AGREEMENT AND PLAN OF MERGER BY AND AMONG SYS, SHADOW IV, INC., AI METRIX, INC., THE MAJORITY STOCKHOLDERS, SOLELY FOR PURPOSES OF SECTIONS 4.32, 5.2(c) AND 5.3(d) AND ARTICLES VII, IX AND X AND VICTOR E. PARKER, AS THE STOCKHOLDER REPRESENTATIVE...
AGREEMENT
AND PLAN OF MERGER
BY
AND AMONG
SYS,
SHADOW
IV, INC.,
AI
METRIX, INC.,
THE
MAJORITY STOCKHOLDERS,
SOLELY
FOR PURPOSES OF SECTIONS 4.32, 5.2(c) AND 5.3(d)
AND
ARTICLES VII, IX AND X
AND
XXXXXX
X. XXXXXX,
AS
THE STOCKHOLDER REPRESENTATIVE
Dated
as of October 17, 2006
TABLE
OF CONTENTS
ARTICLE
I
THE MERGER
1.1
The
Merger
1.2 Effective
Time
1.3 Effects
of the Merger
1.4 Certificate
of Incorporation and Bylaws
1.5 Directors
and Officers of the Surviving Corporation
ARTICLE
II CONVERSION OF SECURITIES
2.1 Merger
Consideration; Conversion of Capital Stock; Deposit to Escrow
2.2 Conversion
of Merger Sub Stock
2.3 Fractional
Shares
2.4 Exchange
of Certificates.
2.5 Earnout/Clawback.
2.6 Escrow
Account.
ARTICLE
III REPRESENTATIONS AND WARRANTIES OF SYS AND MERGER SUB
3.1 Organization
and Standing
3.2 Corporate
Power and Authority
3.3 Conflicts;
Consents and Approvals
3.4 Actions
3.5 Financial
Ability
3.6 Capitalization
of SYS.
3.7 Brokerage
and Finders’ Fees
3.8 Board
Recommendation; Required Vote
3.9 SYS
SEC
Documents
3.10 Undisclosed
Liabilities
3.11 No
Other
Warranties
ARTICLE
IV REPRESENTATIONS AND WARRANTIES OF AI METRIX
4.1 Organization
and Standing
4.2 Subsidiaries
4.3 Corporate
Power and Authority
4.4 Capitalization
of Ai Metrix.
4.5 Conflicts;
Consents and Approvals
4.6 Brokerage
and Finders’ Fees
4.7 Books
and
Records; Financial Statements.
4.8 Compliance
with Law
4.9 Actions
4.10 No
Material Adverse Change
4.11 Taxes.
4.12 Intellectual
Property.
4.13 Title
to
Assets and Properties
4.14 Employee
Benefit Plans.
4.15 Contracts.
4.16 Labor
Matters.
4.17 Undisclosed
Liabilities
4.18 Operation
of Ai Metrix’s Business.
4.19 Permits
4.20 Real
Property.
4.21 Environmental
Matters
4.22 Accounts
Receivable
4.23 Insurance
4.24 Product
or Service Warranty
4.25 Data
Protection Matters.
4.26 Foreign
Corrupt Practices Act.
4.27 Government
Contracts
4.28 Relations
with Governments
4.29 No
Existing Discussions
4.30 Review
of
SYS SEC Documents
4.31 Interested
Party Transactions
ARTICLE
V
COVENANTS OF THE PARTIES
5.1 Mutual
Covenants
5.2 Covenants
of SYS.
5.3 Covenants
of Ai Metrix and the Ai Metrix Stockholders
ARTICLE
VI CONDITIONS
6.1 Conditions
to the Obligations of Each Party
6.2 Conditions
to Obligations of Ai Metrix and the Majority Stockholders
6.3 Conditions
to Obligations of SYS and Merger Sub
ARTICLE
VII STOCKHOLDER REPRESENTATIVE
7.1 Election
and Replacement
7.2 Authority.
7.3 No
Liability of SYS
ARTICLE
VIII TERMINATION AND AMENDMENT
8.1 Termination
8.2 Effect
of
Termination
ARTICLE
IX GENERAL SURVIVAL; INDEMNIFICATION
9.1 Survival
of Representations and Warranties
9.2 Indemnification
9.3 No
Right
of Indemnification or Contribution
9.4 Payments
9.5 Computation
of Damages; Mitigation
9.6 Exclusive
Remedy
9.7 Consequential
Damages
ARTICLE
X
MISCELLANEOUS
10.1 Notices
10.2 Interpretation.
10.3 Counterparts
10.4 Entire
Agreement
10.5 Third-Party
Beneficiaries
10.6 Governing
Law; Venue.
10.7 Specific
Performance
10.8 Assignment
10.9 Expenses
and Transfer Taxes
10.10 Severability
10.11 Amendment
EXHIBITS
Exhibit
A Form
of
Voting Agreement
Exhibit
B Form
of
Investment Representation Certificate
Exhibit
C Form
of
Escrow Agreement
Exhibit
D Form
of
Carrai Employment Agreement
Exhibit
E Form
of
Opinion of Counsel to Ai Metrix
SCHEDULES
Schedule
1 Merger
Consideration Allocation per Ai Metrix Stockholder
Schedule
2 Ai
Metrix
Employees Signing Non-Compete Agreements
Schedule
3 Ai
Metrix
Stockholder Addresses; Wire Transfer Instructions
Schedule
4 Unaccredited
Ai Metrix Stockholders
Attached Ai
Metrix
Disclosure Schedule
Attached SYS
Disclosure Schedule
This
Agreement and Plan of Merger (this “Agreement”)
is
made and entered into as of October 17, 2006, by and among SYS, a California
corporation (“SYS”);
Shadow IV, Inc., a Delaware corporation and a wholly-owned subsidiary of
SYS
(“Merger
Sub”);
Ai
Metrix, Inc., a Delaware corporation (“Ai
Metrix”);
the
following stockholders of Ai Metrix (collectively, the “Majority
Stockholders,”
and
each individually, a “Majority
Stockholder”):
General Atlantic Partners 74, L.P., GAP Coinvestment Partners II, L.P., GAPCO
GmbH & Co. KG, GapStar, LLC, Spectrum Equity Investors II, L.P., SEA 1998
II, L.P., Spectrum Equity Investors III, L.P., SEI III Entrepreneurs’ Fund,
L.P., Spectrum III Investment Managers’ Fund, L.P., and Xxxx Xxxxxx, solely for
purposes of Sections
4.32, 5.2(c)
and
5.3(d)
and
Articles
VII,
IX
and
X;
and
Xxxxxx X. Xxxxxx, as the Stockholder Representative (the “Stockholder
Representative”).
WHEREAS,
the respective Boards of Directors of SYS, Merger Sub and Ai Metrix have
determined that the merger of Merger Sub with and into Ai Metrix, in the
manner
contemplated herein (the “Merger”),
is
desirable and in the best interests of their respective stockholders and,
by
resolutions duly adopted, have approved and adopted this Agreement;
WHEREAS,
SYS, Merger Sub, Ai Metrix and the Majority Stockholders desire to make certain
representations, warranties, covenants and agreements in connection with
the
Merger and also to prescribe various conditions to the Merger; and
WHEREAS,
certain stockholders of SYS have executed and delivered to Ai Metrix a voting
agreement (the “Voting
Agreement”),
in
substantially the form attached as Exhibit
A
hereto
(with such stockholders listed on Schedule A to the Voting Agreement), as
an
inducement to Ai Metrix to enter into this Agreement.
NOW,
THEREFORE, in consideration of these premises and their promises hereinafter
set
forth, the parties hereto agree as follows:
ARTICLE
I
THE
MERGER
1.1 The
Merger.
Upon the
terms and subject to the conditions set forth in this Agreement, and in
accordance with the Delaware General Corporation Law (the “DGCL”),
Merger Sub shall be merged with and into Ai Metrix at the Effective Time
(as
defined below). As a result of the Merger, the separate corporate existence
of
Merger Sub shall cease and Ai Metrix shall continue its existence under the
laws
of the State of Delaware as a wholly-owned subsidiary of SYS. Ai Metrix,
in its
capacity as the corporation surviving the Merger, is hereinafter sometimes
referred to as the “Surviving
Corporation.”
1.2 Effective
Time.
As
promptly as practicable on the Closing Date (as defined below), the parties
shall cause the Merger to be consummated by filing with the Secretary of
State
of the State of Delaware (the “Delaware
Secretary of State”)
a
certificate of merger (the “Certificate
of Merger”)
in
such form as is required by and executed in accordance with the DGCL. The
Merger
shall become effective (the “Effective
Time”)
when
the Certificate of Merger has been filed with the Delaware Secretary of State
or
at such later time as shall be agreed upon by SYS and Ai Metrix and specified
in
the Certificate of Merger. Prior to the filing referred to in this Section 1.2,
a
closing (the “Closing”)
shall
be held at the offices of SYS’s legal counsel, Xxxxxx & Xxxxxxx LLP, 00000
Xxxx Xxxxx Xxxxx, Xxxxx 000, Xxx Xxxxx, Xxxxxxxxxx 00000, or such other place
as
the parties may agree upon, as soon as practicable (but in any event within
ten
(10) business days) following the date upon which all conditions set forth
in
Article VI
that are
capable of being satisfied prior to the Closing have been satisfied or waived,
or at such other date as SYS and Ai Metrix may agree; provided
that the
conditions set forth in Article VI
have
been satisfied or waived at or prior to such date. The date on which the
Closing
takes place is referred to herein as the “Closing
Date.”
For
all purposes, the Closing shall be effective as of 11:59 p.m. on the
Closing Date.
1.3 Effects
of the Merger.
At
and
after the Effective Time, the separate existence of Merger Sub will cease,
and
Ai Metrix, as the Surviving Corporation and successor, shall succeed to all
of
the rights and property of Merger Sub and Ai Metrix, and shall be subject
to all
the debts and liabilities of Merger Sub and Ai Metrix except as otherwise
expressly provided in reference to this Agreement.
1.4 Certificate
of Incorporation and Bylaws.
(a) Subject to Section
5.2(d),
the
Certificate of Incorporation of the Surviving Corporation shall be amended
in
its entirety to contain the provisions set forth in the Certificate of
Incorporation of Merger Sub, as in effect immediately prior to the Effective
Time (the “Merger
Sub Certificate”),
and
(b) the Bylaws of Merger Sub, as in effect immediately prior to the
Effective Time (the “Merger
Sub Bylaws”),
shall
be the Bylaws of the Surviving Corporation; in each case, until amended in
accordance with the DGCL.
1.5 Directors
and Officers of the Surviving Corporation.
On the
Closing Date, Ai Metrix shall deliver to SYS evidence satisfactory to SYS
of the
resignations of the directors and officers of Ai Metrix and any subsidiary
of Ai
Metrix, with such resignations to be effective immediately after the Effective
Time. SYS shall cause the election of new directors and officers, as determined
by SYS, for Ai Metrix and any subsidiary to be effective as of the resignation
of the former directors and officers of Ai Metrix and any
subsidiary.
ARTICLE
II
CONVERSION
OF SECURITIES
2.1 Merger
Consideration; Conversion of Capital Stock; Deposit to Escrow.
(a) At
the
Effective Time, by virtue of the Merger and without any action on the part
of
SYS, Merger Sub or Ai Metrix or their respective stockholders, each share
of Ai
Metrix Capital Stock (as defined below) issued and outstanding immediately
prior
to the Effective Time shall in accordance with Section 2.1(a)
be
converted into, and shall represent the right to receive, that portion of
3,075,705 shares of SYS Common Stock (as defined below) to which such share
is
entitled, as specified in Section 2.1(a) below (such aggregate number of
shares,
the “Merger
Consideration”),
such
number of shares equaling 19.9% of the issued and outstanding shares of SYS
Common Stock. Pursuant to Section
2.4(f),
all
outstanding options, warrants and other securities (other than Ai Metrix
Preferred Stock) convertible into Ai Metrix Capital Stock shall be exercised
or
cancelled prior to the Closing Date, so that as of the Effective Time no
person
shall have any options, warrants or other rights to buy, or convert into,
any
securities of the Surviving Corporation. The Merger Consideration shall be
allocated and distributed as set forth on Schedule
1,
which
has been determined in accordance with the following (and after conversion
of
all options and warrants in accordance with Section
2.4(f)
below):
(i) Each
issued share of Ai Metrix Common Stock shall, at the Effective Time, be
converted into 0.18979119 shares of SYS Common Stock; and
(ii) Each
issued share of Ai Metrix Series C Preferred Stock shall, at the Effective
Time,
be converted into 0.18979119 shares of SYS Common Stock.
Ai
Metrix
shall deliver to SYS at the Closing an updated Schedule
1,
revised
to set forth the amount of cash to be received by each Other Stockholder
following the Effective Time, and the amount of cash constituting the Escrow
Consideration that is allocated to each such Other Stockholder.
(b) As
soon
as practicable after the Effective Time, but no later than the close of business
on the third business day immediately following the Closing Date (the
“Payment
Deadline”),
the
following shall be delivered directly by SYS from the Merger Consideration
to
the Escrow Agent, for deposit into the Escrow Account, as set forth in
Section
2.6,
in lieu
of being delivered to the stockholders of Ai Metrix (the “Ai
Metrix Stockholders”):
(i) the
sum
of (A) the number of shares of SYS Common Stock equal to the difference between
(x) 307,571 minus (y) the Indemnity Equivalent (as hereinafter defined),
plus
(B) the amount of cash equal to the product of 0.10 multiplied by the amount
of
cash paid to the Other Stockholders pursuant Section
2.4(h)
(such
sum, the “Indemnity
Escrow”);
and
(ii) the
sum
of (A) the number of shares of SYS Common Stock equal to the difference between
(x) 550,000 minus (y) the Clawback Equivalent (as hereinafter defined), plus
(B)
the amount of cash equal to the product of 0.17882079 multiplied by the amount
of cash paid to the Other Stockholders pursuant Section
2.4(h)
(such
sum, the “Clawback
Escrow”
and
together with the Indemnity Escrow, the “Escrow
Consideration”).
(c) The
allocation of the Indemnity Escrow and the allocation of the Clawback Escrow
among the Ai Metrix Stockholders shall be as set forth on Schedule
1.
(d) “Indemnity
Equivalent”
means
the number of shares of SYS Common Stock (rounded to the nearest whole number)
equal to the product of (i) 0.10 multiplied by (ii) a fraction, the numerator
of
which is the amount of cash paid to the Other Stockholders pursuant Section
2.4(h)
and the
denominator of which is the SYS Average Price per share (as defined
below).
(e) “Clawback
Equivalent”
means
the number of shares of SYS Common Stock (rounded to the nearest whole number)
equal to the product of (i) 0.17882079 multiplied by (ii) a fraction, the
numerator of which is the amount of cash paid to the Other Stockholders pursuant
Section
2.4(h)
and the
denominator of which is the SYS Average Price per share.
2.2 Conversion
of Merger Sub Stock.
Each
share of capital stock of Merger Sub outstanding at the Effective Time shall
be
converted into and become one validly issued, fully paid and non-assessable
share of common stock of the Surviving Corporation.
2.3 Fractional
Shares.
(a) No
certificates for fractional shares of SYS Common Stock shall be issued as
a
result of the conversion provided for in Section 2.1,
and
such fractional share interests will not entitle the owner thereof to vote
or
have any rights of a holder of shares of SYS Common Stock.
(b) In
lieu
of any such fractional shares of SYS Common Stock, the holder of a certificate
or certificates (the “Certificates”)
that
immediately prior to the Effective Time represented outstanding shares of
Ai
Metrix Capital Stock whose shares were converted into the right to receive
the
Merger Consideration pursuant to Section 2.1(a),
upon
presentation of such fractional interest represented by an appropriate
Certificate for Ai Metrix Capital Stock to SYS pursuant to Section 2.4,
shall
be entitled to receive a cash payment therefor, in an amount equal to the
value
of such fractional interest, with a share of SYS Common Stock being valued
for
this purpose at the value of the average closing price of SYS Common Stock
on
the American Stock Exchange over the ten (10) consecutive trading days
immediately preceding October 16, 2006 (the “SYS
Average Price”).
Such
payment with respect to fractional shares is intended to avoid the expense
and
inconvenience of issuing fractional shares and to provide a mechanical rounding
off of, and is not a separately bargained for, consideration. If more than
one
Certificate shall be surrendered for the account of the same holder, the
number
of shares of Ai Metrix Capital Stock for which Certificates have been
surrendered shall be appropriately adjusted to provide to the Ai Metrix
Stockholders the same economic effect as contemplated by this Agreement.
The
fractional share interests of each Ai Metrix Stockholder will be aggregated,
and
no Ai Metrix Stockholder will receive cash in an amount greater than the
value
of one full share of SYS Common Stock for such fractional share
interest.
2.4 Exchange
of Certificates.
(a) Exchange
Procedures.
(i) At
the
Closing, each
(A)
Majority Stockholder and (B) other Ai Metrix Stockholder (but excluding the
individuals listed on Schedule
4
hereto,
which individuals have represented to Ai Metrix that they are not accredited
investors) that is the record owner of shares of Ai Metrix Capital Stock
that
are equal to or convertible into more than 5,000 shares of Ai Metrix Common
Stock in the aggregate, shall deliver (all of such Majority Stockholders
and Ai
Metrix Stockholders being collectively referred to herein as the “Closing
Stockholders”):
(x) the Certificate or Certificates representing such Closing Stockholder’s
shares of Ai Metrix Capital Stock (or affidavits of lost certificates in
lieu
thereof), duly endorsed in blank or accompanied by stock powers duly executed
in
blank (or, in the event of Closing Stockholders who exercised options
immediately prior to the Closing Date and have not received a Certificate
representing such Closing Stockholder’s Ai Metrix Capital Stock by the Closing,
an executed acknowledgement that such Closing Stockholder has exercised such
Closing Stockholder’s options and paid the consideration therefor, and has not
received a Certificate representing its Ai Metrix Capital Stock) (collectively,
the “Required
Deliveries”),
(y)
duly executed stock powers with respect to that Closing Stockholder’s shares of
SYS Common Stock which are to be deposited with the Escrow Agent, and (z)
a duly
executed Investment Representation Certificate substantially in the form
of
Exhibit B
hereto
(the “Investment
Representation Certificate”),
and
in exchange for such delivery shall receive, as soon as practicable after
the
Effective Time, but no later than the Payment Deadline, (A) subject to
Section
2.4(h),
the
Merger Consideration to which such Closing Stockholder is entitled as set
forth
on Schedule
1,
payable
by delivery of a stock certificate naming such Closing Stockholder as the
holder
thereof, and (B) payment by check or wire transfer of funds in U.S. dollars
representing the amount of cash in lieu of fractional shares, if any, which
such
holder has the right to receive pursuant to the provisions of this Article II.
(ii) Promptly
after the Closing, the Surviving Corporation shall send to all Ai Metrix
Stockholders who were not Closing Stockholders (such stockholders, the
“Other
Stockholders”)
a
notice informing such Other Stockholders of the consummation of the Merger,
instructing such Other Stockholders to deliver the Required Deliveries to
the
Surviving Corporation within the twenty (20) day period following the date
of
such notice (the “Delivery
Period”),
and
notifying such Other Stockholders that in the event that the Required Deliveries
are not received by the Surviving Corporation during such time period, then
all
rights of such Ai Metrix Stockholder to the Merger Consideration will be
forfeited. In exchange for such delivery of the Required Deliveries by the
Other
Stockholders, such Other Stockholder shall receive, as soon as practicable
after
the end of the Delivery Period, payment by check or wire transfer of funds
in
U.S. dollars representing (A) the Merger Consideration to which such Other
Stockholder is entitled pursuant to Section
2.4(h),
as set
forth on Schedule
1,
and
(B) the amount of cash in lieu of fractional shares, if any, which such
holder has the right to receive pursuant to the provisions of this Article II.
(iii) No
interest will be paid or accrued on the cash in lieu of fractional shares,
if
any, and unpaid dividends and distributions, if any, payable to holders of
shares of Ai Metrix Capital Stock. In the event of a transfer of ownership
of
shares of Ai Metrix Capital Stock that is not registered on the transfer
records
of Ai Metrix, a certificate representing the proper number of shares of SYS
Common Stock, if any, together with a check for the cash to be paid in lieu
of
fractional shares, if any, unpaid dividends and distributions, if any, and
cash
in lieu of SYS Common Stock pursuant to Section
2.4(h),
if any,
may be issued to such transferee if the Certificate representing such shares
of
Ai Metrix Capital Stock held by such transferee is presented to SYS, accompanied
by all documents required to evidence and effect such transfer and to evidence
that any applicable stock transfer taxes have been paid. Until surrendered
as
contemplated by this Section 2.4,
each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive the appropriate amount of Merger Consideration
upon
surrender. If
any
Certificate shall have been lost, stolen or destroyed, upon the making of
an
affidavit of that fact by the person claiming such Certificate to be lost,
stolen or destroyed and, if required by SYS, the posting by such person of
a
bond in such reasonable amount as SYS may direct as indemnity against any
claim
that may be made against it with respect to such Certificate, SYS will deliver
in exchange for such lost, stolen or destroyed Certificate, the Merger
Consideration, payable at Closing, with respect to the shares of Ai Metrix
Capital Stock that were represented by such Certificate, as provided in this
Article II.
(b) Distributions
with Respect to Unexchanged Shares. Notwithstanding
any other provisions of this Agreement, no dividends or other distributions
declared or made after the Effective Time with respect to shares of SYS Common
Stock having a record date after the Effective Time shall be paid to the
holder
of any unsurrendered Certificate, and no cash payment in lieu of fractional
shares shall be paid to any such holder, until the holder shall surrender
such
Certificate (or affidavit) as provided in this Section 2.4(a).
Subject
to the effect of all applicable constitutions, laws, statutes, treaties,
orders,
rules, regulations, ordinances, notices, approvals, policies or guidelines
promulgated, or judgments, decisions, decrees, or orders of any Governmental
Authority (as defined below) (collectively, “Applicable
Laws”),
following surrender of any such Certificate, there shall be paid to the holder
of the Merger Consideration issued in exchange therefor, without interest,
(i) at the time of such surrender, the amount of dividends or other
distributions with a record date after the Effective Time theretofore payable
with respect to such whole shares of SYS Common Stock and not paid, less
the
amount of any withholding taxes that may be required thereon, and (ii) at
the appropriate payment date subsequent to surrender, the amount of dividends
or
other distributions with a record date after the Effective Time but prior
to
surrender and a payment date subsequent to surrender payable with respect
to
such whole shares of SYS Common Stock, less the amount of any withholding
taxes
which may be required thereon.
(c) No
Further Ownership Rights in Ai Metrix Capital Stock.
