARDENT STOCKHOLDERS (SEE PAGE 42)
The Ardent meeting will be held at Ardent's offices located at 50 Washington
Street, Westboro, Massachusetts on Tuesday, February 29, 2000 at 11:00 a.m.,
local time. At the meeting, Ardent will ask its stockholders to adopt the merger
agreement and approve the merger. You are entitled to vote at the Ardent meeting
if you owned shares of Ardent as of the close of business on January 20, 2000,
the record date. At the close of business on the record date, 19,664,028 shares
of Ardent common stock were outstanding and entitled to vote at the Ardent
meeting of which approximately 3% is held by executive officers and directors of
Ardent. You will have one vote at the Ardent meeting for each share of Ardent
common stock you owned as of the record date. Notice of the Ardent meeting was
first mailed to Ardent stockholders on or about January 28, 2000.
VOTE REQUIRED AT THE ARDENT MEETING (SEE PAGE 42)
The affirmative vote of a majority of the shares of Ardent common stock
entitled to vote at the Ardent meeting is required to adopt the merger agreement
and to approve the merger.
RECOMMENDATION OF ARDENT'S BOARD OF DIRECTORS (SEE PAGE 42)
The Ardent board of directors believes that the merger is fair and in the
best interests of both Ardent and its stockholders. The Ardent board of
directors unanimously recommends that Ardent stockholders vote "for" the
proposal to adopt the merger agreement and to approve the merger.
7
WHAT ARDENT SECURITYHOLDERS WILL RECEIVE IN THE MERGER (SEE PAGE 66)
If the merger is consummated, Ardent stockholders will receive 3.5 shares of
Informix common stock in exchange for each share of Ardent common stock they own
prior to the merger. Ardent stockholders will receive only whole shares and will
receive cash for any fractional shares.
Similarly, each option to purchase Ardent common stock will convert into an
option to purchase 3.5 times as many shares of Informix common stock at an
adjusted per share exercise price. Informix will assume each Ardent option in
accordance with the terms of the stock option plan under which the option was
issued and the related stock option agreement. Likewise, each outstanding
warrant to purchase Ardent common stock will convert into a warrant to purchase
3.5 times as many shares of Informix common stock at an adjusted per share
exercise price. Informix will assume each warrant in accordance with its terms.
For more information on conversion of Ardent common stock, stock options and
warrants, see "The Merger and Related Transactions--Conversion of Ardent
Securities" beginning on page 66.
OWNERSHIP OF INFORMIX FOLLOWING THE MERGER
Based on the capitalization of Ardent on January 20, 2000, the record date,
Informix will issue an aggregate of approximately 70,000,000 shares of Informix
common stock (excluding shares that may be issued in the future upon exercise of
Ardent options or Ardent warrants) in connection with the merger. Based on the
closing price of Informix common stock on the record date, those shares will be
valued in aggregate at approximately $907.5 million. In addition, by virtue of
the merger and based on the number of Ardent options and warrants outstanding on
the record date, Informix will be obligated to issue an additional aggregate of
approximately 18.8 million shares of Informix common stock upon exercise, if and
when exercised, of the Ardent options and Ardent warrants assumed in the merger.
Based further on the capitalization of Informix on the record date (not
including outstanding options or warrants), and the number of additional shares
of Informix common stock that Informix will issue to Ardent stockholders in
connection with the merger, the former holders of Ardent common stock will hold
approximately 25% of the total number of shares of Informix common stock
outstanding immediately after the merger.
INTERESTS OF EXECUTIVE OFFICERS AND DIRECTORS OF ARDENT IN THE MERGER (SEE PAGE
67)
Ardent stockholders should note that Ardent's executive officers and
directors have interests in the merger as executive officers and/or directors
that are different from, or in addition to, your interest as a stockholder. As a
result of their interests, these directors and officers of Ardent may be more
likely to vote to approve the merger agreement than if they did not hold these
interests. Also, the executive officers and directors of Ardent have signed
voting agreements in which they have agreed to vote their shares of Ardent
common stock in favor of adoption of the merger agreement and approval of the
merger. For more information see "The Merger and Related Transactions--Interests
of Executive Officers and Directors of Ardent in the Merger" beginning on
page 67, and "Other Provisions of the Merger Agreement--Other Covenants and
Agreements--Voting Agreements" beginning on page 75.
ACCELERATION OF VESTING OF OPTIONS. As required by the terms of Ardent's
change of control policy, options held by the executive officers and certain key
employees for the purchase of an aggregate of 618,990 shares will immediately
vest upon the effectiveness of the merger. These individuals include the
following executive officers of Ardent: Peter L. Fiore, vice president, data
warehousing, James D. Foy, vice president, engineering, Peter Gyenes, chairman
of the board, president and chief executive officer, Charles F. Kane, vice
president and chief financial officer, Cornelius McMullan, vice president,
international operations, Jason E. Silvia, vice president, services, and
James K. Walsh vice president and general counsel.
8
Additionally, as required by the terms of the plan under which options to
outside directors are issued, approximately 154,242 shares subject to unvested
options held by the outside directors will become vested upon the effectiveness
of the merger. These options will be exercisable upon the effectiveness of the
merger and will continue to be exercisable for a period of 12 months following
the merger. These outside directors are Robert G. Claussen, Martin T. Hart and
Robert M. Morrill. Further, pursuant to a letter agreement, the options held by
director David Brunel will become vested upon the effectiveness of the merger
with Informix.
EXECUTIVE OFFICER SEVERANCE BENEFITS. Under Ardent's change of control
policy, the merger with Informix will trigger the severance benefits of the
change of control policy in the event Informix terminates the employment of the
Ardent executive officers covered by the policy other than for cause during a
twelve-month period following the merger. These officers include Messrs. Fiore,
Foy, Gyenes, Kane, McMullan, Silvia and Walsh.
ASSUMPTION OF SPLIT DOLLAR AGREEMENTS. Upon the effectiveness of the
merger, Informix will assume Ardent's obligations to pay the premiums on split
dollar life insurance agreements that Ardent has entered into with each of
Messrs. Brunel, Fiore, Foy, Gyenes, Kane, Silvia and Walsh.
EMPLOYMENT ARRANGEMENTS. Peter Gyenes has agreed to remain with the
combined company for a one year term following the merger. Mr. Gyenes will work
for the combined company as a part-time employee, assisting Jean-Yves F.
Dexmier, Informix's president and chief executive officer, with the integration
of the two businesses. Mr. Gyenes will be paid an annual base salary of
$150,000. At the conclusion of the one-year period, Mr. Gyenes will be entitled
to receive benefits comparable to those provided under Ardent's change of
control policy discussed under "The Merger and Related Transactions--Interests
of Executive Officers and Directors of Ardent in the Merger--Executive Officer
Severance Benefits" on page 68.
In addition, Messrs. Fiore, Foy and Silvia have been offered employment
arrangements with Informix that will be effective upon the closing of the merger
if the arrangements are accepted. Pursuant to such arrangements, Messrs. Fiore,
Foy and Silvia would become executive officers of Informix following the merger,
and each would be entitled to base salary, bonuses, stock option grants and
severance in the event that his employment is terminated by Informix other than
for cause in the 12 months following the closing of the merger. For further
discussion of these employment arrangements, see "The Merger and Related
Transactions--Interests of Executive Officers and Directors of Ardent in the
Merger--Employment Arrangements" beginning on page 68.
INDEMNIFICATION. Informix has agreed to assume Ardent's obligations under
the indemnification provisions of Ardent's certificate of incorporation.
Informix has also agreed to provide for indemnification provisions in the
certificate of incorporation and bylaws of the surviving corporation of the
merger that are at least as favorable as Ardent's provisions and to maintain
these provisions for at least six years following the merger. In addition,
Informix has agreed to maintain Ardent's directors' and officers' liability
insurance for six years following the merger.
BOARD OF DIRECTORS AND MANAGEMENT OF INFORMIX AND ARDENT FOLLOWING THE MERGER
After the merger, the Informix board of directors will include two
additional directors, Mr. Gyenes and Mr. Robert Morrill, each of whom is
currently a member of the Ardent board of directors. Otherwise, the executive
management of Informix will not change as a result of the merger. Once the
merger occurs, the officers and directors of Informix will become the officers
and directors of Ardent.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER (SEE PAGE 70)
The merger is intended to qualify for federal income tax purposes as a
reorganization within the meaning of section 368(a) of the Internal Revenue
Code. Assuming the merger so qualifies, in general,
9
no gain or loss will be recognized by holders of Ardent common stock, except
with respect to cash received in lieu of fractional shares, and no gain or loss
will be recognized by Informix or Ardent solely as a result of the merger. No
ruling has been requested from the Internal Revenue Service regarding the
federal income tax consequences of the merger. It is a condition to Ardent's and
Informix's respective obligations to complete the merger that they receive from
their respective legal counsel tax opinions to the effect that the merger will
constitute a reorganization under the Internal Revenue Code. For more
information, see "The Merger and Related Transactions--Material Federal Income
Tax Consequences of the Merger" beginning on page 70.
TAX MATTERS ARE VERY COMPLICATED. THE TAX CONSEQUENCES OF THE MERGER TO YOU
WILL DEPEND ON THE FACTS OF YOUR OWN SITUATION. WE URGE STOCKHOLDERS TO CONSULT
THEIR OWN TAX ADVISORS AS TO THE SPECIFIC TAX CONSEQUENCES OF THE MERGER,
INCLUDING THE APPLICABLE FEDERAL, STATE, LOCAL AND FOREIGN TAX LAWS.
INFORMIX AND ARDENT RECEIVED OPINIONS FROM THEIR FINANCIAL ADVISORS
In deciding to approve the merger, the boards of directors of Informix and
Ardent considered the opinion of their respective financial advisors. Informix
received an opinion from its financial advisor, Merrill Lynch, Pierce, Fenner &
Smith Incorporated, that the exchange ratio was fair, from a financial point of
view, to Informix. Ardent received an opinion from its financial advisor, SG
Cowen Securities Corporation, that the exchange ratio was fair, from a financial
point of view, to Ardent's stockholders.
More information on these opinions is provided in the section of this joint
proxy statement/ prospectus entitled "The Merger and Related
Transactions--Opinion of Informix's Financial Advisor" beginning on page 52 and
"--Opinion of Ardent's Financial Advisor" beginning on page 58. In addition, the
opinion of Merrill Lynch is attached as Appendix E to this joint proxy
statement/ prospectus and the opinion of SG Cowen is attached as Appendix F to
this joint proxy statement/ prospectus. We encourage you to read these sections
and the opinions carefully and in their entirety.
CONDITIONS TO THE MERGER (SEE PAGE 77)
Informix is not required to complete the merger unless a number of
conditions are either satisfied or waived by Informix, which include:
- The representations and warranties made by Ardent in the merger agreement
(subject to specified materiality qualifications) are true and correct,
- Ardent performs its covenants and obligations contained in the merger
agreement in all material respects,
- The necessary stockholder approvals have been obtained,
- There is no material adverse effect with respect to Ardent,
- There are no restraining orders, injunctions or other orders preventing
the consummation of the merger,
- Specified executive officers and key employees of Ardent have entered into
noncompetition agreements with Informix,
- KPMG LLP has delivered a letter stating that they concur with the
conclusion of Informix management that the transaction will qualify as a
pooling of interests, and
- Deloitte & Touche LLP has delivered a letter to the effect that no
conditions exist relating to Ardent which would preclude Ardent from
entering into a business combination to be accounted for as a "pooling of
interests."
10
Ardent is not required to complete the merger unless a number of conditions
are satisfied or waived by Ardent, which include:
- The representations and warranties made by Informix in the merger
agreement (subject to specified materiality qualifications) are true and
correct,
- Informix performs its covenants and obligations contained in the merger
agreement in all material respects,
- The necessary stockholder approvals have been obtained,
- There is no material adverse effect with respect to Informix, and
- There are no restraining orders, injunctions or other orders preventing
the consummation of the merger.
For more information on the conditions to the merger, see "Other Provisions
of the Merger Agreement--Conditions to the Merger" beginning on page 77.
VOTING AGREEMENTS (SEE PAGE 75)
The executive officers and directors of Ardent, who beneficially own
approximately 11% of the outstanding shares of Ardent common stock, including
Ardent shares subject to options, as of the record date, have agreed to vote
their shares of Ardent common stock in favor of adoption of the merger agreement
and approval of the merger. These stockholders have also delivered proxies with
respect to such matters to Informix that cannot be revoked.
The form of the voting agreement that these Ardent stockholders signed and
the related irrevocable proxy are included as Appendix B to this joint proxy
statement/prospectus.
AFFILIATE AGREEMENTS (SEE PAGE 73)
Informix and certain stockholders who might be considered affiliates of
Ardent under applicable securities laws have entered into affiliate agreements.
The purpose of these agreements is to comply with the requirements of federal
securities laws and pooling of interests accounting with respect to such
stockholders' ability to dispose of Informix common stock received in the
merger. A form of these affiliate agreements is included as Appendix C to this
joint proxy statement/prospectus.
STOCK OPTION AGREEMENT (SEE PAGE 73)
Ardent entered into a stock option agreement with Informix that grants
Informix the option to acquire shares of Ardent common stock that represent
approximately 19.9% of the issued and outstanding shares of Ardent common stock.
The exercise price of the option is $38.50 per share. Informix also has the
right under some circumstances to require Ardent to purchase the option or the
shares acquired by Informix from the exercise of the option.
Informix required Ardent to grant the option, for no consideration, as a
prerequisite to entering into the merger agreement. The option may discourage
third parties who are interested in acquiring a significant stake in Ardent and
is intended by Informix to increase the likelihood that the merger will be
completed.
The option is not currently exercisable and Informix may exercise the option
only if the merger agreement is terminated in circumstances similar to those in
which Ardent would be required to pay a termination fee. Otherwise, the option
terminates. You are urged to read the stock option agreement, which is attached
as Appendix D, in its entirety.
11
NONCOMPETITION AGREEMENTS (SEE PAGE 75)
In connection with the merger, several executive officers and key employees
of Ardent each agreed to enter into a noncompetition agreement with Informix.
Under the noncompetition agreements, these individuals agree not to solicit
Informix's employees for employment or compete with Informix in the design,
development, marketing, distribution and/or licensing of data integration
infrastructure software for e-business, data warehousing and analytical
applications, and enterprise portals until 12 months after the effective time of
the merger.
TERMINATION OF THE MERGER AGREEMENT (SEE PAGE 79)
Informix or Ardent may terminate the merger agreement by mutual written
consent, duly authorized by Informix's and Ardent's boards of directors. Either
Informix or Ardent may also terminate the merger agreement if the conditions to
completion of the merger are not satisfied because of a material breach of the
merger agreement by the other party or if a representation or warranty of the
other party in the merger agreement becomes materially untrue, either of which
is incurable through commercially reasonable efforts. In addition, either
Informix or Ardent may terminate the merger agreement under any of the following
circumstances:
- If the merger is not completed by June 30, 2000,
- If a final court order or other government decree or ruling prohibiting
the merger is issued and is not appealable, or
- If Ardent's stockholders do not adopt the merger agreement and approve
the merger or Informix's stockholders do not approve the issuance of
the shares of Informix common stock necessary to complete the merger.
Furthermore, Informix may terminate the merger agreement if:
- Ardent breaches its obligations not to engage in negotiations with
another party about a business combination,
- Ardent's board of directors withdraws or changes in a manner adverse to
Informix its recommendation in favor of the merger,
- Ardent's board of directors does not reaffirm its recommendation in
favor of the merger within five business days after Informix requests
reaffirmation following the announcement of any offer or proposal from
a party other than Informix relating to an acquisition proposal
involving Ardent, such as a merger or a sale of significant assets,
- Ardent's board of directors approves or recommends any offer or
proposal from a party other than Informix relating to an acquisition
proposal,
- Ardent enters into any letter of intent or other agreement accepting
any offer or proposal from a party other than Informix relating to an
acquisition proposal, or
- A person unaffiliated with Informix starts a tender or exchange offer
relating to the securities of Ardent, and Ardent does not recommend
that its stockholders reject such offer within ten business days after
the offer is first started.
NO OTHER NEGOTIATIONS INVOLVING ARDENT (SEE PAGE 76)
Ardent has agreed, subject to some limited exceptions, not to initiate or
engage in discussions with another party about a business combination while the
merger is pending.
12
EXPENSES AND TERMINATION FEE (SEE PAGES 79 AND 81)
Informix and Ardent have agreed that they will each pay their own fees and
expenses in connection with the merger, whether or not they consummate the
merger, except that they will share equally all fees and expenses (other than
attorneys' fees) in connection with the printing and filing of this joint proxy
statement/prospectus and the registration statement of which this joint proxy
statement/ prospectus is a part.
In addition, Ardent has agreed to pay Informix a $25.5 million termination
fee in the following situations:
- Ardent fails to include in the joint proxy statement/prospectus the
unanimous recommendation of its board of directors with respect to the
merger,
- The Ardent board of directors approves or recommends an acquisition
proposal from a party other than Informix,
- The Ardent board of directors fails to reaffirm its unanimous
recommendation with respect to the merger within five business days after
Informix makes a written request following the announcement of an
acquisition proposal,
- The Ardent board of directors has withdrawn, modified or refrained from
making its unanimous recommendation or approval in respect of the merger,
or has disclosed its intention to change such recommendation,
- Ardent breaches the non-solicitation clauses of the merger agreement,
- Ardent enters into any letter of intent or similar documents accepting any
acquisition proposal,
- A tender or exchange offer is commenced by a party unrelated with Ardent
or Informix, and Ardent has not sent a statement to its stockholders that
it recommends rejection of such tender or exchange offer, or
- The merger has not been consummated by June 30, 2000 or Ardent has not
obtained the approval of its stockholders and a third-party announces an
acquisition proposal and within 12 months following the termination of the
merger agreement, a company acquisition (as defined below) is consummated
or Ardent enters into a letter of intent providing for a company
acquisition.
For more information, see "Other Provisions of the Merger
Agreement--Termination; Break-up Fee" beginning on page 79.
MATERIAL DIFFERENCES BETWEEN THE RIGHTS OF SECURITYHOLDERS OF INFORMIX AND
ARDENT (SEE PAGE 90)
The rights of Ardent's stockholders are currently governed by Delaware law
and Ardent's certificate of incorporation and bylaws. The rights of Informix's
stockholders are governed by Delaware law and Informix's certificate of
incorporation and bylaws. At the time of the merger, Ardent stockholders will
become Informix stockholders. There are important differences between the rights
of stockholders of Ardent and stockholders of Informix. For a description of
these differences, see "Comparison of Rights of Holders of Ardent Common Stock
and Informix Common Stock" beginning on page 90.
ACCOUNTING TREATMENT OF THE MERGER (SEE PAGE 72)
The merger is intended to be treated as a pooling of interests for
accounting purposes. It is a condition to the merger that Informix shall have
received a letter from KPMG LLP, its independent accountants, and that Ardent
shall have received a letter from Deloitte & Touche LLP, its independent
13
accountants, stating that the independent accountants concur with the
conclusions of management of Informix and Ardent, respectively, that the
transaction will qualify as a pooling of interests if the transaction is
consummated in accordance with the merger agreement, in the case of KPMG LLP, or
that any conditions exist that would preclude Ardent from entering into a
business combination to be accounted for as a pooling of interests, in the case
of Deloitte & Touche LLP.
NO APPRAISAL RIGHTS (SEE PAGE 71)
Neither Ardent nor Informix stockholders are entitled to appraisal rights in
connection with the merger.
REGULATORY APPROVALS (SEE PAGE 78)
The merger is subject to the Hart-Scott-Rodino Antitrust Improvement Act of
1976, as amended, which is referred to as the HSR Act. Ardent and Informix have
each made the notifications required under the HSR Act and the waiting period
under the HSR Act expired on January 20, 2000. The merger must also comply with
federal and state securities laws.
MARKETS AND MARKET PRICES
Informix common stock is quoted on Nasdaq under the symbol "IFMX." Ardent
common stock is quoted on Nasdaq under the symbol "ARDT." Following the
consummation of the merger, Ardent common stock will cease to be quoted on
Nasdaq.
The following table sets forth various Informix and Ardent common stock
closing sale prices per share on November 30, 1999, the last trading day
preceding public announcement of the signing of the merger agreement and on
January 21, 2000 the latest practicable trading day before printing of this
joint proxy statement/prospectus. Additionally, the table shows the Ardent
equivalent per share price, which is the equivalent of one share of Ardent
common stock calculated by multiplying the price per share of Informix common
stock by 3.5.
INFORMIX COMMON STOCK ARDENT COMMON STOCK ARDENT EQUIVALENT
DATE PER SHARE PRICE PER SHARE PRICE PER SHARE PRICE
- ---- --------------------- ------------------- -----------------
November 30, 1999..................... $11.00 $26.25 $38.50
January 21, 2000...................... $13.19 $45.00 $46.16
14
RISK FACTORS
INFORMIX STOCKHOLDERS AND ARDENT STOCKHOLDERS SHOULD CONSIDER THE FOLLOWING
FACTORS CAREFULLY IN EVALUATING WHETHER TO APPROVE THE MERGER. THESE FACTORS
SHOULD BE CONSIDERED TOGETHER WITH THE OTHER INFORMATION INCLUDED OR
INCORPORATED BY REFERENCE IN THIS JOINT PROXY STATEMENT/PROSPECTUS.
RISKS RELATED TO THE MERGER
DIFFICULTIES INTEGRATING INFORMIX AND ARDENT MAY PREVENT THE BENEFITS OF THE
MERGER FROM BEING REALIZED.
As a result of the broad scope of Informix's and Ardent's operations and the
geographic distance separating their bases of operation, it will be difficult to
quickly integrate the products, technologies, research and development
activities, administration, sales and marketing and other operations of the two
companies. Integration difficulties may disrupt the combined company's business
and could prevent the achievement of the potential benefits of the merger. See
"The Merger and Related Transactions--Joint Reasons for the Merger." The
difficulties, costs and delays involved in integrating the companies, which
could be substantial, may include:
- Distracting management and other key personnel, particularly sales and
marketing personnel and senior engineers involved in product development
and product definition, from the business of the combined company,
- Inability to effectively market and distribute Ardent's products or
develop Ardent technology so as to produce new or enhanced products that
will be accepted in the marketplace,
- Perceived and potential adverse changes in business focus or product
offerings,
- Failure to generate significant revenue from the sale of newly developed
Ardent products,
- Failure to integrate complex software technology, product lines and
software development plans,
- Potential incompatibility of business cultures,
- Costs and delays in implementing common systems and procedures,
particularly in integrating different information systems,
- Inability to retain and integrate key management, technical, sales and
customer support personnel,
- Inability to maintain Ardent's existing relationships with its partners,
- Inability to maintain Ardent's existing customer base or replace the
Ardent products used by those customers with Informix products, and
- Disruption in the combined sales forces may result in a loss of current
customers or the inability to close sales with potential customers.
INFORMIX AND ARDENT MAY NOT BE ABLE TO RETAIN OR INTEGRATE KEY PERSONNEL, WHICH
MAY PREVENT THE COMBINED COMPANY FROM SUCCEEDING.
The combined company may not be able to retain its key personnel, including
senior management, sales, consulting, technical, marketing and administrative
personnel, or attract other qualified personnel in the future. The success of
the combined company will depend upon the continued service of key management
personnel of both Informix and Ardent. The competition to attract, retain and
motivate qualified technical, sales and operations personnel is intense.
Informix and Ardent have at times experienced, and continue to experience,
difficulty recruiting qualified personnel. The loss of services of any of the
key members of the combined company's management team or the combined company's
15
failure to attract and retain other important personnel could disrupt the
combined company's operations and have a negative effect on employee
productivity and morale, decrease production and harm financial results for the
combined company.
Except for a part-time, one-year arrangement with Peter Gyenes, Ardent's
president and chief executive officer, to assist in integration matters, none of
the key members of Ardent's current executive management team has accepted an
offer of continued employment or otherwise committed to remain with the combined
company following the merger. Additionally, in the recent past Informix has had
significant turnover at the senior management levels. The inability to attract
and retain members of senior management, including some of Ardent's current
executive officers, may increase the difficulty of integrating the two companies
and otherwise harm the business and operations of the combined company.
See "Informix has experienced, and anticipates that it will continue to
experience, turnover..." and "Informix's executive team may not be able to
successfully..." beginning on page 24, for a fuller discussion of the risks
related to senior management turnover at Informix.
IF THE COMBINED COMPANY IS UNABLE TO SUSTAIN AND INCREASE INFORMIX'S AND
ARDENT'S CURRENT REVENUE, THE COMBINED COMPANY MAY NOT BE ABLE TO ACHIEVE THE
POTENTIAL FINANCIAL BENEFITS OF THE MERGER.
Following the merger, Informix and Ardent may not be able to sustain and
increase Ardent's current level of revenue. The failure of the combined company
to meet revenue expectations could adversely affect the combined company's
operating results and financial condition. A number of factors could cause the
combined company to fail to meet such expectations, including:
- A steeper than expected decline in revenue derived from the licensing of
Ardent's embedded database products,
- The failure to increase the level of revenue derived from the licensing of
Ardent's datawarehouse products,
- The effect of Informix's more generous discount policy on the license fees
derived from Ardent's products, and
- The loss of current and potential Ardent customers because a significant
number of Ardent's customers use database management software acquired
from Informix's competitors or choose not to use Informix's products.
IF THE PRICE OF INFORMIX COMMON STOCK DECREASES BEFORE THE MERGER, ARDENT
STOCKHOLDERS WILL RECEIVE LESS DOLLAR VALUE FOR THEIR ARDENT STOCK, AND AT THE
TIME THEY VOTE TO APPROVE THE MERGER THEY WILL NOT KNOW THE VALUE OF THE
INFORMIX COMMON STOCK THEY WILL RECEIVE WHEN THE MERGER IS COMPLETED.
As a result of the merger, each Ardent stockholder will receive 3.5 shares
of Informix common stock for each share of Ardent common stock held. This
exchange ratio is fixed, and as a result, Ardent stockholders will not be
compensated for decreases in the market price of Informix common stock that
could occur before the merger. In addition, Ardent does not have "walk-away
rights" and consequently cannot terminate the merger agreement solely because
Informix's stock price declines. The market prices of Informix common stock and
Ardent common stock as of a recent date are set forth under "Summary--Markets
and Market Prices." Ardent stockholders are advised to obtain recent market
quotations for Informix common stock and Ardent common stock. Additionally,
there may be some time between when Ardent stockholders vote to approve the
merger and when the merger is actually completed, during which the price of
Informix common stock could decline. As a consequence, Ardent stockholders will
not know at the time they vote the value of the shares of Informix common stock
they will receive in the merger.
16
THE MERGER WILL DECREASE THE VOTING CONTROL THAT INFORMIX STOCKHOLDERS WILL HAVE
OVER THE COMBINED COMPANY.
After the merger, the current stockholders of Informix will own
approximately 75% of the outstanding shares of Informix common stock. Therefore,
Informix's current stockholders' ownership interest in Informix will be diluted
by approximately 25%. The issuance of additional shares of Informix common stock
in connection with the exercise of Ardent options being assumed by Informix in
the merger will cause further dilution to the current stockholders of Informix.
This decrease in ownership means that current Informix stockholders will have
reduced voting power in the combined company.
THE MERGER WILL GREATLY INCREASE THE NUMBER OF FREELY TRADABLE INFORMIX SHARES,
WHICH COULD DRIVE DOWN THE PRICE OF INFORMIX STOCK.
If the merger is consummated, Informix will issue to stockholders of Ardent
an aggregate of approximately 70,000,000 shares of Informix common stock based
on the number of shares of Ardent common stock outstanding as of the record
date. Almost all of these shares will be freely tradable upon consummation of
the merger. As a result, substantial sales of Informix common stock could occur
immediately after the merger, which could cause the price of Informix common
stock to drop. In addition, based on the number of Ardent options and warrants
outstanding as of the record date, approximately 18.8 million additional shares
of Informix common stock will be reserved for issuance to holders of Ardent
options and warrants to be assumed by Informix in the merger. Future sales of a
substantial number of such shares of Informix common stock could adversely
affect or cause substantial fluctuations in the market price of Informix common
stock.
THERE WILL BE SUBSTANTIAL EXPENSES RESULTING FROM THE MERGER THAT COULD DIVERT
RESOURCES FROM OTHER PRODUCTIVE USES.
Informix and Ardent estimate that the negotiation and implementation of the
merger will result in aggregate costs and expenses of $30 million to
$40 million. These expenses will prevent the combined company from spending that
amount on other, possibly more productive, uses. These costs will primarily
relate to costs associated with combining the operations of the two companies
and the fees of financial advisors, attorneys and accountants. Although we
believe that the costs will not exceed this estimate, the estimate may be
incorrect or unanticipated contingencies may occur which substantially increase
the costs of combining the operations of Informix and Ardent.
SOME OFFICERS AND DIRECTORS OF ARDENT HAVE CONFLICTS OF INTEREST ARISING OUT OF
PERSONAL BENEFITS TO BE RECEIVED IN THE MERGER THAT COULD INFLUENCE THEIR
SUPPORT OF THE MERGER.
The personal benefits to be received in the merger by Ardent's executive
officers and directors may raise conflicts of interest for each of these
individuals because the receipt of these benefits may favorably influence their
support of the merger. In particular, Ardent's change of control policy provides
for severance benefits and the continuation of premium payments under whole-life
insurance policies benefiting some of Ardent's executive officers and directors.
Moreover, Informix and Mr. Gyenes have entered into a memorandum of
understanding regarding an employment arrangement for a term of one year
following the merger. Informix has also made offers of employment to Peter
Fiore, James Foy and Jason Silvia that would provide salary, bonus, stock
options and severance to such individuals. In addition, most of the outstanding
options to purchase Ardent common stock held by executive officers and directors
will, in accordance with the terms of various policies, plans and agreements,
become fully vested as a result of the merger. Further, Mr. Gyenes and
Mr. Morrill will be nominated and appointed to serve as directors on the
Informix board of directors immediately following the merger. Under the merger
agreement, Informix has agreed to indemnify and provide directors' and officers'
liability insurance for the directors and officers of Ardent for six years
following
17
the merger. See "The Merger and Related Transactions--Interests of Executive
Officers and Directors of Ardent in the Merger" beginning on page 67.
THE COMBINED COMPANY MAY EXPERIENCE DIFFICULTY IN REALIZING THE POTENTIAL
FINANCIAL OR STRATEGIC BENEFITS OF FUTURE BUSINESS ACQUISITIONS, WHICH COULD
HURT THE COMBINED COMPANY'S ABILITY TO GROW ITS BUSINESS AND SELL ITS PRODUCTS.
In the future, the combined company may acquire or invest in other
businesses which offer products, services and technologies that it believes
would help expand or enhance its products and services or help expand
distribution channels. If the combined company were to make such an acquisition
or investment, the following risks could impair its ability to grow its
business, to develop new products and, ultimately, to sell its products:
- Difficulty in combining the technology, operations or work force of the
acquired business,
- Disruption of its on-going businesses,
- Difficulty in realizing the potential financial or strategic benefits of
the transaction,
- Difficulty in maintaining uniform standards, controls, procedures and
policies, and
- Possible impairment of relationships with employees and customers as a
result of the integration of new businesses and management personnel.
The consideration for any future acquisition could be paid in cash, shares
of the combined company's common stock, or a combination of cash and its common
stock. If the consideration is paid in the combined company's common stock,
existing stockholders would be further diluted. Any amortization of goodwill or
other assets resulting from any acquisition could materially adversely affect
the combined company's operating results and financial condition.
RISKS RELATED TO THE BUSINESS AND OPERATIONS OF INFORMIX AND ARDENT
THE RISKS SET FORTH BELOW ARE A NUMBER OF THE RISKS RELATING TO THE BUSINESS
AND OPERATIONS OF EACH OF INFORMIX AND ARDENT. IT IS IMPORTANT FOR STOCKHOLDERS
OF INFORMIX AND ARDENT TO UNDERSTAND THESE RISKS BECAUSE, AFTER THE MERGER, THEY
COULD HARM THE BUSINESS OF THE COMBINED COMPANY.
THE QUARTERLY OPERATING RESULTS OF INFORMIX AND ARDENT ARE SUBJECT TO
FLUCTUATIONS CAUSED BY MANY FACTORS, WHICH COULD RESULT IN INFORMIX OR ARDENT
FAILING TO ACHIEVE REVENUE OR PROFITABILITY EXPECTATIONS.
Informix's and Ardent's quarterly and annual results of operations have
varied significantly in the past and are likely to continue to vary in the
future due to a number of factors described below and elsewhere in this "Risk
Factors" section, many of which are beyond Informix's or Ardent's control. Any
one or more of the factors listed below or other factors could cause Informix or
Ardent to fail to achieve their revenue or profitability expectations. In
particular, the failure to meet market expectations could cause a sharp drop in
either company's stock price. These factors include:
- Changes in demand for their products and services, including changes in
industry growth rates,
- The size, timing and contractual terms of large orders for their software
products,
- Adjustments of delivery schedules to accommodate customer or regulatory
requirements,
- The budgeting cycles of their customers and potential customers,
- Any downturn in their customers' businesses, in the domestic economy or in
international economies where their customers do substantial business,
18
- Changes in their pricing policies resulting from competitive pressures,
such as aggressive price discounting by their competitors or other
factors,
- Their ability to develop and introduce on a timely basis new or enhanced
versions of their products and solutions,
- Changes in the mix of revenues attributable to domestic and international
sales, and
- Seasonal buying patterns which tend to peak in the fourth quarter.
INTENSE COMPETITION COULD ADVERSELY AFFECT INFORMIX'S AND ARDENT'S ABILITY TO
SELL THEIR PRODUCTS OR GROW THEIR BUSINESS.
Informix and Ardent may not be able to compete successfully against current
and/or future competitors and such inability could impair their ability to sell
their products. The market for their products is highly competitive, diverse and
is subject to rapid change. Moreover, Informix and Ardent expect that the
technology for database products generally, and, in particular, the technology
underlying database solutions and products for the Internet and datawarehousing
products, will continue to change rapidly. For example, as customers embrace the
Internet, Informix and Ardent need to develop and enhance their software
solutions to support Internet applications. It is possible that Informix's and
Ardent's products will be rendered obsolete by technological advances.
Informix and Ardent currently face competition from a number of sources,
including several large vendors that develop and market databases, applications,
development tools, decision support products, consulting services and/or
complete database-driven solutions for the Internet. Informix's principal
competitors include Computer Associates, IBM, Microsoft, NCR/Teradata, Oracle
and Sybase. Ardent's primary competitors are Progress Software, Oracle,
Informatica and Sagent. Additionally, as Informix and Ardent expand their
business in the markets of datawarehousing and Web/e-commerce, Informix and
Ardent expect to compete with a different group of companies, including small,
highly-focused companies offering single products or services that Informix and
Ardent include as part of an overall solution. A number of Informix's and
Ardent's competitors have significantly greater financial, technical, marketing
and other resources than they have. As a result, these competitors may be able
to respond more quickly to new or emerging technologies, evolving markets and
changes in customer requirements or to devote greater resources to the
development, promotion and sale of their products than Informix and Ardent can.
COMPETITION MAY AFFECT THE PRICING OF INFORMIX'S AND ARDENT'S PRODUCTS OR
SERVICES, AND CHANGES IN PRODUCT MIX MAY OCCUR, EITHER OF WHICH MAY REDUCE ITS
MARGINS.
Existing and future competition or changes in Informix's and Ardent's
product or service pricing structure or product or service offerings could
result in an immediate reduction in the prices of Informix's and Ardent's
products or services. Also, a significant change in the mix of software products
and services that Informix sells, including the mix between higher margin
software and maintenance products and lower margin consulting and training,
could materially adversely affect its operating results for future quarters.
Additionally, if significant price reductions in their products or services were
to occur and not be offset by increases in sales volume, their operating margins
would be adversely affected. For example, several of Informix's competitors have
announced the development of enhanced versions of their principal database
products that are intended to improve the performance or expand the capabilities
of their existing products. New or enhanced products by existing competitors or
new competitors could result in greater price pressure on both Informix's and
Ardent's products.
In addition, the following factors could affect the pricing of relational
database management solutions products and related products:
- The industry movement to new operating systems, like Windows NT, Linux and
other low-cost operating systems available through other appliances,
19
- Access to relational database management solutions products through
low-end desktop computers,
- Access to database-driven solutions, including object-relational database
management systems products, through the Internet,
- The bundling of software products for promotional purposes or as a
long-term pricing strategy by competitors, and
- Informix's own practice of bundling its software products for enterprise
licenses or for promotional purposes with its partners.
In particular, the pricing strategies of competitors in the software
database industry have historically been characterized by aggressive price
discounting to encourage volume purchasing by customers. Informix and Ardent may
not be able to compete effectively against competitors who continue to
aggressively discount the prices of their products.
IF INFORMIX AND ARDENT DO NOT RESPOND ADEQUATELY TO THEIR INDUSTRY'S EVOLVING
TECHNOLOGY STANDARDS OR DO NOT CONTINUE TO MEET THE SOPHISTICATED NEEDS OF THEIR
CUSTOMERS, SALES OF THE COMBINED COMPANY'S PRODUCTS MAY DECLINE.
Informix's and Ardent's future success will depend on their ability to
address the increasingly sophisticated needs of their customers by supporting
existing and emerging hardware, software, database and networking platforms.
Informix and Ardent will have to develop and introduce commercially viable
enhancements to their existing products and solutions on a timely basis to keep
pace with technological developments, evolving industry standards and changing
customer requirements. If Informix and Ardent do not enhance their products to
meet these evolving needs, they will not sell as many products. Their position
in existing, emerging or potential markets could be eroded rapidly by product
advances. For example, certain of Ardent's planned products in the areas of data
warehouse and database management are in various stages of development. These
products may prove not to be commercially viable or may experience operational
problems after commercial introduction. Any such operational problems could
delay or defeat the ability of such products to generate revenue.
Informix's and Ardent's product development efforts will continue to require
substantial financial and operational investments. Informix and Ardent may not
have sufficient resources to make the necessary investments or to attract and
retain qualified software development engineers. In addition, they may not be
able to internally develop new products or solutions quickly enough to respond
to market forces. As a result, they may have to acquire technology or access to
products or solutions through mergers and acquisitions, investments and
partnering arrangements. They may not have sufficient cash, access to funding,
or available equity to engage in such transactions. Moreover, they may not be
able to forge partnering arrangements or strategic alliances on satisfactory
terms, or at all, with the companies of their choice.
ANY CANCELLATIONS OR DELAYS IN PLANNED CUSTOMER PURCHASES OF INFORMIX'S AND
ARDENT'S PRODUCTS OR SERVICES COULD MATERIALLY ADVERSELY AFFECT THEIR NET INCOME
AND COULD SUBSTANTIALLY REDUCE QUARTERLY REVENUES.
Because Informix and Ardent do not know when, or if, potential customers
will place orders and finalize contracts, they cannot accurately predict revenue
and operating results for future quarters. If there is a downturn in potential
customers' businesses, the domestic economy in general, or in international
economies where Informix and Ardent derive substantial revenue, potential
customers may defer or cancel planned purchases of their products. Because
Informix and Ardent base operating expenses on anticipated revenue levels and
because a high percentage of their expenses are relatively fixed, delays in the
recognition of revenues from even a limited number of product license
transactions
20
could cause significant variations in operating results from quarter to quarter,
which could cause net income to fall significantly short of anticipated levels.
IF A LARGE NUMBER OF THE ORDERS THAT ARE TYPICALLY BOOKED AT THE END OF A
QUARTER ARE NOT BOOKED, INFORMIX'S AND ARDENT'S NET INCOME FOR THAT QUARTER
COULD BE SUBSTANTIALLY REDUCED.
Informix's and Ardent's software license revenue in any quarter often
depends on orders booked and shipped in the last month, weeks or days of that
quarter. At the end of each quarter, both Informix and Ardent typically have
either minimal or no backlog of orders for the subsequent quarter. If a large
number of orders or several large orders do not occur or are deferred, revenue
in that quarter could be substantially reduced.
SEASONAL TRENDS IN SALES OF INFORMIX'S AND ARDENT'S SOFTWARE PRODUCTS COULD
ADVERSELY AFFECT THE COMBINED COMPANY'S QUARTERLY OPERATING RESULTS.
Informix's and Ardent's sales of software products have been affected by
seasonal purchasing trends that materially affect Informix's and Ardent's
quarter-to-quarter operating results. Informix and Ardent expect these seasonal
trends to continue in the future. Revenue and operating results in each
company's quarter ending December 31 are typically higher relative to each
company's other quarters because many customers make purchase decisions based on
their calendar year-end budgeting requirements and because both Informix and
Ardent measure their sales incentive plans for sales personnel on a calendar
year basis. As a result, both Informix and Ardent have historically experienced
a substantial decline in revenue in the first quarter of each fiscal year
relative to the preceding quarter.
THE LENGTHY SALES CYCLE FOR PRODUCTS MAKES REVENUES SUSCEPTIBLE TO FLUCTUATIONS.
Any delay in the sales cycle of a large transaction or a number of smaller
transactions could result in significant fluctuations in Informix's and Ardent's
quarterly operating results. Informix's and Ardent's sales cycles typically take
many months to complete and vary depending on the product, service or solution
that is being sold. The length of the sales cycle for both companies may vary
depending on a number of factors over which neither company may have control,
including the size of a potential transaction and the level of competition that
they encounter in their selling activities. The sales cycle can be further
extended for sales made through third party distributors.
EACH OF INFORMIX'S AND ARDENT'S FUTURE REVENUE AND ITS ABILITY TO MAKE
INVESTMENTS IN DEVELOPING ITS PRODUCTS IS SUBSTANTIALLY DEPENDENT UPON ITS
INSTALLED CUSTOMER BASE CONTINUING TO LICENSE ITS PRODUCTS AND RENEW ITS SERVICE
AGREEMENTS.
Each of Informix and Ardent depends on its installed customer base for
future revenue from services and licenses of additional products. If either
company's customers fail to renew their maintenance agreements, its revenue will
be harmed. The maintenance agreements are generally renewable annually at the
option of the customers and there are no minimum payment obligations or
obligations to license additional software. Therefore, current customers may not
necessarily generate significant maintenance revenue in future periods. In
addition, customers may not necessarily purchase additional products or
services. Each of Informix's and Ardent's services revenue and maintenance
revenue also depend upon the continued use of these services by its installed
customer base. Any downturn in software license revenue could result in lower
services revenue in future quarters. Moreover, if either license revenue or
revenue from services declines, the combined company may not have sufficient
cash to finance investments or acquire technology.
21
THE SUCCESS OF INFORMIX'S AND ARDENT'S INTERNATIONAL OPERATIONS IS DEPENDENT
UPON MANY FACTORS WHICH COULD ADVERSELY AFFECT THE COMBINED COMPANY'S ABILITY TO
SELL ITS PRODUCTS INTERNATIONALLY AND COULD AFFECT ITS PROFITABILITY.
International sales represented approximately 50% of Informix's total
revenue during the nine months ended September 30, 1999 and 39% of Ardent's
total revenue during the nine months ended September 30, 1999. The international
operations are, and any expanded international operations will be, subject to a
variety of risks associated with conducting business internationally that could
adversely affect the combined company's ability to sell its products
internationally, and therefore, its profitability, including the following:
- Difficulties in staffing and managing international operations,
- Problems in collecting accounts receivable,
- Longer payment cycles,
- Fluctuations in currency exchange rates,
- Seasonal reductions in business activity during the summer months in
Europe and certain other parts of the world,
- Uncertainties relative to regional, political and economic circumstances,
- Recessionary environments in foreign economies, and
- Increases in tariffs, duties, price controls or other restrictions on
foreign currencies or trade barriers imposed by foreign countries.
In particular, instability in the Asian-Pacific and Latin American economies
and financial markets, which together accounted for approximately 20% of
Informix's and 9% of Ardent's total net revenues during the nine months ended
September 30, 1999, could adversely affect the combined company's ability to
sell its products internationally.
FLUCTUATIONS IN THE VALUE OF FOREIGN CURRENCIES COULD RESULT IN CURRENCY
TRANSACTION LOSSES.
Despite efforts to manage foreign exchange risk, Informix's and Ardent's
hedging activities may not adequately protect the combined company against the
risks associated with foreign currency fluctuations. As a consequence, the
combined company may incur losses in connection with fluctuations in foreign
currency exchange rates. Most of the international revenue and expenses are
denominated in local currencies. Due to the substantial volatility of currency
exchange rates, among other factors, it is not possible to predict the effect of
exchange rate fluctuations on the combined company's future operating results.
Although Informix takes into account changes in exchange rates over time in its
pricing strategy, it does so only on an annual basis, resulting in substantial
pricing exposure as a result of foreign exchange volatility during the period
between annual pricing reviews. In addition, as noted previously, the sales
cycles for Informix's and Ardent's products are relatively long. Foreign
currency fluctuations could, therefore, result in substantial changes in the
financial impact of a specific transaction between the time of initial customer
contact and revenue recognition. In addition to the hedging program, Informix
has implemented a foreign exchange hedging program consisting principally of the
purchase of forward foreign exchange contracts in the primary European and Asian
currencies. This program is intended to hedge the value of intercompany accounts
receivable or intercompany accounts payable denominated in foreign currencies
against fluctuations in exchange rates until such receivables are collected or
payables are disbursed. Additionally, uncertainties related to the Euro
conversion could adversely affect Informix's hedging activities.
22
IF THE INTERNET DOES NOT CONTINUE TO DEVELOP AS INFORMIX ANTICIPATES, OR IF THE
COMBINED COMPANY'S PRODUCT OFFERINGS ARE NOT ACCEPTED IN THIS MARKET, THE
COMBINED COMPANY MAY NOT BE ABLE TO GROW ITS BUSINESS.
The Internet is a rapidly evolving market. Informix is unable to predict
whether and to what extent Internet computing and electronic commerce will be
embraced by consumers and traditional businesses. Informix's successful
introduction of database-driven products and solutions for the Internet market
will depend in large measure on:
- The commitment by hardware and software vendors to manufacture, promote
and distribute Internet access appliances,
- The lower cost of ownership of Internet computing relative to
client/server architecture, and
- The ease of use and administration relative to client/server architecture.
In addition, if a sufficient number of vendors do not undertake a commitment
to the market, the market may not accept Internet computing or Internet
computing may not generate significant revenues for Informix's business. Also,
standards for network protocols, as well as other industry-adopted and de facto
standards for the Internet, are evolving rapidly. There can be no assurance that
standards Informix has chosen will position its products and the combined
company's products to compete effectively for business opportunities as they
arise on the Internet. The widespread acceptance and adoption of the Internet by
traditional businesses for conducting business and exchanging information is
likely only if the Internet provides these businesses with greater efficiencies
and improvements. The failure of the Internet to continue to develop as a
commercial or business medium could materially adversely affect Informix's,
Ardent's or the combined company's business. Even if the Internet and electronic
commerce are widely accepted and adopted by consumers and businesses, the
combined company's database products and database-driven solutions for the
Internet may not succeed. Informix recently announced its intention to focus a
substantial part of its product development and sales efforts on developing and
selling technology and services for the Internet market. This market is new to
Informix's and Ardent's product development, marketing and sales organizations.
Neither company may be able to market and sell products and solutions in this
market successfully. In addition, the combined company's database products and
database-driven solutions for the Internet may not compete effectively with its
competitors' products and solutions. Further, the combined company may not
generate significant revenue and/or margin in this market. Any of these events
could materially, adversely affect the combined company's business, operating
results and financial condition.
IF THE DATA WAREHOUSE MARKET DOES NOT CONTINUE TO GROW, OR IF THE COMBINED
COMPANY'S PRODUCT OFFERINGS IN THIS MARKET ARE NOT ACCEPTED, THE COMBINED
COMPANY MAY NOT BE ABLE TO SELL ITS PRODUCTS OR GROW ITS BUSINESS.
The data warehouse market may not continue to grow, or may not grow rapidly,
and Informix's and Ardent's customers may not expand their use of data warehouse
products. In addition, the combined company may not be able to market and sell
its products and solutions in this market or otherwise compete effectively and
generate significant revenue. Although demand for data warehouse software has
grown in recent years, the market is still emerging. The combined company's
future financial performance in this area will depend to a large extent on:
- Continued growth in the number of organizations adopting data warehouses,
- The combined company's success in developing partnering arrangements with
developers of software tools and applications for the data warehouse
market, and
- Existing customers expanding their use of data warehouses.
23
RECENT ORGANIZATIONAL CHANGES COULD DISRUPT INFORMIX'S BUSINESS OPERATIONS AND
COULD ADVERSELY AFFECT THE SALES OF INFORMIX'S PRODUCTS.
On October 1, 1999, Informix reorganized its operating business divisions
into four new business groups: the TransAct Business Group, which is responsible
for delivering on-line transaction processing products; the i.Foundation
Business Group, which is responsible for delivering products that provide the
technological foundation for Internet-based electronic commerce solutions; the
i.Informix Business Group, which is responsible for delivering Internet-based
solutions for electronic commerce; and the i.Intelligence Business Group, which
is responsible for delivering Internet-based data warehouse products and
solutions. Informix may not achieve the anticipated benefits of this
reorganization. In addition, the reorganization could disrupt Informix's current
business operations, including its product development and sales efforts.
Further, any such disruption or other operational difficulty encountered while
implementing the organization could distract Informix's management team and
cause uncertainty and confusion among its customers.
INFORMIX HAS EXPERIENCED, AND ANTICIPATES THAT IT WILL CONTINUE TO EXPERIENCE,
TURNOVER AT ITS SENIOR MANAGEMENT LEVELS, WHICH COULD HARM ITS BUSINESS AND
OPERATIONS.
In July 1999, Informix announced the appointment of Jean-Yves F. Dexmier as
a member of the board of directors and president and chief executive officer,
while Robert J. Finocchio resigned his position as president and chief executive
officer. Mr. Finocchio continues to be actively involved in Informix's
management in his capacity as the chairman of the board. During the past six
months, several of Informix's senior executive officers have resigned, including
its (i) vice president and treasurer, (ii) vice president, human resources and
(iii) vice president, web and e-commerce division, all three of whom have since
been replaced, as well as the vice president, corporate controller, who resigned
when Informix replaced the corporate controller position with two controller
positions, both of which report directly to Informix's chief financial officer.
Also, Informix's vice president, corporate marketing, resigned effective
December 31, 1999. Informix expects that this high turnover at its senior
management levels will continue and that other senior executive officers will
also resign.
Of Informix's senior executive officers and key employees, only Robert J.
Finocchio, chairman of the board, and the former president and chief executive
officer, is bound by an employment agreement, the terms of which are nonetheless
at-will. In addition, Informix does not maintain key man life insurance on its
employees and has no plans to do so. The loss of the services of one or more of
Informix's current senior executive officers or key employees could harm its
business and could affect its ability to successfully implement its business
objectives. Informix's future success will depend to a significant extent on the
continued service of its current senior executives. If Informix were to lose the
services of one or more of its current senior executives or key employees, this
could adversely affect its ability to grow its business and achieve its business
objectives, particularly if one or more of those executives or key employees
decided to join a competitor or otherwise compete directly or indirectly with
Informix.
INFORMIX'S EXECUTIVE TEAM MAY NOT BE ABLE TO SUCCESSFULLY WORK TOGETHER TO MEET
ITS BUSINESS OBJECTIVES.
Since the beginning of 1998, Informix has expanded its ability to deliver
products and solutions for the Internet, including e-commerce solutions, and
business intelligence solutions driven by its datawarehouse technology.
Informix's management team has not worked together for a significant length of
time and may not be able to successfully implement this strategy. If the
management team is unable to accomplish Informix's business objectives, it could
materially adversely affect Informix's ability to grow its business. As noted
above, Mr. Dexmier was appointed as the president and chief executive officer in
July 1999. In addition, two new executive officers, the vice president and
treasurer and the vice president, i.Intelligence Business Group, joined Informix
in July 1999 and the vice
24
president, human resources, joined Informix in October 1999. Almost all of
Informix's other executive officers have joined the company since the beginning
of fiscal 1998.
IF INFORMIX AND ARDENT FAIL TO PROTECT THEIR INTELLECTUAL PROPERTY RIGHTS,
COMPETITORS MAY BE ABLE TO USE THEIR TECHNOLOGY OR TRADEMARKS AND THIS WOULD
WEAKEN THE COMPETITIVE POSITION OF THE COMBINED COMPANY, REDUCE THE COMBINED
COMPANY'S REVENUE AND INCREASE COSTS.
The combined company's success will continue to be heavily dependent upon
proprietary technology. Both Informix and Ardent rely primarily on a combination
of patent, copyright and trademark laws, trade secrets, confidentiality
procedures and contractual provisions to protect their proprietary rights. These
means of protecting proprietary rights may not be adequate, and the inability to
protect intellectual property rights may adversely affect the combined company's
business and/or financial condition. Informix currently holds eight United
States patents and several pending applications. Ardent currently holds two
United States patents. There can be no assurance that any other patents covering
either company's inventions will be issued or that any patent, if issued, will
provide sufficiently broad protection or will prove enforceable in actions
against alleged infringers. The combined company's ability to sell its products
and prevent competitors from misappropriating its proprietary technology and
trade names is dependent upon protecting its intellectual property. Both
Informix's and Ardent's products are generally licensed to end-users on a
"right-to-use" basis under a license that restricts the use of the products for
the customer's internal business purposes. Informix and Ardent also rely on
"shrink-wrap" and "click-on" licenses, which include a notice informing the
end-user that by opening the product packaging, or in the case of a click-on
license by clicking on an acceptance icon and downloading the product, the
end-user agrees to be bound by the license agreement. Despite such precautions,
it may be possible for unauthorized third parties to copy aspects of their
current or future products or to obtain and use information that is regarded as
proprietary. In addition, Informix and Ardent have both licensed the source code
of their products to certain customers under certain circumstances and for
restricted uses. Both Informix and Ardent have also entered into source code
escrow agreements with a number of their customers that generally require
release of source code to the customer in the event the company enters
bankruptcy or liquidation proceedings or otherwise ceases to conduct business.
Informix and Ardent may also be unable to protect their technology because:
- Competitors may independently develop similar or superior technology,
- Policing unauthorized use of software is difficult,
- The laws of some foreign countries do not protect proprietary rights in
software to the same extent as do the laws of the United States,
- "Shrink-wrap" and/or "click-on" licenses may be wholly or partially
unenforceable under the laws of certain jurisdictions, and
- Litigation to enforce intellectual property rights, to protect trade
secrets, or to determine the validity and scope of the proprietary rights
of others could result in substantial costs and diversion of resources.
IN THE FUTURE, THIRD PARTIES COULD, FOR COMPETITIVE OR OTHER REASONS, ASSERT
THAT INFORMIX'S AND ARDENT'S PRODUCTS INFRINGE THEIR INTELLECTUAL PROPERTY
RIGHTS.
Third parties may claim that Informix's or Ardent's current or future
products infringe their proprietary rights. These claims, with or without merit,
could harm the combined company's business by increasing costs and by adversely
affecting its ability to sell its products. Any claim of this type could affect
the combined company's relationships with either company's existing customers
and prevent future customers from licensing its products. Any such claim, with
or without merit, could be time
25
consuming, result in costly litigation, cause product shipment delays or require
the combined company to enter into royalty or licensing agreements. Royalty or
license agreements may not be available on acceptable terms or at all. It is
expected that software product developers will increasingly be subject to
infringement claims as the number of products and competitors in the software
industry segment grows and the functionality of products in different industry
segments overlaps.
ERRORS IN INFORMIX'S AND ARDENT'S PRODUCTS OR THE FAILURE OF PRODUCTS TO CONFORM
TO CUSTOMER SPECIFICATIONS OR EXPECTATIONS COULD RESULT IN THEIR CUSTOMERS
DEMANDING REFUNDS FROM THE COMBINED COMPANY, ASSERTING CLAIMS FOR DAMAGES OR
LIMITING SALES OF PRODUCTS.
Because both companies' software products are complex, they often contain
errors or "bugs" that can be detected at any point in a product's life cycle.
While both companies continually test their products for errors and work with
customers through their customer support services to identify and correct bugs
in their software, it is expected that product errors will continue to be found
in the future. Although many of these errors may prove to be immaterial, some
could be significant. Detection of any significant errors may result in, among
other things, loss of, or delay in, market acceptance and sales of the combined
company's products, diversion of development resources, injury to its
reputation, or increased service and warranty costs.
THE FAILURE OF INFORMIX'S OR ARDENT'S PRODUCTS TO CONFORM TO CUSTOMER
SPECIFICATIONS OR EXPECTATIONS COULD RESULT IN DECREASED SALES OF THE COMBINED
COMPANY'S PRODUCTS.
A key determinative factor in future success will continue to be the ability
of each company's products to operate and perform well with existing and future
leading, industry-standard application software products intended to be used in
connection with relational and object-relational database management system
products. Failure to meet in a timely manner existing or future interoperability
and performance requirements of certain independent vendors could adversely
affect the market for the combined company's products. Commercial acceptance of
the combined company's products and services could also be adversely affected by
critical or negative statements or reports by brokerage firms, industry and
financial analysts and industry periodicals about the combined company, its
products or business, or by the advertising or marketing efforts of competitors,
or by other factors that could adversely affect consumer perception.
POTENTIAL YEAR 2000 PROBLEMS MAY OCCUR WHICH COULD RESULT IN SIGNIFICANT COSTS
TO THE COMBINED COMPANY.
To date, neither Informix nor Ardent has experienced any disruption of its
business or key systems as a result of year 2000 problems. Similarly, neither
Informix nor Ardent has been informed of any year 2000 problems encountered by
its customers relating to their use of Informix's or Ardent's software products.
It is possible, however, that Informix or Ardent or their respective customers
may encounter year 2000 problems at a later time. If such problems were to
arise, the combined company could incur substantial costs or the interruption in
or a failure of certain normal business activities or operations, which could
hurt the combined company's business. If Ardent's or Informix's customers
experience year 2000 related problems as a result of their use of Informix's or
Ardent's software products, then those customers could assert claims for damages
which, if successful, could result in significant costs to the combined company,
damage the combined company's operations or adversely affect its ability to sell
its products.
IF THE RDBMS AND ORDBMS MARKETS DO NOT GROW AS QUICKLY AS INFORMIX ANTICIPATES,
INFORMIX MAY SELL FEWER PRODUCTS.
If the growth rates for the relational and object-relational database
management systems, or RDBMS or ORDBMS, respectively, decline for any reason,
there will be less demand for Informix's
26
products, which would have a negative impact on the combined company's business
and financial results. Prior to fiscal 1997, the RDBMS industry grew
significantly, due in part to the continuing development of new technologies and
products responsive to customer requirements. In fiscal 1997 and 1998, however,
growth rates throughout the industry slowed and the future growth rate of the
RDBMS market cannot be predicted.
