1
Exhibit 2.01
STOCK PURCHASE AGREEMENT
BETWEEN
ANSOFT CORPORATION
AND
XX. XXXXXX X. XXXXX AND DR. META XXXXX
DATED APRIL 9, 1997
2
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is made as of April 9,
1997, by and among Ansoft Corporation, a Delaware corporation (the "Buyer" or
"Ansoft"), and Xx. Xxxxxx X. Xxxxx, an individual, and Dr. Meta Xxxxx, an
individual (collectively the "Sellers").
RECITALS
WHEREAS, Sellers own all of the issued and outstanding shares
of common stock, par value $.01 (the "Shares), of Compact Software, Inc., a
Delaware corporation (the "Company");
WHEREAS, Sellers desire to sell the Shares and Buyer desires
to purchase the Shares on the terms and conditions hereinafter set forth;
NOW, THEREFORE, for and in consideration of the mutual
agreements contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and intending to be
legally bound hereby, the Sellers, jointly and severally, and the Buyer
covenant, represent, warrant, stipulate and agree as follows:
1. SALE AND TRANSFER OF SHARES; CLOSING
1.1 SALE AND PURCHASE OF THE SHARES.
Subject to the terms and conditions of this Agreement, Sellers hereby
sell, assign, transfer and deliver to Buyer, and Buyer purchases and accepts
from Sellers, effective as of the date hereof, the Shares, in the manner and
for the consideration set forth in Article II hereof.
1.2 CONSIDERATION.
(a) Contemporaneously with the execution of this Agreement, Sellers
have delivered to Buyer good and sufficient certificates for the
Shares, duly assigned in blank, with any required transfer stamps or
taxes paid and affixed thereto and have caused the entire right, title
and interest in and to the Shares to be transferred of record to
Buyer, free and clear of any claim, suit, proceeding, call,
commitment, voting trust, proxy, restriction, limitation, security
interest, pledge, lien or encumbrance of any kind or nature
whatsoever; and in consideration thereof Buyer has contemporaneously
paid and delivered, to Sellers as the aggregate purchase price for the
Shares, payable (i) by wire transfer, an aggregate of $3,000,000.00,
and (ii) in certificates representing an aggregate of 1,272,728 shares
of the Common Stock, par value $.01 per share, of Buyer (the "Ansoft
Shares") (clauses (i) and (ii) together with the payments under
Sections 1.2(b) and (d), the "Purchase Price"), as allocated on
Schedule 1.2, attached hereto and made part hereof.
3
(b) Ten (10) days after the receipt by the Company of full payment
of the Company's invoice in regard to the MAFET Milestone 6 payment,
Buyer shall pay to Sellers by wire transfer, an amount equal to
$311,413.00.
(c) Subject to Sellers' indemnification obligations pursuant to
this Agreement, Buyer shall fund the liabilities of the Company as
they appear on the Balance Sheet and the ordinary expenses of the
Company for at least one year following the Closing.
(d) With respect to Buyer's acquisition of the Shares hereunder,
the Sellers and Buyer hereby covenant and agree with each other that
they will join in making an election under Section 338(h)(10) of the
IRC, and any applicable analogous provision of state or local law (the
"Section 338(h)(10) Election"). The Sellers shall cooperate with Buyer
to enable the Buyer to prepare and file all Section 338 forms and
shall execute and deliver to the Buyer such documents as are required
by the IRC (and any analogous provision of state or local law) or
otherwise reasonably requested to properly complete the Section
338(h)(10) Election with any attendant cost or expense of Sellers to
be borne by Buyer. Sellers and Buyer shall cooperate in the
preparation of a joint schedule allocating the Purchase Price among
the assets of the Company within ninety (90) days after the date
hereof. Sellers and Buyer each agree to file all requisite local,
state and federal forms in accordance with said schedule. Buyer shall
pay to Sellers within thirty (30) days after notice from the Sellers
of the amount of the Additional Tax Cost (as defined), and
presentation of the method and manner of their calculation thereof,
the amount of the Additional Tax Cost. For purposes of this Section
1.2(d), "Additional Tax Cost" shall mean an amount determined in such
a way as to result in Sellers having an after-tax amount equal to the
excess of (i) Sellers' federal, state and local income tax liability
resulting from a sale of the Shares pursuant to the Section 338(h)(10)
Election, over (ii) Sellers' federal, state and local income tax
liability that would result from a sale of the Shares assuming that no
Section 338(h)(10 Election is made.
1.3 CLOSING.
The purchase and sale (the "Closing") provided for in this Agreement
will take place at the offices of the Company at 000 XxXxxx Xxxx., Xxxxxxxx,
Xxx Xxxxxx 00000, at 10:00 a.m. (local time) on the later of (i) April 9, 1997
or (ii) at such other time and place as the parties may agree (the "Closing
Date"). Failure to consummate the purchase and sale provided for in this
Agreement on the date and time and at the place determined pursuant to this
Section will not result in the termination of this Agreement and will not
relieve any party of any obligation under this Agreement.
-2-
4
2. REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers, jointly and severally, represent and warrant to Buyer as
follows:
2.1 ORGANIZATION AND GOOD STANDING
The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, and has all requisite
corporate power and authority to execute and deliver this Agreement and any
ancillary agreements hereto, to consummate the transactions contemplated hereby
and thereby and to perform all the terms and conditions hereof and thereof to
be performed by it. True and correct copies of the Company's Articles of
Incorporation and By-Laws (the "Organizational Documents") have been delivered
to Buyer. The Company is qualified to conduct business and is in good standing
under the laws of the State of New Jersey. The Company has no direct or
indirect subsidiaries.
2.2 AUTHORIZATION OF AGREEMENT AND ENFORCEABILITY
(a) This Agreement constitutes the legal, valid and binding
obligation of the Sellers, enforceable in accordance with its terms
except to the extent that enforceability may be limited by bankruptcy,
insolvency, moratorium or other similar laws presently or hereafter in
effect relating to or affecting the enforcement of creditors' rights
generally and by general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or law). Sellers
have the absolute and unrestricted right, power, authority, and
capacity to execute and deliver this Agreement and any ancillary
agreements hereto (the "Sellers' Closing Documents") and to perform
their obligations under this Agreement and the Sellers' Closing
Documents.
(b) Except as set forth on Schedule 2.2, neither the execution and
delivery of this Agreement nor the consummation or performance of any
of the transactions contemplated by this Agreement will, directly or
indirectly (with or without notice or lapse of time):
(i) contravene, conflict with, or result in a violation of (A)
any provision of the Organizational Documents of the Company, or
(B) any resolution adopted by the board of directors or the
stockholders of the Company;
(ii) contravene, conflict with, or result in a violation of, or
give any governmental body or other Person (as herein defined) the
right to challenge any of the transactions contemplated by this
Agreement or to exercise any remedy or obtain any relief under, any
legal requirement or any order to which the Company or either
Seller, or any of the assets owned or used by the Company, may be
subject;
(iii) contravene, conflict with, or result in a violation of any
of the terms or requirements of, or give any governmental body the
right to revoke,
-3-
5
withdraw, suspend, cancel, terminate, or modify, any governmental
authorization that is held by the Company or that otherwise relates
to the business of, or any of the assets owned or used by, the
Company;
(iv) cause the Company to become subject to, or to become liable
for the payment of, any tax (including any income tax, capital
gains tax, value-added tax, sales tax, property tax, gift tax, or
estate tax), levy, assessment, tariff, duty (including any customs
duty), deficiency, or other fee, and any related charge or amount
(including any fine, penalty, interest, or addition to tax),
imposed, assessed, or collected by or under the authority of any
governmental body or payable pursuant to any tax-sharing agreement
or any other contract relating to the sharing or payment of any
such tax, levy, assessment, tariff, duty, deficiency, or fee
("Tax");
(v) cause any of the assets owned by the Company to be
reassessed or revalued by any taxing authority or other
governmental body;
(vi) contravene, conflict with, or result in a violation or
breach of any provision of, or give any individual, corporation
(including any non-profit corporation), general or limited
partnership, limited liability company, joint venture, estate,
trust, association, organization, labor union, or other entity or
governmental body ("Person") the right to declare a default or
exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate, or modify, any Applicable
Contract (as herein defined); or
(vii) result in the imposition or creation of any charge, claim,
community property interest, condition, equitable interest, lien,
option, pledge, security interest, right of first refusal, or
restriction of any kind, including any restriction on use, voting,
transfer, receipt of income, or exercise of any other attribute of
ownership ("Encumbrance") upon or with respect to any of the assets
owned or used by the Company.
Except as set forth in Schedule 2.2, neither the Sellers nor the
Company is or will be required to give any notice to or obtain any
consent from any Person in connection with the execution and delivery
of this Agreement or the consummation or performance of any of the
transactions contemplated by this Agreement.
2.3 CAPITALIZATION
The authorized capital of the Company consists of 1,000 shares of
common stock, par value $.01 per share, of which 1,000 shares are issued and
outstanding and constitute the Shares. Sellers are and will be on the Closing
Date the record and beneficial owners and holders of the Shares, free and clear
of all Encumbrances. Xx. Xxxxxx Xxxxx owns 810 of the Shares and Dr. Meta Xxxxx
owns 190 of the Shares. With the exception of the Shares (which are owned by
Sellers), all of the outstanding equity securities of the Company are owned of
record and
-4-
6
beneficially by the Company, free and clear of all Encumbrances. No legend or
other reference to any purported Encumbrance appears upon any certificate
representing equity securities of the Company. All of the outstanding equity
securities of the Company have been duly authorized and validly issued and are
fully paid and nonassessable. There are no contracts relating to the issuance,
sale, or transfer of any equity securities or other securities of the Company.
None of the outstanding equity securities or other securities of the Company
were issued in violation of the Securities Act of 1933 or any successor law,
and regulations and rules issued pursuant to that Act or any successor law (the
"Securities Act"). The Company does not own, or have any contract to acquire,
any equity securities or other securities of any Person or any direct or
indirect equity or ownership interest in any other business.
2.4 FINANCIAL STATEMENTS
Sellers have delivered to Buyer unaudited balance sheet of the Company
as at December 31 in each of the years 1995 through 1996, and the related
unaudited statements of income and changes in stockholders' equity for each of
the fiscal years then ended. Except as set forth on Schedule 2.4, such
financial statements fairly present the financial condition and the results of
operations and changes in stockholders' equity of the Company as at the
respective dates of and for the periods referred to in such financial
statements. The financial statements referred to in this Section 2.4 reflect
the consistent application of such accounting principles throughout the periods
involved. No financial statements of any Person other than the Company are
required to be included in the consolidated financial statements of the
Company.