All
Merger Consideration issued and/or paid and any cash payments in lieu of
fractional shares upon surrender of Certificates (or affidavits) in accordance
with the terms hereof shall be deemed to have been issued and/or paid in
full
satisfaction of all rights pertaining to such shares of Ai Metrix Capital
Stock
represented thereby, and, as of the Closing, the stock transfer books of
Ai
Metrix shall be closed and there shall be no further registration of transfers
on the stock transfer books of Ai Metrix of shares of Ai Metrix Capital Stock
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation for any reason,
they shall be cancelled and exchanged as provided in this Section 2.4.
(d) No
Liability.
Neither
SYS nor the Surviving Corporation shall be liable to any person in respect
of
any Merger Consideration (or any dividends or distributions with respect
thereto) delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law. If any Certificates shall not have been
surrendered (A) prior to seven (7) years after the Effective Time or (B)
immediately prior to such earlier date on which any Merger Consideration
(or any
dividends or distributions with respect thereto) would otherwise escheat
to or
become the property of any Governmental Authority, then, at such time, any
such
Merger Consideration (or any dividends or distributions with respect thereto)
shall, to the extent permitted by Applicable Law, become the property of
SYS,
free and clear of all claims or interest of any person previously entitled
thereto. For purposes of this Agreement, “Governmental
Authority”
means
any (i) nation, region, state, county, city, town, village, district or
other jurisdiction, (ii) federal, state, local, municipal, foreign or other
government, (iii) federal, state, local municipal, foreign or
multi-national court, arbitral tribunal, administrative agency or commission,
(iv) other governmental, quasi-governmental, public, or regulatory body,
agency, instrumentality or authority of any nature, (v) multi-national
organization, (vi) body exercising, or entitled to exercise, any
administrative, executive, judicial, legislative, policy, regulatory or taxing
authority or power of any nature or (vii) official of any of the
foregoing.
(e) Withholding.
Upon
any
exercise of options prior to the Closing Date in accordance with Section
2.4(f),
Ai
Metrix agrees that, to the extent it is required to do so under the U.S.
Internal Revenue Code of 1986, as amended (the “Code”),
or
any provision of state, local or foreign tax law, it will deduct and withhold
such amounts as it is required to deduct and withhold with respect to such
exercise. Each of the Surviving Corporation and SYS shall be entitled to
deduct
and withhold from any cash otherwise payable pursuant to this Agreement to
any
holder of shares of Ai Metrix Capital Stock such amounts as it is required
to
deduct and withhold with respect to the making of such payment under the
Code,
or any provision of state, local or foreign tax law. Notwithstanding the
foregoing, no withholding shall be required to the extent that any holder
of Ai
Metrix Capital Stock delivers to SYS or the Surviving Corporation a validly
executed Form W-8 and/or Form W-9 as requested by either SYS or the Surviving
Corporation with respect to such payment prior to or at the time that any
such
payment is made. To the extent that amounts are so withheld by the Surviving
Corporation or SYS, as the case may be, such withheld amounts shall be treated
for all purposes of this Agreement as having been paid to the holder of the
shares of Ai Metrix Capital Stock in respect of which such deduction and
withholding was made by the Surviving Corporation or SYS, as the case may
be.
(f) Options,
Warrants and Other Convertible Securities.
Prior
to the Closing Date, the Board of Directors of Ai Metrix shall take all actions
necessary and appropriate to cause each outstanding option or warrant to
acquire, and each issued note or other security (other than Ai Metrix Preferred
Stock) convertible into, Ai Metrix Common Stock, whether or not exercisable,
vested or converted, to have been exercised or cancelled so that as of the
Effective Time no person shall have any options, warrants, or other rights
to
buy, or convert into, any securities of the Surviving Corporation. In connection
with any such exercise, the holders of such options and warrants may elect
whether to convert by (i) paying Ai Metrix in cash for the exercise price
of all
such options, or (ii) a cash-free exercise such that, in lieu of paying the
exercise price or other consideration required to be paid by such holder
to
exercise the options or warrants, such holders will not make any cash payment,
but will receive that number of shares of Ai Metrix Common Stock to which
it is
entitled upon exercise, less the number of shares whose value equals the
aggregate consideration or exercise price that such holder would have been
required to pay in order to exercise or convert such options or warrants.
Shares
of Ai Metrix Common Stock will be valued for purposes of this conversion
at the
SYS Average Price.
(g) Restrictive
Legend. Each
certificate evidencing shares of SYS Common Stock issued pursuant to this
Agreement shall bear the following legend in conspicuous type:
THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR REGISTERED OR QUALIFIED UNDER ANY
STATE
SECURITIES LAWS. THE SHARES MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR QUALIFICATION WITHOUT AN OPINION OF COUNSEL
SATISFACTORY TO THE CORPORATION THAT SUCH REGISTRATION OR QUALIFICATION IS
NOT
REQUIRED.
(h) Cash
in Lieu of Securities.
Notwithstanding anything to the contrary contained herein, in lieu of Merger
Consideration and Earnout Consideration, if any, consisting of SYS Common
Stock,
SYS shall pay each Other Stockholder that delivers the Required Deliveries
to
the Surviving Corporation within the Delivery Period an equivalent amount
of
cash; it being agreed that (i) such shares of SYS Common Stock will be valued
for this purpose: (A) with respect to Merger Consideration, at the SYS Average
Price per share and (B) with respect to Earnout Consideration, at the SYS
Average Earnout Price, and (ii) a portion of such cash shall be paid into
the
Escrow Account as provided in Section
2.1(b)
in lieu
of the SYS Common Stock that would have been delivered to the Escrow Account
if
such Ai Metrix Stockholder had received Merger Consideration in the form
of SYS
Common Stock.
2.5 Earnout/Clawback.
(a) EBITDA
Calculations.
“EBITDA
Period”
shall
mean the period commencing on the Closing Date and ending on December 31,
2007.
No later than forty-five (45) days following the end of the EBITDA Period,
SYS
shall in good faith calculate, prepare and deliver to the Stockholder
Representative a statement showing the earnings before interest, taxes,
depreciation and amortization, calculated in accordance with U.S. generally
accepted accounting principles (“GAAP”)
applied on a consistent basis during the periods involved, generated
by the Surviving Corporation during the EBITDA Period (“EBITDA”),
and
showing in reasonable detail the Earnout Consideration or Clawback
Consideration, as applicable, calculated in accordance with Section
2.5(b).
The
statement of calculations referred to in this Section
2.5(a)
shall be
referred to herein as the “EBITDA
Calculations.”
Any
products of Ai Metrix sold during the EBITDA Period in conjunction with products
or services of other segments of SYS’s business shall be taken into account in
calculating EBITDA based on the proportional value of such products or services.
For the avoidance of doubt, for the purpose of determining the EBITDA
Calculations only, (i) 90% of all deferred maintenance revenue booked by
Ai
Metrix prior to the Closing that, but for the consummation of the Merger
and the
application of purchase price accounting with respect thereto, would otherwise
have been recognized as revenue during the EBITDA Period, shall be taken
into
account in calculating
EBITDA, (ii) 10%
of
all deferred maintenance revenue booked by Ai Metrix during the last three
months of the EBITDA Period that have not, as of the end of the EBITDA Period,
been recognized as revenue shall constitute revenue for purposes of calculating
EBITDA to the extent that such bookings are reasonably likely to be recognized
during the 12-month period following the later of (A) the date of booking
such
revenue and (B) the end of the EBITDA Period, and (iii) software
license bookings received during the 45-day period following the EBITDA Period
that are invoiced and that can be recognized as revenue during that 45-day
period shall constitute revenue for purposes of calculating EBITDA to the
extent
that such bookings are reasonably likely to be collected upon the terms on
which
such bookings were made. All Transaction Expenses (as defined in Section
5.3(e)
below) shall be excluded from the calculation of EBITDA, regardless of when
incurred.
(b) Earnout/Clawback
Consideration.
If the
Surviving Corporation generates EBITDA in excess of US$2,500,000, SYS shall
issue to the Ai Metrix Stockholders (subject to Sections
2.4(h)
and
2.5(c))
one
additional share of SYS Common Stock for each dollar of EBITDA over
US$2,500,000, up to a maximum of 1,950,000 shares of SYS Common Stock; provided
that, if for any reason, SYS is no longer a public company at the time that
such
SYS Common Stock is to be issued due to a merger, consolidation or other
acquisition by another company, then, instead of receiving SYS Common Stock
as
Earnout Consideration, the Ai Metrix Stockholders shall receive shares or
equity
of such successor entity of equivalent value (the “Earnout
Consideration”).
The
Earnout Consideration, if any, shall be allocated among the Ai Metrix
Stockholders in accordance with the percentages set forth on Schedule
1.
If the
Surviving Corporation generates EBITDA of less than US$1,500,000 (the
“Clawback
Threshold”),
the
Escrow Agent (i) shall return to SYS from the Clawback Escrow a combination
of
shares of SYS Common Stock and cash in an amount equal to one share of SYS
Common Stock for each dollar of EBITDA less than the Clawback Threshold,
up to a
maximum of the total amount of the Clawback Escrow (the “Clawback
Consideration”)
and
(ii) the shares and cash remaining in the Clawback Escrow after returning
the
Clawback Consideration to SYS shall remain in the Escrow Account until released
in accordance with the Escrow Agreement. In the event that the Clawback
Threshold is not achieved solely due to the fact that the Surviving Corporation
is unable to recognize 100% of the deferred maintenance revenues on Ai Metrix’s
books as of the Closing Date due to the requirements of GAAP purchase price
accounting, then, for the sole purpose of determining whether the Clawback
Threshold has been achieved, then such deferred maintenance revenues shall
be
deemed to constitute revenue (for this purpose only) to the extent not so
recognized under Section
2.5(a).
The
cash in the Clawback Escrow shall be deemed to equal the number of shares
of SYS
Common Stock equal to a fraction, the numerator of which is the amount of
such
cash and the denominator is the average closing price of SYS Common Stock
on the
principal national securities exchange or principal national securities
quotation system on which the SYS Common Stock is then listed over the ten
(10)
consecutive trading days immediately preceding the date of disbursement of
any
such cash in the Clawback Escrow in accordance with this Agreement and the
Escrow Agreement. The Clawback Consideration, if any, shall be obtained from
the
Escrow Account pro rata between SYS Common Stock and cash and allocated among
the Ai Metrix Stockholders (subject to Section
2.4(h))
as set
forth on Schedule
1.
If the
Surviving Corporation generates EBITDA between US$1,500,000 to US$2,500,000,
then neither Earnout Consideration nor Clawback Consideration shall be payable
hereunder, and the shares of SYS Common Stock and cash constituting the Clawback
Escrow shall remain in the Escrow Account until released in accordance with
the
Escrow Agreement.
(c) Acceptance
of Earnout Calculations.
If the
Stockholder Representative does not dispute the EBITDA Calculations, it shall
promptly, within thirty (30) days after receipt of such calculations, notify
SYS
in writing thereof. The date on which the Stockholder Representative so notifies
SYS, or the date on which the EBITDA Calculations are otherwise agreed between
SYS and the Stockholder Representative or otherwise resolved pursuant to
Section
2.5(d),
is
referred to herein as the “EBITDA
Determination Date.”
If
any
Earnout Consideration is required to be paid, SYS shall convene the SYS
Stockholders Meeting in accordance with Section
5.2(b)
to seek
the SYS Stockholder Approval (as defined below) in accordance with the terms
of
the Voting Agreement. If SYS obtains the SYS Stockholder Approval at the
SYS
Stockholders Meeting, SYS shall (subject to Section
2.4(h))
promptly, within ten (10) business days after the SYS Stockholders Meeting,
issue to each Ai Metrix Stockholder his, her or its applicable percentage
of the
Earnout Consideration. If, for any reason, SYS does not obtain the SYS
Stockholder Approval within one hundred eighty (180) days after the EBITDA
Determination Date, it shall promptly, within ten (10) business days after
the
earlier of the last day of such 180-day period and the date of the SYS
Stockholders Meeting at which the SYS Stockholder Approval is not obtained,
pay
the Ai Metrix Stockholders an equivalent amount of cash, where every one
share
of SYS Common Stock that constitutes Earnout Consideration shall represent
an
amount in cash equal to the average closing price of SYS Common Stock on
the
principal national securities exchange or principal national securities
quotation system on which the SYS Common Stock is then listed over the ten
(10)
consecutive trading days immediately preceding the date of payment of such
cash
(the “SYS
Average Earnout Price”).
If
any Clawback Consideration is required to be paid, SYS shall be entitled
to
obtain the requisite shares of SYS Common Stock and cash from the Escrow
Account
and the Stockholder Representative shall promptly take all actions and execute
and deliver all documents reasonably necessary to facilitate the return of
such
shares of SYS Common Stock and cash from the Clawback Escrow.
(d) Dispute
Resolution.
If the
Stockholder Representative disagrees with the EBITDA Calculations, it shall
notify SYS of such disagreement in writing, setting forth in reasonable detail
the particulars of such disagreement, within thirty (30) days after his receipt
of the EBITDA Calculations. If any such notice of disagreement is timely
provided, SYS and the Stockholder Representative shall use commercially
reasonable efforts for a period of thirty (30) days to resolve any disagreement.
If SYS and the Stockholder Representative have been unable to resolve the
disagreement by the end of such period, Ernst & Young (the “Arbitrator”),
shall
be retained to make a determination on the matter in dispute. The determination
of the Arbitrator shall be final, binding and conclusive on the parties and
the
appropriate payment shall be made by the parties based upon the final
determination of the Arbitrator. The fees and expenses of the Arbitrator
shall
be borne equally by SYS, on the one hand, and the Stockholder Representative,
on
behalf of the Ai Metrix Stockholders, on the other hand. Each party shall
pay
its own costs and expenses (including attorneys’ fees) incurred in connection
with any such disagreement. The date on which the EBITDA Calculations are
finally determined in accordance with this Section
2.5(d)
shall be
deemed to be acceptance by the Stockholder Representative for purposes of
Section
2.5(c).
(e) Conduct
of Business During EBITDA Period.
SYS
acknowledges and agrees that the ability of the Surviving Corporation to
meet
EBITDA objectives and the ability of the parties to calculate fairly and
measure
the performance of the Surviving Corporation relative to EBITDA objectives
will
depend to a significant degree upon maintaining the business of Ai Metrix
(the
“Business”)
as a
whole and as a discrete operating unit. SYS and the Surviving Corporation
(and
any acquirer of or successor to SYS or the Surviving Corporation pursuant
to a
merger, consolidation or other acquisition by another company) shall, after
the
Closing Date (i) act in good faith at all times during the EBITDA Period,
(ii)
not fail to take any action that would be required by reasonable, skillful,
prudent and diligent business persons engaged in the independent operation
of a
business similar to the Business, and (iii) not take any action that would
be
prejudicial or discriminatory to the Business, the Surviving Corporation
or the
interests of the Ai Metrix Stockholders in receiving the Earnout Consideration.
Without limiting the foregoing, during the EBITDA Period after the Closing
Date:
(i) SYS
shall
act in good faith and, acting as a reasonable, skillful, prudent and diligent
person engaged in the independent operation of a business similar to the
Business, use commercially reasonable efforts to enable the Surviving
Corporation to achieve the targets contemplated by this Agreement, including
providing the Surviving Corporation with sufficient liquidity
and
working capital funds as required in SYS’s reasonable business judgment for the
operation of the Business;
(ii) SYS
shall
provide the Surviving Corporation’s management team reasonable authority to
participate in the management and operation of the Business throughout the
EBITDA Period, including reasonable authority to direct business strategy,
pricing, sales and marketing during the EBITDA Period in a manner consistent
with the current plans of the Business;
(iii) SYS
shall
use reasonable efforts to retain the services of the officers and key employees
of the Business and to maintain relationships with customers, suppliers,
lessees, licensees and other relevant third parties, to the extent reasonably
required for the operation of the Business;
(iv) SYS
shall
cause or permit the Surviving Corporation to engage in the Business and such
other and further business lines as the Surviving Corporation’s management team
may from time to time determine, subject in the case of additional business
lines to SYS’s prior approval (not to be unreasonably withheld or
delayed);
(v) Except
as
required or appropriate in SYS’s reasonable business judgment, SYS shall not
sell, abandon, lease, assign, transfer, license or otherwise dispose of any
of
the assets of the Business, or amend, modify or provide for the early
termination of any material agreement or license to which the Surviving
Corporation is a party, if any of the foregoing would reasonably be expected
to
have a material adverse effect on the Business, the financial condition of
the
Surviving Corporation, its assets or properties, or the likelihood of the
Ai
Metrix Stockholders receiving the maximum Earnout Consideration otherwise
attainable in the circumstances then prevailing;
(vi) Neither
the Surviving Corporation nor the Business shall be wound up, dissolved,
or
merged, amalgamated, or otherwise reorganized in such a manner that either
the
Surviving Corporation or the Business is no longer readily identifiable as
a
discrete business entity;
(vii) Separate
books and records will be maintained related to the Surviving Corporation
and
the Business sufficient to allow independent verification of the results
of
operations of the Surviving Corporation throughout the EBITDA Period, including
for purposes of calculating EBITDA; and
(viii) For
purposes of the EBITDA Calculations, SYS shall allocate to the Surviving
Corporation or the Business corporate overhead charges not to exceed the
same
ratio that general and administrative charges incurred by Ai Metrix during
the
first nine (9) months of fiscal year 2006 had to net revenue recorded by
Ai
Metrix during such period.
2.6 Escrow
Account.
(a) Escrow
Agreement.
On or
prior to the Closing Date, SYS and the Stockholder Representative shall
establish an escrow account (the “Escrow
Account”)
at
Union Bank of California, N.A., by the execution and delivery of an Escrow
Agreement substantially in the form attached as Exhibit C
hereto
(the “Escrow
Agreement”).
The
Escrow Account shall contain the shares of SYS Common Stock and cash
representing the Indemnity Escrow and the shares of SYS Common Stock and
cash
representing the Clawback Escrow.
(b) Deposit
of Escrow Consideration.
As soon
as practicable after the Effective Time, but no later than the Payment Deadline,
SYS shall deliver the Escrow Consideration to the Escrow Agent (as defined
in
the Escrow Agreement), for immediate deposit into the Escrow
Account.
(c) Disbursement
of Escrow Consideration.
(i) The
Clawback Consideration deposited in the Escrow Account shall be available,
in
accordance with this Agreement and the Escrow Agreement, to provide recourse
for
SYS for any Clawback Consideration and for any breach of the representations,
warranties, covenants and agreements of Ai Metrix in the manner provided
in
Article IX
hereof,
and (ii) the Indemnity Escrow deposited in the Escrow Account shall be
available, in accordance with this Agreement and the Escrow Agreement, to
provide recourse for SYS for any breach of the representations, warranties,
covenants and agreements of Ai Metrix in the manner provided in Article IX
hereof,
and shall be paid to the Ai Metrix Stockholders or returned to SYS only in
accordance with and subject to the terms and conditions set forth herein
and in
the Escrow Agreement.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF SYS AND MERGER SUB
In
order
to induce Ai Metrix and the Majority Stockholders to enter into this Agreement,
SYS and Merger Sub, jointly and severally, hereby represent and warrant to
Ai
Metrix and the Ai Metrix Stockholders that the statements contained in this
Article III
are
true, correct and complete, except as otherwise expressly set forth in this
Article III
as of
the date hereof and as of the Closing Date unless another date is expressly
stated below.
3.1 Organization
and Standing.
(a) Each
of
SYS, Merger Sub and each other subsidiary of SYS is a corporation duly
organized, validly existing and, where applicable, in good standing under
the
laws of its state of incorporation with corporate power and authority to
own,
lease, use and operate its properties and to conduct its business as and
where
now owned, leased, used, operated and conducted.
(b) Each
of
SYS, Merger Sub and each other subsidiary of SYS is duly qualified to do
business and in good standing in each jurisdiction in which the nature of
the
business conducted by it or the property it owns, leases or operates, requires
it to so qualify, except where the failure to be so qualified or in good
standing in such jurisdiction would not have a Material Adverse Effect (as
defined below) on SYS and its subsidiaries, taken as a whole. SYS is not
in
default in the performance, observance or fulfillment of any provision of
the
SYS Articles of Incorporation, as amended (the “SYS
Articles”),
or
the SYS Amended and Restated Bylaws, as amended, as in effect on the date
hereof
(the “SYS
Bylaws”),
and
Merger Sub and each other subsidiary of SYS is not in default in the
performance, observance or fulfillment of any provisions of its Certificate
of
Incorporation or Bylaws. SYS has heretofore furnished to the Ai Metrix
Stockholders complete and correct copies of the SYS Articles and the SYS
Bylaws,
the Merger Sub Certificate and Merger Sub Bylaws and the governing documents
of
each other subsidiary of SYS.
3.2 Corporate
Power and Authority.
Each
of
SYS and Merger Sub has all requisite corporate power and authority to enter
into
and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated by this Agreement. The execution
and
delivery of this Agreement and the consummation of the transactions contemplated
hereby by SYS and Merger Sub have been duly authorized by all necessary
corporate action on the part of each of SYS and Merger Sub, other than as
provided in Section
3.8.
This
Agreement has been duly executed and delivered by each of SYS and Merger
Sub and
constitutes the legal, valid and binding obligation of each of SYS and Merger
Sub enforceable against each of them in accordance with its terms, except
to the
extent that such enforceability may be subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting the
enforcement of creditors’ rights generally or by general equitable
principles.
3.3 Conflicts;
Consents and Approvals.
Neither
the execution and delivery of this Agreement by SYS and Merger Sub nor the
consummation of the transactions contemplated hereby will:
(a) conflict
with, or result in a breach of any provision of, the SYS Articles or the
SYS
Bylaws, the Merger Sub Certificate or the Merger Sub Bylaws or the governing
documents of any other subsidiary of SYS;
(b) except
as
set
forth
in Section
3.3(b)
of the
SYS Disclosure Schedule,
materially violate, or conflict with, or result in a material breach of any
provision of, or constitute a material default (or an event that, with the
giving of notice, the passage of time or otherwise, would constitute a default)
under, or entitle any party (with the giving of notice, the passage of time
or
otherwise) to terminate, accelerate, modify or call a material default under,
or
result in the creation of any material Encumbrance (as defined below) upon
any
of the properties or assets of SYS or any of its subsidiaries under, any
of the
terms, conditions or provisions of any material note, bond, mortgage, indenture,
deed of trust, license, contract, undertaking, agreement, lease or other
instrument or obligation to which SYS or any of its subsidiaries is a party
(for
purposes of this Agreement, “Encumbrance”
means
any charge, claim, mortgage, servitude, easement, right of way, equitable
interest, lease or other possessory interest, conditional sale or other title
retention arrangement, lien, pledge, security interest, preference, priority,
right of first refusal or similar restriction);
(c) materially
violate any (i) order, writ, injunction, decree, statute, ruling,
assessment, or arbitration or award of any Governmental Authority or
(ii) Applicable Laws relating to SYS or any of its subsidiaries or their
respective properties or assets; or
(d) require
any action or consent or approval of, or review by, or registration or filing
by
SYS or any of its affiliates with, any third party or any Governmental
Authority, other than (i) registrations or other actions required under federal
and state securities laws or the rules and regulations of the national
securities exchange or national securities quotation system on which the
SYS
Common Stock is then listed, and (ii) the filing of the Certificate of Merger
with the Delaware Secretary of State. Based on the representations and
warranties made by Ai Metrix hereunder and assuming that each Closing
Stockholder executes and delivers to SYS prior to the Closing an Investment
Representation Certificate in the form attached hereto as Exhibit
B,
no
registration of the SYS Common Stock to be issued as Merger Consideration
hereunder is required under federal or state securities laws.
