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Exhibit 2.1
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AGREEMENT AND PLAN OF REORGANIZATION
DATED AS OF APRIL 28, 1998
AMONG
ASPEN TECHNOLOGY, INC.,
AT ACQUISITION CORP.,
CHESAPEAKE DECISION SCIENCES, INC.
AND
XX. XXXXXX X. XXXXX
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TABLE OF CONTENTS
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1. Certain Defined Terms.................................................... 1
2. The Merger............................................................... 5
2.1. Merger Documents................................................... 5
2.2. Closing Date....................................................... 5
2.3. Effective Time..................................................... 5
2.4. Effect on Capital Stock............................................ 5
2.5. Exchange of Chesapeake Certificates................................ 6
2.6. Lost, Stolen or Destroyed Chesapeake Certificates.................. 6
2.7. Other Effects...................................................... 6
2.8. Accounting and Tax Treatment....................................... 7
2.9. Further Action..................................................... 7
3. Representations and Warranties of Chesapeake............................. 7
3.1. Organization and Qualification..................................... 7
3.2. Capitalization and Other Ownership Interests....................... 7
3.3. Authority; No Violations........................................... 8
3.4. Compliance with Applicable Laws.................................... 8
3.5. Properties......................................................... 9
3.6. Financial Statements............................................... 9
3.7. Indebtedness....................................................... 10
3.8. Absence of Certain Changes or Events; Undisclosed Liabilities...... 10
3.9. Litigation......................................................... 10
3.10. Commitments........................................................ 10
3.11. Customers, Suppliers and Sales Agents.............................. 11
3.12. Warranty and Product Liability Claims.............................. 11
3.13. Intellectual Property.............................................. 11
3.14. Investments........................................................ 12
3.15. Insurance.......................................................... 12
3.16. Books and Records.................................................. 13
3.17. Employee Relations................................................. 13
3.18. Employee Plans..................................................... 13
3.19. Potential Conflicts of Interest.................................... 14
3.20. Bank Accounts...................................................... 15
3.21. Taxes.............................................................. 15
3.22. Environmental Matters.............................................. 16
3.23. Finder's Fees...................................................... 17
3.24. Disclosure......................................................... 17
4. Additional Representations and Warranties of the Principal Stockholder... 17
4.1. Investment in AspenTech Common..................................... 17
4.2. Execution; No Violations........................................... 18
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5. Representations and Warranties of AspenTech and Acquisition Corp......... 19
5.1. Organization and Qualification..................................... 19
5.2. Capitalization..................................................... 19
5.3. Authority; No Violations........................................... 19
5.4. SEC Documents...................................................... 20
5.5. Financial Statements............................................... 21
5.6. Litigation......................................................... 21
5.7. Finder's Fees...................................................... 21
6. Covenants of Chesapeake and the Principal Stockholder as to
Conduct of Business...................................................... 21
6.1. Operation of Business.............................................. 21
6.2. Capital Structure.................................................. 21
6.3. Notification of Changes............................................ 22
6.4. Exclusivity........................................................ 22
6.5. Investments and Acquisitions....................................... 22
6.6. Indebtedness....................................................... 22
6.7. Litigation......................................................... 22
6.8. Commitments........................................................ 22
6.9. Taxes.............................................................. 22
6.10. Employee Plans..................................................... 22
6.11. Employee Matters................................................... 23
6.12. Compliance with Applicable Laws.................................... 23
7. Additional Covenants..................................................... 23
7.1. Access to Information.............................................. 23
7.2. Confidentiality.................................................... 23
7.3. Public Disclosure.................................................. 24
7.4. Pooling Accounting................................................. 24
7.5. Consents; Further Assurances....................................... 24
7.6. Updates of Chesapeake Disclosure Schedule.......................... 25
7.7. Antitrust Laws..................................................... 25
7.8. Stock Options...................................................... 25
7.9. Expenses........................................................... 26
7.10. Tax Matters........................................................ 26
7.11. Employment and Non-Competition Agreements.......................... 26
7.12. Securities and Corporate Statutes.................................. 26
7.13. Nasdaq Rules....................................................... 26
7.14. Records............................................................ 26
7.15. Amendment of Registration Rights Declaration....................... 27
8. Conditions Precedent..................................................... 27
8.1. Conditions to Each Party's Obligations............................. 27
8.2. Additional Conditions to Obligations of AspenTech and
Acquisition Corp................................................... 28
8.3. Additional Conditions to Obligations of Chesapeake and the
Principal Stockholder.............................................. 29
9. Indemnification.......................................................... 30
9.1. Agreement to Indemnify............................................. 30
9.2. Survival of Indemnity.............................................. 30
9.3. Additional Provisions.............................................. 31
9.4. Escrow............................................................. 32
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10. Term and Termination..................................................... 32
10.1. Term............................................................... 32
10.2. Termination........................................................ 32
10.3. Effect of Termination and Abandonment.............................. 33
11. Miscellaneous............................................................ 33
11.1. Amendment and Waiver............................................... 33
11.2. Notices............................................................ 33
11.3. Successors; Third Parties; Assignment.............................. 34
11.4. Entire Agreement................................................... 34
11.5. Applicable Law..................................................... 34
11.6. Consent to Jurisdiction............................................ 35
11.7. Validity........................................................... 35
11.8. Captions; Construction............................................. 35
11.9. Counterparts....................................................... 35
Exhibit A. List of Stockholders............................................ A-1
Exhibit B. Form of Delaware Agreement of Merger............................ B-1
Exhibit C. Form of Employment Agreement with Xxxxxx X. Xxxxx............... C-1
Exhibit D. Form of Employment Agreement with Xxxxxx X. Xxxxxxxx............ D-1
Exhibit E. Form of Employment Agreement with Xxxxxx X. Xxxxxx.............. E-1
Exhibit F. Form of Employment Agreement with Xxxxx X. Linkin............... F-1
Exhibit G. Form of Escrow Agreement........................................ G-1
Exhibit H. Form of New Jersey Certificate of Merger........................ H-1
Exhibit I. Form of Non-Competition Agreements.............................. I-1
Exhibit J. Form of Registration Rights Declaration......................... J-1
Exhibit K. List of ESOP Participants....................................... K-1
Exhibit L. List of AspenTech Option Grants................................. L-1
Chesapeake Disclosure Schedule
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AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT dated as of April 28, 1998 among Aspen Technology, Inc., a
Delaware corporation ("AspenTech"), AT Acquisition Corp., a Delaware corporation
and wholly owned subsidiary of AspenTech ("Acquisition Corp."), Chesapeake
Decision Sciences, Inc., a New Jersey corporation ("Chesapeake"), and Xx. Xxxxxx
X. Xxxxx, a stockholder of Chesapeake (the "Principal Stockholder").
INTRODUCTION
The individuals named on EXHIBIT A, including the Principal Stockholder
(collectively the "Stockholders"), are the record holders of all of the issued
and outstanding shares of capital stock of Chesapeake.
The parties to this Agreement desire to effect a reorganization in which
Acquisition Corp. shall be merged with and into Chesapeake (the "Merger"), with
the surviving corporation to be a wholly owned subsidiary of AspenTech and all
of the issued and outstanding shares of capital stock of Chesapeake to be
converted into shares of common stock, $.10 par value, of AspenTech ("AspenTech
Common"), all upon the terms and conditions set forth in this Agreement.
The boards of directors of AspenTech, Acquisition Corp. and Chesapeake
each have determined that the Merger is in the best interests of their
respective corporations and the stockholders thereof and have approved the
Merger and the execution of this Agreement. The Principal Stockholder has
delivered to Chesapeake a written consent dated April 28, 1998 approving the
Merger and Chesapeake's execution of this Agreement, which consent constitutes
all action of the Stockholders necessary to approve the Merger.
1. CERTAIN DEFINED TERMS.
As used in this Agreement, the following terms shall have the following
meanings:
"ASPENTECH MAE" means any material adverse effect on the business,
properties, assets or financial condition of AspenTech and its subsidiaries,
taken as a whole.
"CHESAPEAKE CERTIFICATES" means the stock certificates representing all of
the shares of Chesapeake Common outstanding immediately prior to the Closing.
"CHESAPEAKE CLASS A COMMON" means Class "A" common stock, without par
value, of Chesapeake.
"CHESAPEAKE CLASS B COMMON" means Class "B" common stock, without par
value, of Chesapeake.
"CHESAPEAKE COMMON" means, together, Class A Common and Class B Common.
"CHESAPEAKE DISCLOSURE SCHEDULE" means the disclosure schedule of
Chesapeake attached to this Agreement.
"CHESAPEAKE MAE" means any material adverse effect on the business,
properties, assets or financial condition of Chesapeake.
"CLOSING" means the closing of the transactions contemplated by this
Agreement.
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"CLOSING DATE" means the date on which the Closing is held, as established
pursuant to Section 2.2.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMITMENTS" means, with respect to a Person, all written contracts,
agreements, instruments, powers of attorney, guarantees, promises, obligation,
undertakings and commitments entered into by such Person.
"COMMONLY CONTROLLED ENTITY" means any entity that is under common control
with Chesapeake within the meaning of Code section 414(b), (c), (m) or (o).
"CREDITOR EXCEPTION" means bankruptcy, reorganization, insolvency,
moratorium or similar laws of general application from time to time in effect
and relating to or affecting the rights or remedies of creditors generally.
"DAMAGES" has the meaning set forth in Section 9.1.
"DELAWARE AGREEMENT OF MERGER" means the agreement of merger to be
executed by Acquisition Corp. and Chesapeake substantially in the form of
EXHIBIT B.
"EFFECTIVE TIME" means the later of (a) the time at which the Delaware
Agreement of Merger is filed with the Secretary of State of the State of
Delaware and (b) the time at which the New Jersey Certificate of Merger is filed
with the Secretary of State of the State of New Jersey.
"EMPLOYEE PLANS" means (a) all "employee benefit plans" as defined in
ERISA section 3(3), (b) all "fringe benefit plans" as defined in Code section
6039D and (c) all other pension, benefit, profit sharing, retirement, deferred
compensation, welfare, insurance, disability, bonus, vacation pay, severance pay
and other similar plans, programs and agreements (including any and all
self-insurance arrangements), whether reduced to writing or not, relating to the
employees of Chesapeake or any Commonly Controlled Entity, or maintained at any
time by Chesapeake or any Commonly Controlled Entity for its employees.
"EMPLOYMENT AGREEMENTS" means the employment agreements to be entered into
as of the Closing Date between Chesapeake and Xxxxxx X. Xxxxx, Xxxxxx X.
Xxxxxxxx, Xxxxxx X. Xxxxxx and Xxxxx X. Linkin substantially in the forms set
forth in EXHIBIT C, EXHIBIT D, EXHIBIT E and EXHIBIT F, respectively.
"ENVIRONMENT" means all navigable waters, waters of the contiguous zone,
ocean waters, natural resources, surface waters, ground water, drinking water
supply, land surface, subsurface strata, ambient air, both inside and outside of
buildings and structures, and plant and animal life on Earth.
"ENVIRONMENTAL LAWS" means all federal, state, local and foreign laws,
principles of common law, rules, regulations and codes, as well as orders,
decrees, judgments or injunctions issued, promulgated, approved or entered
thereunder relating to pollution, protection of the environment or public health
and safety, including the Release or threatened Release of Oil or Hazardous
Material into the environment or otherwise relating to presence, manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Oil or Hazardous Material.
"ENVIRONMENTAL LIABILITIES AND COSTS" means all costs, expenses or losses,
whether direct or indirect, known or unknown, current or potential, past,
present or future, arising from, relating to or imposed by, under or pursuant to
Environmental Laws and in any way based on, arising out of or otherwise in
respect of (a) the ownership or operation by Chesapeake or any predecessor or
affiliate, of the business of Chesapeake
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or (b) the condition or operation of any real property, assets, equipment or
facilities owned, leased or operated by Chesapeake (including, in each case, the
disposal or arrangement for the disposal of any Oil or Hazardous Material, or
other substances or wastes on-site or off-site), including all costs, expenses
or losses (i) related to Remedial Actions, (ii) necessary for compliance with
any requirements of Environmental Laws and any applicable permits, licenses,
approvals or other authorizations, (iii) necessary to make full economic use of
the property, assets, equipment and facilities of Chesapeake (assuming that
Chesapeake's properties are operated for substantially the same purpose and at
substantially the same levels as at the date hereof) and (iv) related to
reasonable fees, disbursements and expenses of counsel and consultants.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ESCROW AGENT" means American Stock Transfer & Trust Company, as escrow
agent under the Escrow Agreement.
"ESCROW AGREEMENT" means the escrow agreement to be entered into as of the
Closing Date among AspenTech, Chesapeake, the Principal Stockholder and the
Escrow Agent substantially in the form set forth as EXHIBIT G.
"ESCROW SHARES" has the meaning set forth in Section 2.5.
"ESOP" means the Chesapeake Decision Sciences, Inc. Employee Stock
Ownership Plan and Trust effective January 1, 1987, as amended and restated
effective January 1, 1989.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"FACCENDA AGREEMENT" means the letter agreement dated March 10, 1997
between Chesapeake and Xxxxxx Xxxxxxxx.
"GOVERNMENT ENTITY" means any domestic or foreign court, administrative
agency or commission, or other governmental authority or instrumentality.
"HSR ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended.
"INDEBTEDNESS" means (a) all indebtedness of Chesapeake for borrowed
money, (b) all indebtedness or obligations of Chesapeake evidenced by bonds,
notes, or similar written instruments, (c) all obligations of Chesapeake in
respect of letters of credit or similar instruments issued or accepted by banks
and other financial institutions for the account of Chesapeake, (d) all
capitalized lease obligations of Chesapeake, and (e) all guarantees by
Chesapeake of indebtedness and obligations of other Persons, which indebtedness
and obligations are of a character described in clause (a), (b), (c) or (d) of
this definition.
"INTELLECTUAL PROPERTY" means all trademarks, trade names, service marks,
logos, trade secrets, patents, inventions, copyrights and other proprietary
rights, whether or not registered, and all rights, licenses and registration
applications with respect thereto, used by Chesapeake in connection with the
development, manufacturing, processing, distribution, licensing, service or
marketing of products and services of Chesapeake.
