Exhibit 10.6
AGREEMENT AND PLAN OF MERGER
Agreement and Plan of Merger (this "Agreement") by ULD
Holding Corp., a New York corporation (the "Operating Company"), USG
Acquisition Sub, Inc. a New York corporation (the "Acquisition Company"), The
Ultimate Software Group, Inc., a Delaware corporation (the "Company"), and the
principals whose names appear on the signature page hereto (the "Principals")
dated as of February 24, 1998.
WHEREAS, Ultimate Software Group of New York and New England,
G.P. (the "Assignor"), the assets and liabilities of which (including the
Reseller Agreement) were assigned to and assumed by the Operating Company)
entered into the Exclusive Reseller Agreement (the "Reseller Agreement") dated
March 24, 1994 with The Ultimate Software Group, Ltd., the assets and
liabilities of which were subsequently assigned to and assumed by the Company;
WHEREAS, the Company desires to acquire all the issued and
outstanding stock of the Operating Company pursuant to the terms hereof;
WHEREAS, the transactions contemplated hereby are intended to
be treated as a pooling of interests business combination by the Company for
financial accounting purposes and as a tax free reorganization for United
States federal income tax purposes;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Merger.
(a) The Merger. Subject to the terms hereof, the
Acquisition Company shall be merged with and into the Operating
Company on the Closing Date (as defined below). Upon the Closing Date,
the parties hereto shall cause to be executed and filed with the
Secretary of State of New York, a certificate of merger. Following the
Closing Date, the separate existence of the Acquisition Company shall
cease, and the Operating Company shall be the surviving corporation
(the "Surviving Corporation").
(b) Charter and By-laws. The Certificate of
Incorporation of the Operating Company, as in effect immediately prior
to the Closing Date, shall be the initial Certificate of Incorporation
of the Surviving Corporation. The by-laws of the Operating Company, as
in effect immediately prior to the Closing Date, shall be the initial
by-laws of the Surviving Corporation.
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(c) Directors. The directors of the Acquisition
Company at the Closing Date shall be the initial directors of the
Surviving Corporation. The officers of the Acquisition Company at the
Closing Date shall be the initial officers of the Surviving
Corporation.
(d) Effect on Stock. (i) The authorized capital
stock of the Operating Company consists of 200 shares of voting
common stock, no par value, of which all 200 shares are issued and
outstanding. The authorized capital stock of the Acquisition Company
consists of 1,000 shares of voting common stock, par value $.01 per
share, of which all 1,000 shares are issued and outstanding.
(ii) Upon the Closing Date, each issued and
outstanding share of common stock of the Acquisition Company
shall be converted into one validly issued, fully paid and
nonassessable share of common stock of the Surviving
Corporation.
(iii) Upon the Closing Date all the issued
and outstanding Capital Stock (as defined below) of the
Operating Company by virtue of the merger and without any
action on the part of the holders of Operating Company shares
shall be converted into the right to receive 40,265 shares
(the "Shares") of Class B Common Stock of the Company on a
pro rata basis.
(iv) As of the Closing Date, all of the
shares of Capital Stock of the Operating Company shall no
longer be outstanding and shall automatically be canceled and
retired and shall cease to exist, and each holder of a
certificate or certificates which immediately prior to the
Closing Date represented outstanding Capital Stock (the
"Certificates") shall cease to have any rights with respect
thereto, except the right to receive certificates
representing the number of Shares into which such shares have
been converted. The Company shall exchange the Certificates
for certificates representing the Shares promptly upon
receipt of the Certificates.
2. Reseller Agreement. Each of the parties hereto agrees that
any rights of the Assignor and the Operating Company and its affiliates arising
under the Reseller Agreement shall terminate on the Closing Date; provided
however, that the terms of this Section 2 shall not constitute a waiver by the
Assignor, the Principals or the Operating Company, on the one hand, or the
Company, on the other hand, of its right to assert claims against the other
with respect to any breach by the other of the Reseller Agreement, which breach
preceded the date hereof and was unknown to the party asserting such claim on
the date hereof.
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3. Representations and Warranties of the Company. The
Company hereby represents and warrants to and agrees with the Operating Company
as follows:
(a) Organization, Good Standing and Qualification.
The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has all
requisite power and authority to carry on its business as now
conducted and as proposed to be conducted, and the Company has all
requisite power and authority to enter into and perform this Agreement
and the transactions contemplated hereby.
(b) Authorization. All corporate action on the part
of the Company, its officers, directors and shareholders necessary for
the authorization, execution and delivery of this Agreement, the
performance of all obligations of the Company hereunder and the
authorization, issuance (or reservation for issuance) and delivery of
the Shares and any interest therein has been taken or will be taken
prior to the Closing Date.
