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STOCK PURCHASE AGREEMENT
BETWEEN
X. X. XXXXXXXX, INC.
AND
PROJECT SOFTWARE & DEVELOPMENT, INC.
APRIL 20, 1999
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is entered into as of
April 20, 1999, by and between X.X. Xxxxxxxx, Inc., an Illinois corporation (the
"Purchaser"), and Project Software & Development, Inc., a Massachusetts
corporation (the "Company").
WHEREAS, the Purchaser wishes to purchase from the Company, and the
Company wishes to sell to the Purchaser 500,000 shares of the Company's common
stock, $0.01 par value per share (the "Common Stock").
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements hereinafter set forth, the parties hereto hereby agree
as follows:
ARTICLE I
DEFINITIONS
The following terms are used with the meanings given them herein:
"Affiliate" means: (a) with respect to a person, any member of such
person's family; (b) with respect to an entity, any officer, director,
stockholder, partner or investor of or in such entity or of or in any Affiliate
of such entity; and (c) with respect to a person or entity, any person or entity
which directly or indirectly, through one or more intermediaries, Controls, is
Controlled by, or is under common Control with such person or entity.
"Assets" means assets of every kind and everything that is or may be
available for the payment of liabilities (whether inchoate, tangible or
intangible), including, without limitation, real and personal property.
"Closing" means the closing of the sale and purchase of shares of
Common Stock pursuant to the Agreement.
"Closing Date" means 10:00 a.m. C.D.T. on such date as is five (5)
business days following the satisfaction or waiver of the latest to occur of the
conditions precedent described in Section 3.2 or such other time and date as
shall be mutually agreed upon by the Purchaser and the Company.
"Code" means the Internal Revenue Code of 1986, as amended, and all
Laws promulgated pursuant thereto or in connection therewith.
"Commission" means the Securities and Exchange Commission or any other
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governmental authority at the time administering the Securities Act or the
Exchange Act.
"Confidential Information" shall have the meaning set forth in Section
4.3.
"Contract" shall mean any contract, lease, sales order, purchase order,
agreement, warranty, indenture, mortgage, note, bond, right, warrant or
instrument, whether written or verbal.
"Control" means possession, directly or indirectly, of power to direct
or cause the direction of management or policies (whether through ownership of
voting securities, by Agreement or otherwise).
"Environmental Law" shall mean any Law that imposes liability or
standards of conduct concerning, or otherwise relates to, discharges, emissions,
releases or threatened releases of noises, odors or any pollutants, contaminants
or hazardous or toxic wastes, substances or materials, whether as matter or
energy, into ambient air, water or land, or otherwise relating to the
manufacture, processing, generation, distribution, use, treatment, storage,
disposal, cleanup, transport or handling of pollutants, contaminants or
hazardous or toxic wastes, substances or materials, including the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, the
Superfund Amendments and Reauthorization Act of 1986, as amended, the Resource
Conservation and Recovery Act of 1976, as amended, the Toxic Substances Control
Act of 1976, as amended, the Federal Water Pollution Control Act Amendments of
1972, as amended, the Clean Water Act of 1977, as amended, any so-called
"Superfund" or "Superlien" Law (including those already referenced in this
definition) and any other Law having a similar subject matter.
"Environmental Permit" shall mean any Permit required by or pursuant to
any applicable Environmental Law.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and all laws promulgated pursuant thereto or in connection therewith.
"Exhibit" means an exhibit attached to the Agreement.
"Xxxx-Xxxxx-Xxxxxx" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended, and all Laws promulgated pursuant thereto or in
connection therewith.
"Intellectual Property" shall mean all United States and foreign
patents (including continuations, continuations-in-part, reissues and
re-examinations thereof) and patent applications; registered and unregistered
trade names, trademarks, service names and service marks (and applications for
registration of the same) and all goodwill associated therewith; copyrights and
copyright registrations (and applications for the same); trade secrets; computer
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data (including formulations and analyses), computer programs and software (in
source code and object code form) and firmware and all related programming, user
and systems documentation; inventions, processes and designs (whether or not
patentable or reduced to practice); know-how and formulae; and all other
intellectual property rights and assets.
"Interim Financial Statements" shall have the meaning set forth in
Section 4.4.
"Law" or "Laws" means all foreign, federal, state and local statutes,
laws, ordinances, regulations, rules, resolutions, orders, determinations,
writs, injunctions, awards (including, without limitation, awards of any
arbitrator), judgments and decrees applicable to the specified persons or
entities and to the businesses and Assets thereof (including, without
limitation, Laws relating to securities registration and regulation; the sale,
leasing, ownership or management of real property; employment practices, terms
and conditions, and wages and hours; building standards, land use and zoning;
safety, health and fire prevention; and environmental protection).
"Lien" shall mean any lien (except for any lien for taxes not yet due
and payable), mortgage, charge, restriction, pledge, security interest, option,
lease, sublease or right of any third party.
"Loss" and "Losses" means any and all actual out of pocket: losses,
liabilities, damages, costs and expenses (including reasonable attorneys' fees),
taxes, penalties, fines, expenditures, judgments and awards.
"Material Adverse Effect" shall mean an effect on the business,
operations, assets, liabilities, results of operations, cash flows, condition
(financial or otherwise) or prospects of the Company and its subsidiaries, taken
as a whole, which is materially adverse.
"NASDAQ" means the National Association of Securities Dealers Automated
Quotations System.
"Ordinary Course of Business" means ordinary course of business
consistent with past practices.
"Person" means any individual, partnership, joint venture, corporation,
trust, unincorporated organization, government or department or agency of a
government.
"Purchase Price" shall have the meaning set forth in Article II.
"Representatives" has the meaning set forth in Section 4.4.
"Section" means a Section (or a subsection) of the Agreement.
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"Securities Act" means the Securities Act of 1933, as amended, and all
laws promulgated pursuant thereto or in connection therewith.