3.4 Actions.
Except
as
set forth in Section
3.4
of the
SYS Disclosure Schedule, there are no material Actions pending or, to the
knowledge of SYS, threatened against SYS or Merger Sub, including any Action
which questions the validity of this Agreement or the Merger or any action
taken
or to be taken pursuant hereto or pursuant to the Merger, or relating to
its
method of doing business or its relationship with past or existing users
or
purchasers of any goods or services, and there is no outstanding order, writ,
injunction or decree of any Governmental Authority against SYS or Merger
Sub.
For purposes of this Agreement, “Action”
means
any action, arbitration, audit, examination, suit, proceeding, hearing or
litigation, whether formal or informal, and whether public or private,
commenced, brought, conducted or heard by or before any court or Governmental
Authority.
3.5 Financial
Ability.
At the
Effective Time, SYS will have a sufficient number of shares of SYS Common
Stock
and sufficient cash funds to pay the Merger Consideration, any cash in lieu
of
fractional shares and all related fees and expenses of SYS.
3.6 Capitalization
of SYS.
(a) The
authorized capital stock of SYS consists of 48,000,000 common shares (the
“SYS
Common Stock”),
250,000 preferred shares (the “SYS
Preferred Stock”),
and
2,000,000 preference shares (the “SYS
Preference Stock”).
At
October 16, 2006, (i) 15,455,805 shares of SYS Common Stock were issued and
outstanding, (ii) 6,249,582 shares of SYS Common Stock were reserved for
issuance upon the exercise or conversion of options, warrants or convertible
securities granted or issuable by SYS, including pursuant to SYS’s stock option
and stock purchase plans, (iii) no shares of SYS Preferred Stock were
issued and outstanding, and (iv) no shares of SYS Preference Stock were
issued and outstanding. The SYS Common Stock, the SYS Preferred Stock, and
the
SYS Preference Stock are referred to herein collectively as the “SYS
Capital Stock.”
Each
outstanding share of SYS Capital Stock is duly authorized and validly issued,
fully paid and nonassessable and has not been issued in violation of any
preemptive or similar rights. The issuance and sale of all of the shares
of SYS
Capital Stock described in this Section 3.6
have
been in compliance in all material respects with applicable federal and state
securities laws.
(b) At
October 16, 2006, other than as set forth in clause (a)(ii) above or
as set forth in Section
3.6(b)
of the
SYS Disclosure Schedule, there are no outstanding subscriptions, options,
warrants, puts, calls, agreements, understandings, claims or other commitments
or rights of any type relating to the issuance, sale, repurchase or transfer
by
SYS of any securities of SYS, nor are there outstanding any securities which
are
convertible into or exchangeable for any shares of SYS Capital Stock, and
SYS
has no obligation of any kind to issue any additional securities or to pay
for
or repurchase any securities of SYS or any predecessor.
(c) The
shares of SYS Common Stock to be issued at the Effective Time have been duly
authorized and will, at the Effective Time, be fully paid and nonassessable
and
issued in reliance on exceptions from the registration and qualification
requirements of federal and state securities laws. The Escrow Consideration
has
been duly authorized and will, if issued pursuant to this Agreement, be fully
paid and nonassessable and issued in reliance on exceptions from the
registration and qualification requirements of federal and state securities
laws.
(d) The
transactions contemplated by this Agreement, including without limitation,
the
issuance of SYS Common Stock and the ownership of the SYS Common Stock by
the Ai
Metrix Stockholders, will not create any obligation by SYS to sell or otherwise
issue any shares of SYS Common Stock or any other securities, or otherwise
cause
the application of, any control share acquisition, shareholder approval
requirement (other than the SYS Stockholder Approval), poison pill (including
any distribution under a rights agreement) or other similar anti-takeover
provision under the SYS Articles or the laws of the state of its incorporation
or other Applicable Law.
3.7 Brokerage
and Finders’ Fees.
Other
than USBX Advisory Services, LLC, whose fees will be paid by SYS, neither
SYS
nor any stockholder, director, officer or employee thereof has incurred or
will
incur on behalf of SYS or any of its affiliates, any brokerage, finders’ or
similar fee in connection with the transactions contemplated by this
Agreement.
3.8 Board
Recommendation; Required Vote.
The
Board of Directors of SYS, at a meeting duly called and held, has by the
requisite vote of those directors present and constituting a quorum of the
directors then in office (a) determined that this Agreement and the transactions
contemplated hereby, including the Merger, are fair to and in the best interests
of SYS and its stockholders, and (b) resolved to recommend that the
stockholders of SYS vote for approval of the issuance of SYS Common Stock
in
payment of the Earnout Consideration, if such payment is required under
Section
2.5
and if
such approval is required by the rules and regulations of the national
securities exchange or national securities quotation system on which the
SYS
Common Stock is then listed. The affirmative vote of a majority of the total
votes cast by the holders of SYS Common Stock, excluding any such holders
who
received SYS Common Stock in connection with the transactions contemplated
by
this Agreement, in favor of the issuance of SYS Common Stock as Earnout
Consideration, if any, is the only vote of the SYS stockholders necessary
to
approve the issuance of the Earnout Consideration (the “SYS
Stockholder Approval”).
No
vote or approval of the holders of SYS Capital Stock is necessary for SYS
to
issue the Merger Consideration.
3.9 SYS
SEC Documents.
(a) Except
as
set forth in Section
3.9(a)
of the
SYS Disclosure Schedule, SYS has timely filed with the U.S. Securities and
Exchange Commission (the “Commission”)
all
forms, reports, schedules, statements and other documents (including exhibits
and other information incorporated therein) required to be filed by it since
July 1, 2004 under the Securities Act of 1933, as amended (the “Securities
Act”),
or
the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)
(such
documents, as supplemented and amended since the time of filing, collectively,
the “SYS
SEC Documents”).
No
subsidiary of SYS is required to file any form, report, registration statement,
prospectus or other document with the Commission.
(b) The
SYS
SEC Documents, including any financial statements or schedules included in
the
SYS SEC Documents, at the time filed (and, in the case of registration
statements and proxy statements, on the dates of effectiveness and the dates
of
mailing, respectively and, in the case of any SYS SEC Document amended or
superseded by a filing prior to the date of this Agreement, then on the date
of
such amending or superseding filing): (i) did not contain any untrue
statement of a material fact or omit to state a material fact required to
be
stated therein or necessary in order to make the statements therein, in light
of
the circumstances under which they were made, not misleading and
(ii) complied in all material respects with the applicable requirements of
the Exchange Act and the Securities Act, as the case may be.
(c) The
financial statements of SYS (including the related notes) included in the
SYS
SEC Documents at the time filed (and, in the case of registration statements
and
proxy statements, on the dates of effectiveness and the dates of mailing,
respectively, and, in the case of any SYS SEC Document amended or superseded
by
a filing prior to the date of this Agreement, then on the date of such amending
or superseding filing) complied in all material respects with applicable
accounting requirements and with the published rules and regulations of the
Commission with respect thereto, were prepared in accordance with GAAP applied
on a consistent basis during the periods involved (except as may be indicated
in
the notes thereto or, in the case of unaudited statements, as permitted by
Form
10-Q or Form 10-QSB of the Commission), and fairly present (subject, in the
case of unaudited statements, to normal, recurring audit adjustments not
material in amount) in all material respects the consolidated financial position
of SYS and its consolidated subsidiaries as at the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended.
3.10 Undisclosed
Liabilities.
As of
the date of this Agreement, neither SYS nor Merger Sub has any liabilities
or
obligations of any nature (whether accrued, absolute, contingent or otherwise)
that, individually or in the aggregate, could reasonably be expected to have
a
Material Adverse Effect on SYS and its subsidiaries, taken as a whole, other
than (a) liabilities disclosed on SYS’s consolidated financial statements or in
the notes thereto, (b) liabilities contemplated by this Agreement and/or
set
forth in the SYS Disclosure Schedule, and (c) liabilities incurred or accrued
after the date hereof in the ordinary course of business consistent with
past
practice.
3.11 No
Other
Warranties.
There
are no representations or warranties made by the Ai Metrix Stockholders and
no
representations or warranties made by Ai Metrix, other than the representations
and warranties set forth in Article IV and in the other documents and
instruments delivered by Ai Metrix on the date hereof or at the Closing.
SYS and
Merger Sub are not relying upon any representations or warranties, other
than
the representations and warranties set forth in Article IV of this Agreement
and
in the other documents and instruments delivered by Ai Metrix on the date
hereof
or at the Closing.
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF AI METRIX
In
order
to induce SYS to enter into this Agreement, Ai Metrix hereby represents and
warrants to SYS and Merger Sub that the statements contained in this
Article IV
are
true, correct and complete, except as otherwise expressly set forth in this
Article IV,
as of
the date hereof and as of the Closing Date unless another date is expressly
stated below or in the Ai Metrix Disclosure Schedule.
4.1 Organization
and Standing.
(a) Ai
Metrix
is a corporation duly organized and validly existing under the laws of the
State
of Delaware with full corporate power and authority to own, lease, use and
operate its properties and to conduct its business as and where now owned,
leased, used, operated and conducted.
(b) Ai
Metrix
is duly qualified or licensed to do business and is in good standing in each
jurisdiction in which the nature of the business conducted by it or the property
it owns, leases, uses, or operates requires it to so qualify, except where
the
failure to be so qualified or in good standing in such jurisdiction would
not
have a Material Adverse Effect on Ai Metrix. Ai Metrix is not in default
in the
performance, observance or fulfillment of any provision of its Certificate
of
Incorporation
(the “Ai
Metrix Certificate”)
or its
Bylaws (the “Ai
Metrix Bylaws”),
as in
effect on the date hereof. Ai Metrix has previously furnished to SYS complete
and correct copies of the Ai Metrix Certificate and the Ai Metrix Bylaws,
each
as in effect on the date hereof. Listed in Section 4.1
of the
Ai Metrix Disclosure Schedule is each jurisdiction in which Ai Metrix is
qualified or licensed to do business and whether Ai Metrix is in good standing
in each applicable jurisdiction as of the date of this Agreement.
4.2 Subsidiaries.
Ai
Metrix does not own, directly or indirectly, any equity or other ownership
interest in any corporation, partnership, joint venture or other entity or
enterprise. Ai Metrix is not subject to any obligation or requirement to
provide
funds to or make any investment (in the form of a loan, capital contribution
or
otherwise) in any person.
4.3 Corporate
Power and Authority.
Ai
Metrix has all requisite corporate power and authority to enter into and
deliver
this Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated by this Agreement. The execution and delivery of
this
Agreement and the consummation of the transactions contemplated hereby by
Ai
Metrix have been duly authorized by all necessary corporate action on the
part
of Ai Metrix, including all requisite approvals of its Board of Directors
and
the holders of the Ai Metrix Capital Stock. This Agreement has been duly
executed and delivered by Ai Metrix and constitutes the legal, valid and
binding
obligation of Ai Metrix, enforceable against Ai Metrix in accordance with
its
terms, except to the extent that such enforceability may be subject to
applicable bankruptcy, insolvency, reorganization, moratorium and similar
laws
affecting the enforcement of creditors’ rights generally or by general equitable
principles.
4.4 Capitalization
of Ai Metrix.
(a) The
authorized capital stock of Ai Metrix consists of 17,353,900 common shares
(the
“Ai
Metrix Common Stock”)
and
16,213,403 preferred shares (the “Ai
Metrix Preferred Stock”).
At
the date of this Agreement, (i) 2,022,328
shares
of Ai Metrix Common Stock are issued and outstanding and (ii) 14,183,403
shares
of Ai Metrix Preferred Stock designated Series C Preferred Stock are issued
and outstanding. The Ai Metrix Common Stock and the Ai Metrix Preferred Stock
are referred to herein collectively as the “Ai
Metrix Capital Stock.”
Each
outstanding share of Ai Metrix Capital Stock is duly authorized and validly
issued, fully paid and nonassessable, and has not been issued in violation
of
any preemptive or similar rights. The issuance and sale of all of the shares
of
Ai Metrix Capital Stock described in this Section
4.4
have
been in compliance in all material respects with applicable federal and state
securities laws.
(b) As
of the
date hereof, other than as set forth in clause (a)(ii) above or as set
forth in Section
4.4(b)
of the
Ai Metrix Disclosure Schedule, there are no outstanding subscriptions, options,
warrants, puts, calls, agreements, understandings, claims or other commitments
or rights of any type relating to the issuance, sale, repurchase or transfer
by
Ai Metrix of any securities of Ai Metrix, nor are there outstanding any
securities which are convertible into or exchangeable for any shares of Ai
Metrix Capital Stock, and Ai Metrix has no obligation of any kind to issue
any
additional securities or to pay for or repurchase any securities of Ai Metrix
or
any predecessor. Set forth in Section 4.4
of the
Ai Metrix Disclosure Schedule is an accurate and complete list of the names
of
all holders of Ai Metrix Capital Stock, and the number and class of shares
held
by each such Ai Metrix Stockholder. Set forth in Section 4.4
of the
Ai Metrix Disclosure Schedule is an accurate and complete list of the names
of
all holders of options, warrants or convertible instruments to purchase Ai
Metrix Capital Stock, the number of shares issuable to each such holder upon
exercise of such option or warrant, and the exercise price and vesting schedule
with respect thereto.
(c) Ai
Metrix
has not agreed to register any securities of Ai Metrix under the Securities
Act
or under any applicable securities law or granted registration rights to
any
person or entity (other than agreements with respect to registration rights
that
are no longer in effect as of the date of this Agreement); complete and correct
copies of all such agreements have previously been provided to SYS.
4.5 Conflicts;
Consents and Approvals.
Except
as set forth on Section
4.5
of the
Ai Metrix Disclosure Schedule, neither the execution and delivery of this
Agreement by Ai Metrix, nor the consummation of the transactions contemplated
hereby, will:
(a) conflict
with, or result in a breach of any provision of, the Ai Metrix Certificate
or
the Ai Metrix Bylaws;
(b) materially
violate or conflict with, or result in a material breach of any provision
of, or
constitute a material default (or an event that, with the giving of notice,
the
passage of time or otherwise, would constitute a default) under, or entitle
any
party (with the giving of notice, the passage of time or otherwise) to
terminate, accelerate, modify or call a default under, or result in the creation
of any material Encumbrance upon any of the properties or assets of Ai Metrix
under, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust, license, contract, undertaking, agreement, lease
or
other instrument or obligation to which Ai Metrix is a party, including without
limitation, any Contract (as defined below);
(c) materially
violate any (i) order, writ, injunction, decree, ruling, assessment,
arbitration, or award of any Governmental Authority or arbitrator or
(ii) Applicable Laws relating to Ai Metrix or any of its properties or
assets; or
(d) require
any action or consent or approval of, or review by, or registration or filing
by
Ai Metrix or any of its affiliates with, any third party or any Governmental
Authority, other than (i) registrations or other actions required under federal
and state securities laws and (ii) the filing of the Certificate of Merger
with
the Delaware Secretary of State.
4.6 Brokerage
and Finders’ Fees.
Other
than X.X. Xxxxxxxxx, Towbin, whose fees will be paid by Ai Metrix prior to
the
Closing Date, neither Ai Metrix nor any stockholder, director, officer or
employee thereof has incurred or will incur on behalf of Ai Metrix any
brokerage, finders’ or similar fee in connection with the transactions
contemplated by this Agreement.
4.7 Books
and Records; Financial Statements.
(a) From
its
date of incorporation, the minute books, stock books and stock ledgers of
Ai
Metrix (the “Books
of Account”)
have
been maintained, in all material respects, in accordance with Applicable
Law.
The signatures of Ai Metrix personnel appearing on all documents contained
in
such Books of Account are the true signatures of the persons purporting to
have
signed the same, and complete and correct copies in all material respects
of
such Books of Account have been provided to SYS.
(b) Attached
to Section 4.7(b)
of the
Ai Metrix Disclosure Schedule, as previously delivered to SYS, are complete
and
correct copies of (i) the audited balance sheets of Ai Metrix as of
December 31, 2004 and December 31, 2005, the related statements of income
for
the three (3) years then ended, and the related sources and uses of cash
for the
12-month periods then ended, and (ii) the unaudited balance sheet of Ai
Metrix as of September 30, 2006, and the related statements of income and
sources and uses of cash for the nine (9)-month period then ended and
(collectively, the “Ai
Metrix Financial Statements”).
The
Ai Metrix Financial Statements (including the related notes) were prepared
in
accordance with GAAP applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto) and fairly present (subject,
in the case of unaudited statements, to normal, recurring audit adjustments
not
material in amount and to the absence of footnotes) in all material respects
the
consolidated financial position of Ai Metrix and its consolidated subsidiaries
as at the dates thereof and the consolidated results of their operations
and
cash flows for the periods then ended.
(c) Attached
to Section 4.7(c)
of the
Ai Metrix Disclosure Schedule is a pro forma estimated unaudited balance
sheet
of Ai Metrix as of the Closing Date (the “Closing
Date Balance Sheet”).
Except as otherwise disclosed on Section
4.7(c)
of the
Ai Metrix Disclosure Schedule, the Closing Date Balance Sheet was prepared
by Ai
Metrix in good faith in accordance with GAAP applied on a consistent basis
and,
to the best of Ai Metrix’s knowledge, fairly presents in all material respects
the consolidated financial position of Ai Metrix and its consolidated
subsidiaries as of the Closing Date. The Closing Date Balance Sheet sets
forth
Ai Metrix’s good faith estimate of Ai Metrix’s costs and expenses incurred in
connection with the transactions contemplated hereby.
4.8 Compliance
with Law.
Except
with respect to Applicable Laws discussed elsewhere in this Article IV
including, without limitation, those relating to Taxes (as set forth in
Section 4.11),
employee benefit plans (as set forth in Section 4.14),
labor
matters (as set forth in Section 4.16),
Permits (as set forth
in
Section 4.19),
Environmental Laws (as set forth in Section 4.21),
product warranties (as set forth in Section 4.24),
Data
Protection Laws (as set forth in Section 4.25)
and the
Foreign Corrupt Practices Act (as set forth in Section 4.26),
Ai
Metrix is in compliance, in all material respects, and at all times since
January 1, 2004 has been in compliance, in all material respects, with all
Applicable Laws relating to Ai Metrix or its businesses or properties. Ai
Metrix
has received no written notice of any pending investigation or review by
any
Governmental Authority with respect to Ai Metrix, and to the knowledge of
Ai
Metrix, no such investigation or review is threatened, nor has any Governmental
Authority indicated an intention to conduct the same.
4.9 Actions.
Except
as
set forth in Section 4.9
of the
Ai Metrix Disclosure Schedule, there are no material Actions pending or,
to the
knowledge of Ai Metrix, threatened against Ai Metrix, including any Action
which
questions the validity of this Agreement or the Merger or any action taken
or to
be taken pursuant hereto or pursuant to the Merger, or relating to its method
of
doing business or its relationship with users or purchasers of any goods
or
services, and there is no outstanding order, writ, injunction or decree of
any
Governmental Authority against Ai Metrix.
4.10 No
Material Adverse Change.
Since
June 30, 2006, there has been no Material Adverse Effect (as defined in
Section
10.2(b))
on Ai
Metrix.
4.11 Taxes.
(a) |
With
regard to Taxes:
|
(i) Ai
Metrix
has filed all Tax Returns (as defined below) (including, but not limited
to,
those filed on a consolidated, combined or unitary basis) required to have
been
filed by Ai Metrix prior to the date hereof;
(ii) All
such
Tax Returns referred to in clause (a)(i) above were true and correct
in all material respects and Ai Metrix has paid or, prior to the Effective
Time,
will pay within the time and manner prescribed by Applicable Law, all Taxes,
interest and penalties required to be paid in respect of the periods covered
by
such Tax Returns due to any federal, state, foreign, local or other Tax
authority;
(iii) Ai
Metrix
has and will have no liability for Taxes due or accruing on or prior to the
Closing Date that is in excess of the amount reserved on the Ai Metrix Financial
Statements therefor;
(iv) Ai
Metrix
has not requested or filed any document having the effect of causing any
extension of time within which to file any returns in respect of any fiscal
year
which have not since been filed;
(v) Ai
Metrix
has not received written notice of any currently due and payable deficiency
for
any Tax from any Tax authority;
(vi) Ai
Metrix
has not received written notice that it is the subject of any currently ongoing
Tax audit;
(vii) As
of the
date of this Agreement, Ai Metrix has not received written notice from any
Tax
authority of any pending requests for waivers of the time to assess any Tax,
other than those made in the ordinary course and for which payment has been
made;
(viii) Ai
Metrix
has not waived any statute of limitations in respect of Taxes or agreed to
any
extension of time with respect to a Tax assessment or deficiency;
(ix) There
are
no recorded Encumbrances with respect to Taxes upon any of the properties
or
assets, real or personal, tangible or intangible of Ai Metrix (other than
liens
for Taxes not yet due and/or delinquent);
(x) No
written claim has ever been received by Ai Metrix from a Governmental Authority
in a jurisdiction where Ai Metrix files Tax Returns that Ai Metrix is or
may be
subject to taxation by that jurisdiction;
(xi) Neither
Ai Metrix nor any predecessor is or was on or prior to the Closing Date a
member
of any affiliated, consolidated, combined or unitary tax group; and
(xii) Ai
Metrix
has retained and will retain through the Closing Date all relevant books
and
records with respect to Tax matters pertinent to Ai Metrix relating to any
taxable period beginning before the Closing Date until the expiration of
the
statute of limitations of the respective taxable periods, and has abided
by all
record retention agreements entered into with any taxing authority.