(c) Valid Issuance of Shares. The Shares, when
issued and delivered in accordance with the terms hereof, (i) will be
duly and validly issued, fully paid and nonassessable, (ii) will be
free of any pledges, liens, security interests, claims or other
encumbrances of any kind, and (iii) will be issued in compliance with
all applicable federal and state securities laws.
(d) Prospectus. The Company shall provide the
Operating Company with the preliminary and final prospectuses with
respect to its proposed initial public offering of common stock and
any amendments thereto, promptly after the Company's Registration
Statement and amendments thereto containing such prospectuses are
filed with the Securities and Exchange Commission (the "SEC").
(e) Outstanding Options and Warrants. Except as set
forth on Schedule 3(e) hereto, there are no outstanding options,
warrants or agreements, oral or written, for the purchase or
acquisition from or by the Company of any shares, options or warrants
for its capital stock.
(f) Anti-Dilution Adjustments. Except for the
outstanding shares of Series A and Series B Convertible Preferred
Stock of the Company, no outstanding options, warrants, shares or
other securities of the Company contain provisions for anti-dilution
adjustments by reason of the issuance of additional securities of the
Company.
(g) Exercise Price of Options. The exercise price
of options granted on the date hereof, if any, under the Company's
Nonqualified Stock Option Plan is $90.00.
(h) Percentage Interest. As of the Closing Date, the
Shares will represent at least 2.82% of the outstanding capital stock
of the Company on a
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fully diluted basis determined as if all outstanding shares of such
capital stock had been converted into one class of common stock of
the Company.
(i) Financial Statements. The Company has delivered
to the Operating Company, and the Operating Company and the Principals
may rely upon, copies of (i) the audited financial statements of the
Company for the fiscal years ended December 31, 1995 and December 31,
1996, respectively and (ii) unaudited financial statements of the
Company for the fiscal year ended December 31, 1997, in each case,
certified by an officer of the Company as being true and complete
copies of such financial statements. Such financial statements fairly
present the financial position and results of the Company as of the
dates and for the periods indicated therein, and have been prepared in
accordance with generally acceptable accounting principles,
consistently applied.
(j) Litigation. There is no pending or threatened
action or proceeding affecting the Company before any court,
governmental agency or arbitrator which may materially adversely
affect the Company or which could affect the legality, validity or
enforceability of this Agreement.
4. Representations and Warranties of the Operating Company and the
Principals. The Operating Company and the Principals hereby jointly and
severally represent and warrant to and agree with the Company as follows:
(a) Operating Company. (i) The Operating Company is
a corporation duly organized, existing and in good standing
under the laws of the State of New York, and has all
requisite corporate power and corporate authority to own,
lease and operate its properties and to conduct its business
as currently being conducted. The Operating Company has all
requisite corporate power and corporate authority to execute
and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated
hereby.
(ii) The authorized capital stock of the
Operating Company consists of 200 shares of common stock, no
par value (the "Capital Stock"), all of which are issued and
outstanding. All of the issued and outstanding shares of the
Capital Stock (1) have been duly authorized and validly
issued and are fully paid and nonassessable, (2) are free of
any pledges, liens, security interests, claims or other
encumbrances of any kind, (3) have been issued in compliance
with all applicable federal and state securities laws and (4)
are held by the person(s) listed on Schedule 4(a)(ii)
attached hereto.
(iii) The Operating Company has not issued
or granted any options, warrants, rights, or other securities
convertible into or exchangeable or exercisable for the
Capital Stock, any other commitments or agreements providing
for the issuance of additional shares of the Capital Stock,
the sale of treasury shares, or for the repurchase or
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redemption of shares of the Capital Stock, and there are no
agreements of any kind which may obligate the Company to
issue, purchase, register for sale, redeem, or otherwise
acquire any of its securities or interests
(b) Assets. The Operating Company is the legal and
beneficial owner of the assets described on Schedule 4(b) hereto (the
"Assets"), free and clear of any lien, charge, encumbrance or adverse
claim, except as set forth on Schedule 4(c) hereto. There are no
assets used in, or necessary for the operation of, the business of the
Operating Company as presently operated (the "Business") other than
the Assets. The Assets are all of the assets of Operating Company.
(c) Liabilities; Litigation. The Operating Company
has no liabilities known or unknown, fixed or contingent, including
contractual liabilities, other than the liabilities described on
Schedule 4(c) hereto (the "Liabilities"). There is no pending or
threatened action or proceeding affecting the Assets or the Business
before any court, governmental agency or arbitrator, which may
materially adversely affect the Assets or the Business or which could
affect the legality, validity or enforceability of this Agreement.
