<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 24, 2000
REGISTRATION STATEMENT NO.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
MOLDFLOW CORPORATION
(Exact Name of Registrant as Specified in its Charter)
<TABLE>
<S> <C> <C>
DELAWARE 7372 04-3406763
(State or Other Jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Incorporation or Organization) Classification Code Number) Identification No.)
</TABLE>
------------------------
91 HARTWELL AVENUE
LEXINGTON, MA 02421
(781) 674-0085
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive office)
------------------------------
MARC J. L. DULUDE
PRESIDENT AND CHIEF EXECUTIVE OFFICER
MOLDFLOW CORPORATION
91 HARTWELL AVENUE
LEXINGTON, MA 02421
(781) 674-0085
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------------
COPIES TO:
<TABLE>
<S> <C>
STUART M. CABLE, P.C. KEITH F. HIGGINS, ESQ.
ANDREW F. VILES, ESQ. JOEL F. FREEDMAN, ESQ.
GOODWIN, PROCTER & HOAR LLP ROPES & GRAY
EXCHANGE PLACE ONE INTERNATIONAL PLACE
BOSTON, MASSACHUSETTS 02109-2881 BOSTON, MASSACHUSETTS 02110-2624
(617) 570-1000 (617) 951-7000
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective. If any of the
securities being registered on this Form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, check
the following box. / /
- ---------------
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
- ---------------
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
- ---------------
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
- ---------------
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
- ---------------
------------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
TITLE OF EACH PROPOSED MAXIMUM AMOUNT OF
CLASS OF SECURITIES AGGREGATE REGISTRATION
TO BE REGISTERED OFFERING PRICE (1) FEE
<S> <C> <C>
Common Stock, $.01 par value per share............. $46,000,000 $12,144
</TABLE>
(1) Estimated solely for purposes of calculating the registration fee in
accordance with Rule 457(o) under the Securities Act of 1933.
------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SEC, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
SUBJECT TO COMPLETION, DATED JANUARY 24, 2000
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE IN WHICH THE OFFER OR SALE IS NOT PERMITTED.
<PAGE>
SHARES
[LOGO]
COMMON STOCK
------------------
This is an initial public offering of common stock of Moldflow Corporation.
We are offering shares of common stock in this offering and several
stockholders identified in this prospectus are offering an additional
shares. We will not receive any of the proceeds from the sale of shares
by the selling stockholders. We expect the initial public offering price will be
between $ and $ per share.
Prior to this offering, there has been no public market for our common
stock. We have applied to list our common stock on the Nasdaq National Market
under the symbol MFLO.
------------------------
INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. PLEASE SEE THE
SECTION ENTITLED "RISK FACTORS" STARTING ON PAGE 7 TO READ ABOUT RISKS YOU
SHOULD CONSIDER CAREFULLY BEFORE BUYING SHARES OF OUR COMMON STOCK.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
------------------------
<TABLE>
<CAPTION>
PER SHARE TOTAL
----------- -----------
<S> <C> <C>
Public offering price................................... $ $
Underwriting discounts.................................. $ $
Proceeds to Moldflow.................................... $ $
Proceeds to selling stockholders........................ $ $
</TABLE>
The underwriters have an option to purchase additional shares of
common stock from Moldflow at the initial public offering price less the
underwriting discount to cover any over-allotments of shares.
------------------------
Adams, Harkness & Hill, Inc. A.G. Edwards & Sons, Inc.
Prospectus dated , 2000
<PAGE>
[EDGAR Graphics Descriptions]
(Inside Front Cover)
Three pages of graphics follow:
- - Page 1: Picture of planet Earth with list of customers above
(Hewlett-Packard, Nokia, Motorola, DuPont, Ford, DaimlerChrysler, Hyundai,
Lucent, Siemens, Polaroid, Hasbro M.A. Hanna, Abbot Laboratories, Lego,
DENSO, Baxter, Framatone, Samsung, Dow Chemical, Bayer, Valeo, Volkswagen,
Mattel, Fuji Xerox, Eastman Chemical, 3M, LG Group, AMP, Montblanc-Simplo
and Solvay) and phrase "Global Concurrent Product Development" below.
Moldflow's logo is at the bottom of the page.
- - Pages 2 and 3: Gatefold has words "Process Wide Plastics Solutions" in
center with arrows pointing in from and out to four corners of page. Each
corner depicts a separate step in the design and production process for
plastics parts. The upper left corner has the words "Initial Design" and a
picture of a man and a woman viewing a computer monitor depicting a three
dimensional image of cell phone outer casings as well as two computer
screens with closer views of these casings. The upper right corner has the
words "In-Depth Analysis" and a picture of man working at a computer as well
as two computer screens depicting three dimensional images of cell phone
outer casings. The bottom right corner has the words "Mold Design" and a
picture of a metal mold as well as two computer screens depicting cell phone
outer casings within a mold. The bottom left corner has the words
"Production" and picture of a large injection molding machine as well as a
picture of a computer and a computer screen displaying pages of Moldflow's
MPX product.
<PAGE>
You should rely only on information contained in this prospectus. We have
not authorized anyone to provide you with information different from that
contained in this prospectus. We are offering to sell, and seeking offers to
buy, shares of common stock only in jurisdictions where offers and sales are
permitted. The information contained in this prospectus is accurate only as of
the date of this prospectus, regardless of the time of delivery of this
prospectus or any sale of our common stock.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Prospectus Summary.......................................... 3
Risk Factors................................................ 7
Use of Proceeds............................................. 14
Dividend Policy............................................. 14
Capitalization.............................................. 15
Dilution.................................................... 16
Selected Financial Data..................................... 17
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 19
Business.................................................... 29
Management.................................................. 43
Certain Relationships and Related Transactions.............. 50
Principal and Selling Stockholders.......................... 51
Description of Capital Stock................................ 53
Shares Eligible for Future Sale............................. 57
Underwriting................................................ 59
Validity of Common Stock.................................... 61
Experts..................................................... 61
Where You Can Find More Information......................... 61
Index to Consolidated Financial Statements.................. F-1
</TABLE>
------------------------
Until , all dealers that buy, sell or trade in our common
stock, whether or not participating in this offering, may be required to deliver
a prospectus. This is in addition to the dealer's obligation to deliver a
prospectus when acting as an underwriter and with respect to its unsold
allotments or subscriptions.
2
<PAGE>
PROSPECTUS SUMMARY
YOU SHOULD READ THE FOLLOWING SUMMARY TOGETHER WITH THE MORE DETAILED
INFORMATION AND OUR CONSOLIDATED FINANCIAL STATEMENTS, THE NOTES TO THOSE
STATEMENTS AND THE OTHER FINANCIAL INFORMATION APPEARING ELSEWHERE IN THIS
PROSPECTUS.
MOLDFLOW CORPORATION
We believe we are the world's leading developer of software solutions that
enhance the design, analysis and manufacture of injection molded plastic parts.
We have developed a suite of software applications that address the difficulties
and variables inherent in the design and production of injection molded plastic
parts. We believe we have the widest and most advanced range of software
solutions and proprietary technology to address the problems that arise in each
phase of the process of designing and manufacturing injection molded plastic
parts. Our products enable our customers to speed their products to market,
decrease manufacturing costs and reduce costly design and manufacturing errors
with an automated and integrated process. Our products are used by more than
2,200 customers at more than 2,500 sites in over 50 countries around the world.
Representative customers include Baxter International, DaimlerChrysler, DuPont,
Fuji Xerox, Hewlett-Packard, Lego, Lucent Technologies, Motorola, Nokia and
Samsung.
The use of plastics as a manufacturing material is widespread because
plastic parts can be formed into an almost limitless number of shapes, are
relatively inexpensive to manufacture in volume and are easy to assemble.
Injection molding, the dominant method by which plastic parts are produced, is
extremely complex due to the inherent difficulties and the many variables
encountered in transforming various molten plastic materials into sophisticated
part shapes. Common consumer products that make extensive use of injection
molded plastic parts include cellular telephones, personal digital assistants,
pagers, automobiles, televisions, cameras, toys and personal computers. As
product life cycles shrink and the importance of time to market increases,
successful manufacturers in these industries must design and build products
quickly. In particular, product delays or high product defect rates for
manufacturers in rapidly changing industries can result in significant economic
and opportunity costs.
We believe a substantial portion of companies producing injection molded
plastic parts continue to employ trial-and-error at most steps of the design and
production process. We believe this condition exists today primarily because of
the limited availability of specific software tools which are capable of
addressing many of the complex and unique issues involved in designing injection
molded plastic parts and their molds. Further, the trend toward outsourcing and
supply chain management across multiple geographic time zones has exacerbated
the inefficiencies and costs occurring in the design and manufacturing of
plastic parts.
Prior to 1997, our products were designed to be used by highly specialized
engineers conducting in-depth plastics simulation. Since then, we have developed
two new product lines that can be used by design engineers and injection molding
machine operators who do not specialize in plastic part design. We believe a
large untapped market exists for these new product lines. In particular, we
believe that up to 750,000 injection molding machines are currently in use and
are being operated without integrated software solutions that can analyze and
improve the efficiency of their production.
We intend to exploit the universal accessibility of the Internet to further
grow our business. For example, we are currently configuring our products for
use in an application service provider or ASP model, which would permit our
customers to use our products on demand over the Internet. We also intend to
create an Internet portal to enable our customers to use our production set-up
and monitoring product to remotely monitor the injection molding manufacturing
process, including machine efficiency and production data, from anywhere in the
world. We believe this global
3
<PAGE>
availability of software solutions addressing each stage of the plastics product
development process will provide an environment for continuous collaboration
across all participants in a supply chain for every plastic part made.
We operate facilities in nine countries. We sell our products worldwide
primarily through our direct sales force in North America, Europe and Asia and,
to a lesser extent, through original equipment manufacturers and distributors.
We have distribution arrangements with Parametric Technology Corporation,
Structural Dynamics Research Corporation or SDRC, Unigraphics Solutions and
CoCreate and resellers of products of SolidWorks, a subsidiary of Dassault
Systemes, and Autodesk. Our research and development efforts involve
approximately 50 research and development personnel located at our United
States, Australia and United Kingdom facilities. As a result, our research and
development continues on an around-the-clock basis.
------------------------
We were reincorporated in Delaware as Moldflow Corporation on January 15,
1997. From 1994 to 1997, we existed as an Australian corporation under the name
Moldflow International Pty. Ltd. From 1980 to 1994, we existed as an Australian
corporation under the name Moldflow Pty. Ltd. Our principal executive offices
are located at 91 Hartwell Avenue, Lexington, MA 02421. Our telephone number at
that location is (781) 674-0085 and our Internet address is www.moldflow.com.
The information contained on our Website is not part of this prospectus.
The name Moldflow and our logo are names and trademarks that belong to us.
We have registrations for other names and marks used in this prospectus. This
prospectus also contains the trademarks and trade names of other entities that
are the property of their respective owners.
4
<PAGE>
THE OFFERING
<TABLE>
<S> <C>
Shares offered by Moldflow................... shares
Shares offered by the selling stockholders... shares
Common stock to be outstanding after this
offering................................... shares
Use of proceeds.............................. For general corporate purposes, including
research and development, expansion of our
direct sales operations, working capital,
capital expenditures and any acquisitions.
See "Use of Proceeds."
Proposed Nasdaq National Market symbol....... MFLO
Risk factors................................. See "Risk Factors" for discussion of factors
you should carefully consider before deciding
to invest in shares of our common stock.
</TABLE>
The number of shares of our common stock that will be outstanding after this
offering excludes 605,071 shares of common stock issuable upon exercise of stock
options outstanding at January 20, 2000 at a weighted average exercise price of
$3.79 per share.
------------------------
EXCEPT AS OTHERWISE NOTED, ALL INFORMATION IN THIS PROSPECTUS ASSUMES NO
EXERCISE OF THE UNDERWRITERS' OVER-ALLOTMENT OPTION. IN ADDITION, WE HAVE
ADJUSTED ALL OF THE INFORMATION IN THIS PROSPECTUS, EXCEPT AS OTHERWISE NOTED,
TO REFLECT:
- A 2.4-TO-1 REVERSE STOCK SPLIT OF OUR COMMON STOCK TO BE EFFECTED IN
CONNECTION WITH THIS OFFERING,
- THE CONVERSION OF ALL OUTSTANDING SHARES OF OUR CLASS C PREFERRED STOCK
INTO SHARES OF COMMON STOCK UPON THE CLOSING OF THIS OFFERING,
- THE EXERCISE OF THE OUTSTANDING WARRANT TO PURCHASE 20,833 SHARES OF OUR
COMMON STOCK AT AN AGGREGATE EXERCISE PRICE OF $150,000 UPON THE CLOSING
OF THIS OFFERING, AND
- THE AMENDMENT AND RESTATEMENT OF OUR CERTIFICATE OF INCORPORATION IN
CONNECTION WITH THIS OFFERING.
5
<PAGE>
SUMMARY FINANCIAL DATA
The tables below present our summary consolidated financial data which you
should read together with our consolidated financial statements and related
notes and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" presented elsewhere in this prospectus. The as adjusted
balance sheet data at January 1, 2000 reflects the automatic conversion of all
outstanding shares of preferred stock into an aggregate of 5,488,450 shares of
common stock and the exercise of the outstanding warrant to purchase 20,833
shares of common stock upon the closing of this offering, as well as the sale of
the shares of common stock in this offering, assuming an initial public
offering price of $ per share and after deducting underwriting discounts
and commissions and our estimated offering expenses. Pro forma net income per
common share reflects the assumed conversion of all convertible preferred stock
and the exercise of an outstanding warrant into shares of common stock upon the
closing of this offering as if they had occurred at the beginning of the
applicable period.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
FISCAL YEAR ENDED JUNE 30, -----------------------
---------------------------------------------------- JANUARY 2, JANUARY 1,
1995 1996 1997 1998 1999 1999 2000
-------- -------- -------- -------- -------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue:
Software licenses............. $ 5,374 $ 6,531 $ 6,743 $ 8,514 $12,238 $5,275 $ 6,651
Services...................... 6,162 7,472 8,080 7,875 7,983 3,969 4,853
------- ------- ------- ------- ------- ------ -------
Total revenue............... 11,536 14,003 14,823 16,389 20,221 9,244 11,504
Operating expenses, excluding
litigation.................... 13,592 17,959 18,600 15,818 18,675 8,877 10,610
Litigation...................... -- -- -- -- 620 -- 530
------- ------- ------- ------- ------- ------ -------
Income (loss) from operations... (2,056) (3,956) (3,777) 571 926 367 364
Net income (loss)............... (1,600) (4,259) (4,270) 189 351 73 433
Pro forma net income per common
share:
Basic......................... $ 0.06 $ 0.07
Diluted....................... $ 0.06 $ 0.07
Shares used in computing pro
forma net income per common
share:
Basic......................... 5,717 5,855
Diluted....................... 6,166 6,311
</TABLE>
<TABLE>
<CAPTION>
AS OF JANUARY 1, 2000
-----------------------
ACTUAL AS ADJUSTED
--------- -----------
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................... $ 1,328 $
Total assets................................................ 10,564
Stockholders' equity........................................ 1,763
</TABLE>
6
<PAGE>
RISK FACTORS
YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING RISKS AND ALL OTHER INFORMATION
CONTAINED IN THIS PROSPECTUS BEFORE PURCHASING OUR COMMON STOCK. IF ANY OF THE
FOLLOWING RISKS OCCUR, OUR BUSINESS, PROSPECTS, RESULTS OF OPERATIONS OR
FINANCIAL CONDITION COULD BE HARMED. IN THAT CASE, THE TRADING PRICE OF OUR
COMMON STOCK COULD DECLINE, AND YOU COULD LOSE ALL OR PART OF YOUR INVESTMENT.
IF WE EXPERIENCE DELAYS IN INTRODUCING NEW PRODUCTS OR IF OUR EXISTING OR NEW
PRODUCTS DO NOT ACHIEVE MARKET ACCEPTANCE, WE MAY LOSE REVENUE.
Our industry is characterized by:
- rapid technological advances,
- evolving industry standards,
- changes in end-user requirements,
- intense competition,
- technically complex products,
- frequent new product introductions, and
- evolving offerings by product manufacturers.
We believe our future success will depend, in part, on our ability to
anticipate or adapt to these factors and to offer on a timely basis products
that meet customer demands. For example, the introduction of new products and
services embodying new technologies and the emergence of new industry standards
can render our existing products obsolete. The development of new or enhanced
products is a complex and uncertain process requiring the anticipation of
technological and market trends. We may experience design, manufacturing,
marketing and other difficulties that could delay or prevent our development,
introduction or marketing of new products and enhancements and result in
unexpected expenses.
Our growth and profitability also will depend upon our ability to expand the
use and market penetration of our existing product lines as well as new products
we introduce. Market acceptance of our products will depend in part on our
ability to demonstrate the cost-effectiveness, ease of use and technological
advantages of our products over competing products.
WE DO NOT HAVE EXTENSIVE EXPERIENCE IN INTERNET-ENABLED PRODUCTS AND WE MAY BE
UNABLE TO SUCCESSFULLY DEVELOP AN INTERNET-BASED PRODUCT.
Our business strategy includes providing additional Internet-related
functions to our products to exploit the trend toward worldwide collaborative
product development and manufacturing and to explore new pricing and packaging
strategies made possible by the Internet. We have limited experience in
developing and marketing Internet-based products. We may be unable to capitalize
on the rapid transformation of the Internet as a computing platform,
communications vehicle and distribution channel.
IF INTERNET USAGE DOES NOT CONTINUE TO GROW, WE MAY NOT BE ABLE TO SUCCESSFULLY
IMPLEMENT OUR INTERNET STRATEGY.
Widespread use of the Internet is a relatively recent phenomenon. The future
success of our Internet strategy depends, in part, on the continued development
of the Internet as a viable commercial medium. We cannot be certain that the
Internet will continue to be developed or accessible for free or at nominal cost
to users. In this event, our future growth may be adversely impacted.
7
<PAGE>
OUR BUSINESS WILL SUFFER IF WE ARE UNABLE TO ATTRACT OR RETAIN KEY PERSONNEL.
In order to grow our business, we will have to hire additional employees in
various countries. Our future success, therefore, will depend, in part, on
attracting and retaining additional qualified management, marketing and
technical personnel. We do not know whether we will be successful in hiring or
retaining qualified personnel. Competition for personnel throughout the software
industry is intense.
IF WE ARE FORCED TO DEFEND AGAINST INTELLECTUAL PROPERTY INFRINGEMENT CLAIMS, WE
COULD INCUR SIGNIFICANT EXPENSES AND OUR BUSINESS COULD BE ADVERSELY AFFECTED.
Our products include proprietary intellectual property. We may become
subject to claims that we infringe on the proprietary rights of others. In the
United States, a significant number of software and business method patents have
been issued over the past decade and the holders of these patents have been
actively seeking out potential infringers. If any element of our products or
services violates third-party proprietary rights, we might not be able to obtain
licenses on commercially reasonable terms to continue offering our products or
services without substantial re-engineering and any effort to undertake such
re-engineering might not be successful. In addition, any claim of infringement
could cause us to incur substantial costs defending against the claim, even if
the claim is invalid, and could distract our management from our business. Any
judgment against us could require us to pay substantial damages and could also
include an injunction or other court order that could prevent us from offering
our products and services.
OUR BUSINESS MAY SUFFER IF WE ARE NOT ABLE TO PROTECT IMPORTANT INTELLECTUAL
PROPERTY.
Our ability to compete effectively against other companies in our industry
will depend, in part, on our ability to protect our proprietary rights in our
technology. We may be unable to maintain the proprietary nature of our
technology. While we have attempted to safeguard and maintain our proprietary
rights, we do not know whether we have been or will be completely successful in
doing so.
We rely, in part, on contractual provisions to protect our trade secrets and
proprietary knowledge. These agreements may be breached, and we may not have
adequate remedies for any breach. Our trade secrets may also become known
without breach of such agreements or may be independently developed by
competitors. In addition, foreign countries, including some of those in which we
do business, may reduce or limit the protection of our intellectual property
rights.
WE MAY BE ADVERSELY AFFECTED BY INTERNATIONAL BUSINESS RISKS.
The majority of our employees, including sales, support and research and
development personnel, are located outside of the United States. Conducting
business outside of the United States is subject to numerous risks, including:
- longer accounts receivable collection cycles typical of foreign countries,
- possible foreign currency exchange and conversion issues,
- difficulties in managing operations across many countries,
- difficulties associated with enforcing agreements and collecting
receivables through foreign legal systems,
- changes in a specific country's or region's political or economic
conditions,
- global employment issues and the ability to attract and retain qualified
personnel,
- the imposition by foreign governments of trade protection measures, and
- import or export licensing requirements.
8
<PAGE>
WE MAY BE ADVERSELY AFFECTED BY PENDING LITIGATION INVOLVING A FORMER EMPLOYEE
AND ONE OF OUR COMPETITORS.
We are pursuing a lawsuit against both a former Moldflow employee and one of
our competitors alleging theft and misappropriation of some of our trade
secrets. In response to our lawsuit, our competitor filed counterclaims against
us alleging antitrust violations, defamation and trade libel and tortious
interference. We may suffer adverse consequences as a result of this lawsuit or
the counterclaims which we cannot now predict. If the lawsuit or the
counterclaims are decided against us, we could suffer monetary damages, lose our
product development advantage and face enhanced competition. Continuation of the
lawsuit or the counterclaims will result in additional litigation expenses.
WE MAY BE ADVERSELY AFFECTED BY INCREASED COMPETITION IN OUR INDUSTRY AND MAY BE
UNABLE TO COMPETE SUCCESSFULLY.
We operate in a highly competitive environment and may not be able to
successfully compete. Entities in similar industries could decide to focus on
the development of software solutions for the design, analysis, and
manufacturing of injection molded plastic parts. Many of these entities have
substantially greater financial, research and development, manufacturing and
marketing resources than we do. Increased competition may result in price
reductions, reduced profitability and loss of market share.
OUR QUARTERLY OPERATING RESULTS ARE SUBJECT TO SIGNIFICANT FLUCTUATIONS AND AS A
RESULT PERIOD-TO-PERIOD COMPARISONS OF OUR RESULTS OF OPERATIONS ARE NOT
NECESSARILY MEANINGFUL AND SHOULD NOT BE RELIED UPON AS INDICATORS OF FUTURE
PERFORMANCE.
We have experienced significant fluctuations in our results of operations on
a quarterly basis. We expect to continue to experience significant fluctuations
in our future quarterly results of operations due to a variety of factors, many
of which are outside of our control, including:
- seasonal slowdowns, in particular, in our first fiscal quarter, in many of
the markets in which we sell our products,
- demand for and market acceptance of our products and services,
- customer retention,
- developments in the litigation that we are pursuing against our former
employee and our competitor, and in the nature and extent of proceedings
and findings related to the counterclaims pending against us,
- the timing and magnitude of capital expenditures, including costs relating
to the expansion of our operations and infrastructure,
- introductions of new services or enhancements by us and our competitors,
- increased competition in our industry,
- changes in our and our competitors' pricing policies,
- currency fluctuations,
- general economic conditions affecting our industry, and
- timing and integration of acquisitions.
9
<PAGE>
WE MAY HAVE DIFFICULTY MANAGING THE EXPANSION OF OUR OPERATIONS.
The implementation of our business strategy could result in a period of
rapid growth in the number of our employees and the scope of our operations.
Rapid expansion could place a significant strain on our senior management team
and our operational, financial and other resources as we attempt to expand our
operations in multiple locations around the world. We may have difficulty
effectively managing the budgeting, forecasting, global hiring and other
business control issues presented by such a rapid expansion. This could, among
other things, adversely affect our relationships with our customers and result
in delays in billing and collections of revenue from our customers and increased
costs.
IF WE ARE UNABLE TO MAINTAIN AND LEVERAGE OUR STRATEGIC ALLIANCES, WE MAY BE
UNABLE TO GROW AS PLANNED.
We are, and will continue to be, dependent to some extent on distribution
arrangements and strategic partnerships with third-parties because we sell a
portion of our products through these third parties. In addition, we may sell
other products through third-party distributors in the future. These third
parties may not fulfill their agreements with us. In particular, third-party
distributors may breach or terminate their distribution agreements with us or
fail to devote sufficient time and resources to successfully commercialize, or
increase sales of, our products. As a result, our revenues from these
arrangements depend, in part, on third parties' sales of our products.
ANY FUTURE ACQUISITIONS AND STRATEGIC RELATIONSHIPS MAY RESULT IN DISRUPTIONS TO
OUR BUSINESS AND THE DISTRACTION OF OUR MANAGEMENT.
We may engage in acquisitions and strategic relationships. We may not be
able to identify suitable acquisition candidates, and, if we do identify
suitable candidates, we may not be able to make such acquisitions on
commercially acceptable terms or at all. If we acquire another company, we will
only receive the anticipated benefits if we successfully integrate the acquired
business into our existing business in a timely and non-disruptive manner. We
may have to devote a significant amount of time and management and financial
resources to do so. Even with this investment of management and financial
resources, an acquisition may not produce the revenues, earnings or business
synergies that we anticipated. If we fail to integrate the acquired business
effectively or if key employees of that business leave, the anticipated benefits
of the acquisition would be jeopardized. The time, capital, management and other
resources spent on an acquisition that failed to meet our expectations could
cause our business and financial condition to be materially and adversely
affected. In addition, from an accounting perspective, acquisitions can involve
non-recurring charges and amortization of significant amounts of goodwill that
could adversely affect our results of operations.
DISRUPTION OF OPERATIONS AT OUR MELBOURNE, AUSTRALIA FACILITY COULD INTERFERE
WITH OUR PRODUCT DEVELOPMENT AND PRODUCTION CYCLES.
A significant portion of our computer equipment, source code and personnel,
including critical resources dedicated to research and development, is presently
located at a single operating facility in a suburb of Melbourne, Australia. The
occurrence of a natural disaster or other unanticipated catastrophe at this
facility could cause interruptions in our operations and services. Extensive or
multiple interruptions in our operations at this facility could severely disrupt
our product development.
10
<PAGE>
OUR MOLDFLOW PLASTICS XPERT (MPX) PRODUCT LINE MAY LEAD TO PRODUCT LIABILITY
CLAIMS AGAINST US.
We have designed our Moldflow Plastics Xpert (MPX) product line to be
installed directly on our customers' injection molding machines and to
automatically adjust the operation of these machines. As a result, it is
possible that our customers may claim that our product interfered with the
proper operation of their machines and may seek reimbursement for consequential
and other damages from us. Although we expressly disclaim any liability for
consequential or other damages in connection with our sale of the MPX product,
this disclaimer may not protect us from claims for damages from our customers
and these claims may adversely affect our relationships with our customers or
our reputation generally. In addition, our insurance coverage limits may not be
adequate to protect us against any product liability claims that arise. This
insurance is expensive and may not be available on acceptable terms, or at all.
ANY DISRUPTION OF OUR RELATIONS WITH OUR SUPPLIERS COULD INCREASE OUR COSTS OR
CAUSE DELAYS IN ORDER FULFILLMENT.
We purchase some of the software components and all of the hardware
components included in our product offerings from limited sources. Any
disruption in our relationships with any of the suppliers of these components
could increase our costs, adversely affect our ability to timely fill customer
orders and disrupt our product development efforts.
OUR EXISTING STOCKHOLDERS WILL HAVE SUBSTANTIAL INFLUENCE OVER MATTERS REQUIRING
A STOCKHOLDER VOTE.
Upon the closing of this offering, funds associated with Ampersand Ventures
will own approximately % of our outstanding common stock. Ampersand will,
therefore, have the ability to exert significant influence over our board of
directors and the outcome of stockholder votes. Furthermore, officers, directors
and their affiliates, including Ampersand, will own approximately % of our
outstanding common stock. If all of these stockholders were to vote together as
a group, they would have the ability to elect our board of directors and control
the outcome of stockholder votes.
AN ACTIVE TRADING MARKET FOR OUR COMMON STOCK MAY NOT DEVELOP.
Before this offering, there has been no public market for our common stock.
Although we expect our common stock to be quoted on the Nasdaq National Market,
an active trading market for our shares may not develop or be sustained
following this offering. You may not be able to resell your shares at prices
equal to or greater than the initial public offering price. The initial public
offering price will be determined through negotiations between us and the
underwriters and may not be indicative of the market price for these shares
following this offering. You should read "Underwriting" for a discussion of the
factors to be considered in determining the initial public offering price.
OUR STOCK PRICE IS LIKELY TO BE HIGHLY VOLATILE.
The stock market has, from time to time, experienced extreme price and
volume fluctuations. Many factors may cause the market price for our common
stock to decline, perhaps substantially, following this offering, including:
- a decrease in the demand for our common stock,
- revenues and operating results failing to meet the expectations of
securities analysts or investors in any quarter,
11
<PAGE>
- downward revisions in securities analysts' estimates or changes in general
market conditions,
- technological innovations by competitors or in competing technologies,
- investor perception of our industry or our prospects, and
- general technology or economic trends.
In the past, companies that have experienced volatility in the market price
of their stock have been the subject of securities class action litigation. We
may be involved in a securities class action litigation in the future. Such
litigation often results in substantial costs and a diversion of management's
attention and resources and could harm our business, financial condition and
results of operations.
SHARES ELIGIBLE FOR PUBLIC SALE AFTER THIS OFFERING COULD ADVERSELY AFFECT OUR
STOCK PRICE.
The market price of our common stock could decline as a result of sales of
shares by our existing stockholders after this offering, or the perception that
such sales will occur. These sales also might make it difficult for us to sell
equity securities in the future at a time and at a price that we deem
appropriate. After this offering, we will have shares of common stock
outstanding. All of the shares sold in this offering will be freely tradeable.
Of the remaining shares, over 99% are subject to 180-day lock-up agreements. At
least shares will generally be available for sale in the public market
180 days after the date of this prospectus. In addition, approximately 180 days
after this offering, we intend to register 2,000,000 shares of common stock for
issuance under our 2000 Stock Option and Incentive Plan and promptly following
this offering we intend to register 500,000 shares of common stock for issuance
under our Employee Stock Purchase Plan.
WE WILL HAVE BROAD DISCRETION AS TO THE USE OF THE PROCEEDS FROM THIS OFFERING.
Our board of directors and management will have broad discretion over the
use of the net proceeds of this offering. You may disagree with the judgment of
our board of directors and management regarding the application of the proceeds
of this offering.
PROVISIONS OF DELAWARE LAW AND OF OUR CHARTER AND BY-LAWS MAY MAKE A TAKEOVER
MORE DIFFICULT.
Provisions in our certificate of incorporation and by-laws and in the
Delaware corporate law may make it difficult and expensive for a third party to
pursue a tender offer, change in control or takeover attempt which is opposed by
our management and board of directors. Public stockholders who might desire to
participate in such a transaction may not have an opportunity to do so. We also
have a staggered board of directors which makes it difficult for stockholders to
change the composition of the board of directors in any one year. These
anti-takeover provisions could substantially impede the ability of public
stockholders to change our management and board of directors.
YOU WILL SUFFER IMMEDIATE AND SUBSTANTIAL DILUTION.
The initial public offering price per share will be substantially higher
than the net tangible book value per share immediately after the offering. If
you purchase common stock in this offering, you will incur immediate and
substantial dilution in the net tangible book value per share of the common
stock from the price you paid. We also have a large number of outstanding stock
options to purchase our common stock with exercise prices significantly below
the initial public offering price of the common stock. To the extent that the
holders of these options exercise them, you will experience further dilution.
12
<PAGE>
WE DO NOT INTEND TO PAY DIVIDENDS.
We have never declared or paid any cash dividends on our common stock. We
currently intend to retain our future earnings, if any, to finance the expansion
of our business and do not expect to pay any cash dividends in the foreseeable
future. In addition, our existing credit facility does not permit us to pay cash
dividends.
OUR BUSINESS MAY BE ADVERSELY AFFECTED BY YEAR 2000 PROBLEMS.
In conducting our business, we rely on computer systems to manage our
business and to serve our customers. Further, all of our products include
computer software or hardware components or both. Year 2000 problems may
adversely affect our operations and increase our costs. Among other things, Year
2000 problems could cause us to:
- fail to fulfill our contractual obligations with our customers,
- face substantial claims by our customers and loss of revenue,
- fail to bill our customers accurately and on a timely basis, and
- be subject to the inability by customers and others to pay, on a timely
basis or at all, obligations owed to us.
Although the effects of any or all of these events are not quantifiable at
this time, any of these events could have a material adverse effect on our
business and operating results.
FORWARD-LOOKING STATEMENTS ARE INHERENTLY UNCERTAIN.
Some statements about us and our industry under the captions "Prospectus
Summary," "Risk Factors," "Use of Proceeds," "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Business" and
elsewhere in this prospectus are "forward-looking statements." These
forward-looking statements include, but are not limited to, statements about our
plans, objectives, expectations, intentions and assumptions, the industry in
which we operate and other statements in this prospectus that are not historical
facts. When we use the words "estimate," "project," "believe," "anticipate,"
"intend," "plan," "expect" and similar expressions in this prospectus, we
generally intend to identify forward-looking statements. Because these forward-
looking statements involve risks and uncertainties, including those described in
this "Risk Factors" section, actual results could differ materially from those
expressed or implied by these forward-looking statements. We caution you not to
place undue reliance on these forward-looking statements.
13
<PAGE>
USE OF PROCEEDS
We estimate that the net proceeds to us from our sale of shares of our
common stock in this offering will be approximately $ million, assuming an
initial public offering price of $ per share and after deducting the
underwriting discounts and commissions and our estimated offering expenses. If
the underwriters exercise their over-allotment option in full, we estimate that
our net proceeds will be approximately $ . We intend to use our net
proceeds for general corporate purposes, including research and development,
expansion of our direct sales operations, working capital, capital expenditures
and any acquisitions. We will not receive any proceeds from the sale of shares
by selling stockholders in this offering.
Until used, we intend to invest these proceeds in government securities and
other short-term, investment-grade securities.
DIVIDEND POLICY
We have never declared or paid any cash dividends on our common stock. We
currently intend to retain our future earnings, if any, to finance the expansion
of our business and do not expect to pay any cash dividends in the foreseeable
future. In addition, our existing credit facility does not permit us to pay cash
dividends.
14
<PAGE>
CAPITALIZATION
The following table sets forth our capitalization as of January 1, 2000 on
an actual basis and as adjusted for the following:
- the filing prior to the effective date of this offering of an amended
certificate of incorporation authorizing 60,000,000 shares of common stock
and 5,000,000 shares of undesignated preferred stock,
- the conversion of all outstanding shares of preferred stock into an
aggregate of 5,488,450 shares of common stock upon the closing of this
offering,
- the exercise of the outstanding warrant to acquire 20,833 shares of common
stock at an aggregate exercise price of $150,000 upon the closing of this
offering, and
- the receipt of the estimated net proceeds of $ million from our sale in
this offering of shares of common stock assuming an initial
public offering price of $ per share.
<TABLE>
<CAPTION>
AS OF JANUARY 1, 2000
-----------------------
ACTUAL AS ADJUSTED
--------- -----------
(IN THOUSANDS)
<S> <C> <C>
Convertible preferred stock, $0.01 par value per share:
Series C-1; 4,918,616 shares authorized, issued and
outstanding, actual; no shares authorized, issued and
outstanding, as adjusted................................ $ 1,151 $ --
Series C-2; 1,855,688 shares authorized, issued and
outstanding, actual; no shares authorized, issued and
outstanding, as adjusted................................ 8,382 --
Series C-3; 1,480,082 shares authorized, 1,365,275 issued
and outstanding, actual; no shares authorized, issued
and outstanding, as adjusted............................ 2,963 --
------- -------
Total convertible preferred stock....................... 12,496 --
------- -------
Undesignated preferred stock, $0.01 par value per share; no
shares authorized, issued and outstanding, actual;
5,000,000 shares authorized, no shares issued and
outstanding, as adjusted.................................. -- --
Common stock, $0.01 par value per share; 20,000,000 shares
authorized, 560,327 shares issued and outstanding, actual;
60,000,000 shares authorized, shares issued and
outstanding, as adjusted.................................. 6
Additional paid-in capital.................................. 285
Deferred compensation....................................... (57) (57)
Notes receivable from stockholders.......................... (198) (198)
Accumulated deficit......................................... (11,410) (11,410)
Accumulated other comprehensive income...................... 641 641
------- -------
Total stockholders' equity................................ 1,763
------- -------
Total capitalization.................................... $ 1,763 $
======= =======
</TABLE>
The above table excludes 574,234 shares of common stock issuable upon
exercise of stock options outstanding as of January 1, 2000 at a weighted
average exercise price of $3.35 per share. The above table also assumes no
exercise of the underwriters' over-allotment option.
15
<PAGE>
DILUTION
As of January 1, 2000, we had a pro forma net tangible book value of $1.9
million, or $0.32 per share of common stock. Pro forma net tangible book value
per share is equal to our total tangible assets less total liabilities, divided
by the number of shares of our outstanding common stock assuming the conversion
of all outstanding preferred stock into common stock and the exercise of the
outstanding warrant to purchase common stock.
After giving effect to the sale of the shares of common stock offered
by us at an assumed initial public offering price of $ per share, and after
deducting our underwriting discounts and commissions and our estimated offering
expenses, our pro forma net tangible book value as of January 1, 2000 would have
been $ , or $ per share of common stock. This represents an immediate
increase in pro forma net tangible book value of $ per share to our
existing stockholders and an immediate dilution of $ per share to new
investors in this offering. If the initial public offering price is higher or
lower than $ per share, the dilution to new stockholders will be higher or
lower. The following table illustrates this per share dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share............. $
-----
Pro forma net tangible book value per share before this $0.32
offering................................................
Increase per share attributable to new investors..........
-----
Pro forma net tangible book value per share after this
offering..................................................
-----
Dilution per share to new investors......................... $
=====
</TABLE>
The following table summarizes, on a pro forma basis as of January 1, 2000,
the number of shares of common stock purchased, the total consideration paid and
the average price per share paid by existing stockholders and new investors in
this offering assuming the conversion of all outstanding preferred stock into
common stock and the exercise of the outstanding warrant to purchase common
stock. The table assumes that the initial public offering price will be $ .
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
-------------------- ---------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
--------- -------- ----------- -------- -------------
<S> <C> <C> <C> <C> <C>
Existing stockholders.............. 6,069,610 % $12,937,000 % $2.13
New investors......................
--------- ----- ----------- -----
Total.......................... 100.0% $ 100.0% $
========= ===== =========== =====
</TABLE>
The tables above exclude:
- shares which may be issued by us pursuant to the underwriters'
over-allotment option,
- 574,234 shares of common stock issuable upon exercise of outstanding
options at January 1, 2000 at a weighted average exercise price of $3.35
per share, and
- an aggregate of 2,500,000 shares available for future grant under our 2000
Stock Option and Incentive Plan and our Employee Stock Purchase Plan.
To the extent our outstanding options are exercised, new investors may
experience further dilution.
16
<PAGE>
SELECTED FINANCIAL DATA
The following selected consolidated financial data should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and our consolidated financial statements and related
notes included elsewhere in this prospectus. The statement of operations data
for the years ended June 30, 1997, 1998 and 1999 and the balance sheet data at
June 30, 1998 and 1999 are derived from our audited consolidated financial
statements appearing elsewhere in this prospectus. The balance sheet data at
June 30, 1997 are derived from our audited consolidated financial statements not
included in this prospectus. The statement of operations data for the years
ended June 30, 1995 and 1996 and the balance sheet data at June 30, 1995 and
1996 are derived from our unaudited consolidated financial statements not
included in this prospectus. The unaudited consolidated financial statements, in
the opinion of management, have been prepared on the same basis as the audited
consolidated financial statements and reflect all adjustments necessary for a
fair presentation of that data. The interim statement of operations data for the
six-month periods ended January 2, 1999 and January 1, 2000 and the interim
balance sheet data at January 1, 2000 are derived from our unaudited
consolidated interim financial statements appearing elsewhere in this prospectus
which, in the opinion of management, have been prepared on the same basis as the
audited consolidated financial statements and reflect all adjustments necessary
for a fair presentation of that data. The data for the six-month period ended
January 1, 2000 are not necessarily indicative of results for the year ending
June 30, 2000 or any future period. Pro forma net income per common share
reflects the assumed conversion of all outstanding convertible preferred stock
and the exercise of the outstanding warrant into shares of common stock upon
completion of this offering as if such conversion had occurred at the beginning
of the applicable period.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
FISCAL YEAR ENDED JUNE 30, -----------------------
---------------------------------------------------- JANUARY 2, JANUARY 1,
1995 1996 1997 1998 1999 1999 2000
-------- -------- -------- -------- -------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue:
Software licenses............. $ 5,374 $ 6,531 $ 6,743 $ 8,514 $12,238 $5,275 $ 6,651
Services...................... 6,162 7,472 8,080 7,875 7,983 3,969 4,853
------- ------- ------- ------- ------- ------ -------
Total revenue............... 11,536 14,003 14,823 16,389 20,221 9,244 11,504
------- ------- ------- ------- ------- ------ -------
Costs and expenses:
Cost of software licenses
revenue..................... 215 261 377 397 378 168 322
Cost of services revenue...... 1,676 2,615 1,904 1,685 1,319 605 491
Research and development...... 2,234 3,535 3,527 3,062 3,466 1,754 1,709
Selling and marketing......... 4,541 6,094 6,703 7,287 9,673 4,615 5,811
General and administrative.... 2,486 2,550 3,719 3,303 3,839 1,735 2,277
Litigation.................... -- -- -- -- 620 -- 530
Amortization of intangible
assets...................... 2,440 2,904 2,370 84 -- -- --
------- ------- ------- ------- ------- ------ -------
Total operating expenses.... 13,592 17,959 18,600 15,818 19,295 8,877 11,140
------- ------- ------- ------- ------- ------ -------
Income (loss) from
operations.................. (2,056) (3,956) (3,777) 571 926 367 364
Interest income (expense),
net........................... 156 135 (139) (238) (177) (85) (39)
Other income (loss), net........ 766 (24) 17 19 (92) (22) (64)
------- ------- ------- ------- ------- ------ -------
Income (loss) before income
taxes and extraordinary
loss........................ (1,134) (3,845) (3,899) 352 657 260 261
Provision for income taxes...... 466 414 371 163 176 57 (172)
Extraordinary loss from early
extinguishment of debt, net of
taxes......................... -- -- -- -- 130 130 --
------- ------- ------- ------- ------- ------ -------
Net income (loss)............. (1,600) (4,259) (4,270) 189 351 73 433
Accretion on convertible
preferred stock............... 146 482 741 80 -- -- --
------- ------- ------- ------- ------- ------ -------
Net income (loss) available to
common stockholders......... $(1,746) $(4,741) $(5,011) $ 109 $ 351 $ 73 $ 433
======= ======= ======= ======= ======= ====== =======
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED
FISCAL YEAR ENDED JUNE 30, -----------------------
---------------------------------------------------- JANUARY 2, JANUARY 1,
1995 1996 1997 1998 1999 1999 2000
-------- -------- -------- -------- -------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
Net income (loss) per common
share:
Basic......................... $ -- $ -- $ -- $ -- $1.33 $0.34 $1.18
Diluted....................... $ -- $ -- $ -- $0.04 $0.06 $0.01 $0.07
Pro forma net income per common
share:
Basic......................... $0.06 $0.07
Diluted....................... $0.06 $0.07
Shares used in computing net
income (loss) per share:
Basic......................... -- -- -- -- 265 215 367
Diluted....................... -- -- -- 5,228 6,166 6,042 6,311
Pro forma basic............... 5,717 5,855
Pro forma diluted............. 6,166 6,311
</TABLE>
<TABLE>
<CAPTION>
AS OF JUNE 30,
---------------------------------------------------- AS OF JANUARY 1,
1995 1996 1997 1998 1999 2000
-------- -------- -------- -------- -------- ----------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents............. $ 564 $ 1,638 $ 1,009 $ 1,700 $ 1,240 $ 1,328
Total assets.......................... 16,184 16,432 13,940 14,336 10,247 10,564
Long-term debt, net of current
portion............................. -- -- 524 890 -- --
Redeemable convertible preferred
stock............................... 1,608 9,582 10,322 -- -- --
Stockholders' equity (deficit)........ 3,461 (5,340) (10,584) 34 1,270 1,763
</TABLE>
The computation of basic and diluted net income (loss) per common share has
been adjusted retroactively for all periods presented to reflect the
redesignation of our common and preferred stock in March 1998. As a result of
the treatment of this redesignation, we had no common stock outstanding prior to
June 30, 1998 for purposes of computing net income (loss) per common share.
Accordingly, basic net income (loss) per common share was zero for the years
ended June 30, 1995, 1996, 1997 and 1998.
18
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH OUR CONSOLIDATED
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION APPEARING ELSEWHERE IN THIS
PROSPECTUS.
OVERVIEW
Our primary business is the development, sale and support of software
applications for the design and manufacture of plastic injection molded parts.
Our products allow a product designer or engineer to simulate the manufacture of
a plastic part to determine and maintain the optimal part design and
manufacturing conditions throughout the manufacturing process.
We develop software products internally and through cooperative research
relationships with a number of public and private educational and research
organizations around the world. Prior to June 1997, our products consisted
solely of our Moldflow Plastics Insight (MPI) Series for in-depth mold design.
Since then, we have introduced two new product lines. Our Moldflow Plastics
Advisers (MPA) Series for part design and high level mold design was introduced
in fiscal 1997 and our Moldflow Plastics Xpert (MPX) Series for production
set-up and production monitoring was introduced in fiscal 1999. We have also
introduced additional modules of our MPI product series since June 1997.
We sell our products and services internationally through our direct sales
operations in nine countries. In addition, we sell through a network of
distributors and value-added resellers and through distribution arrangements
with developers of other design software products.
We generate revenue from two principal sources:
- license fees for our packaged software products, and
- services revenue derived from maintenance and support services related to
our software products, consulting, training and material testing.
SOFTWARE LICENSES REVENUE. Typically, our customers pay an up-front,
one-time fee for a perpetual license of our software products. The amount of the
fee depends upon the number and type of software modules purchased and the
number of the customers' employees or other users who can access the software
product simultaneously. Sales of our MPA product are initiated upon receipt of a
customer purchase order and are subject to the terms of a "shrink-wrapped" or
"click-wrapped" software license agreement which is pre-packaged with the
software and is also included as part of customers' installation process. For
sales of our MPI and MPX products, we generally require a signed license
agreement. In addition, we receive royalty payments from original equipment
manufacturers related to the bundling of our software with their design software
programs.
We recognize software licenses revenue when evidence of a purchase
commitment exists, delivery of the product has occurred, no significant
installation obligations remain, the license fee is fixed and determinable, and
collectibility is probable.
SERVICES REVENUE. Most of our customers enter into maintenance and support
contracts, which require us to provide customer technical support services and
unspecified product upgrades and enhancements on a when-and-if-available basis.
Services revenue is primarily comprised of revenue derived from these
maintenance and support contracts. We also provide consulting services, training
of customers' employees, and material testing services. Maintenance and support
contract revenue is invoiced in advance and is recognized ratably over the term
of the corresponding maintenance agreement, which typically is twelve months.
Other services revenue is recognized as the services are performed.
COST OF SOFTWARE LICENSES REVENUE. Cost of software licenses revenue
consists primarily of the costs associated with compact discs and related
packaging material, duplication and shipping costs
19
<PAGE>
and the salaries of our distribution personnel. In some cases, we pay royalties
to third parties for usage-based licenses of their products that are embedded in
our software programs. Product royalties are expensed when the related
obligation arises, which is generally upon the sale of our products, and are
included in cost of software licenses revenue.
COST OF SERVICES REVENUE. Cost of services revenue consists primarily of
salary, fringe benefit and facility related costs of our maintenance and
support, consulting and training activities and of our material testing
laboratory in Australia, and is expensed when incurred. Additionally, from time
to time, we engage outside consultants to meet peaks in customer demand for our
consulting services.
RESEARCH AND DEVELOPMENT. We maintain an in-house development staff to
enhance our existing products and to develop new ones. Product development
expenditures are generally charged to operations as incurred. Statement of
Financial Accounting Standards No. 86 requires the capitalization of certain
software development costs subsequent to the establishment of technological
feasibility. We typically establish technological feasibility upon the
completion of a working model. Accordingly, due to the minimal level of software
development costs incurred subsequent to the establishment of technological
feasibility, costs eligible for capitalization have not been significant to
date.
SELLING AND MARKETING. We sell our products primarily through our direct
sales force and indirect distribution channels. Selling and marketing expenses
consist primarily of personnel costs, commissions to employees, sales office
facilities, travel and promotional events such as trade shows, advertising,
print and Web-based collateral materials, and public relations programs.
GENERAL AND ADMINISTRATIVE. General and administrative expenses include our
personnel, routine legal, audit and other costs of our executive management,
finance and administrative support activities.
LITIGATION. In February 1999, we filed suit in U.S. District Court against
a former employee and a principal competitor in which we allege theft and
misappropriation of our trade secrets related to the development of a
three-dimensional plastic simulation and modeling product. The U.S. District
Court has issued a preliminary injunction precluding the defendants from using
or disclosing our trade secrets and prohibiting our former employee from working
for our competitor in this area. In January 2000, the court denied our
competitor's motion to have this injunction lifted. In April 1999, the
competitor filed counterclaims against us in which they allege that we engaged
in anti-competitive practices including, among other things, restraint of trade,
attempt to monopolize, price discrimination, libel and defamation. We are unable
to determine the ultimate outcome of these matters, however, we intend to
vigorously pursue our claims and defend the counterclaims asserted against us.
Litigation expenses reflect our costs for pursuing our claims and for defending
against the counterclaims.
INTEREST INCOME (EXPENSE), NET. Interest income (expense), net includes our
cost of borrowings, including interest cost incurred on our working capital
lines of credit and stockholder loans, offset in part by interest income earned
on invested cash balances.
OTHER INCOME (LOSS), NET. Other income (loss), net includes realized and
unrealized gains and losses arising from translation of foreign currency
denominated asset and liability balances and other non-operating income and
expense items.
PROVISION FOR INCOME TAXES. Our provision for income taxes includes
federal, state and foreign taxes on our income in the countries in which we do
business. Because we have incurred significant operating losses in prior years,
we have significant net operating loss carryforwards available to offset our
future tax obligations in the U.S. and Australia, and to a lesser extent,
certain other countries. At June 30, 1999, we had available federal, state and
foreign net operating loss carryforwards of approximately $4.5 million,
$3.2 million and $7.8 million. Use of net operating
20
<PAGE>
losses to reduce future taxable income is subject to a number of limitations. We
expect that our income taxes will increase in the future once our net operating
loss carryforwards and other deferred tax assets are fully utilized.
Our fiscal year end is June 30. References to 1997, 1998 or 1999 mean the
fiscal year ended June 30, unless otherwise indicated. During the fiscal year,
we follow a schedule in which each interim quarterly period ends on the Saturday
of the thirteenth full week of the reporting period.
RESULTS OF OPERATIONS
The following table sets forth statement of operations data for the periods
indicated as a percentage of total revenue:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
FISCAL YEAR ENDED JUNE 30, --------------------
-------------------------------- JAN. 2, JAN. 1,
1997 1998 1999 1999 2000
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Revenue:
Software licenses.............................. 45.5% 51.9% 60.5% 57.1% 57.8%
Services....................................... 54.5 48.1 39.5 42.9 42.2
----- ----- ----- ----- -----
Total revenue................................ 100.0 100.0 100.0 100.0 100.0
----- ----- ----- ----- -----
Costs and expenses:
Cost of software licenses revenue.............. 2.6 2.4 1.9 1.8 2.8
Cost of services revenue....................... 12.8 10.3 6.5 6.5 4.3
Research and development....................... 23.8 18.7 17.1 19.0 14.9
Selling and marketing.......................... 45.2 44.4 47.8 49.9 50.5
General and administrative..................... 25.1 20.2 19.0 18.8 19.8
Litigation..................................... -- -- 3.1 -- 4.6
Amortization of intangible assets.............. 16.0 0.5 -- -- --
----- ----- ----- ----- -----
Total operating expenses..................... 125.5 96.5 95.4 96.0 96.9
----- ----- ----- ----- -----
Income (loss) from operations.................. (25.5) 3.5 4.6 4.0 3.1
Interest income (expense), net................... (0.9) (1.5) (0.9) (0.9) (0.4)
Other income (loss), net......................... 0.1 0.1 (0.5) (0.2) (0.6)
----- ----- ----- ----- -----
Income (loss) before income taxes and
extraordinary loss........................... (26.3) 2.1 3.2 2.9 2.1
Provision for income taxes....................... 2.5 1.0 0.9 0.6 (1.5)
Extraordinary loss from early extinguishment of
debt, net of taxes............................. -- -- 0.6 1.4 --
----- ----- ----- ----- -----
Net income (loss).............................. (28.8)% 1.1% 1.7% 0.9% 3.6%
===== ===== ===== ===== =====
</TABLE>
SIX MONTHS ENDED JANUARY 1, 2000 COMPARED TO SIX MONTHS ENDED JANUARY 2, 1999
REVENUE. Total revenue increased by 24.4%, or $2.3 million, to
$11.5 million for the six months ended January 1, 2000 from $9.2 million for the
six months ended January 2, 1999. In the same period, software licenses revenue
increased by 26.1%, or $1.4 million, to $6.7 million. The increase in software
licenses revenue was attributable to an increase in the number of our direct
sales representatives, improvement in the economic conditions in Asia, and new
MPA and MPX product releases in March 1999 and September 1999. Software licenses
revenue accounted for 57.8% of total revenue for the six months ended
January 1, 2000 compared to 57.1% for the six months ended January 2, 1999.
Services revenue increased by 22.3%, or $884,000, to $4.9 million for the six
months ended January 1, 2000 from $4.0 million for the six months ended
January 2, 1999. This increase was due primarily to an increase in the amount of
revenue derived from maintenance and support contracts resulting from the growth
in our software licenses revenue and
21
<PAGE>
installed user base in fiscal 1999. No customer accounted for more than 10% of
total revenue for the six months ended January 1, 2000 and January 2, 1999.
COST OF REVENUE. Cost of software licenses revenue increased 91.7%, or
$154,000, to $322,000 for the six months ended January 1, 2000 from $168,000 for
the six months ended January 2, 1999. This increase was primarily attributable
to higher costs for third-party royalties and increased personnel and hardware
costs related to MPX product sales. Cost of services revenue decreased 18.8%, or
$114,000, from $605,000 for the six months ended January 2, 1999 to $491,000 for
the six months ended January 1, 2000. This decrease resulted from the continued
redirection of field technical personnel from largely passive roles of customer
hotline and maintenance services to active field roles in pre-sales and customer
retention programs, which costs are included in selling and marketing.
RESEARCH AND DEVELOPMENT. Research and development expenses decreased 2.6%,
or $45,000, to $1.7 million for the six months ended January 1, 2000 from
$1.8 million for the six months ended January 2, 1999. This decrease was the
result of lower research sponsorship costs in the six months ended January 1,
2000.
SELLING AND MARKETING. Selling and marketing expenses increased 25.9%, or
$1.2 million, to $5.8 million for the six months ended January 1, 2000 from
$4.6 million for the six months ended January 2, 1999. This growth was due
principally to the establishment in July 1999 of a direct sales subsidiary in
Sweden, an increase in the number of direct sales representatives and pre-sales
application support engineers, and an increase in spending for promotional
activities.
GENERAL AND ADMINISTRATIVE. General and administrative expenses increased
31.2%, or $542,000, to $2.3 million for the six months ended January 1, 2000
from $1.7 million for the six months ended January 2, 1999. This resulted from
the cost of additional finance and administrative personnel hired in the second
half of fiscal 1999, an increase in costs of pursuing business development
opportunities, and an increase in general corporate insurance and facility
costs.
LITIGATION. Litigation expenses were $530,000 for the six months ended
January 1, 2000. There were no litigation expenses for the six months ended
January 2, 1999. These litigation expenses consist of the legal costs incurred
to pursue our claims regarding theft of our trade secrets and to defend against
the counterclaims.
INTEREST INCOME (EXPENSE), NET. Interest income (expense), net decreased
54.1%, or $46,000, to a net expense of $39,000 in the six months ended
January 1, 2000 from a net expense of $85,000 for the six months ended
January 2, 1999. This was due primarily to a decrease in interest expense
resulting from the reduction in the amount of outstanding borrowings under our
domestic and foreign revolving credit facilities.
OTHER INCOME (LOSS), NET. Other income (loss), net increased $42,000 to a
loss of $64,000 in the six months ended January 1, 2000 from a loss of $22,000
for the six months ended January 2, 1999. This change was primarily due to
unrealized foreign exchange losses incurred on the translation of intercompany
foreign currency denominated obligations.
PROVISION FOR INCOME TAXES. The provision for income taxes was a benefit of
$172,000 in the six months ended January 1, 2000 compared to a provision of
$57,000 for the six months ended January 2, 1999. This change reflects the
impact of a refund received in September 1999 of foreign taxes that we paid in
prior years.
COMPARISON OF FISCAL YEARS 1999 AND 1998
REVENUE. Total revenue increased 23.4%, or $3.8 million, to $20.2 million
for 1999 from $16.4 million for 1998. The increase was attributable principally
to growth in software licenses revenue, including the impact of the release of
three new products, MPI/Fusion, MPI/FLOW 3D and MPA/Mold Adviser in
August 1998, September 1998 and March 1999. A portion of the increase
22
<PAGE>
resulted from the continued implementation of our direct selling model,
including the addition of sales representatives and the improvement of sales
productivity. Software licenses revenue increased 43.7%, or $3.7 million, to
$12.2 million for 1999 from $8.5 million for 1998. Software licenses revenue
accounted for 60.5% of total revenue in 1999, compared to 51.9% during 1998.
Services revenue increased slightly by $108,000, or 1.4%, as the increase in
maintenance and support contract revenue was offset, in part, by a reduction in
consulting revenue resulting from our decision to de-emphasize our simulation
consulting and analysis business. No customer accounted for more than 10% of our
total revenue during 1999 and a distributor in Japan, ISI-Dentsu, Ltd.,
accounted for 12.7% of our total revenue in 1998.
COST OF REVENUE. Cost of software licenses revenue decreased by 4.8%, or
$19,000, to $378,000 for 1999 from $397,000 for 1998. This decrease was due
primarily to lower packaging and freight costs in 1999. Cost of services revenue
decreased by 21.7%, or $366,000, to $1.3 million for 1999 from $1.7 million for
1998. This was due primarily to lower personnel costs resulting from the
centralization of U.S.-based customer support activities, the implementation of
a worldwide customer support management system, and the continued redirection of
technical and consulting employees into pre-sales support activities, which
costs are included in selling and marketing.
RESEARCH AND DEVELOPMENT. Research and development expenses increased by
13.2%, or $404,000, to $3.5 million for 1999 from $3.1 million for 1998. This
increase was attributable to the addition of software development engineers in
Australia and the United Kingdom, and increased costs of travel and outside
consultants primarily engaged in MPX product development activities.
SELLING AND MARKETING. Selling and marketing expenses increased by 32.7%,
or $2.4 million, to $9.7 million for 1999 from $7.3 million for 1998. These
expenses increased as a percentage of total revenue from 44.4% to 47.8% due
principally to the hiring of additional direct sales representatives, pre-sales
support and product marketing employees, and the establishment of a marketing
communications function. Further, we increased our spending for promotional
activities including collateral materials, direct mailings and public relations
in connection with the rollout of new products introduced during 1999.
GENERAL AND ADMINISTRATIVE. General and administrative expenses increased
by 16.2%, or $536,000, to $3.8 million for 1999 from $3.3 million for 1998.
These expenses increased in 1999 due primarily to the addition of financial and
administrative management personnel, improvements in information systems and
increases in routine legal and audit fees.
LITIGATION. Litigation expenses were $620,000 in 1999. This was
attributable to the legal costs incurred in 1999 to pursue our claims regarding
theft of our trade secrets and to defend against the other parties'
counterclaims. There were no such expenses in 1998.
INTEREST INCOME (EXPENSE), NET. Interest income (expense), net decreased by
25.6%, or $61,000, to a net expense of $177,000 in 1999 from a net expense of
$238,000 in 1998 due primarily to a reduction in the amount of interest expense
incurred as a result of a reduction in the level of bank and stockholder debt
outstanding in 1999. Outstanding debt was reduced through repayment with funds
generated from operations in 1999 and through the conversion of $890,000 of
stockholder debt into preferred stock.
OTHER INCOME (LOSS), NET. Other income (loss), net decreased by $111,000,
to a loss of $92,000 in 1999 from income of $19,000 in 1998 due primarily to
unrealized foreign exchange losses incurred on the translation of intercompany
foreign currency denominated obligations.
PROVISION FOR INCOME TAXES. The provision for income taxes increased
slightly to $176,000 in 1999 from $163,000 in 1998 due primarily to changes in
the amount of taxes paid on income in state and foreign jurisdictions.
23
<PAGE>
EXTRAORDINARY LOSS. We incurred a loss of $130,000, net of taxes, on the
early extinguishment of $890,000 of stockholder debt upon its conversion into
series C-3 preferred stock in 1999.
COMPARISON OF FISCAL YEARS 1998 AND 1997
REVENUE. Our total revenue increased 10.6%, or $1.6 million, to
$16.4 million for 1998 from $14.8 million for 1997. The increase was principally
attributable to increased sales of our MPI software products, the introduction
in June 1997 of the MPA/Part Adviser product and the impact of our direct sales
subsidiary established in Italy in January 1998. This increase was offset in
part by lower sales in Asia resulting from declining economic conditions in the
region and the impact of currency fluctuations. Software licenses revenue
accounted for 51.9% of total revenue in 1998, compared to 45.5% during 1997.
Services revenue declined by 2.5% in 1998, or $205,000, to $7.9 million,
compared to $8.1 million in 1997. This was due to our decision to de-emphasize
our simulation and analysis consulting business while redirecting our
consultants into pre-sales support in order to increase software product sales
at a more rapid pace. In 1998 and 1997, a distributor in Japan, ISI-Dentsu,
Ltd., accounted for 12.7% and 14.9% of our total revenue for those periods.
COST OF REVENUE. Cost of software licenses revenue increased by 5.3%, or
$20,000, to $397,000 for 1998 from $377,000 for 1997 due primarily to the
increased volume of product sales. Cost of services revenue decreased by 11.5%,
or $219,000, to $1.7 million in 1998 from $1.9 million in 1997. The decrease was
attributable principally to a redirection of some of our technical and
consulting employees into pre-sales support activities, which costs are included
in selling and marketing.
RESEARCH AND DEVELOPMENT. Research and development expenses decreased by
13.2%, or $465,000, to $3.1 million for 1998 from $3.5 million for 1997. This
decrease was attributable primarily to the reduction in costs of our development
activities in Australia due to the weakening in the rate of exchange of the
Australian dollar to the U.S. dollar during 1998.
SELLING AND MARKETING. Selling and marketing expenses increased by 8.7%, or
$584,000, to $7.3 million for 1998 from $6.7 million for 1997. These expenses
increased due to compensation and other costs related to the addition of sales
associates and sales management in existing operations, including our Japanese
operation established in August 1997, and the establishment of direct sales and
support operations in Italy in January 1998.
GENERAL AND ADMINISTRATIVE. General and administrative expenses decreased
by 11.2%, or $416,000, to $3.3 million for 1998 from $3.7 million for 1997. The
decrease was due primarily to a reduction in the cost of our Asian regional
finance and administrative activities located in Australia resulting from
changes in the rate of exchange versus the U.S. dollar and a reduction in the
level of professional fees incurred after our reorganization into a U.S.
corporation in August 1997.
AMORTIZATION OF INTANGIBLE ASSETS. Amortization of intangible assets
decreased $2.3 million, or 96.5%, to $84,000 in 1998 from $2.4 million in 1997
as our intangible assets, including developed software and goodwill acquired in
1994, became fully amortized in 1997.
INTEREST INCOME (EXPENSE), NET. Interest income (expense), net increased by
71.2%, or $99,000, to a net expense of $238,000 in 1998 from a net expense of
$139,000 in 1997 due to the increased level of bank and stockholder debt
outstanding in 1998.
OTHER INCOME (LOSS), NET. Other income (loss), net increased by $2,000, to
income of $19,000 in 1998 from income of $17,000 in 1997 due primarily to
unrealized foreign exchange gains resulting from the translation of intercompany
foreign currency denominated obligations.
PROVISION FOR INCOME TAXES. The provision for income taxes decreased by
56.1%, or $208,000, from $371,000 in 1997 to $163,000 in 1998 primarily as the
result of a reduction in the amount of foreign withholding taxes paid after the
establishment of our direct sales subsidiary in Japan.
24
<PAGE>
SELECTED QUARTERLY RESULTS OF OPERATIONS
The following table sets forth the unaudited quarterly consolidated
statement of operations data for each of the ten quarters in the period ended
January 1, 2000. In the opinion of management, the unaudited financial results
include all adjustments, consisting only of normal recurring adjustments,
necessary for the fair presentation of our results of operations for those
periods and have been prepared on the same basis as the audited consolidated
financial statements. The quarterly data should be read in conjunction with our
audited consolidated financial statements and the accompanying notes appearing
elsewhere in this prospectus. The results of operations for any quarter are not
necessarily indicative of the results of operations for any future period.
<TABLE>
<CAPTION>
QUARTER ENDED
-------------------------------------------------------------------------------------
OCT 4, JAN. 3, APR. 4, JUN. 30, OCT. 3, JAN. 2, APR. 3, JUN. 30,
1997 1998 1998 1998 1998 1999 1999 1999
-------- -------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue:
Software licenses................... $1,568 $2,410 $2,313 $2,223 $2,350 $2,925 $3,555 $3,408
Services............................ 1,956 2,050 1,851 2,018 1,838 2,131 1,845 2,169
------ ------ ------ ------ ------ ------ ------ ------
Total revenue..................... 3,524 4,460 4,164 4,241 4,188 5,056 5,400 5,577
------ ------ ------ ------ ------ ------ ------ ------
Costs and expenses:
Cost of software licenses revenue... 165 125 79 28 77 91 116 94
Cost of services revenue............ 429 398 417 441 290 315 363 351
Research and development............ 809 748 785 720 895 859 1,031 681
Selling and marketing............... 1,569 1,920 1,900 1,898 2,086 2,529 2,526 2,532
General and administrative.......... 776 840 742 945 794 941 1,065 1,039
Litigation.......................... -- -- -- -- -- -- 150 470
Amortization of intangible assets... 84 -- -- -- -- -- -- --
------ ------ ------ ------ ------ ------ ------ ------
Total operating expenses.......... 3,832 4,031 3,923 4,032 4,142 4,735 5,251 5,167
------ ------ ------ ------ ------ ------ ------ ------
Income (loss) from operations....... (308) 429 241 209 46 321 149 410
Interest income (expense), net........ (39) (42) (44) (113) (41) (44) 8 (100)
Other income (loss), net.............. 1 (60) 16 62 50 (72) (19) (51)
------ ------ ------ ------ ------ ------ ------ ------
Income (loss) before income taxes
and extraordinary loss............ (346) 327 213 158 55 205 138 259
Provision for income taxes............ -- 57 75 31 (3) 60 62 57
Extraordinary loss from early
extinguishment of debt, net of
taxes............................... -- -- -- -- 130 -- -- --
------ ------ ------ ------ ------ ------ ------ ------
Net income (loss)................... $ (346) $ 270 $ 138 $ 127 $ (72) $ 145 $ 76 $ 202
====== ====== ====== ====== ====== ====== ====== ======
<CAPTION>
QUARTER ENDED
-------------------
OCT. 2, JAN. 1,
1999 2000
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Revenue:
Software licenses................... $2,823 $3,828
Services............................ 2,358 2,495
------ ------
Total revenue..................... 5,181 6,323
------ ------
Costs and expenses:
Cost of software licenses revenue... 169 153
Cost of services revenue............ 236 255
Research and development............ 835 874
Selling and marketing............... 2,698 3,113
General and administrative.......... 1,076 1,201
Litigation.......................... 280 250
Amortization of intangible assets... -- --
------ ------
Total operating expenses.......... 5,294 5,846
------ ------
Income (loss) from operations....... (113) 477
Interest income (expense), net........ (1) (38)
Other income (loss), net.............. (34) (30)
------ ------
Income (loss) before income taxes
and extraordinary loss............ (148) 409
Provision for income taxes............ (217) 45
Extraordinary loss from early
extinguishment of debt, net of
taxes............................... -- --
------ ------
Net income (loss)................... $ 69 $ 364
====== ======
</TABLE>
<TABLE>
<CAPTION>
QUARTER ENDED
---------------------------------------------------------------
OCT. 4, JAN. 3, APR. 4, JUN. 30, OCT. 3, JAN. 2,
1997 1998 1998 1998 1998 1999
-------- -------- -------- -------- -------- --------
(AS A PERCENTAGE OF TOTAL REVENUE)
<S> <C> <C> <C> <C> <C> <C>
Revenue:
Software licenses................... 44.5% 54.0% 55.5% 52.4% 56.1% 57.9%
Services............................ 55.5 46.0 44.5 47.6 43.9 42.1
----- ----- ----- ----- ----- -----
Total revenue..................... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
===== ===== ===== ===== ===== =====
Costs and expenses:
Cost of software licenses revenue... 4.7% 2.8% 1.9% 0.7% 1.8% 1.8%
Cost of services revenue............ 12.2 8.9 10.0 10.4 6.9 6.2
Research and development............ 23.0 16.8 18.9 17.0 21.4 17.0
Selling and marketing............... 44.5 43.0 45.6 44.8 49.8 50.0
General and administrative.......... 22.0 18.8 17.8 22.3 19.0 18.6
Litigation.......................... -- -- -- -- -- --
Amortization of intangible assets... 2.4 -- -- -- -- --
----- ----- ----- ----- ----- -----
Total operating expenses.......... 108.8 90.3 94.2 95.2 98.9 93.6
----- ----- ----- ----- ----- -----
Income (loss) from operations....... (8.8) 9.7 5.8 4.8 1.1 6.4
Interest income (expense), net........ (1.1) (0.9) (1.1) (2.7) (1.0) (0.9)
Other income (loss), net.............. 0.0 (1.3) 0.4 1.5 1.2 (1.4)
----- ----- ----- ----- ----- -----
Income (loss) before income taxes
and extraordinary loss............ (9.9) 7.5 5.1 3.6 1.3 4.1
Provision for income taxes............ -- 1.3 1.8 0.7 (0.1) 1.2
Extraordinary loss from early
extinguishment of debt, net of
taxes............................... -- -- -- -- 3.1 --
----- ----- ----- ----- ----- -----
Net income (loss)................... (9.9)% 6.2% 3.3% 2.9% (1.7)% 2.9%
===== ===== ===== ===== ===== =====
<CAPTION>
QUARTER ENDED
-----------------------------------------
APR. 3, JUN. 30, OCT. 2, JAN. 1,
1999 1999 1999 2000
-------- -------- -------- --------
(AS A PERCENTAGE OF TOTAL REVENUE)
<S> <C> <C> <C> <C>
Revenue:
Software licenses................... 65.8% 61.1% 54.5% 60.5%
Services............................ 34.2 38.9 45.5 39.5
----- ----- ----- -----
Total revenue..................... 100.0% 100.0% 100.0% 100.0%
===== ===== ===== =====
Costs and expenses:
Cost of software licenses revenue... 2.1% 1.7% 3.3% 2.4%
Cost of services revenue............ 6.7 6.3 4.6 4.0
Research and development............ 19.1 12.2 16.1 13.8
Selling and marketing............... 46.8 45.4 52.1 49.2
General and administrative.......... 19.7 18.6 20.8 19.0
Litigation.......................... 2.8 8.4 5.4 4.0
Amortization of intangible assets... -- -- -- --
----- ----- ----- -----
Total operating expenses.......... 97.2 92.6 102.3 92.4
----- ----- ----- -----
Income (loss) from operations....... 2.8 7.4 (2.3) 7.6
Interest income (expense), net........ 0.1 (1.8) -- (0.6)
Other income (loss), net.............. (0.4) (1.0) (0.7) (0.5)
----- ----- ----- -----
Income (loss) before income taxes
and extraordinary loss............ 2.5 4.6 (3.0) 6.5
Provision for income taxes............ 1.1 1.0 (4.2) 0.7
Extraordinary loss from early
extinguishment of debt, net of
taxes............................... -- -- -- --
----- ----- ----- -----
Net income (loss)................... 1.4% 3.6% 1.2% 5.8%
===== ===== ===== =====
</TABLE>
25
<PAGE>
Our quarterly results have varied in the past and may vary significantly in
the future depending on many factors, many of which are outside of our control.
The primary factors that may affect us include the following:
- seasonal slowdowns, in particular, in our first fiscal quarter, in many of
the markets in which we sell our products,
- start-up expenses for new facilities and new personnel,
- our success in expanding our sales and marketing programs, including the
rollout of our Internet-enabled products currently under development,
- currency fluctuations,
- developments in the litigation that we are pursuing against our former
employee and our competitor, and in the nature and extent of proceedings
and findings related to their counterclaims pending against us, and
- the timing and integration of acquisitions.
LIQUIDITY AND CAPITAL RESOURCES
Historically, we have financed our operations and met our capital
expenditure requirements primarily through private sales of our capital stock,
stockholder loans, funds generated from operations and borrowings from lending
institutions. As of January 1, 2000, our primary sources of liquidity consisted
of $1.3 million in total cash and cash equivalents and $1.4 million of available
borrowings under our $3,250,000 domestic and foreign revolving lines of credit,
which are secured by substantially all of our assets. As of January 1, 2000, the
balance outstanding on our lines of credit was $998,000. Borrowings under our
lines of credit are subject to a borrowing base of 80% of eligible domestic
accounts receivable, 30% of eligible foreign accounts receivable, and 90% of a
standby letter of credit issued by an Australian bank. The assets of our
Australian subsidiary secure the standby letter of credit. Interest on these
lines of credit is payable monthly at rates of prime plus 1.25% for the domestic
line and prime plus 1.5% for the foreign line. The standby letter of credit is
subject to a fee of 0.5% per year.
Net cash used in operating activities was $608,000 in 1997, and net cash
provided by operations was $771,000 in 1998, $1.2 million in 1999 and $210,000
in the six months ended January 1, 2000. The cash used in operating activities
in 1997 primarily reflects the net loss of $4.3 million offset, in part, by
non-cash charges of $3.1 million for depreciation of fixed assets and
amortization of intangible assets included in the net loss. The cash provided by
operations in 1998, 1999 and the six months ended January 1, 2000 reflects the
impact of increases in net income, deferred maintenance and support contract
revenue and accounts payable, offset by the impact of the increase in 1998 of
accounts receivable, and by non-cash depreciation and amortization charges
included in net income.
Net cash used in investing activities was $1.2 million, $729,000, and
$854,000 in 1997, 1998 and 1999, and $387,000 in the six months ended
January 1, 2000. Net cash used in investing activities reflects amounts used for
purchases of property and equipment, primarily for computers, networking and
materials laboratory test equipment to support our global product development
activities, and to enable data communications among our worldwide development,
sales, customer support and administrative organizations. In addition, in 1997,
net cash used in investing activities reflects $431,000 used to acquire the
shares of our third party distributor in France.
Net cash provided by financing activities was $1.4 million and $716,000 in
1997 and 1998. Net cash used in financing activities was $907,000 in 1999 and
net cash provided by financing activities was $134,000 in the six months ended
January 1, 2000. Net cash provided by financing activities in 1997 and 1998
reflects primarily borrowings from stockholders and lending institutions, net of
the repayment of debt obligations. In July 1998, we converted indebtedness of
$890,000 incurred in
26
<PAGE>
1997 and 1998 under stockholder loans into shares of preferred stock. For more
information on the loan conversion, see "Certain Relationships and Related
Transactions--Loans from Stockholders." Net cash used in financing activities in
1999 reflects principally the repayments of amounts outstanding on our working
capital lines of credit and capital lease obligations. Net cash provided by
financing activities in the six months ended January 1, 2000 reflects
principally borrowings on our working capital lines of credit.
We believe that the net proceeds of this offering, together with our current
cash, cash equivalents, and available lines of credit will be sufficient to meet
our anticipated cash needs for working capital and capital expenditures for at
least the next 12 months following the date of this prospectus. On a long-term
basis or to complete acquisitions, we may require additional external financing
through credit facilities, sales of additional equity or other financing
vehicles.
YEAR 2000 ISSUES
We are unaware of any problems that have arisen with respect to year 2000
issues in our current software products, our internal computer systems or in the
computer systems of our vendors. Prior to January 1, 2000, we conducted a
comprehensive review of the potential impact that the change in the date to the
year 2000 would have on our current products and computer systems. Based on this
review, we determined that all of our current products and major computer
systems are able to recognize and appropriately process dates commencing in the
year 2000. Our historical costs to assess our year 2000 readiness have not been
significant. The majority of the costs required to complete our year 2000
compliance process were incurred as part of our normal capital asset acquisition
program, and would have been incurred without consideration of year 2000 issues.
We are not currently able to estimate the final aggregate cost of addressing the
year 2000 issue, because funds may be required as a result of future findings.
However, given the lack of any problems related to the year 2000 since the year
change, we do not anticipate that we will experience any material problems
related to the year 2000 in the future. As a result, we do not expect costs
associated with these problems to have an adverse effect on our business and
financial results.
RECENT ACCOUNTING PRONOUNCEMENTS
In December 1998, the American Institute of Certified Public Accountants
issued Statement of Position No. 98-9, "Modification of SOP No. 97-2, Software
Revenue Recognition, with Respect to Certain Transactions." SOP 98-9 amends SOP
97-2 to require recognition of revenue using the "residual method" in
circumstances outlined in SOP 98-9. Under the residual method, revenue is
recognized as follows: (1) the total fair value of undelivered elements, as
indicated by vendor specific objective evidence, is deferred and subsequently
recognized in accordance with the relevant sections of SOP 97-2 and (2) the
difference between the total arrangement fee and the amount deferred for the
undelivered elements is recognized as revenue related to the delivered elements.
SOP 98-9 is effective for transactions entered into in fiscal years beginning
after March 15, 1999. Also, the provision of SOP 97-2 that were deferred by SOP
98-4 will continue to be deferred until the date SOP 98-9 becomes effective. We
do not expect that the adoption of SOP 98-9 will have a significant impact on
our results of operations or financial position.
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities." SFAS 133 establishes accounting and reporting standards
for derivative instruments, including certain derivative instruments embedded in
other contracts (collectively referred to as derivatives), and for hedging
activities. SFAS 133, as amended by SFAS 137, is effective for all fiscal
quarters of all fiscal years beginning after June 15, 2000, with earlier
application encouraged. We do not currently use derivative instruments or engage
in hedging activities.
27
<PAGE>
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We develop our products in research centers in Australia, the United Kingdom
and the United States. We sell our products globally through our direct sales
force and indirect distributor channels. As a result, our financial results are
affected by factors such as changes in foreign currency exchange rates and weak
economic conditions in foreign markets. In the future, we expect to increase our
international operations in our existing markets and in geographic locations
where we do not have any operations now.
We collect a substantial portion of our revenue and pay a substantial
portion of our operating expenses in foreign currencies. As a result, changes in
currency exchange rates from time to time may affect our operating results.
Currently, we do not engage in hedging transactions to reduce our exposure to
changes in currency exchange rates, although we may do so in the future. We
cannot assure you, however, that any efforts we may make in the future to hedge
our exposure to currency exchange rate changes will be successful.
EUROPEAN UNION CURRENCY CONVERSION
On January 1, 1999, eleven member nations of the European Economic and
Monetary Union began using a common currency, the Euro. For a three-year
transition period ending June 30, 2002, both the Euro and each of the currencies
for such member countries will remain in circulation. After June 30, 2002, the
Euro will be the sole legal tender for those countries. The adoption of the Euro
will affect many financial systems and business applications as the commerce of
those countries may be transacted both in the Euro and the existing national
currency during the transition period. Significant portions of our revenue have
been historically generated in Europe. Of the eleven countries currently using
the Euro, we have subsidiary operations in France, Germany and Italy. We have
assessed the potential impact of the Euro conversion in a number of areas,
particularly on our pricing and other marketing strategies. Although we do not
currently expect that the conversion, either during or after the transition
period, will have an adverse effect on our operations or financial condition,
the conversion has only recently been implemented and there can be no assurance
that it will not have some unexpected adverse impact.
IMPACT OF INFLATION
We believe that our revenue and results of operations have not been
significantly impacted by inflation during the past three fiscal years.
FORWARD LOOKING STATEMENTS
This prospectus contains forward-looking statements. You can identify these
statements by forward-looking words such as "may," "will," "expect,"
"anticipate," "believe," "estimate," and "continue" or similar words. You should
read statements that contain these words carefully because they discuss our
future expectations, contain projections of our future results of operations or
of our financial condition, or state other "forward-looking" information. We
believe that it is important to communicate our future expectations to our
investors. However, there may be events in the future that we are not able to
accurately predict or control and that may cause our actual results to differ
materially from the expectations we describe in our forward-looking statements.
Investors are cautioned that all forward-looking statements involve risks and
uncertainties, and actual results may differ materially from those discussed as
a result of various factors, including those factors described in the "Risk
Factors" section of this prospectus. Readers should not place undue reliance on
our forward-looking statements. Before you invest in our common stock, you
should be aware that the occurrence of the events described in the "Risk
Factors" section and elsewhere in this prospectus could harm our business,
prospects, operating results and financial condition.
28
<PAGE>
BUSINESS
OVERVIEW
We believe we are the world's leading developer of software solutions that
enhance the design, analysis, and manufacture of injection molded plastic parts.
Our products are used by participants in all aspects of the injection molded
plastic parts manufacturing process, including part designers, mold designers,
manufacturing engineers and machine operators. Our products enable our customers
to speed their products to market, decrease manufacturing costs and reduce
costly design and manufacturing errors by:
- assisting part designers in the selection of a plastic material,
- determining the strength, rigidity and ease of manufacturing of a given
part design,
- predicting the amount a plastic part will shrink or warp during
production,
- optimizing production conditions such as machine temperatures, injection
speeds, cooling, times and the locations in a mold to inject the plastic,
- identifying and providing optimized solutions for adverse variations
during production, and
- providing features which facilitate collaboration over shared media, such
as the Internet.
Prior to 1997, we offered a single product line, Moldflow Plastics Insight
(MPI), which was designed to be used by highly specialized engineers conducting
in-depth plastics simulation. Our two new product lines, Moldflow Plastics
Advisers (MPA) and Moldflow Plastics Xpert (MPX), can be used by participants in
all phases of the design and production process for injection molded plastic
parts, many of whom do not specialize in plastic part design. We believe a
large, untapped market for our new product lines exists.
We focus on developing software tools that improve the entire span of
product development for injection molded plastic parts to enable our customers
to enhance their competitiveness and reduce their costs. We believe we have the
widest and most advanced range of software solutions and proprietary technology
to address the problems that arise in each phase of the process of designing and
manufacturing injection molded plastic parts.
Our products are used by more than 2,200 customers at more than 2,500 sites
in over 50 countries around the world. We sell our products primarily through
our direct sales force in North America, Europe and Asia and, to a lesser
extent, through original equipment manufacturers and through distributors in
defined geographic regions. Representative customers include Baxter
International, DaimlerChrysler, DuPont, Fuji Xerox, Hewlett-Packard, Lego,
Lucent Technologies, Motorola, Nokia and Samsung. We have distribution
arrangements with Parametric Technology Corporation, Structural Dynamics
Research Corporation or SDRC, Unigraphics Solutions and CoCreate and resellers
of products of SolidWorks, a subsidiary of Dassault Systemes, and Autodesk.
INDUSTRY BACKGROUND
INJECTION MOLDED PLASTICS INDUSTRY
From high technology to traditional manufacturing, companies in many
industries today make extensive use of plastic materials to produce component
parts for their products. The widespread use of plastics as a manufacturing
material has occurred because plastic parts can be formed into an almost
limitless number of shapes, are relatively inexpensive to manufacture in volume
and are easy to assemble. Common consumer products that make extensive use of
plastic parts include cellular telephones, personal digital assistants, pagers,
automobiles, televisions, cameras, toys and personal computers. The commercial
success of each of these products often relies heavily upon reducing the time to
bring new products to market, reducing engineering and manufacturing costs, and
improving product quality and design.
29
<PAGE>
In high technology industries, the use of plastics has become increasingly
important as weight, cost and quality are standard points of competitive
differentiation. Most importantly, because plastics can be molded into extremely
complex shapes, they are uniquely suited for use in high technology products.
Products such as cell phones, personal digital assistants, or PDAs, and notebook
computers have all employed increasingly complex designs characterized by
smaller parts, reduced weight, more sophisticated shapes and lower tolerances.
These complexities often lengthen the time to market for new products. As
product life cycles shrink and time to market becomes increasingly important,
successful manufacturers in these industries must design and build products
quickly and correctly the first time. In particular, production delays or high
product defect rates for manufacturers in rapidly changing industries can
represent significant economic and opportunity costs. Cell phone sales in the
United States alone, for example, have been projected by industry sources to
increase from approximately 29 million cell phones in 1998 to approximately
71 million in 2003 and PDA sales worldwide have been projected by industry
sources to increase from 2.7 million in 1998 to 13.6 million in 2003.
The use of plastics also continues to increase in traditional industries
such as the automotive industry in large part due to improvements in the
injection molding process. Automobile manufacturers frequently find that plastic
parts provide the same or superior functionality at a lower cost than other
alternatives and permit a single part to replace multiple parts. Reducing the
number of parts decreases assembly costs and simplifies the overall product
development process. For instance, industry trade journals have reported that
DaimlerChrysler predicts that the 75-100 metal parts currently used on a typical
car's body structure could be replaced by 6-12 plastic parts on future cars. In
addition to cost savings and enhanced part performance, the use of plastics in
the automobile industry can yield improvements in other important design
criteria such as fuel economy due to the weight savings achieved by using
plastics instead of other heavier structural materials. For example, industry
trade journals have reported that DaimlerChrysler has recently produced a new
hardtop for its Jeep Wrangler model which uses plastics on external components
and weighs 23 pounds less than its current production hardtop.
INJECTION MOLDING PROCESS
The dominant method for producing plastic parts with complex shapes is
injection molding. We believe that in 1999 up to 750,000 injection molding
machines were in operation on a worldwide basis. Injection molding involves the
injection of molten plastic into a cavity called the mold, usually made of
metal, where it is packed under pressure, subsequently cooled, and then ejected,
yielding a final part.
The injection molding process is extremely complex. It requires the matching
of part geometry to mold geometry, as well as accommodating varying material,
machine, and environmental operating conditions. Not only must the mold cavity
be machined precisely to produce the desired shape of the final part, it also
must account for shrinkage and warpage of the plastic material as it cools and
is ejected. Problems can arise in this process if the molten plastic enters the
mold at the wrong temperature, if the locations of the points of entry of the
plastic into the mold are mismatched to the design of the part, or if the
properties of the chosen plastic are poorly matched to the product's function.
Each of these potential problems can cause an excessive number of defective or
substandard parts to be produced or require several attempts to remachine the
mold.
The process of designing and producing injection molded plastic parts
consists of four distinct steps, the design portion of which can take from
several weeks to several months depending on the complexity and other attributes
of the part being designed:
- PART DESIGN--A design engineer, who typically does not specialize in the
design of plastic parts, lays out the initial design of the end product,
including the plastic components. These
30
<PAGE>
design engineers face difficult plastic-related decisions which often fall
outside of their area of specialization, including:
- selecting a plastic material out of which the plastic portion of the
product will be made from among the thousands of plastic materials
currently available,
- estimating the strength and rigidity of the part,
- designing the part with shapes and thicknesses that can be readily
produced using injection molding, and
- completing each of the steps in a cost efficient manner.
- MOLD DESIGN--After the part has been designed, typically a second engineer
designs the mold into which injection molding machines can pack the
selected plastic material to create the part. Designing a mold requires
the engineer to estimate many important variables, including the amount
the plastic part will warp or shrink and the optimal locations for
injecting plastic into the mold. The cost of a mold can vary from as
little as a few thousand dollars to more than one million dollars.
- PRODUCTION SET-UP--After the mold has been designed and built, the mold is
fastened into an injection molding machine. A machine operator then
adjusts several machine settings, such as machine temperature, injection
speed and cooling time until the machine produces a single acceptable
part. In many instances, once acceptable parts are made with some
frequency, the operator makes little or no effort to improve the machine's
set-up to optimize speed or minimize failure rates.
- PRODUCTION MONITORING--Once commercial production begins, machine
operators monitor the injection molding machine's performance, which will
vary over time. This variation can be caused by operating conditions which
shift as a result of factors such as temperature fluctuations and
lot-to-lot variations in the plastic raw material.
Traditionally, these steps have been carried out through a trial-and-error
process which requires a significant amount of guesswork throughout. As a
result, the design and development process has been inherently inefficient. An
incorrect guess at any step of this process may produce suboptimal parts or
require that portions or all of the process be repeated, delaying production and
increasing costs.
The inefficiencies and resulting cost increases occurring in this process
are further exacerbated when companies outsource one or more of these steps.
Many companies have set up supply chains to match expertise and cost structures
to each step of this process and take advantage of available networks to
establish "design anywhere, build anywhere" collaborations with suppliers and
between divisions across their company. The part design, mold design and
production steps often occur in geographically separated facilities. As a
result, the iterative process of designing a plastic part is frequently hindered
by having to coordinate this process across multiple locations and time zones.
ABSENCE OF SOFTWARE SOLUTIONS FOR THE INJECTION MOLDED PLASTICS INDUSTRY
Although many industries have embraced software tools to improve their
product design and production processes, we believe that a substantial portion
of companies in the injection molded plastics industry continue to employ a
trial-and-error process at most steps of the design and development process. We
believe this condition exists today primarily because of the limited
availability of specific software tools capable of addressing many of the
complex and unique issues involved in designing injection molded plastic parts
and their molds. In addition, we believe that up to 750,000 injection molding
machines are currently in use worldwide and are being operated without
integrated software tools which can analyze and improve the efficiency of their
production.
31
<PAGE>
THE MOLDFLOW SOLUTION
Using our extensive knowledge of designing and manufacturing with plastics,
we have developed a suite of software applications which enhance our customers'
ability to optimize the design and production process for injection molded
plastic parts. Our approach, which we call Process Wide Plastics Solutions,
provides our customers with a software tool for each step in this process, from
part design through production monitoring, in an integrated environment.
Together, our suite of products permit plastics manufacturers for the first time
to significantly decrease the guesswork involved in each step of the injection
molding process by replacing the traditional trial-and-error process with an
automated and integrated process.
Our products can significantly reduce the time it takes to design plastic
parts for injection molding, improve the quality of the plastic part produced
and decrease the cost of the production process by:
- assisting part designers in the selection of a plastic material based on
their design criteria,
- determining the strength and rigidity of a given part design,
- evaluating the ease of manufacturing a given part design,
- predicting the amount a part will shrink or warp during production,
- determining the optimal locations in a mold to inject the plastic
material,
- selecting optimal machine temperatures, injection speeds and cooling times
for part production,
- identifying and providing solutions for adverse variations during
production, and
- providing features which facilitate collaboration over shared media, such
as the Internet.
With direct sales offices and distribution partners worldwide, we believe
that we are uniquely positioned to deliver our evolving suite of software tools
to customers in any part of the world.
OUR STRATEGY
We plan to extend our position as the leading provider of software solutions
that enhance the design, analysis and manufacture of injection molded plastic
parts. Key elements of our strategy are to:
CAPITALIZE ON MARKET OPPORTUNITY FOR EXPANDED PRODUCT OFFERINGS
We focus our research and development efforts on developing new products to
address unmet market needs. We developed Moldflow Plastics Advisers (MPA),
initially released in June 1997 and expanded in 1999, to provide plastic part
and mold design solutions to design engineers who are not highly specialized in
plastics simulation. Prior to the introduction of MPA, no software solution
existed specifically for use by these design engineers for the design of
injection molded plastic parts. Our MPA product has contributed significantly to
our revenue since its introduction. We developed Moldflow Plastics Xpert (MPX),
our newest product line initially introduced in September 1998, to optimize the
production set-up and monitoring of injection molding machines. No software
solution currently exists with functionality comparable to our MPX product to
address this market. We believe MPX represents a significant opportunity for
growth and we intend to vigorously pursue this largely untapped market. In
addition, we will continue to develop new product lines and expand our existing
product lines as opportunities arise.
EXPLOIT THE INTERNET TO PROVIDE SOLUTIONS TO OUR CUSTOMERS
We intend to use the Internet to allow users of our products, including part
and mold designers, machine operators, suppliers, business customers and
outsourcing plants, to share product data and coordinate product design and
development on a worldwide basis. Currently, our
32
<PAGE>
products permit users to produce and access product reports via the Internet
which can be viewed with any standard web browser. For example, we intend to use
the Internet to:
- release our MPA product using an application server provider or ASP
model, which would permit customers to use our products on demand over
the Internet,
- create an Internet portal to enable customers to use our MPX product to
monitor the injection molding process, including machine efficiency and
production data, from anywhere in the world.
FOCUS ON DIRECT SELLING MODEL
We believe that a key element of our success over the last two years has
been our focus on creating a highly effective direct sales organization. Most of
our products are sold through this organization, which encompassed 29 sales
associates employed at sales office located in nine countries as of January 1,
2000. Over the last two years, we have implemented a new sales model which
involves teaming each sales associate with an engineer. Each team works together
to conduct a thorough evaluation of potential customers' design and
manufacturing processes and provide them with a detailed analysis of the cost
savings our products could produce.
EXPAND OUR GLOBAL PRESENCE
We will continue to build on our existing global presence in sales, support
and research and development, which we believe provides us with a competitive
advantage. We maintain direct sales and support offices in the United States,
Australia, United Kingdom, France, Germany, Italy, Sweden, Korea and Japan. In
addition, we extend our geographic coverage by selling our products through over
100 distributors worldwide. Our research and development process involves
approximately 50 research and development personnel located at our United
States, Australia and United Kingdom facilities. Our personnel share software
code among these facilities, and are able to electronically update colleagues in
most cases every two hours and, at a minimum, at the end of each team's working
day. As a result, our research and development continues on an around-the-clock
basis. We believe that this geographically dispersed, team-oriented approach to
product development and delivery helps us to bring new products to market
faster.
SELECTIVELY ENGAGE IN ACQUISITIONS AND STRATEGIC RELATIONSHIPS
We intend to selectively engage in acquisitions and enter into strategic
relationships to accelerate the implementation of elements of our strategy. We
may pursue acquisitions, partnerships or licensing arrangements to obtain
technology to improve or broaden our product offerings if we determine that to
do so would be more cost effective or timely than developing our own.
OUR PRODUCTS
We offer software solutions for all phases of designing and manufacturing
injection molded plastic parts. We have categorized our product offerings into
three distinct families, the Moldflow Plastics Advisers (MPA) series for part
design and high-level mold design, the Moldflow Plastics Insight (MPI) series
for more in-depth mold design and the Moldflow Plastics Xpert (MPX) series for
production set-up and production monitoring. Our products employ complex and
proprietary mathematical concepts. For example, our MPA and MPI products employ
our patent-pending Dual Domain technology, which permits users to conduct
complex plastic flow simulations using the solid models created by their design
modeling software. As a result, users can eliminate the otherwise necessary,
time consuming and error prone step of creating a different type of model based
upon the part geometry contained in the solid model's database. Our products run
on the most widely used computing platforms and operating systems, including
various versions of Windows and UNIX.
33
<PAGE>
MOLDFLOW PLASTICS ADVISERS
Our MPA series provides part and mold designers with applications that
permit them to quickly check the ultimate manufacturability of their designs at
an early stage in the design process. We have designed MPA to input its results
directly into MPX to enhance the efficiency of machine set-up. The MPA series
consists of two products:
PART ADVISER is a user-friendly application which enables product
designers without expertise in designing plastic parts to address key
manufacturing concerns in the preliminary design stage. Part Adviser offers
practical advice for the broad range of problems it identifies without the
need to consult with engineers who specialize in plastic part design. For
the first time, part designers are able to receive rapid feedback on the
extent to which a number of factors, including modifications such as part
geometry, material selection or plastic fill locations affect the
manufacturability of a plastic part. In addition, Part Adviser permits the
designer to instantly share information with fellow team members across the
Internet.
MOLD ADVISER extends the capabilities of Part Adviser to permit the mold
designer to layout and analyze an optimal mold. This product eliminates the
need to design and build molds through trial-and-error, enabling a mold
designer to create molds quickly and efficiently.
The following is an example of how one of our customers has used MPA:
POLAROID CORPORATION, a producer of instant and digital imaging products,
recently used our MPA product in the design of its new digital microscope camera
product. Polaroid estimated that the use of our MPA product reduced their
overall product development time by 50% and enabled them to take the digital
microscope camera product from concept to market in only nine months. Among the
many challenges faced by Polaroid in designing their product was the
modification of an existing mold used to produce the camera's shutter. The
vendor which produced these parts for Polaroid did not believe that the mold
would work properly if modified to produce the new shutter and, therefore, was
reluctant to proceed and modify the mold. Using MPA, a Polaroid design engineer
was able to verify that the existing mold could be modified to reflect the
design of the new shutter and produce parts of acceptable quality. The results
MPA predicted were proven correct when the vendor was persuaded to modify the
mold after reviewing MPA's reports.
MOLDFLOW PLASTICS INSIGHT
The MPI series contains our broadest set of predictive capabilities for
injection molding for use by highly specialized design engineers. The MPI series
assists design engineers in determining the optimal combination of part
geometry, material choice, mold design and processing parameters to produce
quality finished products. MPI allows the optimization of the variables which
remain in the mold designer's control to adjust. For instance, a mold designer
often receives a part design and is not permitted to make changes to the design,
but rather must create a mold design and a set of operating conditions best
suited for the part as designed. MPI may also be used in connection with a
completed mold which was poorly designed and is producing defective parts at an
unacceptable rate. In these cases, MPI can be used to find the best possible
operating conditions for the mold-part combination to minimize the defects. The
results generated by our MPI products can be input directly into our MPX product
to reduce machine set-up time.
All applications in the MPI series use an integrated environment which
permits users to easily import all of the most commonly used types of
computer-generated models, select and compare material grades, prepare models
for analysis, sequence a series of analysis jobs, undertake advanced analysis
post-processing and use Internet-based capabilities to enhance collaboration
with team members. In these applications, we believe that we offer the broadest
integration with existing computer-aided design products in the plastics
software industry.
34
<PAGE>
MPI/FLOW predicts the flow and subsequent packing of plastics at the
start of the injection molding cycle to enable users to optimize locations
for plastic filling and processing conditions, assess possible part defects
and automatically determine the dimensions for a balanced feed system for
the plastic material.
MPI/COOL is used to design cooling circuits and a mold block around a
part to optimize mold design by adjusting the size and locations of the
cooling circuits. Because many warpage problems result from improper cooling
design, using MPI/COOL for mold designs enhances ultimate product quality.
MPI/COOL also enables all the benefits of mold cooling analysis to be
applied to gas injection molded parts.
MPI/WARP AND MPI/SHRINK predict and identify the cause and amount of
warpage and shrinkage in plastic parts. The mathematical tools incorporated
in these products permit the user to analyze warpage for the more than 4,500
plastics materials in our database.
MPI/FUSION allows users to work directly from three-dimensional solid
models to perform detailed calculations. Based upon the same patent pending
technology at the core of the MPA series of products, MPI/FUSION permits
more rapid investigation into the characteristics of the plastic parts and
molds being analyzed.
MPI/FLOW3D uses a fully three-dimensional meshing and solving technology
to analyze thick plastic parts. The majority of the MPI modules are focused
on the broadest class of plastic parts, those that are termed thin wall.
