EXHIBIT 10.19
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AGREEMENT AND PLAN OF REORGANIZATION
among
PRI AUTOMATION, INC.,
E-ACQUISITION CORP.,
EQUIPE TECHNOLOGIES, INC.
and
CERTAIN STOCKHOLDERS OF EQUIPE TECHNOLOGIES, INC.
Dated as of October 25, 1997
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TABLE OF CONTENTS
ARTICLE 1. THE MERGER
Section 1.1. Officers' Certificates..........................................................................1
Section 1.2. Closing Date....................................................................................1
Section 1.3. Effective Time..................................................................................1
Section 1.4. Effect on Capital Stock.........................................................................2
Section 1.5. Exchange of Equipe Certificates.................................................................3
Section 1.6. Other Effects...................................................................................3
Section 1.7. Accounting and Tax Treatment....................................................................3
ARTICLE 2. REPRESENTATIONS AND WARRANTIES OF EQUIPE AND FOUNDERS
Section 2.1. Corporate Status................................................................................4
Section 2.2. Corporate Documents.............................................................................4
Section 2.3. Capital Structure...............................................................................4
Section 2.4. Authority.......................................................................................5
Section 2.5. Investments.....................................................................................5
Section 2.6. Financial Statements............................................................................6
Section 2.7. Compliance with Applicable Laws.................................................................7
Section 2.8. Litigation......................................................................................7
Section 2.9. Properties......................................................................................7
Section 2.10. Contracts.......................................................................................9
Section 2.11. Taxes..........................................................................................10
Section 2.12. Benefit Plans..................................................................................11
Section 2.13. Absence of Certain Changes or Events...........................................................13
Section 2.14. Officers, Directors and Key Employees..........................................................14
Section 2.15. Potential Conflicts of Interest................................................................14
Section 2.16. Finder's Fees..................................................................................14
Section 2.17. Environmental Matters..........................................................................15
Section 2.18. Insurance......................................................................................16
Section 2.19. Employee Relations.............................................................................17
Section 2.20. Proprietary Rights.............................................................................17
Section 2.21. Certain Loans..................................................................................19
Section 2.22. Customers, Suppliers, Sales Agents and Distributors............................................19
Section 2.23. Business Activity Restrictions.................................................................19
ARTICLE 3. REPRESENTATIONS AND WARRANTIES
OF EQUIPE AND FOUNDERS REGARDING THE RELATED COMPANIES
Section 3.1. Corporate Status...............................................................................19
Section 3.2. Corporate Documents............................................................................19
Section 3.3. Capital Structure..............................................................................20
Section 3.4. Authority; Noncontravention....................................................................20
Section 3.5. Investments....................................................................................20
Section 3.6. Related Company Financial Statements...........................................................21
(i)
ARTICLE 4. ADDITIONAL REPRESENTATIONS AND WARRANTIES OF THE FOUNDERS
Section 4.1. Ownership of Equipe Common.....................................................................21
Section 4.2. Authority......................................................................................21
Section 4.3. Investment in PRI Common.......................................................................21
Section 4.4. Government Consents............................................................................22
Section 4.5. Finder's Fees..................................................................................23
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF PRI AND ACQUISITION CORP.
Section 5.1. Corporate Status...............................................................................23
Section 5.2. Capital Structure..............................................................................23
Section 5.3. Authority......................................................................................23
Section 5.4. SEC Documents..................................................................................25
Section 5.5. Absence of Certain Events and Undisclosed Liabilities..........................................25
Section 5.6. Litigation.....................................................................................25
Section 5.7. Compliance with Applicable Laws................................................................26
Section 5.8. Taxes..........................................................................................26
Section 5.9. Proprietary Rights.............................................................................26
Section 5.10. Finder's Fees..................................................................................26
ARTICLE 6. COVENANTS OF EQUIPE AS TO CONDUCT OF BUSINESS
Section 6.1. Ordinary Course................................................................................27
Section 6.2. Corporate Documents............................................................................27
Section 6.3. Capital Structure..............................................................................27
Section 6.4. Compliance with Applicable Laws................................................................27
Section 6.5. Investments and Acquisitions...................................................................27
Section 6.6. Indebtedness...................................................................................27
Section 6.7. Litigation.....................................................................................28
Section 6.8. Properties.....................................................................................28
Section 6.9. Contracts......................................................................................28
Section 6.10. Taxes..........................................................................................28
Section 6.11. Benefit Plans..................................................................................28
Section 6.12. Insurance......................................................................................28
Section 6.13. Employee Matters...............................................................................28
Section 6.14. Proprietary Rights.............................................................................28
Section 6.15. General........................................................................................28
ARTICLE 7. COVENANTS OF PRI AS TO CONDUCT OF BUSINESS
Section 7.1. Ordinary Course................................................................................29
Section 7.2. Corporate Documents............................................................................29
Section 7.3. Capital Structure..............................................................................29
Section 7.4. Compliance with Applicable Laws................................................................29
Section 7.5. Investments and Acquisitions...................................................................29
Section 7.6. General........................................................................................29
(ii)
ARTICLE 8. ADDITIONAL COVENANTS
Section 8.1. Proxy Statement................................................................................29
Section 8.2. PRI Stockholders' Meeting......................................................................29
Section 8.3. Related Company Acquisitions...................................................................30
Section 8.4. Access to Information..........................................................................30
Section 8.5. Confidentiality................................................................................30
Section 8.6. Public Disclosure..............................................................................31
Section 8.7. Exclusivity....................................................................................31
Section 8.8. Securities Laws................................................................................31
Section 8.9. Option Assumption; S-8 Registration Statement..................................................31
Section 8.10. State Statutes.................................................................................31
Section 8.11. Pooling Accounting.............................................................................31
Section 8.12. Expenses.......................................................................................31
Section 8.13. Consents; Further Assurances...................................................................31
Section 8.14. Updates of Schedules...........................................................................32
Section 8.15. Nomination of Director.........................................................................32
Section 8.16. Indemnification of Equipe Officers and Directors...............................................32
Section 8.17. Employee Matters...............................................................................33
Section 8.18. Obligations of Acquisition Corp................................................................33
Section 8.19. Affiliate's Agreements.........................................................................33
ARTICLE 9. CONDITIONS PRECEDENT
Section 9.1. Conditions to Each Party's Obligations.........................................................33
Section 9.2. Conditions to Obligations of PRI and Acquisition Corp..........................................34
Section 9.3. Conditions to Obligations of Equipe and Founders...............................................36
ARTICLE 10. INDEMNIFICATION
Section 10.1. Agreement to Indemnify.........................................................................36
Section 10.2. Appointment of Stockholders' Representative....................................................37
Section 10.3. Survival of Representations and Warranties.....................................................37
Section 10.4. Certain Limitations............................................................................37
ARTICLE 11. TERMINATION, AMENDMENT AND WAIVER
Section 11.1. Termination....................................................................................38
Section 11.2. Effect of Termination..........................................................................38
Section 11.3. Amendment......................................................................................39
Section 11.4. Extension; Waiver..............................................................................39
ARTICLE 12. MISCELLANEOUS
Section 12.1. Arbitration....................................................................................39
Section 12.2. Notices........................................................................................40
Section 12.3. Construction...................................................................................41
Section 12.4. Exhibits and Schedules.........................................................................41
Section 12.5. Entire Agreement, Assignability, etc...........................................................41
Section 12.6. Validity.......................................................................................41
(iii)
Section 12.7. Further Assurances.............................................................................41
Section 12.8. Jurisdiction and Venue.........................................................................41
Section 12.9. Governing Law..................................................................................41
Section 12.10. Counterparts...................................................................................41
EXHIBITS
Exhibit A-1. E-Machine Purchase Agreement
Exhibit A-2. Equipe Japan Purchase Agreement
Exhibit B-1. Form of PRI Affiliate's Agreement
Exhibit B-2. Form of Equipe Affiliate's Agreement
Exhibit C. Form of Employment Agreement
Exhibit D. Form of Registration Rights Agreement
Exhibit E. Form of Irrevocable Proxy
Exhibit F. Form of Opinion of Counsel for Equipe and the Founders
Exhibit G. Form of Opinion of Counsel for PRI and Acquisition Corp.
(iv)
THIS AGREEMENT AND PLAN OF REORGANIZATION dated as of October 25, 1997
(this "Agreement") is entered into among PRI Automation, Inc., a Massachusetts
corporation ("PRI"), E-Acquisition Corp., a California corporation and wholly
owned subsidiary of PRI ("Acquisition Corp."), Equipe Technologies, Inc., a
California corporation ("Equipe"), and each of Xxxxx Xxxxxxx, Xxxxxxxxx Xxxxxx,
Xxxx Xxxxx, Xxxxxxx Xxxxxxx and Xxxxxx The (each a "Founder" and collectively
the "Founders").
RECITALS
Each of the Founders is the record holder of the number of issued and
outstanding shares of common stock of Equipe ("Equipe Common") set forth on
Schedule 2.3 to this Agreement.
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Simultaneously with entering into this Agreement, PRI, the Founders and
the holders of the capital stock of the Related Companies (as defined below)
have entered into share purchase agreements (collectively, the "Related Company
Acquisition Agreements") in the forms attached hereto as Exhibit A-1 and Exhibit
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A-2 relating to the purchase by PRI (collectively, the "Related Company
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Acquisitions") of all of the outstanding capital stock of E-Machine, Inc.
("E-Machine") and Equipe Japan Corporation ("Equipe Japan"). (E-Machine and
Equipe Japan are sometimes referred to herein as the "Related Companies.")
The parties hereto desire to effect a reorganization in which Acquisition
Corp. shall be merged into Equipe, with (a) the surviving corporation to be a
wholly owned subsidiary of PRI, (b) all of the issued and outstanding shares of
Equipe Common to be converted into shares of common stock, $.01 par value, of
PRI ("PRI Common") and (c) all of the outstanding options to purchase Equipe
Common (the "Equipe Options") to become exercisable (if and when vested) to
acquire shares of PRI Common, all upon the terms and conditions set herein.
NOW, THEREFORE, PRI, Acquisition Corp., Equipe and the Founders hereby
agree as follows:
ARTICLE 1. THE MERGER
Section 1.1. Officers' Certificates. Subject to and upon the terms and
conditions of this Agreement, and on the basis of the agreements, covenants,
representations and warranties herein contained, at the closing of the
transactions contemplated by this Agreement (the "Closing") authorized officers
of each of Equipe and Acquisition Corp. shall execute the officers' certificates
(the "Officers' Certificates") required by Section 1103 of the California
General Corporation Law in connection with the statutory merger of Acquisition
Corp. with and into Equipe (the "Merger").
Section 1.2. Closing Date. The Closing shall be held within five (5) days
following the satisfaction of each of the conditions set forth in Article 9 and
shall take place at the xxxxxx xx Xxxxx, Xxxx & Xxxxx XXX, Xxxxxx,
Xxxxxxxxxxxxx, at 9 A.M., Pacific time, or on such other date, or at such other
time and place, as the parties may agree upon in writing. The date on which the
Closing is to be held is herein referred to as the "Closing Date."
Section 1.3. Effective Time. Subject to the provisions of this
Agreement, as soon as practicable on or after the Closing Date, a certificate of
satisfaction of the California Franchise Tax Board relating to Acquisition Corp.
(the "Certificate of Satisfaction"), a copy of this Agreement (or a merger
agreement as contemplated by Section 1101 of the California General Corporation
Law) and the executed original Officers' Certificates shall be filed in
accordance with the California General Corporation Law. The
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Merger shall become effective as of the time (the "Effective Time") and on such
date (the "Effective Date") as the latest of such filings has been made
(provided that all such filings are subsequently accepted in due course by the
Secretary of State of the State of California). Under this Agreement, shares of
Equipe Common issued and outstanding immediately prior to the Effective Time
will be converted into fully paid and nonassessable shares of PRI Common, in
accordance with Section 1.4.
Section 1.4. Effect on Capital Stock. At the Effective Time, by virtue of
the Merger and without any action on the part of any party:
1.4.1. All of the 1,000 issued and outstanding shares of common
stock of Acquisition Corp. shall be converted into an aggregate of 1,000
shares of common stock of the Surviving Corporation (as defined in Section
1.6). Each stock certificate representing shares of common stock of
Acquisition Corp. prior to the Effective Time shall represent an equal
number of shares of common stock of the Surviving Corporation from and
after the Effective Time.
1.4.2. Each share of Equipe Common issued and outstanding
immediately prior to the Effective Time shall be converted, subject to the
indemnification provisions of Article 10, into the right to receive the
consideration set forth below. Subject to the terms and conditions of this
Agreement, as of the Effective Time, by virtue of the Merger and without
any action on the part of Acquisition Corp., Equipe or the holder of any
shares of the capital stock of Equipe, the following shall occur:
(a) Each holder of record of Equipe Common issued and
outstanding immediately prior to the Effective Time (each a
"Holder") shall receive a number of shares of PRI Common equal to
the product of the number of shares of such Equipe Common held of
record by such Holder immediately prior to the Effective Time
multiplied by 0.760372 (the "Merger Ratio").
(b) Each outstanding Equipe Option will be assumed by PRI as
of the Effective Time and shall thereafter entitle its holder, upon
exercise of such Equipe Option (if and when vested) following the
Effective Time, to receive that number of shares of PRI Common equal
to the product of the number of shares of Equipe Common that were
issuable upon exercise of such Equipe Option immediately prior to
the Effective Time (without regard to vesting) multiplied by the
Merger Ratio, rounded up to the nearest whole number of shares of
PRI Common. In addition, following the Effective Time, the per share
exercise price for the PRI Common issuable upon exercise of each
Equipe Option shall be equal to the quotient, rounded down to the
nearest whole cent, of the exercise price per share of Equipe Common
at which such Equipe Option was exercisable immediately prior to the
Effective Time divided by the Merger Ratio. Following the Effective
Time, each assumed Equipe Option shall continue to have, and be
subject to, the same terms and conditions as provided in the option
agreement governing such Equipe Option immediately prior to the
Effective Time, except as set forth in this Section.
1.4.3. No fractional shares of PRI Common shall be issuable in
connection with the Merger, but in lieu thereof each Holder who would
otherwise be entitled to a fraction of a share of PRI Common shall receive
from PRI an amount of cash (rounded to the nearest whole cent) equal to
the product of (i) the fraction and (ii) the average of the last reported
sale price of the PRI Common on the Nasdaq National Market on each of the
twenty consecutive trading days immediately preceding the Effective Time
(the "Average Price").
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1.4.4. If, between the date of this Agreement and the Effective
Time, the outstanding shares of PRI Common shall have been changed into a
different number of shares or a different class by reason of any
reclassification, recapitalization, split up, combination, exchange of
shares or readjustment, the Merger Ratio shall be correspondingly
adjusted.
Section 1.5. Exchange of Equipe Certificates. PRI hereby appoints Xxxxx,
Xxxx & Xxxxx LLP to act as exchange agent (the "Exchange Agent") in the Merger,
to act in accordance with the terms hereof and with such other instructions as
PRI may provide from time to time at or prior to the Closing. At the Closing,
the Holders shall surrender to the Exchange Agent certificates (the "Equipe
Certificates") representing all of the outstanding shares of Equipe Common and
the Exchange Agent shall deliver to each of the Holders certificates
representing the shares of PRI Common issuable pursuant to Section 1.4 in
exchange for shares represented by the Equipe Certificates and cash in lieu of
fractional shares pursuant to Section 1.4.3. Upon the delivery of such
certificates, the Equipe Certificates shall forthwith be canceled. The shares of
PRI Common delivered to the Holders pursuant to this Section 1.5 shall be deemed
to have been delivered in full satisfaction of all rights pertaining to the
ownership of the shares represented by the Equipe Certificates.
Section 1.6. Other Effects. At the Effective Time:
(a) the separate existence of Acquisition Corp. shall cease and
Acquisition Corp. shall be merged with and into Equipe, with
Equipe remaining as the surviving corporation (the "Surviving
Corporation");
(b) the bylaws of Acquisition Corp. shall be the bylaws of the
Surviving Corporation;
(c) the articles of incorporation of Acquisition Corp., as in
effect immediately prior to the Effective Time, shall be the
articles of incorporation of the Surviving Corporation until
the same shall be amended thereafter in accordance with the
California General Corporation Law and such articles of
incorporation; provided, however, that Article First of the
articles of incorporation of the Surviving Corporation shall
be amended to read as follows: "The name of the corporation is
Equipe Technologies, Inc.";
(d) the directors and officers of Acquisition Corp. shall be the
directors and officers of the Surviving Corporation; and
(e) the Merger shall, from and after the Effective Time, have all
of the effects provided by applicable law, including, without
limitation, the effects provided for in Section 1107 of the
California General Corporation Law.
Section 1.7. Accounting and Tax Treatment. The parties intend that the
Merger shall be treated as a pooling of interests for accounting purposes and as
a reorganization under Section 368(a)(2)(E) of the Internal Revenue Code of
1986, as amended (the "Code").
