EXHIBIT 2.2
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
MOLDFLOW CORPORATION
("Parent")
MF MERGER SUB I, INC.
("MergerSub")
AMERICAN MSI CORPORATION
(the "Company")
THE XXXXXXX AND XXXXXXX XXXXXXXX FAMILY TRUST
(the "Stockholder")
XXXXXXX X. XXXXXXXX
("Xxxxxxxx")
AND
XXXXXXX X. XXXXXXXX
("Xxx. Xxxxxxxx")
DATED AS OF JANUARY 23, 2004
AGREEMENT AND PLAN OF MERGER
INDEX
PAGE
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SECTION 1. PLAN OF MERGER............................................................................... 2
1.1 The Merger...................................................................................... 2
1.2 Exchange Procedures............................................................................. 4
1.3 Fractional Shares............................................................................... 4
1.4 Escrow Account; Escrow Agreement................................................................ 5
1.5 Tax Treatment of Merger......................................................................... 5
1.6 Post-Closing Adjustments........................................................................ 5
SECTION 2. CLOSING...................................................................................... 6
2.1 Closing......................................................................................... 6
2.2 Further Assurances.............................................................................. 6
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY PARTIES WITH RESPECT TO THE COMPANY............ 7
3.1 Making of Representations and Warranties........................................................ 7
3.2 Organization and Qualification of the Company................................................... 7
3.3 Capitalization; Beneficial Ownership............................................................ 7
3.4 Subsidiaries.................................................................................... 8
3.5 Authority of the Company........................................................................ 8
3.6 Real and Personal Property...................................................................... 9
3.7 Financial Statements............................................................................ 10
3.8 Taxes........................................................................................... 11
3.9 Accounts Receivable; Accounts Payable; Inventories.............................................. 13
3.10 Absence of Certain Changes...................................................................... 14
3.11 [Intentionally Omitted]......................................................................... 16
3.12 Banking Relations............................................................................... 16
3.13 Intellectual Property........................................................................... 16
3.14 Contracts....................................................................................... 18
3.15 Litigation...................................................................................... 19
3.16 Compliance with Laws; Permits; Burdensome Agreements............................................ 20
3.17 Insurance....................................................................................... 20
3.18 Powers of Attorney.............................................................................. 20
3.19 Finder's Fee.................................................................................... 20
3.20 Corporate Records; Copies of Documents.......................................................... 21
3.21 Transactions with Interested Persons............................................................ 21
3.22 Employee Benefit Programs....................................................................... 21
3.23 Directors, Officers and Employees; Labor Matters................................................ 23
3.24 Non-Foreign Status.............................................................................. 24
3.25 Transfer of Shares.............................................................................. 24
(i)
3.26 Tax Treatment.................................................................................. 24
3.27 Environmental Matters.......................................................................... 24
3.28 Customers, Distributors and Partners........................................................... 25
3.29 Suppliers...................................................................................... 25
3.30 Warranty and Related Matters................................................................... 26
3.31 Backlog........................................................................................ 26
3.32 Disclosure..................................................................................... 26
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER, XXXXXXXX AND XXX. XXXXXXXX............... 26
4.1 Company Shares................................................................................. 26
4.2 Authority...................................................................................... 27
4.3 Finder's Fee................................................................................... 27
4.4 Agreements..................................................................................... 27
4.5 Investment Representation...................................................................... 28
4.6 Tax Treatment.................................................................................. 28
4.7 Organization of Trust.......................................................................... 28
SECTION 5. COVENANTS OF THE COMPANY PARTIES............................................................ 29
5.1 Making of Covenants and Agreements............................................................. 29
5.2 Confidential Information; Non-Solicitation; Unfair Competition................................. 29
SECTION 6. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGERSUB...................................... 31
6.1 Making of Representations and Warranties....................................................... 31
6.2 Organization of Parent and MergerSub........................................................... 31
6.3 Authority of Parent and MergerSub.............................................................. 31
6.4 Litigation..................................................................................... 32
6.5 Finder's Fee................................................................................... 32
6.6 SEC Reports; Parent Financial Statements....................................................... 33
6.7 Shares......................................................................................... 33
6.8 No Material Adverse Change..................................................................... 33
6.9 Capitalization................................................................................. 33
6.10 Tax Treatment.................................................................................. 34
6.11 No Prior Activities............................................................................ 34
SECTION 7. COVENANTS OF PARENT AND MERGERSUB........................................................... 34
7.1 Making of Covenants and Agreement.............................................................. 34
7.2 Benefit Arrangements........................................................................... 34
7.3 Registration................................................................................... 34
7.4 Nasdaq Listing Application..................................................................... 38
SECTION 8. CONDITIONS TO THE OBLIGATIONS OF EACH PARTY................................................. 38
8.1 Litigation; No Opposition...................................................................... 38
8.2 Approvals...................................................................................... 38
8.3 Escrow Agreement............................................................................... 39
8.4 Payoff Letter.................................................................................. 39
(ii)
8.5 Employment Agreement........................................................................... 39
SECTION 9. CONDITIONS TO THE OBLIGATIONS OF PARENT AND MERGERSUB....................................... 39
9.1 Representations and Warranties................................................................. 39
9.2 [Intentionally Omitted]........................................................................ 39
9.3 Delivery....................................................................................... 39
9.4 Release........................................................................................ 40
SECTION 10. CONDITIONS TO OBLIGATIONS OF THE COMPANY PARTIES............................................ 40
10.1 Representations and Warranties................................................................. 40
10.2 Delivery....................................................................................... 40
SECTION 11. RIGHTS AND OBLIGATIONS SUBSEQUENT TO CLOSING................................................ 42
11.1 Survival of Representations, Warranties and Covenants.......................................... 42
11.2 Regulatory Filings............................................................................. 42
SECTION 12. INDEMNIFICATION............................................................................. 42
12.1 Indemnification by the Stockholder, Xxxxxxxx and Xxx. Xxxxxxxx................................. 42
12.2 Limitations on Indemnification by the Stockholder, Xxxxxxxx and Xxx. Xxxxxxxx.................. 43
12.3 Indemnification by Parent...................................................................... 43
12.4 Limitation on Indemnification by Parent........................................................ 44
12.5 Notice; Defense of Claims...................................................................... 44
12.6 Escrow Amount.................................................................................. 45
12.7 Insurance...................................................................................... 45
SECTION 13. DEFINITIONS................................................................................. 45
13.1 Definitions.................................................................................... 45
SECTION 14. MISCELLANEOUS............................................................................... 50
14.1 Fees and Expenses.............................................................................. 50
14.2 Dispute Resolution............................................................................. 50
14.3 Waivers........................................................................................ 51
14.4 Governing Law.................................................................................. 52
14.5 Notices........................................................................................ 52
14.6 Entire Agreement............................................................................... 53
14.7 Assignability; Binding Effect.................................................................. 53
14.8 Captions and Gender............................................................................ 53
14.9 Execution in Counterparts...................................................................... 53
14.10 Amendments..................................................................................... 53
14.11 Publicity and Disclosures...................................................................... 53
14.12 Consent to Jurisdiction........................................................................ 54
(iii)
EXHIBITS
--------
Exhibit 1.4 -- Form of Escrow Agreement
Exhibit 8.5 -- Form of Employment Agreement with Xxxxxxx Xxxxxxxx
Exhibit 9.3(f) -- Form of Opinion of Xxxxxxxxx Xxxxx Xxxxxxx & Xxxxx
Exhibit 9.3(g) -- Transferor's Certificate of Non-Foreign Status
Exhibit 9.4 -- Form of Release
Exhibit 10.2(k) -- Form of Opinion of Xxxxxxx Procter LLP
SCHEDULES
---------
Schedule 3.3(a) -- Repurchases
Schedule 3.3(b) -- Company Capitalization; Voting Agreements
Schedule 3.4 -- Subsidiaries
Schedule 3.5 -- Approvals; Waivers
Schedule 3.6(a) -- Real Property
Schedule 3.6(b) -- Personal Property
Schedule 3.7 -- Financial Statements
Schedule 3.8 -- Taxes
Schedule 3.9 -- Accounts Receivable; Accounts Payable; Inventory
Schedule 3.10 -- Adverse Changes
Schedule 3.12 -- Banking Relations
Schedule 3.13 -- Intellectual Property
Schedule 3.14 -- Contracts; Commitments
Schedule 3.15 -- Litigation
Schedule 3.16 -- Permits
Schedule 3.17 -- Insurance
Schedule 3.21 -- Transactions with Interested Persons
Schedule 3.22 -- Employee Benefits
Schedule 3.23(a) -- Directors and Officers; Certain Employees
Schedule 3.23(b) -- Employment Agreements
Schedule 3.25 -- Share Transfers
Schedule 3.28 -- Customers, Distributors and Partners
Schedule 3.29 -- Suppliers
Schedule 3.30 -- Warranties
Schedule 3.31 -- Backlog
Schedule 4.1 -- Share Restrictions
Schedule 6.3 -- Parent and MergerSub Approvals
(iv)
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is entered into as
of January 23, 2004, by and among Moldflow Corporation, a Delaware corporation
("Parent"), MF Merger Sub I, Inc., a California corporation ("MergerSub"),
American MSI Corporation, a California corporation (the "Company"), Xxxxxxx X.
Xxxxxxxx and Xxxxxxx X. Xxxxxxxx as co-trustees of The Xxxxxxx and Xxxxxxx
Xxxxxxxx Family Trust under Declaration of Trust and Trust Agreement dated
February 28, 1994, as amended from time to time, the sole stockholder of the
Company (the "Stockholder"), Xxxxxxx X. Xxxxxxxx in his individual capacity
("Xxxxxxxx") and Xxxxxxx X. Xxxxxxxx in her individual capacity ("Xxx.
Xxxxxxxx"). The Company, the Stockholder and Xxxxxxxx shall collectively be
known as the "Company Parties," and each, individually, as a "Company Party."
All capitalized terms used herein and not otherwise defined shall have the
meanings ascribed to them in Section 13.1 hereof.
W I T N E S S E T H
WHEREAS, the Stockholder owns of record and beneficially all of the
issued and outstanding capital stock of the Company, consisting of seventy (70)
shares of the Company's Common Stock, no par value (the "Company Common Stock");
WHEREAS, Parent and the Company desire to effect a combination of their
respective businesses through a merger of MergerSub, a subsidiary of Parent,
with and into the Company, in accordance with applicable laws;
WHEREAS, the Boards of Directors of Parent, MergerSub and the Company
each have determined that it is in the best interests of their respective
stockholders for MergerSub to merge with and into the Company upon the terms in
and subject to the conditions of this Agreement (the "Merger");
WHEREAS, following the Merger and subject to Section 1.5 of this
Agreement, Parent will merge (the "Second Merger") the Company, as the surviving
corporation of the Merger, with and into a Delaware limited liability company
that is a wholly-owned subsidiary of Parent ("MergerSub2"), with MergerSub2 to
be the surviving entity of the Second Merger;
WHEREAS, the Merger and the Second Merger are intended to be a part of
an integrated plan and together are intended to qualify as a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code"), and this Agreement is intended to constitute a "plan of
reorganization" within the meaning of the regulations promulgated under Section
368 of the Code; and
WHEREAS, in order to induce Parent and MergerSub to enter into this
Agreement, and in order to receive the benefits that will accrue to them upon
consummation of the Merger, the Company Parties and Xxx. Xxxxxxxx have agreed to
make certain representations, warranties and covenants as set forth herein.
NOW, THEREFORE, in consideration of the mutual agreements set forth
herein and other valuable consideration, the receipt and adequacy whereof are
hereby acknowledged, the parties hereto agree as follows:
SECTION 1 PLAN OF MERGER.
1.1 The Merger.
(a) The Merger. On the terms and subject to the
conditions set forth in this Agreement, at the Effective Time (as defined in
Section 1.1(c) hereof), in accordance with this Agreement and the California
General Corporation Law (the "California Law"), MergerSub shall merge with and
into the Company, the separate existence of MergerSub shall cease and the
Company shall continue, as the surviving corporation under the corporate name
"American MSI Corporation." The Company, in its capacity as the corporation
surviving the Merger, is sometimes referred to herein (together with MergerSub2,
as provided in Section 1.5 below) as the "Surviving Corporation."
(b) Effect of the Merger. At and after the Effective
Time, the Merger shall have the effects set forth in Section 1107 of the
California Law and all other applicable laws.
(c) Consummation of the Merger. On the Closing Date (as
defined in Section 2.1 hereof), the parties hereto shall cause an Agreement of
Merger to be filed with the Secretary of State of California, in such form as
required by, and executed in accordance with, Section 1103 of the California
Law. The Merger shall be effective as of the date and time of filing of the
Agreement of Merger (the "Effective Time").
(d) Articles of Incorporation. At the Effective Time and
without any further action on the part of the Company or MergerSub, the
Company's Articles of Incorporation, as amended to date, shall be amended to
read in their entirety as the Articles of Incorporation of MergerSub reads as in
effect immediately prior to the Effective Time, and shall be and become the
Articles of Incorporation of the Surviving Corporation, and shall thereafter
continue in effect until amended as provided therein and in accordance with the
California Law; provided that such Articles of Incorporation shall reflect as of
the Effective Time "American MSI Corporation" as the name of the Surviving
Corporation.
(e) By-Laws. The By-Laws of MergerSub, as in effect
immediately prior to the Effective Time, shall be the By-Laws of the Surviving
Corporation, and shall thereafter continue in effect until amended as provided
therein and in accordance with the California Law.
(f) Directors and Officers. The directors and officers of
MergerSub holding office immediately prior to the Effective Time shall, from and
after the Effective Time, be the directors and officers of the Surviving
Corporation, until their respective successors shall have been duly elected or
appointed and qualified or until their earlier death, resignation or removal in
accordance with the Surviving Corporation's Articles of Incorporation and
By-Laws.
(g) Merger Consideration. The manner of converting or
canceling shares of the Company in the Merger shall be as follows:
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(i) Company Common Stock. The aggregate consideration to
be paid by Parent and MergerSub in the Merger shall be $10,219,611.59
(the "Merger Consideration"). The Merger Consideration shall be payable
in cash and in shares of Parent Common Stock (as defined below), as set
forth in this Section 1.1(g). At the Effective Time, each share of
Company Common Stock (other than shares of Company Common Stock to be
canceled in accordance with Section 1.1(g)(iii)) that is issued and
outstanding immediately prior to the Effective Time will, by virtue of
the Merger, and without the need for any further action on the part of
the holder thereof, be converted into the right to receive (A) an
amount in cash equal to the Per Share Cash Merger Consideration (as
defined in Section 1.1(g)(iv)) and (B) a number of shares of Common
Stock of Parent, par value $.01 per share ("Parent Common Stock"),
equal to the Per Share Stock Merger Consideration (as defined in
Section 1.1(g)(iv)), subject in each case to the provisions of Section
1.3 regarding the elimination of fractional shares, and subject to
Section 1.1(g)(v) hereof.
(ii) Conversion of MergerSub Capital Stock. Each share of
common stock of MergerSub issued and outstanding immediately prior to
the Effective Time shall be converted into and exchangeable for one
validly issued, fully paid and nonassessable share of the common stock
of the Surviving Corporation.
(iii) Shares held by the Company. At the Effective Time,
each share of Company Common Stock held by the Company as treasury
stock or held by any subsidiary of the Company immediately prior to the
Effective Time shall, by virtue of the Merger and without any action on
the part of Parent, MergerSub, the Company or the holder thereof, be
canceled, retired and cease to exist, and no consideration shall be
delivered with respect thereto.
(iv) Definitions. For purposes of this Section 1.1(g) and
this Agreement generally the following definitions apply:
"CASH MERGER VALUE" shall be equal to $6,131,766.95, which represents
the product obtained by multiplying (a) the Merger Consideration and (b) sixty
percent (60%).
"PARENT AVERAGE PRICE PER SHARE" shall be equal to $11.7033333, which
represents the average closing price per share of Parent Common Stock on the
Nasdaq National Market over the fifteen (15) trading days ending on the second
trading day prior to, but not including, the date of this Agreement.
"PARENT MERGER STOCK VALUE" shall be equal to 349,288 shares, which
represents the quotient obtained by dividing (a) the Merger Consideration minus
the Cash Merger Value by (b) the Parent Average Price Per Share.
"PER SHARE CASH MERGER CONSIDERATION" shall be equal to $87,596.6707142
which represents (a) the Cash Merger Value divided by (b) the number of
outstanding fully-diluted shares of Company Common Stock as of the Closing Date
(which shall represent all outstanding equity and rights to receive equity in
the Company, shall exclude shares of Company Common Stock to be cancelled in
accordance with Section 1.1(g)(iii), and shall include, without limitation,
3
the shares of Company Common Stock outstanding on the date hereof), which amount
shall be rounded up to the nearest one hundred thousandth of a dollar (seven (7)
decimal places).
"PER SHARE STOCK MERGER CONSIDERATION" shall be equal to 4,989.8428571
shares which represents the number of shares of Parent Common Stock issuable
with respect to each share of Company Common Stock, determined by dividing (a)
the Parent Merger Stock Value by (b) the number of outstanding fully-diluted
shares of Company Common Stock as of the Closing Date (which shall represent all
outstanding equity and rights to receive equity in the Company, shall exclude
shares of Company Common Stock to be cancelled in accordance with Section
1.1(g)(iii), and shall include, without limitation, the shares of Company Common
Stock outstanding on the date hereof), which number of shares shall be rounded
up to the nearest one hundred thousandth of a share (seven (7) decimal places).
1.2 Exchange Procedures.
(a) At or as soon as practicable after the Effective
Time, Parent shall make available, and the Stockholder will be entitled to
receive, upon surrender to Parent of one or more certificates ("Company
Certificates") representing shares of Company Common Stock for cancellation duly
endorsed, together with such other documents as may be reasonably required by
Parent, cash and certificates ("Parent Certificates") representing the number of
shares of Parent Common Stock ("Parent Common Shares") that such Stockholder is
entitled to receive pursuant to Section 1.1(g) hereof; provided, however, that
the Escrow Amount (as defined in Section 1.4 hereof) shall be held in escrow in
accordance with Section 1.4 of this Agreement. The Merger Consideration that the
Stockholder shall be entitled to receive pursuant to the Merger shall be deemed
to have been issued at the Effective Time. No interest shall accrue on the
Merger Consideration. If the Merger Consideration (or any portion thereof) is to
be delivered to any Person other than the Stockholder, it shall be a condition
to such exchange that the Stockholder shall pay to Parent any transfer or other
taxes required by reason of the payment of the Merger Consideration to a Person
other than the Stockholder, or shall establish to the satisfaction of Parent
that such tax has been paid or is not applicable. In the event that any Company
Certificate shall have been lost, stolen or destroyed, Parent shall pay, upon
the making of an affidavit of that fact by the holder thereof in form and
substance reasonably acceptable to Parent, the proper Merger Consideration as
may be required pursuant to this Section 1.2; provided, however, that Parent
may, in its discretion, require the delivery of a suitable bond and/or
indemnity.
