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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) of the
SECURITIES EXCHANGE ACT OF 1934
Date of earliest event reported: August 30, 2000
ANSYS, Inc.
(Exact name of registrant as specified in charter)
Delaware 0-20853 04-3219960
(State or other jurisdiction (Commission (IRS employer
of incorporation) file number) identification no.)
275 Technology Drive, Canonsburg, Pennsylvania 15317
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code:
(724) 726-3304
Page 1 of 64 Pages
Exhibit Index appears on Page 5
Item 2. Acquisition or Disposition of Assets.
On August 30, 2000, ANSYS, Inc. and GenesisOne
Acquisition Corporation, a Delaware corporation and wholly-owned
subsidiary of ANSYS, entered into an Agreement and Plan of Merger
(the "Merger Agreement") with Pacific Marketing and Consulting,
Inc., a California corporation ("PMAC"), Mr. Armin Wulf, Mr.
Reimund Steberl and the holders of the outstanding shares of
capital stock of PMAC. The transactions contemplated by the
Merger Agreement were consummated on August 31, 2000 with the
merger of PMAC with and into GenesisOne.
In the merger, each share of common stock, no par
value, of PMAC outstanding at the time of the Merger ceased to be
outstanding and each such share was converted into the right to
receive the initial merger consideration provided for under the
Merger Agreement. Holders of PMAC's Class A voting and Class B
non-voting common stock received initial merger consideration
consisting of an aggregate of 618,992 shares of ANSYS common
stock, valued for purposes of such issuance at $10.01563 per
share, and cash in an aggregate amount of $5,832,531.24.
Holders of PMAC's Class C non-voting common stock received
initial merger consideration aggregating $367,289.92 solely in
cash. Of such initial stock consideration, an aggregate of
123,795 shares of ANSYS common stock were delivered into escrow,
to be released on August 31, 2001 or, if later, upon the resolution of
any outstanding indemnification claims secured by such shares.
In addition, $3,000,000 of the initial aggregate cash
consideration was delivered into escrow, to be released during
the first quarter of 2001 upon and subject to the determination
of certain post-closing adjustments and claims.
The Merger Agreement also provides for certain
additional future payments if the surviving corporation achieves
certain performance criteria. Such additional
contingent consideration will be paid to the former holders
of PMAC Class A and Class B common stock 48.4737% in cash
and 51.5263% in shares of ANSYS common stock, valued for such
purposes at the average closing price for the twenty consecutive
trading days preceding the date of such payment.
The total number of shares of ANSYS common stock that
will be issued under the Merger Agreement therefore will depend
on the future value of ANSYS common stock. The total amount of
funds required to pay the initial aggregate cash consideration
was $6,199,821.16, which was obtained from the working capital of
ANSYS. The aggregate merger consideration was determined on the
basis of arms' length negotiations between representatives of
ANSYS and PMAC.
The Merger Agreement and the press release announcing
its execution are filed as exhibits to this Current Report on
Form 8-K, are incorporated by reference into the text of this
Item 2, and qualify the text of this Item 2 in its entirety.
Item 7. Financial Statements and Exhibits.
(a) Financial statements of businesses
acquired.
(b) Pro forma financial information.
It is not practicable to provide the financial
statements and the pro forma financial information
concerning the business acquired under the Merger
Agreement on the date that this report is being filed
with the Securities and Exchange Commission. The
required financial statements and pro forma financial
information will be filed by amendment to this report
on Form 8-K as soon as practicable, but in any event
not later than 60 days after this report is being
filed. The Registrant expects to file such financial
statements and pro forma financial information on or
about November 10, 2000.
(c) Exhibits.
2.1 Agreement and Plan of Merger, dated
August 30, 2000, by and among ANSYS, Inc.,
GenesisOne Acquisition Corporation, Pacific
Marketing and Consulting, Inc., Christine
Schoefer, Michael Hohmeyer, Wayne Christopher,
Mary Jo Hamilton, Michael Salari, Masoud
Doroudian, Diane Poirier, Devendra Rajwade, Jan
Soreide, Vijay Shah, Akila Diwakar, Philip
Diwakar, Alan Magnuson, Forest Rouse, Vladimir
Griaznov, Xiaomin Wang, Jieyong Xu, Jigen Zhou,
Manfred Friedrichs, Carsten Martens, Reimund
Steberl and Armin Wulf.*
99.1 Press release, dated August 30, 2000.
* Certain exhibits and schedules to this Exhibit
filed herewith have been omitted in accordance
with Item 601(b)(2) of Regulation S-K. A copy of
any omitted exhibit or schedule will be furnished
to the Commission upon request.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
ANSYS, Inc.
By: /s/ James E. Cashman
James E. Cashman, III
President and CEO
Dated: September 13, 2000
EXHIBIT INDEX
Exhibit Description Page No.
2.1 Agreement and Plan of Merger, dated August 30, 11 - 62
2000,by and among ANSYS, Inc., GenesisOne
Acquisition Corporation, Pacific Marketing and
Consulting, Inc., Christine Schoefer, Michael
Hohmeyer, Wayne Christopher, Mary Jo Hamilton,
Michael Salari, Masoud Doroudian, Diane Poirier,
Devendra Rajwade, Jan Soreide, Vijay Shah, Akila
Diwakar, Philip Diwakar, Alan Magnuson, Forest
Rouse, Vladimir Griaznov, Xiaomin Wang, Jieyong Xu,
Jigen Zhou, Manfred Friedrichs, Carsten Martens,
Reimund Steberl and Armin Wulf.
99.1 Press release, dated August 30, 2000. 63 - 64
Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
TABLE OF CONTENTS
1. THE MERGER 11
1.1 The Merger. 11
1.2 Effective Time. 12
1.3 Closing. 12
1.4 Certificate of Incorporation of the Surviving
Corporation. 12
1.5 Effect on Capital Stock: 12
1.6 Repayment Obligations. 21
1.7 Directors of the Surviving Corporation. 21
1.8 Officers of the Surviving Corporation. 21
1.9 Acknowledgement and Release of Stockholders. 21
2. REPRESENTATIONS AND WARRANTIES OF ANSYS 22
2.1 Organization. 22
2.2 Capitalization. 23
2.3 Authority Relative to this Agreement. 23
2.4 Shares of ANSYS Common Stock. 23
2.5 SEC Documents; Financial Statements. 23
2.6 Absence of Certain Changes. 24
2.7 No Conflicts. 24
2.8 Governmental Consents. 24
2.9 Litigation. 24
2.10 No Brokers. 24
3. REPRESENTATIONS AND WARRANTIES OF PMAC, THE CLASS A
STOCKHOLDERS, MR. SHAH, MR. WULF AND MR. STEBERL 25
3.1 Existence; Good Standing; Authority; Compliance
With Law. 25
3.2 Authorization, Validity and Effect of
Agreements. 26
3.3 Capitalization. 26
3.4 Subsidiaries. 27
3.5 Other Interests. 27
3.6 No Conflicts. 27
3.7 Governmental Consents. 27
3.8 Litigation. 28
3.9 Absence of Certain Changes. 28
3.10 Taxes. 28
3.11 Books, Records and Financial Statements. 29
3.12 Properties. 29
3.13 Proprietary Products, Trademarks, Patents and
Copyrights and Other Property Rights. 30
3.14 Environmental Matters. 31
3.15 Employee Benefit Plans. 32
3.16 Labor Matters. 33
3.17 Certain Agreements. 34
3.18 Major Contracts. 34
3.19 Absence of Undisclosed Liabilities. 35
3.20 Receivables. 35
3.21 Governmental Authorizations and Regulations. 35
3.22 Insider Transactions. 36
3.23 No Brokers. 36
3.24 Insurance. 36
3.25 Payments. 36
3.26 Full Disclosure. 36
4. ADDITIONAL REPRESENTATIONS AND WARRANTIES OF THE
STOCKHOLDERS 37
4.1 Power and Authority. 37
4.2 Ownership of Stock. 37
5. CONDUCT OF BUSINESS OF PMAC PRIOR TO CLOSING 37
5.1 Ordinary Course. 38
5.2 Dividends; Changes in Stock. 38
5.3 Governing Documents. 38
5.4 No Solicitation. 38
5.5 No Acquisitions. 38
5.6 No Dispositions. 38
5.7 Indebtedness. 39
5.8 Employees. 39
5.9 Benefit Plans, etc. 39
5.10 Material Claims. 39
5.11 Elections. 39
5.12 Accounting. 39
5.13 Breach. 39
6. ADDITIONAL AGREEMENTS 39
6.1 Access to PMAC Information. 39
6.2 Stockholders Approval. 40
6.3 Reports Under Securities Exchange Act of 1934. 40
6.4 Legal Conditions to the Merger. 41
6.5 Communications. 41
6.6 Expenses. 42
6.7 Escrow Agreement. 42
6.8 Additional Actions. 42
6.9 Notification of Certain Matters. 42
6.10 Operating Authority and Reporting Structure. 42
6.11 Restriction on Transfer of ANSYS Common Stock. 42
6.12 Right of First Refusal. 43
6.13 Management of the Surviving Corporation. 43
6.14 [Intentionally Omitted.] 44
6.15 Employees. 44
6.16 Employee Bonuses. 45
6.17 Release of German and French Interests. 45
6.18 Indian Subsidiary. 45
6.19 Swiss Subsidiary. 45
6.20 Certain Tax Matters. 46
6.21 Adequate Funds for Certain Payments. 46
6.22 Option Grants. 46
7. CONDITIONS PRECEDENT 46
7.1 Conditions to Each Party's Obligations to
Effect the Merger. 46
7.2 Conditions to Obligations of ANSYS and Merger
Sub. 47
7.3 Conditions to Obligations of PMAC. 48
8. TERMINATION, AMENDMENT AND WAIVER 49
8.1 Termination. 49
8.2 Effect of Termination. 50
8.3 Amendment. 50
8.4 Extension; Waiver. 50
9. COMPETITION 50
9.1 Non-Compete. 50
9.2 Confidential Information. 51
9.3 Definition. 51
9.4 Reasonableness. 52
9.5 Injunctive Relief. 52
9.6 Severability: Separate Covenants. 52
10. INDEMNIFICATION AND CLAIMS 53
10.1 Stockholders Indemnification. 53
10.2 ANSYS Indemnification. 55
10.3 Insurance Recoveries; Tax Benefits. 56
10.4 Actual Knowledge. 56
11. GENERAL PROVISIONS 56
11.1 Survival of Representations, Warranties and
Agreements. 57
11.2 Notices. 57
11.3 Interpretation. 58
11.4 Counterparts. 58
11.5 Entire Agreement. 58
11.6 No Third Party Beneficiaries. 58
11.7 Non-Assignment. 58
11.8 Governing Law. 58
11.9 Arbitration. 58
11.10Sole Remedy. 59
11.11No Agreement Until Executed. 59
Exhibits:
Exhibit A Budget Goals
Exhibit B Accounting Expenses
Exhibit C Escrow Agreement
Exhibit D Operating Plan
Exhibit E Opinion of Counsel to PMAC
Exhibit F Opinion of Corporate Counsel of ANSYS
Exhibit G Bonus Employee Group
Exhibit H French and German Taxes
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of August 30,
2000 (this "Agreement"), is made and entered into by and among
ANSYS, Inc., a Delaware corporation ("ANSYS"), GenesisOne
Acquisition Corporation, a Delaware corporation and a wholly-
owned subsidiary of ANSYS ("Merger Sub"), Pacific Marketing and
Consulting, Inc. a California corporation ("PMAC"), Christine
Schoefer, Michael Hohmeyer, Wayne Christopher, Mary Jo Hamilton,
Michael Salari, Masoud Doroudian (the six aforelisted
individuals, the "Class A Stockholders"), Diane Poirier, Devendra
Rajwade, Jan Soreide, and Mr.Vijay Shah ("Mr. Shah"; the four
aforelisted individuals, the "Class B Stockholders" and together
with the Class A Stockholders, the "Class A and B Stockholders"),
Akila Diwakar, Philip Diwakar, Alan Magnuson, Forest Rouse,
Vladimir Griaznov, Xiaomin Wang, Jieyong Xu, Jigen Zhou, Manfred
Friedrichs, and Carsten Martens (the aforelisted ten individuals,
the "Class C Stockholders"; each of the Class A and B
Stockholders and the Class C Stockholders a "Stockholder" and
together, the "Stockholders"), Reimund Steberl ("Mr. Steberl")
and Armin Wulf ("Mr. Wulf").
WITNESSETH:
WHEREAS, ANSYS, PMAC and the Stockholders desire that the
business of PMAC be combined with that of ANSYS and that, in
connection therewith, all of the issued and outstanding Class A
Common Stock, Class B Common Stock and Class C Common Stock,
without par value, of PMAC (collectively, "PMAC Common Stock")
be converted into the consideration provided in Section 1.5 (the
"Merger Consideration"); and
WHEREAS, for this purpose ANSYS has formed Merger Sub whose
sole purpose shall be to facilitate the implementation of the
transaction by being the surviving corporation of its merger with
PMAC (the "Merger"); and
WHEREAS, ANSYS, PMAC and the Stockholders desire to make
certain representations, warranties and agreements in connection
with the Merger and to prescribe various conditions precedent to
the Merger;
NOW, THEREFORE, in consideration of these premises and the
representations, warranties and agreements herein contained, the
parties agree as follows:
1. THE MERGER
1.1 The Merger.
Upon the terms and subject to the conditions set forth in this
Agreement, at the Effective Time (as defined in Section 1.2),
PMAC will be merged with and into Merger Sub and the separate
corporate existence of PMAC will thereupon cease. Merger Sub, as
the surviving corporation of the Merger (sometimes hereinafter
referred to as the "Surviving Corporation"), will continue to be
governed by the laws of the State of California. The Merger will
have the effects specified in the Delaware General Corporation
Law (the "DGCL") and, with respect to PMAC, in the Corporations
Code of the State of California (the "California Code"). Without
limiting the generality of the foregoing, and subject thereto, at
the Effective Time, all of the properties, rights, privileges,
powers, franchises, debts, liabilities, obligations and duties of
Merger Sub will continue in the Surviving Corporation unaffected
by the Merger.
1.2 Effective Time.
Pursuant to Section 1.3, at Closing Merger Sub will file a
Certificate of Merger with the Delaware Secretary of State in
accordance with the relevant provisions of the DGCL, and will
make all other filings or recordings required under the DGCL and
the California Code to consummate the Merger. The Merger will
become effective upon such filing of the Certificate of Merger or
at such other time as the parties hereto may agree and as may be
specified in the Certificate of Merger in accordance with
applicable law. The date and time when the Merger becomes
effective is herein referred to as the "Effective Time."
1.3 Closing.
(a) Subject to satisfaction (or waiver) of the conditions set
forth in Article 7, the Closing of the Merger (the "Closing")
will take place (i) at the offices of Greene Radovsky Maloney &
Share LLP, 4 Embarcadero Center, Suite 4000, San Francisco,
California, beginning at 10:00 a.m., Pacific Daylight Time, on
August 31, 2000 or (ii) at such other place, date and/or time as
the parties hereto may agree. The date upon which the Closing
occurs is herein referred to as the "Closing Date."
(b) At the Closing, (i) ANSYS shall deliver to PMAC
and/or the Stockholders' Representative, as the case may be, the
various certificates, instruments and documents required to be
delivered at or prior to Closing pursuant to Sections 7.1 and 7.3
if not previously delivered pursuant to the terms thereof, (ii)
PMAC and/or the Stockholders' Representative, as the case may be,
shall deliver to ANSYS the various certificates, instruments and
documents required to be delivered at Closing pursuant to
Sections 7.1 and 7.2 if not previously delivered pursuant to the
terms thereof, and (iii) Merger Sub shall file the Certificate of
Merger with the Delaware Secretary of State pursuant to Sections
103 and 252 of the DGCL, and shall file an original executed
counterpart of the same with the Secretary of State of the State
of California under cover of a letter stating that a Request for
Tax Clearance Certificate - Corporations has been filed.
1.4 Certificate of Incorporation of the Surviving Corporation.
At the Effective Time, in accordance with the DGCL, the
Certificate of Incorporation, as amended, of Merger Sub as in
effect immediately prior to the Effective Time will (except as to
the name of the Surviving Corporation, which shall be "ICEM CFD
Engineering, Inc.") be the Certificate of Incorporation of the
Surviving Corporation until amended in accordance with the terms
thereof and applicable law.
1.5 Effect on Capital Stock:
(a) As of the Effective Time, by virtue of the Merger and
without any action on the part of the holders of any of the
issued and outstanding shares of PMAC Common Stock:
(i) Cancellation of Certain PMAC Common Stock. All
shares of PMAC Common Stock that are held in the treasury of
PMAC and any shares of PMAC Common Stock owned by any
subsidiary of PMAC shall be canceled and no consideration
shall be delivered in exchange therefor.
(ii) Conversion of the Other PMAC Common Stock. Each
share of PMAC Class A Common Stock and Class B Common Stock
(other than those shares referred to in Section 1.5(a)(i))
shall be converted, by virtue of the Merger and without any
action on the part of the holder thereof, into and represent
the right to receive (subject to Section 1.5(b) and the
other provisions of this Section 1.5) the Pro Rata Portion
of that number of shares of fully paid and nonassessable
common stock, par value $.01 per share ("ANSYS Common
Stock"), equal to (X) $7,279,118.78 minus 51.5263% of the
sum of (1) the aggregate amount of any consideration
(including notes) given to Mr. Vedat Akdag in connection
with the repurchase of his shares of PMAC Common Stock prior
to Closing plus (2) the aggregate amount of the Steberl
Bonus plus (3) the aggregate amount of the Closing Employee
Bonuses, divided by (Y) the average of the daily closing
prices of ANSYS Common Stock for the 20 consecutive trading
days immediately preceding the date on which ANSYS and PMAC
jointly announce the execution of this Agreement (such
shares, the "Initial Stock Amount") plus the other Merger
Consideration provided in Section 1.5(d). Each share of
PMAC Class C Common Stock shall be converted, by virtue of
the Merger and without any action on the part of the holder
thereof, into and represent the right to receive (subject to
Section 1.5(b) and the other provisions of this Section 1.5)
cash in an amount equal to the Pro Rata Portion of
$7,279,118.78 minus 51.5263% of the sum of (1) the aggregate
amount of any consideration (including notes) given to Mr.
Vedat Akdag in connection with the repurchase of his shares
of PMAC Common Stock prior to Closing plus (2) the aggregate
amount of the Steberl Bonus plus (3) the aggregate amount of
the Closing Employee Bonuses, plus the other Merger
Consideration provided in Section 1.5(d); provided, that
ANSYS may cause such portion of the Merger Consideration
payable to any Class C Stockholder to be paid to PMAC as is
necessary to pay the outstanding principal and interest of
PMAC's loan to such Class C Stockholder in respect of tax
withheld upon the issuance of Class C Common Stock to such
Class C Stockholder.