(d) Consents; No Conflicts. The execution, delivery
and performance of this Agreement by the Operating Company and the
Principals and the consummation by the Operating Company and the
Principals of the transactions contemplated hereby (x) do not
contravene (i) the Operating Company's organizational documents, (ii)
any law or (iii) any contractual restriction binding on or affecting
the Operating Company or the Principals and (y) do not require the
consent, approval, permission or other authorization of any court,
arbitrator or governmental, administrative or self-regulatory
authority or consent under any material lease, license, agreement or
other material instrument of the Operating Company, the Principals or
the Business and (z) do not require any stockholder, director or other
authorization or action, other than authorizations that have been duly
obtained and actions that have been duly taken.
(e) Financial Statements. The Operating Company has
delivered to the Company all of the Assignor's quarterly financial
statements for the years ended December 31, 1996 and December 31, 1997
and, it will, on or before the Closing Date, deliver to the Company
the Assignor's financial statements for the fiscal years ended
December 31, 1995, December 31, 1996 and December 31, 1997, audited by
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP ("▇▇▇▇▇▇▇▇") (the "Audited Statements"), and such
financial statements do and will fairly present the financial position
and results of operations of the Assignor as of the dates and for the
periods indicated therein. Such financial statements were and will be
prepared in accordance with generally accepted accounting principles,
consistently applied.
(f) No Brokers. No broker, finder or any other
third party is entitled to any fee or commission in connection with
the transactions contemplated hereby.
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(g) Accredited Investor. Each of the Operating
Company and the Principals is an "accredited investor" within the
meaning of Rule 501(a) of Regulation D promulgated under the
Securities Act of 1933, as amended (the "Securities Act"), and each
Principal has executed an Accredited Investor Certification in the
form attached hereto.
(h) Investment Intent. Each Principal (i) has such
knowledge, sophistication and experience in business and financial
matters that it is capable of evaluating the merits and risks of an
investment in the Shares and any interest therein, (ii) can bear the
economic risk of an investment in the Shares and any interest therein
for an indefinite period of time and can afford a complete loss of
such investment, and (iii) is acquiring the Shares and any interest
therein for its own account and not with a view to, or for a sale in
connection with, a distribution in violation of any applicable
securities laws of any jurisdiction.
(i) No Registration. Each Principal understands that
the offering and the issuance of the Shares have not been and will not
be registered or qualified under the laws of any jurisdiction
regarding the offering or sale of securities, and that the Shares and
any interest therein may not be resold or otherwise transferred by the
Principals unless any such subsequent sale or transfer is duly
registered and qualified under the applicable securities laws or is
exempt from such registration and qualification.
(j) Access to Information. The Operating Company (i)
has been furnished with, and hereby acknowledges the receipt and
review of, (a) a copy of a draft (the "Draft Prospectus") of the
Preliminary Prospectus of the Company dated December 31, 1997 and any
attachments thereto, (b) the audited financial statements of the
Company for the fiscal years ended December 31, 1995 and December 31,
1996, respectively, and (c) unaudited financial statements of the
Company for the fiscal year ended December 31, 1997, (ii) has been
afforded the opportunity to obtain such additional information from
the Company and its representatives as the Operating Company has
deemed necessary in order to evaluate the merits, risks and other
considerations relating to an acquisition of Shares and any interest
therein, (iii) fully understands the risks and other considerations
relating to the investment contemplated hereby, and (iv) with respect
to tax, employee benefits and other financial and economic
considerations related to the investment contemplated hereby, has
relied solely on the advice of the Operating Company's own
professional advisors.
(k) Draft Prospectus. The Operating Company
understands that (i) the Draft Prospectus is a preliminary draft and
that future drafts may contain material changes from the Draft
Prospectus and (ii) there can be no assurance that an initial public
offering of the Company's stock will be consummated in the near future
or ever or that the Registration Statement filed in connection
therewith will be declared effective by the SEC.
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(l) Information. All information which the Operating
Company has heretofore furnished or furnishes herewith to the Company
in connection with the transactions contemplated hereby is correct and
complete in all respects as of the date of this Agreement, and if
there should be any change in such information prior to the
consummation of the transactions contemplated hereby, the Operating
Company will immediately furnish such revised or corrected information
to the Company.
(m) Schedule of Contracts. Attached hereto as
Schedule 4(m) is a true and complete list of all oral and written
contracts and agreements entered into by the Assignor or the Operating
Company with respect to the Business through the date hereof. Complete
copies of all such written contracts and complete descriptions of all
such oral contracts have been delivered to the Company. To the
knowledge of the Operating Company, the Operating Company is not in
material default under any such contracts.
(n) Certain Accounting Matters. Neither the Assignor
nor the Operating Company have knowingly taken or agreed to take any
action that would prevent the Company from accounting for the
transactions contemplated hereby as a pooling of interest business
combination.