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ARTICLE 2. REPRESENTATIONS AND WARRANTIES OF EQUIPE AND FOUNDERS
Except as set forth in the disclosure schedule dated as of the date of
this Agreement delivered to PRI by Equipe (the "Disclosure Schedule"), Equipe
and each of the Founders, jointly and severally, represent and warrant to PRI
and Acquisition Corp. as follows (except where the context expressly precludes
such reference, references to "Equipe" in the following representations and
warranties shall be deemed to include Equipe and the Related Companies, and the
assets, liabilities, operations and business of each of them, on a combined
basis):
Section 2.1. Corporate Status. Equipe is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of California,
with all requisite corporate power to own, lease and operate its properties and
to carry on its business as now being conducted. Equipe is duly qualified to do
business as a foreign corporation, and is in good standing, in each other
jurisdiction in which it owns or leases property or conducts business, except
where the failure to be so qualified does not have any effect that is, or is
reasonably likely to be, materially adverse to its results of operations or
financial condition, including the Related Companies, on a combined basis, other
than such effects resulting from (i) general economic changes affecting the
semiconductor capital equipment industry in general or (ii) this Agreement or
the transactions contemplated hereby or the announcement hereof (an "Equipe
Material Adverse Effect").
Section 2.2. Corporate Documents. Equipe has delivered to PRI true and
complete copies of its articles of incorporation, as amended to date (the
"Equipe Charter"), and its bylaws, as amended to date (the "Equipe Bylaws"). The
Equipe Charter and the Equipe Bylaws are in full force and effect, and, except
as contemplated hereby, no further amendment or restatement thereof has been
adopted or proposed. Equipe is not in violation of any provision of the Equipe
Charter or the Equipe Bylaws. The minute books and stock records of Equipe,
copies of which have heretofore been delivered to PRI, are true and complete and
are the only minute books and stock records of Equipe as of the date hereof.
Schedule 2.2 sets forth the current directors and officers of Equipe.
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Section 2.3. Capital Structure. The authorized capital stock of Equipe
consists of (a) 10,000,000 shares of Equipe Common, of which 5,376,344 shares
are outstanding as of the date hereof and (b) 1,000,000 shares of preferred
stock, none of which are outstanding. No shares of Equipe Common are held as
treasury stock. All shares of Equipe Common issued and outstanding as of the
date hereof are duly authorized, validly issued, fully paid and nonassessable
and not subject to preemptive rights created by statute, the Equipe Charter, the
Equipe Bylaws or any agreement to which Equipe is a party or is bound. The name
of each holder of an Equipe Option, the grant date of each Equipe Option, and
the number of shares of Equipe Common for which each Equipe Option is
exercisable are set forth on Schedule 2.3. The terms of the Equipe Options are
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reflected in written option agreements, true and complete copies of which have
been delivered to PRI. Equipe has not accelerated the vesting schedule or
otherwise modified the terms of any of the Equipe Options. Equipe has not
issued, nor is Equipe or any stockholder of Equipe a party to or bound by: (a)
any option, warrant, call, right or agreement, other than the Equipe Options,
obligating Equipe to issue, deliver or sell additional shares of capital stock
of Equipe or to grant or modify any such option, warrant, call, right or
agreement; (b) any option, warrant, call, right or agreement obligating any such
stockholder of Equipe, in any circumstances, to deliver or sell, or offer for
delivery or sale, any shares of the capital stock of Equipe or obligating any
such stockholder to grant or modify any such option, warrant, call, right or
agreement, including any agreement containing provisions with respect to
preemptive rights, rights of first refusal, purchase rights, "tag-along" or
"come-along" arrangements, or similar rights; (c) any voting trust, proxy or
other agreement or understanding with respect to the voting of shares of capital
stock of Equipe; and (d) any other agreement restricting the transfer of, or
affecting rights with respect to, shares of the capital stock of Equipe.
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Section 2.4. Authority.
2.4.1. Equipe has all requisite corporate power to execute and
deliver this Agreement and each of the Employment Agreements and to cause
its officers to execute and deliver the Officers' Certificate of Equipe
(each as defined herein and collectively the "Equipe Corollary
Agreements") and to consummate the transactions contemplated hereby and
thereby. The execution and delivery of this Agreement and the Equipe
Corollary Agreements, and the consummation of the transactions
contemplated hereby and thereby, have been duly and validly authorized by
all requisite corporate action on the part of Equipe no other corporate
proceedings on the part of Equipe are necessary to authorize the execution
and delivery of this Agreement or any of the Equipe Corollary Agreements
or to consummate the transactions contemplated hereby and thereby. This
Agreement has been duly and validly executed and delivered by Equipe and,
assuming the due and valid execution and delivery of this Agreement by the
other parties hereto, constitutes a legal, valid and binding obligation of
Equipe enforceable in accordance with its terms, all as may be subject to
or affected by any bankruptcy, reorganization, insolvency, moratorium or
similar laws of general application from time to time in effect and
relating to or affecting the rights or remedies of creditors generally
(the "Creditor Exception"). As of the Closing Date, each of the Equipe
Corollary Agreements will be duly and validly executed and delivered by
Equipe and will constitute a legal, valid and binding obligation of Equipe
enforceable in accordance with its terms, all as may be subject to or
affected by the Creditor Exception.
2.4.2. The execution and delivery of this Agreement do not, and the
execution and delivery of the Equipe Corollary Agreements and the
consummation of the transactions contemplated hereby and thereby will not,
result in any Violation (as defined below) of any provision of the Equipe
Charter, the Equipe Bylaws, any Contract (as defined in Section 2.10),
including any loan or credit agreement, note, mortgage, indenture, lease
or employee benefit plan, any of the Permits (as defined in Section 2.7),
or any judgment, order, decree, statute, law, ordinance, rule or
regulation of any Governmental Entity (as defined below) applicable to
Equipe or its properties or assets, other than Violations that do not and
will not, individually or in the aggregate, have an Equipe Material
Adverse Effect. Equipe does not have any plans, programs or agreements to
which it is a party or subject pursuant to which payments may be required
or acceleration of benefits may be required upon a change of control of
Equipe. No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity is required by or with
respect to Equipe in connection with the execution and delivery of this
Agreement or any of the Equipe Corollary Agreements or the consummation of
the transactions contemplated hereby and thereby, other than pursuant to
the HSR Act (as hereinafter defined) and except for the filing of the
Certificate of Satisfaction, a copy of this Agreement and the executed
original Officers' Certificates with the Secretary of State of the State
of California. As used herein: "Violation" means, with respect to a
provision, (A) any conflict with, violation of or default (with or without
notice or lapse of time, or both) under such provision, (B) the arising of
any right of termination, cancellation or acceleration of any obligation,
or loss of any material benefit, under such provision, or (C) the arising
of any lien, pledge, claim, charge, security interest, mortgage, easement,
servitude, refusal, claim of infringement, condition or other restriction
or encumbrance of any kind, including any restriction on use, voting (in
the case of any security), transfer, receipt of income or exercise of any
other attribute of ownership on assets; and "Governmental Entity" means
any domestic or foreign court, administrative agency or commission, or
other governmental authority or instrumentality.
Section 2.5. Investments. Equipe does not directly or indirectly own,
or have the right to acquire, any equity interest or investment in the equity
capital of any Person (as defined below). Equipe
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has no obligation to acquire any class of securities (including debt securities)
issued by any Person. Equipe has not owned or controlled any subsidiary
corporation or any stock or other interest in any Person and is not a party to,
and has not been a party to, or bound by any partnership, joint venture,
voluntary association, cooperative or business trust agreement or arrangement
other than in the ordinary course of business. Equipe has delivered to PRI true
and complete copies of any such agreements or arrangements that were entered
into in the ordinary course of business and any provision of which is currently
in effect. As used herein, "Person" means any individual, corporation,
partnership, firm, joint venture, association, joint-stock company, trust,
unincorporated organization, Governmental Entity or any other entity.
Section 2.6. Financial Statements.
2.6.1. The audited balance sheets of Equipe at each of December 31,
1994, 1995 and 1996 and the related audited statements of operations,
changes in stockholders' equity and cash flows for the years then ended
(including the notes thereto), and the unaudited balance sheets of Equipe
at June 30, 1996 and 1997 and the related unaudited statements of
operations, changes in stockholders' equity and cash flows for the
six-month period then ended (including the notes thereto), as provided by
Equipe to PRI, have been prepared in accordance with generally accepted
accounting principles ("GAAP"), applied on a consistent basis throughout
the periods involved (except that the unaudited financial statements do
not contain all the notes that may be required by GAAP and were or are
subject to normal and recurring year-end adjustments that were not or are
not expected to be material in amount), and fairly present in all material
respects the financial position of Equipe as at the dates thereof and the
results of its operations and its cash flows for the periods then ended.
As used herein, "Financial Statements" means all of such financial
statements and notes collectively, "1997 Balance Sheet" means the
unaudited balance sheet of Equipe at June 30, 1997, and "1997 Financial
Statements" means the 1997 Balance Sheet and the related unaudited
financial statements of Equipe for the six months ended June 30, 1997
(including the notes thereto). The books of account of Equipe have been
prepared and maintained in accordance with Equipe's normal practice,
consistent in all material respects with the accounting principles and
policies reflected in the Financial Statements.
2.6.2. All accounts receivable reflected on the 1997 Balance Sheet
and Equipe's books and records as of the date hereof represent sales
actually made in the ordinary course of business and in a manner
consistent with Equipe's regular credit practices. The reserve for
doubtful accounts reflected on the 1997 Balance Sheet was established
based upon and consistent with past practice.
2.6.3. Equipe has no liabilities, asserted liabilities or
obligations of any nature, whether absolute, accrued, contingent or
otherwise, other than (a) those disclosed or reflected on the 1997
Financial Statements or disclosed in accordance with this Agreement
(including any Schedule hereto), (b) those incurred since June 30, 1997 in
the ordinary course of Equipe's business consistent with past practice,
and (c) liabilities or obligations that are not material, individually or
in the aggregate, or that are not required under GAAP to be disclosed or
reflected on the 1997 Financial Statements.
2.6.4. Equipe does not have any outstanding Indebtedness (as defined
below) for borrowed money or any other Indebtedness, other than
Indebtedness reflected or reserved against in the 1997 Balance Sheet,
accounts payable incurred since June 30, 1997 in the ordinary course of
business consistent with past practice, and Indebtedness disclosed in
accordance with this Agreement (including any Schedule hereto). For
purposes of this Agreement, "Indebtedness"
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means (a) all items (except items of capital stock, stockholders' equity,
surplus or retained earnings, and general contingency reserves) that in
accordance with GAAP would be included in determining total liabilities of
Equipe as at the date as of which Indebtedness is to be determined, (b)
indebtedness secured by any mortgage, pledge, lien, security interest or
conditional sale or other title retention agreement to which any property
or asset owned or held by Equipe is subject, whether or not the
indebtedness secured thereby shall have been assumed, and (c) indebtedness
of others which Equipe has directly or indirectly guaranteed, endorsed
(otherwise than for collection or deposit in the ordinary course of
business), sold or discounted with recourse or (contingently or otherwise)
to purchase or repurchase or otherwise acquire, or in respect of which
Equipe has agreed to supply or advance funds (whether by way of loan,
stock purchase, capital contribution or otherwise) or otherwise become
directly or indirectly liable.
Section 2.7. Compliance with Applicable Laws. Equipe holds all permits,
licenses, variances, certificates of occupancy, exemptions, orders, approvals
and authorizations of all Governmental Entities that are material to the
operation of its business (the "Permits"). All of the Permits are in full force
and effect, and Equipe has delivered to PRI true and complete copies of all of
the Permits. Equipe is in compliance with the terms of the Permits, except where
any such failure so to comply, individually or in the aggregate with any other
such failures, would not have an Equipe Material Adverse Effect. Equipe has not
received notice from any Governmental Entity that it is in Violation of any
Permit, and no proceeding is pending, or, to the knowledge of Equipe or any
Founder, threatened, to revoke, suspend, cancel or limit any of the Permits. No
action by Equipe, PRI, the Surviving Corporation or any other party is required
in order that all of the Permits will remain in full force and effect following
the Merger. The business of Equipe is not being conducted in violation of or
conflict with any law, ordinance or regulation or any order, judgment,
injunction, award or decree of any Governmental Entity (except for Environmental
Laws, which are the subject of Section 2.17) (collectively "Laws"), except such
violations or conflicts as do not and will not, individually or in the
aggregate, have an Equipe Material Adverse Effect. As of the date of this
Agreement, no investigation or review by any Governmental Entity with respect to
Equipe is pending or, to the knowledge of Equipe or any Founder, threatened,
and, to the knowledge of Equipe and each Founder, the continued use, occupancy
and operation of the Leased Real Property (as defined in Section 2.9.2) as
currently used, occupied and operated does not constitute a nonconforming use
under any Law.
Section 2.8. Litigation. Except as set forth on Schedule 2.8, there is no
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claim, dispute, action, suit, appeal, legal, administrative or arbitral
proceeding, or investigation, at law or in equity, pending against Equipe, or
involving any of its assets or properties, or in respect of which Equipe has
agreed to indemnify or defend any other Person, before any court, agency,
authority, arbitration panel or other tribunal, and, to the knowledge of Equipe
and each Founder, none has been threatened. Equipe is not subject to any
subpoena, warrant, order, writ, injunction or decree of any court, agency,
authority, arbitration panel or other tribunal, nor is it in default with
respect to any such subpoena, warrant, order, writ, injunction or decree. No
judgment has been entered by, and no claim, dispute, action, suit, appeal,
legal, administrative or arbitral proceeding, or investigation, at law or in
equity, is pending or, to the knowledge of Equipe or any Founder, threatened,
that materially and adversely affects, or could materially and adversely affect,
the ability of Equipe to perform under this Agreement or that seeks to enjoin or
prohibit any of the transactions contemplated by this Agreement.
Section 2.9. Properties.
2.9.1. Owned Properties. Equipe does not own and has never owned any
real property.
7
2.9.2. Leased Properties. Equipe has delivered to PRI true and
complete copies of all leases, subleases, licenses, revocable use permits
and other agreements (collectively, the "Real Property Leases") under
which Equipe uses or occupies any real property (the land and improvements
covered by the Real Property Leases being herein called the "Leased Real
Property"), which Real Property Leases involve aggregate payments by
Equipe of $100,000 or more per year. Each Real Property Lease is valid,
binding and in full force and effect, no written notice of default or
termination thereunder is outstanding with respect to any Real Property
Lease, all rent and other material sums due and payable by Equipe under
each Real Property Lease are current, neither Equipe nor, to the knowledge
of Equipe, the lessor, is in default in any material respect in its
obligations under any Real Property Lease, and no event has occurred nor
condition exists which, with the giving of notice or the lapse of time or
both, would constitute a material default under any Real Property Lease.
Equipe holds the leasehold estate under and interest in each Real Property
Lease free and clear of all liens, claims, charges and encumbrances
(together, "Encumbrances") except for (a) Encumbrances reflected in the
1997 Financial Statements with respect to which no default (or event that,
with notice or lapse of time or both, would constitute a default) exists,
(b) Encumbrances securing taxes, assessments, governmental charges or
levies, or the claims of materialmen, carriers, landlords and like
persons, all of which are not yet due and payable, (c) restrictions on use
contained in Real Property Leases that do not restrict the property
subject thereto from being used as such property is currently used or (d)
imperfections of title and other minor Encumbrances that do not materially
detract from the value or impair the use of the asset subject thereto or
impair the operations of Equipe (collectively, the Encumbrances described
in clauses (a), (b), (c) and (d) shall be referred to as "Permitted
Encumbrances"). Neither Equipe nor any of its officers, directors or
stockholders has any ownership, financial or other interest in the
landlord under any Real Property Lease.
2.9.3. Entire Premises. All of the land, buildings, structures and
other improvements used by Equipe in the conduct of Equipe's business (the
"Improvements") are included in the Leased Real Property. To the knowledge
of Equipe and each Founder, Equipe has taken no action and has suffered no
action to occur that would materially adversely affect the interest of
Equipe in the Leased Real Property. Equipe does not own or hold, and is
not obligated under or a party to, any option, right of first refusal or
other contractual right to purchase, acquire, sell or dispose of the
Leased Real Property or any portion thereof or interest therein.
2.9.4. Personal Property. Equipe has good and marketable title to,
or holds under valid leasehold estates, all personal property necessary
for the operation of Equipe's business, free and clear of any imperfection
of title or Encumbrance, other than Permitted Encumbrances and
imperfections and Encumbrances that, individually or in the aggregate,
would not have an Equipe Material Adverse Effect.
2.9.5. Condition of Property. The Leased Real Property and all
personal property owned or leased by Equipe and necessary for the
operation of Equipe's business are in good operating condition and repair
in all material respects, ordinary wear and tear excepted.
