AGREEMENT AND PLAN OF MERGER

 

AGREEMENT AND PLAN OF MERGER

 

THIS AGREEMENT AND PLAN OF MERGER (this “ Agreement ”) is made and entered into on August 16, 2005, by and among Phase Forward Incorporated, a Delaware corporation (“ Phase Forward ”), Abe Acquisition Corp., a Massachusetts corporation and wholly owned subsidiary of Phase Forward (“ Sub ”), and Lincoln Technologies, Inc., a Massachusetts corporation (“ Lincoln ”), and for purposes of Sections 4.3, 4.4, 4.5, 4.6(d)-(g), 4.8(a) and (d)-(f), 5.1, 8.13(c), 8.14, 9.3(l), 10.3, 13.2, 13.3, 13.4, 13.5, 15.2, 15.13, Section 3 of Exhibit 7.18, and Article 14 only, the Securityholder Representative.

 

Preamble

 

The respective Boards of Directors of Phase Forward, Sub and Lincoln are of the opinion that the transactions described herein are in the best interests of the parties to this Agreement and their respective shareholders.  This Agreement provides for the acquisition of Lincoln by Phase Forward pursuant to the merger of Sub with and into Lincoln (the “ Merger ”), with Lincoln surviving the Merger.  At the effective time of such Merger, the outstanding shares of the Lincoln Common Stock and Lincoln Rights shall be converted into the right to receive the consideration provided herein.  As a result, after the effective time of the Merger, Lincoln shall continue to conduct its business and operations as a direct wholly owned subsidiary of Phase Forward.  The transactions described in this Agreement are subject to the approvals of the Lincoln Shareholders and the satisfaction of certain other conditions described in this Agreement.

 

Prior to the date hereof, Lincoln has been providing certain Lincoln Shareholders who collectively hold more than 75% of the issued and outstanding Lincoln Common Stock as of the date hereof (collectively, the “ Consenting Shareholders ”) with information regarding the material terms of this Agreement and the Merger.  The parties hereto intend that promptly after the execution hereof the Consenting Shareholders will execute and deliver a written consent in form and substance reasonably satisfactory to Phase Forward (the “ Merger Consent ”), pursuant to which the Consenting Shareholders, among other things, irrevocably adopt and approve this Agreement, the Merger and other transactions contemplated by this Agreement.

 

NOW, THEREFORE, in consideration of the above and the mutual warranties, representations, covenants, and agreements set forth herein, the parties agree as follows:

 

ARTICLE 1

CERTAIN DEFINITIONS

 

“ 2005 Earnout Revenue ” means revenue recognized in 2005 in excess of $* million resulting from the sale of Lincoln software and services, computed in accordance with Exhibit 4.8(a) .

 

“ 2006 Earnout Revenue ” means revenue recognized in 2006 resulting from the sale of Lincoln software and services in excess of an amount equal to:  $* million minus (i) the first $* of 2005 Earnout Revenue in excess of $* million, if any, minus (ii) an amount equal to *% of 2005 Earnout Revenue in excess of $* million, if any, computed in each case in accordance with Exhibit 4.8(a) .

 

** Confidential Treatment Requested.

 

 

“ Accounting Expert ” has the meaning set forth in Section 4.6(f).

 

“ Acquisition Proposal ” has the meaning set forth in Section 8.4.

 

“ Affiliate ” means, as to a Person, any other Person that directly or indirectly through one or more intermediaries controls, or is under common control with, or is controlled by, such Person.

 

“ Appraisal Reduction Amount ” has the meaning set forth in Section 4.4(c).

 

“ Articles of Merger ” has the meaning set forth in Section 2.3.

 

“ Assets ” means, as to a Person, all of the assets, properties, businesses and rights of such Person of every kind, nature, character and description, whether real, personal or mixed, tangible or intangible, accrued or contingent, or otherwise relating to or utilized in such Person’s business, directly or indirectly, in whole or in part, whether or not carried on the books and records of such Person, and whether or not owned in the name of such Person or any Affiliate of such Person and wherever located.

 

“ Base Consideration ” means an amount of cash equal to $11.0 million, (1) plus or minus, as the case may be, the working capital adjustments described in Section 4.6, if any, minus (2) any Transaction Fees to be paid by Lincoln (to the extent not paid prior to the Effective Time or not reflected in the working capital adjustments described in Section 4.6, but not including any Transaction Fees to be paid by the Lincoln Securityholders).

 

“ Benefit Claims ”:  See Exhibit 7.19.

 

“ Benefit Plans ”:  See Exhibit 7.19.

 

“ Board of Directors ” means the board of directors of Lincoln and any committees or subcommittees thereof.

 

“ Certificates ” has the meaning set forth in Section 5.1(a).

 

“ Closing ” has the meaning set forth in Section 2.2.

 

“ Closing Adjustment ” has the meaning set forth in Section 4.6(c).

 

“ Closing Balance Sheet ” has the meaning set forth in Section 4.6(d).

