Exhibit 4.2
AGREEMENT AND PLAN OF REORGANIZATION AND MERGER
BY AND AMONG
PAREXEL INTERNATIONAL CORPORATION,
KMI ACQUISITION CORPORATION,
▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇, INC.,
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
P. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇ ▇. ▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
▇▇▇▇ ▇. PARENTEAU,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇
AND
▇▇▇ ▇. ▇▇▇▇
Dated as of October 22, 1997
TABLE OF CONTENTS
PAGE
ARTICLE I 2
DEFINITIONS 2
1.01. DEFINITIONS 2
ARTICLE II 5
REORGANIZATION AND MERGER 5
2.01. THE MERGER. 5
2.02. CLOSING 6
2.03. CERTIFICATES FOR PARENT STOCK 7
2.04. TRANSFER TAXES 7
2.05. BOOKS AND RECORDS 7
2.06. RESIGNATIONS 7
2.07. NO FRACTIONAL SHARES 7
ARTICLE III 8
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
STOCKHOLDERS 8
3.01. CORPORATE EXISTENCE AND POWER 8
3.02. CORPORATE AUTHORIZATION 8
3.03. GOVERNMENTAL AUTHORIZATION; CONSENTS 8
3.04. NON-CONTRAVENTION 9
3.05. CAPITALIZATION 9
3.06. SUBSIDIARIES 9
3.07. FINANCIAL STATEMENTS 10
3.08. ABSENCE OF CERTAIN CHANGES 10
3.09. PROPERTY AND EQUIPMENT 12
3.10. NO UNDISCLOSED MATERIAL LIABILITIES 12
3.11. LITIGATION 12
3.12. MATERIAL CONTRACTS 12
3.13. INSURANCE COVERAGE 14
3.14. COMPLIANCE WITH LAWS; NO DEFAULTS 14
3.15. FINDERS' FEES 14
3.16. INTELLECTUAL PROPERTY 14
3.17. INVENTORIES 16
3.18. RECEIVABLES 16
3.19. TAXES 16
3.20. ENVIRONMENTAL COMPLIANCE 17
3.21. CUSTOMERS AND SUPPLIERS 18
3.22. TRANSACTIONS WITH AFFILIATES 18
3.23. OTHER INFORMATION 18
3.24. INTERCOMPANY ARRANGEMENTS 18
3.25. EMPLOYEES 19
ARTICLE IV 19
ADDITIONAL REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS 19
4.01. TITLE TO AND VALIDITY OF SHARES 19
4.02. AUTHORITY 19
4.03. PURCHASE FOR INVESTMENT 19
4.04. POWER TO ACT AS TRUSTEE OR EXECUTOR 20
4.05. NO LEGAL PROCEEDINGS 20
ARTICLE V 20
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB 20
5.01. ORGANIZATION AND EXISTENCE 20
5.02. CORPORATE AUTHORIZATION 20
5.03. GOVERNMENTAL AUTHORIZATION 20
5.04. LITIGATION 20
5.05. REPORTS AND FINANCIAL STATEMENTS 21
5.06. FINDER'S FEES 21
5.07. NON-CONTRAVENTION 21
ARTICLE VI 22
COVENANTS OF THE COMPANY AND EACH STOCKHOLDER 22
6.01. CONFIDENTIALITY 22
6.02. AFFILIATE AGREEMENTS 22
6.03. EXPENSES 23
6.04. SATISFACTION OF PARENT'S WITHHOLDING OBLIGATION 23
ARTICLE VII 23
COVENANTS OF PARENT 23
7.01. ACCESS 23
7.02. QUARTERLY REPORT ON FORM 10-Q 24
7.03. AFFILIATE AGREEMENTS 24
7.04. REORGANIZATION STATUS 24
7.05. BUSINESS CONTINUITY 24
7.06. CONFIDENTIALITY 24
7.07. PUBLICATION OF INTERIM FINANCIAL RESULTS 25
7.08. NASDAQ NATIONAL MARKET ADDITIONAL SHARES NOTIFICATION 25
ARTICLE VIII 25
COVENANTS OF ALL PARTIES 25
8.01. BEST EFFORTS 25
8.02. CERTAIN FILINGS 25
8.03. PUBLIC ANNOUNCEMENTS 25
8.04. POOLING 26
ARTICLE IX 26
EMPLOYEE BENEFITS 26
9.01. EMPLOYEE BENEFITS DEFINITIONS 26
9.02. ERISA REPRESENTATIONS 27
9.03. NO THIRD PARTY BENEFICIARIES 28
ARTICLE X 29
CONDITIONS TO CLOSING 29
10.01. CONDITIONS TO THE OBLIGATIONS OF EACH PARTY 29
10.02. CONDITIONS TO OBLIGATIONS OF PARENT AND SUB 29
10.03. CONDITIONS TO OBLIGATIONS OF THE COMPANY 31
ARTICLE XI 32
SURVIVAL; INDEMNIFICATION 32
11.01. SURVIVAL 32
11.02. INDEMNIFICATION 32
11.03. PROCEDURES 33
11.04. HOLDBACK AND WITHHOLDING SHARES 34
11.05. HOLDBACK TERMINATION 34
11.06. WITHHOLDING TERMINATION 34
ARTICLE XII 35
MISCELLANEOUS 35
12.01. NOTICES 35
12.02. AMENDMENTS; NO WAIVERS 37
12.03. EXPENSES 37
12.04. SUCCESSORS AND ASSIGNS 37
12.05. FURTHER ASSURANCES 37
12.06. GOVERNING LAW 38
12.07. COUNTERPARTS; EFFECTIVENESS 38
12.08. ENTIRE AGREEMENT 38
12.09. CAPTIONS 38
12.10. JURISDICTION 38
SCHEDULES
SCHEDULE 2.01 LIST OF STOCKHOLDERS
SCHEDULE 3.03 REQUIRED CONSENTS
SCHEDULE 3.05 COMPANY OPTIONS
SCHEDULE 3.06 LIST OF SUBSIDIARIES
SCHEDULE 3.07 FINANCIAL STATEMENTS
SCHEDULE 3.08 ABSENCE OF CHANGES
SCHEDULE 3.10 NO UNDISCLOSED MATERIAL LIABILITIES
SCHEDULE 3.11 LITIGATION
SCHEDULE 3.12 MATERIAL CONTRACTS
SCHEDULE 3.14 PERMITS
SCHEDULE 3.16 INTELLECTUAL PROPERTY
SCHEDULE 3.18 RECEIVABLES
SCHEDULE 3.19 TAXES AND AUDITS
SCHEDULE 3.21 CUSTOMERS
SCHEDULE 3.22 TRANSACTIONS WITH AFFILIATES
SCHEDULE 3.24 INTERCOMPANY ARRANGEMENTS
SCHEDULE 3.25 EMPLOYEES
SCHEDULE 5.03 GOVERNMENTAL AUTHORIZATION
SCHEDULE 9.02 EMPLOYEE PLANS AND BENEFIT ARRANGEMENTS
EXHIBITS
EXHIBIT A ARTICLES OF MERGER TO BE FILED WITH THE SECRETARY OF
STATE OF THE
COMMONWEALTH OF MASSACHUSETTS
EXHIBIT B CERTIFICATE OF MERGER TO BE FILED WITH THE SECRETARY
OF STATE OF THE
STATE OF DELAWARE
EXHIBIT C REGISTRATION RIGHTS AGREEMENT
EXHIBIT D LETTER AGREEMENT BETWEEN PARENT ON THE ONE HAND AND
▇▇▇▇▇▇ AND ▇▇▇▇▇▇▇▇▇ ON THE OTHER HAND
EXHIBIT E AFFILIATE AGREEMENT OF THE COMPANY'S AFFILIATES
EXHIBIT F COMPANY COUNSEL OPINION
EXHIBIT G AFFILIATE AGREEMENT OF PARENT'S AFFILIATES
EXHIBIT H NON-COMPETITION, EMPLOYEE AND KEY EMPLOYEE AGREEMENTS
AGREEMENT AND PLAN OF REORGANIZATION AND MERGER
AGREEMENT dated as of October 22, 1997 by and among PAREXEL
International Corporation, a Massachusetts corporation
("Parent"), KMI Acquisition Corporation, a Massachusetts
corporation ("Sub"), ▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇, Inc., a Delaware
corporation (the "Company"), ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("▇▇▇▇▇▇"),
P. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇▇"), ▇▇▇▇ ▇. ▇▇▇▇▇▇ ("▇▇▇▇▇▇"),
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇"), ▇▇▇▇ ▇. Parenteau ("Parenteau"),
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇"), ▇▇▇▇▇ ▇▇▇▇ ("▇▇▇▇") and ▇▇▇ ▇. ▇▇▇▇
("▇▇▇▇"). ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ are hereinafter referred to
collectively as the "Principal Stockholders" and the Principal
Stockholders, Lester, Tetzlaff, Parenteau, ▇▇▇▇▇▇▇, Hyde and ▇▇▇▇
are hereinafter referred to collectively as the "Stockholders".
W I T N E S S E T H :
WHEREAS, subject to and in accordance with the terms and
conditions of this Agreement and pursuant to the Massachusetts
Articles of Merger attached hereto as Exhibit A (the
"Massachusetts Articles of Merger") and the Delaware Certificate
of Merger attached hereto as Exhibit B (the "Delaware Certificate
of Merger"), the respective boards of directors of Parent, Sub
and the Company, and Parent as sole stockholder of Sub, have
approved the merger of Sub with and into the Company (the
"Merger"), whereby each issued and outstanding share of Class A
and Class B common stock, no par value per share, of the Company
(the "Shares") will be converted into the right to receive common
stock, $.01 par value per share, of Parent as provided herein;
WHEREAS, for federal income tax purposes, it is intended
that (i) the Merger shall qualify as a reorganization, and (ii)
this Agreement (and the other agreements entered into in
connection herewith) shall qualify as a plan or reorganization
within the meaning of the regulations issued pursuant to Section
368 of the Internal Revenue Code of 1986, as amended (the
"Code");
WHEREAS, the Merger is intended to be treated as a "pooling
of interests" transaction for accounting purposes under generally
accepted accounting principles, and Price Waterhouse LLP has
confirmed to Parent in writing that it has reviewed to the extent
it deemed necessary the terms and structure of the Merger, that
it has reviewed this Agreement, the Articles of Merger and such
other documents as it has requested as necessary for its review
and that, as of the date of this Agreement, it knows of nothing
that will prohibit the Merger from being treated as a "pooling of
interests" transaction for accounting purposes; and
WHEREAS, the parties hereto desire to set forth certain
representations, warranties and covenants made by each to the
other as an inducement to the consummation of the Merger.
NOW, THEREFORE, in reliance on the foregoing recitals and in
and for the consideration and mutual covenants set forth herein,
and for other good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, the parties agree
as follows:
ARTICLE I
DEFINITIONS
1.01. Definitions. (a) The following terms, as used
herein, have the following meanings:
"Affiliate" means, with respect to any Person, any
Person directly or indirectly controlling, controlled by, or
under common control with such Person.
"Ancillary Agreements" means the Registration Rights
Agreement attached hereto as Exhibit C, the Letter Agreement
attached hereto as Exhibit D, the Affiliate Agreement attached
hereto as Exhibit E and the non-competition, employee and key
employee agreements, forms of which are attached hereto as
Exhibit H.