2.5 BOOKS AND RECORDS
The books of account, minute books, stock record books, and other
records of the Company, all of which have been made available to Buyer, are
complete and correct and have been maintained in accordance with sound business
practices, including the maintenance of an adequate system of internal
controls. The minute books of the Company contain accurate and complete
records of all meetings held, and all corporate actions taken by, the
stockholders, the Boards of Directors, and committees of the Boards of
Directors of the Company, and no meeting of any such stockholders, Board of
Directors, or committee has been held for which minutes have not been prepared
and are not contained in such minute books. At the Closing, all of those books
and records will be in the possession of the Company.
2.6 TITLE TO PROPERTIES; ENCUMBRANCES
Schedule 2.6 contains a complete and accurate list of all real
property, leaseholds, or other interests therein owned by the Company. The
Company owns (with good and marketable title in the case of real property,
subject only to the matters permitted by the following sentence) all the
properties and assets (whether real, personal, or mixed and whether tangible or
intangible) that it purports to own, including all of the properties and assets
reflected in the Balance Sheet, and all of the properties and assets purchased
or otherwise acquired by the Company since December 31, 1996, the date of the
unaudited balance sheet of the Company as of December 31, 1996 (the "Balance
Sheet") (except for personal property acquired and sold since the date of the
-5-
7
Balance Sheet in the ordinary course of business and consistent with past
practice) are listed on Schedule 2.6 hereto. Except as provided on Schedule
2.6, all material properties and assets reflected in the Balance Sheet are free
and clear of all Encumbrances and are not, in the case of real property,
subject to any rights of way, building use restrictions, exceptions, variances,
reservations, or limitations of any nature which materially affect the current
use of such real property. All buildings, plants, and structures owned by the
Company lie wholly within the boundaries of the real property owned by the
Company and do not encroach upon the property of, or otherwise conflict with
the property rights of, any other Person.
2.7 CONDITION AND SUFFICIENCY OF ASSETS
The leased buildings, plants, structures, and owned and leased
equipment of the Company are structurally sound, are in good operating
condition and repair, and are adequate for the uses to which they are being
put, and none of such buildings, plants, structures, or equipment is in need of
maintenance or repairs except for ordinary, routine maintenance and repairs
that are not material in nature or cost. The building, plants and structures of
the Company are sufficient for the continued conduct of the Company' business
for the 120-day period referred to in Section 7.2 of this Agreement after the
Closing in substantially the same manner as conducted prior to the Closing, and
the equipment of the Company is sufficient for the continued conduct of the
Company' business after the Closing in substantially the same manner as
conducted prior to the Closing.
2.8 ACCOUNTS RECEIVABLE
All accounts receivable of the Company that are reflected on the
Balance Sheet or on the accounting records of the Company as of the Closing
Date (collectively, the "Accounts Receivable") represent or will represent
valid obligations arising from sales actually made or services actually
performed in the ordinary course of business. Unless paid prior to the Closing
Date, the Accounts Receivable are or will be as of the Closing Date current and
collectible net of the respective reserves shown on the Balance Sheet or on the
accounting records of the Company as of the Closing Date (which reserves are
adequate and calculated consistent with past practice and, in the case of the
reserve as of the Closing Date, except as set forth on Schedule 2.8, will not
represent a greater percentage of the Accounts Receivable as of the Closing
Date than the reserve reflected in the Balance Sheet represented of the
Accounts Receivable reflected therein and will not represent a material adverse
change in the composition of such Accounts Receivable in terms of aging).
Except as set forth in Schedule 2.8, subject to such reserves, each of the
Accounts Receivable either has been or will be collected in full, without any
setoff, within ninety days after the day on which it first becomes due and
payable. There is no contest, claim, or right of setoff, other than returns in
the ordinary course of business, under any contract with any obligor of an
Accounts Receivable relating to the amount or validity of such Accounts
Receivable. Schedule 2.8 sets forth a complete and accurate list of all
Accounts Receivable as of the date of the Balance Sheet, which list sets forth
the aging of such Accounts Receivable.
-6-
8
2.9 NO UNDISCLOSED LIABILITIES
Except as set forth on Schedule 2.9 hereto, the Company has no
liabilities or obligations of any nature (whether known or unknown and whether
absolute, accrued, contingent, or otherwise) except for (i) liabilities or
obligations reflected or reserved against in the Balance Sheet, (ii) current
liabilities incurred in the ordinary course of business since the respective
dates thereof and (iii) immaterial liabilities which total in the aggregate no
more than $50,000.
2.10 TAXES
(a) The Company has filed or caused to be filed on a timely basis
since 1993 all tax returns that are or were required to be filed by
the Company as a result of the Company's business, pursuant to
applicable legal requirements, and each such tax return is complete
and accurate in all material respects. Sellers have delivered to Buyer
copies of all such tax returns filed since 1993. The Company has paid,
or made provision for the payment of, all taxes, including any penalty
or interest thereon, that have or may have become due and owing by the
Company pursuant to those tax returns or otherwise, or pursuant to any
assessment received by the Company, except such taxes, if any, as are
listed on Schedule 2.10 hereto are being contested in good faith and
as to which adequate reserves have been provided in the Balance Sheet.
(b) The United States federal and state tax returns of the Company
subject to such Taxes have been audited by the United States Internal
Revenue Service or any successor agency (the "IRS") or relevant state
tax authorities or are closed by the applicable statute of limitations
for all taxable years through 1992. Schedule 2.10(b) contains a
complete and accurate list of all audits of all such tax returns,
including a reasonably detailed description of the nature and outcome
of each audit. All deficiencies proposed as a result of such audits
have been paid, reserved against, settled, or, as described in
Schedule 2.10(b), are being contested in good faith by appropriate
proceedings. Schedule 2.10(b) describes all adjustments to the United
States federal or state tax returns filed by the Company for all
taxable years since 1993, and the resulting deficiencies proposed by
the IRS or relevant state authority. Except as described in Schedule
2.10(b), the Company has not given or been requested to give waivers
or extensions (or is or would be subject to a waiver or extension
given by any other Person) of any statute of limitations relating to
the payment of taxes of the Company or for which the Company may be
liable.
(c) The charges, accruals, and reserves with respect to taxes on
the respective books of the Company are adequate and are at least
equal to the Company's liability for taxes, including any penalty or
interest thereon. There exists no proposed claim or assessment for any
taxes against the Company except as disclosed in the Balance Sheet or
in Schedule 2.10(c). No consent to the application of Section
341(f)(2) of the IRC has been filed with respect to any property or
assets held, acquired, or to be acquired by the Company. All Taxes
that the Company is or was required by legal requirements to
-7-
9
withhold or collect have been duly withheld or collected and, to the
extent required, have been paid to the proper governmental body or
other Person.
(d) The Company, since its acquisition by Sellers, has been a
qualified "S Corporation" as that term is defined in the IRC. As the
context requires hereunder, the term "taxes" and "returns" refer only
to those taxes and returns (including information returns) required to
be filed, paid, accrued or reserved by the Company. Sellers shall
prepare or cause to be prepared all tax returns of the Company for all
tax periods ending on or before the Closing Date, shall submit such
returns (other than income tax returns) to Buyer for Buyer's review
prior to the filing of such returns by the Sellers, and shall provide
copies to Buyer of all such returns after the filing thereof by the
Sellers. In accordance with the Section 338(h)(10) Election, Company's
final "S Corporation" return shall report any gain or loss from the
deemed sale under Section 338.
2.11 NO MATERIAL ADVERSE CHANGE
To Sellers' knowledge, except as set forth on Schedule 2.11, since the
date of the Balance Sheet, there has not been any material adverse change in
the business, operations, properties, prospects, assets, or condition of the
Company, and no event has occurred or circumstance exists that may result in
such a material adverse change.
2.12 EMPLOYEE BENEFITS
Except as set forth in Schedule 2.12, the Company is not and has never
been a party to or obligated to contribute to any employee benefit plan as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974
("ERISA") (or "Employee Benefit Plan"), guaranteed annual income plan, fund or
arrangement, or any incentive, bonus, profit-sharing, deferred compensation,
stock option or purchase plan, agreement or arrangement, or any employment or
consulting agreement in effect on the date hereof, or any collective bargaining
agreement, or any other agreement, plan or arrangement similar to, or in the
nature of the foregoing, oral or written. Neither the execution of this
Agreement nor the consummation of the transactions contemplated hereby shall
cause the Company to become obligated to contribute to any such plan, or under
any such agreement or arrangement, except for such plans as may be described on
Schedule 2.12. The Company has the right to terminate any Company sponsored
Employee Benefit Plans as of the Closing Date on a prospective basis.
2.13 COMPLIANCE WITH LAWS
(a) The Company has at all times conducted, and is presently
conducting, the business of the Company so as to comply with all laws,
statutes, ordinances, rules and regulations applicable to the conduct
or operation of the business of the Company, except where such
non-compliance has not or will not result in a material adverse effect
upon the Company or its assets.
-8-
10
(b) Schedule 2.13 contains a complete and accurate list of each
governmental authorization that is held by the Company or that
otherwise relates to the business of, or to any of the assets owned or
used by, the Company. Each governmental authorization listed or
required to be listed on Schedule 2.13 is valid and in full force and
effect. The governmental authorizations listed on Schedule 2.13 hereto
constitute all of the governmental authorizations necessary to permit
the Company to lawfully conduct and operate its business in the manner
it currently conducts and operates such business and to permit the
Company to own and its assets in the manner in which it currently owns
and uses such assets, except where such failure to obtain governmental
authorizations has not or will not result in a material adverse effect
upon the Company or its assets.
(c) All applications required to have been filed for the renewal of
the governmental authorizations listed or required to be listed on
Schedule 2.13 have been duly filed on a timely basis with the
appropriate Governmental Bodies, and all other filings required to
have been made with respect to such governmental authorizations have
been duly made on a timely basis with the appropriate Governmental
Bodies.
2.14 LEGAL PROCEEDINGS
Except as set forth in Schedule 2.14 hereto, there are no
lawsuits, claims, actions, suits, proceedings, or investigations pending, or to
Sellers' knowledge, threatened against or affecting the Company or any Seller,
nor are there any lawsuits, claims, actions, suits, proceedings or
investigations pending in which the Company or any Seller is a plaintiff or
claimant, that relate to the Shares, assets or business and involve the
possibility of any judgment, order, award or other decision that might impair
the quality of title to the Shares, or might adversely affect the normal
operation of the business, or might result in liability for damages or might
otherwise adversely affect the Company's right, title or interest in the
assets, the business, or Sellers' right, title or interest in the Shares.
