EXHIBIT-2.1
AGREEMENT AND PLAN
OF MERGER AND REORGANIZATION
THIS AGREEMENT AND PLAN OF MERGER AND REORGANIZATION ("Agreement")
is made and entered into as of February 28, 2000, by and among: WIND RIVER
SYSTEMS, INC., a Delaware corporation ("Parent"); BOAT ACQUISITION CORP., a
Massachusetts corporation and a wholly owned subsidiary of Parent ("Merger
Sub"); EMBEDDED SUPPORT TOOLS CORPORATION, a Massachusetts corporation (the
"Company"); ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (the
"Designated Stockholders").
RECITALS
A. Parent, Merger Sub and the Company intend to effect a merger of
Merger Sub into the Company in accordance with this Agreement and the Business
Corporation Law of the Commonwealth of Massachusetts (the "Merger"). Upon
consummation of the Merger, Merger Sub will cease to exist, and the Company will
become a wholly owned subsidiary of Parent.
B. It is intended that the Merger qualify as a tax-free reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code"). For accounting purposes, it is intended that the Merger be
treated as a "purchase."
C. This Agreement has been approved by the respective boards of
directors of Parent, Merger Sub and the Company.
AGREEMENT
The parties to this Agreement agree as follows:
SECTION 1. DESCRIPTION OF TRANSACTION
1.1 MERGER OF MERGER SUB INTO THE COMPANY. Upon the terms and subject
to the conditions set forth in this Agreement, at the Effective Time (as defined
in Section 1.3), Merger Sub shall be merged with and into the Company, and the
separate existence of Merger Sub shall cease. The Company will continue as the
surviving corporation in the Merger (the "Surviving Corporation").
1.2 EFFECT OF THE MERGER. The Merger shall have the effects set forth
in this Agreement and in the applicable provisions of the General Laws of the
Commonwealth of Massachusetts ("MGL") and particularly Chapter 156B thereof.
1.3 CLOSING; EFFECTIVE TIME. The consummation of the transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of Cooley Godward LLP, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ at
10:00 a.m. on a date to be designated by Parent as soon as practicable after the
satisfaction (or, to the extent permitted, waiver) of the conditions set forth
in Sections 6 and 7. (The date on which the Closing actually takes place is
referred to in
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this Agreement as the "Closing Date.") Contemporaneously with or as promptly
as practicable after the Closing, properly executed articles of merger
conforming to the requirements of Chapter 156B of the MGL shall be filed with
the Secretary of State of the Commonwealth of Massachusetts. The Merger shall
become effective at the time such articles of merger are filed with the
Secretary of State of the State of Massachusetts or at such later time as
Parent and the Company shall designate in the articles of merger (the
"Effective Time").
1.4 ARTICLES OF ORGANIZATION AND BYLAWS; DIRECTORS AND OFFICERS. Unless
otherwise determined by Parent and the Company prior to the Effective Time:
(a) the articles of organization of the Surviving Corporation
shall be amended and restated as of the Effective Time in a form acceptable to
Parent;
(b) the bylaws of the Surviving Corporation shall be amended
and restated as of the Effective Time to conform to the bylaws of Merger Sub as
in effect immediately prior to the Effective Time; and
(c) the directors and officers of the Surviving Corporation
immediately after the Effective Time shall be the individuals selected by Parent
prior to the Closing.
1.5 CONVERSION OF SHARES.
(a) Subject to Sections 1.8(b) and 1.9, at the Effective Time,
by virtue of the Merger and without any further action on the part of Parent,
Merger Sub, the Company or any Stockholder:
(i) each share of Company Common Stock outstanding
immediately prior to the Effective Time shall be converted into the right to
receive the Applicable Fraction (as defined below) of a share of the common
stock (par value $0.001 per share) of Parent ("Parent Common Stock"). The
"Applicable Fraction" shall be 0.4246; and
(ii) each share of the common stock (par value $0.01
per share) of Merger Sub outstanding immediately prior to the Effective Time
shall be converted into one share of common stock of the Surviving Corporation.
(b) If any shares of Company Common Stock outstanding
immediately prior to the Effective Time are unvested or are subject to a
repurchase option, risk of forfeiture or other condition under any applicable
restricted stock purchase agreement or other agreement with the Company, then
the shares of Parent Common Stock issued in exchange for such shares of Company
Common Stock will also be unvested and subject to the same repurchase option,
risk of forfeiture or other condition, and the certificates representing such
shares of Parent Common Stock may accordingly be marked with appropriate
legends.
1.6 EMPLOYEE STOCK OPTIONS. At the Effective Time, each option (if any)
to purchase shares of capital stock of the Company that is then outstanding,
whether vested or unvested (a "Company Option"), shall be assumed by Parent in
accordance with the terms (as in effect as of the date of this Agreement) of the
stock option agreement by which such Company Option is evidenced. All rights
with respect to Company Common Stock under outstanding
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Company Options shall thereupon be converted into rights with respect to
Parent Common Stock. Accordingly, from and after the Effective Time, (a) each
Company Option assumed by Parent may be exercised solely for shares of Parent
Common Stock, (b) the number of shares of Parent Common Stock subject to each
such assumed Company Option shall be equal to the number of shares of Company
Common Stock that were subject to such Company Option immediately prior to
the Effective Time multiplied by the Applicable Fraction, rounded down to the
nearest whole number of shares of Parent Common Stock, (c) the per share
exercise price for the Parent Common Stock issuable upon exercise of each
such assumed Company Option shall be determined by dividing the exercise
price per share of Company Common Stock subject to such Company Option, as in
effect immediately prior to the Effective Time, by the Applicable Fraction,
and rounding the resulting exercise price up to the nearest whole cent, and
(d) all restrictions on the exercise of each such assumed Company Option
shall continue in full force and effect, and the term, exercisability,
vesting schedule and other provisions of such Company Option shall otherwise
remain unchanged; PROVIDED, HOWEVER, that each such assumed Company Option
shall, in accordance with its terms, be subject to further adjustment as
appropriate to reflect any stock split, reverse stock split, stock dividend,
recapitalization or other similar transaction effected by Parent after the
Effective Time. The Company and Parent shall take all action that may be
necessary to effectuate the provisions of this Section 1.6. Following the
Closing, Parent will send to each holder (if any) of an assumed Company
Option a written notice setting forth (i) the number of shares of Parent
Common Stock subject to such assumed Company Option and (ii) the exercise
price per share of Parent Common Stock issuable upon exercise of such assumed
Company Option. Parent shall file with the SEC, within 15 days after the
Closing Date, a registration statement on Form S-8 registering the securities
to be issued upon exercise of any Company Options assumed by Parent pursuant
to this Section 1.6, and shall use reasonable efforts to maintain the
effectiveness of such registration statement for so long as such Company
Options remain outstanding.
1.7 CLOSING OF THE COMPANY'S TRANSFER BOOKS. At the Effective Time,
holders of certificates representing shares of the Company's capital stock that
were outstanding immediately prior to the Effective Time shall cease to have any
rights as stockholders of the Company, and the stock transfer books of the
Company shall be closed with respect to all shares of such capital stock
outstanding immediately prior to the Effective Time. No further transfer of any
such shares of the Company's capital stock shall be made on such stock transfer
books after the Effective Time. If, after the Effective Time, a valid
certificate previously representing any of such shares of the Company's capital
stock (a "Company Stock Certificate") is presented to the Surviving Corporation
or Parent, such Company Stock Certificate shall be canceled and shall be
exchanged as provided in Section 1.8.
1.8 EXCHANGE OF CERTIFICATES.
(a) At the Closing, each Stockholder shall surrender to Parent
all of his certificates representing shares of Company Common Stock (properly
endorsed for transfer). At or as soon as practicable after the Effective Time,
Parent shall (i) deliver to each Stockholder a certificate representing
90 percent of the number of whole shares of Parent Common Stock that such
Stockholder has the right to receive pursuant to the provisions of Section 1.5
and (ii) deliver to the escrow agent under the Escrow Agreement (as defined
below), on behalf and in the name of each Stockholder a certificate representing
10 percent of the number of whole shares of Parent
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Common Stock that such Stockholder has the right to receive pursuant to the
provisions of Section 1.5. If any Company Stock Certificate shall have been
lost, stolen or destroyed, Parent may, in its discretion and as a condition
precedent to the issuance of any certificate representing Parent Common
Stock, require the owner of such lost, stolen or destroyed Company Stock
Certificate to provide an appropriate affidavit and to deliver a bond (in
such sum as Parent may reasonably direct) as indemnity against any claim that
may be made against Parent or the Surviving Corporation with respect to such
Company Stock Certificate.
(b) No fractional shares of Parent Common Stock shall be
issued in connection with the Merger, and no certificates for any such
fractional shares shall be issued. In lieu of such fractional shares, any holder
of capital stock of the Company who would otherwise be entitled to receive a
fraction of a share of Parent Common Stock (after aggregating all fractional
shares of Parent Common Stock issuable to such holder) shall, upon surrender of
such holder's Company Stock Certificate(s), be paid in cash the dollar amount
(rounded to the nearest whole cent), without interest, determined by multiplying
such fraction by the average of the closing sale prices of a share of Parent
Common Stock as reported on the Nasdaq National Market for each of the five
consecutive trading days ending on the trading day immediately preceding the
Closing.
(c) Parent and the Surviving Corporation shall be entitled to
deduct and withhold from any consideration payable or otherwise deliverable to
any holder or former holder of capital stock of the Company pursuant to this
Agreement such amounts as Parent or the Surviving Corporation may be required to
deduct or withhold therefrom under the Code or under any provision of state,
local or foreign tax law. To the extent such amounts are so deducted or
withheld, such amounts shall be treated for all purposes under this Agreement as
having been paid to the Person to whom such amounts would otherwise have been
paid.
(d) Neither Parent nor the Surviving Corporation shall be
liable to any holder or former holder of capital stock of the Company for any
shares of Parent Common Stock (or dividends or distributions with respect
thereto), or for any cash amounts, delivered to any public official pursuant to
any applicable abandoned property, escheat or similar law.
1.9 DISSENTING SHARES.
(a) Notwithstanding anything to the contrary contained in this
Agreement, any shares of capital stock of the Company that, as of the Effective
Time, are or may become "dissenting shares" as provided in Sections 86 to 98 of
Chapter 156B of the MGL shall not be converted into or represent the right to
receive Parent Common Stock in accordance with Section 1.5 (or cash in lieu of
fractional shares in accordance with Section 1.8(b)), and the holder or holders
of such shares shall be entitled only to such rights as may be granted to such
holder or holders in Chapter 156B of the MGL; PROVIDED, HOWEVER, that if the
status of any such shares as "dissenting shares" shall not be perfected, or if
any such shares shall lose their status as "dissenting shares," then, as of the
later of the Effective Time or the time of the failure to perfect such status or
the loss of such status, such shares shall automatically be converted into and
shall represent only the right to receive (upon the surrender of the certificate
or certificates representing such shares) Parent Common Stock in accordance with
Section 1.5 (and cash in lieu of fractional shares in accordance with
Section 1.8(b)). For purposes of this Section 1.9,
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"dissenting shares" means shares of the capital stock of the Company for
which a stockholder has filed a written objection meeting the requirements of
Section 86 of Chapter 156B of the MGL and, provided that such shares have not
been voted in favor of the Merger, for which such stockholder's right to
receive payment has been perfected under Section 89 of Chapter 156B of the
MGL and for which such stockholder's right to receive payment has not been
extinguished under Section 96 of Chapter 156B of the MGL.
(b) The Company shall give Parent (i) prompt notice of any
written objection received by the Company prior to the Effective Time to require
the Company to purchase shares of capital stock of the Company pursuant to
Chapter 156B of the MGL and of any other demand, notice or instrument delivered
to the Company prior to the Effective Time pursuant to Chapter 156B of the MGL
and (ii) the opportunity to participate in all negotiations and proceedings with
respect to any such demand, notice or instrument. The Company shall not make any
payment or settlement offer prior to the Effective Time with respect to any such
objection unless Parent shall have consented in writing to such payment or
settlement offer.
1.10 TAX CONSEQUENCES. For federal income tax purposes, the Merger is
intended to constitute a reorganization within the meaning of Section 368 of the
Code. The parties to this Agreement hereby adopt this Agreement as a "plan of
reorganization" within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the
United States Treasury Regulations.
1.11 ACCOUNTING TREATMENT. For accounting purposes, the Merger is
intended to be treated as a "purchase."
1.12 FURTHER ACTION. If, at any time after the Effective Time, any
further action is determined by Parent to be necessary or desirable to carry out
the purposes of this Agreement or to vest the Surviving Corporation or Parent
with full right, title and possession of and to all rights and property of
Merger Sub and the Company, the officers and directors of the Surviving
Corporation and Parent shall be fully authorized (in the name of Merger Sub, in
the name of the Company and otherwise) to take such action.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE DESIGNATED
STOCKHOLDERS
The Company and the Designated Stockholders jointly and severally
represent and warrant, to and for the benefit of the Indemnitees, as follows:
2.1 DUE ORGANIZATION; SUBSIDIARIES; ETC.
(a) Each of the Acquired Corporations has been duly organized
and is validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has full power (corporate and other) and
authority to own or lease its properties and conduct its business as described
in the Company's Amendment No. 2 to S-1 Registration Statement, dated
February 24, 2000 (the "Registration Statement"), and as currently being
conducted and proposed to be conducted by it and is duly qualified as a
foreign corporation and in good standing in all jurisdictions in which the
character of the property owned or leased or the nature of the business
transacted by it makes qualification necessary, except where the failure to
be so qualified would not have a material adverse effect on the business,
properties, condition
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(financial or otherwise), results of operations or prospects of the Acquired
Corporations considered as one enterprise (a "Material Adverse Effect on the
Acquired Corporations"). Each of the Acquired Corporations is in possession
of and operating in compliance with all Governmental Authorizations that are
material to the conduct of its business, all of which are valid and in full
force and effect.
(b) Part 2.1 of the Disclosure Schedule accurately sets forth
(i) the names of the members of the Company's board of directors, (ii) the names
of the members of each committee of the Company's board of directors, and
(iii) the names and titles of the Company's officers.
(c) Part 2.1 of the Disclosure Schedule accurately sets forth
the full legal name and jurisdiction of each of the Company's subsidiaries (the
"Subsidiaries"). The Company owns 100 percent of the issued and outstanding
stock of each Subsidiary. Neither of the Acquired Corporations has any equity
interest in any Entity other than the Subsidiaries. As used in this Agreement,
the word "Subsidiary" means any Entity of which the Company directly or
indirectly owns 50 percent or more of the equity or that the Company directly or
indirectly controls.