"Shares" shall have the meaning set forth in Article II.
"Subsidiary" or "Subsidiaries" means any corporation or other entity of
which at least 80% of the outstanding securities or other interests having
rights to vote or otherwise exercise Control are held, directly or indirectly,
by the Company or another subsidiary.
"Voting Securities" means shares of any class of capital stock of the
Company which are then entitled to vote generally in the election of directors.
ARTICLE II
SALE AND PURCHASE OF SHARES
On the basis of the representations, warranties and agreements
contained herein, and subject to the terms and conditions hereof, the Company
hereby agrees to issue and sell to the Purchaser, and the Purchaser agrees to
purchase from the Company 500,000 shares of Common Stock (the "Shares"). In
consideration for the Shares, the Purchaser shall pay (the "Purchase Price") to
the Company an amount equal to $14,500,000. At the Closing, the Purchaser shall
deliver to the Company the Purchase Price by wire transfer of immediately
available funds, and the Company will deliver to the Purchaser a certificate, as
the Purchaser may request, registered in the name of the Purchaser evidencing
the Shares.
ARTICLE III
CLOSING
3.1. CLOSING OF SALE AND PURCHASE. Subject to the terms and
conditions of this Agreement, the Closing shall take place on the Closing Date.
3.2. CONDITIONS PRECEDENT TO THE PURCHASER'S OBLIGATIONS. The
Purchaser's obligation to purchase and pay for the Shares on the Closing Date is
subject to the satisfaction, on or before the Closing Date, of the following
conditions:
(a) Each of the representations and warranties of the Company
contained in Article 5 of this Agreement shall be true and correct as
of the date hereof and as of the Closing Date, except to the extent
they expressly refer to another time or period, in which case they
shall be true and correct as of such time or period.
(b) The Company and the Purchaser each shall have received all
consents,
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authorizations and approvals of governmental authorities which are
required to be obtained in order to consummate the transactions
contemplated hereby, including, without limitation, the expiration or
termination of any applicable waiting periods under Xxxx-Xxxxx-Xxxxxx.
(c) No order, injunction or decree issued by any court or
governmental authority of competent jurisdiction or other legal
restraint or prohibition preventing the consummation of the Closing or
any of the transactions contemplated thereby shall be in effect.
(d) There shall not be any suit, action, investigation,
inquiry or other proceeding instituted by any governmental authority
which seeks to enjoin or otherwise prevent consummation of the Closing
or the transactions contemplated thereby or which would individually,
or in the aggregate with each other failure to satisfy such condition,
or in the aggregate with all other unsatisfied conditions that have not
been waived result in a Material Adverse Effect.
(e) The Company shall have duly performed and complied in all
material respects with each obligation, covenant, agreement and
condition required by this Agreement to be performed or complied with
by the Company at or prior to the Closing.
(f) Since the date of this Agreement, there shall not have
occurred any event, change or effect having, or that would reasonably
be likely to have, individually or in the aggregate, a Material Adverse
Effect.
(g) The Purchaser shall have received on the Closing Date the
opinion of Xxxxx, Xxxx & Xxxxx L.L.P. to the effect that: (i) the
Company is duly organized, validly existing and in good standing under
the laws of its jurisdiction of organization; (ii) the Company has the
corporate power and authority to own, operate and lease its Assets and
to carry on its business as currently conducted; (iii) the execution,
delivery and performance of this Agreement by the Company is within the
corporate power and authority of the Company and does not require any
additional consents or approvals of the shareholders of the Company;
(iv) the Shares issued to the Purchaser pursuant to this Agreement have
been duly authorized and validly issued; and (v) upon payment for the
Shares pursuant to this Agreement, title to the Shares will pass to the
Purchaser free and clear of any claim, Lien, adverse interest or
incumbrance of any kind.
(h) Except as contemplated by this Agreement or as reasonably
required to carry out their obligations hereunder, the Company and its
Subsidiaries shall, through the Closing Date, have conducted their
respective businesses only in the Ordinary Course of Business and, in
addition, shall not have: (i) issued any capital stock or any options,
warrants or other rights to subscribe for or purchase any of their
capital stock or any securities convertible into or exchangeable for
their capital stock (other than to employees
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in the Ordinary Course of Business); (ii) directly or indirectly
redeemed, purchased or otherwise acquired any of their capital stock;
(iii) effected a split, reclassification or other change in or of any
of their capital stock; (iv) amended their certificate or articles of
incorporation, bylaws or equivalent documents (excepts as may have been
necessary to comply with the applicable statutes, rules, regulations or
orders issued by any governmental or regulatory authority); (v) merged
or consolidated with any Person or entered into any agreement that
provided for the merger or consolidation with any Person; or (vi)
entered into any new material line of business or exited a current
material line of business of the Company.
(i) The Purchaser shall have received a certificate executed
by the Company's Chief Executive Officer and Chief Financial Officer
stating that the representations and warranties of the Company are true
and correct as of the date of execution of this Agreement and as of the
Closing Date and that the Company has complied with all of its
covenants set forth in this Agreement.
3.3. CONDITIONS PRECEDENT TO THE COMPANY'S OBLIGATIONS. The Company's
obligation to sell and issue the Shares on the Closing Date is subject to the
satisfaction, on or before the Closing Date, of the following conditions:
(a) Each of the representations and warranties of the
Purchaser contained in Article 6 of this Agreement shall be true and
correct at the date hereof and as of the Closing Date as if made at and
as of the Closing Date, except to the extent they expressly refer to
another time or period, in which case they shall be true and correct as
of such time or period.
(b) The Company and the Purchaser each shall have received all
consents, authorizations and approvals of governmental authorities
which are required to be obtained in order to consummate the
transactions contemplated hereby, including, without limitation, the
expiration or termination of any applicable waiting periods under
Xxxx-Xxxxx-Xxxxxx.