2.15 ABSENCE OF CERTAIN CHANGES AND EVENTS
Except as set forth on Schedule 2.15, since the date of the Balance
Sheet, the Company has conducted its business only in the ordinary course of
business and there has not been any:
(a) change in the Company's authorized or issued capital stock;
grant of any stock option or right to purchase shares of capital stock
of the Company; issuance of any security convertible into such capital
stock; grant of any registration rights; purchase, redemption,
retirement, or other acquisition by the Company of any shares of any
such capital stock; or declaration or payment of any dividend or other
distribution or payment in respect of shares of capital stock;
(b) amendment to the Organizational Documents of the Company;
-9-
11
(c) payment or increase by the Company of any bonuses, salaries, or
other compensation to any stockholder, director, officer, or (except
in the ordinary course of business) employee or entry into any
employment, severance, or similar contract with any director, officer,
or employee;
(d) adoption of, or increase in the payments to or benefits under,
any profit-sharing, bonus, deferred compensation, savings, insurance,
pension, retirement, or other employee benefit plan for or with any
employees of the Company;
(e) damage to or destruction or loss of any asset or property of
the Company, whether or not covered by insurance, materially and
adversely affecting the properties, assets, business, financial
condition, or prospects of the Company, taken as a whole;
(f) entry into, termination of, or receipt of notice of termination
of (i) any license, distributorship, dealer, sales representative,
joint venture, credit, or similar agreement, or (ii) any contract or
transaction involving a total remaining commitment by or to the
Company of at least $50,000;
(g) sale (other than sales of inventory in the ordinary course of
business), lease, or other disposition of any asset or property of the
Company or mortgage, pledge, or imposition of any lien or other
Encumbrance on any material asset or property of the Company,
including the sale, lease, or other disposition of any of the
Intellectual Property Assets (as herein defined);
(h) cancellation or waiver of any claims or rights with a value to
the Company in excess of $50,000;
(i) material change in the accounting methods used by the Company;
or
(j) agreement, whether oral or written, by the Company to do any of
the foregoing.
2.16 CONTRACTS; NO DEFAULTS
(a) Schedule 2.16(a) contains a complete and accurate list, and
Sellers have delivered to Buyer true and complete copies, of:
(i) each contract (a) under which the Company has or may acquire
any rights, (b) under which the Company has or may become subject
to any obligation or liability, or (c) by which the Company or any
of the assets owned or used by it is or may become bound
("Applicable Contract"), that involves performance of services or
delivery of goods or materials by the Company of an amount or value
in excess of $50,000;
-10-
12
(ii) each Applicable Contract that was not entered into in the
ordinary course of business and that involves expenditures or
receipts of the Company in excess of $50,000;
(iii) each lease, rental or occupancy agreement, license,
installment and conditional sale agreement, and other Applicable
Contract affecting the ownership of, leasing of, title to, use of,
or any leasehold or other interest in, any real or personal
property (except personal property leases and installment and
conditional sales agreements having a value per item or aggregate
payments of less than $50,000 and with terms of less than one
year);
(iv) each licensing agreement or other Applicable Contract with
respect to patents, trademarks, copyrights, or other intellectual
property, including agreements with current or former employees,
consultants, or contractors regarding the appropriation or the
nondisclosure of any of the Intellectual Property Assets;
(v) each joint venture, partnership, and other Applicable
Contract (however named) involving a sharing of profits, losses,
costs, or liabilities by the Company with any other Person;
(vi) each Applicable Contract, including distributor agreements,
providing for payments to or by any Person based on sales,
purchases, or profits, other than direct payments for goods;
(vii) each power of attorney that is currently effective and
outstanding;
(viii) each Applicable Contract for capital expenditures in
excess of $50,000;
(ix) each written warranty, guaranty, and or other similar
undertaking with respect to contractual performance extended by the
Company other than in the ordinary course of business; and
(x) each amendment, supplement, and modification (whether oral
or written) in respect of any of the foregoing.
Schedule 2.16(a) sets forth reasonably complete details concerning
such contracts, including the parties to the contracts and the amount of the
remaining commitment of the Company under the contracts.
(b) Except as disclosed on Schedule 2.16, (i) each of the agreements,
contracts, commitments, leases and other instruments, documents and
undertakings listed on Schedule 2.16, to the Sellers' knowledge, is valid and
enforceable in accordance with its terms, the Company and, to Sellers'
knowledge, the other parties thereto, are in compliance with the provisions
-11-
13
thereof, the Company and, to Sellers' knowledge, the other parties thereto are
not in default in the performance, observance or fulfillment of any material
obligation, covenant or condition contained therein, and no event has occurred
that with or without the giving of notice or lapse of time, or both, would
constitute a default by the Company, or to Sellers' knowledge, such other
parties thereunder; (ii) no such agreement, contract, commitment, lease or
other instrument, document or undertaking, in the reasonable opinion of
Sellers, contains a contractual requirement with which there is a reasonable
likelihood that the Company or any other party thereto will be unable to
comply; (iii) other than for maintenance and use of the products as indicated
on Schedule 2.16, no advance payments have been received by the Company by or
on behalf of any party to any of the agreements, contracts, commitments, leases
and other instruments listed on Schedule 2.16 for services to be rendered or
products to be delivered to such party after the Closing Date; and (iv) no
consent or approval of any party to any agreement, contract, commitment, lease
or other instrument, document, or undertaking listed on Schedule 2.16 is
required for the execution of this Agreement or the consummation of the
transactions contemplated hereby. The customer agreements listed on Schedule
2.16 represent all of the currently operative customer agreements to which the
Company is a party which relate to the sale of products by the Company except
any operative customer agreement that involves receipts by the Company or
contemplates future receipts by the Company of $50,000 or less.
2.17 INSURANCE
Schedule 2.17 sets forth a true and correct listing of all policies of
insurance and all surety and other bonds to which the Company now is a party.
All of such policies and bonds are valid and in full force and effect at the
present time, and no claim has been made, or notice given to cancel or avoid
any of said policies or bonds or to reduce the coverage provided thereby.
2.18 ENVIRONMENTAL MATTERS
(a) As used herein, the following terms shall have the meaning
ascribed to them hereby:
"Environmental Law" shall mean any federal (including but not
limited to the Federal Water Pollution Control Act, 33 U.S.C. Sections
1251 et seq., the Toxic Substances Control Act, 15 U.S.C. Sections
2601 et seq., the Clean Air Act, 42 U.S.C. Sections 7401 et seq., the
Comprehensive Environmental Response, Compensation and Liability Act,
42 U.S.C. Sections 9601 et seq., the Resource Conservation and
Recovery Act, 42 U.S.C. Section 6901 et seq., the Hazardous Materials
Transportation Act, 49 U.S.C. Sections 1801 et seq., and the Federal
Insecticide Fungicide and Rodenticide Act, 7 U.S.C. Sections 136 et
seq.), state or local statute, ordinance, rule or regulation any
judicial or administrative order or judgment (whether or not by
consent), any common law doctrine and any provision or condition of
any permit, license or other operating authorization relating to (i)
the protection of the environment or the public welfare from actual or
potential exposure (or the effects of exposure) to any actual or
potential release, discharge, disposal or emission (whether past or
present) of any Regulated Substance or
-12-
14
(ii) the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of any Regulated Substance.
"Regulated Substance" shall mean petroleum, petroleum hydrocarbons
or petroleum products and any other chemical, material, substance or
waste that is identified (by listing or characteristic) and regulated
(or the clean-up of which can be required) by any federal, state or
local statute, ordinance, rule or regulation intended to protect the
environment or the public health or welfare, including but not limited
to the statutes, ordinances, rules or regulations relating to clean
air, clean water, hazardous and solid waste disposal, safe drinking
water, endangered species, occupational safety and health, oil spill
prevention, groundwater protection, and toxic substances control.
(b) To Sellers' knowledge, the Company has not received any notice
alleging any violation by it or any of its predecessors of any
Environmental Law or any written request for information from any
governmental agency or other person pursuant to any Environmental Law,
and the Company is in compliance with all applicable Environmental
Laws;
(c) To Sellers' knowledge, there are no Regulated Substances
released by the Company, or any other person on or beneath the leased
real property described on Schedule 2.18, or on any owned or leased
property formerly inhabited by the Company or its predecessors, in
quantities or concentrations that could give rise to obligations,
responsibilities or liabilities of the Company or Buyer under any
Environmental Law;
(d) The Company has not received any notice or order from any
governmental agency or private or public entity advising it that the
Company is responsible for or potentially responsible for remediation
or paying for the cost of investigation or remediation of any
Regulated Substance, and the Company has not entered into any
agreements pertaining thereto;
(e) To the Sellers' knowledge, the leased real property included
among the assets of the Company does not contain any: (i) underground
storage tanks; (ii) underground injection xxxxx; (iii) septic tanks in
which process wastewater or any Regulated Substances have been
disposed; (iv) asbestos; (v) equipment using PCBs; or (vi) drums
buried in the ground; and
(f) There are no environmental studies, analyses or reports in the
possession of the Sellers or the Company relating to property
currently or formerly owned or leased by the Company or its
predecessors.
2.19 EMPLOYEES
(a) Schedule 2.19 contains a complete and accurate list of the
following information for each employee or director of the Company,
including each employee on leave of absence or layoff status:
employer; name; job title; current compensation paid or
-13-
15
payable and any change in compensation since January 1, 1997; vacation
accrued through December 31, 1996; date of hire and length of service
with the Company.
(b) To Sellers' knowledge, no employee or director of the Company
is a party to, or is otherwise bound by, any agreement or arrangement,
including any confidentiality, noncompetition, or proprietary rights
agreement, between such employee or director and any other Person
("Proprietary Rights Agreement") that in any way adversely affects or
will affect (i) the performance of his duties as an employee or
director of the Company, or (ii) the ability of the Company to conduct
its business, including any Proprietary Rights Agreement with Sellers
or the Company by any such employee or director. To Sellers'
knowledge, no director, officer, or other key employee of the Company
intends to terminate his employment with the Company.
2.20 LABOR RELATIONS; COMPLIANCE
Since January 1, 1995, the Company neither has been nor is a party to
any collective bargaining or other labor contract. Except as set forth on
Schedule 2.20, since January 1, 1995, there has not been, there is not
presently pending or existing, and there is not threatened, (a) any strike,
slowdown, picketing, work stoppage, or employee grievance process, (b) any
proceeding against or affecting the Company relating to the alleged violation
of any legal requirement pertaining to labor relations or employment matters,
including any charge or complaint filed by an employee or union with the
National Labor Relations Board, the Equal Employment Opportunity Commission, or
any comparable governmental body, organizational activity, or other labor or
employment dispute against or affecting any of the Company or their premises,
or (c) any application for certification of a collective bargaining agent. No
event has occurred or circumstance exists that could provide the basis for any
work stoppage or other labor dispute. There is no lockout of any employees by
the Company, and no such action is contemplated by the Company. Since January
1, 1995, to Sellers' knowledge, the Company has complied in all respects with
all legal requirements relating to employment, equal employment opportunity,
nondiscrimination, immigration, wages, hours, benefits, collective bargaining,
the payment of social security and similar taxes, occupational safety and
health, and plant closing. To Sellers' knowledge, the Company is not liable for
the payment of any compensation, damages, taxes, fines, penalties, or other
amounts, however designated, for failure to comply with any of the foregoing
legal requirements.