2.2 ARTICLES OF ORGANIZATION AND BYLAWS; RECORDS. The Company has
delivered to Parent accurate and complete copies of: (a) the Company's Articles
of Organization and bylaws, including all amendments thereto; (b) the stock
records of the Company; and (c) except as set forth in Part 2.2 of the
Disclosure Schedule, the minutes and other records of the meetings and other
proceedings (including any actions taken by written consent or otherwise without
a meeting) of the stockholders of the Company, the board of directors of the
Company and all committees of the board of directors of the Company. The Company
is not in violation of any of the provisions of the Company's Articles of
Organization or bylaws, and the Company has not taken any action that is
inconsistent in any material respect with any resolution adopted by the
Company's stockholders, the Company's board of directors or any committee of the
Company's board of directors. The books of account, stock records, minute books
and other records of the Company are accurate, up-to-date and complete in all
material respects.
2.3 CAPITALIZATION, ETC.
(a) The authorized and outstanding capital stock of the
Company is as set forth in the Registration Statement, and the description of
the Common Stock set forth in the Registration Statement under the caption
"Description of Capital Stock" conforms with and accurately describes the rights
set forth in the instruments defining the Company Common Stock. The Designated
Stockholders own seventy-eight and four-tenths percent (78.4%) of the
outstanding shares of capital stock of the Company. Part 2.3 of the Disclosure
Schedule accurately sets forth, with respect to each Company Option that is
outstanding as of the date of this Agreement: (i) the name of the holder of such
Company Option; (ii) the total number of shares of Company Common Stock that are
subject to such Company Option and the number of shares of Company Common Stock
with respect to which such Company Option is immediately exercisable; (iii) the
date on which such Company Option was granted and the term of such Company
Option; (iv) the vesting schedule for such Company Option; (v) the exercise
price per share of Company Common Stock purchasable under such Company Option;
and (vi) whether
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such Company Option has been designated an "incentive stock option" as
defined in Section 422 of the Code. Except as set forth in Part 2.3 of the
Disclosure Schedule, there is no: (i) outstanding subscription, option, call,
warrant or right (whether or not currently exercisable) to acquire any shares
of the capital stock or other securities of the Company; (ii) outstanding
security, instrument or obligation that is or may become convertible into or
exchangeable for any shares of the capital stock or other securities of the
Company; (iii) Contract under which the Company is or may become obligated to
sell or otherwise issue any shares of its capital stock or any other
securities; or (iv) to the best of the knowledge of the Company and the
Designated Stockholders, condition or circumstance that may give rise to or
provide a basis for the assertion of a claim by any Person to the effect that
such Person is entitled to acquire or receive any shares of capital stock or
other securities of the Company.
(b) All of the outstanding shares of Company Common Stock have
been duly authorized and validly issued and are fully paid and nonassessable,
have been issued in compliance with all applicable federal and state securities
laws and were not issued in violation of or subject to any preemptive rights or
other rights to subscribe for or purchase securities of the Company. There are
no preemptive rights applicable to any shares of capital stock of the Company.
(c) All of the stock in the Subsidiaries owned by the Company
is owned by the Company free and clear of any Encumbrance. All of the
outstanding stock of the Subsidiaries has been duly authorized and validly
issued and is fully paid and nonassessable, has been issued in compliance with
all applicable Legal Requirements, including securities laws, and was not issued
in violation of or subject to any preemptive rights or other rights to subscribe
for or purchase securities of the Subsidiaries. There are no options, warrants
or other rights outstanding to subscribe for or purchase any shares of the
capital stock of the Subsidiaries and the Subsidiaries are not subject to any
obligation, commitment, plan, arrangement or court or administrative order with
respect to same. There are no preemptive rights applicable to any shares of
capital of the Subsidiaries.
2.4 FINANCIAL STATEMENTS.
(a) The Company has delivered to Parent the following
financial statements and notes (collectively, the "Company Financial
Statements"): the audited balance sheets of the Company as of December 31, 1997,
1998 and 1999 (the December 31, 1999 balance sheet is referred to as the "Most
Recent Balance Sheet"), and the related audited income statements, statements of
stockholders' equity and statements of cash flows of the Company for the years
then ended, together with the notes thereto and the unqualified report and
opinion of PricewaterhouseCoopers LLP relating thereto.
(b) The Company Financial Statements are accurate and complete
in all material respects and present fairly the financial position of the
Company as of the respective dates thereof and the results of operations and (in
the case of the financial statements referred to in Section 2.4(a)(i)) cash
flows of the Company for the periods covered thereby. The Company Financial
Statements have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods covered, except
as set forth in the notes thereto.
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(c) The books, records and accounts of the Acquired
Corporations accurately and fairly reflect, in reasonable detail, the
transactions in and dispositions of the assets of the Acquired Corporations. The
systems of internal accounting controls maintained by the Acquired Corporations
are sufficient to provide reasonable assurances that: (i) transactions are
executed in accordance with management's general or specific authorization;
(ii) transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting
principles and to maintain accountability for assets; (iii) access to assets
is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared
with the existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
2.5 ABSENCE OF CHANGES. Except as set forth in Part 2.5 of the
Disclosure Schedule, since December 31, 1999:
(a) there has not been any material loss or interference with
the business of any of the Acquired Corporations from fire, explosion, flood,
earthquake or other calamity, whether or not covered by insurance, or from any
court or governmental action, order or decree;
(b) there has not been any change in the capital stock or
long-term debt of any of the Acquired Corporations;
(c) none of the Acquired Corporations have declared, paid or
made any dividend or distribution of any kind on the capital stock of any of the
Acquired Corporations;
(d) there has not been any material adverse change, or a
development known to the Company that might cause or result in a material
change, in or affecting the business, properties, condition (financial or
otherwise), results of operation or prospects of the Acquired Corporations
considered as one enterprise, whether or not arising from transactions in the
ordinary course of business; and
(e) other than as is expressly and specifically set forth in
the Registration Statement, except in the ordinary course of business, none of
the Acquired Corporations has entered into any material transaction.
2.6 TITLE TO ASSETS. Each of the Acquired Corporations owns, or has
valid rights to use, all items of real and personal property that are material
to their respective business and, except as set forth in Part 2.6 of the
Disclosure Schedule, such assets are owned or used by the Acquired Corporations
free and clear of all Encumbrances that might materially interfere with the
business, properties, condition (financial or otherwise), results of operations
or prospects of the Acquired Corporations.
2.7 EQUIPMENT; LEASEHOLD. All material items of equipment and other
tangible assets owned by or leased to each of the Acquired Corporations are
adequate for the uses to which they are being put, are in good condition and
repair (ordinary wear and tear excepted) and are adequate for the conduct of the
respective Acquired Corporations in the manner in which such business is
currently being conducted.
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2.8 TITLE TO REAL PROPERTY. None of the Acquired Corporations owns any
real property or interest in real property. Part 2.8 of the Disclosure Schedule
sets forth a complete list of all real property and interest in real property
leased by any of the Acquired Corporations ("Leased Real Property"). The
applicable Acquired Corporation has good and valid title to the leasehold
estates in all Leased Real Property, in each case free and clear of all
Encumbrances, except (i) such as are set forth in Part 2.8 of the Disclosure
Schedule, (ii) leases, subleases and similar agreements set forth in Part 2.8 of
the Disclosure Schedule, (iii) easements, covenants, rights-of-way and other
similar restrictions of record, and (iv) any conditions that may be shown by a
current, accurate survey or physical inspection of any Leased Real Property made
prior to Closing other than conditions, of any, that do not, individually or in
the aggregate, materially impair the use and operation by the respective
Acquired Corporation.
2.9 PROPRIETARY ASSETS.
(a) Part 2.9(a)(i) of the Disclosure Schedule sets forth, with
respect to each Acquired Corporation Proprietary Asset registered with any
Governmental Body or for which an application has been filed with any
Governmental Body, (i) a brief description of such Proprietary Asset, and
(ii) the names of the jurisdictions covered by the applicable registration or
application. Part 2.9(a)(ii) of the Disclosure Schedule identifies and
provides a brief description of all other Acquired Corporation Proprietary
Assets owned by the Acquired Corporations. Part 2.9(a)(iii) of the Disclosure
Schedule identifies and provides a brief description of each Proprietary
Asset licensed to any of the Acquired Corporations by any Person (except for
any Proprietary Asset that is licensed to an Acquired Corporation under any
third party software license generally available to the public at a cost of
less than $10,000), and identifies the license agreement under which such
Proprietary Asset is being licensed to the Company. Except as set forth in
Part 2.9(a)(iv) of the Disclosure Schedule, each of the Acquired Corporations
has good, valid and marketable title to all of their respective Acquired
Corporation Proprietary Assets identified in Parts 2.9(a)(i) and 2.9(a)(ii)
of the Disclosure Schedule, free and clear of all liens and other
Encumbrances, and has a valid right to use all Proprietary Assets identified
in Part 2.9(a)(iii) of the Disclosure Schedule. Except as set forth in
Part 2.9(a)(v) of the Disclosure Schedule, none of the Acquired Corporation
is obligated to make any payment to any Person for the use of any Acquired
Corporation Proprietary Asset. Except as set forth in Part 2.9(a)(vi) of the
Disclosure Schedule, no Acquired Corporation has developed jointly with any
other Person any Acquired Corporation Proprietary Asset with respect to which
such other Person has any rights.
(b) Except as set forth in Part 2.9(b) of the Disclosure
Schedule, none of the Acquired Corporations has (other than pursuant to license
agreements identified in Part 2.10 of the Disclosure Schedule) disclosed or
delivered to any Person, or permitted the disclosure or delivery to any Person
of, (i) the source code, or any portion or aspect of the source code, of any
Acquired Corporation Proprietary Asset, or (ii) the object code, or any portion
or aspect of the object code, of any Acquired Corporation Proprietary Asset.
(c) None of the Acquired Corporation Proprietary Assets
infringes or conflicts with any Proprietary Asset owned or used by any other
Person. None of the Acquired Corporations is infringing, misappropriating or
making any unlawful use of, and no Acquired Corporation has at any time
infringed, misappropriated or made any unlawful use of, or received
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any notice or other communication (in writing or otherwise) of any actual,
alleged, possible or potential infringement, misappropriation or unlawful use
of, any Proprietary Asset owned or used by any other Person. To the best of
the knowledge of the Company and the Designated Stockholders, no other Person
is infringing, misappropriating or making any unlawful use of, and no
Proprietary Asset owned or used by any other Person infringes or conflicts
with, any Acquired Corporation Proprietary Asset.
(d) Except as set forth in Part 2.9(d) of the Disclosure
Schedule: (i) each Acquired Corporation Proprietary Asset conforms in all
material respects with any specification, documentation, performance standard,
representation or statement made or provided with respect thereto by or on
behalf of the Company; and (ii) there has not been any claim by any customer or
other Person alleging that any Acquired Corporation Proprietary Asset (including
each version thereof that has ever been licensed or otherwise made available by
any Acquired Corporation to any Person) does not conform in all material
respects with any specification, documentation, performance standard,
representation or statement made or provided by or on behalf of any Acquired
Corporation, and, to the best of the knowledge of the Company and the Designated
Stockholders, there is no basis for any such claim. Except as set forth in
Part 2.9(d) of the Disclosure Schedule, the Company has established adequate
reserves on the Most Recent Balance Sheet to cover all costs associated with
any obligations that an Acquired Corporation may have with respect to the
correction or repair of programming errors or other defects in the Acquired
Corporation Proprietary Assets.
(e) The Acquired Corporation Proprietary Assets constitute all
the Proprietary Assets necessary to enable each Acquired Corporation to conduct
its business in the manner in which such business has been and is being
conducted. Except as set forth in Part 2.9(e) of the Disclosure Schedule, (i) no
Acquired Corporation has licensed any of the Acquired Corporation Proprietary
Assets to any Person on an exclusive basis, and (ii) no Acquired Corporation has
entered into any covenant not to compete or Contract limiting its ability to
exploit fully any Acquired Corporation Proprietary Asset or to transact business
in any market or geographical area or with any Person.
(f) Except as set forth in Part 2.9(f) of the Disclosure
Schedule, all current and former consultants and independent contractors to any
of the Acquired Corporations have executed and delivered to the Company an
agreement (containing no exceptions to or exclusions from the scope of its
coverage) pursuant to which they have validly and properly assigned to the
Company all rights with respect to Acquired Corporation Proprietary Assets
developed or created by them. No current or former officer, director,
stockholder, employee, consultant or independent contractor of or to any of the
Acquired Corporations has any right, claim or interest in or with respect to any
Acquired Corporation Proprietary Asset.
(g) Except as set forth in Part 2.9(g) of the Disclosure
Schedule, none of the Acquired Corporations has disclosed or delivered to any
Person, or permitted the disclosure or delivery to any escrow agent or other
Person, of any Acquired Corporation Source Code. No event has occurred, and no
circumstance or condition exists, that (with or without notice or lapse of time)
will, or could reasonably be expected to, result in the disclosure or delivery
to any Person of any Acquired Corporation Source Code. Part 2.9(g) of the
Disclosure Schedule identifies each Contract pursuant to which any Acquired
Corporation has deposited or is required
10
to deposit with an escrowholder or any other Person any Acquired Corporation
Source Code, and further describes whether the execution of this Agreement or
the consummation of any of the transactions contemplated hereby could
reasonably be expected to result in the release or disclosure of any Acquired
Corporation Source Code.