Delays in market acceptance of Informix's ORDBMS products could result in
fewer product sales for Informix. In recent years, the types and quantities of
data required to be stored and managed has grown increasingly complex and
includes, in addition to conventional character data, audio, video, text and
three-dimensional graphics in a high-performance scalable environment. Since
1996, Informix has invested substantial resources in developing its ORDBMS
product line. The market for ORDBMS products is new and evolving, and its growth
depends upon a growing need to store and manage complex data and upon broader
market acceptance of Informix's products as a solution for this need.
Organizations may not choose to make the transition from conventional RDBMS
products to ORDBMS products.
THE SETTLEMENT OF INFORMIX'S SECURITIES CLASS ACTION LITIGATION WILL FURTHER
DILUTE EXISTING STOCKHOLDERS.
Informix recently entered into a settlement agreement with respect to
several federal and state securities lawsuits. As a result of the settlement
agreement (which has received final approval from both federal and state
courts), Informix will have to issue at least 9,000,000 shares of its common
stock to the plaintiffs and their lawyers, which will further dilute the
stockholdings of Informix's existing stockholders. In addition, pursuant to the
proposed settlement, the total value of the shares of Informix's common stock to
be issued must total at least $91.0 million. Depending on Informix's stock
price, the company may have to issue more than the 9,000,000 shares described
above.
SETTLEMENT OF SEC INVESTIGATION COULD HARM INFORMIX'S BUSINESS.
In July 1997, the SEC issued a formal order of private investigation of
Informix and certain unidentified other entities and persons with respect to
accounting matters, public disclosures and trading activity in Informix's
securities that were not described in the formal order. During the course of the
investigation, Informix learned that the investigation concerned the events
leading to the restatement of its financial statements, including fiscal years
1994, 1995 and 1996, that was publicly announced in November 1997.
Effective January 11, 2000, Informix and the SEC have entered into a
settlement of the investigation as to Informix. Pursuant to the settlement,
Informix consented to the entry by the SEC of an Order Instituting Public
Administrative Proceedings Pursuant to Section 8A of the Securities Act of 1933
and Section 21C of the Securities Exchange Act of 1934, Making Findings, and
Imposing a Cease and Desist Order. Pursuant to the order, Informix neither
admitted nor denied the findings, except as to jurisdiction, contained in the
order.
The order prohibits Informix from violating and causing any violation of the
anti-fraud provisions of the federal securities laws, for example by making
materially false and misleading statements concerning its financial performance.
The order also prohibits Informix from violating or causing any violation of the
provisions of the federal securities laws requiring Informix to: (1) file
accurate quarterly and annual reports with the SEC; (2) maintain accurate
accounting books and records; and (3) maintain adequate internal accounting
controls. Pursuant to the order, Informix is also required to cooperate in the
SEC's continuing investigation of other entities and persons. In the event that
Informix violates the order, Informix could be subject to substantial monetary
penalties.
As a consequence of the issuance of the order, Informix will not, for a
period of three years from the date of the issuance of the order, be able to
rely on the "safe harbor" for forward-looking statements contained in the
federal securities laws. The "safe harbor," among other things, limits
27
potential legal actions against Informix in the event a forward-looking
statement concerning Informix's anticipated performance turns out to be
inaccurate, unless it can be proved that, at the time the statement was made,
Informix actually knew that the statement was false. At this time, Informix is
not able to predict whether its inability to rely on the "safe harbor" will
limit Informix in making forward-looking statements. If Informix's ability to
make forward-looking statements is limited or prevented, it could have a
material adverse affect upon Informix's business and operations. In the event
that Informix is a defendant in any private securities litigation brought under
the federal securities laws, its legal position in the litigation could be
materially adversely affected by its inability to rely on the "safe harbor"
provisions for forward-looking statements.
FAILURE TO CONTINUE TO STRENGTHEN INFORMIX'S INTERNAL ACCOUNTING CONTROLS COULD
ADVERSELY AFFECT ITS ABILITY TO ACCURATELY FORECAST AND REPORT ITS FINANCIAL
RESULTS WHICH COULD RESULT IN REDUCED CUSTOMER CONFIDENCE AND ADVERSELY AFFECT
ITS ABILITY TO SELL ITS PRODUCTS.
Although Informix has made significant progress in its efforts to strengthen
its accounting controls and processes, it may not be able to hire and retain
enough finance personnel to continue to do so. If Informix is unable to continue
to strengthen its accounting controls and processes, that inability could
adversely affect its ability to accurately forecast and report its financial
results. Any customer uncertainty about Informix's internal accounting controls
could have an adverse effect on its ability to sell its products. In connection
with their audit of Informix's consolidated financial statements for the year
ended December 31, 1998, KPMG LLP, its current independent auditors, notified
the company that they had identified certain conditions which, collectively,
represented a continuing material weakness in Informix's internal accounting
controls during the year ended December 31, 1998. The identified conditions were
significant turnover and a lack of adequate resources in the accounting and
finance departments, a failure to have timely and complete account analyses and
reconciliations at the end of each financial reporting period, the absence of a
formal budgeting process, and a lack of up-to-date formal written accounting
policies and procedures. Informix has taken, and continues to take, actions to
strengthen its internal accounting controls. Informix has:
- Added a significant number of experienced accounting and finance
personnel,
- Improved its account reconciliation and review processes,
- Created a 1999 revenue and operating expense budget by quarter that was
approved by its board of directors, and
- Engaged in a comprehensive review of its accounting policies and
procedures, as well as its compliance with its existing accounting
policies and procedures.
Informix has made significant progress toward addressing each of the
identified conditions. Informix's independent auditors have informed it that the
existence of the identified conditions did not affect the report on its
consolidated financial statements for the year ended December 31, 1998. In
addition, it is Informix's conclusion that the existence of the identified
conditions for the year ended December 31, 1998 had no effect on its reported
financial results for the quarters ended March 31, 1999, June 30, 1999 and
September 30, 1999. Moreover, based on the existing personnel, policies and
procedures, monthly financial statement review, account reconciliations and
general business processes, including forecasting, it is Informix's conclusion
that during the quarters ended March 31, 1999, June 30, 1999, September 30, 1999
and December 31, 1999, Informix maintained, and it continues to maintain,
effective internal control over financial reporting. Moreover, in its annual
report on Form 10-K for the year ended December 31, 1997, Informix stated that
Ernst & Young LLP, its former independent auditors, had issued a letter
identifying certain material weaknesses in its internal accounting controls for
the year ended December 31, 1997. During fiscal year 1998, Informix devoted
substantial effort and expense to addressing those material weaknesses.
28
THE RIGHTS OF INFORMIX'S SERIES B PREFERRED STOCKHOLDERS MAY ADVERSELY AFFECT
THE RIGHTS OF INFORMIX COMMON STOCKHOLDERS.
Holders of Informix's series B preferred shares have certain rights that may
adversely affect holders of Informix's common stock. At January 20, 2000, 7,000
shares of Informix's series B preferred stock remained outstanding.
RIGHTS TO CONSENT TO CORPORATE TRANSACTIONS.
Informix's agreements with the purchasers of its series B preferred stock
contain covenants that could impair its ability to engage in various corporate
transactions in the future, including financing transactions and certain
transactions involving a change-in-control or acquisition of Informix's assets
or equity, or that could otherwise be disadvantageous to the company and the
holders of its common stock. In particular, an acquisition of Informix's assets
or equity may not be effected without the consent of the holders of the
outstanding series B preferred stock or without requiring the acquiring entity
to assume the series B preferred stock or cause the series B preferred stock to
be redeemed. These provisions are likely to make an acquisition more difficult
and expensive and could discourage potential acquirors. Informix made certain
covenants in connection with the issuance of the series B preferred stock which
could limit its ability to obtain additional financing by, for example,
providing the holders of the series B preferred stock certain rights of first
offer and prohibiting Informix from issuing additional preferred stock without
the consent of the series B preferred stockholders.
CONVERSION RIGHTS.
The shares of Informix's series B preferred stock are convertible into
shares of its common stock based on the trading prices of its common stock
during future periods. Any conversion of series B preferred stock into its
common stock will dilute the existing common stockholders. Informix is also
obligated to issue upon conversion of the series B preferred stock additional
warrants to acquire shares of its common stock equal to 20% of the total number
of shares of common stock into which the series B preferred stock converts. The
exercise of these warrants will have further dilutive effect to the holders of
Informix's common stock. As of January 20, 2000, 7,000 shares of series B
preferred stock remained outstanding and, assuming a $4.00 per share conversion
price, were convertible into 1,750,000 shares of Informix's common stock, and
warrants to purchase an aggregate of 350,000 additional shares of the company's
common stock would become issuable upon such conversion. If the conversion price
of the series B preferred stock is determined during a period when the trading
price of Informix's common stock is low, the resulting number of shares of
common stock issuable upon conversion of the series B preferred stock could
result in greater dilution to the holders of Informix's common stock. As of
January 20, 2000, series B preferred stockholders had converted an aggregate of
43,000 shares of series B preferred stock into 8,694,804 shares of Informix's
common stock and warrants to purchase an aggregate of 1,938,947 shares of
Informix's common stock.
PENALTY PROVISION.
The terms of Informix's series B preferred financing agreements also include
certain penalty provisions that are triggered if Informix fails to satisfy
certain obligations. For instance, Informix must keep a registration statement
in effect for the resale of shares of its common stock issued or issuable upon
conversion of the series B preferred shares and upon exercise of the warrants.
INFORMIX MAY BE SUBJECT TO PRODUCT LIABILITY CLAIMS THAT COULD RESULT IN
SIGNIFICANT COSTS.
Informix may be subject to claims for damages related to product errors in
the future. A material product liability claim could materially adversely affect
Informix's business because of the costs of defending against these types of
lawsuits, diversion of key employees' time and attention from the
29
business and potential damage to the company's reputation. Although Informix has
not experienced any product liability claims to date, the sale and support of
its products entail the risk of such claims. While Informix carries insurance
policies covering this type of liability, these policies may not provide
sufficient protection should a claim be asserted. Informix's license agreements
with its customers typically contain provisions designed to limit exposure to
potential product liability claims. Such limitation of liability provisions may
not be effective under the laws of certain jurisdictions to the extent local
laws treat certain warranty exclusions as unenforceable.
PROVISIONS IN INFORMIX'S CHARTER DOCUMENTS WITH RESPECT TO UNDESIGNATED
PREFERRED STOCK MAY DISCOURAGE POTENTIAL ACQUISITION BIDS FOR INFORMIX.
Informix's board of directors is authorized to issue up to 5,000,000 shares
of undesignated preferred stock in one or more series. Of the 5,000,000 shares
of preferred stock, 440,000 shares have been designated series A preferred, none
of which is outstanding; 440,000 shares have been designated series A-1
preferred, none of which is outstanding; and 50,000 shares have been designated
series B preferred, of which 7,000 shares remained outstanding as of
January 20, 2000. Subject to the prior consent of the holders of the series B
preferred stock, Informix's board of directors can fix the price, rights,
preferences, privileges and restrictions of such preferred stock without any
further vote or action by its stockholders. However, the issuance of shares of
preferred stock may delay or prevent a change in control transaction without
further action by Informix's stockholders. As a result, the market price of
Informix's common stock and the voting and other rights of the holders of its
common stock may be adversely affected. The issuance of preferred stock with
voting and conversion rights may adversely affect the voting power of the
holders of Informix's common stock, including the loss of voting control to
others.
OTHER PROVISIONS IN INFORMIX'S CHARTER DOCUMENTS WITH RESPECT TO UNDESIGNATED
PREFERRED STOCK MAY DISCOURAGE POTENTIAL ACQUISITION BIDS FOR INFORMIX AND
PREVENT CHANGES IN THE COMPANY'S MANAGEMENT WHICH ITS STOCKHOLDERS MAY FAVOR.
Other provisions in Informix's charter documents could discourage potential
acquisition proposals and could delay or prevent a change in control transaction
that the company's stockholders may favor. The provisions include:
- Elimination of the right of stockholders to act without holding a meeting,
- Certain procedures for nominating directors and submitting proposals for
consideration at stockholder meetings, and
- A board of directors divided into three classes, with each class standing
for election once every three years.
These provisions are intended to enhance the likelihood of continuity and
stability in the composition of the board of directors and in the policies
formulated by the board of directors and to discourage certain types of
transactions involving an actual or threatened change of control. These
provisions are designed to reduce Informix's vulnerability to an unsolicited
acquisition proposal and, accordingly, could discourage potential acquisition
proposals and could delay or prevent a change in control. Such provisions are
also intended to discourage certain tactics that may be used in proxy fights but
could, however, have the effect of discouraging others from making tender offers
for shares of Informix's common stock, and consequently, may also inhibit
fluctuations in the market price of Informix's common stock that could result
from actual or rumored takeover attempts. These provisions may also have the
effect of preventing changes in Informix's management.
In addition, Informix has adopted a rights agreement, commonly referred to
as a "poison pill," that grants holders of Informix's common stock preferential
rights in the event of an unsolicited
30
takeover attempt. These rights are denied to any stockholder involved in the
takeover attempt and this has the effect of requiring cooperation with the
company's board of directors. This may also prevent an increase in the market
price of Informix's common stock resulting from actual or rumored takeover
attempts. The rights agreement could also discourage potential acquirors from
making unsolicited acquisition bids.
DELAWARE LAW MAY INHIBIT POTENTIAL ACQUISITION BIDS WHICH MAY ADVERSELY AFFECT
THE MARKET PRICE FOR INFORMIX COMMON STOCK AND PREVENT CHANGES IN ITS MANAGEMENT
THAT ITS STOCKHOLDERS MAY FAVOR.
Informix is incorporated in Delaware and is subject to the antitakeover
provisions of the Delaware General Corporation Law, which regulates corporate
acquisitions. Delaware law prevents certain Delaware corporations, including
those corporations, such as Informix, whose securities are listed for trading on
the Nasdaq National Market, from engaging, under certain circumstances, in a
"business combination" with any "interested stockholder" for three years
following the date that the stockholder became an interested stockholder. For
purposes of Delaware law, a "business combination" would include, among other
things, a merger or consolidation involving Informix and an interested
stockholder and the sale of more than 10% of Informix's assets. In general,
Delaware law defines an "interested stockholder" as any entity or person
beneficially owning 15% or more of the outstanding voting stock of a corporation
and any entity or person affiliated with or controlling or controlled by such
entity or person. Under Delaware law, a Delaware corporation may "opt out" of
the antitakeover provisions. Informix does not intend to "opt out" of these
antitakeover provisions of Delaware Law.
INFORMIX'S COMMON STOCK LIKELY WILL BE SUBJECT TO SUBSTANTIAL PRICE AND VOLUME
FLUCTUATIONS WHICH MAY PREVENT STOCKHOLDERS FROM RESELLING THEIR SHARES AT OR
ABOVE THE PRICE AT WHICH THEY PURCHASED THEIR SHARES.
Fluctuations in the price and trading volume of Informix's common stock may
prevent stockholders from reselling their shares above the price at which they
purchased their shares. Stock prices and trading volumes for many software
companies fluctuate widely for a number of reasons, including some reasons which
may be unrelated to their businesses or results of operations. This market
volatility, as well as general domestic or international economic, market and
political conditions, could materially adversely affect the market price of
Informix's common stock without regard to the company's operating performance.
In addition, Informix's operating results may be below the expectations of
public market analysts and investors. If this were to occur, the market price of
Informix's common stock would likely decrease significantly. The market price of
Informix's common stock has fluctuated significantly in the past and may
continue to fluctuate significantly because of:
- Market uncertainty about the company's business prospects or the prospects
for the RDBMS ORDBMS markets in general,
- Revenues or results of operations that do not match analysts'
expectations,
- The introduction of new products or product enhancements by Informix or
its competitors,
- General business conditions in the software industry,
- Changes in the mix of revenues attributable to domestic and international
sales, and
- Seasonal trends in technology purchases and other general economic
conditions.
31
THE COMPANIES
BUSINESS OF INFORMIX
Informix is a leading supplier of information management software and
solutions to governments and enterprises worldwide. Informix designs, develops,
manufactures, markets and supports:
- Relational and object-relational database management systems, or RDBMS and
ORDBMS, respectively,
- Connectivity interfaces and gateways, and
- Graphical and character-based application development tools for building
database applications that allow customers to access, retrieve and
manipulate business data.
Informix also offers complete solutions, which include database management
software, Informix's own and third party software, and consulting services, to
help customers design and deploy data warehousing, Web-based enterprise
repository and electronic commerce applications.
Informix believes that technological advances, including the development and
commercialization of the Internet, will lead to increasingly sophisticated
customer requirements for data storage and management beyond the functionality
offered by conventional RDBMS products. In recent years, the types and
quantities of data required to be stored and managed has grown increasingly
complex and includes audio, video, text and three dimensional graphics in
addition to conventional character data. Since 1996, Informix has devoted
substantial resources to the development of ORDBMS products, which provide RDBMS
functionality for complex data such as images, video, audio and spatial data,
and tools for applications in multimedia and entertainment, digital media
publishing and financial services.
Organizations employ RDBMS and ORDBMS software for use in storing, managing
and retrieving the large amounts of data necessary to support four types of
systems:
- Internal management information systems, such as accounting, human
resources and manufacturing,
- Mission-critical on-line transaction processing systems that process
business information from a large number of locations or users,
- Data warehousing/data mart systems that aggregate data from multiple
sources and perform sophisticated analyses to support business decisions,
and
- Internet applications, including dynamic site publishing, information
retrieval and electronic commerce.
In October 1999, Informix acquired Cloudscape, Inc. and expanded its
capability to deliver a client database with a small footprint, pure Java, fully
synchronizable technology. In December 1998, Informix expanded its ability to
deliver data warehousing solutions by acquiring Red Brick Systems, Inc. and
integrating Red Brick's data mart technology into Informix's suite of products
that form the core of its data warehousing solution.
RDBMS and, increasingly, ORDBMS software is being used to drive Internet
applications, from site publishing and information retrieval to electronic
commerce.
Informix markets its products to end-users on a worldwide basis directly
through its sales force and indirectly through applications resellers, original
equipment manufacturers and distributors. The principal geographic markets for
its products are North America, Europe, the Asia/Pacific region and Latin
America. In recent years, approximately half of Informix's total revenues have
been generated outside North America. Informix's principal customers include
businesses ranging from small
32
corporations to Fortune 1000 companies, principally in the manufacturing,
financial services, telecommunications, media, retail/wholesale, hospitality and
government services sectors.
Iroquois Acquisition Sub, or the Merger Sub, was incorporated in Delaware in
November 1999 solely for the purpose of effecting the merger. Merger Sub is a
wholly-owned subsidiary of Informix.
Informix's corporate headquarters are located at 4100 Bohannon Drive, Menlo
Park, California 94025. Informix's telephone number at that address is
(650) 926-6300.
BUSINESS OF ARDENT
Ardent is a data management software company. Ardent designs, develops and
markets easy-to-use and highly compatible products that enable businesses to
extract, transform and load increasingly large amounts of information. Ardent's
principal products include DataStage, a software product that simplifies the
creation of large storage units of data known as data marts and data warehouses,
and two extended RDBMS known as UniVerse and UniData.
Ardent currently has two business units which are based on two general
product areas: data warehouses and databases. Ardent maintains 68
sales/distribution offices in 52 countries around the world. In addition to
direct sales, Ardent has established relationships with more than 1,000 value
added resellers. These value added resellers market Ardent's products in
connection with other products and services which, as a combined package,
provide business solutions for all phases of a company's operations.
In addition to its product-focused business units, Ardent provides customers
worldwide with a full spectrum of services. These services include technical
support for customers who purchase maintenance contracts, education and
consulting services.
Internationally, Ardent has wholly-owned international subsidiaries located
in the United Kingdom, France, Switzerland, Spain, Netherlands, Sweden, New
Zealand, Hong Kong, Singapore, Canada, Germany, South Africa, Australia and
Japan. Ardent also has exclusive distributors in Argentina, Brazil, Ecuador and
Spain.
Ardent's corporate headquarters are located at 50 Washington Street,
Westboro, Massachusetts 01581. Ardent's telephone number at that address is
(508) 366-3888.
33
SELECTED HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
Informix and Ardent are providing the following consolidated financial
information to aid you in your analysis of the financial aspects of the merger.
This information is only a summary and you should read it in conjunction with
the historical financial statements and related notes contained in the annual
reports and other information that Informix and Ardent have filed with the SEC.
See "Where You Can Find More Information" on page 96.
Informix and Ardent each prepare its financial statements on the basis of a
fiscal year ending on December 31. Informix derived its information from the
supplemental consolidated financial statements of Informix audited by KPMG LLP
as of and for the year ended December 31, 1998, the supplemental consolidated
financial statements of Informix audited by Ernst & Young LLP as of
December 31, 1997 and for each of the two years in the period then ended, the
unaudited supplemental consolidated balance sheet as of December 31, 1996, the
audited consolidated financial statements of Informix audited by Ernst & Young
LLP as of December 31, 1995 and 1994 and for each of the years then ended and
the unaudited financial statements as of and for the nine months ended
September 30, 1998 and 1999. Ardent derived its information from consolidated
financial statements of Ardent audited by Deloitte & Touche LLP as of
December 31, 1998, 1997, 1996, 1995 and 1994 and for each of the years then
ended and from the unaudited financial statements as of and for the nine months
ended September 30, 1998 and 1999.
The selected supplemental and historical consolidated financial information
for both Informix and Ardent reflects the effects of recent acquisitions,
non-recurring charges and extraordinary losses. The supplemental consolidated
financial statements of Informix give retroactive effect to the merger,
accounted for as a pooling of interests, with Cloudscape, Inc. on October 8,
1999. The supplemental consolidated financial statements of Informix have been
restated for all periods presented as if Cloudscape and Informix had always been
combined.
The unaudited financial statements include all adjustments, consisting of
normal recurring accruals, which Informix and Ardent consider necessary for a
fair presentation of their respective financial positions and results of
operations for these periods. Operating results for the nine month period ended
September 30, 1999 are not necessarily indicative of results that may be
expected for the entire year ending December 31, 1999 or any other period.
For purposes of the pro forma consolidated statement of operations data,
Informix's supplemental consolidated statements of operations for the nine
months ended September 30, 1999 and 1998, and the three years ended
December 31, 1998, 1997 and 1996, have been combined with the Ardent financial
statements for the nine months ended September 30, 1999 and 1998, and the three
years ended December 31, 1998, 1997 and 1996. The pro forma information is
presented for illustrative purposes only and is not necessarily indicative of
the operating results or financial position that would have occurred if the
merger had been consummated at the beginning of the periods indicated, nor is it
necessarily indicative of future operating results or financial position.
34
INFORMIX SELECTED SUPPLEMENTAL AND HISTORICAL CONSOLIDATED FINANCIAL DATA
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
--------------------- ---------------------------------------------------------
1999(1) 1998 1998(2) 1997(3) 1996 1995 1994
--------- --------- --------- --------- --------- --------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Net revenues.................................. $ 620,424 $ 520,587 $ 735,506 $ 663,892 $ 734,540 $ 636,547 $ 451,969
Operating income (loss)....................... 48,626 29,949 53,286 (359,453) (61,787) 68,725 77,229
Net income (loss)............................. (53,934) 27,630 50,184 (360,388) (74,019) 38,600 48,293
Preferred stock dividend...................... (829) (1,816) (3,478) (301) -- -- --
Value assigned to warrants.................... -- (1,982) (1,982) (1,601) -- -- --
Net income (loss) applicable to common
stockholders................................ (54,763) 23,832 44,724 (362,290) (74,019) 38,600 48,293
Net income (loss) per common share:
Basic....................................... $ (0.28) $ 0.14 $ 0.26 $ (2.37) $ (0.49) $ 0.27 $ 0.35
Diluted..................................... $ (0.28) $ 0.13 $ 0.25 $ (2.37) $ (0.49) $ 0.26 $ 0.34
Shares used in per share calculations
Basic....................................... 195,930 166,917 169,581 152,543 149,525 145,062 137,742
Diluted..................................... 195,930 180,359 182,400 152,543 149,525 150,627 142,782
CONSOLIDATED BALANCE SHEET DATA:
Cash, cash equivalents and short-term
investments................................. $ 215,931 $ 163,057 $ 226,552 $ 157,628 $ 262,075 $ 253,209 $ 194,153
Working capital (deficit)..................... 111,833 (8,586) 31,260 (138,803) 3,000 163,594 184,867
Total assets.................................. 583,320 547,312 622,065 566,021 883,259 682,445 447,769
Long-term obligations......................... 2,090 5,201 3,759 6,544 2,394 2,846 892
Retained earnings (accumulated deficit)....... (283,848) (254,489) (231,934) (282,118) 78,269 154,098 115,668
Total stockholders' equity.................... 262,523 132,921 212,044 60,762 325,337 357,747 269,400
- ------------------------------
(1) In the nine month period ended September 30, 1999, Informix recorded a
charge of $97.0 million related to the settlement of the private securities
and related litigation against it.
(2) In fiscal 1998, Informix recorded restructuring-related adjustments that
increased operating income by $10.3 million and, in connection with
Informix's acquisition of Red Brick in December 1998, recorded a charge to
operations of $2.6 million for in-process research and development which had
not yet reached technological feasibility and had no alternative future
uses.
(3) In fiscal 1997, Informix recorded a restructuring charge of $108.2 million,
a write-down of certain assets in Japan of $30.5 million and a write-down of
capitalized software of $14.7 million.
35
ARDENT SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------------- ----------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
-------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Revenue.................................... $120,173 $ 84,681 $119,260 $102,728 $110,499 $92,721 $81,888
Other charges(1)........................... 14,947 14,895 14,895 3,642 12,758 7,381 5,562
Income (loss) from operations.............. 6,481 (2,589) 4,578 (5,788) (7,615) (3,019) 2,525
Income (loss) before extraordinary item.... 1,164 (3,068) 1,637 (8,921) (7,611) (2,626) (148)
Net income (loss)(2)....................... 1,164 (3,068) 1,637 (8,921) (9,993) (2,626) (148)
Basic income (loss) per common share:
Before extraordinary item(2)............. $ 0.07 $ (0.21) $ 0.11 $ (0.65) $ (0.58) $ (0.21) $ (0.01)
Net income (loss)........................ $ 0.07 $ (0.21) $ 0.11 $ (0.65) $ (0.76) $ (0.21) $ (0.01)
Diluted income (loss) per common share:
Before extraordinary item(2)............. $ 0.06 $ (0.21) $ 0.10 $ (0.65) $ (0.58) $ (0.21) $ (0.01)
Net income (loss)........................ $ 0.06 $ (0.21) $ 0.10 $ (0.65) $ (0.76) $ (0.21) $ (0.01)
Shares for basic calculation............. 17,574 14,604 14,790 13,751 13,701 12,623 12,474
Shares for diluted calculation........... 19,760 14,604 16,724 13,751 13,071 12,623 12,474
CONSOLIDATED BALANCE SHEET DATA:
Cash and short-term investments............ $ 37,904 $ 22,218 $ 24,167 $ 24,155 $ 15,545 $12,654 $16,293
Working capital............................ 22,018 7,336 13,087 12,548 18,314 18,873 24,800
Total assets............................... 164,452 83,802 82,804 93,984 94,516 79,833 78,779
Total long-term liabilities................ -- 4,900 -- 21,190 21,704 12,085 12,091
Accumulated deficit........................ (20,719) (26,588) (21,883) (23,520) (14,050) (3,818) (1,192)
Stockholders' equity....................... 102,812 35,376 43,790 32,082 35,851 41,134 41,983
- ------------------------------
(1) During the periods presented, Ardent recorded several charges related to
restructurings, litigation, and mergers and acquisitions. In 1994,
$2,750,000 was recorded relating to the estimated amount of purchased
in-process research and development acquired in a business combination,
$650,000 in litigation related charges were recorded, $1,700,000 in
restructuring costs were recorded and $462,000 was recorded to write off the
carrying value of acquired technology. In 1995, $6,882,000 was recorded
related to the merger with Easel Corporation and $499,000 in litigation
related costs were recorded. In 1996, $7,858,000 was recorded related to
restructurings of the business and the exit from certain unprofitable
business lines and $4,900,000 was recorded related to the estimated amount
of purchased in-process research and development acquired in a business
combination. In 1997, Ardent incurred losses related to the disposal of a
subsidiary and a loss on a joint venture. These items totaled $602,000. Also
in 1997, Ardent recorded $3,040,000 related to the estimated amount of
purchased in-process research and development acquired in a business
combination. In February 1998, $14,895,000 in merger-related charges were
recorded in connection with the merger with Unidata. The nine months ended
September 30, 1999 include $9,895,000 in restructuring costs and $5,052,000
in purchased in-process research and development.
(2) In 1996, Ardent recorded an extraordinary loss of $2,382,000 related to the
disposition of product lines and businesses that were present at the date of
the merger with Easel Corporation. Since the merger was accounted for as a
pooling of interests and the dispositions were not contemplated at the date
of the merger, the amounts associated with the total loss on the
dispositions were presented as an extraordinary item.
36
SELECTED UNAUDITED PRO FORMA FINANCIAL DATA
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
--------------------- ---------------------------------
1999 1998 1998 1997 1996
--------- --------- --------- --------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Net revenues................................... $ 739,278 $ 605,268 $ 854,520 $ 766,620 $ 845,039
Operating income (loss)........................ 55,107 27,360 57,864 (365,241) (69,402)
Net income (loss) before extraordinary item.... (52,770) 24,562 51,821 (369,309) (81,630)
Net income (loss).............................. (52,770) 24,562 51,821 (369,309) (84,012)
Preferred stock dividend....................... (829) (1,816) (3,478) (301) --
Value assigned to warrants..................... -- (1,982) (1,982) (1,601) --
Net income (loss) applicable to common
stockholders................................. (53,599) 20,764 46,361 (371,211) (84,012)
Basic income (loss) per common share
Before extraordinary item.................... $ (0.21) $ 0.10 $ 0.21 $ (1.85) $ (0.42)
Net income (loss)............................ $ (0.21) $ 0.10 $ 0.21 $ (1.85) $ (0.43)
Diluted income (loss) per common share
Before extraordinary item.................... $ (0.21) $ 0.09 $ 0.19 $ (1.85) $ (0.42)
Net income (loss)............................ $ (0.21) $ 0.09 $ 0.19 $ (1.85) $ (0.43)
Shares used in per share calculations
Basic........................................ 257,439 218,031 221,344 200,672 195,273
Diluted...................................... 257,439 237,712 240,933 200,672 195,273
AS OF
SEPTEMBER 30, 1999
CONSOLIDATED BALANCE SHEET DATA: ------------------
Cash, cash equivalents and short-term
investments............................... $ 253,835
Working capital (deficit)................... 98,851
Total assets................................ 747,316
Long-term obligations....................... 2,090
Retained earnings (accumulated deficit)..... (339,567)
Total stockholders' equity.................. 330,335
37
COMPARATIVE PER SHARE DATA
The following tables set forth certain supplemental and historical per share
data of Informix and Ardent and combined per share data on an unaudited pro
forma basis after giving effect to the merger on a pooling of interests
accounting basis assuming the issuance of 3.5 shares of Informix common stock in
exchange for each share of Ardent common stock. This data is derived from and
should be read in conjunction with the Selected Supplemental Consolidated
Financial Data, the Selected Historical Consolidated Financial Data and the
separate supplemental and historical consolidated financial statements of
Informix and Ardent incorporated by reference in this joint proxy statement/
prospectus. The unaudited pro forma combined financial data are not necessarily
indicative of the operating results that would have been achieved had the
transaction been in effect as of the beginning of the periods presented and
should not be construed as representative of future operations. Neither Informix
nor Ardent declared any cash dividends related to their respective common stock
during the periods presented.
NINE MONTHS
ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------------- ------------------------------
1999 1998 1998 1997 1996
-------- -------- -------- -------- --------
Supplemental Informix:
Basic net income (loss) per common share............ $(0.28) $ 0.14 $0.26 $(2.37) $(0.49)
Diluted net income (loss) per common share.......... $(0.28) $ 0.13 $0.25 $(2.37) $(0.49)
Historical Ardent:
Basic income (loss) per common share
Before extraordinary item......................... $ 0.07 $(0.21) $0.11 $(0.65) $(0.58)
Net income (loss)................................. $ 0.07 $(0.21) $0.11 $(0.65) $(0.76)
Diluted net income (loss) per share
Before extraordinary item......................... $ 0.06 $(0.21) $0.10 $(0.65) $(0.58)
Net income (loss)................................. $ 0.06 $(0.21) $0.10 $(0.65) $(0.76)
Pro forma combined diluted net income (loss):
Per Informix share.................................. $(0.20) $ 0.09 $0.19 $(1.81) $(0.42)
Equivalent per Ardent share......................... $(0.72) $ 0.32 $0.66 $(6.35) $(1.46)
Book value per share
Supplemental Informix............................... $ 1.35 $1.11
Historical Ardent................................... $ 5.35 $2.78
Pro forma combined per Informix share............... $ 1.26 $0.90
Pro forma equivalent combined per Ardent share...... $ 4.41 $3.14
To assist you in understanding the table above, we used the following
methods:
- We calculated the equivalent pro forma combined per Ardent share amount by
multiplying the pro forma combined share amounts by the exchange ratio of
3.5 shares of Informix common stock for each share of Ardent common stock.
- We computed the historical book value per share by dividing stockholders'
equity by the number of shares of common stock outstanding at
September 30, 1999 and December 31, 1998. We computed the pro forma
combined book value per share by dividing pro forma stockholders' equity
by the pro forma number of shares of Informix common stock outstanding as
of September 30, 1999 and December 31, 1998, assuming the merger had
occurred as of those dates. We calculated the pro forma equivalent
combined book value per Ardent share by multiplying the pro forma combined
book value per Informix share by the exchange ratio of 3.5 shares of
Informix common stock for each share of Ardent common stock.
38
COMPARATIVE MARKET PRICE DATA
Informix's common stock is traded on The Nasdaq National Market under the
symbol "IFMX." Ardent's common stock is traded on The Nasdaq National Market
under the symbol "ARDT." The following table sets forth for the periods
indicated the quarterly high and low sales prices for each of Informix and
Ardent reported on The Nasdaq National Market.
INFORMIX ARDENT
COMMON STOCK COMMON STOCK
----------------- -------------------
HIGH LOW HIGH LOW
------ -------- -------- --------
FISCAL YEAR ENDED DECEMBER 31, 1997
First Quarter............................................. $24.38 $14.88 $ 7.88 $ 5.75
Second Quarter............................................ 12.13 6.56 8.63 5.88
Third Quarter............................................. 12.44 5.88 10.88 7.75
Fourth Quarter............................................ 8.25 4.00 11.75 6.63
FISCAL YEAR ENDED DECEMBER 31, 1998
First Quarter............................................. $ 9.88 $ 4.81 $15.13 $ 7.00
Second Quarter............................................ 10.44 6.00 15.88 10.25
Third Quarter............................................. 7.91 3.50 15.44 10.00
Fourth Quarter............................................ 9.88 3.75 23.88 9.50
FISCAL YEAR ENDED DECEMBER 31, 1999
First Quarter............................................. $14.00 $ 7.00 $28.00 $13.25
Second Quarter............................................ 9.81 6.03 23.00 14.38
Third Quarter............................................. 9.75 6.75 27.50 18.63
Fourth Quarter............................................ 13.31 6.38 38.44 18.75
FISCAL YEAR ENDING DECEMBER 31, 2000
First Quarter (through January 21, 2000).................. $13.50 $ 7.88 $46.25 $31.88
On November 30, 1999, the last full trading day prior to the public
announcement of the execution and delivery of the merger agreement, the last
reported sale prices on Nasdaq were $11.00 per share of Informix common stock
and $26.25 per share of Ardent common stock. On January 21, 2000, the last
reported sale prices on Nasdaq were $13.19 per share of Informix common stock
and $45.00 per share of Ardent common stock. As of January 20, 2000, the record
date, there were approximately 4,136 stockholders of record of Informix common
stock and 325 stockholders of record of Ardent Common Stock.
Because the exchange ratio of 3.5 is fixed, changes in the market price of
Informix common stock will affect the dollar value of the Informix common stock
to be received by stockholders of Ardent in the merger. Ardent stockholders are
urged to obtain current market quotations for Informix common stock and Ardent
common stock prior to the Ardent meeting.
Neither Informix nor Ardent has paid cash dividends related to their
respective common stock. After the merger, Informix intends to retain earnings
for development of its business and not to distribute earnings to common
stockholders as dividends. The declaration and payment by Informix of any future
dividends and the amount thereof will depend upon Informix's results of
operations, financial condition, cash requirements, future prospects,
limitations imposed by credit agreements or senior securities and other factors
deemed relevant by the Informix board of directors.
39
SPECIAL MEETING OF THE INFORMIX STOCKHOLDERS
WHEN AND WHERE THE MEETING WILL BE HELD
This joint proxy statement/prospectus is being furnished to Informix
stockholders as part of the solicitation of proxies by the Informix board of
directors for use at the Informix special meeting of stockholders to be held on
Tuesday, February 29, 2000 at 8:00 a.m., local time, at Hyatt Rickey's, located
at 4219 El Camino Real, Palo Alto, California, and at any adjournments or
postponements thereof. This joint proxy statement/prospectus, and the
accompanying proxy card, are first being mailed to holders of Informix capital
stock on or about January 28, 2000.
PURPOSE OF THE MEETING
The purpose of the Informix special meeting is to consider and vote upon a
proposal to approve the issuance of shares of Informix common stock necessary to
complete the merger.
If the stockholders approve the merger and it is completed, holders of
Ardent common stock will receive 3.5 shares of Informix common stock for each
share of Ardent common stock they own, with cash paid for fractional shares.
Similarly, each outstanding Ardent stock option and warrant will convert into an
option or warrant to purchase 3.5 times as many shares of Informix common stock
at an adjusted exercise price. See "The Merger and Related
Transactions--Conversion of Ardent Securities."
RECOMMENDATION OF INFORMIX'S BOARD OF DIRECTORS
The Informix board of directors believes that the merger is fair, from a
financial point of view, to Informix and in the best interests of both Informix
and its stockholders. The Informix board of directors recommends that Informix
stockholders vote "for" the proposal to issue the shares of common stock
necessary to complete merger.
RECORD DATE AND OUTSTANDING SHARES
You are entitled to vote at the Informix meeting if you owned shares of
Informix as of the close of business on January 20, 2000, the record date. At
the close of business on the record date, 207,123,491 shares of Informix common
stock were outstanding and entitled to vote at the Informix meeting. You will
have one vote at the Informix meeting for each share of Informix common stock
you owned as of the record date.
VOTING OF PROXIES
The Informix proxy card accompanying this joint proxy statement/prospectus
is solicited on behalf of the Informix board of directors for use at the
Informix meeting. Stockholders are requested to complete, date and sign the
accompanying proxy and promptly return it in the accompanying envelope or
otherwise mail it to Informix. All proxies that are properly executed and
returned, and that are not revoked, will be voted at the Informix meeting in
accordance with the instructions indicated thereon. EXECUTED BUT UNMARKED
PROXIES WILL BE VOTED FOR THE ISSUANCE OF SHARES OF INFORMIX COMMON STOCK
PURSUANT TO THE MERGER AGREEMENT. The Informix board of directors does not
presently intend to bring any business before the Informix meeting other than
the specific proposal relating to the merger referred to in this joint proxy
statement/prospectus and specified in the notice of the Informix meeting. So far
as is known to the Informix board of directors, no other matters are to be
brought before the Informix meeting. As to any business that may properly come
before the Informix meeting, including, among other things, consideration of any
motion made for adjournment of the Informix meeting (including, without
limitation, for purposes of soliciting additional votes for approval of the
issuance of Informix common stock pursuant to the merger agreement), it is
intended that proxies, in the form enclosed, will be voted in respect thereof in
accordance with the judgment of the person voting such proxies.
40
VOTE REQUIRED TO APPROVE THE ISSUANCE OF INFORMIX COMMON STOCK
Under Nasdaq rules, approval of the issuance of shares of Informix common
stock pursuant to the merger requires the affirmative vote of a majority of the
votes cast in person or by proxy at the special meeting. Informix is not a
constituent corporation of the legal merger of Merger Sub with and into Ardent
and, therefore, specific approval of the merger agreement by Informix's
stockholders is not required under Delaware law or Informix's certificate of
incorporation or bylaws.
Each holder of record of Informix common stock as of the record date is
entitled to cast one vote for each common share held, exercisable in person or
by properly executed proxy, on each matter properly submitted for the vote of
the stockholders of Informix at the Informix meeting.
The matters to be considered at the Informix meeting are of great importance
to the stockholders of Informix. Accordingly, stockholders are urged to read and
carefully consider the information presented in this joint proxy
statement/prospectus, and to complete, date, sign and promptly return the
enclosed proxy in the enclosed postage-paid envelope.
QUORUM; ABSTENTIONS; BROKER NON-VOTES
The presence, in person or by properly executed proxy, of at least the
holders of a majority of the outstanding shares of Informix common stock
entitled to vote at the Informix meeting shall constitute a quorum. Broker
non-votes and shares held by persons abstaining will be counted in determining
whether a quorum is present at the Informix meeting. Abstentions are counted as
votes cast and accordingly have the same effect as votes against the proposal,
whereas broker non-votes are not counted as votes cast and accordingly, once a
quorum is present, will have no effect on the proposal.
HOW TO CHANGE YOUR VOTE
Any person giving a proxy pursuant to this solicitation has the power to
revoke it at any time before it is voted. It may be revoked by filing a written
notice of revocation or a duly executed proxy bearing a later date with the
secretary of Informix at Informix's principal offices, or it may be revoked by
attending the meeting and voting in person. Attendance at the meeting will not,
by itself, revoke a proxy.
APPRAISAL RIGHTS
Under Delaware law, Informix stockholders are not entitled to appraisal
rights in connection with the merger.
SOLICITATION OF PROXIES AND EXPENSES
Informix will bear the cost of the solicitation of proxies in the enclosed
form from its stockholders. In addition to solicitation by mail, the directors,
officers and employees of Informix may solicit proxies from stockholders by
telephone, telegram, letter, facsimile or in person. Following the original
mailing of the proxies and other soliciting materials, Informix will request
that brokers, custodians, nominees and other record holders forward copies of
the proxy and other soliciting materials to persons for whom they hold shares of
Informix common stock and request authority for the exercise of proxies. In such
cases, Informix, upon the request of the record holders, will reimburse such
record holders for their reasonable expenses. Informix will retain Corporate
Investor Communications, Inc. to assist in the solicitation of proxies at a cost
of approximately $10,000.
INDEPENDENT AUDITORS
Representatives of KPMG LLP, independent auditors for Informix, are expected
to be present at the meeting to respond to appropriate questions and will have
an opportunity to make a statement if they desire to do so.
41
SPECIAL MEETING OF THE ARDENT STOCKHOLDERS
WHEN AND WHERE THE MEETING WILL BE HELD
This joint proxy statement/prospectus is being furnished to Ardent
stockholders as part of the solicitation of proxies by the Ardent board of
directors for use at the Ardent special meeting of stockholders to be held on
Tuesday, February 29, 2000 at 11:00 a.m., local time, at Ardent's offices at 50
Washington Street, Westboro, Massachusetts, and at any adjournments or
postponements thereof. This joint proxy statement/prospectus, and the
accompanying proxy card, are first being mailed to holders of Ardent common
stock on or about January 28, 2000.
PURPOSE OF THE MEETING
The purpose of the Ardent meeting is to consider and vote upon a proposal to
adopt the merger agreement and to approve the merger.
If the stockholders adopt the merger agreement and approve the merger and it
is completed, holders of Ardent common stock will receive 3.5 shares of Informix
common stock for each share of Ardent common stock they own, with cash paid for
fractional shares. Similarly, each outstanding Ardent stock option and warrant
will convert into an option or warrant to purchase 3.5 times as many shares of
Informix common stock, at an adjusted exercise price. See "The Merger and
Related Transactions--Conversion of Ardent Securities."
If the merger is completed, Ardent stockholders will no longer hold any
interest in Ardent other than through their interest in shares of Informix
common stock. Consummation of the merger is subject to a number of conditions,
including the receipt of required regulatory and stockholder approvals.
RECOMMENDATION OF ARDENT'S BOARD OF DIRECTORS
The Ardent board of directors believes that the merger is fair and in the
best interests of both Ardent and its stockholders. The Ardent board of
directors unanimously approved the merger agreement and unanimously recommends
that the holders of Ardent's common stock vote "for" the proposal to adopt the
merger agreement and approve the merger.
RECORD DATE AND OUTSTANDING SHARES
You are entitled to vote at the Ardent meeting if you owned shares of Ardent
as of the close of business on January 20, 2000, the record date. At the close
of business on the record date, 19,664,028 shares of Ardent common stock were
outstanding and entitled to vote at the Ardent meeting. You will have one vote
at the Ardent meeting for each share of Ardent common stock you owned as of the
record date.
VOTE REQUIRED TO ADOPT THE MERGER AGREEMENT
Under Delaware law, the charter documents of Ardent and Nasdaq rules,
adoption of the merger agreement requires the affirmative vote of a majority of
the outstanding shares of Ardent common stock. Ardent's directors and executive
officers, who collectively hold approximately 3% of the outstanding shares of
Ardent common stock entitled to vote at the meeting, have each agreed, among
other things, to vote their shares in favor of the proposal to adopt the merger
agreement.
Each Ardent stockholder of record as of the record date is entitled to cast
one vote for each share of Ardent common stock held, exercisable in person or by
properly executed proxy, on each matter properly submitted for the vote of the
stockholders of Ardent at the Ardent meeting.
The matters to be considered at the Ardent meeting are of great importance
to the stockholders of Ardent. Accordingly, stockholders are urged to read and
carefully consider the information presented in this joint proxy
statement/prospectus, including the merger agreement attached as Appendix A, and
to complete, date, sign and promptly return the enclosed proxy in the enclosed
postage-paid envelope.
42
QUORUM; ABSTENTIONS; BROKER NON-VOTES
The presence, in person or by properly executed proxy, of at least the
holders of a majority of the outstanding shares of Ardent common stock entitled
to vote at the Ardent meeting shall constitute a quorum. Broker non-votes and
shares held by persons abstaining will be counted in determining whether a
quorum is present at the Ardent meeting. Because the required vote of the Ardent
stockholders to adopt the merger agreement is based upon the number of
outstanding shares of Ardent common stock, rather than upon the shares actually
voted, the failure by the holder of any such shares to submit a proxy or to vote
in person at the Ardent meeting (including abstention and broker non-votes) will
have the same effect as a vote against the adoption of the merger agreement.
VOTING OF PROXIES
The Ardent proxy card accompanying this joint proxy statement/prospectus is
solicited on behalf of the Ardent board of directors for use at the Ardent
meeting. Stockholders are requested to complete, date and sign the accompanying
proxy and promptly return it in the accompanying envelope or otherwise mail it
to Ardent. All proxies that are properly executed and returned, and that are not
revoked, will be voted at the Ardent meeting in accordance with the instructions
indicated thereon. EXECUTED BUT UNMARKED PROXIES WILL BE VOTED FOR ADOPTION OF
THE MERGER AGREEMENT. The Ardent board of directors does not presently intend to
bring any business before the Ardent meeting other than the specific proposal
referred to in this joint proxy statement/prospectus and specified in the notice
of the Ardent meeting. So far as is known to the Ardent board of directors, no
other matters are to be brought before the Ardent meeting. As to any business
that may properly come before the Ardent meeting, the Ardent board intends that
proxies, in the form enclosed, will be voted in accordance with the judgment of
the person voting such proxies. Such other matters could include consideration
of any motion made for adjournment of the Ardent meeting including for purposes
of soliciting additional votes for adoption of the merger agreement.
REVOCABILITY OF PROXIES
Any person giving a proxy pursuant to this solicitation has the power to
revoke it at any time before it is voted. It may be revoked by filing a written
notice of revocation or a duly executed proxy bearing a later date with the
secretary of Ardent at Ardent's principal offices, or it may be revoked by
attending the meeting and voting in person. Attendance at the meeting will not,
by itself, revoke a proxy.
APPRAISAL RIGHTS
Under Delaware law, Ardent stockholders have no right to an appraisal of the
value of their shares in connection with the merger.
SOLICITATION OF PROXIES AND EXPENSES
Ardent will bear the cost of the solicitation of proxies in the enclosed
form from its stockholders. In addition to solicitation by mail, the directors,
officers and employees of Ardent may solicit proxies from stockholders by
telephone, telegram, letter, facsimile or in person. Following the original
mailing of the proxies and other soliciting materials, Ardent will request that
brokers, custodians, nominees and other record holders forward copies of the
proxy and other soliciting materials to persons for whom they hold shares of
Ardent common stock and request authority for the exercise of proxies. In such
cases, Ardent, upon the request of the record holders, will reimburse such
record holders for their reasonable expenses. Ardent has retained Corporate
Investor Communications, Inc. to assist in the solicitation of proxies at a cost
of approximately $6,000.
INDEPENDENT AUDITORS
Representatives of Deloitte & Touche LLP, independent auditors for Ardent,
are expected to be present at the meeting to respond to appropriate questions
and will have an opportunity to make a statement if they desire to do so.
43
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT OF INFORMIX
The following table lists the beneficial ownership of Informix common stock
and options to purchase shares of Informix common stock as of December 31, 1999
by:
- each of the Informix directors,
- each executive officer,
- all directors and executive officers of Informix as a group, and
- each person known to Informix to beneficially own more than 5% of the
outstanding shares of any class of Informix stock.
The second column shows the number of options granted to the indicated
person or group of persons that are exercisable as of December 31, 1999 or that
will be exercisable within 60 days after December 31, 1999. In addition, except
as otherwise noted, the address for each owner is c/o Informix Corporation, 4100
Bohannon Drive, Menlo Park, California 94025. Applicable percentage ownership is
based on 207,123,491 shares of Informix common stock and 7,000 shares of
Informix series B preferred stock outstanding as of December 31, 1999.
For purposes of this table, beneficial ownership of securities is defined
according to the rules of the SEC. Beneficial ownership means generally the
power to vote or exercise investment discretion with respect to securities,
regardless of any economic interests in those securities. Except as otherwise
indicated, Informix believes that the beneficial owners of shares of Informix
common stock listed above have sole investment and voting power with respect to
such shares, subject to community property laws where applicable. In addition,
for purposes of this table, a person is deemed to have beneficial ownership of
any shares which such person has the right to acquire within 60 days after
December 31, 1999. For purposes of calculating the percentage of outstanding
shares held by each person named above, any shares which such person has the
right to acquire within 60 days after December 31, 1999 are deemed to be
outstanding, but such shares are not deemed outstanding for the purpose of
calculating the percentage ownership of any other person.
The series B preferred is convertible into Informix common stock based on a
conversion rate that is dependent upon the trading price of Informix's common
stock. At the time that shares of series B preferred are converted into Informix
common stock, the series B stockholders will be issued warrants to purchase
additional shares of Informix common stock. The number of shares of common stock
purchasable in connection with the exercise of the series B warrants is
generally determined according to the number of shares of Informix common stock
issuable upon conversion of the series B preferred. The first day the Series B
stockholders were able to elect to convert shares of the Series B Preferred and
exercise the series B warrants was May 19, 1998. The series B preferred shares
are non-voting securities and holders of series B preferred shares are not
generally entitled to vote such shares at the Annual Meeting or otherwise, prior
to the conversion of such shares into Informix common stock.
Assuming the conversion of such shares of series B preferred based on an
assumed conversion price of $4.00 (the price used in Informix's Registration
Statement on Form S-1), such stockholder would hold 1,750,000 shares of Informix
common stock and warrants to purchase an additional 350,000
44
shares of Informix common stock. Such warrants are issuable upon the conversion
of the underlying series B preferred and are immediately thereafter exercisable.
INFORMIX STOCK BENEFICIALLY OWNED
PRIOR TO THE MERGER
----------------------------------------------
SHARES
SHARES SUBJECT TO PERCENTAGE
BENEFICIAL OWNER OWNED OPTIONS TOTAL OF CLASS
- ---------------- -------- ---------- --------- ----------
COMMON STOCK
DIRECTORS AND EXECUTIVE OFFICERS
Leslie G. Denend................................ -- 10,000 10,000 *
Robert J. Finocchio, Jr.(1)..................... 36,439 1,000,000 1,036,439 *
Jean-Yves F. Dexmier............................ -- 350,000 350,000 *
Howard A. Bain, III............................. -- 87,500 87,500 *
Karen Blasing................................... 5,360 57,300 62,660 *
Charles W. Chang................................ -- -- -- *
Diane L. Fraiman(2)............................. -- 75,000 75,000 *
James F. Hendrickson............................ 2,684 418,750 421,434 *
James L. Koch(3)................................ 2,225 97,000 99,225 *
Gary Lloyd...................................... 8,166 93,750 101,916 *
Thomas A. McDonnell............................. 55,000 100,000 155,000 *
William O'Kelly................................. -- -- -- *
Wayne E. Page................................... -- -- -- *
George Reyes.................................... -- 5,000 5,000 *
Michael R. Stonebraker(4)....................... 336,119 87,500 423,619 *
F. Steven Weick................................. 9,644 85,000 94,644 *
Cyril J. Yansouni............................... -- 50,000 50,000 *
All current directors and executive officers as
a group (17 persons).......................... 455,637 2,516,800 2,972,437 1%
5% STOCKHOLDERS
None
SERIES B PREFERRED STOCK
5% STOCKHOLDERS
Capital Ventures International.................. 7,000 -- 7,000 100%
1 Capital Place
P.O. Box 1787
Georgetown, Grand Cayman, Cayman Islands
British Virgin Islands
- ------------------------
* Less than 1%.
(1) Includes 100 shares of Common Stock held by Mr. Finocchio's minor son.
(2) Ms. Fraiman resigned as Informix's vice president, marketing, effective
December 31, 1999.
(3) Includes 400 shares of Common Stock held by Mr. Koch's minor son.
(4) Includes 533 shares of Common Stock held in trust and 59,882 shares held by
Mr. Stonebraker's two minor children.
45
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT OF ARDENT
The following table lists the beneficial ownership, as of December 31, 1999,
of shares of Ardent common stock and options to purchase shares of Ardent common
stock by:
- each of the Ardent directors,
- the chief executive officer and the next four most highly compensated
executive officers,
- all directors and executive officers of Ardent as a group, and
- each person known to Ardent to beneficially own more than 5% of the
outstanding shares of Ardent common stock.
The number of options to purchase shares of Ardent common stock reflects the
number of options to purchase shares of Ardent common stock exercisable as of
December 31, 1999 or exercisable within 60 days of December 31, 1999, as well as
the options granted that will accelerate upon consummation of the merger. Unless
otherwise indicated, to the knowledge of Ardent, all shares are owned directly
and the owner has sole voting and investment power.
ARDENT COMMON STOCK BENEFICIALLY OWNED
PRIOR TO THE MERGER
-----------------------------------------------
SHARES
SHARES SUBJECT TO
BENEFICIAL OWNER OWNED OPTIONS TOTAL PERCENTAGE
- ---------------- --------- ---------- --------- ----------
DIRECTORS AND OFFICERS
Peter Gyenes..................................... 43,747 518,471 562,218 2.8%
David Brunel..................................... 141,906 344,765 486,671 2.4%
Robert G. Claussen............................... 125,219 27,707 152,926 *
Martin T. Hart................................... 50,000 25,000 75,000 *
Robert M. Morrill................................ 181,634 166,420 348,054 1.7%
Peter L. Fiore................................... 5,157 136,901 142,058 *
James D. Foy..................................... 19,661 165,529 185,190 *
Charles F. Kane.................................. 14,346 130,000 144,346 *
Cornelius P. McMullan............................ -- 150,000 150,000 *
All current directors and executive officers as a
group (11 persons)............................. 631,698 1,858,640 2,490,338 11.1%
- ------------------------
* Less than 1.0%
For purposes of this table, beneficial ownership of securities is defined
according to the rules of the SEC. Beneficial ownership means generally the
power to vote or exercise investment discretion with respect to securities,
regardless of any economic interests in those securities. Except as otherwise
indicated, Ardent believes that the beneficial owners of shares of Ardent common
stock listed above have sole investment and voting power with respect to such
shares, subject to community property laws where applicable. In addition, for
purposes of this table, a person is deemed to have beneficial ownership of any
shares which such person has the right to acquire within 60 days after
December 31, 1999. For purposes of calculating the percentage of outstanding
shares held by each person named above, any shares which such person has the
right to acquire within 60 days after December 31, 1999 are deemed to be
outstanding, but such shares are not deemed outstanding for the purpose of
calculating the percentage ownership of any other person.
The second column shows separately shares which may be acquired by exercise
of stock options within sixty days after December 31, 1999 by the directors and
executive officers individually and as a group.
46
THE MERGER AND RELATED TRANSACTIONS
This section of the joint proxy statement/prospectus summarizes material
aspects of the proposed merger. A copy of the merger agreement is attached as
Appendix A. All holders of Informix common stock and Ardent common stock are
urged to read the merger agreement and the other appendices in their entirety.
BACKGROUND OF THE MERGER
Over the last several years, the market for business intelligence and
analysis software products has grown rapidly. Recently, the importance of such
software products to businesses has increased significantly as electronic
commerce has been widely embraced within the industry.
Informix has developed a database software product to sell into the data
warehouse segment of the business intelligence market and, in the summer of
1998, it created a data warehouse division. In December 1998, Informix acquired
Red Brick Systems, Inc., a leading provider of data warehouse and data mart
software products in order to expand its presence in this market. Informix has
continued to invest in this market and its strategy is to provide a full
spectrum of products and solutions for business and transaction analysis.
Ardent has established itself as a leader in the data movement segment of
the business intelligence market. Ardent's products include data movement, meta
data management and data quality. Informix has an existing reseller arrangement
with Ardent for the distribution of its DataStage product. Both Informix and
Ardent perceived an opportunity to accelerate the business strategies of both
companies with their complementary product lines in the business intelligence
market.
On September 15, 1999, Jean-Yves F. Dexmier, president and chief executive
officer of Informix, and Peter Gyenes, president and chief executive officer of
Ardent, met to discuss a possible business combination between Informix and
Ardent. Although Messrs. Dexmier and Gyenes did not discuss specific terms of a
transaction, they agreed to pursue discussions and to arrange a meeting between
Karen Blasing, vice president, corporate business development, finance of
Informix, and Charles Kane, vice president and chief financial officer of
Ardent.
On September 22, 1999, Ms. Blasing and Mr. Kane met in Westboro,
Massachusetts to discuss further the possible business combination and to review
the business operations of each company.
On September 29, 1999, Informix and Ardent executed a Mutual Nondisclosure
Agreement regarding the ongoing discussions of a potential combination, which
provided for, among other things, the parties' exchange of due diligence
material regarding their businesses on a confidential basis.