2.9.6. Condemnation. To the knowledge of Equipe and each Founder,
there is no threatened condemnation proceeding affecting the Leased Real
Property or any part thereof or any sale or other disposition of the
Leased Real Property or any part thereof in lieu of condemnation.
2.9.7. Space Leases. Equipe has not entered into any lease,
sublease, license or other agreement granting to any person other than
Equipe any right to the possession, use, occupancy or enjoyment of the
Leased Real Property or any portion thereof.
8
Section 2.10. Contracts. Set forth on Schedule 2.10 is a list of the
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following written agreements, contracts, instruments, guaranties, or commitments
to which Equipe or either of the Related Companies is a party or by which or to
which any of such company's assets or properties are bound or subject
("Contracts"), true and complete copies of which have been provided to PRI:
(a) Contracts with any current or former officer, director, employee,
consultant, agent, representative or security holder, including any
employment, consulting or deferred compensation agreement and any
executive compensation, bonus or incentive plan agreement;
(b) Contracts for the purchase, sale or lease of materials, supplies,
equipment, goods, research and development, or capital assets, or
the receipt of services, the performance of which will extend over a
period of more than one year or involve consideration in excess of
$100,000;
(c) Contracts currently in effect that were entered into in the ordinary
course of business and that involve payment of consideration to or
by Equipe in excess of $100,000;
(d) Contracts for the sale of any assets or properties of Equipe other
than in the ordinary course of business or for the grant to any
Person of any preferential rights to purchase any assets or
properties of Equipe;
(e) Contracts establishing joint ventures or partnerships;
(f) Contracts establishing franchise, distribution or sales agency
arrangements;
(g) Contracts under which Equipe agrees to indemnify any party other
than Contracts entered into in the ordinary course of business;
(h) Contracts containing obligations or liabilities of any kind to
holders of the capital stock of Equipe as such;
(i) Contracts relating to the acquisition by Equipe of any operating
business or any capital stock of any other Person (including,
without limitation, either of the Related Companies);
(j) Contracts containing options for the purchase of any asset tangible
or intangible, for an aggregate purchase price of more than
$100,000;
(k) Contracts requiring the payment to any person of any override or
similar commission or fee;
(l) Contracts for the borrowing of money;
(m) Contracts calling for an aggregate purchase price or payments by
Equipe in any one year of more than $100,000 in any one case (or in
the aggregate, in the case of any related series of Contracts); and
(n) any other Contracts that were not made in the ordinary course of
business and that are, individually or in the aggregate, material to
Equipe.
With respect to each Contract referred to above:
9
(1) the Contract is legal, valid and binding, is enforceable in
accordance with its terms, and is in full force and effect;
(2) the Contract will continue to be legal, valid and binding,
enforceable in accordance with its terms, and in full force and
effect on identical terms following the Merger;
(3) neither Equipe nor, to the knowledge of Equipe or any Founder, any
other party to the Contract is in material breach or default, and no
event has occurred which with notice or lapse of time would
constitute a material breach or default by Equipe, or, to the
knowledge of Equipe or any Founder, by any other party, or permit
termination, modification or acceleration under the Contract; and
(4) neither Equipe nor, to the knowledge of Equipe or any Founder, any
other party to the Contract has repudiated any material provision of
the Contract;
provided that the foregoing representations and warranties are qualified by the
Creditor Exception, and assume (x) the due and valid execution and delivery by
or on behalf of each of the other parties thereto, (y) that each of such other
parties had the power to enter into and perform its obligations thereunder and
(z) that the Contracts constitute the legal, valid, binding and enforceable
obligation of each such other party.
Section 2.11. Taxes.
2.11.1. Equipe and each of the Related Companies has timely filed in
accordance with applicable law all Tax Returns (as defined below) they
were required to file, and the Founders individually have filed in
accordance with applicable law all Tax Returns they were required to file
with respect to the operations and assets of Equipe and each of the
Related Companies. All Taxes (as defined below) shown as due on such Tax
Returns have been paid. All Tax Returns filed by Equipe, the Related
Companies and the Founders with respect to Taxes were prepared in
compliance with all applicable laws and regulations and were true and
complete in all material respects as of the date on which they were filed
or as subsequently amended to the date hereof. Equipe has delivered to PRI
true and complete copies of federal, state, local and foreign Tax Returns
and the related Form K-1's of Equipe, the Related Companies and the
Founders for each of the years ended December 31, 1996, 1995 and 1994 and
all revenue agent's reports and other written assertions of deficiencies
or other liabilities for Taxes with respect to past periods for which the
applicable statute of limitations has not expired. None of such Tax
Returns is or has been subject to audit. Equipe will provide to PRI copies
of any such reports or written assertions received after the date hereof
within ten days of their first being received by Equipe.
2.11.2. Equipe and each Related Company has timely paid, or will
timely pay on or prior to the Closing Date, all Taxes for which a notice
of, or assessment or demand for, payment has been received or which are
otherwise due and payable up to and including the Closing Date with
respect to Equipe, its operations and assets (in each case, whether or not
shown on any Tax Return), except for Taxes that are being contested in
good faith by appropriate proceedings (all of which are set forth on
Schedule 2.11) and Taxes for which adequate reserves are reflected on the
-------------
1997 Balance Sheet.
2.11.3. Equipe and each Related Company has complied with all
applicable laws, rules and regulations relating to the withholding of
Taxes and has timely collected or withheld and paid over (and up to the
Closing Date will have timely collected or withheld and paid over) to the
proper
10
Governmental Entities all amounts required to be so collected or withheld
and paid over for all periods up to the Closing Date under all applicable
laws. There are not currently in effect any waivers or extensions of any
applicable statute of limitations for the assessment or collection of
Taxes with respect to any Tax Return that relates to Equipe or either of
the Related Companies, and no request for any such waiver or extension is
pending. There are no Tax rulings, requests for rulings or closing
agreements relating to Equipe that could affect its liability for Taxes
for any period after the Closing Date.
2.11.4. Neither Equipe nor either Related Company has any current or
potential contractual obligation to indemnify any other Person with
respect to Taxes, or any obligation to make distributions in respect of
Taxes. No claim has ever been made by a taxing authority in a jurisdiction
where Equipe does not file Tax Returns that Equipe is or may be subject to
taxation by such jurisdiction. No power of attorney has been granted by
Equipe with respect to any matter relating to Taxes, which power of
attorney is currently in force. Equipe has not filed a consent under Code
section 341(f) or any comparable provision of state law.
As used herein: "Taxes" means all taxes of any kind, charges, fees, customs,
duties, imposts, levies or other assessments, including all net income, gross
receipts, ad valorem, value added, transfer, gains, franchise, profits,
inventory, net worth, capital stock, asset, sales, use, license, estimated,
withholding, payroll, transaction, capital, employment, social security, workers
compensation, unemployment, excise, severance, stamp, occupation, and property
taxes, together with any interest and any penalties, additions to tax or
additional amounts, imposed by any taxing authority; and "Tax Return" means all
returns, declarations, reports, forms, estimates, information returns and
statements required to be filed in respect of any Taxes or to be supplied to a
taxing authority in connection with any Taxes.
Section 2.12. Benefit Plans.
2.12.1. Schedule 2.12 sets forth a true and complete list of all
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employee benefit plans (whether or not they constitute employee benefit
plans within the meaning of section 3(3) of Title IV of Employee
Retirement Income Security Act of 1974, as amended), arrangements,
policies or commitments (including any employment, consulting or deferred
compensation agreement, executive compensation, bonus, incentive, pension,
profit-sharing, savings, retirement, stock option, stock purchase or
severance pay plan, any life, health, disability or accident insurance
plan, or any holiday or vacation practice) as to which Equipe or any
Commonly Controlled Entity has any direct or indirect, actual or
contingent liability (each a "Benefit Plan"). Equipe has, with respect to
each Benefit Plan, delivered to PRI, where applicable, true and complete
copies of: (a) all plan texts and agreements and related trust agreements
or annuity contracts; (b) all summary plan descriptions and material
employee communications; (c) the most recent annual report (Form 5500
series, including all schedules thereto); (d) the most recent actuarial
valuation; (e) the most recent annual audited financial statement and
opinion; (f) if the plan is intended to qualify under Code section 401(a)
or 403(a), the most recent determination letter received from the Internal
Revenue Service (the "IRS"); and (g) all material communications with any
Governmental Entity, including the Pension Benefit Guaranty Corporation
(the "PBGC") and the IRS.
2.12.2. No Benefit Plan is subject to Title IV of Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or to Code
section 412 or is a defined benefit plan within the meaning of ERISA
section 3(35) or Code section 414(i). Equipe and any entity which is under
common control with Equipe within the meaning of Code section 414(b), (c),
(m) or (o) (a "Commonly Controlled Entity") has made all payments due from
it to date with respect to each Benefit Plan. All amounts properly accrued
as liabilities to or expenses of any Benefit Plan that
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have not been paid have been properly reflected on the 1997 Financial
Statements. Each Benefit Plan conforms to, and its administration is in
compliance with, all applicable laws and regulations except where the
failure to so conform or comply would not have an Equipe Material Adverse
Effect. There are no actions, liens, suits or claims pending or, to the
knowledge of Equipe, threatened (other than routine claims for benefits)
with respect to any Benefit Plan which would have an Equipe Material
Adverse Effect. Each Benefit Plan which is intended to qualify under Code
section 401(a) or 403(a) so qualifies except where the failure to so
qualify would not have an Equipe Material Adverse Effect. No event has
occurred, and there exists no condition or set of circumstances, that
presents a material risk of a partial termination (within the meaning of
Code section 411(d)(3)) of any Benefit Plan. Except as set forth on
Schedule 2.12, Equipe does not have any Benefit Plan that is a "group
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health plan" (as defined in ERISA section 607(1)). No assets of Equipe are
allocated to or held in a "rabbi trust" or similar funding vehicle. Equipe
does not have any Benefit Plan that is a welfare plan within the meaning
of ERISA section 3(1) (regardless of whether the plan is covered by ERISA)
and that provides benefits to current or former employees beyond their
retirement or other termination of service (other than coverage mandated
by COBRA, the cost of which is fully paid by the current or former
employee or his dependents); and there exists no (a) unfunded benefit
obligations with respect to any employee of Equipe which are not fairly
reflected by reserves shown on Equipe's most recent financial statements
or (b) reserves, assets, surpluses or prepaid premiums with respect to any
Benefit Plan that is a welfare plan within the meaning of ERISA section
3(1) (regardless of whether the plan is covered by ERISA).
2.12.3. The consummation of the transactions contemplated by this
Agreement will not (a) entitle any current or former individual employed
by Equipe or any Commonly Controlled Entity to severance pay, unemployment
compensation or any similar payment, (b) accelerate the time of payment or
vesting, or increase the amount of any compensation due to, any current or
former employed by Equipe or any Commonly Controlled Entity, (c)
constitute or involve a prohibited transaction (as defined in ERISA
section 406 or Code section 4975), constitute or involve a breach of
fiduciary responsibility within the meaning of ERISA section 502(1) or
otherwise violate Part 4 of Title I of ERISA or (d) result in the payment
of compensation that would, in combination with any other payment, result
in an "excess parachute payment" within the meaning of Code section
280G(b).
2.12.4. As of the Closing, neither Equipe nor any Commonly
Controlled Entity has incurred any liability or obligation under the
Worker Adjustment and Retraining Notification Act, as it may be amended
from time to time, and within the six-month period immediately following
the Closing, neither will incur any such liability or obligation if,
during such six-month period, only terminations of employment in the
normal course of operations occur.
2.12.5. With respect to the Benefit Plans, individually and in the
aggregate, no event has occurred, and to the knowledge of Equipe and each
Founder, there exists no condition or set of circumstances in connection
with which Equipe could be subject to any liability under ERISA, the Code
or any other applicable law that is reasonably likely to have an Equipe
Material Adverse Effect, other than any liability for benefits claims and
funding obligations payable in the ordinary course.
2.12.6. With respect to the Benefit Plans, there are no funded
benefit obligations for which contributions have not been made or properly
accrued and there are no unfunded benefit obligations that have not been
accounted for by reserves, or otherwise properly footnoted in accordance
with GAAP, on the 1997 Balance Sheet, except for obligations that are not,
individually and in the aggregate, reasonably likely to have an Equipe
Material Adverse Effect.
12
Section 2.13. Absence of Certain Changes or Events. Except as contemplated
by this Agreement, since June 30, 1997, Equipe has conducted its business only
in the ordinary course consistent with past practice. Without limiting the
generality of the foregoing, during such period:
(a) there has been no Equipe Material Adverse Effect;
(b) neither the business, properties nor assets of Equipe have suffered
a material adverse loss (whether or not covered by insurance) as the
result of fire, explosion, earthquake, accident, labor trouble,
condemnation or taking of property by any Governmental Entity,
flood, windstorm, pestilence, embargo, riot, act of God or the
public enemy or any other casualty or similar event;
(c) Equipe has not declared or paid any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in
respect of the capital stock of Equipe;
(d) Equipe has not purchased, redeemed or otherwise acquired (or
committed itself to purchase, redeem or acquire), directly or
indirectly, any shares of the capital stock of Equipe;
(e) Equipe has not made any acquisition of all or any part of the
assets, properties, capital stock or business of any other Person,
other than inventory, equipment and supplies acquired in the
ordinary course of business consistent with past practice;
(f) Equipe has not, except in the ordinary course of business consistent
with past practice, sold or otherwise disposed of any material
assets of Equipe;
(g) Equipe has not sold, assigned, transferred, conveyed or licensed, or
committed itself to sell, assign, transfer, convey or license, any
Proprietary Rights (as defined in Section 2.20), other than in the
ordinary course of business;
(h) Equipe has not waived or released any right or claim of material
value to its business, including any write-off or other compromise
of any material account receivable of Equipe;
(i) Equipe has not paid, directly or indirectly, any of its material
liabilities before the same became due in accordance with its terms
or otherwise than in the ordinary course of business consistent with
past practice;
(j) Equipe has not made any payment or commitment to pay any severance
or termination pay to any employee of Equipe;
(k) Equipe has not made any wage or salary increase or bonus, or
increase in any other direct or indirect compensation for or to any
employee, officer, director, consultant, agent or other
representative, other than in the ordinary course of business
consistent with past practice;
(l) Equipe has not made any loan or advance to any of its stockholders,
officers, directors, employees, consultants, agents or other
representatives (other than travel advances made in the ordinary
course of business), or made any other loan or advance otherwise
than in the ordinary course of business consistent with past
practice;
(m) Equipe has not pledged or otherwise, voluntarily or involuntarily,
encumbered any of its assets or properties, except for liens for
current taxes which are not yet delinquent and purchase-
13
money liens arising out of the purchase or sale of products made in
the ordinary and usual course of business and in any event not in
excess of $25,000 for any single item or $50,000 in the aggregate;
(n) Equipe has not materially changed any of its accounting methods,
principles or procedures;
(o) Equipe has not materially changed any of its business policies or
practices, including advertising, marketing, pricing, purchasing,
personnel, sales or budget policies;
(p) Equipe has not suffered or incurred any damage, destruction or loss,
whether or not covered by insurance, which will have or could
reasonably be expected to have an Equipe Material Adverse Effect;
and
(q) Equipe has not entered into any agreement to do any of the
foregoing.
Section 2.14. Officers, Directors and Key Employees. Equipe has provided
to PRI:
(a) the name, position held and compensation of each Person who is
either an officer or director of Equipe or an employee, consultant,
agent or other representative of Equipe whose current annual rate of
compensation (including bonuses and commissions) exceeds $100,000;
and
(b) any arrangement or obligation of Equipe to make any payment to any
such Person as a result of, or conditioned on, the consummation of
the transactions contemplated hereby.
Section 2.15. Potential Conflicts of Interest. Except for normal
compensation received as employees, no officer, director or stockholder of
Equipe and, other than the Related Companies, no entity known by Equipe to be
controlled by any officer, director or stockholder of Equipe:
(a) is directly or indirectly engaged in business as a competitor,
lessor, lessee, customer or supplier of Equipe; owns directly or
indirectly any interest (excepting no more than five percent
stockholdings for investment purposes in securities of publicly held
companies) in any Person that is directly or indirectly engaged in
business as a competitor, lessor, lessee, franchisee, customer or
supplier of Equipe; or is an officer, director, employee or
consultant of any such Person;
(b) owns directly or indirectly, in whole or in part, any material
tangible or intangible property that Equipe uses;
(c) has any cause of action or other claim whatsoever against, or owes
any amount to, Equipe, except for claims in the ordinary course of
business, such as for accrued vacation pay, and similar matters in
agreements existing on the date hereof; or
(d) has made any payment or commitment to pay any commission, fee or
other amount to, or purchase or obtain or otherwise contract to
purchase or obtain any goods or services from, any Person of which
any officer or director of Equipe is a partner or stockholder
(excepting no more than five percent stockholdings for investment
purposes in securities of publicly held companies).