(b) Initial Stock Amount Issuance. At the Closing,
the Stockholders shall deliver to ANSYS certificates representing
all outstanding shares of PMAC Common Stock, and ANSYS will issue
or cause to be issued, and deliver or cause to be delivered (in
accordance with Section 1.5(c)) to the Stockholders that number
of shares of ANSYS Common Stock as provided in Section
1.5(a)(ii), plus cash for any fractional shares as provided in
such Section 1.5(a)(ii), except that twenty percent (20%) of such
shares shall not be delivered to such Stockholders, but instead
shall be delivered to the Bank of San Francisco as escrow agent
to be held in escrow (the "Escrow Shares") as security for the
Stockholders' indemnification obligations under Section 10 and
pursuant to the provisions of an escrow agreement (the "Escrow
Agreement") to be executed pursuant to Section 6.7. ANSYS may
satisfy its obligation to deliver the aforedescribed shares by
delivery of an irrevocable letter of instruction to its transfer
agent directing the transfer agent to deliver such shares to the
Stockholders and the Escrow Agent, provided that such shares are
actually delivered to the Stockholders and the Escrow Agent
within seven days of Closing.
(c) Exchange Procedures. Subject to Section 1.5(b),
upon valid surrender of a certificate formerly representing
outstanding shares of PMAC Common Stock (a "Certificate") which
have been converted into the right to receive the Merger
Consideration pursuant to Section 1.5(a)(ii), the holder thereof
shall be entitled to receive in exchange therefor a certificate
representing the number of whole shares of ANSYS Common Stock
pursuant to Section 1.5(a)(ii) for the shares formerly
represented by the Certificate so surrendered and other Merger
Consideration to which that person is entitled. The Certificate
so surrendered shall forthwith be canceled. Subject to Section
1.5(b), in the event of a transfer of ownership of PMAC Common
Stock which is not registered in the transfer records of PMAC,
the appropriate Merger Consideration may be delivered to a
transferee if a Certificate is presented to ANSYS and accompanied
by all documents required to evidence and effect such transfer
and to evidence that any applicable stock transfer taxes have
been paid. Until surrendered as contemplated by this Section
1.5(c), each Certificate shall be deemed at any time after the
Effective Time only to represent the right to receive upon
surrender the Merger Consideration as provided by this Section
1.5.
(d) Other Merger Consideration. In addition to the
Initial Stock Amount, each Stockholder shall, subject to the
conditions set forth herein, receive a Pro Rata Portion of
(A) cash in an amount equal to (i) the Initial Cash Amount
minus (ii) the sum of (W) the Escrow Cash Amount plus
(X) 48.4737% of the aggregate amount of any
consideration (including notes) given to Mr. Vedat
Akdag in connection with the repurchase of his shares
of PMAC Common Stock prior to Closing plus (Y) 48.4737%
of the amount of the Steberl Bonus plus (Z) 48.4737% of
the aggregate amount of the Closing Employee Bonuses,
payable at Closing by one or more wire transfers of
immediately available funds to such account(s) as are
designated by such Stockholder at least three business
days before the Closing Date, and
(B) the Contingent Payment Right, payable as described
herein.
(e) Merger Consideration Adjustment. ANSYS shall
deliver to each Stockholder on the Initial Period Payment Date
such Stockholder's Pro Rata Share of (i) the Escrowed Cash Amount
(including any interest earned on the Escrowed Cash Amount
pursuant to the terms of the Escrow Agreement) by wire transfer
of immediately available funds, and (ii) the amount, if any, by
which the Revenue Formula as applied to the Initial Period
exceeds the Estimated Purchase Price; provided, however, that
such amounts are subject (A) to reduction by an amount equal to
the estimated dollar amount of all Damages for which the ANSYS
Indemnified Parties have made claims for indemnification pursuant
to this Agreement on or before the Initial Period Payment Date
(to the extent not yet satisfied by the PMAC Indemnitors), (B) to
reduction by the amount, if any, by which the Estimated Purchase
Price exceeds the Revenue Formula as applied to the Initial
Period; (C) to increase by the amount of the excess, if any of
PMAC Working Capital as reflected on the December 31, 2000
Balance Sheet over $0, (D) to reduction by the amount, if any,
that PMAC Working Capital as reflected on the December 31, 2000
Balance Sheet is less than $0, (E) to reduction by up to
$1,366,110.00 in respect of amounts then owed, if any, in respect
of the payments previously scheduled to be made to PTC in
September 2000, and (F) to reduction by the amount of the Initial
Period Retention Bonuses. If the adjustments provided for under
clauses (A) through (F) above result in a net reduction which
exceeds the amount of the Escrowed Cash Amount, then the amount
of such excess (the "Escrow Shortfall") shall be repaid pursuant
to Section 1.6. Any Merger Consideration Adjustment amount due
to the Stockholders pursuant to the foregoing that exceeds the
Escrowed Cash Amount shall be payable to such Stockholders as
follows:
(a) to each Class A and B Stockholder, 48.4737% in
immediately available funds, and 51.5263% in ANSYS
Common Stock determined based upon the average of the
daily closing prices of ANSYS Common Stock for the 20
consecutive trading days immediately preceding the
Initial Period Payment Date; and
(b) to each Class C Stockholder in cash.
The term of the Escrow Agreement shall be extended, and ultimate
distribution of escrowed shares and funds made, as provided
therein.
(f) Fractional Shares. No fractional shares of ANSYS
Common Stock shall be issued as a result of the Merger, but in
lieu thereof each holder of shares of PMAC Common Stock who would
otherwise be entitled to receive a fraction of a share of ANSYS
Common Stock shall receive an amount in cash equal to the per
share valuation of ANSYS Common Stock determined in respect of
such issuance pursuant to Section 1.5(a)(ii), Section 1.5(e) or
the definition of "Contingent Payment Right" in Section 1.5(i),
as the case may be, multiplied by the fraction of a share of
ANSYS Common Stock to which such Stockholder would otherwise be
entitled.
(g) No Further Ownership Rights in PMAC Common Stock.
The Merger Consideration delivered upon the surrender for
exchange of shares of PMAC Common Stock in accordance with the
terms hereof shall be deemed to have been delivered in full
satisfaction of all rights pertaining to such shares of PMAC
Common Stock.
(h) Calculation Procedure.
(i) ANSYS shall prepare in accordance with GAAP
(as modified by this Agreement), as soon as practicable
after the end of each of the calendar years 2000 and 2001, a
report containing a statement of income of the PMAC Group
for the twelve months then ended as of the close of business
on December 31 of each such period, in each case together
with a certificate of an officer of ANSYS which states that
the report was prepared in accordance with this Agreement,
and sets forth for the period under examination the
applicable calculation of EBITDA, Expenses, and the Revenue
Formula and sets forth all adjustments required to be made
to such financial statements in order to make the
calculations required under this Section 1.5 (the "Annual
Determination"). A copy of each such Annual Determination
shall be delivered to the Stockholders' Representative not
later than 45 days after the end of the calendar year to
which such Annual Determination relates, provided that no
delay shall be considered in breach of this Agreement if
ANSYS has used its best efforts to complete such Annual
Determination but any entity in the PMAC Group, any
Stockholder or either of Mr. Wulf and Mr. Sterberl have not
used their best efforts in preparing and delivering data
needed for, or otherwise cooperating in the completion of,
the Annual Determination.
(ii) If the Stockholders' Representative does not
agree that any Annual Determination correctly states the
applicable EBITDA, Expenses, and Revenue Formula calculation
for the period under examination, he shall promptly (but not
later than 20 days after the delivery of such Annual
Determination) give written notice to ANSYS of any
exceptions thereto, such notice to set forth in reasonable
detail each disputed item or amount and the basis for the
Stockholders' Representative's disagreement therewith,
together with supporting calculations. If the Stockholders'
Representative and ANSYS reconcile their differences, the
Annual Determination shall be adjusted accordingly and shall
thereupon become binding final and conclusive upon all of
the parties hereto and enforceable in a court of law. If
the Stockholders' Representative and ANSYS are unable to
reconcile their differences in writing within 20 days after
written notice of exceptions is delivered to ANSYS (the
"Reconciliation Period"), the items in dispute shall be
submitted to an independent accounting firm of national
standing in the United States in terms of gross revenue (the
"Independent Auditors") for final determination, and the
Annual Determination shall be deemed adjusted in accordance
with the determination of the Independent Auditors and shall
become binding, final and conclusive upon all of the parties
hereto. The Independent Auditors shall consider only the
items in dispute and shall be instructed to act within 10
days (or such longer period as the Stockholders'
Representative and ANSYS shall agree) to resolve all items
in dispute. If the Stockholders' Representative does not
give notice of any exception within 20 days after the
delivery of an Annual Determination or if the Stockholders'
Representative gives written notification of his acceptance
of an Annual Determination prior to the end of such 20 day
period, such Annual Determination shall thereupon become
binding, final and conclusive upon all the parties hereto
and enforceable in a court of law. Any expenses relating to
the engagement of the Independent Auditors shall be borne by
the Stockholders; provided, that if the Independent Auditors
determine that the aggregate Merger Consideration Adjustment
or Contingent Payment Right, as the case may be, to which
the Stockholders are entitled is equal to 110% or more of
the aggregate amounts of such Merger Consideration
Adjustment or Contingent Payment Right as set forth by ANSYS
in its proposed Annual Determination, then all expenses
relating to the engagement of the Independent Auditors in
respect of such Annual Determination shall be borne by
ANSYS.
(iii) The books and records of the Surviving
Corporation shall be made available during normal business
hours upon reasonable advance notice to ANSYS, the
Stockholders' Representative and the Independent Auditors to
the extent required to perform the determinations required
under this Section 1.5(h). The parties hereto shall cause
the Surviving Corporation to make arrangements to make
available to the Stockholders' Representative and ANSYS
(including auditors) any back-up materials generated by the
Surviving Corporation with respect to any adjustments made
by them to the financial statements in the process of
preparing any Annual Determination.
(i) Certain Definitions. For purposes of this
Agreement, the following terms have the following meanings:
"Balance Sheet" means the balance sheets of the PMAC
Group prepared by ANSYS in connection with the Annual
Determination for calendar year 2000.
"Budget Goals" means the budget goals for operating
revenue, Expenses and EBITDA in calendar years 2000 and 2001 as
specified in Exhibit A attached hereto.
"Consulting Services" means services rendered to third
parties for cash fees in directly performing or interpreting
modeling or simulation of mechanical systems. Such services do
not include custom development or modification of software
products. For purposes of allocating revenue between Consulting
Services and Direct or Indirect Sales for a sale that involves
multiple (service and software) components, a pro-rata allocation
will be made to each respective component based on the standard
list price of each component compared to the total standard list
price of all components.
"Contingent Payment Rights" means each Stockholder's
right to receive, as of the Second Period Payment Date, such
Stockholder's Pro Rata Portion of an amount equal to (X)
Incremental Revenue minus (Y) the sum of (1) the aggregate amount
of the Contingent Retention Bonuses plus (2) the amount, if any,
of the payment or accrual of any bonus (other than the Steberl
Bonus as defined herein) to Mr. Steberl in 2001; provided,
however, that such amount shall be subject to further reduction
(but in no event to an amount less than zero) by an amount equal
to the sum of (a) the estimated dollar amount of all Damages for
which the ANSYS Indemnified Parties have made claims for
indemnification pursuant to this Agreement on or before the
Second Period Payment Date (to the extent not yet satisfied by
the PMAC Indemnitors or secured by funds or ANSYS Common Stock
retained in escrow on the Initial Period Payment Date in respect
of such Damages) and (b) if EBITDA of the PMAC Group for 2001 is
less than that set forth in the Budget Goals for 2001, the
amount, if any, of the excess of Expenses for calendar year 2001
over the Expenses for 2001 set forth in the Budget Goals. Any
payment due pursuant to such Contingent Payment Right shall be
payable to such Stockholder as follows:
(a) to each Class A and B Stockholder, 48.4737% in
immediately available funds, and 51.5263% in ANSYS
Common Stock determined based upon the average of the
daily closing prices of ANSYS Common Stock for the 20
consecutive trading days immediately preceding the
Second Period Payment Date; and
(b) to each Class C Stockholder in cash.
Should any reduction be made pursuant to the foregoing clause
(a), the amount of such reduction, insofar as it would have been
payable in cash, shall be placed into an interest bearing escrow
account to be established with the Bank of San Francisco or any
other banking or trust company mutually agreement to ANSYS and
the Stockholders' Representative until the final determination of
the respective claims by agreement of the parties or by the
arbitrator pursuant to Section 11.9, to be held in escrow until
disbursed in accordance with such final determination, and, to
the extent payable in shares of ANSYS Common Stock, such shares
as are finally determined to be issuable to the Stockholders
shall be issued and delivered within seven days of such final
determination.
"Direct Sales" shall mean sales of the ICEM CFD product
or any other products made directly to customers by the PMAC
Group.
"EBITDA" means the consolidated profits before
interest, income taxes, depreciation and amortization as shown on
the income statements of the PMAC Group, as determined in
accordance with GAAP; provided, however, that (i) EBITDA shall
exclude any write-off or amortization or depreciation of goodwill
or other intangible assets, attributed to the Merger; (ii) except
as otherwise agreed by ANSYS and the Stockholders'
Representative, no intercompany management fees or other overhead
or group charges, charged by ANSYS (or any of its affiliates) to
the PMAC Group, shall be treated as an expense; (iii) any Damages
of an ANSYS Indemnified Person which give rise to an indemnity
payment pursuant to the indemnification provisions of Article 10
and which are assumed by the Stockholders or as to which such
ANSYS Indemnified Person has been reimbursed (by offset,
insurance, tax benefit or otherwise), or which does not give
ANSYS Indemnified Person the right to an indemnity payment
because it falls within the indemnity threshold referred to in
Article 10, shall not be treated as an expense; (iv) any
indemnity payments made by ANSYS or any of its affiliates to any
Stockholder shall not be treated as an expense; (v) there shall
be no charge against income for the payment or accrual of any
component of the Purchase Price or Contingent Payment; (vi) any
costs and expenses incurred by the PMAC Group in contesting any
Annual Determination shall not be treated as an expense, except
to the extent that such costs and expenses are incurred as a
result of any Stockholder's or the Stockholders' Representative's
breach of the procedures provided for in this Agreement or
willful delay; (vii) any expenses of ANSYS or any of its
affiliates prior to or after the Closing incurred (excluding
expenses incurred by the PMAC Group prior to or at Closing) in
connection with the negotiation, preparation and execution of
this Agreement and the other documents to be delivered at the
Closing hereunder (including without limitation the fees and
disbursements of its attorneys and accountants and any brokers or
finders fees) shall not be treated as an expense; (viii) any
Damages suffered by ANSYS or costs incurred by the PMAC Group
resulting from PMAC's failure to obtain the third-party consents
set forth in Section 1.5 of the PMAC Disclosure Schedule shall
not be treated as an expense; (ix) any costs and expenses
incurred by the Surviving Corporation in the pursuit of any
indemnity claim under Article 10 to the extent such claim has
been rejected by a final determination pursuant to Article 10;
(x) payments made to Vedat Akdag pursuant to PMAC's note issued
in consideration of the repurchase of Mr. Akdag's PMAC Common
Stock shall not be treated as an expense; and (xi) the Steberl
Bonus (as defined in Section 3.18(b)) and payments made to the
Bonus Employee Group pursuant to Section 6.16 shall not be
treated as an expense.
"Escrow Agreement" means the Escrow Agreement described
in Section 6.7 in substantially the form attached hereto as
Exhibit C.
"Escrowed Cash Amount" means Three Million Dollars
($3,000,000.00), to be delivered by ANSYS to the Bank of San
Francisco as escrow agent pursuant to the terms of the Escrow
Agreement.
"Estimated Purchase Price" is based upon Estimated
Revenue and consists of the Initial Cash Amount and the Initial
Stock Amount (disregarding adjustments thereto in respect of the
Closing Employee Bonuses, the Steberl Bonus and the repurchase of
Mr. Akdag's shares of PMAC Common Stock), which amounts
(disregarding such adjustments) total Fourteen Million One
Hundred Twenty Seven Thousand Dollars ($14,127,000.00).
"Estimated Revenue" means the estimated net operating
revenue, calculated based on GAAP, for the PMAC Group for the
Initial Period of Ten Million Two Hundred Thirty Six Thousand
Dollars ($10,236,000.00) attributable to agreements related to
Magna TDM and Icepak, other original equipment manufacturer
agreements, Direct Sales and Indirect Sales, Software Services
and Consulting Services performed by PMAC.
"Expenses" means those categories of expense of the
PMAC Group set forth in the Budget Goals for 2001.
"GAAP" means United States generally accepted
accounting principles applied on a consistent basis throughout
the periods involved.
"Incremental Revenue" means the amount by which the
Revenue Formula for the year ended December 31, 2001 exceeds the
Revenue Formula for the year ended December 31, 2000, determined
in accordance with GAAP and reflected in the financial statements
of the PMAC Group.
"Indirect Sales" shall mean net sales by distributors
of the general purpose ICEM CFD product which has not been
customized for use with such distributor's products.
"Initial Cash Amount" means $6,847,881.22.
"Initial Period" means the 12 months ended December 31, 2000.
"Initial Period Payment Date" means the later of (a)
the fifth business day after the Stockholders' Representative
delivers notice to ANSYS of the Stockholders' acceptance of and
agreement with the Annual Determination for calendar year 2000,
(b) the fifth business day after the 20th day after the delivery
of the Annual Determination for calendar year 2000 to the
Stockholders' Representative, and (c) the date five business days
after the final determination of the Annual Determination for
2000 pursuant to Section 1.5(h)(ii).
"Knowledge," with respect to: (i) PMAC, means, after
having made reasonable inquiries of each of the officers,
directors and responsible employees of PMAC and the PMAC
Subsidiaries, the actual knowledge of, or the receipt of
notification by, Armin Wulf, Wayne Christopher, Michael Hohmeyer,
Reimond Steberl, Michael Salari and Vijay Shah; and (ii) ANSYS,
means, after having made reasonable inquiries of its officers,
directors and responsible employees, the actual knowledge of, or
the receipt of notification by, James Cashman, Bud Dunbar, Maria
Shields, David Secunda and Lee Detwiler.
"Material Adverse Effect" shall mean, for purposes of
this Agreement, any change, event or effect that is materially
adverse to the business, assets (including intangible assets),
condition (financial or otherwise), properties, or results of
operations of the relevant party, other than conditions resulting
from the performance of the terms of this Agreement.
"Merger Consideration Adjustment" means any adjustment
to the Merger Consideration made pursuant to Section 1.5(e).
"PMAC Group" means (i) prior to the Effective Time,
PMAC and the PMAC Subsidiaries, and (ii) at and after the
Effective Time, the PMAC Subsidiaries and the Surviving
Corporation.
"PMAC Working Capital" means cash and marketable
securities of the PMAC Group, minus any indebtedness of the PMAC
Group (excluding loans payable to ANSYS), subject to increase by
the amount by which other items of current assets are in excess
of zero and decrease by the amount by which other items of
current liabilities are in excess of zero, in each case as
determined pursuant to GAAP; provided, that in making such
determination deferred tax liabilities and assets shall be
disregarded; and further provided, that to the extent the
inclusion of the current income tax liability causes the
calculation of PMAC Working Capital to be less than zero, the
current income tax liability will be excluded from the
calculation to the extent such exclusion results in PMAC Working
Capital being no greater than zero.
"Pro Rata Portion" means that portion determined by
multiplying the amount in question by a fraction, the numerator
of which is the number of shares of PMAC Common Stock owned of
record immediately prior to the Effective Time by the Stockholder
in question, and the denominator of which is the total number of
outstanding shares of PMAC Common Stock immediately prior to the
Effective Time.
"Revenue" means operating revenue from original
equipment manufacture agreements, Direct Sales, Indirect Sales,
Software Services and Consulting Services, calculated under GAAP,
net of discounts and net of the distributors' share (including
ANSYS' share when the sale is made by ANSYS or an ANSYS
distributor).