(o) Shareholder Agreements. The Operating Company
and Principals acknowledge that it is the parties' intention that the
transactions contemplated by this Agreement be accounted for as a
pooling of interests business combination and that each of the
shareholders of the Operating Company may be deemed to be an
"affiliate" of the Operating Company within the meaning of Rule 145
promulgated under the Securities Act. Accordingly, each of the
Operating Company and the Principals covenants and agrees that he, she
or it will not (i) knowingly take any action after the date hereof to
cause the transactions contemplated hereby not to be accountable under
the pooling of interests method of accounting, or (ii) sell, transfer,
pledge, dispose of or otherwise part with any interest in or with
respect to, or in any other manner reduce his, her or its investment
risk with respect to, (A) any shares of capital stock of the Operating
Company at any time prior to the Closing Date, and (B) any shares of
the Company's stock received by such shareholder in connection with
the transactions contemplated hereby or otherwise until such time as
the Company publishes financial results covering at least 30 days of
combined operations of the Company and the Operating Company or (iii)
from the Closing Date until the time the Company publishes financial
results covering at least thirty days of combined operations of the
Company and the Operating Company, directly or indirectly sell or
purchase or enter into any agreement, contract or arrangement to sell
or purchase any put or call options or other derivative securities
(including any short sales) with respect to shares of the Company's
stock or enter into any other agreements, contracts or arrangements
providing for the alteration of such shareholder's investment risk
with respect to any shares of the Company's stock.
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(p) Reseller Agreement. To its knowledge, the
Operating Company has not materially breached any of its obligations
under the Reseller Agreement as of the date hereof.
5. Securities Laws. The Operating Company hereby
acknowledges and agrees that:
(a) the Shares must be held indefinitely unless
subsequently registered under the Securities Act and under any
applicable state securities laws or unless an exemption from such
registration is available.
(b) the Shares will not be registered under the
Securities Act on the grounds that the offering and sale thereof
contemplated by this Agreement will be exempt from registration under
the Securities Act, and that the Company's reliance upon such
exemption is predicated upon the representations of the Operating
Company set forth herein.
(c) "stop transfer" instructions shall be placed
against the Shares on the transfer books of the Company and that the
certificate(s) evidencing the Shares shall bear a legend, in addition
to any legend required by applicable state securities laws, in
substantially the following form:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY APPLICABLE STATE
SECURITIES LAWS AND MAY NOT BE OFFERED FOR SALE, SOLD OR
OTHERWISE DISPOSED OF FOR VALUE UNLESS A REGISTRATION
STATEMENT HAS BECOME EFFECTIVE WITH RESPECT TO SUCH
SECURITIES UNDER THE SECURITIES ACT AND SUCH STATE SECURITIES
LAWS OR IN THE OPINION OF COUNSEL REASONABLY ACCEPTABLE TO
THE CORPORATION THERE IS AN APPLICABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND THE
APPLICABLE STATE SECURITIES LAWS OR SUCH REGISTRATION IS NOT
OTHERWISE REQUIRED."
6. Due Diligence; Termination.
(a) The Operating Company and the Principals shall
afford any and all authorized representatives of the Company access,
during normal business hours, to its employees, properties, books,
contracts and records and shall furnish promptly all information
concerning its business, properties and personnel and
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copies of any of its books, records or contracts as the Company or
its representatives shall request; provided, that no investigation
pursuant to this Section 6 shall effect or be deemed to modify any
representation or warranty made in this Agreement by the Operating
Company.
(b) Until the date which is ten days after the
Operating Company delivers to the Company the Audited Statements
pursuant to Section 4(e) hereof, the Company shall have the right to
terminate this Agreement if the Company shall determine in its sole
discretion, based on its investigation of the Operating Company
pursuant to Section 6(a) or a review of such Audited Statements, that
consummating the transactions contemplated hereby would not be in the
best interests of the Company.
(c) The Company shall have the right to terminate
this Agreement if the Company does not receive requisite approval of
the transactions contemplated hereunder from its stockholders on or
before the Closing Date.
7. Closing. Subject to Section 6(b) hereof and the
satisfaction or waiver of the conditions set forth in Section 9 hereof,
consummation of the transactions contemplated by Section 1 hereof (the
"Closing") shall take place at the offices of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇▇▇
▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ on a date (the "Closing Date") which
is the earlier of (a) March 31, 1998 and (b) the date specified in a written
notice given by the Company no less than five (5) days prior to such date.