 

“ Closing Date ” shall mean the day on which the Effective Time occurs.

 

“ Closing Date Consideration ” means the aggregate cash consideration to be issued in the Merger in accordance with this Agreement at Closing in exchange for the Lincoln Common Stock and Lincoln Rights having an aggregate value equal to (1) the Base Consideration as calculated on the Closing Date pursuant to Section 4.6(c) minus (2) the Escrow Amount.

 

“ Closing Schedule ” has the meaning set forth in Section 4.6(d).

 

** Confidential Treatment Requested.

 

2

 

“ Code ” means the United States Internal Revenue Code of 1986, as amended.

 

“ Common Stock ” means the common stock, $.01 par value per share, of Lincoln.

 

“ Confidential Information ” shall have the meaning ascribed to it in the Confidentiality Agreement.

 

“ Confidentiality Agreement ” means the Mutual Non-Disclosure Agreement, dated as of March 18, 2002, by and between Phase Forward and Lincoln.

 

“ Consent ” means any approval, clearance, exemption, notice, consent, order, waiver, authorization or similar affirmation by any Person pursuant to any Contract, Law or Permit.

 

“ Contract ” means any contract, agreement, obligation, commitment, indenture, instrument, lease, license, plan, practice, course of conduct, understanding, promise, arrangement or undertaking (whether written or oral and whether express or implied) to which any Person is a party or that is legally binding on any Person or its equity interests, Assets or business.

 

“ Earnout ” has the meaning set forth in Section 4.8(a).

 

“ Earnout Determination Materials ” has the meaning set forth in Section 4.8(e).

 

“ Earnout Objection ” has the meaning set forth in Section 4.8(e).

 

“ Earnout Offset Amount “ has the meaning set forth in Section 13.3(f).

 

“ Earnout Period ” means the period from the Closing Date through the date on which the final Earnout payment is made pursuant to this Agreement.

 

“ Earnout Report ” has the meaning set forth in Section 4.8(e).

 

“ Effective Time ” has the meaning set forth in Section 2.3.

 

“ Enforceability Exceptions ” has the meaning set forth in Section 6.2.

 

“ Escrow Agent ” has the meaning set forth in Section 4.5.

 

“ Escrow Agreement ” has the meaning set forth in Section 4.5.

 

“ Escrow Amount ” means an aggregate amount in cash equal to $2.2 million.

 

“ Estimated Net Working Capital ” has the meaning set forth in Section 4.6(b).

 

“ Final Net Working Capital ” has the meaning set forth in Section 4.6(d).

 

“ GAAP ” means U.S. generally accepted accounting principles.

 

** Confidential Treatment Requested.

 

3

 

“ Governmental Authority ” means any federal, state, county, local, foreign or other governmental, public or regulatory agencies, departments, authorities (including self-regulatory authorities), courts, instrumentalities, officials, committees, commissions, boards or bodies, including the SEC, the Federal Trade Commission and the Department of Justice.

 

“ Guaranteed Indebtedness ” of a Person means Indebtedness of a third party that is (a) guaranteed by such Person, (b) secured by a Lien on any Asset of such Person or (c) the subject of any other credit support arrangement provided by such Person.

 

“ Indebtedness ” means (a) indebtedness for borrowed money, (b) obligations as lessee under capital leases, (c) indebtedness under title retention agreements, (d) Liabilities for unfunded benefits under any pension plan or scheme for employees, (e) obligations under currency, interest rate or other hedging arrangements or swaps, and (f) Guaranteed Indebtedness.

 

“ Indemnification Threshold ” means the sum of $*.

 

“ Indemnified Directors/Officers ” has the meaning set forth in Section 8.11.

 

“ Intellectual Property ” includes the following: (a) any and all ideas, inventions, discoveries, prototypes, processes, art-work, know-how, compositions, techniques, methods, concepts, schematics, flow charts, works under the copyright laws (for example, computer programs, including source and object code), formulas, systems, mask works, databases, data, client lists (current clients, former clients or prospective clients), vendor lists, business associates/partners list, manuals, notes, designs, drawings, training materials, company information and records, brand names, trade names, trademarks, service marks, company names, company goodwill, phone numbers, domain names, Internet Protocol addresses and all other intangible property of any kind,  (b) all copyrights, rights of authorship, rights of publicity or broadcast, patent rights, rights of inventorship, trade dress rights, trade secrets and proprietary information, rights of attribution and integrity and other moral rights, and other intellectual property rights of any type under state law, federal Law of the United States, the Laws of any other nation or international treaty, (c) all rights of registration or rights in applications for (a) and (b), and (d) the medium in which (a), (b) or (c) resides where applicable (e.g., brochure upon which trademark resides, disk or CD upon which computer code resides).

 

“ Internal Revenue Service ” and “ IRS ”:  See Exhibit 7.18 .

 

“ Key Employee Agreements ” has the meaning set forth in Section 9.3(i).