(c) No order, injunction or decree issued by any court or
governmental authority of competent jurisdiction or other legal
restraint or prohibition preventing the consummation of the Closing or
any of the transactions contemplated thereby shall be in effect.
(d) There shall not be any suit, action, investigation,
inquiry or other proceeding instituted by any governmental authority
which seeks to enjoin or otherwise prevent consummation of the Closing
or the transactions contemplated thereby or which would individually,
or in the aggregate with each other failure to satisfy such condition,
or in the aggregate with all other unsatisfied conditions that have not
been waived,
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prevent, materially delay or materially impair the ability of Purchaser
to consummate the transactions contemplated hereby.
(e) The Purchaser shall have duly performed and complied in
all material respects with each obligation, covenant, agreement and
condition required by this Agreement to be performed or complied with
by the Purchaser at or prior to the Closing.
3.4. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PURCHASER AND
THE COMPANY. The obligations of the Purchaser and the Company pursuant to this
Agreement are subject to the execution, on or before the Closing Date, of the
following agreements:
(a) The Stock Option Agreement;
(b) The Registration Rights Agreement; and
(c) The Cooperation Agreement.
The simultaneous Closing of the foregoing agreements shall satisfy this
condition.
ARTICLE IV
ADDITIONAL UNDERTAKINGS AND COVENANTS
The Purchaser and the Company hereby covenant and agree with each other
as follows:
4.1. CONSENTS AND APPROVALS.
(a) The Company and the Purchaser shall take all measures
reasonably necessary or advisable to secure such consents,
authorizations and approvals of governmental and supragovernmental
authorities and of private persons or entities with respect to the
transactions contemplated by this Agreement, and to the performance of
all other obligations of such parties hereunder, as may be required by
any applicable statute or regulation of the United States or any
country, state or other jurisdiction or by any Agreement of any kind
whatsoever to which the Purchaser, the Company or any of its
Subsidiaries is a party or by which the Purchaser, the Company or any
of its Subsidiaries is bound.
(b) The Purchaser and the Company shall (i) cooperate in the
filing of all forms, notifications, reports and information, if any,
required or reasonably deemed advisable pursuant to applicable
statutes, rules, regulations or orders of any governmental or
supragovernmental authority in connection with the transactions
contemplated by this
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Agreement and (ii) use their respective good faith efforts to cause any
applicable waiting periods thereunder to expire and any objections to
the transactions contemplated hereby to be withdrawn before the
Closing.
(c) In addition to the obligations set forth in Section
4.1(b), as promptly as practicable, and in any event no later than
fifteen (15) days following the execution of this Agreement, the
Company and the Purchaser shall complete any filing that may be
required pursuant to Xxxx-Xxxxx-Xxxxxx, or shall mutually agree that no
such filing is required. The Company and the Purchaser shall diligently
take (or fully cooperate in the taking of) all actions, and provide any
additional information, required or reasonably requested in order to
comply with the requirements of Xxxx-Xxxxx-Xxxxxx.
4.2. PUBLICITY. Prior to the Closing Date, no public announcement or
other publicity regarding the existence of this Agreement or its contents or the
transactions contemplated hereby shall be made by Purchaser or the Company or
any of their respective Affiliates, officers, directors, employees,
representatives or agents, without the prior written agreement of the Purchaser
and the Company, in any case, as to form, content, timing and manner of
distribution or publication; provided, that nothing in this Section 4.2 shall
prevent any party from (a) making any public announcement required by Law or the
rules of any stock exchange so long as, if such party is Purchaser, Purchaser
consults with the Company, and if such party is the Company, the Company
consults with Purchaser, in each case as to the form, content, timing and manner
of distribution or publication, (b) discussing this Agreement or its contents or
the transactions contemplated hereby with those Persons whose approval,
agreement or opinion, as the case may be, is required for consummation of such
particular transaction or transactions or (c) enforcing its rights hereunder.
4.3. CONFIDENTIALITY.
(a) Without the prior written consent of the other party, any
information relating to the Company or the Purchaser provided to or
generated by either the Company or the Purchaser in connection with the
transactions contemplated hereby which is confidential, proprietary, or
otherwise not generally available to the public (but excluding (i)
information obtained independently from third-party sources without
knowledge that the source has violated any fiduciary or other duty not
to disclose such information and (ii) other information that is in the
public domain or otherwise publicly available) (the "Confidential
Information") will be kept confidential by the other party and each of
their respective directors, officers, employees and representatives
(collectively, "Representatives"), using the same standard of care in
safeguarding the Confidential Information as the parties hereto employ
when protecting their own proprietary information which the parties
desire not to disseminate or publish. It is understood (i) that such
Representatives shall be informed by the Purchaser and the Company of
the confidential nature of the Confidential Information, (ii) that such
Representatives shall be
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bound by the provisions of this section as a condition of receiving the
Confidential Information and (iii) that, in any event, the Purchaser
and the Company shall be responsible for any breach of this Agreement
by any of its Representatives.
(b) Without the prior written consent of the Company, other
than as required by applicable law, the Purchaser will not, and will
direct its Representatives not to, disclose to any Person either the
fact that the Confidential Information has been made available to the
Purchaser or that the Purchaser has inspected any portion of the
Confidential Information.
(c) If the Purchaser or its Representatives are requested or
required (by oral question, interrogatories, requests for information
or documents, subpoena, civil investigative demand or similar process)
to disclose any Confidential Information, the Purchaser will, as soon
as practicable, notify the Company of such request or requirement so
that the Company may seek an appropriate protective order. If, in the
absence of a protective order or the receipt of a waiver hereunder, the
Purchaser or its Representatives are, in the opinion of the Purchaser's
counsel, compelled to disclose the Confidential Information or else
stand liable for contempt or suffer other censure or significant
penalty, the Purchaser may disclose only such of the Confidential
Information to the party compelling disclosure as is required by law.