"Balance Sheet" means the balance sheet of the Company
as of June 27, 1997 referred to in Section 3.07.
"Balance Sheet Date" means June 27, 1997.
"Closing Date" means the date of the Closing.
"Company" means KMI ▇▇▇▇▇▇▇▇▇, Inc., a Delaware
corporation.
"Company Counsel" means the law firm of ▇▇▇▇▇ & ▇▇▇▇▇,
Holliston, Massachusetts.
"Conversion Ratio" means Parent Stock divided by the
total number of Shares and Option Shares outstanding on the
Closing Date.
"Intellectual Property Right" means any trademark,
trade name, trade dress, service ▇▇▇▇, service name, logo, and
corporate name, registration thereof or application for
registration therefor; invention, patent, patent application,
patent disclosure and any related continuation, continuation-in-
part, divisional, reissue, re-examination, utility, model,
certificate of invention and design patent, patent application,
registration and application for registration; mask work and
registration and application for registration thereof; computer
software, data and documentation; trade secret, know-how, and
confidential business information, whether patentable or
nonpatentable and whether or not reduced to practice, know-how,
manufacturing and product processes and techniques, research and
development information, copyrightable works, financial,
marketing and business data, pricing and cost information,
business and marketing plans and customer and supplier lists and
information; copyright, copyright registration, application for
copyright registration; or any other similar type of proprietary
intellectual property right, (including without limitation
associated goodwill and remedies against infringements thereof
and rights of protection of an interest therein under the laws of
all jurisdictions) in each case which is owned or licensed by
the Company and used or held for use by the Company.
"Lien" means, with respect to any asset, any mortgage,
lien, pledge, charge, security interest, restriction or
encumbrance of any kind in respect of such asset.
"Material Adverse Change" means a material adverse
change in the business, assets, condition (financial or
otherwise), results of operations or prospects of the Company,
including but not limited to the departure of a key employee or a
significant deterioration in backlog or earnings.
"Massachusetts Articles of Merger" means the Articles
of Merger to be filed with the Secretary of State of the
Commonwealth of Massachusetts on the Closing Date, in the form
set forth in Exhibit A.
"Material Adverse Effect" means a material adverse
effect on the business, assets, condition (financial or
otherwise), results of operations or prospects of the Company,
which effect shall be deemed to have occurred upon, among other
things, the departure of a key employee or a significant
deterioration in backlog or earnings.
"Merger" means the merger of Sub with and into the
Company.
"1934 Act" means the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated thereunder.
"Option Shares" means the shares of the Company's
capital stock issuable upon the exercise of Company Options (as
defined in Section 3.05), all of which are set forth in
Schedule 3.05.
"Parent" means PAREXEL International Corporation, a
Massachusetts corporation.
"Parent Common Stock" means the common stock, $.01 par
value per share, of Parent.
"Parent Stock" means the number of shares of Parent
Common Stock as is determined by dividing $23,000,000 by the
average of the last reported sale price of Parent's Common Stock
on the Nasdaq National Market on each of the twenty business days
up to and including the second business day preceding the date of
this Agreement (subject to appropriate adjustment in the event of
a stock split or reverse stock split) (the "Parent Stock Price");
provided, however, that if the Parent Stock Price is less than
$34.00, then the Parent Stock Price shall be $34.00 and if the
Parent Stock Price is greater than $40.00, then the Parent Stock
Price shall be $40.00. Accordingly, in no event shall the Parent
Stock Price be less than $34.00 or greater than $40.00.
"Parent's Counsel" means the law firm of ▇▇▇▇▇,
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP, Boston, Massachusetts.
"Person" means an individual, corporation, partnership,
association, trust or other entity or organization, including a
government or political subdivision or an agency or
instrumentality thereof.
"Principal Stockholders" means ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇,
collectively.
"Registration Rights Agreement" means the Registration
Rights Agreement between the Stockholders and Parent in the form
set forth in Exhibit C.
"Shares" means all outstanding shares of capital stock
of the Company, all of which are set forth on Schedule 2.01.
"Stockholders" means Kemper, Masterson, Lester,
Tetzlaff, Parenteau, ▇▇▇▇▇▇▇, Hyde and ▇▇▇▇, collectively.
"Sub" means KMI Acquisition Corporation, a
Massachusetts corporation.
"Subsidiary" means any entity of which securities or
other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing
similar functions are owned directly or indirectly by the
Company.
"Delaware Certificate of Merger" means the Certificate
of Merger to be filed with the Secretary of State of the State of
Delaware on the Closing Date, in the form set forth in Exhibit B.
"Working Capital" means cash and cash equivalents (on
hand or in bank accounts), plus accounts receivable (net of any
allowance for doubtful accounts), minus current liabilities.
(b) Each of the following terms is defined in the
Section set forth opposite such term:
Term Section
Affiliate 6.02
Agreements
Benefit Arrangement 9.01
Claims 11.02
Closing 2.02
Code Preamble
Company Affiliate 6.02
Company Option 3.05
Company Securities 3.05
Damages 11.02
Effective Date 2.02
Employee Plans 9.01
Environmental Laws 3.20
Environmental 3.20
Liabilities
ERISA 9.01
ERISA Affiliate 9.01
Financial 3.07
Statements
Holdback Shares 2.02
Indemnified Party 11.03
Indemnifying Party 11.03
Parent Group 11.02
Multiemployer Plan 9.01
Permit 3.14
Reports 5.05
Return 3.19
Returns 3.19
Surviving 2.01
Corporation
Tax 3.19
Taxes 3.19
ARTICLE II
REORGANIZATION AND MERGER
2.01. The Merger. Subject to the terms and conditions of
this Agreement, the Massachusetts Articles of Merger and the
Delaware Certificate of Merger, Sub shall be merged with and into
the Company in accordance with the applicable provisions of the
laws of the Commonwealth of Massachusetts and the State of
Delaware and with the terms and conditions of this Agreement, the
Massachusetts Articles of Merger and the Delaware Certificate of
Merger so that:
(a) At the Effective Date, Sub shall be merged with
and into the Company. As a result of the Merger, the separate
corporate existence of Sub shall cease and the Company shall
continue as the surviving corporation (sometimes referred to
herein as the "Surviving Corporation") and shall succeed to and
assume all of the rights and obligations of the Company in
accordance with the laws of the Commonwealth of Massachusetts and
the State of Delaware.
(b) The articles of organization and bylaws of the
Company in effect immediately prior to the Effective Date shall
be the articles of organization and bylaws, respectively, of the
Surviving Corporation after the Effective Date unless and until
further amended as provided by law.
(c) The directors and officers of Sub immediately
prior to the Effective Date shall be the directors and officers
of the Surviving Corporation after the Effective Date. Such
directors and officers shall hold their positions until the
election and qualification of their respective successors or
until their tenures are otherwise terminated in accordance with
the bylaws of Surviving Corporation.
The Shares that are issued and outstanding immediately prior
to the Effective Date will, by virtue of the Merger and at the
Effective Date, automatically and without further action on the
part of the Stockholders, be converted into such number of shares
of Parent Stock as is equal to the number of Shares held by each
Stockholder (as set forth on Schedule 2.01) multiplied by the
Conversion Ratio (rounded down to the largest whole number of
shares of Parent Stock pursuant to Section 2.07 below).
Each option evidencing the right to purchase the Option
Shares (each a "Company Option") that is outstanding immediately
prior to the Effective Date shall be exercised by the holder
thereof contemporaneously with the Closing (as hereinafter
defined) and the Option Shares that are outstanding as a result
of such exercise will, by virtue of the Merger and at the
Effective Date, automatically and without further action on the
part of such holder, be converted into such number of shares of
Parent Stock as is equal to the number of Option Shares held by
such Stockholder (as set forth on Schedule 2.01) multiplied by
the Conversion Ratio (rounded down to the largest whole number of
shares of Parent Stock pursuant to Section 2.07 below).
2.02. Closing. The closing (the "Closing") of the
transactions contemplated hereunder shall take place at the
offices of Parent's Counsel in Boston, Massachusetts as soon as
possible after satisfaction of the conditions set forth in
Article X, but in no event later than 11:59 p.m., Boston time, on
December 1, 1997, or at such other time or place as Parent and
the Company may agree. Simultaneously with the Closing, the
Massachusetts Articles of Merger shall be filed in the office of
the Secretary of State of the Commonwealth of Massachusetts and
the Delaware Certificate of Merger shall be filed in the office
of the Secretary of State of the State of Delaware. The Merger
shall become effective immediately upon the date stamped by the
Massachusetts Secretary of State on the Massachusetts Articles of
Merger (such date is referred to as the "Effective Date"). At
the Closing, Parent shall deliver to each Stockholder
certificates representing the number of shares of Parent Stock to
which such Stockholder is entitled pursuant to Section 2.01
hereof, less such Stockholder's portion of the "Holdback Shares"
and the "Withholding Shares" (as hereinafter defined). Each
certificate shall be duly endorsed by the Parent's transfer agent
and registered in the name of each such Stockholder, as is
determined in accordance with Section 2.01. At the Closing,
Parent shall retain in accordance with the provisions of
Section 11.04 certificates representing the number of shares of
Parent Stock worth $1,000,000 (calculated using the Parent Stock
Price) (rounded up to the nearest whole number of shares) (the
"Holdback Shares") and certificates representing the number of
shares of Parent Stock worth $1,202,093 (calculated using the
Parent Stock Price) (rounded up to the nearest whole number of
shares (the "Withholding Shares"), to be held by the Parent in
accordance with the provisions of Sections 11.04, 11.05 and
11.06.
2.03. Certificates for Parent Stock. Each certificate for
Parent Stock issued to the Stockholders as part of the Merger
shall bear the following legend:
"The securities represented hereby have
not been registered under the Securities Act
of 1933, as amended, and may not be sold,
transferred or otherwise disposed of except
in accordance with the terms thereof and
unless registered with the Securities and
Exchange Commission of the United States and
the securities regulatory authorities of
certain states or unless an exception from
such registration is available."
2.04. Transfer Taxes. The Stockholders shall pay any and
all sales, documentary, use, filing, transfer and other taxes
payable as a result of the Merger.
2.05. Books and Records. On or before the Closing Date,
the Company and the Stockholders shall deliver to Parent, or its
representatives, where located, all minute books, stock record
books and corporate seals of the Company, and the original copies
of all books of account, leases, other agreements, securities,
customer lists, files and other documents, instruments and papers
of any kind or nature belonging to or relating to the Company or
its business.
2.06. Resignations. The Company will deliver to Parent the
resignations of all officers and directors of the Company from
their positions with the Company at or prior to the Closing Date,
unless otherwise specified by Parent.