(b) Ai
Metrix
is not obligated by any Contract or other arrangement to indemnify any other
person with respect to Taxes. Ai Metrix is not now, and during the past six
(6)
years has not been, a party to or bound by any agreement or arrangement (whether
or not written and including, without limitation, any arrangement required
or
permitted by law) binding Ai Metrix that (i) requires Ai Metrix to make any
Tax payment to or for the account of any other person, (ii) affords any
other person the benefit of any net operating loss, net capital loss, investment
Tax credit, foreign Tax credit, charitable deduction or any other credit
or Tax
attribute which could reduce Taxes (including, without limitation, deductions
and credits related to alternative minimum Taxes) of Ai Metrix, or
(iii) requires or permits the transfer or assignment of income, revenues,
receipts or gains to Ai Metrix, from any other person.
(c) Ai
Metrix
has withheld and paid over all Taxes required to have been withheld and paid
over in connection with amounts paid or owing to any employee, independent
contractor, creditor, stockholder or other third party.
(d) Ai
Metrix
has not agreed to make, or has received any written notice from the Internal
Revenue Service proposing that Ai Metrix make, any adjustments pursuant to
Sections 263A or 481(a) of the Code or any similar provision of state, local
or
foreign law by reason of a change in accounting method initiated by Ai Metrix,
and Ai Metrix has no application pending with any Governmental Authority
requesting permission for any changes in accounting methods that relate to
the
business or operations of Ai Metrix.
(e) Ai
Metrix
has not requested any private letter ruling of the Internal Revenue Service
or
comparable ruling of other Governmental Authorities.
(f) The
Tax
Returns of Ai Metrix for the years ended December 31, 2004 and December 31,
2005, complete and correct copies of which have been provided to SYS prior
to
the date hereof, list all deductions giving rise to any current-year Tax
loss
set forth on the applicable Tax Returns and the amount of each such Tax loss
in
each jurisdiction.
(g) Except
for the group for which Ai Metrix is presently a member, if any, Ai Metrix
has
never been a member of an affiliated group of corporations, within the meaning
of Section 1504 of the Code, other than as a common parent corporation,
within the meaning of Section 1504 of the Code (or any similar provision of
state or local law), except where Ai Metrix was the common parent corporation
of
such affiliated group.
(h) Ai
Metrix
has no liability for the Taxes of any person other than any of Ai Metrix
under
Regulation Section 1.1502-6 (or any similar provision of state, local or
foreign law), as a transferee or successor, by contract or
otherwise.
(i) All
elections with respect to the Tax Returns are reflected in the Tax
Returns.
(j) Ai
Metrix
is not and has not been a United States real property holding corporation
(as
defined in section 897(c)(2) of the Code) during the applicable period
specified in section 897(c)(1)(A)(ii) of the Code.
(k) Ai
Metrix
is not and has not been a party to any joint venture, partnership, or other
agreement that would be treated as a partnership for U.S. federal income
tax
purposes.
(l) Ai
Metrix
has not participated in an international boycott as defined in Section 999
of the Code (or any similar provision of state, local or foreign
law).
(m) Ai
Metrix
is not a party to any agreement, contract, arrangement or plan that has resulted
or would result, separately or in the aggregate, in the payment of any “excess
parachute payment” within the meaning of Code Section 280G (or any corresponding
provision of state, local or foreign law).
(n) Ai
Metrix
is not a party to or bound by any tax allocation or sharing
agreement.
(o) Ai
Metrix
will not 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) “Closing
Agreement”
as
described in Code Section 7121 (or any corresponding or similar provision
of
state, local or foreign law) executed on or prior to the Closing
Date;
(ii) 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 law);
(iii) Installment
sale or open transaction disposition made on or prior to the Closing Date;
or
(iv) Prepaid
amount received on or prior to the Closing Date.
(p) Ai
Metrix
has not distributed stock of another corporation, or has had its stock
distributed by another corporation, in a transaction that was purported or
intended to be governed in whole or in part by Code Section 355.
(q) As
used
in this Agreement, “Tax
Returns”
means
all federal, state, local and foreign Tax returns, declarations, schedules,
information returns, reports and forms, and any amendments to any of the
foregoing relating to Taxes, required to be filed with any Governmental
Authority responsible for the imposition or collection of Taxes.
(r) As
used
in this Agreement, “Tax”
or
“Taxes”
means
any federal, state, county, local or foreign taxes, charges, fees, levies
or
other assessments, including all net income, gross income, premium, sales
and
use, ad valorem, transfer, gains, profit, windfall profits, excise, franchise,
real and personal property, gross receipts, capital stock, production, business
and occupation, employment, disability, payroll, license, estimated, customs
duties, severance or withholding taxes, other taxes or similar charges of
any
kind imposed by a Governmental Authority and includes any interest and penalties
(civil or criminal) on or additions to any such taxes or in respect of a
failure
to comply with any requirement relating to any Tax Return and any expenses
incurred in connection with the determination, settlement or litigation of
any
tax liability.
4.12 Intellectual
Property.
(a) Set
forth
in Section 4.12
of the
Ai Metrix Disclosure Schedule is an accurate and complete list of (i) all
foreign and domestic patents, patent applications, invention disclosures,
trademarks, service marks, trade names, internet domain names (and any
registrations or applications for registration for any of the foregoing
trademarks, service marks, trade names and internet domain names) and all
copyright applications and registrations and all other material Intellectual
Property rights owned or used by Ai Metrix, and (ii) other than as set
forth in Section 4.15
of the
Ai Metrix Disclosure Schedule, all non-customer agreements to which Ai Metrix
is
a party which concern any of its Intellectual Property.
(b) With
regard to Intellectual Property:
(i) Ai
Metrix
owns, free and clear of any Encumbrances, or has sufficient rights to, the
Intellectual Property;
(ii) No
written claim of invalidity or ownership with respect to the Intellectual
Property has been received by Ai Metrix from any third party and no Intellectual
Property is the subject of any pending or, to the knowledge of Ai Metrix,
threatened Action;
(iii) No
person
or entity has asserted that, with respect to any Intellectual Property, Ai
Metrix or any licensee of Ai Metrix is infringing or has infringed any domestic
or foreign patent, trademark, service xxxx, trade name, or copyright or design
right, or has misappropriated or improperly used or disclosed any trade secret,
confidential information or know-how;
(iv) All
fees,
annuities, royalties, honoraria and other payments which are due from Ai
Metrix
on or before the date of this Agreement for any of the Intellectual Property
or
under any agreement related to the Intellectual Property have been paid or
reserved for on the Ai Metrix Financial Statements;
(v) Except
as
limited by the terms of any license relating thereto, the making, using,
selling, manufacturing, marketing, licensing, reproduction, distribution,
disposal, modification, display, transmission or publishing of any process,
machine, manufacture, composition of matter, or material related to any part
of
the Intellectual Property, does not infringe in any material respect any
domestic or foreign patent, trademark, service xxxx, trade name, copyright,
moral right or other intellectual property right of any third party, and
does
not involve the misappropriation or improper use or disclosure of any trade
secrets, confidential information or know-how of any third party;
(vi) To
the
knowledge of Ai Metrix, no unexpired foreign or domestic patents or patent
applications exist that are adverse to the interests of Ai Metrix;
(vii) To
the
knowledge of Ai Metrix, there exists no (A) prior act of Ai Metrix or any
third party that would void or invalidate any of the Intellectual Property
or
(B) conduct or use by Ai Metrix or any third party that would void or
invalidate any of the Intellectual Property; and
(viii) The
execution, delivery and performance of this Agreement by Ai Metrix and the
Majority Stockholders, and the consummation of the transactions contemplated
hereby, will not materially breach, violate or conflict with any instrument
or
agreement relating to the Intellectual Property to which Ai Metrix is a party,
will not cause the forfeiture or termination or give rise to a right of
forfeiture or termination of any of the Intellectual Property or in any way
impair the right of Ai Metrix to make, use, sell, license or dispose of,
distribute, modify, display or transmit or to bring any action for the
infringement of, any Intellectual Property.
(c) Ai
Metrix
has taken commercially reasonable steps to safeguard and maintain the secrecy
and confidentiality of (i) all trade secrets and (ii) to the extent
required by Applicable Law, patent applications and their related inventions
prior to the issuance of a patent registration contained in the Intellectual
Property.
(d) As
used
in this Agreement, “Intellectual
Property”
means
all domestic or foreign patents, patent applications, inventions (whether
or not
patentable), processes, products, technologies, discoveries, copyrightable
and
copyrighted works, apparatus, trade secrets, trademarks, logos, know-how,
internet domain names, copyrights, trademark registrations and applications,
service marks, service xxxx registrations and applications, trade names,
trade
dress, copyright registrations, licenses, technical information (whether
confidential or otherwise), software, and all documentation thereof, in each
case that is owned by, or licensed to Ai Metrix (other than third-party “click
wrap” or “shrink wrap” software licenses, as to which Ai Metrix makes no
representations or warranties) on the date hereof.
4.13 Title
to Assets and Properties.
Ai
Metrix has good, valid, and marketable title to, or a valid leasehold interest
in, and unrestricted possession (other than under the terms of relevant leases)
of, the assets and properties used by Ai Metrix or shown on the Ai Metrix
Financial Statements, free and clear of all Encumbrances, except for assets
and
properties disposed of in the ordinary course of business since June 30,
2006.
Such assets are sufficient to carry on the business of Ai Metrix as it is
currently being conducted and in accordance with past practice.
4.14 Employee
Benefit Plans.
(a) With
respect to each Ai Metrix Plan (as defined below), Ai Metrix has made available
to SYS a correct and complete copy of the following (where applicable):
(i) each writing constituting a part of such Ai Metrix Plan, including
without limitation all plan documents, benefit schedules, trust agreements, and
insurance contracts and other funding vehicles; (ii) the three most
recently filed Annual Reports (Form 5500 Series) and accompanying
schedules, if any; (iii) the current summary plan description, if any;
(iv) the most recent annual financial report, if any; and (v) the most
recent determination letter from the Internal Revenue Service, if
any.
(b) The
Internal Revenue Service has issued a favorable determination letter with
respect to each Ai Metrix Plan that is intended to be a Qualified Plan (as
defined below) and, to the knowledge of Ai Metrix, there are no existing
circumstances or any events that have occurred that could adversely affect
the
qualified status of any Ai Metrix Plan that is a Qualified Plan or the related
trust.
(c) All
contributions required to be made by Ai Metrix to any Ai Metrix Plan by
Applicable Laws or by any Ai Metrix Plan document or other contractual
undertaking, and all premiums due or payable with respect to insurance policies
funding any Ai Metrix Plan, for any period through the date hereof, have
been
made or paid in full.
(d) Each
Ai
Metrix Plan has been maintained and administered in compliance in all material
respects with its terms and Applicable Law, including ERISA (as defined below)
and the Code. There is not now, and to the knowledge of Ai Metrix, there
are no
existing circumstances that could reasonably be expected to give rise to,
any
requirement for the posting of security with respect to an Ai Metrix Plan
or the
imposition of any Encumbrance on the assets of Ai Metrix under ERISA or the
Code
with respect to an Ai Metrix Plan. Except as set forth on Section
4.14(d)
of the
Ai Metrix Disclosure Schedule, each Ai Metrix Plan can
be
amended, terminated or otherwise discontinued after the Effective Time in
accordance with its terms, without additional liability to Ai Metrix, the
Surviving Corporation or SYS.
(e) Ai
Metrix
has not, at any time within six (6) years before the date hereof, maintained,
contributed to or been obligated to contribute to any Multiemployer Plan
(as
defined below) or Multiple Employer Plan (as defined below) or any plan covered
by Section 412 of the Code or Title IV of ERISA.
(f) To
the
knowledge of Ai Metrix, there does not now exist, and there are no existing
circumstances that could reasonably be expected to result in, any Controlled
Group Liability (as defined below) that would be a liability of Ai Metrix
following the Closing. Without limiting the generality of the foregoing,
Ai
Metrix has not engaged in any transaction described in Section 4069 or
Section 4204 of ERISA.
(g) Except
for health continuation coverage as required by Section 4980B of the Code
or Part 6 of Title I of ERISA (or other Applicable Law pertaining to COBRA
or Cal-COBRA) or otherwise set forth on Section
4.14(g)
of the
Ai Metrix Disclosure Schedule, Ai Metrix has no liability for life, health,
medical or other welfare benefits to former employees or beneficiaries or
dependents thereof and there has been no communication to employees of Ai
Metrix
that promises or guarantees such employees retiree health or life insurance
benefits or other retiree death benefits.
(h) Neither
the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will result in, cause the accelerated vesting
or delivery of, or increase the amount or value of, any payment or benefit
to
any employee, officer, director or consultant of Ai Metrix (other than the
acceleration of vesting of stock options which will, however, terminate upon
the
Merger). Without limiting the generality of the foregoing, no amount paid
or
payable by Ai Metrix in connection with the transactions contemplated hereby,
either solely as a result thereof or as a result of such transactions in
conjunction with any other events, will be an “excess parachute payment” within
the meaning of Section 280G of the Code. No director, officer or employee
of Ai Metrix is entitled to receive any severance or similar payment upon
termination of service or employment, other than pursuant to the severance
agreements set forth on Section 4.14(h)
of the
Ai Metrix Disclosure Schedule.
(i) Ai
Metrix
has not received written notice of any pending, and to the knowledge of Ai
Metrix there are no threatened, claims (other than claims for benefits in
the
ordinary course), lawsuits or arbitrations that have been asserted or instituted
against the Ai Metrix Plans, any fiduciaries thereof with respect to their
duties to the Ai Metrix Plans, or the assets of any of the trusts under any
of
the Ai Metrix Plans that would reasonably be expected to result in any material
liability of Ai Metrix to the Pension Benefit Guaranty Corporation, the U.S.
Department of Treasury, the U.S. Department of Labor or any Multiemployer
Plan.
(j) Section 4.14(j)
of the
Ai Metrix Disclosure Schedule sets forth the names of all directors and officers
of Ai Metrix, the names of each employee of Ai Metrix, and the total current
salary, bonus eligibility, and fringe benefits and perquisites that each
such
director, officer and employee is expected to receive in the fiscal year
ending
December 31, 2006 based on current compensation arrangements. Section 4.14(j)
of the
Ai Metrix Disclosure Schedule also sets forth the liability of Ai Metrix
for
deferred compensation under any deferred compensation plan, excess plan or
similar arrangement (other than pursuant to Qualified Plans) to each such
director, officer and employee, together with the value, as of the date
specified thereon, of the assets (if any) set aside in any grantor trust(s)
to
fund such liabilities. There are no other forms of compensation paid to any
such
director,
officer or employee of Ai Metrix. No officer, director, or employee of Ai
Metrix, or any immediate family member of any of the foregoing, provides
or
causes to be provided to Ai Metrix any assets, services (except for services
in
such capacity as officer, director or employee) or facilities and Ai Metrix
does
not provide or cause to be provided to any such officer, director, or employee,
or any immediate family member of any of the foregoing, any assets, services
or
facilities (except for compensation in the ordinary course for services provided
as an officer, director or employee).
(k) With
respect to each Ai Metrix Plan (i) there has been no prohibited transaction
(within the meaning of Section 406 of ERISA or Section 4975 of the Code and
other than a transaction that is exempt under a statutory or administrative
exemption) that could result in liability to Ai Metrix, (ii) no audit or
inquiry
by the Internal Revenue Service or United States Department of Labor is pending
or notice of which has been received and (iii) Ai Metrix has no liability
under
ERISA Section 502.
(l) Each
Ai
Metrix Plan has been operated in good faith compliance, consistent with the
changing guidance with respect to Section 409A of the Code. No Ai Metrix
Plan
provides for the gross-up of any taxes or penalties imposed by Section
409A(a)(1)(B) of the Code.
(m) As
used
in this Agreement, the following terms have the meanings given
below:
(i) “Controlled
Group Liability”
means
any and all liabilities (A) under Title IV of ERISA, (B) under
section 302 of ERISA, (C) under sections 412 and 4971 of the Code,
(D) resulting from a violation of the continuation coverage requirements of
section 601 et seq. of ERISA and section 4980B of the Code or the
group health plan requirements of Section 701 et seq. of ERISA, and
(E) under corresponding or similar provisions of foreign laws or
regulations, in each case other than pursuant to the Ai Metrix
Plans.
(ii) “ERISA”
means
the Employee Retirement Income Security Act of 1974, as amended.
(iii) “ERISA
Affiliate”
means,
with respect to any entity, trade or business, any other entity, trade or
business that is a member of a group described in Section 414(b), (c),
(m) or (o) of the Code or Section 4001(b)(1) of ERISA that
includes the first entity, trade or business, or that is a member of the
same
“controlled group” as the first entity, trade or business pursuant to
Section 4001(a)(14) of ERISA. As of the date hereof, Ai Metrix has no ERISA
Affiliates.
(iv) “Ai
Metrix Employee”
means
a
person who is, as of the Closing Date, an active or inactive employee of
Ai
Metrix.
(v) “Ai
Metrix Plans”
means
all employee benefit plans, programs and other arrangements providing benefits
to any current or former employee, officer, director or consultant (or any
beneficiary or dependent thereof) in respect of services provided to Ai Metrix,
and whether covering one person or more than one person, sponsored or maintained
by Ai Metrix or to which Ai Metrix contributes (or is obligated to contribute)
or has any liability. Without limiting the generality of the foregoing, the
term
“Ai Metrix Plans” includes each “employee pension benefit plan” as defined in
Section 3(2) of ERISA, each “employee welfare benefit plan” as defined in
Section 3(1) of ERISA, and each agreement, plan, program, fund, policy,
contract or arrangement (whether written or unwritten) providing compensation,
benefits, pension, retirement, superannuation, profit sharing, stock bonus,
stock option, stock purchase, phantom or stock equivalent, bonus, thirteenth
month, incentive, deferred compensation, hospitalization, medical, dental,
vision, vacation, life insurance, death benefit, sick pay, disability,
severance, termination, indemnity, redundancy pay, educational assistance,
holiday pay, housing assistance, moving expense reimbursement, fringe benefit
or
similar employee benefits covering any employee, former employee, or the
beneficiaries and dependents of any employee or former employee, regardless
of
whether it is mandated under local law, voluntary, private, funded, unfunded,
financed by the purchase of insurance, contributory or
non-contributory.
(vi) “Multiemployer
Plan”
means
a
“multiemployer plan” within the meaning of Section 4001(a)(3) of ERISA. As
of the date hereof, Ai Metrix has no Multiemployer Plans.
(vii) “Multiple
Employer Plan”
means
a
plan that has two or more contributing sponsors at least two of whom are
not
under “common control” within the meaning of Section 4063 of ERISA. As of
the date hereof, Ai Metrix has no Multiple Employer Plans.
(viii) “Qualified
Plan”
means
a
“qualified plan” within the meaning of Section 401(a) of the
Code.
4.15 Contracts.
(a) Section 4.15
of the
Ai Metrix Disclosure Schedule lists each, and Ai Metrix has provided SYS
with
correct and complete copies or summaries of each, Contract (“Contract”
means
all written or oral contracts, agreements, guarantees, licenses and executory
commitments, other than Ai Metrix Plans and real property leases) to which
Ai
Metrix is a party as of the date hereof and which falls within any one or
more
of the following categories:
(i) Contracts
that involve expenditures or receipts by Ai Metrix of more than US$10,000
per month;
(ii) joint
venture, partnership, strategic alliances and other Contracts (however named)
involving a sharing of profits, losses, costs or liabilities;
(iii) leases
for equipment or other personal property assets;
(iv) Contracts
with respect to which Ai Metrix received gross revenue of at least US$25,000
during the 12-month period from January 1, 2005 to December 31,
2005;
(v) Contracts
containing covenants purporting to limit the freedom of Ai Metrix to compete
in
any line of business or in any geographic area or to hire any individual
or
group of individuals (including, without limitation, any software license
agreements that authorize or permit Ai Metrix to use the applicable software
only in particular business lines, languages or geographic areas);
(vi) Contracts
providing for the settlement of disputed claims (including disputed dollar
amounts) with third parties;
(vii) powers
of
attorney that are currently outstanding;
(viii) Contracts
entered into other than in the ordinary course of business that contain or
provide for an express undertaking to be responsible for consequential
damages;
(ix) Contracts
which contain minimum purchase conditions in excess of US$25,000 or other
terms
that restrict or limit the purchasing relationships of Ai Metrix;
(x) Contracts
relating to any outstanding commitment for capital expenditures in excess
of
US$25,000;
(xi) Contracts
with any labor organization, union, employee representative or group of
employees;
(xii) indentures,
mortgages, promissory notes, loan agreements, guarantees of borrowed money,
letters of credit or other agreements, instruments or commitments for the
borrowing or the lending of money;
(xiii) Contracts
providing for the creation of any Encumbrance upon any of the assets of Ai
Metrix;
(xiv) Contracts
involving annual revenues to the business of Ai Metrix in excess of 5% of
Ai
Metrix’s annual revenues during either of its past two fiscal
years;
(xv) Contracts
providing for “earn-outs,” “savings guarantees,” “performance guarantees,” or
other contingent payments involving more than US$25,000 per year or US$50,000
over the term of the Contract;
(xvi) Contracts
with or for the benefit of (A) any corporate affiliate of Ai Metrix or
(B) any immediate family member of any stockholder, director or officer of
Ai Metrix;
(xvii) Contracts
that purport to limit the ability of the directors, officers, agents or
employees of Ai Metrix to engage in or continue any conduct, activity or
practice relating to the business of Ai Metrix, or assign to Ai Metrix any
rights to any invention, improvement or discovery;
(xviii) any
cost-sharing, tax-sharing or transfer pricing agreements between Ai Metrix
and
any related or unrelated party;
(xix) each
amendment, supplement and modification with respect to any of the foregoing;
and
(xx) any
agreement to enter into any of the foregoing.
(b) All
such
Contracts are valid, binding and enforceable obligations of Ai Metrix and,
to
the knowledge of Ai Metrix, each other party thereto, except to the extent
that
such enforceability may be subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting the enforcement of
creditors’ rights generally or by general equitable principles.
(c) Neither
Ai Metrix nor, to the knowledge of Ai Metrix, any other party thereto is
in
material violation of or in material default in respect of, nor has there
occurred an event or condition which with the passage of time or giving of
notice (or both) would constitute a material default under or permit the
termination of, any such Contract. Except as set forth on Section
4.15(c)
of the
Ai Metrix Disclosure Schedule, Ai Metrix has not received any written notice
or
other communication (i) claiming a breach on its part of any Contract or
(ii)
exercising or indicating an intent to exercise either (A) a right of offset
against amounts due to Ai Metrix under any Contract or (B) a right of
termination of any Contract. To the knowledge of Ai Metrix, Ai Metrix is
not
currently performing services under any Contract which is “at risk” (in that Ai
Metrix is or reasonably expects to incur costs under such Contract in excess
of
committed funds), other than with respect to normal and customary pre-sales
services that are provided in connection with attempts to obtain sales. Ai
Metrix is not party to any Contract allowing a right of return on a refundable
basis. To the knowledge of Ai Metrix, no employee of Ai Metrix has attempted
to
direct any Contract to any third party. Subject to the disclosure on
Section
4.15(c)
of the
Ai Metrix Disclosure Schedule, the Closing Date Balance Sheet fairly reflects
all liabilities with respect to sales commissions or other similar incentive
compensation earned, accrued or relating to any period prior to the Closing
Date.