 

“ Knowledge ” means the actual knowledge of a party’s directors and officers and any knowledge those individuals should have had after reasonable inquiry on the matter.  Reasonable inquiry means making reasonable inquiry of employees or advisors with responsibility for or expertise in the relevant subject matter regarding the accuracy of any applicable representation or warranty contained in this Agreement.

 

“ Labor Proceedings ” has the meaning set forth in Section 7.16

 

** Confidential Treatment Requested.

 

4

 

“ Law ” means any federal, state, local, foreign, international or other law, statute, code, regulation, ordinance, treaty, rule of common law, decree, injunction, judgment, order or ruling.

 

“ Leased Real Property ” has the meaning set forth in Section 7.11(b).

 

“Letter of Transmittal” has the meaning set forth in Section 5.1(a).

 

“ Liabilities ” means any and all liabilities, obligations or commitments of any nature, whether known or unknown, direct or indirect, absolute, accrued, contingent or otherwise, whether due or to become due, and whether or not required to be reflected or reserved against on a balance sheet under GAAP or under the principles, policies, estimates and procedures set forth in Exhibit 7.5 .

 

“ Lien ” means any lien, security interest, encumbrance, easement, encroachment, mortgage, pledge, community property interest, option, right of first refusal, right of preemption, restriction, charge or adverse claim or right of any kind or character.

 

“ Lincoln Financial Statements ” means (a) the unaudited balance sheets and statements of operations and cash flows of Lincoln (including related notes and schedules, if any) for the fiscal years ended December 31, 2002, 2003 and 2004, and (b) the unaudited balance sheets and statements of operations and cash flows of Lincoln and its Subsidiaries (including related notes and schedules, if any) for the six months ended June 30, 2005. The Financial Statements described in (b) are referred to as the “ Interim Financial Statements ”.

 

“ Lincoln Indemnitees ” has the meaning set forth in Section 13.5(a).

 

“ Lincoln Intellectual Property ” includes Intellectual Property that Lincoln or its Subsidiaries own, license (as licensor or licensee), or use (directly or indirectly via another Person), or have a contractual right to own, license (as licensor or licensee), or use (directly or indirectly via another Person).

 

“ Lincoln Material Adverse Effect ” means any circumstance, occurrence of any event, or any change in or effect on Lincoln and its Subsidiaries that, individually or when taken together with all other circumstances, events, changes in or effects on Lincoln and its Subsidiaries, is or would reasonably be expected to be materially adverse to (i) the condition (financial or otherwise), results of operations, business, Assets, or affairs of Lincoln and its Subsidiaries, taken as a whole, or (ii) the ability of Lincoln to perform its obligations under this Agreement or to consummate the Merger or the other transactions contemplated by this Agreement; provided, that, “Lincoln Material Adverse Effect” shall not be deemed to include the impact of (1) any changes in Laws of general applicability or interpretations thereof by courts or Governmental Authorities, (2) any changes affecting the general economic conditions in the United States, which changes do not disproportionately affect Lincoln and its Subsidiaries in any material respect, (3) any changes in the financial, banking or capital markets, Tax rates or the implementation of new Taxes, which changes do not disproportionately affect Lincoln and its Subsidiaries in any material respect; (4) any event to which Phase Forward has provided written consent hereunder; or (5) the execution, delivery or performance of this

 

** Confidential Treatment Requested.

 

5

 

Agreement (including any announcement relating to this Agreement or the fact that Phase Forward is acquiring Lincoln).

 

“ Lincoln-Owned Software ” has the meaning set forth in Section 7.9(d).

 

“ Lincoln Rights ” means rights to subscribe to, options, warrants or similar Contracts relating to, or securities or rights convertible into or exchangeable for, Common Stock of Lincoln, other Lincoln Rights, or issuance, transfer, acquisition or disposition of any of the foregoing.

 

“ Lincoln Securityholder ” means a holder of Lincoln Common Stock or of Lincoln Rights.

 

“ Lincoln Shareholder ” means a holder of Lincoln Common Stock.

 

“ Losses ” means any and all known or unknown damage, losses, injuries, Liabilities, damages, assessments and costs and expenses, including interest, penalties, costs of investigation and defense, and reasonable attorneys’ and other reasonable professional fees and expenses actually incurred by a party with respect to any demand, claim or action.  For purposes of any indemnification claim involving a third party claim under Section 13, “Losses” shall be deemed to include any amounts paid to such third party for special, incidental or consequential damages.  For all other purposes, “Losses” shall be deemed to exclude special, incidental and consequential damages.

 

“ Maximum Amount ” has the meaning set forth in Section 13.3(a).

 

“ MBCA ” means the Massachusetts Business Corporation Act (Chapter 156D of the Massachusetts General Laws).

 

“ Merger Consideration ” has the meaning set forth in Section 4.1.