2.07. No Fractional Shares. No certificates or scrip for
fractional shares of Parent Stock will be issued, no Parent stock
split or dividend shall be paid in respect of any fractional
share interest, and no such fractional share interests shall
entitle the owner thereof to vote or to any rights of or as a
stockholder of Parent. In lieu of such fractional shares, any
holder of shares of Common Stock of the Company who would
otherwise be entitled to a fraction of a share of Parent Stock
(after aggregating all fractional shares of Parent Stock to be
received by such holder) will be paid the cash value of such
fraction, which shall be equal to the fraction multiplied by the
Parent Stock Price (subject to appropriate adjustment in the
event of a stock split or reverse stock split).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY AND THE PRINCIPAL STOCKHOLDERS
The Company and the Principal Stockholders hereby jointly
and severally represent and warrant to Parent and Sub as of the
date hereof that:
3.01. Corporate Existence and Power. The Company is a
corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation, and
has all corporate powers and all governmental licenses,
authorizations, consents and approvals required to carry on its
business as now conducted. The Company is duly qualified to do
business as a foreign corporation and is in good standing in each
jurisdiction in the United States where the character of the
property owned or leased by it or the nature of its activities
make such qualification necessary, except for those jurisdictions
where failure to be so qualified would not, individually or in
the aggregate, have a Material Adverse Effect. The Company has
heretofore delivered to Parent true and complete copies of the
corporate charter and bylaws, and all amendments thereto, of the
Company.
3.02. Corporate Authorization. The execution, delivery and
performance by the Company of this Agreement and the consummation
by the Company of the transactions contemplated hereby are within
the Company's corporate powers and have been duly authorized by
all necessary corporate action on the part of the Company. This
Agreement constitutes a valid and binding agreement of the
Company.
3.03. Governmental Authorization; Consents.
(a) The execution and delivery of this Agreement
by the Company and the Stockholders, and the performance by the
Company and the Stockholders of their obligations under this
Agreement, require no action by or in respect of, or filing with,
any governmental body, agency, official or authority or any other
Person, other than the Massachusetts Articles of Merger and the
Delaware Certificate of Merger.
(b) Except as set forth on Schedule 3.03, no consent,
approval, waiver or other action by any Person under any
contract, agreement, indenture, lease, instrument or other
document to which the Company is a party or by which it is bound
is required or necessary for the execution and delivery of this
Agreement by the Company and the Stockholders, the performance by
the Company and the Stockholders of their obligations under this
Agreement or the consummation of the transactions contemplated
hereby.
3.04. Non-Contravention. The execution and delivery of
this Agreement by the Company and the Stockholders, the
performance by the Company and the Stockholders of their
obligations under this Agreement and the consummation of the
transactions contemplated hereby do not and will not (i)
contravene or conflict with the corporate charter or bylaws of
the Company, (ii) contravene or conflict with or constitute a
violation of any provision of any law, regulation, judgment,
injunction, order or decree binding upon or applicable to the
Company; (iii) constitute a default under or give rise to any
right of termination, cancellation or acceleration of any right
or obligation of the Company or to a loss of any benefit to which
the Company is entitled under any provision of any agreement,
contract or other instrument binding upon the Company or any
permit held by the Company or (iv) assuming the receipt of all
required consents, result in the creation or imposition of any
Lien on any asset of the Company.
3.05. Capitalization. The authorized capital stock of the
Company consists of 90,000 shares of Class A Common Stock, no par
value, and 30,000 shares of Class B Common Stock, no par value.
As of the date hereof, there were outstanding 80,000 shares of
Class A Common Stock and 6,000 shares of Class B Common Stock.
All outstanding shares of capital stock of the Company have been
duly authorized and validly issued and are fully paid and are
owned by the Stockholders as shown on Schedule 2.01. As of the
date hereof, 14,666 shares of the Company's Class B Common Stock
were reserved for issuance upon exercise of stock options granted
pursuant to the Company's Stock Option Plan (the "Company
Options") and 9,334 shares of the Company's Class B Common Stock
were reserved for issuance upon exercise of future grants of
stock options. Except for the Company Options, all of which are
listed on Schedule 3.05, there are no options, warrants or other
rights, agreements, arrangements or commitments of any character
to which the Company is a party or by which the Company is bound
relating to the issued or unissued capital stock of the Company
or obligating the Company to issue or sell any shares of capital
stock of, or other equity interests in, the Company. All shares
of Company Common Stock subject to issuance as aforesaid, upon
issuance prior to the Effective Time on the terms and conditions
specified in the instruments pursuant to which they are issuable,
will be duly authorized, validly issued, fully paid and
nonassessable. There are no outstanding contractual obligations
of the Company to repurchase, redeem or otherwise acquire any
shares of Company Common Stock. Except as set forth in this
Section 3.05, there are no outstanding (i) shares of capital
stock, other securities or phantom or other equity interests of
the Company, (ii) securities of the Company convertible into or
exchangeable for shares of capital stock or other securities of
the Company or (iii) options or other rights to acquire from the
Company any capital stock, other securities or phantom or other
equity interests of the Company (the items in clauses (i), (ii)
and (iii) being referred to collectively as the "Company
Securities"). There are no outstanding obligations of the
Company, actual or contingent, to issue or deliver or to
repurchase, redeem or otherwise acquire any Company Securities.
3.06. Subsidiaries. The Company does not have any
Subsidiaries or any ownership or equity interest in or control of
(direct or indirect) any other person. Except as set forth on
Schedule 3.06, the Company has never had any Subsidiaries or any
ownership or equity interest in or control of (direct or
indirect) any other person. The Subsidiaries set forth on
Schedule 3.06 have been duly dissolved in accordance with the
laws of their respective jurisdictions of incorporation, in each
case without any liability to the Company.
3.07. Financial Statements. The Company has previously
furnished Parent with a true and complete copy of the balance
sheets of the Company as of December 31, 1995 and 1996 and
June 27, 1997 and the statements of operations, and changes in
stockholders' equity of the Company for the respective years or
period then ended, (collectively, the "Financial Statements"),
which are attached hereto as Schedule 3.07. Each of the balance
sheets included in the Financial Statements fairly presents in
all material respects the financial position of the Company as of
its date, and the other statements included in the Financial
Statements fairly present in all material respects the results of
operations and stockholders' equity, as the case may be, of the
Company for the periods therein set forth, in each case in
accordance with generally accepted accounting principles
consistently applied during the periods involved.
3.08. Absence of Certain Changes. Except as set forth in
Schedule 3.08, since the Balance Sheet Date, the Company has
conducted its business in the ordinary course consistent with
past practices and there has not been:
(a) any Material Adverse Change or any event,
occurrence, development or state of circumstances or facts which
could reasonably be expected to result in a Material Adverse
Change;
(b) any declaration, setting aside or payment of any
dividend or other distribution with respect to any Company
Securities or any repurchase, redemption or other acquisition by
the Company of any outstanding shares of capital stock or other
securities of, or other ownership interests in, the Company;
(c) any amendment of any outstanding security of the
Company;
(d) any incidence, assumption or guarantee by the
Company of any indebtedness for borrowed money other than in the
ordinary course of business and in amounts and on terms
consistent with past practices;
(e) any creation or assumption by the Company of any
Lien on any asset;
(f) any making of any loan, advance or capital
contributions to or investment in any Person;
(g) any damage, destruction or other casualty loss
(whether or not covered by insurance) affecting the business or
assets of the Company which, individually or in the aggregate,
has had or would reasonably be expected to have a Material
Adverse Effect;
(h) any transaction or commitment made, or any
contract or agreement entered into, by the Company relating to
its assets or business (including the acquisition or disposition
of any assets) or any relinquishment by the Company of any
contract or other right, in either case, material to the Company,
other than transactions and commitments in the ordinary course of
business consistent with past practices and those contemplated by
this Agreement;
(i) any change in any method of accounting or
accounting practice by the Company;
(j) any (i) grant of any severance or termination pay
to any director, officer or employee of the Company, (ii)
entering into of any employment, deferred compensation or other
similar agreement (or any amendment to any such existing
agreement) with any director, officer or employee of the Company,
(iii) change in benefits payable under existing severance or
termination pay policies or employment agreements or (iv) change
in compensation, bonus or other benefits payable to directors,
officers or employees of the Company;
(k) any change in the business or operations or in the
manner of conducting the business or operations of the Company
other than changes in ordinary course of business;
(l) except as reflected on the Balance Sheet, any
mortgage, pledge or subjection of any properties or assets to any
claim, Lien or liability, except claims, Liens or liabilities for
taxes not yet due;
(m) any write-down of the value of any inventory, or
write-off of any notes or accounts receivable or any portion
thereof as uncollectible, other than valuation reserves
established for inventory and receivables;
(n) any cancellation or release of any other debts or
claims, or waivers of any rights;
(o) any sale, transfer or conveyance of any property
or assets, except in the ordinary course of business consistent
with past practice;
(p) any disposition of, or lapse, or other failure to
preserve the exclusive rights of the Company to any Intellectual
Property Right;
(q) any payments, loans or advances of any amount to
or in respect of, or sale, transfer or lease of any properties or
assets to, or the entering into of any agreement, arrangement or
transaction with any of the Stockholders, officers or directors
of the Company, any Affiliate or associate of any of the
Stockholders, the Company or any officer or director of the
Company, or any business or entity in which any of the
Stockholders or the Company, or any Affiliate or associate of any
such person, has any direct or material indirect interest;
(r) any lease of real or personal property or any
capital expenditures or commitments for additions to property,
plant, equipment or capital assets; or
(s) any agreement, whether in writing or otherwise, to
take any action described in this Section 3.08.
3.09. Property and Equipment. The Company has marketable
title to, or in the case of leased property has valid leasehold
interests in, all property and assets (whether real or personal,
tangible or intangible) reflected on the Balance Sheet or
acquired after the Balance Sheet Date. None of such properties
or assets is subject to any Liens, except Liens for taxes not yet
due or being contested in good faith (and for which adequate
accruals or reserves have been established on the Balance Sheet),
Liens disclosed on the Balance Sheet or Liens which do not
materially detract from the value of such property or assets as
now used, or materially interfere with any present or intended
use of such property or assets.
3.10. No Undisclosed Material Liabilities. There are no
liabilities of the Company of any kind whatsoever, whether
accrued, contingent, absolute, determined, determinable or
otherwise, and there is no existing condition, situation or set
of circumstances which could reasonably be expected to result in
such a liability, other than:
(i) liabilities disclosed on Schedule 3.10 or in any
other Schedule hereto or provided for in the Balance Sheet;
and
(ii) liabilities incurred in the ordinary course of
business consistent with past practice since the Balance
Sheet Date, which in the aggregate are not material to the
Company.
3.11. Litigation. Other than as disclosed on
Schedule 3.11, there is no action, suit, investigation or
proceeding pending against, or to the knowledge of the Company
and Principal Stockholders threatened against or affecting, the
Company or any of its properties or the transactions contemplated
hereby before any court or arbitrator or any governmental body,
agency, official or authority.
3.12. Material Contracts.
(a) Except for agreements, contracts, plans,
leases, arrangements or commitments disclosed in Schedule 3.12,
the Company is not a party to or subject to:
(i) any lease providing for annual rentals of $5,000
or more;
(ii) any contract for the purchase of materials,
supplies, goods, services, equipment or other assets in an
amount exceeding $1,000;
(iii) any partnership, joint venture or other
similar arrangement or agreement or any license agreement
under which the Company is the licensee, or any agency,
distributor, dealer, franchise, sales representative or
other similar contract or commitment;
(iv) except for trade indebtedness incurred in the
ordinary course of business, any loan or credit agreements
or any instrument evidencing or related in any way to
indebtedness incurred in the acquisition of any asset,
business, company or other entity or indebtedness for
borrowed money by way of direct loan, sale of debt
securities, purchase money obligation, conditional sale,
guarantee, or otherwise, or agreement relating to the
mortgaging, pledging or otherwise placing a lien on any
assets of the Company or any guaranty of indebtedness or
performance of others by the Company;
(v) any contract or other document that limits the
freedom of the Company to compete in any line of business or
with any Person or in any area or which would so limit the
freedom of the Company after the Closing Date;
(vi) any guarantees;
(vii) any contract for personal services or
employment (including without limitation contracts with
directors, officers, employees, agents, consultants,
advisors, salesmen, sales representatives, distributors or
dealers);
(viii) any agreement or arrangement providing for
the sale of any of the assets, properties or rights of the
Company (other than in the ordinary course of business) or
for the grant of a preferential right to purchase any of the
Company's assets, properties or rights or which required the
consent of any third party to the transfer and assignment of
any of its assets, properties or rights; and
(ix) any other agreements, contracts, leases, licenses
or commitments to which the Company is a party (or under
which the Company may be obligated or which the Company or
any of its rights, properties or assets may be subject or
bound) and which is material to the financial condition,
results of operations, business, property or prospects of
the Company or is not made in the ordinary course of
business that is material to the Company.