From October 11 through October 14, 1999 in Westboro, Massachusetts,
Messrs. Gyenes and Kane, Peter Fiore, vice president and general manager,
marketing operations and business development of Ardent, and Ralph Breslauer,
vice president, product marketing of Ardent provided overviews of Ardent's
business operations and strategies to Ms. Blasing, Charlie Chang, vice
president, i.Intelligence Business Group of Informix, Robert Dinsdale, vice
president, corporate strategy of Informix, and Roger Phillips, director,
marketing intelligence in the corporate marketing department of Informix.
On October 11, 1999, Informix formally retained Merrill Lynch, Pierce,
Fenner & Smith Incorporated, to assist it in analyzing the potential combination
with Ardent.
On October 19, 1999, at a regularly scheduled meeting of the Ardent board of
directors held in New Orleans, Mr. Gyenes advised the Ardent board of directors
of the status of the discussions with Informix.
On October 21, 1999, at a special meeting of the Informix board of
directors, Mr. Dexmier reported on the status of management's discussions with
Ardent, Ms. Blasing provided an overview of
47
Ardent's business operations and strategies, Mr. Chang described the proposed
combination strategy and Informix's financial advisers provided an analysis of
Ardent's stock trading history and the proposed combination. Following
discussion, the Informix board of directors authorized Informix's management to
continue discussions with Ardent and to conduct detailed due diligence of
Ardent's business operations and prospects.
On October 24, 1999, in Lafayette, California, Messrs. Dexmier, Gyenes,
Kane, and Ms. Blasing discussed the potential business strategies of a combined
company and possible combination scenarios.
On October 28, 1999, Informix formally retained KPMG LLP to assist Informix
in performing its due diligence investigation of Ardent's business and
operations.
On October 28, 1999, in Phoenix, Arizona, Mr. Dexmier presented Informix's
strategy and business objectives to and discussed potential benefits of a
business combination with the Ardent board of directors. Also at the meeting,
the Ardent board of directors formally retained SG Cowen Securities Corporation
to act as financial advisor to Ardent in connection with a potential combination
with Informix.
From November 2 through November 4, 1999, in Westboro, Massachusetts,
Ms. Blasing, Philip L. Rugani, vice president, North American sales, other
members of Informix's senior management, representatives from Informix's legal
and human resources departments, Informix's financial advisers, and
representatives from KPMG LLP, conducted interviews with members of Ardent's
management and independent auditors and reviewed requested due diligence
material. Messrs. Dexmier and Gyenes and each company's financial advisers
negotiated the terms of the potential combination.
On November 9 and 10, 1999, in Millbrae, California, Mr. Dexmier and other
members of Informix's senior management discussed Informix's business operations
and strategies with Mr. Gyenes, other members of Ardent's senior management, and
Ardent's financial, legal and accounting advisers. Messrs. Dexmier and Gyenes
and each company's financial advisers continued to negotiate the terms of the
potential combination. The evening of November 9, 1999, Informix delivered to
representatives of Ardent drafts of the merger agreement and related agreements.
In mid-November 1999, Informix and Ardent, together with their legal,
financial and accounting advisers, continued to conduct due diligence reviews
and negotiate the terms of the definitive agreements providing for the merger.
On November 15, 1999, the Informix board of directors held a special meeting
to discuss the status of management's due diligence reviews and to assess
management's recommendations and the proposed terms of the combination. In
addition, Mr. Gyenes, whom the Informix board of directors had invited to attend
the meeting, presented a review of Ardent's history, business operations and
strategies.
On November 24, 1999, the Ardent board of directors held a special board
meeting. Mr. Gyenes updated the board on the status of the negotiations.
Representatives of SG Cowen then presented their analysis of the proposed
combination and summarized the terms of the proposed merger agreement. After the
presentation, SG Cowen indicated that, in its opinion, the transaction was fair,
from a financial point of view, to the stockholders of Ardent. At the conclusion
of the meeting, the board of directors authorized Ardent management to continue
to negotiate the terms of the definitive agreement.
From November 15 through November 29, 1999, Informix and Ardent, together
with their legal, financial and accounting advisers, continued to conduct due
diligence reviews and negotiate the terms of the definitive agreements providing
for the merger.
On November 29, 1999, the Informix board of directors held a special
telephonic meeting to approve the terms of the merger agreement and the merger.
Informix's financial advisers presented
48
their analysis of the proposed combination on the terms discussed. At the
conclusion of their presentation, Merrill Lynch delivered its oral opinion, and
subsequently confirmed in writing, that, as of such date, the exchange ratio was
fair to Informix from a financial point of view. Following further discussion,
those members of the Informix board of directors who attended the meeting
unanimously determined that the proposed merger was in the best interests of
Informix and its stockholders, approved the terms of the merger and the merger
agreement in substantially the form presented, subject to the approval of the
Informix stockholders of the issuance of Informix common stock in the merger.
The board of directors authorized Informix's management to conclude negotiations
and enter into the merger agreement and related transactions.
On November 30, 1999, the Ardent board of directors held a special board
meeting. Mr. Gyenes updated the board on the progress of the negotiations since
November 24, 1999. Representatives of SG Cowen presented their revised analysis
of the proposed combination. After the presentation, SG Cowen indicated that, in
its opinion, the transaction was fair to Ardent's stockholders from a financial
perspective. The board of directors concluded that the proposed merger was in
the best interests of Ardent and its stockholders and authorized Ardent's
management to conclude negotiations and sign the merger and related agreements.
During the course of the day on November 30, 1999, management of both Ardent
and Informix and their respective legal advisors completed negotiations and
finalized the terms of the definitive merger agreement and the related
agreements. Thereafter, on the evening of November 30, 1999, the parties entered
into the merger agreement and the stock option agreement and Informix and
certain stockholders and affiliates of Ardent entered into the voting agreements
and the affiliate agreements. The merger agreement was announced in a joint
press release on December 1, 1999.
JOINT REASONS FOR THE MERGER
This section contains numerous forward-looking statements that involve risks
and uncertainties. See "Forward-Looking Statements" on page 95.
In order to evaluate the proposed merger, the Informix board of directors
and the Ardent board of directors consulted with their respective management
teams and professional advisers, independently reviewed each other's business
operations and considered the combination of those operations. The boards of
directors of Informix and Ardent determined that the combined company would have
the potential to realize long-term improved operating and financial results and
a stronger competitive position in the market for data and information
management software.
The Informix board of directors and the Ardent board of directors identified
the following mutual reasons for engaging in the merger:
- The companies share similar strategic objectives and goals, particularly
with respect to the market for software that facilitates electronic
commerce,
- The companies' product offerings and development plans are complementary,
- The combined company would have the potential to increase stockholder
value by competing effectively in the rapidly growing market for software
that facilitates electronic commerce,
- The merger would provide the combined company with the potential for
greater depth of skilled personnel, strengthened research and development
activity and expanded distribution and support capacity,
- Customers of both companies would be able to choose from an enhanced set
of products,
49
- Customers of both companies potentially would have access to expanded
support and professional services,
- The merger would provide the combined company with access to each
company's existing customer base and partners, and
- The creation of a larger customer base, a higher market profile and
greater financial strength would present greater opportunities for
marketing the products and services of the combined company.
Each board of directors recognizes that the potential benefits of the merger
may not be realized. See "Risk Factors--Risks Related to the Merger" beginning
on page 15.
INFORMIX'S REASONS FOR THE MERGER AND BOARD CONSIDERATIONS
The decision of the Informix board of directors to approve the merger
agreement and the merger and recommend that the Informix stockholders approve
the issuance of the shares of Informix common stock necessary to complete the
merger was based upon its consultation with Informix's management, as well as
its financial and legal advisors.
In addition to the joint reasons for the merger described above, the
Informix board of directors believes that the following are reasons why the
merger would be beneficial to Informix and its stockholders:
- The Ardent product offerings would complete Informix's ability to offer a
complete, integrated software infrastructure solution for data processing,
data movement and analytics in electronic commerce,
- Informix customers would have access to Ardent's data movement,
integration and meta data products,
- The merger would potentially provide Informix access to Ardent's partners
and installed customer base,
- Informix would have the potential to increase its revenue growth rates,
and
- The merger would provide Informix with the potential to enhance its sales,
research and development and support organizations.
The Informix board of directors instructed Informix's senior management to
conduct a detailed due diligence review of Ardent, its business operations,
strategies and goals and its prospects for future performance. In addition, the
Informix board of directors sought the advice and analysis of independent
financial, legal and accounting advisers regarding due diligence and the
structure and fairness of the merger. The Informix board of directors
considered, among other things:
- The extent to which the merger would further Informix's long term
strategies and goals,
- The detailed reports presented by Informix's management and advisers
regarding Ardent's business operations, financial condition, culture,
long-term strategic goals, prospects, and Informix's integration plans and
strategies,
- Current financial market conditions and historical market prices,
volatility and trading information with respect to both companies' common
stock,
- The terms and conditions of the merger agreement,
- The expectation that the merger will be accounted for as a pooling of
interests,
50
- The expectation that the merger will be tax-free for federal income tax
purposes to Informix,
- The oral opinion, subsequently confirmed in writing, of Merrill Lynch
delivered November 30, 1999, that, as of such date, the exchange ratio is
fair, from a financial point of view, to Informix (see "--Opinion of
Informix's Financial Advisor"),
- The compatibility of the corporate cultures of each of Informix and
Ardent, and
- That the issuance of the Informix common stock necessary to complete the
merger is conditioned on the approval of Informix's stockholders and the
merger is conditioned on the adoption of the merger agreement and the
approval of the merger by the Ardent stockholders.
The Informix board of directors also considered a variety of potentially
negative factors in its deliberations concerning the merger, including:
- The potential dilutive effect of the issuance of Informix common stock in
the merger,
- The substantial costs expected to be incurred, primarily in the current
and next quarter, in connection with the merger, including the transaction
expenses arising from the merger and costs associated with combining the
operations of the two companies,
- The risk that, despite the intentions and efforts of Informix and Ardent,
the benefits sought to be achieved in the merger will not be achieved,
- The risk that the market price of Informix's common stock might be
adversely affected by the public announcement of the merger,
- The potential failure to meet revenue expectations due to (i) a steeper
than expected decline in revenue derived from the licensing of Ardent's
embedded database products, (ii) the failure to increase the level of
revenue derived from the licensing of Ardent's datawarehouse products,
(iii) the effect of Informix's more generous discount policy on the
license fees derived from Ardent's products, and (iv) the potential loss
of current and future Ardent customers because a significant number of
Ardent's customers use database management software acquired from
Informix's competitors,
- The risk that Informix will be unable to integrate the two businesses
successfully,
- The risk that important members of Ardent's management team would not
continue their employment with Informix following the merger, and
- The other risks identified above under "Risk Factors" beginning on
page 15.
The foregoing discussion of the information and factors considered by the
Informix board of directors is not intended to be exhaustive but is believed to
include all material factors considered by the Informix board of directors. In
view of the variety of factors considered in connection with its evaluation of
the merger, the Informix board of directors did not find it possible to and did
not quantify or otherwise assign relative weights to the specific factors
considered in reaching its determination. In addition, individual members of the
Informix board of directors may have given different weights to different
factors. In the course of its deliberations, the Informix board of directors did
not establish a range of value for Ardent; however, based on the factors
outlined above and on the opinion of its financial advisor, Merrill Lynch,
described below, the Informix board of directors determined that the terms of
the merger agreement are fair, from a financial point of view to Informix, and
that the merger is in the best interests of, Informix and its stockholders.
After considering the information and matters described above and the
reports and recommendations of Informix's management and financial, legal and
accounting advisers, the Informix board of directors concluded that the merger
was in the best interests of Informix and its stockholders.
51
ARDENT'S REASONS FOR THE MERGER AND BOARD CONSIDERATIONS
The Ardent board of directors has unanimously approved the merger agreement
and declared it to be advisable and in the best interests of Ardent and its
stockholders. The Ardent board of directors unanimously recommends that the
stockholders of Ardent adopt the merger agreement. In reaching its
determinations, the Ardent board of directors consulted with Ardent's
management, as well as its financial, legal and accounting advisors, and
considered a number of factors, principally including the following:
- The complementary fit between Informix's position in the Internet
infrastructure and business intelligence markets and Ardent's position in
the data warehousing and enterprise information infrastructure markets,
including the complementary products, channels, partners, technology and
critical skills of the two companies,
- The critical mass and infrastructure of the combined company, giving it
the opportunity to accelerate achievement of each company's strategic
objectives,
- The opportunity of the combined company to achieve significant cost
reductions, principally through the elimination of overlapping positions
in corporate support functions and closure of duplicate facilities,
- The merger consideration represented a premium over the market price of
Ardent stock which the Ardent board of directors deemed to be appropriate
in relation to Ardent's growth potential,
- The Ardent stockholders will receive stock in a company which is more
widely traded and has greater visibility and coverage in the investment
community, and
- The expectation that the merger will be tax-free for federal income tax
purposes.
The Ardent board also considered a variety of negative factors associated
with the merger, primarily those described above under "Risk Factors" beginning
on page 15. It did not consider those factors in the aggregate to outweigh the
merits of the transaction. The Ardent board did not find it practical to, and
did not, quantify or otherwise assign relative values to the specific factors
associated with the merger.
OPINION OF INFORMIX'S FINANCIAL ADVISOR
On November 29, 1999, Merrill Lynch delivered its opinion to the Informix
board, subsequently confirmed in writing as of November 30, 1999, to the effect
that, as of that date, and based upon the assumptions made, matters considered
and limits of review specified in that opinion, the proposed exchange ratio in
the merger was fair from a financial point of view to Informix.
THE MERRILL LYNCH OPINION ATTACHED AS APPENDIX E TO THIS DOCUMENT SETS FORTH
THE ASSUMPTIONS MADE, MATTERS CONSIDERED AND THE LIMITATIONS ON THE SCOPE OF
REVIEW UNDERTAKEN BY MERRILL LYNCH. EACH HOLDER OF INFORMIX COMMON SHARES IS
URGED TO READ THE MERRILL LYNCH OPINION ATTACHED AS APPENDIX E IN ITS ENTIRETY.
THE MERRILL LYNCH OPINION WAS INTENDED FOR THE USE AND BENEFIT OF THE INFORMIX
BOARD, WAS DIRECTED ONLY TO THE FAIRNESS OF THE EXCHANGE RATIO FROM A FINANCIAL
POINT OF VIEW TO INFORMIX, DID NOT ADDRESS THE MERITS OF THE UNDERLYING DECISION
BY INFORMIX TO ENGAGE IN THE MERGER AND DOES NOT CONSTITUTE A RECOMMENDATION TO
ANY STOCKHOLDER AS TO HOW THAT STOCKHOLDER SHOULD VOTE ON THE PROPOSED MERGER OR
ANY RELATED MATTER. THE EXCHANGE RATIO WAS DETERMINED ON THE BASIS OF
NEGOTIATIONS BETWEEN INFORMIX AND ARDENT AND WAS APPROVED BY THE INFORMIX BOARD.
THE SUMMARY OF THE MERRILL LYNCH OPINION IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO THE FULL TEXT OF THE OPINION ATTACHED AS APPENDIX E.
52
In arriving at its opinion, Merrill Lynch:
- Reviewed certain publicly available business and financial information
relating to Informix and Ardent that it deemed to be relevant,
- Reviewed certain information relating to the business, earnings, cash
flow, assets, liabilities and prospects of Informix and Ardent, as well as
the amount and timing of the cost savings and related expenses and
synergies expected to result from the merger, prepared by and furnished to
it by Informix and Ardent, respectively,
- Conducted discussions with members of senior management of Informix and
Ardent,
- Reviewed the market prices and valuation multiples for Informix common
shares and Ardent common shares and compared them with those of certain
publicly traded companies that it deemed to be relevant,
- Reviewed the results of operations of Informix and Ardent and compared
them with those of certain publicly traded companies that it deemed to be
relevant,
- Compared the proposed financial terms of the merger with the financial
terms of certain other transactions it deemed to be relevant,
- Participated in certain discussions and negotiations among representatives
of Informix and Ardent and their financial and legal advisors,
- Reviewed the potential pro forma impact of the merger,
- Reviewed the merger agreement and the stock option agreement, and
- Reviewed such other financial studies and analyses and took into account
such other matters as it deemed necessary, including Merrill Lynch's
assessment of general economic, market and monetary conditions.
In preparing its opinion, Merrill Lynch assumed and relied on the accuracy
and completeness of all information supplied or otherwise made available to it,
discussed with or reviewed by or for it, or publicly available, and Merrill
Lynch did not assume any responsibility for independently verifying such
information. Merrill Lynch did not undertake an independent evaluation or
appraisal of any of the assets or liabilities of Ardent or Informix nor was
Merrill Lynch furnished with any such evaluation or appraisal. In addition,
Merrill Lynch did not assume any obligation to conduct any physical inspection
of the properties or facilities of Ardent or Informix. With respect to the
information furnished to or discussed with Merrill Lynch by Ardent or Informix,
including information discussed with management of Ardent and Informix regarding
their views of future operations, Merrill Lynch assumed that such information
had been reasonably prepared and reflected the best currently available
estimates and judgment of Ardent's or Informix's management, as the case may be,
as to the competitive, operating and regulatory environments, the financial
performance of Ardent and Informix and the expected synergies. Merrill Lynch
assumed that outstanding litigation involving Ardent will be resolved in a
manner that does not materially adversely affect the value of Ardent or the
contemplated benefits of the merger to Informix. As to the legal matters,
Merrill Lynch relied upon the advice of counsel to Informix. Merrill Lynch
further assumed that the merger will be accounted for as a pooling of interests
under generally accepted accounting principles and that it will qualify as a
tax-free reorganization for U.S. federal income tax purposes. Merrill Lynch
assumed that the merger will be consummated on the terms set forth in the
Agreement without waiver or amendment of any of the terms or conditions thereof.
Merrill Lynch assumed that in the course of obtaining the necessary
regulatory or other consents or approvals (contractual or otherwise) for the
merger, no restrictions, including any divestiture
53
requirements or amendments or modifications, would be imposed that would have a
material adverse effect on the contemplated benefits of the merger. Merrill
Lynch did not express any opinion as to the prices at which Informix shares
would trade following announcement or consummation of the merger.
Merrill Lynch's opinion was necessarily based on market, economic and other
conditions as they existed and could be evaluated only on the information made
available to Merrill Lynch as of the date of the Merrill Lynch opinion. Under
its engagement by Informix, Merrill Lynch has no obligation to update its
opinion to take into account events occurring after the date that its opinion
was delivered to the Informix board. As a result, circumstances could develop
prior to the consummation of the merger that, if known at the time Merrill Lynch
rendered its opinion, would have altered such opinion.
The following is a summary of the material portions of the financial and
comparative analyses performed by Merrill Lynch which were presented to the
Informix board in connection with the Merrill Lynch opinion. These summaries of
analyses include information presented in tabular format. In order to fully
understand the analyses used by Merrill Lynch, the tables must be read together
with the text of each summary. The tables alone do not constitute a complete
description of the analyses.
STOCK TRADING HISTORY
Using publicly available information, Merrill Lynch calculated average
exchange ratios and implied offer premiums of Informix common shares for Ardent
common shares over certain trading periods ending on November 26, 1999. The
average exchange ratio for a relevant period was calculated by taking the daily
exchange ratios for the relevant period and averaging them over such period. An
implied offer premium was calculated by comparing the actual exchange ratio of
3.5 shares of Informix common stock for each share of Ardent common stock to the
average exchange ratio over the relevant period. The resulting average exchange
ratios of Informix common shares per Ardent common shares and implied offer
premiums were as follows:
AVERAGE EXCHANGE RATIO AND IMPLIED OFFER PREMIUMS
- ----------------------------------------------------------------------------------
IMPLIED OFFER
PERIOD (ENDING 11/26/99) AVG. RATIOS PREMIUMS
- ----------------------------------------------------- ----------- -------------
1 Day................................................ 2.37x 48.0%
1 Week............................................... 2.29x 52.9%
1 Month.............................................. 2.51x 39.6%
3 Months............................................. 3.07x 14.0%
6 Months............................................. 3.05x 14.6%
1 Year............................................... 2.70x 29.6%
VALUATION OF ARDENT
ARDENT COMPARABLE PUBLIC COMPANY ANALYSIS. Using publicly available Wall
Street research analyst forecasts, Merrill Lynch compared certain financial,
operating and stock market information and ratios for each of the Ardent
Database Division and the Ardent Data Warehouse Division with the corresponding
data of certain publicly traded companies that Merrill Lynch deemed to be
relevant.
The companies included in the comparable company analysis for the Ardent
Database Division were:
- IBM Corporation
- Progress Software Corporation, and
- Sybase, Inc.
54
The companies included in the comparable company analysis for the Ardent
Data Warehouse Division were:
- Brio Technology, Inc
- Business Objects S.A.
- Cognos, Inc.
- Informatica Corporation, and
- Sagent Technology, Inc.
Based on these companies, Merrill Lynch derived a reference range of
multiples for each group of comparable companies of enterprise value to calendar
year 2000 estimated revenues. These reference ranges are summarized below:
COMPANIES RANGE OF MULTIPLES
- --------- ------------------
Ardent Database Division comparable companies............... 1.0x to 1.3x
Ardent Data Warehouse Division comparable companies......... 3.0x to 10.0x
As a result of this analysis, Merrill Lynch established a reference range
for Ardent common stock of $20 to $54.
PREMIUMS PAID IN PRECEDENT TRANSACTIONS. Merrill Lynch reviewed certain
publicly available information regarding the premiums paid since January 1, 1994
by acquirors of publicly traded U.S. technology companies with market
capitalizations in excess of $800 million. Merrill Lynch's review of the premium
paid to the pre-announcement stock price of the target one day prior to
announcement of the transaction revealed the following:
PREMIUM TO PRE-ANNOUNCEMENT PRICE PERCENTAGE OF TRANSACTIONS
- --------------------------------- --------------------------
19% or greater........................................ 75%
35% or greater........................................ 50%
62% or greater........................................ 25%
As a result of this analysis, Merrill Lynch established a reference range
for Ardent common stock of $33 to $44.
ARDENT DISCOUNTED CASH FLOW ANALYSIS WITHOUT SYNERGIES. Merrill Lynch
performed a discounted cash flow analysis for Ardent using publicly available
Wall Street research analyst forecasts trended to 2004. Merrill Lynch calculated
ranges of value for each of Ardent's Database Division and Ardent's Data
Warehouse Division based upon the value discounted to the present of such
division's stream of projected unlevered cash flows through December 31, 2003
and a range of projected 2004 terminal value. For Ardent's Database Division
Merrill Lynch applied discount rates ranging from 14% to 16% and calculated a
range of terminal values based on perpetual growth rates of 2003 free cash flow
ranging from minus 7.5% to minus 2.5%. For Ardent's Data Warehouse Division
Merrill Lynch applied discount rates ranging from 16% to 20% and calculated a
range of 2004 terminal values based upon a range of multiples to its projected
2004 unlevered net income of 27.5x to 32.5x. As a result of this analysis,
Merrill Lynch established a reference range for Ardent common stock of $53 to
$69.
DISCOUNTED CASH FLOW ANALYSIS WITH SYNERGIES. Merrill Lynch performed a
discounted cash flow analysis for the synergies expected to result from the
merger. The resulting range of present value of synergies per share of Ardent
common stock was added to the reference range for Ardent common stock
established by Merrill Lynch in its discounted cash flow analysis that excluded
forecasted
55
synergies. As a result of this analysis, Merrill Lynch established a reference
range for Ardent common stock of $63 to $83.
VALUATION OF INFORMIX
INFORMIX COMPARABLE PUBLIC COMPANY ANALYSIS. Using publicly available Wall
Street research analyst forecasts, Merrill Lynch compared certain financial,
operating and stock market information and ratios for Informix with
corresponding data of certain publicly traded companies that Merrill Lynch
deemed to be relevant. The companies included in the Informix comparable company
analysis were:
- IBM Corporation
- Oracle Systems Corporation
- Progress Software Corporation, and
- Sybase, Inc.
Based on these companies, Merrill Lynch derived a reference range of
multiples for these comparable companies of market value to calendar year 2000
estimated net income. Merrill Lynch also derived reference ranges of enterprise
value to calendar year 2000 estimated revenues. These reference ranges are
summarized below:
CATEGORY RANGE OF MULTIPLES
- -------- ------------------
Calendar year 2000 estimated revenues....................... 1.3x to 2.3x
Calendar year 2000 estimated net income..................... 20.0x to 25.0x
Based on its analysis, Merrill Lynch established a summary reference range
for Informix common stock of $7 to $13.
INFORMIX DISCOUNTED CASH FLOW ANALYSIS. Merrill Lynch performed a
discounted cash flow analysis for Informix using publicly available Wall Street
research analyst forecasts trended to 2004. Merrill Lynch calculated ranges of
value for Informix based upon the value discounted to the present of its stream
of projected unlevered cash flow through December 31, 2003 and a range of 2004
terminal values based upon a range of multiples to its projected 2004 unlevered
net income. Applying discount rates ranging from 14% to 16% and terminal value
multiples of 17.5x to 22.5x to projected 2004 unlevered net income, Merrill
Lynch established a reference range for Informix's common stock of $17 to $22.
PRO FORMA EARNINGS ANALYSIS.
Merrill Lynch analyzed the estimated pro forma effect of the merger on the
forecasted earnings per share of Informix in 2000. Using publicly available Wall
Street research analyst forecasts, Merrill Lynch estimated that the merger would
have the following pro forma effects on earnings per share of Informix in 2000:
ACCRETION/(DILUTION) TO
INFORMIX EPS
-----------------------
With synergies........................................... $ 0.01
Without synergies........................................ ($0.06)
This summary does not purport to be a complete description of the analyses
underlying the Merrill Lynch opinion or the presentation made by Merrill Lynch
to the Informix board. The preparation of a fairness opinion is a complex
analytic process involving various determinations as to the most appropriate and
relevant methods of financial analysis and the application of those methods to
the
56
particular circumstances. Therefore, such an opinion is not readily susceptible
to partial analysis or summary description. In arriving at its opinion, Merrill
Lynch did not attribute any particular weight to any analysis or factor
considered by it, but rather made qualitative judgments as to the significance
and relevance of each analysis and factor. Accordingly, Merrill Lynch believes
that its analyses must be considered as a whole and that selecting portions of
its analyses, without considering all analyses, would create an incomplete view
of the process underlying its opinion.
In performing its analyses, numerous assumptions were made with respect to
industry performance, general business, economic, market and financial
conditions and other matters, many of which are beyond the control of Merrill
Lynch, Informix or Ardent. Any estimates contained in the analyses performed by
Merrill Lynch are not necessarily indicative of actual values or future results,
which may be significantly more or less favorable than suggested by such
analyses. Additionally, estimates of the value of businesses or securities do
not purport to be appraisals or to reflect the prices at which such businesses
or securities might actually be sold. Accordingly, such analyses and estimates
are inherently subject to substantial uncertainty. In addition, the Merrill
Lynch opinion was among several factors taken into consideration by the Informix
board in making its determination to approve the merger agreement and the
merger. Consequently, the Merrill Lynch analyses should not be viewed as
determinative of the decision of the Informix board or Informix management with
respect to the fairness of the exchange ratio.
None of the companies that Merrill Lynch compared to Ardent or Informix is
identical to Ardent or Informix, and none of the comparable merger or
acquisition transactions utilized as a comparison is identical to the
transactions contemplated by the merger agreement. Accordingly, a complete
analysis of the results of the comparable companies and comparable mergers and
acquisitions cannot be limited to a quantitative review of these results. A
complete analysis involves complex considerations and judgments concerning
differences in financial and operating characteristics of the comparable
companies and transactions and other factors that could affect the public
trading values of such comparable companies to which they are being compared. In
addition, various analyses performed by Merrill Lynch incorporate projections
prepared by research analysts using only publicly available information. These
estimates may or may not prove to be accurate.
The Informix board of directors selected Merrill Lynch to act as its
financial advisor because of Merrill Lynch's reputation as an internationally
recognized investment banking firm with substantial experience in transactions
similar to this merger and because Merrill Lynch is familiar with Informix and
its business. As part of Merrill Lynch's investment banking businesses, Merrill
Lynch is continually engaged in the valuation of businesses and their securities
in connection with mergers and acquisitions, leveraged buyouts, negotiated
underwritings, secondary distributions of listed and unlisted securities and
private placements.
The terms of a letter agreement between Informix and Merrill Lynch, dated
October 11, 1999, require Informix to pay Merrill Lynch a fee of $4 million,
payable in cash upon closing of the merger. Informix also has agreed to
reimburse Merrill Lynch for its reasonable out-of-pocket expenses, including the
reasonable fees and disbursements of legal counsel, and to indemnify Merrill
Lynch and related parties from and against liabilities, including liabilities
under the federal securities laws, arising out of its engagement.
Merrill Lynch has, in the past, provided financial advisory and financing
services to Informix and/or its affiliates and may continue to do so and has
received, and may receive, fees for the rendering of those services. In
addition, in the ordinary course of Merrill Lynch's business, Merrill Lynch and
its affiliates may actively trade Ardent common shares and other securities of
Ardent, as well as Informix common shares and other securities of Informix, for
their own account and for the accounts of customers. Accordingly, Merrill Lynch
and its affiliates may at any time hold a long or short position in such
securities.
57
OPINION OF ARDENT'S FINANCIAL ADVISOR
Pursuant to an engagement letter dated October 28, 1999, Ardent retained SG
Cowen Securities Corporation to render an opinion to Ardent's board of directors
as to the fairness, from a financial point of view, to the stockholders of
Ardent, other than Informix and its affiliates, of the exchange ratio.
On November 29, 1999, SG Cowen delivered substantial parts of its written
analyses and its oral opinion to the Ardent board, subsequently confirmed in
writing as of November 30, 1999, to the effect that and subject to the various
limitations and assumptions set forth therein, as of November 30, 1999, the
exchange ratio was fair, from a financial point of view, to the stockholders of
Ardent, other than Informix and its affiliates.
THE FULL TEXT OF THE WRITTEN OPINION OF SG COWEN, DATED NOVEMBER 30, 1999,
IS ATTACHED HERETO AS APPENDIX F AND IS INCORPORATED BY REFERENCE. HOLDERS OF
ARDENT COMMON STOCK ARE URGED TO READ THE OPINION IN ITS ENTIRETY FOR THE
ASSUMPTIONS MADE, PROCEDURES FOLLOWED, OTHER MATTERS CONSIDERED AND LIMITS OF
THE REVIEW BY SG COWEN. THE SUMMARY OF THE WRITTEN OPINION OF SG COWEN SET FORTH
HEREIN IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF SUCH
OPINION. SG COWEN PREPARED ITS ANALYSES AND OPINION FOR AND ADDRESSED THEM TO
THE ARDENT BOARD. SUCH ANALYSES AND OPINIONS ARE DIRECTED ONLY TO THE FAIRNESS,
FROM A FINANCIAL POINT OF VIEW, OF THE EXCHANGE RATIO, AND DO NOT CONSTITUTE AN
OPINION AS TO THE MERITS OF THE MERGER OR A RECOMMENDATION TO ANY STOCKHOLDER AS
TO HOW TO VOTE ON THE PROPOSED MERGER. THE EXCHANGE RATIO WAS DETERMINED THROUGH
NEGOTIATIONS BETWEEN ARDENT AND INFORMIX AND NOT PURSUANT TO RECOMMENDATIONS OF
SG COWEN.
In arriving at its opinion, SG Cowen reviewed and considered such financial
and other matters as it deemed relevant, including, among other things:
- A draft of the merger agreement dated November 26, 1999,
- Certain publicly available information for Ardent and Informix, including
the annual reports of Ardent and Informix filed on Form 10-K for the year
ended December 31, 1998 and the quarterly reports of Ardent and Informix
filed on Form 10-Q for the quarter ended September 30, 1999,
- Certain internal financial analyses, financial forecasts, reports and
other information concerning Ardent prepared by the management of Ardent,
- Earnings per share estimates and financial projections provided in
currently available analyst reports for Ardent and Informix,
- Discussions SG Cowen has had with certain members of the management of
each of Ardent and Informix concerning the historical and current business
operations, financial conditions and prospects of Ardent and Informix, and
such other matters SG Cowen deemed relevant,
58
- The reported price and trading histories of the shares of the common stock
of Ardent and Informix,
- The respective financial conditions of Ardent and Informix as compared to
the financial conditions of certain other companies SG Cowen deemed
relevant,
- Certain financial terms of the merger as compared to the financial terms
of other selected business combinations SG Cowen deemed relevant,
- The financial forecasts of Ardent for the cash flows generated by Ardent
on a stand-alone basis to determine the present value of the discounted
cash flows,
- Based on the financial forecasts of Ardent, the earnings per share
estimates and financial projections contained in currently available
analysts reports, the potential pro forma financial effects of the merger,
and
- such other information, financial studies, analyses and investigations and
such other factors that SG Cowen deemed relevant for the purposes of this
opinion.
In conducting its review and arriving at its opinion, SG Cowen, with
Ardent's consent, assumed and relied, without independent investigation, upon
the accuracy and completeness of all financial and other information provided to
it by Ardent and Informix, respectively, or which was publicly available. SG
Cowen did not undertake any responsibility for the accuracy, completeness or
reasonableness of, or independently verify, such information. In addition, SG
Cowen did not conduct any physical inspection of the properties or facilities of
Ardent or Informix. SG Cowen further relied upon the assurance of management of
Ardent that it was unaware of any facts that would make the information provided
to SG Cowen incomplete or misleading in any respect. SG Cowen, with Ardent's
consent, assumed that the financial forecasts were reasonably prepared by the
management of Ardent, and reflected the best currently available estimates and
good faith judgments of such management as to the future performance of Ardent.
Management of Ardent and Informix, respectively, confirmed to SG Cowen, and SG
Cowen assumed, with Ardent's consent, that each of the financial forecasts
prepared by management of Ardent, the earnings per share estimates and the
financial projections contained in currently available analyst reports with
respect to Ardent and Informix provided a reasonable basis for its opinion. SG
Cowen did not make or obtain any independent evaluations, valuations or
appraisals of the assets or liabilities of Ardent or Informix, nor was SG Cowen
furnished with such materials. With respect to all legal matters relating to
Ardent and Informix, SG Cowen relied on the advice of legal counsel to Ardent.
SG Cowen's services to Ardent in connection with the merger included
rendering an opinion from a financial point of view of the exchange ratio to be
received by the stockholders of Ardent. SG Cowen necessarily based its opinion
upon economic and market conditions and other circumstances as they existed and
could be evaluated by SG Cowen on the date of their opinion. You should
understand that although subsequent developments may affect its opinion, SG
Cowen does not have any obligation to update, revise or reaffirm its opinion and
SG Cowen expressly disclaims any responsibility to do so. Additionally, SG Cowen
was not authorized or requested to, and did not, solicit alternative offers for
Ardent or its assets, nor did SG Cowen investigate any other alternative
transactions that may be available to Ardent.
SG Cowen's opinion does not constitute a recommendation to any stockholder
as to how such stockholder should vote with respect to the merger or to take any
other action in connection with the merger or otherwise. SG Cowen did not
express an opinion as to what the value of Informix common stock will be when
issued to the stockholders of Ardent pursuant to the merger. SG Cowen did not
express any opinion as to what the future price, trading range or value of
Informix common stock will be following the merger. SG Cowen expressed no
opinion with respect to Ardent's underlying business decision to effect the
merger.
59
For purposes of rendering SG Cowen's opinion, SG Cowen assumed, in all
respects material to its analysis, that:
- The representations and warranties of each party contained in the merger
agreement are true and correct,
- Each party will perform all of the covenants and agreements required to be
performed by it under the merger agreement,
- All conditions to the consummation of the merger will be satisfied without
waiver thereof,
- The final form of the merger agreement would be substantially similar to
the last draft received by SG Cowen prior to rendering its opinion,
- All governmental, regulatory and other consents and approvals contemplated
by the merger agreement would be obtained and that in the course of
obtaining any of those consents no restrictions will be imposed or waivers
made that would have an adverse effect on the contemplated benefits of the
merger,
- Based on information from Ardent, the merger will be recorded for
accounting purposes as a pooling of interests under generally accepted
accounting principles, and
- Based on information from Ardent, the merger will be treated as a tax-free
reorganization within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended.
The following is a summary of the principal financial analyses that SG Cowen
performed to arrive at its opinion. Some of the summaries of financial analyses
include information presented in tabular format. In order to fully understand
the financial analyses, you must read the tables together with the text of each
summary. The tables alone do not constitute a complete description of the
financial analyses. Considering the data set forth in the tables without
considering the full narrative description of the financial analyses, including
the methodologies and assumptions underlying the analyses, could create a
misleading or incomplete view of the financial analyses. SG Cowen performed
certain procedures, including each of the financial analyses described below,
and reviewed with the management of Ardent the assumptions on which such
analyses were based and other factors, including the historical and projected
financial results of Ardent and Informix. No limitations were imposed by the
Ardent board with respect to the investigations made or procedures followed by
SG Cowen in rendering its opinion.
ANALYSIS OF PREMIUMS PAID IN SELECTED TRANSACTIONS. SG Cowen reviewed the
premium of the offer price over the trading prices one trading day prior, one
week prior and four weeks prior to the announcement date of 64 technology
company acquisitions announced after January 1, 1998, the consideration for
which exceeded $50 million and that were accounted for as pooling transactions
(the "Representative Transactions"). SG Cowen also reviewed the offer price as
multiple of latest reported twelve month revenues ("LTM Revenue") for the
Representative Transactions.
The following table presents the premium of the offer prices over the
trading prices one day prior, one week prior and four weeks prior to the
announcement date for the median of the Representative Transactions, and the
premiums implied for Ardent, based on the exchange ratio. The following table
also presents the offer prices as a multiple of LTM Revenue for the median of
the Representative
60
Transactions and Ardent, based on the exchange ratio. The information in the
table is based on the closing stock price of Ardent and Informix stock on
November 26, 1999.
PREMIUM IMPLIED BY
REPRESENTATION TRANSACTIONS EXCHANGE RATIO FOR ARDENT
--------------------------- -------------------------
Premiums Paid to Stock Price
One Day Prior to Announcement................ 28% 48%
One Week Prior to Announcement............... 35% 57%
Four Weeks Prior to Announcement............. 52% 93%
Multiple of LTM Revenue........................ 4.4x 5.6x
ANALYSIS OF CERTAIN TRANSACTIONS. SG Cowen reviewed the financial terms, to
the extent publicly available, of 14 transactions (the "Selected Transactions")
involving the acquisition of companies in the software industry, which were
announced or completed since January 1, 1998. These transactions were (listed as
acquiror/target):
- Nortel Networks Corp./Clarify Inc.
- PeopleSoft Inc./Vantive Corp.
- Sun Microsystems, Inc./Forte Software, Inc.
- Sterling Software Inc./Information Advantage
- Computer Associates/Platinum Technology, Inc.
- Brio Technology Inc./SQRIBE Technologies
- Ardent Software, Inc./Prism Solutions, Inc.
- Oracle Corporation/Concentra Corporation
- Informix Corporation/Red Brick Systems, Inc.
- MicroFocus Group Plc/Insersolv, Inc.
- Information Advantage/IQ Software
- PeopleSoft, Inc./Intrepid Systems
- PLATINUM Technology, Inc./Logic Works, Inc.
- Siebel Systems Inc./Scopus Technology, Inc.
SG Cowen reviewed the market capitalization of common stock plus total debt
less cash and equivalents ("Enterprise Value") paid in the Selected Transactions
as a multiple of LTM Revenue and the market capitalization of common stock
("Equity Value") paid in the Selected Transactions as a multiple of estimated
calendar year 2000 earnings per share ("CY00 EPS") (as available from SG Cowen
research analyst reports or, if not so available, First Call).
The following table presents the median of multiples implied by the ratio of
Enterprise Value to LTM revenues and the ratio of Equity Value to year forward
earnings per share for the selected transactions. The information in the table
is based on the closing stock price of Ardent and Informix stock on
November 26, 1999.
MULTIPLE IMPLIED BY
EXCHANGE
SELECTED TRANSACTIONS RATIO FOR ARDENT
--------------------- -------------------
Enterprise Value as a Ratio of LTM Revenue............ 2.3x 5.6x
Equity Value as a Ratio of CY00 EPS................... 27.3x 29.7x
61
Although SG Cowen used the Selected Transactions for comparison purposes,
none of those transactions is directly comparable to the merger, and none of the
companies in those transactions is directly comparable to Ardent or Informix.
Accordingly, an analysis of the results of such a comparison is not purely
mathematical, but instead involves complex considerations and judgments
concerning differences in historical and projected financial and operating
characteristics of the companies involved and other factors that could affect
the acquisition value of such companies or Ardent to which they are being
compared.
ANALYSIS OF CERTAIN PUBLICLY TRADED COMPANIES. To provide contextual data
and comparative market information, SG Cowen compared selected historical
operating and financial data and ratios for Ardent to the corresponding
financial data and ratios of certain other middle market database and database
tools companies and certain other business intelligence companies (collectively,
the "Selected Companies") whose securities are publicly traded and which SG
Cowen believes have operating, market valuation and trading valuations similar
to what might be expected of Ardent. These companies were:
Database Companies:
- Informix Corporation
- Sybase Inc.
- Progress Software Corp.
- Centura Software Corp.
- Pervasive Software Inc.
- Inprise Corp.
Business Intelligence Companies:
- Business Objects SA
- Cognos Inc.
- Informatica Corp.
- Brio Technology Inc.
- Sagent Technology Inc.
- Hummingbird Communications Ltd.
The data and ratios included the Enterprise Value of the Selected Companies
as multiples of last reported quarter annualized revenues ("LQA Revenues") and
calendar year 2000 projected revenue ("CY00 Revenues") (as available from SG
Cowen and other research analyst reports). SG Cowen also examined the ratios of
the current share prices of the Selected Companies to the CY00 EPS for the
Selected Companies. SG Cowen also reviewed revenue growth of the Selected
Companies between the third quarter of 1998 and the third quarter of 1999 and
estimated revenue growth of the Selected Companies between calendar year 1999
and calendar year 2000 and operating margins for the last reported quarter.
The following table presents the median of the Selected Companies for
multiples implied by the ratio of Enterprise Value to LQA Revenues and CY00
Revenues, the ratio of current share prices to CY00 EPS, revenue growth between
the third quarter of 1998 and the third quarter of 1999 and estimated revenue
growth between calendar year 1999 and calendar year 2000, and operating margins
62
for the last reported quarter. The information in the table is based on the
closing stock price of Ardent and Informix common stock on November 26, 1999.
MARKET DATA OPERATING DATA
------------------------------- ------------------------------------
ENT. VALUE AS A
MULTIPLE OF: REVENUE GROWTH
-------------------- PRICE/ --------------------- LQ OPERATING
LQA REV. CY00 REV. CY00 EPS 99Q3/98Q3 CY99/CY00 MARGIN
-------- --------- -------- --------- --------- ------------
Database Companies.................... 2.6x 2.0x 24x 10% 19% 10%
Business Intelligence Companies....... 7.7x 5.7x 66x 49% 37% 12%
Combined Database and Business
Intelligence Companies.............. 3.5x 2.9x 26x 26% 29% 10%
Multiple Implied by Exchange Ratio for
Informix/Ardent..................... 5.1x 4.4x 32x 52% 23% 24%
Although SG Cowen used the Selected Companies for comparison purposes, none
of those companies is directly comparable to Ardent. Accordingly, an analysis of
the results of such a comparison is not purely mathematical, but instead
involves complex considerations and judgments concerning differences in
historical and projected financial and operating characteristics of the Selected
Companies and other factors that could affect the public trading value of the
Selected Companies or Ardent to which they are being compared.
STOCK TRADING HISTORY. To provide contextual data and comparative market
data, SG Cowen reviewed the historical market prices of Ardent common stock from
May 15, 1992 (the first trading day of Ardent common stock) to November 19, 1999
and for the twelve month period ended November 19, 1999. SG Cowen noted that
over the indicated periods the high and low prices for shares of Ardent were
$29.38 and $5.50, and $29.38 and $14.00, respectively. SG Cowen also reviewed
the historical market prices of Informix common stock from November 2, 1989 (the
first trading day of Informix common stock) to November 19, 1999 and for the
twelve month period ended November 19, 1999. SG Cowen noted that over the
indicated periods the high and low prices for shares of Informix were $36.75 and
$11.63, and $14.00 and $11.63, respectively.
CONTRIBUTION ANALYSIS. SG Cowen analyzed the respective contributions of
calendar year 1999 estimated revenues and operating income and calendar year
2000 estimated revenues and operating income of Ardent and Informix to the
combined company, based upon the projected financial results of Ardent and
Informix (based upon SG Cowen research analyst estimates for Ardent and
Informix).
% OF COMBINED COMPANY
-------------------------------------------
ARDENT CONTRIBUTION INFORMIX CONTRIBUTION
------------------- ---------------------
OPERATING RESULTS
Calendar Year 1999
Revenues............................................... 17% 83%
Operating Income....................................... 28% 72%
Calendar Year 2000
Revenues............................................... 17% 83%
Operating Income....................................... 28% 72%
BALANCE SHEET
Cash and Short Term Investments........................ 15% 85%
Debt................................................... -- --
SG Cowen also noted that holders of Ardent common stock would own
approximately 26% of the combined company, based on Informix's outstanding
shares on November 26, 1999.
63
DISCOUNTED CASH FLOW ANALYSIS. SG Cowen estimated a range of values for
Ardent common stock based upon the discounted present value of the projected
after-tax cash flows of Ardent described in the financial forecasts prepared by
the management of Ardent for the fiscal years ended December 31, 1999 through
December 31, 2002, and of the terminal value of Ardent at December 31, 2002,
based upon multiples of earnings before interest, taxes, depreciation and
amortization ("EBITDA"). After-tax cash flow was calculated by taking projected
earnings before interest and taxes and subtracting from this amount projected
taxes, capital expenditures, changes in working capital and changes in other
assets and liabilities and adding back projected depreciation and amortization.
SG Cowen based this analysis upon certain assumptions described by, projections
supplied by and discussions held with the management of Ardent. In performing
this analysis, SG Cowen utilized discount rates ranging from 17.0% to 21.0%,
which were selected based on the estimated industry weighted average cost of
capital. SG Cowen used terminal multiples of EBITDA ranging from 5.0 times to
9.0 times. These multiples represent the general range of multiples of EBITDA
for comparable publicly traded companies.
Utilizing this methodology, Ardent's estimated value per share ranged from
$22.89 to $39.64 per share as set forth in the following table. Because of the
limited number of years for which projected financial information for Ardent was
provided by Ardent, and because the discounted terminal value accounted for such
a high percentage of the discounted present value of Ardent, SG Cowen did not
ascribe significance to this analysis in reaching its opinion.
DISCOUNT CASH FLOW ANALYSIS
------------------------------------------------------------------------------------------------
DISCOUNT RATE (1) 17.0% 19.0% 21.0%
- ------------------------------- ------------------------------ ------------------------------ ------------------------------
2002 EBITDA Multiple 5.0 7.0 9.0 5.0 7.0 9.0 5.0 7.0 9.0
------ ------ ------ ------ ------ ------ ------ ------ ------
Present Value of Terminal
Value........................ $401.2 $561.6 $722.1 $381.3 $533.8 $686.3 $362.7 $507.7 $652.8
Present Value of Free Cash
Flow......................... 108.1 108.1 108.1 104.2 104.2 104.2 100.6 100.6 100.6
------ ------ ------ ------ ------ ------ ------ ------ ------
Present Value of Enterprise
Value...................... 509.2 669.7 830.2 485.5 638.0 790.5 463.3 608.4 753.4
Present Value of Equity
Value...................... 547.1 707.6 868.1 523.4 675.9 828.4 501.2 646.3 791.3
Value of Equity Per Equity
Value...................... $24.98 $32.31 $39.64 $23.90 $30.86 $37.83 $22.89 $29.51 $36.13
(1) Columns may not add due to rounding.
SG Cowen does not purport that the summary set forth above is a complete
description of all the analyses performed by SG Cowen. The preparation of a
fairness opinion involves various determinations as to the most appropriate and
relevant methods of financial analyses and the application of these methods to
the particular circumstances and, therefore, such an opinion is not readily
susceptible to partial analysis or summary description. SG Cowen did not
attribute any particular weight to any analysis or factor considered by it, but
rather made qualitative judgments as to the significance and relevance of each
analysis and factor. Accordingly, notwithstanding the separate factors
summarized above, SG Cowen believes, and has advised the Ardent board, that the
Ardent board must consider SG Cowen's analyses as a whole and that selecting
portions of its analyses and the factors considered by it, without considering
all analyses and factors, could create an incomplete view of the process
underlying its opinion. In performing its analyses, SG Cowen made numerous
assumptions with respect to industry performance, business and economic
conditions and other matters, many of which are beyond the control of Ardent and
Informix. These analyses performed by SG Cowen are not necessarily indicative of
actual values or future results, which may be significantly more or less
favorable than suggested by such analyses. In addition, analyses relating to the
value of businesses do not purport to be appraisals or to reflect the prices at
which businesses or securities may actually be sold. Accordingly, such analyses
and estimates are inherently subject to uncertainty, being based upon numerous
factors or events beyond the control of the parties or their respective
advisors. None of Ardent, Informix, SG Cowen or any other person assumes
responsibility if future results are materially different from those projected.
As mentioned above, the analyses supplied by SG Cowen and its opinion were among
several factors taken into consideration by the Ardent board in making its
64
decision to enter into the merger agreement and should not be considered as
determinative of such decision.
SG Cowen was selected by the Ardent board to render an opinion to the Ardent
board because SG Cowen is a nationally recognized investment banking firm and
because, as part of its investment banking business, SG Cowen is continually
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, secondary distributions of
listed and unlisted securities, private placements and valuations for corporate
and other purposes. SG Cowen is providing financial services for Ardent for
which it will receive customary fees. In addition, in the ordinary course of its
business, SG Cowen and its affiliates trade the equity securities of Ardent and
Informix for their own account and for the accounts of their customers, and,
accordingly, may at any time hold a long or short position in such securities.
SG Cowen, and its affiliates, in the ordinary course of business have from time
to time provided, and in the future may continue to provide, investment banking
services to Ardent.
Pursuant to the SG Cowen engagement letter dated October 28, 1999, Ardent
agreed to pay to SG Cowen a retainer fee of $50,000 and, if the transaction is
consummated, a transaction fee of $5,600,000. Ardent has also agreed to pay a
fee of $300,000 to SG Cowen for rendering its opinion. The retainer fee and
opinion fee will be fully credited against the transaction fee. Additionally,
Ardent has agreed to reimburse SG Cowen for its out-of-pocket expenses,
including attorneys' fees, and has agreed to indemnify SG Cowen against certain
liabilities, including liabilities under the federal securities laws. The terms
of the fee arrangement with SG Cowen, which are customary in transactions of
this nature, were negotiated at arm's length between Ardent and SG Cowen. The
Ardent board was aware of the arrangement, including the fact that a significant
portion of the aggregate fee payable to SG Cowen is contingent upon consummation
of the transaction.
RECOMMENDATIONS OF THE BOARDS OF DIRECTORS
The Informix board of directors has approved the merger agreement and the
merger and believes that the terms of the merger agreement are fair to, and that
the merger is in the best interests of, Informix and its stockholders and
therefore recommends that the holders of Informix common stock vote for the
issuance of the shares of Informix common stock necessary to complete the
merger.
The Ardent board of directors has unanimously approved the merger agreement
and the merger and believes that the terms of the merger agreement are fair to,
and that the merger is in the best interests of, Ardent and its stockholders and
therefore recommends that the holders of Ardent common stock vote for adoption
of the merger agreement and approval of the merger.
THE MERGER STRUCTURE
The acquisition will be accomplished through the merger of Merger Sub with
and into Ardent pursuant to which each outstanding share of Ardent common stock
will be converted into the right to receive 3.5 shares of Informix common stock.
Ardent will be the surviving corporation of the merger and will become a
wholly-owned subsidiary of Informix. The certificate of incorporation of Merger
Sub will be the certificate of incorporation of the surviving corporation in the
merger, but the name of the surviving corporation will be changed to "Ardent
Software, Inc." The bylaws of Merger Sub as in effect immediately prior to the
merger will be the bylaws of the surviving corporation. The officers and
directors of Merger Sub immediately prior to the merger will be the initial
directors of the surviving corporation.
If the merger is completed, holders of Ardent common stock will no longer
hold any interest in Ardent other than through their interest in shares of
Informix common stock. The stockholders of Ardent will become stockholders of
Informix, and their rights will be governed by the Informix certificate of
incorporation and the Informix bylaws.
65
EFFECTIVE TIME OF THE MERGER
The merger will become effective upon the filing of a signed certificate of
merger with the Secretary of State of Delaware. The merger agreement provides
that the certificate of merger is to be filed as soon as practicable after:
- the Ardent stockholders have adopted the merger agreement and the merger,
- the Informix stockholders have approved the issuance of Informix common
stock necessary for completion of the merger,
- all required regulatory approvals and actions have been obtained or taken
(see "Other Provisions of the Merger Agreement--Regulatory Approvals
Required"), and
- all other conditions to the consummation of the merger have been satisfied
or waived (see "Other Provisions of the Merger Agreement--Conditions to
the Merger").
In addition, the merger agreement may be terminated by either Informix or
Ardent under various conditions as specified in the merger agreement. See "Other
Provisions of the Merger Agreement--Termination; Breakup Fee." Therefore, we
cannot be sure whether or when the merger will become effective.
CONVERSION OF ARDENT SECURITIES
COMMON STOCK. Upon completion of the merger, each outstanding share of
Ardent common stock will automatically be converted into the right to receive
3.5 shares of Informix common stock. No fractional shares of Informix common
stock will be issued in the merger. Instead of any fractional share, each Ardent
stockholder will receive an amount of cash based on the average closing price of
a share of Informix common stock as reported on Nasdaq for the five most recent
trading days ending on the trading day immediately prior to the merger.
The exchange ratio of 3.5 is fixed and will not increase or decrease due to
fluctuations in the market price of either Informix common stock or Ardent
common stock. If the market price of Informix common stock decreases or
increases prior to the merger, the value at the time of the merger of Informix
common stock to be received by Ardent stockholders in the merger will
correspondingly decrease or increase. Further, Ardent stockholders will not be
compensated for positive developments, if any, in Ardent's business, unless and
to the extent such changes result in an increase in the market price of Informix
common stock. The market prices of Informix common stock and Ardent common stock
as of a recent date are set forth herein under "Summary--Markets and Market
Prices," and Ardent stockholders are advised to obtain recent market quotations
for Informix common stock and Ardent common stock.
OPTIONS. Upon the merger, all options to purchase Ardent common stock then
outstanding under the 1991 Director Option Plan, the 1986 Stock Option Plan and
the 1995 Non-Statutory Stock Option Plan shall be assumed by Informix. Each
outstanding Ardent option will be assumed by Informix and converted into an
option to acquire 3.5 as many shares of Informix common stock. The exercise
price for each outstanding option will be adjusted by dividing the exercise
price by 3.5 and rounding up to the nearest tenth of a cent. To avoid fractional
shares, the number of shares of Informix common stock subject to an assumed
Ardent option will be rounded down to the nearest whole share.
The vesting of Ardent options granted to executive officers, directors and
key employees entitled to the benefits under Ardent's change of control policy
and options to outside directors under the director option plan will be
accelerated upon the effective time. The vesting, duration and other terms of
the new Informix option will otherwise be the same as the Ardent option.
As soon as practicable after the merger, Informix will file a registration
statement on Form S-8 with the SEC with respect to the shares of Informix common
stock subject to the assumed Ardent
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options. Based upon the number of Ardent options outstanding at the record date
approximately 18.4 million additional shares of Informix common stock would be
reserved for issuance to holders of Ardent options in connection with Informix's
assumption of such Ardent options.
EMPLOYEE STOCK PURCHASE PLAN. Prior to the merger, outstanding purchase
rights under Ardent's Employee Stock Purchase Plan, or ESPP, shall be exercised
in accordance with the terms of the ESPP. Such exercise shall happen
automatically and each share purchased under the ESPP shall be converted into
the right to receive 3.5 shares of Informix common stock. No stock certificates
representing the Ardent common stock will be issued. Ardent shall immediately
terminate the ESPP after this purchase has occurred. Informix has agreed that
from and after the closing of the merger, employees of Ardent may participate in
Informix's ESPP, subject to its terms and conditions.
WARRANTS. Informix will assume warrants to purchase 114,151 shares of
Ardent common stock, all of which are currently fully exercisable. Upon
consummation of the merger, each outstanding warrant will be assumed by Informix
and converted into a warrant to acquire 3.5 of as many shares of Informix common
stock rounded down to the nearest whole number of shares, at an exercise price
per share equal to the exercise price per share of the Ardent common stock under
such warrant immediately prior to the merger divided by 3.5 and rounding to the
nearest tenth of a cent. Informix will assume each warrant in accordance with
its terms and each warrant will become exercisable for shares of Informix common
stock on substantially the same terms and conditions that apply to the existing
warrant.
401(k) PLAN
Ardent's 401(k) plan shall be terminated immediately prior to the closing,
unless Informix agrees to sponsor and maintain such plan and provides written
notice to Ardent three days prior to closing. Informix currently does not
anticipate maintaining Ardent's 401(k) plan.
INTERESTS OF EXECUTIVE OFFICERS AND DIRECTORS OF ARDENT IN THE MERGER
When considering the recommendation of Ardent's board of directors, you
should be aware that Ardent's directors and officers have interests in the
merger that are different from, or are in addition to, your interests. As a
result of these interests, these directors and officers of Ardent could be more
likely to vote to approve the merger agreement than if they did not hold these
interests. Ardent's stockholders should consider whether these interests may
have influenced these directors and officers to support or recommend the merger:
EXECUTIVE OFFICER ACCELERATION OF VESTING OF OPTIONS. In 1996, Ardent
instituted a change of control policy, which was amended in 1998, establishing
benefits for its executive officers and some key employees in the event of a
sale of Ardent or other similar transaction. Upon a sale of Ardent, the stock
options of the executive officers named in the change of control policy will
become exercisable immediately following the closing of the sale.