 

“ Merger Consideration Spreadsheet ” means the spreadsheet, prepared exclusively by Lincoln and attached hereto as Exhibit 4.1 , calculating and allocating to each Lincoln Securityholder the Merger Consideration, which shall be updated as provided in Section 4.7.

 

“ Net Working Capital ” means as of any particular date: (a) cash and cash equivalents, plus the net book value of all fixed assets, plus the net book value of purchased software, plus the value of accounts receivable (net of provision for bad debt) of Lincoln and its Subsidiaries on a consolidated basis as of that date, but excluding accounts receivable owed from any Affiliate, plus prepaid expenses, minus (b) current Liabilities of Lincoln and its Subsidiaries on a consolidated basis as of that date, determined in each case in accordance with the principles, policies, estimates and procedures described in Exhibit 7.5 .

 

“ Net Working Capital Target ” means **.

 

“ No Limit Losses ” has the meaning set forth in Section 13.3.(a)

 

** Confidential Treatment Requested.

 

6

 

An action or omission is in the “ Ordinary Course of Business ” of a Person only if it (a) is in the ordinary course of business, consistent with past practices of such Person (but not less than prudent business practices) and (b) does not constitute any breach of Contract, tort, infringement or violation of Law by such Person.

 

“ Permits ” means permits, licenses, franchises, certificates and other Consents of any Governmental Authority.

 

“ Permitted Liens ” means: (a) Liens for Taxes not yet due or that are being contested in good faith by appropriate proceedings and for which adequate reserves for contested Taxes have been made in the Financial Statements; (b) statutory Liens of mechanics, materialmen, warehousemen and other similar statutory Liens for labor, materials or supplies incurred in the Ordinary Course of Business, but only to the extent the underlying payment obligations of Lincoln are not past due or are being contested in good faith by appropriate proceedings and for which adequate reserves for contested amounts have been made in the Financial Statements; (c) Liens arising under original purchase price conditional sales contracts and equipment leases with third parties entered into in the Ordinary Course of Business and under which the Lincoln is not in default; (d) easements, covenants, rights-of-way and other similar restrictions or conditions of record or which would be shown by a current accurate survey of any of the Leased Real Property; (e) (i) zoning, building and other similar restrictions imposed by applicable Laws, and (ii) unrecorded easements, covenants, rights-of-way and other similar restrictions on the Leased Real Property none of which, individually or in the aggregate, materially impairs the continued use and operation of such Leased Real Property; and (f) minor imperfections of title not waived by Phase Forward that, in the aggregate, do not materially detract from the value or interfere with the use of any Assets of Lincoln and its Subsidiaries.

 

“ Person ” means an individual, corporation, limited liability company, partnership, trust, association, joint venture, unincorporated organization or entity of any kind or nature, or a Governmental Authority.

 

“ Phase Forward Indemnitees ” has the meaning set forth in Section 13.1.

 

“ Phase Forward Material Adverse Effect ” means any circumstance, occurrence of any event, or any change in or effect on Phase Forward and its Subsidiaries that, individually or when taken together with all other circumstances, events, changes in or effects on Phase Forward and its Subsidiaries, is (or would reasonably be expected to be) materially adverse to (i) the condition (financial or otherwise), results of operations, business, Assets or affairs of Phase Forward and its Subsidiaries, taken as a whole, or (ii) the ability of Phase Forward to perform its obligations under this Agreement or to consummate the Merger or the other transactions contemplated by this Agreement; provided, that, “Phase Forward Material Adverse Effect” shall not be deemed to include the impact of (1) any changes in Laws of general applicability or interpretations thereof by courts or Governmental Authorities, (2) any changes in GAAP, (3) any changes affecting the general economic conditions in the United States, which changes do not disproportionately affect Phase Forward and its Subsidiaries in any material respect, (4) any changes in the financial, banking or capital markets, Tax rates or the implementation of new Taxes, which changes do not disproportionately affect Phase Forward and its Subsidiaries in any material respect; (5) any event to which Lincoln has

 

** Confidential Treatment Requested.

 

7

 

provided written consent hereunder; or (6) the execution, delivery or performance of this Agreement (including any announcement relating to this Agreement or the fact that Phase Forward is acquiring Lincoln).

 

“ Post-Closing Tax Period” :  See Exhibit 7.18 .

 

“ Pre-Closing Tax Period” :  See Exhibit 7.18 .

 

“ Proceeding ” has the meaning set forth in Section 7.16.

 

“ Pro Rata Share ” means, (a) with respect to each share of Lincoln Common Stock or each Lincoln Right, the share of the Merger Consideration or each portion thereof allocable to such share of Lincoln Common Stock or Lincoln Right as set forth on the Merger Consideration Spreadsheet, and (b) with respect to each Lincoln Securityholder, such holder’s share of the Merger Consideration or each portion thereof as set forth on the Merger Consideration Spreadsheet.

 

“ Publicly Available Software ” has the meaning set forth in Section 7.9(g).

 

“ Purchase Documents ” means this Agreement and all other agreements, certificates, assignments, instruments or documents at any time executed and delivered by any Person pursuant to this Agreement.