"Revenue Formula" means the sum of (1) 250% of Revenue
of the PMAC Group attributable to original equipment manufacture
agreements related to Magna TDM and Icepak, (2) 195% of Revenue
of the PMAC Group attributable to original equipment manufacturer
agreements other than those reflected to in clause (1), (3) 166%
of Revenue of the PMAC Group attributable to Direct Sales and
Indirect Sales, (4) 108% of Revenue of the PMAC Group
attributable to Software Services, and (5) 50% of Revenue of the
PMAC Group attributable to Consulting Services performed by the
PMAC Group.
"Second Period" means the 12 months ended December 31, 2001.
"Second Period Payment Date" means the the later of (a)
the fifth business day after the Stockholders' Representative
delivers notice to ANSYS of the Stockholders' acceptance of and
agreement with the Annual Determination for calendar year 2001,
(b) the fifth business day after the 20th day after the delivery
of the Annual Determination for calendar year 2001 to the
Stockholders' Representative, and (c) the date five business days
after the final determination of the Annual Determination for
2001 pursuant to Section 1.5(h)(ii).
"Software Services" means services rendered to third
parties for cash fees to develop or modify software. For
purposes of allocating revenue between Software Services and
Direct or Indirect Sales for a sale that involves multiple
(service and software) components, a pro-rata allocation will be
made to each respective component based on the standard list
price of each component compared to the total standard list price
of all components.
"Stockholders' Representative" means Mr. Wulf or such
other Stockholders' Representative as may be appointed by the
Stockholders pursuant to the terms of the Stockholders
Representative Agreement (as defined in Section 7.2(g).
1.6 Repayment Obligations.
Each Stockholder shall have the obligation to pay to ANSYS, as of
the Initial Period Payment Date, such Stockholder's Pro Rata
Portion of the Escrow Shortfall, if any, as follows: one-half in
cash and one-half in shares of ANSYS Common Stock of such value,
determined based upon the average of the daily closing prices of
ANSYS Common Stock for the 20 consecutive trading days
immediately preceding the Initial Period Payment Date.
1.7 Directors of the Surviving Corporation.
At the Effective Time, the directors of Merger Sub then in office
will become the directors of the Surviving Corporation until the
earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
1.8 Officers of the Surviving Corporation.
At the Effective Time, the officers of Merger Sub will become the
officers of the Surviving Corporation until the earlier of their
resignation or removal or until their respective successors are
duly elected and qualified, as the case may be.
1.9 Acknowledgement and Release of Stockholders.
(a) Investment Representations. Set forth in Section
1.9 of the PMAC Disclosure Schedule (as hereinafter defined) is a
list of all Stockholders, the number of shares of PMAC Common
Stock they own, their principal addresses, their marital status
and whether they are "accredited investors" as such term is
defined in Rule 501(a) promulgated under the Securities Act of
1933, as amended (the "Securities Act"). Each Stockholder
identified in Section 1.9 of the PMAC Disclosure Schedule as
being an accredited investor hereby severally represents,
warrants and acknowledges to ANSYS that such Stockholder has been
provided with and has reviewed ANSYS' Financial Statements and
the ANSYS SEC Documents (each as hereinafter defined); that no
other material written information concerning this Agreement, the
Merger Agreement or the Merger has been provided to such
Stockholder by ANSYS or PMAC; and that such Stockholder is an
"accredited investor" as such term is defined in Rule 501(a)
promulgated under the Securities Act. Each Stockholder
identified in Section 1.9 of the PMAC Disclosure Schedule as not
being an accredited investor hereby severally represents,
warrants and acknowledges to ANSYS (i) that such Stockholder has
been provided with and has reviewed ANSYS' Financial Statements
and the ANSYS SEC Documents; (ii) that the material exhibits to
the ANSYS SEC Documents have been made available to such
Stockholder; (iii) that such Stockholder has had the opportunity
to ask questions and receive answers concerning the terms and
conditions of the Merger of and from representatives of PMAC and
ANSYS and to obtain any additional information which ANSYS
possesses or can acquire without unreasonable effort or expense
that is necessary to verify the accuracy of the information set
forth in the ANSYS SEC Documents and ANSYS's Financial
Statements, (iv) that such Stockholder has been given access to
all such records and financial statements of PMAC that such
Stockholder requires in order to value his or her shares of PMAC
Common Stock, (v) that such Stockholder has had the opportunity
to compare and evaluate the relative rights of shareholders of
PMAC and ANSYS under the governing documents of each, and (vi)
that such Stockholder, by reason of his or her business or
financial experience or the business and financial experience of
his or her professional advisors (who are unaffiliated with and
who are not compensated by ANSYS or any affiliate or selling
agent of ANSYS, directly or indirectly), has the capacity to
protect his or her own interests in connection with the
transactions contemplated hereby. Each Stockholder is acquiring
the shares of ANSYS Common Stock to be issued hereunder for
investment purposes. Each Stockholder understands and agrees
with ANSYS that the shares of ANSYS Common Stock to be issued to
such Stockholder as a result of the Merger will not be registered
under the Securities Act or any applicable state securities law
when issued and that, as a result, such shares of ANSYS Common
Stock may be sold by such Stockholder only pursuant to an
effective registration statement under the Securities Act or an
exemption from the registration requirement thereof, if
available, and that the certificates representing such shares of
ANSYS Common Stock will contain an appropriate legend to the
effect of the foregoing.
(b) Acknowledgement of Bonuses and Release. Each
Stockholder, both in his or her capacity as a stockholder of PMAC
and as party to this Agreement, hereby acknowledges, ratifies and
consents to the bonuses payable to certain employees and Mr.
Steberl in accordance with Sections 6.16 and 6.23 (the "Bonus
Payments"). Each Class A and B Stockholder acknowledges that
their interest in PMAC was diluted by the authorization and
issuance of Class C Common Stock prior to the date hereof (the
"Class C Issuance"). Each Stockholder acknowledges and agrees
that these actions were in the best interests of PMAC when taken
and were necessary and desirable for the further prospects of the
PMAC Group. Each Stockholder releases PMAC and each of its
directors and officers from any liability whatsoever, known or
unknown, in connection with the Bonus Payments and the Class C
Issuance. Each Stockholder expressly waives for the purposes of
this Section 1.9(b) only the provisions of California Civil Code
1542, which provides: "A general release does not extend to
claims which the creditor does not know or suspect to exist in
his favor at the time of executing the release, which if known by
him must have materially affected his settlement with the
debtor."
2. REPRESENTATIONS AND WARRANTIES OF ANSYS
For purposes of the representations and warranties of ANSYS
contained herein, the inclusion of any information in any section
of the ANSYS Disclosure Schedule attached hereto (the "ANSYS
Disclosure Schedule") shall not be deemed to be an admission or
evidence of the materiality of such item, nor shall it establish
a standard of materiality inconsistent with that provided for by
the terms of this Agreement. ANSYS represents and warrants to
PMAC and the Stockholders as follows:
2.1 Organization.
ANSYS and Merger Sub are each a corporation duly organized,
validly existing and in good standing under the laws of the
jurisdictions of their incorporation and have sufficient
corporate power to carry on their respective businesses as they
are now being conducted and ANSYS is duly qualified to do
business and is in good standing in each jurisdiction where its
ownership or leasing of property or the conduct of its business
requires it to be so qualified and in good standing, except in
jurisdictions, if any, where the failure to be so qualified or in
good standing would not, either individually or in the aggregate,
have a Material Adverse Effect ANSYS and its subsidiaries taken
as a whole.
2.2 Capitalization.
The authorized capital stock of ANSYS consists of 50,000,000
shares of ANSYS Common Stock, 16,584,758 shares of which were
issued and 15,173,504 shares outstanding on August 4, 2000, and
2,000,000 shares of preferred stock, par value $.01 per share,
none of which are issued and outstanding. All of such
outstanding shares of ANSYS Common Stock have been duly
authorized and are validly issued, fully paid and nonassessable.
2.3 Authority Relative to this Agreement.
ANSYS and Merger Sub each have the corporate power and authority
to enter into and deliver this Agreement and to carry out their
respective obligations hereunder. The execution and delivery of
this Agreement by ANSYS and Merger Sub and the consummation of
the transactions contemplated hereby have been duly authorized by
their respective Boards of Directors and no other corporate
proceedings on their part are necessary to authorize this
Agreement. This Agreement is a valid and binding obligation of
ANSYS and Merger Sub enforceable against them in accordance with
their respective terms, except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws
of general application relating to or affecting enforcement of
creditor's rights and by rules of law governing specific
performance, injunctive relief or other equitable remedies.
2.4 Shares of ANSYS Common Stock.
The shares of ANSYS Common Stock to be issued pursuant to this
Agreement have been reserved for such issuance and, when issued
and delivered in accordance with this Agreement will be duly and
validly authorized and issued, fully paid and nonassessable.
2.5 SEC Documents; Financial Statements.
(a) ANSYS has furnished to PMAC and the Stockholders true and
complete copies of (i) its Annual Report on Form 10-K for the
year ended December 31, 1999 and (ii) each of its Quarterly
Reports on Form 10-Q for the quarters ended March 31, 2000 and
June 30, 2000 (collectively. the "ANSYS SEC Documents"). As of
their respective filing dates, the ANSYS SEC Documents complied
in all material respects with the requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and none
of the ANSYS SEC Documents contained any untrue statement of a
material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements made
therein, in light of the circumstances under which they were or
will be made, not misleading.
(b) Each of the consolidated financial statements
(including, in each case, any related notes) contained in the
ANSYS SEC Documents complied as to form in all material respects
with the applicable published rules and regulations of the
Securities and Exchange Commission ("SEC") with respect thereto,
was prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes to such
financial statements or, in the case of unaudited statements, as
permitted by Form 10-Q of the SEC) and fairly presented in all
material respects the consolidated financial position of ANSYS
and its Subsidiaries as at the respective dates and the
consolidated results of its operations and cash flows for the
periods indicated.
2.6 Absence of Certain Changes.
Since June 30, 2000, there has not been any change in the nature
of the business, results of operations, financial condition,
method of accounting or accounting practices or manner of
conducting the business of ANSYS, other than changes in the
ordinary course of business, none of which has had, or may
reasonably be expected to have, a Material Adverse Effect upon
ANSYS.
2.7 No Conflicts.
Neither the execution and delivery of this Agreement by ANSYS and
Merger Sub, nor the consummation of the transactions contemplated
hereby, nor compliance by ANSYS or Merger Sub with any of the
provisions hereof will (i) violate, or conflict with, or result
in a breach of any provisions of, or constitute a default (or an
event which with notice or lapse of time or both would constitute
a default) under, or result in the termination of, or accelerate
the performance required by, or result in a right of termination
or acceleration or result in the creation of any lien, security
interest, charge or encumbrance upon any of the properties or
assets of ANSYS or Merger Sub under any of the terms, conditions
or provisions of, (x) the Certificate of Incorporation or By-laws
of ANSYS or Merger Sub or (y) any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which ANSYS or Merger Sub is a party
or by which ANSYS or Merger Sub may be bound or by which either
of them is, or any of their properties or assets may be, except
for such violations, conflicts, breaches, defaults, etc. which
would not, in the aggregate, have a Material Adverse Effect on
ANSYS and its subsidiaries taken as a whole, or (ii) subject to
compliance with the statutes and regulations referred to in
Section 2.8, violate any judgment, ruling, order, writ,
injunction, decree, statute, rule or regulation applicable to
ANSYS or Merger Sub or any of their respective properties or
assets.
2.8 Governmental Consents.
No consent, approval, order or authorization of, or registration,
declaration or filing with, any court, administrative agency or
commission or other governmental authority or instrumentality (a
"Governmental Entity") is required by or with respect to ANSYS or
Merger Sub in connection with the execution and delivery of this
Agreement by ANSYS or Merger Sub or the consummation by ANSYS or
Merger Sub of the transactions contemplated hereby or thereby,
except for (i) the filing of such reports under Section 13 of
the Exchange Act as may be required in connection with this
Agreement and the transactions contemplated hereby, (ii) the
filing of the Merger Agreement and related officers' certificates
pursuant to the DGCL and appropriate documents with the relevant
authorities of other states in which Merger Sub is qualified to
do business, (iii) such consents, approvals, orders,
authorizations, registrations, declarations and filings as may be
required under applicable state securities laws and the laws of
any foreign country and (iv) such other consents, approvals,
orders, authorizations, registrations declarations and filings
which if not obtained or made would not have a Material Adverse
Effect on ANSYS and its subsidiaries taken as a whole.
2.9 Litigation.
There is no litigation, suit, action or proceeding pending or, to
the Knowledge of ANSYS, threatened against ANSYS, as to which
there is a reasonable likelihood of an adverse determination and
which, if adversely determined, individually or in the aggregate
with all such other litigation, suits, actions or proceedings,
would adversely effect ANSYS's ability to perform its obligations
under this Agreement.
2.10 No Brokers.
ANSYS has not entered into any contract, arrangement or
understanding with any person or firm which may result in the
obligation of ANSYS or any of PMAC, the PMAC Subsidiaries or the
Stockholders to pay any finder's fees, brokerage or agent's
commissions or other like payments in connection with the
negotiations leading to this Agreement and the transactions
contemplated hereby. ANSYS is not aware of any claim for payment
of any finder's fees, brokerage or agent's commissions or other
like payments in connection with the negotiations leading to
Agreement and the transactions contemplated hereby.
3. REPRESENTATIONS AND WARRANTIES OF PMAC, THE CLASS A
STOCKHOLDERS, MR. SHAH, MR. WULF AND MR. STEBERL
For purposes of the representations and warranties of PMAC
and the Stockholders contained herein, the inclusion of any
information in any section of the PMAC Disclosure Schedule
attached hereto (the "PMAC Disclosure Schedule") shall not be
deemed to be an admission or evidence of the materiality of such
item, nor shall it establish a standard of materiality
inconsistent with that provided for by the terms of this
Agreement. PMAC, the Class A Stockholders, Mr. Vijay Shah, Mr.
Wulf and Mr. Steberl represent and warrant to ANSYS and Merger
Sub as follows:
3.1 Existence; Good Standing; Authority; Compliance With Law.
(a) PMAC is a corporation duly organized, validly
existing and in good standing under the laws of the State of
California. Except as set forth in Section 3.1(a) of the PMAC
Disclosure Schedule provided to ANSYS, PMAC is duly licensed or
qualified to do business as a foreign corporation and is in good
standing under the laws of any other state of the United States
in which the character of the properties owned or leased by it
therein or in which the transaction of its business makes such
qualification necessary[, except where the failure to be so
licensed or qualified would not reasonably be expected to have a
Material Adverse Effect on PMAC or any PMAC Subsidiary. PMAC has
all requisite corporate power and authority to own, operate,
lease and encumber its properties and carry on its business as
now conducted. Other than the Stockholders Agreement, dated as
of April 30, 1997, among PMAC and certain Stockholders (the "PMAC
Stockholders Agreement"), a true and complete copy of which has
been provided to ANSYS, and the Amended and Restated Corporate
Buy-Sell Agreement, effective January 31, 1996, among PMAC,
Michael Hohmeyer, Christine Schoefer, Wayne Christopher and Mary
Jo Hamilton (the "Buy-Sell Agreement") and the other parties
subsequently made party thereto, a true and complete copy of
which has been provided to ANSYS, there is no shareholders
agreement among or between any of the Stockholders.
(b) Each of the PMAC subsidiaries listed in
Section 3.1(b) of the PMAC Disclosure Schedule (the "PMAC
Subsidiaries") is a corporation, partnership or limited liability
company (or similar entity or association in the case of those
PMAC Subsidiaries organized and existing other than under the
laws of a state of the United States) duly incorporated or
organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation or organization, has the
corporate or other power and authority to own its properties and
to carry on its business as it is now being conducted, and is
duly qualified to do business and is in good standing in each
jurisdiction in which the ownership of its property or the
conduct of its business requires such qualification, except where
the failure to be so licensed or qualified would not reasonably
be expected to have a Material Adverse Effect.
(c) Neither PMAC nor any of the PMAC Subsidiaries is
in violation of any order of any court, governmental authority or
arbitration board or tribunal, or any law, ordinance,
governmental rule or regulation to which PMAC or any PMAC
Subsidiary or any of their respective properties or assets is
subject. PMAC and the PMAC Subsidiaries have obtained all
licenses, permits and other authorizations and have taken all
actions required by applicable law or governmental regulations in
connection with their businesses as now conducted.
(d) True and complete copies of the articles of
incorporation and by-laws, each as amended, of PMAC are included
in Section 3.1(d) of the PMAC Disclosure Schedule. True and
complete copies of the charter documents, bylaws, organizational
documents, partnership agreements, limited liability company
agreements, joint venture agreements and comparable governing
documents (and in each such case, all amendments thereto) of each
of the PMAC Subsidiaries are included in Section 3.1(d) of the
PMAC Disclosure Schedule.
3.2 Authorization, Validity and Effect of Agreements.
PMAC has the corporate power and authority to enter into and
deliver this Agreement and the Merger Agreement and, subject to
requisite approval of this Agreement by the Stockholders, to
carry out its obligations hereunder and thereunder. The
execution and delivery of this Agreement and the Merger Agreement
and the consummation of the transactions contemplated hereunder
and thereunder have been duly authorized by its PMAC Board of
Directors and, except for the approval of the Stockholders, no
other corporate proceedings on the part of PMAC are necessary to
authorize this Agreement and the transactions contemplated
hereby. This Agreement is a valid and binding obligation of PMAC
enforceable against PMAC in accordance with its terms, except as
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application relating to or
affecting enforcement of creditor's rights and by rules of law
governing specific performance, injunctive relief or other
equitable remedies.
3.3 Capitalization.
The authorized capital stock of PMAC consists of 1,000,000 shares
of Class A Common Stock, 1,000,000 shares of Class B Non-Voting
Common Stock and 1,000,000 shares of Class C Non-Voting Common
Stock, each without par value. The aggregate number of shares of
PMAC Common Stock set forth in Section 1.9 of the PMAC Disclosure
Schedule are the only shares of PMAC Common Stock issued and
outstanding. No shares of PMAC Common Stock have been reserved
for issuance for any purpose. No shares of PMAC Common Stock are
held in the treasury of PMAC. All such issued and outstanding
shares of PMAC Common Stock are duly authorized, validly issued,
fully paid, nonassessable and free of preemptive rights. PMAC
has no outstanding bonds, debentures, notes or other obligations
the holders of which have the right to vote (or which are
convertible into or exercisable for securities having the right
to vote) with the stockholders of PMAC on any matter. There are
no options, warrants, calls, subscriptions, convertible
securities, or other rights, agreements or commitments which
obligate PMAC to issue, transfer or sell any shares of capital
stock of PMAC. Except as set forth in Section 3.3 of the PMAC
Disclosure Schedule, there are no agreements or understandings to
which PMAC or any PMAC Subsidiary is a party with respect to the
voting of any shares of PMAC Common Stock or which restrict the
transfer of any such shares, nor does PMAC have Knowledge of any
third party agreements or understandings with respect to the
voting of any such shares or which restrict the transfer of any
such shares. Except as set forth in Section 3.3 of the PMAC
Disclosure Schedule, there are no outstanding contractual
obligations of PMAC or any PMAC Subsidiary to repurchase, redeem
or otherwise acquire any shares of PMAC Common Stock, partnership
interests or any other securities of PMAC or any PMAC Subsidiary.