(d) As
of the
date hereof, Ai Metrix is not engaged in any renegotiation of and, to the
knowledge of Ai Metrix, neither Ai Metrix nor any third party thereto has
any
outstanding rights to renegotiate, any material amounts paid or payable under
such Contracts.
4.16 Labor
Matters.
(a) Ai
Metrix
is not a party to any collective bargaining agreement or labor union contract
and is not required to consult or negotiate with any local works council,
union,
labor board or any Governmental Authority with authority over labor matters
concerning the transactions contemplated by the Agreement.
(b) Set
forth
in Section 4.16
of the
Ai Metrix Disclosure Schedule is a list of each agreement to which Ai Metrix
is
a party pursuant to which any individual employed by Ai Metrix or otherwise
performing services primarily for Ai Metrix receives compensation in excess
of
US$20,000 per annum, and Ai Metrix has furnished or made available to SYS
complete and correct copies of any such agreements in writing. Ai Metrix
has not
breached or otherwise failed to comply with any provisions of any agreement
set
forth therein and, to the knowledge of Ai Metrix, there are no grievances
outstanding thereunder. There is no labor strike, dispute or stoppage pending
or, to the knowledge of Ai Metrix, threatened against Ai Metrix. To the
knowledge of Ai Metrix, no campaign or other attempt for recognition is pending
by any labor organization or employee with respect to employees of Ai
Metrix.
(c) Ai
Metrix
is in material compliance with Applicable Laws and its own policies respecting
employment and employment practices, terms and conditions of employment,
wages
and hours, equal opportunity, equal pay, civil rights, labor relations,
immigration, occupational health and safety, plant closing, and payroll and
wage
taxes.
(d) Except
as
set forth on Section
4.16(d)
of the
Ai Metrix Disclosure Schedule, as of the date of this Agreement and except
as
required by Applicable Law, (i) Ai Metrix is not a party to any outstanding
employment agreements or contracts with officers, managers or directors (or
foreign equivalents) or Ai Metrix Employees (as defined below) that are not
terminable at will, or that provide for the payment of any bonus or commission;
and (ii) Ai Metrix is not a party to any agreement, policy or practice that
will require it to pay termination or severance pay to salaried, non-exempt
or
hourly Ai Metrix Employees after the Merger.
(e) Except
as
disclosed in Section
4.16(e)
of the
Ai Metrix Disclosure Schedule, to the knowledge of Ai Metrix, no Ai Metrix
Employee intends to terminate his or her employment with Ai Metrix.
4.17 Undisclosed
Liabilities.
Ai
Metrix has no liabilities or obligations of any nature, whether absolute,
accrued, contingent or otherwise and whether due or to become due, that,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect on Ai Metrix, other than (a) liabilities disclosed
to SYS in the Ai Metrix Financial Statements, (b) liabilities contemplated
by this Agreement and/or set forth in the Ai Metrix Disclosure Schedule,
and
(c) liabilities incurred or accrued after the date hereof in the ordinary
course of business consistent with past practice and not prohibited by this
Agreement.
4.18 Operation
of Ai Metrix’s
Business.
(a) Except
as
set forth on Section
4.18
of the
Ai Metrix Disclosure Schedule, since January 1, 2006 until the date of this
Agreement, Ai Metrix has not, except in the ordinary course of business
consistent with past practice, engaged in any of the actions described in
Sections 5.3(a)(i),
(ii), (iii), (iv), (v), (vi), (vii), (ix), (x), (xi), (xii), (xv), (xvii),
(xix), (xx) or (xxi).
(b) Except
as
set forth in Section
4.18(b)
of the
Ai Metrix Disclosure Schedule, since January 1, 2006 until the date of this
Agreement, Ai Metrix has not (i) received any formal complaint from any material
customer regarding the quality of Ai Metrix’s products or services, (ii)
received any notice from any material customer of Ai Metrix stopping or
materially decreasing such customer’s purchase of materials, products or
services from Ai Metrix, or (iii) received any notice from any material supplier
who is required for the continued operation of the business consistent with
past
practices that such supplier will stop or decrease the supply of materials,
products or services to Ai Metrix.
4.19 Permits.
Ai
Metrix is in possession of all material licenses, permits, easements, variances,
exemptions, consents, certificates, approvals and orders legally required
in
each jurisdiction to own, lease and operate its properties and to carry on
its
business as currently conducted, including under any applicable Environmental
Laws (as defined below) (collectively, the “Permits”).
Ai
Metrix has not received notice of any Action pending, and to the knowledge
of Ai
Metrix no Action is threatened, regarding any of the Permits which, if
successful, would reasonably be expected to have a Material Adverse Effect
on Ai
Metrix. Ai Metrix is not in material conflict with, or in material default
or
violation of, any of the Permits.
4.20 Real
Property.
(a) Ai
Metrix
does not currently own, and during the six (6) year period prior to the date
of
this Agreement has not owned, any United States Real Property Interest (as
such
term is defined in Section 897(c) of the Code and the Treasury regulations
promulgated thereunder) or any other real property.
(b) Section 4.20
of the
Ai Metrix Disclosure Schedule lists each lease for real property to which
Ai
Metrix is a party (each a “Lease”).
Ai
Metrix does not sublease any real property. Ai Metrix has delivered to SYS
a
correct and complete copy of each Lease. With respect to each
Lease:
(i) the
Lease
is legal, valid, binding, enforceable, and in full force and effect with
respect
to Ai Metrix, and, to the knowledge of Ai Metrix, with respect to the other
party thereto;
(ii) to
the
knowledge of Ai Metrix, no party to the Lease is in material breach or default
thereunder, and no event has occurred which, with notice or lapse of time,
would
constitute a material breach or default or permit termination, modification,
or
acceleration thereunder;
(iii) Ai
Metrix
has not, and to the knowledge of Ai Metrix no other party thereto has,
repudiated any provision thereof;
(iv) Ai
Metrix
has not received written notice of any disputes with respect thereto, and
Ai
Metrix is not party to any oral agreements or forbearance programs in effect
as
to the Lease;
(v) Ai
Metrix
has not assigned, transferred, conveyed, mortgaged, deeded in trust, or
encumbered any interest in the leasehold; and
(vi) the
facility leased under the Lease has received all approvals of Governmental
Authorities (including Permits) required to be received by Ai Metrix in
connection with the operation thereof and has been operated and maintained
by Ai
Metrix in accordance with Applicable Laws.
4.21 Environmental
Matters.
With
regard to environmental matters:
(a) The
properties, operations and activities of Ai Metrix are in compliance in all
material respects with all applicable Environmental Laws and all past
noncompliance of Ai Metrix with any applicable Environmental Laws has been
resolved without any pending, ongoing or future obligation, cost or
liability;
(b) Ai
Metrix
has not received notice of any pending Action by or before any court or
Governmental Authority under any Environmental Law, and to the knowledge
of Ai
Metrix no such Action is pending or threatened and there is no basis for
any
present or future Action against it that may reasonably be likely to lead
to any
material liability;
(c) There
has
been no release, discharge or emission of any Hazardous Material into the
environment in material violation of applicable Environmental Laws by Ai
Metrix
in connection with its currently leased or formerly leased properties or
operations; and
(d) There
has
been no material exposure in violation of applicable Environmental Laws of
any
person or property to any Hazardous Material (as defined below) in connection
with the properties, operations and activities of Ai Metrix.
(e) For
purposes of this Agreement, the term “Environmental
Laws”
means
all federal, state, local or foreign laws relating to pollution or protection
of
human health or the environment (including, without limitation, ambient air,
surface water, groundwater, land surface or subsurface strata), including,
without limitation, laws relating to emissions, discharges, releases or
threatened releases of Hazardous Materials into the environment, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials, as well as all
authorizations, codes, decrees, demands or demand letters, injunctions,
judgments, licenses, notices, orders, permits, plans or regulations issued,
entered, promulgated or approved thereunder.
(f) For
purposes of this Agreement, the term “Hazardous
Materials”
means
chemicals, pollutants, contaminants, or industrial, toxic or hazardous
substances or wastes as those terms are defined or identified in any
Environmental Law or regulated by any Permit required by applicable
Environmental Law, including but not limited to petroleum products or
by-products, asbestos, and polychlorinated materials.
4.22 Accounts
Receivable.
The
accounts and notes receivable reflected in the Ai Metrix Financial Statements
(a) arose from bona fide sales transactions in the ordinary course of
business and are payable on ordinary trade terms, (b) to the knowledge of
Ai Metrix, are binding obligations of the respective debtors enforceable
in
accordance with their terms, except to the extent that such enforceability
may
be subject to applicable bankruptcy, insolvency, reorganization, moratorium
and
similar laws affecting the enforcement of creditors’ rights generally or by
general equitable principles, and (c) are not subject to valid set-off or
counterclaim. Except as set forth on Section
4.22
of the
Ai Metrix Disclosure Schedule, the net accounts receivable set forth in the
Ai
Metrix Financial Statements and the Closing Date Balance Sheet reflect adequate
reserves for uncollectible accounts.
4.23 Insurance. Section 4.23
of the
Ai Metrix Disclosure Schedule lists all insurance policies pursuant to which
Ai
Metrix is presently insured and during each of the past three calendar years
has
been insured (each, an “Insurance
Policy”
and,
collectively, the “Insurance
Policies”).
Each
Insurance Policy is in full force and effect in accordance with its terms
and
all premiums reflected on invoices received by Ai Metrix to date have been
paid
in full. No written notice of cancellation with respect to any Insurance
Policy
has been received by Ai Metrix and, to the knowledge of Ai Metrix, there
is no
existing default or event which, with the giving of notice or lapse of time
or
both, would constitute a default thereunder. Ai Metrix is a “named insured” or
an “insured” under each Insurance Policy. Except as set forth on Section
4.23
of the
Ai Metrix Disclosure Schedule, Ai Metrix has not been refused any insurance,
nor
has the coverage of Ai Metrix been limited, by any insurance carrier to which
it
has applied for insurance or with which it has carried insurance during the
past
three years. Set forth in Section 4.23
of the
Ai Metrix Disclosure Schedule is (a) with respect to each Policy under
which the annual premium amount is fixed, the current amount of such premium,
and (b) with respect to each Policy under which the periodic or annual
premium amount is variable, the amount of the most recent periodic payment
made
and the calculation formula with respect to such premium.
4.24 Product
or Service Warranty.
(a) Each product or service sold or delivered by Ai Metrix has been in
material conformity with any applicable express and implied warranties,
(b) Ai Metrix has no current liability for damages in connection with any
such warranty (and there is no basis for any present or future Action against
it
that may reasonably be likely to lead to any liability) and (c) no product
or
service sold or delivered by Ai Metrix is subject to any guaranty, warranty
or
other indemnity beyond the applicable standard terms and conditions of sale
given by Ai Metrix, if any, or as required by Applicable Law.
4.25 Data
Protection Matters.
(a) Ai
Metrix
has not received notice of any existing or pending, and to the knowledge
of Ai
Metrix there is no threatened, Action against Ai Metrix by or before any
court
or Governmental Authority under any Data Protection Law (as defined below).
Ai
Metrix has never instituted a policy with respect to, or taken steps to comply
with or protect Personal Data (as defined below) as required under, any Data
Protection Law.
(b) As
used
in this Agreement, the term “Data
Protection Laws”
means
all federal, state, local or foreign laws, statutes, orders, rules, regulations,
policies or guidelines, or judgments, decisions or orders entered by any
Governmental Authority, relating to Personal Data.
(c) As
used
in this Agreement, the term “Personal
Data”
means
any and all information that Ai Metrix maintains or otherwise processes that
relates to an identified or identifiable natural person, including employees,
stockholders, customers, customers of customers, vendors, contractors, and
other
business partners of Ai Metrix, and any employees of or contractors to any
of
the foregoing.
4.26 Foreign
Corrupt Practices Act.
(a) Ai
Metrix
has not, to secure any improper advantage in order to obtain or retain business,
directly or indirectly offered, paid, given, or promised to pay, or authorized
the payment of, any money, offer, gift, or other thing of value,
to:
(i) an
officer or employee of any Governmental Authority, or any person acting in
an
official capacity for or on behalf of any Governmental Authority;
(ii) any
political party or official thereof;
(iii) any
candidate for political or political party office; or
(iv) any
other
individual or entity;
while
knowing or having reason to believe that all or any portion of such money
or
thing of value would be offered, given, or promised, directly or indirectly,
to
any person or entity listed in clauses
(i) - (iii) above.
(b) Ai
Metrix
maintains a system of internal accounting controls adequate to insure that
it
maintains no off-the-books accounts and that its assets are used only in
accordance with its management’s directives.
(c) No
product sold or service provided by Ai Metrix has been directly or, to the
knowledge of Ai Metrix, indirectly sold to or performed on behalf of Cuba,
Iraq,
Iran, Libya, or Sudan.
4.27 Government
Contracts.
With
respect to any Contract with any Governmental Authority, whether entered
into by
Ai Metrix as a prime contractor or subcontractor, there is, as of the date
of
this Agreement, no (a) civil fraud or criminal investigation by any
Governmental Authority, (b) suspension or debarment proceeding (or
equivalent proceeding) against Ai Metrix, (c) request by a Governmental
Authority for a contract price adjustment based on a claimed disallowance
by the
Defense Contract Audit Agency (or other applicable Governmental Authority)
or
claim of defective pricing, (d) dispute between Ai Metrix or any prime
contractor of Ai Metrix and a Governmental Authority which has resulted in
a
government contracting officer’s final decision where the amount in controversy
exceeds or is expected to exceed US$25,000, (e) claim or request for
equitable adjustment by Ai Metrix or any prime contractor of Ai Metrix against
a
Governmental Authority in excess of US$25,000, or (f) to the knowledge of
Ai Metrix, any claim or assertion by a Governmental Authority that Ai Metrix
or
any prime contractor of Ai Metrix may have violated applicable rules regarding
conflicts of interest or statutes, rules or regulations regarding the integrity
of the purchase process.
4.28 Relations
with Governments.
Neither
Ai Metrix, nor any director or officer of Ai Metrix, nor, to the knowledge
of Ai
Metrix, any agent or employee of Ai Metrix, has (a) used any funds for
unlawful contributions, gifts, entertainment or other unlawful expenses related
to political activity, (b) made any unlawful payment or offered anything of
value to foreign or domestic government officials or employees or to foreign
or
domestic government officials or employees or to foreign or domestic political
parties or campaigns, (c) made any other unlawful payment, or
(d) violated any applicable export control, money laundering or
anti-terrorism law or regulation.
4.29 No
Existing Discussions.
As of
the date of this Agreement, Ai Metrix is not engaged, directly or indirectly,
in
any negotiations or discussions with any other party with respect to an
acquisition of a controlling interest in Ai Metrix or a substantial portion
of
the assets of Ai Metrix.
4.30 Review
of SYS SEC Documents.
Each
Majority Stockholder has reviewed the SYS SEC Documents and has received
from
SYS any additional information which he, she or it has requested in connection
with the execution, delivery, and performance of this Agreement. Each Majority
Stockholder, by reason of his, her or its business or financial experience,
has
the capacity to protect his, her or its own interests in connection with
the
transactions described in this Agreement, provided that the foregoing shall
not
mitigate or reduce any liability of SYS or Merger Sub arising out of any
breach
by SYS or Merger Sub of the representations and warranties set forth in
Article
III
or any
other provision of this Agreement.
4.31 Interested
Party Transactions.
No
officer or director of Ai Metrix nor, to the knowledge of Ai Metrix, any
person
related by blood or marriage or other person in which any such person has
or has
had an interest, has directly or indirectly (a) any interest in any entity
that
furnished or sold, or furnishes or sells, services or products that Ai Metrix
furnishes or sells, or proposes to furnish or sell, or (b) any interest in
any
entity that purchases from or sells or furnishes to Ai Metrix any goods or
services, or (c) any beneficial interest in any contract, agreement, or
commitment of Ai Metrix; provided,
however,
that
ownership of no more than 2.5% of the outstanding voting stock of a publicly
traded corporation shall not be deemed an “interest in any entity” for purposes
of this Section
4.31.
Section
4.31
of the
Ai Metrix Disclosure Schedule contains a description of all indebtedness
which
currently exists between Ai Metrix and any stockholder, director, or officer
of
Ai Metrix.
4.32 No
Other Warranties.
There
are no representations and warranties made by SYS or Merger Sub other than
the
representations and warranties set forth in Article III and in the other
documents and instruments delivered by SYS on
the
date hereof or at the Closing.
Ai
Metrix and the Ai Metrix Stockholders are not relying upon any representations
or warranties other than the representations and warranties set forth in
Article
III of this Agreement and in the other documents and instruments delivered
by
SYS on
the
date hereof or at the Closing.
ARTICLE
V
COVENANTS
OF THE PARTIES
5.1 Mutual
Covenants.
(a) Reasonable
Efforts; Notification. Each
of
the parties agrees to use all commercially reasonable efforts to take, or
cause
to be taken, all actions, and to do, or cause to be done, and to assist and
cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the Merger and the other transactions contemplated by this
Agreement, including (A) the obtaining of all other necessary actions or
nonactions, waivers, consents, licenses, permits, authorizations, orders
and
approvals from Governmental Authorities and the making of all other necessary
registrations and filings (including other filings with Governmental
Authorities, if any), (B) the execution and delivery of any additional
instruments necessary to consummate the transactions contemplated by this
Agreement and (C) in the case of Ai Metrix, the obtaining of all consents,
approvals or waivers from third parties set forth in Section
4.5
of the
Ai Metrix Disclosure Schedule. Notwithstanding anything to the contrary in
this
Agreement, none of the parties shall be required to waive any of the conditions
of the Merger set forth in Article
VI
as they
apply to such party.
(b) Public
Announcements.
The
initial press release concerning the Merger and the transactions contemplated
hereby shall be a joint press release and shall be issued upon the mutual
agreement of the parties, on or after the date of this Agreement. SYS and
Ai
Metrix shall consult with each other before issuing, and give each other
the
opportunity to review and comment upon, any other press release or public
statements with respect to the transactions contemplated by this Agreement,
including the Merger, and shall not issue any such press release or make
any
such public statement prior to such consultation, except as may be required
by
Applicable Law, court process or by obligations pursuant to any listing
agreement of SYS with any national securities exchange or national securities
quotation system. In addition to the foregoing, neither SYS nor Ai Metrix
shall
issue any press release or otherwise make any public statement or disclosure
concerning non-public information relating to the other party’s business,
financial condition or results of operations without the consent of the other
party, which consent shall not be unreasonably withheld, conditioned or delayed,
or except as required by Applicable Law.
(c) Notices
of Certain Events. Each
party hereto shall promptly notify the other parties in writing of:
(i) the
receipt by such party or any of such party’s subsidiaries of any notice or other
communication from any person alleging that the consent of such person is
or may
be required in connection with the transactions contemplated by this
Agreement;
(ii) subject
to any applicable legal restrictions, the receipt by such party or any of
such
party’s subsidiaries of any notice or other communication from any Governmental
Authority in connection with the transactions contemplated by this
Agreement;
(iii) such
party’s obtaining knowledge of any Actions commenced or threatened against,
relating to or involving or otherwise affecting any of the other parties
hereto,
as the case may be, or, with respect to SYS or Ai Metrix, any of their
respective subsidiaries, which relate to the consummation of the transactions
contemplated by this Agreement; and
(iv) such
party’s obtaining knowledge of the occurrence, or failure to occur, of any event
which occurrence or failure to occur will be likely to cause the conditions
set
forth in Article VI
not to
be satisfied; provided,
however,
that no
such notification shall affect the representations, warranties or obligations
of
the parties or the conditions to the obligations of the parties hereunder,
or
limit or otherwise affect the remedies available hereunder to the party
receiving such notice.
(d) Notification.
Between
the date of this Agreement and the Closing Date, each party hereto shall
promptly notify the other parties hereto in writing if such party becomes
aware
of any fact or condition that causes or constitutes a breach in any of its
representations and warranties as of the date of this Agreement or any other
date applicable to a representation or warranty as set forth herein. Should
any
such fact or condition require any change in the Ai Metrix Disclosure Schedule,
Ai Metrix shall promptly deliver to SYS a written statement specifying such
change. Such delivery
will not affect any rights of any party under any other provision of this
Agreement. During the same period, each party shall promptly notify the other
parties in writing if such party becomes aware of the occurrence of any breach
of any covenant of such party in this Agreement or the occurrence of any
event
that may make the satisfaction of the conditions in Article VI
impossible or unlikely.
5.2 Covenants
of SYS.
(a) Employees
and Employee Benefits.
From and
after January 1, 2007, each continuing Ai Metrix employee shall be entitled
to
participate in all SYS employee benefit plans and incentive plans in a manner
and to the extent consistent with their position. From and after the Effective
Time, SYS shall, to the extent the necessary records are reasonably available
to
it, treat all service by Ai Metrix employees with Ai Metrix (or any predecessor
thereto) prior to the Effective Time for all purposes as service with SYS
(except for purposes of benefit accrual under defined benefit pension plans
or
to the extent such treatment would result in duplicative accrual on or after
the
Closing Date of benefits for the same period of service).
(b) SYS
Stockholders Meeting.
(i) If
the
Earnout Consideration is required to be paid under Section
2.5,
SYS
shall duly call, give notice of, convene and hold a special or annual meeting
of
SYS stockholders (the “SYS
Stockholders Meeting”)
as
soon as reasonably practicable to seek the SYS Stockholder Approval. In
connection with the SYS Stockholders Meeting, the Board of Directors of SYS
shall recommend that the stockholders of SYS vote in favor of the SYS
Stockholder Approval; provided,
however,
that
the SYS Board may withdraw, modify or amend such recommendation if the SYS
Board
determines in good faith that failure to take such actions would violate
or
conflict with its fiduciary duties under Applicable Law.
(ii) In
connection with the foregoing, SYS shall within thirty (30) days after the
EBITDA Determination Date prepare and file with the Commission a preliminary
proxy statement relating to the SYS Stockholder Approval necessary for the
issuance of the Earnout Consideration (as amended or supplemented from time
to
time, the “Proxy
Statement”).