8. Covenants.
(a) Interim Operations. Prior to the Closing Date, unless
the Company has consented in writing thereto, the Operating
Company:
(i) shall conduct its operations according to its
usual, regular and ordinary course in substantially
the same manner as heretofore conducted;
(ii) shall use its reasonable efforts to preserve intact
its business organization and goodwill and maintain
satisfactory relationships with those persons having
business relationships with it;
(iii) shall promptly notify the Company of (x) any
material change in its condition (financial or
otherwise), business, properties, assets,
liabilities or the normal course of its business or
of its properties, (y) any material litigation or
material governmental complaints, investigations or
hearings (or communications indicating that the same
may be contemplated), or (z) the breach of any
representation or warranty contained herein;
(iv) shall not issue any equity interest;
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(v) shall not (w) incur, create, assume or otherwise
become liable for borrowed money or assume,
guarantee, endorse or otherwise become
responsible or liable for the obligations of any
other individual, corporation or other entity,
(x) make any loans or advances to any other
person, except in each case in the ordinary
course of business, (y) acquire (including,
without limitation, for cash or shares of stock,
by merger, consolidation, or acquisition of stock
or assets) any interest in any corporation,
partnership or other business organization or
division thereof or any assets, or make any
investment either by purchase of stock or
securities, contributions of capital or property
transfer or, except in the ordinary course of
business, consistent with past practice, purchase
any property or assets of any other person or (z)
effect a sale or other disposition of any of the
Assets or allow the creation of any lien or
encumbrance thereon;
(vi) shall not (x) declare, set aside or make any
distribution or payment with respect to any shares
of its capital stock or other ownership interest,
other than such distributions or payments as are
consistent with past practice or (y) directly or
indirectly redeem, purchase or otherwise acquire any
shares of its capital stock or make any commitment
for any such action;
(vii) shall not amend or otherwise change its articles of
incorporation, by-laws or equivalent organizational
documents;
(viii) shall not increase the compensation payable or to
become payable to its officers or employees, pay any
employment related or other bonus to its
shareholder, or, except as presently bound to do,
grant any severance or termination pay to, or enter
into any employment or severance agreement with, any
of its directors, officers or other employees;
(ix) shall not take any action other than in the ordinary
course of business and in a manner consistent with
past practice with respect to accounting policies or
procedures; and
(x) shall not agree, in writing or otherwise, to take
any of the foregoing actions or take any action
which would make any representation or warranty in
this Agreement untrue or incorrect as of the Closing
Date.
(b) Trading in Company Stock. Except as otherwise
expressly consented to by the Company, from the date of this Agreement
until the Closing Date, neither the Operating Company nor the
Principals will directly or indirectly purchase or sell (including
short sales) any shares of the Company's stock, or sell, transfer,
pledge, dispose of or otherwise part with any interest in or with
respect to
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or in any other manner reduce its investment risk with respect to any
shares of the Company's stock to be received pursuant to this
Agreement.
(c) Confidentiality of Prospectus. The Operating
Company acknowledges and agrees that the Draft Prospectus is highly
confidential, that it may not be photocopied, distributed or otherwise
communicated to persons other than the Operating Company or its
representatives retained for purposes of this transaction and that
upon receipt by the Operating Company of a preliminary or final
prospectus of the Company, the Draft Prospectus will be returned to
the Company.
(d) Custom Applications. The Operating Company shall
provide on the date hereof a Schedule 8(d) which lists, by customer,
all custom applications, including, without limitation, custom
programs, modules and interfaces (other than software purchased by the
Operating Company from the Company) ("Custom Applications"), which
have been provided to any customer of the Operating Company. The
Operating Company shall provide source code with respect to all Custom
Applications on or before the Closing Date.
(e) Cooperation; Tax Schedule. Following the Closing
Date, the Operating Company shall promptly furnish the Company with
such financial and reporting data and other information with respect
to the Assets and Liabilities as the Company may from time to time
reasonably request, for any reasonable business purpose, including,
without limitation, the preparation of tax returns and financial
statements. Within sixty (60) days following the Closing Date, the
Operating Company shall prepare and deliver to the Company a schedule
indicating the federal income tax basis and state income tax basis, if
different, of each of the Assets and Liabilities.
(f) Options; Dilution. The Company hereby agrees
that from the date hereof until April 30, 1998, the Company will not
issue any options to purchase shares of capital stock of the Company
to any persons who are officers of the Company as of the date hereof.
The Company shall not enter into a transaction pursuant to which any
shares of Class B Common Stock of the Company, including the Shares,
are diluted in a manner which is not pari passu with other shares of
Class B Common Stock of the Company.