Except as set forth in Section 3.3 of the PMAC Disclosure
Schedule, neither PMAC nor any PMAC Subsidiary is under any
obligation, contingent or otherwise, by reason of any agreement
to register the offer and sale or resale of any of their
securities under the Securities Act.
3.4 Subsidiaries.
Except as set forth in Section 3.4 of the PMAC Disclosure
Schedule, PMAC owns directly or indirectly each of the
outstanding shares of capital stock or other equity interest of
each of the PMAC Subsidiaries. Each of the outstanding shares of
capital stock of each of the PMAC Subsidiaries having corporate
form is duly authorized, validly issued, fully paid and
nonassessable. Except as set forth in Section 3.4 of the PMAC
Disclosure Schedule, each of the outstanding shares of capital
stock or other equity interest of each of the PMAC Subsidiaries
is owned, directly or indirectly, by PMAC free and clear of all
liens, pledges, security interests, claims or other encumbrances.
The following information for each PMAC Subsidiary as of the date
of this Agreement is set forth in Section 3.4 of the PMAC
Disclosure Schedule: (i) its name and jurisdiction of
incorporation or organization; (ii) its authorized capital stock,
share capital or other equity interest, to the extent applicable;
and (iii) the name of each stockholder or equity interest holder
and the number of issued and outstanding shares of capital stock,
share capital or other equity interest held by it.
3.5 Other Interests.
Except as set forth in Section 3.5 of the PMAC Disclosure
Schedule, neither PMAC nor any PMAC Subsidiary owns directly or
indirectly any interest or investment (whether equity or debt) in
any corporation, partnership, limited liability company, joint
venture, business, trust or other entity (other than investments
in short-term investment securities).
3.6 No Conflicts.
Except as set forth in Section 3.6 of the PMAC Disclosure
Schedule, neither the execution and delivery of this Agreement by
PMAC, nor the consummation of the transactions contemplated
hereby, nor compliance by PMAC or the PMAC Subsidiaries with any
of the provisions hereof will (i) violate or conflict with, or
result in a breach of any provisions of, or constitute a default
(or an event which with notice or lapse of time or both would
constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in a right of
termination or acceleration, or result in the creation of any
lien, security interest, charge or encumbrance upon any of the
properties or assets of PMAC or the PMAC Subsidiaries under any
of the terms, conditions or provisions of the Articles of
Incorporation or By-laws of PMAC or the PMAC Subsidiaries or any
note, bond, mortgage, indenture, deed of trust, license, lease,
agreement or other instrument or obligation to which PMAC or the
PMAC Subsidiaries is a party or by which PMAC or the PMAC
Subsidiaries may be bound or by which it is, or any of its
properties or assets may be, subject or (ii) subject to
compliance with the statutes and regulations referred to in
Section 3.7, violate any judgment, ruling, order, writ,
injunction, decree, statute, rule, permit or regulation
(collectively, "Legal Requirements") applicable to PMAC or the
PMAC Subsidiaries or any of its properties or assets.
3.7 Governmental Consents.
Except as set forth in Section 3.7 of the PMAC Disclosure
Schedule, no consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity
is required by or with respect to PMAC in connection with the
execution and delivery of this Agreement or the Merger Agreement
by PMAC or the consummation by PMAC or any Stockholder of the
transactions contemplated hereby or thereby, except for the
filing of the Merger Agreement and related officers' certificates
under the DGCL and appropriate documents with the relevant
authorities of other states in which PMAC is qualified to do
business.
3.8 Litigation.
Except as set forth in Section 3.8 of the PMAC Disclosure
Schedule, there is no litigation, suit, action or proceeding
pending or, to the Knowledge of PMAC or the Stockholders,
threatened against PMAC or any of the PMAC Subsidiaries, as to
which there is a reasonable likelihood of an adverse
determination and which, if adversely determined, individually or
in the aggregate with all such other litigation, suits, actions
or proceedings, would adversely effect PMAC's or any
Stockholder's ability to perform its obligations under this
Agreement or the Merger Agreement.
3.9 Absence of Certain Changes.
Except as set forth is Section 3.9 of the PMAC Disclosure
Schedule, since October 31, 1999, PMAC and the PMAC Subsidiaries
have conducted their businesses only in the ordinary course of
business and there has not been: (i) any declaration, setting
aside or payment of any dividend or other distribution, or any
repurchase, with respect to PMAC Common Stock; (ii) any
commitment, contractual obligation (including, without
limitation, any management or franchise agreement, any lease
(capital or otherwise) or any letter of intent), borrowing,
liability, guaranty, capital expenditure or transaction (each, a
"Commitment") entered into by PMAC or any of the PMAC
Subsidiaries outside the ordinary course of business except for
(A) Commitments for expenses of attorneys, accountants and
investment bankers incurred in connection with this Agreement or
(B) for purposes of paying 1999 and 2000 corporate income taxes;
or (iii) any change in PMAC's accounting principles, practices or
methods except for those changes set forth in Section 3.9 of the
PMAC Disclosure Schedule which were made at the request of ANSYS.
3.10 Taxes.
(a) Except as set forth in Section 3.10 of the PMAC
Disclosure Schedule, each of PMAC and the PMAC Subsidiaries (i)
has filed all Tax Returns (as defined below) it was required to
file (after giving effect to any filing extension granted by a
Governmental Entity) and all such Tax Returns are complete and
accurate in all material respects, and (ii) has paid all Taxes
(as defined below) shown on such Tax Returns as required to be
paid by it. Except as set forth in Section 3.10 of the PMAC
Disclosure Schedule, the most recent audited financial statements
for the fiscal year ended October 31, 1999 reflect an adequate
reserve for all Taxes payable by PMAC and the PMAC Subsidiaries
for all taxable periods and portions thereof through the date of
such financial statements. Except as set forth in Section 3.10
of the PMAC Disclosure Schedule, no deficiencies for any Taxes
have been proposed, asserted or assessed against PMAC or any of
the PMAC Subsidiaries, and no requests for waivers of the time to
assess any such Taxes are pending. Section 3.10 of the PMAC
Disclosure Schedule lists all (A) Tax sharing agreements and (B)
agreements for exemptions with Governmental Entities to which
PMAC or any of the PMAC Subsidiaries is a party.
(b) For purposes of this Agreement, "Taxes" means all
federal, state, local and foreign income, property, sales,
franchise, employment, excise, VAT and other taxes, tariffs or
governmental charges of any nature whatsoever, together with any
interest, penalties or additions to Tax with respect thereto.
(c) For purposes of this Agreement, "Tax Returns"
means all reports, returns, declarations, statements or other
information required to be supplied to a taxing authority in
connection with Taxes.
3.11 Books, Records and Financial Statements.
(a) Set forth in Section 3.11 of the PMAC Disclosure
Schedule are the unaudited consolidated balance sheet of the PMAC
Group at October 31, 1999, and unaudited consolidated statements
of cash flow and income of the PMAC Group for the twelve months
ending October 31, 1999 (the financial statements referred to in
this Section 3.5(a) are hereinafter collectively referred to as
the "PMAC Financial Statements").
(b) Except as set forth in Section 3.11(b) of the PMAC
Disclosure Schedule, the PMAC Financial Statements present fairly
in all material respects the financial position and results of
operations of the PMAC Group as of the dates thereof and for the
periods then ended.
(c) The books of account and other financial records
of PMAC and each of the PMAC Subsidiaries are true, complete and
correct in all material respects, have been maintained in
accordance with good business practices, and are accurately
reflected in the PMAC Financial Statements.
(d) The minute books and other records of PMAC and
each of the PMAC Subsidiaries have been made available to ANSYS,
and contain accurate records of (i) all meetings and actions by
consent of the stockholders and directors and any committees of
the Boards of Directors of each of PMAC and the PMAC Subsidiaries
and (ii) all meetings and actions by consent of the partners or
managers of each of the PMAC Subsidiaries, as applicable.
3.12 Properties.
(a) Neither PMAC nor any PMAC Subsidiary owns, nor
have they at any time in the past owned, any real property. A
description of each real property leased by PMAC or any PMAC
Subsidiary is set forth in Section 3.12 of the PMAC Disclosure
Schedule (the "Leased Real Properties"), together with a summary
of all leases under which each such Leased Real Property is held
(the "Real Property Leases"). A true and correct copy of each
Real Property Lease, as amended, has been provided by PMAC to
ANSYS. Subject to the terms of the respective Real Property
Lease, PMAC or the PMAC Subsidiary party thereto, as the case may
be, has the right to quiet enjoyment of each such Leased Real
Property for the full term, including all renewal rights, of the
leasehold interest.
(b) Except as set forth in Section 3.12 of the PMAC
Disclosure Schedule, PMAC and PMAC Subsidiaries own good title,
free and clear of all pledges, security interests, mortgages,
deeds of trust, liens or other encumbrances (collectively,
"Encumbrances"), to all of the personal property and assets shown
on PMAC's balance sheet at October 31, 1999 (the "PMAC Balance
Sheet") or acquired after October 31, 1999, except for (A) assets
which have been disposed of to nonaffiliated third parties since
October 31, 1999 in the ordinary course of business, (B)
Encumbrances reflected in the PMAC Financial Statements as of
October 31, 1999, (C) Encumbrances or imperfections of title
which are not, individually or in the aggregate, amount or
extent and which do not detract from the value or interfere with
the present or presently contemplated use of the assets subject
thereto or affected thereby, and (D) Encumbrances for current
Taxes not yet due and payable. All of the machinery, equipment
and other tangible personal property and assets owned or used by
PMAC and the PMAC Subsidiaries are in good condition and repair,
except for ordinary wear and tear not caused by neglect, and are
useable in the ordinary course of business.
3.13 Proprietary Products, Trademarks, Patents and Copyrights and
Other Property Rights.
(a) Each of the software products and/or services of
PMAC specified in Section 3.13(a) of the PMAC Disclosure
Schedule, which constitutes a complete list of the software
products and/or services of PMAC and the PMAC Subsidiaries, are
proprietary products, except for the freeware or open source
products expressly identified as such thereon. PMAC owns
outright good and merchantable title thereto, free and clear of
all liens, encumbrances, security interests and rights of third
parties. All of its trademark, trade name and service mark
registrations, patents and copyrights are valid and in full force
and effect. PMAC or any of the PMAC Subsidiaries are not
infringing any trademark or service mark registration or any
trade name or any patent, copyright or trade secret of any other
person, firm or corporation. PMAC or any of the PMAC
Subsidiaries has not received any notice of any claim of such
infringement.
(b) Section 3.13(b) of the PMAC Disclosure Schedule
sets forth each trademark, trade name, service mark, patent and
copyright owned by PMAC or right relating thereto held by PMAC,
together with identifying information with regard to each
registration and pending registration application relating
thereto.
(c) To PMAC's Knowledge, no person, corporation or
other entity is infringing any of PMAC's rights identified
pursuant to or in paragraph (a) or (b) of this Section 3.13.
(d) No employee of PMAC or any of the PMAC
Subsidiaries is in violation of any term of any employment
contract, patent disclosure agreement or any other contract or
agreement relating to the relationship of any such employee with
PMAC or any of the PMAC Subsidiaries or any other party because
of the nature of the business conducted or to be conducted by
PMAC or any of the PMAC Subsidiaries.
(e) Each person presently employed by PMAC or any of
the PMAC Subsidiaries with access to confidential information has
executed a proprietary information agreement pursuant to which
such person (i) acknowledges that such information is the
property of PMAC or any of the PMAC Subsidiaries and agrees not
to disclose or use any such information other than in connection
with his/her employment with PMAC or any of the PMAC
Subsidiaries, and (ii) agrees not to compete with PMAC or any of
the PMAC Subsidiaries while employed by PMAC or any of the PMAC
Subsidiaries. Such proprietary information agreements constitute
valid and binding obligations of PMAC or any of the PMAC
Subsidiaries and such persons, enforceable in accordance with
their respective terms.
(f) Neither PMAC nor any of the PMAC Subsidiaries has
at any time disclosed, published, disseminated, made available,
granted any rights in the use of, or otherwise distributed, any
of its products or any part thereof to any person, except in the
normal course of the business of PMAC and the PMAC Subsidiaries
and pursuant to confidentiality agreements.
(g) PMAC and the PMAC Subsidiaries have at all times
in connection with its licensing and other use of its products
required all licensees and other persons (including distribution
customers) who may from time to time have a right of access to or
use of its products to execute agreements by which such persons
agree to keep all proprietary information relating to the
products confidential.
(h) PMAC or any of the PMAC Subsidiaries has at all
times placed proprietary warnings and copyright notices on its
products and all documentation relating thereto and all revisions
thereof, and on all packaging in which any product is delivered
to any licensee or any other person, to the extent required by
all applicable laws to fully protect and preserve its proprietary
and property rights in all of the intellectual property embodied
in the products.
(i) Each of the software products and/or services of
PMAC identified in Section 3.13(a) of the PMAC Disclosure
Schedule perform all of the corresponding material functions
described in Section 3.13(i) of the PMAC Disclosure Schedule.
3.14 Environmental Matters.
PMAC and the PMAC Subsidiaries are in compliance with all
Environmental Laws (as defined below). As used in this
Agreement, "Environmental Laws" shall mean all federal, state and
local laws, rules, regulations, ordinances and orders as in
effect now or at any point on or prior to the Closing Date that
purport to regulate the release of hazardous substances or other
materials into the environment, or impose requirements relating
to environmental protection. As used in this Agreement,
"Hazardous Materials" means any "hazardous waste" as defined in
either the United States Resource Conservation and Recovery Act
or regulations adopted pursuant to said act, any "hazardous
substances" or "hazardous materials" as defined in the United
States Comprehensive Environmental Response, Compensation and
Liability Act and, to the extent not included in the foregoing,
any medical waste, oil or fractions thereof, pollutants or
contaminants. Except as set forth in Section 3.14 of the PMAC
Disclosure Schedule, there is no administrative or judicial
enforcement proceeding pending, or to the Knowledge of PMAC
threatened, against PMAC or any PMAC Subsidiary under any
Environmental Law. Except as set forth in Section 3.14 of the
PMAC Disclosure Schedule, neither PMAC nor any PMAC Subsidiary
or, to the Knowledge of PMAC, any legal predecessor of PMAC or
any PMAC Subsidiary, has received any written notice that it is
potentially responsible under any Environmental Law for response
costs or natural resource damages, as those terms are defined
under the Environmental Laws, at any location and neither PMAC
nor any PMAC Subsidiary has transported or disposed of, or
allowed or arranged for any third party to transport or dispose
of, any waste containing Hazardous Materials at any location
included on the National Priorities List, as defined under the
Comprehensive Environmental Response, Compensation, and Liability
Act, or any location proposed for inclusion on that list or at
any location on any analogous state list. Except as set forth in
Section 3.14 of the PMAC Disclosure Schedule, (i) PMAC has no
Knowledge of any release on the real property owned or leased by
PMAC or any PMAC Subsidiary or predecessor entity of Hazardous
Materials in a manner that could result in an order to perform a
response action or in material liability under the Environmental
Laws, and (ii) to PMAC's Knowledge, there is no hazardous waste
treatment, storage or disposal facility, underground storage
tank, landfill, surface impoundment, underground injection well,
friable asbestos or PCB's, as those terms are defined under the
Environmental Laws, located at any of the real property owned or
leased by PMAC or any PMAC Subsidiary or predecessor entity or
facilities utilized by PMAC or the PMAC Subsidiaries.
3.15 Employee Benefit Plans.
(a) Section 3.15 of the PMAC Disclosure Schedule sets
forth a list of every Benefit Plan (as hereinafter defined) that
is maintained by PMAC or an Affiliate (as hereinafter defined) on
the date hereof (each a "PMAC Benefit Plan"). Each PMAC Benefit
Plan will not require any consent as a result of the consummation
of the transactions contemplated by this Agreement or any other
change of control of PMAC or any PMAC Subsidiary.
(b) Each PMAC Benefit Plan which has been intended to
qualify under Section 401(a) of the Internal Revenue Code of
1986, as amended (the "Code"), has received a favorable
determination or approval letter from the Internal Revenue
Service ("IRS") regarding its qualification under such section
and, to the Knowledge of PMAC and its Affiliates, no such PMAC
Benefit Plan has been maintained in a manner that would preclude
qualified status.
(c) With respect to any PMAC Benefit Plan, there has
been no (i) "prohibited transaction," as defined in Section 406
of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or Code Section 4975, for which an exemption
is not available or (ii) failure to comply with any provision of
ERISA, other applicable law, or any agreement, which, in either
case, would subject PMAC or any Affiliate to liability
(including, without limitation, through any obligation of
indemnification or contribution) for any damages, penalties, or
taxes, or any other material loss or expense. No litigation or
governmental administrative proceeding (or investigation) or
other proceeding (other than those relating to routine claims for
benefits) is pending or, to PMAC's Knowledge, threatened with
respect to any such PMAC Benefit Plan.
(d) Neither PMAC nor any Affiliate has incurred any
liability under Title IV of ERISA which has not been paid in full
as of the date of this Agreement. There has been no "accumulated
funding deficiency" (whether or not waived) with respect to any
employee pension benefit plan maintained by PMAC or any Affiliate
and subject to Code Section 412 or ERISA Section 302. With
respect to any PMAC Benefit Plan maintained by PMAC or any
Affiliate and subject to Title IV of ERISA, there has been no
(other than as a result of the transactions contemplated by this
Agreement) (i) "reportable event," within the meaning of ERISA
Section 4043 or the regulations thereunder, for which the notice
requirement is not waived by the regulations thereunder, and (ii)
event or condition which presents a material risk of a plan
termination or any other event that may cause PMAC or any
Affiliate to incur liability or have a lien imposed on its assets
under Title IV of ERISA. Except as set forth in Section 3.15 of
the PMAC Disclosure Schedule, neither PMAC nor any Affiliate has
ever maintained a Multiemployer Plan (as hereinafter defined).
(e) With respect to each PMAC Benefit Plan, complete
and correct copies of the following documents (if applicable to
such PMAC Benefit Plan) have previously been delivered or made
available to ANSYS: (i) all documents embodying or governing
such PMAC Benefit Plan, and any funding medium for such PMAC
Benefit Plan (including, without limitation, trust agreements) as
they may have been amended to the date hereof; (ii) the most
recent IRS determination or approval letter with respect to such
PMAC Benefit Plan under Code Section 401(a), and any applications
for determination or approval subsequently filed with the IRS;
(iii) the most recently filed IRS Form 5500, with all applicable
schedules and accountants' opinions attached thereto; and (iv)
the current summary plan description for such PMAC Benefit Plan
(or other descriptions of such PMAC Benefit Plan provided to
employees) and all modifications thereto.
(f) For purposes of this Section 3.15 of this
Agreement:
(i) "Benefit Plan" means (A) all employee
benefit plans within the meaning of ERISA Section 3(3)
maintained by an entity or any Affiliate of such entity
and (B) all stock option plans and stock purchase
plans;
(ii) An entity "maintains" a Benefit Plan if
such entity sponsors, contributes to, or provides
benefits under or through such Benefit Plan, or has any
obligation (by agreement or under applicable law) to
contribute to or provide benefits under or through such
Benefit Plan, or if such Benefit Plan provides benefits
to or otherwise covers employees of such entity (or
their spouses, dependents, or beneficiaries);
(iii) An entity is an "Affiliate" of
another entity if it would have ever been considered a
single employer with such other entity under ERISA
Section 4001(b) or part of the same "controlled group"
as such other entity for purposes of ERISA Section
302(d)(8)(C); and
(iv) "Multiemployer Plan" means an employee
pension or welfare benefit plan to which more than one
unaffiliated employer contributes and which is
maintained pursuant to one or more collective
bargaining agreements.