Of the options for 1,294,748 shares of Ardent common stock expected to be
held by executive officers immediately prior to the merger, options for
approximately 675,758 shares will then be vested, and the remainder would
otherwise be subject to vesting over periods of up to five years from the date
the options were granted. As required by the terms of the change of control
policy, it is expected that
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options held by the executive officers for the purchase of an aggregate of
618,990 shares will immediately vest upon the effectiveness of the merger, as
follows:
NUMBER OF UNVESTED SHARES TO WEIGHTED AVERAGE EXERCISE PRICE
EMPLOYEE VEST UPON MERGER PER SHARE
- -------------------------- ---------------------------- -------------------------------
Peter L. Fiore............ 62,199 $12.81
James D. Foy.............. 67,542 11.90
Peter Gyenes.............. 292,917 11.28
Charles F. Kane........... 51,458 13.11
Cornelius McMullan........ 69,583 10.81
Jason E. Silvia........... 34,417 12.80
James K. Walsh............ 40,874 11.88
EXECUTIVE OFFICER SEVERANCE BENEFITS. In addition, under Ardent's change of
control policy, if an executive officer's status is terminated by the resulting
company within one year of the change of control for any reason other than for
cause, the resulting company is obligated to pay the employee his or her salary
for one year after termination of executive status, plus any applicable bonus
and benefits. For Peter Gyenes, Ardent's president and chief executive officer,
and James K. Walsh, Ardent's vice president, general counsel and a founder, the
duration of the payments and benefits after termination is two years. The
employee is obligated to be available to provide services to the resulting
company if and as requested for up to five hours in any month. The merger with
Informix will trigger the benefits of this change of control policy.
OUTSIDE DIRECTORS ACCELERATION OF VESTING OF OPTIONS. Of the options for
the 579,805 shares of Ardent common stock expected to be held by outside
directors immediately prior to the merger, options for approximately 425,563
will then be vested, and the remainder would otherwise be subject to vesting
over periods of up to three years from the date the options were granted. As
required by the terms of the plan under which the options are issued, all the
unvested options held by the outside directors will become vested upon the
effectiveness of the merger. These options will be exercisable upon the
effectiveness of the merger and will continue to remain exercisable for a period
of 12 months following the merger. Further, pursuant to a letter agreement with
Ardent, the 344,765 options held by director David Brunel will become vested
upon the effectiveness of the merger.
ASSUMPTION OF SPLIT DOLLAR AGREEMENTS. Ardent has entered into split dollar
life insurance agreements with each of Messrs. Brunel (a director and the former
chief operating officer), Fiore, Foy, Gyenes, Kane, Silvia and Walsh. These
agreements provide for a whole-life insurance policy on the life of the officer
for which premiums are paid over a ten year period. Ardent pays the annual
premiums for so long as the officer is an employee and retains specified rights
of control over the policy. In the event of the death of the insured, Ardent is
entitled to receive from the proceeds the sum of the premiums it paid on the
insurance policy. The designated beneficiary of the insured is entitled to the
balance of the proceeds. The insured is also entitled to borrow against the cash
value of the insurance policy subject to Ardent's right to the return of its
aggregate premiums paid. Upon a change of control, Ardent's obligations to pay
the premiums continues for at least five years after the insured ceases to be an
employee unless the insured competes with Ardent within 24 months after
termination. Informix will assume Ardent's obligations to pay the premiums on
these split dollar agreements upon the effectiveness of the merger.
EMPLOYMENT ARRANGEMENTS. Pursuant to a memorandum of understanding,
Mr. Gyenes has agreed to remain with the combined company for one year following
the merger. Mr. Gyenes will work for the combined company as a part-time
employee assisting Mr. Dexmier, Informix's president and chief executive
officer, with the integration of the two businesses. Mr. Gyenes will be paid an
annual base salary of $150,000. At the conclusion of the one year period,
Mr. Gyenes will be entitled to receive
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benefits comparable to those under Ardent's change of control policy discussed
above in this "Interests of Executive Officers and Directors of Ardent in the
Merger" section.
Mr. Fiore, Ardent's vice president, data warehousing, has been offered a
position with the combined company as vice president, business intelligence
infrastructure. Mr. Fiore has been offered a written at-will employment
agreement for a period of one year following the merger. Mr. Fiore will be paid
an annual base salary of $250,000, with a maximum annual target incentive bonus
of $112,500. Mr. Fiore will also receive an integration performance bonus in the
amount of $112,500 for the completion of certain defined objectives for services
involved in successfully integrating the two companies' operations. Mr. Fiore
will also be granted an option to purchase 250,000 shares of Informix's common
stock. The option will vest ratably over four years upon continued employment.
If Informix terminates Mr. Fiore's employment for reasons other than for cause
within the one year employment period, Mr. Fiore would be entitled to receive
benefits comparable to those under Ardent's change of control policy discussed
above in this "Interests of Executive Officers and Directors of Ardent in the
Merger" section.
Mr. Foy, Ardent's vice president, engineering, has been offered a position
with the combined company as senior vice president, group executive, TransAct
business group. Mr. Foy has been offered a written at-will employment agreement
for a period of one year following the merger. Mr. Foy will be paid an annual
base salary of $250,000, with an annual target incentive bonus of $112,500 if
achieved at 100%. Mr. Foy will also be granted an option to purchase 250,000
shares of Informix's common stock. The option will vest ratably over four years
upon continued employment. If Informix terminates Mr. Foy's employment for
reasons other than for cause within the one year employment period, Mr. Foy
would be entitled to receive benefits comparable to those under Ardent's change
of control policy discussed above in this "Interests of Executive Officers and
Directors of Ardent in the Merger" section.
Mr. Silvia, Ardent's vice president, services, has been offered a position
with the combined company as vice president, services, business intelligence.
Mr. Silvia has been offered a written at-will employment agreement for a period
of one year following the merger. Mr. Silvia will be paid an annual base salary
of $205,000, with a maximum annual target incentive bonus of $82,000. In
addition, Mr. Silvia will receive a retention bonus in the amount of $34,167 all
of which must be repaid if Mr. Silvia's employment terminates within six months
after the merger and half of which must be repaid if Mr. Silvia's employment
terminates during the period between six and twelve months after the merger.
Mr. Silvia will also receive an integration performance bonus in the amount of
$82,000 for the completion of certain defined objectives for services involved
in successfully integrating the two companies' operations. Mr. Silvia will also
be granted an option to purchase 100,000 shares of Informix's common stock. The
option will vest ratably over four years upon continued employment. If Informix
terminates Mr. Silvia's employment for reasons other than for cause within the
one year employment period, Mr. Silvia would be entitled to receive benefits
comparable to those under Ardent's change of control policy discussed above in
this "Interests of Executive Officers and Directors of Ardent in the Merger"
section.
Informix is still in negotiations with Messrs. Fiore, Foy and Silvia respect
to these employment arrangements and consequently the final terms of these
agreements may differ from what is described above. In the event that any of
these individuals does not enter into an employment agreement with Informix and
his employment with Informix is terminated within one year of the merger other
than for cause, he will be entitled to the severance benefits of Ardent's
existing change of control policy, which is described above under "--Executive
Officer Severance Benefits."
CONTINUING DIRECTORS. Mr. Gyenes and Robert Morrill, currently directors of
Ardent, will serve as directors of Informix after the merger.
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INDEMNIFICATION. Under the merger agreement, Informix has agreed to assume
Ardent's obligations under the indemnification provisions of Ardent's
certificate of incorporation. Informix has also agreed to provide for
indemnification provisions in the certificate of incorporation and bylaws of the
surviving corporation of the merger that are at least as favorable as Ardent's
provisions and to maintain these provisions for at least six years from the
completion of the merger. In addition, Informix has agreed to maintain Ardent's
directors' and officers' liability insurance for six years from the completion
of the merger.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
In the opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation, counsel to Informix, and Choate, Hall & Stewart, counsel to Ardent,
the following are the material federal income tax consequences of the merger.
Ardent stockholders should be aware that the following does not deal with
all federal income tax considerations that may be relevant to particular
stockholders of Ardent in light of their particular circumstances or because
they are subject to specific rules, such as stockholders who are:
- banks,
- insurance companies,
- tax-exempt organizations,
- dealers in securities,
- non-U.S. persons,
- holders of Ardent common stock as part of a hedge, straddle or other risk
reduction, constructive sale or conversion transaction, or
- persons who acquired their shares in connection with stock option or stock
purchase plans or in other compensatory transactions.
This discussion assumes that Ardent stockholders hold their Ardent common
stock as capital assets within the meaning of Section 1221 of the Internal
Revenue Code.
In addition, the following does not address the tax consequences of the
merger under foreign, state or local tax laws or the tax consequences of
transactions completed prior or subsequent to or concurrently with the merger,
whether or not such transactions are in connection with the merger. ACCORDINGLY,
ARDENT STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE
SPECIFIC TAX CONSEQUENCES OF THE MERGER, INCLUDING THE APPLICABLE FEDERAL,
STATE, LOCAL AND FOREIGN TAX CONSEQUENCES TO THEM OF THE MERGER IN THEIR
PARTICULAR CIRCUMSTANCES.
The obligations of Informix and Ardent to complete the merger are
conditioned on, among other things, the receipt by Informix of a tax opinion
from its counsel, Wilson Sonsini Goodrich & Rosati, Professional Corporation,
and the receipt by Ardent of a tax opinion from its counsel, Choate, Hall &
Stewart, stating, in each case, that the merger will constitute a
"reorganization" within the meaning of Section 368 of the Internal Revenue Code.
The opinions of counsel described in this joint proxy statement/prospectus and
the opinions to be provided at the completion of the merger are based upon and
subject to current law, which is subject to change, possibly with retroactive
effect. No ruling has been or will be obtained from the Internal Revenue
Service, or IRS, in connection with the merger. Ardent stockholders should be
aware that the tax opinions do not bind the IRS and that the IRS is therefore
not precluded from successfully asserting a contrary opinion, in which case
Informix common stock to be received in the merger could be taxable to Ardent
stockholders. The tax opinions are also subject to customary and specific
assumptions and limitations, and are subject to the truth and accuracy of
representations and covenants made and to be made by Informix and Ardent.
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MATERIAL FEDERAL INCOME TAX CONSIDERATIONS FOR ARDENT STOCKHOLDERS.
(1) No gain or loss will be recognized by holders of Ardent common stock
upon their receipt of Informix common stock solely in exchange for Ardent common
stock in the merger.
(2) The aggregate tax basis of Informix common stock received by Ardent
stockholders in the merger will be the same as the aggregate tax basis of Ardent
common stock surrendered in exchange therefor (excluding any basis allocable to
fractional shares of Informix common stock for which cash is received).
(3) The holding period of Informix common stock received in the merger will
include the period for which the Ardent common stock surrendered in exchange for
the Informix common stock was held.
(4) Cash payments received by holders of Ardent common stock in lieu of a
fractional share will be treated as if a fractional share of Informix common
stock had been issued in the merger and then redeemed by Informix. A stockholder
of Ardent receiving such cash will generally recognize gain or loss upon such
payment, equal to the difference, if any, between such stockholder's allocable
basis in the fractional share and the amount of cash received. This gain or loss
will be a capital gain or loss.
A successful IRS challenge to the reorganization status of the merger would
result in an Ardent stockholder recognizing gain or loss with respect to each
share of Ardent common stock surrendered equal to the difference between the
stockholder's basis in such share and the fair market value, as of the effective
time, of the Informix common stock received and other consideration, if any, in
exchange therefor. In that case, a stockholder's aggregate basis in the Informix
common stock so received would equal its fair market value as of the effective
time and his or her holding period for such stock would begin the day after the
merger.
Ardent stockholders will be required to attach a statement to their tax
returns for the year of the merger that contains the information listed in
Treasury Regulation Section 1.368-3(b). Such statement must include the
stockholder's tax basis in the stockholder's Ardent common stock and a statement
regarding the amount of the Informix common stock and other consideration, if
any, received.
MATERIAL FEDERAL INCOME TAX CONSIDERATIONS FOR INFORMIX, INFORMIX
STOCKHOLDERS, IROQUOIS ACQUISITION CORPORATION AND ARDENT.
None of Informix, Informix stockholders, Iroquois Acquisition Corporation or
Ardent will recognize gain or loss solely as a result of the merger.
APPRAISAL RIGHTS
Under Delaware law, neither Ardent nor Informix stockholders are entitled to
appraisal rights in connection with the merger.
RESTRICTIONS ON RESALE OF INFORMIX COMMON STOCK
The shares of Informix common stock issuable to stockholders of Ardent upon
consummation of the merger have been registered under the Securities Act. Such
shares may be traded freely without restriction by those stockholders who are
not deemed to be "affiliates" of Ardent or Informix, as that term is defined in
the rules under the Securities Act.
Shares of Informix common stock received by those stockholders of Ardent who
are deemed to be "affiliates" of Ardent may be resold without registration under
the Securities Act only as permitted by Rule 145 under the Securities Act or as
otherwise permitted under the Securities Act. Ardent has obtained agreements by
each stockholder of Ardent who is an "affiliate" of Ardent to this effect. A
form of these affiliate agreements is included as Appendix C to this joint proxy
statement/prospectus. The "affiliates" of Ardent also agreed that they would not
sell or dispose of Ardent stock during the period beginning the later of
35 days preceding the closing of the merger and the time prior to a merger
prescribed by Staff Accounting Bulletin No. 65 during which trading is
prohibited and ending
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two days after Informix announces financial results covering at least 30 days of
combined operations. See "--Other Provisions of the Merger Agreement--Certain
Covenants and Agreements--Ardent Affiliate Agreements."
ACCOUNTING TREATMENT
The merger is intended to qualify as a pooling of interests for accounting
and financial reporting purposes. This treatment permits Informix to restate its
financial and accounting information to include Ardent's financial information
as if the companies had been combined since their inceptions. It is a condition
to the merger that Informix shall have received a letter from KPMG LLP, its
independent accountants, to the effect that KPMG concurs with Informix's
conclusion that no conditions exist related to Informix that would prevent
Informix from accounting for the merger as a pooling of interests under
generally accepted accounting principles if the transaction is consummated in
accordance with the merger agreement. It is also a condition to the merger that
Ardent shall have received a letter from Deloitte & Touche LLP, its independent
accountants, to the effect that Deloitte & Touche LLP concurs with Ardent's
conclusion that no conditions exist related to Ardent that would preclude Ardent
from entering into a business combination to be accounted for as a pooling of
interests. See "Other Provisions of the Merger Agreement--Conditions to the
Merger." Under this method of accounting, the recorded assets and liabilities of
Informix and Ardent will be carried forward to the combined company at their
recorded amounts, and income of the combined company will include income of
Informix and Ardent for the entire fiscal year in which the merger occurs, and
the reported income or loss of Informix and Ardent for prior periods will be
combined and restated as income of the combined company. No goodwill in the
business combination will be recorded by either company.
STOCK EXCHANGE LISTING OF INFORMIX COMMON STOCK
It is a condition to the obligations of Ardent and Informix to consummate
the merger that the shares of Informix common stock to be issued in the merger
be approved for listing on Nasdaq. Informix will file an additional listing
application with Nasdaq covering such shares, and it is anticipated that such
application will be approved at or before the close of the merger.
OTHER PROVISIONS OF THE MERGER AGREEMENT
REPRESENTATIONS AND WARRANTIES
Under the merger agreement, Ardent made a number of representations relating
to, among other things:
- Its organization and similar corporate matters and the organization and
similar corporate matters regarding its subsidiaries,
- Its capital structure,
- Authorization, execution, delivery, performance and enforceability of the
merger agreement and related matters,
- The absence of conflicts under certificates of incorporation or bylaws,
required consents or approvals and violations of any instruments or law,
- Documents filed with the SEC and the accuracy of the information contained
therein,
- Absence of certain specified material adverse changes, material litigation
or material undisclosed liabilities,
- Tax, labor and employee benefit matters,
- Title to properties and certain intellectual property matters,
- Compliance with applicable laws including environmental laws,
72
- The accuracy of information supplied by Ardent in connection with the
preparation of this joint proxy statement/prospectus and the related
registration statement,
- The receipt of a fairness opinion from SG Cowen,
- The approval of the merger agreement by the Ardent board of directors,
- The absence of undisclosed litigation,
- Year 2000 compliance, and
- The ability of Informix to account for the merger as a pooling of
interests.
Under the merger agreement, Informix and Merger Sub made a number of
representations relating to, among other things:
- Their organization and similar corporate matters,
- Their capital structure,
- Authorization, execution, delivery, performance and enforceability of the
merger agreement and related matters,
- The absence of conflicts under the certificates of incorporation, required
consents or approvals and violations of any instruments of law,
- Documents filed with the SEC and the accuracy of the information contained
therein,
- The accuracy of information supplied by Informix in connection with the
preparation of this joint proxy statement/prospectus and the related
registration statement,
- The receipt of a fairness opinion from Merrill Lynch,
- The approval of the merger agreement by the Informix board of directors,
- The absence of undisclosed litigation, and
- The ability of Informix to account for the merger as a pooling of
interests.
Each party has agreed promptly to notify the other of any event likely to
result in the failure of a representation or warranty to be true in any material
respect or the material breach of a covenant under the merger agreement. Ardent
has promised until the consummation of the merger or the termination of the
merger agreement, it will, among other things, maintain its business, conduct
its operations in the ordinary course, not take certain actions outside the
ordinary course without the other's consent (which consent will not be
unreasonably withheld), provide the other with reasonable access to its
financial, operating and other information, and use all reasonable efforts to
consummate the merger.
OTHER COVENANTS AND AGREEMENTS
ARDENT AFFILIATE AGREEMENTS. Ardent has delivered to Informix executed
affiliate agreements with selected stockholders who might be considered
affiliates of Ardent under applicable securities laws. The purpose of these
agreements is to comply with the requirements of certain federal securities laws
and pooling of interests accounting with respect to such stockholders' ability
to dispose of Informix common stock received in the merger. A form of these
affiliate agreements is included as Appendix C to this joint proxy
statement/prospectus. For more information on these agreements, see "The Merger
and Related Transactions--Restrictions on Resale of Informix Common Stock."
STOCK OPTION AGREEMENT. The stock option agreement grants Informix the
option to acquire up to a number of shares of Ardent common stock that represent
19.9% of the issued and outstanding
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Ardent common stock, as of the first date, if any, upon which the option is
exercisable. The exercise price of the option is $38.50 per share of Ardent
common stock, payable in cash. The number of shares issuable upon exercise of
the option and the exercise price of the option are subject to adjustment to
prevent dilution. Based on the number of shares of Ardent common stock
outstanding on November 30, 1999, the option would be exercisable for
approximately 3,921,396 shares of Ardent common stock. Informix required Ardent
to enter into the stock option agreement, for no consideration, as a condition
to entering into the merger agreement.
The option is intended to increase the likelihood that the merger will be
completed. Some of the aspects of the stock option agreement may have the effect
of discouraging persons who might now or at any time be interested in acquiring
all or a significant interest in Ardent or its assets before completion of the
merger.
If the option becomes exercisable, Ardent possibly would not be able to
account for future transactions under the pooling of interests accounting method
for some period of time.
The full text of the stock option agreement is attached as Appendix D to
this joint proxy statement/prospectus and you are urged to read the stock option
agreement in its entirety.
EXERCISE EVENTS. Informix may exercise the option, in whole or part, at
any time or from time to time, upon the occurrence of the following events:
- The termination of the merger agreement by Informix because of the
occurrence of a triggering event,
- Ardent breaches its non-solicitation obligations, or
- If either Informix or Ardent terminates the merger agreement because
(1) the merger is not consummated by June 30, 2000 or (2) the stockholders
of Ardent fail to adopt the merger agreement and approve the merger,
and
- the consummation of an acquisition of Ardent occurs within 12 months
after the termination of the merger agreement if a third party
announced an acquisition proposal after November 30, 1999 and prior to
the termination of the merger agreement, or
- Ardent enters into an agreement or letter of intent providing for an
acquisition of Ardent within 12 months after the termination of the
merger agreement if a third party announced an acquisition proposal
after November 30, 1999 and prior to the termination of the merger
agreement.
TERMINATION. The option will terminate and cease to be exercisable upon
the earliest of any of the following:
- Completion of the merger,
- 12 months after termination of the merger agreement based on a failure of
the merger to be consummated by June 30, 2000 or the failure to obtain the
required approval of Ardent stockholders as long as no event causing the
termination fee to become payable has occurred,
- 12 months after termination of the merger agreement based on the
occurrence of a triggering event or a breach of the nonsolicitation
provisions of the merger agreement by Ardent,
- 18 months after payment of the termination fee if the merger agreement is
terminated based on a failure of the merger to be completed by June 30,
2000 or the failure to obtain the required approval of Ardent stockholders
and an event causing the termination fee to become payable has occurred,
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- The date on which the merger agreement is terminated if neither a
triggering event nor the announcement of an acquisition proposal by a
third party has occurred on or prior to the date of such termination, or
- If the option becomes exercisable but cannot be exercised by Informix
because of a government order or because a waiting period under antitrust
laws has not expired, ten business days after prohibition to exercise, if
the prohibition has been removed or has become final and not subject to
any appeal.
REPURCHASE AT THE OPTION OF INFORMIX. During the period when the option
is exercisable, Informix may require Ardent to repurchase from Informix the
unexercised portion of the option and all the shares of Ardent common stock
purchased by Informix under the option that Informix then owns.
LIMITED ECONOMIC BENEFIT TO INFORMIX. The stock option agreement limits
the cash payment, including the amount, if any, paid to Informix as a
termination fee under the merger agreement, which may be received by Informix on
exercise of its put right, to $25.5 million plus the amount paid by Informix to
exercise the option minus any amount paid by Ardent to Informix as a termination
fee or otherwise in connection with the termination of the merger agreement.
REGISTRATION RIGHTS. The stock option agreement grants registration
rights to Informix with respect to the shares of Ardent common stock represented
by the option, including the right to demand that Ardent register all or part of
such shares with the SEC, provided that Informix will only be able to make two
such demands, and the right to register all or part of such shares if Ardent
otherwise registers shares.
VOTING AGREEMENTS. As a condition to Informix's entering into the merger
agreement, Informix and each of Messrs. Gyenes, Brunel, Claussen, Hart, Morrill,
Fiore, Foy, Kane, McMullan, Silvia and Walsh entered into voting agreements. By
entering into the voting agreements these Ardent stockholders have irrevocably
appointed Informix as their lawful attorney and proxy. These proxies give
Informix the limited right to vote the shares of Ardent common stock
beneficially owned by these Ardent stockholders, including shares of Ardent
common stock acquired after the date of the voting agreements, in favor of the
adoption of the merger agreement, and in favor of each other matter that could
reasonably be expected to facilitate the merger. These Ardent stockholders may
vote their shares of Ardent common stock on all other matters.
As of the record date, these individuals and entities collectively
beneficially owned shares of Ardent common stock which represented
approximately 11% of the outstanding Ardent common stock. None of the Ardent
stockholders who are parties to the voting agreements were paid additional
consideration in connection with the voting agreements.
Under these voting agreements, and except as otherwise waived by Informix,
the Ardent stockholders agreed not to sell the Ardent common stock and options
owned, controlled or acquired, either directly or indirectly, by that person
until the earlier of the termination of the merger agreement or the completion
of the merger, unless the transfer is in accordance with any affiliate agreement
between the stockholder and Informix and each person to which any shares or any
interest in any shares is transferred agrees to be bound by the terms and
provisions of the voting agreement.
These voting agreements will terminate upon the earlier to occur of the
termination of the merger agreement and the completion of the merger. The form
of voting agreement is attached to this joint proxy statement/prospectus as
Appendix C, and you are urged to read it in its entirety.
NON-COMPETITION AGREEMENTS. Selected Ardent employees have agreed to enter
into non-competition agreements with Informix prior to the closing of the
merger. These employees include Messrs. Gyenes, Kane, Foy, Fiore, and Silvia, as
well as Ralph Breslauer, Gary Hoffman, Rodger Morrill, Lee Scheffler and Mikael
Wipperfield. Pursuant to the provisions of these agreements, the
75
employees agree not to solicit Informix's employees nor compete with Informix in
the design, development, marketing distribution and/or licensing of data
infrastructure software for e-business, data warehousing and analytical
applications, and enterprise portals until 12 months from the effective time of
the merger.
EMPLOYMENT ARRANGEMENTS. Selected Ardent employees have been offered
employment arrangements with Informix which would become effective on the
closing of the merger. These employees include Messrs. Breslauer, Fiore, Foy,
Hoffman, Morrill, Scheffler, Silvia and Wipperfield. Informix and these
individuals are still in negotiations with respect to these employment
arrangements and consequently, the final terms of these agreements may differ
from what is described above. In the event that any of these individuals does
not enter into an employment agreement with Informix and his employment with
Informix is terminated within one year of the merger other than for cause, he
will be entitled to severance benefits under Ardent's existing change of control
policy, which is described above under "Interests of Certain Executive Officers
and Directors of Ardent in the Merger--Executive Officer Severance Benefits."
See "The Merger and Related Transactions--Interests of Executive Officers and
Directors of Ardent in the Merger--Employment Arrangements" for a more detailed
description of the employment offers for Messrs. Fiore, Foy and Silvia.
SEVERANCE. Informix has agreed to provide the following severance benefits
to Ardent employees:
- For each Ardent employee who is terminated by Informix at the effective
time of the Merger, the same severance benefits as the Ardent employee
would have received immediately prior to the effective time,
- For each Ardent employee who is identified and hired by Informix to assist
with the transition and is subsequently terminated, the same severance
benefits as the Ardent employee would have received immediately prior to
the effective time, and
- For each other Ardent employee who becomes a full-time employee of
Informix, and is subsequently terminated, severance benefits in accordance
with Informix's policies.
NON-SOLICITATION. The merger agreement provides that Ardent will not,
directly or indirectly, solicit, initiate, or encourage (including by way of
furnishing nonpublic information) or take other action to facilitate, any
inquiries or the making of any proposal that constitutes or may reasonably be
expected to lead to an acquisition proposal (as defined below). However, the
Ardent board of directors, in the exercise of and as required by its fiduciary
duties as determined after consultation with outside legal counsel, may engage
in discussions or negotiations with, and furnish information to, a third party
who makes a written, unsolicited acquisition proposal that constitutes a
superior offer (as defined below), provided that Ardent notifies Informix in
writing of the principal financial terms and conditions of such superior offer.
The merger agreement also requires Ardent to immediately notify Informix of any
unsolicited offer or proposal to enter into negotiations relating to an
acquisition proposal and to provide Informix with information as to the identity
of the party making such offer or proposal and the principal financial terms and
conditions of such offer or proposal. See "--Termination; Breakup Fee."
Under the merger agreement, an "acquisition proposal" is defined as any
inquiry, offer or proposal other than that by Informix relating to
- Any acquisition or purchase from Ardent by any party of more than a 10%
interest in the total outstanding voting securities of Ardent or any of
its subsidiaries or any tender offer or exchange offer that if consummated
would result in any party beneficially owning 10% or more of the total
outstanding voting securities of Ardent or any merger, consolidation,
business combination or similar transaction involving Ardent where the
stockholders immediately preceding the transaction will own less than 90%
of the equity interests in the surviving or resulting entity of such
transaction,
76
- Any sale, lease (other than in the ordinary course of business), exchange,
transfer, license (other than in the ordinary course of business),
acquisition or disposition of more than 10% of the assets of Ardent, or
- Any liquidation or dissolution of Ardent.
A "superior offer" is defined as an unsolicited, bona fide written offer
made by a third party to consummate any of the following transactions:
- Merger, consolidation, dissolution or similar transaction pursuant to
which the stockholders of Ardent immediately preceding such transaction
will hold less than 51% of the equity interest in the surviving or
resulting entity of such transaction,
- A sale or other disposition by Ardent of assets representing in excess of
51% of the fair market value of Ardent's business immediately prior to
such sale, or
- The acquisition by any person or group, including by way of a tender offer
or an exchange offer, directly or indirectly, of beneficial ownership in
excess of 51% of the voting power of the then outstanding shares, on terms
that the Ardent board of directors determines, in its reasonable judgment,
after consultation with its financial advisor, to be more favorable to
Ardent stockholders than the terms of the merger.
DIRECTORS. After the merger, Messrs. Gyenes and Morrill will be designated
as directors of Informix to serve in the class of directors whose term expires
in 2002.
CONDITIONS TO THE MERGER
The obligations of Informix and Ardent to consummate the merger are subject
to the satisfaction of a number of conditions, including among others:
- Receipt by Ardent of the requisite stockholder approval,
- Receipt by Informix of the requisite stockholder approval,
- The effectiveness and the absence of any stop orders or proceedings
seeking a stop order with respect to the registration statement,
- The absence of any temporary restraining order, preliminary or permanent
injunction, or other legal restraint or prohibition issued or pending by
any court or governmental authority, or any action taken or any statute or
regulation that would prohibit or render illegal the consummation of the
merger,
- Receipt by Informix and Ardent of substantially identical written tax
opinions from their counsel to the effect that the merger will constitute
a tax-free reorganization within the meaning of Section 368(a) of the
Internal Revenue Code,
- Receipt by Informix and Ardent of letters from their respective
accountants concurring with the conclusion of the respective management
that the transaction will qualify as a pooling of interests, and
- Authorization of the Informix common stock for listing on Nasdaq.
The obligation of Ardent to consummate the merger is subject to the
following further conditions:
- Continued accuracy of Informix's representations and warranties in all
material respects, compliance by Informix in all material respects with
its covenants and agreements under the merger agreement, and delivery of
an appropriate certificate by Informix to such effect, and
- Absence of any material adverse change with respect to Informix.
77
The obligation of Informix to consummate the merger is subject to the
following further conditions:
- Continued accuracy of Ardent's representations and warranties in all
material respects, compliance by Ardent in all material respects with its
covenants and agreements under the merger agreement, and delivery of an
appropriate certificate by Ardent to such effect,
- Absence of any material adverse change with respect to Ardent,
- Execution and delivery of noncompetition agreements by certain employees
of Ardent,
- Receipt of all necessary third party consents to the merger, and
- Execution and delivery of affiliate agreements by affiliates of Ardent.
Any of the conditions in the merger agreement may be waived by the party
benefited, except those conditions imposed by law.
REGULATORY APPROVALS REQUIRED
Under the merger agreement, the obligations of both Informix and Ardent to
consummate the merger are subject to
- The expiration or termination of any waiting period (and any extension
thereof) applicable to the consummation of the merger under the HSR Act
and no action having been instituted by the Department of Justice or the
Federal Trade Commission, or FTC, challenging or seeking to enjoin the
consummation of the merger, which action shall not have been withdrawn or
terminated.
- All material authorizations, consents, orders or approvals of, or
declarations or filings with, or expiration of waiting periods imposed by,
any governmental entity, shall have been filed, expired or have been
obtained, other than those that, individually or in the aggregate, the
failure to be filed, expired or obtained, would not, in the reasonable
opinion of Informix, have a material adverse effect on Informix or Ardent.
Transactions such as the merger are reviewed by the Department of Justice
and the FTC to determine whether they comply with applicable antitrust laws.
Under the provisions of the HSR Act, the merger may not be consummated until
such time as certain information has been furnished to the Department of Justice
and the FTC and the specified waiting period requirements of the HSR Act have
been satisfied. Pursuant to the HSR Act, on December 21, 1999, Informix and
Ardent each furnished notification of the merger and provided certain
information to the Department of Justice and the FTC. The specified waiting
period requirements of the HSR Act expired on January 20, 2000. There can be no
assurance that a challenge to the merger on antitrust grounds will not be made
by the Department of Justice, the FTC, state attorneys' general, the antitrust
regulatory agencies of various foreign countries or a private person or entity.
If such a challenge is made, Informix or Ardent may not prevail and may be
required to accept certain conditions, possibly including certain divestitures
in order to consummate the merger.
Informix and Ardent are not aware of any other governmental approvals or
actions that are required in order to consummate the merger except in connection
with the Securities Act, the filing of merger-related documents under Delaware
Law and the HSR filing described above. Should such other approval or action be
required, it is contemplated that Informix and Ardent would seek such approval
or action. There can be no assurance as to whether or when any such approval or
action, if required, could be obtained.
78
TERMINATION; BREAK-UP FEE
Informix and Ardent may terminate the merger agreement by mutual written
consent. Additionally, either Informix or Ardent may terminate the merger
agreement under any of the following circumstances;
- By mutual written consent,
- If the merger has not become effective on or before June 30, 2000, unless
caused by the action or failure to act of the party seeking to terminate
the merger agreement in breach of such party's obligations thereunder,
- If any court or governmental entity of competent jurisdiction shall have
taken any action having the effect of permanently restraining, enjoining
or otherwise prohibiting the merger, which action is final and
nonappealable,
- If the required approval of the stockholders of Ardent or Informix is not
obtained at the Ardent or Informix meeting, respectively, or any
adjournment thereof, unless caused by the action or failure to act of
Ardent or Informix, as the case may be, and such failure constitutes a
breach of the merger agreement,
- Upon a breach of any representation, warranty, covenant or agreement of
the other party, or if any representation or warranty of the other party
has become untrue, in either case such that the conditions to the
consummation of the merger would not be satisfied as of the time of such
breach or as of the time such representation or warranty has become
untrue; provided, that if such inaccuracy in the representations and
warranties or breach is curable by the party through the exercise of its
reasonable efforts for the other party may not terminate the merger
agreement for 30 days after notice of breach provided the party continues
to exercise commercially reasonable efforts to cure such breach.
Additionally, Informix may terminate the merger agreement under the following
conditions:
- If Ardent has accepted or recommended to the stockholders of Ardent an
acquisition proposal and, in the case of the termination of the merger
agreement by Ardent, Ardent has paid to Informix the break-up fee as
described below,
- If the Ardent board of directors withdraws, modifies or refrains from
making its recommendation for approval in respect of the merger,
- Ardent's board of directors does not reaffirm its recommendation in favor
of the merger within five business days after Informix requests
reaffirmation following the announcement of any offer or proposal from a
party other than Informix relating to an acquisition proposal involving
Ardent, such as a merger or a sale of significant assets,
- Ardent's board of directors approves or recommends any offer or proposal
from a party other than Informix relating to an acquisition proposal,
- Ardent enters into any letter of intent or other agreement accepting any
offer or proposal from a party other than Informix relating to an
acquisition proposal,
- A person unaffiliated with Informix starts a tender or exchange offer
relating to the securities of Ardent, and Ardent does not recommend that
its stockholders reject such offer within ten business days after the
offer is first started, or
- If Ardent breaches its non-solicitation obligations under the merger
agreement.
79
In the event the merger agreement is terminated pursuant to any of the
foregoing provisions, the merger will be deemed abandoned and such termination
will be without liability of any party thereto, except for liability for breach
of the merger agreement and except as set forth in the next paragraph.
In the event of such termination, the provisions of the merger agreement
regarding fees and expenses and termination shall survive.
Upon the occurrence of any of the following events, Ardent shall immediately
make payment to Informix of a break-up fee of $25.5 million upon request by
Informix:
- Ardent shall have failed to include in the joint proxy
statement/prospectus the unanimous recommendation of its board of
directors with respect to the merger,
- The Ardent board of directors has approved or recommended an acquisition
proposal,
- The Ardent board of directors fails to reaffirm its unanimous
recommendation within five business days after Informix makes a written
request following the announcement of an acquisition proposal,
- The Ardent board of directors has withdrawn, modified or refrained from
making its unanimous recommendation or approval in respect of the merger,
or has disclosed its intention to change such recommendation,
- Ardent breaches the non-solicitation clauses of the merger agreement,
- Ardent has entered into any letter of intent or similar documents
accepting any acquisition proposal,
- A tender or exchange offer has been commenced by a party unrelated with
Ardent or Informix, and Ardent has not sent a statement to its
stockholders that it recommends rejection of such tender or exchange
offer, or
- The merger has not been consummated by June 30, 2000 or Ardent has not
obtained the approval of its stockholders and a third-party announces an
acquisition proposal and within 12 months following the termination of the
merger agreement, a company acquisition (as defined below) is consummated
or Ardent enters into a letter of intent providing for a company
acquisition.
A "company acquisition" is defined as:
- Merger, consolidation, dissolution or similar transaction pursuant to
which the stockholders of Ardent immediately preceding such transaction
will hold less than 50% of the equity interest in the surviving or
resulting entity of such transaction,
- A sale or other disposition by Ardent of assets representing in excess of
50% of the fair market value of Ardent's business immediately prior to
such sale, or
- The acquisition by any person or group, including by way of a tender offer
or an exchange offer, directly or indirectly, of beneficial ownership in
excess of 51% of the voting power of the then outstanding shares of
Ardent.
Payment of the fee described in this paragraph will not be in lieu of
damages incurred in the event of a breach of the merger agreement.
WAIVER AND AMENDMENT
At any time before the completion of the merger, Informix or Ardent may
extend the time for the performance of any of the obligations or other acts of
the parties under the merger agreement, waive any inaccuracies in the
representations and warranties of the other contained in the merger agreement
80
or waive compliance by the other with any of the agreements or conditions
contained in the merger agreement.
The merger agreement may be amended by Informix and Ardent at any time
before or after the approval by the stockholders of Informix or Ardent of the
merger agreement, but after any such stockholder approval, no amendment may be
made which by law requires the further approval of such stockholders without
obtaining such further approval.
EXPENSES
The merger agreement provides that all costs and expenses incurred in
connection with the agreement and the transactions contemplated thereby will be
paid by the party incurring such costs and expenses, except for expenses (other
than attorneys' fees) incurred in connection with printing the Registration
Statement and this joint proxy statement/prospectus, and the filing of fees with
the SEC with respect to the Registration Statement and this joint proxy
statement/prospectus, which will be shared equally by Ardent and Informix.
Ardent will also pay Informix a breakup fee in certain circumstances. See
"--Termination; Break-up Fee."
SURRENDER OF ARDENT COMMON STOCK CERTIFICATES
Promptly after the completion of the merger, Informix will cause its
exchange agent, Boston EquiServe, to mail to each Ardent stockholder of record a
letter of transmittal with instructions to be used by such stockholder in
surrendering certificates which, prior to the merger, represented shares of
Ardent common stock in exchange for certificates representing shares of Informix
common stock. ARDENT STOCKHOLDERS SHOULD NOT SURRENDER STOCK CERTIFICATES FOR
EXCHANGE PRIOR TO RECEIVING THE LETTER OF TRANSMITTAL FROM INFORMIX'S EXCHANGE
AGENT.
Upon the surrender of a Ardent common stock certificate to Informix's
exchange agent together with a duly executed letter of transmittal and such
other documents as may be reasonably required by the exchange agent, the holder
of such certificate will be entitled to receive in exchange therefor a
certificate representing the number of shares of Informix common stock to which
the holder of Ardent common stock is entitled pursuant to the provisions of the
merger agreement cash in lieu of fractional shares and any payable dividends or
distributions. In the event of a transfer of ownership of Ardent common stock
which is not registered in the transfer records of Ardent, a certificate
representing the appropriate number of shares of Informix common stock may be
issued to a transferee if the certificate representing such Ardent common stock
is presented to the exchange agent, accompanied by all documents required to
evidence and effect such transfer and to evidence that any applicable stock
transfer taxes have been paid, along with a duly executed letter of transmittal.
Until a certificate representing Ardent common stock has been surrendered to
the exchange agent, each such certificate will be deemed at any time after the
completion of the merger to represent only the right to receive upon such
surrender the certificate representing the number of shares of Informix common
stock (and associated preferred stock purchase rights) to which the Ardent
stockholder is entitled under the merger agreement, cash in lieu of fractional
shares and any payable dividends or distributions. Upon consummation of the
merger, shares of Ardent common stock will cease to be traded on Nasdaq, and
there will be no further market for Ardent common stock.
81
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION
The following unaudited pro forma combined condensed financial statements
give effect to the proposed merger of Informix and Ardent on a pooling of
interests basis. The unaudited pro forma combined condensed statements of
operations assume the merger was consummated as of the beginning of the earliest
period presented and combine Informix's supplemental consolidated statements of
operations for the nine months ended September 30, 1999 and 1998 and the years
ended December 31, 1998, 1997 and 1996 with Ardent's consolidated statements of
operations for the nine months ended September 30, 1999 and 1998 and the years
ended December 31, 1998, 1997 and 1996, respectively. The unaudited pro forma
combined condensed balance sheet at September 30, 1999 combines the supplemental
consolidated balance sheet of Informix as of September 30, 1999 and the
consolidated balance sheet of Ardent as of September 30, 1999. The supplemental
consolidated financial statements of Informix give retroactive effect to the
merger with Cloudscape, Inc. on October 8, 1999. The supplemental consolidated
financial statements of Informix have been restated for all periods presented as
if Cloudscape and Informix had always been combined.
These unaudited pro forma combined condensed financial statements, including
the notes thereto, are qualified in their entirety by reference to, and should
be read in conjunction with, the supplemental consolidated financial statements
of Informix and the historical consolidated financial statements of Ardent,
including the notes thereto, incorporated herein by reference. See "Where You
Find More Information" on page 96.
The following unaudited pro forma combined condensed financial statements
are presented for illustrative purposes only and are not necessarily indicative
of the combined financial position or results of operations of future periods or
the results or financial position that actually would have been realized had
Informix and Ardent been a combined company during the specified periods. In
addition, based on the timing of the closing of the transaction, the
finalization of the integration plans and other factors, the pro forma
adjustments may differ materially from those presented in these pro forma
financial statements.
82
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
AS OF SEPTEMBER 30, 1999
(IN THOUSANDS)
SUPPLEMENTAL HISTORICAL PRO FORMA
------------ ---------- --------------------------
INFORMIX ARDENT ADJUSTMENTS COMBINED
------------ ---------- -------------- ---------
ASSETS
CURRENT ASSETS
Cash and cash equivalents................. $ 136,230 $ 25,466 $ 161,696
Short-term investments.................... 79,701 12,438 92,139
(456)
Accounts receivable, net.................. 184,382 30,895 2(d) 214,821
Deferred taxes............................ -- 1,655 1,655
Other current assets...................... 30,227 13,204 43,431
--------- -------- -------- ---------
Total current assets........................ 430,540 83,658 (456) 513,742
--------- -------- -------- ---------
PROPERTY AND EQUIPMENT, net................. 62,772 8,346 71,118
SOFTWARE COSTS, net......................... 39,214 5,781 44,995
LONG-TERM INVESTMENTS....................... 14,092 -- 14,092
INTANGIBLE ASSETS........................... 32,046 51,818 83,864
DEFERRED TAXES.............................. -- 8,799 8,799
OTHER ASSETS................................ 4,656 6,050 10,706
--------- -------- -------- ---------
Total Assets................................ $ 583,320 $164,452 $ (456) $ 747,316
========= ======== ======== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
(456)
Accounts payable.......................... $ 18,011 $ 6,686 2(d) $ 24,241
Accrued expenses.......................... 50,463 22,654 73,117
Accrued employee compensation............. 55,139 5,578 60,717
Deferred revenue.......................... 135,198 21,409 156,607
Advances from customers and financial
institutions............................ 53,148 -- 53,148
Accrued merger and restructuring costs.... 2,289 5,313 35,000 2(a) 42,602
Other current liabilities................. 4,459 -- 4,459
--------- -------- -------- ---------
Total current liabilities................... 318,707 61,640 34,544 414,891
--------- -------- -------- ---------
OTHER NON-CURRENT LIABILITIES............... 2,090 -- 2,090
STOCKHOLDERS' EQUITY
Preferred stock........................... 63 -- 63
Common stock.............................. 1,950 194 690 2(e) 2,834
Shares to be issued for litigation
settlement.............................. 91,000 -- 91,000
(690)
Additional paid-in-capital................ 458,282 126,530 2(e) 584,122
(35,000)
Accumulated deficit....................... (283,848) (20,719) 2(a) (339,567)
Treasury stock............................ (59) (2,956) (3,015)
Accumulated other comprehensive loss...... (4,865) (237) (5,102)
--------- -------- -------- ---------
Total stockholders' equity.................. 262,523 102,812 (35,000) 330,335
--------- -------- -------- ---------
Total Liabilities & Stockholders' Equity.... $ 583,320 $164,452 $ (456) $ 747,316
========= ======== ======== =========
83
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
(IN THOUSANDS, EXCEPT PER SHARE DATA)
SUPPLEMENTAL HISTORICAL PRO FORMA
------------ ---------- -------------------------
INFORMIX ARDENT ADJUSTMENTS COMBINED
------------ ---------- ------------- ---------
NET REVENUES
Licenses................................... $307,562 $ 66,435 $ (1,095) $ 372,902
Services................................... 312,862 53,738 (224) 366,376
-------- -------- -------- ---------
(1,319)
620,424 120,173 2(d) 739,278
COSTS AND EXPENSES
(1,319)
Cost of software distribution.............. 31,304 5,903 2(d) 35,888
Cost of services........................... 131,634 24,570 156,204
Sales and marketing........................ 230,987 42,563 273,550
Research and development................... 120,464 15,197 135,661
General and administrative................. 57,987 10,512 68,499
Write-off of acquired research and
development.............................. -- 5,052 5,052
Merger and restructuring charges........... (578) 9,895 9,317
-------- -------- -------- ---------
571,798 113,692 (1,319) 684,171
-------- -------- -------- ---------
Operating income............................. 48,626 6,481 -- 55,107
OTHER INCOME (EXPENSE)
Interest income (expense), net............. 4,705 733 5,438
Litigation settlement expense.............. (97,016) -- (97,016)
Other, net................................. 245 73 318
-------- -------- -------- ---------
INCOME (LOSS) BEFORE INCOME TAXES............ (43,440) 7,287 -- (36,153)
Income taxes............................... 10,494 6,123 16,617
-------- -------- -------- ---------
NET INCOME (LOSS)............................ (53,934) 1,164 -- (52,770)
Preferred stock dividends.................... (829) -- (829)
-------- -------- -------- ---------
NET INCOME (LOSS) APPLICABLE TO COMMON
STOCKHOLDERS............................... $(54,763) $ 1,164 $ -- $ (53,599)
======== ======== ======== =========
NET INCOME (LOSS) PER COMMON SHARE
Basic...................................... $ (0.28) $ 0.07 $ (0.21)
======== ======== =========
Diluted.................................... $ (0.28) $ 0.06 $ (0.21)
======== ======== =========
SHARES USED IN PER SHARE CALCULATIONS
Basic...................................... 195,930 17,574 257,439
======== ======== =========
Diluted.................................... 195,930 19,760 257,439
======== ======== =========
84
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
(IN THOUSANDS, EXCEPT PER SHARE DATA)
SUPPLEMENTAL HISTORICAL PRO FORMA
------------ ---------- -------------------------
INFORMIX ARDENT ADJUSTMENTS COMBINED
------------ ---------- ------------- ---------
NET REVENUES
Licenses................................... $265,870 $ 49,379 $ $ 315,249
Services................................... 254,717 35,302 290,019
-------- -------- -------- ---------
520,587 84,681 -- 605,268
COSTS AND EXPENSES
Cost of software distribution.............. 26,662 5,317 31,979
Cost of services........................... 113,904 16,676 130,580
Sales and marketing........................ 196,094 29,729 225,823
Research and development................... 110,071 13,094 123,165
General and administrative................. 51,162 7,559 58,721
Merger and restructuring charges........... (7,255) 14,895 7,640
-------- -------- -------- ---------
490,638 87,270 -- 577,908
-------- -------- -------- ---------
Operating income............................. 29,949 (2,589) -- 27,360
OTHER INCOME (EXPENSE)
Interest income (expense), net............. 1,977 (497) 1,480
Other, net................................. (2,396) 617 (1,779)
-------- -------- -------- ---------
INCOME (LOSS) BEFORE INCOME TAXES............ 29,530 (2,469) -- 27,061
Income taxes............................... 1,900 599 2,499
-------- -------- -------- ---------
NET INCOME (LOSS)............................ 27,630 (3,068) -- 24,562
Preferred stock dividends.................... (1,816) -- (1,816)
Value assigned to warrants................... (1,982) -- (1,982)
-------- -------- -------- ---------
NET INCOME (LOSS) APPLICABLE TO
COMMON STOCKHOLDERS........................ $ 23,832 $ (3,068) $ -- $ 20,764
======== ======== ======== =========
NET INCOME (LOSS) PER COMMON SHARE
Basic...................................... $ 0.14 $ (0.21) $ 0.10
======== ======== =========
Diluted.................................... $ 0.13 $ (0.21) $ 0.09
======== ======== =========
SHARES USED IN PER SHARE CALCULATIONS
Basic...................................... 166,917 14,604 218,031
======== ======== =========
Diluted.................................... 180,359 14,604 237,712
======== ======== =========
85
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
(IN THOUSANDS, EXCEPT PER SHARE DATA)
SUPPLEMENTAL HISTORICAL PRO FORMA
------------ ---------- --------------------------
INFORMIX ARDENT ADJUSTMENTS COMBINED
------------ ---------- ----------- --------
NET REVENUES
Licenses.................................... $383,947 $ 70,200 $ (204) $453,943
Services.................................... 351,559 49,060 (42) 400,577
-------- -------- -------- --------
735,506 119,260 (246 )2(d) 854,520
COSTS AND EXPENSES
Cost of software distribution............... 35,446 7,953 (246 )2(d) 43,153
Cost of services............................ 155,947 22,511 178,458
Sales and marketing......................... 271,881 41,761 313,642
Research and development.................... 149,591 17,576 167,167
General and administrative.................. 77,010 9,986 86,996
Write-off of acquired research and
development............................... 2,600 -- 2,600
Merger and restructuring charges............ (10,255) 14,895 4,640
-------- -------- -------- --------
682,220 114,682 (246) 796,656
-------- -------- -------- --------
Operating income.............................. 53,286 4,578 -- 57,864
OTHER INCOME (EXPENSE)
Interest income (expense), net.............. 5,879 (389) 5,490
Other, net.................................. (4,581) 579 (4,002)
-------- -------- -------- --------
INCOME BEFORE INCOME TAXES.................... 54,584 4,768 -- 59,352
Income taxes................................ 4,400 3,131 7,531
-------- -------- -------- --------
NET INCOME.................................... 50,184 1,637 -- 51,821
Preferred stock dividends..................... (3,478) -- (3,478)
Value assigned to warrants.................... (1,982) -- (1,982)
-------- -------- -------- --------
NET INCOME APPLICABLE TO
COMMON STOCKHOLDERS......................... $ 44,724 $ 1,637 $ -- $ 46,361
======== ======== ======== ========
NET INCOME PER COMMON SHARE
Basic....................................... $ 0.26 $ 0.11 $ 0.21
======== ======== ========
Diluted..................................... $ 0.25 $ 0.10 $ 0.19
======== ======== ========
SHARES USED IN PER SHARE CALCULATIONS
Basic....................................... 169,581 14,790 221,344
======== ======== ========
Diluted..................................... 182,400 16,724 240,933
======== ======== ========
86
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)
SUPPLEMENTAL HISTORICAL PRO FORMA
------------ ---------- ------------------------
INFORMIX ARDENT ADJUSTMENTS COMBINED
------------ ---------- ----------- ----------
NET REVENUES
Licenses........................................ $ 378,164 $ 58,812 $ 436,976
Services........................................ 285,728 43,916 329,644
---------- -------- -------- ----------
663,892 102,728 -- 766,620
COSTS AND EXPENSES
Cost of software distribution................... 63,027 9,211 72,238
Cost of services................................ 166,916 24,825 191,741
Sales and marketing............................. 418,139 40,786 458,925
Research and development........................ 141,455 16,924 158,379
General and administrative...................... 88,087 13,128 101,215
Write-off of goodwill and other long-term
assets........................................ 30,473 602 31,075
Write-off of acquired research and
development................................... 7,000 3,040 10,040
Merger and restructuring charges................ 108,248 -- 108,248
---------- -------- -------- ----------
1,023,345 108,516 -- 1,131,861
---------- -------- -------- ----------
Operating loss.................................... (359,453) (5,788) -- (365,241)
OTHER INCOME (EXPENSE)
Interest income (expense), net.................. (3,592) (2,965) (6,557)
Other, net...................................... 10,474 981 11,455
---------- -------- -------- ----------
LOSS BEFORE INCOME TAXES.......................... (352,571) (7,772) -- (360,343)
Income taxes.................................... 7,817 1,149 8,966
---------- -------- -------- ----------
NET LOSS.......................................... $ (360,388) $ (8,921) -- $ (369,309)
Preferred stock dividends......................... (301) -- (301)
Value assigned to warrants........................ (1,601) -- (1,601)
---------- -------- -------- ----------
NET LOSS APPLICABLE TO
COMMON STOCKHOLDERS............................. $ (362,290) $ (8,921) $ -- $ (371,211)
========== ======== ======== ==========
NET LOSS PER COMMON SHARE
Basic........................................... $ (2.37) $ (0.65) $ (1.85)
========== ======== ==========
Diluted......................................... $ (2.37) $ (0.65) $ (1.85)
========== ======== ==========
SHARES USED IN PER SHARE CALCULATIONS
Basic........................................... 152,543 13,751 200,672
========== ======== ==========
Diluted......................................... 152,543 13,751 200,672
========== ======== ==========
87
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS, EXCEPT PER SHARE DATA)
SUPPLEMENTAL HISTORICAL PRO FORMA
------------ ---------- ----------------------
INFORMIX ARDENT ADJUSTMENTS COMBINED
------------ ---------- ----------- --------
NET REVENUES
Licenses....................................... $502,730 $ 61,805 $564,535
Services....................................... 231,810 48,694 280,504
-------- -------- -------- --------
734,540 110,499 -- 845,039
COSTS AND EXPENSES
Cost of software distribution.................. 46,786 8,864 55,650
Cost of services............................... 144,850 26,807 171,657
Sales and marketing............................ 413,690 40,116 453,806
Research and development....................... 120,567 16,649 137,216
General and administrative..................... 64,520 12,920 77,440
Write-off of acquired research and
development.................................. -- 4,900 4,900
Merger and restructuring charges............... 5,914 7,858 13,772
-------- -------- -------- --------
796,327 118,114 -- 914,441
-------- -------- -------- --------
Operating loss................................... (61,787) (7,615) -- (69,402)
OTHER INCOME (EXPENSE)
Interest income (expense), net................. (2,600) (2,100) (4,700)
Other, net..................................... 2,899 285 3,184
-------- -------- -------- --------
LOSS BEFORE INCOME TAXES AND EXTRAORDINARY
ITEM........................................... (61,488) (9,430) -- (70,918)
Income taxes................................... 12,531 (1,819) 10,712
-------- -------- -------- --------
NET LOSS BEFORE EXTRAORDINARY ITEM............... (74,019) (7,611) -- (81,630)
Extraordinary loss............................... -- (2,382) -- (2,382)
-------- -------- -------- --------
NET LOSS......................................... $(74,019) $ (9,993) $ -- $(84,012)
======== ======== ======== ========
BASIC LOSS PER COMMON SHARE
Before extraordinary item...................... $ (0.49) $ (0.58) $ (0.42)
======== ======== ========
Net loss....................................... $ (0.49) $ (0.76) $ (0.43)
======== ======== ========
DILUTED LOSS PER COMMON SHARE
Before extraordinary item...................... $ (0.49) $ (0.58) $ (0.42)
======== ======== ========
Net loss....................................... $ (0.49) $ (0.76) $ (0.43)
======== ======== ========
SHARES USED IN PER SHARE CALCULATIONS
Basic.......................................... 149,525 13,071 195,273
======== ======== ========
Diluted........................................ 149,525 13,071 195,273
======== ======== ========
88
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
1. PRO FORMA BASIS OF PRESENTATION.
Subject to the conditions set forth in the merger agreement, Ardent will
become a wholly-owned subsidiary of Informix. In connection with the merger
agreement, based on the number of shares of Ardent common stock outstanding at
January 20, 2000, Informix will issue approximately 70,000,000 shares of common
stock in exchange for all of the issued and outstanding Ardent common stock and
all outstanding options to purchase Ardent common stock will be converted into
options to acquire Informix common stock at the common stock exchange ratio of
3.5 shares of Informix common stock for each share of Ardent common stock. The
unaudited pro forma combined condensed financial statements reflect the combined
operations of the two companies as if the merger was consummated as of the
beginning of the earliest period presented on a pooling-of-interests basis.
2. PRO FORMA ADJUSTMENTS.
(a) Informix expects acquisition-related costs of approximately $35 million
to be included in operations for the quarter ended March 31, 2000. These costs
include:
- Direct transaction costs of approximately $12.5 million consisting
primarily of financial advisory, legal, accounting, regulatory filing fees
and other related costs; and
- Severance and related employee termination costs of approximately
$10.0 million; and
- Facilities and equipment costs of approximately $11.0 million consisting
primarily of estimated lease termination and duplicate facility closure
costs; and
- Other costs of approximately $1.5 million.
(b) It is expected that following the merger, the combined company will
incur an additional significant charge to operations, which is not currently
reasonably estimable, to reflect costs associated with integrating the two
companies. This charge has not been reflected in the pro forma condensed balance
sheet. There can be no assurance that the combined company will not incur
additional charges to reflect costs associated with the merger or that
management will be successful in its efforts to integrate the operations of the
two companies.
The acquisition-related costs and additional significant charge are not
reflected in the unaudited pro forma combined condensed statements of
operations.
(c) 2,186,000 common stock equivalents arising from options to purchase
Ardent common stock are excluded from the calculation of shares used in per
share calculations for the nine-month period ended September 30, 1999, as they
would be antidilutive on a pro forma combined basis. 1,782,000 common stock
equivalents arising from options to purchase Ardent common stock are included in
the calculation of shares used in per share calculations for the nine-month
period ended September 30, 1998, as they are dilutive on a pro forma combined
basis.
(d) Effective July 21, 1998, Ardent (licensor) and Informix (licensee)
entered into a Software License Agreement pursuant to which Informix has a
non-exclusive, world-wide, royalty bearing right and license to copy, sell and
support some of Ardent's data warehouse products. A pro forma adjustment has
been made to eliminate $456,000 of receivable and payable balances between the
companies at September 30, 1999. Pro forma adjustments of $1,319,000 and
$246,000 have been made to eliminate revenues and costs between the companies
for the nine months ended September 30, 1999 and the year ended December 31,
1998, respectively.
(e) In connection with the merger agreement, based on the number of shares
of Ardent common stock outstanding at January 20, 2000, Informix will issue
approximately 70,000,000 shares of common stock to Ardent with a par value of
approximately $690.
89
COMPARISON OF RIGHTS OF HOLDERS OF
ARDENT COMMON STOCK AND INFORMIX COMMON STOCK
After completion of the merger, the holders of Ardent common stock who
receive Informix common stock in the merger will become stockholders of
Informix. As stockholders of Ardent, their rights are presently governed by the
Delaware corporation law and by Ardent's certificate of incorporation, commonly
referred to as its charter, and bylaws. As stockholders of Informix, their
rights will be governed by the Delaware corporation law and by Informix's
charter and bylaws. The following discussion summarizes the material differences
between Ardent's charter and bylaws and Informix's charter and bylaws. This
summary does not purport to be complete and is qualified in its entirety by
reference to Ardent's charter and bylaws and Informix's charter and bylaws, all
of which are publicly available as exhibits in the materials each company has
filed with the SEC.
SPECIAL MEETING OF STOCKHOLDERS
Ardent's charter provides that special meetings of stockholders may only be
called by the chairman of the board, the chief executive officer, the president
or, within 10 days after a written request by a majority of the directors, by
the secretary. Informix's charter provides that special meetings of the
stockholders may be called only by the chairman of the board of directors, the
president of the corporation or the board of directors pursuant to a resolution
approved by a majority of the whole board of directors.