The Purchaser shall not be liable for the disclosure of Confidential
Information pursuant to the preceding sentence. The Purchaser will,
prior to any said disclosure, exercise all reasonable efforts to assist
the Company in obtaining a protective order or other reliable assurance
that confidential treatment will be accorded the Confidential
Information.
(d) The Purchaser's corporate policy prohibits any of its
directors or employees who learn of material nonpublic information
about the Company (or any other Person with whom the Purchaser does
business) through the course of their employment from purchasing or
selling securities of the Company (or any other such Person) or from
communicating such information to any other person under circumstances
in which it is reasonably foreseeable that such person is likely to
purchase or sell such securities.
4.4. INTERIM FINANCIAL STATEMENTS. The Company has provided the
Purchaser with unaudited consolidated financial statements of the Company and
the subsidiaries, consisting of a balance sheet and an income statement covering
the three months ended March 31, 1999 (such financial statements, "Interim
Financial Statements"). The Interim Financial Statements have been prepared in
accordance with generally accepted accounting principles and have been prepared
in a manner consistent with the financial statements contained in the Company
Reports filed on Form 10-Q and fairly present in all material respects the
consolidated financial position of the Company and its subsidiaries as of its
date.
4.5. RULE 144 REQUIREMENTS. The Company shall use its best efforts
to (a) file with the
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Securities and Exchange Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the Securities
Exchange Act of 1934, as amended; and (b) the Company shall otherwise reasonably
cooperate with Purchaser to permit it to effect resales in accordance with
Securities and Exchange Commission Rule 144.
4.6. AGREEMENT NOT TO SELL. The Purchaser agrees not to sell its
Shares for a period of one year from the date hereof; PROVIDED, HOWEVER, that if
the Company and the Purchaser agree to extend the termination date of the
Cooperation Agreement for an additional period of not less than one year, the
Purchaser shall agree not to sell its Shares for an additional period of one
year, except pursuant to the Purchaser's rights under the Registration Rights
Agreement; PROVIDED, FURTHER, the obligations imposed by this Section 4.6 shall
automatically terminate in the event of a change of control of the Company which
shall be deemed to include, without limitation: (i) the merger of the Company
with any other Person if the holders of the Company's common stock immediately
prior to the merger own less than 50% of the common stock of the surviving
parent company; (ii) the accumulation by any Person, other than a current
stockholder of the Company, of more than 25% of the outstanding voting
securities of the Company; and (iii) the resignation of both Mr. Xxxxxx Xxxxxxx
and Xx. Xxxxxx X. Xxxxxxx from the positions of Chairman of the Board and Chief
Executive Officer of the Company respectively.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants (which representation and warranty
shall be deemed to include the disclosure with respect thereto so specified in
the Disclosure Schedule) to the Purchaser as follows:
5.1. ORGANIZATION AND STANDING. The Company is duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization, and has the corporate or equivalent power and authority to own,
operate and lease its Assets and to carry on its business as currently
conducted. The Company and its Subsidiaries are duly qualified to conduct
business and are in good standing in every jurisdiction in which the nature of
the respective business conducted or Assets owned by it makes such qualification
necessary (and the Subsidiaries are duly organized and validly existing under
the laws of their respective jurisdiction of organization), except where the
failure so to qualify (or to be organized and existing) would not have a
Material Adverse Effect. The Company and the Subsidiaries each have all
governmental licenses, authorizations, consents and approvals required to carry
on its business as currently conducted except where the failure to hold such
licenses, authorizations, consents or approvals would not have a Material
Adverse Effect.
5.2. AUTHORIZATION. The execution, delivery and performance by the
Company of this Agreement and the issuance and sale of the Shares by the Company
and compliance with all the
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provisions of this Agreement: (a) are within the corporate power and authority
of the Company; (b) do not require any consent or approval of any stockholders
of the Company; and (c) have been authorized by all required corporate
proceedings on the part of the Company. The issuance and sale of the Shares will
not trigger any current Company shareholders' rights plan or violate (or create
any rights under) the provisions of M.G.L.A. chapters 110C, 110D, 110E and 110F.
The Company has furnished to the Purchaser true and correct copies of the
Company's Articles of Organization and By-Laws as in effect on the date of this
Agreement. This Agreement constitutes a valid and binding obligation of the
Company, enforceable in accordance with its terms, subject, however, to the
limitations of enforcement imposed by bankruptcy, insolvency, reorganization or
other laws affecting the enforcement of the rights of creditors and others and
to the extent equitable remedies are only available in the discretion of the
court from which they are sought.
5.3. CAPITALIZATION. The authorized capital stock of the Company
consists of 15,350,000 shares of Common Stock, of which 10,043,623 shares were
outstanding as of the close of business on April 16, 1999, and 1,000,000 shares
of undesignated preferred stock, none of which are issued or outstanding as of
such date. All of the outstanding shares of Common Stock, and the Shares, have
been duly authorized, and the outstanding shares of Common Stock are, and the
Shares upon issuance and payment therefor as provided herein will be, validly
issued, fully paid and nonassessable. The Company has no commitments to issue or
deliver any shares of capital stock as of April 16, 1999, other than 1,172,878
shares subject to issuance pursuant to outstanding stock options and other than
pursuant to the Company's Employee Stock Purchase Plan. Except as provided in
the stockholders' rights plan adopted by the Company in January 1998, there are
no preemptive or other outstanding rights, options, warrants, conversion rights,
stock appreciation rights, redemption rights, repurchase rights, agreements,
arrangements or commitments to issue or sell any shares of capital stock or
other securities of the Company or any securities or obligations convertible or
exchangeable into or exercisable for, or giving any Person a right to subscribe
for or acquire, any securities of the Company, and no securities or obligations
evidencing such rights are issued or outstanding. The Company does not have
outstanding any bonds, debentures, notes or other obligations the holders of
which have the right to vote on any matter.