(b) After the Effective Time, there shall be no transfers
of any Company Shares on the stock transfer books of the Surviving Corporation.
If, after the Effective Time, Company Certificates are presented to Parent, they
shall be canceled and exchanged in accordance with Sections 1.1(g) and 1.2
hereof.
1.3 Fractional Shares. No fractional Parent Common Shares shall be
issued in connection with the Merger, but in lieu thereof, the holder of any
Company Shares who would otherwise be entitled to receive a fraction of a Parent
Common Share (after aggregating all Parent Common Shares being issued to such
holder in the Merger at such time) shall receive from Parent promptly after the
Effective Time, an amount of cash equal to such fraction multiplied by the
Parent Average Price Per Share.
4
1.4 Escrow Account; Escrow Agreement. Notwithstanding anything in
this Agreement to the contrary, at Closing, Parent (a) will withhold from the
Merger Consideration an amount of cash equal to One Million Five Hundred Thirty
Thousand Dollars ($1,530,000) (the "Escrow Amount"), and (b) will deliver the
Escrow Amount to Mellon Trust of New England, N.A. or a similar institution, as
escrow agent (the "Escrow Agent"), to be held in escrow by the Escrow Agent in
an interest-bearing account (the "Escrow Account") as security for (i) the
indemnification obligations of the Stockholder and Xxxxxxxx under Section 12
hereof and (ii) the post-Closing adjustments set forth in Section 1.6 hereof,
pursuant to the provisions of an escrow agreement in substantially the form of
Exhibit 1.4 attached hereto (the "Escrow Agreement") to be entered into on or
prior to the Closing by Parent, the Escrow Agent and the Stockholder. The Escrow
Amount will be held by the Escrow Agent pursuant to and in accordance with the
terms of the Escrow Agreement, which will provide for fifty percent (50%) of the
Escrow Amount (less any amounts subject to claims thereunder) to be released to
the Stockholder on August 15, 2005 and for the remainder of the Escrow Amount
(less any amounts subject to claims thereunder) to be released to the
Stockholder on the second anniversary of the Effective Time. Distributions of
any amounts from the Escrow Account shall be governed by the terms and
conditions of the Escrow Agreement.
1.5 Tax Treatment of Merger. As soon as practicable following the
Merger, the Company shall be merged with and into MergerSub2, a subsidiary of
Parent that is disregarded as an entity separate from Parent for federal income
tax purposes, the separate existence of the Company shall cease and MergerSub2
shall continue, as the surviving entity under the name "American MSI
Corporation, LLC." If Parent determines in its sole discretion that the Company
will not be able to obtain a tax clearance certificate from the State of
California, the Company shall be merged with and into a Delaware corporation
that is a wholly-owned subsidiary of Parent and is disregarded as an entity
separate from Parent for federal income tax purposes and that shall be referred
to as "MergerSub2" for all purposes of this Agreement, the separate existence of
the Company shall cease and MergerSub2 shall continue, as the surviving entity
under the name "American MSI Corporation." MergerSub2, in its capacity as the
entity surviving the Second Merger, is sometimes referred to herein as the
"Surviving Corporation." The parties hereto agree to report the Merger and the
Second Merger as an integrated transaction that constitutes a single
reorganization under Section 368(a) of the Code, and the Treasury Regulations
thereunder and to file all Tax Returns (as defined in Section 3.8) and reports
consistently therewith.
1.6 Post-Closing Adjustments.
(a) Following the Closing Date, Parent shall cause the
Company's balance sheet as of December 31, 2003 and the Company's income
statement for the year ended December 31, 2003 (collectively, the "Closing
Statements") to be reviewed or audited by Parent's auditors in accordance with
GAAP and consistent with the Company's historical practices.
(b) Within ninety (90) days after the Closing Date,
Parent shall at its expense prepare and deliver to the Stockholder the Closing
Statements.
5
(c) The cash portion of the Merger Consideration shall be
decreased one dollar for each dollar by which the Company's operating loss, if
any, for the year ended December 31, 2003 as set forth on the Closing Statements
is greater than two hundred fifty thousand dollars ($250,000).
(d) If the Stockholder disagrees with the Closing
Statements, the Stockholder shall, within ten (10) business days after receipt
thereof, furnish to Parent a written statement of such disagreement, together
with an explanation of the reasons therefor. If within such ten (10) business
day period, Parent does not receive such a written statement of disagreement
from the Stockholder, the Stockholder shall be deemed to have accepted the
Closing Statements for all purposes of this Agreement. If Parent does receive
such a written statement of disagreement from the Stockholder within such ten
(10) business day period, then within ten (10) business days of such receipt,
Xxxxxxxx as the trustee of Stockholder and the Chief Executive Officer or the
Chief Financial Officer of Parent shall discuss, in person, by telephone or by
video conference, their disagreement in order to attempt to resolve it through
good faith negotiations. If the Stockholder and Parent are unable to resolve
their disagreement within forty-five (45) days after the delivery of the Closing
Statements to the Stockholder, the disagreement shall be submitted for
determination to a mutually acceptable independent accounting firm (the
"Accountant"), which determination shall be final and binding upon the
Stockholder and Parent. Such determination by the Accountant shall be made in
accordance with this Agreement, including the Exhibits hereto. The expenses
incurred by the Accountant in making such determination shall be borne equally
by the Stockholder and Parent.
(e) The amount of any adjustment to the cash portion of
the Merger Consideration shall be paid to Parent out of the Escrow Account
established pursuant to Section 1.4 within five (5) business days after the
earlier of (i) the acceptance by the Stockholder of the Closing Statements
delivered by Parent and (ii) the resolution of any dispute by the Stockholder
and Parent following notification of their disagreement or a determination by
the Accountant pursuant to paragraph (d) above.
SECTION 2 CLOSING.
2.1 Closing. The closing of the transactions provided for in this
Agreement (herein called the "Closing") shall be held at the offices of Xxxxxxx
Procter LLP at Exchange Place, Boston, Massachusetts at 10:00 a.m. local time on
the date of this Agreement or at such other place, or an earlier or later date
or time as may be mutually agreed upon by Parent and the Company (the "Closing
Date").
2.2 Further Assurances. The Stockholder shall from time to time
after the Closing, at the request of Parent and without further consideration,
execute and deliver further instruments of transfer and assignment and take such
other action as Parent may reasonably require to more effectively transfer and
assign to, and vest in, the Surviving Corporation the business and assets
currently held by the Company and all rights thereto, and to fully implement the
provisions of this Agreement.
6
SECTION 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY PARTIES WITH RESPECT TO
THE COMPANY.
3.1 Making of Representations and Warranties. As a material
inducement to Parent to enter into this Agreement and consummate the
transactions contemplated hereby and subject to such exceptions as are disclosed
in the disclosure schedules dated as of the date hereof and delivered herewith
to Parent (the "Company Schedules") (each of which exceptions disclosed in one
section of the Company Schedules shall be deemed disclosed in each other section
provided it is reasonably apparent on its face that the matter is responsive to
the representation to which such other section relates), the Company Parties
jointly and severally hereby make to Parent the representations and warranties
contained in this Section 3.
3.2 Organization and Qualification of the Company. The Company is
a corporation duly organized, validly existing and in good standing under the
laws of the State of California, with all requisite corporate power and
authority to own or lease its properties and to conduct its business in the
manner and in the places where such properties are owned or leased or such
business is currently conducted. The copies of the Company's Articles of
Incorporation, as amended and restated to date (the "Articles of
Incorporation"), certified by the Secretary of State of the State of California,
and of the Company's By-Laws, as amended to date, certified by the Company's
Secretary, and heretofore delivered to Parent's counsel, are complete and
correct, and no amendments thereto are pending. The Company is not in violation
of any term of its Articles of Incorporation or By-Laws. The Company is duly
qualified to do business as a foreign corporation under the laws of each
jurisdiction in which the nature of its business or the ownership or leasing of
its properties requires such qualification except where the failure to be so
licensed or qualified could not reasonably be expected to have a Material
Adverse Effect on the Company.
3.3 Capitalization; Beneficial Ownership.
(a) The authorized capital stock of the Company consists
only of ten million (10,000,000) shares of Common Stock, no par value, of which
seventy (70) shares are duly and validly authorized, issued, outstanding, fully
paid and non-assessable, of which no shares are held by the Company as treasury
stock, and of which nine million, nine hundred ninety-nine thousand, nine
hundred thirty (9,999,930) shares are authorized but unissued. There are no
outstanding options, warrants, rights, commitments, preemptive rights or
agreements of any kind for the issuance or sale of, or outstanding securities
convertible into, any additional shares of capital stock of any class of the
Company. None of the Company's capital stock has been issued in violation of any
federal or state law. Except as set forth on Schedule 3.3(a) hereto, the Company
has not redeemed or repurchased any shares of its capital stock from any holder
thereof since its inception.
(b) The Stockholder owns beneficially and of record the
shares of the Company's capital stock set forth opposite such Stockholder's name
on Schedule 3.3(b) hereto, free and clear of any Encumbrances (as defined in
Section 3.6). The Stockholder is the only beneficial or record holder of the
Company's capital stock, and the capital stock shown on Schedule 3.3(b) are the
only shares of capital stock of the Company held by the Stockholder or with
respect to which such Stockholder has any rights. Except as set forth in
Schedule 3.3(b)
7
attached hereto, there are no voting trusts, voting agreements, proxies or other
agreements, instruments or undertakings with respect to the voting of the
Company's capital stock to which the Company or the Stockholder is a party.
3.4 Subsidiaries. The Company has one subsidiary, TDKE Ventures
Ltd, a company formed under the laws of the United Kingdom (the "Subsidiary").
All of the outstanding shares of capital stock of the Subsidiary are owned
beneficially and of record by the Company free and clear of any lien,
restriction or encumbrance and said shares have been duly authorized and validly
issued and are fully paid and non-assessable. There are no outstanding warrants,
options or other rights to purchase or acquire any of the shares of capital
stock of the Subsidiary, or any outstanding securities convertible into or
exercisable or exchangeable for such shares, or outstanding warrants, options or
other rights to acquire any such convertible, exercisable or exchangeable
securities. The Subsidiary has no assets, liabilities or employees and does not
conduct, and has not conducted, any operations. Except for the Subsidiary and as
set forth on Schedule 3.4 hereto, the Company has no subsidiaries or investments
in any other Person and has never had any subsidiaries or investments in any
other Person.
3.5 Authority of the Company.
(a) The Company has full right, authority and power to
enter into this Agreement and each agreement, document and instrument to be
executed and delivered by the Company pursuant to, or as contemplated by, this
Agreement and to carry out the transactions contemplated hereby and thereby,
other than the Second Merger. The execution, delivery and performance by the
Company of this Agreement and each such other agreement, document and instrument
contemplated by this Agreement have been duly authorized by all necessary action
of the Company and the Stockholder, and no other action on the part of the
Company or the Stockholder is required in connection therewith.
(b) This Agreement and each agreement, document and
instrument executed and delivered by the Company pursuant to this Agreement
constitutes, or when executed and delivered will constitute, valid and binding
obligations of the Company enforceable in accordance with their terms. The
execution, delivery and performance by the Company of this Agreement, including
the Merger and, only with respect to paragraph (iii) below, the Second Merger,
and each such other agreement, document and instrument:
(i) does not and will not violate any provision
of the Articles of Incorporation or By-Laws of the Company, each as
amended to date;
(ii) does not and will not violate any laws of
the United States, or any state or other jurisdiction (domestic or
foreign) applicable to the Company or require the Company to obtain any
approval, consent or waiver of, or make any filing with, any Person or
entity (governmental or otherwise) that has not been obtained or made,
except as specifically identified on Schedule 3.5 hereto; and
(iii) does not and will not result in a breach of,
constitute a material default under, accelerate any obligation under,
require approval or consent under or give rise to a right of
termination of, any agreement, contract, instrument, mortgage, lien,
8
lease, permit, authorization, order, writ, judgment, injunction,
decree, determination or arbitration award to which the Company is a
party or by which the property of the Company is bound or affected, or
result in the creation or imposition of any mortgage, pledge, lien,
security interest or other charge or encumbrance on any of the
Company's assets or any Person's interest in the Company, except as
specifically identified on Schedule 3.5 hereto.
3.6 Real and Personal Property.
(a) Real Property. The Company does not own any real
property. All of the real property leased by the Company is identified on
Schedule 3.6(a) (herein referred to as the "Leased Real Property").
(i) Title. The Company has valid and enforceable
leasehold interests in the Leased Real Property, in each case, free and
clear of all easements, covenants, restrictions, leases, mortgages,
liens, assessments, claims, rights, judgments, encroachments, charges,
security interests, assignments, mortgages, deposit arrangements,
pledges or encumbrances of any kind or nature whatsoever or other
matters affecting title (collectively, "Encumbrances"), other than
liens for Taxes (as defined in Section 3.8) not yet due or delinquent
or being contested in good faith by appropriate means and statutory
liens arising in the ordinary course of business by operation of law
that are not yet due or developed ("Permitted Encumbrances"), except as
set forth on Schedule 3.6(a).
(ii) Status of Leases. All leases of Leased Real
Property by the Company are identified on Schedule 3.6(a), and true and
complete copies thereof have been delivered to Parent. Each of said
leases has been duly authorized and executed by the parties thereto and
is in full force and effect. The Company is not in material default
under any of said leases, nor has any event occurred which, with notice
or the passage of time, or both, would give rise to such a material
default. To the knowledge of the Company Parties, the other party to
each of said leases is not in material default under any of said leases
and there is no event which, with notice or the passage of time, or
both, would give rise to such a material default. After giving effect
to the Merger and the Second Merger, each lease identified on Schedule
3.6(a) will be valid and effective in accordance with its terms, with
the Surviving Corporation having succeeded to all the rights and
obligations of the Company thereunder.
(iii) Consents. Except as set forth in Schedule
3.6(a), no consent or approval is required with respect to the
transactions contemplated by this Agreement from the other parties to
any lease of Leased Real Property or from any regulatory authority and
no filing with any regulatory authority is required in connection
therewith.
(iv) Condition of Leased Real Property. Except as
set forth in Schedule 3.6(a), to the knowledge of the Company Parties,
there are no material defects in the physical condition of any land,
buildings or improvements constituting part of the Leased Real
Property, including without limitation, structural elements, mechanical
systems, parking and loading areas, and all such buildings and
improvements are in good
9
operating condition and repair, ordinary wear and tear excepted, and
have been well maintained.
(v) Compliance with the Law. Except as set forth
on Schedule 3.5(a), the Company has not received any notice from any
governmental authority of any violation of any law, ordinance,
regulation, license, permit or authorization issued with respect to any
Leased Real Property or improvements located on or constituting part of
the Leased Real Property that has not been heretofore corrected and no
such violation existed or exists which could have a Material Adverse
Effect on the use, operation or value of any Leased Real Property or
improvements located on or constituting part of the Leased Real
Property. No approval or consent to the transactions contemplated by
this Agreement is required of any governmental authority with
jurisdiction over any aspect of the Leased Real Property or its use or
operations. The Company has not received any notice of any real estate
tax deficiency or assessment or is aware of any proposed deficiency,
claim or assessment with respect to any of the Leased Real Property, or
any pending or threatened condemnation thereof.
(b) Personal Property. Attached hereto as Schedule 3.6(b)
is a list of all the tangible assets of the Company (excluding assets with a
value of less than $5,000) and including as part of such Schedule, the tax basis
of each such asset (excluding assets with a value of less than $5,000). Except
as set forth on Schedule 3.6(b) hereto, as of the date hereof, the Company owns
all its assets free and clear of any Encumbrances except for minor imperfections
of title or insignificant liens which do not, in the aggregate, detract from the
value of such assets, taken as a whole, or interfere with the present or
proposed uses thereof or the business of the Company or, after giving effect to
the Merger and the Second Merger, the Surviving Corporation. After giving effect
to the Merger and the Second Merger, the Surviving Corporation will own all such
assets free and clear of any Encumbrances except those set forth on Schedule
3.6(b) hereto and minor imperfections of title or insignificant liens which do
not, in the aggregate, detract from the value of such assets, taken as a whole,
or interfere with the present or proposed uses thereof, or the business of the
Surviving Corporation. The assets listed on Schedule 3.6(b) hereto include all
the material assets used in, and all the assets necessary or desirable for, the
conduct of the business of the Company as currently conducted.
3.7 Financial Statements.
(a) The Company has delivered to Parent the following
financial statements, copies of which are attached hereto as Schedule 3.7:
(i) unaudited balance sheets of the Company at
December 31, 2000, 2001 and 2002, and unaudited statements of income
and stockholders' equity for each of the three (3) years then ended, in
each case reviewed by Xxxxxxx Xxxxx CPA and certified by the Company's
Chief Executive Officer.
(ii) an unaudited balance sheet of the Company at
December 31, 2003 and statements of income and stockholders' equity for
the year then ended, in each case certified by the Company's Chief
Executive Officer. The unaudited balance sheet of the
10
Company at December 31, 2003 (including the notes thereto) is referred
to hereinafter as the "Base Balance Sheet."
Said financial statements have been prepared in accordance with GAAP
using the accrual method of accounting, applied consistently during the periods
covered thereby (except that the Company's unaudited financial statements do not
include footnote disclosure), are complete and correct in all material respects
and present fairly the financial condition of the Company at the dates of said
statements and the results of its operations for the periods covered thereby
(except that the balance sheets for periods ending in 2003 (other than the Base
Balance Sheet) are subject to normal year end audit adjustments).
(b) The projections for the year ending December 31, 2004
previously provided to Parent and attached hereto in Schedule 3.7, represent
good faith estimates of the performance of the Company for the periods stated
therein based upon assumptions which were believed in good faith to be
reasonable when made and continue to be reasonable as of the date hereof;
provided, however, that the foregoing is not a representation, warranty or
guarantee that such projections will be achieved.