There are plastic parts, however, that are very thick or have widely varying
thicknesses throughout. Until the development of MPI/FLOW3D, creators of
these types of products had no commercially viable product alternative to
investigate the filling process to produce better parts and molds.
MPI/STRESS predicts the structural integrity of plastic components under
stress to quickly predict whether initial concept designs meet desired
structural requirements and whether the part will permanently deform if put
under load. The stress analysis calculates the amount of force which will
cause buckling and predicts the final buckled shape.
MPI/FIBER utilizes sophisticated visualization tools to provide insight
into the part's properties by allowing the user to see how fiber alignment
varies throughout the part's layers. The fiber analysis also predicts the
effects of fiber orientation. The effects of plastic flow on fiber
orientation have a significant impact on the mechanical and structural
properties of fiber filled plastic injection molded parts. Plastics are
often filled with various forms and quantities of fibers to tailor the
material's operating characteristics, such as strength or resistance to
bending.
MPI/OPTIM automatically determines the optimum processing conditions to
be set for a specific part on an injection molding machine to produce a part
of acceptable quality. These results may be used as input for MPX to ensure
molding machine setup is as quick and efficient as possible. The results may
also be used in isolation, as an input to assist the operator in finding the
best settings for a specific machine to produce the desired parts.
MPI/GAS provides predictive capabilities for the gas injection molding
process. The gas injection molding process is very similar to the injection
molding process described earlier but the machine produces an injection of
air, timed within the filling phase to follow the injection of plastic, to
produce wider, but hollow, channels within the part. These channels add
structural rigidity to the end product that is often desirable for large
parts such as television casings and lawn furniture.
MPI/TSETS provides tools to simulate the major thermoset molding
processes. Thermoset materials are a type of plastic which are used for
products which must withstand higher temperatures without alteration in
their material properties. Because other plastics may deform when exposed to
high temperatures, thermoset materials are used for a variety of plastic
parts
35
<PAGE>
such as chip holders in integrated circuits, distributor caps and other
automotive engine components and electrical outlets.
The following is an example of how one of our customers has used MPI:
HEWLETT-PACKARD COMPANY used our MPI product in the design of a recent model
in its HP DeskJet line of inkjet computer printers. Approximately 60% to 80% of
the mechanical parts used in these printers are injection molded plastic parts.
Hewlett-Packard typically introduces a new printer every six months and requires
ten molds to produce a sufficient quantity of each part. In order to maintain
this rapid product introduction cycle, Hewlett-Packard designs the plastic part
itself, but relies on vendors to design and build the part molds and produce the
parts. Hewlett-Packard uses our MPI products to ensure that its part designs can
be made using injection molding and to establish the optimal manufacturing
settings prior to retaining vendors to create molds and build the products.
Virtually all parts analyzed by Hewlett-Packard with our MPI product have been
produced on the first try by the ultimate producer of the part. In addition,
Hewlett-Packard has been able to reduce the amount of time it takes to produce
each part, yielding substantial cost savings. For example, using our MPI
product, Hewlett-Packard determined that the cavity through which plastic was
fed into the mold for one of its parts was wider than necessary and resulted in
the mold taking longer to fill with plastic. Hewlett-Packard was able to modify
the mold by narrowing the cavity, resulting in a reduction in the amount of time
required to produce each part by approximately 15 seconds, or 30%.
Hewlett-Packard estimated that this time savings would reduce their annual
production costs by $1.1 million.
MOLDFLOW PLASTICS XPERT
Our MPX product attaches to injection molding machines to monitor and
control the manufacturing process. MPX addresses common shop floor issues such
as machine set-up, process optimization and production part quality monitoring.
MPX interacts directly with the molding machine's built-in controller to provide
optimized process correction. With MPX, engineers and die-setters can
consistently and systematically set up molds, identify a robust molding window
and monitor production. MPX can be used with substantially all injection molding
machines and provides operators with a single, intuitive user interface,
minimizing the need for machine-specific operator training. In addition, MPX
gives real-time feedback, providing a mechanism for rapid manual or automatic
process adjustments. We designed MPX to reduce mold set-up times and to optimize
the efficiency of the part production cycle. Our MPX product consists of three
integrated modules:
SETUP XPERT enables systematic mold set-up from starting points
generated by MPA, MPI or operator inputs, independent of operator and
location. Setup Xpert optimizes the molding cycle and maximizes the usage of
machine capabilities without requiring the operator to have in-depth
knowledge of the individual machine or process. Setup Xpert quickly sets up
and optimizes each machine, while ensuring that each operator uses the same
set-up procedures.
MOLDSPACE XPERT establishes a defined range of operating conditions
within which acceptable quality parts will be produced. Moldspace Xpert can
reduce to a few minutes an optimization task that previously took several
hours or was not performed. The identification of a defined range of
operating conditions is one of the key steps in being able to determine what
operating conditions can be used by the machine to prevent scrap and machine
downtime.
PRODUCTION XPERT graphically monitors variables specific to the
injection molding process and automatically evaluates the quality of the
production process. In addition, Production Xpert spots problems and either
provides suggestions on how to correct the process or makes the necessary
changes.
36
<PAGE>
The following is an example of how one of our customers has used MPX:
MONTBLANC-SIMPLO GMBH designs and sells the Montblanc brand of premium pens.
Montblanc-Simplo employs injection molding to manufacture the outer casings of
many styles of Montblanc pens. These pen casings must have mirror-like surfaces
to satisfy Montblanc-Simplo's design requirements and high quality control
standards. However, producing mirror-like surfaces using injection molding
requires very precise machine operating conditions. Montblanc-Simplo's machine
operators experienced difficulty identifying these precise machine operating
conditions and reproducing them over time and from machine-to-machine. Prior to
using our MPX product, Montblanc produced pen casings with a high scrap rate.
However, since acquiring our MPX product, Montblanc-Simplo estimates that it has
been able to reduce the scrap rate of pen casings by 50% without significantly
altering the time required to manufacture each casing. In addition, Montblanc
estimates that it has been able to reduce its production set-up times and
reset-up times by approximately 60% with an equivalent reduction in wasted
material.
OUR CUSTOMERS
Our products are used at more than 2,500 user sites in more than 2,200
companies, which are located in over 50 countries spanning the globe.
Representative customers in various industries include:
<TABLE>
<S> <C>
AUTOMOTIVE ELECTRONICS
- ---------- ----------
DaimlerChrysler AG AMP Incorporated
DENSO Corporation The Framatome Group
Ford Motor Company Fuji Xerox Co., Ltd.
Hyundai Business Group Hewlett-Packard Company
Solvay SA Lucent Technologies, Inc.
Valeo SA Motorola, Inc.
Volkswagen AG Nokia Corporation
TOYS Siemens AG
- ---- MEDICAL
Hasbro, Inc. -------
The Lego Group Abbott Laboratories
Mattel, Inc. Baxter International, Inc.
MATERIAL SUPPLIERS Becton Dickinson and Company
- ----------------- OTHER/MULTIPLE INDUSTRIES
Bayer AG ------------------------
The Dow Chemical Company Fisher & Paykel Industries Limited
Eastman Chemical Company Honeywell International, Inc.
E. I. duPont de Nemours and Company LG Group
M. A. Hanna Company Minnesota Mining and Manufacturing (3M)
Montblanc-Simplo GmbH
Polaroid Corporation
Samsung Group
</TABLE>
SALES AND MARKETING
We distribute our products and services primarily through a direct sales
organization. As of January 1, 2000, our direct sales organization consisted of
29 sales associates, who operated out of offices located in Australia, France,
Germany, Italy, Japan, Korea, Sweden, the United Kingdom and the United States.
Our direct sales model involves pairing a sales associate and an engineer to
form a single sales team. These teams work together to conduct a thorough
evaluation of potential customers' design and manufacturing processes and
provide the potential customers with a detailed analysis of the cost savings our
products could produce in a selected aspect of their business. Based upon the
success of this sales model to date in increasing sales as well as the awareness
among our potential customers of our products, we intend to continue building
our direct sales organization worldwide.
37
<PAGE>
To supplement the efforts of our direct sales organization, we also sell our
products through marketing and distribution arrangements with several design
software vendors as an integrated application on their solid modeling design
systems. For example, Parametric Technology Corporation incorporates our MPA
product in a module of its Pro/ENGINEER product, which they call Pro/PLASTIC
ADVISOR, Structural Dynamics Research Corporation or SDRC sells our MPA product
as well as many modules contained within our MPI family of products, and
Unigraphics Solutions, Inc. sells our MPA product. Several distributors of
SolidWorks Corporation, a subsidiary of Dassault Systemes S.A., distribute our
MPA product and Autodesk, Inc. has designated us an MAI partner, which gives us
access to Autodesk's distribution channel to sell our MPA product. We have
retained over 100 distributors to provide worldwide sales coverage to complement
our direct sales organization.
CUSTOMER SUPPORT AND OTHER SERVICES
CUSTOMER SUPPORT AND TRAINING
We provide customer training on our products and 24-hour customer support.
Our customers may access customer support either through our telephone hotline
or our website. In addition, our product development staff is available to solve
more complex problems.
CONSULTING SERVICES
In addition to traditional customer support services, we also provide
consulting services to customers who lack employees with the expertise necessary
to take advantage of the full capability of our products. We employ design
engineers who use our products on behalf of our customers to optimize their part
design and production processes. We view providing consulting services as
complementary to our core business of selling sophisticated software solutions.
Accordingly, we provide consulting services typically in cases where we believe
that providing these services will help build relationships with future
customers for our software products.
MATERIAL TESTING SERVICES
Our material testing group provides testing services to our customers who
are seeking accurate, reliable material data on new or existing grades of
polymers, measured under a wide range of practical molding conditions. We have
established a database containing information on more than 4,500 plastics
materials. We conduct this testing at our facility located near Melbourne,
Australia, which we have equipped with state-of-the-art equipment and a number
of injection molding machines. The research and testing conducted at this
facility provides essential data for our full line of software applications.
PRODUCT DEVELOPMENT
Our product development strategy focuses on ongoing development and
innovation of new technologies to increase our customers' productivity and
provide solutions that our customers can integrate into their existing computing
platforms. We plan to extend our leadership position in plastics simulation
technology by continuing to make significant investments in research and
development and to maintain our market share by rapidly creating and delivering
new product releases to our customers. We intend to take advantage of current
and future technology trends, such as the Internet, to ensure our customers are
always able to gain incremental competitive advantage in their respective
industries.
Our product development activities take place in facilities located in the
United States, Australia and the United Kingdom. We linked the information
systems of each of these facilities to provide a continuous development
environment, enabling software development to be undertaken 24 hours per day.
38
<PAGE>
We also fund or participate in a wide assortment of external research and
development projects, often being conducted by the world's leading experts in
their fields. For instance, we currently have ongoing projects with CEMEF in
France and the University of Illinois, two highly regarded centers for plastic
material research. In many cases, under these projects we gain access to
fundamental research with comprehensive experimentation results. Often the
centers agree to restricted publishing rights in order to pursue topics of
mutual interest. A partial list of our collaborative partners includes ENSAM
(France) for shrinkage, Cranfield University (United Kingdom) for analysis of
fiber filled parts, Bradford/Leeds University (United Kingdom) for fiber
orientation measurement, Technical University of Eindhoven (Netherlands) for
numerical methods, McGill University (Canada) for material crystallization,
University of Sydney (Australia) for fluid mechanics and Nanyang Technological
University of Singapore for optimization. We believe that these relationships
provide a significant benefit to our product development efforts.
As of January 1, 2000, our product development staff had approximately 50
employees, most of whom hold advanced degrees and have industry experience in
engineering, mathematics, computer science or related disciplines. We seek to
recruit highly skilled employees, and our ability to attract and retain such
employees will be a principal factor in our success in maintaining our leading
technological position. We believe that such investments in research and
development are required in order for us to remain competitive and we believe
our cadre of software developers and our worldwide development capabilities
represent a significant competitive advantage.
COMPETITION
The markets into which our products are sold are highly competitive. We
compete with many companies engaged in selling software solutions to companies
engaged in product development and manufacturing. We also face competition from
material vendors, injection molding machine manufacturers and small vendors,
such as independent engineering consultants. In addition, new competitors may
arise as we introduce new products into the marketplace.
The entrance of new competitors would be likely to intensify competition in
all or a portion of the markets in which we compete. Some of our current and
possible future competitors have greater financial, technical, marketing and
other resources than we do, and some have well established relationships with
our current and potential customers. Alliances among competitors may emerge and
rapidly acquire significant market share. Moreover, competition may increase as
a result of software industry consolidation.
We believe that the principal competitive factors affecting our market
include:
- speed of innovation,
- ease of use,
- flexibility,
- quality,
- ease of integration into or communication with computer-aided design
systems,
- compatibility across computer platforms,
- range of supported computer platforms,
- performance,
- price and cost of ownership,
- customer service and support,
- company reputation and financial viability, and
- effectiveness of sales and marketing efforts.
We believe that we compete effectively on these factors.
39
<PAGE>
TECHNOLOGY AND PROPRIETARY RIGHTS
Our proprietary technology applies general mathematical models describing
the behavior of plastics as fluids under conditions of heat and pressure to the
real world environment of plastic polymers and injection molding machines. We
believe that our broad range of proven numerical methods represents considerable
intellectual property and that these trade secrets are difficult to reproduce.
We own all of the core technology used in our products and license only assorted
peripheral software that facilitates the operation of our products' core
functions.
We engage in a regular review of our proprietary technology to determine the
optimal method of protecting such technology. We have been granted patents on
portions of our technology and have filed both U.S. and international
applications with respect to other technologies. We view these patents as one
important way of protecting our key intellectual property that may not be
protected by the use of other methods. We may not obtain any of the patents for
which we have applied and may not be able to enforce any patents we currently
hold or obtain in the future.
We rely on a combination of trade secret, copyright and trademark laws,
license agreements, nondisclosure and other contractual provisions and technical
measures to protect the unpatented proprietary technology contained in our
products. We distribute our software under software license agreements that
typically grant customers nonexclusive, nontransferable licenses to use our
products. These agreements usually restrict use of the licensed software to our
customer's internal operations on designated computers at specified sites unless
the customer obtains a site license for the customer's use of the software, and
are subject to terms and conditions prohibiting unauthorized reproduction or
transfer of the software.
For certain software such as the MPA series, we rely primarily on
"shrink-wrapped" or "click-wrapped" licenses that are not signed by licensees
and therefore may be unenforceable under the laws of certain jurisdictions.
We also seek to protect the source code of our software through trade secret
and copyright law. We have obtained or applied for United States federal
trademark mark protection for Moldflow, MPI, MPA, MPX and a number of other
trademarks and logos. We have also applied for or obtained trademark
registrations of these key marks in a number of foreign jurisdictions and are in
the process of seeking trademark registrations in other foreign countries.
We require our employees and consultants to sign a confidentiality and
non-competition agreement. Under these agreements, our employees agree not to
disclose trade secrets or confidential information and agree not to engage in or
be connected with any business that is competitive with our business while
employed by us, and in some cases for specified periods thereafter. Within these
agreements, employees also agree that any products or technology they create
during the term of their employment are our property.
Despite these precautions, misappropriation of our technology may occur.
Further, patent, trademark, copyright and trade secret protection may not be
available for our products in every country.
The software development industry is characterized by rapid technological
change. Therefore, we believe that factors such as the technological and
creative skills of our personnel, new product developments, frequent product
enhancements, name recognition and reliable product maintenance are more
important to establishing and maintaining a technology leadership position than
the various legal protections of our technology which may be available.
We seek to monitor the public records in order to become aware of any
potentially conflicting proprietary rights. To date, we have not received any
notification that any of our products infringe on the proprietary rights of
third parties. We can not assure you, however, that third parties will not
40
<PAGE>
claim such infringement by us or our licensors with respect to current or future
products. We expect that software product developers will increasingly be
subject to such claims as the number of products and competitors in our market
segment grows and the product functionality in different market segments
overlaps. In addition, patents on software and business methods are becoming
more common and we expect that more patents will issue in our technical field.
Any such claims, with or without merit, could be time-consuming, result in
costly litigation, cause product shipment delays or require us to enter into
royalty or licensing agreements. Moreover, such royalty or licensing agreements,
if required, may not be on terms acceptable to us.
We integrate third-party software into our products. This software may not
continue to be available on commercially reasonable terms. If we cannot maintain
licenses to this third-party software, distribution of our products could be
delayed until equivalent software could be developed or licensed and integrated
into our products. This could cause delays in our product sales and development
efforts.
EMPLOYEES
As of January 1, 2000, we had 161 employees, 54 of whom resided in
Australia, 44 of whom resided in the United States, 14 of whom resided in the
United Kingdom and 49 of whom resided in other countries. None of our employees
is subject to any collective bargaining agreement. We believe that our
relationship with our employees is good.
FACILITIES
We operate out of two primary facilities. We lease a 7,900 square foot
office in Lexington, Massachusetts pursuant to a 5-year lease that expires in
November 2001. The Lexington facility is our corporate headquarters. Personnel
located at the Lexington facility include most of our senior management team,
some of our North American sales force, some product marketing and development
personnel and some finance and administration personnel. We also own an 18,100
square foot office building set on approximately 15 acres in the Kilsyth suburb
of Melbourne, Australia. Personnel located at our Melbourne facility include
members of our software development and research team, our materials testing
personnel and a portion of our Asia Pacific sales force. We also maintain an
office containing a smaller group of our sales, administrative and software
development personnel in the United Kingdom as well as direct sales offices in
Korea, Japan, Sweden, Germany, Italy and France. We had aggregate lease payments
of $664,000 in our 1999 fiscal year.
LEGAL PROCEEDINGS
In February 1999, we filed suit in the United States District Court for the
Northern District of New York against a former employee, Leonid K. Antanovskii,
and his current employer, Advanced CAE Technology. Advanced CAE Technology is
one of our competitors and does business under the name C-Mold. We are seeking
immediate and permanent injunctive relief and monetary damages arising from the
alleged theft and misappropriation of some of our trade secrets. Specifically,
we allege misappropriation of trade secrets, proprietary information and
confidential information, breach of contract, breach of implied covenant of good
faith, breach of fiduciary duty, aiding and abetting a breach of fiduciary duty,
unfair competition, interference with contractual relations, fraud, civil
conspiracy and unjust enrichment. On February 28, 1999, the court issued a
preliminary injunction prohibiting Mr. Antanovskii and C-Mold from using or
disclosing our confidential and trade secret information. On January 11, 2000,
the court denied C-Mold's motion to vacate the preliminary injunction and
ordered that it remain in place. On the same date the court also held
Mr. Antanovskii and C-Mold in contempt of court and ordered sanctions, including
the award of attorneys' fees in connection with the motion, against
Mr. Antanovskii and C-Mold.
41
<PAGE>
In March 1999, C-Mold filed counterclaims against us alleging that we had
violated federal antitrust laws, committed defamation and trade libel and
tortiously interfered with C-Mold's prospective business advantage.
Specifically, C-Mold alleges that we have engaged in predatory and
anticompetitive conduct in an attempt to monopolize the market for computer
software for use in simulating, modeling and analyzing the design and
manufacture of plastic injection molded articles or products and their
corresponding molds, particularly in full three-dimensional geometry. C-Mold
alleges antitrust violations based on bad faith assertion of a trade secret
claim and predatory pricing. In addition, C-Mold claims that we made certain
disparaging comments regarding C-Mold's products and its business. C-Mold has
requested that the court awards costs, attorneys' fees, injunctive relief and
monetary damages. We filed a motion to dismiss the amended counterclaims in
July 1999 and all discovery with respect to the counterclaims has been stayed
pending the outcome of our motion. In the event that the court does not grant
our motion to dismiss the counterclaims, we intend to vigorously defend this
action. We believe that the counterclaims are without merit.
We have incurred and may continue to incur significant expenses in the
course of pursuing our claims in this case and defending the counterclaims made
against us. For the year ended June 30, 1999 and the six months ended
January 1, 2000, our litigation expenses were $620,000 and $530,000.
From time to time we may be involved in other disputes and litigation
matters that arise in the ordinary course of business.
42
<PAGE>
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
Our executive officers and directors and their positions and ages as of
January 20, 2000 are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- -------- --------
<S> <C> <C>
Marc J. L. Dulude...................... 39 President, Chief Executive Officer and Director
Suzanne E. Rogers...................... 42 Vice President of Finance and Administration, Chief
Financial Officer and Treasurer
A. Roland Thomas....................... 41 Vice President of Research and Development and
Director
Richard M. Underwood................... 45 Vice President of Sales
Kenneth R. Welch....................... 42 Vice President of Marketing
Charles D. Yie(1)(2)................... 41 Chairman of the Board of Directors
Julian H. Beale(1)..................... 65 Director
Roger Brooks(2)........................ 54 Director
Richard A. Charpie, Ph.D............... 47 Director
Robert P. Schechter(2)................. 51 Director
</TABLE>
- ------------------------
(1) Member of the compensation committee
(2) Member of the audit committee
MARC J. L. DULUDE has served as our President and Chief Executive Officer
and as a director of Moldflow since May 1996. Prior to joining Moldflow,
Mr. Dulude served in various positions with and most recently as the Senior Vice
President of Marketing of Parametric Technology Corporation, a computer-aided
design software company, from 1991 to May 1996, and in various positions with
the Bell-Northern Research division of Northern Telecom, a telecommunications
company, from 1987 to 1991. Mr. Dulude holds Bachelor and Master of Mechanical
Engineering degrees from Carleton University in Canada.
SUZANNE E. ROGERS has served as our Vice President of Finance and
Administration, Chief Financial Officer and Treasurer since September 1996.
Before joining Moldflow, Ms. Rogers served as the Vice President of Finance and
Chief Financial Officer from November 1994 to September 1996 and as the
Controller from May 1993 to November 1994 of Scitex America Corp., a subsidiary
of Scitex Corporation Ltd., a graphic arts systems manufacturer, in various
positions with Autographix, a graphic workstation manufacturer, from 1991 to
1993 and as the Director of Finance of MRS Technology, a micro-lithography
equipment manufacturer, from 1987 to 1991. Ms. Rogers is a certified public
accountant.
A. ROLAND THOMAS has served as a director of Moldflow since November 1989,
our Vice President of Research and Development since January 1997 and has served
in various other positions with Moldflow since 1982. Mr. Thomas holds a Bachelor
of Mechanical Engineering degree from the Royal Melbourne Institute of
Technology.
RICHARD M. UNDERWOOD has served as our Vice President of Sales since
October 1997. Prior to joining Moldflow, Mr. Underwood served in various
positions with and most recently as the Vice President of Sales Operations of
Parametric Technology Corporation from 1990 to October 1997.
KENNETH R. WELCH has served as our Vice President of Marketing since
November 1996. Prior to joining Moldflow, Mr. Welch served as the Director of
AutoCAD Product Marketing for Autodesk, Inc., a computer-aided design software
company, from September 1995 to November 1996, Vice President of Sales and
Marketing of Visual Kinematics, an original equipment manufacturer of software
tools, from June 1994 to September 1995, and the Director of Product Marketing
of Rasna Corporation, a computer-aided engineering software company, from 1989
to June 1994. Mr. Welch holds Bachelor and Master of Science degrees in Civil
Engineering from the University of California at Davis.
43
<PAGE>
CHARLES D. YIE has served as the Chairman of our board of directors since
August 1996 and as a director since December 1995. Mr. Yie has 15 years of
experience in the private equity industry. He joined Ampersand's predecessor in
1985 and serves as a General Partner of all Ampersand's active partnerships. Mr.
Yie has served as a director of more than twelve public and private companies
and currently serves as a director of Intelligent Controls, Inc., an electronic
measurement systems manufacturer serving the petroleum industry, and various
privately-held companies. Mr. Yie holds a B.S. in Electrical Engineering and an
M.S. in Management from the Massachusetts Institute of Technology.
JULIAN H. BEALE has served as a director of Moldflow since September 1996.
Mr. Beale is a private investor. Mr. Beale served as a member of Australia's
federal Parliament from 1984 to 1996.
ROGER BROOKS has served as a director of Moldflow since October 1998.
Mr. Brooks has served as the President and Chief Executive Officer and a
director of Intelligent Controls, Inc. since May 1998. Previously, Mr. Brooks
served as President and Chief Executive Officer and a director of Dynisco Inc.,
an instrumentation and equipment company, from 1984 through 1996.
RICHARD A. CHARPIE, PH.D. has served as a director of Moldflow since
December 1995. Dr. Charpie has 20 years of experience in the private equity
industry. Dr. Charpie joined Ampersand Ventures' predecessor in 1980 and led its
activities beginning in 1983. The Managing General Partner of all of Ampersand's
active partnerships, he founded the firm in 1988 and structured its spinoff from
PaineWebber. Dr. Charpie has served as a director of more than thirty-five
public and private companies and currently serves as a director of TriPath
Imaging, Inc., a medical products company, V. I. Technologies, Inc., a developer
of blood products and systems, and various privately-held companies.
Dr. Charpie holds an M.S. degree in Physics and a Ph.D. in Applied Economics and
Finance from the Massachusetts Institute of Technology.
ROBERT P. SCHECHTER has served as a director of Moldflow since
January 2000. Mr. Schechter has served as President and Chief Executive Officer
of Natural MicroSystems, a telecommunications enabling technology company, since
April 1995 and its chairman since March 1996. Prior to joining Natural
MicroSystems, Mr. Schechter served in various positions with and most recently
as the Senior Vice President of the International Business Group of Lotus
Development Corporation, a software company, from 1987 to March 1994.
BOARD COMPOSITION
Following the closing of this offering, our board of directors will be
divided into three classes, each of whose members will serve for a staggered
three-year term. Our board of directors will consist of Messrs. Schechter,
Thomas and Yie as Class I directors, whose term of office will continue until
the 2000 annual meeting of stockholders, Messrs. Beale and Dulude as Class II
directors, whose term of office will continue until the 2001 annual meeting of
stockholders, and Messrs. Brooks and Charpie as Class III directors, whose term
of office will continue until the 2002 annual meeting of stockholders. At each
annual meeting of stockholders, a class of directors will be elected for a
three-year term.
BOARD COMMITTEES
Effective upon the closing of this offering, our board of directors will
reconstitute the audit committee and compensation committee.
AUDIT COMMITTEE. The members of the audit committee will be responsible for
recommending to the board of directors the engagement of our outside auditors
and reviewing our accounting controls and the results and scope of audits and
other services provided by our auditors. All of the members of the audit
committee will be independent directors unless the board of directors determines
that exceptional and limited circumstances exist which warrant the inclusion of
one non-independent director on the audit committee and that the inclusion of
one non-independent director is in the best interests of Moldflow and its
stockholders. Although Mr. Yie is not an
44
<PAGE>
independent director, the board of directors has determined that his service on
the audit committee is in the best interest of Moldflow and its stockholders.
The board of directors based this determination, in part, on Mr. Yie's expertise
in financial and accounting matters and his extensive knowledge of Moldflow's
operations.
COMPENSATION COMMITTEE. The members of the compensation committee, a
majority of whom will be independent directors, will be responsible for
reviewing and recommending to the board of directors the amount and type of
consideration to be paid to senior management, administering our stock option
plans and establishing and reviewing general policies relating to compensation
and benefits of employees.
DIRECTOR COMPENSATION
Directors who are employees receive no additional compensation for their
services as directors. Non-employee directors receive a $2,000 quarterly fee for
their service as directors and $250 for each meeting of a committee of the board
of directors they attend. Non-employee directors are also eligible to
participate in the 2000 Stock Option and Incentive Plan. The 2000 Stock Option
and Incentive Plan contains a formula under which each non-employee director
will receive an option to acquire 10,000 shares of common stock upon initial
election to the board. Non-employee directors will also receive an option to
acquire an additional 10,000 shares of common stock following the 2002 annual
meeting of stockholders and at every second annual meeting of stockholders
thereafter. Mr. Schechter received an option to acquire 10,000 shares upon his
election on January 20, 2000 and Messrs. Beale, Brooks, Charpie and Yie will
each receive options to acquire 10,000 shares of common stock concurrently with
the effectiveness of this offering.
EXECUTIVE COMPENSATION
The following table sets forth the total compensation paid or accrued in the
fiscal year ended June 30, 1999 to our Chief Executive Officer and the four
other most highly compensated executive officers, each of whose aggregate
compensation exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
----------------------------------------- --------------
NUMBER
OF SECURITIES
OTHER UNDERLYING ALL
ANNUAL OPTIONS OTHER
NAME SALARY BONUS COMPENSATION GRANTED COMPENSATION
- ---- --------- --------- ----------------- -------------- -----------------
<S> <C> <C> <C> <C> <C>
Marc J. L. Dulude............. $215,000 $35,000 -- 131,250 $26,563(1)
President and Chief
Executive Officer
Suzanne E. Rogers............. 133,000 20,000 -- 35,417 10,400(2)
Vice President of Finance
and Administration, Chief
Financial Officer and
Treasurer
Richard M. Underwood.......... 120,000 -- $97,000(3) 22,917 17,321(2)
Vice President of Sales
A. Roland Thomas.............. 96,880 19,407 -- 25,000 22,150(4)
Vice President of Research
and Development
Kenneth R. Welch.............. 133,000 17,500 -- 33,333 10,400(2)
Vice President of Marketing
</TABLE>
- ------------------------------
(1) Includes $12,000 as a car allowance, $10,500 in contributions by Moldflow to
Mr. Dulude's 401(k) account, and $4,063 representing life insurance and
disability insurance purchased for Mr. Dulude's benefit.
(2) Constitute contributions by Moldflow to the executive officers' 401(k)
accounts.
(3) Constitutes sales commissions.
(4) Includes $9,057 in contributions to Mr. Thomas' retirement plan account and
$13,093 as a car allowance.
45
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information regarding stock options granted
during fiscal 1999 to the executive officers listed in the Summary Compensation
Table. The exercise price per share of each option was equal to the fair market
value of the common stock as of the grant date as determined by the board of
directors.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------------- POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
NUMBER OF PERCENT OF TOTAL EXERCISE STOCK PRICE
SECURITIES OPTIONS OR BASE APPRECIATION
UNDERLYING GRANTED TO PRICE FOR OPTION TERM(3)
OPTIONS EMPLOYEES IN ($/ EXPIRATION ---------------------
NAME GRANTED(1) FISCAL YEAR(2) SHARE) DATE 5% 10%
- ---- ------------ ---------------- -------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Marc J. L. Dulude................ 16,667 4.52% $0.72 8/14/2006 $ 5,729 $ 13,723
114,583 31.07 6.00 6/15/2007 328,251 786,217
Suzanne E. Rogers................ 10,417 2.82 0.72 8/14/2006 3,581 8,577
25,000 6.78 6.00 6/15/2007 71,618 171,538
Richard M. Underwood............. 2,083 0.56 0.72 8/14/2006 716 1,715
2,083 0.56 1.20 1/21/2007 1,194 2,859
2,083 0.56 4.80 4/22/2007 2,775 11,436
16,668 4.52 6.00 6/15/2007 47,746 114,359
A. Roland Thomas................. 25,000 6.78 6.00 6/15/2007 71,618 171,538
Kenneth R. Welch................. 8,333 2.26 0.72 8/14/2006 2,865 6,862
25,000 6.78 6.00 6/15/2007 71,618 171,538
</TABLE>
- --------------------------
(1) Subject to each executive officer's continued employment with Moldflow, 25%
of the options in each option grant vest on the first anniversary of the
date of the grant and the remaining options vest in equal quarterly
installments through the fourth anniversary of the date of the grant. In
addition, these options also vest in full upon any change of control of
Moldflow as defined in the options.
(2) Based on an aggregate of 368,813 options granted to employees in fiscal
1999.
(3) The amounts shown as potential realizable value illustrate what might be
realized upon exercise immediately prior to expiration of the option term
using the 5% and 10% appreciation rates compounded annually as established
in regulations of the Securities and Exchange Commission.
The following table sets forth the potential realizable value of the options
granted to the listed executive officers using our assumed initial public
offering price of $ per share:
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES
OF STOCK PRICE
NUMBER OF APPRECIATION FOR OPTION
SECURITIES TERM
UNDERLYING ---------------------------
OPTIONS GRANTED 5% 10%
-------------------- ------------ ------------
<S> <C> <C> <C>
Marc J. L. Dulude....................... 16,667
114,583
Suzanne E. Rogers....................... 10,417
25,000
Richard M. Underwood.................... 2,083
2,083
2,083
16,668
A. Roland Thomas........................ 25,000
Kenneth R. Welch........................ 8,333
25,000
</TABLE>
The potential realizable value is not intended to predict future
appreciation of the price of our common stock. The values shown do not
consider non-transferability, vesting or termination of the options upon
termination of the employee's employment relationship with us.
46
<PAGE>
FISCAL YEAR-END OPTION VALUES
The following table sets forth information concerning the number and value
of unexercised options to purchase common stock held as of June 30, 1999 by the
executive officers listed in the Summary Compensation Table. There was no public
trading market for our common stock as of June 30, 1999. Accordingly, the values
of the unexercised in-the-money options have been calculated on the basis of the
estimated fair value of our common stock at June 30, 1999 of $6.00 per share,
less the applicable exercise price multiplied by the number of shares which may
be acquired on exercise. None of the executive officers listed in the Summary
Compensation Table exercised any stock options in fiscal 1999.
AGGREGATE OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END
------------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Marc J. L. Dulude....................... -- 131,250 $ -- $ 88,002
Suzanne E. Rogers....................... -- 35,417 -- 55,002
Richard M. Underwood.................... -- 22,917 -- 23,496
A. Roland Thomas........................ 17,392 69,494 98,091 152,855
Kenneth R. Welch........................ -- 33,333 -- 43,998
</TABLE>
2000 STOCK OPTION AND INCENTIVE PLAN
Our board of directors has adopted the 2000 Stock Option and Incentive Plan,
subject to stockholder approval. The 2000 Stock Option and Incentive Plan will
be submitted to our stockholders for approval in February 2000. The 2000 Stock
Option and Incentive Plan allows for the issuance of up to 2,000,000 shares of
common stock plus an additional amount equal to 20% of any net increase in the
total number of shares of common stock outstanding after this offering. Our
compensation committee will administer the 2000 Stock Option and Incentive Plan.
Under the 2000 Stock Option and Incentive Plan, our compensation committee
may:
- grant incentive stock options,
- grant non-qualified stock options,
- grant stock appreciation rights,
- issue or sell common stock with vesting or other restrictions, or without
restrictions,
- grant rights to receive common stock in the future with or without
vesting,
- grant common stock upon the attainment of specified performance goals, and
- grant dividend rights in respect of common stock.
These grants and issuances may be made to officers, employees, directors,
consultants, advisors and other key persons of Moldflow.
Our compensation committee has the right, in its discretion, to select the
individuals eligible to receive awards, determine the terms and conditions of
the awards granted, accelerate the vesting schedule of any award and generally
administer and interpret the plan.
The exercise price of options granted under the 2000 Stock Option and
Incentive Plan is determined by our compensation committee. Under present law,
incentive stock options and options intended to qualify as performance-based
compensation under Section 162(m) of the Internal Revenue Code of 1986 may not
be granted at an exercise price less than the fair market value of the common
stock on the date of grant, or less than 110% of the fair market value in the
case of incentive stock options granted to optionees holding more than 10% of
the voting power.
Non-qualified stock options may be granted at prices which are less than the
fair market value of the underlying shares on the date granted. Options are
typically subject to vesting schedules,
47
<PAGE>
terminate eight years from the date of grant and may be exercised for specified
periods after the termination of the optionee's employment or other service
relationship with us. Upon the exercise of options, the option exercise price
must be paid in full either in cash or by certified or bank check or other
instrument acceptable to the committee or by delivery of shares of common stock
that have been owned by the optionee free of restrictions for at least six
months.
The 2000 Stock Option and Incentive Plan and all awards issued under the
plan will terminate upon a merger, reorganization or consolidation, the sale of
all or substantially all of our assets or all of our outstanding capital stock
or a liquidation or other similar transaction, unless Moldflow and the other
parties to such transactions have agreed otherwise. All participants under the
2000 Stock Option and Incentive Plan will be permitted to exercise for a period
of 30 days before any such termination all awards held by them which are then
exercisable or will become exercisable upon the closing of the transaction.
EMPLOYEE STOCK PURCHASE PLAN
The Employee Stock Purchase Plan was adopted by our board of directors in
January 2000, subject to stockholder approval. The Employee Stock Purchase Plan
will be submitted to stockholders in February 2000. Up to 500,000 shares of our
common stock may be issued under the Employee Stock Purchase Plan. The Employee
Stock Purchase Plan is administered by our compensation committee.
The first offering under the Employee Stock Purchase Plan will commence on
July 1, 2000 and end on December 31, 2000. Subsequent offerings will commence on
each January 1 and July 1 thereafter and will have a duration of six months.
Generally, all employees who are customarily employed for more than 20 hours per
week as of the first day of the applicable offering period are eligible to
participate in the Employee Stock Purchase Plan. Any employee who owns or is
deemed to own shares of stock representing in excess of 5% of the combined
voting power of all classes of our stock may not participate in the Employee
Stock Purchase Plan.
During each offering, an employee may purchase shares under the Employee
Stock Purchase Plan by authorizing payroll deductions of up to 10% of his cash
compensation during the offering period. Unless the employee has previously
withdrawn from the offering, his accumulated payroll deductions will be used to
purchase shares of our common stock on the last business day of the period at a
price equal to 85% of the fair market value of our common stock on the first or
last day of the offering period, whichever is lower. Under applicable tax rules,
an employee may purchase no more than $25,000 worth of our common stock in any
calendar year under the Employee Stock Purchase Plan. We have not issued any
shares to date under the Employee Stock Purchase Plan.
1997 EQUITY INCENTIVE PLAN
The 1997 Equity Incentive Plan was initially approved by our board of
directors in August 1997 and was approved by our stockholders in October 1997.
The 1997 Equity Incentive Plan provides for the issuance of 1,537,158 shares of
our common stock. As of January 20, 2000, options to purchase 605,071 shares of
our common stock were outstanding under the 1997 Equity Incentive Plan. Options
granted under the 1997 Equity Incentive Plan generally vest over four years and
terminate on the eighth anniversary of the date of grant. We will not make any
additional grants under the 1997 Equity Incentive Plan after the completion of
this offering.
EMPLOYMENT AGREEMENTS
We anticipate entering into employment agreements with each of
Messrs. Dulude, Underwood, Thomas and Welch and Ms. Rogers. Each proposed
agreement would be for a period of one year, and would be automatically extended
for one additional year on the anniversary date unless either party has given
notice that it does not wish to extend the agreement. Each agreement provides
for the payment of base salary and incentive compensation and for the provision
of certain fringe benefits to the executive. The agreements require our
executive officers to refrain from competing
48
<PAGE>
with Moldflow and from soliciting our employees for a period of twelve months
following termination for any reason. Each agreement also provides for certain
payments and benefits for an executive officer should his or her employment with
us be terminated because of death or disability, by the executive for good
reason or by us without cause, as further defined in the agreements. In general,
in the case of a termination by the executive officer for good reason, or by us
without cause, the executive officer will receive up to one year of salary, an
extension of benefits for one year and an acceleration of vesting for stock
options and restricted stock which otherwise would vest during the next twelve
months. Upon a change of control, as defined in the agreements, the executive
officer is eligible for payment of a minimum of six months and up to one year of
salary, an extension of benefits for one year and an acceleration of vesting for
all outstanding stock options and restricted stock. Mr. Dulude's agreement also
includes certain provisions requiring Moldflow to increase the payments to him
following a change in control in the event that amounts paid to him would
subject him to the excise tax imposed by Section 4999 of the Internal Revenue
Code of 1986.
RESTRICTED STOCK AGREEMENTS
In July 1998, Messrs. Dulude, Underwood and Welch and Ms. Rogers purchased
from Moldflow a total of 551,287 shares of common stock at a price of $0.36 per
share. Each of these executive officers paid for the shares by delivering to
Moldflow a promissory note, which bears interest at a rate of 5.77% per year.
Principal and interest on the notes become payable in full on June 30, 2003, but
may be prepaid at any time. Each of these executive officers also entered into a
stock restriction agreement with Moldflow. Pursuant to these agreements,
Moldflow has the right, but not the obligation, to repurchase a portion of these
shares at the initial purchase price per share upon the termination for any
reason of the employment of the respective executive officer. The repurchase
rights with respect to these shares lapse on varying schedules through
October 2002 so long as the executive officer who purchased the shares remains
an employee of Moldflow. The repurchase right with respect to a portion of these
shares will also lapse if Moldflow terminates the employment of the executive
officer without cause as defined in his or her employment agreement or if
employment terminates due to his or her death or disability. The repurchase
right will lapse in its entirety in the event Moldflow experiences a change in
control as defined in the executive officers' employment agreements.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Beale and Yie are the members of our compensation committee. Neither
Mr. Beale nor Mr. Yie is an executive officer of Moldflow or has received any
compensation from Moldflow within the last three years other than in his
capacity as a director.
In January 1997, we entered into loan agreements with a group of our
stockholders consisting of JTC Investment Management Pty. Ltd., funds associated
with Ampersand Ventures, Thomas Investments Australia Pty. Ltd, Floatflow
Pty. Ltd. and Helmet Investments Australia Pty. Ltd. pursuant to which these
stockholders provided us with a credit line of approximately $1.1 million. In
July 1998, we converted the outstanding principal balance of $890,000 under this
credit line into 698,609 shares of our series C-3 convertible preferred stock
and paid these stockholders $107,000 of accrued interest. Mr. Yie is affiliated
with the funds associated with Ampersand Ventures, and Mr. Beale is affiliated
with JTC Investment Management Pty. Ltd.
49
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
1997 REORGANIZATION
In June 1997, our predecessor, Moldflow International Pty. Ltd., an
Australian corporation, entered into a reorganization agreement with Moldflow
and its stockholders. In the reorganization, the stockholders of Moldflow
International became stockholders of Moldflow, and Moldflow International became
a wholly-owned subsidiary of Moldflow. Stockholders of Moldflow International
were issued shares of either Moldflow's common stock, series A convertible
preferred stock or series B convertible preferred stock. In March 1998, these
shares of common stock, series A convertible preferred and series B convertible
preferred were redesignated as series C-1, C-2 and C-3 convertible preferred
stock. Upon completion of this offering, all shares of our outstanding preferred
stock will be converted into shares of common stock.
LOANS FROM STOCKHOLDERS
In January 1997, we entered into loan agreements with a group of our
stockholders consisting of JTC Investment Management Pty. Ltd., funds associated
with Ampersand Ventures, Thomas Investments Australia Pty. Ltd, Floatflow
Pty. Ltd. and Helmet Investments Australia Pty. Ltd. pursuant to which these
stockholders provided us with a credit line of approximately $1.1 million. In
July 1998, we converted the outstanding principal balance of $890,000 under this
credit line into 698,609 shares of our series C-3 convertible preferred stock
and paid these stockholders $107,000 of accrued interest. Dr. Charpie and
Mr. Yie, directors of Moldflow, are affiliated with the funds associated with
Ampersand Ventures, Mr. Beale, also a director of Moldflow, is affiliated with
JTC Investment Management Pty. Ltd., and Mr. Thomas, our Vice President of
Research and Development and a director of Moldflow, is the beneficial owner of
Thomas Investments Australia Pty. Ltd.
LOAN TO EXECUTIVE OFFICER AND DIRECTOR
In July 1999, Mr. Thomas borrowed approximately $129,000 from our
subsidiary, Moldflow International, pursuant to a promissory note. This
promissory note is not interest bearing and is due on July 1, 2000. The amounts
due under this promissory note will be completely offset by amounts due to
Mr. Thomas on July 1, 2000 pursuant to the terms of a deferred compensation
arrangement between Moldflow and Mr. Thomas.
In connection with the expatriate assignment of Mr. Thomas from Australia to
the United States, Moldflow loaned him $87,000 in September 1996. The loan was
repaid in January 1999.
OTHER ARRANGEMENTS WITH EXECUTIVE OFFICERS
In addition, other agreements with our executive officers are described
under "Management--Employment Agreements" and "Management--Restricted Stock
Agreements."
50
<PAGE>
PRINCIPAL AND SELLING STOCKHOLDERS
The following table sets forth information regarding the beneficial
ownership of Moldflow common stock as of January 20, 2000 and on an as adjusted
basis to reflect the sale of the common stock offered hereby by:
- all persons known by us to own beneficially 5% or more of the common
stock,
- each of our directors,
- the executive officers listed in the summary compensation table,
- each stockholder selling shares in this offering, and
- all of our directors and executive officers as a group.
Unless otherwise indicated, each of the stockholders has sole voting and
investment power with respect to the shares of common stock beneficially owned
by the stockholder. The address of Ampersand Ventures is 55 William Street,
Suite 240, Wellesley, MA 02481, the address of JTC Investment Management
Pty. Ltd. is 333 Collins Street, Melbourne VIC 3000, Australia, the address of
Lombard Capital Fund LLC, is c/o Asiaciti Corp. Services Pte. Ltd., 3 Raffles
Place, #09-01 Bharat Building, Singapore 048617 and the address of Paul
Bordonaro is c/o Floatflow Pty. Ltd., 13 Townsend Street, Ivanhoe, VIC 3079,
Australia. The address of all other listed stockholders is c/o Moldflow
Corporation, 91 Hartwell Avenue, Lexington, MA 02421.
The number of shares beneficially owned by each stockholder is determined
under rules issued by the Securities and Exchange Commission and includes voting
or investment power with respect to securities. Under these rules, beneficial
ownership includes any shares as to which the individual or entity has sole or
shared voting power or investment power and includes any shares as to which the
individual or entity has the right to acquire beneficial ownership within
60 days after January 20, 2000 through the exercise of any warrant, stock option
or other right. The inclusion in this prospectus of such shares, however, does
not constitute an admission that the named stockholder is a direct or indirect
beneficial owner of such shares.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP
PRIOR TO OFFERING AFTER OFFERING
---------------------- SHARES TO ------------------------
NAME OF BENEFICIAL OWNER SHARES PERCENT(1) BE SOLD SHARES PERCENT(1)
- ------------------------ --------- ---------- --------- -------- ----------
<S> <C> <C> <C> <C> <C>
Ampersand Ventures(2)................... 4,039,060 66.7%
Richard A. Charpie(3)................... 4,039,060 66.7
Charles D. Yie(4)....................... 4,039,060 66.7
JTC Investment Management Pty.
Ltd.(5)............................... 752,627 12.4
Julian H. Beale(6)...................... 752,627 12.4
Marc J. L. Dulude(7).................... 403,151 6.7
Lombard Capital Fund LLC(8)............. 218,054 3.6
A. Roland Thomas(9)..................... 183,494 3.0
Paul Bordonaro(10)...................... 158,457 2.6
Richard M. Underwood(11)................ 57,104 *
Suzanne E. Rogers(12)................... 54,127 *
Kenneth R. Welch(13).................... 51,486 *
Roger Brooks............................ 1,562 *
Robert P. Schechter..................... -- *
All executive officers and directors, as
a group (10 persons)(14).............. 5,542,611 91.0
</TABLE>
- ------------------------
* Represents less than 1% of the outstanding shares of common stock.
51
<PAGE>
(1) All percentages assume the underwriters do not elect to exercise the
over-allotment option to purchase an additional shares of common
stock. The number of shares of common stock includes shares to be issued
upon completion of this offering pursuant to the conversion of all of the
shares of our class C preferred stock into shares of common stock and the
exercise of the outstanding warrant into shares of common stock.
(2) Consists of 1,482,131 shares held by Ampersand Specialty Materials and
Chemicals II Limited Partnership, 2,516,019 shares held by Ampersand
Specialty Materials and Chemicals III Limited Partnership and 40,910 shares
held by Ampersand Specialty Materials and Chemicals III Companion Fund
Limited Partnership. Ampersand Specialty Materials and Chemicals II Limited
Partnership, Ampersand Specialty Materials and Chemicals III Limited
Partnership and Ampersand Specialty Materials and Chemicals III Companion
Fund Limited Partnership are part of an affiliated group of investment
partnerships referred to collectively herein as Ampersand Ventures. ASMC-II
MCLP LLP is the general partner of ASMC-II Management Company Limited
Partnership, which is the general partner of Ampersand Specialty Materials
and Chemicals II Limited Partnership, which exercises sole voting and
investment power with respect to all of the shares held of record by
Ampersand Specialty Materials and Chemicals II Limited Partnership. ASMC-III
MCLP LLP is the general partner of ASMC-III Management Company Limited
Partnership, which is the general partner of Ampersand Specialty Materials
and Chemicals III Limited Partnership and Ampersand Specialty Materials and
Chemicals III Companion Fund Limited Partnership, which exercises sole
voting and investment power with respect to all of the shares held of record
by Ampersand Specialty Materials and Chemicals III Limited Partnership and
Ampersand Specialty Materials and Chemicals III Companion Fund Limited
Partnership. Dr. Charpie, a director of Moldflow, is the Managing General
Partner of both ASMC-II MCLP LLP and ASMC-III MCLP LLP and Mr. Yie, a
director of Moldflow, is a General Partner of both ASMC-II MCLP LLP and
ASMC-III MCLP LLP. Dr. Charpie and Mr. Yie disclaim any beneficial ownership
of the shares held by Ampersand Ventures, except to the extent of their
respective pecuniary interests therein.
(3) Consists solely of the shares described in note (2) above, of which
Dr. Charpie may be considered the beneficial owner. Dr. Charpie disclaims
beneficial ownership of such shares, except to the extent of his pecuniary
interest therein.
(4) Consists solely of the shares described in note (2) above, of which Mr. Yie
may be considered the beneficial owner. Mr. Yie disclaims beneficial
ownership of such shares, except to the extent of his pecuniary interest
therein.
(5) Mr. Beale, a director of Moldflow, may be considered the beneficial owner of
these shares based on his voting and investment power with respect to the
parent company of JTC Investment Management Pty. Ltd.
(6) Consists solely of the shares described in note (5) above, of which
Mr. Beale may be considered the beneficial owner. Mr. Beale disclaims
beneficial ownership of 323,706 of such shares.
(7) Includes 6,250 shares that may be acquired within 60 days of January 20,
2000.
(8) The sole beneficial owner of these shares is Asiaciti Trust Samoa Limited.
(9) Includes 158,457 shares held by Thomas Investments Australia Pty. Ltd., of
which Mr. Thomas is the beneficial owner. Also includes 25,037 shares that
may be acquired within 60 days of January 20, 2000.
(10) Consists solely of shares held by Floatflow Pty. Ltd., of which
Mr. Bordonaro is the beneficial owner.
(11) Includes 1,302 shares that may be acquired within 60 days of January 20,
2000.
(12) Includes 3,906 shares that may be acquired within 60 days of January 20,
2000.
(13) Includes 3,125 shares that may be acquired within 60 days of January 20,
2000.
(14) Includes 39,620 shares that may be acquired within 60 days of January 20,
2000.
52
<PAGE>
DESCRIPTION OF CAPITAL STOCK
AUTHORIZED AND OUTSTANDING CAPITAL STOCK
Following the offering, our authorized capital stock will consist of
60,000,000 shares of common stock, of which will be issued and
outstanding, and 5,000,000 shares of undesignated preferred stock issuable in
one or more series designated by our board of directors, of which no shares will
be issued and outstanding. In addition, 605,071 shares of our common stock will
be issuable upon exercise of stock options outstanding and 2,500,000 shares of
our common stock will be available for future grant under our stock option plan
and our employee stock purchase plan.
COMMON STOCK
VOTING RIGHTS. The holders of our common stock have one vote per share.
Holders of our common stock are not entitled to vote cumulatively for the
election of directors. Generally, all matters to be voted on by stockholders
must be approved by a majority, or, in the case of the election of directors, by
a plurality, of the votes cast at a meeting at which a quorum is present, voting
together as a single class, subject to any voting rights granted to holders of
any then outstanding preferred stock.
DIVIDENDS. Holders of common stock will share ratably in any dividends
declared by our board of directors, subject to the preferential rights of any
preferred stock then outstanding. Dividends consisting of shares of common stock
may be paid to holders of shares of common stock.
OTHER RIGHTS. Upon liquidation, dissolution or winding up of Moldflow, all
holders of common stock are entitled to share ratably in any assets available
for distribution to holders of shares of common stock. No shares of common stock
are subject to redemption or have preemptive rights to purchase additional
shares of common stock.
PREFERRED STOCK
Our certificate of incorporation provides that shares of preferred stock may
be issued from time to time in one or more series. Our board of directors is
authorized to fix the voting rights, if any, designations, powers, preferences,
qualifications, limitations and restrictions thereof, applicable to the shares
of each series. Our board of directors may, without stockholder approval, issue
preferred stock with voting and other rights that could adversely affect the
voting power and other rights of the holders of the common stock and could have
anti-takeover effects, including preferred stock or rights to acquire preferred
stock in connection with implementing a shareholder rights plan. We have no
present plans to issue any shares of preferred stock. The ability of our board
of directors to issue preferred stock without stockholder approval could have
the effect of delaying, deferring or preventing a change of control of Moldflow
or the removal of existing management.
INDEMNIFICATION MATTERS
Prior to the offering, we will have entered into indemnification agreements
with each of our directors. The form of indemnification agreement provides that
we will indemnify our directors for expenses incurred because of their status as
a director to the fullest extent permitted by Delaware law, our certificate of
incorporation and our by-laws.
Our certificate of incorporation contains a provision permitted by Delaware
law that generally eliminates the personal liability of directors for monetary
damages for breaches of their fiduciary duty, including breaches involving
negligence or gross negligence in business combinations, unless the director has
breached his or her duty of loyalty, failed to act in good faith, engaged in
intentional misconduct or a knowing violation of law, paid a dividend or
approved a stock
53
<PAGE>
repurchase in violation of the Delaware General Corporation Law or obtained an
improper personal benefit. This provision does not alter a director's liability
under the federal securities laws and does not affect the availability of
equitable remedies, such as an injunction or rescission, for breach of fiduciary
duty. Our by-laws provide that directors and officers shall be, and in the
discretion of our board of directors, non-officer employees may be, indemnified
by Moldflow to the fullest extent authorized by Delaware law, as it now exists
or may in the future be amended, against all expenses and liabilities reasonably
incurred in connection with service for or on behalf of Moldflow. Our by-laws
also provide for the advancement of expenses to directors and, in the discretion
of our board of directors, to officers and non-officer employees. In addition,
our by-laws provide that the right of directors and officers to indemnification
shall be a contract right and shall not be exclusive of any other right now
possessed or hereafter acquired under any by-law, agreement, vote of
stockholders or otherwise. We also have directors' and officers' insurance
against certain liabilities. We believe that the indemnification agreements,
together with the limitation of liability and indemnification provisions of our
certificate of incorporation and by-laws and directors' and officers' insurance
will assist us in attracting and retaining qualified individuals to serve as
directors and officers of Moldflow.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be provided to directors, officers or persons controlling Moldflow
as described above, we have been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is therefore unenforceable. At present,
there is no pending material litigation or proceeding involving any director,
officer, employee or agent of Moldflow in which indemnification will be required
or permitted.
PROVISIONS OF OUR CERTIFICATE OF INCORPORATION AND BY-LAWS THAT MAY HAVE
ANTI-TAKEOVER EFFECTS
Certain provisions of our certificate of incorporation and by-laws described
below, as well as the ability of our board of directors to issue shares of
preferred stock and to set the voting rights, preferences and other terms
thereof, may be deemed to have an anti-takeover effect and may discourage
takeover attempts not first approved by our board of directors, including
takeovers which particular stockholders may deem to be in their best interests.
These provisions also could have the effect of discouraging open market
purchases of our common stock because they may be considered disadvantageous by
a stockholder who desires subsequent to such purchases to participate in a
business combination transaction with us or to elect a new director to our
board.
CLASSIFIED BOARD OF DIRECTORS
Our board of directors is divided into three classes serving staggered
three-year terms, with approximately one-third of the board being elected each
year. Our classified board, together with certain other provisions of our
certificate of incorporation authorizing the board of directors to fill vacant
directorships or increase the size of the board, may prevent a stockholder from
removing, or delay the removal of, incumbent directors and simultaneously
gaining control of the board of directors by filling vacancies created by such
removal with its own nominees.
DIRECTOR VACANCIES AND REMOVAL
Our certificate of incorporation and by-laws provide that vacancies in our
board of directors may be filled only by the affirmative vote of a majority of
the remaining directors. Our certificate of incorporation provides that
directors may be removed from office only with cause and only by the affirmative
vote of holders of at least 75% of the shares then entitled to vote at an
election of directors.
54
<PAGE>
NO STOCKHOLDER ACTION BY WRITTEN CONSENT
Our certificate of incorporation provides that any action required or
permitted to be taken by our stockholders at an annual or special meeting of
stockholders must be effected at a duly called meeting and may not be taken or
effected by a written consent of stockholders.
SPECIAL MEETINGS OF STOCKHOLDERS
Our certificate of incorporation and by-laws provide that a special meeting
of stockholders may be called only by our board of directors. Our by-laws
provide that only those matters included in the notice of the special meeting
may be considered or acted upon at that special meeting unless otherwise
provided by law.
ADVANCE NOTICE OF DIRECTOR NOMINATIONS AND STOCKHOLDER PROPOSALS
Our by-laws include advance notice and informational requirements and time
limitations on any director nomination or any new proposal which a stockholder
wishes to make at an annual meeting of stockholders. For the first annual
meeting following the completion of this offering, a stockholder's notice of a
director nomination or proposal will be timely if delivered to the Secretary of
Moldflow at our principal executive offices not later than the close of business
on the later of the 75th day prior to the scheduled date of such annual meeting
or the 10th day following the day on which public announcement of the date of
such annual meeting is made by Moldflow.
AMENDMENT OF THE CERTIFICATE OF INCORPORATION
As required by Delaware law, any amendment to our certificate of
incorporation must first be approved by a majority of our board of directors
and, if required by law, thereafter approved by a majority of the outstanding
shares entitled to vote with respect to such amendment, except that any
amendment to the provisions relating to stockholder action by written consent,
directors, limitation of liability and the amendment of our certificate of
incorporation must be approved by not less than 75% of the outstanding shares
entitled to vote with respect to such amendment.
AMENDMENT OF BY-LAWS
Our certificate of incorporation and by-laws provide that our by-laws may be
amended or repealed by our board of directors or by the stockholders. Such
action by the board of directors requires the affirmative vote of a majority of
the directors then in office. Such action by the stockholders requires the
affirmative vote of at least 75% of the shares present in person or represented
by proxy at an annual meeting of stockholders or a special meeting called for
such purpose unless our board of directors recommends that the stockholders
approve such amendment or repeal at such meeting, in which case such amendment
or repeal only requires the affirmative vote of a majority of the shares present
in person or represented by proxy at the meeting.
STATUTORY BUSINESS COMBINATION PROVISION
Following the offering, we will be subject to Section 203 of the Delaware
General Corporation Law, which prohibits a publicly-held Delaware corporation
from consummating a "business combination," except under certain circumstances,
with an "interested stockholder" for a period of three years after the date such
person became an "interested stockholder" unless:
- before such person became an interested stockholder, the board of
directors of the corporation approved the transaction in which the
interested stockholder became an interested stockholder or approved the
business combination;
55
<PAGE>
- upon the closing of the transaction that resulted in the interested
stockholder becoming such, the interested stockholder owned at least 85%
of the voting stock of the corporation outstanding at the time the
transaction commenced, excluding shares held by directors who are also
officers of the corporation and shares held by employee stock plans; or
- following the transaction in which such person became an interested
stockholder, the business combination is approved by the board of
directors of the corporation and authorized at a meeting of stockholders
by the affirmative vote of the holders of at least two-thirds of the
outstanding voting stock of the corporation not owned by the interested
stockholder.
The term "interested stockholder" generally is defined as a person who,
together with affiliates and associates, owns, or, within the prior three years,
owned, 15% or more of a corporation's outstanding voting stock. The term
"business combination" includes mergers, consolidations, asset sales involving
10% or more of a corporation's assets and other similar transactions resulting
in a financial benefit to an interested stockholder. Section 203 makes it more
difficult for an "interested stockholder" to effect various business
combinations with a corporation for a three-year period. A Delaware corporation
may "opt out"of Section 203 with an express provision in its original
certificate of incorporation or an express provision in its certificate of
incorporation or by-laws resulting from an amendment approved by holders of at
least a majority of the outstanding voting stock. Neither our certificate of
incorporation nor our by-laws contain any such exclusion.
TRADING ON THE NASDAQ NATIONAL MARKET SYSTEM
We have applied to have our common stock approved for quotation on the
Nasdaq National Market under the symbol MFLO.
NO PREEMPTIVE RIGHTS
No holder of any class of our stock has any preemptive right to purchase any
of our securities.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for our common stock will be .
56
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there was no public market for our common stock, and
we cannot predict the effect, if any, that sales of common stock or the
availability of common stock for sale will have on the market price of our
common stock prevailing from time to time. Nonetheless, substantial sales of
common stock in the public market following this offering, or the perception
that such sales could occur, could lower the market price of our common stock or
make it difficult for us to raise additional equity capital in the future.
Following this offering, there will be shares of our common stock
outstanding, assuming no exercise of the underwriters' over-allotment option and
no exercise of outstanding options. All of the shares which are being sold in
this offering will be freely transferable without restriction or further
registration under the Securities Act unless the shares are purchased by
"affiliates" as that term is defined in Rule 144 under the Securities Act.
The remaining shares of common stock held by existing stockholders
that will be outstanding after the offering will be "restricted securities" as
defined in Rule 144, and may be sold in the future without registration under
the Securities Act subject to compliance with the provisions of Rule 144,
Rule 701 or any other applicable exemption under the Securities Act.
In connection with this offering, our existing officers, directors and
stockholders, who hold substantially all of our currently outstanding shares of
common stock and will own an aggregate of shares of common stock after
this offering and shares of common stock issuable upon exercise of stock
options outstanding, have agreed with the underwriters that, subject to
exceptions, they will not sell or dispose of any of their shares for 180 days
after the date of this prospectus. Adams, Harkness & Hill, Inc. may, in its sole
discretion and at any time without notice, release all or any portion of the
shares subject to such restrictions. Subject to these lock-up agreements, the
shares of common stock outstanding upon the closing of the offering will be
available for sale in the public market as follows:
<TABLE>
<CAPTION>
APPROXIMATE
NUMBER OF
SHARES DESCRIPTION
- ----------- -----------
<S> <C>
After the date of this prospectus, freely tradeable shares
sold in the offering.
After 180 days from the date of this prospectus, the lock-up
period will expire and these shares will be saleable under
Rule 144.
</TABLE>
In general, under Rule 144, as currently in effect, a person who has
beneficially owned shares for at least one year is entitled to sell, within any
three-month period commencing 90 days after the date of this prospectus, a
number of shares that does not exceed the greater of:
- one percent of the then outstanding shares of common stock, which is
expected to be approximately shares upon the completion of this
offering, or
- the average weekly trading volume of the common stock during the four
calendar weeks preceding the date on which notice of such sale is filed,
subject to manner of sale provisions and notice requirements and to the
availability of current public information about us.
Affiliates may sell shares not constituting restricted securities in accordance
with the foregoing volume limitations and other restrictions, but without regard
to the one-year holding period.
57
<PAGE>
In addition, a person who was not an affiliate of ours, as defined in
Rule 144, at any time during the 90 days preceding a sale and who has
beneficially owned the shares proposed to be sold for at least two years would
be entitled to sell such shares under Rule 144(k) without regard to the
requirements described above. To the extent that shares were acquired from an
affiliate of ours, such person's holding period for the purpose of effecting a
sale under Rule 144 commences on the date of transfer from the affiliate.
In general, under Rule 701 of the Securities Act as currently in effect,
each of our employees, consultants or advisors who purchased shares from us in
connection with a compensatory stock plan or other written agreement is eligible
to resell those shares 90 days after the effective date of this offering in
reliance on Rule 144, but without compliance with some of the restrictions,
including the holding period, contained in Rule 144.
We cannot predict the effect, if any, that market sales of shares or the
availability of shares for sale will have on the market price of our common
stock prevailing from time to time. We are unable to estimate the number of our
shares that may be sold in the public market pursuant to Rule 144 or Rule 701
because this will depend on the market price of our common stock, the personal
circumstances of the sellers and other factors. Nevertheless, sales of
significant amounts of our common stock in the public market could adversely
affect the market price of our common stock.
We have agreed not to sell or otherwise dispose of any shares of common
stock during the 180-day period following the date of this prospectus, except we
may issue, and grant options to purchase, shares of common stock under the 2000
Stock Option and Incentive Plan and our Employee Stock Purchase Plan.
We intend to file registration statements on Form S-8 with respect to the
aggregate of shares of common stock issuable under our 2000 Stock Option
and Incentive Plan approximately 180 days following this offering. We intend to
file a registration statement with respect to our Employee Stock Purchase Plan
promptly following the consummation of this offering. Shares issued upon the
exercise of stock options after the effective date of the Form S-8 registration
statement will be eligible for resale in the public market without restriction,
except that affiliates must comply with Rule 144.
58
<PAGE>
UNDERWRITING
Under the underwriting agreement, which is filed as an exhibit to the
registration statement relating to this prospectus, each underwriter named
below, for whom Adams, Harkness & Hill, Inc. and A.G. Edwards & Sons, Inc. are
acting as representatives, has agreed to purchase from us and the selling
stockholders the respective number of shares of common stock shown opposite its
name below:
<TABLE>
<CAPTION>
NUMBER OF SHARES
OF COMMON
UNDERWRITERS STOCK
- ------------ ----------------
<S> <C>
Adams, Harkness & Hill, Inc................................
A.G. Edwards & Sons, Inc...................................
-------
Total..................................................
=======
</TABLE>
Of the shares to be purchased by the underwriters, shares will
be purchased from us and shares will be purchased from the selling
stockholders.
The underwriting agreement provides that the underwriters' obligation to
purchase shares of common stock depends on the satisfaction of the conditions
contained in the underwriting agreement and that, if any of the shares of common
stock are purchased by the underwriters under the underwriting agreement, all of
the shares of common stock that the underwriters have agreed to purchase under
the underwriting agreement must be purchased. The conditions contained in the
underwriting agreement include the requirement that the representations and
warranties made by us and the selling stockholders to the underwriters are true,
that there is no material change in the financial markets and that we deliver to
the underwriters customary closing documents.
The representatives of the underwriters have advised us that the
underwriters propose to offer the shares of common stock directly to the public
at the public offering price set forth on the cover page of this prospectus, and
to dealers, who may include the underwriters, at the public offering price less
a selling concession not in excess of $ per share. The underwriters may
also allow, and dealers may reallow, a concession not in excess of $ per
share to brokers and dealers. After the offering, the underwriters may change
the offering price and other selling terms.
Adams, Harkness & Hill, Inc. and A.G. Edwards & Sons, Inc. have informed us
that they do not intend to confirm sales of shares of common stock offered by
this prospectus to any accounts over which they exercise discretionary
authority. In addition, the other underwriters have informed us that they do not
intend to confirm sales to discretionary accounts that exceed 5% of the total
number of shares of common stock offered by them.
The following table shows the per share and total public offering price,
underwriting discount to be paid by us to the underwriters and the proceeds
before expenses to us and the selling stockholders. This information is
presented assuming both no exercise and full exercise by the underwriters of
their over-allotment option.
<TABLE>
<CAPTION>
TOTAL
-------------------
WITHOUT WITH
PER SHARE OPTION OPTION
--------- -------- --------
<S> <C> <C> <C>
Public offering price....................................... $ $ $
Underwriting discount.......................................
Proceeds before expenses to Moldflow........................
Proceeds before expenses to the selling stockholders........ --
</TABLE>
59
<PAGE>
The total proceeds before expenses to be received by us from this offering
will be approximately , assuming no exercise of the over-allotment option.
The expenses of this offering, exclusive of the underwriting discount, are
estimated at $ and are payable by us.
We have granted to the underwriters an option to purchase from us up to
additional shares of common stock, exercisable solely to cover
over-allotments, if any, at the public offering price less the underwriting
discount shown on the cover page of this prospectus. The underwriters may
exercise this option at any time until 30 days after the date of the
underwriting agreement. If this option is exercised, each underwriter will be
committed, so long as the conditions of the underwriting agreement are
satisfied, to purchase a number of additional shares of common stock
proportionate to the underwriters' initial commitment as indicated in the
preceding table and we will be obligated, under the over-allotment option, to
sell the shares of common stock to the underwriters.
We have agreed that, without the prior consent of Adams, Harkness &
Hill, Inc., we will not, directly or indirectly, offer, sell or otherwise
dispose of any shares of common stock or any securities which may be converted
into or exchanged for any such shares of common stock for a period of 180 days
from the date of this prospectus. Our executive officers and directors, the
selling stockholders and other stockholders who currently hold in the aggregate
more than % of our outstanding common stock have agreed under lock-up
agreements that, without the prior written consent of Adams, Harkness &
Hill, Inc., they will not, directly or indirectly, offer, sell or otherwise
dispose of any shares of common stock or any securities that may be converted
into or exchanged for any such shares for the period ending 180 days after the
date of this prospectus.
Prior to the offering, there has been no public market for the shares of
common stock. The initial public offering price and the underwriters'
compensation will be negotiated between the representatives and us. In
determining the initial public offering price of the common stock, we and the
representatives will consider, in addition to prevailing market conditions, our
historical performance and capital structure, estimates of our business
potential and earning prospects, an overall assessment of our management and the
consideration of the above factors in relation to the market valuation of
companies in related businesses.
We and the selling stockholders will indemnify the underwriters against
certain liabilities, including liabilities under the Securities Act and
liabilities arising from breaches of their representations and warranties
contained in the underwriting agreement, and contribute to payments that the
underwriters may be required to make for these liabilities.
Until the distribution of the common stock is completed, rules of the
Securities and Exchange Commission may limit the ability of the underwriters and
selling group members to bid for and purchase shares of common stock. As an
exception to these rules, the representatives are permitted to engage in
transactions that stabilize the price of the common stock. These transactions
may consist of bids or purchases for the purposes of pegging, fixing or
maintaining the price of the common stock.
The underwriters may create a short position in the common stock in
connection with the offering, which means that they may sell more shares than
are set forth on the cover page of this prospectus. If the underwriters create a
short position, then the representatives may reduce that short position by
purchasing common stock in the open market. The representatives also may elect
to reduce any short position by exercising all or part of the over-allotment
option.
The representatives also may impose a penalty bid on underwriters and
selling group members. This means that if the representatives purchase shares of
common stock in the open market to reduce the underwriters' short position or to
stabilize the price of the common stock, the representatives may reclaim the
amount of the selling concession from the underwriters and selling
60
<PAGE>
group members who sold those shares as part of the offering. In addition, the
representatives reserve the right to reclaim selling concessions from
underwriters and selling group members if the representatives receive a report
that clients of the underwriters and selling group members have sold the stock
they purchased in this offering, generally within 30 days following this
offering. The representatives reserve this right even if the representatives do
not purchase shares in the open market.
In general, purchases of a security for the purpose of stabilization or to
reduce a syndicate short position could cause the price of the security to be
higher than it might otherwise be in the absence of such purchases. The
imposition of a penalty bid might have an effect on the price of a security to
the extent that it might discourage resales of the security by purchasers in an
offering.
The underwriters have reserved up to shares of the common stock
offered by this prospectus for sale to our officers, directors, employees and
their family members and to our business associates at the initial public
offering price set forth on the cover page of this prospectus. These persons
must commit to purchase no later than the close of business on the day following
the date of this prospectus. The number of shares available for sale to the
general public will be reduced to the extent these persons purchase the reserved
shares.
VALIDITY OF COMMON STOCK
The validity of the shares of common stock offered hereby will be passed
upon for Moldflow by Goodwin, Procter & Hoar LLP, Boston, Massachusetts. Various
legal matters related to the sale of the common stock offered hereby will be
passed upon for the underwriters by Ropes & Gray, Boston, Massachusetts.
EXPERTS
The audited consolidated financial statements of Moldflow as of June 30,
1998 and 1999, and for each of the years ended June 30, 1997, 1998 and 1999,
included in this prospectus have been so included in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the Securities and Exchange Commission, or SEC, a
registration statement on Form S-1 (including the exhibits and schedules
thereto) under the Securities Act and the rules and regulations thereunder, for
the registration of the common stock offered hereby. This prospectus is part of
the registration statement. This prospectus does not contain all the information
included in the registration statement because we have omitted certain parts of
the registration statement as permitted by the SEC rules and regulations. For
further information about us and our common stock, you should refer to the
registration statement. Statements contained in this prospectus as to any
contract, agreement or other document referred to are not necessarily complete.
Where the contract or other document is an exhibit to the registration
statement, each statement is qualified by the provisions of that exhibit.
You can inspect and copy at the public reference facility maintained by the
SEC at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
SEC's regional offices at Seven World Trade Center, 13th Floor, New York, New
York 10048 and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. You
may call the SEC at 1-800-732-0330 for further information about the operation
of the public reference rooms. Copies of all or any portion of the registration
statement can be obtained from the Public Reference Section of the SEC, 450
Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. In addition,
the registration statement is publicly available through the SEC's site on the
Internet's World Wide Web, located at http://www.sec.gov.
We will also file annual, quarterly and current reports, proxy statements
and other information with the SEC. You can also request copies of these
documents, for a copying fee, by writing to the SEC. We intend to furnish to our
stockholders annual reports containing audited financial statements for each
fiscal year.
61
<PAGE>
MOLDFLOW CORPORATION
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Report of Independent Accountants........................... F-2
Consolidated Balance Sheet at June 30, 1998 and 1999 and
January 1, 2000 (unaudited)............................... F-3
Consolidated Statement of Operations for the years ended
June 30, 1997, 1998 and 1999 and the six months ended
January 2, 1999 (unaudited) and January 1, 2000
(unaudited)............................................... F-4
Consolidated Statement of Stockholders' Equity for the years
ended June 30, 1997, 1998 and 1999 and the six months
ended January 1, 2000 (unaudited)......................... F-5
Consolidated Statement of Cash Flows for the years ended
June 30, 1997, 1998 and 1999 and the six months ended
January 2, 1999 (unaudited) and January 1, 2000
(unaudited)............................................... F-6
Notes to Consolidated Financial Statements.................. F-7
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and
Stockholders of Moldflow Corporation
The 2.4-to-1 reverse stock split approved by the Board of Directors on
January 20, 2000 described in Note 16 to the consolidated financial statements
has not been consummated at January 24, 2000. When it has been consummated, we
will be in a position to furnish the following report:
"In our opinion, the accompanying consolidated balance sheet and the
related consolidated statements of operations, of stockholders' equity
and of cash flows present fairly, in all material respects, the financial
position of Moldflow Corporation and its subsidiaries (the "Company") at
June 30, 1999 and 1998, and the results of their operations and their
cash flows for the years ended June 30, 1999, 1998 and 1997, in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements
based on our audits. We conducted our audits of these statements in
accordance with generally accepted auditing standards which require that
we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for the opinion expressed
above."
PricewaterhouseCoopers LLP
Boston, Massachusetts
August 20, 1999, except as to Note 16 for
which the date is January 20, 2000
F-2
<PAGE>
MOLDFLOW CORPORATION
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA
JANUARY 1,
JUNE 30, JANUARY 1, 2000
------------------- 2000 (UNAUDITED)
1998 1999 (UNAUDITED) (NOTE 2)
-------- -------- ------------ ------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 1,700 $ 1,240 $ 1,328 $ 1,478
Accounts receivable, net of allowance for doubtful
accounts of $539, $232 and $237 at June 30, 1998 and
1999 and January 1, 2000 (unaudited), respectively...... 4,277 4,444 4,534 4,534
Inventories............................................... -- 84 99 99
Prepaid expenses.......................................... 400 283 340 340
Other current assets...................................... 814 539 851 851
-------- -------- -------- --------
Total current assets.................................... 7,191 6,590 7,152 7,302
Fixed assets, net........................................... 2,978 3,110 3,026 3,026
Restricted cash............................................. 3,982 -- 22 22
Other assets................................................ 185 547 364 364
-------- -------- -------- --------
Total assets............................................ $ 14,336 $ 10,247 $ 10,564 $ 10,714
======== ======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Bank notes payable........................................ $ 1,525 $ 832 $ 1,029 $ 1,029
Current portion of capital lease obligations.............. 158 191 120 120
Accounts payable.......................................... 985 1,422 1,202 1,202
Accrued expenses.......................................... 3,539 2,835 3,102 3,102
Deferred revenue.......................................... 2,983 3,418 3,310 3,310
-------- -------- -------- --------
Total current liabilities............................... 9,190 8,698 8,763 8,763
Notes payable to stockholders............................... 890 -- -- --
Capital lease obligations, net of current portion........... 227 11 -- --
Unearned revenue from research and development contract..... 3,982 -- -- --
Other long-term liabilities................................. 13 268 38 38
-------- -------- -------- --------
Total liabilities....................................... 14,302 8,977 8,801 8,801
-------- -------- -------- --------
Commitments and contingencies (Note 13)
Stockholders' equity:
Convertible preferred stock, $0.01 par value; 8,254,386
shares authorized; 7,440,970, 8,139,579, 8,139,579 and 0
shares issued and outstanding at June 30, 1998 and 1999,
January 1, 2000 (unaudited) and pro forma January 1,
2000 (unaudited), respectively.......................... 11,476 12,496 12,496 --
Common stock, $0.01 par value; 8,333,333 shares
authorized; 0, 553,177, 560,327 and 6,069,610 shares
issued and outstanding at June 30, 1998 and 1999,
January 1, 2000 (unaudited) and pro forma January 1,
2000 (unaudited), respectively.......................... -- 6 6 61
Additional paid-in capital................................ -- 270 285 12,876
Deferred compensation..................................... -- (67) (57) (57)
Notes receivable from stockholders........................ -- (198) (198) (198)
Accumulated deficit....................................... (12,194) (11,843) (11,410) (11,410)
Accumulated other comprehensive income.................... 752 606 641 641
-------- -------- -------- --------
Total stockholders' equity.............................. 34 1,270 1,763 1,913
-------- -------- -------- --------
Total liabilities and stockholders' equity.............. $ 14,336 $ 10,247 $ 10,564 $ 10,714
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
<PAGE>
MOLDFLOW CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
---------------------------
YEAR ENDED JUNE 30, JANUARY 2, JANUARY 1,
------------------------------ 1999 2000
1997 1998 1999 (UNAUDITED) (UNAUDITED)
-------- -------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenue:
Software licenses...................................... $ 6,743 $8,514 $12,238 $5,275 $6,651
Services............................................... 8,080 7,875 7,983 3,969 4,853
------- ------ ------- ------ ------
Total revenue........................................ 14,823 16,389 20,221 9,244 11,504
------- ------ ------- ------ ------
Costs and expenses:
Cost of software licenses revenue...................... 377 397 378 168 322
Cost of services revenue............................... 1,904 1,685 1,319 605 491
Research and development............................... 3,527 3,062 3,466 1,754 1,709
Selling and marketing.................................. 6,703 7,287 9,673 4,615 5,811
General and administrative............................. 3,719 3,303 3,839 1,735 2,277
Litigation............................................. -- -- 620 -- 530
Amortization of intangible assets...................... 2,370 84 -- -- --
------- ------ ------- ------ ------
Total operating expenses............................. 18,600 15,818 19,295 8,877 11,140
------- ------ ------- ------ ------
Income (loss) from operations.......................... (3,777) 571 926 367 364
Interest income.......................................... 14 -- 21 1 26
Interest expense......................................... (153) (238) (198) (86) (65)
Other income (loss), net................................. 17 19 (92) (22) (64)
------- ------ ------- ------ ------
Income (loss) before income taxes and extraordinary
loss................................................. (3,899) 352 657 260 261
Provision (benefit) for income taxes..................... 371 163 176 57 (172)
------- ------ ------- ------ ------
Income (loss) before extraordinary loss................ (4,270) 189 481 203 433
Extraordinary loss from early extinguishment of debt, net
of taxes............................................... -- -- 130 130 --
------- ------ ------- ------ ------
Net income (loss)...................................... (4,270) 189 351 73 433
Accretion on convertible preferred stock................. 741 80 -- -- --
------- ------ ------- ------ ------
Net income (loss) available to common stockholders... $(5,011) $ 109 $ 351 $ 73 $ 433
======= ====== ======= ====== ======
Net income (loss) per common share:
Basic................................................ $ -- $ -- $ 1.33 $ 0.34 $ 1.18
Diluted.............................................. $ -- $ 0.04 $ 0.06 $ 0.01 $ 0.07
Pro forma unaudited net income per common share:
Basic................................................ $ 0.06 $ 0.07
Diluted.............................................. $ 0.06 $ 0.07
Shares used in computing net income (loss) per common
share:
Basic................................................ -- -- 265 215 367
Diluted.............................................. -- 5,228 6,166 6,042 6,311
Pro forma unaudited basic............................ 5,717 5,855
Pro forma unaudited diluted.......................... 6,166 6,311
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE>
MOLDFLOW CORPORATION
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
CONVERTIBLE NOTES
PREFERRED STOCK COMMON STOCK ADDITIONAL RECEIVABLE
-------------------- ---------------------- PAID-IN DEFERRED FROM
SHARES AMOUNT SHARES PAR VALUE CAPITAL COMPENSATION STOCKHOLDERS
--------- -------- ---------- --------- ---------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at June 30, 1996............. -- $ -- 2,016,923 $297 $740 $ -- $ --
Issuance of common stock............. 3,333 1 36
Accretion of redeemable preferred
stock to redemption value..........
Comprehensive income (loss):
Net loss...........................
Foreign currency translation
adjustment.......................
Comprehensive loss.................
--------- ------- ---------- ---- ---- ----- -----
Balance at June 30, 1997............. -- -- 2,020,256 298 776 -- --
Accretion of redeemable preferred
stock to redemption value..........
Issuance of common stock in exchange
for redemption rights of
outstanding preferred stock........ 29,167 4 73
Exchange of class A convertible
preferred stock for series A
convertible preferred stock, which
was redesignated as series C-2
convertible preferred stock........ 1,855,688 8,382
Exchange of convertible preferred
stock for series B convertible
preferred stock, which was
redesignated as series C-3
convertible preferred stock........ 666,666 1,943
Redesignation of common stock as
series C-1 convertible preferred
stock.............................. 4,918,616 1,151 (2,049,423) (302) (849)
Comprehensive income:
Net income.........................
Foreign currency translation
adjustment.......................
Comprehensive income...............
--------- ------- ---------- ---- ---- ----- -----
Balance at June 30, 1998............. 7,440,970 11,476 -- -- -- -- --
Conversion of promissory notes to
series C-3 convertible preferred
stock.............................. 698,609 1,020
Issuance of common stock............. 551,287 6 192 (198)
Exercise of stock options............ 1,890 -- 1
Deferred compensation associated with
stock options...................... 77 (77)
Amortization of deferred
compensation....................... 10
Comprehensive income:
Net income.........................
Foreign currency translation
adjustment.......................
Comprehensive income...............
--------- ------- ---------- ---- ---- ----- -----
Balance at June 30, 1999............. 8,139,579 12,496 553,177 6 270 (67) (198)
Exercise of stock options
(unaudited)........................ 7,150 -- 15
Amortization of deferred compensation
(unaudited)........................ 10
Comprehensive income (unaudited):
Net income.........................
Foreign currency translation
adjustment.......................
Comprehensive income...............
--------- ------- ---------- ---- ---- ----- -----
Balance at January 1, 2000
(unaudited)........................ 8,139,579 $12,496 560,327 $ 6 $285 $ (57) $(198)
========= ======= ========== ==== ==== ===== =====
<CAPTION>
ACCUMULATED TOTAL
COMPREHENSIVE OTHER STOCKHOLDERS'
INCOME ACCUMULATED COMPREHENSIVE EQUITY
(LOSS) DEFICIT INCOME (DEFICIT)
--------------- ------------- --------------- -------------
<S> <C> <C> <C> <C>
Balance at June 30, 1996............. $ (7,292) $914 $(5,341)
Issuance of common stock............. 37
Accretion of redeemable preferred
stock to redemption value.......... (741) (741)
Comprehensive income (loss):
Net loss........................... $(4,270) (4,270) (4,270)
Foreign currency translation
adjustment....................... (269) (269) (269)
-------
Comprehensive loss................. (4,539)
======= -------- ---- -------
Balance at June 30, 1997............. (12,303) 645 (10,584)
Accretion of redeemable preferred
stock to redemption value.......... (80) (80)
Issuance of common stock in exchange
for redemption rights of
outstanding preferred stock........ 77
Exchange of class A convertible
preferred stock for series A
convertible preferred stock, which
was redesignated as series C-2
convertible preferred stock........ 8,382
Exchange of convertible preferred
stock for series B convertible
preferred stock, which was
redesignated as series C-3
convertible preferred stock........ 1,943
Redesignation of common stock as
series C-1 convertible preferred
stock.............................. --
Comprehensive income:
Net income......................... 189 189 189
Foreign currency translation
adjustment....................... 107 107 107
-------
Comprehensive income............... 296
======= -------- ---- -------
Balance at June 30, 1998............. (12,194) 752 34
Conversion of promissory notes to
series C-3 convertible preferred
stock.............................. 1,020
Issuance of common stock............. --
Exercise of stock options............ 1
Deferred compensation associated with
stock options...................... --
Amortization of deferred
compensation....................... 10
Comprehensive income:
Net income......................... 351 351 351
Foreign currency translation
adjustment....................... (146) (146) (146)
-------
Comprehensive income............... 205
======= -------- ---- -------
Balance at June 30, 1999............. (11,843) 606 1,270
Exercise of stock options
(unaudited)........................ 15
Amortization of deferred compensation
(unaudited)........................ 10
Comprehensive income (unaudited):
Net income......................... 433 433 433
Foreign currency translation
adjustment....................... 35 35 35
-------
Comprehensive income............... $ 468
======= -------- ---- -------
Balance at January 1, 2000
(unaudited)........................ $(11,410) $641 $ 1,763
======== ==== =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
<PAGE>
MOLDFLOW CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
---------------------------
YEAR ENDED JUNE 30, JANUARY 2, JANUARY 1,
------------------------------ 1999 2000
1997 1998 1999 (UNAUDITED) (UNAUDITED)
-------- -------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)......................................... $(4,270) $ 189 $ 351 $ 73 $ 433
Adjustments to reconcile to net cash provided by (used in)
operating activities:
Loss on disposal of fixed assets........................ -- -- 18 7 8
Depreciation and amortization........................... 3,138 810 881 426 417
Provision for doubtful accounts......................... (95) 256 29 9 7
Foreign exchange losses................................. 122 51 97 134 56
Common stock issued for services........................ 37 -- -- -- --
Changes in assets and liabilities:
Accounts receivable................................... (4) (1,901) (7) (88) (23)
Prepaid expenses, other current assets and
inventories......................................... 361 (47) 209 383 (382)
Accounts payable...................................... (463) 122 437 134 (208)
Accrued expenses...................................... (82) 889 (974) (918) 24
Deferred revenue...................................... 643 442 374 (284) (189)
Other assets.......................................... 5 (40) (209) (205) 67
------- ------- ------- ------ ------
Net cash provided by (used in) operating
activities........................................ (608) 771 1,206 (329) 210
------- ------- ------- ------ ------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of fixed assets................................. (723) (729) (863) (683) (391)
Proceeds from fixed asset disposals....................... -- -- 9 -- 4
Acquisition of business, net of cash acquired............. (431) -- -- -- --
------- ------- ------- ------ ------
Net cash used in investing activities............... (1,154) (729) (854) (683) (387)
------- ------- ------- ------ ------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of notes payable to stockholder.... 542 460 -- -- --
Borrowings on bank notes payable.......................... 1,060 1,495 1,412 349 1,000
Payments on bank notes payable............................ (78) (1,124) (2,120) (56) (803)
Payments on capital lease obligations..................... (86) (115) (200) (99) (78)
Proceeds from issuance of common stock.................... -- -- 1 1 15
------- ------- ------- ------ ------
Net cash provided by (used in) financing
activities........................................ 1,438 716 (907) 195 134
------- ------- ------- ------ ------
Effect of exchange rate changes on cash and cash
equivalents............................................... (305) (67) 95 41 131
------- ------- ------- ------ ------
NET INCREASE (DECREASE) IN CASH............................. (629) 691 (460) (776) 88
Cash and cash equivalents, beginning of period.............. 1,638 1,009 1,700 1,700 1,240
------- ------- ------- ------ ------
Cash and cash equivalents, end of period.................... $ 1,009 $ 1,700 $ 1,240 $ 924 $1,328
======= ======= ======= ====== ======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest.................................... $ 145 $ 183 $ 225 $ 80 $ 69
Cash paid for income taxes................................ 416 112 157 52 109
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING
ACTIVITIES:
Acquisition of fixed assets under capital leases.......... $ 88 $ 18 $ -- $ -- $ 4
Conversion of notes payable to stockholder into series C-3
convertible preferred stock............................. -- -- 1,020 1,020 --
Issuance of common stock in exchange for notes
receivable.............................................. -- -- 198 198 --
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-6
<PAGE>
MOLDFLOW CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION AND NATURE OF BUSINESS
Moldflow Corporation (the "Company") was incorporated in Delaware, USA in
January 1997. The Company was formed as the successor corporation to Moldflow
International Pty. Ltd. ("MIPL"), an Australian corporation that had been
incorporated in March 1994. On August 5, 1997, the stockholders of MIPL effected
a reorganization of that company's shares, resulting in MIPL becoming a wholly
owned subsidiary of the Company, and the stockholders of MIPL becoming
stockholders of the Company (Note 7). Given the carryover of the stockholders'
interests in MIPL to the Company, these consolidated financial statements
present together the financial position and results of operations of MIPL and
the Company before and after the reorganization.
The Company was formed to design, develop, manufacture and market computer
software applications for the design, engineering and manufacture of injection
molded plastic parts and, as such, revenues are derived from the plastic design
and manufacturing industry. The Company sells its products primarily to
customers in the United States, Europe, Asia and Australia.
The Company's fiscal year end is June 30. References to 1997, 1998 or 1999
mean the fiscal year ended June 30, unless otherwise indicated. During the
fiscal year, the Company follows a schedule in which each interim quarterly
period ends on the Saturday of the thirteenth full week of the reporting period.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company
and all of its wholly owned subsidiaries. All significant intercompany balances
and transactions have been eliminated in the consolidated financial statements.
FOREIGN CURRENCY TRANSLATION
Assets and liabilities of international subsidiaries, whose functional
currency is the local currency, are translated at the rates in effect at the
balance sheet date and translation adjustments are recorded in stockholders'
equity. Statement of operations amounts are translated at the average rate for
the year. Foreign currency transaction gains and losses are included in other
income and expense.
CASH AND CASH EQUIVALENTS
All highly liquid investments purchased with a maturity of three months or
less are considered to be cash equivalents. The Company invests excess cash
primarily in over-night investments held at major financial institutions.
Accordingly, these investments are subject to minimal credit and market risk and
are reported at cost, which approximates fair value.
ACCOUNTS RECEIVABLE, CONCENTRATION OF CREDIT RISK AND SIGNIFICANT CUSTOMERS
Financial instruments which potentially expose the Company to concentrations
of credit risk include only accounts receivable. The Company's customer base
consists of a large number of geographically dispersed customers. The Company
maintains reserves for potential credit losses on accounts receivable and such
losses, in the aggregate, have not exceeded management expectations.
Revenue of $2,206,000 (15% of total revenue), $2,074,000 (13% of total
revenue) and $1,888,000 (9% of total revenue) was attributable to one customer
in fiscal 1997, 1998 and 1999, respectively. At June 30, 1998 and 1999, accounts
receivable from that customer accounted for
F-7
<PAGE>
MOLDFLOW CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
$462,000 (10% of total accounts receivable) and $153,000 (3% of total accounts
receivable), respectively.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company's financial instruments consist of cash and cash equivalents,
short-term investments, accounts receivable, accounts payable, accrued expenses,
deferred revenue, and long-term debt. The carrying amounts of these instruments
at June 30, 1999 approximate their fair values.
INVENTORIES
Inventories are predominantly finished goods and are stated at the lower of
cost, using the first-in, first-out method, or market.
FIXED ASSETS
Fixed assets are recorded at cost and are depreciated using the
straight-line method over their estimated useful lives. Fixed assets held under
capital leases are stated at the lower of the fair market value of the related
asset or the present value of the minimum lease payments at the inception of the
lease and are amortized using the straight-line method over the shorter of the
life of the related asset or the term of the lease.
IMPAIRMENT OF LONG-LIVED ASSETS
In accordance with Statement of Financial Accounting Standards ("SFAS")
No. 121, "Accounting for the Impairment of Long-Lived Assets and Long-Lived
Assets to be Disposed Of," the Company records impairment losses on long-lived
assets used in operations when indicators of impairment are present and the
undiscounted cash flows estimated to be generated by those assets are less than
the assets' carrying amount. Through June 30, 1999, the Company had not
recognized an impairment loss on its long-lived assets.
REVENUE RECOGNITION
Revenue is derived from the licensing of computer software products and from
services consisting of maintenance and support, consulting, material testing and
training. Effective July 1, 1998, the Company adopted the guidelines of
Statement of Position (SoP) 97-2, "Software Revenue Recognition" ("SoP 97-2"),
which provides guidance on applying generally accepted accounting principles in
recognizing revenue on software transactions.
The Company recognizes revenue from sales of software licenses upon product
shipment and upon receipt of a signed purchase order or contract, provided that
the license fee is fixed and determinable, collection is probable and all other
revenue recognition criteria of SoP 97-2 are met. The Company's software
products do not require significant modification or customization. Installation
of the products is generally routine, requires insignificant effort and is not
essential to the functionality of the product. The Company recognizes revenue
from maintenance and support ratably over the contract period and from training
and other related services as the services are performed.
F-8
<PAGE>
MOLDFLOW CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
SOFTWARE DEVELOPMENT COSTS
Costs associated with the research and development of the Company's products
are expensed as incurred. Costs associated with the development of computer
software are expensed prior to establishing technological feasibility, as
defined by SFAS No. 86, "Accounting for the Costs of Computer Software to be
Sold, Leased, or Otherwise Marketed," and capitalized thereafter until
commercial release of the software products. Software development costs eligible
for capitalization have not been significant to date.
ADVERTISING COSTS
The Company expenses as incurred costs of producing advertising and
sales-related collateral materials. Other production costs associated with
direct mail programs, placement costs associated with magazine or other printed
media and all direct costs associated with trade shows and other sales related
events are expensed when the related direct mail is sent, advertising space is
used or the event is held. Advertising expense for the years ended June 30,
1997, 1998 and 1999 was $252,000, $207,000 and $741,000, respectively.
ACCOUNTING FOR STOCK-BASED COMPENSATION
The Company accounts for stock-based compensation to employees in accordance
with Accounting Principles Board Opinion ("APB") No. 25, "Accounting for Stock
Issued to Employees," and related interpretation. Accordingly, compensation
expense is recorded for options issued to employees in fixed amounts to the
extent that the fixed exercise prices are less than the fair market value of the
Company's common stock at the date of grant. The Company follows the disclosure
requirements of SFAS No. 123, "Accounting for Stock-Based Compensation"
(Note 9). All stock-based awards to non-employees are accounted for at their
fair value in accordance with SFAS No. 123.
NET INCOME (LOSS) PER COMMON SHARE--HISTORICAL
The Company computes net income (loss) per common share in accordance with
SFAS No. 128, "Earnings Per Share," ("SFAS 128") and SEC Staff Accounting
Bulletin No. 98 ("SAB 98"). Under the provisions of SFAS 128 and SAB 98, basic
earnings per common share is computed by dividing net income (loss) available to
common stockholders by the weighted-average number of common shares outstanding.
Diluted earnings per common share is computed by dividing net income (loss) by
the weighted-average number of common shares outstanding and, when dilutive, all
potential common equivalent shares outstanding including restricted stock,
options and warrants. The dilutive effect of options and warrants to purchase
common stock is determined under the treasury stock method using the average
fair value of common stock for the period (Note 10).
NET INCOME PER COMMON SHARE--PRO FORMA (UNAUDITED)
Pro forma net income per common share for the year ended June 30, 1999 and
the six months ended January 1, 2000 is calculated assuming that the automatic
conversion of all convertible preferred stock outstanding had occurred at
July 1, 1998 and July 1, 1999, respectively (Note 7). The calculation of pro
forma net income per common share for the year ended June 30, 1999 does not
include 411,000 potential shares of common stock equivalents, as their inclusion
would be antidilutive. The calculation of pro forma net income per common share
for the six months ended January 1, 2000 does not include 289,000 potential
shares of common stock equivalents, as their inclusion would be antidilutive.
F-9
<PAGE>
MOLDFLOW CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
SEGMENT AND GEOGRAPHIC INFORMATION
As required, the Company adopted SFAS No. 131, "Disclosure about Segments of
an Enterprise and Related Information," on July 1, 1998 (Note 15). SFAS No. 131
establishes standards for reporting information on operating segments in interim
and annual financial statements. SFAS No. 131 relates to disclosure only and had
no impact on the Company's consolidated financial position or results of
operations.
COMPREHENSIVE INCOME
As required, the Company adopted SFAS No. 130, "Reporting Comprehensive
Income" on July 1, 1998. Under SFAS No. 130, the Company is required to display
comprehensive income and its components as part of the Company's full set of
financial statements. The measurement and presentation of net income did not
change. Comprehensive income is comprised of net income and other comprehensive
income. Other comprehensive income includes certain changes in equity that are
excluded from net income. At June 30, 1999, accumulated other comprehensive
income was comprised solely of cumulative foreign currency translation
adjustments. The individual components of comprehensive income are reflected in
the consolidated statement of stockholders' equity for the years ended June 30,
1997, 1998 and 1999.
UNAUDITED INTERIM FINANCIAL STATEMENTS
The interim consolidated financial statements and related notes as of
January 1, 2000 and for the six month periods ended January 2, 1999 and
January 1, 2000 are unaudited. In the opinion of the Company's management, the
unaudited interim consolidated financial statements include all adjustments,
consisting only of normal recurring adjustments, necessary for a fair
presentation of the financial position and results of operations for these
interim periods. The results of operations for the six months ended January 1,
2000 are not necessarily indicative of the results of operations for the year
ended June 30, 2000 or any other future period.
UNAUDITED PRO FORMA BALANCE SHEET
Under the terms of the Company's convertible preferred stock (Note 7), all
such preferred stock will be converted automatically into 5,488,450 shares of
common stock in connection with an initial public offering of common stock.
Also, the holder of an outstanding warrant to purchase common stock (Note 6) has
committed to exercise the warrant in connection with the initial public offering
of common stock; the warrant is exercisable for 20,833 shares of common stock at
$7.20 per share. The unaudited pro forma balance sheet reflects the conversion
of the preferred stock and the exercise of the warrant as if the conversion and
exercise had occurred on January 1, 2000.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
F-10
<PAGE>
MOLDFLOW CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
RECENT ACCOUNTING PRONOUNCEMENTS
In December 1998, the Accounting Standards Executive Committee of the
American Institute of Certified Public Accountants issued Statement of Position
No. 98-9, "Modification of SOP No. 97-2, Software Revenue Recognition, with
Respect to Certain Transactions" ("SOP 98-9"). SOP 98-9 amends SOP 97-2 to
require recognition of revenue using the "residual method" in circumstances
outlined in SOP 98-9. Under the residual method, revenue is recognized as
follows: (1) the total fair value of undelivered elements, as indicated by
vendor specific objective evidence, is deferred and subsequently recognized in
accordance with the relevant sections of SOP 97-2 and (2) the difference between
the total arrangement fee and the amount deferred for the undelivered elements
is recognized as revenue related to the delivered elements. SOP 98-9 is
effective for transactions entered in fiscal years beginning after March 15,
1999 (fiscal 2000 for the Company). Also, the provisions of SOP 97-2 that were
deferred by SOP 98-4 will continue to be deferred until the date SOP 98-9
becomes effective. The Company does not expect that the adoption of SOP 98-9
will have a significant impact on the Company's results of operations or
financial position.