Section 2.16. Finder's Fees. Equipe has not incurred any liability,
contingent or otherwise, for brokerage fees, finder's fees, agent's commissions,
financial advisory fees or other similar forms of
14
compensation in connection with this Agreement or any of the transactions
contemplated hereby, other than as described in its engagement letter with BT
Alex. Xxxxx Incorporated dated July 7, 1997, a copy of which has been provided
to PRI.
Section 2.17. Environmental Matters.
2.17.1. Equipe has been in the past and is now in compliance with
all Environmental Laws (as defined below) and all requirements of
applicable permits, licenses, approvals and other authorizations
pertaining thereto other than any such noncompliance that would not have
an Equipe Material Adverse Effect.
2.17.2. Equipe has received no notification that it is or could be,
and there is no basis for it to become, and, to Equipe's knowledge, it is
not, subject to any claim, action, obligation, proceeding, investigation
or evaluation, directly or indirectly relating to any of its current or
past operations, or those of any predecessor or affiliate (as defined
below), or any by-product thereof, or any of its current or formerly
owned, leased or operated properties, or those of any predecessor or
affiliate, that could reasonably be expected to directly or indirectly
result in the incurrence of any Environmental Liabilities and Costs (as
defined below) by Equipe.
2.17.3. To Equipe's knowledge, there are not now and never have been
any underground storage tanks situated on any real property owned, leased
or operated by Equipe or any of its affiliates.
2.17.4. Equipe has entered into no agreement with any Governmental
Entity or other Person by which responsibility was assumed for, either
directly or indirectly, the conduct of any Remedial Action or the
incurrence of any other Environmental Liabilities and Costs.
2.17.5. Equipe has not prepared, caused to be prepared or received
any environmental audits, environmental risk assessments or site
assessments. Equipe is not a party to any Contract with respect to the
removal or disposal of any Oil or Hazardous Material.
As used herein:
(a) "affiliate" shall mean a Person that, directly or indirectly,
through one or more intermediaries, controls, is controlled by, or
is under common control with, the first mentioned Person;
(b) "Environment" shall mean all navigable waters, waters of the
contiguous zone, ocean waters, natural resources, surface waters,
ground water, drinking water supply, land surface, subsurface
strata, ambient air, both inside and outside of buildings and
structures, and plant and animal life on Earth;
(c) "Environmental Laws" shall mean all federal, state, local and
foreign laws, principles of common law, rules, regulations and
codes, as well as orders, decrees, judgments or injunctions issued,
promulgated, approved or entered thereunder relating to pollution,
protection of the Environment or public health and safety, including
the Release or threatened Release of Oil or Hazardous Material into
the Environment or otherwise relating to presence, manufacture,
processing, distribution, use, treatment, storage, disposal,
transport or handling of Oil or Hazardous Material;
15
(d) "Environmental Liabilities and Costs" shall mean all costs, expenses
or losses, whether direct or indirect, known or unknown, current or
potential, past, present or future, arising from, relating to or
imposed by, under or pursuant to Environmental Laws and in any way
based on, arising out of or otherwise in respect of (1) the
ownership or operation by Equipe or any predecessor or affiliate, of
the businesses of Equipe or (2) the condition or operation of any
real property, assets, equipment or facilities owned, leased or
operated by or related to the businesses of Equipe (including, in
each case, the disposal or arrangement for the disposal of any Oil
or Hazardous Material, or other substances or wastes On-site or Off-
site), including all costs, expenses or losses (A) related to
Remedial Actions, (B) necessary for compliance with any requirements
of Environmental Laws and any applicable permits, licenses,
approvals or other authorizations, (C) necessary to make full
economic use of the property, assets, equipment and facilities of
Equipe (assuming that Equipe's properties are operated for
substantially the same purpose and at substantially the same levels
as at the date hereof) and (D) related to reasonable fees,
disbursements and expenses of counsel and consultants;
(e) "Off-site" shall mean any property of any Person other than those
properties included within the definition of On-site;
(f) "Oil or Hazardous Material" shall mean any waste, pollutant,
hazardous substance, toxic substance, hazardous waste, special
waste, industrial substance or waste, petroleum or petroleum-derived
substance or waste, asbestos-containing substance or waste,
radioactive material or any constituent of any such substance or
waste including any such substance regulated under or defined by any
Environmental Law;
(g) "On-site" shall mean any property owned, leased, or operated by
Equipe;
(h) "Release" shall mean any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching,
migration, or movement of Oil or Hazardous Material through the
indoor or outdoor Environment; and
(i) "Remedial Action" shall mean all actions reasonably necessary,
whether voluntary or involuntary, to (A) clean up, remove, treat or
in any other way adjust Oil or Hazardous Material in the indoor or
outdoor Environment; (B) prevent the Release of Oil or Hazardous
Material so that they do not migrate or endanger or threaten to
endanger public health or welfare or the indoor or outdoor
Environment; or (C) perform investigations, remedial studies,
restoration and post-remedial studies and monitoring on, in, under,
above or about any assets or properties On-site or Off-site.
Section 2.18. Insurance. Equipe and each of the Related Companies has in
force insurance against such risks and in such amounts as are reasonable and
prudent for a similarly situated corporation engaged in Equipe or such Related
Company's business, as the case may be, and as are required by applicable law.
Equipe has delivered to PRI true and complete copies of all insurance policies
or binders to which Equipe or either of the Related Companies is a party or
under which any of such companies is covered and true and complete copies of all
applications for insurance policies. All insurance policies to which Equipe or
either of the Related Companies is a party or that provide coverage to Equipe or
either of the Related Companies are in full force and effect. Since January 1,
1995, neither Equipe nor either of the Related Companies has received any
refusal of coverage, or any notice of suspension, revocation, modification or
cancellation or any other indication that any insurance policy is no longer in
full force or effect or that the issuer of any policy is not willing or able to
perform its obligations thereunder or any notice from an insured to discontinue
any coverage afforded to any of such companies and, to the
16
knowledge of Equipe and each Founder, there is no basis for the issuance of any
such notice or the taking of any such action. Equipe and each of the Related
Companies has paid all premiums due and has otherwise performed all of its
respective obligations under each such policy, except such as will not adversely
affect such company's coverage thereunder. There was no claim in excess of
$5,000 asserted under any of the insurance policies of Equipe or either of the
Related Companies for the period from January 1, 1995 to the date hereof.
Neither Equipe nor either of the Related Companies is party to, or bound by, any
Contract requiring such company (a) to name a third party as loss payee under
any insurance policy or binder held by or on behalf of such company or otherwise
requiring such company to obtain insurance for or on behalf of any third party
or (b) to provide coverage to third parties (such as, for example, under leases
or service agreements). There is no self-insurance arrangement by or affecting
Equipe or either of the Related Companies.
Section 2.19. Employee Relations. Equipe has never been a party to a
collective bargaining agreement and has never made any final or binding offer to
a labor union or association representing its employees with respect to any
terms or conditions of employment. Equipe has never had, nor is there now
threatened, a union organizing effort, strike, picket, organized work stoppage,
organized work slowdown, or other labor trouble that has had, or could
reasonably be expected to have, an Equipe Material Adverse Effect. Equipe has
complied with all applicable laws relating to employment, equal opportunity,
nondiscrimination, immigration, wages, hours, benefits, collective bargaining,
the payment of social security and similar taxes, occupational safety and
health, and plant closings, except where the failure so to be in compliance
would not have an Equipe Material Adverse Effect.
Section 2.20. Proprietary Rights.
2.20.1. Equipe owns, or is licensed or otherwise possesses legally
enforceable rights to use, all patents, trademarks, trade names, service
marks, copyrights, and any applications therefor, maskworks, net lists,
schematics, trade secrets, blueprints, designs, technology, know-how,
computer software programs or applications (in both source code and object
code form), and tangible or intangible proprietary information or material
(excluding Commercial Software, as defined below) that are material to the
business of Equipe as currently conducted or as proposed to be conducted
by Equipe (the "Proprietary Rights").
2.20.2. Schedule 2.20 sets forth a complete list of all patents,
-------------
trademarks and registered copyrights, trade names and service marks, and
any applications therefor, included in the Proprietary Rights, specifying,
where applicable, the jurisdictions in which each such Proprietary Right
has been issued or registered or in which an application for such issuance
and registration has been filed, including the respective registration or
application numbers and the names of all registered owners. No software
product marketed by Equipe has been registered for copyright protection
with the United States Copyright Office or any foreign offices nor has
Equipe been requested to make any such registration. Equipe has delivered
to PRI true and complete copies of all material licenses, sublicenses and
other agreements (excluding End-User Licenses, as defined below) as to
which Equipe is a party and pursuant to which Equipe or any other person
is authorized to use any Proprietary Right or other trade secret material
to Equipe. Equipe is not in Violation of any such license, sublicense or
agreement except for such Violations that do not, in the aggregate,
materially impair Equipe's rights under such license, sublicense or
agreement. Equipe is the exclusive owner or the licensee of, with all
right, title and interest in and to (free and clear of any and all
Encumbrances), the Proprietary Rights, and has exclusive rights (and is
not contractually obligated to pay any compensation to any third party in
respect thereof) to the use thereof or the material covered thereby in
connection with the services or products in respect of which the
Proprietary Rights are being used. No claims with respect to the
Proprietary Rights have
17
been asserted or, to the knowledge of Equipe, are threatened by any person
(a) to the effect that the business of Equipe as currently conducted or as
proposed to be conducted by Equipe, including Equipe's design,
development, use, import, manufacture and sale of the products, technology
(including products or technology currently under development) or services
of Equipe, infringes on or misappropriates any copyright, patent,
trademark, service xxxx, trade secret or other proprietary rights of any
other Person or constitutes unfair competition or trade practices under
any Law, (b) against the use by Equipe of any trademarks, service marks,
trade names, trade secrets, copyrights, patents, technology, know-how or
computer software programs and applications used in Equipe's business as
currently conducted or as proposed to be conducted by Equipe, or (c)
challenging the ownership by Equipe, validity or effectiveness of any of
the Proprietary Rights. All registered trademarks, service marks and
copyrights included in the Proprietary Rights are valid and subsisting,
all necessary registration, maintenance and renewal fees in connection
with such Proprietary Rights have been paid and all necessary documents
and certificates in connection with such Proprietary Rights have been
filed with the relevant Governmental Entities for the purposes of
maintaining such Proprietary Right. There has been, to the knowledge of
Equipe and the Founders, no material unauthorized use, infringement or
misappropriation of any of the Proprietary Rights by any third party,
including any employee or former employee of Equipe. No Proprietary Right
or product of Equipe is subject to any outstanding decree, order,
judgment, or stipulation restricting in any manner the licensing thereof
by Equipe. There are no Contracts between Equipe and any other Person with
respect to Proprietary Rights under which there is any dispute known to
Equipe regarding the scope of such Contract, or performance under such
Contract, including with respect to any payments to be made or received by
Equipe thereunder.
2.20.3. To the extent that any Proprietary Rights have been
developed or created by a third party for which Equipe has, directly or
indirectly, paid, Equipe has a written agreement with such third party
with respect thereto and Equipe thereby has obtained valid ownership of or
rights sufficient for the conduct of Equipe's business to all such
Proprietary Rights by operation of law or by valid assignment or license.
Each employee, officer and consultant of Equipe, and, to the knowledge of
Equipe and the Founders, each employee, officer and consultant of each of
the Related Companies, has executed a confidentiality agreement in
substantially the form provided to PRI, providing Equipe with title and
ownership to Proprietary Rights developed or used by Equipe in its
business. To the knowledge of Equipe and the Founders, no employee,
officer or consultant of Equipe is in violation of any term of any
employment or consulting contract, proprietary information and inventions
agreement, non-competition agreement, or any other contract or agreement
relating to the relationship of any such employee, officer or consultant
with Equipe or any previous employer.
As used herein:
(a) "Commercial Software" means packaged commercially available software
programs generally available to the public through retail dealers in
computer software which have been licensed to Equipe pursuant to
End-User Licenses and which are used in Equipe's business but are in
no way a component of or incorporated in or specifically required to
develop or support any of Equipe's products and related trademarks,
technology and know-how; and
(b) "End-User Licenses" means any object code and end-user licenses
granted to end-users in the ordinary course of business that permit
use of software products without a right to modify, distribute or
sublicense the same.
18
Section 2.21. Certain Loans. There are no loans, receivables, advances or
similar amounts owed to Equipe by any director, officer, employee, consultant or
stockholder of Equipe, or owing by any affiliate of any director or officer of
Equipe, nor is any amount owed by Equipe to any of its directors, officers,
employees or stockholders other than normal compensation and advances in the
ordinary course of business to officers and employees for reimbursable business
expenses not exceeding $1,000 for any one individual.
Section 2.22. Customers, Suppliers, Sales Agents and Distributors. Equipe
has provided to PRI a true and complete summary listing (a) the twenty largest
customers and vendors of Equipe (by dollar volume of purchases) for the year
ended December 31, 1996, and (b) each sales agent and each distributor of
Equipe, if any, not identified in a Contract listed in Schedule 2.10, together
-------------
with the territory and term of engagement of each such agent and distributor.
The relationships of Equipe with its suppliers, customers, sales agents and
distributors are good commercial working relationships, and no material
customer, supplier, sales agent or distributor of Equipe has canceled or
otherwise terminated, or threatened in writing to cancel or otherwise terminate,
its relationship with Equipe since January 1, 1997.
Section 2.23. Business Activity Restrictions. There is no agreement
(noncompetition or otherwise), commitment, judgment, injunction, order or decree
to which Equipe or any officer, employee or consultant of Equipe is a party or
that otherwise is binding upon Equipe or such officer, employee or consultant
that has or reasonably could be expected to have the effect of prohibiting or
impairing any business practice of Equipe, any acquisition of property (tangible
or intangible) by Equipe or the conduct of business by Equipe. Equipe has not
entered into any agreement under which Equipe is restricted from selling,
licensing or otherwise distributing any of its technology or products to, or
providing services to, customers or potential customers or any class of
customers, in any geographic area, during any period of time or in any segment
of the market or line of business.
ARTICLE 3. REPRESENTATIONS AND WARRANTIES
OF EQUIPE AND FOUNDERS REGARDING THE RELATED COMPANIES
Equipe and each of the Founders, jointly and severally, represent and
warrant to PRI and Acquisition Corp. as follows:
Section 3.1. Corporate Status. Each of the Related Companies (to the
extent, in the case of Equipe Japan, that the following concepts are recognized
under the laws of Japan), is a corporation duly incorporated, validly existing
and in good standing under the laws of the jurisdiction of its incorporation,
with all requisite corporate power to own, lease and operate its properties and
to carry on its business as now being conducted. None of the Related Companies
is qualified to do business as a foreign corporation in any jurisdiction other
than the jurisdiction of its incorporation and the failure to be so qualified
does not and will not have an Equipe Material Adverse Effect.
Section 3.2. Corporate Documents. Equipe has delivered to PRI true and
complete copies of the charter documents, as amended to date, and the bylaws, as
amended to date, of each of the Related Companies. Such charter documents and
such bylaws are all in full force and effect, and, except as contemplated
hereby, no further amendment or restatement thereof has been adopted or
proposed. None of the Related Companies is in violation of any provision of its
charter or bylaws. The minute books and stock records of each of the Related
Companies, copies of which have heretofore delivered to PRI, are true and
complete and are the only minute books and stock records of each of the Related
Companies. Schedule 3.2 sets forth the current directors and officers of each of
------------
the Related Companies.
19
Section 3.3. Capital Structure. The authorized capital stock of E-Machine
consists of 1,000,000 shares of common stock, of which 833,333 shares are
outstanding as of the date hereof. The authorized capital stock of Equipe Japan
consists of 4,000 shares, (Y)50,000 par value, of which 1,000 shares are
outstanding as of the date hereof. No shares of capital stock of either of the
Related Companies are held as treasury stock. The name of each holder of capital
stock of each of the Related Companies and the number of shares and class of
capital stock owned of record by each such holder as of the date hereof are set
forth on Schedule 3.3. All shares of capital stock of each of the Related
------------
Companies issued and outstanding as of the date hereof are duly authorized,
validly issued, fully paid and nonassessable and not subject to preemptive
rights created by statute, the charter documents or bylaws of such Related
Company or any agreement to which such Related Company is a party or is bound.