(c) As of the date of the Base Balance Sheet, the Company
did not have any liabilities of any nature, whether accrued, absolute,
contingent or otherwise, asserted or unasserted, known or unknown (including,
without limitation, liabilities as guarantor or otherwise with respect to
obligations of others, liabilities for Taxes due or then accrued or to become
due, or contingent or potential liabilities relating to activities of the
Company or the conduct of its businesses prior to the date of the Base Balance
Sheet regardless of whether claims in respect thereof had been asserted as of
such date), except liabilities stated or adequately reserved against on the Base
Balance Sheet or reflected in Schedules furnished to Parent hereunder as of the
date hereof.
(d) As of the date hereof, the Company does not have any
liabilities of any nature, whether accrued, absolute, contingent or otherwise,
asserted or unasserted, known or unknown (including, without limitation,
liabilities as guarantor or otherwise with respect to obligations of others, or
liabilities for Taxes due or then accrued or to become due or contingent or
potential liabilities relating to activities of the Company or the conduct of
its business prior to the date hereof or the Closing, as the case may be,
regardless of whether claims in respect thereof had been asserted as of such
date), except: (i) liabilities stated or adequately reserved against on the Base
Balance Sheet or the notes thereto, (ii) liabilities expressly reflected in
Schedules furnished to Parent hereunder on the date hereof, (iii) immaterial
liabilities incurred after the date of the Base Balance Sheet in the ordinary
course of business of the Company consistent with the terms of this Agreement,
or (iv) liabilities for Taxes (as such term is defined in Section 3.8 hereof)
incurred after the date of the Base Balance Sheet in the ordinary course of
business of the Company.
3.8 Taxes.
(a) Each of the Company and the Subsidiary has paid or
caused to be paid all federal, state, local, foreign, and other taxes,
including, without limitation, income taxes, estimated taxes, alternative
minimum taxes, franchise taxes, capital stock taxes, employment and
11
payroll-related taxes, withholding taxes, and transfer taxes, whether or not
measured in whole or in part by net income, and all deficiencies, or other
additions to tax, interest, fines and penalties owed by it (collectively,
"Taxes"), required to be paid by it. The unpaid Taxes of each of the Company and
the Subsidiary (i) did not, as of the date of the Base Balance Sheet, exceed the
reserve for tax liability (rather than the reserve for deferred Taxes
established to reflect timing differences between book and tax income) set forth
in the Base Balance Sheet, and (ii) do not exceed that reserve as adjusted for
the passage of time through the date hereof and the date of the Closing in
accordance with the past custom and practice of the Company in filing its Tax
Returns (as defined below).
(b) Each of the Company and the Subsidiary has, in
accordance with applicable law, filed all federal, state, local and foreign tax
returns required to be filed by it (the "Tax Returns"), and all such returns are
correct and complete in all respects, and accurately set forth the amount of any
Taxes relating to the applicable period. A list of all Tax Returns filed with
respect to the Company and the Subsidiary for taxable periods ended on or after
December 31, 1996, is set forth in Schedule 3.8 attached hereto, and said
Schedule indicates those returns that have been audited or currently are the
subject of an audit. For each taxable period of each of the Company and the
Subsidiary ended on or after December 31, 1996, the Company has delivered to
Parent correct and complete copies of all federal, state, local and foreign
income tax returns, examination reports and statements of deficiencies assessed
against or agreed to by the Company or the Subsidiary. At no time has the
Company or the Subsidiary had an election in place pursuant to Section 1362 of
the Code to be a subchapter "S" corporation.
(c) Neither the IRS nor any other governmental authority
is now asserting or, to the knowledge of the Company Parties, threatening to
assert against the Company or the Subsidiary any deficiency or claim for
additional Taxes. No claim has ever been made by an authority in a jurisdiction
where the Company or the Subsidiary does not file reports and returns that the
Company or the Subsidiary is or may be subject to taxation by that jurisdiction.
There are no security interests on any of the assets of the Company or the
Subsidiary that arose in connection with any failure (or alleged failure) to pay
any Taxes. Neither the Company nor the Subsidiary has ever entered into a
closing agreement pursuant to Section 7121 of the Code.
(d) Except as set forth in Schedule 3.8 attached hereto,
there has not been any audit of any Tax Returns filed by the Company or the
Subsidiary, to the knowledge of the Company Parties no such audit is in
progress, and neither the Company nor the Subsidiary has been notified by any
tax authority that any such audit is contemplated or pending. Except as set
forth in Schedule 3.8, no extension of time with respect to any date on which a
Tax Return was or is to be filed by the Company or the Subsidiary is in force,
and no waiver or agreement by the Company or the Subsidiary is in force for the
extension of time for the assessment or payment of any Taxes.
(e) Neither the Company nor the Subsidiary has ever been
(or has ever had any liability for unpaid Taxes because it once was) a member of
an "affiliated group" (as defined in Section 1504(a) of the Code) filing a
consolidated federal income Tax Return. Except as set forth in Schedule 3.8,
neither the Company nor the Subsidiary has ever filed, or has ever been required
to file, a consolidated, combined or unitary Tax Return with any other entity.
Neither the Company nor the Subsidiary is a party to or bound by any Tax
allocation or sharing
12
agreement, and has no liability for the Taxes of any Person (other than
Company) under Reg. Section 1.1502-6 (or any similar provision of state, local,
or foreign law), as a transferee or successor, by contract, or otherwise.
(f) Except as set forth in Schedule 3.8, none of the
Company's or the Subsidiary's payroll, property, or receipts, or other factors
used in a particular state's apportionment or allocation formula results in an
apportionment or allocation of business income to any state, commonwealth or
other jurisdiction other than the State of California, and neither the Company
nor the Subsidiary has any non-business income that is allocated, apportioned or
otherwise sourced to any state, commonwealth or jurisdiction other than the
State of California. Except as set forth in Schedule 3.8, neither the Company
nor the Subsidiary is required to file Tax Returns in any state, commonwealth or
jurisdiction other than the State of California.
(g) Neither the Company nor the Subsidiary is a party to
any agreement, contract, arrangement or plan that has resulted or would result,
separately or in the aggregate, in the payment of (i) any "excess parachute
payment" within the meaning of Code Section 280G (or any corresponding provision
of state, local or foreign Tax law) and (ii) any amount that will not be fully
deductible as a result of Code 162(m) (or any corresponding provision of state,
local or foreign Tax law). Neither the Company nor the Subsidiary has been a
United States real property holding corporation within the meaning of Code
Section 897(c)(2) during the applicable period specified in Code Section
897(c)(1)(A)(ii). Each of the Company and the Subsidiary has disclosed on its
federal or other income Tax Returns all positions taken therein that could give
rise to a substantial understatement of federal or other income tax within the
meaning of Code Section 6662 or any similar provision under the laws of any
other jurisdiction.
(h) Neither the Company nor the Subsidiary will be
required to include any item of income in, or exclude any item of deduction
from, taxable income for any taxable period (or portion thereof) ending after
the Closing Date as a result of any: (i) change in method of accounting for a
taxable period ending on or prior to the Closing Date; (ii) "closing agreement"
as described in Code Section 7121 (or any corresponding or similar provisions of
state, local or foreign income Tax law) executed on or prior to the Closing Date
except as set forth on Schedule 3.8; (iii) intercompany transactions or any
excess loss account described in Treasury Regulations under Code Section 1502
(or any corresponding or similar provision of state, local, or foreign income
Tax law); (iv) installment sale or open transaction disposition made on or prior
to the Closing Date except in the ordinary course of business consistent with
past practices; or (v) prepaid amount received on or prior to the Closing Date
except in the ordinary course of business consistent with past practices.
3.9 Accounts Receivable; Accounts Payable; Inventories
(a) All of the accounts receivable of the Company as of
the date of the Base Balance Sheet are set forth on Schedule 3.9. All of the
accounts receivable of the Company arose in the ordinary course of business, are
valid and enforceable claims, and are fully collectible in the normal course of
business, except to the extent of any reserve for uncollectible accounts
receivable set forth on the Base Balance Sheet. Since the date of the Base
Balance Sheet, the Company has collected its accounts and intends to collect its
accounts receivable in the ordinary course of its business and in a manner which
is consistent with past practices and
13
has not and does not intend to accelerate any such collections. The Company does
not have any accounts receivable or loans receivable from any Person affiliated
with it or any of its directors, officers, employees or stockholders.
(b) All accounts payable of the Company as of the date of
the Base Balance Sheet in the amount of $10,000 or more are set forth on
Schedule 3.9. Except as set forth on Schedule 3.9, the terms of the Company's
accounts payable are normal and customary and in all cases contain terms
requiring payment in full within sixty (60) days. None of such accounts payable
has been outstanding for more than sixty (60) days and the Company has no
agreements, arrangements or understandings, whether oral or written, that alter
the normal and customary terms requiring payment for its accounts payable.
(c) Except as set forth on Schedule 3.9, all of the
Company's inventory items are of a quality and quantity salable in the ordinary
course of its business. Except as set forth on Schedule 3.9, the values of the
inventories stated in the Base Balance Sheet, subject to any reserve for
obsolescence set forth on the Base Balance Sheet, reflect the normal inventory
valuation policies of the Company and were determined in accordance with GAAP
applied consistently during the periods covered thereby. Except as set forth on
Schedule 3.9, purchase commitments for raw materials and parts are not in excess
of normal requirements and none are at prices materially in excess of current
market prices. Since the date of the Base Balance Sheet, no inventory items have
been sold or disposed of except through sales in the ordinary course of business
at profit margins consistent with the Company's experience in prior years, and
all sales commitments made for the Company's products are at prices not less
than inventory values plus selling expenses and said profit margins.
3.10 Absence of Certain Changes. Except as disclosed in Schedule
3.10 attached hereto or as expressly provided for herein, since the date of the
Base Balance Sheet, other than with respect to transactions specifically
contemplated herein, the Company has conducted its business only in the ordinary
course and consistently with its prior practices, and there has not been:
(a) Any change in the condition (financial or otherwise),
properties, assets, liabilities, business, operations or prospects of the
Company, which change by itself or in conjunction with all other such changes,
whether or not arising in the ordinary course of business, could reasonably be
expected to have a Material Adverse Effect on the Company;
(b) Any amendment or termination or, to the knowledge of
the Company Parties, proposed or threatened amendment or termination, whether
written or oral, of any agreement listed in Schedule 3.14 hereto;
(c) Except for Permitted Encumbrances, any obligation or
liability of any nature, whether accrued, absolute, contingent or otherwise,
asserted or unasserted, known or unknown (including, without limitation (i)
liabilities for Taxes due or to become due, or (ii) contingent or potential
liabilities relating to services provided by the Company or the conduct of the
business of the Company since the date of the Base Balance Sheet regardless of
whether claims in respect thereof have been asserted, or (iii) contingent
liabilities incurred by the Company as guarantor or otherwise with respect to
the obligations of the Company or others),
14
incurred by the Company other than obligations and liabilities incurred in the
ordinary course of business (it being understood that liability claims in
respect of products sold or services provided shall not be deemed to be incurred
in the ordinary course of business);
(d) Except for Permitted Encumbrances, any mortgage,
encumbrance, pledge or lien placed on any of the properties or assets of the
Company;
(e) Any cancellation of any material debt or claim owing
to, or waiver of any material right of, the Company;
(f) Any purchase, sale or other disposition, or any
agreement or other arrangement for the purchase, sale or other disposition, of
any of the properties or assets of the Company in excess of $10,000 in the
aggregate for all such sales other than sales of inventory in the ordinary
course of business consistent with past practices;
(g) Any damage, destruction or loss, whether or not
covered by insurance, materially and adversely affecting the properties, assets
or business of the Company;
(h) Any declaration, setting aside or payment of any
dividend or distribution by the Company, or the making of any other distribution
in respect of the capital stock of the Company, or any direct or indirect
redemption, purchase or other acquisition by the Company of its own capital
stock;
(i) Any change in the compensation payable or to become
payable by the Company to any of its officers, employees, agents or independent
contractors other than normal merit increases in accordance with the Company's
usual practices, or any bonus payment or arrangement made to or with any of such
officers, employees, agents or independent contractors;
(j) Any change in the identities, officers, duties or
compensation of the officers or management of the Company;
(k) Any payment or discharge of a material lien or
liability of the Company in excess of $10,000 in the aggregate for all such
payments or discharges other than in the ordinary course of business consistent
with the past practices of the Company;
(l) Any obligation or liability incurred by the Company
to any of its officers, directors, stockholders, partners or employees, or any
loans or advances made by the Company to any of its officers, directors,
stockholders, partners or employees, except normal compensation and expense
allowances payable to officers or employees in the ordinary course of business
consistent with past practices;
(m) Any change in accounting methods or practices, or
billing or collection policies used by the Company; or
(n) Any agreement, commitment or understanding, whether
in writing or otherwise, for the Company to take any of the actions specified in
paragraphs (a) through (m) above, except as specifically contemplated hereby.
15
3.11 [Intentionally Omitted]
3.12 Banking Relations. All of the arrangements which the Company
has with any banking institution are listed in Schedule 3.12 attached hereto,
indicating with respect to each of such arrangements the type of arrangement
maintained (such as checking account, borrowing arrangements, etc.) and the
person or persons authorized in respect thereof.
3.13 Intellectual Property.
(a) Schedule 3.13 contains a complete and accurate list
of all Patents owned by the Company or used or held for use by the Company in
the Business ("Company Patents"), Marks owned by the Company or used or held for
use by the Company in the Business ("Company Marks") and Copyrights owned by the
Company or used or held for use by the Company in the Business ("Company
Copyrights"). Except as set forth on Schedule 3.13:
(i) the Company exclusively owns or possesses
adequate and enforceable rights to use, without payment to a third
party, all of the Intellectual Property Assets necessary for the
operation of the Business, free and clear of all mortgages, pledges,
charges, liens, equities, security interests, or other encumbrances or
similar agreements other than Permitted Encumbrances;
(ii) all Company Patents, Company Marks and
Company Copyrights which are issued by, or registered or the subject of
an application filed with, as applicable, the U.S. Patent and Trademark
Office, the U.S. Copyright Office or in any similar office or agency
anywhere in the world are currently in compliance with formal legal
requirements (including without limitation, as applicable, payment of
filing, examination and maintenance fees, proofs of working or use,
timely post-registration filing of affidavits of use and
incontestability and renewal applications) and are valid and
enforceable;
(iii) there are no pending, or, to the knowledge
of the Company Parties, threatened claims against any of the Company or
its employees alleging that any of the Company Intellectual Property
Assets or the operation of the Business, infringes or conflicts with
the rights of others under any Intellectual Property Assets ("Third
Party Rights");
(iv) neither the operation of the Business nor
any Company Intellectual Property Asset infringes or conflicts with any
Third Party Right;
(v) the Company has not received any
communications alleging that the Company has violated or, by conducting
the Business, would violate any Third Party Rights or that any of the
Company Intellectual Property Assets is invalid or unenforceable;
(vi) no current or former employee or consultant
of the Company owns any rights in or to any of the Company Intellectual
Property Assets;
16
(vii) to the knowledge of the Company Parties,
there is no violation or infringement by a third party of any of the
Company Intellectual Property Assets;
(viii) the Company has taken all reasonable
security measures to protect the secrecy, confidentiality and value of
all Trade Secrets owned by the Company or used or held for use by the
Company in the Business (the "Company Trade Secrets"), including,
without limitation, requiring each Company employee and consultant and
any other person with access to Company Trade Secrets to execute a
binding confidentiality agreement, copies or forms of which have been
provided to Parent and, to the knowledge of the Company Parties, there
has not been any breach by any party to such confidentiality
agreements;
(ix) (A) the Company has not directly or
indirectly granted any rights, licenses or interests in the source code
of the Products, and (B) since the Company developed the source code of
the Products, the Company has not provided or disclosed the source code
of the Products to any Person;
(x) the Products perform in accordance with
their documented specifications and as the Company has warranted to its
customers;
(xi) the Products do not contain any "viruses",
"time-bombs", "key-locks", or any other devices created that could
disrupt or interfere with the operation of the Products or the
integrity of the data, information or signals they produce in a manner
adverse to the Company or any licensee or recipient; and
(xii) the Company has (A) not collected any
personally identifiable information from any third parties, and (B) in
connection with any collection of personally identifiable information
described on Schedule 3.13, complied with all applicable regulations
and its publicly available privacy policy (if any) relating to the
collection, storage and onward transfer of all personally identifiable
information collected by the Company or by third parties having
authorized access to Company's databases or other records.
(b) For purposes of this Agreement,
(i) "Business" means the business of the Company
as currently conducted and proposed to be conducted.
(ii) "Company Intellectual Property Assets" means
all Intellectual Property Assets owned by the Company or used or held
for use by the Company in the Business. "Company Intellectual Property
Assets" includes, without limitation, the Products (as defined herein),
Company Patents, Company Marks, Company Copyrights and Company Trade
Secrets.
17
(iii) "Intellectual Property Assets" means:
(A) patents, patent applications, patent rights,
and inventions and discoveries and invention disclosures (whether or
not patented) (collectively, "Patents");
(B) trade names, trade dress, logos, packaging
design, slogans, Internet domain names, registered and unregistered
trademarks and service marks and related registrations and applications
for registration (collectively, "Marks");
(C) copyrights in both published and unpublished
works, including without limitation all compilations, databases and
computer programs, manuals and other documentation and all copyright
registrations and applications, and all derivatives, translations,
adaptations and combinations of the above (collectively, "Copyrights");
(D) know-how, trade secrets, confidential or
proprietary information, research in progress, algorithms, data,
designs, processes, formulae, drawings, schematics, blueprints, flow
charts, models, strategies, prototypes, techniques, Beta testing
procedures and Beta testing results (collectively, "Trade Secrets");
and
(E) goodwill, licenses, and claims of
infringement against third parties.
(iv) "Products" means those goods and/or services and
related documentation designed, manufactured, marketed, sold and/or
distributed by the Company. A complete list of the Products is provided
on Schedule 3.13 attached hereto.
