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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------------
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO
13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO 13d-2(a)
Diehl Graphsoft, Inc.
---------------------
(Name of Issuer)
Common Stock, $0.01 par value
------------------------------
(Title of Class of Securities)
253676308
--------------
(CUSIP Number)
Gerhard Weiss
Nemetschek Aktiengesellshaft
Riedenburger Strasse 2
D-81677 Munich
Germany
49 89 92 793-427
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
COPY TO:
John K. Hughes
Brown & Wood LLP
1666 K Street, N.W.
Washington, D.C. 20006-1208
(202) 533-1300
February 18, 2000
-------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition that is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box |_|.
(Continued on following pages)
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<PAGE>
SCHEDULE 13D
Cusip No. 253676308
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION Nos. OF ABOVE PERSONS (ENTITIES ONLY)
Nemetschek Aktiengesellshaft I.R.S. ID No. _________
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_|
(b) |X|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
WC
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Germany
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
977,411(1)
NUMBER OF ---------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY None
OWNED BY ---------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 977,411(1)
PERSON ---------------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
None
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
977,411(1)
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
|_|
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
32.0%(1)
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
- --------------------------------------------------------------------------------
(1) Of the 977,411 shares of common stock of Diehl Graphsoft, Inc. (the
"Company") covered by this report, 917,011 are purchasable by Nemetschek
Aktiengesellshaft ("Nemetschek") upon exercise of an option (the "Option")
granted to Nemetschek pursuant to the Support/Voting Agreement, dated as of
February 18, 2000 (the "Support Agreement"), by and between Nemetschek and
Richard Diehl (President of the Company), as further described in this
report. Prior to the exercise of the Option, Nemetschek is not entitled to
any rights as a
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<PAGE>
shareholder of the Company as to the shares covered by the Option. The
number of shares of common stock of the Company purchasable by Nemetschek
under the Option will be adjusted if necessary so that the number of shares
purchasable by Nemetschek upon exercise of the Option at the time of its
exercise is equal to 30% of the total outstanding shares of the common
stock of the Company. The Option may only be exercised upon the happening
of certain events, none of which has occurred as of the date hereof. Prior
to such exercise, Nemetschek expressly disclaims beneficial ownership of
the 917,011 shares of common stock of the Company which are purchasable by
Nemetschek upon exercise of the Option. The number of shares indicated
represents approximately 32% of the total outstanding shares, as indicated
in the Company's Form 10-QSB for the quarter ended November 30, 1999, of
the common stock of the Company.
3 of 12
<PAGE>
Item 1. Security and Issuer.
This Schedule 13D relates to the common stock, par value $.01 per share
(the "Common Stock"), of Diehl Graphsoft, Inc. (the "Company"), a Maryland
corporation. The principal executive offices of the Company are located at 10270
Old Columbia Road, Columbia, Maryland 21046.
Item 2. Identity and Background.
This Schedule 13D is being filed by Nemetschek Aktiengesellshaft
("Nemetschek"), a German corporation. Nemetschek is a vendor of information
technology and consulting services for the design, construction and management
of buildings and real estate. The principal offices of Nemetschek are located at
Riedenburger Strasse 2, D-81677 Munich, Germany.
Schedule A hereto sets forth the name, business address, present
principal occupation or employment (including the name, principal business and
address of the corporation or other organization in which such employment is
conducted) and citizenship of each director and executive officer of Nemetschek.
The information set forth in Schedule A hereto is incorporated herein by
reference.
During the past five years, neither Nemetschek nor, to the best of its
knowledge, any of the persons listed on Schedule A attached hereto, has (i) been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or (ii) been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was, or is, subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
On February 18, 2000, Nemetschek, DGI Acquisition Corp., a wholly owned
subsidiary of Nemetschek, and the Company entered into an Agreement and Plan of
Merger (the "Merger Agreement"). The Merger Agreement is attached hereto as
Exhibit 1. As a condition to, and in consideration of, Nemetschek's execution of
the Merger Agreement, Nemetschek and Richard Diehl, President of the Company,
entered into the Support/Voting Agreement, dated as of February 18, 2000 (the
"Support Agreement"). The Support Agreement is attached hereto as Exhibit 2.
Pursuant to the Support Agreement, Richard Diehl, among other things, granted to
Nemetschek an option (the "Option") to purchase, on the terms and conditions
expressed therein and upon the occurrence of certain events, a number of shares
equal to 30% of the Company's outstanding Common Stock, which percentage
currently equates to 917,011 shares of the Common Stock.
If Nemetschek were to exercise the Option, the purchase price for the
shares of Common Stock covered thereby would be the Option price equal to the
greater of (i) the Merger Consideration (as defined in the Merger Agreement) or
(ii) the average trading price of the
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Common Stock during the five day period immediately prior to the exercise of the
Option, which average shall be reduced by 50% of the difference between the
value of the Merger Consideration and such average trading price. If Nemetschek
elects to exercise the Option, it currently anticipates that the funds necessary
to pay the purchase price therefor would be provided by the working capital of
Nemetschek.
The remaining 60,400 shares of Common Stock covered by this report were
purchased for an aggregate purchase price of $454,747, which funds were provided
by the working capital of Nemetschek.
Item 4. Purpose of Transaction.
As noted herein, the Option was granted to Nemetschek in connection
with the execution of the Merger Agreement. Under the Merger Agreement, subject
to certain terms and conditions stated therein (including approval by the
stockholders of the Company), DGI Acquisition Corp. will be merged with and into
the Company, with the Company remaining as the surviving corporation and as a
wholly-owned subsidiary of Nemetschek (the "Merger"). In the Merger, each issued
and outstanding share of the Common Stock, other than those shares owned by
Nemetschek or the Company, shall be converted into the right to receive $9.50
cash.
If the Merger is consummated in accordance with the terms of the Merger
Agreement, the Board of Directors of the Company following the Merger shall
consist of those directors who were directors of DGI Acquisition Corp.
immediately prior to the Merger. The Officers of the Company immediately prior
to the Merger shall continue as the officers of the Company following the
Merger.
The Option can be exercised following the occurrence of a Purchase
Event (as defined in the Support Agreement) provided certain actions are taken.
A Purchase Event has not occurred as of the date hereof. The Option is not
presently exercisable and, accordingly, Nemetschek has no present plan or
proposal to purchase the Common Stock through the exercise of the Option. If the
Option becomes exercisable through the occurrence of a Purchase Event,
Nemetschek will evaluate the facts and circumstances then existing to determine
when, and if, it will purchase any shares of the Common Stock pursuant to the
exercise of the Option.
Under the terms of the Merger Agreement, the Company has agreed to
certain limitations on its ability to declare or pay dividends or make other
distributions without Nemetschek's prior written consent prior to the
consummation of the Merger.
The remaining 60,400 shares of Common Stock were purchased for
investment purposes.
The preceding discussion of the Merger Agreement and the Support
Agreement is qualified in its entirety by the full text of such documents which
are filed as exhibits hereto and are incorporated herein by reference.
5 of 12
<PAGE>
Item 5. Interest in Securities of the Issuer.
Nemetschek may be deemed to be the beneficial owner of 977,411 shares
of the Common Stock, 917,011 of which are represented by the Option. Such shares
represent approximately 32% of the outstanding shares of the Common Stock.
Nemetschek has sole voting and investment power with respect to 60,400 shares of
Common Stock, and if the Option is exercised, will have sole voting and
dispositive power with respect to the shares as well.
Nothing herein shall be deemed to be an admission by Nemetschek as to
the beneficial ownership of 917,011 shares of the Common Stock subject to the
Option, and, prior to exercise of the Option, Nemetschek disclaims beneficial
ownership of all such shares.
Schedule B attached hereto and incorporated herein by reference
provides additional information relating to Nemetschek's ownership of 60,400
shares of Common Stock, which were purchased through open-market transactions.
Except as described herein and on Schedule B attached hereto, neither
Nemetschek nor, to the best of Nemetschek's knowledge, any other person referred
to in Schedule A attached hereto, beneficially owns or has acquired or disposed
of any shares of the Common Stock during the past 60 days.
Item 6. Contracts, Arrangements, Understandings or Relationships With Respect to
Securities of the Issuer.
In connection with the execution of the Merger Agreement, Nemetschek
entered into the Support Agreement with Richard Diehl, pursuant to which Mr.
Diehl has agreed, in his capacity as a stockholder of the Company, (i) not to
transfer, or to allow any person controlled by him to transfer, any of the
shares of the Common Stock without the written consent of Nemetschek and (ii) to
vote or cause to be voted all of the shares of Common Stock over which he or any
of his affiliates has voting power or control in favor of the Merger and the
Merger Agreement, except in each case under certain circumstances specified in
the Support Agreement.
Except for the Merger Agreement and the Support Agreement and as
otherwise described in this Item 6, Nemetschek and none of the persons named on
Schedule A has any contracts, arrangements, understandings or relationships
(legal or otherwise) with any persons with respect to any securities of the
Company.
Item 7. Material to be Filed as Exhibits.
Exhibit 1: Agreement and Plan of Merger, dated as of February 18,
2000, by and among Nemetschek Aktiengesellshaft, DGI
Acquisition Corp., and Diehl Graphsoft, Inc.
Exhibit 2: Support/Voting Agreement, dated as of February 18, 2000,
by and between Richard Diehl and Nemetschek
Aktiengesellshaft.
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<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: February 28, 2000
Nemetschek Aktiengesellshaft
By /s/ Gerhard Weiss
---------------------------------
Name: Gerhard Weiss
Title: CFO
7 of 12
<PAGE>
Schedule A
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the name and present principal
occupation or employment of each director and executive officer of Nemetschek,
as well as the name, principal business and address of such employer. The
principal business address of each person listed below is Riedenburger Strasse
2, D-81677 Munich, Germany. Each person listed below is a citizen of Germany,
except for Ms. Louise Morgan who is a citizen of the United States.
<TABLE>
<CAPTION>
Name Principal Occupation Principal Employer
- ---- -------------------- ------------------
<S> <C> <C>
Jurgen Peters Doctor/Lawyer Peters, Schonberger, Partner
Chairman of the Supervisory Board Schackstr. 2
D-80539 Munich
Germany
Kurt Dobitsch Self-Employed Hochkalterstr. 5
Deputy Chairman of the Supervisory D-85598 Baldham
Board Germany
Ingrid Nemetschek Member of the Supervisory Board Nemetschek AG
Riedenburger Str. 2
D-81677 Munich
Germany
Ralf Nemetschek Doctor THEVA GmbH
Member of the Supervisory Board Hauptstr. lb
D-85386 Eching
Germany
Alexander Nemetschek Self-Employed Poccistr. 13
Member of the Supervisory Board D-80336 Munich
Germany
Clemens Jochum Professor Deutsche Bank AG
Member of the Supervisory Board Technology and Services
Frankfurter Str. 84
D-65760 Eschborn
Germany
Georg Nemetschek President of the Managing Board of Nemetschek AG
Professor Directors and CEO Riedenburger Str. 2
D-81677 Munich
Germany
Jurgen Burtsch Member of the Managing Board and Nemetschek AG
Business Units Riedenburger Str. 2
D-81677 Munich
Germany
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Name Principal Occupation Principal Employer
- ---- -------------------- ------------------
<S> <C> <C>
Uwe Wassermann Member of the Managing Board and Nemetschek AG
Marketing and Sales Riedenburger Str. 2
D-81677 Munich
Germany
Gerhard Weiss Member of the Managing Board and CFO Nemetschek AG
Riedenburger Str. 2
D-81677 Munich
Germany
Thomas Bachmaier Vice President of Research and Nemetschek AG
Development Riedenburger Str. 2
D-81677 Munich
Germany
Wolfgang Ehlert Vice President of Contractor Systems Nemetschek AG
Riedenburger Str. 2
D-81677 Munich
Germany
Volker Grimmeissen Vice President of International Sales Nemetschek AG
Riedenburger Str. 2
D-81677 Munich
Germany
Louise Morgan Vice President of Marketing and Nemetschek AG
Strategic Planning Riedenburger Str. 2
D-81677 Munich
Germany
Stefan Murr Vice President of Domestic Sales Nemetschek AG
Riedenburger Str. 2
D-81677 Munich
Germany
Boris Nalbach Chief Technology Officer Nemetschek AG
Riedenburger Str. 2
D-81677 Munich
Germany
Gunther Wildermuth Vice President of Civil Engineering Nemetschek AG
Riedenburger Str. 2
D-81677 Munich
Germany
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Name Principal Occupation Principal Employer
- ---- -------------------- ------------------
<S> <C> <C>
Harald Linne Vice President of Architecture Nemetschek AG
Riedenburger Str. 2
D-81677 Munich
Germany
Thomas Steinhausen Vice President of Facility and Real Nemetschek AG
Estate Management Riedenburger Str. 2
D-81677 Munich
Germany
Gabor Takacs Vice President of Development Sales Nemetschek AG
Riedenburger Str. 2
D-81677 Munich
Germany
Wolfgang Mundel Vice President of Electronic Nemetschek AG
Document Management Riedenburger Str. 2
D-81677 Munich
Germany
</TABLE>
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<PAGE>
Schedule B
SCHEDULE OF TRANSACTIONS IN THE SHARES
<TABLE>
<CAPTION>
Name Date No. of Shares Price Per Share1
Purchased
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Nemetschek Aktiengesellshaft 2/02/2000 2,000 $5.15
2/02/2000 8,300 5.94
2/04/2000 4,000 6.19
2/08/2000 2,300 6.06
2/11/2000 12,000 6.31
2/15/2000 500 6.31
2/16/2000 3,600 6.31
2/23/2000 20,000 9.19
2/25/2000 7,700 9.228
</TABLE>
- ------------
1. Does not include brokerage commission.
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Exhibit Index
Exhibit Description
- ------- -----------
1 Agreement and Plan of Merger, dated as of February 18, 2000, by
and among Nemetschek Aktiengesellshaft, DGI Acquisition Corp.,
and Diehl Graphsoft, Inc.
2 Support/Voting Agreement, dated as of February 18, 2000, by and
between Richard Diehl and Nemetschek Aktiengesellshaft.
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EXHIBIT 1
AGREEMENT AND PLAN OF MERGER
By and Among
NEMETSCHEK AKTIENGESELLSHAFT,
DGI ACQUISITION CORP.,
and
DIEHL GRAPHSOFT, INC.
Dated as of February 18, 2000
<PAGE>
Table of Contents
<TABLE>
<CAPTION>
Page
----
Article I
DEFINITIONS
<S> <C> <C>
Section 1.01. Terms Defined in this Section...................................................................1
Article II
THE MERGER
Section 2.01. The Merger; Effective Time......................................................................7
Section 2.02. Closing.........................................................................................7
Section 2.03. Effective Time..................................................................................7
Section 2.04. Effect of the Merger............................................................................7
Article III
THE SURVIVING CORPoration
Section 3.01. Name............................................................................................7
Section 3.02. Articles of Incorporation and Bylaws............................................................7
Section 3.03. Officers and Directors..........................................................................8
Section 3.04. Additional Actions..............................................................................8
Article IV
MERGER CONSIDERATION; CONVERSION OR CANCELLATION OF SECURITIES
Section 4.01. Merger Consideration............................................................................8
Section 4.02. Payment.........................................................................................9
Section 4.03. Closing of the Company's Transfer Books........................................................10
Section 4.04. No Splits, Etc.................................................................................10
Section 4.05. Treatment of Options...........................................................................11
Section 4.06. Lost, Stolen or Destroyed Certificates.........................................................11
Section 4.07. Dissenting Shares..............................................................................11
Article V
REPRESENTATIONS AND WARRANTIES OF the Company
Section 5.01. Organization...................................................................................11
Section 5.02. Authorization; Enforceability..................................................................12
Section 5.03. Conflicts......................................................................................12
Section 5.04. Consents and Approvals.........................................................................12
Section 5.05. Anti-takeover Provisions Inapplicable..........................................................13
Section 5.06. Capitalization.................................................................................13
Section 5.07. Subsidiaries. .................................................................................13
Section 5.08. Financial Statements; No Material Adverse Change...............................................14
Section 5.09. SEC Reports....................................................................................15
Section 5.10. Compliance with Laws; Permits..................................................................15
</TABLE>
i
<PAGE>
<TABLE>
<S> <C> <C>
Section 5.11. Litigation.....................................................................................15
Section 5.12. Compensation and Employee Matters..............................................................16
Section 5.13. Employee Benefit Plans; Labor Matters..........................................................16
Section 5.14. Tax Matters....................................................................................18
Section 5.15. Real Property Owned or Leased..................................................................19
Section 5.16. Undisclosed Liabilities........................................................................19
Section 5.17. Absence of Certain Changes or Events...........................................................19
Section 5.18. Assets.........................................................................................20
Section 5.19. Books and Records. ............................................................................21
Section 5.20. Proxy Statement................................................................................21
Section 5.21. Brokers and Finders............................................................................21
Section 5.22. Full Disclosure................................................................................21
Section 5.23. Environmental Matters..........................................................................22
Section 5.24. Insurance Disclosure...........................................................................22
Section 5.25. Year 2000 Compliance...........................................................................23
Section 5.26. Material Agreements............................................................................23
Section 5.27. Intellectual Property..........................................................................23
Section 5.28. Absence of Certain Business Practices..........................................................25
Section 5.29. Affiliate Transactions.........................................................................26
Article VI
REPRESENTATIONS AND WARRANTIES OF NEMETSCHEK AND ACQUISITION
Section 6.01. Organization...................................................................................26
Section 6.02. Authorization; Enforceability..................................................................26
Section 6.03. Conflicts......................................................................................27
Section 6.04. Consents and Approvals.........................................................................27
Section 6.05. Anti-takeover Provisions Inapplicable..........................................................27
Section 6.06. No Prior Activities; Assets of Acquisition.....................................................27
Section 6.07. Compliance with Laws...........................................................................27
Section 6.08. Litigation.....................................................................................28
Section 6.09. Proxy Statement................................................................................28
Section 6.10. Financing......................................................................................28
Section 6.11. Brokers and Finders. ..........................................................................28
Article VII
COVENANTS AND AGREEMENTS OF THE PARTIES
Section 7.01. Conduct of the Business........................................................................29
Section 7.02. Officers and Employees.........................................................................31
Section 7.03. Meeting of Stockholders........................................................................32
Section 7.04. Proxy Materials................................................................................32
Section 7.05. Filings; Other Action..........................................................................32
Section 7.06. Access to Information..........................................................................33
Section 7.07. Intellectual Property Rights...................................................................33
Section 7.08. Notice of Certain Events.......................................................................33
Section 7.09. Certain Actions. ..............................................................................34
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C> <C>
Section 7.10. Current Information............................................................................35
Section 7.11. Indemnification................................................................................35
Section 7.12. Stock Transfer Agreement.......................................................................36
Article VIII
CONDITIONS TO THE MERGERS
Section 8.01. Conditions to Each Party's Obligations.........................................................36
Section 8.02. Additional Conditions to Obligation of Nemetschek and Acquisition..............................37
Section 8.03. Additional Conditions to Obligation of the Company.............................................39
Article IX
TERMINATION
Section 9.01. Termination....................................................................................40
Section 9.02. Notice.........................................................................................41
Section 9.03. Effect of Termination..........................................................................41
Section 9.04. Termination Fee................................................................................41
Article X
GENERAL PROVISIONS
Section 10.01. Expenses.......................................................................................42
Section 10.02. Notices, Etc...................................................................................42
Section 10.03. Binding Effect; No Assignment..................................................................43
Section 10.04. Entire Agreement...............................................................................43
Section 10.05. Remedies Cumulative; Specific Performance......................................................43
Section 10.06. Waiver.........................................................................................43
Section 10.07. No Third-Party Beneficiaries...................................................................44
Section 10.08. Governing Law..................................................................................44
Section 10.09. Section Headings; Interpretation...............................................................44
Section 10.10. Severability...................................................................................44
Section 10.11. Amendment......................................................................................44
Section 10.12. Further Assurances.............................................................................45
Section 10.13. Public Announcements...........................................................................45
Section 10.14. Exhibits and Schedules.........................................................................45
Section 10.15. Counterparts...................................................................................45
Section 10.16. Non-Survival of Representations and Warranties.................................................45
</TABLE>
EXHIBITS
Exhibit A: Employment Agreement
Exhibit B: Escrow Agreement
Exhibit C: Support Agreement
SCHEDULES
Schedule 5.07 Subsidiaries
Schedule 5.13: Employee Benefit Plans
iii
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Schedule 5.14: Tax Matters
Schedule 5.15: Real Property
Schedule 5.16: Undisclosed Liabilities
Schedule 5.17: Absence of Certain Changes
Schedule 5.18: Assets
Schedule 5.23: Environmental
Schedule 5.26: Material Agreements
Schedule 5.27: Intellectual Properties
Schedule 5.29: Affiliate Transactions
iv
<PAGE>
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement") is dated as of
February 18, 2000 and is by and between NEMETSCHEK AKTIENGESELLSHAFT, a German
corporation ("Nemetschek"), DGI ACQUISITION CORP., a Maryland corporation
("Acquisition"), and DIEHL GRAPHSOFT, INC., a Maryland corporation ("the
Company").