REGISTERED HOLDERS
Informix's charter provides that it shall be entitled to treat the
registered holder of any shares of Informix as the owner of such shares and of
all rights derived from such shares for all purposes. Informix is not obligated
to recognize any equitable or other claim to or interest in such shares or
rights on the part of any other person, including, but without limiting the
generality of the term "person," a purchaser, pledgee, assignee or transferee of
such shares or rights, unless and until such person becomes the registered
holder of such shares. Neither Ardent's charter nor its bylaws contain this sort
of provision.
AMENDMENT OF CHARTER
Informix's charter provides that none of the provisions of Articles Four,
Five, Six, Seven, Eleven, Twelve or Thirteen may be amended, altered, changed or
repealed except upon the affirmative vote at any annual or special meeting of
the stockholders, of the holders of at least 2/3 or more of the total voting
power of the then outstanding shares of voting stock, considered for this
purpose as one class. Additionally, new provisions to the charter may not be
adopted or existing provisions be amended, altered or repealed which in either
instance are in conflict or inconsistent with Articles Four, Five, Six, Seven,
Eleven, Twelve or Thirteen except upon 2/3 or more stockholder vote. These
provisions relate to the following subjects:
ARTICLE SUBJECT
- ----------------- -------
Four............. Rights, preferences and privileges of preferred stock and
common stock
Five............. Matters relating to the board of directors, including
classified board, removal of directors, and nominations for
directors
Six.............. Matter relating to bylaws, including board of directors
authority to adopt, amend and repeal bylaws, and
super-majority vote requirement for stockholder action
with respect to bylaws
Seven............ Delaware antitakeover statute
90
ARTICLE SUBJECT
- ----------------- -------
Eleven........... Reservation to corporation of the right to amend certificate
of incorporation subject to law
Twelve........... Super-majority vote requirement for stockholder amendment or
repeal of Articles Four, Five, Six, Seven, Eleven, Twelve
and Thirteen of the certificate of incorporation
Thirteen......... Elimination of actions by written consent of the
stockholders
Any inconsistency developing between the provisions of a bylaw and any
provisions of the charter shall be controlled by Informix's charter.
Ardent's charter provides that any amendment, repeal or other alteration of
the charter, unless proposed and declared advisable by the board of directors,
must be approved by at least 2/3 of the outstanding shares entitled to vote in
the election of directors.
EXCULPATION OF DIRECTORS
Each of Informix and Ardent has included in its charter a provision which
eliminates the personal liability of its directors from monetary damages
resulting from a breach of fiduciary duty as a director to the fullest extent
permitted by the Delaware Law. However, under Delaware law, such a provision may
not eliminate or limit liability:
- for any breach of the director's duty of loyalty to the corporation or its
stockholders,
- for acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law,
- under Section 174 of Title 8 of the Delaware Code, or
- for any transaction from which the director derived an improper personal
benefit.
The Ardent charter, unlike the Informix charter, explicitly excludes from
the exculpation provision, the four situations listed above.
INDEMNIFICATION
The Ardent charter provides for the indemnification of directors and
officers to the maximum extent and in the manner permitted by the Delaware law.
The Informix charter provides for the indemnification of a director, officer,
employee or agent, provided that indemnification shall be prohibited in the case
of conduct which was finally adjudged to have been knowingly fraudulent,
deliberately dishonest or willful misconduct. The Informix bylaws contain more
detailed provisions on the indemnification of directors, officers, employees and
agents, including provisions with respect to the right of indemnitee to bring
suit, indemnification contracts, insurance and non-exclusivity of the
indemnification rights contained in the bylaws.
AMENDMENT, REPEAL OF BYLAWS
The Ardent charter and Ardent bylaws provide that the Ardent bylaws can be
amended or repealed either by the affirmative vote of the holders of a majority
of the outstanding voting shares or by the board of directors. The Informix
charter provides that the Informix bylaws can be amended or repealed only upon
the affirmative vote of the holders of 2/3 of the outstanding voting shares
considered as one class.
91
STOCKHOLDER RIGHTS PLANS
Each of Ardent and Informix has adopted a stockholder rights plan that,
among other things, discourages certain types of transactions which may involve
an actual or threatened change of control of their respective companies. In
connection with the signing of the merger agreement, Ardent amended its
stockholder rights plan to render it inapplicable to the merger and the
transactions contemplated by the merger agreement, the stock option agreement,
the voting agreements and the affiliate agreements and ensure that neither
Informix nor Iroquois Acquisition Corporation will be acquiring persons (as
defined in the stockholder rights plan) or that a distribution date would occur
under the plan. Additionally, the amendment provided that Ardent's stockholder
rights plan will terminate immediately prior to the effective time of the
merger. The primary difference between the plans is the threshold percentage of
stock ownership sought or obtained by a potential acquiror which triggers the
exercisability of rights under such plans. The threshold percentage for Ardent
is 15% of Ardent's outstanding common stock. The threshold percentage for
Informix is 20% of Informix's outstanding common stock.
NOMINATIONS FOR ELECTION OF DIRECTORS
Informix's charter provides that nominations for the election of directors
can be made by the board of directors or a committee thereof or by any
stockholder. However, stockholders may make nominations only if written notices
of the stockholders intent to make such nomination has been given to the company
not later than
- in the case of an annual meeting of stockholders, 120 days in advance of
the date of the annual stockholders meeting; and
- the close of a special meeting, the close of business on the seventh day
following the date on which notice of the meeting was first given to
stockholders.
Additionally, the notice must provide specific information about the
stockholder proposing the nomination, a representation that the stockholder is a
holder of record of Informix's stock and intends to appear at the meeting in
person or by proxy to make the nominations and information regarding the
proposed nominee, the consent of the proposed nominee and a description of all
arrangements and understanding, between the nominating stockholder and the
nominee.
Ardent's bylaws contain a similar advance notice provision but the notice
must be delivered to the company not later than 80 days prior to the date of the
annual or special meeting. The notice required by Ardent's bylaws is required to
contain substantially the same information as the notice required by Informix's
charter.
STOCKHOLDER PROPOSALS
Informix's bylaws provide that business conducted at an annual meeting must
be properly brought before the meeting, which means that the matter must be:
- specified in the notice of meeting given by or at the direction of the
board of directors,
- otherwise properly brought before the meeting by or at the direction of
the board of directors, or
- otherwise properly brought before the meeting by a stockholder.
To properly bring a matter before the annual meeting, a stockholder must
give notice to the secretary of Informix not less than 120 days prior to the
date of the annual meeting. The notice must provide:
- a description of the matter to be brought before the meeting,
92
- the stockholder's name and address of record,
- the class and number of shares beneficially owned by the stockholders,
- any material interest of the stockholders in the matter to be brought
before the meeting, and
- other information of the sort required by the SEC's rules and regulations
with respect to the solicitation of proxies.
Except with respect to nominations for directors, as discussed above,
Ardent's charter and bylaws do not contain provisions relating to a
stockholder's bringing business before an annual meeting.
EFFECT OF DELAWARE ANTITAKEOVER STATUTE
Informix is subject to Section 203 of the Delaware General Corporation Law
(the "Antitakeover Law"), which regulates corporate acquisitions. The
Antitakeover Law prevents certain Delaware corporations, including those whose
securities are listed for trading on the Nasdaq National Market, from engaging,
under certain circumstances in a "business combination" with any "interested
stockholder" for three years following the date that such stockholder became an
interested stockholder. For purposes of the Antitakeover Law, a "business
combination" includes, among other things, a merger or consolidation involving
Informix and the interested stockholder and the sale of more than 10% of
Informix's assets. In general, the Antitakeover Law defines an "interested
stockholder" as any entity or person beneficially owning 15% or more of the
outstanding voting stock of Informix and any entity or person affiliated with or
controlling or controlled by such entity or person.
A Delaware corporation may "opt out" of the Antitakeover Law with an express
provision in its original certificate of incorporation or an express provision
in its certificate of incorporation or bylaws resulting from amendments approved
by the holders of at least a majority of its outstanding voting shares. Informix
has not "opted out" of the provisions of the Antitakeover Law. See "Risk
Factors--Risks Relating to the Business and Operations of Informix and Ardent."
Ardent, in contrast, has "opted out" of the Antitakeover Law.
93
STOCKHOLDER PROPOSALS
Pursuant to Rule 14a-8 under the Exchange Act, Informix stockholders may
properly present proposals for inclusion in Informix's proxy statement and for
consideration at the next annual meeting of its stockholders by submitting
proposals to Informix in a timely manner. As noted in Informix's proxy statement
relating to its 1999 annual meeting of stockholders, in order to be included for
the 2000 annual meeting, stockholder proposals must have been received by
Informix no later than December 7, 1999, and must otherwise have complied with
the requirements of Rule 14a-8 of the Exchange Act.
Pursuant to Rule 14a-8 under the Exchange Act, Ardent stockholders may
properly present proposals for inclusion in Ardent's proxy statement and for
consideration at the next annual meeting of its stockholders by submitting
proposals to Ardent in a timely manner. As noted in Ardent's proxy statement
relating to its 1999 annual meeting of stockholders, in order to be included for
the 2000 annual meeting, in the event that the merger has not been consummated
before that, stockholder proposals must have been received by Ardent no later
than December 3, 1999, and must otherwise have complied with the requirements of
Rule 14a-8. In addition, if Ardent receives notice of a stockholder proposal
after February 25, 2000, the persons named as proxies for the 2000 annual
meeting will have discretionary authority to vote on such proposal.
ADJOURNMENT OF SPECIAL MEETINGS
ADJOURNMENT OF INFORMIX MEETING. If at the time of the Informix meeting,
there are not a sufficient number of votes to approve the issuance of shares of
Informix common stock necessary to complete the merger, that proposal cannot be
approved unless the Informix meeting is adjourned in order to permit further
solicitation of proxies from Informix stockholders. Proxies that are being
solicited by the Informix board of directors grant the discretionary authority
to vote for an adjournment, if necessary. If it is necessary to adjourn the
Informix meeting and the adjournment is for a period of less than 30 days, no
notice of the time and place of the adjourned meeting is required to be given to
stockholders other than an announcement of a time and place at the Informix
meeting. A majority of the shares represented and voting at the Informix meeting
is required to approve any adjournment, whether or not a quorum is present.
ADJOURNMENT OF ARDENT MEETING. If at the time of the Ardent meeting, there
are not a sufficient number votes to adopt the merger agreement and approve the
merger, that proposal cannot be approved unless the Ardent meeting is adjourned
in order to permit further solicitation of proxies from Ardent stockholders.
Proxies that are being solicited by the Ardent board of directors grant the
discretionary authority to vote for an adjournment, if necessary. If it is
necessary to adjourn the Ardent meeting and the adjournment is for a period of
less than 30 days, no notice of the time and place of the adjourned meeting is
required to be given to stockholders other than an announcement of a time and
place at the Ardent meeting. A majority of the shares represented and voting at
the Ardent meeting is required to approve any adjournment, whether or not a
quorum is present.
EXPERTS
The supplemental consolidated financial statements and financial statement
schedule of Informix, as of December 31, 1998 and for the year then ended, have
been incorporated by reference herein and in the registration statement in
reliance upon the report of KPMG LLP, independent auditors, incorporated by
reference herein, and upon the authority of said firm as experts in accounting
and auditing.
The supplemental consolidated financial statements and financial statement
schedule of Informix, at December 31, 1997 and 1996 and for each of the two
years in the period ended December 31, 1997, incorporated by reference herein
and in the registration statement, have been audited by Ernst &
94
Young LLP, independent auditors, as set forth in their report incorporated by
reference herein, in reliance upon said report given on the authority of said
firm as experts in accounting and auditing.
The consolidated financial statements of Ardent and its subsidiaries as of
December 31, 1998 and 1997 and for each of the three years in the period ended
December 31, 1998 (except for the statements of operations, stockholders' equity
and cash flows of Unidata, Inc. for the year ended June 30, 1996) and the
related financial statement schedule incorporated by reference in this joint
proxy statement/ prospectus have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their reports dated January 22, 1999
(March 30, 1999 as to Note 13 to the consolidated financial statements) (which
report expresses an unqualified opinion and includes an explanatory paragraph
regarding the restatement of the 1996 statement of operations) incorporated by
reference in this joint proxy statement/prospectus. The statements of
operations, stockholders' equity and cash flows of Unidata, Inc. for the year
ended June 30, 1996 (consolidated with those of Ardent and its subsidiaries for
the year ended December 31, 1996) have been audited by PricewaterhouseCoopers
LLP as stated in their report incorporated by reference herein. Such
consolidated financial statements of Ardent and subsidiaries have been so
incorporated in reliance upon the reports of such firms given upon their
authority as experts in accounting and auditing.
LEGAL MATTERS
The validity of the shares of Informix common stock offered hereby and the
qualification of the merger as a tax-free reorganization will be passed upon for
Informix by Wilson Sonsini Goodrich & Rosati, Professional Corporation. The
qualification of the merger as a tax-free reorganization will be passed upon for
Ardent by Choate, Hall & Stewart.
TRADEMARKS
INFORMIX is a registered trademark of Informix or its affiliates, and
Informix believes that all of its product names are trademarks of Informix or
its affiliates. ARDENT is a registered trademark of Ardent and Ardent believes
that all of its product names, other than wIntegrate, are trademarks of Ardent.
This joint proxy statement/prospectus also includes trademarks, service marks or
tradenames of companies other than Informix and Ardent, which are the property
of their respective owners.
FORWARD-LOOKING STATEMENTS
Certain statements made in this document are forward-looking statements
which are subject to numerous risks and uncertainties. These forward-looking
statements include those as to:
- The anticipated closing date of the merger,
- The anticipated tax treatment of the merger,
- The benefits expected to result from the merger,
- The future performance of the combined company following the merger and
- The analyses performed by the financial advisors to Informix and Ardent.
Any statements contained herein--including without limitation statements to
the effect that Informix, Ardent or their respective management "believes,"
"expects," "anticipates," "plans," "may," "will," "projects," "continues," or
"estimates," or statements concerning "potential," or "opportunity" or other
variations thereof or comparable terminology or the negative thereof that are
not statements of historical fact should be considered forward-looking
statements as a result of certain factors, including those set forth in "Risk
Factors" beginning on page 15, which stockholders should review carefully.
95
WHERE YOU CAN FIND MORE INFORMATION
Informix and Ardent file annual, quarterly and special reports, proxy
statements and other information with the Securities and Exchange Commission, or
the SEC. You may inspect and copy these materials at the public reference
facilities maintained by the SEC at:
Judiciary Plaza Citicorp Center Seven World Trade Center
Room 1024 500 West Madison Street 13th Floor
450 Fifth Street, N.W. Suite 1400 New York, New York 10048
Washington, D.C. 20549 Chicago, Illinois 60661
You may also obtain copies of such material from the SEC at prescribed rates
by writing to the Public Reference Section of the SEC, 450 Fifth Street, N.W.,
Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for more
information on the operation of the public reference rooms. You can also find
the SEC filings of Informix and Ardent at the SEC's website at www.sec.gov.
Reports, proxy statements and other information concerning Informix and
Ardent may also be inspected at: The National Association Securities Dealers,
1735 K Street, N.W. Washington, D.C. 20006.
The SEC's rules and regulations allow Informix and Ardent to "incorporate by
reference" the information contained in documents that they filed with the SEC,
which means that Informix and Ardent can disclose important information to you
by referring you to those documents. The information incorporated by reference
is considered to be part of this joint proxy statement/prospectus. Information
in this joint proxy statement/prospectus supersedes information incorporated by
reference that Informix and Ardent have filed with the SEC prior to the date of
this joint proxy statement/ prospectus, while information that Informix and
Ardent file later with the SEC will automatically update and, in some cases,
supersede the information in this joint proxy statement/prospectus.
All documents filed by Informix or Ardent pursuant to Section 13(a),
13(c),14 or 15(d) of the Securities Exchange Act of 1934, as amended, after the
date of this joint proxy statement/prospectus and before the date of the special
meetings are incorporated by reference into and to be a part of this joint proxy
statement/prospectus from the date of filing of those documents.
The following documents, which were filed by Informix with the SEC, are
incorporated by reference into this joint proxy statement/prospectus:
1. Informix's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998.
2. Informix's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1999.
3. Informix's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1999.
4. Informix's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1999.
5. Informix's Current Report on Form 8-K filed on June 18, 1999,
(relating to the settlement of pending private securities and related
litigation).
6. Informix's Current Report on Form 8-K filed on October 15, 1999
(relating to the acquisition of Cloudscape, Inc. in 1999).
7. Informix's Current Report on Form 8-K filed on November 10, 1999
(relating to the supplemental financial statements giving retroactive effect
to the pooling of interests with Cloudscape, Inc.).
8. Informix's Current Report on Form 8-K filed on December 6, 1999
(relating to the signing of the merger agreement with Ardent).
9. Informix's Current Report on Form 8-K filed on January 19, 2000
(relating to settlement of the SEC's enforcement action against Informix).
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10. Informix's Current Report on Form 8-K filed on January 24, 2000
(relating to executive compensation and related matters for fiscal 1999).
11. The description of Informix common stock contained in Informix's
registration statement on Form 8-A, filed on January 21, 1987 and any
amendment or reports filed for the purpose of updating such description.
12. The description of Informix's common stock purchase rights attached
to each share of Informix's common stock contained in Informix's
registration statement Form 8-A, filed on September 19, 1991, as
subsequently amended on May 27, 1992, August 11, 1995 and September 3, 1997
and any amendment or report filed for the purpose of updating such
description.
The following documents, which were filed by Ardent with the SEC, are
incorporated by reference into this joint proxy statement/prospectus:
1. Ardent's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998.
2. Ardent's Quarterly Report on Form 10-Q for the period ended
March 31, 1999, as amended.
3. Ardent's Quarterly Report on Form 10-Q for the period ended
June 30, 1999.
4. Ardent's Quarterly Report on Form 10-Q for the period ended
September 30, 1999.
5. Ardent's Current Report on Form 8-K filed on April 27, 1999
(relating to the acquisition of Prism Solutions, Inc.).
6. Ardent's Current Report on Form 8-K filed on January 20, 2000
(relating to executive compensation and related matters for fiscal 1999).
7. The description of Ardent's common stock contained in its
registration statement on Form 8-A filed on April 8, 1992, including any
amendments or reports filed for the purpose of updating such description.
8. The description of Ardent's Junior Preferred Stock Purchase Rights
attached to each share of Ardent's common stock contained in its
registration statement on Form 8-A filed on July 29, 1996, and its
registration statement on Form 8-A filed on November 11, 1997 including any
amendments or reports filed for the purpose of updating such description.
You may request a copy of these filings, at no cost to you, by writing or
telephoning Informix or Ardent at:
INFORMIX CORPORATION ARDENT SOFTWARE, INC.
4100 Bohannon Drive 50 Washington Street
Menlo Park, California 94075 Westboro, Massachusetts 01581
Attn: Investor Relations Attn: Investor Relations
Telephone: (650) 926-6300 Telephone: (508) 366-3888
If you wish to receive copies of any of the Informix or Ardent documents
listed above, you should make your request by five days before your special
meeting, or February 24, 2000, to ensure delivery prior to your special meeting.
You should rely only on the information contained in this joint proxy
statement/prospectus or that we have referred you to. We have not authorized
anyone to provide you with information that is different. Informix provided the
information concerning Informix. Ardent provided the information concerning
Ardent.
Informix has filed a registration statement on Form S-4 under the Securities
Act with the SEC with respect to Informix's common stock to be issued to Ardent
stockholders in the merger. This joint
97
proxy statement/prospectus constitutes the prospectus of Informix filed as part
of the registration statement. This proxy statement/prospectus does not contain
all of the information set forth in the registration statement because parts of
the registration statement are omitted in accordance with the rules and
regulations of the SEC. The registration statement and its exhibits are
available for inspection and copying as set forth above.
Informix's website is located at http:\\www.informix.com. Ardent's website
is located at http:\\www.ardent.com. Information contained in either Informix's
or Ardent's website does not constitute, and shall not be deemed to constitute,
part of this joint proxy statement/prospectus.
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APPENDIX A
AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
INFORMIX CORPORATION
IROQUOIS ACQUISITION CORPORATION
AND
ARDENT SOFTWARE, INC.
DATED AS OF NOVEMBER 30, 1999
TABLE OF CONTENTS
PAGE
--------
ARTICLE I THE MERGER................................................... 1
1.1 The Merger.................................................. 1
1.2 Effective Time; Closing..................................... 2
1.3 Effect of the Merger........................................ 2
1.4 Certificate of Incorporation; Bylaws........................ 2
1.5 Directors and Officers...................................... 2
1.6 Effect on Capital Stock..................................... 2
1.7 Surrender of Certificates................................... 4
1.8 No Further Ownership Rights in Company Common Stock......... 5
1.9 Lost, Stolen or Destroyed Certificates...................... 5
1.10 Tax and Accounting Consequences............................. 5
1.11 Taking of Necessary Action; Further Action.................. 6
ARTICLE II REPRESENTATIONS AND WARRANTIES OF COMPANY................... 6
2.1 Organization and Qualification; Subsidiaries................ 6
2.2 Certificate of Incorporation and Bylaws..................... 6
2.3 Capitalization.............................................. 7
2.4 Authority Relative to this Agreement........................ 8
2.5 No Conflict; Required Filings and Consents.................. 8
2.6 Compliance; Permits......................................... 9
2.7 SEC Filings; Financial Statements........................... 10
2.8 No Undisclosed Liabilities.................................. 10
2.9 Absence of Certain Changes or Events........................ 10
2.10 Absence of Litigation....................................... 11
2.11 Employee Matters and Benefit Plans.......................... 11
2.12 Registration Statement; Proxy Statement..................... 14
2.13 Restrictions on Business Activities......................... 15
2.14 Title to Property........................................... 15
2.15 Taxes....................................................... 15
2.16 Environmental Matters....................................... 17
2.17 Brokers..................................................... 17
2.18 Intellectual Property....................................... 18
2.19 Agreements, Contracts and Commitments....................... 21
2.20 Company Rights Plan......................................... 22
2.21 Insurance................................................... 22
2.22 Opinion of Financial Advisor................................ 22
2.23 Board Approval.............................................. 22
2.24 Vote Required............................................... 22
2.25 Pooling of Interests........................................ 23
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB.... 23
3.1 Organization and Qualification; Subsidiaries................ 23
3.2 Certificate of Incorporation and Bylaws..................... 23
3.3 Capitalization.............................................. 23
3.4 Authority Relative to this Agreement........................ 24
3.5 No Conflict; Required Filings and Consents.................. 24
3.6 SEC Filings; Financial Statements........................... 25
3.7 Registration Statement; Proxy Statement..................... 25
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TABLE OF CONTENTS
(CONTINUED)
PAGE
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3.8 Compliance; Permits......................................... 26
3.9 No Undisclosed Liabilities.................................. 26
3.10 Absence of Litigation....................................... 26
3.11 Brokers..................................................... 26
3.12 Opinion of Financial Advisor................................ 26
3.13 Board Approval.............................................. 27
3.14 Vote Required............................................... 27
3.15 Pooling of Interests........................................ 27
3.16 Interim Operations of Sub................................... 27
ARTICLE IV CONDUCT PRIOR TO THE EFFECTIVE TIME......................... 27
4.1 Conduct of Business by Company.............................. 27
4.2 Conduct of Business by Parent............................... 30
ARTICLE V ADDITIONAL AGREEMENTS........................................ 30
5.1 Proxy Statement/Prospectus; Registration Statement; Other
Filings; Board Recommendations............................ 30
5.2 Meeting of Company Stockholders............................. 31
5.3 Confidentiality; Access to Information...................... 32
5.4 No Solicitation............................................. 32
5.5 Public Disclosure........................................... 34
5.6 Reasonable Efforts; Notification............................ 34
5.7 Third Party Consents........................................ 35
5.8 Stock Options, Warrants and Employee Benefits............... 35
5.9 Form S-8.................................................... 36
5.10 Indemnification............................................. 36
5.11 Nasdaq Listing.............................................. 36
5.12 Company Affiliate Agreement................................. 36
5.13 Regulatory Filings; Reasonable Efforts...................... 36
5.14 No Rights Plan Amendment.................................... 37
5.15 Termination of 401(k) Plan.................................. 37
5.16 Severance................................................... 37
5.17 Parent Stockholders' Meeting................................ 38
5.18 Directors................................................... 38
5.19 Benefit Arrangements........................................ 38
5.20 Restructuring............................................... 38
ARTICLE VI CONDITIONS TO THE MERGER.................................... 39
6.1 Conditions to Obligations of Each Party to Effect the
Merger.................................................... 39
6.2 Additional Conditions to Obligations of Company............. 39
6.3 Additional Conditions to the Obligations of Parent and
Merger Sub................................................ 40
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER.......................... 41
7.1 Termination................................................. 41
7.2 Notice of Termination; Effect of Termination................ 43
7.3 Fees and Expenses........................................... 43
7.4 Amendment................................................... 44
7.5 Extension; Waiver........................................... 44
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TABLE OF CONTENTS
(CONTINUED)
PAGE
--------
ARTICLE VIII GENERAL PROVISIONS........................................ 44
8.1 Non-Survival of Representations and Warranties.............. 44
8.2 Notices..................................................... 44
8.3 Interpretation; Knowledge................................... 45
8.4 Counterparts................................................ 46
8.5 Entire Agreement; Third Party Beneficiaries................. 46
8.6 Severability................................................ 46
8.7 Other Remedies; Specific Performance........................ 46
8.8 Governing Law............................................... 46
8.9 Rules of Construction....................................... 47
8.10 Assignment.................................................. 47
8.11 WAIVER OF JURY TRIAL........................................ 47
INDEX OF EXHIBITS
Exhibit A Form of Company Voting Agreement
Exhibit B Form of Stock Option Agreement
Exhibit C Form of Company Affiliate Agreement
Exhibit D Schedule of Employees to Sign Noncompetition Agreements
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AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION is made and entered into as of
November 30, 1999, among Informix Corporation, a Delaware corporation
("PARENT"), Iroquois Acquisition Corporation, a Delaware corporation and a
wholly-owned subsidiary of Parent ("MERGER SUB"), and Ardent Software, Inc., a
Delaware corporation ("COMPANY").
RECITALS
A. Upon the terms and subject to the conditions of this Agreement (as
defined in Section 1.2 below) and in accordance with the Delaware General
Corporation Law ("DELAWARE LAW"), Parent and Company intend to enter into a
business combination transaction.
B. The Board of Directors of Company (i) has determined that the Merger (as
defined in Section 1.1) is consistent with and in furtherance of the long-term
business strategy of Company and fair to, and in the best interests of, Company
and its stockholders, (ii) has approved this Agreement, the Merger (as defined
in Section 1.1) and the other transactions contemplated by this Agreement and
(iii) has determined to recommend that the stockholders of Company adopt and
approve this Agreement and approve the Merger.
C. Concurrently with the execution of this Agreement, and as a condition
and inducement to Parent's willingness to enter into this Agreement, certain
affiliates of Company are entering into Voting Agreements in substantially the
form attached hereto as EXHIBIT A (the "COMPANY VOTING AGREEMENTS").
D. Concurrently with the execution of this Agreement, and as a condition and
inducement to Parent's willingness to enter into this Agreement, Company shall
execute and deliver a Stock Option Agreement in favor of Parent in substantially
the form attached hereto as EXHIBIT B (the "STOCK OPTION AGREEMENT"). The Board
of Directors of Company has approved the Stock Option Agreement.
E. Concurrently with the execution of this Agreement, and as a condition
and inducement to Parent's willingness to enter into this Agreement, certain
affiliates of Company (the "COMPANY AFFILIATES") are entering into Company
Affiliate Agreements in substantially the form attached hereto as EXHIBIT C (the
"COMPANY AFFILIATE AGREEMENTS").
F. The parties intend, by executing this Agreement, to adopt a plan of
reorganization within the meaning of Section 368 of the Internal Revenue Code of
1986, as amended (the "CODE").
G. It is also intended by the parties hereto that the Merger shall qualify
for accounting treatment as a pooling of interests.
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER.
At the Effective Time (as defined in Section 1.2) and subject to and upon
the terms and conditions of this Agreement and the applicable provisions of
Delaware Law, Merger Sub shall be merged with and into Company (the "MERGER"),
the separate corporate existence of Merger Sub shall cease and Company shall
continue as the surviving corporation. Company as the surviving corporation
after the Merger is hereinafter sometimes referred to as the "SURVIVING
CORPORATION."
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1.2 EFFECTIVE TIME; CLOSING
Subject to the provisions of this Agreement, the parties hereto shall cause
the Merger to be consummated by filing a Certificate of Merger with the
Secretary of State of the State of Delaware in accordance with the relevant
provisions of Delaware Law (the 'CERTIFICATE OF MERGER") (the time of such
filing (or such later time as may be agreed in writing by Company and Parent and
specified in the Certificate of Merger) being the "EFFECTIVE TIME") as soon as
practicable on or after the Closing Date (as herein defined). Unless the context
otherwise requires, the term "AGREEMENT" as used herein refers collectively to
this Agreement and Plan of Reorganization and the Certificate of Merger. The
closing of the Merger (the "CLOSING") shall take place at the offices of Wilson
Sonsini Goodrich & Rosati, Professional Corporation, at a time and date to be
specified by the parties, which shall be no later than the second business day
after the satisfaction or waiver of the conditions set forth in Article VI, or
at such other time, date and location as the parties hereto agree in writing
(the "CLOSING DATE").
1.3 EFFECT OF THE MERGER
At the Effective Time, the effect of the Merger shall be as provided in this
Agreement and the applicable provisions of the Delaware Law. Without limiting
the generality of the foregoing, and subject thereto, at the Effective Time all
the property, rights, privileges, powers and franchises of Company and Merger
Sub shall vest in the Surviving Corporation, and all debts, liabilities and
duties of Company and Merger Sub shall become the debts, liabilities and duties
of the Surviving Corporation.
1.4 CERTIFICATE OF INCORPORATION; BYLAWS
(a) At the Effective Time, the Certificate of Incorporation of Merger
Sub, as in effect immediately prior to the Effective Time, shall be the
Certificate of Incorporation of the Surviving Corporation until thereafter
amended as provided by law and such Certificate of Incorporation of the
Surviving Corporation; PROVIDED, HOWEVER, that at the Effective Time the
Certificate of Incorporation of the Surviving Corporation shall be amended
so that the name of the Surviving Corporation shall be "Ardent Software,
Inc."
(b) The Bylaws of Merger Sub, as in effect immediately prior to the
Effective Time, shall be, at the Effective Time, the Bylaws of the Surviving
Corporation until thereafter amended.
1.5 DIRECTORS AND OFFICERS
The initial directors of the Surviving Corporation shall be the directors of
Merger Sub immediately prior to the Effective Time, until their respective
successors are duly elected or appointed and qualified. The initial officers of
the Surviving Corporation shall be the officers of Merger Sub immediately prior
to the Effective Time.
1.6 EFFECT ON CAPITAL STOCK
Subject to the terms and conditions of this Agreement, at the Effective
Time, by virtue of the Merger and without any action on the part of Merger Sub,
Company or the holders of any of the following securities, the following shall
occur:
(a) CONVERSION OF COMPANY COMMON STOCK. Each share of Common Stock,
$0.01 par value per share, of Company, including, with respect to each such
share of Company Common Stock, the associated Rights (as defined in that
certain Amended and Restated Rights Agreement (the "Company Rights Plan")
dated as of July 20, 1999 and amended as of November 30, 1999, between
Company and State Street Bank and Trust Company as Rights Agent) (the
"COMPANY COMMON STOCK") issued and outstanding immediately prior to the
Effective Time, other than any shares of Company Common Stock to be canceled
pursuant to Section 1.6(b), will be canceled and extinguished and
automatically converted (subject to Sections 1.6(e) and (f)) into the right
to receive 3.5 shares of Common Stock of Parent (the "PARENT COMMON STOCK")
(the "EXCHANGE
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RATIO") upon surrender of the certificate representing such share of Company
Common Stock in the manner provided in Section 1.7 (or in the case of a
lost, stolen or destroyed certificate, upon delivery of an affidavit (and
bond, if required) in the manner provided in Section 1.9). If any shares of
Company Common Stock outstanding immediately prior to the Effective Time are
unvested or are subject to a repurchase option, risk of forfeiture or other
condition under any applicable restricted stock purchase agreement or other
agreement with Company, then the shares of Parent Common Stock issued in
exchange for such shares of Company Common Stock will also be unvested and
subject to the same repurchase option, risk of forfeiture or other
condition, and the certificates representing such shares of Parent Common
Stock may accordingly be marked with appropriate legends. Company shall take
all action that may be necessary to ensure that, from and after the
Effective Time, Parent is entitled to exercise any such repurchase option or
other right set forth in any such restricted stock purchase agreement or
other agreement.
(b) CANCELLATION OF PARENT-OWNED STOCK. Each share of Company Common
Stock held by Company or owned by Merger Sub, Parent or any direct or
indirect wholly-owned subsidiary of Company or of Parent immediately prior
to the Effective Time shall be canceled and extinguished without any
conversion thereof.
(c) STOCK OPTIONS; WARRANTS; EMPLOYEE STOCK PURCHASE PLANS. At the
Effective Time, all options to purchase Company Common Stock then
outstanding under Company's 1986 Stock Option Plan (the "1986 Plan"), the
1999 Director Stock Option Plan (the "Director Plan") and the 1995
Non-Statutory Stock Option Plan (the "1995 Plan" and together with the 1986
Plan and the Director Plan, the "COMPANY OPTION PLANS") shall be assumed by
Parent in accordance with Section 5.8 hereof. Warrants to purchase Company
Common Stock shall be treated as set forth in Section 5.8. Purchase rights
outstanding under Company's Employee Stock Purchase Plan (the "ESPP") shall
be treated as set forth in Section 5.8.
(d) CAPITAL STOCK OF MERGER SUB. Each share of Common Stock, $0.001
par value per share, of Merger Sub (the "MERGER SUB COMMON STOCK") issued
and outstanding immediately prior to the Effective Time shall be converted
into one validly issued, fully paid and nonassessable share of Common Stock,
$0.001 par value per share, of the Surviving Corporation. Each certificate
evidencing ownership of shares of Merger Sub Common Stock shall evidence
ownership of such shares of capital stock of the Surviving Corporation.
(e) ADJUSTMENTS TO EXCHANGE RATIO. The Exchange Ratio shall be
adjusted to reflect appropriately the effect of any stock split, reverse
stock split, stock dividend (including any dividend or distribution of
securities convertible into Parent Common Stock or Company Common Stock),
extraordinary cash dividends, reorganization, recapitalization,
reclassification, combination, exchange of shares or other like change with
respect to Parent Common Stock or Company Common Stock occurring on or after
the date hereof and prior to the Effective Time.
(f) FRACTIONAL SHARES. No fraction of a share of Parent Common Stock
will be issued by virtue of the Merger, but in lieu thereof each holder of
shares of Company Common Stock who would otherwise be entitled to a fraction
of a share of Parent Common Stock (after aggregating all fractional shares
of Parent Common Stock that otherwise would be received by such holder)
shall, upon surrender of such holder's Certificates(s) (as defined in
Section 1.7(c)) receive from Parent an amount of cash (rounded to the
nearest whole cent), without interest, equal to the product of (i) such
fraction, multiplied by (ii) the average closing price of one share of
Parent Common Stock for the five (5) most recent days that Parent Common
Stock has traded ending on the trading day immediately prior to the
Effective Time, as reported on the Nasdaq National Market System ("NASDAQ").
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1.7 SURRENDER OF CERTIFICATES
(a) EXCHANGE AGENT. Parent shall select a bank or trust company
reasonably acceptable to Company to act as the exchange agent (the "EXCHANGE
AGENT") in the Merger.
(b) PARENT TO PROVIDE COMMON STOCK. Promptly after the Effective Time,
Parent shall make available to the Exchange Agent, for exchange in
accordance with this Article I, the shares of Parent Common Stock issuable
pursuant to Section 1.6 in exchange for outstanding shares of Company Common
Stock, and cash in an amount sufficient for payment in lieu of fractional
shares pursuant to Section 1.6(f) and any dividends or distributions to
which holders of shares of Company Common Stock may be entitled pursuant to
Section 1.7(d).
(c) EXCHANGE PROCEDURES. Promptly after the Effective Time, Parent
shall cause the Exchange Agent to mail to each holder of record (as of the
Effective Time) of a certificate or certificates (the "CERTIFICATES"), which
immediately prior to the Effective Time represented outstanding shares of
Company Common Stock whose shares were converted into the right to receive
shares of Parent Common Stock pursuant to Section 1.6, cash in lieu of any
fractional shares pursuant to Section 1.6(f) and any dividends or other
distributions pursuant to Section 1.7(d), (i) a letter of transmittal in
customary form (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 Exchange Agent and shall contain such other
provisions as Parent may reasonably specify) and (ii) instructions for use
in effecting the surrender of the Certificates in exchange for certificates
representing shares of Parent Common Stock, cash in lieu of any fractional
shares pursuant to Section 1.6(f) and any dividends or other distributions
pursuant to Section 1.7(d). Upon surrender of Certificates for cancellation
to the Exchange Agent or to such other agent or agents as may be appointed
by Parent, together with such letter of transmittal, duly completed and
validly executed in accordance with the instructions thereto, the holders of
such Certificates shall be entitled to receive in exchange therefor
certificates representing the number of whole shares of Parent Common Stock
into which their shares of Company Common Stock were converted at the
Effective Time, payment in lieu of fractional shares which such holders have
the right to receive pursuant to Section 1.6(f) and any dividends or
distributions payable pursuant to Section 1.7(d), and the Certificates so
surrendered shall forthwith be canceled. Until so surrendered, outstanding
Certificates will be deemed from and after the Effective Time, for all
corporate purposes, subject to Section 1.7(d) as to dividends and other
distributions, to evidence only the ownership of the number of full shares
of Parent Common Stock into which such shares of Company Common Stock shall
have been so converted and the right to receive an amount in cash in lieu of
the issuance of any fractional shares in accordance with Section 1.6(f) and
any dividends or distributions payable pursuant to Section 1.7(d).
(d) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No dividends or
other distributions declared or made after the date of this Agreement with
respect to Parent Common Stock with a record date after the Effective Time
will be paid to the holders of any unsurrendered Certificates with respect
to the shares of Parent Common Stock represented thereby until the holders
of record of such Certificates shall surrender such Certificates. Subject to
applicable law, following surrender of any such Certificates, the Exchange
Agent shall deliver to the record holders thereof, without interest,
certificates representing whole shares of Parent Common Stock issued in
exchange therefor along with payment in lieu of fractional shares pursuant
to Section 1.6(f) hereof and the amount of any such dividends or other
distributions with a record date after the Effective Time payable with
respect to such whole shares of Parent Common Stock.
(e) TRANSFERS OF OWNERSHIP. If certificates representing shares of
Parent Common Stock are to be issued in a name other than that in which the
Certificates surrendered in exchange therefor are registered, it will be a
condition of the issuance thereof that the Certificates so surrendered
A-4
will be properly endorsed and otherwise in proper form for transfer and that
the persons requesting such exchange will have paid to Parent or any agent
designated by it any transfer or other taxes required by reason of the
issuance of certificates representing shares of Parent Common Stock in any
name other than that of the registered holder of the Certificates
surrendered, or established to the satisfaction of Parent or any agent
designated by it that such tax has been paid or is not payable.
(f) REQUIRED WITHHOLDING. Each of the Exchange Agent, Parent and the
Surviving Corporation shall be entitled to deduct and withhold from any
consideration payable or otherwise deliverable pursuant to this Agreement to
any holder or former holder of Company Common Stock such amounts as may be
required (as advised by tax counsel for Parent) to be deducted or withheld
therefrom under the Code or under any provision of state, local or foreign
tax law or under any other applicable legal requirement. To the extent such
amounts are so deducted or withheld, such amounts shall be treated for all
purposes under this Agreement as having been paid to the person to whom such
amounts would otherwise have been paid.
(g) NO LIABILITY. Notwithstanding anything to the contrary in this
Section 1.7, neither the Exchange Agent, Parent, the Surviving Corporation
nor any party hereto shall be liable to a holder of shares of Parent Common
Stock or Company Common Stock for any amount properly paid to a public
official pursuant to any applicable abandoned property, escheat or similar
law.
1.8 NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK
All shares of Parent Common Stock issued in accordance with the terms hereof
(including any cash paid in respect thereof pursuant to Section 1.6(f) and
1.7(d)) shall be deemed to have been issued in full satisfaction of all rights
pertaining to such shares of Company Common Stock, and there shall be no further
registration of transfers on the records of the Surviving Corporation of shares
of Company Common Stock which were outstanding immediately prior to the
Effective Time. 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 I.
1.9 LOST, STOLEN OR DESTROYED CERTIFICATES
In the event that any Certificates shall have been lost, stolen or
destroyed, the Exchange Agent shall issue in exchange for such lost, stolen or
destroyed Certificates, upon the making of an affidavit of that fact by the
holder thereof, certificates representing the shares of Parent Common Stock into
which the shares of Company Common Stock represented by such Certificates were
converted pursuant to Section 1.6, cash for fractional shares, if any, as may be
required pursuant to Section 1.6(f) and any dividends or distributions payable
pursuant to Section 1.7(d); PROVIDED, HOWEVER, that Parent may, in its
discretion and as a condition precedent to the issuance of such certificates
representing shares of Parent Common Stock, cash and other distributions,
require the owner of such lost, stolen or destroyed Certificates to deliver a
bond in such sum as it may reasonably direct as indemnity against any claim that
may be made against Parent, the Surviving Corporation or the Exchange Agent with
respect to the Certificates alleged to have been lost, stolen or destroyed.
1.10 TAX AND ACCOUNTING CONSEQUENCES
(a) It is intended by the parties hereto that the Merger shall
constitute a reorganization within the meaning of Section 368 of the Code.
The parties hereto adopt this Agreement as a "plan of reorganization" within
the meaning of Sections 1.368-2(g) and 1.368-3(a) of the United States
Income Tax Regulations.
(b) It is intended by the parties hereto that the Merger shall be
treated as a pooling of interests for accounting purposes.
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1.11 TAKING OF NECESSARY ACTION; FURTHER ACTION
If, at any time after the Effective Time, any further action is necessary or
desirable to carry out the purposes of this Agreement and to vest the Surviving
Corporation with full right, title and possession to all assets, property,
rights, privileges, powers and franchises of Company and Merger Sub, the
officers and directors of Company and Merger Sub will take all such lawful and
necessary action.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF COMPANY
As of the date hereof and as of the Closing Date, Company represents and
warrants to Parent and Merger Sub, subject to such exceptions as are
specifically disclosed in writing in the disclosure letter supplied by Company
to Parent dated as of the date hereof and certified by a duly authorized officer
of Company and whether or not referenced in any specific section herein, which
disclosure shall provide an exception to or otherwise qualify the
representations or warranties of Company specifically referred to in such
disclosure (the "COMPANY SCHEDULE"), as follows:
2.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES
(a) Each of 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 to own, lease and operate its assets and properties and to carry
on its business as it is now being conducted, except where the failure to do
so would not, individually, or in the aggregate, have a Material Adverse
Effect. Each of Company and its subsidiaries is in possession of all
franchises, grants, authorizations, licenses, permits, easements, consents,
certificates, approvals and orders ("APPROVALS") necessary to own, lease and
operate the properties it purports to own, operate or lease and to carry on
its business as it is now being conducted, except where the failure to have
such Approvals would not, individually or in the aggregate, have a Material
Adverse Effect on Company.
(b) Company has no subsidiaries except for the corporations identified
in Section 2.1(b) of the Company Schedule. Neither Company nor any of its
subsidiaries has agreed nor is obligated to make nor is bound by any
written, oral or other agreement, contract, subcontract, lease, binding
understanding, instrument, note, option, warranty, purchase order, license,
sublicense, insurance policy, benefit plan, commitment or undertaking of any
nature, as of the date hereof or as may hereafter be in effect (a
"CONTRACT") under which it may become obligated to make, any future
investment in or capital contribution to any other entity. Neither Company
nor any of its subsidiaries directly or indirectly owns any equity or
similar interest in or any interest convertible, exchangeable or exercisable
for, any equity or similar interest in, any corporation, partnership, joint
venture or other business, association or entity.
(c) Company and each of its subsidiaries is qualified to do business as
a foreign corporation, and is in good standing, under the laws of all
jurisdictions where the nature of their business requires such qualification
and where the failure to so qualify would have a Material Adverse Effect (as
defined in Section 8.3) on Company.
2.2 CERTIFICATE OF INCORPORATION AND BYLAWS
Company has previously furnished to Parent a complete and correct copy of
its Certificate of Incorporation and Bylaws as amended to date (together, the
"COMPANY CHARTER DOCUMENTS"). Such Company Charter Documents and equivalent
organizational documents of each of its subsidiaries are in full force and
effect. Company is not in violation of any of the provisions of the Company
Charter Documents, and no subsidiary of Company is in violation of its
equivalent organizational documents.
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2.3 CAPITALIZATION
(a) The authorized capital stock of Company consists of 65,000,000
shares of Company Common Stock and 10,000,000 shares of Preferred Stock
("COMPANY PREFERRED STOCK"), each having a par value of $0.01 per share. At
the close of business on the date of this Agreement (i) 19,705,506 shares of
Company Common Stock (including treasury shares) were issued and
outstanding, all of which are validly issued, fully paid and nonassessable
(not including any shares issued on or after such date upon exercise of
options outstanding on the date hereof); (ii) no shares of Company Common
Stock were held by subsidiaries of Company; (iii) 407,071 shares of Company
Common Stock were available for future issuance pursuant to Company's ESPP;
(iv) 595,346 shares of Company Common Stock were reserved for issuance upon
the exercise of outstanding options to purchase Company Common Stock under
the 1986 Plan; (v) 98,438 shares of Company Common Stock were available for
future grant under the Directors Plan; (vi) 572,624 shares of Company Common
Stock were available for future grant under the 1995 Plan; (vii) 114,151
shares of Company Common Stock were reserved for issuance upon conversion of
warrants of Company (the "WARRANTS") and (viii) 3,921,396 shares of Company
Common Stock were reserved for future issuance pursuant to the Stock Option
Agreement. As of the date hereof, no shares of Company Preferred Stock were
issued or outstanding. Section 2.3(a) of the Company Schedule sets forth the
following information with respect to each Company Stock Option (as defined
in Section 5.8) outstanding as of the date of this Agreement: (i) the name
and address of the optionee; (ii) the particular plan pursuant to which such
Company Stock Option was granted; (iii) the number of shares of Company
Common Stock subject to such Company Stock Option; (iv) the exercise price
of such Company Stock Option; (v) the date on which such Company Stock
Option was granted; (vi) the applicable vesting schedule; (vii) the date on
which such Company Stock Option expires; and (viii) whether the
exercisability of such option will be accelerated in any way by the
transactions contemplated by this Agreement, and indicates the extent of
acceleration. Company has made available to Parent accurate and complete
copies of all stock option plans pursuant to which Company has granted such
Company Stock Options that are currently outstanding and the form of all
stock option agreements evidencing such Company Stock Options. All shares of
Company Common Stock subject to issuance as aforesaid, upon issuance on the
terms and conditions specified in the instrument pursuant to which they are
issuable, would be duly authorized, validly issued, fully paid and
nonassessable. Except as set forth in Section 2.3(a) of the Company
Schedule, there are no commitments or agreements of any character to which
Company is bound obligating Company to accelerate the vesting of any Company
Stock Option as a result of the Merger. All outstanding shares of Company
Common Stock, all outstanding Company Stock Options, and all outstanding
shares of capital stock of each subsidiary of Company have been issued and
granted in compliance with (i) all applicable securities laws and other
applicable Legal Requirements (as defined below) and (ii) all requirements
set forth in applicable Contracts. For the purposes of this Agreement,
"LEGAL REQUIREMENTS" means any federal, state, local, municipal, foreign or
other law, statute, constitution, principle of common law, resolution,
ordinance, code, edict, decree, rule, regulation, ruling or requirement
issues, enacted, adopted, promulgated, implemented or otherwise put into
effect by or under the authority of any Governmental Entity (as defined
below) and (ii) all requirements set forth in applicable contracts,
agreements, and instruments.
(b) Except for securities Company owns free and clear of all liens,
pledges, hypothecations, charges, mortgages, security interests,
encumbrances, claims, infringements, interferences, options, right of first
refusals, preemptive rights, community property interests or restriction of
any nature (including any restriction on the voting of any security, any
restriction on the transfer of any security or other asset, any restriction
on the possession, exercise or transfer of any other attribute of ownership
of any asset) directly or indirectly through one or more subsidiaries, and
except for shares of capital stock or other similar ownership interests of
subsidiaries of Company that are
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owned by certain nominee equity holders as required by the applicable law of
the jurisdiction of organization of such subsidiaries (which shares or other
interests do not materially affect Company's control of such subsidiaries),
as of the date of this Agreement, there are no equity securities,
partnership interests or similar ownership interests of any class of equity
security of any subsidiary of Company, or any security exchangeable or
convertible into or exercisable for such equity securities, partnership
interests or similar ownership interests, issued, reserved for issuance or
outstanding. Except as set forth in Section 2.3(b) of the Company Schedule
or as set forth in Section 2.3(a) hereof and except for the Stock Option
Agreement, there are no subscriptions, options, warrants, equity securities,
partnership interests or similar ownership interests, calls, rights
(including preemptive rights), commitments or agreements of any character to
which Company or any of its subsidiaries is a party or by which it is bound
obligating Company or any of its subsidiaries to issue, deliver or sell, or
cause to be issued, delivered or sold, or repurchase, redeem or otherwise
acquire, or cause the repurchase, redemption or acquisition of, any shares
of capital stock, partnership interests or similar ownership interests of
Company or any of its subsidiaries or obligating Company or any of its
subsidiaries to grant, extend, accelerate the vesting of or enter into any
such subscription, option, warrant, equity security, call, right, commitment
or agreement. As of the date of this Agreement, except as contemplated by
this Agreement and except for the Company Rights Plan, there are no
registration rights and there is, except for the Company Voting Agreements,
no voting trust, proxy, rights plan, antitakeover plan or other agreement or
understanding to which Company or any of its subsidiaries is a party or by
which they are bound with respect to any equity security of any class of
Company or with respect to any equity security, partnership interest or
similar ownership interest of any class of any of its subsidiaries.
Stockholders of Company will not be entitled to dissenters' rights under
applicable state law in connection with the Merger.
2.4 AUTHORITY RELATIVE TO THIS AGREEMENT
Company has all necessary corporate power and authority to execute and
deliver this Agreement and the Stock Option Agreement and to perform its
obligations hereunder and thereunder and, subject to obtaining the approval of
the stockholders of Company of the Merger, to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
and the Stock Option Agreement by Company and the consummation by Company of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action on the part of Company and no other
corporate proceedings on the part of Company are necessary to authorize this
Agreement, the Stock Option Agreement or to consummate the transactions so
contemplated (other than the approval and adoption of this Agreement and the
Merger by holders of a majority of the outstanding shares of Company Common
Stock in accordance with Delaware Law and the Company Charter Documents). This
Agreement and the Stock Option Agreement have been duly and validly executed and
delivered by Company and, assuming the due authorization, execution and delivery
by Parent and Merger Sub, constitute legal and binding obligations of Company,
enforceable against Company in accordance with their respective terms.
2.5 NO CONFLICT; REQUIRED FILINGS AND CONSENTS
(a) The execution and delivery of this Agreement and the Stock Option
Agreement by Company do not, and the performance of this Agreement and the
Stock Option Agreement by Company shall not, (i) conflict with or violate
the Company Charter Documents or the equivalent organizational documents of
any of Company's subsidiaries, (ii) subject to obtaining the approval of
Company's stockholders of this Agreement and the Merger and compliance with
the requirements set forth in Section 2.5(b) below, conflict with or violate
any law, rule, regulation, order, judgment or decree applicable to Company
or any of its subsidiaries or by which its or any of their respective
properties is bound or affected, or (iii) result in any breach of or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or
A-8
materially impair Company's or any of its subsidiaries' rights or alter the
rights or obligations of any third party under, or give to others any rights
of termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any of the properties or assets of
Company or any of its subsidiaries pursuant to, any material note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise
or other instrument or obligation to which Company or any of its
subsidiaries is a party or by which Company or any of its subsidiaries or
its or any of their respective properties are bound or affected.
(b) The execution and delivery of this Agreement and the Stock Option
Agreement by Company do not, and the performance of this Agreement by
Company shall not, require any consent, approval, authorization or permit
of, or filing with or notification to, any court, administrative agency,
commission, governmental or regulatory authority, domestic or foreign (a
"GOVERNMENTAL ENTITY"), except (A) for applicable requirements, if any, of
the Securities Act of 1933, as amended (the "SECURITIES ACT"), the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), state
securities laws ("BLUE SKY LAWS"), the pre-merger notification requirements
(the "HSR APPROVAL") of the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR ACT") and of foreign Governmental Entities and
the rules and regulations thereunder, the rules and regulations of Nasdaq,
and the filing and recordation of the Merger Documents as required by
Delaware Law and (B) where the failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, could
not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on Company or, after the Effective Time, Parent, or
prevent consummation of the Merger or otherwise prevent the parties hereto
from performing their obligations under this Agreement.
2.6 COMPLIANCE; PERMITS
(a) Neither Company nor any of its subsidiaries is in conflict with, or
in default or violation of, (i) any law, rule, regulation, order, judgment
or decree applicable to Company or any of its subsidiaries or by which its
or any of their respective properties is bound or affected, or (ii) any
material note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which
Company or any of its subsidiaries is a party or by which Company or any of
its subsidiaries or its or any of their respective properties is bound or
affected, except for any conflicts, defaults or violations that
(individually or in the aggregate) would not cause Company to lose any
material benefit or incur any material liability. No investigation or review
by any governmental or regulatory body or authority is pending or, to the
knowledge of Company, threatened against Company or its subsidiaries, nor
has any governmental or regulatory body or authority indicated to Company an
intention to conduct the same, other than, in each such case, those the
outcome of which could not, individually or in the aggregate, reasonably be
expected to have the effect of prohibiting or materially impairing any
business practice of Company or any of its subsidiaries, any acquisition of
material property by Company or any of its subsidiaries or the conduct of
business by Company or any of its subsidiaries.
(b) Company and its subsidiaries hold all permits, licenses, variances,
exemptions, orders and approvals from governmental authorities which are
material to operation of the business of Company and its subsidiaries taken
as a whole (collectively, the "COMPANY PERMITS"). Company and its
subsidiaries are in compliance in all material respects with the terms of
the Company Permits.
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2.7 SEC FILINGS; FINANCIAL STATEMENTS
(a) Company has made available to Parent a correct and complete copy of
each report, schedule, registration statement and definitive proxy statement
filed by Company with the Securities and Exchange Commission ("SEC") since
September 30, 1997 (the "COMPANY SEC REPORTS"), which are all the forms,
reports and documents required to be filed by Company with the SEC since
September 30, 1997. The Company SEC Reports (A) were prepared in accordance
with the requirements of the Securities Act or the Exchange Act, as the case
may be, and (B) did not at the time they were filed (and if amended or
superseded by a filing prior to the date of this Agreement then on the date
of such filing) 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 light of the circumstances under which they
were made, not misleading. None of Company's subsidiaries is required to
file any reports or other documents with the SEC.
(b) Each set of consolidated financial statements (including, in each
case, any related notes thereto) contained in the Company SEC Reports was
prepared in accordance with generally accepted accounting principles
("GAAP") applied on a consistent basis throughout the periods involved
(except as may be indicated in the notes thereto or, in the case of
unaudited statements, do not contain footnotes as permitted by Form 10-Q of
the Exchange Act) and each fairly presents in all material respects the
consolidated financial position of Company and its subsidiaries at the
respective dates thereof and the consolidated results of its operations and
cash flows for the periods indicated, except that the unaudited interim
financial statements were or are subject to normal adjustments which were
not or are not expected to be material in amount.
(c) Company has previously furnished to Parent a complete and correct
copy of any amendments or modifications, which have not yet been filed with
the SEC but which are required to be filed, to agreements, documents or
other instruments which previously had been filed by Company with the SEC
pursuant to the Securities Act or the Exchange Act.
2.8 NO UNDISCLOSED LIABILITIES
Neither Company nor any of its subsidiaries has any liabilities (absolute,
accrued, contingent or otherwise) of a nature required to be disclosed on a
balance sheet or in the related notes to the consolidated financial statements
prepared in accordance with GAAP which are, individually or in the aggregate,
material to the business, results of operations or financial condition of
Company and its subsidiaries taken as a whole, except (i) liabilities provided
for in Company's balance sheet as of September 30, 1999 or (ii) liabilities
incurred since September 30, 1999 in the ordinary course of business, none of
which is material to the business, results of operations or financial condition
of Company and its subsidiaries, taken as a whole.
2.9 ABSENCE OF CERTAIN CHANGES OR EVENTS
Since September 30, 1999, there has not been: (i) any Material Adverse
Effect on Company, (ii) any declaration, setting aside or payment of any
dividend on, or other distribution (whether in cash, stock or property) in
respect of, any of Company's or any of its subsidiaries' capital stock, or any
purchase, redemption or other acquisition by Company of any of Company's capital
stock or any other securities of Company or its subsidiaries or any options,
warrants, calls or rights to acquire any such shares or other securities except
for repurchases from employees following their termination pursuant to the terms
of their pre-existing stock option or purchase agreements, (iii) any split,
combination or reclassification of any of Company's or any of its subsidiaries'
capital stock, (iv) any granting by Company or any of its subsidiaries of any
increase in compensation or fringe benefits, except for normal increases of cash
compensation in the ordinary course of business consistent with past practice,
or any payment by Company or any of its subsidiaries of any bonus, except for
bonuses made in the ordinary course of business consistent with past practice or
any granting by Company or any of its
A-10
subsidiaries of any increase in severance or termination pay or any entry by
Company or any of its subsidiaries into any currently effective employment,
severance, termination or indemnification agreement or any agreement the
benefits of which are contingent or the terms of which are materially altered
upon the occurrence of a transaction involving Company of the nature
contemplated hereby, (v) entry by Company or any of its subsidiaries into any
licensing or other agreement with regard to the acquisition or disposition of
any Intellectual Property (as defined in Section 2.18) other than licenses in
the ordinary course of business consistent with past practice or any amendment
or consent with respect to any licensing agreement filed or required to be filed
by Company with the SEC, (vi) any material change by Company in its accounting
methods, principles or practices, except as required by concurrent changes in
GAAP, or (vii) any revaluation by Company of any of its assets, including,
without limitation, writing down the value of capitalized inventory or writing
off notes or accounts receivable or any sale of assets of Company other than in
the ordinary course of business.