"LIABILITIES" means all items (except items of capital stock or partners'
or owners' equity or of surplus or retained earnings or of general contingency
reserves) that in accordance with generally accepted
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accounting principles would be included in determining total liabilities as
shown on the liability side of a balance sheet.
"NEW JERSEY CERTIFICATE OF MERGER" means the certificate of
merger/consolidation (profit corporations) to be executed by Chesapeake and
Acquisition Corp. substantially in the form of EXHIBIT H.
"NON-COMPETITION AGREEMENTS" means the non-competition agreements to be
entered into as of the Closing Date among AspenTech, Chesapeake and each of
Xxxxxx X. Xxxxx and Xxxxx X. Linkin, each substantially in the form set forth in
EXHIBIT I.
"NUMBER OF MERGER SHARES" means the remainder of (a) 3,000,000 less (b)
the quotient of the total amount of Offset Expenses divided by the average of
the last sales prices of AspenTech Common on the Nasdaq National Market during
the ten trading days immediately preceding the date that is two business days
before the Closing Date.
"OFFSET EXPENSES" means all costs and expenses of Chesapeake incurred or
arising prior to the Closing in connection with or in anticipation of the Merger
and the other transactions contemplated hereby, including all fees and expenses
of accountants (including Xxxxxxxxx, Rich, Baker, Xxxxxx & Company, but
excluding Xxxxxx Xxxxxxxx LLP), counsel (including Bourne, Xxxx & Xxxxxx and
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP) and financial advisors (including
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation) incurred by Chesapeake in
connection with or in anticipation of the Merger or the other transactions
contemplated hereby.
"OIL OR HAZARDOUS MATERIAL" means any waste, pollutant, hazardous
substance, toxic substance, hazardous waste, special waste, industrial substance
or waste, petroleum or petroleum-derived substance or waste, asbestos-containing
substance or waste, radioactive material or any constituent of any such
substance or waste, including any such substance regulated under or defined by
any Environmental Law.
"PERMITS" means all permits, licenses, variances, certificates of
occupancy, exemptions, orders, approvals and authorizations of all Government
Entities necessary to conduct Chesapeake's business substantially in the manner
in which it is currently being conducted.
"PERSON" means any individual, company, corporation, association,
partnership, joint venture, or other legal entity.
"REGISTRATION RIGHTS DECLARATION" means the declaration of registration
rights adopted by the board of directors of Aspen, effective as of the Closing
Date, substantially in the form set forth in EXHIBIT J.
"RELEASE" means any release, spill, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching, migration, or movement of Oil
or Hazardous Material through the Environment.
"REMEDIAL ACTION" means all actions reasonably necessary, whether
voluntary or involuntary, to: (a) clean up, remove, treat or in any other way
adjust Oil or Hazardous Material in the indoor or outdoor environment; (b)
prevent the Release of Oil or Hazardous Material so that they do not migrate or
endanger or threaten to endanger public health or welfare or the Environment; or
(c) perform investigations, remedial studies, restoration and post-remedial
studies and monitoring on, in, under, above or about any assets or properties
on-site or off-site.
"SEC DOCUMENTS" has the meaning set forth in Section 5.4.
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"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SURVIVING CORPORATION" has the meaning set forth in Section 2.7(a).
"TAX RETURNS" means all returns, declarations, reports, forms, estimates,
information returns and statements required to be filed in respect of any Taxes
or to be supplied to a taxing authority in connection with any Taxes.
"TAXES" means all taxes of any kind and nature, charges, fees, customs,
duties, imposts, levies or other assessments, including all net income, gross
receipts, ad valorem, value added, transfer, gains, franchise, profits,
inventory, net worth, capital stock, asset, sales, use, license, estimated,
withholding, payroll, transaction, capital, employment, social security, workers
compensation, unemployment, excise, severance, stamp, occupation, and property
taxes, together with any interest, penalties, additions or additional amounts
imposed by any taxing authority.
"VIOLATION" means, with respect to any provision of a Commitment, statute,
judgment, corporate governance document, security, or other legal document or
instrument, (a) any material violation of or material default (with or without
notice or lapse of time, or both) under such provision, (b) the arising of any
right of termination, cancellation or acceleration of any material obligation,
or loss of any material benefit, under such provision, or (c) the arising of any
material lien, pledge, claim, charge, security interest, mortgage, easement,
servitude, refusal, claim of infringement or other restriction or encumbrance of
any kind, including any restriction on use, voting (in the case of any
security), transfer, receipt of income or exercise of any other attribute of
ownership on assets or properties.
2. THE MERGER.
2.1. MERGER DOCUMENTS. Subject to and upon the terms and conditions of
this Agreement, and on the basis of the agreements, covenants, representations
and warranties herein contained, at the Closing Acquisition Corp. and Chesapeake
shall execute and deliver the Delaware Agreement of Merger and the New Jersey
Certificate of Merger, which together shall provide for the Merger as of the
Effective Time. Under the Delaware Agreement of Merger, shares of Chesapeake
Common issued and outstanding immediately prior to the Effective Time will be
converted into fully paid and nonassessable shares of AspenTech Common, in
accordance with Section 2.4.
2.2. CLOSING DATE. The Closing shall be held on May 18, 1998 or, if each
of the conditions to the Closing provided herein shall not have been satisfied
or waived by such date, on a later date occurring as soon as reasonably
practicable after each of such conditions has been satisfied or waived, as such
later date shall be reasonably agreed upon by AspenTech, Acquisition Corp.,
Chesapeake and the Principal Stockholder. The time of the Closing on the Closing
Date, and the place of the Closing, shall be as reasonably agreed upon by
AspenTech, Acquisition Corp., Chesapeake and the Principal Stockholder.
2.3. EFFECTIVE TIME. Subject to the provisions of this Agreement, the
parties hereto shall cause the Delaware Agreement of Merger to be filed in
accordance with the Delaware General Corporation Law and shall cause the New
Jersey Certificate of Merger to be filed in accordance with the New Jersey
Business Corporation Act, in each case as soon as practicable after the Closing.
The Merger shall become effective as of the Effective Time.
2.4. EFFECT ON CAPITAL STOCK. At the Effective Time, by virtue of the
Merger and without any action on the part of any party:
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(a) All of the 1,000 issued and outstanding shares of common stock,
$.001 par value, of Acquisition Corp. shall be converted into an aggregate
of 1,000 shares of Class "B" common stock, without par value, of the
Surviving Corporation. Each stock certificate representing shares of
common stock, $.001 par value, of Acquisition Corp. prior to the Effective
Time shall represent an equal number of shares of Class "B" common stock,
without par value, of the Surviving Corporation from and after the
Effective Time.
(b) Each outstanding share of Chesapeake Common shall be converted,
subject to the indemnification and escrow provisions of Section 9, into a
number of shares of AspenTech Common equal to the quotient of the Number
of Merger Shares divided by the number of shares of Chesapeake Common
outstanding immediately prior to the Closing (including any shares issued
pursuant to the Faccenda Agreement), rounded, with respect to each
Stockholder, to the nearest whole share of AspenTech Common. Each
fractional share of Chesapeake Common shall be converted into the
equivalent fractional amount of such quotient, subject to rounding as
aforesaid. No fractional shares of AspenTech Common shall be issuable in
connection with the Merger.
2.5. EXCHANGE OF CHESAPEAKE CERTIFICATES. At the Closing, upon surrender
of all of the Chesapeake Certificates to AspenTech (or affidavits and bonds
relating thereto in accordance with Section 2.6), AspenTech shall deliver to
each of the Stockholders certificates representing ninety percent of the shares
of AspenTech Common issuable to such Stockholder pursuant to Section 2.4 and
shall deliver to the Escrow Agent, in accordance with the provisions of
Section 9 and the Escrow Agreement, a certificate representing the remaining ten
percent of the Number of Merger Shares issuable to the Stockholders (the "Escrow
Shares"). Upon the delivery of such certificates representing AspenTech Common,
the Chesapeake Certificates shall forthwith be canceled. All AspenTech Common
issued to the Stockholders pursuant to this Section 2.5 or retained in escrow
pursuant to Section 9 and the Escrow Agreement shall be deemed to have been
given in full satisfaction of all rights pertaining to the ownership of the
shares represented by the Chesapeake Certificates.
2.6. LOST, STOLEN OR DESTROYED CHESAPEAKE CERTIFICATES. In the event any
of the Chesapeake Certificates shall have been lost, stolen or destroyed,
AspenTech shall issue in exchange for such lost, stolen or destroyed Chesapeake
Certificates, upon the making of an affidavit of that fact by the record holder
thereof, shares of AspenTech Common in accordance with Sections 2.4 and 2.5;
provided, however, that AspenTech may, in its discretion and as a condition
precedent to the issuance thereof, require the record holder of such lost,
stolen or destroyed Chesapeake Certificates to deliver a bond in such sum as
AspenTech may reasonably direct as indemnity against any claim that may be made
against AspenTech with respect to the Chesapeake Certificates alleged to have
been lost, stolen or destroyed.
2.7. OTHER EFFECTS. At the Effective Time:
(a) the separate existence of Acquisition Corp. shall cease and
Acquisition Corp. shall be merged with and into Chesapeake, with
Chesapeake remaining as the surviving corporation (the "Surviving
Corporation");
(b) the by-laws of Chesapeake shall become the by-laws of the
Surviving Corporation;
(c) the directors and officers of Acquisition Corp. shall become
the directors and officers of the Surviving Corporation; and
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(d) the Merger shall, from and after the Effective Time, have all
of the effects provided under the Delaware General Corporation Law, the
New Jersey Business Corporation Act and any other applicable law.
2.8. ACCOUNTING AND TAX TREATMENT. The parties intend that the Merger
shall be treated as a pooling of interests for accounting purposes and as a
reorganization under Code section 368(a).
2.9. FURTHER ACTION. If, at any time after the Effective Time, any
further action is necessary or desirable to carry out the purposes of this
Agreement and to vest the Surviving Corporation with full right, title and
possession to all assets, properties, rights, privileges and powers of
Acquisition Corp. and Chesapeake, the officers and directors of Acquisition
Corp. and Chesapeake are fully authorized in the name of their respective
corporations or otherwise to take, and shall take, all such lawful and necessary
action.
3. REPRESENTATIONS AND WARRANTIES OF CHESAPEAKE.
Chesapeake represents and warrants to AspenTech as follows, subject to
such exceptions as are specifically disclosed under appropriate section headings
in the Chesapeake Disclosure Schedule:
3.1. ORGANIZATION AND QUALIFICATION. Chesapeake is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New Jersey. Chesapeake is qualified to do business and is in good standing in
all other jurisdictions in which such qualification is required, other than
those jurisdictions where failure to so qualify would not have a Chesapeake MAE.
Chesapeake has all requisite corporate power and authority to own its property,
to carry on its business as now being conducted, to execute, deliver and perform
this Agreement, and to consummate the transactions contemplated by this
Agreement. Complete and correct copies of the Certificate of Incorporation and
By-Laws of Chesapeake, each as amended to date, have been delivered to
AspenTech.
3.2. CAPITALIZATION AND OTHER OWNERSHIP INTERESTS. The authorized capital
stock of Chesapeake consists of 1,000 shares of Chesapeake Class A Common, of
which 300 shares are outstanding and no shares are held as treasury stock as of
the date hereof, and 1,000 shares of Chesapeake Class B Common, of which
197.95176 shares are outstanding and no shares are held as treasury stock as of
the date hereof. All of the outstanding shares of Chesapeake Common have been
duly authorized and validly issued, are fully paid and nonassessable, and are
not subject to preemptive rights created by statute, Chesapeake's Certificate of
Incorporation or By-Laws, or any agreement to which Chesapeake is a party or by
which it is bound. Each of the Stockholders is the record holder of the number
of shares of Chesapeake Class A Common and Chesapeake Class B Common set forth
opposite such Stockholder's name on EXHIBIT A. The shares of Chesapeake Class A
Common held of record of Xxxxxx X. Xxxxxx, as trustee of the ESOP, were, as of
December 31, 1997, beneficially owned by the ESOP participants named in
EXHIBIT K, in the respective numbers set forth opposite their names therein. No
Indebtedness having the right to vote (or convertible into securities having the
right to vote) on any matters on which holders of Chesapeake Common may vote has
been issued or is outstanding. Except as provided by the ESOP and the Faccenda
Agreement (complete and correct copies of both of which have been provided to
AspenTech), neither Chesapeake, the Principal Stockholder nor, to the knowledge
of Chesapeake, any of the other Stockholders is a party to or bound by: (a) any
option, warrant, call, right or agreement obligating Chesapeake to issue,
deliver or sell additional shares of Chesapeake Common or to grant, extend or
enter into any such option, warrant, call, right or agreement; (b) any option,
warrant, call, right or agreement obligating any Stockholder, in any
circumstances, to deliver or sell, or offer for delivery or sale, any shares of
Chesapeake Common or obligating any of the Stockholders to grant, extend or
enter into any such option, warrant, call, right or agreement, including any
agreement containing provisions with respect to preemptive rights, rights of
first
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refusal, purchase rights, "tag-along" or "come-along" arrangements, or similar
rights, except as provided in the redemption agreements between Chesapeake and
certain employees as listed in the Chesapeake Disclosure Schedule (complete and
correct copies of all of which have been provided or made available to
AspenTech); (c) any voting trust, proxy or other agreement or understanding with
respect to the voting of shares of Chesapeake Common; and (d) any other
agreement restricting the transfer of, or affecting rights with respect to,
shares of Chesapeake Common. The Faccenda Agreement contemplates that .3032
shares of Chesapeake Common will become issuable to Xxxxxx Xxxxxxxx on May 1,
1998 if Xx. Xxxxxxxx continues to be employed by Chesapeake as of that date. In
the event such fractional share of Chesapeake Common is issued to Xx. Xxxxxxxx
pursuant to the Faccenda Agreement, EXHIBIT A shall be promptly amended to
reflect such fractional share and Xx. Xxxxxxxx shall be deemed to be a
"Stockholder" for purposes of this Agreement.
