SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): June 18, 1999
MSC.SOFTWARE CORPORATION
(Exact Name of Registrant as Specified in Charter)
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| DELAWARE | 1-8722 | 95-2239450 |
|--------------------|--------------------|---------------------|
| (State or Other | (Commission File | (IRS Employer |
| Jurisdiction | Number) | Identification No.)|
| of Incorporation) | | |
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815 COLORADO BOULEVARD, LOS ANGELES, CALIFORNIA 90041
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number including area code: (323) 258-9111
THE MACNEAL-SCHWENDLER CORPORATION
(Former name or former address, if changed since last report.)
<PAGE>
Item 2. Acquisition or Disposition of Assets.
On June 18, 1999, MSC.Software Corporation, formerly,
The MacNeal-Schwendler Corporation ("MSC"), acquired MARC
Analysis Research Corporation, a California corporation ("MARC"),
pursuant to an Agreement and Plan of Merger dated as of May 26,
1999 among MSC, MSC Holdings Co. II, a wholly-owned subsidiary of
MSC (the "Merger Sub"), MARC and the following Significant
Shareholders: Dendron Technology B.V., a Dutch corporation
("Dendron"), Fronos Technology B.V., a Dutch Corporation
("Fronos") and Nearchos Irinarchos (the "Merger Agreement").
Dendron and Fronos are each owned by Mr. Irinarchos. The
transaction had a two-step structure whereby MSC purchased
approximately 42% of MARC's outstanding common stock from Dendron
and Fronos pursuant to a Stock Purchase Agreement dated as of May
26, 1999 among Dendron, Fronos and MSC (the "Stock Purchase
Agreement"), and immediately thereafter, pursuant to the Merger
Agreement, the Merger Sub merged with and into MARC, with MARC
being the surviving corporation and a wholly-owned subsidiary of
MSC. MARC is a software developer and supplier whose products
include MARC, a non-linear finite element analysis program for
engineering structural analysis, Mentat, a graphical user
interface for MARC, and MARC/Autoforge, a simulation program for
the bulk forging industry.
The aggregate purchase price for the acquisition paid
to shareholders and holders of options of MARC was valued at
approximately $36 million. The Merger Agreement provided for a
cash purchase price of approximately $20.3 million and the Stock
Purchase Agreement provided for MSC to issue a package of
securities to Dendron and Fronos, including $11 million principal
amount of subordinated notes due in 10 years, approximately $3.2
million principal amount of subordinated notes due in two years,
$2 million principal amount of MSC's 7 7/8% convertible
subordinated debentures due August 18, 2004 and five year
warrants to purchase 1,400,000 shares of MSC common stock at an
exercise price of $10.00 per share.
The purchase price was determined through arms-length
negotiations between members of the Board of Directors of MSC and
representatives of MARC. MSC considered the revenues and results
of operations of MARC in recent periods, estimates of the
business potential of MARC, MARC's software offerings in the non-
linear finite element analysis market segment and other synergies
of the two companies (such as the ability to offer a full suite
of FEA products and leveraging technology and distribution
channels). In connection with the acquisition, MSC has
established a retention bonus plan valued at approximately $1.4
million for employees of MARC who continue their employment
following the acquisition.
MSC funded the cash portion of the purchase price out
of available cash and from proceeds of the sale of a 10% interest
in LMS International. MSC is currently investigating whether
alternate financing methods would be desirable to replenish cash.
Copies of the Merger Agreement, the Stock Purchase
Agreement, and other material documents related to the
acquisition are attached hereto as Exhibits 2.1, 2.2, 4.1, 4.2
and 4.3 respectively, and are incorporated herein by reference.
<PAGE> 2
Item 5. Other Events.
On June 23, 1999 MSC issued a press release related to
the change in MSC's name to "MSC.Software Corporation" attached
hereto as Exhibit 99.1, which is incorporated herein by
reference.
On June 24, 1999, MSC issued a press release related to
MSC's acquisition of Universal Analytics, Inc. attached hereto as
Exhibit 99.2, which is incorporated herein by reference.
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits.
(a) Financial Statements.
The following financial information is not included
with this report and will be filed by amendment not later than 60
days after the date on which this Current Report on Form 8-K is
required to be filed:
(1) Audited financial statements of MARC for the
fiscal year ended December 31, 1998 and the independent auditors'
report of PricewaterhouseCoopers LLP with respect thereto.
(2) Unaudited interim financial statements of MARC for
the three months ended March 31, 1999.
(b) Pro Forma Financial Information.
The following pro forma financial is not included with
this report and will be filed by amendment not later than 60 days
after the date on which this Current Report on Form 8-K is
required to be filed:
(1) Pro forma combined balance sheet of MSC and MARC
as of March 31, 1999, as if the acquisition had occurred on the
balance sheet date.
(2) Pro forma combined statement of operations for MSC
and MARC for the year ended December 31, 1998 and the three
months ended March 31, 1999, as if the acquisition had occurred
on the first day of the periods presented.
(3) Notes supporting the pro forma financial
statements referred to in (1) and (2) above.
<PAGE> 3
(c) Exhibits.
Exhibit Number Description
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2.1 Agreement and Plan of Merger dated as of May
26, 1999 by and among The MacNeal-Schwendler
Corporation, MSC Holdings Co. II, MARC
Analysis Research Corporation, Dendron
Technology B.V., Fronos Technology B.V. and
Nearchos Irinarchos. (1)
2.2 Stock Purchase Agreement dated as of May 26,
1999 among The MacNeal-Schwendler
Corporation, Dendron Technology B.V. and
Fronos Technology B.V. (1)
4.1 The MacNeal-Schwendler Corporation Indenture
dated as of June 17, 1999 with Chase
Manhattan Bank & Trust Company N.A. as
Trustee. (1)
4.2 The MacNeal-Schwendler Corporation Warrant
Agreement dated as of June 18, 1999 with The
MacNeal-Schwendler Corporation acting in the
capacity of Warrant Agent. (1)
4.3 Registration Rights Agreement dated June 18,
1999 among The MacNeal-Schwendler
Corporation, Dendron Technology B.V. and
Fronos Technology B.V.
99.1 Press release issued June 23, 1999.
99.2 Press release issued June 24, 1999.
_________________
(1) The Schedules and Exhibits to the Agreement and Plan of
Merger, the Stock Purchase Agreement, the Indenture and the
Warrant Agreement are not filed with this report. The registrant
will furnish supplementally a copy of any of the Schedules or
Exhibits to the Commission upon request.
<PAGE> 4
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
MSC.Software Corporation
By: /s/ Louis A. Greco
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Louis A. Greco
Chief Financial Officer
Date: July 1, 1999
<PAGE>
Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
dated as of
May 26, 1999,
among
MARC Analysis Research Corporation,
The Significant Shareholders,
The MacNeal-Schwendler Corporation
and
Msc Holdings Co. II
<PAGE>
ARTICLE I - THE MERGER
1.1 The Merger 1
1.2 Closing 2
1.3 Effective Time 2
1.4 Conversion of Shares 2
1.5 Delivery of Merger Consideration 3
1.6 Dissenting Shares 4
ARTICLE II - REPRESENTATIONS AND WARRANTIES OF COMPANY AND THE
SIGNIFICANT SHAREHOLDERS
2.1 Subsidiaries; Organization and Related
Matters 4
2.2 Capitalization 5
2.3 Financial Statements; Contingencies 5
2.4 No Material Adverse Changes 6
2.5 Tax and Other Returns and Reports 6
2.6 Material Contracts 8
2.7 Property 9
2.8 Authorization; No Conflicts 9
2.9 Actions and Orders 11
2.10 Dividends and Other Distributions 11
2.11 Insurance 11
2.12 Compliance with Law 12
2.13 Employee Benefits 13
2.14 Certain Interests 15
2.15 Bank Accounts, Powers, etc. 15
2.16 No Brokers or Finders 15
2.17 Intangible Property 16
2.18 Receivables 17
2.19 Customers and Suppliers 17
2.20 Certain Payments 17
2.21 Employees 18
2.22 Disclosure 18
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF BUYER
3.1 Organization and Related Matters 19
3.2 Authorization 19
3.3 Approvals 19
3.4 No Conflicts 19
3.5 No Brokers or Finders 19
3.6 Legal Proceedings 19
3.7 Merger Sub 20
3.8 Available Funds 20
3.9 SEC Reports 20
ARTICLE IV - COVENANTS RELATING TO THE PERIOD ENDING
WITH THE CLOSING
4.1 Access 20
4.2 Changes; Reports 21
4.3 Conduct of Business 21
4.4 Permits and Approvals 22
4.5 Preservation of Business Before Closing Date 23
4.6 Confidentiality 23
4.7 Negotiations 23
4.8 Shareholders' Meeting 23
4.9 Tax Returns 24
ARTICLE V - ADDITIONAL CONTINUING COVENANTS
5.1 Nondisclosure of Proprietary Data 24
5.2 Tax Cooperation 24
ARTICLE VI - CONDITIONS
6.1 Conditions to Obligations of All Parties 25
6.2 Conditions to Buyer's Obligations 25
6.3 Conditions to Obligations of Company and the
Significant Shareholders. 26
ARTICLE VII - TERMINATION OF OBLIGATIONS; SURVIVAL
7.1 Termination of Agreement 27
7.2 Effect of Termination 28
ARTICLE VIII - INDEMNIFICATION
8.1 Effect of Knowledge; Waiver 29
8.2 Losses 29
8.3 Indemnification of Buyer 29
8.4 Indemnification by Buyer 30
8.5 Survival. 30
8.6 Limitation on Indemnification; Escrow 30
8.7 Procedure 31
ARTICLE IX - GENERAL
9.1 Amendments; Waivers 32
9.2 Schedules; Exhibits; Integration 33
9.3 Best Efforts; Further Assurances 33
9.4 Governing Law 33
9.5 No Assignment 34
9.6 Headings 34
9.7 Counterparts 34
9.8 Publicity and Reports 34
9.9 Notices 34
9.10 Expenses and Attorneys Fees 36
9.11 Shareholder Representative 36
9.12 Specific Performance 37
9.13 Agreement to Arbitrate 37
ARTICLE X - DEFINITIONS
10.1 Definitions 38
<PAGE>
Exhibits
Exhibit A Form of Letter of Transmittal
Exhibit B Forms of Software Licensing Agreements
Exhibit C Forms of Confidentiality and Inventions Agreements
Exhibit D Form of Opinion of Counsel to Company
Exhibit E Form of Opinion of Counsel to Buyer
Exhibit F Terms of Stay Bonus Letter
Exhibit G Form of Agreement of Merger
Exhibit H Form of Consulting Agreement
Exhibit I Form of Escrow Agreement
Exhibit J Form of Non-Competition Agreement
Schedules
Schedule 1.1 Surviving Corporation Officers and Directors
Schedule 2.1 Subsidiaries; Acquired Company Officers and
Directors
Schedule 2.2 Capitalization; Options; Share Ownership
Schedule 2.3 Liabilities: Auditor's Exceptions
Schedule 2.5 Taxes; Audits; Credits
Schedule 2.6 Material Contracts
Schedule 2.7 Property
Schedule 2.8 Authorizations
Schedule 2.9 Actions; Orders
Schedule 2.11 Insurance
Schedule 2.12 Compliance; Permits
Schedule 2.13 Employee Benefits
Schedule 2.14 Certain Interests
Schedule 2.15 Bank Accounts, Powers, etc.
Schedule 2.17 Intangible Property
Schedule 2.19 Customers and Suppliers
Schedule 2.21 Employees
Schedule 3.3 Buyer Approvals
Schedule 4.3(q) Capital Expenditures
<PAGE>
AGREEMENT AND PLAN OF MERGER
This Agreement ("Agreement") is entered into as of
May 26, 1999, by and among The MacNeal-Schwendler
Corporation, a Delaware corporation ("Buyer"), MSC Holdings
Co. II, a California corporation ("Merger Sub"), MARC
Analysis Research Corporation, a California corporation
("Company"), and the following "Significant Shareholders" of
Company: Dendron Technology B.V., a Dutch corporation
("Dendron"), Fronos Technology B.V., a Dutch corporation
("Fronos") and Nearchos Irinarchos, a resident of Sweden.
R E C I T A L S
WHEREAS, the Persons listed on Schedule 2.2 own
all issued and outstanding shares of Company Common Stock,
1/50 cent par value (the "Shares");
WHEREAS, the Boards of Directors of Buyer and
Company have each determined that it is in the respective
best interests of Buyer and Company for Buyer to acquire
Company through the merger of Merger Sub with and into
Company (the "Merger") upon the terms and subject to the
conditions of this Agreement;
WHEREAS, in connection with the Merger, Dendron,
Fronos and Buyer are entering into a Stock Purchase
Agreement dated the date of this Agreement (the "Stock
Purchase Agreement") providing for Buyer's acquisition,
immediately before the Merger, of 10,325,688 Shares owned by
Dendron and Fronos (the "Stock Purchase");
WHEREAS, Company and its Subsidiaries are
collectively referred to as the "Acquired Companies;" and
WHEREAS, other capitalized terms used in this
Agreement have the meanings given in Article X.
A G R E E M E N T
In consideration of the mutual promises contained
in this Agreement and intending to be legally bound, the
Parties agree as follows:
ARTICLE I - THE MERGER
1.1 The Merger.
At the Effective Time, Merger Sub will merge with
and into Company, the separate corporate existence of Merger
Sub will then cease, and Company will be the surviving
corporation (the "Surviving Corporation") and a wholly-owned
subsidiary of Buyer. The separate corporate existence of
Company with all its rights, privileges, immunities, powers
and franchises will continue unaffected by the Merger, and
Company will succeed, without other transfer, to all of
Merger Sub's rights and properties and will be subject to
all of Merger Sub's debts and liabilities. Merger Sub's
Articles of Incorporation and Bylaws in effect immediately
before the Effective Time will be the Surviving
Corporation's Articles of Incorporation and Bylaws, except
that, at the Effective Time, Article I of the Surviving
Corporation's Articles of Incorporation will be amended to
provide that the Surviving Corporation's name is "MARC
Analysis Research Corporation." The Surviving Corporation's
directors and officers will be as stated on Schedule 1.1.
Those directors will hold office until their successors have
been duly elected or appointed and qualified or until their
earlier death, resignation or removal in accordance with the
Surviving Corporation's Articles of Incorporation and
Bylaws.
1.2 Closing.
The closing of the Merger (the "Closing") will
take place (a) at the offices of O'Melveny & Myers LLP, 400
South Hope Street, Los Angeles, California, beginning at
10:00 A.M., Los Angeles time on the second business day
after the last of the conditions in Article VI is fulfilled
or waived in accordance with this Agreement, or (b) as
otherwise agreed to by the Parties. The Stock Purchase
Closing will take place immediately before the Closing.
1.3 Effective Time.
As soon as practicable after the Closing, and
provided that this Agreement has not been terminated or
abandoned pursuant to Article VII, the Surviving Corporation
will file an Agreement of Merger and appropriate
certificates of approval with the Office of the Secretary of
State of the State of California. The Merger will then
become effective in accordance with the CGCL; the time of
such effectiveness is referred to in this Agreement as the
"Effective Time;" and the date of such effectiveness is
referred to as the "Effective Date."
1.4 Conversion of Shares.
(a) Company Stock. On the Effective Date, each
outstanding Share will be cancelled and extinguished, and will
be automatically converted into the right to receive the
Exchange Amount upon surrender of the Certificate
representing that Share in accordance with Section 1.5, upon
the terms and subject to the conditions in this Agreement,
including the escrow provisions of Section 8.6(b); except
that any Shares held by Buyer, any of its subsidiaries or
any Acquired Company will be cancelled (the "Cancelled
Shares"). After the Effective Time and until surrendered
for payment, each Certificate will represent only the right
to receive an amount equal to the Exchange Amount multiplied
by the number of Shares represented by that certificate (the
"Merger Consideration") (without interest). Buyer and
Surviving Corporation will be entitled to rely on Company's
stock records at the Effective Time.
(b) Company Options. At the Effective Time, by virtue
of the Merger and without any action by any Person, each then
outstanding Company Option will be cancelled and
extinguished, and will be automatically converted into the
right to receive an amount in cash (without interest) equal
to (i) the product of (x) the number of Shares issuable upon
the exercise in full of the Company Option, multiplied by
(y) the Exchange Amount less (ii) the Aggregate Exercise
Price of the Company Option (net of any required Tax
withholdings), all upon the terms and subject to the
conditions in this Agreement, including Section 8.6(b).
(c) Capital Stock of Merger Sub. At the Effective
Time, by virtue of the Merger and without any action by any
Person, each share of common stock of Merger Sub issued and
outstanding immediately before the Effective Time will be
cancelled and extinguished, and will be automatically
converted into and exchanged for one validly issued, fully
paid and nonassessable share of common stock of the
Surviving Corporation. Each stock certificate evidencing
ownership of any such shares of common stock of Merger Sub
will from then on evidence ownership of an equivalent number
of shares of common stock of the Surviving Corporation.
(d) No Further Ownership Rights in Common Stock. All
cash paid in respect of the surrender for exchange of Shares in
accordance with this Agreement will be deemed to be full
satisfaction of all rights pertaining to those Shares, and
there will be no further registration of transfers on the
records of the Surviving Corporation of Shares outstanding
immediately before the Effective Time. If, after the
Effective Time, certificates representing Shares are
presented to the Surviving Corporation for any reason, they
will be cancelled and exchanged on the terms and subject to
the conditions in this Section 1.4.
1.5 Delivery of Merger Consideration.
(a) Surrender of Certificates. Subject to Sections
1.6 and 8.6(b), each holder of one or more Certificates
representing Shares (other than Cancelled Shares) at the
Effective Time will be entitled to receive in exchange for
delivery of those Certificates and a signed Letter of
Transmittal in the form of Exhibit A (the "Letter of
Transmittal") to Buyer, cash in an amount equal to the Merger
Consideration, less any applicable withholding Taxes. No
interest will accrue or be paid on any Merger Consideration.
In the event of a Share transfer not registered in Company's
transfer records, the transferee will be entitled to receive
Merger Consideration only if (i) the Certificate representing
the transferred Shares surrendered in accordance with this
Section 1.5 is properly endorsed for transfer or is
accompanied by appropriate and properly endorsed stock
powers and is otherwise in proper form to effect the
transfer, (ii) the Person requesting the transfer pays any
transfer or other Taxes payable by reason of the transfer or
establishes to Buyer's satisfaction that those Taxes have
been paid or are not required to be paid, and (iii) the
Person establishes to Buyer's satisfaction that the transfer
would not violate any applicable federal or state securities
Laws. At and after the Effective Time, each holder of a
Certificate will cease to have any rights as a Company
shareholder, except for the right to surrender the holder's
Certificate in exchange for the Merger Consideration and
except as otherwise provided by applicable Law, and no
transfer of Shares will be made on the Surviving
Corporation's stock transfer books.
(b) Company Options. Subject to Sections 1.6 and
8.6(b), at the Effective Time, each Option Holder will be
entitled to receive in exchange for it, cash in an amount equal
to the amount payable in respect of the Company Option pursuant
to Section 1.4(b). No interest will accrue or be paid on
any Merger Consideration paid to Option Holders. Merger
Consideration due Option Holders will be deposited by Buyer
in an account designated in writing by the Surviving
Corporation and will be distributed (net of appropriate Tax
and other withholdings) to Option Holders as soon as
practicable after the Effective Time.
(c) Lost Certificates. If any Certificate is lost,
stolen or destroyed before its surrender to the Buyer in
accordance with this Section 1.5, the holder of the Shares
represented by that Certificate will be entitled to receive,
and the Buyer will deliver, or cause to be delivered, the Merger
Consideration payable in respect of those Shares pursuant to
Section 1.4 upon the execution and delivery by the holder to
the Buyer of an Affidavit of Lost Certificate (which will
include an appropriate indemnity) in the form attached to
the Letter of Transmittal.
(d) Unclaimed Merger Consideration. Neither Buyer
nor the Surviving Corporation will be liable to a holder of a
Certificate or an Option Holder for the Merger Consideration
payable in respect of the Shares represented by that
Certificate, or due such Option Holder, properly delivered
to a public official pursuant to any applicable abandoned
property, escheat or similar Law.
1.6 Dissenting Shares.
(a) Conversion. Notwithstanding any provision of this
Agreement to the contrary, any Shares held by a holder who
has, subject to paragraph (b) below, exercised and perfected
dissenter's rights for those Shares in accordance with
Chapter 13 of the CGCL and who, as of the Effective Date,
has not effectively withdrawn, waived, surrendered or lost
those dissenter's rights ("Dissenting Shares"), will not be
converted into or represent a right to receive the Merger
Consideration pursuant to Section 1.4, and the holder will
only be entitled to the rights granted by Chapter 13 of the
CGCL.
(b) Loss of Rights. Notwithstanding paragraph
(a) above, if any holder of Dissenting Shares effectively
withdraws, waives, surrenders or loses (through failure to
perfect or otherwise) the holder's dissenter's rights, then,
as of the later of the Effective Date and the occurrence of that
event, the Shares previously constituting Dissenting Shares
will automatically be converted into and represent only the
right to receive the Merger Consideration as provided in
Section 1.4, without interest, upon surrender of the
Certificate representing the Common Stock and delivery of a
signed Letter of Transmittal to Buyer.
(c) Notice. As soon as practicable before the
Effective Date, Company will give Buyer (i) prompt notice of any
written demand for the purchase by the Company of any Shares
received by Company pursuant to the applicable provisions of
Section 1301 of the CGCL regarding dissenter's rights, and
(ii) the opportunity to participate in all negotiations and
proceedings with respect to those demands. Company will
not, except with Buyer's prior written consent, voluntarily
make any payment with respect to any such demands or offer
to settle or settle any such demands. After the Effective
Date, Buyer will solely control all negotiations and
proceedings related to those demands.
(d) Expenses. If Buyer and/or the Surviving
Corporation incur more than $5,000 of reasonable administrative,
legal and other related expenses in handling Dissenting Shares,
the excess will be deemed an indemnifiable Loss covered by
Section 8.3.
ARTICLE II - REPRESENTATIONS AND WARRANTIES OF COMPANY
AND THE SIGNIFICANT SHAREHOLDERS
Company and the Significant Shareholders, jointly
and severally, represent, warrant and agree as follows:
2.1 Subsidiaries; Organization and Related Matters.
Schedule 2.1 lists all Company Subsidiaries and
correctly states the name of each Subsidiary, Company's
ownership interest in that Subsidiary, any interest of any
other Person in that Subsidiary, the jurisdiction in which
each Acquired Company was organized and each jurisdiction in
which each Acquired Company is qualified or licensed to do
business as a foreign Person. Each Acquired Company is a
corporation duly organized, validly existing and in good
standing under the laws of their respective jurisdictions of
incorporation, with all necessary corporate power and
authority to own its properties and assets and to carry on
its business as now conducted. Schedule 2.1 correctly lists
the current directors and officers of each Acquired Company.
True, correct and complete copies of the respective charter
documents of each Acquired Company as in effect on the date
of this Agreement have been delivered to Buyer. Each
Acquired Company is qualified or licensed to do business as
a foreign Person in each jurisdiction where the failure to
be so qualified or licensed could have a material adverse
effect on that Acquired Company.
2.2 Capitalization.
(a) Equity Securities. Company's authorized capital
stock consists of 50,000,000 shares of Common Stock, 1/50> per
share par value, of which 20,913,921 Shares are issued and
outstanding on the date of this Agreement, and 5,000,000
shares of Preferred Stock, 1/50> per share par value, none
of which is outstanding. Schedule 2.2 lists all outstanding
options, warrants or other agreements for the issuance of
Equity Securities of any Acquired Company, indicating the
holder thereof and exercise price. Except as described on
Schedule 2.2, there are no outstanding Contracts or other
rights to subscribe for or purchase, or Contracts or other
obligations to issue or grant any rights to acquire, any
Equity Securities of any Acquired Company, or to restructure
or recapitalize any Acquired Company. There are no
outstanding Contracts of any Acquired Company to repurchase,
redeem or otherwise acquire any Equity Securities of any
other Acquired Company. All outstanding Equity Securities
of each Acquired Company are duly authorized, validly
issued, fully paid and nonassessable and were issued in
conformity with applicable Laws. There are no preemptive
rights in respect of any Equity Securities of any Acquired
Company. Any Equity Securities of any Acquired Company that
were issued and reacquired by any of these entities were so
reacquired (and, if reissued, so reissued) in compliance
with all applicable Laws, and no Acquired Company has any
outstanding obligation or liability with respect to them.
Except as stated on Schedule 2.2, Company owns no Equity
Securities of any Person except the Subsidiaries, and no
Subsidiary owns any Equity Securities of any Person.
(b) Ownership. Schedule 2.2 lists the name of each
Shareholder and the number of Shares owned of record by each
Shareholder.
2.3 Financial Statements; Contingencies.
(a) Audited Financial Statements. Company has
delivered to Buyer the audited consolidated balance sheets
for the Acquired Companies as of December 31, 1998, 1997 and
1996, and the related consolidated statements of income, changes
in shareholders' equity and cash flows for the periods then
ended, together with the related report of the Auditors.
Since December 31, 1998, there has been no change in any of
the significant accounting policies, practices or procedures
of any of the Acquired Companies. The audited consolidated
balance sheet as of December 31, 1998 is referred to in this
Agreement as the "Balance Sheet."
(b) Unaudited Interim Financial Statements. Company
has delivered to Buyer unaudited consolidated balance sheets for
the Acquired Companies at April 30, 1999 and 1998, and the
related statements of income changes in shareholders' equity
and cash flows for the periods then ended. The
consolidated balance sheet as of April 30, 1999 is referred
to in this Agreement as the "Interim Balance Sheet."
(c) Fair Presentation; GAAP. The financial
statements referred to in clauses (a) and (b) of this Section
2.3 (i) fairly present the financial condition and results of
operations, changes in shareholders' equity and cash flows
of the Acquired Companies as of the respective dates and for
the periods referred to in such financial statements, all in
accordance with GAAP, subject, in the case of unaudited
financial statements, to normal recurring year-end
adjustments (the effect of which will not, individually or
in the aggregate, be materially adverse) and the absence of
notes, and (ii) reflect the consistent application of GAAP
throughout the periods involved, subject in each case to the
exceptions stated in the auditors' report included in
Schedule 2.3. No financial statements of any Person other
than the Acquired Companies are required by GAAP to be
included in Company's consolidated financial statements.
(d) No Other Liabilities. Except as stated on
Schedule 2.3, the Acquired Companies do not have any
liabilities of any nature, whether known or unknown, and
whether accrued, absolute, contingent or otherwise, and
whether due or to become due, except (i) liabilities that
are reflected or reserved against in the Interim Balance
Sheet or (ii) current liabilities incurred after the date of
the Interim Balance Sheet Date in the Ordinary Course and
that, in the aggregate, do not exceed $35,000.
2.4 No Material Adverse Changes.
Since the date of the Interim Balance Sheet Date,
whether or not in the Ordinary Course, there has not been,
occurred or arisen: (a) any change in or event affecting the
Acquired Companies that has had or could reasonably be
expected to have a material adverse effect on the Acquired
Companies or the Business, or (b) any agreement, condition,
action or omission that would be proscribed by (or require
consent under) Section 4.3 had it existed, occurred or
arisen after the date of this Agreement.
2.5 Tax and Other Returns and Reports.
(a) Filings and Payments. All Tax Returns required
to be filed by or with respect to each Acquired Company have
been timely filed, and all those Tax Returns are complete and
correct in all material respects. Each Acquired Company has
paid (or there has been paid on its behalf) all Taxes that
are due from or with respect to it for the periods covered
by the Tax Returns and has made all required estimated
payments of Tax sufficient to avoid any penalties for
underpayment. The accrual for current Taxes in the
financial statements referred to in Section 2.3 are adequate
to cover any and all Taxes (whether or not disputed and
whether or not due) of each Acquired Company with respect to
all taxable periods (or portions thereof) ending on or
before the date of the relevant financial statement. No
Acquired Company has incurred any liability for Taxes
subsequent to April 30, 1999, other than in the ordinary
course of the company's business. True and correct copies
of all income and franchise Tax Returns (or summaries in the
case of certain non-U.S. Tax Returns) filed by each Acquired
Company for the preceding seven taxable years and all
examination reports issued by any Governmental Entity with
respect to the Tax Returns have been delivered to Buyer. No
claim has ever been made by any Governmental Entity in any
jurisdiction where an Acquired Company does not file Tax
Returns that Acquired Company is or may be subject to
taxation by that jurisdiction.
(b) Consenting Corporation. No Acquired Company has
elected to be treated as a consenting corporation under
Section 341(f)(2) of the Code.
(c) Audits. Schedule 2.5 lists the date or dates
through which the IRS and any other Governmental Entity have
examined the United States federal income tax returns and
any other Tax Returns of the Acquired Companies. Except as
stated in Schedule 2.5, since December 31, 1996 no
Governmental Entity has examined or is in the process of
examining any Tax Returns of any Acquired Company. Except
as stated in Schedule 2.5, no Governmental Entity has
proposed or Threatened any deficiency, assessment or claim
for Taxes. Except as stated on Schedule 2.5, no waiver of
the statute of limitations with respect to Acquired Company
Tax Returns has been given by or requested from any Acquired
Company or any Group member.
(d) Losses, Etc. Schedule 2.5 also states (i) all
material consents or agreements for purpose of federal, foreign,
state or local Taxes, in each case, that reasonably could be
expected to affect or be binding upon any Acquired Company
or its assets or operations after the Closing, and (ii) all
adjustments at any time made, agreed to, requested or
required with respect to any Acquired Company pursuant to
Section 481(a) or 482 of the Code or similar provisions of
state or foreign law.
(e) Withholding. All Taxes that Company has been
required by Law to withhold or to collect for payment have been
duly withheld and collected, and have been paid or accrued,
reserved against and added on the Acquired Company's books.
The Acquired Companies have complied in all material
respects with all information reporting and backup
withholding requirements, including maintenance of required
records, in connection with amounts paid or owing to any
employee, independent contractor, creditor, shareholder or
other third party.
(f) Liabilities for Others. No Acquired Company is
liable for the Taxes of any Person, including as a transferee,
pursuant to Treasury Regulations Section 1.1502-6 or any
analogous provision of state, local or foreign law, or as a
result of any indemnity or other contractual arrangement
with any third party or any taxing authority.
(g) Parachute Payments. Except as specifically
stated on Schedule 2.5, there is no Contract or plan by or
with any Acquired Company covering any Person as to which
payment or vesting thereunder (including any payment or vesting
as a result of the Merger) could result in either a
nondeductible expense to the Acquired Company because of Section
280(G) of the Code or an excise tax to the recipient of the
payment under Section 4999 of the Code.
(h) Miscellaneous. No Acquired Company (i) is or has
ever been a partner in a partnership or an owner of an interest
in an entity treated as a partnership for federal income tax
purposes; or (ii) is a passive foreign investment company as
defined in Section 1296(a) of the Code.
(i) Straddle Periods. For purposes of this
Agreement, whenever it is necessary to determine the liability
for Taxes of any Acquired Company for a taxable period that
begins before and ends after the Closing Date (a "Straddle
Period"), the determination of the Taxes of the Acquired
Company for the portion of the Straddle Period ending on and
including, and the portion of the Straddle Period beginning
after, the Closing Date will be determined by assuming that
the Straddle Period consisted of two taxable years or
periods, one that ended at the close of the Closing Date and
the other that began at the beginning of the day following
the Closing Date, and items of income, gain, deduction, loss
or credit of the Acquired Company for the Straddle Period
will be allocated between the two taxable years or periods
on a "closing of the books basis" by assuming that the
Acquired Company's books were closed at the close of
business on the Closing Date, provided, however, that
exemptions, allowances or deductions that are calculated on
an annual basis, such as the deduction for depreciation,
will be apportioned between such two taxable years or
periods on a daily basis.
2.6 Material Contracts.
Schedule 2.6 lists each Contract to which any
Acquired Company is a party or to which any Acquired Company
or any of its properties is subject or by which any Acquired
Company or its assets is bound that is deemed a Material
Contract under this Agreement. The following Contracts will
be deemed to be Material Contracts: any Contract that
(a) obligates any Acquired Company to pay, or entitles any
Acquired Company to receive, after the date of the Interim
Balance Sheet, $35,000 or more, (b) has an unexpired term as
of the date of the Interim Balance Sheet in excess of one
year, (c) the Business is substantially dependent upon or
that is otherwise material to the Business, (d) provides for
an extension of credit to or by any Acquired Company,
(e) limits or restricts the ability of any Acquired Company
to compete or otherwise to conduct its business in any
manner or place, (f) provides for a guaranty or indemnity by
or in favor of any Acquired Company, (g) grants a power of
attorney, agency or similar authority to another Person,
(h) grants to a third party a right of first refusal,
(i) grants a right to, or creates an obligation of, any
Affiliate, officer or director or any Associate of any
Shareholder or Acquired Company, other than options granted
under Company's stock option plans, as described on Schedule
2.2, (j) requires any Acquired Company to buy or sell goods
or services with respect to which there will be material
losses (other than as provided for or otherwise reserved
against on the Interim Balance Sheet), (k) is between one or
more Shareholders or Option Holders or any Affiliate of any
Shareholder or any Option Holder and any Acquired Company,
other than options granted under Company's stock option
plans, as described on Schedule 2.2, (l) relates to the
licensing to or by any Acquired Company of Intellectual
Property Rights (other than Company's standard license
agreements substantially in the forms attached as Exhibit B
and shrink-wrap licenses for readily available software),
(m) pertains to a joint venture, partnership or other
arrangement involving a sharing of profits, losses, costs or
liabilities with any other Person; (n) is a collective
bargaining or similar agreement with a labor union or
representative of a group of employees; (o) relates to the
lease, rental, installment or conditional sale of any
Acquired Company tangible or intangible personal property
(other than Intellectual Property licenses); (p) relates to
the licensing of software and deviates from the forms of
standard licensing agreements attached as Exhibit B; (q)
relates to distribution or reseller arrangements for
software products; or (r) was not made in the Ordinary
Course and involves an amount in excess of $5,000. Each
Material Contract is valid and subsisting; the relevant
Acquired Company has duly performed all its material
obligations thereunder to the extent that those obligations
have accrued; no breach or default or alleged breach or
default, or event that would (with the passage of time,
notice or both) constitute a breach or default thereunder by
any Acquired Company or, to the Knowledge of Company and the
Significant Shareholders, any other Person, as the case may
be, has occurred; and no breach or default thereunder has
occurred or will occur as a result of the execution,
delivery or performance of this Agreement. True copies of
the agreements listed on Schedule 2.6, including all
amendments and supplements, have been delivered to Buyer.
2.7 Property.
(a) Leased Real Property. Schedule 2.7 accurately
lists all real property leaseholds held by any Acquired Company.
The Acquired Companies do not own any real property in fee,
and do not own or hold any other interests in real property.
Company has delivered or made available to Buyer true copies
of all lease agreements pertaining to real property leased
by any Acquired Company.
(b) Ownership of Property. The Acquired Companies
own all the properties and assets they purport to own or that
are reflected as owned in the Acquired Companies' books and
records, including all properties and assets reflected in
the Balance Sheet and the Interim Balance Sheet (except for
personal property sold since the date of the Balance Sheet
and the Interim Balance Sheet, as the case may be, in the
Ordinary Course), and all properties and assets purchased or
otherwise acquired by the Acquired Companies since the date
of the Interim Balance Sheet (except for personal property
acquired and sold since the date of the Interim Balance
Sheet in the Ordinary Course).
(c) Encumbrances. All material properties and
assets reflected in the Balance Sheet and the Interim Balance
Sheet are free and clear of all Encumbrances except (i)
security interests shown on the Balance Sheet or the Interim
Balance Sheet as securing specified liabilities or obligations,
with respect to which no default (or event that, with notice or
lapse of time or both, would constitute a default) exists,
(ii) security interests incurred in connection with the
purchase of property or assets after the date of the Interim
Balance Sheet (these mortgages and security interests being
limited to the property or assets so acquired), with respect
to which no default (or event that, with notice or lapse of
time or both, would constitute a default) exists,
(iii) liens for current Taxes not yet due, and (iv) as
described on Schedule 2.7.
2.8 Authorization; No Conflicts.
(a) Authorization. Each of Company and each corporate
Significant Shareholder has all necessary power and
authority to execute, deliver and perform this Agreement and
the other Seller Documents to which it is a party. The
execution, delivery and performance of this Agreement and
other Seller Documents by Company and the corporate
Significant Shareholders have been duly and validly
authorized by their respective Boards of Directors and by
all other necessary corporate action on their part. The
individual Significant Shareholder has the unrestricted
right, power and capacity to execute, deliver and perform
this Agreement and other Seller Documents signed by him.
This Agreement and the other Seller Documents constitute the
legally valid and binding obligations of Company and the
Significant Shareholders, enforceable against Company and
the Significant Shareholders in accordance with their
respective terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and other
similar laws and equitable principles relating to or
limiting creditors rights generally.
(b) No Conflicts. Neither the execution and
delivery of this Agreement and the other Seller Documents nor
the consummation or performance of any Transactions will,
directly or indirectly (with or without notice or lapse of
time):
(i) contravene, conflict with or violate (A) any
provision of the charter documents or bylaws of any
Acquired Company or any corporate Significant Shareholder
or (B) any resolution adopted by the boards of directors or
shareholders of any Acquired Company or any corporate
Significant Shareholder;
(ii) contravene, conflict with or violate, or
give any Governmental Entity or other Person the right to
challenge any of the Transactions or any related agreements
or to exercise any remedy or obtain any relief under, any
Law or Order to which any Acquired Company or Significant
Shareholder or any assets owned or used by any Acquired
Company may be subject;
(iii) contravene, conflict with or violate
any of the terms or requirements of, or give any
Governmental Entity the right to revoke, withdraw, suspend,
cancel, terminate or modify, any Permit held by any
Acquired Company or that otherwise relates to the Business;
(iv) cause any Acquired Company to become
subject to, or to become liable for the payment of, any
Tax;
(v) cause any material assets owned by any
Acquired Company to be reassessed or revalued by any taxing
authority or other Governmental Entity;
(vi) contravene, conflict with or violate any
provision of, or give any Person the right to declare a
default or exercise any remedy under, or to accelerate the
maturity or performance of, or to cancel, terminate or
modify, any Material Contract or any Contract of a
Significant Shareholder (except that Company Options will
be affected as provided in Sections 1.4(b) and 1.5(b));
(vii) result in the imposition or creation of
any Encumbrance upon or with respect to any assets owned
or used by any Acquired Company; or
(viii) accelerate vesting of any employee
benefits except as disclosed on Schedule 2.8.
(c) Approvals. Except for a filing under the Hart-
Scott-Rodino Act, the approval of the Merger by the Shareholders,
and the Approvals listed on Schedule 2.8, no Acquired
Company or Significant Shareholder is, nor will it be,
required to give any notice to, make any filing with, or
obtain any Approval or Permit from, any Person in connection
with the execution and delivery of this Agreement or the
consummation or performance of any of the Transactions.
(d) No Dissenters' Rights. Each Significant
Shareholder hereby waives any dissenter's rights it could have
under Chapter 13 of the CGCL in connection with the Merger.
2.9 Actions and Orders.
(a) Actions. Except as stated on Schedule 2.9, (i)
there is no pending Action that (A) has been commenced by
or against any Acquired Company or that otherwise relates to
or could affect the Business, or any of the assets owned or
used by any Acquired Company; or (B) that challenges, or
that may have the effect of preventing, delaying, making
illegal, or otherwise interfering with, any of the
Transactions, and (ii) to the Knowledge of Company and the
Significant Shareholders, (A) no such Action has been
Threatened, and (B) no event has occurred or circumstance
exists that could give rise to or serve as a basis for the
commencement of any such Action.
(b) Orders. Except as stated on Schedule 2.9, (i)
there is no Order to which any of the Acquired Companies, or
any of the assets owned or used by any Acquired Company, is
subject; (ii) no Significant Shareholder is subject to any
Order that relates to the Business, or to any of the assets
owned or used by any Acquired Company; (iii) no officer,
director, agent, or employee of any Acquired Company is
subject to any Order that prohibits him or her from engaging
in or continuing any conduct, activity, or practice relating
to the Business; (iv) each Acquired Company is, and at all
times since December 31, 1994 has been, in full compliance
with all of the terms and requirements of each Order to
which it, or any of the assets owned or used by it, is or
has been subject; (v) no event has occurred or circumstance
exists that may constitute or result in (with or without
notice or lapse of time) a violation of or failure to comply
with any term or requirement of any Order to which any
Acquired Company, or any of the assets owned or used by any
Acquired Company, is subject; and (vi) no Acquired Company
has received, at any time since December 31, 1994, any
notice or other communication (whether oral or written) from
any Governmental Entity or any other Person regarding any
actual, alleged, possible, or potential violation of, or
failure to comply with, any term or requirement of any Order
to which any Acquired Company, or any of the assets owned or
used by any Acquired Company, is or has been subject.
(c) Effect; Documents. No Order applicable to any
Acquired Company or the Business, and no pending or
Threatened Action involving any Acquired Company or the
Business has had or will have, individually or in the
aggregate, a material adverse effect on any Acquired Company
or the Business. Company has made available to Buyer true
copies of all Actions and Orders listed in Schedule 2.9.