In June 1998, the Financial Accounting Standard Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133").
SFAS 133 establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts (collectively referred to as "derivatives"), and for hedging
activities. SFAS 133, as amended by SFAS 137, is effective for all fiscal
quarters of all years beginning after June 15, 2000, with earlier application
encouraged. The Company does not currently use derivative instruments or engage
in hedging activities.
3. FIXED ASSETS
Fixed assets consist of the following (dollars in thousands):
<TABLE>
<CAPTION>
ESTIMATED
USEFUL JUNE 30,
LIFE -------------------
(YEARS) 1998 1999
--------- -------- --------
<S> <C> <C> <C>
Land........................................... -- $ 522 $ 562
Buildings...................................... 30 1,275 1,392
Equipment...................................... 5-7 1,724 2,149
Computer equipment............................. 3-5 1,276 1,491
Furniture and fixtures......................... 7-10 240 493
Vehicles....................................... 3-7 20 --
Computers and equipment under capital leases... 3-7 657 708
Leasehold improvements......................... -- 20
------- -------
5,714 6,815
Less--accumulated depreciation and
amortization................................. (2,736) (3,705)
------- -------
$ 2,978 $ 3,110
======= =======
</TABLE>
Depreciation expense, including amortization of assets under capital leases,
was $768,000, $726,000 and $881,000 for the years ended June 30, 1997, 1998 and
1999, respectively. Accumulated amortization for assets held under capital
leases was $342,000, $425,000 and $596,000 at June 30, 1997, 1998 and 1999,
respectively.
F-11
<PAGE>
MOLDFLOW CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
4. ACCRUED EXPENSES
Accrued expenses consist of the following (in thousands):
<TABLE>
<CAPTION>
JUNE 30,
-------------------
1998 1999
-------- --------
<S> <C> <C>
Employee wages and commissions............................. $ 411 $ 565
Employee leave costs....................................... 685 604
Employee retirement costs.................................. 389 344
Professional fees.......................................... 189 591
Other...................................................... 1,865 731
------ ------
$3,539 $2,835
====== ======
</TABLE>
5. NOTES PAYABLE TO STOCKHOLDERS
In January 1997, certain subsidiaries of the Company entered into loan
agreements with stockholders of the Company which provided the Company with a
maximum borrowing amount of $1,073,000. At June 30, 1998, amounts outstanding
under the notes were $890,000 with accrued interest of $107,000. Interest
expense incurred by the Company under these agreements in the year ended
June 30, 1998 was $85,000.
On July 6, 1998, the Company converted the outstanding principal balance of
the notes of $890,000 into 698,609 shares of the Company's series C-3
convertible preferred stock. Accrued interest of $107,000 was paid in cash upon
conversion. As a result of this early extinguishment of debt the Company
recognized an extraordinary loss of $130,000, net of taxes ($0.02 per diluted
common share).
6. BANK NOTES PAYABLE
LINES OF CREDIT
In April 1998, the Company entered into an agreement with a bank for a
revolving credit facility totaling $3,750,000. In November 1998, the overall
facility was reduced to $3,250,000. Borrowings under the facility are secured by
certain assets of the Company and its Australian subsidiaries, and by a standby
letter of credit issued by an Australian bank. Available borrowings under the
line are computed based upon a percentage of domestic and foreign accounts
receivable and the value of the standby letter of credit in the amount of
$754,000. The line bears interest at the rate of prime plus 1.25% (9.0% at
June 30, 1999) and prime plus 1.50% (9.25% at June 30, 1999) on the domestic and
foreign lines, respectively, and was subject to a commitment fee of one half of
one percent. All outstanding principal plus accrued interest was due in
October 1999.
At June 30, 1998 and 1999, borrowings under the facility were $1,475,000 and
$767,000, respectively. The agreement contains covenants which, among other
matters, restrict or limit the ability of the Company to pay dividends, incur
indebtedness, merge, acquire or sell assets. The Company must also maintain
certain financial ratios regarding liquidity, profitability and net worth, among
other restrictions. At June 30, 1999, the Company was in compliance with these
covenants.
F-12
<PAGE>
MOLDFLOW CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
6. BANK NOTES PAYABLE (CONTINUED)
In connection with the facility, the Company issued warrants to purchase up
to 20,833 shares of the Company's common stock. These warrants are immediately
exercisable at $7.20 per share and have an expiration date of April 2005. The
value ascribed to these warrants was determined by management using the
Black-Scholes pricing model and was not significant.
UNAUDITED--On October 22, 1999, the term of the facility was extended to
December 31, 2000. All other significant provisions of the facility remained
unchanged. In addition, the holder of the warrant has committed to exercise the
warrant in connection with the initial public offering of common stock.
EQUIPMENT LOANS
At June 30, 1998 and 1999, the Company had $62,000 and $65,000,
respectively, outstanding under various equipment term loans. The loans bear
interest at variable rates and require monthly payments of principal and
interest through 2000. At June 30, 1998 and 1999, the long-term portion of the
loans amounted to $12,000 and $0, respectively, and are included in other
long-term liabilities.
SECURED LOAN
At June 30, 1997, the Company had $1,217,000 outstanding under a secured
line of credit which was collateralized by real estate and substantially all
other assets of the Company. In April 1998, in connection with the revolving
credit facility described above, the note was repaid in full.
7. CONVERTIBLE PREFERRED STOCK
On June 30, 1997, the Board of Directors of MIPL voted to enter into an
agreement with its stockholders and with the Company, whereby MIPL would
reacquire all of its outstanding and issued shares and issue an equal number of
common and convertible preferred shares to the Company. Simultaneously under the
arrangement, the former stockholders of MIPL would become stockholders of the
Company. Upon execution of the share exchange on August 5, 1997, the Company
effectively reorganized and MIPL became a wholly owned subsidiary of the
Company. The exchange resulted in the issuance by the Company of common stock,
series A convertible preferred stock, and series B convertible preferred stock.
Prior to the exchange, the MIPL preferred stockholders' redemption rights
were removed. As consideration for the removal of these redemption rights, these
stockholders received 29,167 common shares of MIPL which were valued at $77,000.
On March 9, 1998, the Company redesignated the previously issued common,
series A convertible preferred and series B convertible preferred into shares of
series C-1, C-2 and C-3 convertible preferred stock, respectively. In addition,
on that date, the Company increased the number of authorized common shares from
4,166,667 to 8,333,333 and increased the number of all classes of authorized
convertible preferred shares from 5,732,032 to 8,254,386.
On July 6, 1998, the Company converted the outstanding principal balance of
$890,000 in notes payable to stockholders of the Company into 698,609 shares of
newly designated series C-3 convertible preferred stock. As a result of this
early extinguishment of debt, the Company recognized an extraordinary loss of
$130,000, net of taxes.
F-13
<PAGE>
MOLDFLOW CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
7. CONVERTIBLE PREFERRED STOCK (CONTINUED)
Convertible preferred stock consists of the following (amounts in thousands,
except share data):
<TABLE>
<CAPTION>
JUNE 30,
-------------------
1998 1999
-------- --------
<S> <C> <C>
Series C-1 convertible preferred stock, $0.01 par value;
4,918,616 shares authorized, issued and outstanding at
June 30, 1998 and 1999 (liquidation preference of
$7,181 at June 30, 1999)............................... $ 1,151 $ 1,151
Series C-2 convertible preferred stock, $0.01 par value;
1,855,688 shares authorized, issued and outstanding at
June 30, 1998 and 1999 (liquidation preference of
$10,058 at June 30, 1999).............................. 8,382 8,382
Series C-3 convertible preferred stock, $0.01 par value;
1,480,082 shares authorized; 666,666 and 1,365,275
shares issued and outstanding at June 30, 1998 and
1999, respectively (liquidation preference of $1,993 at
June 30, 1999)......................................... 1,943 2,963
------- -------
$11,476 $12,496
======= =======
</TABLE>
The series C-1, C-2 and C-3 convertible preferred stock have the following
characteristics:
VOTING
Each holder of the series C-1, C-2 and C-3 convertible preferred stock is
entitled to the number of votes equal to the number of whole shares of common
stock into which such holders' shares are convertible. The holders of the
series C-1, C-2 and C-3 convertible preferred stock shall vote together with the
holders of common stock as a single class.
DIVIDENDS
The holders of the series C-1, C-2 and C-3 convertible preferred stock are
entitled to dividends when and if declared by the Board of Directors subject to
any preferential dividend rights of any other then outstanding series of
preferred stock. In addition, the holders of series C-1, C-2 and C-3 convertible
preferred stock are entitled to receive a payment equal to any dividend declared
or paid by the Company in respect to common stock for each share of common stock
into which the convertible preferred stock is then convertible.
LIQUIDATION PREFERENCE
In the event of any liquidation, dissolution, or winding up of the affairs
of the Company, the holders of the series C-1, C-2 and C-3 convertible preferred
stock shall rank equally among themselves and be entitled to be paid out of the
assets of the Company available for distribution prior and in preference to the
holders of common stock.
The holders of the series C-1, C-2 and C-3 convertible preferred stock are
entitled to receive upon liquidation an amount equal to $1.46 per share, $5.42
per share and $1.46 per share, respectively, plus all accrued and unpaid
dividends. After the payment of all preferential amounts, the series C-1, C-2
and C-3 preferred stockholders and any other class ranking equal shall be
F-14
<PAGE>
MOLDFLOW CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
7. CONVERTIBLE PREFERRED STOCK (CONTINUED)
entitled to receive, on a pro-rata basis with the holders of the common stock,
the remaining funds and assets of the Company available for distribution to its
stockholders.
CONVERSION
Each share of the series C-1, C-2 and C-3 preferred stock is convertible, at
the option of the holder, into common stock of the Company based on a formula
which currently would result in a 1-for-0.41667 exchange for the series C-1 and
C-3 holders and a 1-for-1.54668 exchange for the series C-2 holders. All shares
of series C-1, C-2 and C-3 preferred stock will automatically convert into
common stock in connection with an initial public offering of common stock.
8. COMMON STOCK
Each share of common stock entitles the holder to one vote on all matters
submitted to a vote of the Company's stockholders. Common stockholders are
entitled to dividends when and if declared by the Board of Directors, subject to
the preferential rights of the series C-1, C-2 and C-3 preferred stockholders.
At June 30, 1999, the Company had 6,202,178 shares of its common stock
reserved for issuance upon the conversion of the series C-1, C-2 and C-3
preferred stock, warrants and instruments issued under the Company's Equity
Incentive Plan.
On July 1, 1998, the Company issued 551,287 shares of its common stock to
certain officers and senior managers of the Company for a cash purchase price of
$198,000. In connection with this issuance, the employees entered into Stock
Restriction Agreements that contain restrictions on the sale of the shares by
the employees and loan agreements evidenced by promissory notes bearing interest
at 5.77% and maturing on June 30, 2003. The shares purchased by the employees
under the Stock Restriction Agreements vest on varying schedules through fiscal
year 2003.
9. STOCK OPTION PLAN
In August 1997, the Company adopted the 1997 Equity Incentive Plan (the
"Plan") which provides for the grant of incentive stock options, non-qualified
stock options, stock awards and stock purchase rights for the purchase of up to
931,303 shares of the Company's common stock by officers, employees, consultants
and directors of the Company. In April 1999, the number of shares available
under the Plan was increased to 1,537,158 shares. The Board of Directors is
responsible for administration of the Plan. The Board determines the term of
each option, the option exercise price, the number of shares for which each
option is granted and the rate at which each option is exercisable. Incentive
stock options may be granted to any officer or employee at an exercise price per
share of not less than the fair value per common share on the date of the grant
(not less than 110% of fair value in the case of holders of more than 10% of the
Company's voting stock) and with a term not to exceed ten years from the date of
the grant (five years for incentive stock options granted to holders of more
than 10% of the Company's voting stock). Non-qualified stock options may be
granted to any officer, employee, consultant or director at an exercise price
per share of not less than the book value per share.
In January 1999 an amendment was made to certain employee stock options
which resulted in a determinable measurement date. Deferred compensation of
$77,000 was recorded, in accordance with APB No. 25, and will be amortized over
the related vesting period. Related compensation expense of $10,000 was recorded
during the year ended June 30, 1999.
F-15
<PAGE>
MOLDFLOW CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
9. STOCK OPTION PLAN (CONTINUED)
Except for the options noted above, no compensation cost has been recognized
for employee stock-based compensation for the years ended June 30, 1997, 1998
and 1999. Had compensation cost been determined based on the fair value at the
grant dates for awards in 1997, 1998 and 1999 consistent with the provisions of
SFAS No. 123, the Company's net income (loss) available to common stockholders
would have been the pro forma amounts indicated below. Because options vest over
several years and additional option grants are expected to be made in future
years, the pro forma results are not representative of the pro forma results for
future years.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
------------------------------
1997 1998 1999
-------- -------- --------
<S> <C> <C> <C>
Net income (loss) available to common stockholders:
As reported....................................... $(5,011) $ 109 $ 351
Pro forma......................................... (5,011) (58) 332
Net income (loss) per common share:
Basic--as reported................................ $ -- $ -- $1.33
Pro forma basic................................... -- -- 1.25
Diluted--as reported.............................. -- 0.04 0.06
Pro forma diluted................................. -- -- 0.05
</TABLE>
The fair value of each option grant was estimated on the date of grant using
the Black-Scholes option-pricing model with the following assumptions for
grants: no dividend yield; no volatility; risk-free interest rates of 5.8%, 5.8%
and 4.6% for 1997, 1998 and 1999, respectively; and expected option life of
8 years.
A summary of the status of the Company's stock options as of June 30, 1998
and 1999 and MIPL's stock options as of June 30, 1997, and changes during the
years then ended, is presented below:
<TABLE>
<CAPTION>
1997 1998 1999
-------------------- ---------------------- ---------------------
WEIGHTED- WEIGHTED- WEIGHTED-
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
-------- --------- ---------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year... 62,500 $7.80 -- $ -- 795,624 $2.45
Granted............................ -- -- 1,267,277 1.15 375,938 4.44
Exercised.......................... -- -- -- -- (553,177) 0.36
Canceled........................... (62,500) 7.80 (471,653) 2.45 (52,280) 0.36
-------- ---------- ---------
Outstanding at end of year......... -- -- 795,624 2.45 566,105 3.07
======== ========== =========
Options exercisable at end of
year............................. -- 254,392 68,382
Weighted-average fair value of
options granted during the
year............................. $ -- $ 0.41 $ 1.37
Options available for future
grant............................ -- 135,679 417,877
</TABLE>
In conjunction with the redesignation of the Company's common and preferred
stock in March 1998 (Note 7), 390,842 options with an exercise price of $2.64
were exchanged for 697,910 options with an exercise price of $0.36. The exercise
price at the time of the exchange was considered the fair market value of the
common stock of the Company subsequent to the redesignation. All other terms of
the new options remained consistent with the terms of the exchanged options.
F-16
<PAGE>
MOLDFLOW CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
9. STOCK OPTION PLAN (CONTINUED)
The following table summarizes information about stock options outstanding
at June 30, 1999:
<TABLE>
<CAPTION>
WEIGHTED-AVERAGE
REMAINING
CONTRACTUAL LIFE SHARES
EXERCISE PRICE SHARES (YEARS) EXERCISABLE
- -------------- -------- ---------------- -----------
<S> <C> <C> <C>
$0.36...................................... 196,751 6.2 68,382
$0.72-1.20................................. 101,958 7.1 --
$4.80-6.00................................. 267,396 7.8 --
------- ------
$0.36-6.00................................. 566,105 7.1 68,382
======= ======
</TABLE>
10. NET INCOME (LOSS) PER COMMON SHARE
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
----------------------------------
1997 1998 1999
-------- ---------- ----------
<S> <C> <C> <C>
Net income (loss)......................... $(4,270) $ 189 $ 351
Accretion on preferred stock.............. 741 80 --
------- ---------- ----------
Net income (loss) available to common
stockholders............................ $(5,011) $ 109 $ 351
======= ========== ==========
Weighted average shares used in computing
net income (loss) per common share--
basic................................... -- -- 264,731
------- ---------- ----------
Effect of dilutive securities:
Restricted stock...................... -- -- 286,741
Employee stock options................ -- 34,207 162,264
Convertible preferred stock........... -- 5,193,717 5,452,064
------- ---------- ----------
Dilutive potential common shares........ -- 5,227,924 5,901,069
------- ---------- ----------
Weighted average shares used in computing
net income (loss) per common share--
diluted................................. -- 5,227,924 6,165,800
======= ========== ==========
Net income (loss) per common
share--basic............................ $ -- $ -- $ 1.33
Net income (loss) per common share--
diluted................................. $ -- $ 0.04 $ 0.06
</TABLE>
Under the provisions of SFAS 128, the computation of basic and diluted net
income (loss) per common share has been adjusted retroactively for all periods
presented to reflect the redesignation of the Company's common and preferred
stock in March 1998 (Note 7). As a result of this treatment of the
redesignation, the Company had no common stock outstanding prior to June 30,
1998 for purposes of computing net income (loss) per common share. Accordingly,
basic net income (loss) per common share was zero for the years ended June 30,
1997 and 1998.
Options and warrants to purchase 680,000 and 432,000 shares of common stock
were outstanding for the years ended June 30, 1998 and 1999, respectively, but
were not included in the calculation of diluted net income per common share, as
their inclusion would be antidilutive.
F-17
<PAGE>
MOLDFLOW CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
11. INCOME TAXES
The income (loss) before income taxes consists of the following (in
thousands):
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
------------------------------
1997 1998 1999
-------- -------- --------
<S> <C> <C> <C>
Domestic income (loss)............................. $ 1,030 $(57) $(3,335)
Foreign income (loss).............................. (4,929) 409 3,992
------- ---- -------
Income (loss) before taxes and extraordinary
loss........................................... (3,899) 352 657
Extraordinary loss from early extinguishment of
debt............................................. -- -- 130
------- ---- -------
Income (loss) before taxes....................... $(3,899) $352 $ 527
======= ==== =======
</TABLE>
The provision for income taxes consists of the following (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
------------------------------
1997 1998 1999
-------- -------- --------
<S> <C> <C> <C>
Current:
Federal.......................................... $ 14 $ 10 $ 5
State............................................ 41 47 18
Foreign.......................................... 316 184 153
------- ---- -------
Total current.................................. 371 241 176
------- ---- -------
Deferred:
Federal.......................................... -- (78) --
State............................................ -- -- --
Foreign.......................................... -- -- --
------- ---- -------
Total deferred................................. -- (78) --
------- ---- -------
$ 371 $163 $ 176
======= ==== =======
</TABLE>
The reconciliation of the provision for income taxes computed at the U.S.
federal statutory tax rate to the actual provision is as follows (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
------------------------------
1997 1998 1999
-------- -------- --------
<S> <C> <C> <C>
Statutory federal rate of 34%........................ $(1,326) $120 $179
Foreign withholding taxes............................ 323 36 79
State income taxes, net of federal benefit........... 29 (51) 12
Permanent differences................................ 516 11 (94)
Change in valuation allowance........................ 881 27 (10)
Foreign tax rate differential........................ 5 35 20
Other................................................ (57) (15) (10)
------- ---- ----
$ 371 $163 $176
======= ==== ====
</TABLE>
F-18
<PAGE>
MOLDFLOW CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
11. INCOME TAXES (CONTINUED)
The deferred tax assets and liabilities consist of the following (in
thousands):
<TABLE>
<CAPTION>
JUNE 30,
-------------------
1998 1999
-------- --------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards....................... $ 4,071 $ 4,516
Foreign tax credits.................................... 311 326
Accrued expenses not deductible for tax purposes....... 239 133
Revenue deferred for financial purposes................ 1,628 1,614
Other.................................................. 327 274
------- -------
Gross deferred tax assets............................ 6,576 6,863
Deferred tax asset valuation allowance................. (6,293) (6,580)
------- -------
Total deferred tax assets............................ 283 283
Deferred tax liabilities................................. (205) (205)
------- -------
Net deferred tax assets.............................. $ 78 $ 78
======= =======
</TABLE>
At June 30, 1999, the Company had available federal, state and foreign net
operating loss carryforwards of approximately $4,505,000, $3,167,000 and
$7,844,000, respectively. These carryforwards expire at various times through
2014 if not utilized. Under the provisions of the U.S. Internal Revenue Code,
certain substantial changes in the Company's ownership may limit the amount of
federal net operating loss carryforwards and tax credit carryforwards which
could be utilized annually to offset federal future taxable income and taxes
payable.
Under generally accepted accounting principles, the benefit associated with
future deductible differences is recognized if it is more likely than not that
the benefit will be realized. Management believes that, based on the Company's
historical results of operations, it is more likely than not that a substantial
amount of the Company's deferred tax assets will not be realized. Accordingly,
the Company has recorded a valuation allowance of $6,293,000 and $6,580,000 at
June 30, 1998 and 1999, respectively. Management believes that the net deferred
tax asset represents management's best estimate, based upon the weight of
available evidence, of the deferred tax asset that will be realized. If such
evidence were to change, based upon near-term operating results and longer-term
projections, the amount of the valuation allowance recorded against the gross
deferred tax asset may be decreased or increased.
12. BENEFIT PLANS
401(K) SAVINGS PLAN
The Company has established a retirement savings plan under Section 401(k)
of the U.S. Internal Revenue Code (the "401(k) Plan"). The 401(k) Plan covers
substantially all U.S. based employees of the Company who meet minimum age and
service requirements, and allows Participants to defer a portion of their annual
compensation on a pre-tax basis. Matching contributions to the 401(k) Plan may
be made at the discretion of the Company. The Company contributed $87,000,
$132,000 and $175,000 to the 401(k) Plan in the years ended June 30, 1997, 1998
and 1999, respectively.
F-19
<PAGE>
MOLDFLOW CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
12. BENEFIT PLANS (CONTINUED)
SUPERANNUATION PLAN
Employees of the Company's Australian subsidiary are covered by a defined
contribution Super-annuation Plan. The Superannuation Plan covers substantially
all Australian employees and, under Australian law, the Company is required to
contribute 7% of taxable compensation to this plan. The Company contributed
$226,000, $157,000 and $201,000 to the Superannuation Plan in the years ended
June 30, 1997, 1998 and 1999, respectively.
13. COMMITMENTS AND CONTINGENCIES
The Company leases certain of its office space and certain office equipment
under noncancelable operating leases which expire at various dates through 2009.
The Company also leases computers and other equipment under capital leases that
expire through 2001. Future minimum lease commitments at June 30, 1999 are as
follows:
<TABLE>
<CAPTION>
OPERATING CAPITAL
YEAR ENDING JUNE 30, LEASES LEASES
- -------------------- ---------- ---------
<S> <C> <C>
2000................................................. $ 958,000 $206,000
2001................................................. 817,000 11,000
2002................................................. 443,000 --
2003................................................. 190,000 --
2004................................................. 177,000 --
Thereafter........................................... 729,000 --
---------- --------
$3,314,000 217,000
==========
Less: portion representing interest 15,000
--------
$202,000
========
</TABLE>
Total rent expense under these operating leases was $297,000, $515,000 and
$664,000 for the years ended June 30, 1997, 1998 and 1999, respectively.
LITIGATION
On February 17, 1999, the Company filed suit against a former employee and
the individual's current employer, a competitor of the Company, seeking
immediate and permanent injunctive relief in connection with the theft and
misappropriation of the Company's proprietary trade secrets. Specifically, the
suit alleges, among other things, (i) misappropriation of trade secrets,
proprietary information, unfair competition and civil conspiracy, (ii) breach of
contract, implied covenant of good faith and fiduciary duty, and (iii) fraud
against the individual in his actions to breach his fiduciary duties. The
complaint seeks permanent injunction against the defendants, actual
consequential and punitive damages, and recovery of all legal costs.
Counterclaims, and amendments thereto, have been filed against the Company,
alleging that the Company (i) breached certain federal antitrust laws and
(ii) committed defamation and trade libel. The Company has moved to dismiss
these amended counterclaims. While the outcome of these matters cannot be
predicted with certainty, the Company believes that these counterclaims are
without merit.
F-20
<PAGE>
MOLDFLOW CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
13. COMMITMENTS AND CONTINGENCIES (CONTINUED)
During fiscal 1999, the Company incurred legal expenses of $620,000 during
the prosecution of the above referenced trade secret litigation. These expenses
have been included in litigation expenses in the consolidated statement of
operations. Management anticipates that further material expenditures will be
incurred at least through fiscal 2000 in pursuit of the Company's claims and in
defending against the counterclaims.
UNAUDITED--In connection with the trade secret litigation described above,
during the six months ended January 1, 2000, the Company incurred legal expenses
of $530,000 reflecting current period legal costs incurred to pursue its claims
regarding theft of trade secrets and to defend against the other parties'
counterclaims. The Company anticipates that it will continue to incur legal
costs to pursue its claims and to defend against the counterclaims. The Company
estimates that its possible costs to defend against the counterclaims could
range from $0 to $1,600,000.
14. RESEARCH AND DEVELOPMENT ARRANGEMENT
During 1994, the Company entered into a research and development arrangement
(the "Arrangement") with an unrelated third party. Under the terms of the
Arrangement, the Company received payments for (i) a license for certain of the
Company's technology and (ii) future research activities relating to the
licensed technology as agreed to by the parties. The Company accounted for the
Arrangement under SFAS No. 68, "Research and Development Arrangements," and,
accordingly, the amount of the Company's potential future obligation to provide
security and to subscribe for shares in the third party was recorded as unearned
revenue on the consolidated balance sheet. The part of the funds originally paid
to the Company that might have been required to satisfy the Company's potential
security and subscription obligation was held in a restricted cash account and
was classified as a long-term asset on the consolidated balance sheet. The
Company's potential security and subscription obligation was limited to the
amount of restricted cash on deposit. At June 30, 1998, the restricted cash and
potential security and subscription obligation amounted to $3,982,000. The
restricted cash was held in an interest bearing account in an Australian bank.
The interest earned on this account was used to satisfy the Company's
requirement to make minimum royalty payments to the third party, who had a right
of set-off against the accumulated interest. Interest income and license fees of
$270,000, $235,000 and $155,000 for the years ended June 30, 1997, 1998 and
1999, respectively, and have been offset against each other in the consolidated
statement of operations.
In April 1999, the Company and the third party concluded that the project
was technically infeasible. Subsequently, under the terms of the Arrangement,
the Company subscribed the funds held as restricted cash for shares in the third
party, which used those funds to repay its borrowing. Involvement of the third
party's original shareholders in the Arrangement was then terminated.
15. SEGMENT AND GEOGRAPHIC INFORMATION
The Company is engaged in one industry segment: the development, marketing
and support of software products for the plastic design and manufacturing
industry.
The Company licenses its products to customers throughout the world. Sales
and marketing operations outside the United States are conducted principally
through the Company's foreign sales subsidiaries in Europe and Asia.
F-21
<PAGE>
MOLDFLOW CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
15. SEGMENT AND GEOGRAPHIC INFORMATION (CONTINUED)
The Company's principal software development facility is located in
Australia and additional development facilities are located in the United States
and the United Kingdom.
Geographic information regarding the Company's operations was as follows (in
thousands):
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30, 1997
---------------------------------------------------
ASIA/AUSTRALIA USA EUROPE CONSOLIDATED
-------------- -------- -------- ------------
<S> <C> <C> <C> <C>
Revenue from unaffiliated
customers:
Software licenses............... $2,767 $1,810 $2,166 $ 6,743
Services........................ 2,954 2,392 2,734 8,080
------ ------ ------ -------
Total......................... $5,721 $4,202 $4,900 $14,823
====== ====== ====== =======
Fixed assets, net................. $3,119 $ 234 $ 206 $ 3,559
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30, 1998
---------------------------------------------------
ASIA/AUSTRALIA USA EUROPE CONSOLIDATED
-------------- -------- -------- ------------
<S> <C> <C> <C> <C>
Revenue from unaffiliated
customers:
Software licenses............... $2,945 $2,443 $3,126 $ 8,514
Services........................ 2,067 3,078 2,730 7,875
------ ------ ------ -------
Total......................... $5,012 $5,521 $5,856 $16,389
====== ====== ====== =======
Fixed assets, net................. $2,325 $ 396 $ 257 $ 2,978
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30, 1999
---------------------------------------------------
ASIA/AUSTRALIA USA EUROPE CONSOLIDATED
-------------- -------- -------- ------------
<S> <C> <C> <C> <C>
Revenue from unaffiliated
customers:
Software licenses............... $3,156 $3,904 $5,178 $12,238
Services........................ 1,856 3,070 3,057 7,983
------ ------ ------ -------
Total......................... $5,012 $6,974 $8,235 $20,221
====== ====== ====== =======
Fixed assets, net................. $2,363 $ 408 $ 339 $ 3,110
</TABLE>
16. SUBSEQUENT EVENTS
On January 20, 2000, the Board of Directors approved a 2.4-to-1 reverse
stock split of the Company's common stock to be effective prior to the effective
date of the registration statement related to the Company's planned initial
public offering of common stock. All share and per share information in the
accompanying consolidated financial statements and notes has been retroactively
restated to reflect the effect of this reverse stock split.
In addition, the Board of Directors approved an amendment to the Company's
certificate of incorporation to take effect prior to the effective date of the
registration statement, increasing the authorized capital stock to 60,000,000
shares of common stock and 5,000,000 shares of preferred stock, each with a par
value of $0.01 per share.
F-22
<PAGE>
MOLDFLOW CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
16. SUBSEQUENT EVENTS (CONTINUED)
Also on January 20, 2000, the Board of Directors approved the Moldflow
Corporation 2000 Stock Option and Incentive Plan with an authorization of up to
2,000,000 shares of common stock and the Moldflow Corporation Employee Stock
Purchase Plan with an authorization of up to 500,000 shares of common stock.
F-23
<PAGE>
[Inside Back Cover]
The inside back cover page has the words "Global Concurrent Product
Development" at the top and below those words the sentence "Moldflow products
enable users to speed products to market, decrease costs and reduce errors."
Lower on the page are the MPA, MPI and MPX logos with the following
respective words beside them: (i) "Moldflow Plastics Advisers permits design
engineers to create their initial product designs knowing that these designs
will be manufacturable and meet the design requirements," (ii) "Moldflow
Plastics Insight allows a specialist to perform comprehensive product reviews
to solve complex part and mold design problems and optimize these designs,"
and (iii) "Moldflow Plastics Xpert removes trial-and-error approaches to
pre-production mold set-up in the injection molding machine and monitors and
controls subsequent production."
The following paragraph is below next to a chart: "Our products work
together to optimize the process of designing and producing injection molded
plastic parts. Moldflow's software technology delivers solutions that provide
valuable information and advice at the product design, mold design and part
production phases of the process -- and this information can be shared with
colleagues down the hall or around the world." The chart has four columns
labeled "Conceptual Design," "Part Design," "Mold Design" and "Part
Production." Across the rows are arrows labeled "Advisers," "Insight" and
"Xpert." The Advisers arrow runs from conceptual design through mold design,
the Insight arrow runs from part design through part production. The Xpert
arrow crosses part production only. At the bottom of the page is Moldflow's
logo and Moldflow's website address "www.moldflow.com."
<PAGE>
_______ Shares
[LOGO]
Common Stock
---------------------
PROSPECTUS
---------------------
Adams, Harkness & Hill, Inc.
A.G. Edwards & Sons, Inc.
-----------------
, 2000
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated expenses payable by us in
connection with the offering (excluding underwriting discounts and commissions):
<TABLE>
<CAPTION>
NATURE OF EXPENSE AMOUNT
- ----------------- ----------
<S> <C>
SEC Registration Fee........................................ $ 12,144
NASD Filing Fee............................................. 5,100
Nasdaq National Market Listing Fee.......................... *
Accounting Fees and Expenses................................ *
Legal Fees and Expenses..................................... *
Printing Expenses........................................... *
Blue Sky Qualification Fees and Expenses.................... 15,000
Transfer Agent's Fee........................................ *
Miscellaneous............................................... *
----------
TOTAL.....................................................
</TABLE>
The amounts set forth above, except for the Securities and Exchange
Commission, National Association of Securities Dealers, Inc. and Nasdaq National
Market fees, are in each case estimated.
- ------------------------
* To be completed by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
In accordance with Section 145 of the Delaware General Corporation Law,
Article VII of our certificate of incorporation provides that no director of
Moldflow shall be personally liable to Moldflow or its stockholders for monetary
damages for breach of fiduciary duty as a director, except for liability
(1) for any breach of the director's duty of loyalty to Moldflow or its
stockholders, (2) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (3) in respect of unlawful
dividend payments or stock redemptions or repurchases, or (4) for any
transaction from which the director derived an improper personal benefit. In
addition, our first amended and restated certificate of incorporation provides
that if the Delaware General Corporation Law is amended to authorize the further
elimination or limitation of the liability of directors, then the liability of a
director of the corporation shall be eliminated or limited to the fullest extent
permitted by the Delaware General Corporation Law, as so amended.
Article V of our by-laws provides for indemnification by Moldflow of its
officers and certain non-officer employees under certain circumstances against
expenses, including attorneys' fees, judgments, fines and amounts paid in
settlement, reasonably incurred in connection with the defense or settlement of
any threatened, pending or completed legal proceeding in which any such person
is involved by reason of the fact that such person is or was an officer or
employee of the registrant if such person acted in good faith and in a manner he
or she reasonably believed to be in or not opposed to the best interests of
Moldflow, and, with respect to criminal actions or proceedings, if such person
had no reasonable cause to believe his or her conduct was unlawful.
Prior to the offering, we will have entered into indemnification agreements
with each of our directors. The form of indemnification agreement provides that
we will indemnify our directors for expenses incurred because of their status as
a director to the fullest extent permitted by Delaware law, our certificate of
incorporation and our by-laws.
II-1
<PAGE>
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
Set forth in chronological order below is information regarding the number
of shares of capital stock issued by Moldflow since our formation. Also included
is the consideration, if any, received by Moldflow for such shares. There was no
public offering in any such transaction and we believe that each transaction was
exempt from the registration requirements of the Securities Act of 1933, as
amended, by reason of Section 4(2) thereof, based on the private nature of the
transactions and the financial sophistication of the purchasers, all of whom had
access to complete information concerning Moldflow and acquired the securities
for investment and not with a view to the distribution thereof. In addition, we
believe that the transactions described below with respect to issuances and
option grants to our employees and consultants were exempt from the registration
requirements of said Act by reason of Section 4(2) of said Act or Rule 701
promulgated thereunder.
(a) Issuance of Capital Stock
(i) In August 1997, in connection with its reorganization Moldflow
issued 4,918,616 shares of its common stock, 1,855,688 shares of
its series A convertible preferred stock and 666,666 shares of its
series B convertible preferred stock to the shareholders of
Moldflow International Pty. Ltd., an Australian corporation, in
exchange for all of the outstanding capital stock of Moldflow
International.
(ii) In March 1998, Moldflow's shares of common stock, series A
convertible preferred stock and series B convertible preferred
stock were redesignated as series C-1 convertible preferred stock,
series C-2 convertible preferred stock and series C-3 convertible
preferred stock.
(iii) In April 1998, Moldflow granted warrants to purchase 20,833 shares
of its common stock to Silicon Valley Bank at an exercise price of
$7.20 per share.
(iv) In July 1998, Moldflow sold 551,285 shares of its common stock for
an aggregate purchase price of $198,463.35 which was paid by
promissory notes. These shares are subject to stock restriction
agreements.
(v) In July 1998, Moldflow issued 698,609 shares of its series C-3
convertible preferred stock in connection with the conversion into
equity of the outstanding principal balance of approximately
$890,000 under stockholder loan agreements.
(vi) In April 1999, Moldflow issued 327 shares of its common stock upon
the exercise of previously granted stock options at an aggregate
exercise price of $117.75.
(vii) In June 1999, Moldflow issued 1,562 shares of its common stock
upon the exercise of previously granted stock options at an
aggregate exercise price of $562.50.
(viii) In July 1999, Moldflow issued 74 shares of its common stock upon
the exercise of previously granted stock options at an aggregate
exercise price of $26.85.
(ix) In August 1999, Moldflow issued 2,715 shares of its common stock
upon the exercise of previously granted stock options at an
aggregate exercise price of $1,240.65.
(x) In September 1999, Moldflow issued 327 shares of its common stock
upon the exercise of previously granted stock options at an
aggregate exercise price of $136.50.
(xi) In October 1999, Moldflow issued 2,900 shares of its common stock
upon the exercise of previously granted stock options at an
aggregate exercise price of $1,607.10.
(xii) In November 1999, Moldflow issued 52 shares of its common stock
upon the exercise of previously granted stock options at an
aggregate exercise price of $37.50.
(xiii) In December 1999, Moldflow issued 2,117 shares of its common stock
upon the exercise of previously granted stock options at an
aggregate exercise price of $1,006.80.
II-2
<PAGE>
(xiv) In January 2000, Moldflow issued 3,140 shares of its common stock
upon the exercise of previously granted stock options at an
aggregate exercise price of $1,384.50.
(b) Grants of Stock Options
(i) As of January 20, 2000, options to purchase 605,071 shares of common
stock were outstanding under Moldflow's 1997 Equity Incentive Plan
of which options to purchase 120,350 shares are exercisable within
60 days of such date. All such options were granted between August
1997 and January 20, 2000 to officers, directors, employees and
consultants of Moldflow.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) EXHIBITS. The following is a complete list of exhibits filed or
incorporated by reference as part of this Registration Statement.
<TABLE>
<C> <S>
*1.1 Form of Underwriting Agreement
*3.1 Second Amended and Restated Certificate of Incorporation of
the Registrant.
*3.2 Third Amended and Restated Certificate of Incorporation of
the Registrant.
*3.3 Amended and Restated By-laws of the Registrant.
*4.1 Specimen certificate for shares of Common Stock, $.01 par
value, of the Registrant.
*5.1 Opinion of Goodwin, Procter & Hoar LLP as to the legality of
the securities offered.
10.1 Indenture of Lease, dated October 15, 1996, between Moldflow
Pty. Ltd and Mortimer B. Zuckerman and Edward H. Linde,
Trustees of 91 Hartwell Avenue Trust, which relates to space
in a certain building known as, and with an address at, 91
Hartwell Avenue, Lexington, Massachusetts.
10.2 Acknowledgment of Assumption of Lease, dated June 28, 1999,
by and among Boston Properties Limited Partnership (as
successor-in-interest to the Trustees of 91 Hartwell Avenue
Trust), Moldflow Pty. Ltd and the Registrant.
10.3 Stock Purchase Agreement, dated August 25, 1998, among
Ampersand Specialty Materials and Chemicals III Limited
Partnership ("Ampersand III"), Ampersand Specialty Materials
and Chemicals Companion Fund III Limited Partnership
("Ampersand III CF"), JTC Investment Management Pty. Ltd.
("JTC") and Westpac Custodian Nominees Limited (as nominee
for NJI No. 1(A) Investment Fund and NJI No. 1(B) Investment
Fund) ("Westpac").
10.4 Shareholders Agreement, dated July 18, 1997 ("Shareholders
Agreement"), by and among the Registrant, Thomas Investments
Australia Pty. Ltd. ("Thomas"), Helmet Investments Australia
Pty. Ltd. ("Helmet"), Floatflow Pty. Ltd. ("Floatflow"),
JTC, Westpac, Ampersand Specialty Materials and Chemicals II
Limited Partnership ("Ampersand II"), Ampersand III,
Ampersand III CF and Mazza & Riley, Inc.
10.5 First Amendment to Shareholders Agreement, dated October 24,
1997.
10.6 Amended and Restated Credit Agreement, dated January 28,
1998 ("Amended and Restated Credit Agreement"), by and among
the Registrant, Thomas, Helmet, Floatflow, JTC, Westpac,
Ampersand II, Ampersand III and Ampersand III CF.
10.7 First Amendment to Amended and Restated Credit Agreement,
dated August 25, 1998.
10.8 Termination of Amended and Restated Credit Agreement.
10.9 Loan Agreement, dated April 23, 1998, by and among Silicon
Valley Bank, the Registrant, Moldflow International Pty.
Ltd. and Moldflow Pty. Ltd.
</TABLE>
II-3
<PAGE>
<TABLE>
<C> <S>
10.10 Loan Document Modification Agreement No. 2, dated
November 30, 1998, by and between Silicon Valley Bank and
the Registrant.
10.11 Amendment to Loan Modification Agreement No. 2, dated
January 19, 1999, by and between Silicon Valley Bank and the
Registrant.
10.12 Loan Document Modification Agreement No. 3, dated as of
June 1, 1999, by and between Silicon Valley Bank and the
Registrant.
10.13 Loan Document Modification Agreement No. 4, dated as of
October 22, 1999, by and between Silicon Valley Bank and the
Registrant.
10.14 Warrant to Purchase Common Stock, dated April 23, 1998,
issued by the Registrant to Silicon Valley Bank.
10.15 Stock Restriction Agreement, dated July 1, 1998, between the
Registrant and Marc J. L. Dulude.
10.16 Amended and Restated Promissory Note, dated September 9,
1999, issued by Marc J. L. Dulude in favor of the
Registrant.
10.17 Stock Restriction Agreement, dated July 1, 1998, between the
Registrant and Suzanne E. Rogers.
10.18 Amended and Restated Promissory Note, dated September 9,
1999, issued by Suzanne E. Rogers in favor of the
Registrant.
10.19 Stock Restriction Agreement, dated July 1, 1998, between the
Registrant and Kenneth R. Welch.
10.20 Amended and Restated Promissory Note, dated September 9,
1999, issued by Kenneth R. Welch in favor of the Registrant.
10.21 Stock Restriction Agreement, dated July 1, 1998, between the
Registrant and Richard M. Underwood.
10.22 Amended and Restated Promissory Note, dated September 9,
1999, issued by Richard M. Underwood in favor of the
Registrant.
10.23 Service Agreement, dated July 1, 1994, between Moldflow Pty.
Ltd. and A. Roland Thomas.
10.24 Letter Amendment, dated June 30, 1997, to Service Agreement
between Moldflow Pty. Ltd. and A. Roland Thomas.
10.25 Letter Amendment, dated July 1, 1999, to Service Agreement
between Moldflow Pty. Ltd. and A. Roland Thomas.
10.26 Loan Agreement, dated July 1, 1999 between Moldflow Pty.
Ltd, and A. Roland Thomas.
*10.27 Moldflow Corporation 2000 Stock Option and Incentive Plan.
*10.28 Form of Incentive Stock Option Agreement under the Moldflow
Corporation 2000 Stock Option and Incentive Plan.
*10.29 Form of Non-Qualified Stock Option Agreement under the
Moldflow Corporation 2000 Stock Option and Incentive Plan.
*10.30 Moldflow Corporation Employee Stock Purchase Plan.
10.31 Moldflow Corporation 1997 Equity Incentive Plan.
10.32 Form of Incentive Stock Option Agreement under the Moldflow
Corporation 1997 Equity Incentive Plan.
10.33 Form of Non-Qualified Stock Option Agreement under the
Moldflow Corporation 1997 Equity Incentive Plan.
</TABLE>
II-4
<PAGE>
<TABLE>
<C> <S>
10.34 Form of Non-Qualified Stock Option Agreement for Australian
employees under the Moldflow Corporation 1997 Equity
Incentive Plan.
*10.35 Employment Agreement, dated , between the
Registrant and Marc J. L. Dulude.
*10.36 Employment Agreement, dated , between the
Registrant and Suzanne E. Rogers.
*10.37 Employment Agreement, dated , between the
Registrant and Kenneth R. Welch.
*10.38 Employment Agreement, dated , between the
Registrant and Richard M. Underwood.
*10.39 Employment Agreement, dated , between the
Registrant and A. Roland Thomas.
*10.40 Form of Director Indemnification Agreement to be entered
into between the Registrant and each non-employee director.
*21.1 Subsidiaries of the Registrant.
*23.1 Consent of Goodwin, Procter & Hoar LLP (included in Exhibit
5.1 hereto).
23.2 Consent of PricewaterhouseCoopers LLP.
24.1 Powers of Attorney (included on pages II-7 and II-8).
*27.1 Financial Data Schedule.
</TABLE>
- ------------------------
* To be filed by amendment to this registration statement.
II-5
<PAGE>
(b) FINANCIAL STATEMENT SCHEDULES
All schedules have been omitted because they are not required or because the
required information is given in the consolidated financial statements or notes
to those statements.
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes to provide to the underwriters
at the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the underwriters to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial BONA FIDE offering thereof.
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Boston, on January 24,
2000.
<TABLE>
<S> <C> <C>
MOLDFLOW CORPORATION
BY: /S/ MARC J. L. DULUDE
-----------------------------------------
Marc J. L. Dulude
PRESIDENT AND CHIEF EXECUTIVE OFFICER
</TABLE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each individual whose signature appears
below constitutes and appoints each of Marc J. L. Dulude and Suzanne E. Rogers
such person's true and lawful attorney-in-fact and agent with full power of
substitution and resubstitution, for such person and in such person's name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement (or to any
other registration statement for the same offering that is to be effective upon
filing pursuant to Rule 462(b) under the Securities Act), and to file the same,
with all exhibits thereto, and all documents in connection therewith, with the
Securities and Exchange Commission, granting unto each said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as such person might or could do in person, hereby
ratifying and confirming all that any said attorney-in-fact and agent, or any
substitute or substitutes of any of them, may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
President, Chief Executive
/s/ MARC J. L. DULUDE Officer and Director
------------------------------------------- (Principal Executive January 24, 2000
Marc J. L. Dulude Officer)
Vice President and Chief
/s/ SUZANNE E. ROGERS Financial Officer
------------------------------------------- (Principal Financial January 24, 2000
Suzanne E. Rogers Officer and Principal
Accounting Officer)
/s/ A. ROLAND THOMAS Director
------------------------------------------- January 24, 2000
A. Roland Thomas
</TABLE>
II-7
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ CHARLES D. YIE Director
------------------------------------------- January 24, 2000
Charles D. Yie
/s/ JULIAN H. BEALE Director
------------------------------------------- January 24, 2000
Julian H. Beale
/s/ RICHARD A. CHARPIE Director
------------------------------------------- January 24, 2000
Richard A. Charpie
/s/ ROGER BROOKS Director
------------------------------------------- January 24, 2000
Roger Brooks
/s/ ROBERT P. SCHECHTER Director
------------------------------------------- January 24, 2000
Robert P. Schechter
</TABLE>
II-8
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- --------------------- -----------
<C> <S>
*1.1 Form of Underwriting Agreement
*3.1 Second Amended and Restated Certificate of Incorporation of
the Registrant.
*3.2 Third Amended and Restated Certificate of Incorporation of
the Registrant.
*3.3 Amended and Restated By-laws of the Registrant.
*4.1 Specimen certificate for shares of Common Stock, $.01 par
value, of the Registrant.
*5.1 Opinion of Goodwin, Procter & Hoar LLP as to the legality of
the securities offered.
10.1 Indenture of Lease, dated October 15, 1996, between Moldflow
Pty. Ltd and Mortimer B. Zuckerman and Edward H. Linde,
Trustees of 91 Hartwell Avenue Trust, which relates to space
in a certain building known as, and with an address at, 91
Hartwell Avenue, Lexington, Massachusetts.
10.2 Acknowledgment of Assumption of Lease, dated June 28, 1999,
by and among Boston Properties Limited Partnership (as
successor-in-interest to the Trustees of 91 Hartwell Avenue
Trust), Moldflow Pty. Ltd and the Registrant.
10.3 Stock Purchase Agreement, dated August 25, 1998, among
Ampersand Specialty Materials and Chemicals III Limited
Partnership ("Ampersand III"), Ampersand Specialty Materials
and Chemicals Companion Fund III Limited Partnership
("Ampersand III CF"), JTC Investment Management Pty. Ltd.
("JTC") and Westpac Custodian Nominees Limited (as nominee
for NJI No. 1(A) Investment Fund and NJI No. 1(B) Investment
Fund) ("Westpac").
10.4 Shareholders Agreement, dated July 18, 1997 ("Shareholders
Agreement"), by and among the Registrant, Thomas Investments
Australia Pty. Ltd. ("Thomas"), Helmet Investments Australia
Pty. Ltd. ("Helmet"), Floatflow Pty. Ltd. ("Floatflow"),
JTC, Westpac, Ampersand Specialty Materials and Chemicals II
Limited Partnership ("Ampersand II"), Ampersand III,
Ampersand III CF and Mazza & Riley, Inc.
10.5 First Amendment to Shareholders Agreement, dated October 24,
1997.
10.6 Amended and Restated Credit Agreement, dated January 28,
1998 ("Amended and Restated Credit Agreement"), by and among
the Registrant, Thomas, Helmet, Floatflow, JTC, Westpac,
Ampersand II, Ampersand III and Ampersand III CF.
10.7 First Amendment to Amended and Restated Credit Agreement,
dated August 25, 1998.
10.8 Termination of Amended and Restated Credit Agreement.
10.9 Loan Agreement, dated April 23, 1998, by and among Silicon
Valley Bank, the Registrant, Moldflow International Pty.
Ltd. and Moldflow Pty. Ltd.
10.10 Loan Document Modification Agreement No. 2, dated
November 30, 1998, by and between Silicon Valley Bank and
the Registrant.
10.11 Amendment to Loan Modification Agreement No. 2, dated
January 19, 1999, by and between Silicon Valley Bank and the
Registrant.
10.12 Loan Document Modification Agreement No. 3, dated as of
June 1, 1999, by and between Silicon Valley Bank and the
Registrant.
10.13 Loan Document Modification Agreement No. 4, dated as of
October 22, 1999, by and between Silicon Valley Bank and the
Registrant.
10.14 Warrant to Purchase Common Stock, dated April 23, 1998,
issued by the Registrant to Silicon Valley Bank.
10.15 Stock Restriction Agreement, dated July 1, 1998, between the
Registrant and Marc J. L. Dulude.
10.16 Amended and Restated Promissory Note, dated September 9,
1999, issued by Marc J. L. Dulude in favor of the
Registrant.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- --------------------- -----------
<C> <S>
10.17 Stock Restriction Agreement, dated July 1, 1998, between the
Registrant and Suzanne E. Rogers.
10.18 Amended and Restated Promissory Note, dated September 9,
1999, issued by Suzanne E. Rogers in favor of the
Registrant.
10.19 Stock Restriction Agreement, dated July 1, 1998, between the
Registrant and Kenneth R. Welch.
10.20 Amended and Restated Promissory Note, dated September 9,
1999, issued by Kenneth R. Welch in favor of the Registrant.
10.21 Stock Restriction Agreement, dated July 1, 1998, between the
Registrant and Richard M. Underwood.
10.22 Amended and Restated Promissory Note, dated September 9,
1999, issued by Richard M. Underwood in favor of the
Registrant.
10.23 Service Agreement, dated July 1, 1994, between Moldflow Pty.
Ltd. and A. Roland Thomas.
10.24 Letter Amendment, dated June 30, 1997, to Service Agreement
between Moldflow Pty. Ltd. and A. Roland Thomas.
10.25 Letter Amendment, dated July 1, 1999, to Service Agreement
between Moldflow Pty. Ltd. and A. Roland Thomas.
10.26 Loan Agreement, dated July 1, 1999 between Moldflow Pty.
Ltd, and A. Roland Thomas.
*10.27 Moldflow Corporation 2000 Stock Option and Incentive Plan.
*10.28 Form of Incentive Stock Option Agreement under the Moldflow
Corporation 2000 Stock Option and Incentive Plan.
*10.29 Form of Non-Qualified Stock Option Agreement under the
Moldflow Corporation 2000 Stock Option and Incentive Plan.
*10.30 Moldflow Corporation Employee Stock Purchase Plan.
10.31 Moldflow Corporation 1997 Equity Incentive Plan.
10.32 Form of Incentive Stock Option Agreement under the Moldflow
Corporation 1997 Equity Incentive Plan.
10.33 Form of Non-Qualified Stock Option Agreement under the
Moldflow Corporation 1997 Equity Incentive Plan.
10.34 Form of Non-Qualified Stock Option Agreement for Australian
employees under the Moldflow Corporation 1997 Equity
Incentive Plan.
*10.35 Employment Agreement, dated , between the
Registrant and Marc J. L. Dulude.
*10.36 Employment Agreement, dated , between the
Registrant and Suzanne E. Rogers.
*10.37 Employment Agreement, dated , between the
Registrant and Kenneth R. Welch.
*10.38 Employment Agreement, dated , between the
Registrant and Richard M. Underwood.
*10.39 Employment Agreement, dated , between the
Registrant and A. Roland Thomas.
*10.40 Form of Director Indemnification Agreement to be entered
into between the Registrant and each non-employee director.
*21.1 Subsidiaries of the Registrant.
*23.1 Consent of Goodwin, Procter & Hoar LLP (included in Exhibit
5.1 hereto).
23.2 Consent of PricewaterhouseCoopers LLP.
24.1 Powers of Attorney (included on pages II-7 and II-8).
*27.1 Financial Data Schedule.
</TABLE>
- ------------------------
* To be filed by amendment to this registration statement.
<PAGE>
91 HARTWELL AVENUE
LEXINGTON, MASSACHUSETTS
LEASE DATED OCTOBER 15, 1996
THIS INSTRUMENT IS AN INDENTURE OF LEASE in which the Landlord and the
Tenant are the parties hereinafter named, and which relates to space in a
certain building (the "Building") known as, and with an address at, 91 Hartwell
Avenue, Lexington, Massachusetts.
The parties to this Indenture of Lease hereby agree with each other as
follows:
ARTICLE I
REFERENCE DATA
1.1 Subjects Referred To:
Each reference in this Lease to any of the following subjects shall be
construed to incorporate the data stated for that subject in this
Article:
<TABLE>
<CAPTION>
<S> <C>
LANDLORD: Mortimer B. Zuckerman and Edward H. Linde, Trustees of 91
Hartwell Avenue Trust under Declaration of Trust
dated September 28, 1981 filed with the Middlesex
South Registry District as Document No. 616455 as
amended by instruments dated December 10, 1984 and
April 17, 1991 respectively filed with said
Registry District as Document Nos. 675674 and
844541 but not individually.
LANDLORD'S ORIGINAL c/o Boston Properties, Inc.
ADDRESS: 8 Arlington Street
Boston, Massachusetts 02116
LANDLORD'S CONSTRUCTION
REPRESENTATIVE: Stacey A. Baker
TENANT: Moldflow Pty. LTD an Australian corporation registered to do
business in Connecticut.
<PAGE>
TENANT'S ORIGINAL Two Corporate Drive, Suite 232
ADDRESS: Shelton, Connecticut 06484
TENANT'S CONSTRUCTION
REPRESENTATIVE: Marc Dulude
SPECIAL ALLOWANCE: As defined in Section 3.1.1
SCHEDULED TERM
COMMENCEMENT DATE: November 1, 1996
COMMENCEMENT DATE: As defined in Sections 2.4 and 3.2
OUTSIDE COMPLETION DATE: December 1, 1996.
ORIGINAL TERM: Sixty (60) calendar months (plus the partial month, if any,
immediately following the Commencement Date), unless
extended or sooner terminated as provided in this Lease.
EXTENSION OPTION: One (1) period of five (5) years as provided in and on the
terms set forth in Section 2.4.1 hereof.
TERM OR LEASE TERM: All references in this Lease to the Term or Lease Term shall
mean the Original Term and if extended pursuant to Section 2.4.1,
the Original Term as extended by the exercise of the applicable
extension options unless otherwise specifically provided in this
Lease.
THE SITE: That certain parcel of land known as and numbered 91
Hartwell Avenue, Lexington, Middlesex County, Massachusetts,
being more particularly described in Exhibit A attached hereto.
THE BUILDING: The Building known as and numbered 91 Hartwell Avenue,
Lexington,
-2-
<PAGE>
Massachusetts. The Building is appropriately labeled on Exhibit A-1
attached hereto and hereby made a part hereof.
THE COMPLEX: The Building together with all surface parking areas, the
Site and all improvements (including landscaping)
thereon and thereto.
TENANT'S SPACE: A portion of the first floor of the Building in accordance
with the floor plan attached hereto as Exhibit D
and incorporated herein by reference.
NUMBER OF PARKING SPACES: 26 spaces.
ANNUAL FIXED RENT: (a) During the Original Term of this Lease at the annual
rate of $185,650.00 (being the product of (i)
$23.50 and (ii) the "Rentable Floor Area of
Tenant's Space" (hereinafter defined in this
Section 1.1).
(b) During the extension option period (if exercised), as
determined pursuant to Section 2.4.1.
OPERATING EXPENSES: As provided in Section 2.6 hereof.
REAL ESTATE TAXES: As provided in Section 2.7 hereof.
TENANT ELECTRICITY: Initially as provided in Section 2.5 subject to adjustment
as provided in Section 2.8 hereof.
ADDITIONAL RENT: All charges and other sums payable by Tenant as set forth in this
Lease, in addition to Annual Fixed Rent.
RENTABLE FLOOR AREA 7,900 square feet.
OF TENANT'S SPACE
-3-
<PAGE>
(SOMETIMES ALSO
CALLED RENTABLE FLOOR
AREA OF THE PREMISES):
TOTAL RENTABLE FLOOR 122,328 square feet.
AREA OF THE BUILDING:
PERMITTED USES: General office purposes.
INITIAL MINIMUM $2,000,000.00 combined single limit
LIMITS OF TENANT'S per occurrence on a per location basis.
COMMERCIAL GENERAL
LIABILITY INSURANCE:
RECOGNIZED BROKER: Spaulding & Slye
125 High Street, 16th Floor
Boston, Massachusetts 02110-2701
SECURITY DEPOSIT: $46,412.50
</TABLE>
1.2 Exhibits. There are incorporated as part of this Lease:
<TABLE>
<CAPTION>
<S> <C>
EXHIBIT A Description of Site
EXHIBIT A-1 Site Plan
EXHIBIT B Tenant's Construction Plan
EXHIBIT C Landlord's Services
EXHIBIT D Floor Plan
EXHIBIT E Form of Commencement Date
Agreement
</TABLE>
-4-
<PAGE>
1.3 Table of Articles and Sections
ARTICLE I-REFERENCE DATA
1.1 Subjects Referred to
1.2 Exhibits
1.3 Table of Articles and Sections
ARTICLE II-THE BUILDINGS, PREMISES, TERM AND RENT
2.1 The Premises
2.1.1 Relocation of Tenant's Space
2.2 Rights To Use Common Facilities
2.2.1 Tenant's Parking
2.3 Landlord's Reservations
2.4 Original Term
2.4.1 Extension Option
2.5 Monthly Fixed Rent Payments
2.6 Adjustment for Operating Expenses
2.7 Adjustment for Real Estate Taxes
2.8 Adjustment for Tenant Electricity
ARTICLE III-CONSTRUCTION
3.1 Tenant's Plans and Tenant Plan Excess Costs
-5-
<PAGE>
3.1.1 Special Allowance
3.2 Landlord's and Tenant's Work; Delays
3.3 Alterations and Additions
3.4 General Provisions Applicable to Construction
ARTICLE IV-LANDLORD'S COVENANTS; INTERRUPTIONS AND DELAYS
4.1 Landlord's Covenants
4.1.1 Services Furnished by Landlord
4.1.2 Additional Services Available to Tenant
4.1.3 Roof, Exterior Wall, Floor Slab and Common Facility
Repairs
4.1.4 Door Signs
4.2 Interruptions and Delays in Services and Repairs, etc.
ARTICLE V-TENANT'S COVENANTS
5.1 Payments
5.2 Repair and Yield Up
5.3 Use
5.4 Obstructions; Items Visible From Exterior; Rules and
Regulations
5.5 Safety Appliances; Licenses
5.6 Assignment; Sublease
5.7 Indemnity; Insurance
-6-
<PAGE>
5.8 Personal Property at Tenant's Risk
5.9 Right of Entry
5.10 Floor Load; Prevention of Vibration and Noise
5.11 Personal Property Taxes
5.12 Compliance with Laws
5.13 Payment of Litigation Expenses
ARTICLE VI-CASUALTY AND TAKING
6.1 Fire and Casualty-Termination or Restoration; Rent Adjustment
6.2 Uninsured Casualty
6.3 Eminent Domain-Termination or Restoration
6.4 Eminent Domain Damages Reserved
ARTICLE VII-DEFAULT
7.1 Tenant's Default
7.2 Landlord's Default
ARTICLE VIII-MISCELLANEOUS PROVISIONS
8.1 Extra Hazardous Use
8.2 Waiver
8.3 Cumulative Remedies
8.4 Quiet Enjoyment
-7-
<PAGE>
8.5 Notice To Mortgagee and Ground Lessor
8.6 Assignment of Rents
8.7 Surrender
8.8 Brokerage
8.9 Invalidity of Particular Provisions
8.10 Provisions Binding, Etc.
8.11 Recording
8.12 Notices
8.13 When Lease Becomes Binding
8.14 Section Headings
8.15 Rights of Mortgagee
8.16 Status Report and Financial Statements
8.17 Self-Help
8.18 Holding Over
8.19 Non-Subrogation
8.20 Security Deposit
8.21 Late Payment
8.22 Governing Law
8.23 Submission to Jurisdiction
-8-
<PAGE>
ARTICLE II
BUILDING, PREMISES, TERM AND RENT
2.1 Landlord hereby demises and leases to Tenant, and Tenant hereby hires
and accepts from Landlord, Tenant's Space in the Building excluding
exterior faces of exterior walls, the common stairways and stairwells,
elevators and elevator wells, fan rooms, electric and telephone
closets, janitor closets, and pipes, ducts, conduits, wires and
appurtenant fixtures serving exclusively, or in common, other parts of
the Building, and if Tenant's Space includes less than the entire
rentable area of any floor, excluding the common corridors, elevator
lobbies and toilets located on such floor.
Tenant's Space with such exclusions is hereinafter referred to as
the "Premises". The term "Building" means the Building identified on
the first page, and which is the subject of this Lease; the term
"Site" means all, and also any part of the Land described in
Exhibit A, plus any additions or reductions thereto resulting from
the change of any abutting street line and all parking areas and
structures. The term "Property" means the Building and the Site.
2.1.1 Tenant hereby agrees with Landlord that upon the request of Landlord,
Landlord shall have the right to relocate Tenant's Space within the
Building one time during the Lease Term. Upon such relocation,
Tenant's Space shall be relocated to premises on the first, second, or
third floor of the Building at Landlord's sole discretion. Landlord,
at its sole cost and expense, shall perform the partitioning of the
relocated Tenant's Space, and shall improve, alter and finish the
relocated Tenant's Space to substantially the same condition of the
former Tenant's Space. Landlord also shall pay for Tenant's reasonable
out of pocket moving costs in relocating, including, costs to reinstall
the telecommunication and computer lines and cabling in the relocated
Tenant's Space. The relocated Tenant's Space shall be complete
(excluding punch list items and long lead items, as further defined in
Section 3.2) before Tenant shall be required to vacate the former
Tenant's Space. Upon any such relocation, Tenant's Space may be
increased or decreased by not more than one hundred fifty (150) square
feet of Rentable Floor Area in total, and Tenant agrees to enter into
an appropriate lease amendment reflecting the relocation of Tenant's
Space and the adjustment to the Rentable Floor Area (as defined in
Section 1.1 of this Lease), if any. Further, upon adjustment to the
Rentable Floor Area, if any, the Annual Fixed Rent defined in
Section 1.1 of this Lease shall be at the rate defined therein but
shall be calculated on the basis of the adjusted Rentable Floor Area
of Tenant's Space.
2.2 Tenant shall have, as appurtenant to the Premises, the non-exclusive
right to use in common with others, subject to reasonable rules of
general applicability to tenants of the
-9-
<PAGE>
Building from time to time made by Landlord of which Tenant is given
notice (a) the common lobbies, corridors, stairways, elevators and
loading area of the Building, and the pipes, ducts, conduits, wires
and appurtenant meters and equipment serving the Premises in common
with others, (b) common walkways and driveways necessary for access
to the Building, and (c) if the Premises include less than the entire
rentable floor area of any floor, the common toilets, corridors and
elevator lobby of such floor.
2.2.1 In addition, Tenant shall have the right to use the Number of Parking
Spaces (referred to in Section 1.1) of the parking area, in common
with use by other tenants from time to time of the Complex; provided,
however, Landlord shall not be obligated to furnish stalls or spaces
in any parking area specifically designated for Tenant's use.
Tenant covenants and agrees that it and all persons claiming by,
through and under it, shall at all times abide by all reasonable
rules and regulations promulgated by Landlord with respect to the
use of the parking areas on the Site. The parking privileges
granted herein are non-transferrable except to a permitted assignee
or subtenant as provided in Section 5.6 through Section 5.6.6.
Further, Landlord assumes no responsibility whatsoever for loss or
damage due to fire, theft or otherwise to any automobile(s) parked
on the Site or to any personal property therein, however caused, and
Tenant covenants and agrees, upon request from Landlord from time to
time, to notify its officers, employees, agents and invitees of such
limitation of liability. Tenant acknowledges and agrees that a
license only is hereby granted, and no bailment is intended or shall
be created.
2.3 Landlord reserves the right from time to time, without unreasonable
interference with Tenant's use: (a) to install, use, maintain, repair,
replace and relocate for service to the Premises and other parts of the
Building, or either, pipes, ducts, conduits, wires and appurtenant
fixtures, wherever located in the Premises or Building, and (b) to
alter or relocate any other common facility, provided that
substitutions are substantially equivalent or better. Installations,
replacements and relocations referred to in clause (a) above shall be
located so far as practicable in the central core area of the Building,
above ceiling surfaces, below floor surfaces or within perimeter walls
of the Premises so that the same are not visible within the Premises.
2.4 Tenant shall have and hold the Premises for a period commencing on the
earlier of (a) that date on which the Premises are ready for occupancy
as in Section 3.2 provided, or (b) that date on which Tenant commences
occupancy of any portion of the Premises for the Permitted Uses, and
continuing for the Term unless sooner terminated as provided in Article
VI or Article VII or unless extended as provided in Section 2.4.1.
As soon as may be convenient after the date has been determined on
which the Term commences as aforesaid, Landlord and Tenant agree to
join with each other in the
-10-
<PAGE>
execution of a written Declaration, in the form of Exhibit E, in which
the date on which the Term commences as aforesaid and the Term of this
Lease shall be stated. If Tenant shall fail to execute such
Declaration, the Commencement Date and Lease Term shall be as
reasonably determined by Landlord in accordance with the terms of this
Lease.
2.4.1 (A) Provided that at the time of exercise of the option to extend and
at the commencement date of the extension option period (i) there
exists no Event of Default (defined in Section 7.1), (ii) this Lease
is still in full force and effect, and (iii) Tenant has neither
assigned this Lease nor sublet in excess of fifty percent (50%) of
the Rentable Floor Area of the Premises in the aggregate (except for
an assignment or subletting permitted under Section 5.6.1 hereof),
Tenant shall have the right to extend the Term hereof upon all the
same terms, conditions, covenants and agreements herein contained
(except for the Annual Fixed Rent which shall be adjusted during the
option period as hereinbelow set forth) for one (1) period of five
(5) years as hereinafter set forth. The option period is sometimes
herein referred to as the "Extended Term".
(B) If Tenant desires to exercise the option to extend the Term, then
Tenant shall give notice to Landlord, not earlier than twelve (12)
months nor later than nine (9) months prior to the expiration of the
Term, hereunder of Tenant's request for Landlord's quotation of the
annual fair market rent for the Premises as of the commencement date of
the extension period, such quotation to be based on the use of the
Premises in its then condition as first class office space utilizing
properties of a similar character within the Boston West Suburban
market (including premises within the Complex if at the time such
quotation is requested such premises shall be available for rent)
(hereinafter called the "Annual Market Rent"). Within thirty (30) days
after Landlord's receipt of Tenant's notice requesting such a
quotation, Landlord shall notify Tenant of Landlord's quotation of the
Annual Market Rent. Within twenty (20) days after receipt by Tenant of
Landlord's quotation of the Annual Market Rent, Tenant shall have the
right to extend the Term by written notice to Landlord within said last
mentioned 20-day period upon all of the same terms, conditions,
covenants and agreements contained in this Lease, except that the
annual fixed rent for the option period shall be equal to the Annual
Market Rent per square foot as quoted by Landlord for the option period
multiplied by the Rentable Floor Area of the Premises; provided,
however, that in no event shall the annual fixed rent payable during
the option period be less than the annual fixed rent for the last year
of the Term of this Lease and further that the only extension option
shall be that set forth in this Section 2.4.1. Upon the giving of such
notice, this Lease and the Term hereof shall be extended for the option
period, without the necessity for the execution of any additional
documents (except that Landlord and Tenant agree to enter into an
instrument in writing setting forth the fixed rent); and in such event
all references herein to the Term or the term of this Lease shall be
construed as referring to the Term, as so extended, unless the
-11-
<PAGE>
context clearly otherwise requires. Notwithstanding anything herein
contained to the contrary, in no event shall the Lease Term hereof be
extended for more than five (5) years after the expiration of the
Original Term hereof.
2.5 Tenant agrees to pay to Landlord, or as directed by Landlord, at
Landlord's Original Address specified in Section 1.1 hereof, or at such
other place as Landlord shall from time to time designate by notice,
(1) (a) on the Commencement Date (defined in Section 1.1 hereof) and
thereafter monthly, in advance, on the first day of each and every
calendar month during the Original Term, a sum equal to one twelfth
(1/12th) of the applicable Annual Fixed Rent (sometimes hereinafter
referred to as "fixed rent") and (1) (b) on the Commencement Date and
thereafter monthly, in advance, on the first day of each and every
calendar month during the Original Term, a sum equal to one twelfth
(1/12th) of $0.85 per annum for each square foot of Rentable Floor Area
of Tenant's Space for tenant electricity subject to escalation as
provided in Section 2.8 and (2) on the first day of each and every
calendar month during the extension option period (if exercised), a sum
equal to (a) one twelfth (1/12th) of the applicable annual fixed rent
as determined in Section 2.4.1 for the extension option period plus (b)
then applicable monthly electricity charges (subject to escalation for
electricity as provided in Section 2.8 hereof). Until notice of some
other designation is given, fixed rent and all other charges for which
provision is herein made shall be paid by remittance to or for the
order of Boston Properties, Inc., Agents, at 8 Arlington Street,
Boston, Massachusetts 02116, and all remittances received by Boston
Properties, Inc., as Agents as aforesaid, or by any subsequently
designated recipient, shall be treated as payment to Landlord.
Annual Fixed Rent for any partial month shall be paid by Tenant to
Landlord at such rate on a pro rata basis, and, if the Commencement
Date is a day other than the first day of a calendar month, the first
payment which Tenant shall make to Landlord shall be a payment equal to
a proportionate part of such monthly Annual Fixed Rent for the partial
month from the Commencement Date to the first day of the succeeding
calendar month.
Other charges payable by Tenant on a monthly basis, as hereinafter
provided, likewise shall be prorated, and the first payment on account
thereof shall be determined in similar fashion but shall commence on
the Commencement Date; and other provisions of this Lease calling for
monthly payments shall be read as incorporating this undertaking by
Tenant.
The Annual Fixed Rent and all other charges for which provision is
herein made shall be paid by Tenant to Landlord, without offset,
deduction or abatement except as otherwise specifically set forth in
this Lease.
-12-
<PAGE>
2.6 "Landlord's Operating Expenses" means the cost of operation of the
Building and the Site which shall exclude: costs of special services
rendered to tenants (including Tenant) for which a separate charge is
made; brokerage commissions related to the leasing of space in the
Building; the cost of any item or service to the extent to which
Landlord is actually reimbursed or compensated by insurance, any tenant
or any third party; the cost of any capital expansion made to the
Building or the Site after the date of this Lease; capital expenditures
(except as provided hereinbelow in this Section 2.6); legal fees or
other expenses incurred in connection with negotiating and enforcing
leases with tenants in the Building; expenses for renovating,
decorating or other tenant improvement work which Landlord performs in
connection with leasing in the Building; costs incurred in performing
work or furnishing services for any tenant (including Tenant), whether
at such tenant's or Landlord's expense to the extent that such work or
service is in excess of such work or service that Landlord is obligated
to furnish to Tenant at Landlord's expense (e.g., if Landlord agrees to
provide extra cleaning to another tenant, the cost thereof would be
excluded since Landlord is not obligated to furnish extra cleaning to
Tenant); the cost of any service or materials provided by any
subsidiaries or affiliates of Landlord, to the extent such costs exceed
the reasonable cost for such service or materials absent such
relationship in buildings similar to the Building in the vicinity of
the Building; interest on any debt, debt amortization or ground rent
for any mortgage or ground lease of the Building or Site; salaries and
other compensation paid to employees above the level of building
manager; advertising and promotional expenses for obtaining tenants for
the Building; fines or penalties incurred by Landlord due to violations
by Landlord of any applicable governmental law; acquisition costs of
sculptures, paintings or other art work for the Building, the cost of
removal or remediation of "Hazardous Materials" (as defined in Section
5.3) in the Building or on the Site required by "Hazardous Materials
Laws" (as defined in Section 5.3) but shall include, without
limitation, the following: premiums for insurance carried with respect
to the Building and the Site (including, without limitation, liability
insurance, insurance against loss in case of fire or casualty and
insurance of monthly installments of fixed rent and any Additional Rent
which may be due under this Lease and other leases of space in the
Building for not more than 12 months in the case of both fixed rent and
Additional Rent and if there be any first mortgage of the Property,
including such insurance as may be required by the holder of such first
mortgage); compensation and all fringe benefits, workmen's compensation
insurance premiums and payroll taxes paid to, for or with respect to
all persons engaged in the operating, maintaining or cleaning of the
Building or Site (provided that Landlord shall prorate any such
expenses for any person whose time is not spent solely in the operation
of the Building or the Site) water, sewer, electric, gas, oil and
telephone charges (excluding utility charges separately chargeable to
tenants for additional or special services); cost of building and
cleaning supplies and equipment; cost of maintenance, cleaning and
repairs (other than repairs not properly chargeable against income or
reimbursed from contractors
-13-
<PAGE>
under guarantees); cost of snow removal and care of landscaping;
payments under service contracts with independent contractors;
management fees at reasonable rates consistent with the
type of occupancy and the service rendered; and all other reasonable
and necessary expenses paid in connection with the operation, cleaning
and maintenance of the Building and the Site and properly chargeable
against income, provided, however, there shall be included an annual
charge for (a) depreciation for capital expenditures made by Landlord
(i) to reduce operating expenses if Landlord shall have reasonably
determined that the annual reduction in operating expenses shall exceed
depreciation therefor or (ii) to comply with applicable laws, rules,
regulations, requirements, statutes, ordinances, by-laws and court
decisions of all public authorities which are enacted after the date of
this Lease (herein collectively called "Legal Requirements"); plus (b)
in the case of both (i) and (ii) an interest factor, reasonably
determined by Landlord, as being the interest rate then charged for
long term mortgages by institutional lenders on like properties within
the locality in which the Building is located; depreciation in the case
of both (i) and (ii) shall be determined by dividing the original cost
of such capital expenditure by the number of years of useful life of
the capital item acquired and the useful life shall be reasonably
determined by Landlord in accordance with generally accepted accounting
principles and practices in effect at the time of acquisition of the
capital item.
"Operating Expenses Allocable to the Premises" shall mean the same
proportion of Landlord's Operating Expenses for and pertaining to the
Building and the Site as the Rentable Floor Area of Tenant's Space
bears to the Total Rentable Floor Area of the Building.
"Base Operating Expenses" shall mean Landlord's Operating Expenses for
calendar year 1997 (that is, the period beginning January 1, 1997 and
ending December 31, 1997).
"Base Operating Expenses Allocable to the Premises" shall mean the same
proportion of Base Operating Expenses as the Rentable Floor Area of
Tenant's Space bears to the Total Rentable Floor Area of the Building.
If with respect to any calendar year falling within the Term, or
fraction of a calendar year falling within the Term at the beginning or
end thereof, the Operating Expenses Allocable to the Premises for a
full calendar year exceed Base Operating Expenses Allocable to the
Premises or for any such fraction of a calendar year exceed the
corresponding fraction of Base Operating Expenses Allocable to the
Premises (such amount being hereinafter sometimes referred to as the
"Operating Cost Excess") then Tenant shall pay to Landlord, as
Additional Rent, the amount of such excess. Such payments shall be made
at the times and in the manner hereinafter provided in this Section
2.6. (The Base Operating
-14-
<PAGE>
Expenses Allocable to the Premises do not include the $0.85 for tenant
electricity to be paid by Tenant together with Annual Fixed Rent and
for which provision is made in Section 2.5 hereof, separate provision
being made in Section 2.8 of this Lease for Tenant's share of
increases in electricity costs.)
Not later than ninety (90) days after the end of the first calendar
year or fraction thereof ending December 31 and of each succeeding
calendar year during the Term or fraction thereof at the end of the
Term, Landlord shall render Tenant a statement in reasonable detail and
according to generally acceptable accounting practices used in the real
estate industry certified by a representative of Landlord, showing for
the preceding calendar year or fraction thereof, as the case may be,
Base Operating Expenses, Landlord's Operating Expenses and Operating
Expenses Allocable to the Premises. Said statement to be rendered to
Tenant shall also show for the preceding year or fraction thereof as
the case may be the amounts of operating expenses already paid by
Tenant as Additional Rent on account of the operating expenses and the
amount of the Operating Cost Excess remaining due from, or overpaid by,
Tenant for the year or other period covered by the statement. Within
thirty (30) days after the date of delivery of such statement, Tenant
shall pay to Landlord the balance of the amounts, if any, required to
be paid pursuant to the above provisions of this Section 2.6 with
respect to the preceding year or fraction thereof, or Landlord shall
credit any amounts overpaid by Tenant against (i) monthly installments
of fixed rent next thereafter coming due or (ii) any sums then due from
Tenant to Landlord under this Lease (or refund such portion of the
overpayment as aforesaid if the Term has ended and Tenant has no
further obligation to Landlord). At the request of Tenant, Landlord
shall make available for Tenant's review, at Tenant's expense, and at a
time and place reasonably determined by Landlord, the records Landlord
used to prepare such statement. Tenant shall hold such books and
records in confidence and not disclose the same to any other party,
including, without limitation, any other tenant in the Building.
In addition, Tenant shall make payments monthly on account of Tenant's
share of increases in operating expenses anticipated for the then
current year at the time and in the fashion herein provided for the
payment of fixed rent. The amount to be paid to Landlord shall be an
amount reasonably estimated annually by Landlord to be sufficient to
cover, in the aggregate, a sum equal to the Operating Cost Excess for
each calendar year during the Term.
Notwithstanding the foregoing provisions, no decrease in Landlord's
Operating Expenses shall result in a reduction of the amount otherwise
payable by Tenant if and to the extent said decrease is attributable to
vacancies in the Building rather than to any other causes.
-15-
<PAGE>
In the event that on the average less than ninety-five percent (95%) of
the Rentable Floor Area of the Building is leased during any calendar
year during the Lease Term (including, without limitation, calendar
year 1997 for purposes of calculating Base Operating Expenses),
Landlord's Operating Expenses for such calendar year shall be
determined by Landlord to be an amount equal to the Landlord's
Operating Expenses which would normally be expected to have been
charged had ninety-five percent (95%) of the Rentable Floor Area of the
Building been leased during such calendar year.
2.7 If with respect to any full Tax Year or fraction of a Tax Year falling
within the Term, Landlord's Tax Expenses Allocable to the Premises (as
hereinafter defined) for a full Tax Year exceed Base Taxes Allocable to
the Premises or for any such fraction of a Tax Year exceed the
corresponding fraction of Base Taxes Allocable to the Premises (such
amount being hereinafter sometimes referred to as the "Tax Excess")
then, on or before the thirtieth (30th) day following receipt by Tenant
of the certified statement referred to below in this Section 2.7,
Tenant shall pay to Landlord, as Additional Rent, the amount of the Tax
Excess. In addition, payments by Tenant on account of the Tax Excess
anticipated for the then current year shall be made monthly at the time
and in the fashion herein provided for the payment of fixed rent. The
amount so to be paid to Landlord shall be an amount reasonably
estimated by Landlord to be sufficient to provide Landlord, in the
aggregate, a sum equal to the Tax Excess at least ten (10) days before
the day on which such payments by Landlord would become delinquent. Not
later than ninety (90) days after Landlord's Tax Expenses Allocable to
the Premises are determined for the first such Tax Year or fraction
thereof and for each succeeding Tax Year or fraction thereof during the
Term, Landlord shall render Tenant a statement in reasonable detail
certified by a representative of Landlord showing for the preceding
year or fraction thereof, as the case may be, real estate taxes on the
Building and the Site and abatements and refunds of any taxes and
assessments. Expenditures for legal fees and for other expenses
incurred in obtaining the tax refund or abatement may be charged
against the tax refund or abatement before the adjustments are made for
the Tax Year.
To the extent that real estate taxes shall be payable to the taxing
authority in installments with respect to periods less than a Tax Year,
the foregoing statement shall be rendered and payments made on account
of such installments. Notwithstanding the foregoing provisions, no
decrease in Landlord's Tax Expenses with respect to any Tax Year shall
result in a reduction of the amount otherwise payable by Tenant if and
to the extent said decrease is attributable to vacancies in the
Building or partial completion of the Building rather than to any other
causes.
Terms used herein are defined as follows:
-16-
<PAGE>
(i) "Tax Year" means the twelve-month period beginning
July 1 each year during the Term or if the
appropriate governmental tax fiscal period shall
begin on any date other than July 1, such other date.
(ii) "Landlord's Tax Expenses Allocable to the Premises"
shall mean the same proportion of Landlord's Tax
Expenses for and pertaining to the Building and the
Site as the Rentable Floor Area of Tenant's Space
bears to 95% of the Total Rentable Floor Area of the
Building.
(iii) "Landlord's Tax Expenses" with respect to any Tax
Year means the aggregate real estate taxes on the
Building and Site with respect to that Tax Year,
reduced by any abatement receipts with respect to
that Tax Year.
(iv) "Base Taxes" means Landlord's Tax Expenses
(hereinbefore defined) for fiscal tax year 1996 (that
is, the period beginning July 1, 1995 and ending June
30, 1996).
(v) "Base Taxes Allocable to the Premises" means the same
proportion of Base Taxes as the Rentable Floor Area
of Tenant's Space bears to 95% of the Total Rentable
Floor Area of the Building.
(vi) "Real estate taxes" means all taxes and special
assessments of every kind and nature assessed by
any governmental authority on the Building or Site
which the Landlord shall become obligated to pay
because of or in connection with the ownership,
leasing and operation of the Site, the Building and
the Property (including, without limitation, if
applicable the excise prescribed by Mass Gen Laws
Chapter 121A, Section 10 and amounts in excess
thereof paid to the Town of Lexington pursuant to
agreement between Landlord and the Town) and
reasonable expenses of any proceedings for
abatement of taxes. The amount of special taxes
or special assessments to be included shall be
limited to the amount of the installment (plus any
interest, other than penalty interest, payable
thereon) of such special tax or special assessment
required to be paid during the year in respect of
which such taxes are being determined. There
shall be excluded from such taxes all income,
estate, succession, inheritance and transfer
taxes; provided, however, that if at any time
during the Term the present system of ad valorem
taxation of real property shall be changed so that
in lieu of, or in addition to, the whole or any
part of the ad valorem tax on real property there
shall be assessed on Landlord a capital levy or
other
-17-
<PAGE>
91 HARTWELL AVENUE
REAL ESTATE TAX ESCALATION
FOR THE PERIOD ENDING FEBRUARY 28, 1998
Tenant: MOLDFLOW PTY, LIMITED Square Footage: 7,900
JULY 1, 1997 TO FEBRUARY 28, 1998
---------------------------------
Total FY 1998 Real Estate Costs: 178,978.16
Less Tenant Real Estate Tax Base: (157,961.27)
-----------
Real Estate Expense Excess: 21,016.89
Tenant's Proportionate Share: (1) 1,359.43
Real Estate Expenses Due For The Period Occupied
July 1997 - February 1998 (243 / 243 days): 1,359.43
Less Amounts Billed: 0.00
-----------
TOTAL FY1998 REAL ESTATE ESCALATION DUE
LANDLORD/(TENANT) 1,359.43
==========
(1) Tenant's Proportionate Share based on square footage of 122,135.
<PAGE>
91 HARTWELL AVENUE
REAL ESTATE TAX ESCALATION
FOR THE PERIOD ENDING JUNE 30, 1998
Tenant: MOLDFLOW PTY, LIMITED Square Footage: 7,900
MARCH 1, 1998 THROUGH JUNE 30, 1998
-----------------------------------
Total FY 1998 Real Estate Costs remaining: 89,489.08
Less Tenant Real Estate Tax Base: (78,980.63)
----------
Real Estate Expense Excess: 10,508.45
Tenant's Proportionate Share: (1) 679.71
Real Estate Expenses Due For The Period Occupied
March 1998 - June 1998 (122/122 days): 679.71
169.93
NEW MONTHLY PAYMENT DUE LANDLORD: ==========
<PAGE>
<TABLE>
<S> <C> <C>
MAKE PAYMENTS TO FISCAL YEAR 1998 REAL ESTATE TAX BILL
TOWN OF LEXINGTON COMMONWEALTH OF MASSACHUSETTS BILL NUMBER 000062
COLLECTOR OF TAXES TOWN OF LEXINGTON
P.O. BOX 614 OFFICE OF THE COLLECTOR OF TAXES
LEXINGTON, MASSACHUSETTS 02173
Based on assessment as of January 1, 1997 your
Real Estate Tax for the fiscal year beginning
OFFICE HOURS July 1, 1997 and ending June 30, 1998 on the
8:30 a.m. - 4:30 p.m. Real Estate described below is as follows:
MONDAY - FRIDAY
ASSESSED OWNERS
AS OF JAN 1, 1997 85 HARTWELL AVENUE TRUST Property Location 91 HARTWELL AVE
Map 0080 Parcel 00010C
TAX RATE RESIDENTIAL COMMERCIAL INDUSTRIAL Reference Deed Book 951 Page 42
PER $1000 13.43 25.51 25.51 Area 652,093.000 Sq. Ft.
Amount Due By: 02/02/98 72,693.15
TOTAL VALUE 10,524,000
85 HARTWELL AVENUE TRUST
8 ARLINGTON ST Payment must be received in the Tax Collector's
BOSTON, MA 02116-3406 Office on or before the due date to avoid
penalty
TAXPAYER'S COPY - RETAIN FOR YOUR RECORDS
15501000062000726931500000000009802136
This form approved by the Commissioner of Revenue
Bill No 00062
BETTERMENTS AND LIENS Real Estate Tax FY97 268,467.2X
Total Betterment & Liens
Exemption / Deferral
Total Due FY97 268,457.2X
1st Prelim: Due 08/01/97 61,540.4X
2nd Prelim: Due 11/03/97 61,540.47
3rd Quarter Tax Due 02/02/98 72,693.15
4th Quarter Tax Due 05/01/98 72,693.14
Payments 123,030.95
Interest Due As Of 02/02/98
3rd Quarter Tax Due 02/02/98 72,693.15
TOTAL BETTERMENTS AND LIENS Amount Due Now 72,693.15
See Reverse Side For Important Information
Interest at the rate of 14% per annum will See reverse side of bill for important tax information.
accrue on overdue payments from the due If you have sold your property please forward this bill
date until payment is made. to the new owner as soon as possible. Request for change
of mailing address must be sent in writing to:
* This bill reflects payments Board of Assessors, 1625 Massachusetts Ave,
received as of 12/11/97 Lexington, MA 02173
Detach Here Detach Here
</TABLE>
<PAGE>
tax on the gross rents received with respect
to the Site or Building or Property, or a federal,
state, county, municipal, or other local income,
franchise, excise or similar tax, assessment, levy
or charge (distinct from any now in effect in the
jurisdiction in which the Property is located)
measured by or based, in whole or in part, upon
any such gross rents, then any and all of such
taxes, assessments, levies or charges, to the
extent so measured or based, shall be deemed to be
included within the term "real estate taxes" but
only to the extent that the same would be payable
if the Site and Building were the only property of
Landlord.
2.8 If with respect to any calendar year falling within the Term or
fraction of a calendar year falling within the Term at the beginning or
end thereof, the cost of furnishing electricity to the Building and the
Site which in no event shall exceed the amount billed for such
electricity by the utility company providing the same, including common
areas and facilities and space occupied by tenants, (but expressly
excluding utility charges separately chargeable to tenants for
additional or special services) for a full calendar year exceeds $0.85
per square foot of Rentable Floor Area of the Building, or for any such
fraction of a calendar year exceeds the corresponding fraction of $0.85
per square foot of Rentable Floor Area of the Building, then Tenant
shall pay to Landlord, as Additional Rent, on or before the thirtieth
(30th) day following receipt by Tenant of the statement referred to
below in this Section 2.8, its proportionate share of the amount of
such excess (i.e. the same proportion of such excess as the Rentable
Floor Area of Tenant's Space bears to the Total Rentable Floor Area of
the Building). Payments by Tenant on account of such excess shall be
made monthly at the time and in the fashion herein provided for the
payment of Annual Fixed Rent. The amount so to be paid to Landlord
shall be an amount from time to time reasonably estimated by Landlord
to be sufficient to cover, in the aggregate, a sum equal to such excess
for each calendar year during the Term.
Not later than ninety (90) days after the end of the first calendar
year or fraction thereof ending December 31 and of each succeeding
calendar year during the Term or fraction thereof at the end of the
Term, Landlord shall render Tenant a reasonably detailed accounting
certified by a representative of Landlord showing for the preceding
calendar year, or fraction thereof, as the case may be, the costs of
furnishing electricity to the Building. Said statement to be rendered
to Tenant also shall show for the preceding year or fraction thereof,
as the case may be, the amount already paid by Tenant on account of
electricity, and the amount remaining due from, or overpaid by, Tenant
for the year or other period covered by the statement. Within thirty
(30) days after the date of the delivery of such statement, Tenant
shall pay to Landlord the balance of the amounts, if any required to be
paid pursuant to the above provisions of this Section 2.8 with respect
to the preceding year, or fraction thereof, or Landlord shall credit
any amounts due from
-18-
<PAGE>
it to Tenant pursuant to the above provisions of this Section 2.8
against monthly installments of Annual Fixed Rent or Additional
Rent next thereafter coming due unless the Lease Term has
expired and Tenant has no other or further obligations to Landlord, in
which case Landlord shall promptly refund such amount to Tenant.
ARTICLE III
CONSTRUCTION
3.1 Landlord shall perform the work shown on Exhibit B annexed hereto. In
addition, Landlord represents that as of the Commencement Date, the
heating, ventilating and air conditioning system installed by Landlord
servicing the Premises shall be in good working order and condition.
However, Landlord shall have no responsibility for the installation or
connection of Tenant's computer, telephone or other communications
equipment, systems or wiring.
3.1.1 Landlord shall provide Tenant with a special allowance in the amount
of $86,900.00 to be applied towards the cost of the work to be
performed by Landlord shown on Exhibit B attached hereto and the
architect's fee in connection with the preparation of the plans
described on Exhibit B. Landlord shall obtain Tenant's consent
prior to performing any work which has a cost in excess of the
special allowance and Tenant shall pay Landlord, as Additional Rent,
any cost of performing such work in excess of said special allowance
within thirty (30) days after being billed therefor. In the event
that the cost of the work shown on Exhibit B is less than the
special allowance, such excess shall be applied against Annual Fixed
Rent or Additional Rent next due pursuant to this Lease. Within one
hundred and twenty (120) days after the Commencement Date, Landlord
agrees to provide Tenant with a written report with respect to the
air balance of the heating, ventilating and air conditioning system
servicing the Premises.
3.2 Landlord agrees to use due diligence to complete the work described in
Section 3.1 on or before the Scheduled Term Commencement Date. Landlord
shall not be required to install any improvements which are not in
conformity with the plans and specifications for the Building. In case
of delays due to governmental regulation, unusual scarcity of or
inability to obtain labor or materials, labor difficulties, casualty or
other causes reasonably beyond Landlord's control (collectively,
"Landlord's Force Majeure"), the Scheduled Term Commencement Date shall
be extended for the period of such delays. The Premises shall be deemed
ready for occupancy on the date on which (a) the work described in
Section 3.1, together with common facilities for access and service to
the Premises, has been substantially completed except for (i) items of
work and adjustment of
-19-
<PAGE>
equipment and fixtures which are not necessary to make the Premises
tenantable for office uses and which can be completed after occupancy
thereof has been taken without causing substantial interference with
Tenant's use of the Premises (i.e. so-called "punch list" items) and
(ii) items of work for which there is a long lead time in obtaining
the materials therefor or which are specially or specifically
manufactured, produced or milled for the work in or to the Premises
and require additional time for receipt or installation, provided
that Landlord has promptly notified Tenant of such items of work
having such characteristics after Landlord becomes aware of same
("long lead" items) and, (b) a certificate of occupancy, temporary or
permanent, has been approved for issuance by applicable governmental
authority, to the extent required by law permitting occupancy of the
Premises by Tenant. Landlord shall complete as soon as conditions
practically permit the punch list items and the long lead items and
Tenant shall not use the Premises in such manner as will increase the
cost of completion. Landlord shall permit Tenant access for installing
furnishings and wiring for Tenant's telephone and telecommunications
equipment in portions of the Premises when it can be done without
material interference with remaining work.
If, however, Landlord shall have failed to substantially complete the
work to be performed by Landlord in accordance with Section 3.1
(excluding punch list items and long lead items) on or before the
Outside Completion Date (which date shall be extended automatically for
such periods of time as Landlord is prevented from proceeding with or
completing the same by reason of Landlord's Force Majeure or any act or
failure to act of Tenant which interferes with Landlord's construction
of the Premises, without limiting Landlord's other rights on account
thereof), Tenant shall have the right to terminate this Lease by giving
notice to Landlord of Tenant's desire to do so within the time period
from the Outside Completion Date (as so extended) until the date which
is thirty (30) days subsequent to the Outside Completion Date (as so
extended); and, upon the giving of such notice, the Term of this Lease
shall cease and come to an end without further liability or obligation
on the part of either party unless, within thirty (30) days after
Landlord's receipt of Tenant's notice Landlord substantially completes
the work to be performed by Landlord under Section 3.1 (except for
punch list items and long lead items) and such right of termination
shall be Tenant's sole and exclusive remedy at law or in equity or
otherwise for Landlord's failure so to complete such work within such
time.
Tenant agrees that no delay by it, or anyone employed by it, in
performing work to prepare the Premises for occupancy (including,
without limitation, the work in installing telephones and other
communications equipment or systems) shall delay commencement of the
Term or the obligation to pay rent, regardless of the reason for such
delay or whether or not it is within the control of Tenant or any such
employee.
-20-
<PAGE>
3.3 This Section 3.3 shall apply before and during the Term. Tenant shall
not make alterations and additions to Tenant's space except in
accordance with plans and specifications therefor first approved by
Landlord, which approval shall not be unreasonably withheld. Landlord
shall not be deemed unreasonable for withholding approval of any
alterations or additions which (a) involve or might affect any
structural or exterior element of the Building, any area or element
outside of the Premises, or any facility serving any area of the
Building outside of the Premises, or (b) will delay completion of the
Premises or Building, or (c) will require unusual expense to readapt
the Premises to normal office use on Lease termination or increase the
cost of construction or of insurance or taxes on the Building or of the
services called for by Section 4.1 unless Tenant first gives assurance
acceptable to Landlord for payment of such increased cost and that such
readaptation will be made prior to such termination without expense to
Landlord. Landlord's review and approval of any such plans and
specifications and consent to perform work described therein shall not
be deemed an agreement by Landlord that such plans, specifications and
work conform with applicable Legal Requirements and requirements of
insurers of the Building (herein called "Insurance Requirements") nor
deemed a waiver of Tenant's obligations under this Lease with respect
to applicable Legal Requirements and Insurance Requirements nor impose
any liability or obligation upon Landlord with respect to the
completeness, design sufficiency or compliance of such plans,
specifications and work with applicable Legal Requirements and
Insurance Requirements. Except for the work shown on Exhibit B and for
any additions or alterations which Tenant requests to remain in the
Premises in Tenant's notice seeking Landlord's consent for the
installation thereof (which notice shall specifically refer to this
Section 3.3) and for which Landlord agrees in writing may remain, all
alterations and additions shall be part of the Building unless and
until Landlord shall specify the same for removal pursuant to Section
5.2. All of Tenant's alterations and additions and installation of
furnishings shall be coordinated with any work being performed by
Landlord and in such manner as to maintain harmonious labor relations
and not to damage the Building or Site or interfere with construction
or operation of the Building and other improvements to the Site and,
except for installation of furnishings, shall be performed by
Landlord's general contractor or by contractors or workmen first
approved by Landlord. Except for work by Landlord's general contractor,
Tenant, before its work is started, shall secure all licenses and
permits necessary therefor; deliver to Landlord a statement of the
names of all its contractors and subcontractors and the estimated cost
of all labor and material to be furnished by them and security
satisfactory to Landlord protecting Landlord against liens arising out
of the furnishing of such labor and material; and cause each contractor
to carry workmen's compensation insurance in statutory amounts covering
all the contractor's and subcontractor's employees and commercial
general liability insurance or comprehensive general liability
insurance with a broad form comprehensive liability endorsement with
such limits as Landlord may reasonably require, but in no event less
than $2,000,000.00
-21-
<PAGE>
combined single limit per occurrence on a per location basis (all such
insurance to be written in companies approved by Landlord and naming
and insuring Landlord and Landlord's managing agent as additional
insureds and insuring Tenant as well as the contractors), and to
deliver to Landlord certificates of all such insurance. Tenant agrees
to pay promptly when due the entire cost of any work done on the
Premises by Tenant, its agents, employees, or independent contractors,
and not to cause or permit any liens for labor or materials performed
or furnished in connection therewith to attach to the Premises or the
Building or the Site and immediately to discharge any such liens which
may so attach. Tenant shall pay, as Additional Rent, 100% of any real
estate taxes on the Complex which shall, at any time after
commencement of the Term, result from any alteration, addition or
improvement to the Premises made by Tenant.
3.3.1 Notwithstanding the terms of Section 3.3, Tenant shall have the
right, without obtaining the prior consent of Landlord, to make
alterations, additions or improvements to the Premises where:
(i) the same are within the interior of the Premises
within the Building, and do not affect the exterior
of the Premises and the Building (including no signs
on windows);
(ii) the same do not affect the roof, any structural
element of the Building, the mechanical, electrical,
plumbing, heating, ventilating, air-conditioning and
fire protection systems of the Building;
(iii) the cumulative sum of the costs of said alterations,
additions or improvements made by Tenant during the
Lease Term shall not exceed $5,000.00 in cost;
(iv) Tenant shall comply with the provisions of this Lease
and if such work increases the cost of insurance or
taxes or of services, Tenant shall pay for any such
increase in cost;
provided, however, that Tenant shall, within fifteen (15) days after
the making of such changes, send to Landlord plans and specifications
describing the same in reasonable detail and provided further that
Landlord, by notice to Tenant given at least thirty (30) days prior to
the expiration or earlier termination of the Lease Term, may require
Tenant to restore the Premises to its condition prior to such
alteration, addition or improvement at the expiration or earlier
termination of the Lease Term.
-22-
<PAGE>
3.4 All construction work required or permitted by this Lease shall be done
in a good and workmanlike manner and in compliance with all applicable
Legal Requirements and Insurance Requirements now or hereafter in
force. Each party may inspect the work of the other at reasonable times
and shall promptly give notice of observed defects. Each party
authorizes the other to rely in connection with design and construction
upon approval and other actions on the party's behalf by any
Construction Representative of the party named in Article I or any
person hereafter designated in substitution or addition by notice to
the party relying. Except as otherwise provided in Article IV, the work
required of Landlord pursuant to this Article III shall be deemed
approved by Tenant when Tenant commences occupancy of the Premises for
the Permitted Uses, except for items which are then uncompleted
(including punch list items and long lead items) and as to which Tenant
shall have given notice to Landlord within thirty (30) days after such
date.