5.4. COMPANY REPORTS; FINANCIAL STATEMENTS.
(a) The Company's definitive Proxy Statements for its 1998 and
1999 Annual Meeting of Stockholders, (b) the Company's Quarterly Report
on Form 10-Q for the quarterly periods ended December 31, 1997, March
31, 1998, June 30, 1998, December 31, 1998, and March 31, 1999 (when
filed) and (c) the Company's Annual Report on Form 10-K for the year
ended September 30, 1998 may collectively, together with any such
reports filed subsequent to the date hereof, be referred to as the
"Company Reports". As of their respective dates the Company Reports
complied (or when filed will comply) as to form in all material
respects with the requirements of the Securities Act or the
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Exchange Act, as applicable, and the rules and regulations of the
Commission. As of their respective dates, the Company Reports did not
contain any untrue statement of material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they
were made, not misleading.
(b) Each of the consolidated balance sheets included in or
incorporated by reference into the Company Reports (including the
related notes and schedules) fairly presents (or will fairly present)
in all material respects the consolidated financial position of the
Company and its Subsidiaries as of its date and each of the
consolidated statements of income and of cash flow included in or
incorporated by reference into the Company Reports (including any
related notes and schedules) fairly presents (or will fairly present)
in all material respects the consolidated results of operations and
cash flows, as the case may be, of the Company and its Subsidiaries for
the periods set forth therein (subject, in the case of unaudited
statements, to notes and normal year-end audit adjustments that will
not be material in amount or effect), in each case in accordance with
generally accepted accounting principles consistently applied during
the periods involved, except as may be noted therein.
5.5. TAXES. The Company and each of its Subsidiaries have filed all
United States Federal income tax returns and all other material tax returns
which are required to be filed by them and have paid all taxes due pursuant to
such returns or pursuant to any assessment received by the Company or any or its
Subsidiaries except to the extent the failure to pay would not have a Material
Adverse Effect. Such returns are true and accurate in all material respects. The
charges, accruals and reserves on the books of the Company and its Subsidiaries
in respect of taxes are, in the opinion of the Company, adequate.
5.6. GOVERNMENTAL FILINGS; NO VIOLATIONS.
(a) Other than the filings, permits, authorizations, consents,
approvals and/or notices pursuant to or required by (i)
Xxxx-Xxxxx-Xxxxxx, (ii) the Exchange Act, (iii) the Securities Act,
(iv) state securities or "blue-sky" laws, and (v) NASDAQ, and except as
may result from any facts or circumstances relating to the Purchaser or
its affiliates, in connection with the execution and delivery of this
Agreement by the Company and the consummation by the Company of the
issuance of the Shares, there are no filings, authorizations, consents,
approvals or notices required with or by any Court, administrative
agency, commission, government or regulatory authority, domestic or
foreign, except those that the failure to make or obtain will not,
individually or in the aggregate, have a Material Adverse Effect.
(b) Subject to compliance with the filings described in
Section 5.7(a), the execution, delivery and performance of this
Agreement by the Company do not, and the
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consummation by the Company of the issuance of the Shares will not,
constitute or result in (i) a breach or violation of, or a default
under, the Articles of Organization or by-laws of the Company or the
comparable governing instruments of any of its Subsidiaries, (ii) a
breach or violation of, or a default under, or the acceleration of any
obligations or the creation of a Lien, pledge, security interest or
other encumbrance on the assets of the Company or any of its
Subsidiaries (with or without notice, lapse of time or both) pursuant
to, any agreement, lease, contract, note, mortgage, indenture,
arrangement or other obligation ("Contracts") binding upon the Company
or any of its Subsidiaries, (iii) any change in the rights or
obligations of any party under any of those Contracts, (iv) the
impairment of the Company's or any of its Subsidiaries' business or
adversely affect any licenses or approvals necessary to enable the
Company and its Subsidiaries to carry on their business as presently
conducted, except for any conflict, breach, violation, default,
acceleration, declaration, imposition or impairment that would not have
a Material Adverse Effect.
5.7. LITIGATION AND LIABILITIES.
(a) Except as disclosed in the Company Reports filed prior to
the date hereof, there are no actions, suits, claims, proceedings or
investigations pending against, or to the knowledge of the Company,
threatened against or affecting, the Company or any of its Subsidiaries
or any of their respective properties before any governmental entity or
otherwise that (i) individually or in the aggregate would be expected
to have a Material Adverse Effect, (ii) in any manner challenges or
seeks to prevent, enjoin, alter or delay the transactions contemplated
hereby or (iii) alleges criminal action or inaction. As of the date
hereof, neither the Company, its Subsidiaries nor any of their
respective properties is subject to any order, writ, judgment,
injunction, decree, determination or award having, or that would
reasonably be expected to have, a Material Adverse Effect or that would
prevent or delay the consummation of the transactions contemplated
hereby. Except as disclosed in the Company Reports, there are no
pending or, to the knowledge of the Company, threatened claims for
indemnification by the Company or any of its Subsidiaries in favor of
directors, officers, employees and agents of the Company or any of its
Subsidiaries.
5.8. COMPLIANCE WITH LAWS; PERMITS. Except as set forth in the
Company Reports, the businesses of each of the Company and its Subsidiaries have
been, and are being, conducted in compliance with all applicable Laws except in
any such case for noncompliance that, individually or in the aggregate, would
not have a Material Adverse Effect. The Company and its Subsidiaries each has
all permits, licenses, trademarks, patents, trade names, copyrights, service
marks, franchises, variances, exemptions, orders and other governmental
authorizations, consents and approvals necessary to conduct its business as
presently conducted except those the absence of which would not, individually or
in the aggregate, have a Material Adverse Effect.