3.16 Labor Matters.
Except as set forth in Section 3.16 of the PMAC Disclosure
Schedule, neither PMAC nor any PMAC Subsidiary is a party to, or
bound by, any collective bargaining agreement, contract or other
agreement or understanding with a labor union or labor union
organization. There is no unfair labor practice or labor
arbitration proceeding pending or, to the Knowledge of PMAC,
threatened against PMAC or any of the PMAC Subsidiaries relating
to their business. There are no organizational efforts with
respect to the formation of a collective bargaining unit
presently being made or, to the Knowledge of PMAC, threatened
involving employees of PMAC or any of the PMAC Subsidiaries.
3.17 Certain Agreements.
Except as set forth in Section 3.17 of the PMAC Disclosure
Schedule, neither PMAC nor any PMAC Subsidiary is a party to any
(i) agreement with any executive officer or other employee of
PMAC or any PMAC Subsidiary (A) any benefits of which are
contingent, or the terms of which would be materially altered,
upon the occurrence of a transaction involving PMAC or any PMAC
Subsidiary of the nature of any of the transactions contemplated
by this Agreement, (B) providing any term of employment or
compensation guarantee extending for a period longer than 30 days
which is not terminable by PMAC or any PMAC Subsidiary on 30 days
or less notice, or (C) providing severance benefits or other
benefits which are conditioned upon the occurrence of a
transaction involving PMAC or any PMAC Subsidiary of the nature
of any of the transactions contemplated by this Agreement or any
other change of control of PMAC or any PMAC Subsidiary that
precedes the termination of employment of such employee
regardless of the reason for such termination of employment or
(ii) agreement or plan, including without limitation, any stock
option plan, stock appreciation right plan or stock purchase
plan, any of the benefits of which will be increased, or the
vesting of benefits under which will be accelerated, by the
occurrence of any of the transactions contemplated by this
Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated
by this Agreement.
3.18 Major Contracts.
(a) Except as set forth in Section 3.17 or 3.18 of the PMAC
Disclosure Schedule, neither PMAC nor any PMAC Subsidiary is a
party to, subject to, or the beneficiary of, any:
(i) Collective bargaining contract or any employment
contract or arrangement providing for future compensation,
written or oral, with any officer, consultant, director or
employee which is not terminable by it on 30 days, or less notice
without penalty or obligation to make payments related to such
termination;
(ii)Joint venture contract or arrangement or any other
agreement which involves a sharing of profits with other persons;
(iii) Instrument evidencing or related in any way
to indebtedness for borrowed money by way of direct loan, sale of
debt securities, purchase money obligation, conditional sale,
guarantee or otherwise, except for trade indebtedness incurred in
the ordinary course of business;
(iv)License agreement, either as licensor or licensee
(excluding non-exclusive software licenses granted to customers
or end-users in the ordinary course of its business utilizing
PMAC or any PMAC Subsidiaries standard form of license agreement
without material modification);
(v) Contract containing covenants purporting to limit
PMAC or any PMAC Subsidiaries freedom to compete in any line of
business or in any geographic area;
(vi)Service contract (excluding maintenance contracts
entered into with customers in the ordinary course of its
business utilizing PMAC or any PMAC Subsidiaries standard form of
maintenance agreement without material modification);
(vii) Agency, distributorship or marketing
agreement;
(viii) Invention assignment agreement; or
(ix)Confidentiality agreement.
All agreements, contracts, plans, leases, instruments,
arrangements, licenses and commitments to which PMAC or any PMAC
Subsidiary is a party are valid and in full force and effect and
neither PMAC or any PMAC Subsidiary nor any other party thereto
has breached any material provision of, or is in default in any
respect under the terms of, any such agreement, contract,
instrument, arrangement, license, commitment, plan or lease.
(b) Attached to Section 3.18(b) of the PMAC Disclosure
Schedule is a true and complete copy of the incentive bonus
agreement (the "Incentive Bonus Agreement") between Mr. Steberl
and PMAC providing, among the other terms set forth therein, for
the payment by Swiss Sub (as defined in Section 6.19) to Mr.
Steberl of the an incentive bonus obligation in an aggregate
amount equal to $1,125,000.00 (the "Steberl Bonus").
3.19 Absence of Undisclosed Liabilities.
PMAC has no liability or obligation, whether accrued, absolute,
contingent or otherwise except (i) current liabilities incurred
in the ordinary course of business subsequent to October 31, 1999
in amounts usual and normal for PMAC, both individually and in
the aggregate, (ii) liabilities and obligations as and to the
extent reflected in the PMAC Financial Statements, (iii) those
liabilities and obligations set forth in Section 3.19 of the PMAC
Disclosure Schedule (such schedule to include all asserted claims
and assessments not reflected in the PMAC Financial Statements),
and (iv) any liabilities and obligations (other than asserted
claims and assessments) that would not be required under GAAP to
be disclosed on financial statements of the PMAC Group (and the
footnotes thereto).
3.20 Receivables.
All receivables of PMAC shown on the balance sheet of PMAC at
January 31, 2000 and as of the date of any subsequent PMAC
balance sheet delivered to ANSYS arose in the ordinary course of
business. The aggregate amount thereof, less the reserve for
doubtful accounts with respect thereto, are current and, to
PMAC's Knowledge, collectible and are carried at values
determined in accordance with generally accepted accounting
principles consistently applied. Adequate reserves for doubtful
accounts have been established on the books of PMAC and are
reflected on the balance sheet of PMAC at January 31, 2000 and as
of the date of any subsequent PMAC balance sheet delivered to
ANSYS. None of the receivables of PMAC is subject to any stated
claim of offset, recoupment, setoff or counterclaim and PMAC has
no Knowledge of any facts or circumstances that would give rise
to any such claim. No receivables are contingent upon the
performance by PMAC of any obligation or contract. No person has
any lien on any of such receivables and no agreement for
deduction or discount has been made with respect to any of such
receivables.
3.21 Governmental Authorizations and Regulations.
All licenses, franchises, permits and other governmental
authorizations held by PMAC or any PMAC Subsidiary that are
necessary for the operation of its business are valid and
sufficient for all business presently carried on by it. The
business of PMAC or any PMAC Subsidiary is not being conducted in
violation of any law, ordinance or regulation of any Governmental
Entity, except for violations which either singly or in the
aggregate do not and will not have a Material Adverse Effect.
3.22 Insider Transactions.
No director, officer or employee of PMAC or any PMAC Subsidiary
and no person related to any of them has any interest in (i) any
equipment or other property, real or personal, tangible or
intangible, including, without limitation, any item of
intellectual property, used in connection with or pertaining to
the business of PMAC or any PMAC Subsidiary, or (ii) any
creditor, supplier, customer, manufacturer, agent,
representative, or distributor of products of PMAC or any PMAC
Subsidiary.
3.23 No Brokers.
Neither PMAC nor any of PMAC Subsidiaries has entered into any
contract, arrangement or understanding with any person or firm
which may result in the obligation of such entity or ANSYS to pay
any finder's fees, brokerage or agent's commissions or other like
payments in connection with the negotiations leading to this
Agreement and the transactions contemplated hereby. PMAC is not
aware of any claim for payment of any finder's fees, brokerage or
agent's commissions or other like payments in connection with the
negotiations leading to Agreement and the transactions
contemplated hereby.
3.24 Insurance.
PMAC and the PMAC Subsidiaries are covered by insurance policies
in the scope and amount set forth beside each on Section 3.24 of
the PMAC Disclosure Schedule. Except as disclosed in Section
3.24 of the PMAC Disclosure Schedule, each insurance policy to
which PMAC or any of the PMAC Subsidiaries is a party is in full
force and effect and will not require any consent as a result of
the consummation of this Agreement or any other change of control
of PMAC or any PMAC Subsidiary. Neither PMAC nor any of the PMAC
Subsidiaries is in material breach or default (including with
respect to the payment of premiums or the giving of notices)
under any insurance policy to which it is a party, and no event
has occurred which, with notice or the lapse of time, would
constitute such a material breach or default by PMAC or any of
the PMAC Subsidiaries or would permit termination, modification
or acceleration, under such policies; and PMAC has not received
any notice from the insurer disclaiming coverage or reserving
rights with respect to any material claim or any such policy in
general.
3.25 Payments.
PMAC and the PMAC Subsidiaries have not paid or delivered any
fee, commission or other sum of money or item or property to any
finder, agent, government official or other party, in the United
States or any other country, which is related to the business or
operations of PMAC and PMAC Subsidiaries, which PMAC and the PMAC
Subsidiaries knows or has reason to believe to have been illegal
under any federal, state or local laws of the United States or
any other country having jurisdiction; and PMAC and the PMAC
Subsidiaries have not participated in any illegal boycotts or
other similar practices affecting any of its actual or potential
customers. PMAC and the PMAC Subsidiaries are in compliance with
the Foreign Corrupt Practices Act.
3.26 Full Disclosure.
No statement by PMAC or any Stockholder contained in this
Agreement, the PMAC Disclosure Schedule or any written statement
or certificate furnished or required to be furnished to ANSYS
pursuant hereto contains or will contain any untrue statement of
a material fact or omits to state a material fact necessary in
order to make the statements contained herein or therein not
misleading in light of the circumstances under which they were
made.
4. ADDITIONAL REPRESENTATIONS AND WARRANTIES OF THE
STOCKHOLDERS
Each Stockholder severally, and not jointly, represents and
warrants to ANSYS as follows:
4.1 Power and Authority.
(a) This Agreement has been duly and validly executed
and delivered by, and constitutes the valid and binding
obligation of, such Stockholder, and is enforceable against such
Stockholder in accordance with its terms.
(b) Such Stockholder is 21 years of age or older and
has the full power and authority to execute and deliver this
Agreement and the other instruments and agreements to be executed
by such Stockholder pursuant to the terms hereof and to
consummate the transactions contemplated hereby, all of which
have been duly authorized by all necessary action on the part of
said trustees.
(c) No approval, consent or authorization of any
person or entity not a party to this Agreement is required as a
condition precedent to the consummation by such Stockholder of
the transactions contemplated by this Agreement and no approval,
consent or authorization of or filing with any federal, state,
local or foreign governmental body or authority with respect to
such Stockholder is necessary for the execution, delivery and
performance of this Agreement by such Stockholder.
4.2 Ownership of Stock.
(a) Such Stockholder is the lawful record and
beneficial owner of, and has good and marketable title to, the
shares of PMAC Common Stock and options to acquire PMAC Common
Stock listed in Section 1.9 of the PMAC Disclosure Schedule
opposite such person's name, free and clear of all liens,
encumbrances, equities, restrictions and claims of every kind.
(b) The shares of PMAC Common Stock set forth opposite
such Stockholder's name in such Section 1.9 and options to
acquire PMAC Common Stock constitute all the issued and
outstanding shares of capital stock of PMAC and options to
acquire PMAC Common Stock owned by him, her or it.
(c) Except as set forth in Section 3.3 of the PMAC
Disclosure Schedule, there are no outstanding contractual
obligations or rights of such Stockholder to purchase or
otherwise acquire or to sell or otherwise dispose of, whether
from or to PMAC or from or to any other stockholder or otherwise,
any shares of capital stock or other ownership interests, or
securities convertible or exchangeable into or exercisable for
shares of capital stock or other ownership interests, of PMAC.
5. CONDUCT OF BUSINESS OF PMAC PRIOR TO CLOSING
During the period from the date of this Agreement and
continuing until Closing, PMAC and the Stockholders agree that:
5.1 Ordinary Course.
PMAC shall carry on its business in the usual, regular and
ordinary course in substantially the same manner as heretofore
conducted and, to the extent consistent with such business, use
all reasonable efforts consistent with its past practice and
policies to preserve intact its present business organization,
keep available the services of its present officers and key
employees and preserve its relationships with customers,
suppliers and others having business dealings with it.
5.2 Dividends; Changes in Stock.
PMAC shall not, nor shall they propose to, (i) issue or authorize
the issuance of shares of capital stock, except as a result of
the exercise of Mr. Shah's option, (ii) declare or pay any
dividends on or make other distributions in respect of capital
stock, (iii) reclassify any capital stock or issue or authorize
the issuance of any other securities in respect of any capital
stock, (iv) repurchase or otherwise acquire any shares of its
capital stock other than the pre-Closing repurchase of Mr.
Akdag's shares of PMAC Common Stock pursuant to the terms hereof,
or (v) make any gift of any assets.
5.3 Governing Documents.
PMAC shall not amend its Articles of Incorporation or Bylaws,
except as expressly contemplated by this Agreement.
5.4 No Solicitation.
None of PMAC or any of the Stockholders shall directly or
indirectly through any officer, director, agent, representative
(including, without limitation, investment bankers, attorneys and
accountants) or otherwise, (i) solicit, initiate or encourage
submission of any proposal or offer or any inquiry regarding any
proposal or offer from any person, corporation, partnership or
other entity, or group (a "Third Party"), relating to any
acquisition or purchase of all or a material portion of the
assets of, or any equity interest in, PMAC or any merger,
consolidation or business combination with, or similar
transaction involving, PMAC, or (ii) participate in any
discussions or negotiations regarding, or furnish to any Third
Party any information with respect to, or otherwise cooperate in
any way with, assist or participate in, or facilitate or
encourage, any effort or attempt by any Third Party to do or seek
to do any of the foregoing. PMAC shall promptly notify ANSYS of
any such inquiry, proposal or offer, or any contact with any
Third Party with respect thereto, is made, and shall in any such
notice, set forth in reasonable detail the terms of any such
inquiry, proposal or offer or contact and the identity of the
Third Party.
5.5 No Acquisitions.
PMAC shall not acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial portion of the
assets of, or by any other manner, any business or any
corporation, partnership, association or other business
organization or division thereof or otherwise acquire or agree to
acquire any software product or other assets which are material,
individually or in the aggregate.
5.6 No Dispositions.
PMAC shall not sell, lease or otherwise dispose of any of its
software products or other assets which are material,
individually or in the aggregate, except in the ordinary course
of business consistent with its prior practice.
5.7 Indebtedness.
PMAC shall not incur any indebtedness for borrowed money except
in the ordinary course of business consistent with its prior
practice, or guarantee any indebtedness of any Third Party, or
issue or sell any debt securities or guarantee any debt
securities of others.
5.8 Employees.
PMAC shall not make any change in the compensation payable or to
become payable to any of its officers or employees (other than
increases in compensation called for by the terms of any
outstanding employment agreement), enter into or amend any
employment or consulting agreements, amend the Incentive Bonus
Agreement, or make any loans to any of its officers, directors or
employees or make any change in its existing borrowing
arrangements.
5.9 Benefit Plans, etc.
PMAC shall not adopt or amend in any material respect any
collective bargaining agreement or any other agreement with
employees or benefit plans.
5.10 Material Claims.
PMAC shall not settle nor compromise any material claim or
litigation or, except in the ordinary and usual course of
business, modify, amend or terminate any of its material
contracts or waive, release or assign any material rights or
claim.
5.11 Elections.
PMAC shall not make any tax election or permit any insurance
policy naming it as beneficiary or a loss payable payee to be
canceled or terminated without notice to ANSYS, except in the
ordinary and usual course of business.
5.12 Accounting.
PMAC shall not change its methods of accounting as in effect at
October 31, 1999, except as required by changes in generally
accepted accounting principles as concurred to in writing by
ANSYS' independent certified public accountants and in any such
case shall promptly provide notice of any such change to the
other party. PMAC shall not change its fiscal year.
5.13 Breach.
PMAC shall not take any action that would be reasonably likely to
cause any of the representations and warranties of PMAC set forth
herein to be untrue in any material respect as of any date after
the date hereof through and including the Effective Time.
6. ADDITIONAL AGREEMENTS
6.1 Access to PMAC Information.
PMAC shall afford to ANSYS and to ANSYS' accountants, counsel and
other representatives reasonable access during normal business
hours during the period prior to the Effective Time to all of
PMAC's properties, books, contracts, commitments and records and,
during such period, PMAC shall furnish promptly to ANSYS all
information concerning the business, properties and personnel of
PMAC that ANSYS may reasonably request. No information or
knowledge obtained in any investigation pursuant to this Section
shall affect or be deemed to modify any representation or
warranty contained in this Agreement or its exhibits and
schedules. All such access shall be subject to the
confidentiality obligations contained in Section 9.2.
6.2 Stockholders Approval.
(a) PMAC shall call, give notice of, convene and hold
a meeting for the purpose of voting upon the Merger of all
stockholders entitled to vote upon the Merger under the
California Code for the purpose of voting upon the Merger ("PMAC
Stockholders Meeting"). PMAC shall use all reasonable efforts to
ensure that such meeting shall be held promptly. PMAC shall also
use all reasonable efforts to obtain at the earliest practical
date the unanimous written consent of its stockholders to the
Merger in the manner contemplated by the Articles of
Incorporation and Bylaws of PMAC and the California Code; in the
event that such consent is obtained prior to the date of such
stockholders meeting, the PMAC Stockholders Meeting may be
cancelled.
(b) Each Stockholder entitled to vote shall attend the
PMAC Stockholders Meeting and shall vote all shares of PMAC
Common Stock held by him, her or it in favor of this Agreement
and the Merger or, if action is taken pursuant to unanimous
written consent as provided in Section 6.2(a), shall provide his
or her written consent approving this Agreement, and the Merger,
and shall not during the term of this Agreement vote any such
shares in favor of any other merger or business combination or
sale of assets involving PMAC. Each Stockholder shall not during
the term of this Agreement transfer any of his, her or its
respective shares of PMAC Common Stock to any person or entity
other than ANSYS.
6.3 Reports Under Securities Exchange Act of 1934.
With a view to making available to the Stockholders the benefits
of Rule 144 promulgated under the Securities Act of 1933 ("SEC
Rule 144") and any other rule or regulation of the SEC that may
at any time permit the Stockholders to sell shares of ANSYS
Common Stock to the public without registration, ANSYS agrees
that it shall:
(a) make and keep public information available, as
those terms are understood and defined in SEC Rule 144, at all
times;
(b) file with the SEC in a timely manner all reports
and other documents required of ANSYS under the Act and the
Securities Exchange Act of 1934, as amended;
(c) furnish to the Stockholders forthwith upon request
so long as the Stockholders hold any shares of ANSYS Common
Stock, whenever applicable (i) a written statement by ANSYS that
it has complied with its reporting requirements under SEC Rule
144, the 1933 Act, and the 1934 Act, (ii) a copy of the most
recent annual or quarterly report of ANSYS and such other reports
and documents filed by ANSYS with the SEC, and (iii) such other
information as may be reasonably requested in availing the
Stockholders of any current rule or regulation of the SEC (or any
future rule or regulation containing issuer information
requirements comparable to or less burdensome than current SEC
Rule 144) which permits the selling of any such securities
without registration; and
(d) in the event that a Stockholder requests to
transfer any ANSYS Common Stock in accordance with the provisions
of SEC Rule 144, ANSYS will advise its transfer agent that the
holding period for such shares, as determined pursuant to Rule
144(d), commenced on the Closing Date, and, assuming that all
other conditions to SEC Rule 144 are met, that such shares will
be transferable by Stockholder pursuant to SEC Rule 144 from and
after one year from such date; and
(e) subsequent to the Closing, before ANSYS shall
consummate any transaction which would cause an extension of the
time period a Stockholder must hold ANSYS Common Stock before
selling in reliance upon Rule 144 (such as a merger in which
ANSYS is not the survivor), ANSYS will offer to repurchase all
ANSYS Common Stock held by the Stockholders for a cash price
equal to the closing price of the ANSYS Common Stock on the
preceding day or, in the alternative, shall ensure that such
transaction affords the Stockholders the right to registration of
such securities as they may receive in exchange for the shares of
ANSYS Common Stock received by them pursuant to this Agreement.