RECITALS
WHEREAS, the respective Board of Directors of each of Nemetschek,
Acquisition, and the Company has determined that it is in the best interests of
Nemetschek, Acquisition and the Company and their respective stockholders for
Acquisition and the Company to merge pursuant to applicable law, with the
Company being the surviving entity; and
WHEREAS, Nemetschek, Acquisition, and the Company desire to make
certain representations, warranties, covenants, and agreements in connection
with the Merger.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements contained herein, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties to this Agreement, intending to be legally bound,
agree as follows:
ARTICLE I
DEFINITIONS
Terms Defined in this Section. As used in this Agreement, the following
terms shall have the respective meanings set forth below:
"Acquisition" shall have the meaning set forth in the Preamble.
"Acquisition Proposal" shall have the meaning set forth in Section
7.09(a).
"Affiliate" shall have the meaning set forth in Rule 12b-2 under the
Exchange Act.
"Agreement" shall have the meaning set forth in the Preamble.
"Articles of Merger" shall mean the articles of merger with respect to
the Merger containing the provisions required by, and executed in accordance
with, MGCL Sections 3-107 and 3-109."
"Authorization" shall mean any consent, approval or authorization of,
expiration or termination of any waiting period requirement (including pursuant
to the HSR Act) by, or filing, registration, qualification, declaration or
designation with, any Governmental Authority.
"Business Combination" shall have the meaning set forth in Section
4.04.
<PAGE>
"Business Day" shall mean any day, other than a Saturday or Sunday,
that is neither a legal holiday nor a day on which banking institutions are
authorized or required by law, regulation or executive order to close in The
Federal Republic of Germany or in the State of Maryland.
"Company Permits" shall have the meaning set forth in Section 5.10
"Company Common Stock" shall mean the common stock, par value $0.01 per
share, of the Company.
"Company Stockholders" shall mean the stockholders of Company Common
Stock.
"Closing" shall mean the closing of the Merger.
"Closing Date" shall mean the date on which the Closing occurs.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Company" shall have the meaning set forth in the Preamble.
"Company Option Plan" shall have the meaning set forth in Section 5.06.
"Disclosure Schedule" shall mean the schedule executed and delivered by
the Company and Nemetschek and Acquisition concurrently with the execution
hereof and that sets forth exceptions to the representations and warranties
contained herein and contains certain other information required hereby.
"Disbursing Agent" shall have the meaning set forth in Section 4.02.
"Dissenting Shares" shall mean shares of Company Common Stock
outstanding immediately prior to the Effective Time and held by holders who have
not voted in favor of the Merger or consented thereto in writing and who has
demanded appraisal for such shares in accordance with the applicable provisions
of the MGCL.
"Effective Time" shall have the meaning set forth in Section 2.03.
"Employment Agreement" shall mean that certain Employment Agreement,
dated the date of the Effective Time, and substantially in the form of Exhibit
A.
"Environmental Claim" shall mean any written notice, claim, demand,
action, suit, complaint, proceeding that has been served upon or delivered or
otherwise transmitted to the party in question, by any Person alleging material
Environmental Liabilities or potential material Environmental Liabilities.
"Environmental Laws" shall mean all applicable federal, state, local
and foreign laws, statutes, ordinances, codes, rules, standards and regulations,
now or hereafter in effect, and in each case as amended or supplemented from
time to time, and any applicable judicial or administrative interpretation
thereof, including any applicable judicial or administrative order,
2
<PAGE>
consent decree, order or judgment, imposing liability or standards of conduct
for or relating to the regulation and protection of human health, safety, the
environment and natural resources (including ambient air, surface water,
groundwater, wetlands, land surface or subsurface strata, wildlife, aquatic
species and vegetation). Environmental Laws include the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980 (42 U.S.C.
ss.ss. 9601 et seq.) ("CERCLA"); the Hazardous Materials Transportation
Authorization Act of 1994 (49 U.S.C. ss.ss. 5101 et seq.); the Federal
Insecticide Fungicide, and Rodenticide Act (7 U.S.C. ss.ss. 136 et seq.); the
Solid Waste Disposal Act (42 U.S.C. ss.ss. 6901 et seq.); the Toxic Substance
Control Act (15 U.S.C. ss.ss. 2601 et seq.); the Clean Air Act (42 U.S.C. ss.ss.
7401 et seq.); the Occupational Safety and Health Act (29 U.S.C. ss.ss. 651 et
seq.); and the Safe Drinking Water Act (42 U.S.C. ss.ss. 300(f) et seq.), each
as from time to time amended, and any and all regulations promulgated
thereunder, and all analogous state, local and foreign counterparts or
equivalents and any transfer of ownership notification or approval statutes.
"Environmental Liabilities" shall mean, with respect to any Person, all
liabilities, obligations, responsibilities, response, remedial and removal
costs, investigation and feasibility study costs, capital costs, operation and
maintenance costs, losses, damages, punitive damages, property damages, natural
resource damages, consequential damages, treble damages, costs and expenses
(including all fees, disbursements and expenses of counsel, experts and
consultants), fines, penalties, sanctions and interest incurred as a result of
or related to any claim, suit, action, investigation, proceeding or demand by
any Person, whether based in contract, tort, implied or express warranty, strict
liability, criminal or civil statute or common law, including any arising under
or related to any Environmental Laws, Environmental Permits, or in connection
with any Release or threatened Release or presence of a Hazardous Material
whether on, at, in, under, from or about or in the vicinity of any real or
personal property.
"Environmental Permits" shall mean all permits, licenses,
authorizations, certificates, approvals or registrations required by any
Governmental Authority under any Environmental Laws.
"ERISA" shall have the meaning set forth in Section 5.13(a).
"ERISA Affiliate" shall have the meaning set forth in Section 5.13.
"Escrow Agreement" shall mean that certain Escrow Agreement, dated the
Closing Date and substantially in the form of Exhibit B.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended and the rules and regulations promulgated thereunder and as in effect
from time to time.
"FBW" shall mean Ferris, Baker Watts, Incorporated.
"Financial Statements" shall have the meaning set forth in Section
5.08(a).
"Governmental Authority" shall mean any nation or government, any state
or other political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government and any self-regulating organization, securities exchange or other
securities trading system.
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"Hazardous Material" shall mean any substance, material or waste that
is regulated by or forms the basis of liability now or hereafter under, any
Environmental Laws, including any material or substance which is (a) defined as
a "solid waste," "hazardous waste," "hazardous material," "hazardous substance,"
"extremely hazardous waste," "restricted hazardous waste," "pollutant,"
"contaminant," "hazardous constituent," "special waste," "toxic substance" or
other similar term or phrase under any Environmental Laws, (b) petroleum or any
fraction or by-product thereof, asbestos, polychlorinated biphenyls (PCB's), or
any radioactive substance.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended and the rules and regulations promulgated thereunder and as
in effect from time to time.
"Intellectual Property" shall mean any and all patents, patent
applications, trademarks, trademark applications and registrations, service
marks, service mark applications and registrations, tradenames, tradename
applications and registrations, trade dress, Internet domain names, URL's,
copyrights, copyright applications and registrations, mask work, mask work
applications, licenses, logos, corporate and partnership names, and customer
lists, proprietary processes, formulae, inventions, trade secrets, secret
processes, computer programs, databases, data collections, know-how,
confidential information, development tools and other proprietary rights, and
all documentation and media constituting, describing or relating to the above,
including, but not limited to, manuals, memoranda, know-how, notebooks,
software, records and disclosures, and any similar or equivalent rights to any
of the foregoing anywhere in the world.
"Internal MIS Systems and Facilities" shall mean any computer software
and systems (including hardware, firmware, operating system software, utilities,
and applications software) used in the ordinary course of the applicable parties
business by or on behalf of such party, including the Company's payroll,
accounting, billing/receivables, inventory, asset tracking, customer service,
human resources, e-mail systems, and Intranets.
"Knowledge" shall mean the terms "knowledge" and "aware" and any
derivatives thereof and, when applied to any party to this Agreement, shall
refer to the knowledge or awareness, as the case may be, which such party or, if
applicable, any director, senior or executive officer thereof (or consultant
performing similar functions) has, or reasonably should have had, given such
party's official position and after reasonable due inquiry of the other
officers, directors, and/or employees of such party.
"Lien" shall mean any mortgage, pledge, hypothecation, assignment,
encumbrance, claim, easement, transfer restriction, lien (statutory or
otherwise) or security agreement of any kind or nature whatsoever.
"Material Adverse Effect" shall mean as to any Person, a material
adverse effect on or change in the business, properties, operations, assets or
condition (financial or other) or prospects of such Person that is, or that a
reasonably prudent Person would believe will be, materially adverse to the
business, properties, operations, assets, or conditions (financial or otherwise)
or prospects of such Person.
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"Material Agreement" shall mean any contract, lease, restriction,
agreement, instrument or commitment to which the Company is a party or by which
its properties are bound (i) which provides for the Company to receive or
commits the Company to expend, $25,000 (including cash or the fair market value
of non-cash assets) or more in the aggregate in any 12-month period or $25,000
or more in the aggregate over any period, (ii) which if breached by any party
thereto would result in liability or loss to the Company of $25,000 or more in
the aggregate, or (iii) which is a stockholders agreement relating to the
Company, partnership agreement, joint venture agreement or other agreement
pursuant to which the Company has an equity interest in any Person or any Person
has an equity interest in the Company.
"Merger Consideration" shall have the meaning set forth in Section
4.01.
"MGCL" shall mean the General Corporation Law of the State of Maryland,
as amended and in effect from time to time.
"Merger" shall mean the merger of Acquisition with and into the
Company.
"Nemetschek" shall have the meaning set forth in the Preamble.
"Option" shall have the meaning set forth in Section 4.05.
"Order " shall have the meaning set forth in Section 8.01(e).
"Ordinary course of business" shall mean the ordinary course of
business consistent with past practice (including with respect to quantity and
frequency).
"PBGC" shall have the meaning set forth in Section 5.13.
"Permitted Liens" shall mean (a) statutory Liens, including mechanics',
carriers', workmen's, repairmen's and other similar liens, arising or incurred
in the ordinary course of business with respect to which the underlying
obligations are not delinquent or the validity of which is being contested in
good faith by appropriate proceedings, (b) Liens for current taxes not yet due
and payable or for taxes the validity of which is being contested in good faith
by appropriate proceedings, and (c) Liens and defects in title that in the
aggregate do not have a Material Adverse Effect.
"Person" shall mean any individual or corporation, company,
partnership, trust, incorporated or unincorporated association, joint stock
company, Governmental Authority, joint venture, or other legal entity of any
kind.
"Plans" shall have the meaning set forth in Section 5.13.
"Proxy Statement" shall have the meaning set forth in Section 5.04.
"Release" shall mean any release, threatened release, spill, emission,
leaking, pumping, pouring, emitting, emptying, escape, injection, deposit,
disposal, discharge, dispersal, dumping, leaching or migration of Hazardous
Material in the indoor or outdoor environment, including the
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movement of Hazardous Material through or in the air, soil, surface water,
ground water or property.
"SDAT" shall mean the State Department of Assessment and Taxation of
the State of Maryland.
"SEC" shall mean the Securities and Exchange Commission and any
successor entity.
"SEC Documents" shall have the meaning set forth in Section 5.09.
"Securities Act" shall mean the Securities Act of 1933, as amended and
the rules and regulations promulgated thereunder and as in effect from time to
time.
"Stockholders Meeting" shall have the meaning set forth in Section
5.04.
"Subsidiary" shall mean as to any Person, any other Person of which at
the time of determination the first Person owns or controls, directly or
indirectly, more than 50% of the outstanding common stock.
"Support Agreement" shall mean that certain Support Agreement, dated
the date hereof, and substantially in the form of Exhibit C.
"Surviving Corporation" shall have the meaning set forth in Section
2.03(b).
"Tax" or "Taxes" means all net income, capital gains, gross income,
gross receipts, sales, use, ad valorem, franchise, profits, license,
withholding, payroll, employment, excise, severance, stamp, occupation, premium,
property, or windfall profit taxes, customs duties, or other taxes, fees,
assessments, or charges of any kind whatsoever, together with any interest and
any penalties, additions to tax, or additional amounts imposed by any Taxing
Authority.
"Tax Return" shall mean any return, declaration of estimated tax, tax
report, customs declaration, claim for refund or information return or statement
relating to Taxes, including any amendment thereto.
"Taxing Authority" shall have the meaning set forth in Section 5.14(a).
"Year 2000 Compliant" means that (1) the products, services, or other
item(s) at issue accurately process, provide and/or receive all date/time data
(including calculating, comparing, sequencing, processing, and outputting)
within, from, into, and between centuries (including the twentieth and
twenty-first centuries and the years 1999 and 2000), including leap year
calculations, and (2) neither the performance nor the functionality of the
products, services, and other item(s) at issue will be affected by any
dates/times prior to, on, after, or spanning January 1, 2000 except as could not
reasonably be expected to have a Material Adverse Effect as to the party at
issue.
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ARTICLE II
THE MERGER
Section 2.01. The Merger; Effective Time. Subject to the terms and
conditions set forth in this Agreement, at the Effective Time, Acquisition shall
be merged with and into the Company in accordance with Section 3-102 of the
MGCL, with the Company being the surviving corporation, whereupon the separate
corporate existence of Acquisition shall cease and the Company shall continue
its corporate existence under the laws of the State of Maryland (the "Merger").
Section 2.02. Closing. Subject to Article X and the fulfillment or waiver
of the conditions set forth in Article VIII, the Closing shall take place at (i)
the offices of Brown & Wood LLP, 1666 K Street, N.W., Washington, D.C., at 10:00
a.m., as promptly as practical (and in any event within two Business Days)
following the fulfillment or waiver of the conditions set forth in Article VIII
(other than conditions which by their nature are intended to be fulfilled at the
Closing), or (ii) such other place or time or on such other date as the parties
may mutually agree in writing or as the parties may mutually agree is necessary
to permit the fulfillment or waiver of the conditions set forth in Article VIII.
Section 2.03. Effective Time. (a) In accordance with the applicable
provisions of the MGCL, the Merger shall become effective (the "Effective Time")
on the date and at the time of the filing of the Articles of Merger with respect
to the Merger with the State Department of Assessment and Taxation (the "SDAT")
of the State of Maryland, or at such later time, not later than five Business
Days thereafter, as may be specified in the Articles of Merger.
(b) The Company, as the surviving corporation of the Merger, shall be
referred to herein as "Surviving Corporation." In accordance with the applicable
provisions of the MGCL, all the rights, privileges, powers, immunities, purposes
and franchises of the Company and Acquisition shall vest in Surviving
Corporation and all debts, liabilities, obligations, and duties of the Company
and Acquisition shall become the debts, liabilities, obligations, and duties of
Surviving Corporation. For Tax purposes, the parties agree that the Effective
Time shall be deemed to occur after the close of business on the date on which
the Effective Time occurs, and no party hereto shall take a position
inconsistent therewith, except as may be required by law.
Section 2.04. Effect of the Merger. The Merger shall have the effects set
forth in Section 3-114 of the MGCL.
ARTICLE III
THE SURVIVING CORPORATION
Section 3.01. Name. The name of the Surviving Corporation shall be "Diehl
Graphsoft, Inc." or such other name as may be approved by the stockholders of
the Surviving Corporation.
Section 3.02. Articles of Incorporation and Bylaws. The Articles of
Incorporation and Bylaws of the Company as in effect immediately prior to the
Effective Time shall be the Articles
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of Incorporation and Bylaws of the Surviving Corporation unless and until
amended in accordance with their terms and applicable law.
Section 3.03. Officers and Directors. (a) The officers of the Company
immediately prior to the Effective Time shall continue as the officers of
Surviving Corporation and shall remain officers thereof until their successors
are duly elected and qualified or their prior resignation, removal or death.
(b) The directors of Acquisition immediately prior to the Effective Time
shall continue as the directors of the Surviving Corporation and shall remain
directors thereof until their successors are duly elected and qualified or their
prior resignation, removal or death.
Section 3.04. Additional Actions. If, at any time after the Effective Time,
the Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments, assurances or any other actions, things or documentation is
necessary or desirable to vest, perfect or confirm of record or otherwise in the
Surviving Corporation, its respective right, title or interest in, to or under
any of the rights, properties or assets of Acquisition, or otherwise to carry
out the terms or purposes of this Agreement, the officers and directors of the
Surviving Corporation shall be authorized to execute and deliver, in the name
and on behalf of the Company or Acquisition all such deeds, bills of sale,
assignments and assurances or other documentation and to take and do, in the
name and on behalf of the Company or Acquisition all such other actions and
things as may be necessary or desirable to vest, perfect or confirm any and all
right, title and interest in, to and under such rights, properties or assets in
the Surviving Corporation or otherwise to carry out the purpose of this
Agreement.