(h) Except as set forth in Part 2.9(h) of the Disclosure
Schedule, each computer, computer program and other item of software (whether
installed on a computer or on any other piece of equipment, including firmware)
that is owned or used by any of the Acquired Corporations for their internal
business operations is Year 2000 Compliant (as defined below). Except as set
forth in Part 2.9(h) of the Disclosure Schedule, each computer program and other
item of software that has been designed, developed, sold, licensed or otherwise
made available to any Person by any of the Acquired Corporations is Year 2000
Compliant. Except as set forth in Part 2.9(h) of the Disclosure Schedule, each
of the Acquired Corporations has conducted sufficient Year 2000 compliance
testing for each computer, computer program and item of software referred to in
the preceding two sentences to be able to determine whether such computer,
computer program and item of software is Year 2000 Compliant. Each of the
Acquired Corporations has obtained warranties or other written assurances from
each of its suppliers of any material Acquired Corporation Proprietary Assets to
the effect that the Acquired Corporation Proprietary Assets provided by such
suppliers to the Acquired Corporations is Year 2000 Compliant. For purposes of
this Section 2.9, a computer, computer program or other item of software shall
be deemed to be "Year 2000 Compliant" only if (i) the functions, calculations
and other computing processes of such computer, program or software perform in a
consistent and correct manner without interruption regardless of the date on
which such functions, calculations and processes are actually performed and
regardless of the date input to the applicable computer system (whether before,
on or after January 1, 2000); (ii) such computer, program or software accepts,
calculates, compares, sorts, extracts, sequences and otherwise processes date
inputs and date values, and returns and displays date values, in a consistent
and correct manner regardless of the dates used (whether before, on or after
January 1, 2000); (iii) such computer, program or software accepts and responds
to year input in a manner that resolves any ambiguities as to century in a
defined, predetermined and appropriate manner; (iv) such computer, program or
software stores and displays date information in ways that are unambiguous as to
the determination of the century; and (v) such computer, program or software
determines leap years in accordance with the following standard: (A) if dividing
the year by 4 yields an integer, it is a leap year, except for years ending in
00, but (B) a year ending in 00 is a leap year if dividing it by 400 yields an
integer.
(i) Except with respect to demonstration or trial copies, no
product, system, program or software module designed, developed, sold, licensed
or otherwise made available by any of the Acquired Corporations to any Person
contains any "back door," "time bomb," "Trojan horse," "worm," "drop dead
device," "virus" or other software routines or hardware components designed to
permit unauthorized access or to disable or erase software, hardware or data
without the consent of the user.
11
2.10 CONTRACTS.
(a) Part 2.10(a) of the Disclosure Schedule identifies:
(i) each Acquired Corporation Contract relating to
the employment of, or the performance of services by, any employee, consultant
or independent contractor, and any Contract pursuant to which any of the
Acquired Corporations is or may become obligated to make any severance,
termination or similar payment to any current or former employee or director;
and any Contract pursuant to which any of the Acquired Corporations is or may
become obligated to make any bonus or similar payment (other than payments
constituting base salary) in excess of $5,000 to any current or former employee
or director;
(ii) each Acquired Corporation Contract imposing any
restriction on the right or ability of any Acquired Corporation (A) to compete
with any other Person, (B) to acquire any product or other asset or any services
from any other Person, (C) to solicit, hire or retain any Person as an employee,
consultant or independent contractor, (D) to develop, sell, supply, distribute,
offer, support or service any product or any technology or other asset to or for
any other Person or class or category of Persons, (E) to perform services for
any other Person or class or category of Persons, or (F) to transact business or
deal in any other manner with any other Person or class or category of Persons;
(iii) each Acquired Corporation Contract creating or
relating to any partnership or joint venture or any sharing of revenues,
profits, losses, costs or liabilities;
(iv) each Acquired Corporation Contract creating or
involving any agency relationship, distribution arrangement or franchise
relationship;
(v) each Acquired Corporation Contract relating to
the acquisition, issuance or transfer of any securities;
(vi) each Acquired Corporation Contract (A) relating
to the acquisition, transfer, development, sharing or license of any Proprietary
Asset (except for any Contract pursuant to which (1) any Proprietary Asset is
licensed to the Acquired Corporations under any third party software license
generally available to the public, or (2) any Proprietary Asset is licensed by
any of the Acquired Corporations to any Person on a non-exclusive basis), or (B)
of the type referred to in Section 2.9;
(vii) any other Acquired Corporation Contract that
contemplates or involves (A) the payment or delivery of cash or other
consideration in an amount or having a value in excess of $100,000 in the
aggregate or (B) the performance of services having a value in excess of
$100,000 in the aggregate, in each case other than Contracts that have a term of
less than 60 days or that may be terminated by the Acquired Corporation (without
penalty) within 60 days after the delivery of a termination notice by the
Acquired Corporation; and
(viii) any other Acquired Corporation Contract that
is material to the business of any of the Acquired Corporations.
12
(Contracts in the respective categories described in clauses "(i)" through
"(viii)" above are referred to in this Agreement as "Material Contracts.")
(b) The Company has delivered to Parent accurate and complete
copies of all Material Contracts. Each Contract identified in Part 2.10 of the
Disclosure Schedule is valid and in full force and effect, and, to the best of
the knowledge of the Company and the Designated Stockholders, is enforceable by
the respective Acquired Corporation in accordance with its terms, subject to (i)
laws of general application relating to bankruptcy, insolvency and the relief of
debtors and (ii) rules of law governing specific performance, injunctive relief
and other equitable remedies.
(c) Except as set forth in Part 2.10 of the Disclosure
Schedule:
(i) none of the Acquired Corporations have violated
or breached, or committed any default under, any Acquired Corporation Contract,
and, to the best of the knowledge of the Company and the Designated
Stockholders, no other Person has violated or breached, or committed any default
under, any Acquired Corporation Contract;
(ii) to the best of the knowledge of the Company and
the Designated Stockholders, no event has occurred, and no circumstance or
condition exists, that (with or without notice or lapse of time) will, or could
reasonably be expected to, (A) result in a violation or breach of any of the
provisions of any Acquired Corporation Contract, (B) give any Person the right
to declare a default or exercise any remedy under any Acquired Corporation
Contract, (C) give any Person the right to accelerate the maturity or
performance of any Acquired Corporation Contract, or (D) give any Person the
right to cancel, terminate or modify any Acquired Corporation Contract;
(iii) since December 31, 1998, none of the Acquired
Corporations have received any notice or other communication regarding any
actual or possible violation or breach of, or default under, any Acquired
Corporation Contract; and
(iv) none of the Acquired Corporations has waived any
of its material rights under any Material Contract.
2.11 LIABILITIES. None of the Acquired Corporations have any accrued,
contingent or other liabilities of any nature, either matured or unmatured
(whether or not required to be reflected in financial statements in accordance
with generally accepted accounting principles, and whether due or to become
due), except for: (a) liabilities identified as such in the "liabilities" column
of the Most Recent Balance Sheet; (b) accounts payable or accrued salaries that
have been incurred by the Company since December 31, 1999 in the ordinary course
of business and consistent with the Company's past practices; (c) liabilities
under the Company Contracts identified in Part 2.10 of the Disclosure Schedule,
to the extent the nature and magnitude of such liabilities can be specifically
ascertained by reference to the text of such Company Contracts; and (d) the
liabilities identified in Part 2.11 of the Disclosure Schedule.
13
2.12 RECEIVABLES, CUSTOMERS.
(a) All existing accounts receivable of the Acquired
Corporations (including those accounts receivable reflected on the Most Recent
Balance Sheet that have not yet been collected and those accounts receivable
that have arisen since December 31, 1999, and have not yet been collected) (i)
represent valid obligations of customers of the Acquired Corporations arising
from bona fide transactions entered into in the ordinary course of business,
(ii) are current and, to the best of the knowledge of the Company and the
Designated Stockholders, will be collected in full when due, without any
counterclaim or set off (net of an allowance for doubtful accounts not to exceed
the sum of (A) $105,000, plus (B) an amount equal to an allowance for doubtful
accounts with respect to accounts receivables recorded between January 1, 2000
and the Closing, which amount shall be determined in good faith by the Company
on a basis consistent with past practices).
(b) Part 2.12(b) of the Company Disclosure Schedule contains
an accurate and complete list as of the date of this Agreement of all loans and
advances made by any of the Acquired Corporations to any employee, director,
consultant or independent contract, other than routine travel advances and other
expenses made to employees in the ordinary course of business.
(c) Part 2.12(c) of the Company Disclosure Schedule accurately
identifies, and provides a breakdown that is accurate and complete in all
material respects of the revenues received from, (i) the top 20 customers of the
Company in terms of gross revenue generated in fiscal year 1998 and fiscal year
1999. The Company has not received any notice or other communication (in writing
or otherwise), and has not received any other information, indicating that any
of the customers described in the preceding sentence may cease dealing with the
Company or may otherwise reduce the volume of business transacted by such Person
with the Company below historical levels.
2.13 SALE OF PRODUCTS; PERFORMANCE OF SERVICES.
(a) Except as set forth in Part 2.13(a) of the Company
Disclosure Schedule, to the best of the knowledge of the Company and the
Designated Stockholders, each product, system, program, Proprietary Asset or
other asset designed, developed, manufactured, assembled, sold, installed,
repaired, licensed or otherwise made available by any of the Acquired
Corporations to any Person:
(i) conformed and complied in all material respects
with the terms and requirements of any applicable warranty or other Contract and
with all applicable Legal Requirements; and
(ii) was free of any bug, virus, design defect or
other defect or deficiency at the time it was sold or otherwise made available,
other than any immaterial bug or similar defect that would not adversely affect
the Acquired Corporations in any material respect taken as a whole.
(b) All installation services, programming services, repair
services, maintenance services, support services, training services, upgrade
services and other services that
14
have been performed by the Acquired Corporations were performed properly and
in compliance in all material respects with the terms and requirements of all
applicable warranties and other Contracts and with all applicable Legal
Requirements.
2.14 COMPLIANCE WITH LEGAL REQUIREMENTS. The Company is, and has always
been, in compliance in all material respects with all applicable Legal
Requirements. Except as set forth in Part 2.14 of the Disclosure Schedule, since
January 1, 1997, none of the Acquired Corporations have received any notice or
other communication from any Person regarding any actual or possible violation
of, or failure to comply with, any Legal Requirement.
2.15 GOVERNMENTAL AUTHORIZATIONS. Part 2.15 of the Disclosure Schedule
identifies each material Governmental Authorization held by each of the Acquired
Corporations, and the Company has delivered to Parent accurate and complete
copies of all Governmental Authorizations identified in Part 2.15 of the
Disclosure Schedule. The Governmental Authorizations identified in Part 2.15 of
the Disclosure Schedule are valid and in full force and effect, and collectively
constitute all Governmental Authorizations necessary to enable each of the
Acquired Corporations to conduct its business in the manner in which its
business is currently being conducted. Each of the Acquired Corporations is, and
at all times since January 1, 1997, has been, in substantial compliance with the
terms and requirements of the respective Governmental Authorizations identified
in Part 2.15 of the Disclosure Schedule. Since January 1, 1997, none of the
Acquired Corporations has received any notice or other communication from any
Governmental Body regarding (a) any actual or possible violation of or failure
to comply with any term or requirement of any Governmental Authorization, or (b)
any actual or possible revocation, withdrawal, suspension, cancellation,
termination or modification of any Governmental Authorization.
2.16 TAX MATTERS.
(a) The Company made a valid election under Section 1361 et
seq. of the Code to be an "S corporation" for federal income tax purposes, and
under the Chapter 63, section 32D of the MGL, to be an "S corporation" for
Massachusetts income tax purposes, beginning on January 5, 1989; such elections
have been in effect at all times since such date; and no actions have been taken
by the Stockholders or otherwise to cause the Company to cease to so qualify as
an S corporation. All Tax Returns required to be filed by or on behalf of the
Acquired Corporations with any Governmental Body on or before the date hereof
(the "Acquired Corporation Returns") (i) have been filed in a timely manner, and
(ii) have been accurately and completely prepared in compliance with all
applicable Legal Requirements. All amounts shown on the Acquired Corporation
Returns to be due on or before the date hereof have been paid. The Company has
delivered to Parent accurate and complete copies of all Acquired Corporation
Returns filed since and including December 31, 1996.
(b) Except for immaterial failures to pay, withhold or collect
Taxes (or to establish reserves) (i) each Tax required to have been paid, or
claimed by any Governmental Body to be payable, by each of the Acquired
Corporations (whether pursuant to any Tax Return or otherwise) has been duly
paid in full on a timely basis; (ii) any Tax required to have been withheld or
collected by the Acquired Corporations has been duly withheld and collected on a
timely basis; and (to the extent required) each such Tax has been paid to the
appropriate
15
Governmental Body on a timely basis; and (iii) the Company has established,
in the ordinary course of business and consistent with its past practices,
reserves adequate for the payment of all Taxes for the period from May 31,
1998 through the date hereof.
(c) No Acquired Corporation Return relating to income Taxes
has ever been examined or audited by any Governmental Body. Except as set forth
in Part 2.16(c) of the Disclosure Schedule, there has been no examination or
audit of any Acquired Corporation Return, and no such examination or audit has
been proposed or scheduled by any Governmental Body. The Company has delivered
to Parent accurate and complete copies of all audit reports and similar
documents (to which the Company has access) relating to the Acquired Corporation
Returns. Except as set forth in Part 2.16(c) of the Disclosure Schedule, no
extension or waiver of the limitation period applicable to any of the Acquired
Corporation Returns has been granted (by the Company or any other Person), and
no such extension or waiver has been requested from any of the Acquired
Corporations.
(d) Except as set forth in Part 2.16(d) of the Disclosure
Schedule, no claim or Legal Proceeding is pending or has been to the best of the
knowledge of the Company and the Designated Stockholders threatened against or
with respect to any of the Acquired Corporations in respect of any Tax. There
are no unsatisfied liabilities for Taxes (including liabilities for interest,
additions to tax and penalties thereon and related expenses) with respect to any
notice of deficiency or similar document received by any of the Acquired
Corporations. There are no liens for Taxes upon any of the assets of any of the
Acquired Corporations, except liens for current Taxes not yet due and payable.
None of the Acquired Corporations has entered into or become bound by any
agreement or consent pursuant to Section 341(f) of the Code. None of the
Acquired Corporations has been, and none of the Acquired Corporations will be,
required to include any adjustment in taxable income for any tax period (or
portion thereof) pursuant to Section 481 or 263A of the Code or any comparable
provision under state or foreign Tax laws as a result of transactions or events
occurring, or accounting methods employed, prior to the date hereof.
(e) Other than stock option agreements previously provided to
Parent, there is no agreement, plan, arrangement or other Contract covering any
Acquired Corporation Employee or any independent contractor or former employee
or independent contractor of any Acquired Corporation that, considered
individually or considered collectively with any other such Contracts, will, or
could reasonably be expected to, give rise directly or indirectly to the payment
of any amount that would not be deductible pursuant to Section 280G or Section
162 of the Code. None of the Acquired Corporations has ever been a party to or
bound by any tax indemnity agreement, tax sharing agreement, tax allocation
agreement or similar Contract, except as set forth in Part 2.16(e) of the
Disclosure Schedule.