2.10 Dividends and Other Distributions.
Since the date of the Interim Balance Sheet,
Company has not declared, paid, distributed or issued to its
Shareholders any dividend or other distribution of assets or
securities, whether consisting of money, property or any
other thing of value.
2.11 Insurance.
(a) Deliveries. Company has delivered to Buyer: (i)
true and complete copies of all policies of insurance to which
any Acquired Company is a party or under which any Acquired
Company, or any director of any Acquired Company, is or has
been covered at any time since December 31, 1994; (ii) true
and complete copies of all pending applications for policies
of insurance; and (iii) any statement by the auditor of any
Acquired Company's financial statements with regard to the
adequacy of such entity's coverage or of the reserves for
claims.
(b) Self-Insurance, Etc. Schedule 2.11 describes (i)
any self-insurance arrangement by or affecting any Acquired
Company, including any reserves established under that
arrangement; (ii) any Contract or arrangement, other than a
policy of insurance, for the transfer or sharing of any risk
by any Acquired Company; and (iii) all obligations of the
Acquired Companies to third parties with respect to
insurance (including such obligations under leases and
service agreements) and identifies the policy under which
such coverage is provided.
(c) Loss Experience. Schedule 2.11 provides, for
the current policy year and each of the three preceding policy
years: (i) a summary of the loss experience under each
policy; (ii) a statement describing each claim under an
insurance policy for an amount in excess of $10,000, which
states: (A) the name of the claimant; (B) a description of
the policy by insurer, type of insurance, and period of
coverage; and (C) the amount and a brief description of the
claim; and (iii) a statement describing the loss experience
for all claims that were self-insured, including the number
and aggregate cost of such claims.
(d) Status. Except as stated on Schedule 2.11, all
policies to which any Acquired Company is a party or that
provide coverage to any Acquired Company, or any director or
officer of an Acquired Company (i) are valid, outstanding
and enforceable; (ii) are issued by an insurer that is
financially sound and reputable; (iii) taken together,
provide insurance coverage for the Acquired Companies and
the Business at a level customary in the Acquired Companies'
industry; (iv) will continue in full force and effect
following the consummation of the Transactions; and (v) do
not provide for any retrospective premium adjustment or
other experienced-based liability on the part of any
Acquired Company. There are no Material Contracts, or Laws
applicable to the Acquired Companies, requiring that any
Acquired Company maintain any particular amount or type of
insurance.
(e) Cancellation and Premiums. Except as stated on
Schedule 2.11, (i) no Acquired Company or Significant
Shareholder has received since December 31, 1994, (A) any
refusal of coverage or any notice that a defense will be
afforded with reservation of rights, or (B) any notice of
cancellation or any other indication that any insurance
policy is no longer in full force or effect or will not be
renewed or that the issuer of any policy is not willing or
able to perform its obligations thereunder; and (ii) the
Acquired Companies have paid all premiums due, and have
otherwise performed all of their respective obligations,
under each policy to which any Acquired Company is a party
or that provides coverage to any Acquired Company or any of
its directors.
(f) Notice of Claims. The Acquired Companies have
given notice to the relevant insurer of all claims that
could be insured by their insurance policies.
2.12 Compliance with Law.
(a) General. Except as stated in Schedule 2.12:
(i) each Acquired Company is, and at all times
since December 31, 1994 has been, in full compliance with each
Law applicable to it or the Business;
(ii) no event has occurred or circumstance
exists that (with or without notice or lapse of time) (A) could
constitute or result in a violation by any Acquired Company of,
or a failure on the part of any Acquired Company to comply with,
any Law, or (B) could give rise to any obligation on the
part of any Acquired Company to undertake, or to bear all or
any portion of the cost or, any remedial action of any
nature; and
(iii) no Acquired Company has received, at any
time since December 31, 1994, any notice or other communication
(whether oral or written) from any Governmental Entity or
any other person regarding (A) any actual, alleged,
possible, or potential violation of, or failure to company
with, any Law, or (B) any actual, alleged, possible, or
potential obligation on the part of any Acquired Company to
undertake, or to bear all or any portion of the cost of, any
remedial action of any nature.
(b) Environmental Matters. Except as specifically
described in Schedule 2.12, (i) no Acquired Company has
generated, used, transported, treated, stored, released or
disposed of, or has suffered or permitted anyone else to
generate, use, transport, treat, store, release or dispose
of any Hazardous Substance in violation of any Law;
(ii) there has not been any generation, use, transportation,
treatment, storage, release or disposal of any Hazardous
Substance in connection with the conduct of the Business or
the use of any property or facility of any Acquired Company,
or to the Knowledge of Company or the Significant
Shareholders any nearby or adjacent properties that has
created or might reasonably be expected to create any
liability under any Law or that would require reporting to
or notification of any Governmental Entity; (iii) no
asbestos or polychlorinated biphenyl or underground storage
tank is contained in or located at any Acquired Company
facility; and (iv) any Hazardous Substance handled or dealt
with in any way in connection with the Business, whether
before or during the relevant Acquired Company's ownership,
has been and is being handled or dealt with in compliance
with all applicable Laws.
(c) Permits. The Acquired Companies hold no Permits
other than routine, immaterial licenses to do business in
certain localities. These Listed Permits (i) will not be
revoked or otherwise adversely affected by the Transactions,
and (ii) collectively constitute all of the Permits necessary
to permit the Acquired Companies to lawfully conduct and
operate the Business in the manner they currently conduct
and operate it and to permit the Acquired Companies to own
and use their assets in the manner in which they currently
own and use them.
2.13 Employee Benefits.
(a) Benefit Plans.
(i) Schedule 2.13 lists all employee benefit,
compensation and fringe benefit plans and arrangements,
including any "employee benefit plan" (within the meaning
of Section 3(3) of ERISA), to which any Acquired Company
is or ever has been a party or by which any is or ever has
been bound, legally or otherwise (collectively, the
"Plans").
(ii) Company has delivered to Buyer true and
complete copies of all documents and summary plan
descriptions with respect to the Plans, or summary
descriptions of any Plans not in writing.
(iii) There are no negotiations, demands or
proposals that are pending or have been made that concern
matters now covered, or that would be covered, by the Plans.
(iv) The Acquired Companies and each trade or
business (whether or not incorporated) that is a member of a
group of which any Acquired Company is a member and that is
under common control within the meaning of Section 414(b)
and (c) of the Code ("ERISA Affiliate") are in full
compliance with the applicable provisions of ERISA and all
other Laws applicable with respect to all such plans,
agreements and arrangements and to all group health plans
of any ERISA Affiliate. The Acquired Companies and ERISA
Affiliates have performed all of their obligations under all
such plans, agreements and arrangements. There are no
Actions (other than routine claims for benefits) pending or
Threatened against such plans or their assets, or arising
out of such plans, agreements or arrangements, and, no facts
exist that could give rise to any such Actions.
(v) Except as specified in Schedule 2.13, each
Plan can be terminated by an Acquired Company within 30 days
after the Closing Date, without payment of any additional
compensation or amount or the additional vesting or
acceleration of any benefits.
(b) Qualified Stock, Pension and Profit-sharing Plans.
(i) Company's 401(k) plan (the "401(k) Plan")
is the only "employee pension benefit plan" (within the
meaning of Section 3(2) of ERISA) that is a stock bonus,
pension or profit-sharing plan within the meaning of Section
401(a) of the Code.
(ii) The 401(k) Plan is qualified in form and
operation under Section 401(a) of the Code and the trust
under that plan is exempt from tax under Section 501(a)
of the Code. No event has occurred that will or could
subject the 401(k) Plan to tax under Section 511 of the
Code. No prohibited transaction (within the meaning of
Section 4975 of the Code) or party-in-interest transaction
(within the meaning of Section 406 of ERISA) has occurred
with respect to the 401(k) Plan.
(iii) With respect to the 401(k) Plan, Company
has delivered to Buyer copies of the following documents:
(i) the form 5500 with all attachments filed in each of
the most recent three plan years, (ii) the most recent
determination letter from the IRS, and (iii) the
consolidated statement of assets and liabilities of the
401(k) Plan as of its most recent valuation date.
(c) Section 412 or Title IV Plans. No plan listed in
Schedule 2.13(a) is a plan subject to Section 412 of the
Code or Title IV of ERISA.
(d) Multiemployer Plans. No Plan listed in Section
2.13 is a "multiemployer plan" (within the meaning of Section
3(37) of ERISA). Neither Company nor any ERISA Affiliate has
ever contributed to or had an obligation to contribute to any
multiemployer plan.
(e) Retiree Benefits. There are no Company employees
who are entitled to (i) any pension benefit that is unfunded or
(ii) any pension or other benefit to be paid after
termination of employment other than required by Section 601
of ERISA (or similar provision of state Law) or pursuant to
plans intending to be qualified under Section 401(a) of the
Code, and no other benefits whatsoever are payable to any
Company employees after termination of employment (including
retiree medical and death benefits).
(f) Employee Welfare Benefit Plans. Each Plan that
is an "employee welfare benefit plan" as that term is defined
in Section 3(1) of ERISA is either (i) funded through an
insurance company contract and is not a "welfare benefit
fund" within the meaning of Section 419 of the Code or
(ii) unfunded. There is no liability in the nature of a
retroactive rate adjustment to or loss-sharing or similar
arrangement, with respect to any employee welfare benefit
plan.
(g) Contributions. All contributions or payments
owed with respect to any periods before the Closing under any
Plan have been made, and all other amounts that relate to those
periods have been accrued on the financial statements
referred to in Section 2.3.
2.14 Certain Interests.
Except as listed on Schedule 2.14, no Affiliate or
Associate of any Acquired Company, no Associate of any such
Affiliate, no director or officer of any Acquired Company
(or any Associate of such officer or director), no
Significant Shareholder, and, to the Knowledge of Company
and the Significant Shareholders, no other Shareholder, has
any (a) interest in any property used in or pertaining to
the Business; (b) interest in any Person that competes with
any Acquired Company; (c) interest in any customer or
supplier doing business with the any Acquired Company; (d)
any Contract with any Acquired Company; or (e) claim
against any Acquired Company.
2.15 Bank Accounts, Powers, etc.
Schedule 2.15 lists each bank, trust company,
savings institution, brokerage firm, mutual fund or other
financial institution with which any Acquired Company has an
account or safe deposit box and the names and identification
of all Persons authorized to draw on it or to have access to
it.
2.16 No Brokers or Finders.
No agent, broker, finder, or investment or
commercial banker, or other Person or firm engaged by or
acting on behalf of any Acquired Company or any of their
respective Affiliates in connection with the negotiation,
execution or performance of this Agreement or the
Transactions, is or will be entitled to any brokerage or
finder's or similar fee or other commission as a result of
this Agreement or the Transactions other than Ned Elliot or
his previous employer.
2.17 Intangible Property.
(a) Registrations. Schedule 2.17 lists all United
States and foreign: (i) patents and patent applications;
(ii) registered trademarks and trademark applications;
(iii) registered copyrights and applications for copyright
applications; (iv) mask work registrations and applications
to register mask works; (v) other registered Intellectual
Property Rights; and (vi) other material items of Intangible
Property, in each case owned by, or licensed to, any
Acquired Company, or in which any Acquired Company has an
interest. The registrations listed on Schedule 2.17 are
valid and subsisting in all jurisdictions listed on Schedule
2.17; all necessary registration and renewal fees have been
made or paid; all documents and certificates have been filed
with the relevant patent, copyright and trademark
authorities; and there are no pending or, to the Knowledge
of Company and the Significant Shareholders, Threatened
objections or oppositions by third parties against these
registrations.
(b) Products. The Acquired Companies own
exclusively, and have good title to, all software products of
the Acquired Companies or other works of authorship that any
Acquired Company otherwise purports to own. Except as listed
on Schedule 2.17, the Acquired Companies have complete rights
and ownership of all Intangible Property used in connection
with the Business and do not use any Intangible Property by
consent of any other Person or pursuant to any obligation to
make any payments (and do not make any payments) to others
with respect to them (other than shrink wrap licenses for
readily available software). The Acquired Companies'
Intangible Property is fully assignable free and clear of
any Encumbrances and will not be adversely affected by the
execution and delivery of this Agreement or the consummation
of the Transactions.
(c) Contracts. The Contracts listed on Schedule
2.17 include all Contracts, including all licenses or
sublicense agreements, to which any Acquired Company is a
party with respect to any Intellectual Property Rights licensed
to or by any Acquired Company (other than shrink wrap licenses
for readily available software and standard software license
agreements in the forms attached as Exhibit B). The
Acquired Companies have performed all obligations required
to be performed by them, and are not in default, under any
of these Contracts.
(d) Notice of Infringement. No Acquired Company has
received notice from any Person (or otherwise has Knowledge)
that its operation of the Business, including its design,
development, manufacture and sale of its products and
provision of services, conflicts with or infringes the
Intellectual Property Rights of any Person.
(e) Agreements. All current and former employees
and consultants of the Acquired Companies have executed
confidentiality and inventions agreements in the form of
Exhibit C.
(f) Year 2000. All (i) software products sold by
the Acquired Companies since December 31, 1994, and (ii)
internal computer hardware, software and networks of
the Acquired Companies are "Year 2000 compliant" in
accordance with the standards contained in IEEE Standard
2000.1-1998.
(g) Trade Secrets.
(i) The documentation relating to each Trade
Secret is current, accurate and sufficient in detail and
content to identify and explain it and to allow its full
and proper use without reliance on the Knowledge or memory
of any individual.
(ii) The Acquired Companies have taken all
reasonable precautions to protect the secrecy,
confidentiality and value of their Trade Secrets.
(iii) The Acquired Companies have good title
and an absolute (but not necessarily exclusive) right to use
the Trade Secrets. The Trade Secrets are not part of the
public knowledge or literature and, to the Knowledge of the
Acquired Companies and the Significant Shareholders, have
not been used, divulged or appropriated either for the
benefit of any Person or to the detriment of the Acquired
Companies. No Trade Secret is subject to any adverse claim
or has been challenged or threatened in any way.
2.18 Receivables.
All receivables of the Acquired Companies
reflected on the Interim Balance Sheet or on the Acquired
Companies' accounting records as of the Closing Date or
otherwise, represent or will represent valid obligations
arising from sales actually made in the Ordinary Course.
Unless paid before the Closing Date, these receivables are
or will be current and fully collectible net of any reserves
shown on the Interim Balance Sheet (which reserves are
adequate and were calculated on a basis consistent with GAAP
and past practices) within 90 days after the day they first
became or become due. Company has delivered to Buyer a
complete and accurate aging list of all Acquired Company
receivables as of April 30, 1999.
2.19 Customers and Suppliers.
Schedule 2.19 lists all Acquired Company Contracts
with, and the relevant percentage of business attributable
to, the 10 largest customers of the Business at the date of
this Agreement. No Acquired Company has any sole-source
suppliers of significant goods or services (other than
utilities), and no supplier is otherwise critical to any
Acquired Company.
2.20 Certain Payments.
Since December 31, 1994, no Acquired Company or
director, officer, agent or employee of any Acquired
Company, or any other Person associated with or acting for
or on behalf of any Acquired Company, has directly or
indirectly (a) made any contribution, gift, bribe, rebate,
payoff, influence payment, kickback or other payment to any
Person, private or public, regardless of form, whether in
money, property or services (i) to obtain favorable
treatment in securing business, (ii) to pay for favorable
treatment for business secured, (iii) to obtain special
concessions or for special concessions already obtained, for
or in respect of any Acquired Company or any Affiliate of an
Acquired Company, or (iv) otherwise in violation of any Law;
or (b) established or maintained any fund or asset not
recorded in the books and records of the Acquired Companies.
2.21 Employees.
(a) List. Schedule 2.21 contains a complete and
accurate list of the following information for each Acquired
Company employee or director, including each employee on leave
of absence or layoff status: employer; name; job title; current
compensation paid or payable; vacation accrued; location;
and service credited for purposes of vesting and eligibility
to participate under any Acquired Company's employee benefit
plans described in Section 2.13.
(b) Agreements. To the Knowledge of Company and the
Significant Shareholders, no employee or director of any
Acquired Company is a party to, or is otherwise bound by,
any agreement or arrangement, including any confidentiality,
non-competition, or proprietary rights agreement, between
him or her and any other Person that in any way adversely
affects or will affect (i) the performance of his or her
duties as an Acquired Company employee or director, or
(ii) the ability of any Acquired Company to conduct its
business, including any agreement with the Acquired
Companies or the Significant Shareholders by any such
employee or director. To the Knowledge of Company and the
Significant Shareholders, no director, officer, or other key
employee of any Acquired Company intends to terminate his
employment with that Acquired Company.
(c) Retiree Benefits. Schedule 2.21 also accurately
summarizes all benefit plans for all retired Acquired
Company employees, directors and their dependents receiving
benefits or scheduled to receive benefits in the future.
(d) Labor Relations; Compliance. Since December 31,
1994, no Acquired Company has been or is a party to any
collective bargaining or other labor Contract. Since that date,
there has not been, there is not presently pending or existing,
and there is not Threatened, (a) any strike, slowdown,
picketing, work stoppage, or employee grievance process,
(b) any Action against or affecting any Acquired Company
relating to the alleged violation of any Law pertaining to
labor relations or employment matters, including any charge
or complaint filed by an employee or union with the National
Labor Relations Board, the Equal Employment Opportunity
Commission, or any comparable Governmental Entity,
organizational activity, or other labor or employment
dispute against or affecting any Acquired Company or its
premises, or (c) any application for certification of a
collective bargaining agent. No event has occurred or
circumstance exists that could provide the basis for any
work stoppage or other labor dispute. There is no lockout
of any employees by any Acquired Company, and no Acquired
Company contemplates such an action. Each Acquired Company
has complied in all respects with all Laws relating to
employment, equal employment opportunity, nondiscrimination,
immigration, wages, hours, benefits, collective bargaining,
the payment of social security and similar taxes,
occupational safety and health, and plant closing. No
Acquired Company is liable for the payment of any
compensation, damages, taxes, fines, penalties, or other
amounts, however designated, for failure to comply with any
of the foregoing Laws.
2.22 Disclosure.
No representation or warranty of Company and the
Significant Shareholders in this Agreement or the related
Schedules, contains, and no notice under this Agreement will
contain, a Material Misstatement.
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF BUYER
3.1 Organization and Related Matters.
Buyer is a corporation duly organized, validly
existing and in good standing under the laws of Delaware.
Buyer has all necessary corporate power and authority to
carry on its business as now being conducted. Buyer has the
necessary corporate power and authority to execute, deliver
and perform this Agreement and the other Buyer Documents.
3.2 Authorization.
The execution, delivery and performance of this
Agreement and the other Buyer Documents by Buyer has been
duly and validly authorized by Buyer's Board of Directors
and by all other necessary corporate action on Buyer's part.
This Agreement and the other Buyer Documents constitute the
legal, valid and binding obligations of Buyer, enforceable
against Buyer in accordance with their respective terms
except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar
laws and equitable principles relating to or limiting
creditors' rights generally.
3.3 Approvals.
Except for a filing under the Hart-Scott-Rodino
Act and the Approvals listed on Schedule 3.3, Buyer is not,
nor will it be, required to give any notice to, make any
filing with, or obtain any Approval or Permit from, any
Person in connection with the execution and delivery of this
Agreement or the consummation or performance of any of the
Transactions.
3.4 No Conflicts.
The execution, delivery and performance of this
Agreement and the other Buyer Documents by Buyer will not
violate or constitute a breach or default (whether upon
lapse of time and/or the occurrence of any act or event or
otherwise) under (a) Buyer's charter documents or bylaws,
(b) any Law to which Buyer is subject or (c) any Contract to
which Buyer is a party that is material to Buyer's financial
condition, results of operations or business.
3.5 No Brokers or Finders.
No agent, broker, finder or investment or
commercial banker, or other Person or firms engaged by or
acting on behalf of Buyer or its Affiliates in connection
with the negotiation, execution or performance of this
Agreement or the Transactions, is or will be entitled to any
broker's or finder's or similar fees or other commissions as
a result of this Agreement or the Transactions.
3.6 Legal Proceedings.
There is no Order or Action pending or, to Buyer's
Knowledge, Threatened against Buyer that individually or
when aggregated with one or more other Actions has or might
reasonably be expected to have a material adverse effect on
Buyer's business or its ability to perform this Agreement.
3.7 Merger Sub.
(a) Formation. Merger Sub is a corporation duly
organized, validly existing and in good standing under the
laws of the State of California. The execution, delivery and
performance by Merger Sub of this Agreement and all the
other instruments to be executed and/or delivered by Merger
Sub in connection with the Transactions, have been duly and
validly authorized by all necessary corporate action on the
part of Merger Sub, and do not conflict with its Articles of
Incorporation or Bylaws. Merger Sub has all necessary power
and authority to execute, deliver and perform this Agreement
and such other instruments. This Agreement and all the
other instruments to be executed and/or delivered by Merger
Sub constitute valid and binding obligations of Merger Sub
enforceable in accordance with their respective terms,
except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar
laws and equitable principles relating to or limiting
creditors' rights generally.
(b) Ownership. Buyer owns all issued and outstanding
capital stock of Merger Sub.
3.8 Available Funds.
On the Closing Date, Buyer will have sufficient
available funds to pay the Merger Consideration.
3.9 SEC Reports.
All documents filed by Buyer with the SEC pursuant
to the Securities Act and the Exchange Act were filed on a
timely basis, complied in form in all material respects with
applicable Laws, and did not contain any Material
Misstatement.
ARTICLE IV - COVENANTS RELATING TO THE PERIOD ENDING
WITH THE CLOSING
4.1 Access.
The Acquired Companies and the Significant
Shareholders will authorize and permit Buyer and its
representatives (including its independent accountants and
counsel) to have reasonable access during normal business
hours, upon reasonable notice and in ways that will not
unreasonably interfere with the conduct of the Business, to
all of their respective properties, books, records,
operating instructions and procedures, Tax Returns and all
other information with respect to the Business as Buyer may
from time to time request, and to make copies of those
books, records and other documents and to discuss the
Business with those other Persons, including its directors,
officers, employees, accountants, counsel, suppliers,
customers and creditors, as Buyer considers necessary or
appropriate for the purposes of familiarizing itself with
the Business, obtaining any necessary Approvals of or
Permits for the Transactions and conducting an evaluation of
the Business. Company will provide Buyer with notice of all
meetings of the shareholders of the Company and its board of
directors and will furnish concurrently to Buyer copies of
all materials distributed to members of the board in
connection with those meetings.
4.2 Changes; Reports. Between the date of this
Agreement and the Closing Date:
(a) Notice. Company will promptly notify Buyer
of any event, fact or condition that (i) has had or might
reasonably be expected to have a material adverse effect on
the Business; or (ii) if known as of the date of this
Agreement would have been required by this Agreement to be
disclosed to Buyer in this Agreement (including its
schedules); or (iii) would constitute a breach of any
covenant of Company or the Significant Shareholders; or
(iv) would make satisfaction of any condition in this
Agreement unlikely or impossible.
(b) Reports. Company will furnish to Buyer (i)
monthly and quarterly unaudited balance sheets, statements of
income, changes in shareholders' equity and cash flows for the
Acquired Companies, and (ii) any other reports Buyer
reasonably requests relating to the Business.
(c) Tax Returns. Company will furnish to Buyer all Tax
Returns filed with any Governmental Entity relating to any
Acquired Company.
4.3 Conduct of Business.
Between the date of this Agreement and the Closing
Date, Company and the Significant Shareholders will ensure
that no Acquired Company will, without Buyer's prior consent
in writing:
(a) conduct the Business other than in the Ordinary
Course; or
(b) except as required by their terms, amend,
terminate, renew/fail to renew or renegotiate any Material
Contract or default (or take or omit to take any action that,
with or without the giving of notice or passage of time, would
constitute a default) in any of its obligations under any
Material Contract or enter into any new Material Contract or
take any action that could reasonably be expected to
jeopardize the continuance of its material supplier or
customer relationships; or
(c) terminate, amend or fail to renew any existing
insurance coverage; or
(d) terminate or fail to renew or preserve any
Permits; or
(e) incur or agree to incur any obligation or
liability (absolute or contingent) that individually calls for
payment by any Acquired Company of more than $10,000 in any
specific case or $50,000 in the aggregate; or
(f) make any loan, guaranty or other extension of
credit, or enter into any commitment to make any loan, guaranty
or other extension of credit, to or for the benefit of any
director, officer, employee, shareholder or any of their
respective Associates or Affiliates; or
(g) sell, transfer, lease, pledge, mortgage, encumber
or otherwise dispose of any assets (other than sales of
inventory in the Ordinary Course), including any sale,
license, lease or other disposition of Intellectual
Property; or
(h) issue, sell, redeem or acquire for value, any
debt obligations or Equity Securities of any Acquired Company,
other than issuances of Common Stock upon the exercise of
stock options under the Company's existing stock option
plan; or
(i) declare, issue, make or pay any dividend or other
distribution of assets, whether consisting of money, other
personal property, real property or other thing of value, to
its shareholders, or split, combine, dividend, distribute or
reclassify any shares of its Equity Securities; or
(j) change or amend its charter documents or bylaws;
or
(k) make special or extraordinary payments to any
Person; or
(l) make any material investment, by purchase,
contributions to capital, property transfers, or otherwise,
in any other Person; or
(m) compromise or otherwise settle any claims
involving more than $10,000; or
(n) make any Tax election or make any change in any
method or period of accounting or in any accounting policy,
practice or procedure; or
(o) dispose of or permit to lapse any Intangible
Property or any rights to its use; or
(p) grant any general or uniform increase in the
rates of pay or benefits to officers, directors or employees
(or a class thereof) or any material increase in salary or
benefits of any officer, director, employee or agent; or pay
any bonus to any Person; or adopt any new employee benefit
plan or arrangement, or modify any existing employee benefit
plans described in Section 2.13; or
(q) make any capital expenditures, except as stated
in Schedule 4.3(q); or
(r) cancel or waive any claims or rights; or
(s) agree to or make any commitment to take any
actions prohibited by this Section 4.3.
4.4 Permits and Approvals.
Company, the Significant Shareholders and Buyer
each agree to cooperate with each other and use their Best
Efforts to obtain, and will immediately prepare all
registrations, filings (including filings under the Hart-
Scott-Rodino Act), applications, requests and notices
necessary to obtain, all Approvals and Permits that are
necessary, or that are reasonably requested by Buyer, to
consummate the Transactions.
4.5 Preservation of Business Before Closing Date.
During the period beginning on the date of this
Agreement and ending on the Closing Date, (a) Company and
the Significant Shareholders will use their best efforts to
preserve the Business and to preserve the goodwill of
customers, suppliers and others having business relations
with any Acquired Company, and (b) the Parties will consult
with each other concerning, and Company and the Significant
Shareholders will cooperate to keep available to Buyer, the
services of the officers and employees of each Acquired
Company that Buyer wishes to have such Acquired Company
retain. Nothing in this Section will obligate Buyer or any
Acquired Company after the Closing to retain or offer
employment to any Acquired Company officer or employee.
4.6 Confidentiality.
All non-public information disclosed by any Party
(or its representatives) whether before or after the date of
this Agreement, in connection with the Transactions, or the
discussions and negotiations preceding this Agreement, to
any other Party (or its representatives) will be kept
confidential by the receiving Party and its representatives
and will not be used by any such Persons other than as
contemplated by this Agreement, except to the extent
otherwise required by Law or to the extent the duty as to
confidentiality is waived in writing by the disclosing
Party. If this Agreement is terminated in accordance with
its terms, each receiving Party will return upon written
request from the disclosing Party all documents (and
reproductions thereof) received by it or its representatives
from the disclosing Party (and, in the case of
reproductions, all such reproductions made by the receiving
Party) that include information not within the exceptions
contained in the first sentence of this Section 4.6, unless
the recipients provide assurances reasonably satisfactory to
the requesting Party that the documents have been destroyed.
4.7 Negotiations.
The Acquired Companies and the Significant
Shareholders (either directly or indirectly) and Company,
and each of their representatives and agents, will not
initiate, solicit or encourage any inquiry, offer or
proposal with respect to any acquisition, merger, tender or
exchange offer or other form of business combination
involving any Acquired Company, or any acquisition or
disposition of all or any substantial part of any Acquired
Company's assets, stock or other securities (each a
"Competing Transaction"). Company and the Significant
Shareholders will promptly notify Buyer of the details of
any discussions with or proposal or offer from any other
Person relating to a Competing Transaction. Compliance with
this Section will not relieve Company of any other express
or implied obligations under this Agreement or under
applicable Law.
4.8 Shareholders' Meeting.
Company will, and the Significant Shareholders
will cause Company to, take all steps necessary to duly
call, give notice of, convene and hold a meeting of the
Shareholders to be held as soon as is reasonably practicable
for the purpose of voting on the approval of this Agreement
and the Transactions, including the Merger. Company will,
through its Board of Directors, recommend to the
Shareholders that they approve this Agreement, the Merger
and the other Transactions, and any other matters submitted
to the Shareholders in connection with this Agreement. The
materials sent by Company to the Shareholders to solicit
their approval will not contain any Material Misstatement.
The Significant Shareholders will vote all their Shares in
favor of the Transactions, including the Merger and any
other matters submitted to the Shareholders in connection
with this Agreement.
4.9 Tax Returns.
Company and the Significant Shareholders will
ensure that the Acquired Companies timely file all Tax
Returns required to be filed, and pay all Taxes (including
payments of estimated tax sufficient to avoid penalties)
required to be paid, before the Closing Date. Buyer will
have the opportunity to review all such material Tax Returns
before they are filed and to approve any positions taken in
those Tax Returns that could materially affect the Tax
liability of the Acquired Companies or their Affiliates in
any post-Closing period; provided, however, that such
approval will not be required as to any position that
reflects a consistent reporting practice followed by the
relevant Acquired Company in prior years.
ARTICLE V - ADDITIONAL CONTINUING COVENANTS
5.1 Nondisclosure of Proprietary Data.
No Acquired Company or Significant Shareholder nor
any of their representatives will, at any time, make use of,
divulge or otherwise disclose, directly or indirectly, any
Trade Secret or other proprietary data (including, but not
limited to, any customer list, record or financial
information) concerning the Business or any Acquired Company
that the Significant Shareholders or any representative of
the Significant Shareholders may have learned as a
shareholder, employee, officer or director of any Acquired
Company. In addition, neither the Significant Shareholders
nor any of their representatives will make use of, divulge
or otherwise disclose, directly or indirectly, to Persons
other than Buyer, any confidential information concerning
the Business that may have been learned in any such capacity
or any confidential information they learn about Buyer.
5.2 Tax Cooperation.
After the Closing, the Significant Shareholders
will cooperate with Buyer and the Acquired Companies in the
preparation of their Tax Returns and will provide, or cause
to be provided at Buyer's sole cost and expense, to Buyer
and the Acquired Companies any related records and other
information they reasonably request, as well as access to,
and the cooperation of, the auditors of the Acquired
Companies. The Significant Shareholders will cooperate with
Buyer and the Acquired Companies in connection with any Tax
audit or Tax-related Action. Any information obtained
pursuant to this Section 5.2 or pursuant to any other
Section of this Agreement providing for the sharing of
information or the review of any Tax Return or other
Schedule relating to Taxes will be subject to Section 4.6.
ARTICLE VI - CONDITIONS
6.1 Conditions to Obligations of All Parties.
The Parties' respective obligations to complete
the Merger and related Transactions will be subject to (a)
the expiration or termination of the waiting period
prescribed by the Hart-Scott-Rodino Act before July 31,
1999; (b) the closing of the Stock Purchase; and (c) the
absence of any Action commenced or Threatened since the date
of this Agreement against Buyer, or against any person
affiliated with Buyer, or against Company, any Company
officer or director or any Significant Shareholder
(i) involving any challenge to, or seeking damages or other
relief in connection with, any of the Transactions, or
(ii) that may have the effect of preventing, delaying,
making illegal, or otherwise interfering with any of the
Transactions.
6.2 Conditions to Buyer's Obligations.
Buyer's obligation to consummate the Merger and
other Transactions is subject to the satisfaction, on or
before the Closing Date, of each of the following additional
conditions (any of which can be waived by Buyer in whole or
in part):
(a) Representations and Warranties of Company and the
Significant Shareholders. All of the representations and
warranties of Company and the Significant Shareholders in
this Agreement (considered collectively), and each of these
representations and warranties (considered individually),
must have been accurate as of the date of this Agreement,
and all such representations and warranties, other than the
representation and warranty in Section 2.4(a), must be
accurate in all material respects as of the Closing Date as
if made on the Closing Date, without giving effect to any
disclosures after the date of this Agreement. It is
understood that if there has been a material adverse change
or effect of the kind described in Section 2.4(a) after the
date of this Agreement, other than as a result of an adverse
change or event triggered by third party actions taken in
response to the Transactions, it will be subject to a claim
for indemnification under Section 8.3(a) and will not give
rise to a failure of a condition to Buyer's obligations to
complete the Closing.
(b) Performance by Company and the Significant
Shareholders. All of the covenants and obligations that
Company and the Significant Shareholders are required to
perform or to comply with pursuant to this Agreement at or
before the Closing (considered collectively), and each of
these covenants and obligations (considered individually),
must have been duly performed and complied with in all
material respects.
(c) Approvals. Each Approval identified in Schedule
2.8, must have been obtained (without the imposition of
conditions or other requirements Buyer reasonably deems
materially burdensome) and remain in full force and effect.
(d) Resignation of Directors and Officers. The
directors and officers of the Acquired Companies listed in a
letter to be delivered by Buyer to Company not less than five
days before the Closing Date must have submitted their
resignations in writing to the relevant Acquired Company, as
applicable. These resignations will be effective as of the
Closing.
(e) Documents. Each of the following documents must
have been delivered to Buyer:
(i) an opinion of Graham & James LLP, dated the
Closing Date, in form and substance reasonably satisfactory
to Buyer and addressing the matters listed in Exhibit D, as
well as any others reasonably requested by Buyer:
(ii) the Escrow Agreement, duly executed by
Company and the Significant Shareholders;
(iii) the Non-Competition Agreement, duly
executed by Nearchos Irinarchos;
(iv) a certificate signed by Company's Chief
Executive Officer and Chief Financial Officer and each
of the Significant Shareholders to the effect that the
conditions stated above in Sections 6.2(a) and 6.2(b)
have been satisfied; and
(v) any other documents Buyer reasonably
requests for the purpose of (A) enabling its counsel to
provide the opinion referred to in Section 6.3(c)(i), (B)
evidencing the accuracy of any of the representations
and warranties of Company and the Significant
Shareholders, (C) evidencing the performance by Company
and the Significant Shareholders of, or their
compliance with, any covenant or obligation required to
be performed or complied with by them, (D) evidencing
the satisfaction of any condition referred to in
Section 6.1 or this Section 6.2, or (E) otherwise
facilitating the consummation of any of the
Transactions.
(f) Dendron/Fronos Instructions. Dendron and Fronos
must have delivered to Buyer irrevocable instructions, in
form and substance reasonably satisfactory to Buyer,
directing the deduction from the Aggregate Merger
Consideration otherwise due to them, and the deposit into
the Escrow, of the amount required by Section 8.6(b).
(g) Disinterested Shareholder Approval. The Merger
and related Transactions must have been approved by a
majority of the Shareholders other than the Significant
Shareholders.
6.3 Conditions to Obligations of Company and the
Significant Shareholders.
The obligation of Company and the Significant
Shareholders to consummate the Merger and related
Transactions is subject to the satisfaction, at or prior to
the Closing, of each of the following additional conditions
(any of which may be waived by Company and the Significant
Shareholders, in whole or in part):
(a) Buyer Representations. All of Buyer's
representations and warranties in this Agreement (considered
collectively), and each of these representations and
warranties (considered individually), must have been
accurate as of the date of this Agreement and must be
accurate in all material respects as of the Closing Date as
if made on the Closing Date, without giving effect to any
disclosures after the date of this Agreement.
(b) Buyer Performance. All of the covenants and
obligations that Buyer is required to perform or to comply
with pursuant to this Agreement at or prior to the Closing
(considered collectively), and each of these covenants and
obligations (considered individually), must have been
performed and complied with in all material respects.
(c) Documents. Buyer must have caused the following
documents to be delivered as indicated below:
(i) to Company and the Significant Shareholders
an opinion of O'Melveny & Myers LLP, dated the Closing
Date, substantially in the form of Exhibit E;
(ii) to Company and the Significant Shareholders
the Escrow Agreement duly executed by Buyer;
(iii) to Pan Cosmos A.B., the Consulting Agreement,
duly executed by Buyer.
(iv) to Company and the Significant Shareholders a
certificate signed by Buyer's Chief Executive Officer
and Chief Financial Officer to the effect that that the
conditions stated above in Sections 6.3(a) and 6.3(b)
have been satisfied;
(v) any other documents Company and the
Significant Shareholders reasonably request for the
purpose of (A) enabling their counsel to provide the
opinion referred to in Section 6.2(e)(i),
(B) evidencing the accuracy of any Buyer representation
or warranty, (C) evidencing Buyer's performance of, or
compliance with, any covenant or obligation required to
be performed or complied with by Buyer, (D) evidencing
the satisfaction of any condition referred to in
Section 6.1 or this Section 6.3, or (E) otherwise
facilitating the consummation of any of the
Transactions.
(d) Stay Bonus Plan. Buyer must have created a stay
bonus program for the key Acquired Company employees to be
identified by mutual agreement of Buyer and Company. The
program will consist of (i) $723,802 in cash which will vest
and be payable over a period to be determined and
(ii) options to purchase Buyer's Common Stock under Buyer's
1998 Stock Option Plan having an aggregate value of $723,802
determined in accordance with the Black-Scholes valuation
model. Acquired Company employees will receive offers of
the stay bonus pursuant to a letter substantially in the
form of Exhibit F.
(e) Injunction. There must not be in effect any Law
or Order that (i) prohibits the Merger, the Stock Purchase
or the other Transactions, and (ii) has been adopted or
issued, or has otherwise become effective, since the date of
this Agreement.
ARTICLE VII - TERMINATION OF OBLIGATIONS; SURVIVAL
7.1 Termination of Agreement.
Anything in this Agreement to the contrary
notwithstanding, either Party (as used in this Article 7,
"Party" means Buyer on the one hand and Company and the
Significant Shareholders on the other) can terminate this
Agreement and the Transactions by notice to the other Party
after July 31, 1999 unless that date is extended by mutual
consent in writing by the Parties. Otherwise, this
Agreement can be terminated at any time before the Closing
as follows and in no other manner:
(a) Mutual Consent. By mutual consent in writing
of Buyer, Company, Merger Sub and the Significant Shareholders.
(b) Certain Conditions Not Met by Earlier Date. By
either Party if the condition in Section 6.1(a) has not been met
by July 31, 1999; provided, however, that notwithstanding the
foregoing, the right to terminate this Agreement pursuant to
this Section 7.1(b) will not be available to any Party whose
action or failure to act has been a principal direct or
indirect cause in the failure of the condition in Article VI
to have been satisfied and the action or failure to act
constitutes a material breach of this Agreement.
(c) Conditions to Buyer's Performance Not Met. By
Buyer by written notice to Company and the Significant
Shareholders if any event occurs or condition exists that
would render impossible the satisfaction of one or more
conditions to Buyer's obligations to consummate the
Transactions as stated in Section 6.1 or 6.2.
(d) Conditions to Company's Performance Not Met. By
Company and the Significant Shareholders by written notice
to Buyer if any event occurs or condition exists that would
render impossible the satisfaction of one or more conditions
to the obligations of Company and the Significant
Shareholders to consummate the Transactions as stated in
Section 6.1 or 6.3.
(e) Material Breach. By either Party if there has
been a Material Misstatement by the other Party in its
representations and warranties in this Agreement, or other
material breach by the other Party of its covenants in this
Agreement.
(f) Hart-Scott-Rodino. By Buyer if it receives a
request for further information under the Hart-Scott-Rodino Act
from either the Federal Trade Commission or Department of
Justice (provided Buyer exercises its right to terminate this
Agreement at any time before making a responsive filing to
the request) by delivering written notice of the termination
to Company and the Significant Shareholders.
7.2 Effect of Termination.
Subject to the two immediately following
sentences, if this Agreement is terminated pursuant to
Section 7.1, all further obligations of the Parties under
this Agreement will terminate without further liability of
any Party to another; provided that the obligations of the
Parties contained in Sections 4.6, 9.11 and 9.14 will
survive any such termination. A termination under
Section 7.1 will not relieve any Party of any liability for
a breach of, or for any misrepresentation under, this
Agreement, or be deemed to constitute a waiver of any
available remedy (including specific performance if
available) for any such breach or misrepresentation.
ARTICLE VIII - INDEMNIFICATION
8.1 Effect of Knowledge; Waiver.
The right to indemnification, payment of Losses or
other remedy based on the representations, warranties,
covenants and obligations in this Agreement, the Stock
Purchase Agreement and any related document delivered in
connection with this Agreement or the Stock Purchase
Agreement, will not be affected by any investigation
conducted with respect to, or any Knowledge acquired (or
capable of being acquired) at any time, whether before or
after the execution and delivery of this Agreement or the
Closing Date, with respect to the accuracy or inaccuracy of
or compliance with, any such representation, warranty,
covenant or obligation. The waiver of any condition based
on the accuracy of any representation or warranty, or on the
performance of or compliance with any covenant or
obligation, will not affect the right to indemnification,
payment of Losses, or other remedy based on such
representations, warranties, covenants or obligations.