ARTICLE IV
MERGER CONSIDERATION; CONVERSION OR
CANCELLATION OF SECURITIES
Section 4.01. Merger Consideration. As of the Effective Time, by virtue of
the Merger and without any action on the part of any shareholder of the Company
or Acquisition:
(a) Each share of Company Common Stock issued and outstanding immediately
prior to the Effective Time that is held by Nemetschek, the Company, or any
wholly-owned subsidiary of Nemetschek (including Acquisition) or the Company
shall be cancelled and retired and shall cease to exist, and no consideration
shall be delivered in exchange therefor.
(b) Each share of Company Common Stock held in treasury by the Company
immediately prior to the Effective Time shall, by virtue of the Merger, be
cancelled and retired and cease to exist, without any conversions thereof and no
consideration shall be issued in exchange therefor.
(c) Each issued and outstanding share of Company Common Stock, other than
those to which Section 4.01(a)-(b) applies and other than any Dissenting Shares
shall be converted into and represent the right to receive $9.50 cash, without
interest thereon (such amount of cash being referred to herein as the "Merger
Consideration").
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(d) Subject to Section 4.07, each Dissenting Shares shall be converted into
the right to receive payment from the Surviving Corporation with respect thereto
in accordance with the provisions of the MGCL.
(e) Each issued and outstanding share of common stock of Acquisition shall
be converted into and become one fully paid and nonassessable share of common
stock of the Surviving Corporation
Section 4.02. Payment. (a) Pursuant to an agreement in form and substance
acceptable to Nemetschek and the Company to be entered into prior to the
Effective Time between Nemetschek and a disbursing agent selected by Nemetschek
and reasonably acceptable to the Company (the "Disbursing Agent"), at the
Effective Time, Nemetschek and/or Acquisition shall make available to the
Disbursing Agent the aggregate amount of cash to which holders of shares of
Company Common Stock (other than Dissenting Shares) shall be entitled pursuant
to Section 4.01(c). The agreement with the Disbursing Agent shall provide for
reasonable investment of the cash as directed by Nemetschek and all investment
income shall be paid to Nemetschek. Notwithstanding the foregoing, the Company
and Nemetschek agree that, at the Effective Time, the Company shall make
available to the Disbursing Agent from cash on hand at the Company, unless
otherwise agreed by Nemetschek and the Company, not less than 90% of all such
cash (the "Company Amount"), which amount shall be used as partial payment of
the Merger Consideration as contemplated by this Section 4.02, and which amount,
when paid to holders of Company Common Stock, shall be paid in partial
redemption of such Company Common Stock. The Company covenants and agrees that,
immediately prior to the Effective Time, it shall convert all cash equivalents
held by the Company to cash. The parties further agree that any amount that
Nemetschek and/or Acquisition is required to provide to the Disbursing Agent
pursuant to the first sentence of this Section 4.02(a) may be reduced
dollar-for-dollar by the Company Amount.
(b) As soon as practicable after the Effective Time, Nemetschek shall cause
the Disbursing Agent to send a notice and a letter of transmittal to each holder
of certificates formerly evidencing shares of Company Common Stock (other than
certificates formerly representing shares of Company Common Stock to be
cancelled pursuant to Section 4.01(a)-(b) and other than shares representing
Dissenting Shares) advising such holder of the effectiveness of the Merger and
the procedure for surrendering to the Disbursing Agent such certificates for
exchange into the Merger Consideration for each share of Company Common Stock so
represented, and that delivery shall be effected, and risk of loss and title to
the shares of Company Common Stock shall pass, only upon proper delivery to the
Disbursing Agent of the certificates for the shares of Company Common Stock and
a duly executed letter of transmittal and any other required documents of
transfer. Each holder of certificates theretofore evidencing shares of Company
Common Stock (other than certificates formerly representing shares of Company
Common Stock to be cancelled pursuant to Section 4.01(a)-(b) and other than
shares representing Dissenting Shares), upon surrender thereof to the Disbursing
Agent together with such letter of transmittal (duly executed) and any other
required documents of transfer, shall be entitled to receive in exchange
therefor the Merger Consideration with respect to each such share. Upon such
surrender, the Disbursing Agent shall promptly deliver the Merger Consideration
(less any amount required to be withheld under applicable law) in accordance
with the instructions set forth in the related letter of transmittal, and the
certificates so surrendered
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shall promptly be cancelled. Until surrendered, certificates formerly evidencing
shares of Company Common Stock shall be deemed for all purposes to cease to be
outstanding, shall be canceled and retired and shall cease to exist, and the
holders of a certificate or certificates representing such shares evidence only
the right to receive the Merger Consideration per share of Company Common Stock
as provided for hereunder. Other than as provided in Section 4.01(c), no
interest shall accrue or be paid on any cash payable upon the surrender of
certificates which immediately prior to the Effective Time represented
outstanding shares of Company Common Stock.
(c) If the Merger Consideration is to be delivered to a Person other than
the Person in whose name the certificates surrendered in exchange therefor are
registered, it shall be a condition to the payment of such Merger Consideration
that the certificates so surrendered shall be properly endorsed or accompanied
by appropriate stock powers and otherwise in proper form for transfer, that such
transfer otherwise be proper and that the Person requesting such transfer pay to
the Disbursing Agent any transfer or other taxes payable by reason of the
foregoing or establish to the satisfaction of the Disbursing Agent that such
taxes have been paid or are not required to be paid.
(d) Unless required otherwise by applicable law, any portion of the
aggregate Merger Consideration that remains undistributed to holders of shares
of Company Common Stock six months after the Effective Time shall be delivered
to the party who provided such funds to the Disbursing Agent and any holders of
shares of Company Common Stock who have not theretofore complied with the
provisions of this Article IV shall thereafter look only to Nemetschek for
payment of any Merger Consideration to which they are entitled pursuant to this
Article IV. Neither Nemetschek nor the Disbursing Agent shall be liable to any
holder of shares of Company Common Stock for any cash held by Nemetschek or the
Disbursing Agent for payment pursuant to this Article IV delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
Section 4.03. Closing of the Company's Transfer Books. The stock transfer
books of the Company shall be closed on the date immediately prior to the date
of the Effective Time and no transfer of shares of the Company Common Stock
shall be made thereafter. In the event that, after the Effective Time,
certificates for shares of the Company Common Stock are presented to the
Surviving Corporation or Nemetschek, they shall be cancelled and exchanged for
Merger Consideration for each share of the Company Common Stock represented as
provided in Section 4.02.
Section 4.04. No Splits, Etc. The Company covenants and agrees that, prior
to the Effective Time, it shall not split or combine the Company Common Stock,
or pay a stock dividend or other stock distribution in shares of the Company
Common Stock, or in rights or securities exchangeable or convertible into or
exercisable for the Company Common Stock, or otherwise change the Company Common
Stock into, or exchange the Company Common Stock for, any other securities
(whether pursuant to or as part of a merger, consolidation, acquisition of
property or stock, separation, reorganization or liquidation of such entity as a
result of which its respective stockholders receive cash, stock or other
property in exchange for, or in connection with, their Company Common Stock (a
"Business Combination") or otherwise), or make any other dividend or
distribution on or of the Company Common Stock, without the parties hereto
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having first entered into an amendment to this Agreement pursuant to which the
consideration to be paid hereunder will be adjusted to reflect such split,
combination, dividend, distribution, Business Combination or change.
Section 4.05. Treatment of Options. Immediately prior to the Effective
Time, each outstanding stock option and any related stock appreciation right
granted to officers, directors, or employees of the Company or others with
respect to Company Common Stock (together, an "Option"), shall be cancelled by
the Company, and the holder thereof shall be entitled to receive at the
Effective Time or as soon as practicable thereafter from the Disbursing Agent in
consideration for such cancellation the Merger Consideration promptly upon
payment to the Surviving Corporation by such holder of the exercise price per
share previously applicable to such Option.
Section 4.06. Lost, Stolen or Destroyed Certificates. In the event any
certificate shall have been lost, stolen or destroyed, upon receipt by the
Surviving Corporation or the Disbursing Agent of an affidavit of that fact from
the holder thereof and if reasonably satisfied that adequate provision for
indemnification has been made, the Disbursing Agent will issue in exchange for
such lost, stolen or destroyed certificate the Merger Consideration all as
provided in Section 4.02, deliverable in respect thereof pursuant to this
Agreement.
Section 4.07. Dissenting Shares. Notwithstanding anything in this Agreement
to the contrary, Dissenting Shares shall not be converted into a right to
receive the Merger Consideration unless such holder fails to perfect or
withdraws or otherwise loses his right to appraisal under the MGCL. If, after
the Effective Time, such holder fails to perfect or withdraws or loses his right
to appraisal, such shares shall be treated as if they had been converted as of
the Effective Time into a right to receive the Merger Consideration, without
interest thereon. Prior to the Effective Time, the Company shall give Nemetschek
and Acquisition prompt notice of any demands received by the Company for
appraisal of shares, and, prior to the Effective Time, Nemetschek and
Acquisition shall have the right to participate in all negotiations and
proceedings with respect to such demands. Prior to the Effective Time, the
Company shall not, except with the prior written consent of Nemetschek and
Acquisition, make any payment with respect to, or settle or offer to settle, any
such demands.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY
The Company hereby represents and warrants to Nemetschek and
Acquisition as follows:
Section 5.01. Organization. The Company and each of its Subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation and has all requisite power and authority,
corporate or otherwise, to own, operate and lease its properties, and to carry
on its business substantially as now conducted. The Company and each of its
Subsidiaries is duly qualified to do business and is in good standing in each
jurisdiction in which the character of its assets or property owned, leased or
operated by it or the nature of the business conducted by it makes such
qualification necessary, except where
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the failure to be so qualified or to be in good standing has not had or would
not have a Material Adverse Effect on the Company or such Subsidiary, or on the
ability of the Company to consummate the transactions contemplated hereby. The
Company has all requisite power and authority, corporate or otherwise, to enter
into this Agreement and, subject to the adoption of this Agreement by the
stockholders of the Company and the receipt of all requisite regulatory
approvals and the expiration of any applicable waiting periods, to consummate
the transactions contemplated hereby. The Company has provided to Nemetschek a
complete and correct copy of the Articles of Incorporation and Bylaws for itself
and each of its Subsidiaries, as amended or restated. Neither the Company nor
any of its Subsidiaries is in violation of any of the provisions of its Articles
of Incorporation or Bylaws, as amended or restated, or equivalent organizational
documents.
Section 5.02. Authorization; Enforceability. The execution, delivery and
performance of this Agreement and all other agreements contemplated hereby and
the consummation of the transactions contemplated hereby have been duly approved
and authorized by the Board of Directors of the Company, and all necessary
corporate action on the part of such party has been taken, subject to the
adoption of this Agreement by the stockholders of the Company. This Agreement
has been duly executed and delivered by the Company and constitutes the valid
and binding obligation of the Company and is enforceable against the Company in
accordance with its terms, except to the extent that enforceability thereof may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws or equitable principles or doctrines.
Section 5.03. Conflicts. Except as set forth on Schedule 5.03, the
execution and delivery of this Agreement does not, and the consummation of the
transactions contemplated hereby will not, conflict with or result in any
violation, breach or termination of, or default or loss of a material benefit
under, or permit the acceleration of any obligation under, or result in the
creation of any material Lien on any of the property or assets under, any
provision of the Articles of Incorporation or Bylaws (or equivalent
organizational documents) of the Company, or any mortgage, indenture, lease,
agreement or other instrument, permit, concession, grant, franchise, license,
decree, statute, law, ordinance, rule or regulation applicable to the Company or
any of its Subsidiaries or their respective properties, other than any such
conflicts, violations, breaches or defaults which would not have a Material
Adverse Effect on the Company or any such Subsidiary or the ability of the
Company to consummate the transactions contemplated hereby.
Section 5.04. Consents and Approvals. Except as set forth on Schedule 5.04,
no consent, approval, order or authorization of, or registration, declaration or
filing with, any Governmental Authority is required by or with respect to the
Company in connection with the execution and delivery of this Agreement or the
consummation by it of the transactions contemplated hereby except for: (i) the
filing by the Company of a proxy statement and form of proxy (the "Proxy
Statement") for use in connection with a meeting of the stockholders of the
Company to consider and vote on the terms of this Agreement and the Merger (the
"Stockholders Meeting"); (ii) the filing of Articles of Merger with the SDAT,
and the approval thereof; (iii) any filings, approvals or no-action letters with
or from state securities authorities; and (iv) any filings required under the
HSR Act or with any other Governmental Authority, and/or any consents, waivers
or approvals obtained with respect thereto.
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Section 5.05. Anti-takeover Provisions Inapplicable. Assuming the
representations and warranties of Nemetschek and Acquisition in Section 6.05 are
accurate, no "business combination," "moratorium," "control share" or other
state anti-takeover statute or regulation applicable to the Company (i) applies
to the Merger or any other agreement being entered into in connection therewith,
(ii) prohibits or restricts the ability of the Company to perform its
obligations under this Agreement or its ability to consummate the transactions
contemplated hereby or the ability of any other party to consummate the
transactions contemplated to be entered into in connection with the Merger,
(iii) would have the effect of invalidating or voiding this Agreement or any
agreement being entered into in connection herewith or any provision hereof or
thereof, or (iv) would subject Nemetschek or Acquisition to any material
impediment or condition in connection with the exercise of any of its rights
under this Agreement or such other agreement.
Section 5.06. Capitalization. The authorized capital stock of the Company
consists of 10,000,000 shares of common stock, par value $0.01 per share, of
which 3,070,705 shares are issued and outstanding. All such outstanding shares
of Company Common Stock are (i) duly and validly authorized and issued, (ii)
fully paid and nonassessable, and (iii) free from any preemptive rights of
current or past stockholders. The Company has reserved for issuance upon
exercise of the Warrants (as hereinafter defined) 120,000 shares of Company
Common Stock. The Company has reserved for issuance upon exercise of options
granted under its 1995 Amended and Restated Stock Option Plan ("Company Option
Plan") an aggregate of 300,000 shares of Company Common Stock. There are no
outstanding or existing options, warrants, rights (including preemptive rights),
calls, subscriptions, commitments, conversion rights, rights of exchange, plans
or other agreements of any character providing for the purchase, issuance or
sale of any shares of the capital stock of the Company, except for options
related to the purchase of 100,200 shares of Company Common Stock under the
Company Option Plan. No shares of capital stock are held in treasury, and except
as set forth above, no shares of capital stock are reserved for issuance. The
Company has not granted or agreed to grant any rights relating to the
registration of its securities under applicable federal and state securities
laws, including piggyback rights, and the consummation of the transactions
contemplated by this Agreement will not trigger the anti-dilution provisions or
other price adjustment mechanisms of any outstanding subscriptions, options,
warrants, calls, contracts, preemptive rights, demands, commitments, conversion
rights or other agreements or arrangements of any character or nature whatsoever
under which the Company is or may be obligated to issue or acquire its capital
stock.
Section 5.07. Subsidiaries. Set forth on Schedule 5.07 is a complete and
correct list of each of the Company's Subsidiaries. Each Subsidiary is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation (as set forth in such schedule), and
has all requisite corporate power and authority to own its property and to
conduct its business as now being conducted. Set forth on Schedule 5.07 is a
list of jurisdictions in which each Subsidiary is qualified as a foreign
corporation and each Subsidiary is in good standing in each of the states or
jurisdictions where they are so qualified. Such jurisdictions are the only
jurisdictions in which the character or location of the properties owned or
leased by such Subsidiary, or the nature of the business conducted by such
Subsidiary, make such qualification necessary. All of the issued and outstanding
shares of capital stock of each Subsidiary are (i) duly and validly authorized
and issued, (ii) fully paid and nonassessable, (iii) owned, of record and
beneficially, by the Company, and (iv) free and clear of all Liens,
encumbrances, equities,
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options or claims whatsoever, including preemptive rights. No shares of capital
stock of any Subsidiary are reserved for issuance and there are no outstanding
options, warrants, rights, subscriptions, claims of any character, agreements,
obligations, convertible or exchangeable securities, or other commitments,
contingent or otherwise, relating to the capital stock of such Subsidiary, or
pursuant to which such Subsidiary is or may become obligated to issue or
exchange any shares of capital stock of such Subsidiary. Except for the
Subsidiaries listed on Schedule 5.07, neither the Company nor any Subsidiary
owns, directly or indirectly, any capital stock or other economic, equity or
ownership or proprietary interest in any other Person. The Company is not party
to any partnership agreement, stockholders agreement, voting agreement or joint
venture agreement with any other Person.
Section 5.08. Financial Statements; No Material Adverse Change. (a) The
financial statements of the Company included in its Annual Report on Form 10-KSB
for the fiscal years ended May 31, for each of 1998, 1997, and 1996, and its
Quarterly Reports on Form 10-QSB for the fiscal quarters ended August 31, 1999
and November 30, 1999 (collectively, the "Financial Statements") comply as to
form in all material respects with the applicable accounting requirements and
with the published rules and regulations of the SEC with respect thereto, have
been prepared in accordance with GAAP during the periods covered thereby (except
as may be indicated in the notes thereto or, in the case of the unaudited
statements, as permitted by Form 10-QSB of the SEC, or for normal year-end
adjustments), and fairly present in all material respects the financial position
of the Company as at the dates thereof and the results of its operations and
cash flows for the periods then ended. Since May 31, 1999, there has not been
any declaration, setting aside or payment of a dividend or other distribution
with respect to shares of capital stock of the Company except for dividends
distributed to stockholders in the ordinary course of business or any material
change in accounting methods or practices by the Company. The Company has
delivered to Nemetschek the Financial Statements prior to the date hereof.
(b) Since May 31, 1998, except as disclosed in the SEC Documents filed
prior to the date hereof, and except for the execution, delivery and performance
of this Agreement and any other agreements to be entered into or contemplated
hereby and the transactions contemplated hereby and thereby, (A) neither the
Company nor any of its Subsidiaries has incurred any obligations, contingent or
non-contingent liabilities, liabilities for Taxes, levies, Liens, claims or
other charges, long-term leases or unusual forward or long-term commitments
(whether absolute, accrued, contingent or otherwise, known or unknown, whether
due or to become due, or whether or not required by GAAP to be reflected in a
balance sheet of the Company or disclosed in the notes thereto), except
liabilities and obligations that (x) are adequately accrued or reserved against
in the Financial Statements or disclosed in the notes thereto, (y) were incurred
after May 31, 1999 in the ordinary course of business and consistent with past
practice and are not in the aggregate material to the Company taken as a whole,
or (z) have been discharged or paid in full, (B) no contract, lease or other
agreement or instrument has been entered into by the Company or any of its
Subsidiaries or has become binding upon the Company or any of its Subsidiaries
or their respective assets which, individually or in the aggregate, has
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had or could reasonably be expected to have a Material Adverse Effect on the
Company taken as a whole, or the ability of the Company to consummate the
transactions contemplated hereby, (C) neither the Company nor any of its
Subsidiaries is in default, and to the Company's knowledge no third party is in
default, under any Material Agreement which, individually or in the aggregate,
has had or could reasonably be expected to have a Material Adverse Effect on the
Company taken as a whole or the ability of the Company to consummate the
transactions contemplated hereby, and (D) the business of the Company and each
of its Subsidiaries has been operated in the usual and ordinary course
consistent with past practice. Since May 31, 1999, no event has occurred, which
alone or together with other events, could reasonably be expected to have a
Material Adverse Effect on the Company or the ability of the Company to
consummate the transactions contemplated hereby, except as disclosed in the SEC
Documents filed after May 31, 1999 and prior to the date hereof and except to
the extent resulting from any changes in general economic conditions in the
United States.