2.10 ABSENCE OF LITIGATION
There are no claims, actions, suits or proceedings pending or, to the
knowledge of Company, threatened (or, to the knowledge of Company, any
governmental or regulatory investigation pending or threatened) against Company
or any of its subsidiaries or any properties or rights of Company or any of its
subsidiaries, before any court, arbitrator or administrative, governmental or
regulatory authority or body, domestic or foreign.
2.11 EMPLOYEE MATTERS AND BENEFIT PLANS
(a) DEFINITIONS. With the exception of the definition of "Affiliate"
set forth in Section 2.11(a)(i) below (which definition shall apply only to
this Section 2.11, for purposes of this Agreement, the following terms shall
have the meanings set forth below:
(i) "AFFILIATE" shall mean any other person or entity under common
control with Company within the meaning of Section 414(b), (c), (m) or
(o) of the Code and the regulations issued thereunder;
(ii) "CODE" shall mean the Internal Revenue Code of 1986, as amended;
(iii) "COMPANY EMPLOYEE PLAN" shall mean any plan, program, policy,
practice, contract, agreement or other arrangement providing for
compensation, severance, termination pay, deferred compensation,
performance awards, stock or stock-related awards, fringe benefits or
other employee benefits or remuneration of any kind, whether written or
unwritten or otherwise, funded or unfunded, including without limitation,
each "employee benefit plan," within the meaning of Section 3(3) of ERISA
which is or has been maintained, contributed to, or required to be
contributed to, by Company or any Affiliate for the benefit of any
Employee, or with respect to which Company or any Affiliate has or may
have any liability or obligation;
(iv) "COBRA" shall mean the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended;
(v) "DOL" shall mean the Department of Labor;
(vi) "EMPLOYEE" shall mean any current or former employee, consultant
or director of Company or any Affiliate;
(vii) "EMPLOYEE AGREEMENT" shall mean each management, employment,
severance, consulting, relocation, repatriation, expatriation or other
agreement, contract or understanding in effect between Company or any
Affiliate and any Employee;
(viii) "ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended;
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(ix) "FMLA" shall mean the Family Medical Leave Act of 1993, as
amended;
(x) "INTERNATIONAL EMPLOYEE PLAN" shall mean each Company Employee
Plan that has been adopted or maintained by Company or any Affiliate,
whether informally or formally, or with respect to which Company or any
Affiliate will or may have any liability, for the benefit of Employees
who perform services outside the United States;
(xi) "IRS" shall mean the Internal Revenue Service;
(xii) "MULTIEMPLOYER PLAN" shall mean any "Pension Plan" (as defined
below) which is a "multiemployer plan," as defined in Section 3(37) of
ERISA;
(xiii) "PBGC" shall mean the Pension Benefit Guaranty Corporation; and
(xiv) "PENSION PLAN" shall mean each Company Employee Plan which is an
"employee pension benefit plan," within the meaning of Section 3(2) of
ERISA.
(b) SCHEDULE. Section 2.11(b) of the Company Schedule contains an
accurate and complete list of each Company Employee Plan, International
Employee Plan, and each Employee Agreement. Company does not have any plan
or commitment to establish any new Company Employee Plan, International
Employee Plan, or Employee Agreement, to modify any Company Employee Plan or
Employee Agreement (except to the extent required by law or to conform any
such Company Employee Plan or Employee Agreement to the requirements of any
applicable law, in each case as previously disclosed to Parent in writing,
or as required by this Agreement), or to adopt or enter into any Company
Employee Plan, International Employee Plan, or Employee Agreement.
(c) DOCUMENTS. Company has provided to Parent: (i) correct and
complete copies of all documents embodying each Company Employee Plan,
International Employee Plan, and each Employee Agreement including (without
limitation) all amendments thereto and all related trust documents;
(ii) the most recent annual actuarial valuations, if any, prepared for each
Company Employee Plan; (iii) the three (3) most recent annual reports (Form
Series 5500 and all schedules and financial statements attached thereto), if
any, required under ERISA or the Code in connection with each Company
Employee Plan; (iv) if the Company Employee Plan is funded, the most recent
annual and periodic accounting of Company Employee Plan assets; (v) the most
recent summary plan description together with the summary(ies) of material
modifications thereto, if any, required under ERISA with respect to each
Company Employee Plan; (vi) all IRS determination, opinion, notification and
advisory letters, and all applications and correspondence to or from the IRS
or the DOL with respect to any such application or letter; (vii) all
material written agreements and contracts relating to each Company Employee
Plan, including, but not limited to, administrative service agreements,
group annuity contracts and group insurance contracts; (viii) all
communications material to any Employee or Employees relating to any Company
Employee Plan and any proposed Company Employee Plans, in each case,
relating to any amendments, terminations, establishments, increases or
decreases in benefits, acceleration of payments or vesting schedules or
other events which would result in any material liability to Company;
(ix) all correspondence to or from any governmental agency relating to any
Company Employee Plan; (x) all COBRA forms and related notices (or such
forms and notices as required under comparable law); (xi) all policies
pertaining to fiduciary liability insurance covering the fiduciaries for
each Company Employee Plan; (xii) the three (3) most recent plan years
discrimination tests for each Company Employee Plan; and (xiii) all
registration statements, annual reports (Form 11-K and all attachments
thereto) and prospectuses prepared in connection with each Company Employee
Plan.
(d) EMPLOYEE PLAN COMPLIANCE. Except as set forth in Section 2.11(d)
of the Company Schedule, (i) Company has performed in all material respects
all obligations required to be
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performed by it under, is not in default or violation of, and has no
knowledge of any default or violation by any other party to each Company
Employee Plan, and each Company Employee Plan has been established and
maintained in all material respects in accordance with its terms and in
compliance with all applicable laws, statutes, orders, rules and
regulations, including but not limited to ERISA or the Code; (ii) each
Company Employee Plan intended to qualify under Section 401(a) of the Code
and each trust intended to qualify under Section 501(a) of the Code has
either received a favorable determination, opinion, notification or advisory
letter from the IRS with respect to each such Plan as to its qualified
status under the Code, including all amendments to the Code effected by the
Tax Reform Act of 1986 and subsequent legislation, or has remaining a period
of time under applicable Treasury regulations or IRS pronouncements in which
to apply for such a letter and make any amendments necessary to obtain a
favorable determination as to the qualified status of each such Company
Employee Plan; (iii) no "prohibited transaction," within the meaning of
Section 4975 of the Code or Sections 406 and 407 of ERISA, and not otherwise
exempt under Section 4975 or Section 408 of ERISA (or any administrative
class exemption issued thereunder), has occurred with respect to any Company
Employee Plan; (iv) there are no actions, suits or claims pending, or, to
the knowledge of Company, threatened or reasonably anticipated (other than
routine claims for benefits) against any Company Employee Plan or against
the assets of any Company Employee Plan; (v) each Company Employee Plan
(other than any stock option plan) can be amended, terminated or otherwise
discontinued after the Effective Time, without material liability to Parent,
Company or any of its Affiliates (other than ordinary administration
expenses); (vi) there are no audits, inquiries or proceedings pending or, to
the knowledge of Company or any Affiliates, threatened by the IRS or DOL
with respect to any Company Employee Plan; and (vii) neither Company nor any
Affiliate is subject to any penalty or tax with respect to any Company
Employee Plan under Section 502(i) of ERISA or Sections 4975 through 4980 of
the Code.
(e) PENSION PLAN. Neither Company nor any Affiliate has ever
maintained, established, sponsored, participated in, or contributed to, any
Pension Plan which is subject to Title IV of ERISA or Section 412 of the
Code.
(f) MULTIEMPLOYER AND MULTIPLE EMPLOYER PLANS. At no time has Company
or any Affiliate contributed to or been obligated to contribute to any
Multiemployer Plan. Neither Company, nor any Affiliate has at any time ever
maintained, established, sponsored, participated in, or contributed to any
multiple employer plan, as described in Section 413(c) of the Code.
(g) NO POST-EMPLOYMENT OBLIGATIONS. Except as set forth in
Section 2.11(g) of the Company Schedule, no Company Employee Plan provides,
or reflects or represents any liability to provide retiree health to any
person for any reason, except as may be required by COBRA or other
applicable statute, and Company has never represented, promised or
contracted (whether in oral or written form) to any Employee (either
individually or to Employees as a group) or any other person that such
Employee(s) or other person would be provided with retiree health, except to
the extent required by statute.
(h) HEALTH CARE COMPLIANCE. Neither Company nor any Affiliate has,
prior to the Effective Time and in any material respect, violated any of the
health care continuation requirements of COBRA, the requirements of FMLA,
the requirements of the Health Insurance Portability and Accountability Act
of 1996, the requirements of the Women's Health and Cancer Rights Act, the
requirements of the Newborns' and Mothers' Health Protection Act of 1996, or
any amendment to each such Act, or any similar provisions of state law
applicable to its Employees.
(i) EFFECT OF TRANSACTION.
(i) Except as set forth in Section 2.11(i) of the Company Schedule,
the execution of this Agreement and the consummation of the transactions
contemplated hereby will not (either
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alone or upon the occurrence of any additional or subsequent events)
constitute an event under any Company Employee Plan, Employee Agreement,
trust or loan that will or may result in any payment (whether of
severance pay or otherwise), acceleration, forgiveness of indebtedness,
vesting, distribution, increase in benefits or obligation to fund
benefits with respect to any Employee.
(ii) Except as set forth in Section 2.11(i) of the Company Schedule,
no payment or benefit which will or may be made by Company or its
Affiliates with respect to any Employee will be characterized as a
"parachute payment," within the meaning of Section 280G(b)(2) of the
Code.
(j) EMPLOYMENT MATTERS. Company: (i) is in compliance in all respects
with all applicable foreign, federal, state and local laws, rules and
regulations respecting employment eligibility, employment, employment
practices, terms and conditions of employment and wages and hours, in each
case, with respect to Employees; (ii) has withheld and reported all amounts
required by law or by agreement to be withheld and reported with respect to
wages, salaries and other payments to Employees; (iii) is not liable for any
arrears of wages or any taxes or any penalty for failure to comply with any
of the foregoing; and (iv) is not liable for any payment to any trust or
other fund governed by or maintained by or on behalf of any governmental
authority, with respect to unemployment compensation benefits, social
security or other benefits or obligations for Employees (other than routine
payments to be made in the normal course of business and consistent with
past practice). There are no pending, threatened or reasonably anticipated
claims or actions against Company under any worker's compensation policy or
long-term disability policy.
(k) LABOR. No work stoppage or labor strike against Company is
pending, threatened or reasonably anticipated. Company does not know of any
activities or proceedings of any labor union to organize any Employees.
Except as set forth in Section 2.11(k) of the Company Schedule, there are no
actions, suits, claims, labor disputes or grievances pending, or, to the
knowledge of Company, threatened or reasonably anticipated relating to any
labor, safety or discrimination matters involving any Employee, including,
without limitation, charges of unfair labor practices or discrimination
complaints, which, if adversely determined, would, individually or in the
aggregate, result in any material liability to Company. Neither Company nor
any of its subsidiaries has engaged in any unfair labor practices within the
meaning of the National Labor Relations Act. Except as set forth in
Section 2.11(k) of the Company Schedule, Company is not presently, nor has
it been in the past, a party to, or bound by, any collective bargaining
agreement or union contract with respect to Employees and no collective
bargaining agreement is being negotiated by Company.
(l) INTERNATIONAL EMPLOYEE PLAN. Each International Employee Plan has
been established, maintained and administered in compliance with its terms
and conditions and with the requirements prescribed by any and all statutory
or regulatory laws that are applicable to such International Employee Plan.
Furthermore, no International Employee Plan has unfunded liabilities, that
as of the Effective Time, will not be offset by insurance or fully accrued.
Except as required by law, no condition exists that would prevent Company or
Parent from terminating or amending any International Employee Plan at any
time for any reason.
2.12 REGISTRATION STATEMENT; PROXY STATEMENT
None of the information supplied or to be supplied by Company for inclusion
or incorporation by reference in (i) the registration statement on Form S-4 to
be filed with the SEC by Parent in connection with the issuance of the Parent
Common Stock in or as a result of the Merger (the "S-4") will, at the time the
S-4 becomes effective under the Securities Act, 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 are made, not misleading;
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and (ii) the joint proxy statement/prospectus to be filed with the SEC by
Company and Parent pursuant to Section 5.1(a) hereof (the "PROXY
STATEMENT/PROSPECTUS") will, at the dates mailed to the stockholders of Company
and Parent, at the times of the stockholders meetings of Company (the "COMPANY
STOCKHOLDERS' MEETING") and of Parent (the "PARENT STOCKHOLDERS' MEETING" and
together with the Company Stockholders' Meeting, the "STOCKHOLDERS MEETING") in
connection with the transactions contemplated hereby and as of 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 are made, not
misleading. The Proxy Statement/Prospectus will comply as to form in all
material respects with the provisions of the Exchange Act and the rules and
regulations promulgated by the SEC thereunder. Notwithstanding the foregoing,
Company makes no representation or warranty with respect to any information
supplied by Parent or Merger Sub which is contained in any of the foregoing
documents.
2.13 RESTRICTIONS ON BUSINESS ACTIVITIES
There is no agreement, commitment, judgment, injunction, order or decree
binding upon Company or its subsidiaries or to which Company or any of its
subsidiaries is a party which has or could reasonably be expected to have the
effect of prohibiting or materially impairing any business practice of Company
or any of its subsidiaries, any acquisition of property by Company or any of its
subsidiaries or the conduct of business by Company or any of its subsidiaries as
currently conducted.
2.14 TITLE TO PROPERTY
Neither Company nor any of its subsidiaries owns any material real property.
Company and each of its subsidiaries have good and defensible title to all of
their material properties and assets, free and clear of all liens, charges and
encumbrances except liens for taxes not yet due and payable and such liens or
other imperfections of title, if any, as do not materially detract from the
value of or materially interfere with the present use of the property affected
thereby; and all leases pursuant to which Company or any of its subsidiaries
lease from others material real or personal property are in good standing, valid
and effective in accordance with their respective terms, and there is not, under
any of such leases, any existing material default or event of default of Company
or any of its subsidiaries or, to Company's knowledge, any other party (or any
event which with notice or lapse of time, or both, would constitute a material
default and in respect of which Company or subsidiary has not taken adequate
steps to prevent such default from occurring). All the plants, structures and
equipment of Company and its subsidiaries, except such as may be under
construction, are in good operating condition and repair, in all material
respects.
2.15 TAXES
(a) DEFINITION OF TAXES. For the purposes of this Agreement, "TAX" or
"TAXES" refers to any and all federal, state, local and foreign taxes,
assessments and other governmental charges, duties, impositions and
liabilities relating to taxes, including taxes based upon or measured by
gross receipts, income, profits, sales, use and occupation, and value added,
ad valorem, transfer, franchise, withholding, payroll, recapture,
employment, excise and property taxes, together with all interest, penalties
and additions imposed with respect to such amounts and any obligations under
any agreements or arrangements with any other person with respect to such
amounts and including any liability for taxes of a predecessor or transferor
entity.
(b) TAX RETURNS AND AUDITS.
(i) Company and each of its subsidiaries have timely filed all
federal, state, local and foreign returns, estimates, information
statements and reports ("RETURNS") relating to Taxes required to be filed
by Company and each of its subsidiaries with any Tax authority, except
such Returns which are not, individually or in the aggregate, material to
Company. Company
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and each of its subsidiaries have paid all Taxes required to be paid,
except such Taxes which are not, individually or in the aggregate,
material to Company.
(ii) Company and each of its subsidiaries as of the Effective Time
will have withheld with respect to all employees, independent contractors
or other persons all federal and state income Taxes, Taxes pursuant to
the Federal Insurance Contribution Act, Taxes pursuant to the Federal
Unemployment Tax Act and other Taxes required to be withheld, except such
Taxes which are not, individually or in the aggregate, material to
Company.
(iii) Neither Company nor any of its subsidiaries has been delinquent
in the payment of any material Tax nor is there any material Tax
deficiency outstanding, proposed or assessed against Company or any of
its subsidiaries, nor has Company or any of its subsidiaries executed any
unexpired waiver of any statute of limitations on or extending the period
for the assessment or collection of any Tax.
(iv) No audit or other examination of any Return of Company or any of
its subsidiaries by any Tax authority is presently in progress, nor has
Company or any of its subsidiaries been notified of any request for such
an audit or other examination.
(v) No adjustment relating to any Returns filed by Company or any of
its subsidiaries has been proposed, formally or informally, by any Tax
authority to Company or any of its subsidiaries or any representative
thereof.
(vi) Neither Company nor any of its subsidiaries has any liability
for any material unpaid Taxes which has not been accrued for or reserved
on Company balance sheet dated September 30, 1999 in accordance with
GAAP, whether asserted or unasserted, contingent or otherwise, other than
any liability for unpaid Taxes that may have accrued since October 1,
1999 in connection with the operation of the business of Company and its
subsidiaries in the ordinary course. There are no liens with respect to
Taxes on any of the assets of Company, other than liens which are not,
individually or in the aggregate, material or customary liens for current
Taxes not yet due and payable.
(vii) There is no contract, agreement, plan or arrangement to which
Company or any of its subsidiaries is a party as of the date of this
Agreement, including but not limited to the provisions of this Agreement,
covering any employee or former employee of Company or any of its
subsidiaries that, individually or collectively, could reasonably be
expected to give rise to the payment of any amount that would not be
deductible pursuant to Sections 280G, 404 or 162(m) of the Code. There is
no contract, agreement, plan or arrangement to which Company or any of
its subsidiaries is a party or by which it is bound to compensate any
individual for excise taxes paid pursuant to Section 4999 of the Code.
(viii) Neither Company nor any of its subsidiaries has filed any
consent agreement under Section 341(f) of the Code or agreed to have
Section 341(f)(2) of the Code apply to any disposition of a subsection
(f) asset (as defined in Section 341(f)(4) of the Code) owned by Company
or any of its subsidiaries.
(ix) Neither Company nor any of its subsidiaries (A) has ever been a
member of a consolidated group other than a consolidated group of which
Company is the parent corporation or (B) is party to or has any
obligation under any tax-sharing, tax indemnity or tax allocation
agreement or arrangement.
(x) None of Company's or its subsidiaries' assets are tax exempt use
property within the meaning of Section 168(h) of the Code.
(xi) Neither Company nor any of its subsidiaries has distributed the
stock of any corporation in a transaction satisfying the requirements of
Section 355 of the Code since
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April 16, 1997. The stock of neither Company nor any of its subsidiaries
has been distributed in a transaction satisfying the requirements of
Section 355 of the Code since April 16, 1997.
(xii) Neither Company nor any of its subsidiaries owns any property,
the indirect transfer of which pursuant to this Agreement would give rise
to any documentary, stamp or other transfer Tax.
2.16 ENVIRONMENTAL MATTERS
(a) HAZARDOUS MATERIAL. Except as would not result in material
liability to Company or any of its subsidiaries, no underground storage
tanks and no amount of any substance that has been designated by any
Governmental Entity or by applicable federal, state or local law to be
radioactive, toxic, hazardous or otherwise a danger to health or the
environment, including, without limitation, PCBs, asbestos, petroleum,
urea-formaldehyde and all substances listed as hazardous substances pursuant
to the Comprehensive Environmental Response, Compensation, and Liability Act
of 1980, as amended, or defined as a hazardous waste pursuant to the United
States Resource Conservation and Recovery Act of 1976, as amended, and the
regulations promulgated pursuant to said laws, but excluding office and
janitorial supplies, (a "HAZARDOUS MATERIAL") are present, as a result of
the actions of Company or any of its subsidiaries or any affiliate of
Company, or, to Company's knowledge, as a result of any actions of any third
party or otherwise, in, on or under any property, including the land and the
improvements, ground water and surface water thereof, that Company or any of
its subsidiaries has at any time owned, operated, occupied or leased.
(b) HAZARDOUS MATERIALS ACTIVITIES. Except as would not result in a
material liability to Company (in any individual case or in the aggregate)
(i) neither Company nor any of its subsidiaries has transported, stored,
used, manufactured, disposed of, released or exposed its employees or others
to Hazardous Materials in violation of any law in effect on or before the
Closing Date, and (ii) neither Company nor any of its subsidiaries has
disposed of, transported, sold, used, released, exposed its employees or
others to or manufactured any product containing a Hazardous Material
(collectively "HAZARDOUS MATERIALS ACTIVITIES") in violation of any rule,
regulation, treaty or statute promulgated by any Governmental Entity in
effect prior to or as of the date hereof to prohibit, regulate or control
Hazardous Materials or any Hazardous Material Activity.
(c) PERMITS. Company and its subsidiaries currently hold all
environmental approvals, permits, licenses, clearances and consents (the
"COMPANY ENVIRONMENTAL PERMITS") necessary for the conduct of Company's and
its subsidiaries' Hazardous Material Activities and other businesses of
Company and its subsidiaries as such activities and businesses are currently
being conducted, except where the absence of such Company Environmental
Permits would not cause a Material Adverse Effect.
(d) ENVIRONMENTAL LIABILITIES. No action, proceeding, revocation
proceeding, amendment procedure, writ or injunction is pending, and to
Company's knowledge, no action, proceeding, revocation proceeding, amendment
procedure, writ or injunction has been threatened by any Governmental Entity
against Company or any of its subsidiaries in a writing delivered to Company
or any of its subsidiaries concerning any Company Environmental Permit,
Hazardous Material or any Hazardous Materials Activity of Company or any of
its subsidiaries. Company is not aware of any fact or circumstance which
could involve Company or any of its subsidiaries in any environmental
litigation or impose upon Company any material environmental liability.
2.17 BROKERS
Other than fees owed to Company's financial advisors, S.G. Cowen and Volpe
Brown Whelan & Co., as set forth in Section 2.17 to the Company Schedule,
Company has not incurred, nor will it incur, directly or indirectly, any
liability for brokerage or finders fees or agent's commissions or any similar
charges in connection with this Agreement or any transaction contemplated
hereby.
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2.18 INTELLECTUAL PROPERTY
For the purposes of this Agreement, the following terms have the following
definitions:
"INTELLECTUAL PROPERTY" shall mean any or all of the following and all
worldwide common law and statutory rights in, arising out of, or associated
therewith: (i) patents and applications therefor and all reissues,
divisions, renewals, extensions, provisionals, continuations and
continuations-in-part thereof ("PATENTS"); (ii) inventions (whether
patentable or not), invention disclosures, improvements, trade secrets,
proprietary information, know how, technology, technical data and customer
lists, and all documentation relating to any of the foregoing;
(iii) copyrights, copyrights registrations and applications therefor, and
all other rights corresponding thereto throughout the world; (iv) domain
names, uniform resource locators ("URLS") and other names and locators
associated with the Internet ("DOMAIN NAMES"); (v) industrial designs and
any registrations and applications therefor; (vi) trade names, logos, common
law trademarks and service marks, trademark and service mark registrations
and applications therefor; (vii) all databases and data collections and all
rights therein; (viii) all moral and economic rights of authors and
inventors, however denominated, and (ix) any similar or equivalent rights to
any of the foregoing (as applicable).
"COMPANY INTELLECTUAL PROPERTY" shall mean any Intellectual Property that is
owned by, or exclusively licensed to, Company and it subsidiaries.
"REGISTERED INTELLECTUAL PROPERTY" means all Intellectual Property that is
the subject of an application, certificate, filing, registration or other
document issued, filed with, or recorded by any private, state, government
or other legal authority.
"COMPANY REGISTERED INTELLECTUAL PROPERTY" means all of the Registered
Intellectual Property owned by, or filed in the name of, Company or any of
its subsidiaries.
(a) Section 2.18(a) of the Company Schedule is a complete and accurate
list of all Company Registered Intellectual Property and specifies, where
applicable, the jurisdictions in which each such item of Company Registered
Intellectual Property has been issued or registered and lists any
proceedings or actions before any court or tribunal (including the United
States Patent and Trademark Office (the "PTO") or equivalent authority
anywhere in the world) related to any of the Company Registered Intellectual
Property.
(b) Section 2.18(b) of the Company Schedule is a complete and accurate
list (by name and version number) of all products or service offerings of
Company or any of its subsidiaries ("COMPANY PRODUCTS") that have been
distributed or provided in the two (2) year period preceding the date hereof
or which Company or any of its subsidiaries currently intends to distribute
or provide in the future, including any products or service offerings under
development.
(c) No Company Intellectual Property or Company Product is subject to
any proceeding or outstanding decree, order, judgment, contract, license,
agreement, or stipulation restricting in any manner the use, transfer, or
licensing thereof by Company or any of its subsidiaries, or which may affect
the validity, use or enforceability of such Company Intellectual Property or
Company Product.
(d) Each material item of Company Registered Intellectual Property is
valid and subsisting, all necessary registration, maintenance and renewal
fees currently due in connection with such Company Registered Intellectual
Property have been made and all necessary documents, recordations and
certificates in connection with such Company Registered Intellectual
Property have been filed with the relevant patent, copyright, trademark or
other authorities in the United States or foreign jurisdictions, as the case
may be, for the purposes of maintaining such Company Registered Intellectual
Property.
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(e) Section 2.18(e) of the Company Schedule is a complete and accurate
list of all material actions that are required to be taken by Company within
ninety (90) days of the date hereof with respect to any of the foregoing
Registered Intellectual Property.
(f) Company owns and has good and exclusive title to, each material item
of Company Intellectual Property owned by it free and clear of any lien or
encumbrance (excluding non-exclusive licenses and related restrictions
granted in the ordinary course). Without limiting the foregoing:
(i) Company is the exclusive owner of all trademarks and trade names used in
connection with the operation or conduct of the business of Company and its
subsidiaries, including the sale, distribution or provision of any Company
Products by Company or its subsidiaries; (ii) Company owns exclusively, and
has good title to, all copyrighted works that are Company Products or which
Company or any of its subsidiaries otherwise purports to own; and (iii) to
the extent that any Patents would be infringed by any Company Products,
Company is the exclusive owner of such Patents.
(g) To the extent that any material technology, software or Intellectual
Property has been developed or created independently or jointly by a third
party for Company or any of its subsidiaries or is incorporated into any of
the Company Products, Company has a written agreement with such third party
with respect thereto and Company thereby either (i) has obtained ownership
of, and is the exclusive owner of, or (ii) has obtained a perpetual,
non-terminable license (sufficient for the conduct of its business as
currently conducted and as proposed to be conducted) to all such third
party's Intellectual Property in such work, material or invention by
operation of law or by valid assignment, to the fullest extent it is legally
possible to do so.
(h) Neither Company nor any of its subsidiaries has transferred
ownership of, or granted any exclusive license with respect to, any
Intellectual Property that is material Company Intellectual Property, to any
third party, or knowingly permitted Company's rights in such material
Company Intellectual Property to lapse or enter the public domain.
(i) Section 2.18(i) of the Company Schedule lists all material
contracts, licenses and agreements to which Company or any of its
subsidiaries is a party: (i) with respect to Company Intellectual Property
licensed or transferred to any third party (other than end-user licenses in
the ordinary course); or (ii) pursuant to which a third party has licensed
or transferred any material Intellectual Property to Company.
(j) All material contracts, licenses and agreements relating to either
(i) Company Intellectual Property or (ii) Intellectual Property of a third
party licensed to Company or any of its subsidiaries, are in full force and
effect. The consummation of the transactions contemplated by this Agreement
will neither violate nor result in the breach, modification, cancellation,
termination or suspension of such contracts, licenses and agreements. Each
of Company and its subsidiaries is in material compliance with, and has not
materially breached any term of any such contracts, licenses and agreements
and, to the knowledge of Company, all other parties to such contracts,
licenses and agreements are in compliance with, and have not materially
breached any term of, such contracts, licenses and agreements. Following the
Closing Date, the Surviving Corporation will be permitted to exercise all of
Company's rights under such contracts, licenses and agreements to the same
extent Company and its subsidiaries would have been able to had the
transactions contemplated by this Agreement not occurred and without the
payment of any additional amounts or consideration other than ongoing fees,
royalties or payments which Company would otherwise be required to pay.
Neither this Agreement nor the transactions contemplated by this Agreement,
including the assignment to Parent or Merger Sub by operation of law or
otherwise of any contracts or agreements to which Company is a party, will
result in (i) either Parent's or the Merger Sub's granting to any third
party any right to or with respect to any material Intellectual Property
right owned by, or licensed to, either of them, (ii) either the Parent's or
the Merger Sub's
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being bound by, or subject to, any non-compete or other material restriction
on the operation or scope of their respective businesses, or (iii) either
the Parent's or the Merger Sub's being obligated to pay any royalties or
other material amounts to any third party in excess of those payable by
Company prior to the Closing.
(k) The operation of the business of Company and its subsidiaries as
such business currently is conducted, including (i) Company's and its
subsidiaries' design, development, manufacture, distribution, reproduction,
marketing or sale of the products or services of Company and its
subsidiaries (including Company Products) and (ii) Company's use of any
product, device or process, has not, does not and, to its knowledge, will
not infringe or misappropriate the Intellectual Property of any third party
or constitute unfair competition or trade practices under the laws of any
jurisdiction.
(l) Neither Company nor any of its subsidiaries has received notice from
any third party that the operation of the business of Company or any of its
subsidiaries or any act, product or service of Company or any of its
subsidiaries, infringes or misappropriates the Intellectual Property of any
third party or constitutes unfair competition or trade practices under the
laws of any jurisdiction.
(m) To the knowledge of Company, no person has or is infringing or
misappropriating any Company Intellectual Property.
(n) Company and each of its subsidiaries has taken reasonable steps to
protect Company's and its subsidiaries' rights in Company's confidential
information and trade secrets that it wishes to protect or any trade secrets
or confidential information of third parties provided to Company or any of
its subsidiaries, and, without limiting the foregoing, each of Company and
its subsidiaries has and uses its best efforts to enforce a policy requiring
each employee and contractor to execute a proprietary
information/confidentiality agreement substantially in the form provided to
Parent and all current and former employees and contractors of Company and
any of its subsidiaries have executed such an agreement, except where the
failure to do so is not reasonably expected to be material to Company.
(o) All of the Company Products (i) will record, store, process,
calculate and present calendar dates falling on and after (and if
applicable, spans of time including) January 1, 2000, and will calculate any
information dependent on or relating to such dates in the same manner, and
with the same functionality, data integrity and performance, as the products
record, store, process, calculate and present calendar dates on or before
December 31, 1999, or calculate any information dependent on or relating to
such dates (collectively, "YEAR 2000 COMPLIANT"), (ii) will lose no
functionality with respect to the introduction of records containing dates
falling on or after January 1, 2000, and (iii) will, to the knowledge of
Company, be interoperable with other products used and distributed by Parent
that may reasonably deliver records to Company's or any of its subsidiaries'
products or receive records from Company's or any of its subsidiaries'
products, or interact with Company's or any of its subsidiaries' products.
Except as would not result in a Material Adverse Effect, all of Company's or
its subsidiaries' Information Technology (as defined below) is Year 2000
Compliant, and will not cause an interruption in the ongoing operations of
Company's or any of its subsidiaries' business on or after January 1, 2000.
For purposes of the foregoing, the term "INFORMATION TECHNOLOGY" shall mean
and include all software, hardware, firmware, telecommunications systems,
network systems, embedded systems and other systems, components and/or
services (other than general utility services including gas, electric,
telephone and postal) that are owned or used by Company or any of its
subsidiaries in the conduct of their business, or purchased by Company or
any of its subsidiaries from third-party suppliers.
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2.19 AGREEMENTS, CONTRACTS AND COMMITMENTS
Neither Company nor any of its subsidiaries is a party to or is bound by:
(a) any employment or consulting agreement, contract or commitment with
any officer, director, Company employee or member of Company's Board of
Directors, other than those that are terminable by Company or any of its
subsidiaries on no more than thirty (30) days' notice without liability or
financial obligation to Company;
(b) any agreement or plan, including, without limitation, any stock
option plan, stock appreciation right plan or stock purchase plan, any of
the benefits of which will be increased, or the vesting of benefits of which
will be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement or the value of any of the benefits of which
will be calculated on the basis of any of the transactions contemplated by
this Agreement;
(c) any material agreement of indemnification or any guaranty other than
any agreement of indemnification entered into in connection with the sale or
license of software products in the ordinary course of business;
(d) any material agreement, contract or commitment containing any
covenant limiting in any respect the right of Company or any of its
subsidiaries to engage in any line of business or to compete with any person
or granting any exclusive distribution rights;
(e) any agreement, contract or commitment currently in force relating to
the disposition or acquisition by Company or any of its subsidiaries after
the date of this Agreement of a material amount of assets not in the
ordinary course of business or pursuant to which Company or any of its
subsidiaries has any material ownership interest in any corporation,
partnership, joint venture or other business enterprise other than Company's
subsidiaries;
(f) any dealer, distributor, joint marketing or development agreement
currently in force under which Company or any of its subsidiaries have
continuing material obligations to jointly market any product, technology or
service or any material agreement pursuant to which Company or any of its
subsidiaries have continuing material obligations to jointly develop any
intellectual property that will not be owned, in whole or in part, by
Company or any of its subsidiaries;
(g) any agreement, contract or commitment currently in force to provide
source code to any third party for any product or technology that is
material to Company and its subsidiaries taken as a whole;
(h) any agreement, contract or commitment currently in force to license
any third party to manufacture or reproduce any Company product, service or
technology or any agreement, contract or commitment currently in force to
sell or distribute any Company products, service or technology except
agreements with distributors or sales representative in the normal course of
business cancelable without penalty upon notice of ninety (90) days or less
and substantially in the form previously provided to Parent;
(i) any mortgages, indentures, guarantees, loans or credit agreements,
security agreements or other agreements or instruments relating to the
borrowing of money or extension of credit;
(j) any material settlement agreement entered into within five
(5) years prior to the date of this Agreement; or
(k) any other agreement, contract or commitment that has a value of
$500,000 or more individually.
Neither Company nor any of its subsidiaries, nor to Company's knowledge any
other party to a Company Contract (as defined below), is in breach, violation or
default under, and neither Company
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nor any of its subsidiaries has received written notice that it has breached,
violated or defaulted under, any of the material terms or conditions of any of
the agreements, contracts or commitments to which Company or any of its
subsidiaries is a party or by which it is bound that are required to be
disclosed in the Company Schedule (any such agreement, contract or commitment, a
"COMPANY CONTRACT") in such a manner as would permit any other party to cancel
or terminate any such Company Contract, or would permit any other party to seek
material damages or other remedies (for any or all of such breaches, violations
or defaults, in the aggregate).
2.20 COMPANY RIGHTS PLAN
The Company Rights Plan has been amended to (i) render the Company Rights
Plan inapplicable to the Merger and the other transactions contemplated by this
Agreement, the Stock Option Agreement, the Company Affiliate Agreements and the
Company Voting Agreements, (ii) ensure that (x) neither Parent nor Merger Sub,
nor any of their affiliates shall be deemed to have become an Acquiring Person
(as defined in the Company Rights Plan) pursuant to the Company Rights Plan
solely by virtue of the execution of this Agreement, the Stock Option Agreement,
the Company Affiliate Agreements and the Company Voting Agreements of the
consummation of the transactions contemplated hereby or thereby and (y) a
Distribution Date, a Shares Acquisition Date (as such terms are defined in the
Company Rights Plan) or similar event does not occur by reason of the execution
of this Agreement, the Company Stock Option Agreement, the Company Affiliate
Agreements and the Company Voting Agreements, the consummation of the Merger, or
the consummation of the other transactions, contemplated hereby and thereby,
(iii) provide that the exercise of rights under the Company Rights Plan shall
expire immediately prior to the Effective Time and (iv) that such amendment may
not be further amended by Company without the prior consent of Parent in its
sole discretion.
2.21 INSURANCE
Company maintains insurance policies and fidelity bonds covering the assets,
business, equipment, properties, operations, employees, officers and directors
of Company and its subsidiaries (collectively, the "INSURANCE POLICIES") which
are of the type and in amounts customarily carried by persons conducting
businesses similar to those of Company and its subsidiaries. There is no
material claim by Company or any of its subsidiaries pending under any of the
material Insurance Policies as to which coverage has been questioned, denied or
disputed by the underwriters of such policies or bonds.
2.22 OPINION OF FINANCIAL ADVISOR
Company has been advised in writing by its financial advisor, S.G. Cowen
that in its opinion, as of the date of this Agreement, the Exchange Ratio is
fair to the stockholders of Company from a financial point of view.
2.23 BOARD APPROVAL
The Board of Directors of Company has, as of the date of this Agreement
unanimously (i) approved, subject to stockholder approval, this Agreement, the
Stock Option Agreement and the transactions contemplated hereby and thereby,
(ii) determined that the Merger is in the best interests of the stockholders of
Company and is on terms that are fair to such stockholders and
(iii) recommended that the stockholders of Company approve this Agreement and
the Merger.
2.24 VOTE REQUIRED
The affirmative vote of a majority of the votes that holders of the
outstanding shares of Company Common Stock are entitled to vote with respect to
the Merger is the only vote of the holders of any class or series of Company's
capital stock necessary to approve this Agreement and the transactions
contemplated hereby.
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2.25 POOLING OF INTERESTS
To its knowledge, and based on consultation with its independent
accountants, neither Company nor any of its directors, officers or affiliates
has taken any action which would interfere with (i) Parent's ability to account
for the Merger as a pooling of interests or (ii) Parent's, Surviving
Corporation's or Company's ability to continue to account for as a pooling of
interests any past acquisition by Company currently accounted for as a pooling
of interests.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub jointly and severally represent and warrant to
Company, subject to such exceptions as are specifically disclosed in writing in
the disclosure letter and referencing a specific representation supplied by
Parent to Company dated as of the date hereof and certified by a duly authorized
officer of Parent (the "PARENT SCHEDULE"), as follows:
3.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES
Each of Parent 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 to own, lease
and operate its assets and properties and to carry on its business as it is now
being conducted, except where the failure to do so would not, individually or in
the aggregate, have a Material Adverse Effect on Parent. Each of Parent and its
subsidiaries is in possession of all Approvals necessary to own, lease and
operate the properties it purports to own, operate or lease and to carry on its
business as it is now being conducted, except where the failure to have such
Approvals would not, individually or in the aggregate, have a Material Adverse
Effect on Parent. Each of Parent and its subsidiaries is duly qualified or
licensed as a foreign corporation to do business, and is in good standing, in
each jurisdiction where the character of the properties owned, leased or
operated by it or the nature of its activities makes such qualification or
licensing necessary, except for such failures to be so duly qualified or
licensed and in good standing that would not, either individually or in the
aggregate, have a Material Adverse Effect on Parent.
3.2 CERTIFICATE OF INCORPORATION AND BYLAWS
Parent has previously furnished to Company a complete and correct copy of
its Certificate of Incorporation and Bylaws as amended to date (together, the
"PARENT CHARTER DOCUMENTS"). Such Parent Charter Documents and equivalent
organizational documents of each of its subsidiaries are in full force and
effect. Parent is not in violation of any of the provisions of the Parent
Charter Documents, and no subsidiary of Parent is in violation of any of its
equivalent organizational documents.
3.3 CAPITALIZATION
The authorized capital stock of Parent consists of (i) 500,000,000 shares of
Parent Common Stock, par value $0.01 per share, and (ii) 5,000,000 shares of
Preferred Stock, par value $0.01 per share ("PARENT PREFERRED STOCK"), 440,000
of which have been designated as Series A-1 Preferred Stock and 80,000 of which
have been designated as Series B Preferred Stock. At the close of business on
October 31, 1999, (i) 201,346,149 shares of Parent Common Stock were issued and
outstanding, (ii) 253,365 shares of Parent Common Stock were held in treasury by
Parent or by subsidiaries of Parent, (iii) 1,463,379 shares of Parent Common
Stock were reserved for future issuance pursuant to Parent's employee stock
purchase plan, (iv) 7,237,949 shares of Parent Common Stock were reserved for
issuance upon the exercise of outstanding options ("PARENT OPTIONS") to purchase
Parent Common Stock. As of the date hereof, no shares of Series A-1 Preferred
Stock and 7,000 shares of Series B Preferred Stock were issued or outstanding. A
warrant to purchase an aggregate of 1,938,947 shares of
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Parent Common Stock, associated with the exercise of Series B Preferred Stock,
were outstanding as of the date hereof. The authorized capital stock of Merger
Sub consists of 1,000 shares of common stock, par value $0.001 per share, all of
which, as of the date hereof, are issued and outstanding. All of the outstanding
shares of Parent's and Merger Sub's respective capital stock have been duly
authorized and validly issued and are fully paid and nonassessable. All shares
of Parent Common Stock subject to issuance as aforesaid, upon issuance on the
terms and conditions specified in the instruments pursuant to which they are
issuable, shall, and the shares of Parent Common Stock to be issued pursuant to
the Merger will be, duly authorized, validly issued, fully paid and
nonassessable. All of the outstanding shares of capital stock (other than
directors' qualifying shares) of each of Parent's subsidiaries is duly
authorized, validly issued, fully paid and nonassessable and all such shares
(other than directors' qualifying shares) are owned by Parent or another
subsidiary free and clear of all security interests, liens, claims, pledges,
agreements, limitations in Parent's voting rights, charges or other encumbrances
of any nature whatsoever.
3.4 AUTHORITY RELATIVE TO THIS AGREEMENT
Each of Parent and Merger Sub has all necessary corporate power and
authority to execute and deliver this Agreement and the Stock Option Agreement,
and to perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of this
Agreement and the Stock Option Agreement by Parent and Merger Sub and the
consummation by Parent and Merger Sub of the transactions contemplated hereby
and thereby have been duly and validly authorized by all necessary corporate
action on the part of Parent and Merger Sub, and no other corporate proceedings
on the part of Parent or Merger Sub are necessary to authorize this Agreement
and the Stock Option Agreement, or to consummate the transactions so
contemplated. This Agreement and the Stock Option Agreement have been duly and
validly executed and delivered by Parent and Merger Sub and, assuming the due
authorization, execution and delivery by Company, constitute legal and binding
obligations of Parent and Merger Sub, enforceable against Parent and Merger Sub
in accordance with their respective terms.
3.5 NO CONFLICT; REQUIRED FILINGS AND CONSENTS
(a) The execution and delivery of this Agreement by Parent and Merger
Sub and the Stock Option Agreement by Parent do not, and the performance of
this Agreement by Parent and Merger Sub and the Stock Option Agreement by
Parent shall not, (i) conflict with or violate the Certificate of
Incorporation, Bylaws or equivalent organizational documents of Parent or
any of its subsidiaries, (ii) subject to compliance with the requirements
set forth in Section 3.5(b) below, conflict with or violate any law, rule,
regulation, order, judgment or decree applicable to Parent or any of its
subsidiaries or by which it or their respective properties are bound or
affected, or (iii) result in any breach of or constitute a default (or an
event that with notice or lapse of time or both would become a default)
under, or impair Parent's or any such subsidiary's rights or alter the
rights or obligations of any third party under, or give to others any rights
of termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any of the properties or assets of
Parent or any of its subsidiaries pursuant to, any material note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise
or other instrument or obligation to which Parent or any of its subsidiaries
is a party or by which Parent or any of its subsidiaries or its or any of
their respective properties are bound or affected, except to the extent such
conflict, violation, breach, default, impairment or other effect could not
in the case of clauses (ii) or (iii) individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on Parent.
(b) The execution and delivery of this Agreement by Parent and Merger
Sub and the Stock Option Agreement by Parent do not, and the performance of
this Agreement by Parent and Merger Sub shall not, require any consent,
approval, authorization or permit of, or filing with or
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notification to, any Governmental Entity except (i) for applicable
requirements, if any, of the Securities Act, the Exchange Act, Blue Sky
Laws, the pre-merger notification requirements of the HSR Act and of foreign
governmental entities and the rules and regulations thereunder, the rules
and regulations of Nasdaq, and the filing and recordation of the Certificate
of Merger as required by Delaware Law and (ii) where the failure to obtain
such consents, approvals, authorizations or permits, or to make such filings
or notifications, (x) would not prevent consummation of the Merger or
otherwise prevent Parent or Merger Sub from performing their respective
obligations under this Agreement or (y) could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on
Parent.
3.6 SEC FILINGS; FINANCIAL STATEMENTS
(a) Parent has made available to Company a correct and complete copy of
each report, schedule, registration statement and definitive proxy statement
filed by Parent with the SEC on or after September 30, 1997 (the "PARENT SEC
REPORTS"), which are all the forms, reports and documents required to be
filed by Parent with the SEC since September 30, 1997. The Parent SEC
Reports (A) were prepared in accordance with the requirements of the
Securities Act or the Exchange Act, as the case may be, and (B) did not at
the time they were filed (or if amended or superseded by a filing prior to
the date of this Agreement, then on the date of such filing) 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 light of the circumstances under which they were made, not
misleading. None of Parent's subsidiaries is required to file any reports or
other documents with the SEC.
(b) Each set of consolidated financial statements (including, in each
case, any related notes thereto) contained in the Parent SEC Reports was
prepared in accordance with GAAP applied on a consistent basis throughout
the periods involved (except as may be indicated in the notes thereto or, in
the case of unaudited statements, do not contain footnotes as permitted by
Form 10-Q of the Exchange Act) and each fairly presents in all material
respects the consolidated financial position of Parent and its subsidiaries
at the respective dates thereof and the consolidated results of its
operations and cash flows for the periods indicated, except that the
unaudited interim financial statements were or are subject to normal
adjustments which were not or are not expected to be material in amount.
(c) Since the date of the balance sheet included in Parent's report on
Form 10-Q filed on November 15, 1999, and until the date hereof, there has
not occurred any Material Adverse Effect on Parent.
3.7 REGISTRATION STATEMENT; PROXY STATEMENT
None of the information supplied or to be supplied by Parent for inclusion
or incorporation by reference in (i) the S-4 will, at the time the S-4 becomes
effective under the Securities Act, 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 are made, not misleading; and (ii) the Proxy
Statement/Prospectus will, at the dates mailed to the stockholders of Company
and Parent, at the times of the Stockholders' Meetings and as of 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 are made, not
misleading. The S-4 will comply as to form in all material respects with the
provisions of the Securities Act and the rules and regulations promulgated by
the SEC thereunder. Notwithstanding the foregoing, Parent makes no
representation or warranty with respect to any information supplied by Company
which is contained in any of the foregoing documents.
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3.8 COMPLIANCE; PERMITS
(a) Neither Parent nor any of its subsidiaries is in conflict with, or
in default or violation of, (i) any law, rule, regulation, order, judgment
or decree applicable to Parent or any of its subsidiaries or by which its or
any of their respective properties is bound or affected, or (ii) any
material note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which Parent
or any of its subsidiaries is a party or by which Parent or any of its
subsidiaries or its or any of their respective properties is bound or
affected, except for any conflicts, defaults or violations that
(individually or in the aggregate) would not cause Parent to lose any
material benefit or incur any material liability. Except as disclosed in the
Parent SEC Reports, no investigation or review by any governmental or
regulatory body or authority is pending or, to the knowledge of Parent,
threatened against Parent or its subsidiaries, nor has any governmental or
regulatory body or authority indicated to Parent an intention to conduct the
same, other than, in each such case, those the outcome of which could not,
individually or in the aggregate, reasonably be expected to have the effect
of prohibiting or materially impairing any business practice of Parent or
any of its subsidiaries, any acquisition of material property by Parent or
any of its subsidiaries or the conduct of business by Parent or any of its
subsidiaries.
(b) Parent and its subsidiaries hold all permits, licenses, variances,
exemptions, orders and approvals from governmental authorities which are
material to operation of the business of Parent and its subsidiaries taken
as a whole (collectively, the "PARENT PERMITS"). Parent and its subsidiaries
are in compliance in all material respects with the terms of the Parent
Permits.
3.9 NO UNDISCLOSED LIABILITIES
Neither Parent nor any of its subsidiaries has any liabilities (absolute,
accrued, contingent or otherwise) of a nature required to be disclosed on a
balance sheet or in the related notes to the consolidated financial statements
prepared in accordance with GAAP which are, individually or in the aggregate,
material to the business, results of operations or financial condition of Parent
and its subsidiaries taken as a whole, except (i) liabilities provided for in
Parent's balance sheet as of September 30, 1999 or (ii) liabilities incurred
since September 30, 1999 in the ordinary course of business, none of which is
material to the business, results of operations or financial condition of Parent
and its subsidiaries, taken as a whole.
3.10 ABSENCE OF LITIGATION
Except as disclosed in Parent SEC Reports, there are no claims, actions,
suits or proceedings pending or, to the knowledge of Parent, threatened (or, to
the knowledge of Parent, any governmental or regulatory investigation pending or
threatened) against Parent or any of its subsidiaries or any properties or
rights of Parent or any of its subsidiaries, before any court, arbitrator or
administrative, governmental or regulatory authority or body, domestic or
foreign.
3.11 BROKERS
Other than fees owed to Parent's financial advisor, Merrill Lynch & Co.,
Parent has not incurred, nor will it incur, directly or indirectly, any
liability for brokerage or finders fees or agent's commissions or any similar
charges in connection with this Agreement or any transaction contemplated
hereby.
3.12 OPINION OF FINANCIAL ADVISOR
Parent has been advised in writing by its financial advisor, Merrill
Lynch & Co., that in its opinion, as of the date of this Agreement, the Exchange
Ratio is fair, from a financial point of view, to Parent.
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3.13 BOARD APPROVAL
The Board of Directors of Parent has, as of the date of this Agreement
unanimously (i) approved, subject to stockholder approval, this Agreement, the
Stock Option Agreement and the transactions contemplated hereby and thereby,
(ii) determined that the Merger is in the best interests of the stockholders of
Parent and is on terms that are fair to such stockholders and (iii) recommended
that the stockholders of Parent approve the issuance of Parent Common Stock in
connection with the Merger.
3.14 VOTE REQUIRED
The affirmative vote of a majority of the votes that holders of the
outstanding shares of Parent Common Stock are entitled to vote with respect to
the Merger is the only vote of the holders of any class or series of Parent's
capital stock necessary to approve the issuance of Parent Common Stock in
connection with the Merger.
3.15 POOLING OF INTERESTS
To its knowledge, and based on consultation with its independent
accountants, neither Parent nor any of its directors, officers or affiliates has
taken any action which would interfere with Parent's ability to account for the
Merger as a pooling of interests.
3.16 INTERIM OPERATIONS OF SUB
Merger Sub was formed solely for the purpose of engaging in the transactions
contemplated hereby, has engaged in no other business activities and has
conducted its operations only as contemplated hereby.
ARTICLE IV
CONDUCT PRIOR TO THE EFFECTIVE TIME
4.1 CONDUCT OF BUSINESS BY COMPANY
During the period from the date of this Agreement and continuing until the
earlier of the termination of this Agreement pursuant to its terms or the
Effective Time, Company and each of its subsidiaries shall, except to the extent
that Parent shall otherwise consent in writing, carry on its business, in the
usual, regular and ordinary course, in substantially the same manner as
heretofore conducted and in compliance with all applicable laws and regulations,
pay its debts and taxes when due subject to good faith disputes over such debts
or taxes, pay or perform other material obligations when due, and use its
commercially reasonable efforts consistent with past practices and policies to
(i) preserve intact its present business organization, (ii) keep available the
services of its present officers and employees and (iii) preserve its
relationships with customers, suppliers, distributors, licensors, licensees, and
others with which it has significant business dealings.
In addition, except as permitted by the terms of this Agreement, and except
as provided in Section 4.1 of the Company Schedule, without the prior written
consent of Parent, during the period from the date of this Agreement and
continuing until the earlier of the termination of this Agreement pursuant to
its terms or the Effective Time, Company shall not do any of the following and
shall not permit its subsidiaries to do any of the following:
(a) Other than pursuant to terms of agreements or policies in existence
as of the date of this Agreement as they apply to the transactions
contemplated by this Agreement, waive any stock repurchase rights,
accelerate, amend or change the period of exercisability of options or
restricted stock, or reprice options granted under any employee, consultant,
director or other stock plans or authorize cash payments in exchange for any
options granted under any of such plans;
A-27
(b) Grant any severance or termination pay to any officer or employee
except pursuant to written agreements outstanding, or policies existing, on
the date hereof and as previously disclosed in writing or made available to
Parent, or adopt any new severance plan, or amend or modify or alter in any
manner any severance plan, agreement or arrangement existing on the date
hereof;
(c) Transfer or license to any person or entity or otherwise extend,
amend or modify any rights to the Company Intellectual Property, or enter
into grants to transfer or license to any person future patent rights, other
than in the ordinary course of business consistent with past practices,
provided that in no event shall Company license on an exclusive basis or
sell any Company Intellectual Property;
(d) Declare, set aside or pay any dividends on or make any other
distributions (whether in cash, stock, equity securities or property) in
respect of any capital stock or split, combine or reclassify any capital
stock or issue or authorize the issuance of any other securities in respect
of, in lieu of or in substitution for any capital stock;
(e) Except as set forth in Section 4.1(h) of the Company Schedule with
respect to mergers among Company and any of its direct or indirect
subsidiaries, acquire or purchase, redeem or otherwise acquire, directly or
indirectly, any shares of capital stock of Company or its subsidiaries,
except repurchases of unvested shares at cost in connection with the
termination of the employment relationship with any employee pursuant to
stock option or purchase agreements in effect on the date hereof;
(f) Issue, deliver, sell, authorize, pledge or otherwise encumber or
propose any of the foregoing with respect to, any shares of capital stock or
any securities convertible into shares of capital stock, or subscriptions,
rights, warrants or options to acquire any shares of capital stock or any
securities convertible into shares of capital stock, or enter into other
agreements or commitments of any character obligating it to issue any such
shares or convertible securities, other than (x) the issuance delivery
and/or sale of (i) shares of Company Common Stock pursuant to the exercise
of the Warrants or stock options outstanding as of the date of this
Agreement, and (ii) shares of Company Common Stock issuable to participants
in the ESPP consistent with the terms thereof and (y) the granting of stock
options to employees (excluding directors and executive officers), in the
ordinary course of business and consistent with past practices, in an amount
not to exceed options to purchase (and the issuance of Company Common Stock
upon exercise thereof) 600,000 shares in the aggregate;
(g) Cause, permit or propose any amendments to the Company Charter
Documents (or similar governing instruments of any of its subsidiaries);
(h) Except as set forth in Section 4.1(h) of the Company Schedule with
respect to mergers among Company and any of its direct or indirect
subsidiaries, acquire or agree to acquire by merging or consolidating with,
or by purchasing any equity interest in or a portion of the assets of, or by
any other manner, any business or any corporation, partnership, association
or other business organization or division thereof, or otherwise acquire or
agree to enter into any joint ventures, strategic partnerships or alliances;
(i) Sell, lease, license, encumber or otherwise dispose of any
properties or assets except sales of inventory in the ordinary course of
business consistent with past practice, except for the sale, lease or
disposition (other than through licensing) of property or assets which are
not material, individually or in the aggregate, to the business of Company
and its subsidiaries;
(j) Incur any indebtedness for borrowed money or guarantee any such
indebtedness of another person, issue or sell any debt securities or
options, warrants, calls or other rights to acquire any debt securities of
Company, enter into any "keep well" or other agreement to maintain any
financial statement condition or enter into any arrangement having the
economic
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effect of any of the foregoing other than in connection with the financing
of ordinary course trade payables consistent with past practice;
(k) Adopt or amend any employee benefit plan, policy or arrangement, any
employee stock purchase or employee stock option plan, or enter into any
employment contract or collective bargaining agreement (other than offer
letters and letter agreements entered into in the ordinary course of
business consistent with past practice with employees who are terminable "at
will"), pay any special bonus or special remuneration to any director or
employee, or increase the salaries or wage rates or fringe benefits
(including rights to severance or indemnification) of its directors,
officers, employees or consultants;
(l) (i) pay, discharge, settle or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), or litigation (whether or not commenced prior to the date of
this Agreement) other than the payment, discharge, settlement or
satisfaction, in the ordinary course of business consistent with past
practice or in accordance with their terms, or liabilities recognized or
disclosed in the most recent consolidated financial statements (or the notes
thereto) of Company included in the Company SEC Reports or incurred since
the date of such financial statements, or (ii) waive the benefits of, agree
to modify in any manner, terminate, release any person from or knowingly
fail to enforce any confidentiality or similar agreement to which Company or
any of its subsidiaries is a party or of which Company or any of its
subsidiaries is a beneficiary;
(m) Make any individual or series of related payments outside of the
ordinary course of business in excess of $100,000;
(n) Except as set forth in Section 4.1(h) of the Company Schedule or
except in the ordinary course of business consistent with past practice,
modify, amend or terminate any material contract or agreement, to which
Company or any subsidiary thereof is a party or waive, delay the exercise
of, release or assign any material rights or claims thereunder;
(o) Enter into, renew or materially modify any contracts, agreements, or
obligations relating to the distribution, sale, license or marketing by
third parties of Company's products or products licensed by Company other
than new (or material modifications of existing) non-exclusive contracts,
agreements or obligations entered into in the usual, regular and ordinary
course, in substantially the same manner as heretofor conducted, and
renewals of existing nonexclusive contracts, agreements or obligations;
(p) Except as required by GAAP, revalue any of its assets or make any
change in accounting methods, principles or practices;
(q) Incur or enter into any agreement, contract or commitment requiring
Company or any of its subsidiaries to pay in excess of $250,000;
(r) Engage in any action that could reasonably be expected to (i) cause
the Merger to fail to qualify as a "reorganization" under Section 368(a) of
the Code or (ii) interfere with Parent's ability to account for the Merger
as a pooling of interests, whether or not (in each case) otherwise permitted
by the provisions of this Article IV;
(s) Settle any litigation;
(t) Make any tax election that, individually or in the aggregate, is
reasonably likely to adversely affect in any material respect the tax
liability or tax attributes of Company or any of its subsidiaries or settle
or compromise any material income tax liability;
(u) Agree in writing or otherwise to take any of the actions described
in Section 4.1(a) through (t) above.
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4.2 CONDUCT OF BUSINESS BY PARENT
During the period from the date of this Agreement and continuing until the
earlier of the termination of this Agreement pursuant to its terms or the
Effective Time, except as permitted by the terms of this Agreement and the Stock
Option Agreement and except as provided in Section 4.2 of the Parent Schedule,
without the prior written consent of Company, Parent shall not
(a) Engage in any action that could reasonably be expected to (i) cause
the Merger to fail to qualify as a "reorganization" under Section 368(a) of
the Code or (ii) interfere with Parent's ability to account for the Merger
as a pooling of interests;
(b) Declare, set aside or pay any cash dividends on or make any other
cash distributions in respect of any capital stock; or
(c) Take any action that would reasonably be likely to materially delay
the Merger.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 PROXY STATEMENT/PROSPECTUS; REGISTRATION STATEMENT; OTHER FILINGS;
BOARD RECOMMENDATIONS
(a) As promptly as practicable after the execution of this Agreement,
Company and Parent will prepare, and file with the SEC, the Proxy
Statement/Prospectus, and Parent will prepare and file with the SEC the S-4
in which the Proxy Statement/Prospectus will be included as a prospectus.