 

“ SEC ” means the Unites States Securities and Exchange Commission.

 

“ Securities Act ” means the Securities Act of 1933, as amended.

 

“ Securityholder Account ” means the bank account designated by the Securityholder Representative into which Phase Forward or the Escrow Agent shall make all payments due hereunder to the Lincoln Securityholders or to the Securityholder Representative for further distribution to the Lincoln Securityholders.

 

“ Securityholder Representative ” means Lincoln SR, Inc. or any successor thereto appointed in accordance with the provisions of Section 14.3.

 

“ Shareholder Approval ” means the adoption and approval of this Agreement and the transactions contemplated hereby by the Lincoln Shareholders by written consent executed within two (2) business days after execution of this Agreement, and otherwise in accordance with the MBCA and the Articles of Organization and bylaws of Lincoln as then in effect.

 

“ Software ” or “ software ” means any computer programming code consisting of instructions or statements in a form readable by individuals (source code) or machines (object code), and related documentation and supporting materials therefor, in any form or medium, including electronic media.

 

“ Special Limit Losses ” has the meaning set forth in Section 13.3(a).

 

“ Special Limit Losses Maximum Amount ” has the meaning set forth in Section 13.3(b).

 

** Confidential Treatment Requested.

 

8

 

“ Straddle Period ”:  See Exhibit 7.18 .

 

“ Subsidiary ” of any Person means a corporation, partnership or other entity of which more than 50% of the outstanding capital stock, partnership interests, other equity interests or ordinary voting power is owned, directly or indirectly, by such Person.

 

“ Surviving Corporation ” has the meaning set forth in Section 2.1.

 

“ Tax ” and “ Taxes ”:  See Exhibit 7.18 .

 

“ Tax Authority ”:  See Exhibit 7.18 .

 

“ Tax Claim ” and “ Tax Claims ”:  See Exhibit 7.18 .

 

“ Tax Return ” and “ Tax Returns ”:  See Exhibit 7.18 .

 

“ Transaction Fees ” means all of Lincoln’s expenses and fees associated with or incurred in connection with this Agreement and the Merger and the other transactions contemplated by this Agreement (including, without limitation, all legal, investment banking and other professional fees and expenses and any similar professional fees paid or incurred in connection with any appraisal demand or Proceeding).

 

“ Treasury Regulation ” and “ Treasury Regulations ”:  See Exhibit 7.18 .

 

“ Working Capital Determination Materials ” has the meaning set forth in Section 4.6(f).

 

“ Working Capital Objection ” has the meaning set forth in Section 4.6(f).

 

Note that additional capitalized terms used herein are defined elsewhere in this Agreement or in certain of the Exhibits to this Agreement, including Exhibits 7.15 (Labor), 7.18 (Tax Matters) and 7.19 (Benefits).

 

ARTICLE 2

TRANSACTIONS AND TERMS OF MERGER

 

2.1                                  Merger .  Subject to the terms and conditions of this Agreement, at the Effective Time, Sub shall be merged with and into Lincoln in accordance with and with the effect provided in the MBCA.  Lincoln shall be the surviving corporation (the “ Surviving Corporation ”) resulting from the Merger and shall become a wholly owned subsidiary of Phase Forward and shall continue to be governed by the Laws of the Commonwealth of Massachusetts.  The Merger shall be consummated pursuant to the terms of this Agreement, which has been approved and adopted by the respective Boards of Directors of Phase Forward, Sub and Lincoln.  The parties to this Agreement intend that the Merger be treated for Tax purposes as the taxable purchase by Phase Forward of all of the outstanding shares of Lincoln Common Stock in exchange for the consideration described herein, pursuant to Section 1001 of the Code.

 

** Confidential Treatment Requested.

 

9

 

2.2                                  Time and Place of Closing .  The closing of the transactions contemplated hereby (the “ Closing ”) will take place at 9:00 A.M. on the second (2 ^nd ) business day after all conditions in Articles 9, 10 and 11 are satisfied or waived or at such other time as the parties, acting through their authorized officers, may mutually agree in writing.  The Closing shall be held at such location as may be mutually agreed upon by the parties.

 

2.3                                  Effective Time .  The Merger and other transactions contemplated by this Agreement shall become effective on the date and at the time the Articles of Merger (the “ Articles of Merger ”) reflecting the Merger shall have been duly filed with and become effective with the Secretary of State of the Commonwealth of Massachusetts (the “ Effective Time ”).  Subject to the terms and conditions of this Agreement, at the Closing the parties shall file the Articles of Merger with the Secretary of State for the Commonwealth of Massachusetts on the Closing Date.

 

ARTICLE 3

TERMS OF MERGER

 

3.1                                  Articles of Organization .  As of the Effective Time, the Articles of Organization of Lincoln shall be amended in a form reasonably acceptable to Phase Forward and Lincoln, and such Articles of Organization shall be the Articles of Organization of the Surviving Corporation, until thereafter amended as provided herein or by the MBCA.