3.3. AUTHORITY; NO VIOLATIONS.
(a) The execution, delivery and performance of this Agreement and
all agreements and instruments to be entered into or delivered by
Chesapeake in connection with the transactions contemplated hereby
(including the Delaware Agreement of Merger, the New Jersey Certificate of
Merger and each of the Employment Agreements and Non-Competition
Agreements) have been duly and validly authorized by all requisite
corporate action on the part of Chesapeake. This Agreement has been duly
executed and delivered by Chesapeake, constitutes a valid and binding
obligation of Chesapeake, and is enforceable against Chesapeake in
accordance with its terms, all as may be subject to or affected by the
Creditor Exception. As of the Closing Date, the Delaware Agreement of
Merger, the New Jersey Certificate of Merger and each of the Employment
Agreements and Non-Competition Agreements will be duly and validly
executed and delivered by Chesapeake and will constitute valid and binding
obligation of Chesapeake enforceable in accordance with their respective
terms, all as may be subject to or affected by the Creditor Exception.
(b) The execution, delivery and performance of this Agreement by
Chesapeake do not and will not result in any Violation of any provision of
(i) the Certificate of Incorporation or By-Laws of Chesapeake, each as
amended to date, (ii) any Commitment by which Chesapeake is bound, (iii)
any judgment, order, decree, ruling or injunction applicable to Chesapeake
or the Chesapeake Common or (iv) any statute, law, regulation or rule of
any Government Entity applicable to Chesapeake or the Chesapeake Common.
Chesapeake does not have any plans, programs or agreements to which it is
a party or subject pursuant to which payments may be required or
acceleration of benefits may be required upon a change of control of
Chesapeake.
(c) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Government Entity is
required by or with respect to Chesapeake in connection with the
execution, delivery and performance of this Agreement by Chesapeake,
except for the filing of a notification under the HSR Act, the filing of
the Delaware Agreement of Merger with the Secretary of State of the State
of Delaware, the filing of the New Jersey Certificate of Merger with the
Secretary of State of the State of New Jersey, and such other consents,
authorizations, filings, approvals and registrations that if not obtained
or made would not have a material adverse effect on the transactions
contemplated by this Agreement.
3.4. COMPLIANCE WITH APPLICABLE LAWS. Chesapeake holds all Permits and
has delivered or made available to AspenTech complete and correct copies of all
of the Permits. All of the Permits are in full force and effect and Chesapeake
is in compliance with the terms of the Permits, except in either case where any
failure, individually or in the aggregate with any other such failures, would
not have a Chesapeake MAE.
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No Violation of any of the Permits has been alleged by any Government Entity,
and no proceeding is pending, or to the knowledge of Chesapeake threatened, to
revoke, suspend, cancel or limit any of the Permits. Except for normal renewal
and reporting requirements, no action by Chesapeake, AspenTech, the Surviving
Corporation or any other party is required in order that all of the Permits will
remain in full force and effect following the Merger. The business of Chesapeake
is not being conducted in Violation of any law, ordinance or regulation or any
order, judgment, injunction, award or decree of any Government Entity and
Chesapeake is not otherwise subject to or in Violation of any judgment, order,
writ, injunction or decree of any court, administrative agency or Government
Entity or under any rule or regulation of any Government Entity relating to or
affecting Chesapeake (other than Environmental Laws, which are the subject of
Section 3.22), except in any such case where any such Violation, individually or
in the aggregate with any other such Violations, would not have a Chesapeake
MAE.
3.5. PROPERTIES. The unaudited balance sheet of Chesapeake at March 31,
1998 reflects all of the real and personal property used by Chesapeake in its
business or otherwise held by Chesapeake, except for personal property acquired
in the ordinary course of business by Chesapeake since March 31, 1998 and
personal property not required under generally accepted accounting principles to
be reflected on the unaudited balance sheet of Chesapeake at March 31, 1998.
Chesapeake has good and marketable title in fee simple to the real property
owned by it and good and marketable title to all of the personal property
reflected as owned on the unaudited balance sheet of Chesapeake at March 31,
1998 or thereafter acquired, in each case free and clear of any imperfection of
title, lien, claim or encumbrance except for (a) any lien, claim or encumbrance
securing taxes, assessments, governmental charges or levies, or the claims of
material men, carriers, landlords and similar Persons, all of which are not yet
due and payable, (b) imperfections of title and other minor liens, claims and
encumbrances that do not have a material adverse effect on the use of such real
or personal property by Chesapeake and (c) as shown on deeds, title policies or
other real estate instruments provided or made available to AspenTech.
Chesapeake does not own or hold, and is not obligated under or a party to, any
option, right of first refusal or other contractual right to purchase, acquire,
sell or dispose of any real property. There is no lease, sublease, license or
other agreement granting to any Person other than Chesapeake any right to the
possession, use, occupancy or enjoyment of any portion of the real property
owned by Chesapeake. The continued use, occupancy and operation of the real
property owned by Chesapeake as currently used, occupied and operated does not
constitute a nonconforming use under any law, ordinance or regulation or any
order, judgment, injunction, award or decree of any Government Entity such as
would have a Chesapeake MAE.
3.6. FINANCIAL STATEMENTS. The unaudited balance sheets of Chesapeake at
each of December 31, 1995, 1996 and 1997 and the related unaudited statements of
income, stockholders' equity and cash flows for the years then ended, and the
unaudited balance sheet of Chesapeake at March 31, 1998 and the related
unaudited statements of income, stockholders' equity and cash flows for the
three months then ended, all as provided by Chesapeake to AspenTech, have been
prepared in accordance with generally accepted accounting principles, applied on
a consistent basis for the periods involved (except that such statements do not
contain all the notes that may be required by generally accepted accounting
principles and are subject to normal and recurring year-end adjustments that are
not expected to be material in amount), and fairly present in all material
respects the financial position of Chesapeake as of the dates thereof and its
results of operations and cash flows for the periods then ended. The books of
account of Chesapeake have been prepared and maintained in accordance with
Chesapeake's normal practice, and Chesapeake has indicated to AspenTech those
provisions that are not consistent in all material respects with the accounting
principles and policies reflected in such financial statements.
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3.7. INDEBTEDNESS. Chesapeake does not have any outstanding Indebtedness
other than Indebtedness reflected or reserved against in the unaudited balance
sheet of Chesapeake at March 31, 1998 and accounts payable incurred since
March 31, 1998 in the ordinary course of business consistent with past practice.
3.8. ABSENCE OF CERTAIN CHANGES OR EVENTS; UNDISCLOSED LIABILITIES. Since
March 31, 1998, Chesapeake has not entered into any transaction that is not in
the ordinary course of business consistent with past practice, except as
otherwise specifically contemplated by this Agreement. Since March 31, 1998,
Chesapeake has not sold or purchased, assigned or transferred any of its assets
or properties or canceled any material debts or material claims, or done any act
or omitted to do any act that would cause any Violation of any material
Commitment of Chesapeake. Since March 31, 1998, there has been no change, and no
commitments have been made by Chesapeake, that has had, or could reasonably be
expected to have, a Chesapeake MAE. Chesapeake does not have any unstated
Liabilities other than Liabilities reflected or reserved against in the
unaudited balance sheet of Chesapeake at March 31, 1998, other than Liabilities
incurred since March 31, 1998 in the ordinary course of business consistent with
past practice.
3.9. LITIGATION. Chesapeake is not a party to nor to its knowledge
threatened with, or involved in any litigation, suit, action, investigation,
proceeding or controversy, at law or in equity, before any court, administrative
agency or other Government Entity relating to or affecting Chesapeake. To the
knowledge of Chesapeake, there are no facts that, if known to customers,
Government Entities or other Persons, would result in any claim, dispute,
action, suit, appeal, legal, administrative or arbitral proceeding, or
investigation that could reasonably be expected to have a Chesapeake MAE.
Chesapeake is not named as a subject of any order, writ, injunction or decree of
any court, agency, authority, arbitration panel or other tribunal, nor is it in
default with respect to any notice, order, writ, injunction or decree. No
judgment has been entered by, and no claim, dispute, action, suit, appeal,
legal, administrative or arbitral proceeding, or investigation, at law or in
equity, is pending or, to the knowledge of Chesapeake, threatened that
materially and adversely affects, or could materially and adversely affect, the
ability of Chesapeake or any of the Stockholders to perform under this
Agreement.
3.10. COMMITMENTS.
(a) Chesapeake has delivered or made available to AspenTech
complete and correct copies of the following Commitments of Chesapeake:
(i) pledges, conditional sale or title retention agreements,
security agreements, equipment obligations, and lease
agreements relating to any assets or properties of
Chesapeake;
(ii) Commitments currently in effect that were entered into
in the ordinary course of business and that involve
executory payment of consideration to or by Chesapeake
in excess of $100,000;
(iii) Commitments to perform consulting, modeling or
integration services that include an obligation,
guarantee, promise or undertaking to be responsible or
liable for damages, losses or costs in excess of
$100,000;
(iv) Commitments establishing franchise, distribution or
sales agency arrangements;
(v) Commitments with any current or former officer,
director, employee, consultant, agent, representative or
security holder, including any employment, consulting or
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deferred compensation agreement and any executive
compensation, bonus or incentive plan agreement;
(vi) Commitments for the purchase, sale or lease of
materials, supplies, equipment, goods, research and
development, or capital assets, or the receipt of
services, the performance of which will extend over a
period of more than one year or involve consideration in
excess of $100,000;
(vii) Commitments under which Chesapeake agrees to indemnify
any party other than Commitments entered into in the
ordinary course of business;
(viii) Commitments for the sale of any assets or properties of
Chesapeake other than in the ordinary course of business
or for the grant to any Person of any preferential
rights to purchase any assets or properties of
Chesapeake; and
(ix) any other Commitments that were not made in the ordinary
course of business and that are, individually or in the
aggregate, material to Chesapeake.
(b) With respect to each Commitment described in Section 3.10(a),
(i) Chesapeake is not in Violation of any provision of such Commitment,
(ii) no event has occurred that, after notice or lapse of time or both,
would constitute a Violation of any provision of such Commitment, and
(iii) to the knowledge of Chesapeake, there is no existing Violation of
any provision of such Commitment by any other party to such Commitment and
no event has occurred that, after notice or lapse of time or both, would
constitute such a Violation by such other party.
3.11. CUSTOMERS, SUPPLIERS AND SALES AGENTS. The relationships of
Chesapeake with its suppliers, customers and sales agents are good commercial
working relationships. Since December 31, 1997, no customer, supplier or sales
agent of Chesapeake has canceled or otherwise terminated, or threatened in
writing to cancel or otherwise terminate, its relationship with Chesapeake.
3.12. WARRANTY AND PRODUCT LIABILITY CLAIMS. No amounts in excess of
$50,000 have been paid to third parties in satisfaction of warranty or other
product liability claims made against Chesapeake other than in the ordinary
course of business. Chesapeake does not have and will not have any obligations
for warranties or indemnities in connection with the conduct of its business
prior to the Closing Date in excess of the amount accrued therefor on the
unaudited balance sheet of Chesapeake at March 31, 1998.
3.13. INTELLECTUAL PROPERTY.
(a) Chesapeake owns, or is licensed or otherwise possesses legally
enforceable rights to use, all Intellectual Property rights that either
are material to Chesapeake or are commonly used by Chesapeake for the
development, support or license of any of the software products licensed
or used by Chesapeake, and all designs, permits, labels, packages and
displays, schematics, technology, know-how, computer software programs or
applications (in object code form and, with respect to Intellectual
Property rights owned or purported to be owned by Chesapeake, in source
code form) used on or in connection with such rights, and Chesapeake has
not received notice of a claim, and does not have present knowledge of any
potential claim, against Chesapeake that any of its operations,
activities, products or publications infringes on any patent, trademark,
trade name, copyright or other property right of others, or that
Chesapeake is illegally or otherwise using the trade secrets, formulae or
any property rights of others. To the knowledge of Chesapeake, (i) there
are no assertions by others against
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Chesapeake conflicting with Chesapeake's rights to any Intellectual
Property, (ii) no other Person has any superior right to the Intellectual
Property owned or purported to be owned by Chesapeake, and (iii) no other
Person has infringed the rights of Chesapeake in the Intellectual Property
or uses the Intellectual Property owned or purported to be owned by
Chesapeake without a license from Chesapeake. Chesapeake is not aware of
any steps in its judgment reasonably necessary to protect its right, title
and interest in and to the Intellectual Property that have not been taken.
(b) The execution and delivery of this Agreement by Chesapeake, and
the consummation of the transactions contemplated hereby, will not cause
Chesapeake to be in Violation of any provision of any license, sublicense
or agreement with respect to Intellectual Property.
(c) Each employee, officer and consultant of Chesapeake has
executed a confidentiality agreement in substantially the form provided to
AspenTech, providing Chesapeake with title and ownership to Intellectual
Property developed or used by Chesapeake in its business. All of such
agreements are valid, binding and enforceable in accordance with their
terms in all material respects. To the knowledge of Chesapeake, no
employee, officer or consultant of Chesapeake is in Violation of any term
or any employment or consulting contract, proprietary information and
inventions agreement, non-competition agreement, or any other contract or
agreement relating to the relationship of any such employee, officer or
consultant with Chesapeake or any previous employer.
(d) Each Chesapeake software program has been tested for compliance
with Year 2000 standards, are Year 2000 compliant and otherwise comply
with the Year 2000 warranties and representations made in binding
agreements with third parties. Year 2000 compliant means that the products
are capable of (i) correctly processing, providing and receiving date data
within and between the twentieth and twenty-first centuries and (ii)
handling the computer date rollover on December 31, 1999 at midnight.
(e) Each Chesapeake software program substantially meets the
specifications applicable to it and the standards set forth in the
documentation and marketing information and in Chesapeake's
representations and warranties (express and implied) to customers and
sales agents.
3.14. INVESTMENTS. Chesapeake does not directly or indirectly own, or have
the right to acquire, any equity interest or investment in the equity capital of
any Person. Chesapeake has no obligation to acquire any class of securities
(including debt securities) issued by any Person. Chesapeake has not owned or
controlled any subsidiary corporation or any stock or other interest in any
Person and is not a party to, and has not been a party to, or bound by any
partnership, joint venture, voluntary association, cooperative or business trust
agreement or arrangement other than in the ordinary course of business.