(b) Each agreement, contract, plan, lease, arrangement
and commitment disclosed in any schedule to this Agreement or
required to be disclosed pursuant to Section 3.12(a) is a valid
and binding agreement of the Company and is in full force and
effect, and neither the Company, nor, to the knowledge of the
Company and the Stockholders, any other party thereto is in
default in any material respect under the terms of any such
agreement, contract, plan, lease, arrangement or commitment.
3.13. Insurance Coverage. The Company has furnished to
Parent a list of, and true and complete copies of, all insurance
policies covering the assets, business, equipment, properties,
operations, employees, officers and directors of the Company.
There is no claim by the Company pending under any of such
policies as to which coverage has been questioned, denied or
disputed by the underwriters of such policies. All premiums
payable under all such policies have been paid and the Company is
otherwise in full compliance with the terms and conditions of all
such policies. Such policies are of the type and in amounts
customarily carried by Persons conducting businesses similar to
those of the Company.
3.14. Compliance with Laws; No Defaults.
(a) The Company is not currently in violation of, and
since its inception has not violated, any applicable provisions
of any laws, statutes, ordinances or regulations except for
violations that have not had and would not reasonably be expected
to have, individually or in the aggregate, a Material Adverse
Effect.
(b) Schedule 3.14 correctly describes each license and
permit (a "Permit") material to the business of the Company,
together with the name of the governmental agency or entity
issuing such license or permit. Such licenses and permits are
valid and in full force and effect in accordance with their terms
and none of such licenses or permits will be terminated or
impaired or become terminable as a result of the transactions
contemplated hereby.
(c) The Company is not in default under, and no
condition exists that with notice or lapse of time or both would
constitute a default under, (i) any mortgage, loan agreement,
indenture or evidence of indebtedness for borrowed money to which
the Company is a party or by which the Company or any material
amount of its assets is bound or (ii) any judgment, order or
injunction of any court, arbitrator or governmental body, agency,
official or authority which defaults or potential defaults
individually or in the aggregate would reasonably be expected to
have a Material Adverse Effect.
3.15. Finders' Fees. There is no investment banker,
broker, finder or other intermediary which has been retained by
or is authorized to act on behalf of the Stockholders or the
Company who might be entitled to any fee or commission from
Parent, Sub, the Company or any of their respective Affiliates
upon consummation of the transactions contemplated by this
Agreement.
3.16. Intellectual Property.
(a) Schedule 3.16 includes a list of all
Intellectual Property Rights specifying as to each, as
applicable: (i) the nature of such Intellectual Property Right;
(ii) the owner of such Intellectual Property Right; (iii) the
jurisdictions by or in which such Intellectual Property Right has
been registered or in which an application for such registration
has been filed, including the respective registration or
application numbers; and (iv) licenses, sublicenses and other
agreements as to which the Company or any of its Affiliates is a
party and pursuant to which any Person is authorized to use such
Intellectual Property Right, including the identity of all
parties thereto, a description of the nature and subject matter
thereof, the applicable royalty and the term thereof.
(b) The Company has not since its inception been
charged in writing with or been a defendant in any claim, suit,
action or proceeding relating to its business that has not been
finally terminated prior to the date hereof and that involves a
claim of infringement of any patents, trademarks, service marks
or copyrights. The Company and the Principal Stockholders have
no knowledge of any other claim or infringement by the Company,
or no knowledge of any continuing infringement by any other
Person of any Intellectual Property Rights. To the knowledge of
the Company and the Principal Stockholders, no Intellectual
Property Right is subject to any outstanding order, judgment,
decree, stipulation or agreement restricting the use thereof by
the Company or restricting the licensing thereof by the Company
to any Person. The Company has not entered into any agreement to
indemnify any other Person against any charge of infringement of
any patent, trademark, service ▇▇▇▇ or copyright.
(c) None of the Intellectual Property Rights of the
Company, the value of which to the Company is contingent upon
maintenance of the confidentiality thereof, has been disclosed by
the Company or by any of the Stockholders or, to the knowledge of
the Company and the Principal Stockholders, by any employee of
the Company to any Person other than Persons who are parties to
confidentiality agreements with the Company.
(d) To the knowledge of the Company and the Principal
Stockholders, no third party has asserted any claim, or has
threatened to assert any claim, against the Company with respect
to (i) the continued employment by, or association with, the
Company of any of the present officers, employees of or
consultants to the Company or (ii) the use by the Company or any
of such Persons in connection with their activities for or on
behalf of the Company of any information which the Company or any
of such Persons would be prohibited from using under any prior
agreements or arrangements or any laws applicable to unfair
competition, trade secrets or proprietary information.
(e) None of the former or present employees, officers,
directors, consultants or contractors of the Company holds any
right, title or interest, directly or indirectly, in whole or in
part, in or to any of the Intellectual Property Rights which the
Company is currently using or the use of which is necessary for
the business of the Company as presently conducted. To the best
knowledge of the Company and the Principal Stockholders, no
employee of the Company is in violation of any term of any
employment contract, patent disclosure agreement or any other
contract or agreement relating to the relationship of any such
employee with the Company or any other party because of the
nature of the business conducted by the Company. No person has
any so-called "moral rights," including any right to
identification of authorship, rights of approval of modifications
or limitations on subsequent modifications, in or to any of the
Intellectual Property Rights owned by the Company. Nothing
prohibits the Company from (i) modifying, changing, altering,
adapting, revising, translating, adding to or subtracting from
any of the Intellectual Property Rights owned by the Company,
(ii) doing any of the foregoing without obligation to name the
author of any of the Intellectual Property Rights owned by the
Company or to give credit to any person in connection therewith
or (iii) leasing, licensing, distributing or marketing any of the
Intellectual Property Rights owned by the Company without the
consent of any person.
3.17. Inventories. The Company has no inventories.
3.18. Receivables. Except as set forth on Schedule 3.18,
all accounts, notes receivable and other receivables (other than
receivables collected since the Balance Sheet Date) reflected on
the Balance Sheet are, and all accounts and notes receivable of
the Company at the Closing Date will be, valid, genuine and fully
collectible (using commercially reasonable collection efforts)
within ninety (90) days in the aggregate amount thereof, less any
reserves for doubtful accounts recorded on the Balance Sheet.
All accounts, notes receivable and other receivables of the
Company at the Balance Sheet Date have been included in the
Balance Sheet.
3.19. Taxes.
(a) The term "Taxes" as used herein means all
federal, state, local, foreign and other net income, gross
income, gross receipts, sales, use, ad valorem, transfer,
franchise, profits, license, lease, service, service use,
withholding, payroll, employment, excise, severance, stamp,
occupation, premium, property, windfall profits, customs duties,
or other Taxes, fees, assessments or other charges of any kind
whatever, together with any interest and any penalties, additions
to Tax or additional amounts with respect thereto, and the term
"Tax" means any one of the foregoing taxes. The term "Returns"
as used herein, means all returns, declarations, reports,
statements and other documents required to be filed in respect of
Taxes, and "Return" means any one of the foregoing Returns. All
citations to the Code, or the Treasury regulations promulgated
thereunder, shall include any amendments or any substitute or
successor provisions thereto.
(b) The Company has filed all Returns required to
be filed by the due date for such Return and has paid all Taxes
owed (whether or not shown as due on such returns), including,
without limitation, all Taxes which the Company is obligated to
withhold for amounts owing to employees, creditors and third
parties. All such Returns were complete and correct in all
respects. All Taxes with respect to which the Company has become
obligated pursuant to elections made by it in accordance with
generally accepted practice have been paid and adequate reserves
have been established for all Taxes accrued but not yet payable.
No issues have been raised (and are currently pending) by any
taxing authority in connection with any of the Returns and the
Return, have never been audited by any state or federal
authorities. No waivers of statutes of limitation with respect
to any of the Returns have been given by or requested from the
Company. All deficiencies asserted or assessments made as a
result of any examinations have been fully paid, or are fully
reflected as a liability in the financial statements of the
Company, or are being contested and an adequate reserve therefor
has been established and is fully reflected in the financial
statements of the Company. There are no liens for Taxes (other
than for current Taxes not yet due and payable) upon the assets
of the Company. All material elections with respect to Taxes
affecting the Company, as of the date hereof, are set forth in
the financial statements of the Company, or are set forth on
Schedule 3.19. The Company has not agreed to make any adjustment
under Section 481(a) of the Code by reason of a change in
accounting method or otherwise, and the Company will not be
required to make any such adjustment as a result of the
transactions set forth in this Agreement. Except as set forth on
Schedule 3.19, the Company does not have and has not had a
permanent establishment in any foreign country, as defined in any
applicable Tax treaty or convention between the United States of
America and such foreign country. The Company is not a party to
any agreement, contract, arrangement or plan that has resulted or
would result, separately or in the aggregate, in (i) the payment
of any "excess parachute payments" within the meaning of
Section 280G of the Code (without regard to the exception in
Sections 280G(b)(4) and 280G(b)(5) of the Code) or (ii) any
payments or other transactions that would be, in whole or in
part, nondeductible under Sections 162 or 404 of the Code. The
Company is not a party to any tax sharing or similar agreement
with any Person. The Company has never been a member of an
affiliated group (within the meaning of Section 1504 of the Code)
filing a consolidated federal Return (other than a group the
common parent of which was the Company). The Company does not
have any liability for Taxes of any Person (other than the
Company) under Treasury Regulation Section 1.1502-6 (or any
similar provision of state, local, or foreign law), as a
transferee or successor, by contract, or otherwise. The Company
has never filed a consent pursuant to Section 341(f) of the Code,
relating to collapsible corporations.
3.20. Environmental Compliance.
(i) The Stockholders and the Company have complied
with all federal, state and local laws (including without
limitation case law, rules, regulations, orders, judgments,
decrees, permits, licenses and governmental approvals) which
are intended to protect the environment and/or human health
or safety (collectively, "Environmental Laws") and the
Stockholders and the Company have not received any notice of
non-compliance with Environmental Laws;
(ii) none of the Stockholders or the Company have
handled, generated, used, stored, transported or disposed of
any substance or waste which is regulated by Environmental
Laws, except for reasonable amounts of ordinary office
and/or office-cleaning supplies which have been used in
compliance with Environmental Laws; and
(iii) there are no "Environmental Liabilities".