Section 5.09. SEC Reports. The Company has filed and made available to
Nemetschek a true and complete copy of each report, schedule, filing,
registration statement and definitive proxy statement required to be filed by
the Company with the SEC since January 1, 1997 (the "SEC Documents"). As of
their respective dates, the SEC Documents, after giving effect to any amendments
and supplements thereto filed prior to the date hereof, complied in all material
respects with the requirements of the Securities Act or the Exchange Act, as the
case may be, applicable to such SEC Documents. None of the SEC Documents when
filed, after giving effect to any amendments and supplements thereto filed prior
to the date hereof, contained (or, if filed after the date hereof, will contain)
any untrue statement of a material fact or omitted (or, if filed after the date
hereof, will omit) to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. None of the Company's Subsidiaries
is required to file any forms, reports or other documents with the SEC.
Section 5.10. Compliance with Laws; Permits. (a) The business of the
Company and each of its Subsidiaries has been and is being conducted in
compliance in all material respects with all laws, ordinances and regulations of
Governmental Authorities, including, without limitation, federal and state
securities laws, laws and regulations relating to financial statements and
reports, occupational safety, fair employment practices, fair labor standards
and laws and regulations relating to employees and employee benefits, and any
statutes or ordinances relating to the properties occupied or used by the
Company and its Subsidiaries. The Company and each of its Subsidiaries is in
possession of all franchises, grants, authorizations, licenses, permits,
easements, variances, exemptions, consents, certificates, approvals and orders
necessary for it to own, lease and operate its properties or to carry on its
business as it is now being conducted (the "Company Permits") and no suspension,
revocation or cancellation of any of the Company Permits is pending or, to the
knowledge of the Company or any of its Subsidiaries, threatened.
(b) No investigation or review by any Governmental Authority with respect
to the Company or any of its Subsidiaries is pending or, to the knowledge of the
Company or any of its Subsidiaries, threatened, nor has any Governmental
Authority indicated to the Company or any of its Subsidiaries any intention to
conduct the same.
Section 5.11. Litigation. There is no action, suit, investigation or
proceedings, legal, quasi-legal, administrative or otherwise, pending or, to the
knowledge of the Company or any of its Subsidiaries, threatened against the
Company or any such Subsidiary or any property of the Company or any such
Subsidiary in any court or before any arbitrator of any kind or before or by any
Governmental Authority except for such actions, suits, investigations or legal
proceedings
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that would not have a Material Adverse Effect on the Company or any such
Subsidiary or which would affect the ability of the Company to consummate the
transactions contemplated hereby. Neither the Company nor any of its
Subsidiaries is subject to any judgment, order, writ, injunction or decree of
any arbitrator, court or Governmental Authority, and there are no unsatisfied
judgments against the Company or any of its Subsidiaries.
Section 5.12. Compensation and Employee Matters. The Company has previously
provided to Nemetschek, a true, correct and complete list of all directors,
officers and personnel of the Company and each of its Subsidiaries, and the
annual salary, bonuses paid or accrued with respect thereto for the year ending
May 31, 1999, and for the period from June 1, 1999 through December 31, 1999,
and any commitments by the Company or any Subsidiary entered into on or prior to
the date hereof to pay any further bonuses for or increase the salary of any
such person, which list shall be updated as of the Closing Date.
Section 5.13. Employee Benefit Plans; Labor Matters. (a) Schedule 5.13
lists all employee plans, programs, practices and arrangements, including,
without limitation, all employee benefit plans (within the meaning of Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) employment agreements, and health, medical, dental, welfare,
accident, disability, life insurance, stock purchase, bonus, equity and
equity-type compensation, severance pay and other employee benefit or fringe
benefit plans maintained or contributed to by the Company or any ERISA Affiliate
or with respect to which the Company or any ERISA Affiliate has any fixed or
contingent, direct or indirect liability ("Plans"). For purposes of this
Agreement, "ERISA Affiliate" means any Affiliate or Subsidiary and any other
person or entity that would be treated as under common control or a single
employer with the Company under Section 4001 of ERISA or Section 414 of the
Code. The Company has delivered or made available to Nemetschek copies of each
Plan and all amendments thereto and, if applicable, the summary plan description
and any summaries of material modifications, any other material employee
communications during the past two years, the most recent determination letters
and any other rulings, the three most recent annual reports on Internal Revenue
Service Form 5500, and the three most recent actuarial reports and/or statements
of trust assets with respect to each such Plan.
(b) Except as set forth on Schedule 5.13, (i) no Plan is or has been
subject to Section 302 of ERISA, Title IV of ERISA or Section 412 of the Code;
(ii) no material, nonexempt "prohibited transaction" (as such term is defined in
ERISA and the Code, as applicable) has occurred with respect to any Plan during
the five years preceding the Effective Time; (iii) each Plan is and has been
operated in compliance in all material respects with the presently applicable
provisions of ERISA, the Code and other applicable law; (iv) with respect to any
insurance contract providing funding under any Plan, there is no liability for
any material retroactive rate adjustment arising from events occurring prior to
the Effective Time; and (v) no Plan is or has been a "welfare benefit fund"
(within the meaning of Section 419(e) of the Code), a "multiple employer plan"
(within the meaning of Section 413(c) of the Code) or a "multiemployer plan" (as
defined in Section 3(37) of ERISA).
(c) Each Plan that is a "group health plan" (as defined in Section 4980B of
the Code) has been operated in material compliance with Section 4980B of the
Code and the secondary payor requirements of Section 1862(b)(1) of the Social
Security Act. Except as provided in
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Schedule 5.13 and except as required by Section 4980B of the Code, neither the
Company nor any ERISA Affiliate has any obligation or liability to provide
medical, life insurance or supplemental pension benefits in respect of any
current or former employees or independent contractors of the Company or any
ERISA Affiliate beyond their retirement. Except as set forth on Schedule 5.13,
no Plan provides for severance pay, unemployment compensation or any similar
payment with respect to any current or former employee or independent contractor
of the Company or any ERISA Affiliate. Except as provided in Schedule 5.13, the
consummation of the transactions contemplated by this Agreement will not (i)
entitle any such person or entity to severance pay, unemployment compensation or
any other similar payment; (ii) accelerate the time of payment or vesting of any
amount; (iii) increase the amount of compensation due to any such person or
entity; (iv) constitute a "prohibited transaction" (as defined in Section 406 of
ERISA or Section 4975 of the Code); or (v) entitle any such person or entity to
an "excess parachute payment" within the meaning of Section 280G of the Code.
The Company has reserved all rights necessary to amend each Plan and to
terminate its participation in each Plan.
(d) Except as set forth on Schedule 5.13, there are no material actions or
claims existing or pending (other than routine claims for benefits) or
threatened with respect to any Plan, and neither the Company nor any ERISA
Affiliate has been notified of any audit or investigation of a Plan by any
governmental entity.
(e) The Company and each ERISA Affiliate (except as a result of any actions
taken by Nemetschek after the Effective Time) (i) is in material compliance with
all applicable laws respecting employment, employment practices, terms and
conditions of employment and wages and hours (including, but not limited to, the
Worker Adjustment Retraining Notification Act, the Age Discrimination in
Employment Act, the Civil Rights Act of 1964, the Equal Pay Act, the
Occupational Safety and Health Act, the Fair Labor Standards Act, the Americans
with Disability Act of 1990, the Family and Medical Leave Act of 1993, and any
other federal, state or local law regulating employment or protecting employee
rights), in each case, with respect to current and former employees and
independent contractors of the Company and such ERISA Affiliate, (ii) has
withheld all material amounts required by applicable law or by agreement to be
withheld from the wages, salaries and other payments to such current and former
employees and independent contractors, (iii) is not liable for any material
arrears of wages or any taxes or any penalty for failure to comply with any of
the foregoing, and (iv) is not liable for any material payment to any trust or
other fund or to any governmental entity, with respect to unemployment
compensation benefits, social security or other benefits for such current or
former employees and independent contractors.
(f) Except as set forth on Schedule 5.13, (i) no employees of the Company
or any Subsidiary are represented by any labor organization and there is no
union organizational activity currently underway, or to the Company's knowledge,
threatened, with respect to any employees of the Company or any Subsidiary, (ii)
neither the Company nor any of its Subsidiaries is engaged in, or has received
any written notice during the current or preceding year of, any unfair labor
practice, and no such complaint is pending before the National Labor Relations
Board or any other agency having jurisdiction thereof, (iii) neither the Company
nor any of its Subsidiaries is engaged in, or has received any notice of, any
grievances arising under any collective bargaining agreements, or any pending
arbitration proceedings under any collective bargaining agreements, (iv) during
the immediately preceding 24 calendar months there has not
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been any, and there is no, threatened, labor strike, work stoppage or slowdown
pending against any portion of the business of the Company or its Subsidiaries,
and there is no pending lockout by the Company or any Subsidiary. The Company
and each of its Subsidiaries has satisfied and performed fully its obligations
under each collective bargaining agreement, and under any order, conciliation
contract or settlement contract by which any of them is bound or to which any of
them is subject concerning employment related matters. Neither the Company nor
any of its Subsidiaries is engaged in, or has received notice of, any local,
state and/or federal charge, complaint, lawsuit or other action, pertaining to
the violation of any employment law, statute, ordinance or regulation and no
such charge, complaint, lawsuit or other action is pending before any agency or
administrative body responsible for administering such employment law, statute,
ordinance or regulation.
Section 5.14. Tax Matters. (a) Except as set forth on Schedule 5.14: (i)
all Tax Returns required to be filed by or on behalf of the Company and each of
its Subsidiaries have been or will be timely filed; (ii) all such Tax Returns
that have been filed are complete and correct in all respects, and all Taxes
shown to be due on such Tax Returns have been paid; (iii) no written claim
(other than a claim that has been finally settled) has been made by a Taxing
Authority that either the Company or any of its Subsidiaries is subject to an
obligation to file Tax Returns or to pay or collect Taxes imposed by any
jurisdiction in which the Company or such Subsidiary does not file Tax Returns
or pay or collect Taxes, other than any such claim that would not have a
Material Adverse Effect on the Company or such Subsidiary or for which adequate
reserves have been provided on the Financial Statements; (iv) there is no
deficiency with respect to any Taxes, other than any such deficiency for which
adequate reserves have been provided on the Financial Statements; and (v) all
material assessments for Taxes due with respect to completed and settled
examinations or concluded litigation have been paid which, individually or in
the aggregate (with respect to the Company or any Subsidiary), exceed $20,000.
As used in this Agreement, "Tax Returns" shall mean all federal, state, local
and foreign tax returns, declarations, statements, reports, schedules, forms and
information returns relating to Taxes.
(b) Except as set forth on Schedule 5.14, the Company and each of its
Subsidiaries has duly and timely withheld all Taxes required to be withheld in
connection with its business and assets, and such withheld Taxes have been
either duly and timely paid to the proper Governmental Authorities or properly
set aside in accounts for such purpose.
(c) Except as set forth on Schedule 5.14, (i) neither the Company nor any
of its Subsidiaries is a party to or bound by or has any obligation under any
Tax allocation, sharing, indemnification or similar agreement or arrangement
with any Person that might result in a Material Adverse Effect on the Company or
such Subsidiary that entered into such agreement or arrangement, and (ii)
neither the Company nor any of its Subsidiaries is or has been at any time a
member of any group of companies filing a consolidated, combined or unitary
income tax return other than any such group the common parent of which is the
Company.
(d) Except as set forth on Schedule 5.14, (i) all taxable periods of the
Company and each of its Subsidiaries ending before May 31, 1996 are closed or no
longer subject to audit, (ii) neither the Company nor any of its Subsidiaries is
currently under any audit by any taxing authority as to which such taxing
authority has asserted in writing any claim which, if adversely determined,
could have a Material Adverse Effect on the Company or such Subsidiary, and
(iii)
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no waiver of the statute of limitations is in effect with respect to any taxable
year of the Company or any of its Subsidiaries.
Section 5.15. Real Property Owned or Leased. Schedule 5.15 of the
Disclosure Statement sets forth a complete and accurate list or description of
all real property that the Company or any of its Subsidiaries owns or leases,
has agreed (or has an option) to purchase, sell or lease, or may be obligated to
purchase, sell or lease and any title insurance or guarantee policies with
respect thereto, specifying in the case of leases, the name of the lessor,
licensor or other grantor, the approximate square footage covered thereunder,
the basic annual rental and other amounts paid or payable with respect thereto
and a summary of the other terms thereof. True copies of all such leases for
real property have been delivered to Nemetschek prior to the date hereof. Except
as set forth in Schedule 5.03, no consent to the consummation of the
transactions contemplated by this Agreement is required from the lessor of any
such real property.
Section 5.16. Undisclosed Liabilities. As of the date hereof and as of the
Effective Time, except as and to the extent reflected, reserved against or
otherwise disclosed on the Financial Statements or the notes thereto, or set
forth in Schedule 5.16 of the Disclosure Statement, and except for those
incurred in the ordinary course of business consistent with such practice,
neither the Company nor any of its Subsidiaries has any indebtedness or
liability of any nature, whether accrued, absolute, contingent or otherwise,
whether due or to become due.
Section 5.17. Absence of Certain Changes or Events. Since November 30,
1999, except as contemplated by this Agreement or disclosed on the Financial
Statements or the notes thereto, or as set forth in Schedule 5.17 of the
Disclosure Schedule, the Company and each of its Subsidiaries have conducted its
business only in the ordinary course and in a manner consistent with past
practice and, since such date, there has not been:
(a) any changes in the business, financial condition or results of
operations of such party having or reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect;
(b) any damage, destruction or loss (whether or not covered by insurance)
reasonably likely, individually or in the aggregate, to have a Material Adverse
Effect;
(c) any material change by such party in its accounting methods, principles
or practices;
(d) any revaluation by such party or any of its material assets, including
but not limited to writing down the value of inventory or writing off of notes
or accounts receivable which aggregates in excess of $15,000;
(e) any entry by such party into any commitment or transactions material to
such party (other than commitments or transactions entered into in the ordinary
course of business);
(f) any declaration, setting aside or payment of any dividends or
distributions in respect of the capital stock of such party;
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(g) any increase in or establishment of any bonus, insurance, severance,
deferred compensation, pension, retirement, profit sharing, stock option
(including without limitation the granting of stock options, stock appreciation
rights, performance awards, or restricted stock awards), stock purchase or other
employee benefit plan or agreement or arrangement, or any other increase in the
compensation payable or to become payable to any present or former director,
officer or key employee of such party, except for increases in base compensation
in the ordinary course of business consistent with past practice, or pursuant to
any employment, consulting or severance agreement or arrangement previously
entered into with any such present or former directors, officers or key
employees; or
(h) any other action which, if it had been taken after the date hereof,
would have required the consent of Nemetschek hereunder.
Section 5.18. Assets.
(a) The Company and each of its Subsidiaries has good and marketable title
to their real properties, including any leaseholds and ground leases, and their
other assets and properties, all as reflected as owned or held by the Company or
such Subsidiary respectively, in the Financial Statements as of May 31, 1999,
and those acquired since such date, except for (i) assets and properties
disposed of since such date in the ordinary course of business and (ii)
Permitted Liens none of which, individually or in the aggregate, except as set
forth in the Financial Statements or in Schedule 5.18 of the Disclosure
Schedule, are material to the Company or such Subsidiary, respectively. All
buildings, structures, fixtures and appurtenances comprising part of the real
properties of the Company and its Subsidiaries (whether owned or leased) are, in
the opinion of management of the Company or such Subsidiary, in good operating
condition, reasonable wear and tear excepted. Title to all real property owned
by the Company and its Subsidiaries is held in fee simple, except as otherwise
noted in the Financial Statements or as set forth in Schedule 5.18 of the
Disclosure Schedule. The Company and each of its Subsidiaries have title or
other rights to its assets sufficient in all material respects for the conduct
of their respective businesses as presently conducted, and except as set forth
in the Financial Statements or in Schedule 5.18 of the Disclosure Schedule, such
assets are free, clear and discharged of and from any and all Liens which are
material to the Company and its Subsidiaries, other than Permitted Liens.
(b) All leases and licenses pursuant to which the Company and each of its
Subsidiaries, as lessee or licensee, leases or licenses real property, personal
property or Intellectual Property are, to the knowledge of the Company and such
Subsidiary, valid, effective, and enforceable against the lessor in accordance
with their respective terms except as the enforceability thereof may be limited
by bankruptcy, insolvency, moratorium, reorganization, receivership,
conservatorship or similar laws relating to or affecting the enforcement of
creditors' rights generally, and by general principles of equity, whether
applied by a court of law or equity. There is not under any of such leases or
licenses any existing material default, or any event which with notice or lapse
of time, or both, would constitute a material default, with respect to either
the Company or such Subsidiary, or to the knowledge of the Company, the other
party. Except as disclosed in Schedule 5.18 of the Disclosure Schedule, none of
such leases involving a rental payment of more than $25,000 annually or such
licenses contains a prohibition against assignment by the Company or such
Subsidiary, by operation of law or otherwise, or any other
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provision which would preclude the Surviving Corporation from possessing and
using the leased premises or licensed property (including Intellectual Property)
for the same purposes and upon the same rental and other terms upon the
consummation of the Merger as are applicable to the use by the Company or such
Subsidiary as of the date of this Agreement.
Section 5.19. Books and Records. The respective minute books of the Company
and each of its Subsidiaries, as previously made available to Nemetschek and its
representatives, contain accurate records of all meetings of and all corporate
actions or written consents taken by the respective stockholders and boards of
directors of the Company and each of its Subsidiaries. Neither the Company nor
any of its Subsidiaries has any of their respective records, systems, controls,
data or information recorded, stored, maintained, operated or otherwise wholly
or partly dependent upon or held by any means (including any electronic,
mechanical or photographic process, whether computerized or not) which
(including all means of access thereto and therefrom) are not under the
exclusive ownership and direct control of the Company and such Subsidiary, as
the case may be.
Section 5.20. Proxy Statement. The information to be supplied by the
Company for inclusion in the Proxy Statement will not on the date the Proxy
Statement (or any amendment thereof or supplement thereto) is first mailed to
the Company's stockholders, at the time of the Stockholders Meeting, and at the
Effective Time, contain any statement that, in the light of the circumstances
under which it is made, is false or misleading with respect to any material
fact, omits to state a material fact necessary in order to make the statements
made therein not false or misleading, or omits to state any material fact
necessary to correct any statement in any earlier communication with respect to
the solicitation of proxies for the Stockholders Meeting that has become false
or misleading. If at any time prior to the Effective Time, any event relating to
the Company or any of its Subsidiaries or their respective officers or directors
is discovered by the Company that should be set forth in a supplement to the
Proxy Statement, the Company will promptly inform Nemetschek thereof and such
amendment or supplement will be promptly filed with the SEC, and, as required by
law, disseminated to the Company's Stockholders. Notwithstanding the foregoing,
the Company makes no representation or warranty with respect to any information
supplied by Nemetschek or Acquisition that is to be included in the Proxy
Statement. The Proxy Statement will comply in all material respects as to form
and substance with the requirements of the Exchange Act and the rules and
regulations thereunder.