(f) Except as set forth in Part 2.16(f) of the Disclosure
Schedule, since December 31, 1993, (i) no Governmental Body has asserted any
claim or otherwise made any allegation that any Acquired Corporation has failed
or may have failed to pay any sales tax, use tax or similar Tax, and (ii) none
of the Acquired Corporations has engaged in any discussions or negotiations with
any Governmental Body, or sent any written communication to or received any
written communication from any Governmental Body, in connection with any
possible failure on the part of any Acquired Corporation to pay any sales tax,
use tax or similar Tax.
16
2.17 EMPLOYEE AND LABOR MATTERS; BENEFIT PLANS.
(a) No labor disturbance or organizing effort by or on behalf
of the employees of any of the Acquired Corporations exists, is imminent or, to
the best of the knowledge of the Company and the Designated Stockholders, is
contemplated or threatened. No collective bargaining agreement exists with any
representative of the employees of the Acquired Corporations and, to the best of
the knowledge of the Company and the Designated Stockholders, no such agreement
is imminent. To the best of the knowledge of the Company and the Designated
Stockholders, no officer, employee or consultant of any of the Acquired
Corporations whose continued services are material to the conduct of the
business of the Acquired Corporations has any plans to terminate employment with
the Acquired Corporations nor do any of the Acquired Corporations have a present
intention to terminate the employment or Contract of any such person, except for
▇▇▇▇ ▇▇▇▇▇▇▇.
(b) Part 2.17(b) of the Disclosure Schedule identifies each
plan, program, policy, practice, contract, agreement or other arrangement
providing for compensation, severance, termination pay, deferred compensation,
performance awards, stock or stock-related awards, fringe benefits or other
employee benefits or remuneration of any kind, whether written, unwritten or
otherwise, funded or unfunded, including, without limitation, each "employee
benefit plan" within the meaning of Section 3(3) of ERISA, which is or has been
sponsored, maintained, contributed to or required to be contributed to by any of
the Acquired Corporations for the benefit of any employee of any of the Acquired
Corporations (collectively the "Benefit Plans").
(c) The Acquired Corporations have made available or delivered
to Parent (i) accurate and complete copies in all material respects of each
Benefit Plan including all amendments thereto and all related trust documents,
(ii) the three (3) most recent annual reports on Form Series 5500 (including all
schedules and financial statements attached thereto) filed in connection with
each Benefit Plan, (iii) if the Benefit Plan is funded, the most recent annual
and periodic accounting of Benefit Plan assets, (iv) if required, the most
recent summary plan description, together with all summaries of material
modification, for each Benefit Plan, (v) all material Contracts relating to each
Benefit Plan, including, without limitation, administrative service agreements
and group insurance contracts, (vi) all communications materials provided to
participants in the Benefit Plans and (vii) all correspondence to or from any
Governmental Body relating to any Benefit Plan.
(d) The Acquired Corporations have performed in all material
respects all obligations required to be performed by them under each Benefit
Plan. Each Benefit Plan has been established and maintained in all material
respects in accordance with its terms and in compliance with all applicable
laws, statutes, orders, rules and regulations, including, but not limited to,
ERISA and the Code. No "prohibited transaction" within the meaning of Section
4975 of ERISA has occurred with respect to any Benefit Plan. Other than routine
claims for benefits, there are no actions, suits or claims pending, or to the
best of the knowledge of the Company and the Designated Stockholders, threatened
or reasonably anticipated against any Benefit Plan. Each Benefit Plan can be
amended, terminated or otherwise discontinued after the Effective Time in
accordance with its terms, without liability to Parent or any Acquired
Corporation. There are no audits, inquiries or proceedings pending or, to the
best of the
17
knowledge of the Company and the Designated Stockholders, threatened by any
Governmental Body with respect to any Benefit Plan.
(e) Each of the Benefit Plans that is intended to be qualified
under Section 401(a) of the Code is so qualified and nothing has occurred,
whether by action or by failure to act, that would cause the loss of such
qualification or the imposition of any material liability, penalty or tax under
ERISA or the Code.
(f) Part 2.17(f) of the Disclosure Schedule contains a list of
all salaried employees of the Acquired Corporations as of February 23, 2000, and
correctly reflects, in all material respects, their salaries, any other
compensation payable to them, their dates of employment and their positions.
Part 2.17(g) of the Disclosure Schedule contains a list of all
employees and former employees of the Acquired Corporations whom, as of the date
of this Agreement, are receiving disability benefits pursuant to a Benefit Plan.
(g) Part 2.17(h) of the Disclosure Schedule contains a list of
former employees of the Acquired Corporations and "qualified beneficiaries,"
within the meaning of the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended ("COBRA"), who are entitled to receive health care continuation
coverage under a Benefit Plan pursuant to COBRA or a similar state law.
2.18 ENVIRONMENTAL MATTERS. There has been no storage, disposal,
generation, manufacture, refinement, transportation, handling or treatment of
toxic wastes, medical wastes, hazardous wastes or hazardous substances by any of
the Acquired Corporations (or, to the best of the knowledge of the Company and
the Designated Stockholders, any of the predecessors in interest of the Acquired
Corporations) at, upon or from any of the property now or previously owned or
leased by any of the Acquired Corporations in violation of any applicable Legal
Requirement, order, judgment, decree or permit or which would require remedial
action under any applicable Legal Requirement, order, judgment, decree or
permit, except for any violation or remedial action which would not have, or
would not be reasonably likely to have, singularly or in the aggregate with all
such violations and remedial actions, a Material Adverse Effect on the Acquired
Corporations; there has been no material spill, discharge, leak, emission,
injection, escape, dumping or release of any kind onto such property or into the
environment surrounding such property of any toxic wastes, medical wastes, solid
wastes, hazardous wastes, radioactive wastes, mixed wastes or hazardous
substances due to or caused by any of the Acquired Corporations or with respect
to which the Company has knowledge, except for any such spill, discharge, leak,
emission, injection, escape, dumping or release which would not have or would
not be reasonably likely to have, singularly or in the aggregate with all such
spills, discharges, leaks, emissions, injections, escapes, dumpings and
releases, a Material Adverse Effect on the Acquired Corporations. The terms
"radioactive wastes," "mixed wastes," "hazardous wastes," "toxic wastes,"
"hazardous substances" and "medical wastes" shall have the meanings specified in
any applicable Legal Requirements with respect to environmental protection.
2.19 INSURANCE. Part 2.19 of the Disclosure Schedule identifies all
insurance policies maintained by, at the expense of or for the benefit of any of
the Acquired Corporations, identifies
18
any material claims made thereunder, and includes a summary of the amounts
and types of coverage and the deductibles under each such insurance policy.
Each of the insurance policies identified in Part 2.19 of the Disclosure
Schedule is in full force and effect. Neither of the Acquired Corporations
has received any notice or other communication regarding any actual or
possible (a) cancellation or invalidation of any insurance policy, (b)
refusal of any coverage or rejection of any claim under any insurance policy,
or (c) material adjustment in the amount of the premiums payable with respect
to any insurance policy.
2.20 RELATED PARTY TRANSACTIONS. Except as set forth in the
Registration Statement, there are no outstanding loans, advances or guaranties
of indebtedness by any of the Acquired Corporations to or for the benefit of any
of (a) any "affiliate," as such term is defined in the Securities Act rules and
regulations or (b) any of the members of the families of any of them.
2.21 LEGAL PROCEEDINGS; ORDERS.
(a) Except as set forth in Part 2.21 of the Disclosure
Schedule, there is no pending Legal Proceeding, and (to the best of the
knowledge of the Company and the Designated Shareholders) no Person has
threatened to commence any Legal Proceeding: (i) that involves any of the
Acquired Corporations or any of the assets owned or used by, or any of the
Proprietary Assets or other assets of, the Acquired Corporations or any Person
whose liability any of the Acquired Corporations has or may have retained or
assumed, either contractually or by operation of law; or (ii) that challenges,
or that may have the effect of preventing, delaying, making illegal or otherwise
interfering with, the Merger or any of the other transactions contemplated by
this Agreement. To the best of the knowledge of the Company and the Designated
Shareholders, except as set forth in Part 2.21 of the Disclosure Schedule, no
event has occurred, and no claim, dispute or other condition or circumstance
exists, that will, or that could reasonably be expected to, give rise to or
serve as a basis for the commencement of any such Legal Proceeding.
(b) Neither of the Acquired Corporations is in violation of,
or has received any notice or claim from any governmental agency or third party
that it is in violation of, any order, writ, injunction, judgment or decree of
any agency or body or of any court, to which it or its properties (whether owned
or leased) may be subject, which violation might have a Material Adverse Effect
on the Acquired Corporations.
2.22 AUTHORITY; BINDING NATURE OF AGREEMENT. The Company and the
Designated Stockholders have the right, power and authority to enter into and to
perform their obligations under this Agreement and under each other agreement,
document or instrument referred to in or contemplated by this Agreement to which
the Company and/or the Designated Stockholders is, are or will be a party; and
the execution, delivery and performance by the Company and the Designated
Stockholders of this Agreement and of each such other agreement, document and
instrument have been duly authorized by all necessary action on the part of the
Company and its board of directors and the Designated Stockholders. Subject to
the approval of the Stockholders as required by the MGL, this Agreement and each
other agreement, document and instrument referred to in or contemplated by this
Agreement to which the Company and/or the Designated Stockholders is or are a
party constitutes the legal, valid and binding obligation of the Company and the
Designated Stockholders, enforceable against the Company and the Designated
19
Stockholders in accordance with its terms, subject to (i) laws of general
application relating to bankruptcy, insolvency and the relief of debtors, and
(ii) rules of law governing specific performance, injunctive relief and other
equitable remedies.
2.23 NON-CONTRAVENTION; CONSENTS. Neither (1) the execution, delivery
or performance of this Agreement or any of the other agreement, document or
instrument referred to in or contemplated by this Agreement, nor (2) the
consummation of the Merger or any of the other transactions contemplated by this
Agreement or any such other agreement, document or instrument, will directly or
indirectly (with or without notice or lapse of time):
(a) contravene, conflict with or result in a violation of (i)
any of the provisions of any of the Acquired Corporations' articles of
organization or bylaws (or similar charter documents), or (ii) any resolution
adopted by the Company's stockholders or the Company's board of directors;
(b) contravene, conflict with or result in a violation of, or
give any Governmental Body or other Person the right to challenge any of the
transactions contemplated by this Agreement or to exercise any remedy or obtain
any relief under, any Legal Requirement or any order, writ, injunction, judgment
or decree to which any of the Acquired Corporations, or any of the assets owned
or used by any of the Acquired Corporations, is subject;
(c) contravene, conflict with or result in a violation of any
of the terms or requirements of, or give any Governmental Body the right to
revoke, withdraw, suspend, cancel, terminate or modify, any Governmental
Authorization that is held by any of the Acquired Corporations or that otherwise
relates to any of the Acquired Corporations' business or to any of the assets
owned or used by any of the Acquired Corporations;
(d) contravene, conflict with or result in a violation or
breach of, or result in a default under, any provision of any Acquired
Corporation Contract, or give any Person the right to (i) declare a default or
exercise any remedy under any Acquired Corporation Contract, (ii) accelerate the
maturity or performance of any Acquired Corporation Contract, or (iii) cancel,
terminate or modify any Acquired Corporation Contract; or
(e) result in the imposition or creation of any lien or other
Encumbrance upon or with respect to any asset owned or used by any of the
Acquired Corporations (except for minor liens that will not, in any case or in
the aggregate, materially detract from the value of the assets subject thereto
or materially impair the operations of any of the Acquired Corporations).
2.24 FINANCIAL ADVISOR. Except for Prudential ▇▇▇▇▇ Technology, a unit
of Prudential Securities, ("Prudential"), Chase H&Q and ▇▇▇▇▇▇▇ & Co., no
broker, finder or investment banker is entitled to any brokerage, finder's or
other fee or commission in connection with the Merger or any of the other
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of any of the Acquired Corporations. The Company has furnished to
Parent accurate and complete copies of all agreements under which any such fees,
commissions or other amounts have been paid or may become payable and all
indemnification and other agreements related to the engagement of Prudential,
Chase H&Q and ▇▇▇▇▇▇▇ & Co. Part 2.24 of the Disclosure Schedule accurately sets
forth the full amount of any unpaid fees,
20
commissions or other compensation payable by any of the Acquired Corporations
to any Person in connection with the Company's previously contemplated
initial public offering.
2.25 FULL DISCLOSURE.
(a) This Agreement (including the Disclosure Schedule) does
not (i) contain any representation, warranty or information that is false or
misleading with respect to any material fact or (ii) omit to state any material
fact necessary in order to make the representations, warranties and information
contained herein (in the light of the circumstances under which such
representations, warranties and information were made or provided) not false or
misleading.
(b) The information in the Registration Statement does not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub jointly and severally represent and
warrant to the Company and the Designated Stockholders as follows:
3.1 CORPORATE EXISTENCE AND POWER. Each of Parent and Merger Sub is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware, and has all corporate power required to conduct
its business as now conducted, and is duly qualified to do business and is in
good standing in each jurisdiction in which the conduct of its business or the
ownership or leasing of its properties requires such qualification, except where
the failure to be so qualified would not have a material adverse effect on
Parent's business, financial condition or results of operations.
3.2 CAPITALIZATION. As of the date of this Agreement, the authorized
capital stock of Parent consists of 125,000,000 shares of Parent Common Stock
and 2,000,000 shares of preferred stock of Parent. As of February 25, 2000,
approximately 64,863,923 shares of Parent Common Stock were issued and
outstanding (excluding treasury shares). As of the date of this Agreement, no
shares of preferred stock of Parent are outstanding. All of the outstanding
shares of Parent Common Stock have been duly authorized and validly issued, and
are fully paid and nonassessable.
3.3 AUTHORITY; BINDING NATURE OF AGREEMENT. Parent and Merger Sub have
the absolute and unrestricted right, power and authority to enter into and to
perform their obligations under this Agreement and the other agreements referred
to in this Agreement to which Parent or Merger Sub is a party; and the
execution, delivery and performance by Parent and Merger Sub of this Agreement
and such other agreements (including the contemplated issuance of Parent Common
Stock in the Merger in accordance with this Agreement) have been duly authorized
by all necessary action on the part of Parent and Merger Sub and their
respective boards of directors. No vote of Parent's stockholders is needed to
approve the Merger. This Agreement constitutes the legal, valid and binding
obligation of Parent and Merger Sub, enforceable against them in accordance with
its terms, subject to (a) laws of general application relating to
21
bankruptcy, insolvency and the relief of debtors and (b) rules of law
governing specific performance, injunctive relief and other equitable
remedies.