For purposes of this Agreement, "Environmental Liabilities"
are any liabilities which (y) arise out of or in any way
relate to the Company or any real estate at any time owned,
used or leased by the Company, or the Company's or any
Stockholder's use or ownership thereof, whether vested or
unvested, contingent or fixed, actual or potential, and
(z) arise from or relate to actions occurring (including any
failure to act) or conditions existing on or before the
Closing Date.
3.21. Customers and Suppliers. Schedule 3.21 sets forth an
accurate list of the Company's twenty (20) largest customers by
revenue. The Company and the Stockholders have not received
notice from or otherwise have knowledge that any group of
customers who are under common ownership or control and who
accounted as a group for a material percentage of the aggregate
products and services furnished by the Company during the past 18
months has stopped or intends to stop purchasing the Company's
products or services nor has the Company lost any supplier or
group of suppliers, which accounted for a material percentage of
the aggregate supplies purchased by the Company during the past
18 months.
3.22. Transactions with Affiliates. Except as set forth on
Schedule 3.22, there are no loans, leases, royalty agreements or
other continuing transactions between the Company and any
Stockholder, any Affiliate of any Stockholder, or any member of
any Stockholder's family. Except as set forth on Schedule 3.22,
to the best knowledge of the Company and the Principal
Stockholders, none of the officers or directors of the Company or
Stockholder (a) has any material direct or indirect interest in
any entity which does business with the Company; (b) has any
direct or indirect interest in any property, asset or right which
is used by the Company in the conduct of its business; or (c) has
any contractual relationship with the Company other than such
relationships which occur from being an officer, director or
stockholder of the Company.
3.23. Other Information. None of the documents or
information delivered to Parent in connection with the
transactions contemplated by this Agreement contains any untrue
statement of a material fact or omits to state a material fact
necessary in order to make the statements contained therein not
misleading. The ▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇, Inc. August 15, 1997 Forecast
and accompanying information relating to the projected future
performance of the Company delivered to Parent constitute the
Company's and the Principal Stockholders' best estimate of the
information purported to be shown therein, and the Company and
the Principal Stockholders are not aware of any fact or
information that would lead them to believe that such projections
are incorrect or misleading in any material respect. The results
forecast in the above-referenced document are estimates and the
Company and the Principal Stockholders cannot guarantee that any
particular result will be achieved.
3.24. Intercompany Arrangements. Except as set forth on
Schedule 3.24, the Company does not own any note, bond, debenture
or other indebtedness, and is not otherwise a creditor, of any
Stockholder or any of his or its Affiliates. Since the Balance
Sheet Date there has not been any payment by the Company to any
Stockholder or any of his or its Affiliates, charge by any
Stockholder or any of his or its Affiliates to the Company or
other transaction between the Company and any Stockholder and any
of his or its Affiliates, except in any such case in the ordinary
course of business of the Company consistent with past practice.
3.25. Employees. Schedule 3.25 sets forth a true and
complete list of (a) the names, titles, annual salaries and other
compensation of all employees of the Company and (b) the wage
rates for non-salaried employees of the Company (by
classification). None of such employees and no other employee of
the Company has indicated to the Company or any Stockholder that
he intends to resign, retire or file a claim or otherwise bring
an action against the Company, Parent or Sub as a result of the
transactions contemplated by this Agreement or otherwise.
ARTICLE IV
ADDITIONAL REPRESENTATIONS
AND WARRANTIES OF THE STOCKHOLDERS
Each Stockholder represents and warrants to, and agrees
with, Parent and Sub as follows:
4.01. Title to and Validity of Shares. The Stockholder now
has, and on the Closing Date will have (or, with respect to a
Stockholder who has Option Shares, on the Closing Date only will
have), good and marketable title to and unrestricted power to
vote and sell the Shares designated as owned by such Stockholder
opposite such Stockholder's name on Schedule 2.01 and
Schedule 3.05, free and clear of any Lien. All Shares owned by
such Stockholder have been duly authorized and validly issued and
are fully paid and non-assessable.
4.02. Authority. Such Stockholder has the legal power,
right and authority to enter into and perform this Agreement and
each of the Ancillary Agreements, and to perform each of his or
its obligations hereunder and thereunder. The execution,
delivery and performance of this Agreement and each of the
Ancillary Agreements by such Stockholder does not contravene, or
constitute a default under, any provision of applicable law or
regulation or of any agreement, judgment, injunction, order,
decree or any other instrument binding upon such Stockholder.
This Agreement and each of the Ancillary Agreements have been
duly executed and delivered by such Stockholder and constitute
valid and binding obligations of such Stockholder, enforceable in
accordance with their respective terms.
4.03. Purchase for Investment. Such Stockholder is
acquiring the shares of Parent Stock for investment for his or
its own account and not with a view to, or for sale in connection
with, any distribution thereof. Such Stockholder agrees that the
shares of Parent Stock acquired by such Stockholder may not be
sold, transferred or otherwise disposed of unless such shares are
registered with the Securities and Exchange Commission and the
securities regulatory authorities of certain states or unless an
exemption from such registration is available.
4.04. Power To Act as Trustee or Executor. If such
Stockholder is serving as trustee or executor with respect to its
Shares, such Stockholder is the only such trustee or executor and
is duly authorized and empowered by the instruments creating such
trust or trusts or by the will of which such Stockholder is
acting as executor and under applicable law to enter into this
Agreement with respect to the Shares held by such Stockholder and
to consummate the transactions contemplated herein.
4.05. No Legal Proceedings. There is no action, suit,
investigation or proceeding pending against, or to the knowledge
of such Stockholder, threatened against or affecting, the
Stockholder or any of his property or the transactions
contemplated hereby before any court or arbitrator or any
governmental body, agency, official or authority.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub jointly and severally represent and warrant
to the Company and the Stockholders that:
5.01. Organization and Existence. Parent and Sub are
corporations duly incorporated, validly existing and in good
standing under the laws of the Commonwealth of Massachusetts and
have all corporate powers and all material governmental licenses,
authorizations, consents and approvals required to carry on their
businesses as now conducted.
5.02. Corporate Authorization. The execution, delivery and
performance by Parent and Sub of this Agreement and by Parent of
the Registration Rights Agreement and the consummation by Parent
and Sub of the transactions contemplated hereby and thereby are
within the corporate powers of Parent and Sub and have been duly
authorized by all necessary corporate action on the part of
Parent and Sub. This Agreement constitutes a valid and binding
agreement of Parent and Sub and the Registration Rights Agreement
constitutes a valid and binding agreement of Parent.
5.03. Governmental Authorization. Except as set forth on
Schedule 5.03, the execution, delivery and performance by Parent
and Sub of this Agreement require no action by or in respect of,
or filing with, any governmental body, agency, official or
authority.
5.04. Litigation. There is no action, suit, investigation
or proceeding pending against, or to the knowledge of Parent or
Sub threatened against, Parent or Sub before any court or
arbitrator or any governmental body, agency or official which in
any manner challenges or seeks to prevent, enjoin, alter or
materially delay the transactions contemplated hereby.
5.05. Reports and Financial Statements. Parent has
previously furnished to the Company copies of its (i) Annual
Report on Form 10-K for the fiscal year ended June 30, 1996; (ii)
1996 Annual Report; (iii) Proxy Statement dated October 8, 1996;
(iv) Prospectus dated December 6, 1996; (v) Current Report on
Form 8-K dated January 28, 1997 and (vi) Quarterly Report on Form
10-Q for the quarter ended March 31, 1997 (collectively, the
"Reports"). Taken together, the reports do not contain any
untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements contained therein,
in light of the circumstances in which they were made, not
misleading. The Reports complied as to form, at the time such
form, document or report was filed, in all material respects with
the applicable requirements of the Federal securities laws and
the rules and regulations promulgated thereunder. Since
March 31, 1997, Parent has filed all forms, reports and documents
with the Commission required to be filed by it pursuant to the
Federal securities laws and the rules and regulations promulgated
thereunder, each of which complied as to form, at the time such
form, document or report was filed, in all material respects with
the applicable requirements of the Federal securities laws and
the rules and regulations promulgated thereunder.
5.06. Finder's Fees. There is no investment banker,
broker, finder or other intermediary which has been retained by
or is authorized to act on behalf of Parent or Sub who might be
entitled to any fee or commission from the Company, the
Stockholders or any of their respective Affiliates upon
consummation of the transactions contemplated by this Agreement.
5.07. Non-Contravention. The execution and delivery of
this Agreement by the Parent and Sub, the performance by the
Parent and Sub of their obligations under this Agreement and the
consummation of the transactions contemplated hereby do not and
will not (i) contravene or conflict with the corporate charter or
bylaws of the Parent or Sub, (ii) contravene or conflict with or
constitute a violation of any provision of any law, regulation,
judgment, injunction, order or decree binding upon or applicable
to the Parent or Sub; (iii) constitute a default under or give
rise to any right of termination, cancellation or acceleration of
any right or obligation of the Parent or Sub or to a loss of any
benefit to which the Parent or Sub is entitled under any
provision of any agreement, contract or other instrument binding
upon the Parent or Sub or any permit held by the Parent or Sub or
(iv) assuming the receipt of all required consents, result in the
creation or imposition of any Lien on any asset of the Parent or
Sub.
ARTICLE VI
COVENANTS OF THE COMPANY AND EACH STOCKHOLDER
The Company and each Stockholder agree that:
6.01. Confidentiality. The Company, such Stockholder and
their Affiliates will hold, and will use reasonable efforts to
cause their respective officers, directors, employees,
accountants, counsel, consultants, advisors and agents to hold,
in confidence, unless compelled to disclose by judicial or
administrative process or by other requirements of law, all
confidential documents and information concerning Parent or Sub
furnished to the Company, such Stockholder or their Affiliates in
connection with the transactions contemplated by this Agreement,
and (after the Closing Date) all confidential documents and
information concerning the Company, except to the extent that
such information can be shown to have been (i) previously known
on a nonconfidential basis by such Stockholder, (ii) in the
public domain through no fault of such Stockholder or (iii) later
lawfully acquired by such Stockholder from sources other than the
Company, Parent or Sub; provided that the Company and such
Stockholder may disclose such information to their respective
officers, directors, employees, accountants, counsel,
consultants, advisors and agents in connection with the
transactions contemplated by this Agreement so long as such
persons are informed by the Company and such Stockholder of the
confidential nature of such information and are directed by the
Company and such Stockholder to treat such information
confidentially. The obligation of the Company, such Stockholder
and their Affiliates to hold any such information in confidence
shall be satisfied if they exercise the same care with respect to
such information as they would take to preserve the
confidentiality of their own similar information. If this
Agreement is terminated, the Company, such Stockholder and their
Affiliates will, and will use their best efforts to cause their
respective officers, directors, employees, accountants, counsel,
consultants, advisors and agents to, destroy or deliver to
Parent, upon request, all documents and other materials, and all
copies thereof, obtained by the Company, such Stockholder or
their Affiliates or on their behalf from Parent or Sub in
connection with this Agreement that are subject to such
confidence.