3.14 Contracts. Except for contracts, commitments, plans,
agreements and licenses expressly contemplated hereby or described in Schedule
3.6(a), Schedule 3.9, Schedule 3.13, Schedule 3.14 or Schedule 3.22 attached
hereto (true and complete copies of which have been delivered to Parent), the
Company is not a party to or subject to:
(a) any plan or contract providing for bonuses, pensions,
options, stock (or beneficial interest) purchases (or other securities or
phantom equity purchases), deferred compensation, retirement payments, profit
sharing, or the like;
(b) any employment contract or contract for services
which is not terminable at will by the Company (and, after giving effect to the
Merger and the Second Merger, the Surviving Corporation) without liability for
any penalty or severance payment (except for regular payments in arrears for
services rendered under contracts which require payment for services rendered to
the date of such termination);
(c) any contract or agreement for the purchase of any
assets, material or equipment except purchase orders in the ordinary course for
less than $10,000 each, such orders not exceeding $50,000 in the aggregate;
18
(d) any other contracts or agreements creating any
obligations of the Company of $25,000 or more with respect to any such contract
or agreement not specifically disclosed elsewhere under this Agreement;
(e) any contract or agreement relating to the merger or
consolidation of, or sale of all or any material portion of the assets or stock
of, the Company or any contract for the merger or consolidation of, or purchase
of all or any material portion of the assets or stock of, any other entity
(other than this Agreement);
(f) any contract with any finder or broker;
(g) any contract containing covenants limiting the
freedom of the Company (or its affiliates) to compete in any line of business or
with any Person;
(h) any license agreement (as licensor or licensee);
(i) any agreement providing for the borrowing or lending
of money, and the Company does not have any obligations: (i) for borrowed money,
(ii) evidenced by bonds, debentures, notes or similar instruments, (iii) to pay
the deferred purchase price of property or services, (iv) under leases that
would, in accordance with GAAP, appear on the balance sheet of the lessee as a
liability, (v) secured by a lien, (vi) in respect of letters of credit, or
bankers acceptances, contingent or otherwise, or (vii) in respect of any
guaranty or endorsement or other obligations to be liable for the debts of
another Person; or
(j) any service contracts or software development
contracts.
Each of the contracts described in Schedule 3.6(a), Schedule 3.9,
Schedule 3.13, Schedule 3.14 or Schedule 3.22 attached hereto is, and will be
after giving effect to the Merger and the Second Merger, valid and effective in
accordance with its respective terms, and there is not, under any such contract,
an existing material breach or event by the Company or, to the knowledge of the
Company Parties, other parties thereto which, with the giving of notice or the
lapse of time or both, would become such a breach. The Company Parties have no
knowledge of any notice or threat to terminate any such contracts, agreements,
leases or instruments, which termination would reasonably be expected to have a
Material Adverse Effect. The Company is not bound by any agreement, contract or
arrangement which could reasonably be expected to have a Material Adverse Effect
on the Surviving Corporation.
3.15 Litigation. There is no litigation or legal or other action,
suit, proceeding or, to the knowledge of the Company Parties, investigation, at
law or in equity, before any federal, state, municipal or other governmental
department, commission, bureau, board, agency or instrumentality, domestic or
foreign (including, without limitation, any voluntary or involuntary proceeding
under any bankruptcy laws or any action, suit, proceeding or investigation under
any foreign, federal or state securities law, rule or regulation), in which any
Company Party or, to the knowledge of the Company Parties, any officer,
director, stockholder, partner or employee thereof is engaged, or, to the
knowledge of the Company Parties, with which any of them is threatened, in
connection with the business, affairs, properties or assets of the Company, or
which might call into question the validity or hinder the enforceability or
performance of this Agreement, the Xxxxxxxx Employment Agreement, the Release,
or the Escrow Agreement or of the
19
other agreements, documents and instruments described in Schedule 3.6(a),
Schedule 3.9, Schedule 3.13, Schedule 3.14 or Schedule 3.22 attached hereto and
the transactions contemplated hereby and thereby. Schedule 3.15 hereto sets
forth a list and description of each such action, suit or proceeding that the
Company has been a party to during the past three (3) years.
3.16 Compliance with Laws; Permits; Burdensome Agreements. The
Company is, and heretofore has been, in compliance in all material respects with
all applicable statutes, ordinances, orders, judgments, decrees and rules and
regulations promulgated by any federal, state, municipal or other governmental
authority which apply to the Company or to the conduct of its business,
including, without limitation, any labor or employment laws and regulations, and
the Company has not received notice of a violation or alleged violation of any
such statute, ordinance, order, rule or regulation. The Company has all of the
material permits, licenses, orders, franchises and other rights and privileges
of all federal, state, local or foreign governmental or regulatory bodies
necessary for the Company to conduct its business as presently conducted and as
contemplated to be conducted (including, without limitation, those required
under federal, state or local statutes, ordinances, orders, requirements, rules,
regulations, or laws pertaining to environmental protection, public health and
safety, worker health and safety, buildings, highways or zoning). All such
permits, licenses, orders, franchises and other rights and privileges are listed
on Schedule 3.16 and are in full force and effect (and will be in full force and
effect after giving effect to the transactions contemplated hereby) and, to the
knowledge of the Company Parties, no suspension or cancellation of any of them
is threatened, and none of such permits, licenses, orders, franchises or other
rights and privileges will be affected by the consummation of this Agreement and
all agreements, documents and instruments contemplated hereby. The Company is
not, and during the past three (3) years has not been, subject to any judgment,
consent decree, compliance order or administrative order with respect to any
aspect of the business, affairs, properties or assets of the Company. During the
past three (3) years the Company has not received, nor is there currently
pending, any request for information, notice, demand letter, administrative
inquiry or formal or informal complaint or claim from any regulatory agency with
respect to any aspect of the business, affairs, properties or assets of the
Company.
3.17 Insurance. The Company has in full force and effect such
insurance as is customarily maintained by companies of similar size in the same
or a similar business, with respect to its businesses, properties and assets
(including, without limitation, errors and omissions liability insurance), and
all bonds required by ERISA and by any contract to which the Company is a party,
all as listed on Schedule 3.17 hereto. The Company is not in material default
under any such insurance policy. Immediately after giving effect to the Merger
and the Second Merger, each such insurance policy or equivalent policies will be
in full force and effect with the Surviving Corporation as the sole owner and
beneficiary of each such policy.
3.18 Powers of Attorney. Except as is otherwise contemplated
herein, no Company Party has any outstanding power of attorney with respect to
any shares of the Company's capital stock.
3.19 Finder's Fee. No Company Party has incurred or become liable
for any broker's commission or finder's fee relating to or in connection with
the transactions contemplated by this Agreement.
20
3.20 Corporate Records; Copies of Documents. The record books of
the Company accurately record all corporate action taken by its stockholders and
board of directors and committees, as applicable, and true and complete copies
of the originals of such documents have been made available to Parent for
review. The Company Parties have made available to Parent and its counsel true
and correct copies of all documents referred to in this Agreement or in the
Schedules delivered to Parent in connection herewith.
3.21 Transactions with Interested Persons. Except as set forth on
Schedule 3.21 hereto, neither the Company nor any stockholder, partner, officer,
supervisory employee or director of the Company or, to the knowledge of the
Company Parties, any of their respective affiliates, spouses or family members,
is a party to any transaction or contract or arrangement with the Company, or
owns directly or indirectly in an individual or joint basis any interest
(excluding passive investments in the shares of any enterprise which are
publicly traded provided his or her holdings therein, together with any holdings
of his or her affiliates and family members, do not exceed one percent (1%) of
the outstanding shares of comparable interest in such entity) in, or serves as
an officer or director or in another similar capacity of, any competitor or
client of the Company, or any organization which has a contract or arrangement
with the Company (in each case, other than as expressly contemplated hereby).
3.22 Employee Benefit Programs.
(a) Schedule 3.22 hereto lists every Employee Program (as
defined below) that has been maintained (as defined below) by the Company at any
time during the three-year period ending on the date of the Closing.
(b) Each Employee Program which has ever been maintained
by the Company and which has at any time been intended to qualify under Section
401(a) or 501(c)(9) of the Code has received a favorable determination or
approval letter from the IRS regarding its qualification under such section (or
is entitled to rely on a determination letter as received by any sponsor with
respect to a standard master or prototype plan, as permitted under applicable
law) and has, in fact, been qualified under the applicable section of the Code
from the effective date of such Employee Program through and including the
Closing (or, if earlier, the date that all of such Employee Program's assets
were distributed). No event or omission has occurred which would cause any such
Employee Program to lose its qualification under the applicable Code section.
(c) The Company does not know of any failure of any party
to comply with any laws applicable to the Employee Programs that have been
maintained by the Company. With respect to any Employee Program ever maintained
by the Company, there has occurred no "prohibited transaction," as defined in
Section 406 of ERISA or Section 4975 of the Code, or breach of any duty under
ERISA or other applicable law (including, without limitation, any health care
continuation requirements or any other tax law requirements, or conditions to
favorable tax treatment, applicable to such plan), which could result, directly
or indirectly, in any taxes, penalties or other liability to the Company or the
Surviving Corporation. No litigation, arbitration, or governmental
administrative proceeding (or investigation) or other proceeding (other than
those relating to routine claims for benefits) is pending or threatened with
respect to any such Employee Program.
21
(d) Neither the Company nor any ERISA Affiliate (as
defined below) (i) has ever maintained any Employee Program which has been
subject to title IV of ERISA (including, but not limited to, any Multiemployer
Plan (as defined below)) or (ii) has ever provided health care or any other
non-pension benefits to any employees after their employment is terminated
(other than as required by part 6 of subtitle B of title I of ERISA or Section
4980B of the Code) or has ever promised to provide such post-termination
benefits.
(e) With respect to each Employee Program maintained by
the Company within the three (3) years preceding the Closing, complete and
correct copies of the following documents (if applicable to such Employee
Program) have been made available to Parent: (i) all documents embodying or
governing such Employee Program, and any funding medium for the Employee Program
(including, without limitation, trust agreements) as they may have been amended;
(ii) the most recent IRS determination or approval letter with respect to such
Employee Program under Code Sections 401 or 501(c)(9), and any applications for
determination or approval subsequently filed with the IRS; (iii) the three (3)
most recently filed IRS Forms 5500, with all applicable schedules and
accountants' opinions attached thereto; (iv) the summary plan description for
such Employee Program (or other descriptions of such Employee Program provided
to employees) and all modifications thereto; (v) any insurance policy (including
any fiduciary liability insurance policy) related to such Employee Program; (vi)
any documents evidencing any loan to an Employee Program that is a leveraged
employee stock ownership plan; and (vii) all other materials reasonably
necessary for Parent to perform any of its responsibilities with respect to any
Employee Program subsequent to the Closing (including, without limitation,
health care continuation requirements).
(f) For purposes of this section:
(i) "Employee Program" means (A) all employee
benefit plans within the meaning of ERISA Section 3(3), including, but
not limited to, multiple employer welfare arrangements (within the
meaning of ERISA Section 3(4)), plans to which more than one
unaffiliated employer contributes and employee benefit plans (such as
foreign or excess benefit plans) which are not subject to ERISA; and
(B) all stock option plans, bonus or incentive award plans, severance
pay policies or agreements, deferred compensation agreements,
supplemental income arrangements, vacation plans, and all other
employee benefit plans, agreements, and arrangements not described in
(A) above. In the case of an Employee Program funded through an
organization described in Code Section 501(c)(9), each reference to
such Employee Program shall include a reference to such organization.
(ii) An entity "maintains" an Employee Program if
such entity sponsors, contributes to, or provides (or has promised to
provide) benefits under such Employee Program, or has any obligation
(by agreement or under applicable law) to contribute to or provide
benefits under such Employee Program, or if such Employee Program
provides benefits to or otherwise covers employees of such entity, or
their spouses, dependents, or beneficiaries.
(iii) An entity is an "ERISA Affiliate" of the
Company if it would have ever been considered a single employer with
the Company under ERISA Section 4001(b)
22
or part of the same "controlled group" as the Company for purposes of
ERISA Section 302(d)(8)(C).
(iv) "Multiemployer Plan" means a (pension or
non-pension) employee benefit plan to which more than one employer
contributes and which is maintained pursuant to one or more collective
bargaining agreements.
3.23 Directors, Officers and Employees; Labor Matters.
(a) Schedule 3.23(a) hereto contains a true and complete
list of all current directors and officers of the Company. In addition, Schedule
3.23(a) hereto contains a list of all managers and employees of, and consultants
to, the Company who, individually, have received or are scheduled to receive
compensation from the Company for the fiscal years ending December 31, 2003 or
2004, in excess of $50,000. In each case such Schedule includes the current job
title of each such individual.
(b) The Company employs 41 full-time employees and 2
part-time employees. Except as set forth on Schedule 3.23(b) hereto (or Schedule
3.22 hereto), the Company does not have any obligation, contingent or otherwise,
under (a) any employment, collective bargaining or other labor agreement, (b)
any written or oral agreement containing severance or termination pay
arrangements, (c) any deferred compensation agreement, retainer or consulting
arrangements, (d) any pension or retirement plan, any bonus or profit-sharing
plan, any stock option or stock purchase plan, or (e) any other employee
contract or non-terminable (whether with or without penalty) employment
arrangement (each an "Employment Arrangement"). The Company is not in default
with respect to any material term or condition of any Employment Arrangement nor
will the Merger (or the transactions contemplated hereby) result in any such
default, including, without limitation, after the giving of notice, lapse of
time or both. The Company is not delinquent in payments to any of its employees
for any wages, salaries, commissions, bonuses or other direct compensation for
any services performed for it to the date hereof or amounts required to be
reimbursed to such employees. Except as set forth on Schedule 3.23(b) hereto,
upon termination of the employment of any of said employees, neither the Company
nor the Surviving Corporation would, by reason of the transactions contemplated
under this Agreement or anything done prior to the Closing, be liable to any of
said employees for so-called "severance pay" or any other payments. The Company
has not made any payments, is not obligated to make any payments and is not a
party to any agreement that under certain circumstances could obligate the
Company or the Surviving Corporation to make any payments that will not be
deductible under Section 280G of the Code. The Company does not have any policy,
practice, plan or program of paying severance pay or any form of severance
compensation in connection with the termination of employment. The Company is in
compliance in all material respects with all applicable laws and regulations
respecting labor, employment, fair employment practices, work place safety and
health, terms and conditions of employment, and wages and hours. There are no
and have never been any charges or, to the knowledge of the Company Parties,
threatened charges of employment discrimination or unfair labor practices
against or involving the Company. There are no grievances, complaints or charges
that have been filed against the Company under any dispute resolution procedure
that could reasonably be expected to have a Material Adverse Effect on the
Company, and there is no arbitration or similar proceeding pending and no claim
therefor has been asserted. Except as set forth on Schedule 3.23(b), the
23
Company has in place all employee policies required by applicable laws, rules
and regulations, and there have been no material violations or alleged material
violations of any of such policies. No Company Party has received any notice
indicating that any of the Company's employment policies or practices is
currently being audited or investigated by any federal, state or local
government agency. The Company is, and at all times since November 6, 1986 has
been, in compliance with the requirements of the Immigration Reform Control Act
of 1986.
3.24 Non-Foreign Status. No Company Party is a "foreign person"
within the meaning of Section 1445 of the Code and Treasury Regulations Section
1.1445-2.
3.25 Transfer of Shares. Except as set forth on Schedule 3.25
hereto, no holder of stock of the Company has at any time transferred any of
such stock to any employee of the Company or other Person, which transfer
constituted or could be viewed as compensation for services rendered to the
Company by said employee.
3.26 Tax Treatment. Neither the Company nor the Subsidiary has
taken or agreed to take any action, or is aware of any fact or circumstance with
respect to the Company or the Subsidiary, that would prevent the Merger and the
Second Merger taken as an integrated transaction from qualifying as a
reorganization within the meaning of Section 368(a) of the Code.
3.27 Environmental Matters.
(a) Except as set forth in Schedule 3.27, (i) the Company
has never generated, transported, used, stored, treated, disposed of, or managed
any Hazardous Waste (as defined below); (ii) no Hazardous Material (as defined
below) is present at any site presently or formerly owned, operated, leased, or
used by the Company, or, to the knowledge of the Company Parties, has ever been
located in the soil or groundwater at any such site in violation of any
Environmental Law; (iii) no Hazardous Material has ever been transported from
any site presently or formerly owned, operated, leased, or used by the Company
for treatment, storage, or disposal at any other place in violation of any
Environmental Law; (iv) the Company does not presently own, operate, lease, or
use, nor has it previously owned, operated, leased, or used any site on which
underground storage tanks are or were located in violation of any Environmental
Law; and (v) no lien has ever been imposed by any governmental agency on any
property, facility, machinery, or equipment owned, operated, leased, or used by
the Company in connection with the presence of any Hazardous Material.
(b) Except as set forth in Schedule 3.27, (i) the Company
has no liability under, nor has it ever violated, any Environmental Law (as
defined below); (ii) the Company is in compliance with all applicable
Environmental Laws; (iii) the Company has never entered into or been subject to
any judgment, consent decree, compliance order, or administrative order with
respect to any environmental or health and safety matter or received any request
for information, notice, demand letter, administrative inquiry, or formal or
informal complaint or claim with respect to any environmental or health and
safety matter or the enforcement of any Environmental Law; and (iv) the Company
Parties have no knowledge or reason to know that any of the items enumerated in
clause (iii) of this subsection will be forthcoming.
24
(c) Except as set forth in Schedule 3.27 hereto, no site
owned, operated, leased, or used by the Company contains any asbestos or
asbestos-containing material, any polychlorinated biphenyls (PCBs) or equipment
containing PCBs, or any urea formaldehyde foam insulation.
(d) The Company has made available to Parent copies of
all documents, records, and information available to the Company concerning any
environmental or health and safety matter relevant to the Company, whether
generated by the Company or others, including, without limitation, environmental
audits, environmental risk assessments, site assessments, documentation
regarding off-site disposal of Hazardous Materials, spill control plans, and
reports, correspondence, permits, licenses, approvals, consents, and other
authorizations related to environmental or health and safety matters issued by
any governmental agency.
(e) For purposes of this Section 3.27, (i) "Hazardous
Material" shall mean and include any hazardous waste, hazardous material,
hazardous substance, petroleum product, oil, toxic substance, pollutant,
contaminant, or other substance which may pose a threat to the environment or to
human health or safety, as defined or regulated under any Environmental Law, but
excluding janitorial supplies in customary quantities; (ii) "Hazardous Waste"
shall mean and include any hazardous waste as defined or regulated under any
Environmental Law; (iii) "Environmental Law" shall mean any environmental or
health and safety-related law, regulation, rule, ordinance, or by-law at the
foreign, federal, state, or local level, whether existing as of the date hereof
or previously enforced; and (iv) the "Company" shall mean and include the
Company and all other Persons for whose conduct the Company is or may be held
responsible under any Environmental Law.