No options to purchase capital stock of either Related Company have been issued
or are outstanding. None of the Related Companies and none of the stockholders
of the Related Companies is a party to or bound by: (a) any option, warrant,
call, right or agreement obligating either of the Related Companies to issue,
deliver or sell additional shares of capital stock or to grant or modify any
such option, warrant, call, right or agreement; (b) any option, warrant, call,
right or agreement obligating any stockholder of either of the Related
Companies, in any circumstances, to deliver or sell, or offer for delivery or
sale, any shares of capital stock, including any agreement containing provisions
with respect to preemptive rights, rights of first refusal, purchase rights,
"tag-along" or "come-along" arrangements, or similar rights; (c) any voting
trust, proxy or other agreement or understanding with respect to the voting of
shares of capital stock of either of the Related Companies; and (d) any other
agreement restricting the transfer of, or affecting rights with respect to,
shares of the capital stock of either of the Related Companies.
Section 3.4. Authority; Noncontravention.
3.4.1. Each stockholder of a Related Company has all requisite
corporate power to execute and deliver the Related Company Acquisition
Agreement to which he is a party and to consummate the transactions
contemplated hereby and thereby. Each of the Related Company Acquisition
Agreements has been duly and validly executed and delivered by each
stockholder of such Related Company and constitutes a legal, valid and
binding obligation of such stockholder enforceable in accordance with its
terms, all as may be subject to or affected by the Creditor Exception.
3.4.2. The execution and delivery of the Related Company Acquisition
Agreements do not, and the consummation of the transactions contemplated
hereby and thereby will not, result in any Violation of any provision of
(a) the charter documents, as amended to date, or the bylaws, as amended
to date, of the respective Related Companies or (b) any loan or credit
agreement, note, mortgage, indenture, lease, employee benefit plan, other
agreement, obligation, instrument, permit, concession, franchise, license,
judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to either of the Related Companies or any stockholder of such
Related Company or to the properties or assets of any of them. No consent,
approval, order or authorization of, or registration, declaration or
filing with, any Governmental Entity is required by or with respect to
either of the Related Companies or any stockholder of such Related Company
in connection with the execution and delivery of the Related Company
Acquisition Agreements or the consummation of the transactions
contemplated hereby and thereby.
Section 3.5. Investments. None of the Related Companies directly or
indirectly owns, or has the right to acquire, any equity interest or investment
in the equity capital of any Person (as defined below). None of the Related
Companies has any obligation to acquire any class of securities (including debt
securities) issued by any Person. None of the Related Companies has owned or
controlled any subsidiary corporation or any stock or other interest in any
Person. None of the Related Companies is a
20
party to, or has been a party to, or bound by any partnership, joint venture,
voluntary association, cooperative or business trust agreement.
Section 3.6. Related Company Financial Statements.
3.6.1 E-Machine. The unaudited balance sheets of E-Machine at
September 30, 1997 and December 31, 1996 and 1995, and the related
unaudited income statements of E-Machine for the nine-month period ended
September 30, 1997 and the two-year period ended December 31, 1996,
attached as Schedule 3.6.1 hereto, fairly present, in all material
--------------
respects, the financial position and results of operations of E-Machine at
the dates and for the periods stated therein.
3.6.2 Equipe Japan. The unaudited balance sheets of Equipe Japan at
September 30, 1997 and December 31, 1996 and the related unaudited income
statements of Equipe Japan for the nine-month and one-year period then
ended, respectively, attached as Schedule 3.6.2 hereto, fairly present, in
--------------
all material respects, the financial position and results of operations of
Equipe Japan at the dates and for the period stated therein.
ARTICLE 4. ADDITIONAL REPRESENTATIONS AND WARRANTIES OF THE
FOUNDERS
Each Founder, severally and not jointly, represents, warrants and
covenants to PRI as follows:
Section 4.1. Ownership of Equipe Common. Such Founder has good and
marketable title to the shares of Equipe Common owned by such Founder as shown
on Schedule 2.3, free and clear of any and all Encumbrances.
------------
Section 4.2. Authority. Such Founder has all requisite right to enter into
this Agreement, each of the Registration Rights Agreement and such Founder's
Irrevocable Proxy (as defined in Section 9.2.4), and any Affiliate's Agreement
and any Employment Agreement to which such Founder is to be a party (each as
defined herein and collectively "such Founder's Corollary Agreements") and to
consummate the transactions contemplated hereby and thereby. This Agreement has
been duly and validly executed and delivered by such Founder and, assuming the
due and valid execution and delivery of this Agreement by the other parties
hereto, constitutes a legal, valid and binding obligation of such Founder
enforceable in accordance with its terms, all as may be subject to or affected
by the Creditor Exception. As of the Closing Date, each of such Founder's
Corollary Agreements will be duly and validly executed and delivered by such
Founder and will constitute a legal, valid and binding obligation of such
Founder enforceable in accordance with its terms, all as may be subject to or
affected by the Creditor Exception. The execution and delivery of this Agreement
do not, and the execution of such Founder's Corollary Agreements and the
consummation of the transactions contemplated hereby and thereby will not,
result in any Violation of any provision of any loan or credit agreement, note,
mortgage, indenture, lease, employee benefit plan, other agreement, obligation,
instrument, permit, concession, franchise, license, judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to such Founder or the
properties or assets of such Founder.
Section 4.3. Investment in PRI Common.
4.3.1. Such Founder is an accredited investor as defined in Rule 501
under the Securities Act of 1933, as amended (the "Securities Act"). Such
Founder (together with such Founder's financial and other advisors, if
any) has such knowledge and expertise in financial and business matters
that such Founder is capable of evaluating the merits and risks of the
exchange of such
21
Founder's shares of Equipe Common for shares of PRI Common pursuant to
this Agreement and of protecting such Founder's interests in connection
therewith. Such Founder has the ability to bear the economic risk of the
investment in PRI Common.
4.3.2. Such Founder has reviewed a copy of the SEC Documents, as
defined in Section 5.4, and has had an opportunity to discuss PRI's
business, management and financial affairs with PRI's management.
4.3.3. Such Founder is acquiring shares of PRI Common for such
Founder's own account and not with a view to, or for resale in connection
with, any distribution thereof in violation of applicable law, and such
Founder has no present intention of selling, granting any participation
in, or otherwise distributing the same in violation of applicable law.
Such Founder understands that the shares of PRI Common to be received by
such Founder pursuant to this Agreement have not been registered under the
Securities Act by reason of a specific exemption from the registration
provisions of the Securities Act that depends upon, among other things,
the bona fide nature of such Founder's investment intent and the accuracy
of such Founder's representations, warranties and covenants as expressed
herein. Such Founder understands that the shares of PRI Common to be
received by such Founder pursuant to this Agreement are characterized as
"restricted securities" under the Securities Act inasmuch as they are
being acquired from PRI in a transaction not involving a public offering
and that under such laws and applicable regulations such shares may be
resold without registration under the Securities Act only in certain
limited circumstances. Such Founder acknowledges that the shares of PRI
Common must be held indefinitely unless subsequently registered under the
Securities Act (pursuant to the Registration Rights Agreement referred to
below or otherwise) or an exemption from such registration is available.
Such Founder is aware of the provisions of Rule 144 under the Securities
Act which permit limited resale of shares purchased in a private placement
subject to the satisfaction of certain conditions, including the existence
of a public market for the shares, the availability of certain current
public information about the Company, the resale occurring not less than
two years after a party has purchased and paid for the security to be
sold, the sale being effected through a "broker's transaction" or in
transactions directly with a "market maker" (as provided by Rule 144(f)
under the Securities Act) and the number of shares being sold during any
three-month period not exceeding specified limitations.
4.3.4. It is understood that each certificate representing shares of
PRI Common received by such Founder pursuant to this Agreement shall bear
a legend substantially to the following effect (in addition to any legend
required under applicable state securities laws):
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION
STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH
ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
SUCH REGISTRATION IS NOT REQUIRED."
Section 4.4. Government Consents. No consent, approval, order or
authorization of, or registration, declaration or filing with any Governmental
Entity is required by or with respect to such Founder in connection with the
execution and delivery of this Agreement or such Founder's Corollary Agreements
or the consummation of the transactions contemplated hereby or thereby.
22
Section 4.5. Finder's Fees. Such Founder has not incurred any liability,
contingent or otherwise, for brokerage fees, finder's fees, agent's commissions,
financial advisory fees or other similar forms of compensation in connection
with this Agreement or any of the transactions contemplated hereby.
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF PRI AND ACQUISITION CORP.
Each of PRI and Acquisition Corp., jointly and severally, represents and
warrants to Equipe as follows:
Section 5.1. Corporate Status. PRI is a corporation duly incorporated,
validly existing and in good standing under the laws of the Commonwealth of
Massachusetts, and Acquisition Corp. is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of California. Each of
PRI and Acquisition Corp. has all requisite corporate power to own, lease and
operate its properties and to carry on its business as now being conducted. Each
of PRI and Acquisition Corp. is duly qualified to do business as a foreign
corporation, and is in good standing, in each other jurisdiction in which it
owns or leases property or conducts business, except where the failure to be so
qualified does not have any effect that is, or is reasonably likely to be,
materially adverse to the business, results of operations or financial condition
of PRI and its subsidiaries, taken as a whole, other than such effects resulting
from (i) general economic changes affecting the semiconductor capital equipment
industry in general or (ii) this Agreement or the transactions contemplated
hereby or the announcement hereof (a "PRI Material Adverse Effect").
Section 5.2. Capital Structure.
5.2.1. The authorized and outstanding capital stock of PRI
consists of (a) 400,000 shares of preferred stock, $.01 par value, none of
which is issued and outstanding, and (b) 24,000,000 shares of PRI Common,
of which 14,570,920 shares were issued and outstanding as of June 29,
1997. All of the outstanding shares of PRI Common are, and the shares of
PRI Common when issued and delivered to the Holders in accordance with
this Agreement will be, duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights created by statute,
PRI's articles of organization or bylaws, or any agreement to which PRI is
a party or is bound. All outstanding shares of PRI Common are listed on
the Nasdaq National Market, and there are no proceedings to revoke or
suspend such listing.
5.2.2. The authorized capital stock of Acquisition Corp. consists
of 1,000 shares of common stock, $.01 par value, all of which are
outstanding and held by PRI of record and beneficially.
Section 5.3. Authority.
5.3.1. PRI has all requisite corporate power to execute and
deliver this Agreement and the Registration Rights Agreement and
Employment Agreements (collectively the "PRI Corollary Agreements") and to
consummate the transactions contemplated hereby and thereby. The execution
and delivery of this Agreement and the PRI Corollary Agreements, and the
consummation of the transactions contemplated hereby and thereby, have
been duly and validly authorized by all requisite corporate action on the
part of PRI, and no other corporate proceedings on the part of PRI are
necessary to authorize the execution and delivery of this Agreement or any
of the PRI Corollary
23
Agreements or to consummate the transactions contemplated hereby and
thereby. The board of directors of PRI has unanimously approved the Merger
and this Agreement. This Agreement has been duly and validly executed and
delivered by PRI and, assuming the due and valid execution and delivery of
this Agreement by the other parties hereto, constitutes a legal, valid and
binding obligation of PRI enforceable in accordance with its terms, all as
may be subject to or affected by the Creditor Exception. As of the Closing
Date, each of the PRI Corollary Agreements will be duly and validly
executed and delivered by PRI and will constitute a legal, valid and
binding obligation of PRI enforceable in accordance with its terms, all as
may be subject to or affected by the Creditor Exception. The execution and
delivery of this Agreement do not, and the execution and delivery of the
PRI Corollary Agreements and the consummation of the transactions
contemplated hereby and thereby will not, result in any Violation of any
provision of (a) the articles of organization or bylaws of PRI or (b) any
loan or credit agreement, note, mortgage, indenture, lease, employee
benefit plan, other agreement, obligation, instrument, permit, concession,
franchise, license, judgment, order, decree, statute, law, ordinance, rule
or regulation applicable to PRI or its properties or assets, other than
Violations that do not and will not, individually or in the aggregate,
have a PRI Material Adverse Effect.
5.3.2. Acquisition Corp. has all requisite corporate power to
execute and deliver this Agreement and to cause its officers to execute
and deliver the Officers' Certificate of Acquisition Corp. and to
consummate the transactions contemplated hereby and thereby. The execution
and delivery of this Agreement and the Officers' Certificate of
Acquisition Corp., and the consummation of the transactions contemplated
hereby and thereby, have been duly and validly authorized by all requisite
corporate action on the part of Acquisition Corp., and no other corporate
proceedings on the part of Acquisition Corp. are necessary to authorize
the execution and delivery of this Agreement or the Officers' Certificate
of Acquisition Corp. or to consummate the transactions contemplated hereby
and thereby. The board of directors and sole stockholder of Acquisition
Corp. have unanimously approved the Merger and this Agreement, subject to
the approval of the stockholders of PRI. This Agreement has been duly and
validly executed and delivered by Acquisition Corp., and this Agreement
constitutes a legal, valid and binding obligation of Acquisition Corp.
enforceable in accordance with its terms, all as may be subject to or
affected by the Creditor Exception. As of the Closing Date, the Officers'
Certificate of Acquisition Corp. will be duly and validly executed and
delivered by Acquisition Corp. and will constitute a legal, valid and
binding obligation of PRI enforceable in accordance with its terms, all as
may be subject to or affected by the Creditor Exception. The execution and
delivery of this Agreement do not, and the execution and delivery of the
Officers' Certificate of Acquisition Corp. and the consummation of the
transactions contemplated hereby and thereby will not, result in any
Violation of any provision of (a) the articles of incorporation or bylaws
of Acquisition Corp. or (b) any loan or credit agreement, note, mortgage,
indenture, lease, employee benefit plan, other agreement, obligation,
instrument, permit, concession, franchise, license, judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to
Acquisition Corp. or its properties or assets, other than Violations that
do not and will not, individually or in the aggregate, have a PRI Material
Adverse Effect.
5.3.3. No consent, approval, order or authorization of, or
registration, declaration or filing with any Governmental Entity is
required by or with respect to PRI or Acquisition Corp. in connection with
the execution and delivery of this Agreement by PRI and Acquisition Corp.
or the consummation of the transactions contemplated hereby, except for
(a) the filing of the Certificate of Satisfaction, a copy of this
Agreement and the executed original Officers' Certificates with the
Secretary of State of the State of California, (b) such other filings,
consents, approvals, orders, authorizations, registrations and
declarations as may be required under applicable federal and state
securities laws (collectively "Securities Filings"), which Securities
Filings will be made by the
24
Effective Time or as soon thereafter as required by applicable law, (c)
the filing of such reports under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), as may be required in connection with this
Agreement and the transactions contemplated hereby, and (d) such other
consents, authorizations, filings, approvals and registrations that if not
obtained or made would not have a PRI Material Adverse Effect or a
material adverse effect on the transactions contemplated by this
Agreement.
Section 5.4. SEC Documents. PRI has furnished to Equipe true and
complete copies of PRI's Annual Report on Form 10-K, as amended, for the fiscal
year ended September 30, 1996, the definitive proxy statements for the annual
meeting of stockholders of PRI held on February 7, 1997 and the special meeting
of stockholders of PRI held on April 22, 1997 and its Quarterly Reports on Form
10-Q for the fiscal quarters ended December 29, 1996, March 30, 1997 and June
29, 1997 (collectively, the "SEC Documents"). As of their respective filing
dates, (a) each of the SEC Documents complied in all material respects with the
requirements of the Exchange Act and (b) none of the 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 made, not misleading. The
consolidated financial statements and notes thereto of PRI included in the SEC
Documents have been prepared in accordance with GAAP, applied on a consistent
basis throughout the periods involved (except that the unaudited financial
statements do not contain all the notes that may be required by GAAP and are
subject to normal and recurring year-end adjustments that are not expected to be
material in amount), and fairly present in all material respects the
consolidated financial position of PRI and its subsidiaries as at the dates
thereof and their consolidated results of operations and cash flows for the
periods covered therein.
Section 5.5. Absence of Certain Events and Undisclosed Liabilities.
Since June 29, 1997, (a) PRI has not declared or paid any dividend or other
distribution (whether in cash, stock or property or any combination thereof) in
respect of the capital stock of PRI, (b) there has been no PRI Material Adverse
Effect, (c) neither the business, properties nor assets of PRI have suffered a
material adverse loss (whether or not covered by insurance) as the result of
fire, explosion, earthquake, accident, labor trouble, condemnation or taking of
property by any Governmental Entity, flood, windstorm, pestilence, embargo,
riot, act of God or the public enemy or any other casualty or similar event, (d)
PRI has not materially changed any of its accounting methods, principles or
procedures, and (e) PRI has not entered into any agreement to do any of the
foregoing. PRI has no liabilities, asserted liabilities or obligations of any
nature, whether absolute, accrued, contingent or otherwise, other than (a) those
disclosed or reflected in the SEC Documents or disclosed in accordance with this
Agreement, (b) those incurred since June 29, 1997 in the ordinary course of
PRI's business consistent with past practice, and (c) liabilities or obligations
that are not material, individually or in the aggregate, or that are not
required under GAAP to be disclosed or reflected in the financial statements
which are included in the SEC Documents.