3.15. INSURANCE. The Chesapeake Disclosure Schedule sets forth a complete
and correct list of all insurance policies that are maintained by Chesapeake or
of which Chesapeake is a beneficiary or a named insured. All such insurance
policies will be maintained through and including the Closing Date. Such
insurance policies will not terminate as a result of any action contemplated by
this Agreement and will remain valid in accordance with their terms after the
Merger. Chesapeake is not a party to, or bound by, any Commitment requiring
Chesapeake (a) to name a third party as loss payee under any insurance policy or
binder held by or on behalf of Chesapeake or otherwise requiring Chesapeake to
obtain insurance for or on behalf of any party or (b) to provide coverage to
third parties (such as, for example, under leases or service agreements). There
is no self-insurance arrangement by or affecting Chesapeake.
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3.16. BOOKS AND RECORDS. The general ledgers and books of account of
Chesapeake are in all material respects complete and correct and have been
maintained in accordance with Chesapeake's normal accounting practices.
Chesapeake has no knowledge of any law or regulation that would materially
affect the information and disclosures set forth in the books, records and
accounts, correspondence, production records, technical, accounting,
manufacturing and procedural manuals, customer lists, studies, reports and
summaries relating to Chesapeake.
3.17. EMPLOYEE RELATIONS.
(a) Chesapeake is in material compliance with all laws respecting
employment and employment practices, terms and conditions of employment,
and wages and hours, and is not engaged in any unfair labor practice.
Chesapeake is not in arrears in the payment of any wages. There is no
material labor trouble affecting Chesapeake.
(b) The Chesapeake Disclosure Schedule sets forth a complete and
correct list of (i) the employee benefits provided by Chesapeake to its
employees and all contracts or agreements between Chesapeake and any of
its employees and (ii) Chesapeake's current payroll, including the current
salary or wage rates of each of its employees, showing separately for each
employee the amounts paid or payable as bonus payments for the year ending
December 31, 1997, including any special bonus arrangements payable prior
to the Closing.
3.18. EMPLOYEE PLANS.
(a) The Chesapeake Disclosure Schedule contains a complete and
correct list of all Employee Plans, and Chesapeake has no other
obligations relating to any Employee Plan, contingent or otherwise, past
or present, under any applicable law or the terms of any Employee Plan.
(b) No Employee Plan is subject to ERISA Title IV or to Code
section 412 or is a defined benefit plan within the meaning of ERISA
section 3(35) or Code section 414(i). Neither Chesapeake nor any Commonly
Controlled Entity has ever maintained or contributed to a "multiemployer
pension plan," as such term is defined in ERISA section 3(37). Each of
Chesapeake and any Commonly Controlled Entities has made all payments due
from it to date with respect to each Employee Plan. All amounts properly
accrued as liabilities to or expenses of any Employee Plan that have not
been paid have been properly reflected on the unaudited balance sheet of
Chesapeake at March 31, 1998. Each Employee Plan conforms to, and its
administration (where applicable) is in material compliance with, the
terms of such Employee Plan, the Code and ERISA and with all other
applicable federal, state, and local laws and regulations. To the
knowledge of Chesapeake, there are no actions, liens, suits or claims
pending or threatened (other than routine claims for benefits) with
respect to any Employee Plan. Each Employee Plan that is intended to
qualify under Code section 401(a) or 402(a) so qualifies, and the Internal
Revenue Service has issued a favorable determination letter with respect
to such plan. No event has occurred and there exists no condition or set
of circumstances that presents a material risk of a partial termination
(within the meaning of Code section 411(d)(3)) of any Employee Plan.
Chesapeake does not have any Employee Plan that is a "group health plan"
(as defined in ERISA section 607(1)), other than medical insurance
coverage as described in the Chesapeake Disclosure Schedule. No assets or
properties of Chesapeake are allocated to or held in a "rabbi trust" or
similar funding vehicle. Chesapeake does not have any Employee Plan that
is a welfare plan within the meaning of ERISA section 3(1) (regardless of
whether the plan is covered by ERISA) and that provides benefits to
current or former employees beyond their retirement or other termination
of service (other than coverage mandated by COBRA, the cost of which is
fully paid by the current or former employee
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or his dependents); and there exists no (i) unfunded benefit obligations
with respect to any employee of Chesapeake that are not fairly reflected
by reserves shown on Chesapeake's most recent financial statements or (ii)
reserves, assets, surpluses or prepaid premiums with respect to any
Employee Plan that is a welfare plan within the meaning of ERISA
section 3(1) (regardless of whether the plan is covered by ERISA).
(c) Chesapeake has performed in all material respects all
obligations required to be performed by it under, and is not in Violation
in any respect of, and there has been no Violation by any other party with
respect to, any of the Employee Plans. There has been no "prohibited
transaction" (as such term is defined in Code section 4975 or in part 4 of
subtitle B of ERISA Subchapter I) with respect to any Employee Plan. No
Employee Plan has incurred any federal income or excise tax liability.
(d) Chesapeake has previously delivered or made available to
AspenTech complete and correct copies of all Employee Plans that have been
reduced to writing and written descriptions of all Employee Plans that
have not been reduced to writing, and all agreements, including trust
agreements and insurance contracts, related to such Employee Plans.
(e) All premiums or other payments required by the terms of any
group or individual insurance policies and programs maintained by
Chesapeake and covering any present or former employees of Chesapeake with
respect to all periods up to and including the Closing Date have been
fully paid for the length of the obligation.
(f) The consummation of the transactions contemplated by this
Agreement will not (i) entitle any individual currently or formerly
employed by Chesapeake or any Commonly Controlled Entity to severance pay,
unemployment compensation or any similar payment, (ii) accelerate the time
of payment or vesting, or increase the amount of any compensation due to,
any individual currently or formerly employed by Chesapeake or any
Commonly Controlled Entity, (iii) constitute or involve a prohibited
transaction (as defined in ERISA section 406 or Code section 4975),
constitute or involve a breach of fiduciary responsibility within the
meaning of ERISA section 502(l) or otherwise violate part 4 of title I or
ERISA or (iv) result in the payment of compensation that would, in
combination with any other payment, result in an "excess parachute
payment" within the meaning of Code section 280G(b).
(g) All reports, returns and similar items required to be filed
with any Government Entity or distributed to employees or Employee Plan
participants in connection with the maintenance or operation of any
Employee Plan have been duly and timely filed and distributed, and there
have bee no acts or omissions by Chesapeake or any Commonly Controlled
Entity that have given rise to, or may reasonably be expected to give rise
to, any material fines, penalties, taxes or related charges under ERISA
section 502(c), 502(i) or 4071 or Code chapter 43 or section 6039D for
which Chesapeake or any Commonly Controlled Entity may be liable.
3.19. POTENTIAL CONFLICTS OF INTEREST. Except for compensation received as
an employee, no officer, director or Stockholder of Chesapeake and no entity
known by Chesapeake to be controlled by any officer, director or Stockholder of
Chesapeake:
(a) is directly or indirectly engaged in business as a competitor,
lessor, lessee, customer or supplier of Chesapeake; owns
directly or indirectly any interest in any Person (except for
ownership of not more than five percent of the outstanding
voting stock of any publicly traded company) that is directly
or indirectly engaged in business as a competitor, lessor,
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lessee, franchisee, customer or supplier of Chesapeake; or is
an officer, director, employee or consultant of any such
Person;
(b) owns directly or indirectly, in whole or part, any material
tangible or intangible property used by Chesapeake;
(c) has any cause of action or other claim whatsoever against, or
owes any amount to, Chesapeake, except for (i) claims in the
ordinary course of business, such as for normal compensation,
accrued vacation pay and advances for reimbursable expenses,
(ii) rights under the ESOP, and (iii) similar matters in
agreements existing on the date hereof, complete and correct
copies of which have been provided or made available to
AspenTech; or
(d) has made any payment or commitment to pay any commission, fee
or other amount to, or purchase or obtain or otherwise
contract to purchase or obtain any goods or services from, any
Person of which any officer or director of Chesapeake is a
partner or stockholder (except for ownership of not more than
five percent of the outstanding voting stock of any publicly
traded company).
3.20. BANK ACCOUNTS. Chesapeake has provided or made available to
AspenTech complete and correct written summaries of information regarding all
accounts, lock boxes and safe deposit boxes maintained by Chesapeake at banks,
trust companies, securities or other brokers or other financial institutions,
including the names of all Persons authorized to draw thereon or have access
thereto.
3.21. TAXES.
(a) Chesapeake has timely filed in accordance with all applicable
laws all Tax Returns required to be filed by or with respect to it, its
operations and assets, and all Taxes shown as due on such Tax Returns have
been paid. All Tax Returns filed by Chesapeake with respect to Taxes were
prepared in compliance with all applicable laws and regulations and were
true and complete in all material respects as of the date on which they
were filed or as subsequently amended to the date hereof. Complete and
correct copies of federal, state, local and foreign Tax Returns of
Chesapeake for each of the years ended December 31, 1993, 1994, 1995 and
1996 have been delivered or made available to AspenTech. Prior to the date
hereof, Chesapeake has provided or made available to AspenTech complete
and correct copies of all revenue agents' reports and other written
assertions of deficiencies or other liabilities for Taxes with respect to
the past periods for which the applicable statute of limitations has not
expired. Chesapeake will provide to AspenTech copies of any such reports
or written assertions received after the date hereof within ten days of
receipt.
(b) Chesapeake has timely filed, or will timely pay on or prior to
the Closing Date, all Taxes for which notice of, or assessment or demand
for, payment has been received or that are otherwise due and payable up to
and including the Closing Date with respect to Chesapeake, its operations
and assets (in each case, whether or not shown on any Tax Return).
(c) Chesapeake has complied in all material respects with all
applicable laws, rules and regulations relating to the withholding of
Taxes and has timely collected or withheld and paid over (and up to the
Closing Date will have timely collected or withheld and paid over) to the
proper governmental authorities substantially all amounts required to be
so collected or withheld and paid over for all periods up to the Closing
Date under all applicable laws. There are not currently in effect any
waivers or
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extensions of any applicable statute of limitations for the assessment or
collection of Taxes with respect to any Tax Return that relates to
Chesapeake, and no request for any such waiver or extension is pending.
There are no Tax rulings, requests for rulings or closings agreements
relating to Chesapeake that could affect its liability for Taxes for any
period after the Closing Date.
(d) No action, suit, proceeding, investigation, audit, claim or
assessment is presently pending, or to the knowledge of Chesapeake
threatened, with regard to any Taxes for which Chesapeake would or could
be liable. Chesapeake does not know of any fact or condition that, if
known to any taxing authority having jurisdiction, would likely result in
the issuance of a notice of proposed deficiency or similar notice of
intention to assess Taxes against Chesapeake, and no issue has arisen in
any examination of Chesapeake by any taxing authority that if raised with
respect to any other period not so examined would, if upheld, result in a
material deficiency for such other period.
(e) Chesapeake is not a party to, bound by or subject to any Tax
allocation or Tax sharing agreement (or similar agreement). Chesapeake has
no current or potential contractual obligation to indemnify any other
Person with respect to Taxes, and has no obligation to make distributions
in respect of Taxes.
(f) No claim has ever been made by a taxing authority in a
jurisdiction where Chesapeake does not file Tax Returns that Chesapeake is
or may be subject to taxation in such jurisdiction.
(g) No power of attorney has been granted by Chesapeake with
respect to any matter relating to Taxes, which power of attorney is
currently in force.
3.22. ENVIRONMENTAL MATTERS.
(a) Chesapeake has been in the past and is now in material
compliance with all Environmental Laws and all requirements of applicable
Permits pertaining thereto.
(b) Chesapeake has received no notification that it is or could be,
and to the knowledge of Chesapeake there is no basis for it to become, and
it is not, subject to any claim, action, obligation, proceeding,
investigation or evaluation, directly or indirectly relating to any of its
current or past operations, or those of any predecessor or affiliate, or
any of its currently or formerly owned, leased or operated properties, or
those of any predecessor or affiliate, that could reasonably be expected
directly or indirectly to result in the incurrence of any Environmental
Liabilities and Costs by Chesapeake.
(c) There are not now and never have been any underground storage
tanks situated on any real property owned by Chesapeake or any of its
affiliates or, to the knowledge of Chesapeake, any property leased or
operated by Chesapeake or any of its affiliates.
(d) Chesapeake has entered into no agreement with any Government
Entity or other Person by which responsibility was assumed, either
directly or indirectly, for the conduct of any Remedial Action or the
incurrence of any other Environmental Liabilities and Costs.
(e) Chesapeake has not prepared, caused to be prepared or received
any environmental audits, environmental risk assessments or site
assessments. Chesapeake is not a party to any Commitment with respect to
the removal or disposal of any Oil or Hazardous Material.
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3.23. FINDER'S FEES. Neither Chesapeake nor the Principal Stockholder has
incurred any liability, contingent or otherwise, for brokerage fees, finder's
fees, agent's commissions, financial advisory fees or other similar forms of
compensation in connection with this Agreement or any of the transactions
contemplated hereby, other than to Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities
Corporation.
3.24. DISCLOSURE. Disclosure of any matter herein, including as set forth
under any Section of the Chesapeake Disclosure Schedule, shall, if reasonable,
be deemed to be set forth under any other Section of the Chesapeake Disclosure
Schedule for which such matter is applicable. Chesapeake has made available to
AspenTech all material facts pertaining to its business and properties.
4. ADDITIONAL REPRESENTATIONS AND WARRANTIES OF THE PRINCIPAL STOCKHOLDER.
The Principal Stockholder represents and warrants to AspenTech and
Acquisition Corp. as follows:
4.1. INVESTMENT IN ASPENTECH COMMON.
(a) The Principal Stockholder is an accredited investor as defined
in Rule 501 under the Securities Act and is a resident of New Jersey. The
Principal Stockholder (together with such Principal Stockholder's
financial and other advisors, if any) has such knowledge and expertise in
financial and business matters that the Principal Stockholder is capable
of evaluating the merits and risks of the conversion of the Principal
Stockholder's shares of Chesapeake Common into shares of AspenTech Common
pursuant to the Merger and of protecting the Principal Stockholder's
interests in connection therewith. The Principal Stockholder has the
ability to bear the economic risk of his investment in AspenTech Common.