<PAGE>
ARTICLE IV
LANDLORD'S COVENANTS; INTERRUPTIONS AND DELAYS
4.1 Landlord covenants:
4.1.1 To furnish services, utilities, facilities and supplies set forth in
Exhibit C equal to those customarily provided by landlords in high
quality buildings in the Boston West Suburban Market subject to
escalation reimbursement in accordance with Section 2.6.
4.1.2 To furnish, at Tenant's expense, reasonable additional Building
operation services which are usual and customary in similar office
buildings in the Boston West Suburban Market upon reasonable advance
request of Tenant at reasonable and equitable rates from time to time
established by Landlord.
4.1.3 Subject to the escalation provisions of Section 2.6 and except as
otherwise provided in Article VI, (i) to make such repairs to the
roof, exterior walls, floor slabs and common areas and facilities
as may be necessary to keep them in serviceable condition and
(ii) to maintain the Building (exclusive of Tenant's responsibilities
under this Lease) in a first class manner comparable to the
maintenance of similar properties in the Boston West Suburban Market.
4.1.4 To provide and install, at Landlord's expense, letters or numerals on
(i) the entrance doors to the Premises (ii) the tenant directory in the
lobby of the Building and (iii), at Landlord's option from time to time
and subject to receipt of any required permits or approvals, the
existing monument sign facing Hartwell Avenue, to identify Tenant's
-23-
<PAGE>
official name and Building address; all such letters and numerals shall
be in the building standard graphics and no others shall be used or
permitted on the Premises.
4.1.5 Subject to escalation reimbursement in accordance with Section 2.6, to
maintain during the Term of this Lease (a) commercial general
liability insurance insuring Landlord with respect to the Building in
an amount not less than $2,000,000 and insurance against loss or
damage to the Building covered by "all risk" type insurance coverage,
which insurance shall be in an amount at least equal the replacement
cost of the Building. Any and all of such insurance (i) may be
maintained under a blanket policy affecting other premises of
Landlord and/or its affiliated business organizations and (ii) may
be written with deductibles as determined by Landlord. Nothing herein
shall limit Landlord's right to maintain such other insurance as
provided in Section 2.6 hereof.
4.2 In exercising any of its rights to enter the Premises or to repair the
Premises or any portion of the Building, Landlord will use reasonable
efforts not to unreasonably interfere with Tenant's business during
such entry. Notwithstanding the foregoing sentence, Landlord shall not
be liable to Tenant for any compensation or reduction of rent by
reason of inconvenience or annoyance or for loss of business arising
from the necessity of Landlord or its agents entering the Premises
for any of the purposes in this Lease authorized, or for repairing
the Premises or any portion of the Building however the necessity may
occur. In case Landlord is prevented or delayed from making any
repairs, alterations or improvements, or furnishing any services or
performing any other covenant or duty to be performed on Landlord's
part, by reason of any cause reasonably beyond Landlord's control,
including without limitation the causes set forth in Section 3.2
hereof as being reasonably beyond Landlord's control, Landlord shall
not be liable to Tenant therefor, nor, except as expressly otherwise
provided in Article VI, shall Tenant be entitled to any abatement or
reduction of rent by reason thereof, nor shall the same give rise to
a claim in Tenant's favor that such failure constitutes actual or
constructive, total or partial, eviction from the Premises. In the
event that the electricity service to the Premises shall be shut down
for more than five (5) full and consecutive business days, but only
as a result of causes which are covered by Landlord's loss of rentals
insurance, then, Tenant shall be entitled to an abatement of Annual
Fixed Rent equal to the "Insurance Amount" (hereinafter defined).
The "Insurance Amount" shall be an amount equal to the payment
actually received by Landlord (but ONLY allocable to and on account
of the Premises) for such shut down of electricity service to the
Premises from Landlord's insurance carrier providing such loss of
rents insurance less the amount of any deductible contained in such
loss of rents insurance coverage.
Landlord reserves the right to stop any service or utility system, when
necessary by reason of accident or emergency, or until necessary
repairs have been completed;
-24-
<PAGE>
provided, however, that in each instance of stoppage, Landlord shall
exercise reasonable diligence to eliminate the cause thereof. Except
in case of emergency repairs, Landlord will give Tenant reasonable
advance notice of any contemplated stoppage and will use reasonable
efforts to avoid unnecessary inconvenience to Tenant by reason thereof.
ARTICLE V
TENANT'S COVENANTS
Tenant covenants during the term and such further time as Tenant
occupies any part of the Premises:
5.1 To pay when due all fixed rent and Additional Rent and all charges for
utility services rendered to the Premises (except as otherwise
provided in Exhibit C) and, further, as Additional Rent, all charges
for additional services rendered pursuant to Section 4.1.2.
5.2 Except as otherwise provided in Article VI and Section 4.1.3, to keep
the Premises in good order, repair and condition, reasonable wear and
tear and damage from fire or other casualty only excepted, and all
glass in windows (except glass in exterior walls unless the damage
thereto is attributable to Tenant's negligence or misuse) and doors of
the Premises whole and in good condition with glass of the same type
and quality as that injured or broken, damage by fire or taking under
the power of eminent domain only excepted, and at the expiration or
termination of this Lease peaceably to yield up the Premises all
construction, work, improvements, and all alterations and additions
thereto in good order, repair and condition, reasonable wear and tear
and damage from fire or to other casualty only excepted, first removing
all goods and effects of Tenant and, to the extent specified by
Landlord by notice to Tenant given at least ten (10) days before such
expiration or termination (unless otherwise specified by Landlord as
set forth in Section 3.3), the wiring for Tenant's computer, telephone
and other communication systems and equipment and all alterations and
additions made by Tenant and all partitions, and repairing any damage
caused by such removal and restoring the Premises and leaving them
clean and neat. Tenant shall not permit or commit any waste, and
Tenant shall be responsible for the cost of repairs which may be made
necessary by reason of damage to common areas in the Building or to the
Site caused by Tenant, Tenant's independent contractors, Tenant's
employees or Tenant's invitees.
5.3 From the commencement of the Term, to use and occupy the Premises for
the Permitted Uses only, and not to injure or deface the Premises,
Building, the Site or any other part of the Complex nor to permit in
the Premises or on the Site any auction sale, vending
-25-
<PAGE>
machine, or inflammable fluids or chemicals, or nuisance, or the
emission from the Premises of any objectionable noise or odor, nor
to use or devote the Premises or any part thereof for any purpose
other than the Permitted Uses, nor for any use thereof which is
inconsistent with maintaining the Building as a first class office
building in the quality of its maintenance, use and occupancy, or
which is improper, offensive, contrary to law or ordinance or liable
to render necessary any alteration or addition to the Building.
Further, (i) Tenant shall not, nor shall Tenant permit its employees,
invitees, agents, independent contractors, contractors, assignees or
subtenants to, keep, maintain, store or dispose of (into the sewage
or waste disposal system or otherwise) or engage in any activity
which might produce or generate any substance which is or may
hereafter be classified as a hazardous material, waste or substance
(collectively "Hazardous Materials"), under federal, state or local
laws, rules and regulations, including, without limitation, 42 U.S.C.
Section 6901 et seq., 42 U.S.C. Section 9601 et seq., 42 U.S.C.
Section 2601 et seq., 49 U.S.C. Section 1802 et seq. and
Massachusetts General Laws, Chapter 21E and the rules and regulations
promulgated under any of the foregoing, as such laws, rules and
regulations may be amended from time to time (collectively "Hazardous
Materials Laws"), (ii) Tenant shall immediately notify Landlord of
any incident in, on or about the Premises, the Building or the Site
that would require the filing of a notice under any Hazardous
Materials Laws, (iii) Tenant shall comply and shall cause its
employees, invitees, agents, independent contractors, contractors,
assignees and subtenants to comply with each of the foregoing and (iv)
Landlord shall have the right to make such inspections (including
testing) as Landlord shall elect from time to time to determine that
Tenant is complying with the foregoing. Notwithstanding the foregoing,
Tenant may use normal amounts and types of substances typically used
for office uses, provided that Tenant uses such substances in the
manner which they are normally used, and in compliance with all
Hazardous Materials Laws and other applicable laws, ordinances,
bylaws, rules and regulations, and Tenant obtains and complies with
all permits required by Hazardous Materials Laws or any other laws,
ordinances, bylaws, rules or regulations prior to the use or presence
of any such substances in the Premises.
(B) Landlord represents to Tenant that to the best of Landlord's
actual knowledge as of the date of this Lease, based upon and except
as provided in the Report on Oil and Hazardous Material Site
Evaluation prepared by Dames & Moore and dated August 29, 1996, and
the Preliminary Asbestos Survey prepared by Briggs Associates, Inc.
and dated April 26, 1990 and Waste Shipment Manifest Numbers 008549
and 008514 and letters from Environmental Remediation Services to
Dec-Tam Corporation dated May 13, 1996, May 15, 1996, May 16, 1996,
May 17, 1996 and May 20, 1996, copies of which have been provided to
Tenant, there is no asbestos or Hazardous Materials in the Premises
which are required to be removed or remediated by Hazardous Materials
Laws.
-26-
<PAGE>
5.4 Not to obstruct in any manner any portion of the Building not hereby
leased or any portion thereof or of the Site used by Tenant in common
with others; not without prior consent of Landlord to permit the
painting or placing of any signs, curtains, blinds, shades, awnings,
aerials or flagpoles, or the like, visible from outside the Premises;
and to comply with all reasonable Rules and Regulations now or
hereafter made by Landlord of general applicability to all tenants in
the Building, of which Tenant has been given notice, for the care and
use of the Building and Site and their facilities and approaches;
Landlord shall not be liable to Tenant for the failure of other
occupants of the Building to conform to such Rules and Regulations.
5.5 To keep the Premises equipped with all safety appliances required by
any public authority because of any use made by Tenant other than
normal office use, and to procure all licenses and permits so required
because of such use and, if requested by Landlord, to do any work so
required because of such use, it being understood that the foregoing
provisions shall not be construed to broaden in any way Tenant's
Permitted Uses.
5.6 Except as otherwise expressly provided herein, Tenant covenants and
agrees that it shall not assign, mortgage, pledge, hypothecate or
otherwise transfer this Lease and/or Tenant's interest in this Lease
or sublet (which term, without limitation, shall include granting of
concessions, licenses or the like) the whole or any part of the
Premises. Any assignment, mortgage, pledge, hypothecation, transfer or
subletting not expressly permitted in or consented to by Landlord
under Sections 5.6.1-5.6.6 shall be void, ab initio; shall be of no
force and effect; and shall confer no rights on or in favor of third
parties. In addition, Landlord shall be entitled to seek specific
performance of or other equitable relief with respect to the
provisions hereof.
5.6.1 Notwithstanding the provisions of Section 5.6 above and the
provisions of Section 5.6.2, 5.6.3 and 5.6.5 below, Tenant shall
have the right to assign this Lease or to sublet the Premises (in
whole or in part) to (i) any parent or subsidiary corporation of
Tenant or Moldflow, Inc. (ii) to any corporation into which Tenant
or Moldflow, Inc. may be converted or with which they may merge or be
consolidated or (iii) to any entity which acquires substantially all
of the assets or corporate stock of Tenant, provided that the entity
to which this Lease is so assigned or which so sublets the Premises
has a credit worthiness (e.g. assets on a pro forma basis using
generally accepted accounting principles consistently applied and
using the most recent financial statements) which in Landlord's
reasonable determination is sufficient to perform the obligations
of Tenant under this Lease. Any such assignment or subletting shall
be subject to the provisions of Section 5.6.4 and Section 5.6.6 below.
-27-
<PAGE>
5.6.2 Notwithstanding the provisions of Section 5.6 above, in the event
Tenant desires to assign this Lease or to sublet the Premises in
whole but not in part (no partial subletting being permitted other
than as provided in Section 5.6.1), Tenant shall notify Landlord
thereof in writing and Landlord shall have the right at its sole
option, to be exercised within thirty (30) days after receipt of
Tenant's notice, to terminate this Lease as of a date specified in
a notice to Tenant, which date shall not be earlier than sixty (60)
days nor later than one hundred and twenty (120) days after
Landlord's notice to Tenant; provided, however, that upon the
termination date as set forth in Landlord's notice, all obligations
relating to the period after such termination date (but not those
relating to the period before such termination date) shall cease and
promptly upon being billed therefor by Landlord, Tenant shall make
final payment of all rent and Additional Rent due from Tenant through
the termination date.
In the event that Landlord shall not exercise its termination rights
as aforesaid, or shall fail to give any or timely notice, the
provisions of Sections 5.6.3-5.6.6 shall be applicable. This Section
5.6.2 shall not be applicable to an assignment or sublease pursuant
to Section 5.6.1.
5.6.3 Notwithstanding the provisions of Section 5.6 above, BUT subject to
the provisions of this Section 5.6.3 and the provisions of Sections
5.6.4, 5.6.5 and 5.6.6 below, in the event that Landlord shall not
have exercised the termination right as set forth in Section 5.6.2,
then for a period of one hundred twenty (120) days after the receipt
of Tenant's notice referred to in Section 5.6.2, Tenant shall have the
right to assign this Lease or sublet the whole (but not part) of the
Premises in accordance with Tenant's notice to Landlord given as
provided in Section 5.6.4 provided that, in each instance, Tenant
first obtains the express prior written consent of Landlord, which
consent shall not be unreasonably withheld or delayed. Landlord
shall not be deemed to be unreasonably withholding its consent to
such a proposed assignment or subleasing if:
(a) the proposed assignee or subtenant is not of a
character consistent with the operation of a first
class office building (by way of example Landlord
shall not be deemed to be unreasonably withholding
its consent to an assignment or subleasing to any
governmental agency), or
(b) the proposed assignee or subtenant is not of good
character and reputation, or
(c) the proposed assignee or subtenant does not possess
adequate financial capability to perform the Tenant
obligations as and when due or required, or
-28-
<PAGE>
(d) the assignee or subtenant proposes to use the
Premises (or part thereof) for a purpose other than
the purpose for which the Premises may be used as
stated in Section 1.1 hereof, or
(e) the character of the business to be conducted or the
proposed use of the Premises by the proposed
subtenant or assignee shall (i) be likely to increase
Landlord's Operating Expenses beyond that which
Landlord now incurs for use by Tenant; (ii) be likely
to increase the burden on elevators or other Building
systems or equipment over the burden prior to such
proposed subletting or assignment; or (iii) violate
or be likely to violate any provisions or
restrictions contained herein relating to the use or
occupancy of the Premises, or
(f) there shall be existing an Event of Default (defined in
Section 7.1).
5.6.4 Tenant shall give Landlord notice of any proposed sublease or
assignment, and said notice shall specify the provisions of the
proposed assignment or subletting, including (a) the name and
address of the proposed assignee or subtenant, (b) in the case
of a proposed assignment or subletting pursuant to Section 5.6.2,
such information as to the proposed assignee's or proposed
subtenant's net worth and financial capability and standing as may
reasonably be required for Landlord to make the determination
referred to in Section 5.6.3 above (provided, however, that
Landlord shall hold such information confidential having the right to
release same to its officers, accountants, attorneys and mortgage
lenders on a confidential basis), (c) all of the terms and provisions
upon which the proposed assignment or subletting is to be made,
(d) in the case of a proposed assignment or subletting pursuant to
Section 5.6.2, all other information necessary to make the
determination referred to in Section 5.6.3 above and (e) in the case
of a proposed assignment or subletting pursuant to Section 5.6.1
above, such information as may be reasonably required by Landlord to
determine that such proposed assignment or subletting complies with
the requirements of said Section 5.6.1. No partial subletting shall
be permitted except as provided in Section 5.6.1.
If Landlord shall consent to the proposed assignment or subletting, as
the case may be, then, in such event, Tenant may thereafter sublease
(the whole but not part of the Premises) or assign pursuant to Tenant's
notice, as given hereunder; provided, however, that if such assignment
or sublease shall not be executed and delivered to Landlord within
ninety (90) days after the date of Landlord's consent, the consent
shall be deemed null and void and the provisions of Section 5.6.2
shall be applicable.
-29-
<PAGE>
5.6.5 In addition, in the case of any assignment or subleasing as to which
Landlord may consent (other than an assignment or subletting permitted
under Section 5.6.1 hereof) such consent shall be upon the express and
further condition, covenant and agreement, and Tenant hereby covenants
and agrees that, in addition to the Annual Fixed Rent, Additional Rent
and other charges to be paid pursuant to this Lease, fifty percent
(50%) of the "Assignment/Sublease Profits" (hereinafter defined), if
any, shall be paid to Landlord.
The "Assignment/Sublease Profits" shall be the excess, if any, of (a)
the "Assignment/Sublease Net Revenues" as hereinafter defined over (b)
the Annual Fixed Rent and Additional Rent and other charges provided
in this Lease. The "Assignment/Sublease Net Revenues" shall be the
fixed rent, Additional Rent and all other charges and sums payable
either initially or over the term of the sublease or assignment PLUS
all other profits and increases to be derived by Tenant as a result
of such subletting or assignment, less the reasonable costs of Tenant
incurred in such subleasing or assignment (the definition of which
shall include but not necessarily be limited to rent concessions,
brokerage commissions and alteration allowances) amortized over the
term of the sublease or assignment.
All payments of the Assignment/Sublease Profits due Landlord shall be
made within ten (10) days of receipt of same by Tenant.
5.6.6 (A) It shall be a condition of the validity of any assignment or
subletting of right under Section 5.6.1 above, or consented to under
Section 5.6.3 above, that the assignee or sublessee agrees directly
with Landlord, in form reasonably satisfactory to Landlord, to be
bound by all the obligations of the Tenant hereunder, including,
without limitation, the obligation to pay the rent and other amounts
provided for under this Lease to the extent of the payments which such
assignee or subtenant is obligated to make to Tenant pursuant to such
sublease or assignment including the provisions of Sections 5.6
through 5.6.6 hereof, but such assignment or subletting shall not
relieve the Tenant named herein of any of the obligations of the
Tenant hereunder, Tenant shall remain fully and primarily liable
therefor and the liability of Tenant and such assignee (or subtenant,
as the case may be) shall be joint and several. Further, and
notwithstanding the foregoing, the provisions hereof shall not
constitute a recognition of the assignment or the assignee thereunder
or the sublease or the subtenant thereunder, as the case may be, and
at Landlord's option, upon the termination of the Lease, the
assignment or sublease shall be terminated.
(B) As Additional Rent, Tenant shall reimburse Landlord promptly for
reasonable out of pocket legal and other expenses incurred by Landlord
in connection with any request
-30-
<PAGE>
by Tenant for consent to assignment or subletting in an amount not to
exceed $1,000.00 for each request.
(C) If this Lease be assigned, or if the Premises or any part thereof
be sublet or occupied by anyone other than Tenant, Landlord may upon
prior notice to Tenant, at any time and from time to time, collect
rent and other charges from the assignee, sublessee or occupant and
apply the net amount collected to the rent and other charges herein
reserved, but no such assignment, subletting, occupancy or collection
shall be deemed a waiver of this covenant, or a waiver of the
provisions of Sections 5.6 through 5.6.6 hereof, or the acceptance of
the assignee, sublessee or occupant as a tenant or a release of
Tenant from the further performance by Tenant of covenants on the
part of Tenant herein contained, the Tenant herein named to remain
primarily liable under this Lease.
(D) The consent by Landlord to an assignment or subletting under any
of the provisions of Sections 5.6.1 or 5.6.3 shall in no way be
construed to relieve Tenant from obtaining the express consent in
writing to Landlord to any further assignment or subletting.
5.7 To defend with counsel first approved by Landlord (which approval shall
not be unreasonably withheld or delayed), save harmless, and indemnify
Landlord from any liability for injury, loss, accident or damage to any
person or property, and from any claims, actions, proceedings and
expenses and costs in connection therewith (including without
limitation reasonable counsel fees) (i) arising from or claimed to have
arisen from (a) the omission, fault, willful act, negligence or other
misconduct of Tenant or Tenant's contractors, licensees, invitees,
agents, servants, independent contractors or employees or (b) any use
made or thing done or occurring on the Premises not due to the
omission, fault, willful act, negligence or other misconduct of
Landlord, or (ii) resulting from the failure of Tenant to perform and
discharge its covenants and obligations under this Lease; to maintain
commercial general liability insurance or comprehensive general
liability insurance written on an occurrence basis with a broad form
comprehensive liability endorsement covering the Premises insuring
Landlord and Landlord's managing agent (and such persons as are in
privity of estate with Landlord and Landlord's managing agent as may be
set out in notice from time to time) as additional insureds as well as
Tenant with limits which shall, at the commencement of the Term, be at
least equal to those stated in Section 1.1 and from time to time during
the Term shall be for such higher limits, if any, as are customarily
carried in Greater Boston with respect to similar properties or which
may reasonably be required by Landlord, and workmen's compensation
insurance with statutory limits covering all of Tenant's employees
working in the Premises, and to deposit with Landlord on or before the
Commencement Date and concurrent with all renewals thereof,
certificates for such insurance bearing the
-31-
<PAGE>
endorsement that the policies will not be canceled until after thirty
(30) days' written notice to Landlord. All insurance required to be
maintained by Tenant pursuant to this Lease shall be maintained with
responsible companies qualified to do business, and in good standing,
in the Commonwealth of Massachusetts and which have a rating of at
least "A-" and are within a financial size category of not less than
"Class VIII" in the most current Best's Key Rating Guide or such
similar rating as may be reasonably selected by Landlord if such
Guide is no longer published.
5.8 That all of the furnishings, fixtures, equipment, effects and property
of every kind, nature and description of Tenant and of all persons
claiming by, through or under Tenant which, during the continuance of
this Lease or any occupancy of the Premises by Tenant or anyone
claiming under Tenant, may be on the Premises or elsewhere in the
Building or on the Site, shall be at the sole risk and hazard of
Tenant, and if the whole or any part thereof shall be destroyed or
damaged by fire, water or otherwise, or by the leakage or bursting of
water pipes, or other pipes, by theft or from any other cause, no part
of said loss or damage is to be charged to or be borne by Landlord,
except that Landlord shall in no event be indemnified or held harmless
or exonerated from any liability to Tenant or to any other person, for
any injury, loss, damage or liability to the extent such indemnity,
hold harmless or exoneration is prohibited by law. Further, Tenant, at
Tenant's expense, shall maintain at all times during the Term of this
Lease insurance against loss or damage covered by the so-called "all
risk" type insurance coverage with respect to Tenant's fixtures,
equipment, goods, wares and merchandise, tenant improvements made by or
paid for by Tenant, and other property of Tenant (collectively
"Tenant's Property"). Such insurance shall be in an amount at least
equal to the full replacement cost of Tenant's Property.
5.9 To permit Landlord and its agents to examine the Premises at reasonable
times and, if Landlord shall so elect, to make any repairs or
replacements Landlord may deem necessary; to remove, at Tenant's
expense, any alterations, addition, signs, curtains, blinds, shades,
awnings, aerials, flagpoles, or the like not consented to in writing;
and to show the Premises to prospective tenants during the nine (9)
months preceding expiration of the Term and to prospective purchasers
and mortgagees at all reasonable times. Upon reasonable prior written
or verbal notice, except in the event of an emergency, Landlord shall
make reasonable efforts not to unreasonably interfere with Tenant's
business during any entry to the Premises pursuant to this Section 5.9.
5.10 Not to place a load upon the Premises exceeding an average rate of 100
pounds of live load per square foot of floor area (partitions shall be
considered as part of the live load); and not to move any safe, vault
or other heavy equipment in, about or out of the Premises except in
such manner and at such time as Landlord shall in each instance
authorize;
-32-
<PAGE>
Tenant's business machines and mechanical equipment which
cause vibration or noise that may be transmitted to the Building
structure or to any other space in the Building shall be so installed,
maintained and used by Tenant so as to eliminate such vibration or
noise.
5.11 To pay promptly when due all taxes which may be imposed upon
Tenant's Property in the Premises to whomever assessed.
5.12 To comply with all applicable Legal Requirements now or hereafter in
force which shall impose a duty on Landlord or Tenant relating to or as
a result of the use or occupancy of the Premises; provided that Tenant
shall not be required to make any alterations or additions to the
structure, roof, exterior and load bearing walls, foundation,
structural floor slabs, common areas and other structural elements of
the Building unless the same are required by such Legal Requirements as
a result of or in connection with Tenant's use or occupancy of the
Premises beyond normal use of space of this kind. Tenant shall promptly
pay all fines, penalties and damages that may arise out of or be
imposed because of its failure to comply with the provisions of this
Section 5.12. Tenant shall not be responsible for the compliance of the
common areas with the Federal Americans with Disabilities Act (the
"ADA") except for compliance required because of Tenants use or
occupancy of the Premises beyond normal use of space of this kind or
because of improvements in the Premises performed by or for Tenant.
5.13 To pay as Additional Rent all reasonable costs, counsel and other fees
incurred by Landlord in connection with the successful enforcement by
Landlord of any obligations of Tenant under this Lease.
ARTICLE VI
CASUALTY AND TAKING
6.1 In case during the Lease Term the Building or the Site are damaged by
fire or other casualty and such fire or casualty damage cannot, in the
ordinary course, reasonably be expected to be repaired within one
hundred fifty (150) days from the time that repair work would commence,
Landlord may, at its election, terminate this Lease by notice given to
Tenant within sixty (60) days after the date of such fire or other
casualty, specifying the effective date of termination. The effective
date of termination specified by Landlord shall not be less than thirty
(30) days nor more than forty-five (45) days after the date of notice
of such termination.
-33-
<PAGE>
In case during the last year of the Lease Term, the Premises are
damaged by fire or other casualty and such fire or casualty damage
cannot, in the ordinary course, reasonably be expected to be repaired
within one hundred fifty (150) days (and/or as to special work or work
which requires long lead time then if such work cannot reasonably be
expected to be repaired within such additional time as is reasonable
under the circumstances given the nature of the work) from the time
that repair work would commence, Tenant may, at its election, terminate
this Lease by notice given to Landlord within sixty (60) days after the
date of such fire or other casualty, specifying the effective date of
termination. The effective date of termination specified by Tenant
shall be not less than thirty (30) days nor more than forty-five (45)
days after the date of notice of such termination.
Unless terminated pursuant to the foregoing provisions, this Lease
shall remain in full force and effect following any such damage
subject, however, to the following provisions.
If the Building or the Site or any part thereof are damaged by fire or
other casualty and this Lease is not so terminated, or Landlord or
Tenant have no right to terminate this Lease, and in any such case the
holder of any mortgage which includes the Building as a part of the
mortgaged premises or any ground lessor of any ground lease which
includes the Site as part of the demised premises allows the net
insurance proceeds to be applied to the restoration of the Building
(and/or the Site), Landlord shall, promptly after such damage and the
determination of the net amount of insurance proceeds available, use
due diligence to restore the Premises and the Building in the event of
damage thereto (excluding Tenant's Property) into substantially the
same condition they were in prior to the damage and a just proportion
of the Annual Fixed Rent, Tenant's share of Operating Costs and
Tenant's share of real estate taxes shall be abated according to the
nature and extent of the injury to the Premises, until the Premises
shall have been restored by Landlord substantially into such condition
except for punch list items and long lead items. Notwithstanding
anything herein contained to the contrary, Landlord shall not be
obligated to expend for such repair and restoration any amount in
excess of the net insurance proceeds. If such net insurance proceeds
are not allowed by such mortgagee or ground lessor to be applied to, or
are insufficient for, the restoration of the Building and if Landlord
does not otherwise elect to restore the Building, then Landlord shall
give prompt notice to Tenant terminating this Lease, the effective date
of which termination shall not be less than sixty (60) days after the
date of notice of such termination.
If such restoration is not completed within ten (10) months from the
date of the fire or casualty, such period to be subject, however, to
extension where the delay in completion of such work is due to causes
beyond Landlord's reasonable control (but in no event beyond sixteen
(16) months from the date of the fire or casualty), Tenant shall have
the
-34-
<PAGE>
right to terminate this Lease at any time after the expiration of
such ten-month period (as extended), which right shall continue until
the restoration is substantially completed. Such termination shall be
effective as of the thirtieth (30th) day after the date of receipt by
Landlord of Tenant's notice, with the same force and effect as if such
date were the date originally established as the expiration date hereof
unless, within thirty (30) days after Landlord's receipt of Tenant's
notice, such restoration is substantially completed, in which case
Tenant's notice of termination shall be of no force and effect and this
Lease and the Lease Term shall continue in full force and effect.
6.2 Notwithstanding anything to the contrary contained in this Lease, if
the Building or the Premises shall be substantially damaged by fire or
casualty as the result of a risk not covered by the forms of casualty
insurance at the time maintained by Landlord and such fire or casualty
damage cannot, in the ordinary course, reasonably be expected to be
repaired within ninety (90) days from the time that repair work would
commence, Landlord may, at its election, terminate the Term of this
Lease by notice to the Tenant given within thirty (30) days after such
loss. If Landlord shall give such notice, then this Lease shall
terminate as of the date of such notice with the same force and effect
as if such date were the date originally established as the expiration
date hereof.
6.3 If the entire Building, or such portion of the Premises as to render
the balance (if reconstructed to the maximum extent practicable in the
circumstances) unsuitable for Tenant's purposes, shall be taken by
condemnation or right of eminent domain, Landlord or Tenant shall have
the right to terminate this Lease by notice to the other of its desire
to do so, provided that such notice is given not later than thirty (30)
days after Tenant has been deprived of possession. If either party
shall give such notice, then this Lease shall terminate as of the date
of such notice with the same force and effect as if such date were the
date originally established as the expiration date hereof.
Further, if so much of the Building shall be so taken that continued
operation of the Building would be uneconomic as a result of the
taking, Landlord shall have the right to terminate this Lease by giving
notice to Tenant of Landlord's desire to do so not later than thirty
(30) days after Tenant has been deprived of possession of the Premises
(or such portion thereof as may be taken). If Landlord shall give such
notice, then this Lease shall terminate as of the date of such notice
with the same force and effect as if such date were the date originally
established as the expiration date hereof.
Should any part of the Premises be so taken or condemned during the
Lease Term hereof, and should this Lease not be terminated in
accordance with the foregoing provisions, and the holder of any
mortgage which includes the Premises as part of the mortgaged premises
or any ground lessor of any ground lease which includes the Site as
part of the
-35-
<PAGE>
demised premises allows the net condemnation proceeds to be
applied to the restoration of the Building, Landlord agrees, after the
determination of the net amount of condemnation proceeds available to
Landlord, to use due diligence to put what may remain of the Premises
into proper condition for use and occupation as nearly like the
condition of the Premises prior to such taking as shall be practicable
(excluding Tenant's Property). Notwithstanding the foregoing, Landlord
shall not be obligated to expend for such repair and restoration any
amount in excess of the net condemnation proceeds.
If the Premises shall be affected by any exercise of the power of
eminent domain, then the Annual Fixed Rent, Tenant's share of operating
costs and Tenant's share of real estate taxes shall be justly and
equitably abated and reduced according to the nature and extent of the
loss of use thereof suffered by Tenant; and in case of a taking which
permanently reduces the Rentable Floor Area of the Premises, a just
proportion of the Annual Fixed Rent, Tenant's share of operating costs
and Tenant's share of real estate taxes shall be abated for the
remainder of the Lease Term.
6.4 Landlord shall have and hereby reserves to itself any and all rights to
receive awards made for damages to the Premises, the Building, the
Complex and the Site and the leasehold hereby created, or any one or
more of them, accruing by reason of exercise of eminent domain or by
reason of anything lawfully done in pursuance of public or other
authority. Tenant hereby grants, releases and assigns to Landlord all
Tenant's rights to such awards, and covenants to execute and deliver
such further assignments and assurances thereof as Landlord may from
time to time request, and if Tenant shall fail to execute and deliver
the same within fifteen (15) days after notice from Landlord, Tenant
hereby covenants and agrees that Landlord shall be irrevocably
designated and appointed as its attorney-in-fact to execute and deliver
in Tenant's name and behalf all such further assignments thereof which
conform with the provisions hereof.
Nothing contained herein shall be construed to prevent Tenant from
prosecuting in any condemnation proceeding a claim for the value of any
of Tenant's usual trade fixtures installed in the Premises by Tenant at
Tenant's expense and for relocation and moving expenses, provided that
such action and any resulting award shall not affect or diminish the
amount of compensation otherwise recoverable by Landlord from the
taking authority.
-36-
<PAGE>
ARTICLE VII
DEFAULT
7.1 (a) If at any time subsequent to the date of this Lease any one or more
of the following events (herein sometimes called an "Event of Default")
shall occur:
(i) Tenant shall fail to pay the fixed rent, Additional
Rent or other charges for which provision is made
herein on or before the date on which the same become
due and payable, and the same continues for five (5)
days after notice from Landlord thereof, or
(ii) Landlord having rightfully given the notice specified
in subdivision (a) above twice in any calendar year,
Tenant shall thereafter in the same calendar year
fail to pay the fixed rent, Additional Rent or other
charges on or before the date on which the same
become due and payable, or,
(iii) Tenant shall neglect or fail to perform or observe
any other covenant herein contained on Tenant's part
to be performed or observed and Tenant shall fail to
remedy the same within thirty (30) days after notice
to Tenant specifying such neglect or failure, or if
such failure is of such a nature that Tenant cannot
reasonably remedy the same within such thirty (30)
day period, Tenant shall fail to commence promptly to
remedy the same and to prosecute such remedy to
completion with diligence and continuity; or
(iv) Tenant's leasehold interest in the Premises shall be
taken on execution or by other process of law
directed against Tenant; or
(v) Tenant shall make an assignment for the benefit of
creditors or shall file a voluntary petition in
bankruptcy or shall be adjudicated bankrupt or
insolvent, or shall file any petition or answer
seeking any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar
relief for itself under any present or future
Federal, State or other statute, law or regulation
for the relief of debtors, or shall seek or consent
to or acquiesce in the appointment of any trustee,
receiver or liquidator of Tenant or of all or any
substantial part of its properties, or shall admit
in writing its inability to pay its debts generally
as they become due; or
(vi) A petition shall be filed against Tenant in
bankruptcy or under any other law seeking any
reorganization, arrangement, composition,
readjustment,
-37-
<PAGE>
liquidation, dissolution, or similar relief under any
present or future Federal, State or other statute,
law or regulation and shall remain undismissed or
unstayed for an aggregate of sixty (60) days
(whether or not consecutive), or if any debtor in
possession (whether or not Tenant) trustee, receiver
or liquidator of Tenant or of all or any substantial
part of its properties or of the Premises shall be
appointed without the consent or acquiescence of
Tenant and such appointment shall remain unvacated
or unstayed for an aggregate of sixty (60) days
(whether or not consecutive)--
then, and in any of said cases (notwithstanding any license of a former
breach of covenant or waiver of the benefit hereof or consent in a
former instance), Landlord lawfully may, immediately or at any time
thereafter, and without demand or further notice terminate this Lease
by notice to Tenant, specifying a date not less than ten (10) days
after the giving of such notice on which this Lease shall terminate,
and this Lease shall come to an end on the date specified therein as
fully and completely as if such date were the date herein originally
fixed for the expiration of the Lease Term (Tenant hereby waiving any
rights of redemption), and Tenant will then quit and surrender the
Premises to Landlord, but Tenant shall remain liable as hereinafter
provided.
(b) If This Lease shall have been terminated as provided in this
Article, then Landlord may, without notice, re-enter the Premises,
either by force, summary proceedings, ejectment or otherwise, and
remove and dispossess Tenant and all other persons and any and all
property from the same, as if this Lease had not been made, and Tenant
hereby waives the service of notice of intention to re-enter or to
institute legal proceedings to that end.
(c) In the event that this Lease is terminated under any of the
provisions contained in Section 7.1 (a) or shall be otherwise
terminated by breach of any obligation of Tenant, Tenant covenants and
agrees forthwith to pay and be liable for, on the days originally fixed
herein for the payment thereof, amounts equal to the several
installments of rent and other charges reserved as they would, under
the terms of this Lease, become due if this Lease had not been
terminated or if Landlord had not entered or re-entered, as aforesaid,
and whether the Premises be relet or remain vacant, in whole or in
part, or relet for a period less than the remainder of the Term, and
for the whole thereof, but in the event the Premises be relet by
Landlord, Tenant shall be entitled to a credit in the net amount of
rent and other charges received by Landlord in reletting, after
deduction of all expenses incurred in reletting the Premises
(including, without limitation, remodeling costs, brokerage fees and
the like), and in collecting the rent in connection therewith, in the
following manner:
-38-
<PAGE>
Amounts received by Landlord after reletting shall first be applied
against such Landlord's expenses, until the same are recovered, and
until such recovery, Tenant shall pay, as of each day when a payment
would fall due under this Lease, the amount which Tenant is obligated
to pay under the terms of this Lease (Tenant's liability prior to any
such reletting and such recovery not in any way to be diminished as a
result of the fact that such reletting might be for a rent higher than
the rent provided for in this Lease); when and if such expenses have
been completely recovered, the amounts received from reletting by
Landlord as have not previously been applied shall be credited against
Tenant's obligations as of each day when a payment would fall due under
this Lease, and only the net amount thereof shall be payable by Tenant.
Further, amounts received by Landlord from such reletting for any
period shall be credited only against obligations of Tenant allocable
to such period, and shall not be credited against obligations of Tenant
hereunder accruing subsequent or prior to such period; nor shall any
credit of any kind be due for any period after the date when the term
of this Lease is scheduled to expire according to its terms.
(d)(i) At any time after such termination and whether or not Landlord
shall have collected any damages as aforesaid, Tenant shall pay to
Landlord as liquidated final damages and in lieu of all other damages
beyond the date of notice from Landlord to Tenant, at Landlord's
election, such a sum as at the time of the giving of such notice
represents the amount of the excess, if any, of the total rent and
other benefits which would have accrued to Landlord under this Lease
from the date of such notice for what would be the then unexpired Lease
Term if the Lease terms had been fully complied with by Tenant over and
above the then cash rental value (in advance) of the Premises for the
balance of the Lease Term.
(d)(ii) For the purposes of this Article, if Landlord elects to require
Tenant to pay damages in accordance with the immediately preceding
paragraph, the total rent shall be computed by assuming that Tenant's
share of excess taxes, Tenant's share of excess operating costs and
Tenant's share of excess electrical costs would be, for the balance of
the unexpired Term from the date of such notice, the amount thereof (if
any) for the immediately preceding annual period payable by Tenant to
Landlord.
(e) In case of any Event of Default, re-entry, dispossession by summary
proceedings or otherwise, Landlord may (i) re-let the Premises or any
part or parts thereof, either in the name of Landlord or otherwise, for
a term or terms which may at Landlord's option be equal to or less than
or exceed the period which would otherwise have constituted the balance
of the Term of this Lease and may grant commercially reasonable
concessions or free rent to the extent that Landlord considers
advisable or necessary to re-let the same and (ii) may make such
alterations, repairs and decorations in the Premises as Landlord in
-39-
<PAGE>
its sole judgment considers advisable or necessary for the purpose of
reletting the Premises; and the making of such alterations, repairs and
decorations shall not operate or be construed to release Tenant from
liability hereunder as aforesaid. Landlord shall in no event be liable
in any way whatsoever for failure to re-let the Premises, or, in the
event that the Premises are re-let, for failure to collect the rent
under re-letting. Tenant hereby expressly waives any and all rights of
redemption granted by or under any present or future laws in the event
of Tenant being evicted or dispossessed, or in the event of Landlord
obtaining possession of the Premises, by reason of the violation by
Tenant of any of the covenants and conditions of this Lease.
(f) The specified remedies to which Landlord may resort hereunder are
not intended to be exclusive of any remedies or means of redress to
which Landlord may at any time be entitled lawfully, and Landlord may
invoke any remedy (including the remedy of specific performance)
allowed at law or in equity as if specific remedies were not herein
provided for. Further, nothing contained in this Lease shall limit or
prejudice the right of Landlord to prove and obtain in proceedings for
bankruptcy or insolvency by reason of the termination of this Lease, an
amount equal to the maximum allowed by any statute or rule of law in
effect at the time when, and governing the proceedings in which, the
damages are to be proved, whether or not the amount be greater, equal
to, or less than the amount of the loss or damages referred to above.
7.2 Landlord shall in no event be in default in the performance of any of
Landlord's obligations hereunder unless and until Landlord shall have
failed to perform such obligations within thirty (30) days, or such
additional time as is reasonably required to correct any such default,
after notice by Tenant to Landlord properly specifying wherein Landlord
has failed to perform any such obligation.
ARTICLE VIII
8.1 Tenant covenants and agrees that Tenant will not do or permit anything
to be done in or upon the Premises, or bring in anything or keep
anything therein, which shall invalidate or increase the rate of
insurance on the Premises or on the Building above the standard rate
applicable to premises being occupied for the use to which Tenant has
agreed to devote the Premises; and Tenant further agrees that, in the
event that Tenant shall do any of the foregoing, Tenant will promptly
pay to Landlord, on demand, any such increase resulting therefrom,
which shall be due and payable as Additional Rent thereunder.
8.2 Failure on the part of Landlord or Tenant to complain of any action or
non-action on the part of the other, no matter how long the same may
continue, shall never be a waiver by
-40-
<PAGE>
Tenant or Landlord, respectively, of any of its rights hereunder.
Further, no waiver at any time of any of the provisions hereof by
Landlord or Tenant shall be construed as a waiver of any of the other
provisions hereof, and a waiver at any time of any of the provisions
hereof shall not be construed as a waiver at any subsequent time of
the same provisions. The consent or approval of Landlord or Tenant to
or of any action by the other requiring such consent or approval shall
not be construed to waive or render unnecessary Landlord's or Tenant's
consent or approval to or of subsequent similar act by the other.
No payment by Tenant, or acceptance by Landlord, of a lesser amount
than shall be due from Tenant to Landlord shall be treated otherwise
than as a payment on account. The acceptance by Landlord of a check for
a lesser amount with an endorsement or statement thereon, or upon any
letter accompanying such check, that such lesser amount is payment in
full, shall be given no effect, and Landlord may accept such check
without prejudice to any other rights or remedies which Landlord may
have against Tenant.
8.3 The specific remedies to which Landlord may resort under the terms of
this Lease are cumulative and are not intended to be exclusive of any
other remedies or means of redress to which such party may be lawfully
entitled in case of any breach or threatened breach by Tenant of any
provisions of this Lease. In addition to the other remedies provided in
this Lease, Landlord shall be entitled to the restraint by injunction
of the violation or attempted or threatened violation of any of the
covenants, conditions or provisions of this Lease or to a decree
compelling specific performance of any such covenants, conditions or
provisions.
8.4 Tenant, subject to the terms and provisions of this Lease on payment of
the rent and observing, keeping and performing all of the terms and
provisions of this Lease on Tenant's part to be observed, kept and
performed, shall lawfully, peaceably and quietly have, hold, occupy and
enjoy the Premises during the Term, without hindrance or ejection by
any persons lawfully claiming under Landlord to have title to the
Premises superior to Tenant; the foregoing covenant of quiet enjoyment
is in lieu of any other covenant, express or implied; and it is
understood and agreed that this covenant and any and all other
covenants of Landlord contained in this Lease shall be binding upon
Landlord and Landlord's successors only with respect to breaches
occurring during Landlord's or Landlord's successors' respective
ownership of Landlord's interest hereunder, as the case may be.
Further, Tenant specifically agrees to look solely to Landlord's then
equity interest in the Building at the time owned, or in which Landlord
holds an interest as ground lessee, for recovery of any judgment from
Landlord; it being specifically agreed that neither Landlord (original
or successor), nor any partner in or of Landlord, nor any beneficiary
of
-41-
<PAGE>
any Trust of which any person holding Landlord's interest is
Trustee, shall ever be personally liable for any such judgment, or for
the payment of any monetary obligation to Tenant. The provision
contained in the foregoing sentence is not intended to, and shall not,
limit any right that Tenant might otherwise have to obtain injunctive
relief against Landlord or Landlord's successors in interest, or any
action not involving the personal liability of Landlord (original or
successor), any partner in or of Landlord, any successor Trustee to the
persons named herein as Landlord, or any beneficiary of any Trust of
which any person holding Landlord's interest is Trustee, to respond in
monetary damages from Landlord's assets other than Landlord's equity
interest aforesaid in the Building. In no event shall Landlord ever be
liable to Tenant for any indirect or consequential damages suffered by
Tenant from whatever cause.
8.5 After receiving notice from any person, firm or other entity that it
holds a mortgage which includes the Premises as part of the mortgaged
premises, or that it is the ground lessor under a lease with Landlord,
as ground lessee, which includes the Premises as a part of the demised
premises, no notice from Tenant to Landlord shall be effective unless
and until a copy of the same is given to such holder or ground lessor,
and the curing of any of Landlord's defaults by such holder or ground
lessor within a reasonable time thereafter (including a reasonable time
to obtain possession of the premises if the mortgagee or ground lessor
elects to do so) shall be treated as performance by Landlord. For the
purposes of this Section 8.5 or Section 8.15, the term "mortgage"
includes a mortgage on a leasehold interest of Landlord (but not one on
Tenant's leasehold interest).
8.6 With reference to any assignment by Landlord or Landlord's interest in
this Lease, or the rents payable hereunder, conditional in nature or
otherwise, which assignment is made to the holder of a mortgage or
ground lease on property which includes the Premises, Tenant agrees:
(a) That the execution thereof by Landlord, and the
acceptance thereof by the holder of such mortgage or
the ground lessor, shall never be treated as an
assumption by such holder or ground lessor of any of
the obligations of Landlord hereunder, unless such
holder, or ground lessor, shall, by notice sent to
Tenant, specifically otherwise elect; and
(b) That, except as aforesaid, such holder or ground
lessor shall be treated as having assumed Landlord's
obligations hereunder only upon foreclosure of such
holder's mortgage and the taking of possession of the
Premises, or, in the case of a ground lessor, the
assumption of Landlord's position hereunder by such
ground lessor.
-42-
<PAGE>
In no event shall the acquisition of title to the
Building and the land on which the same is located by
a purchaser which, simultaneously therewith, leases
the entire Building or such land back to the seller
thereof be treated as an assumption by such
purchaser-lessor, by operation of law or otherwise,
of Landlord's obligations hereunder, but Tenant shall
look solely to such seller-lessee, and its successors
from time to time in title, for performance of
Landlord's obligations hereunder subject to the
provisions of Section 8.4 hereof. In any such event,
this Lease shall be subject and subordinate to the
lease to such purchaser provided that such purchaser
agrees to recognize the right of Tenant to use and
occupy the Premises upon the payment of rent and
other charges payable by Tenant under this Lease and
the performance by Tenant of Tenant's obligations
under this Lease and provided that Tenant agrees to
attorn to such purchaser. For all purposes, such
seller-lessee, and its successors in title, shall be
the landlord hereunder unless and until Landlord's
position shall have been assumed by such
purchaser-lessor.
8.7 No act or thing done by Landlord during the Lease Term shall be deemed
an acceptance of a surrender of the Premises, and no agreement to
accept such surrender shall be valid, unless in writing signed by
Landlord. No employee of Landlord or of Landlord's agents shall have
any power to accept the keys of the Premises prior to the termination
of this Lease. The delivery of keys to any employee of Landlord or of
Landlord's agents shall not operate as a termination of the Lease or a
surrender of the Premises.
8.8 (A) Tenant warrants and represents that Tenant has not dealt with any
broker, finder or other agent in connection with the consummation of
this Lease other than the Recognized Brokers, if any, designated in
Section 1.1 hereof; and in the event any claim is made against the
Landlord relative to dealings by Tenant with brokers, finders or other
agents other than the Recognized Brokers, if any, designated in Section
1.1 hereof, Tenant shall defend the claim against Landlord with counsel
of Tenant's selection first approved by Landlord (which approval will
not be unreasonably withheld) and save harmless and indemnify Landlord
on account of loss, cost or damage which may arise by reason of such
claim.
(B) Landlord warrants and represents that Landlord has not dealt with
any broker, finder or other agent in connection with the consummation
of this Lease other than the Recognized Brokers, if any, designated in
Section 1.1 hereof; and in the event any claim is made against the
Tenant relative to dealings by Landlord with brokers, finders or other
agents other than the Recognized Brokers, if any, designated in Section
1.1 hereof, Landlord shall defend the claim against Tenant with counsel
of Landlord's selection and
-43-
<PAGE>
save harmless and indemnify Tenant on account of loss, cost or
damage which may arise by reason of such claim. Landlord agrees
that it shall be solely responsible for the payment of brokerage
commissions to the Recognized Brokers, if any, designated in
Section 1.1 hereof.
8.9 If any term or provision of this Lease, or the application thereof to
any person or circumstance shall, to any extent, be invalid or
unenforceable, the remainder of this Lease, or the application of such
term or provision to persons or circumstances other than those as to
which it is held invalid or unenforceable, shall not be affected
thereby, and each term and provision of this Lease shall be valid and
be enforced to the fullest extent permitted by law.
8.10 The obligations of this Lease shall run with the land, and except as
herein otherwise provided, the terms hereof shall be binding upon and
shall inure to the benefit of the successors and assigns, respectively,
of Landlord and Tenant and, if Tenant shall be an individual, upon and
to his heirs, executors, administrators, successors and assigns. Each
term and each provision of this Lease to be performed by Tenant shall
be construed to be both a covenant and a condition. The reference
contained to successors and assigns of Tenant is not intended to
constitute a consent to subletting or assignment by Tenant.
8.11 Tenant agrees not to record the within Lease, but each party hereto
agrees, on the request of the other, to execute a so-called Notice of
Lease or short form lease in form recordable and complying with
applicable law and reasonably satisfactory to both Landlord's and
Tenant's attorneys. In no event shall such document set forth rent or
other charges payable by Tenant under this Lease; and any such document
shall expressly state that it is executed pursuant to the provisions
contained in this Lease, and is not intended to vary the terms and
conditions of this Lease.
8.12 Whenever, by the terms of this Lease, notice shall or may be given
either to Landlord or to Tenant, such notice shall be in writing and
shall be sent by registered or certified mail or by recognized
overnight courier service postage prepaid:
If intended for Landlord, addressed to Landlord at the address
set forth on the first page of this Lease (or to such other
address or addresses as may from time to time hereafter be
designated by Landlord by like notice) with a copy to
Landlord, Attention: General Counsel.
If intended for Tenant, addressed to Tenant at the address set
forth on the second page of this Lease except that from and
after the Commencement Date the address of Tenant shall be the
Premises with a copy to Palmer & Dodge LLP, One Beacon
-44-
<PAGE>
Street, Boston, Massachusetts 02108, Attention: Thomas G.
Schnorr, Esquire (or to such other address or addresses as
may from time to time hereafter be designated by Tenant by
like notice).
Except as otherwise provided herein, all such notices shall be
effective when received; provided, that (i) if receipt is refused,
notice shall be effective upon the first occasion that such receipt is
refused or (ii) if the notice is unable to be delivered due to a change
of address of which no notice was given, notice shall be effective upon
the date such delivery was attempted.
Where provision is made for the attention of an individual or
department, the notice shall be effective only if the wrapper in which
such notice is sent is addressed to the attention of such individual or
department.
Time is of the essence with respect to any and all notices and periods
for giving notice or taking any action thereto under this Lease.
8.13 Employees or agents of Landlord have no authority to make or agree to
make a lease or any other agreement or undertaking in connection
herewith. The submission of this document for examination and
negotiation does not constitute an offer to lease, or a reservation of,
or option for, the Premises, and this document shall become effective
and binding only upon the execution and delivery hereof by both
Landlord and Tenant. All negotiations, considerations, representations
and understandings between Landlord and Tenant are incorporated herein
and may be modified or altered only by written agreement between
Landlord and Tenant, and no act or omission of any employee or agent of
Landlord shall alter, change or modify any of the provisions hereof.
8.14 The titles of the Articles throughout this Lease are for convenience
and reference only, and the words contained therein shall in no way be
held to explain, modify, amplify or aid in the interpretation,
construction or meaning of the provisions of this Lease.
8.15 This Lease shall be subject and subordinate to any mortgage now or
hereafter on the Site or the Building, or both, and to each advance
made or hereafter to be made under any mortgage, and to all renewals,
modifications, consolidations, replacements and extensions thereof and
all substitutions therefor provided that the holder of such mortgage
agrees to recognize the rights of Tenant under this Lease (including
the right to use and occupy the Premises) upon the payment of rent and
other charges payable by Tenant under this Lease and the performance by
Tenant of Tenant's obligations hereunder in which event Tenant shall
agree to attorn to such holder and its successors as landlord. In
confirmation of such subordination and recognition, Tenant shall
execute and deliver promptly such
-45-
<PAGE>
instruments of subordination and recognition as such mortgagee may
reasonably request. Tenant hereby appoints such mortgagee (from
time to time) as Tenant's attorney-in-fact to execute such
subordination upon default of Tenant in complying with such mortgagee's
(from time to time) request. In the event that any mortgagee or its
respective successor in title shall succeed to the interest of
Landlord, then, this Lease shall nevertheless continue in full force
and effect and Tenant shall and does hereby agree to attorn to such
mortgagee or successor and to recognize such mortgagee or successor
as its landlord. If any holder of a mortgage which includes the
Premises, executed and recorded prior to the date of this Lease, shall
so elect, this Lease and the rights of Tenant hereunder, shall be
superior in right to the rights of such holder, with the same force
and effect as if this Lease had been executed, delivered and recorded,
or a statutory Notice hereof recorded, prior to the execution,
delivery and recording of any such mortgage. The election of any
such holder shall become effective upon either notice from such holder
to Tenant in the same fashion as notices from Landlord to Tenant are
to be given hereunder or by the recording in the appropriate registry
or recorder's office of an instrument in which such holder
subordinates its rights under such mortgage to this Lease.
8.16 Recognizing that Landlord may find it necessary to establish to third
parties, such as accountants, banks, potential or existing mortgagees,
potential purchasers or the like, the then current status of
performance hereunder, Tenant, on the request of Landlord made from
time to time, will promptly furnish to Landlord, or any existing or
potential holder of any mortgage encumbering the Premises, the
Building, the Site and/or the Complex or any potential purchaser of the
Premises, the Building, the Site and/or the Complex, (each an
"Interested Party"), a statement of the status of any matter pertaining
to this Lease, including, without limitation, acknowledgments that (or
the extent to which) each party is in compliance with its obligations
under the terms of this Lease. In addition, Tenant shall deliver to
Landlord, or any Interested Party designated by Landlord, financial
statements of Tenant and any guarantor of Tenant's obligations under
this Lease, as reasonably requested by Landlord, including, but not
limited to financial statements for the past three (3) years. Any such
status statement or financial statement delivered by Tenant pursuant to
this Section 8.16 may be relied upon by any Interested Party.
8.17 If Tenant shall at any time default in the performance of any
obligation under this Lease and such failure continues beyond the
expiration of any applicable notice, grace or cure period, Landlord
shall have the right, but shall not be obligated, to enter upon the
Premises and to perform such obligation notwithstanding the fact that
no specific provision for such substituted performance by Landlord is
made in this Lease with respect to such default. In performing such
obligation, Landlord may make any payment of money or perform any other
act. All sums so paid by Landlord (together with interest at the rate
of one and one-half percentage points over the then prevailing prime
rate in
-46-
<PAGE>
Boston as set by The First National Bank of Boston) and all
costs and expenses in connection with the performance of any such act
by Landlord, shall be deemed to be Additional Rent under this Lease and
shall be payable to Landlord immediately on demand. Landlord may
exercise the foregoing rights without waiving any other of its rights
or releasing Tenant from any of its obligations under this Lease.
8.18 Any holding over by Tenant after the expiration of the term of this
Lease shall be treated as a tenancy at sufferance at one and one-half
(1 1/2) the rents and other charges herein (prorated on a daily basis)
and shall otherwise be on the terms and conditions set forth in this
Lease, as far as applicable; provided, however, that neither the
foregoing nor any other term or provision of this Lease shall be deemed
to permit Tenant to retain possession of the Premises or hold over in
the Premises after the expiration or earlier termination of the Lease
Term.
8.19 Any insurance carried (or required to be carried) by either party with
respect to the Premises or property therein or occurrences thereon
shall, if it can be so written without additional premium or with an
additional premium which the other party agrees to pay, include a
clause or endorsement denying to the insurer rights of subrogation
against the other party to the extent rights have been waived by the
insured prior to occurrence of injury or loss. Each party,
notwithstanding any provisions of this Lease to the contrary, hereby
waives any rights of recovery against the other for injury or loss due
to hazards covered by such insurance to the extent of the
indemnification received thereunder.
8.20 If, in Section 1.1 hereof, a security deposit is specified, Tenant
agrees that the same will be paid upon execution and delivery of this
Lease, and that Landlord shall hold the same, throughout the term of
this Lease (including any extension thereof), as security for the
performance by Tenant of all obligations on the part of Tenant to be
kept and performed. Landlord shall have the right from time to time
without prejudice to any other remedy Landlord may have on account
thereof, to apply such deposit, or any part thereof, to Landlord's
damages arising from any default on the part of Tenant. If Landlord so
applies all or any portion of such deposit, Tenant shall within seven
(7) days after notice from Landlord deliver cash to Landlord in an
amount sufficient to restore such deposit to the full amount stated in
Section 1.1. Tenant not then being in default and having performed all
of its obligations under this Lease, including the payment of all
Annual Fixed Rent, Landlord shall return the deposit, or so much
thereof as shall not have theretofore been applied in accordance with
the terms of this Section 8.20 plus any interest earned thereon, to
Tenant on the expiration or earlier termination of the term of this
Lease and the surrender of possession of the Premises by Tenant to
Landlord in the condition required by this Lease at such time. While
Landlord holds such deposit, Landlord shall hold the same in an
interest bearing account and shall have the right to commingle the same
with
-47
<PAGE>
Landlord's other funds. If Landlord conveys Landlord's interest
under this Lease, the deposit, or any part thereof not previously
applied, shall be turned over by Landlord to Landlord's grantee, and,
once so turned over, Tenant agrees to look solely to such grantee for
proper application of the deposit in accordance with the terms of this
Section 8.20, and the return thereof in accordance herewith.
Neither the holder of any mortgage nor the lessor in any ground lease
on property which includes the Premises shall ever be responsible to
Tenant for the return or application of any such deposit, whether or
not it succeeds to the position of Landlord hereunder, unless such
deposit shall have been received in hand by such holder or ground
lessor.
8.21 If Landlord shall not have received any payment or installment of rent
on or before the date (the "Due Date") on which the same first becomes
payable under this Lease, the amount of such payment or installment
shall bear interest from the Due Date through and including the date
such payment or installment is received by Landlord, at a rate equal to
the lesser of (i) the rate announced by The First National Bank of
Boston from time to time as its prime or base rate (or if such rate is
no longer available, a comparable rate reasonably selected by
Landlord), plus two percent (2%), or (ii) the maximum applicable legal
rate, if any. Such interest shall be deemed Additional Rent and shall
be paid by Tenant to Landlord upon demand.
8.22 This Lease shall be governed exclusively by the provisions hereof and
by the law of the Commonwealth of Massachusetts, as the same may from
time to time exist.
8.23 Tenant hereby irrevocably and unconditionally (a) submits to personal
jurisdiction in the Commonwealth of Massachusetts over any suit, action
or proceeding arising out of or relating to this Lease, and (b) waives
any and all personal rights under the laws of any state to object to
jurisdiction with respect to such suit, action or proceeding within the
Commonwealth of Massachusetts or venue in any particular forum within
the Commonwealth of Massachusetts. Tenant hereby appoints Suzanne
Rogers at 91 Hartwell Avenue, Lexington, MA 02173 as its authorized
agent for service of process and agrees that methods of service of
process shall be, either, as determined by Landlord in Landlord's sole
discretion, (i) as provided for under applicable law or (ii) by
certified mail, return receipt requested to such authorized agent.
Nothing contained herein, however, shall prevent Landlord from
bringing any suit, action or proceeding or exercising any rights
against Tenant, in the Commonwealth of Massachusetts, or other
jurisdiction in which Tenant is located, all at Landlord's election,
and against any property of Tenant, in any other state. Initiating
such suit, action or proceeding or taking such action in any state
shall in no event constitute a waiver of the agreement contained
herein that the laws of the Commonwealth of Massachusetts shall govern
the rights and obligations of Tenant and Landlord or the
-48-
<PAGE>
submission herein made by Tenant to personal jurisdiction within the
Commonwealth of Massachusetts.
EXECUTED as a sealed instrument in two or more counterparts each of
which shall be deemed to be an original.
LANDLORD:
WITNESS: By /s/ Edward H. Linde
--------------------------------
EDWARD H. LINDE, AS TRUSTEE OF
/s/ Sue Baker 91 HARTWELL AVENUE TRUST FOR
- ------------------------------ HIMSELF AND CO-TRUSTEE BUT NOT
INDIVIDUALLY
TENANT:
MOLDFLOW PTY. LTD
By /s/ Marc Dulude
--------------------------------
Name Marc Dulude
------------------------------
Title PRESIDENT (OR VICE PRESIDENT)
-----------------------------
HERETO DULY AUTHORIZED
By /s/ Charles D. Yie
--------------------------------
Name Charles D. Yie
------------------------------
Title CHAIRMAN
-----------------------------
(OR ASSISTANT TREASURER)
HERETO DULY AUTHORIZED
(CORPORATE SEAL)
-49-
<PAGE>
EXHIBIT A
That certain parcel of land situate in Lexington in the County of
Middlesex and Commonwealth of Massachusetts, described as follows:
SOUTHEASTERLY by Hartwell Avenue, two hundred thirty-seven and
47/100 feet;
SOUTHEASTERLY by a curving line forming the junction of said
Hartwell Avenue and Hartwell Place, as shown on plan
hereinafter mentioned, thirty-nine and 27/100 feet;
SOUTHWESTERLY five hundred thirty-two and 23/100 feet, and
SOUTHWESTERLY, SOUTHERLY and SOUTHEASTERLY one hundred ninety and
25/100 feet, by said Hartwell Place;
SOUTHERLY by lot 9 on said plan, three hundred seventy-four
and 57/100 feet;
SOUTHWESTERLY three hundred sixty-seven and 65/100 feet;
NORTHWESTERLY thirty-one and 12/100 feet, and
NORTHWESTERLY again, eight hundred ninety and 63/100 feet, by land
now or formerly of The United States of America;
NORTHEASTERLY by said United States of America land and by land
now or formerly of John W. O('Connor et al, nine
hundred thirty-three and 87/100 feet.
Said parcel is shown as lot 10 on said plan, (Plan No.31330D).
All of said boundaries are determined by the Court to be located as shown
on a subdivision plan, as approved by the Court, filed in the Land Registration
Office, a copy of which is filed in the Registry of Deeds for the South Registry
District of Middlesex County in Registration Book 835, Page 146, with
Certificate 141096.
The above described land is subject to and has the benefit of the ditches
as approximately shown on said plan at date of original decree, (May 17, 1963).
<PAGE>
So much of the above described land as is included within the area marked
"Tennessee Gas Transmission Company Easement 30' wide" is subject to the
easements set forth in a taking by the Northeastern Gas Transmission Company,
dated July 13, 1951 and duly recorded in Book 7772, Page 162.
The above described land is subject to an Avigation Easement set forth in
a Declaration of Taking by the United States of America dated February 12, 1954
recorded with the Middlesex South District Registry of Deeds in Book 8219, Page
421 and more particularly shown as "Avigation Easement A-130E-1" on Plan No.
31330-D (referred to above).
The above described land is subject to an Order by the Town of Lexington
for construction of water main in Hartwell Avenue, Document No. 461902 as
affected by Certificate for Dissolving Betterments filed as Document No. 499500.
The above described land is subject to a Grant of Easement from Wilbur C.
Nylander et al Trs. to the Town of Lexington to construct and maintain sewer in
Hartwell Place, Document No. 508567.
The above described land is subject to a grant of Easement over 20 feet
wide drain easement (i) for the benefit of lot 9 in common with others entitled
thereto, set forth in Document 511666 and (ii) set forth in Document No. 479843
for the benefit of lot 7 shown on plan recorded with said Document No. 479843.
The above described land is subject to a Taking of easement by the Town of
Lexington in Hartwell Place, Document No. 544200.
The above described land is subject to and has the benefit of a Grant of
Easement and Reservation from Wilbur C. Nylander et al Trs. to the Town of
Lexington for conservation purposes, Document No. 616453.
The above described land is subject to and has the benefit of the
following:
A. Order of Conditions issued by the Town of Lexington
Conservation Commission filed as Document No. 616456 as
extended by Extension Permits issued by said Conservation
Commission filed as Document Nos. 627154, 635069, 655552 and
669180.
B. Decision of the Town of Lexington Board of Appeals filed as
Document No. 616457.
-2-
<PAGE>
C. Decision of the Town of Lexington Board of Appeals filed as
Document No. 616458.
D. Decision of the Town of Lexington Board of Appeals filed as
Document No. 616459.
E. Decision of the Town of Lexington Board of Appeals filed as
Document No. 634489.
F. Decision of the Town of Lexington Board of Appeals filed as
Document No. 646344.
G. Decision of the Town of Lexington Board of Appeals filed as
Document No. 646345.
H. Decision of the Town of Lexington Board of Appeals filed as
Document No. 646346.
The above described land is subject to an Easement granted to Boston
Edison Company filed as Document No. 672152.
The above described land is subject to such other easements, agreements
and matters of record, if any, insofar as in force and applicable.
-3-
<PAGE>
EXHIBIT A-1
Site Plan
[GRAPHIC]
SITE PLAN
91 HARTWELL AVENUE
LEXINGTON, MASSACHUSETTS
[ILLEGIBLE]
<PAGE>
ACKNOWLEDGEMENT OF ASSUMPTION OF LEASE
ACKNOWLEDGEMENT OF ASSUMPTION OF LEASE dated as of this 28 day of June,
1999, by and among BOSTON PROPERTIES LIMITED PARTNERSHIP (as
successor-in-interest to the Trustees of 91 Hartwell Avenue Trust, "Landlord"),
MOLDFLOW PTY. LTD, an Australian corporation registered to do business in
Connecticut ("Assignor") and MOLDFLOW CORPORATION, a Delaware corporation
("Assignee").
R E C I T A L S
By Lease dated October 15, 1996 (the "Lease"), Landlord did lease to
Assignor and Assignor did lease from Landlord certain premises in the building
known as and numbered 91 Hartwell Avenue, Lexington, Massachusetts, all as more
specifically described in the Lease (hereinafter referred to as the "Premises").
Effective as of July 1, 1999, Assignor will assign and Assignee will
assume all of Assignor's liabilities, rights and obligations under the Lease
(such assumption by Assignee being hereinafter referred to as the "Assumption").
Landlord desires to acknowledge Assignee's assumption of Assignor's
obligations under the Lease upon the terms and conditions contained in this
Acknowledgement of Assumption of Lease (the "Acknowledgment").
NOW, THEREFORE, in consideration of One Dollar ($1.00) and other good and
valuable consideration, paid by each of the parties hereto to the other, the
receipt and sufficiency of which are hereby acknowledged, and in further
consideration of the provisions herein, Landlord, Assignor and Assignee hereby
agree as follows:
1. Landlord, Assignor and Assignee hereby acknowledge and agree that the
Assumption constitutes an assignment by Assignor and an assumption by
Assignee of Assignor's rights and obligations under Section 5.6.1 of the
Lease.
2. Assignee shall be directly bound and fully liable to Landlord for all of
the obligations of Assignor under the Lease, both prior to and subsequent
to the Assumption, including, without limitation, the obligation to pay
rent, additional rent and all other charges in the full amount, in the
manner and at the times provided for under the Lease.
- 1 -
<PAGE>
3. Notwithstanding the provisions of Section 5.6.6 of the Lease regarding the
joint and several liability of Assignor and Assignee (which such
provisions are expressly waived by Landlord in connection with this
Assumption), Landlord hereby releases and discharges Assignor from any
obligations and responsibilities under the Lease effective as of July 1,
1999.
4. Landlord's execution of this Acknowledgement shall not constitute a
consent or acknowledgement to any future assignment of the Lease or
subletting of the Premises which shall be subject to the terms of Sections
5.6 through 5.6.6.
5. All capitalized terms and words used in this instrument shall have the
same meaning as set forth in the Lease unless a contrary meaning is
expressly set forth herein.
6. Except as expressly provided herein, the Lease and the terms and
provisions thereof, shall remain unchanged and in full force and effect.
7. This Acknowledgment may be executed in several counterparts, each of which
shall be deemed to be an original but all of which shall constitute one
and the same agreement.
- 2 -
<PAGE>
EXECUTED under seal as of the date and year first above written.
LANDLORD
BOSTON PROPERTIES LIMITED
PARTNERSHIP
By: Boston Properties, Inc., its
general partner
By: /s/ Stacey A. Baker
--------------------------
Name: Stacey A. Baker
------------------------
Title: Vice President
-----------------------
ASSIGNOR
MOLDFLOW PTY. LTD
By: /s/ Marc Dulude
------------------------
Name: Marc Dulude
----------------------
Title: Director
---------------------
ASSIGNEE:
MOLDFLOW CORPORATION
By: /s/ Suzanne E. Rogers
------------------------
Name: Suzanne E. Rogers
----------------------
Title: Vice President
---------------------
-3-
<PAGE>
STOCK PURCHASE AGREEMENT
among
AMPERSAND SPECIALTY MATERIALS AND CHEMICALS III, LIMITED
PARTNERSHIP,
AMPERSAND SPECIALTY MATERIALS AND CHEMICALS III COMPANION FUND,
LIMITED PARTNERSHIP,
JTC INVESTMENT MANAGEMENT PTY LTD
WESTPAC CUSTODIAN NOMINEES LIMITED
------------
dated as of August 25, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 1. PURCHASE OF THE SHARES; THE CLOSING...............................................1
SECTION 2. REPRESENTATIONS, WARRANTIES OF AMPERSAND..........................................1
2.1 Consents; Due Execution; Delivery and Performance of the Agreement................1
2.2 Reliance on Representations and Warranties........................................2
2.3 Investment........................................................................2
2.4 Authority.........................................................................2
2.5 Experience........................................................................2
2.6 Accredited Investor...............................................................2
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE
SHAREHOLDERS......................................................................2
3.1 Title to the Shares...............................................................2
3.2 Availability of Information.......................................................3
3.3 Reliance on Representations and Warranties........................................3
3.4 Absence of Success Fees...........................................................3
3.5 Authority of JTC..................................................................3
SECTION 4. CONDITIONS TO CLOSING.............................................................3
4.1 Accuracy of Representations and Warranties........................................3
4.2 Amendment to Shareholders Agreement...............................................3
4.3 Amendment to Credit Agreement.....................................................3
SECTION 5 COVENANTS OF JTC..................................................................4
SECTION 6 SURVIVAL OF REPRESENTATIONS, WARRANTIES
AND AGREEMENTS; ASSIGNABILITY OF RIGHTS...........................................4
SECTION 7 MISCELLANEOUS.....................................................................4
7.1 Notices...........................................................................4
7.2 Entire Agreement..................................................................5
7.3 Assignment........................................................................5
7.4 Amendments and Waivers............................................................5
7.5 Headings..........................................................................5
7.6 Severability......................................................................5
7.7 Governing Law; Consent to Jurisdiction............................................5
7.8 Counterparts......................................................................5
</TABLE>
-i-
<PAGE>
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT dated as of August 25, 1998 (the
"Agreement") is made among Ampersand Specialty Materials and Chemicals III
Limited Partnership, Ampersand Specialty Materials and Chemicals Companion
Fund III Limited Partnership (collectively, "Ampersand") and JTC Investment
Management Pty, Ltd. ("JTC"), Westpac Custodian Nominees Limited (as nominee
for NJI No. 1(A) Investment Fund and NJI No. 1(B) Investment Fund ("Westpac,"
and together with JTC ,the "Shareholders").
R E C I T A L S
WHEREAS, the Shareholders are collectively the owner of shares of
Class C-1 Preferred Stock and Class C-3 Preferred Stock (the "Shares"), of
Moldflow Corporation, a Delaware corporation (the "Company") as set forth on
Exhibit A hereto;
WHEREAS, Ampersand desires to purchase the Shares from the
Shareholders on the terms set forth herein;
NOW THEREFORE, in consideration of the premises and of the covenants
herein contained, the parties hereto mutually agree as follows:
SECTION 1. PURCHASE OF THE SHARES; THE CLOSING. On the Closing Date
(as hereinafter defined), the Shareholders shall sell to Ampersand, and
Ampersand shall purchase (among themselves in such proportions as ASMC-III
and ASMC-IIICF shall determine) from the Shareholders, upon the terms and
conditions hereinafter set forth, the Shares, at a price per Share of $1.46.
The closing of the purchase and sale of the Shares (the "Closing") shall take
place at a date and time as mutually agreed by the parties hereto (the
"Closing Date") at the offices of Palmer & Dodge LLP, One Beacon Street,
Boston, Massachusetts, or at such other time and place Ampersand and the
Shareholders hereto may mutually agree. On the Closing Date, each Shareholder
shall deliver to Ampersand a certificate representing not less than the
number of Shares to be transferred hereunder as set forth on Exhibit A
hereto, duly endorsed for transfer, free and clear of all liens,
encumbrances, charges or adverse claims. Upon receipt of such certificate
from each Shareholder, Ampersand shall (i) pay to such Shareholder, by cash,
certified check or wire transfer of immediately available funds to such
account as may be notified to Ampersand, the aggregate purchase price for the
Shares purchased from such Shareholder, and (ii) if the certificate delivered
by such Shareholder pursuant to this Section represents a greater number of
Shares than the Shares being transferred hereunder, promptly deliver to
Palmer & Dodge, LLP, as transfer agent for the Company, such certificate with
instructions that a balance certificate be prepared and delivered to such
Shareholder on the Closing Date.
SECTION 2. REPRESENTATIONS, WARRANTIES OF AMPERSAND.
Ampersand hereby represents and warrants to the Shareholders as follows:
2.1 CONSENTS; DUE EXECUTION; DELIVERY AND PERFORMANCE OF THE
AGREEMENT. Ampersand's execution, delivery and performance of this Agreement
(a) has been duly
<PAGE>
authorized under Delaware law by all requisite corporate action by Ampersand,
(b) will not violate any law or the organizational documents or By-laws of
Ampersand or any provision of any material indenture, mortgage, agreement,
contract or other material instrument to which Ampersand is a party or by
which any of its properties or assets is bound as of the date hereof or (c)
require any consent by any person under, constitute or result (upon notice or
lapse of time or both) in a breach of any term, condition or provision of, or
constitute a default or give rise to any right of termination or acceleration
under any such indenture, mortgage, agreement, contract or other material
instrument or result in the creation or imposition of any lien, security
interest, mortgage, pledge, charge or other encumbrance, of any nature
whatsoever, upon any properties or assets of Ampersand. Upon its execution
and delivery, and assuming the valid execution thereof by the Shareholders,
the Agreement will constitute a valid and binding obligation of Ampersand,
enforceable against Ampersand in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' and
contracting parties' rights generally and except as enforceability may be
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
2.2 RELIANCE ON REPRESENTATIONS AND WARRANTIES. Ampersand has
not received or relied on any representations or warranties of the
Shareholders other than those set forth in this Agreement.
2.3 INVESTMENT. Ampersand is acquiring the Shares for its own
account for investment and not with a view to, or for sale in connection
with, any distribution thereof, nor with any present intention of
distributing or selling the same; and Ampersand has no present or
contemplated agreement, undertaking, arrangement, obligation, indebtedness or
commitment providing for the disposition thereof.
2.4 AUTHORITY. Ampersand has full power and authority to
execute, deliver and perform this Agreement in accordance with its terms.
Ampersand has not been organized, reorganized, or recapitalized specifically
for the purpose of investing in the Company.
2.5 EXPERIENCE. Ampersand has adequate net worth and means to
purchase the Shares and to provide for its current needs and contingencies
and the financial capacity to sustain a complete loss of its investment in
the Company.
2.6 ACCREDITED INVESTOR. Ampersand is an "accredited investor"
as defined in Rule 501 of Regulation D under the Securities Act of 1933, as
amended.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS. Each
of the Shareholders hereby severally represents and warrants (except that the
representation and warranty made in Section 3.5 shall only be deemed made by
JTC) in respect to itself only, or as the case may be, the Shares to be
transferred by it to Ampersand as follows :
3.1 TITLE TO THE SHARES. The Shareholder has good and valid
title to the Shares to be sold and transferred to Ampersand by the
Shareholder hereunder, and shall transfer such Shares to Ampersand free and
clear of all restrictions, encumbrances, liens, rights, title or
2
<PAGE>
interests of others, except restrictions under applicable securities laws.
Following the purchase of the Shares by Ampersand hereunder, Ampersand will
acquire good and valid title to the Shares.
3.2 AVAILABILITY OF INFORMATION. The Shareholder has made all
such investigations of the financial condition, business affairs and
prospects of the Company as such Shareholder deems appropriate and has
received all information requested, has consulted with personal, financial,
and legal representatives with respect to the legal, tax and other financial
effects of this transaction as such Shareholder deems necessary.
3.3 RELIANCE ON REPRESENTATIONS AND WARRANTIES. The Shareholder
has not received or relied on any representations or warranties of Ampersand
other than those set forth in this Agreement.
3.4 ABSENCE OF SUCCESS FEES. There are no success fees
associated with the transactions contemplated hereby that are being borne by
the Shareholders.
3.5 AUTHORITY OF JTC. JTC has entered into this Agreement in
its capacity as the Trustee of the JTC Investment Trust and has all requisite
power and authority to act on behalf of the JTC Investment Trust and to cause
the performance by the JTC Investment Trust of the obligations of JTC
hereunder.
SECTION 4. CONDITIONS TO CLOSING. Notwithstanding anything else
contained herein, the obligations of each party hereunder are subject to the
satisfaction of the following conditions:
4.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Shareholders and Ampersand,
respectively, as set forth in Section 3 and Section 2 hereof, respectively,
shall be true and correct on the Closing Date as if such representations and
warranties were made as of the Closing Date.
4.2 AMENDMENT TO SHAREHOLDERS AGREEMENT. The Second Amendment
to Shareholders Agreement, in the form attached hereto as Exhibit B, shall
have been executed by all Shareholders that are parties to the Shareholders
Agreement dated as of July 18, 1997.
4.3 AMENDMENT TO CREDIT AGREEMENT. The First Amendment to
Amended and Restated Credit Agreement, in the form attached hereto as Exhibit
C, shall have been executed by all parties thereto.
3
<PAGE>
SECTION 5. COVENANTS OF JTC. JTC hereby covenants and agrees as
follows:
5.1 As soon as practicable following the Closing, JTC will use
its best efforts to redeem all of the issued units in the JTC Investment
Trust, other than (i) 50% of the units held by Tanya Lee Chambers (which
units are to be transferred by Tanya Lee Chambers to Chris Murphy), (ii) all
of the units held by Seafirst Pty Ltd. and Obena Ridge Pty Ltd., (iii) all of
the units held by PY Pty Ltd. less such number of units held by PY Pty Ltd.
which correspond to a sale of 350,000 Shares, and (iv) all of the units held
by Sentech Pty Ltd. less such number of units held by Sentech Pty Ltd. which
correspond to a sale of 30,000 Shares.
5.2 JTC will use its best efforts to ensure that no
distribution of any securities of the Company shall be made to any holder of
equity interests of JTC until the earlier to occur of (i) an initial public
offering of any class of the Company's equity securities or (ii) any sale or
merger of the Company or a sale of all or substantially all of the assets of
the Company.
SECTION 6. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS;
ASSIGNABILITY OF RIGHTS. Notwithstanding any investigation made by any party
to this Agreement, all covenants, agreements, representations and warranties
made by Ampersand and the Shareholders herein shall survive the execution of
this Agreement, the delivery to Ampersand of the Shares being purchased and
the payment therefor. Except as otherwise provided herein, (i) the covenants,
agreements, representations and warranties of each Shareholder made herein
shall bind the Shareholder's successors and assigns and shall inure to the
benefit of Ampersand's successors and assigns, and (ii) the covenants,
agreements, representations and warranties of Ampersand made herein shall
bind Ampersand's successors and assigns and shall inure to the benefit of the
Shareholder's successors and assigns.
SECTION 7. MISCELLANEOUS.
7.1 NOTICES. Any consent, notice or report required or
permitted to be given or made under this Agreement by one of the parties
hereto to the other shall be in writing, delivered personally or by facsimile
(and promptly confirmed by telephone, personal delivery or courier) or
courier, postage prepaid (where applicable), addressed to such other party at
its address indicated below, or to such other address as the addressee shall
have last furnished in writing to the addressor and shall be effective upon
receipt by the addressee.
If to Ampersand: Ampersand Ventures
55 William Street
Wellesley, MA 02481
Attention: Charles D. Yie
Telephone: (781) 239-0700
Telecopy: (781) 239-0824
4
<PAGE>
with a copy to: Palmer & Dodge LLP
One Beacon Street
Boston, Massachusetts 02108
Attention: Marc A. Rubenstein, Esq.
Telephone: (617) 573-0100
Telecopy: (617) 227-4420
If to the Shareholders, at the address or telecopy number or
telephone number set forth on the signature pages hereto.
7.2 ENTIRE AGREEMENT. This Agreement contains the entire
understanding of the parties with respect to the subject matter hereof. All
express or implied agreements and understandings, either oral or written,
heretofore made are expressly merged in and made a part of this Agreement.
7.3 ASSIGNMENT. Neither this Agreement nor any of the rights
and obligations contained herein may be assigned or otherwise transferred by
either party without the consent of the other party.
7.4 AMENDMENTS AND WAIVERS. This Agreement may not be modified
or amended except pursuant to an instrument in writing signed by Ampersand
and all of the Shareholders. The waiver by either party hereto of any right
hereunder or the failure to perform or of a breach by the other party shall
not be deemed a waiver of any other right hereunder or of any other breach or
failure by said other party whether of a similar nature or otherwise.
7.5 HEADINGS. The headings of the various sections of this
Agreement have been inserted for convenience of reference only and shall not
be deemed to be part of this Agreement.
7.6 SEVERABILITY. In case any provision contained in this
Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.
7.7 GOVERNING LAW; CONSENT TO JURISDICTION. This Agreement
shall be governed by and construed in accordance with the laws of the
Commonwealth of Massachusetts (without giving effect to the choice of law
provisions thereof) and the federal law of the United States of America.
Ampersand and each Shareholder hereby irrevocably consents to any suit,
action or proceeding with respect to this Agreement being brought in any
court of law in the Commonwealth of Massachusetts and in the United States
District Court for the District of Massachusetts and consents to personal
jurisdiction in any such court.
7.8 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which,
when taken together, shall constitute but one instrument, and shall become
effective when one or more counterparts have been signed by each party hereto
and delivered to the other parties.
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Stock
Purchase Agreement to be executed by their duly authorized representatives as
of the day and year first above written.
"AMPERSAND"
SIGNED for and on behalf of AMPERSAND )
SPECIALTY MATERIALS AND )
CHEMICALS III, LIMITED PARTNERSHIP )
by its general partner ASMC III Management )
Company LP by its general partner )
ASMC-II MCLP LLP )
/s/ Charles D. Yie
------------------------------
By: Charles D. Yie
Its: General Partner
Charles D. Yie
------------------------------
Name (print)
SIGNED for and on behalf of AMPERSAND )
SPECIALTY MATERIALS AND )
CHEMICALS III COMPANION FUND )
LIMITED PARTNERSHIP by its general )
partner ASMC IIICF Management Company LP )
by its general partner ASMC-II MCLP LLP )
/s/ Charles D. Yie
------------------------------
By: Charles D. Yie
Its: General Partner
Charles D. Yie
------------------------------
Name (print)
[Signature Page to Stock Purchase Agreement]
<PAGE>
"SHAREHOLDERS"
THE COMMON SEAL of JTC )
INVESTMENT MANAGEMENT PTY LTD is ) [SEAL]
affixed in accordance with its articles of )
association in the presence of )
/s/ Julian Beale /s/ Michael Kroger
- ------------------------------ ------------------------------
Secretary Director
Julian Beale Michael Kroger
- ------------------------------ ------------------------------
Name of secretary (print) Name of director (print)
Shareholder Address:
----------------------------------
----------------------------------
----------------------------------
Telephone Number:
----------------------------------
Telecopy Number:
----------------------------------
THE COMMON SEAL of WESTPAC )
CUSTODIAN NOMINEES LIMITED (as )
nominee for NJI No. 1(A) Investment Fund) )
is affixed in accordance with its articles of )
association in the presence of )
- ------------------------------ ------------------------------
Secretary Director
- ------------------------------ ------------------------------
Name of secretary (print) Name of director (print)
Shareholder Address:
----------------------------------
----------------------------------
----------------------------------
Telephone Number:
----------------------------------
Telecopy Number:
----------------------------------
[Signature Page to Stock Purchase Agreement]
<PAGE>
"SHAREHOLDERS"
THE COMMON SEAL of JTC )
INVESTMENT MANAGEMENT PTY LTD is )
affixed in accordance with its articles of )
association in the presence of )
- ------------------------------ ------------------------------
Secretary Director
- ------------------------------ ------------------------------
Name of secretary (print) Name of director (print)
Shareholder Address:
----------------------------------
----------------------------------
----------------------------------
Telephone Number:
----------------------------------
Telecopy Number:
----------------------------------
THE COMMON SEAL of WESTPAC )
CUSTODIAN NOMINEES LIMITED (as )
nominee for NJI No. 1(A) Investment Fund) ) [SEAL]
is affixed in accordance with its articles of )
association in the presence of )
/s/ Michelle Dunlop /s/ Sean Brennan
- ------------------------------ ------------------------------
Secretary Director
Michelle Dunlop Sean Brennan
- ------------------------------ ------------------------------
Name of secretary (print) Name of director (print)
Shareholder Address: [STAMP]
----------------------------------
----------------------------------
----------------------------------
Telephone Number:
----------------------------------
Telecopy Number:
----------------------------------
[Signature Page to Stock Purchase Agreement]
<PAGE>
THE COMMON SEAL of WESTPAC )
CUSTODIAN NOMINEES LIMITED (AS NOMINEE ) [SEAL]
FOR NJI NO.1(B) INVESTMENT FUND) )
is affixed in accordance with its )
articles of association in the )
presence of )
/s/ Michelle Dunlop /s/ Sean Brennan
- ------------------------------ ------------------------------
Secretary Director
Michelle Dunlop Sean Brennan
- ------------------------------ ------------------------------
Name of secretary (print) Name of director (print)
Shareholder Address: [STAMP]
----------------------------------
----------------------------------
----------------------------------
Telephone Number:
----------------------------------
Telecopy Number:
----------------------------------
<PAGE>
EXHIBIT A
<TABLE>
<CAPTION>
Shares and Class to
Shareholder be Sold Hereunder
- ----------- -------------------
<S> <C>
JTC Investment Management Pty, Ltd 1,864,991 Class C-1
Westpac Custodian Nominees Limited,
as nominee for NJI No. 1(A) Investment Fund 25,000 Class C-1
333,333 Class C-3
Westpac Custodian Nominees Limited,
as nominee for NJI No. 1(B) Investment Fund 25,000 Class C-1
333,333 Class C-3
</TABLE>
<PAGE>
SHAREHOLDERS AGREEMENT
This Agreement is made as of the 18th day of July, 1997 by and among
Moldflow Corporation, a Delaware corporation (the "Company"), and the
individuals listed on Schedule I hereto (the "Shareholders").
WHEREAS, the Company, the Shareholders and Moldflow International Pty
Ltd. ("Moldflow Pty") are parties to a Moldflow Capital Reconstruction
Implementation Agreement dated as of the date hereof (the "Implementation
Agreement"), pursuant to which the Shareholders will exchange all of their
shares of Moldflow Pty. for shares of the Company;
WHEREAS, in connection with such exchange, the Shareholders desire to
set forth certain terms concerning their rights as shareholders of the Company
as set forth herein;
NOW THEREFORE, the parties hereto agree as follows:
1. SHAREHOLDERS' UNDERTAKINGS
a. J.T.C. Investment Management Pty. Ltd. ("JTC"), Thomas
Investments Australia Pty. Ltd. ("Thomas"), Helmet Investments
Australia Pty. Ltd. ("Helmet") and Floatflow Pty. Ltd.
("Floatflow") each agrees that it will not, without the prior
written consent of Ampersand Specialty Materials and Chemicals
II ("Ampersand II"), Ampersand Specialty Materials and
Chemicals III ("Ampersand III") and Ampersand Specialty
Materials and Chemicals III Companion Fund ("Ampersand III
CF") (which consent shall not be unreasonably withheld):
i. sell, transfer, hypothecate, assign or otherwise
dispose of or grant an option over any of its shares
of capital stock of the Company held by it; or
ii. mortgage, pledge or otherwise encumber any of its
shares of capital stock of the Company (each of the
foregoing actions described in clauses i or ii of
this Section are hereinafter referred to as a
"Transfer").
b. If any Shareholder proposes to Transfer any of such
Shareholder's shares of capital stock of the Company (a
"Proposing Transferor"), the Shareholder shall:
i. obtain the consent of Ampersand II, Ampersand III and
Ampersand III CF in accordance with clause 1.a, if
applicable;
ii. comply with the following provisions:
<PAGE>
(1) provide written notice to the Board of Directors
of the Company stating that it proposes to Transfer
shares of capital stock of the Company (the "Subject
Shares") and specifying the number of shares that it
proposes to Transfer (the "Transfer Notice");
(2) upon receipt of such Transfer Notice, the Board
of Directors of the Company and the Proposing
Transferor will proceed to establish the fair market
value of the Subject Shares within 28 days after the
Transfer Notice is given, being the amount per share
which is a fair selling value of the Subject Shares
as between a willing purchaser and a willing vendor
as agreed between the Board of Directors and the
Proposing Transferor or, failing agreement, as
determined by the auditors of the Company whose
decision shall be final and binding (the "Fair
Value");
(3) if the Proposing Transferor does not wish to
transfer the Subject Shares at the Fair Value, it may
withdraw the Transfer Notice within 7 days after the
Fair Value of the Shares has been determined;
(4) if the Proposing Transferor does not withdraw its
Transfer Notice, the Board of Directors of the
Company will proceed to offer the Subject Shares to
the holders of the Series A Preferred Stock of the
Company at the Fair Value in proportion to their
holdings of capital stock of the Company. Offers made
pursuant to this Subsection will remain open for
acceptance (in whole or in part) for a period of
thirty days, and the Proposing Transferor will, upon
being notified of an acceptance, tender to the
accepting Shareholder such portion of the Subject
Shares as are accepted;
(5) if all Subject Shares to be transferred by the
Proposing Transferor have not been transferred within
the thirty day period set forth in Subsection
1.b.ii.(4), the Board of Directors of the Company
will proceed to offer those Subject Shares that have
not been so transferred to the other Shareholders at
the Fair Value in proportion to their holdings of
capital stock of the Company. Offers made pursuant to
this Subsection will remain open for acceptance (in
whole or in part) for a period of thirty days, and
the Proposing Transferor will, upon being notified of
an acceptance, tender to the accepting Shareholder
such portion of the Subject Shares as are accepted.
Where a Shareholder does not accept an offer, the
Board of Directors of the Company will offer the
Subject Shares offered to such Shareholder to
accepting Shareholders proportionally to their
holdings at the time. Offers made pursuant to the
preceding sentence will remain open for acceptance
(in whole or in part) for a period of fifteen days
and the Proposing Transferor will, upon being
notified of an acceptance, tender to the accepting
Shareholder such portion of the Subject Shares as are
accepted;
- 2 -
<PAGE>
(6) if all of the Subject Shares have not been
transferred within forty-five days from the date of
the offer made pursuant to Subsection 1.b.ii.(5), the
Board of Directors may within thirty days find a
third party who is willing to purchase the remaining
Subject Shares at the Fair Value, and the Proposing
Transferor will tender to such third party such
portion of the Subject Shares as such third party is
willing to purchase;
(7) if all of the Subject Shares have not been
transferred within seventy-five days from the date of
the offer made pursuant to Subsection 1.b.ii.(5), the
Proposing Transferor may sell the remaining Subject
Shares at a price not less than the Fair Value to any
person;
(8) if the Proposing Transferor has not sold all of
the Subject Shares remaining for sale pursuant to
Subsection 1.b.ii.(7) within thirty days of the end
of the seventy-five day period referred to in such
Subsection, then the Proposing Transferor shall
withdraw the Transfer Notice and shall not thereafter
Transfer any shares of capital stock of the Company
without complying with the terms of this Section 1.b;
iii. if Ampersand II, Ampersand III and Ampersand III CF
have not waived the operation of this clause 1.b.iii
when providing their consent under clause 1.b.i, the
Proposing Transferor shall give ten business days
written notice to Ampersand II, Ampersand III and
Ampersand III CF of any proposed Transfer pursuant to
Subsection 1.b.ii.(7) (the "Co-Sale Notice") and
allow Ampersand II, Ampersand III and Ampersand III
CF to participate by Transferring in respect of such
number of the shares of Ampersand II, Ampersand III
and Ampersand III CF which represents the same
proportion to the total number of shares to be sold
or transferred as the sum of the number of shares of
common stock into which the all shares held by
Ampersand II, Ampersand III and Ampersand III CF
could be converted as the number of shares of common
stock held by Ampersand II, Ampersand III and
Ampersand III CF represents to the sum of the total
number of issued common stock and the number of
common stock into which all of the shares held by
Ampersand II, Ampersand III and Ampersand III CF and
the shares held by NJI No. 1(A) Investment Fund ("NJI
1A") and NJI No. 2(B) Investment Fund ("NJI 1B")
could be converted at the time that the Co-Sale
Notice was given.
iv. The provisions of this Section 1.b. shall not apply
where the Board of Directors have determined that a
transfer is (i) from a trustee (not being a
stockholder of the Company who has divested himself
of all or part of the equitable interest in the
shares of the Company) to a new trustee of the same
trust; (ii) by the legal personal representative of a
deceased stockholder to a person beneficially
entitled to the shares on the distribution of the
stockholder's estate; (iii) by a trustee (not being a
- 3 -
<PAGE>
stockholder of the Company who has divested himself
of all or part of the equitable interest in the
shares of the Company) to a beneficiary or (iv) by
the written consent of all of the Shareholders.
c. Each of the Shareholders agrees that it will not vote any
shares of capital stock of the Company held by it, or take any
other action, to alter the By-laws or the Certificate of
Incorporation of the Company without the consent of Ampersand
II, Ampersand III and Ampersand III CF.
d. The rights and obligations set out in this Section 1 are
subject to the issue of the Replacement Shares (as defined in
the Implementation Agreement) by the Company to the
Shareholders. Upon such issue, clauses 6.1, 6.2 and 6.3 of the
Ampersand Subscription Agreement (as defined in the
Implementation Agreement) are terminated and of no further
force and effect.
2. REGISTRATION RIGHTS
a. The Shareholders will co-operate to procure quotation of the
Company's shares of common stock on the Nasdaq National Market
or listing of such common stock any internationally recognized
stock exchange approved by Ampersand II, Ampersand III and
Ampersand III CF by June 30, 1998, and will take all actions
reasonably necessary to achieve a listing by that date.
b. The Shareholders will have the registration rights contained
in Schedule II hereto.
c. The Shareholders will have the following registration rights
outside the United States:
(a) whenever the Company proposes to lodge or register a
prospectus or other offering document with the
Australian Securities Commission or any other
relevant authority it will give 30 days notice to the
Shareholders of its intention to do so, and, upon
receiving a written request from any Shareholder
within the 30 day notice period, the Company will use
its best endeavors to include any shares of common
stock held by that Shareholder as part of the offer
or invitation to subscribe for or purchase shares
which is contained in the prospectus or offering
document;
(b) upon receipt of written notice from any of the
Shareholders, the Company will use its best endeavors
in assisting in the preparation and filing of a
prospectus or offer document with the Australian
Securities Commission or any other relevant authority
in respect of the shares of common stock held by that
Shareholder;
(c) the shares held by Ampersand II, Ampersand III and
Ampersand III CF will be treated no less favorably
than those held by any other
- 4 -
<PAGE>
shareholder of the Company in respect of any offer or
invitation to purchase shares;
d. The rights and obligations set out in this Section 2 are
subject to the issue of the Replacement Shares by the Company
to the Shareholders. Upon such issue, clauses 7.1, 7.2 and 7.3
of the Ampersand Subscription Agreement are terminated and of
no further force and effect.
3. OBLIGATIONS OF THE COMPANY
a. The Company will use its best endeavors to procure quotation
of the Company's shares of common stock on the Nasdaq National
Market or listing of such common stock any internationally
recognized stock exchange approved by Ampersand II, Ampersand
III and Ampersand III CF by 30 June 1998, and will take all
actions reasonably necessary to achieve a listing by that
date.
b. The Company will not dispose of all or substantially all of
its assets without the prior written consent of Ampersand II,
Ampersand III and Ampersand III CF (which consent shall not be
unreasonably withheld). Prior to obtaining the consent of
Ampersand II, Ampersand III and Ampersand III CF and of the
shareholders of the Company pursuant to applicable law, if
any, the directors of the Company will commission an
independent expert to report on whether the proposed sale is
fair and reasonable to the Company and all shareholders,
taking into account all existing arrangements including the
rights of Ampersand II, Ampersand III and Ampersand III CF
under this Agreement and the Company's Certificate of
Incorporation and By-laws.
c. Unless otherwise consented to by the holders of at least 80%
of the shares of capital stock of the Company, the Company
will not declare or pay any dividends on any shares and will
not buy-back, cancel or redeem or acquire for any
consideration any shares of the capital stock of the Company.
d. The Company will not issue any shares with rights or priority
superior to the rights or priority attaching to the shares of
Series A Preferred Stock shares held by Ampersand II,
Ampersand III and Ampersand III CF without their prior written
consent.
e. The Company will provide to Ampersand II, Ampersand III and
Ampersand III CF:
(a) monthly financial information of the Company and its
subsidiaries ("the Company Group") in such detail as
Ampersand II, Ampersand III and Ampersand III CF
reasonably requests within 30 days of the end of each
month;
- 5 -
<PAGE>
(b) the annual budget and operating plan for the
following financial year for the Company before the
end of the current financial year;
(c) audited accounts for the Company on an consolidated
basis within 90 days of the end of each financial
year; and
(d) any other information in relation to the Company
which Ampersand II, Ampersand III and Ampersand III
CF reasonably requests.
f. The rights of Ampersand II, Ampersand III and Ampersand III CF
under Subsections 1.a., 1.b.i., 1.b.iii, and 1.c., and the
obligations of the Company under Section 3 will lapse if
Ampersand II, Ampersand III and Ampersand III CF in the
aggregate hold less than 5% of the issued capital in the
Company.
g. The rights and obligations set out in this Section 3 are
subject to the issue of the Replacement Shares by the Company
to the Shareholders. Upon such issue, clauses 8.1, 8.2, 8.3,
8.4, 8.5 and 8.6 of the Ampersand Subscription Agreement are
terminated and of no further force and effect.