Each of Parent and Company shall provide promptly to the other such
information concerning its business and financial statements and affairs as,
in the reasonable judgment of the providing party or its counsel, may be
required or appropriate for inclusion in the Proxy Statement/Prospectus and
the S-4, or in any amendments or supplements thereto, and to cause its
counsel and auditors to cooperate with the other's counsel and auditors in
the preparation of the Proxy Statement/Prospectus and the S-4. Each of
Company and Parent will respond to any comments of the SEC, and will use its
respective commercially reasonable efforts to have the S-4 declared
effective under the Securities Act as promptly as practicable after such
filing, and Parent and Company will cause the Proxy Statement/Prospectus to
be mailed to its respective stockholders at the earliest practicable time
after the S-4 is declared effective by the SEC. As promptly as practicable
after the date of this Agreement, each of Company and Parent will prepare
and file any other filings required to be filed by it under the Exchange
Act, the Securities Act or any other Federal, foreign or Blue Sky or related
laws relating to the Merger and the transactions contemplated by this
Agreement (the "OTHER FILINGS"). Each of Company and Parent will notify the
other promptly upon the receipt of any comments from the SEC or its staff or
any other government officials and of any request by the SEC or its staff or
any other government officials for amendments or supplements to the S-4, the
Proxy Statement/Prospectus or any Other Filing or for additional information
and will supply the other with copies of all correspondence between such
party or any of its representatives, on the one hand, and the SEC or its
staff or any other government officials, on the other hand, with respect to
the S-4, the Proxy Statement/Prospectus, the Merger or any Other Filing.
Each of Company and Parent will cause all documents that it is responsible
for filing with the SEC or other regulatory authorities under this
Section 5.1(a) to comply in all material respects with all applicable
requirements of law and the rules and regulations promulgated thereunder.
Whenever any event occurs which is required to be set forth in an amendment
or supplement to the Proxy Statement/Prospectus, the S-4 or any Other
Filing, Company or Parent, as the case may be, will promptly inform the
other of such occurrence and cooperate in filing with the SEC or its staff
or any other government officials, and/or mailing to stockholders of
Company, such amendment or supplement.
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(b) The Proxy Statement/Prospectus will include the unanimous
recommendations of (i) the Board of Directors of Parent in favor of the
issuance of the shares of Parent Common Stock in connection with the Merger
and (ii) subject to Section 5.2, the Board of Directors of Company in favor
of adoption and approval of this Agreement and approval of the Merger.
5.2 MEETING OF COMPANY STOCKHOLDERS
(a) Promptly after the date hereof, Company will take all action
necessary in accordance with Delaware Law and the Company Charter Documents
to convene the Company Stockholders' Meeting to be held as promptly as
practicable, and in any event (to the extent permissible under applicable
law) within 45 days after the declaration of effectiveness of the S-4, for
the purpose of voting upon this Agreement and the Merger. Subject to
Section 5.2(c), Company will use its commercially reasonable efforts to
solicit from its stockholders proxies in favor of the adoption and approval
of this Agreement and the approval of the Merger and will take all other
action necessary or advisable to secure the vote or consent of its
stockholders required by the rules of Nasdaq or Delaware Law to obtain such
approvals. Notwithstanding anything to the contrary contained in this
Agreement, Company may adjourn or postpone the Company Stockholders' Meeting
to the extent necessary to ensure that any necessary supplement or amendment
to the Prospectus/Proxy Statement is provided to Company's stockholders in
advance of a vote on the Merger and this Agreement or, if as of the time for
which the Company Stockholders' Meeting is originally scheduled (as set
forth in the Prospectus/Proxy Statement) there are insufficient shares of
Company Common Stock represented (either in person or by proxy) to
constitute a quorum necessary to conduct the business of the Company
Stockholders' Meeting. Company shall ensure that the Company Stockholders'
Meeting is called, noticed, convened and conducted, and that all proxies
solicited by Company in connection with the Company Stockholders' Meeting
are solicited, in compliance with Delaware Law, the Company Charter
Documents, the rules of Nasdaq and all other applicable legal requirements.
Company's obligation to call, give notice of, convene and conduct the
Company Stockholders' Meeting in accordance with this Section 5.2(a) shall
not be limited to or otherwise affected by the commencement, disclosure,
announcement or submission to Company of any Acquisition Proposal.
(b) Subject to Section 5.2(c): (i) the Board of Directors of Company
shall unanimously recommend that Company's stockholders vote in favor of and
adopt and approve this Agreement and the Merger at the Company Stockholders'
Meeting; (ii) the Prospectus/Proxy Statement shall include a statement to
the effect that the Board of Directors of Company has unanimously
recommended that Company's stockholders vote in favor of and adopt and
approve this Agreement and the Merger at the Company Stockholders' Meeting;
and (iii) neither the Board of Directors of Company nor any committee
thereof shall withdraw, amend or modify, or propose or resolve to withdraw,
amend or modify in a manner adverse to Parent, the unanimous recommendation
of the Board of Directors of Company that Company's stockholders vote in
favor of and adopt and approve this Agreement and the Merger. For purposes
of this Agreement, said recommendation of the Board of Directors shall be
deemed to have been modified in a manner adverse to Parent if said
recommendation shall no longer be unanimous.
(c) Nothing in this Agreement shall prevent the Board of Directors of
Company from withholding, withdrawing, amending or modifying its unanimous
recommendation in favor of the Merger if (i) a Superior Offer (as defined
below) is made to Company and is not withdrawn, (ii) neither Company nor any
of its representatives shall have violated any of the restrictions set forth
in Section 5.4, and (iii) the Board of Directors of Company concludes in
good faith, after consultation with its outside counsel, that, in light of
such Superior Offer, the withholding, withdrawal, amendment or modification
of such recommendation is required in order for the Board of Directors of
Company to comply with its fiduciary obligations to Company's stockholders
under applicable law. Nothing contained in this Section 5.2 shall limit
Company's obligation to
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convene and conduct the Company Stockholders' Meeting (regardless of whether
the unanimous recommendation of the Board of Directors of Company shall have
been withdrawn, amended or modified). For purposes of this Agreement,
"SUPERIOR OFFER" shall mean an unsolicited, bona fide written offer made by
a third party to consummate any of the following transactions: (i) a merger,
consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving Company pursuant to which the
stockholders of Company immediately preceding such transaction hold less
than 51% of the equity interest in the surviving or resulting entity of such
transaction; (ii) a sale or other disposition by Company of assets
(excluding inventory and used equipment sold in the ordinary course of
business) representing in excess of 51% of the fair market value of
Company's business immediately prior to such sale, or (iii) the acquisition
by any person or group (including by way of a tender offer or an exchange
offer or issuance by Company), directly or indirectly, of beneficial
ownership or a right to acquire beneficial ownership of shares representing
in excess of 51% of the voting power of the then outstanding shares of
capital stock of Company, in each case on terms that the Board of Directors
of Company determines, in its reasonable judgment (based on written advice
of a financial advisor of nationally recognized reputation) to be more
favorable to Company stockholders from a financial point of view than the
terms of the Merger.
5.3 CONFIDENTIALITY; ACCESS TO INFORMATION
(a) The parties acknowledge that Company and Parent have previously
executed a Mutual Nondisclosure Agreement, dated as of September 29, 1999
(the "CONFIDENTIALITY AGREEMENT"), which Confidentiality Agreement will
continue in full force and effect in accordance with its terms.
(b) ACCESS TO INFORMATION. Each Party will afford the other Party its
accountants, counsel and other representatives reasonable access during
normal business hours, upon reasonable notice, to the properties, books,
records and personnel of such Party during the period prior to the Effective
Time to obtain all information concerning the business, including the status
of product development efforts, properties, results of operations and
personnel of such Party, as such requesting Party may reasonably request. No
information or knowledge obtained by any Party in any investigation pursuant
to this Section 5.3 will affect or be deemed to modify any representation or
warranty contained herein or the conditions to the obligations of the
parties to consummate the Merger.
5.4 NO SOLICITATION
(a) From and after the date of this Agreement until the Effective Time
or termination of this Agreement pursuant to Article VII, Company and its
subsidiaries will not, nor will they authorize or permit any of their
respective officers, directors, affiliates or employees or any investment
banker, attorney or other advisor or representative retained by any of them
to, directly or indirectly (i) solicit, initiate, encourage or induce the
making, submission or announcement of any Acquisition Proposal (as defined
below), (ii) participate in any discussions or negotiations regarding, or
furnish to any person any non-public information with respect to, or take
any other action to facilitate any inquiries or the making of any proposal
that constitutes or may reasonably be expected to lead to, any Acquisition
Proposal, (iii) engage in discussions with any person with respect to any
Acquisition Proposal, (iv) subject to Section 5.2(c), approve, endorse or
recommend any Acquisition Proposal or (v) enter into any letter of intent or
similar document or any contract, agreement or commitment contemplating or
otherwise relating to any Acquisition Transaction (as defined below);
PROVIDED, HOWEVER, that this Section 5.4(a) shall not prohibit Company from
furnishing nonpublic information regarding Company and its subsidiaries to,
entering into a confidentiality agreement with or entering into discussions
with, any person or group in response to a Superior Offer submitted by such
person or group (and not withdrawn) if (1) neither Company nor any
representative of Company and its subsidiaries shall have violated any of
the
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restrictions set forth in this Section 5.4, (2) the Board of Directors of
Company concludes in good faith, after consultation with its outside legal
counsel, that such action is required in order for the Board of Directors of
Company to comply with its fiduciary obligations to Company's stockholders
under applicable law, (3) (x) at least five days prior to furnishing any
such nonpublic information to, or entering into discussions or negotiations
with, such person or group, Company gives Parent written notice of the
identity of such person or group and of Company's intention to furnish
nonpublic information to, or enter into discussions or negotiations with,
such person or group and (y) Company receives from such person or group an
executed confidentiality agreement containing customary limitations on the
use and disclosure of all nonpublic written and oral information furnished
to such person or group by or on behalf of Company, and
(4) contemporaneously with furnishing any such nonpublic information to such
person or group, Company furnishes such nonpublic information to Parent (to
the extent such nonpublic information has not been previously furnished by
Company to Parent). Company and its subsidiaries will immediately cease any
and all existing activities, discussions or negotiations with any parties
conducted heretofore with respect to any Acquisition Proposal. Without
limiting the foregoing, it is understood that any violation of the
restrictions set forth in the preceding two sentences by any officer or
director of Company or any of its subsidiaries or any investment banker,
attorney or other advisor or representative of Company or any of its
subsidiaries shall be deemed to be a breach of this Section 5.4 by Company.
In addition to the foregoing, Company shall (i) provide Parent with at least
forty-eight (48) hours prior notice (or such lesser prior notice as provided
to the members of Company's Board of Directors but in no event less than
eight hours) of any meeting of Company's Board of Directors at which
Company's Board of Directors is reasonably expected to consider a Superior
Offer and (ii) provide Parent with at least five (5) business days prior
written notice (or such lesser prior notice as provided to the members of
Company's Board of Directors but in no event less than 24 hours) of a
meeting of Company's Board of Directors at which Company's Board of
Directors is reasonably expected to recommend a Superior Offer to its
stockholders.
For purposes of this Agreement, "ACQUISITION PROPOSAL" shall mean any
offer or proposal (other than an offer or proposal by Parent) relating to
any Acquisition Transaction. For the purposes of this Agreement,
"ACQUISITION TRANSACTION" shall mean any transaction or series of related
transactions other than the transactions contemplated by this Agreement
involving: (A) any acquisition or purchase from Company by any person or
"group" (as defined under Section 13(d) of the Exchange Act and the rules
and regulations thereunder) of more than a 10% interest in the total
outstanding voting securities of Company or any of its subsidiaries or any
tender offer or exchange offer that if consummated would result in any
person or "group" (as defined under Section 13(d) of the Exchange Act and
the rules and regulations thereunder) beneficially owning 10% or more of the
total outstanding voting securities of Company or any of its subsidiaries or
any merger, consolidation, business combination or similar transaction
involving Company pursuant to which the stockholders of Company immediately
preceding such transaction hold less than 90% of the equity interests in the
surviving or resulting entity of such transaction; (B) any sale, lease
(other than in the ordinary course of business), exchange, transfer, license
(other than in the ordinary course of business), acquisition or disposition
of more than 10% of the assets of Company; or (C) any liquidation or
dissolution of Company.
(b) In addition to the obligations of Company set forth in
paragraph (a) of this Section 5.4, Company as promptly as practicable shall
advise Parent orally and in writing of any request received by Company for
non-public information which Company reasonably believes would lead to an
Acquisition Proposal or of any Acquisition Proposal, or any inquiry received
by Company with respect to or which Company reasonably should believe would
lead to any Acquisition Proposal, the material terms and conditions of such
request, Acquisition Proposal or inquiry, and the identity of the person or
group making any such request, Acquisition Proposal or inquiry. Company will
keep Parent informed in all material respects of the status and details
(including
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material amendments or proposed amendments) of any such request, Acquisition
Proposal or inquiry.
5.5 PUBLIC DISCLOSURE
(a) Parent and Company will consult with each other, and to the extent
practicable, agree, before issuing any press release or otherwise making any
public statement with respect to the Merger, this Agreement or an
Acquisition Proposal and will not issue any such press release or make any
such public statement prior to such consultation, except as may be required
by law or any listing agreement with a national securities exchange. The
parties have agreed to the text of the joint press release announcing the
signing of this Agreement.
5.6 REASONABLE EFFORTS; NOTIFICATION
(a) Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties agrees to use all reasonable efforts to take,
or cause to be taken, all actions, and to do, or cause to be done, and to
assist and cooperate with the other parties in doing, all things necessary,
proper or advisable to consummate and make effective, in the most
expeditious manner practicable, the Merger and the other transactions
contemplated by this Agreement, including using reasonable efforts to
accomplish the following: (i) the taking of all reasonable acts necessary to
cause the conditions precedent set forth in Article VI to be satisfied,
(ii) the obtaining of all necessary actions or nonactions, waivers,
consents, approvals, orders and authorizations from Governmental Entities
and the making of all necessary registrations, declarations and filings
(including registrations, declarations and filings with Governmental
Entities, if any) and the taking of all reasonable steps as may be necessary
to avoid any suit, claim, action, investigation or proceeding by any
Governmental Entity, (iii) the obtaining of all consents, approvals or
waivers from third parties required as a result of the transactions
contemplated in this Agreement, (iv) the defending of any suits, claims,
actions, investigations or proceedings, whether judicial or administrative,
challenging this Agreement or the consummation of the transactions
contemplated hereby, including seeking to have any stay or temporary
restraining order entered by any court or other Governmental Entity vacated
or reversed and (v) the execution or delivery of any additional instruments
reasonably necessary to consummate the transactions contemplated by, and to
fully carry out the purposes of, this Agreement. In connection with and
without limiting the foregoing, Company and its Board of Directors shall, if
any state takeover statute or similar statute or regulation is or becomes
applicable to the Merger, this Agreement or any of the transactions
contemplated by this Agreement, use all reasonable efforts to ensure that
the Merger and the other transactions contemplated by this Agreement may be
consummated as promptly as practicable on the terms contemplated by this
Agreement and otherwise to minimize the effect of such statute or regulation
on the Merger, this Agreement and the transactions contemplated hereby.
Notwithstanding anything herein to the contrary, nothing in this Agreement
shall be deemed to require Parent or Company or any subsidiary or affiliate
thereof to agree to any divestiture by itself or any of its affiliates of
shares of capital stock or of any business, assets or property, or the
imposition of any material limitation on the ability of any of them to
conduct their business or to own or exercise control of such assets,
properties and stock.
(b) Company shall give prompt notice to Parent upon becoming aware that
any representation or warranty made by it contained in this Agreement has
become untrue or inaccurate, or of any failure of Company to comply with or
satisfy in any material respect any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement, in each case, such
that the conditions set forth in Section 6.3(a) or 6.3(b) would not be
satisfied; PROVIDED, HOWEVER, that no such notification shall affect the
representations, warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under this Agreement.
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(c) Parent shall give prompt notice to Company (i) upon becoming aware
that any representation or warranty made by it or Merger Sub contained in
this Agreement has become untrue or inaccurate, or of any failure of Parent
or Merger Sub to comply with or satisfy in any material respect any
covenant, condition or agreement to be complied with or satisfied by it
under this Agreement, in each case, such that the conditions set forth in
Section 6.2(a) or 6.2(b) would not be satisfied or (ii) in the event Parent
intends to undertake a transaction that would require the vote of Parent
stockholders; PROVIDED, HOWEVER, that no such notification shall affect the
representations, warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under this Agreement.
5.7 THIRD PARTY CONSENTS
As soon as practicable following the date hereof, Parent and Company will
each use its commercially reasonable efforts to obtain any consents, waivers and
approvals under any of its or its subsidiaries' respective agreements,
contracts, licenses or leases required to be obtained in connection with the
consummation of the transactions contemplated hereby.
5.8 STOCK OPTIONS, WARRANTS AND EMPLOYEE BENEFITS
(a) STOCK OPTIONS. At the Effective Time, each outstanding option to
purchase shares of Company Common Stock (each, a "Company Stock Option")
under the Company Option Plans, whether or not vested, shall by virtue of
the Merger be assumed by Parent. Each Company Stock Option so assumed by
Parent under this Agreement will continue to have, and be subject to, the
same terms and conditions of such options immediately prior to the Effective
Time (including, without limitation, any repurchase rights or vesting
provisions and provisions regarding the acceleration of vesting on certain
transactions, other than the transactions contemplated by this Agreement),
except that (i) each Company Stock Option will be exercisable (or will
become exercisable in accordance with its terms) for that number of whole
shares of Parent Common Stock equal to the product of the number of shares
of Company Common Stock that were issuable upon exercise of such Company
Stock Option immediately prior to the Effective Time multiplied by the
Exchange Ratio, rounded down to the nearest whole number of shares of Parent
Common Stock and (ii) the per share exercise price for the shares of Parent
Common Stock issuable upon exercise of such assumed Company Stock Option
will be equal to the quotient determined by dividing the exercise price per
share of Company Common Stock at which such Company Stock Option was
exercisable immediately prior to the Effective Time by the Exchange Ratio,
rounded up to the nearest tenth of a cent.
(b) WARRANTS. At the Effective Time, the Warrants will be assumed by
Parent. Each Warrant so assumed by Parent under this Agreement will continue
to have, and be subject to, the same terms and conditions set forth in the
applicable warrant agreement immediately prior to the Effective Time
(including, without limitation, any repurchase rights or vesting
provisions), except that (i) each Warrant will be exercisable (or will
become exercisable in accordance with its terms) for that number of whole
shares of Parent Common Stock equal to the product of the number of shares
of Company Common Stock that were issuable upon exercise of such Warrant
immediately prior to the Effective Time multiplied by the Exchange Ratio,
rounded to the nearest whole number of shares of Parent Common Stock and
(ii) the per share exercise price for the share of Parent Common Stock
issuable upon exercise of such assumed Warrant will be equal to the quotient
determined by dividing the exercise price per share of Company Common Stock
at which such Warrant was exercisable immediately prior to the Effective
Time by the Exchange Ratio, rounded to the nearest whole cent. Company
agrees to provide the holders of Company Warrants with any and all notices
required as a result of the Merger and the transactions contemplated
thereby.
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(c) ESPP. Prior to the Effective Time, outstanding purchase rights
under Company's ESPP shall be exercised in accordance with the terms of the
ESPP. With respect to each share of Company Common Stock purchased pursuant
to the ESPP, such exercise shall by virtue of the Merger, and without any
action on the part of the holder thereof, be converted into the right to
receive a number of shares of Parent Common Stock equal to the Exchange
Ratio without issuance of certificates representing issued and outstanding
shares of Company Common Stock to ESPP participants. Company agrees that it
shall terminate the ESPP immediately following the aforesaid purchase of
shares of Company Common Stock thereunder.
5.9 FORM S-8
Parent agrees to file, if available for use by Parent, a registration
statement on Form S-8 for the shares of Parent Common Stock issuable with
respect to assumed Company Stock Options as soon as is reasonably practicable
after the Effective Time.
5.10 INDEMNIFICATION
From and after the Effective Time, Parent will cause the Surviving
Corporation to fulfill and honor in all respects the obligations of Company
pursuant to any indemnification agreements between Company and its directors and
officers in effect immediately prior to the Effective Time (the "INDEMNIFIED
PARTIES") and any indemnification provisions under the Company Charter Documents
as in effect on the date hereof. The Certificate of Incorporation and Bylaws of
the Surviving Corporation will contain provisions with respect to exculpation
and indemnification that are at least as favorable to the Indemnified Parties as
those contained in the Company Charter Documents as in effect on the date
hereof, which provisions will not be amended, repealed or otherwise modified for
a period of six (6) years from the Effective Time in any manner that would
adversely affect the rights thereunder of individuals who, immediately prior to
the Effective Time, were directors, officers, employees or agents of Company,
unless such modification is required by law. For a period of six years after the
Effective Time, Parent will cause the Surviving Corporation to use its
commercially reasonable efforts to maintain in effect, if available, directors'
and officers' liability insurance covering those persons who are currently
covered by Company's directors' and officers' liability insurance policy on
terms substantially similar to those applicable to the current directors and
officers of Company.
5.11 NASDAQ LISTING
Parent agrees to cause the listing on Nasdaq the shares of Parent Common
Stock issuable, and those required to be reserved for issuance, in connection
with the Merger, subject to official notice of issuance.
5.12 COMPANY AFFILIATE AGREEMENT
Set forth in Section 5.12 the Company Schedule is a list of those persons
who may be deemed to be, in Company's reasonable judgment, affiliates of Company
within the meaning of Rule 145 promulgated under the Securities Act (each, a
"COMPANY AFFILIATE"). Company will provide Parent with such information and
documents as Parent reasonably requests for purposes of reviewing such list.
Each Company Affiliate Agreement will be in full force and effect as of the
Effective Time. Parent will be entitled to place appropriate legends on the
certificates evidencing any Parent Common Stock to be received by a Company
Affiliate pursuant to the terms of this Agreement, and to issue appropriate stop
transfer instructions to the transfer agent for the Parent Common Stock,
consistent with the terms of the Company Affiliate Agreement.
5.13 REGULATORY FILINGS; REASONABLE EFFORTS
As soon as may be reasonably practicable, Company and Parent each shall file
with the United States Federal Trade Commission (the "FTC") and the Antitrust
Division of the United States Department of Justice ("DOJ") Notification and
Report Forms relating to the transactions
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contemplated herein as required by the HSR Act, as well as comparable pre-merger
notification forms required by the merger notification or control laws and
regulations of any applicable jurisdiction, as agreed to by the parties. Company
and Parent each shall promptly (a) supply the other with any information which
may be required in order to effectuate such filings and (b) supply any
additional information which reasonably may be required by the FTC, the DOJ or
the competition or merger control authorities of any other jurisdiction and
which the parties may reasonably deem appropriate; PROVIDED, HOWEVER, that
Parent shall not be required to agree to any divestiture by Parent or Company or
any of Parent's subsidiaries or affiliates of shares of capital stock or of any
business, assets or property of Parent or its subsidiaries or affiliates or of
Company, its affiliates, or the imposition of any material limitation on the
ability of any of them to conduct their businesses or to own or exercise control
of such assets, properties and stock.
5.14 NO RIGHTS PLAN AMENDMENT
Except as expressly required by Section 6.3(g), prior to the Closing,
Company and its Board of Directors shall not amend or modify or take any other
action with regard to the Company Rights Plan in any manner or take another
action so as to (i) render the Company Rights Plan inapplicable to any
transaction(s) other than the Merger and other transactions contemplated by this
Agreement, the Stock Option Agreement, the Company Affiliate Agreements and the
Company Voting Agreements, or (ii) permit any person or group who would
otherwise be an Acquiring Person (as defined in the Company Rights Plan) not to
be an Acquiring Person, or (iii) provide that a Distribution Date or a Shares
Acquisition Date (as such terms are defined in the Company Rights Plan) or
similar event does not occur as promptly as practicable by reason of the
execution of any agreement or transaction other than this Agreement and the
Merger and the agreements and transactions contemplated hereby and thereby, or
(iv) except as specifically contemplated by this Agreement, otherwise affect the
rights of holders of Rights.
5.15 TERMINATION OF 401(K) PLAN
Company and its Affiliates, as applicable, each agrees to terminate its
401(k) plan immediately prior to Closing, unless Parent, in its sole and
absolute discretion, agrees to sponsor and maintain such plans by providing
Company with written notice of such election at least three (3) days before the
Effective Time. Unless Parent provides such notice to Company, Parent shall
receive from Company evidence that Company's and each Affiliate's (as
applicable) 401(k) plan has been terminated pursuant to resolutions of each such
entity's Board of Directors (the form and substance of which resolutions shall
be subject to review and approval of Parent), effective as of the day
immediately preceding the Closing Date.
5.16 SEVERANCE
(i) Parent shall provide each Company employee terminated by Parent or its
Affiliates at the Effective Time the same severance, transition and separation
benefits as such employee would have received from Company pursuant to policies
and practices in effect immediately prior to the Effective Time; (ii) Parent
shall provide each Company employee identified at Closing who is hired by Parent
to assist with the transition of Company after the Effective Time and who is
subsequently terminated by Parent or its Affiliates the same severance,
transition and separation benefits as such employee would have received from
Company pursuant to policies and practices in effect immediately prior to the
Effective Time; and (iii) Parent shall provide each Company employee who becomes
a full-time employee of Parent and who is subsequently terminated by Parent or
its Affiliates severance, transition and separation benefits under Parent's
policies and practices in effect at such time. Company's Policy Regarding
Termination of Executive Status and Related Matters shall apply to the
transactions contemplated by this Agreement but shall not apply to subsequent
changes of control (as defined therein) occuring between Merger Sub or any
affiliated entities subsequent to the Effective Time.
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5.17 PARENT STOCKHOLDERS' MEETING
Promptly after the date hereof, Parent will take all action necessary in
accordance with Delaware Law and the Parent Charter Documents to convene the
Parent Stockholders' Meeting to be held as promptly as practicable, and in any
event (to the extent permissible under applicable law) within 45 days after the
declaration of effectiveness of the S-4, for the purpose of voting upon the
issuance of Parent Common Stock pursuant to the Merger and this Agreement.
Parent will use its commercially reasonable efforts to solicit from its
stockholders proxies in favor of the issuance of Parent Common Stock in
connection with the Merger and will take all other action necessary or advisable
to secure the vote or consent of its stockholders required by the rules of
Nasdaq or Delaware Law to obtain such approvals. Notwithstanding anything to the
contrary contained in this Agreement, Parent may adjourn or postpone the Parent
Stockholders' Meeting to the extent necessary to ensure that any necessary
supplement or amendment to the Prospectus/Proxy Statement is provided to
Parent's stockholders in advance of a vote on the issuance of such stock or, if
as of the time for which the Parent Stockholders' Meeting is originally
scheduled (as set forth in the Prospectus/Proxy Statement) there are
insufficient shares of Parent Common Stock represented (either in person or by
proxy) to constitute a quorum necessary to conduct the business of the Parent
Stockholders' Meeting. Parent shall ensure that the Parent Stockholders' Meeting
is called, noticed, convened and conducted, and that all proxies solicited by
Parent in connection with the Parent Stockholders' Meeting are solicited, in
compliance with Delaware Law, the Parent Charter Documents, the rules of Nasdaq
and all other applicable legal requirements.
5.18 DIRECTORS
Promptly following the Effective Time, Parent will cause Mr. Peter Gyenes
and Mr. Robert Morrill to be designated as directors of Parent to serve in the
class of directors whose term expires in 2002. In the event either of
Messrs. Gyenes or Morrill is unable or unwilling to serve or complete his term,
Mr. Morrill will designate Mr. Gyenes' successor and Mr. Gyenes will designate
Mr. Morrill's successor. If the individual that will make such designation is
unable to do so, Mr. Robert Claussen will make such designation.
5.19 BENEFIT ARRANGEMENTS
Parent covenants and agrees that to the extent permitted by applicable law
and to the extent the existing benefit plans and arrangements provided by
Company to its employees are terminated on or after the Effective Time, such
employees shall be entitled to benefits which are available or subsequently
become available to Parent's employees, and on a basis which is on parity with
Parent's employees. For purposes of satisfying the terms and conditions of such
plans, Parent shall give full credit for eligibility, vesting or benefit accrual
to the extent possible for each participant's period of service at the Company
prior to the Effective Time.
5.20 RESTRUCTURING
In the event that all conditions to the closing are satisfied on or before
the date specified in Section 7.1(b) other than the condition specified in
Section 6.3(f), then the parties agree to use best efforts in good faith to
negotiate the restructure of this Agreement to allow the transaction
contemplated hereby to proceed; provided however that in such case neither party
shall be bound to any agreement or any such restructuring unless mutually
agreed.
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ARTICLE VI
CONDITIONS TO THE MERGER
6.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE MERGER.
The respective obligations of each party to this Agreement to effect the
Merger shall be subject to the satisfaction at or prior to the Closing Date of
the following conditions:
(a) COMPANY STOCKHOLDER APPROVAL. This Agreement shall have been
approved and adopted, and the Merger shall have been duly approved, by the
requisite vote under applicable law, by the stockholders of Company.
(b) PARENT STOCKHOLDER APPROVAL. This Agreement shall have been
approved and adopted, and the Merger shall have been duly approved, by the
requisite vote under applicable law, by the stockholders of Parent.
(c) REGISTRATION STATEMENT EFFECTIVE; PROXY STATEMENT. The SEC shall
have declared the S-4 effective. No stop order suspending the effectiveness
of the S-4 or any part thereof shall have been issued and no proceeding for
that purpose, and no similar proceeding in respect of the Proxy
Statement/Prospectus, shall have been initiated or threatened in writing by
the SEC.
(d) NO ORDER; HSR ACT. No Governmental Entity shall have enacted,
issued, promulgated, enforced or entered any statute, rule, regulation,
executive order, decree, injunction or other order (whether temporary,
preliminary or permanent) which is in effect and which has the effect of
making the Merger illegal or otherwise prohibiting consummation of the
Merger. All waiting periods, if any, under the HSR Act relating to the
transactions contemplated hereby will have expired or terminated early and
all material foreign antitrust approvals required to be obtained prior to
the Merger in connection with the transactions contemplated hereby shall
have been obtained.
(e) TAX OPINIONS. Parent and Company shall each have received written
opinions from their respective tax counsel (Wilson Sonsini Goodrich &
Rosati, Professional Corporation, and Choate Hall & Stewart, respectively),
in form and substance reasonably satisfactory to them, to the effect that
the Merger will constitute a reorganization within the meaning of
Section 368(a) of the Code and such opinions shall not have been withdrawn;
PROVIDED, HOWEVER, that if the counsel to either Parent or Company does not
render such opinion, this condition shall nonetheless be deemed to be
satisfied with respect to such party if counsel to the other party renders
such opinion to such party. The parties to this Agreement agree to make such
reasonable representations as requested by such counsel for the purpose of
rendering such opinions.
(f) NASDAQ LISTING. The shares of Parent Common Stock issuable to the
stockholders of Company pursuant to this Agreement and such other shares
required to be reserved for issuance in connection with the Merger shall
have been authorized for listing on Nasdaq upon official notice of issuance.
6.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF COMPANY
The obligation of Company to consummate and effect the Merger shall be
subject to the satisfaction at or prior to the Closing Date of each of the
following conditions, any of which may be waived, in writing, exclusively by
Company:
(a) REPRESENTATIONS AND WARRANTIES. Each representation and warranty
of Parent and Merger Sub contained in this Agreement (i) shall have been
true and correct as of the date of this Agreement and (ii) shall be true and
correct on and as of the Closing Date with the same force and effect as if
made on the Closing Date except (A) in each case, or in the aggregate, as
does not constitute a Material Adverse Effect on Parent and Merger Sub,
(B) for changes contemplated by
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this Agreement and (C) for those representations and warranties which
address matters only as of a particular date (which representations shall
have been true and correct (subject to the qualifications as set forth in
the preceding clause A) as of such particular date) (it being understood
that, for purposes of determining the accuracy of such representations and
warranties, (i) all "Material Adverse Effect" qualifications and other
qualifications based on the word "material" or similar phrases contained in
such representations and warranties shall be disregarded and (ii) any update
of or modification to the Parent Schedule made or purported to have been
made after the date of this Agreement shall be disregarded). Company shall
have received a certificate with respect to the foregoing signed on behalf
of Parent by an authorized officer of Parent.
(b) AGREEMENTS AND COVENANTS. Parent and Merger Sub shall have
performed or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with by
them on or prior to the Closing Date, and Company shall have received a
certificate to such effect signed on behalf of Parent by an authorized
officer of Parent.
(c) MATERIAL ADVERSE EFFECT. No Material Adverse Effect with respect
to Parent and its subsidiaries shall have occurred since the date of this
Agreement.
6.3 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF PARENT AND MERGER SUB
The obligations of Parent and Merger Sub to consummate and effect the Merger
shall be subject to the satisfaction at or prior to the Closing Date of each of
the following conditions, any of which may be waived, in writing, exclusively by
Parent:
(a) REPRESENTATIONS AND WARRANTIES. Each representation and warranty
of Company contained in this Agreement (i) shall have been true and correct
as of the date of this Agreement and (ii) shall be true and correct on and
as of the Closing Date with the same force and effect as if made on and as
of the Closing Date except (A) in each case, or in the aggregate, as does
not constitute a Material Adverse Effect on Company provided, however, such
Material Adverse Effect qualifier shall be inapplicable with respect to
representations and warranties contained in Section 2.3, (B) for changes
contemplated by this Agreement and (C) for those representations and
warranties which address matters only as of a particular date (which
representations shall have been true and correct (subject to the
qualifications as set forth in the preceding clause (A) as of such
particular date) (it being understood that, for purposes of determining the
accuracy of such representations and warranties, (i) all "Material Adverse
Effect" qualifications and other qualifications based on the word "material"
or similar phrases contained in such representations and warranties shall be
disregarded and (ii) any update of or modification to the Company Schedule
made or purported to have been made after the date of this Agreement shall
be disregarded). Parent shall have received a certificate with respect to
the foregoing signed on behalf of Company by an authorized officer of
Company.
(b) AGREEMENTS AND COVENANTS. Company shall have performed or complied
in all material respects with all agreements and covenants required by this
Agreement to be performed or complied with by it at or prior to the Closing
Date, and Parent shall have received a certificate to such effect signed on
behalf of Company by the Chief Executive Officer and the Chief Financial
Officer of the Company.
(c) MATERIAL ADVERSE EFFECT. No Material Adverse Effect with respect
to Company and its subsidiaries shall have occurred since the date of this
Agreement.
(d) AFFILIATE AGREEMENTS. Each of the Company Affiliates shall have
entered into the Company Affiliate Agreement and each of such agreements
will be in full force and effect as of the Effective Time.
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(e) CONSENTS. Company shall have obtained all consents, waivers and
approvals required in connection with the consummation of the transactions
contemplated hereby in connection with the agreements, contracts, licenses
or leases set forth on Section 6.3(e) of the Company Schedule.
(f) OPINIONS OF ACCOUNTANTS. Parent shall have received (i) from
Deloitte & Touche LLP, independent auditors for Company, a copy of a letter
addressed to Company dated as of the Closing Date in substance reasonably
satisfactory to Parent (which may contain customary qualifications and
assumptions) to the effect that Deloitte & Touche LLP concurs with Company
management's conclusion that no conditions exist related to Company that
would preclude Parent from accounting for the Merger as a
"pooling-of-interests" and (ii) from KPMG LLP, independent accountants for
Parent, a letter dated as of the Closing Date in substance reasonably
satisfactory to Parent (which may contain customary qualifications and
assumptions) to the effect that KPMG LLP concurs with Parent management's
conclusion that no conditions exist related to Parent that would preclude
Parent from accounting for the Merger as a "pooling-of-interests."
(g) COMPANY RIGHTS PLANS. All actions necessary to extinguish and
cancel all outstanding Rights under the Company Rights Plan at the Effective
Time and to render such rights inapplicable to the Merger shall have been
taken.
(h) NONCOMPETITION AGREEMENTS. Parent shall have received from each of
the persons identified on EXHIBIT D a noncompetition agreement in a form
provided by the Parent and approved by the Company.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 TERMINATION.
This Agreement may be terminated at any time prior to the Effective Time,
whether before or after the requisite approval of the stockholders of Company:
(a) by mutual written consent duly authorized by the Boards of Directors
of Parent and Company;
(b) by either Company or Parent if the Merger shall not have been
consummated by June 30, 2000 for any reason; PROVIDED, HOWEVER, that the
right to terminate this Agreement under this Section 7.1(b) shall not be
available to any party whose action or failure to act has been a principal
cause of or resulted in the failure of the Merger to occur on or before such
date and such action or failure to act constitutes a breach of this
Agreement;
(c) by either Company or Parent if a Governmental Entity shall have
issued an order, decree or ruling or taken any other action, in any case
having the effect of permanently restraining, enjoining or otherwise
prohibiting the Merger, which order, decree, ruling or other action is final
and nonappealable;
(d) by either Company or Parent if the required approval of the
stockholders of Company contemplated by this Agreement shall not have been
obtained by reason of the failure to obtain the required vote at a meeting
of Company stockholders duly convened therefor or at any adjournment
thereof; PROVIDED, HOWEVER, that the right to terminate this Agreement under
this Section 7.1(d) shall not be available to Company where the failure to
obtain Company stockholder approval shall have been caused by the action or
failure to act of Company and such action or failure to act constitutes a
breach by Company of this Agreement;
(e) by Company, upon a breach of any representation, warranty, covenant
or agreement on the part of Parent set forth in this Agreement, or if any
representation or warranty of Parent shall
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have become untrue, in either case such that the conditions set forth in
Section 6.2(a) or Section 6.2(b) would not be satisfied as of the time of
such breach or as of the time such representation or warranty shall have
become untrue, PROVIDED, that if such inaccuracy in Parent's representations
and warranties or breach by Parent is curable by Parent through the exercise
of its commercially reasonable efforts, then Company may not terminate this
Agreement under this Section 7.1(e) for thirty (30) days after delivery of
written notice from Company to Parent of such breach, provided Parent
continues to exercise commercially reasonable efforts to cure such breach
(it being understood that Company may not terminate this Agreement pursuant
to this paragraph (e) if it shall have materially breached this Agreement or
if such breach by Parent is cured during such thirty (30)-day period);
(f) by Parent, upon a breach of any representation, warranty, covenant
or agreement on the part of Company set forth in this Agreement, or if any
representation or warranty of Company shall have become untrue, in either
case such that the conditions set forth in Section 6.3(a) or Section 6.3(b)
would not be satisfied as of the time of such breach or as of the time such
representation or warranty shall have become untrue, PROVIDED, that if such
inaccuracy in Company's representations and warranties or breach by Company
is curable by Company through the exercise of its commercially reasonable
efforts, then Parent may not terminate this Agreement under this
Section 7.1(f) for thirty (30) days after delivery of written notice from
Parent to Company of such breach, provided Company continues to exercise
commercially reasonable efforts to cure such breach (it being understood
that Parent may not terminate this Agreement pursuant to this paragraph (f)
if it shall have materially breached this Agreement or if such breach by
Company is cured during such thirty (30)-day period);
(g) by Parent, upon a breach of the provisions of Section 5.4 of this
Agreement;
(h) by Parent if a Triggering Event (as defined below) shall have
occurred; or
(i) by either Company or Parent if the required approval by the
stockholders of Parent contemplated by this Agreement shall not have been
obtained by reason of the failure to obtain the required vote at a meeting
of Parent stockholders duly convened therefor or at any adjournment thereof;
PROVIDED, HOWEVER, that the right to terminate this Agreement under this
Section 7.1(i) shall not be available to Parent where the failure to obtain
Parent stockholder approval shall have been caused by the action or failure
to act of parent and such action or failure to act constitutes a breach by
Parent of this Agreement.
For the purposes of this Agreement, a "Triggering Event" shall be deemed to
have occurred if: (i) the Board of Directors of Company or any committee thereof
shall for any reason have withdrawn or shall have amended or modified in a
manner adverse to Parent its unanimous recommendation in favor of, the adoption
and approval of the Agreement or the approval of the Merger; (ii) Company shall
have failed to include in the Proxy Statement/Prospectus the unanimous
recommendation of the Board of Directors of Company in favor of the adoption and
approval of the Agreement and the approval of the Merger; (iii) Board of
Directors of Company fails to reaffirm its unanimous recommendation in favor of
the adoption and approval of the Agreement and the approval of the Merger within
five (5) business days after Parent requests in writing that such recommendation
be reaffirmed at any time following the announcement of an Acquisition Proposal;
(iv) the Board of Directors of Company or any committee thereof shall have
approved or recommended any Acquisition Proposal; (v) Company shall have entered
into any letter of intent or similar document or any agreement, contract or
commitment accepting any Acquisition Proposal; or (vi) a tender or exchange
offer relating to securities of Company shall have been commenced by a person
unaffiliated with Parent and Company shall not have sent to its securityholders
pursuant to Rule 14e-2 promulgated under the Securities Act, within ten
(10) business days after such tender or exchange offer is first published sent
or given, a statement disclosing that Company recommends rejection of such
tender or exchange offer.
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7.2 NOTICE OF TERMINATION; EFFECT OF TERMINATION
Any termination of this Agreement under Section 7.1 above will be effective
immediately upon (or, if the termination is pursuant to Section 7.1(e) or
Section 7.1(f) and the proviso therein is applicable, thirty (30) days after)
the delivery of written notice of the terminating party to the other parties
hereto. In the event of the termination of this Agreement as provided in
Section 7.1, this Agreement shall be of no further force or effect, except
(i) as set forth in this Section 7.2, Section 7.3 and Article 8 (General
Provisions), each of which shall survive the termination of this Agreement, and
(ii) nothing herein shall relieve any party from liability for any intentional
or willful breach of this Agreement. No termination of this Agreement shall
affect the obligations of the parties contained in the Confidentiality
Agreement, all of which obligations shall survive termination of this Agreement
in accordance with their terms.
7.3 FEES AND EXPENSES
(a) GENERAL. Except as set forth in this Section 7.3, all fees and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses
whether or not the Merger is consummated; PROVIDED, HOWEVER, that Parent and
Company shall share equally all fees and expenses, other than attorneys' and
accountants fees and expenses, incurred in relation to the printing and
filing (with the SEC) of the Proxy Statement/Prospectus (including any
preliminary materials related thereto) and the S-4 (including financial
statements and exhibits) and any amendments or supplements thereto.
(b) COMPANY PAYMENTS.
(i) Company shall pay to Parent in immediately available funds,
within one (1) business day after demand by Parent, an amount equal to
$25,500,000.00 (the "TERMINATION FEE") if this Agreement is terminated by
Parent pursuant to Section 7.1(g) or (h).
(ii) Company shall pay Parent in immediately available funds, within
one (1) business day after demand by Parent, an amount equal to the
Termination Fee, if this Agreement is terminated by Parent or Company, as
applicable, pursuant to Sections 7.1(b) or (d) and any of the following
shall occur:
a) if following the date hereof and prior to the termination of
this Agreement, a third party has announced an Acquisition Proposal
and within twelve (12) months following the termination of this
Agreement a Company Acquisition (as defined below) is consummated; or
b) if following the date hereof and prior to the termination of
this Agreement, a third party has announced an Acquisition Proposal
and within twelve (12) months following the termination of this
Agreement Company enters into an agreement or letter of intent
providing for a Company Acquisition.
Notwithstanding the foregoing, Parent shall not be entitled to
Termination Fee with respect to Section 7.1(b) if Parent's or Merger
Sub's action or failure to act has been the principal cause of or
resulted in the failure of the Merger to occur on or before June 30, 2000
and such action or failure to act constitutes a breach of this Agreement.
(iii) Company acknowledges that the agreements contained in this
Section 7.3(b) are an integral part of the transactions contemplated by
this Agreement, and that, without these agreements, Parent would not
enter into this Agreement; accordingly, if Company fails to pay in a
timely manner the amounts due pursuant to this Section 7.3(b) and, in
order to obtain such payment, Parent makes a claim that results in a
judgment against Company for the amounts set forth in this
Section 7.3(b), Company shall pay to Parent its reasonable costs and
expenses (including reasonable attorneys' fees and expenses) in
connection with such suit,
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together with interest on the amounts set forth in this Section 7.3(b) at
the prime rate of The Chase Manhattan Bank in effect on the date such
payment was required to be made. Payment of the fees described in this
Section 7.3(b) shall not be in lieu of damages incurred in the event of
breach of this Agreement. For the purposes of this Agreement, "COMPANY
ACQUISITION" shall mean any of the following transactions (other than the
transactions contemplated by this Agreement): (i) a merger,
consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving Company pursuant to which
the stockholders of Company immediately preceding such transaction hold
less than 50% of the aggregate equity interests in the surviving or
resulting entity of such transaction, (ii) a sale or other disposition by
Company of assets representing in excess of 50% of the aggregate fair
market value of Company's business immediately prior to such sale or
(iii) the acquisition by any person or group (including by way of a
tender offer or an exchange offer or issuance by Company), directly or
indirectly, of beneficial ownership or a right to acquire beneficial
ownership of shares representing in excess of 50% of the voting power of
the then outstanding shares of capital stock of Company.
7.4 AMENDMENT
Subject to applicable law, this Agreement may be amended by the parties
hereto at any time by execution of an instrument in writing signed on behalf of
each of Parent and Company.
7.5 EXTENSION; WAIVER
At any time prior to the Effective Time, any party hereto may, to the extent
legally allowed, (i) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties made to such party contained
herein or in any document delivered pursuant hereto and (iii) waive compliance
with any of the agreements or conditions for the benefit of such party contained
herein. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party. Delay in exercising any right under this Agreement shall
not constitute a waiver of such right.
ARTICLE VIII
GENERAL PROVISIONS
8.1 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES
The representations and warranties of Company, Parent and Merger Sub
contained in this Agreement shall terminate at the Effective Time, and only the
covenants that by their terms survive the Effective Time shall survive the
Effective Time.
8.2 NOTICES
All notices and other communications hereunder shall be in writing and shall
be deemed given if delivered personally or by commercial delivery service, or
sent via telecopy (receipt confirmed) to the parties at the following addresses
or telecopy numbers (or at such other address or telecopy numbers for a party as
shall be specified by like notice):
(a) if to Parent or Merger Sub, to:
Informix Corporation
4100 Bohannon Drive
Menlo Park, California 94025
Attention: Scott Harlan, Esq.
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Telephone No.: (650) 926-6300
Fax No.: (650) 926-6091
with a copy to:
Wilson Sonsini Goodrich & Rosati
Professional Corporation
650 Page Mill Road
Palo Alto, California 94304-1050
Attention: Douglas H. Collom
Michael J. Kennedy
Telephone No.: (650) 493-9300
Fax No.: (650) 493-6811
(b) if to Company, to:
Ardent Software, Inc.
50 Washington Street
Westboro, Massachusetts
Attention: James K. Walsh
Telephone No.:(508) 366-3888
Fax No.: (508) 389-8767
with a copy to:
Choate, Hall & Stewart
Exchange Place
53 State Street
Boston, Massachusetts 02109
Attention: Richard Hoehn, Esq.
Telephone No.:(617) 248-5000
Fax No.: (617) 248-4000
8.3 INTERPRETATION; KNOWLEDGE
(a) When a reference is made in this Agreement to Exhibits, such
reference shall be to an Exhibit to this Agreement unless otherwise
indicated. When a reference is made in this Agreement to Sections, such
reference shall be to a Section of this Agreement. Unless otherwise
indicated the words "include," "includes" and "including" when used herein
shall be deemed in each case to be followed by the words "without
limitation." The table of contents and headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning
or interpretation of this Agreement. When reference is made herein to "the
business of" an entity, such reference shall be deemed to include the
business of all direct and indirect subsidiaries of such entity. Reference
to the subsidiaries of an entity shall be deemed to include all direct and
indirect subsidiaries of such entity.
(b) For purposes of this Agreement, the term "KNOWLEDGE" means with
respect to a party hereto, with respect to any matter in question, that any
of the executive officers of such party has actual knowledge of such matter.
(c) For purposes of this Agreement, the term "MATERIAL ADVERSE EFFECT"
when used in connection with an entity means any change, event, violation,
inaccuracy, circumstance or effect, individually or when aggregated with
other changes, events, violations, inaccuracies, circumstances or effects,
that is materially adverse to the business, assets (including intangible
assets), capitalization, financial condition or results of operations of
such entity and its subsidiaries taken
A-45
as a whole; PROVIDED that the failure of Parent or Company to achieve the
current street expectations for any fiscal quarter shall not by itself
constitute a Material Adverse Effect.
(d) For purposes of this Agreement, the term "PERSON" shall mean any
individual, corporation (including any non-profit corporation), general
partnership, limited partnership, limited liability partnership, joint
venture, estate, trust, company (including any limited liability company or
joint stock company), firm or other enterprise, association, organization,
entity or Governmental Entity.
8.4 COUNTERPARTS
This Agreement may be executed in one or more counterparts, all of which
shall be considered one and the same agreement and shall become effective when
one or more counterparts have been signed by each of the parties and delivered
to the other party, it being understood that all parties need not sign the same
counterpart.
8.5 ENTIRE AGREEMENT; THIRD PARTY BENEFICIARIES
This Agreement and the documents and instruments and other agreements among
the parties hereto as contemplated by or referred to herein, including the
Company Schedule and the Parent Schedule (a) constitute the entire agreement
among the parties with respect to the subject matter hereof and supersede all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof, it being understood that the
Confidentiality Agreement shall continue in full force and effect until the
Closing and shall survive any termination of this Agreement; and (b) are not
intended to confer upon any other person any rights or remedies hereunder,
except as specifically provided in Section 5.10.
8.6 SEVERABILITY
In the event that any provision of this Agreement, or the application
thereof, becomes or is declared by a court of competent jurisdiction to be
illegal, void or unenforceable, the remainder of this Agreement will continue in
full force and effect and the application of such provision to other persons or
circumstances will be interpreted so as reasonably to effect the intent of the
parties hereto. The parties further agree to replace such void or unenforceable
provision of this Agreement with a valid and enforceable provision that will
achieve, to the extent possible, the economic, business and other purposes of
such void or unenforceable provision.
8.7 OTHER REMEDIES; SPECIFIC PERFORMANCE
Except as otherwise provided herein, any and all remedies herein expressly
conferred upon a party will be deemed cumulative with and not exclusive of any
other remedy conferred hereby, or by law or equity upon such party, and the
exercise by a party of any one remedy will not preclude the exercise of any
other remedy. The parties hereto agree that irreparable damage would occur in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to seek an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court of the United States or any state
having jurisdiction, this being in addition to any other remedy to which they
are entitled at law or in equity.
8.8 GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware, regardless of the laws that might otherwise
govern under applicable principles of conflicts of law thereof.
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8.9 RULES OF CONSTRUCTION
The parties hereto agree that they have been represented by counsel during
the negotiation and execution of this Agreement and, therefore, waive the
application of any law, regulation, holding or rule of construction providing
that ambiguities in an agreement or other document will be construed against the
party drafting such agreement or document.
8.10 ASSIGNMENT
No party may assign either this Agreement or any of its rights, interests,
or obligations hereunder without the prior written approval of the other
parties. Subject to the preceding sentence, this Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
8.11 WAIVER OF JURY TRIAL
EACH OF PARENT, COMPANY AND MERGER SUB HEREBY IRREVOCABLY WAIVES ALL RIGHT
TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON
CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
ACTIONS OF PARENT, COMPANY OR MERGER SUB IN THE NEGOTIATION, ADMINISTRATION,
PERFORMANCE AND ENFORCEMENT HEREOF.
*****
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized respective officers as of the date first
written above.
INFORMIX CORPORATION
By: /s/ JEAN-YVES DEXMIER
--------------------------------------
Name: Jean-Yves Dexmier
--------------------------------------
Title: President and Chief Executive Officer
--------------------------------------
IROQUOIS ACQUISITION CORPORATION
By: /s/ JEAN-YVES DEXMIER
--------------------------------------
Name: Jean-Yves Dexmier
--------------------------------------
Title: President
--------------------------------------
ARDENT SOFTWARE, INC.
By: /s/ PETER GYENES
--------------------------------------
Name: Peter Gyenes
--------------------------------------
Title: Chairman, President and CEO
--------------------------------------
**** REORGANIZATION AGREEMENT ****
A-48
APPENDIX B
VOTING AGREEMENT
THIS VOTING AGREEMENT (this "AGREEMENT") is made and entered into as of
November 30, 1999, among Informix Corporation, a Delaware corporation
("PARENT"), and the undersigned stockholder and/or option holder (the
"STOCKHOLDER") of Ardent Software, Inc., a Delaware corporation (the "COMPANY").
RECITALS
A. The Company, Merger Sub (as defined below) and Parent have entered into
an Agreement and Plan of Reorganization (the "REORGANIZATION AGREEMENT"), which
provides for the merger (the "MERGER") of a wholly-owned subsidiary of Parent
("MERGER SUB") with and into the Company. Pursuant to the Merger, all
outstanding capital stock of the Company shall be converted into the right to
receive common stock of Parent, as set forth in the Reorganization Agreement;
B. Stockholder is the beneficial owner (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT")) of such number
of shares of the outstanding capital stock of the Company and shares subject to
outstanding options and warrants as is indicated on the signature page of this
Agreement; and
C. In consideration of the execution of the Reorganization Agreement by
Parent, Stockholder (in his or her capacity as such) agrees to vote the Shares
(as defined below) and other such shares of capital stock of the Company over
which Stockholder has voting power so as to facilitate consummation of the
Merger.
NOW, THEREFORE, intending to be legally bound, the parties hereto agree as
follows:
1. CERTAIN DEFINITIONS. Capitalized terms not defined herein shall have
the meanings ascribed to them in the Reorganization Agreement. For purposes of
this Agreement:
(a) "EXPIRATION DATE" shall mean the earlier to occur of (i) such date
and time as the Reorganization Agreement shall have been terminated pursuant
to Article VII thereof, or (ii) such date and time as the Merger shall
become effective in accordance with the terms and provisions of the
Reorganization Agreement.
(b) "PERSON" shall mean any (i) individual, (ii) corporation, limited
liability company, partnership or other entity, or (iii) governmental
authority.
(c) "SHARES" shall mean: (i) all securities of the Company (including
all shares of Company Common Stock and all options, warrants and other
rights to acquire shares of Company Common Stock) owned by Stockholder as of
the date of this Agreement; and (ii) all additional securities of the
Company (including all additional shares of Company Common Stock and all
additional options, warrants and other rights to acquire shares of Company
Common Stock) of which Stockholder acquires ownership during the period from
the date of this Agreement through the Expiration Date.
(d) TRANSFER. A Person shall be deemed to have effected a "TRANSFER"
of a security if such person directly or indirectly: (i) sells, pledges,
encumbers, grants an option with respect to, transfers or disposes of such
security or any interest in such security; or (ii) enters into an agreement
or commitment providing for the sale of, pledge of, encumbrance of, grant of
an option with respect to, transfer of or disposition of such security or
any interest therein.
B-1
2. TRANSFER OF SHARES.
(a) TRANSFEREE OF SHARES TO BE BOUND BY THIS AGREEMENT. Stockholder
agrees that, during the period from the date of this Agreement through the
Expiration Date, Stockholder shall not cause or permit any Transfer of any
of the Shares to be effected unless such Transfer is in accordance with any
affiliate agreement between Stockholder and Parent contemplated by the
Reorganization Agreement.
(b) TRANSFER OF VOTING RIGHTS. Stockholder agrees that, during the
period from the date of this Agreement through the Expiration Date,
Stockholder shall not deposit (or permit the deposit of) any Shares in a
voting trust or grant any proxy or enter into any voting agreement or
similar agreement in contravention of the obligations of Stockholder under
this Agreement with respect to any of the Shares.
3. AGREEMENT TO VOTE SHARES. At every meeting of the stockholders of the
Company called, and at every adjournment thereof, and on every action or
approval by written consent of the stockholders of the Company, Stockholder (in
his or her capacity as such) shall cause the Shares to be voted in favor of
approval of the Reorganization Agreement and the Merger and in favor of any
matter that could reasonably be expected to facilitate the Merger.
4. IRREVOCABLE PROXY. Concurrently with the execution of this Agreement,
Stockholder agrees to deliver to Parent a proxy in the form attached hereto as
EXHIBIT A (the "PROXY"), which shall be irrevocable to the fullest extent
permissible by law, with respect to the Shares.
5. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER. Stockholder (i) is
the beneficial owner of the shares of Company Common Stock and the options and
warrants to purchase shares of Common Stock of the Company indicated on the
final page of this Agreement, free and clear of any liens, claims, options,
rights of first refusal, co-sale rights, charges or other encumbrances;
(ii) does not beneficially own any securities of the Company other than the
shares of Company Common Stock and options and warrants to purchase shares of
Common Stock of the Company indicated on the final page of this Agreement; and
(iii) has full power and authority to make, enter into and carry out the terms
of this Agreement and the Proxy.
6. ADDITIONAL DOCUMENTS. Stockholder (in his or her capacity as such)
hereby covenants and agrees to execute and deliver any additional documents
necessary or desirable, in the reasonable opinion of Parent, to carry out the
intent of this Agreement.
7. CONSENT AND WAIVER. Stockholder (not in his capacity as a director or
officer of the Company) hereby gives any consents or waivers that are reasonably
required for the consummation of the Merger under the terms of any agreements to
which Stockholder is a party or pursuant to any rights Stockholder may have.
8. LEGENDING OF SHARES. If so requested by Parent, Stockholder agrees that
the Shares shall bear a legend stating that they are subject to this Agreement
and to an irrevocable proxy. Subject to the terms of Section 2 hereof,
Stockholder agrees that Stockholder shall not Transfer the Shares without first
having the aforementioned legend affixed to the certificates representing the
Shares.
9. TERMINATION. This Agreement shall terminate and shall have no further
force or effect as of the Expiration Date.
10. MISCELLANEOUS.
(a) SEVERABILITY. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
void or unenforceable, then the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
B-2
(b) BINDING EFFECT AND ASSIGNMENT. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns, but,
except as otherwise specifically provided herein, neither this Agreement nor
any of the rights, interests or obligations of the parties hereto may be
assigned by either of the parties without prior written consent of the
other.
(c) AMENDMENTS AND MODIFICATION. This Agreement may not be modified,
amended, altered or supplemented except upon the execution and delivery of a
written agreement executed by the parties hereto.
(d) SPECIFIC PERFORMANCE; INJUNCTIVE RELIEF. The parties hereto
acknowledge that Parent shall be irreparably harmed and that there shall be
no adequate remedy at law for a violation of any of the covenants or
agreements of Stockholder set forth herein. Therefore, it is agreed that, in
addition to any other remedies that may be available to Parent upon any such
violation, Parent shall have the right to enforce such covenants and
agreements by specific performance, injunctive relief or by any other means
available to Parent at law or in equity.