15
5.9. NO ADVERSE EFFECTS OR CHANGES. Since September 30, 1998,
neither the Company nor any Subsidiary has experienced: (i) any Material Adverse
Effect, (ii) any transaction that is material to the Company and its
subsidiaries considered as one enterprise, except transactions entered into in
the Ordinary Course of Business, (iii) any obligation, direct or contingent,
that is material to the Company and its subsidiaries considered as one
enterprise, incurred by the Company or its subsidiaries, except obligations
incurred in the Ordinary Course of Business, (iv) any change in the capital
stock or outstanding indebtedness of the Company or any of its subsidiaries that
is material to the Company and its subsidiaries considered as one enterprise,
(v) any dividend or distribution of any kind declared, paid or made on the
capital stock of the Company, or (vi) any loss or damage (whether or not
insured) to the property of the Company or any of its subsidiaries which has
been sustained or will have been sustained which has a Material Adverse Effect.
5.10. MATERIAL CONTRACTS. All of the material Contracts of the
Company and its Subsidiaries that are required to be described in the Company
Reports or to be filed as exhibits thereto pursuant to Item 601 of Regulation
S-K promulgated by the Commission are described in the Company Reports or filed
as exhibits thereto. Neither the Company nor any of its Subsidiaries, nor to the
best of the Company's knowledge, any other party is in breach of or in default
under any such Contract, except for such breaches and defaults as individually
or in the aggregate have not had and will not have a Material Adverse Effect.
5.11. YEAR 2000 COMPLIANCE.
(a) That the occurrence in or use by any of the Company's
current or future versions of its software systems that the Company
markets or licenses (collectively, the "Commercial Systems") of dates
on or after January 1, 2000 ("Millennial Dates") will not materially
adversely affect the Commercial Systems' performance with respect to
date- dependent data, computations, output, or other functions
(including, without limitation, calculating, comparing and sequencing)
and that the Commercial Systems will create, store, process and output
information related to or including Millennial Dates without material
error or omissions and at no additional cost to the Company; the
foregoing warranty is subject to error-free input of date data in
appropriate format to the Commercial Systems.
(b) That as of December 31, 1999, the occurrence in or use by
any of the Company's current or future software systems used for its
internal business operations (collectively, the "Internal Systems") of
dates on or after January 1, 2000, will not materially adversely affect
the Internal Systems' performance with respect to date- dependent data,
computations, output, or other functions (including, without
limitation, calculating, comparing and sequencing) and that the
Internal Systems will create, store, process and output information
related to or including Millennial Dates without material error or
omissions; the foregoing warranty is subject to error-free input
16
of date data in appropriate format to the Internal Systems. The Company
represents and warrants that, to its best estimates and knowledge, the
costs associated with reaching the foregoing warranty status shall not
materially adversely affect the Company.
5.12. INTELLECTUAL PROPERTY. Each of the Company and its
subsidiaries owns or possesses adequate rights to use all patents, patent
rights, inventions, trade secrets, know-how, trademarks, technology, licenses,
service marks, trade names and copyrights which are necessary to conduct its
businesses as described in the Company Reports; the expiration in accordance
with the terms of the applicable agreements of any patent, patent rights,
trademarks, service marks, trade names or copyrights would not to the Company's
knowledge have a Material Adverse Effect on the Company; the Company has not
received any notice of, and has no knowledge of, any infringement of or conflict
with asserted rights of the Company by others with respect to any patent, patent
rights, inventions, trade secrets, know-how, trademarks, service marks, trade
names or copyrights; and the Company has not received any notice of and has no
knowledge of, any infringement of or conflict with asserted rights of others
with respect to any patent, patent rights, inventions, trade secrets, know-how,
trademarks, service marks, trade names or copyrights which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, would
have a Material Adverse Effect on the Company.
5.13. ENVIRONMENTAL MATTERS.
(a) The Company and its Subsidiaries are in compliance with
all Environmental Laws, and no condition exists or event has occurred
which, with or without notice or the passage of time or both, would
constitute a violation of or give rise to any liability, obligation or
Lien under any Environmental Law; and
(b) the Company and its Subsidiaries are in possession of all
Environmental Permits, if any, required for the conduct or operation of
their respective businesses (or any part thereof), and are in
compliance with all of the requirements and limitations included in
such Environmental Permits.
5.14. ACCURACY OF STATEMENTS. This Agreement and any schedule or
certificate furnished or to be furnished by or on behalf of the Company or any
Subsidiary to Purchaser in connection with this Agreement taken as a whole, do
not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements contained herein or therein, in light of
the circumstances in which they are made, not misleading.
17
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Company as follows:
6.1. ORGANIZATION AND STANDING. The Purchaser is duly organized,
validly existing and in good standing under the laws of the State of Illinois,
and has the corporate power and authority to own, operate and lease its Assets
and to carry on its business as currently conducted. The Purchaser is duly
qualified to conduct its business and is in good standing in every jurisdiction
in which the nature of the respective business conducted or Assets owned by it
makes such qualification necessary and where the failure so to qualify would
have a Material Adverse Effect, and has all governmental licenses,
authorizations, consents and approvals required to carry on its business as
currently conducted except where the failure to hold such licenses,
authorizations, consents or approvals would not have a Material Adverse Effect.
6.2. AUTHORIZATION. The execution, delivery and performance by the
Purchaser of this Agreement: (a) are within the power and authority of the
Purchaser; (b) do not require any consent or approval of any stockholders of the
Purchaser; and (c) have been authorized by all required proceedings on the part
of the Purchaser. This Agreement constitutes a valid and binding obligation of
the Purchaser, enforceable in accordance with its terms.