(b) The Principal Stockholder has received from AspenTech and has
reviewed copies of AspenTech's proxy statement dated November 25, 1997,
annual report on Form 10-K for the fiscal year ended June 30, 1997 and
quarterly reports on Form 10-Q for the quarters ended September 30, 1997
and December 31, 1997, and will review any additional SEC Documents
provided by AspenTech. The Principal Stockholder has had an opportunity to
discuss AspenTech's business, management and financial affairs with
AspenTech's management.
(c) The Principal Stockholder understands that the shares of
AspenTech Common to be issued in connection with the Merger will not be
registered under the Securities Act and will not be registered or
qualified under the securities or blue sky laws of any jurisdiction,
except as contemplated by the Registration Rights Declaration. The
Principal Stockholder further understands that such shares are being
issued to the Stockholders pursuant to exemptions contained in the
Securities Act and other applicable securities and blue sky laws and that
AspenTech's reliance on these exemptions is based in part on the
representations of the Principal Stockholder made herein. The Principal
Stockholder is acquiring shares of AspenTech Common for his own account
and not with a view to, or for resale in connection with, any distribution
thereof in Violation of any applicable law, and unless the shares have
been registered in accordance with this Agreement and such registration is
then in effect, the Principal Stockholder has no present intention of
selling, granting any participation in, or otherwise distributing the same
in Violation of any applicable law. The Principal Stockholder understands
that the shares of AspenTech Common issued in the Merger will constitute
"restricted securities" within the meaning of Rule 144 under the
Securities Act and that, as such, such shares must be held indefinitely
unless they are subsequently registered under the Securities Act or unless
an exemption from the registration requirements of the Securities Act is
available. The Principal Stockholder is also aware of the provisions of
Rule 144 under the Securities Act that permit limited resales of shares
purchased in a
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private placement subject to the satisfaction of certain conditions,
including the existence of a public market for the shares, the
availability of certain current public information about AspenTech, the
resale occurring not less than one year after a party has purchased and
paid for the security to be sold, the sale being effected through a
"broker's transaction" or in transactions directly with a "market maker"
(as provided by Rule 144(f) under the Securities Act) and the number of
shares being sold during any three-month period not exceeding specified
limitations.
(d) Without in any way limiting the representations set forth
above, the Principal Stockholder further agrees not to make any
disposition of all or any portion of the shares of AspenTech Common
received by the Principal Stockholder as a result of the Merger will
unless and until:
(i) there is then in effect a registration statement under
the Securities Act covering such proposed disposition and such
disposition is made in accordance with such registration statement;
or
(ii) the Principal Stockholder (A) has notified AspenTech of
the proposed disposition and has furnished AspenTech with a
reasonably detailed statement of the circumstances surrounding the
proposed disposition and (B) if requested by AspenTech, has
furnished AspenTech with an opinion of counsel, reasonably
satisfactory to AspenTech, that such disposition will not require
registration under the Securities Act.
(e) It is understood that each certificate representing shares of
AspenTech Common received by the Stockholders as a result of the Merger
will bear a legend substantially to the following effect (in addition to
any legend required under applicable state securities or blue sky laws):
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT
WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED."
4.2. EXECUTION; NO VIOLATIONS.
(a) This Agreement has been duly executed and delivered by the
Principal Stockholder, constitutes a valid and binding obligation of the
Principal Stockholder, and is enforceable against the Principal
Stockholder in accordance with its terms, all as may be subject to or
affected by the Creditor Exception. As of the Closing Date, the Principal
Stockholder's Employment Agreement and Non-Competition Agreement will be
duly and validly executed and delivered by the Principal Stockholder and
will constitute valid and binding obligation of the Principal Stockholder
enforceable in accordance with their respective terms, all as may be
subject to or affected by the Creditor Exception.
(b) The execution, delivery and performance of this Agreement by
the Principal Stockholder do not and will not result in any Violation of
any provision of (i) any note, agreement, contract, license, instrument,
mortgage, lease or other obligation by which the Principal Stockholder is
bound, (iii) any judgment, order, decree, ruling or injunction applicable
to the Principal Stockholder or (iv) any statute, law, regulation or rule
of any Government Entity applicable to the Principal Stockholder.
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(c) No consent, approval, order or authorization of, or
registration, declaration or filing with any Government Entity is required
by or with respect to the Principal Stockholder in connection with the
execution, delivery and performance of this Agreement by the Principal
Stockholder, except for the filing of a notification under the HSR Act and
such other consents, authorizations, filings, approvals and registrations
that if not obtained or made would not have a material adverse effect on
the transactions contemplated by this Agreement.
5. REPRESENTATIONS AND WARRANTIES OF ASPENTECH AND ACQUISITION CORP.
AspenTech and Acquisition Corp., jointly and severally, represent and
warrant to Chesapeake as follows:
5.1. ORGANIZATION AND QUALIFICATION. Each of AspenTech and Acquisition
Corp. is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. Each of AspenTech and Acquisition Corp.
is qualified to do business and is in good standing in all other jurisdictions
in which such qualification is required, other than those jurisdictions where
failure to so qualify would not have an AspenTech MAE. Each of AspenTech and
Acquisition Corp. has all requisite corporate power and authority to own its
property, to carry on its business as now being conducted, to execute, deliver
and perform this Agreement, and to consummate the transactions contemplated by
this Agreement.
5.2. CAPITALIZATION.
(a) The authorized capital stock of AspenTech consists of (i)
10,000,000 shares of Preferred Stock, $.10 par value, none of which are
issued or outstanding, and (ii) 40,000,000 shares of AspenTech Common, of
which 21,728,140 shares were issued and outstanding as of April 24, 1998.
All of the outstanding shares of AspenTech Common are, and the shares of
AspenTech Common when issued and delivered to the Stockholders in
accordance with the Delaware Agreement of Merger will be, duly authorized,
validly issued, fully paid and nonassessable and not subject to preemptive
rights created by statute, AspenTech's Certificate of Incorporation or
By-Laws, or any agreement to which AspenTech is a party or by which it is
bound. All outstanding shares of AspenTech Common are approved for
quotation on the Nasdaq National Market, and there are no proceedings to
revoke or suspend the quotation of AspenTech Common on the Nasdaq National
Market.
(b) The authorized capital stock of Acquisition Corp. consists of
1,000 shares of common stock, $.001 par value, all of which are
outstanding and held of record by AspenTech.
5.3. AUTHORITY; NO VIOLATIONS
(a) The execution, delivery and performance of this Agreement and
all agreements and instruments to be entered into or delivered by
AspenTech in connection with the transactions contemplated hereby
(including the Escrow Agreement, the Non-Competition Agreements and the
Registration Rights Declaration) have been duly and validly authorized by
all requisite corporate action on the part of AspenTech. This Agreement
has been duly executed and delivered by AspenTech, constitutes a valid and
binding obligation of AspenTech, and is enforceable against AspenTech in
accordance with its terms, all as may be subject to or affected by the
Creditor Exception. As of the Closing Date, the Escrow Agreement and each
of the Non-Competition Agreements will be duly and validly executed and
delivered by AspenTech, the Registration Rights Declaration will be duly
and validly adopted by the board of directors of AspenTech, and each of
the Escrow Agreement, the Non-Competition Agreement and the Registration
Rights Declaration will constitute a valid and
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binding obligation of AspenTech enforceable against AspenTech in
accordance with its terms, all as may be subject to or affected by the
Creditor Exception.
(b) The execution, delivery and performance of this Agreement and
all agreements and instruments to be entered into or delivered by
Acquisition Corp. in connection with the transactions contemplated hereby
(including the Delaware Agreement of Merger and the New Jersey Certificate
of Merger) have been duly and validly authorized by all requisite
corporate action on the part of Acquisition Corp. This Agreement has been
duly executed and delivered by Acquisition Corp., constitutes a valid and
binding obligation of Acquisition Corp., and is enforceable against
Acquisition Corp. in accordance with its terms, all as may be subject to
or affected by the Creditor Exception. As of the Closing Date, each of the
Delaware Agreement of Merger and the New Jersey Certificate of Merger will
be duly and validly executed and delivered by Chesapeake and will
constitute a valid and binding obligation of Acquisition Corp. enforceable
in accordance with its terms, all as may be subject to or affected by the
Creditor Exception.
(c) The execution, delivery and performance of this Agreement by
AspenTech do not and will not result in any Violation of any provision of
(i) the Certificate of Incorporation or By-Laws of AspenTech, (ii) any
Commitment by which AspenTech is bound, (iii) any judgment, order, decree,
ruling or injunction applicable to AspenTech or the AspenTech Common or
(iv) any statute, law, regulation or rule of any Government Entity
applicable to AspenTech or the AspenTech Common, except to the extent that
a consent or waiver to any such Violation has been obtained as of the date
hereof or is obtained prior to the Closing.
(d) The execution, delivery and performance of this Agreement by
Acquisition Corp. do not and will not result in any Violation of any
provision of (i) the Certificate of Incorporation or By-Laws of
Acquisition Corp., (ii) any Commitment by which Acquisition Corp. is
bound, (iii) any judgment, order, decree, ruling or injunction applicable
to Acquisition Corp. or (iv) any statute, law, regulation or rule of any
Government Entity applicable to Acquisition Corp., except to the extent
that a consent or waiver to any such Violation has been obtained as of the
date hereof or is obtained prior to the Closing.
(e) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Government Entity is
required by or with respect to AspenTech or Acquisition Corp. in
connection with the execution, delivery and performance of this Agreement
by AspenTech and Acquisition Corp., except for the filing of a
notification under the HSR Act, the filing of the Delaware Agreement of
Merger with the Secretary of State of the State of Delaware, the filing of
the New Jersey Certificate of Merger with the Secretary of State of the
State of New Jersey, such filings under the Securities Act or applicable
state securities or blue sky laws as may be necessary or desirable in
connection with the issuance of shares of AspenTech Common in the Merger
or with the transactions contemplated by the Registration Rights
Declaration, the filing of a current report on Form 8-K with the
Securities and Exchange Commission in accordance with the Exchange Act,
and such other consents, authorizations, filings, approvals and
registrations that if not obtained or made would not have a material
adverse effect on the transactions contemplated by this Agreement.
5.4. SEC DOCUMENTS. AspenTech has furnished to Chesapeake and the
Principal Stockholder complete and correct copies of AspenTech's proxy statement
dated November 25, 1997, annual report on Form 10-K for the fiscal year ended
June 30, 1997 and quarterly reports on Form 10-Q for the quarters ended
September 30, 1997 and December 31, 1997, and will furnish, promptly after
filing and in any event before the Closing Date, complete and correct copies of
any other statement, report, registration statement or
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definitive proxy statement filed by AspenTech with the Securities and Exchange
Commission from the date hereof to the Closing Date. Such proxy statement,
annual report and quarterly reports and any such other filings are collectively
referred to herein as the "SEC Documents." As of their respective filing dates,
the SEC Documents complied or will comply in all material respects with the
requirements of the Exchange Act or the Securities Act (as the case may be) and
none of the SEC Documents contained or will contain any untrue statement of a
material fact or will omit to state a material fact required to be stated
therein or necessary in order to make the statements made therein, in light of
the circumstances under which they were made, not misleading, as of their
respective filing dates, except to the extent corrected by a subsequently filed
SEC Document.
5.5. FINANCIAL STATEMENTS. The audited and unaudited consolidated balance
sheets and consolidated statements of income, stockholders' equity and cash
flows included in the SEC Documents have been or will be (as the case may be)
prepared in accordance with generally accepted accounting principles, applied on
a consistent basis for the periods involved (except that the unaudited
statements do not or may not contain all the notes that may be required by
generally accepted accounting principles and are or may be subject to normal and
recurring year-end adjustments that are not expected to be material in amount),
and fairly present in all material respects the consolidated financial position
of AspenTech and its consolidated subsidiaries as of the respective dates
thereof and its results of operations and cash flows for the periods then ended.
5.6. LITIGATION. No judgment has been entered by, and no claim, dispute,
action, suit, appeal, legal, administrative or arbitral proceeding, or
investigation, at law or in equity, is pending or, to the knowledge of AspenTech
or Acquisition Corp., threatened that materially and adversely affects, or could
materially and adversely affect, the ability of AspenTech or Acquisition Corp.
to perform under this Agreement.
5.7. FINDER'S FEES. Neither AspenTech nor Acquisition Corp. has incurred
any liability, contingent or otherwise, for brokerage fees, finder's fees,
agent's commissions, financial advisory fees or other similar forms of
compensation in connection with this Agreement or any of the transactions
contemplated hereby, other than to NationsBanc Xxxxxxxxxx Securities.
6. COVENANTS OF CHESAPEAKE AND THE PRINCIPAL STOCKHOLDER AS TO CONDUCT OF
BUSINESS.
From and after the date of this Agreement and until the Closing Date, each
of Chesapeake and the Principal Stockholder covenants and agrees with AspenTech
and Acquisition Corp. that, except as specifically contemplated by this
Agreement or as consented to by AspenTech and Acquisition Corp. in writing:
6.1. OPERATION OF BUSINESS. Chesapeake shall conduct its business and
maintain its assets and properties diligently and in substantially the same
manner as prior to the date of this Agreement. Chesapeake shall not: (a) incur
any obligation or liability other than in the ordinary course of business
consistent with past practice; (b) mortgage, pledge, subject to any lien or
encumbrance, sell, transfer or assign any of its assets or properties other than
in the ordinary course of business consistent with past practice; (c) enter into
any contracts, agreements, leases or understandings other than in the ordinary
course of business consistent with past practice; (d) modify, amend or terminate
any material Commitments; (e) waive any rights of material value; or (f)
otherwise materially change the normal conduct of its business.
6.2. CAPITAL STRUCTURE. Chesapeake shall not: (a) declare or pay any
dividend or other distribution (whether in cash, stock or property or any
combination thereof) in respect of any shares of Chesapeake Common; (b) issue,
deliver or sell, or authorize the issuance, delivery or sale of, any shares of
capital stock of any class, any voting debt or any options, warrants, calls,
rights or agreements that obligate Chesapeake
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to issue, deliver or sell additional shares of Chesapeake Common or voting debt
or to grant, extend or enter into any option, warrant, call, right or agreement,
other than any issuance of shares of Chesapeake Common pursuant to the Faccenda
Agreement; (c) split, combine or reclassify any of the Chesapeake Common; or (d)
purchase, redeem or otherwise acquire, directly or indirectly, any Chesapeake
Common.