2.21 INTELLECTUAL PROPERTY
(a) Intellectual Property Assets--The term "Intellectual Property
Assets" includes:
(i) the name "Compact Software, Inc.", all fictional business
names, trading names, registered and unregistered trademarks,
service marks, and applications (collectively, "Marks");
(ii) all patents and patent applications (collectively,
"Patents");
-14-
16
(iii) all copyrights in both published works and unpublished
works (collectively, "Copyrights");
(iv) all rights in mask works (collectively, "Rights in Mask
Works"); and
(v) all know-how, trade secrets, confidential information,
customer lists, software, technical information, data, process
technology, plans, drawings, and blueprints, source code and all
inventions and discoveries that may be patentable (collectively,
"Trade Secrets");
owned, used, or licensed by the Company as licensee or licensor.
(b) Agreements--Schedule 2.21(b) contains a complete and accurate
list and summary description, including any royalties paid or received
by the Company, of all contracts relating to the Intellectual Property
Assets to which the Company is a party or by which the Company is
bound, except for any license implied by the sale of a product and
perpetual, paid-up licenses for commonly available software programs
with a value of less than $10,000 under which and the Company is the
licensee. There are no outstanding and, to Sellers' knowledge, no
threatened disputes or disagreements with respect to any such
agreement.
(c) Know-How Necessary for the Business
(i) The Intellectual Property Assets are all those necessary for
the operation of the Company' businesses as they are currently
conducted and all Marks, Patents and registered Copyrights
comprising a part of the Intellectual Property Assets are set forth
on Schedule 2.21(c). Except as indicated on Schedule 2.21(c), the
Company owns, uses or holds a license with respect to all
Intellectual Property Assets, free and clear of all liens, security
interests and charges, and to the Sellers' knowledge, free and
clear of all Encumbrances, equities, and other adverse claims, and
has the right to use without payment to a third party all such
Intellectual Property Assets.
(ii) Except as set forth on Schedule 2.21(c), all former and
current employees of the Company have executed written contracts
with the Company that assign to the Company all rights to any
inventions, improvements, discoveries, or information relating to
the business of the Company. No employee of the Company has entered
into any contract that restricts or limits in any way the scope or
type of work in which the employee may be engaged or requires the
employee to transfer, assign, or disclose information concerning
his work to anyone other than the Company.
-15-
17
(d) Patents
(i) Schedule 2.21(d) contains a complete and accurate list and
summary description of all Patents. Except as indicated on Schedule
2.21(d), the Company owns, uses or holds a license with respect to
each of the Patents, free and clear of all liens, security
interests and charges, and to the Sellers' knowledge, free and
clear of all Encumbrances, entities, and other adverse claims, and
has the right to use without payment to a third party all such
Patents.
(ii) To Sellers' knowledge, all of the issued Patents are
currently in compliance with formal legal requirements (including
payment of filing, examination, and maintenance fees and proofs of
working or use), are valid and enforceable, and are not subject to
any maintenance fees or taxes or actions falling due within ninety
days after the Closing Date.
(iii) No Patent has been or is now involved in any interference,
reissue, reexamination, or opposition proceeding. To Sellers'
knowledge, there is no potentially interfering patent or patent
application of any third party.
(iv) To Sellers' knowledge, no Patent is infringed or has been
challenged or threatened in any way. To Sellers' knowledge, none of
the products manufactured and sold, nor any process or know-how
used, by the Company infringes or is alleged to infringe any patent
or other proprietary right of any other Person.
(v) All products made, used, or sold under the Patents have been
marked with the proper patent notice.
(e) Trademarks
(i) Schedule 2.21(e) contains a complete and accurate list and
summary description of all Marks. Except as indicated on Schedule
2.21(e), the Company owns, uses or holds a license with respect to
each of the Marks, free and clear of all liens, security interests
and charges, and to the Sellers' knowledge, free and clear of all
Encumbrances, equities, and other adverse claims, and has the right
to use without payment to a third party all such Marks.
(ii) To Sellers' knowledge, all Marks that have been registered
with the United States Patent and Trademark Office are currently in
compliance with all formal legal requirements (including the timely
post-registration filing of affidavits of use and incontestability
and renewal applications), are valid and enforceable, and are not
subject to any maintenance fees or taxes or actions falling due
within ninety days after the Closing Date.
-16-
18
(iii) No Xxxx has been or is now involved in any opposition,
invalidation, or cancellation and, to Sellers' knowledge, no such
action is threatened with the respect to any of the Marks.
(iv) To Sellers' knowledge, there is no potentially interfering
trademark or trademark application of any third party.
(v) To Sellers' knowledge, no Xxxx is infringed or has been
challenged or threatened in any way. To Sellers' knowledge, none of
the Marks used by the Company infringes or is alleged to infringe
any trade name, trademark, or service xxxx of any third party.
(vi) All products and materials containing a Xxxx xxxx the
proper federal registration notice where permitted by law.
(f) Copyrights
(i) Schedule 2.21(f) contains a complete and accurate list and
summary description of all registered Copyrights. The Company is
the owner of all right, title, and interest in and to each of the
registered Copyrights, free and clear of all liens, security
interests and charges, and to the Sellers' knowledge, free and
clear of all Encumbrances, equities, and other adverse claims.
(ii) To Sellers' knowledge, no Copyright is infringed or has
been challenged or threatened in any way. To Sellers' knowledge,
none of the subject matter of any of the Copyrights infringes or is
alleged to infringe any copyright of any third party or is a
derivative work based on the work of a third party.
(iii) All works encompassed by the Copyrights have been marked
with the proper copyright notice.
(g) Trade Secrets
(i) With respect to each Trade Secret that is documented (and
including, in any event, all source code of the Company), the
documentation relating to such Trade Secret is current, accurate,
and sufficient in detail and content to identify and explain it and
to allow its full and proper use without reliance on the knowledge
or memory of any individual.
(ii) Sellers and the Company have taken all reasonable
precautions to protect the secrecy, confidentiality, and value of
their Trade Secrets.
(iii) To Sellers' knowledge, the Company has good title and an
absolute (but not necessarily exclusive) right to use the Trade
Secrets. To Sellers' knowledge, the Trade Secrets have not been
used, divulged, or appropriated either
-17-
19
for the benefit of any Person (other than one or more of the
Company) or to the detriment of the Company. No Trade Secret is
subject to any adverse claim or has been challenged or threatened
in any way.
2.22 CERTAIN PAYMENTS
Since January 1, 1995, to the Sellers' knowledge, the Company or
director, officer, agent, or employee of the Company, or any other Person
associated with or acting for or on behalf of the Company, has not directly or
indirectly (a) made any contribution, gift, bribe, rebate, payoff, influence
payment, kickback, or other payment to any Person, private or public,
regardless of form, whether in money, property, or services, (i) to obtain
favorable treatment in securing business, (ii) to pay for favorable treatment
for business secured, (iii) to obtain special concessions, or for special
concessions already obtained, for or in respect of the Company, or (iv) in
violation of any legal requirement; or (b) established or maintained any fund
or asset that has not been recorded in the books and records of the Company.
2.23 DISCLOSURE
No representation or warranty of Sellers in this Agreement omits to
state a material fact necessary to make the statements herein or therein, in
light of the circumstances in which they were made, not misleading. Any
information listed on any Schedule to this Agreement shall be deemed to be
supplemental to all other Schedules hereto.
2.24 RELATIONSHIPS WITH RELATED PERSONS
There are no contracts, agreements, purchase orders, commitments,
leases, understandings or arrangements, including loan arrangements, between
the Company and any of its officers, directors or shareholders, or any related
or affiliated person, corporation or other entity, except as set forth on
Schedule 2.24 attached hereto and made part hereof, or as set forth and
identified as such on any other Schedule hereto (a true and correct and
complete copy of each such written document and a true and correct and complete
written description of each such oral relationship having heretofore been
delivered by Sellers to Buyer).
2.25 BROKERS OR FINDERS
Sellers and their agents have incurred no obligation or liability,
contingent or otherwise, for brokerage or finders' fees or agents' commissions
or other similar payment in connection with this Agreement.
2.26 INVESTOR REPRESENTATIONS
(a) Each Seller acknowledges receipt of the Ansoft Filings (as
defined herein). Each Seller represents that he or she is (i) an
"accredited investor" as defined in Rule 501 of Regulation D under the
Securities Act of 1933, as amended, or (ii) either individually or
together with his representatives and advisors, has such knowledge and
experience in
-18-
20
financial and business matters that he or she is capable of evaluating
the merits and risks of acquisition of the Ansoft Shares and of making
an informed investment decision with respect thereto, and understands
all risks of holding the Ansoft Shares for an indefinite period of
time.
(b) Each Seller has carefully considered and has, to the extent
such Seller believes such discussion necessary discussed with such
Seller's professional legal, tax, accounting and financial advisors
the suitability of an investment in the Ansoft Shares for such
Seller's particular tax and financial situation and has determined
that the Ansoft Shares are a suitable investment for such Seller.
(c) Each Seller is aware that the Ansoft Shares are not registered
under the Securities Act of 1933, as amended, or under any state
securities laws; agrees that he or she will not transfer the Ansoft
Shares without compliance with the registration and other provisions
of all applicable securities laws and acknowledges that each
certificate representing the Ansoft Shares which he or she receives
will be marked with an appropriate legend to such effect; and
represents and warrants to Ansoft that he or she is purchasing the
Ansoft Shares solely for investment purposes, with no present
intention to sell the Ansoft Shares.
(d) Each Seller understands that he or she must bear the economic
risk of the investment represented by the purchase of the Ansoft
Shares for an indefinite period.
(e) Each Seller represents and acknowledges to Ansoft that he or
she either (i) has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks
of the investment contemplated by this Agreement, (ii) has been
advised by someone who has such knowledge and experience in financial
and business matters as to be capable of evaluating the merits and
risks of the investment contemplated by this Agreement, or (iii) has a
preexisting personal or business relationship with either Ansoft or
one of its officers or directors. Each Seller has a high level of
knowledge of the industry in which Ansoft operates by virtue of its
ownership of the Company's Shares.