6.02. Affiliate Agreements. The Company shall deliver to
Parent on or prior to the date of this Agreement a letter from
Company Counsel, satisfactory in form and substance to Parent's
Counsel, which, based upon discussion with the Company and such
inquiries as such firm deems necessary, shall identify all
persons who, at the date of this Agreement, such firm believes
may be deemed to be "affiliates" of the Company as such term is
used in and for the purposes of Accounting Series Releases 130
and 135, as amended, of the Securities and Exchange Commission,
and defined in Rule 144(a)(1) of the Securities Act of 1933, as
amended, and who will become the beneficial owners of shares of
Parent Stock pursuant to the transactions contemplated by this
Agreement (each such person being referred to as a "Company
Affiliate"). The Company shall deliver to Parent on or prior to
the Closing Date a letter from Company Counsel, satisfactory in
form and substance to Parent's Counsel, which shall identify all
Company Affiliates as of the Closing Date. The Company shall
cause each of the Company Affiliates to execute and deliver to
Parent (i) on the date of this Agreement and (ii) on the Closing
Date, a written agreement (the "Affiliate Agreement")
satisfactory to Parent and substantially in the form of Exhibit E
hereto, including provisions indicating that such Company
Affiliate (i) has not offered to sell, sold or otherwise disposed
of any Shares in the 30 day period prior to the date hereof,
(ii) will not offer to sell, sell or otherwise dispose of any
shares of Parent Stock, except pursuant to an effective
registration statement or in compliance with an available
exemption from the registration requirements of the Securities
Act (for which Stockholder shall provide Parent with an opinion
of counsel satisfactory to Parent that the securities being sold
thereby may be publicly sold without registration under the
Securities Act), and (iii) will not offer to sell, sell or
otherwise dispose of any shares of Parent Stock until Parent
shall have publicly released financial results covering a period
of at least 30 days of post-closing combined operations of Parent
and the Company.
6.03. Expenses. The Stockholders shall pay, prior to or at
the Closing, all costs and expenses incurred by the Company or
the Stockholder in connection with this Agreement.
6.04. Satisfaction of Parent's Withholding Obligation.
Each of the Stockholders covenants and agrees that he shall pay
to Parent, in immediately available funds (through wire transfer
or federal funds check) not later than 12:00 noon, Eastern
Standard Time, on the tenth business day after the Lapse Date (as
defined below), the federal, state, local and foreign tax
withholding amounts attributable to the Parent Stock issued to
him with respect to the Option Shares, including without
limitation federal, state, local and foreign income tax, Social
Security and Medicare tax withholding and similar amounts
(excluding the employer's portion of such amounts), at the
applicable tax withholding rates, all as determined by Parent and
its accountants. Each Stockholder agrees to cooperate fully and
to follow any reasonable instructions with respect to such tax
withholding obligation, and each understands that the fair market
value of the Parent Stock received in exchange for the Option
Shares must be reported as compensation for tax purposes, such
compensation being reported as of the Lapse Date. For purposes
of this Section 6.04, Lapse Date shall mean the first business
day following the date the Parent Stock issued to such person
pursuant to this Agreement is no longer subject to a restriction
on transfer pursuant to the "pooling of interests" accounting
rules.
ARTICLE VII
COVENANTS OF PARENT
Parent agrees that:
7.01. Access. After the Closing Date, Parent agrees to
give each Stockholder reasonable access to the books and records
provided by the Company and such Stockholder pursuant to Section
2.07 hereof to enable such Stockholder to make required filings
with, and respond to any inquiries from, state or federal tax or
other regulatory authorities.
7.02. Quarterly Report on Form 10-Q . Parent agrees to
file in a timely manner all reports and other documents required
of Parent under the Securities Exchange Act of 1934, including,
without limitation, its Quarterly Report on Form 10-Q for the
fiscal quarter ended September 30, 1997.
7.03. Affiliate Agreements. Parent shall use its best
efforts to cause each person who, at the date of this Agreement,
Parent believes may be deemed to be "affiliates" of Parent as
such term is used in and for the purposes of Accounting Series
Releases 130 and 135, as amended, of the Securities and Exchange
Commission, and defined in Rule 144(a)(1) of the Securities Act
of 1933, as amended (each a "Parent Affiliate"), to execute and
deliver on the Closing Date, an Affiliate Agreement substantially
in the form of Exhibit G hereto.
7.04. Reorganization Status. Parent shall consistently
treat for all United States federal income tax purposes the
Merger as a reorganization, within the meaning of Section 368(a)
of the Code.
7.05. Business Continuity. Parent shall either continue to
conduct the historic business of the Company or shall continue to
use the historic assets of the Company in a business.
7.06. Confidentiality. Until the Closing Date, Parent and
Sub and their Affiliates will hold, and will use reasonable
efforts to cause their respective officers, directors, employees,
accountants, counsel, consultants, advisors and agents to hold,
in confidence, unless compelled to disclose by judicial or
administrative process or by other requirements of law, all
confidential documents and information concerning the Company
furnished to the Parent or Sub or their Affiliates in connection
with the transactions contemplated by this Agreement, except to
the extent that such information can be shown to have been
(i) previously known on a nonconfidential basis by Parent or Sub,
(ii) in the public domain through no fault of Parent or Sub or
(iii) later lawfully acquired by Parent or Sub from sources other
than the Company; provided that the Parent and Sub may disclose
such information to their respective officers, directors,
employees, accountants, counsel, consultants, advisors and agents
in connection with the transactions contemplated by this
Agreement so long as such persons are informed by the Parent or
Sub of the confidential nature of such information and are
directed by the Parent or Sub to treat such information
confidentially. The obligation of the Parent and Sub and their
Affiliates to hold any such information in confidence shall be
satisfied if they exercise the same care with respect to such
information as they would take to preserve the confidentiality of
their own similar information. If this Agreement is terminated,
the Parent and Sub and their Affiliates will, and will use their
best efforts to cause their respective officers, directors,
employees, accountants, counsel, consultants, advisors and agents
to, destroy or deliver to the Company, upon request, all
documents and other materials, and all copies thereof, obtained
by the Parent and Sub or their Affiliates or on their behalf from
the Company in connection with this Agreement that are subject to
such confidence.
7.07. Publication of Interim Financial Results. Parent
will use good faith commercially reasonable efforts to cause
interim financial results covering thirty (30) days beginning
December 1, 1997 (or December 2, 1997 if the Closing occurs on
December 1, 1997) to be published as promptly as reasonably
practicable following the Closing.
7.08. Nasdaq National Market Additional Shares
Notification. Parent will file an additional share notification
with the Nasdaq National Market to approve for listing the shares
of Parent Stock to be issued in connection with the Merger, and
Parent will exercise good faith reasonable efforts to cause the
shares to be approved for listing prior to the effective date of
the first Registration Statement to be filed pursuant to the
Registration Rights Agreement.
ARTICLE VIII
COVENANTS OF ALL PARTIES
The parties hereto agree that:
8.01. Best Efforts. Subject to the terms and conditions of
this Agreement, each party will use commercially reasonable
efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary or desirable under
applicable laws and regulations to consummate the transactions
contemplated by this Agreement. Each Stockholder, the Company
and Parent agree to execute and deliver such other documents,
certificates, agreements and other writings and to take such
other actions as may be necessary or desirable in order to
consummate or implement expeditiously the transactions
contemplated by this Agreement.
8.02. Certain Filings. The Company, each Stockholder and
Parent shall cooperate with each other (a) in determining whether
any action by or in respect of, or filing with, any governmental
body, agency, official or authority is required, or any actions,
consents, approvals or waivers are required to be obtained from
parties to any material contracts, in connection with the
consummation of the transactions contemplated by this Agreement
and (b) in taking such actions or making any such filings,
furnishing information required in connection therewith and
seeking timely to obtain any such actions, consents, approvals or
waivers.
8.03. Public Announcements. The Stockholders and the
Company shall consult with Parent before issuing any press
release or making any public statement with respect to this
Agreement or the transactions contemplated hereby and, except as
may be required by applicable law or any listing agreement with
any national securities exchange, will not issue any such press
release or make any such public statement prior to such
consultation and approval by Parent.
8.04. Pooling. Each Stockholder, the Company and the
Parent shall use commercially reasonable efforts and shall
cooperate fully to allow the transactions contemplated by this
Agreement to be accounted for as a "pooling of interests" in
accordance with generally accepted accounting principles which
shall be acceptable to the U.S. Securities and Exchange
Commission.
ARTICLE IX
EMPLOYEE BENEFITS
9.01. Employee Benefits Definitions. The following terms,
as used herein, have the following meanings:
"Benefit Arrangement" means each employment, severance
or other similar contract, arrangement or policy (written or
oral) and each plan or arrangement (written or oral) providing
for severance benefits, insurance coverage (including any self-
insured arrangements), workers' compensation, disability
benefits, supplemental unemployment benefits, vacation benefits,
retirement benefits or for deferred compensation, profit-sharing,
bonuses, stock options, stock appreciation rights or other forms
of incentive compensation or post-retirement insurance,
compensation or benefits which (i) is not an Employee Plan,
(ii) is entered into, maintained or contributed to, as the case
may be, by the Company, any Stockholder or any of their
Affiliates and (iii) covers any employee or former employee of
the Company.
"Employee Plans" means each "employee benefit plan", as
such term is defined in Section 3(3) of ERISA, that (i) is
subject to any provision of ERISA and (ii) is maintained or
contributed to by the Company or any of its ERISA Affiliates, as
the case may be.
"ERISA" means the Employment Retirement Income Security
Act of 1974, as amended.
"ERISA Affiliate" of any entity means any other entity
that, together with such entity, would be treated as a single
employer under Section 414 of the Code.
"Multiemployer Plan" means each Employee Plan that is a
multiemployer plan, as defined in Section 3(37) of ERISA.
"PBGC" means the Pension Benefit Guaranty Corporation
established and maintained within the United States Department of
Labor pursuant to Section 4002 of ERISA.
9.02. ERISA Representations. The Company and each
Stockholder, jointly and severally, hereby represent and warrant
to Parent that:
(a) Schedule 9.02 lists each Employee Plan that covers
any employee of the Company, copies and descriptions of all of
which have previously been made available or furnished to Parent.
With respect to each Employee Plan, the Company has provided the
three most recently filed Forms 5500 and an accurate summary
description of such plan. The Company has provided Parent with
complete age, salary, service and related data as of the most
recent practicable date for employees of the Company.
(b) Schedule 9.02 also includes a list of each Benefit
Arrangement of the Company, copies and descriptions of which have
been made available or furnished previously to Parent.
(c) None of the Employee Plans or other arrangements
listed on Schedule 9.02 covers any non-United States employee or
former employee of the Company, except one employee of the
Company located in England who is covered by the Employee Plans
so designated on Schedule 9.02.
(d) No "prohibited transaction", as defined in Section
406 of ERISA or Section 4975 of the Code, has occurred with
respect to any Employee Plan.
(e) No plan or arrangement listed on Schedule 9.02 is
a Multiemployer Plan. Neither the Company nor any Subsidiary or
ERISA Affiliate has ever contributed to or had an obligation to
contribute to any Multiemployer Plan.
(f) Each Employee Plan which is intended to be
qualified under Section 401(a) of the Code is so qualified and
has been so qualified during the period from its adoption to
date, and each trust forming a part thereof is exempt from tax
pursuant to Section 501(a) of the Code. The Company has
furnished to Parent copies of the most recent Internal Revenue
Service determination letters with respect to each such plan.
Each Employee Plan has been maintained in compliance with its
terms and with the requirements prescribed by any and all
statutes, orders, rules and regulations, including but not
limited to ERISA and the Code, which are applicable to such plan.