8.2 Losses.
The term "Losses" as used in this Article VIII is
not limited to matters asserted by third parties against any
Indemnified Party, but includes Losses incurred or sustained
by an Indemnified Party in the absence of third party
claims. Payments by any Indemnified Party of amounts for
which the Indemnified Party is indemnified under this
Agreement will not be a condition precedent to recovery.
Nothing in this Agreement will preclude a Party from
exercising its rights under this Agreement and applicable
Law to any available equitable remedies, including specific
performance and injunctions, with respect to other Losses or
breaches.
8.3 Indemnification of Buyer.
(a) By the Shareholders and Option Holders Through
the Escrow. Buyer, Merger Sub and the Surviving Corporation
and their respective directors, officers, employees, Affiliates,
agents and assigns (each an "Indemnified Buyer Party"), will
be indemnified and held harmless, through the Escrow (as
defined in Section 8.6(b)), from and against any and all
Losses (whether or not arising out of third-party claims)
including Losses incurred in connection with, arising out
of, resulting from or incident to (i) any breach of any
representation or warranty made by Company and the
Significant Shareholders in this Agreement, other than a
breach resulting from an adverse change or event triggered
by third party actions taken in response to the Transactions
(such as, for example, a Company client terminating its
relationship with Company because of an unwillingness to
deal with a Buyer Affiliate); (ii) any breach of any
covenant or agreement made by Company and the Significant
Shareholders in this Agreement; and (iii) any liability of
an Acquired Company for Taxes for any period (or portion
thereof) ending on or before the Closing Date, except to the
extent the liability was included in the accrual for current
Taxes in the Interim Balance Sheet. Company and the
Significant Shareholders will notify Buyer of any matters
covered by this Article VIII upon discovery or receipt of
notice thereof (other than from Buyer), whether before or
after Closing.
(b) By the Significant Shareholders. The
Significant Shareholders, jointly and severally, will
indemnify and hold harmless each Indemnified Buyer Party from
(i) any fraud and/or willful or intentional misrepresentation
by Company or the Significant Shareholders in this Agreement
or the related documents; (ii) any liabilities of the Acquired
Companies for Taxes for any period (or portion thereof)
ending on or before the Closing Date, to the extent such
liabilities arise after the termination of the Escrow (or
cannot otherwise be satisfied through the Escrow), are
asserted by the Indemnified Party during the Survival Period
and exceed $100,000 in the aggregate (with indemnification
from the first dollar if such threshold is reached), except
to the extent the liability was included in the accrual for
current Taxes in the Interim Balance Sheet; and (iii) any of
the following kinds of Losses to the extent there are
insufficient Escrowed Assets to cover those Losses, or to
the extent the Losses are incurred or discovered after the
termination of the Escrow and before the end of the relevant
Survival Period (as defined below): (A) Losses relating to
breaches of the representations and warranties in the second
sentence of Section 2.1, or of those in Sections 2.2, 2.5 or
2.8; and (B) Losses relating to breaches of the covenants of
Company and the Significant Shareholders in this Agreement.
8.4 Indemnification by Buyer.
Buyer will indemnify and hold harmless Company and
the Shareholders and their respective directors, officers,
employees, Affiliates, agents and assigns (each an
"Indemnified Seller Party" and together with an Indemnified
Buyer Party an "Indemnified Party") from and against any and
all Losses incurred in connection with, arising out of,
resulting from or incident to (a) any breach of any
representation or warranty made by Buyer in this Agreement
or the Stock Purchase Agreement; or (b) any breach of any
covenant or agreement made by Buyer in this Agreement
.
8.5 Survival.
The indemnification obligations with respect to
breaches of representations and warranties in this Agreement
will survive for 12 months after the Effective Date, except
that (a) such obligations with respect to the
representations and warranties in the second sentence of
Section 2.1 and those in Sections 2.2, 2.5 and 2.8 will
survive the Closing and will remain in full force and effect
through the shorter of (i) the expiration of the applicable
statute of limitations as the same may be extended or (ii)
ten years, and (b) if a Claim or notice is given under
Article VIII with respect to any representation or warranty
before the applicable expiration date, the indemnification
obligations with respect to that representation or warranty
will continue indefinitely until the Claim is finally
resolved (the "Survival Period"). Continuing covenants in
this Agreement will continue indefinitely, or for any
shorter period specified in the relevant section.
8.6 Limitation on Indemnification; Escrow.
(a) Maximum. The maximum amount of Losses that the
Shareholders and Option Holders will be responsible to bear
pursuant to Section 8.3(a) (which Losses will be indemnified
solely through the Escrow), is $1,400,000 in cash. The
maximum amount of Losses that Buyer will be responsible to
bear under Section 8.4 is $1,400,000.
(b) Escrow. On the Effective Date, an escrow (the
"Escrow") will be established pursuant to the Escrow
Agreement. On that date, Buyer will deduct from the
Aggregate Merger Consideration, and deposit in the Escrow,
$1,500,000. Of this amount, $629,596.50 will be deducted
from the Aggregate Merger Consideration due to Dendron and
Fronos under this Agreement (with such deduction being made
pursuant to an irrevocable instruction in form reasonably
satisfactory to Buyer), and $870,403.50 will be deducted
from the Aggregate Merger Consideration due all Shareholders
(including Dendron and Fronos) and Option Holders pro rata
in proportion to the Aggregate Merger Consideration payable
to them under this Agreement. The $1,500,000 deposited in
the Escrow will be held and disbursed as provided in the
Escrow Agreement. The Parties will promptly give any
necessary instructions to the escrow agent to carry out the
purposes of this Agreement and the Escrow Agreement. The
funds placed in the Escrow, along with any related income
and dividends (less the Shareholder Expense Reserve, as
defined in the Escrow Agreement), are referred to as the
"Escrowed Assets."
(c) Insurance. The amount of Losses for which any
Indemnified Party is entitled to indemnification under
Section 8.3 or 8.4, as the case may be, will be offset, on a
dollar for dollar basis, against the net amount of any
insurance proceeds actually received by the Indemnified
Party, less any expenses incurred in connection with the
receipt of those proceeds under any available insurance
policies then in effect covering the Losses to which the
Indemnified Party is a party; provided, however, that with
respect to any Indemnified Buyer Party, this section will
apply only to insurance policies to which Company is a
party. Nothing in this section will preclude an Indemnified
Party from filing a Claim for Losses pursuant to this
Article VIII. Each Indemnified Party will use its
commercially reasonable efforts to obtain any insurance
reimbursement that may be available under insurance policies
then in effect to which the Indemnified Party is a party in
respect of any Losses suffered or incurred by the
Indemnified Party for which the Indemnified Party would
otherwise be entitled to indemnification under Section 8.3
or 8.4, as the case may be.
8.7 Procedure.
(a) Cooperation. The Indemnified Party will
cooperate in all reasonable respects with the indemnifying
Party and its representatives (including its attorneys) with
respect to any Action covered by the indemnification provisions
of this Agreement (and any appeal arising therefrom); provided,
however that the Indemnified Party may at its own cost,
participate in negotiations, arbitrations and the
investigation, trial and defense of the lawsuit or action
and any appeal arising therefrom. The Parties will
cooperate with each other in any notifications to insurers.
(b) Defense of Claim. If a claim for Losses (a
"Claim") is to be made by an Indemnified Party against the
indemnifying Party, the Party claiming indemnification will
give written notice (a "Claim Notice") to the indemnifying
Party as soon as practicable after the Party entitled to
indemnification becomes aware of any fact, condition or event
that may give rise to Losses for which indemnification may be
sought under this Article VIII. If any lawsuit or enforcement
action is filed against an Indemnified Party, written notice
thereof will be given to the indemnifying Party as promptly as
practicable (and in any event within 15 calendar days after
the service of the citation or summons). The failure of any
Indemnified Party to give timely notice hereunder for any
purpose will not affect rights to indemnification hereunder,
except to the extent that the indemnifying Party has been
damaged by the failure. After the notice, except as
provided in the following sentence, if the indemnifying
Party acknowledges in writing to the Indemnified Party that
the indemnifying Party will be obligated under its indemnity
in this Agreement in connection with the lawsuit or action,
then the indemnifying Party will be entitled, if it so
elects at its own cost, risk and expense, (i) to take
control of the defense and investigation of the lawsuit or
action, (ii) to employ and engage attorneys of its own
choice but in any event, reasonably acceptable to the
Indemnified Party, to handle and defend the same unless the
named parties to the action or proceeding (including any
impleaded parties) include both the indemnifying Party and
the Indemnified Party and the Indemnified Party has been
advised in writing by counsel that there may be one or more
legal defenses available to the Indemnified Party that are
different from or additional to those available to the
indemnifying Party, in which event the Indemnified Party
will be entitled, at the indemnifying Party's cost risk and
expense, to separate counsel of its own choosing and
(iii) to compromise or settle the lawsuit or action, which
compromise or settlement will be made only with the written
consent of the Indemnified Party, such consent not to be
unreasonably withheld. The Shareholders and Option Holders
may assume the defense of a lawsuit or action as described
in the preceding sentence only if Shareholders and Option
Holders agree to be responsible for all Claims for Losses
related to Action and if the funds available pursuant to the
Escrow Agreement or otherwise provided as security by the
Shareholders and Option Holders are sufficient to cover the
amount of the Claim, without regard to the probability of
success on the merits of any such Claim.
If the indemnifying Party fails to assume the
defense of the lawsuit or action within 30 calendar days
after receipt of the Claim Notice, the Indemnified Party
against which the lawsuit or action has been asserted will
(upon delivering notice to that effect to the indemnifying
Party) have the right to undertake, at the indemnifying
Party's cost and expense, the defense, compromise or
settlement of the lawsuit or action on behalf of and for the
account and risk of the indemnifying Party and the
indemnifying Party will, upon request of the Indemnified
Party, promptly pay to the Indemnified Party the amount of
any Losses resulting from the lawsuit or action; provided,
however, that the lawsuit or action will not be compromised
or settled without the written consent of the indemnifying
Party, which consent will not be unreasonably withheld or
delayed. In the event the Indemnified Party assumes the
defense of the lawsuit or action, the Indemnified Party will
keep the indemnifying Party reasonably informed about the
progress of any such defense, compromise or settlement.
Subject to Section 8.6, the indemnifying Party will be
liable for any settlement of any action effected pursuant to
and in accordance with this Article VIII and for any final
judgment (subject to any right of appeal) and the
Indemnifying Party agrees to indemnify and hold harmless an
indemnified Party from and against any Losses by reason of
the settlement or judgment.
ARTICLE IX - GENERAL
9.1 Amendments; Waivers.
This Agreement and any attached schedule or
exhibit can be amended only by agreement in writing of all
Parties. No waiver of any provision nor consent to any
exception to the terms of this Agreement or any agreement
contemplated by it will be effective unless in writing and
signed by the Party to be bound and then only to the
specific purpose, extent and instance so provided.
9.2 Schedules; Exhibits; Integration.
Each schedule and exhibit delivered pursuant to
this Agreement will be in writing and will constitute a part
of this Agreement, although schedules need not be attached
to each counterpart of this Agreement. This Agreement,
together with those schedules and exhibits, constitutes the
entire agreement among the Parties pertaining to the subject
matter of this Agreement and supersedes all of the Parties'
prior agreements and understandings in connection therewith,
including, but not limited to, the existing confidentiality
agreement between Buyer and Company.
9.3 Best Efforts; Further Assurances.
Each Party will use its Best Efforts to cause all
conditions to its obligations to be timely satisfied and to
perform and fulfill all obligations on its part to be
performed and fulfilled under this Agreement, to the end
that the Transactions will be effected substantially in
accordance with its terms as soon as feasible. Each Party
will execute and deliver both before and after the Closing
any further certificates, agreements and other documents,
and take any other actions, necessary or desirable to
consummate, implement or evidence the Transactions.
9.4 Governing Law.
This Agreement, the legal relations between the
Parties and any Action, whether contractual or non-
contractual, instituted by any Party with respect to matters
arising under or growing out of or in connection with or in
respect of this Agreement, the Stock Purchase Agreement and
the other Buyer Documents and Seller Documents
(collectively, the "Transaction Agreements"), including but
not limited to the negotiation, execution, interpretation,
coverage, scope, performance, breach, termination, validity,
or enforceability of the Agreements, will be governed by and
construed in accordance with the laws of the State of
California applicable to contracts made and performed in
that state and without regard to conflicts of law doctrines,
except to the extent that certain matters are preempted by
federal law or are governed as a matter of controlling law
by the law of the State of Delaware, Buyer's jurisdiction of
incorporation. Each Party irrevocably submits to and
accepts for itself and its properties, generally and
unconditionally, the exclusive jurisdiction of and service
of process pursuant to the laws of the State of California
and the rules of its courts, waives any defense of forum non
conveniens and agrees to be bound by any judgment rendered
thereby arising under or out of in respect of or in
connection with the Transaction Agreements or any related
document or obligation. Each Party further irrevocably
designates and appoints the individual identified in or
pursuant to Section 9.10 to receive notices on its behalf,
as its agent to receive on its behalf service of all process
in any such Action before any body, such service being
hereby acknowledged to be effective and binding service in
every respect (copies of notices or service to counsel for a
party are not notice or service of process for purposes of
this Agreement). A copy of any such process so served will
be mailed by registered mail to each Party at its address
provided in Section 9.10; provided that, unless otherwise
provided by applicable law, any failure to mail that copy
will not affect the validity of the service of process. If
any agent so appointed refuses to accept service, the
designating Party agrees that service of process sufficient
for personal jurisdiction in any action against it in the
applicable jurisdiction can be made by registered or
certified mail, return receipt requested, to its address
provided in Section 9.10. Each Party acknowledges that such
service will be effective and binding in every respect.
Nothing in this Agreement will affect the right to serve
process in any other manner permitted by Law.
9.5 No Assignment.
Neither this Agreement nor any rights or
obligations under it are assignable except that (a) Buyer
can assign its rights under this Agreement (including but
not limited to its rights under Article VIII) to any Buyer
Affiliate or to any post-Closing purchaser of the Shares or
of a substantial part of Company's assets, provided,
however, that any such transferee will be bound by Buyer's
obligations to Company and the Significant Shareholders
under this Agreement; and (b) Dendron and Fronos can merge
with each other without Buyer's consent or liquidate,
reorganize or engage in other restructuring transactions
with the consent of Buyer, which consent will not be
unreasonably withheld.
9.6 Headings.
The descriptive headings of the Articles, Sections
and subsections of this Agreement are for convenience only
and do not constitute a part of this Agreement.
9.7 Counterparts.
This Agreement and any amendment to it or any
other agreement (or document) delivered pursuant to this
Agreement can be executed in one or more counterparts and by
different Parties in separate counterparts. All these
counterparts will constitute one and the same agreement (or
other document) and will become effective (unless otherwise
provided therein) when one or more counterparts have been
signed by each Party and delivered to the other Party.
9.8 Publicity and Reports.
Company and Buyer will coordinate all publicity
relating to the Transactions and no Party will issue any
press release, publicity statement or other public notice
relating to this Agreement, or the Transactions, without
obtaining the prior consent of both Company and Buyer except
to the extent that independent legal counsel to Company or
Buyer, as the case may be, delivers a written opinion to the
other Party that a particular action is required by
applicable Law. Company will obtain Buyer's prior consent
to the form and content of any application or report made to
any Governmental Entity or that relates to this Agreement.
9.9 Notices.
Any notice or other communication hereunder must
be given in writing and (a) delivered in person,
(b) transmitted by telex, telefax or telecommunications
mechanism or (c) mailed, postage prepaid, receipt requested
as follows:
If to Buyer, addressed to:
The MacNeal-Schwendler Corporation
815 Colorado Boulevard
Los Angeles, CA 90041
Attn: Louis A. Greco
Fax: (323) 259-4969
With a copy (which does not constitute notice or
service of process) to:
O'Melveny & Myers LLP
1999 Avenue of the Stars, 7th Floor
Los Angeles, CA 90067
Attn: D. Stephen Antion
Fax: (310) 246-6779
If to Company, addressed to:
MARC Analysis Research Corporation
260 Sheridan Avenue, Suite 309
Palo Alto, CA 94306
Attn: Carl J. Kennedy
Fax: (650) 323-5892
If to the Significant Shareholders, addressed to:
Dendron Technology B.V. or Fronos Technology B.V.
C/O Nearchos Irinarchos
Vikavagen 9
S-167 71 Bromma
Sweden
If to the Shareholder Representative, addressed to
Carl J. Kennedy
MARC Analysis Research Corporation
260 Sheridan Avenue, Suite 309
Palo Alto, CA 94306
Fax: (650) 323-5892
With copies of any notice to Company, the
Significant Shareholders or the Shareholder
Representative (which does not constitute notice
or service of process) to:
Graham & James LLP
600 Hansen Way
Palo Alto, CA 94304
Attn: Joe C. Sorenson
Fax: (650) 856-3619
and
Nearchos Irinarchos (at the address given above
for Mr. Irinarchos)
or to any other address or to such other Person either Party
has last designated by notice to the other Party. Each such
notice or other communication will be effective (i) if given
by telecommunication, when transmitted to the applicable
number so specified in (or pursuant to) this Section 9.9 and
an appropriate answerback is received, (ii) if given by
mail, three days after the communication is deposited in the
mails with first class postage prepaid, addressed as
aforesaid or (iii) if given by any other means, when
actually received at that address.
9.10 Expenses and Attorneys Fees.
The Parties will each pay their own respective
expenses incident to the negotiation, preparation and
performance of this Agreement and the Transactions,
including the fees, expenses and disbursements of their
respective investment bankers, accountants and counsel;
provided, however, that, (a) Company's expenses in excess of
$450,000 will be paid for by the Significant Shareholders to
the extent not covered by the Shareholder Expense Reserve
established under the Escrow Agreement and will not be paid
by Company; and (b) Buyer will pay the fee for the
contemplated filing under the Hart-Scott-Rodino Act. In the
event of any Action for the breach of this Agreement or
misrepresentation by any Party, the prevailing Party will be
entitled to reasonable attorney's fees, costs and expenses
incurred in connection with the Action.
9.11 Shareholder Representative.
Each Significant Shareholder hereby appoints, and
each Shareholder and Option Holder will appoint (through the
Letter of Transmittal and the approval of the Merger and
related Transactions by the Shareholders, in the case of the
Shareholders, and by another appropriate instrument in the
case of the Option Holders), Carl J. Kennedy (in that
capacity, the "Shareholder Representative") the true and
lawful agents and attorneys-in-fact of each Shareholder and
Option Holder in his or her name, place and stead, with full
power and authority to act, including full power of
substitution, in the name of, for and on behalf of each
Shareholder and Option Holder relating to any matters
arising in connection with, or related to the following
actions and omissions:
(a) compromise and settlement of any indemnification
claims; and any and all acts and omissions involving the
Shareholders in any way related to or in furtherance of this
Agreement and the Escrow Agreement; and
(b) provision of instructions and notices for
distributions and any other actions under the Escrow Agreement;
provided, however, that any payments to be made to the
Shareholders and Option Holders will be made directly to the
Shareholders and Option Holders and not to the Shareholder
Representative. The Shareholder Representative can make,
exchange, acknowledge and deliver any and all agreements,
certificates, receipts or other documents, and in general do
all things and take all actions, that the Shareholder
Representative, in his sole discretion consider necessary or
proper in connection with, or to carry out the purposes of,
the Transactions.
9.12 Specific Performance.
The Parties each acknowledge that, in view of the
uniqueness of the Business and the Transactions, each Party
would not have an adequate remedy at law for money damages
in the event that this Agreement has not been performed in
accordance with its terms, and therefore agrees that the
other Party will be entitled to specific enforcement of this
Agreement in addition to any other remedy to which it may be
entitled, at law or in equity.
9.13 Agreement to Arbitrate.
(a) General. Any controversy, dispute or claim
under, arising out of, in connection with or in relation to the
Agreements (other than the Escrow Agreement and matters
covered by Section 1.6(b)), including the negotiation,
execution, interpretation, construction, coverage, scope,
performance, non-performance, breach, termination, validity
or enforceability of those Agreements or this Section 9.13
will be determined by arbitration conducted in accordance
with the Commercial Arbitration Rules or then existing rules
for commercial arbitration of the American Arbitration
Association. The arbitration will additionally be governed
by the California Arbitration Act. The arbitration will be
before a single arbitrator selected by mutual agreement of
the Parties from among a list of seven potential arbitrators
provided by the American Arbitration Association. If the
Parties cannot agree on an arbitrator from this first list,
the Parties will select an arbitrator for the arbitration
from a second list of seven potential arbitrators provided
by the American Arbitration Association with Buyer on the
one hand, and the Shareholder Representatives, on the other,
alternately striking names, with the last name remaining to
be the arbitrator so selected. If either Party seeks a
temporary restraining order, preliminary injunction or other
provisional relief, Section 1281.8 of the California Code of
Civil Procedure will apply. The arbitration of such issues,
including any Party's rights to specific performance
pursuant to Section 9.12 or any other provision of the
Agreements providing for specific performance or to any
award of damages suffered by any Party by reason of the acts
or omissions of any Party, will be final and binding upon
the Parties to the maximum extent permitted by law. The
Parties intend that this Section will be valid, binding,
enforceable and irrevocable and will survive the termination
of this Agreement.
(b) Choice of Law. This Section 9.13, and any
proceedings under it, will be subject to Section 9.4.
(c) Place of Arbitration. Any arbitration
proceedings under this Agreement will be held in Los Angeles,
California.
(d) Judgment. Judgment upon any award rendered by
the arbitrator(s) can be entered by any court having
jurisdiction thereof.
ARTICLE X - DEFINITIONS
10.1 Definitions.
For all purposes of this Agreement, except as
otherwise expressly provided,
(a) the terms defined in this Article X have the
meanings given them in this Article X and include the plural
as well as the singular,
(b) all accounting terms not otherwise defined in
this Agreement have the meanings assigned under GAAP.
(c) all references in this Agreement to designated
"Articles," "Sections" and other subdivisions are to the
designated Articles, Sections and other subdivisions of the
body of this Agreement,
(d) pronouns of either gender or neuter will include,
as appropriate, the other pronoun forms,
(e) the words "herein," "hereof" and "hereunder" and
similar words refer to this Agreement as a whole and not to
any particular Article, Section or other subdivision, and
(f) the word "including" does not imply any
limitation.
As used in this Agreement and the Exhibits and
Schedules delivered pursuant to this Agreement, the
following definitions apply.
"Accountants" is defined in Section 1.6.
"Acquired Companies" is defined in the Recitals.
"Action" means any action, complaint, petition,
investigation, suit or other proceeding, whether civil or
criminal, in law or in equity, or before any arbitrator or
Governmental Entity.
"Affiliate" means a Person that directly, or
indirectly through one or more intermediaries, controls, or
is controlled by, or is under common control with, a
specified Person.
"Agreement" means this Agreement as amended or
supplemented together with all Exhibits and Schedules
attached or incorporated by reference.
"Agreement of Merger" means an agreement of merger
to be filed with the Office of the Secretary of State of the
State of California, substantially in the form of Exhibit G.
"Aggregate Exercise Price" means, with respect to
any Company Option, an amount equal to the product of
(a) the exercise price per share of that Company Option,
multiplied by (b) the aggregate number of Shares issuable
upon the exercise in full of the Company Option.
"Aggregate Merger Consideration" means
$20,276,198.
"Approval" means any approval, authorization,
consent, qualification or registration, or any waiver of any
of the foregoing, required to be obtained from, or any
notice, statement or other communication required to be
filed with or delivered to, any Governmental Entity or any
other Person.
"Associate" of a Person means (a) a corporation or
organization (other than Company or a Party to this
Agreement) of which that Person is an officer or partner or
is, directly or indirectly, the beneficial owner of 10% or
more of any class of equity securities; (b) any trust or
other estate in which that Person has a substantial
beneficial interest or as to which the Person serves as
trustee or in a similar capacity; and (iii) any relative or
spouse of that individual or any relative of such spouse.
"Auditors" means PricewaterhouseCoopers, LLP,
Company's independent public accountants.
"Balance Sheet" is defined in Section 2.3(a).
"Best Efforts" means the efforts a prudent Person
who wanted to achieve a result would use in similar
circumstances to see that the result was achieved as quickly
as possible; provided, however, that an obligation to use
Best Efforts under this Agreement does not require the
Person subject to that obligation to take actions that would
result in a materially adverse change in the benefits to
that Person of this Agreement and the Transactions.
"Business" means the business of the Acquired
Companies, and will be deemed to include any of the
following incidents of that business: income, cash flow,
operations, condition (financial or other), assets and
properties (whether owned or used), anticipated revenues,
prospects, rights, policies, liabilities, goodwill and
personnel.
"Buyer Documents" means this Agreement and the
other Agreements signed by Buyer (or a Buyer Affiliate) in
connection with this Agreement, including the Consulting
Agreement, the Escrow Agreement, the Stock Purchase
Agreement and the following documents described in the Stock
Purchase Agreement: the Indenture, the Registration Rights
Agreement, the Warrant Agreement and the Notes .
"Cancelled Shares" is defined in Section 1.4.
"Certificate" means a certificate that represented
issued and outstanding Shares immediately before the
Effective Time.
"CGCL" means the General Corporation Law of the
State of California.
"Claim" is defined in Section 8.7.
"Claim Notice" is defined in Section 8.7.
"Closing" is defined in Section 1.2.
"Closing Date" means the date of the Closing.
"Code" means the Internal Revenue Code of 1986, as
amended, or as hereafter amended.
"Common Stock" means the common stock, par value
$1/50> per share, of Company.
"Company" is defined in the opening paragraph.
"Company Options" means the options, warrants or
other agreements for the issuance of Company Equity
Securities listed on Schedule 2.2.
"Competing Transaction" is defined in Section 4.7.
"Consulting Agreement" means the Consulting
Agreement between Buyer (or a Buyer Affiliate) and Pan
Cosmos A.B., a Swedish corporation, in substantially the
form of Exhibit H.
"Contract" means any agreement, arrangement, bond,
commitment, franchise, indemnity, indenture, instrument,
lease, license or understanding, whether or not in writing.
"Copyright Law" means the Copyright Laws of the
U.S., Title 17 U.S.C. section 101 et. seq.
"Dissenting Shares" is defined in Section 1.6(a).
"Effective Date" is defined in Section 1.3.
"Effective Time" is defined in Section 1.3.
"Encumbrance" means any claim, charge, easement,
encumbrance, lease, covenant, security interest, lien,
option, pledge, rights of others, or restriction (whether on
voting, sale, transfer, disposition or otherwise), whether
imposed by agreement, understanding, law, equity or
otherwise, except for any restrictions on transfer generally
arising under any applicable federal or state securities
law.
"Equity Securities" means any capital stock or
other equity interest or any securities convertible into or
exchangeable for capital stock or any other rights, warrants
or options to acquire any of the foregoing securities.
"ERISA" means the Employee Retirement Income
Security Act of 1974, as amended, and the related
regulations and published interpretations.
"ERISA Affiliate" is defined in Section 2.13(c).
"Escrow" is defined in Section 8.6(b).
"Escrow Agreement" means the escrow agreement
substantially in the form of Exhibit I.
"Escrowed Assets" is defined in Section 8.6(b).
"Exchange Act" means the Securities Exchange Act
of 1934, as amended.
"Exchange Amount" means an amount (before any
adjustment under this Agreement) equal to the quotient
obtained by dividing (i) the Aggregate Merger Consideration
by (ii) Total Outstanding Shares.
"GAAP" means generally accepted accounting
principles in the United States, as in effect from time to
time.
"Governmental Entity" means any government or any
agency, district, bureau, board, commission, court,
department, official, political subdivision, tribunal or
other instrumentality of any government, whether federal,
state or local, domestic or foreign.
"Group" means, individually and collectively,
(a) Company, (b) any Significant Shareholder, (c) the
Company's Subsidiaries and (d) any Person as to which
Company is liable for Taxes incurred by that Person as
transferee, pursuant to Treasury Regulations 1.1502-6 or
pursuant to other provisions of Law.
"Hart-Scott-Rodino Act" means the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended, and
the related regulations and published interpretations.
"Hazardous Substance" means (but will not be
limited to) substances that are defined or listed in, or
otherwise classified pursuant to, any applicable Laws as
"hazardous substances," "hazardous materials," "hazardous
wastes" or "toxic substances," or any other formulation
intended to define, list or classify substances by reason of
deleterious properties such as ignitibility, corrosivity,
reactivity, radioactivity, carcinogenicity, reproductive
toxicity or "EP toxicity," and petroleum and drilling
fluids, produced waters and other wastes associated with the
exploration, development, or production of crude oil,
natural gas or geothermal energy.
"Indemnified Buyer Party" is defined in Section
8.3.
"Indemnified Party" is defined in Section 8.4.
"Indemnified Seller Party" is defined in Section
8.4.
"Intangible Property" means any trade secret,
secret process or other confidential information or know-how
and any and all Intellectual Property Rights.
"Intellectual Property Rights" means any and all
(by whatever name or term known or designated) tangible and
intangible and now known or hereafter existing (a) rights
associated with works of authorship, including but not
limited to copyrights (including the sole and exclusive
right to prepare "derivative works" (as defined in the
Copyright Law) of the copyrighted work and to copy,
manufacture, reproduce, distribute copies of, modify,
publicly perform and display the copyrighted work and all
derivative works thereof) and moral rights (including any
right to identification of authorship and any limitation on
subsequent modification), (b) rights in and relating to the
protection of trademarks, service marks, trade names,
goodwill, rights in packaging, rights of publicity and
privacy, merchandising rights and similar rights, (c) rights
in and relating to the protection of trade secrets and
confidential information, (d) patents, designs, algorithms
and other industrial property rights and rights associated
therewith, (e) other intellectual and industrial property
and proprietary rights (of every kind and nature however
designated) relating to intangible property that are
analogous to any of the foregoing rights (including logos,
character rights, "rental rights" and rights to
remuneration), whether arising by operation of law,
contract, license or otherwise, (f) registrations,
applications, renewals, extensions, continuations,
divisions, or reissues thereof now or hereafter in force
throughout the universe (including rights in any of the
foregoing), and (g) rights in and relating to the sole and
exclusive possession, ownership and use of any of the
foregoing, including the right to license and sublicense,
franchise, assign, pledge, mortgage, sell, transfer, convey,
grant, gift over, divide, partition and use (or not use) in
any way any of the foregoing now or hereafter (including any
claims and causes of action of any kind with respect to, and
any other rights relating to the enforcement of, any of the
foregoing).
"Interim Balance Sheet" is defined in Section
2.3(b).
"IRS" means the Internal Revenue Service or any
successor entity.
"Knowledge" of an individual means his or her
actual knowledge and will be deemed to exist with respect to
a particular matter if a prudent individual could be
expected to discover or otherwise become aware of it in the
course of conducting a reasonably comprehensive
investigation concerning its existence. A Person (other
than an individual) will be deemed to have "Knowledge" of a
particular matter if any individual who is serving, or who
has at any time served, as a director, officer, partner,
executor, or trustee of that Person (or in any similar
capacity) has, or at any time had, Knowledge of the matter.
"Law" means any constitutional provision, statute
or other law, rule, regulation, or interpretation of any
Governmental Entity and any Order.
"Letter of Transmittal" is defined in Section 1.5.
"Loss" means any action, cost, damage,
disbursement, expense, liability, loss, deficiency,
diminution in value, obligation, penalty or settlement of
any kind or nature, whether foreseeable or unforeseeable,
including but not limited to, interest or other carrying
costs, penalties, costs of remedial or corrective action
(including clean-up costs), legal, accounting and other
professional fees and expenses incurred in the
investigation, collection, prosecution and defense of claims
and amounts paid in settlement, that may be imposed on or
otherwise incurred or suffered by the specified Person.
"Material Contract" means any Contract material to
the business of the subject Person as of or after the date
of this Agreement and includes those contracts deemed
material by Section 2.6.
"Material Misstatement" means, with respect to any
statement or document, an untrue statement of a material
fact or an omission to state any material fact required to
be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were
made, not misleading.
"Merger" is defined in the Recitals.
"Merger Consideration" is defined in Section
1.4(a).
"Merger Sub" is defined in the first paragraph.
"Non-Competition Agreement" means the Non-
Competition Agreement between Buyer (or a Buyer Affiliate)
and Nearchos Irinarchos in substantially the form of Exhibit
J.
"Option Holders" means holders of Company Options.
"Order" means any decree, injunction, judgment,
order, ruling, assessment or writ.
"Ordinary Course" means an action taken in
connection with the Business that is consistent with the
past practices in the ordinary course of the normal day-to-
day operations of the Business;
"Parties" means the parties to this Agreement,
unless otherwise specified.
"PBGC" means the Pension Benefit Guaranty
Corporation or any successor to it.
"Permit" means any license, permit, franchise,
certificate of authority, or order, or any waiver of the
foregoing, issued, granted or given by any Governmental
Entity pursuant to any Law.
"Person" means an association, a corporation, an
individual, a partnership, a trust or any other entity or
organization, including a Governmental Entity.
"Plans" is defined in Section 2.13(a)(i).
"Qualified Plans" is defined in
Section 2.13(b)(i).
"SEC" means the Securities and Exchange Commission
or any successor entity.
"Securities Act" means the Securities Act of 1933,
as amended.
"Seller Documents" means this Agreement and the
other instruments signed by Company and/or one or more of
the Significant Shareholders, including the Non-Competition
Agreement, Escrow Agreement, Consulting Agreement, Stock
Purchase Agreement, and Registration Rights Agreement.
"Shareholders" means the holders of Shares.
"Shareholder Representative" is defined in Section
9.12.
"Shares" is defined in the Recitals.
"Significant Shareholders" is defined in the
Recitals.
"Stock Purchase" is defined in the Recitals
"Stock Purchase Agreement" is defined in the
Recitals.
"Stock Purchase Closing" means the closing of the
transactions under the Stock Purchase Agreement.
"Straddle Period" is defined in Section 2.5(i)
"Subsidiary" means any Person in which Company has
a direct or indirect equity interest in excess of 50%.
"Survival Period" is defined in Section 8.5.
"Surviving Corporation" is defined in Section 1.1.
"Tax" means any foreign, federal, state, county or
local income, sales, use, excise, franchise, ad valorem,
real and personal property, transfer, gross receipt, stamp,
premium, profits, customs, duties, windfall profits, capital
stock, production, business and occupation, disability,
employment, payroll, severance or withholding taxes, fees,
assessments or charges of any kind whatever imposed by any
Governmental Entity, any interest and penalties (civil or
criminal), additions to tax, payments in lieu of taxes or
additional amounts related thereto or to the nonpayment
thereof, and any Loss in connection with the determination,
settlement or litigation of any Tax liability.
"Tax Return" means a declaration, statement,
report, return or other document or information required to
be filed or supplied with respect to Taxes including, where
permitted or required, combined or consolidated returns for
any group of entities that includes any Acquired Company.
"Threatened" means, with respect to an Action,
dispute or other matter, that a demand or statement has been
made (orally or in writing) or any notice has been given
(orally or in writing), or if any other event has occurred
or any other circumstances exist, that would lead a prudent
Person to conclude that such an Action, dispute or other
matter is likely to be asserted, commenced, taken or
otherwise pursued in the future.
"Total Aggregate Exercise Price" means the sum of
the Aggregate Exercise Prices of all Company Options
outstanding immediately before the Effective Time.
"Total Outstanding Shares" means an amount equal
to the sum of (a) the aggregate number of Shares issued and
outstanding immediately before the Effective Time, and
(b) the aggregate number of Shares issuable upon the
conversion, exercise or exchange of all securities
convertible into, or exercisable or exchangeable for,
Shares, including all Shares issuable upon the exercise of
all Company Options outstanding immediately before the
Effective Time; provided, however, that for purposes of
determining the number of Total Outstanding Shares, all
Shares held by Buyer or any Buyer Affiliate as a result of
the Stock Purchase Agreement will be excluded.
"Trade Secret" means all know-how, trade secrets,
confidential information, customer lists, software,
technical information, data, process technology, plans,
drawings and blue prints owned, used or licensed by the
Acquired Companies as licensee or licensor.
"Transaction Agreements" is defined in
Section 9.4.
"Transactions" means all of the transactions
contemplated by or referred to in this Agreement, including
(a) the Merger; (b) the Stock Purchase; (c) the execution,
delivery and performance of this Agreement and the Stock
Purchase Agreement; and (d) Buyer's acquisition of Company
through the Stock Purchase and the Merger.
"Warrant Agreement" means the Warrant Agreement
executed and delivered under the Stock Purchase Agreement.
"Warrants" is defined in Section 1.2 of the Stock
Purchase Agreement.
<PAGE>
IN WITNESS WHEREOF, each Party has caused this
Agreement to be executed by its duly authorized officers as
of the day and year first above written.
BUYER
By: /s/ Frank Perna, Jr.
----------------------------
Its: Chief Executive Officer
By: /s/ Louis A. Greco
----------------------------
Its: Chief Financial Officer
and Secretary
COMPANY
By: /s/ Carl J. Kennedy
----------------------------
Its: Vice-President of Finance
and Administration
By: /s/ Joe C. Sorenson
----------------------------
Its: Secretary
MSC HOLDINGS CO. II
By: /s/ Frank Perna, Jr.
----------------------------
Its: President
By: /s/ Louis A. Greco
----------------------------
Its: Secretary
DENDRON TECHNOLOGY B.V.
By: /s/ Nearchos Irinarchos
----------------------------
Its: General Manager
FRONOS TECHNOLOGY B.V.
By: /s/ Nearchos Irinarchos
----------------------------
Its: General Manager
NEARCHOS IRINARCHOS
/s/ Nearchos Irinarchos
--------------------------------
<PAGE>
Exhibit 2.2
STOCK PURCHASE AGREEMENT
dated as of
May 26, 1999
among
Dendron Technology B.V.,
Fronos Technology B.V.
and
The MacNeal-Schwendler Corporation
<PAGE>
ARTICLE I - PURCHASE, SALE & CLOSING
1.1 Sale of Purchased Shares by Sellers 1
1.2 Purchase of the Purchased Shares/Purchase Price 1
1.3 The Closing 2
ARTICLE II - SELLERS' REPRESENTATIONS AND WARRANTIES
2.1 Power and Authority 2
2.2 Stock 2
2.3 Authorization;No Conflicts 2
2.4 Sellers' Investment Intent 3
2.5 Merger Agreement Representations and Warranties 3
ARTICLE III - BUYER'S REPRESENTATIONS AND WARRANTIES
3.1 Merger Agreement Representations and Warranties 3
3.2 Investment Intent 3
ARTICLE IV - COVENANTS
4.1 Merger Agreement Covenants 4
4.2 Transfers 4
ARTICLE V - INDEMNIFICATION
5.1 Seller Indemnification Relating to this Agreement 4
5.2 Indemnification by Buyer 4
5.3 Survival 4
5.4 Procedure, Etc. 4
ARTICLE VI - CONDITIONS
6.1 Merger Agreement Conditions 5
6.2 Other Conditions 5
ARTICLE VII - TERMINATION
7.1 Termination 5
ARTICLE VIII - GENERAL
8.1 Incorporation from Merger Agreement 5
ARTICLE IX - DEFINITIONS
9.1 Merger Agreement Definitions 6
9.2 Other Definitions 6
Exhibits
Exhibit A Form of Ten-Year Notes
Exhibit B Form of Indenture
Exhibit C Form of Two-Year Notes
Exhibit D Form of Warrant Agreement
Exhibit E Form of Registration Rights Agreement
<PAGE>
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement is entered into as of May
26, 1999, among The MacNeal-Schwendler Corporation, a Delaware
corporation ("Buyer"), Dendron Technology B.V., a Dutch
corporation ("Dendron"), and Fronos Technology B.V., a Dutch
corporation ("Fronos") (Dendron and Fronos are collectively
referred to as "Sellers").
R E C I T A L S
WHEREAS, Dendron owns 8,942,460 Shares of MARC Analysis
Research Corporation, a California corporation ("Company"), and
Fronos owns 8,942,458 Shares;
WHEREAS, Dendron desires to sell to Buyer, and Buyer
desires to buy from Dendron, 5,162,844 Shares;
WHEREAS, Fronos desires to sell to Buyer, and Buyer
desires to buy from Fronos, 5,162,844 Shares;
WHEREAS, Sellers are also parties (in their capacities
as "Significant Shareholders"), along with Company, MSC Holdings
Co. II ("Merger Sub"), Buyer and Nearchos Irinarchos, to the
Agreement and Plan of Merger dated the date of this Agreement
(the "Merger Agreement") providing for the merger of Merger Sub
into Company immediately after the consummation of the stock
purchase contemplated by this Agreement (the "Stock Purchase");
and
WHEREAS, certain capitalized terms used in this
Agreement have the meanings given in Article IX; capitalized
terms used in this Agreement without separate definition have the
meanings given in the Merger Agreement.