(f) Each Seller agrees not to offer, sell, pledge, hypothecate, or
otherwise dispose of the shares of the Ansoft Shares, unless such
offer, sale, pledge, hypothecation or other disposition is (i)
registered under the Securities Act, or (ii) in compliance with an
opinion of counsel of the Sellers, delivered to Ansoft and reasonably
acceptable to it, to the effect that such offer, sale, pledge,
hypothecation or other disposition thereof does not violate the
Securities Act. The certificate(s) representing the Ansoft Shares
delivered hereunder pursuant to Section 1.2, shall bear the following
legend:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE FEDERAL OR STATE SECURITIES LAWS AND MAY NOT BE OFFERED FOR
SALE, SOLD OR OTHERWISE TRANSFERRED OR ASSIGNED FOR VALUE,
DIRECTLY OR
-19-
21
INDIRECTLY, NOR MAY THE SECURITIES BE TRANSFERRED ON THE BOOKS
OF THE CORPORATION, WITHOUT REGISTRATION OF SUCH SECURITIES
UNDER ALL APPLICABLE FEDERAL OR STATE SECURITIES LAWS OR
COMPLIANCE WITH AN APPLICABLE EXEMPTION THEREFROM, TO BE
EVIDENCED BY AN OPINION OF COUNSEL, IN FORM ACCEPTABLE TO THE
CORPORATION, THAT NO VIOLATION OF SUCH REGISTRATION PROVISIONS
WOULD RESULT FROM ANY PROPOSED TRANSFER OR ASSIGNMENT.
THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER AS SET FORTH IN A REGISTRATION RIGHTS
AGREEMENT, A COPY OF WHICH MAY BE OBTAINED FROM THE CORPORATION.
3. REPRESENTATIONS AND WARRANTIES OF BUYER
3.1 ORGANIZATION AND GOOD STANDING
Buyer is a corporation duly organized, validly existing and in good
standing under the laws of the state of Delaware, and has all requisite
corporate power and authority to execute and deliver this Agreement and the any
ancillary agreements hereto, to consummate the transactions contemplated hereby
and thereby and to perform all the terms and conditions hereof and thereof to
be performed by it. True and correct copies of Buyer's Certificate of
Incorporation and By-Laws (the "Buyer's Organizational Documents") have been
delivered to Sellers. Buyer is qualified to conduct business and is in good
standing under the laws of each other jurisdiction wherein the nature of its
business or its ownership of property requires it to be so qualified.
3.2 AUTHORIZATION OF AGREEMENT AND ENFORCEABILITY
(a) Buyer has taken all necessary corporate action to authorize the
execution and delivery of this Agreement and any ancillary agreements
hereto ("Buyer's Closing Documents"), the performance by it of all
terms and conditions hereof and thereof to be performed by it and the
consummation of the transactions contemplated hereby and thereby. This
Agreement constitutes the legal, valid and binding obligation of the
Buyer, enforceable in accordance with its terms except to the extent
that enforceability may be limited by bankruptcy, insolvency,
moratorium or other similar laws presently or hereafter in effect
relating to or affecting the enforcement of creditors' rights
generally and by general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or law). Buyer has
the absolute and unrestricted right, power, authority, and capacity to
execute and deliver this Agreement and Buyer's Closing Documents and
to perform its obligations under this Agreement and the Buyer's
Closing Documents.
-20-
22
(b) Except as set forth on Schedule 3.2, neither the execution and
delivery of this Agreement nor the consummation or performance of any
of the transactions contemplated by this Agreement will, directly or
indirectly (with or without notice or lapse of time):
(i) contravene, conflict with, or result in a violation of (A)
any provision of the Buyer's Organizational Documents, or (B) any
resolution adopted by the board of directors or the stockholders of
the Buyer;
(ii) contravene, conflict with, or result in a violation of, or
give any governmental body or other Person (as herein defined) the
right to challenge any of the transactions contemplated by this
Agreement or to exercise any remedy or obtain any relief under, any
legal requirement or any order to which the Buyer, or any of the
assets owned or used by the Buyer, may be subject;
(iii) contravene, conflict with, or result in a violation of any
of the terms or requirements of, or give any governmental body the
right to revoke, withdraw, suspend, cancel, terminate, or modify,
any governmental authorization that is held by the Buyer or that
otherwise relates to the business of, or any of the assets owned or
used by, the Buyer;
(iv) cause the Buyer to become subject to, or to become liable
for the payment of, any tax (including any income tax, capital
gains tax, value-added tax, sales tax, property tax, gift tax, or
estate tax), levy, assessment, tariff, duty (including any customs
duty), deficiency, or other fee, and any related charge or amount
(including any fine, penalty, interest, or addition to tax),
imposed, assessed, or collected by or under the authority of any
governmental body or payable pursuant to any tax-sharing agreement
or any other contract relating to the sharing or payment of any
such Tax;
(v) cause any of the assets owned by the Buyer to be reassessed
or revalued by any taxing authority or other governmental body;
(vi) contravene, conflict with, or result in a violation or
breach of any provision of, or give any Person the right to declare
a default or exercise any remedy under, or to accelerate the
maturity or performance of, or to cancel, terminate, or modify, any
contract (a) under which the Buyer has or may acquire any rights,
(b) under which the Buyer has or may become subject to any
obligation or liability, or (c) by which the Buyer or any of the
assets owned or used by it is or may become bound that involves
performance of services or delivery of goods or materials by the
Buyer of an amount or value in excess of $50,000; or
(vii) result in the imposition or creation of any Encumbrance
upon or with respect to any of the assets owned or used by the
Buyer.
-21-
23
Except as set forth in Schedule 3.2, Buyer is not and will not be
required to give any notice to or obtain any consent from any Person in
connection with the execution and delivery of this Agreement or the
consummation or performance of any of the transactions contemplated by this
Agreement.
3.3 CERTAIN PROCEEDINGS
There is no pending proceeding that has been commenced against Buyer
and that challenges, or may have the effect of preventing, delaying, making
illegal, or otherwise interfering with, any of the transactions contemplated by
this Agreement. To Buyer's knowledge, no such proceeding has been threatened.
3.4 BROKERS OR FINDERS
Buyer and its officers and agents have incurred no obligation or
liability, contingent or otherwise, for brokerage or finders' fees or agents'
commissions or other similar payment in connection with this Agreement and will
indemnify and hold Sellers harmless from any such payment alleged to be due by
or through Buyer as a result of the action of Buyer or its officers or agents.
3.5 ANSOFT SHARES
(a) Ansoft has delivered to each of Sellers its Annual Report on
Form 10-K for its fiscal year ended April 30, 1996, its Annual Report
to Shareholders containing the consolidated financial statements of
Ansoft and its subsidiaries for the fiscal year ended April 30, 1996,
accompanied by the reports thereon by KPMG Peat Marwick, independent
public accountants, its proxy statement for the Annual Meeting of
Shareholders of Ansoft, dated August 12, 1996, its Quarterly Form 10-Q
for the fiscal quarter ended July 31, 1996, its Quarterly Form 10-Q
for the fiscal quarter ended October 31, 1996, its Quarterly Form 10-Q
for the fiscal quarter ended January 31, 1997, its Current Report on
Form 8-K dated August 9, 1996, as amended by Form 8-K/A Amendment No.
1, dated October 8, 1996 (collectively, the "Ansoft Filings"). Since
March 5, 1997, and except as specifically contemplated by this
Agreement or as disclosed or reflected in the Ansoft Filings as filed
with the Securities and Exchange Commission there have been no
material adverse changes in the business, financial condition or
prospects of Ansoft. The Form 10-K of Ansoft does not contain any
untrue statement of a material fact or any omission to state a fact
necessary to make any statement of fact contained therein not
misleading in any material respect.
(b) All Ansoft Shares to be issued in accordance with this
Agreement will be, upon issuance, duly authorized, validly issued,
fully paid and non-assessable.
-22-
24
3.6 CAPITALIZATION
The authorized capital of the Buyer consists of 10,000,000 shares of
common stock, par value $0.01 per share and 1,000,000 shares of preferred
stock, par value $.01 per shares, of which 7,714,859 shares of common stock and
no shares of preferred stock are issued and outstanding immediately prior to
the Closing.
3.7 ABSENCE OF CERTAIN CHANGES AND EVENTS
Except as set forth on Schedule 3.7, since the date of the Balance
Sheet, the Buyer has conducted its business only in the ordinary course of
business and there has not been any:
(a) change in the Buyer's authorized or issued capital stock; grant
of any stock option or right to purchase shares of capital stock of
the Buyer; issuance of any security convertible into such capital
stock; grant of any registration rights; purchase, redemption,
retirement, or other acquisition by the Buyer of any shares of any
such capital stock; or declaration or payment of any dividend or other
distribution or payment in respect of shares of capital stock;
(b) amendment to the Organizational Documents of the Buyer;
(c) adoption of, or increase in the payments to or benefits under,
any profit-sharing, bonus, deferred compensation, savings, insurance,
pension, retirement, or other employee benefit plan for or with any
employees of the Buyer;
(d) damage to or destruction or loss of any asset or property of
the Buyer, whether or not covered by insurance, materially and
adversely affecting the properties, assets, business, financial
condition, or prospects of the Buyer, taken as a whole;
(e) sale (other than sales of inventory in the ordinary course of
business), lease, or other disposition of any asset or property of the
Buyer or mortgage, pledge, or imposition of any lien or other
Encumbrance on any material asset or property of the Buyer, including
the sale, lease, or other disposition of any of the Intellectual
Property Assets (as herein defined);
(f) cancellation or waiver of any claims or rights with a value to
the Buyer in excess of $50,000;
(g) material change in the accounting methods used by the Buyer; or
(h) agreement, whether oral or written, by the Buyer to do any of
the foregoing.
-23-
25
4. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
Buyer's obligation to purchase the Shares and to take the other
actions required to be taken by Buyer at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by Buyer, in whole or in part):
4.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES
All of Sellers' representations and warranties in this Agreement
(considered collectively) and each of these representations and warranties
(considered individually) shall have been accurate in all material respects as
of the date of this Agreement.
4.2 SELLERS' PERFORMANCE
(a) All of the covenants and obligations that Sellers are required
to perform or to comply with pursuant to this Agreement at or prior to
the Closing (considered collectively) and each of these covenants and
obligations (considered individually) shall have been duly performed
and complied with in all material respects.
(b) Each document required to be delivered pursuant to this Section
4 shall have been delivered.
4.3 REGISTRATION RIGHTS AGREEMENT
Each Seller shall have executed and delivered the Registration Rights
Agreement, substantially in the form attached hereto as Exhibit A.
4.4 CONSENTS
Each of the consents identified on Schedule 2.2 and 2.16 shall have
been obtained and must be in full force and effect, except as otherwise
indicated on Schedule 2.2 or 2.16.