Section 5.21. Brokers and Finders. Except for the fees and expenses paid or
to be paid to FBW and Offutt Securities, the Company represents and warrants to
the other parties hereto that no broker, finder, investment bankers, agent or
similar intermediary has acted directly or indirectly on its behalf in
connection with this Agreement or the transactions contemplated hereby, and that
no brokerage commissions, finders' fees, investment banker, or similar fees or
commissions and/or expenses are payable or to be paid in connection therewith
based on any agreement, arrangement or understanding with it or any action taken
by it.
Section 5.22. Full Disclosure. None of this Agreement, the Financial
Statements, or any Schedule, Exhibit or certificate delivered in accordance with
the terms hereof or any other document or instrument in writing that has been
supplied by or on behalf of the Company in connection with the transactions
contemplated hereby contains an untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements contained herein
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or therein not misleading in light of the circumstances in which the same were
made. There is no fact known to the Company with regard to the Company and its
Subsidiaries that individually, or in the aggregate has had or could reasonable
be expected to have a Material Adverse Effect on the Company or its Subsidiaries
or the Surviving Corporation assuming the transactions contemplated hereby are
consummated or on any of their respective property or assets and that has not
been disclosed herein or in the Schedules, Exhibits or certificates furnished in
connection with the consummation of the transactions contemplated hereby.
Section 5.23. Environmental Matters. Except as set forth in Schedule 5.23:
(i) the Company and each of its Subsidiaries are and have been in compliance in
all material respects with all Environmental Laws, except for such noncompliance
that would not result in Environmental Liabilities which could reasonably be
expected to have a Material Adverse Effect on the Company or its Subsidiaries or
the Surviving Corporation assuming the transactions contemplated hereby are
consummated; (ii) the Company and each of its Subsidiaries have obtained, and
are in compliance in all material respects with, all Environmental Permits
required by Environmental Laws for the operations of their respective businesses
as presently conducted or as proposed to be conducted, except where the failure
to so obtain or comply with such Environmental Permits would not result in
Environmental Liabilities which could reasonably be expected to have
individually or in the aggregate a Material Adverse Effect on the Company or its
Subsidiaries or the Surviving Corporation assuming the transactions contemplated
hereby are consummated; (iii) neither the Company nor any of its Subsidiaries
are involved in operations or know of any facts, circumstances or conditions,
including any Releases of Hazardous Materials, that are likely to result in any
Environmental Liabilities of the Company or any of its Subsidiaries or which
could reasonably be expected to have individually or in the aggregate a Material
Adverse Effect on the Company or its Subsidiaries or the Surviving Corporation
assuming the transactions contemplated hereby are consummated, and none of the
Company or its Subsidiaries has permitted any current or former tenant of such
Person to engage in any such operations, except as would not reasonably be
expected to have individually or in the aggregate a Material Adverse Effect on
the Company or any of its Subsidiaries or the Surviving Corporation assuming the
transactions contemplated hereby are consummated; (iv) neither the Company nor
any of its Subsidiaries has received any Environmental Claim, nor to their
knowledge is any Environmental Claim threatened, which individually or in the
aggregate would result in a Material Adverse Effect on the Company or any of its
Subsidiaries or the Surviving Corporation assuming the transactions contemplated
hereby are consummated; (v) neither the Company nor any of its Subsidiaries has
assumed, contractually or by operation of law, any material liabilities under
any Environmental Laws which individually or in the aggregate could reasonably
be expected to have a Material Adverse Effect on the Company or any of its
Subsidiaries or the Surviving Corporation assuming the transactions contemplated
hereby are consummated; and (vi) neither the Company nor any of its Subsidiaries
has entered into, has agreed to, or is subject to any material judgment, decree,
order or other similar requirement of any Governmental Authority under any
Environmental Laws, including without limitation those relating to compliance
with Environmental Laws or to investigation, cleanup, remediation or removal of
Hazardous Substances.
Section 5.24. Insurance Disclosure. The Company and each of its
Subsidiaries maintain insurance with insurers that in the best judgment of
management of the Company are sound and reputable with respect to the Company's
and its Subsidiaries' assets and upon their respective
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businesses and operations against loss or damage, risks, hazards and liabilities
as in the judgment of the Company is customary and appropriate for companies
comparable to the Company. The Company and each of its Subsidiaries maintain in
effect all insurance required to be carried by law or by any agreement by which
they are bound. All material claims under all policies of insurance maintained
by the Company or any of its Subsidiaries have been filed in due and timely
fashion. The Company and each of its Subsidiaries has taken or will timely take
all requisite action (including without limitation the making of claims and the
giving of notices) pursuant to its directors' and officers' liability insurance
policy or policies in order to preserve all rights thereunder with respect to
all matters (other than matters arising in connection with this Agreement and
the transactions contemplated hereby) occurring prior to the Effective Time.
Neither the Company nor any of its Subsidiaries has, during the past three
years, had an insurance policy cancelled or been denied insurance coverage for
which such companies has applied.
Section 5.25. Year 2000 Compliance. All of the Company's and each of its
Subsidiaries' products and services, products and services under development,
Web sites, and material Internal MIS Systems and Facilities are Year 2000
Compliant. The Company has furnished Nemetschek with a true, correct and
complete copy of any internal investigations, memoranda, budget plans,
forecasts, or reports concerning the Year 2000 Compliance of the products,
services, operations, systems, supplies, and facilities of the Company and each
of its Subsidiaries and their respective vendors. The Company and its
Subsidiaries have made appropriate inquiries of their key vendors and suppliers
and have received assurances, reasonably believed by the Company and its
Subsidiaries to be reliable, that such Persons have also taken appropriate
actions to ensure that there shall be no material adverse change to their
respective business and electronic and information systems related to Year 2000.
Based upon the information provided to the Company and its Subsidiaries and
their own internal assessments, Year 2000 issues will not have a Material
Adverse Effect on the Company or any of its Subsidiaries.
Section 5.26. Material Agreements. Each of the Company and its Subsidiaries
has made available to Nemetschek a true and correct copy of all Material
Agreements. Each Material Agreement is valid, binding, in full force and effect
and enforceable by the Company and such Subsidiary as the case may be in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors generally and by general equitable principles. Except as disclosed in
Schedule 5.26, neither the Company nor any of its Subsidiaries is (with or
without the lapse of time or the giving of notice, or both) in breach or default
in any material respect thereunder and, to the knowledge of the Company, no
other party to any of the Material Agreements is (with or without the lapse of
time or the giving of notice, or both) in breach or default in any material
respect thereunder.
Section 5.27. Intellectual Property. (a) Schedule 5.27 of the Disclosure
Schedule contains a list of all material Intellectual Property used by the
Company or its Subsidiaries in its business. The Company and each of its
Subsidiaries owns or has a valid license or other agreement to use, in the
manner currently used or currently proposed to be used, all Intellectual
Property used in its business as currently conducted or currently proposed to be
conducted, including, without limitation, its Web sites and all software or
other works embodied in or integrated into the products of the Company or its
Subsidiaries. Schedule 5.27 also contains a
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complete and accurate list of (i) all material licenses and other rights granted
by any third party to the Company or its Subsidiaries with respect to any
Intellectual Property, and (ii) all material licenses or other rights granted by
the Company or any of its Subsidiaries to any third party with respect to
Intellectual Property. The Company and its Subsidiaries have provided copies of
all such material licenses or other grants of Intellectual Property, and of all
material trademark, service mark, trade dress, trade name, domain name,
copyright, and patent registrations or applications therefor.
(b) To the knowledge of the Company and its Subsidiaries, the operation of
the business of the Company and its Subsidiaries as such business currently is
conducted and currently is proposed to be conducted, including the design,
development, marketing, and sale of products or services (including with respect
to products or services under development), has not, does not, and will not
under the laws of any jurisdiction infringe or misappropriate the Intellectual
Property of any third party, constitute unfair competition or trade practices,
violate the rights of any person (including rights to privacy or publicity), or
violate any export control laws. Except as stated in Schedule 5.27 of the
Disclosure Schedule, no claims with respect to the Company's or any of its
Subsidiaries' Intellectual Property have been asserted, are pending, or have
been threatened by any third party, nor are there valid grounds for any bona
fide claims (i) that any distribution, licensing, sublicensing, or other use of
the Intellectual Property infringes the rights of any third parties, (ii)
against the use of any Intellectual Property as used in the Company's or any of
its Subsidiaries' business as currently conducted or currently proposed to be
conducted, or (iii) challenging the ownership, validity or effectiveness of any
of the Intellectual Property. Except as stated in Schedule 5.27 of the
Disclosure Schedule, none of the Company's or any of its Subsidiaries' owned
Intellectual Property is subject to any outstanding decree, order, judgment or
stipulation restricting in any manner the licensing thereof by the Company or
such Subsidiary.
(c) To the knowledge of the Company and its Subsidiaries, and except as set
forth in Schedule 5.27(c), there is no unauthorized use, infringement or
misappropriation of any Intellectual Property of the Company or any of its
Subsidiaries by any Person or third party. Except as would not be materially
adverse to the Company or any of its Subsidiaries, the Company and its
Subsidiaries have taken all necessary measures to protect their Intellectual
Property, including registrations, renewals, and filings, and have taken all
necessary measures to protect and preserve the security and confidentiality of
its trade secrets and other confidential information. All trade secrets and
other confidential information of the Company and its Subsidiaries are not part
of the public domain or knowledge, nor, to the knowledge of the Company and its
Subsidiaries, have they been misappropriated by any person. To the knowledge of
the Company and its Subsidiaries, no employee or consultant of the Company or
its Subsidiaries has used any trade secrets or other confidential information of
any other person in the course of their work for the Company, or violated any
agreement or law concerning the use or disclosure of trade secrets or other
confidential information.
(d) The Company and its Subsidiaries are the exclusive owner of all right,
title, and interest in the Intellectual Property purportedly owned by the
Company or its Subsidiaries, including, without limitation, all object or source
code or software. Except as listed in Schedule 5.27 of the Disclosure Schedule,
the rights to such Intellectual Property are in full force and effect. As to the
trademarks and service marks purportedly owned by the Company or any of its
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Subsidiaries, there has been no prior use of such trademarks or service marks by
any third party, to the knowledge of the Company and its Subsidiaries, that
would convey upon said third party superior rights in any such trademarks or
service marks.
(e) All Intellectual Property purported to be owned by the Company and its
Subsidiaries which was developed, worked on or otherwise held by any employee,
officer, consultant, or other Person is owned free and clear by the Company or
such Subsidiary by operation of law or has been validly assigned to the Company
or such Subsidiary. Except as would not be materially adverse to the Company or
any of its Subsidiaries, all services provided to the Company and its
Subsidiaries by non-employees with respect to the creation, modification or
improvement of any Intellectual Property purported to be owned by the Company or
such Subsidiary (including, without limitation, software, hardware, patentable
inventions, and copyrightable works) have been performed pursuant to agreements
with the Company that assign to the Company or such Subsidiary ownership of such
Intellectual Property, each of which is valid, binding, and enforceable
according to its terms.
(f) All material contracts, licenses and agreements relating to the
Intellectual Property owned or used by the Company or its Subsidiaries are in
full force and effect. The execution, delivery or performance of this Agreement,
or consummation of the transactions contemplated by this Agreement, will neither
violate nor result in the breach, modification, cancellation, termination, or
suspension of such contracts, licenses, and agreements. The Company and each of
its Subsidiaries is in material compliance with, and has not materially breached
any term of any such contracts, licenses and agreements and, to the knowledge of
the Company, all other parties to such contracts, licenses and agreements are in
compliance with, and have not materially breached any term of, such contracts,
licenses and agreements. Following the Closing Date, the Surviving Corporation
will be permitted to exercise all of the Company's and its Subsidiaries' rights
under such contracts, licenses and agreements to the same extent the Company and
its Subsidiaries would have been able or permitted to had the transactions
contemplated by this Agreement not occurred and without the payment of any
additional amounts or consideration other than ongoing fees, royalties, or
payments which the Company or its Subsidiaries would otherwise be required to
pay.
Section 5.28. Absence of Certain Business Practices. None of the Company or
any of its Subsidiaries, or any officer, employee or agent thereof, nor any
other Person acting on behalf of the Company or any of its Subsidiaries, has,
directly or indirectly, within the past five years given or agreed to give any
gift or similar benefit to any customer, supplier, governmental employee or
other Person or entity who is or may be in a position to help or hinder the
Company or such Subsidiary (or assist the Company or such Subsidiary in
connection with any actual or proposed transaction) which (i) subjects any party
to any damage or penalty in any civil, criminal or governmental litigation or
proceeding which would have individually or in the aggregate a Material Adverse
Effect on the Company or such Subsidiary or the Surviving Corporation assuming
the transactions contemplated hereby are consummated, (ii) if not given in the
past, could have had individually or in the aggregate a Material Adverse Effect
on the Company or such Subsidiary, or (iii) if not continued in the future,
could have individually or in the aggregate a Material Adverse Effect on the
Company or such Subsidiary or the Surviving Corporation assuming the
transactions contemplated hereby are consummated.
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Section 5.29. Affiliate Transactions. Schedule 5.29 sets forth (i) all
contracts, agreements, other arrangements or transactions existing or occurring
at any time after May 31, 1997 between the Company and any of its Subsidiaries,
on the one hand, and any of the Company's or such Subsidiaries' Affiliates
(including officers, directors, or employees or any of them) or any holder of 1%
of the outstanding common stock of the Company or its Subsidiaries or a family
member of such a Person, on the other hand, or any of their respective
Affiliates, other than agreements relating to services provided as an officer or
director of the Company other than relating to any extraordinary bonuses, and
(ii) a description of all payments made to or received from, the Company or any
of its Subsidiaries, on the one hand, and any of the Company's Affiliates
(including officers, directors, or employees or any of them) or any holder of 1%
of the outstanding common stock of the Company or a family member of such a
Person, on the other hand, or any of their respective Affiliates, since May 31,
1997, except for dividends paid or distributions made with respect to any
outstanding class or series of securities of such party and payments of salary
or other regular compensation for services in the ordinary course.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF NEMETSCHEK AND ACQUISITION
Nemetschek and Acquisition hereby represent and warrant to the Company
as follows:
Section 6.01. Organization. Nemetschek is a corporation duly organized,
validly existing and in good standing under the laws of The Federal Republic of
Germany and Acquisition is a corporation duly organized, validly existing and in
good standing under the laws of the State of Maryland, and each of Nemetschek
and Acquisition has all requisite power and authority, corporate or otherwise,
to own, operate and lease its properties, and to carry on its business
substantially as now conducted. Each of Nemetschek and Acquisition is duly
qualified to do business and is in good standing in each jurisdiction in which
the character of the assets or property owned, leased or operated by it or the
nature of the business conducted by it makes such qualification necessary,
except where the failure to be so qualified or in good standing would not have a
Material Adverse Effect on the ability of either Nemetschek or Acquisition to
consummate the transactions contemplated hereby. Each of Nemetschek and
Acquisition has all requisite power and authority, corporate or otherwise, to
enter into this Agreement and, subject to the adoption of this Agreement by the
stockholders of the Company and the receipt of all requisite regulatory
approvals and the expiration of any applicable waiting periods, to consummate
the transactions contemplated hereby.
Section 6.02. Authorization; Enforceability. The execution, delivery and
performance of this Agreement and all other agreements contemplated hereby and
the consummation of the transactions contemplated hereby have been duly approved
and authorized by the Board of Directors (or comparable governing bodies) of
each of Nemetschek and Acquisition, and all necessary corporate action on the
part of such party has been taken, subject to the adoption of this Agreement by
the stockholders of the Company and the receipt of all requisite regulatory
approvals and the expiration of any applicable waiting periods. This Agreement
has been duly executed and delivered by each of Nemetschek and Acquisition and
constitutes the valid and binding obligation of such party and is enforceable
against such party in accordance with its
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terms, except to the extent that enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws or
equitable principles or doctrines.
Section 6.03. Conflicts. The execution and delivery of this Agreement does
not, and the consummation of the transactions contemplated hereby will not,
conflict with or result in any violation, breach or termination of, or default
or loss of a material benefit under, or permit the acceleration of any
obligation under, or result in the creation of any material Lien on any of the
property or assets under, any provision of the Articles of Incorporation or
Bylaws (or comparable constitutive documents) of either Nemetschek or
Acquisition, or any mortgage, indenture, lease, agreement or other instrument,
permit, concession, grant, franchise, license, judgment, order, decree, statute,
law, ordinance, rule or regulation applicable to Nemetschek or Acquisition or
their respective properties, other than any such conflicts, violations, breaches
or defaults which would not have a Material Adverse Effect on the ability of
either Nemetschek or Acquisition to consummate the transactions contemplated
hereby.
Section 6.04. Consents and Approvals. No consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Authority is required by or with respect to Nemetschek or Acquisition in
connection with the execution and delivery of this Agreement or the consummation
by such party of the transactions contemplated hereby except for: (i) the filing
by the Company of the Proxy Statement with the SEC for use in connection with
the Stockholders Meeting to approve the Merger; (ii) the filing of Articles of
Merger with the SDAT, and the acceptance thereof; (iii) any filings, approvals
or no-action letters with or from state securities authorities; and (iv) any
filings required under the HSR Act or with any other Governmental Authority, and
consents, waivers or approvals obtained with respect thereto.
Section 6.05. Anti-takeover Provisions Inapplicable. Assuming the Company
has taken the actions necessary to ensure that the representations and
warranties of the Company contained in Section 5.05 are accurate, no "business
combination," "moratorium," "control share" or other state anti-takeover statute
or regulation applicable to Nemetschek or Acquisition (i) applies to the Merger,
(ii) prohibits or restricts the ability Nemetschek or Acquisition to perform its
obligations under this Agreement or its ability to consummate the transactions
contemplated hereby, (iii) would have the effect of invalidating or voiding this
Agreement or any provision hereof, or (iv) would subject the Company to any
material impediment or condition in connection with the exercise of any of its
rights under this Agreement.
Section 6.06. No Prior Activities; Assets of Acquisition. Acquisition was
formed solely for the purpose of effecting the Merger and engaging in the
transactions contemplated hereby. Acquisition has neither incurred any
obligations or liabilities nor engaged in any business or activities of any type
or kind whatsoever or entered into any agreements or arrangements with any
Person except in connection with its organization and this Agreement.
Section 6.07. Compliance with Laws. (a) The business of Nemetschek and
Acquisition has been and is being conducted in compliance in all material
respects with all laws, ordinances and regulations of Governmental Authorities
applicable thereto, including, without limitation, federal and state securities
laws, laws and regulations relating to financial statements and reports,
occupational safety, fair employment practices, fair labor standards and laws
and regulations
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relating to employees and employee benefits, and any statutes or ordinances
relating to the properties occupied or used by Nemetschek or Acquisition.