(g) Registration Rights Agreement. The Company
agrees that if at any time between the Closing Date and the first
anniversary of the Closing Date, the Company proposes to register any
shares of capital stock of the Company owned by ▇▇▇▇▇ ▇▇▇▇▇▇ and/or
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, other than on a Registration Statement on Form S-8,
the shareholders of the Operating Company shall have the right to
register in such registration, on the same terms as Messrs. ▇▇▇▇▇▇
and/or ▇▇▇▇▇▇▇▇▇, a number of Shares equal to the total number of
Shares held by the shareholders of the Operating Company multiplied by
a fraction, the numerator of which
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is the total number of shares of Messrs. ▇▇▇▇▇▇ and/or ▇▇▇▇▇▇▇▇▇, as
applicable, proposed to be registered and the denominator of which is
the total number of shares of the Company's capital stock owned by
Messrs. ▇▇▇▇▇▇ and/or ▇▇▇▇▇▇▇▇▇, as applicable, at the time of
registration.
9. Conditions to Closing. (a) The obligations of the Company
under this Agreement are subject to the fulfillment or waiver on or
before the Closing Date of the following conditions:
(i) Representations and Warranties. The representations
and warranties of the Operating Company and the
Principals contained in Section 4 shall be true on
and as of the Closing Date with the same effect as
though such representations and warranties had been
made on and as of the Closing Date.
(ii) Performance. The Operating Company shall have
performed and complied with all agreements,
obligations and conditions contained in this
Agreement.
(iii) No Material Adverse Change. There shall have been no
material adverse change in the condition of the
Operating Company or the Assets since the date
hereof.
(iv) Pooling Letter. The Company shall have received from
▇▇▇▇▇▇▇▇, a letter dated the Closing Date,
confirming that the transactions contemplated
hereby, if consummated, can properly be accounted
for as a pooling of interests combination in
accordance with GAAP and the criteria of Accounting
Principles Board Opinion No. 16 and the regulations
of the SEC.
(v) Balance Sheet. The Operating Company shall have
delivered to the Company a balance sheet of the
Operating Company, dated as of the Closing Date,
prepared in accordance with generally accepted
accounting principles, consistently applied, and
which shall be subject to review or audit by
▇▇▇▇▇▇▇▇ at the sole discretion of the Company. Such
balance sheet shall demonstrate that the assets of
the Operating Company, other than the Reseller
Agreement and other intangible assets, have an
aggregate value greater than the aggregate value of
the liabilities of the Operating Company.
(vi) Updated Schedules. The Operating Company shall have
prepared and delivered to the Company updated
Schedules 4(b), 4(c), 4(m) and 8(d) which reflect,
as of the Closing Date, the information required to
be stated therein.
(vii) Other Documents. The Company shall have received
such other documents as it shall reasonably request
prior to the Closing.
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(b) The obligations of the Operating Company under this
Agreement are subject to the fulfillment or waiver on or before the Closing
Date of each of the following conditions:
(i) Representations and Warranties. The representations
and warranties of the Company contained in Section 3
shall be true on and as of the Closing Date with the
same effect as though such representations and
warranties had been made on and as of the date
thereof.
(ii) Delivery of Shares. The Company shall have delivered
the Shares specified in Section 1.
(iii) Performance. The Purchaser shall have performed and
complied with all agreements, obligations and
conditions contained in this Agreement.
(iv) No Material Adverse Change. There shall have been no
material adverse change in the financial condition
of the Company after the date hereof.
10. Certain Tax Matters. The parties to this Agreement intend
that the transactions contemplated hereby (and the distribution of the Shares
of the Company to the Operating Company's shareholders) (collectively, the
"Transaction") will constitute a reorganization described in Section
368(a)(2)(E) of the Internal Revenue Code of 1986, as amended (the "Code").
However, each of the parties to this Agreement acknowledges that it is relying
solely upon its respective advisors in determining the tax consequences of the
Transaction and will not rely on any representation or assurance of the other
party other than the representations and covenants set forth in this Agreement
or any other agreement or certificate delivered in connection herewith. None of
the Company, the Operating Company or the Principals will take any tax
reporting position or make any tax election inconsistent with the
characterization of the Transaction qualifying as a reorganization described in
Section 368(a)(2)(E) of the Code, except as may be required upon examination
(or as the result of a prior determination) by the Internal Revenue Service or
any other tax authority.
11. Waiver. Subject to the consummation of the transactions
contemplated hereby, each of the parties hereto hereby releases and discharges
the other party, its shareholders, employees, parents, subsidiaries,
affiliates, successors and assigns from all actions, causes of action, suits,
debts, agreements, judgments, claims, and demands whatsoever, in law or equity
which such party ever had, now have or hereafter can, shall or may have, for,
upon or by reason of any claim relating to the Reseller Agreement and the
relationship of the parties thereunder.