4.5 DELIVERY OF DOCUMENTS BY SELLERS
Each of the following documents shall have been delivered to Buyer:
(a) a certificate signed by each Seller and dated the Closing Date,
in form and substance reasonably satisfactory to Buyer, certifying
that (1) the conditions set forth in Sections 4.1, 4.2, 4.3 and 4.4
above, inclusive, are satisfied as of such date, and (2) the Company
has complied with all agreements and satisfied all conditions on its
part to be performed or satisfied at or prior to such date in
connection with the transactions contemplated by this Agreement.
(b) Sellers shall have delivered to Buyer certificates, in form and
substance reasonably satisfactory to Purchaser, signed by the
Secretary of the Company, dated the Closing Date, identifying the
following documents to be delivered therewith: (A) the
-24-
26
corporate minute books of the Company which, to the knowledge of the
Secretary of the Company, shall contain minutes of all meetings (or
consents to action in lieu thereof) of the directors and stockholders
of the Company from January 1, 1993 to the Closing Date; (B) the
corporate seal of the Company; (C) the Articles of Incorporation of
the Company, certified as of not more than seven days before the
Closing Date by the Secretary of the State of Delaware; (D) certified
copy of the By-Laws of the Company as in effect on the Closing Date;
(E) a long form certificate, dated as of not more than seven days
before the Closing Date, as to the good standing of the Company, and a
facsimile, dated the Closing Date, updating the long form certificate,
both from the Secretary of the Delaware; (F) all stock certificate
books and stock ledgers of the Company; and (G) such other documents
or instruments as Buyer may reasonably request in writing not less
than two days prior to the Closing Date to carry out the intent and
purpose of this Agreement, and all such minute books, stock
certificate books and other documents shall be complete, accurate and
sufficient, and such delivery shall be to the reasonable satisfaction
of Buyer and its counsel;
(c) Sellers shall have delivered to Buyer the stock certificates
representing the Shares;
(d) Sellers shall have delivered to Buyer (A) a copy of the text of
the director resolutions by which the corporate action on the part of
the Company necessary to approve this Agreement was taken, certified
by the Secretary of the Company; and (B) an incumbency certificate
signed by an officer of the Company certifying the signature and
office of each officer or director of the Company executing any
agreement, certificate or other instrument executed pursuant to this
Agreement; and
(e) The officers and directors of the Company shall have delivered
their resignations to the Company, effective as of the Closing, and
the Company shall have presented them to the Buyer at Closing.
4.6 NO PROCEEDINGS
No action or proceeding shall have been instituted or threatened to
set aside the transactions provided for herein or to enjoin or prevent the
consummation thereof; and that all required consents and approvals for the
consummation of such transactions shall have been secured
4.7 NO CLAIM REGARDING STOCK OWNERSHIP OR SALE PROCEEDS
There must not have been made or threatened by any Person any claim
asserting that such Person (a) is the holder or the beneficial owner of, or has
the right to acquire or to obtain beneficial ownership of, any stock of, or any
other voting, equity, or ownership interest in, any of the Company, or (b) is
entitled to all or any portion of the Purchase Price payable for the Shares.
-25-
27
5. CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO CLOSE
Sellers' obligation to sell the Shares and to take the other actions
required to be taken by Sellers at the Closing is subject to the satisfaction,
at or prior to the Closing, of each of the following conditions (any of which
may be waived by Sellers, in whole or in part):
5.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES
All of Buyer's representations and warranties in this Agreement
(considered collectively) and each of these representations and warranties
(considered individually) must have been accurate in all material respects as
of the date of this Agreement.
5.2 BUYER'S PERFORMANCE
(a) All of the covenants and obligations that Buyer is required to
perform or to comply with pursuant to this Agreement at or prior to
the Closing (considered collectively) and each of these covenants and
obligations (considered individually) must have been performed and
complied with in all material respects.
(b) Buyer must have delivered each of the documents required to be
delivered by Buyer pursuant to Section 5.4 and must have paid the
Purchase Price to Sellers as set forth herein.
5.3 CONSENTS
All consents required to be obtained by Buyer in order to consummate
the transactions contemplated hereby shall have been obtained and must be in
full force and effect.
5.4 DELIVERY OF DOCUMENTS BY BUYER
Buyer must have caused to be delivered to Sellers:
(a) a certificate signed by Buyer and dated the Closing Date, in
form and substance reasonably satisfactory to Sellers, certifying that
the conditions set forth in Sections 5.1, 5.2, 5.3, 5.4 and 5.5 above,
inclusive, are satisfied as of such date.
(b) certificates, in form and substance reasonably satisfactory to
Sellers, signed by the Secretary of the Buyer, dated the Closing Date,
identifying the following documents to be delivered therewith: (A) the
Articles of Incorporation of the Buyer, certified as of not more than
seven days before the Closing Date by the Secretary of the State of
Delaware; (B) certified copy of the By-Laws of the Buyer as in effect
on the Closing Date; (C) a long form certificate, dated as of not more
than seven days before the Closing Date, as to the good standing of
the Buyer, and a facsimile, dated the Closing Date, updating the long
form certificate, both from the Secretary of the State of Delaware;
and (D) such other documents or instruments as Sellers may reasonably
request in writing
-26-
28
not less than two days prior to the Closing Date to carry out the
intent and purpose of this Agreement, and all documents shall be
complete, accurate and sufficient, and such delivery shall be to the
reasonable satisfaction of Sellers and their counsel;
(c) the stock certificates representing the Ansoft Shares;
(d) a copy of the text of the director resolutions by which the
corporate action on the part of the Buyer necessary to approve this
Agreement was taken, certified by the Secretary of the Buyer; and an
incumbency certificate signed by an officer of the Buyer certifying
the signature and office of each officer or director of the Buyer
executing this Agreement and any agreement, certificate or other
instrument executed pursuant hereto.
5.5 ELECTION AS DIRECTOR AND OFFICER
Xx. Xxxxxx Xxxxx shall be elected to the Board of Directors of the
Buyer, and shall be named as Executive Vice President of Buyer, without
employment compensation therefor.
5.6 NO PROCEEDINGS
No action or proceeding shall have been instituted or threatened to
set aside the transactions provided for herein or to enjoin or prevent the
consummation thereof; and that all required consents and approvals for the
consummation of such transactions shall have been secured.
6. INDEMNIFICATION; REMEDIES
6.1 SURVIVAL; RIGHT TO INDEMNIFICATION NOT AFFECTED BY KNOWLEDGE
All representations, warranties, covenants, and obligations in this
Agreement, the Schedules hereto and any other certificate or document delivered
pursuant to this Agreement will survive the Closing for a period of eighteen
(18) months after the Closing Date, except for representations warranties
regarding title to the Shares or the Ansoft Shares, or those contained in
Section 2.6 of this Agreement, which shall survive the Closing indefinitely.
The right to indemnification, payment of damages or other remedy based on such
representations, warranties, covenants, and obligations will not be affected by
any investigation conducted with respect to, or any knowledge acquired (or
capable of being acquired) at any time, whether before or after the execution
and delivery of this Agreement or the Closing Date, with respect to the
accuracy or inaccuracy of or compliance with, any such representation,
warranty, covenant, or obligation. The waiver of any condition based on the
accuracy of any representation or warranty, or on the performance of or
compliance with any covenant or obligation, will not affect the right to
indemnification, payment of damages, or other remedy based on such
representations, warranties, covenants, and obligations.
-27-
29
6.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLERS
(a) Sellers, jointly and severally, will indemnify and hold
harmless Buyer, the Company, and their respective representatives,
stockholders, controlling persons, and affiliates (collectively, the
"Indemnified Persons") for, and will pay to the Indemnified Persons
the amount of, any loss, liability, claim, damage (including
incidental and consequential damages), expense (including costs of
investigation and defense and reasonable attorney fees) or diminution
of value, net of tax benefits to the Indemnified Person arising
therefrom and insurance proceeds received by the Indemnified Person,
whether or not involving a third-party claim (collectively,
"Damages"), arising, directly or indirectly, from or in connection
with:
(i) any breach of any representation or warranty made by Sellers
in this Agreement and the Schedules hereto, or any other
certificate or document delivered by Sellers pursuant to this
Agreement;
(ii) any breach by either Seller of any covenant or obligation
of such Seller in this Agreement;
(iii) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or
understanding alleged to have been made by any such Person with
either Seller or the Company (or any Person acting on their behalf)
in connection with any of the transactions contemplated by this
Agreement.
(b) Notwithstanding the foregoing, Sellers' obligation to indemnify
the Indemnified Persons shall be limited to a maximum aggregate amount
of Damages of $1,500,000, and such obligation shall terminate and be
of no further force or effect with respect to any claims raised by the
Indemnified Persons after eighteen (18) months following the Closing
Date; provided, however, that with respect to a claim for Damages
arising from a breach of any representation or warranty relating to
title to the Shares, there shall be no limitation on Damages nor
expiration of the period of time in which a claim may be raised,
except as may be provided by law. Sellers shall have no liability for
indemnification pursuant to this Section 6.2 until the total of all
Damages equals or exceeds $150,000, and then for the aggregate amount
of such Damages in excess of such $150,000 amount. The remedies
provided in this Section 6.2 will not be exclusive of or limit any
other remedies that may be available to Buyer or the other Indemnified
Persons.
6.3 INDEMNIFICATION AND PAYMENT OF DAMAGES BY BUYER
(a) Buyer will indemnify and hold harmless Sellers, and will pay to
Sellers the amount of any Damages arising, directly or indirectly,
from or in connection with:
-28-
30
(i) any breach of any representation or warranty made by Buyer
in this Agreement or in any certificate delivered by Buyer pursuant
to this Agreement,
(ii) any breach by Buyer of any covenant or obligation of Buyer
in this Agreement, or
(iii) any inaccuracy in the calculation of the Additonal Tax
Cost, which inaccuracy is determined as the result of any IRS or
other governmental tax audit or review, discovery of any error of
computation, or otherwise; or
(iv) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or
understanding alleged to have been made by such Person with Buyer
(or any Person acting on its behalf) in connection with any of the
transactions contemplated by this Agreement.
(b) Notwithstanding the foregoing, Buyer's obligation to indemnify
the Sellers shall be limited to a maximum aggregate amount of Damages
of $1,500,000, and such obligation shall terminate and be of no
further force or effect with respect to any claims raised by the
Sellers after eighteen (18) months following the Closing Date;
provided, however, that with respect to a claim for Damages arising
from a breach of any representation or warranty relating to title to
the Ansoft Shares or under Section 6.3(a)(iii), there shall be no
limitation on Damages nor expiration of the period of time in which a
claim may be raised, except as may be provided by law. Buyer shall
have no liability for indemnification pursuant to this Section 6.3
until the total of all Damages equals or exceeds $150,000, and then
for the aggregate amount of such Damages in excess of such $150,000
amount. The remedies provided in this Section 6.3 will not be
exclusive of or limit any other remedies that may be available to
Sellers or the other Indemnified Persons.