Each
of SYS and the Surviving Corporation shall furnish all information that is
required to be included in the Proxy Statement in connection with the SYS
Stockholder Approval contemplated by this Agreement. To the extent any
information specifically regarding the Majority Stockholders is required
to be
included in such Proxy Statement, each Majority Stockholder shall furnish
such
information about itself. Each of SYS and the Surviving Corporation shall
use
its commercially reasonable efforts to respond as promptly as practicable
to any
comments of the Commission with respect to the Proxy Statement, and SYS shall
use its commercially reasonable efforts to cause the definitive Proxy Statement
to be mailed to SYS’s stockholders as promptly as reasonably practicable after
the Commission clears the Proxy Statement. SYS shall promptly notify the
Stockholder Representative upon the receipt of any comments from the Commission
or its staff or any request from the Commission or its staff for amendments
or
supplements to the Proxy Statement and shall provide the Stockholder
Representative with copies of all correspondence between it and its
representatives, on the one hand, and the Commission and its staff, on the
other
hand, relating to the Proxy Statement. If at any time, any information relating
to SYS, Merger Sub or the Surviving Corporation or any of their respective
affiliates, officers or directors, should be discovered by SYS or the Surviving
Corporation which should be set forth in an amendment or supplement to the
Proxy
Statement, so that the Proxy Statement shall not contain any untrue statement
of
a material fact or omit to state any material fact required to be stated
therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading, SYS shall promptly
notify the Stockholder Representative, and an appropriate amendment or
supplement describing such information shall be filed with the Commission
and,
to the extent required by applicable law, disseminated to the stockholders
of
SYS. Notwithstanding anything to the contrary stated above, prior to filing
or
mailing the Proxy Statement (or any amendment or supplement thereto), SYS
shall
provide the Stockholder Representative a reasonable opportunity to review
and
comment on the Proxy Statement (at the Stockholder Representative’s cost and
expense) and shall consider in good faith for inclusion in the Proxy Statement
comments reasonably and promptly proposed by the Stockholder
Representative.
(iii) The
Proxy
Statement filed by SYS will comply as to form in all material respects with
the
requirements of the Securities Exchange Act of 1934, as amended, and the
rules
and regulations promulgated thereunder. SYS hereby covenants and agrees that
none of the information included or incorporated by reference in the Proxy
Statement furnished by SYS will, in the case of the Proxy Statement, at the
date
it is first mailed to SYS’s stockholders or at the time of the SYS Stockholders
Meeting or at the time of any amendment or supplement thereof, or at the
date it
is first filed with the Commission, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading. Each of the Majority Stockholders
hereby covenants and agrees that none of the information furnished by such
Majority Stockholder regarding itself pursuant to Section
5.2(b)(ii)
will
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading.
(c) Registration.
(i) If
at any
time prior
to
the registration of the Registrable Securities (as defined below) under
Section
5.2(c)(iii)
SYS
proposes to file a registration statement with respect to SYS Common Stock
under
the Securities Act in a primary registration on behalf of SYS or in a secondary
registration on behalf of holders of such securities, other than a registration
statement relating to employee benefit plans or corporate reorganizations
or
other transactions covered by Rule 145 promulgated under the Securities Act
or a registration on any registration form that does not permit secondary
sales,
SYS shall give written notice as soon as practicable, but not later than
fifteen
(15) business days prior to the proposed filing date of the registration
statement, to the Stockholder Representative of its intention to file such
registration statement and shall offer to include in such registration statement
such number of outstanding shares of SYS Common Stock issued pursuant to
this
Agreement as part of the Merger Consideration and Earnout Consideration,
if any
(collectively, the “Registrable
Securities”),
with
respect to which SYS has received a written request from the Ai Metrix
Stockholders for inclusion therein within ten (10) business days after the
receipt by the Stockholder Representative of notice from SYS. All registrations
requested pursuant to this Section
5.2(c)(i)
are
referred to herein as “Piggyback
Registrations.”
(ii) If
a
Piggyback Registration involves an underwriting, SYS shall so advise the
Stockholder Representative as a part of the written notice given pursuant
to
Section 5.2(c)(i).
In such
event, the right of an Ai Metrix Stockholder to participate in that Piggyback
Registration shall be conditioned upon such Ai Metrix Stockholder’s
participation in such underwriting. Each such Ai Metrix Stockholder shall
enter
into an underwriting agreement in customary form with the representative
of the
underwriter or underwriters selected by SYS, but each such Ai Metrix Stockholder
shall be entitled to withdraw its Registrable Securities from such registration
prior to its effective date in the event that such Ai Metrix Stockholder
shall
disapprove of any of the terms of the related underwriting agreement. If
the
underwriter(s) for the offering being registered by SYS shall determine in
good
faith and advise SYS that in its/their opinion the number of Registrable
Securities requested to be included in such registration exceeds the number
that
can be sold in such offering without adversely affecting the distribution
of
such securities by SYS, SYS shall include in such registration (A) first,
the securities that SYS proposes to sell, if any, (B) second, the securities
with demand registration rights requesting such registration, if any, (C)
third,
to the extent possible, the Registrable Securities requested to be included
in
such registration, apportioned pro rata among the holders of such securities,
and (D) fourth, to the extent possible, any other securities with piggyback
registration rights requesting to be included therein.
(iii) To
the
extent not previously registered under Section
5.2(c)(i),
SYS
shall use its commercially reasonable efforts to prepare and, within sixty
(60)
days after the (A) the SYS Stockholders Meeting (if the Earnout Consideration
is
required to be paid under Section
2.5)
or
(B) the EBITDA Determination Date (if the Earnout Consideration is not
required to be paid under Section
2.5),
as
applicable, file with the Commission a registration statement on any appropriate
form covering the resale of all outstanding Registrable Securities. SYS shall
use commercially reasonable efforts to have the registration statement declared
effective by the Commission as soon as reasonably practicable after such
filing.
(iv) SYS
shall
(A) prepare and file with the Commission and promptly notify the Ai Metrix
Stockholders of the filing of any amendment or supplement to such registration
statement or prospectus as may be necessary to correct any statement therein
or
omission therefrom if, at any time when a prospectus relating to the Registrable
Securities is required to be delivered under the Securities Act, any event
with
respect to SYS shall have occurred as a result of which any prospectus would
include an untrue statement of material fact or omit to state any material
fact
necessary to make the statements therein not misleading; (B) prepare and
file
with the Commission such amendments and supplements to such registration
statement or prospectus as may be necessary to keep such registration statement
or prospectus effective until the earlier of (x) the date on which all
securities covered by such Registration Statement have been disposed of and
(y)
one hundred eighty (180) days after the effective date of such registration
statement, and comply with the provisions of the Securities Act with respect
to
the disposition of the Registrable Securities covered by such registration
statement during such effective period in accordance with the intended methods
of disposition by the sellers thereof set forth in such registration statement;
(C) in case the Ai Metrix Stockholders are required to deliver a prospectus,
promptly prepare such amendment or amendments to such registration statement
and
such prospectus or prospectuses as may be necessary to permit compliance
with
the requirements of Section 10(a)(3) of the Securities Act; (D) advise the
Ai
Metrix Stockholders promptly after SYS shall receive notice or obtain knowledge
of the issuance of any stop order by the Commission suspending the effectiveness
of any such registration statement or amendment thereto or of the initiation
or
threatening of any proceedings for that purpose, and promptly use commercially
reasonable efforts to prevent the issuance of any stop order or to obtain
its
withdrawal if such stop order should be issued; (E) use commercially reasonable
efforts to qualify such Registrable Securities for sale under the securities
or
“blue sky” laws of such states within the United States as the Ai Metrix
Stockholders may reasonably designate, except that SYS shall not be required
in
connection therewith or as a condition thereto to qualify to do business
in any
such state or to take any action that would subject it to general service
of
process in any such jurisdiction where it is not then so subject; (F) furnish
to
the Ai Metrix Stockholders, as soon as available, copies of any such
registration statement and each preliminary and final prospectus, or supplement
or amendment required to be prepared with respect thereto, all in such
quantities as they may from time to time reasonably request; and (G) cooperate
with the holders of Registrable Securities to facilitate the timely preparation
and delivery of certificates (not bearing any restrictive legends) representing
Registrable Securities to be sold under such registration, and enable such
Registrable Securities to be in such denominations and registered in such
names
as such holders may reasonably request.
(v) The
Ai
Metrix Stockholders agree that, upon receipt of any notice from SYS of the
happening of any event of the kind described in Section
5.2(c)(iv)(A),
they
will forthwith discontinue the disposition of the Registrable Securities
until
they have received copies of the supplemented or amended prospectus contemplated
by Section
5.2(c)(iv)(A),
or
until the Ai Metrix Stockholders are advised in writing by SYS that the use
of
the prospectus may be resumed, and have received copies of any additional
or
supplemental filings that are incorporated by reference in the prospectus,
and,
if so directed by SYS, the Ai Metrix Stockholders will deliver to SYS all
copies, other than permanent file copies, then in the Ai Metrix Stockholders’
possession of the prospectus covering the Registrable Securities current
at the
time of receipt of such notice; provided that the obligations of SYS under
Section
5.2(c)(iv)
with
respect to maintaining any registration statement current and effective shall
be
extended by a period of days equal to the period such suspension is in
effect.
(vi) The
Ai
Metrix Stockholders shall furnish information to SYS concerning the Ai Metrix
Stockholders’ holdings of securities of SYS and the proposed method of sale or
other disposition of the Registrable Securities and such other information
and
undertakings relating to the Ai Metrix Stockholders as shall be reasonably
required in connection with the preparation and filing of any registration
statement and any amendments thereto covering all or part of the Registrable
Securities in order to assist SYS in complying with the Securities Act and
the
Exchange Act. The Ai Metrix Stockholders further agree to enter into such
undertakings and take such other action relating to the conduct of the proposed
offering that SYS may reasonably request as being necessary to assist SYS
in
complying with the federal and state securities laws or otherwise to effectuate
the offering and sale of the Registrable Securities hereunder by the Ai Metrix
Stockholders, so long as such undertakings and actions would not materially
reduce the benefit of such offering and sale to the Ai Metrix Stockholders.
The
failure of any Ai Metrix Stockholder to furnish any information or documents
or
take any actions in accordance with the foregoing shall not affect the
obligations of SYS under this Section 5.2(c) to any remaining sellers who
furnish such information and documents or take such actions.
(vii) SYS
shall
pay all registration expenses incident to the registration of the Registrable
Securities, including all registration and filing fees, fees and expenses
of
complying with securities or blue sky laws, word processing, duplicating
and
printing expenses, and fees and expenses of counsel for SYS and of its
independent public accountants. With respect to sales of Registrable Securities,
the Ai Metrix Stockholders shall pay all underwriting discounts and commissions
and fees, and all expenses of any separate legal counsel retained by or on
behalf of any or all of the Ai Metrix Stockholders, if any.
(d) Director
and Officer Liability.
(i) Ai
Metrix
shall, prior to the Closing, exercise the six (6) year tail on the directors’
and officers’ liability insurance policy currently maintained by Ai Metrix,
which exercise shall cause the persons currently serving as officers and
directors of Ai Metrix to be covered for a period of no less than six (6)
years
following the Effective Time with respect to acts or omissions occurring
prior
to the Effective Time which were committed by such officers and directors
in
their capacity as such; provided,
however,
that
the cost for such insurance for such six (6)-year period shall not exceed
US$25,000 in the aggregate. After the Closing and for a period of six years
thereafter, the Surviving Corporation and SYS agree to maintain such policy
in
effect (provided that the Surviving Corporation may substitute therefor policies
of at least the same coverage and amounts containing terms and conditions
which
are not less advantageous than such policy).
(ii) In
the
event that the Surviving Corporation, SYS or any of their respective successors
or assigns (i) consolidates with or merges into any other Person and shall
not
be the continuing or surviving corporation or entity of such consolidation
or
merger, or (ii) transfers or conveys all or substantially all of its properties
and assets to any Person, then, and in each such case, to the extent necessary,
proper provision shall be made so that the successors and assigns of the
Surviving Corporation or SYS, as applicable, assume the obligations set forth
in
this Section 5.2(d).
(iii) In
addition to the foregoing, all rights to indemnification existing in favor
of
those Persons who are directors and officers of Ai Metrix as of the date
of this
Agreement (the “Indemnified
Officers”)
for
their acts and omissions occurring prior to the Effective Time, as provided
in
the Ai Metrix Certificate and Ai Metrix Bylaws (as in effect on the date
of this
Agreement, which shall be the forms disclosed by Ai Metrix to SYS prior to
the
date of this Agreement), shall survive the Merger and shall be observed by
the
Surviving Corporation to the fullest extent available under Delaware law
for a
period of six (6) years following the Effective Time. During such period,
the
Surviving Corporation shall not, and SYS shall not cause the Surviving
Corporation to, amend such provisions of the Surviving Corporation’s Certificate
of Incorporation and Bylaws in a manner that would adversely effect the rights
of such Indemnified Officers.
(iv) The
provisions of this Section 5.2(d) are intended to be for the benefit of,
and
shall be enforceable by, the directors and officers covered by the policy
described in clause (i) above.
5.3 Covenants
of Ai Metrix and the Ai Metrix Stockholders.
(a) Conduct
of Ai Metrix’s Operations.
During
the period from the date of this Agreement to the Closing Date, or the date,
if
any, on which this Agreement is earlier terminated pursuant to Section 8.1,
and
except as may otherwise be agreed in writing by the parties, Ai Metrix shall
conduct its operations in the ordinary course of business consistent with
past
practice, except as expressly contemplated by this Agreement, and shall use
its
commercially reasonable efforts to maintain and preserve its business
organization and its rights and franchises and to retain the services of
its
officers and key employees and maintain relationships with customers, suppliers,
lessees, licensees and other third parties, and to maintain all of its operating
assets in their current condition (normal wear and tear excepted). Without
limiting the generality of the foregoing, during the period from the date
of
this Agreement to the Closing Date, or the date, if any, on which this Agreement
is earlier terminated pursuant to Section 8.1,
Ai
Metrix shall not, except as otherwise expressly contemplated by this Agreement
and the transactions contemplated hereby or with the prior written consent
of
SYS:
(i) do
or
effect any of the following actions with respect to its securities:
(A) adjust, split, combine or reclassify its capital stock, (B) make,
declare or pay any dividend or distribution on, or directly or indirectly
redeem, purchase or otherwise acquire, any shares of its capital stock or
any
securities or obligations convertible into or exchangeable for any shares
of its
capital stock, (C) grant any person any right or option to acquire any
shares of its capital stock, (D) issue, deliver or sell or agree to issue,
deliver or sell any additional shares of its capital stock or any securities
or
obligations convertible into or exchangeable or exercisable for any shares
of
its capital stock or such securities (except pursuant to the exercise of
Ai
Metrix options that are outstanding as of the date hereof), (E) enter into
any agreement, understanding or arrangement with respect to the sale, voting,
registration or repurchase of its capital stock, provided,
however,
that Ai
Metrix is hereby expressly permitted to take all lawful actions necessary
in
order to (x) cause all outstanding options to be exercised or cancelled,
(y) cause all outstanding warrants to be exercised or cancelled and
(z) cause any outstanding convertible debt instruments to become
non-convertible;
(ii) directly
or indirectly sell, transfer, lease, pledge, mortgage, encumber or otherwise
dispose of any of its property or assets other than in the ordinary course
of
business consistent with past practice;
(iii) adopt
or
propose any changes in the Ai Metrix Certificate or the Ai Metrix
Bylaws;
(iv) merge
or
consolidate with any other person;
(v) acquire
a
material amount of assets or capital stock of any other person outside of
the
ordinary course of business consistent with past practice;
(vi) make
any
borrowings, incur, create, assume or otherwise become liable for any
indebtedness for borrowed money or assume, guarantee, endorse or otherwise
as an
accommodation, become responsible or liable for the obligations of any other
individual, corporation or other entity, other than in the ordinary course
of
business, consistent with past practice;
(vii) create
any subsidiaries;
(viii) enter
into or modify any employment, severance, termination or similar agreements
or
arrangements with, or grant any bonuses, salary increases, severance or
termination pay to, any officer, director, consultant or employee other than
pursuant to Applicable Law or contractual commitments existing as of the
date
hereof in the ordinary course of business consistent with past practice
(provided
past
practices shall not be deemed to include actions taken in connection with
the
Merger) or grant any increase in the compensation or benefits of directors,
officers, employees, consultants or agents of Ai Metrix or grant, re-price
any
Ai Metrix options or warrants or other equity-based awards, other than increases
in the ordinary course of business consistent with past practice;
(ix) enter
into, adopt or amend any Ai Metrix Plan, except as may be required by Applicable
Law;
(x) take
any
action that could give rise to severance benefits payable to any officer
or
director of Ai Metrix as a result of consummation of the transactions
contemplated by this Agreement;
(xi) change
any method or principle of accounting in a manner that is inconsistent with
past
practice except to the extent required by generally accepted accounting
principles as advised by Ai Metrix’s regular independent
accountants;
(xii) settle
any Actions, whether now pending or hereafter made or brought other than
settlement in the ordinary course of business or in accordance with their
terms,
of liabilities disclosed, reflected or reserved against in the most recent
Ai
Metrix financial statements (or the notes thereto) or incurred since the
date of
such financial statements in the ordinary course of business;
(xiii) modify,
extend, amend or terminate, or waive, release or assign any rights or claims
with respect to, any Contract set forth in Section 4.15
of the
Ai Metrix Disclosure Schedule;
(xiv) enter
into any confidentiality agreements or arrangements other than in the ordinary
course of business consistent with past practice;
(xv) write
up,
write down or write off the book value of any assets, except for depreciation
and amortization in accordance with generally accepted accounting principles
consistently applied;
(xvi) incur
or
commit to any capital expenditures;
(xvii) make
any
payments in respect of policies of directors’ and officers’ liability insurance
(premiums or otherwise) other than premiums paid in respect of its current
or
renewed or replacement policies;
(xviii) take
any
other action that could likely result in the representations and warranties
set
forth in Article IV
becoming
false or inaccurate in any material respect;
(xix) enter
into or carry out any other material transaction other than in the ordinary
and
usual course of business;
(xx) permit
or
cause any subsidiary to do any of the foregoing or agree or commit to do
any of
the foregoing;
(xxi) make
or
revoke any Tax election, file any amended Tax Return, or settle any audit
or
other proceeding with any Tax authority;
(xxii) enter
into any agreement to purchase, or to lease for a term in excess of one year,
any real property; or
(xxiii) agree
in
writing or otherwise to take any of the foregoing actions;
provided,
however, that, notwithstanding anything set forth in this Section 5.3(a)
to the
contrary, during the period from the date of this Agreement to the Closing,
Ai
Metrix shall be entitled to (i) purchase the insurance described in Section
5.2(d), (ii) pay all transaction expenses incurred in connection with this
Agreement and the transactions contemplated hereby, and (iii) set aside
US$25,000 in the aggregate for the payment of any expenses incurred by the
Stockholder Representative in connection with its duties described herein
and in
the Voting Agreement and the Escrow Agreement, and the transactions contemplated
hereby and thereby.
(b) Access
to Information; Confidentiality.
Upon
reasonable notice, Ai Metrix shall afford to the officers, employees,
accountants, counsel, financial advisors and other representatives of SYS
reasonable access during normal business hours, during the period prior to
the
Effective Time or the date, if any, on which this Agreement is earlier
terminated pursuant to Section 8.1,
to such
of its properties, books, contracts, commitments, records, all other information
and data, officers and employees as SYS may reasonably request and, during
such
period, Ai Metrix shall furnish promptly to SYS (i) a copy of each report,
schedule, and other document filed, published, announced
or received by it during such period pursuant to the requirements of Applicable
Laws (other than documents which Ai Metrix is not permitted to disclose under
Applicable Laws), and (ii) consistent with its legal obligations, all other
information concerning it and its business, properties and personnel as SYS
may
reasonably request. SYS shall hold any such information in confidence to
the
extent required by, and in accordance with, the provisions of the
confidentiality agreement between SYS and Ai Metrix. SYS shall use commercially
reasonable efforts to minimize disruption to the business of Ai Metrix which
may
result from the requests for data and information hereunder. All requests
for
access and information shall be coordinated through senior executives of
the
parties to be designated.
(c) No
Solicitation.
Until
the consummation of the Merger or the termination of this
Agreement:
(i) Ai
Metrix
will not, and will not permit or cause any subsidiary or any of the directors
or
officers of Ai Metrix or any subsidiary, and will direct Ai Metrix’s employees,
agents and representatives not to, directly or indirectly, solicit, initiate,
encourage, or furnish or disclose non-public information in furtherance of,
or
otherwise facilitate any inquiries that may be reasonably expected to lead
to,
the making of any proposal or offer with respect to a merger, reorganization,
share exchange, consolidation, or similar transaction involving, or any purchase
of 10% or more of the assets or any equity of, Ai Metrix or any subsidiary
or
any other business combination other than the transactions contemplated by
this
Agreement (any such proposal or offer, an “Acquisition
Proposal”).
(ii) Ai
Metrix
will not, and will not permit or cause any subsidiary or any of the officers
or
directors of it or any subsidiary to, and shall direct its and such subsidiary’s
employees, agents and representatives not to, directly or indirectly, engage
in
any negotiations concerning, or provide any confidential information or data
to,
or have any discussions with, any person relating to an Acquisition Proposal,
whether such Acquisition Proposal arises or has arisen before or after the
date
of this Agreement, or otherwise facilitate any effort or attempt to make
or
implement an Acquisition Proposal.
(iii) Ai
Metrix
will immediately cease all existing activities, discussions and negotiations
with any parties conducted heretofore with respect to any Acquisition Proposal
and request the return of all confidential information regarding Ai Metrix
provided to any such parties prior to the date hereof pursuant to the terms
of
any confidentiality agreements or otherwise. Ai Metrix will notify SYS
immediately if any such inquiries, proposals, or offers are received by,
any
such information is requested from, or any such discussions or negotiations
are
sought to be initiated or continued with, any of its representatives indicating,
in connection with such notice, the name of such person and the material
terms
and conditions of any proposals or offers.
(d) Release.
Each
Majority Stockholder (who
for
purposes of this Section
5.3(d)
shall be
referred to as a “Releasor”)
on
behalf of Releasor and Releasor’s successors, heirs, and assigns, hereby fully
and forever releases and discharges Ai Metrix and SYS and their respective
successors, heirs, and assigns, and their respective subsidiaries, affiliates,
officers, directors, agents, representatives, employees and attorneys from
any
and all claims, demands, actions, agreements, suits, causes of action,
obligations, controversies, debts, costs, attorneys’ fees, expenses, damages,
judgments, orders and liabilities of whatever kind or nature (collectively,
“Claims”)
in
law, equity or otherwise, past, present or future, known or unknown, suspected
or unsuspected, from the beginning of time through and until the execution
of
this Agreement arising out of such Releasor’s capacity as a stockholder of Ai
Metrix, excepting only (i) any Claims arising out of this Agreement and
enforcement thereof and (ii) Claims for indemnification and/or contribution
made, asserted or sought by any officer or director of Ai Metrix to which
such
officers and directors are entitled under the liability insurance and
indemnification provisions provided for in Section
5.2(d)
hereof.