3.28 Customers, Distributors and Partners. Schedule 3.28 sets forth
a true and complete list of each customer and distributor of the Company who
accounted for revenues of the Company greater than $50,000 during any of the
fiscal years ended December 31, 2002 and 2003, showing with respect to each the
name, address and amount paid by such party to the Company in each such fiscal
year (the "Customers" and "Distributors", respectively) together with the names
and addresses of any persons or entities with which the Company has a material
strategic partnership or similar relationship ("Partners"). No Customer,
Distributor or Partner of the Company has canceled or otherwise terminated its
relationship with the Company. No Customer, Distributor or Partner has, to the
knowledge of the Company Parties, any plan or intention to terminate, to cancel
or otherwise materially and adversely modify its relationship with the Company
or to decrease materially or limit its usage, purchase or distribution of the
services or products of the Company.
3.29 Suppliers. Schedule 3.29 sets forth a true and complete list
of each supplier of the Company who has provided services, supplies or materials
to the Company in an amount in excess of $50,000 during any of the fiscal years
ended December 31, 2002 and 2003, showing with respect to each the name, address
and amount paid to such party by the Company in each such fiscal year (the
"Suppliers"). Except as disclosed on Schedule 3.29, within the past twelve
months, no Supplier that the Company has paid or is under contract to pay has
canceled, materially modified, or otherwise terminated its relationship with the
Company, nor to the knowledge of the Company Parties, does any Supplier have any
plan or intention to do any of the
25
foregoing in a manner which would be reasonably likely to have a Material
Adverse Effect nor has the Company agreed to do any of the foregoing.
3.30 Warranty and Related Matters. Schedule 3.30 sets forth the
Company's standard warranties that accompany each of the Products and any parts
delivered in connection with any Products. The Company has made no promises or
commitments with respect to any Product it has sold, distributed, marketed or
produced or that it intends, plans or expects to distribute, service, market,
sell or produce in the future except as set forth on Schedule 3.30. Except as
set forth on Schedule 3.30, there are no existing or, to the knowledge of the
Company Parties, threatened, claims against the Company relating to any work
performed by the Company, product liability, warranty or other similar claims
against the Company alleging that any Product is defective or fails to meet any
product or service warranties which would reasonably be expected to have a
Material Adverse Effect. There are (a) no inherent design defects or systemic or
chronic problems in any Product and (b) no liabilities for warranty or other
claims or returns with respect to any Product relating to any such defects or
problems which would reasonably be expected to have a Material Adverse Effect.
3.31 Backlog. As of December 31, 2003, the Company has a backlog of
orders for the sale of its products or services for which revenues have not been
recognized by the Company as set forth in Schedule 3.31 (the "Backlog") which
schedule has been prepared in a manner consistent with the Company's past
practices.
3.32 Disclosure. The representations, warranties and statements
contained in this Agreement and the agreements, documents and instruments
contemplated hereby, and in the certificates, exhibits and schedules delivered
by the Company Parties to Parent pursuant to this Agreement or any of such other
agreements, documents and instruments, when taken together, do not contain any
untrue statement of a material fact, or omit to state a material fact required
to be stated therein or necessary in order to make such representations,
warranties or statements not misleading in light of the circumstances under
which they were made.
SECTION 4 REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER, XXXXXXXX AND XXX.
XXXXXXXX.
As a material inducement to Parent to enter into this Agreement and
consummate the transactions contemplated hereby, the Stockholder, Xxxxxxxx and
Xxx. Xxxxxxxx jointly and severally hereby make to Parent each of the
representations and warranties set forth in this Section 4.
4.1 Company Shares. Except as set forth in Schedule 4.1, the
Stockholder owns of record and beneficially the number of the shares of the
Company's capital stock set forth opposite the Stockholder's name in Schedule
3.3(b) (the "Company Shares") and such Company Shares are fully paid and
non-assessable and free and clear of any and all Encumbrances. The Company
Shares set forth opposite the Stockholder's name in Schedule 3.3(b), are, except
as reflected in Schedule 3.3(b), the only shares of capital stock held by the
Stockholder or with respect to which the Stockholder has any rights in the
Company.
26
4.2 Authority. Each of the Stockholder, Xxxxxxxx and Xxx. Xxxxxxxx
has full right, authority, power and capacity to enter into this Agreement and
each agreement, document and instrument to be executed and delivered by or on
behalf of the Stockholder, Xxxxxxxx or Xxx. Xxxxxxxx, as applicable, pursuant
to, or as contemplated by, this Agreement and to carry out the transactions
contemplated hereby and thereby. This Agreement and each agreement, document and
instrument executed and delivered by each of Stockholder, Xxxxxxxx and Xxx.
Xxxxxxxx pursuant to this Agreement constitutes, or when executed and delivered
will constitute, a valid and binding obligation of the Stockholder, Xxxxxxxx or
Xxx. Xxxxxxxx, as applicable, enforceable in accordance with its respective
terms, except as enforceability may be restricted, limited or delayed by
applicable bankruptcy or other laws affecting creditors' rights generally. The
execution, delivery and performance of this Agreement and each such agreement,
document and instrument:
(i) does not and will not violate any provision of The
Xxxxxxx and Xxxxxxx Xxxxxxxx Family Trust under Declaration of Trust
and Trust Agreement dated February 28, 1994, as amended from time to
time;
(ii) does not and will not violate any laws of the United
States or any state or other jurisdiction applicable to the Stockholder
, Xxxxxxxx or Xxx. Xxxxxxxx, or require the Stockholder , Xxxxxxxx or
Xxx. Xxxxxxxx to obtain any approval, consent or waiver from, or make
any filing with, any Person or entity (governmental or otherwise) that
has not been obtained or made; and
(iii) does not and will not result in a breach of,
constitute a default under, accelerate any obligation under, or give
rise to a right of termination of, any agreement, contract, instrument,
mortgage, lien, lease, permit, authorization, order, writ, judgment,
injunction, decree, determination or arbitration award to which the
Stockholder, Xxxxxxxx or Xxx. Xxxxxxxx is a party or by which the
property of the Stockholder, Xxxxxxxx or Xxx. Xxxxxxxx is bound or
affected, or result in the creation or imposition of any Encumbrance on
any assets of the Company.
4.3 Finder's Fee. Neither the Stockholder nor Xxxxxxxx has
incurred or become liable for any broker's commission or finder's fee relating
to or in connection with the transactions contemplated by this Agreement.
4.4 Agreements.
(a) Neither the Stockholder nor Xxxxxxxx is a party to
any employment, non-competition, trade secret or confidentiality agreement,
arrangement, understanding or obligation with or to any party other than the
Company. There are no agreements or arrangements not contained herein or
disclosed in a Schedule hereto, to which the Stockholder or Xxxxxxxx is a party
relating to the business of the Company or to the Stockholder's or Xxxxxxxx'x
rights and obligations as a stockholder, director, officer or employee of the
Company.
(b) Neither the Stockholder nor Xxxxxxxx owns, directly
or indirectly, on an individual or joint basis, any interest (excluding passive
investments in the shares of any enterprise which are publicly traded, provided
it or his holdings therein, together with any
27
holdings of its or his affiliates and family members, are less than one percent
(1%) of the outstanding shares of comparable interest in such entity) in, or
serve as an officer or director of, any organization which has a contract or
arrangement with the Company or which could be considered a competitor of the
Company.
4.5 Investment Representation.
(a) Each of the Stockholder, Xxxxxxxx and Xxx. Xxxxxxxx
is an "accredited investor" as defined in Regulation D under the Securities Act.
(b) Each of the Stockholder, Xxxxxxxx and Xxx. Xxxxxxxx
understands that the shares of Parent Common Stock to be issued in the Merger
have not been registered under the Securities Act or under the securities laws
of any state or other jurisdiction and are being offered and issued in reliance
upon exemptions for private offerings, and that Parent is under no obligation to
register such shares (except as specifically set forth in Section 7.3 herein),
and each of the Stockholder, Xxxxxxxx and Xxx. Xxxxxxxx further understands that
the Stockholder is acquiring shares of Parent Common Stock without being
furnished any offering literature or prospectus other than Parent's latest
reports on Forms 10-K, 10-Q and 8-K as filed with the SEC under the Exchange
Act.
(c) Each of the Stockholder, Xxxxxxxx and Xxx. Xxxxxxxx
represents that the shares of Parent Common Stock to be issued in the Merger to
the Stockholder are being acquired solely for the Stockholder's own account, for
investment and not with a view to or for the resale, distribution, subdivision,
or fractionalization thereof, and none of the Stockholder, Xxxxxxxx or Xxx.
Xxxxxxxx has any present plans to enter into any contract, undertaking,
agreement, or arrangement relating thereto. Each of the Stockholder, Xxxxxxxx
and Xxx. Xxxxxxxx acknowledges and is aware that the shares of Parent Common
Stock to be issued in the Merger cannot be resold unless they are registered
under the Securities Act and qualified under any applicable securities law of
any state or other jurisdiction, or an exemption from such registration or
qualification is available.
4.6 Tax Treatment. Prior to the Closing Date, none of the
Stockholder, Xxxxxxxx or Xxx. Xxxxxxxx has taken or agreed to take any action,
or is aware of any fact or circumstance with respect to the Company or the
Subsidiary, that would prevent the Merger and the Second Merger taken as an
integrated transaction from qualifying as a reorganization within the meaning of
Section 368(a) of the Code.
4.7 Organization of Trust. The Xxxxxxx and Xxxxxxx Xxxxxxxx Family
Trust was established on February 28, 1994 under the laws of the State of
California by Xxxxxxx X. Xxxxxxxx and Xxxxxxx X. Xxxxxxxx, as Settlors and
Trustees (as Trustees, hereinafter referred to as the "Trustees"), is currently,
and since February 28, 1994 has continuously been, in full force and effect and
has not been revoked, modified or amended. Each of the Trustees, acting singly
or together, has full right, authority, power and capacity to sell the Company
Shares pursuant to the terms of this Agreement.
28
SECTION 5. COVENANTS OF THE COMPANY PARTIES.
5.1 Making of Covenants and Agreements. The Company Parties
jointly and severally hereby make the covenants and agreements set forth in this
Section 5 and Xxxxxxxx agrees to use his best efforts to cause the Company and
the Stockholder to comply with such agreements and covenants.
5.2 Confidential Information; Non-solicitation; Unfair
Competition.
(a) Confidential Information. The parties acknowledge
that the Company's assets include confidential or proprietary information, which
is a competitive asset of the Company (and, following the Merger and the Second
Merger, of Parent, the Surviving Corporation and their respective successors and
assigns) or constitutes a "trade secret," as that term is defined by the Uniform
Trade Secrets Act (collectively, "Confidential Information"). The Company
Parties acknowledge and agree that Confidential Information includes all
information that the Company possesses or to which the Company has rights with
respect to its business and assets, whether or not reduced to writing (or in a
form from which information can be obtained, translated, or derived into
reasonably usable form), which both derives independent economic value (actual
or potential) from not being readily known to or ascertainable by proper means
by others who can obtain economic value from the disclosure or use of such
information and is the subject of efforts that are reasonable under the
circumstances to maintain its secrecy. The term Confidential Information shall
also include, without limitation, the Company's: (i) planning data, marketing
and operational strategies; (ii) financial results and information; (iii) terms
of any agreement or material contract; (iv) terms of compensation and
performance levels of employees of the Company; (v) customer and prospecting
lists and contact persons at such customers and prospects; and (vi) material
information concerning customers or their operations, condition (financial or
otherwise) or plans (clauses (v) and (vi) collectively herein referred to as the
"Customer Information"). The Company Parties specifically acknowledge and agree
that the Customer Information, including without limitation, the names and
addresses of the customers of the Company and all other non-public information
relating to such customers, including but not limited to their special needs or
requirements, constitutes Confidential Information.
(b) Non-Disclosure Of Confidential Information.
(i) Each of the Company Parties acknowledges and
agrees to maintain the confidentiality of such Confidential
Information. Each of the Company Parties further acknowledges and
agrees that any retention, use or disclosure of Confidential
Information during or after the Closing, except in the conduct of the
Business (as defined herein), constitutes a misappropriation of
Confidential Information. Accordingly, each of the Company Parties
covenants that it shall not retain, disclose, use, or suffer to be
used, in any manner, directly or indirectly, any Confidential
Information under any circumstances without Parent's prior written
consent, which may be withheld in its sole discretion.
(ii) The Company's obligations with respect to
Confidential Information shall continue through the Closing. The
obligations of each of the Stockholder and Xxxxxxxx under this
Agreement with respect to Confidential Information
29
shall continue until such Confidential Information shall have become,
through no fault of the Stockholder or Xxxxxxxx, generally known to the
public or in the trade or industry or the Stockholder or Xxxxxxxx is
required by law (after providing Parent with prior written notice so
that Parent may have an opportunity to contest such requirement) to
make disclosure.
(c) Non-solicitation of Employees. During the period
commencing on the Closing Date and ending on the earlier of (i) the fifth (5th)
anniversary of the Closing Date or the first (1st) anniversary of the
termination of the Xxxxxxxx Employment Agreement (as defined herein), whichever
period is longer, and (ii) the date on which Parent, the Surviving Corporation
and their respective successors or assigns completely cease carrying on the
Business, neither the Stockholder nor Xxxxxxxx shall recruit, solicit or induce
(or in any way assist another person or enterprise in recruiting, soliciting or
inducing) any employee or consultant of the Surviving Corporation, Parent or
their respective successors or assigns (or any person who was such an employee
or consultant within six (6) months prior to such attempted recruitment,
solicitation or inducement) to terminate his or her employment or other
relationship with the Surviving Corporation, Parent or their respective
successors or assigns or to become employed or engaged by any other Person.
(d) Unfair Competition. During the period commencing on
the Closing Date and ending on the earlier of (i) the fifth (5th) anniversary of
the Closing Date or the first (1st) anniversary of the termination of the
Xxxxxxxx Employment Agreement (as defined herein), whichever period is longer,
and (ii) the date on which Parent, the Surviving Corporation and their
respective successors or assigns completely cease carrying on the Business,
neither the Stockholder nor Xxxxxxxx shall directly or indirectly (whether as a
founder, director, general or limited partner, manager, member, employee,
consultant, contractor or otherwise), engage or participate in, assist in any
manner or in any capacity, or have any interest in or make any loan to any
person, firm, corporation or business which engages in any activity which is
similar to or competitive with the Business in the United States or in any other
country where the Surviving Corporation conducts the Business; provided,
however, the foregoing shall not prevent the Stockholder or Xxxxxxxx from owning
beneficially or of record up to one percent (1%) of the outstanding securities
of a publicly-held corporation which engages in competitive activities. The
Company Parties hereby acknowledge that the Company currently conducts its
business throughout the entire United States and in other countries throughout
the world.
(e) Reasonable Restrictions. The Company Parties hereby
acknowledge that the foregoing restrictions are reasonable in the context of the
transaction contemplated hereby and served as a material inducement to Parent to
enter into this Agreement.
(f) Certain Remedies. It is specifically understood and
agreed that breaches of this Section 5.2 by the Company Parties may result in
irreparable injury to Parent and the Surviving Corporation (and their respective
successors and assigns), that the remedy at law alone may be an inadequate
remedy for such breach and that, in addition to any other remedy for such breach
and any other remedy it may have, Parent and the Surviving Corporation (and
their respective successors and assigns) shall be entitled to seek the specific
performance of the agreements contained in this Section 5.2 by the Company
Parties, and to seek both temporary
30
and permanent injunctive relief as well as other equitable remedies, without the
necessity of proving actual damages, but without limitation of its rights to
recover damages.
(g) Definition. For purposes of this Section 5.2 only,
the "Business" means the fields of automation and optimization software
solutions for the plastics injection molding industry, computer-based control
solutions for the plastics injection molding industry, and management execution
systems and secure industrial information technology and any business that is
like or substantially similar to such fields.
SECTION 6. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGERSUB.
6.1 Making of Representations and Warranties. As a material
inducement to the Company Parties to enter into this Agreement and consummate
the transactions contemplated hereby, Parent and MergerSub jointly and severally
hereby make the representations and warranties to the Company Parties contained
in this Section 6.
6.2 Organization of Parent and Mergersub.
(a) Parent is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware with all
requisite corporate power and authority to own or lease its properties and to
conduct its business in the manner and in the places where such properties are
owned or leased or such business is conducted by it.
(b) MergerSub is a corporation duly organized, validly
existing and in good standing under the laws of the State of California with all
requisite corporate power and authority to own or lease its properties and to
conduct its business in the manner and in the places where such properties are
owned or leased or such business is conducted by it.
6.3 Authority of Parent and Mergersub.
(a) Parent has full right, authority and power to enter
into this Agreement and each agreement, document and instrument to be executed
and delivered by Parent pursuant to or as contemplated by, this Agreement and to
carry out the transactions contemplated hereby and thereby. The execution,
delivery and performance by Parent of this Agreement and each such other
agreement, document and instrument have been duly authorized by all necessary
corporate action of Parent and no other action on the part of Parent is required
in connection therewith. This Agreement and each other agreement, document and
instrument executed and delivered by Parent pursuant to this Agreement
constitute, or when executed and delivered will constitute, valid and binding
obligations of Parent enforceable in accordance with their terms. The execution,
delivery and performance by Parent of this Agreement and each such agreement,
document and instrument:
(i) does not and will not violate any provision
of the Certificate of Incorporation or By-Laws of Parent, each as
amended to date;
(ii) does not and will not violate any laws of
the United States or of any state or any other jurisdiction applicable
to Parent or require Parent to obtain any
31
approval, consent or waiver of, or make any filing with, any Person or
entity (governmental or otherwise) which has not been obtained or made,
except as set forth on Schedule 6.3 hereto; and
(iii) does not and will not result in a breach of,
constitute a material default under, accelerate any obligation under,
or give rise to a right of termination of any indenture, loan or credit
agreement, or other agreement, mortgage, lease, permit, order, judgment
or decree to which Parent is a party and which would prevent or hinder
the consummation of the transactions contemplated by this Agreement.