A G R E E M E N T
In consideration of the mutual promises contained in
this Agreement and intending to be legally bound, the parties
agree as follows:
ARTICLE I - PURCHASE, SALE & CLOSING
1.1 Sale of Purchased Shares by Sellers. Each
Seller will sell 5,162,844 Shares to Buyer, for an aggregate of
10,325,688 Shares (the "Purchased Shares"). Sellers will
deliver the certificates evidencing the Purchased Shares to
Buyer at the closing of the Stock Purchase (the "Stock Purchase
Closing"). These certificates will be properly endorsed for
transfer to or accompanied by a duly executed stock power in
favor of Buyer and otherwise in a form acceptable for transfer
on Company's books. Sellers will pay any Taxes payable with
respect to the transfer of the Purchased Shares.
1.2 Purchase of the Purchased Shares/Purchase Price.
Subject to the terms and conditions of this Agreement, including
Sections 1.3 and 1.4, Buyer will, at the Closing, purchase the
Purchased Shares from Sellers and pay each Seller a purchase
price of:
(a) 8% subordinated promissory notes in an aggregate
principal amount of $5,500,000 due on the 10th anniversary of
the Closing (the "Ten-Year Notes"), to be issued substantially
in the form of Exhibit A under an indenture substantially in the
form of Exhibit B (the "Indenture");
(b) 8% subordinated promissory notes in the aggregate
principal amount of $1,618,006 due on the second anniversary of
the Closing (the "Two-Year Notes") to be issued substantially in
the form of Exhibit C under the Indenture;
(c) 7 7/8% convertible subordinated notes due 2004 in
the aggregate principal amount of $1,000,000 (the "Convertible
Notes") to be issued under the Indenture dated as of August 18,
1994 between Buyer and Chemical Trust Company of California (the
"1994 Indenture"); and
(d) warrants for the purchase of 700,000 shares of
common stock of Buyer (the "Warrants") issued pursuant to a
Warrant Agreement in substantially the form of Exhibit D
(the "Warrant Agreement").
The Ten-Year Notes, Two-Year Notes, Convertible Notes, and
Warrants deliverable to Sellers are collectively referred to as
the "Purchase Price."
1.3 The Closing. The Stock Purchase Closing will
take place at the offices of O'Melveny & Myers LLP, 400 South
Hope Street, Los Angeles, California, beginning at 10:00 A.M.,
Los Angeles time, immediately before the Closing of the Merger.
At the Stock Purchase Closing, Sellers will deliver to Buyer
certificates representing the Purchased Shares; Buyer will
deliver the Purchase Price; and the Parties will deliver to
each other duly executed counterparts of the Registration
Rights Agreement.
ARTICLE II - SELLERS' REPRESENTATIONS AND WARRANTIES
Sellers jointly and severally represent, warrant and
agree that:
2.1 Power and Authority. Each Seller is a corporation duly
organized, validly existing and in good standing under the laws
of The Netherlands. Each Seller has all necessary corporate
power and authority to carry on its business as now being
conducted. Each Seller has the necessary corporate power and
authority to execute, deliver and perform this Agreement and any
related agreement to which it is a party.
2.2 Stock. Dendron and Fronos own 8,942,460 and 8,942,458
Shares, respectively, beneficially and of record, and free of all
Encumbrances. At the Stock Purchase Closing, Buyer will acquire
good and marketable title to and complete ownership of the
Purchased Shares, free of any Encumbrance.
2.3 Authorization; No Conflicts.
(a) Authorization. The execution, delivery and
performance of this Agreement and any related agreements by
Sellers has been duly and validly authorized by their respective
Boards of Directors and by all other necessary corporate action
on their part. This Agreement and any related agreements
constitute the legally valid and binding obligation of Sellers,
enforceable against Sellers in accordance with their terms
except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws
and equitable principles relating to or limiting creditors
rights generally.
(b) No Conflicts. Except as stated in Schedule 2.3,
neither the execution and delivery of this Agreement and any
related agreements nor the consummation or performance of the
Transactions, directly or indirectly (with or without notice or
lapse of time):
(i) contravene, conflict with or result in a
violation of (A) any provision charter documents or bylaws
of either Seller or (B) any resolution adopted by the boards
of directors or stockholders of either Seller;
(ii) contravene, conflict with or result in a
violation of, or give any Governmental Entity or other
Person the right to challenge, the Stock Purchase or any
related agreements or to exercise any remedy or obtain any
relief under, any Law or Order to which either Seller may be
subject; or
(iii) violate or will violate or result or will
result in a breach of any of the terms and provisions of,
or constitute or will constitute a default under, or
conflict or will conflict with, or result or will result
in any augmentation or acceleration of rights, benefits or
obligations of any party under, any Contract to which any
Seller is a party or is bound, or any Order applicable to
Sellers.
(c) No Approval or Permit. Sellers are not, and will
not be, required to give any notice to, or obtain any Permit
or Approval from, any Person in connection with the
execution, delivery and performance of this Agreement.
2.4 Sellers' Investment Intent. Sellers are acquiring
the Ten-Year Notes, the Two-Year Notes and the Warrants for their
own accounts for investment purposes only and not with a present
view to, or for sale in connection with, any distribution of
those instruments.
2.5 Merger Agreement Representations and Warranties.
The representations and warranties made by Sellers in Article II
of the Merger Agreement are incorporated in this Agreement by
this reference, and are confirmed as the representations and
warranties of Sellers for purposes of this Agreement.
ARTICLE III - BUYER'S REPRESENTATIONS AND WARRANTIES
3.1 Merger Agreement Representations and Warranties.
Buyer's representations and warranties in Article III of the
Merger Agreement are incorporated in this Agreement by this
reference, and are confirmed as the representations and
warranties of Buyer for purposes of this Agreement.
3.2 Investment Intent. Buyer is acquiring the
Purchased Shares for its own account for investment purposes
only and not with a view to or for sale in connection with any
distribution of the Purchased Shares.
ARTICLE IV - COVENANTS
4.1 Merger Agreement Covenants. The covenants of
Sellers and Buyer in Articles IV and V of the Merger Agreement
are hereby incorporated in this Agreement by this reference, and
are confirmed as covenants of Sellers and Buyer for purposes of
this Agreement.
4.2 Transfers. Neither Seller will sell, transfer
or otherwise dispose of the Ten-Year Notes, the Two-Year Notes
or the Warrants (or the underlying shares of Buyer common stock)
except in compliance with applicable securities Laws. Buyer will
not sell, transfer or otherwise dispose of the Purchased Shares
except in compliance with applicable securities Laws.
ARTICLE V - INDEMNIFICATION
5.1 Seller Indemnification Relating to this Agreement.
Sellers will jointly and severally indemnify, save and hold
harmless Buyer and its directors, officers, employees,
affiliates, agents and assigns (each an "Indemnified Buyer
Party"), from and against any and all Losses (whether or not
arising out of third-party claims) incurred in connection with,
arising out of, resulting from or incident to (a) any breach of
any representation or warranty made by Sellers in Sections 2.1,
2.2, 2.3 and 2.4 of this Agreement; or (b) any breach of any
covenant or agreement made by Sellers in Section 4.2 of this
Agreement. These indemnification obligations are separate from,
and not subject to the survival or maximum indemnity limitations
under, the indemnification provisions of the Merger Agreement.
Sellers will notify Buyer of any matters covered by this Section
5.1 upon discovery or receipt of notice thereof (other than from
Buyer), whether before or after the Closing.
5.2 Indemnification by Buyer. Buyer will indemnify,
save and hold harmless Sellers and their respective directors,
officers, employees, affiliates, agents and assigns (each an
"Indemnified Seller Party" and together with an Indemnified
Buyer Party an "Indemnified Party") from and against any and
all Losses (whether or not arising out of third-party claims)
incurred in connection with, arising out of, resulting from or
incident to (a) any breach of any representation or warranty
made by Buyer in this Agreement (apart from those incorporated
by reference to the Merger Agreement); or (b) any breach of any
covenant or agreement made by the Buyer in this Agreement.
These indemnification obligations are separate from, and not
subject to the survival or maximum indemnity limitations under,
the indemnification provisions of the Merger Agreement. Buyer
will notify Sellers of any matters covered by this Section 5.2
upon discovery or receipt of notice thereof (other than from
Sellers), whether before or after Closing.
5.3 Survival. The foregoing indemnification
obligations will survive for the shorter of the applicable
statute of limitations or 10 years.
5.4 Procedure, Etc. Sections 8.6(c) and 8.7 of the Merger
Agreement are incorporated by this reference into this Agreement
(but only for the purpose of stating the procedures for seeking
indemnification and the effect of insurance, and not to alter the
nature or scope of the indemnification rights and obligations in
this Agreement).
ARTICLE VI - CONDITIONS
6.1 Merger Agreement Conditions. The conditions stated in
Article VI of the Merger Agreement (except the one in Section
6.2(e)) are incorporated in this Agreement by this reference, and
are confirmed by Sellers and Buyer as the conditions to their
respective obligations under this Agreement.
6.2 Other Conditions. In addition, the obligations of the
parties under this Agreement are subject to the execution and
delivery of the documents called for specifically by this
Agreement, including the Registration Rights Agreement.
ARTICLE VII - TERMINATION
7.1 Termination. This Agreement is subject to
termination only if, as and when the Merger Agreement is
terminated in accordance with, and with the consequences
provided in, Article VII of the Merger Agreement (with the
references in that Article to "this Agreement" being deemed
for purposes of this Agreement to refer to this Agreement, not
the Merger Agreement).
ARTICLE VIII - GENERAL
8.1 Incorporation from Merger Agreement. The general
provisions of Article IX of the Merger Agreement are
incorporated by this reference, except that (a) references in
that Article to "this Agreement" will be deemed to be to this
Agreement; and (b) notices to Sellers under this Agreement must
be sent as follows and will be deemed given (i) when delivered
by hand, (ii) sent by telecopier to the applicable number
specified in, or pursuant to this Section 8.1, and an
appropriate answerback is received, or (iii) when received if
sent by a nationally-recognized courier or delivery service
(receipt requested).
If to Dendron or Fronos, addressed to:
Dendron Technology B.V. or Fronos Technology B.V.
C/O Nearchos Irinarchos
Vikavagen 9
S-167 71 Bromma
Sweden
With a copy (which will not constitute notice or
service of process) to:
Graham & James LLP
600 Hansen Way
Palo Alto, CA 94304
Attn: Joe C. Sorenson
ARTICLE IX - DEFINITIONS
9.1 Merger Agreement Definitions. Section 10.1 of
the Merger Agreement is incorporated in this Agreement by
this reference. Capitalized terms used in this Agreement,
and not otherwise defined, have the meanings given in the Merger
Agreement.
9.2 Other Definitions.
"Agreement" means this Agreement as amended or
supplemented, together with all Exhibits, Schedules and
provisions attached to, or incorporated by reference in, this
Agreement.
"1994 Debenture" is defined in Section 1.2(c).
"Convertible Notes" is defined in Section 1.2(c).
"Indemnified Buyer Party" is defined in Section 5.1.
"Indemnified Party" is defined in Section 5.2.
"Indemnified Seller Party" is defined in Section 5.2.
"Indenture" is defined in Section 1.2(b).
"Merger Agreement" is defined in the Recitals.
"Notes" means the Ten-Year Notes, Two-Year Notes and
Convertible Notes.
"Purchase Price" is defined in Section 1.2.
"Purchased Shares" is defined in Section 1.1.
"Registration Rights Agreement" means the registration
rights agreement between Buyer and Sellers dated as of the date
of this Agreement in the form of Exhibit E.
"Sellers" is defined in the recitals.
"Stock Purchase is defined in the Recitals.
"Stock Purchase Closing" is defined in Section 1.1.
"Ten-Year Notes" is defined in Section 1.2(a).
"Two-Year Notes" is defined in Section 1.2(b).
"Warrants" is defined in Section 1.2(d).
"Warrant Agreement" is defined in Section 1.2(d).
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused
this Agreement to be executed by its duly authorized
officers as of the day and year first above written.
THE MACNEAL-SCHWENDLER CORPORATION
By: /s/ Frank Perna, Jr.
----------------------------
Name: Frank Perna, Jr.
------------------------
Title: Chief Executive Officer
-----------------------
By: /s/ Louis A. Greco
----------------------------
Name: Louis A. Greco
------------------------
Title: Chief Financial Officer
and Secretary
-----------------------
DENDRON TECHNOLOGY B.V.
By: /s/ Nearchos Irinarchos
-------------------------
Name: Nearchos Irinarchos
---------------------
Title: General Manager
--------------------
FRONOS TECHNOLOGY B.V.
By: /s/ Nearchos Irinarchos
-------------------------
Name: Nearchos Irinarchos
---------------------
Title: General Manager
--------------------
<PAGE>
<PAGE>
Exhibit 4.1
THE MACNEAL-SCHWENDLER CORPORATION
AND
CHASE MANHATTAN BANK AND TRUST COMPANY N.A., Trustee
INDENTURE
Dated as of June 17, 1999
Subordinated Promissory Notes
of up to $50,000,000
<PAGE>
ARTICLE ONE
DEFINITIONS
SECTION 1.01 Definitions 1
ARTICLE TWO
ISSUE, DESCRIPTION, EXECUTION, REGISTRATION AND
EXCHANGE OF NOTES
SECTION 2.01 Designation, Amount and Issue of Notes 4
SECTION 2.02 Form of Notes 6
SECTION 2.03 Date and Denomination of Notes; Payment
of Interest 6
SECTION 2.04 Execution and Authentication of Notes 7
SECTION 2.05 Exchange and Registration of Transfer of Notes 7
SECTION 2.06 Mutilated, Destroyed, Lost or Stolen Notes 8
SECTION 2.07 Cancellation of Notes Paid, etc. 9
SECTION 2.08 Temporary Securities 9
SECTION 2.09 CUSIP Numbers 9
SECTION 2.10 Book-Entry Provisions for Global Note 10
ARTICLE THREE
REDEMPTION OF NOTES
SECTION 3.01 Right of Redemption 11
SECTION 3.02 Notice to Trustee; Selection by Trustee
of Notes to Be Redeemed 11
SECTION 3.03 Notice of Redemption 11
SECTION 3.04 Deposit of Redemption Price 12
SECTION 3.05 Notes Payable on Redemption Date 12
SECTION 3.06 Notes Redeemed in Part 13
ARTICLE FOUR
PARTICULAR COVENANTS OF THE COMPANY
SECTION 4.01 Payment of Principal, Premium and Interest 13
SECTION 4.02 Office for Transfer, Exchange, Redemption,
Notices and Payments, etc. 13
SECTION 4.03 Appointments to Fill Vacancies in Trustee's
Office 13
SECTION 4.04 Provision as to Paying Agent 13
SECTION 4.05 Certificate to Trustee 14
SECTION 4.06 Corporate Existence 14
SECTION 4.07 Maintenance of Properties 14
SECTION 4.08 Payment of Taxes and Other Claims 15
SECTION 4.09 Restrictions on Payments and Stock Repurchases 15
SECTION 4.10 Stay, Extension and Usury Laws 15
ARTICLE FIVE
NOTEHOLDERS LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE
SECTION 5.01 Noteholders Lists 15
SECTION 5.02 Preservation and Disclosure of Lists 16
SECTION 5.03 Reports by the Company 17
SECTION 5.04 Reports by the Trustee 18
ARTICLE SIX
REMEDIES OF THE TRUSTEE AND NOTEHOLDERS ON EVENT OF DEFAULT
SECTION 6.01 Events of Default 18
SECTION 6.02 Payment of Notes on Default; Suit Therefor 20
SECTION 6.03 Application of Moneys Collected by Trustee 21
SECTION 6.04 Proceedings by Noteholders 22
SECTION 6.05 Proceedings by Trustee 22
SECTION 6.06 Remedies Cumulative and Continuing 23
SECTION 6.07 Direction of Proceedings and Waiver of
Default by Majority of Noteholders 23
SECTION 6.08 Notice of Defaults 23
SECTION 6.09 Undertaking to Pay Costs 24
ARTICLE SEVEN
CONCERNING THE TRUSTEE
SECTION 7.01 Duties and Responsibilities of the Trustee 24
SECTION 7.02 Reliance on Documents, Opinions, etc. 25
SECTION 7.03 No Responsibility for Recitals, etc. 26
SECTION 7.04 Trustee, Paying Agents or Registrar May
Own Notes 26
SECTION 7.05 Moneys to Be Held in Trust 26
SECTION 7.06 Compensation and Expenses of Trustee 27
SECTION 7.07 Officers' Certificate as Evidence 27
SECTION 7.08 Conflicting Interest of Trustee 28
SECTION 7.09 Eligibility of Trustee 28
SECTION 7.10 Resignation or Removal of Trustee 28
SECTION 7.11 Acceptance by Successor Trustee 29
SECTION 7.12 Succession By Merger, etc. 30
SECTION 7.13 Limitation on Rights of Trustee as a Creditor 30
ARTICLE EIGHT
CONCERNING THE NOTEHOLDERS
SECTION 8.01 Action by Noteholders 30
SECTION 8.02 Proof of Execution by Noteholders 30
SECTION 8.03 Who Are Deemed Owners 31
SECTION 8.04 Company-Owned Notes Disregarded 31
SECTION 8.05 Revocation of Consents; Future Holders Bound 31
ARTICLE NINE
NOTEHOLDERS' MEETINGS
SECTION 9.01 Purposes of Meetings 31
SECTION 9.02 Call of Meetings by Trustee 32
SECTION 9.03 Call of Meetings by Company or Noteholders 32
SECTION 9.04 Qualifications for Voting 32
SECTION 9.05 Regulations 32
SECTION 9.06 Voting 33
SECTION 9.07 No Delay of Rights by Meeting 33
ARTICLE TEN
SUPPLEMENTAL INDENTURES
SECTION 10.01 Supplemental Indentures without Consent of
Noteholders 34
SECTION 10.02 Supplemental Indentures with Consent of
Noteholders 34
SECTION 10.03 Compliance with Trust Indenture Act; Effect of
Supplemental Indentures 35
SECTION 10.04 Notation on Notes 35
SECTION 10.05 Evidence of Compliance of Supplemental
Indenture to Be Furnished Trustee 36
SECTION 10.06 Notice of Supplemental Indenture 36
ARTICLE ELEVEN
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
SECTION 11.01 Company May Consolidate, etc. on
Certain Terms 36
SECTION 11.02 Successor Corporation to Be Substituted 37
ARTICLE TWELVE
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 12.01 Discharge of Indenture 37
SECTION 12.02 Deposited Moneys to Be Held in Trust by
Trustee 38
SECTION 12.03 Paying Agent to Repay Moneys Held 38
SECTION 12.04 Return of Unclaimed Moneys 38
ARTICLE THIRTEEN
SUBORDINATION OF NOTES
SECTION 13.01 Agreement to Subordinate 39
SECTION 13.02 Certain Definitions 39
SECTION 13.03 Liquidation; Dissolution; Bankruptcy 40
SECTION 13.04 Default on Senior Indebtedness 40
SECTION 13.05 Acceleration of Notes 42
SECTION 13.06 When Distribution Must Be Paid Over 42
SECTION 13.07 Notice by Company 42
SECTION 13.08 Subrogation 42
SECTION 13.09 Relative Rights 42
SECTION 13.10 Subordination May Not Be Impaired 43
SECTION 13.11 Distribution or Notice to Representative
or Agent 44
SECTION 13.12 Rights of Trustee 44
SECTION 13.13 Authorization to Effect Subordination 44
SECTION 13.14 Miscellaneous 45
ARTICLE FOURTEEN
IMMUNITY OF DIRECTORS, OFFICERS, EMPLOYEES AND SHAREHOLDERS
SECTION 14.01 Indenture and Notes Solely Corporate
Obligations 45
ARTICLE FIFTEEN
MISCELLANEOUS PROVISIONS
SECTION 15.01 Provisions Binding on Company's Successors 46
SECTION 15.02 Indenture for Sole Benefit of Parties and
Noteholders 46
SECTION 15.03 Addresses for Notices, etc. 46
SECTION 15.04 California Contract 46
SECTION 15.05 Evidence of Compliance with Conditions
Precedent 46
SECTION 15.06 Legal Holidays 47
SECTION 15.07 Trust Indenture Act to Control 47
SECTION 15.08 No Security Interest Created 47
SECTION 15.09 Table of Contents, Headings, etc. 47
SECTION 15.10 Execution in Counterparts 48
<PAGE>
Indenture
INDENTURE, dated as of June 17, 1999, between THE
MACNEAL-SCHWENDLER CORPORATION, a Delaware corporation (the
"Company"), and CHASE MANHATTAN BANK & TRUST COMPANY N.A., as
trustee (the "Trustee").
W I T N E S S E T H:
WHEREAS, for its lawful corporate purposes, the Company
desires to issue an aggregate principal amount of up to
$50,000,000 of promissory notes (the "Notes"), and to execute and
deliver this Indenture setting forth the terms and conditions
upon which the Notes are to be authenticated, issued and
delivered;
WHEREAS, the Notes, the certificate of authentication
to be borne by the Notes, the notice of conversion and the
temporary Notes, if any (as described in Section 2.08), are to be
substantially in the form of Exhibit A;
WHEREAS, all acts and things necessary to make the
Notes, when executed by the Company and authenticated and
delivered by the Trustee as provided herein, and issued, the
valid, binding and legal obligations of the Company, and to
constitute these presents a valid agreement according to its
terms, have been done and performed; and
WHEREAS, the execution of this Indenture and the issue
hereunder of the Notes have in all respects been duly authorized.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
That in order to declare the terms and conditions upon
which the Notes are, and are to be, authenticated, issued and
delivered, and in consideration of the premises, the purchase and
acceptance of the Notes by the holders thereof, the Company
covenants and agrees with the Trustee for the equal and
proportionate benefit of the respective holders from time to time
of the Notes, as follows:
ARTICLE ONE
DEFINITIONS
SECTION 1.01 Definitions. The terms defined in this
Section 1.01 (except as herein otherwise expressly provided or
unless the context otherwise requires) for all purposes of this
Indenture and of any indenture supplemental hereto shall have
the respective meanings specified in this Section 1.01. All
other terms used in this Indenture which are defined in the
Trust Indenture Act (as defined below) or which are by reference
therein defined in the Securities Act of 1933, as amended
(except as herein otherwise expressly provided or unless the
context otherwise requires) shall have the meanings assigned to
such terms in said Trust Indenture Act and in said Securities
Act of 1933, as amended, as in force at the date of the execution
of this Indenture.
Definitions
"Affiliate" of any specified Person shall mean any
other Person directly or indirectly controlling or controlled by
or under direct or indirect common control with such specified
Person. For the purposes of this definition, "control" when used
with respect to any specified Person means the power to direct
the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities,
by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing. Without
limiting the generality of the foregoing, any Person directly or
indirectly beneficially owning or controlling more than ten
percent (10%) of the issued and outstanding voting stock of the
Company shall be deemed an Affiliate of the Company.
"Authorizing Resolution" means a resolution adopted by
the Board of Directors or by an Officer or committee of Officers
pursuant to Board delegation authorizing a Series of Notes.
"Bankruptcy Law" means title 11 of the United States
Code, as amended, or any similar federal or state law for the
relief of debtors.
"Board of Directors" shall mean the Board of Directors
of the Company or any committee thereof validly acting in lieu of
the entire Board of Directors.
"Business Day" shall mean any day which is not a
Saturday, a Sunday, or a day on which banks and trust companies
in the City of Los Angeles and the City of New York are
authorized or obligated by law, regulation or executive order to
be closed.
"Claim" shall have the meaning assigned to it in
Section 13.02.
"Commission" shall mean the Securities and Exchange
Commission.
"Company" shall mean The MacNeal-Schwendler
Corporation, a Delaware corporation, and subject to the
provisions of Article Eleven hereof, shall include its successors
and assigns.
"Company Request" or "Company Order" shall mean a
written request or order signed in the name of the Company by its
Chairman of the Board, its President or a Vice President, and by
its Chief Financial Officer, its Secretary or an Assistant
Secretary, and delivered to the Trustee.
"Corporate Trust Office" shall mean the principal
office of the Trustee, at which at any particular time its
corporate trust business shall be administered, which at the date
of this Indenture is located at 101 California Street, Suite
2725, San Francisco, CA 94111, and upon written notice to the
Company and Noteholders (as defined below) such other address as
it shall determine from time to time.
"Event of Default" shall mean any event specified in
Section 6.01, continued for the period of time, if any, and after
the giving of the notice, if any, therein designated.
"Indenture" shall mean this instrument as originally
executed or, if amended or supplemented as herein provided, as so
amended or supplemented, including pursuant to any Authorizing
Resolution or supplemental indenture pertaining to any Series.
"Interest Payment Date" shall have the meaning assigned
to it in Section 2.01.
"Note" or "Notes" shall mean any Note or Notes, as the
case may be, authenticated and delivered by the Trustee under
this Indenture.
"Noteholder", "holder of Notes", or other similar
terms, shall mean any person in whose name at the time a
particular Note is registered on the Note register kept for that
purpose in accordance with the terms hereof.
"Officers' Certificate", when used with respect to the
Company, shall mean a certificate signed by the Chairman of the
Board, the President or any Vice President and by the Chief
Financial Officer, the Secretary or any Assistant Secretary of
the Company and delivered to the Trustee. Each such certificate
shall include the statements provided for in Section 15.05 if and
to the extent required by the provisions of such Section.
The term "Outstanding," when used with reference to
Notes, shall, subject to the provisions of Section 8.04, mean, as
of any particular time, all Notes authenticated and delivered
under this Indenture, except:
(1) Notes theretofore cancelled by the Trustee or
delivered to the Trustee for cancellation;
(2) Notes, or portions thereof, for the payment
or redemption of which moneys in the necessary amount
shall have been deposited in trust with the Trustee or
with any paying agent (other than the Company) or
shall have been set aside and segregated in trust by
the Company (if the Company shall act as its own
paying agent), provided that if such Notes are to
be redeemed prior to the maturity thereof, notice of
such redemption shall have been given as provided in
Article Three hereof, or provision satisfactory to
the Trustee shall have been made for giving such
notice; and
(3) Notes in lieu of or in substitution for
which other Notes shall have been authenticated and
delivered pursuant to the terms of Section 2.06.
"Opinion of Counsel" shall mean an opinion in writing
signed by legal counsel who may be an employee of or of counsel
to the Company provided that such legal counsel is acceptable to
the Trustee. Each such opinion shall include the statements
provided for in Section 15.05 if and to the extent required by
the provisions of such Section.
"Payment Default" shall have the meaning assigned to it
in Section 13.04(a).
"Person" shall mean any individual, corporation,
partnership, joint venture, association, limited liability
company, joint-stock company, trust, unincorporated organization
or government or any agency or political subdivision thereof.
"Record Date" shall have the meaning assigned to it in
Section 2.01.
"Redemption Date", when used with respect to any Note
to be redeemed, shall mean the date fixed for such redemption by
or pursuant to this Indenture.
"Redemption Price", when used with respect to any Note
to be redeemed, shall mean the price at which it is to be
redeemed pursuant to this Indenture.
"Responsible Officer", when used with respect to the
Trustee, shall mean the chairman of the board of directors, the
chairman of the trust committee, the president, any vice
president, any assistant vice president, the secretary, the
treasurer, any trust officer, or any other officer or assistant
officer of the Trustee customarily performing functions similar
to those performed by the persons who at the time shall be such
officers, respectively, or to whom any corporate trust matter is
referred because of his knowledge of and familiarity with the
particular subject.
"Senior Indebtedness" shall have the meaning assigned
to it in Section 13.02.
"Series" means a series of Notes established under this
Indenture.
"Subsidiary" shall mean any corporation or other entity
of which at least a majority of the outstanding stock having by
the terms thereof ordinary voting power to elect a majority of
the directors of such corporation (irrespective of whether or not
at the time stock of any other class or classes of such
corporation shall have or might have voting power by reason of
the happening of any contingency) is at the time, directly or
indirectly, owned or controlled by the Company or by one or more
Subsidiaries thereof, or by the Company and one or more
Subsidiaries.
"Trust Indenture Act" shall mean the Trust Indenture
Act of 1939, as amended, as in force at the date of execution of
this Indenture, except as provided in Section 10.03.
"Trustee" shall mean Chase Manhattan Bank & Trust
Company N.A., and subject to the provisions of Article Seven
hereof, shall also include its successors and assigns as Trustee
hereunder.
ARTICLE TWO
ISSUE, DESCRIPTION, EXECUTION, REGISTRATION AND
EXCHANGE OF NOTES
SECTION 2.01 Designation, Amount and Issue of Notes.
The
aggregate principal amount of Notes that may be issued under this
Indenture is $50,000,000. The Notes may be issued from time to
time in one or more Series. Each Series shall be created by an
Authorizing Resolution or a supplemental indenture that
establishes the terms of the Series, which may include the
following:
(1) the title of the Series;
(2) the aggregate principal amount (or any limit on
the aggregate principal amount) of the Series and,
if any Notes of a Series are to be issued at a
discount from their face amount, the method of
computing the accretion of such discount;
(3) the interest rate or method of calculation of the
interest rate;
(4) the date from which interest will accrue;
(5) the record dates for interest payable on Notes of
the Series (the "Record Date");
(6) the dates when, places where and manner in which
principal and interest are payable (such date, the
"Interest Payment Date");
(7) the registrar and paying agent;
(8) the terms of any mandatory (including any sinking
fund requirements) or optional redemption by the
Company;
(9) the terms of any redemption at the option of
Holders;
(10) the denominations in which Notes are issuable;
(11) whether Notes will be issued in registered or
bearer form and the terms of any such forms of
Notes;
(12) whether any Notes will be represented by a global
Note and the terms of any such global Note;
(13) the currency or currencies (including any
composite currency) in which principal or interest
or both may be paid;
(14) if payments of principal or interest may be made
in a currency other than that in which Notes are
denominated, the manner for determining such
payments;
(15) provisions for electronic issuance of Notes or
issuance of Notes in uncertificated form;
(16) any Events of Default, covenants and/or defined
terms in addition to or in lieu of those set forth
in this Indenture;
(17) whether and upon what terms Notes may be defeased
if different from the provisions set forth in this
Indenture;
(18) the form of the Notes, which, unless the
Authorizing Resolution or supplemental indenture
otherwise provides, shall be in the form of
Exhibit A;
(19) any terms that may be required by or advisable
under applicable law;
(20) the percentage of the principal amount of the
Notes which is payable if the maturity of the
Notes is accelerated in the case of Notes issued
at a discount from their face amount;
(21) whether any Notes will have guarantees; and
(22) any other terms in addition to or different from
those contained in this Indenture.
All Notes of one Series need not be issued at the same time and,
unless otherwise provided, a Series may be reopened for issuances
of additional Notes of such Series pursuant to an Authorizing
Resolution, an Officers' Certificate or in any indenture
supplemental hereto. The creation and issuance of a Series and
the authentication and delivery thereof are not subject to any
conditions precedent. Nothing contained in this Section 2.01 or
elsewhere in this Indenture, or in the Notes, is intended to or
shall limit execution by the Company or authentication by the
Trustee of Notes under the circumstances contemplated by Sections
2.05, 2.06, 2.08, 3.06, and 11.01 hereof.
SECTION 2.02 Form of Notes. The Notes and the Trustee's
certificate and authentication to be borne by the Notes shall be
substantially in the form as set forth in Exhibit A unless an
Authorizing Resolution or indenture supplement provides
otherwise. Any of the Notes may be engraved as a whole or in
part and may have imprinted thereon such legends or endorsements
as the officers executing the same may approve (the execution
thereof to be the conclusive evidence of such approval) and as
are not inconsistent with the provisions of this Indenture, or as
may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation
of any stock exchange or securities association on which the
Notes may be listed or traded, or to conform to usage.
SECTION 2.03 Date and Denomination of Notes; Payment of
Interest. Unless otherwise specified in an Authorizing
Resolution or supplemental indenture, the Notes shall be issuable
as registered Notes without coupons in denominations of $1,000
and above, and shall be numbered, lettered or otherwise
distinguished in such manner or in accordance with such
arrangement as the officers of the Company executing the same may
determine with the approval of the Trustee. Each Note shall be
dated the date of its authentication.
The person in whose name a Note (or any Note evidencing
the same debt) is registered at the close of business on any
Record Date with respect to any Interest Payment Date shall be
entitled to receive the interest payable on such Interest Payment
Date notwithstanding the cancellation of such Note upon any
registration of transfer or exchange subsequent to the Record
Date and prior to such Interest Payment Date; provided, however,
that if and to the extent the Company shall default in the
payment of the interest due on such Interest Payment Date, such
defaulted interest shall be paid to the persons in whose names
Outstanding Notes are registered at the close of business on a
subsequent record date established by notice given by mail by or
on behalf of the Company to the holders of Notes not less than 15
days preceding such subsequent record date, such record date to
be not less than ten days preceding the date of payment of such
defaulted interest.
Principal of and interest on the Notes will be payable
at the office or agency maintained by the Trustee on behalf of
the Company in the City of Los Angeles or such other location as
the Company shall select upon notice to Noteholders, provided
that payment of interest may be made at the option of the Company
by check mailed by first-class mail to the address of the persons
entitled thereto at such addresses as shall appear on the
registry books of the Company. In no event shall the persons
entitled to receive such interest payments be entitled to receive
interest upon interest.
SECTION 2.04 Execution and Authentication of Notes.
The Notes shall be executed manually or by facsimile in the
name and on behalf of the Company by its Chairman of the Board,
its President or any of its Vice Presidents and by its Secretary
or an Assistant Secretary, under its corporate seal (which may
be printed, engraved, or otherwise reproduced thereon, by
facsimile or otherwise). At any time after the execution and
delivery of this Indenture, the Company may deliver Notes
executed by the Company to the Trustee for authentication,
together with a Company Order for the authentication and
delivery of such Notes; and the Trustee in accordance with such
Company Order shall authenticate and deliver such Notes as
provided in this Indenture. Only such Notes as shall bear
thereon a certificate of authentication substantially in the
form set forth in the recitals above, executed by the Trustee
by manual signature, shall be entitled to the benefits of this
Indenture or be valid or obligatory for any purpose. Such
certificate by the Trustee upon any Note executed by the Company
shall be conclusive evidence that the Note so authenticated has
been duly authenticated and delivered hereunder and that the
holder is entitled to the benefits of this Indenture.
In case any officer of the Company who shall have
executed any of the Notes shall cease to be such officer before
the Notes so executed shall have been authenticated and delivered
by the Trustee, or disposed of by the Company, such Notes
nevertheless may be authenticated and delivered or disposed of as
though the person who executed such Notes had not ceased to be
such officer of the Company; and any Note may be executed on
behalf of the Company by such persons as, at the actual date of
the execution of such Note, shall be the proper officers of the
Company, although at the date of the execution of this Indenture
any such person was not such an officer.
SECTION 2.05 Exchange and Registration of Transfer
of Notes. Notes may be exchanged for a like aggregate principal
amount of Notes of other authorized denominations in the same
Series. Notes to be exchanged shall be surrendered at the
office or agency to be maintained by the Company, as provided
in Section 4.02, and the Company shall execute and the Trustee
shall register and authenticate and deliver in exchange therefor
the Note or Notes which the Noteholder making the exchange shall
be entitled to receive.
The Company shall cause to be kept at said office or
agency a Note register in which, subject to such reasonable
regulations as it may prescribe, the Company shall register
Notes and shall register the transfer of Notes as provided in
this Article Two. Such register shall be in written form or in
any other form capable of being converted into written form
within a reasonable time. At all reasonable times, such
register shall be open for inspection by the Trustee.
Upon due presentment for registration of transfer of any Note
at said office or agency, the Company shall execute and
register and the Trustee shall authenticate and deliver in the
name of the transferee or transferees a new Note or Notes for
an equal aggregate principal amount.
All Notes presented for registration of transfer,
conversion, purchase or payment shall be accompanied by a written
instrument or instruments of transfer, conversion or purchase, in
form satisfactory to the Company and the Trustee, duly executed
by the holder of Notes or his attorney duly authorized in
writing.
No service charge shall be made for any exchange or
registration of transfer of Notes, but the Company may require
payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith.
Neither the Company nor the Trustee shall be required
to issue, exchange or register a transfer of (a) any Notes for a
period of 15 days next preceding the date of mailing of a notice
of any selection of Notes to be redeemed, or (b) any Notes
selected, called or being called for redemption pursuant to
Article Three of this Indenture except, in the case of any Notes
to be redeemed or converted in part, the portion thereof not so
to be redeemed or converted.
SECTION 2.06 Mutilated, Destroyed, Lost or Stolen
Notes. In case any Note shall become mutilated or be destroyed,
lost or stolen, the Company shall execute, and upon its request
the Trustee shall authenticate and deliver, a new Note, bearing
a number not contemporaneously or previously Outstanding, in
exchange and substitution for the mutilated Note, or in lieu of
and in substitution for the Note so destroyed, lost or stolen;
provided, however, that in every such case involving a
mutilated, destroyed, lost or stolen Note, the applicant for a
substituted Note shall, simultaneously with such application,
furnish to the Company and the Trustee such security or
indemnity as may be required by them to save each of them
harmless, and, in every case of destruction, loss or theft, the
applicant shall also furnish to the Company and to the Trustee
evidence to their satisfaction of the destruction, loss or
theft of such Note and of the ownership thereof.
The Trustee may authenticate any such substituted
Note and deliver the same upon the written request or
authorization of any officer of the Company. Upon the issuance
of any substituted Note, the Company may require payment of a
sum sufficient to cover any tax or other governmental charge
that may be imposed in relation thereto and any other expenses
connected therewith. In case any Note that has matured or is
about to mature shall become mutilated or be destroyed, lost or
stolen, the Company may, instead of issuing a substitute Note,
pay or authorize the payment of same (without surrender thereof,
except in the case of a mutilated Note) if the applicant for
such payment shall furnish to the Company and to the Trustee
such security or indemnity as may be required by them to save
each of them harmless and, in case of destruction, loss or
theft, evidence satisfactory to the Company and the Trustee of
the destruction, loss or theft of such Note and of the ownership
thereof.
Every substituted Note issued pursuant to the
provisions of this Section 2.06 by virtue of the fact that any
Note is destroyed, lost or stolen shall constitute an additional
contractual obligation of the Company, whether or not the
destroyed, lost or stolen Note shall be found at any time, and
shall be entitled to all the benefits of this Indenture equally
and proportionately with any and all other Notes duly issued
hereunder. All Notes shall be held and owned upon the express
condition that the foregoing provisions are exclusive with
respect to the replacement or payment of mutilated, destroyed,
lost or stolen Notes and shall preclude any and all other rights
or remedies notwithstanding any law or statute existing or
hereafter enacted to the contrary with respect to the replacement
or payment of negotiable instruments or other securities without
their surrender.
SECTION 2.07 Cancellation of Notes Paid, etc. All
Notes surrendered for the purpose of payment, redemption,
conversion, exchange or registration of transfer shall, if
surrendered to the Company or any paying agent or any Note
registrar, be surrendered to the Trustee and promptly cancelled
by the Trustee, or, if surrendered to the Trustee, shall be
promptly cancelled by the Trustee, and any Note so cancelled
shall be destroyed by the Trustee and certification of its
destruction delivered to the Company unless by a Company Order
the Company shall direct that cancelled debentures be returned
to the Company, and no Notes shall be issued in lieu thereof
except as expressly permitted by any of the provisions of this
Indenture. If the Company shall purchase or otherwise acquire
any of the Notes, however, such purchase or acquisition shall
not operate as a payment or satisfaction of the indebtedness
represented by such Notes unless and until the Company, at its
option, shall deliver or surrender the same to the Trustee for
cancellation.
SECTION 2.08 Temporary Securities. Until definitive
Notes are ready for delivery, the Company may prepare and the
Trustee shall authenticate temporary Notes. Temporary Notes
shall be substantially in the form of definitive Notes but may
have variations that the Company considers appropriate for
temporary Notes. Without unreasonable delay, the Company shall
prepare and the Trustee, upon receipt of a Company Order, shall
authenticate definitive Notes in exchange for temporary Notes.
Until such exchange, temporary Notes shall be entitled to the
same rights, benefits and privileges as definitive Notes.
SECTION 2.09 CUSIP Numbers. The Company in issuing
the Notes of any Series may use a "CUSIP" number, and if so, the
Trustee shall use the CUSIP number in notices of redemption or
exchange as a convenience to holders of such Notes; provided
that no representation is hereby deemed to be made by the
Trustee as to the correctness or accuracy of any such CUSIP
number printed in the notice or on such Notes, and that reliance
may be placed only on the other identification numbers printed
on such Securities. The Company shall promptly notify the
Trustee of any change in any CUSIP number.
SECTION 2.10 Book-Entry Provisions for Global Note.
(a) Any global Note of a Series initially shall (i)
be registered in the name of the depository who shall be
identified in the Authorizing Resolution or supplemental
indenture relating to such Notes (the "Depository") or the
nominee of such Depository, (ii) be delivered to the Trustee as
custodian for such Depository and (iii) bear any required legends.
Members of, or participants in, the Depository ("Agent Members")
shall have no rights under this Indenture with respect to any
global Note held on their behalf by the Depository, or the
Trustee as its custodian, or under the global Note, and the
Depository may be treated by the Company, the Trustee and any
agent of the Company or the Trustee as the absolute owner of
the global Note for all purposes whatsoever. Notwithstanding
the foregoing, nothing herein shall prevent the Company, the
Trustee or any agent of the Company or the Trustee from giving
effect to any written certification, proxy or other
authorization furnished by the Depository or impair, as between
the Depository and its Agent Members, the operation of customary
practices governing the exercise of the rights of a Holder of
any Note.