12. Indemnification.
13
(a) The Principals and, until the Closing Date, the
Operating Company hereby jointly and severally agree to indemnify and
hold harmless the Company and any fiduciary, officer, director,
employee, agent or controlling person of the Company (each, an
"Indemnified Person") against any and all losses, claims, damages,
expenses and liabilities (or actions in respect thereof) whatsoever by
reason of or arising from (i) any breach of the representations and
warranties of this Agreement, (ii) any failure by the Operating
Company or the Principals to comply with any covenant in this
Agreement and (iii) any liabilities whether known or unknown, fixed or
contingent (including contractual liabilities) of the Operating
Company or any of its affiliates, other than the Liabilities. The
Principals will reimburse any Indemnified Person for all expenses
(including reasonable attorneys' fees) as they are incurred by any
such Indemnified Person in connection with investigating, preparing or
defending any such action or claim, whether or not in connection with
pending or threatened litigation in which any Indemnified Person is a
party.
(b) The Company hereby agrees to indemnify and hold
harmless the Operating Company and the Principals and any fiduciary,
officer, director, employee, agent or controlling person of the
Operating Company (each, an "Indemnified Person") against any and all
losses, claims, damages, expenses and liabilities (or actions in
respect thereof) whatsoever by reason of or arising from (i) any
breach of the Company's representations and warranties in this
Agreement and (ii) any failure by the Company to comply with any of
its covenants in this Agreement. The Company will reimburse any
Indemnified Person for all expenses (including reasonable attorneys'
fees) as they are incurred by any such Indemnified Person in
connection with investigating, preparing or defending any such action
or claim, whether or not in connection with pending or threatened
litigation in which any Indemnified Person is a party.
(c) Promptly after the receipt by a party of notice
of any third party claim or the commencement of any third party
action, suit or proceeding subject to indemnification hereunder (a
"Third Party Claim"), such party (the "Indemnified Party") will, if a
claim in respect thereto is to be made against any party obligated to
provide indemnification hereunder (the "Indemnifying Party"), give
such Indemnifying Party reasonable written notice of such Third Party
Claim; provided, however, that the failure to provide such notice will
not relieve the Indemnifying Party of any of its or his obligations,
or impair the right of the Indemnified Party to indemnification,
pursuant to this Section 12 unless, and only to the extent that, such
failure materially prejudices the Indemnifying Party's opportunity to
defend or compromise the Third Party Claim. Such Indemnifying Party
shall have the right, at its option, to defend at its own expense and
by its own counsel any Third Party Claim, provided that (i) the
Indemnifying Party acknowledges in writing (at the time such
Indemnifying Party elects to assume such defense) its obligation under
this Section 12 to indemnify the Indemnified Party with respect to
such Third Party Claim, (ii) such counsel is reasonably satisfactory
to the Indemnified Party, (iii) the Indemnified Party is kept fully
informed of all developments, and is furnished with copies of all
documents and
14
papers, related thereto and is given the right to participate in the
defense and investigation thereof as provided below, and (iv) such
counsel proceeds with diligence and in good faith with respect
thereto. If the Indemnifying Party shall undertake to defend any Third
Party Claim, such Indemnifying Party shall notify the Indemnified
Party of its intention to do so promptly (and in any event no later
than thirty (30) days) after receipt of notice of the Third Party
Claim, and the Indemnified Party agrees to cooperate in good faith
with the Indemnifying Party and its counsel in the defense of such
Third Party Claim. Notwithstanding the foregoing, the Indemnified
Party shall have the right to participate in the defense and
investigation of any Third Party Claim with its own counsel at its own
expense, except that the Indemnifying Party shall bear the expense of
such separate counsel if (A) in the written opinion of counsel to the
Indemnified Party reasonably acceptable to the Indemnifying Party, use
of counsel of the Indemnifying Party's choice would be expected to
give rise to a conflict of interest, (B) there are or may be legal
defenses available to the Indemnified Party that are different from or
additional to those available to the Indemnifying Party, (C) the
Indemnifying Party shall not have employed counsel to represent the
Indemnified Party within a reasonable time after notice of the Third
Party Claim is given to the Indemnifying Party or notice that the
Indemnifying Party intends to assume the defense of the Third Party
Claim is given to the Indemnified Party or (D) the Indemnifying Party
shall authorize the Indemnified Party to employ separate counsel at
the expense of the Indemnifying Party. The Indemnifying Party shall
not settle any Third Party Claim without the prior written consent of
the Indemnified Party, which shall not be unreasonably withheld;
provided, however, that an Indemnified Party shall not be required to
consent to any settlement involving the imposition of equitable
remedies.