(e) NOTICES. All notices and other communications pursuant to this
Agreement shall be in writing and deemed to be sufficient if contained in a
written instrument and shall be deemed given if delivered personally,
telecopied, sent by nationally-recognized overnight courier or mailed by
registered or certified mail (return receipt requested), postage prepaid, to
the parties at the following address (or at such other address for a party
as shall be specified by like notice):
If to Parent: Informix Corporation
4100 Bohannon Drive
Menlo Park, California 94025
Attention: Scott Harlan, Esq.
Telecopy No.: (650) 926-6091
With a copy to: Wilson Sonsini Goodrich & Rosati
Professional Corporation
650 Page Mill Road
Palo Alto, California 94304
Attention: Douglas H. Collom, Esq.
Michael J. Kennedy, Esq.
Telecopy No.: (650) 493-6811
If to Stockholder: To the address for notice set forth on the
signature page hereof.
(f) GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Delaware, without reference to rules of conflicts of law.
(g) ENTIRE AGREEMENT. This Agreement and the Proxy contain the entire
understanding of the parties in respect of the subject matter hereof, and
supersede all prior negotiations and understandings between the parties with
respect to such subject matter.
(h) EFFECT OF HEADINGS. The section headings are for convenience only
and shall not affect the construction or interpretation of this Agreement.
(i) COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
B-3
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed on the day and year first above written.
Informix Corporation Stockholder
By:
Signature
By:
Name: Name:
Title: Title:
Print Address
Telephone
Facsimile No.
Shares beneficially owned:
shares of Company Common Stock
shares of Company Common Stock issuable upon
exercise of outstanding options or warrants
[SIGNATURE PAGE TO VOTING AGREEMENT]
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IRREVOCABLE PROXY
The undersigned stockholder of Ardent Software, Inc., a Delaware corporation
(the "COMPANY"), hereby irrevocably (to the fullest extent permitted by law)
appoints the directors on the Board of Directors of Informix Corporation, a
Delaware corporation ("PARENT"), and each of them, as the sole and exclusive
attorneys and proxies of the undersigned, with full power of substitution and
resubstitution, to vote and exercise all voting and related rights (to the full
extent that the undersigned is entitled to do so) with respect to all of the
shares of capital stock of the Company that now are or hereafter may be
beneficially owned by the undersigned, and any and all other shares or
securities of the Company issued or issuable in respect thereof on or after the
date hereof (collectively, the "SHARES") in accordance with the terms of this
Proxy. The Shares beneficially owned by the undersigned stockholder of the
Company as of the date of this Proxy are listed on the final page of this Proxy.
Upon the undersigned's execution of this Proxy, any and all prior proxies given
by the undersigned with respect to any Shares are hereby revoked and the
undersigned agrees not to grant any subsequent proxies with respect to the
Shares until after the Expiration Date (as defined below).
This Proxy is irrevocable (to the fullest extent permitted by law), is
coupled with an interest and is granted pursuant to that certain Voting
Agreement of even date herewith by and among Parent and the undersigned
stockholder (the "VOTING AGREEMENT"), and is granted in consideration of Parent
entering into that certain Agreement and Plan of Reorganization (the
"REORGANIZATION AGREEMENT"), among Parent, Iroquois Acquisition Corporation, a
Delaware corporation and a wholly-owned subsidiary of Parent ("MERGER SUB"), and
the Company. The Reorganization Agreement provides for the merger of Merger Sub
with and into the Company in accordance with its terms (the "MERGER"). As used
herein, the term "EXPIRATION DATE" shall mean the earlier to occur of (i) such
date and time as the Reorganization Agreement shall have been validly terminated
pursuant to Article VII thereof or (ii) such date and time as the Merger shall
become effective in accordance with the terms and provisions of the
Reorganization Agreement.
The attorneys and proxies named above, and each of them, are hereby
authorized and empowered by the undersigned, at any time prior to the Expiration
Date, to act as the undersigned's attorney and proxy to vote the Shares, and to
exercise all voting, consent and similar rights of the undersigned with respect
to the Shares (including, without limitation, the power to execute and deliver
written consents) at every annual, special or adjourned meeting of stockholders
of the Company and in every written consent in lieu of such meeting in favor of
approval of the Merger, the execution and delivery by the Company of the
Reorganization Agreement and the adoption and approval of the terms thereof and
in favor of each of the other actions contemplated by the Reorganization
Agreement and any action required in furtherance hereof and thereof.
The attorneys and proxies named above may not exercise this Proxy on any
other matter except as provided above. The undersigned stockholder may vote the
Shares on all other matters.
Any obligation of the undersigned hereunder shall be binding upon the
successors and assigns of the undersigned.
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This Proxy is irrevocable (to the fullest extent permitted by law). This
Proxy shall terminate, and be of no further force and effect, automatically upon
the Expiration Date.
Dated: ____________, 1999
Signature of Stockholder: ___________
Print Name of Stockholder: __________
Shares beneficially owned:
_________shares of the Company Common
Stock
_________shares of the Company Common
Stock issuable upon exercise of
outstanding options or warrants
[SIGNATURE PAGE TO IRREVOCABLE PROXY]
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APPENDIX C
COMPANY AFFILIATE AGREEMENT
THIS COMPANY AFFILIATE AGREEMENT (this "Agreement") is made and entered into
as of November 30, 1999, among Informix Corporation, a Delaware corporation
("Parent"), and the undersigned stockholder who may be deemed an affiliate
("Affiliate") of Ardent Software, Inc., a Delaware corporation ("Company").
Capitalized terms used but not otherwise defined herein shall have the meanings
ascribed to them in the Reorganization Agreement (as defined below).
RECITALS
A. The Company, Merger Sub (as defined below) and Parent have entered into
an Agreement and Plan of Reorganization (the "REORGANIZATION AGREEMENT") which
provides for the merger (the "MERGER") of a wholly-owned subsidiary of Parent
("MERGER SUB") with and into the Company. Pursuant to the Merger, all
outstanding capital stock of the Company (the "COMPANY CAPITAL STOCK") shall be
converted into the right to receive Common Stock of Parent;
B. Affiliate has been advised that Affiliate may be deemed to be an
"affiliate" of the Company, as the term "affiliate" is used for purposes of
Rule 144 of the Rules and Regulations (the "RULES AND REGULATIONS") of the
Securities and Exchange Commission (the "COMMISSION");
C. The execution and delivery of this Agreement by Affiliate is a material
inducement to Parent to enter into the Reorganization Agreement; and
D. Affiliate has been advised that Affiliate may be deemed to be an
"affiliate" of Parent after the Merger as the term "affiliate" is used in
Accounting Series Releases 130 and 135, as amended, although nothing contained
herein shall be construed as an admission by Affiliate that Affiliate is in fact
an "affiliate" of Parent.
NOW, THEREFORE, intending to be legally bound, the parties hereto agree as
follows:
1. ACKNOWLEDGMENTS BY AFFILIATE. Affiliate acknowledges and understands
that the representations, warranties and covenants by Affiliate set forth herein
shall be relied upon by Parent, the Company and their respective affiliates,
counsel and accounting firms, and that substantial losses and damages may be
incurred by these persons if Affiliate's representations, warranties or
covenants are breached. Affiliate has carefully read this Agreement and the
Reorganization Agreement and has discussed the requirements of this Agreement
with Affiliate's professional advisors, who are qualified to advise Affiliate
with regard to such matters.
2. BENEFICIAL OWNERSHIP OF COMPANY CAPITAL STOCK. The Affiliate is the
sole beneficial owner (as defined in Rule 13d-3 under the Securities Exchange
Act of 1934, as amended) of the number of shares of Company Capital Stock set
forth next to its name on the signature page hereto (the "Shares"). The Shares
are not subject to any claim, lien, pledge, charge, security interest or other
encumbrance or to any rights of first refusal of any kind. There are no options,
warrants, calls, rights, commitments or agreements of any character, written or
oral, to which the Affiliate is party or by which it is bound obligating the
Affiliate to issue, deliver, sell, repurchase or redeem, or cause to be issued,
delivered, sold, repurchased or redeemed, any Shares or obligating the Affiliate
to grant or enter into any such option, warrant, call, right, commitment or
agreement. The Affiliate has the sole right to transfer such Shares. The Shares
constitute all shares of Company Capital Stock owned, beneficially or of record,
by the Affiliate. The Shares are not subject to preemptive rights created by any
agreement to which the Affiliate is party. The Affiliate has not engaged in any
sale or other transfer of the Shares in contemplation of the Merger. All shares
of Company Capital Stock and common stock of Parent
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("Parent Common Stock") acquired by Affiliate subsequent to the date hereof
(including shares of Parent Common Stock acquired in the Merger) shall be
subject to the provisions of this Agreement as if held by Affiliate as of the
date hereof.
3. COVENANTS RELATED TO POOLING OF INTERESTS. During the period beginning
the later of 35 days preceding the Effective Time of the Merger and the time
prior to a merger prescribed by Staff Accounting Bulletin No. 65 during which
trading is prohibited and ending two trading days after Parent publicly
announces financial results covering at least 30 days of combined operations of
Parent and the Company, Affiliate shall not sell, exchange, transfer, pledge,
distribute, make any gift or otherwise dispose of or grant any option, establish
any "short" or put-equivalent position with respect to or enter into any similar
transaction (through derivatives or otherwise) (collectively, a "Disposition")
intended or having the effect, directly or indirectly, to reduce Affiliate's
risk relative to any shares of Parent Common Stock or Company Capital Stock
(including the Shares). Parent may, at its discretion, place a stock transfer
notice consistent with the foregoing, with respect to Affiliate's shares. In
light of the complexity of the rules relating to pooling-of-interest accounting
treatment and the inability to predict now when the Effective Time will be, from
the date hereof until the expiration of, the 30 day period referred to above,
Affiliate will not enter into a Disposition transaction without first having
given counsel for Parent at least three business days notice thereof.
4. COMPLIANCE WITH RULE 145 AND THE SECURITIES ACT.
(a) Affiliate has been advised that (i) the issuance of shares of Parent
Common Stock in connection with the Merger is expected to be effected
pursuant to a registration statement on Form S-4 promulgated under the
Securities Act of 1933, as amended (the "SECURITIES ACT"), and the resale of
such shares shall be subject to restrictions set forth in Rule 145 under the
Securities Act, and (ii) Affiliate may be deemed to be an affiliate of the
Company. Affiliate accordingly agrees not to sell, transfer or otherwise
dispose of any Parent Common Stock issued to Affiliate in the Merger unless
(i) such sale, transfer or other disposition is made in conformity with the
requirements of Rule 145(d) promulgated under the Securities Act, (ii) such
sale, transfer or other disposition is made pursuant to an effective
registration statement under the Securities Act or an appropriate exemption
from registration, (iii) Affiliate delivers to Parent a written opinion of
counsel, reasonably acceptable to Parent in form and substance, that such
sale, transfer or other disposition is otherwise exempt from registration
under the Securities Act or (iv) an authorized representative of the
Commission shall have rendered written advice to Affiliate to the effect
that the Commission would take no action, or that the staff of the
Commission would not recommend that the Commission take any action, with
respect to the proposed disposition if consummated.
(b) Parent shall give stop transfer instructions to its transfer agent
with respect to any Parent Common Stock received by Affiliate pursuant to
the Merger and there shall be placed on the certificates representing such
Common Stock, or any substitutions therefor, a legend stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A TRANSACTION
TO WHICH RULE 145 APPLIES AND MAY ONLY BE TRANSFERRED IN CONFORMITY WITH
RULE 145(d) OR PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR IN ACCORDANCE WITH A WRITTEN
OPINION OF COUNSEL, REASONABLY ACCEPTABLE TO THE ISSUER IN FORM AND
SUBSTANCE, THAT SUCH TRANSFER IS EXEMPT FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED."
The legend set forth above shall be removed (by delivery of a substitute
certificate without such legend) and Parent shall so instruct its transfer
agent, if Affiliate delivers to Parent (i) satisfactory written evidence that
the shares have been sold in compliance with Rule 145 (in which case, the
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substitute certificate shall be issued in the name of the transferee), or
(ii) an opinion of counsel, in form and substance reasonably satisfactory to
Parent, to the effect that public sale of the shares by the holder thereof is no
longer subject to Rule 145.
5. TERMINATION. This Agreement shall be terminated and shall be of no
further force and effect in the event of the termination of the Reorganization
Agreement pursuant to Article VII of the Reorganization Agreement.
6. MISCELLANEOUS.
(a) WAIVER; SEVERABILITY. No waiver by any party hereto of any
condition or of any breach of any provision of this Agreement shall be
effective unless in writing and signed by each party hereto. In the event
that any provision of this Agreement, or the application of any such
provision to any person, entity or set of circumstances, shall be determined
to be invalid, unlawful, void or unenforceable to any extent, the remainder
of this Agreement, and the application of such provision to persons,
entities or circumstances other than those as to which it is determined to
be invalid, unlawful, void or unenforceable, shall not be impaired or
otherwise affected and shall continue to be valid and enforceable to the
fullest extent permitted by law.
(b) BINDING EFFECT AND ASSIGNMENT. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns, but,
except as otherwise specifically provided herein, neither this Agreement nor
any of the rights, interests or obligations of the parties hereto may be
assigned by either of the parties without prior written consent of the other
party hereto.
(c) AMENDMENTS AND MODIFICATION. This Agreement may not be modified,
amended, altered or supplemented except upon the execution and delivery of a
written agreement executed by the parties hereto.
(d) INJUNCTIVE RELIEF. Each of the parties acknowledge that (i) the
covenants and the restrictions contained in this Agreement are necessary,
fundamental, and required for the protection of Parent and the Company and
to preserve for Parent the benefits of the Merger; (ii) such covenants
relate to matters which are of a special, unique, and extraordinary
character that gives each of such covenants a special, unique, and
extraordinary value; and (iii) a breach of any such covenants or any other
provision of this Agreement shall result in irreparable harm and damages to
Parent and the Company which cannot be adequately compensated by a monetary
award. Accordingly, it is expressly agreed that in addition to all other
remedies available at law or in equity, Parent and the Company shall be
entitled to the immediate remedy of a temporary restraining order,
preliminary injunction, or such other form of injunctive or equitable relief
as may be used by any court of competent jurisdiction to restrain or enjoin
any of the parties hereto from breaching any such covenant or provision or
to specifically enforce the provisions hereof.
(e) GOVERNING LAW. This Agreement shall be governed by and construed,
interpreted and enforced in accordance with the internal laws of the State
of Delaware without giving effect to any choice or conflict of law provision
or rule (whether of the State of Delaware or any other jurisdiction) that
would cause the application of the laws of any jurisdiction other than the
State of Delaware.
(f) ENTIRE AGREEMENT. This Agreement, the Reorganization Agreement and
the other agreements referred to in the Reorganization Agreement set forth
the entire understanding of Affiliate and Parent relating to the subject
matter hereof and thereof and supersede all prior agreements and
understandings between Affiliate and Parent relating to the subject matter
hereof and thereof.
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(g) ATTORNEYS' FEES. In the event of any legal actions or proceeding
to enforce or interpret the provisions hereof, the prevailing party shall be
entitled to reasonable attorneys' fees, whether or not the proceeding
results in a final judgment.
(h) FURTHER ASSURANCES. Affiliate shall execute and/or cause to be
delivered to Parent such instruments and other documents and shall take such
other actions as Parent may reasonably request to effectuate the intent and
purposes of this Agreement.
(i) THIRD PARTY RELIANCE. Counsel to and independent auditors for
Parent and the Company shall be entitled to rely upon this Affiliate
Agreement.
(j) SURVIVAL. The representations, warranties, covenants and other
provisions contained in this Agreement shall survive the Merger.
(k) NOTICES. All notices and other communications pursuant to this
Agreement shall be in writing and deemed to be sufficient if contained in a
written instrument and shall be deemed given if delivered personally,
telecopied, sent by nationally-recognized overnight courier or mailed by
registered or certified mail (return receipt requested), postage prepaid, to
the parties at the following address (or at such other address for a party
as shall be specified by like notice):
If to Parent: Informix Corporation
4100 Bohnannon Drive
Menlo Park, California 94025
Attention: Scott Harlan, Esq.
Telecopy No.: (650) 926-6300
With a copy to: Wilson Sonsini Goodrich & Rosati, P.C.
650 Page Mill Road
Palo Alto, California 94304
Attention: Douglas H. Collom, Esq.
Michael J. Kennedy, Esq.
Telecopy No.: (650) 493-6811
If to
Affiliate: To the address for notice set forth on the signature page
hereof.
(l) COUNTERPARTS. This Agreement shall be executed in one or more
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
[The remainder of this page has been intentionally left blank]
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IN WITNESS WHEREOF, the parties have caused this Affiliate Agreement to be
duly executed on the day and year first above written.
INFORMIX CORPORATION AFFILIATE
By: By:
Name: Affiliate's Address for Notice:
Title:
Shares beneficially owned:
shares of Company Common Stock
shares of Company Common Stock issuable upon exercise
of outstanding options and warrants
shares of Parent Common Stock
[SIGNATURE PAGE TO AFFILIATE AGREEMENT]
C-5
APPENDIX D
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "AGREEMENT") is made and entered into as
of November 30, 1999, among Informix Corporation, a Delaware corporation
("PARENT"), and Ardent Software, Inc., a Delaware corporation (the "COMPANY").
Capitalized terms used but not otherwise defined herein will have the meanings
ascribed to them in the Reorganization Agreement (as defined below).
RECITALS
A. The Company, Merger Sub (as defined below) and Parent have entered into
an Agreement and Plan of Reorganization (the "REORGANIZATION AGREEMENT") which
provides for the merger (the "MERGER") of a wholly-owned subsidiary of Parent
("MERGER SUB") with and into the Company. Pursuant to the Merger, all
outstanding capital stock of the Company will be converted into the right to
receive Common Stock of Parent.
B. As a condition to Parent's willingness to enter into the Reorganization
Agreement, Parent has requested that Company agree, and Company has so agreed,
to grant to Parent an option to acquire shares of Company's Common Stock, $0.01
par value per share (the "COMPANY SHARES"), upon the terms and subject to the
conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements set forth herein and in the Reorganization Agreement
and for other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the parties hereto agree as follows:
1. GRANT OF OPTION. The Company hereby grants to Parent an irrevocable
option (the "OPTION") to acquire up to a number of Company Shares equal to 19.9%
of the issued and outstanding shares as of the first date, if any, upon which an
Exercise Event (as defined in Section 2(a) below) occurs (the "OPTION SHARES"),
in the manner set forth below by paying cash at a price of $38.50 per share (the
"EXERCISE PRICE").
2. EXERCISE OF OPTION.
(a) The Option may be exercised by Parent, in whole or in part, at any
time or from time to time if the Reorganization Agreement is terminated
pursuant to Section 7.1(b), 7.1(d), 7.1(g), or 7.1(h) thereof and an event
causing the Termination Fee to become payable pursuant to Section 7.3(b) of
the Reorganization Agreement occurs (any of the events being referred to
herein as an "EXERCISE EVENT"). In the event Parent wishes to exercise the
Option, Parent will deliver to the Company a written notice (each an
"EXERCISE NOTICE") specifying the total number of Option Shares it wishes to
acquire. Each closing of a purchase of Option Shares (a "CLOSING") will
occur on a date and at a time prior to the termination of the Option
designated by Parent in an Exercise Notice delivered at least two business
days prior to the date of such Closing, which Closing will be held at the
principal offices of the Company.
(b) The Option will terminate upon the earliest of (i) the Effective
Time, (ii) twelve (12) months following the date on which the Reorganization
Agreement is terminated pursuant to Section 7.1(b) or 7.1(d) thereof, if no
event causing the Termination Fee to become payable pursuant to
Section 7.3(b)(ii) of the Reorganization Agreement has occurred,
(iii) twelve (12) months following the date on which the Reorganization
Agreement is terminated pursuant to Section 7.1(g) or 7.1(h) thereof,
(iv) in the event the Reorganization Agreement has been
D-1
terminated pursuant to Section 7.1(b) or 7.1(d) thereof and the Termination
Fee became payable pursuant to Section 7.3(b)(ii) thereof, 18 months after
payment of the Termination Fee; and (v) the date on which the Reorganization
Agreement is otherwise terminated if neither a Triggering Event nor the
announcement of an Acquisition Proposal by a third party occurred on or
prior to the date of such termination; PROVIDED, HOWEVER, that if the Option
cannot be exercised by reason of any applicable government order or because
the waiting period related to the issuance of the Option Shares under the
HSR Act will not have expired or been terminated, then the Option will not
terminate until the tenth business day after such impediment to exercise
will have been removed or will have become final and not subject to appeal.
3. CONDITIONS TO CLOSING. The obligation of Company to issue Option Shares
to Parent hereunder is subject to the conditions that (A) any waiting period
under the HSR Act applicable to the issuance of the Option Shares hereunder will
have expired or been terminated; (B) all material consents, approvals, orders or
authorizations of, or registrations, declarations or filings with, any Federal,
state or local administrative agency or commission or other Federal state or
local governmental authority or instrumentality, if any, required in connection
with the issuance of the Option Shares hereunder will have been obtained or
made, as the case may be; and (C) no preliminary or permanent injunction or
other order by any court of competent jurisdiction prohibiting or otherwise
restraining such issuance will be in effect. It is understood and agreed that at
any time during which the Option is exercisable, the parties will use their
respective best efforts to satisfy all conditions to Closing, so that a Closing
may take place as promptly as practicable.
4. CLOSING. At any Closing, (A) the Company will deliver to Parent a
single certificate in definitive form representing the number of Company Shares
designated by Parent in its Exercise Notice, such certificate to be registered
in the name of Parent and to bear the legend set forth in Section 9 hereof,
against delivery of (B) payment by Parent to the Company of the aggregate
purchase price for the Company Shares so designated and being purchased by
delivery of a certified check or bank check.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Company represents and
warrants to Parent that (A) Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
the corporate power and authority to enter into this Agreement and to carry out
its obligations hereunder; (B) the execution and delivery of this Agreement by
the Company and consummation by the Company of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of the Company and no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement or any of the transactions contemplated
hereby; (C) this Agreement has been duly executed and delivered by the Company
and constitutes a legal, valid and binding obligation of the Company and,
assuming this Agreement constitutes a legal, valid and binding obligation of
Parent, is enforceable against the Company in accordance with its terms;
(D) except for any filings required under the HSR Act, the Company has taken all
necessary corporate and other actions to authorize and reserve for issuance and
to permit it to issue upon exercise of the Option, and at all times from the
date hereof until the termination of the Option will have reserved for issuance,
a sufficient number of unissued Company Shares for Parent to exercise the Option
in full and will take all necessary corporate or other action to authorize and
reserve for issuance all additional Company Shares or other securities which may
be issuable pursuant to Section 8(a) upon exercise of the Option, all of which,
upon their issuance and delivery in accordance with the terms of this Agreement,
will be validly issued, fully paid and nonassessable; (E) upon delivery of the
Company Shares and any other securities to Parent upon exercise of the Option,
Parent will acquire such Company Shares or other securities free and clear of
all material claims, liens, charges, encumbrances and security interests of any
kind or nature whatsoever, excluding those imposed by Parent; (F) the execution
and delivery of this Agreement by the Company do not, and the performance of
this Agreement by the Company will not, (i) conflict with
D-2
or violate the Certificate of Incorporation or Bylaws or equivalent
organizational documents of the Company or any of its subsidiaries,
(ii) conflict with or violate any law, rule, regulation, order, judgment or
decree applicable to the Company or any of its subsidiaries or by which its or
any of their respective properties is bound or affected or (iii) result in any
breach of or constitute a default (or an event that with notice or lapse of time
or both would become a default) under, or impair the Company's or any of its
subsidiaries' rights or alter the rights or obligations of any third party
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or encumbrance on any of
the properties or assets of the Company or any of its subsidiaries pursuant to,
any material note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which the
Company or any of its subsidiaries is a party or by which the Company or any of
its subsidiaries or its or any of their respective properties are bound or
affected; and (G) the execution and delivery of this Agreement by the Company
does not, and the performance of this Agreement by the Company will not, require
any consent, approval, authorization or permit of, or filing with, or
notification to, any Governmental Entity except pursuant to the HSR Act.
6. CERTAIN RIGHTS.
(a) PARENT PUT. At the request of and upon notice by Parent (the "PUT
NOTICE"), at any time during the period during which the Option is
exercisable pursuant to Section 2 (the "PURCHASE PERIOD"), the Company (or
any successor entity thereof) will purchase from Parent the Option, to the
extent not previously exercised, at the price set forth in subparagraph
(i) below (as limited by subparagraph (iii) below), and the Option Shares,
if any, acquired by Parent pursuant thereto, at the price set forth in
subparagraph (ii) below (as limited by subparagraph (iii) below):
(i) The difference between the "MARKET/TENDER OFFER PRICE" for the
Company Shares as of the date Parent gives notice of its intent to
exercise its rights under this Section 6(a) (defined as the higher of
(A) the highest price per share offered as of such date pursuant to any
Acquisition Proposal which was made prior to such date and (B) the
highest closing sale price of Company Shares then on the Nasdaq National
Market during the 20 trading days ending on the trading day immediately
preceding such date) and the Exercise Price, multiplied by the number of
Company Shares purchasable pursuant to the Option that remain, but only
if the Market/Tender Offer Price is greater than the Exercise Price. For
purposes of determining the highest price offered pursuant to any
Acquisition Proposal which involves consideration other than cash, the
value of such consideration will be equal to the higher of (x) if
securities of the same class of the proponent as such consideration are
traded on any national securities exchange or by any registered
securities association, a value based on the closing sale price or asked
price for such securities on their principal trading market on such date
and (y) the value ascribed to such consideration by the proponent of such
Acquisition Proposal, or if no such value is ascribed, a value determined
in good faith by the Board of Directors of the Company.
(ii) The Exercise Price paid by Parent for Company Shares acquired
pursuant to the Option plus the difference between the Market/Tender
Offer Price and such Exercise Price (but only if the Market/Tender Offer
Price is greater than the Exercise Price) multiplied by the number of
Company Shares so purchased.
(iii) Notwithstanding subparagraphs (i) and (ii) above, pursuant to
this Section 6 Company will not be required to pay Parent in excess of an
aggregate of (x) $25,500,000.00 PLUS (y) the Exercise Price paid by
Parent for Company Shares acquired pursuant to the Option MINUS (z) any
amounts paid to Parent by the Company pursuant to Section 7.3(b) of the
Reorganization Agreement.
D-3
(b) PAYMENT AND REDELIVERY OF OPTION OR SHARES. In the event Parent
exercises its rights under Section 6(a), the Company will, within five
business days after Parent delivers notice pursuant to Section 6(a), pay the
required amount to Parent in immediately available funds and Parent will
surrender to the Company the Option and the certificates evidencing the
Company Shares purchased by Parent pursuant thereto.
7. REGISTRATION RIGHTS.
(a) Following the termination of the Reorganization Agreement, Parent
(sometimes referred to herein as the "HOLDER") may by written notice (a
"REGISTRATION NOTICE") to the Company (the "REGISTRANT") request the
Registrant to register under the Securities Act all or any part of the
shares acquired by the Holder pursuant to this Agreement (such shares
requested to be registered, the "REGISTRABLE SECURITIES") in order to permit
the sale or other disposition of any or all shares of the Registrable
Securities that have been acquired by or are issuable to Holder upon
exercise of the Option in accordance with the intended method of sale or
other disposition stated by Holder, including a "shelf" registration
statement under Rule 415 under the Securities Act or any successor
provision. Holder agrees to cause, and to cause any underwriters of any sale
or other disposition to cause, any sale or other disposition pursuant to
such registration statement to be effected on a widely distributed basis so
that upon consummation thereof no purchaser or transferee will own
beneficially more than 5.0% of the then-outstanding voting power of
Registrant. Upon a request for registration, the Registrant will have the
option exercisable by written notice delivered to the Holder within ten
business days after the receipt of the Registration Notice, irrevocably to
agree to purchase all or any part of the Registrable Securities for cash at
a price (the "OPTION PRICE" equal to the product of (i) the number of
Registrable Securities so purchased and (ii) the per share average of the
closing sale prices of the Registrant's Common Stock on the Nasdaq National
Market for the ten trading days immediately preceding the date of the
Registration Notice. Any such purchase of Registrable Securities by the
Registrant hereunder will take place at a closing to be held at the
principal executive offices of the Registrant or its counsel at any
reasonable date and time designated by the Registrant in such notice within
ten business days after delivery of such notice. The payment for the shares
to be purchased will be made by delivery at the time of such closing of the
Option Price in immediately available funds.
(b) If the Registrant does not elect to exercise its option to purchase
pursuant to Section 7(a) with respect to all Registrable Securities, the
Registrant will use all reasonable efforts to effect, as promptly as
practicable, the registration under the Securities Act of the unpurchased
Registrable Securities requested to be registered in the Registration Notice
and to keep such registration statement effective for such period not in
excess of 120 calendar days from the day such registration statement first
becomes effective as may be reasonably necessary to effect such sale or
other disposition; PROVIDED, HOWEVER, that the Holder will not be entitled
to more than an aggregate of two effective registration statements
hereunder. The obligations of Registrant hereunder to file a registration
statement and to maintain its effectiveness may be suspended for up to 120
calendar days in the aggregate if the Board of Directors of Registrant shall
have determined that the filing of such registration statement or the
maintenance of its effectiveness would require premature disclosure of
material nonpublic information that would materially and adversely affect
Registrant or otherwise interfere with or adversely affect any pending or
proposed offering of securities of Registrant or any other material
transaction involving Registrant. If consummation of the sale of any
Registrable Securities pursuant to a registration hereunder does not occur
within 120 days after the filing with the SEC of the initial registration
statement therefor, the provisions of this Section 7 will again be
applicable to any proposed registration. The Registrant will use all
reasonable efforts to cause any Registrable Securities registered pursuant
to this Section 7 to be qualified for sale under the securities or blue sky
laws of such jurisdictions as the Holder may reasonably request and will
continue such registration or qualification in effect in such
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jurisdictions; PROVIDED, HOWEVER, that the Registrant will not be required
to qualify to do business in, or consent to general service of process in,
any jurisdiction by reason of this provision. If Registrant effects a
registration under the Securities Act of Company Common Stock for its own
account or for any other stockholders of Registrant (other than on Form S-4
or Form S-8, or any successor form), it will allow Holder the right to
participate in such registration by selling its Registrable Securities, and
such participation will not affect the obligation of Registrant to effect
demand registration statements for Holder under this Section 7; PROVIDED
that, if the managing underwriters of such offering advise Registrant in
writing that in their opinion the number of shares of Company Common Stock
requested to be included in such registration exceeds the number which can
be sold in such offering, Registrant will include the shares requested to be
included therein by Holder pro rata with the shares intended to be included
therein by Registrant and such other stockholders.
(c) The registration rights set forth in this Section 7 are subject to
the condition that the Holder will provide the Registrant with such
information with respect to the Holder's Registrable Securities, the plan
for distribution thereof, and such other information with respect to the
Holder as, in the reasonable judgment of counsel for the Registrant, is
necessary to enable the Registrant to include in a registration statement
all facts required to be disclosed with respect to a registration
thereunder.
(d) A registration effected under this Section 7 will be effected at the
Registrant's expense, except for underwriting discounts and commissions and
the fees and expenses of counsel to the Holder, and the Registrant will
provide to the underwriters such documentation (including certificates,
opinions of counsel and "comfort" letters from auditors) as are customary in
connection with underwritten public offerings and as such underwriters may
reasonably require. In connection with any registration, the Holder and the
Registrant agree to enter into an underwriting agreement reasonably
acceptable to each such party, in form and substance customary for
transactions of this type with the underwriters participating in such
offering.
(e) INDEMNIFICATION.
(i) The Registrant will indemnify the Holder, each of its directors
and officers and each person who controls the Holder within the meaning
of Section 15 of the Securities Act, and each underwriter of the
Registrant's securities, with respect to any registration, qualification
or compliance which has been effected pursuant to this Agreement, against
all expenses, claims, losses, damages or liabilities (or actions in
respect thereof), including any of the foregoing incurred in settlement
of any litigation, commenced or threatened, arising out of or based on
any untrue statement (or alleged untrue statement) of a material fact
contained in any registration statement, prospectus, offering circular or
other document, or any amendment or supplement thereto, incident to any
such registration, qualification or compliance, or based on any omission
(or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of
the circumstances in which they were made, not misleading, or any
violation by the Registrant of any rule or regulation promulgated under
the Securities Act applicable to the Registrant in connection with any
such registration, qualification or compliance, and the Registrant will
reimburse the Holder, each of its directors and officers and each person
who controls the Holder within the meaning of Section 15 of the
Securities Act, and each underwriter for any legal and any other expenses
reasonably incurred in connection with investigating, preparing or
defending any such claim, loss, damage, liability or action; PROVIDED,
that the Registrant will not be liable in any such case to the extent
that any such claim, loss, damage, liability or expense arises out of or
is based on any untrue statement or omission or alleged untrue statement
or omission, made in reliance upon and in conformity with written
information furnished to the Registrant by such Holder or director or
officer or controlling person or underwriter seeking indemnification.
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(ii) The Holder will indemnify the Registrant, each of its directors
and officers and each underwriter of the Registrant's securities covered
by such registration statement and each person who controls the
Registrant within the meaning of Section 15 of the Securities Act,
against all expenses, claims, losses, damages and liabilities (or actions
in respect thereof), including any of the foregoing incurred in
settlement of any litigation, commenced or threatened, arising out of or
based on any untrue statement (or alleged untrue statement) of a material
fact contained in any such registration statement, prospectus, offering
circular or other document, or any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary
to make the statements therein not misleading, or any violation by the
Holder of any rule or regulation promulgated under the Securities Act
applicable to the Holder in connection with any such registration,
qualification or compliance, and will reimburse the Registrant, such
directors, officers or control persons or underwriters for any legal or
any other expenses reasonably incurred in connection with investigating,
preparing or defending any such claim, loss, damage, liability or action,
in each case to the extent, but only to the extent, that such untrue
statement (or alleged untrue statement) or omission (or alleged omission)
is made in such registration statement, prospectus, offering circular or
other document in reliance upon and in conformity with written
information furnished to the Registrant by the Holder for use therein;
PROVIDED, that in no event will any indemnity under this Section 7(e)
exceed the net proceeds of the offering received by the Holder.
(iii) Each party entitled to indemnification under this Section 7(e)
(the "INDEMNIFIED PARTY") will give notice to the party required to
provide indemnification (the "INDEMNIFYING PARTY") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity
may be sought, and will permit the Indemnifying Party to assume the
defense of any such claim or any litigation resulting therefrom,
PROVIDED, that counsel for the Indemnifying Party, who will conduct the
defense of such claim or litigation, will be approved by the Indemnified
Party (whose approval will not unreasonably be withheld), and the
Indemnified Party may participate in such defense at such party's
expense; PROVIDED, HOWEVER, that the Indemnifying Party will pay such
expense if representation of the Indemnified Party by counsel retained by
the Indemnifying Party would be inappropriate due to actual or potential
differing interests between the Indemnified Party and any other party
represented by such counsel in such proceeding, and PROVIDED FURTHER,
HOWEVER, that the failure of any Indemnified Party to give notice as
provided herein will not relieve the Indemnifying Party of its
obligations under this Section 7(e) unless the failure to give such
notice is materially prejudicial to an Indemnifying Party's ability to
defend such action. No Indemnifying Party, in the defense of any such
claim or litigation will, except with the consent of each Indemnified
Party, consent to entry of any judgment or enter into any settlement
which does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such Indemnified Party of a release from all
liability in respect to such claim or litigation. No Indemnifying Party
will be required to indemnify any Indemnified Party with respect to any
settlement entered into without such Indemnifying Party's prior consent
(which will not be unreasonably withheld).
8. ADJUSTMENT UPON CHANGES IN CAPITALIZATION; RIGHTS PLANS.
(a) In the event of any change in the Company Shares by reason of stock
dividends, stock splits, reverse stock splits, mergers (other than the
Merger), recapitalizations, combinations, exchanges of shares and the like,
the type and number of shares or securities subject to the Option, the
Exercise Price will be adjusted appropriately, and proper provision will be
made in the agreements governing such transaction so that Parent will
receive, upon exercise of the Option, the number and class of shares or
other securities or property that Parent would have received in
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respect of the Company Shares if the Option had been exercised immediately
prior to such event or the record date therefor, as applicable.
(b) At any time during which the Option is exercisable, and at any time
after the Option is exercised (in whole or in part, if at all), the Company
will not amend (nor permit the amendment of) the Company Rights Plan nor
adopt (nor permit the adoption of) a new stockholders rights plan, that
contains provisions for the distribution or exercise of rights thereunder as
a result of Parent or any affiliate or transferee being the beneficial owner
of shares of the Company by virtue of the Option being exercisable or having
been exercised (or as a result of beneficially owning shares issuable in
respect of any Option Shares).
9. RESTRICTIVE LEGENDS. Each certificate representing Option Shares issued
to Parent hereunder will include a legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE REOFFERED OR SOLD
ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE. SUCH SECURITIES ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON
TRANSFER AS SET FORTH IN THE STOCK OPTION AGREEMENT DATED AS OF NOVEMBER 30,
1999, A COPY OF WHICH MAY BE OBTAINED FROM THE ISSUER.
It is understood and agreed that (i) the reference to restrictions arising
under the Securities Act in the above legend will be removed by delivery of
substitute certificate(s) without such reference if such Option Shares have been
registered pursuant to the Securities Act, such Option Shares have been sold in
reliance on and in accordance with Rule 144 under the Securities Act or Holder
has delivered to Registrant a copy of a letter from the staff of the SEC, or an
opinion of counsel in form and substance reasonably satisfactory to Registrant
and its counsel, to the effect that such legend is not required for purposes of
the Securities Act and (ii) the reference to restrictions pursuant to this
Agreement in the above legend will be removed by delivery of substitute
certificate(s) without such reference if the Option Shares evidenced by
certificate(s) containing such reference have been sold or transferred in
compliance with the provisions of this Agreement under circumstances that do not
require the retention of such reference.
10. LISTING AND HSR FILING. The Company, upon the request of Parent, will
promptly file an application to list the Company Shares to be acquired upon
exercise of the Option for quotation on the Nasdaq National Market and will use
its best efforts to obtain approval of such listing as soon as practicable.
Promptly after the date hereof, each of the parties hereto will promptly file
with the Federal Trade Commission and the Antitrust Division of the United
States Department of Justice all required premerger notification and report
forms and other documents and exhibits required to be filed under the HSR Act to
permit the acquisition of the Company Shares subject to the Option at the
earliest possible date.
11. BINDING EFFECT. This Agreement will be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns. Nothing contained in this Agreement, express or implied, is intended to
confer upon any person other than the parties hereto and their respective
successors and permitted assigns any rights or remedies of any nature whatsoever
by reason of this Agreement. Any shares sold by a party in compliance with the
provisions of Section 7 will, upon consummation of such sale, be free of the
restrictions imposed with respect to such shares by this Agreement and any
transferee of such shares will not be entitled to the rights of such party.
Certificates representing shares sold in a registered public offering pursuant
to Section 7 will not be required to bear the legend set forth in Section 9.
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12. SPECIFIC PERFORMANCE. The parties hereto recognize and agree that if
for any reason any of the provisions of this Agreement are not performed in
accordance with their specific terms or are otherwise breached, immediate and
irreparable harm or injury would be caused for which money damages would not be
an adequate remedy. Accordingly, each party hereto agrees that in addition to
other remedies the other party hereto will be entitled to an injunction
restraining any violation or threatened violation of the provisions of this
Agreement or the right to enforce any of the covenants or agreements set forth
herein by specific performance. In the event that any action will be brought in
equity to enforce the provisions of the Agreement, neither party hereto will
allege, and each party hereto hereby waives the defense, that there is an
adequate remedy at law.
13. ENTIRE AGREEMENT. This Agreement and the Reorganization Agreement
(including the appendices thereto) constitute the entire agreement between the
parties hereto with respect to the subject matter hereof and supersede all other
prior agreements and understandings, both written and oral, between the parties
hereto with respect to the subject matter hereof.
14. FURTHER ASSURANCES. Each party hereto will execute and deliver all
such further documents and instruments and take all such further action as may
be necessary in order to consummate the transactions contemplated hereby.
15. VALIDITY. The invalidity or unenforceability of any provision of this
Agreement will not affect the validity or enforceability of the other provisions
of this Agreement, which will remain in full force and effect. In the event any
Governmental Entity of competent jurisdiction holds any provision of this
Agreement to be null, void or unenforceable, the parties hereto will negotiate
in good faith and will execute and deliver an amendment to this Agreement in
order, as nearly as possible, to effectuate, to the extent permitted by law, the
intent of the parties hereto with respect to such provision.
16. NOTICES. All notices and other communications hereunder will be in
writing and will be deemed given if delivered personally or by commercial
delivery service, or sent via telecopy (receipt confirmed) to the parties at the
following addresses or telecopy numbers (or at such other address or telecopy
numbers for a party as will be specified by like notice):
(a) if to Parent, to:
Informix Corporation
4100 Bohannon Drive
Menlo Park, California 94025
Attention: Karen Blasing
Telecopy No.: (650) 926-6091
with a copy to:
Wilson, Sonsini, Goodrich & Rosati, P.C.
650 Page Mill Road
Palo Alto, California 94304-1050
Attention: Douglas H. Collom, Esq.
Michael J. Kennedy, Esq.
Telecopy No.: (650) 493-6811
(b) if to the Company, to:
Ardent Software, Inc.
50 Washington Street
Westboro, Massachusetts
Attention: General Counsel
Telecopy No.: (508) 366-3888
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with a copy to:
Choate, Hall & Stewart
Exchange Place
53 State Street
Boston, Massachusetts 02109
Attention: Richard Hoehn, Esq.
Telecopy No.: (617) 248-4000
17. GOVERNING LAW. This Agreement will be governed by and construed in
accordance with the laws of the State of Delaware applicable to agreements made
and to be performed entirely within such State.
18. EXPENSES. Except as otherwise expressly provided herein or in the
Reorganization Agreement, all costs and expenses incurred in connection with the
transactions contemplated by this Agreement will be paid by the party incurring
such expenses.
19. AMENDMENTS; WAIVER. This Agreement may be amended by the parties
hereto and the terms and conditions hereof may be waived only by an instrument
in writing signed on behalf of each of the parties hereto, or, in the case of a
waiver, by an instrument signed on behalf of the party waiving compliance.
20. ASSIGNMENT. Neither of the parties hereto may sell, transfer, assign
or otherwise dispose of any of its rights or obligations under this Agreement or
the Option created hereunder to any other person, without the express written
consent of the other party, except that the rights and obligations hereunder
will inure to the benefit of and be binding upon any successor of a party
hereto.
21. COUNTERPARTS. This Agreement may be executed in counterparts, each of
which will be deemed to be an original, but both of which, taken together, will
constitute one and the same instrument.
22. EFFECT OF HEADINGS. The section headings are for convenience only and
shall not affect the construction or interpretation of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective duly authorized officers as of the date first above
written.
INFORMIX CORPORATION
By: /s/ JEAN-YVES DEXMIER
--------------------------------------
Name: Jean-Yves Dexmier
--------------------------------------
Title: President and Chief Executive Officer
--------------------------------------
ARDENT SOFTWARE, INC.
By: /s/ PETER GYENES
--------------------------------------
Name: Peter Gyenes
--------------------------------------
Title: Chairman, President and CEO
--------------------------------------
[SIGNATURE PAGE TO STOCK OPTION AGREEMENT]
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APPENDIX E
November 30, 1999
Board of Directors
Informix Corporation
4100 Bohannon Drive
Menlo Park, CA 94025
Members of the Board of Directors:
Ardent Software, Inc. (the "Company"), Informix Corporation (the "Parent")
and Informix Acquisition Corporation, a newly formed, wholly owned subsidiary of
the Parent (the "Merger Sub"), propose to enter into an Agreement and Plan of
Reorganization (the "Agreement"), pursuant to which the Merger Sub will be
merged with and into the Company (the "Merger") in a transaction in which each
outstanding share of the Company's common stock, par value $0.01 per share (the
"Company Shares"), will be converted into the right to receive 3.50 shares (the
"Exchange Ratio") of the common stock of the Parent, par value $0.01 per share
(the "Parent Shares"). In connection with the Merger, the Parent and the Company
also propose to enter into a Stock Option Agreement (the "Option Agreement")
pursuant to which the Company has granted the Parent an option to purchase up to
19.9% of the outstanding shares of the Company common stock under certain
circumstances, all as set forth more fully in the Option Agreement.
You have asked us whether, in our opinion, the Exchange Ratio is fair from a
financial point of view to the Parent.
In arriving at the opinion set forth below, we have, among other things:
(1) Reviewed certain publicly available business and financial information
relating to the Company and the Parent that we deemed to be relevant;
(2) Reviewed certain information relating to the business, earnings, cash
flow, assets, liabilities and prospects of the Company and the Parent, as
well as the amount and timing of the cost savings and related expenses
and synergies expected to result from the Merger (the "Expected
Synergies"), prepared by and furnished to us by the Company and the
Parent, respectively;
(3) Conducted discussions with members of senior management;
(4) Reviewed the market prices and valuation multiples for the Company
Shares and the Parent Shares and compared them with those of certain
publicly traded companies that we deemed to be relevant;
(5) Reviewed the results of operations of the Company and the Parent and
compared them with those of certain publicly traded companies that we
deemed to be relevant;
(6) Compared the proposed financial terms of the Merger with the financial
terms of certain other transactions that we deemed to be relevant;
(7) Participated in certain discussions and negotiations among
representatives of the Company and the Parent and their financial and
legal advisors;
(8) Reviewed the potential pro forma impact of the Merger;
E-1
Board of Directors
Informix Corporation
November 30, 1999
Page 2
(9) Reviewed the Agreement and the Option Agreement; and
(10) Reviewed such other financial studies and analyses and took into
account such other matters as we deemed necessary, including our
assessment of general economic, market and monetary conditions.
In preparing our opinion, we have assumed and relied on the accuracy and
completeness of all information supplied or otherwise made available to us,
discussed with or reviewed by or for us, or publicly available, and we have not
assumed any responsibility for independently verifying such information or
undertaken an independent evaluation or appraisal of any of the assets or
liabilities of the Company or the Parent or been furnished with any such
evaluation or appraisal. In addition, we have not assumed any obligation to
conduct any physical inspection of the properties or facilities of the Company
or the Parent. With respect to the information furnished to or discussed with us
by the Company or the Parent, including information discussed with management of
the Parent and the Company regarding their views of future operations, we have
assumed that such information has been reasonably prepared and reflects the best
currently available estimates and judgment of the Company's or the Parent's
management, as the case may be, as to the competitive, operating and regulatory
environments, the financial performance of the Company and Parent and the
Expected Synergies. We have assumed that outstanding litigation involving the
Company will be resolved in a manner that does not materially adversely affect
the value of the Company or the contemplated benefits of the Merger to Parent.
As to legal matters, we have relied upon the advice of counsel to Parent. We
have further assumed that the Merger will be accounted for as a pooling of
interests under generally accepted accounting principles and that it will
qualify as a tax-free reorganization for U.S. federal income tax purposes. We
have assumed that the Merger will be consummated on the terms set forth in the
Agreement without waiver or amendment of any of the terms or conditions thereof.
Our opinion is necessarily based upon market, economic and other conditions
as they exist and can only be evaluated on the information made available to us
as of the date hereof. We have assumed that in the course of obtaining the
necessary regulatory or other consents or approvals (contractual or otherwise)
for the Merger, no restrictions, including any divestiture requirements or
amendments or modifications, will be imposed that will have a material adverse
effect on the contemplated benefits of the Merger.
We are acting as financial advisor to the Parent in connection with the
Merger and will receive a fee from the Parent for our services, a significant
portion of which is contingent upon the consummation of the Merger. In addition,
the Parent has agreed to indemnify us for certain liabilities arising out of our
engagement. We have, in the past, provided financial services to the Parent and
may continue to do so and have received, and may receive, fees for the rendering
of such services. In addition, in the ordinary course of our business, we may
actively trade the Company Shares and other securities of the Company as well as
the Parent Shares and other securities of the Parent for our own account and for
the accounts of customers and, accordingly, may at any time hold a long or short
position in such securities.
This opinion is for the use and benefit of the Board of Directors of the
Parent. Our opinion does not address the merits of the underlying decision by
the Parent to engage in the Merger and does not constitute a recommendation to
any shareholder of the Parent as to how such shareholder should vote on the
proposed Merger or any matter related thereto.
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Board of Directors
Informix Corporation
November 30, 1999
Page 3
We are not expressing any opinion herein as to the prices at which the
Parent Shares will trade following the announcement or consummation of the
Merger.
On the basis of and subject to the foregoing, we are of the opinion that, as
of the date hereof, the Exchange Ratio is fair from a financial point of view to
the Parent.
Very truly yours,
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
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APPENDIX F
November 30, 1999
Board of Directors
Ardent Software, Inc.
50 Washington Street
Westboro, Massachusetts 01581
Members of the Board of Directors:
You have requested our opinion as to the fairness, from a financial point of
view, to the stockholders of Ardent Software, Inc. ("Ardent") of the Conversion
Ratio (as defined below), pursuant to the terms of that certain Agreement and
Plan of Reorganization, to be dated as of November 30, 1999 (the "Agreement"),
by and among Ardent, Informix Corporation ("Informix"), and Teepee Acquisition
Corporation, a wholly-owned subsidiary of Informix ("Teepee").
As more specifically set forth in the Agreement, and subject to the terms
and conditions thereof, the Agreement provides for the acquisition of Ardent by
Informix through the merger of Teepee with and into Ardent, with Ardent as the
surviving company (the "Merger") as a wholly-owned subsidiary of Informix. In
the Merger, among other things, each share of the common stock of Ardent, par
value $0.01 per share ("Ardent Common Stock"), outstanding as of the effective
time of the Merger, other than shares held by Ardent, Informix or affiliates of
Informix, will be converted into the right to receive 3.5 shares (the
"Conversion Ratio") of the common stock of Informix, par value $0.01 per share
("Informix Common Stock"). The terms and conditions of the Merger are more fully
set forth in the Agreement.
SG Cowen Securities Corporation ("SG Cowen"), as part of its investment
banking business, is continually engaged in the valuation of businesses and
their securities in connection with mergers and acquisitions, negotiated
underwritings, secondary distributions of listed and unlisted securities,
private placements and valuations for corporate and other purposes. In the
ordinary course of our business, we and our affiliates actively trade the equity
securities of Ardent and Informix for our own account and for the accounts of
our customers and, accordingly, may at any time hold a long or short position in
such securities.
We have been engaged to act as exclusive financial advisor to Ardent in
connection with the Merger and to render to the Board of Directors of Ardent in
connection with the Merger an opinion as to the fairness, from a financial point
of view, to the stockholders of Ardent, other than Informix and its affiliates,
of the Conversion Ratio. We will receive a fee from Ardent for providing these
services, including this opinion, pursuant to the terms of our engagement letter
with Ardent, dated as of October 28, 1999, a significant portion of which is
contingent upon the consummation of the Merger. SG Cowen and its affiliates in
the ordinary course of business have from time to time provided, and in the
future may continue to provide, investment banking services to Ardent.
In connection with our opinion, we have reviewed and considered such
financial and other matters as we have deemed relevant, including, among other
things:
(i) a draft of the Agreement dated November 26, 1999;
(ii) certain publicly available information for Ardent and Informix,
including the annual reports of Ardent and Informix filed on Form 10-K
for the year ended December 31, 1998 and the quarterly reports of
Ardent and Informix filed on Form 10-Q for the quarter ended
September 30, 1999;
F-1
(iii) certain internal financial analyses, financial forecasts (the
"Financial Forecasts"), reports and other information concerning Ardent
prepared by the management of Ardent;
(iv) earnings per share estimates (the "Estimates") and financial
projections (the "Analyst Projections") provided in currently available
analyst reports for Ardent and Informix;
(v) discussions we have had with certain members of the management of each
of Ardent and Informix concerning the historical and current business
operations, financial conditions and prospects Ardent and Informix, and
such other matters we deemed relevant;
(vi) the reported price and trading histories of the shares of the common
stock of Ardent and Informix;
(vii) the respective financial conditions of Ardent and Informix as compared
to the financial conditions of certain other companies we deemed
relevant;
(viii) certain financial terms of the Merger as compared to the financial
terms of other selected business combinations we deemed relevant;
(ix) the Financial Forecasts of Ardent for the cash flows generated by
Ardent on a stand-alone basis to determine the present value of the
discounted cash flows;
(x) based on the Financial Forecasts, the Estimates and Analyst Projections,
the potential pro forma financial effects of the Merger; and
(xi) such other information, financial studies, analyses and investigations
and such other factors that we deemed relevant for the purposes of this
opinion.
In conducting our review and arriving at our opinion, we have, with your
consent, assumed and relied, without independent investigation, upon the
accuracy and complete-ness of all financial and other information provided to us
by Ardent and Informix, respectively, or which is publicly available, and we
have not undertaken any responsibility for the accuracy, completeness or
reasonableness of, or independently verified, such information. In addition, we
have not conducted any physical inspection of the properties or facilities of
Ardent or Informix. We have further relied upon the assurance of management of
Ardent that it is unaware of any facts that would make the information provided
to us incomplete or misleading in any respect. We have, with your consent,
assumed that the Financial Forecasts were reasonably prepared by the management
of Ardent, and reflect the best currently available estimates and good faith
judgments of such management as to the future performance of Ardent. Management
of Ardent and Informix, respectively, have confirmed to us and we have assumed,
with your consent, that each of the Financial Forecasts, the Estimates and the
Analyst Projections with respect to Ardent and Informix provide a reasonable
basis for our Opinion. We have not made or obtained any independent evaluations,
valuations or appraisals of the assets or liabilities of Ardent or Informix, nor
have we been furnished with such materials. With respect to all legal matters
relating to Ardent and Informix, we have relied on the advice of legal counsel
to Ardent. Our services to Ardent in connection with the Merger include
rendering an opinion from a financial point of view of the Conversion Ratio to
be received by the shareholders of Ardent. Our opinion is necessarily based upon
economic and market conditions and other circumstances as they exist and can be
evaluated by us on the date hereof. It should be understood that although
subsequent developments may affect our opinion, we do not have any obligation to
update, revise or reaffirm our opinion, and we expressly disclaim any
responsibility to do so. Additionally, we have not been authorized or requested
to, and did not, solicit alternative offers for Ardent or its assets, nor have
we investigated any other alternative transactions that may be available to
Ardent.
For purposes of rendering our opinion we have assumed, in all respects
material to our analysis, that the representations and warranties of each party
contained in the Agreement are true and correct, that each party will perform
all of the covenants and agreements required to be performed by it under
F-2
the Agreement and that all conditions to the consummation of the Merger will be
satisfied without waiver thereof. We have assumed that the final form of the
Agreement will be substantially similar to the last draft reviewed by us. We
have also assumed that all governmental, regulatory and other consents and
approvals contemplated by the Agreement will be obtained and that in the course
of obtaining any of those consents no restrictions will be imposed or waivers
made that would have an adverse effect on the contemplated benefits of the
Merger. You have informed us, and we have assumed, that the Merger (i) will be
recorded as a pooling-of-interests under generally accepted accounting
principles and (ii) will be treated as a tax-free reorganization within the
meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended.
It is understood that this letter is intended for the benefit and use of the
Board of Directors of Ardent in its consideration of the Merger and may not be
used for any other purpose or reproduced, disseminated, quoted or referred to at
any time, in any manner or for any purpose without our prior written consent.
This letter does not constitute a recommendation to any stockholder as to how
such stockholder should vote with respect to the Merger or to take any other
action in connection with the Merger or otherwise. We are not expressing an
opinion as to what the value of Informix Common Stock will be when issued to
Ardent's stockholders pursuant to the Merger. Furthermore, we are not expressing
any opinion as to what the future price, trading range or value of Informix
Common Stock will be following the Merger. We have not been requested to opine
as to, and our opinion does not in any manner address, Ardent's underlying
business decision to effect the Merger.
Based upon and subject to the foregoing, including the various assumptions
and limitations set forth herein, it is our opinion that, as of the date hereof,
the Conversion Ratio is fair, from a financial point of view, to the
stockholders of Ardent, other than Informix and its affiliates.
Very truly yours,
SG COWEN SECURITIES CORPORATION
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EXHIBIT 99.2
ARDENT SOFTWARE, INC.
PROXY FOR SPECIAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Peter Gyenes and James K. Walsh and either
of them, as attorneys of the undersigned with full power of substitution, to
vote all shares of stock which the undersigned is entitled to vote at the
Special Meeting of Stockholders of Ardent Software, Inc., to be held at the
headquarters of Ardent Software, Inc. at 50 Washington Street, Westboro,
Massachusetts, on, Tuesday, February 29, 2000 at 11:00 a.m., local time, and at
any continuation or adjournment thereof, with all the powers which the
undersigned might have if personally present at the meeting.
The undersigned hereby acknowledges receipt of the Notice of Special Meeting
and Proxy Statement, each dated January 28, 2000, and hereby expressly revokes
any and all proxies heretofore given or executed by the undersigned with respect
to the shares of stock represented by this Proxy and by filing this Proxy with
the Secretary of the corporation, gives notice of such revocation.
THIS PROXY MAY BE REVOKED AT ANY TIME PRIOR TO THE TIME IT IS VOTED.
PLEASE COMPLETE, DATE AND SIGN THIS PROXY AND RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE.
/X/ PLEASE MARK VOTES AS IN THIS EXAMPLE
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE FOLLOWING PROPOSAL:
1. Proposal to adopt the Agreement and Plan of Reorganization, dated as of
November 30, 1999, among Informix Corporation, Iroquois Acquisition Corporation,
a wholly-owned subsidiary of Informix, and Ardent Software, Inc., and to approve
the merger of Informix and Ardent.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
In their discretion, the proxies are authorized to vote upon such other
matter(s) as may properly come before the meeting (including any motion to
adjourn to a later date to permit further solicitation of proxies if necessary
to establish a quorum or to obtain additional votes in favor of the proposal) or
any postponements or adjournments thereof.
MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW [ ]
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS INDICATED, WILL BE
VOTED FOR THE ADOPTION OF THE MERGER AGREEMENT AND APPROVAL OF THE MERGER.
Please date and sign exactly as your name or names appear hereon. Corporate
or partnership proxies should be signed in full corporate or partnership name by
an authorized person. Persons signing in a fiduciary capacity should indicate
their full titles in such capacity. If shares are held by joint tenants or as
community property, both parties should sign.
Signature: ----------------------------------- Date: -----------------------------------
Signature: Date:
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