(b) Transfers of any global Note shall be limited to
transfers in whole, but not in part, to the Depository, its
successors or their respective nominees. Interests of beneficial
owners in the global Note may be transferred or exchanged for
definitive Notes in accordance with the rules and procedures
of the Depository. In addition, definitive Notes shall be
transferred to all beneficial owners in exchange for their
beneficial interests in a global Note if (i) the Depository
notifies the Company that it is unwilling or unable to continue
as Depository for the global Note and a successor depository is
not appointed by the Company within 90 days of such notice or
(ii) an Event of Default has occurred and is continuing and the
Registrar has received a request from the Depository to issue
definitive Notes.
(c) In connection with any transfer or exchange of a
portion of the beneficial interest in any global Note to
beneficial owners pursuant to paragraph (b), the Registrar
shall (if one or more definitive Notes are to be issued)
reflect on its books and records the date and a decrease in
the principal amount of the global Note in an amount equal to
the principal amount of the beneficial interest in the global
Note to be transferred, and the Company shall execute, and the
Trustee shall authenticate and deliver, one or more definitive
Notes of like tenor and amount.
(d) In connection with the transfer of an entire
global Note to beneficial owners pursuant to paragraph (b), the
global Note shall be deemed to be surrendered to the Trustee for
cancellation, and the Company shall execute, and the Trustee
shall authenticate and deliver, to each beneficial owner
identified by the Depository in exchange for its beneficial
interest in the global Note, an equal aggregate principal amount
of definitive Notes of authorized denominations.
(e) The Holder of any global Note may grant proxies and
otherwise authorize any person, including Agent Members and
persons that may hold interests through Agent Members, to take
any action which a Holder is entitled to take under this
Indenture or the Notes of such Series.
ARTICLE THREE
REDEMPTION OF NOTES
SECTION 3.01 Right of Redemption. Unless otherwise
specified in an Authorizing Resolution or supplemental
indenture, any Notes or Series of Notes may be redeemed at the
election of the Company, as a whole or from time to time in part,
at any time and from time to time, at par without premium,
together with accrued but unpaid interest to the Redemption
Date. The Company may redeem any Series of Notes individually
or jointly with one or more other Series.
SECTION 3.02 Notice to Trustee; Selection by Trustee
of Notes to Be Redeemed. The election of the Company to redeem
any Notes pursuant to Section 3.01 shall be evidenced by a
resolution of the Board of Directors delivered to the Trustee.
In case of any redemption at the election of the Company of less
than all of a Series of Notes, the Company shall, at least 60
days (but not more than 90 days) prior to the Redemption Date
fixed by the Company (unless a shorter or longer notice shall be
satisfactory to the Trustee), notify the Trustee in writing of
such Redemption Date and of the principal amount of Notes to be
redeemed.
If less than all of a Series of Notes are to be
redeemed, the particular Notes to be redeemed shall be selected
not more than 45 days prior to the Redemption Date by the
Trustee, from the Outstanding Notes not previously called for
redemption, pro rata, by lot or by a method that complies with
applicable legal and stock exchange requirements and which may
provide for the selection for redemption of portions (equal to
$1,000 or above) of the principal amount of Notes of a
denomination larger than $1,000. If a Note selected for partial
redemption by the Trustee would, as a result of such redemption,
have a remaining principal amount of less than $1,000, then the
entire Note shall be redeemed at the applicable Redemption Price.
The Trustee shall promptly notify the Company in
writing of the Notes selected for redemption and, in the case of
any Notes selected for partial redemption, the principal amount
thereof to be redeemed.
For all purposes of this Indenture, unless the context
otherwise requires, all provisions relating to the redemption of
Notes shall relate, in the case of any Note redeemed or to be
redeemed only in part, to the portion of the principal amount of
such Note which has been or is to be redeemed.
SECTION 3.03 Notice of Redemption. Notice of
redemption shall be given by first-class mail, postage prepaid,
mailed not less than 30 nor more than 60 days prior to the
Redemption Date, to each holder of Notes to be redeemed, at his
address appearing in the Note register; provided, however, that
failure to give such notice to any holder of a Note designated
for redemption as a whole or in part, or any defect in such
notice, shall not affect the validity of the proceedings for
the redemption of any other Notes.
All notices of redemption shall state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) the name and address of the paying agent;
(4) that Notes called for redemption must be
surrendered to the paying agent to collect the
Redemption Price;
(5) if less than all Outstanding Notes are to
be redeemed, the identification (and, in the case of
partial redemption, the principal amounts) of the
particular Notes and Series of Notes to be redeemed;
and
(6) that on the Redemption Date the Redemption
Price will become due and payable upon each such Note
to be redeemed and that interest thereon will cease to
accrue on and after said date.
Notice of redemption of Notes to be redeemed at the
election of the Company shall be given by the Company or, at the
Company's request, by the Trustee in the name and at the expense
of the Company. Any notice which is mailed in the manner herein
provided shall be conclusively presumed to have been duly given,
whether or not the holder of any such Note to be so redeemed
receives the notice.
SECTION 3.04 Deposit of Redemption Price. On or
prior to any Redemption Date, the Company shall deposit with the
Trustee or with a paying agent an amount of money sufficient to
pay the Redemption Price of, and (except if the Redemption Date
shall be an interest payment date) accrued interest on, all the
Notes which are to be redeemed on that date. The Trustee (or
applicable paying agent) shall promptly return to the Company
such portion of the amount of money deposited with it that
exceeds the Redemption Price plus accrued interest of the Notes
actually redeemed.
SECTION 3.05 Notes Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Notes
to be redeemed shall, on the Redemption Date, become due and
payable at the Redemption Price therein specified, and from
and after such date (unless the Company shall default in the
payment of the Redemption Price and accrued interest) such Notes
shall cease to bear interest. Upon surrender of any such Note
for redemption in accordance with said notice, such Note shall
be paid by the Company at the Redemption Price, together with
accrued interest to the Redemption Date; provided, however, that
installments of interest whose stated maturity is on the
Redemption Date shall be payable to the holders of such Notes,
registered as such at the close of business on the relevant
record dates according to their terms and the provisions of
Section 2.03.
If any Note called for redemption shall not be so paid
upon surrender thereof for redemption, the principal, and
premium, if any, shall, until paid, bear interest from the
Redemption Date at the rate borne by the Note.
SECTION 3.06 Notes Redeemed in Part. Any Note which
is to be redeemed only in part shall be surrendered at an office
or agency of the Company designated for that purpose pursuant
to Section 4.02 (with, if the Company or the Trustee so
requires, due endorsement by, or a written instrument of transfer
in form satisfactory to the Company and the Trustee, duly
executed by the holder thereof or his attorney duly authorized
in writing), and the Company shall execute, and the Trustee
shall authenticate and deliver to the holder of such Note
without service charge, a new Note or Notes, of any authorized
denomination as requested by such holder, in aggregate
principal amount equal to and in exchange for the unredeemed
portion of the principal of the Note so surrendered.
ARTICLE FOUR
PARTICULAR COVENANTS OF THE COMPANY
SECTION 4.01 Payment of Principal, Premium and
Interest. The Company covenants and agrees that it will duly
and punctually pay or cause to be paid the principal of, and
premium, if any, and interest on, each of the Notes at the
place, at the respective times and in the manner provided on
such Notes and in this Indenture.
SECTION 4.02 Office for Transfer, Exchange,
Redemption, Notices and Payments, etc. So long as any of the
Notes remain outstanding, the Company will maintain an office
or agency where the Notes may be presented for payment, an
office or agency where the Notes may be presented for
registration of transfer and for exchange or conversion as
provided in this Indenture and an office or agency where notices
and demands to or upon the Company in respect of the Notes or
of this Indenture may be served. Until otherwise designated by
the Company in a written notice to the Trustee, such office or
agency for all of the above purposes shall be the Corporate
Trust Office. In case the Company shall at any time fail to
maintain any such office or agency, or shall fail to give notice
to the Trustee of any change in the location thereof,
presentation and demand may be made and notice may be served
in respect of the Notes or of this Indenture at said Corporate
Trust Office of the Trustee, as appointed agent for the Company
for such matters. The Trustee shall promptly notify the Company
in writing as to any change in the location of its Corporate
Trust Office.
SECTION 4.03 Appointments to Fill Vacancies in
Trustee's Office. The Company, whenever necessary to avoid or
fill a vacancy in the office of Trustee, will appoint, in the
manner provided in Section 7.11, a successor Trustee, so that
there shall at all times be a Trustee hereunder.
SECTION 4.04 Provision as to Paying Agent.
(a) If the Company shall appoint a paying agent other
than the Trustee, it will cause such paying agent to execute and
deliver to the Trustee an instrument in which such agent shall
agree with the Trustee, subject to the provisions of this Section
4.04:
(1) that it will hold all sums held by it as
such agent for the payment of the principal of, and
premium, if any, or interest on the Notes (whether
such sums have been paid to it by the Company
or by any other obligor on the Notes) in trust for
the benefit of the holders of the Notes and will
notify the Trustee of the receipt of sums to be so
held;
(2) that it will give the Trustee notice of any
failure by the Company (or by any other obligor on
the Notes) to make any payment of the principal of,
and premium, if any, or interest on the Notes when
the same shall be due and payable; and
(3) that it will at any time during the
continuance of an Event of Default specified in
subsection (a) or (b) of Section 6.01, upon the
written request of the Trustee, forthwith pay to
the Trustee all sums so held by it as such agent.
(b) If the Company shall act as its own paying agent,
it will, on or before each due date of the principal of, and
premium, if any, or interest on the Notes, set aside, segregate
and hold in trust for the benefit of the holders of the Notes a
sum sufficient to pay such principal, premium or interest so
becoming due and will notify the Trustee of any failure to take
such action and of any failure by the Company (or by any other
obligor under the Notes) to make any payment of the principal
of, and premium, if any, or interest on the Notes when the same
shall become due and payable.
(c) Anything in this Section 4.04 to the contrary
notwithstanding, the Company may, at any time, for the purpose
of obtaining a satisfaction and discharge as provided for in
Article Twelve of this Indenture, or for any other reason, pay
or by Company Order direct any paying agent to pay to the
Trustee all sums held in trust by it, as required by this
Section 4.04, such sums to be held by the Trustee upon the
trusts herein contained and upon such payment by any paying
agent to the Trustee and the receipt thereof, such paying agent
shall be released from all further liability with respect to
such money.
(d) Anything in this Section 4.04 to the contrary
notwithstanding, the agreement to hold sums in trust as
provided in this Section 4.04 is subject to Sections 12.03 and
12.04.
SECTION 4.05 Certificate to Trustee. The Company
will deliver to the Trustee, within 120 days after the end of
each fiscal year of the Company ending after the date hereof,
an Officers' Certificate signed by the principal executive
officer, principal financial officer or principal accounting
officer, stating whether or not to the best knowledge of the
signer thereof the Company has fulfilled all its obligations
of any of the terms, provisions and conditions of this
Indenture and if the Company shall be in default, specifying
all such defaults and the nature and status thereof of which
they may have knowledge.
SECTION 4.06 Corporate Existence. Subject to
Article Eleven, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect
its corporate existence.
SECTION 4.07 Maintenance of Properties. The Company
will cause all material properties, rights and franchises used
or useful in the conduct of its business or the business of any
Subsidiary to be maintained and kept in good condition, repair
and working order and supplied with all necessary equipment and
will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in
the judgment of the Company may be necessary so that the
business carried on in connection therewith may be properly
and advantageously conducted at all times; provided, however,
that nothing in this Section shall prevent the Company from
discontinuing the operation and maintenance of any such
properties if such discontinuance is, in the judgment of the
Company, desirable in the conduct of its business or the
business of any Subsidiary and not disadvantageous in any
material respect to the holders of the Notes.
SECTION 4.08 Payment of Taxes and Other Claims. The
Company will pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (1) all taxes,
assessments and governmental charges levied or imposed upon the
Company or any Subsidiary or upon the income, profits or
property of the Company or any Subsidiary and (2) all claims for
labor, materials and suppliers which, if unpaid, might by law
become a lien upon the property of the Company or any
Subsidiary; provided, however, that the Company shall not be
required to pay or discharge or cause to be paid or discharged
any such tax, assessment, charge or claim of which the amount,
applicability or validity of which is being contested in good
faith by appropriate proceedings.
SECTION 4.09 Restrictions on Payments and Stock
Repurchases. If an Event of Default (as defined in Section
6.01) shall occur and be continuing, the Company shall not
declare or pay any dividend or make any distribution on any
class or series of its outstanding capital stock, nor shall
the Company repurchase any of such outstanding capital stock;
provided, however, that such restrictions shall not apply to any
agreement by the Company to repurchase any of the Company's
outstanding capital stock if such agreement is already existing
at the time of any such Event of Default.
SECTION 4.10 Stay, Extension and Usury Laws. The
Company (to the extent that it may lawfully do so) covenants
that it will not at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or advantage of,
any stay, extension or usury law wherever enacted, now or at
any time hereafter which may affect the covenants or the
Company's performance of its obligations under this Indenture;
and the Company (to the extent it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law,
and covenants that it will not, by resort to any such law,
hinder, delay or impede the execution of any power herein
granted to the Trustee, but will suffer and permit the
execution of every such power as though no such law has
been enacted.
ARTICLE FIVE
NOTEHOLDERS LISTS AND REPORTS BY THE COMPANY
AND THE TRUSTEE
SECTION 5.01 Noteholders Lists. The Company
covenants and agrees that it will furnish or cause to be
furnished to the Trustee, within 45 days after each interest
payment date, and at such other times as the Trustee may
request in writing within 30 days after receipt by the Company
of any such request, a list in such form as the Trustee may
reasonably require of the names and addresses of the holders of
Notes as of a date not more than 15 days prior to the time such
information is furnished; provided, however, that so long as the
Trustee shall be the Note registrar, such list shall not be
required to be furnished.
SECTION 5.02 Preservation and Disclosure of Lists.
(a) The Trustee shall preserve, in as current a form
as is reasonably practicable, all information as to the names
and addresses of the holders of Notes contained in the most
recent list furnished to it as provided in Section 5.01 or
received by the Trustee in its capacity as Note registrar.
The Trustee may destroy any list furnished to it as provided
in Section 5.01 upon receipt of a new list so furnished.
(b) In case three or more holders of Notes of a
single Series (hereinafter referred to as "applicants")
apply in writing to the Trustee and furnish to the Trustee
reasonable proof that each such applicant has owned a Note for
a period of at least six months preceding the date of such
application, and such application states that the applicants
desire to communicate with other holders of Notes of such
Series with respect to their rights under this Indenture or
under the Notes and is accompanied by a copy of the form of
proxy or other communication which such applicants propose to
transmit, then, the Trustee may, within 15 business days after
the receipt of such application, at its election, either
(1) afford such applicants access to the
information preserved at the time by the Trustee in
accordance with the provisions of subsection (a) of
this Section 5.02, or
(2) inform such applicants as to the approximate
number of holders of Notes of such Series whose names
and addresses appear in the information preserved at
the time by the Trustee in accordance with the
provisions of subsection (a) of this Section
5.02, and as to the approximate cost of mailing to
such Noteholders the form of proxy or other
communication, if any,
specified in such application.
If the Trustee elects not to afford such applicants
access to such information, the Trustee shall, upon the written
request of such applicants, mail to each Noteholder whose name
and address appears in the information preserved at the time by
the Trustee in accordance with the provisions of subsection (a)
of this Section 5.02 a copy of the form of proxy or other
communication which is specified in such request, with reasonable
promptness after a tender to the Trustee of the material to be
mailed and of payment, or irrevocable provision for the payment,
of the reasonable expenses of mailing, unless within five days
after such tender, the Trustee shall mail to such applicants and
file with the Commission, together with a copy of the material to
be mailed, a written statement to the effect that, in the opinion
of the Trustee, such mailing would be contrary to the best
interests of the holders of Notes or would be in violation of
applicable law. Such written statement shall specify the basis
of such opinion. If the Commission, after opportunity for a
hearing upon the objections specified in the written statement so
filed, shall enter an order refusing to sustain any of such
objections, or if, after the entry of an order sustaining one or
more of such objections, the Commission shall find, after notice
and opportunity for hearing, that the objections so sustained
have been met and shall enter an order so declaring, the Trustee
shall mail copies of such material to all such Noteholders with
reasonable promptness after the entry of such order and the
renewal of such tender; otherwise the Trustee shall be relieved
of any obligation or duty to such applicants respecting their
application.
(c) Each and every holder of the Notes, by receiving
and holding the same, agrees with the Company and the Trustee
that neither the Company nor the Trustee nor any paying agent
shall be held accountable by reason of the disclosure of any such
information as to the names and addresses of the holders of Notes
in accordance with the provisions of subsection (b) of this
Section 5.02, regardless of the source from which such
information was derived, and that the Trustee shall not be held
accountable by reason of mailing any material pursuant to a
request made under this subsection (b).
SECTION 5.03 Reports by the Company.
(a) The Company covenants and agrees to file with the
Trustee, within 15 days after the Company is required to file
the same with the Commission, copies of the annual reports and
of the information, documents and other reports (or copies of
such portions of any of the foregoing as the Commission from
time to time by rules and regulations may prescribe) which the
Company may be required to file with the Commission pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of
1934, as amended; or, if the Company is not required to file
information, documents or reports pursuant to either such
section, then to file with the Trustee and the Commission, in
accordance with rules and regulations prescribed from time to
time by said Commission, such of the supplementary and periodic
information, documents and reports which may be required pursuant
to Section 13 of the Securities Exchange Act of 1934, as amended,
in respect of a security listed and registered on a national
securities exchange as may be prescribed from time to time in
such rules and regulations.
(b) The Company covenants and agrees to file with the
Trustee and the Commission, in accordance with the rules and
regulations prescribed from time to time by the Commission, such
additional information, documents and reports with respect to
compliance by the Company with the conditions and covenants
provided for in this Indenture as may be required from time to
time by such rules and regulations.
(c) The Company covenants and agrees to transmit by
mail to all holders of Notes, as the names and addresses of
such holders appear upon the Note register within 30 days after
the filing thereof with the Trustee, such summaries of any
information, documents and reports required to be filed by the
Company pursuant to subsections (a) and (b) of this Section 5.03
as may be required by rules and regulations prescribed from time
to time by the Commission.
SECTION 5.04 Reports by the Trustee.
(a) Each year, the Trustee shall transmit by mail to
all Noteholders, as their names and addresses appear in the Note
register, in accordance with, and to the extent required under
Section 313 of the Trust Indenture Act.
(b) The Trustee will transmit any such reports in the
manner and to the persons or entities required by Sections
313(c) and 13(d) of the Trust Indenture Act.
ARTICLE SIX
REMEDIES OF THE TRUSTEE AND NOTEHOLDERS
ON EVENT OF DEFAULT
SECTION 6.01 Events of Default. In case one or more
of the following Events of Default shall have occurred and be
continuing:
(a) default in the payment of any installment of
interest upon any of the Notes as and when the same shall
become due and payable, and continuance of such default for a
period of 30 days; or
(b) default in the payment of the principal of, and
premium, if any, on any of the Notes as and when the same shall
become due and payable either at maturity, upon redemption, by
declaration or otherwise when due; or
(c) failure on the part of the Company duly to
observe or perform any other of the covenants or agreements
on the part of the Company in the Notes or in this Indenture
continued for a period of 60 days after the date on which written
notice of such failure, requiring the same to be remedied, shall
have been given to the Company by the Trustee by registered mail,
or to the Company and the Trustee by the holders of at least 25
percent in aggregate principal amount of the Notes at the time
Outstanding (as determined by counting all Series as a single
class); or
(d) default in the payment of any other mortgage,
indenture or instrument evidencing indebtedness of the Company
in an amount equal to at least $10,000,000, being declared due
and payable prior to the date on which it otherwise would become
due and payable or failure to pay such indebtedness at maturity;
provided, however, that if such indebtedness has been discharged
by the Company or any such declaration of acceleration has been
rescinded or annulled within 30 days after such default occurs,
such default shall not be an Event of Default under this
Indenture; or
(e) the entry of a decree or order for relief by a
court having jurisdiction in the premises with respect to the
Company in an involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect or
the appointing of a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or other similar official) of the Company
or of all or substantially all of its property, or ordering the
winding up or liquidation of its affairs, and the continuance of
any such decree or order unstayed and in effect for a period of
90 consecutive days; or
(f) the institution by the Company of proceedings
under the Bankruptcy Laws or to be adjudged insolvent, or the
consent by it to the institution of bankruptcy or insolvency
or other similar proceedings against it or the consent by it
to the entry of an order for relief in an involuntary case or
to the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian, sequestrator (or other
similar official) of the Company or of all or substantially all
of its property, or the making by it of an arrangement for the
benefit of creditors, or the admission by it in writing of the
failure generally by it to pay its debts as they become due, or
the taking of corporate action by the Company in furtherance of
any such action;
then and in each and every such case, unless the principal of
all of the Notes shall have already become due and payable,
either the Trustee or the holders of not less than 25
percent in aggregate principal amount of the Notes then
Outstanding (as determined by counting all Series as a single
class) hereunder, by notice in writing to the Company (and to
the Trustee if given by Noteholders), may declare the principal
of all the Notes and the unpaid interest accrued thereon to be
due and payable immediately, and upon any such declaration the
same shall become and shall be immediately due and payable,
anything in this Indenture or in the Notes contained to the
contrary notwithstanding. This provision, however, is subject
to the condition that if, at any time after the principal of the
Notes shall have been so declared due and payable, and before
any judgment or decree for the payment of the moneys due shall
have been obtained or entered as hereinafter provided, the
Company shall pay or shall deposit with the Trustee a sum
sufficient to pay all matured installments of interest upon
all of the Notes and the principal of, and premium, if any, on
any and all Notes which shall have become due otherwise than
by acceleration (with interest on overdue installments of
interest to the extent that payment of such interest is
enforceable under applicable law and on such principal and
premium, if any, at the rate borne by the Notes, to the date of
such payment or deposit) and in addition thereto, such further
amount as shall be sufficient to cover the costs and expenses of
collection, including reasonable compensation to the Trustee, its
agents, attorneys and counsel, and any expenses or liabilities
incurred by the Trustee hereunder other than through its own
negligence, its own negligent failure to act or its own wilful
misconduct, and any and all defaults under this Indenture, other
than the nonpayment of principal of, and premium, if any, and
accrued interest on Notes which shall have become due by
acceleration, shall have been cured or shall have been waived in
accordance with Section 6.07--then, and in every such case the
holders of at least a majority in aggregate principal amount of
the Notes then Outstanding (as determined by counting all Series
as a single class), by written notice to the Company and to the
Trustee, may rescind and annul such declaration and its
consequences; but no such rescission and annulment shall extend
to or shall affect any subsequent default, or shall impair any
right consequent thereon.
In case the Trustee or Noteholders shall have proceeded
to enforce any right under this Indenture and such proceedings
shall have been discontinued or abandoned because of such
rescission or annulment or for any other reason or shall have
been determined adversely to the Trustee or Noteholders, then,
and in every such case the Company, the Trustee and the
Noteholders shall be restored to their respective positions and
rights hereunder, and all rights, remedies and powers of the
Company, the Trustee and the Noteholders shall continue as though
no such proceeding had been taken.
SECTION 6.02 Payment of Notes on Default; Suit
Therefor. The Company covenants that (a) in case default shall
be made in the payment of any installment of interest upon any
of the Notes as and when the same shall become due and payable,
and such default shall have continued for a period of 30 days,
or (b) in case default shall be made in the payment of the
principal of, and premium, if any, any of the Notes as and
when the same shall have become due and payable, whether at
maturity of the Notes or upon redemption or by declaration or
otherwise when due - then, upon demand of the Trustee, the
Company will pay to the Trustee, for the benefit of the holders
of the Notes, the whole amount that then shall have become due
and payable on all such Notes for principal and premium, if any,
or interest, or both, as the case may be, with interest upon the
overdue principal and to the extent that payment of such
interest shall be legally enforceable, upon overdue installments
of interest at the rate borne by the Notes; and, in addition
thereto, such further amount as shall be sufficient to cover the
costs and expenses of collection, including reasonable
compensation, expenses, disbursements and advances to the
Trustee, its agents, attorneys and counsel, and any expenses or
liabilities incurred by the Trustee hereunder other than through
its own negligence, its own negligent failure to act or its own
wilful misconduct.
In case the Company shall fail forthwith to pay such
amounts upon such demand, the Trustee, in its own name and as
trustee of an express trust, shall be entitled and empowered to
institute any actions or proceedings at law or in equity for the
collection of the sums so due and unpaid, and may prosecute any
such action or proceeding to judgment or final decree, and may
enforce any such judgment or final decree against the Company or
any other obligor on the Notes and collect in the manner provided
by law out of the property of the Company or any other obligor on
the Notes wherever situated the moneys adjudged or decreed to be
payable.
In case there shall be pending proceedings for the
bankruptcy or for the reorganization of the Company or any other
obligor on the Notes under any applicable bankruptcy, insolvency
or other similar law now or hereafter in effect relative to the
Company or to any such other obligor, its creditors or its
property or in case a receiver or trustee shall have been
appointed for the property of the Company or such other obligor,
or in the case of any other similar judicial proceedings relative
to the Company or any such other obligor upon the Notes, or to
the creditors or property of the Company or such other obligor,
the Trustee, irrespective of whether the principal of, and
premium, if any, the Notes shall then be due and payable as
therein expressed or by declaration or otherwise and irrespective
of whether the Trustee shall have made any demand pursuant to the
provisions of this Section 6.02, shall be entitled and empowered
by intervention in such proceedings or otherwise, to file and
prove a claim or claims for the whole amount of principal, and
premium, if any, and interest owing and unpaid in respect of the
Notes, and to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for reasonable
compensation, expenses, disbursements, advances and reasonable
counsel fees incurred thereby) and of the Noteholders allowed in
such judicial proceedings relative to the Company or any other
obligor on the Notes, its or their creditors, or its or their
property, and to collect and receive any moneys or other property
payable or deliverable on any such claims, and to distribute the
same after the deduction of its charges and expenses; and any
receiver, assignee or trustee in bankruptcy or reorganization is
hereby authorized by each of the Noteholders to make such
payments to the Trustee, and, in the event that the Trustee shall
consent to the making of such payments directly to the
Noteholders, to pay to the Trustee any amount due it for
reasonable compensation, expenses, disbursements and advances,
including counsel fees incurred by it up to the date of such
distribution. To the extent that such payment of reasonable
compensation, expenses, disbursements, advances and counsel fees
out of the estate in any such proceedings shall be denied for any
reason, payment of the same shall be secured by a first lien on,
and shall be paid out of, any and all distributions, dividends,
moneys, securities and other property which the holders of the
Notes may be entitled to receive in such proceedings, whether in
liquidation or under any plan of reorganization or arrangement or
otherwise.
All rights of action and of asserting claims under this
Indenture, or under any of the Notes, may be enforced by the
Trustee without the possession of any of the Notes, or the
production thereof on any trial or other proceeding relative
thereto, and any such suit or proceeding instituted by the
Trustee shall be brought in its own name as trustee of an express
trust, and any recovery of judgment shall be for the ratable
benefit of the holders of the Notes.
Nothing herein contained shall be deemed to authorize
the Trustee to authorize or consent to or accept or adopt on
behalf of any Noteholder any plan of reorganization, arrangement,
adjustment or composition affecting the Notes or the rights of
any holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Noteholder in any such proceeding.
SECTION 6.03 Application of Moneys Collected by
Trustee. Any moneys collected by the Trustee shall be applied
in the order following, at the date or dates fixed by the Trustee
for the distribution of such moneys, upon presentation of the
several Notes, and stamping thereon the payment, if only
partially paid, and upon surrender thereof, if fully paid:
FIRST: To the payment of all moneys due the
Trustee under Section 7.06;
SECOND: In case the principal of the outstanding
Notes shall not have become due and be unpaid, to the
payment of interest on the Notes, in the order of the
maturity of the installments of such interest, such
payments to be made ratably to the persons entitled
thereto;
THIRD: In case the principal of the outstanding
Notes shall have become due, by maturity, redemption,
declaration or otherwise, to the payment of the whole
amount then owing and unpaid upon the Notes for
principal, premium and interest, with interest on the
overdue principal, and to the extent that payment of
such interest shall be legally enforceable, upon
overdue installments of interest at the rate borne by
the Notes; and in case such moneys shall be
insufficient to pay in full the whole amounts so due
and unpaid upon the Notes, then to the payment of such
principal, premium, if any, and interest without
preference or priority (i) of principal over interest,
or (ii) of interest over principal, (iii) of any Note
over any other Note, or (iv) of any Series over another
Series, ratably to the aggregate of such principal and
accrued and unpaid interest; and
FOURTH: Any remaining money shall be paid over to
the Company.
SECTION 6.04 Proceedings by Noteholders. No holder
of any Note shall have any right by virtue of or by availing
of any provision of this Indenture to institute any suit, action
or proceeding in equity or at law upon or under or with respect
to this Indenture or for the appointment of a receiver or
trustee, or for any other remedy hereunder, unless such holder
previously shall have given to the Trustee written notice of
default and of the continuance thereof, as hereinbefore provided
and the holders of not less than 25 percent in aggregate
principal amount of the Notes then Outstanding (as determined by
counting all Series as a single class) shall have made written
request upon the Trustee to institute such action, suit or
proceeding in its own name as Trustee hereunder and shall have
offered to the Trustee such reasonable indemnity as it may
require against the costs, expenses, disbursements and advances
to be incurred therein or thereby, and also unless the Trustee
for 60 days after its receipt of such notice, request and offer
of indemnity, shall have neglected or refused to institute any
such action, suit or proceeding and no direction inconsistent
with such written request has been given to the Trustee during
such 60 day period by the holders of a majority in principal
amount of the Outstanding Notes, it being understood and
intended, and being expressly covenanted by the taker and
holder of every Note with every other taker and holder and the
Trustee that no one or more holders of Notes shall have any
right in any manner whatever by virtue of or by availing of any
provision of this Indenture to affect, disturb or prejudice the
rights of any other holder of such Notes, or to obtain or seek
to obtain priority over or preference to any other such holder,
or to enforce any right under this Indenture, except in the
manner herein provided and for the equal, ratable and common
benefit of all holders of Notes.
Notwithstanding any other provisions in this Indenture,
however, the right of any holder of any Note to receive payment
of the principal of, and premium, if any, and interest on such
Note, on or after the respective due dates expressed in such
Note, or to institute suit for the enforcement of any such
payment on or after such respective dates shall not be impaired
or affected without the consent of such holder.
Notwithstanding any other provision of this Indenture,
the right of any Noteholder to bring suit for the enforcement of
the right to convert its Notes shall not be impaired or affected
without the consent of such Noteholder.
SECTION 6.05 Proceedings by Trustee. In case of an
Event of Default hereunder the Trustee may but shall not be
obligated to (and shall incur no liability for any such action
or inaction taken in good faith) proceed to protect and enforce
the rights vested in it by this Indenture by such appropriate
judicial proceedings as the Trustee shall deem most effectual to
protect and enforce any of such rights, either by suit in equity
or by action at law or by proceedings in bankruptcy or otherwise,
whether for the specific enforcement of any covenant or agreement
contained in this Indenture or in aid of the exercise of any
power granted in this Indenture, or to enforce any other legal or
equitable right vested in the Trustee by this Indenture or by law
or equity.
SECTION 6.06 Remedies Cumulative and Continuing. All
powers and remedies given by this Article Six to the Trustee or
to the Noteholders shall, to the extent permitted by law, be
deemed cumulative and not exclusive of any other powers and
remedies available to the Trustee or the holders of the Notes,
by judicial proceedings or otherwise, to enforce the performance
or observance of the covenants and agreements contained in this
Indenture, and no delay or omission of the Trustee or of any
holder of any of the Notes to exercise any right or power
accruing upon any default occurring and continuing as aforesaid
shall impair any such right or power, or shall be construed to be
a waiver of any such default or an acquiescence therein; and,
subject to the provisions of Section 6.04, every power and remedy
given by this Article Six or by law to the Trustee or to the
Noteholders may be exercised from time to time, and as often as
shall be deemed expedient, by the Trustee or by the Noteholders.
SECTION 6.07 Direction of Proceedings and Waiver of
Default by Majority of Noteholders. The holders of a majority in
aggregate principal amount of the Notes at the time Outstanding
(as determined by counting all Series as a single class) shall
have the right to direct the time, method, and place of
conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred on the
Trustee; provided, however, that (subject to the provisions of
Section 7.01) the Trustee shall have the right to decline to
follow any such direction if the Trustee shall determine upon
advice of counsel that the action or proceeding so directed may
not lawfully be taken, such action is in conflict with this
Indenture, or if the Trustee in good faith by its board of
directors or trustees, executive committee, or a trust committee
of directors or trustees shall determine that the action or
proceeding so directed would expose the Trustee to personal
liability or be unduly prejudicial to the holders not joining
in and the Trustee may take any other action deemed proper by
the Trustee which is not inconsistent with such direction.
The holders of a majority in aggregate principal amount of the
Notes at the time Outstanding (as determined by counting all
Series as a single class) may on behalf of the holders of
all of the Notes waive any past default or Event of Default
hereunder and its consequences except a default in the
payment of interest on, or the principal of, or premium, if any,
the Notes. Upon any such waiver the Company, the Trustee and
the holders of the Notes shall be restored to their former
positions and rights hereunder, respectively; but no such waiver
shall extend to any subsequent or other default or Event of
Default or impair any right consequent thereon. Whenever any
default or Event of Default hereunder shall have been waived as
permitted by this Section 6.07, said default or Event of Default
shall for purposes of the Notes and this Indenture be deemed to
have been cured and to be not continuing.
SECTION 6.08 Notice of Defaults. The Trustee shall,
within 90 days after the occurrence of a default, mail to all
Noteholders, as the names and addresses of such holders appear
upon the Note registers, notice of all defaults known to the
Trustee, unless such defaults shall have been cured before the
giving of such notice (the term "defaults" for the purpose of
this Section 6.08 being hereby defined to be the events specified
in clauses (a), (b), (c), (d) and (e) of Section 6.01, not
including periods of grace, if any, provided for therein) and
irrespective of the giving of the written notice specified in
said clause (c) but in the case of any default of the character
specified in said clause (c) no such notice to Noteholders shall
be given until at least 60 days after the occurrence thereof;
provided that, except in the case of default in the payment of
the principal of, and premium, if any, or interest on any of the
Notes, the Trustee shall be protected in withholding such notice
if and so long as the board of directors, or a trust committee
of directors and/or Responsible Officers of the Trustee in good
faith determines that the withholding of such notice is in the
interests of the Noteholders.
SECTION 6.09 Undertaking to Pay Costs. All parties
to this Indenture agree, and each holder of any Note by his
acceptance thereof shall be deemed to have agreed, that any
court may in its discretion require, in any suit against the
Trustee for any action taken or omitted by it as Trustee, the
filing by any party litigant in such suit of an undertaking to
pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in such suit, having
due regard to the merits and good faith of the claims or
defenses made by such party litigant; but the provisions of this
Section 6.09 shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Noteholder, or group of
Noteholders, holding in the aggregate more than ten percent in
principal amount of the Notes outstanding, or to any suit
instituted by any Noteholder for the enforcement of the payment
of the principal of, and premium, if any, or interest on any
Note against the Company on or after the due date expressed
in such Note.
ARTICLE SEVEN
CONCERNING THE TRUSTEE
SECTION 7.01 Duties and Responsibilities of the
Trustee.
(a) Except during the continuance of an Event of
Default:
(1) the Trustee undertakes to perform such duties
and only such duties as are specifically set forth in
this Indenture, and no implied covenants or obligations
shall be read into this Indenture against the Trustee;
and
(2) in the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions
expressed therein, upon certificates or opinions
furnished to the Trustee and conforming to the
requirements of this Indenture; but in the case of any
such certificates or opinions which by any provision
hereof are specifically required to be furnished to the
Trustee, the Trustee shall be under a duty to examine
the same to determine whether or not they conform to
the requirements of this Indenture.
(b) In case an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and
powers vested in it by this Indenture, and use the same degree
of care and skill in their exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his
own affairs.
(c) No provision of this Indenture shall be construed
to relieve the Trustee from liability for its own negligent
action,
its own negligent failure to act, or its own willful misconduct,
except that
(1) this subsection shall not be construed to limit
the intent and obligations of the Trustee under subsection
(a) of this Section;
(2) the Trustee shall not be liable for any
error of judgment made in good faith by a Responsible
Officer, unless it shall be proved that the Trustee
was negligent in ascertaining the pertinent facts;
(3) the Trustee shall not be liable with respect
to any action taken or omitted to be taken by it in
good faith in accordance with the direction of the
holders of a majority in principal amount of the
Outstanding Notes relating to the time, method and
place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or
power conferred upon the Trustee, under this Indenture;
and
(4) no provision of this Indenture shall require
the Trustee to expend or risk its own funds or
otherwise incur any financial liability in the
performance of any of its duties hereunder, or
in the exercise of any of its rights or powers, if it
shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it.
(d) Whether or not therein expressly so provided,
every provision of this Indenture (except Section 7.02(b) hereof)
relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the
provisions of this Section.
SECTION 7.02 Reliance on Documents, Opinions, etc.
(a) Except as otherwise provided in Section 7.01:
(1) the Trustee may rely and shall be protected
in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report,
notice, request, consent, order, bond, debenture or
other paper or document believed by it to be genuine
and to have been signed or presented by the proper
party or parties;
(2) any request, direction, order or demand of
the Company mentioned herein shall be sufficiently
evidenced by an Officers' Certificate (unless other
evidence in respect thereof be herein specifically
prescribed); and any resolution of the Board of
Directors may be evidenced to the Trustee by a copy
thereof certified by the Secretary or an Assistant
Secretary of the Company;
(3) the Trustee may rely on an Officers'
Certificate as provided for in Section 7.07;
(4) the Trustee may consult with counsel and any
Opinion of Counsel shall be full and complete
authorization and protection in respect of any action
taken, suffered or omitted by it hereunder in good faith
and in reliance thereon;
(5) the Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by
this Indenture at the request, order of direction of
any of the Noteholders, pursuant to the provisions of
this Indenture, unless such Noteholders shall have
offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities
which may be incurred by it in compliance with such
request or direction;
(6) the Trustee shall not be bound to, but in its
discretion may, make any investigation into the facts
or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice,
request, consent, order, approval, bond, debenture
or other paper or document, and if it elects to make
such further inquiry or investigation, it shall be
entitled to examine the books, records and/or premises
of the Company, personally, or by agent or attorney;
provided, however, that if the payment within a
reasonable time (in no event more than 15 days) to the
Trustee of the costs, expenses or liabilities likely
to be incurred by it in the making of such investigation
is, in the opinion of the Trustee, not reasonably
assured to the Trustee by the security afforded to it by
the terms of this Indenture, the Trustee may require
reasonable indemnity against such expense or liability
as a condition to so proceeding; and
(7) the Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either
directly or by or through agents or attorneys; provided,
however, that the Trustee shall not be responsible for
misconduct or negligence of any agent or attorney
appointed with due care.
(b) The Trustee shall not be charged with knowledge of
any Event of Default with respect to the Notes unless either
(1) a Responsible Officer of the Trustee assigned to the
department of the Trustee specified for such purpose shall have
actual knowledge of the Event of Default or (2) written notice
of such Event of Default shall have been given to the Trustee at
the place so specified in Section 15.03 by the Company or by any
other obligor on such Notes or by any holder of such Notes.
SECTION 7.03 No Responsibility for Recitals, etc. The
recitals contained herein and in the Notes (except in the
Trustee's certificate of authentication) shall be taken as the
statements of the Company, and the Trustee assumes no
responsibility and shall have no liability for the correctness
of the same. The Trustee makes no representations as to the
validity or sufficiency of this Indenture or of the Notes.
The Trustee shall not be accountable for the use or application
by the Company of any Notes or the proceeds of any Notes
authenticated and delivered by the Trustee in conformity with the
provisions of this Indenture.
SECTION 7.04 Trustee, Paying Agents or Registrar May
Own Notes. The Trustee or any paying agent or Note registrar, in
its individual or any other capacity, may become the owner or
pledgee of Notes with the same rights it would have if it were
not Trustee, paying agent or Note registrar and subject to
Sections 7.08 and 7.13 may otherwise deal with the Company with
the same rights it would have if it were not Trustee, paying
agent, Note registrar or such other agent.
SECTION 7.05 Moneys to Be Held in Trust. Subject to
the provisions of Section 12.04, all moneys received by the
Trustee shall, until used or applied as herein provided, be held
in trust for the purposes for which they were received, but need
not be segregated from other funds except to the extent required
by law. Neither the Trustee nor any paying agent shall be under
any liability for interest on any moneys received by it hereunder
except such as it may agree with the Company to pay thereon. So
long as no Event of Default shall have occurred and be
continuing, all interest allowed on any such moneys shall be paid
from time to time upon the written order of the Company, signed
by its Chairman of the Board, its President, any Vice President,
its Treasurer or an Assistant Treasurer.