Section 5.6. Litigation. Except as disclosed in the SEC Documents, there
is no claim, dispute, action, suit, appeal, legal, administrative or arbitral
proceeding, or investigation, at law or in equity, pending against PRI, or
involving any of its assets or properties, before any court, agency, authority,
arbitration panel or other tribunal, and, to the knowledge of PRI, none has been
threatened, in each case that could be reasonably expected to have a PRI
Material Adverse Effect. No judgment has been entered by, and no claim, dispute,
action, suit, appeal, legal, administrative or arbitral proceeding, or
investigation, at law or in equity, is pending or, to the knowledge of PRI or
Acquisition Corp., threatened that materially and adversely affects, or could
materially and adversely affect, the ability of PRI or Acquisition Corp. to
perform under this Agreement or that seeks to enjoin or prohibit any of the
transactions contemplated by this Agreement.
25
Section 5.7. Compliance with Applicable Laws. The business of PRI is not
being conducted in violation of or conflict with any Law, except such violations
or conflicts as do not and will not, individually or in the aggregate, have a
PRI Material Adverse Effect. As of the date of this Agreement, no investigation
or review by any Governmental Entity with respect to PRI is pending or, to the
knowledge of PRI, threatened.
Section 5.8. Taxes. PRI has timely filed in accordance with applicable
law all Tax Returns required to be filed by or with respect to it, its
operations and assets other than Tax Returns the failure to file which would not
cause a PRI Material Adverse Effect. All Taxes shown as due on such Tax Returns
have been paid. All Tax Returns filed by PRI with respect to Taxes were prepared
in compliance with all applicable laws and regulations, other than such
noncompliance as would not cause a PRI Material Adverse Effect, and were true
and complete in all material respects as of the date on which they were filed or
as subsequently amended to the date hereof.
Section 5.9. Proprietary Rights.
5.9.1. PRI owns, or is licensed or otherwise possesses legally
enforceable rights to use, all patents, trademarks, trade names, service
marks, copyrights, and any applications therefor, maskworks, net lists,
schematics, trade secrets, blueprints, designs, technology, know-how,
computer software programs or applications (in both source code and object
code form), and tangible or intangible proprietary information or material
(excluding Commercial Software, as defined in Section 2.20 above) that are
material to the business of PRI as currently conducted or as proposed to
be conducted by PRI (the "PRI Proprietary Rights").
5.9.2. PRI is not in Violation of any license, sublicense or
agreement as to which PRI is a party and pursuant to which PRI or any
other person is authorized to use any PRI Proprietary Right except for
such Violations that do not, in the aggregate, materially impair PRI's
rights under such license, sublicense or agreement. Except as disclosed in
the SEC Documents, no claims with respect to the PRI Proprietary Rights
have been asserted or, to the knowledge of PRI, are threatened by any
person (a) to the effect that the business of PRI as currently conducted
or as proposed to be conducted by PRI, including PRI's design,
development, use, import, manufacture and sale of the products, technology
(including products or technology currently under development) or services
of PRI, infringes on or misappropriates any copyright, patent, trademark,
service xxxx, trade secret or other proprietary rights of any other Person
or constitutes unfair competition or trade practices under any Law, (b)
against the use by PRI of any trademarks, service marks, trade names,
trade secrets, copyrights, patents, technology, know-how or computer
software programs and applications used in PRI's business as currently
conducted or as proposed to be conducted by PRI, or (c) challenging the
ownership by PRI, validity or effectiveness of any of the PRI Proprietary
Rights.
Section 5.10. Finder's Fees. Neither PRI nor Acquisition Corp. has
incurred any liability, contingent or otherwise, for brokerage fees, finder's
fees, agent's commissions, financial advisory fees or other similar forms of
compensation in connection with this Agreement or any of the transactions
contemplated hereby, other than as described in PRI's engagement letter with
Xxxxxx Xxxxxxx & Co. Incorporated dated October 21, 1997, a copy of which has
been provided to Equipe.
26
ARTICLE 6. COVENANTS OF EQUIPE AS TO CONDUCT OF BUSINESS
During the period from the date of this Agreement and continuing until the
Closing, Equipe agrees, and each Founder agrees to take such action as may be
necessary to cause Equipe to agree, that, except as expressly contemplated by
this Agreement (including those actions necessary to effect the Related Company
Acquisitions) or as consented to by PRI in writing:
Section 6.1. Ordinary Course. Equipe shall carry on its business in the
ordinary course consistent with prior practice, including the payment of all
debts and taxes owed by Equipe in substantially the same manner as heretofore.
Section 6.2. Corporate Documents. Equipe shall not amend the Equipe
Charter or the Equipe Bylaws.
Section 6.3. Capital Structure. Equipe shall not (a) declare or pay any
dividend or other distribution (whether in cash, stock or property or any
combination thereof) in respect of Equipe Common, (b) issue, deliver or sell, or
authorize the issuance, delivery or sale of, any shares of capital stock of any
class, or any options, warrants, calls, rights or agreements that obligate
Equipe to issue, deliver or sell additional shares of Equipe Common or to grant,
extend or enter into any such option, warrant, call, right or agreement, (c)
split, combine or reclassify any of the Equipe Common, or (d) purchase, redeem
or otherwise acquire, directly or indirectly, any shares of Equipe Common.
Notwithstanding the foregoing, each of Equipe and E-Machine shall be entitled,
prior to the Closing, to make a distribution or distributions to its
stockholders in such amount or amounts as, when added to prior distributions, if
any, made by such entity to such stockholders between January 1, 1997 and the
Closing, will not exceed the aggregate state and federal income tax obligations
of such stockholders in respect of the income of such entity from January 1,
1997 through the end of the tax year ending on the date of the Closing, as
estimated in good faith by Equipe and its independent accountants (the "Current
Year Taxes"). Each such stockholder shall furnish to Equipe, promptly after
their filing with the appropriate tax authorities, copies of his final state and
federal income tax returns for 1997 and any subsequent tax year ending on the
date of the Closing. If the aggregate amount of the distributions made to any
such stockholder by Equipe or E-Machine since January 1, 1997 exceeds such
stockholder's Current Year Taxes attributable to such entity, the amount of such
excess shall be refunded by such stockholder to Equipe within ten business days
of his filing of the last such return.
Section 6.4. Compliance with Applicable Laws. Equipe shall duly comply
in all material respects with all applicable laws, ordinances and regulations
and all applicable orders, judgments, injunctions, awards and decrees of
Governmental Entities.
Section 6.5. Investments and Acquisitions. Equipe shall not (a) acquire
any equity interest or investment exceeding five percent of the equity capital
of any Person, (b) acquire by merging or consolidating with, by purchasing a
substantial portion of the assets of, or by any other manner, any Person, (c)
otherwise acquire or license any assets that are material, individually or in
the aggregate, to Equipe except in the ordinary course of business consistent
with prior practice or (d) enter into any partnership, joint venture, voluntary
association, cooperative or business trust agreement or arrangement, other than
in the ordinary course of business consistent with prior practice.
Section 6.6. Indebtedness. Equipe shall not, and shall not propose to,
incur any Indebtedness for borrowed money, incur any other Indebtedness except
in the ordinary course of business, or guarantee any Indebtedness of others.
Equipe shall not pay, discharge or satisfy, in an amount in excess of $50,000
27
(in the aggregate), any claims, liabilities or obligations reflected or reserved
against in the 1997 Balance Sheet except in the ordinary course of business
consistent with past practice.
Section 6.7. Litigation. Equipe shall not commence any litigation.
Equipe shall cooperate and consult with PRI with respect to all matters
regarding any proceeding set forth on any Schedule relating to Section 2.8 of
this Agreement, including any settlement proposed by any Person (including PRI),
and Equipe shall not take any significant actions with respect to such
proceedings (including the entering into of any such settlement) without the
prior approval of PRI, which approval shall not be unreasonably withheld.
Section 6.8. Properties. Equipe shall not lease or otherwise dispose of
any of its property, individually or in the aggregate, except in the ordinary
course of business consistent with prior practice.
Section 6.9. Contracts. Equipe shall not (a) enter into any Contract or
engage in any transaction not in the ordinary course of business consistent with
past practice, (b) amend or otherwise modify any Contract pursuant to which any
other party is granted marketing, distribution or similar rights of any type or
scope with respect to any products of Equipe, (c) amend or otherwise modify any
Contract except in the ordinary course of business consistent with past
practice, or (d) do or omit to do any act or permit any act or omission to act,
which act or omission will result in a Violation of any material provision of
any material Contract.
Section 6.10. Taxes. Equipe shall not make or change any material
election in respect of Taxes, adopt or change any accounting method in respect
of Taxes, enter into any closing agreement, settle any claim or assessment in
respect of Taxes, or consent to any extension or waiver of the limitation period
applicable to any claim or assessment in respect of Taxes.
Section 6.11. Benefit Plans. Equipe shall not adopt any Benefit Plan or
amend any Benefit Plan in any material respect.
Section 6.12. Insurance. Equipe shall maintain insurance of the types, in
the amounts and with deductibles and exclusions consistent with past business
practice.
Section 6.13. Employee Matters. Equipe shall not (a) adopt any collective
bargaining agreement, (b) grant any severance or termination pay to any
director, officer or other employee of Equipe, (c) grant any general or uniform
increase in the rates of pay of employees of Equipe or in the benefits under any
bonus plan or other compensation arrangements or (d) increase the compensation
payable or to become payable to any officer or key salaried employee.
Section 6.14. Proprietary Rights. Equipe shall not transfer to any Person
any rights to Proprietary Rights, except in the ordinary course of business
consistent with past practice.
Section 6.15. General. Neither Equipe nor any Founder shall take, propose
to take, or agree in writing or otherwise to take any of the actions described
in Sections 6.1 through 6.14 or any other action that would prevent Equipe or
any Founder from performing, or cause Equipe or any Founder not to perform, its
covenants and other obligations hereunder.
28
ARTICLE 7. COVENANTS OF PRI AS TO CONDUCT OF BUSINESS
During the period from the date of this Agreement and continuing until the
Closing, PRI agrees that, except as expressly contemplated by this Agreement
(including those actions necessary to effect the Related Company Acquisitions)
or as consented to by Equipe in writing:
Section 7.1. Ordinary Course. PRI shall carry on its business in the
ordinary course consistent with prior practice, including the payment of all
debts and taxes owed by PRI in substantially the same manner as heretofore.
Section 7.2. Corporate Documents. PRI shall not amend its articles of
organization or its bylaws; provided, however, that PRI may amend its articles
of organization to increase the number of shares of PRI Common that PRI is
authorized to issue.
Section 7.3. Capital Structure. PRI shall not (a) declare or pay any
dividend or other distribution (whether in cash, stock or property or any
combination thereof) in respect of PRI, (b) issue, deliver or sell, or authorize
the issuance, delivery or sale of, any shares of capital stock of any class, or
any options, warrants, calls, rights or agreements that obligate PRI to issue,
deliver or sell additional shares of PRI Common, or to grant, extend or enter
into any such option, warrant, call, right or agreement, other than in the
ordinary course of PRI's business pursuant to its 1984 Incentive Stock Option
Plan, 1994 Incentive and Nonqualified Stock Option Plan and 1994 Employee Stock
Purchase Plan, (c) split, combine or reclassify any of the PRI Common, or (d)
purchase, redeem or otherwise acquire, directly or indirectly, any shares of PRI
Common.
Section 7.4. Compliance with Applicable Laws. PRI shall duly comply in
all material respects with all applicable laws, ordinances and regulations and
all applicable orders, judgments, injunctions, awards and decrees of
Governmental Entities.
Section 7.5. Investments and Acquisitions. Except as contemplated by
this Agreement, PRI shall not engage in any acquisition of the equity capital or
assets of any Person in a transaction requiring the approval of the stockholders
of PRI.
Section 7.6. General. PRI shall not take, propose to take, or agree in
writing or otherwise to take any of the actions described in Sections 7.1
through 7.5 or any other action that would prevent PRI from performing, or cause
PRI not to perform, its covenants and other obligations hereunder.
ARTICLE 8. ADDITIONAL COVENANTS
Section 8.1. Proxy Statement. As soon as reasonably practicable after
the execution of this Agreement, PRI shall prepare and file with the Securities
and Exchange Commission a proxy statement (as amended or supplemented, the
"Proxy Statement") to be sent to the stockholders of PRI in connection with the
solicitation of proxies for the meeting of PRI's stockholders to consider the
Merger (the "PRI Stockholders' Meeting").
Section 8.2. PRI Stockholders' Meeting. Promptly after the date hereof,
PRI shall take all action necessary in accordance with the Massachusetts
Business Corporation Law, its articles of organization and its bylaws to convene
the PRI Stockholders' Meeting to be held as soon as reasonably practicable for
the purpose of voting upon this Agreement and the Merger.
29
Section 8.3. Related Company Acquisitions. PRI, Equipe and the Founders
shall take any and all actions reasonably necessary to validly effect the
Related Company Acquisitions.
Section 8.4. Access to Information. Equipe shall afford to PRI, and PRI
shall afford to Equipe, and each shall cause its independent accountants to
afford to the other party and its accountants, counsel and other
representatives, reasonable access during normal business hours during the
period prior to the Closing to all of the other party's properties, books,
contracts, commitments and records. During such period, each party shall use
reasonable efforts to furnish promptly to the other party all other information
concerning the business, properties and personnel of such party as the other
party may reasonably request.
Section 8.5. Confidentiality.
8.5.1. For purposes of this Section 8.5, a "party" shall refers to
(i) collectively, Equipe (prior to the Closing Date) and each of the
Founders and (ii) together, PRI and Acquisition Corp. Each party shall
treat as confidential, and shall cause its accountants, counsel and other
representatives to treat as confidential, all documents and information
concerning the other party furnished by the other party to such party
(including documents and information furnished prior to the date hereof)
in connection with the transactions contemplated by this Agreement, except
to the extent that such information or documents: (a) at the time of its
disclosure to the receiving Party by or on behalf of the disclosing party
is already known or available to the receiving party, provided that the
receiving party is not subject to similar restrictions of confidentiality
as set forth herein with a third party with respect to such information;
(b) is or becomes known or available to the public other than as a result
of an unauthorized disclosure by the receiving party or its directors,
officers, employees, agents or representatives; (c) is or becomes known or
available to the receiving party without similar restrictions of
confidentiality as set forth herein from a source other than the
disclosing party, provided that such source is not known by the receiving
party, after reasonable inquiry, to be bound by a confidentiality
agreement with, or other obligation of secrecy to, the disclosing party
that would prohibit such disclosures to the receiving party by such other
party; (d) is independently generated by the receiving party and not
derived from confidential information; or (e) is required to be disclosed
by the receiving party by law, regulation, court order or other legal
process. Subject to the foregoing, each party will not release or disclose
such information or documents to any Person other than its representatives
in connection with this Agreement and will not use such information for
purposes other than as contemplated by this Agreement. In the event of the
termination of this Agreement, each party hereto shall, and shall cause
its representatives to, deliver to the other party the originals of all
documents obtained by such party or on behalf of such party from the other
party in connection with this Agreement, whether so obtained before or
after the execution hereof, and such party shall, and shall cause its
representatives to, destroy all copies thereof.
8.5.2. Except as contemplated by Section 8.6, no party shall
disclose to any Person (other than the party's representatives) any
information regarding the transactions contemplated by this Agreement,
including the existence and terms of this Agreement. Prior to the time
that this Agreement is publicly announced in a press release in accordance
with Section 8.6 or is disclosed in a filing made by PRI with the
Securities and Exchange Commission pursuant to the Securities Act or the
Exchange Act, no Founder shall, directly or indirectly, buy, sell or
otherwise trade in any shares of PRI Common or advise any other Person as
to any trading of PRI Common.
8.5.3. The agreements contained in this Section 8.5 shall survive
any termination of this Agreement and remain in effect for a period of
five years from the date hereof.
30
Section 8.6. Public Disclosure. Any press release or other public
disclosure of information regarding the transactions contemplated by this
Agreement (including the existence and terms of this Agreement) shall be
developed by PRI, subject to (a) the approval of Equipe, which approval shall
not be unreasonably withheld, or (b) if such disclosure is required in order for
PRI to comply with applicable law, reasonable consultation with Equipe.
Section 8.7. Exclusivity. Neither Equipe nor any Founder shall, nor
shall Equipe permit any of its representatives or affiliates to, directly or
indirectly, (a) solicit, initiate or participate in discussions or negotiations
or otherwise cooperate in any way with, or provide any information to, any
Person (other than PRI) or any group of Persons concerning any tender offer,
exchange offer, merger, business combination, sale of substantial assets, sale
of shares of capital stock or similar transaction involving such party or (b)
enter into any agreement to effect, or effect, any such transaction (other than
the transactions contemplated hereby). Equipe and each Founder shall immediately
notify PRI in writing of any of the events referred to in this Section 8.7,
including a summary of the material terms of any offer made or proposed in
connection therewith.