 

3.2                                  Bylaws .  The Bylaws of Sub in effect immediately prior to the Effective Time shall be the Bylaws of the Surviving Corporation until duly amended or repealed.

 

3.3                                  Directors and Officers .  The directors of Sub in office immediately prior to the Effective Time, together with such additional persons as may thereafter be elected, shall serve as the directors of the Surviving Corporation from and after the Effective Time in accordance with the Bylaws of the Surviving Corporation.  The officers of Sub in office immediately prior to the Effective Time, together with such additional persons as may thereafter be elected, shall serve as the officers of the Surviving Corporation from and after the Effective Time in accordance with the Bylaws of the Surviving Corporation.

 

ARTICLE 4

MERGER CONSIDERATION; MANNER OF CONVERTING SHARES; WORKING
CAPITAL ADJUSTMENTS; ESCROW; EARN-OUT

 

4.1                                  Merger Consideration .  The aggregate consideration to be paid in the Merger in exchange for the Lincoln Common Stock and the Lincoln Rights (the “ Merger Consideration ”) shall have an aggregate value equal to (1) the Base Consideration, plus (2) the amount of any Earnout payable in accordance with Section 4.8 of this Agreement.

 

4.2                                  Conversion of Shares .  Subject to the provisions of this Article 4, at the Effective Time, by virtue of the Merger and without any action on the part of Phase Forward, Lincoln, Sub or the shareholders of any of the foregoing, the shares of the constituent corporations shall be converted as follows:

 

(a)                                   Each share of Sub capital stock issued and outstanding immediately prior to the Effective Time shall cease to be outstanding and shall be converted into one share of Surviving Corporation common stock.

 

** Confidential Treatment Requested.

 

10

 

(b)                                  Each share of Lincoln Common Stock, excluding shares held by Lincoln Shareholders who perfect their statutory appraisal rights as provided in Section 4.4, issued and outstanding immediately prior to the Effective Time shall cease to be outstanding and shall be converted into and exchanged for the right to receive its Pro Rata Share of the Merger Consideration.

 

4.3                                  Conversion of Lincoln Rights .  Each Lincoln Right outstanding immediately prior to the Effective Time which is then exercisable and not previously exercised shall be exchanged for the right to receive its Pro Rata Share of the Merger Consideration in excess of the exercise price thereof and shall thereafter be deemed cancelled as of the Effective Time in accordance with the terms of the Lincoln Rights.  Any other Lincoln Rights that are then outstanding shall be cancelled and Lincoln shall take all actions necessary or appropriate so that, as of the Effective Time and as a result of the Merger, no Lincoln Rights are outstanding.  Lincoln represents and warrants that a complete list of the Lincoln Rights (including the number thereof that will be vested on the Closing Date, including pursuant to any acceleration provisions) and the aggregate exercise prices thereof are listed on the Merger Consideration Spreadsheet.  Lincoln and the Securityholder Representative shall cause to be deducted and withheld from the Merger Consideration otherwise payable to the holder of each such Lincoln Right pursuant to this Section 4.3 such amounts as are required to be deducted and withheld with respect to the making of such payment under the Code or any other applicable state, local or foreign tax law.  Such withheld amounts shall be remitted to the applicable Governmental Authority and shall be treated for all purposes of this Agreement as having been paid to the holder of the Lincoln Right in respect of which such deduction and withholding was made.

 

4.4                                  Dissenting Shareholders .

 

(a)                                   After the Consenting Shareholders execute and deliver to Lincoln the Merger Consent, which, when so executed and delivered, approves and adopts this Agreement and the Merger, Lincoln shall, within one business day thereafter, mail to all of the Lincoln Shareholders other than the Consenting Shareholders the notices required under Part 13 of the MBCA.

 

(b)                                  Any holder of shares of Lincoln Common Stock who perfects such holder’s appraisal rights in accordance with and as contemplated by Part 13 of the MBCA shall not receive consideration pursuant to Section 4.2, but shall instead be entitled to receive from the Surviving Corporation the value of such shares in cash as determined pursuant to such provision of the MBCA; provided, that no such payment shall be made to any dissenting Lincoln Shareholder unless and until such dissenting Lincoln Shareholder has complied with the applicable provisions of the MBCA and surrendered to Lincoln the certificate or certificates representing the shares for which payment is being made.  In the event that a dissenting Lincoln Shareholder fails to perfect, or effectively withdraws or loses, such holder’s right to appraisal of and payment for such holder’s shares, Phase Forward shall issue and deliver the Merger Consideration to which such holder of shares of Lincoln Common Stock is entitled under this Article 4 (without interest) upon surrender by such holder of the certificate or certificates representing the shares of Lincoln Common Stock held by such holder.

 

(c)                                   Within one day prior to the Effective Time, Lincoln shall give Phase Forward notice of any demands received by Lincoln through such date for appraisal of shares of Lincoln Common Stock held by dissenting Lincoln Shareholders. 