SECTION 7.06 Compensation and Expenses of Trustee.
The Company covenants and agrees to pay to the Trustee from time
to time, and the Trustee shall be entitled to, reasonable
compensation for all services rendered by it hereunder as may be
mutually agreed in writing between the Company and the Trustee
(which shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust), and the
Company will pay or reimburse the Trustee upon its request for
all reasonable expenses, disbursements and advances incurred or
made by the Trustee in accordance with any of the provisions of
this Indenture (including the reasonable compensation and the
expenses and disbursements of its counsel and of all persons not
regularly in its employ) except any such expense, disbursement or
advance as may be attributable to its own negligence, its own
negligent failure to act or its own wilful misconduct. The
Company also covenants to indemnify the Trustee for, and hold
it harmless against, any and all loss, liability or expense
incurred without negligence, negligent failure to act or wilful
misconduct on the part of the Trustee, arising out of or in
connection with the acceptance or administration of this trust,
including the reasonable costs and expenses of defending itself
against any claim of liability in connection with its exercise
or performance of any of its powers or duties hereunder;
provided, however, that promptly after the Trustee becomes aware
of any fact or circumstance which might result in any such loss,
liability or expense the Trustee (i) shall have advised the
Company thereof with particularity in writing; (ii) shall not
have admitted liability for or compromised or settled any such
loss, liability or expense without the prior written consent of
the Company which shall not be unreasonably withheld or delayed;
and (iii) shall have permitted the Company, in the Trustee's name
but at the Company's expense, to defend any claim made against
the Trustee, employing counsel reasonably acceptable to the
Trustee and the Trustee has been reasonably responsive to the
Company's reasonable request for cooperation and assistance in
connection therewith. Such indebtedness to the Trustee shall be
entitled to the benefit of a claim prior to that of the Notes upon
all property and funds held or collected by the Trustee as such,
except funds held in trust for the benefit of the holders of
particular Notes.
SECTION 7.07 Officers' Certificate as Evidence.
Except as otherwise provided in Section 7.01, whenever in the
administration of the provisions of this Indenture the Trustee
shall deem it necessary or desirable that a matter be proved or
established prior to taking or omitting any action hereunder,
such matter (unless other evidence in respect thereof be herein
specifically prescribed) may, in the absence of negligence or bad
faith on the part of the Trustee, be deemed to be conclusively
proved and established by an Officers' Certificate delivered to
the Trustee, and such Certificate, in the absence of negligence
or bad faith on the part of the Trustee, shall be full warrant
to the Trustee for any action taken or omitted by it under the
provisions of this Indenture upon the faith thereof.
SECTION 7.08 Conflicting Interest of Trustee. The
Trustee shall comply with the terms of Section 310(b) of the
Trust Indenture Act.
SECTION 7.09 Eligibility of Trustee. The Company
expressly approves Chase Manhattan Bank & Trust Company N.A. as
Trustee hereunder, notwithstanding any qualification requirements
of a successor Trustee hereunder. The Trustee and any successor
Trustee hereunder shall at all times be a corporation or other
banking entity organized and doing business under the laws of
the United States or any State or Territory thereof or of the
District of Columbia authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of
at least twenty-five million dollars (or a subsidiary of any such
entity where the combined capital and surplus of such subsidiary
shall be equal to at least five million dollars and the combined
capital and surplus of both such entities shall be equal to at
least twenty-five million dollars) and subject to supervision or
examination by Federal, State, territorial, or District of
Columbia authority. If a Trustee hereunder publishes reports of
condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority,
then for the purposes of this Section 7.09, the combined capital
and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent
report of condition so published. In case at any time the Trustee
shall cease to be eligible in accordance with the provisions of
this Section 7.09, the Trustee shall resign immediately in the
manner and with the effect specified in Section 7.10.
SECTION 7.10 Resignation or Removal of Trustee.
(a) No resignation or removal of the Trustee and no
appointment of a successor Trustee shall become effective until
the acceptance of appointment by the successor Trustee pursuant
to Section 7.11 hereof. Subject to the foregoing, the Trustee
may at any time resign by giving written notice of such
resignation to the Company. Upon receiving such notice of
resignation, the Company shall promptly appoint a successor
trustee by written instrument, in duplicate, executed by order
of the Board of Directors, one copy of which instrument shall be
delivered to the resigning Trustee and one copy to the successor
trustee. If no successor trustee shall have been so appointed
and have accepted appointment within 60 days after the giving of
such notice of resignation to the Company, the resigning Trustee
may petition any court of competent jurisdiction for the
appointment of a successor trustee, or any Noteholder who has
been a bona fide holder of a Note or Notes for at least six
months may, subject to the provisions of Section 6.09, on behalf
of himself and all others similarly situated, petition any such
court for the appointment of a successor trustee. Such court may
thereupon, after such notice, if any, as it may deem proper and
prescribe, appoint a successor trustee.
(b) In case at any time any of the following shall
occur --
(1) the Trustee shall fail to comply with the
provisions of Section 7.08 after written request
therefor by the Company or by any Noteholder who has
been a bona fide holder of a Note or Notes for at
least six months, or
(2) the Trustee shall cease to be eligible in
accordance with the provisions of Section 7.09 and
shall fail to resign after written request therefor
by the Company or by any such Noteholder, or
(3) the Trustee shall become incapable of acting,
or shall be adjudged a bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be
appointed, or any public officer shall take charge or
control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation
or liquidation,
then, in any such case, the Company may remove the
Trustee and appoint a successor trustee by written
instrument, in duplicate, executed by order of the
Board of Directors, one copy of which instrument shall
be delivered to the Trustee so removed and one copy to
the successor trustee, or, subject to the provisions of
Section 6.09, any Noteholder who has been a bona fide
holder of a Note or Notes for at least six months may,
on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a
successor trustee. Such court may thereupon, after
such notice, if any, as it may deem proper and
prescribe, remove the Trustee and appoint a successor
trustee.
SECTION 7.11 Acceptance by Successor Trustee. Any
successor trustee appointed as provided in Section 7.10 shall
execute, acknowledge and deliver to the Company and to its
predecessor trustee an instrument accepting such appointment
hereunder, and thereupon the resignation or removal of the
predecessor trustee shall become effective and such successor
trustee, without any further act, deed or conveyance, shall
become vested with all the rights, powers, duties and obligations
of its predecessor hereunder, with like effect as if originally
named as trustee herein; but, nevertheless, on the written
request of the Company or of the successor trustee, the trustee
ceasing to act shall, upon payment of any amounts then due it
pursuant to the provisions of Section 7.06, execute and deliver
an instrument transferring to such successor trustee all the
rights and powers of the trustee so ceasing to act and shall
duly assign, transfer and deliver to such successor trustee all
property and money held by such retiring Trustee hereunder,
subject, nevertheless, to such retiring Trustee's lien, if any,
provided for in Section 7.06. Upon request of any such successor
trustee, the Company shall execute any and all instruments in
writing formally and certainly vesting in and confirming to such
successor trustee all such rights and powers.
No successor trustee shall accept appointment as
provided in this Section 7.11 unless at the time of such
acceptance such successor trustee shall be qualified under the
provisions of Section 7.08 and eligible under the provisions of
Section 7.09.
Upon acceptance of appointment by a successor trustee
as provided in this Section 7.11, the Company shall mail notice
of the succession of such trustee hereunder to the holders of
Notes at their addresses as they shall appear on the Note
register. Each notice shall include the name of the successor
trustee and the address of its Corporate Trust Office. If the
Company fails to mail such notice within ten days after
acceptance of appointment by the successor trustee, the successor
trustee shall cause such notice to be mailed at the expense of
the Company.
SECTION 7.12 Succession By Merger, etc. Subject to
Sections 7.08 and 7.09, any corporation into which the Trustee
may be merged or converted or with which it may be consolidated,
or any corporation resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any
corporation succeeding to the corporate trust business of the
Trustee, shall be the successor of the Trustee hereunder without
the execution or filing of any paper or any further act on the
part of any of the parties thereto.
In case at the time such successor to the Trustee shall
succeed to the trusts created by this Indenture any of the Notes
shall have been authenticated but not delivered, any such
successor to the Trustee by merger, conversion or consolidation
may adopt the certificate of authentication of any predecessor
Trustee, and deliver such Notes so authenticated; and in case at
that time any of the Notes shall not have been authenticated, any
successor to the Trustee may authenticate such Notes either in
the name of such successor Trustee or, if such successor Trustee
is a successor by merger, conversion or consolidation, the name
of any predecessor hereunder; and in all such cases such
certificate shall have the full force which it is anywhere in the
Notes or in this Indenture provided that the certificate of the
Trustee shall have.
SECTION 7.13 Limitation on Rights of Trustee as a
Creditor. The Trustee is subject to Section 311(a) of the Trust
Indenture Act, excluding any creditor relationship listed in
Section 311(b) of the Trust Indenture Act. A Trustee who has
resigned or been removed shall be subject to Section 311(a) of
the Trust Indenture Act to the extent indicated therein.
ARTICLE EIGHT
CONCERNING THE NOTEHOLDERS
SECTION 8.01 Action by Noteholders. Whenever in this
Indenture it is provided that the holders of a specified
percentage in aggregate principal amount of the Notes may take
any action (including the making of any demand or request, the
giving of any notice, consent or waiver or the taking of any
other action) the fact that at the time of taking any such action
the holders of such specified percentage have joined therein may
be evidenced (a) by any instrument or any number of instruments
of similar tenor executed by Noteholders in person or by agent
or proxy appointed in writing and delivered to the Trustee, or
(b) by the record of the holder of Notes voting in favor thereof
at any meeting of Noteholders duly called and held in accordance
with the provisions of Article Nine, or (c) by a combination of
such instrument or instruments and any such record of such a
meeting of Noteholders.
SECTION 8.02 Proof of Execution by Noteholders.
Subject to the provisions of Sections 7.01, 7.02 and 9.05, proof
of the execution of any instrument by a Noteholder or his agent
or proxy shall be sufficient if made in accordance with such
reasonable rules and regulations as may be prescribed by the
Trustee or in such manner as shall be satisfactory to the
Trustee. The ownership of Notes shall be proved by the Note
register or by a certificate of the Note registrar.
The record of any Noteholders' meeting shall be proved
in the manner provided in Section 9.06.
SECTION 8.03 Who Are Deemed Owners. Prior to due
presentment for registration of transfer of any Notes, the
Company, the Trustee, any paying agent and any Note registrar may
deem the person in whose name such Note shall be registered upon
the Note register to be, and may treat him as, the absolute owner
of such Note (whether or not such Note shall be overdue and
notwithstanding any notation of ownership or other writing
thereon made by anyone other than the Company, the Trustee, or
any Note registrar) for the purpose of receiving payment of or on
account of the principal of, and premium, if any, and (subject to
Section 2.03) interest on such Note and for all other purposes;
and neither the Company nor the Trustee nor any paying agent nor
any Note registrar shall be affected by any notice to the
contrary. All such payments so made to any holder for the time
being or upon his order shall be valid and to the extent of the
sum or sums so paid, effectual to satisfy and discharge the
liability for moneys payable upon any such Note.
SECTION 8.04 Company-Owned Notes Disregarded. In
determining whether the holders of the requisite aggregate
principal amount of Notes have concurred in any direction, waiver
or consent under this Indenture, Notes which are owned by the
Company or any other obligor on the Notes or by any Affiliate of
the Company or any such other obligor shall be disregarded and
deemed not to be Outstanding for the purpose of any such
determination; provided that for the purposes of determining
whether the Trustee shall be protected in relying on any such
direction or consent only Notes which the Trustee knows are so
owned shall be so disregarded. Notes so owned which have been
pledged in good faith may be regarded as outstanding for the
purposes of this Section 8.04 if the pledgee shall establish
to the satisfaction of the Trustee the pledgee's right to vote
such Notes and that the pledgee is not the Company, an Affiliate
of the Company or any such other obligor. In the case of a
dispute as to such right, any decision by the Trustee based
upon the advice of counsel shall be full protection to the
Trustee.
SECTION 8.05 Revocation of Consents; Future Holders
Bound. At any time prior to (but not after) the evidencing to
the Trustee, as provided in Section 8.01, of the taking of any
action by the holders of the percentage in aggregate principal
amount of the Notes specified in this Indenture in connection
with such action, any holder of a Note which is shown by the
evidence to be included in the Notes the holders of which have
consented to or are bound by consents to such action may, by
filing written notice with the Trustee at its principal office
and upon proof of holding as provided in Section 8.02, revoke
such action so far as concerns such Note. Except as aforesaid,
any such action taken by the holder of any Note shall be
conclusive and binding upon such holder and upon all future
holders and owners of such Note and of any Note issued in
exchange or substitution therefor, irrespective of whether or not
any notation in regard thereto is made upon any such Note.
ARTICLE NINE
NOTEHOLDERS' MEETINGS
SECTION 9.01 Purposes of Meetings. A meeting of
Noteholders may be called at any time and from time to time
pursuant to the provisions of this Article Nine for any of the
following purposes:
(a) to give any notice to the Company or to the
Trustee, or to give any directions to the Trustee, or to consent
to the waiving of any default hereunder and its consequences, or
to take any other action authorized to be taken by Noteholders
pursuant to any of the provisions of Article Six;
(b) to remove the Trustee and nominate a successor
trustee pursuant to the provisions of Article Seven;
(c) to consent to the execution of an indenture or
indentures supplemental hereto pursuant to the provisions of
Section 10.02; or
(d) to take any other action authorized to be taken by
or on behalf of the holders of any specified aggregate principal
amount of the Notes under any other provision of this Indenture
or under applicable law.
SECTION 9.02 Call of Meetings by Trustee. The
Trustee may at any time call a meeting of Noteholders to take
any action specified in Section 9.01, to be held at such time
and at such place as the Trustee shall determine. Notice of
every meeting of the Noteholders, setting forth the time and the
place of such meeting and in general terms the action proposed
to be taken at such meeting, shall be mailed to holders of Notes
at their addresses as they shall appear on the Note register.
Such notice shall be mailed not less than 20 nor more than 90
days prior to the date fixed for the meeting.
SECTION 9.03 Call of Meetings by Company or
Noteholders. In case at any time the Company, pursuant to a
resolution of its Board of Directors, or the holders of at least
ten percent in aggregate principal amount of the Notes then
Outstanding (as determined by counting all Series as a single
class), shall have requested the Trustee to call a meeting of
Noteholders, by written request setting forth in reasonable
detail the action proposed to be taken at the meeting, and the
Trustee shall not have mailed the notice of such meeting within
20 days after receipt of such request, then the Company or such
Noteholders may determine the time and the place for such meeting
and may call such meeting to take any action authorized in
Section 9.01, by mailing notice thereof as provided in Section
9.02.
SECTION 9.04 Qualifications for Voting. To be
entitled to vote at any meeting of Noteholders a person shall
(a) be a holder of one or more Notes or (b) be a person appointed
by an instrument in writing as proxy by a holder of one or more
Notes; provided, however, if a meeting is called for only one
Series of Notes, only holders of that Series will be entitled to
vote. The only persons who shall be entitled to be present or to
speak at any meeting of Noteholders shall be the persons entitled
to vote at such meeting and their counsel and any representatives
of the Trustee and its counsel and any representatives of the
Company and its counsel.
SECTION 9.05 Regulations. Notwithstanding any other
provisions of this Indenture, the Trustee may make such
reasonable regulations as it may deem advisable for any meeting
of Noteholders, in regard to proof of the holding of Notes and
of the appointment of proxies, and in regard to the appointment
and duties of inspectors of votes, the submission and examination
of proxies, certificates and other evidence of the right to
vote, and such other matters concerning the conduct of the
meeting as it shall think fit and such decisions shall be deemed
final and the Trustee shall incur no liability therefore in the
absence of negligence, negligent failure to act or wilful
misconduct on its part.
The Trustee shall, by an instrument in writing, appoint
a temporary chairman of the meeting, unless the meeting shall
have been called by the Company or by Noteholders as provided in
Section 9.03, in which case the Company or the Noteholders
calling the meeting, as the case may be, shall in like manner
appoint a temporary chairman. A permanent chairman and a
secretary of the meeting shall be elected by majority vote of the
meeting.
At any meeting each Noteholder or proxy shall be
entitled to one vote for each $100 principal amount of Notes held
or represented by him; provided, however, that no vote shall be
cast or counted at any meeting in respect of any Note challenged
as not Outstanding and ruled by the chairman of the meeting to be
not Outstanding. The chairman of the meeting shall have no right
to vote other than by virtue of Notes held by him or instruments
in writing as aforesaid duly designating him as the person to
vote on behalf of other Noteholders. Any meeting of Noteholders
duly called pursuant to the provisions of Section 9.02 or 9.03
may be adjourned from time to time by a majority vote of the
meeting, whether or not constituting a quorum, and the meeting
may be held as so adjourned without further notice.
SECTION 9.06 Voting. The vote upon any resolution
submitted to any meeting of Noteholders shall be by written
ballots on which shall be subscribed the signatures of the
holders of Notes or of their representatives by proxy and the
principal amount of the Notes voted. The permanent chairman of
the meeting shall appoint two inspectors of votes who shall count
all votes cast at the meeting for or against any resolution and
who shall make and file with the secretary of the meeting their
verified written reports in duplicate of all votes cast at the
meeting. A record in duplicate of the proceedings of each
meeting of Noteholders shall be prepared by the secretary of the
meeting and there shall be attached to said record the original
reports of the inspectors of votes on any vote by ballot taken
thereat and affidavits by one or more persons having knowledge
of the facts setting forth a copy of the notice of the meeting
and showing that said notice was mailed as provided in Section
9.02. The record shall be signed and verified by the affidavits
of the permanent chairman and secretary of the meeting and one
of the duplicates shall be delivered to the Company and the other
to the Trustee to be preserved by the Trustee. Any record so
signed and verified shall be conclusive evidence of the matters
therein stated.
SECTION 9.07 No Delay of Rights by Meeting. Nothing
contained in this Article Nine shall be deemed or construed to
authorize or permit, by reason of any call of a meeting of
Noteholders or any rights expressly or impliedly conferred
hereunder to make such call, any hindrance or delay in the
exercise of any right or rights conferred upon or reserved
to the Trustee or to the Noteholders under any of the
provisions of this Indenture or of the Notes.
ARTICLE TEN
SUPPLEMENTAL INDENTURES
SECTION 10.01 Supplemental Indentures without Consent
of Noteholders. The Company, when authorized by a resolution of
the Board of Directors, and the Trustee may from time to time and
at any time enter into an indenture or indentures supplemental
hereto for one or more of the following reasons:
(a) to evidence the succession of another corporation
to the Company, or successive successions, and the assumption by
the successor corporation of the covenants, agreements and
obligations of the Company herein and in the Notes pursuant to
Article Eleven hereof;
(b) to add to the covenants of the Company such further
covenants, restrictions, conditions or provisions as the Board of
Directors and the Trustee shall consider to be for the protection
of the holders of Notes, and to make the occurrence, or the
occurrence and continuance, of a default in any of such
additional covenants, restrictions, conditions or provisions a
default or an Event of Default permitting the enforcement of all
or any of the several remedies provided in this Indenture as
herein set forth; provided, however, that in respect of any such
additional covenant, restriction or condition such supplemental
indenture may provide for a particular period of grace after
default (which period may be shorter or longer than that allowed
in the case of other defaults) or may provide for an immediate
enforcement upon such default or may limit the remedies available
to the Trustee upon such default; and
(c) to cure any ambiguity or to correct or supplement
any provision contained herein or in any supplemental indenture
which may be defective or inconsistent with any other provision
contained herein or in any supplemental indenture; to convey,
transfer, assign, mortgage or pledge any property to or with the
Trustee; or to make such other provisions in regard to matters
or questions arising under this Indenture as shall not adversely
affect the interests of the holders of the Notes.
The Trustee is hereby authorized to join with the
Company in the execution of any such supplemental indenture, to
make any further appropriate agreements and stipulations which
may be therein contained and to accept the conveyance, transfer,
assignment, mortgage or pledge of any property thereunder, but
the Trustee shall not be obligated to enter into any such
supplemental indenture which affects the Trustee's own rights,
duties or immunities under this Indenture or otherwise.
Any supplemental indenture authorized by the provisions
of this Section 10.01 may be executed by the Company and the
Trustee without the consent of the holders of any of the Notes at
the time outstanding, notwithstanding any of the provisions of
Section 10.02.
SECTION 10.02 Supplemental Indentures with Consent of
Noteholders. With the consent (evidenced as provided in Section
8.01) of the holders of not less than a majority in aggregate
principal amount of the Notes at the time Outstanding (as
determined by counting all Series as a single class), the
Company, when authorized by a resolution of its Board of
Directors, and the Trustee may from time to time and at any time
enter into an indenture or indentures supplemental hereto for the
purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of his Indenture or of any
supplemental indenture or of modifying in any manner the rights
of the holders of the Notes; provided, however, that no such
supplemental indenture shall without the consent of the holder of
each Outstanding Note (i) reduce the principal of (or premium
payable upon redemption) or extend the fixed maturity of any
Note, or reduce the rate or extend the time of payment of
interest thereon, or make the principal amount thereof or
interest or premium thereon payable in any coin or currency other
than that provided in the Notes, or modify this Indenture with
respect to the priority of the Notes in a manner adverse to the
Noteholders, without the consent of the holder of each Note so
affected, (ii) reduce the aforesaid percentage of Notes, the
holders of which are required to consent to any such supplemental
indenture, without the consent of the holders of all Notes then
Outstanding, (iii) reduce the Redemption Prices hereinbefore
specified in the form of Note, (iv) modify the terms of Section
6.07 hereof, (v) modify the provisions of this Indenture with
respect to subordination of the Notes in a manner adverse to the
holders thereof; or (vi) in any material way impair the rights of
Noteholders, as herein provided, to institute proceedings for the
enforcement of their right to receive payments on the Notes on or
after the stated maturity thereof (or, in the case of
redemptions, after the applicable Redemption Date).
Upon the written request of the Company, accompanied by
a copy of a resolution of the Board of Directors certified by its
Secretary or Assistant Secretary authorizing the execution of any
such supplemental indenture, and upon the filing with the Trustee
of evidence of the consent of Noteholders as aforesaid, the
Trustee shall join with the Company in the execution of such
supplemental indenture unless such supplemental indenture affects
the Trustee's own rights, duties or immunities under this
Indenture or otherwise, in which case the Trustee may in its
discretion, but shall not be obligated to, enter into such
supplemental indenture.
It shall not be necessary for the consent of the
Noteholders under this Section 10.02 to approve the particular
form of any proposed supplemental indenture, but it shall be
sufficient if such consent shall approve the substance thereof.
SECTION 10.03 Compliance with Trust Indenture Act;
Effect of Supplemental Indentures. Any supplemental indenture
executed pursuant to the provisions of this Article Ten shall
comply with the Trust Indenture Act, as then in effect. Upon the
execution of any supplemental indenture pursuant to the
provisions of this Article Ten, this Indenture shall be and be
deemed to be modified and amended in accordance therewith and
the respective rights, limitation of rights, obligations, duties
and immunities under this Indenture of the Trustee, the Company
and the holders of Notes shall thereafter be determined,
exercised and enforced hereunder subject in all respects to such
modifications and amendments and all the terms and conditions
of any such supplemental indenture shall be and be deemed to be
part of the terms and conditions of this Indenture for any and
all purposes.
SECTION 10.04 Notation on Notes. Notes authenticated
and delivered after the execution of any supplemental indenture
pursuant to the provisions of this Article Ten may bear a
notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company or
the Trustee shall so determine, new Notes so modified as to
conform, in the opinion of the Trustee and the Company's Board of
Directors, to any modification of this Indenture contained in any
such supplemental indenture may be prepared and executed by the
Company, authenticated by the Trustee and delivered in exchange
for the Notes then Outstanding.
SECTION 10.05 Evidence of Compliance of Supplemental
Indenture to Be Furnished Trustee. The Trustee, subject to the
provisions of Sections 7.01 and 7.02, may receive and shall be
fully protected in relying upon an Officers' Certificate and an
Opinion of Counsel as conclusive evidence that any supplemental
indenture executed pursuant hereto complies with the requirements
of this Article Ten and when executed and delivered by the
Company, will constitute a valid and binding obligation of the
Company in accordance with its terms.
SECTION 10.06 Notice of Supplemental Indenture.
Promptly after the execution by the Company and the Trustee of
any supplemental indenture pursuant to Section 10.02, the Company
shall transmit by mail to all Noteholders, as their names and
addresses appear in the Note register, a notice setting forth in
general terms the substance of such supplemental indenture.
ARTICLE ELEVEN
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
SECTION 11.01 Company May Consolidate, etc. on Certain
Terms. Nothing contained in this Indenture or in any of the
Notes shall prevent any consolidation or merger, of the Company
with or into any other corporation or corporations (whether or not
affiliated with the Company), or successive consolidations or
mergers in which the Company or its successor or successors shall
be a party or parties, or shall prevent any sale, conveyance or
lease of all or substantially all the property of the Company to
any other corporation (whether or not affiliated with the
Company) authorized to acquire and operate the same; provided,
however, and the Company hereby covenants and agrees that upon
any such sale, conveyance or lease, and upon any such merger or
consolidation in which the Company is not the surviving
corporation, the due and punctual payment of the principal of,
and premium, if any, and interest on all of the Notes, according
to this tenor, and the due and punctual performance and
observance of all of the covenants and conditions of this
Indenture to be performed by the Company, shall be expressly
assumed, by supplemental indenture satisfactory in form to the
Trustee executed and delivered to the Trustee, by the corporation
(if other than the Company) formed by such consolidation, or into
which the company shall have been merged, or by the corporation
which shall have acquired or leased such property; and provided,
further, however, and the Company hereby covenants and agrees:
(a) that the corporation formed by such consolidation
or into which the Company is merged or the corporation which
acquires by sale, conveyance or lease the properties and assets
of the Company substantially as an entirety shall be a
corporation organized and existing under the laws of the United
States of America or any State or the District of Columbia;
(b) that immediately after giving effect to such
transaction, no Event of Default, and no event which, after
notice or lapse of time, or both, would become an Event of
Default, shall have happened and be continuing; and
(c) that the Trustee shall have received an Officers'
Certificate and an Opinion of Counsel as conclusive evidence that
any such consolidation, merger, sale, conveyance or lease and any
such assumption complies with the provisions of this Article
Eleven and that all conditions precedent herein provided relating
to such transaction have been complied with.
SECTION 11.02 Successor Corporation to Be Substituted.
In case of any such consolidation, merger, sale, conveyance or
lease and upon the assumption by the successor corporation, by
supplemental indenture, executed and delivered to the Trustee
and satisfactory in form to the Trustee, of the due and punctual
payment of the principal of, and premium, if any, and interest on
all of the Notes and the due and punctual performance of all of
the covenants and conditions of this Indenture and the Notes to
be performed by the Company, such successor corporation shall
succeed to and be substituted for the Company, with the same
effect as if it had been named herein as the party of the first
part. Such successor corporation thereupon may cause to be
signed, and may issue either in its own name or in the name of
The MacNeal-Schwendler Corporation, any or all of the Notes
issuable hereunder which theretofore shall not have been signed
by the Company and delivered to the Trustee; and, upon the order
of such successor corporation instead of the Company and subject
to all the terms, conditions and limitations in this Indenture
prescribed, the Trustee shall authenticate and shall deliver any
Notes which previously shall have been signed and delivered by
the officers of the Company to the Trustee for authentication,
and any Notes which such successor corporation thereafter shall
cause to be signed and delivered to the Trustee for that purpose.
All the Notes so issued shall in all respects have the same legal
rank and benefit under this Indenture as the Notes theretofore or
thereafter issued in accordance with the terms of this Indenture
as though all of such Notes had been issued at the date of the
execution hereof.
In case of any such consolidation, merger, sale,
conveyance or lease such changes in phraseology and form (but not
in substance) may be made in the Notes thereafter to be issued as
may be appropriate.
ARTICLE TWELVE
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 12.01 Discharge of Indenture. When (a) the
Company shall deliver to the Trustee for cancellation all Notes
theretofore authenticated (other than any Notes which shall have
been destroyed, lost or stolen and in lieu of or in substitution
for which other Notes shall have been authenticated and
delivered) and not theretofore cancelled, or (b) all the Notes
not theretofore cancelled or delivered to the Trustee for
cancellation shall have become due and payable, or are by their
terms to become due and payable within one year or are to be
called for redemption within one year under arrangements
satisfactory to the Trustee for the giving of notice of
redemption, and the Company shall deposit with the Trustee, in
trust, funds sufficient to pay at maturity or upon redemption all
of the Notes (other than any Notes which shall have been
destroyed, lost or stolen and which shall have been replaced or
paid as provided in Section 2.06) not theretofore cancelled or
delivered to the Trustee for cancellation, including principal
and premium, if any, and interest due or to become due to such
date of maturity or redemption date, as the case may be, but
excluding, however, the amount of any moneys for the payment of
principal or of premium, if any, or interest on the Notes
(1) theretofore deposited with the Trustee and repaid by the
Trustee to the Company in accordance with the provisions of
Section 12.04, or (2) paid to any State or the District of
Columbia pursuant to its unclaimed property or similar laws, and
if in either case the Company shall also pay or cause to be paid
all other sums payable hereunder by the Company, so long as no
Event of Default shall be continuing, then this Indenture shall
cease to be of further effect, and the Trustee, on demand of the
Company accompanied by an Officers' Certificate and an Opinion of
Counsel as required by Section 15.05 and at the cost and expense
of the Company, shall execute proper instruments acknowledging
satisfaction of and discharging this Indenture. Notwithstanding
the satisfaction and discharge of this Indenture, the obligations
of the Company to the Trustee under Section 7.06 shall survive.
SECTION 12.02 Deposited Moneys to Be Held in Trust by
Trustee. All moneys deposited with the Trustee pursuant to
Section 12.01 shall be held in trust and applied by it to the
payment, either directly or through any paying agent (including
the Company acting as its own paying agent), to the holders of
the particular Notes for the payment or redemption of which such
moneys have been deposited with the Trustee, of all sums due and to
become due thereon for principal, and premium, if any, and
interest; provided, however, that the Company shall not make or
cause to be made the deposit provided by Section 12.01 unless the
Company shall have delivered to the Trustee an Opinion of Counsel
to the effect that, as a result of such deposit, registration
will not be required under the Investment Company Act of 1940, as
amended, by the Company. If any of the moneys so deposited
relate to Notes that are converted by the holders thereof into
common stock of the Company after such deposit, the Trustee shall
promptly return such payments to the Company.
SECTION 12.03 Paying Agent to Repay Moneys Held.
Upon the satisfaction and discharge of this Indenture all moneys
then held by any paying agent of the Notes (other than the Trustee)
shall, upon demand of the Company, be repaid to it or paid to the
Trustee, and thereupon such paying agent shall be released from
all further liability with respect to such moneys.
SECTION 12.04 Return of Unclaimed Moneys. Any moneys
deposited with or paid to the Trustee for payment of the principal
of, and premium, if any, or interest on Notes and not applied but
remaining unclaimed by the holders of Notes for two years after
the date upon which the principal of, and premium, if any, or
interest on such Notes, as the case may be, shall have become due
and payable, shall be repaid to the Company by the Trustee on
Company Request; and the holder of any of the Notes shall
thereafter look only to the Company for any payment which such
holder may be entitled to collect; provided, however, that the
Trustee or such paying agent before being required to make any
such repayment, may at the expense of the Company cause to be
published once, in a newspaper in the place of payment or mail to
each such holder, or both, notice that such money remains
unclaimed and that after a date specified therein, which shall
not be less than 30 days from the date of such publication or
mailing, any unclaimed balance of such money then remaining will
be repaid to the Company.
ARTICLE THIRTEEN
SUBORDINATION OF NOTES
SECTION 13.01 Agreement to Subordinate. The Company
agrees, and each holder of Notes by accepting a Note consents and
agrees, that the indebtedness evidenced by the Note, all
obligations of the Company under this Indenture and the payment
of any Claims are subordinated in right of payment, to the extent
and in the manner provided in this Article Thirteen, to the prior
payment in full of all Senior Indebtedness, and that the
subordination is for the benefit of the holders of Senior
Indebtedness and they and/or each of them may enforce such
subordination. The indebtedness evidenced by the Notes shall
rank pari passu with the 7-7/8% Convertible Subordinated
Debentures due 2004 of the Company issued under the Indenture
dated as of August 18, 1994 between the Company and the Trustee
(formerly, Chemical Trust Company of California).
SECTION 13.02 Certain Definitions.
"Claim" means any claim arising from the rescission of
the purchase of the Notes, for damages arising from the purchase
of the Notes or for reimbursement or contribution on account of
such a claim.
"Senior Indebtedness" means the principal of and
premium, if any, and accrued and unpaid interest (whether or not
accruing on or after the filing of any petition in bankruptcy or
for reorganization relating to the Company) on the following,
whether outstanding on the date of execution of the Indenture or
thereafter created, incurred or assumed: (1) indebtedness of the
Company for money borrowed or in respect of letters of credit
issued for the Company's account, (2) purchase money obligations
evidenced by notes, lease-purchase agreements, purchase contracts
or agreements, mortgages or similar instruments for the payment
of which the Company is liable or responsible, (3) obligations of
the Company under any agreement to lease, or lease of, any real
or personal property, which are required to be capitalized in
accordance with generally accepted accounting principles, (4)
guarantees by the Company of indebtedness for money borrowed by
any other person and guarantees of obligations of others of the
kinds referred to in clauses (2) and (3) above, and
(5) modifications, renewals, extensions and refundings of any
such indebtedness, liabilities or obligations; unless, in each
case, by its terms, it is not superior in right of payment to the
Notes. Senior Indebtedness outstanding shall continue to
constitute Senior Indebtedness for all purposes of this
Indenture, and the provisions of this Article Thirteen shall
continue to apply to such Senior Indebtedness, notwithstanding
that such Senior Indebtedness or any claim in respect thereof may
be disallowed, avoided or subordinated pursuant to any Bankruptcy
Law or other applicable insolvency law or equitable principles
(i) as a claim for unmatured interest, or (ii) as a fraudulent
transfer or conveyance arising in connection with and under
applicable law.
A distribution may consist of cash, securities or other
property, by set-off or otherwise, and a payment or distribution
on account of any obligations with respect to the Notes shall
include any redemption, purchase or other acquisition of the
Notes.
For the purposes of this Article Thirteen, all
indebtedness now or hereafter existing shall not be deemed to
have been paid in full unless the holders or owners thereof shall
have received payment in full in cash.
SECTION 13.03 Liquidation; Dissolution; Bankruptcy.
Upon any distribution to creditors of the Company in a total or
partial liquidation or dissolution of the Company or in a
bankruptcy, reorganization, insolvency, receivership or similar
proceeding relating to the Company or its property or in an
assignment for the benefit of creditors, or an arrangement,
adjustment, composition or relief of the Company or its debts or
any marshalling of the assets and liabilities of the Company:
(a) holders of Senior Indebtedness shall be entitled
to receive payment in full of all obligations due or to become
due with respect to the Senior Indebtedness (including interest
after the commencement of any such proceeding at the rate
specified in the applicable Senior Indebtedness) before holders
of Notes shall be entitled to receive any payment or
distribution on account of any obligations with respect to the
Notes or on account of any Claim; and
(b) until all obligations with respect to Senior
Indebtedness (as provided in subsection (a) above) are paid
in full, any payment or distribution, including, without
limitation, any payment or distribution which may be payable
or deliverable by reason of the payment of any other indebtedness
of the Company being subordinated to the payment of the Notes,
to which holders of Notes would be entitled but for this Article
Thirteen shall be made to holders of Senior Indebtedness, as their
interests may appear, for application (in the case of cash) to,
or as collateral (in the case of non-cash property or securities)
for the payment or prepayment of, the Senior Indebtedness to the
extent necessary to pay all such Senior Indebtedness in full
after giving effect to any concurrent payment or distribution to
or for the holders of such Senior Indebtedness, except that
pursuant to a plan of reorganization under applicable Bankruptcy
Law, holders of Notes may receive securities that are
subordinated to at least the same extent as the Notes to (1)
Senior Indebtedness and (2) any securities issued in exchange for
Senior Indebtedness; provided, however, that if any Senior
Indebtedness is outstanding, the terms (including, without
limitation, terms in respect of maturities, covenants, defaults,
acceleration and remedies) of any securities issued to holders of
Notes pursuant to this Section 13.03 must be reasonably
satisfactory to the trustee or agent for such Senior
Indebtedness.
SECTION 13.04 Default on Senior Indebtedness.
(a) In the event that (i) any default in the payment
of any obligation with respect to any Senior Indebtedness shall
have occurred and be continuing, whether at maturity, upon
redemption or otherwise (a "Payment Default") unless and until
such Payment Default shall have been cured or waived in writing
by the holders of such Senior Indebtedness, or (ii) any judicial
proceedings shall be pending with respect to any default under
such Senior Indebtedness or (iii) the Notes mature on any date
prior to the Maturity Date, no direct or indirect payment or
distribution (including, without limitation, any payment or
distribution which may be payable or deliverable by reason of
the payment of any other indebtedness of the Company being
subordinated to payment of the Notes) shall be made by or on
behalf of the Company for or on account of any obligations
with respect to the Notes or on account of any Claim, and
neither the Trustee nor any holder of Notes shall receive
from the Company, directly or indirectly, any payment or
distribution, including, without limitation, from or by way of
collateral, on account of any obligations with respect
to the Notes or on account of any Claim, except that holders of
Notes may receive other indebtedness which is subordinated to at
least the same extent as the Notes to (i) Senior Indebtedness or
(ii) any securities issued in exchange for Senior Indebtedness;
provided, however, that if any Senior Indebtedness is
outstanding, the terms (including, without limitation, terms in
respect of maturities, covenants, defaults, acceleration and
remedies) of any indebtedness issued to holders of Notes pursuant
to this Section 13.04 must be reasonably satisfactory to the
trustee or agent for such Senior Indebtedness.
(b) Upon the maturity of all or any part of any Senior
Indebtedness by lapse of time, acceleration (unless waived in
writing) or otherwise, all amounts due to become due in respect
of all Senior Indebtedness shall first be paid in full before any
direct or indirect payment or distribution (including, without
limitation, any payment or distribution which may be payable or
deliverable by reason of the payment of any other indebtedness of
the Company being subordinated to the payment of the Notes to
which holders of Notes would be entitled but for this Article
Thirteen), may be made by or on behalf of the Company on account
of any obligations with respect to the Notes or on account of any
Claim, except that holders of Notes may receive other
indebtedness which is subordinated to at least the same extent as
the Notes to (i) Senior Indebtedness or (ii) any securities
issued in exchange for Senior Indebtedness; provided, however,
that if any Senior Indebtedness is outstanding, the terms
(including, without limitation, terms in respect of maturities,
covenants, defaults, acceleration and remedies) of any
indebtedness issued to holders of Notes pursuant to this Section
13.04 must be reasonably satisfactory to the trustee or agent for
such Senior Indebtedness.
(c) Upon receipt by the Company and the Trustee of
written notice from the trustee or agent for any Senior
Indebtedness of any default under any Senior Indebtedness, other
than a Payment Default, or that a payment or distribution by the
Company with respect to any Note would, immediately after giving
effect thereto, result in such a default, and unless such default
shall have been cured or waived in writing in accordance with the
terms of such Senior Indebtedness, no direct or indirect payment
or distribution (including, without limitation, any payment or
distribution which may be payable or deliverable by reason of the
payment of any other indebtedness of the Company being
subordinated to payment of the Notes) may be made by or on behalf
of the Company for or on account of the obligations with respect
to the holders of Notes or on account of any Claim and neither
the Trustee nor any holders of Notes shall receive from the
Company, directly or indirectly, any payment or distribution in
respect of the obligations with respect to the Notes or on
account of any Claim.
SECTION 13.05 Acceleration of Notes. If payment of
the Notes is accelerated because of an Event of Default, the
Company shall promptly notify holders of Senior Indebtedness
of the acceleration.
SECTION 13.06 When Distribution Must Be Paid Over. If
a distribution is made to the Trustee, any trustee, agent or any
securityholder that because of this Article Thirteen should not
have been made to it, the trustee, such paying agent or such
securityholder who receives the distribution shall segregate such
distribution from its other funds and property and hold it in
trust for the benefit of, and, upon written request, pay it over
(in the same form as received, with any necessary endorsement)
to, the holders of Senior Indebtedness as their interests may
appear, or their agent or representative or the trustee under the
indenture or other agreement (if any) pursuant to which Senior
Indebtedness may have been issued, as their respective interests
may appear, for application (in the case of cash) to, or as
collateral (in the case of non-cash property or securities) for
the payment or prepayment of all obligations with respect to
Senior Indebtedness remaining unpaid to the extent necessary to
pay such obligations in full in accordance with their terms,
after giving effect to any concurrent payment or distribution to
or for the holders of Senior Indebtedness.
With respect to the holders of Senior Indebtedness, the
Trustee undertakes to perform only such obligations on the part
of the Trustee as are specifically set forth in this Article
Thirteen, and no implied covenants or obligations with respect to
the holders of Senior Indebtedness shall be read into this
Indenture against the Trustee. The Trustee shall not be deemed
to owe any fiduciary duty to the holders of Senior Indebtedness.