6.3. NOTIFICATION OF CHANGES. Chesapeake shall promptly advise AspenTech
in writing of any material change in the condition of its assets, properties or
business, whether arising from matters occurring in the ordinary course of
business or otherwise.
6.4. EXCLUSIVITY. Chesapeake and the Principal Stockholder shall not,
directly or indirectly, through any officer, director or agent or otherwise: (a)
solicit, initiate or encourage any acquisition proposal or offers from any
Person relating to the purchase of all or a material portion of the capital
stock or assets of Chesapeake; (b) discuss any acquisition proposals relating to
Chesapeake either from parties who have already expressed an interest in
Chesapeake or from any other unsolicited outside sources; or (c) disclose (other
than to AspenTech) any material unpublished information concerning Chesapeake.
Chesapeake and the Principal Stockholder shall promptly notify AspenTech if any
such proposal or offer, or any inquiry or contact with any Person with respect
thereto, is made.
6.5. INVESTMENTS AND ACQUISITIONS. Chesapeake shall not (a) acquire any
equity interest or investment in any Person, (b) merge or consolidate with any
other Person, or (c) enter into any partnership, joint venture, voluntary
association, cooperative or business trust agreement or arrangement.
6.6. INDEBTEDNESS. Chesapeake shall not, and shall not propose to, incur
any Indebtedness for borrowed money, incur any other Indebtedness except in the
ordinary course of business consistent with past practice, or guarantee any
Indebtedness of others. Chesapeake shall not pay, discharge or satisfy, in an
amount in excess of $50,000 (in the aggregate), any claims, liabilities or
obligations reflected or reserved against in the unaudited balance sheet of
Chesapeake at March 31, 1998, except in the ordinary course of business
consistent with past practice.
6.7. LITIGATION. Chesapeake shall not commence any litigation without the
prior written consent of AspenTech, except that Chesapeake may take such action
if a delay would result in an irreparable material injury or loss to it.
6.8. COMMITMENTS. Chesapeake shall not: (a) enter into any Commitment or
engage in any transaction not in the ordinary course of business consistent with
past practice; (b) amend or otherwise modify any Commitment except in the
ordinary course of business consistent with past practice; or (c) do or omit to
do any act or permit any act or omission to act, which act or omission will
result in a Violation of any provision of any Commitment of Chesapeake.
6.9. TAXES. Chesapeake shall not make or change any material election in
respect of Taxes, adopt or change any accounting method in respect of Taxes,
enter into any closing agreement, consent to any extension or waiver of the
limitation period applicable to any claim or assessment in respect of Taxes, or
settle any claim or assessment in respect of Taxes, except for any such
settlement that is entered into in connection with the currently pending audit
of the Internal Revenue Service and that is consented to in writing by AspenTech
(which consent shall not be unreasonably withheld).
6.10. EMPLOYEE PLANS. Chesapeake shall not adopt any new Employee Plan or
amend any Employee Plan in any material respect.
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6.11. EMPLOYEE MATTERS. Chesapeake shall not (a) adopt any collective
bargaining agreement, (b) grant any severance or termination pay to any
director, officer or other employee of Chesapeake except in accordance with
existing agreements and policies disclosed in the Chesapeake Disclosure
Statement, (c) grant any general or uniform increase in the rates of pay of
employees of Chesapeake or in the benefits under any bonus plan or other
compensation arrangements or (d) increase the compensation payable or to become
payable to any officer or key salaried employee.
6.12. COMPLIANCE WITH APPLICABLE LAWS. Chesapeake shall comply in all
respects with all applicable laws, ordinances and regulations and all applicable
orders, judgments, injunctions, awards and decrees of Government Entities,
except where any failure, individually or in the aggregate with any other such
failures, would not have a Chesapeake MAE.
7. ADDITIONAL COVENANTS.
7.1. ACCESS TO INFORMATION. Chesapeake shall afford to AspenTech, and
shall cause its independent accountants to afford to AspenTech and AspenTech's
accountants, counsel and other representatives, reasonable access during normal
business hours during the period prior to the Closing to all of Chesapeake's
assets, properties, books, Commitments and records. Chesapeake and the Principal
Stockholder shall permit AspenTech and its representatives to make abstracts
from and copies of such books and records. During such period, Chesapeake shall
use its reasonable best efforts to furnish promptly to AspenTech all other
information concerning the business, properties and personnel of Chesapeake as
AspenTech may reasonably request. Chesapeake shall use its reasonable best
efforts to cause its management and independent auditors to facilitate on a
timely basis (a) the preparation of financial statements (including pro forma
financial statements if required) as required by AspenTech to comply with
applicable regulations of the Securities and Exchange Commission and (b) the
review of any Chesapeake review work papers for any of the past three fiscal
years or any portion of the current fiscal year, including the examination of
selected interim financial statements and data.
7.2. CONFIDENTIALITY.
(a) For purposes of this Section 7.2, a "party" shall refer to (i)
together, Chesapeake (prior to the Closing Date) and the Principal
Stockholder and (ii) together, AspenTech and Acquisition Corp. Each party
shall treat as confidential, and shall cause its accountants, counsel and
other representatives to treat as confidential, all documents and
information concerning the other party furnished by the other party to
such party (including documents and information furnished prior to the
date hereof) in connection with the transactions contemplated by this
Agreement, except to the extent that such any such document or
information: (i) at the time of its disclosure to the receiving party by
or on behalf of the disclosing party is already known or available to the
receiving party, provided that the receiving party is not subject to
similar restrictions of confidentiality as set forth herein with a third
party with respect to such information; (ii) is or becomes known or
available to the public other than as a result of an unauthorized
disclosure by the receiving party or its directors, officers, employees,
agents or representatives; (iii) is or becomes known or available to the
receiving party without similar restrictions of confidentiality as set
forth herein from a source other than the disclosing party, provided that
such source is not known by the receiving party, after reasonable inquiry,
to be bound by a confidentiality agreement with, or other obligation of
secrecy to, the disclosing party that would prohibit such disclosures to
the receiving party by such other party; (iv) is independently generated
by the receiving party and not derived from confidential information; or
(v) is required to be disclosed by the receiving party by any law,
regulation, court order or other legal requirement, provided that the
recipient takes reasonable steps to limit such disclosure to the extent
permissible under law. Subject to the foregoing,
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each party shall not release or disclose such information or documents to
any Person other than its representatives in connection with this
Agreement and shall not use such information for purposes other than as
contemplated by this Agreement. In the event of the termination of this
Agreement, each party hereto shall, and shall cause its representatives
to, deliver to the other party the originals of all documents obtained by
such party or on behalf of such party from the other party in connection
with this Agreement, whether so obtained before or after the execution
hereof, and such party shall, and shall cause its representatives to,
destroy all abstracts therefrom and copies thereof.
(b) Except for a press release issued pursuant to Section 7.3 or a
filing made by AspenTech with the Securities and Exchange Commission
pursuant to the Securities Act or the Exchange Act, no party shall
disclose to any Person (other than the party's representatives) any
information regarding the transactions contemplated by this Agreement,
including the existence and terms of this Agreement. Notwithstanding the
foregoing, after such a press release or filing, (i) either party may
disclose to its employees, its clients and others information regarding
the transactions contemplated by this Agreement, but only to the extent
(A) such information is set forth in such press release or filing or (B)
such information relates to the proposed operations of the Surviving
Corporation after the Closing and disclosure thereof to such parties has
been generally agreed upon in advance by AspenTech and Chesapeake and (ii)
Chesapeake and the Principal Stockholder may disclose to the other
Stockholders and to ESOP participants such additional information
regarding the transactions contemplated by this Agreement as they may deem
necessary or desirable to effect such transactions, provided that they
take reasonable steps to ensure that such other Stockholders maintain the
confidentiality of such additional information. Prior to the earlier of
(i) the time that this Agreement is disclosed in a current report on Form
8-K filed by AspenTech after the Closing and (ii) two full business days
after the time that this Agreement is terminated, the Principal
Stockholder shall not, directly or indirectly, buy, sell or otherwise
trade in any shares of AspenTech Common or advise any other Person as to
any trading of AspenTech Common.
(c) The agreements contained in this Section 7.2 shall survive any
termination of this Agreement and remain in effect for a period of five
years from the date hereof.
7.3. PUBLIC DISCLOSURE. Subject to the obligations of the parties to
comply with applicable laws (including state corporate laws and federal and
state securities laws) and the obligation of AspenTech to comply with the rules
and regulations of the Nasdaq Stock Market, Inc., any press release or other
public disclosure of information regarding the transactions contemplated by this
Agreement (including the existence and terms of this Agreement) shall be
approved by AspenTech and Chesapeake, which approval shall not be unreasonably
withheld.
7.4. POOLING ACCOUNTING. No party to this Agreement shall knowingly take
any action, directly or indirectly, that would cause the Merger to fail to
qualify as a pooling of interests, including taking any action that would alter
the equity interests of Chesapeake in a way that would prohibit pooling of
interests treatment for the Merger. AspenTech shall use its reasonable best
efforts to publish financial results reflecting the first thirty days of
combined operations of AspenTech and the Surviving Corporation (i) by August 11,
1998, if the Closing occurs by May 31, 1998, or (ii) by October 27, 1998, if the
Closing occurs after May 31, 1998 but before September 1, 1998.
7.5. CONSENTS; FURTHER ASSURANCES. The parties shall use their reasonable
best efforts to obtain any consent, authorization, order or approval of, or any
exemption by, any Government Entity, or other third party, required to be
obtained or made by such party in connection with the taking of any action
contemplated by this Agreement (including, with respect to Chesapeake, the
consents and approvals required
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from third parties relating to Commitments listed under Section 3.3(c) of the
Chesapeake Disclosure Schedule), provided that AspenTech shall not be required
to agree to any divestiture by AspenTech, Chesapeake or any of AspenTech's
subsidiaries of shares of capital stock or of any business, assets or properties
of AspenTech, Chesapeake or any of AspenTech's subsidiaries or the imposition of
any material limitation on the ability of any of them to conduct their
businesses or to own or exercise control of such stock, assets or properties.
Each party shall use its reasonable best efforts to ensure that its
representations and warranties herein remain true in all material respects and
to obtain the satisfaction of the conditions specified in Section 8 of this
Agreement and the consummation of the transactions contemplated hereby.
AspenTech or Acquisition Corp. shall give prompt notice to Chesapeake and the
Principal Stockholder, and Chesapeake or the Principal Stockholder shall give
prompt notice to AspenTech and Acquisition Corp., of (a) the occurrence or
non-occurrence of any event that is likely to cause any representation or
warranty of such notifying party contained in this Agreement to be untrue at or
prior to the Closing Date and (b) any failure of such notifying party to comply
with or satisfy any covenant, condition or agreement to be complied with or
satisfied by it hereunder; the delivery of any notice pursuant to this sentence
shall not limit or otherwise affect any remedies available to the parties
receiving notice. At any time and from time to time after the Closing, the
parties agree to cooperate with each other to execute and deliver such other
documents, instruments or transfer or assignment, files, books and records, and
to do all such further acts and things, as may be reasonably required to carry
out the transactions contemplated hereby.
7.6. UPDATES OF CHESAPEAKE DISCLOSURE SCHEDULE. Chesapeake may, from time
to time after the date hereof but not later than three business days before the
Closing Date, prepare and deliver to AspenTech updates to the Chesapeake
Disclosure Schedule disclosing any changes thereto required in respect of
matters not known to Chesapeake on or prior to the date hereof. In the event the
Closing does not occur, the initial Chesapeake Disclosure Schedule shall
constitute the Chesapeake Disclosure Schedule to be used in determining any
inaccuracy in, or breach of, any representations or warranties of Chesapeake
hereunder. In the event the Closing occurs, the final version of the Chesapeake
Disclosure Schedule as of the Closing Date shall supersede the initial
Chesapeake Disclosure Schedule and shall constitute the definitive Chesapeake
Disclosure Schedule for all purposes of this Agreement.
7.7. ANTITRUST LAWS. As promptly as practicable, to the extent required
under applicable laws, Chesapeake, the Principal Stockholder, AspenTech and
Acquisition Corp. shall make all such filings and submissions under the HSR Act
as may be reasonably required to be made in connection with this Agreement and
the transactions contemplated hereby. Chesapeake and the Principal Stockholder
shall furnish to AspenTech and Acquisition Corp., and AspenTech and Acquisition
Corp. shall furnish to Chesapeake and the Principal Stockholder, such
information and assistance as the others may reasonably request in connection
with the preparation of any such filings and submissions. Chesapeake and the
Principal Stockholder shall provide AspenTech and Acquisition Corp., and
AspenTech and Acquisition Corp. shall provide Chesapeake and the Principal
Stockholder, with copies of all correspondence, filings or communications (or
memoranda setting forth the substance thereof) between such party or any of its
representatives, on the one hand, and any Government Entity or members of their
respective staffs, on the other hand, with respect to this Agreement and the
transactions contemplated hereby, except to the extent that AspenTech or
Chesapeake is advised by counsel that the provision of such information would be
inadvisable under applicable antitrust laws.
7.8. STOCK OPTIONS. On or prior to August 31, 1998, AspenTech shall grant
under, at AspenTech's sole determination, either or both of the Aspen
Technology, Inc. 1996 Special Stock Option Plan or the Aspen Technology, Inc.
1995 Stock Option Plan, to each of the Persons named in EXHIBIT L an incentive
stock option to purchase the number of shares of AspenTech Common set forth
opposite the name of such Person in EXHIBIT L, provided that such Person is an
employee of the Surviving Corporation as of the date of grant.
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7.9. EXPENSES. If the Merger is not consummated, each party shall be and
remain responsible for its costs and expenses, including fees and disbursements
of consultants, investment bankers and other financial advisors, counsel and
accountants, and the costs incurred in seeking necessary consents, in connection
with the acquisition of Chesapeake by AspenTech. In the event the Merger is
completed, (a) AspenTech and Acquisition Corp. shall be and remain responsible
for their costs and expenses and (b) the Stockholders shall be and remain
responsible for their costs and expenses and further shall be responsible for
the Offset Expenses. The obligations of the Stockholders to pay the Offset
Expenses shall be deemed to be paid by decreasing the Number of Merger Shares as
contemplated in Section 2.4. A true and complete listing of the Offset Expenses
shall be set forth in a certificate delivered to AspenTech by Chesapeake no
later than two business days before the Closing Date.