(b) MergerSub has full right, authority and power to
enter into this Agreement and each agreement, document and instrument to be
executed and delivered by MergerSub pursuant to this Agreement and to carry out
the transactions contemplated hereby and thereby. The execution, delivery and
performance by MergerSub of this Agreement and each such other agreement,
document and instrument have been duly authorized by all necessary corporate
action of MergerSub and no other action on the part of MergerSub is required in
connection therewith. This Agreement and each other agreement, document and
instrument executed and delivered by MergerSub pursuant to this Agreement
constitute, or when executed and delivered will constitute, valid and binding
obligations of MergerSub enforceable in accordance with their terms. The
execution, delivery and performance by MergerSub of this Agreement and each such
agreement, document and instrument:
(i) does not and will not violate any provision
of the Articles of Incorporation or By-Laws of MergerSub, each as
amended to date;
(ii) does not and will not violate any laws of
the United States or of any state or any other jurisdiction applicable
to MergerSub or require MergerSub to obtain any approval, consent or
waiver of, or make any filing with, any Person or entity (governmental
or otherwise) which has not been obtained or made, except as set forth
on Schedule 6.3 hereto; and
(iii) does not and will not result in a breach of,
constitute a material default under, accelerate any obligation under,
or give rise to a right of termination of any indenture, loan or credit
agreement, or other agreement, mortgage, lease, permit, order, judgment
or decree to which MergerSub is a party and which would prevent or
hinder the consummation of the transactions contemplated by this
Agreement.
6.4 Litigation. There is no action, suit or proceeding pending or,
to its knowledge, threatened against Parent or MergerSub which would prevent or
hinder the consummation of the transactions contemplated by this Agreement.
6.5 Finder's Fee. Neither Parent nor MergerSub has incurred or
become liable for any broker's commission or finder's fee relating to or in
connection with the transactions contemplated by this Agreement.
32
6.6 SEC Reports; Parent Financial Statements.
(a) Parent has timely filed its Annual Report on Form
10-K for the fiscal year ended June 30, 2003 and its Quarterly Report on Form
10-Q for the quarter ended September 27, 2003 with the SEC (collectively, the
"SEC Reports"). As of their respective filing dates, the SEC Reports (i)
complied as to form in all material respects with the requirements of the
Exchange Act, and the rules and regulations thereunder and (ii) did not at the
time they were filed contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(b) Each of the consolidated financial statements of
Parent (including, in each case, the notes thereto) included in the SEC Reports
(i) was prepared in accordance with GAAP applied on a consistent basis
throughout the periods indicated (except as may be indicated in the notes
thereto or, in the case of unaudited statements, as may be permitted by the SEC
on Form 10-Q under the Exchange Act); and (ii) fairly presented in all material
respects the consolidated financial position of Parent and its subsidiaries as
at the respective dates thereof and the consolidated results of Parent's and its
subsidiaries' operations and cash flows for the periods indicated (subject, in
the case of unaudited financial statements, to normal audit adjustments and the
absence of footnotes).
6.7 Shares. The Parent Common Stock to be issued to the
Stockholder pursuant to this Agreement will be, when issued and delivered to the
Stockholder in accordance with this Agreement, duly authorized, validly issued,
fully paid and non-assessable and free and clear of any Encumbrances, subject to
the restrictions imposed herein or by the agreements contemplated hereby, on the
certificate or certificates therefor, or by the Securities Act or other
applicable securities laws.
6.8 No Material Adverse Change. Since September 27, 2003, there
has not occurred any material adverse change in the business, assets,
liabilities, condition (financial or other) or results of operations of Parent
and its subsidiaries on a consolidated basis, other than any material adverse
change that may relate to or have arisen from (i) conditions in the economy in
general, (ii) conditions in the industries in which Parent operates that are not
specifically related to Parent, including legal, accounting or regulatory
changes, or conditions, except if Parent has been adversely affected in a
materially disproportionate manner as compared to other comparable participants
in such industries, or (iii) the announcement of the transactions contemplated
hereby.
6.9 Capitalization. The authorized capital stock of Parent
consists of 5,000,000 shares of preferred stock, par value $0.01 per share, of
which no shares are issued or outstanding, and 40,000,000 shares of Parent
Common Stock, of which, as of December 27, 2003, 10,065,970 shares were issued
and outstanding (excluding treasury shares). As of December 27, 2003, options to
purchase 2,795,167 shares at a weighted average exercise price of $9.41 per
share were outstanding under Parent's stock option plans. On December 31, 2003,
16,575 shares of Parent Common Stock were issued under Parent's Employee Stock
Purchase Plan.
33
6.10 Tax Treatment. Neither Parent nor any of its subsidiaries has
taken or agreed to take any action, or is aware of any fact or circumstance with
respect to Parent or its subsidiaries, that would prevent the Merger and the
Second Merger taken as an integrated transaction from qualifying as a
reorganization within the meaning of Section 368(a) of the Code.
6.11 No Prior Activities. Except for obligations incurred in
connection with its incorporation or organization or the negotiation, execution
and consummation of this Agreement and the transactions contemplated hereby,
MergerSub has neither incurred any obligation or liability nor engaged in any
business or activity of any type or kind or entered into any agreement or
arrangement with any Person.
SECTION 7. COVENANTS OF PARENT AND MERGERSUB.
7.1 Making of Covenants and Agreement. Parent and MergerSub
jointly and severally hereby make the covenants and agreements set forth in this
Section 7.
7.2 Benefit Arrangements. Subject to the other provisions of this
paragraph, Parent agrees that all full-time employees of the Company who
continue employment with the Surviving Corporation after the Closing Date (the
"Continuing Employees") shall have the opportunity to participate, or to
continue to participate, in employee benefit plans and arrangements of the
Surviving Corporation that provide the following benefits: medical and dental
care, time off pay (in accordance with the Company's past practices) and
participation in the 401(k) plan (the "Plans"). Participation of the Continuing
Employees in such Plans shall be in accordance with the terms and conditions of
the Plans, provided that each Continuing Employee shall retain credit, for
purposes of any service requirements for participation or vesting in a Plan, for
his or her period of service with the Company. Each Continuing Employee who, as
of the Closing Date, was participating in an employee group health plan
maintained by Company which plan is terminated by Parent shall not be excluded
from Parent's employee group health plan or limited in coverage thereunder by
reason of any waiting period restriction or pre-existing condition limitation;
provided, however, that (i) nothing in this Section 7.2 or elsewhere in this
Agreement shall limit the right of Parent or the Surviving Corporation to amend
or terminate any such health or welfare benefit at any time, and (ii) if Parent
or the Surviving Corporation terminates any Plan, then the Continuing Employees
shall be eligible to participate in the plans or arrangements of the Parent that
provide benefits similar to the benefits provided under any such terminated
Plan, as determined by Parent in its sole discretion. Nothing in this Section
7.2 or elsewhere in this Agreement shall be construed to create a right in any
employee to employment with Parent, the Surviving Corporation or any other
subsidiary of Parent, and the employment of each Continuing Employee shall be
"at will" employment, if permitted under applicable law. It is expressly agreed
that the provisions of this Section 7.2 are not intended to be for the benefit
of or otherwise enforceable by any third Person, including, without limitation,
any employee of the Company, or any collective bargaining unit or employee
organization.
7.3 Registration.
(a) Parent agrees to file with the SEC a Registration
Statement on Form S-3 (or any successor short form registration involving a
similar amount of disclosure; or if then ineligible to use any such form, then
any other available form of registration statement) (the
34
"Registration Statement") for a public offering of fifty percent (50%) of the
Parent Common Shares issued to the Stockholder in connection with the Merger to
be made on a continuous basis pursuant to Rule 415 of the Securities Act. Parent
will use its commercially reasonable efforts to file such Registration Statement
with SEC (subject to review of such Registration Statement by the Stockholder
pursuant to Section 7.3(b)) within thirty (30) days after the Closing Date and
to cause such Registration Statement to become effective (subject to review of
such Registration Statement by the SEC) within ninety (90) days after the
Closing Date; provided, however, that in the event that Parent is required to
file financial statements of the Company pursuant to Item 7 of Form 8-K, Parent
will use its commercially reasonable efforts to file such Registration Statement
with SEC (subject to review of such Registration Statement by the Stockholder
pursuant to Section 7.3(b)) within seventy-five (75) days after the Closing Date
and to cause such Registration Statement to become effective (subject to review
of such Registration Statement by the SEC) within one hundred twenty (120) days
after the Closing Date; provided, further, that in the event that such
Registration Statement is not subject to review by the SEC, Parent shall submit
a request for acceleration to the SEC requesting that such Registration
Statement become effective within five (5) business days after the date that the
Company is first advised by the SEC, whether orally or in writing, that such
Registration Statement shall not be subject to review. Once effective, the
Registration Statement shall remain continuously effective until the earlier of
(i) two years after the Closing Date and (ii) such time as all of the Parent
Common Shares registered thereunder and held by the Stockholder may be sold
pursuant to Rule 144 promulgated under the Securities Act on a single day. Upon
written notice to the Stockholder, Parent may, not more often than four times
during any Parent fiscal year, suspend use of the Registration Statement for a
period of up to thirty (30) days, provided, that no more than three such periods
may occur consecutively, unless, in the good faith judgment of the Board of
Directors of Parent, there is material nonpublic information the disclosure of
which at that point in time would have a Material Adverse Effect on Parent. The
Stockholder acknowledges that any sales of Parent Common Shares pursuant to the
Registration Statement shall be subject to Parent's xxxxxxx xxxxxxx policy and
procedures, as applicable.
(b) Each of the Company Parties covenants and agrees that
it shall provide to Parent on a timely basis such consents, representations and
information and execute such documents as may reasonably be required by Parent
in connection with such Registration Statement. Parent will, prior to filing the
Registration Statement or prospectus or any amendment or supplement thereto,
furnish to the Stockholder copies of such Registration Statement and prospectus
or any amendment or supplement thereto as proposed to be filed, together with
exhibits thereto, which documents will be subject to review and approval by the
Stockholder (such approval not to be unreasonably withheld or delayed).
(c) Parent shall pay all expenses of registration of the
Parent Common Shares pursuant to Section 7.3(a), except brokerage commissions,
legal expenses, and such other expenses as may be required by law to be paid by
the Stockholder, which commissions and expenses shall be paid by the party by
which such expenses are incurred.
(d) Parent will promptly notify the Stockholder upon the
occurrence of any of the following events in respect of the Registration
Statement or related prospectus: (i) receipt of any request for additional
information by the SEC or any other federal or state governmental authority
during the period of effectiveness of the Registration Statement or amendments
or
35
supplements to the Registration Statement or related prospectus; (ii) the
issuance by the SEC or any other federal or state governmental authority of any
stop order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose; (iii) receipt of any
notification with respect to the suspension of the qualification or exemption
from qualification of the Parent Common Shares registered pursuant to Section
7.3(a) for sale in any jurisdiction or the initiation of any proceeding for such
purpose; (iv) the happening of any event that makes any statement made in the
Registration Statement or related prospectus or any document incorporated or
deemed to be incorporated therein by reference untrue in any material respect or
that requires the making of any changes in the Registration Statement, related
prospectus or documents so that (or Parent otherwise becomes aware of any
statement included in the Registration Statement, related prospectus or
documents that is untrue in any material respect or that requires the making of
any changes in the Registration Statement, related prospectus or documents so
that), in the case of the Registration Statement, it will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, and
that in the case of the related prospectus, it will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and (v) Parent's
reasonable determination that a post-effective amendment to the Registration
Statement would be appropriate (in which event Parent will promptly make
available to the Stockholder any such supplement or amendment to the
Registration Statement and, as applicable, the related prospectus).
(e) To the extent permitted by law, Parent will indemnify
and hold harmless the Stockholder and each Person, if any, who controls the
Stockholder within the meaning of the Securities Act, against any costs or
expenses (including attorney's fees), judgments, fines, losses, claims, damages,
liabilities or amounts paid in settlement, joint or several, to which any of
them may become subject under the Securities Act or otherwise, insofar as such
costs or expenses (including attorney's fees), judgments, fines, losses, claims,
damages liabilities or amounts paid in settlement (or actions in respect
thereof) arise out of or are based upon any untrue or alleged untrue statement
of any material fact contained or expressly incorporated by reference in any
such Registration Statement, including any preliminary prospectus or final
prospectus contained therein or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse the Stockholder and each such
controlling person for any legal or other expenses reasonably incurred by any of
them in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity agreement contained
in this Section 7.3(e) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected without
the consent of Parent (which consent shall not be unreasonably withheld) nor
shall Parent be liable in any such case for any such loss, claim, damage,
liability or action to the extent that it arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in connection with such Registration Statement, preliminary prospectus,
final prospectus or amendment or supplement thereto in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by the Stockholder or any person controlling the
Stockholder.
36
(f) To the extent permitted by law, the Stockholder will
indemnify and hold harmless Parent, its directors and its officers who have
signed such Registration Statement and each Person, if any, who controls Parent
within the meaning of the Securities Act against any costs or expenses
(including attorney's fees), judgments, fines, losses, claims, damages,
liabilities or amounts paid in settlement, joint or several, to which any of
them may become subject under the Securities Act or otherwise, insofar as such
costs or expenses (including attorney's fees), judgments, fines, losses, claims,
damages liabilities or amounts paid in settlement (or actions in respect
thereof) arise out of or are based upon any untrue or alleged untrue statement
of any material fact contained or expressly incorporated by reference in such
Registration Statement, including any preliminary prospectus or final prospectus
contained therein or any amendment or supplement thereto, or arise out of or
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in such Registration Statement, preliminary prospectus, final prospectus or
amendments or supplements thereto, in reliance upon and in conformity with
written information furnished by the Stockholder expressly for use in connection
with such registration; and the Stockholder will reimburse any legal or other
expenses reasonably incurred by Parent or any such director, officer and
controlling person in connection with investigating or defending any such loss,
claim, damage, liability or action. It is agreed that the indemnity agreement
contained in this Section 7.3(f) shall not apply to amounts paid in settlement
of any such loss, claim, damage, liability or action if such settlement is
effected without the consent of the indemnifying party (which consent shall not
be unreasonably withheld).
(g) If the indemnification provided for in Sections 7.3
(e) and (f) hereof is unavailable to a Person entitled to indemnification
hereunder, then each Person that would have been an indemnifying party hereunder
will, in lieu of indemnifying such indemnified party, contribute to the amount
paid or payable by such indemnified person for which indemnification is provided
herein in such proportion as is appropriate to reflect the relative fault of the
indemnifying party and such indemnified party, respectively, in connection with
the statements or omissions which resulted in the costs or expenses (including
attorney's fees), judgments, fines, losses, claims, damages, liabilities or
amounts paid in settlement underlying such indemnification obligations. Relative
fault will be determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
indemnifying party or such indemnified party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. Parent and the Stockholder agree that it would not be
just and equitable if contribution pursuant to this Section 7.3(g) were
determined by pro rata allocation or by any other method of allocation that does
not take account of the equitable considerations referred to above in this
Section 7.3(g). No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) will be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation.
(h) Promptly after receipt by a party indemnified under
this Section 7.3 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against any indemnifying
party under this Section 7.3, notify the indemnifying party in writing of the
commencement thereof and the indemnifying party shall
37
have the right to participate in, and, to the extent the indemnifying party
desires, jointly with any other indemnifying party similarly noticed, to assume
the defense thereof with counsel mutually satisfactory to the parties; provided,
however that if the defendants in any such action include both the indemnified
party and the indemnifying party and, under applicable standards of professional
conduct, a conflict on any significant issue between the positions of the
indemnified party and the indemnifying party exists, the indemnified party or
parties shall have the right to select one separate law firm, at the
indemnifying party's or parties' expense, to assume such legal defenses and to
otherwise participate in the defense of such action on behalf of such
indemnified party or parties. The failure to notify any indemnifying party
promptly of the commencement of any such action shall not relieve such
indemnifying party of any liability to the indemnified party under this Section
7.3, except to the extent that such indemnifying party is actually prejudiced
thereby.
(i) Until two (2) years after the Closing Date, Parent
will use its commercially reasonable efforts to make and keep public information
available, as those terms are understood and defined in Rule 144 promulgated
under the Securities Act and file on a timely basis with the SEC all information
that it may be required to file under either of Section 13 or Section 15(d) of
the Exchange Act and, so long as it is required to file such information, use
its commercially reasonable efforts to maintain the availability of Rule 144
promulgated under the Securities Act (or any successor exemptive rule
hereinafter in effect) with respect to the Parent Common Shares.
7.4 Nasdaq Listing Application. Parent shall promptly prepare and
submit to Nasdaq all reports, applications and other documents that may be
necessary or desirable to authorize for listing on the Nasdaq National Market
the Parent Common Shares issued to the Stockholder in connection with the
Merger.
SECTION 8. CONDITIONS TO THE OBLIGATIONS OF EACH PARTY.
The obligations of each party to consummate this Agreement and the
transactions contemplated hereby are subject to the fulfillment (or waiver by
such party), prior to or at the Closing, of the following conditions precedent:
8.1 Litigation; No Opposition. No judgment, injunction, order or
decree enjoining or prohibiting any of Parent, MergerSub, the Company Parties or
other parties to this Agreement or any of the agreements, documents and
instruments contemplated hereby, from consummating the transactions contemplated
hereby or thereby, shall have been entered and no suit, action or proceeding
shall be pending or threatened at any time prior to or on the date of the
Closing before or by any court or governmental body seeking to restrain or
prohibit, or seeking material damages or other material relief in connection
with, the execution and delivery of this Agreement or any of the agreements,
documents and instruments contemplated hereby, or the consummation of the
transactions contemplated hereby or thereby or which could reasonably be
expected to have an Material Adverse Effect on the Company, MergerSub, the
Surviving Corporation or Parent.
8.2 Approvals. Except as otherwise specifically contemplated
hereby, all actions by or in respect of, or filings with, any governmental body,
agency, or official or authority required
38
to permit the consummation of the transactions contemplated hereby other than
the Second Merger (so that after the Closing the Surviving Corporation shall be
able to carry on the Company's business in the manner now conducted) shall have
been taken, made or obtained, and any and all other material permits, approvals,
consents or other actions necessary to consummate the transactions hereunder,
including, without limitation, the consent of the Company's stockholders, shall
have been received or taken.
8.3 Escrow Agreement. Parent, the Stockholder and the Escrow Agent
shall have executed and delivered to the other parties thereto, the Escrow
Agreement in substantially the form of Exhibit 1.4 attached hereto.
8.4 Payoff Letter. The Company shall have received and delivered
to Parent a copy of a payoff letter from Bank of America in an amount not to
exceed $1,130,000 related to that certain Business Loan Agreement dated as of
January 2, 2002, as amended from time to time, by and between Bank of America,
N.A. and the Company and related promissory note.