Notwithstanding any provision of this Agreement to the contrary
but subject to clause (e) above, ANSYS shall be under no
obligation to abstain from, or to obtain the consent of the
Stockholders in respect of, any corporate transaction of ANSYS,
including any such transaction which might result in the removal
from registration or delisting of ANSYS Common Stock (other than
such rights of consent and limitations as are provided for under
the DGCL and federal and state securities laws).
6.4 Legal Conditions to the Merger.
Subject to the terms and conditions of this Agreement, each of
the parties hereto agrees to use all reasonable efforts to take,
or cause to be taken, all reasonable action and to do, or cause
to be done, all things reasonably necessary, proper or advisable
under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement and to
comply promptly with all legal requirements which may be imposed
on such party with respect to the Merger, and shall cooperate
with and promptly furnish information to the other party in
connection with any such requirements imposed upon such other
party or any subsidiary of such other party in connection with
the Merger. Each party will take all reasonable actions to
obtain (and to cooperate with the other party in obtaining) any
consent, authorization, order or approval of, or any exemption
from, any Governmental Entity or other third party required to be
obtained by such party (or by the other party) in connection with
the Merger or the taking of any action contemplated by this
Agreement. Notwithstanding anything herein to the contrary,
neither ANSYS nor PMAC shall be required to take any action to
comply with any legal requirement or agree to the imposition of
any order of any Governmental Entity that would (i) prohibit or
restrict the ownership or operation by ANSYS or PMAC of any
portion of the business or assets of ANSYS or PMAC (or any of
their respective subsidiaries), (ii) compel ANSYS or PMAC (or any
of their respective subsidiaries) to dispose of or hold or
separate any portion of ANSYS' or PMAC's business or assets, or
(iii) impose any limitation on the ability of ANSYS or the
Surviving Corporation or any of their respective affiliates or
Subsidiaries to own or operate the business and operations of
PMAC and the PMAC Subsidiaries.
6.5 Communications.
Except as provided in Section 6.2(a) hereof, between the date
hereof and the Closing Date, neither ANSYS nor PMAC will furnish
any written communication to its stockholders or to the public
generally if the subject matter thereof relates to the
transactions contemplated by this Agreement without the prior
approval of the other of them as to the content thereof, which
approval shall not be unreasonably withheld, conditioned or
delayed; provided, that the foregoing shall not be deemed to
prohibit any disclosure by ANSYS or PMAC after receiving advice
from its counsel that such disclosure is required by any
applicable law or regulation.
6.6 Expenses.
Whether or not the Merger is consummated, all expenses incurred
in connection with this Agreement, including brokers and finders
fees, and the transactions contemplated hereby shall be paid by
the party incurring such expense. Notwithstanding the foregoing,
the accounting and other expenses outlined in Exhibit B attached
hereto shall be paid per Exhibit B.
6.7 Escrow Agreement.
At or before Closing, the parties hereto shall cause the Bank of
San Francisco, ANSYS and the Stockholders Representative (as
defined in Section 1.5), to enter into an Escrow Agreement in
substantially the form attached hereto as Exhibit C.
6.8 Additional Actions.
If in any case at any time after the Effective Time any further
action is necessary or desirable to carry out the purposes of
this Agreement or to vest the Surviving Corporation with full
title to all properties, assets, rights, approvals, immunities
and franchises of either PMAC or Merger Sub, the proper officers
and directors of each corporation which is a party to this
Agreement shall take all such necessary action.
6.9 Notification of Certain Matters.
Each party shall give prompt notice to each other party of: (a)
any event or circumstance with regard to such party that has
resulted or may result in any representation or warranty of such
party made herein being untrue in any material respect or that
may result in such party being unable to comply with any of its
covenants or agreements set forth herein or that may result in
the failure to satisfy any condition specified in Section 7, or
(b) any event which, so far as reasonably can be foreseen at the
time of its occurrence, is reasonably likely to result in a
material adverse effect on such party. Each party shall give
prompt notice to the other parties of any notice or other
communication from any third party alleging that the consent of
such third party is or may be required in connection with the
transactions contemplated by this Agreement.
6.10 Operating Authority and Reporting Structure.
The Surviving Corporation shall be operated pursuant to the
Budget Goals (as defined in Section 1.5), the Operating Plan
attached as Exhibit D, and pursuant to Section 6.13.
6.11 Restriction on Transfer of ANSYS Common Stock.
(a) In addition to and not in limitation of any other
restriction imposed by applicable law or this Agreement,
Christine Schoefer covenants and agrees that she will not sell,
transfer or otherwise dispose of any shares of ANSYS Common Stock
received by her pursuant to this Agreement until Eighteen (18)
months from the Closing Date. She agrees that any certificates
representing shares of ANSYS Common Stock issued pursuant to this
Agreement prior to such date will contain a legend to effect the
foregoing.
(b) In addition to and not in limitation of any other
restriction imposed by applicable law or this Agreement, Michael
Hohmeyer, Wayne Christopher, Mary Jo Hamilton, Michael Salari,
Masoud Doroudian, Diane Poirier, Devendra Rajwade, Jan Soreide,
and Vijay Shah covenant and agree that they will not sell,
transfer or otherwise dispose of any shares of ANSYS Common Stock
received by them pursuant to this Agreement until Twelve (12)
months from the Closing Date. Such Stockholders agree that any
certificates representing shares of ANSYS Common Stock issued
pursuant to this Agreement prior to such date will contain a
legend to effect the foregoing.
6.12 Right of First Refusal.
If a Stockholder desires to sell any of his or her shares of
ANSYS Common Stock acquired pursuant to this Agreement then the
Stockholder shall give written notice thereof to ANSYS (by
facsimile, e-mail or overnight delivery) whereupon ANSYS will
have the right to purchase such shares at a price equal to the
closing price of ANSYS Common Stock on the day immediately
preceding the receipt of such notice by ANSYS. At any time
within one business day after receipt of such notice ANSYS shall
have the right to accept such offer to sell and shall indicate
the number of shares ANSYS is willing to purchase. The closing
of the purchase of such shares shall occur within 5 business days
after the delivery of the proper certificate(s) to ANSYS,
appropriately endorsed for transfer by such Stockholder.
6.13 Management of the Surviving Corporation.
The following provisions shall govern the operations of the
Surviving Corporation during the period commencing on the Closing
Date through December 31, 2001 (the "Earn-Out Period").
(a) Separate Subsidiary. The parties agree that
during the Earn-Out Period, the Surviving Corporation and the
PMAC Subsidiaries will be operated and be managed as separate
wholly-owned and direct or indirect subsidiaries of ANSYS.
(b) Restricted Activities. During the Earn-Out
Period, ANSYS agrees to conduct the business of the Surviving
Corporation and the PMAC Subsidiaries in substantially the same
manner as PMAC and the PMAC Subsidiaries' business were conducted
immediately prior to the Closing. In addition, except as
provided in Exhibit D and as ANSYS is advised in writing by its
outside counsel is required to comply with any Legal Requirement,
ANSYS agrees that it will not cause the Surviving Corporation or
the PMAC Subsidiaries to take or acquiesce in the taking any of
the following actions without the prior consent of the
Stockholders' Representative (as defined herein) which consent
may be withheld in the Stockholders' Representative's sole and
absolute discretion:
(i) any sale, lease or disposition of all or any
significant part of the assets, stock or business of the
Surviving Corporation or any subsidiary thereof ;
(ii) entering into any line of business not
related to the business then being conducted by the
Surviving Corporation and its subsidiaries;
(iii) any acquisition by the Surviving
Corporation or any subsidiary thereof of the stock, assets
or business of another business organization;
(iv) the merger, consolidation or amalgamation of
the Surviving Corporation or any subsidiary thereof with and
into another business organization or of another business
organization with and into the Surviving Corporation or any
subsidiary thereof;
(v) except as contemplated by this Agreement, the
adoption or amendment of any profit sharing or other
employee benefit plan except for such amendments as may be
required by law;
(vi) except as contemplated by this Agreement, any
change in the name of the Surviving Corporation or any
subsidiary thereof;
(vii) any transfer of any customer's business,
in whole or in part, to ANSYS or any of its subsidiaries;
(viii) the hiring or firing of personnel,
provided that ANSYS shall have the right to require PMAC to
hire a controller and (so long as such hiring is excluded
from the calculation of EBITDA for purposes of Section 1.5
and is not deemed to affect the Budget Goals, including
Expenses) human relations manager, such appointments to be
made in consultation with the Stockholders' Representative,
and further provided that ANSYS shall have the right to
require PMAC or any PMAC Group to terminate an employee in
the event of criminal or other gross misconduct (including
but not limited to sexual harassment or discriminatory
conduct) by such employee upon consultation with the
Stockholders' Representative;
(ix) the institution of any bonus or other
compensation plan;
(x) entering into any lease of real property or
purchasing any real estate;
(xi) any sale, disposition or change in control of
the Surviving Corporation; and
(xii) any relocation of the principal offices
of the Surviving Corporation (A) outside of Alameda County
or (B) inside of Alameda County unless PMAC's proposal would
fall outside of the Budget Plan.
Notwithstanding any provision hereof to the contrary, ANSYS shall
have no obligation to abstain from, or to obtain any consent of
the Stockholders or the Stockholders' Representative in respect
of, any sale, disposition, merger, change of control, going-
private or other fundamental corporate transaction of ANSYS
(other than such rights of consent and limitations as are
provided for under the DGCL, federal and state securities laws
and the articles of incorporation and bylaws, as amended, of
ANSYS).
6.14 [Intentionally Omitted.]
6.15 Employees.
The Closing of the transactions contemplated hereby shall not
adversely affect the job responsibility, salary, and bonus and
commission plan, and overall benefits (including health insurance
and vacation) currently enjoyed by the employees of the PMAC
Group. The foregoing provisions shall not be construed as a
promise of employment for any length of time and shall not alter
the nature of the existing employment relationship between the
PMAC Group and its employees.
6.16 Employee Bonuses.
ANSYS shall pay in cash to those employees of PMAC and the PMAC
Subsidiaries set forth on Exhibit G (the "Bonus Employee Group")
the bonuses accrued by PMAC prior to the date hereof in respect
of past services rendered by the Bonus Employee Group (the
"Closing Employee Bonuses"), the aggregate amount of such Closing
Employee Bonuses having been agreed to be $233,764.00. ANSYS
further agrees to pay in cash to the Bonus Employee Group, to the
extent the members thereof are still employees on such payment
dates (with any amount forfeited due to employment termination
allocated on a pro rata basis to the members of the Bonus
Employee Group who remain employed by the PMAC Group) 2.48700559%
of (a) the Merger Consideration Adjustment, if any, without
giving effect to the reduction thereof in respect of this Section
6.16 (such payments, the "Initial Period Retention Bonuses"), and
(b) the Contingent Payment Right, without giving effect to the
reduction thereof in respect of this Section 6.16 (such payments,
the "Contingent Retention Bonuses").
6.17 Release of German and French Interests.
Mr. Steberl agrees to release, transfer, assign and grant any and
all economic or voting interests that he may have in CFD &
Structural Engineering GmbH, Sassnitz ("CFD") and in ICEM CFD
Engineering France, S.A.R.L. ("ICEM France") to PMAC and to
terminate the escrow. Mr. Steberl shall execute prior to Closing
all such other agreements and instruments as may be required
under local law to cause such transfers to be effective, copies
of such executed instruments to be delivered at Closing and the
originals to be filed as soon after Closing as may be practicable
for PMAC. Mr. Steberl agrees to take all such other actions
prior to, at or following Closing as may be requested by ANSYS or
PMAC in order to effect such transfers. Mr. Steberl acknowledges
and agrees that the covenants of ANSYS under this Agreement are
adequate consideration for such release, transfer, assignment and
grant. Mr. Steberl represents and warrants that he holds no
interest, whether economic, voting or other, in the PMAC Group
other than his interests in CFD and ICEM France that are to be
released hereunder. Mr. Steberl covenants that he will deliver
to ANSYS at Closing an executed release, in form and substance
reasonably satisfactory to ANSYS, with respect to any claims in
respect of any economic or voting interest in any entity within
the PMAC Group.
6.18 Indian Subsidiary.
Prior to Closing or, if performance under this Section is not
possible prior to Closing despite the best efforts of PMAC and
the Stockholders, as soon thereafter as is practicable, PMAC and
the Stockholders shall cause the Articles of Association and
other governing documents of PMAC's Indian Subsidiary shall be
amended and restated in forms satisfactory to ANSYS in its sole
discretion, such amendments to include, without limitation, terms
requiring the affirmative vote or consent of all shares held by
PMAC for the taking of any corporate action by the Indian
Subsidiary, whether or not PMAC is represented at a meeting of
the stockholders thereof, permitting PMAC to elect the majority
of the Board of Directors of the Indian Subsidiary and requiring
the consent of such PMAC directors for certain corporate actions
of the Indian Subsidiary.
6.19 Swiss Subsidiary.
PMAC shall cause a direct wholly-owned subsidiary of PMAC to be
formed in Switzerland (such subsidiary, "Swiss Sub"), such
formation to be supervised by and in form and substance
satisfactory to ANSYS in its sole discretion.
6.20 Certain Tax Matters.
PMAC, Mr. Wulf and the Stockholders shall use their best efforts
to file or to cause to be filed PMAC's tax returns for the period
ending August 31, 2000, as soon as possible after Closing, and in
no event later than the date set by statute for such filing
without extension or penalty.
6.21 Adequate Funds for Certain Payments.
ANSYS shall provide to the Surviving Corporation the funds
necessary to make all payments under PMAC's note to Mr. Akdag
when due and in respect of the retention bonuses under Section
6.16, and shall provide to Swiss Sub the funds necessary to make
the payments to Mr. Steberl pursuant to the Incentive Bonus
Agreement described in Section 3.18(b), in each case no later
than the date of the respective payment.
6.22 Option Grants.
For new option grants after Closing, ANSYS shall permit the
management and other key employees of the PMAC Group to
participate in the incentive option plans of ANSYS on such terms
and to such extent that such participation is granted generally
to comparably placed employees of ANSYS and its subsidiaries.
7. CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligations to Effect the Merger.
The respective obligations of ANSYS and Merger Sub, on the one
hand, and PMAC on the other, to effect the Merger shall be
subject to the satisfaction on or prior to the Closing Date of
each of the following conditions, unless waived by both ANSYS and
PMAC in writing:
(a) Government Approvals. All authorizations,
consents, orders or approvals of, or declarations or filings
with, or expiration of waiting periods imposed by, any
Governmental Entity necessary for the consummation of the
transactions contemplated by this Agreement shall have been
obtained or filed or shall have occurred.
(b) Legal Action. No temporary restraining order,
preliminary injunction or permanent injunction or other order
preventing the consummation of the Merger shall have been issued
by any Federal or state court and remain in effect, and no
litigation seeking the issuance of such an order or injunction,
or seeking the imposition against ANSYS or PMAC of damages if the
Merger is consummated, shall be pending which, in the good faith
judgment of ANSYS' and PMAC's Boards of Directors (acting upon
advice of their respective counsel), has a reasonable probability
of resulting in such order, injunction or damages. In the event
any such order or injunction shall have been issued, each party
agrees to use its reasonable efforts to have any such injunction
lifted.
(c) Statutes. No statute, rule or regulation shall
have been enacted by the government of the United States or any
state or agency thereof which would make the consummation of the
Merger illegal.
(d) Third-Party Approvals. Any and all necessary
consents from third parties relating to contracts, licenses,
leases, loans and all other instruments, material to the
respective business of PMAC, shall have been obtained.
(e) Escrow Agreement. The Escrow Agreement shall have
been fully executed and delivered to ANSYS, and such agreement
shall remain in full force and effect.
7.2 Conditions to Obligations of ANSYS and Merger Sub.
The obligations of ANSYS and Merger Sub to effect the Merger are
subject to the satisfaction on or prior to the Closing Date of
each of the following conditions, unless waived by ANSYS:
(a) PMAC Shareholder Approval. This Agreement, the
Merger Agreement and the Merger shall have been approved and
adopted by the affirmative vote of the holders of the PMAC Common
Stock in accordance with the provisions of the California Code
and PMAC's Articles of Incorporation and/or By-laws.
(b) Representations and Warranties. The
representations and warranties of PMAC and of the Stockholders
set forth in this Agreement shall be true and correct in all
material respects (ignoring for the purposes of such
determination of materiality any qualifications as to materiality
in Articles 3 and 4), in each case as of the date of this
Agreement and as of the Closing Date as though made on and as of
the Closing Date (except that the accuracy of representations and
warranties that by their terms speak as of the date of this
Agreement or some other data will be determined as of such date);
provided, that for the purposes of this Section 7.2(b) only PMAC
and the Stockholders shall not be deemed to be in material breach
of their representations and warranties to the extent that the
ultimate aggregate amount of the Damages (as defined in Article
10) of ANSYS in respect of breaches of those representations and
warranties could not reasonably be expected to be in excess of
$165,000. ANSYS shall have received a certificate signed on
behalf of PMAC by the chief executive officer of PMAC certifying
as to the above with respect to the representations and
warranties of PMAC .
(c) Performance of Obligations. PMAC, the
Stockholders and Mr. Steberl shall have performed all obligations
required to be performed by them under this Agreement on or prior
to the Closing Date, and ANSYS shall have received a certificate
signed by the chief executive officer, the chief operating
officer or the chief financial officer of PMAC to such effect.
(d) Opinion of Company's Counsel. ANSYS shall have
received an opinion dated the Closing Date of the law firm of
Greene Radovsky Maloney & Share LLP, counsel to PMAC,
substantially in the form set forth in Exhibit E attached hereto.
(e) Resignation of Directors. ANSYS shall have
received the written resignation, effective as of the Closing, of
each director of PMAC.
(f) No Material Adverse Change. No change, event,
development nor combination thereof shall have occurred which,
individually or in aggregate, has resulted or is reasonably
likely to result in a Material Adverse Effect on PMAC, other than
any Material Adverse Effect caused by (i) general business or
economic conditions affecting the U.S. economy as a whole,
(ii) conditions affecting the industry in which PMAC competes as
a whole, (iii) conditions resulting from the announcement of this
Agreement or the pendency of the consummation of this Agreement,
and (iv) conditions resulting from or relating to the taking of
any action contemplated by this Agreement.
(g) Stockholders' Representative. The Stockholders
shall have executed an agreement among themselves and Mr. Wulf
(the "Stockholders Representative Agreement"). Such Stockholders
Representative Agreement shall be in form and substance
reasonably satisfactory to ANSYS.
(h) Certificate Of Good Standing. PMAC and/or the
Stockholders shall have delivered to ANSYS a certificate of good
standing from appropriate California authorities that PMAC is a
corporation in good standing under the laws of California as of
the Closing Date or a date not more than five calendar days
before the Closing Date.