7.10. TAX MATTERS. The parties shall not, before or after the Effective
Time, purposefully take any action or fail to take any action that would
prevent, or would be reasonably likely to prevent, the Merger from qualifying as
a reorganization within the meaning of Code section 368(a). Each of the
Stockholders and each participant in the ESOP shall pay all Taxes relating to
any resale of shares of AspenTech Common Shares acquired as a result of the
Merger.
7.11. EMPLOYMENT AND NON-COMPETITION AGREEMENTS. Chesapeake and the
Principal Stockholder shall use their reasonable best efforts to cause the
specified employees to enter into the Employment Agreements and the
Non-Competition Agreements as of the Closing Date.
7.12. SECURITIES AND CORPORATE STATUTES. AspenTech shall use its
reasonable best efforts to comply with the securities and blue sky laws of all
jurisdictions of the United States that are applicable in connection with the
Merger. Chesapeake and the Principal Stockholder shall use its reasonable best
efforts to assist AspenTech as may be necessary to comply with such laws. During
the two-year period following the Closing Date, AspenTech shall use its
reasonable best efforts to make current public information available in
accordance with Rule 144(c) under the Securities Act. If any state takeover law
shall become applicable to the transactions contemplated by this Agreement,
AspenTech and its board of directors or Chesapeake and its board of directors,
as the case may be, shall use its reasonable best efforts to obtain such
approvals and take such actions as are necessary so that the transactions
contemplated by this Agreement may be consummated as promptly as practicable on
the terms contemplated by this Agreement and otherwise to minimize the effects
of such state takeover law on the transactions contemplated by this Agreement.
7.13. NASDAQ RULES. AspenTech shall comply in all material respects with
all rules and regulations of the Nasdaq Stock Market, Inc. applicable to it in
connection with the Merger.
7.14. RECORDS.
(a) At the Closing, the Stockholders shall deliver to AspenTech all
books, records and other documents in their possession relating to
Chesapeake.
(b) From the Closing Date until the later of (i) the first
anniversary of the Closing Date and (ii) the date on which all
indemnification claims under Section 9 have been resolved, AspenTech and
the Surviving Corporation shall retain all books, records and other
documents relating to the business of Chesapeake and in existence on the
Closing Date and shall make the same available during normal business
hours for inspection and copying by the Stockholders, at the Stockholders'
expense, upon reasonable request and upon reasonable advance notice. No
such books, records or other documents shall be destroyed by AspenTech or
the Surviving Corporation without first advising the Stockholders in
writing and giving the Stockholders a reasonable opportunity to obtain
possession thereof. Without
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limiting the generality of the foregoing, AspenTech and the Surviving
Corporation shall make available to the Stockholders and their
representatives all information reasonably deemed necessary or desirable
by the Stockholders in preparing their respective financial statements and
tax returns and in complying with any audits in connection therewith.
7.15. AMENDMENT OF REGISTRATION RIGHTS DECLARATION. AspenTech shall not
modify or amend the Registration Rights Declaration after the Closing Date
except with the requisite consent of Holders (as defined therein) as provided in
section 1.8 thereof.
8. CONDITIONS PRECEDENT.
8.1. CONDITIONS TO EACH PARTY'S OBLIGATIONS. The obligations of
AspenTech, Acquisition Corp., Chesapeake and the Principal Stockholder to
consummate the transactions contemplated by this Agreement are subject to the
fulfillment, at or before the Closing, of the following conditions precedent:
(a) SEC DOCUMENTS. The SEC Documents shall not have contained any
untrue statement of a material fact or omitted 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 were made, not
misleading, as of their respective filing dates, except to the extent
corrected by a subsequently filed SEC Document.
(b) CONSENTS OF THIRD PARTIES. There shall have been obtained
consents or approvals required from third parties relating to (i)
Commitments listed under Section 3.3(c) of the Chesapeake Disclosure
Schedule and marked with an asterisk and (ii) contracts, agreements,
licenses, leases and other instruments to which AspenTech is a party or by
which it is bound, to the extent that such contracts, agreements,
licenses, leases and other instruments are material to the business of
AspenTech.
(c) STATUTES. No statute, rule or regulation shall have been
enacted by any Government Entity that (i) makes the consummation of the
transactions contemplated by this Agreement illegal, (ii) prohibits
AspenTech's ownership or operation of all or a material portion of the
business, assets or properties of Chesapeake, or compels AspenTech to
dispose of or hold separate all or a material portion of the business,
assets or properties of Chesapeake, as a result of the transaction
contemplated by this Agreement, or (iii) renders AspenTech or Chesapeake
unable to consummate the transactions contemplated by this Agreement.
(d) ADVERSE PROCEEDINGS. No action or proceeding by or before any
court or other governmental body shall have been instituted or threatened
by any Government Entity or Person that (i) shall seek to restrain,
prohibit or invalidate the transactions contemplated by this Agreement,
(ii) might affect the Merger or any of the other transactions contemplated
hereby or (iii) shall seek to prohibit AspenTech's ownership or operation
of all or a material portion of the business, assets or properties of
Chesapeake.
(e) SECURITIES LAW COMPLIANCE. The issuance of AspenTech Common in
the Merger shall be exempt from registration under the Securities Act and
shall have been qualified or shall be exempt under all applicable state
securities and blue sky laws.
(f) HSR COMPLIANCE. Any applicable waiting period under the HSR Act
shall have expired or been terminated.
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(g) ACCOUNTANT'S LETTER. AspenTech shall have received from Xxxxxx
Xxxxxxxx LLP, AspenTech's independent accountants, an letter regarding
such firm's concurrence with the conclusion of AspenTech's management that
pooling of interests accounting for the Merger is appropriate under
Accounting Principles Board Opinion No. 16 if consummated in accordance
with this Agreement.
8.2. ADDITIONAL CONDITIONS TO OBLIGATIONS OF ASPENTECH AND ACQUISITION
CORP. The obligations of AspenTech and Acquisition Corp. to consummate the
transactions contemplated by this Agreement are subject to the fulfillment, at
or before the Closing, of the following conditions precedent:
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS. The representations
and warranties of Chesapeake and the Principal Stockholder contained in
this Agreement shall have been true in all material respects as of the
date of this Agreement and shall be true in all material respects at and
as of the Closing Date as though such representations and warranties were
made on and as of such date, except for any changes permitted by the terms
of this Agreement. Each of Chesapeake and the Principal Stockholder shall
have performed and complied in all material respects with all terms,
conditions, obligations, agreements and restrictions required by this
Agreement to be performed or complied with by it prior to or at the
Closing. Since March 31, 1998, there shall have been no changes that, in
the aggregate, have had or could reasonably be expected to have a
Chesapeake MAE, and the Closing, itself, shall not cause any default under
any material Commitment to which Chesapeake is a party or otherwise have a
Chesapeake MAE. AspenTech shall have received a certificate signed by the
chief executive officer and chief financial officer of Chesapeake
confirming the preceding three sentences.
(b) FINAL CHESAPEAKE DISCLOSURE SCHEDULE. The updates, if any, to
the Chesapeake Disclosure Schedule pursuant to Section 7.6 shall be
reasonably satisfactory in form and substance to AspenTech.
(c) MERGER DOCUMENTS. Chesapeake shall have executed the Delaware
Agreement of Merger and the New Jersey Certificate of Merger.
(d) EMPLOYMENT AGREEMENTS. Chesapeake and the respective employees
party thereto shall have entered into the Employment Agreements.
(e) NON-COMPETITION AGREEMENTS. Chesapeake and the respective
employees party thereto shall have entered into the Non-Competition
Agreements.
(f) ESCROW AGREEMENT. The Principal Stockholder and the Escrow
Agent shall have entered into the Escrow Agreement.
(g) FAIRNESS OPINION. AspenTech shall have received a written
opinion from NationsBanc Xxxxxxxxxx Securities (or any successor thereto)
to the effect that the transactions contemplated by this Agreement are
fair to the stockholders of AspenTech from a financial point of view.
(h) OPINIONS OF COUNSEL FOR CHESAPEAKE AND THE PRINCIPAL
STOCKHOLDER. AspenTech shall have received opinions dated as of the
Closing Date of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, special counsel
for Chesapeake and the Principal Stockholder, and Bourne, Xxxx & Xxxxxx,
general counsel for Chesapeake and the Principal Stockholder, each in a
form reasonably satisfactory to AspenTech.
(i) TAX OPINION OF COUNSEL FOR ASPENTECH. AspenTech shall have
received an opinion dated as of the Closing Date of Xxxxx, Xxxx & Xxxxx
LLP (or, if such counsel fails to deliver the opinion, of
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Bourne, Xxxx & Xxxxxx) to the effect that the Merger will constitute a
reorganization within the meaning of Code section 368(a).
(j) FIRPTA COMPLIANCE. Chesapeake shall deliver to AspenTech a
properly executed statement, in a form reasonably acceptable to AspenTech,
for purposes of satisfying AspenTech's obligations under Treasury
Regulation section 1.1445-2(c)(3).
(k) DISSENTERS' RIGHTS. Either (i) none of the Stockholders shall
have any right to exercise dissenters', appraisal or similar rights under
the New Jersey Business Corporation Act by virtue of the Merger or (ii)
Stockholders owning less than five percent of the shares of Chesapeake
Common outstanding immediately prior to the Closing shall have exercised,
or shall have a continuing right to exercise, such dissenters', appraisal
or similar rights.
(l) REPAYMENT OF INSIDER LOANS. All loans payable to Chesapeake
from any of its officers, directors or employees shall have been repaid in
full.
(m) PROCEEDINGS AND DOCUMENTS SATISFACTORY. All proceedings in
connection with the transactions contemplated by this Agreement, and all
certificates and documents delivered to AspenTech and Acquisition Corp.
pursuant to this Section 8.2 or otherwise reasonably requested by
AspenTech or Acquisition Corp., shall be reasonably satisfactory to
AspenTech, Acquisition Corp. and their counsel.
8.3. ADDITIONAL CONDITIONS TO OBLIGATIONS OF CHESAPEAKE AND THE PRINCIPAL
STOCKHOLDER. The obligations of Chesapeake and the Principal Stockholder to
consummate the transactions contemplated by this Agreement are subject to the
fulfillment, at or before the Closing, of the following conditions precedent:
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS. The representations
and warranties of AspenTech and Acquisition Corp. contained in this
Agreement shall have been true in all material respects as of the date of
this Agreement and shall be true in all material respects at and as of the
Closing Date as though such representations and warranties were made on
and as of such date, except for any changes permitted by the terms of this
Agreement. Each of AspenTech and Acquisition Corp. shall have performed
and complied in all material respects with all terms, conditions,
obligations, agreements and restrictions required by this Agreement to be
performed or complied with by it prior to or at the Closing. Since March
31, 1998, there shall have been no changes that, in the aggregate, have
had or could reasonably be expected to have an AspenTech MAE, and the
Closing, itself, shall not cause any default under any material Commitment
to which AspenTech is a party or otherwise have an AspenTech MAE.
Chesapeake and the Principal Stockholder shall have received a certificate
signed by the chief executive officer and chief financial officer of
AspenTech confirming the preceding three sentences.
(b) MERGER DOCUMENTS. Acquisition Corp. shall have executed the
Delaware Agreement of Merger and the New Jersey Certificate of Merger.
(c) REGISTRATION RIGHTS DECLARATION. The Registration Rights
Declaration shall have been adopted by the board of directors of AspenTech
and shall be in full force and effect as of the Closing Date.
(d) NON-COMPETITION AGREEMENTS. AspenTech shall have entered into
each of the Non-Competition Agreements.
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(e) ESCROW AGREEMENT. AspenTech shall have entered into the Escrow
Agreement.
(f) FAIRNESS OPINION. Chesapeake shall have received a written
opinion from Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation to the
effect that the transactions contemplated by this Agreement are fair to
the Stockholders from a financial point of view.
(g) OPINION OF COUNSEL FOR ASPENTECH. Chesapeake and the Principal
Stockholder shall have received an opinion dated as of the Closing Date of
Xxxxx, Xxxx & Xxxxx LLP, special counsel for AspenTech, in a form
reasonably satisfactory to Chesapeake and the Principal Stockholder.
(h) TAX OPINION OF COUNSEL FOR CHESAPEAKE. Chesapeake shall have
received an opinion dated as of the Closing Date of Bourne, Xxxx & Xxxxxx
(or, if such counsel fails to deliver the opinion, of Xxxxx, Xxxx & Xxxxx
LLP) to the effect that the Merger will constitute a reorganization within
the meaning of Code section 368(a).
(i) PROCEEDINGS AND DOCUMENTS SATISFACTORY. All proceedings in
connection with the transactions contemplated by this Agreement, and all
certificates and documents delivered to Chesapeake and the Principal
Stockholder pursuant to this Section 8.3 or otherwise reasonably requested
by Chesapeake or the Principal Stockholder, shall be reasonably
satisfactory to Chesapeake, the Principal Stockholder and their counsel.
9. INDEMNIFICATION.
9.1. AGREEMENT TO INDEMNIFY. Following the Closing and subject to the
limitations set forth herein, (a) all of the Stockholders collectively and the
Principal Stockholder individually shall indemnify and agree to defend and hold
harmless AspenTech and the Surviving Corporation (and their respective
affiliates, officers, directors, employees, representatives and agents) against
and in respect of any and all claims, costs, losses, expenses, liabilities or
other damages, including interest and penalties (collectively "Damages"), by
reason of or otherwise arising out of a breach by Chesapeake or the Principal
Stockholder prior to or at the Closing of a representation, warranty or covenant
contained in this Agreement and (b) AspenTech shall indemnify and agree to
defend and hold harmless the Stockholders (and their respective affiliates,
representatives and agents) against and in respect of any and all Damages by
reason of or otherwise arising out of a breach by AspenTech or Acquisition Corp.
prior to or at the Closing of a representation, warranty or covenant contained
in this Agreement. The amounts for which AspenTech, the Surviving Corporation
and the Stockholders may seek indemnification under this Section 9 shall extend
to, and as used herein the term "Damages" shall include, reasonable attorneys'
fees and disbursements, reasonable accountants' fees and disbursements, costs of
litigation and other expenses incurred by them (or their respective affiliates,
officers, directors or employees) in the defense of any claim asserted against
them (or their respective affiliates, officers, directors or employees) and any
amounts paid in settlement or compromise of any claim asserted against them to
the extent that the claim asserted is or would have been subject to the
indemnification provisions hereof, subject to the limitations on indemnification
set forth in Sections 9.2 and 9.3. "Damages" shall not include any amount for
which reimbursement is received by AspenTech, the Surviving Corporation or the
Stockholders, as the case may be, pursuant to insurance policies or third-party
payments by virtue of indemnification or subrogation received by such party.