SECTION 13.07 Notice by Company. The Company shall
promptly notify the Trustee of any facts known to the Company
that would cause a payment of any obligations with respect to the
Notes or of any Claim to violate this Article Thirteen, but
failure to give such notice shall not affect the subordination
of the Notes and all Claims to the Senior Indebtedness provided
in this Article Thirteen.
SECTION 13.08 Subrogation. After all Senior
Indebtedness is paid in full and until the Notes are paid in
full, holders of Notes shall be subrogated (equally and ratably
with all other indebtedness pari passu with the Notes) to the
rights of holders of Senior Indebtedness to receive distributions
applicable to Senior Indebtedness to the extent that
distributions otherwise payable to the holders of Notes have been
applied to the payment of Senior Indebtedness. A distribution
made under this Article Thirteen to holders of Senior
Indebtedness which otherwise would have been made to holders of
Notes is not, as between the Company and holders of Notes, a
payment by the Company on the Notes.
SECTION 13.09 Relative Rights. This Article Thirteen
defines the relative rights of holders of Notes and holders of
Senior Indebtedness. Nothing in this Indenture shall:
(a) impair, as between the Company and holders of
Notes, the obligation of the Company, which is absolute and
unconditional, to pay principal of, premium, if any, and interest
on the Notes in accordance with their terms;
(b) affect the relative rights of holders of Notes and
creditors of the Company other than their rights in relation to
holders of Senior Indebtedness; or (c) prevent the Trustee or any
holders of Notes from exercising its available remedies upon a
Default or Event of Default, subject to the rights of holders and
owners of Senior Indebtedness to receive distributions and
payments otherwise payable to holders of Notes.
If the Company fails because of this Article Thirteen
to pay principal of, and premium, if any, or interest on a Note
on the due date, the failure is still a Default or Event of
Default.
SECTION 13.10 Subordination May Not Be Impaired. No
right of any present or future holder of any Senior Indebtedness
to enforce subordination as herein provided shall at any time in
any way be prejudiced or impaired by any act or failure to act in
good faith by any such holder, or by any noncompliance by the
Company, the Trustee or any agent with the terms and provisions
and covenants herein, regardless of any knowledge thereof any
such holder may have or otherwise be charged with.
Without in any way limiting the generality of the
foregoing paragraph, the holders or owners of Senior Indebtedness
may at any time and from time to time, without the consent of or
notice to the Trustee or any holder of Notes, without incurring
responsibility to any holder of Notes and without impairing or
releasing the subordination provided in this Article Thirteen or
the obligations hereunder of the holders of Notes to the holders
of Senior Indebtedness, do any one or more of the following: (i)
change the manner, place or terms of payment or extend the time
of payment of, or renew or alter, all or any of the Senior
Indebtedness (including any change in the rate of interest
thereon), or otherwise amend or supplement in any manner, or
grant any waiver or release with respect to, Senior Indebtedness
or any instrument evidencing the same or any agreement under
which Senior Indebtedness is outstanding; (ii) sell, exchange,
release, not perfect or otherwise deal with any property at any
time pledged, assigned or mortgaged to secure or otherwise
securing, Senior Indebtedness, or amend, or grant any waiver or
release with respect to, or consent to any departure from any
guarantee for all or any of the Senior Indebtedness; (iii)
release any person liable in any manner under or in respect of
Senior Indebtedness; and (iv) exercise or refrain from exercising
any rights against, and release from obligations of any type, the
Company and any other person; and (v) apply any sums from time to
time received to the Senior Indebtedness.
All rights and interests under this Indenture of the
holders of Senior Indebtedness, and all agreements and
obligations of the Trustee, the holders of Notes, and the Company
under Article Six and under this Article Thirteen shall remain in
full force and effect irrespective of (i) any lack of validity or
enforceability of any Senior Indebtedness, any promissory notes
evidencing indebtedness thereunder, or any other agreement or
instrument relating thereto or to any other Senior Indebtedness,
or (ii) any other circumstance that might otherwise constitute a
defense available to, or a discharge of, the Trustee, any holder
of Notes, or the Company.
The provisions set forth in Article Six and in this
Article Thirteen constitute a continuing agreement and shall (i)
be and remain in full force and effect until payment in full of
all Senior Indebtedness, (ii) be binding upon the Trustee, the
holders of Notes and the Company and their respective successors
transferees and assigns, and (iii) inure to the benefit of, and
be enforceable directly by, each of the holders of Notes and
their respective successors, transferees and assigns.
Any trustee or agent for Senior Indebtedness is hereby
authorized to demand specific performance of the provisions of
this Article Thirteen, whether or not the Company shall have
complied with any of the provisions of Article Thirteen
applicable to it, at any time when the Trustee or any holders of
Notes shall have failed to comply with any of these provisions.
The Trustee and the holders of Notes hereby irrevocably waive any
defense based on the adequacy of a remedy at law that might be
asserted as a bar to such remedy of specific performance.
SECTION 13.11 Distribution or Notice to Representative
or Agent. Whenever a distribution is to be made or a notice
given to holders of Senior Indebtedness, the distribution may be
made and the notice given to their representative or agent.
Upon any payment or distribution of assets of the
Company referred to in this Article Thirteen, the Trustee and the
holders of Notes shall be entitled to rely in good faith upon any
order or decree made by any court of competent jurisdiction or
upon any certificate of such representative, agent or of any
liquidating trustee or agent or other person making any
distribution to the Trustee or to the holders of Notes for the
purpose of ascertaining the persons entitled to participate in
such distribution, the holders of the Senior Indebtedness and
other indebtedness of the Company, the amount thereof or payable
thereon, the amount or amounts paid or distributed thereon and
all other facts pertinent thereto or to this Article Thirteen.
SECTION 13.12 Rights of Trustee. Notwithstanding the
provisions of this Article Thirteen or any other provision of
this Indenture, the Trustee shall not be charged with knowledge
of the existence of any facts which would prohibit the making
of any payment or distribution by the Trustee, or the taking
of any action by the Trustee, and the Trustee may continue to
make payments on the Notes unless it shall have received at its
Corporate Trustee Office at least three Business Days prior to
the date of such payment written notice of facts that would cause
the payment of any obligations with respect to the Notes to
violate this Article Thirteen. Only the Company, a
representative, agent or a holder of an issue of Senior
Indebtedness that has no representative or agent may give the
notice. Nothing in this Article Thirteen shall impair the claims
of, or payments to, the Trustee under or pursuant to Section 7.06
hereof.
The Trustee in its individual or any other capacity may
hold Senior Indebtedness with the same rights it would have if it
were not Trustee. Any agent for the holders of Notes may do the
same with like rights.
SECTION 13.13 Authorization to Effect Subordination.
Each holder of Notes by his acceptance thereof authorizes and
directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effectuate the subordination as
provided in this Article Thirteen, and appoints the Trustee his
attorney-in-fact for any and all such purposes.
SECTION 13.14 Miscellaneous.
(a) Each holder of Notes and the Company hereby waives
promptness, diligence, notice of acceptance and any other notice
with respect to any of the Senior Indebtedness, and any
requirement that the trustee, agent or any holder of Senior
Indebtedness protect, secure, perfect or insure any security
interest or lien or any property subject thereto or exhaust any
right or take any action against the Company or any other person
or entity or any collateral.
(b) The agreement contained in this Article Thirteen
shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Senior Indebtedness
is rescinded or must otherwise be returned by any holder of
Senior Indebtedness upon the insolvency, bankruptcy or
reorganization of the Company or otherwise, all as though such
payment had not been made.
(c) The Trustee shall notify the trustee or agent
under any Senior Indebtedness of the existence of any Event of
Default under Section 6.01 and of any event which, with the
giving of notice or the passage of time or both, would constitute
such an Event of Default, promptly after becoming aware thereof.
(d) Each holder of Notes by accepting a Note agrees, so
long as Senior Indebtedness is outstanding, not to compromise,
release, forgive or otherwise discharge the obligations of the
Company with respect to his Note without the prior written consent
of the trustee or agent under any Senior Indebtedness.
(e) Unless and until written notice shall be given by
the Company and the trustee or agent under any Senior
Indebtedness to the Trustee at its Corporate Trustee Office
notifying the Trustee that Senior Indebtedness is no longer
outstanding, the Trustee shall assume that such indebtedness is
outstanding. The Company agrees to give such notice to the
Trustee promptly after the first date on which no Senior
Indebtedness shall be outstanding. For the purposes of this
Indenture, Senior Indebtedness shall be outstanding whenever
either (i) such indebtedness shall not have been paid in full
or (ii) commitments to lend under any agreement related to any
such Senior Indebtedness shall not have expired or
been cancelled or terminated.
ARTICLE FOURTEEN
IMMUNITY OF DIRECTORS, OFFICERS,
EMPLOYEES AND SHAREHOLDERS
SECTION 14.01 Indenture and Notes Solely Corporate
Obligations. No director, officer, employee or shareholder, as
such, of the Company from time to time shall have any liability
for any obligations of the Company under the Notes or this
Indenture, or for any claim based on, in respect of, or by reason
of such obligations or their creation. Each Noteholder by
accepting a Note waives and releases all such Persons from all
such liability. The waiver and releases are part of the
consideration for the issuance by the Company of the Notes.
ARTICLE FIFTEEN
MISCELLANEOUS PROVISIONS
SECTION 15.01 Provisions Binding on Company's
Successors. All the covenants, stipulations, promises and
agreements by the Company contained in this Indenture shall bind
its successor and assigns whether so expressed or not.
SECTION 15.02 Indenture for Sole Benefit of Parties
and Noteholders. Nothing in this Indenture or in the Notes,
expressed or implied, shall give or be construed to give to any
person, firm or corporation, other than the parties hereto and
their successors, any paying agent, any Note registrar and the
holders of the Notes, any legal or equitable right, remedy or
claim under or in respect of this Indenture, or under any
covenant, condition or provision herein contained; all such
covenants, conditions and provisions being, subject to the
provisions of Article Eleven, for the sole benefit of the parties
hereto and their successors, any paying agent, any Note registrar
and the holders of the Notes.
SECTION 15.03 Addresses for Notices, etc. Any notice
or demand which by any provision of this Indenture is required
or permitted to be given or served by the Trustee or by the
holders of Notes on the Company may be given or served by being
deposited postage prepaid by registered or certified mail in a
post office letter box addressed (until another address is
filed by the Company with the Trustee) to The MacNeal-Schwendler
Corporation, 815 Colorado Boulevard, Los Angeles, California
90041, Attention: President. Any notice, direction, request or
demand by any Noteholder or the Company to or upon the Trustee
shall be deemed to have been sufficiently given, delivered or
made, for all purposes, if (i) given or made in writing at the
Corporate Trust Office, or (ii) upon receipt by the Trustee of
such notice, direction, request or demand mailed by certified or
registered mail to the Trustee at its Corporate Trust Office.
Any notice, report or other instrument required by any of the
provisions of this Indenture to be given by the Trustee to the
Noteholders shall be deemed to have been sufficiently given, for
all purposes, if mailed, postage prepaid, by first class mail.
SECTION 15.04 California Contract. This Indenture
and each Note shall be deemed to be a contract made and to be
performed entirely in the State of California, and for all
purposes shall be construed in accordance with the laws of said
state.
SECTION 15.05 Evidence of Compliance with Conditions
Precedent. Upon any application or demand by the Company to the
Trustee to take any action under any of the provisions of this
Indenture, the Company shall furnish to the Trustee an Officers'
Certificate stating that all conditions precedent, if any,
provided for in this Indenture relating to the proposed action,
have been complied with and an Opinion of Counsel stating that,
in the opinion of such counsel, all such conditions precedent
have been complied with.
Each certificate or opinion provided for in this
Indenture and delivered to the Trustee with respect to compliance
with a condition or covenant provided for in this Indenture shall
include (1) a statement that the person making such certificate
or opinion has read such covenant or condition; (2) a brief
statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in
such certificate or opinion are based; (3) a statement that, in
the opinion of such person, he has made such examination or
investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition
has been complied with; and (4) a statement as to whether or not,
in the opinion of such person, such condition or covenant has
been complied with.
Any certificate, statement or opinion of an officer of
the Company may be based, insofar as it relates to legal matters,
upon a certificate or opinion of or representations by counsel,
unless such officer knows that the certificate or opinion or
representations with respect to the matters upon which his
certificate, statement or opinion may be based as aforesaid are
erroneous, or in the exercise of reasonable care should know that
the same are erroneous. Any certificate, statement or opinion of
counsel may be based, insofar as it relates to factual matters
information with respect to which is in the possession of the
Company, upon the certificate, statement or opinion of or
representations by an officer or officers of the Company, unless
such counsel knows that the certificate, statement or opinion or
representations with respect to the matters upon which his
certificate, statements or opinion may be based as aforesaid are
erroneous.
Any certificate, statement or opinion of an officer of
the Company or of counsel may be based, insofar as it relates to
accounting matters, upon a certificate or opinion of or
representations by an accountant or a firm of accountants unless
such officer or counsel, as the case may be, knows that the
certificate or opinion or representations with respect to the
accounting matters upon which his certificate, statement or
opinion may be based as aforesaid are erroneous, or in the
exercise of reasonable care should know that the same are
erroneous.
SECTION 15.06 Legal Holidays. In any case where the
date of maturity of interest or principal of, or premium, if
any, on the Notes or the date fixed for redemption of any Note
will not be a Business day, then payment of such interest on or
principal of, and premium, if any, on the Notes need not be made
on such date but may be made on the next succeeding Business Day
with the same force and effect as if made on such date of
maturity or the date fixed for redemption and no interest shall
accrue for the period from and after such prior date.
SECTION 15.07 Trust Indenture Act to Control. If and
to the extent that any provision of this Indenture limits,
qualifies or conflicts with another provision in this Indenture
which is required or deemed to be included in this Indenture by
any of Sections 310 to 317, inclusive, of the Trust Indenture
Act, such required or deemed provision shall control.
SECTION 15.08 No Security Interest Created. Nothing
in this Indenture or in the Notes, expressed or implied, shall be
construed to constitute a security interest under the Uniform
Commercial Code or similar legislation, as now or hereafter
enacted and in effect, in any jurisdiction where property of the
Company or its Subsidiaries is located except for the Trustee's
prior lien under Section 7.06.
SECTION 15.09 Table of Contents, Headings, etc. The
table of contents and the titles and headings of the articles and
sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part hereof, and shall
in no way modify or restrict any of the terms or provisions
hereof.
SECTION 15.10 Execution in Counterparts. This
Indenture may be executed in any number of counterparts, each of
which shall be an original, but such counterparts shall together
constitute one and the same instrument.
Chase Manhattan Bank & Trust Company N.A. hereby
accepts the trusts in this Indenture declared and provided, upon
the terms and conditions hereinabove set forth.
[Signature page follows]
<PAGE>
IN WITNESS WHEREOF, THE MACNEAL-SCHWENDLER CORPORATION
has caused this Indenture to be signed and acknowledged by its
President, or a Vice President, and its corporate seal to be
affixed hereunto, and the same to be attested by its Secretary or
an Assistant Secretary, and Chase Manhattan Bank and Trust
Company, National Association has caused this Indenture to be
signed and acknowledged by one of its Vice Presidents, has caused
its corporate seal to be affixed hereunto, and the same to be
attested by one of its Trust Officers, as of the day and year
first written above.
THE MACNEAL-SCHWENDLER CORPORATION
By: /s/ Frank Perna, Jr.
----------------------------------
Name: Frank Perna Jr.
Title: Chief Executive Officer
Attest:
/s/ Louis A. Greco
- -----------------------------
Name: Louis A. Greco
Title: Chief Financial Officer and Secretary
CHASE MANHATTAN BANK & TRUST COMPANY N.A.
By: /s/ Hans H. Helley
---------------------------------
Name: Hans H. Helley
-------------------------
Title: Assistant Vice President
-------------------------
Attest:
/s/ Paula Oswald
- -------------------------------
Name: Paula Oswald
-------------------------
Title: Assistant Vice President
------------------------
<PAGE>
Exhibit 4.2
WARRANT AGREEMENT
RELATING TO THE ISSUANCE OF THE
COMMON STOCK PURCHASE WARRANTS
THE MACNEAL-SCHWENDLER CORPORATION
Dated as of June 18, 1999
<PAGE>
SECTION 1. APPOINTMENT OF WARRANT AGENT 1
SECTION 2. FORM OF WARRANTS 1
2.1 Form of Warrant Certificates 1
2.2 Countersignature of Warrant Certificates 2
2.3 Registration 2
SECTION 3. TRANSFER OR EXCHANGE OF WARRANTS 2
3.1 Transfer 2
3.2 Exchange of Warrant Certificates 2
SECTION 4. [SECTION 4 INTENTIONALLY LEFT BLANK] 3
SECTION 5. MUTILATED OR MISSING WARRANTS 3
SECTION 6. TERM OF WARRANTS; EXERCISE OF WARRANTS 3
6.1 Term of Warrants 3
6.2 Exercise of Warrants 3
6.3 Payment of Exercise Price 4
SECTION 7. DISPOSITION OF PROCEEDS ON EXERCISE OF
WARRANTS 4
SECTION 8. PAYMENT OF TAXES 4
SECTION 9. RESERVATION OF WARRANT SHARES; PURCHASE AND
CANCELLATION OF WARRANTS 5
9.1 Reservation of Warrant Shares 5
9.2 Governmental Approvals and Listings 5
9.3 Purchase of Warrants by the Company 5
9.4 Cancellation of Warrants 5
SECTION 10. EXERCISE PRICE 6
SECTION 11. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF
WARRANT SHARES 6
11.1 Adjustments 6
(a) Stock Dividends, Splits, etc. 6
(b) Distributions of Assets 6
(c) Computation of Market Price 7
(d) Minimum Adjustment 7
(e) Warrant Share Adjustment 7
(f) Notice of Adjustment 8
(g) Definition of Common Stock 8
(h) Company May Reduce Exercise Price or Increase
Number of Warrant Shares Purchasable 8
(i) Subsequently Issued Warrants 9
(j) Number of Warrant Shares on Warrant
Certificates 9
11.2 No Adjustment for Dividends 9
11.3 Preservation of Purchase Rights and
Adjustment of Exercise Price upon Merger,
Consolidation, etc. 9
SECTION 12. NO RIGHTS AS STOCKHOLDERS 10
SECTION 13. FRACTIONAL SHARES OF COMMON STOCK 10
SECTION 14. RIGHT OF ACTION 10
SECTION 15. INSPECTION OF WARRANT AGREEMENT 10
SECTION 16. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF
WARRANT AGENT 11
SECTION 17. CONCERNING THE WARRANT AGENT 11
17.1 Disclaimer of Representations 11
17.2 No Responsibility for Failure of Company's
Covenants 11
17.3 Delegation 11
17.4 Opinion of Counsel 12
17.5 Officer's Certificate 12
17.6 Compensation, Reimbursement and
Indemnification 12
17.7 No Action Without Assurance of Reimbursement 12
17.8 Conflicts of Interest 13
17.9 Solely as Agent 13
17.10 Reliance on Documents 13
17.11 No Representation Regarding Validity, Etc. 13
17.12 Instructions from Company 13
17.13 Warrant Agent Not Required to Expend Funds 13
SECTION 18. CHANGE OF WARRANT AGENT 14
SECTION 19. IDENTITY OF TRANSFER AGENT 14
SECTION 20. NOTICES 14
SECTION 21. SUPPLEMENTS AND AMENDMENTS 15
SECTION 22. SUCCESSORS 15
SECTION 23. MERGER OR CONSOLIDATION OF THE COMPANY 15
SECTION 24. APPLICABLE LAW 16
SECTION 25. BENEFITS OF THIS AGREEMENT 16
SECTION 26. COUNTERPARTS 16
SECTION 27. CAPTIONS 16
<PAGE>
Warrant Agreement
WARRANT AGREEMENT dated as of June 18, 1999, between
THE MACNEAL-SCHWENDLER CORPORATION, a Delaware corporation (the
"Company"), and THE MACNEAL-SCHWENDLER CORPORATION, in its
capacity as Warrant Agent (the "Warrant Agent").
WITNESSETH:
WHEREAS, the Company proposes to issue up to 1,400,000
Common Stock Purchase Warrants (the "Warrants") to purchase
Common Stock, par value $0.01 per share (the "Common Stock"), as
part of the purchase price for certain stock of the MARC Analysis
Research Corporation to be acquired by the Company, each Warrant
entitling the registered owner thereof to purchase one share of
Common Stock (each share of Common Stock purchasable upon the
exercise of a Warrant being referred to herein as a "Warrant
Share"); and
WHEREAS, the Company wishes the Warrant Agent to act on
behalf of the Company, and the Warrant Agent is willing to act,
in connection with the issuance, transfer, exchange and exercise
of the Warrants.
NOW, THEREFORE, in consideration of the foregoing and
for the purpose of defining the terms and provisions of the
Warrants and the respective rights and obligations thereunder of
the Company and the registered owners of the Warrants (the
"Holders"), the Company and the Warrant Agent hereby agree as
follows:
SECTION 1. Appointment of Warrant Agent.
The Company hereby appoints the Warrant Agent to act as
agent for the Company in accordance with the terms and conditions
hereinafter set forth, and the Warrant Agent hereby accepts such
appointment.
SECTION 2. Form of Warrants.
2.1 Form of Warrant Certificates. The text of the
Warrant certificate and of the form of election to purchase
Warrant Shares shall be substantially as set forth in Exhibit A
attached hereto. The Warrant certificates shall be appropriately
printed, lithographed or engraved and may have such letters,
numbers, other marks of identification, or legends as the Company
may deem appropriate and as are not inconsistent with the
provisions of this Agreement, or as may be required to comply
with any rule or regulation of any stock exchange on which the
Warrants may be listed, or to conform to usage. The price per
Warrant Share and the number of Warrant Shares issuable upon
exercise of each Warrant are subject to adjustment upon the
occurrence of certain events, all as hereinafter provided.
The Warrant certificates shall be executed on behalf of the
Company by its Chairman of the Board, its President or one of
its Vice Presidents under its corporate seal reproduced thereon
and attested by its Secretary or an Assistant Secretary. The
signature of any of such officers on the Warrant certificates
may be manual or facsimile.
Warrant certificates bearing the manual or facsimile
signatures of individuals who were at any time the proper
officers of the Company shall bind the Company, notwithstanding
that such individuals or any one of them shall have ceased to
hold such offices prior to the delivery of such Warrant
certificates or did not hold such office on the date of this
Agreement.
Warrant certificates shall be dated as of the date of
countersignature thereof by the Warrant Agent either upon initial
issuance or upon exchange, substitution or transfer.
2.2 Countersignature of Warrant Certificates. The
Warrant certificates shall be manually countersigned by the
Warrant Agent (or any successor to the Warrant Agent then acting
as warrant agent under this Agreement) and shall not be valid for
any purpose unless so countersigned. Warrant certificates may be
countersigned by the Warrant Agent (or by its successor as
warrant agent hereunder) and may be delivered by the Warrant
Agent notwithstanding that the persons whose manual or facsimile
signatures appear thereon as proper officers of the Company shall
have ceased to be such officers at the time of such
countersignature, issuance or delivery. The Warrant Agent shall,
upon written instructions of the Chairman of the Board, the
President, any Vice President or the Secretary of the Company,
countersign, issue and deliver Warrant certificates entitling the
Holders thereof to purchase in the aggregate Warrant Shares
(subject to adjustment pursuant to Section 11 hereof) and shall
countersign and deliver Warrant certificates as otherwise
provided in this Agreement.
2.3 Registration. The Warrant certificates shall be
numbered and shall be registered in a register (the "Warrant
Register") as they are issued. The Company and the Warrant Agent
shall be entitled to treat the registered holder of any Warrant
as the owner in fact thereof for all purposes and shall not be
bound to recognize any equitable or other claim to, or interest
in, such Warrant on the part of any other person, notwithstanding
any notice to the Company or the Warrant Agent to the contrary.
SECTION 3. Transfer or Exchange of Warrants.
3.1 Transfer. The Warrants shall be transferable
only in the books of the Company maintained at the office or
agency of the Warrant Agent designated for such purpose in the
City of Los Angeles upon delivery thereof duly endorsed by the
Holder or by his or her duly authorized attorney or legal
representative, or accompanied by proper evidence of succession,
assignment or authority to transfer, which endorsement shall be
guaranteed by a bank or trust company located in the United
States or a broker or dealer that is a member of a national
securities exchange. In all cases of transfer by an attorney,
the original power of attorney, duly approved, or an official
copy thereof, duly certified, shall be deposited and remain with
the Warrant Agent. In case of transfer by executors,
administrators, guardians or other legal representatives, duly
authenticated evidence of their authority shall be produced, and
required to be deposited and remain with the Warrant Agent. Upon any
registration of transfer, the Warrant Agent shall countersign and
deliver a new Warrant certificate to the person entitled thereto.
3.2 Exchange of Warrant Certificates. Warrant
certificates may be exchanged for another certificate or
certificates entitling the Holder thereof to purchase a like
aggregate number of Warrant Shares as the certificate or
certificates surrendered then entitle such Holder to purchase.
Any Holder desiring to exchange a Warrant certificate shall make
such request in writing delivered to the Warrant Agent, and shall
surrender, properly endorsed in the manner described in
subsection 3.1 hereof, the Warrant certificate or certificates
to be so exchanged. Thereupon, the Warrant Agent shall
countersign and deliver to the person entitled thereto a new
Warrant certificate or certificates, as the case may be, as so
requested.
SECTION 4. [Section 4 intentionally left blank].
SECTION 5. Mutilated or Missing Warrants.
In case any of the certificates evidencing the Warrants
shall be mutilated, lost, stolen or destroyed, the Company may,
in its discretion, issue and the Warrant Agent shall countersign
and deliver in exchange and substitution for and upon
cancellation of the mutilated Warrant certificate, or in lieu of
and substitution for the Warrant certificate lost, stolen or
destroyed, a new Warrant certificate of like tenor and
representing an equivalent right or interest, but only, in case
of any such loss, theft or destruction, upon receipt of evidence
satisfactory to the Company and the Warrant Agent thereof and an
indemnity also satisfactory to them. An applicant for such
substitute Warrant certificate shall also comply with such other
reasonable regulations and pay such other reasonable charges as
the Company or the Warrant Agent may prescribe.
SECTION 6. Term of Warrants; Exercise of Warrants.
6.1 Term of Warrants. Subject to the terms of this
Agreement, each Holder shall have the right until 5:00 P.M., Los
Angeles time, on June 18, 2004 (the "Expiration Date"), to
purchase from the Company the number of fully paid and
nonassessable Warrant Shares which the Holder may at the time
be entitled to purchase on exercise of such Warrants.
6.2 Exercise of Warrants. Warrant Shares may be
purchased upon surrender to the Company at the office or agency
of the Warrant Agent designated for such purpose in the City of
Los Angeles, of the certificate or certificates evidencing the
Warrants to be exercised, together with the form of election to
purchase on the reverse thereof duly filled in and signed, which
signature shall, if the Warrant Shares are to be issued in the
name of a person other than the Holder of the Warrant, be
guaranteed by a bank or trust company located in the United
States or a broker or dealer that is a member of a national
securities exchange, and upon payment to the Warrant Agent
for the account of the Company of the Exercise Price (as defined
in and determined in accordance with the provisions of Sections
10 and 11 hereof) for the number of Warrant Shares in respect
of which such Warrants are then being exercised.
Subject to Section 8 hereof, upon such surrender of
Warrants and payment of the Exercise Price as aforesaid, the
Company shall issue and cause to be delivered, with all
reasonable dispatch, to or upon the written order of the Holder
and in such name or names as the Holder may designate, a
certificate or certificates for the number of full Warrant Shares
so purchased upon the exercise of such Warrants. Such
certificate or certificates shall be deemed to have been issued
and any person so designated to be named therein shall be deemed
to have become a holder of record of such Warrant Shares as of
the date of the surrender of such Warrants and payment of the
Exercise Price, as aforesaid; provided, however, that if such
Warrants are surrendered, and the Exercise Price is paid, on a
Saturday, Sunday or other day on which banking institutions in
the City of Los Angeles are authorized or obligated by law or
executive order to close, or on a day when the Common Stock
transfer books of the Company are closed, the certificates for
the Warrant Shares in respect of which such Warrants are then
exercised shall be issuable as of the next succeeding Monday,
Tuesday, Wednesday, Thursday or Friday on which such banking
institutions are not so authorized or obligated to close (whether
before or after the Expiration Date) and which is a day on which
the Common Stock transfer books of the Company are open. The
rights of purchase represented by the Warrants shall be
exercisable, at the election of the Holders thereof, either in
full or from time to time in part and, in the event that a
certificate evidencing Warrants is exercised in respect of less
than all of the Warrant Shares specified therein at any time
prior to the expiration of such Warrants, a new certificate
evidencing the remaining Warrant or Warrants will be issued, and
the Warrant Agent is hereby irrevocably authorized to countersign
and to deliver the required new Warrant certificates pursuant to
the provisions of this subsection and of subsection 2.2 hereof
and the Company, whenever required by the Warrant Agent, will
supply the Warrant Agent with Warrant certificates duly executed
on behalf of the Company for such purpose.
6.3 Payment of Exercise Price. Payment of the
aggregate Exercise Price shall be made by certified or cashier's
check, by presentment of any of the notes described below, or
by any combination thereof. Holders may present, as payment of
the aggregate Exercise Price, any note from those series of notes
issued by the Company pursuant to the Indenture dated as of June
17, 1999 among the Company and Chase Manhattan Bank & Trust
Company N.A., as trustee, known as 8% Subordinated Promissory
Notes due 2001 and 8% Subordinated Promissory Notes due 2009.
Holders surrendering such notes in payment of the Exercise Price
shall be fully credited for the unpaid principal value and
accrued but unpaid interest thereon toward the subject Exercise
Price, or portion thereof, as the case may be.
SECTION 7. Disposition of Proceeds on Exercise of
Warrants.
The Warrant Agent will promptly provide information to
the Company with respect to the Warrants exercised including the
name of the holder of Warrants exercised, the number of Warrants
exercised and the date of exercise, and concurrently pay to the
Company all moneys (or notes referred to in Section 6.3) received
by the Warrant Agent for the purchase of the Warrant Shares
through the exercise of such Warrants. Any such notes shall be
promptly delivered to the Company by the Warrant Agent.
SECTION 8. Payment of Taxes.
The Company will pay all documentary stamp taxes, if
any, attributable to the issuance of any Warrant certificates or
certificates for Warrant Shares issuable upon the exercise of
Warrants; provided, however, that the Company shall not be
required to pay, and the Holder shall pay, any tax or taxes that
may be payable in respect of any transfer involved in the issue
or delivery of any Warrant certificates or certificates for
Warrant Shares in a name other than that of the registered Holder
of the Warrants that were surrendered and the Company shall not
be required to issue or deliver such Warrant certificates or
certificates for Warrant Shares unless or until the persons
requesting the issuance thereof shall have paid to the Company
the amount of such tax or shall have established to the
satisfaction of the Company that such tax has been paid.
SECTION 9. Reservation of Warrant Shares; Purchase
and Cancellation of Warrants.
9.1 Reservation of Warrant Shares. There have been
reserved, and the Company shall at all times keep reserved out
of its authorized Common Stock, a number of shares of Common
Stock sufficient to provide for the exercise of the right of
purchase represented by the outstanding Warrants. The Company
covenants that all Warrant Shares will, upon issuance, be duly
authorized, validly issued, fully paid and nonassessable. The
transfer agent for the Company's Common Stock (the "Transfer
Agent") and every subsequent transfer agent for any shares of
the Company's capital stock issuable upon the exercise of any
of the rights of purchase aforesaid will be irrevocably
authorized and directed at all times to reserve such number of
authorized shares required for such purpose. The Company will
keep a copy of this Agreement on file with the Transfer Agent
for the Common Stock and with every subsequent transfer agent
for any shares of the Company's capital stock issuable upon
the exercise of the rights of purchase represented by the
Warrants. The Warrant Agent is hereby irrevocably authorized
to requisition from time to time from such Transfer Agent stock
certificates required to honor outstanding Warrants upon exercise
thereof in accordance with the terms of this Agreement. The
Company will supply such Transfer Agent with duly executed stock
certificates for such purpose. Promptly after the Expiration
Date, the Warrant Agent shall, upon the written request of the
Company, certify to the Company the aggregate number of Warrants
then outstanding and thereafter no shares shall be subject to
reservation in respect of such Warrants.
9.2 Governmental Approvals and Listings. The Company
will as promptly as practicable take all action which may be
necessary to obtain and keep effective any and all permits,
consents and approvals of governmental agencies and authorities,
and will make any and all filings under federal and state
securities laws, necessary in connection with the issuance,
distribution and transfer of Warrant certificates, the exercise
of the Warrants, and the issuance, sale, transfer and delivery of
Warrant Shares.
9.3 Purchase of Warrants by the Company. The Company
shall have the right, except as limited by law, other agreement
or herein, to purchase or otherwise acquire Warrants at such
times, in such manner and for such consideration as it may deem
appropriate.
9.4 Cancellation of Warrants. In the event the
Company shall purchase or otherwise acquire Warrants, the related
Warrant certificates shall thereupon be delivered by the Company
to the Warrant Agent together with instructions that such
certificates be cancelled by it and retired. The Warrant Agent
shall cancel any Warrant certificate surrendered for exchange,
substitution, transfer or exercise in whole or in part. Warrant
certificates cancelled by the Warrant Agent pursuant to any
provision of this Agreement shall be delivered to the Company or,
upon the request of the Warrant Agent and with the consent of the
Company, destroyed by the Warrant Agent. Upon the Company's
request, the Warrant Agent shall furnish to the Company written
confirmation of the destruction of the Warrant certificates so
cancelled.
SECTION 10. Exercise Price.
The price per share at which Warrant Shares shall be
purchasable upon exercise of each Warrant (the "Exercise Price")
shall be $10.00, subject to adjustment pursuant to Section 11
hereof.
SECTION 11. Adjustment of Exercise Price and Number
of Warrant Shares.
11.1 Adjustments. The number and kind of securities
purchasable upon the exercise of each Warrant and the Exercise
Price shall be subject to adjustment as follows:
(a) Stock Dividends, Splits, etc. In case the Company
shall at any time after the date of this Agreement (w) pay a
dividend or make a distribution on its Common Stock which is
paid or made (A) in Common Stock or other shares of the
Company's capital stock or (B) in rights or warrants to
purchase Common Stock or other capital stock of the Company
if such rights or warrants are not exercisable or separable
from the Common Stock except upon the occurrence of a
contingency, (x) subdivide its outstanding Common Stock
into a greater number of shares of Common Stock, (y) combine
its outstanding shares into a smaller number of shares of
Common Stock or (z) issue by reclassification of its
Common Stock other securities of the Company, then, in any
such event the number of Warrant Shares purchasable upon
exercise of each Warrant immediately prior thereto shall be
adjusted so that the Holder of each Warrant shall be
entitled to receive upon exercise of such Warrant the kind
and number of shares of the Company and rights to purchase
Common Stock or other securities of the Company (or, in the
event of the redemption of any such rights, any cash paid in
respect of such redemption) that he, she or it would have
owned or been entitled to receive after the happening of any
of the events described above had such Warrant been
exercised immediately prior to the happening of such event
or any record date with respect thereto. An adjustment made
pursuant to this paragraph (a) shall become effective
immediately after the opening of business on the next
business day following the record date in the case of
dividends or other distributions and shall become effective
immediately after the opening of business on the next
business day following the effective date in the case of a
subdivision or combination.
(b) Distributions of Assets. In case the Company
shall at any time after the date of this Agreement
distribute to all holders of its Common Stock evidences
of indebtedness of the Company or assets of the Company
(including cash dividends or distributions out of retained
earnings other than cash dividends or distributions made
on a quarterly or other periodic basis) or warrants to
subscribe for securities of the Company (excluding those
referred to in paragraph (a) above), then in each case the
Exercise Price shall be adjusted to a price determined by
multiplying the Exercise Price in effect immediately prior
to such distribution by a fraction, of which the numerator
shall be the then current Market Price (as defined in
paragraph (c) below) per share of Common Stock on the record
date for determination of shareholders entitled to receive
such distribution, less the then fair value (as determined
in good faith by the Board of Directors of the Company,
whose determination shall be conclusive and notice of which
shall be provided to Warrant Agent) of the portion of the
assets or evidences of indebtedness so distributed or of
such subscription rights or warrants which are applicable
to one share of Common Stock, and of which the denominator
shall be such Market Price per share of Common Stock;
provided, however, that if the then current Market Price
per share of Common Stock on the record date for
determination of shareholders entitled to receive such
distribution is less than the then fair value of the portion
of the assets or evidences of indebtedness so distributed
or of such subscription rights or warrants which are
applicable to one share of Common Stock, the foregoing
adjustment of the Exercise Price shall not be made and in
lieu thereof the Holder of each Warrant shall be entitled
to receive upon exercise of such Warrant in addition to the
Common Stock the kind and number of assets, evidences of
indebtedness, subscription rights and warrants (or, in the
event of the redemption of any such evidences of
indebtedness, subscription rights and warrants, any cash
paid in respect of such redemption) that he or she would
have owned or have been entitled to receive after the
happening of such distribution had such Warrant been
exercised immediately prior to the record date for such
distribution. Such adjustment shall be made successively
whenever such a record date is fixed, and in the event that
such distribution is not so made, the Exercise Price shall
again be adjusted to be the Exercise Price which would then
be in effect if such record date had not been fixed.
(c) Computation of Market Price. For the purpose of
any computation under this Agreement, the current Market
Price per share of Common Stock at any date shall be deemed
to be the average of the daily closing price per share for
the 15 consecutive Trading Days (as defined below)
commencing 30 Trading Days before the date in question.
"Market Price" is defined as the closing price for the
Common Stock on the New York Stock Exchange. If Market
Price cannot be established as described above, Market
Price shall be the fair market value of the Common
Stock as determined in good faith by the Board of Directors.
"Trading Day" shall mean a day on which the principal
national securities exchange on which the Common Stock is
listed or admitted to trading is open for the transaction
of business.
(d) Minimum Adjustment. No adjustment in the number
of Warrant Shares purchasable hereunder or the Exercise
Price shall be required unless such adjustment would require
an increase or decrease of at least 1.0% in the number of
Warrant Shares purchasable upon the exercise of each
Warrant, or the Exercise Price, as the case may be; provided,
however, that any adjustments which by reason of this
paragraph (d) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment.
All calculations under this Section 11 shall be made to the
nearest cent or the nearest ten-thousandth of a share, as
the case may be.
(e) Warrant Share Adjustment. Upon each adjustment of
the Exercise Price as a result of the calculations made in
paragraph (a) or (b) above, each Warrant outstanding
immediately prior to the making of such adjustment shall
thereafter evidence the right to purchase, at the adjusted
Exercise Price, that number of shares (calculated to the
nearest ten-thousandth) obtained by (A) multiplying (x)
the number of shares covered by a Warrant immediately prior
to such adjustment of the Exercise Price by (y) the Exercise
Price in effect immediately prior to such adjustment of the
Exercise Price and (ii) dividing the product so obtained by
the Exercise Price in effect immediately after such
adjustment of the Exercise Price.
(f) Notice of Adjustment. Whenever the number of
Warrant Shares purchasable upon the exercise of Warrants
or the Exercise Price of such Warrant Shares is adjusted,
as herein provided, the Company shall cause the Warrant
Agent promptly to mail by first class mail, postage prepaid,
to each Holder of a Warrant or Warrants notice of such
adjustment or adjustments and shall deliver to the Warrant
Agent a certificate of a firm of independent public
accountants selected by the Board of Directors of the
Company (who may be the regular accountants employed by
the Company) setting forth (A) the number of Warrant Shares
purchasable upon the exercise of each Warrant and the
Exercise Price of such Warrant Shares after such adjustment,
(B) a brief statement of the facts requiring such adjustment
and (C) the computation by which such adjustment was made.
Such certificate shall be conclusive evidence of the
correctness of such adjustment. The Warrant Agent shall be
entitled to rely on such certificate and shall be under no
duty or responsibility with respect to any such certificate,
except to exhibit the same, from time to time, to any Holder
desiring an inspection thereof during reasonable business
hours. The Warrant Agent shall not at any time be under any
duty or responsibility to any Holders to determine whether
any facts exist that may require any adjustment of the
Exercise Price or the number of Warrant Shares or other
stock or property purchasable upon exercise thereof or with
respect to the nature or extent of any such adjustment when
made, or with respect to the method employed in making such
adjustment.
(g) Definition of Common Stock. For the purpose of
this subsection 11.1, the term "Common Stock" shall mean (A)
the class of stock designated as the Common Stock of the
Company at the date of this Agreement or (B) any other class
of stock resulting from successive changes or
reclassifications of such shares consisting solely of
changes in par value, or from par value to no par value or
from no par value to par value. In the event that at any
time, as a result of an adjustment made pursuant to
paragraph (a) above, the Holders of a Warrant or Warrants
shall become entitled to purchase any securities of the
Company other than Common Stock, thereafter the number of
such other securities so purchasable upon exercise of each
Warrant and the Exercise Price of such securities shall be
subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions
with respect to the Warrant Shares contained in this
subsection 11.1 and the provisions of Section 6
and subsections 11.2 and 11.3, inclusive, with respect to
the Warrant Shares, shall apply on like terms to any such
other securities.