Section 8.8. Securities Laws. PRI shall take such steps as may be
necessary to comply with the securities laws of the United States and the
securities and Blue Sky laws of all other jurisdictions that are applicable in
connection with the Merger. Equipe shall use its best efforts to assist PRI as
may be necessary to comply with such laws.
Section 8.9. Option Assumption; S-8 Registration Statement. PRI will
take such action as is necessary to effect the assumption of the Equipe Options
in accordance with Section 1.4.2 above. PRI will file a registration statement
on Form S-8 covering the shares of PRI Common issuable upon exercise of the
assumed Equipe Options no later than January 4, 1998 or, if later, five business
days after the Closing, and will use its best efforts to cause such registration
statement to become and remain effective for so long as any of the Equipe
Options remain outstanding.
Section 8.10. State Statutes. If any state takeover law shall become
applicable to the transactions contemplated by this Agreement, PRI and its board
of directors or Equipe and its board of directors, as the case may be, shall use
their best efforts to obtain such approvals and take such actions as are
necessary so that the transactions contemplated by this Agreement may be
consummated as promptly as practicable on the terms contemplated by this
Agreement and otherwise to minimize the effects of such state takeover law on
the transactions contemplated by this Agreement.
Section 8.11. Pooling Accounting. No party to this Agreement shall
knowingly take any action, directly or indirectly, that would cause the Merger
to fail to qualify as a pooling of interests, including taking any action that
would alter the equity interests of Equipe in a way that would prohibit pooling
of interests treatment for the Merger.
Section 8.12. Expenses. If the Merger is not consummated, each party
will be and remain responsible for its costs and expenses, including fees and
disbursements of consultants, investment bankers and other financial advisors,
counsel and accountants, and the costs incurred in seeking necessary consents,
in connection with the acquisition of Equipe by PRI.
Section 8.13. Consents; Further Assurances. The parties shall use all
commercially reasonable efforts to obtain any consent, authorization, order or
approval of, or any exemption by, any Governmental Entity, or other third party,
required to be obtained or made by such party in connection with the taking of
any action contemplated by this Agreement. No party shall take any action that
would, or is reasonably likely to, result in any of its representations and
warranties set forth in this Agreement being
31
untrue or in any of the conditions precedent set forth in Article 9 not being
satisfied. At any time and from time to time after the Closing, the parties
agree to cooperate with each other to execute and deliver such other documents,
instruments or transfer or assignment, files, books and records, and to do all
such further acts and things, as may be reasonably required to carry out the
transactions contemplated hereby.
Section 8.14. Updates of Schedules. Equipe and the Founders may, from
time to time after the date hereof but not later than five days before the
Closing Date, prepare and deliver to PRI updates to one or more of the Schedules
hereto disclosing any changes thereto required in respect of matters not known
to Equipe or the Founders on or prior to the date of execution and delivery
hereof. In the event the Closing does not occur, the initial Schedules shall
constitute the Schedules to be used in determining any inaccuracy in, or breach
of, any representations or warranties of Equipe and the Founders pursuant to
Section 11.2. In the event the Closing occurs, the final versions of the
Schedules as of the Closing Date shall supersede the initial Schedules and shall
constitute the definitive Schedules for all purposes of Article 10.
Section 8.15. Nomination of Director. PRI hereby agrees that, at each
annual or special meeting of its stockholders at which directors of PRI are to
be elected, PRI will include as one of the nominees for whose election proxies
are solicited on behalf of PRI one person designated in writing by those Holders
holding, in the aggregate, a majority of the shares of PRI Common issued at the
Effective Time that are owned of record by the Holders (the "Equipe Nominee").
PRI will use its best efforts, consistent with applicable law, to solicit
proxies for the election of the Equipe Nominee, consistent with the efforts
customarily employed by PRI in soliciting proxies for the election of
management's nominees for director, and otherwise to cause the election of the
Equipe Nominee as a director. Provided that an Equipe Nominee is nominated for
election to a term of at least one year at PRI's annual meeting of stockholders
or special meeting in lieu thereof following the end of each of its 1997, 1998
and 1999 fiscal years, PRI shall not be required to nominate any Equipe Nominee
(a) for election to a term that will end after PRI's annual meeting of
stockholders or special meeting in lieu thereof following the end of its 1999
fiscal year or (b) for election at any meeting if an Equipe Nominee is already
serving as a director and will remain in office following such meeting.
Section 8.16. Indemnification of Equipe Officers and Directors.
8.16.1 PRI and the Surviving Corporation hereby agree that the
indemnification obligations set forth in the Equipe Charter and the Equipe
Bylaws, in each case on the date of this Agreement, shall survive the
Merger (and, prior to the Effective Time, PRI shall cause the articles of
incorporation and bylaws of Acquisition Corp. to reflect such provisions)
and shall not be amended, repealed or otherwise modified for a period of
six years after the Effective Time in any manner that would adversely
affect the rights thereunder of the individuals who on or prior to the
Effective Time were directors or officers, employees or agents (each such
term being used in this Section 8.16 in the manner defined in the Equipe
Charter and the Equipe Bylaws in effect on the date hereof) of Equipe.
8.16.2 PRI shall take all action necessary to cause the Surviving
Corporation to perform its obligations under Section 8.16.1 and to fulfill
its indemnification obligations under the Surviving Corporation's articles
of incorporation and bylaws.
8.16.3 The obligations of Equipe, the Surviving Corporation, and
PRI under this Section 8.16 shall not be terminated or modified in such a
manner as to adversely affect any director, officer, employee or agent to
whom this Section 8.16 applies without the consent of such affected
director, officer, employee or agent (it being expressly agreed that each
such director,
32
officer, employee and agent to whom this Section 8.16 applies shall be a
third-party beneficiary of this Section 8.16).
Section 8.17. Employee Matters. To the maximum extent permitted under the
terms of the applicable PRI benefit plans, all Equipe employees shall be
eligible to participate in the various benefit plans and programs maintained for
PRI employees or in substantially similar programs, including (without
limitation) any of the following benefit plans maintained by PRI as of the
Effective Time: medical/dental/vision care, life insurance, disability income,
sick pay, holiday and vacation pay, 401(k) plan coverage, Section 125 benefit
arrangements, bonus, profit-sharing or other incentive plans, pension or
retirement programs, dependent care assistance, and employee stock option and
stock purchase plans, to the extent the Equipe employees meet the eligibility
requirements for each such plan or program. Equipe employees shall be given
credit, for purposes of any service requirements for participation, for their
period of service with Equipe prior to the Effective Time, and the Equipe
employees shall also, with respect to any PRI plans or programs which have
co-payment, deductible or other co-insurance features, receive credit for any
amounts such employees have paid to date in the plan year of the Merger in co-
payments, deductibles or co-insurance under comparable programs maintained by
Equipe prior to the Effective Time. No Equipe employee who participates in any
medical/health plan of Equipe at the Effective Time shall be denied coverage
under the PRI medical/health plan by reason of any pre-existing condition
exclusions. All officers of Equipe immediately prior to the Effective Time shall
be entitled to all perquisites and other special benefits generally made
available to PRI officers of equivalent responsibility.
Section 8.18. Obligations of Acquisition Corp. PRI shall take all action
necessary to cause Acquisition Corp. to perform its obligations under this
Agreement and to consummate the Merger on the terms and conditions set forth in
this Agreement.
Section 8.19. Affiliate's Agreements. Each of PRI and Equipe shall use
its best efforts to cause each person who is, or may be deemed to be, at the
time of the PRI Stockholders' Meeting, an "affiliate" of PRI (a "PRI Affiliate")
or of Equipe (an "Equipe Affiliate"), respectively, to deliver to the other,
prior to the date the Proxy Statement is mailed to PRI's stockholders, a written
agreement in substantially the form of Exhibit B-1 (a "PRI Affiliate's
-----------
Agreement") or Exhibit B-2 (an "Equipe Affiliate's Agreement") hereto,
-----------
respectively.
ARTICLE 9. CONDITIONS PRECEDENT
Section 9.1. Conditions to Each Party's Obligations. The respective
obligations of each party to effect the transactions contemplated by this
Agreement shall be subject to the satisfaction on or prior to the Closing Date
of the following conditions unless waived by such party:
9.1.1. Government Approvals. All authorizations, consents, orders
or approvals of, or declarations or filings with, or expiration or early
termination of waiting periods imposed by, any Governmental Entity
necessary for the consummation of the transactions contemplated by this
Agreement, including under applicable federal and state securities laws,
and including the waiting period required by the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976 and regulations promulgated thereunder
(the "HSR Act"), shall have been filed, occurred or been obtained.
9.1.2. Stockholder Approval. This Agreement shall have been
approved and adopted by the stockholders of both Equipe and PRI.
33
9.1.3. Legal Action. No temporary restraining order, preliminary
injunction or permanent injunction or other order preventing the
consummation of the transactions contemplated by this Agreement shall have
been issued by any federal or state court and remain in effect, and no
litigation brought by any Governmental Entity seeking the issuance of such
an order or injunction shall be pending which, in the good faith judgment
of Equipe's or PRI's board of directors, 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.
9.1.4. Statutes. No statute, rule or regulation shall have been
enacted by any Governmental Entity that (a) makes the consummation of the
transactions contemplated by this Agreement illegal, (b) prohibits PRI's
ownership or operation of all or a material portion of the business or
assets of Equipe, or compels PRI to dispose of or hold separate all or a
material portion of the business or assets of Equipe, as a result of the
transactions contemplated by this Agreement, or (c) renders PRI or Equipe
unable to consummate the transactions contemplated by this Agreement,
except for any waiting period provisions.
9.1.5. Tax Opinions. PRI and Equipe shall have received written
opinions of Xxxxx, Xxxx & Xxxxx LLP and Xxxxxxx, Phleger & Xxxxxxxx LLP,
respectively, in form and substance reasonably satisfactory to them to the
effect that the Merger and the Related Company Acquisitions constitute
reorganizations within the meaning of Section 368 of the Code. In
rendering such opinions, counsel may rely upon representations and
certificates of PRI, Acquisition Corp., Equipe and the Founders.
9.1.6. Pooling Letters. Each of PRI and Equipe shall have received
updates of letters from Coopers & Xxxxxxx LLP and Ernst & Young LLP
regarding those firms' concurrence with the conclusions of the managements
of PRI and Equipe respectively as to the appropriateness of pooling of
interests accounting for the Merger and the Related Company Acquisitions
under Accounting Principles Board Opinion No. 16, if closed and
consummated in accordance with this Agreement.
Section 9.2. Conditions to Obligations of PRI and Acquisition Corp. The
obligations of PRI and Acquisition Corp. to effect the transactions contemplated
by this Agreement are subject to the satisfaction on or prior to the Closing
Date of the following conditions, unless waived by PRI:
9.2.1. Representations, Warranties and Performance of Equipe and the
Founders. The representations and warranties of Equipe and each of the
Founders set forth in this Agreement shall be true and correct as of the
date of this Agreement and as if made at and as of the Closing Date,
except for (i) changes specifically contemplated by this Agreement, (ii)
those representations and warranties that address matters only as of a
particular date (which shall remain true and correct as of such date) and
(iii) in each case except where the failure to be so true and correct
would not have an Equipe Material Adverse Effect (other than
representations and warranties that are already so qualified, which shall
be true and correct as written). Equipe and each Founder shall have
performed in all material respects all obligations required to be
performed under this Agreement prior to the Closing Date by such parties.
Since June 30, 1997 there shall have been no changes that, in the
aggregate, have had or could reasonably be expected to have an Equipe
Material Adverse Effect, and the Closing, itself, will not cause any
default under any material contract to which Equipe is a party that would
have an Equipe Material Adverse Effect. PRI shall have received a
certificate signed by the chief executive officer and chief financial
officer of Equipe and by each Founder confirming the preceding three
sentences.
34
9.2.2. Officers' Certificate. Authorized officers of Equipe shall
have executed the Officers' Certificate of Equipe.
9.2.3. Other Agreements. Each of the parties thereto, other than PRI
and Acquisition Corp., shall have entered into the following agreements:
(a) Equipe Affiliate's Agreements, dated as of the Closing Date,
of each of the Equipe Affiliates;
(b) Employment Agreements, dated as of the Closing Date, between
Equipe and each of Xxxxx Xxxxxxx, Xxxxxxxxx Xxxxxx, Xxxx
Xxxxx, Xxxxxxx Xxxxxxx and Xxxxxx The in the form of
Exhibit C (the "Employment Agreements");
---------
(c) a Registration Rights Agreement, dated as of the Closing
Date, among PRI, each of the Holders, the stockholders of
each of the Related Companies, and the Stockholders'
Representatives (as defined in Section 10.2) in the form of
Exhibit D (the "Registration Rights Agreement); and
---------
(d) each of Xxxxx Xxxxxxx, Xxxx Xxxxxxx, Xxxxxxx Xxxxx and Xxxx
Xxxxxx (collectively, the "Other Holders") shall have
executed an instrument of adherence (each an "Instrument of
Adherence"), agreeing to be bound by Articles 10 and 12
hereof.
9.2.4. Irrevocable Proxies. Each Founder shall have delivered to
PRI, simultaneously with the execution of this Agreement, and Equipe shall
have used its best efforts to cause each of Xxxxx Xxxxxxx, Xxxx Xxxxxxx,
Xxxxxxx Xxxxx and Xxxx Xxxxxx to deliver to PRI as soon as practicable
following the execution of this Agreement, his or her irrevocable proxy
(each, an "Irrevocable Proxy") in the form of Exhibit E with respect to
---------
approval of the Merger by the stockholders of Equipe.
9.2.5. Opinion of Counsel for Equipe and Founders. PRI shall have
received an opinion dated as of the Closing Date of Xxxxxxx, Phleger &
Xxxxxxxx LLP, counsel for Equipe and the Founders, in the form of
Exhibit F.
---------
9.2.6. Resignations. Equipe shall have received a letter from each
person who is an officer or director of Equipe or of either Related
Company immediately prior to the Closing Date, to the effect that such
person thereby resigns from all such offices effective as of the Closing
Date.
9.2.7. FIRPTA Compliance. Each Holder shall have delivered to PRI an
affidavit complying with the requirements of Code section 1445 and the
regulations thereunder certifying as to the non-foreign status of such
Holder, or Equipe and each of the Related Companies shall have delivered
to PRI certificates complying with the requirements of Section 1445 of the
Code and the regulations thereunder to the effect that Equipe and the
Related Companies are not and have not been U.S. real property holding
corporations.
9.2.8. Effectiveness of Related Company Acquisitions. All conditions
to the consummation of the Related Company Acquisitions, other than the
consummation of the Merger, shall have been satisfied, such that the
Related Party Acquisitions will be able to be consummated immediately
following the consummation of the Merger.
35
Section 9.3. Conditions to Obligations of Equipe and Founders. The
obligations of Equipe and the Founders to effect the transactions contemplated
by this Agreement are subject to the satisfaction on or prior to the Closing
Date of the following conditions unless waived by the Founders:
9.3.1. Representations, Warranties and Performance of PRI. The
representations and warranties of PRI and Acquisition Corp. set forth in
this Agreement shall be true and correct as of the date of this Agreement
and as if made at and as of the Closing Date, except for (i) changes
specifically contemplated by this Agreement, (ii) those representations
and warranties that address matters only as of a particular date (which
shall remain true and correct as of such date) and (iii) in each case
except where the failure to be so true and correct would not have a PRI
Material Adverse Effect. PRI and Acquisition Corp. shall have performed in
all material respects all obligations required to be performed under this
Agreement prior to the Closing Date by such parties. Since June 29, 1997,
there shall have been no changes that, in the aggregate, have had or could
reasonably be expected to have a PRI Material Adverse Effect, and the
Closing, itself, will not cause any default under any material contract to
which PRI or Acquisition Corp. is a party that would have a PRI Material
Adverse Effect. Equipe shall have received a certificate signed by the
chief executive officer and chief financial officer of PRI and Acquisition
Corp. confirming the preceding three sentences.
9.3.2. Officers' Certificate. Authorized officers of Acquisition
Corp. shall have executed the Officers' Certificate of Acquisition Corp.
9.3.3. Other Agreements. Each of PRI and Acquisition Corp., to the
extent a party thereto, shall have entered into the Registration Rights
Agreement and the Employment Agreements.
9.3.4. Opinion of PRI's Counsel. The Founders shall have received an
opinion dated as of the Closing Date of Xxxxx, Xxxx & Xxxxx LLP, counsel
to PRI and Acquisition Corp., substantially in the form of Exhibit G.