(b) No investigation or review by any Governmental Authority with respect
to Nemetschek or Acquisition is pending or, to the knowledge of Nemetschek or
Acquisition, threatened, nor has any Governmental Authority indicated to
Nemetschek or Acquisition an intention to conduct the same.
Section 6.08. Litigation. There is no action, suit, investigation or
proceeding, legal, quasi-legal, administrative or otherwise, pending or, to the
knowledge of Nemetschek or Acquisition, threatened against Nemetschek or
Acquisition or any property of Nemetschek or Acquisition in any court or before
any arbitrator of any kind or before or by any Governmental Authority except for
such actions, suits, investigations or legal proceedings that would not
materially affect the ability of Nemetschek or Acquisition to consummate the
transactions contemplated hereby. Neither Nemetschek nor Acquisition is in
default with respect to any judgment, order, writ, injunction or decree of any
arbitrator, court or Governmental Authority, and there are no unsatisfied
judgments against Nemetschek or Acquisition except for such defaults or
unsatisfied judgments as would not materially affect the ability of Nemetschek
and Acquisition to consummate the transactions contemplated hereby.
Section 6.09. Proxy Statement. The information to be supplied by Nemetschek
and Acquisition for inclusion in the Proxy Statement will not, on the date the
Proxy Statement (or any amendment thereof or supplement thereto) is first mailed
to the Company's stockholders, at the time of the Stockholders Meeting, and at
the Effective Time, contain any statement that, in the light of the
circumstances under which it is made, is false or misleading with respect to any
material fact, omits to state any material fact necessary in order to make the
statements made therein not false or misleading, or omits to state any material
fact necessary to correct any statement in any earlier communication with
respect to the solicitation of proxies for the Stockholders Meetings that has
become false or misleading. If at any time prior to the Effective Time, any
event relating to either Nemetschek or Acquisition or its officers or directors
is discovered by Nemetschek or Acquisition that should be set forth in a
supplement to the Proxy Statement, Nemetschek will promptly inform the Company
and such amendment or supplement will be promptly filed with the SEC and, as
required by law, disseminated to the Company's stockholders. Notwithstanding the
foregoing, Nemetschek and Acquisition make no representation or warranty with
respect to any information supplied by the Company that is to be contained in
the Proxy Statement.
Section 6.10. Financing. Nemetschek has available to it the funds necessary
to purchase the Company Common Stock pursuant to and as contemplated by the
terms of Article IV and to consummate the Merger.
Section 6.11. Brokers and Finders. Each of Nemetschek and Acquisition
represents and warrants to the Company that no broker, finder, investment
bankers, agent or similar intermediary has acted directly or indirectly on its
behalf in connection with this Agreement or the transactions contemplated
hereby, and that no brokerage commissions, finders' fees, investment banker, or
similar fees or commissions and/or expenses are payable or to be paid in
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connection therewith based on any agreement, arrangement or understanding with
it or any action taken by it.
ARTICLE VII
COVENANTS AND AGREEMENTS OF THE PARTIES
Section 7.01. Conduct of the Business. During the period from the date of
this Agreement until the Effective Time, the Company will not, and will cause
each of its Subsidiaries not to, take any action that adversely affects its
ability to, and the Company (on its own behalf and that of its Subsidiaries)
covenants and agrees that it will (i) pursue its business in the ordinary
course, (ii) seek to preserve intact its current business organization, (iii)
keep available the services of its current officers and employees, and (iv)
preserve its relationships with customers, suppliers and others having business
dealings with it. During such period, the Company shall not, and shall cause
each of its Subsidiaries not to, without Nemetschek's prior written consent:
(a) except with respect to options currently outstanding under the Company
Option Plan, issue, deliver, sell, dispose of, pledge or otherwise encumber, or
authorize or propose the issuance, delivery, sale, disposition or pledge or
other encumbrances of (i) any shares of any class of its capital stock, or any
securities or rights convertible into, exchangeable for or evidencing the right
to subscribe for any shares of its capital stock, or any rights, warrants,
options, calls, commitments or any other agreements of any character to purchase
or acquire any shares of its capital stock or any securities or rights
convertible into, exchangeable for or evidencing the right to subscribe for any
shares of its capital stock, or (ii) any other securities in respect of, in lieu
of, or in substitution for, any shares of its capital stock outstanding on the
date hereof;
(b) directly or indirectly redeem, purchase or otherwise acquire, or
propose to redeem, purchase or otherwise acquire, any of its outstanding capital
stock or any profit or loss or any beneficial interest therein;
(c) split, combine, subdivide or reclassify any shares of its capital stock
or otherwise make any payments to its stockholders;
(d) (i) grant any increases in the compensation of any of its directors,
officers or employees, (ii) pay or agree to pay any pension or retirement
allowance or other employee benefit not required or contemplated by any Plan as
in effect on the date hereof to any such director, officer or employee, whether
past or present, (iii) enter into any new or amend any existing employment or
severance agreement or any change of control agreement with any such director,
officer or employee, (iv) pay or agree to pay any bonus to any director, officer
or employee (whether in the form of cash, capital stock or otherwise), or (v)
except as may be required to comply with applicable law, amend any existing, or
become obligated under any new, Plan, except in the case of the foregoing
clauses (i) - (iv);
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(e) adopt a plan of complete or partial liquidation, dissolution, merger,
consolidation, reclassification, restructuring, recapitalization or other
reorganization (other than as contemplated hereby) or otherwise effect the same;
(f) declare or pay any dividend or make any other distribution with respect
to its capital stock, whether in cash, stock or other property;
(g) make any acquisition, by means of merger, consolidation or otherwise,
of any direct or indirect ownership interest in, or assets comprising, any
business enterprise or operation or enter into any joint venture, partnership,
or strategic alliance agreement with any Person;
(h) adopt any amendments to its Articles of Incorporation or Bylaws or
comparable governing documents;
(i) directly or indirectly incur any indebtedness for borrowed money or
guarantee such indebtedness or agree to become contingently liable, by guaranty
or otherwise, for the obligations or indebtedness of any Person or make or
commit to make any loans, advances or capital contributions to, or investments
in, any Person or to any other Person, except for bank deposits and other
investments in marketable securities and cash equivalents made in the ordinary
course of its business consistent with past practice, or refinance or
restructure any existing loan;
(j) engage in the conduct of any business the nature of which is materially
different from the business in which it is currently engaged or outside the
ordinary course of business consistent with past practice;
(k) enter into any agreement providing for acceleration of payment or
performance or other consequence as a result of a change of control of the
Company;
(l) enter into any contract, arrangement or understanding requiring the
purchase of equipment, materials, supplies or services over a period greater
than 12 months which is not cancelable without penalty on 30 or fewer days'
notice and that involves an expenditure in excess of $35,000;
(m) foreclose upon or otherwise take title to or possession or control of
any real property without first obtaining a phase one environmental report
thereon;
(n) forgive any indebtedness owed to such party or convert or contribute by
way of capital contribution any such indebtedness owed or settle or cancel any
claims that it may possess or waive any rights of material value;
(o) except with respect to currently outstanding options under the Company
Option Plan, enter into any securities transaction for its own account or
purchase or otherwise acquire any investment security for its own account other
than securities backed by the full faith and credit of the United States or an
agency thereof;
(p) enter into, modify or extend any agreement, contract or commitment
involving an expenditure in excess of $35,000 for any one such agreement,
contract or commitment; provided,
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however, that notwithstanding any other provision of this Agreement, the Company
is permitted to enter into an agreement for tail coverage officers and directors
insurance, the cost of which shall not exceed $100,000 in the aggregate;
(q) place on any of its assets or properties any mortgage, pledge, lien,
charge, or other encumbrance;
(r) sell or otherwise dispose of any real property or any material amount
of tangible or intangible personal property other than properties acquired in
foreclosure or otherwise in the ordinary collection of indebtedness;
(s) enter into any new, or modify, amend or extend the terms of any
existing, contracts relating to the purchase or sale of financial or other
futures, or any put or call option relating to cash, securities or commodities
or any interest rate swap agreements or other agreements relating to the hedging
of interest rate risk, except in the ordinary course of business consistent with
past practices and prudent business practices;
(t) knowingly take any action that would materially impede or delay the
consummation of the transactions contemplated by this Agreement or the ability
of the parties hereto to obtain any approval of any regulatory authority
required for the transactions contemplated by this Agreement or to perform its
covenants and agreements under this Agreement;
(u) make any material changes in its pricing policies related to its
products;
(v) authorize or enter into any agreement providing for management or
advisory services to be provided by or to such party;
(w) mortgage, pledge, encumber, sell, lease or otherwise transfer or
dispose of any of its assets, provided that the sale of inventory in the
ordinary course is not precluded by this clause (w);
(x) implement or adopt any changes in its accounting principles, practices
or methods, other than as may be required by GAAP;
(y) authorize or announce an intention to do any of the foregoing, or enter
any contract, agreement, commitment or arrangement to do any of the foregoing;
or
(z) perform any act or omit to take any action that would make any of the
representations or warranties contained in this Agreement inaccurate or
materially misleading as of the Effective Time or that would cause a breach of
any of the covenants or agreements of this Agreement.
Section 7.02. Officers and Employees. The Company agrees that, prior to the
Effective Time, it will use its reasonable efforts to encourage its officers and
employees and those of its Subsidiaries to the extent they are in good standing
to maintain their employment with the Company and such subsidiary after the
Effective Time.
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Section 7.03. Meeting of Stockholders. The Company hereby covenants and
agrees that it shall, as promptly as practicable, take all action necessary in
accordance with applicable law and its Articles of Incorporation and Bylaws to
convene a meeting of its stockholders and shall use all commercially reasonable
efforts to hold such meeting as promptly as practicable after the date hereof.
The purpose of such meeting shall be, among other things, to consider and vote
upon the approval of this Agreement, the Merger, and the transactions
contemplated hereby. Subject to the fiduciary duties of the Company's Board of
Directors under applicable law as advised by counsel, the Board of Directors of
the Company shall recommend and declare advisable such approval and the Company
shall take all lawful action to solicit such approval, including, without
limitation, the inclusion of the recommendation of the Board of Directors and
the Special Committee of the Company in the Proxy Statement that the
stockholders of the Company vote in favor of the approval of the Merger and the
adoption of this Agreement.
Section 7.04. Proxy Materials. (a) As soon as practicable after the date
hereof, the Company shall promptly prepare, and Nemetschek and Acquisition shall
cooperate in the preparation of, and the Company shall file with the SEC as soon
as practicable, the Proxy Statement and a form of proxy, in connection with the
vote of the Company's stockholders with respect to the Merger. The Company will
use all reasonable efforts to cause the Proxy Statement to be mailed to
stockholders of the Company at the earliest practicable date as permitted by the
SEC.
(b) If at any time prior to the Effective Time, any event relating to or
affecting the Company, Nemetschek, or Acquisition shall occur as a result of
which it is necessary, in the opinion of counsel for the Company, Nemetschek, or
Acquisition, to supplement or amend the Proxy Statement in order to make such
document not misleading in light of the circumstances existing at the time
approval of the stockholders of the Company is sought, the Company, Nemetschek,
or Acquisition, respectively, will notify the other parties hereto thereof and,
in the case of Nemetschek and Acquisition, it will cooperate with the Company in
preparing, and, in the case of the Company, it will prepare and file, an
amendment or supplement with the SEC and, if required by law or the rules and
regulations under the Exchange Act, applicable state securities authorities and
each national securities exchange upon which the Company Common Stock is then
listed for trading and/or quotation system on which such stock is quoted such
that such document, as so supplemented or amended, will not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in light of the circumstances existing at
such time, not misleading, and the Company will, as required by law, disseminate
to its stockholders such amendment or supplement.
Section 7.05. Filings; Other Action. The Company, Nemetschek, and
Acquisition shall: (a) to the extent required, promptly make all filings and
thereafter make any other required submissions under the HSR Act with respect to
the Merger; (b) use all reasonable efforts to cooperate with one another to (i)
determine which Authorizations are required to be made or obtained prior to the
Effective Time in connection with the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby, and (ii) timely
make and seek all such Authorizations; (c) use all reasonable efforts to obtain
in writing any consents required from third parties in form reasonably
satisfactory to the Company, Nemetschek, and Acquisition necessary to effectuate
the Merger; (d) use all reasonable efforts to promptly take, or cause to be
taken, all other actions and do, or cause to be done, all other things
necessary, proper
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or appropriate to satisfy the conditions set forth in Article VIII and to
consummate and make effective the transactions contemplated by this Agreement on
the terms and conditions set forth herein as soon as practicable, including
seeking to remove promptly any injunction or other legal barrier that may
prevent such consummation; provided, however, that notwithstanding anything to
the contrary in this Agreement, no party nor any of its Affiliates shall be
required to make any disposition of, or enter into any agreement to hold
separate, any asset or business and no party hereto nor any of their Affiliates
shall be required to make any payment of money nor shall any party or its
Affiliates be required to comply with any condition or undertaking or take any
action which, individually or in the aggregate, would materially adversely
affect the economic benefits to such party of the transactions contemplated
hereby, taken as a whole, or materially adversely affect any other business of
such party; and (e) not take any action that might reasonably be expected to
impair the ability of the parties to consummate the Merger at the earliest
possible time.
Section 7.06. Access to Information. From the date hereof until the
Effective Time, the Company and its Subsidiaries (i) will give Nemetschek, its
counsel, financial advisors, accountants, auditors and other authorized
representatives full access to the offices, properties, books and records, and
personnel of the Company and its Subsidiaries during reasonable business hours,
(ii) will furnish copies to the Company, its counsel, financial advisors,
accountants, auditors and other authorized representatives such financial and
operating data and other information as such persons may reasonably request, and
which is in the possession of or can be obtained by the Company and its
Subsidiaries without undue expense, and (iii) will instruct their respective
employees, counsel, financial advisors and accountants to cooperate with
Nemetschek in its investigation of the business of the Company and its
Subsidiaries.
Section 7.07. Intellectual Property Rights. Prior to the Effective Time,
the Company and its Subsidiaries shall use all reasonable efforts to cooperate
with Nemetschek in obtaining all assignments or other consents, if any,
necessary with respect to Intellectual Property, to the extent not already owned
by the Company and its Subsidiaries, including all interests that may hereafter
become Intellectual Property prior to the Effective Time.
Section 7.08. Notice of Certain Events. Each party hereto shall promptly
notify the other party of: (i) any notice or other communication from any Person
alleging that the consent of such Person is or may be required in connection
with the transactions contemplated by this Agreement; (ii) any notice or other
communication from any Governmental Authority in connection with the
transactions contemplated by this Agreement; (iii) any actions, suits, claims,
investigations or proceedings commenced or, to its knowledge, threatened
against, relating to, or involving or otherwise affecting, such party which, if
pending on the date of this Agreement, would have been required to have been
disclosed or which relate to the consummation of the transactions contemplated
by this Agreement, and (iv) any event or matter known to or directly involving
such party that would result in a breach of this Agreement, is reasonably likely
to result in a Material Adverse Effect on such party or impair the ability of
such party to consummate the transactions contemplated hereby.
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Section 7.09. Certain Actions.
(a) The Company agrees that neither it nor any of its Subsidiaries nor any
of the officers and directors of it or its Subsidiaries shall, and that it shall
use its reasonable best efforts to cause its and its Subsidiaries' employees,
agents and representatives (including any investment banker, attorney or
accountant retained by it or any of its Subsidiaries) not to, directly or
indirectly, (i) initiate, solicit, encourage or knowingly facilitate any
inquiries or the making of any proposal or offer with respect to, or a
transaction to effect, a merger, reorganization, share exchange, consolidation,
business combination, recapitalization, liquidation, dissolution or similar
transaction involving it or any of its Significant Subsidiaries (as defined in
Rule 1-02 of Regulation S-X of the SEC, or any purchase or sale of the
consolidated assets (including without limitation stock of its Subsidiaries) of
such party and its Subsidiaries, taken as a whole, or any purchase or sale of,
or tender exchange offer for, the equity securities of such party that, if
consummated, would result in any Person (or the stockholders of such Person)
beneficially owning securities representing 10% or more of the total voting
power of such party (or of the surviving parent entity in such transaction) or
any of its Significant Subsidiaries (any such proposal, offer or transaction
(other than a proposal or offer made by the other party or an Affiliate thereof)
being hereinafter referred to as an "Acquisition Proposal"), (ii) have any
discussion with or provide any confidential information or data to any Person
relating to an Acquisition Proposal, or engage in any negotiations concerning an
Acquisition Proposal, or knowingly facilitate any effort or attempt to make or
implement an Acquisition Proposal, (iii) approve or recommend, or propose
publicly to approve or recommend, any Acquisition Proposal, or (iv) approve or
recommend, or propose to approve or recommend, or execute or enter into, any
letter of intent, agreement in principle, merger agreement, acquisition
agreement, option agreement or other similar agreement or propose publicly or
agree to do any of the foregoing related to any Acquisition Proposal. The
Company shall immediately instruct and otherwise use its reasonable best efforts
to cause its directors, officers, employees, agents, the Company (including,
without limitation, any investment banker, attorney, or accountant retained by
it), consultants and other representatives to comply with such prohibitions. The
Company shall immediately cease and cause to be terminated any existing
activities, discussions, or negotiations with any parties conducted heretofore
with respect to such activities. The Company shall promptly notify Nemetschek
orally and in writing in the event it receives any such inquiry or proposal and
shall provide reasonable detail of all relevant facts relating to such
inquiries. Notwithstanding the foregoing, the Board of Directors on behalf of
the Company shall be permitted to engage in any discussions or negotiations with
or provide any information to, any Person in response to an unsolicited bona
fide written Acquisition Proposal by any such Person, if the Board of Directors
of the Company, in its good faith judgment and after receipt of the written
advice of counsel, determines that the failure to provide such information or
engage in such action would result in the members of the Board of Directors
breaching their fiduciary duties under applicable law, and clauses (iii) and
(iv) shall not be applicable with regard to an Acquisition Proposal, if and only
to the extent that, the Board of Directors of the Company concludes in good
faith that such Acquisition Proposal constitutes a Superior Proposal. "Superior
Proposal" means, with respect to the Company, a bona fide written Acquisition
Proposal for the Company made by a Person (other than Nemetschek or any
affiliates thereof) as a result of which such party or its stockholders will own
40% or more of the combined voting power of the entity surviving and which is on
terms that the Company's Board of Directors in good faith concludes (following
receipt of the advice of its financial advisors and outside
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counsel), taking into account, among other things, all legal, financial,
regulatory and other aspects of the proposal would, if consummated, result in a
transaction that is more favorable to its stockholders, from a financial point
of view, than the Merger and is reasonably capable of being completed.
Section 7.10. Current Information. During the period from the date of this
Agreement to the Effective Time, the Company shall promptly furnish Nemetschek
with copies of all monthly and other interim financial statements produced in
the ordinary course of business as the same become available and shall cause one
or more of its designated representatives to confer on a regular and frequent
basis with representatives of Nemetschek.
Section 7.11. Indemnification.