8.5 Employment Agreement. Xxxxxxxx shall have entered into an
Employment Agreement with Parent in the form attached hereto as Exhibit 8.5 (the
"Xxxxxxxx Employment Agreement"), and such Xxxxxxxx Employment Agreement shall
be in full force and effect.
SECTION 9. CONDITIONS TO THE OBLIGATIONS OF PARENT AND MERGERSUB.
The obligations of Parent and MergerSub to consummate this Agreement
and the transactions contemplated hereby are subject to the fulfillment (or
waiver by Parent), prior to or at the Closing, of the following conditions
precedent:
9.1 Representations and Warranties. Each of the representations
and warranties of the Company Parties contained in this Agreement and in any
Schedule or Exhibit attached hereto and in each other agreement, document,
instrument or certificate contemplated hereby or otherwise made in writing by
any of them or made by any person authorized by them to make representations on
their behalf, shall be true and correct in all respects.
9.2 [Intentionally Omitted]
9.3 Delivery. Each Company Party shall have executed (where
applicable) and delivered to Parent (or shall have caused to be executed and
delivered to Parent by the appropriate person) the following:
(a) certified copies of resolutions of the board of
directors and the shareholders of the Company authorizing the execution of this
Agreement and each of the agreements, documents and instruments contemplated
hereby to which the Company is a party;
(b) a copy of the Articles of Incorporation and By-Laws
of the Company which, in the case of the Articles of Incorporation, is certified
as of a recent date by the Secretary of State of the State of California;
39
(c) certificates issued by the appropriate Secretary of
State of each state in which the Company does business certifying that the
Company is in good standing in such state as of the most recent practicable
date;
(d) true and correct copies of each of the agreements,
documents and instruments contemplated hereby and all agreements, documents,
instruments and certificates delivered or to be delivered in connection
therewith;
(e) a certificate of the Secretary of the Company,
certifying that the resolutions, Articles of Incorporation and By-Laws
referenced in paragraphs (a) and (b) above are in full force and effect and have
not been amended or modified, and that the officers of such corporation are
those Persons named in the certificate;
(f) an opinion from Xxxxxxxxx Xxxxx Xxxxxxx & Xxxxx, in
substantially the form of Exhibit 9.3(f) hereto;
(g) a "transferor's certificate of non-foreign status" as
provided in the Treasury Regulations under Section 1445 of the Code outstanding
in the form attached hereto as Exhibit 9.3(g) attached hereto from each of the
Company, the Stockholder, Xxxxxxxx and each deemed holder or beneficiary of the
Stockholder;
(h) a copy of The Xxxxxxx and Xxxxxxx Xxxxxxxx Family
Trust under Declaration of Trust and Trust Agreement dated February 28, 1994;
and
(i) a certificate of the Trustees, certifying that the
Declaration of Trust and Trust Agreement referenced in paragraph (h) above is in
full force and effect and has not been amended, modified or revoked, and that
the Trustees of The Xxxxxxx and Xxxxxxx Xxxxxxxx Family Trust under Declaration
of Trust and Trust Agreement dated February 28, 1994 are those Persons named in
the certificate.
9.4 Release. The Stockholder shall have executed and delivered to
Parent a release in substantially the form of Exhibit 9.4 attached hereto.
SECTION 10. CONDITIONS TO OBLIGATIONS OF THE COMPANY PARTIES.
The obligations of the Company Parties to consummate this Agreement and
the transactions contemplated hereby are subject to the fulfillment (or waiver
by the Company), prior to or at the Closing, of the following conditions
precedent:
10.1 Representations and Warranties . Each of the representations
and warranties of Parent or MergerSub contained in this Agreement and in any
Schedule or Exhibit attached hereto and in the other agreements, documents or
instruments contemplated hereby or otherwise made in writing by Parent or
MergerSub or by any Person authorized by Parent or MergerSub to make
representations on its behalf shall be true and correct in all respects.
10.2 Delivery. Parent shall have executed and delivered to the
Company, as applicable, the following:
40
(a) certified copies of resolutions of the board of
directors of Parent authorizing the execution of this Agreement and each of the
other agreements, documents or instruments contemplated hereby to which Parent
is a party;
(b) a copy of the Certificate of Incorporation and
By-Laws of Parent which, in the case of the Certificate of Incorporation, is
certified as of a recent date by the Secretary of State of the State of
Delaware;
(c) a certificate issued by the Secretary of State of the
State of Delaware certifying that Parent is validly existing and in good
standing in the State of Delaware as of the most recent practicable date;
(d) true and correct copies of each of the agreements,
documents and instruments contemplated hereby to which Parent is a party, and
all agreements, documents, instruments and certificates delivered or to be
delivered in connection therewith by Parent;
(e) certified copies of resolutions of the board of
directors and stockholder of MergerSub authorizing the execution of this
Agreement and each of the other agreements, documents or instruments
contemplated hereby to which MergerSub is a party;
(f) a copy of the Articles of Incorporation and By-Laws
of MergerSub which, in the case of the Articles of Incorporation, is certified
as of a recent date by the Secretary of State of the State of California;
(g) a certificate issued by the Secretary of State of the
State of California certifying that MergerSub is validly existing and in good
standing in the State of California as of the most recent practicable date;
(h) true and correct copies of each of the agreements,
documents and instruments contemplated hereby to which MergerSub is a party, and
all agreements, documents, instruments and certificates delivered or to be
delivered in connection therewith by MergerSub;
(i) a certificate of the Secretary of Parent certifying
that the resolutions, Certificate of Incorporation and By-laws in paragraphs (a)
and (b) above are in full force and effect and have not been amended or
modified, and that the officers of Parent are those Persons named in the
certificate;
(j) a certificate of the Secretary of MergerSub
certifying that the resolutions, Certificate of Incorporation and By-laws in
paragraphs (e) and (f) above are in full force and effect and have not been
amended or modified, and that the officers of MergerSub are those Persons named
in the certificate; and
(k) an opinion from Xxxxxxx Procter LLP in substantially
the form of Exhibit 10.2(k) hereto.
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SECTION 11. RIGHTS AND OBLIGATIONS SUBSEQUENT TO CLOSING.
11.1 Survival of Representations, Warranties and Covenants. Each of
the representations and warranties herein or in any agreement, document,
instrument, schedule, exhibit or certificate required to be delivered pursuant
to this Agreement are material, shall be deemed to have been relied upon by the
other party and shall survive the Closing until the second anniversary of the
date of the Closing, except for (a) the representations and warranties made in
Sections 3.3, 3.5, 3.8, 3.13 or 4.1 and, to the extent it relates thereto,
Section 3.32, each of which shall survive until the expiration of the applicable
statute of limitations, if any, and (b) the representations and warranties made
in Section 3.27 and, to the extent it relates thereto, Section 3.32, which shall
survive until the fifth (5th) anniversary of the Closing Date. The expiration of
any representation or warranty shall not affect any claim made prior to the date
of such expiration. All covenants herein not fully performed shall survive the
Closing and continue thereafter until fully performed. Any investigation, audit
or other examination that may have been made or may be made at any time by or on
behalf of the party to whom any such representation or warranty is made shall
not limit or diminish such representations and warranties, and the parties may
rely on the representations and warranties set forth in this Agreement or in any
agreement, document, instrument, schedule, exhibit or certificate required to be
delivered pursuant to this Agreement irrespective of any information obtained by
them by any investigation, audit or examination or otherwise.
11.2 Regulatory Filings. Each of the Company Parties will cooperate
with Parent to enable Parent, the Company, the Surviving Corporation, MergerSub
and/or MergerSub2 to make any and all regulatory filings required by them with
respect to any of them or the transactions contemplated hereby (including, by
way of example and not of limitation, the filing of Tax Returns).
SECTION 12. INDEMNIFICATION.
12.1 Indemnification by the Stockholder, Xxxxxxxx and Xxx.
Xxxxxxxx.
The Stockholder, Xxxxxxxx and Xxx. Xxxxxxxx jointly and severally agree
to indemnify and hold Parent and its subsidiaries and persons serving as
officers and directors thereof (individually a "Parent Indemnified Party" and
collectively the "Parent Indemnified Parties") harmless from and against any
damages, liabilities, losses, taxes, fines, penalties, costs, and expenses
(including, without limitation, reasonable fees of counsel and including all
reasonable amounts paid in investigation, defense or settlement of the
foregoing) (a "Loss" or "Losses"), as the same are incurred, which may be
sustained or suffered by any of them arising out of or based upon any of the
following matters:
(a) fraud, intentional misrepresentation or a deliberate
or willful breach by any Company Party of any of their representations,
warranties or covenants under this Agreement or any agreement, document,
instrument, certificate, schedule or exhibit required to be delivered pursuant
hereto;
(b) any breach of any representation or warranty of any
Company Party under this Agreement or under any agreement, document, instrument,
certificate, schedule or exhibit
42
required to be delivered pursuant hereto, or by reason of any claim, action or
proceeding asserted or instituted growing out of any matter or thing
constituting such a breach; and
(c) any breach of any covenant of any Company Party under
this Agreement or under any agreement, document, instrument, certificate,
schedule or exhibit required to be delivered pursuant hereto, or by reason of
any claim, action or proceeding asserted or instituted growing out of any matter
or thing constituting such a breach.
Notwithstanding anything herein to the contrary, amounts distributed
from the Escrow Account to Parent pursuant to Section 1.6 above shall not be
included in the calculation of Losses under this Section 12.
12.2 Limitations On Indemnification by the Stockholder, Xxxxxxxx
and Xxx. Xxxxxxxx. Notwithstanding the foregoing, the right of Parent
Indemnified Parties to indemnification under Section 12.1 shall be subject to
the following provisions:
(a) No indemnification shall be payable to a Parent
Indemnified Party by the Stockholder, Xxxxxxxx or Xxx. Xxxxxxxx with respect to
claims asserted pursuant to Section 12.1(b), unless the total of all claims for
indemnification pursuant to Section 12.1 shall exceed $250,000 in the aggregate,
whereupon the full amount of such claims shall be recoverable in accordance with
the terms hereof;
(b) No indemnification shall be payable to a Parent
Indemnified Party by the Stockholder, Xxxxxxxx or Xxx. Xxxxxxxx with respect to
claims asserted pursuant to Section 12.1(b) (exclusive of any claims for
indemnification related to the representations and warranties set forth in
Sections 3.3, 3.5, 3.8, 3.13, 3.27 or 4.1 and to the extent it relates thereto
Section 3.32) to the extent the cumulative amount of all Losses for which the
Parent Indemnified Parties have been indemnified pursuant to this Section 12
exceeds $4,520,000 (the "Indemnification Cap");
(c) No indemnification shall be payable to a Parent
Indemnified Party by the Stockholder, Xxxxxxxx or Xxx. Xxxxxxxx with respect to
claims asserted pursuant to Section 12.1(b) related to the representations and
warranties set forth in Sections 3.3, 3.5, 3.8, 3.13, 3.27 or 4.1 and to the
extent it relates thereto Section 3.32 to the extent the cumulative amount of
all Losses for which the Parent Indemnified Parties have been indemnified
pursuant to this Section 12 exceeds $6,780,000; and
(d) No indemnification shall be payable to a Parent
Indemnified Party by the Stockholder or Xxxxxxxx with respect to claims asserted
pursuant to Section 12.1(b) (exclusive of any claims for indemnification related
to the representations and warranties set forth in Sections 3.3, 3.5, 3.8, 3.13,
3.27 or 4.1 and to the extent it relates thereto Section 3.32) after the second
anniversary of the date of the Closing (the "Indemnification Cut-off Date");
provided, however, that such expiration shall not affect any claim with respect
to which notice was given in the manner contemplated by Section 12.5 hereof
prior to the Indemnification Cut-Off Date.
12.3 Indemnification by Parent. Parent agrees to indemnify and hold
the Stockholder harmless from and against any Losses, as the same are incurred,
which may be sustained or suffered by the Stockholder arising out of or based
upon any breach of any representation, warranty or covenant made by Parent in
this Agreement or in any agreement, document,
43
instrument, certificate, schedule or exhibit required to be delivered pursuant
hereto, or by reason of any claim, action or proceeding asserted or instituted
growing out of any matter or thing constituting such a breach.
12.4 Limitation On Indemnification by Parent. Notwithstanding the
foregoing, the rights of the Stockholder to indemnification under Section 12.3
shall be subject to the following provisions:
(a) No indemnification shall be payable to the
Stockholder by Parent with respect to claims asserted pursuant to Section 12.3
unless the total of all claims for indemnification pursuant to Section 12.3
shall exceed $250,000 in the aggregate, whereupon the full amount of such claims
shall be recoverable in accordance with the terms hereof;
(b) No indemnification shall be payable to the
Stockholder by Parent with respect to claims asserted pursuant to Section 12.3
to the extent the cumulative amount of all Losses for which the Stockholder has
been indemnified pursuant to this Section 12 exceeds the Indemnification Cap;
and
(c) No indemnification shall be payable to the
Stockholder by Parent with respect to claims asserted pursuant to Section 12.3
after the Indemnification Cut-Off Date; provided, however, that such expiration
shall not affect any claim with respect to which notice was given in the manner
contemplated by Section 12.5 hereof prior to the Indemnification Cut-Off Date.
12.5 Notice; Defense of Claims. An indemnified party may make
claims for indemnification hereunder by giving written notice thereof to the
indemnifying party within the period in which indemnification claims can be made
hereunder, provided that if the party seeking indemnification is a Parent
Indemnified Party it shall, at its option, either (a) provide notice of such
claim to the Stockholder, Xxxxxxxx and Xxx. Xxxxxxxx contemporaneously or (b)
provide notice of such claim to the party or parties from whom it elects to seek
indemnification, acknowledge that it has not provided notice to all parties and
acknowledge that the party or parties receiving such notice may elect to provide
notice to all other parties. If indemnification is sought for a claim or
liability asserted by a third party, the indemnified party shall also give
written notice thereof to the indemnifying party promptly after it receives
notice of the claim or liability being asserted, but the failure to do so shall
not relieve the indemnifying party from any liability except to the extent that
it is prejudiced by the failure or delay in giving such notice. Such notice
shall summarize the bases for the claim for indemnification and any claim or
liability being asserted by a third party. Within twenty (20) days after
receiving such notice the indemnifying party shall give written notice to the
indemnified party stating whether it disputes the claim for indemnification and
whether it will defend against any third party claim or liability at its own
cost and expense. If the indemnifying party fails to give notice that it
disputes an indemnification claim within twenty (20) days after receipt of
notice thereof, it shall be deemed to have accepted and agreed to the claim,
which shall become immediately due and payable. The indemnifying party shall be
entitled to direct the defense against a third party claim or liability with
counsel selected by it (subject to the consent of the indemnified party, which
consent shall not be unreasonably withheld) as long as the indemnifying party is
conducting a good faith and diligent defense. The indemnified party shall at all
times have the right to fully participate in the
44
defense of a third party claim or liability at its own expense directly or
through counsel; provided, however, that if the named parties to the action or
proceeding include both the indemnifying party and the indemnified party and the
indemnified party is advised in writing by its counsel that representation of
both parties by the same counsel would be inappropriate under applicable
standards of professional conduct, the indemnified party may engage separate
counsel at the expense of the indemnifying party. The indemnifying party may not
compromise or settle such claim or liability unless the compromise or settlement
includes a release of all liability against the indemnified party. If no such
notice of intent to dispute and defend a third party claim or liability is given
by the indemnifying party, or if such good faith and diligent defense is not
being or ceases to be conducted by the indemnifying party, the indemnified party
shall have the right, at the expense of the indemnifying party, to undertake the
defense of such claim or liability (with counsel selected by the indemnified
party), and to compromise or settle it, exercising reasonable business judgment.
If the third party claim or liability is one that by its nature cannot be
defended solely by the indemnifying party, then the indemnified party shall make
available such information and assistance as the indemnifying party may
reasonably request and shall cooperate with the indemnifying party in such
defense, at the expense of the indemnifying party.
12.6 Escrow Amount. At the Effective Time or as soon thereafter as
practicable, the Escrow Amount shall be deposited in escrow with the Escrow
Agent by Parent as provided in Section 1.4 hereof as a mechanism to satisfy
potential claims for indemnification by Parent under Section 12.1. Any claims
for indemnification against the Stockholder, Xxxxxxxx and Xxx. Xxxxxxxx pursuant
to Section 12.1 hereof shall be satisfied first out of the Escrow Amount and
then, to the extent such claim or claims exceed the Escrow Amount then
available, by the Stockholder, Xxxxxxxx and/or Xxx. Xxxxxxxx directly.
12.7 Insurance. The amount of any Losses for which indemnification
may be received hereunder shall be reduced by the amount of insurance proceeds
with respect to such claim actually received by the party seeking such
indemnification (net of the costs of obtaining such insurance proceeds or any
increase in premiums resulting therefrom). In connection with any claim for
indemnification under this Agreement, the party seeking such indemnification
must use its commercially reasonable efforts to seek reimbursement for any and
all Losses from any applicable insurance coverage. The parties agree that any
indemnification provided by this Agreement is not deemed to be insurance
(whether primary, excess, or otherwise) for purposes of seeking reimbursement
from the applicable insurance coverage.
SECTION 13. DEFINITIONS.
13.1 Definitions. For purposes of this Agreement and the Exhibits
and Schedules hereto, the following terms shall have the respective meanings set
forth in this Section 13.1:
"Accountant" shall have the meaning specified in Section 1.6 hereof.
"Agreement" shall have the meaning specified in the preamble hereof.
"Articles of Incorporation" shall have the meaning specified in Section
3.2 hereof.
"Backlog" shall have the meaning specified in Section 3.31 hereof.
45
"Base Balance Sheet" shall have the meaning specified in Section 3.7(a)
hereof.
"Business" shall have the meaning specified in Section 3.13(b) hereof;
provided that for the purposes of Section 5.2 only "Business" shall have the
meaning specified in Section 5.2(g) hereof.
"California Law" shall mean the California General Corporation Law, as
the same may be amended from time to time, and any successor to such act.
"Cash Merger Value" shall have the meaning specified in Section
1.1(g)(iv) hereof.
"Closing" shall have the meaning specified in Section 2.1 hereof.
"Closing Date" shall have the meaning specified in Section 2.1 hereof.
"Closing Statements" shall have the meaning specified in Section 1.6
hereof.
"Code" shall mean the Internal Revenue Code of 1986, as the same may be
amended from time to time, and any successor to such code. For purposes of this
Agreement, all references to Sections of the Code shall include any predecessor
provisions to such Sections and any similar provisions of federal, state, local
or foreign law.