---------
9.3.5. PRI Options. The board of directors of PRI shall have
authorized, and any other necessary corporate action shall have been taken
by PRI to cause, the issuance, as of the Effective Time, of nonqualified
stock options to purchase PRI Common to those Equipe employees listed on
Schedule 9.3.5, in the respective amounts listed on Schedule 9.3.5 (the
-------------- --------------
"PRI Options"). Such PRI Options shall be at an exercise price equal to
the last reported sale price of the PRI Common as reported by the Nasdaq
National Market on the Effective Date, and shall otherwise be consistent
in form and substance with the nonqualified stock options granted by PRI
to employees having comparable responsibilities.
ARTICLE 10. INDEMNIFICATION
Section 10.1. Agreement to Indemnify. Subject to the limitations set forth
herein, the Holders shall jointly and severally (and without any right of
contribution from or indemnification by Equipe or either Related Company)
indemnify, defend and hold harmless PRI and the Surviving Corporation (and their
respective affiliates, officers, directors, employees, representatives and
agents) (collectively, the "Indemnified Persons") against and in respect of any
and all claims, costs, losses, expenses, liabilities or other damages, including
interest, penalties and reasonable attorneys' fees and disbursements
(collectively "Damages") by reason of or otherwise arising out of a breach by
Equipe or any Founder of a representation, warranty or covenant contained in
this Agreement. The amounts for which the
36
Indemnified Persons may seek indemnification under this Article 10 shall extend
to, and as used herein the term "Damages" shall include, reasonable attorneys'
fees and disbursements, reasonable accountants' fees, costs of litigation and
other expenses incurred by them in the defense of any claim asserted against
them and any amounts paid in settlement or compromise of any claim asserted
against them to the extent that the claim asserted is or would have been subject
to the indemnification provisions hereof, subject to the limitations set forth
in Section 10.4. The indemnity under this Article 10 extends only to the net
amount of Damages sustained by the Indemnified Person after deducting therefrom
any amount that such Indemnified Person recovers as proceeds of insurance in
respect of such claim, net of any cost of collection, deductible, retroactive
premium adjustment, reimbursement obligation or other cost directly related to
the insurance claim for such claim.
Section 10.2. Appointment of Stockholders' Representative. Each Holder, by
operation of the Merger and by virtue of his receipt of the merger consideration
specified in Section 1.5 above, shall be deemed at the Effective Time to have
appointed Xxxxx Xxxxxxx and Xxxx Xxxxx, and each of them, acting singly, with
full power of substitution, the representatives and attorneys-in-fact of such
Holder (the "Stockholders' Representatives"), with full power and authority in
the name of and for and on behalf of such Holder to:
(a) execute and deliver on behalf of such Holder the Registration
Rights Agreement and on behalf of each Other Holder an
Instrument of Adherence; and
(b) to receive at the Closing and forward promptly to such Holder
the stock certificates referred to in Section 1.5 above.
This power of attorney, and the authority conferred hereby, being coupled
with an interest, are irrevocable and shall not be terminable by any act or deed
of such Holder, by the death or incapacity of such Holder, by operation of law
or otherwise. Notwithstanding the foregoing, this power of attorney shall
terminate in the event that the Closing has not taken place within one hundred
twenty (120) days after the date hereof.
Section 10.3. Survival of Representations and Warranties. Except as
otherwise set forth below, the representations and warranties of Equipe and the
Founders in this Agreement shall survive the Closing, and any investigation made
by PRI, for a period of one year after the Closing Date or, if sooner, until the
publication of audited financial statements of PRI for its first fiscal year
ending after the Effective Time (the "Survival Period"). The representations and
warranties of PRI and Acquisition Corp. shall terminate at the Effective Time.
The covenants of any party shall survive the Closing in accordance with their
terms.
Section 10.4. Certain Limitations. The obligations of the Holders with
respect to indemnification pursuant to Section 10.1 above shall be subject to
the following limitations:
(a) no indemnification shall be required to be made hereunder (i) with
regard to individual claims for $10,000 or less and (ii) unless the
aggregate amount of individual claims of greater than $10,000 for
which indemnity is sought exceeds $2,500,000, in which case
indemnification shall be provided to the full extent of such claims;
(b) no claims for indemnity shall be made after the expiration of the
Survival Period; and
(c) the amount of the claims for which indemnification shall be made
hereunder by any Holder shall not exceed the product of (i) the
Average Price multiplied by (ii) ten percent (10%) of the number of
shares of PRI Common received by such Holder pursuant to this
Agreement and any Related Company Acquisition Agreement to which
such Holder is a party.
37
ARTICLE 11. TERMINATION, AMENDMENT AND WAIVER
Section 11.1. Termination. This Agreement may be terminated at any time
prior to the Closing:
(a) by mutual written consent of Equipe, the Founders and PRI;
(b) by Equipe or any Founder if there has been a breach of any
representation, warranty, covenant or agreement contained in this
Agreement on the part of PRI or Acquisition Corp. such that the
condition set forth in Section 9.3.1 would not be satisfied and, if
such breach is curable, such breach has not been cured within twenty
days after written notice of such breach, or by PRI if there has
been a breach of any representation, warranty, covenant or agreement
contained in this Agreement on the part of Equipe or any Founder
such that the condition set forth in Section 9.2.1 would not be
satisfied and, if such breach is curable, such breach has not been
cured within twenty days after written notice of such breach;
(c) by Equipe, any Founder or PRI if the stockholders of Equipe or PRI
shall have voted not to approve this Agreement;
(d) by Equipe, any Founder or PRI if the Closing shall not have been
occurred on or before May 31, 1998; provided, however, that the
rights to terminate this Agreement under this Section 11.1(d) shall
not be available to any party whose failure to fulfill an obligation
under this Agreement has been the cause of the failure of the Merger
to occur on or before such date;
(e) by Equipe, any Founder or PRI if (i) there shall be a final
nonappealable order of a federal or state court in effect preventing
consummation of the transactions contemplated by this Agreement or
(ii) there shall be any action taken, or any statute, rule,
regulation or order erected, promulgated or issued or deemed
applicable to the transactions contemplated by this Agreement by any
Governmental Entity which would make consummation of the
transactions contemplated by this Agreement illegal; and
(f) by Equipe or PRI if there shall be any action taken, or any statute,
rule, regulation or order enacted, promulgated or issued or deemed
applicable to the transactions contemplated by this Agreement by any
Governmental Entity that would (i) prohibit PRI's or Equipe's
ownership or operation of all or a material portion of the business
or assets of Equipe or PRI and its subsidiaries taken as a whole, or
compel PRI or Equipe to dispose of or hold separate all or a
material portion of the business or assets of Equipe or PRI, as a
result of the transactions contemplated by this Agreement or (ii)
render PRI, Equipe or any Founder unable to consummate the
transactions contemplated by this Agreement.
Section 11.2. Effect of Termination. In the event of termination of this
Agreement by Equipe, PRI or the Founders as provided in Section 11.1, this
Agreement shall forthwith become void and there shall be no liability or
obligation on the part of PRI or Equipe or their respective officers or
directors or any Founder, except that if such termination results from any
material and intentionally fraudulent misrepresentation by a party made herein
or an intentional breach by any party of any of its material agreements herein,
the other parties shall be entitled to recover from such party all fees and
expenses incurred by them incident to their investigation, preparation and
carrying out of the transactions contemplated hereby.
38
Section 11.3. Amendment. This Agreement may not be amended, modified or
supplemented by the parties hereto in any manner, except by an instrument in
writing signed on behalf of each of the parties hereto.
Section 11.4. Extension; Waiver. At any time prior to the Effective Time,
any party hereto, by such corporate or other action as shall be appropriate,
may, to the extent legally allowed, (a) extend the time for the performance of
any of the obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties made to such party contained
herein or in any document delivered pursuant hereto and (c) waive compliance
with any of the covenants, 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.
ARTICLE 12. MISCELLANEOUS
Section 12.1. Arbitration.
12.1.1. Any dispute, controversy or claim arising in connection with
this Agreement, including any claim for indemnification pursuant to
Section 10.1 of this Agreement, shall be settled by arbitration by a panel
of three arbitrators; except that, notwithstanding the foregoing, any
dispute, controversy or claim arising in connection with a breach of the
confidentiality provisions of this Agreement shall not be subject to
arbitration pursuant to this Section 12.1. The arbitration shall be held
in New York, New York and shall be conducted in accordance with the
Commercial Arbitration Rules of the American Arbitration Association,
except that the rules set forth in this Section 12.1 shall govern such
arbitration to the extent they conflict with the rules of the American
Arbitration Association.
12.1.2. Upon written notice by a party to any other party of a
request for arbitration hereunder, PRI and the Founders shall each select
an arbitrator within thirty days after the date of such notice, and the
two arbitrators so selected shall use their best efforts to select a
mutually acceptable arbitrator within thirty days after their selection.
If the two arbitrators are unable to agree upon a third arbitrator within
said thirty-day period, the third arbitrator shall be selected by the
American Arbitration Association pursuant to its rules. The arbitration
shall be conducted in an expeditious manner, the parties using their best
efforts to cause the arbitration to be completed within sixty days after
selection of the arbitrator. In the arbitration, there shall be no
discovery except as the arbitrators shall permit following a determination
by the arbitrators that the party seeking such discovery has substantial
demonstrable need. All other procedural matters shall be within the
discretion of the arbitrators. In the event a party fails to comply with
the procedures in any arbitration in a manner deemed material by the
arbitrators, the arbitrators shall fix a reasonable period of time for
compliance and, if the party does not comply within said period, a remedy
deemed just by the arbitrators, including an award of default, may be
imposed.
12.1.3. The determination of the arbitrators by majority vote shall
be final and binding on the parties. The expense of the arbitration and
all expenses incurred by the parties with respect thereto (including
reasonable attorneys' fees and fees of experts shall be borne by the party
not prevailing in the arbitration, as determined by the arbitrators.
Judgment upon the award rendered by the arbitrators may be entered in the
U.S. District Court for the District of New York sitting in New York, New
York.
39
Section 12.2. Notices. Any notice, request, instruction or other document
to be given hereunder by any party to the other shall be in writing and
delivered personally or sent by certified mail, postage prepaid, by facsimile
(with receipt confirmed), or by courier service, as follows:
To PRI: PRI Automation, Inc.
000 Xxxxxxxxx Xxxxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000-0000
Fax: 000-000-0000
Attention: President
With a copy to:
Xxxxx, Xxxx & Xxxxx LLP
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Fax: 000-000-0000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
To Equipe: Equipe Technologies, Inc.
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Fax: 000-000-0000
Attention: President
With a copy to:
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP
Spear Street Tower
Xxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Fax: 000-000-0000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
To any Founder: Xxxxx Xxxxxxx and Xxxx Xxxxx,
as Stockholders' Representatives
c/o Equipe Technologies, Inc.
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Fax: 000-000-0000
With a copy to:
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP
Spear Street Tower
Xxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Fax: 000-000-0000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
or to such other Persons as may be designated in writing by the parties, by a
notice given as aforesaid.
40
Section 12.3. Construction. The headings in this Agreement are included
only for convenience and shall not affect the meaning or interpretation of this
Agreement. The words "herein" and "hereof" and other words of similar import
refer to this Agreement as a whole and not to any particular part of this
Agreement. The word "including" as used herein shall not be construed so as to
exclude any other thing not referred to or described.
Section 12.4. Exhibits and Schedules. The Exhibits and Schedules to this
Agreement are a part of this Agreement as if set forth in full herein. All
references herein to Sections, Exhibits and Schedules shall be deemed references
to such parts of this Agreement, except as otherwise provided.
Section 12.5. Entire Agreement, Assignability, etc. This Agreement (a)
constitutes the entire agreement, and supersedes all other prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof, (b) is not intended to confer upon any Person other than
the parties hereto any rights or remedies hereunder, except as otherwise
expressly provided herein, and (c) shall not be assignable by operation of law
or otherwise, except to each Founder's heirs upon such Founder's death. No
provisions of this Agreement are intended, nor will be interpreted, to provide
or create any third party beneficiary rights or any other rights of any kind in
any client, customer, affiliate, stockholder, partner or employee of any party
hereto or any other Person unless specifically provided otherwise herein, and,
except as so provided, all provisions hereof will be personal solely between the
parties to this Agreement.
Section 12.6. Validity. The invalidity or unenforceability of any
provisions of this Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, each of which shall remain in full force
and effect.
Section 12.7. Further Assurances. Each party agrees to cooperate fully
with the other parties and to execute such further instruments, documents and
agreements and to give such further written assurances as may be reasonably
requested by any other party to evidence and reflect the transactions described
herein and contemplated hereby and to carry into effect the intents and purposes
of this Agreement.
Section 12.8. Jurisdiction and Venue. Each party agrees that the federal
courts of the United States shall have the exclusive jurisdiction for any
dispute under this Agreement.
Section 12.9. Governing Law. This Agreement shall be governed by the laws
of the Commonwealth of Massachusetts.
Section 12.10. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
* * *
41
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
PRI AUTOMATION, INC.
By: /s/ Xxxxxxxxx Xxxxxxx
----------------------------------------
Name: Xxxxxxxxx Xxxxxxx
Title: Chief Executive Officer
E-ACQUISITION, CORP.
By: /s/ Xxxxxxxxx Xxxxxxx
----------------------------------------
Name: Xxxxxxxxx Xxxxxxx
Title: Chief Executive Officer
EQUIPE TECHNOLOGIES, INC.
By: /s/ Xxxxx Xxxxxxx
----------------------------------------
Name: Xxxxx Xxxxxxx
Title: CEO
FOUNDERS:
/s/ Xxxxx Xxxxxxx
-------------------------------------------
Xxxxx Xxxxxxx
/s/ Xxxxxxxxx Xxxxxx
-------------------------------------------
Xxxxxxxxx Xxxxxx
/s/ Xxxx Xxxxx
-------------------------------------------
Xxxx Xxxxx
/s/ Xxxxxxx Xxxxxxx
-------------------------------------------
Xxxxxxx Xxxxxxx
/s/ Xxxxxx The
-------------------------------------------
Xxxxxx The
42
Instrument of Adherence
-----------------------
Each of the undersigned hereby agrees to be bound by Articles 10 and 12 of
the foregoing Agreement and Plan of Reorganization dated October 25, 1997, as
fully as if each had been an original signatory thereto.
*
----------------------------------------
Xxxxx Xxxxxxx
*
----------------------------------------
Xxxx Xxxxxxx
*
----------------------------------------
Xxxxxxx Xxxxx
*
----------------------------------------
Xxxx Xxxxxx
By: /s/ Xxxxx Xxxxxxx
-------------------------------------
Xxxxx Xxxxxxx, Attorney-in-fact
/s/ Xxxx Xxxxx
-------------------------------------
Xxxx Xxxxx, Attorney-in-fact
43
Agreement and Plan of Reorganization, dated as of October 25, 1997,
among PRI Automation, Inc., E-Acquisition Corp., Equipe Technologies, Inc.
and Certain Stockholders of Equipe Technologies, Inc.
--------------------------------------------------------------------------------
Exhibits and Schedules Omitted In Accordance with Item 601(b)(2) of Regulation
S-K:
(a) Exhibit A-1. Form of stock purchase agreement for the acquisition
of the capital stock of E-Machine by PRI;
(b) Exhibit A-2. Form of stock purchase agreement for the acquisition
of the capital stock of Equipe Japan by PRI;
(c) Exhibit B-1. Form of affiliate's agreement to be entered into by
affiliates of PRI prior to the mailing of a proxy statement (the "Proxy
Statement") concerning the Merger and related transactions to the stockholders
of PRI;
(d) Exhibit B-2. Form of affiliate's agreement to be entered into by
affiliates of Equipe prior to the mailing of the Proxy Statement;
(e) Exhibit C. Form of employment agreement to be entered into
between Equipe and each of the Founders on or before the date of the closing
(the "Closing") of the transactions contemplated by the Merger Agreement;
(f) Exhibit D. Form of registration rights agreement to be entered
into between PRI and the currently outstanding stockholders of Equipe, E-Machine
and Equipe Japan on or before the date of the Closing;
(g) Exhibit E. Form of irrevocable proxy to be executed by each of
the stockholders of Equipe with respect to their approval of the Merger;
(h) Exhibit F. Form of opinion of counsel for Equipe and the Founders
to be delivered to PRI at the Closing;
(i) Exhibit G. Form of opinion of counsel for PRI and E-Acquisition
to be delivered to the Founders at the Closing;
(j) Schedules of exceptions to Article 2 of the Merger Agreement;
(k) Schedule of officers and directors of the Related Companies;
(l) Schedule of stockholders of the Related Companies;
(m) Schedule of exceptions to Article 3 of the Merger Agreement;
(n) Financial information relating to E-Machine and Equipe Japan for
the last three months of 1990, 1991 to 1996 and the first three quarters of
1997; and
(o) Schedule of options to be issued to employees of Equipe.
* * *
PRI Automation, Inc. ("PRI") will furnish supplementally a copy of any
omitted schedule to the Securities and Exchange Commission upon request. PRI
may request confidential treatment pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934, as amended, for any schedule so furnished.