9.2. SURVIVAL OF INDEMNITY. The indemnification obligations of each
indemnifying party pursuant to Section 9.1 shall survive the Closing and
continue for all Damages as to an indemnified party has given written notice
thereof to the indemnifying party on or prior to the first anniversary of the
Closing Date. Upon expiration of such period, no indemnifying party shall have
any liability for Damages under such
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indemnification obligations unless it has received written notice from an
indemnified party claiming indemnification prior to the expiration of the
applicable period as required.
9.3. ADDITIONAL PROVISIONS.
(a) LIMITATIONS ON INDEMNIFIED AMOUNTS OF STOCKHOLDERS. The
Stockholders collectively shall not have any obligation to indemnify any
parties under this Section 9 until the indemnified parties' aggregate
indemnity obligations shall exceed $250,000, whereupon such parties shall
be entitled to receive Damages from the first dollar, provided that the
foregoing limitation shall not apply to any breach of the covenants of the
Stockholders contained in this Agreement to the extent such covenants
continue after the Closing Date. The liability of the Stockholders
collectively for indemnification under this Section 9 by reason of or
arising out of any breach by Chesapeake or the Principal Stockholder of
any covenant that does not survive the Closing or of any representation or
warranty (i) shall be limited to the setoff and application of Damages
against the Escrow Shares in accordance with the terms of the Escrow
Agreement and this Section 9 and (ii) shall not be modified, waived or
diminished by any examination or investigation conducted by AspenTech of
the books, records or operations of Chesapeake.
(b) ADDITIONAL INDEMNIFICATION OBLIGATIONS OF PRINCIPAL
STOCKHOLDER. In addition to the Principal Stockholder's pro rata liability
for indemnification provided by the Stockholders collectively, the
Principal Stockholder individually shall have the additional
indemnification obligations set forth in Section 9.1, subject to the
limitations of this Section 9.3(b). Except to the extent of his pro rata
liability for indemnification provided by the Stockholders collectively,
the Principal Stockholder shall have no any obligation to indemnify any
parties under this Section 9 until the indemnified parties' aggregate
indemnity obligations shall exceed the amount of any indemnification
provided by the Stockholders collectively pursuant to Section 9.1, as
limited by Section 9.3(a), provided that the foregoing limitation shall
not apply to any breach of the covenants of the Principal Stockholder
contained in this Agreement to the extent such covenants continue after
the Closing Date. The liability of the Principal Stockholder for
indemnification under this Section 9 by reason of or arising out of any
breach by Chesapeake or the Principal Stockholder of any covenant that
does not survive the Closing or of any representation or warranty (i)
shall be limited to an aggregate of an amount equal to (A) ten percent of
the Number of Merger Shares multiplied by (B) the average of the last
sales prices of AspenTech Common on the Nasdaq National Market during the
ten trading days immediately preceding the Closing Date and (ii) shall not
be modified, waived or diminished by any examination or investigation
conducted by AspenTech of the books, records or operations of Chesapeake.
(c) LIMITATIONS ON INDEMNIFIED AMOUNTS OF ASPENTECH. AspenTech
shall have no obligation to indemnify any parties under this Section 9
until the indemnified parties' aggregate indemnity obligations shall
exceed $250,000, whereupon such parties shall be entitled to receive
Damages from the first dollar, provided that the foregoing limitation
shall not apply to any breach of the covenants contained in this Agreement
to the extent such covenants continue after the Closing Date. The
liability of AspenTech for indemnification under this Section 9 by reason
of or arising out of any breach by AspenTech or Acquisition Corp. of any
covenant that does not survive the Closing or of any representation or
warranty (i) shall be limited to an aggregate of an amount equal to (A)
twenty percent of the Number of Merger Shares multiplied by (B) the
average of the last sales prices of AspenTech Common on the Nasdaq
National Market during the ten trading days immediately preceding the
Closing Date and (ii) shall not be modified, waived or diminished by any
examination or investigation conducted by Chesapeake or any Stockholder of
the books, records or operations of AspenTech and Acquisition Corp.
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(d) NO LIMITATION IN EVENT OF FRAUD. Notwithstanding any other
provision hereof, nothing in this Section 9 (including the provisions of
paragraphs (a), (b) and (c) of this Section 9.3) or otherwise shall limit,
in any manner, any remedy at law or equity, to which any party may be
entitled as a result of fraud by any indemnifying party or its employees,
officers or directors.
(e) EXCLUSIVITY OF REMEDY; SURVIVAL OF COVENANTS. Following the
Closing Date, except in respect of claims based upon fraud, the
indemnification accorded by this Section shall be the sole and exclusive
remedy of the parties indemnified under this Section 9 in respect of any
misrepresentation or inaccuracy in, or breach of, any representation or
warranty or any breach or failure in performance of any covenant or
agreement made in this Agreement (including the Chesapeake Disclosure
Schedule) or in any document or certificate delivered pursuant hereto.
Notwithstanding the foregoing, in the event of any breach or failure in
performance after the Closing Date of any covenant or agreement, a
non-breaching party shall also be entitled to seek specific performance,
injunctive or other equitable relief. The covenants of any party shall
terminate according to the terms of such covenant and the expiration of
the applicable statutes of limitations.
(f) SUBROGATION. Upon making any payment to an indemnified party
for any indemnification claim pursuant to this Section 9, an indemnifying
party shall be subrogated, to the extent of such payment, to any rights
that the indemnified party may have against any other Persons with respect
to the subject matter underlying such indemnification claim and the
indemnified party shall take such actions as the indemnifying party may
reasonably require to perfect such subrogation or to pursue such rights
against such other Persons as the indemnified party may have.
9.4. ESCROW. At the Closing, AspenTech, the Principal Stockholder and the
Escrow Agent shall enter into the Escrow Agreement pursuant to which AspenTech
shall deliver the Escrow Shares to the Escrow Agent, subject to the requirements
of pooling of interests accounting. To the extent any of the parties named in
Section 9.1 is entitled to indemnification from the Stockholders collectively
under Section 9.1 as a result of any Damages, AspenTech shall be entitled to set
off and apply against all of such Damages the Escrow Shares in accordance with
the terms of the Escrow Agreement and this Section 9. Pursuant to the terms of
the Escrow Agreement, the Escrow Shares shall be valued at any time, for
purposes of set off against any Damages, at the average closing sales price per
share of the AspenTech Common for the thirty trading days preceding the date on
which such valuation is determined, as reported on the Nasdaq National Market or
such other principal exchange or trading market on which AspenTech Common is
then traded.
10. TERM AND TERMINATION.
10.1. TERM. Subject to the other terms and conditions hereof, the term of
this Agreement shall continue until the earlier of (i) June 30, 1998 and (ii)
termination pursuant to the provisions of Section 10.2 below.
10.2. TERMINATION. This Agreement may be terminated at any time prior to
the Closing:
(a) by mutual written consent of Chesapeake and AspenTech;
(b) by Chesapeake if there has been a material breach of any
representation, warranty, covenant or agreement contained in
this Agreement on the part of AspenTech or Acquisition Corp.
and, if such breach is curable, such breach has not been cured
within thirty days after written notice of such breach, or by
AspenTech if there has been a material breach of any
representation, warranty, covenant or agreement contained in
this
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Agreement on the part of Chesapeake and, if such breach is
curable, such breach has not been cured within thirty days
after written notice of such breach;
(c) by either Chesapeake or AspenTech if the Closing shall not
have been consummated on or before June 30, 1998;
(d) by either Chesapeake or AspenTech if (i) there shall be a
final nonappealable order of a federal or state court in
effect preventing consummation of the Merger or the other
transactions contemplated by this Agreement or (ii) there
shall be any action taken, or any statute, rule, regulation or
order erected, promulgated or issued or deemed applicable to
the Merger or the other transactions contemplated by this
Agreement by any Government Entity that would make
consummation of the Merger or the other transactions
contemplated by this Agreement illegal; or
(e) by AspenTech if there shall be any action taken, or any
statute, rule, regulation or order enacted, promulgated or
issued or deemed applicable to the Merger or the other
transactions contemplated by this Agreement by any Government
Entity that would (i) prohibit AspenTech's or the Surviving
Corporation's ownership or operation of all or a material
portion of the business, assets or properties of Chesapeake or
AspenTech and its subsidiaries taken as a whole, or compel
AspenTech or Chesapeake to dispose of or hold separate all or
a material portion of the business, assets or properties of
Chesapeake or AspenTech, as a result of the Merger or (ii)
render AspenTech or Chesapeake unable to consummate the Merger
or the other transactions contemplated by this Agreement.
10.3. EFFECT OF TERMINATION AND ABANDONMENT. In the event of termination
of this Agreement pursuant to this Section 10, written notice thereof shall be
given as promptly as practicable to the other parties to this Agreement and this
Agreement shall terminate and the transactions contemplated hereby shall be
abandoned without further action by the parties hereto; provided, however, that
such termination shall not relieve any party hereto of any liability for any
breach of this Agreement occurring prior to the date of termination.
11. MISCELLANEOUS.
11.1. AMENDMENT AND WAIVER. This Agreement, or any provision of this
Agreement, may be amended or waived from time to time only upon the mutual
written agreement of each of the parties hereto. No delay or omission by any
party to exercise any right or power hereunder shall impair such right or power
or be construed to be a waiver thereof. A waiver by any of the parties hereto of
any of the covenants to be performed by the other or any breach thereof shall
not be construed to be a waiver of any subsequent breach or of any other
covenant contained in this Agreement.
11.2. NOTICES. Notices and other communications by a party under this
Agreement shall be in writing and hand-delivered, deposited with an overnight
carrier for next- or second-day delivery, or transmitted by facsimile (with
receipt confirmed), addressed to the parties as follows (or to such other
addresses as any party may designate from time to time in writing):
To AspenTech: Aspen Technology, Inc.
Xxx Xxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000-0000
Facsimile: (000) 000-0000
Attention: Chairman and Chief Executive Officer
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with a copy to: Aspen Technology, Inc.
Xxx Xxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000-0000
Facsimile: (000) 000-0000
Attention: Vice President and General Counsel
To Chesapeake or any Stockholder (including the Principal Stockholder):
Chesapeake Decision Sciences, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxxxxxxxx, Xxx Xxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxx
With copies to: J. Xxxxxxx Xxxxxx, Esq.
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Facsimile: (000) 000-0000
Xxxx X. Xxxxx, Esq.
Bourne, Xxxx & Xxxxxx
000 Xxxxxxxxxxx Xxxxxx
Xxxxxx, Xxx Xxxxxx 00000
Facsimile: (000) 000-0000
and shall be deemed given when received.
11.3. SUCCESSORS; THIRD PARTIES; ASSIGNMENT. This Agreement shall be
binding upon and inure to the benefit of the parties and their respective
successors and assigns. This Agreement is not intended to confer upon any Person
other than the parties hereto any rights or remedies hereunder, except as
otherwise expressly provided herein. No provisions of this Agreement are
intended, nor shall be interpreted, to provide or create any third party
beneficiary rights or any other rights of any kind in any client, customer,
affiliate, stockholder, partner or employee of any party hereto or any other
Person unless specifically provided otherwise herein, and, except as so
provided, all provisions hereof shall be personal solely between the parties to
this Agreement. Neither Chesapeake nor the Principal Stockholder may assign its
obligations under this Agreement without the prior written consent of AspenTech,
and neither AspenTech nor Acquisition Corp. may assign its obligations under
this Agreement without the prior written consent of Chesapeake and the Principal
Stockholder.
11.4. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
among Chesapeake, the Principal Stockholder, AspenTech and Acquisition Corp.
with respect to the subject matter of this Agreement, and supersedes any and all
prior agreements, understandings, promises or representations made by either
party concerning the subject matter of this Agreement. All Exhibits and the
Chesapeake Disclosure Schedule are an integral part of this Agreement and are
incorporated in this Agreement by this reference.
11.5. APPLICABLE LAW. The validity, performance and construction of this
Agreement shall be governed by and construed in accordance with the laws of the
Commonwealth of Massachusetts.
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11.6. CONSENT TO JURISDICTION. Each of the parties hereby consents and
agrees to submit himself or itself to the non-exclusive jurisdiction of the
federal courts of Massachusetts.
11.7. VALIDITY. The invalidity or unenforceability of any provisions of
this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, each of which shall remain in full force and
effect.
11.8. CAPTIONS; CONSTRUCTION. Titles or captions of Sections contained in
this Agreement are inserted only as a matter of convenience and for reference,
and in no way define, limit, extend or describe the scope of this Agreement or
the intent of any provision of this Agreement. The words "herein" and "hereof"
and other words of similar import refer to this Agreement as a whole and not to
any particular part of this Agreement. The word "including" as used herein shall
not be construed so as to exclude any other thing not referred to or described.
All references herein to Sections and Exhibits shall be deemed references to
such parts of this Agreement, except as otherwise provided.
11.9. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
This Agreement has been duly executed as a sealed instrument as of and on
the date first above written.
ASPEN TECHNOLOGY, INC. CHESAPEAKE DECISION SCIENCES, INC.
By: /s/ Xxxxxxxx X. Xxxxx By: /s/ Xxxxxx X. Xxxxx
------------------------- -------------------------------------
Xxxxxxxx X. Xxxxx Xxxxxx X. Xxxxx
Chief Executive Officer President and Chief Executive Officer
AT ACQUISITION CORP.
By: /s/ Xxxxxxxx X. Xxxxx /s/ Xxxxxx X. Xxxxx
------------------------- -----------------------------------------
Xxxxxxxx X. Xxxxx Xxxxxx X. Xxxxx, Individually
President and
Chief Executive Officer
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