6.4 PROCEDURE FOR INDEMNIFICATION--THIRD-PARTY CLAIMS
(a) Promptly after receipt by an indemnified party under Section
6.2 or Section 6.3 of notice of the commencement of any proceeding
against it, such indemnified party will, if a claim is to be made
against an indemnifying party under such Section, give notice to the
indemnifying party of the commencement of such claim, but the failure
to notify the indemnifying party will not relieve the indemnifying
party of any liability that it may have to any indemnified party,
except to the extent that the indemnifying party demonstrates that the
defense of such action is prejudiced by the indemnifying party's
failure to give such notice.
(b) If any proceeding referred to in Section 6.2(a) is brought
against an indemnified party and it gives notice to the indemnifying
party of the commencement of such proceeding, the indemnifying party
will, unless the claim involves Taxes, be entitled
-29-
31
to participate in such proceeding and, to the extent that it wishes
(unless (i) the indemnifying party is also a party to such proceeding
and the indemnified party determines in good faith that joint
representation would be inappropriate, or (ii) the indemnifying party
fails to provide reasonable assurance to the indemnified party of its
financial capacity to defend such proceeding and provide
indemnification with respect to such proceeding), to assume the
defense of such proceeding with counsel satisfactory to the
indemnified party and, after notice from the indemnifying party to the
indemnified party of its election to assume the defense of such
proceeding, the indemnifying party will not, as long as it diligently
conducts such defense, be liable to the indemnified party under this
Article 6 for any fees of other counsel or any other expenses with
respect to the defense of such proceeding, in each case subsequently
incurred by the indemnified party in connection with the defense of
such proceeding, other than reasonable costs of investigation. If the
indemnifying party assumes the defense of a proceeding, (i) it will be
conclusively established for purposes of this Agreement that the
claims made in that proceeding are within the scope of and subject to
indemnification; (ii) no compromise or settlement of such claims may
be effected by the indemnifying party without the indemnified party's
consent which shall not be unreasonably withheld, unless (A) there is
no finding or admission of any violation of legal requirements or any
violation of the rights of any Person and no effect on any other
claims that may be made against the indemnified party, and (B) the
sole relief provided is monetary damages that are paid in full by the
indemnifying party; and (iii) the indemnified party will have no
liability with respect to any compromise or settlement of such claims
effected without its consent. If notice is given to an indemnifying
party of the commencement of any proceeding and the indemnifying party
does not, within ten days after the indemnified party's notice is
given, give notice to the indemnified party of its election to assume
the defense of such proceeding, the indemnifying party will be bound
by any determination made in such proceeding or any compromise or
settlement effected by the indemnified party.
(c) Notwithstanding the foregoing, if an indemnified party
determines in good faith that there is a reasonable probability that a
proceeding may adversely affect it or its affiliates other than as a
result of monetary damages for which it would be entitled to
indemnification under this Agreement, the indemnified party may, by
notice to the indemnifying party, assume the exclusive right to
defend, compromise, or settle such proceeding, but the indemnifying
party will not be bound by any determination of a proceeding so
defended or any compromise or settlement effected without its consent
(which may not be unreasonably withheld).
(d) Sellers and Buyer hereby consent to the nonexclusive
jurisdiction of any court in which a proceeding is brought against any
Indemnified Person for purposes of any claim that an Indemnified
Person may have under this Agreement with respect to such proceeding
or the matters alleged therein, and agree that process may be served
on Sellers with respect to such a claim anywhere in the world.
-30-
32
6.5 PROCEDURE FOR INDEMNIFICATION--OTHER CLAIMS
A claim for indemnification for any matter not involving a third-party
claim may be asserted by notice to the party from whom indemnification is
sought.
7. GENERAL PROVISIONS
7.1 ACCESS TO BOOKS AND RECORDS
Following the Closing, Buyer shall make available to Sellers, upon
reasonable notice and during normal business hours, the books and records of
the Company relating to periods prior to the Closing Date, and Sellers may
inspect such records and make photocopies thereof for reasonable business
purposes, including without limitation preparation of tax returns and response
to tax audits and proceedings.
7.2 LEASED PREMISES
Following the Closing, Buyer and the Company shall use their best
efforts to vacate the premises currently inhabited by the Company,
notwithstanding the terms of the current lease, located at 000 XxXxxx
Xxxxxxxxx, Xxxxxxxx, XX 00000, as soon as practicable but in any event within
120 days after the Closing Date.
7.3 FURTHER SUPPORT
So long as either or both of Sellers own a controlling interest in
Synergy Microwave Corporation, or its legal successor or assign ("Synergy"),
Company shall provide software support services to Synergy, which support
services shall be provided pursuant to a Software Support Agreement in the form
of Exhibit B attached hereto, in regard to certain software previously obtained
by Synergy from the Company, and such Software Support Agreement shall be
executed and delivered by Synergy and the Company prior to the Closing.
7.4 BENEFIT PLANS
(a) Except as provided in Section 7.4(c) with respect to medical
coverage, on or before the Closing Date, the Sellers will cause the
Company to terminate its participation in the Synergy Microwave
Corporation 401 (k) Plan (the "Synergy DC Plan") and any welfare
benefits plan sponsored by, contributed to or otherwise maintained by
Synergy and that covers current employees of the Company as of the
Closing Date ("Covered Employees") and their dependents. Following the
Closing, Seller, Buyer, Synergy and the Company will cooperate in
effecting a transfer of assets for Covered Employees in the Synergy DC
Plan to the 401 (k) plan currently sponsored by Buyer (the "Buyer 401
(k) Plan"). The transfer is contingent upon the following: (i) the
assets transferred must be in cash equal to the accrued benefits under
the Synergy DC Plan for the accounts of the Covered Employees; (ii)
the Synergy DC Plan is qualified
-31-
33
under Section 401(a) of the Code and permits the transfer; (iii) no
charge will be assessed to the Company as a result of the transfer;
and (iv) all necessary documents are executed and requirements met,
including those to ensure the tax qualification of both the Synergy DC
Plan and the Buyer 401 (k) Plan (the "Plans"), said documents and
requirements to be satisfactory to Sellers, Buyer, the Plans and the
Plans' respective service providers.
(b) Sellers shall have no obligation or liability with respect to
Covered Employees (and their dependents and qualified beneficiaries)
as a result of actions taken by the Company or Buyer after the
Closing, or under any employee plan or program established by the
Company or Buyer for the benefit of Covered Employees after the
Closing, and Sellers have no obligation or liability with respect to
claims incurred or benefits accruing after the Closing under any such
employee plan or program maintained by the Company or Buyer after the
Closing. Buyer shall have no obligation or liability with respect to
Covered Employees (and their dependents and qualified beneficiaries)
as a result of actions taken by the Company, Synergy or Sellers prior
to the Closing, or under any employee plan or program established by
the Company, Synergy or Sellers for the benefit of Covered Employees
prior to the Closing, and Buyer has no obligation or liability with
respect to claims incurred or benefits accruing prior to the Closing
under any such employee plan or program maintained by the Company,
Synergy or Sellers prior to the Closing.
(c) After the Closing, Buyer or the Company shall enroll Covered
Employees and their dependents in Buyer's current medical plan, which
provides for coverage effective May 1, 1997 with no prexisting
condition limitation. Buyer shall reimburse the Sellers for medical
coverage for the Covered Employees for the period from April 15 1997
to April 30, 1997, which amount is estimated to be $6,500.
7.5 EXPENSES
Except as otherwise expressly provided in this Agreement, each party
to this Agreement will bear its respective expenses incurred in connection with
the preparation, execution, and performance of this Agreement and the
transactions contemplated by this Agreement, including all fees and expenses of
agents, representatives, counsel, and accountants. Sellers will cause the
Company not to incur any out-of-pocket expenses in connection with this
Agreement, except for professional fees not in excess of $10,000. In the event
of termination of this Agreement, the obligation of each party to pay its own
expenses will be subject to any rights of such party arising from a breach of
this Agreement by another party.
-32-
34
7.6 PUBLIC ANNOUNCEMENTS
Any public announcement or similar publicity with respect to this
Agreement or the transactions contemplated by this Agreement will be issued, if
at all, at such time and in such manner as Buyer determines. Unless consented
to by Buyer in advance or required by legal requirements, prior to the Closing,
Sellers shall, and shall cause the Company to, keep this Agreement strictly
confidential and may not make any disclosure of this Agreement to any Person.
Sellers and Buyer will consult with each other concerning the means by which
the Company' employees, customers, and suppliers and others having dealings
with the Company will be informed of the transactions contemplated by this
Agreement, and Buyer will have the right to be present for any such
communication.
7.7 NOTICES
All notices, consents, waivers, and other communications under this
Agreement must be in writing and will be deemed to have been duly given when
(a) delivered by hand (with written confirmation of receipt), (b) sent by
telecopier (with written confirmation of receipt), provided that a copy is
mailed by registered mail, return receipt requested, or (c) when received by
the addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a
party may designate by notice to the other parties):
Sellers: Xx. Xxxxxx X. Xxxxx
Dr. Meta Xxxxx
00 Xxxxxxxxx Xxxxx
Xxxxx Xxxxxx Xxxxx, XX 00000
Facsimile No.: (000) 000-0000
with a copy to: Xxxxxx, Xxxxxxx, Xxxxxxxxx & Green, P.C.
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxxx Xxxxxx, Esquire
Facsimile No.: (000) 000-0000
Buyer: Ansoft Corporation
Xxxx Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxxxx Xxxxxxx
Facsimile No.: (000) 000-0000
-33-
35
with a copy to: Xxxxxxxx Ingersoll Professional Corporation
000 Xxxxx Xxxxxx
One Oxford Centre, 20th Floor
Pittsburgh, PA 15219
Attention: Xxxxxx X. Xxxxxxx, Esq.
Facsimile No.: (000) 000-0000
7.8 ARBITRATION
(a) Any controversy, dispute or claim arising out of or relating to
this Agreement, or any modification, amendment or extension to this
Agreement or to any collateral document, or any modification,
amendment or extension thereto, or the breach thereof, including any
claim to rescind or set aside any of the same (individually a "Claim"
and collectively "Claims"), shall be settled by arbitration conducted
in Pittsburgh, Pennsylvania in accordance with the provisions of this
Section 7.8 and in accordance with the Commercial Arbitration Rules of
the American Arbitration Association ("AAA") in effect on the date the
claim is brought. To the extent that any of the Commercial Arbitration
Rules of the AAA conflict with the provisions of this Agreement, the
provisions of this Agreement shall take precedence. The parties retain
the right to seek and obtain interim relief pending receipt of an
award in accordance with the terms of this Section for the purpose of
maintaining and preserving the status quo as provided in subparagraph
(b) below. The award rendered by the Arbitration Panel (as hereafter
defined) shall be final and binding as between the parties hereto and
their heirs, executors, administrators, successors and assigns, and
judgment on the award may be entered by any court having jurisdiction
thereof. Notwithstanding the foregoing, a party hereto may join the
other party hereto as Indemnitor to any third party claim pending in a
court of record, to enforce its indemnity rights for such claim,
without resorting to arbitration.