6.3. NO REGISTRATION UNDER THE SECURITIES ACT. The Purchaser
understands that the Shares to be purchased by it under this Agreement have not
been registered under the Securities Act, in reliance upon exemptions contained
in the Securities Act or interpretations thereof, and cannot be offered for
sale, sold or otherwise transferred unless such Common Stock being acquired
hereunder subsequently is so registered or qualifies for exemption from
registration under the Securities Act. The Purchaser acknowledges that, except
as provided in that certain Registration Rights Agreement between the Company
and the Purchaser and dated as of the date hereof, the Purchaser has no right to
require the Company to register the Shares. The Purchaser understands and agrees
that each certificate representing Shares shall bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF
ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT
TO AN EFFECTIVE
18
REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES
LAWS OR AN APPLICABLE EXEMPTION TO THE REGISTRATION REQUIREMENTS OF
SUCH ACT OR SUCH LAWS."
6.4. ACQUISITION FOR INVESTMENT. The Shares are being acquired
under this Agreement by the Purchaser in good faith solely for its own account,
for investment and not with a view toward resale or other distribution within
the meaning of the Securities Act. The Shares will not be offered for sale, sold
or otherwise transferred by the Purchaser without either registration or
exemption from registration under the Securities Act it being understood that
any sale or disposition of the Shares is in Purchaser's control.
6.5. EVALUATION OF MERITS AND RISKS OF INVESTMENT. The Purchaser is
an "accredited investor" within the meaning of Rule 501(a) promulgated under the
Securities Act. The Purchaser has such knowledge and experience in financial and
business matters that the Purchaser is capable of evaluating the merits and
risks of the Purchaser's investment in the Shares being acquired hereunder. The
Purchaser understands and is able to bear any economic risks associated with
such investment (including, without limitation, the necessity of holding such
Shares for an indefinite period of time, inasmuch as such Shares have not been
registered under the Securities Act). The Purchaser has had an opportunity to
request, and has received or had access to, all information as the Purchaser has
considered necessary to make a determination to purchase the Shares, and has had
all questions which have been asked by the Purchaser satisfactorily answered by
the Company. The Purchaser has not been offered the Shares by any form of
general solicitations or general advertising.
6.6. STANDSTILL PROVISIONS.
(a) Until the fifth anniversary of the date of the execution
of this Agreement, without the prior written approval of the Company,
unless a change in control of the Company has occurred in the meantime,
neither the Purchaser nor its Affiliates will (i) acquire, offer to
acquire, or agree to acquire, directly or indirectly, by purchase,
tender offer or otherwise, any assets or Voting Securities of the
Company or direct or indirect rights or options to acquire any assets
or Voting Securities of the Company, or solicit or assist any other
person so acquiring, offering to acquire or agreeing to acquire such
assets or securities, rights or options, (ii) announce or publicly
propose any extraordinary transaction involving the Company, or any
Voting Securities or assets of the Company; (iii) make, or participate,
directly or indirectly, in any "solicitation" of "proxies" to vote (as
such terms are used in the proxy rules of the Commission), or seek to
advise or influence any
19
person or entity with respect to the voting of, any Voting Securities;
(iv) form, join or in any way participate in a "group" within the
meaning of Section 13(d)(3) of the Exchange Act with respect to any
Voting Securities or (v) otherwise act, alone or in concert with
others, to seek to control the management, board of directors, or
policies of the Company; PROVIDED, HOWEVER, that the Purchaser may
purchase shares of Common Stock other than the Shares without violating
this section so long as such purchase, combined with the Shares, would
not exceed 5% of the outstanding shares of the Company on a
fully-diluted basis following such purchase.
(b) In the event that any time prior to the fifth anniversary
of the execution of this Agreement, (i) the Board of Directors of the
Company recommends to the stockholders of the Company an acquisition
proposal involving a business combination proposed to be accounted for
as a pooling of interests (a "Pooling Proposal"), and if at such time
the Purchaser holds an amount of Common Stock equal to 5% or more of
the then outstanding Common Stock, or (ii) the Company shall be advised
in writing by its independent public accountants that the assertion by
the Purchaser of statutory appraisal rights in respect of such Pooling
Proposal (considered in light of all the facts and circumstances then
known to such accountants, but without regard to the assertion of
appraisal rights by any other stockholder of the Company) would be
likely to preclude accounting for the transaction as a pooling, then in
such event the Purchaser will refrain from perfecting its statutory
appraisal rights, if any, in respect of the Pooling Proposal.
ARTICLE VII
MISCELLANEOUS
7.1. SURVIVAL. This Article VII and the agreements of the Company
and the Purchaser contained in Section 4.2 (Publicity) and Section 4.3
(Confidentiality) shall survive the issuance and sale of the Shares in
accordance with their terms. This Article VII and the agreements of the Company
and the Purchaser contained in Section 7.3 (Expenses) shall survive the
termination of this Agreement. All representations, warranties in Sections 5 and
6 (except Section 4.3, 4.5 and 6.6) shall survive for eighteen months from the
Closing Date. The representations and warranties made in Section 6.6 shall
survive for a period of five years from the Closing Date. The covenants made in
Section 4.3 and 4.5 shall survive indefinitely. All other covenants and
agreements in this Agreement shall not survive the consummation of the issuance
of the Shares or the termination of this Agreement.
20
7.2. ADDITIONAL ACTIONS AND DOCUMENTS. Each of the parties
hereto hereby agrees to take or cause to be taken such further actions, to
execute, deliver and file or cause to be executed, delivered and filed such
further documents, and will obtain such consents, as may be necessary or as may
be reasonably requested in order to fully effectuate the purposes, terms and
conditions of this Agreement.
7.3. EXPENSES. Each party hereto shall pay its own expenses
incident to this Agreement and the transactions contemplated hereunder,
including all legal and accounting fees and disbursements, except that the
Company shall pay all required filing fees under Xxxx-Xxxxx-Xxxxxx.