4. COMPENSATION COMMITTEE
a. The parties agree that the remuneration paid by the Company to
Peter Kenneth Kennedy, Paul John Bordonaro and Alan Rowland
Thomas will be determined (consistent with all relevant
employment agreements) by a committee of three directors
including a director appointed by JTC (as Chairman) and a
director appointed by either Ampersand II or Ampersand III.
b. In addition to any rights they have under the Company's
Certificate of Incorporation or otherwise to appoint a
director, each of Thomas, Helmet and Floatflow while they are
shareholders in the Company may appoint Peter Kenneth Kennedy,
Paul John Bordonaro and Alan Rowland Thomas as corporate
representatives to attend meetings of the Board of Directors,
and the Company shall cause to be delivered to such
individuals all notices of meetings that are delivered to the
Directors of the Company.
c. The rights of Thomas, Helmet and Floatflow under Section 4.b.
will lapse if Thomas, Helmet and Floatflow in aggregate hold
less than 5% of the outstanding capital stock of the Company.
d. The rights and obligations set out in this Section 4 are
subject to the issue of the Replacement Shares by the Company
to the Shareholders. Upon such issue, clauses 10.1, 10.2 and
10.3 of the Ampersand Subscription Agreement are terminate and
of no further force and effect.
- 6 -
<PAGE>
5. TRANSFER
a. Notwithstanding any other provision of this Agreement,
Ampersand II, Ampersand III and Ampersand III CF may at any
time transfer all or any of their shares of capital stock of
the Company to any affiliate, including any limited
partnership associated with Ampersand II or Ampersand III,
subject to the transferee agreeing in writing to be bound by
the terms of this Agreement.
b. Notwithstanding any other provision of this Agreement, each of
NJI 1A or NJI 1B may at any time transfer all or any of its
shares of capital stock of the Company to any affiliate or to
any fund under the management of Nomura/Jafco Investment
(Asia) Ltd, subject to the transferee agreeing in writing to
be bound by the terms of this agreement.
c. The rights and obligations set out in this Section 5 are
subject to the issue of the Replacement Shares by the Company
to the Shareholders. Upon such issue, clauses 11.1 and 11.2 of
the Ampersand Subscription Agreement are terminated and of no
further force and effect.
6. UNDERTAKINGS TO NOMURA/JAFCO
a. Each of JTC, Thomas, Helmet and Floatflow agrees that it will
not, without the prior written consent of NJI 1A and NJI 1B
(which consent shall not be unreasonably withheld) Transfer
any of its shares of capital stock of the Company.
b. The Company agrees that while NJI 1A or NJI 1B holds any
shares of capital stock of the Company:
(a) a person nominated from time to time by NJI 1A and/or
NJI 1B shall have the right to attend all meetings of
the board of directors of the Company and receive all
notices of meetings delivered to Directors of the
Company; and
(b) the Company shall provide to NJI 1A and NJI 1B in a
timely manner monthly, quarterly and annual financial
statements of the Company and the annual budget of
the Company.
c. NJI 1A and/or NJI 1B shall comply with any reasonable
confidentiality requirements of the Company and shall obtain
the written agreement that any person nominated by NJI 1A
and/or NJI 1B pursuant Section 6.b.(a) shall comply with any
such requirements.
d. The rights of NJI 1A and NJI 1B under Section 6 shall lapse
upon the sale or transfer by NJI 1A and NJI 1B of all of their
shares of capital stock of the Company.
- 7 -
<PAGE>
e. The rights and obligations set out in this Section 6 are
subject to the issue of the Replacement Shares. Upon such
issue, clauses 6.1 and 6.2 of the Nomura Subscription
Agreement (as defined in the Implementation Agreement) are
terminated and of no further force and effect.
7. ELECTION OF DIRECTORS; CERTAIN VOTING RIGHTS.
a. Subject to Section 7.b. below, each of the Shareholders agrees
to vote his, her or its shares of capital stock of the Company
over which he, she or it exercises voting control, and take
such other actions as are necessary, so as to elect (to the
extent of the voting rights of the shares of capital stock
held by such party) and thereafter continue in office as
Directors of the Company:
(1) the following number of individuals designated by
Ampersand II and Ampersand III:
(a) while Ampersand II holds between 6.25%
and 13% of the issued shares in the Company,
Ampersand II will have the right to appoint one
Director of the Company;
(b) while Ampersand II holds more than 13.0%
of the issued shares in the Company, and if Ampersand
III does not have the right to appoint a Director,
Ampersand II will have the right to appoint two
Directors of the Company;
(c) while Ampersand III holds 6.25% or more
of the issued shares in the Company Ampersand III
will have the right to appoint one Director of the
Company.
(2) the following number of individuals designated by
JTC:
(a) at such times as JTC holds 25% or more
of the outstanding shares of capital stock of the
Corporation, three directors,
(b) at such times as JTC holds at least 13%
but less than 25% of the outstanding shares of
capital stock of the Corporation, two directors;
(c) at such times as JTC holds at least
6.25% but less than 13% of the outstanding shares of
capital stock of the Corporation, one director.
(3) an individual designated by the Management Team at
such times as any of Helmet, Floatflow, Thomas or the
Management Team hold 6.25% or more of the outstanding
shares of capital stock of the Company.
- 8 -
<PAGE>
b. Each of the Shareholders agrees to vote his, her or its shares
of the capital stock of the Company over which he, she or it
exercises voting control, and take such other actions as are
necessary, for the removal of any Director upon the request of
the party or parties designating such Director and for the
election to the Board of Directors of a substitute designated
by such party or parties in accordance with the provisions of
Section 7.a hereof.
c. Each of the Shareholders agrees to vote, his, her or its
shares of the capital stock of the Company over which he, she
or it exercises voting control, and take such other actions as
are necessary, in such manner as shall be necessary or
appropriate to ensure that any vacancy on the Board of
Directors of the Company shall be filed in accordance with
Section 7.a.
8. MISCELLANEOUS
a. TERMINATION. This Agreement shall terminate and be of no
further effect if any shares in the Company are listed on any
stock exchange or quoted on any nationally recognized
automated quotation system.
b. CONFIDENTIALITY. Subject to the provisions of this Section,
none of the parties will disclose any information or document
in connection with this Agreement which is not in the public
domain.
A party may disclose any confidential information or document:
1. in enforcing this Agreement or in a proceeding
arising our of or in connection with this Agreement;
2. if required under a binding order of a governmental
agency or under a procedure for discovery in any
proceedings;
3. if required under any law or any administrative
guideline, directive, request or policy whether or
not having the force of law and, if not having the
force of law, the observance of which is in
accordance with the practice of responsible bankers
or financial institutions similarly situated;
4. as required or permitted by this Agreement;
5. to its legal advisers and its consultants;
6. if necessary to comply with any duty or obligation to
keep investors properly informed; or
7. with the prior written consent of each other party.
This Section 8.b. survives the termination of this Agreement.
- 9 -
<PAGE>
c. ASSIGNMENT. Subject to Section 5 and this Section, the rights
and obligations of each party to this Agreement are personal.
They cannot be assigned, encumbered or otherwise dealt with
and no party shall attempt, or purport, to do so without the
prior written consent of all parties.
If a Shareholder transfers its shares to a related corporation or
limited partnership or fund pursuant to Section 5, it must assign its
rights and obligations under this Agreement to that related corporation
or limited partnership or fund, and such transferee must execute an
instrument which provides that such transferee shall be bound by the
provisions hereof.
d. SEVERABILITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, and
each other provision of this Agreement shall be severable and
enforceable to the extent permitted by law.
e. BINDING EFFECT. This Agreement shall be binding upon and inure
to the benefit of the Company, the Shareholders and their
respective heirs, executors, administrators, legal
representatives, successors and assigns.
f. NOTICE. All notices required or permitted hereunder shall be
in writing and deemed effectively given upon personal delivery
by registered or certified mail, postage prepaid, addressed to
the other parties hereto at the address shown beneath his or
its respective signature to this Agreement, or at such other
address or addresses as any party shall designate to the
others in accordance with this Section 8.c.
g. PRONOUNS. Whenever the context may require, any pronouns used
in this Agreement shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns and
pronouns shall include the plural, and vice vera.
h. ENTIRE AGREEMENT; RELATIONSHIP TO CERTIFICATE OF INCORPORATION
AND BY-LAWS. This Agreement constitutes the entire agreement
between the parties, and supersedes all prior agreements and
understandings relating to the subject matter of this
Agreement. To the extent permitted by law, in the event of any
inconsistency between this Agreement and the provisions of the
Certificate of Incorporation or By-laws of the Company, the
provisions of this Agreement shall apply.
i. AMENDMENT. Any term of this Agreement may be amended and the
observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively
or prospectively), with the written consent of all the parties
hereto.
j. NO WAIVER. No failure to exercise nor any delay in exercising
any right, power or remedy by a party operates as a waiver. A
single or partial exercise of any right, power or remedy does
not preclude any other or further exercise of that or any
other right, power or remedy. A waiver is not valid or binding
on the party granting that waiver unless made in writing.
- 10 -
<PAGE>
k. GOVERNING LAW. This Agreement shall be construed, interpreted
and enforced in accordance with the laws of the State of
Delaware.
l. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same
instrument.
- 11 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Shareholders
Agreement to be executed as an instrument under seal as of the date first set
forth above.
SIGNED for and on behalf of MOLDFLOW )
CORPORATION )
in the presence of )
/s/ Nevill Antony Sherburn /s/ Julian Beale
- ---------------------------------- --------------------------------
Secretary President
Nevill Antony Sherburn Julian Beale
- ---------------------------------- --------------------------------
Name of secretary (print) Name of president (print)
THE COMMON SEAL of THOMAS )
INVESTMENTS AUSTRALIA PTY LTD )
is affixed in accordance with its articles )
of association in the presence of )
- ---------------------------------- --------------------------------
Secretary Director
- ---------------------------------- --------------------------------
Name of secretary (print) Name of director (print)
- 12 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Shareholders
Agreement to be executed as an instrument under seal as of the date first set
forth above.
SIGNED for and on behalf of MOLDFLOW )
CORPORATION )
in the presence of )
- ---------------------------------- --------------------------------
Secretary President
- ---------------------------------- --------------------------------
Name of secretary (print) Name of president (print)
SIGNED for and on behalf of THOMAS )
INVESTMENTS AUSTRALIA PTY LTD )
by a director in the presence of )
/s/ Stephanie M. Rowland /s/ A. Roland Thomas
- ---------------------------------- --------------------------------
Witness Director
Stephanie M. Rowland A. Roland Thomas
- ---------------------------------- --------------------------------
Name of witness (print) Name of director (print)
- 12 -
<PAGE>
THE COMMON SEAL of HELMET )
INVESTMENTS AUSTRALIA PTY LTD is )
affixed in accordance with its articles )
of association in the presence of )
/s/ Peter Kennedy /s/ Pauline M. Healy
- ---------------------------------- --------------------------------
Secretary Director
Peter Kennedy Pauline M. Healy
- ---------------------------------- --------------------------------
Name of secretary (print) Name of director (print)
THE COMMON SEAL of FLOATFLOW )
PTY LTD is affixed in accordance with its )
articles of association in the presence of )
- ---------------------------------- --------------------------------
Secretary Director
- ---------------------------------- --------------------------------
Name of secretary (print) Name of director (print)
THE COMMON SEAL of JTC )
INVESTMENT MANAGEMENT PTY is )
affixed in accordance with its articles of )
association in the presence of )
- ---------------------------------- --------------------------------
Secretary Director
- ---------------------------------- --------------------------------
Name of secretary (print) Name of director (print)
- 13 -
<PAGE>
THE COMMON SEAL of HELMET )
INVESTMENTS AUSTRALIA PTY LTD is )
affixed in accordance with its articles )
of association in the presence of )
- ---------------------------------- --------------------------------
Secretary Director
- ---------------------------------- --------------------------------
Name of secretary (print) Name of director (print)
SIGNED for and on behalf of FLOATFLOW )
PTY LTD by a director in the presence of )
/s/ N. Broome /s/ Paul Bordonaro
- ---------------------------------- --------------------------------
Witness Director
N. Broome Paul Bordonaro
- ---------------------------------- --------------------------------
Name of witness (print) Name of director (print)
THE COMMON SEAL of JTC )
INVESTMENT MANAGEMENT PTY is )
affixed in accordance with its articles of )
association in the presence of )
/s/ Julian Beale /s/ Michael Kroeger
- ---------------------------------- --------------------------------
Secretary Director
Julian Beale Michael Kroeger
- ---------------------------------- --------------------------------
Name of secretary (print) Name of director (print)
- 13 -
<PAGE>
THE COMMON SEAL of WESTPAC )
CUSTODIAN NOMINEES LIMITED (as )
nominee for NJI No. 1(A) Investment Fund) ) [SEAL]
is affixed in accordance with its articles )
of association in the presence of )
/s/ illegible
------------------------
Director
/s/ illegible
------------------------
Name of director (print)
THE COMMON SEAL of WESTPAC )
CUSTODIAN NOMINEES LIMITED (as )
nominee for NJI No. 1 (B) Investment Fund) ) [SEAL]
is affixed in accordance with its articles )
of association in the presence of )
/s/ illegible
------------------------
Director
/s/ illegible
------------------------
Name of director (print)
SIGNED for and on behalf of AMPERSAND )
SPECIALTY MATERIALS AND )
CHEMICALS II, LIMITED PARTNERSHIP )
by its general partner ASMC II Management )
Company LP in the presence of )
/s/ Charles D. Yie
--------------------------------
Director
/s/ Charles D. Yie
--------------------------------
Name of director (print)
- 14 -
<PAGE>
THE COMMON SEAL of WESTPAC )
CUSTODIAN NOMINEES LIMITED (as )
nominee for NJI No. 1(A) Investment Fund) )
is affixed in accordance with its articles )
of association in the presence of )
/s/ illegible
- ----------------------------------- --------------------------------
Secretary Director
/s/ illegible
- ----------------------------------- --------------------------------
Name of secretary (print) Name of director (print)
THE COMMON SEAL of WESTPAC )
CUSTODIAN NOMINEES LIMITED (as )
nominee for NJI No. 1 (B) Investment Fund) )
is affixed in accordance with its articles )
of association in the presence of )
- ---------------------------------- --------------------------------
Secretary Director
- ---------------------------------- --------------------------------
Name of secretary (print) Name of director (print)
SIGNED for and on behalf of AMPERSAND )
SPECIALTY MATERIALS AND )
CHEMICALS II, LIMITED PARTNERSHIP )
by its general partner ASMC II Management )
Company LP in the presence of )
/s/ Charles D. Yie
- ---------------------------------- --------------------------------
Secretary Director
Charles D. Yie
- ---------------------------------- --------------------------------
Name of secretary (print) Name of director (print)
By its General Partner of the General Partner ASMC-II MCLP LLP
- 14 -
<PAGE>
SIGNED for and on behalf of AMPERSAND )
SPECIALTY MATERIALS AND )
CHEMICALS III, LIMITED PARTNERSHIP )
by its general partner ASMC III Management )
Company LP in the presence of )
By its General Partner of the General Partner ASMC-III MCLP LLP
/s/ Charles D. Yie
--------------------------------
Director and General Partner
Charles D. Yie
--------------------------------
Name of director (print)
SIGNED for and on behalf of AMPERSAND )
SPECIALTY MATERIALS AND )
CHEMICALS III COMPANION FUND )
LIMITED PARTNERSHIP by its general )
partner ASMC IIICF Management Company LP )
in the presence of )
By its General Partner of the General Partner ASMC-III MCLP LLP
/s/ Charles D. Yie
--------------------------------
Director and General Partner
Charles D. Yie
--------------------------------
Name of director (print)
SIGNED for and on behalf of MAZZA & )
RILEY, INC. )
in the presence of )
- ---------------------------------- --------------------------------
Secretary
- ---------------------------------- --------------------------------
Name of secretary (print) Name (print)
- 15 -
<PAGE>
SIGNED for and on behalf of AMPERSAND )
SPECIALTY MATERIALS AND )
CHEMICALS III, LIMITED PARTNERSHIP )
by its general partner ASMC III Management )
Company LP in the presence of )
--------------------------------
Director
--------------------------------
Name of director (print)
SIGNED for and on behalf of AMPERSAND )
SPECIALTY MATERIALS AND )
CHEMICALS III COMPANION FUND )
LIMITED PARTNERSHIP by its general )
partner ASMC IIICF Management Company LP )
in the presence of )
--------------------------------
Director
--------------------------------
Name of director (print)
SIGNED for and on behalf of MAZZA & )
RILEY, INC. )
in the presence of )
/s/ David B. Mazza
--------------------------------
Treasurer
David B. Mazza
--------------------------------
Name (print)
- 15 -
<PAGE>
SCHEDULE I
THOMAS INVESTMENTS AUSTRALIA PTY LTD
HELMET INVESTMENTS AUSTRALIA PTY LTD
FLOATFLOW PTY LTD
JTC INVESTMENT MANAGEMENT PTY LTD
WESTPAC CUSTODIAN NOMINEES LIMITED (as nominee for NJI No. 1(A) Investment
Fund)
WESTPAC CUSTODIAN NOMINEES LIMITED (as nominee for NJI No. 1 (B) Investment
Fund)
AMPERSAND SPECIALTY MATERIALS AND CHEMICALS II, LIMITED PARTNERSHIP
AMPERSAND SPECIALTY MATERIALS AND CHEMICALS III, LIMITED PARTNERSHIP
AMPERSAND SPECIALTY MATERIALS AND CHEMICALS III COMPANION FUND
MAZZA & RILEY, INC.
<PAGE>
SCHEDULE II
REGISTRATION RIGHTS
1. Certain Definitions
Words defined in the Shareholders Agreement have the same meaning in this
Schedule II, except that as used in this Schedule II, the following terms shall
have the following respective meanings:
Commission means the United States Securities and Exchange Commission, or
any other United States Federal agency at the time administering the
Securities Act.
Common Stock means the common stock, $.01 par value per share, of the
Company.
Company means Moldflow Corporation.
Exchange Act means the United States Securities Exchange Act of 1934, as
amended, or any similar United States statute, and the rules and
regulations of the Commission issued under such act, as they each may,
from time to time, be in effect.
Securities Act means the United States Securities Act of 1933, as amended,
or any similar United States statute, and the rules and regulations of the
Commission issued under such act, as they each may, from time to time, be
in effect.
Registration Statement means a registration statement filed by the Company
with the Commission for a public offering and sale of securities of the
Company (other than a registration statement on Form S-8 or Form S-4, or
their successors, or any other form for a limited purpose, or any
registration statement covering only securities proposed to be issued in
exchange for securities or assets of another corporation).
Registration Expenses means the expenses described in Section 6 of this
Schedule.
Registrable Shares means (i) the shares of Common Stock issued or issuable
upon, exercise or conversion of the securities held by Ampersand II and
Ampersand III, and (ii) any other shares of Common Stock of the Company
issued in respect of such shares (because of stock splits, stock
dividends, reclassifications, recaptializations, or similar events).
Wherever reference is made in this Agreement to a request or consent of
Holders of a certain percentage of Registrable Shares, or to a number of
percentage of Registrable Shares held by a Holder, such reference shall
include shares of Common Stock issuable upon exercise of conversion of the
securities held by Ampersand II and Ampersand III even though such
exercise or conversion has not yet been effected.
<PAGE>
Holder means Ampersand Speciality Materials and Chemicals II and Ampersand
Speciality Materials and Chemicals III and the Shareholders and their
direct or indirect successors or assigns.
2. Sale or Transfer of Shares; Legend
(a) The Registrable Shares shall not be sold or transferred in the
United States unless either (i) they first shall have been
registered under the Securities Act, or (ii) the Company first shall
have been furnished with an opinion of legal counsel, reasonably
satisfactory to the Company, to the effect that such sale or
transfer is exempt from the registration requirements of the
Securities Act.
(b) Each certificate representing the Registrable Shares shall bear a
legend substantially in the following form:
"The Shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the
"Act"), and may not be offered, sold or otherwise transferred,
pledged or hypothecated in the United States unless and until
such shares are registered under the Act or an opinion of
counsel satisfactory to the Company is furnished to the
Company to the effect that such registration is not required."
The foregoing legend shall be removed from the certificates
representing any Registrable Shares at the request of the Holder
thereof at such time as they become registered under the Securities
Act or eligible or resale pursuant to Rule 144(k) under the
Securities Act.
3. Required Registration
(a) Within 90 days following written notice from a Holder or Holders
holding (or intending to exercise warrants for) (i) in the case of
Forms S-1 and S-2, not less than fifty one percent (51%) of the
Registrable Shares and (ii) in the case of Form S-3, Registrable
Shares having a fair market value of not less than $100,000, the
Company shall use its best efforts to effect the registration of
such Registrable Shares on Form S-1, Form S-2 or Form S-3 (or any
successor forms) or other appropriate Registration Statement
designated by such Holder or Holders. Any demand registration on
Form S-1 or Form S-2 pursuant to this Section 3 must be underwritten
on a firm commitment basis by a merchant or investment banker of
recognized national or regional standing in the United States. The
right of other Holders to participate in such underwritten
registration shall be conditioned on such Holders' participation in
such underwriting upon the same terms and conditions. Upon receipt
of any such request, the Company shall promptly give written notice
of such proposed registration to all Holders. Such Holders shall
have the right, by giving written notice to the Company within 30
days after the Company provides its
- 2 -
<PAGE>
notice, to elect to have included in such registration such of their
Registrable Shares as such Holders may request in such notice of
election subject to the approval of the underwriter managing the
offering. Thereupon, the Company shall, as expeditiously as
possible, use its best efforts to effect the registration on Form
S-1, Form S-2 or Form S-3 (or any successors form) or such other
appropriate Registration Statement designated by such Holder or
Holders, of all such Registrable Shares.
(b) The Company shall not be required to effect more than two
registrations (other than on Form S-3 or any successor form relating
to secondary offerings, if available) pursuant to Section 3(a). The
Holder or Holders holding the requisite amount of Registrable Shares
shall have the right to require the Company to effect an unlimited
number of registrations on Form S-3 or any successor form relating
to secondary offerings; however, in any one year the Company shall
not be required to effect more than two such registrations. If, upon
receipt of any request for registration from the Holders pursuant to
this Section 3, the Company elects to sell shares directly as part
of such registration, then such registration shall be considered a
registration under Section 4 rather than under Section 3 hereof.
4. Incidental Registration
(a) Whenever the Company proposes to file a Registration Statement,
prior to such filing it shall give written notice to all Holders of
its intention to do so, and upon the written request of a Holder or
Holders given within 30 days after the Company provides such notice
(which request shall state the intended method of disposition of
such Registrable Shares), the Company shall use its best efforts to
cause all Registrable Shares which the Company has been requested to
register to be registered under the Securities Act to the extent
necessary to permit their sale or other disposition in accordance
with the intended methods of distribution specified in the request
of such Holder(s); provided that, the Company shall have the right
to postpone or withdraw any registration effected pursuant to this
Section 4 without obligation to any Holder.
(b) In connection with any offering under this Section 4 involving an
underwriting, and subject to the next sentence hereof, the Company
shall not be required to include any Registrable Shares in such
underwriting in such quantity as will, in the opinion of the
underwriters, jeopardize the success of the offering by the Company
or materially adversely affect the price receivable by the Company
in such offering. If in the opinion of the managing underwriter the
registration of all, or part of, the Registrable Shares which the
Holders have requested to be included would materially and adversely
affect the success or the price receivable in such public offering,
then the Company shall be required to include in the underwriting
only that number of Registrable Shares, if any, which the managing
underwriter believes may be sold without causing such adverse
effect, provided, however, that in no event
- 3 -
<PAGE>
shall more than 50% of the Registrable Shares which the Holders have
requested to be included in any underwriting be excluded from such
underwriting (other than an underwriting relating to the initial
public offering of the Company's Common Stock, in which case 100% of
such Registrable Shares may be excluded). In the event of such a
reduction in the number of shares to be included in the
underwriting, all Holders of Registrable Shares who have requested
registration shall participate in the underwriting pro rata based
upon their total ownership of Registrable Shares (or in any other
proportion as agreed upon by such Holders) and if any such Holder
would thus be entitled to include more shares than such Holder
requested to be registered, the excess shall be allocated among such
other requesting Holders pro rata based on their ownership of
Registrable Shares. No other securities requested to be included in
a registration for the account of anyone other than the Company or
the Holders shall be included in a registration unless either (i)
all Registrable Shares requested to be included in such registration
are so included or (ii) the Holders of a majority of the Registrable
Shares requested to be included in such registration otherwise
consent in writing.
5. Registration Procedures
If and whenever the Company is required by the provisions of this
Agreement to use its best efforts to effect the registration of any of the
Registrable Shares under the Securities Act, the Company shall:
(a) file with the Commission a Registration Statement with respect to
such Registrable Shares and use its best efforts to cause that
Registration Statement to become and remain effective:
(b) as expeditiously as possible prepare and file with the Commission
any amendments and supplements to the Registration Statement and the
prospectus included in the Registration Statement as may be
necessary to keep the Registration Statement effective for a period
of not less than 90 days from the effective date;
(c) as expeditiously as possible furnish to each selling Holder such
reasonable numbers of copies of the prospectus, including a
preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as the selling Holder may
reasonably request in order to facilitate the public sale or other
disposition of the registered Registrable Shares owned by the
selling Holder; and
(d) as expeditiously as possible use its best efforts to register or
qualify the Registrable Shares covered by the Registration Statement
under the securities or Blue Sky laws of such states as the selling
Holder shall reasonably request, and do any and all other acts and
things that may be necessary or desirable to enable the selling
Holder to consummate the public sale or other disposition in such
jurisdictions; provided, however, that the Company shall not be
required
- 4 -
<PAGE>
in connection with this paragraph (d) to qualify as a foreign
corporation or execute a general consent to service of process in
any jurisdiction.
If the Company has delivered preliminary or final prospectuses to the
selling Holder and after having done so the prospectus is amended to
comply with the requirements of the Securities Act, the Company shall
promptly notify the selling Holder and, if requested, the selling Holder
shall immediately cease making offers of Registrable Shares and shall
return all prospectuses to the Company. The Company shall promptly provide
the selling Holder with revised prospectuses and, following receipt of the
revised prospectuses, the selling Holder shall be free to resume making
offers of the Registrable Shares.
6. Allocation of Expenses
The Company shall pay the Registration Expenses for all registrations
requested by the Holders pursuant to this Agreement. If a registration on
a Registration Statement other than Form S-3 (or any successor form)
requested by the Holders pursuant to Section 3(a) is withdrawn prior to
effectiveness at the request of the Holders requesting it and if the
requesting Holders holding a majority of the Registrable Shares requested
to be included in such registration elect not to have such registration
counted as a registration requested under Section 3(a), the requesting
Holders shall pay the Registration Expenses of such registration pro rata
in accordance with the number of their Registrable Shares included in such
registration. For purposes of this Section, the term Registration Expenses
shall mean all expenses incurred by the Company in complying with this
Agreement, including, without limitation, all registration and filing
fees, exchange listing fees, printing expenses, fees and disbursements of
counsel for the Company and one counsel for the selling Holders,
out-of-pocket expenses of the Company and the underwriters, state Blue Sky
fees and expenses, and the expense of any special audits incident to or
required by any such registration, but excluding underwriting discount and
selling commissions and fees of more than one counsel for the selling
Holders. Such underwriting discounts and selling commissions shall be
borne pro rata by the selling Holders in accordance with the number of
their Registrable Shares included in such registration.
7. Indemnification
(a) In the event of any registration of any of the Registrable Shares
under the Securities Act pursuant to this Agreement, then to the
extent permitted by law the Company shall indemnify and hold
harmless the seller of such Registrable Shares, each underwriter of
such Registrable Shares and each other persons, if any, who controls
such seller or underwriter within the meaning of the Securities Act
or the Exchange Act against any losses, claims, damages or
liabilities, joint or several, to which such seller, underwriter or
controlling person may become subject under the Securities Act, the
Exchange Act, state securities laws or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in
- 5 -
<PAGE>
any Registration Statement under which such Registrable Shares were
registered under the Securities Act, or any preliminary prospectus
or final prospectus contained in the Registration Statement, or any
amendment or supplement to such Registration Statement, or arise out
of or are based upon the omission or alleged omission to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading; and the Company shall reimburse
such seller, underwriter and each such controlling person for any
legal or any other expenses reasonably incurred by such seller,
underwriter or controlling person in connection with investigating
or defending any such loss, claim, damage, lability or action;
provided, however, that the Company shall not be liable in any such
cases to the extent that such loss, claim, damage or liability
arises out of or is based upon any untrue statement or omission made
in such Registration Statement, preliminary prospectus or
prospectus, or any such amendment or supplement, in reliance upon
and in conformity with information furnished to the Company, in
writing, by or on behalf of such seller, underwriter or controlling
person specifically for use in the preparation thereof.
(b) In the event of any registration of any of the Registrable Shares
under the Securities Act pursuant to this Agreement, then to the
extent permitted by law, each seller of Registrable Shares severally
and not jointly, shall indemnify and hold harmless the Company, each
of its directors and officers and each underwriter (if any) and each
person, if any, who controls the Company or any such underwriter
within the meaning of the Securities Act or the Exchange Act,
against any losses, claims, damages or liabilities joint or several,
to which the Company, such directors and officers, underwriter or
controlling person may become subject under the Securities Act,
Exchange Act, state securities laws or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect
hereof) arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in any
Registration Statement under which Registrable Shares were
registered under the Securities Act, any preliminary prospectus or
final prospectus contained in the Registration Statement, or any
amendment or supplement to the Registration Statement, or arise out
of or are based upon any omission or alleged omission to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, if the statement or omission was
made in reliance upon and in conformity with information furnished
in writing to the Company by or on behalf of such seller
specifically for use in connection with the preparation of such
Registration Statement, prospectus, amendment or supplement;
provided, however, that the obligations of such Holder hereunder
shall be limited to an amount equal to the proceeds to each Holder
of Registrable Shares sold as contemplated herein.
(c) Indemnifications of an underwriter pursuant to this Section 7 shall
not be interpreted as providing relief of such underwriter from any
or all of its due diligence obligations. Further, a underwriter
shall not be entitled to indemnification pursuant to this section in
the event that it fails to deliver to
- 6 -
<PAGE>
any selling Holder any preliminary or final or revised prospectus,
as required by the Rules and Regulations of the Commission. Finally,
no indemnification shall be provided pursuant to this Section in the
event that any error in a preliminary prospectus of the Company is
subsequently corrected in the final prospectus of the Company for a
particular offering, and such final prospectus is delivered to the
person seeking indemnity, in the case of a claim made under Section
7(a), or to all purchasers in the offering by the Company in the
case of a claim under Section 8(b) prior to the date of purchase of
the securities.
Each party entitled to indemnification under this Section 7 (the
Indemnified Party) shall give notice to the party required to provide
indemnification (the Indemnifying Party) promptly after such Indemnified
Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of
any such claim or any litigation resulting therefrom, provided that
counsel for the Indemnifying Party, who shall conduct the defense of such
claim or litigation, shall be approved by the Indemnified Party (whose
approval shall not be unreasonably withheld or delayed); and, provided,
further, that the failure of any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying Party of its
obligations under this Agreement. The Indemnified Party may participate in
such defense at such Indemnified Party's expense, provided, however, that
the Indemnifying Party shall pay such expense if representation of such
Indemnified Party by the counsel retained by the Indemnifying Party would
be inappropriate due to actual or potential differing interest between the
Indemnified Party and any other party represented by such counsel in such
proceeding. No Indemnifying Party, in the defense of any such claim or
litigation shall, except with the consent of each Indemnified Party,
consent to entry of any judgement or enter into any settlement that does
not include as an unconditional term thereof the giving of the claimant or
plaintiff to such Indemnified Party of a release from all liability in
respect of such claim or litigation, and no Indemnified Party shall
consent to entry of any judgment or settle such claim or litigation
without the prior written consent of the Indemnifying Party.
8. Indemnification with Respect to Underwritten Offering.
In the event that Registrable Shares are sold pursuant to a Registration
Statement in an underwritten offering pursuant to Section 3(a), the
Company agrees to enter into an underwriting agreement containing
customary representations and warranties with respect to the business and
operations of an issuer of the securities being registered and customary
covenants and agreements to be performed by such issuer, including without
limitation customary provisions with respect to indemnification by the
Company of the underwriters of such offering.
9. Stand-Off Agreement
Each Holder of Registrable Shares, if requested by the Company and an
underwriter of Common Stock or other securities of the Company, shall
agree not to sell or
- 7 -
<PAGE>
otherwise transfer or dispose of any Registrable Shares or other
securities of the Company held by such Holder for a specified period of
time (not to exceed 90 days) following the effective date of a
Registration Statement; provided that:
(a) such agreement shall only apply to the first such Registration
Statement covering Common Stock of the Company to be sold on its
behalf to the public in an underwritten offering; and
(b) all officers and directors of the Company and all Holders of five
percent (5%) or more of the Company's Common Stock enter into
similar agreements.
Such agreement shall be in writing in a form satisfactory to the Company
and such underwriter.
10. Information by Holder
Each Holder of Registrable Shares included in any registration shall
furnish to the Company such information regarding such Holder and the
distribution proposed by such Holder as the Company may request in writing
and as shall be required or advisable in connection with any registration,
qualification or compliance referred to in this Agreement.
11. Rule 144 Requirements
With a view to making available to the Holders the benefits of Rule 144
promulgated under the Securities Act and any other rule or regulation of
the Commission that may at any time permit a Holder to sell securities of
the Company to the public without registration, the Company agrees to use
its best efforts to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act (at any
time after it has become subject to the reporting requirements of
the Exchange Act).
(b) file with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the
Exchange Act (at any time after it has become subject to such
reporting requirements); and
(c) furnish to any Holder of Registrable Shares upon request a written
statement by the Company as to its compliance with the reporting
requirements of said Rule 144 (at any time after 90 days after the
closing of the first sale of securities by the Company pursuant to a
Registration Statement), and of the Securities Act and the Exchange
Act (at any time after it has become subject to such reporting
requirements), a copy of the most recent annual or quarterly report
of the Company, and such other reports and documents of the Company
as such Holder may reasonably request to avail itself of any similar
rule or regulation of the Commission allowing it to sell any such
securities without registration.
- 8 -
<PAGE>
12. Selection of Underwriter
In the case of any registration effected pursuant to Section 3, the
Requesting Holders shall have the right to designate the managing
underwriter, subject to the approval of the Company, which approval may
not be unreasonably withheld or delayed.
13. Restrictions on Other Agreements
The Company will not enter into any other agreement with any party which
by its terms grants any right relating to the registration of its Common
Stock superior to or on a parity with the rights granted to the Holders
pursuant to this Agreement.
14. Transfer of Rights
(a) The rights granted hereunder may be transferred or succeeded to only
by any (i) other Holder or any general or limited partner, officer
or other affiliate (within the meaning of Rule 144 under the
Securities Act) of any Holder, or (ii) any other person or entity
that holds (including any shares hereafter acquired) at least 5% of
the Registrable Shares and who is not a competitor of the Company or
a partner, officer, director, employee or owner of more than 1 % of
the outstanding securities of any direct or indirect competitor of
the Company; provided, however, that the Company is given written
notice by the transferee and identifying the securities with respect
to which such rights are being assigned.
(b) A transferee to whom rights are transferred pursuant to this Section
14 may not again transfer such rights to any other person or entity,
other than as provided in paragraph (a) above.
15. Successors and Assigns
The provisions of this Schedule shall bind and inure to the benefit of
respective successors, assigns, heirs, executors, and administrators of
the parties hereto.
- 9 -
<PAGE>
First Amendment to Shareholders Agreement
This First Amendment to the Shareholders Agreement (the
"Shareholders Agreement") dated as of July 18, 1997 by and among Moldflow
Corporation, a Delaware corporation (the "Company"), and the individuals
listed on Schedule I thereto (the "Shareholders"), is dated as of the 24th
day of October, 1997 (the "First Amendment") by and among the Company and the
Shareholders, and amends the Shareholders Agreement.
WHEREAS, pursuant to Section 2.b. of the Shareholders Agreement, the
Company has granted to certain Shareholders certain registration rights
contained in Schedule II thereto; and
WHEREAS, the Company and the Shareholders desire to amend the
Shareholders Agreement to include the shares of Common Stock held by Thomas
Investments Australia Pty. Ltd., Helmet Investments Australia Pty. Ltd.,
Floatflow Pty. Ltd., JTC Investment Management Pty. Ltd., Westpac Custodian
Nominees Limited (as nominee for NJI No. 1(A) Investment Fund), Westpac
Custodian Nominees Limited (as nominee for NJI No. 1(B) Investment Fund),
Ampersand Specialty Materials and Chemicals III Companion Fund, and Mazza &
Riley, Inc. as Registrable Shares pursuant to Schedule II;
NOW THEREFORE, the parties agree as follows.
1. Amendment of Shareholders Agreement. The Shareholders Agreement is hereby
amended by deleting the paragraph defining the term Registerable Shares found
in Section 1 of Schedule II in its entirety, and substituting the following
therefor:
REGISTRABLE SHARES means (i) the shares of Common Stock held by the
Shareholders, (ii) the shares of Common Stock issued or issuable
upon exercise of conversion of the securities held by the
Shareholders, and (iii) any other shares of Common Stock of the
Company issued in respect of such shares (because of stock splits,
stock dividends, reclassifications, recapitalizations, or similar
events). Wherever reference is made in this Agreement to a request
or consent of Holders of a certain percentage of Registrable
Shares, or to a number of percentage of Registrable Shares held by
Holder, such reference shall include shares of Common Stock
issuable upon exercise of conversion of the securities held by the
Shareholders even though such exercise or conversion has not yet
been effected.
2. Counterparts. This First Amendment may be executed in several
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First
Amendment to the Shareholders Agreement to be executed as an instrument under
seal as of the date first set forth above.
SIGNED for and on behalf of MOLDFLOW )
CORPORATION )
in the presence of )
/s/ Marc Dulude
- ------------------------------
President
Marc Dulude
- ------------------------------
Name of president (print)
SIGNED for and on behalf of THOMAS )
INVESTMENTS AUSTRALIA PTY LTD )
by a director in the presence of )
- ------------------------------ ------------------------------
Witness Director
- ------------------------------ ------------------------------
Name of witness (print) Name of director (print)
THE COMMON SEAL of HELMET )
INVESTMENTS AUSTRALIA PTY LTD is )
affixed in accordance with its articles )
of association in the presence of )
- ------------------------------ ------------------------------
Secretary Director
- ------------------------------ ------------------------------
Name of secretary (print) Name of director (print)
2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First
Amendment to the Shareholders Agreement to be executed as an instrument under
seal as of the date first set forth above.
SIGNED for and on behalf of MOLDFLOW )
CORPORATION )
in the presence of )
- ------------------------------
President
- ------------------------------
Name of president (print)
SIGNED for and on behalf of THOMAS )
INVESTMENTS AUSTRALIA PTY LTD )
by a director in the presence of )
/s/ Nevill Antony Sherburn /s/ A. Roland Thomas
- ------------------------------ ------------------------------
Witness Director
Nevill Antony Sherburn A. Roland Thomas
- ------------------------------ ------------------------------
Name of witness (print) Name of director (print)
THE COMMON SEAL of HELMET )
INVESTMENTS AUSTRALIA PTY LTD is ) [SEAL]
affixed in accordance with its articles )
of association in the presence of )
/s/ Pauline M. Healy /s/ Peter Kennedy
- ------------------------------ ------------------------------
Secretary Director
Pauline M. Healy Peter Kennedy
- ------------------------------ ------------------------------
Name of secretary (print) Name of director (print)
2
<PAGE>
SIGNED for and on behalf of FLOATFLOW ) [SEAL]
PTY LTD by a director in the presence of )
/s/ Deborah Bordonaro /s/ Paul Bordonaro
- ------------------------------ ------------------------------
Witness Director
Deborah Bordonaro Paul Bordonaro
- ------------------------------ ------------------------------
Name of witness (print) Name of director (print)
THE COMMON SEAL of JTC )
INVESTMENT MANAGEMENT PTY is )
affixed in accordance with its articles )
of association in the presence of )
- ------------------------------ ------------------------------
Secretary Director
- ------------------------------ ------------------------------
Name of secretary (print) Name of director (print)
THE COMMON SEAL of WESTPAC )
CUSTODIAN NOMINEES LIMITED (as nominee )
for NJI No. 1(A) Investment Fund) )
is affixed in accordance with its )
articles of association in the )
presence of )
- ------------------------------ ------------------------------
Secretary Director
- ------------------------------ ------------------------------
Name of secretary (print) Name of director (print)
3
<PAGE>
SIGNED for and on behalf of FLOATFLOW )
PTY LTD by a director in the presence of )
- ------------------------------ ------------------------------
Witness Director
- ------------------------------ ------------------------------
Name of witness (print) Name of director (print)
THE COMMON SEAL of JTC )
INVESTMENT MANAGEMENT PTY is )
affixed in accordance with its articles )
of association in the presence of )
- ------------------------------ ------------------------------
Secretary Director
- ------------------------------ ------------------------------
Name of secretary (print) Name of director (print)
THE COMMON SEAL of WESTPAC )
CUSTODIAN NOMINEES LIMITED (as nominee )
for NJI No. 1(A) Investment Fund) )
is affixed in accordance with its )
articles of association in the ) [SEAL]
presence of )
/s/ illegible
--------------------------------
Director
/s/ illegible
--------------------------------
Name of director (print)
3
<PAGE>
THE COMMON SEAL of WESTPAC )
CUSTODIAN NOMINEES LIMITED (as nominee )
for NJI No. 1(A) Investment Fund) ) [SEAL]
is affixed in accordance with its )
articles of association in the )
presence of )
SIGNED for and on behalf of AMPERSAND )
SPECIALTY MATERIALS AND )
CHEMICALS II, LIMITED PARTNERSHIP )
by its general partner ASMC II Management)
Company LP by its general partner )
ASMC-II MCLP LLP )
------------------------------
Director and General Partner
------------------------------
Name of director (print)
SIGNED for and on behalf of AMPERSAND )
SPECIALTY MATERIALS AND )
CHEMICALS III, LIMITED PARTNERSHIP )
by its general partner ASMC III Management)
Company LP by its general partner )
ASMC-II MCLP LLP )
------------------------------
Director and General Partner
------------------------------
Name of director (print)
4
<PAGE>
THE COMMON SEAL of WESTPAC )
CUSTODIAN NOMINEES LIMITED (as nominee )
for NJI No. 1(A) Investment Fund) )
is affixed in accordance with its )
articles of association in the )
presence of )
- ------------------------------ ------------------------------
Secretary Director
- ------------------------------ ------------------------------
Name of secretary (print) Name of director (print)
SIGNED for and on behalf of AMPERSAND )
SPECIALTY MATERIALS AND )
CHEMICALS II, LIMITED PARTNERSHIP )
by its general partner ASMC II Management)
Company LP by its general partner )
ASMC-II MCLP LLP )
/s/ Charles D. Yie
------------------------------
Director and General Partner
Charles D. Yie
------------------------------
Name of director (print)
SIGNED for and on behalf of AMPERSAND )
SPECIALTY MATERIALS AND )
CHEMICALS III, LIMITED PARTNERSHIP )
by its general partner ASMC III Management)
Company LP by its general partner )
ASMC-II MCLP LLP )
/s/ Charles D. Yie
------------------------------
Director and General Partner
Charles D. Yie
------------------------------
Name of director (print)
4
<PAGE>
SIGNED for and on behalf of AMPERSAND )
SPECIALTY MATERIALS AND )
CHEMICALS III, LIMITED PARTNERSHIP )
by its general partner ASMC III Management)
Company LP by its general partner )
ASMC-II MCLP LLP )
/s/ Charles D. Yie
------------------------------
Director and General Partner
Charles D. Yie
------------------------------
Name of director (print)
SIGNED for and on behalf of MAZZA & )
RILEY, INC. )
------------------------------
Director and General Partner
------------------------------
Name (print)
5
<PAGE>
SIGNED for and on behalf of AMPERSAND )
SPECIALTY MATERIALS AND )
CHEMICALS III, LIMITED PARTNERSHIP )
by its general partner ASMC III Management)
Company LP by its general partner )
ASMC-II MCLP LLP )
------------------------------
Director and General Partner
------------------------------
Name of director (print)
SIGNED for and on behalf of MAZZA & )
RILEY, INC. )
/s/ David B. Mazza
------------------------------
Treasurer
David B. Mazza
------------------------------
Name (print)
5
<PAGE>
SIGNED for and on behalf of FLOATFLOW )
PTY LTD by a director in the presence of )
- ------------------------------ ------------------------------
Witness Director
- ------------------------------ ------------------------------
Name of witness (print) Name of director (print)
THE COMMON SEAL of JTC )
INVESTMENTS MANAGEMENT PTY is ) [SEAL]
affixed in accordance with its articles )
of association in the presence of )
/s/ J.H. Beale /s/ G. Lorentzen
- ------------------------------ ------------------------------
Secretary Director
J.H. Beale G. Lorentzen
- ------------------------------ ------------------------------
Name of secretary (print) Name of director (print)
THE COMMON SEAL of WESTPAC )
CUSTODIAN NOMINEES LIMITED (as nominee )
for NJI No. 1(A) Investment Fund) )
is affixed in accordance with its )
articles of association in the )
presence of )
- ------------------------------ ------------------------------
Secretary Director
- ------------------------------ ------------------------------
Name of secretary (print) Name of director (print)
3
<PAGE>
AMENDED AND RESTATED CREDIT AGREEMENT
This Amended and Restated Credit Agreement (the "Agreement") is made
as of the 28th day of January, 1998 among the lenders identified on Schedule
I hereto (the "Lenders") and Moldflow Corporation, a Delaware corporation
(the "Company"). This Agreement amends and restates the Credit Agreement
entered into as of the 4th day of December, 1997 among the Lenders and the
Company.
WHEREAS, the Company desires that the Lenders extend to the Company
a line of credit (the "Line of Credit") on the terms and in an amount set
forth herein;
WHEREAS, the Lenders are willing to extend the Line of Credit to the
Company on the terms set forth herein;
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency is hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1
ESTABLISHMENT AND BORROWINGS UNDER THE LINE OF CREDIT
1.1 AGREEMENT TO LEND. Subject to the terms and conditions set forth
herein, each Lender agrees to make loans to the Company on the terms set
forth in the Convertible Term Note in the form attached hereto as Exhibit A
(the "Note") in two advances during the period (the "Loan Period") from the
date hereof to the second anniversary of the date hereof, in an aggregate
principal amount that will not result in such Lender's loans hereunder
exceeding such Lender's Credit Commitment (as set forth in Schedule I hereto
and as may be increased as set forth herein), PROVIDED that the aggregate of
the loans made by the Lenders hereunder shall not at any time exceed the
total Credit Commitments.
1.2 REQUESTS FOR ADVANCES. To request a loan hereunder (an
"Advance"), the Company shall provide each of the Lenders with a notice of
such request (an "Advance Request"), which shall be delivered not fewer than
ten (10) days prior to the date on which the funds are to be disbursed. The
Company may request up to two (2) Advances hereunder and may not request in
excess of $500,000 per Advance. Each Advance Request shall specify the
location and number of the Company's account to which funds are to be
disbursed.
1.3 FUNDING OF ADVANCES.
1.3.1 Each Lender shall make an Advance in the Allocable
Loan Amount (as defined below) with respect to each Advance Request by the
tenth day following the delivery of the Advance Request by wire transfer of
immediately available funds to the account of the Company specified in the
Advance Request, against delivery by the Company to each Lender of a Note (in
the attached form) in the amount of such Lender's Advance and dated the date
of such Advance. A Lender's Allocable Loan Amount shall be equal to the total
amount of the Advance requested by the Company in any particular instance
multiplied by a fraction, the
<PAGE>
numerator of which is such Lender's Credit Commitment and the denominator of
which is the total amount of Credit Commitments (a Lender's "Allocable
Percentage").
1.3.2 The obligations and rights of each Lender under this
Agreement are several.
1.3.3 If any Lender does not make an Advance in accordance
with Section 1.3.1 following receipt of an Advance Request (a "Defaulting
Lender"), then the Company shall so notify the other Lenders. Each other
Lender may elect, by notifying the Company within fifteen (15) days of
receipt of notification from the Company, to have such Lender's Credit
Commitment increased by a pro rata portion of such Defaulting Lender's
Allocable Loan Amount based upon the Loan Commitment of each of the other
Lenders desiring to have their Credit Commitments so increased. Thereafter,
the Defaulting Lender shall not be entitled to make any additional Advances
hereunder. The Company's rights under this Section 1.3.2 with respect to a
Defaulting Lender shall be in addition to all other rights which the Company
may have under law.
1.4 REPAYMENT OF LOANS. The Company unconditionally promises to pay
to each Lender the then unpaid principal amount, plus any accrued interest,
of such Lender's aggregate loans hereunder on the maturity date of the Note.
1.5 PREPAYMENT OF LOANS. The Company may, at its option, prepay from
time to time all or any part of the Note in accordance with the conditions of
the Note. In the event that the Company prepays only part of the Note, each
Lender shall be prepaid rateably in the proportion to which its loan bears to
the total amount of loans hereunder.
ARTICLE 2
TERMINATION
The provisions of Sections 1.1, 1.2 and 1.3 hereof shall terminate
upon the second anniversary of the date hereof.
ARTICLE 3
MISCELLANEOUS
3.1 RANKING. The Company hereby covenants with each Lender that the
Notes will rank PARI PASSU and rateably without any preference or priority
among themselves and shall not rank junior to any other obligation of the
Company to its shareholders.
3.2 NOTICES. All notices and other communications provided for
herein shall be in writing and shall be delivered by hand or overnight
courier service, mailed by certified or registered mail or sent by telecopy,
as follows:
2
<PAGE>
3.2.1 if to the Company, to Moldflow Corporation, 91
Hartwell Avenue, Lexington, Massachusetts 02173, Attention of President
(Telecopy No. 781-674-0267), with an additional copy to Palmer & Dodge LLP,
One Beacon Street, Boston, Massachusetts 02108, Attention of Marc A.
Rubenstein (Telecopy No. 617-227-4420); and
3.2.2 if to the Lenders, at the address set forth on
Schedule I hereto.
Any party hereto may change its address or telecopy number for
notices and other communications hereunder by notice to the other parties
hereto. All notices and other communications given to any party hereto in
accordance with the provisions of this Agreement shall be deemed to have been
given on the date of receipt.
3.3 WAIVERS; AMENDMENTS. No failure or delay by a party in
exercising any right or power hereunder shall operate as a waiver thereof,
nor shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to an agreement or agreements in
writing entered into by the Company and all of the Lenders.
3.4 SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby. Nothing in this
Agreement, expressed or implied, shall be construed to confer upon any person
(other than the parties hereto, their respective successors and assigns
permitted hereby) any legal or equitable right, remedy or claim under or by
reason of this Agreement. Moldflow Corporation may not assign or transfer all
or any part of its rights or obligations under this Agreement other than to a
wholly-owned subsidiary of Moldflow Corporation. In the event that Moldflow
Corporation assigns or transfers all or any part of its rights or obligations
under this Agreement to its wholly-owned subsidiary, Moldflow Corporation
shall guarantee the performance by such wholly-owned subsidiary of its rights
and obligations under this Agreement.
3.5 COUNTERPARTS; INTEGRATION; REFERENCES TO AGREEMENT;
EFFECTIVENESS. This Agreement may be executed in counterparts (and by
different parties hereto on different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute
a single contract. This Agreement together with the exhibits and schedules
hereto constitute the entire contract among the parties relating to the
subject matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof.
Delivery of an executed counterpart of a signature page of this Agreement by
telecopy shall be effective as delivery of a manually executed counterpart of
this Agreement.
3.6 GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS. This
Agreement shall be construed in accordance with and governed by the law of the
Commonwealth of
3
<PAGE>
Massachusetts. Each party hereto hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of the
courts of the Commonwealth of Massachusetts and of the United States District
Court for the District of Massachusetts, and any appellate court from any
thereof, in any action or proceeding arising out of or relating to this
Agreement or the Note, or for recognition or enforcement of any judgment, and
each of the parties hereto hereby irrevocably and unconditionally agrees that
all claims in respect of any such action or proceeding may be heard and
determined in such Massachusetts court (or, to the extent permitted by law,
in such Federal court). Each of the parties hereto agrees that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law. Nothing in this Agreement shall affect any right that
any party may otherwise have to bring any action or proceeding relating to
this Agreement against any other party or its properties in the courts of any
jurisdiction.
3.7 HEADINGS. Article and Section headings used herein are for
convenience of reference only, are not part of this Agreement and shall not
affect the construction of, or be taken into consideration in interpreting,
this Agreement.
4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and
year first above written.
COMPANY
SIGNED for and on behalf of MOLDFLOW )
CORPORATION )
in the presence of )
/s/ Marc Dulude
- ---------------------------------
President
Marc Dulude
- ----------------------------------
Name of president (print)
LENDERS
SIGNED for and on behalf of THOMAS )
INVESTMENTS AUSTRALIA PTY LTD )
by a director in the presence of )
- ------------------------------------ ---------------------------------
Witness Director
- ------------------------------------ ---------------------------------
Name of witness (print) Name of director (print)
THE COMMON SEAL of HELMET )
INVESTMENTS AUSTRALIA PTY LTD is )
affixed in accordance with its )
articles of association )
in the presence of )
- ------------------------------------ ---------------------------------
Secretary Director
- ------------------------------------ ---------------------------------
Name of secretary (print) Name of director (print)
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and
year first above written.
COMPANY
SIGNED for and on behalf of MOLDFLOW )
CORPORATION )
in the presence of )
- ---------------------------------
President
- ----------------------------------
Name of president (print)
LENDERS
SIGNED for and on behalf of THOMAS )
INVESTMENTS AUSTRALIA PTY LTD )
by a director in the presence of )
/s/ Suzanne E. Rogers /s/ A. Roland Thomas
- ------------------------------------ ---------------------------------
Witness Director
Suzanne E. Rogers A. Roland Thomas
- ------------------------------------ ---------------------------------
Name of witness (print) Name of director (print)
THE COMMON SEAL of HELMET )
INVESTMENTS AUSTRALIA PTY LTD is )
affixed in accordance with its )
articles of association )
in the presence of )
- ------------------------------------ ---------------------------------
Secretary Director
- ------------------------------------ ---------------------------------
Name of secretary (print) Name of director (print)
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and
year first above written.
COMPANY
SIGNED for and on behalf of MOLDFLOW )
CORPORATION )
in the presence of )
- ---------------------------------
President
- ----------------------------------
Name of president (print)
LENDERS
SIGNED for and on behalf of THOMAS )
INVESTMENTS AUSTRALIA PTY LTD )
by a director in the presence of )
- ------------------------------------ ---------------------------------
Witness Director
- ------------------------------------ ---------------------------------
Name of witness (print) Name of director (print)
THE COMMON SEAL of HELMET )
INVESTMENTS AUSTRALIA PTY LTD is )
affixed in accordance with its ) [SEAL]
articles of association )
in the presence of )
/s/ Pauline Healy /s/ Peter Kennedy
- ------------------------------------ ---------------------------------
Secretary Director
Pauline Healy Peter Kennedy
- ------------------------------------ ---------------------------------
Name of secretary (print) Name of director (print)
5
<PAGE>
SIGNED for and on behalf of FLOATFLOW ) [SEAL]
PTY LTD by a director in the presence of )
/s/ Pamela A. Hambling /s/ Paul Bordonaro
- ----------------------------------- --------------------------------
Witness Director
Pamela A. Hambling Paul Bordonaro
- ----------------------------------- --------------------------------
Name of witness (print) Name of director (print)
THE COMMON SEAL of JTC )
INVESTMENT MANAGEMENT PTY is )
affixed in accordance with its )
articles of association in the )
presence of )
- ----------------------------------- --------------------------------
Secretary Director
- ----------------------------------- --------------------------------
Name of secretary (print) Name of director (print)
THE COMMON SEAL of WESTPAC )
CUSTODIAN NOMINEES LIMITED (as )
nominee for NJI No. 1(A) Investment Fund) )
is affixed in accordance with its )
articles of association in the )
presence of )
- ----------------------------------- --------------------------------
Secretary Director
- ----------------------------------- --------------------------------
Name of secretary (print) Name of director (print)
6
<PAGE>
SIGNED for and on behalf of FLOATFLOW )
PTY LTD by a director in the presence of )
- ----------------------------------- --------------------------------
Witness Director
- ----------------------------------- --------------------------------
Name of witness (print) Name of director (print)
THE COMMON SEAL of JTC )
INVESTMENT MANAGEMENT PTY is )
affixed in accordance with its ) [SEAL]
articles of association in the )
presence of )
/s/ Julian Beale
--------------------------------
Director
Julian Beale
--------------------------------
Name of director (print)
THE COMMON SEAL of WESTPAC )
CUSTODIAN NOMINEES LIMITED (as )
nominee for NJI No. 1(A) Investment Fund) )
is affixed in accordance with its )
articles of association in the )
presence of )
--------------------------------
Director
--------------------------------
Name of director (print)
6
<PAGE>
SIGNED for and on behalf of FLOATFLOW )
PTY LTD by a director in the presence of )
- ----------------------------------- --------------------------------
Witness Director
- ----------------------------------- --------------------------------
Name of witness (print) Name of director (print)
THE COMMON SEAL of JTC )
INVESTMENT MANAGEMENT PTY is )
affixed in accordance with its )
articles of association in the )
presence of )
--------------------------------
Director
--------------------------------
Name of director (print)
THE COMMON SEAL of WESTPAC )
CUSTODIAN NOMINEES LIMITED (as )
nominee for NJI No. 1(A) Investment Fund)) [SEAL]
is affixed in accordance with its )
articles of association in the )
presence of )
/s/ illegible
--------------------------------
Director
/s/ illegible
--------------------------------
Name of director (print)
6
<PAGE>
THE COMMON SEAL of WESTPAC )
CUSTODIAN NOMINEES LIMITED (AS ) [SEAL]
NOMINEE FOR NJI NO. 1 (B) )
INVESTMENT FUND) )
is affixed in accordance with )
its articles of association in )
the presence of )
/s/ illegible
--------------------------------
Director
/s/ illegible
--------------------------------
Name of director (print)
SIGNED for and on behalf of AMPERSAND )
SPECIALTY MATERIALS AND )
CHEMICALS II, LIMITED PARTNERSHIP )
by its general partner ASMC II Management )
Company LP by its general partner )
ASMC-II MCLP LLP )
--------------------------------
Director and General Partner
--------------------------------
Name of director (print)
SIGNED for and on behalf of AMPERSAND )
SPECIALTY MATERIALS AND )
CHEMICALS III, LIMITED PARTNERSHIP )
by its general partner ASMC III Management)
Company LP by its general partner )
ASMC-II MCLP LLP )
--------------------------------
Director and General Partner
--------------------------------
Name of director (print)
7
<PAGE>
THE COMMON SEAL of WESTPAC )
CUSTODIAN NOMINEES LIMITED (AS )
NOMINEE FOR NJI NO. 1 (B) )
INVESTMENT FUND) )
is affixed in accordance with )
its articles of association in )
the presence of )
- ----------------------------------- --------------------------------
Secretary Director
- ----------------------------------- --------------------------------
Name of secretary (print) Name of director (print)
SIGNED for and on behalf of AMPERSAND )
SPECIALTY MATERIALS AND )
CHEMICALS II, LIMITED PARTNERSHIP )
by its general partner ASMC II Management )
Company LP by its general partner )
ASMC-II MCLP LLP )
/s/ Charles D. Yie
--------------------------------
Director and General Partner
Charles D. Yie
--------------------------------
Name of director (print)
SIGNED for and on behalf of AMPERSAND )
SPECIALTY MATERIALS AND )
CHEMICALS III, LIMITED PARTNERSHIP )
by its general partner ASMC III Management)
Company LP by its general partner )
ASMC-III MCLP LLP )
/s/ Charles D. Yie
--------------------------------
Director and General Partner
Charles D. Yie
--------------------------------
Name of director (print)
7
<PAGE>
SIGNED for and on behalf of AMPERSAND )
SPECIALTY MATERIALS AND )
CHEMICALS III COMPANION FUND )
LIMITED PARTNERSHIP by its general )
partner ASMC III Management )
Company LP by its general partner )
ASMC-III MCLP LLP )
/s/ Charles D. Yie
--------------------------------
Director and General Partner
Charles D. Yie
--------------------------------
Name of director (print)
8
<PAGE>
SCHEDULE I
MOLDFLOW CORPORATION
TABLE OF SHAREHOLDER LOAN PARTICIPATION
JANUARY 9, 1998
<TABLE>
<CAPTION>
TOTAL % OF
COMMON PREFERRED COMMON SHARE CURRENT ALLOCABLE CREDIT ADVANCE
SHARES SHARES EQUIVALENTS SHARES PERCENTAGE COMMITMENT AMOUNT
USD USD
-----------------------
$1,000,000 $ 500,000
-----------------------
<S> <C> <C> <C> <C> <C> <C> <C>
PRINCIPAL AMOUNT:
COMMON SHAREHOLDERS:
Thomas Investments Australia
Pty. Ltd. 344,065 - 344,065 4.62% 4.63% $ 46,289 $ 23,145
Helmet Investments Australia
Pty. Ltd. 344,065 - 344,065 4.62% 4.63% $ 46,289 $ 23,145
Floatflow Pty. Ltd. 344,065 - 344,065 4.62% 4.63% $ 46,289 $ 23,145
JTC Investment Management
Pty. Ltd. 3,808,421 - 3,808,421 51.18% 51.24% $ 512,369 $ 256,184
Mazza & Riley Inc. 8,000 - 8,000 0.11% - -
PREFERENCE SHAREHOLDERS:
SERIES B CONVERTIBLE
PREFERRED STOCK
Westpac Custodian Nominees
Limited as nominee for NJI
No. 1 (A) Investment Fund 25,000 333,333 358,333 4.82% 4.82% $ 48,209 $ 24,104
Westpac Custodian Nominees
Limited as nominee for NJI
No. 1 (B) Investment Fund 25,000 333,333 358,333 4.82% 4.82% $ 48,209 $ 24,104
--------- ---------- ---------- ---------
TOTAL NJI 50,000 666,666 716,666 $ 96,417 $ 48,209
SERIES A CONVERTIBLE
PREFERRED STOCK
Ampersand Specialty
Materials and Chemicals II 10,003 928,123 938,126 12.61% 12.62% $ 126,211 $ 63,106
Ampersand Specialty
Materials and Chemicals III 9,837 912,724 922,561 12.40% 12.41% $ 124,117 $ 62,059
Ampersand Specialty
Materials and Chemicals III
Companion Fund 160 14,841 15,001 0.20% 0.20% $ 2,018 $ 1,009
--------- ---------- ---------- --------- ----------
Total Ampersand 20,000 1,855,688 1,875,688 $ 252,347 $ 126,174
TOTAL SHARES ISSUED 4,918,616 2,522,354 7,440,970 100% 100%
TOTAL LOAN COMMITMENT $1,000,000 $ 500,000
</TABLE>
<PAGE>
EXHIBIT C
FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
This First Amendment to Amended and Restated Credit Agreement (the
"Credit Agreement") dated as of January 28, 1998 by and among Moldflow
Corporation, a Delaware corporation (the "Company"), and the lenders listed
on Schedule I thereto (the "Lenders"), is dated as of the 25th day of July,
1998 (the "First Amendment") by and among the Company and the Lenders, and
amends the Credit Agreement.
WHEREAS, the parties hereto desire to amend the Credit Agreement as
set forth herein;
NOW THEREFORE, the parties agree as follows.
1. Amendment of Credit Agreement. Schedule I of the Credit
Agreement is hereby replaced in its entirety by Schedule I in the form
attached hereto to reflect the increase in the Credit Commitment under the
Credit Agreement of Ampersand Specialty Material and Chemicals III, Limited
Partnership and Ampersand Specialty Materials and Chemicals III Companion
Fund, Limited Partnership (together, "Ampersand"), such increase to occur
concurrent with the transfer of capital stock of the Company held by JTC
Investment Management Pty Ltd ("JTC") and by Westpac Custodian Nominees
Limited as nominees for NJI No. 1(A) Investment Fund and NJI 1(B) Investment
Fund (together, "Westpac") as described in the Stock Purchase Agreement dated
as of the date hereof among Ampersand and the Shareholders named therein. The
parties hereto acknowledge and agree that (i) JTC and Westpac shall have no
future commitments under the Credit Agreement and (ii) JTC and Westpac are
hereby released from all future obligations under the Credit Agreement.
2. Counterparts. This First Amendment may be executed in several
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
[Remainder of Page Intentionally Left Blank]
1
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment
to the Credit Agreement to be executed as an instrument under seal as of the
date first set forth above.
SIGNED for and on behalf of MOLDFLOW )
CORPORATION )
in the presence of )
/s/ Marc Dulude
- ---------------------------------------
President
Marc Dulude
President and CEO
- ---------------------------------------
Name of president (print)
SIGNED for and on behalf of THOMAS )
INVESTMENTS AUSTRALIA PTY LTD )
by a director in the presence of )
- --------------------------------------- -------------------------------
Witness Director
- --------------------------------------- -------------------------------
Name of witness (print) Name of director (print)
THE COMMON SEAL of HELMET )
INVESTMENTS AUSTRALIA PTY LTD is )
affixed in accordance with its articles of )
association in the presence of )
- --------------------------------------- -------------------------------
Secretary Director
- --------------------------------------- -------------------------------
Name of secretary (print) Name of director (print)
2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment
to the Credit Agreement to be executed as an instrument under seal as of the
date first set forth above.
SIGNED for and on behalf of MOLDFLOW )
CORPORATION )
in the presence of )
- ---------------------------------------
President
- ---------------------------------------
Name of president (print)
SIGNED for and on behalf of THOMAS )
INVESTMENTS AUSTRALIA PTY LTD )
by a director in the presence of )
/s/ Jane Thomas /s/ A. Roland Thomas
- --------------------------------------- -------------------------------
Witness Director
Jane Thomas A. Roland Thomas
- --------------------------------------- -------------------------------
Name of witness (print) Name of director (print)
THE COMMON SEAL of HELMET )
INVESTMENTS AUSTRALIA PTY LTD is )
affixed in accordance with its articles of )
association in the presence of )
- --------------------------------------- -------------------------------
Secretary Director
- --------------------------------------- -------------------------------
Name of secretary (print) Name of director (print)
[Signature Page to the First Amendment]
2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment
to the Credit Agreement to be executed as an instrument under seal as of the
date first set forth above.
SIGNED for and on behalf of MOLDFLOW )
CORPORATION )
in the presence of )
- ---------------------------------------
President
- ---------------------------------------
Name of president (print)
SIGNED for and on behalf of THOMAS )
INVESTMENTS AUSTRALIA PTY LTD )
by a director in the presence of )
- --------------------------------------- -------------------------------
Witness Director
- --------------------------------------- -------------------------------
Name of witness (print) Name of director (print)
THE COMMON SEAL of HELMET )
INVESTMENTS AUSTRALIA PTY LTD is )
affixed in accordance with its articles of ) [SEAL]
association in the presence of )
/s/ Pauline Healy /s/ Peter Kennedy
- --------------------------------------- -------------------------------
Secretary Director
Pauline Healy Peter Kennedy
- --------------------------------------- -------------------------------
Name of secretary (print) Name of director (print)
[Signature Page to the First Amendment]
2
<PAGE>
SIGNED for and on behalf of FLOATFLOW ) [SEAL]
PTY LTD by a director in the presence of )
/s/ Deborah Bordonaro /s/ Paul Bordonaro
- --------------------------------------- -------------------------------
Witness Director
Deborah Bordonaro Paul Bordonaro
- --------------------------------------- -------------------------------
Name of witness (print) Name of director (print)
THE COMMON SEAL of JTC )
INVESTMENT MANAGEMENT PTY LTD is )
affixed in accordance with its articles of )
association in the presence of )
- --------------------------------------- -------------------------------
Secretary Director
- --------------------------------------- -------------------------------
Name of secretary (print) Name of director (print)
THE COMMON SEAL of WESTPAC )
CUSTODIAN NOMINEES LIMITED (as )
nominee for NJI No. 1(A) Investment Fund) )
is affixed in accordance with its articles of )
association in the presence of )
- --------------------------------------- -------------------------------
Secretary Director
- --------------------------------------- -------------------------------
Name of secretary (print) Name of director (print)
[Signature Page to Consent and Second Amendment]
3
<PAGE>
SIGNED for and on behalf of FLOATFLOW )
PTY LTD by a director in the presence of )
- --------------------------------------- -------------------------------
Witness Director
- --------------------------------------- -------------------------------
Name of witness (print) Name of director (print)
THE COMMON SEAL of JTC )
INVESTMENT MANAGEMENT PTY is ) [SEAL]
affixed in accordance with its articles of )
association in the presence of )
/s/ Julian Beale /s/ Michael Kroeger
- --------------------------------------- -------------------------------
Secretary Director
Julian Beale Michael Kroeger
- --------------------------------------- -------------------------------
Name of secretary (print) Name of director (print)
THE COMMON SEAL of WESTPAC )
CUSTODIAN NOMINEES LIMITED (as )
nominee for NJI No. 1(A) Investment Fund) )
is affixed in accordance with its articles of )
association in the presence of )
- --------------------------------------- -------------------------------
Secretary Director
- --------------------------------------- -------------------------------
Name of secretary (print) Name of director (print)
4
<PAGE>
SIGNED for and on behalf of FLOATFLOW )
PTY LTD by a director in the presence of )
- --------------------------------------- -------------------------------
Witness Director
- --------------------------------------- -------------------------------
Name of witness (print) Name of director (print)
THE COMMON SEAL of JTC )
INVESTMENT MANAGEMENT PTY is )
affixed in accordance with its articles of )
association in the presence of )
- --------------------------------------- -------------------------------
Secretary Director
- --------------------------------------- -------------------------------
Name of secretary (print) Name of director (print)
THE COMMON SEAL of WESTPAC )
CUSTODIAN NOMINEES LIMITED (as ) [SEAL]
nominee for NJI No. 1(A) Investment Fund) )
is affixed in accordance with its articles of )
association in the presence of )
/s/ Michelle Dunlop /s/ Sean Brennan
- --------------------------------------- -------------------------------
Secretary Director
Michelle Dunlop Sean Brennan
- --------------------------------------- -------------------------------
Name of secretary (print) Name of director (print)
[Signature Page to the First Amendment]
5
<PAGE>
THE COMMON SEAL of WESTPAC )
CUSTODIAN NOMINEES LIMITED (AS ) [SEAL]
NOMINEE FOR NJI NO. 1 (B) INVESTMENT FUND) )
is affixed in accordance with its articles of )
association in the presence of )
/s/ Michelle Dunlop /s/ Sean Brennan
- --------------------------------------- -------------------------------
Secretary Director
Michelle Dunlop Sean Brennan
- --------------------------------------- -------------------------------
Name of secretary (print) Name of director (print)
SIGNED for and on behalf of AMPERSAND )
SPECIALTY MATERIALS AND )
CHEMICALS II, LIMITED PARTNERSHIP )
by its general partner ASMC II Management )
Company LP by its general partner )
ASMC-II MCLP LLP )
-------------------------------
General Partner
-------------------------------
Name (print)
SIGNED for and on behalf of AMPERSAND )
SPECIALTY MATERIALS AND )
CHEMICALS III, LIMITED PARTNERSHIP )
by its general partner ASMC III Management )
Company LP by its general partner )
ASMC-II MCLP LLP )
-------------------------------
General Partner
-------------------------------
Name (print)
[Signature Page to the First Amendment]
6
<PAGE>
THE COMMON SEAL of WESTPAC )
CUSTODIAN NOMINEES LIMITED (AS )
NOMINEE FOR NJI NO. 1 (B) INVESTMENT FUND) )
is affixed in accordance with its articles of )
association in the presence of )
- --------------------------------------- -------------------------------
Secretary Director
- --------------------------------------- -------------------------------
Name of secretary (print) Name of director (print)
SIGNED for and on behalf of AMPERSAND )
SPECIALTY MATERIALS AND )
CHEMICALS II, LIMITED PARTNERSHIP )
by its general partner ASMC II Management )
Company LP by its general partner )
ASMC-II MCLP LLP )
/s/ Charles D. Yie
-------------------------------
By: Charles D. Yie
Its: General Partner
Charles D. Yie
-------------------------------
Name (print)
SIGNED for and on behalf of AMPERSAND )
SPECIALTY MATERIALS AND )
CHEMICALS III, LIMITED PARTNERSHIP )
by its general partner ASMC III Management )
Company LP by its general partner )
ASMC-II MCLP LLP )
/s/ Charles D. Yie
-------------------------------
By: Charles D. Yie
Its: General Partner
Charles D. Yie
-------------------------------
Name (print)
[Signature Page to the First Amendment]
4
<PAGE>
SIGNED for and on behalf of AMPERSAND )
SPECIALTY MATERIALS AND )
CHEMICALS III COMPANION FUND )
LIMITED PARTNERSHIP by its general )
partner ASMC III Management Company LP )
by its general partner ASMC-III MCLP LLP )
/s/ Charles D. Yie
-------------------------------
By: Charles D. Yie
Its: General Partner
Charles D. Yie
-------------------------------
Name (print)
SIGNED for and on behalf of MAZZA & )
RILEY, INC. )
/s/ David B. Mazza
-------------------------------
David B. Mazza
-------------------------------
Name (print)
[Signature Page to the First Amendment]
5
<PAGE>
SCHEDULE I
MOLDFLOW CORPORATION
TABLE OF SHAREHOLDER LOAN PARTICIPATION
25-AUG-98
<TABLE>
<CAPTION>
-----------
ALLOCABLE CREDIT ADVANCE
PERCENTAGE COMMITMENT AMOUNT
USD USD
<S> <C> <C> <C>
-------------------------
PRINCIPAL AMOUNT: $1,000,000 $500,000
-------------------------
LENDERS:
Thomas Investments Australia Pty. Ltd. 4.36% $ 46,289 $ 23,145
Helmet Investments Australia Pty. Ltd. 4.36% $ 46,289 $ 23,145
Floatflow Pty. Ltd. 4.36% $ 46,289 $ 23,145
Total Non-Ampersand $ 138,867
Ampersand Specialty Materials and
Chemicals II 31.16% $ 311,627 $155,814
Ampersand Specialty Materials and
Chemicals III 54.59% $ 545,945 $272,973
Ampersand Specialty Materials and
Chemicals III Companion Fund 0.36% $ 3,561 $ 1,780
---------- --------
Total Ampersand $ 861,133 $430,566
TOTAL ALLOCABLE PERCENTAGE 100%
TOTAL LOAN COMMITMENT $1,000,000 $500,000
----------
</TABLE>
<PAGE>
TERMINATION OF AMENDED AND RESTATED CREDIT AGREEMENT
Reference is made to a certain Amended and Restated Credit Agreement dated
as of January 28, 1998 and amended by the First Amendment to Amended and
Restated Credit Agreement dated as of August 25, 1998 (together, the
"Agreement") entered into by and among Thomas Investments Australia Pty. Ltd.,
Helmet Investments Australia Pty. Ltd., Floatflow Pty. Ltd., Ampersand Specialty
Materials and Chemicals II, Ampersand Specialty Materials and Chemicals III, and
Ampersand Specialty Materials and Chemicals III Companion Fund (collectively,
the "Lenders") and Moldflow Corporation, a Delaware corporation (the
"Borrower"). All terms used in this letter of agreement which are not defined
herein shall have the meanings specified in the Agreement.
There is not, as of the date hereof, nor has there at any time ever been
any outstanding indebtedness pursuant to the Agreement.
The Lenders and the Borrower hereby agree to terminate the Agreement and
any obligation of any and all of the Lenders to make loans to the Borrower under
the Agreement, such termination to be deemed effective as of the date hereof.
This Termination Agreement may be executed in any number of counterparts,
but all of such counterparts shall together constitute but one and the same
agreement. In making proof of this Termination Agreement, it shall not be
necessary to produce or account for more than one counterpart thereof signed by
each of the parties hereto.
[Remainder of Page Intentionally Left Blank]
<PAGE>
THE BORROWER:
MOLDFLOW CORPORATION
By: /s/ Marc Dulude
-----------------------
Marc Dulude
President
THE LENDERS:
SIGNED for and on behalf of THOMAS )
INVESTMENTS AUSTRALIA PTY LTD )
by a director in the presence of )
/s/ F. Hatart /s/ Robert Thomas
- --------------------------- ---------------------------
Witness Director
Frank Hatart A.R. Thomas
- --------------------------- ---------------------------
Name of witness (print) Name of director (print)
SIGNED for and on behalf of HELMET )
INVESTMENTS AUSTRALIA PTY LTD )
affixed in accordance with its articles of )
association in the presence of )
- --------------------------- ---------------------------
Secretary Director
- --------------------------- ---------------------------
Name of secretary (print) Name of director (print)
2
<PAGE>
THE BORROWER:
MOLDFLOW CORPORATION
By:
-----------------------
Marc Dulude
President
THE LENDERS:
SIGNED for and on behalf of THOMAS )
INVESTMENTS AUSTRALIA PTY LTD )
by a director in the presence of )
- --------------------------- ---------------------------
Witness Director
- --------------------------- ---------------------------
Name of witness (print) Name of director (print)
SIGNED for and on behalf of HELMET )
INVESTMENTS AUSTRALIA PTY LTD )
affixed in accordance with its articles of )
association in the presence of )
[SEAL]
/s/ Pauline M. Healy /s/ Peter Kennedy
- --------------------------- ---------------------------
Secretary Director
Pauline M. Healy Peter Kennedy
- --------------------------- ---------------------------
Name of secretary (print) Name of director (print)
<PAGE>
SIGNED for and on behalf of FLOATFLOW ) [SEAL]
PTY LTD by a director in the presence of )
/s/ Deborah Bordonaro /s/ Paul Bordonaro
- --------------------------- ----------------------------
Witness Director
Deborah Bordonaro Paul Bordonaro
- --------------------------- ----------------------------
Name of witness (print) Name of director (print)
SIGNED for and on behalf of AMPERSAND )
SPECIALTY MATERIALS AND )
CHEMICALS II, LIMITED PARTNERSHIP )
by its general partner ASMC II Management )
Company LP by its general partner )
ASMC-II MCLP LLP )
----------------------------
Director and General Partner
----------------------------
Name (print)
SIGNED for and on behalf of AMPERSAND )
SPECIALTY MATERIALS AND )
CHEMICALS III, LIMITED PARTNERSHIP )
by its general partner ASMC III Management )
Company LP by its general partner )
ASMC-III MCLP LLP )
----------------------------
Director and General Partner
----------------------------
Name (print)
3
<PAGE>
SIGNED for and on behalf of FLOATFLOW )
PTY LTD by a director in the presence of )
- --------------------------- ----------------------------
Witness Director
- --------------------------- ----------------------------
Name of witness (print) Name of director (print)
SIGNED for and on behalf of AMPERSAND )
SPECIALTY MATERIALS AND )
CHEMICALS II, LIMITED PARTNERSHIP )
by its general partner ASMC II Management )
Company LP by its general partner )
ASMC-II MCLP LLP )
/s/ Charles D. Yie
----------------------------
Director and General Partner
Charles D. Yie
----------------------------
Name (print)
SIGNED for and on behalf of AMPERSAND )
SPECIALTY MATERIALS AND )
CHEMICALS III, LIMITED PARTNERSHIP )
by its general partner ASMC III Management )
Company LP by its general partner )
ASMC-III MCLP LLP )
/s/ Charles D. Yie
----------------------------
Director and General Partner
Charles D. Yie
----------------------------
Name (print)
3
<PAGE>
SIGNED for and on behalf of AMPERSAND )
SPECIALTY MATERIALS AND )
CHEMICALS III COMPANION FUND )
LIMITED PARTNERSHIP by its general )
partner ASMC III Management Company LP )
by its general partner ASMC-III MCLP LLP )
/s/ Charles D. Yie
----------------------------
Director and General Partner
Charles D. Yie
----------------------------
Name (print)
4
<PAGE>
Exhibit 10.9
LOAN AGREEMENT
By and Among
SILICON VALLEY BANK
and
MOLDFLOW CORPORATION
MOLDFLOW INTERNATIONAL PTY. LTD.
(ACN 061 633 798)
MOLDFLOW PTY. LTD.
(ACN 005 047 496)
<PAGE>
-ii-
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1. DEFINITIONS AND CONSTRUCTION.................................................................................................1
1.1 Definitions.................................................................................................1
1.2 Accounting and Other Terms..................................................................................9
2. LOANS AND TERMS OF PAYMENT...................................................................................................9
2.1 Advances....................................................................................................9
2.2 Overadvances...............................................................................................10
2.3 Interest Rates, Payments, and Calculations.................................................................10
2.4 Crediting Payments.........................................................................................10
2.5 Fees.......................................................................................................11
2.6 Additional Costs...........................................................................................11
2.7 Term.......................................................................................................11
2.8 Additional Payments........................................................................................12
3. CONDITIONS OF LOANS.........................................................................................................13
3.1 Conditions Precedent to Initial Advance....................................................................13
3.2 Conditions Precedent to all Advances.......................................................................14
4. RIGHT TO INSPECT............................................................................................................14
4.1 Right to Inspect...........................................................................................14
5. REPRESENTATIONS AND WARRANTIES..............................................................................................14
5.1 Due Organization and Qualification.........................................................................14
5.2 Due Authorization; No Conflict.............................................................................14
5.3 No Prior Encumbrances......................................................................................14
5.4 Bona Fide Eligible Accounts................................................................................15
5.5 Merchantable Inventory.....................................................................................15
5.6 Intellectual Property......................................................................................15
5.7 Name; Location of Chief Executive Office...................................................................15
5.8 Litigation.................................................................................................15
5.9 No Material Adverse Change in Financial Statements.........................................................15
5.10 Solvency...................................................................................................15
5.11 Regulatory Compliance......................................................................................15
5.12 Environmental Condition....................................................................................16
5.13 Taxes......................................................................................................16
5.14 Subsidiaries...............................................................................................16
5.15 Government Consents........................................................................................16
5.16 Full Disclosure............................................................................................16
6. AFFIRMATIVE COVENANTS.......................................................................................................16
6.1 Good Standing, etc.........................................................................................16
6.2 Government Compliance......................................................................................16
6.3 Financial Statements, Reports, Certificates................................................................17
6.4 Inventory; Returns.........................................................................................17
6.5 Taxes......................................................................................................17
6.6 Insurance..................................................................................................18
6.7 Quick Ratio................................................................................................18
6.8 Tangible Net Worth.........................................................................................18
6.9 Profitability..............................................................................................18
</TABLE>
<PAGE>
-iii-
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
6.10 Principal Depository.......................................................................................18
6.11 Additional Warrants........................................................................................18
6.12 Further Assurances.........................................................................................19
7. NEGATIVE COVENANTS..........................................................................................................19
7.1 Dispositions...............................................................................................19
7.2 Changes in Business, Business Locations....................................................................19
7.3 Mergers or Acquisitions....................................................................................19
7.4 Indebtedness...............................................................................................19
7.5 Liens......................................................................................................19
7.6 Distributions..............................................................................................19
7.7 Investments................................................................................................19
7.8 Transactions with Affiliates...............................................................................19
7.9 Intellectual Property Agreements...........................................................................20
7.10 Subordinated Debt..........................................................................................20
7.11 Inventory..................................................................................................20
7.12 Compliance.................................................................................................20
8. EVENTS OF DEFAULT...........................................................................................................20
8.1 Payment Default............................................................................................20
8.2 Covenant Default...........................................................................................20
8.3 Material Adverse Change....................................................................................21
8.4 Attachment.................................................................................................21
8.5 Insolvency.................................................................................................21
8.6 Other Agreements...........................................................................................21
8.7 Subordinated Debt..........................................................................................21
8.8 Judgments..................................................................................................21
8.9 Misrepresentations.........................................................................................21
8.10 Guaranty...................................................................................................22
9. BANK'S RIGHTS AND REMEDIES..................................................................................................22
9.1 Rights and Remedies........................................................................................22
9.2 Power of Attorney..........................................................................................23
9.3 Accounts Collection........................................................................................23
9.4 Bank Expenses..............................................................................................23
9.5 Bank's Liability for Collateral............................................................................24
9.6 Remedies Cumulative........................................................................................24
9.7 Demand; Protest............................................................................................24
9.8 Current Indemnity..........................................................................................24
10. NOTICES.....................................................................................................................25
11. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER..................................................................................25
12. GENERAL PROVISIONS..........................................................................................................26
12.1 Successors and Assigns.....................................................................................26
12.2 Indemnification............................................................................................26
12.3 Time of Essence............................................................................................26
12.4 Severability of Provisions.................................................................................26
12.5 Amendments in Writing, Integration.........................................................................26
12.6 Counterparts...............................................................................................26
12.7 Survival...................................................................................................26
12.8 Countersignature...........................................................................................27
12.9 Joint and Several Obligations..............................................................................27
</TABLE>
<PAGE>
-iv-
<TABLE>
<CAPTION>
<S> <C> <C>
12.10 MC as Agent for Borrowers..................................................................................27
</TABLE>
<PAGE>
-v-
Exhibits and Schedules
EXHIBITS
A - Loan Payment/Advance Telephone Request Form
B - Domestic Borrowing Base Certificate
C - Foreign Borrowing Base Certificate
D - Compliance Certificate
E - Promissory Note (Domestic Revolving Line of Credit Loans)
F - Promissory Note (Foreign Revolving Line of Credit Loans)
SCHEDULES
A - Disclosure Schedule
<PAGE>
-1-
This LOAN AGREEMENT is entered into as of April 23, 1998, by and among
SILICON VALLEY BANK (the "Bank"), a California-chartered bank with its principal
place of business at 3003 Tasman Drive, Santa Clara, California 95054 with a
loan production office located at 40 William Street, Wellesley, Massachusetts
02181 doing business under the name "Silicon Valley East," and MOLDFLOW
CORPORATION, a Delaware corporation ("MC"), MOLDFLOW INTERNATIONAL PTY. LTD., a
corporation organized under the laws of Australia and a wholly-owned subsidiary
of MC ("MIPL") and MOLDFLOW PTY. LTD., a corporation organized under the laws of
Australia and a wholly-owned subsidiary of MIPL ("MPL"). MC, MIPL and MPL are
sometimes each referred to herein as a "Borrower" and collectively as the
"Borrowers."
RECITALS
Borrowers wish to obtain credit from time to time from the Bank, and the
Bank desires to extend credit to Borrower. This Agreement sets forth the terms
on which the Bank will advance credit to Borrower, and a Borrower will repay the
amounts owing to the Bank.
AGREEMENT
The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION
1.1 DEFINITIONS. As used in this Agreement, the following terms shall
have the following definitions:
"Accounts" means all presently existing and hereafter arising accounts,
contract rights, and all other forms of obligations owing to a Borrower arising
out of the sale or lease of goods (including, without limitation, the licensing
of software and other technology) or the rendering of services by a Borrower,
whether or not earned by performance, and any and all credit insurance,
guaranties, and other security therefor, as well as all merchandise returned to
or reclaimed by a Borrower and Borrowers' Books relating to any of the
foregoing.
"Advance" or "Advances" means a loan advance under the Domestic Committed
Revolving Line or the Foreign Committed Revolving Line.
"Affiliate" means, with respect to any Person, any Person that owns or
controls directly or indirectly such Person, any Person that controls or is
controlled by or is under common control with such Person, and each of such
Person's senior executive officers, directors, partners and, for any Person that
is a limited liability company, such Persons, managers and members.
"Bank Expenses" means all: reasonable costs or expenses (including
reasonable attorneys' fees and expenses) incurred in connection with the
preparation, negotiation, administration, registration and enforcement of the
Loan Documents (including stamp duties imposed by Australian law, registration
fees and fees and penalties); and the Bank's reasonable attorneys' fees and
expenses incurred in amending, enforcing or defending the Loan Documents or the
transactions contemplated thereby (including fees and expenses of appeal or
review, or those incurred in any Insolvency Proceeding), whether or not suit is
brought.
<PAGE>
-2-
"Borrowers' Books" means all of the Borrowers' books and records including,
without limitation: ledgers; records concerning Borrowers' assets or
liabilities, the Collateral, business operations or financial condition; and all
computer programs, or tape files, and the equipment, containing such
information.
"Business Day" means any day that is not a Saturday, Sunday, or other day
on which banks in the State of California or The Commonwealth of Massachusetts
are authorized or required to close.
"Change In Control" means Ampersand Ventures or an Affiliate thereof shall
cease to own at least thirty-five percent (35%) of the shares of capital stock
having voting power to elect a majority of the Board of Directors of MC (not
taking into account an existing voting agreement which limits them to two board
seats), provided, however, this definition shall be of no further force and
effect upon completion of an initial public offering by MC with net proceeds to
the Borrowers of at least US $15,000,000.
"Change In Management" shall mean any two of the individuals who as of the
date of this Loan Agreement hold the positions of President and Chief Executive
Officer, Chief Financial Officer and Vice President-Sales (or a Person who the
Bank shall subsequently approve in such capacity) cease to hold such positions
for a period in excess of sixty (60) days.
"Closing Date" means the date of this Agreement.
"Code" means the Massachusetts Uniform Commercial Code.
"Collateral" means the property of the Borrowers described in the Security
Instruments.
"Committed Revolving Lines" means the Domestic Committed Revolving Line and
the Foreign Committed Revolving Line.
"Contingent Obligation" means, as applied to any Person, any direct or
indirect liability, contingent or otherwise, of that Person with respect to (i)
any indebtedness, lease, dividend, letter of credit or other obligation of
another, including, without limitation, any such obligation directly or
indirectly guaranteed, endorsed, co-made or discounted or sold with recourse by
that Person, or in respect of which that Person is otherwise directly or
indirectly liable; (ii) any obligations with respect to undrawn letters of
credit issued for the account of that Person; and (iii) all obligations arising
under any interest rate, currency or commodity swap agreement, interest rate cap
agreement, interest rate collar agreement, or other agreement or arrangement
designated to protect a Person against fluctuation in interest rates, currency
exchange rates or commodity prices; provided, however, that the term "Contingent
Obligation" shall not include endorsements for collection or deposit in the
ordinary course of business. The amount of any Contingent Obligation shall be
deemed to be an amount equal to the stated or determined amount of the primary
obligation in respect of which such Contingent Obligation is made or, if not
stated or determinable, the maximum reasonably anticipated liability in respect
thereof as determined by such Person in good faith; provided, however, that such
amount shall not in any event exceed the maximum amount of the obligations under
the guarantee or other support arrangement.
"Copyrights" means any and all copyright rights, copyright applications,
copyright registrations and like protections in each work or authorship and
derivative work thereof, whether published or unpublished and whether or not the
same also constitutes a trade secret, now or hereafter existing, created,
acquired or held.
"Credit Extension" means each Advance or any other extension of credit by
the Bank for the benefit of a Borrower hereunder.
<PAGE>
-3-
"Current Liabilities" means, as of any applicable date, all amounts that
should, in accordance with GAAP, be included as current liabilities on the
consolidated balance sheet of Borrowers and their Subsidiaries, as at such date,
plus, to the extent not already included therein, all outstanding Credit
Extensions made under this Agreement, including all Indebtedness that is payable
upon demand or within one year from the date of determination thereof unless
such Indebtedness is renewable or extendable at the option of a Borrower or any
Subsidiary to a date more than one year from the date of determination, but
excluding Subordinated Debt.
"Daily Balance" means the amount of the Obligations owed at the end of a
given day.
"Domestic Borrowing Base" means an amount equal to the sum of (a)
seventy-five percent (75%) of Eligible Domestic Accounts, as determined by the
Bank with reference to the most recent Borrowing Base Certificate delivered by
Borrowers, and (b) ninety percent (90%) of the face amount of the Standby Letter
of Credit (based on the most recently reported exchange rate for U.S. and
Australian dollars as reported in The Wall Street Journal) as long as such
Standby Letter of Credit remains in effect and the issuing bank has not sought
to cancel or terminate such Standby Letter of Credit prior to its specified
expiration date or indicated that it would not honor a drawing thereunder, and
(c) seventy percent (70%) of Eligible Special Accounts, as determined by the
Bank with reference to the most recent Borrowing Base Certificate.
"Domestic Committed Revolving Line" means Credit Extensions of up to Two
Million Six Hundred Fifty Thousand Dollars ($2,650,000) pursuant to Section
2.1(a) below.
"Domestic Revolving Line Note" means that certain promissory note of the
Borrowers, payable to the order of the Bank, the form of which is attached
hereto as Exhibit E.
"Eligible Accounts" means all Eligible Domestic Accounts, all Eligible
Special Accounts and all Eligible Foreign Accounts.
"Eligible Domestic Accounts" means those Accounts that arise in the
ordinary course of a Borrower's business and that comply with all of the
Borrowers' representations and warranties to the Bank set forth in Section 5.4.
Unless otherwise agreed to by the Bank in writing, Eligible Domestic Accounts
shall not include the following:
(1) Accounts that the account debtor has failed to pay within ninety
(90) days of invoice date;
(2) Accounts with respect to an account debtor, fifty percent (50%) of
whose Accounts the account debtor has failed to pay within ninety (90) days
of invoice date;
(3) Accounts with respect to an account debtor, including Affiliates,
whose total obligations to Borrowers and their Subsidiaries exceed
twenty-five percent (25%) of all Accounts, the excess over the 25% level
shall not constitute Eligible Accounts, except as approved in writing by
the Bank;
(4) Accounts with respect to which the account debtor does not have
its principal place of business in the United States;
(5) Accounts with respect to which the account debtor is a federal,
state, or local governmental entity or any department, agency, or
instrumentality thereof, except for those Accounts of the United States or
any department, agency or instrumentality thereof as to which the payee has
assigned its rights to payment thereof to the Bank and the
<PAGE>
-4-
assignment has been acknowledged, pursuant to the Assignment of Claims
Act of 1940, as amended (31 U.S.C. 3727);
(6) Accounts with respect to which any Borrower or any Subsidiary
thereof is liable to the account debtor, but only to the extent of any
amounts owing to the account debtor (sometimes referred to as "contra"
accounts, e.g. accounts payable, customer deposits, credit accounts etc.);
(7) Accounts generated by demonstration or promotional equipment, or
with respect to which goods are placed on consignment, guaranteed sale,
sale or return, sale on approval, bill and hold, or other terms by reason
of which the payment by the account debtor may be conditional;
(8) Accounts with respect to which the account debtor is an Affiliate,
officer, employee, or agent of a Borrower or any Subsidiary thereof;
(9) Accounts with respect to which the account debtor disputes
liability or makes any claim with respect thereto as to which the Bank
believes, in its sole discretion, that there may be a basis for dispute
(but only to the extent of the amount subject to such dispute or claim), or
is subject to any Insolvency Proceeding, or becomes insolvent, or goes out
of business; and
(10) Accounts the collection of which the Bank reasonably determines
to be doubtful.
"Eligible Special Accounts" means Accounts which satisfy the requirements
for Eligible Domestic Accounts except for those set forth in clause (d) of the
definition thereof and that are billed from, and the receivables records for
which are located in the United States and that are: (1) covered by credit
insurance in form and amount, and by an insurer satisfactory to the Bank less
the amount of any deductible(s) which may be or become owing thereon; or (2)
supported by one or more letters of credit either advised or negotiated through
the Bank or in favor of the Bank as beneficiary, in an amount and of a tenor,
and issued by a financial institution, acceptable to the Bank; or (3) that the
Bank approves on a case-by-case basis.
"Eligible Foreign Accounts" means Accounts that satisfy the requirements
for Eligible Domestic Accounts except those set forth in clause (d) of the
definition thereof and that do not satisfy the requirements for Eligible Special
Accounts, provided that Accounts of any non-U.S. Subsidiary of the Borrowers
shall be included in determining Eligible Foreign Accounts as long as such
Account arose in the ordinary course of such Subsidiaries' business and satisfy
the Borrowers' representations and warranties set forth in Section 5.4.
"Equipment" means all present and future machinery, equipment, tenant
improvements, furniture, fixtures, vehicles, tools, parts and attachments in
which any Borrower has any interest.
"ERISA" means the Employment Retirement Income Security Act of 1974, as
amended, and the regulations thereunder.
"Foreign Borrowing Base" means an amount equal to (a) thirty percent (30%)
of Eligible Foreign Accounts, as determined by the Bank with reference to the
most recent Borrowing Base Certificate delivered by Borrowers, and (b) the
amount of the Overadvance Allowance to the extent it is then in effect.
"Foreign Committed Revolving Line" means Credit Extensions up to One
Million One Hundred Thousand Dollars ($1,100,000) pursuant to Section 2.1(b)
below.
<PAGE>
-5-
"GAAP" means generally accepted accounting principles as in effect in the
United States from time to time.
"Guarantor" means any present or future guarantor of the Obligations,
including, without limitation, Moldflow (Europe) Ltd., Moldflow Japan and
Moldflow Vertiebs GmbH.
"Indebtedness" means (a) all indebtedness for borrowed money or the
deferred purchase price of property or services, including without limitation
reimbursement and other obligations with respect to surety bonds and letters of
credit, (b) all obligations evidenced by notes, bonds, debentures or similar
instruments, (c) all capital lease obligations and (d) all Contingent
Obligations, in each case whether presently existing or hereafter incurred.
"Insolvency Proceeding" means any proceeding commenced by or against any
person or entity under any provision of the United States Bankruptcy Code, as
amended, or under any other bankruptcy or insolvency law of any country, state
or jurisdiction, including assignments for the benefit of creditors, formal or
informal moratoria, compositions, administration, winding up, receivership,
liquidation, dissolution, extension generally with its creditors, or proceedings
seeking reorganization, arrangement, or other relief.
"Intellectual Property" means all Copyrights, Mask Works, Patents and
Trademarks.
"Inventory" means all present and future inventory in which any Borrower
has any interest, including merchandise, raw materials, parts, supplies, packing
and shipping materials, work in process and finished products intended for sale
or lease or to be furnished under a contract of service, of every kind and
description now or at any time hereafter owned by or in the custody or
possession, actual or constructive, of a Borrower, including such inventory as
is temporarily out of its custody or possession or in transit and including any
returns upon any accounts or other proceeds, including insurance proceeds,
resulting from the sale or disposition of any of the foregoing and any documents
of title representing any of the above.
"Investment" means any beneficial ownership of (including stock,
partnership interest or other securities) any Person, or any loan, advance or
capital contribution to any Person.
"Investor Lines" means (a) a line of credit by certain investors to
Moldflow Inc. in the amount of AUS $378,044; (b) a line of credit by Moldflow
Inc. and certain investors to MPL in the amount of AUS $1,364,186; and (c) a
line of credit by certain investors and other parties to MC in the amount of US
$1,000,000 and evidenced by documents acceptable to the Bank in form and
substance (the "Investor Loan Documents") under which the Borrowers shall be
permitted to draw down funds in order to cure Defaults or Events of Default
hereunder.
"IRC" means the Internal Revenue Code of 1986, as amended, and the
regulations thereunder.
"Lien" means any mortgage, lien, deed of trust, charge, pledge, security
interest or other encumbrance.
"Loan Documents" means, collectively, this Agreement, the Notes, the
Security Documents and any present or future agreement entered into between any
Borrower and/or for the benefit of the Bank in connection with this Agreement,
all as amended, extended or restated from time to time.
"Mask Works" means all mask work or similar rights available for the
protection of semiconductor chips, now owned or hereafter acquired.
<PAGE>
-6-
"Material Adverse Effect" means a material adverse effect on (i) the
business operations or condition (financial or otherwise) of any Borrower or the
Borrowers and their Subsidiaries taken as a whole or (ii) the ability of any
Borrower to repay the Obligations or otherwise perform its obligations under the
Loan Documents.
"Negotiable Collateral" means all letters of credit, notes, drafts,
instruments, securities, documents of title and chattel papers, whether current
existing or hereafter arising, in which Borrowers have or may hereafter have an
interest.
"Net Income" (or "Net Loss") shall mean consolidated net income or net loss
of the Borrowers as determined under GAAP.
"Notes" means the Domestic Revolving Line Note and the Foreign Revolving
Line Note.