(g) Each Benefit Arrangement has been maintained in
substantial compliance with its terms and with the requirements
prescribed by any and all statutes, orders, rules and regulations
which are applicable to such Benefit Arrangement.
(h) With respect to the employees and former employees
of the Company, there are no employee post-retirement medical or
health plans in effect, except as required by Section 4980B of
the Code.
(i) All contributions and payments accrued under each
Employee Plan and Benefit Arrangement, determined in accordance
with prior funding and accrual practices, as adjusted to include
proportional accruals for the period ending on the Closing Date,
will be discharged and paid on or prior to the Closing Date.
Except as disclosed in writing to Parent prior to the date
hereof, there has been no amendment to, written interpretation of
or announcement (whether or not written) by the Company, any
Stockholder or any of their ERISA Affiliates relating to, or
change in employee participation or coverage under, any Employee
Plan or Benefit Arrangement that would increase materially the
expense of maintaining such Employee Plan or Benefit Arrangement
above the level of the expense incurred in respect thereof for
the year ended prior to the date hereof.
(j) The Company does not have and has never had any
Employee Plan subject to Title IV of ERISA (a "Defined Benefit
Plan").
(k) No charge, complaint, action, suit, proceeding,
hearing, investigation, claim or demand with respect to the
administration or the investment of the assets of any Employee
Plan maintained by the Company or to which the Company has
contributed or the benefit of any current or former employee of
the Company (other than routine claim for benefit) is pending.
(l) There is no contract, agreement, plan or
arrangement covering any employee or former employee of the
Company that, individually or collectively, could give rise to
the payment of any amount that would not be deductible pursuant
to the terms of Section 280G of the Code.
(m) No tax under Section 4980B of the Code has been
incurred in respect of any Employee Plan that is a group health
plan, as defined in Section 5000(b)(1) of the Code.
(n) Except as set forth on Schedule 9.02, no employee
of the Company will become entitled to any bonus, retirement,
severance or similar benefit or enhanced benefit solely as a
result of the transactions contemplated hereby.
9.03. No Third Party Beneficiaries. No provision of this
Article IX shall create any third party beneficiary or other
rights in any employee or former employee (including any
beneficiary or dependent thereof) of the Company in respect of
continued employment (or resumed employment) with the Company and
no provision of this Article IX shall create any such rights in
any such Persons in respect of any benefits that may be provided,
directly or indirectly, under any Employee Plan or Benefit
Arrangement or any plan or arrangement that may be established by
Parent or any of its Affiliates. No provision of this Agreement
shall constitute a limitation on rights to amend, modify or
terminate after the Closing Date any Employee Plan or Benefit
Arrangement.
ARTICLE X
CONDITIONS TO CLOSING
10.01. Conditions to the Obligations of Each Party. The
obligations of Parent, Sub, the Company and the Stockholders to
consummate the Closing are subject to the satisfaction or waiver
of the following conditions:
(a) No proceeding challenging this Agreement or the
transactions contemplated hereby or seeking to prohibit, alter,
prevent or materially delay the Closing shall have been
instituted by any Person before any court, arbitrator or
governmental body, agency or official and be pending.
(b) All actions by or in respect of or filings with
any governmental body, agency, official or authority required to
permit the consummation of the Closing shall have been obtained.
10.02. Conditions to Obligations of Parent and Sub. The
obligation of Parent and Sub to consummate the Closing is subject
to the satisfaction or waiver of the following further
conditions:
(a)(i) the Company and each Stockholder shall have
performed in all material respects all of its or his obligations
hereunder required to be performed on or prior to the Closing
Date, (ii) the representations and warranties of the Company and
each Stockholder contained in this Agreement at the time of its
execution and delivery and in any certificate or other writing
delivered by the Company or such Stockholder pursuant hereto,
disregarding all qualifications and exceptions contained therein
relating to materiality or Material Adverse Effect, shall be true
at and as of the Closing Date, as if made at and as of such date
with only such exceptions as would not in the aggregate
reasonably be expected to have a Material Adverse Effect and
(iii) Parent shall have received a certificate signed by (A) the
President of the Company and (B) each Stockholder to the
foregoing effect.
(b) No court, arbitrator or governmental body, agency
or official shall have issued any order, and there shall not be
any statute, rule or regulation, restraining the effective
operation by Parent of the business of the Company after the
Closing Date, and no proceeding challenging this Agreement or the
transactions contemplated hereby or seeking to prohibit, alter,
prevent or materially delay the Closing shall have been
instituted by any Person before any court, arbitrator or
governmental body, agency or official and be pending.
(c) Parent shall have received an opinion of Company
Counsel, dated the Closing Date, to the effect specified on
Exhibit F. In rendering such opinion, such counsel may rely upon
certificates of public officers, as to matters governed by the
laws of jurisdictions other than the State of Delaware, the
Commonwealth of Massachusetts or the federal laws of the United
States of America, upon opinions of counsel reasonably
satisfactory to Parent, copies of which shall be
contemporaneously delivered to Parent, and as to matters of fact,
upon certificates of the Stockholders and officers of the
Company.
(d) Each Stockholder and the Company shall have
executed and delivered each of the Ancillary Agreements to be
entered into by them or it at the Closing, in each case
substantially in the form attached as an exhibit to this
Agreement.
(e) Parent shall have received all other closing
documents specified in Section 2.02 of this Agreement and all
other closing documents that it may reasonably request, all in
form and substance reasonably satisfactory to Parent.
(f) Price Waterhouse LLP shall have delivered to
Parent its written opinion that it has no basis for believing
that the transactions contemplated by this Agreement shall not be
accounted for as a "pooling of interests" in accordance with
generally accepted accounting principles, and Parent shall have
no reason to believe that such accounting treatment will not be
accepted by the Securities and Exchange Commission.
(g) The Company shall deliver to Parent a properly
executed statement in a form reasonably requested by Parent for
purposes of satisfying Parent's obligations under Treasury
Regulation 1.1445-2(c)(3).
(h) Parent shall have received evidence satisfactory
to it of the Stockholder's payment of all costs and expenses
incurred by the Company or the Stockholders in connection with
this Agreement.
(i) Parent shall have received from the Company
written evidence that (i) the execution, delivery and performance
of the Agreement have been duly and validly approved and
authorized by the Company's board of directors and by the
stockholders of the Company and (ii) no stockholders of the
Company have, or might be able to perfect, dissenters' or
appraisal rights in connection with the Merger.
(j) Parent shall have received evidence from the
Company of its receipt of the exercise price for the Company
Options.
(k) The Company shall have received all of the
consents and waivers set forth on Schedule 3.03, including but
not limited to all necessary lender consents.
(l) Price Waterhouse LLP shall have completed an
audit, to Parent's satisfaction, of the balance sheet of the
Company as of June 27, 1997 and the accompanying statements for
the period then ended. The Company and the Stockholders shall
cooperate fully with Parent and the accountants in connection
with such audit. The expenses of such audit shall be shared
equally between the Parent on the one hand and the Stockholders
on the other hand; provided, however, that the maximum payment to
be made by the Stockholders in connection with such audit shall
not exceed $20,000 and provided, further, that the expenses of
such audit shall be borne exclusively by Parent if the Merger is
not consummated. Price Waterhouse LLP shall also have completed
a review, to Parent's satisfaction, of the balance sheet of the
Company as of October 31, 1997 and the accompanying statements
for the period ended October 31, 1997. The Company and the
Stockholders shall cooperate fully with Parent and the
accountants in connection with such review. The expenses of such
review shall be borne exclusively by the Parent.
(m) As of the Closing Date, the Company shall have,
and the President and Chief Financial Officer of the Company
shall certify to the Parent that the Company has, Working Capital
of at least $500,000.
(n) Parent shall have completed, to its satisfaction,
its financial, business and legal due diligence investigation of
the Company by November 15, 1997.
(o) Parent shall have received from the Company
written evidence that all outstanding loans of the Company to the
Stockholders have either been paid in full or have been evidenced
by a payment schedule that has been approved by Parent.
(p) Each of the employees of the Company shall have
executed and delivered to Parent a non-competition, key employee
or an employee agreement with Parent, as requested by Parent.
(q) Parent shall have received from the Company good
standing certificates from Delaware and from each state in which
the Company is qualified to do business as a foreign corporation.
10.03. Conditions to Obligations of the Company. The
obligation of the Company to consummate the Closing is subject to
the satisfaction of the following further conditions:
(a)(i) Parent and Sub shall have performed in all
material respects all of their obligations hereunder required to
be performed by them at or prior to the Closing Date, (ii) the
representations and warranties of Parent and Sub contained in
this Agreement at the time of its execution and delivery and in
any certificate or other writing delivered by Parent or Sub
pursuant hereto shall be true in all material respects at and as
of the Closing Date, as if made at and as of such date and (iii)
the Company shall have received a certificate signed by the Chief
Financial Officer of Parent and the President of Sub to the
foregoing effect.
(b) No proceeding challenging this Agreement or the
transactions contemplated hereby or seeking to prohibit, alter,
prevent or materially delay the Closing shall have been
instituted by any Person before any court, arbitrator or
governmental body, agency or official and be pending.
(c) The Company shall have received an opinion of
Parent's Counsel, dated the Closing Date, to the effect specified
in Sections 5.01 through 5.04 and that the shares of Parent Stock
issued in the Merger will, when issued in accordance with the
provisions of this Agreement, be duly authorized, validly issued,
fully paid and nonassessable. In rendering such opinion, such
counsel may rely upon certificates of public officers, as to
matters governed by the laws of jurisdictions other than the
Commonwealth of Massachusetts or the federal laws of the United
States of America, upon opinions of counsel reasonably
satisfactory to the Company, copies of which shall be
contemporaneously delivered to the Company, and as to matters of
fact, upon certificates of officers of Parent and Sub.
(d) Parent and Sub shall have executed and delivered
each of the Ancillary Agreements to be entered into by them at
the Closing, in each case substantially in the form attached as
an exhibit to this Agreement.
(e) The Company and the Stockholders shall have
received all items specified in Section 2.02 of this Agreement
and all other closing documents that they may reasonably request,
all in form and substance reasonably satisfactory to them.
ARTICLE XI
SURVIVAL; INDEMNIFICATION
11.01. Survival. The covenants contained in this Agreement
shall survive the Closing and continue until the date set forth
in each such covenant. The agreements, representations and
warranties contained in this Agreement shall survive the Closing
until the earlier of (i) the delivery by Price Waterhouse LLP of
its report on Parent's financial statements for the fiscal year
ended June 30, 1998 or (ii) the one (1) year anniversary of the
Closing Date. Notwithstanding the preceding sentences, any
covenant, agreement, representation or warranty in respect of
which indemnity may be sought under Section 11.02 shall survive
the time at which it would otherwise terminate pursuant to the
preceding sentences, if notice of the inaccuracy or breach
thereof giving rise to such right to indemnity shall have been
given to the party against whom such indemnity may be sought
prior to such time.