(a) Post-Merger Indemnification of Officers and Directors. The Surviving
Corporation agrees that all rights permitted under Maryland law to
indemnification, including provisions relating to advances of expenses incurred
in defense of any action or suit, existing in favor of the present or former
directors or officers of the Company (collectively, the "Indemnified Parties")
as provided in the Company's Articles of Incorporation or By-Laws, as permitted
by Maryland law and in effect as of the date hereof, with respect to matters
(including the transactions contemplated by this Agreement) occurring at or
prior to the Effective Time, shall survive the Merger and shall continue in full
force and effect for a period of six (6) years from the Effective Time. In the
event any action or suit is asserted or commenced against any Indemnified Party
(whether before or after the Effective Time) as to which such Indemnified Party
would be entitled to indemnification under rights provided by the Company and
permitted by Maryland law, the Surviving Corporation will be entitled to
participate in and, to the extent it may wish, to assume the defense thereof,
except that if the Surviving Corporation is a subject of such action or suit and
there is, under applicable standards of professional conduct, a conflict on any
significant issue between the position of the Surviving Corporation and the
position of such Indemnified Party, or if the Surviving Corporation shall fail
to assume responsibility for such defense, such Indemnified Party may retain
counsel who will represent such Indemnified Party, and the Surviving Corporation
shall pay all reasonable fees and expenses of such counsel promptly as
statements therefor are received; provided, however, that such Indemnified Party
shall defend (or, if the defense is assumed by the Surviving Corporation, use
his reasonable efforts to assist in the defense of) any such matter; provided,
further, that the Surviving Corporation shall not be liable for any settlement
effected without its written consent; and provided, further, that the Surviving
Corporation shall not have any further obligation hereunder to any Indemnified
Party with respect to a claim for indemnification hereunder when and if a court
of competent jurisdiction shall ultimately determine, after exhaustion of all
avenues of appeal or after such time that any rights to prosecute an appeal have
lapsed, that such Indemnified Party is not entitled to indemnification hereunder
with respect to such claim. This covenant is intended to benefit each of the
Indemnified Parties.
(b) Procedures. Any Indemnified Party wishing to claim indemnification
under Section 7.11, upon learning of any such action or suit, shall promptly
notify the Surviving Corporation and shall deliver to the Surviving Corporation
an undertaking to repay any amounts advanced pursuant thereto when and if a
court of competent jurisdiction shall ultimately determine, after exhaustion of
all avenues of appeal or after such time that any rights to
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prosecute an appeal have lapsed, that such Indemnified Party is not entitled to
indemnification hereunder with respect to such claim. In no event may the
indemnified parties retain more than one law firm to represent them with respect
to any such matter unless there is, under applicable standards of professional
conduct, a conflict on any significant issue between the position of any two or
more indemnified parties in which case the Indemnified Parties may retain, at
the expense of the Surviving Corporation, such number of additional counsel as
are necessary to eliminate all conflicts of the type referred to above.
(c) Survival. The provisions of this Section 7.11 are intended to be for
the benefit of, and shall be enforceable by, each Indemnified Party, and his or
her heirs and representatives.
Section 7.12. Stock Transfer Agreement. Nemetschek and Acquisition hereby
acknowledge and agree that, notwithstanding any other provision of this
Agreement or the agreements referred to herein, Richard Diehl is expressly
permitted to transfer up to 200,000 shares of Company Common Stock to current
employees of the Company prior to or concurrent with the Closing.
ARTICLE VIII
CONDITIONS TO THE MERGERS
Section 8.01. Conditions to Each Party's Obligations. The performance of
the obligations of Nemetschek and Acquisition and the Company to consummate the
transactions contemplated by this Agreement are subject to the fulfillment at or
prior to the Effective Time of each of the following conditions, which
conditions may be waived only with the consent of both (x) Nemetschek and
Acquisition, and (y) the Company:
(a) Company Shareholder Approval. This Agreement and the transactions
contemplated hereby shall have been duly approved by the requisite holders of
Company Common Stock in accordance with applicable provisions of the MGCL and
the Company's Articles of Incorporation and Bylaws.
(b) Governmental Filings and Consents. Except for the filing of the
Articles of Merger, all governmental filings required to be made prior to the
Effective Time by Nemetschek, Acquisition, and the Company with, and all
governmental consents required to be obtained prior to the Effective Time by
Nemetschek, Acquisition, and the Company from, governmental regulatory
authorities in connection with the execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby shall have been made or
obtained, except where the failure to make such filing or obtain such consent
would not reasonably be expected to have a Material Adverse Effect on
Nemetschek, Acquisition, or the Company or the ability of such parties to
consummate the transactions contemplated hereby, and any waiting periods or
extensions thereof under the HSR Act shall have expired or been terminated.
(c) Third-Party Consents. All required authorizations, consents and
approvals of any third party (other than a governmental or regulatory
authority), the failure of which (either individually or in the aggregate) to
obtain would have a Material Adverse Effect on Nemetschek,
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Acquisition, or the Company or the ability of such parties to consummate the
transactions contemplated hereby, shall have been obtained.
(d) No Injunction or Proceedings. There shall not be in effect any
judgment, writ, order (including any temporary restraining order), injunction or
decree (collectively, an "Order") of any court or Governmental Authority of
competent jurisdiction restraining, enjoining or otherwise preventing
consummation of the transactions contemplated by this Agreement or permitting
such consummation only subject to any condition or restriction unacceptable to
either of (x) Nemetschek and Acquisition, or (y) the Company, each in its
reasonable judgment, nor shall there be pending or threatened by any
Governmental Authority any suit, action or proceeding seeking to restrain or
restrict the consummation of the transactions contemplated hereby or seeking
damages in connection therewith, which, in the reasonable judgment of either (x)
Nemetschek and Acquisition, or (y) the Company, could have (i) a Material
Adverse Effect on (x) Nemetschek or Acquisition, or (y) the Company after the
Effective Time, or (ii) a Material Adverse Effect on the ability of (x)
Nemetschek or Acquisition, or (y) the Company to perform their respective
obligations under this Agreement, nor shall there be pending any cause of action
or other proceeding commenced by a Governmental Authority of competent
jurisdiction seeking the imposition of an Order.
Section 8.02. Additional Conditions to Obligation of Nemetschek and
Acquisition.
The performance of the obligations of Nemetschek and Acquisition
hereunder is subject to the fulfillment at or prior to the Effective Time of the
following conditions (all or any of which may be waived in whole or in part by
Nemetschek and Acquisition acting by unanimous written consent):
(a) Representations and Warranties. Each of the representations and
warranties of the Company made in this Agreement which are not, by their terms,
qualified by a materiality standard, shall have been true and correct in all
material respects as of the date hereof and shall be true and correct in all
material respects on and as of the Effective Time as though made on and as of
the Effective Time (and the representations and warranties of the Company
contained in this Agreement which are, by their terms, qualified by a
materiality standard, shall have been true and correct on the date hereof and
shall be true and correct on and as of the Effective Time as though made on and
as of the Effective Time), except for representations and warranties
specifically relating to a time or times other than the date hereof or thereof,
which shall be true and correct in all material respects (to the extent they are
not, by their terms, qualified by a materiality standard, and shall be true and
correct to the extent they are so qualified) at such specified time or times,
and except for changes thereto permitted or contemplated by this Agreement.
(b) Compliance with Covenants and Agreements. The Company shall have
performed and complied in all material respects with all terms, covenants,
agreements, undertakings, acts, conditions and obligations required by this
Agreement to be performed or complied with by them prior to or at the Effective
Time.
(c) Officer's Certificate. Nemetschek shall have received a certificate
from the Company, dated as of the Effective Time, executed by the President of
the Company, certifying
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that (i) the Board of Directors thereof has duly adopted resolutions, copies of
which shall be attached to such certificate, authorizing and approving the
transactions contemplated hereby (A) approving the terms of this Agreement and
any agreement to be delivered in accordance with this Agreement and authorizing
the consummation of the transactions contemplated hereby and thereby, and (B)
authorizing an officer thereof to execute and deliver this Agreement and all
ancillary documents, (ii) all of such resolutions are in full force and effect,
and (iii) none of such resolutions has been amended or modified. Nemetschek
shall also have received a certificate from such officer of the Company
certifying that the representations and warranties of such party contained in
this Agreement that are not, by their terms, qualified by a materiality
standard, were true and correct in all material respects when made and are true
and correct in all material respects on and as of the Effective Time as though
made on and as of the Effective Time (and that the representations and
warranties of such party contained in this Agreement that are, by their terms,
qualified by a materiality standard, were true and correct when made and are
true and correct on and as of the Effective Time as though made on and as of the
Effective Time), except to the extent they relate to a particular date and
except for changes permitted or contemplated by this Agreement, and that such
party has complied with or performed in all material respects all terms,
covenants, agreements, undertakings, acts, conditions and obligations to be
complied with or performed by it on or prior to the Effective Time.
(d) Incumbency Certificate. Nemetschek shall have received a certificate
from the Company, signed by its Secretary or Assistant Secretary and dated the
Effective Time, certifying as to the person executing this Agreement on behalf
of such party that (i) such person is an officer thereof holding the office or
offices specified therein, and (ii) the signature of each such person set forth
on such certificate is his or her genuine signature.
(e) Employment Agreements. The individual listed in Schedule 8.02(e) shall
have delivered to Nemetschek an Employment Agreement duly executed by such
party.
(f) Material Adverse Change. No event, change or development shall exist or
have occurred since August 31, 1999 with regard to the Company, including the
filing of any action, claim, suit, cause of action, or litigation commenced by
any third party against the Company, that has had or reasonably could be
expected to have a Material Adverse Effect on the Company or its Subsidiaries
(or on Nemetschek or Acquisition assuming the transactions contemplated hereby
were consummated), or on the ability of (x) Nemetschek or Acquisition, or (y)
the Company to consummate the transactions contemplated hereby.
(g) Approvals. The Board of Directors of the Company, at a meeting duly
called and held, shall have (A) determined that this Agreement, the Merger and
the transactions contemplated hereby are advisable on the terms and conditions
set forth herein and in the best interest of the Company and its stockholders,
and (B) approved this Agreement, the Merger, and the transactions contemplated
hereby and thereby and such action shall not have been withdrawn, modified or
revoked in any manner.
(h) Support Agreement. The individuals listed in Schedule 8.02(h) shall
have delivered to Nemetschek the Support Agreement, duly executed by such party.
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(i) Resignations. Nemetschek shall have received the resignation of each of
the directors of the Board of Directors of the Company.
(j) Escrow Agreement. The party listed on Schedule 8.02(k) shall have
delivered to Nemetschek the Escrow Agreement, duly executed by such party.
Section 8.03. Additional Conditions to Obligation of the Company. The
performance of the obligations of the Company hereunder is subject to the
fulfillment at or prior to the Effective Time, of each of the following
conditions (all or any of which may be waived in whole or in part by the
Company):
(a) Representations and Warranties. Each of the representations and
warranties of Nemetschek and Acquisition made in this Agreement which are not,
by their terms, qualified by a materiality standard, shall have been true and
correct in all material respects as of the date hereof and shall be true and
correct in all material respects on and as of the Effective Time as though made
on and as of the Effective Time (and the representations and warranties of
Nemetschek and Acquisition contained in this Agreement which are, by their
terms, qualified by a materiality standard, shall have been true and correct on
the date hereof and shall be true and correct on and as of the Effective Time as
though made on and as of the Effective Time), except for representations and
warranties specifically relating to a time or times other than the date hereof
or thereof, which shall be true and correct in all material respects (to the
extent they are not, by their terms, qualified by a materiality standard, and
shall be true and correct to the extent they are so qualified) at such specified
time or times, and except for changes thereto permitted or contemplated by this
Agreement.
(b) Compliance with Covenants and Agreements. Nemetschek and Acquisition
shall have performed and complied in all material respects with all terms,
covenants, agreements, undertakings, acts, conditions and obligations required
by this Agreement to be performed or complied with by them prior to or at the
Effective Time.
(c) Officer's Certificate. The Company shall have received a certificate
from Nemetschek and Acquisition, dated as of the Effective Time, executed by the
President or any Vice-President thereof certifying that: (i) the Board of
Directors (or comparable governing body) thereof has duly adopted resolutions,
copies of which shall be attached to such certificate, (A) approving the terms
of this Agreement and any agreement to be delivered in accordance with this
Agreement and authorizing the consummation of the transactions contemplated
hereby and thereby, and (B) authorizing an officer thereof to execute and
deliver this Agreement and all ancillary documents, (ii) all of such resolutions
are in full force and effect, and (iii) none of such resolutions has been
amended or modified. The Company shall also have received a certificate from
such person certifying that the representations and warranties of Nemetschek and
Acquisition contained in this Agreement that are not, by their terms, qualified
by a materiality standard, were true and correct in all material respects when
made and are true and correct in all material respects on and as of the
Effective Time as though made on and as of the Effective Time (and that the
representations and warranties of such party contained in this Agreement that
are, by their terms, qualified by a materiality standard, were true and correct
when made and are true and correct on and as of the Effective Time as though
made on and as of the Effective Time), except to the extent they relate to a
particular date and except for changes permitted or
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contemplated by this Agreement, and that Nemetschek and Acquisition has complied
with or performed in all material respects all terms, covenants, agreements,
undertakings, acts, conditions and obligations to be complied with or performed
by it on or prior to the Effective Time.
(d) Incumbency Certificate. The Company shall have received a certificate
from Nemetschek and Acquisition, signed by its Secretary or Assistant Secretary
(or comparable officers) and dated as of the Effective Time, certifying as to
the person executing this Agreement on behalf of such party that (i) such person
is an officer thereof holding the office or offices specified therein, and (ii)
the signature of each such person set forth on such certificate is his or her
genuine signature.
(e) Employment Agreement. The Company shall have executed and delivered the
Employment Agreement and the Escrow Agreement duly executed by such party.
(f) Purchase Price. Nemetschek and/or Acquisition shall have made
arrangements for the payment of the Merger Consideration as contemplated by
Section 4.02.
ARTICLE IX
TERMINATION
Section 9.01. Termination. This Agreement may be terminated and the
transactions contemplated in this Agreement may be abandoned at any time prior
to the Effective Time, whether before or after approval by the stockholders of
the Company of this Agreement and the Merger:
(a) by mutual written consent of Nemetschek, Acquisition, and the Company;
(b) by either Nemetschek and Acquisition (acting by unanimous written
consent) or the Company if, on the Effective Time, any condition precedent to
the obligations of the terminating party set forth in Section 8.02 in the case
of Nemetschek and Acquisition and Section 8.03 in the case of the Company shall
not have been satisfied (or waived by the terminating party); provided, however,
that no party shall have the right to terminate this Agreement pursuant to this
Section 9.01(b) if such party is then in breach of any material representation
or warranty contained herein or is in default in any material respect in the
observance or in the timely performance of any of its covenants or agreements
contained herein;
(c) by either Nemetschek and Acquisition (acting by unanimous written
consent) or the Company if there shall be in effect any permanent injunction or
action by any court of competent jurisdiction or other Governmental Authority
preventing the consummation of the Merger that shall have become final and
nonappealable;
(d) by either Nemetschek and Acquisition (acting by unanimous written
consent) or the Company if the Effective Time shall not have occurred on or
before June 30, 2000 (time is of the essence with respect to such date);
provided, however, that no party shall have the right to terminate this
Agreement pursuant to this Section 9.01(d) if such party is then in breach of
any
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material representation or warranty contained herein or is in default in any
material respect in the observance or in the timely performance of any of its
covenants or agreements contained herein;
(e) by either Nemetschek and Acquisition (acting by unanimous written
consent) or the Company if this Agreement and the Merger shall have been voted
on by the stockholders of the Company at a meeting duly convened therefor and
fail to receive the requisite vote for approval and adoption by the stockholders
of the Company at the Stockholders Meeting as provided under law and the
Company's Charter;
(f) by Nemetschek and Acquisition (acting by unanimous written consent) if
(i) the Board of Directors of the Company shall withdraw, modify or change its
approval or recommendation of this Agreement or the Merger in a manner adverse
to Nemetschek and Acquisition or shall have resolved to do any of the foregoing,
or (ii) the Board of Directors of the Company shall have approved and/or
recommended to the stockholders of the Company any Acquisition Proposal or be
required to do so.
Section 9.02. Notice. If any party elects to terminate this Agreement
pursuant to an applicable provision of Section 9.01, such party shall give
written notice of its election to the other parties hereto at least two Business
Days before such termination shall become effective.
Section 9.03. Effect of Termination. Upon termination of this Agreement
pursuant to the terms of Section 9.01, this Agreement shall become void and no
longer be of any force or effect and there shall be no liability on the part of
any party or its respective directors, officers or stockholders to the other
parties hereto, other than as provided in Section 9.04. Notwithstanding the
foregoing, nothing contained in this Agreement shall relieve any party from
liability to the extent that such termination results from the willful and
material breach by a party of any of its representations, warranties, covenants
or agreements set forth in this Agreement, whereupon the non-breaching party or
parties will have such rights and remedies as are available to such party at law
or in equity.
Section 9.04. Termination Fee. In the event Nemetschek and Acquisition
terminates this Agreement pursuant to Section 9.01(f)(i)-(ii), then the Company
agrees that it shall pay a fee to Nemetschek of $4.5 Million Dollars, plus an
amount, not to exceed $500,000, equal to Nemetschek's and Acquisition's fees and
expenses incurred in connection with (or reasonably related to) the transactions
contemplated by this Agreement. Such fees and expenses shall be payable in
immediately available funds on the second Business Day following the termination
of this Agreement. Notwithstanding any other provision of this Agreement, (i)
such fees and expenses shall not be paid pursuant to this Section 9.04 if
Nemetschek or Acquisition shall have breached in any material respect any of its
material representations, warranties, covenants, or agreements contained in this
Agreement, and (ii) the payment by the Company of the amounts required to be
paid pursuant to this Section 9.04 shall, except in the case of willful breach
of this Agreement by the Company, constitute the exclusive remedy for, and full
settlement of, any and all liabilities and obligations of the Company for
damages under this Agreement.
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ARTICLE X
GENERAL PROVISIONS
Section 10.01. Expenses. Except as otherwise expressly provided herein,
whether or not the transactions contemplated hereby are consummated, each party
shall bear its own expenses, including the fees and expenses of any attorneys,
accountants, investment bankers, brokers, finders or other intermediaries or
Persons engaged by it incurred in connection with the preparation, negotiation
and execution of this Agreement and the transactions leading up to and
contemplated hereby and no other party shall have any liability with respect
thereto; provided, however, that the Company shall bear all costs and expenses
arising out of or incurred in connection with the preparation, negotiation and
execution of the Proxy Statement and the Stockholders Meeting, including all
printing, mailing, solicitation, legal, accounting and other fees and expenses
incurred with respect thereto. In the event of termination of this Agreement,
the obligations of each party to pay its own expenses shall be subject to any
rights of such party arising from a breach of this Agreement by another party,
subject to Section 9.04.