(i) No Exercise of Dissenters' Rights. No Stockholder
shall have exercised rights of dissent or appraisal under the
California Code or the DGCL.
(j) Tax Returns. PMAC shall have filed amended Tax
Returns for 1999 to ANSYS' reasonable satisfaction.
(k) PTC Agreement. PMAC shall have satisfied all
obligations under the Asset Purchase Agreement among PMAC and
Parametric Technology Corporation with an effective date of March
1, 1999, and the Development and Distribution License To ICEM
Software agreement ("PTC Agreements") and shall have received
written confirmation from PTC that PTC has transferred ownership
of "ICEM CFD" (as that term is defined in the PTC Agreements) to
PMAC pursuant to PTC Agreements.
(l) Termination of Stockholder and Buy-Sell Agreement.
The PMAC Stockholders Agreement and the Buy-Sell Agreement shall
have been terminated, and ANSYS shall have received evidence of
such terminations reasonably satisfactory to it.
7.3 Conditions to Obligations of PMAC.
The obligations of PMAC to effect the Merger are subject to the
satisfaction on or prior to the Closing Date of each of the
following conditions, unless waived by PMAC:
(a) Representations and Warranties. The
representations and warranties of ANSYS and Merger Sub set forth
in this Agreement shall be true and correct in all material
respects (disregarding for the purposes of such determination of
materiality all qualifications as to materiality in Article 2),
in each case as of the date of this Agreement and as of the
Closing Date as though made on and as of the Closing Date (except
that the accuracy of representations and warranties that by their
terms speak as of the date of this Agreement or some other data
will be determined as of such date); provided, that for the
purposes of this Section 7.3(a) only ANSYS and Merger Sub shall
not be deemed to be in material breach of their representations
and warranties to the extent that the ultimate aggregate amount
of the Damages (as defined in Article 10) of the Stockholders in
respect of breaches of those representations and warranties could
not reasonably be expected to be in excess of $165,000. PMAC
shall have received a certificate signed on behalf of ANSYS by
the chief executive officer, the chief operating officer or the
chief financial officer of ANSYS to the above effect.
(b) Performance of Obligations. ANSYS and Merger Sub
shall have performed in all material respects all obligations
required to be performed by them under this Agreement on or prior
to the Closing Date, and PMAC shall have received a certificate
signed by the chief executive officer, the chief operating
officer or the chief financial officer of ANSYS to such effect.
(c) No Material Adverse Change. No change, event,
development nor combination thereof shall have occurred which,
individually or in aggregate, has resulted or is reasonably
likely to result in a Material Adverse Effect on ANSYS, other
than any Material Adverse Effect caused by (i) general business
or economic conditions affecting the U.S. economy as a whole,
(ii) conditions affecting the industry in which ANSYS competes as
a whole, (iii) conditions resulting from the announcement of this
Agreement or the pendency of the consummation of this Agreement,
and (iv) conditions resulting from or relating to the taking of
any action contemplated by this Agreement.
(d) Certificate Of Good Standing. ANSYS shall have
delivered to PMAC a certificate of good standing from appropriate
Delaware authorities that ANSYS is a corporation in good standing
under the laws of Delaware as of the Closing Date or a date not
more than five calendar days before the Closing Date.
(e) Opinion of Company's Counsel. The Stockholders'
Representative shall have received an opinion dated the Closing
Date of David Secunda, Corporate Counsel of ANSYS, substantially
in the form set forth in Exhibit F attached hereto.
8. TERMINATION, AMENDMENT AND WAIVER
8.1 Termination.
This Agreement may be terminated at any time prior to the Closing
Date, whether before or after approval by the Stockholders of
PMAC:
(a) by mutual consent of PMAC and ANSYS, each as
authorized by its Board of Directors;
(b) by PMAC if there has been a material breach of
this Agreement on the part of ANSYS or Merger Sub with respect to
any of ANSYS' covenants, representations or warranties contained
herein and such breach has not been cured within 30 business days
after written notice thereof from PMAC;
(c) by ANSYS if there has been a material breach of
this Agreement on the part of PMAC or one of the Stockholders
with respect to any of their covenants, representations or
warranties contained herein and such breach has not been cured
within 30 business days after written notice thereof from ANSYS,
provided that such breach or breaches results or would result in
aggregate Damages under this Agreement in excess of Two Hundred
Eighty Thousand Dollars ($280,000.00);
(d) by either PMAC or ANSYS if the Merger shall not
have been consummated on or before September 15, 2000;
(e) by either PMAC or ANSYS if a court of competent
jurisdiction or any other Governmental Entity shall have issued
an order, decree or ruling or taken any other action, in each
case permanently restraining, enjoining or otherwise prohibiting
the consummation of the Merger and such order, decree, ruling or
other action shall have become final and not appealable; or if
any statute, rule or regulation is enacted, promulgated or deemed
applicable to the Merger by any Governmental Entity which makes
the consummation of the Merger illegal.
Where action is taken to terminate this Agreement pursuant
to this Section 8.1, it shall be sufficient for such action to be
authorized by the Board of Directors of the party taking such
action. Any action taken to terminate this Agreement pursuant to
this Section 8.1 shall become effective when notice of such
termination is delivered by the terminating party to the other
party in accordance with the provisions of Section 8.2 below.
8.2 Effect of Termination.
In the event of termination of this Agreement by either ANSYS or
PMAC as provided in Section 8.1, this Agreement shall forthwith
become void and there shall be no liability or obligation on the
part of ANSYS or PMAC or their respective officers or directors
except as set forth in Sections 6.6, and 9.2; provided, however,
that nothing set forth herein shall relieve a party hereto from
liability for its willful breach of this Agreement; and provided
further, that upon such termination:
(a) each party will re-deliver all documents, work
papers and other material of any other party (including all
copies) relating to the transactions contemplated hereby, whether
so obtained before or after the execution hereof, to the party
furnishing the same; and
(b) all confidential information received by any party
hereto with respect to the business of any other party or its
subsidiaries and partners shall be treated in accordance with
Section 9.2 hereof.
8.3 Amendment.
This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
8.4 Extension; Waiver.
At any time prior to the Closing, either ANSYS or PMAC, by action
taken by its Board of Directors, may, to the extent legally
allowed, (i) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (ii) waive
any inaccuracies in the representations and warranties made to
such party contained herein or in any document delivered pursuant
hereto and (iii) waive compliance with any of the agreements or
conditions for the benefit of such party contained herein. Any
agreement on the part of a party hereto to any such extension or
waiver shall be valid if set forth in an instrument in writing
signed on behalf of such party.
9. COMPETITION
9.1 Non-Compete.
(a) None of Mr. Wulf, Christine Schoefer, Michael Hohmeyer, or
Wayne Christopher, nor any person or entity now or hereafter
controlled by Mr. Wulf, Christine Schoefer, Michael Hohmeyer, or
Wayne Christopher, will at any time within the five-year period
immediately following Closing, directly or indirectly, (i)
solicit, or knowingly enter into any contract for the sale,
marketing or distribution of goods of the type currently
distributed or sold by the PMAC Group; (ii) request or induce any
distributor or supplier of goods or services to the PMAC Group to
curtail or cancel any business they are currently or in the past
twenty-four (24) months have been, transacting with the PMAC
Group; (iii) request or induce any then existing customer of the
PMAC Group to curtail or cancel any business they are currently,
or in the past twenty-four (24) months have been, transacting
with the PMAC Group; or (iv) except as disclosed in writing to
ANSYS and approved by ANSYS, request or induce any employee of
the PMAC Group to terminate his or her employment with ANSYS or
any entity in the PMAC Group; or (v) engage in the Territory (as
defined in Section 9.3) in any business competitive with the
business conducted by the PMAC Group on the date of this
Agreement or within the twenty-four (24) months preceding said
date.
(b) None of Mary Jo Hamilton, Michael Salari, Masoud
Doroudian, Diane Poirier, Devendra Rajwade, Jan Soreide, or Vijay
Shah, nor any person or entity now or hereafter controlled by
Mary Jo Hamilton, Michael Salari, Masoud Doroudian, Diane
Poirier, Devendra Rajwade, Jan Soreide, or Vijay Shah, will at
any time within the two-year period immediately following
Closing, directly or indirectly, (i) solicit, or knowingly enter
into any contract for the sale, marketing or distribution of
goods of the type currently distributed or sold by the PMAC
Group; (ii) request or induce any distributor or supplier of
goods or services to the PMAC Group to curtail or cancel any
business they are currently or in the past twenty-four (24)
months have been, transacting with the PMAC Group; (iii) request
or induce any then existing customer of the PMAC Group to curtail
or cancel any business they are currently, or in the past twenty-
four (24) months have been, transacting with the PMAC Group; or
(iv) except as disclosed in writing to ANSYS and approved by
ANSYS, request or induce any employee of the PMAC Group to
terminate his or her employment with ANSYS or any entity in the
PMAC Group; or (v) engage in the Territory in any business
competitive with the business conducted by the PMAC Group on the
date of this Agreement or within the twenty-four (24) months
preceding said date.
9.2 Confidential Information.
None of the Stockholders, nor any person or entity now or
hereafter controlled by any Stockholders, will (i) use in any
manner adverse to the interest of Merger Sub or ANSYS any
proprietary or confidential information obtained from or relating
specifically to PMAC, Merger Sub or ANSYS; (ii) disclose or
furnish any proprietary or confidential information obtained from
or relating to PMAC, Merger Sub or ANSYS to any third parties, or
(iii) use any trade name, trademark, copyright, patent or service
mark previously used by PMAC, Merger Sub or ANSYS which is not
the subject of a license agreement which permits the use of any
of the foregoing by that Stockholder or person or entity and
none of them will at any time following the Effective Time use
any trade name, trademark, copyright, logo or service mark which
is confusingly similar to one currently or previously owned by
PMAC, Merger Sub or ANSYS.
9.3 Definition.
For purposes of this Article, "control" or "controlled by" shall
mean ownership, direct or indirect, of more than 5% of the
outstanding voting equity securities of any such entity.
"Territory" shall mean (a) each county in the State of California
in which ANSYS conducts business on the date of this Agreement or
within the twenty-four (24) months preceding said date, (b) each
county in the State of California in which ANSYS conducts
business on the date of this Agreement or within the twenty-four
(24) months preceding said date, it being agreed by the parties
hereto that such counties include all counties of the State of
California, (c) each state of the United States of America other
than California, and (d) each jurisdiction outside of the United
States of America in which the PMAC Group or ANSYS is, has in the
past or will at any time during the term of the covenants in this
Article 9 conducts its business.
9.4 Reasonableness.
Each of the individuals named in this Article has carefully
considered the nature and extent of the restrictions upon him or
her and the rights and remedies conferred upon ANSYS and the PMAC
Group under this Article, and hereby acknowledges and agrees that
the same are reasonable in time and territory.
9.5 Injunctive Relief.
Each of the individuals named in this Article acknowledges and
agrees that their covenants and obligations under this Article
relate to special, unique and extraordinary matters and that the
violation or threatened violation of any of the terms of such
covenants and obligations will cause ANSYS irreparable injury
which cannot be reasonably or adequately compensated in damages
and that, in addition to any other relief to which ANSYS may be
entitled by reason of such violation, ANSYS shall also be
entitled to permanent and temporary injunctive and other
equitable relief (without the requirement of securing or posting
any bond) as a court of competent jurisdiction may deem necessary
or appropriate to restrain such named individual from committing
any violation of their covenants and obligations under this
Article. In connection with the foregoing provisions of this
Article, each such named individual represents that his or her
economic means and circumstances are such that such provisions
will not prevent that individual from providing for that
individual and his or her family on a satisfactory basis to such
individual. Without limiting the generality of the foregoing,
each such individual specifically acknowledges that a showing by
ANSYS of any breach of any of the provisions of this Article
shall constitute, for the purposes of all judicial determinations
of the issue of injunctive relief, conclusive proof of all of the
elements necessary to entitle ANSYS to temporary and permanent
injunctive relief against such individual.
9.6 Severability: Separate Covenants.
It is the intent of the parties that the provisions of this
Article shall be enforced to the fullest extent permissible under
the laws of the State of Delaware, the State of California or any
other applicable jurisdiction. Each party hereto recognizes that
the duration of the covenants and the territorial restrictions
contained in this Article are necessary and required for the
adequate protection of the business of ANSYS and the PMAC Group
and are a material inducement to ANSYS's willingness to enter
into this Agreement and to consummate the Merger. If any
provision of this Article shall be illegal, invalid or
unenforceable in the State of Delaware, the State of California
or in any jurisdiction in which enforcement is sought, then in
such jurisdiction only, such provision shall be ineffective to
the extent of such illegality, invalidity or unenforceability,
without affecting in any way the remaining provisions hereof (and
without rendering such provision or any other provision of this
Article illegal, invalid or unenforceable in any other
jurisdiction), and shall be enforced to the greatest extent
permitted by law in such jurisdiction. If, however, this Article
or any provision hereof shall be deemed illegal, invalid, or
unenforceable in any jurisdiction in which enforcement is sought
because the scope of this Article or such provision is excessive
or more restrictive than permitted by the law of such
jurisdiction, then in such jurisdiction only, the scope of this
Article or such provision shall be limited to the minimum extent
necessary (and without limiting the scope of this Article or such
provision in any other jurisdiction) to render this Article or
such provision valid, legal and enforceable to the greatest
extent permitted under the law of such jurisdiction.
10. INDEMNIFICATION AND CLAIMS
10.1 Stockholders Indemnification.
(a) The Stockholders and Mr. Wulf (each, a "PMAC
Indemnitor") shall, jointly and severally, indemnify and hold
harmless ANSYS and Merger Sub (together the "ANSYS Indemnified
Parties") against and in respect of all actions, damages, claims,
losses, liabilities and expenses (including, without limitation,
reasonable attorneys' fees and disbursements) incurred by either
of the ANSYS Indemnified Parties (all such amounts being
hereinafter sometimes referred to as "Damages") arising out of or
related to (i) any misrepresentation or breach of any warranty
made by PMAC, the Class A Stockholders, Mr. Shah, Mr. Wulf or Mr.
Steberl pursuant to Section 3 and Section 6.17 or in any
statement, certificate or other document furnished by PMAC
pursuant to this Agreement, (ii) the nonperformance or breach of
any covenant, agreement or obligation of PMAC contained in this
Agreement, or (iii) until the second anniversary of the date of
the Effective Time, any Damages in respect of the non-standard
end user license/consulting agreements, global terms and
conditions, secondary supplier and software services agreements
set forth in Section 3.18(d) of the PMAC Disclosure Schedule.
There shall be no liability for indemnification under this
Section 10.1(a) unless the aggregate amount of Damages hereunder
exceeds One Hundred Sixty-Five Thousand Dollars ($165,000.00),
and then only to the extent such aggregate amount of Damages
exceeds $165,000. The total liability of the PMAC Indemnitors
for Damages hereunder shall not exceed the sum of (X) Seven
Million Dollars ($7,000,000.00) plus (Y) the aggregate amount of
the Merger Consideration Adjustment, plus (Z) the aggregate value
of all cash and stock payable in respect of the Contingent
Payment Rights, as valued pursuant to the definition of
"Contingent Payment Rights" in Section 1.5(i) prior to the
payment thereof. Notwithstanding the foregoing, the PMAC
Indemnitors shall be fully liable to ANSYS for, and the limits on
indemnification set forth in this Section shall not apply to, any
Damages relating to (i) such PMAC Indemnitor's willful misconduct
or fraud in connection with the representations and warranties
set forth herein and the transactions contemplated under this
Agreement and in connection with the Merger, (ii) to the extent
such Damages are not limited to payment from the share capital of
CFD, both (X) the omission from any end-user or consulting
agreement entered into by the PMAC Group prior to Closing of
terms limiting the liability of the PMAC Group for damages to a
maximum liability equal to the value of the monetary
consideration received by the PMAC Group under such agreement,
and (Y) where the end-user or consulting agreement incorporates
such terms, the invalidity under the governing law of the
contract of such terms as they are incorporated in such
agreement, and (iii) provided claim for indemnity is made on or
before the two (2) year anniversary date of the Effective Time,
any liabilities of the PMAC Group in respect of the German and
French taxes set forth in Exhibit H for any period prior to
Closing that remain unpaid at Closing, including any amounts
assessed in a tax audit during the indemnity period.
Notwithstanding anything in this Section 10.1 to the contrary,
the total liability of any Class C Stockholder for Damages under
this Section 10.1(a) shall not exceed the aggregate consideration
received by such Class C Stockholder under this Agreement.
(b) Each Stockholder shall, severally and not jointly,
indemnify and hold harmless the ANSYS Indemnified Parties against
and in respect of all Damages incurred by either of them arising
out of or related to (i) any inaccuracy or breach of any
representation or warranty made by such Stockholder pursuant to
Section 1.9, Section 4 or in any statement, certificate or other
document furnished by or on behalf of such Stockholder pursuant
to this Agreement, or (ii) the nonperformance or breach of any
covenant, agreement or obligation of such Stockholder contained
in this Agreement. Notwithstanding anything in this Section 10.1
to the contrary, the total liability of any PMAC Indemnitor for
indemnification under this Section 10.1(b) shall not exceed the
aggregate Merger Consideration less amounts paid by such PMAC
Indemnitor to the ANSYS Indemnified Parties pursuant to the
indemnification obligations under Section 10.1(a) and not
reimbursed or recouped by such PMAC Indemnitor pursuant to rights
of contribution or indemnity or otherwise.
(c) None of the PMAC Indemnitors shall have right to
seek contribution from PMAC or the Surviving Corporation in the
event that he is required to make any payments under this Section
10.1. Each PMAC Indemnitor shall have the right to seek
contribution from each other PMAC Indemnitor in the event that he
or it is required to make any payments under Section 10.1(a).
(d) The shares and cash deposited in escrow pursuant
to Section 1.5 and Section 6.7 shall be the initial but not the
exclusive source of indemnification for Damages as provided by
Section 10.1. The PMAC Indemnitors may make payment of indemnity
to ANSYS (i) by wire transfer of immediately available funds,
(ii) if and to the extent ANSYS has by delivery to ANSYS of that
number of shares of ANSYS Common Stock having a value as of the
date of delivery equal to the value of the ANSYS Damages in
respect of which indemnification is being made, or (iii) a
combination thereof.
(e) If an ANSYS Indemnified Party believes it has
incurred any Damages which are subject to indemnification under
Section 10.1 it shall forward notice thereof to the Stockholders'
Representative.
(f) With respect to claims or demands by third
parties, whenever an ANSYS Indemnified Party shall have received
notice that such a claim or demand has been asserted or
threatened, which, if true, would result in indemnification under
Section 10.1, the ANSYS Indemnified Party shall as soon as
reasonably practicable, and in any event within thirty (30) days
of receipt of such notice, notify the Stockholders'
Representative of such claim or demand and of all relevant facts
within its knowledge which relate thereto. If such claim for
indemnification arises under Section 10.1(a), then the
Stockholders' Representative shall then have the right at the
expense of the PMAC Indemnitors to undertake the defense of any
such claims or demands utilizing counsel selected by the
Stockholders' Representative and approved by ANSYS, which
approval shall not be unreasonably withheld, conditioned or
delayed; provided however, that the Stockholders' Representative
shall not settle or otherwise compromise any such action without
the prior written consent of ANSYS unless such settlement affords
ANSYS and the PMAC Group a full release. If such claim for
indemnification arises under Section 10.1(b), then the PMAC
Indemnitor who may have made the misrepresentation or breached
the warranty or failed to perform or breached the covenant that
is the basis of such claim or demand shall then have the right at
his, her or its expense to undertake the defense of any such
claims or demands utilizing counsel selected by such PMAC
Indemnitor and approved by ANSYS, which approval shall not be
unreasonably withheld. In the event that the Stockholders'
Representative or such PMAC Indemnitor shall fail to give notice
of his intention to undertake the defense of any such claim or
demand within ten (10) days after receiving notice that it has
been asserted or threatened, the ANSYS Indemnified Party shall
have the right to satisfy and discharge the same by payment,
compromise or otherwise.