"Obligations" means all debt, principal, interest, Bank Expenses and other
amounts owed to the Bank by the Borrowers pursuant to this Agreement or any
other agreement, whether absolute or contingent, due or to become due, now
existing or hereafter arising, including any interest that accrues after the
commencement of an Insolvency Proceeding and including any debt, liability, or
obligation owing from Borrowers to others that the Bank may have obtained by
assignment or otherwise.
"Overadvance Allowance" means with respect to Foreign Borrowing Base, the
sum of $750,000 but only up to and including the Overadvance Expiration Date at
which time the Overadvance Allowance shall expire.
"Overadvance Expiration Date" shall mean October 22, 1998.
"Patents" means all patents, patent applications and like protections
including without limitation improvements, divisions, continuations, renewals,
reissues, extensions and continuations-in-part of the same.
"Payment Date" means the twenty-second calendar day of each month
commencing on the first such date after the Closing Date and ending on the
Revolving Maturity Date.
"Peak Overadvance Amount" shall have the meaning set forth in Section 6.11.
"Periodic Payments" means all installments or similar recurring payments
that Borrower may now or hereafter become obligated to pay to the Bank pursuant
to the terms and provisions of any instrument, or agreement now or hereafter in
existence between any Borrower and the Bank.
"Permitted Indebtedness" means:
Indebtedness of Borrowers in favor of the Bank arising under this Agreement
or any other Loan Document;
(1) Indebtedness existing on the Closing Date and disclosed in
Schedule A;
(2) Subordinated Debt;
(3) Indebtedness to trade creditors incurred in the ordinary
course of business;
(4) Indebtedness secured by Permitted Liens;
<PAGE>
-7-
(5) Guaranties by Borrowers of real estate lease obligations
incurred in the ordinary course of business by their Subsidiaries,
provided, however, that the aggregate amount of the foregoing
Contingent Obligations shall not at any time exceed $100,000; and
(6) capital support letters issued by one or more of the
Borrowers on behalf of foreign wholly-owned Subsidiaries to the extent
required by the applicable laws of the jurisdictions in which such
Subsidiaries are located.
"Permitted Investment" means:
(a) Investments existing on the Closing Date disclosed in
Schedule A;
(b) (i) marketable direct obligations issued or unconditionally
guaranteed by the United States of America or any agency or any State
thereof maturing within one (1) year from the date of acquisition
thereof, (ii) commercial paper maturing no more than one (1) year from
the date of creation thereof and currently having the highest rating
obtainable from either Standard & Poor's Corporation or Moody's
Investors Service, Inc., and (iii) certificates of deposit maturing no
more than one (1) year from the date of investment therein issued by
the Bank;
(c) depositary accounts maintained by the Borrowers and their
Subsidiaries with banking institutions outside the U.S. in the
ordinary course of business, provided that the aggregate amount of
such accounts shall not exceed US $500,000 in the aggregate or US
$200,000 in any single instance; and
(d) contributions by MC or MPL to the so-called 401(k) Plan of MC
or MPL, but only so long as no Event of Default has occurred and is
continuing or could reasonably be expected to arise therefrom.
"Permitted Liens" means the following:
(a) Any Liens existing on the Closing Date and disclosed in
Schedule A or arising under this Agreement or the other Loan
Documents;
(b) Liens for taxes, fees, assessments or other governmental
charges or levies, either not delinquent or being contested in good
faith by appropriate proceedings and as to which adequate reserves are
maintained on Borrowers' Books in accordance with GAAP, PROVIDED the
same have no priority over any of the Bank's security interests;
(c) Liens (i) upon or in any Equipment acquired or held by any
Borrower or any of its Subsidiaries to secure the purchase price of
such Equipment or indebtedness incurred solely for the purpose of
financing the acquisition of such Equipment, or (ii) existing on such
Equipment at the time of its acquisition, PROVIDED that the Lien is
confined solely to the property so acquired and improvements thereon,
and the proceeds of such Equipment;
(d) Leases or subleases and licenses or sublicenses granted to
others in the ordinary course of a Borrower's business not interfering
in any material respect with the business of such Borrower and its
Subsidiaries taken as a whole, and any interest or title of a lessor,
licensor or under any lease or license provided that such leases,
subleases, licenses and sublicenses do not prohibit the grant of the
security interest granted hereunder; and
(e) Liens incurred in connection with the extension, renewal or
refinancing of the indebtedness secured by Liens of the type described
in clauses (a) through (c) above, PROVIDED that any extension, renewal
or replacement Lien shall be limited to the property
<PAGE>
-8-
encumbered by the existing Lien and the principal amount of the
indebtedness being extended, renewed or refinanced does not increase.
"Person" means any individual, sole proprietorship, partnership, limited
liability company, joint venture, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, firm, joint
stock company, estate, entity or governmental agency.
"Prime Rate" means the variable rate of interest, per annum, most recently
announced by the Bank, as its "prime rate," whether or not such announced rate
is the lowest rate available from the Bank.
"Quick Assets" means, as of any applicable date, the consolidated cash,
cash equivalents, accounts receivable and investments with maturities of less
than 90 days of Borrowers determined in accordance with GAAP.
"Responsible Officer" means each of the Chief Executive Officer, the
President, the Chief Financial Officer and the Controller of a Borrower.
"Revolving Maturity Date" means April 22, 1999.
"Schedule A" means the schedule of exceptions attached hereto.
"Security Documents" means the MC Security Agreement, the MPL Deed of
Charge (Victoria), the MPL Deed of Charge (Future Property), the MPL Share
Mortgage, the guaranties of the Guarantors and each other agreement which
purports to secure the Obligations.
"Standby Letter of Credit" means a standby letter of credit in favor of the
Bank in the face amount of AUS $1,130,000 satisfactory to the Bank in form and
substance and issued by Australia and New Zealand Banking Group Limited, ACN 005
357 522 ("ANZ Bank") or another bank acceptable to the Bank.
"Subordinated Debt" means any debt incurred by any Borrower that is
subordinated to the debt owing by Borrowers to the Bank on terms acceptable to
the Bank (and identified as being such by Borrowers and the Bank).
"Subsidiary" means with respect to any Person, corporation, partnership,
company association, joint venture, or any other business entity of which more
than fifty percent (50%) of the voting stock or other equity interests is owned
or controlled, directly or indirectly, by such Person or one of more Affiliates
of such Person.
"Tangible Net Worth" means as of any applicable date, the consolidated
total assets of Borrower and its Subsidiaries MINUS, without duplication, (i)
the sum of any amounts attributable to (a) goodwill, (b) intangible items such
as unamortized debt discount and expense, patents, trade and service marks and
names, copyrights and research and development expenses except prepaid expenses,
and (c) all reserves not already deducted from assets, AND (ii) Total
Liabilities.
"Total Liabilities" means as of any applicable date, any date as of which
the amount thereof shall be determined, all obligations that should, in
accordance with GAAP be classified as liabilities on the consolidated balance
sheet of Borrowers, including in any event all Indebtedness, but specifically
excluding Subordinated Debt.
"Trademarks" means any trademark and servicemarks rights, whether
registered or not, applications to register and registration of the same and
like protections, and the entire goodwill of the business of Assignor connected
with and symbolized by such trademarks.
<PAGE>
-9-
"UCC" means the Uniform Commercial Code as enacted in The Commonwealth of
Massachusetts.
"Warrant" means a 7-year stock purchase warrant to purchase 50,000 shares
of common stock of MC at an exercise price of $3.00 per share issued to the
Bank.
1.2 ACCOUNTING AND OTHER TERMS. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP and all calculations
and determinations made hereunder shall be made in accordance with GAAP. When
used herein, the term "financial statements" shall include the notes and
schedules thereto. The terms "including"/"includes" shall always be read as
meaning "including (or includes) without limitation", when used herein or in any
other Loan Document. All references to dollar amounts are to U.S. dollars unless
indicated otherwise.
2. LOANS AND TERMS OF PAYMENT
2.1 ADVANCES. Borrowers promise on a joint and several basis to pay to the
order of the Bank, in lawful money of the United States of America, the
aggregate unpaid principal amount of all Advances made by the Bank to Borrowers
hereunder. Borrowers also promise on a joint and several basis to pay interest
on the unpaid principal amount of such Advances at rates in accordance with the
terms hereof.
(1) DOMESTIC COMMITTED REVOLVING LINE. Subject to and upon the
terms and conditions of this Agreement, the Bank agrees to make
Advances to Borrowers in an aggregate outstanding amount not to exceed
the Domestic Committed Revolving Line or the Domestic Borrowing Base,
whichever is less. Subject to the terms and conditions of this
Agreement, amounts borrowed pursuant to this Section 2.1(a) may be
repaid and reborrowed at any time during the term of this Agreement.
(2) FOREIGN COMMITTED REVOLVING LINE. Subject to and upon the
terms and conditions of this Agreement, the Bank agrees to make
Advances to Borrowers in an aggregate outstanding amount not to exceed
the Foreign Committed Revolving Line or the Foreign Borrowing Base,
whichever is less. Subject to the terms and conditions of this
Agreement, amounts borrowed pursuant to this Section 2.1(b) may be
repaid and reborrowed at any time during the term of this Agreement.
(3) Whenever a Borrower desires an Advance, such Borrower will
notify the Bank by facsimile transmission or telephone no later than
12:00 Noon, Boston time, on the Business Day that the Advance is to be
made. Each such notification shall be promptly confirmed by a
Payment/Advance Form in substantially the form of EXHIBIT A hereto.
Each request for an Advance shall indicate whether it is to be made
under the Domestic Committed Revolving Line or the Foreign Committed
Revolving Line. The Bank is authorized to make Advances under this
Agreement, based upon instructions received from a Responsible Officer
or a designee of a Responsible Officer, or without instructions if in
the Bank's discretion such Advances are necessary to meet Obligations
which have become due and remain unpaid. The Bank shall be entitled to
rely on any telephonic notice given by a person who the Bank
reasonably believes to be a Responsible Officer or a designee thereof,
and such Borrower shall indemnify and hold the Bank harmless for any
damages or loss suffered by the Bank as a result of such reliance. The
Bank will credit the amount of Advances made under this Section 2.1 to
the deposit account of such Borrower. Notwithstanding anything herein
to the contrary, MC shall not be entitled to request (i) Advances
under the Foreign Committed Revolving Line or (ii) Advances under the
Domestic Committed Revolving Line to the extent that they are based
upon Eligible Domestic Accounts of any Borrower or Subsidiary thereof
other than MC.
<PAGE>
-10-
(4) The Domestic Committed Revolving Line and the Foreign
Committed Revolving Line shall each terminate on the Revolving
Maturity Date, at which time all Advances under this Section 2.1 and
other amounts due under this Agreement (except as otherwise expressly
specified herein) shall be immediately due and payable. Subject to the
provisions of Section 2.5(b) and payment of the Termination Fee
provided for therein, the Borrowers shall have the right to terminate
the Commitment.
2.2 OVERADVANCES. If, at any time or for any reason, the amount of
Obligations owed by Borrowers to the Bank (a) pursuant to Section 2.1(a) of this
Agreement is greater than the lesser of (i) the Domestic Committed Revolving
Line or (ii) the Domestic Borrowing Base, or (b) pursuant to Section 2.1(b) of
this Agreement is greater than the lesser of (i) the Foreign Committed Revolving
Line, or (ii) the Foreign Borrowing Base, Borrowers agree in either case on a
joint and several basis but subject to the provisions of Section 12.9(b), to
immediately pay to the Bank, in cash, the amount of such excess.
2.3 INTEREST RATES, PAYMENTS, AND CALCULATIONS.
(1) INTEREST RATE. Except as set forth in Section 2.3(b), (i) any
Advances under the Domestic Committed Revolving Line shall bear
interest, on the average Daily Balance, at a rate equal to Prime Rate
plus 1.25% and (ii) any Advances under the Foreign Committed Revolving
Line shall bear interest at a per annum rate equal to Prime Plus
1.50%.
(2) DEFAULT RATE. All Obligations shall bear interest, from and
after the occurrence of an Event of Default, at a rate equal to three
(3) percentage points above the interest rate applicable immediately
prior to the occurrence of the Event of Default.
(3) PAYMENTS. Interest hereunder shall be due and payable on each
Payment Date. Borrower hereby authorizes the Bank to debit any
accounts with the Bank, including, without limitation, Account Number
3300097077 of MC and Account Number 3300097081 of MPL for payments of
principal and interest due on the Obligations and any other amounts
owing by Borrowers to the Bank. The Bank will notify each Borrower of
all debits which the Bank has made against such Borrower's accounts.
Any such debits against any Borrower's accounts in no way shall be
deemed a set-off. Any interest not paid when due shall be compounded
by becoming a part of the Obligations, and such interest shall
thereafter accrue interest at the rate then applicable hereunder.
(4) COMPUTATION. In the event the Prime Rate is changed from time
to time hereafter, the applicable rate of interest hereunder shall be
increased or decreased effective as of 12:01 a.m., California time, on
the day the Prime Rate is changed, by an amount equal to such change
in the Prime Rate. All interest chargeable under the Loan Documents
shall be computed on the basis of a three hundred sixty (360) day year
for the actual number of days elapsed.
2.4 CREDITING PAYMENTS. Prior to the occurrence of an Event of Default, the
Bank shall credit a wire transfer of funds, check or other item of payment to
such deposit account or Obligation as the Borrowers specify. After the
occurrence of an Event of Default, the receipt by the Bank of any wire transfer
of funds, check, or other item of payment, whether directed to a Borrower's
deposit account with the Bank or to the Obligations or otherwise, may at the
election of the Bank be immediately applied to conditionally reduce Obligations,
but shall not be considered a payment in respect of the Obligations unless such
payment is of immediately available federal funds or unless and until such check
or other item of payment is honored when presented for payment. Notwithstanding
anything to the contrary contained herein, any wire transfer or payment received
by the Bank after 12:00 noon Pacific time shall be deemed to have been received
by the Bank as of the opening of business on the immediately following Business
Day. Whenever any payment to the Bank under the Loan Documents would otherwise
be due on a date that is not a Business Day,
<PAGE>
-11-
such payment shall instead be due on the next Business Day, and additional
fees or interest, as the case may be, shall accrue and be payable for the period
of such extension.
2.5 FEES. Borrowers shall agree to pay to the Bank on a joint and several
basis the following:
(1) FACILITY FEE. A Facility Fee in an amount equal to one-half
percent (1/2%) of each of the Domestic Committed Revolving Line and
the Foreign Committed Revolving Line shall be due on the Closing Date,
which fees shall be fully earned and non-refundable;
(2) TERMINATION FEE. In the event that the Committed Revolving
Lines are terminated prior to the Revolving Maturity Date, at the
election of the Borrowers in connection with the sale of substantially
all the assets of the Borrowers or a merger of a Borrower with another
Person, the Borrowers shall pay to the Bank a Termination Fee equal to
one percent (1%) of the aggregate amount of the Committed Revolving
Lines, provided, however, the Termination Fee shall be reduced by
one-twelfth (1/12) on each monthly anniversary of the date hereof.
(3) FINANCIAL EXAMINATION AND APPRAISAL FEES. The Bank's
customary fees and out-of-pocket expenses for the Bank's audits of
Borrower's Accounts, and for each appraisal of Collateral and
financial analysis and examination of Borrower performed from time to
time by the Bank or its agents;
(4) BANK EXPENSES. Upon demand from the Bank, including, without
limitation, upon the date hereof, all Bank Expenses incurred through
the date hereof, including reasonable attorneys' fees and expenses
and, after the date hereof, all Bank Expenses, including reasonable
attorneys' fees and expenses, as and when they become due.
2.6 ADDITIONAL COSTS. In case any law, regulation, treaty or official
directive or the interpretation or application thereof by any court or any
governmental authority charged with the administration thereof or the compliance
with any guideline or request of any central bank or other governmental
authority (whether or not having the force of law):
(1) subjects the Bank to any tax with respect to payments of
principal or interest or any other amounts payable hereunder by
Borrowers or otherwise with respect to the transactions contemplated
hereby (except for taxes on the overall net income of the Bank imposed
by the United States of America or any political subdivision thereof);
(2) imposes, modifies or deems applicable any deposit insurance,
reserve, special deposit or similar requirement against assets held
by, or deposits in or for the account of, or loans by, the Bank; or
(3) imposes upon the Bank any other condition with respect to its
performance under this Agreement,
and the result of any of the foregoing is to increase the cost to the Bank,
reduce the income receivable by the Bank or impose any expense upon the Bank
with respect to any loans, the Bank shall notify Borrowers thereof. Borrowers
agree on a joint and several basis to pay to the Bank the amount of such
increase in cost, reduction in income or additional expense as and when such
cost, reduction or expense is incurred or determined, upon presentation by the
Bank of a statement of the amount and setting forth the Bank's calculation
thereof, all in reasonable detail, which statement shall be deemed true and
correct absent manifest error.
2.7 TERM. Except as otherwise set forth herein, this Agreement shall become
effective on the Closing Date and, subject to Section 12.7, shall continue
in full force and effect for
<PAGE>
-12-
a term ending on April 22, 1999. Notwithstanding the foregoing, the Bank shall
have the right to terminate its obligation to make Credit Extensions under this
Agreement immediately and without notice upon the occurrence and during the
continuance of an Event of Default. The Borrowers shall also have the right upon
two (2) Business Days' notice to the Bank to terminate the Committed Revolving
Lines in full, provided that the Borrowers contemporaneously therewith pay all
outstanding Obligations to the Bank. Notwithstanding termination of this
Agreement, Bank's Lien on the Collateral shall remain in effect for so long as
any Obligations are outstanding.
2.8 ADDITIONAL PAYMENTS. Whenever any Borrower is obliged to make a
deduction in respect of tax from any payment under any Loan Document (including
without limitation any tax levied or imposed by a governmental authority of or
within the Commonwealth of Australia which is required to be withheld or
deducted from any payment of interest to the Bank):
(1) it shall promptly pay the amount deducted to the appropriate
governmental authority;
(2) within 30 days of the end of the month in which the deduction
is made, it shall deliver to the Bank official receipts or other
evidence of payment acceptable to the Bank; and
(3) unless the tax is a tax imposed on the overall net income or
net assets of the Bank by the United States of America or any
political subdivision thereof or by any jurisdiction in which the
Bank's applicable lending office is located or in which it is taxable
solely on account of some connection other than the execution,
delivery or performance of this Agreement or the receipt of income
hereunder, it shall pay the Bank on the due date of the payment any
additional amounts necessary (as determined by the Bank) to ensure
that the Bank receives when due a net amount (after payment of any
taxes in respect of those additional amounts) in the relevant currency
equal to the full amount which it would have received had a deduction
not been made. It shall, on demand, indemnify the Bank against the tax
and any amounts recoverable from the Bank in respect of the tax.
(4) The demand for additional payments under the preceding
subsection (c) shall be accompanied by a certificate as to the amount
of such additional payment required by the Bank which shall be
conclusive absent manifest error. If the Bank is entitled to an
exemption from or reduction of withholding tax under the law of the
jurisdiction in which any of the Borrowers are located, or any treaty
to which such jurisdiction is a party, with respect to payments under
this Agreement, and the Borrowers so advise the Bank and the Borrowers
deliver to the Bank an opinion of tax counsel or a letter of advice
from an internationally recognized accounting firm acceptable to the
Bank and its counsel as to the basis therefor which is acceptable to
the Bank in form and substance, the Bank shall deliver to the
Borrowers, at the time or times prescribed by applicable law or as
reasonably requested by the Borrowers such properly completed and
executed documentation prescribed by applicable law as will permit
such payments to be made without withholding or at a reduced rate. If
the Bank shall become aware that it is entitled to claim a refund from
any taxing authority in respect of any taxes with respect to which the
Borrower has paid increased amounts pursuant to this Section 2.8, the
Bank shall notify the Borrower of the availability of such refund
claim and shall exercise reasonable efforts to make the appropriate
claim to the relevant government authority for such a refund. If the
Bank receives a refund with respect to which the Borrower has paid
increased amounts pursuant to this Section 2.8, it shall with
reasonable promptness pay over such refund to the Borrower, net of all
reasonable Bank Expenses incurred in connection therewith not
previously paid by the Borrowers. The Borrowers agree that the
obligations of the Bank under this clause (d) shall be expressly
conditioned upon the Borrowers' agreement to pay all reasonable Bank
Expenses incurred by the Bank in connection with or relating to the
Bank's discharge of the foregoing obligations.
<PAGE>
-13-
To the extent permitted under applicable law, the Borrowers waive any statutory
right to recover from the Bank any amount paid under this paragraph. The
obligations of the Borrower under this clause survive the repayment of the
Obligations and the termination of this Agreement.
3. CONDITIONS OF LOANS
3.1 CONDITIONS PRECEDENT TO INITIAL ADVANCE. The obligation of the Bank to
make the initial Advance is subject to the condition precedent that the Bank
shall have received, in form and substance satisfactory to the Bank, the
following:
(1) this Agreement, the Notes and the Security Documents;
(2) a certificate of the Secretary or other appropriate officer
of each Borrower with respect to its organization documents,
incumbency and resolutions and original powers of attorney (if
relevant) authorizing the execution and delivery of this Agreement and
the other Loan Documents to which it is a party;
(3) the Warrant;
(4) subordination agreements (including a deed of priority and
subordination with respect to certain assets of MPL located in
Australia) acceptable in form and substance to the Bank with ANZ Bank
and investors in the Borrowers who are parties to the Investor Loan
Documents;
(5) opinions of Borrowers' U.S. and Australian counsel
satisfactory in form and substance to the Banks;
(6) guaranties by the Guarantor(s), provided, however, the Bank
agrees that the Borrowers may postpone delivery of such guaranties
until the 30th day following the Closing Date as long as the Borrowers
provide the Bank prior to the Closing Date reasonable assurance that
such guaranties will be available within such period.
(7) financing statements (Forms UCC-1), Australian Securities
Commission forms, or other filings necessary to perfect the security
interests and charges granted under the Security Documents;
(8) insurance certificate;
(9) payment of the fees and Bank Expenses then due specified in
Section 2.5 hereof;
(10) receipt of the results of the initial accounts receivable
audit, which shall be satisfactory in form and substance to the Bank;
and
(11) such other documents, and completion of such other matters,
as the Bank may reasonably deem necessary or appropriate.
(12) evidence that such Security Document required to be stamped
with duty under Australian law has been lodged for stamping at the
Victorian Office of State Revenue with a check for the appropriate
stamp duty, unless the Bank is advised by its Australian counsel that
as a matter of Australian practice such evidence may be furnished on a
post-closing basis.
<PAGE>
-14-
(13) all documents and evidence of title to the property pledged
by the MPL Share Mortgage and the other Security Documents including,
but not limited to, share certificates and blank signed share
transfers for all the shares pledged under any Security Document
together with a certified copy of the share register to establish that
all certificates have been received.
(14) a certificate from the Responsible Officer of MPL indicating
that (i) at the date of the MPL Deed of Charge (Future Property), the
value of the property owned by MPL in all Australian States (other
than Victoria) is less than AUS $100,000 and (ii) at the date of the
MPL Deed of Charge (Victoria), the value of the property owned by MPL
in the State of Victoria, Australia is less than $AUS 2,000,000.
3.2 CONDITIONS PRECEDENT TO ALL ADVANCES. The obligation of the Bank to
make each Advance, including the initial Advance, is further subject to the
following conditions:
(1) timely receipt by the Bank of a Payment/Advance Form as
provided in Section 2.1; and
(2) the representations and warranties contained in Section 5
shall be true and correct in all material respects on and as of the
date of such Payment/Advance Form and on the effective date of each
Advance as though made at and as of each such date, and no Event of
Default shall have occurred and be continuing, or would result from
such Advance. The making of each Advance shall be deemed to be a
representation and warranty by Borrower on the date of such Advance as
to the accuracy of the facts referred to in this Section 3.2(b).
4. RIGHT TO INSPECT
4.1 RIGHT TO INSPECT. The Bank (through any of its officers, employees, or
agents) shall have the right, upon reasonable prior notice, from time to time
during Borrowers' usual business hours, to inspect Borrowers' Books and to make
copies thereof and to check, test, and appraise the Collateral in order to
verify Borrowers' financial condition or the amount, condition of, or any other
matter relating to, the Collateral.
5. REPRESENTATIONS AND WARRANTIES
Subject to the provisions of Section 12.9(b), Borrowers represent and
warrant on a joint and several basis as follows:
5.1 DUE ORGANIZATION AND QUALIFICATION. Each Borrower and each Subsidiary
is a corporation duly existing and in good standing under the laws of its
jurisdiction of organization and qualified and licensed to do business in, and
is in good standing in, any state in which the conduct of its business or its
ownership of property requires that it be so qualified. No Borrower has any
Subsidiaries except as set forth on Schedule A.
5.2 DUE AUTHORIZATION; NO CONFLICT. The execution, delivery, and
performance of he Loan Documents are within each Borrower's powers, have been
duly authorized, and are not in conflict with nor constitute a breach of any
provision contained in any Borrower's organizational documents, nor will they
constitute an event of default under any material agreement to which any
Borrower is a party or by which any Borrower is bound. Except as disclosed in
SCHEDULE A, no Borrower is in default under any agreement to which it is a party
or by which it is bound, which default could have a Material Adverse Effect.
5.3 NO PRIOR ENCUMBRANCES. Each Borrower owns the Collateral, free and
clear of Liens, except for Permitted Liens.
<PAGE>
-15-
5.4 BONA FIDE ELIGIBLE ACCOUNTS. The Eligible Accounts are bona fide
existing obligations. The property giving rise to such Eligible Accounts has
been delivered to the account debtor or to the account debtor's agent for
immediate shipment to and unconditional acceptance by the account debtor. Except
as disclosed to the Bank from time to time, no Borrower or any Subsidiary
thereof has received any notice of actual or imminent Insolvency Proceeding of
any account debtor that is included in any Domestic Borrowing Base Certificate
or Foreign Borrowing Base Certificate as an Eligible Account.
5.5 MERCHANTABLE INVENTORY. All Inventory is in all material respects of
good and marketable quality, free from all material defects.
5.6 INTELLECTUAL PROPERTY. Borrowers own or license all Intellectual
Property necessary for the conduct of their business. To the best of Borrowers'
knowledge, the ownership and use of the Intellectual Property does not infringe
or violate the rights of any third party and the Borrowers have not received any
claim or notice to such effect.
5.7 NAME; LOCATION OF CHIEF EXECUTIVE OFFICE. Except as disclosed in
Schedule A, no Borrower has done business and will not without at least thirty
(30) days prior written notice to the Bank do business under any name other than
that specified on the signature page hereof. The chief executive office of each
Borrower is located at the address indicated in the Perfection Certificate
previously furnished by such Borrower to the Bank.
5.8 LITIGATION. Except as set forth in Schedule A, there are no actions or
proceedings pending, or, to Borrowers' knowledge, threatened by or against any
Borrower or any Subsidiary before any court or administrative agency in which an
adverse decision could have a Material Adverse Effect. No Borrower has knowledge
of any such pending or threatened actions or proceedings.
5.9 NO MATERIAL ADVERSE CHANGE IN FINANCIAL STATEMENTS. All consolidated
financial statements related to Borrowers and any Subsidiary that have been
delivered by Borrowers to the Bank fairly present in all material respects
Borrowers' consolidated financial condition as of the date thereof and
Borrowers' consolidated results of operations for the period then ended. There
has not been a material adverse change in the consolidated financial condition
of Borrowers since the date of the most recent of such financial statements
submitted to the Bank on or about the Closing Date.
5.10 SOLVENCY. The fair saleable value of each Borrower's assets (including
goodwill minus disposition costs) exceeds the fair value of its liabilities; no
Borrower is left with unreasonably small capital after the transactions
contemplated by this Agreement; and no Borrower is unable to pay its debts
(including trade debts) as they mature or, under any legislation, is presumed or
taken to be unable to pay its debts as and when they fall due.
5.11 REGULATORY COMPLIANCE. MC and each Subsidiary has met the minimum
funding requirements of ERISA with respect to any employee benefit plans subject
to ERISA to the extent applicable. No event has occurred resulting from any
Borrower's failure to comply with ERISA that is reasonably likely to result in
any Borrower's incurring any liability that could have a Material Adverse
Effect. No Borrower is an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act of 1940.
No Borrower is engaged principally, or as one of its the important activities,
in the business of extending credit for the purpose of purchasing or carrying
margin stock (within the meaning of Regulations G, T and U of the Board of
Governors of the Federal Reserve System). Each Borrower has complied with all
the provisions of the Federal Fair Labor Standards Act to the extent applicable.
No Borrower has violated any statutes, laws, ordinances or rules applicable to
it, violation of which could have a Material Adverse Effect.
<PAGE>
-16-
5.12 ENVIRONMENTAL CONDITION. No properties or assets of any Borrower or
any Subsidiary have ever been used by any Borrower or any Subsidiary or, to the
best of Borrowers' knowledge, by previous owners or operators, in the disposal
of, or to produce, store, handle, treat, release, or transport, any hazardous
waste or hazardous substance other than in accordance with applicable law; to
the best of Borrowers' knowledge, none of such properties or assets has ever
been designated or identified in any manner pursuant to any environmental
protection statute as a hazardous waste or hazardous substance disposal site, or
a candidate for closure pursuant to any environmental protection statute; no
lien arising under any environmental protection statute has attached to any
revenues or to any real or personal property owned by any Borrower or any
Subsidiary; and no Borrower and no Subsidiary has received a summons, citation,
notice, or directive from the U.S. Environmental Protection Agency or any other
federal, state or other governmental agency in the United States or Australia
concerning any action or omission by any Borrower or any Subsidiary resulting in
the release, or other disposition of hazardous waste or hazardous substances
into the environment.
5.13 TAXES. Except as disclosed in SCHEDULE A, each Borrower and each
Subsidiary has filed or caused to be filed all tax returns required to be
filed on a timely basis, and has paid, or has made adequate provision for the
payment of, all taxes reflected therein, except those being contested in good
faith by proper proceedings with adequate reserves under GAAP.
5.14 SUBSIDIARIES. No Borrower owns any stock, partnership interest or
other equity securities of any Person, except for Permitted Investments.
5.15 GOVERNMENT CONSENTS. Each Borrower and each Subsidiary has obtained
all consents, approvals and authorizations of, made all declarations or filings
with, and given all notices to, all governmental authorities that are necessary
for the continued operation of its business as currently conducted.
5.16 FULL DISCLOSURE. No representation, warranty or other statement made
by any Borrower in any certificate or written statement furnished to the Bank
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained in such certificates or
statements not misleading.
6. AFFIRMATIVE COVENANTS
The Borrowers covenant and agree, on a joint and several basis but subject
to the provisions of Section 12.9(b), that, until payment in full of all
outstanding Obligations, and for so long as the Bank may have any commitment to
make a Credit Extension hereunder, Borrowers shall do all of the following:
6.1 GOOD STANDING, ETC. Borrowers shall maintain their and each of their
Subsidiaries' corporate existence and good standing in its jurisdiction of
organization and maintain qualification in each jurisdiction in which the
failure to so qualify could have a Material Adverse Effect. Borrowers shall
maintain, and shall cause each of their Subsidiaries to maintain, to the extent
consistent with prudent management of their business, in force all licenses,
approvals and agreements, the loss of which could have a Material Adverse
Effect.
6.2 GOVERNMENT COMPLIANCE. Borrowers shall meet, and shall cause each
Subsidiary to meet, the minimum funding requirements of ERISA with respect to
any employee benefit plans subject to ERISA to the extent applicable. Borrowers
shall comply, and shall cause each Subsidiary to comply, with all statutes,
laws, ordinances and government rules and regulations to which they are subject,
noncompliance with which could have a Material Adverse Effect or a material
adverse effect on the Collateral or the priority of Bank's Lien on the
Collateral.
<PAGE>
-17-
6.3 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES. Borrowers shall deliver to
the Bank: (a) as soon as available, but in any event within 25 days after the
end of each month, a company prepared consolidated balance sheet and income
statement covering the consolidated operations of MC and its Subsidiaries
including without limitation MPL and MIPL, during such period, in a form and
certified by a Responsible Officer of MC; (b) as soon as available, but in any
event within 120 days after the end of Borrowers' fiscal year, audited
consolidated financial statements of MC and its Subsidiaries prepared in
accordance with GAAP, consistently applied, together with an unqualified opinion
on such financial statements of an independent certified public accounting firm
reasonably acceptable to the Bank; (c) within five (5) days of filing, copies of
all statements, reports and notices sent or made available generally by
Borrowers to their security holders or to any holders of Subordinated Debt and
all reports on Form 10-K, 10-Q, 8-K or similar forms filed with the U.S.
Securities and Exchange Commission; (d) promptly upon receipt of notice thereof,
a report of any legal actions pending or threatened against any Borrower or any
Subsidiary that could result in damages or costs to any Borrower or any
Subsidiary of One Hundred Thousand Dollars ($100,000) or more; and (e) such
budgets, sales projections, operating plans or other financial information as
the Bank may reasonably request from time to time.
Within 25 days after the last day of each month, MC shall deliver to the
Bank a Domestic Borrowing Base Certificate in the form of EXHIBIT B and a
Foreign Borrowing Base Certificate in the form of EXHIBIT C signed by a
Responsible Officer, together with aged listings of accounts receivable.
Within 25 days after the last day of each month, MC shall deliver to the
Bank with the monthly financial statements a Compliance Certificate signed by a
Responsible Officer in substantially the form of EXHIBIT D hereto.
The Bank shall have a right from time to time hereafter to audit Borrowers'
Accounts at Borrowers' expense, provided that such audits will be conducted no
more often than every six (6) months unless an Event of Default has occurred and
is continuing. Notwithstanding the foregoing, Borrowers shall not be required to
furnish monthly financial statements, Borrowing Base Certificates and Compliance
Certificates until such time as there is a request for an Advance and the
requirement to continue to furnish such documentation shall be suspended when
there are no outstanding Obligations hereunder.
6.4 INVENTORY; RETURNS. Borrowers shall keep all Inventory in good and
marketable condition, free from all material defects. Returns and allowances, if
any, as between Borrowers and their account debtors shall be on the same basis
and in accordance with the usual customary practices of Borrowers, as they exist
at the time of the execution and delivery of this Agreement. Borrowers shall
promptly notify the Bank of all returns and recoveries and of all disputes and
claims, where the return, recovery, dispute or claim involves more than Fifty
Thousand Dollars ($50,000).
6.5 TAXES. Borrowers shall make, and shall cause each Subsidiary to make,
due and timely payment or deposit of all material foreign, federal, state, and
local taxes, assessments, or contributions required of it by law, and will
execute and deliver to the Bank, on demand, appropriate certificates attesting
to the payment or deposit thereof; and Borrowers will make, and will cause each
Subsidiary to make, timely payment or deposit of all material tax payments and
withholding taxes required of it by applicable laws, including, but not limited
to, those laws concerning F.I.C.A., F.U.T.A., state disability, and local,
state, federal and foreign income taxes, and will, upon request, furnish the
Bank with proof satisfactory to the Bank indicating that a Borrower or a
Subsidiary has made such payments or deposits; provided that a Borrower or a
Subsidiary need not make any payment if the amount or validity of such payment
is contested in good faith by appropriate proceedings and (i) is reserved
against (to the extent required by GAAP) by Borrowers and (ii) no Lien other
than a Permitted Lien arises from such failure to pay or contesting of taxes
due.
<PAGE>
-18-
6.6 INSURANCE.
(1) Borrowers, at their expense, shall keep the Collateral
insured against loss or damage by fire, theft, explosion, sprinklers,
and all other hazards and risks, and in such amounts, as ordinarily
insured against by other owners in similar businesses conducted in the
locations where each Borrower's business is conducted on the date
hereof. Borrowers shall also maintain insurance relating to Borrowers'
ownership and use of the Collateral in amounts and of a type that are
customary to businesses similar to Borrowers',
(2) All such policies of insurance shall be in such form, with
such companies, and in such amounts as reasonably satisfactory to the
Bank. All such policies of property insurance shall contain a lender's
loss payable endorsement, in a form satisfactory to the Bank, showing
the Bank as an additional loss payee thereof and all liability
insurance policies shall show the Bank as an additional insured, and
shall specify that the insurer must give at least twenty (20) days
notice to the Bank before canceling its policy for any reason. At the
Bank's request, Borrower shall deliver to the Bank certified copies of
such policies of insurance and evidence of the payments of all
premiums therefor. All proceeds payable under any such policy shall,
at the option of the Bank, be payable to the Bank to be applied on
account of the Obligations.
6.7 QUICK RATIO. The Borrowers shall maintain as of the last day of each
fiscal month, a ratio of Quick Assets to Current Liabilities of at least 0.7 to
1.0 through February 28, 1998 and 0.8 to 1.0 thereafter and through November 30,
1998.
6.8 TANGIBLE NET WORTH. The Borrowers shall maintain, as of the last day of
each fiscal quarter set forth below, a Tangible Worth of not less than the
amount set forth below opposite such fiscal quarter end:
<TABLE>
<CAPTION>
<S> <C> <C>
at 12/31/97 $700,000
at 3/31/98 $550,000
at 6/30/98 $650,000
at 9/30/98 $900,000
</TABLE>
6.9 PROFITABILITY. The Borrowers shall have (a) minimum Net Income of
$200,000 for the fiscal quarter ending December 31, 1997; (b) Maximum Net Loss
of $150,000 for the fiscal quarter ending March 31, 1998; (c) minimum Net Income
of $100,000 for the quarter ending June 30, 1998; and (d) minimum Net Income of
$100,000 for the quarter ending September 30, 1998.
6.10 PRINCIPAL DEPOSITORY. Borrowers shall maintain their principal U.S.
depository and operating accounts with the Bank. The Borrowers shall deposit a
portion of their excess cash in such accounts.
6.11 ADDITIONAL WARRANTS. Following the Overadvance Expiration Date, the
Bank will notify the Borrower of the peak amount of Borrower's drawings in
respect of the Overadvance Allowance (the "Peak Overadvance Amount"). Within
thirty (30) days following the effective date of such notice, MC shall issue to
the Bank an additional 7-year warrant substantially in the form of the Warrant
to purchase at an exercise price of $3.00 that number of shares of MC's common
stock calculated by dividing ten percent (10%) of the Peak Overadvance Amount by
$3.00. MC agrees to secure an appropriate waiver from any Person to which it
issues any shares of its capital stock (or any debt instrument, option, warrant,
or other security convertible thereto) of any pre-emptive right that would
otherwise be held by such Person, the exercise of which would be triggered by,
or interfere with, the grant of the additional warrant or the exercise of the
Warrant or such additional warrant.
<PAGE>
-19-
6.12 FURTHER ASSURANCES. At any time and from time to time Borrowers shall
execute and deliver such further instruments and take such further action as may
reasonably be requested by the Bank to effect the purposes of this Agreement.
7. NEGATIVE COVENANTS
Borrowers covenant and agree, on a joint and several basis but subject to
the provisions of Section 12.9(b), that, so long as any Credit Extension
hereunder shall be available and until payment in full of the outstanding
Obligations or for so long as the Bank may have any commitment to make any
Advances, Borrowers will not do any of the following:
7.1 DISPOSITIONS. Convey, sell, lease, transfer or otherwise dispose of
(collectively, a "Transfer"), or permit any of their Subsidiaries to Transfer,
all or any part of their business or property, other than Transfers: (i) of
Inventory in the ordinary course of business; (ii) of non-exclusive licenses,
licenses which are exclusive with respect to certain products, geographic
territories, industries or applications and exclusive licenses (provided,
however, in no event shall more than 12% in the aggregate of the Borrowers'
consolidated revenues derive from licenses that are on a completely exclusive
basis) and similar arrangements for the use of the property of Borrowers or
their Subsidiaries as long as in each case they are in the ordinary course of
business and consistent with past practice; (iii) that constitute payment of
normal and usual operating expenses in the ordinary course of business; or (iv)
of worn-out or obsolete Equipment.
7.2 CHANGES IN BUSINESS, BUSINESS LOCATIONS. Engage in any business, or
permit any of their Subsidiaries to engage in any business, other than the
businesses currently engaged in by Borrowers and any business substantially
similar or related thereto (or incidental thereto), or suffer a "Change in
Control" or a "Change in Management." No Borrower will, without at least thirty
(30) days prior written notification to the Bank, relocate its chief executive
office or add any new offices or business locations.
7.3 MERGERS OR ACQUISITIONS. Merge or consolidate, or permit any of their
Subsidiaries to merge or consolidate, with or into any other business
organization, or acquire, or permit any of their Subsidiaries to acquire, all or
substantially all of the capital stock or property of another Person, provided,
however, if no Event of Default has occurred and is continuing or would exist
after giving effect to such action, a Subsidiary may merge or consolidate into
another Subsidiary or into a Borrower.
7.4 INDEBTEDNESS. Create, incur, assume or be or remain liable with respect
to any Indebtedness, or permit any Subsidiary so to do, other than Permitted
Indebtedness.
7.5 LIENS. Create, incur, assume or suffer to exist any Lien with respect
to any of their property, or assign or otherwise convey any right to receive
income, including the sale of any Accounts, or permit any of their Subsidiaries
so to do, except for Permitted Liens.
7.6 DISTRIBUTIONS. Pay any dividends or make any other distribution or
payment on account of or in redemption, retirement or purchase of any capital
stock.
7.7 INVESTMENTS. Directly or indirectly acquire or own, or make any
Investment in or to any Person, or permit any of their Subsidiaries so to do,
other than Permitted Investments and intercompany advances in the ordinary
course of business to any direct or indirect Subsidiary of MC, provided,
however, the aggregate amount of such advances shall not exceed $500,000 in any
calendar year.
7.8 TRANSACTIONS WITH AFFILIATES. Directly or indirectly enter into or
permit to exist any material transaction with any Affiliate of a Borrower or a
Subsidiary except for transactions that are in the ordinary course of such
Borrower's or Subsidiary's business, upon fair
<PAGE>
-20-
and reasonable terms that are no less favorable to Borrowers than would be
obtained in an arm's length transaction with a nonaffiliated Person.
7.9 INTELLECTUAL PROPERTY AGREEMENTS. Permit the inclusion in any material
contract to which any Borrower becomes a party of any provisions that could or
might in any way prevent the creation of a security interest in a Borrower's
rights and interests in any property included within the definition of the
Intellectual Property acquired under such contracts.
7.10 SUBORDINATED DEBT. Make any payment in respect of any Subordinated
Debt, or permit any of their Subsidiaries to make any such payment, except in
compliance with the terms of such Subordinated Debt, or amend any provision
contained in any documentation relating to the Subordinated Debt without the
Bank's prior written consent.
7.11 INVENTORY. Store the Inventory with a bailee, warehouseman, or similar
party unless the Bank has received a pledge of any warehouse receipt covering
such Inventory. Except for Inventory sold in the ordinary course of business and
except for such other locations as the Bank may approve in writing, a Borrower
shall keep the Inventory only at the locations identified in its Perfection
Certificate and such other locations of which such Borrower gives the Bank prior
written notice and as to which such Borrower signs and files a financing
statement where needed to perfect the Bank's security interest.
7.12 COMPLIANCE. Become an "investment company" or a company controlled by
an "investment company," within the meaning of the Investment Company Act of
1940, or become principally engaged in, or undertake as one of its important
activities, the business of extending credit for the purpose of purchasing or
carrying margin stock, or use the proceeds of any Advance for such purpose; fail
to meet the minimum funding requirements of ERISA, to the extent applicable;
permit a Reportable Event or Prohibited Transaction, as defined in ERISA, to the
extent applicable, to occur; fail to comply with the Federal Fair Labor
Standards Act or violate any other law or regulation, to the extent applicable,
which violation could have a Material Adverse Effect or a material adverse
effect on the Collateral or the priority of Bank's Lien on the Collateral; or
permit any of their Subsidiaries to do any of the foregoing.
7.13 INVESTOR LINE. Draw down funds under the Investor Line without the
prior written consent of the Bank, which consent shall not be unreasonably
withheld if the purpose of such draw is to cure or prevent the occurrence of an
Event of Default arising from any overadvance under the Committed Revolving
Lines or noncompliance with a financial covenant.
8. EVENTS OF DEFAULT
Any one or more of the following events shall constitute an Event of
Default by Borrower under this Agreement:
8.1 PAYMENT DEFAULT. If any Borrower fails to pay, when due, any of the
Obligations.
8.2 COVENANT DEFAULT.
(1) If any Borrower fails to perform any obligation under Section
6.1, the second sentence of Section 6.2 or Section 6.5, violates any
of the covenants contained in Article 7 of this Agreement or fails to
furnish to the Bank the guaranties of the Guarantors within the time
period set forth in Section 3.1(f), or
(2) If any Borrower fails or neglects to perform, keep, or
observe any other material term, provision, condition, covenant, or
agreement contained in this Agreement, in any of the Loan Documents,
or in any other present or future agreement between any
<PAGE>
-21-
Borrower and the Bank and as to any default under such other
term, provision, condition, covenant or agreement that can be cured,
has failed to cure such default within ten (10) days after the
occurrence thereof; provided, however, that if the default cannot by
its nature be cured within the ten (10) day period or cannot after
diligent attempts by such Borrower be cured within such ten (10) day
period, and such default is likely to be cured within a reasonable
time, then such Borrower shall have an additional reasonable period
(which shall not in any case exceed thirty (30) days) to attempt to
cure such default, and within such reasonable time period the failure
to have cured such default shall not be deemed an Event of Default
(provided that no Advances will be required to be made during such
cure period);
8.3 MATERIAL ADVERSE CHANGE. If there (i) occurs a material adverse change
in the business, operations, or condition (financial or otherwise) of any
Borrower, or (ii) is a material impairment of the prospect of repayment of any
portion of the Obligations or (iii) is a material impairment of the value or
priority of the Bank's security interests in the Collateral;
8.4 ATTACHMENT. If any material portion of a Borrower's assets is attached,
seized, subjected to a writ or distress warrant, or is levied upon, or comes
into the possession of any trustee, receiver or person acting in a similar
capacity and such attachment, seizure, writ or distress warrant or levy has not
been removed, discharged or rescinded within ten (10) days, or if a Borrower is
enjoined, restrained, or in any way prevented by court order from continuing to
conduct all or any material part of its business affairs, or if a judgment or
other claim becomes a lien or encumbrance upon any material portion of the
assets of any Borrower, or if a notice of Lien or levy is filed of record with
respect to any assets of any Borrower by the United States government or the
Australian government, or any department, agency, or instrumentality thereof, or
by any state, county, municipal, or federal or foreign governmental agency, and
the same is not paid within twenty (20) days after such Borrower receives notice
thereof or any such Lien becomes enforceable or is enforced over any material
portion of a Borrower's assets or any material undertaking of a Borrower,
provided that none of the foregoing shall constitute an Event of Default where
such action or event is stayed or an adequate bond has been posted pending a
good faith contest by a Borrower (provided that if the amount involved exceeds
$100,000, no Credit Extensions will be required to be made during such cure
period);
8.5 INSOLVENCY. If any Borrower becomes insolvent, or if an Insolvency
Proceeding is commenced by any Borrower, or if an Insolvency Proceeding is
commenced against any Borrower and is not dismissed or stayed within thirty (30)
days (provided that no Advances will be made prior to the dismissal of such
Insolvency Proceeding);
8.6 OTHER AGREEMENTS. If there is a default in any agreement to which any
Borrower is a party with a third party or parties resulting in a right by such
third party or parties, whether or not exercised, to accelerate the maturity of
any Indebtedness in an amount in excess of One Hundred Thousand Dollars
($100,000) or that could have a Material Adverse Effect;
8.7 SUBORDINATED DEBT. If any Borrower makes any payment on account of
Subordinated Debt, except to the extent such payment is allowed under any
subordination agreement entered into with the Bank;
8.8 JUDGMENTS. If a judgment or judgments for the payment of money in an
amount, individually or in the aggregate, of at least One Hundred Thousand
Dollars ($100,000) shall be rendered against any Borrower and shall remain
unsatisfied and unstayed for a period of ten (10) days (provided that no Credit
Extensions will be made prior to the satisfaction or stay of such judgment); or
8.9 MISREPRESENTATIONS. If any material misrepresentation or material
misstatement exists now or hereafter in any warranty or representation set forth
herein or in any
<PAGE>
-22-
certificate or writing delivered to the Bank by Borrower or any Person acting on
a Borrower's behalf pursuant to this Agreement or to induce the Bank to enter
into this Agreement or any other Loan Document.
8.10 GUARANTY. Any guaranty of all or a portion of the Obligations ceases
for any reason to be in full force and effect, or any Guarantor fails to perform
any obligation under any guaranty of all or a portion of the Obligations, or any
material misrepresentation or material misstatement exists now or hereafter in
any warranty or representation set forth in any guaranty of all or a portion of
the Obligations or in any certificate delivered to the Bank in connection with
such guaranty, or any of the circumstances described in Sections 8.4, 8.5 or 8.8
occur with respect to any Guarantor.
9. BANK'S RIGHTS AND REMEDIES
9.1 RIGHTS AND REMEDIES. Upon the occurrence and during the continuance of
an Event of Default, the Bank may, at its election, without notice of its
election and without demand, do any one or more of the following, all of which
are authorized by the Borrowers:
(1) Declare all Obligations, whether evidenced by this Agreement,
by any of the other Loan Documents, or otherwise, immediately due and
payable (provided that upon the occurrence of an Event of Default
described in Section 8.5 all Obligations shall become immediately due
and payable without any action by the Bank);
(2) Cease advancing money or extending credit to or for the
benefit of Borrowers under this Agreement or under any other agreement
between Borrowers and the Bank;
(3) Settle or adjust disputes and claims directly with account
debtors for amounts, upon terms and in whatever order that the Bank
reasonably considers advisable;
(4) Without notice to or demand upon Borrowers, make such
payments and do such acts as the Bank considers necessary or
reasonable to protect its security interest in the Collateral.
Borrowers agree to assemble the Collateral if the Bank so requires,
and to make the Collateral available to the Bank as the Bank may
designate. Borrowers authorize the Bank to enter the premises where
the Collateral is located, to take and maintain possession of the
Collateral, or any part of it, and to pay, purchase, contest, or
compromise any encumbrance, charge, or lien which in the Bank's
determination appears to be prior or superior to its security interest
and to pay all expenses incurred in connection therewith. With respect
to any of Borrowers' premises, Borrowers hereby grant the Bank a
license to enter such premises and to occupy the same, without charge,
in order to exercise any of the Bank's rights or remedies provided
herein, at law, in equity, or otherwise;
(5) Without notice to Borrowers, set off and apply to the
Obligations any and all (i) balances and deposits of any Borrower held
by the Bank, or (ii) indebtedness at any time owing to or for the
credit or the account of any Borrower held by the Bank;
(6) Ship, reclaim, recover, store, finish, maintain, repair,
prepare for sale, advertise for sale, and sell (in the manner provided
for herein) the Collateral. The Bank is hereby granted a
non-exclusive, royalty-free license or other right, solely pursuant to
the provisions of this Section 9.1, to use, without charge, any
Borrower's labels, patents, copyrights, mask works, rights of use of
any name, trade secrets, trade names, trademarks, service marks, and
advertising matter, or any property of a similar nature, as it
pertains to the Collateral, in completing production of, advertising
for sale, and selling any Collateral and, in connection with the
Bank's exercise of its rights under this Section 9.1, each
<PAGE>
-23-
Borrower's rights under all licenses and all franchise agreements
shall inure to the Bank's benefit;
(7) Sell the Collateral at either a public or private sale, or
both, by way of one or more contracts or transactions, for cash or on
terms, in such manner and at such places (including any Borrower's
premises) as the Bank determines is commercially reasonable, and apply
the proceeds thereof to the Obligations in whatever manner or order it
deems appropriate;
(8) Credit bid and purchase at any public sale, or private sale
as permitted by law;
(9) Any deficiency that exists after disposition of the
Collateral as provided above will be paid immediately by Borrowers on
a joint and several basis, subject to the provisions of Section
12.9(b);
(10) The Bank shall have a non-exclusive, royalty-free license to
use the Intellectual Property Collateral to the extent reasonably
necessary to permit the Bank to exercise its rights and remedies upon
the occurrence of an Event of Default; and
(11) make a drawing under the Standby Letter of Credit to cover
outstanding Obligations of the Borrowers hereunder. (The Bank agrees
that it will not make such a drawing unless an Event of Default has
occurred and is continuing.)
9.2 POWER OF ATTORNEY. Effective only upon the occurrence and during the
continuance of an Event of Default, each Borrower hereby irrevocably appoints
the Bank (and any of the Bank's designated officers, or employees) as such
Borrower's true and lawful attorney to: (a) send requests for verification of
Accounts or notify account debtors of the Bank's security interest in the
Accounts; (b) endorse such Borrower's name on any checks or other forms of
payment or security that may come into the Bank's possession; (c) sign such
Borrower's name on any invoice or bill of lading relating to any Account, drafts
against account debtors, schedules and assignments of Accounts, verifications of
Accounts, and notices to account debtors; (d) make, settle, and adjust all
claims under and decisions with respect to such Borrower's policies of
insurance; (e) settle and adjust disputes and claims respecting the accounts
directly with account debtors, for amounts and upon terms which the Bank
determines to be reasonable; and (f) to file, in its sole discretion, one or
more financing or continuation statements and amendments thereto, relative to
any of the Collateral without the signature of such Borrower where permitted by
law; provided the Bank may exercise such power of attorney to sign the name of
such Borrower on any of the documents described in Section 4.2 regardless of
whether an Event of Default has occurred. The appointment of the Bank as each
Borrower's attorney in fact, and each and every one of the Bank's rights and
powers, being coupled with an interest, is irrevocable until all of the
Obligations have been fully repaid and performed and the Bank's obligation to
provide advances hereunder is terminated.
9.3 ACCOUNTS COLLECTION. Upon the occurrence and during the continuance of
an Event of Default, the Bank may notify any Person owing funds to any Borrower
of the Bank's security interest in such funds and verify the amount of such
Account. Each Borrower shall collect all amounts owing to such Borrower for the
Bank, receive in trust all payments as the Bank's trustee, and if requested or
required by the Bank, immediately deliver such payments to the Bank in their
original form as received from the account debtor, with proper endorsements for
deposit.
9.4 BANK EXPENSES. If any Borrower fails to pay any amounts or furnish any
required proof of payment due to third persons or entities, as required under
the terms of this Agreement, then the Bank may do any or all of the following:
(a) make payment of the same or any part thereof; (b) set up such reserves under
the Committed Revolving Lines as the Bank deems
<PAGE>
-24-
necessary to protect the Bank from the exposure created by such failure; or (c)
obtain and maintain insurance policies of the type discussed in Section 6.6 of
this Agreement, and take any action with respect to such policies as the Bank
deems prudent. Any amounts so paid or deposited by the Bank shall constitute
Bank Expenses, shall be immediately due and payable, and shall bear interest at
the then applicable rate hereinabove provided, and shall be secured by the
Collateral. Any payments made by the Bank shall not constitute an agreement by
the Bank to make similar payments in the future or a waiver by the Bank of any
Event of Default under this Agreement.
9.5 BANK'S LIABILITY FOR COLLATERAL. So long as the Bank complies with
reasonable banking practices, the Bank shall not in any way or manner be liable
or responsible for: (a) the safekeeping of the Collateral; (b) any loss or
damage thereto occurring or arising in any manner or fashion from any cause; (c)
any diminution in the value thereof; or (d) any act or default of any carrier,
warehouseman, bailee, forwarding agency, or other person whomsoever. All risk of
loss, damage or destruction of the Collateral shall be borne by Borrowers.
9.6 REMEDIES CUMULATIVE. The Bank's rights and remedies under this
Agreement, the Loan Documents, and all other agreements shall be cumulative. The
Bank shall have all other rights and remedies not expressly set forth herein
inconsistent herewith as provided under the Code, by law, or in equity. No
exercise by the Bank of one right or remedy shall be deemed an election, and no
waiver by the Bank of any Event of Default on a Borrower's part shall be deemed
a continuing waiver. No delay by the Bank shall constitute a waiver, election,
or acquiescence by it. No waiver by the Bank shall be effective unless made in a
written document signed on behalf of the Bank and then shall be effective only
in the specific instance and for the specific purpose for which it was given.
9.7 DEMAND; PROTEST. Each Borrower waives demand, protest, notice of
protest, notice of default or dishonor, notice of payment and nonpayment, notice
of any default, nonpayment at maturity, release, compromise, settlement,
extension, or renewal of accounts, documents, instruments, chattel paper, and
guarantees at any time held by the Bank on which such Borrower may in any way be
liable.
9.8 CURRENT INDEMNITY
(1) General
On demand the Borrowers shall, on a joint and several basis, but subject to
the provisions of Section 12.9(b), indemnify the Bank against any
deficiency which arises whenever, for any reason (including as a result of
a judgment or order or Insolvency Proceeding):
(1) the Bank receives or recovers an amount in one currency (the "Payment
Currency") in respect of an amount denominated under a Loan Document
in another currency (the "Due Currency"); and
(2) the amount actually received or recovered by the Bank in accordance
with its normal practice when it converts the Payment Currency into
the Due Currency is less than the relevant amount of the Due Currency.
(2) Reimbursement
Where an amount to be reimbursed or indemnified against under a Loan
Document is denominated in another currency, if the Bank so requests, the
Borrowers shall, on a joint and several basis but subject to the provisions
of Section 12.9(b), reimburse or indemnify it against the amount of United
States dollars which the Bank certifies
<PAGE>
-25-
that it used to buy the relevant amount of the other currency in accordance
with its normal procedures. If the Bank does not so request, the Borrower
shall reimburse or indemnify it in the relevant currency.
10. NOTICES
Unless otherwise provided in this Agreement, all notices or demands by any
party relating to this Agreement or any other agreement entered into in
connection herewith shall be in writing and (except for financial statements and
other informational documents which may be sent by first-class mail, postage
prepaid) shall be personally delivered or sent by a recognized overnight
delivery service, by certified mail, postage prepaid, return receipt requested,
or by telefacsimile to Borrower or to the Bank, as the case may be, at its
addresses set forth below:
If to any Borrower:
c/o Moldflow Corporation
91 Hartwell Avenue
Lexington, Massachusetts 02173
Attn: Suzanne Rogers, Chief Financial Officer
Fax: 781-674-0267
With a copy to:
Palmer & Dodge LLP
One Beacon Street
Boston, MA 02108-3190
Attn: George Ticknor, Esq.
Fax: 617-227-4420
If to Bank:
Silicon Valley Bank
3003 Tasman Drive
Santa Clara, California 95054
Attn: Amy Young, Vice President
Fax: (408) 496-2429
With copies to:
Silicon Valley East
40 William Street
Wellesley, Massachusetts 02181
Attn: Andrew H. Tsao, Vice President
Fax: (617) 431-9906
Sullivan & Worcester LLP
One Post Office Square
Boston, MA 02109
Attn: Dennis J. White, Esq.
Fax: (617) 338-2880
The parties hereto may change the address at which they are to receive
notices hereunder, by notice in writing in the foregoing manner given to the
other.
11. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER
<PAGE>
-26-
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE INTERNAL LAWS OF THE COMMONWEALTH OF MASSACHUSETTS, WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW. EACH BORROWER AND THE BANK HEREBY
SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN
THE COMMONWEALTH OF MASSACHUSETTS, BUT IF FOR ANY REASON THE BANK IS DENIED
ACCESS TO SUCH COURTS, THEN IN SUCH EVENT THE STATE AND FEDERAL COURTS LOCATED
IN THE COUNTY OF SANTA CLARA, STATE OF CALIFORNIA. EACH BORROWER AND THE BANK
EACH HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE
TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS,
BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. EACH PARTY
RECOGNIZES AND AGREES THAT THE FOREGOING WAIVER CONSTITUTES A MATERIAL
INDUCEMENT FOR IT TO ENTER INTO THIS AGREEMENT. EACH PARTY REPRESENTS AND
WARRANTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL.
12. GENERAL PROVISIONS
12.1 SUCCESSORS AND ASSIGNS. This Agreement shall bind and inure to the
benefit of the respective successors and permitted assigns of each of the
parties; PROVIDED, HOWEVER, that neither this Agreement nor any rights hereunder
may be assigned by any Borrower without the Bank's prior written consent, which
consent may be granted or withheld in the Bank's sole discretion. The Bank shall
have the right without the consent of or notice to Borrowers to sell, transfer,
negotiate, or grant participation in all or any part of, or any interest in, the
Bank's obligations, rights and benefits hereunder.
12.2 INDEMNIFICATION. Borrowers shall, on a joint and several basis but
subject to the provisions of Section 12.9(b), indemnify, defend, protect and
hold harmless the Bank and its officers, employees, and agents against: (a) all
obligations, demands, claims, and liabilities claimed or asserted by any other
party in connection with the transactions contemplated by the Loan Documents;
and (b) all losses or Bank Expenses in any way suffered, incurred, or paid by
the Bank as a result of or in any way arising out of, following, or
consequential to transactions between the Bank and any Borrower whether under
the Loan Documents, or otherwise (including without limitation reasonable
attorneys fees and expenses), except for losses caused by the Bank's gross
negligence or willful misconduct.
12.3 TIME OF ESSENCE. Time is of the essence for the performance of all
obligations set forth in this Agreement.
12.4 SEVERABILITY OF PROVISIONS. Each provision of this Agreement shall be
severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.
12.5 AMENDMENTS IN WRITING, INTEGRATION. This Agreement cannot be amended
or terminated except by a writing signed by Borrowers and the Bank. All prior
agreements, understandings, representations, warranties, and negotiations
between the parties hereto with respect to the subject matter of this Agreement,
if any, are merged into this Agreement and the Loan Documents.
12.6 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by different parties on separate counterparts, each of which,
when executed and delivered, shall be deemed to be an original, and all of
which, when taken together, shall constitute but one and the same Agreement.
<PAGE>
-27-
12.7 SURVIVAL. All covenants, representations and warranties made in this
Agreement shall continue in full force and effect so long as any Obligations
remain outstanding. The obligations of Borrowers to indemnify the Bank with
respect to the expenses, damages, losses, costs and liabilities described in
Section 12.2 shall survive until all applicable statute of limitations periods
with respect to actions that may be brought against the Bank have run; provided
that so long as the obligations referred to in the first sentence of this
Section 12.7 have been satisfied, and the Bank has no commitment to make any
Credit Extensions or to make any other loans to Borrowers, the Bank shall
release all security interests granted hereunder and redeliver all Collateral
held by it in accordance with applicable law.
12.8 COUNTERSIGNATURE. This agreement shall become effective only when it
shall have been executed by Borrowers and the Bank, provided, however, in no
event shall this agreement become effective until signed by an officer of the
Bank in California.
12.9 JOINT AND SEVERAL OBLIGATIONS. (a) Subject to the provisions of
subparagraph (b) below, each and every representation, warranty, covenant and
agreement made by any of the Borrowers, hereunder and under the other Loan
Documents shall be joint and several, whether or not so expressed, and such
obligations of any of the Borrowers shall not be subject to any counterclaim,
setoff, recoupment or defense based upon any claim any Borrower may have against
any other Borrower or the Bank, and shall remain in full force and effect
without regard to, and shall not be released, discharged or in any way affected
by, any circumstance or condition affecting any other Borrower, including
without limitation (b) any waiver, consent, extension, renewal, indulgence or
other action or inaction under or in respect of this Agreement or any other Loan
Document, or any agreement or other document related thereto with respect to any
other Borrower, or any exercise or nonexercise of any right, remedy, power or
privilege under or in respect of any such agreement or instrument with respect
to the other Borrower, or the failure to give notice of any of the foregoing to
the other Borrower; (c) any invalidity or unenforceability, in whole or in part,
of any such agreement or instrument with respect to any other Borrower; (d) any
failure on the part of any other Borrower for any reason to perform or comply
with any term of any such agreement or instrument; (e) any bankruptcy,
insolvency, reorganization, arrangement, readjustment, composition, liquidation
or similar proceeding with respect to any other Borrower or its properties or
creditors; or (f) any other occurrence whatsoever, whether similar or dissimilar
to the foregoing, with respect to any other Borrower. Each Borrower hereby
waives any requirement of diligence or promptness on the part of the Bank in the
enforcement of its rights hereunder or under any other Loan Document with
respect to the obligations of itself or of the other Borrowers. Without limiting
the foregoing, any failure to make any demand upon, to pursue or exhaust any
rights or remedies against a Borrower, or any delay with respect thereto, shall
not affect the obligations of the other Borrowers hereunder or under any other
Loan Document.
(b) Notwithstanding the provisions of subparagraph (a) above or anything in
this Loan Agreement or any other Loan Documents to the contrary, the obligations
of MPL and MIPL shall not be joint and several with respect to any
representation, warranty, covenant and agreement made by MC, or any obligation
incurred by MC hereunder or under any other Loan Document, for which MC alone
shall be responsible. The intent of this subparagraph being to prevent any
interpretation or construction of this Loan Agreement or any other Loan Document
under which MIPL or MPL could be construed as providing any form of credit
support for the Obligations of MC to the Bank.
12.10 MC AS AGENT FOR BORROWERS. Each MIPL and MPL hereby appoints MC as
its agent with respect to the receiving and giving of any notices, requests,
instructions, reports, schedules, revisions, financial statements or any other
written or oral communications hereunder or under the Loan Documents. MC shall
keep complete, correct and accurate records of all Revolving Line of Credit
Loans and the application of proceeds thereof, all Letters of Credit and all
payments in respect of Advances and other amounts due hereunder. The Bank is
hereby entitled to rely on any communications given or transmitted by MC as if
such communication were given or transmitted by each and every Borrower;
PROVIDED, HOWEVER, that any communication given or transmitted by any Borrower
other than MC shall be binding with respect to such Borrower. Any
<PAGE>
-28-
communication given or transmitted by the Bank to MC shall be deemed given
and transmitted to each and every Borrower.
<PAGE>
-29-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
MOLDFLOW CORPORATION
By: /s/ Marc Dulude
-----------------------------------
Name: Marc Dulude
----------------------------
Title: President & CEO
----------------------------
MOLDFLOW INTERNATIONAL PTY. LTD.
<TABLE>
<S> <C>
By: /s/ Marc Dulude By: /s/ Suzanne Rogers
----------------------------------- --------------------------------
Name: Marc Dulude Name: Suzanne Rogers
---------------------------- -------------------------
Title: Director Title: Director
---------------------------- -------------------------
</TABLE>
MOLDFLOW PTY. LTD.
<TABLE>
<S> <C>
By: /s/ Marc Dulude By: /s/ Suzanne Rogers
----------------------------------- --------------------------------
Name: Marc Dulude Name: Suzanne Rogers
---------------------------- -------------------------
Title: Director Title: Director
---------------------------- -------------------------
</TABLE>
SILICON VALLEY BANK, doing business as
SILICON VALLEY EAST
By: /s/ Andrew H. Tsao
------------------------------------
Name: Andrew H. Tsao
-----------------------------
Title: Vice President
-----------------------------
SILICON VALLEY BANK
By: /s/ Amy B. Young
------------------------------------
Name: Amy B. Young
-----------------------------
Title: Vice President
-----------------------------
(signed in Santa Clara, California)
<PAGE>
EXHIBIT A
LOAN PAYMENT/ADVANCE TELEPHONE REQUEST FORM
DEADLINE FOR SAME DAY PROCESSING IS 12:00 Noon, Boston Time
TO: CENTRAL CLIENT SERVICE DIVISION DATE:
FAX#: TIME:
- -------------------------------------------------------------------------------
FROM:
--------------------------------------------------------------------------
CLIENT NAME (BORROWER)
RE: [DOMESTIC/FOREIGN] REVOLVING LINE OF CREDIT
--------------------------------------------------------------------------
(DELETE ONE)
REQUESTED BY:
------------------------------------------------------------------
AUTHORIZED SIGNER'S NAME
AUTHORIZED SIGNATURE:
----------------------------------------------------------
PHONE NUMBER:
------------------------------------------------------------------
RE: [DOMESTIC/FOREIGN] REVOLVING LINE OF CREDIT
--------------------------------------------------------------------------
(DELETE ONE)
FROM ACCOUNT # TO ACCOUNT #
---------------------- ------------------------
REQUESTED TRANSACTION TYPE REQUEST DOLLAR AMOUNT
PRINCIPAL INCREASE (ADVANCE) $
-------------------------------
PRINCIPAL PAYMENT (ONLY) $
-------------------------------
INTEREST PAYMENT (ONLY) $
-------------------------------
PRINCIPAL AND INTEREST (PAYMENT) $
-------------------------------
OTHER INSTRUCTIONS:
------------------------------------------------------------
All representations and warranties of Borrower stated in the Loan Agreement
are true, correct and complete in all material respects as of the date of the
telephone request for and Advance confirmed by this Advance Request; provided,
however, that those representations and warranties expressly referring to
another date shall be true, correct and complete in all material respects as of
such date.
- -------------------------------------------------------------------------------
----------------------------------------------------------------------
BANK USE ONLY
TELEPHONE REQUEST:
The following person is authorized to request the loan payment
transfer/loan advance on the advance designated account and is
known to me.
Authorized Requester _______________________________Phone #____________
Received By (Bank)_________________________________Phone #_____________
Authorized Signature (Bank)____________________________________________
-----------------------------------------------------------------------
<PAGE>
EXHIBIT B
DOMESTIC BORROWING BASE CERTIFICATE
Borrowers: Moldflow Corporation, Moldflow International Pty. Ltd.
and Moldflow Pty. Ltd.
Bank: Silicon Valley Bank
Commitment Amount: $2,650,000
- -------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
ACCOUNTS RECEIVABLE
1. Accounts Receivable Book Value as of _______________ $
------------------------
2. Additions (please explain on reverse) $
------------------------
3. TOTAL ACCOUNTS RECEIVABLE $
------------------------
ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication)
4. Amounts over 90 days due $
------------------------
5. Balance of 50% over 90 day accounts $
------------------------
6. Concentration Limits $
------------------------
7. Foreign Accounts (except for Eligible Special Accounts) $
------------------------
8. Governmental Accounts $
------------------------
9. Contra Accounts $
------------------------
10. Promotion or Demo Accounts $
------------------------
11. Intercompany/Employee Accounts $
------------------------
12. Other (please explain on reverse) $
------------------------
13. TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS $
------------------------
14. Eligible Accounts (#3 minus #13) $
------------------------
15. The amount of Eligible Accounts (#14) that are Eligible $
Special Accounts ------------------------
16. Loan Value of Eligible Special Accounts (70% of #15) $
------------------------
17. The amount of Eligible Domestic Accounts. The
amount of Eligible Accounts (#14) less the amount of
Eligible Special Accounts (#15) $
------------------------
18. LOAN VALUE OF ELIGIBLE DOMESTIC ACCOUNTS
(75% of #17) $
------------------------
19. TOTAL LOAN VALUE OF ACCOUNTS (#16 and #18) $
------------------------
STANDBY LETTER OF CREDIT
20. Face Amount as of _______________________ $
------------------------
21. LOAN VALUE OF STANDBY LETTER OF CREDIT $
(90% of #20) ------------------------
BALANCES
22. Maximum Loan Amount $ 2,650,000.00
23. Total Funds Available [Lesser of #22 or (#19 plus #21)] $
------------------------
20. Present balance owing on Line of Credit $
------------------------
21. RESERVE POSITION (#23 minus #21) $
------------------------
</TABLE>
THE UNDERSIGNED REPRESENTS AND WARRANTS THAT THE FOREGOING IS TRUE, COMPLETE AND
CORRECT, AND THAT THE INFORMATION REFLECTED IN THIS BORROWING BASE CERTIFICATE
COMPLIES WITH THE REPRESENTATIONS AND WARRANTIES SET FORTH IN THE LOAN AGREEMENT
BETWEEN THE UNDERSIGNED AND SILICON VALLEY BANK.
COMMENTS:
MOLDFLOW CORPORATION
- --------------------------------------
<PAGE>
By:
----------------------------------
Authorized Signer
<PAGE>
EXHIBIT C
FOREIGN BORROWING BASE CERTIFICATE
Borrowers: Moldflow Corporation, Moldflow International Pty. Ltd.
and Moldflow Pty. Ltd.
Bank: Silicon Valley Bank
Commitment Amount: $1,100,000
- -------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
ACCOUNTS RECEIVABLE
1. Foreign Accounts Receivable Book Value as of $
------------------------
2. Additions (please explain on reverse) $
------------------------
3. TOTAL ACCOUNTS RECEIVABLE $
------------------------
ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication)
4. Amounts over 90 days due $
------------------------
5. Balance of 50% over 90 day accounts $
------------------------
6. Concentration Limits $
------------------------
7. Governmental Accounts $
------------------------
8. Contra Accounts $
------------------------
9. Promotion or Demo Accounts $
------------------------
10. Intercompany/Employee Accounts $
------------------------
11. Eligible Special Accounts $
------------------------
12. Other (please explain on reverse) $
------------------------
13. TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS $
------------------------
14. Eligible Accounts (#3 minus #13) $
------------------------
15. LOAN VALUE OF ACCOUNTS (30% of #14) $
------------------------
OVERADVANCE ALLOWANCE
16. $750,000 which expires on 10/__/98 $
------------------------
BALANCES
17. Maximum Loan Amount $ 1,100,000.00
18. Total Funds Available [Lesser of #17 or (#15 plus #16)] $
------------------------
19. Present balance owing on Line of Credit $
------------------------
20. RESERVE POSITION (#18 minus #19) $
------------------------
</TABLE>
THE UNDERSIGNED REPRESENTS AND WARRANTS THAT THE FOREGOING IS TRUE, COMPLETE AND
CORRECT, AND THAT THE INFORMATION REFLECTED IN THIS BORROWING BASE CERTIFICATE
COMPLIES WITH THE REPRESENTATIONS AND WARRANTIES SET FORTH IN THE LOAN AGREEMENT
BETWEEN THE UNDERSIGNED AND SILICON VALLEY BANK.
COMMENTS:
MOLDFLOW CORPORATION
- ------------------------------------------
By:
---------------------------------------
Authorized Signer
<PAGE>
EXHIBIT D
COMPLIANCE CERTIFICATE
TO: SILICON VALLEY BANK
FROM: MOLDFLOW CORPORATION
The undersigned authorized officer of Moldflow Corporation hereby certifies
that in accordance with the terms and conditions of the Loan Agreement among
Moldflow Corporation, Moldflow International Pty. Ltd. and Moldflow Pty. Ltd.,
and the Bank (the "Agreement"), (i) Borrower is in complete compliance for the
period ending _________________________ with all required covenants except as
noted below and (ii) all representations and warranties of Borrower stated
in the Agreement are true and correct in all material respects as of the date
hereof. Attached herewith are the required documents supporting the above
certification. The Officer further certifies that these are prepared in
accordance with Generally Accepted Accounting Principles (GAAP) and are
consistently applied from one period to the next except as explained in an
accompanying letter or footnotes. The Officer expressly acknowledges that no
borrowings may be requested by the Borrower at any time or date of determination
that Borrower is not in compliance with any of the terms of the Agreement, and
that such compliance is determined not just at the date this certificate is
delivered.
PLEASE INDICATE COMPLIANCE STATUS BY CIRCLING YES/NO UNDER "COMPLIES" COLUMN.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
REPORTING COVENANT REQUIRED COMPLIES
------------------ -------- ---------
Monthly financial statements Monthly within 25 days Yes No
Annual (CPA Audited) FYE within 120 days Yes No
10Q and 10K Within 5 days after filing Yes No
with the SEC
A/R Agings Monthly within 25 days Yes No
A/R Audit Initial and Semi-Annual Yes No
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FINANCIAL COVENANT REQUIRED ACTUAL COMPLIES
------------------ -------- ------ --------
Maintain on a Monthly Basis:
Minimum Quick Ratio 0.7:1.0 through 2/28/98;
thereafter 0.8:1.0
through 11/30/98 ____:1.0 Yes No
Maintain on a Quarterly Basis:
Minimum Tangible Net Worth $700,000 at 12/31/97
$550,000 at 3/31/98
$650,000 at 6/30/98
$900,000 at 9/30/98 $_______ Yes No
Profitability: Quarterly $200,000 for quarter ended 12/31/97
($150,000) for quarter ended 3/31/98
$100,000 for quarter ended 6/30/98
$100,000 for quarter ended 9/30/98 $_______ Yes No
</TABLE>
COMMENTS REGARDING EXCEPTIONS: See Attached.
-----------------------------------------
RECEIVED BY:_______________________
DATE:______________________________
REVIEWED BY:_______________________
COMPLIANCE STATUS: YES/NO
-----------------------------------------
Sincerely,
MOLDFLOW CORPORATION
By:__________________________________
Name:
Title:
Date:
<PAGE>
EXHIBIT E
PROMISSORY NOTE
(DOMESTIC REVOLVING LINE OF CREDIT LOANS)
<PAGE>
EXHIBIT F
PROMISSORY NOTE
(FOREIGN REVOLVING LINE OF CREDIT LOANS)
<PAGE>
DISBURSEMENT REQUEST AND AUTHORIZATION
BORROWERS: Moldflow Corporation, Moldflow International Pty. Ltd. and
Moldflow Pty. Ltd.
BANK: Silicon Valley Bank
- -------------------------------------------------------------------------------
LOAN TYPE. This is a Variable Rate, Revolving Line of Credit of a principal
amount up to $2,650,000.
PRIMARY PURPOSE OF LOAN. The primary purpose of this loan is for business.
SPECIFIC PURPOSE. The specific purpose of this loan is: working capital
DISBURSEMENT INSTRUCTIONS. Borrowers understand that no loan proceeds will be
disbursed until all of the Bank's conditions for making the loan have been
satisfied. Please disburse the loan proceeds as follows:
<TABLE>
<CAPTION>
DOMESTIC REVOLVING LINE
<S> <C>
Amount paid to Borrowers directly $
---------------------
Undisbursed Funds $
---------------------
Principal $
---------------------
CHARGES PAID IN CASH. Borrowers have paid or will pay in cash as agreed the
following charges:
Prepaid Finance Charges Paid in Cash: $
---------------------
$ Loan Fee
---------------
$ Accounts Receivables Audit
---------------
Other Charges Paid in Cash: $
---------------------
$ UCC Search Fees
---------------
$ UCC Filing Fees
---------------
$ Patent Filing Fees
---------------
$ Trademark Filing Fees
---------------
$ Copyright Filing Fees
---------------
$ Outside Counsel Fees and Expenses
--------------- (ESTIMATE, DO NOT LEAVE BLANK)
Total Charges Paid in Cash $
---------------------
</TABLE>
AUTOMATIC PAYMENTS. Borrowers hereby authorize the Bank automatically to deduct
from Borrowers' account numbered *** the amount of any loan payment. If the
funds in the account are insufficient to cover any payment, the Bank shall not
be obligated to advance funds to cover the payment.
FINANCIAL CONDITION. BY SIGNING THIS AUTHORIZATION, BORROWERS REPRESENT AND
WARRANT TO THE BANK THAT THE INFORMATION PROVIDED ABOVE IS TRUE AND CORRECT AND
THAT THERE HAS BEEN NO ADVERSE CHANGE IN EACH BORROWER'S FINANCIAL CONDITION AS
DISCLOSED IN EACH BORROWER'S MOST RECENT FINANCIAL STATEMENT TO THE BANK. THIS
AUTHORIZATION IS DATED AS OF ______________, 19___.
MOLDFLOW CORPORATION, on behalf of itself
and the other Borrowers
<PAGE>
Authorized Officer
<PAGE>
AGREEMENT TO PROVIDE INSURANCE
GRANTOR: Moldflow Corporation BANK: Silicon Valley Bank
- -------------------------------------------------------------------------------
INSURANCE REQUIREMENTS. Moldflow Corporation ("Grantor") understands that
insurance coverage is required in connection with the extending of a loan or the
providing of other financial accommodations to Grantor, Moldflow International
Pty. Ltd. and Moldflow Pty. Ltd. by the Bank. These requirements are set forth
in the Loan Documents. The following minimum insurance coverages must be
provided on the following described collateral (the "Collateral"):
Collateral: All Inventory, Equipment and Fixtures.
Type: All risks, including fire, theft and liability.
Amount: Full insurable value.
Basis: Replacement value.
Endorsements: Loss payable clause to the Bank with
stipulation that coverage will not be
cancelled or diminished without a minimum
of twenty (20) days' prior written notice
to the Bank.
INSURANCE COMPANY. Grantor may obtain insurance from any insurance company
Grantor may choose that is reasonably acceptable to the Bank. Grantor
understands that credit may not be denied solely because insurance was not
purchased through the Bank.
FAILURE TO PROVIDE INSURANCE. Grantor agrees to deliver to the Bank, on or
before closing, evidence of the required insurance as provided above, with an
effective date of , 19___, or earlier. Grantor acknowledges and agrees that if
Grantor fails to provide any required insurance or fails to continue such
insurance in force, the Bank may do so at Grantor's expense as provided in the
Loan Agreement. The cost of such insurance, at the option of the Bank, shall be
payable on demand or shall be added to the indebtedness as provided in the
security document. GRANTOR ACKNOWLEDGES THAT IF THE BANK SO PURCHASES ANY SUCH
INSURANCE, THE INSURANCE WILL PROVIDE LIMITED PROTECTION AGAINST PHYSICAL DAMAGE
TO THE COLLATERAL, UP TO THE BALANCE OF THE LOAN; HOWEVER, GRANTOR'S EQUITY IN
THE COLLATERAL MAY NOT BE INSURED. IN ADDITION, THE INSURANCE MAY NOT PROVIDE
ANY PUBLIC LIABILITY OR PROPERTY DAMAGE INDEMNIFICATION AND MAY NOT MEET THE
REQUIREMENTS OF ANY FINANCIAL RESPONSIBILITY LAWS.
AUTHORIZATION. For purposes of insurance coverage on the Collateral,
Grantor authorizes the Bank to provide to any person (including any insurance
agent or company) all information the Bank deems appropriate, whether regarding
the Collateral, the loan or other financial accommodations, or both.
GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS AGREEMENT TO
PROVIDE INSURANCE AND AGREES TO ITS TERMS. THIS AGREEMENT IS DATED
___________________________, 19___.
GRANTOR:
X
--------------------------------------
Authorized Officer
===========================================================================
FOR BANK USE ONLY
INSURANCE VERIFICATION
DATE: PHONE:
-------------------------- -------------------------------------
AGENT'S NAME:
--------------------------------------------------------------
INSURANCE COMPANY:
----------------------------------------------------------
POLICY NUMBER:
-------------------------------------------------------------
EFFECTIVE DATES:
-----------------------------------------------------------
COMMENTS:
------------------------------------------------------------------
===============================================================================
<PAGE>
Exhibit 10.10
LOAN DOCUMENT MODIFICATION AGREEMENT
(NO. 2; DATED AS OF NOVEMBER 30, 1998)
LOAN DOCUMENT MODIFICATION AGREEMENT dated as of November 30, 1998 by
and among SILICON VALLEY BANK (the "BANK"), a California chartered bank with its
principal place of business at 3003 Tasman Drive, Santa Clara, California 95054,
and with a loan production office located at Wellesley Office Park, 40 William
Street, Wellesley, MA 02181, doing business under the name "Silicon Valley
East," MOLDFLOW CORPORATION, a Delaware corporation ("MC"), MOLDFLOW
INTERNATIONAL PTY. LTD., a corporation organized under the laws of Australia and
a wholly-owned subsidiary of MC ("MIPL") and MOLDFLOW PTY. LTD., a corporation
organized under the laws of Australia and a wholly-owned subsidiary of MIPL
("MPL"). MC, MIPL and MPL are sometimes each referred to herein as a "Borrower"
and collectively as the "Borrowers."
1. REFERENCE TO EXISTING LOAN DOCUMENTS.
Reference is hereby made to that Loan Agreement dated April 23, 1998 by
and among the Bank and the Borrowers as modified by a certain waiver letter from
the Bank dated September 17, 1998 and accepted by the Bank on September 18, 1998
(with the attached schedules and exhibits, the "CREDIT AGREEMENT") and the Loan
Documents referred to therein, including without limitation that certain
Domestic Revolving Line Note of the Borrowers dated April 23, 1998 in the
principal amount of $2,650,000 (the "Note"), that certain Foreign Revolving Line
Note of the Borrowers dated April 23, 1998 in the principal amount of $1,100,000
and the Security Documents referred to therein. Unless otherwise defined herein,
capitalized terms used in this Agreement shall have the same respective meanings
as set forth in the Credit Agreement.
2. EFFECTIVE DATE.
This Agreement shall become effective as of November 30, 1998 (the
"EFFECTIVE DATE"), provided that the Bank shall have received the following on
or before December 23, 1998 and provided further, however, in no event shall
this Agreement become effective until signed by an officer of the Bank in
California:
1. two copies of this Agreement, duly executed by the
Borrowers, with the attached consents of Moldflow (Europe) Ltd., and Moldflow
Vertriebs GmbH, duly executed thereby;
2. an amended and restated Domestic Revolving Line Note in the
form enclosed herewith (the "Amended Domestic Revolving Note"), duly executed by
the Borrowers;
3. an amended and restated Foreign Revolving Line Note in the
form enclosed herewith (the "Amended Foreign Revolving Note"), duly executed by
the Borrowers; and
<PAGE>
-2-
4. a certificate of the secretary of each Borrower with
respect to the adoption of resolutions authorizing Foreign Exchange Contract
transactions substantially in the form attached hereto as Exhibit A.
In addition, the Borrowers agree to furnish to the Bank the duly
executed consent of Moldflow Japan K.K. on or before January 22, 1998, the
failure to furnish such consent on or before such date to constitute an Event of
Default under the Credit Agreement.
By the signature of its authorized officer below, each Borrower is
hereby representing that, except as modified in SCHEDULE A attached hereto, the
representations of the Borrowers set forth in the Loan Documents (including
those contained in the Credit Agreement, as amended by this Agreement) are true
and correct as of the Effective Date as if made on and as of such date. In
addition, the Borrower confirms its authorization as to the debiting of its
account with the Bank in the amount of $8,125 ($6,625 in respect of the Domestic
Committed Revolving Line and $1,500 in respect of the Foreign Committed
Revolving Line) in order to pay the Bank's facility fees for the period up to
and including the extended Revolving Maturity Date. Finally, each Borrower (and
each guarantor, signing below) agrees that, as of the Effective Date, it has no
defenses against its obligations to pay any amounts under the Credit Agreement
and the other Loan Documents.
3. DESCRIPTION OF CHANGE IN TERMS.
As of the Effective Date, the Credit Agreement is modified in the
following respects:
1. The definition of "Current Liabilities" set forth in
Section 1.1 of the Credit Agreement is hereby amended by deleting the words "but
excluding Subordinated Debt" at the end of such definition and substituting in
place thereof the following: "and excluding the current portion of Subordinated
Debt and deferred maintenance revenues."
2. The definition of "Domestic Borrowing Base" set forth in
Section 1.1 thereof is hereby amended by increasing the advance rate appearing
in clause (a) thereof from "seventy-five percent (75%)" to "eighty percent
(80%)."
3. The definition of "Eligible Foreign Accounts" in Section
1.1 of the Credit Agreement is hereby amended and restated in its entirety to
read as follows:
"`Eligible Foreign Accounts' means Accounts of a non-U.S.
Borrower or a non-U.S. Subsidiary of a Borrower that (a)
satisfy the requirements for Eligible Domestic Accounts except
those set forth in clause (d) of the definition thereof, (b)
are billed from and the receivables records for which are
located outside the United States; (c) arose in the ordinary
course of such non-U.S. Borrower's or non-U.S. Subsidiaries
business and satisfy the Borrowers' representations and
warranties set forth in Section 5.4 and (d) either (i) are
Accounts of customers whose principal place
<PAGE>
-3-
of business is located in Japan, Australia, New Zealand or
Europe, or (ii) are (A) covered by credit insurance in form
and amount, and by an insurer satisfactory to the Bank less
the amount of any deductible(s) which may be or become owing
thereon; or (B) supported by one or more letters of credit
either advised or negotiated through the Bank or an Acceptable
Correspondent Bank or in favor of the Bank or an Acceptable
Correspondent Bank as beneficiary, in an amount and of a
tenor, and issued by a financial institution, acceptable to
the Bank; or (C) that the Bank approves on a case-by-case
basis. For the purposes hereof, the term "Acceptable
Correspondent Bank" shall mean the banks whose names and
office addresses are listed on attached EXHIBIT E, or such
other banks that the Bank may approve on a case-by-case basis
in the future.
4. The definition of "Foreign Borrowing Base" in Section 1.1
is hereby amended and restated in its entirety to read as follows:
"`Foreign Borrowing Base' means an amount equal to thirty
percent (30%) of the Eligible Foreign Accounts, as determined
by the Bank with reference to the most recent Foreign
Borrowing Base Certificate."
5. The definition of "Foreign Committed Revolving Line" in
Section 1.1 is hereby amended by reducing the dollar amount stated therein from
"One Million One Hundred Thousand Dollars ($1,100,000)" to "Six Hundred Thousand
Dollars ($600,000)."
6. The definition of "Investors Lines," "Overadvance
Allowance," and "Overadvance Expiration Date" and "Peak Overadvance Amount' in
Section 1.1 are hereby deleted.
7. The definition of "Permitted Indebtedness" in Section 1.1
is hereby amended by inserting the following at the end of clause (f) thereof:
", and Indebtedness arising from foreign exchange contracts
with banking institutions other than the Bank, provided that
the maximum amount of such contracts shall not at any time
exceed $1,000,000."
8. The definition of "Revolving Maturity Date" in Section 1.1
is hereby amended by deleting the date "April 22, 1999" therein and substituting
therefor the date "October 22, 1999."
9. The following is hereby added to the end of Section 1.1:
<PAGE>
-4-
"`Exchange Contracts,' `Contract Limit,' `Foreign Exchange
Reserve,' and `Settlement Limit,' shall have the respective meanings
set forth in Section 2.1.1."
10. The first sentence of Section 2.1(b) is hereby amended and
restated in its entirety as follows:
"Subject to and upon the terms and conditions of this
Agreement, the Bank agrees to make Advances to Borrowers in an
aggregate amount outstanding not to exceed the lesser of (i)
the Foreign Committed Revolving Line; (ii) the Foreign
Borrowing Base; or (iii) an amount equal to twenty-five
percent (25%) of the sum of the Domestic Borrowing Base and
the Foreign Borrowing Base."
11. There is hereby inserted immediately following Section 2.1
the following new Section 2.1.1:
"2.1.1. FOREIGN EXCHANGE CONTRACT; FOREIGN EXCHANGE
SETTLEMENTS. Borrowers may enter foreign exchange contracts (the
"Exchange Contracts") not exceeding an aggregate amount of $2,500,000
(the "Contract Limit"), under which Bank will sell to or purchase from
Borrowers foreign currency on a spot or future basis. Borrowers may not
request any Exchange Contracts if it is out of compliance with any
provision of this Agreement. Exchange Contracts must provide for
delivery of settlement on or before the ninetieth (90th) day after the
Revolving Maturity Date, or if such day is not a Business Day, then on
the next succeeding Business Day. The amount available under the
Domestic Committed Revolving Line shall be reduced in an amount equal
to the following (the "Foreign Exchange Reserve") on any given day (the
"Determination Date"): (i) on all outstanding Exchange Contracts on
which delivery is to be effected or settlement allowed more than two
Business Days after the Determination Date, 10% of the gross amount of
the Exchange Contracts; plus (ii) on all outstanding Exchange Contracts
on which delivery is to be effected or settlement allowed more than two
Business Days after the Determination Date. 100% of the gross amount of
the Exchange Contracts, LESS the amount debited by the Bank from
deposit accounts of the Borrowers with the Bank to cover such Exchange
Contracts, which the Borrowers hereby authorize. If the Bank takes a
Foreign Exchange Reserve pursuant to clause (ii) of the foregoing
sentence, such Foreign Exchange Reserve shall be deemed an Advance
under the Domestic Committed Revolving Line in like amount.
Bank may terminate the Exchange Contracts if (a) an Event of
Default occurs under Section 8.1 or 8.5 hereof or any other Event of
Default has occurred and the Bank has accelerated the Borrowers'
Obligations hereunder (b) there is not sufficient availability under
the Domestic Committed Revolving Line and Borrowers do not have
available funds in their deposit account for the Foreign Exchange
Reserve. If Bank terminates the Exchange Contracts pursuant to this
<PAGE>
-5-
Section 2.1.1, Borrowers will on a joint and several basis reimburse
Bank for all fees, costs and expenses in connection with the Exchange
Contracts.
Borrowers may not permit the total of all Exchange Contracts
on which delivery is to be effected and settlement allowed in any two
Business Day period to be more than $250,000 (the "Settlement Limit")
nor may Borrowers permit the total of all Exchange Contracts
outstanding at any one time, to exceed the Contract Limit. However, the
amount which may be settled in any two Business Day period may be
increased above the Settlement Limit if:
(i) there is sufficient availability under the Domestic
Committed Revolving Line in the amount of the Foreign Exchange
Reserve for each Determination Date, provided that Bank in
advance shall reserve the full amount of the Foreign Exchange
Reserve against the Domestic Committed Revolving Line; or
(ii) there is insufficient availability under the Domestic
Committed Revolving Line for settlements within any two
Business Day period, but Bank: (A) verifies good funds
overseas before crediting a Borrower's deposit account (in the
case of a Borrower's sale of foreign currency); or (B) debits
a Borrower's deposit account before delivering foreign
currency overseas (in the case of a Borrower's purchase of
foreign currency).
If any Borrower purchases foreign currency, Borrowers must in
advance instruct Bank either to treat the settlement as an advance
under the Domestic Committed Revolving Line, or to debit Borrower's
account for the amount settled.
Borrowers will execute all Bank's standard applications and
agreements in connection with the Exchange Contracts and pay all Bank's
standard fees and charges.
Borrowers will indemnify Bank on a joint and several basis and
hold it harmless from all claims, liabilities, demands, obligations,
actions, costs and expenses (including reasonable attorneys' fees and
any costs arising out of the failure of any Borrower to fulfill its
obligations on a timely basis) which the Bank incurs arising out of or
in any way relating to any of the Exchange Contracts or any
transactions contemplated thereby (collectively "Foreign Exchange
Costs"), provided, however, in no event shall the Borrowers be
responsible for Foreign Exchange Costs to the extent (I) caused by the
Bank's gross negligence or willful misconduct, or (II) attributable to
Exchange Contracts entered into by the Bank for the benefit of other
parties."
<PAGE>
-6-
12. Section 2.2 is hereby amended by restating clause (b)
thereof to read as follows:
"(b) pursuant to Section 2.1 of this Agreement is greater than
the lesser of (i) the Foreign Committed Revolving Line, (ii)
the Foreign Borrowing Base, or (iii) an amount equal to
twenty-five percent (25%) of the Domestic Borrowing Base and
the Foreign Borrowing Base."
13. The date appearing in the third line of Section 2.7 is
hereby changed from "April 22, 1999" to "October 22, 1999."
14. Sections 6.7 through 6.9 are hereby restated in their
entirety as follows:
"6.7 QUICK RATIO. The Borrowers shall maintain as of the last
day of each fiscal month, a ratio of Quick Assets to Current
Liabilities as follows: (a) at least 0.8 to 1.0 through February 28,
1999; (b) 1.0 to 1.0 thereafter and through May 31, 1999; and (c) 1.25
to 1.0 thereafter.
6.8 TANGIBLE NET WORTH. The Borrowers shall maintain, as of
the last day of September 30, 1998, a Tangible Net Worth of not less
than $500,000 with no testing thereafter:
6.9 PROFITABILITY. The Borrowers shall have (a) a maximum Net
Loss of $100,000 for each of the fiscal quarters ending September 30,
1998 and December 31, 1998; (b) Minimum Net Income of $1 for the fiscal
quarter ending March 31, 1999; (c) minimum Net Income of $250,000 for
the quarter ending June 30, 1999; (d) minimum Net Income of $250,000
for the fiscal year ending June 30, 1999; and (e) minimum Net Income of
$100,000 for the quarter ending September 30, 1999."
15. Sections 6.11 and 7.13 are hereby deleted in their
entirety.
16. Exhibit B to the Credit Agreement (Domestic Borrowing Base
Certificate) is hereby amended and restated in the form of Exhibit B attached
hereto.
17. Exhibit C to the Credit Agreement (Foreign Borrowing Base
Certificate) is hereby amended and restated in the form of Exhibit C attached
hereto.
18. Exhibit D to the Credit Agreement (Compliance Certificate)
is hereby amended in the form of Exhibit D attached hereto.
19. The Credit Agreement and the other Loan Documents are
hereby amended wherever necessary or appropriate to reflect the foregoing
changes.
<PAGE>
-7-
4. WAIVER. The Bank hereby waives the obligation of the Borrowers
to provide financial statements for the fiscal year ending June 30, 1998 within
120 days of such date as required by Section 6.3 of the Credit Agreement,
provided that such financial statements are provided to the Bank on or before
January 31, 1999.
5. CONTINUING VALIDITY.
Upon the effectiveness hereof, (a) each reference in each Security
Instrument or other Loan Document to "the Credit Agreement", "thereunder",
"thereof", "therein", or words of like import referring to the Credit Agreement,
shall mean and be a reference to the Credit Agreement, as amended hereby, each
reference in the Credit Agreement and each other Loan Document to the Domestic
Revolving Line Note and the Foreign Revolving Line Note shall mean and be a
reference to the Amended Domestic Revolving Note and the Amended Foreign
Revolving Note, respectively. Except as specifically set forth above, the Credit
Agreement and each of the Notes shall remain in full force and effect and is
hereby ratified and confirmed. Each of the other Loan Documents is in full force
and effect and is hereby ratified and confirmed. The amendments and waiver set
forth above (i) do not constitute a waiver or modification of any term,
condition or covenant of the Credit Agreement or any other Loan Document, other
than as expressly set forth herein, and (ii) shall not prejudice any rights
which the Bank may now or hereafter have under or in connection with the Credit
Agreement, as modified hereby, or the other Loan Documents and shall not
obligate the Bank to assent to any further modifications.
6. MISCELLANEOUS.
1. This Agreement may be signed in one or more counterparts
each of which taken together shall constitute one and the same document.
2. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS WITHOUT REGARD TO
PRINCIPLES RELATING TO CONFLICTS OF LAW OR CHOICE OF LAW.
3. THE BORROWER ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS
PROPERTIES, UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF ANY STATE OR
FEDERAL COURT OF COMPETENT JURISDICTION IN THE COMMONWEALTH OF MASSACHUSETTS IN
ANY ACTION, SUIT, OR PROCEEDING OF ANY KIND AGAINST IT WHICH ARISES OUT OF OR BY
REASON OF THIS LOAN MODIFICATION AGREEMENT; PROVIDED, HOWEVER, THAT IF FOR ANY
REASON LENDER CANNOT AVAIL ITSELF OF THE COURTS OF THE COMMONWEALTH OF
MASSACHUSETTS, THEN VENUE SHALL LIE IN SANTA CLARA COUNTY, CALIFORNIA.
<PAGE>
-8-
4. The Borrower agrees to promptly pay on demand all costs and
expenses of the Bank in connection with the preparation, reproduction, execution
and delivery of this letter amendment and the other instruments and documents to
be delivered hereunder, including the reasonable fees and out-of-pocket expenses
of Sullivan & Worcester, special counsel for the Bank with respect thereto.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
-9-
IN WITNESS WHEREOF, the Bank and the Borrower have caused this
Agreement to be signed under seal by their respective duly authorized officers
as of the date set forth above.
SILICON VALLEY EAST, a Division
of Silicon Valley Bank
By: /s/ Andrew H. Tsao
------------------------------
Name: Andrew H. Tsao
Title: Vice President
SILICON VALLEY BANK
By: /s/ Michelle Giannini
------------------------------
Name: Michelle Giannini
Title:
(signed in Santa Clara, CA)
MOLDFLOW CORPORATION
By: /s/ Marc Dulude
------------------------------
Name: Marc Dulude
Title: President, CEO
MOLDFLOW INTERNATIONAL PTY MOLDFLOW INTERNATIONAL PTY
LTD. LTD.