Section 10.02. Notices, Etc. All notices, requests, demands or other
communications required by or otherwise permitted with respect to this Agreement
shall be in writing and shall be deemed to have been duly given to any party if
delivered by any of the following means of delivery, and shall be deemed to have
been duly delivered and received on the date (or the next Business Day if
delivery is not made on a Business Day) of personal delivery or facsimile
transmission or on the date (or the next Business Day if delivery is not made on
a Business Day) of receipt, if mailed by registered or certified mail, postage
prepaid and return receipt requested, or on the date (or the next Business Day
if delivery is not made on a Business Day) of a stamped receipt, if sent by
overnight delivery service, and to the following addresses (or to such other
address as any party may request, in the case of Nemetschek and Acquisition
notifying the Company, and in the case of the Company notifying Nemetschek or
Acquisition.
(a) If to Nemetschek:
Nemetschek AG
Riedenburger Strasse 2
D-81677 Munich
Germany
Attn: Gerhard Weiss
Telephone: 011 49 89 92 793-427
Facsimile: 011 49 89 92 793-406
with a copy to:
Brown & Wood LLP
1666 K Street, N.W.
Washington, D.C. 20006-4004
Attention: John K. Hughes
Facsimile: (202) 533-1399
42
<PAGE>
(b) If to the Company:
Diehl Graphsoft, Inc.
10270 Old Columbia Road
Suite 100
Columbia, Maryland 21046
Attention: Richard Diehl
Facsimile: (410) 290-8050
with a copy to:
Venable, Baetjer and Howard, LLP
1800 Mercantile Bank & Trust Building
Two Hopkins Plaza
Baltimore, Maryland 21201
Attention: Bryson Cook
Facsimile: (410) 244-7742
Section 10.03. Binding Effect; No Assignment. This Agreement is binding
upon, shall inure to the benefit of, and be enforceable by, each of the parties
hereto and their respective successors and permitted assigns. Neither this
Agreement nor any of the rights and/or obligations of any party hereunder may be
assigned or delegated to any Person without the prior written consent of the
other parties hereto; provided, however, that Nemetschek and Acquisitions may
assign the Agreement and any respective rights, interests, and obligations
hereunder to any Affiliate thereof but any such assignment shall not relieve
Nemetschek or Acquisition of their respective obligations hereunder in the event
such assignor does not perform such obligations.
Section 10.04. Entire Agreement. Except as otherwise specifically provided
herein, this Agreement, including the Schedules contained in the Disclosure
Statement and any other written agreements by the parties hereto that are
expressly contemplated hereby to be entered into, constitutes the entire
agreement and understanding among the parties with regard to the subject matter
hereof and supersedes all prior negotiations, agreements, arrangements, or
understandings, written or oral, relating to the matters provided for herein or
therein.
Section 10.05. Remedies Cumulative; Specific Performance. All rights,
powers and remedies provided under this Agreement or otherwise available in
respect hereof at law or in equity shall be cumulative and not exclusive, and
the exercise or commencement of the exercise of any such remedies by any party
hereunder shall not preclude the simultaneous or subsequent exercise of any
other such right, power or remedy by such party. The parties acknowledge that
money damages would not be adequate remedy for violations of this Agreement and
any party may, in its sole discretion, apply to a court of competent
jurisdiction for specific performance or injunctive or such other relief as such
court may deem just and proper to enforce this Agreement or to prevent any
violation hereof.
Section 10.06. Waiver. Any party to this Agreement may extend the time for
the performance of any of the obligations or other acts of any other party
hereto, or waive compliance with any of the agreements of any other party or
with any condition to the
43
<PAGE>
obligations hereunder, in any case only to the extent that such obligations,
agreements and conditions are intended for its benefit. The failure of any party
hereto to exercise any right, power or remedy provided under this Agreement or
otherwise available in respect hereof at law or in equity or to insist upon
compliance by any other party hereto with its obligations hereunder, and any
custom, practice, or course of dealing with the parties at variance with the
terms hereof, shall not constitute a waiver by such party of its right at any
time to exercise any such or other right, power or remedy or to demand such
compliance.
Section 10.07. No Third-Party Beneficiaries. Except as expressly provided
in this Agreement, nothing contained herein is intended to or shall confer on
any Person other than the parties hereto and their successors and permitted
assigns any rights, benefits, remedies, or claims under or by reason of this
Agreement.
Section 10.08. Governing Law. This Agreement and all disputes hereunder
shall be governed by, and interpreted and construed in accordance with, the
internal laws of the State of Maryland without regard to principles of conflict
of laws.
Section 10.09. Section Headings; Interpretation. Reference in this
Agreement to a Section, Article, or Schedule, unless otherwise indicated, shall
constitute references to a Section or an Article of this Agreement or a Schedule
to the Disclosure Statement. The table of contents, section headings and article
titles contained in this Agreement are for convenience of reference only and do
not form a part thereof and shall not affect in any way the meaning or
interpretation of this Agreement. Wherever the words "include," "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation." The words "herein," "hereinafter," and
"hereunder," and words of similar import used in this Agreement shall refer to
this Agreement as a whole and not to any particular provision of this Agreement.
The parties agree that this Agreement is the product of negotiations among
sophisticated parties, all of whom were represented by counsel, and each of whom
had an opportunity to participate in, and did participate in the drafting of
each provision hereto. Accordingly, ambiguities in this Agreement, if any, shall
not be construed strictly against any party hereto but rather shall be given a
fair and reasonable construction without regard to the rule of contra
proferentem.
Section 10.10. Severability. If any term of this Agreement or the
application thereof to any party or circumstance shall be held invalid or
unenforceable to any extent, the remainder of this Agreement and the application
of such term to the other parties or circumstances shall not be affected thereby
and shall be enforced to the fullest extent permitted by applicable law,
provided that in such event the parties shall negotiate in good faith in an
attempt to agree to another provision (in lieu of the term or application held
to be invalid or unenforceable) that will be valid and enforceable and will
carry out the parties' intentions hereunder.
Section 10.11. Amendment. This Agreement may be amended or modified at any
time by written agreement signed by each of the parties hereto; provided,
however, that any amendment to this Agreement made subsequent to the adoption by
the stockholders of the Company of this Agreement shall not alter or change (i)
the amount or kind of consideration to be paid in exchange for all or any of the
shares of Company Common Stock, (ii) any term of the Certificate of
Incorporation of the Company, or (iii) any of the terms and conditions of this
Agreement if such alteration or change would adversely affect the stockholders
of the Company.
44
<PAGE>
Section 10.12. Further Assurances. Each of the parties hereto agrees that,
at any time and from time to time after the date hereof, it shall, upon written
request from the other party or parties hereto, and without further
consideration, perform such other and further acts, and execute, acknowledge and
deliver, or cause to be delivered, such further instruments, documents or
assurances as such other party or parties reasonably may request for the purpose
of carrying with this Agreement.
Section 10.13. Public Announcements. Each of the parties will consult with
each other party before issuing, and provide such other party the opportunity to
review and comment upon, any press release, advertisement or other public
announcement with respect to the transactions contemplated by this Agreement and
no such party shall issue any press release or news release or make any other
public statement prior to such consultation, review, and comment, except as may
be required in the written opinion of such party's counsel by applicable law,
court process, or the rules of any securities exchange or automatic quotation
system in which its securities are traded; provided, however, that even in such
circumstance the party required to make such statement shall use reasonable
efforts to provide a copy of any such statement to the other party prior to
release thereof and afford such party reasonable opportunity to comment thereon.
Section 10.14. Exhibits and Schedules. The Exhibits and the Schedules
contained in the Disclosure Statement are being separately delivered by the
Company concurrently with the execution of this Agreement and such receipt is
being acknowledged by each of the parties to this Agreement. All Exhibits and
Schedules referred to in this Agreement are an integral part of and are hereby
incorporated into this Agreement by reference.
Section 10.15. Counterparts. This Agreement may be executed by exchanging
facsimile signatures and in any number of counterparts, each of which shall be
deemed to be an original, but all of which taken together shall constitute one
and the same instrument. Each counterpart may consist of a number of copies,
each signed by less than all, but together signed by all, the parties hereto and
this Agreement shall be effective when each of the parties hereto has exchanged
executed signature pages with each of the other parties hereto.
Section 10.16. Non-Survival of Representations and Warranties. The
representations and warranties contained in Articles V and VI of this Agreement
shall not survive the Effective Time, and after the Effective Time, the Company,
Acquisition and Nemetschek or their respective officers or directors shall have
no further obligation with respect thereto. The covenants and agreements set
forth in this Agreement shall survive the Effective Time to the extent set forth
therein.
[Signature Page Follows]
45
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the day and year first above written.
NEMETSCHEK AKTIENGESELLSHAFT
By: /s/ Georg Nemetschek
-------------------------------------
Name: Nemetschek
------------------------------
Title: CEO
------------------------------
DGI ACQUISITION CORP.
By: /s/ Georg Nemetschek
--------------------------------------
Name: Nemetschek
-------------------------------
Title: President
-------------------------------
DIEHL GRAPHSOFT, INC.
By: /s/ Richard Diehl
--------------------------------------
Name: Richard Diehl
-------------------------------
Title: CEO
-------------------------------
46
EXHIBIT 2
Richard Diehl
10270 Old Columbia Road
Suite 100
Columbia, Maryland 21046
February 18, 2000
Nemetschek AG
Riedenburger Strasse 2
D-81677 Munich
Germany
Attn: Gerhard Weiss
Re: Support/Voting Agreement
Gentlemen:
The undersigned understands that Diehl Graphsoft, Inc. (the
"Company") and Nemetschek AG and/or an affiliate thereof (in either case, the
"Acquiror") are entering into an Agreement and Plan of Merger, dated as of the
date hereof (the "Merger Agreement"), providing for, among other things, the
merger of Acquiror with and into the Company (the "Merger").
The undersigned is a stockholder of the Company (the
"Stockholder") and is entering into this letter agreement to induce the Acquiror
to enter into the Merger Agreement and to consummate the transactions
contemplated thereby. Capitalized terms used herein and not otherwise defined
herein shall have the meaning set forth in the Merger Agreement.
The Stockholder confirms its agreement with the Acquiror as
follows:
1. The Stockholder represents, warrants and agrees that
Schedule A annexed hereto sets forth all the shares of Company Common Stock that
the Stockholder and his affiliates (as defined under the Securities Exchange Act
of 1934, as amended) are the record or beneficial owner of (the "Shares") and
that the Stockholder and his affiliates are on the date hereof the lawful owners
of the number of Shares set forth in Schedule A, free and clear of all liens,
charges, encumbrances, voting agreements and commitments of any kind, except as
disclosed in Schedule A. Except as set forth in Schedule A, neither the
Stockholder nor any of his affiliates own or hold any rights to acquire any
additional shares of the capital stock of the Company (by exercise of stock
options or otherwise) or any interest therein or any voting rights with respect
to any additional shares.
2. The Stockholder agrees that he will not, will not permit
any Person controlled by the Stockholder to, and will not permit any of his
affiliates to, contract to sell, sell or otherwise transfer or dispose of any of
the Shares or any interest therein or securities
<PAGE>
Nemetschek AG
February 18, 2000
Page 2
convertible therein or any voting rights with respect thereto, other than (i)
pursuant to the Merger, or (ii) with the prior written consent of Acquiror;
provided, however, that notwithstanding any other provision of this Agreement,
the Stockholder is expressly permitted to transfer up to 200,000 shares of
Company Common Stock in the aggregate to the individuals listed on Schedule B
prior to or concurrent with the Closing; provided, further that concurrently
with any such transfer to Messrs. Webster and Flaherty, such parties shall each
execute and deliver to Acquiror a Support/Voting Agreement, substantially
similar to this Agreement, except that such agreements shall not include the
right of Nemetschek to an option for such stock. The Stockholder shall be
permitted to (x) vote in favor of any other bona fide written Acquisition
Proposal by any other Person that has been recommended by the Company's Board of
Directors as contemplated by Section 7.09 of the Merger Agreement, if and only
to the extent that, (i) the Company's stockholders meeting with respect to the
Merger Agreement shall not have occurred, and (ii) the Company's Board of
Directors concludes in good faith (following receipt of the advice of its
financial advisor and outside counsel) that (A) such acquisition proposal
constitutes a Superior Proposal, and (B) the failure to take such action would
be inconsistent with its fiduciary duties under applicable law, and (y) subject
to the option granted in Paragraph 5 of this letter agreement, sell the Shares
in connection with such Acquisition Proposal that constitutes a Superior
Proposal.
3. The Stockholder agrees to, will cause any Person controlled
by the Stockholder to, and will cause his affiliates to, cooperate fully with
Acquiror in connection with the Merger Agreement and the transactions
contemplated thereby. The Stockholder agrees that he will not, will not permit
any Person controlled by the Stockholder to, and will not permit any of his
affiliates to, directly or indirectly (including through its officers,
directors, employees or other representatives), solicit any inquiries or the
making of any proposal with respect to, or negotiate with any other Person with
respect to, any Acquisition Proposal with any Person other than Acquiror (a
"Competing Transaction"); provided, however, that nothing herein shall prevent
the Stockholder from taking any action or omitting to take any action (i) solely
as a member of the Board of Directors of the Company required so as not to
violate such Stockholder's fiduciary obligations as a director as so advised by
outside counsel in writing, or (ii) as directed by the Board of Directors of the
Company so long as such direction is not made in violation of any of the terms
of the Merger Agreement or any other provision of this letter agreement.
4. The Stockholder agrees that all of the Shares beneficially
owned by the Stockholder or his affiliates, or over which the Stockholder or any
of his affiliates has voting power or control, directly or indirectly (including
any common shares of the Company acquired after the date hereof), at the record
date for any meeting of stockholders of the Company called to consider and vote
to approve the Merger and the Merger Agreement and/or the transactions
contemplated thereby will be voted by the Stockholder or his affiliates in favor
thereof except as otherwise permitted by the final sentence of Paragraph 2.
5. (a) Subject to the terms of this Section 5, the Stockholder
hereby grants to Nemetschek an irrevocable option (the "Option") to purchase, in
whole but not in part, at the
<PAGE>
Nemetschek AG
February 18, 2000
Page 3
election of Nemetschek, such number of the Stockholder's Shares such that after
such exercise, Nemetschek would own not less than 30% of the outstanding common
stock of the Company. The purchase price for such shares (the "Purchase Price")
shall be paid in cash, with each Share being deemed to have a value equal to the
greater of the Merger Consideration (as defined in the Merger Agreement) or the
average trading price of the Company Common Stock during the five day period
immediately prior to the exercise of the Option, which average shall be reduced
by 50% of the difference between the value of the Merger Consideration and such
average trading price.
(b) Subject to the terms and conditions of this Agreement, if
Nemetschek elects to exercise the Option in accordance with Section 5(a) hereof,
the Stockholder will, at the closing (as defined in Section 5(c)), sell,
transfer, assign and deliver the Stockholder's Shares to Nemetschek, and
Nemetschek will acquire, accept, purchase and pay for the Stockholder's Shares.
(c) The Option may only be exercised by Nemetschek, in whole
but not in part, following the occurrence of a Purchase Event (as defined
below); provided, however, that the Option shall terminate upon the earlier of
(i) the Effective Time, (ii) termination of the Merger Agreement in accordance
with its terms (other than upon or during the continuance of a Purchase Event),
and (iii) three months following any termination of the Merger Agreement upon or
during the continuance of a Purchase Event (or, if, at the expiration of such
three month period the Option cannot be exercised by reason of any applicable
judgment, decree or order, 20 Business Days after such impediment to exercise
shall have been removed or shall become final and not subject to appeal) at
which time all rights and obligations under this Agreement shall terminate. The
term "Purchase Event" shall mean any of the following events or transactions
occurring after the date hereof: (i) the Company shall have entered into an
agreement to engage in an Acquisition Proposal; or (ii) the Merger Agreement
shall have been terminated by Nemetschek or the Company under circumstances that
would entitle Nemetschek to termination fees under the Merger Agreement. In the
event Nemetschek wishes to exercise the Option, Nemetschek shall send a written
notice (a "Closing Notice") to the Stockholder specifying a place and time (the
"Closing Date") between one and ten Business Days inclusive from the date of the
Closing Notice for the closing of such purchase (the "Closing").
(d) Subject to the terms and conditions of this Agreement, in
reliance on the representations, warranties and covenants of the Stockholder
contained herein and in full payment for the Shares, at the Closing, Nemetschek
will deliver, or cause to be delivered, to the Stockholder, the Purchase Price
to be paid pursuant to Section 5(a). At the Closing, the Stockholder will
deliver, or cause to be delivered, to Nemetschek certificates representing such
Stockholder's Shares duly endorsed to Nemetschek or accompanied by stock powers
duly executed by the Stockholder in blank, together with any necessary stock
transfer stamps properly affixed.
(e) In the event of any change in the Company Common Stock by
reason of stock dividends, split-ups, mergers, recapitalizations, combinations,
conversions, exchanges of shares or the like, (i) the number and kind of Shares
subject to this Section 5 of this
<PAGE>
Nemetschek AG
February 18, 2000
Page 4
Agreement and the purchase price per Share pursuant to the Option shall be
appropriately adjusted to reflect changes made in the Company Common Stock so
that Nemetschek shall receive, upon exercise of the Option and payment of the
Purchase Price, the number and class of shares that Nemetschek would have
received in respect of the Shares if the Option had been exercised and the
Shares had been issued to Nemetschek immediately prior to such event or the
record date therefor, as applicable, and (ii) the term "Shares" shall be deemed
to refer to and include the Shares as well as all such stock dividends and
distributions and any securities into which or for which any or all of the
Shares may be changed or exchanged and such dividends, distributions and shares,
as the case may be, shall be paid to Nemetschek at the Closing or promptly
following the receipt of such dividend or distribution, if the Closing
theretofore shall have occurred.
6. The Stockholder has all necessary power and authority to
enter into this letter agreement. This letter agreement is the legal, valid and
binding agreement of the Stockholder and is enforceable against the Stockholder
in accordance with its terms.
7. The Stockholder agrees that money damages would be an
inadequate remedy for the breach by Stockholder of any term or condition of this
letter agreement and that Acquiror shall be entitled to a temporary restraining
order and preliminary and permanent injunctive relief in order to enforce the
agreements set forth herein. This letter agreement will be governed by and
constructed in accordance with Maryland law.
[SIGNATURE PAGE FOLLOWS]
<PAGE>
Nemetschek AG
February 18, 2000
Page 5
This letter agreement may be executed by facsimile signature
and in counterparts and may be terminated by Acquiror at any time. Please
confirm that the foregoing correctly states the understanding between us by
signing and returning a counterpart hereof.
Sincerely,
RICHARD DIEHL
By: /s/ Richard Diehl
------------------------------
Name: Richard Diehl
Confirmed as of the date
first above written:
NEMETSCHEK AG
By: /s/ Georg Nemetschek
---------------------------
Name: Nemetschek
Title: CEO
<PAGE>
Schedule A
----------
Name Number of Shares
- ---- ----------------
Richard Diehl 1,933,055
<PAGE>
Schedule B
----------
Name Number of Shares
- ---- ----------------
Donald Webster 70,000
Sean Flaherty 70,000
Other Diehl Graphsoft, Inc. Employees 60,000