13. Miscellaneous.
(a) Notices. Any notices or other communications required or
permitted to be given or delivered under this Agreement shall be in
writing and shall be sufficiently given to a party if delivered
personally or mailed by registered or certified mail, postage prepaid,
return receipt requested, or by overnight delivery by a
nationally-recognized courier or by telecopier, as follows (or to such
other address or person as either party may from time to time
designate to the other in writing):
To the Operating Company or the Principals:
---------------------------------------
---------------------------------------
---------------------------------------
---------------------------------------
To the Company:
The Ultimate Software Group, Inc.
15
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Any such notice or other communication shall be deemed to be given as
of the date it is personally delivered, five (5) days after being
deposited in the United States mail, one (1) day after being deposited
with a nationally recognized courier for overnight delivery or the
date it is transmitted via telecopier, answerback received (followed
promptly by delivery of such notice in accordance with one of the
other methods above).
(b) Binding Effect; Assignability. This Agreement
shall be binding upon and inure to the benefit of all of the parties
and their successors, legal representatives and assigns. None of the
parties hereto may transfer its rights hereunder without the prior
written consent of the other party, which consent may be given or
withheld for any reason or no reason.
(c) Severability. If any provision hereof is held to
be illegal or unenforceable, such provision shall be fully severable,
and the remaining provisions of this Agreement shall remain in full
force and effect and shall not be affected by such provision's
severance. Furthermore, in lieu of any such provision, there shall be
added automatically as part of this Agreement a legal and enforceable
provision as similar in terms to the severed provision as may be
possible.
(d) Counterparts. This Agreement may be executed in
any number of counterparts with the same effect as if all parties
hereto had signed the same document. All counterparts shall be
construed together and shall constitute one instrument.
(e) Integration. This Agreement constitutes the
entire agreement among the parties hereto pertaining to the subject
matter hereof and supersedes all prior agreements and understandings
pertaining thereto.
(f) Governing Law. This Agreement and the rights of
the parties hereunder shall be interpreted in accordance with the laws
of the State of Delaware, and all rights and remedies shall be
governed by such laws without regard to principles of conflict of
laws.
(g) State Securities Laws. The offer and sale of the
Shares is intended to be exempt from registration under the securities
laws of certain states. The Operating Company and the Principals must
note that there are restrictions on transfer of the Shares, as agreed
upon in Section 5 of this Agreement.
16
(h) Survival. The representations, warranties and
indemnities of the parties set forth in this Agreement shall survive
for a period of one year from the Closing Date.
IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE COMPANY AND THE TERMS OF THE OFFERING, INCLUDING
THE MERITS AND RISKS INVOLVED. THE SECURITIES OFFERED HEREBY HAVE NOT
BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR
REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT
CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS AGREEMENT.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE SECURITIES OFFERED HEREBY ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT
AS PERMITTED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND THE
APPLICABLE STATE SECURITIES LAWS PURSUANT TO REGISTRATION OR EXEMPTION
THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR
THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF
TIME.
17
IN WITNESS WHEREOF, the undersigned has caused this Agreement
to be executed as of the day and year first above written.
ULD HOLDING CORP.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
USG ACQUISITION SUB, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
THE ULTIMATE SOFTWARE GROUP, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
PRINCIPALS:
ULTIMATE SOFTWARE GROUP OF NEW YORK AND NEW
ENGLAND, G.P.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
18
WEDGEWOOD GROUP, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Managing Director/
Secretary/Treasurer
NEW COUNTRY DEVELOPMENT
GROUP, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: President
▇▇▇▇▇▇▇, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇
---------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇
Title: President
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ ▇▇.
---------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ ▇▇.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
19
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇
---------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇
20
ACCREDITED INVESTOR CERTIFICATION
SIGN BELOW
_____________________ hereby certifies that EITHER (Check Box that Applies):
|_| 1. It is a corporation or a partnership with total
assets in excess of $5,000,000 that was not formed
for the specific purpose of acquiring the Shares or
any interest therein (as defined above); OR
|_| 2. All of the equity owners of the undersigned meet
one or more of the following criteria:
(A) A person having individual net worth, or
joint net worth with his or her spouse,
exceeding $1,000,000; or
(B) A person having an income in excess of
$200,000 in each of the two (2) most recent
years or a joint income with his or her
spouse in excess of $300,000 in each of
those years and having a reasonable
expectation of reaching the same income
level in the current year.
|_| 3. He or she is an individual that meets one or more
of the following criteria:
(A) A person having individual net worth, or
joint net worth with his or her spouse,
exceeding $1,000,000; or
(B) A person having an income in excess of
$200,000 in each of the two (2) most recent
years or a joint income with his or her
spouse in excess of $300,000 in each of
those years and having a reasonable
expectation of reaching the same income
level in the current year.
-----------------------------------
21
[Exhibit B intentionally omitted]
[Schedules intentionally omitted.]