3.4 NO CONFLICT; CONSENTS. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby by
Parent and Merger Sub are not prohibited by, and will not violate or conflict
with, any provision of the Articles of Organization or bylaws of Parent or
Merger Sub, or of any Legal Requirement or any provision of any Contract to
which Parent or Merger Sub is a party, except where any of the foregoing
would not have, individually or in the aggregate, a material adverse effect
on the business, financial condition or results of operation, of Parent.
Other than the HSR Act filing and the acceptance for filing of the Articles
of Merger by the Massachusetts Secretary of State, no Consent of any
Governmental Body is necessary on the part of Parent or Merger Sub for the
consummation by Parent and Merger Sub of the transactions contemplated by
this Agreement.
3.5 VALID ISSUANCE. The Parent Common Stock to be issued in the
Merger will, when issued in accordance with the provisions of this Agreement,
be duly authorized, validly issued, fully paid, nonassessable and free from
any and all preemptive rights.
3.6 MERGER SUB. Merger Sub has been formed solely for the purpose of
executing and delivering this Agreement and consummating the transactions
contemplated hereby. Merger Sub has not engaged in any business or activity
other than activities related to its corporate organization and the execution
and delivery of this Agreement.
3.7 REPORTS AND FINANCIAL STATEMENTS. Parent has previously
furnished or made available to the Company complete and accurate copies, as
amended or supplemented, of its (a) Annual Report on Form 10-K for the fiscal
year ended January 31, 1999, as filed with the SEC, and (b) all other reports
filed by Parent under Section 13 of the Exchange Act with the SEC between
January 31, 1999 and the date of this Agreement, including its Quarterly
Report on Form 10-Q for the quarter ended October 31, 1999 (such reports are
collectively referred to as the "Parent Reports"). The Parent Reports
constitute all of the documents required to be filed by the Parent under
Section 13 of the Exchange Act with the SEC between January 31, 1999 and the
date of this Agreement. As of their respective dates, the Parent Reports did
not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The audited financial statements and unaudited interim
financial statements of the Parent included in the Parent Reports comply as
to form in all material respects with applicable accounting requirements.
SECTION 4. CERTAIN COVENANTS OF THE COMPANY AND THE DESIGNATED
STOCKHOLDERS
4.1 ACCESS AND INVESTIGATION. During the period from the date of
this Agreement through the Closing Date (the "Pre-Closing Period"), the
Company shall, and shall cause its Representatives to: (a) provide Parent and
Parent's Representatives with reasonable access at reasonable times to the
Acquired Corporations' Representatives, personnel and assets and to all
existing books, records, tax returns, work papers and other documents and
information relating to the Acquired Corporations; and (b) provide Parent and
Parent's Representatives with copies of
22
such existing books, records, tax returns, work papers and other documents
and information relating to the Acquired Corporations, and with such
additional financial, operating and other data and information regarding the
Acquired Corporations, as Parent may reasonably request.
4.2 OPERATION OF THE BUSINESS OF THE ACQUIRED CORPORATIONS. Except
for the transactions listed in Part 4.2 of the Disclosure Schedule, without
the prior written consent of Parent, during the Pre-Closing Period:
(a) each of the Acquired Corporations shall conduct its
business and operations in the ordinary course and in substantially the same
manner as such business and operations have been conducted prior to the date
of this Agreement;
(b) each of the Acquired Corporations shall use reasonable
efforts to preserve intact its current business organization, keep available
the services of its current officers and employees and maintain its relations
and good will with all suppliers, customers, landlords, creditors, employees
and other Persons having business relationships with such Acquired
Corporations;
(c) each of the Acquired Corporations shall keep in full
force all insurance policies identified in Part 2.19 of the Disclosure
Schedule;
(d) none of the Acquired Corporations shall declare, accrue,
set aside or pay any dividend or make any other distribution in respect of any
shares of capital stock (except that the Company may distribute up to $4,500,000
of undistributed S Corporation retained earnings to the Stockholders prior to
the Closing), and none of the Acquired Corporations shall repurchase, redeem or
otherwise reacquire any shares of capital stock or other securities;
(e) none of the Acquired Corporations shall sell, issue or
authorize the issuance of (i) any capital stock or other security except upon
the valid exercise of Company Options outstanding as of the date of this
Agreement, (ii) any option or right to acquire any capital stock or other
security, or (iii) any instrument convertible into or exchangeable for any
capital stock or other security;
(f) none of the Acquired Corporations or any of the Designated
Stockholders shall amend or permit the adoption of any amendment to the Articles
of Organization or bylaws of any of the Acquired Corporations, or effect or
permit any of the Acquired Corporations to become a party to any Acquisition
Transaction, recapitalization, reclassification of shares, stock split, reverse
stock split or similar transaction;
(g) none of the Acquired Corporations shall form any
subsidiary or acquire any equity interest or other interest in any other Entity;
(h) none of the Acquired Corporations shall make any capital
expenditure, except for capital expenditures that, when added to all other
capital expenditures made on behalf of all of the Acquired Corporations during
the Pre-Closing Period, do not exceed $250,000 in the aggregate;
23
(i) none of the Acquired Corporations shall (i) enter into, or
permit any of the assets owned or used by it to become bound by, any Contract
that is or would constitute a Material Contract or (ii) amend or prematurely
terminate, or waive any material right or remedy under, any such Material
Contract;
(j) none of the Acquired Corporations shall (i) lend money to
any Person (except that the Acquired Corporations may make routine travel
advances to employees in the ordinary course of business) or (ii) incur or
guarantee any indebtedness for borrowed money (except that the Acquired
Corporations may make routine borrowings in the ordinary course of business
consistent with past practice under its line of credit with BankBoston, N.A.);
(k) none of the Acquired Corporations shall (i) establish,
adopt or amend any Employee Benefit Plan, (ii) other than in the ordinary course
of business consistent with past practice, pay any bonus or make any
profit-sharing payment, cash incentive payment or similar payment to, or
increase the amount of the wages, salary, commissions, fringe benefits or other
compensation or remuneration payable to, any of its directors, officers or
employees, or (iii) hire any new employee whose aggregate annual compensation is
expected to exceed $110,000;
(l) none of the Acquired Corporations shall change any of its
methods of accounting or accounting practices in any material respect;
(m) none of the Acquired Corporations shall make any tax
election;
(n) none of the Acquired Corporations shall commence or settle
any Legal Proceeding;
(o) none of the Acquired Corporations shall agree or commit to
take any of the actions described in clauses "(e)" through "(n)" above.
4.3 NOTIFICATION; UPDATES TO DISCLOSURE SCHEDULE.
(a) During the Pre-Closing Period, the Acquired Corporations
shall promptly notify Parent in writing of: (i) the discovery by any of the
Acquired Corporations of any event, condition, fact or circumstance that
occurred or existed on or prior to the date of this Agreement and that caused or
constitutes an inaccuracy in or breach of any representation or warranty made by
any of the Acquired Corporations or any of the Designated Stockholders in this
Agreement; (ii) any event, condition, fact or circumstance that occurs, arises
or exists after the date of this Agreement and that would cause or constitute an
inaccuracy in or breach of any representation or warranty made by any of the
Acquired Corporations or any of the Designated Stockholders in this Agreement if
(A) such representation or warranty had been made as of the time of the
occurrence, existence or discovery of such event, condition, fact or
circumstance or (B) such event, condition, fact or circumstance had occurred,
arisen or existed on or prior to the date of this Agreement; (iii) any breach of
any covenant or obligation of any of the Acquired Corporations or any of the
Designated Stockholders; and (iv) any event, condition, fact or circumstance
that would make the timely satisfaction of any of the conditions set forth in
Section 6 or Section 7 impossible or unlikely.
24
(b) If any event, condition, fact or circumstance that is
required to be disclosed pursuant to Section 4.3(a) requires any change in the
Disclosure Schedule, or if any such event, condition, fact or circumstance would
require such a change assuming the Disclosure Schedule were dated as of the date
of the occurrence, existence or discovery of such event, condition, fact or
circumstance, then the Company and the Designated Stockholders shall promptly
deliver to Parent an update to the Disclosure Schedule specifying such change.
Except as expressly set forth in this Agreement, no such update shall be deemed
to supplement or amend the Disclosure Schedule for the purpose of (i)
determining the accuracy of any of the representations and warranties made by
any of the Acquired Corporations or any of the Designated Stockholders in this
Agreement or (ii) determining whether any of the conditions set forth in Section
6 has been satisfied.
4.4 NO NEGOTIATION. During the Pre-Closing Period, none of the Acquired
Corporations nor any of the Designated Stockholders shall, directly or
indirectly:
(a) solicit or encourage the initiation of any inquiry,
proposal or offer from any Person (other than Parent) relating to a possible
Acquisition Transaction;
(b) participate in any discussions or negotiations or enter
into any agreement with, or provide any non-public information to, any Person
(other than Parent) relating to or in connection with a possible Acquisition
Transaction; or
(c) consider, entertain or accept any proposal or offer from
any Person (other than Parent) relating to a possible Acquisition Transaction.
The Company and the Designated Stockholders shall promptly notify Parent in
writing of any material inquiry, proposal or offer relating to a possible
Acquisition Transaction that is received by any of the Acquired Corporations or
any of the Designated Stockholders during the Pre-Closing Period.
SECTION 5. ADDITIONAL COVENANTS OF THE PARTIES
5.1 FILINGS AND CONSENTS. As promptly as practicable after the
execution of this Agreement, each party to this Agreement (a) shall make all
filings, if any, and give all notices, if any, required to be made and given
by such party in connection with the Merger and the other transactions
contemplated by this Agreement and (b) shall use all commercially reasonable
efforts to obtain all Consents, if any, required to be obtained (pursuant to
any applicable Legal Requirement or Contract, or otherwise) by such party in
connection with the Merger and the other transactions contemplated by this
Agreement. The Company and the Designated Stockholders shall (upon request)
promptly deliver to Parent a copy of each such filing made, each such notice
given and each such Consent obtained by the Acquired Corporations during the
Pre-Closing Period.
5.2 COMPANY STOCKHOLDERS' MEETING. The Company shall, in accordance
with its Articles of Organization and bylaws and the applicable requirements of
the MGL, call and hold a special meeting of its stockholders as promptly as
practicable for the purpose of permitting them to consider and to vote upon and
approve the Merger and this Agreement, or shall have all of the
25
Stockholders execute a written consent pursuant to which they unanimously
approve the Merger and this Agreement.
5.3 ANTITRUST NOTIFICATION. Parent and the Company shall as promptly
as practicable following the execution and delivery of this Agreement, file
with the United States Federal Trade Commission (the "FTC") and the United
States Department of Justice (the "DOJ") the notification and report form, if
any, required for the transactions contemplated hereby pursuant to the HSR
Act. Any such notification and report form shall be in substantial compliance
with the requirements of the HSR Act. Parent, Merger Sub, each of the
Acquired Corporations and each Designated Stockholder shall furnish to each
other such necessary information and reasonable assistance as Parent or the
Company may request in connection with its preparation of any filing or
submission that is necessary under the HSR Act. Parent and the Company shall
keep each other apprised of the status of any communications with, and any
inquiries or requests for additional information from, the FTC and the DOJ
and shall comply promptly with any such inquiry or request.
5.4 PUBLIC ANNOUNCEMENTS. During the Pre-Closing Period, (a) none of
the Acquired Corporations nor any of the Designated Stockholders shall (and
the Acquired Corporations shall not permit any of their Representatives to)
issue any press release or make any public statement regarding this Agreement
or the Merger, or regarding any of the other transactions contemplated by
this Agreement, without Parent's prior written consent, and (b) Parent will
use reasonable efforts to consult with the Acquired Corporations prior to
issuing any press release or making any public statement regarding the Merger.
5.5 REASONABLE EFFORTS.
(a) During the Pre-Closing Period, (i) each of the Acquired
Corporations and each of the Designated Stockholders shall use its reasonable
efforts to cause the conditions set forth in Section 6 to be satisfied on a
timely basis, and (ii) Parent and Merger Sub shall use their reasonable
efforts to cause the conditions set forth in Section 7 to be satisfied on a
timely basis.
(b) Notwithstanding anything to the contrary contained in
this Agreement, Parent shall not have any obligation under this Agreement:
(i) to dispose or transfer or cause any of its Subsidiaries to dispose of or
transfer any assets, or to commit to cause any of the Acquired Corporations
to dispose of any assets; (ii) to discontinue or cause any of its
Subsidiaries to discontinue offering any product or service, or to commit to
cause any of the Acquired Corporations to discontinue offering any product or
service; (iii) to license or otherwise make available, or cause any of its
Subsidiaries to license or otherwise make available, to any Person, any
technology, software or other Proprietary Asset, or to commit to cause any of
the Acquired Corporations to license or otherwise make available to any
Person any technology, software or other Proprietary Asset; (iv) to hold
separate or cause any of its Subsidiaries to hold separate any assets or
operations (either before or after the Closing Date), or to commit to cause
any of the Acquired Corporations to hold separate any assets or operations;
(v) to make or cause any of its Subsidiaries to make any commitment (to any
Governmental Body or otherwise) regarding its future operations or the future
operations of any of the Acquired Corporations; or (vi) to contest any Legal
Proceeding relating to the Merger if Parent determines in good faith that
contesting such Legal Proceeding might not be advisable.
26
5.6 TAX MATTERS. Prior to the Closing, Parent and the Company shall
execute and deliver to Holland & Knight LLP, tax representation letters in
customary form (which will be used in connection with the legal opinion
contemplated by Section 7.4(b)).
5.7 EMPLOYEE AND RELATED MATTERS.
(a) For not less than one year following the Closing Date,
Parent shall maintain, or shall cause Merger Sub to maintain, compensation
and employee benefit plans and arrangements and perquisites for those persons
who remain employees of the Acquired Corporations after the Closing Date
that, in the aggregate, are substantially comparable to (or more favorable
than) those provided pursuant to the compensation and employee benefit plans
and arrangements and perquisites in effect on the date hereof.
(b) To the extent required by Parent, the Acquired
Corporations shall terminate any of the Benefit Plans effective immediately
prior to the Effective Time.
(c) After the Closing, Parent's Board of Directors shall grant
options to purchase an aggregate of 700,000 shares of Parent Common Stock to
employees of the Acquired Corporations who become employees of Parent. Parent's
Chief Executive Officer will consult with the Chief Executive Officer of the
Company with respect to the options to be granted to such employees.