By: /s/ Marc Dulude By: /s/ Suzanne Rogers
----------------------------- -------------------------------
Name: Marc Dulude Name: Suzanne Rogers
Title: Director Title: Director
MOLDFLOW PTY LTD. MOLDFLOW PTY LTD.
By: /s Marc Dulude By: /s/ Suzanne Rogers
----------------------------- -------------------------------
Name: Marc Dulude Name: Suzanne Rogers
Title: Director Title: Director
<PAGE>
SCHEDULE A
MODIFICATION OF OR SUPPLEMENTS
TO THE DISCLOSURE SCHEDULE
None
<PAGE>
CONSENT
The undersigned, as Guarantor under a certain Guarantee dated as of May
21, 1998 (the "Guarantee") in favor of Silicon Valley Bank, hereby consents to
the foregoing Loan Document Modification Agreement (the "Amendment") and hereby
confirms and agrees that the Guarantee is, and shall continue to be, in full
force and effect and is hereby ratified and confirmed in all respects, except
that, upon the effectiveness of, and on and after the date of, said Amendment,
each reference in the Guarantee and in each other Loan Document (as defined in
the Credit Agreement) to which the undersigned is a party, including, to "the
Credit Agreement", the "Loan Agreement," "thereunder", "thereof", "therein", or
words of like import referring to the Credit Agreement, shall mean and be a
reference to the Credit Agreement, as amended hereby, and each reference in the
Guarantee and in each such other Loan Document to "the Notes", "thereof",
"therein", "thereunder", or words of like import referring to the Notes shall
mean and be a reference to the Amended Domestic Revolving Note and the Amended
Foreign Revolving Note.
MOLDFLOW (EUROPE) LTD.
By:___________________________
Name:
Title:
<PAGE>
CONSENT
The undersigned, as Guarantor under a certain Guarantee dated as of May
21, 1998 (the "Guarantee") in favor of Silicon Valley Bank, hereby consents to
the foregoing Loan Document Modification Agreement (the "Amendment") and hereby
confirms and agrees that the Guarantee is, and shall continue to be, in full
force and effect and is hereby ratified and confirmed in all respects, except
that, upon the effectiveness of, and on and after the date of, said Amendment,
each reference in the Guarantee and in each other Loan Document (as defined in
the Credit Agreement) to which the undersigned is a party, including, to "the
Credit Agreement", the "Loan Agreement," "thereunder", "thereof", "therein", or
words of like import referring to the Credit Agreement, shall mean and be a
reference to the Credit Agreement, as amended hereby, and each reference in the
Guarantee and in each such other Loan Document to "the Notes", "thereof",
"therein", "thereunder", or words of like import referring to the Notes shall
mean and be a reference to the Amended Domestic Revolving Note and the Amended
Foreign Revolving Note.
MOLDFLOW VERTRIEBS GmbH
By:___________________________
Name:
Title:
<PAGE>
EXHIBIT B
DOMESTIC BORROWING BASE CERTIFICATE
Borrowers: Moldflow Corporation, Moldflow International Pty. Ltd.
and Moldflow Pty. Ltd.
Bank: Silicon Valley Bank
Commitment Amount: $2,650,000
<TABLE>
<CAPTION>
ACCOUNTS RECEIVABLE
<S> <C>
1. Accounts Receivable Book Value as of $
--------
2. Additions (please explain on reverse) $
3. TOTAL ACCOUNTS RECEIVABLE $
ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication)
4. Amounts over 90 days due $
5. Balance of 50% over 90 day accounts $
6. Concentration Limits $
7. Foreign Accounts (except for Eligible Special Accounts) $
8. Governmental Accounts $
9. Contra Accounts $
10. Promotion or Demo Accounts $
11. Intercompany/Employee Accounts $
12. Other (please explain on reverse) $
13. TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS $
14. Eligible Accounts (#3 minus #13) $
15. The amount of Eligible Accounts (#14) that are Eligible
Special Accounts $________________
16. Loan Value of Eligible Special Accounts (70% of #15) $________________
17. The amount of Eligible Domestic Accounts. The
amount of Eligible Accounts (#14) less the amount of
Eligible Special Accounts (#15) $________________
18. LOAN VALUE OF ELIGIBLE DOMESTIC ACCOUNTS
(80% of #17) $
19. TOTAL LOAN VALUE OF ACCOUNTS (#16 and #18) $________________
STANDBY LETTER OF CREDIT
20. Face Amount as of $
--------------
21. LOAN VALUE OF STANDBY LETTER OF CREDIT
(90% of #20) $
</TABLE>
<PAGE>
-2-
<TABLE>
<CAPTION>
BALANCES
<S> <C>
22. Maximum Loan Amount $ 2,650,000.00
23. Total Funds Available [Lesser of #22 or (#19 plus #21)] $
24. Present balance owing on Line of Credit (including
Foreign Exchange Reserve of $___________
as of __/__/__/) $
25. RESERVE POSITION (#23 minus #24) $
</TABLE>
THE UNDERSIGNED REPRESENTS AND WARRANTS THAT THE FOREGOING IS TRUE, COMPLETE AND
CORRECT, AND THAT THE INFORMATION REFLECTED IN THIS BORROWING BASE CERTIFICATE
COMPLIES WITH THE REPRESENTATIONS AND WARRANTIES SET FORTH IN THE LOAN AGREEMENT
BETWEEN THE UNDERSIGNED AND SILICON VALLEY BANK.
COMMENTS:
MOLDFLOW CORPORATION
- ------------------------------------
By:
Authorized Signer
<PAGE>
EXHIBIT C
FOREIGN BORROWING BASE CERTIFICATE
Borrowers: Moldflow Corporation, Moldflow International Pty. Ltd.
and Moldflow Pty. Ltd.
Bank: Silicon Valley Bank
Commitment Amount: $600,000
<TABLE>
<CAPTION>
ACCOUNTS RECEIVABLE
<S> <C>
1. Foreign Accounts Receivable Book Value as of $
--------
2. Additions (please explain on reverse) $
3. TOTAL ACCOUNTS RECEIVABLE $
ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication)
4. Amounts over 90 days due $
5. Balance of 50% over 90 day accounts $
6. Concentration Limits $
7. Governmental Accounts $
8. Contra Accounts $
9. Promotion or Demo Accounts $
10. Intercompany/Employee Accounts $
11. Eligible Special Accounts $________
12. Other (please explain on reverse) $
13. TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS $
14. Eligible Accounts (#3 minus #13) $
15. LOAN VALUE OF ACCOUNTS (30% of #14) $
16. ALTERNATIVE LOAN LIMIT (25% of the sum of
(i) #14 and (ii) #19 on the attached Domestic Borrowing
Base Certificate) $
BALANCES
17. Maximum Loan Amount $600,000
18. Total Funds Available [Lesser of #15, #16 or #17] $
19. Present balance owing on Line of Credit $
20. RESERVE POSITION (#18 minus #19) $
</TABLE>
<PAGE>
-2-
THE UNDERSIGNED REPRESENTS AND WARRANTS THAT THE FOREGOING IS TRUE, COMPLETE AND
CORRECT, AND THAT THE INFORMATION REFLECTED IN THIS BORROWING BASE CERTIFICATE
COMPLIES WITH THE REPRESENTATIONS AND WARRANTIES SET FORTH IN THE LOAN AGREEMENT
BETWEEN THE UNDERSIGNED AND SILICON VALLEY BANK.
COMMENTS:
MOLDFLOW CORPORATION
By: ______________________________
Authorized Signer
<PAGE>
EXHIBIT D
COMPLIANCE CERTIFICATE
TO: SILICON VALLEY BANK
FROM: MOLDFLOW CORPORATION
The undersigned authorized officer of Moldflow Corporation hereby
certifies that in accordance with the terms and conditions of the Loan Agreement
among Moldflow Corporation, Moldflow International Pty. Ltd. and Moldflow Pty.
Ltd., and the Bank (the "Agreement"), (i) Borrower is in complete compliance for
the period ending with all required covenants except as noted below and (ii) all
representations and warranties of Borrower stated in the Agreement are true and
correct in all material respects as of the date hereof. Attached herewith are
the required documents supporting the above certification. The Officer further
certifies that these are prepared in accordance with Generally Accepted
Accounting Principles (GAAP) and are consistently applied from one period to the
next except as explained in an accompanying letter or footnotes. The Officer
expressly acknowledges that no borrowings may be requested by the Borrower at
any time or date of determination that Borrower is not in compliance with any of
the terms of the Agreement, and that such compliance is determined not just at
the date this certificate is delivered.
PLEASE INDICATE COMPLIANCE STATUS BY CIRCLING YES/NO UNDER "COMPLIES"
COLUMN.
<TABLE>
<CAPTION>
REPORTING COVENANT REQUIRED COMPLIES
<S> <C> <C> <C>
*Monthly financial statements Monthly within 25 days Yes No
Annual (CPA Audited) FYE within 120 days Yes No
10Q and 10K Within 5 days after filing Yes No
with the SEC
*A/R Agings Monthly within 25 days Yes No
A/R Audit Initial and Semi-Annual Yes No
* when borrowing
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL COVENANT REQUIRED ACTUAL COMPLIES
<S> <C> <C> <C> <C>
Maintain on a Monthly Basis:
Minimum Quick Ratio 0.8:1.0 through 2/28/99;
1.0:1.0 from 3/31/99 through
5/31/99, 1.25:1.0 thereafter ____:1.0 Yes No
Maintain on a Quarterly Basis:
Minimum Tangible Net Worth $500,000 at 9/30/98 $_______ Yes No
Profitability: Quarterly ($100,000) for quarters ended 9/30/98 and
12/31/98; $1 for quarter ended 3/31/99
$250,000 for quarter ended 6/30/99
$250,000 for quarter ended 9/30/99 $_______ Yes No
Annually $250,000 for FYE 6/30/99 $_______ Yes No
</TABLE>
COMMENTS REGARDING EXCEPTIONS: See Attached.
RECEIVED BY:_______________________
DATE:______________________________
REVIEWED BY:_______________________
COMPLIANCE STATUS: YES/NO
Sincerely,
MOLDFLOW CORPORATION
By:__________________________________
Name:
Title:
Date:
<PAGE>
EXHIBIT E
ACCEPTABLE CORRESPONDENT BANKS
Depository banks for Moldflow subsidiaries for customer accounts
supported by Documentary Letters of Credit - in the case of customers who may
reside in countries other than USA, Australia, New Zealand, Japan or Europe:
FOR MOLDFLOW PTY. LTD:
Australia New Zealand Banking Group Ltd.
Collins Street Business Center
4/287 Collins Street
Melbourne, VIC Australia 3000
FOR MOLDFLOW EUROPE LTD.
Barclays Bank PLC
167 High Street
Bromley, Kent BR1 1NL
United Kingdom
FOR MOLDFLOW VERTRIEBS, g.m.b.h.
Deutsche Bank AG
An den Dominkanern 11-27
50668 Cologne Germany
FOR MOLDFLOW ITALIA s.r.l.
Monte DeiPaschi Di Siena
Filiale di Cassina De' Pecchi
Via Roma 55
20060 Cassina De'Pecchi (MI)
<PAGE>
Exhibit 10.11
SILICON VALLEY BANK
40 William Street
Wellesley, MA 02481
January 19, 1999
TO: Moldflow Corporation
Moldflow International Pty Ltd., and
Moldflow Pty Ltd. (collectively, the "Borrowers")
Attn: Suzanne E. Rogers
Chief Financial Officer
RE: Corrective Amendment to Loan Modification Agreement No. 2 dated
November 30, 1998
Reference is made to Loan Document Modification Agreement No. 2 dated
November 30, 1998 among the Borrowers and the Bank (the "Second Amendment").
The purpose of this corrective amendment is to correct the following
typographical errors to the Second Amendment:
1. The minimum Net Income requirement for the fiscal quarter
ending September 30, 1999 as set forth in Section 6.9 of the
Credit Agreement as amended by the Amendment is hereby changed
from "$100,000" to "$250,000."
2. The Compliance Certificate attached to the Second Amendment is
hereby corrected by amending the profitability test for the
quarter ending 6/30/99 from "$100,000" to "$250,000." A
corrected form of the Compliance Certificate is attached
hereto as Exhibit D.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
-2-
Upon execution by the Borrowers where indicated below, this letter
amendment shall be deemed effective as of the date of Amendment No. 2. In all
other respects, Amendment No. 2 and the Credit Agreement shall remain unchanged.
This Agreement may be signed in more than one counterpart, each of which shall
be any original and all of which taken together shall constitute one and the
same document.
SILICON VALLEY BANK
By: /s/ Andrew H. Tsao
----------------------
Name: Andrew H. Tsao
Title: Vice President
MOLDFLOW CORPORATION
By: /s/ Marc Dulude
-------------------
Name: Marc Dulude
Title: President, CEO
MOLDFLOW INTERNATIONAL PTY LTD.
By: /s/ Marc Dulude
--------------------
Name: Marc Dulude
Title: Director
MOLDFLOW PTY LTD.
By: /s/ Marc Dulude
--------------------
Name: Marc Dulude
Title: Director
<PAGE>
Exhibit 10.12
LOAN DOCUMENT MODIFICATION AGREEMENT
(NO. 3; DATED AS OF JUNE 1, 1999)
LOAN DOCUMENT MODIFICATION AGREEMENT dated as of June 1, 1999 by and
among SILICON VALLEY BANK (the "Bank"), a California chartered bank with its
principal place of business at 3003 Tasman Drive, Santa Clara, California 95054,
and with a loan production office located at Wellesley Office Park, 40 William
Street, Wellesley, Massachusetts 02181, doing business under the name "Silicon
Valley East," MOLDFLOW CORPORATION, a Delaware corporation ("MC"), MOLDFLOW
INTERNATIONAL PTY. LTD., a corporation organized under the laws of Australia and
a wholly-owned subsidiary of MC ("MIPL"), and MOLDFLOW PTY. LTD., a corporation
organized under the laws of Australia and a wholly-owned subsidiary of MIPL
("MPL"). MC, MIPL and MPL are sometimes each referred to herein as a "Borrower"
and collectively as the "Borrowers."
1. REFERENCE TO EXISTING LOAN DOCUMENTS.
Reference is hereby made to that Loan Agreement dated April 23, 1998 by
and among the Bank and the Borrowers, as modified by a certain waiver letter
from the Bank dated September 17, 1998 and accepted by the Bank on September 18,
1998, as further amended by Loan Document Modification Agreement No. 2 dated as
of November 30, 1998 by and among the Bank and the Borrowers, and as further
amended by that certain letter amendment dated January 19, 1999 among the Bank
and the Borrowers (with the attached schedules and exhibits, the "CREDIT
AGREEMENT") and the Loan Documents referred to therein, including without
limitation that certain Amended and Restated Domestic Revolving Line Note of the
Borrowers dated November 30, 1998 in the principal amount of $2,650,000 (the
"Note"), that certain Amended and Restated Foreign Revolving Line Note of the
Borrowers dated November 30, 1998 in the principal amount of $600,000 and the
Security Documents referred to therein. Unless otherwise defined herein,
capitalized terms used in this Agreement shall have the same respective meanings
as set forth in the Credit Agreement.
2. EFFECTIVE DATE.
This Agreement shall become effective as of June 1, 1999 (the
"EFFECTIVE DATE"), provided that the Bank shall have received two copies of this
Agreement, duly executed by the Borrowers, with the attached consents of
Moldflow (Europe) Ltd., Moldflow Vertriebs GmbH and Moldflow Japan K.K., duly
executed thereby, on or before August 27, 1999 and provided further, however, in
no event shall this Agreement become effective until signed by an officer of the
Bank in California.
<PAGE>
-2-
By the signature of its authorized officer below, each Borrower is
hereby representing that, except as modified in SCHEDULE A attached hereto, the
representations of the Borrowers set forth in the Loan Documents (including
those contained in the Credit Agreement, as amended by this Agreement) are true
and correct as of the Effective Date as if made on and as of such date.
<PAGE>
-2-
Finally, each Borrower (and each guarantor, signing below) agrees that, as of
the Effective Date, it has no defenses against its obligations to pay any
amounts under the Credit Agreement and the other Loan Documents.
3. DESCRIPTION OF CHANGE IN TERMS.
As of the Effective Date, the Credit Agreement is modified in the
following respects:
1. Section 6.7 is hereby amended and restated in its
entirety to read as follows:
"6.7 QUICK RATIO. The Borrowers shall maintain as of the
last day of each fiscal month, a ratio of Quick Assets to Current
Liabilities as follows: (a) at least 1.0 to 1.0 through June 30, 1999;
and (b) 1.25 to 1.0 thereafter."
2. Section 6.9 is hereby amended and restated in its
entirety to read as follows:
"6.9 PROFITABILITY. The Borrowers shall have (a) minimum Net
Income of $100,000 for the quarter ending June 30, 1999; (b) minimum
Net Income of $250,000 for the fiscal year ending June 30, 1999; and
(c) minimum Net Income of $250,000 for the quarter ending September 30,
1999."
3. Exhibit D to the Credit Agreement (Compliance Certificate)
is hereby amended in the form of Exhibit D attached hereto.
4. The Credit Agreement and the other Loan Documents are
hereby amended wherever necessary or appropriate to reflect the foregoing
changes.
4. CONTINUING VALIDITY.
<PAGE>
-3-
Upon the effectiveness hereof, (a) each reference in each Security
Instrument or other Loan Document to "the Credit Agreement," "thereunder,"
"thereof," "therein" or words of like import referring to the Credit Agreement,
shall mean and be a reference to the Credit Agreement, as amended hereby, each
reference in the Credit Agreement and each other Loan Document to the Domestic
Revolving Line Note and the Foreign Revolving Line Note shall mean and be a
reference to the Amended Domestic Revolving Note and the Amended Foreign
Revolving Note, respectively. Except as specifically set forth above, the Credit
Agreement and each of the Notes shall remain in full force and effect and is
hereby ratified and confirmed. Each of the other Loan Documents is in full force
and effect and is hereby ratified and confirmed. The amendments and waiver set
forth above (i) do not constitute a waiver or modification of any term,
condition or covenant of the Credit Agreement or any other Loan Document, other
than as expressly set forth herein, and (ii) shall not prejudice any rights
which the Bank may now or hereafter have under or in connection with the Credit
Agreement, as modified hereby, or the other Loan Documents and shall not
obligate the Bank to assent to any further modifications.
5. MISCELLANEOUS.
1. This Agreement may be signed in one or more counterparts
each of which taken together shall constitute one and the same document.
2. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS WITHOUT REGARD TO
PRINCIPLES RELATING TO CONFLICTS OF LAW OR CHOICE OF LAW.
3. THE BORROWER ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS
PROPERTIES, UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF ANY STATE OR
FEDERAL COURT OF COMPETENT JURISDICTION IN THE COMMONWEALTH OF MASSACHUSETTS IN
ANY ACTION, SUIT, OR PROCEEDING OF ANY KIND AGAINST IT WHICH ARISES OUT OF OR BY
REASON OF THIS LOAN MODIFICATION AGREEMENT; PROVIDED, HOWEVER, THAT IF FOR ANY
REASON LENDER CANNOT AVAIL ITSELF OF THE COURTS OF THE COMMONWEALTH OF
MASSACHUSETTS, THEN VENUE SHALL LIE IN SANTA CLARA COUNTY, CALIFORNIA.
4. The Borrower agrees to promptly pay on demand all costs and
expenses of the Bank in connection with the preparation, reproduction, execution
and delivery of this letter amendment and the other instruments and documents to
be delivered hereunder, including the reasonable fees and out-of-pocket expenses
of Sullivan & Worcester, special counsel for the Bank with respect thereto.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
-4-
IN WITNESS WHEREOF, the Bank and the Borrower have caused this
Agreement to be signed under seal by their respective duly authorized officers
as of the date set forth above.
SILICON VALLEY EAST, a Division
of Silicon Valley Bank
By: /s/ Andrew H. Tsao
---------------------------
Andrew H. Tsao
Senior Vice President
SILICON VALLEY BANK
By: /s/ illegible
---------------------------
Name:
Title:
(signed in Santa Clara, CA)
MOLDFLOW CORPORATION
By: /s/ Marc Dulude
---------------------------
Name: Marc Dulude
Title: President, CEO
MOLDFLOW INTERNATIONAL PTY. MOLDFLOW INTERNATIONAL PTY.
LTD. LTD.
By: /s/ Marc Dulude By: /s/ Suzanne Rogers
--------------------------- ---------------------------
Name: Marc Dulude Name: Suzanne Rogers
Title: Director Title: Director
MOLDFLOW PTY. LTD. MOLDFLOW PTY. LTD.
By: /s/ Marc Dulude By: /s/ Suzanne Rogers
--------------------------- ---------------------------
Name: Marc Dulude Name: Suzanne Rogers
Title: Director Title: Director
<PAGE>
SCHEDULE A
MODIFICATION OF OR SUPPLEMENTS TO THE DISCLOSURE SCHEDULE
None
<PAGE>
CONSENT
The undersigned, as Guarantor under a certain Guarantee dated as of May
21, 1998 (the "Guarantee") in favor of Silicon Valley Bank, hereby consents to
the foregoing Loan Document Modification Agreement (the "Amendment") and hereby
confirms and agrees that the Guarantee is, and shall continue to be, in full
force and effect and is hereby ratified and confirmed in all respects, except
that, upon the effectiveness of, and on and after the date of, said Amendment,
each reference in the Guarantee and in each other Loan Document (as defined in
the Credit Agreement) to which the undersigned is a party, including, to "the
Credit Agreement", the "Loan Agreement," "thereunder," "thereof," "therein" or
words of like import referring to the Credit Agreement, shall mean and be a
reference to the Credit Agreement, as amended hereby, and each reference in the
Guarantee and in each such other Loan Document to "the Notes," "thereof,"
"therein," "thereunder" or words of like import referring to the Notes shall
mean and be a reference to the Amended Domestic Revolving Note and the Amended
Foreign Revolving Note.
MOLDFLOW (EUROPE) LTD.
By:___________________________
Name:
Title:
<PAGE>
CONSENT
The undersigned, as Guarantor under a certain Guarantee dated as of May
21, 1998 (the "Guarantee") in favor of Silicon Valley Bank, hereby consents to
the foregoing Loan Document Modification Agreement (the "Amendment") and hereby
confirms and agrees that the Guarantee is, and shall continue to be, in full
force and effect and is hereby ratified and confirmed in all respects, except
that, upon the effectiveness of, and on and after the date of, said Amendment,
each reference in the Guarantee and in each other Loan Document (as defined in
the Credit Agreement) to which the undersigned is a party, including, to "the
Credit Agreement," the "Loan Agreement," "thereunder," "thereof," "therein" or
words of like import referring to the Credit Agreement, shall mean and be a
reference to the Credit Agreement, as amended hereby, and each reference in the
Guarantee and in each such other Loan Document to "the Notes," "thereof,"
"therein," "thereunder" or words of like import referring to the Notes shall
mean and be a reference to the Amended Domestic Revolving Note and the Amended
Foreign Revolving Note.
MOLDFLOW VERTRIEBS GmbH
By:___________________________
Name:
Title:
<PAGE>
CONSENT
The undersigned, as Guarantor under a certain Guarantee dated as of
June 11, 1998 (the "Guarantee") in favor of Silicon Valley Bank, hereby consents
to the foregoing Loan Document Modification Agreement (the "Amendment") and
hereby confirms and agrees that the Guarantee is, and shall continue to be, in
full force and effect and is hereby ratified and confirmed in all respects,
except that, upon the effectiveness of, and on and after the date of, said
Amendment, each reference in the Guarantee and in each other Loan Document (as
defined in the Credit Agreement) to which the undersigned is a party, including,
to "the Credit Agreement," the "Loan Agreement," "thereunder," "thereof,"
"therein" or words of like import referring to the Credit Agreement, shall mean
and be a reference to the Credit Agreement, as amended hereby, and each
reference in the Guarantee and in each such other Loan Document to "the Notes,"
"thereof," "therein," "thereunder" or words of like import referring to the
Notes shall mean and be a reference to the Amended Domestic Revolving Note and
the Amended Foreign Revolving Note.
MOLDFLOW JAPAN K.K.
By:___________________________
Name:
Title:
<PAGE>
EXHIBIT D
COMPLIANCE CERTIFICATE
TO: SILICON VALLEY BANK
FROM: MOLDFLOW CORPORATION
The undersigned authorized officer of Moldflow Corporation hereby
certifies that in accordance with the terms and conditions of the Loan Agreement
among Moldflow Corporation, Moldflow International Pty. Ltd. and Moldflow Pty.
Ltd., and the Bank (the "Agreement"), (i) Borrower is in complete compliance for
the period ending _______with all required covenants except as noted below and
(ii) all representations and warranties of Borrower stated in the Agreement are
true and correct in all material respects as of the date hereof. Attached
herewith are the required documents supporting the above certification. The
Officer further certifies that these are prepared in accordance with Generally
Accepted Accounting Principles (GAAP) and are consistently applied from one
period to the next except as explained in an accompanying letter or footnotes.
The Officer expressly acknowledges that no borrowings may be requested by the
Borrower at any time or date of determination that Borrower is not in compliance
with any of the terms of the Agreement, and that such compliance is determined
not just at the date this certificate is delivered.
PLEASE INDICATE COMPLIANCE STATUS BY CIRCLING YES/NO UNDER
"COMPLIES" COLUMN.
<TABLE>
<CAPTION>
REPORTING COVENANT REQUIRED COMPLIES
<S> <C> <C> <C>
*Monthly financial statements Monthly within 25 days Yes No
Annual (CPA Audited) FYE within 120 days Yes No
10Q and 10K Within 5 days after filing with the SEC Yes No
*A/R Agings Monthly within 25 days Yes No
A/R Audit Initial and Semi-Annual Yes No
* when borrowing
<CAPTION>
FINANCIAL COVENANT REQUIRED ACTUAL COMPLIES
<S> <C> <C> <C>
Maintain on a Monthly Basis:
Minimum Quick Ratio 0.8:1.0 through 2/28/99;
1.0:1.0 from 3/31/99 through
6/30/99, 1.25:1.0 thereafter ____:1.0 Yes No
Maintain on a Quarterly Basis:
Minimum Tangible Net Worth $500,000 at 9/30/98 $_______ Yes No
Profitability: Quarterly $100,000 for quarter ended 6/30/99
$250,000 for quarter ended 9/30/99 $_______ Yes No
Annually $250,000 for FYE 6/30/99 $_______ Yes No
</TABLE>
COMMENTS REGARDING EXCEPTIONS: See Attached.
Sincerely,
MOLDFLOW CORPORATION
By:__________________________________
Name:
Title:
Date:
<PAGE>
Exhibit 10.13
LOAN DOCUMENT MODIFICATION AGREEMENT
(NO. 4; DATED AS OF OCTOBER 22, 1999)
LOAN DOCUMENT MODIFICATION AGREEMENT dated as of October 22, 1999 by
and among SILICON VALLEY BANK (the "Bank"), a California chartered bank with its
principal place of business at 3003 Tasman Drive, Santa Clara, California 95054,
and with a loan production office located at Wellesley Office Park, 40 William
Street, Wellesley, MA 02181, doing business under the name "Silicon Valley
East," MOLDFLOW CORPORATION, a Delaware corporation ("MC"), MOLDFLOW
INTERNATIONAL PTY. LTD. (ACN 061 633 798), a corporation organized under the
laws of Australia and a wholly-owned subsidiary of MC ("MIPL") and MOLDFLOW PTY.
LTD. (ACN 005 047 496), a corporation organized under the laws of Australia and
a wholly-owned subsidiary of MIPL ("MPL"). MC, MIPL and MPL are sometimes each
referred to herein as a "Borrower" and collectively as the "Borrowers."
1. Reference to Existing Loan Documents.
Reference is hereby made to that Loan Agreement dated April 23, 1998 by
and among the Bank and the Borrowers as modified by a certain waiver letter from
the Bank dated September 17, 1998 and accepted by the Bank on September 18,
1998, as further amended by Loan Document Modification Agreement No. 2 dated as
of November 30, 1998 by and among the Bank and Borrowers, as further amended by
that certain letter amendment dated January 19, 1999 among the Bank and
Borrowers, and as further amended by Loan Document Modification No. 3 dated as
of June 1, 1999 by and among the Bank and Borrowers (with the attached schedules
and exhibits, the "Credit Agreement") and the Loan Documents referred to
therein, including without limitation that certain Amended and Restated Domestic
Revolving Line Note of the Borrowers dated November 30, 1998 in the principal
amount of $2,650,000 (the "Note"), that certain Amended and Restated Foreign
Revolving Line Note of the Borrowers dated November 30, 1998 in the principal
amount of $600,000 and the Security Documents referred to therein. Unless
otherwise defined herein, capitalized terms used in this Agreement shall have
the same respective meanings as set forth in the Credit Agreement.
2. EFFECTIVE DATE.
This Agreement shall become effective as of October 22, 1999 (the
"Effective Date"), provided that the Bank shall have received the following on
or before November 29, 1999 and provided further, however, in no event shall
this Agreement become effective until signed by an officer of the Bank in
California:
a. two copies of this Agreement, duly executed by the
Borrowers, with the attached consents of Moldflow (Europe) Ltd., Moldflow
Vertriebs GmbH, and Moldflow Japan K.K., duly executed thereby;
b. an amended and restated Domestic Revolving Line Note in the
form enclosed herewith (the "Amended Domestic Revolving Note"), duly executed by
the Borrowers; and
<PAGE>
c. an amended and restated Foreign Revolving Line Note in the
form enclosed herewith (the "Amended Foreign Revolving Note"), duly executed by
the Borrowers.
By the signature of its authorized officer below, each Borrower is
hereby representing that, except as modified in SCHEDULE A attached hereto, the
representations of the Borrowers set forth in the Loan Documents (including
those contained in the Credit Agreement, as amended by this Agreement) are true
and correct as of the Effective Date as if made on and as of such date. In
addition, the Borrowers confirm their authorization as to the debiting of the
designated account with the Bank (i) in the amount of $17,600 in payment of a
facility amendment fee upon delivery of an executed copy of this Agreement and
(ii) in an amount equal to one-half of one percent (1/2%) per annum of the
unutilized portion of each of the Domestic Committed Revolving Line and the
Foreign Committed Revolving Line quarterly in arrears on the Payment Date at the
end of each calendar quarter and on the extended Revolving Maturity Date.
Finally, each Borrower (and each guarantor, signing below) agrees that, as of
the Effective Date, it has no defenses against its obligations to pay any
amounts under the Credit Agreement and the other Loan Documents.
3. DESCRIPTION OF CHANGE IN TERMS.
As of the Effective Date, the Credit Agreement is modified in the
following respects:
a. The following definitions set forth in Section 1.1 of the
Credit Agreement are hereby amended as follows:
i. The definition of "Revolving Maturity Date" is hereby
amended by deleting the date "October 22, 1999" therein and
substituting therefor the date "December 31, 2000."
ii. The definition of "Payment Date" is hereby amended by
deleting the phrase "twenty-second calendar day of each month"
and inserting in place thereof the phrase "the last day of
each month."
iii. The definition of "Permitted Indebtedness" is hereby
amended by deleting sections (e) and (f) and inserting in
place thereof the following: "(e) Guarantees by Borrowers of
real estate lease obligations incurred in the ordinary course
of business by their Subsidiaries, provided, however, that the
aggregate amount of the foregoing Contingent Obligations shall
not at any time exceed $200,000; (f) capital support letters
issued by one or more of the Borrowers on behalf of foreign
wholly-owned Subsidiaries to the extent required by the
applicable laws of the jurisdictions in which such
Subsidiaries are located ("Capital Support Letters"), and (g)
Indebtedness arising from foreign exchange contracts with
banking institutions other than the Bank, provided that the
maximum amount of such contracts shall not at any time exceed
$1,000,000."
iv. The definition of "Permitted Investment" is hereby
amended by deleting the amount "$500,000" in the third line of
section (c) therein and
-2-
<PAGE>
substituting therefor the amount "$750,000" and by adding the
following phrase to the last line of section (d): "and
(e) Capital Support Letters."
b. Section 2.5 is hereby amended by inserting the following
language immediately after "Closing Date" in the last line of clause (a): "plus
a commitment fee on the unutilized portion of the Domestic Committed Revolving
Line and the Foreign Committed Revolving Line payable quarterly in arrears on
the Payment Date at the end of each calendar quarter and on the Revolving
Maturity Date at the rate of one-half of one percent per annum."
c. The date appearing in the third line of Section 2.7 is
hereby changed from "October 22, 1999" to "December 31, 2000."
d. The following is hereby added to the end of Section 5.14:
"and the Subsidiaries set forth on Schedule A."
e. The amount appearing in the second to last line of the
first paragraph of Section 6.3 is hereby changed from $100,000 to $200,000.
f. The amount appearing in the last line of Section 6.4 is
hereby changed from "Fifty Thousand Dollars ($50,000)" to "One Hundred Thousand
Dollars ($100,000)".
g. Section 6.7 is hereby amended and restated in its entirety
to read as follows:
"6.7 QUICK RATIO. The Borrowers shall maintain as of the last
day of each fiscal month, a minimum ratio of Quick Assets to Current
Liabilities as follows: (a) at least 1.0 to 1.0 for the month ended
July 31, 1999, (b) at least 0.9 to 1.0 thereafter and through October
2, 1999, (c) at least 0.7 to 1.0 for the fiscal months ending October
30, 1999 and November 27, 1999; (d) 0.75 to 1.0 for the fiscal month
ending January 1, 2000; (e) 0.65 to 1.0 thereafter and through February
26, 2000; (f) 0.8 to 1.0 thereafter and through May 27, 2000; (g) 0.9
to 1.0 for the fiscal month ending June 30, 2000; (h 0.8 to 1.0
thereafter and through August 26, 2000; and (i) 1.0 to 1.0 for the
fiscal month ending September 30, 2000 and thereafter.
h. Section 6.8 with the caption "Tangible Net Worth" is hereby
deleted in its entirety and there is substituted in place thereof the phrase
"Not utilized."
i. Section 6.9 is hereby amended and restated in its entirety
to read as follows:
6.9 PROFITABILITY. The Borrowers shall have (a) a maximum Net
Loss of $1,000,000 for the fiscal quarter ended October 2, 1999, (b) a
maximum Net Loss of $100,000 for the fiscal quarter ending January 1,
2000; (c) Minimum Net Income of $250,000 for the fiscal quarters ending
April 1, 2000 and June 30,
-3-
<PAGE>
2000; and (d) minimum Net Income of $100,000 for the fiscal quarter
ending September 30, 2000."
j. Section 8.6 is hereby amended and restated in its entirety
to read as follows:
8.6 OTHER AGREEMENTS. If there is a default in any agreement
to which any Borrower is a party with a third party or parties
resulting in a right by such third party or parties, whether or not
exercised, to accelerate the maturity of any Indebtedness in an amount
in excess of Two Hundred Thousand Dollars ($200,000) or that could have
a Material Adverse Effect,
k. Section 8.8 is hereby amended and restated in its entirety
to read as follows:
l. 8.8 JUDGMENTS. If a judgment or judgments for the payment
of money in an amount individually or in the aggregate, of at least One Hundred
Fifty Thousand Dollars ($150,000) shall be rendered against any Borrower and
shall remain unsatisfied and unstayed for a period of thirty (30) days (provided
that no Credit Extensions will be made prior to the satisfaction or stay of such
judgment); or
m. Exhibit D to the Credit Agreement (Compliance Certificate)
is hereby amended in the form of Exhibit D attached hereto.
n. The Credit Agreement and the other Loan Documents are
hereby amended wherever necessary or appropriate to reflect the foregoing
changes.
4. CONTINUING VALIDITY.
Upon the effectiveness hereof, (a) each reference in each Security
Instrument or other Loan Document to "the Credit Agreement", "thereunder",
"thereof", "therein", or words of like import referring to the Credit Agreement,
shall mean and be a reference to the Credit Agreement, as amended hereby, each
reference in the Credit Agreement and each other Loan Document to the Domestic
Revolving Line Note and the Foreign Revolving Line Note shall mean and be a
reference to the Amended Domestic Revolving Note and the Amended Foreign
Revolving Note, respectively. Except as specifically set forth above, the Credit
Agreement and each of the Notes shall remain in full force and effect and is
hereby ratified and confirmed. Each of the other Loan Documents is in full force
and effect and is hereby ratified and confirmed. The amendments set forth above
(i) do not constitute a waiver or modification of any term, condition or
covenant of the Credit Agreement or any other Loan Document, other than as
expressly set forth herein, and (ii) shall not prejudice any rights which the
Bank may now or hereafter have under or in connection with the Credit Agreement,
as modified hereby, or the other Loan Documents and shall not obligate the Bank
to assent to any further modifications.
5. MISCELLANEOUS.
a. This Agreement may be signed in one or more counterparts
each of which taken together shall constitute one and the same document.
-4-
<PAGE>
b. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS WITHOUT REGARD TO
PRINCIPLES RELATING TO CONFLICTS OF LAW OR CHOICE OF LAW.
c. THE BORROWER ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS
PROPERTIES, UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF ANY STATE OR
FEDERAL COURT OF COMPETENT JURISDICTION IN THE COMMONWEALTH OF MASSACHUSETTS IN
ANY ACTION, SUIT, OR PROCEEDING OF ANY KIND AGAINST IT WHICH ARISES OUT OF OR BY
REASON OF THIS LOAN MODIFICATION AGREEMENT; PROVIDED, HOWEVER, THAT IF FOR ANY
REASON LENDER CANNOT AVAIL ITSELF OF THE COURTS OF THE COMMONWEALTH OF
MASSACHUSETTS, THEN VENUE SHALL LIE IN SANTA CLARA COUNTY, CALIFORNIA.
d. The Borrower agrees to promptly pay on demand all costs and
expenses of the Bank in connection with the preparation, reproduction, execution
and delivery of this letter amendment and the other instruments and documents to
be delivered hereunder, including the reasonable fees and out-of-pocket expenses
of Sullivan & Worcester, special counsel for the Bank with respect thereto.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-5-
<PAGE>
IN WITNESS WHEREOF, the Bank and the Borrower have caused this
Agreement to be signed under seal by their respective duly authorized officers
as of the date set forth above.
SILICON VALLEY EAST, a Division
of Silicon Valley Bank
By: /s/ Andrew H. Tsao
-----------------------------
Name: Andrew H. Tsao
Title: Vice President
SILICON VALLEY BANK
By: /s/ Michelle Giannini
-----------------------------
Name:
Title:
(signed in Santa Clara, CA)
MOLDFLOW CORPORATION
By: /s/ Marc Dulude
-----------------------------
Name: Marc Dulude
Title: President, CEO
MOLDFLOW INTERNATIONAL PTY MOLDFLOW INTERNATIONAL PTY
LTD. LTD.
By: /s/ Marc Dulude By: /s/ Suzanne Rogers
------------------------------ ------------------------------
Name: Marc Dulude Name: Suzanne Rogers
Title: Director Title: Director
MOLDFLOW PTY LTD. MOLDFLOW PTY LTD.
By: /s/ Marc Dulude By: /s/ Suzanne Rogers
------------------------------ ------------------------------
Name: Marc Dulude Name: Suzanne Rogers
Title: Director Title: Director
-6-
<PAGE>
SCHEDULE A
MODIFICATION OF OR SUPPLEMENTS
TO THE DISCLOSURE SCHEDULE
[State "None" if None]
<PAGE>
CONSENT
The undersigned, as Guarantor under a certain Guarantee dated as of May
21, 1998 (the "Guarantee") in favor of Silicon Valley Bank, hereby consents to
the foregoing Loan Document Modification Agreement No. 4 (the "Amendment") and
hereby confirms and agrees that the Guarantee is, and shall continue to be, in
full force and effect and is hereby ratified and confirmed in all respects,
except that, upon the effectiveness of, and on and after the date of, said
Amendment, each reference in the Guarantee and in each other Loan Document (as
defined in the Credit Agreement) to which the undersigned is a party, including,
to "the Credit Agreement", the "Loan Agreement," "thereunder", "thereof",
"therein", or words of like import referring to the Credit Agreement, shall mean
and be a reference to the Credit Agreement, as amended hereby, and each
reference in the Guarantee and in each such other Loan Document to "the Notes",
"thereof", "therein", "thereunder", or words of like import referring to the
Notes shall mean and be a reference to the Amended Domestic Revolving Note and
the Amended Foreign Revolving Note.
MOLDFLOW (EUROPE) LTD.
By:___________________________
Name: Suzanne Rogers
Title: Director
<PAGE>
CONSENT
The undersigned, as Guarantor under a certain Guarantee dated as of May
21, 1998 (the "Guarantee") in favor of Silicon Valley Bank, hereby consents to
the foregoing Loan Document Modification Agreement No. 4 (the "Amendment") and
hereby confirms and agrees that the Guarantee is, and shall continue to be, in
full force and effect and is hereby ratified and confirmed in all respects,
except that, upon the effectiveness of, and on and after the date of, said
Amendment, each reference in the Guarantee and in each other Loan Document (as
defined in the Credit Agreement) to which the undersigned is a party, including,
to "the Credit Agreement", the "Loan Agreement," "thereunder", "thereof",
"therein", or words of like import referring to the Credit Agreement, shall mean
and be a reference to the Credit Agreement, as amended hereby, and each
reference in the Guarantee and in each such other Loan Document to "the Notes",
"thereof", "therein", "thereunder", or words of like import referring to the
Notes shall mean and be a reference to the Amended Domestic Revolving Note and
the Amended Foreign Revolving Note.
MOLDFLOW VERTRIEBS GmbH
By:___________________________
Name: Marc Dulude
Title: Managing Director
<PAGE>
CONSENT
The undersigned, as Guarantor under a certain Guarantee dated as of
June 11, 1998 (the "Guarantee") in favor of Silicon Valley Bank, hereby consents
to the foregoing Loan Document Modification Agreement No. 4 (the "Amendment")
and hereby confirms and agrees that the Guarantee is, and shall continue to be,
in full force and effect and is hereby ratified and confirmed in all respects,
except that, upon the effectiveness of, and on and after the date of, said
Amendment, each reference in the Guarantee and in each other Loan Document (as
defined in the Credit Agreement) to which the undersigned is a party, including,
to "the Credit Agreement," the "Loan Agreement," "thereunder," "thereof,"
"therein" or words of like import referring to the Credit Agreement, shall mean
and be a reference to the Credit Agreement, as amended hereby, and each
reference in the Guarantee and in each such other Loan Document to "the Notes,"
"thereof," "therein," "thereunder" or words of like import referring to the
Notes shall mean and be a reference to the Amended Domestic Revolving Note and
the Amended Foreign Revolving Note.
MOLDFLOW JAPAN K.K.
By:___________________________
Name: Marc Dulude
Title: Representative Director
<PAGE>
EXHIBIT D
COMPLIANCE CERTIFICATE
TO: SILICON VALLEY BANK
FROM: MOLDFLOW CORPORATION
The undersigned authorized officer of Moldflow Corporation hereby
certifies that in accordance with the terms and conditions of the Loan Agreement
among Moldflow Corporation, Moldflow International Pty. Ltd. and Moldflow Pty.
Ltd., and the Bank (the "Agreement"), (i) Borrower is in complete compliance for
the period ending __________ with all required covenants except as noted below
and (ii) all representations and warranties of Borrower stated in the Agreement
are true and correct in all material respects as of the date hereof. Attached
herewith are the required documents supporting the above certification. The
Officer further certifies that these are prepared in accordance with Generally
Accepted Accounting Principles (GAAP) and are consistently applied from one
period to the next except as explained in an accompanying letter or footnotes.
The Officer expressly acknowledges that no borrowings may be requested by the
Borrower at any time or date of determination that Borrower is not in compliance
with any of the terms of the Agreement, and that such compliance is determined
not just at the date this certificate is delivered.
PLEASE INDICATE COMPLIANCE STATUS BY CIRCLING YES/NO UNDER
"COMPLIES" COLUMN.
<TABLE>
<CAPTION>
REPORTING COVENANT REQUIRED COMPLIES
------------------ -------- --------
<S> <C> <C> <C>
*Monthly financial statements Monthly within 25 days Yes No
Annual (CPA Audited) FYE within 120 days Yes No
10Q and 10K Within 5 days after filing Yes No
with the SEC
*A/R Agings Monthly within 25 days Yes No
A/R Audit Initial and Semi-Annual Yes No
* when borrowing
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL COVENANT REQUIRED ACTUAL COMPLIES
------------------ -------- ------ --------
<S> <C> <C> <C>
Maintain on a Monthly Basis:
Minimum Quick Ratio 1.0:1.0 at 7/31/99; 0.9:1.0 at 8/31/99 and 10/2/99
0.7:1.0 at 10/30/99 and 11/27/99;
0.75:1.0 at 1/1/00;
0.65:1.0 at 1/29/00 and 2/26/00;
0.8:1.0 from 4/1/00 through 5/27/00;
0.9:1.0 at 6/30/00;
0.8:1.0 at 6/30/00 and 8/26/00;
1.0:1.0 at 9/30/00 and thereafter. ____:1.0 Yes No
Profitability: Quarterly ($1,000,000) for quarter ended 10/2/99 ____ Yes No
($100,000) for quarter ended 1/2/00;
$250,000 for quarters ended 4/1/00
and 6/30/00;
$100,000 for quarter ended 9/30/00
</TABLE>
COMMENTS REGARDING EXCEPTIONS: See Attached.
RECEIVED BY:_______________________
DATE:______________________________
REVIEWED BY:_______________________
COMPLIANCE STATUS: YES/NO
Sincerely,
MOLDFLOW CORPORATION
By:__________________________________
Name:
Title:
Date:
<PAGE>
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS IT HAS BEEN REGISTERED UNDER THE
ACT AND SUCH LAWS OR (1) REGISTRATION UNDER APPLICABLE STATE SECURITIES LAWS
IS NOT REQUIRED AND (2) AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY IS
FURNISHED TO THE COMPANY TO THE EFFECT THAT REGISTRATION UNDER THE ACT
IS NOT REQUIRED.
MOLDFLOW CORPORATION
WARRANT TO PURCHASE COMMON STOCK
This certifies that, for value received, Silicon Valley Bank (the "HOLDER")
is entitled to subscribe for and purchase up to Fifty Thousand (50,000)
shares (subject to adjustment from time to time pursuant to the provisions of
Section 5 hereof) of fully paid and nonassessable Common Stock of Moldflow
Corporation, a Delaware corporation (the "COMPANY"), at the Warrant Price (as
defined in Section 2 hereof), subject to the provisions and upon the terms
and conditions hereinafter set forth.
As used herein, the term "COMMON STOCK" shall mean the Company's presently
authorized Common Stock, $.01 par value per share, and any stock into or for
which such Common Stock may hereafter be converted or exchanged.
1. TERM OF WARRANT. The purchase or conversion right represented by
this warrant (hereinafter the "WARRANT") is exercisable, in whole or in part,
at any time during the period commencing on April 23, 1998 and continuing
until April 23, 2005.
2. WARRANT PRICE. The initial exercise price of this Warrant is
$3.00 per share, subject to adjustment from time to time pursuant to the
provisions of Section 5 hereof (the "WARRANT PRICE").
3. METHOD OF CONVERSION OR EXERCISE; PAYMENT; ISSUANCE OF NEW
WARRANT.
(a) EXERCISE. The purchase right represented by this Warrant may
be exercised by the holder hereof during the term of this Warrant, in whole
or in part, by the surrender of this Warrant (with the notice of exercise
form attached hereto as EXHIBIT 1 duly executed) at the principal office of
the Company and by the payment to the Company, by check or wire transfer, of
an amount equal to the then applicable Warrant Price per share multiplied by
the number of shares then being purchased. The Company agrees that the shares
so purchased shall be deemed to be issued to the holder hereof as the record
owner of such shares as of the close of business on the date on which this
Warrant shall have been surrendered and payment made for such shares as
aforesaid. In the event of any exercise of this Warrant, certificates for the
shares of stock so purchased shall be delivered to the holder hereof within
15 days thereafter and, unless this Warrant has been fully exercised or
expired, a new Warrant representing the portion of the
1
<PAGE>
shares, if any, with respect to which this Warrant shall not then have been
exercised, shall also be issued to the holder hereof within such 15 day
period.
(b) CONVERSION. The Holder may convert this Warrant (the
"CONVERSION RIGHT") during its term, in whole or in part, into the number of
shares of Common Stock of the Company calculated pursuant to the following
formula by surrendering this Warrant (with the notice of exercise form
attached hereto as EXHIBIT 1 duly executed) at the principal office of the
Company specifying the number of shares of Common Stock of the Company, the
rights to purchase which the Holder desires to convert:
X = Y (A - B)
---------
A
where: X = the number of shares of Common Stock to be
issued to the Holder;
Y = the number of shares of Common Stock
subject to this Warrant for which the
Conversion Right is being exercised;
A = the fair market value of one share of
Common Stock;
B = the Warrant Price
As used herein, the fair market value of a share of Common Stock
shall mean with respect to each share of Common Stock the closing price per
share of the Company's Common Stock on the principal national securities
exchange on which the Common Stock is then listed or admitted to trading or,
if not then listed or admitted to trading on any such exchange, on the NASDAQ
National Market System, or if not then listed or traded on any such exchange
or system, the bid price per share on NASDAQ Small-Cap Market or any other
over-the-counter market, including the OTC Bulletin Board, which reports bid,
asked and last sale prices and volume of sales, averaged over the 10 trading
days consisting of the day as of which the current fair market value of
Common Stock is being determined and the nine consecutive business days prior
to such day. If at any time such quotations are not available, the current
fair market value of a share of Common Stock shall be the highest price per
share which the Company could obtain from a willing buyer (not a current
employee or director) for shares of Common Stock sold by the Company, from
authorized but unissued shares, as determined in good faith by the Board of
Directors of the Company, unless the Company shall become subject to a
merger, acquisition or other consolidation pursuant to which the Company is
not the surviving party, in which case the current fair market value of a
share of Common Stock shall be deemed to be the value received by the holders
of the Company's Common Stock for each share of Common Stock pursuant to the
Company's acquisition. The Company agrees that the shares so converted shall
be deemed to be issued to the holder hereof as the record owner of such
shares as of the close of business on the date on which this Warrant shall
have been surrendered as aforesaid. In the event of any conversion of this
Warrant, certificates for the shares of stock so converted shall be delivered
to the holder hereof within 15 days thereafter and, unless this Warrant has
been fully converted or expired, a new Warrant representing the portion of
the shares, if any, with
2
<PAGE>
respect to which this Warrant shall not then have been converted, shall also
be issued to the holder hereof within such 15 day period.
4. STOCK FULLY PAID; RESERVATION OF SHARES. All Common Stock which
may be issued upon the exercise or conversion of this Warrant will, upon
issuance, be fully paid and nonassessable, and free from all taxes, liens and
charges with respect to the issue thereof. During the period within which the
rights represented by this Warrant may be exercised, the Company will at all
times have authorized, and reserved for the purpose of the issuance upon
exercise of the purchase rights evidenced by this Warrant, a sufficient
number of shares of its Common Stock to provide for the exercise of the
rights represented by this Warrant. The issuance of this Warrant and any
shares of Common Stock issued upon exercise or conversion thereof will not be
subject to pre-emptive rights of any holder of record of stock, or of
securities exchangeable for or convertible into stock, of the Company on the
date hereof except such rights as have been waived prior to the issuance
hereof.
5. ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES. The kind of
securities purchasable upon the exercise or conversion of this Warrant, the
Warrant Price and the number of shares purchasable upon exercise or
conversion of this Warrant shall be subject to adjustment from time to time
upon the occurrence of certain events as follows:
(a) RECLASSIFICATION, CONSOLIDATION OR MERGER. In case of any
reclassification or change of outstanding securities of the class issuable
upon exercise or conversion of this Warrant (other than a change in par
value, or from par value to no par value, or from no par value to par value,
or as a result of a subdivision or combination), or in case of any
consolidation or merger of the Company with or into another corporation,
other than a merger with another corporation in which the Company is a
continuing corporation and which does not result in any reclassification or
change of outstanding securities issuable upon exercise of this Warrant, or
in case of any sale of all or substantially all of the assets of the Company,
the Company shall, or shall use its best efforts to cause such successor or
purchasing corporation, as the case may be, to, execute a new Warrant,
providing that the holder of this Warrant shall have the right to exercise
such new Warrant and procure upon such exercise, in lieu of each share of
Common Stock theretofore issuable upon exercise of this Warrant, the kind and
amount of shares of stock, other securities, money and property receivable
upon such reclassification, change, consolidation, or merger by a holder of
one share of Common Stock. Such new Warrant shall provide for adjustments
which shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Section 5. The provisions of this subsection (a) shall
similarly apply to successive reclassification, changes, consolidations,
mergers and transfers.
(b) SUBDIVISION OR COMBINATION OF SHARES. If the Company at any
time while this Warrant remains outstanding and unexpired shall subdivide or
combine its Common Stock, the Warrant Price shall be proportionately
decreased in the case of a subdivision or increased in the case of a
combination.
(c) STOCK DIVIDENDS. If the Company at any time while this
Warrant is outstanding and unexpired shall pay a dividend with respect to
Common Stock payable in, or make any other distribution with respect to
Common Stock (except any distribution specifically provided for in the
foregoing subparagraphs (a) or (b)) of, Common Stock, then the Warrant
3
<PAGE>
Price shall be adjusted, from and after the date of determination of
shareholders entitled to receive such dividend or distribution, to that price
determined by multiplying the Warrant Price in effect immediately prior to
such date of determination by a fraction (i) the numerator of which shall be
the total number of shares of Common Stock outstanding immediately prior to
such dividend or distribution and (ii) the denominator of which shall be the
total number of shares of Common Stock outstanding immediately after such
dividend or distribution.
(d) ADJUSTMENT OF NUMBER OF SHARES. Upon each adjustment in the
Warrant Price pursuant to any of Sections 5 (a) through (c), the number of
shares of Common Stock purchasable hereunder shall be adjusted, to the
nearest whole share, to the product obtained by multiplying the number of
shares purchasable immediately prior to such adjustment in the Warrant Price
by a fraction, the numerator of which shall be the Warrant Price immediately
prior to such adjustment and the denominator of which shall be the Warrant
Price immediately thereafter.
6. NOTICE OF ADJUSTMENTS. Whenever any Warrant Price shall be
adjusted pursuant to Section 5 hereof, the Company shall prepare a
certificate signed by its chief financial officer setting forth, in
reasonable detail, the event requiring the adjustment, the amount of the
adjustment, the method by which such adjustment was calculated, the Warrant
Price after giving effect to such adjustment and the number of shares then
purchasable upon exercise of this Warrant, and shall cause copies of such
certificate to be mailed (by first class mail, postage prepaid) to the holder
of this Warrant at the address specified in Section 12(d) hereof, or at such
other address as may be provided to the Company in writing by the holder of
this Warrant.
7. FRACTIONAL SHARES. No fractional shares of Common Stock will be
issued in connection with any exercise or conversion hereunder, but in lieu
of such fractional shares the Company shall make a cash payment therefor upon
the basis of the Warrant Price then in effect.
8. COMPLIANCE WITH THE ACT.
(a) COMPLIANCE WITH THE ACT. The holder of this Warrant, by
acceptance hereof, agrees that this Warrant and the shares of Common Stock to
be issued upon exercise or conversion hereof are being acquired for
investment for such holder's own account and not with a view toward
distribution thereof, and that it will not offer, sell or otherwise dispose
of this Warrant or any shares of Common Stock to be issued upon exercise or
conversion hereof unless this Warrant has been registered under the Act and
applicable state securities laws or (i) registration under applicable state
securities laws is not required and (ii) an opinion of counsel satisfactory
to the Company is furnished to the Company to the effect that registration
under the Act is not required.
9. TRANSFER OF WARRANT. This Warrant and the rights granted
hereunder may not be transferred or succeeded to by any person without the
prior written consent of the Company. Subject to compliance with the
foregoing sentence, this Warrant and all rights hereunder shall be
transferable, in whole or in part, at the office of the Company by the holder
hereof in person or by duly authorized attorney, upon surrender of this
Warrant properly endorsed. Each taker and holder of this Warrant, by taking
or holding the same, consents and agrees that this Warrant, when endorsed in
blank, shall be deemed negotiable; provided, that the last holder of this
4
<PAGE>
Warrant as registered on the books of the Company may be treated by the
Company and all persons dealing with this Warrant as the absolute owner
hereof for any purposes and as the person entitled to exercise the rights
represented by this Warrant or to transfer hereof on the books of the
Company, any notice to the contrary notwithstanding, unless and until such
holder seeks to transfer registered ownership of this Warrant on the books of
the Company and such transfer is effected.
10. REPORTING REQUIREMENTS. Until the exercise or conversion in full
or the expiration of this warrant, the Company shall provide to the Holder,
as soon as available, but in any case within one hundred twenty (120) days
after the end of the Company's fiscal year, audited consolidated financial
statements of the Company and its subsidiaries, if any, prepared in
accordance with generally accepted accounting principles, consistently
applied, together with an unqualified opinion on such financial statements of
an independent certified public accounting firm.
11. REGISTRATION RIGHTS.
(a) Definitions: the following terms shall have the following
respective meanings for purposes of this Section 11:
(i) "Commission" means the United States Securities and
Exchange Commission, or any other United States Federal agency at the time
administering the Securities Act.
(ii) "Exchange Act" means the United States Securities
Exchange Act of 1934, as amended, or any similar United States statute, and
the rules and regulations of the Commission issued under such act, as they
each may, from time to time, be in effect.
(iii) "Initial Public Offering" means the first public
distribution of the Common Stock pursuant to a firm commitment underwriting,
following which the Common Stock shall be listed and traded on a national
securities exchange or on the NASDAQ National Market System.
(iv) "Securities Act" means the United States Securities
Act of 1933, as amended, or any similar United States statute, and the rules
and regulations of the Commission issued under such act, as they each may,
from time to time, be in effect.
(v) "Registration Statement" means a registration
statement filed by the Company with the Commission for a public offering and
sale of securities of the Company (other than a registration statement on
Form S-8 or Form S-4, or their successors, or any other form for a limited
purpose, or any registration statement covering only securities proposed to
be issued in exchange for securities or assets of another corporation).
(vi) "Registrable Shares" means (i) the shares of Common
Stock issued or issuable upon exercise or conversion of this Warrant, and
(ii) any other shares of Common Stock of the Company issued in respect of
such shares (because of stock splits, stock dividends, reclassifications,
recapitalizations, or similar events).
5
<PAGE>
(b) Sale or Transfer of Shares; Legend
(i) The Registrable Shares shall not be sold or
transferred in the United States unless either (i) they first shall have been
registered under the Securities Act, or (ii) the Company first shall have
been furnished with an opinion of legal counsel, reasonably satisfactory to
the Company, to the effect that such sale or transfer is exempt from the
registration requirements of the Securities Act.
(ii) Each certificate representing the Registrable Shares
shall bear a legend substantially in the following form:
"The Shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended (the "Act"), and may not
be offered, sold or otherwise transferred, pledged or hypothecated in
the United States unless and until such shares are registered under
the Act or an opinion of counsel satisfactory to the Company is
furnished to the Company to the effect that such registration is not
required."
The foregoing legend shall be removed from the certificates representing any
Registrable Shares at the request of the Holder thereof at such time as they
become registered under the Securities Act or eligible or resale pursuant to
Rule 144(k) under the Securities Act.
(c) Incidental Registration.
(i) Whenever the Company proposes to file a Registration
Statement, prior to such filing it shall give written notice to the Holder of
its intention to do so, and upon the written request of the Holder given
within 30 days after the Company provides such notice (which request shall
state the intended method of disposition of such Registrable Shares), the
Company shall use its best efforts to cause all of the Registrable Shares
which the Holder has requested that the Company register to be registered
under the Securities Act to the extent necessary to permit their sale or
other disposition in accordance with the intended method of distribution
specified in the request of the Holder; provided that, the Company shall have
the right to postpone or withdraw any registration effected pursuant to this
Subsection 11(c) without obligation to the Holder.
(ii) In connection with any offering under this Subsection
11(c) involving an underwriting, and subject to the next sentence hereof, the
Company shall not be required to include any Registrable Shares in such
underwriting in such quantity as will, in the opinion of the underwriters,
jeopardize the success of the offering by the Company or materially adversely
affect the price receivable by the Company in such offering. If in the
opinion of the managing underwriter the registration of all, or part of, the
Registrable Shares which the Holder has requested to be included would
materially and adversely affect the success or the price receivable by the
Company in such public offering, then the Company shall be required to
include in the underwriting only that number of Registrable Shares, if any,
which the managing underwriter believes may be sold without causing such
adverse effect, provided, however, that in no event shall any of the
Registrable Shares be included in such underwriting unless all shares which
have been requested to be included pursuant to that certain Shareholders
Agreement, dated as of July 18, 1997, between the Company and certain of its
shareholders have been included (except to the
6
<PAGE>
extent provided for by letter agreement dated on or after the date hereof
between the Holder and any shareholders of the Company having registration
rights under such Shareholders Agreement).
(d) Registration Procedures. If and whenever the Company is
required by the provisions of this Section 11 to use its best efforts to
effect the registration of any of the Registrable Shares under the Securities
Act, the Company shall:
(i) file with the Commission a Registration Statement
with respect to such Registrable Shares and use its best efforts to cause
that Registration Statement to become and remain effective;
(ii) as expeditiously as possible prepare and file with
the Commission any amendments and supplements to the Registration Statement
and the prospectus included in the Registration Statement as may be necessary
to keep the Registration Statement effective for a period of not less than 90
days from the effective date and in any event as long as is required by the
Securities Act;
(iii) as expeditiously as possible furnish to the Holder
such reasonable numbers of copies of the prospectus, including a preliminary
prospectus, in conformity with the requirements of the Securities Act, and
such other documents as the Holder may reasonably request in order to
facilitate the public sale or other disposition of the registered Registrable
Shares owned by the Holder; and
(iv) as expeditiously as possible use its best efforts to
register or qualify the Registrable Shares covered by the Registration
Statement under the securities or Blue Sky laws of such states as the Holder
shall reasonably request, and do any and all other acts and things that may
be necessary or desirable to enable the Holder to consummate the public sale
or other disposition in such jurisdictions; provided, however, that the
Company shall not be required in connection with this paragraph (d) to
qualify as a foreign corporation or execute a general consent to service of
process in any jurisdiction.
If the Company has delivered preliminary or final prospectuses to the Holder
and after having done so the prospectus is amended to comply with the
requirements of the Securities Act, the Company shall promptly notify the
Holder and, if requested, the Holder shall immediately cease making offers of
Registrable Shares and shall return all prospectuses to the Company. The
Company shall promptly provide the Holder with revised prospectuses and,
following receipt of the revised prospectuses, the Holder shall be free to
resume making offers of the Registrable Shares.
(e) Allocation of Expenses. The Company shall pay the
Registration Expenses for all registrations requested by the Holder pursuant
to this Section 11. For purposes of this Section 11, the term "REGISTRATION
EXPENSES" shall mean all expenses incurred by the Company in complying with
this Section 11, including, without limitation, all registration and filing
fees, exchange listing fees, printing expenses, fees and disbursements of
counsel for the Company, out-of-pocket expenses of the Company and the
underwriters, state Blue Sky fees and expenses, and the expense of any
special audits incident to or required by any such registration, but
7
<PAGE>
excluding underwriting discount and selling commissions and fees of counsel
for the Holder. Such underwriting discounts and selling commissions shall be
borne pro rata by all selling stockholders in accordance with the number of
their shares included in such registration.
(f) Indemnification.
(i) In the event of any registration of any of the
Registrable Shares under the Securities Act pursuant to this Section 11, then
to the extent permitted by law the Company shall indemnify and hold harmless
the Holder, each underwriter of such Registrable Shares and each other
persons, if any, who controls the Holder or such underwriter within the
meaning of the Securities Act or the Exchange Act against any losses, claims,
damages or liabilities, joint or several, to which the Holder or such
underwriter or controlling person may become subject under the Securities
Act, the Exchange Act, state securities laws or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of
any material fact contained in any Registration Statement under which such
Registrable Shares were registered under the Securities Act, or any
preliminary prospectus or final prospectus contained in the Registration
Statement, or any amendment or supplement to such Registration Statement, or
arise out of or are based upon the omission or alleged omission to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading; and the Company shall reimburse the
Holder, such underwriter and each such controlling person for any legal or
any other expenses reasonably incurred by the Holder, or such underwriter or
controlling person in connection with investigating or defending any such
loss, claim, damage, liability or action; PROVIDED, HOWEVER, that the Company
shall not be liable in any such cases to the extent that such loss, claim,
damage or liability arises out of or is based upon any untrue statement or
omission made in such Registration Statement, preliminary prospectus or
prospectus, or any such amendment or supplement, in reliance upon and in
conformity with information furnished in writing to the Company by the Holder
or such underwriter or controlling person specifically for use in the
preparation thereof.
(ii) In the event of any registration of any of the
Registrable Shares under the Securities Act pursuant to this Section 11, then
to the extent permitted by law, the Holder shall indemnify and hold harmless
the Company, each of its directors and officers and each underwriter (if any)
and each person, if any, who controls the Company or any such underwriter
within the meaning of the Securities Act or the Exchange Act, against any
losses, claims, damages or liabilities joint or several, to which the
Company, such directors and officers, underwriter or controlling person may
become subject under the Securities Act, Exchange Act, state securities laws
or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect hereof) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement under which Registrable Shares were registered under
the Securities Act, any preliminary prospectus or final prospectus contained
in the Registration Statement, or any amendment or supplement to the
Registration Statement, or arise out of or are based upon any omission or
alleged omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, if the statement or
omission was made in reliance upon and in conformity with information
furnished in writing to the Company by the Holder specifically for use in
connection with the preparation of such Registration Statement, prospectus,
amendment or supplement; PROVIDED, HOWEVER, that the
8
<PAGE>
obligations of the Holder hereunder shall be limited to an amount equal to
the proceeds to the Holder from Registrable Shares sold as contemplated
herein.
(iii) Indemnification of an underwriter pursuant to this
Section 11(f) shall not be interpreted as providing relief of such
underwriter from any or all of its due diligence obligations. Further, an
underwriter shall not be entitled to indemnification pursuant to this section
in the event that it fails to deliver to the Holder or to the person
asserting damages with respect to which indemnification is sought any
preliminary or final or revised prospectus, as required by the Rules and
Regulations of the Commission. Finally, no indemnification shall be provided
pursuant to this Section in the event that any error in a preliminary
prospectus of the Company is subsequently corrected in the final prospectus
of the Company for a particular offering, and such final prospectus is
delivered to the person seeking indemnity, in the case of a claim made under
Section 11(f)(i), or to all purchasers in the offering by the Company in the
case of a claim under Section 11(f)(ii) prior to the date of purchase of the
securities.
Each party entitled to indemnification under this Subsection 11(f) (an
"INDEMNIFIED PARTY") shall give notice to the party required to provide
indemnification (the "INDEMNIFYING PARTY") promptly after such Indemnified
Party has actual knowledge of any claim as to which indemnity may be sought,
and shall permit the Indemnifying Party to assume the defense of any such
claim or any litigation resulting therefrom, PROVIDED that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or
litigation, shall be approved by the Indemnified Party (whose approval shall
not be unreasonably withheld or delayed); and, PROVIDED, FURTHER, that the
failure of any Indemnified Party to give notice as provided herein shall not
relieve the Indemnifying Party of its obligations under this Section 11(f).
The Indemnified Party may participate in such defense at such Indemnified
Party's expense, PROVIDED, HOWEVER, that the Indemnifying Party shall pay
such expense if representation of such Indemnified Party by the counsel
retained by the Indemnifying Party would be inappropriate due to actual or
potential differing interest between the Indemnified Party and any other
party represented by such counsel in such proceeding. No Indemnifying Party,
in the defense of any such claim or litigation shall, except with the consent
of each Indemnified Party, consent to entry of any judgment or enter into any
settlement that does not include as an unconditional term thereof the giving
by the claimant or plaintiff to such Indemnified Party of a release from all
liability in respect of such claim or litigation, and no Indemnified Party
shall consent to entry of any judgment or settle such claim or litigation
without the prior written consent of the Indemnifying Party.
(g) Stand-Off Agreement. The Holder, if requested by the Company
and an underwriter of Common Stock or other securities of the Company, shall
agree not to sell or otherwise transfer or dispose of any Registrable Shares
or other securities of the Company held by the Holder for a specified period
of time (not to exceed 90 days) following the effective date of a
Registration Statement other than sales by the Holder pursuant to such
Registration Statement; PROVIDED THAT such agreement shall only apply to the
first such Registration Statement covering Common Stock of the Company to be
sold on its behalf to the public in an underwritten offering.
Such agreement shall be in writing in a form satisfactory to the Company and
such underwriter.
9
<PAGE>
(h) Information by Holder. If any Registrable Shares are to be
included in any registration, the Holder shall furnish to the Company such
information regarding the Holder and the distribution proposed by the Holder
as the Company may request and as shall be required, in the reasonable
opinion of counsel for the Company, in connection with any registration,
qualification or compliance referred to in this Section 11.
(i) Rule 144 Requirements. With a view to making available to the
Holders the benefits of Rule 144 promulgated under the Securities Act and any
other rule or regulation of the Commission that may at any time permit the
Holder to sell securities of the Company to the public without registration,
the Company agrees to use its best efforts to:
(i) make and keep public information available, as those
terms are understood and defined in Rule 144 under the Securities Act (at any
time after it has become subject to the reporting requirements of the
Exchange Act);
(ii) file with the Commission in a timely manner all
reports and other documents required of the Company under the Securities Act
and the Exchange Act (at any time after it has become subject to such
reporting requirements); and
(iii) furnish to the Holder of Registrable Shares upon
request a written statement by the Company as to its compliance with the
reporting requirements of said Rule 144 (at any time after 90 days after the
closing of the first sale of securities by the Company pursuant to a
Registration Statement), and of the Securities Act and the Exchange Act (at
any time after it has become subject to such reporting requirements), a copy
of the most recent annual or quarterly report of the Company, and such other
reports and documents of the Company as the Holder may reasonably request to
avail itself of any similar rule or regulation of the Commission allowing it
to sell any such securities without registration.
(j) TERMINATION. The Company's obligations under this Section 11
shall survive the exercise or conversion of this Warrant, but shall terminate
on the earlier of (i) two (2) year after the Company's Initial Public
Offering or (ii) such time as the Holder shall be entitled to sell all of the
Registrable Shares which the Holder then holds within a three (3) month
period pursuant to Rule 144 under the Act.
12. MISCELLANEOUS.
(a) NO RIGHTS AS SHAREHOLDER. The Holder of this Warrant shall
not be entitled to vote or receive dividends or be deemed the holder of
Common Stock or any other securities of the Company which may at any time be
issuable on the exercise or conversion hereof for any purpose, nor shall
anything contained herein be construed to confer upon the Holder of this
Warrant, as such, any of the rights of a shareholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action (whether upon any recapitalization, issuance of stock,
reclassification of stock, change of par value or change of stock to no par
value, consolidation, merger, conveyance or otherwise) or to receive notice
of meetings, or to receive dividends or subscription rights or otherwise
until the Warrant shall have been exercised or
10
<PAGE>
converted and the shares purchasable upon the exercise or conversion hereof
shall have become deliverable, as provided herein.
(b) REPLACEMENT. On receipt of evidence reasonably satisfactory
to the Company of the loss, theft, destruction or mutilation of this Warrant
and, in the case of loss, theft or destruction, on delivery of an indemnity
agreement, or bond reasonably satisfactory in form and amount to the Company
or, in the case of mutilation, on surrender and cancellation of this Warrant,
the Company, at its expense, will execute and deliver, in lieu of this
Warrant, a new Warrant of like tenor.
(c) NOTICE OF CAPITAL CHANGES. In case:
(i) the Company shall declare any dividend or
distribution payable to the holders of its Common Stock;
(ii) there shall be any capital reorganization or
reclassification of the capital stock of the Company, or consolidation or
merger of the Company with, or sale of all or substantially all of its assets
to, another corporation or business organization; or
(iii) there shall be a voluntary or involuntary
dissolution, liquidation or winding up of the Company;
then, in any one or more of said cases, the Company shall give the
holder of this Warrant written notice, in the manner set forth in
subparagraph (d) below, of the date on which a record shall be taken for such
dividend, or distribution or for determining shareholders entitled to vote
upon such reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding up and of the date when any such
transaction shall take place, as the case may be. Such written notice shall
be given at least 30 days prior to the transaction in question and not less
than 20 days prior to the record date in respect thereof.
(d) NOTICE. Any notice given to either party under this Warrant
shall be in writing, and any notice hereunder shall be deemed to have been
given upon the earlier of delivery thereof by hand delivery, by courier, or
by standard form of telecommunication or three (3) business days after the
mailing thereof if sent registered mail with postage prepaid, addressed to
the Company at its principal executive offices and to the holder at its
address set forth in the Company's books and records or at such other address
as the holder may have provided to the Company in writing.
(e) NO IMPAIRMENT. The Company will not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or
any other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms to be observed or performed hereunder by the
Company, but will at all times in good faith assist in the carrying out of
all the provisions in the Warrant.
(f) GOVERNING LAW. This Warrant shall be governed by and
construed under the laws of the State of Delaware.
11
<PAGE>
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]
12
<PAGE>
IN WITNESS WHEREOF, this Warrant is executed as of this 23rd day of
April, 1998.
MOLDFLOW CORPORATION
By: /s/ Marc Dulude
----------------------------
Name: Marc Dulude
Title: President
13
<PAGE>
EXHIBIT 1
NOTICE OF EXERCISE
TO: MOLDFLOW CORPORATION
1. Check Box that Applies:
/ / The undersigned hereby elects to purchase _______ shares
of Common Stock of MOLDFLOW CORPORATION pursuant to the terms of the attached
Warrant, and tenders herewith payment of the purchase price of such shares in
full.
/ / The undersigned hereby elects to convert the attached
warrant into _________ shares of Common Stock of MOLDFLOW CORPORATION
pursuant to the terms of the attached Warrant.
2. Please issue a certificate or certificates representing said
shares of Common Stock in the name of the undersigned or in such other name
as is specified below:
__________________________________________________________________
(Name)
__________________________________________________________________
__________________________________________________________________
(Address)
3. The undersigned represents that the aforesaid shares of Common
Stock are being acquired for the account of the undersigned for investment
and not with a view to, or for resale in connection with, the distribution
thereof and that the undersigned has no present intention of distributing or
reselling such shares.
______________________________________
Signature
14
<PAGE>
MOLDFLOW CORPORATION
STOCK RESTRICTION AGREEMENT
This Stock Restriction Agreement (the "Agreement") is made as of this
first day of July, 1998, between Moldflow Corporation, a Delaware corporation
(the "Company") and Marc Dulude (the "Stockholder").
ARTICLE I. RECITALS
1.1 The Stockholder is the owner of options (the "Stockholder Options") to
purchase 952,564 shares of the Company's Common Stock, $0.01 par value (the
"Common Stock").
1.2 The Company has agreed to exchange the Stockholder Options for 952,564
shares of the Company's Common Stock at a price of $ .15 per share (the "Share
Price"), for an aggregate purchase price of $142,884.60 (the "Purchase Price")
and upon the terms set forth herein (the "Restricted Shares"). In exchange for
each Stockholder Option, and upon payment of the Purchase Price, the Stockholder
will receive the Restricted Shares.
NOW, THEREFORE, for valuable consideration, receipt of which is hereby
acknowledged, the parties hereto agree as follows:
ARTICLE 2 PURCHASE AND SALE OF THE RESTRICTED SHARES
Concurrently with the execution of this Agreement, the Stockholder shall
pay to the Company the Purchase Price by check, wire transfer or delivery of a
promissory note as set forth in this Article 2, and the Company shall deliver to
the Stockholder a certificate representing the Restricted Shares. At the
Stockholder's election, the Stockholder may pay the Purchase Price by delivery
of a Promissory Note executed by the Stockholder in the original principal
amount of the Purchase Price and substantially in the form attached hereto as
Exhibit A.
ARTICLE 3 REPURCHASE OF STOCKHOLDER SHARES
The following repurchase provisions hereby are imposed upon the Restricted
Shares and any shares issued in respect thereto, as stock dividends, stock
splits or combinations, or similar recapitalizations:
<PAGE>
3.1 Repurchase of Unvested Restricted Shares upon Termination of
Employment.
3.1.1 If the Stockholder for any reason or no reason, with or without
cause, ceases to be employed by the Company, prior to the date specified in the
table set forth below, then the Company shall have the right and option (the
"Purchase Option"), but not the obligation, to purchase, or to designate one or
more purchasers for, all or a part of the percentage of the total number of the
Restricted Shares as is set forth in the columns of the table set forth below
for the period in which the Stockholder ceases to be so employed (the "Unvested
Restricted Shares"), at a price equal to $.15 per share (the "Share Price"),
such price to be appropriately adjusted for stock dividends, stock splits or
combinations, or similar recapitalizations. For purposes of this Agreement,
employment with the Company shall include employment with a parent, subsidiary
or sibling of the Company.
================================================================================
On or 6 May 6 August 6 November 6 February
Before
- --------------------------------------------------------------------------------
1998 47.1% 42.9% 38.7%
1999 34.6% 30.1% 26.2% 22.0%
2000 17.8% 13.6% 9.5% 5.3%
2001 1.1% 0.9% 0.7% 0.4%
2002 0.2% 0.0%
================================================================================
3.1.2 Notwithstanding the foregoing, the Company may no longer exercise
this Purchase Option with respect to any of the Restricted Shares following a
change of control of the Company. A change of control shall occur upon the
occurrence of the following events:
3.1.2.a -- any person or entity, other than an existing shareholder
of the Company, becomes the beneficial owner of 50% of the outstanding
voting securities of the Company;
3.1.2.b -- a change in the majority of the Company's directors,
other than a voluntary change approved by the Company's current
stockholders;
3.1.2.c -- the approval by the stockholders of a merger or
consolidation of the Company in which the Company's stockholders
immediately prior to the merger or consolidation do not hold a majority of
the outstanding voting securities of the resulting combined entity.
3.1.3 In the event of death or disability of Mr. Dulude or Mr. Dulude's
employment is terminated without "cause" or after a "change in status" (as such
terms are defined in Mr. Dulude's employment agreement), the number of
Restricted Shares for which the Company may exercise its Purchase Option shall
be that percentage shown in the table above as though Mr. Dulude's employment
had continued for one additional year from the date of such event.
<PAGE>
3.2 Manner of Exercise of Purchase Option and Closing.
3.2.1 The Company may exercise the Purchase Option by delivering or
mailing to the Stockholder (or the Stockholder's estate) written notice of
exercise within thirty (30) days after the termination of the employment of the
Stockholder with the Company. Such notice shall specify the number of Unvested
Restricted Shares to be purchased. If and to the extent the Purchase Option is
not so exercised within such 30-day period, the Purchase Option shall
automatically expire and terminate effective upon the expiration of such 30-day
period.
3.2.2 Within thirty (30) days after receipt of the Company's notice of the
exercise of the Purchase Option, the Stockholder (or the Stockholder's estate)
shall tender to the Company at its principal offices the certificate or
certificates representing the Unvested Restricted Shares which the Company has
elected to purchase, duly endorsed in blank by the Stockholder or with duly
endorsed stock powers attached thereto, all in form suitable for the transfer of
such Unvested Restricted Shares to the Company. Upon its receipt of such
Unvested Restricted Shares, the Company shall deliver or mail to the Stockholder
a certified check or bank check in the amount of the aggregate Share Price
therefor.
3.2.3 After the time at which any Unvested Restricted Shares are required
to be delivered to the Company for transfer to the Company pursuant to
subsection 3.2.2, the Company shall not pay any dividend to the Stockholder on
account of such Unvested Restricted Shares or permit the Stockholder to exercise
any of the privileges or rights of a stockholder with respect to the Unvested
Restricted Shares, but shall, in so far as permitted by law, treat the Company
as the owner of such Unvested Restricted Shares.
3.2.4 The Share Price may be payable, at the option of the Company, in
cancellation of all or a portion of any outstanding indebtedness of the
Stockholder to the Company or in cash (by check) or both.
3.2.5 The Company shall not purchase any fraction of an Unvested
Restricted Share upon exercise of the Purchase Option, and any fraction of an
Unvested Restricted Share resulting from a computation made pursuant to Section
3.1 of this Agreement shall be rounded to the nearest whole Restricted Share
(with any one-half or greater Restricted Share being rounded upward).
ARTICLE 4 RESTRICTIONS ON TRANSFER
4.1 Restricted Transfer. The Stockholder agrees that he shall not sell,
transfer, pledge, hypothecate or otherwise dispose of, by operation of law or
otherwise (collectively, "transfer"), any of the Unvested Restricted Shares
except for transfers pursuant to this Agreement.
4.2 Permitted Transfers. Notwithstanding Section 4.1, the Stockholder may
transfer Unvested Restricted Shares (a "Permitted Transfer") to or for the
benefit of any spouse, child or grandchild, or to a trust for their benefit (the
"Permitted Transferees"), provided that such Unvested Restricted Shares shall
remain subject to this Agreement and such Permitted Transferee shall, as a
condition to such transfer, deliver to the Company a written instrument
confirming that
<PAGE>
such transferee shall be bound by all of the terms and conditions of this
Agreement.
4.3 Effect of Prohibited Transfer. The Company shall not be required (a)
to transfer on its books any of the Restricted Shares which shall have been sold
or transferred in violation of any of the provisions set forth in this
Agreement, or (b) to treat as owner of such Restricted Shares or to pay
dividends to any transferee to whom any such Restricted Shares shall have been
so sold or transferred.
4.4 Restrictive Legend. All certificates representing Restricted Shares
shall have affixed thereto a legend in substantially the following form, in
addition to any other legends that may be required under federal or state
securities laws:
"The shares of stock represented by this certificate are subject to
restrictions on transfer and an option to purchase set forth in a
certain Stock Restriction Agreement among the corporation and the
registered owner of this certificate (or his predecessor in
interest), and such Agreement is available for inspection without
charge at the office of the Treasurer of the corporation."
ARTICLE 5 MISCELLANEOUS
5.1 Adjustments for Stock Splits, Stock Dividends, etc. If from time to
time during the term of this Agreement there is any stock split-up, stock
dividend, stock distribution or other reclassification of the Common Stock of
the Company, any and all new, substituted or additional securities to which the
Stockholder is entitled by reason of his ownership of the Restricted Shares
shall be immediately subject to the Purchase Option, the restrictions on
transfer and other provisions of this Agreement in the same manner and to the
same extent as the Restricted Shares, and the Share Price shall be appropriately
adjusted.
5.2 Severability. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, and each other provision of this Agreement shall be
severable and enforceable to the extent permitted by law.
5.3 Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the Company, its administrators, legal representatives, successors
and assigns.
5.4 No Rights To Employment. Nothing contained in this Agreement shall be
construed as giving the Stockholder any right to be retained, in any position,
as an employee of the Company.
5.5 Notice. All notices required or permitted hereunder shall be in
writing and deemed effectively given upon personal delivery or upon deposit in
the United States Post Office, by registered or certified mail, postage prepaid,
addressed to the other parties hereto at the address shown beneath the
Stockholder's and the Company's respective signature to this Agreement, or at
such other address or addresses as any party shall designate to the others in
accordance with this Section 5.5.
<PAGE>
5.6 Plan Incorporated by Reference; Entire Agreement. The Restricted
Shares are being issued pursuant to the terms of the Company's 1997 Equity
Incentive Plan (the "Plan"). Capitalized terms used and not otherwise defined in
this certificate have the meanings given to them in the Plan. The Committee
administers the Plan and its determinations regarding the operation of the Plan
are final and binding. Copies of the Plan may be obtained upon written request
without charge from the Secretary of the Company. Except as set forth in the
Plan, this Agreement constitutes the entire agreement between the parties, and
supersedes all prior agreements and understandings relating to the subject
matter of this Agreement.
5.7 Amendment. This Agreement may be amended or modified only by a written
instrument executed by the Company and the Stockholder.
5.8 Governing Law. This Agreement shall be construed, interpreted and
enforced in accordance with the laws of the Commonwealth of Massachusetts.
[Remainder of Page Left Blank]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
MOLDFLOW CORPORATION
By: /s/ Suzanne Rogers
---------------------------------
Suzanne Rogers, Company Secretary
/s/ Marc Dulude
-------------------------------------
{Name of Stockholder} Marc Dulude
Address: 4 Rowan Field
----------------------------
Wayland, MA 01778
-------------------------------------
<PAGE>
AMENDED AND RESTATED PROMISSORY NOTE
------------------------------------
$142,884.60 September 9, 1999
Lexington, Massachusetts
FOR VALUE RECEIVED, Marc Dulude (the "BORROWER"), hereby
promises to pay to the order of MOLDFLOW CORPORATION (the "COMPANY"), the
principal amount of $142,884.60, together with simple interest from the date
hereof on the unpaid principal balance hereof, which shall accrue at a rate
per annum equal to five and 77/100 percent (5.77%). Accrued interest on the
principal amount hereunder that may be outstanding from time to time shall be
due and payable, at the Borrower's election, (i) quarterly in arrears
beginning June 30, 1998 and on the last business day of each successive
quarter thereafter, or (ii) in full on June 30, 2003 (the "Maturity Date").
All unpaid principal and interest hereunder shall be due and payable on June
30, 2003. Interest shall be computed on the basis of a 360-day year and a
30-day month. The unpaid principal balance and all accrued interest on this
Promissory Note at any time shall be determined from the records of the
Company, which shall constitute presumptive evidence of such amounts.
This Promissory Note amends and restates the terms and
conditions of the obligations of the Borrower under the Promissory Note dated
as of July 1, 1998 (the "Original Note") from the Borrower to the Company.
Nothing contained in this Promissory Note shall be deemed to create or
represent the issuance of new indebtedness or the exchange by the Borrower of
the Original Note for a new Promissory Note. The indebtedness set forth in
the Original Note continues in full force and effect in this Promissory Note.
This Promissory Note may be voluntarily prepaid in whole or in part at any
time without premium or penalty, but together with interest on the principal
amount so prepaid accrued to the date of prepayment.
Payments of both principal and interest hereon shall be
made in immediately available funds at the office of the Company, at 91
Hartwell Avenue, Lexington, Massachusetts, or at such other place as the
holder hereof shall designate to the Borrower in writing, in lawful money of
the United States of America.
Except to the extent otherwise required by the context of
this Promissory Note, the word "Company" wherever used herein shall mean and
include the holder of this Promissory Note originally issued to Moldflow
Corporation.
This Promissory Note shall be deemed to be a contract under
the laws of the Commonwealth of Massachusetts, and for all purposes shall be
governed by the construed in accordance with the laws of said Commonwealth.
This Promissory Note shall be non-recourse to the Borrower,
except as to 40% of the Borrower's total obligations, including principal and
interest, outstanding from time to time under this Promissory Note, for which
the Company shall have full recourse to the Borrower.
<PAGE>
Further, the 40% obligation subject to such full recourse shall by specific
attribution include first any unpaid interest obligation of the Borrower, to
the extent any such interest does not exceed 40% of the total obligation.
The Borrower waives presentment, demand, notice, protest
and all other demands and notices in connection with the delivery,
acceptance, performance, default and enforcement of this Promissory Note.
By: /s/ Marc Dulude
---------------------------
Marc Dulude
Address:_____________________
<PAGE>
MOLDFLOW CORPORATION
STOCK RESTRICTION AGREEMENT
This Stock Restriction Agreement (the "Agreement") is made as of this
first day of July, 1998, between Moldflow Corporation, a Delaware corporation
(the "Company") and Suzanne Rogers (the "Stockholder").
ARTICLE I. RECITALS
1.1 The Stockholder is the owner of options (the "Stockholder Options") to
purchase 120,532 shares of the Company's Common Stock, $0.01 par value (the
"Common Stock").
1.2 The Company has agreed to exchange the Stockholder Options for 120,532
shares of the Company's Common Stock at a price of $ .15 per share (the "Share
Price"), for an aggregate purchase price of $18,079.80 (the "Purchase Price")
and upon the terms set forth herein (the "Restricted Shares"). In exchange for
each Stockholder Option, and upon payment of the Purchase Price, the Stockholder
will receive the Restricted Shares.
NOW, THEREFORE, for valuable consideration, receipt of which is hereby
acknowledged, the parties hereto agree as follows:
ARTICLE 2 PURCHASE AND SALE OF THE RESTRICTED SHARES
Concurrently with the execution of this Agreement, the Stockholder shall
pay to the Company the Purchase Price by check, wire transfer or delivery of a
promissory note as set forth in this Article 2, and the Company shall deliver to
the Stockholder a certificate representing the Restricted Shares. At the
Stockholder's election, the Stockholder may pay the Purchase Price by delivery
of a Promissory Note executed by the Stockholder in the original principal
amount of the Purchase Price and substantially in the form attached hereto as
Exhibit A.
ARTICLE 3 REPURCHASE OF STOCKHOLDER SHARES
The following repurchase provisions hereby are imposed upon the Restricted
Shares and any shares issued in respect thereto, as stock dividends, stock
splits or combinations, or similar recapitalizations:
<PAGE>
3.1 Repurchase of Unvested Restricted Shares upon Termination of
Employment.
3.1.1 If the Stockholder for any reason or no reason, with or without
cause, ceases to be employed by the Company, prior to the date specified in the
table set forth below, then the Company shall have the right and option (the
"Purchase Option"), but not the obligation, to purchase, or to designate one or
more purchasers for, all or a part of the percentage of the total number of the
Restricted Shares as is set forth in the columns of the table set forth below
for the period in which the Stockholder ceases to be so employed (the "Unvested
Restricted Shares"), at a price equal to $.15 per share (the "Share Price"),
such price to be appropriately adjusted for stock dividends, stock splits or
combinations, or similar recapitalizations. For purposes of this Agreement,
employment with the Company shall include employment with a parent, subsidiary
or sibling of the Company.
================================================================================
On or 14 May 14 August 14 November 14 February
Before
- --------------------------------------------------------------------------------
1998 51.9% 47.8% 43.7%
1999 39.6% 35.5% 31.4% 27.3%
2000 23.2% 19.1% 15.0% 11.0%
2001 6.9% 2.8% 2.1% 1.4%
2002 0.7% 0.0%
================================================================================
3.1.2 Notwithstanding the foregoing, the Company may no longer exercise
this Purchase Option with respect to any of the Restricted Shares following a
change of control of the Company. A change of control shall occur upon the
occurrence of the following events:
3.1.2.a -- any person or entity, other than an existing shareholder
of the Company, becomes the beneficial owner of 50% of the outstanding
voting securities of the Company;
3.1.2.b -- a change in the majority of the Company's directors,
other than a voluntary change approved by the Company's current
stockholders;
3.1.2.c -- the approval by the stockholders of a merger or
consolidation of the Company in which the Company's stockholders
immediately prior to the merger or consolidation do not hold a majority of
the outstanding voting securities of the resulting combined entity.
3.2 Manner of Exercise of Purchase Option and Closing.
3.2.1 The Company may exercise the Purchase Option by delivering or
mailing to the Stockholder (or the Stockholder's estate) written notice of
exercise within thirty (30) days after the termination of the employment of the
Stockholder with the Company. Such notice shall specify the number of Unvested
Restricted Shares to be purchased. If and to the extent the Purchase
<PAGE>
Option is not so exercised within such 30-day period, the Purchase Option shall
automatically expire and terminate effective upon the expiration of such 30-day
period.
3.2.2 Within thirty (30) days after receipt of the Company's notice of the
exercise of the Purchase Option, the Stockholder (or the Stockholder's estate)
shall tender to the Company at its principal offices the certificate or
certificates representing the Unvested Restricted Shares which the Company has
elected to purchase, duly endorsed in blank by the Stockholder or with duly
endorsed stock powers attached thereto, all in form suitable for the transfer of
such Unvested Restricted Shares to the Company. Upon its receipt of such
Unvested Restricted Shares, the Company shall deliver or mail to the Stockholder
a certified check or bank check in the amount of the aggregate Share Price
therefor.
3.2.3 After the time at which any Unvested Restricted Shares are required
to be delivered to the Company for transfer to the Company pursuant to
subsection 3.2.2, the Company shall not pay any dividend to the Stockholder on
account of such Unvested Restricted Shares or permit the Stockholder to exercise
any of the privileges or rights of a stockholder with respect to the Unvested
Restricted Shares, but shall, in so far as permitted by law, treat the Company
as the owner of such Unvested Restricted Shares.
3.2.4 The Share Price may be payable, at the option of the Company, in
cancellation of all or a portion of any outstanding indebtedness of the
Stockholder to the Company or in cash (by check) or both.
3.2.5 The Company shall not purchase any fraction of an Unvested
Restricted Share upon exercise of the Purchase Option, and any fraction of an
Unvested Restricted Share resulting from a computation made pursuant to Section
3.1 of this Agreement shall be rounded to the nearest whole Restricted Share
(with any one-half or greater Restricted Share being rounded upward).
ARTICLE 4 RESTRICTIONS ON TRANSFER
4.1 Restricted Transfer. The Stockholder agrees that he shall not sell,
transfer, pledge, hypothecate or otherwise dispose of, by operation of law or
otherwise (collectively, "transfer"), any of the Unvested Restricted Shares
except for transfers pursuant to this Agreement.
4.2 Permitted Transfers. Notwithstanding Section 4.1, the Stockholder may
transfer Unvested Restricted Shares (a "Permitted Transfer") to or for the
benefit of any spouse, child or grandchild, or to a trust for their benefit (the
"Permitted Transferees"), provided that such Unvested Restricted Shares shall
remain subject to this Agreement and such Permitted Transferee shall, as a
condition to such transfer, deliver to the Company a written instrument
confirming that such transferee shall be bound by all of the terms and
conditions of this Agreement.
4.3 Effect of Prohibited Transfer. The Company shall not be required (a)
to transfer on its books any of the Restricted Shares which shall have been sold
or transferred in violation of any of the provisions set forth in this
Agreement, or (b) to treat as owner of such Restricted Shares or to pay
dividends to any transferee to whom any such Restricted Shares shall
<PAGE>
have been so sold or transferred.
4.4 Restrictive Legend. All certificates representing Restricted Shares
shall have affixed thereto a legend in substantially the following form, in
addition to any other legends that may be required under federal or state
securities laws:
"The shares of stock represented by this certificate are subject to
restrictions on transfer and an option to purchase set forth in a
certain Stock Restriction Agreement among the corporation and the
registered owner of this certificate (or his predecessor in
interest), and such Agreement is available for inspection without
charge at the office of the Treasurer of the corporation."
ARTICLE 5 MISCELLANEOUS
5.1 Adjustments for Stock Splits, Stock Dividends, etc. If from time to
time during the term of this Agreement there is any stock split-up, stock
dividend, stock distribution or other reclassification of the Common Stock of
the Company, any and all new, substituted or additional securities to which the
Stockholder is entitled by reason of his ownership of the Restricted Shares
shall be immediately subject to the Purchase Option, the restrictions on
transfer and other provisions of this Agreement in the same manner and to the
same extent as the Restricted Shares, and the Share Price shall be appropriately
adjusted.
5.2 Severability. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, and each other provision of this Agreement shall be
severable and enforceable to the extent permitted by law.
5.3 Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the Company, its administrators, legal representatives, successors
and assigns.
5.4 No Rights To Employment. Nothing contained in this Agreement shall be
construed as giving the Stockholder any right to be retained, in any position,
as an employee of the Company.
5.5 Notice. All notices required or permitted hereunder shall be in
writing and deemed effectively given upon personal delivery or upon deposit in
the United States Post Office, by registered or certified mail, postage prepaid,
addressed to the other parties hereto at the address shown beneath the
Stockholder's and the Company's respective signature to this Agreement, or at
such other address or addresses as any party shall designate to the others in
accordance with this Section 5.5.
5.6 Plan Incorporated by Reference; Entire Agreement. The Restricted
Shares are being issued pursuant to the terms of the Company's 1997 Equity
Incentive Plan (the "Plan"). Capitalized terms used and not otherwise defined in
this certificate have the meanings given to them in the Plan. The Committee
administers the Plan and its determinations regarding the operation of the Plan
are final and binding. Copies of the Plan may be obtained upon written
<PAGE>
request without charge from the Secretary of the Company. Except as set forth in
the Plan, this Agreement constitutes the entire agreement between the parties,
and supersedes all prior agreements and understandings relating to the subject
matter of this Agreement.
5.7 Amendment. This Agreement may be amended or modified only by a written
instrument executed by the Company and the Stockholder.
5.8 Governing Law. This Agreement shall be construed, interpreted and
enforced in accordance with the laws of the Commonwealth of Massachusetts.
[Remainder of Page Left Blank]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
MOLDFLOW CORPORATION
By: /s/ Marc Dulude
-------------------------------------
Marc Dulude, President
/s/ Suzanne E. Rogers
-----------------------------------------
{Name of Stockholder} Suzanne E. Rogers
Address: 19 Rockwood Dr
--------------------------------
Ashland, MA 01721
-----------------------------------------
<PAGE>
AMENDED AND RESTATED PROMISSORY NOTE
------------------------------------
$18,079.80 September 9, 1999
Lexington, Massachusetts
FOR VALUE RECEIVED, Suzanne Rogers (the "BORROWER"), hereby
promises to pay to the order of MOLDFLOW CORPORATION (the "COMPANY"), the
principal amount of $18,079.80, together with simple interest from the date
hereof on the unpaid principal balance hereof, which shall accrue at a rate
per annum equal to five and 77/100 percent (5.77%). Accrued interest on the
principal amount hereunder that may be outstanding from time to time shall be
due and payable, at the Borrower's election, (i) quarterly in arrears
beginning June 30, 1998 and on the last business day of each successive
quarter thereafter, or (ii) in full on June 30, 2003 (the "Maturity Date").
All unpaid principal and interest hereunder shall be due and payable on June
30, 2003. Interest shall be computed on the basis of a 360-day year and a
30-day month. The unpaid principal balance and all accrued interest on this
Promissory Note at any time shall be determined from the records of the
Company, which shall constitute presumptive evidence of such amounts.
This Promissory Note amends and restates the terms and
conditions of the obligations of the Borrower under the Promissory Note dated
as of July 1, 1998 (the "Original Note") from the Borrower to the Company.
Nothing contained in this Promissory Note shall be deemed to create or
represent the issuance of new indebtedness or the exchange by the Borrower of
the Original Note for a new Promissory Note. The indebtedness set forth in
the Original Note continues in full force and effect in this Promissory Note.
This Promissory Note may be voluntarily prepaid in whole or in part at any
time without premium or penalty, but together with interest on the principal
amount so prepaid accrued to the date of prepayment.
Payments of both principal and interest hereon shall be
made in immediately available funds at the office of the Company, at 91
Hartwell Avenue, Lexington, Massachusetts, or at such other place as the
holder hereof shall designate to the Borrower in writing, in lawful money of
the United States of America.
Except to the extent otherwise required by the context of
this Promissory Note, the word "Company" wherever used herein shall mean and
include the holder of this Promissory Note originally issued to Moldflow
Corporation.
This Promissory Note shall be deemed to be a contract under
the laws of the Commonwealth of Massachusetts, and for all purposes shall be
governed by the construed in accordance with the laws of said Commonwealth.
This Promissory Note shall be non-recourse to the Borrower,
except as to 40% of the Borrower's total obligations, including principal and
interest, outstanding from time to time under this Promissory Note, for which
the Company shall have full recourse to the Borrower.