(h) Company May Reduce Exercise Price or Increase
Number of Warrant Shares Purchasable. The Company may, at
its option, at any time during the term of the Warrants,
reduce the then current Exercise Price, or increase the
number of Common Shares purchasable upon exercise of each
Warrant, to any amount deemed appropriate by the Board of
Directors of the Company.
(i) Subsequently Issued Warrants. All Warrants
originally issued by the Company subsequent to any
adjustment made to the Exercise Price hereunder shall
evidence the right to purchase, at the adjusted Exercise
Price, the number of shares of Common Stock purchasable from
time to time hereunder upon exercise of the Warrants, all
subject to further adjustment as provided herein.
(j) Number of Warrant Shares on Warrant Certificates.
Irrespective of any adjustment or change in the Exercise
Price or the number of shares of Common Stock issuable upon
the exercise of the Warrants, the Warrant certificates
theretofore and thereafter issued may continue to express
the Exercise Price per share and the number of shares which
were expressed upon the initial Warrant certificates issued
hereunder.
11.2 No Adjustment for Dividends. Except as provided in
subsection 11.1, no adjustment in respect of any dividends made
on a quarterly or other periodic basis out of retained earnings
shall be made during the term of a Warrant or upon the exercise
of a Warrant.
11.3 Preservation of Purchase Rights and Adjustment of
Exercise Price upon Merger, Consolidation, etc. In case the
Company shall consolidate or merge with or into any other
corporation (other than a consolidation or merger in which the
Company is the surviving corporation and each share of Common
Stock outstanding immediately prior to such consolidation or
merger is to remain outstanding immediately after such
consolidation or merger and no cash, securities or other
property is distributed with respect to such shares) or shall
sell or transfer all or substantially all of its assets to any
person or entity, the Company or such successor or purchasing
person or entity, as the case may be (collectively, the
"acquiring person"), shall execute with the Warrant Agent an
agreement (so long as such agreement does not
affect the Warrant Agent's duties, rights and responsibilities
set forth in this Agreement) that each Holder of a Warrant shall
have the right thereafter upon payment of the Exercise Price in
effect immediately prior to such action to purchase upon exercise
of each Warrant the kind and amount of shares and other
securities, cash and other property that he or she or it would
have owned or have been entitled to receive after the happening
of such consolidation, merger or sale had such Warrant been
exercised immediately prior to such action (assuming that such
Holder, as a holder of Common Stock prior to such action, would
not have exercised any rights of election as a holder of Common
Stock as to the kind or amount of securities, cash or other
property receivable upon such consolidation, merger or sale;
provided, that if the kind or amount of securities, cash or other
property receivable upon such consolidation, merger or sale is
not the same for each non-electing share of Common Stock, then
the kind and amount of securities, cash or other property
receivable shall be deemed to be the kind and amount so
receivable by a plurality of the non-electing shares). The
Company shall mail by first-class mail, postage prepaid, to each
Holder, notice of the execution of any agreement with an
acquiring person as provided in the first sentence of this
subsection 11.3 with a copy thereof to the Warrant Agent. In
addition to any adjustments required by this subsection 11.3,
such agreement shall provide for adjustments which shall be as
nearly equivalent as may be practicable to the adjustments
provided for in this Section 11. The Company shall not effect
any such consolidation, merger or sale unless prior to or
simultaneously with the consummation thereof the acquiring person
(if other than the Company) resulting from such consolidation or
merger or the acquiring person purchasing such assets or other
appropriate corporation or entity shall assume, by written
instrument executed and delivered to the Warrant Agent, the
obligation to deliver to each Holder such shares of stock,
securities or assets as, in accordance with the foregoing
provisions, such Holder may be entitled to receive and the other
obligations of the Company under this Agreement. The provisions
of this subsection 11.3 shall similarly apply to successive
consolidations, mergers, sales or conveyances. The Warrant Agent
shall be under no duty or responsibility to determine the
correctness of any provisions contained in any such agreement
relating either to the kind or amount of shares of stock or other
securities, cash or property receivable upon exercise of Warrants
or with respect to the method employed and provided therein for
any adjustments.
SECTION 12. No Rights as Stockholders.
Nothing contained in this Agreement or in any of the Warrants
shall be construed as conferring upon the Holders or their
transferees the right to vote or to receive dividends or to
consent or to receive notice as shareholders in respect of any
meeting of shareholders for the election of directors of the
Company or any other matter, or any rights whatsoever as
shareholders of the Company.
SECTION 13. Fractional Shares of Common Stock.
The Company will not issue fractions of Warrants or
distribute Warrant certificates which evidence fractional
Warrants. In lieu of such fractional Warrants, there shall be
paid to the Holders to whom Warrant certificates representing
such fractional Warrants would otherwise be issuable an amount in
cash equal to the product of such fraction of a Warrant
multiplied by the current Market Price per share of Common Stock
issuable with respect to such fraction of a Warrant.
SECTION 14. Right of Action.
All rights of action in respect of this Agreement are
vested in the respective Holders of the Warrant certificates, and
any Holder of any Warrant certificate, without the consent of the
Warrant Agent or of the Holder of any other Warrant certificate,
may, on such Holder's own behalf and for such Holder's own
benefit, enforce, and may institute and maintain any suit, action
or proceeding against the Company to enforce, or otherwise act in
respect of, such Holder's right to exercise the Warrants
evidenced by such Warrant certificate in the manner provided in
such Warrant certificate and in this Agreement.
SECTION 15. Inspection of Warrant Agreement.
The Warrant Agent shall keep copies of this Agreement
and any notices given or received by it hereunder available for
inspection by the Holders during normal business hours at its
office in the City of Los Angeles for that purpose. The Company
shall supply the Warrant Agent from time to time with such
numbers of copies of this Agreement as the Warrant Agent may
request.
SECTION 16. Merger or Consolidation or Change of Name of
Warrant Agent.
Any corporation or entity into which the Warrant Agent
may be merged or with which it may be consolidated, or any
corporation or entity resulting from any merger or consolidation
to which the Warrant Agent shall be a party, or any corporation
or entity succeeding to the shareholder services business of the
Warrant Agent, shall be the successor to the Warrant Agent
hereunder without the execution or filing of any paper or any
further act on the part of any of the parties hereto, provided
that such corporation or entity would be eligible for appointment
as successor Warrant Agent under the provisions of Section 18
hereof. In case at the time such successor to the Warrant Agent
shall succeed to the agency created by this Agreement any of the
Warrants shall have been countersigned but not delivered, any
such successor to the Warrant Agent may adopt the
countersignature of the original Warrant Agent and deliver such
Warrants so countersigned; and in case at that time any of the
Warrants shall not have been countersigned, any successor to the
Warrant Agent may countersign such Warrants either in the name of
the predecessor Warrant Agent or in the name of the successor
Warrant Agent, and in all such cases such Warrants shall have the
full force provided in the Warrants and in this Agreement.
In case at any time the name of the Warrant Agent shall
be changed and at such time any of the Warrants shall have been
countersigned but not delivered, the Warrant Agent may adopt the
countersignatures under its prior name and deliver Warrants so
countersigned; and in case at that time any of the Warrants shall
not have been countersigned, the Warrant Agent may countersign
such Warrants either in its prior name or in its changed name;
and in all such cases such Warrants shall have the full force
provided in the Warrants and in this Agreement.
SECTION 17. Concerning the Warrant Agent.
The Warrant Agent undertakes the duties and obligations
expressly imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the Holders of
Warrants, by their acceptance thereof, shall be bound:
17.1 Disclaimer of Representations. The statements
contained herein and in the Warrants shall be taken as statements
of the Company, and the Warrant Agent assumes no responsibility
for the correctness of any of the same except such as describe
the Warrant Agent or action taken by it. The Warrant Agent
assumes no responsibility with respect to the distribution of
the Warrants except as herein otherwise provided.
17.2 No Responsibility for Failure of Company's
Covenants. The Warrant Agent shall not be responsible for any
failure of the Company to comply with any of the covenants or
provisions contained in this Agreement or in the Warrants.
17.3 Delegation. The Warrant Agent may execute and
exercise any of the rights or powers hereby vested in it or
perform any duty hereunder either itself or by or through its
attorneys or agents, and the Warrant Agent shall not be
answerable or accountable for any act, neglect or misconduct
of any such attorneys or agents or for any loss to the Company
resulting from such neglect or misconduct provided reasonable
care shall have been exercised in the selection and continued
retention thereof.
17.4 Opinion of Counsel. The Warrant Agent may consult
at any time with legal counsel satisfactory to it, and the
Warrant Agent shall incur no liability or responsibility to the
Company or to any Holder in respect of any action taken,
suffered or omitted by it hereunder in good faith and in accordance
with the opinion or the advice of such counsel.
17.5 Officer's Certificate. Whenever in the
performance of its duties under this Agreement the Warrant Agent
shall deem it necessary or desirable that any fact or matter be
proved or established by the Company prior to taking or suffering
any action hereunder, such fact or matter (unless other evidence
in respect thereof be herein specifically prescribed) may be
deemed to be conclusively proved and established by a certificate
signed by the Chairman of the Board, the President, any Vice
President, the Chief Financial Officer or the Secretary of the
Company and delivered to the Warrant Agent; and such certificate
shall be full authorization to the Warrant Agent and the Warrant
Agent shall incur no liability for or in respect of any action
taken, suffered or omitted in good faith by it under the
provisions of this Agreement in reliance upon such certificate.
17.6 Compensation, Reimbursement and Indemnification.
The Company agrees to pay the Warrant Agent reasonable
compensation for all services rendered by the Warrant Agent in
the performance of its duties under this Agreement, to reimburse
the Warrant Agent for all expenses, taxes and governmental charges
and other charges of any kind and nature reasonably incurred by
the Warrant Agent in the performance of its duties under this
Agreement including its reasonable expenses and counsel fees.
The Company also agrees to indemnify the Warrant Agent and save
it harmless against any and all losses, liabilities, including
judgments, costs and reasonable counsel fees, for any action
taken, suffered or omitted by the Warrant Agent in the
performance of its duties under this Agreement except as a result
of the Warrant Agent's gross negligence or willful misconduct.
The indemnity provided herein shall survive the termination of
this Agreement and the termination and expiration of the
Warrants. The costs and expenses incurred in enforcing this
right of indemnification shall be paid by the Company. Anything
to the contrary notwithstanding, in no event shall the Warrant
Agent be liable for special, punitive, indirect, consequential
or incidental loss or damage of any kind whatsoever (including
lost profits), even if the Warrant Agent has been advised of the
likelihood of such loss or damage. Any liability of the Warrant
Agent under this Agreement, except in the event of the Warrant
Agent's gross negligence or willful misconduct, will be limited
to the amount of fees paid by the Company to the Warrant Agent.
17.7 No Action Without Assurance of Reimbursement.
The Warrant Agent may, but shall be under no obligation to
institute any action, suit or legal proceeding or to take any
other action likely to involve expense unless the Company or one
or more Holders shall furnish the Warrant Agent with reasonable
security and indemnity for any costs and expenses which may be
incurred. All rights or action under this Agreement or under any
of the Warrants may be enforced by the Warrant Agent without the
possession of any of the Warrants or the production thereof at
any trial or other proceeding relative thereto, and any such
action, suit or proceeding instituted by the Warrant Agent shall
be brought in its name as Warrant Agent, and any recovery of
judgment shall be for the ratable benefit of the Holders, as
their respective rights or interests may appear.
17.8 Conflicts of Interest. The Warrant Agent and any
stockholder, director, officer or employee of the Warrant Agent
may buy, sell or deal in any of the Warrants or other securities
of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract
with or lend money to the Company or otherwise act as fully and
freely as though it were not Warrant Agent under this Agreement.
Nothing herein shall preclude the Warrant Agent from acting in
any other capacity for the Company or for any other legal entity.
17.9 Solely as Agent. The Warrant Agent shall act
hereunder solely as agent, and its duties shall be determined
solely by the provisions hereof. The Warrant Agent shall not be
liable for anything that it may do or refrain from doing in
connection with this Agreement except for its own gross negligence
or willful misconduct.
17.10 Reliance on Documents. The Warrant Agent will
not incur any liability or responsibility to the Company or to
any Holder of any Warrant for any action taken in reliance on
any notice, resolution, waiver, consent, order, certificate, or
other paper, document or instrument reasonably believed by it to
be genuine and to have been signed, sent or presented by the
proper party or parties.
17.11 No Representation Regarding Validity, Etc. The
Warrant Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery
hereof (except the due execution and delivery hereof by the
Warrant Agent) or in respect of the validity or execution of
any Warrant (except its countersignature thereof); nor shall
the Warrant Agent by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation
of any Warrant Shares (or other stock) to be issued pursuant to
this Agreement or any Warrant, or as to whether any Warrant
Shares (or other stock) will when issued be validly issued,
fully paid and nonassessable, or as to the Exercise Price or
the number or amount of Warrant Shares or other securities or
other property issuable upon exercise of any Warrant.
17.12 Instructions from Company. The Warrant Agent
is hereby authorized and directed to accept instructions with
respect to the performance of its duties hereunder from the
Chairman of the Board, the President, any Vice President,
the Chief Financial Officer or the Secretary of the Company,
and to apply to such officers for advice or instructions in
connection with its duties, and shall not be liable for any
action taken, suffered or omitted to be taken by it in good
faith in accordance with instructions of any such Officers.
17.13 Warrant Agent Not Required to Expend Funds. No
provision of this Agreement shall require the Warrant Agent to
expend or risk its own funds or otherwise incur any financial
liability in the performance of its duties hereunder or in the
exercise of its rights if it believes that repayment of such
funds or adequate indemnification against such risk or liability
is not reasonably assured to it.
SECTION 18. Change of Warrant Agent.
The Warrant Agent may resign and be discharged from its
duties under this Agreement by giving to the Company 60 days'
notice in writing. The Warrant Agent may be removed by like
notice to the Warrant Agent from the Company. If the Warrant
Agent shall resign or be removed or shall otherwise become
incapable of acting, the Company shall appoint a successor to the
Warrant Agent. If the Company shall fail to make such
appointment within a period of 50 days after such notice of
removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated
Warrant Agent or by any Holder (who shall with such notice submit
his Warrant for inspection by the Company), then the resigning,
discharged or removed Warrant Agent or any Holder may apply to
any court of competent jurisdiction for the appointment of a
successor to the Warrant Agent. Any successor warrant agent,
whether appointed by the Company or such court, shall be (a) an
entity, in good standing, organized and doing business under the
laws of the United States of America or any state thereof and
having at the time of its appointment as warrant agent a combined
capital and surplus of at least $50,000,000, as set forth in its
most recent published annual report of condition or (b) an
affiliate of an entity described in clause (a) above. After
appointment, the successor warrant agent shall be vested with the
same powers, rights, duties and responsibilities as if it had
been originally named as Warrant Agent hereunder without further
act or deed; but the former Warrant Agent shall deliver and
transfer to the successor warrant agent any property at the time
held by it hereunder, and shall execute and deliver any further
assurance, conveyance, act or deed reasonably requested and
necessary for such purpose. In the event of such resignation or
removal, the successor warrant agent shall mail, by first-class
mail, postage prepaid, to each Holder, written notice of such
removal or resignation and the name and address of such successor
warrant agent. Failure to file any notice provided for in this
Section 18, however, or any defect therein, shall not affect the
legality or validity of the resignation or removal of the Warrant
Agent or the appointment of the successor warrant agent, as the
case may be.
SECTION 19. Identity of Transfer Agent.
Forthwith upon the appointment of any subsequent
Transfer Agent for the Company's shares of Common Stock, or any
other shares of the Company's capital stock issuable upon the
exercise of the rights of purchase represented by the Warrants,
the Company will file with the Warrant Agent a statement setting
forth the name and address of such Transfer Agent.
SECTION 20. Notices.
Any notice pursuant to this Agreement by the Company or
by the Holder of any Warrant to the Warrant Agent, or by the
Warrant Agent or by the Holder of any Warrant to the Company,
shall be in writing and shall be deemed to have been duly given
if delivered or mailed by certified mail, return receipt
requested, (a) if to the Company, to The MacNeal-Schwendler
Corporation, 815 Colorado Boulevard, Los Angeles, California
90041, Attention: Louis A. Greco and, (b) if to the Warrant
Agent, for so long as The MacNeal-Schwendler Corporation is
acting as Warrant Agent, to the address provided above for the
Company. Each party hereto may from time to time change the
address to which notices to it are to be delivered or mailed
hereunder by notice in writing to the other party.
Any notice mailed pursuant to this Agreement by the
Company or the Warrant Agent to the Holders of Warrants shall be
in writing and shall be deemed to have been duly given if mailed
by first-class mail, postage prepaid, to such Holders at their
respective addresses on the Warrant Register of the Warrant
Agent.
SECTION 21. Supplements and Amendments.
The Company and the Warrant Agent may from time to time
supplement or amend this Agreement, without the approval of any
Holder in order to cure any ambiguity or to correct or supplement
any provision contained herein that may be defective or
inconsistent with any other provisions herein, or to make any
other provisions with regard to matters or questions arising
hereunder that the Company and the Warrant Agent may deem
necessary or desirable and that shall not adversely affect the
interests of the Holders of Warrants.
In addition to the foregoing, with the consent of
Holders of Warrants entitled, upon exercise thereof, to receive
not less than a majority of the Warrant Shares issuable
thereunder, the Company and the Warrant Agent may modify this
Agreement for the purpose of adding any provisions to or changing
in any manner or eliminating any of the provisions of this
Agreement or modifying in any manner the rights of the Holders of
the Warrants; provided, however, that (a) no modification of the
terms (including, but not limited to the adjustments described in
Section 11) upon which the Warrants are exercisable or reducing
the percentage required for consent to modification of this
Agreement, no acceleration of the Expiration Date and no increase
in the Exercise Price may, in each case, be made without the
consent of the Holder of each outstanding Warrant affected
thereby, and (b) notwithstanding anything to the contrary
contained herein, the Warrant Agent may, but shall not be
required to, enter into a supplement or amendment that affects
the Warrant Agent's duties, obligations or immunities under this
Agreement.
SECTION 22. Successors.
All the covenants and provisions of this Agreement by
or for the benefit of the Company or the Warrant Agent shall bind
and inure to the benefit of their respective successors and
assigns hereunder.
SECTION 23. Merger or Consolidation of the Company.
The Company will not merge or consolidate with or into
any other corporation unless the corporation resulting from such
merger or consolidation (if not the Company) shall expressly
assume, by supplemental agreement satisfactory in form to the
Warrant Agent in the exercise of its reasonable judgment and
executed and delivered to the Warrant Agent, the due and punctual
performance and observance of each and every covenant and
condition of this Agreement to be performed and observed by the
Company.
SECTION 24. Applicable Law.
This Agreement and each Warrant issued hereunder shall
be deemed to be a contract made under the internal laws of the
State of California (without preference to conflicts of law
principles) and for all purposes shall be construed in accordance
with the laws of said State; except that all provisions regarding
the rights, duties and obligations of the Warrant Agent shall be
governed and construed in accordance with the laws of the State
of New York applicable to contracts made and to be performed
entirely within such State.
SECTION 25. Benefits of this Agreement.
Nothing in this Agreement shall be construed to give to
any person or corporation other than the Company, the Warrant
Agent and the Holders of the Warrants any legal or equitable
right, remedy or claim under this Agreement; and this Agreement
shall be for the sole and exclusive benefit of the Company, the
Warrant Agent, and their respective successors and assigns
hereunder, and the holders from time to time of the Warrants.
SECTION 26. Counterparts.
This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes
be deemed to be an original, and all such counterparts shall
together constitute but one and the same instrument.
SECTION 27. Captions.
The captions of the Sections and subsections of this
Agreement have been inserted for convenience only and shall have
no substantive effect.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above
written.
THE MACNEAL-SCHWENDLER CORPORATION
By /s/ Frank Perna, Jr.
--------------------------------
Title: Chief Executive Officer
Attest:
/s/ Louis A. Greco
- ---------------------------
Title: Chief Financial Officer
and Secretary
THE MACNEAL-SCHWENDLER CORPORATION,
as
Warrant Agent
By /s/ Frank Perna, Jr.
--------------------------------
Title: Chief Executive Officer
Attest:
/s/ Louis A. Greco
- ------------------------------
Title: Chief Financial Officer
And Secretary
<PAGE>
Exhibit 4.3
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement")
is made and entered into as of June 18, 1999, between The MacNeal-
Schwendler Corporation, a Delaware corporation ("MSC"), Dendron
Technology B.V., a Dutch corporation, and Fronos Technology B.V.,
a Dutch corporation (together the "NI Subs").
RECITALS
WHEREAS, MSC has entered into that certain Stock
Purchase Agreement, dated as of May 26, 1999 (the "Stock Purchase
Agreement"; all capitalized terms used herein and not otherwise
defined shall have the meanings given to such terms in the Stock
Purchase Agreement) with the NI Subs;
WHEREAS, pursuant to the Stock Purchase Agreement MSC
has agreed to issue to the NI Subs on the Closing Date (i)
subordinated promissory notes in an aggregate principal amount of
$11,000,000 with a term to full maturity of ten (10) years, (ii)
subordinated promissory notes in an aggregate principal amount of
$3,236,012 with a term to maturity of two (2) years (together the
"Notes"), and (iii) five year warrants for the purchase of
1,400,00 shares of common stock of MSC at an exercise price of
$10.00 per share (the "Warrants");
WHEREAS, the issuance of the Notes and Warrants has not
been registered under the Securities Act and the Notes and
Warrants are subject to restrictions on resale or other
disposition;
WHEREAS, MSC desires to grant, and the NI Subs desire
to accept, the registration rights set forth in this Agreement in
respect of the Securities, as defined herein; and
WHEREAS, execution and delivery of this Agreement by
the parties hereto is a condition precedent to the closing of the
Stock Purchase Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises
contained herein and intending to be legally bound the parties
agree as follows:
SECTION 1. Definitions.
As used in this Agreement, the following terms shall
have the following respective meanings:
"Holder" means the NI Subs and any transferee or
assignee as permitted under Section 8 hereof.
"Securities" means the Notes and Warrants issued to the
NI Subs pursuant to the Stock Purchase Agreement and the shares
of common stock of MSC purchasable upon exercise of the Warrants.
As to any particular Securities, once issued such securities
shall cease to be Securities when (A) a registration statement
with respect to the sale of such securities shall have become
effective under the Securities Act and such securities shall have
been disposed of in accordance with such registration statement,
(B) such securities shall have been sold in accordance with Rule
144 (or any successor provision) under the Securities Act, (C)
such securities are eligible to be resold pursuant to Rule 144(k)
or (D) such securities have been transferred to a person who is
not a Holder.
The terms "register," "registered" and "registration"
refer to the preparation and filing with the SEC of a
registration statement or similar document in compliance with the
Securities Act and the declaration or ordering of the
effectiveness of such registration statement or document.
"Registration Expenses" means all expenses, except
Selling Expenses, incurred by MSC while complying with Section 2
of this Agreement. Registration Expenses shall include, without
limitation, all registration and filing fees and other
qualification fees, blue sky fees, printing expenses and fees and
disbursements of MSC's accountants and legal counsel incurred in
any registration pursuant to Section 2.
"SEC" means the United States Securities and Exchange
Commission or any successor agency.
"Securities Act" means the Securities Act of 1933, as
amended from time to time, and any successor statute.
"Selling Expenses" means all underwriting discounts,
selling commissions, stock transfer taxes relating to any
Holder's registered securities and any fees and disbursements of
counsel, accountants or other agents for any Holder.
"Stock Purchase Agreement" shall have the meaning given
in the recitals hereof.
SECTION 2. Registration.
(a) Registration Statement. Within 120 days from the
date of this Agreement, MSC will file a registration statement on
Form S-3 (if available) with the SEC covering the resale of the
Securities from time to time in unsolicited broker's transactions
including only usual and customary brokers' commissions.
(b) Notice of Effectiveness. Promptly upon
declaration of effectiveness by the SEC of a registration
statement filed pursuant to this Agreement, MSC shall give
written notice thereof to each Holder whose Securities are
included in such registration statement.
(c) Blackout Periods. Following the effective date of
any registration statement filed pursuant to this Section 2, MSC
shall be entitled, from time to time, to notify the Holders to
discontinue offers or sales of Securities pursuant to such
registration statement for the period of time stated in such
notice, up to a maximum of sixty (60) consecutive days (such
notice being a "Blackout Notice"), if MSC determines, in its
reasonable business judgment, that such offers and sales would
materially interfere with any financing, acquisition, corporate
reorganization, securities offering or other material
transaction, or if there has been any development, event,
occurrence or change in circumstances which MSC would not be
required to disclose at such time other than in connection with a
registration statement, involving MSC or any of its subsidiaries,
taken as a whole. Such notice shall be signed by an authorized
officer of MSC. Each Holder agrees that upon receipt of a
Blackout Notice such Holder shall discontinue offers or sales of
Securities pursuant to any such registration statement for the
period of time stated in the Blackout Notice and the time period
set forth in subsection 2(d) shall be tolled during such period.
MSC may issue any number of Blackout Notices and such notices may
be given consecutively.
(d) Effectiveness of Registration Statements. MSC
shall cause any registration statement filed pursuant to this
Section 2 to remain effective for at least two years after it is
declared or ordered effective or until the Holders have completed
the distribution described therein, whichever first occurs;
provided, however, that in no event will MSC be required to
prepare or file audited financial statements with respect to any
fiscal year by a date prior to the date on which MSC would be so
required to prepare and file such audited financial statements if
such registration statement were no longer effective and usable.
(e) Holdback Agreement. In the event of any filing of
a prospectus supplement or the commencement of an underwritten
public distribution of any securities issued by MSC under a
registration statement, whether or not the Securities are
included, each Holder agrees not to effect any public sale or
distribution of the Securities (except as part of such
underwritten public distribution), including a sale pursuant to
Rule 144 or Rule 144A under the Securities Act, during a period
designated by MSC in a written notice duly given to Holders,
which period shall commence approximately fourteen (14) days
prior to the effective date of any such filing of such prospectus
supplement or the commencement of such underwritten public
distribution of such MSC securities under a registration
statement and shall continue for up to ninety (90) consecutive
days after such effective date or commencement.
SECTION 3. Expenses of Registration.
MSC shall bear the Registration Expenses arising out of
the registration described in Section 2 hereof; provided,
however, that all Selling Expenses relating to the registered
securities of any Holder shall be borne by Holder and MSC shall
have no liability therefor.
SECTION 4. Registration Procedures.
For the registration carried out by MSC pursuant to
this Agreement, MSC shall give each Holder written notice of the
initiation of such registration and MSC will:
(a) provide to each Holder participating in such
registration a reasonable number of copies of the registration
statement, preliminary prospectus, final prospectus and any other
documents as may reasonably be necessary to facilitate a public
offering;
(b) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to keep such
registration statement effective and to comply with the
provisions of the Securities Act with respect to the disposition
of all Securities covered by such registration statement during
the effectiveness of such registration statement;
(c) use its best efforts to register or qualify all
Securities covered by such registration statement under the
securities or blue sky laws of such states as each Holder shall
reasonably request, except that MSC shall not for any such
purpose be required to qualify generally to do business as a
foreign corporation in any jurisdiction wherein it is not so
qualified, or to subject itself to taxation in any such
jurisdiction or to consent generally to service of process in any
such jurisdiction; and
(d) immediately notify each Holder of Securities
covered by such registration statement, at any time when a
prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event as a result of
which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact
or omits to state any material fact required to be stated therein
or necessary to make the statements therein not misleading in
light of the circumstances then existing, and at the request of
any such Holder prepare and furnish to such Holder a reasonable
number of copies of a supplement to or an amendment of such
prospectus as may be necessary so that, as thereafter delivered
to the purchasers of such Securities, such prospectus shall not
include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make
the statements therein not misleading in light of the
circumstances then existing.
SECTION 5. Information by Holder.
Each Holder of Securities participating in any
registration shall provide MSC, when requested, with written
information regarding itself, its ownership of securities issued
by MSC and such other information as may be necessary or
desirable in connection with such registration. Such writing
shall expressly state that it is being furnished to MSC for use
in the preparation of a registration statement, preliminary
prospectus, supplementary prospectus, final prospectus or
amendment or supplement thereto, as the case may be. Each Holder
agrees, by its acquisition of Securities and its acceptance of
the benefits provided to it hereunder, to furnish promptly to MSC
all information required to be disclosed in order to make any
previously furnished information not misleading.
SECTION 6. Delay of Registration.
No Holder shall obtain or seek an injunction
restraining or otherwise delaying any registration referred to in
this Agreement as a result of any controversy arising out of the
interpretation or implementation of this Agreement.
SECTION 7. Indemnification.
(a) MSC will indemnify each Holder of Securities
covered by any such registration statement, its officers,
directors and partners and each person who controls such Holder
within the meaning of Section 15 of the Securities Act against
all reasonable expenses, claims, losses, damages and liabilities
(or actions in respect thereof), including any of the foregoing
incurred in the defense and settlement of any litigation, arising
out of or based upon any untrue statement (or alleged untrue
statement) of a material fact contained in any registration
statement, prospectus or documents incorporated by reference
therein, or based upon any omission (or alleged omission) of a
material fact required to be stated therein or necessary to make
the statements therein not misleading, and including any of the
foregoing incurred or arising out of any violation by MSC of the
Securities Act or any rule or regulation promulgated under the
Securities Act; provided, however, that MSC will not be under an
obligation to indemnify any of them (i) if any of the foregoing
are based upon any untrue statement or omission or alleged untrue
statement or omission made in reliance upon information furnished
to MSC by any Holder or (ii) to the extent that any such loss,
claim, damage, liability (or action or proceeding in respect
thereof) or expense arises out of any Holder's failure to send or
give a copy of the final prospectus or supplement to the persons
asserting an untrue statement or alleged untrue statement or
omission or alleged omission at or prior to the written
confirmation of the sale of Securities to such person if such
statement or omission was corrected in such final prospectus or
supplement; provided further, that the indemnity agreements
contained in this subsection shall not apply to amounts paid in
any settlement if such settlement is effected without the consent
of MSC.
(b) Each Holder participating in a registration
pursuant to this Agreement will indemnify MSC, its directors and
officers, each person who controls MSC within the meaning of
Section 15 of the Securities Act, and each other Holder and each
of its officers and directors and each person controlling such
Holder within the meaning of Section 15 of the Securities Act,
against all reasonable expenses, claims, losses, damages and
liabilities incurred and actions arising out of any untrue
statement (or alleged untrue statement) of a material fact
contained in any registration statement and any documents related
thereto or based upon any omission (or alleged omission) of a
material fact required to be stated therein or necessary to make
the statements therein not misleading, and including any of the
foregoing incurred or arising out of the violation by any such
Holder of the Securities Act or any rule or regulation
promulgated thereunder; provided, however, that such Holder will
only be obligated to indemnify any of them for any of the
foregoing based upon a material misstatement or an omission
(alleged or otherwise) made in reliance upon information
furnished to MSC in writing by such Holder.
(c) Each party entitled to indemnification under this
Section 7 ("Indemnified Party") shall give prompt notice to the
party required to provide indemnification ("Indemnifying Party")
as soon as Indemnified Party has actual knowledge of any claim
for which indemnify may be sought, and shall permit Indemnifying
Party to assume and control the defense of any such claim or any
litigation resulting therefrom, provided that Indemnified Party
will have the right to approve (whose approval shall not be
unreasonably withheld) of the counsel chosen by Indemnifying
Party to defend such claim or litigation, and provided that
Indemnified Party may participate in such defense at Indemnified
Party's expense. The failure of any Indemnified Party to give
notice of a claim subject to indemnification shall not relieve
Indemnifying Party of its obligations under this Agreement unless
the failure to give such notice is materially prejudicial to
Indemnifying Party's ability to defend such claim. Indemnifying
Party shall not assume the defense for matters as to which there
is a conflict of interest or separate and different defense. In
defending such claim, Indemnifying Party shall not, without the
prior written consent of Indemnified Party, consent to the entry
of any judgment or enter into any settlement which does not
include an unconditional provision releasing Indemnified Party
from all liability in respect to such claim or litigation.
(d) The obligations of MSC and Holders under this
Section 7 shall survive the completion of any offering of
Securities in a registration statement under this Agreement, and
otherwise.
SECTION 8. Transfer of Registration Rights.
Any Holder's rights under Section 2 hereof may not be
assigned or transferred except to Nearchos Irinarchos or an
affiliate thereof.
SECTION 9. Amendment of Registration Rights.
Any provision of this Agreement may be amended and the
observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively),
only with the written consent of MSC and Holders of a majority of
the Securities then outstanding. Any amendment or waiver
effected in accordance with this Section 9 shall be binding upon
each Holder, each transferee or assignee of Holder pursuant to
Section 8 of this Agreement.
SECTION 10. Rule 144.
MSC covenants that it will file, on a timely basis, all
reports required to be filed by it under the Securities Exchange
Act of 1934, and it will take such further action and provide
such documents as any Holder of Securities may request, all to
the extent required from time to time to enable the Holders to
sell Securities without registration under the Securities Act
within the limitation of the conditions provided by (a) Rule 144
under the Securities Act, as such rule may be amended from time
to time, or (b) any similar rule or regulation hereafter adopted
by the SEC. Upon the request of the Holders, MSC will deliver to
the Holders a written statement verifying that it has complied
with such information and requirements.
SECTION 11. Notices.
All notices, requests, consents and other
communications hereunder shall be in writing and shall be deemed
to have been made (i) when delivered personally or by telecopier,
(ii) if to a party in the same country as the mailing party, when
mailed first class registered or certified mail, postage prepaid,
or (iii) if to a party in a different country from the sending
party, on the second day following deposit with a reputable
commercial air courier, charges prepaid, to each respective party
as shown below:
(a) If to the Holders of Securities, to the addresses
shown on the signature page(s) hereto, with a copy to:
Graham & James
600 Hansen Way
Palo Alto, California 94304
Attention: Joe C. Sorenson, Esq.
Telecopier: (650) 856-3619
(b) If to MSC to:
The MacNeal-Schwendler Corporation
815 Colorado Boulevard
Los Angeles, CA 90041
Attention: Louis Greco
Telecopier: (323) 259-4969
with a copy to:
O'Melveny & Myers LLP
1999 Avenue of the Stars, 7th Floor
Los Angeles, California 90067
Attention: D. Stephen Antion, Esq.
Telecopier: (310) 246-6779
SECTION 12. Parties in Interest.
This Agreement shall be binding upon and inure to the
benefit of each party, and nothing in this Agreement, express or
implied, is intended to confer upon any other person any rights
or remedies of any nature whatsoever under or by reason of this
Agreement. Nothing in this Agreement is intended to relieve or
discharge the obligation of any third person to any party to this
Agreement.
SECTION 13. Counterparts.
This Agreement may be executed in any number of
counterparts and by different parties in separate counterparts,
each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same
agreement.
SECTION 14. Headings.
The headings in this Agreement are for convenience only
and shall not limit or otherwise affect the meaning hereof.
SECTION 15. Governing Law.
This Agreement shall be governed by and construed in
accordance with the laws of the State of California, without
regard to principles of conflict of law.
SECTION 16. Attorney's Fees.
In the event of any action, complaint, petition or
other proceeding ("Action") by any party arising under or out of,
in connection with or in respect of, this Agreement, the
prevailing party shall be entitled to reasonable attorney's fees,
costs and expenses incurred in such Action. Attorney's fees
incurred in enforcing any judgment in respect of this Agreement
are recoverable as a separate item. The parties intend that the
preceding sentences be severable from the other provisions of
this Agreement, survive any judgement and, to the maximum extent
permitted by law, not be deemed merged into such judgment.
SECTION 17. Severability.
In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance,
is held invalid, illegal or unenforceable, the validity, legality
and enforceability of any such provision in every other respect
and of the remaining provisions contained herein shall not be
affected or impaired thereby.
SECTION 18. Entire Agreement.
This Agreement, together with the Stock Purchase
Agreement and the other agreements of MSC and the NI Subs of even
date herewith, contains the entire understanding of the parties
with respect to the subject matter of this Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first written above.
THE MACNEAL-SCHWENDLER CORPORATION
By: /s/ Frank Perna, Jr.
-----------------------------
Its: Chief Executive Officer
-----------------------------
DENDRON TECHNOLOGY B.V.
By: /s/ Nearchos Irinarchos
-----------------------------
Its: General Manager
-----------------------------
Notice Address:
c/o Nearchos Irinarchos
-----------------------
Vikavagen 9
-----------------------
S-167 71 Bromma, Sweden
-----------------------
FRONOS TECHNOLOGY B.V.
By: /s/ Nearchos Irinarchos
-----------------------------
Its: General Manager
-----------------------------
Notice Address:
c/o Nearchos Irinarchos
-----------------------
Vikavagen 9
-----------------------
S-167 71 Bromma, Sweden
-----------------------
Exhibit 99.1
The MacNeal-Schwendler Corporation Changes Name to
MSC.Software Corporation
Stockholders officially approve new name at annual
stockholders' meeting
Pasadena, Calif., June 23, 1999 - (NYSE: MNS) During its
annual meeting here today, the stockholders of The MacNeal-
Schwendler Corporation, the world's leading developer of
simulation software, approved the change of the Company's
name to MSC.Software Corporation. This approval completes a
process initiated in March, together with a new logo, to
clarify and define MSC's position in the software universe.
"This name change confirms MSC's position in an ever-growing
market; to be a major participant in the fast-paced software
development industry, while building on our 35-year
accomplishment of delivering top performing software
products," said Frank Perna, Jr., chairman and CEO,
MSC.Software. "Every change reflects MSC's investment and
commitment to clarity and speed for growth and success. Our
new name is an affirmation of our intention to serve all
facets of the software universe, as they relate to our core
competencies and market leadership."
About MSC.Software
MSC.Software is the world's leading supplier of simulation
software to major manufacturers worldwide. MSC develops,
markets, and supports software tools that simulate the
performance of a product design before manufacture. The
ability to model and test software prototypes has cost
effectively enabled manufacturers to design and build
everything from sophisticated aircraft, space systems
and automobiles to electronic products. For additional
information visit www.mscsoftware.com.
# # #
CONTACT:
Joanne Keates
323.259.4263
[email protected]
Exhibit 99.2
MSC.Software Acquires Universal Analytics, Inc.
Acquisition broadens MSC's worldwide leadership position in
growing simulation market
LOS ANGELES/COSTA MESA, June 24, 1999-(NYSE: MNS)
MSC.Software Corporation (MSC), the world's leading
developer of simulation software, today announced the
acquisition of Universal Analytics, Inc. (UAI), a developer
and distributor of analysis software and services for the
engineering community. UAI's operations, which include
specialized UAI/NASTRAN development technologies and
engineering service capabilities, will be combined with
MSC.Software. This powerful combination will deliver unique
solutions and products to MSC's broadening customer markets.
"The acquisition of UAI is another confirmation of MSC's
growth plan. This outstanding combination allows
MSC.Software to accelerate the MSC.NASTRAN strategic
development plan and strengthens our franchise in the CAE
marketplace. This will provide real growth opportunities
within our traditional business and beyond," said Frank
Perna, Jr., Chairman and CEO of MSC.Software. "Combining
the features of UAI/NASTRAN with MSC.Software products will
provide our current and new customers with new technologies,
new customization capabilities and new software utilities.
MSC.Software's number one market position in simulating
reality advances to a new level of focus and functionality."
"Joining the MSC.Software team gives UAI the opportunity to
deliver specialized technologies to a broader customer base,
which will serve to accelerate the growth of the combined
companies," said Jeffrey Morgan, President of UAI.
UAI, a privately-held company based in Torrance, California,
develops and distributes finite element analysis software
and engineering services to major manufacturers worldwide.
Since its inception in 1972, UAI has grown into a
multinational company with a reputation for high quality
professional services and software products. The acquisition
is not expected to be dilutive to MSC's 1999 earnings,
excluding in-process R&D write-off and other transaction-
related costs.
MSC is the world's leading supplier of simulation software
to major manufacturers worldwide. MSC develops, markets, and
supports software tools that simulate the performance of a
product design before manufacture. The ability to model and
test software prototypes has cost effectively enabled
manufacturers to design and build everything from
sophisticated aircraft and automobiles to electronic
products. For additional information visit
www.mscsoftware.com.
Except for the historical information contained in this
release, certain matters discussed in this news release
constitute forward-looking statements that involve risks and
uncertainties that could cause actual results to differ
materially from those projected. In addition, this news
release contains forward-looking statements regarding the
impact of the acquisition of UAI on MSC's future operating
results and earnings. These statements are based on
management's current expectations and are subject to a
number of factors and uncertainties, which could cause
actual results to differ materially from those described in
the forward-looking statements. Factors that could cause
such results to differ materially from those described in
the forward-looking statements include delays in developing,
completing, or shipping new or enhanced products, the
ability to assimilate UAI's operations into MSC's
operations, foreign currency translations, and other risks
and uncertainties that are detailed in the Company's annual
report on Form 10-K and other reports filed by the Company
with the Securities and Exchange Commission.
# # #
CONTACT: Joanne Keates 323.259.4263 [email protected]