(g) If an ANSYS Indemnified Party believes it has
incurred any Damages which are subject to indemnification under
Section 10.1(a) and does not involve a third party claim or
demand described in Section 10.1(f) it shall forward notice
thereof to the Stockholders' Representative at the addresses
specified in and pursuant to Section 11.2, and shall state
therein the amount of Damages it believes it has suffered, and
shall provide, in reasonable detail the facts alleged as the
basis for such claim and the section or sections of this
Agreement alleged to have been violated (a "Damages Notice"). No
later than thirty (30) days after receipt of a Damages Notice
from an ANSYS Indemnified Party, the Stockholders' Representative
shall deliver to ANSYS either a notice accepting such claim for
Damages or a notice that the Stockholders' Representative
disputes the claim for Damages. A notice by the Stockholders'
Representative accepting a claim for Damages shall be binding on
all of the Stockholders, and a failure to provide ANSYS with
notice disputing a claim for Damages within ten (10) days of
receipt of a Damages Notice from an ANSYS Indemnified Party shall
be deemed acceptance of such claim.
10.2 ANSYS Indemnification.
(a) ANSYS shall indemnify and hold harmless the
Stockholders, Mr. Wulf and Mr. Steberl (together the "PMAC
Indemnified Parties") against and in respect of all Damages
incurred by any of the PMAC Indemnified Parties arising out of or
related to (i) any misrepresentation or breach of any warranty
made by ANSYS or Merger Sub pursuant to Section 2 or in any
statement, certificate or other document furnished by ANSYS or
Merger Sub pursuant to this Agreement, or (ii) the nonperformance
or breach of any covenant, agreement or obligation of ANSYS
contained in this Agreement. There shall be no liability for
indemnification under this Section 10.2 unless the aggregate
amount of Damages hereunder exceeds One Hundred Sixty-Five
Thousand Dollars ($165,000.00), and then only to the extent such
aggregate amount of Damages exceeds $165,000. The total
liability of ANSYS for Damages hereunder shall not exceed (X)
Seven Million Dollars ($7,000,000.00) plus (Y) the aggregate
amount of the Merger Consideration Adjustment, plus (Z) the
aggregate value of all cash and stock payable in respect of the
Contingent Payment Rights, as valued pursuant to the definition
of "Contingent Payment Rights" in Section 1.5(i) prior to the
payment thereof. Notwithstanding the foregoing, ANSYS shall be
fully liable to the Stockholders for, and the limits on
indemnification set forth in this Section shall not apply to, any
Damages relating to the willful misconduct or fraud of ANSYS in
connection with the representations and warranties set forth
herein and the transactions contemplated under this Agreement and
in connection with the Merger.
(b) With respect to claims or demands by third
parties, whenever a PMAC Indemnified Party shall have received
notice that such a claim or demand has been asserted or
threatened, which, if true, would result in indemnification under
Section 10.1, the PMAC Indemnified Party shall as soon as
reasonably practicable, and in any event within thirty (30) days
of receipt of such notice, notify the Stockholders'
Representative of such claim or demand and of all relevant facts
within its knowledge which relate thereto. If such claim for
indemnification arises under Section 10.1(a), then ANSYS shall
then have the right at the expense of ANSYS to undertake the
defense of any such claims or demands utilizing counsel selected
by it and approved by the Stockholders' Representative, which
approval shall not be unreasonably withheld, provided however,
that ANSYS shall not settle or otherwise compromise any such
action without the prior written consent of the Stockholders'
Representative. In the event that ANSYS shall fail to give
notice of its intention to undertake the defense of any such
claim or demand within ten (10) days after receiving notice that
it has been asserted or threatened, the PMAC Indemnified Party
shall have the right to satisfy and discharge the same by
payment, compromise or otherwise.
(c) If a PMAC Indemnified Party believes it has
incurred any Damages which are subject to indemnification under
Section 10.2 and does not involve a third party claim or demand
described in Section 10.2(b) it shall forward notice thereof to
ANSYS at the addresses specified in and pursuant to Section 11.2,
and shall state therein the amount of Damages it believes it has
suffered, and shall provide, in reasonable detail the facts
alleged as the basis for such claim and the section or sections
of this Agreement alleged to have been violated (a "Damages
Notice"). No later than thirty (30) days after receipt of a
Damages Notice from a PMAC Indemnified Party, ANSYS shall deliver
to PMAC either a notice accepting such claim for Damages or a
notice that ANSYS disputes the claim for Damages. A failure to
provide the Stockholders' Representative with notice disputing a
claim for Damages within ten (10) days of receipt of a Damages
Notice from a PMAC Indemnified Party shall be deemed acceptance
of such claim.
10.3 Insurance Recoveries; Tax Benefits.
Any indemnity payment made by the PMAC Indemnitors to any ANSYS
Indemnified Party, on the one hand, or by ANSYS to any PMAC
Indemnified Party, on the other hand, pursuant to this Article 10
in respect of any claim (i) shall be net of an amount equal to
(x) any insurance proceeds realized by and paid to the respective
ANSYS or PMAC Indemnified Parties minus (y) any related costs and
expenses, including the aggregate cost of pursuing any related
insurance claims plus any correspondent increases in insurance
premiums or other chargebacks, and (ii) shall be (A) reduced by
an amount equal to the tax benefits, if any, attributable to such
claim and (B) increased by an amount equal to the taxes, if any,
attributable to the receipt of such indemnity payment, but only
to the extent that such tax benefits are actually realized, or
such taxes are actually paid, as the case may be, by the ANSYS or
PMAC Indemnified Parties or any consolidated, combined or unitary
group of which such ANSYS or PMAC Indemnified Parties are a
member.
10.4 Actual Knowledge.
No PMAC Indemnitor shall be liable under this Article 10 for any
Damages in respect of the matters disclosed by the foreign due
diligence of PriceWaterhouseCoopers in respect of the PMAC
Group's operations in Germany, France and India. ANSYS shall not
be liable under this Article 10 for any Damages in respect of any
matter disclosed in any ANSYS SEC Document filed prior to the
date hereof.
11. GENERAL PROVISIONS
11.1 Survival of Representations, Warranties and Agreements.
The representations and warranties in Sections 2 and 3 shall
survive until the two (2) year anniversary date of the Effective
Time and no suit, action or proceeding shall be brought after
such two year anniversary date. The representations and
warranties in Section 4 shall survive indefinitely after the
Effective Time.
11.2 Notices.
All notices and other communications hereunder shall be in
writing and shall be deemed given upon personal delivery or
delivery by an express courier service (such as Federal Express),
or on the fourth day following deposit in the United States mail
(if sent by registered or certified mail, return receipt
requested, postage prepaid), addressed to the parties at the
following addresses (or at such other address for a party as
shall be specified by like notice):
(a) if to ANSYS or, at and after the Effective Time to
the Surviving Corporation, to:
ANSYS, Inc.
275 Technology Drive
Canonsburg, Pennsylvania 15317
Attn: Chief Executive Officer
with a mandatory copy to
Kirkpatrick & Lockhart, LLP
Henry W. Oliver Building
535 Smithfield Street
Pittsburgh, Pennsylvania 15222
Attn: Ronald West, Esq.
(b) if to PMAC prior to the Effective Time, to:
2855 Telegraph Avenue
Suite 501
Berkeley, California 94705
Attn: Armin Wulf
(c) if to any Stockholder at his address as set forth in
the stock transfer records of PMAC as of the Closing Date.
(d) if to the Stockholders' Representative, to:
2855 Telegraph Avenue
Suite 501
Berkeley, California 94705
Attn: Armin Wulf
with a mandatory copy in the case of each of (b), (c) and
(d) above to
Greene Radovsky Maloney & Share LLP
Four Embarcadero Center
Suite 4000
San Francisco, California 94111-4106
Attn: Adam P. Siegman, Esq.
11.3 Interpretation.
When a reference is made in this Agreement to a Section, Schedule
or Annex, such reference shall be to a Section, Schedule or Annex
to this Agreement unless otherwise indicated. The words
"include," "includes" and "including" when used herein shall be
deemed in each case to be followed by the words "without
limitation." The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
11.4 Counterparts.
This Agreement may be executed in one or more counterparts,
including by facsimile, each of which shall be considered one and
the same agreement, and shall become effective when one or more
counterparts have been signed by each of the parties and
delivered to all other parties, it being understood that all
parties need not sign the same counterpart.
11.5 Entire Agreement.
This Agreement, the PMAC Disclosure Schedule and all documents
and instruments and other agreements among the parties hereto
referred to herein constitute the entire agreement among the
parties with respect to the subject matter hereof and supersede
all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof.
11.6 No Third Party Beneficiaries.
Neither this Agreement nor any of the documents or instruments or
other agreements among the parties hereto referred to herein are
intended to confer upon any other person any rights or remedies.
11.7 Non-Assignment.
Neither this Agreement nor any of the documents or instruments or
other agreements among the parties hereto referred to herein
shall be assigned by operation of law or otherwise except as
otherwise specifically provided herein or therein.
11.8 Governing Law.
This Agreement shall be governed in all respects, including
validity, interpretation and effect, by the laws of the State of
Delaware, without giving effect to the conflicts of law rules
thereof.
11.9 Arbitration.
Except as otherwise provided in Section 1.5, any dispute arising
out of this Agreement, or its performance or breach, shall be
resolved by binding arbitration at San Francisco, California, if
such claim is made by the Stockholders or PMAC, or Pittsburgh,
Pennsylvania, if made by ANSYS, under the Commercial Arbitration
Rules (the "AAA Rules") of the American Arbitration Association
(the "AAA"). This arbitration provision is expressly made
pursuant to and shall be governed by the Federal Arbitration Act,
9 U.S.C. Section 1-14. The Parties agree that pursuant to
Section 9 of the Federal Arbitration Act, a judgment of a United
States District Court of competent jurisdiction shall be entered
upon the award made pursuant to the arbitration. A single
arbitrator, who shall have the authority to allocate the costs of
any arbitration initiated under this paragraph, shall be selected
according to the AAA Rules within ten (10) days of the submission
to the AAA of the response to the statement of claim or the date
on which any such response is due, whichever is earlier. The
arbitrator shall be required to furnish to the parties to the
arbitration a preliminary statement of the arbitrator's decision
that includes the legal rationale for the arbitrator's conclusion
and the calculations pertinent to any damage award being made by
the arbitrator. The arbitrator shall then furnish each of the
parties to the arbitration the opportunity to comment upon and/or
contest the arbitrator's preliminary statement of decision
either, in the discretion of the arbitrator, through briefs or at
a hearing. The arbitrator shall render a final decision
following any such briefing or hearing. The arbitrator shall
conduct the arbitration in accordance with the Federal Rules of
Evidence. The arbitrator shall decide the amount and extent of
pre-hearing discovery which is appropriate. The arbitrator shall
have the power to enter any award of monetary and/or injunctive
relief (including the power to issue permanent injunctive relief
and also the power to reconsider any prior request for immediate
injunctive relief by any party and any order as to immediate
injunctive relief previously granted or denied by a court in
response to a request therefor by any party), including the power
to render an award as provided in Rule 43 of the AAA Rules. The
arbitrator shall have the power to award the prevailing party its
costs and reasonable attorneys' fees; provided, however, that the
arbitrator shall not award attorneys' fees to a prevailing party
if the prevailing party received a settlement offer unless the
arbitrator's award to the prevailing party is greater than such
settlement offer without taking into account attorneys' fees in
the case of the settlement offer or the arbitrator's award. In
addition to the above courts, the arbitration award may be
enforced in any court having jurisdiction over the parties and
the subject matter of the arbitration.
11.10 Sole Remedy.
The parties' sole and exclusive remedy for breach of any
representation, warranty or covenant herein following Closing
having occurred shall be the indemnification provisions of
Article 10; provided, that nothing herein shall limit in any way
such party's remedies in respect of fraud or intentional
misrepresentation or omission by the other party in connection
herewith or with the transactions contemplated hereby or in
respect of their willful misconduct in connection with the
transactions contemplated under this Agreement and in connection
with the Merger; and provided further, that notwithstanding
anything in this Section to the contrary ANSYS may pursue the
remedies specified in Article 9 in respect of the breach of any
covenant therein.
11.11 No Agreement Until Executed.
Irrespective of negotiations among the parties or the exchanging
of drafts of this Agreement, this Agreement shall not constitute
or be deemed to evidence a contract, agreement, arrangement or
understanding among the parties hereto unless and until this
Agreement is executed by all the parties hereto.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement as of the date first set forth above.
ANSYS, INC. PACIFIC MARKETING AND
CONSULTING, INC.
By: /s/ James E. Cashman By: /s/ Armin Wulf
Name: James E. Cashman Name: Dr. Armin Wulf
Title: President and CEO Title: President
By: /s/ Wayne Christopher
Name: Wayne Christopher
Title: Secretary
GENESISONE ACQUISITION CORPORATION
By: /s/ James E. Cashman
Name: James E. Cashman
Title: President
DR. ARMIN WULF, in his individual capacity
/s/ Armin Wulf
Dr. Armin Wulf
MR. STEBERL
/s/ Reimund Steberl
Reimund Steberl
[SIGNATURE PAGE OF CLASS A AND B STOCKHOLDERS FOLLOWS]
CLASS A AND B STOCKHOLDERS:
/s/ Christine Schoefer
Christine Schoefer
/s/ Michael Hohmeyer
Michael Hohmeyer
/s/ Wayne Christopher
Wayne Christopher
/s/ Mary Jo Hamilton
Mary Jo Hamilton
/s/ Michael Salari
Michael Salari
/s/ Masoud Doroudian
Masoud Doroudian
/s/ Vijay Shah
Vijay Shah
/s/ Diane Poirier
Diane Poirier
/s/ Devendra Rajwade
Devendra Rajwade
/s/ Jan Soreide
Jan Soreide
[SIGNATURE PAGE OF CLASS C STOCKHOLDERS FOLLOWS]
CLASS C STOCKHOLDERS:
/s/ Akila Diwakar
Akila Diwakar
/s/ Philip Diwakar
Philip Diwakar
/s/ Vladimir Griaznov
Vladimir Griaznov
/s/ Alan Magnuson
Alan Magnuson
/s/ Forest Rouse
Forest Rouse
/s/ Xiaomin Wang
Xiaomin Wang
/s/ Jieyong Xu
Jieyong Xu
/s/ Jigen Zhou
Jigen Zhou
/s/ Manfred Friedrichs
Manfred Friedrichs
/s/ Carsten Martens
Carsten Martens
Exhibit 99.1
ANSYS to Acquire ICEM CFD Engineering
SOUTHPOINTE, PA: August 30, 2000 -- ANSYS, Inc.
(ANSS:NASDAQ), a global leader in design analysis and
optimization software, today announced that it has entered
into a definitive agreement to acquire ICEM CFD Engineering.
The up-front purchase price of approximately $12.4 million
is comprised of both cash and ANSYS common stock. In
addition, the agreement provides for future payments
contingent upon the attainment of certain performance
criteria. ANSYS anticipates closing the deal by the end of
August, and expects to incur one-time charges related to the
write-off of in-process research and development costs, as
well as certain acquisition-related costs. Excluding the
effects of acquisition-related amortization and other
charges, the acquisition is expected to be accretive to
earnings within the fiscal year 2001.
James E. Cashman III, ANSYS President and CEO, stated, "The
ICEM CFD Engineering acquisition is attractive to customers,
shareholders, and employees for its complementary
technology, growth potential, and market presence. It is
consistent with our stated strategy of being the dominant
supplier of engineering simulation solutions. We believe
that by leveraging ANSYS's global sales and marketing
resources with ICEM CFD Engineering's outstanding
technology, market penetration will accelerate, particularly
in high growth market segments such as electronics. We have
been impressed with the people and commitment of ICEM CFD
Engineering and clearly our stated goal of best-in-class
products will benefit from planned deployment of shared
technologies."
Armin Wulf, founder of ICEM CFD Engineering said, "Our
technological excellence in modeling of high end
computational fluid dynamics (CFD) complements the resources
and market leadership of ANSYS in structural, thermal,
electromagnetic, and other types of physics simulation. The
combination, we believe, will greatly strengthen ANSYS's
leadership in important fields of engineering." Wulf
continued, "Our new association with ANSYS affords us the
tremendous opportunity to extend our solution set into new
markets, expanding our customer base and increasing our
operations as the premier integrated solver-independent
modeling environment for computer aided engineering (CAE).
We are very excited to join forces with ANSYS."
ICEM CFD Engineering is a privately held developer and
leading supplier of software for pre- and post-processing of
CFD and other high growth engineering applications. ICEM
CFD Engineering sells these products into a variety of
market segments including the electronics, automotive, and
aerospace industries. Major products include ICEM CFD,
which is the world's leading software specializing in CFD
modeling. ICEM CFD Engineering also leverages its expertise
in modeling and meshing technology through several strategic
partnerships with leading OEM software suppliers in the CFD
market, which ANSYS intends to continue going forward.
During the fiscal year ended October 1999, revenue for ICEM
CFD Engineering was approximately $6.8 million. ICEM CFD
Engineering, which will continue to be headquartered in
Berkeley, California, will operate as a separate subsidiary,
maintaining its products, sales channels, and OEM
relationships.
Some matters discussed in this news release constitute
forward-looking statements under the "safe harbor"
provisions of the Private Securities Litigation Reform Act
of 1995. The actual future results of the Company could
differ significantly from these statements. These include
statements with respect to being the leading supplier of
engineering simulation solutions, accelerating market
penetration, being a technology leader, realizing accretion
to earnings from this acquisition, deploying shared
technologies, expanding our customer base, and closing the
acquisition, these statements are subject to various risks
and uncertainties such as our ability to successfully retain
current ICEM CFD employees, the ability of the acquired
business to maintain its current level of profitability
through the end of 2001, our ability to integrate ICEM CFD
into our business, the emergence of competitive products and
unforeseen technical issues, our ability to protect our
proprietary technology and maintain our technological lead
over competitors, and other risks and uncertainties that are
detailed from time to time in reports filed by ANSYS, Inc.
with the Securities and Exchange Commission, including
ANSYS, Inc.'s 1999 Annual Report and Form 10-K and most
recent Quarterly Report on Form 10-Q.
ANSYS, Inc. is committed to providing the most open and
flexible analysis solutions to meet customer requirements
for engineering software in today's competitive marketplace.
ANSYS, Inc. partners with leading design software suppliers
to develop state-of-the-art CAD-integrated products. A
global network of ANSYS Support Distributors provides sales,
support and training for customers. Information about ANSYS,
Inc. and its products can be found on the Worldwide Web at:
http://www.ansys.com.
Note to editors: ANSYS and DesignSpace are registered in the
U.S. Patent and Trademark Office. All other trademarks and
registered trademarks are the property of their respective
owners.