<PAGE>
Further, the 40% obligation subject to such full recourse shall by specific
attribution include first any unpaid interest obligation of the Borrower, to
the extent any such interest does not exceed 40% of the total obligation.
The Borrower waives presentment, demand, notice, protest
and all other demands and notices in connection with the delivery,
acceptance, performance, default and enforcement of this Promissory Note.
By: /s/ Suzanne Rogers
--------------------------------
Suzanne Rogers
Address: 19 Rockwood Dr.
Ashland, MA 01721
<PAGE>
MOLDFLOW CORPORATION
STOCK RESTRICTION AGREEMENT
This Stock Restriction Agreement (the "Agreement") is made as of this
first day of July, 1998, between Moldflow Corporation, a Delaware corporation
(the "Company") and Ken Welch (the "Stockholder").
ARTICLE I. RECITALS
1.1 The Stockholder is the owner of options (the "Stockholder Options") to
purchase 116,068 shares of the Company's Common Stock, $0.01 par value (the
"Common Stock").
1.2 The Company has agreed to exchange the Stockholder Options for 116,068
shares of the Company's Common Stock at a price of $ .15 per share (the "Share
Price"), for an aggregate purchase price of $17,410.20 (the "Purchase Price")
and upon the terms set forth herein (the "Restricted Shares"). In exchange for
each Stockholder Option, and upon payment of the Purchase Price, the Stockholder
will receive the Restricted Shares.
NOW, THEREFORE, for valuable consideration, receipt of which is hereby
acknowledged, the parties hereto agree as follows:
ARTICLE 2 PURCHASE AND SALE OF THE RESTRICTED SHARES
Concurrently with the execution of this Agreement, the Stockholder shall
pay to the Company the Purchase Price by check, wire transfer or delivery of a
promissory note as set forth in this Article 2, and the Company shall deliver to
the Stockholder a certificate representing the Restricted Shares. At the
Stockholder's election, the Stockholder may pay the Purchase Price by delivery
of a Promissory Note executed by the Stockholder in the original principal
amount of the Purchase Price and substantially in the form attached hereto as
Exhibit A.
ARTICLE 3 REPURCHASE OF STOCKHOLDER SHARES
The following repurchase provisions hereby are imposed upon the Restricted
Shares and any shares issued in respect thereto, as stock dividends, stock
splits or combinations, or similar recapitalizations:
<PAGE>
3.1 Repurchase of Unvested Restricted Shares upon Termination of
Employment.
3.1.1 If the Stockholder for any reason or no reason, with or without
cause, ceases to be employed by the Company, prior to the date specified in the
table set forth below, then the Company shall have the right and option (the
"Purchase Option"), but not the obligation, to purchase, or to designate one or
more purchasers for, all or a part of the percentage of the total number of the
Restricted Shares as is set forth in the columns of the table set forth below
for the period in which the Stockholder ceases to be so employed (the "Unvested
Restricted Shares"), at a price equal to $.15 per share (the "Share Price"),
such price to be appropriately adjusted for stock dividends, stock splits or
combinations, or similar recapitalizations. For purposes of this Agreement,
employment with the Company shall include employment with a parent, subsidiary
or sibling of the Company.
================================================================================
On or 14 May 14 August 14 November 14 February
Before
- --------------------------------------------------------------------------------
1998 57.4% 53.1% 48.9%
1999 44.6% 40.4% 36.1% 31.9%
2000 27.6% 23.4% 19.2% 14.9%
2001 10.7% 6.4% 2.2% 1.4%
2002 0.7% 0.0%
================================================================================
3.1.2 Notwithstanding the foregoing, the Company may no longer exercise
this Purchase Option with respect to any of the Restricted Shares following a
change of control of the Company. A change of control shall occur upon the
occurrence of the following events:
3.1.2.a -- any person or entity, other than an existing shareholder
of the Company, becomes the beneficial owner of 50% of the outstanding
voting securities of the Company;
3.1.2.b -- a change in the majority of the Company's directors,
other than a voluntary change approved by the Company's current
stockholders;
3.1.2.c -- the approval by the stockholders of a merger or
consolidation of the Company in which the Company's stockholders
immediately prior to the merger or consolidation do not hold a majority of
the outstanding voting securities of the resulting combined entity.
3.2 Manner of Exercise of Purchase Option and Closing.
3.2.1 The Company may exercise the Purchase Option by delivering or
mailing to the Stockholder (or the Stockholder's estate) written notice of
exercise within thirty (30) days after the termination of the employment of the
Stockholder with the Company. Such notice shall specify the number of Unvested
Restricted Shares to be purchased. If and to the extent the Purchase
<PAGE>
Option is not so exercised within such 30-day period, the Purchase Option shall
automatically expire and terminate effective upon the expiration of such 30-day
period.
3.2.2 Within thirty (30) days after receipt of the Company's notice of the
exercise of the Purchase Option, the Stockholder (or the Stockholder's estate)
shall tender to the Company at its principal offices the certificate or
certificates representing the Unvested Restricted Shares which the Company has
elected to purchase, duly endorsed in blank by the Stockholder or with duly
endorsed stock powers attached thereto, all in form suitable for the transfer of
such Unvested Restricted Shares to the Company. Upon its receipt of such
Unvested Restricted Shares, the Company shall deliver or mail to the Stockholder
a certified check or bank check in the amount of the aggregate Share Price
therefor.
3.2.3 After the time at which any Unvested Restricted Shares are required
to be delivered to the Company for transfer to the Company pursuant to
subsection 3.2.2, the Company shall not pay any dividend to the Stockholder on
account of such Unvested Restricted Shares or permit the Stockholder to exercise
any of the privileges or rights of a stockholder with respect to the Unvested
Restricted Shares, but shall, in so far as permitted by law, treat the Company
as the owner of such Unvested Restricted Shares.
3.2.4 The Share Price may be payable, at the option of the Company, in
cancellation of all or a portion of any outstanding indebtedness of the
Stockholder to the Company or in cash (by check) or both.
3.2.5 The Company shall not purchase any fraction of an Unvested
Restricted Share upon exercise of the Purchase Option, and any fraction of an
Unvested Restricted Share resulting from a computation made pursuant to Section
3.1 of this Agreement shall be rounded to the nearest whole Restricted Share
(with any one-half or greater Restricted Share being rounded upward).
ARTICLE 4 RESTRICTIONS ON TRANSFER
4.1 Restricted Transfer. The Stockholder agrees that he shall not sell,
transfer, pledge, hypothecate or otherwise dispose of, by operation of law or
otherwise (collectively, "transfer"), any of the Unvested Restricted Shares
except for transfers pursuant to this Agreement.
4.2 Permitted Transfers. Notwithstanding Section 4.1, the Stockholder may
transfer Unvested Restricted Shares (a "Permitted Transfer") to or for the
benefit of any spouse, child or grandchild, or to a trust for their benefit (the
"Permitted Transferees"), provided that such Unvested Restricted Shares shall
remain subject to this Agreement and such Permitted Transferee shall, as a
condition to such transfer, deliver to the Company a written instrument
confirming that such transferee shall be bound by all of the terms and
conditions of this Agreement.
4.3 Effect of Prohibited Transfer. The Company shall not be required (a)
to transfer on its books any of the Restricted Shares which shall have been sold
or transferred in violation of any of the provisions set forth in this
Agreement, or (b) to treat as owner of such Restricted Shares or to pay
dividends to any transferee to whom any such Restricted Shares shall
<PAGE>
have been so sold or transferred.
4.4 Restrictive Legend. All certificates representing Restricted Shares
shall have affixed thereto a legend in substantially the following form, in
addition to any other legends that may be required under federal or state
securities laws:
"The shares of stock represented by this certificate are subject to
restrictions on transfer and an option to purchase set forth in a
certain Stock Restriction Agreement among the corporation and the
registered owner of this certificate (or his predecessor in
interest), and such Agreement is available for inspection without
charge at the office of the Treasurer of the corporation."
ARTICLE 5 MISCELLANEOUS
5.1 Adjustments for Stock Splits, Stock Dividends, etc. If from time to
time during the term of this Agreement there is any stock split-up, stock
dividend, stock distribution or other reclassification of the Common Stock of
the Company, any and all new, substituted or additional securities to which the
Stockholder is entitled by reason of his ownership of the Restricted Shares
shall be immediately subject to the Purchase Option, the restrictions on
transfer and other provisions of this Agreement in the same manner and to the
same extent as the Restricted Shares, and the Share Price shall be appropriately
adjusted.
5.2 Severability. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, and each other provision of this Agreement shall be
severable and enforceable to the extent permitted by law.
5.3 Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the Company, its administrators, legal representatives, successors
and assigns.
5.4 No Rights To Employment. Nothing contained in this Agreement shall be
construed as giving the Stockholder any right to be retained, in any position,
as an employee of the Company.
5.5 Notice. All notices required or permitted hereunder shall be in
writing and deemed effectively given upon personal delivery or upon deposit in
the United States Post Office, by registered or certified mail, postage prepaid,
addressed to the other parties hereto at the address shown beneath the
Stockholder's and the Company's respective signature to this Agreement, or at
such other address or addresses as any party shall designate to the others in
accordance with this Section 5.5.
5.6 Plan Incorporated by Reference; Entire Agreement. The Restricted
Shares are being issued pursuant to the terms of the Company's 1997 Equity
Incentive Plan (the "Plan"). Capitalized terms used and not otherwise defined in
this certificate have the meanings given to them in the Plan. The Committee
administers the Plan and its determinations regarding the operation of the Plan
are final and binding. Copies of the Plan may be obtained upon written
<PAGE>
request without charge from the Secretary of the Company. Except as set forth in
the Plan, this Agreement constitutes the entire agreement between the parties,
and supersedes all prior agreements and understandings relating to the subject
matter of this Agreement.
5.7 Amendment. This Agreement may be amended or modified only by a written
instrument executed by the Company and the Stockholder.
5.8 Governing Law. This Agreement shall be construed, interpreted and
enforced in accordance with the laws of the Commonwealth of Massachusetts.
[Remainder of Page Left Blank]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
MOLDFLOW CORPORATION
By: /s/ Marc Dulude
----------------------
Marc Dulude, President
Ken Welch /s/ Ken Welch
----------------------------
{Name of Stockholder}
Address: 11 Hastings Rd.
-------------------
Weston, MA 02193
-------------------
<PAGE>
AMENDED AND RESTATED PROMISSORY NOTE
$17,410.20 September 9, 1999
Lexington, Massachusetts
FOR VALUE RECEIVED, Kenneth Welch (the "BORROWER"), hereby
promises to pay to the order of MOLDFLOW CORPORATION (the "COMPANY"), the
principal amount of $17,410.20, together with simple interest from the date
hereof on the unpaid principal balance hereof, which shall accrue at a rate
per annum equal to five and 77/100 percent (5.77%). Accrued interest on the
principal amount hereunder that may be outstanding from time to time shall be
due and payable, at the Borrower's election, (i) quarterly in arrears
beginning June 30, 1998 and on the last business day of each successive
quarter thereafter, or (ii) in full on June 30, 2003 (the "Maturity Date").
All unpaid principal and interest hereunder shall be due and payable on June
30, 2003. Interest shall be computed on the basis of a 360-day year and a
30-day month. The unpaid principal balance and all accrued interest on this
Promissory Note at any time shall be determined from the records of the
Company, which shall constitute presumptive evidence of such amounts.
This Promissory Note amends and restates the terms and
conditions of the obligations of the Borrower under the Promissory Note dated
as of July 1, 1998 (the "Original Note") from the Borrower to the Company.
Nothing contained in this Promissory Note shall be deemed to create or
represent the issuance of new indebtedness or the exchange by the Borrower of
the Original Note for a new Promissory Note. The indebtedness set forth in
the Original Note continues in full force and effect in this Promissory Note.
This Promissory Note may be voluntarily prepaid in whole or in part at any
time without premium or penalty, but together with interest on the principal
amount so prepaid accrued to the date of prepayment.
Payments of both principal and interest hereon shall be
made in immediately available funds at the office of the Company, at 91
Hartwell Avenue, Lexington, Massachusetts, or at such other place as the
holder hereof shall designate to the Borrower in writing, in lawful money of
the United States of America.
Except to the extent otherwise required by the context of
this Promissory Note, the word "Company" wherever used herein shall mean and
include the holder of this Promissory Note originally issued to Moldflow
Corporation.
This Promissory Note shall be deemed to be a contract under
the laws of the Commonwealth of Massachusetts, and for all purposes shall be
governed by the construed in accordance with the laws of said Commonwealth.
This Promissory Note shall be non-recourse to the Borrower,
except as to 40% of the Borrower's total obligations, including principal and
interest, outstanding from time to time under this Promissory Note, for which
the Company shall have full recourse to the Borrower.
<PAGE>
Further, the 40% obligation subject to such full recourse shall by specific
attribution include first any unpaid interest obligation of the Borrower, to
the extent any such interest does not exceed 40% of the total obligation.
The Borrower waives presentment, demand, notice, protest
and all other demands and notices in connection with the delivery,
acceptance, performance, default and enforcement of this Promissory Note.
By: /s/ Kenneth Welch
------------------------------
Kenneth Welch
Address: 11 Hastings Road
Weston, MA 02194
<PAGE>
MOLDFLOW CORPORATION
STOCK RESTRICTION AGREEMENT
This Stock Restriction Agreement (the "Agreement") is made as of this
first day of July, 1998, between Moldflow Corporation, a Delaware corporation
(the "Company") and Richard Underwood (the "Stockholder").
ARTICLE I. RECITALS
1.1 The Stockholder is the owner of options (the "Stockholder Options") to
purchase 133,925 shares of the Company's Common Stock, $0.01 par value (the
"Common Stock").
1.2 The Company has agreed to exchange the Stockholder Options for 133,925
shares of the Company's Common Stock at a price of $ .15 per share (the "Share
Price"), for an aggregate purchase price of $20,088.75 (the "Purchase Price")
and upon the terms set forth herein (the "Restricted Shares"). In exchange for
each Stockholder Option, and upon payment of the Purchase Price, the Stockholder
will receive the Restricted Shares.
NOW, THEREFORE, for valuable consideration, receipt of which is hereby
acknowledged, the parties hereto agree as follows:
ARTICLE 2 PURCHASE AND SALE OF THE RESTRICTED SHARES
Concurrently with the execution of this Agreement, the Stockholder shall
pay to the Company the Purchase Price by check, wire transfer or delivery of a
promissory note as set forth in this Article 2, and the Company shall deliver to
the Stockholder a certificate representing the Restricted Shares. At the
Stockholder's election, the Stockholder may pay the Purchase Price by delivery
of a Promissory Note executed by the Stockholder in the original principal
amount of the Purchase Price and substantially in the form attached hereto as
Exhibit A.
ARTICLE 3 REPURCHASE OF STOCKHOLDER SHARES
The following repurchase provisions hereby are imposed upon the Restricted
Shares and any shares issued in respect thereto, as stock dividends, stock
splits or combinations, or similar recapitalizations:
<PAGE>
3.1 Repurchase of Unvested Restricted Shares upon Termination of
Employment.
3.1.1 If the Stockholder for any reason or no reason, with or without
cause, ceases to be employed by the Company, prior to the date specified in the
table set forth below, then the Company shall have the right and option (the
"Purchase Option"), but not the obligation, to purchase, or to designate one or
more purchasers for, all or a part of the percentage of the total number of the
Restricted Shares as is set forth in the columns of the table set forth below
for the period in which the Stockholder ceases to be so employed (the "Unvested
Restricted Shares"), at a price equal to $.15 per share (the "Share Price"),
such price to be appropriately adjusted for stock dividends, stock splits or
combinations, or similar recapitalizations. For purposes of this Agreement,
employment with the Company shall include employment with a parent, subsidiary
or sibling of the Company.
================================================================================
On or 18 January 18 April 18 July 18 October
Before
- --------------------------------------------------------------------------------
1998 75.0%
1999 70.3% 65.6% 61.9% 56.2%
2000 51.6% 46.9% 42.2% 37.5%
2001 32.8% 28.1% 23.4% 18.7%
2002 14.1% 9.4% 4.7% 0.0%
================================================================================
3.1.2 Notwithstanding the foregoing, the Company may no longer exercise
this Purchase Option with respect to any of the Restricted Shares following a
change of control of the Company. A change of control shall occur upon the
occurrence of the following events:
3.1.2.a -- any person or entity, other than an existing shareholder
of the Company, becomes the beneficial owner of 50% of the outstanding
voting securities of the Company;
3.1.2.b -- a change in the majority of the Company's directors,
other than a voluntary change approved by the Company's current
stockholders;
3.1.2.c -- the approval by the stockholders of a merger or
consolidation of the Company in which the Company's stockholders
immediately prior to the merger or consolidation do not hold a majority of
the outstanding voting securities of the resulting combined entity.
3.2 Manner of Exercise of Purchase Option and Closing.
3.2.1 The Company may exercise the Purchase Option by delivering or
mailing to the Stockholder (or the Stockholder's estate) written notice of
exercise within thirty (30) days after the termination of the employment of the
Stockholder with the Company. Such notice shall specify the number of Unvested
Restricted Shares to be purchased. If and to the extent the Purchase
<PAGE>
Option is not so exercised within such 30-day period, the Purchase Option shall
automatically expire and terminate effective upon the expiration of such 30-day
period.
3.2.2 Within thirty (30) days after receipt of the Company's notice of the
exercise of the Purchase Option, the Stockholder (or the Stockholder's estate)
shall tender to the Company at its principal offices the certificate or
certificates representing the Unvested Restricted Shares which the Company has
elected to purchase, duly endorsed in blank by the Stockholder or with duly
endorsed stock powers attached thereto, all in form suitable for the transfer of
such Unvested Restricted Shares to the Company. Upon its receipt of such
Unvested Restricted Shares, the Company shall deliver or mail to the Stockholder
a certified check or bank check in the amount of the aggregate Share Price
therefor.
3.2.3 After the time at which any Unvested Restricted Shares are required
to be delivered to the Company for transfer to the Company pursuant to
subsection 3.2.2, the Company shall not pay any dividend to the Stockholder on
account of such Unvested Restricted Shares or permit the Stockholder to exercise
any of the privileges or rights of a stockholder with respect to the Unvested
Restricted Shares, but shall, in so far as permitted by law, treat the Company
as the owner of such Unvested Restricted Shares.
3.2.4 The Share Price may be payable, at the option of the Company, in
cancellation of all or a portion of any outstanding indebtedness of the
Stockholder to the Company or in cash (by check) or both.
3.2.5 The Company shall not purchase any fraction of an Unvested
Restricted Share upon exercise of the Purchase Option, and any fraction of an
Unvested Restricted Share resulting from a computation made pursuant to Section
3.1 of this Agreement shall be rounded to the nearest whole Restricted Share
(with any one-half or greater Restricted Share being rounded upward).
ARTICLE 4 RESTRICTIONS ON TRANSFER
4.1 Restricted Transfer. The Stockholder agrees that he shall not sell,
transfer, pledge, hypothecate or otherwise dispose of, by operation of law or
otherwise (collectively, "transfer"), any of the Unvested Restricted Shares
except for transfers pursuant to this Agreement.
4.2 Permitted Transfers. Notwithstanding Section 4.1, the Stockholder may
transfer Unvested Restricted Shares (a "Permitted Transfer") to or for the
benefit of any spouse, child or grandchild, or to a trust for their benefit (the
"Permitted Transferees"), provided that such Unvested Restricted Shares shall
remain subject to this Agreement and such Permitted Transferee shall, as a
condition to such transfer, deliver to the Company a written instrument
confirming that such transferee shall be bound by all of the terms and
conditions of this Agreement.
4.3 Effect of Prohibited Transfer. The Company shall not be required (a)
to transfer on its books any of the Restricted Shares which shall have been sold
or transferred in violation of any of the provisions set forth in this
Agreement, or (b) to treat as owner of such Restricted Shares or to pay
dividends to any transferee to whom any such Restricted Shares shall
<PAGE>
have been so sold or transferred.
4.4 Restrictive Legend. All certificates representing Restricted Shares
shall have affixed thereto a legend in substantially the following form, in
addition to any other legends that may be required under federal or state
securities laws:
"The shares of stock represented by this certificate are subject to
restrictions on transfer and an option to purchase set forth in a
certain Stock Restriction Agreement among the corporation and the
registered owner of this certificate (or his predecessor in
interest), and such Agreement is available for inspection without
charge at the office of the Treasurer of the corporation."
ARTICLE 5 MISCELLANEOUS
5.1 Adjustments for Stock Splits, Stock Dividends, etc. If from time to
time during the term of this Agreement there is any stock split-up, stock
dividend, stock distribution or other reclassification of the Common Stock of
the Company, any and all new, substituted or additional securities to which the
Stockholder is entitled by reason of his ownership of the Restricted Shares
shall be immediately subject to the Purchase Option, the restrictions on
transfer and other provisions of this Agreement in the same manner and to the
same extent as the Restricted Shares, and the Share Price shall be appropriately
adjusted.
5.2 Severability. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, and each other provision of this Agreement shall be
severable and enforceable to the extent permitted by law.
5.3 Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the Company, its administrators, legal representatives, successors
and assigns.
5.4 No Rights To Employment. Nothing contained in this Agreement shall be
construed as giving the Stockholder any right to be retained, in any position,
as an employee of the Company.
5.5 Notice. All notices required or permitted hereunder shall be in
writing and deemed effectively given upon personal delivery or upon deposit in
the United States Post Office, by registered or certified mail, postage prepaid,
addressed to the other parties hereto at the address shown beneath the
Stockholder's and the Company's respective signature to this Agreement, or at
such other address or addresses as any party shall designate to the others in
accordance with this Section 5.5.
5.6 Plan Incorporated by Reference; Entire Agreement. The Restricted
Shares are being issued pursuant to the terms of the Company's 1997 Equity
Incentive Plan (the "Plan"). Capitalized terms used and not otherwise defined in
this certificate have the meanings given to them in the Plan. The Committee
administers the Plan and its determinations regarding the operation of the Plan
are final and binding. Copies of the Plan may be obtained upon written
<PAGE>
request without charge from the Secretary of the Company. Except as set forth in
the Plan, this Agreement constitutes the entire agreement between the parties,
and supersedes all prior agreements and understandings relating to the subject
matter of this Agreement.
5.7 Amendment. This Agreement may be amended or modified only by a written
instrument executed by the Company and the Stockholder.
5.8 Governing Law. This Agreement shall be construed, interpreted and
enforced in accordance with the laws of the Commonwealth of Massachusetts.
[Remainder of Page Left Blank]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
MOLDFLOW CORPORATION
By: /s/ Marc Dulude
-----------------------------------
Marc Dulude, President
/s/ Richard Underwood
---------------------------------------
{Name of Stockholder} Richard Underwood
Address: 165 Westford Rd
------------------------------
Concord, MA 01742
---------------------------------------
<PAGE>
AMENDED AND RESTATED PROMISSORY NOTE
------------------------------------
$20,088.75 September 9, 1999
Lexington, Massachusetts
FOR VALUE RECEIVED, Richard Underwood (the "BORROWER"),
hereby promises to pay to the order of MOLDFLOW CORPORATION (the "COMPANY"),
the principal amount of $20,088.75, together with simple interest from the
date hereof on the unpaid principal balance hereof, which shall accrue at a
rate per annum equal to five and 77/100 percent (5.77%). Accrued interest on
the principal amount hereunder that may be outstanding from time to time
shall be due and payable, at the Borrower's election, (i) quarterly in
arrears beginning June 30, 1998 and on the last business day of each
successive quarter thereafter, or (ii) in full on June 30, 2003 (the
"Maturity Date"). All unpaid principal and interest hereunder shall be due
and payable on June 30, 2003. Interest shall be computed on the basis of a
360-day year and a 30-day month. The unpaid principal balance and all accrued
interest on this Promissory Note at any time shall be determined from the
records of the Company, which shall constitute presumptive evidence of such
amounts.
This Promissory Note amends and restates the terms and
conditions of the obligations of the Borrower under the Promissory Note dated
as of July 1, 1998 (the "Original Note") from the Borrower to the Company.
Nothing contained in this Promissory Note shall be deemed to create or
represent the issuance of new indebtedness or the exchange by the Borrower of
the Original Note for a new Promissory Note. The indebtedness set forth in
the Original Note continues in full force and effect in this Promissory Note.
This Promissory Note may be voluntarily prepaid in whole or in part at any
time without premium or penalty, but together with interest on the principal
amount so prepaid accrued to the date of prepayment.
Payments of both principal and interest hereon shall be
made in immediately available funds at the office of the Company, at 91
Hartwell Avenue, Lexington, Massachusetts, or at such other place as the
holder hereof shall designate to the Borrower in writing, in lawful money of
the United States of America.
Except to the extent otherwise required by the context of
this Promissory Note, the word "Company" wherever used herein shall mean and
include the holder of this Promissory Note originally issued to Moldflow
Corporation.
This Promissory Note shall be deemed to be a contract under
the laws of the Commonwealth of Massachusetts, and for all purposes shall be
governed by the construed in accordance with the laws of said Commonwealth.
This Promissory Note shall be non-recourse to the Borrower,
except as to 40% of the Borrower's total obligations, including principal and
interest, outstanding from time to time under this Promissory Note, for which
the Company shall have full recourse to the Borrower.
<PAGE>
Further, the 40% obligation subject to such full recourse shall by specific
attribution include first any unpaid interest obligation of the Borrower, to
the extent any such interest does not exceed 40% of the total obligation.
The Borrower waives presentment, demand, notice, protest
and all other demands and notices in connection with the delivery,
acceptance, performance, default and enforcement of this Promissory Note.
By: /s/ Richard Underwood
--------------------------------
Richard Underwood
Address:_____________________
<PAGE>
DATED July 1, 1994
ACN NO. 005 647 496
MOLDFLOW PTY. LTD.
ALAN ROLAND THOMAS
SERVICE AGREEMENT
MINTER ELLISON MORRIS FLETCHER
Solicitors
40 Market Street
MELBOURNE VIC 3000
DX 204 MELBOURNE
Telephone (03) 617 4617
Facsimile (03) 617 4666
Reference JJS 932926 CML
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
1. DEFINITIONS ....................................................... 1
2. CONTRACT OF EMPLOYMENT ............................................ 4
3. TERM OF EMPLOYMENT ................................................ 4
4. RESPONSIBILITIES OF THE EXECUTIVE ................................. 5
5. REMUNERATION AND TERMINATION BENEFITS ............................. 6
6. TERMINATION ....................................................... 7
7. CONFIDENTIALITY ................................................... 10
8. NON COMPETITION ................................................... 11
9. COMPANY RECORDS ................................................... 15
10. PATENT AND COPYRIGHT .............................................. 16
11. EXECUTIVE'S LIABILITY ............................................. 17
12. LEAVE ............................................................. 17
13. ARBITRATION ....................................................... 18
14. FURTHER ASSURANCES ................................................ 18
15. CONTINUANCE ....................................................... 19
16. NOTICE ............................................................ 19
17. SEVERANCE ......................................................... 20
18. PROPER LAW ........................................................ 20
19. ASSIGNMENT ........................................................ 20
20. ENTIRE AGREEMENT .................................................. 21
21. NO WAIVER ......................................................... 21
22. MODIFICATION ...................................................... 21
23. INTERPRETATION .................................................... 22
</TABLE>
REMUNERATION SCHEDULE
<PAGE>
CONFIDENTIAL
SERVICE AGREEMENT - EXECUTIVE
AGREEMENT dated
BETWEEN MOLDFLOW PTY. LTD.
AND ALAN ROLAND THOMAS
OF
10 CITRON AVENUE, BALWYN in the State of Victoria
RECITAL
The Executive has agreed to serve the Company upon the terms and conditions
contained in this Agreement.
AGREEMENT
1. DEFINITIONS
1.1 In this Agreement and unless a contrary intention appears:
`ASSOCIATE' in relation to a natural person includes:
(a) the spouse, brother, sister, lineal ancestor and lineal descendant
of the natural person;
(b) the trustee or trustees of any trust under which the Persons
described in paragraph (a) hereof or any of them may benefit; and
(c) any other Person or Persons in concert with whom the natural person
is acting, proposes to act or is or proposes to become associated,
whether informally or formally, in any way in respect of the matter
to which the reference relates;
`ASSOCIATE' in relation to a corporation includes:
(a) a director secretary and shareholder of the corporation;
<PAGE>
2
(b) a corporation that is a Related Corporation or an Associated Entity;
(c) a director secretary and shareholder of such Related Corporation or
Associated Entity;
(d) the trustee or trustees of any trust under which the Persons
described in paragraphs (a), (b) and (c) hereof or any of them may
benefit; and
(e) any Person or Persons in concert with whom the corporation is acting
or proposes to act or is or proposes to become associated, whether
informally or formally, in any other way in respect of the matter to
which the reference relates;
`ASSOCIATED ENTITY' means any corporation, company, trust, partnership or
other entity in which the Company or a Related Corporation has an
interest, whether direct or indirect, of 20% or more;
`BOARD' means the Board of Directors of the Company from time to time;
`COMMENCEMENT DATE' means 1 July 1994 or such other date as the parties
hereto may agree;
`COMPETITOR' means for the purposes of sub-paragraph 6.4(c)(i) of this
Agreement any Person who is, in the reasonable opinion of the Company, a
competitor of the Company and the Related Corporations and Associated
Entities of the Company or any of them;
`CUSTOMER' means for the purposes of sub-paragraph 6.4(c)(i) of this
Agreement any Person who is, in the reasonable opinion of the Company, a
customer of the Company and the Related Corporations and Associated
Entities of the Company or any of them;
`ENTITLEMENT' has the same meaning as in section 609 of the Corporations
Law;
<PAGE>
3
`INITIAL PERIOD' means the period of 3 calendar years;
`PATENT APPLICATION' includes in relation to a patent application any
continuation, continuation in part, division, re-issue or substitution of
lieu thereof;
`PATENT RIGHTS' means all rights of patents and/or Patent Applications
both in Australia and elsewhere in the World relating to each discovery,
invention, secret process or improvement in procedure referred to in
clause 10 of this Agreement whether in whole or in part including any
re-issues, continuations and continuations in part or any substitutions of
the patent applications;
`PERSON' and words signifying persons include individuals, firms,
partnerships, bodies corporate, associations and governments and
governmental, semi-governmental and local authorities and agencies;
`PROPRIETARY RIGHTS' means all rights and interest in every process and
improvement in procedure referred to in clause 10 of this Agreement and
its manufacture and use and shall include, but not be limited to, ideas,
knowhow, technology, confidential information, customer lists, data and
trade secrets;
`RELATED CORPORATION' has the same meaning as in section 50 of the
Corporations Law;
`RECOGNISED STOCK EXCHANGE' means Australian Stock Exchange Limited or any
other body corporate that is declared by regulations made pursuant to the
Corporations Law as a securities exchange for the purpose of the
Corporations Law;
`RELEVANT INTEREST' has the same meaning as in Part 1.2 Division 5 of the
Corporations Law;
<PAGE>
4
`REMUNERATION SCHEDULE' means the remuneration schedule to this Agreement
which is annexed to, and forms part of, this Service Agreement, as amended
from time to time;
1.2 Each word or expression not defined in sub-clause 1.1 of this Agreement
but used in this Agreement and defined in the Remuneration Schedule shall
have the same meaning as defined in the Remuneration Schedule.
1.3 Where there is any conflict between the provisions of this Agreement and
the Remuneration Schedule, the provisions of this Agreement prevail and
upon a written request being received from any party, all parties must
cause the Remuneration Schedule to be amended in order to remove that
conflict.
2. CONTRACT OF EMPLOYMENT
The Company agrees to employ the Executive and the Executive agrees to
serve the Company as an executive on the terms and conditions hereinafter
contained.
3. TERM OF EMPLOYMENT
3.1 Subject to termination pursuant to clause 6 of this Agreement, the
Executive's employment with the Company pursuant to this Agreement shall
be for the Initial Period commencing on the Commencement Date and
thereafter for such further period as is agreed between the Company and
the Executive pursuant to sub-clauses 3.2 and 3.3. If no such further
period is agreed between the Company and the Executive, this Agreement
will terminate at the expiration of the Initial Period.
3.2 If the Executive is not in breach of this Agreement the Executive may by
notice in writing given to the Company not later than 6 months before the
expiration of the Initial Period extend the period of this Agreement for a
further period of 12 months.
<PAGE>
5
3.3 (a) Not later than 6 months before the expiration of the Initial
Period or any further period under clause 3.2, the Company and the
Executive must confer with the view to reaching agreement as to
whether the term of employment of the Executive must be extended
and, if so, on what terms.
(b) Each party shall advise the other party no later than 3 months (or
such other period as they may agree in writing) prior to the
expiration of the Initial Period or any further period under clause
3.2 of their decision regarding the matters referred to in paragraph
3.3(a).
3.4 The terms of any further employment agreed pursuant to this clause shall
be governed by this Agreement except to the extent that the terms of this
Agreement are varied in writing by the parties.
4. RESPONSIBILITIES OF THE EXECUTIVE
During his employment under this Agreement, the Executive must:
(a) undertake such duties and exercise such powers, authorities and
discretions in relation to the business of the Company as the Board
or the Chief Executive Officer shall from time to time delegates to
him;
(b) in the discharge of such duties and the exercise of such powers,
authorities and discretions, conform to observe and comply with the
directions, restrictions and regulation of the Board or the Chief
Executive Officer made or given from time to time;
(c) comply with all legal requirements, statutory or otherwise,
pertaining to his position and responsibilities;
<PAGE>
6
(d) at all times comply with all lawful orders and instructions given to
him by the Board or the Chief Executive Officer and comply in all
respects with all or any rules and regulations which have been or
may after the date of this Agreement be established by the Company
for the conduct of its employees;
(e) faithfully serve the Company and at all times use his best
endeavours to promote the interests of the Company for the time
being;
(f) devote the whole of his attention, time and ability to the
performance of his duties pursuant to this Agreement during the
reasonable normal working hours prescribed by the Company and at
such other times as may be reasonably necessary;
(g) not without the written consent of the Company, which must not be
unreasonably withheld, during the continuance of this Agreement be
engaged or interested, either directly or indirectly, in any
capacity in any other trade, business or occupation whatsoever
whether or alone jointly with or as a director, manager, agent or
servant of any other Person but nothing herein shall prevent the
Executive from having an entitlement to not more than 10% of the
ordinary shares in any company whose share capital is quoted or
dealt in on a Recognised Stock Exchange and which is not carrying on
business in competition with the Company.
5. REMUNERATION AND TERMINATION BENEFITS
The Executive's remuneration and termination benefits shall be determined
in accordance with the provisions of the Remuneration Schedule.
<PAGE>
7
6. TERMINATION
6.1 Notwithstanding anything contained in this Agreement or in the
Remuneration Schedule, this Agreement and the Remuneration Schedule may
forthwith and with such notice (if any) as is provided in this clause or
payment in lieu of such notice (if any) as is provided in this clause be
determined by the Company at its absolute discretion if any one or more of
the following events occur:
(a) the Executive commits wilful misconduct, fraud or dishonesty;
(b) the Executive commits a material breach of this Agreement which is
not in the reasonable opinion of the Company reasonably capable of
remedy by the Executive;
(c) the bankruptcy of the Executive or the committing by the Executive
of an act of bankruptcy;
(d) the Executive becomes of unsound mind;
(e) the use or abuse of alcohol or drugs by the Executive to the extent
that, in the opinion of the Company, the Executive is no longer able
properly to perform his functions under this Agreement;
(f) the conviction of the Executive of an indictable criminal offence;
(g) the Executive fails to perform or observe any of the terms or
provisions of this Agreement for a period of at least 30 days (or
such longer period as may be agreed by the parties) following the
receipt of a written notice from the Company which:
(i) specifies the nature of the Executive's failure; and
<PAGE>
8
(ii) advises the Executive that should the failure continue for a
period 30 days (or such longer period as has been agreed by
the parties) from the date of the service of the notice, his
employment may be terminated forthwith;
(h) the Executive is prevented from carrying out his duties in a proper
and business like manner by reason of sickness, ill health or injury
for any consecutive period of not less than three months or for an
aggregate of 100 working days in any 12 calendar month period;
(i) the Company suspends or ceases its operations or a substantial
portion thereof; or
(j) the Executive fails to disclose an interest which, in the opinion of
the Company, has caused a conflict between the Executive's duty to
the Company and any other duty to which the Executive may be
subject, directly or indirectly.
The parties acknowledge and agree that each of the above grounds for
termination are separate and distinct and shall not operate in any way to
limit the generality of any other ground or grounds of termination set out
above, all of which shall have at all times independent operation.
6.2 The notice required for termination in each of the foregoing events is as
set out below:
EVENT NOTICE
(as set out in sub-clause 6.1)
(a) No period of notice required.
(b) No period of notice required.
(c) No period of notice required.
(d) 6 months notice.
(e) No period of notice required.
<PAGE>
9
(f) No period of notice required.
(g) No period of notice required.
(h) 6 months notice.
(i) 6 months notice.
(j) No period of notice required.
6.3 The Company may elect to make a payment to the Executive in lieu of notice
provided for in sub-clauses 6.2 or 6.5 and such payment will be the amount
equal to that proportion of the Executive's then current total
remuneration attributable to the period of notice (if any). If no period
of notice is required pursuant to sub-clause 6.2 of this Agreement, no
payment in lieu of notice is required.
6.4 (a) The Executive may, upon and only upon having served as an
employee of the Company pursuant to this Agreement for a period of
not less than 2 1/2 years, terminate this Agreement by giving the
Company not less than 6 months written notice of termination.
(b) The Company may choose to waive service of the notice period given
by the Executive pursuant to sub-clause 6.4(a) of this Agreement
and, in such case, shall, subject to sub-clause 6.4(c) of this
Agreement, pay the Executive an amount equal to that proportion of
the Executive's total remuneration attributable to the waived period
of notice as if the employment had continued during the waived
period.
(c) (i) If the Executive intends entering into the employment of, or
does so enter into the employment of, a Competitor or Customer
during the period of written notice of termination given by
the Executive pursuant to sub-clause 6.4(a) of this Agreement,
then and in that event the Company will not be under any
obligation to make any payments to the Executive pursuant to
sub-clause 6.4(b) of this Agreement in lieu of such waived
period of notice and the Executive must forthwith refund
<PAGE>
10
to the Company any moneys paid under that sub-clause by the
Company to the Executive.
(ii) For the purposes of sub-clause 6.4(c)(i), the phrases
`entering into the employment of' and `enter into the
employment of' includes being or becoming directly or
indirectly a member, shareholder, director, employee,
consultant, agent or senior executive in, of, for, to or in
respect of (as the case may be) any Person or Persons.
6.5 If during the term of this Agreement there is a change to the Executive's
employment conditions which, by an objective reasonable standard, is to
his material detriment, the Executive may at any time during the period of
3 months after that change, elect to terminate this Agreement and the
Remuneration Schedule by not less than 3 months written notice to the
Company.
7. CONFIDENTIALITY
7.1 The Executive must:
(a) not, except as authorised or required by his duties as an employee
of the Company, reveal to any Person or Persons any of the trade
secrets, secret or confidential operations, processes or dealings or
any information concerning the Company's business or the
organisation, business finances, transactions or affairs of the
Company which may come to his knowledge during or at any time after
the continuance of this Agreement;
(b) keep with complete secrecy all confidential information entrusted to
him;
(c) not use or attempt to use, nor assist any other person to use or
attempt to use, any such information in any manner which may injure
or cause loss either directly
<PAGE>
11
or indirectly to the Company or its business or may be likely so to
do.
7.2 Each restriction set out in sub-clause 7.1 will continue to apply after
the termination of this Agreement without limitation in point of time but
will cease to apply to information which comes into the public domain
other than by breach of this Agreement or by any breach of any other duty
or obligation of confidentiality owed to the Company.
7.3 For the purposes of this clause 7, `Company' includes jointly and
severally the Company and each Related Corporation of the Company and each
Associated Entity of the Company.
8. NON COMPETITION
8.1 In consideration of the employment of the Executive and other valuable
consideration whether directly or indirectly received by the Executive
from the Company and to reasonably protect the goodwill and the business
of the Company, the Executive agrees with the Company that:
(a) this clause will have effect as if it were several separate
covenants and restraints consisting of each separate covenant and
restraint obtained by the combinations set out in paragraph (b) of
this sub-clause combined with each separate period of time set out
in paragraph (c) of this sub-clause and of each such separate
combination combined with each separate area set out in paragraph
(d) of this sub-clause and if any of these several separate
covenants and restraints are or become invalid or unenforceable for
any reason, then that invalidity or unenforceability will not affect
the validity or enforceability of any of the other separate
covenants and restraints;
(b) without the prior written consent of the Company, the Executive will
not, whether directly or indirectly,
<PAGE>
12
for the periods and within the areas specified in sub-clauses 8.1(c)
and (d) respectively:
(i) be:
(A) a member, or
(B) a shareholder, or
(C) a debenture holder, or
(D) a director, or
(E) an employee, or
(F) a consultant, or
(G) an agent, or
(H) senior executive
in, of, for, to, or in respect of (as the case may be) any,
A. corporation, or
B. Person, or
C. firm, or
D. business, or
E. trust
which is engaged in or carries on any business within the
defined areas which is or, in the reasonable opinion of the
Company, is likely to be during the period of restraint in
competition to any material extent with any business carried
on by the Company or any Related Corporation or Associated
Entity (`Specified Business');
(ii) for himself or in any of the capacities listed in
sub-paragraph 8.1(b)(i) or otherwise:
(A) induce or solicit any employee or agent of the Company
or any Related Corporation or Associated Entity of the
Company to leave the employment or agency of the
<PAGE>
13
Company or such Related Corporation or Associated
Company;
(B) approach or accept any approach from any customer of the
Company or any Related Corporation or Associated Entity
of the Company with the view to soliciting for himself
the business of that customer;
(C) seek to obtain orders in respect of any services
provided by the Company or any Related Corporation or
Associated Entity of the Company to any Person who at
the date of determination or termination of this
Agreement is a customer of, or in the habit of dealing
with, the Company or any Related Corporation or
Associated Entity of the Company or represents himself
as being in any way connected or having formerly been
connected with or interested in the Specified Business;
(D) compete or seek to compete with the Company or any
Related Corporation or Associated Entity of the Company
in the Specified Business or in any way interfere with
the Specified Business;
(c) the periods referred in paragraph 8.1(b) are:
(i) during the period of 1 year from the date of termination of
this Agreement;
(ii) during the period of 6 months from the date of termination of
this Agreement;
(d) the areas referred to in paragraph 8.1(b) are:
(i) Australia;
(ii) Victoria;
<PAGE>
14
(iii) New South Wales;
(iv) Queensland;
(v) Western Australia;
(vi) Tasmania;
(vii) Australian Capital Territory;
(viii) Northern Territory;
(ix) United States of America;
(x) Great Britain;
(xi) Japan;
(xii) each other place where the Company has an office, agency or
established presence.
8.2 The parties agree that:
(a) any combination of the acts referred to in paragraph 8.1(b) by the
Executive for the separate periods and within the separate areas
referred to would be unfair and calculated to damage the Specified
Business and would lead to substantial loss to the Company;
(b) each separate covenant and restraint in this Agreement is reasonable
and that substantial consideration has been received for it both
directly and indirectly by the party to be restrained by these
covenants and that the Executive who is affected by this clause has
been responsible for and approves its drafting;
(c) the words `directly or indirectly interested or engaged in or
concerned with' will be given the widest possible interpretation and
will include without limitation management without salary, advising
or influencing a competitive business on a continuing basis (whether
for direct remuneration or benefit or otherwise), establishing or
being interested in or influencing such a competitive business
through any association or arrangement with any Person, nominee or
trust in or over which any interest or influence (absolute or
partial) is held.
<PAGE>
15
8.3 The provisions of this clause 8 do not in any way operate to limit the
generality of any other clause of this Agreement, all of which will have
at all times independent operation unrestricted by provisions of this
clause 8.
8.4 The Executive must not, after the termination of this Agreement for any
cause whatever, represent himself as being in any way connected with or
interested in the business of the Company or any Related Corporation or
Associated Entity of the Company.
9. COMPANY RECORDS
9.1 The Executive must not, during his employment with the Company or at any
time after the termination of his employment, irrespective of the time,
manner or cause of such termination of his employment, directly or
indirectly disclose to any Person or Persons the requirements of the
Company or any Related Corporation or Associated Entity of the Company or
the name and address of any customer of the Company or any Related
Corporation or Associated Entity of the Company. This restriction shall
continue to apply after the termination of this Agreement without
limitation in point of time.
9.2 The Executive must not, during the continuance of this Agreement, make
otherwise than for the benefit of the Company any notes or memoranda
relating to any matter within the scope of the business of the Company or
any Related Corporation or Associated Entity of the Company or concerning
any of the dealings or affairs of the Company or any Related Corporation
or Associated Entity of the Company.
9.3 The Executive must, upon the termination of his employment with the
Company, irrespective of the time, manner or cause of such termination,
surrender to the Company all lists, and all notes and other documents
relating to the business of the Company or any Related Corporation or
Associated Entity of the Company and all other property whatever
<PAGE>
16
belonging to the Company or any Related Corporation or Associated Entity
of the Company and the Executive agrees not to retain any copies of
documents belonging to the Company or any Related Corporation or
Associated Entity of the Company.
9.4 The provisions of this Agreement are in addition to and not in derogation
of any of the common law rights of the Company pertaining to the
Executive's services with the Company.
10. PATENT AND COPYRIGHT
10.1 The Executive acknowledges and agrees that he will forthwith disclose to
the Company any discovery, invention, literary artistic or musical work,
secret process or improvement in procedure made, developed or discovered
by the Executive whilst in the service of the Company in connection with
or in any way affecting or relating to the business of the Company or any
Related Corporation or Associated Entity of the Company or capable of
being used or adopted for use with that business or in connection with
that business and any copyright, Patent Rights and Proprietary Rights
attaching to any of them all of which will belong to and be the absolute
property of the Company.
10.2 The Executive, if and whenever required by the Company so to do (whether
during or after the termination of his employment), must at the expense of
the Company or its nominee apply or join in applying with the Company (at
the discretion of the Company) for letters patent or other similar
protection in Australia or in any other part of the world for any such
invention, secret process or improvement as referred to in sub-clause 10.1
and execute all instruments and do all things necessary for vesting the
letters patent or other similar protection when obtained and all right and
title to and interest in them (including all Patent Rights and Proprietary
Rights) in the Company or its nominee absolutely and as sole beneficial
owner or such other person as the Company may require.
<PAGE>
17
10.3 The Executive irrevocably appoints the Company to be his attorney in his
name and on his behalf to execute and do any such instrument, act or thing
and generally to use his name for the purpose of giving to the Company or
its nominee the full benefit of the provisions of this clause and in
favour of any third party a certificate in writing signed by any director
or secretary of the Company that any instrument or act falls within the
authority hereby conferred will be conclusive evidence that such is the
case.
10.4 The provisions of this clause will continue to apply after the termination
of this Agreement but without limitation in point of time.
11. EXECUTIVE'S LIABILITY
The Executive indemnifies and undertakes to keep indemnified the Company
and each Related Corporation or Associated Entity of the Company in
respect of loss or damage suffered or incurred by the Company or any
Related Corporation or Associated Entity of the Company, where such loss
or damage arises or is incurred as a direct result of any wilful breach of
the Executive's obligations under the terms of this Agreement. Without in
anyway limiting the generality of any other provision of this Agreement,
this clause 11 is in addition to and not in derogation of any of the
common law or other rights of the Company pertaining to the Executive's
services with the Company.
12. LEAVE
12.1 The Executive will be entitled to 4 weeks annual leave in each year of his
employment and during such leave will be entitled to the receipt of total
remuneration as provided in the Remuneration Schedule. Leave must be taken
at such time or times as agreed upon by the Company and the Executive.
<PAGE>
18
12.2 The Executive will be entitled to 5 days sick leave for each completed
year of service of his employment, and during such leave will be entitled
to the receipt of total remuneration as provided in the Remuneration
Schedule. Any sick leave entitlement not used in any year will accrue and
may be utilized in any subsequent year. Any sick leave entitlement not
utilized at the date of termination of employment lapses.
12.3 The Company may, at its discretion, grant to the Executive special leave
for purposes other than those referred to in sub-clause 12.1 of 12.2 on
such terms as the Company may consider appropriate.
13. ARBITRATION
If any difference or dispute should arise between the parties to this
Agreement as to the meaning of any of the terms and conditions of this
Agreement or the Remuneration Schedule or as to the rights, duties or
obligations of either party under this Agreement or the Remuneration
Schedule or as to any matter or thing arising out of this Agreement or the
Remuneration Schedule, the difference or dispute must be submitted to
arbitration in Victoria, Australia at the Australian Centre for
International Commercial Arbitration in accordance with and subject to the
Institute of Arbitrators Australia Rules for the conduct of commercial
arbitrations.
14. FURTHER ASSURANCES
Each of the parties hereto must, and shall use their best endeavours to
procure their Associates to, sign, execute and do all such further
documents, acts, matters and things as shall be necessary or desirable to
give effect to the provisions of this Agreement.
<PAGE>
19
15. CONTINUANCE
The expiration or determination of this Agreement however arising shall
not affect such of the provisions of this Agreement as are expressed to
operate or to have effect after this Agreement and will be without
prejudice to any right of action already accrued to either party in
respect of any breach of this Agreement by the other party.
16. NOTICE
16.1 A notice to be given by a party to another party under this Agreement must
be:
(a) in writing;
(b) directed to the recipient's address specified above or as varied by
written notice; and
(c) left at or sent by prepaid registered post, hand delivery, telex or
facsimile to that address,
and will be deemed to be duly given:
(d) on the day of delivery;
(e) 3 days after the date of posting by prepaid registered post; or
(f) if sent by telex or facsimile, when the answerback or message
confirmation is received,
as the case may be.
16.2 The provisions of this clause are in addition to any other mode of service
permitted by law.
<PAGE>
20
17. SEVERANCE
17.1 If a provision of this Agreement is void or voidable by either party or
unenforceable or illegal but would not be void or voidable or
unenforceable or illegal as aforesaid if it were read down and it is
capable of being read down, it must be read down accordingly.
17.2 If notwithstanding sub-clause 17.1 of this Agreement a provision of this
Agreement is still void or voidable or unenforceable or illegal:
(a) if the provision would not be void or voidable or unenforceable or
illegal if a word or words (as the case may be) were omitted, that
word or those words are hereby severed; and
(b) in any other case, the whole provision is severed, and the remainder
of this Agreement has full force and effect.
18. PROPER LAW
The validity, interpretation and performance of this Agreement will be
governed by the laws of the State of Victoria and the parties submit to
the exclusive jurisdiction of the Courts of that State and of any Courts
competent to hear appeals those Courts. Without prejudice to any other
permitted mode of service, service on a party of any writ of summons or
notice thereof and of any other documents or pleadings in any action
between the parties may be effected by delivering or leaving them at the
address of the party to be served set out in this Agreement.
19. ASSIGNMENT
19.1 This Agreement may be assigned by the Company to any successor in interest
to its business or any part thereof.
<PAGE>
21
19.2 The Executive shall not assign, transfer, convey, pledge or otherwise
encumber this Agreement or his right title and interest herein.
20. ENTIRE AGREEMENT
This document embodies the entire understanding and the whole agreement
between the parties hereto relative to the subject matter of this
Agreement and all previous negotiations, representations, warranties,
arrangements and statements (if any) whether expressed or implied with
reference to the subject matter of this Agreement or to the intentions of
any of the parties to this Agreement are merged in this Agreement and
otherwise are hereby excluded and cancelled.
21. NO WAIVER
21.1 The failure of a party at any time to require any performance by another
party of a provision of this Agreement does not affect in any way the full
right of the waiving party to require that performance subsequently.
21.2 The waiver by any party of a breach of a provision will not be deemed a
waiver of all or part of that provision or any other provision or of the
right of that party to avail itself of its rights subsequently.
21.3 Any waiver of a breach of this Agreement must be in writing signed by the
party granting the waiver, and shall be effective only to the extent
specifically set out in that waiver.
22. MODIFICATION
This Agreement may only be altered in writing signed by both parties.
<PAGE>
22
23. INTERPRETATION
In this Agreement except to the extent that the context otherwise
requires:
(a) words importing the singular include the plural and vice versa and
words importing a gender include other genders;
(b) a reference to an Act of Parliament or Law or section or schedule of
that Act or Law shall be read as if the words `or any statutory
modification or re-enactment thereof or substitution thereof' were
added to the reference and includes all statutory instruments issued
under that Act or Law as at the date of this Agreement;
(c) where a word or phrase is given a particular meaning, other parts of
speech or grammatical forms of that word or phrase have
corresponding meanings;
(d) a reference to a party to this Agreement or any other document or
agreement includes its successors and permitted assigns;
(e) a reference to a party will be construed as a reference to a party
to this Agreement;
(f) a reference to a document or agreement including this Agreement
includes a reference to that document or agreement as amended,
novated, supplemented, varied or replaced from time to time;
(g) headings, other than the word `AGREEMENT' on page 1, will be
disregarded;
(h) references to currency shall be construed as references to
Australian currency;
<PAGE>
23
(i) a reference to writing includes typewriting, printing, lithography,
photography and any other mode of representing or reproducing words
in a permanent and visible form;
(j) if any day appointed or specified by this Agreement for the payment
of any money falls on a Saturday, Sunday or a day on which trading
banks (as defined in the BANKING ACT 1959 of the Commonwealth) are
not open for business in Melbourne (`Non Business Day'), the day so
appointed or specified shall be deemed to be the next day which is
not a Non Business Day.
EXECUTED as an agreement.
THE COMMON SEAL of MOLDFLOW PTY. LTD. ) [SEAL]
)
is affixed in accordance with )
its articles of association )
in the presence of: )
/s/ Tony Sherburn /s/ Hugh Henderson
....................................... .....................................
Secretary Executive
SIGNED )
by ALAN ROLAND THOMAS )
in the presence of: )
/s/ A. Roland Thomas
....................................... .....................................
Signature of Witness Signature of #
.......................................
Name of Witness (*Print)
<PAGE>
CONFIDENTIAL
REMUNERATION SCHEDULE
1. DEFINITIONS
1.1 In this Schedule, unless a contrary intention appears from the context:
`BURDEN OF FRINGE BENEFITS TAX' means the amount of fringe benefits tax
payable by the Company referable to the particular benefits provided by
the Company to the Executive multiplied by a factor determined by the
following formula:
1
-------
(1 - T)
where T means the rate of tax payable by companies of the kind of the
Company as prescribed by the INCOME TAX RATES ACT 1986 of the
Commonwealth';
`BURDEN OF NON DEDUCTIBILITY' means an amount calculated according to the
following formula:
1
A x -------
(1 - T)
where:
A means the actual cost to the Company of providing the particular
benefits provided by the Company to the Executive
T means the rate of tax payable by companies of the kind of the Company as
prescribed by the INCOME TAX RATES ACT 1986 of the Commonwealth';
<PAGE>
2
`FBT ACT' means the FRINGE BENEFITS TAX ASSESSMENT ACT 1986 of the
Commonwealth';
`FRINGE BENEFITS' means fringe benefits within the meaning of the FBT
Act';
`INITIAL REMUNERATION PERIOD' means the calendar year commencing on the
date of execution of the Principal Agreement;
`PRINCIPAL AGREEMENT' means the Service Agreement to which this Schedule
is annexed and forms part;
`REMUNERATION PERIOD' means a calendar year the first day of which is the
date of execution of the Principal Agreement or any anniversary of that
date;
`TOTAL REMUNERATION' means the total cost to the Company of paying salary
and providing benefits to an Executive pursuant to clause 2.1(a) of this
Schedule.
1.2 Each word or expression not defined in clause 1.1 of this Schedule but
used in this Schedule and defined in the Principal Agreement will have the
same meaning as defined in the Principal Agreement.
2. REMUNERATION
2.1 In consideration of the service to be provided by the Executive and the
covenants given by the Executive under the Principal Agreement, the
Company shall pay or provide to or for the Executive:
(a) during the initial Remuneration Period, Total Remuneration of
$120,000 per annum to be paid or provided by the Company to the
Executive by way of salary of such amount and benefits of such kinds
and cost to the Company as the Company and the Executive may agree
and in the absence of any such agreement
<PAGE>
3
to be paid and provided by the Company to the Executive entirely by
way of salary; and
(b) unless the Principal Agreement is terminated by the Company as a
result of any act or default of the Executive, other than under
clause 6.1(d), (h) or (i) $300,000 upon termination of the Principal
Agreement except that the payment shall be $200,000 if the net
profit before tax of Moldflow Pty Ltd for the financial year ending
30 June 1994 is less than $1,900,000. For the purpose of this clause
the net profit before tax of Moldflow Pty Ltd shall be the amount
agreed by its auditors to be the net profit before tax and shall be
calculated in accordance with the same accounting principles
observed by Moldflow Pty Ltd in preparing its budget for the
financial year ending 30 June 1994.
The Company must reimburse all reasonable and proper expenses incurred by
the Executive in carrying out his duties in accordance with this Schedule
and the Principal Agreement subject always to the presentation of fully
supportable claims approved by the Company.
2.2 For the purposes of this Clause, the cost to the Company of any benefits
provided by the Company to the Executive shall be the actual cost to the
Company of providing such benefits (as determined by the Company and
notified to the Executive) and shall include:
(a) where the benefits are fringe benefits and are provided to the
Executive prior to 1 April 1994 - the amount which would be the
fringe benefits taxable amount (as defined in S.136(1) of the FBT
Act) if calculated in respect of such benefits increased by the
burden of Fringe Benefits Tax;
(b) where the benefits are fringe benefits and are provided to the
Executive on or after 1 April 1994 - the amount which would be the
fringe benefits
<PAGE>
4
taxable amount (as defined in S.136AA of the FBT Act) if calculated
in respect of such benefits; or
(c) where the benefits are not fringe benefits and the Company is not
entitled to an allowable deduction under the Income Tax Assessment
Act in respect of such benefits - the burden of non deductibility.'
2.3 Where by the last day of a Remuneration Period the total cost to the
Company of the benefits provided to the Executive does not equal the cost
of the benefits agreed by the Company to be provided to the Executive for
that Remuneration Period:
(a) the balance then remaining to be provided to the Executive must be
provided in such manner as the parties agree or failing such
agreement in the form of additional salary; and
(b) if the employment of the Executive is not then ceasing, the cost to
the Company of any excess benefits provided during the remuneration
period shall be deducted from the amount of the Total Remuneration
to be paid or provided for the following Remuneration Period, or if
the employment of the Executive has ceased an amount equal to the
cost to the Company of such excess must be paid forthwith by the
Executive to the Company.
3. REVIEW OF REMUNERATION
3.1 The Company agrees that, while the Executive's employment continues under
the Principal Agreement, for each Remuneration Period it must, at least 28
days prior to the expiration of such Period, review the level of Total
Remuneration, and the components of that remuneration, to which the
Executive shall be entitled in the following Remuneration Period.
<PAGE>
5
3.2 The Company's decision in relation to the level of Total Remuneration for
the following Remuneration Period pursuant to sub-clause 3.1 of this
Schedule must be reasonable, and must not be less than the Total
Remuneration paid during the initial Remuneration Period, but otherwise
will be final and binding on the Executive.
3.3 The Executive will not be entitled to an increase in Total Remuneration
otherwise than as a result of a review conducted pursuant to clause 3 of
this Schedule.
3.4 As soon as is reasonable practicable following the review conducted
pursuant to this clause by the Company, the Company shall provide to the
Executive notice in writing of its decision. Where the Executive believes
it to be appropriate and so notifies the Company, the Company must advise
the Executive as soon as reasonably possible after the Executive's
notification of the reasons upon which the decision was based.
<PAGE>
Mr. A. Roland Thomas 30 June 1997
10 Sedgemeadow Road
Wayland, MA
USA
Dear Roland:
Re: Moldflow Pty. Ltd. - Service Agreement dated 1 July 1994
- -------------------------------------------------------------
It is the intention of the parties to modify the abovementioned agreement.
Therefore, in accordance with Section 22 of the agreement, this letter shall
hereby amend the Service Agreement effective 31 January 1997 as follows:
The time for payment by Moldflow of the amount due in accordance with
paragraph 2.1(b) of the Remuneration Schedule as it relates to Section 5 of
the Agreement shall be extended to June 30, 1999, or earlier upon agreement
of the parties.
All other terms and conditions of the Service Agreement shall remain in
force.
Kindly indicate your acceptance of these terms by signing and returning to me
the attached copy of this letter.
Very truly yours,
/s/ Suzanne E. Rogers
- ---------------------------
Suzanne E. Rogers
Company Assistant Secretary
Moldflow Pty. Ltd.
- -------------------------------------------------------------------------------
I, A. Roland Thomas, agree to accept this amendment to the Service Agreement
dated 1 July 1994, in accordance with the terms set out above.
Signed: /s/ Roland Thomas
--------------------------------------
Date: 30/6/97
---------------------------------------
<PAGE>
1 July 1999
Mr AR Thomas
10 Citron Avenue
North Balwyn VIC 3104
Australia
Dear Roland:
RE: MOLDFLOW PTY LTD - SERVICE AGREEMENT DATED 1 JULY 1994, AS AMENDED ON
30 JUNE 1997
It is the intention of the parties to modify the abovementioned agreement.
Therefore, in accordance with Section 22 of the agreement, this letter shall
hereby amend the Service Agreement effective 1 July 1999 as follows:
The time for payment by Moldflow of the amount due in accordance with
paragraph 2.1(b) of the Remuneration Schedule as it relates to Section
5 of the Agreement shall be extended to 1 July, 2000 or earlier upon
agreement of the parties.
For clarity, this modification is not intended to otherwise change the
terms of the agreement with respect to obligations surviving
termination, nor to further extend the Initial Period of Employment
under the contract.
Kindly indicate your acceptance of these terms by signing and returning to me
the attached copy of this letter.
Yours sincerely,
MOLDFLOW PTY LTD
/s/ Suzanne Rogers
- ------------------
Suzanne E Rogers
Company Secretary
- --------------------------------------------------------------------------------
I, AR Thomas agree to accept this amendment to the Service Agreement dated 1
July 1994, as amended on 30 June 1997, in accordance with the terms set out
above.
Signed: /s/ Roland Thomas
--------------------------
Date: 17th Aug. 1999
--------------------------
<PAGE>
LOAN AGREEMENT
THIS AGREEMENT is made on 1 July 1999
BETWEEN: MOLDFLOW PTY LTD ("Company") (A.C.N. 005 647 496) a company duly
incorporated in the State of Victoria and having its
registered office at 259-261 Colchester Road, Kilsyth, 3137
AND: ALAN ROLAND THOMAS ("Shareholder") a shareholder of Company
RECITALS:
A. Company is to make a loan to Shareholder of A$200,000.00 on the first
day of July 1999.
B. Company and Shareholder wish to record the terms and conditions of the
loan.
THE PARTIES AGREE AS FOLLOWS:
1. INTERPRETATION
In this agreement the following expressions shall have the following
meanings
"INCOME TAX LAW" means all laws from time to time in force for the
raising of income tax in the Commonwealth of Australia or a State or
territory thereof, and includes any regulations made under those laws.
"THE ACT" means the Income Tax Assessment Act 1936 as amended.
"LOAN" is the amount to be loaned by Company to Shareholder in
accordance with Recital A.
"REPAYMENTS" includes cash payments in reduction of the Loan
outstanding and any other transactions that have the effect of reducing
the amount of indebtedness under the Loan from Shareholder to Company.
"YEAR OF INCOME" in clause 3 refers to the year ended 30 June unless
Company has a substituted accounting period for income tax purposes, in
which event "year of income" refers to that substituted accounting
period.
<PAGE>
2. REPAYMENTS
2.1 Shareholder shall pay to Company the minimum level of
repayments specified in the Income Tax Law from time to time
as being required in order to prevent the Loan being treated
for income tax purposes as a dividend paid by Company. These
requirements are at present set out in section 109E of the
Act. Until the law is changed Shareholder shall make yearly
repayments under the Loan in accordance with the formula set
out at subsection 109E(6).
2.2 Notwithstanding subclause 2.1, Shareholder may make repayments
to Company greater than what is required under subclause 2.1.
3. INTEREST.
3.1 Interest shall be payable in each year of income by
Shareholder to Company on the Loan at the rate specified in
the Income Tax Law from time to time as being sufficient in
order to avoid the loan being treated for income tax purposes
as a dividend paid by Company. At present this required
interest rate is the benchmark interest rate specified in
subsection 109N(2) of the Act, being the Indicator Lending
Rates - Bank variable housing loans interest rate last
published by the Reserve Bank of Australia before the end of
the year of income.
3.2 Notwithstanding subclause 3.1, there shall be no requirement
under this Agreement for Shareholder to pay interest on the
Loan for the year of income during which the Loan is made and
while there is no minimum interest payable under section
109N(1)(b) of the Act or an equivalent provision for that year
of income.
3.3 Notwithstanding subclauses 3.1 and 3.2, Shareholder and
Company may agree that Shareholder shall pay a rate of
interest higher than the rate specified in subclause 3.1, or
interest on the Loan for the year of income in which the Loan
is made.
<PAGE>
4. TERM OF LOAN
4.1 Shareholder shall pay to Company not later than 1 July 2000
the principal and interest then owing under the Loan.
5. ALLOCATION OF PAYMENTS.
5.1 Whenever there is a payment from Shareholder to Company,
Shareholder shall advise as to which indebtedness the payment
is to be applied against. If Shareholder fails to give this
advice Company shall determine which indebtedness of the
shareholder the payment is to be applied against and the
allocation in its books and accounts shall be binding upon the
parties.
IN WITNESS WHEREOF this agreement was entered into and executed the day and year
first hereinbefore written.
SIGNED for and on behalf of MOLDFLOW PTY LTD by )
) /s/ Marc Dulude
)----------------------
- --------------------------------------
Signature of witness
- --------------------------------------
Name of witness (block letters)
- -------------------------------------
Address of witness
- -----------------------------------
Occupation of witness
<PAGE>
SIGNED by ALAN ROLAND THOMAS )
) /s/ A. Roland Thomas
)--------------------------
- ----------------------------------
Signature of witness
- ----------------------------------
Name of witness (block letters)
- ----------------------------------
Address of witness
- ----------------------------------
Occupation of witness
<PAGE>
MOLDFLOW CORPORATION
1997 EQUITY INCENTIVE PLAN
1. PURPOSE
The purpose of the Moldflow Corporation 1997 Equity Incentive Plan
(the "Plan") is to attract and retain key employees, consultants and
non-employee directors of the Company and its Affiliates, to provide an
incentive for them to achieve long-range performance goals, and to enable
them to participate in the long-term growth of the Company by granting Awards
with respect to the Company's Common Stock (the "Common Stock").
2. ADMINISTRATION
The Plan shall be administered by the Committee. The Committee shall
select the Participants to receive Awards and shall determine the terms and
conditions of the Awards. The Committee shall have authority to adopt, alter
and repeal such administrative rules, guidelines and practices governing the
operation of the Plan as it shall from time to time consider advisable, and
to interpret the provisions of the Plan. The Committee's decisions shall be
final and binding. To the extent permitted by applicable law, the Committee
may delegate to one or more executive officers of the Company the power to
make Awards to Participants who are not Reporting Persons or Covered
Employees and all determinations under the Plan with respect thereto,
provided that the Committee shall fix the maximum amount of such Awards for
all such Participants and a maximum for any one Participant.
3. ELIGIBILITY
All employees, consultants and non-employee directors of the Company
or any Affiliate capable of contributing significantly to the successful
performance of the Company, other than a person who has irrevocably elected
not to be eligible, are eligible to be Participants in the Plan. Incentive
Stock Options may be granted only to persons eligible to receive such Options
under the Code.
4. STOCK AVAILABLE FOR AWARDS
(a) AMOUNT. Subject to adjustment under subsection (b), Awards may
be made under the Plan for up to 3,689,180 shares of Common Stock. If any
Award expires or is terminated unexercised or is forfeited or settled in a
manner that results in fewer shares outstanding than were awarded, the shares
subject to such Award, to the extent of such expiration, termination,
forfeiture or decrease, shall again be available for award under the Plan.
Common Stock issued through the assumption or substitution of outstanding
grants from an acquired company shall not reduce the shares available for
Awards under the Plan. Shares issued under the Plan may consist in whole or
in part of authorized but unissued shares or treasury shares.
<PAGE>
(b) ADJUSTMENT. In the event that the Committee determines that any
stock dividend, extraordinary cash dividend, recapitalization,
reorganization, merger, consolidation, split-up, spin-off, combination,
exchange of shares or other transaction affects the Common Stock such that an
adjustment is required in order to preserve the benefits intended to be
provided by the Plan, then the Committee (subject in the case of Incentive
Stock Options to any limitation required under the Code) shall equitably
adjust any or all of (i) the number and kind of shares in respect of which
Awards may be made under the Plan, (ii) the number and kind of shares subject
to outstanding Awards and (iii) the exercise price with respect to any of the
foregoing, and if considered appropriate, the Committee may make provision
for a cash payment with respect to an outstanding Award, provided that the
number of shares subject to any Award shall always be a whole number.
(c) LIMIT ON INDIVIDUAL GRANTS. Subject to adjustment under
subsection (b), the maximum number of shares of Common Stock subject to Stock
Options and SARs that may be granted to any Participant in the aggregate in
any calendar year will not exceed 3,689,180 shares.
5. STOCK OPTIONS
(a) GRANT OF OPTIONS. Subject to the provisions of the Plan, the
Committee may grant options ("Options") to purchase shares of Common Stock
(i) complying with the requirements of Section 422 of the Code or any
successor provision and any regulations thereunder ("Incentive Stock
Options") and (ii) not intended to comply with such requirements
("Nonstatutory Stock Options"). The Committee shall determine the number of
shares subject to each Option and the exercise price therefor, which in the
case of Incentive Stock Options shall not be less than 100% of the Fair
Market Value of the Common Stock on the date of grant, provided that a
Nonstatutory Stock Option granted to a new employee, consultant or
non-employee director within 90 days of the date of employment may have a
lower exercise price so long as it is not less than 100% of Fair Market Value
on the date of employment. No Incentive Stock Option may be granted hereunder
more than ten years after the effective date of the Plan.
(b) TERMS AND CONDITIONS. Each Option shall be exercisable at such
times and subject to such terms and conditions as the Committee may specify
in the applicable grant or thereafter. The Committee may impose such
conditions with respect to the exercise of Options, including conditions
relating to applicable federal or state securities laws, as it considers
necessary or advisable.
(c) PAYMENT. Payment for shares to be delivered pursuant to any
exercise of an Option may be made in whole or in part in cash or, to the
extent permitted by the Committee at or after the grant of the Option, by
delivery of a note or other commitment satisfactory to the Committee or
shares of Common Stock owned by the optionee, including Restricted Stock, or
by retaining shares otherwise issuable pursuant to the Option, in each case
valued at their Fair Market Value on the date of delivery or retention, or
such other lawful consideration as the Committee may determine.
-2-
<PAGE>
6. STOCK EQUIVALENTS
(a) GRANT OF STOCK EQUIVALENTS. Subject to the provisions of the
Plan, the Committee may grant rights to receive payment from the Company
based in whole or in part on the value of the Common Stock. The Committee
shall determine at the time of grant or thereafter whether Stock Equivalents
are settled in cash, Common Stock or other securities of the Company, Awards
or other property.
(b) STOCK APPRECIATION RIGHTS. Stock Equivalents may include rights
to receive any excess in value of shares of Common Stock over the exercise
price ("Stock Appreciation Rights" or "SARs") which may be granted in tandem
with an Option (at or after the award of the Option), or alone and unrelated
to an Option. SARs in tandem with an Option shall terminate to the extent
that the related Option is exercised, and the related Option shall terminate
to the extent that the tandem SARs are exercised. The Committee shall fix the
exercise price of each SAR or specify the manner in which the price shall be
determined and may define the manner of determining the excess in value of
the shares of Common Stock. An SAR granted in tandem with an Option shall
have an exercise price not less than the exercise price of the related
Option. An SAR granted alone and unrelated to an Option may not have an
exercise price less than 100% of the Fair Market Value of the Common Stock on
the date of the grant, provided that such an SAR granted to a new employee,
consultant or non-employee director within 90 days of the date of employment
may have a lower exercise price so long as it is not less than 100% of Fair
Market Value on the date of employment.
7. STOCK GRANTS
(a) GRANT OF STOCK. Subject to the provisions of the Plan, the
Committee may grant shares of Common Stock upon such terms and conditions as
the Committee determines. Stock Grants may be issued for no cash
consideration, such minimum consideration as may be required by applicable
law or such other consideration as the Committee may determine.
(b) RESTRICTED STOCK. Stock Grants may include shares subject to
forfeiture ("Restricted Stock"). The Committee will determine the duration of
the period (the "Restricted Period") during which, and the conditions under
which, the shares may be forfeited to the Company and the other terms and
conditions of such Awards. Shares of Restricted Stock may not be sold,
assigned, transferred, pledged or otherwise encumbered, except as permitted
by the Committee, during the Restricted Period. Shares of Restricted Stock
shall be evidenced in such manner as the Committee may determine. Any
certificates issued in respect of shares of Restricted Stock shall be
registered in the name of the Participant and unless otherwise determined by
the Committee, deposited by the Participant, together with a stock power
endorsed in blank, with the Company. At the expiration of the Restricted
Period, the Company shall deliver such certificates to the Participant or if
the Participant has died, to the Participant's Designated Beneficiary.
-3-
<PAGE>
8. GENERAL PROVISIONS APPLICABLE TO AWARDS
(a) REPORTING PERSON LIMITATIONS. Notwithstanding any other
provision of the Plan, to the extent required to qualify for the exemption
provided by Rule 16b-3 under the Exchange Act, Awards made to a Reporting
Person shall not be transferable by such person other than by will or the
laws of descent and distribution and are exercisable during such person's
lifetime only by such person or by such person's guardian or legal
representative. If then permitted by Rule 16b-3, such Awards, unless
Incentive Stock Options, may also be made transferable pursuant to a
Qualified Domestic Relations Order as defined in the Code or Title I of the
Employee Retirement Income Security Act or the rules thereunder.
(b) DOCUMENTATION. Each Award under the Plan shall be evidenced by a
writing delivered to the Participant specifying the terms and conditions
thereof and containing such other terms and conditions not inconsistent with
the provisions of the Plan as the Committee considers necessary or advisable
to achieve the purposes of the Plan or to comply with applicable tax and
regulatory laws and accounting principles.
(c) COMMITTEE DISCRETION. Each type of Award may be made alone, in
addition to or in relation to any other Award. The terms of each type of
Award need not be identical, and the Committee need not treat Participants
uniformly. Except as otherwise provided by the Plan or a particular Award,
any determination with respect to an Award may be made by the Committee at
the time of grant or at any time thereafter.
(d) DIVIDENDS AND CASH AWARDS. In the discretion of the Committee,
any Award under the Plan may provide the Participant with (i) dividends or
dividend equivalents payable currently or deferred with or without interest
and (ii) cash payments in lieu of or in addition to an Award.
(e) TERMINATION OF EMPLOYMENT. The Committee shall determine the
effect on an Award of the disability, death, retirement or other termination
of employment or service on the Board of Directors of a Participant and the
extent to which, and the period during which, the Participant's legal
representative, guardian or Designated Beneficiary may receive payment of an
Award or exercise rights thereunder.
(f) CHANGE IN CONTROL. In order to preserve a Participant's rights
under an Award in the event of a change in control of the Company (as defined
by the Committee), the Committee in its discretion may, at the time an Award
is made or at any time thereafter, take one or more of the following actions:
(i) provide for the acceleration of any time period relating to the exercise
or payment of the Award, (ii) provide for payment to the Participant of cash
or other property with a Fair Market Value equal to the amount that would
have been received upon the exercise or payment of the Award had the Award
been exercised or paid upon the change in control, (iii) adjust the terms of
the Award in a manner determined by the Committee to reflect the change in
control, (iv) cause the Award to be assumed, or new rights substituted
therefor, by another entity, or (v) make such other provision as the
Committee may consider equitable to Participants and in the best interests of
the Company.
-4-
<PAGE>
(g) LOANS. The Committee may authorize the making of loans or cash
payments to Participants in connection with the grant or exercise any Award
under the Plan, which loans may be secured by any security, including Common
Stock, underlying or related to such Award (provided that the loan shall not
exceed the Fair Market Value of the security subject to such Award), and
which may be forgiven upon such terms and conditions as the Committee may
establish at the time of such loan or at any time thereafter.
(h) WITHHOLDING TAXES. The Participant shall pay to the Company, or
make provision satisfactory to the Committee for payment of, any taxes
required by law to be withheld in respect of Awards under the Plan no later
than the date of the event creating the tax liability. In the Committee's
discretion, such tax obligations may be paid in whole or in part in shares of
Common Stock, including shares retained from the Award creating the tax
obligation, valued at their Fair Market Value on the date of delivery. The
Company and its Affiliates may, to the extent permitted by law, deduct any
such tax obligations from any payment of any kind otherwise due to the
Participant.
(i) FOREIGN NATIONALS. Awards may be made to Participants who are
foreign nationals or employed outside the United States on such terms and
conditions different from those specified in the Plan as the Committee
considers necessary or advisable to achieve the purposes of the Plan or to
comply with applicable laws.
(j) AMENDMENT OF AWARD. The Committee may amend, modify or terminate
any outstanding Award, including substituting therefor another Award of the
same or a different type, changing the date of exercise or realization and
converting an Incentive Stock Option to a Nonstatutory Stock Option, provided
that the Participant's consent to such action shall be required unless the
Committee determines that the action, taking into account any related action,
would not materially and adversely affect the Participant.
9. CERTAIN DEFINITIONS
"Affiliate" means any business entity in which the Company owns
directly or indirectly 50% or more of the total voting power or has a
significant financial interest as determined by the Committee.
"Award" means any Stock Option, Stock Grant or Stock Equivalent
granted under the Plan.
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, or any successor law.
"Committee" means one or more committees each comprised of not less
than two members of the Board appointed by the Board to administer the Plan
or a specified portion thereof. Unless otherwise determined by the Board, if
a Committee is authorized to grant
-5-
<PAGE>
Awards to a Reporting Person or a Covered Employee, each member shall be a
"non-employee director" or the equivalent within the meaning of applicable
Rule 16b-3 under the Exchange Act or an "outside director" within the meaning
of Section 162(m) of the Code, respectively.
"Common Stock" or "Stock" means the Common Stock, $0.01 par value,
of the Company.
"Company" means Moldflow Corporation, a Delaware corporation.
"Covered Employee" means a "covered employee" within the meaning of
Section 162(m) of the Code.
"Designated Beneficiary" means the beneficiary designated by a
Participant, in a manner determined by the Committee, to receive amounts due
or exercise rights of the Participant in the event of the Participant's
death. In the absence of an effective designation by a Participant,
"Designated Beneficiary" means the Participant's estate.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor law.
"Fair Market Value" means, with respect to Common Stock or any other
property, the fair market value of such property as determined by the
Committee in good faith or in the manner established by the Committee from
time to time.
"Participant" means a person selected by the Committee to receive an
Award under the Plan.
"Reporting Person" means a person subject to Section 16 of the
Exchange Act.
10. MISCELLANEOUS
(a) NO RIGHT TO EMPLOYMENT. No person shall have any claim or right
to be granted an Award. Neither the Plan nor any Award hereunder shall be
deemed to give any employee the right to continued employment or to limit the
right of the Company to discharge any employee at any time.
(b) NO RIGHTS AS STOCKHOLDER. Subject to the provisions of the
applicable Award, no Participant or Designated Beneficiary shall have any
rights as a stockholder with respect to any shares of Common Stock to be
distributed under the Plan until he or she becomes the holder thereof. A
Participant to whom Common Stock is awarded shall be considered the holder of
the Stock at the time of the Award except as otherwise provided in the
applicable Award.
(c) EFFECTIVE DATE. Subject to the approval of the stockholders of
the Company, the Plan shall be effective on August 14, 1997.
(d) AMENDMENT OF PLAN. The Board may amend, suspend or terminate the
Plan or
-6-
<PAGE>
any portion thereof at any time, subject to such stockholder approval as the
Board determines to be necessary or advisable to comply with any tax or
regulatory requirement.
(e) GOVERNING LAW. The provisions of the Plan shall be governed by
and interpreted in accordance with the laws of the state of Delaware.
------------------------------------
THIS PLAN WAS INITIALLY APPROVED BY THE BOARD OF DIRECTORS ON AUGUST 14, 1997.
REVISED OCTOBER 20, 1998, PER BOARD CONSENT. REVISED APRIL 22, 1999 PER BOARD
VOTE, RATIFIED BY A CONSENT OF ALL STOCKHOLDERS EFFECTIVE APRIL 23, 1999.
-7-
<PAGE>
Exhibit 10.32
FORM OF INCENTIVE STOCK OPTION
Dear :
Pursuant to the terms and conditions of the Moldflow Corporation 1997 Equity
Incentive Plan (the "Plan"), you have been granted an Incentive Stock Option to
purchase _____ shares (the "Option") of Common Stock as outlined below.
Granted To:
SSN
Grant ID Number:
Grant Date:
Options Granted:
Option Price per Share: $ Total Cost to Exercise: $
Expiration Date:
Vesting Schedule:
This Option is intended to be treated as an Incentive Stock Option under Section
422 of the Internal Revenue Code of 1986 (the "Code").
By my signature below, I hereby acknowledge receipt of this Option granted on
the date shown above, which has been issued to me under the terms and conditions
of the Plan. I further acknowledge receipt of the copy of the Plan and agree to
conform to all of the terms and conditions of the Option and the Plan.
Moldflow Corporation Employee
- ---------------------------- ----------------------------
Suzanne E. Rogers
Vice President
Note: If there are any discrepancies in the name or address shown above,
please make the appropriate corrections on this form.
<PAGE>
MOLDFLOW CORPORATION 1997 EQUITY INCENTIVE PLAN
Incentive Stock Option Terms And Conditions
1. Plan Incorporated by Reference. This Option is issued pursuant to the
terms of the Plan and may be amended as provided in the Plan. Capitalized terms
used and not otherwise defined in this certificate have the meanings given to
them in the Plan. This certificate does not set forth all of the terms and
conditions of the Plan, which are incorporated herein by reference. The
Committee administers the Plan and its determinations regarding the operation of
the Plan are final and binding. Copies or the Plan may be obtained upon written
request without charge from the Secretary of the Company.
2. Option Price. The price to be paid for each share of Common Stock
issued upon exercise of the whole or any part of this Option is the Option Price
set forth on the face of this certificate.
3. Exercisability Schedule. This Option may be exercised at any time and
from time to time for the number of shares and in accordance with the
exercisability schedule set forth on the face of this certificate, but only for
the purchase of whole shares. This Option may not be exercised as to any shares
after the Expiration Date.
4. Method of Exercise. To exercise this Option, the Optionholder shall
deliver written notice of exercise to the Company specifying the number of
shares with respect to which the Option is being exercised accompanied by
payment of the Option Price for such shares in cash, by certified check or in
such other form, including shares of Common Stock of the Company valued at their
Fair Market Value on the date of delivery, as the Committee may approve.
Promptly following such notice, the Company will deliver to the Optionholder a
certificate representing the number of shares with respect to which the Option
is being exercised.
5. Rights as a Stockholder or Employee. The Optionholder shall not have
any rights in respect of shares as to which the Option shall not have been
exercised and payment made as provided above. The Optionholder shall not have
any rights to continued employment by the Company or its Affiliates by virtue of
the grant of this Option.
6. Recapitalization, Mergers, Etc. As provided in the Plan, in the event
of corporate transactions affecting the Company's outstanding Common Stock, the
Committee shall equitably adjust the number and kind of shares subject to this
Option and the exercise price hereunder or make provision for a cash payment. If
such transaction involves a consolidation or merger of the Company with another
entity, the sale or exchange of all or substantially all of the assets of the
Company or a reorganization or liquidation of the Company, then in lieu of the
foregoing, the Committee may upon written notice to the Optionholder provide
that this Option shall terminate on a date not less than 20 days after the date
of such notice unless theretofore exercised. In connection with such notice, the
Committee may in its discretion accelerate or waive any deferred exercise
period.
7. Option Not Transferable. This Option is not transferable by the
Optionholder otherwise than by will or the laws of descent and distribution, and
is exercisable, during the Optionholder's lifetime, only by the Optionholder.
The naming of a Designated Beneficiary does not constitute a transfer.
8. Exercise of Option After Termination of Employment. If the
Optionholder's employment with (a) the Company, (b) an Affiliate, or (c) a
corporation (or parent or subsidiary corporation of such corporation) issuing or
assuming a stock option in a transaction to which section 424(a) of the Code
applies, is terminated for any reason other than by disability (within the
meaning of section 22(e)(3) of the Code) or death, the Optionholder may
exercise the rights which were available to the Optionholder at the time of such
termination only within one month from the date of termination. If
Optionholder's employment is terminated as a result of disability, such rights
may be exercised within twelve months from the date or termination. Upon the
death of the Optionholder, his or her Designated Beneficiary shall have the
right, at any time within one month after the date of death, to exercise in
whole or in part any rights that were available to the Optionholder at the time
of death. Notwithstanding the foregoing, no rights under this Option may be
exercised after the Expiration Date.
9. Compliance with Securities Laws. It shall be a condition to the
Optionholder's right to purchase shares of Common Stock hereunder that the
Company may, in its discretion, require (a) that the shares of Common Stock
reserved for issue upon the exercise of this Option shall have been duly listed,
upon official notice of issuance, upon any national securities exchange or
automated quotation system on which the Company's Common Stock may then be
listed or quoted, (b) that either (i) a registration statement under the
Securities Act of 1933 with respect to the shares shall be in effect, or (ii) in
the opinion of counsel for the Company, the proposed purchase shall be exempt
from registration under that Act and the Optionholder shall have made such
undertakings and agreements with the Company as the Company may reasonably
require, and (c) that such other steps, if any, as counsel for the Company shall
consider necessary to comply with any law applicable to the issue of such shares
by the Company shall have been taken by the Company or the Optionholder, or
both. The certificates representing the shares purchased under this Option may
contain such legends as counsel for the Company shall consider necessary to
comply with any applicable law.
10. Payment of Taxes. The Optionholder shall pay to the Company, or make
provision satisfactory to the Company for payment of, any taxes required by law
to be withheld with respect to the exercise of this Option. The Committee may,
in its discretion, require any other Federal or state taxes imposed on the sale
of the shares to be paid by the Optionholder. In the Committee's discretion,
such tax obligations may be paid in whole or in part in shares of Common Stock,
including shares retained from the exercise of this Option, valued at their Fair
Market Value on the date of delivery. The Company and its Affiliates may, to the
extent permitted by law, deduct any such tax obligations from any payment of any
kind otherwise due to the Optionholder.
11. Notice of Sale of Shares Required. The Optionholder agrees to notify
the Company in writing within 30 days of the disposition of any shares purchased
upon exercise of this Option if such disposition occurs within two years of the
date of the grant of this Option or within one year after such purchase.
<PAGE>
EXHIBIT 10.33
[LOGO] MOLDFLOW
FORM OF NON-QUALIFIED STOCK OPTION
Dear :
Pursuant to the terms and conditions of the Moldflow Corporation 1997 Equity
Incentive Plan (the "Plan"), you have been granted a Non-Qualified Stock Option
to purchase _____ shares (the "Option") of Common Stock as outlined below.
Granted To:
Grant ID Number:
Grant Date:
Options Granted:
Option Price per Share: $ Total Cost to Exercise: $
Expiration Date:
Vesting Schedule:
This Option shall not be treated as an Incentive Stock Option under Section 422
of the Internal Revenue Code of 1986 (the "Code").
By my signature below, I hereby acknowledge receipt of this Option granted on
the date shown above, which has been issued to me under the terms and conditions
of the Plan. I further acknowledge receipt of the copy of the Plan and agree to
conform to all of the terms and conditions of the Option and the Plan.
Moldflow Corporation Employee
- ---------------------------- ----------------------------
Suzanne Rogers
Vice President
Note: If there are any discrepancies in the name or address shown above,
please make the appropriate corrections on this form.
<PAGE>
MOLDFLOW CORPORATION 1997 EQUITY INCENTIVE PLAN
Nonstatutory Stock Option Terms And Conditions
1. Plan Incorporated by Reference. This Option is issued pursuant to the
terms of the Plan and may be amended as provided in the Plan. Capitalized terms
used and not otherwise defined in this certificate have the meanings given to
them in the Plan. This certificate does not set forth all of the terms and
conditions of the Plan, which are incorporated herein by reference. The
Committee administers the Plan and its determinations regarding the operation of
the Plan are final and binding. Copies or the Plan may be obtained upon written
request without charge from the Secretary of the Company.
2. Option Price. The price to be paid for each share of Common Stock
issued upon exercise of the whole or any part of this Option is the Option Price
set forth on the face of this certificate.
3. Exercisability Schedule. This Option may be exercised at any time and
from time to time for the number of shares and in accordance with the
exercisability schedule set forth on the face of this certificate, but only for
the purchase of whole shares. This Option may not be exercised as to any shares
after the Expiration Date.
4. Method of Exercise. To exercise this Option, the Optionholder shall
deliver written notice of exercise to the Company specifying the number or
shares with respect to which the Option is being exercised accompanied by
payment of the Option Price for such shares in cash, by certified check or in
such other form, including shares of Common Stock of the Company valued at their
Fair Market Value on the date of delivery, as the Committee may approve.
Promptly following such notice, the Company will deliver to the Optionholder a
certificate representing the number of shares with respect to which the Option
is being exercised.
5. Rights as a Stockholder or Employee. The Optionholder shall not have
any rights in respect of shares as to which the Option shall not have been
exercised and payment made as provided above. The Optionholder shall not have
any rights to continued employment by the Company or its Affiliates by virtue of
the grant of this Option.
6. Recapitalization, Mergers, Etc. As provided in the Plan, in the event
of corporate transactions affecting the Company's outstanding Common Stock, the
Committee shall equitably adjust the number and kind of shares subject to this
Option and the exercise price hereunder or make provision for a cash payment. If
such transaction involves a consolidation or merger of the Company with another
entity, the sale or exchange of all or substantially all of the assets of the
Company or a reorganization or liquidation of the Company, then in lieu of the
foregoing, the Committee may upon written notice to the Optionholder provide
that this Option shall terminate on a date not less than 20 days after the date
of such notice unless theretofore exercised. In connection with such notice, the
Committee may in its discretion accelerate or waive any deferred exercise
period.
7. Option Not Transferable. This Option is not transferable by the
Optionholder otherwise than by will or the laws of descent and distribution, and
is exercisable, during the Optionholder's lifetime, only by the Optionholder.
The naming of a Designated Beneficiary does not constitute a transfer.
8. Exercise of Option After Termination of Employment. If the
Optionholder's status as an employee or consultant of (a) the Company, (b) an
Affiliate, or (c) a corporation (or parent or subsidiary corporation of such
corporation) issuing or assuming a stock option in a transaction to which
section 424(a) of the Code applies, is terminated for any reason other than by
disability (within the meaning of section 22(e)(3) of the Code) or death, the
Optionholder may exercise the rights which were available to the Optionholder at
the time of such termination only within one month from the date of termination.
If such status is terminated as a result of disability, such rights may be
exercised within twelve months from the date or termination. Upon the death of
the Optionholder, his or her Designated Beneficiary shall have the right, at any
time within one month after the date of death, to exercise in whole or in part
any rights that were available to the Optionholder at the time of death.
Notwithstanding the foregoing, no rights under this Option may be exercised
after the Expiration Date.
9. Compliance with Securities Laws. It shall be a condition to the
Optionholder's right to purchase shares of Common Stock hereunder that the
Company may, in its discretion, require (a) that the shares of Common Stock
reserved for issue upon the exercise of this Option shall have been duly listed,
upon official notice of issuance, upon any national securities exchange or
automated quotation system on which the Company's Common Stock may then be
listed or quoted, (b) that either (i) a registration statement under the
Securities Act of 1933 with respect to the shares shall be in effect, or (ii) in
the opinion of counsel for the Company, the proposed purchase shall be exempt
from registration under that Act and the Optionholder shall have made such
undertakings and agreements with the Company as the Company may reasonably
require, and (c) that such other steps, if any, as counsel for the Company shall
consider necessary to comply with any law applicable to the issue of such shares
by the Company shall have been taken by the Company or the Optionholder, or
both. The certificates representing the shares purchased under this Option may
contain such legends as counsel for the Company shall consider necessary to
comply with any applicable law.
10. Payment of Taxes. The Optionholder shall pay to the Company, or make
provision satisfactory to the Company for payment of, any taxes required by law
to be withheld with respect to the exercise of this Option. The Committee may,
in its discretion, require any other Federal or state taxes imposed on the sale
of the shares to be paid by the Optionholder. In the Committee's discretion,
such tax obligations may be paid in whole or in part in shares of Common Stock,
including shares retained from the exercise of this Option, valued at their Fair
Market Value on the date of delivery. The Company and its Affiliates may, to the
extent permitted by law, deduct any such tax obligations from any payment of any
kind otherwise due to the Optionholder.
<PAGE>
EXHIBIT 10.34
FORM OF NON-QUALIFIED STOCK OPTION FOR AUSTRALIAN EMPLOYEES
Dear :
Pursuant to the terms and conditions of the Moldflow Corporation 1997 Equity
Incentive Plan (the "Plan"), you have been granted a Non-Qualified Stock Option
to purchase _____ shares (the "Option") of Common Stock as outlined below.
Granted To:
Grant Date:
Options Granted:
Option Price per Share: $ Total Cost to Exercise: $
Expiration Date:
Vesting Schedule:
Notwithstanding the foregoing, this Option may not be exercised until the
earlier to occur of the following: (i) [5 years from the date of grant] (at
which time this Option may be exercised in full) and (ii) the time that the
Company has completed an initial public offering of its Common Stock or
immediately prior to the time that there has occurred a sale of all or
substantially all of the outstanding stock or assets of the Company for a
consideration consisting of cash, publicly traded securities or a combination of
cash or publicly traded securities (at which time this Option may be exercised
with respect to the number of shares set forth in the above schedule); provided
that, this Option may not be exercised if the Optionholder has elected up-front
taxation with respect to the exercise of this Option under applicable Australian
law.
<PAGE>
By my signature below, I hereby acknowledge receipt of this Option granted on
the date shown above, which has been issued to me under the terms and conditions
of the Plan. I further acknowledge receipt of the copy of the Plan and agree to
conform to all of the terms and conditions of the Option and the Plan.
Moldflow Corporation Employee
- ------------------------- --------------------------
Suzanne E. Rogers
Vice President
Note: if there are any discrepancies In the name or address shown above,
please make the appropriate corrections on this form.
<PAGE>
MOLDFLOW CORPORATION 1997 EQUITY INCENTIVE PLAN
Australian Stock Option Terms And Conditions
1. Plan Incorporated by Reference. This Option is issued pursuant to the
terms of the Plan and may be amended as provided in the Plan. Capitalized terms
used and not otherwise defined in this certificate have the meanings given to
them in the Plan. This certificate does not set forth all of the terms and
conditions of the Plan, which are incorporated herein by reference. The
Committee administers the Plan and its determinations regarding the operation of
the Plan are final and binding. Copies of the Plan may be obtained upon written
request without charge from the Secretary of the Company.
2. Option Price. The price to be paid for each share of Common Stock
issued upon exercise of the whole or any part of this Option is the Option Price
set forth on the face of this certificate.
3. Exercisability Schedule. This Option may be exercised at any time and
from time to time for the number of shares and in accordance with the
exercisability schedule set forth on the face of this certificate, but only for
the purchase of whole shares. This Option may not be exercised as to any shares
after the Expiration Date.
4. Method of Exercise. To exercise this Option, the Optionholder shall
deliver written notice of exercise to the Company specifying the number of
shares with respect to which the Option is being exercised accompanied by
payment of the Option Price for such shares in cash, by certified check or in
such other form, including shares of Common Stock of the Company valued at their
Fair Market Value on the date of the delivery, as the Committee may approve.
Promptly following such notice, the Company will deliver to the Optionholder a
certificate representing the number of shares with respect to which the Option
is being exercised.
5. Rights as a Stockholder or Employee. The Optionholder shall not have
any rights in respect of shares as to which the Option shall not have been
exercised and payment made as provided above. The Optionholder shall not have
any rights to continued employment by the Company or its Affiliates by virtue of
the grant of this Option.
6. Recapitalization, Mergers, Etc. As provided in the Plan, in the event
of corporate transactions affecting the Company's outstanding Common Stock, the
Committee shall equitably adjust the number and kind of shares subject to this
Option and the exercise price hereunder or make provision for a cash payment. If
such transaction involves a consolidation or merger of the Company with another
entity, the sale or exchange of all or substantially all of the assets of the
Company or a reorganization or liquidation of the Company, then in lieu of the
foregoing, the Committee may upon written notice to the Optionholder provide
that this Option shall terminate on a date not less than 20 days after the date
of such notice unless theretofore exercised. In connection with such notice, the
Committee may in its discretion accelerate or waive any deferred exercise
period.
7. Transferability. This Option is not transferable by the Optionholder
otherwise than by will or the laws of descent and distribution, and is
exercisable, during the Optionholder's lifetime, only by the Optionholder. The
naming of a Designated Beneficiary does not constitute a transfer.
Notwithstanding the foregoing, the Option may not transferred by the will or the
laws of descent and distribution prior to the time that the Company has
completed an initial public offering of its Common Stock or there has occurred a
sale of all or substantially all of the outstanding stock or assets of the
Company for a consideration consisting of cash, publicly traded securities or a
combination of cash or publicly traded securities.
8. No Exercise of Option After Termination of Employment. If the
Optionholder's status as an employee or consultant of (a) the Company, (b) an
Affiliate, or (c) any corporation (or parent or subsidiary corporation of such
corporation) issuing or assuming a stock option of the Company, is terminated
for any reason, including by disability, this Option shall immediately terminate
as of the time of such termination.
9. Compliance with Securities Laws. It shall be a condition to the
Optionholder's right to purchase shares of Common Stock hereunder that the
Company may, in its discretion, require (a) that the shares of Common Stock
reserved for issue upon the exercise of this Option shall have been duly listed,
upon official notice of issuance, upon any national securities exchange or
automated quotation system on which the Company's Common Stock may then be
listed or quoted, (b) that either (i) a registration statement under the
Securities Act of 1933 with respect to the shares shall be in effect, or (ii) in
the opinion of counsel for the Company, the proposed purchase shall be exempt
from registration under that Act and the Optionholder shall have made such
undertakings and agreements with the Company as the Company may reasonably
require, and (c) that such other steps, if any, as counsel for the Company shall
consider necessary to comply with any law applicable to the issue of such shares
by the Company shall have been taken by the Company or the Optionholder, or
both. The certificates representing the shares purchased under this Option may
contain such legends as counsel for the Company shall consider necessary to
comply with any applicable law.
10. Payment of Taxes. The Optionholder shall pay to the Company, or make
provision satisfactory to the Company for payment of any taxes required by law
to be withheld with respect to the exercise of this Option. The Committee may,
in its discretion, require any other Federal or state taxes imposed on the sale
of the shares to be paid by the Optionholder. In the Committee's discretion,
such tax obligations may be paid in whole or in part in shares of Common Stock,
including shares retained from the exercise of this Option, valued at their Fair
Market Value on the date of delivery. The Company and its Affiliates may, to the
extent permitted by law, deduct any such tax obligations from any payment of any
kind otherwise due to the Optionholder.
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in this Registration Statement on Form S-1 of our
report dated August 20, 1999, except as to Note 16 for which the date is
January 20, 2000, relating to the consolidated financial statements of Moldflow
Corporation, which appears in such Registration Statement. We also consent to
the reference to us under the heading "Experts" in such Registration Statement.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
January 24, 2000