5.8 S CORPORATION DISTRIBUTION. Within 30 days after the Closing,
Parent shall cause the Company to distribute to the Stockholders cash in an
amount equal to the undistributed S Corporation retained earnings of the Company
existing as of the Closing Date (it being understood that such amount shall not
exceed the difference between (a) $4,500,000, and (b) any undistributed S
Corporation retained earnings distributed to the Stockholders between the date
of this Agreement and the Closing). The Company and the Designated Stockholders
shall cooperate with Parent in determining the actual amount of undistributed S
Corporation retained earnings to be so distributed to the Stockholders.
SECTION 6. CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND MERGER SUB
The obligations of Parent and Merger Sub to effect the Merger
and otherwise consummate the transactions contemplated by this Agreement are
subject to the satisfaction (or waiver by Parent), at or prior to the Closing,
of each of the following conditions:
6.1 ACCURACY OF REPRESENTATIONS.
(a) Each of the representations and warranties made by the
Company and the Designated Stockholders in this Agreement and in each of the
other agreements and instruments delivered to Parent in connection with the
transactions contemplated by this Agreement shall have been accurate in all
material respects as of the date of this Agreement (without giving effect to any
update to the Disclosure Schedule, and without giving effect to any "Material
Adverse Effect" or other materiality qualifications, or any similar
qualifications).
(b) Each of the representations and warranties made by the
Company and the Designated Stockholders in this Agreement and in each of the
other agreements and instruments
27
delivered to Parent in connection with the transactions contemplated by this
Agreement shall be accurate in all respects as of the Closing Date as if made
at the Closing (without giving effect to any update to the Disclosure
Schedule, and without giving effect to any "Material Adverse Effect" or other
materiality qualifications, or any similar qualifications), except to the
extent such representations and warranties expressly relate to any earlier
date (in which case such representations and warranties shall be accurate on
and as of such date, without giving effect to any update to the Disclosure
Schedule, and without giving effect to any "Material Adverse Effect" or other
materiality qualifications, or any similar qualifications), and except for
inaccuracies in any such representations or warranties that have not had, and
are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on the Acquired Corporations.
6.2 PERFORMANCE OF COVENANTS. All of the covenants and obligations
that the Acquired Corporations and the Designated Stockholders are required
to comply with or to perform at or prior to the Closing shall have been
complied with and performed in all material respects.
6.3 STOCKHOLDER APPROVAL. The Merger and this Agreement shall have
been duly approved by the affirmative vote of all of the shares of Company
Common Stock entitled to vote with respect thereto.
6.4 CONSENTS. All Consents (a) listed in Schedule 6.4, (b) required
to be obtained from any Governmental Entity, and (c) otherwise required to be
obtained, in each case in connection with the Merger and the other
transactions contemplated by this Agreement shall have been obtained and
shall be in full force and effect, except (in the case of clause (c)) to the
extent that the failure to obtain any such Consents has not had, and is not
reasonably likely to have, a Material Adverse Effect on the Acquired
Corporations.
6.5 ANTITRUST APPROVAL. The waiting period applicable to the
consummation of the Merger under the HSR Act shall have expired or been
terminated and, on the Closing Date, there shall not be in effect any
voluntary agreement between Parent and the Federal Trade Commission or the
Department of Justice pursuant to which Parent has agreed not consummate the
Merger for a period of time; any similar waiting period under any applicable
foreign antitrust law or regulation shall have expired or been terminated;
and any Consent required under any applicable foreign antitrust law or
regulation shall have been obtained.
6.6 AGREEMENTS AND DOCUMENTS. Parent and the Company shall have
received the following agreements and documents, each of which shall be in
full force and effect:
(a) Noncompetition Agreements in the form of Exhibit C,
executed by ▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇;
(b) a FIRPTA Statement in the form of Exhibit I, executed by
each of the Acquired Corporations;
(c) Stockholder Representation Letters in the form of Exhibit
D, executed by each of the Stockholders;
28
(d) a Registration Rights Agreement in the form of Exhibit E,
executed by the Stockholders' Agent on behalf of the Stockholders;
(e) an Escrow Agreement in the form of Exhibit F, executed by
each of the Stockholders and the Escrow Agent;
(f) a legal opinion of Holland & Knight LLP, dated as of the
Closing Date, in the form of Exhibit G;
(g) a Proprietary Rights Assignment Agreement in the form of
Exhibit H, executed by the individuals listed on Schedule 6.6(g);
(h) a Lock-up Agreement in the form of Exhibit J executed by
each of the individuals listed on Schedule 6.6(h);
(i) a certificate executed by each of the Designated
Stockholders and containing the representation and warranty of each Designated
Stockholder that the conditions set forth in Sections 6.1, 6.2, 6.3, 6.4, 6.7,
6.9, 6.12 and 6.13 have been duly satisfied;
(j) the articles of merger executed by the President or a Vice
President and the Clerk or an Assistant Clerk of the Company to be filed with
the Secretary of State of the Commonwealth of Massachusetts in accordance with
Section 1.3; and
(k) written resignations of all directors of all of the
Acquired Corporations, effective as of the Closing Date.
6.7 ABSENCE OF MATERIAL ADVERSE EFFECT. There shall have been no change
in the business, properties, condition (financial or otherwise), results of
operations or prospects of any of the Acquired Corporations since the date of
this Agreement which has had or would reasonably be expected to have a Material
Adverse Effect on the Acquired Corporations.
6.8 STOCK CERTIFICATES. Parent shall have received certificates
representing all of the capital stock of the Company, duly endorsed in blank or
accompanied by stock powers duly endorsed in blank in proper form for transfer,
with appropriate transfer stamps, if any, affixed and, immediately following the
Effective Time, Parent shall own 100 percent of the outstanding capital stock
and rights to acquire capital stock of the Company.
6.9 FIRPTA COMPLIANCE. The Company shall have filed with the Internal
Revenue Service the notification referred to in Section 6.6(b).
6.10 LISTING. The shares of Parent Common Stock to be issued in the
Merger shall have been approved for listing (subject to notice of issuance) on
the Nasdaq National Market.
6.11 NO RESTRAINTS. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the Merger
shall have been issued by any court of competent jurisdiction and remain in
effect, and there shall not be any Legal Requirement enacted or deemed
applicable to the Merger that makes consummation of the Merger illegal.
29
6.12 NO LEGAL PROCEEDINGS. No Governmental Body or other Person
shall have commenced or threatened to commence any Legal Proceeding (a)
challenging or seeking the recovery of a material amount of damages in
connection with the Merger, (b) seeking to prohibit or limit the exercise by
Parent of any material right pertaining to its ownership of stock of Merger
Sub or any of the Acquired Corporations, or (c) claiming to own any capital
stock of any of the Acquired Corporations, or option or other right to
acquire capital stock of any of the Acquired Corporations, or right to
receive consideration as a result of the Merger.
6.13 EMPLOYEES. None of the key employees identified on Schedule
6.13 shall have ceased to be employed by the Company (other than by reason of
death or permanent disability) or shall have expressed an intention to
terminate his or her employment with the Company or to decline to accept
employment with Parent.
SECTION 7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE DESIGNATED
STOCKHOLDERS
The obligations of the Designated Stockholders to effect the
Merger and otherwise consummate the transactions contemplated by this Agreement
are subject to the satisfaction (or waiver by the Stockholders' Agent on behalf
of the Stockholders), at or prior to the Closing, of the following conditions:
7.1 ACCURACY OF REPRESENTATIONS.
(a) Each of the representations and warranties made by Parent
and Merger Sub in this Agreement and in each of the other agreements and
instruments delivered to the Company in connection with the transactions
contemplated by this Agreement shall have been accurate in all material respects
as of the date of this Agreement (without giving effect to any "Material Adverse
Effect" or other materiality qualifications, or any similar qualifications).
(b) Each of the representations and warranties made by Parent
and Merger Sub in this Agreement and in each of the other agreements and
instruments delivered to the Company in connection with the transactions
contemplated by this Agreement shall be accurate in all respects as of the
Closing Date as if made at the Closing (without giving effect to any "Material
Adverse Effect" or other materiality qualifications, or any similar
qualifications), except to the extent such representations and warranties
expressly relate to any earlier date (in which case such representations and
warranties shall be accurate on and as of such date, without giving effect to
any "Material Adverse Effect" or other materiality qualifications, or any
similar qualifications), and except for inaccuracies in any such representations
or warranties that have not had, and are not reasonably likely to have,
individually or in the aggregate, a material adverse effect on the business
properties, condition (financial or otherwise), results of operations or
prospects of Parent.
7.2 PERFORMANCE OF COVENANTS. All of the covenants and obligations that
Parent and Merger Sub are required to comply with or to perform at or prior to
the Closing shall have been complied with and performed in all material
respects.
7.3 ANTITRUST APPROVAL. The waiting period applicable to the
consummation of the Merger under the HSR Act shall have expired or been
terminated and, on the Closing Date, there
30
shall not be in effect any voluntary agreement between Parent and the Federal
Trade Commission or the Department of Justice pursuant to which Parent has
agreed not consummate the Merger for a period of time; any similar waiting
period under any applicable foreign antitrust law or regulation shall have
expired or been terminated; and any Consent required under any applicable
foreign antitrust law or regulation shall have been obtained.
7.4 AGREEMENTS AND DOCUMENTS. The Stockholders' Agent (on behalf of
the Stockholders) shall have received the following documents.
(a) a Registration Rights Agreement in the form of Exhibit E,
executed by Parent;
(b) an Escrow Agreement in the form of Exhibit F, executed by
Parent; and
(c) a legal opinion of Holland & Knight LLP, dated as of the
Closing Date, to the effect that the Merger will constitute a reorganization
within the meaning of Section 368 of the Code (it being understood that (i) in
rendering such opinion, such counsel may rely upon the tax representation
letters referred to in Section 5.8 and (ii) if Holland &Knight LLP refuses to
render such opinion, this condition shall nonetheless be satisfied if ▇▇▇▇▇▇
Godward LLP renders such opinion);
(d) a certificate executed by Parent containing the
representation and warranty that the conditions set forth in Sections 7.1, 7.2
and 7.5 have been duly satisfied.
7.5 LISTING. The shares of Parent common stock to be issued in the
Merger shall have been approved for listing (subject to notice of issuance) on
the Nasdaq National Market.
7.6 NO RESTRAINTS. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the Merger
shall have been issued by any court of competent jurisdiction and remain in
effect, and there shall not be any Legal Requirement enacted or deemed
applicable to the Merger that makes consummation of the Merger illegal.
SECTION 8. TERMINATION
8.1 TERMINATION EVENTS. This Agreement may be terminated prior to the
Closing:
(a) by Parent if Parent reasonably determines that the timely
satisfaction of any condition set forth in Section 6 has become impossible
(other than as a result of any failure on the part of Parent or Merger Sub to
comply with or perform any covenant or obligation of Parent or Merger Sub set
forth in this Agreement or in any other agreement or instrument delivered to the
Designated Stockholders);
(b) by the Stockholders' Agent if it reasonably determines
that the timely satisfaction of any condition set forth in Section 7 has become
impossible (other than as a result of any failure on the part of any of the
Acquired Corporations or any of the Designated Stockholders to comply with or
perform any covenant or obligation set forth in this Agreement or in any other
agreement or instrument delivered to Parent);
31
(c) by Parent if the Closing has not taken place on or before
July 31, 2000 (other than as a result of any failure on the part of Parent or
Merger Sub to comply with or perform any covenant or obligation of Parent or
Merger Sub set forth in this Agreement or in any other agreement or instrument
delivered to the Designated Stockholders);
(d) by the Stockholders' Agent if the Closing has not taken
place on or before July 31, 2000 (other than as a result of the failure on the
part of any of the Acquired Corporations or any of the Designated Stockholders
to comply with or perform any covenant or obligation set forth in this Agreement
or in any other agreement or instrument delivered to Parent); or
(e) by the mutual written consent of Parent and the
Stockholders' Agent.
8.2 TERMINATION PROCEDURES. If Parent wishes to terminate this
Agreement pursuant to Section 8.1(a) or Section 8.1(c), Parent shall deliver to
the Stockholders' Agent a written notice stating that Parent is terminating this
Agreement and setting forth a brief description of the basis on which Parent is
terminating this Agreement. If the Stockholders' Agent wishes to terminate this
Agreement pursuant to Section 8.1(b) or Section 8.1(d), the Stockholders' Agent
shall deliver to Parent a notice, in writing, stating that the Stockholders'
Agent (on behalf of the Stockholders) is terminating this Agreement and setting
forth a brief description of the basis on which it is terminating this
Agreement.
8.3 EFFECT OF TERMINATION. If this Agreement is terminated pursuant to
Section 8.1 and 8.2, all further obligations of the parties under this Agreement
shall terminate; PROVIDED, HOWEVER, that: (a) none of the parties shall be
relieved of any obligation or liability arising from any prior willful breach by
such party of any provision of this Agreement; (b) the parties shall, in all
events, remain bound by and continue to be subject to the provisions set forth
in Section 10; and (c) each of the Acquired Corporations shall, in all events,
remain bound by and continue to be subject to Section 5.4.
SECTION 9. INDEMNIFICATION, ETC.
9.1 SURVIVAL OF REPRESENTATIONS, ETC.
(a) Subject to Sections 9.1(b), 9.1(c), 9.1(d) and 9.1(e), the
representations, warranties, covenants and obligations of the Company and the
Designated Stockholders shall survive: (i) the Closing and the consummation of
the transactions referred to in Section 1.1; (ii) any sale or other disposition
of any or all of the Acquired Corporations; and (iii) any merger, combination,
recapitalization or similar transaction effected by or otherwise involving the
Parent or any or all of the Acquired Corporations.
(b) Subject to Section 9.1(c), 9.1(d) and 9.1(e), the
representations and warranties made by the Company and the Designated
Stockholders (including the representations and warranties set forth in
Section 2) shall survive the Closing and shall expire 455 days after the
Closing Date (the "Expiration Date"); PROVIDED, HOWEVER, that if, at any time
prior to the Expiration Date, any Indemnitee (acting in good faith) delivers
to the Stockholders' Agent a written notice alleging the existence of an
inaccuracy in or a breach of any of the representations and warranties made
by the Company or the Designated Stockholders (and setting forth in
32
reasonable detail the basis for such Indemnitee's belief that such an
inaccuracy or breach may exist) and asserting a claim for recovery under
Section 9.2 based on such alleged inaccuracy or breach, then the claim
asserted in such notice shall survive the Expiration Date until such time as
such claim is fully and finally resolved. All representations and warranties
made by Parent and Merger Sub shall terminate and expire as of the Closing
Date, and any liability of Parent or Merger Sub with respect to such
representations and warranties shall thereupon cease.