(b) The parties hereto agree that notwithstanding and, in addition
to, the rights and remedies available hereunder, each of the Buyer, on
the one hand, and Sellers, on the other hand, reserves the right to
seek and obtain temporary restraining orders or other emergency
temporary or preliminary equitable injunctive relief from the courts
of the Commonwealth of Pennsylvania situate in Allegheny County or the
federal courts situated in the Western District of Pennsylvania, to
preserve the status quo by enjoining or restraining a party hereto
pending final and binding arbitration hereunder or to compel
arbitration as provided herein, and the parties hereto acknowledge and
agree to the right to seek such relief. The parties hereto expressly
agree and acknowledge that seeking relief from the courts as provided
in this Section shall not be deemed a waiver of any party's right to
arbitrate nor shall the existence or exercise of such right be deemed
to be an adequate remedy at law in connection therewith.
(c) Claims shall be heard and decided, and awards rendered on such
Claims by a panel of three (3) arbitrators (the "Arbitration Panel")
appointed in accordance with
-34-
36
the provisions hereof. The decision of a majority of the arbitrators
comprising the Arbitration Panel shall govern on any matter and be the
decision of the Arbitration Panel. In case of any question arising as
to the interpretation of these arbitration provisions or the AAA
Commercial Rules of Arbitration applicable to any arbitration effected
hereunder, the decision of a majority of the members of the
Arbitration Panel shall be accepted by the parties as final and
conclusive, except that no decision or input of or notice to the
Arbitration Panel shall be required in order for either of the parties
to request and obtain the interim relief set forth in Section 7.8(b)
hereof. In the event of the death or disability of any arbitrator
pending final resolution of the Claim, a replacement arbitrator shall
be chosen in the same manner as such arbitrator was originally chosen,
within fifteen (15) days following notice of such death or disability.
(d) If any party hereto has a Claim and desires to arbitrate such
Claim, such party (the "Claimant") shall give written notice (the
"Arbitration Notice") of the Claim and of its intention to arbitrate
to the other party (the "Respondent") and simultaneously with the
giving of the Arbitration Notice to the Respondent, the Claimant shall
file, at the regional office of the AAA located in Pittsburgh,
Pennsylvania (or, should such regional office no longer exist, at the
regional office of the AAA located closest to Pittsburgh,
Pennsylvania), (i) three (3) copies of the Arbitration Notice or
demand for arbitration, (ii) three (3) copies of this Section 7.8 of
this Agreement, and (iii) the appropriate administrative fee as
provided in the Administrative Fee Schedule of the AAA. The
Arbitration Notice shall contain a brief statement setting forth the
nature of the dispute, the amounts involved, if any, and the remedy
sought and shall designate one arbitrator chosen by the Claimant who
shall be on the AAA approved list of arbitrators in Pittsburgh,
Pennsylvania.
(e) Within twenty (20) days following delivery of the Arbitration
Notice to the Respondent, the Respondent may file an answering
statement (the "Answering Statement"), in duplicate, with the AAA. In
the event the Respondent elects to file an Answering Statement with
the AAA, the Respondent shall, at the same time, deliver a copy of the
Answering Statement to the Claimant. If a counterclaim is asserted,
the Answering Statement shall contain a statement setting forth the
nature of the counterclaim, the amount involved, if any, and the
remedy sought, and the appropriate fee as provided in the
Administrative Fee Schedule of the AAA shall be delivered to the AAA
when the Answering Statement is filed. If no Answering Statement is
filed within the twenty (20) day period following receipt of the
Arbitration Notice by the Respondent, it shall be deemed as a denial
by Respondent of the Claim and further shall be deemed a complete
waiver of any counterclaim. Failure to file an Answering Statement
shall not operate to delay the arbitration.
(f) Within thirty (30) days following delivery of the Arbitration
Notice to the Respondent, the Respondent shall choose one (1)
arbitrator who shall be on the AAA approved list of arbitrators in
Pittsburgh, Pennsylvania. If the Respondent shall fail to choose an
arbitrator within such thirty (30) day period, then the AAA shall,
within thirty
-35-
37
(30) days following receipt of notice of such fact by the Claimant,
select one (1) arbitrator on behalf of Respondent from its National
Panel of Commercial Arbitrators to serve on the Arbitration Panel and
further shall choose the third arbitrator to serve on the Arbitration
Panel from its National Panel of Commercial Arbitrators who are on the
approved list of arbitrators in Pittsburgh, Pennsylvania. If the
Respondent names an arbitrator in compliance with this Subsection (f)
within such thirty (30) day period, then the AAA shall, within thirty
(30) days following receipt of notice of such appointment from either
Claimant or Respondent, select one arbitrator from its National Panel
of Commercial Arbitrators to serve as the third arbitrator on the
Arbitration Panel.
(g) The Arbitration Panel, when duly appointed, shall investigate
the facts and shall hold a hearing within sixty (60) days following
such appointment, and, at such hearing, shall permit the parties to
this Agreement to present evidence and arguments. In connection
therewith, the parties agree that each may conduct discovery to the
extent and in the manner allowed by the Federal Rules of Civil
Procedure within the confines of the expedited procedures provided for
herein and further that any discovery conducted during the emergency
or temporary equitable relief or injunctive proceedings permitted
hereby may be utilized by the parties in the arbitration proceeding.
The arbitrators selected shall, as a condition of appointment, agree
to hear the case within sixty (60) days of appointment and on
consecutive days until concluded. The award shall be rendered by the
Arbitration Panel not later than sixty (60) days from the date of the
closing of the hearing.
(h) Except otherwise provided herein, the fees and expenses of the
AAA and the Arbitration Panel shall be borne equally by the parties in
accordance with the applicable provisions of the Commercial
Arbitration Rules of the AAA. Each party shall bear its own attorneys
fees and expenses and the fees and expenses of other experts or
professionals utilized by such party in connection with the
arbitration provided for herein.
(i) Each of the parties hereto hereby irrevocably consents and
submits to the exclusive personal jurisdiction of United States
District Court for the Western District of Pennsylvania and the courts
of the Commonwealth of Pennsylvania situate in Allegheny County over
any suit, action or proceeding to compel arbitration in accordance
with the provisions of this Section 7.8, and irrevocably agrees that
all claims with respect thereto may be heard and determined in either
such court. Service of process in any such suit, action or proceeding
may be made in the manner hereinabove set forth for the giving of
notices and the same shall constitute valid personal service for all
purposes, each party hereby waiving personal service by other means.
7.9 FURTHER ASSURANCES
The parties agree (a) to furnish upon request to each other such
further information, (b) to execute and deliver to each other such other
documents, and (c) to do such other acts and things, all as the other party may
reasonably request for the purpose of carrying out the intent of this Agreement
and the documents referred to in this Agreement.
-36-
38
7.10 WAIVER
The rights and remedies of the parties to this Agreement are
cumulative and not alternative. Neither the failure nor any delay by any party
in exercising any right, power, or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right,
power, or privilege will preclude any other or further exercise of such right,
power, or privilege or the exercise of any other right, power, or privilege. To
the maximum extent permitted by applicable law, (a) no claim or right arising
out of this Agreement or the documents referred to in this Agreement can be
discharged by one party, in whole or in part, by a waiver or renunciation of
the claim or right unless in writing signed by the other party; (b) no waiver
that may be given by a party will be applicable except in the specific instance
for which it is given; and (c) no notice to or demand on one party will be
deemed to be a waiver of any obligation of such party or of the right of the
party giving such notice or demand to take further action without notice or
demand as provided in this Agreement or the documents referred to in this
Agreement.
7.11 ENTIRE AGREEMENT AND MODIFICATION
This Agreement supersedes all prior agreements between the parties
with respect to its subject matter (including the Letter of Intent between
Buyer and Sellers dated March 6, 1997) and constitutes (along with the
documents referred to in this Agreement) a complete and exclusive statement of
the terms of the agreement between the parties with respect to its subject
matter. This Agreement may not be amended except by a written agreement
executed by the party to be charged with the amendment.
7.12 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS
Neither party may assign any of its rights under this Agreement
without the prior consent of the other parties, which will not be unreasonably
withheld, except that Buyer may assign any of its rights under this Agreement
to any subsidiary of Buyer, except Buyer's obligation to deliver the Ansoft
Shares, to execute the Registration Rights Agreement, and to perform the
indemnification obligations set forth herein. Subject to the preceding
sentence, this Agreement will apply to, be binding in all respects upon, and
inure to the benefit of the successors and permitted assigns of the parties.
Nothing expressed or referred to in this Agreement will be construed to give
any Person other than the parties to this Agreement any legal or equitable
right, remedy, or claim under or with respect to this Agreement or any
provision of this Agreement. This Agreement and all of its provisions and
conditions are for the sole and exclusive benefit of the parties to this
Agreement and their successors and assigns.
7.13 SEVERABILITY
If any provision of this Agreement is held invalid or unenforceable by
any court of competent jurisdiction, the other provisions of this Agreement
will remain in full force and effect. Any provision of this Agreement held
invalid or unenforceable only in part or degree will remain in full force and
effect to the extent not held invalid or unenforceable.
-37-
39
7.14 SECTION HEADINGS, CONSTRUCTION
The headings of Articles and Sections in this Agreement are provided
for convenience only and will not affect its construction or interpretation.
All references to "Article" or "Articles" and "Section" or "Sections" refer to
the corresponding Article or Articles and Section or Sections of this
Agreement. All words used in this Agreement will be construed to be of such
gender or number as the circumstances require. Unless otherwise expressly
provided, the word "including" does not limit the preceding words or terms.
7.15 TIME OF ESSENCE
With regard to all dates and time periods set forth or referred to in
this Agreement, time is of the essence.
7.16 GOVERNING LAW
This Agreement will be governed by the laws of the Commonwealth of
Pennsylvania without regard to conflict of laws principles.
7.17 COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of
which will be deemed to be an original copy of this Agreement and all of which,
when taken together, will be deemed to constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as
of the date first written above.
Buyer: Sellers:
ANSOFT CORPORATION
By: /s/ XXXXXXXX XXXXXXX
-------------------------
President
/s/ XX. XXXXXX X. XXXXX
--------------------------
XX. XXXXXX X. XXXXX
/s/ DR. META XXXXX
--------------------------
DR. META XXXXX
-38-