11.02. Indemnification
(a) Each Principal Stockholder, jointly and severally,
and each Stockholder who is not a Principal Stockholder,
severally, hereby indemnifies Parent, Sub, and their respective
subsidiaries, directors, officers, agents and affiliates and,
effective at the Closing, without duplication, the Company
(collectively, the "Parent Group") against and agrees to defend
and hold them harmless from any and all damage, loss, liability
and expense (including without limitation reasonable expenses of
investigation and reasonable attorneys' fees and expenses in
connection with any action, suit or proceeding) ("Damages")
incurred or suffered by Parent, Sub or the Company arising out of
(i) any inaccuracy in or breach or alleged breach of any
agreement, representation or warranty of the Company (with
respect to the Principal Stockholders only) or such Stockholder
contained in or made pursuant to this Agreement or any
certificate or other writing delivered pursuant hereto or in
connection herewith, (ii) any failure by such Stockholder or the
Company (with respect to the Principal Stockholders only) to
perform any of their respective obligations or covenants as set
forth in this Agreement or any certificate or other writing
delivered pursuant hereto or in connection herewith, (iii) any
and all actions, suits, litigation, arbitrations, proceedings,
investigations or claims arising out of any of the foregoing and
based on facts that have occurred on or prior to the Closing Date
even though such action, suit, litigation, arbitration,
proceeding, investigation or claim may not be filed or come to
light until after the Closing Date and (iv) any and all actions,
suits, litigation, arbitrations, proceedings, investigations or
claims filed or made by ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, L.G.M. Technical
Enterprises, Ltd., ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇ or Drumbeat
Dimensions, Inc. (collectively, the "Claims"); provided that the
Stockholders shall not be liable under this Section 11.02(a)
unless the aggregate amount of Damages with respect to all
matters referred to in this Section 11.02(a) exceeds $25,000;
provided, further, that (i) once the Damages exceed $25,000, the
Parent Group shall be entitled to indemnification for the full
amount of such Damages and (ii) such indemnity obligations shall
be satisfied by the Stockholders by transferring to Parent shares
of Parent's common stock owned by the Stockholders having a
value, as of the date hereof, equal to the amount of such Damages
(any deficiency to be paid by such Stockholder in cash). The
maximum liability of all the Stockholders, in the aggregate,
pursuant to this Section 11.02(a) shall be the number of shares
of Parent Stock received by the Stockholders (or the value
thereof as of the Closing Date if previously sold) having an
aggregate value, as of the date hereof, of $10,000,000.
(b) The Stockholders shall have no right of
indemnification, contribution or subrogation against the Company
with respect to any indemnification by the Stockholders under
this Section 11.02 if the transactions contemplated by this
Agreement are consummated.
(c) Parent hereby indemnifies the Stockholders, their
respective agents and affiliates (the "Selling Group") against
and agrees to defend and hold them harmless from any and all
Damages incurred or suffered by the Selling Group arising out of
any misrepresentation or breach of warranty, covenant or
agreement made or to be performed by Parent pursuant to this
Agreement, such indemnity obligations to be satisfied by Parent
by issuing shares of its common stock having a value, as of the
date hereof, equal to the amount of such Damages, provided,
however, that such amount in the aggregate shall in no event
exceed $10,000,000.
11.03. Procedures. The party seeking indemnification under
Section 11.02 (the "Indemnified Party") agrees to give prompt
notice to the party against whom indemnity is sought (the
"Indemnifying Party") of the assertion of any claim, or the
commencement of any suit, action or proceeding in respect of
which indemnity may be sought under such Section. The
Indemnifying Party may, and at the request of the Indemnified
Party shall, participate in and control the defense of any third
party suit, action or proceeding at its own expense. The
Indemnifying Party shall not be liable under Section 11.02 for
any settlement effected without its consent (which may not be
unreasonably withheld or delayed) of any claim, litigation or
proceeding in respect of which indemnity may be sought hereunder.
11.04. Holdback and Withholding Shares. At the Closing, the
Stockholders shall be deemed to have directed Parent to withhold
from delivery the Holdback Shares and the Withholding Shares.
The Holdback Shares and the Withholding Shares shall be issued to
the Stockholders but held in escrow by Parent subject to the
terms and conditions hereinafter set forth. Holdback Shares and
the Withholding Shares shall be considered issued and outstanding
shares of capital stock of Parent and the Stockholders shall be
entitled to vote such shares and receive any and all dividends or
distributions payable with respect to such shares.
11.05. Holdback Termination. The Holdback Shares shall be
distributed to the Stockholders as follows:
(a) Within 30 days after the earlier to occur of (i) the
delivery by Price Waterhouse LLP of its report on Parent's
financial statements for the fiscal year ended June 30, 1998 or
(ii) the one (1) year anniversary of the Closing Date, the
Holdback Shares shall be distributed to the Stockholders, except
that the portion of the Holdback Shares having a value as of the
date hereof most nearly equal to the Damages incurred by Parent
as to which a Claim shall have been previously and duly delivered
to the Stockholders shall continue to be withheld in escrow.
(b) The value of a Holdback Share as of the date hereof
shall be equal to the Parent Stock Price (subject to appropriate
adjustment in the event of a stock split or reverse stock split).
The amount of such Damages shall be based upon a written
certification of the Chief Executive Officer of Parent to the
Stockholders as to the amount of Damages incurred, together with
supporting documentation. If the Stockholders disagree with the
amount of Damages set forth in such certificate, and if the
Stockholders and Parent cannot reach a mutually satisfactory
understanding with regard to the amount of Damages within five
(5) business days after delivery of the certificate to the
Stockholders, the matter shall be promptly submitted to binding
arbitration in Boston, Massachusetts in accordance with the rules
of the American Arbitration Association. The balance of the
Holdback Shares not so withheld shall be distributed to the
Stockholders.
(c) The Holdback Shares not so distributed to the
Stockholders pursuant to subsection 11.05(a) and 11.05(b) shall
be retained by Parent in escrow until such pending Claims are
resolved; provided, however, that upon the disposition of any
such Claim prior to the disposition of all such Claims, Parent
shall distribute to the Stockholders that amount of the Holdback
Shares having a value as of the date hereof in excess of 100% of
the aggregate amounts of the remaining Damages incurred as
determined above.
11.06. Withholding Termination.
(a) Within 25 business days after the Lapse Date (as
defined in Section 6.04), the Withholding Shares shall be
distributed to the Stockholders, except that the portion of the
Withholding Shares having a value as of the date hereof most
nearly equal to the Damages incurred by Parent as a result of or
relating to a breach of the provisions of Section 6.04 hereof
shall continue to be held in escrow.
(b) The value of the Withholding Shares as of the date
hereof shall be equal to the Parent Stock Price (subject to
appropriate adjustment in the event of a stock split or reverse
stock split). The amount of such Damages shall be based upon a
written certification of the Chief Executive Officer of Parent to
the Stockholders as to the amount of Damages incurred, together
with supporting documentation. If the Stockholders disagree with
the amount of Damages set forth in such certificate, and if the
Stockholders and Parent cannot reach a mutually satisfactory
understanding with regard to the amount of Damages within five
(5) business days after delivery of the certificate to the
Stockholders, the matter shall be promptly submitted to binding
arbitration in Boston, Massachusetts in accordance with the rules
of the American Arbitration Association. The balance of the
Withholding Shares not so withheld shall be distributed to the
Stockholders.
(c) The Withholding Shares not so distributed to the
Stockholders pursuant to subsection 11.06(a) and 11.06(b) shall
be retained by Parent in escrow until such pending Claims are
resolved; provided, however, that upon the disposition of any
such Claim prior to the disposition of all such Claims, Parent
shall distribute to the Stockholders that amount of the
Withholding Shares having a value as of the date hereof in
excess of 100% of the aggregate amounts of the remaining Damages
incurred as determined above.
ARTICLE XII
MISCELLANEOUS
12.01. Notices. All notices and other communications which
by any provision of this Agreement are required or permitted to
be given shall be given in writing and shall be (a) mailed by
first-class or express mail, postage prepaid, (b) sent by telex,
telegram, telecopy or other form of rapid transmission, confirmed
by mailing (by first class or express mail, postage prepaid)
written confirmation at substantially the same time as such rapid
transmission, or (c) personally delivered to the receiving party
(which if other than an individual shall be an officer or other
responsible party of the receiving party). All such notices and
communications shall be mailed, sent or delivered as follows:
if to Parent, Sub, or the Company to:
PAREXEL International Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
Senior Vice President and Chief Financial
Officer
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP
High Street Tower
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▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
if to the Stockholders to:
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▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
P. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇. Parenteau
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with a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇ & ▇▇▇▇▇
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Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Notices shall be deemed duly delivered three business days
after being sent by first class mail, postage prepaid, or one
business day after being sent via a reputable nationwide express
mail service. Notices delivered via any other means shall be
deemed duly delivered upon actual receipt by the individual for
whom such notice is intended. Any notice sent to a party hereto
shall be sent simultaneously, by the same means, to such party's
counsel, as set forth above.
12.02. Amendments; No Waivers.
(a) Any provision of this Agreement may be
amended or waived prior to the Closing Date if, and only if, such
amendment or waiver is in writing and signed by Parent, Sub and
the Company.
(b) No failure or delay by either party in exercising
any right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude
any other or further exercise thereof or the exercise of any
other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
12.03. Expenses. All costs and expenses incurred in
connection with this Agreement shall be paid by the party
incurring such cost or expense; provided, however, that if the
Closing shall occur all such costs and expenses incurred by the
Company and the Stockholders shall be paid or reimbursed by the
Stockholders.
12.04. Successors and Assigns. The provisions of this
Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns;
provided that no party may assign, delegate or otherwise transfer
any of his or its rights or obligations under this Agreement
without the consent of the other parties hereto.
12.05. Further Assurances. From time to time after the
Closing, at the request of Parent and without further
consideration, the Stockholders will execute and deliver to
Parent such other documents, and take such other action, at
Parent's cost and expense, as Parent may reasonably request in
order to consummate more effectively the transactions
contemplated hereby.
12.06. Governing Law. This Agreement shall be construed in
accordance with and governed by the law of the Commonwealth of
Massachusetts, without regard to the conflicts of law rules of
such state.
12.07. Counterparts; Effectiveness. This Agreement may be
signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and
hereto were upon the same instrument. This Agreement shall
become effective when each party hereto shall have received a
counterpart hereof signed by the other parties hereto.
12.08. Entire Agreement. This Agreement (including the
exhibits and schedules hereto) constitutes the entire agreement
between the parties with respect to the subject matter hereof and
supersedes all prior agreements, understandings and negotiations,
whether written or oral, between the parties with respect to the
subject matter hereof. No representation, inducement, promise,
understanding, condition or warranty not set forth herein has
been made or relied upon by either party hereto. Neither this
Agreement nor any provision hereof is intended to confer upon any
Person other than the parties hereto any rights or remedies
hereunder.
12.09. Captions. The captions herein are included for
convenience of reference only and shall be ignored in the
construction or interpretation hereof.
12.10. Jurisdiction. Any action or proceeding seeking to
enforce any provision of, or based on any right arising out of,
this Agreement may be brought against any of the parties in the
courts of the Commonwealth of Massachusetts, and each of the
parties hereby consents to the jurisdiction of such courts (and
of the appropriate appellate courts) in any such action or
proceeding and waives any objection to venue laid therein.
Process in any such action or proceeding may be served on any
party anywhere in the world, whether within or without the
Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the parties hereto have duly executed
this Agreement as of the day and year first above written.
PAREXEL INTERNATIONAL CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Chief Executive Officer
KMI ACQUISITION CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Chief Executive Officer
▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇, INC.
By: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
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P. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
P. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇. Parenteau
▇▇▇▇ ▇. Parenteau
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