(c) Subject to Section 9.1(e), the representations and
warranties made by the Company and the Designated Stockholders in Section 2.16
shall remain in full force and effect and shall survive until the expiration of
the longest applicable statute of limitations; PROVIDED, HOWEVER, that if, at
any time prior to the expiration of such statute of limitations, any Indemnitee
(acting in good faith) delivers to the Stockholders' Agent a written notice
alleging the existence of an inaccuracy in or a breach of any of the
representations or warranties made by the Company or the Designated Stockholders
in Section 2.16 (and setting forth in reasonable detail the basis for such
Indemnitee's belief that such an inaccuracy or breach may exist) and asserting a
claim for recovery under Section 9.2 based on such alleged inaccuracy or breach,
then the claim asserted in such notice shall survive until such time as such
claim is fully and finally resolved.
(d) Subject to Section 9.1(e), the representations and
warranties made by the Company and the Designated Stockholders in Section 2.9
shall remain in full force and effect and shall survive until the fifth
anniversary of the Closing Date; PROVIDED, HOWEVER, that if, at any time prior
to the expiration of the fifth anniversary of the Closing Date, any Indemnitee
(acting in good faith) delivers to the Stockholders' Agent a written notice
alleging the existence of an inaccuracy in or a breach of any of the
representations or warranties made by the Company or the Designated Stockholders
in Section 2.9 (and setting forth in reasonable detail the basis for such
Indemnitee's belief that such an inaccuracy or breach may exist) and asserting a
claim for recovery under Section 9.2 based on such alleged inaccuracy or breach,
then the claim asserted in such notice shall survive until such time as such
claim is fully and finally resolved.
(e) Notwithstanding anything to the contrary contained in
Section 9.1(b), 9.1(c) or 9.1(d) (and without limiting the generality of
anything contained in Section 9.1(a)), if any of the Acquired Corporations or
any of the Designated Stockholders has or had actual knowledge, on or prior to
the Closing, of any circumstance that constitutes or that has given rise or
could reasonably be expected to give rise, directly or indirectly, to any
inaccuracy or other Breach of any representation or warranty set forth in
Section 2, then such representation or warranty shall not expire, but rather
shall remain in full force and effect for an unlimited period of time.
(f) The representations, warranties, covenants and obligations
of the Acquired Corporations and the Designated Stockholders, and the rights and
remedies that may be exercised by the Indemnitees, shall not be limited or
otherwise affected by or as a result of any information furnished to, or any
investigation made by or knowledge of, any of the Indemnitees or any of their
Representatives.
(g) For purposes of this Agreement, each statement or other
item of information set forth in the Disclosure Schedule or in any update to
the Disclosure Schedule
33
shall be deemed to be a representation and warranty made by the Company and
the Designated Stockholders in this Agreement.
9.2 INDEMNIFICATION BY STOCKHOLDERS.
(a) From and after the Closing Date, the Stockholders, jointly
and severally, shall hold harmless and indemnify each of the Indemnitees from
and against, and shall compensate and reimburse each of the Indemnitees for, any
Damages that are directly or indirectly suffered or incurred by any of the
Indemnitees or to which any of the Indemnitees may otherwise become subject
(regardless of whether or not such Damages relate to any third-party claim) and
that arise from or as a result of, or are directly or indirectly connected with:
(i) any inaccuracy in or breach of any representation or warranty set forth in
Section 2 (without giving effect to any "Material Adverse Effect" or other
materiality qualification or any similar qualification contained or incorporated
directly or indirectly in such representation or warranty, and without giving
effect to any update to the Disclosure Schedule delivered prior to the
Closing,); (ii) any inaccuracy in or breach of any representation or warranty
set forth in Section 2 as if such representation and warranty had been made on
and as of the Closing Date (without giving effect to any "Material Adverse
Effect" or other materiality qualification or any similar qualification
contained or incorporated directly or indirectly in such representation or
warranty, but giving effect to any update to the Disclosure Schedule delivered
by the Company to Parent prior to the Closing to the extent that the Company and
the Designated Stockholders acknowledge in writing that Parent would be entitled
to terminate this Agreement as a result of such update); (iii) any breach of any
covenant or obligation of any of the Acquired Corporations or any of the
Designated Stockholders (including the covenants set forth in Sections 4 and 5);
(iv) other than pursuant to the letter agreement dated December 20, 1999 between
Prudential, Chase H&Q, ▇▇▇▇▇▇▇ & Co. and the Company, any brokerage, finder's or
other fee, commission or expense payable or claimed to be payable to any broker,
finder or other similar Person, including Prudential, Chase H&Q and ▇▇▇▇▇▇▇ &
Co., by the Company or any Stockholder in connection with the transactions
contemplated by this Agreement or (v) any Legal Proceeding relating to any
inaccuracy or breach of the type referred to in clause "(i)," "(ii)," "(iii)" or
"(iv)" above (including any Legal Proceeding commenced by any Indemnitee for the
purpose of enforcing any of its rights under this Section 9).
(b) DEDUCTIBLE.
(i) The Stockholders shall not be required to make
any indemnification payment pursuant to Section 9.2(a) for any inaccuracy in or
breach of any of their representations and warranties set forth in Section 2
until such time as the total amount of all Damages (including the Damages
arising from such inaccuracy or breach and all other Damages arising from any
other inaccuracies in or breaches of any representations or warranties) that
have been directly or indirectly suffered or incurred by any one or more of the
Indemnitees, or to which any one or more of the Indemnitees has or have
otherwise become subject, exceeds $500,000 in the aggregate. (If the total
amount of such Damages exceeds $500,000, then the Indemnitees shall be entitled
to be indemnified against and compensated and reimbursed only for the portion of
such Damages exceeding $500,000.)
34
(ii) The limitation on the Stockholders'
indemnification obligations that is set forth in Section 9.2(b) shall not
apply to any Breach arising directly or indirectly from any circumstance of
which any of the Acquired Corporations or any of the Designated Stockholders
has or had actual knowledge on or prior to the Closing.
(c) INDEMNIFICATION PROCEDURES. As soon as reasonably
practicable, but in no event later than 30 days after Parent has actual
knowledge of a breach of a representation or warranty for which Parent intends
to make a claim for indemnification pursuant to Section 9 (an "Indemnification
Matter"), Parent shall give notice to the Stockholders' Agent of the nature of
the Indemnification Matter and, to the extent practicable, a non-binding
estimate of the amount claimed in connection therewith (it being understood that
the failure to so notify the Stockholders' Agent shall not in any way limit the
rights of any Indemnitee under this Agreement except to the extent that such
failure is materially prejudicial to the Stockholders' Agent).
9.3 EXCLUSIVE REMEDY.
(a) With the exception of claims based upon fraud, claims
relating to Taxes and claims relating to the matters contemplated by Section 2.9
(for which the escrow shall not be Parent's exclusive remedy), from and after
the Closing, recourse of Parent to the shares of Parent Common Stock held in
escrow pursuant to the Escrow Agreement shall be the sole and exclusive remedy
of Parent for monetary damages for any inaccuracy in or breach of any
representation or warranty contained in this Agreement.
(b) With the exception of claims based upon fraud, in no event
shall the maximum aggregate amount of Damages which the Indemnitees shall be
entitled to be indemnified against and compensated and reimbursed for with
respect to a breach of Section 2.9 exceed the fair market value as of the
Closing Date of fifty percent of the shares of Parent Common Stock being issued
in connection with the Merger.
9.4 NO CONTRIBUTION. Each Stockholder waives, and acknowledges and
agrees that he shall not have and shall not exercise or assert (or attempt to
exercise or assert), any right of contribution, right of indemnity or other
right or remedy against Merger Sub or any of the Acquired Corporations in
connection with any indemnification obligation or any other liability to which
he may become subject under or in connection with this Agreement.
9.5 DEFENSE OF THIRD PARTY CLAIMS. In the event of the assertion or
commencement by any Person of any claim or Legal Proceeding (whether against
Merger Sub or any of the Acquired Corporations, against Parent or against any
other Person) with respect to which any of the Stockholders may become obligated
to hold harmless, indemnify, compensate or reimburse any Indemnitee pursuant to
this Section 9, Parent shall have the right, at its election, to proceed with
the defense of such claim or Legal Proceeding on its own. If Parent so proceeds
with the defense of any such claim or Legal Proceeding:
(a) all reasonable expenses relating to the defense of such
claim or Legal Proceeding shall be borne and paid exclusively by the
Stockholders;
35
(b) each Stockholder shall make available to Parent any
documents and materials in his or its possession or control that may be
necessary to the defense of such claim or Legal Proceeding; and
(c) Parent shall have the right to settle, adjust or
compromise such claim or Legal Proceeding with the consent of the Stockholders'
Agent; PROVIDED, HOWEVER, that such consent shall not be unreasonably withheld.
Parent shall give the Stockholders' Agent prompt notice of the commencement of
any such Legal Proceeding against Parent, Merger Sub or any of the Acquired
Corporations; PROVIDED, HOWEVER, any failure on the part of Parent to so notify
the Stockholders' Agent shall not limit any of the obligations of the
Stockholders under this Section 9 (except to the extent such failure materially
prejudices the defense of such Legal Proceeding). If Parent does not elect to
proceed with the defense of any such claim or Legal Proceeding, the
Stockholders' Agent may proceed with the defense of such claim or Legal
Proceeding with counsel reasonably satisfactory to Parent; PROVIDED, HOWEVER,
that the Stockholders' Agent may not settle, adjust or compromise any such claim
or Legal Proceeding without the prior written consent of Parent (which consent
may not be unreasonably withheld).
SECTION 10. MISCELLANEOUS PROVISIONS
10.1 STOCKHOLDERS' AGENT. By virtue of their approval of this Agreement
and the Merger, the Stockholders appoint ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as their agent for
purposes of Sections 7, 8 and 9 (the "Stockholders' Agent") to give and receive
notices and communications, to authorize delivery to Parent of Parent Company
Stock, cash or other property under the Escrow Agreement, to agree to,
negotiate, enter into settlements and compromises of indemnification claims, and
to take all other actions necessary or appropriate to act on behalf of the
Stockholders under this Agreement. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ hereby accepts his
appointment as the Stockholders' Agent. Parent shall be entitled to deal
exclusively with the Stockholders' Agent on the matters indicated in Sections 7
and 8 and on all matters relating to Section 9, and shall be entitled to rely
conclusively (without further evidence of any kind whatsoever) on any document
executed or purported to be executed on behalf of any Stockholder by the
Stockholders' Agent, and on any other action taken or purported to be taken on
behalf of any Stockholder by the Stockholders' Agent, as fully binding upon such
Stockholder. If the Stockholders' Agent shall die, become disabled or otherwise
be unable to fulfill his responsibilities as agent of the Stockholders, then a
majority of the Designated Stockholders shall, within ten days after such death
or disability, appoint a successor agent and, promptly thereafter, shall notify
Parent of the identity of such successor. Any such successor shall become the
"Stockholders' Agent" for purposes of Sections 7, 8 and 9 and this Section 10.1.
If for any reason there is no Stockholders' Agent at any time, all references
herein to the Stockholders' Agent shall be deemed to refer to the Designated
Stockholders.
10.2 FURTHER ASSURANCES. Each party hereto shall execute and cause to
be delivered to each other party hereto such instruments and other documents,
and shall take such other actions, as such other party may reasonably request
(prior to, at or after the Closing) for the purpose of carrying out or
evidencing any of the transactions contemplated by this Agreement.
36
10.3 FEES AND EXPENSES. Each party to this Agreement shall bear and pay
all fees, costs and expenses (including legal fees and accounting fees) that
have been incurred or that are incurred by such party in connection with the
transactions contemplated by this Agreement (it being understood that fees
payable to Prudential pursuant to the agreement referred to in Section 2.24 and
fees payable to Holland & Knight LLP in connection with the transactions
contemplated by this Agreement shall be payable by the Company).
10.4 ATTORNEYS' FEES. If any action or proceeding relating to this
Agreement or the enforcement of any provision of this Agreement is brought
against any party hereto, the prevailing party shall be entitled to recover
reasonable attorneys' fees, costs and disbursements (in addition to any other
relief to which the prevailing party may be entitled).
10.5 NOTICES. Any notice or other communication required or permitted
to be delivered to any party under this Agreement shall be in writing and shall
be deemed properly delivered, given and received when delivered (by hand, by
registered mail, by courier or express delivery service or by facsimile) to the
address or facsimile telephone number set forth beneath the name of such party
below (or to such other address or facsimile telephone number as such party
shall have specified in a written notice given to the other parties hereto):
IF TO PARENT OR MERGER SUB:
Wind River Systems, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
IF TO THE ACQUIRED CORPORATIONS:
Embedded Support Tools Corporation
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
IF TO THE STOCKHOLDERS' AGENT OR ANY OF THE STOCKHOLDERS:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
c/o Embedded Support Tools Corporation
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
10.6 TIME OF THE ESSENCE. For the purposes of this Agreement and the
transactions contemplated by this Agreement, time is of the essence.
37
10.7 HEADINGS. The underlined headings contained in this Agreement are
for convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.
10.8 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall constitute an original and all of which, when
taken together, shall constitute one agreement.
10.9 GOVERNING LAW; VENUE. This Agreement shall be construed in
accordance with, and governed in all respects by, the laws of the State of
Delaware (without giving effect to principles of conflicts of laws). Except for
claims under Section 9 (which shall be resolved by arbitration in accordance
with the Escrow Agreement), any Legal Proceeding relating to this Agreement or
the enforcement of any provision of this Agreement may be brought or otherwise
commenced in any state court located in the Counties of Alameda or Santa ▇▇▇▇▇,
State of California, or in the federal courts located in the Northern District
of California. The Company and the Designated Stockholders: (a) expressly and
irrevocably consent and submit to the jurisdiction of each state court located
in the Counties of Alameda and Santa ▇▇▇▇▇, State of California (and each
appellate court located in such counties), and each federal court located in the
Northern District of California, in connection with any such Legal Proceeding;
(b) agree that service of any process, summons, notice or document by U.S. mail
addressed to the Company or the Designated Stockholders at the address set forth
in Section 10.5 shall constitute effective service of such process, summons,
notice or document for purposes of any such Legal Proceeding; (c) agree that
each state court located in the Counties of Alameda and Santa ▇▇▇▇▇, State of
California, and each federal court located in the Northern District of
California, shall be deemed to be a convenient forum; and (d) agree not to
assert (by way of motion, as a defense or otherwise), in any such Legal
Proceeding commenced in any state court located in the Counties of Alameda or
Santa ▇▇▇▇▇, State of California, or in any federal court located in the
Northern District of California, any claim that such party is not subject
personally to the jurisdiction of such court, that such Legal Proceeding has
been brought in an inconvenient forum, that the venue of such action or
proceeding is improper or that this Agreement or the subject matter of this
Agreement may not be enforced in or by such court.