"Company" shall mean American MSI Corporation, a California
corporation.
"Company Certificates" shall have the meaning specified in Section
1.2(a) hereof.
"Company Common Stock" shall have the meaning specified in the preamble
hereof.
"Company Copyrights" shall have the meaning specified in Section
3.13(a) hereof.
"Company Intellectual Property Assets" shall have the meaning specified
in Section 3.13(b) hereof.
"Company Marks" shall have the meaning specified in Section 3.13(a)
hereof.
"Company Parties" shall have the meaning specified in the preamble
hereof.
"Company Party" shall have the meaning specified in the preamble
hereof.
"Company Patents" shall have the meaning specified in Section 3.13(a)
hereof.
"Company Schedules" shall have the meaning specified in Section 3.1
hereof.
"Company Shares" shall have the meaning specified in Section 4.1
hereof.
"Company Trade Secrets" shall have the meaning specified in Section
3.13(a) hereof.
"Confidential Information" shall have the meaning specified in Section
5.2(a) hereof.
46
"Continuing Employees" shall have the meaning specified in Section 7.2
hereof.
"Copyrights" shall have the meaning specified in Section 3.13(b)
hereof.
"Customer Information" shall have the meaning specified in Section
5.2(a) hereof.
"Customers" shall have the meaning specified in Section 3.28 hereof.
"Distributors" shall have the meaning specified in Section 3.28 hereof.
"Effective Time" shall have the meaning specified in Section 1.1(c)
hereof.
"Employee Program" shall have the meaning specified in Section 3.22(f)
hereof.
"Employee Agreement" shall have the meaning specified in Section 8.4
hereof.
"Employment Arrangement" shall have the meaning specified in Section
3.23(b) hereof.
"Encumbrances" shall have the meaning specified in Section 3.6(a)
hereof.
"Environmental Law" shall have the meaning specified in Section 3.27(e)
hereof.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as the same may be amended from time to time, and any successor to such act.
"ERISA Affiliate" shall have the meaning specified in Section 3.22(f)
hereof.
"Escrow Account" shall have the meaning specified in Section 1.4
hereof.
"Escrow Agent" shall have the meaning specified in Section 1.4 hereof.
"Escrow Agreement" shall have the meaning specified in Section 1.4
hereof.
"Escrow Amount" shall have the meaning specified in Section 1.4 hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as the
same may be amended from time to time, and any successor to such act.
"Exhibits" shall mean the exhibits attached to and made a part of this
Agreement.
"GAAP" shall mean United States generally accepted accounting
principles as in effect from time to time.
"Hazardous Material" shall have the meaning specified in Section
3.27(e) hereof.
"Hazardous Waste" shall have the meaning specified in Section 3.27(e)
hereof.
"Indemnification Cap" shall have the meaning specified in Section 12.2
hereof.
47
"Indemnification Cut-off Date" shall have the meaning specified in
Section 12.2(c) hereof.
"Intellectual Property Assets" shall have the meaning set forth in
Section 3.13(b) hereof.
"IRS" shall mean the Internal Revenue Service.
"Leased Real Property" shall have the meaning specified in Section
3.6(a) hereof.
"Loss" and "Losses" shall have the meaning specified in Section 12.1
hereof.
"Marks" shall have the meaning specified in Section 3.13(b) hereof.
"Material Adverse Effect" shall mean, with respect to a Person, (a) a
material adverse effect on the condition (financial or otherwise), properties,
assets, liabilities, business, operations or prospects of such Person, other
than any effect relating to (i) conditions in the economy in general, (ii)
conditions in the industries in which such Person operates that are not
specifically related to such Person, including legal, accounting or regulatory
changes, or conditions, except if such Person is adversely affected in a
materially disproportionate manner as compared to other comparable participants
in such industries, or (iii) the announcement of the Merger, or (b) a material
adverse effect on the ability of such Person to perform its obligations under
this Agreement..
"Merger" shall have the meaning specified in the preamble hereof.
"Merger Consideration" shall have the meaning specified in Section
1.1(g)(i) hereof.
"Mergersub" shall have the meaning specified in the preamble hereof.
"Mergersub2" shall have the meaning specified in the preamble hereof.
"Xxx. Xxxxxxxx" shall have the meaning specified in the preamble
hereof.
"Multiemployer Plan" shall have the meaning specified in Section
3.22(f) hereof.
"Parent" shall mean Moldflow Corporation, a Delaware corporation, or
any of its permitted assigns hereunder.
"Parent Average Price Per Share" shall have the meaning specified in
Section 1.1(g)(iv) hereof.
"Parent Certificates" shall have the meaning specified in Section
1.2(a) hereof.
"Parent Common Shares" shall have the meaning specified in Section
1.2(a) hereof.
"Parent Common Stock" shall mean Parent's common stock, par value $.01
per share.
"Parent Indemnified Party" and "Parent Indemnified Parties" shall have
the meaning specified in Section 12.1 hereof.
48
"Parent Merger Stock Value" shall have the meaning specified in Section
1.1(g)(iv) hereof.
"Partners" shall have the meaning specified in Section 3.28 hereof.
"Patents" shall have the meaning specified in Section 3.13(b) hereof.
"Per Share Cash Merger Consideration" shall have the meaning specified
in Section 1.1(g)(iv) hereof.
"Per Share Stock Merger Consideration" shall have the meaning specified
in Section 1.1(g)(iv) hereof.
"Permitted Encumbrances" shall have the meaning specified in Section
3.6(a) hereof.
"Person" means any individual, partnership (general or limited),
corporation, limited liability company, limited liability partnership,
association, trust, joint venture, unincorporated organization, and any
government, governmental department or agency or political subdivision thereof.
"Plans" shall have the meaning specified in Section 7.2 hereof.
"Products" shall have the meaning specified in Section 3.13(b) hereof.
"Registration Statement" shall have the meaning specified in Section
7.3 hereof.
"Schedules" shall mean the schedules attached to and made a part of
this Agreement.
"SEC" shall mean the Securities and Exchange Commission, or any
successor agency thereto.
"SEC Reports" shall have the meaning specified in Section 6.6 hereof.
"Second Merger" shall have the meaning specified in the preamble
hereof.
"Securities Act" shall mean the Securities Act of 1933 and any
successor to such act.
"Stockholder" shall have the meaning specified in the preamble hereof.
"Subsidiary" shall have the meaning specified in Section 3.4 hereof.
"Suppliers" shall have the meaning specified in Section 3.29 hereof.
"Surviving Corporation" shall have the meaning specified in Section
1.1(a) hereof.
"Taxes" shall have the meaning specified in Section 3.8(a) hereof.
"Tax Returns" shall have the meaning specified in Section 3.8(b)
hereof.
49
"Third Party Rights" shall have the meaning specified in Section
3.13(a) hereof.
"Trade Secrets" shall have the meaning specified in Section 3.13(b)
hereof.
"Xxxxxxxx" shall have the meaning specified in the preamble hereof.
"Xxxxxxxx Employment Agreement" shall have the meaning specified in
Section 8.5 hereof.
"Trustees" shall have the meaning specified in Section 4.7 hereof.
SECTION 14. MISCELLANEOUS.
14.1 Fees and Expenses. Parent shall pay its own expenses
(including any legal fees and expenses incident to the negotiation and
consummation of the transactions contemplated hereby) incident to the
negotiation and consummation of the transactions contemplated by this Agreement
and the agreements, instruments and documents contemplated hereby. The
Stockholder shall pay the Company's and the Stockholder's expenses (including
any legal fees and expenses incident to the negotiation and consummation of the
transactions contemplated hereby) incident to the negotiation and consummation
of the transactions contemplated by this Agreement and the agreements,
instruments and documents contemplated hereby, other than the first $50,000 of
such expenses which shall be paid by the Company or Parent.
14.2 Dispute Resolution.
(a) Except with respect to injunctive relief, which may
be sought in a court of competent jurisdiction, as more specifically set forth
below, all disputes, claims, or controversies arising out of or relating to this
Agreement or any other agreement executed and delivered pursuant to this
Agreement or the negotiation, validity or performance hereof and thereof or the
transactions contemplated hereby and thereby that are not resolved by mutual
agreement shall be resolved solely and exclusively by binding arbitration to be
conducted before J.A.M.S./Endispute, Inc. or its successor. The arbitration
shall be held in a neutral location before a single arbitrator and shall be
conducted in accordance with the rules and regulations promulgated by
J.A.M.S./Endispute, Inc. unless specifically modified herein.
(b) The parties covenant and agree that the arbitration
shall commence within one hundred twenty (120) days of the date on which any
party files a written demand for arbitration hereto. In connection with the
arbitration proceeding, the arbitrator shall have the power to order the
production of documents by each party and any third-party witnesses. In
addition, each party may take up to three dispositions as of right, and the
arbitrator may in his or her discretion allow additional depositions upon good
cause shown by the moving party. However, the arbitrator shall not have the
power to order the answering of interrogatories or the response to requests for
admission. In connection with any arbitration, each party shall provide to the
other, no later than fifteen (15) business days before the date of the
arbitration, the identity of all persons that may testify at the arbitration and
a copy of all documents that may be introduced at the arbitration or considered
or used by a party's witness or expert. The arbitrator's decision and award
shall be made and delivered within six (6) months of the selection of the
arbitrator. The arbitrator's decision shall set forth a reasoned basis for any
award
50
of damages or finding of liability. The arbitrator shall not have the power to
award damages in excess of actual compensatory damages and shall not multiply
actual damages or award punitive damages or any other damages that are
specifically excluded under this Agreement, and each party hereby irrevocably
waives any claim to such damages.
(c) The parties covenant and agree that they will
participate in the arbitration in good faith, that they will share equally the
fees and expenses of J.A.M.S./Endispute, Inc. and that they will each bear their
own attorneys' fees and expenses, except as otherwise provided herein. The
arbitrator may in his or her discretion assess costs and expenses (including the
reasonable attorneys' fees and expenses of the prevailing party) against any
party to a proceeding. Any party unsuccessfully refusing to comply with an order
of the arbitrators shall be liable for costs and expenses, including attorneys'
fees, incurred by the other party in enforcing the award. This Section 14.2
applies equally to requests for temporary, preliminary or permanent injunctive
relief, except that in the case of temporary or preliminary injunctive relief
any party may proceed in court without prior arbitration for the limited purpose
of avoiding immediate and irreparable harm or to enforce the provisions of
Section 5.2 hereof. The provisions of this Section 14.2 shall be enforceable in
any court of competent jurisdiction. The prevailing party in any action for
injunctive relief will be entitled to payment of reasonable attorneys' fees and
expenses.
(d) Each of the parties hereto irrevocably and
unconditionally consents to the exclusive jurisdiction of J.A.M.S./Endispute,
Inc. to resolve all disputes, claims or controversies arising out of or relating
to this Agreement or any other agreement executed and delivered pursuant to this
Agreement or the negotiation, validity or performance hereof and thereof or the
transactions contemplated hereby and thereby and further consents to the
jurisdiction of the courts of Massachusetts and California for the purposes of
enforcing the arbitration provisions of this Section 14.2. Each party further
irrevocably waives any objection to proceeding before J.A.M.S./Endispute, Inc.
based upon lack of personal jurisdiction or to the laying of the venue and
further irrevocably and unconditionally waives and agrees not to make a claim in
any court that arbitration before J.A.M.S./Endispute, Inc. has been brought in
an inconvenient forum. Each of the parties hereto hereby consents to service of
process by registered mail at the address to which notices are to be given. Each
of the parties hereto agrees that its or his submission to jurisdiction and its
or his consent to service of process by mail are made for the express benefit of
the other parties hereto.
14.3 Waivers. Any waiver of any terms or conditions or of the
breach of any covenant, representation or warranty of this Agreement in any one
instance, shall not operate as or be deemed to be or construed as a further or
continuing waiver of any other breach of such term, condition, covenant,
representation or warranty or any other term, condition, covenant,
representation or warranty, nor shall any failure or delay at any time or times
to enforce or require performance of any provision hereof operate as a waiver of
or affect in any manner such party's right at a later time to enforce or require
performance of such provision or of any provision hereof; provided, however,
that no such waiver, unless it, by its own terms, explicitly provides to the
contrary, shall be construed to effect a continuing waiver of the provision
being waived and no such waiver in any instance shall constitute a waiver in any
other instance or for any other purpose or impair the right of the party against
whom such waiver is claimed in all other instances or for all other purposes to
require full compliance.
51
14.4 Governing Law. This Agreement shall be construed under and
governed by the internal laws of the State of California without regard to its
conflict of laws provisions.
14.5 Notices. Any notice, request, demand or other communication
required or permitted hereunder shall be in writing and shall be deemed to have
been given if delivered or sent by facsimile transmission, upon receipt, if sent
by a recognized overnight delivery service, upon the next business day, or if
sent by registered or certified mail, upon the sooner of the date on which
receipt is acknowledged or the expiration of three days after deposit in United
States post office facilities properly addressed with postage prepaid. All
notices to a party will be sent to the addresses set forth below or to such
other address or person as such party may designate by notice to each other
party hereunder:
TO PARENT OR MERGERSUB: Moldflow Corporation
000 Xxxxxx Xxxx Xxxx
Xxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxxxx, Esq.
Facsimile No.: (000) 000-0000
with a copy to: Xxxxxxx Procter LLP
Exchange Place
Boston, MA 02109-2881
Attn: Xxxxxx X. Cable, P.C.
Xxxxx X. Xxxxx, Esq.
Facsimile No.: (000) 000-0000
TO THE COMPANY: American MSI Corporation
0000 Xxxxxxx Xxxx
Xxxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxxxxx
Facsimile No.: (000) 000-0000
with a copy to: Xxxxxxxxx Xxxxx Xxxxxxx & Xxxxx
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx Xxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx, Esq.
Facsimile No.: (000) 000-0000
TO THE STOCKHOLDER OR XXXXXXXX: 000 Xxxxxx Xxxxxxxx
Xxxxxxxx Xxxx, XX 00000
Attn: Xxxxxxx Xxxxxxxx
Facsimile No.: (000) 000-0000
52
with a copy to: Xxxxxxxxx Xxxxx Xxxxxxx & Xxxxx
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx Xxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx, Esq.
Facsimile No.: (000) 000-0000
Any notice given hereunder may be given on behalf of any party by its counsel or
other authorized representatives.
14.6 Entire Agreement. This Agreement, including the Schedules and
Exhibits referred to herein and the other writings specifically identified
herein or contemplated hereby, is complete, reflects the entire agreement of the
parties with respect to its subject matter, and supersedes all previous written
or oral negotiations, commitments and writings. No promises, representations,
understandings, warranties and agreements have been made by any of the parties
hereto except as referred to herein or in such Schedules and Exhibits or in such
other writings; and all inducements to the making of this Agreement and the
transactions contemplated hereby which were relied upon by either party hereto
have been expressed herein or in such Schedules or Exhibits or in such other
writings.
14.7 Assignability; Binding Effect. This Agreement or any of the
obligations or rights hereunder may not be assigned by any of the Company
Parties without the prior written consent of Parent. This Agreement shall be
binding upon and enforceable by, and shall inure solely to the benefit of, the
parties hereto and their respective successors, heirs, executors, administrators
and permitted assigns. Nothing in this Agreement, express or implied, is
intended to confer upon any other person any rights or remedies of any nature
whatsoever under or by reason of this Agreement.
14.8 Captions and Gender. The captions in this Agreement are for
convenience only and shall not affect the construction or interpretation of any
term or provision hereof. The use in this Agreement of the masculine pronoun in
reference to a party hereto shall be deemed to include the feminine or neuter,
as the context may require.
14.9 Execution in Counterparts. For the convenience of the parties
and to facilitate execution, this Agreement may be executed (a) in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same document, and (b) by facsimile.
14.10 Amendments. This Agreement may not be amended or modified, nor
may compliance with any condition or covenant set forth herein be waived, except
by a writing duly and validly executed by Parent and the Stockholder, or in the
case of a waiver, the party waiving compliance.
14.11 Publicity and Disclosures. No press releases or public
disclosure, either written or oral, of the transactions contemplated by this
Agreement, shall be made by a party to this Agreement without the prior
knowledge and written consent of Parent and the Company, which consent shall not
be unreasonably withheld, except as is otherwise required by applicable laws,
53
rules and regulations (including, without limitation, the Securities Act, the
Exchange Act and the rules and regulations promulgated thereunder based on the
advice of counsel).
14.12 Consent to Jurisdiction. Each of the parties hereby consents
to personal jurisdiction, service of process and venue in the federal or state
courts of the Commonwealth of Massachusetts and the State of California for any
claim, suit or proceeding arising under this Agreement, or in the case of a
third party claim subject to indemnification hereunder, in the court where such
claim is brought and hereby irrevocably agrees that all claims in respect of
such action or proceeding may be heard and determined in such state court or, to
the extent permitted by law, in such federal court. Each of the parties hereby
irrevocably consents to the service of process in any such action or proceeding
by the mailing by certified mail of copies of any service or copies of the
summons and complaint and any other process to such party at the address
specified in Section 14.5 hereof. The parties agree that a final judgment in any
such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit or in any other manner permitted by law and shall affect
the right of a party to service legal process or to bring any action or
proceeding in the courts of other jurisdictions.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
54
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
executed as of the date set forth above by their duly authorized
representatives.
PARENT: MOLDFLOW CORPORATION
By: /s/ A. Xxxxxx Xxxxxx
----------------------------
Name: A. Xxxxxx Xxxxxx
Title: President
COMPANY: AMERICAN MSI CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxx
----------------------------
Name Xxxxxxx X. Xxxxxxxx
Title: President
MERGERSUB: MF MERGER SUB I, INC.
By: /s/ A. Xxxxxx Xxxxxx
----------------------------
Name: A. Xxxxxx Xxxxxx
Title: President
STOCKHOLDER: THE XXXXXXX AND XXXXXXX
XXXXXXXX FAMILY TRUST UNDER
DECLARATION OF TRUST AND TRUST
AGREEMENT DATED FEBRUARY 28,1994
By: /s/ Xxxxxxx X. Xxxxxxxx
----------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Co-Trustee
By: /s/ Xxxxxxx X. Xxxxxxxx
----------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Co-Trustee
XXXXXXXX: /s/ Xxxxxxx X. Xxxxxxxx
--------------------------------
Xxxxxxx X. Xxxxxxxx
XXX. XXXXXXXX: /s/ Xxxxxxx X. Xxxxxxxx
--------------------------------
Xxxxxxx X. Xxxxxxxx
[SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER]