7.4. ASSIGNMENT. The Purchaser shall have the right to assign its
rights and obligations under this Agreement, in whole or in part, to a
wholly-owned subsidiary or to designate any of its wholly-owned subsidiaries (to
the extent permitted by Law) to receive directly the shares of Common Stock to
be purchased hereunder or to exercise any of the rights of the Purchaser, or to
perform any of its obligations. Except as set forth in the previous sentence and
as otherwise expressly permitted hereunder, the Company and the Purchaser shall
not assign its rights and obligations under this Agreement, in whole or in part,
whether by operation of law or otherwise, without the prior written consent of
the other party hereto, and any such assignment contrary to the terms hereof
shall be null and void and of no force and effect. In no event shall the
assignment by the Company or the Purchaser of its respective rights or
obligations under this Agreement, whether before or after the Closing, release
the Company or the Purchaser from its respective liabilities and obligations
hereunder.
7.5. ENTIRE AGREEMENT; AMENDMENT. This Agreement, including the
Disclosure Schedule, the Exhibits and other documents referred to herein or
furnished pursuant hereto, constitutes the entire agreement among the parties
hereto with respect to the transactions contemplated herein, and it supersedes
all prior oral or written agreements, commitments or understandings with respect
to the matters provided for herein. No amendment, modification or discharge of
this Agreement shall be valid or binding unless set forth in writing and duly
executed and delivered by the party against whom enforcement of the amendment,
modification, or discharge is sought.
7.6. WAIVER. No delay or failure on the part of any party hereto in
exercising any right, power or privilege under this Agreement or under any other
documents furnished in connection with or pursuant to this Agreement shall
impair any such right, power or privilege or be construed as a waiver of any
default or
21
any acquiescence therein. No single or partial exercise of any such right, power
or privilege shall preclude the further exercise of such right, power or
privilege, or the exercise of any other right, power or privilege. No waiver
shall be valid against any party hereto unless made in writing and signed by the
party against whom enforcement of such waiver is sought and then only to the
extent expressly specified therein.
7.7. SEVERABILITY. If any part of any provision of this Agreement
or any other agreement or document given pursuant to or in connection with this
Agreement shall be invalid or unenforceable in any respect, such part shall be
ineffective to the extent of such invalidity or unenforceability only, without
in any way affecting the remaining parts of such provision or the remaining
provisions of this Agreement.
7.8. GOVERNING LAW. This Agreement, the rights and obligations of
the parties hereto, and any claims or disputes relating thereto, shall be
governed by and construed in accordance with the laws of the State of Delaware
(excluding the choice of law rules thereof).
7.9. NOTICES. All notices, demands, requests, or other communications
which may be or are required to be given, served, or sent by any party to any
other party pursuant to this Agreement shall be in writing and shall be hand
delivered, sent by overnight courier or mailed by first-class, registered or
certified mail, return receipt requested, postage prepaid, or transmitted by
telegram, telecopy or telex, addressed as follows:
If to Purchaser:
Prior to June 1, 1999 After June 1, 1999
X.X. Xxxxxxxx, Inc. X.X. Xxxxxxxx, Inc.
000 Xxxxxxxxxxxxx Xxxxxxx 000 Xxxxxxxx Xxxxxxx
Xxxxxxxxxxxx, Xxxxxxxx 00000-0000 Xxxx Xxxxxx, Xxxxxxxx 00000
Attention: Secretary Attention: Secretary
By Fax: (000) 000-0000 By Fax: (000) 000-0000
with a copy to:
Xxxxx, Xxxxx & Xxxxx
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
22
Fax: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx
If to the Company:
Project Software & Development, Inc.
000 Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Fax: (000) 000-0000
Attention: Chief Financial Officer
with a copy to:
Xxxxx, Xxxx & Xxxxx LLP
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Fax: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxxx
Each party may designate by notice in writing a new address to which any notice,
demand, request or communication may thereafter be so given, served or sent.
Each notice, demand, request, or communication which shall be hand delivered,
sent, mailed, telecopied or telexed in the manner described above, or which
shall be delivered to a telegraph company, shall be deemed sufficiently given,
served, sent, received or delivered for all purposes at such time as it is
delivered to the addressee (with the return receipt, the delivery receipt, or
(with respect to a telecopy or telex) the answerback being deemed conclusive,
but not exclusive, evidence of such delivery) or at such time as delivery is
refused by the addressee upon presentation.
7.10. HEADINGS. Section headings contained in this Agreement are
inserted for convenience of reference only, shall not be deemed to be a part of
this Agreement for any purpose, and shall not in any way define or affect the
meaning, construction or scope of any of the provisions hereof.
7.11. EXECUTION IN COUNTERPARTS. To facilitate execution, this
Agreement may be executed in as many counterparts as may be required. It shall
not be necessary that the signatures of, or on behalf of, each party, or that
the signatures of all persons required to bind any party, appear on each
counterpart; but it shall be sufficient that the signature of, or on behalf of,
each party, or that the signatures of the persons required to bind any party,
appear on one or more of the counterparts. All counterparts shall collectively
constitute a single Agreement. It shall not be necessary in making proof of this
Agreement to produce or account for more than a number of counterparts
containing the respective signatures of, or on behalf of, all of the parties
hereto.
23
7.12. LIMITATION ON BENEFITS. The covenants, undertakings and
agreements set forth in this Agreement shall be solely for the benefit of, and
shall be enforceable only by, the parties hereto and their respective
successors, heirs, executors, administrators, legal representatives and
permitted assigns.
7.13. BINDING EFFECT. Subject to any provisions hereof restricting
assignment, this Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective successors, heirs, executors,
administrators, legal representatives and assigns.
24
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement, or have caused this Agreement to be duly executed on their behalf, as
of the date first above written.
THE PURCHASER
X. X. XXXXXXXX, INC.
By: /s/ Xxxx X. Xxxxxxx
--------------------------------
Name: Xxxx X. Xxxxxxx
Its: Senior Vice-President
THE COMPANY
PROJECT SOFTWARE & DEVELOPMENT, INC.
By: /s/ Xxxxxx X. Xxxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxxx
Its: President and CEO