(i) Each
Releasor acknowledges that there is a possibility that subsequent to the
execution of this Agreement, he or she will discover facts or incur or suffer
claims that were unknown or unsuspected at the time this Agreement was executed,
and which if known by such Releasor at that time may have materially affected
such Releasor’s decision to execute this Agreement. Each Releasor acknowledges
and agrees that by reason of this Section
5.3(d),
he or
she is assuming any risk of such unknown facts and such unknown and unsuspected
claims.
(ii) Each
Releasor has been advised of the existence of Section 1542 of the California
Civil Code (“Section
1542”),
which
provides:
(A) A
GENERAL
RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT
TO
EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY
HIM
MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.
(iii) Notwithstanding
such provisions, this Section
5.3(d)
shall
constitute a full release in accordance with its terms. Each Releasor hereby
knowingly and voluntarily waives the provisions of Section 1542, as well
as any
other statute, law or rule of similar effect.
(e) Transaction
Expenses
.
At
least two (2) business days prior to the Closing Date, Ai Metrix shall provide
to SYS an estimated itemized list of all fees, costs and expenses that have
been
incurred or that are to be incurred by Ai Metrix in connection with the
negotiation, execution and delivery of this Agreement and the transactions
contemplated by this Agreement, including any fees, costs or expenses payable
to
Ai Metrix’s outside legal counsel or to any financial advisor, accountant or
other person who performed services for or on behalf of Ai Metrix, or who
is
otherwise entitled to any compensation from Ai Metrix in connection with
this
Agreement or any of the transactions contemplated by this Agreement
(collectively, the “Transaction
Expenses”).
Ai
Metrix shall pay the Transaction Expenses prior to the Closing, but, in
accordance with Section 2.5, payment of such Transaction Expenses shall not
be
taken into account in any calculation of EBITDA upon which the Earnout
Consideration will be determined.
ARTICLE
VI
CONDITIONS
6.1 Conditions
to the Obligations of Each Party.
The
obligations of SYS, Merger Sub, Ai Metrix and the Majority Stockholders to
consummate the Merger shall be subject to the satisfaction or waiver of the
following conditions:
(a) No
provision of any Applicable Law or regulation and no judgment, injunction,
order, decree, ruling, assessment or arbitration award of any Governmental
Authority or arbitrator and no Contract with any Governmental Authority
pertaining to compliance with Applicable Law shall prohibit or enjoin the
consummation of the Merger or the transactions contemplated by this Agreement
or
limit the ownership or operation by SYS, Ai Metrix or any of their respective
subsidiaries of any material portion of the Business.
(b) There
shall not be pending any Action (i) challenging or seeking to restrain or
prohibit the consummation of the Merger or any of the other transactions
contemplated by this Agreement, (ii) seeking to impose limitations on the
ability of SYS to acquire or hold, or exercise full rights of ownership of,
any
shares of capital stock of Ai Metrix, or (iii) seeking to prohibit or limit
the
ownership or operation by SYS, Ai Metrix or any of their respective subsidiaries
of any material portion of the Business.
6.2 Conditions
to Obligations of Ai Metrix and the Majority
Stockholders.
The
obligations of Ai Metrix and the Majority Stockholders to consummate the
Merger
and the other transactions contemplated hereby shall be subject to the
fulfillment of the following conditions unless waived by Ai Metrix:
(a) Each
of
the representations and warranties of SYS and Merger Sub contained in this
Agreement shall be true and correct in all material respects, in each case
on
the date of this Agreement and on and as of the Closing Date as though made
on
and as of the Closing Date (except for representations and warranties made
as of
some other specified date, in which case as of such specified
date).
(b) Each
of
SYS and Merger Sub shall have performed or complied in all material respects
with all agreements and covenants required to be performed by it under this
Agreement at or prior to the Effective Time.
(c) Each
of
SYS and Merger Sub shall have furnished the Majority Stockholders with a
certificate dated the Closing Date signed on behalf of it by the Chairman,
President or any Vice President to the effect that the conditions set forth
in
Sections
6.2(a) and (b) have
been satisfied.
(d) SYS
shall
have furnished the Majority Stockholders with a certificate dated the Closing
Date signed on behalf of it by the Secretary of SYS certifying the attached
copies of (i) SYS’s Board resolutions authorizing the transactions contemplated
hereby and recommending the SYS Stockholder Approval, (ii) the SYS Articles,
certified by the California Secretary of State, and (iii) the SYS
Bylaws.
(e) Since
the
date of this Agreement, there shall not have been any Material Adverse Effect
on
SYS.
(f) SYS
shall
have delivered to Ai Metrix and the Majority Stockholders:
(i) the
Voting Agreement, duly executed by the stockholders of SYS required to be
party
thereto;
(ii) the
Escrow Agreement, duly executed by SYS; and
(iii) an
Employment Agreement with Xxxx Xxxxxx, in the form attached hereto as
Exhibit
D,
duly
executed by SYS.
(g) The
board
of directors of SYS shall have adopted resolutions effective as of, and subject
to, the Effective Time (i) fixing the number of members of the board of
directors of SYS at nine (9) members and (ii) approving the appointment of
Xxxx
Xxxxxxxx to fill the vacancy on the board of directors of SYS.
6.3 Conditions
to Obligations of SYS and Merger Sub.
The
obligations of SYS and Merger Sub to consummate the Merger and the other
transactions contemplated hereby shall be subject to the fulfillment of the
following conditions unless waived by SYS:
(a) Each
of
the representations and warranties of Ai Metrix contained in this Agreement
shall be true and correct in all material respects, in each case, on the
date of
this Agreement and on and as of the Closing Date as though made on and as
of the
Closing Date (except for representations and warranties made as of some other
specified date, in which case, as of such specified date).
(b) Ai
Metrix
shall have performed or complied in all material respects with all agreements
and covenants required to be performed by each of them under this Agreement
at
or prior to the Effective Time.
(c) Ai
Metrix
shall have furnished SYS with an officer’s certificate dated the Closing Date to
the effect that the conditions set forth in Sections
6.3(a) and (b) have
been satisfied.
(d) Ai
Metrix
shall have furnished SYS with a certificate dated the Closing Date signed
on
behalf of them by the Secretary of Ai Metrix certifying the attached copies
of
(i) Ai Metrix’s Board and stockholder resolutions authorizing the transactions
contemplated hereby, (ii) the Ai Metrix Certificate, certified by the Delaware
Secretary of State, and (iii) the Ai Metrix Bylaws.
(e) Since
the
date of this Agreement, there shall not have been any Material Adverse Effect
on
Ai Metrix.
(f) All
consents, approvals and waivers set forth in Section 4.5
of the
Ai Metrix Disclosure Schedule shall have been obtained by Ai Metrix or waived
by
SYS.
(g) Each
outstanding option or warrant to acquire, and each issued note or other security
(other than Ai Metrix Preferred Stock) convertible into, Ai Metrix Capital
Stock, whether or not exercisable, vested or converted, shall have been
exercised or cancelled prior to the Closing Date, so that as of the Effective
Time no person shall have any options, warrants, or other rights to buy,
or
convert into, any securities of the Surviving Corporation.
(h) The
individuals listed on Schedule
2
shall
have executed and delivered mutually acceptable non-competition agreements
with
SYS.
(i) Ai
Metrix
shall have furnished SYS with an opinion of Xxxxxxx XxXxxxxxx LLP, counsel
to Ai
Metrix,
dated
as of the Closing Date, in form and substance reasonably
satisfactory
to SYS
covering the matters set forth on Exhibit
E
hereto.
(j) SYS
shall
have received written acknowledgments pursuant to which each of Ai Metrix’s
outside legal counsel and any financial advisor, accountant or other person
who
performed services for or on behalf of Ai Metrix, or who is otherwise entitled
to any compensation from Ai Metrix, in connection with this Agreement or
any of
the transactions contemplated hereby, acknowledges: (i) the total amount
of
Transaction Expenses as of the Closing Date payable to such person in connection
with the foregoing or otherwise; and (ii) that, upon receipt of the amount
described in clause (i) above, it will have been paid in full and will not
be
owed any other amount by Ai Metrix with respect to the foregoing. Ai Metrix
shall have paid such amount on or prior to the Closing Date and shall provide
SYS evidence reasonably satisfactory in respect thereof.
(k) SYS
shall
have received from Ai Metrix a form of notice to the Internal Revenue Service
in
accordance with the requirements of Treasury Regulation section 1.897-2(h)
and
in form and substance reasonably satisfactory to SYS (“FIRPTA
Certificate”)
along
with the written authorization for SYS to deliver such FIRPTA Certificate
to the
Internal Revenue Service on behalf of Ai Metrix upon the closing of the
Merger.
(l) Xxxx
Xxxxxx shall have duly executed and delivered the Employment Agreement with
SYS
in the form attached hereto as Exhibit
D.
(m) The
Stockholder Representative and the Escrow Agent hall have duly executed and
delivered the Escrow Agreement in the form attached hereto as Exhibit
C.
(n) SYS
shall
have received from each holder of shares of Ai Metrix Capital Stock a validly
executed Form W-8 and/or Form W-9 as requested by SYS.
ARTICLE
VII
STOCKHOLDER
REPRESENTATIVE
7.1 Election
and Replacement.
Xxxxxx
X. Xxxxxx is hereby appointed by the Majority Stockholders as the Stockholder
Representative. Ai Metrix Stockholders holding a majority of the voting power
of
the Ai Metrix Capital Stock outstanding immediately prior to the Effective
Time
(a “Majority”)
may,
from time to time upon written notice to the Stockholder Representative and
SYS,
remove the Stockholder Representative (including any appointed by SYS) or
appoint a new Stockholder Representative to fill any vacancy created by the
death, incapacitation, resignation or removal of the Stockholder Representative.
Furthermore, if the Stockholder Representative dies, becomes incapacitated,
resigns or is removed by a Majority, the Majority shall appoint a successor
Stockholder Representative to fill the vacancy so created. If the Majority
is
required to but has not appointed a successor Stockholder Representative
within
thirty (30) days from a request by SYS to appoint a successor Stockholder
Representative, SYS shall have the right to appoint a Stockholder Representative
to fill any vacancy so created from the directors of Ai Metrix prior to the
Merger, and shall advise the Stockholders of such appointment by written
notice.
A copy of any appointment by the Majority of any successor Stockholder
Representative shall be provided to SYS promptly after it shall have been
effected.
7.2 Authority.
(a) The
Stockholder Representative shall be authorized to take any action and to
make
and deliver any certificate, notice, consent or instrument required or permitted
to be made or delivered under this Agreement or under the documents referred
to
in this Agreement (an “Instrument”)
which
the Stockholder Representative determines in his discretion to be necessary,
appropriate or desirable, and, in connection therewith, to hire or retain,
at
the sole expense of Ai Metrix, such counsel, investment bankers, accountants,
representatives and other professional advisors as he determines in his sole
and
absolute discretion to be necessary, advisable or appropriate in order to
carry
out and perform his rights and obligations hereunder. Any party receiving
an
Instrument from the Stockholder Representative shall have the right to rely
in
good faith upon such Instrument, and to act in accordance with the Instrument
without independent investigation.
(b) Ai
Metrix
shall pay the expenses of the Stockholder Representative up to US$25,000
in the
aggregate and the Majority Stockholders (other than Xxxx Xxxxxx) shall pay
any
and all expenses of the Stockholder Representative in excess of such amount,
pro
rata among such Majority Stockholders (other than Xxxx Xxxxxx) based on the
amount of Merger Consideration received by such Majority Stockholders (other
than Xxxx Xxxxxx). Notwithstanding the foregoing, except in the case of an
indemnity claim described in the last sentence of this Section
7.2(b),
the
Stockholder Representative shall not incur any expenses in excess of the
initial
US$25,000 without the written consent of the other Majority Stockholders
(other
than Xxxx Xxxxxx); provided that, if the Stockholder Representative does
not
receive any such consent, the Majority Stockholders agree that the Stockholder
Representative does not have any obligation to proceed with the contemplated
actions. The Majority Stockholders (other than Xxxx Xxxxxx) agree to indemnify
the Stockholder Representative, pro rata among such Majority Stockholders
based
on the amount of Merger Consideration received by such Majority Stockholders,
for any loss, liability or cost, including attorneys’ fees, incurred by the
Stockholder Representative in such capacity as a result of any claim brought
against the Stockholder Representative in such capacity by any Ai Metrix
Stockholder or any other third party, except to the extent that such claim
arises out of the Stockholder Representative’s willful misconduct or gross
negligence.
(c) Without
limiting the foregoing, the Stockholder Representative shall have the power
(i) to bring, defend, resolve and settle any claim made pursuant to
Article IX
and the
Escrow Agreement, (ii) to agree to, negotiate, enter into settlements and
compromises of, to bring suit or seek arbitration and to comply with orders
of
courts and awards of arbitrators with respect to such claims, (iii) to
negotiate, resolve and settle all matters relating to the EBITDA Calculations,
including, without limitation, to take any actions determined by the Stockholder
Representative to be necessary under Section
2.5
of this
Agreement, (iv) to represent the Ai Metrix Stockholders with respect to all
matters arising under this Agreement, the Escrow Agreement, any amendment
thereto and any related agreements and (v) to take all actions necessary in
the judgment of the Stockholder Representative for the accomplishment of
the
foregoing, including, without limitation, pursuant to this Agreement, the
Escrow
Agreement or otherwise. All actions taken by the Stockholder Representative
under this Agreement and the Escrow Agreement shall be binding as if expressly
confirmed and ratified in writing by the Ai Metrix Stockholders.
(d) The
Stockholder Representative shall incur no liability to SYS, Merger Sub or
any Ai
Metrix Stockholder with respect to any action or inaction taken by the
Stockholder Representative, except its own willful misconduct or gross
negligence, nor any other action taken or suffered by it in reliance upon
any
note, direction, instruction, consent, statement or other documents believed
by
it to be genuinely and duly authorized.
7.3 No
Liability of SYS.
Neither
SYS nor the Surviving Corporation shall have any liability to the Stockholder
Representative or to any of the Ai Metrix Stockholders or otherwise arising
out
of the acts or omissions of the Stockholder Representative or any disputes
among
the Ai Metrix Stockholders or with the Stockholder Representative. SYS may
rely
entirely on its dealings with, and notices to and from, the Stockholder
Representative to satisfy any obligations it might have under this Agreement
and
the Escrow Agreement that expressly contemplate dealings with the Stockholder
Representative. The Ai Metrix Stockholders shall indemnify SYS and Merger
Sub
for any damages suffered, including, but not limited to, attorneys’ fees and
other costs, as a result of SYS or Merger Sub’s good faith reliance on the acts
or omissions of the Stockholder Representative.
ARTICLE
VIII
TERMINATION
AND AMENDMENT
8.1 Termination.
This
Agreement may be terminated and the Merger may be abandoned prior to the
Effective Time:
(a) by
mutual
written consent of SYS, Merger Sub and Ai Metrix;
(b) by
SYS or
Ai Metrix:
(i) if
there
shall be any law or regulation that makes consummation of the Merger illegal
or
otherwise prohibited, or if any judgment, injunction, order or decree of
a court
or other competent Governmental Authority enjoining SYS or the Ai Metrix
Stockholders from consummating the Merger shall have been entered and such
judgment, injunction, order or decree shall have become final and nonappealable;
provided,
however,
that
the party seeking to terminate this Agreement pursuant to this Section
8.1(b)(i)
shall
have used commercially reasonable efforts to prevent the entry of and to
remove
such impediment to the Merger; or
(ii) if
the
Merger shall not have been consummated before October 31, 2006; provided,
however,
that
the right to terminate this Agreement under this Section 8.1(b)(ii) shall
not be available to any party whose failure to perform any material covenant
or
obligation under this Agreement has been the cause of or resulted in the
failure
of the Merger to occur on or before such date.
(c) by
SYS if
Ai Metrix has breached any of its representations and warranties in Article IV
of this
Agreement and as a result thereof, the condition set forth in Section 6.3(a)
could
not be satisfied;
(d) by
SYS if
there has been a Material Adverse Effect with respect to Ai Metrix;
(e) by
Ai
Metrix if SYS and Merger Sub shall have breached any of their representations
and warranties in Article III
of this
Agreement and as a result thereof, the condition set forth in Section 6.2(a)
could
not be satisfied; or
(f) by
Ai
Metrix if there has been a Material Adverse Effect with respect to
SYS.
8.2 Effect
of Termination.
In the
event of the termination of this Agreement pursuant to Section 8.1,
this
Agreement, except for the second sentence of Section 5.3(b),
shall
become void and have no effect, without any liability on the part of any
party
or such party’s directors, officers or stockholders. Notwithstanding the
foregoing, nothing in this Section 8.2
shall
relieve any party to this Agreement of liability for a material breach of
any
provision of this Agreement.
ARTICLE
IX
GENERAL
SURVIVAL; INDEMNIFICATION
9.1 Survival
of Representations and Warranties.
(a) The
representations and warranties made herein by Ai Metrix shall survive until
(and
claims based upon or arising out of such representations and warranties may
be
asserted at any time before) the date that is 15 months following the Closing
Date (the “Cut-Off
Date”);
provided,
however,
that
the representations and warranties in Section
4.11
shall
survive for a period equal to the relevant statute of limitations (including
any
extensions thereof), and the representations and warranties in Sections
4.4(a) and (b)
shall
survive until the second anniversary of the Closing, and any claims alleging
fraud or willful misrepresentation, shall survive indefinitely (each of the
representations and warranties set forth in Sections
4.11, 4.4(a) and 4.4(b)
being
referred to herein as the “Special
Representations”).
(b) The
representations and warranties made herein by SYS shall survive until (and
claims based upon or arising out of such representations and warranties may
be
asserted at any time before) the Cut-Off Date; provided,
however,
that
the representations and warranties in Sections
3.6(a)
and
3.6(b)
shall
survive until the second anniversary of the Closing, the representations
and
warranties in Section
3.6(c)
shall
survive for a period equal to the relevant statute of limitations, and any
claims alleging fraud or willful misrepresentation shall survive
indefinitely.
(c) This
Section 9.1
shall
not limit any covenant or agreement of the parties hereto, which by its terms
contemplates performance after the Closing or after the termination of this
Agreement.
(d) Notwithstanding
any right of SYS to investigate the affairs of Ai Metrix or of Ai Metrix
and the
Ai Metrix Stockholders to investigate the affairs of SYS, SYS shall have
the
right to rely fully upon the representations, warranties, covenants and
agreements of Ai Metrix and the Ai Metrix Stockholders contained in this
Agreement, or in any instrument required to be delivered pursuant to this
Agreement, and Ai Metrix and the Ai Metrix Stockholders shall have the right
to
rely fully upon the representations, warranties, covenants and agreements
of SYS
contained in this Agreement or in any such instrument. No information or
knowledge obtained by a party hereto in an investigation conducted by such
party
shall affect or be deemed to modify any representation or warranty of any
other
party contained herein or the conditions to the obligations of the parties
to
consummate the transactions contemplated by this Agreement. The right to
indemnification contained in this Article
IX,
or to
any other remedy based on a breach of the representations, warranties, covenants
and obligations of another party, will not be affected by any investigation
conducted by a party with respect to, or any knowledge acquired (or capable
of
being acquired) at any time, whether before or after the execution and delivery
of this Agreement or the Closing Date, about an accuracy or inaccuracy of
or
compliance with, any representation, warranty, covenant or obligation of
any
other party.
9.2 Indemnification.
(a) General.
(i) The
Ai
Metrix Stockholders shall severally,
but not
jointly, indemnify, save and hold harmless SYS and its subsidiaries and
affiliates, and their respective officers, directors, attorneys, agents,
employees and other representatives (collectively, the “SYS
Indemnified Parties”),
from
and against any and all costs, losses (including diminution in value),
liabilities, obligations, damages, lawsuits, deficiencies, claims, demands
and
expenses (whether or not arising out of third-party claims), including interest,
penalties, costs of mitigation, attorneys’ fees and all amounts paid in
investigation, defense or settlement of any of the foregoing (“Damages”),
incurred in connection with, arising out of, resulting from or incident to:
(A)
any breach of any representation or warranty or the inaccuracy of any
representation or warranty made by Ai Metrix in this Agreement; and (B) any
breach of any covenant or agreement made by Ai Metrix or any Ai Metrix
Stockholder in this Agreement. Subject to the limitations set forth in this
Article IX, the obligations of each Ai Metrix Stockholder under this Agreement,
including, without limitation, the indemnity obligations under this Section
9.2(a)(i),
shall
at no time exceed the lesser of (A) the value (based on the SYS Average Price)
of 20% of the Merger Consideration received by such Ai Metrix Stockholder
at the
Closing and (B) the value (based on the average closing price of SYS Common
Stock on the principal national securities exchange or principal national
securities quotation system on which the SYS Common Stock is then listed
over
the ten (10) consecutive trading days immediately preceding the date of
disbursement by the Escrow Agent (the “SYS
Average Escrow Price”))
of
such Ai Metrix Stockholder’s portion of the aggregate Escrow Consideration,
except for indemnity obligations arising out of a breach of the Special
Representations, in which cases the indemnity obligation of each Ai Metrix
Stockholder shall at no time exceed the Merger Consideration (where each
share
of SYS Common Stock shall be deemed to have a value equal to the SYS Average
Price), plus any Earnout Consideration (where each share of SYS Common Stock
shall be deemed to have a value equal to the SYS Average Earnout Price),
if any,
received by such Ai Metrix Stockholder, minus any amounts previously paid
with
respect to such Ai Metrix Stockholder in respect of indemnity obligations,
and
minus the Clawback Consideration, if any, received by SYS that is allocable
to
such Ai Metrix Stockholder as set forth on Schedule
1.
The
indemnification obligation of each Ai Metrix Stockholder shall be only for
its
pro rata portion of Damages, based on the percentages set forth on Schedule
1.
(ii) SYS
and
the Surviving Corporation shall, jointly and severally, indemnify, save and
hold
harmless Ai Metrix and the Ai Metrix Stockholders and each of their subsidiaries
and affiliates, and their respective officers, directors, attorneys, agents,
employees and other representatives, from and against any and all Damages
incurred in connection with, arising out of, resulting from or incident to:
(A)
any breach of any representation or warranty or the inaccuracy of any
representation or warranty made by SYS or Merger Sub in this Agreement; and
(B)
any breach of any covenant or agreement made by SYS or Merger Sub in this
Agreement. The indemnity obligations of SYS and the Surviving Corporation
under
this Section
9.2(a)(ii)
shall at
no time exceed the value (based on the SYS Average Price) of 20% of the Merger
Consideration; provided, however, that in the event of any breach by SYS
or the
Surviving Corporation of the covenants, agreements or obligations set forth
in
Section
2.5(e)
or SYS’s
failure to pay any Earnout Consideration to which the Ai Metrix Stockholders
are
due in accordance with Section
2.5(b)
or SYS’s
failure to authorize the release of any portion of the Clawback Escrow to
which
the Ai Metrix Stockholders are entitled pursuant to the Escrow Agreement,
this
limitation on the indemnity obligations of SYS or the Surviving Corporation
shall not restrict the Ai Metrix Stockholders (or the Stockholder Representative
on their behalf) from seeking the entire amount of Clawback Escrow or Earnout
Consideration to which the Ai Metrix Stockholders would otherwise have been
entitled pursuant to the Escrow Agreement or Section
2.5(b),
respectively, in the absence of such breach or failure.