 

** Confidential Treatment Requested.

 

11

 

Prior to Closing, Lincoln shall control all negotiations and proceedings with respect to such demands and from and after the Effective Time, the Securityholder Representative shall exercise such control, subject to Phase Forward’s reasonable review and approval with respect to such negotiations and proceedings, any such approval not to be unreasonably withheld or delayed.  Phase Forward shall promptly pay to any dissenting Lincoln Shareholder any and all amounts due and owing to such holder as a result of any settlement or final, non-appealable determination by a court of competent jurisdiction of the Commonwealth of Massachusetts with respect to such demands.  If, as a result of any such settlement or final, non-appealable determination by a court of competent jurisdiction of the Commonwealth of Massachusetts any Lincoln Shareholder is entitled to receive as payment for its Lincoln Common Stock an amount per share that exceeds the value of the Merger Consideration (valued in accordance with this Agreement) which such Lincoln Shareholder would have received in the Merger in accordance with the terms of this Agreement (the aggregate amount of such excess for all dissenting Lincoln Shareholders, the “ Appraisal Reduction Amount ”), then the Appraisal Reduction Amount shall be subject to the indemnification provisions of Section 13.

 

4.5                                  Escrow .    At the Closing, Phase Forward, the Securityholder Representative and Silicon Valley Bank (the “ Escrow Agent ”) shall enter into an escrow agreement, substantially in the form of Exhibit 4.5 hereto (the “ Escrow Agreement ”), pursuant to which Phase Forward shall deposit the Escrow Amount.

 

4.6                                  Working Capital Adjustment and Other Calculations .

 

(a)                                   Exhibit 4.6 contains (1) a consolidated balance sheet of Lincoln and its Subsidiaries as of June 30, 2005 prepared by Lincoln in good faith and in accordance with the principles, policies, estimates and procedures set forth in Exhibit 7.5 and (2) Lincoln’s good faith estimate as of the same date of the Net Working Capital of Lincoln.  The Net Working Capital of Lincoln identifies the amount of the Transaction Fees to be paid by Lincoln that will not be paid prior to the Effective Time.  In addition, Lincoln has identified the amount of the Transaction Fees and other liabilities of Lincoln, if any, that will be paid by the Lincoln Securityholders.

 

(b)                                  Within three days before the Closing Date, Lincoln will deliver to Phase Forward (1) a revised version of Exhibit 4.6 prepared by Lincoln in good faith and in accordance with the principles, policies, estimates and procedures set forth in Exhibit 7.5 , reflecting an estimated consolidated balance sheet of Lincoln and its Subsidiaries as of the Effective Time and (2) Lincoln’s good faith estimate as of the Effective Time of the Net Working Capital of Lincoln (the “ Estimated Net Working Capital ”).  The Estimated Net Working Capital shall identify the amount of the Transaction Fees to be paid by Lincoln that will not be paid prior to the Effective Time.  In addition, Lincoln shall identify the amount of the Transaction Fees and other liabilities of Lincoln, if any, that will be paid by the Lincoln Securityholders.

 

(c)                                   If the Net Working Capital Target exceeds the Estimated Net Working Capital, then the Base Consideration will be reduced by an amount (the “ Closing Adjustment ”) equal to such excess (subject to later adjustment, if appropriate, in accordance with Section 4.6(e)).

 

** Confidential Treatment Requested.

 

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(d)                                  Within 90 days after the Closing Date, Phase Forward, at its expense, shall prepare and deliver to the Securityholder Representative a copy of an unaudited consolidated balance sheet of Lincoln and its Subsidiaries as of the Effective Time (the “ Closing Balance Sheet ”). The Closing Balance Sheet shall be prepared in accordance with the principles, policies, estimates and procedures set forth in Exhibit 7.5 and shall include a schedule (the “ Closing Schedule ”) showing the difference , if any , between (i) the Net Working Capital Target and (ii) the actual amount of Net Working Capital reflected on the Closing Balance Sheet (the “ Final Net Working Capital ”).  The Final Net Working Capital reflected on the Closing Balance Sheet and the Closing Schedule delivered to the Securityholder Representative shall be conclusive and binding upon the parties unless objected to in accordance with Section 4.6(f).

 

(e)                                   If the amount equal to (1) the Final Net Working Capital (as finally determined pursuant to Section 4.6(d) or, if objected to, pursuant to Sections 4.6(f) and (g)) minus (2) the Net Working Capital Target, plus (3) the Closing Adjustment, if any, is:

 

(i)                                      less than zero, then Phase Forward shall be entitled to recoup in accordance with Section 13.4, against the Escrow Amount or any Earnout payable in accordance with Section 4.8 an amount in cash equal to such shortfall.

 

(ii)                                   greater than zero, then Phase Forward shall pay to the Securityholder Representative for further distribution to the Lincoln Securityholders an amount equal to such excess, such payment to be made within five (5) business days following such final determination.