10.10 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon each
of the parties hereto and each of their respective successors and assigns, if
any. This Agreement shall inure to the benefit of: the Acquired Corporations;
the Designated Stockholders; Parent; Merger Sub; the other Indemnitees; and the
respective successors and assigns, if any, of the foregoing. Parent may freely
assign any or all of its rights under this Agreement (including its
indemnification rights under Section 9), in whole or in part, to any other
Person without obtaining the consent or approval of any other party hereto or of
any other Person.
10.11 REMEDIES CUMULATIVE; SPECIFIC PERFORMANCE. The rights and
remedies of the parties hereto shall be cumulative (and not alternative). The
parties to this Agreement agree that, in the event of any breach or threatened
breach by any party to this Agreement of any covenant, obligation or other
provision set forth in this Agreement for the benefit of any other party to this
Agreement, such other party shall be entitled (in addition to any other remedy
that may be available to it) to (a) a decree or order of specific performance or
mandamus to enforce the
38
observance and performance of such covenant, obligation or other provision
and (b) an injunction restraining such breach or threatened breach.
10.12 WAIVER. No failure on the part of any Person to exercise any
power, right, privilege or remedy under this Agreement, and no delay on the part
of any Person in exercising any power, right, privilege or remedy under this
Agreement, shall operate as a waiver of such power, right, privilege or remedy;
and no single or partial exercise of any such power, right, privilege or remedy
shall preclude any other or further exercise thereof or of any other power,
right, privilege or remedy. No Person shall be deemed to have waived any claim
arising out of this Agreement, or any power, right, privilege or remedy under
this Agreement, unless the waiver of such claim, power, right, privilege or
remedy is expressly set forth in a written instrument duly executed and
delivered on behalf of such Person; and any such waiver shall not be applicable
or have any effect except in the specific instance in which it is given.
10.13 AMENDMENTS. This Agreement may not be amended, modified, altered
or supplemented other than by means of a written instrument duly executed and
delivered on behalf of all of the parties hereto.
10.14 SEVERABILITY. In the event that any provision of this Agreement,
or the application of any such provision to any Person or set of circumstances,
shall be determined to be invalid, unlawful, void or unenforceable to any
extent, the remainder of this Agreement, and the application of such provision
to Persons or circumstances other than those as to which it is determined to be
invalid, unlawful, void or unenforceable, shall not be impaired or otherwise
affected and shall continue to be valid and enforceable to the fullest extent
permitted by law.
10.15 PARTIES IN INTEREST. Except for the provisions of Section 9, none
of the provisions of this Agreement is intended to provide any rights or
remedies to any Person other than the parties hereto and their respective
successors and assigns, if any.
10.16 ENTIRE AGREEMENT. This Agreement and the other agreements
referred to herein set forth the entire understanding of the parties hereto
relating to the subject matter hereof and thereof and supersede all prior
agreements and understandings among or between any of the parties relating to
the subject matter hereof and thereof; PROVIDED, HOWEVER, that the
Confidentiality Agreements dated February 11, 2000 and executed on behalf of
Parent and the Company shall not be superseded by this Agreement and shall
remain in effect in accordance with their terms until the earlier of (a) the
Closing Date, or (b) the date on which such Confidentiality Agreements are
terminated in accordance with their terms.
10.17 WAIVER OF JURY TRIAL. Each of the parties hereto hereby
irrevocably waives any and all right to trial by jury in any Legal Proceeding
arising out of this Agreement or the transactions contemplated hereby.
10.18 CONSTRUCTION.
(a) For purposes of this Agreement, whenever the context
requires: the singular number shall include the plural, and vice versa; the
masculine gender shall include the feminine and neuter genders; the feminine
gender shall include the masculine and neuter genders; and the neuter gender
shall include the masculine and feminine genders.
39
(b) The parties hereto agree that any rule of construction to
the effect that ambiguities are to be resolved against the drafting party shall
not be applied in the construction or interpretation of this Agreement.
(c) As used in this Agreement, the words "include" and
"including," and variations thereof, shall not be deemed to be terms of
limitation, but rather shall be deemed to be followed by the words "without
limitation."
(d) Except as otherwise indicated, all references in this
Agreement to "Sections", "Schedules" and "Exhibits" are intended to refer to
Sections of this Agreement and Schedules and Exhibits to this Agreement.
40
The parties hereto have caused this Agreement to be executed and
delivered as of the date first written above.
WIND RIVER SYSTEMS, INC.,
a Delaware corporation
By:
----------------------------------
BOAT ACQUISITION CORP.,
a Massachusetts corporation
By:
----------------------------------
By:
----------------------------------
EMBEDDED SUPPORT TOOLS CORPORATION,
a Massachusetts corporation
By:
----------------------------------
By:
----------------------------------
DESIGNATED STOCKHOLDERS
-------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
▇▇▇▇ ▇. ▇. ▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
STOCKHOLDERS' AGENT
-------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
[SIGNATURE PAGE]
EXHIBIT A
CERTAIN DEFINITIONS
For purposes of the Agreement (including this Exhibit A):
ACQUIRED CORPORATIONS. "Acquired Corporations" means the Company and
each of its Subsidiaries.
ACQUIRED CORPORATION CONTRACT. "Acquired Corporation Contract" means
any Contract: (a) to which any of the Acquired Corporations is a party; (b) by
which any of the Acquired Corporations or any of their respective assets is or
may become bound or under which any of the Acquired Corporations has, or may
become subject to, any obligation; or (c) under which any of the Acquired
Corporations have or may acquire any right or interest.
ACQUIRED CORPORATION EMPLOYEE. "Acquired Corporation Employee" means
any Person who is employed by any Acquired Corporation as of the date of this
Agreement.
ACQUIRED CORPORATION SOURCE CODE. "Acquired Corporation Source Code"
means any source code, or any portion, aspect or segment of any source code,
relating to any Acquired Corporation Proprietary Asset.
ACQUIRED CORPORATION PROPRIETARY ASSET. "Acquired Corporation
Proprietary Asset" means any Proprietary Asset owned by or licensed to any of
the Acquired Corporations or otherwise used by any of the Acquired Corporations.
ACQUISITION TRANSACTION. "Acquisition Transaction" means any
transaction involving:
(a) the sale, license, disposition or acquisition of all or a material
portion of the business or assets of the Acquired Corporations (taken as a
whole);
(b) the issuance, disposition or acquisition of (i) any capital stock
or other equity security of any of the Acquired Corporations, (ii) any option,
call, warrant or right (whether or not immediately exercisable) to acquire any
capital stock or other equity security of any of the Acquired Corporations, or
(iii) any security, instrument or obligation that is or may become convertible
into or exchangeable for any capital stock or other equity security of any of
the Acquired Corporations; or
(c) any merger, consolidation, business combination, reorganization or
similar transaction involving any of the Acquired Corporations.
AGREEMENT. "Agreement" means the Agreement and Plan of Merger and
Reorganization to which this Exhibit A is attached (including the Disclosure
Schedule), as it may be amended from time to time.
CODE. "Code" means the Internal Revenue Service Code of 1986, as
amended.
COMPANY COMMON STOCK. "Company Common Stock" means the Common Stock
(par value $0.10 per share) of the Company.
A-1.
CONSENT. "Consent" means any approval, consent, ratification,
permission, waiver or authorization (including any Governmental Authorization).
CONTRACT. "Contract" means any written, oral or other agreement,
contract, subcontract, lease, understanding, instrument, note, warranty,
insurance policy, benefit plan or legally binding commitment or undertaking of
any nature.
DAMAGES. "Damages" include any loss, damage, injury, decline in value,
lost opportunity, liability, claim, demand, settlement, judgment, award, fine,
penalty, tax, fee (including reasonable attorneys' fees), charge, cost
(including costs of investigation) or expense of any nature.
DISCLOSURE SCHEDULE. "Disclosure Schedule" means the schedule (dated as
of the date of the Agreement) delivered to Parent on behalf of the Company and
the Designated Stockholders.
ENCUMBRANCE. "Encumbrance" means any lien, pledge, hypothecation,
charge, mortgage, security interest, encumbrance, claim, infringement,
interference, option, right of first refusal, preemptive right, community
property interest or restriction of any nature (including any restriction on the
voting of any security, any restriction on the transfer of any security or other
asset, any restriction on the receipt of any income derived from any asset, any
restriction on the use of any asset and any restriction on the possession,
exercise or transfer of any other attribute of ownership of any asset).
ENTITY. "Entity" means any corporation (including any non-profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, company (including any limited
liability company or joint stock company), firm or other enterprise,
association, organization or entity.
ERISA. "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
EXCHANGE ACT. "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
GOVERNMENTAL AUTHORIZATION. "Governmental Authorization" means any: (a)
permit, license, certificate, franchise, permission, clearance, registration,
qualification or authorization issued, granted, given or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement; or (b) right under any Contract with any Governmental Body.
GOVERNMENTAL BODY. "Governmental Body" means any: (a) nation, state,
commonwealth, province, territory, county, municipality, district or other
jurisdiction of any nature; (b) federal, state, local, municipal, foreign or
other government; or (c) governmental or quasi-governmental authority of any
nature (including any governmental division, department, agency, commission,
instrumentality, official, organization, unit, body or Entity and any court or
other tribunal).
A-2.
HSR ACT. "HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
Act of 1976, as amended.
INDEMNITEES. "Indemnitees" means the following Persons: (a) Parent; (b)
Parent's current and future affiliates (including Merger Sub); (c) the
respective Representatives of the Persons referred to in clauses "(a)" and "(b)"
above; and (d) the respective successors and assigns of the Persons referred to
in clauses "(a)", "(b)" and "(c)" above; PROVIDED, HOWEVER, that none of the
Stockholders is deemed to be an "Indemnitee."
LEGAL PROCEEDING. "Legal Proceeding" means any action, suit,
litigation, arbitration, proceeding (including any civil, criminal,
administrative, investigative or appellate proceeding), hearing, inquiry, audit,
examination or investigation commenced, brought, conducted or heard by or
before, or otherwise involving, any court or other Governmental Body or any
arbitrator or arbitration panel.
LEGAL REQUIREMENT. "Legal Requirement" means any federal, state, local,
municipal, foreign or other law, statute, constitution, principle of common law,
resolution, ordinance, code, edict, decree, rule, regulation, ruling or
requirement issued, enacted, adopted, promulgated, implemented or otherwise put
into effect by or under the authority of any Governmental Body.
PERSON. "Person" means any individual, Entity or Governmental Body.
PROPRIETARY ASSET. "Proprietary Asset" shall mean any: (a) patent,
patent application, trademark (whether registered or unregistered), trademark
application, trade name, fictitious business name, service ▇▇▇▇ (whether
registered or unregistered), service ▇▇▇▇ application, copyright (whether
registered or unregistered), copyright application, maskwork, maskwork
application, trade secret, know-how, customer list, computer software, computer
program, invention, design, technology, proprietary right or other intellectual
property right or intangible asset; or (b) right to use or exploit any of the
foregoing.
REPRESENTATIVES. "Representatives" means officers, directors,
employees, agents, attorneys, accountants, advisors and representatives.
SEC. "SEC" means the United States Securities and Exchange Commission.
SECURITIES ACT. "Securities Act" means the Securities Act of 1933, as
amended.
STOCKHOLDERS. "Stockholders" means all stockholders of the Company
immediately prior to the Closing. "Stockholder" means a stockholder of the
Company immediately prior to the Closing.
TAX. "Tax" means any tax (including any income tax, franchise tax,
capital gains tax, gross receipts tax, value-added tax, surtax, excise tax, ad
valorem tax, transfer tax, stamp tax, sales tax, use tax, property tax, business
tax, withholding tax or payroll tax), levy, assessment, tariff, duty (including
any customs duty), deficiency or fee, and any related charge or amount
(including any fine, penalty or interest), imposed, assessed or collected by or
under the authority of any Governmental Body.
A-3.
TAX RETURN. "Tax Return" means any return (including any information
return), report, statement, declaration, estimate, schedule, notice,
notification, form, election, certificate or other document or information filed
with or submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment, collection
or payment of any Tax or in connection with the administration, implementation
or enforcement of or compliance with any Legal Requirement relating to any Tax.
A-4.
SCHEDULE 6.4
Lease dated October 1, 1999 between the Company and Boston Mutual Insurance
Company
Business Loan Agreement dated September 23, 1999 between the Company and
BankBoston, N.A.
Commercial Security Agreement dated September 23, 1999 between the Company and
BankBoston, N.A.
A-5.
SCHEDULE 6.6(G)
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇
▇▇▇▇-▇▇▇▇▇▇ Coutent
▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
A-6.
SCHEDULE 6.6(H)
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
H. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
A-7.
SCHEDULE 6.13
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇
▇▇▇▇-▇▇▇▇▇▇ Coutent
▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
A-8.
================================================================================
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
among:
WIND RIVER SYSTEMS, INC.
a Delaware corporation;
BOAT ACQUISITION CORP.,
a Massachusetts corporation;
EMBEDDED SUPPORT TOOLS CORPORATION,
a Massachusetts corporation;
and
CERTAIN STOCKHOLDERS OF EMBEDDED SUPPORT TOOLS CORPORATION
---------------------------
Dated as of February 28, 2000
---------------------------
================================================================================
EXHIBITS
Exhibit A - Certain definitions
Exhibit B - Intentionally Omitted
Exhibit C - Form of Noncompetition Agreement
Exhibit D - Form of Stockholder Representation Letter
Exhibit E - Form of Registration Rights Agreement
Exhibit F - Form of Escrow Agreement
Exhibit G - Form of legal opinion of Holland & Knight LLP
Exhibit H - Form of Proprietary Rights Assignment Agreement
Exhibit I - Form of FIRPTA Statement
Exhibit J - Form of Lock-up Agreement