(iii) The
term
“Damages” is not limited to matters asserted by third parties against an
indemnified person, but includes Damages incurred or sustained by the
indemnified person in the absence of third party claims.
(b) Procedure
for Claims Between Parties.
If a
claim for Damages is to be made by a party entitled to indemnification hereunder
(the “Indemnified
Party”),
the
party claiming such indemnification shall give written notice to the party
that
is required to indemnify such party hereunder (the “Indemnifying
Party”,
which
notice, in the case of a claim for indemnification against the Ai Metrix
Stockholders, shall be given to the Stockholder Representative) as soon as
practicable after the Indemnified Party becomes aware of any fact, condition
or
event that may give rise to Damages for which indemnification may be sought
under this Section
9.2.
The
failure of any Indemnified Party to give timely notice hereunder shall not
affect rights to indemnification hereunder, except to the extent that the
Indemnifying Party demonstrates it was actually materially prejudiced by
such
failure or to the extent that the Indemnified Party has missed the Cut-Off
Date,
if applicable, for making such claim. The Indemnifying Party shall be deemed
to
have accepted the notice of claim and to have agreed to pay the Damages at
issue
if the Indemnifying Party does not send a notice of disagreement to the
Indemnified Party within fifteen (15) business days after receiving the notice
of claim. In the case of a disputed claim, the parties shall use commercially
reasonable efforts to resolve the matter internally on an expeditious basis
and
in any event within thirty (30) days after the notice is received by the
Indemnifying Party or the Stockholder Representative, as
applicable.
(c) Defense
of Third-Party Claims.
If any lawsuit or enforcement action is filed against any Indemnified Party,
written notice thereof shall be given to the Indemnifying Party as promptly
as
practicable (and in any event within fifteen (15) days after the service
of the
citation or summons). The failure of any Indemnified Party to give timely
notice
hereunder shall not affect rights to indemnification hereunder, except to
the
extent that the Indemnifying Party demonstrates it was actually materially
prejudiced by such failure or to the extent that the Indemnified Party has
missed the Cut-Off Date, if applicable, for making such claim. After such
notice, if the Indemnifying Party shall acknowledge in writing to the
Indemnified Party that the Indemnifying Party shall be obligated under the
terms
of the indemnity hereunder in connection with such lawsuit or action, then
the
Indemnifying Party shall be entitled, if it so elects at its own cost, risk
and
expense, (i) to take control of the defense and investigation of such lawsuit
or
action, (ii) to employ and engage attorneys of its own choice (and reasonably
acceptable to the Indemnified Party) to handle and defend the same unless
the
named parties to such action or proceeding include both any Indemnifying
Party
and the Indemnified Party and the Indemnified Party has been advised by counsel
that there may be one or more legal defenses available to such Indemnified
Party
that are different from or additional to those available to the Indemnifying
Party, in which event the Indemnified Party shall be entitled, at the
Indemnifying Party’s cost, risk and expense, to separate counsel of its own
choosing, and (iii) to compromise or settle such claim, which compromise
or
settlement shall be made only with the prior written consent of the Indemnified
Party, such consent not to be unreasonably withheld. The Indemnified Party
shall
cooperate in all reasonable respects with the Indemnifying Party and its
attorneys in the investigation, trial and defense of such lawsuit or action
and
any appeal arising therefrom; provided,
however,
that
the Indemnified Party may, at its own cost, participate in the investigation,
trial and defense of such lawsuit or action and any appeal arising therefrom.
The parties shall cooperate with each other in any notifications to insurers.
If
the Indemnifying Party fail to assume the defense of such claim within fifteen
(15) days after receipt of the notice of claim by the Indemnifying Party,
the
Indemnified Party against which such claim has been asserted will (upon
delivering notice to such effect to the Indemnifying Party) have the right
to
undertake, at the Indemnifying Party’s cost, risk and expense, the defense,
compromise or settlement of such claim on behalf of and for the account and
risk
of the Indemnifying Party. The Indemnifying Party shall be liable for any
settlement of any action effected pursuant to and in accordance with this
Section
9.2
and for
any final judgment (subject to any right of appeal), and the Indemnifying
Party
shall indemnify and hold harmless the Indemnified Party from and against
any
Damages by reason of such settlement or judgment.
(d) Limitations.
Notwithstanding anything to the contrary contained herein, the Ai Metrix
Stockholders shall not be liable under this Article
IX
for any
Damages until the aggregate amount due any other party or parties entitled
to
indemnification hereunder exceeds the
value
(based on the SYS Average Price) of 0.75% of the Merger
Consideration
(the
“Deductible”),
in
which case the Ai Metrix Stockholders shall be liable for only the amounts
in
excess of the Deductible; provided,
however,
that
any amounts owed by the Ai Metrix Stockholders to SYS with respect to the
Clawback Consideration shall not be subject to any such limitation.
9.3 No
Right of Indemnification or Contribution.
After
the Closing, except to the extent set forth in Section
5.2(d),
Ai
Metrix shall have no liability to indemnify any Ai Metrix Stockholder on
account
of the breach of any representation or warranty by Ai Metrix in this Agreement
or
in any
other document or instrument delivered by Ai Metrix on the date hereof or
at the
Closing,
the
nonfulfillment of any covenant or agreement of Ai Metrix or any Ai Metrix
Stockholder in this Agreement or
in any
other document or instrument delivered by Ai Metrix on the date hereof or
at the
Closing,
or any
fraud or willful misrepresentation of Ai Metrix arising out of this Agreement;
and no Ai Metrix Stockholder shall have any right of contribution against
Ai
Metrix.
9.4 Payments.
If the
SYS Indemnified Parties are entitled to payment for an indemnification claim
hereunder, (i) such payments shall be satisfied first from the Indemnity
Escrow
and then from the Clawback Escrow, in accordance with the terms of the Escrow
Agreement, and (ii) other than in respect of a breach of the Special
Representations and except
for any non-monetary, equitable relief to which any SYS Indemnified Party
may be
entitled,
the
sole and exclusive remedy of the SYS Indemnified Parties and the Surviving
Corporation for a breach of this Agreement by Ai Metrix or the Ai Metrix
Stockholders (including any indemnification obligation) shall be to make
a claim
against the Escrow Consideration. The value of any Escrow Consideration to
be
paid in fulfillment of any indemnification obligation pursuant to this Agreement
and the Escrow Agreement shall be determined at the date of disbursement
of such
Escrow Consideration from the Escrow Account based on the SYS Average Escrow
Price. Each Closing
Stockholder may, in its sole discretion, satisfy, in whole or in part, its
indemnification obligations arising out of a breach of the Special
Representations by returning to SYS shares of SYS Common Stock owned
beneficially and of record by such Closing Stockholder that were received
by
such Closing Stockholder in connection herewith (which shares of SYS Common
Stock shall, for the purpose of satisfying such indemnification obligation,
be
valued at the average closing price of SYS Common Stock on the principal
national securities exchange or principal national securities quotation system
on which the SYS Common Stock is then listed over the ten (10) consecutive
trading days immediately preceding the date of such indemnification payment
in
shares).
9.5 Computation
of Damages; Mitigation.
SYS
and
Ai Metrix shall use commercially reasonable efforts to mitigate their respective
Damages promptly after incurrence of any such Damages, including by notifying
their insurance carriers of any insured loss and filing claims under all
applicable insurance policies where appropriate in their reasonable business
judgment. If the Ai Metrix Stockholders pay an amount in respect of
indemnification, they shall be subrogated to all rights SYS or the Surviving
Corporation
may have
with respect to insurance or to other third parties responsible for the Damages.
Damages shall be calculated net of any insurance recovery in respect of the
Damages (such insurance recovery excluding any deductible and taking into
account any increase in the cost of insurance
or
associated incremental premiums
as a
result of such recovery) or tax refund (to
the
extent such refund relates solely to the Damages or to the payments made
pursuant to such Damages)
received by any Indemnified Party, and if such amounts are received by an
Indemnified Party after the payment of indemnification amounts by the
Indemnifying Party, the Indemnified Party shall
promptly pay such amount to the Indemnifying Party to
the
extent the aggregate recovery by the Indemnified Party exceeds the Damages
as
calculated hereunder.
9.6 Exclusive
Remedy.
The
parties hereto acknowledge and agree that, from and after the Closing, except
for any non-monetary, equitable relief to which any Indemnified Party may
be
entitled, their sole and exclusive remedy with respect to any and all claims
relating to the subject matter of this Agreement shall be pursuant to the
indemnification provisions of this Article
IX,
whether
such claims are framed in tort, contract or otherwise and each of SYS, Merger
Sub, the Surviving Corporation, Ai Metrix, and the Ai Metrix Stockholders
hereby
expressly waive any and all other rights or causes of action it may have
against
any other party now or in the future with respect to the subject matter of
this
Agreement.
9.7 Consequential
Damages.
Notwithstanding anything to the contrary contained in this Agreement, no
party
shall be liable under this Article
IX
for any
consequential, punitive, special, incidental, exemplary or indirect
damages.
ARTICLE
X
MISCELLANEOUS
10.1 Notices.
All
notices and other communications hereunder shall be in writing and shall
be
deemed given if delivered personally, sent by facsimile (with written
confirmation of successful delivery) or dispatched by a nationally recognized
overnight courier service to the parties at the following addresses (or at
such
other address for a party as shall be specified by like notice from such
party
to the other parties hereto):
(a) if
to SYS
or Merger Sub:
SYS
0000
Xxxxxx Xxxxxx Xxxx, Xxxxx 000
Xxx
Xxxxx, XX 00000
Attention:
Xxxxxxx X. Xxxx, Secretary
Facsimile:
(000) 000-0000
Xxxxxx
& Xxxxxxx LLP
00000
Xxxx Xxxxx Xxxxx, Xxxxx 000
Xxx
Xxxxx, XX 00000
Attention:
Xxxxx X. Xxxxxx, Esq.
Facsimile:
(000) 000-0000
(b) if
to Ai
Metrix:
Ai
Metrix, Inc.
00000
Xxxxxxx Xxxxx
Xxxxxx,
XX 00000
Attention:
Xxxx Xxxxxx
Facsimile:
(000) 000-0000
with
a
copy to:
Xxxxxxx
XxXxxxxxx LLP
0000
X
Xxxxxx, XX
Xxxxxxxxxx,
XX 00000
Attention:
Xxxx X. Xxxxxxxxx, Esq.
Facsimile:
(000) 000-0000
(c) if
to the
Ai Metrix Stockholders or the Stockholder Representative:
to
the
address(es) set forth on Schedule
3
hereto.
10.2 Interpretation.
(a) When
a
reference is made in this Agreement to an Article or Section, such reference
shall be to an Article or Section of this Agreement unless otherwise indicated.
The headings, the table of contents and the index of defined terms contained
in
this Agreement are for reference purposes only and shall not affect in any
way
the meaning or interpretation of this Agreement. Whenever the words “include,”
“includes,” or “including” are used in this Agreement, they shall be deemed to
be followed by the words “without limitation.”
(b) For
the
purposes of any provision of this Agreement, a “Material
Adverse Effect”
with
respect to any party shall be deemed to occur if any event, change or effect
occurs which has or could be reasonably expected to have a material adverse
effect on the business, assets (including intangible assets), liabilities
(contingent or otherwise), results of operations, or financial condition
of such
party taken as a whole, or a material adverse effect on the ability of such
party to timely perform its obligations under this Agreement and the other
transaction documents contemplated hereby; provided,
however,
none of
the following shall be deemed in themselves, either alone or in combination,
to
constitute, and none of the following shall be taken into account in determining
whether there has been, a Material Adverse Effect:
(i) with
respect to any party, any change in or effect upon the assets (including
intangible assets), liabilities (contingent or otherwise), financial condition,
or results of operations of such party directly or indirectly arising out
of or
attributable to any decrease in the market price of shares of SYS Common
Stock
(but not any change or effect underlying such decrease to the extent such
change
or effect would otherwise constitute a Material Adverse Effect on
SYS);
(ii) with
respect to any party, any change in or effect upon the assets (including
intangible assets), liabilities (contingent or otherwise), financial condition,
or results of operations of such party directly or indirectly arising out
of or
attributable to (A) conditions, events, or circumstances generally affecting
the
economy of the United States, or (B) the general state of industries and
market
sectors in which such party operates; provided
in each
case that the change or effect does not have a materially disproportionate
effect (relative to other industry participants) on such party; and
(iii) with
respect to any party, any change in or effect upon the assets (including
intangible assets), liabilities (contingent or otherwise), financial condition,
or results of operations of such party directly or indirectly arising out
of or
attributable to the public announcement of this Agreement.
(c) For
purposes of this Agreement, a “subsidiary”
when
used with respect to any party means any individual partnership, firm,
corporation, association, trust, unincorporated organization (including any
representative office or branch) or other entity under the laws of any
jurisdiction, (i) of which such party or another subsidiary of such party
is a general partner (excluding partnerships, the general partnership interests
of which held by such party or the subsidiary of such party do not have 50%
or
more of the voting interests in such partnership) or (ii) 50% or more of
the securities or other interests of which having by their terms ordinary
voting
power to elect at least 50% of the board of directors or others performing
similar functions with respect to such corporation or other organization
is
directly or indirectly owned or controlled by such party or one or more of
its
subsidiaries (or if there are no such voting securities or interests, 50%
or
more of the equity interests of which is directly or indirectly owned or
controlled by such party or one or more of its subsidiaries).
(d) For
purposes of this Agreement, “affiliate”
means
a
person that directly, or indirectly through one or more intermediaries,
controls, is controlled by or is under common control with another person
or
beneficially owns or has the power to vote or direct the vote of 10% of more
of
the voting stock (or of any other form of general partnership, limited
partnership or voting equity interest in the case of a person that is not
a
corporation) of such other person. For purposes of this definition, “control,”
including the terms “controlling” and “controlled” means through the ownership
of voting securities, by contract or credit arrangement, as trustee, partner
or
executor or otherwise.
(e) For
purposes of this Agreement, “knowledge”
means
(i) with respect to SYS, the actual knowledge of Xxxxxxx X. Xxxx, Xxxxxx X.
Lake and Xxxxxxx X. Xxxxx after due inquiry, and (ii) with respect to Ai
Metrix,
the actual knowledge of Xxxx Xxxxxx, Xxxxx Xxxxx and Xxxxxxxx Xxxxxxxx after
due
inquiry.
(f) For
purposes of this Agreement, “Person”
shall
mean any individual, corporation, partnership, limited liability company,
joint
venture, trust, association, organization, Governmental Authority or other
entity.
10.3 Counterparts.
This
Agreement may be executed in counterparts, which together shall constitute
one
and the same agreement. The parties may execute more than one copy of this
Agreement, each of which shall constitute an original.
10.4 Entire
Agreement.
This
Agreement (including the documents and instruments referred to herein)
constitutes the entire agreement among the parties and supersedes all prior
agreements and understandings by or among the parties, written and oral,
with
respect to the subject matter hereof and thereof; provided,
however,
that
the confidentiality agreement between SYS and Ai Metrix shall survive, and
shall
also survive any termination of this Agreement.
10.5 Third-Party
Beneficiaries.
Nothing
in this Agreement, express or implied, is intended or shall be construed
to
create any third-party beneficiaries.
10.6 Governing
Law; Venue.
(a) This
Agreement (including any claim or controversy arising out of or relating
to this
Agreement) shall be governed by the laws of the State of New York without
regard
to conflict of law principles that would result in the application of any
law
other than the law of the State of New York, and any action arising out of
or
relating to this Agreement or the Merger shall be brought only in the
appropriate federal or state court in San Diego County, California. Each
of the
parties hereto agrees that a final judgment in any action or proceeding shall
be
conclusive and may be enforced in other jurisdictions by suit on the judgment
or
in any other manner provided by law.
(b) Each
of
the parties hereto irrevocably consents to the service of any summons and
complaint and any other process in any other action or proceeding relating
to
this Agreement, on behalf of itself or its property, by the personal delivery
of
copies of such process to such party. Nothing in this Section 10.6
shall
affect the right of any party hereto to serve legal process in any other
manner
permitted by law.
10.7 Specific
Performance.
The
transactions contemplated by this Agreement are unique. Accordingly, each
of the
parties acknowledges and agrees that, in addition to all other remedies to
which
it may be entitled, each of the parties hereto is entitled to a decree of
specific performance; provided
such
party is not in material default hereunder. The party prevailing in any
proceeding seeking such a decree shall be entitled to payment of all reasonable
legal fees and expenses by the non-prevailing party.
10.8 Assignment.
Neither
this Agreement nor any of the rights, interests or obligations hereunder
shall
be assigned by any of the parties hereto (whether by operation of law or
otherwise) without the prior written consent of the other parties. Subject
to
the preceding sentence, this Agreement shall be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors
and
assigns. Without limiting the generality of the foregoing, the covenants
of SYS
and the Surviving Corporation set forth in Section 2.5(e) shall be binding
upon
any successor to or acquirer of SYS and/or the Surviving Corporation pursuant
to
a merger, consolidation or other acquisition by another company.
10.9 Expenses
and
Transfer Taxes.
All
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expenses. The Ai Metrix Stockholders shall pay when due any and all Taxes
imposed on such Ai Metrix Stockholder in connection with the transfer to
the Ai
Metrix Stockholders of the Merger Consideration and the Earnout Consideration,
if any. The Ai Metrix Stockholders shall, at their own expense, file all
necessary Tax Returns of such Ai Metrix Stockholder with respect to all such
Taxes imposed on such Ai Metrix Stockholder.
10.10 Severability.
The
invalidity or unenforceability in whole or in part of any covenant, promise
or
undertaking, or any section, subsection, sentence, clause, phrase, word,
or any
of the provisions of this Agreement will not affect the validity or
enforceability of the remaining portions of this Agreement.
If for any reason, any provision is determined to be invalid or in conflict
with
any existing, or future law or regulation by a court or agency having valid
jurisdiction, such will not impair the operation or have any other effect
upon
such other provisions of this Agreement as may remain otherwise valid, and
the
latter will continue to be given full force and effect and bind the parties
hereto.
10.11 Amendment.
This
Agreement may be amended only by an agreement in writing executed by SYS,
Merger
Sub, Ai Metrix and the Stockholder Representative. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver
of any
other provision hereof (whether or not similar), nor shall such waiver
constitute a continuing waiver unless otherwise expressly provided.
[Signature
Page Follows]
IN
WITNESS WHEREOF,
SYS,
Merger Sub, Ai Metrix and the Majority Stockholders have signed this Agreement
and Plan of Merger as of the date first written above.
SYS
|
By: ___________________
|
Name:
Xxxxxx X. Lake
|
Title:
Chief Financial Officer
|
SHADOW
IV, INC.
|
By: ___________________
|
Name:
Xxxxxx X. Lake
|
Title:
Chief Financial Officer
|
AI
METRIX, INC.
|
By: ___________________
|
Name:
|
Title:
|
MAJORITY
STOCKHOLDERS
|
GENERAL
ATLANTIC PARTNERS 74, L.P.
By: GENERAL
ATLANTIC LLC,
its
General Partner
By:
_______________________________________
Name:
Title:
A Managing Director
GAP
COINVESTMENT PARTNERS II, L.P.
By:
_______________________________________
Name:
Title:
A General Partner
GAPCO
GMBH & CO. KG
By:
GAPCO
MANAGEMENT GMBH,
its
General Partner
By:
_______________________________________
Name:
Title:
Managing Director
GAPSTAR,
LLC
By: GENERAL
ATLANTIC LLC,
its
Sole Member
By:
_______________________________________
Name:
Title:
A Managing Director
|
SPECTRUM
EQUITY INVESTORS II, L.P.
By: SPECTRUM
EQUITY ASSOCIATES II, L.P.,
its
General Partner
By:
_______________________________________
Name:
Title:
SEA
1998 II, L.P.
By:___________________________________
Name:
Title:
SPECTRUM
EQUITY INVESTORS III, L.P.
By: SPECTRUM
EQUITY ASSOCIATES III, L.P.,
its
General Partner
By:
_______________________________________
Name:
Title:
SEI
III ENTREPRENEURS’ FUND, L.P.
By: SEI
III ENTREPRENEURS’ LLC,
its
General Partner
By:
_______________________________________
Name:
Title:
|
SPECTRUM
III INVESTMENT MANAGERS’ FUND, L.P.
By:
_______________________________________
Name:
Title:
XXXX
XXXXXX
_______________________________________
|
STOCKHOLDER
REPRESENTATIVE
|
XXXXXX
X. XXXXXX
_______________________________________
|
S-
EXHIBIT
A
FORM
OF
VOTING AGREEMENT
EXHIBIT
B
FORM
OF
INVESTMENT REPRESENTATION CERTIFICATE
EXHIBIT
C
FORM
OF
ESCROW AGREEMENT
EXHIBIT
D
FORM
OF
CARRAI EMPLOYMENT AGREEMENT
EXHIBIT
E
FORM
OF
OPINION TO COUNSEL OF AI METRIX
SCHEDULE
1
MERGER
CONSIDERATION ALLOCATION PER AI METRIX STOCKHOLDER
[to
be inserted prior to signing, after exercise of options]
SCHEDULE
2
AI
METRIX
EMPLOYEES SIGNING NON-COMPETE AGREEMENTS
Xxxxxx
Xxxxxxx
Xxxxx
Xxxxx
Xxxx
Xxxxxx
Xxxxxxxx
Xxxxxxxx
Xxxxxxx
Xxxxxx
Xxxxxxx
Xxxxx
SCHEDULE
3
AI
METRIX
STOCKHOLDER ADDRESSES; WIRE TRANSFER INSTRUCTIONS
SCHEDULE
4
UNACCREDITED
AI METRIX STOCKHOLDERS
The
following Ai Metrix stockholders holding more than 5,000 shares of Ai Metrix
Common Stock have represented to Ai Metrix that they are not accredited
investors:
Xxxx
Xxxxxxx
Xxxxxx
Xxxxxx
Xxxxx
Xxxxxx
Xxxxx
Xx
Xxxxxxx
Xxxxxx
9311810v2