 

(f)                                     The Final Net Working Capital reflected on the Closing Balance Sheet and the Closing Schedule delivered to the Securityholder Representative shall be conclusive and binding upon the parties unless the Securityholder Representative, within 20 days from the date of receipt of the Closing Balance Sheet and the Closing Schedule, delivers a written objection to Phase Forward specifying in reasonable detail the basis for the objection, and a computation of the Final Net Working Capital asserted by the Securityholder Representative (the “ Working Capital Objection ”).  The Securityholder Representative, and agents and representatives of the Securityholder Representative, shall at all times have a reasonable opportunity to review the working papers relating to the preparation of the Closing Balance Sheet and shall have reasonable access to employees or accountants of Phase Forward or the Surviving Corporation who prepared or assisted in the preparation of the Closing Balance Sheet.  Upon Phase Forward’s receipt of any Working Capital Objection, Phase Forward and the Securityholder Representative shall negotiate in good faith to resolve the Working Capital Objection, but if the Working Capital Objection cannot be resolved by such negotiation within 15 days after Phase Forward’s receipt of the Working Capital Objection, Phase Forward and the Securityholder Representative shall cause the Closing Balance Sheet, Closing Schedule, the Working Capital Objection, and all work papers related thereto (collectively, the “ Working Capital Determination Materials ”), to be submitted to Carlin, Charron & Rosen, LLP, or if such firm is unwilling or unable to serve hereunder, another mutually agreeable independent public auditing firm who does not then audit and has not within the past three years audited the financial statements of

 

** Confidential Treatment Requested.

 

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Lincoln or Phase Forward and is not then and has not within the past three years provided other material services to Lincoln or Phase Forward (the “ Accounting Expert ”).

 

(g)                                  The Accounting Expert shall review the Working Capital Determination Materials and shall determine the Final Net Working Capital, which may not be outside the range of value defined by the Final Net Working Capital reflected on the Closing Balance Sheet and the Final Net Working Capital asserted in the Working Capital Objection.  The Accounting Expert shall notify the parties in writing of its determination within 30 days following the receipt of the Working Capital Determination Materials, which determination shall be final and conclusive.  No such determinations shall result in adjustments to any items not in dispute and no adjustments shall be greater than claimed in any dispute by the Securityholder Representative.  In acting hereunder, the Accounting Expert shall act as experts and not as arbiters.   Phase Forward shall be entitled to offset one-half of the fees and expenses of the Accounting Expert from the Escrow Amount.

 

4.7                                  Merger Consideration Spreadsheet .  At least three business days prior to the Closing Date, Lincoln shall deliver to Phase Forward the Merger Consideration Spreadsheet, which shall set forth the estimated Pro Rata Share of the Merger Consideration (including consideration to be issued after the Effective Time) that would be paid to each Lincoln Securityholder.  At Closing, Lincoln shall deliver to Phase Forward the Merger Consideration Spreadsheet setting forth the final calculation of the Pro Rata Share of each Lincoln Securityholder, which shall be subject to Phase Forward’s reasonable review and approval.  Notwithstanding such review and approval by Phase Forward, Lincoln shall be exclusively responsible and liable for all information contained in the Merger Consideration Spreadsheet.

 

4.8                                  Earnout .

 

(a)                                   As part of the Merger Consideration issued by Phase Forward in the Merger, in addition to the Base Consideration, Phase Forward shall make the following payment(s) (the “ Earnout ”) (but only to the extent such payments become due and payable in accordance with the terms below, computed in each case in accordance with Exhibit 4.8(a) ) to the Securityholder Representative within 120 days following the applicable calendar year end for further distribution to the Lincoln Securityholders in accordance with Sections 4.2 and 4.3; provided that the aggregate Earnout payments that may become payable by Phase Forward under this Section 4.8 shall not exceed $6.0 million:

 

(i)  an amount equal to the product of (x) * multiplied by (y) 2005 Earnout Revenue, up to a maximum payment of $2.0 million; and

 

(ii)  an amount equal to the product of (x) * multiplied by (y) 2006 Earnout Revenue, up to a maximum payment of $4.0 million .

 

(b)                                  The parties acknowledge and agree that the contingent right to Earnout consideration payable under this Section 4.8 is an integral part of the Merger Consideration.

 

** Confidential Treatment Requested.

 

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(c)                                   Notwithstanding any other provision herein, the contingent right to the Earnout payable under this Section 4.8 is not assignable or transferable, except by operation of law; provided, however, that nothing in this Section 4.8(c) shall prohibit or be deemed to prohibit any assignment or transfer of any interest in the contingent right to receive any portion of any Earnout payable hereunder by any Lincoln Securityholder to any other Lincoln Securityholder (provided written notice thereof is provided to Phase Forward).

 

(d)                                  During the Earnout Period, the business and operations of Lincoln shall be conducted in accordance with the provisions set forth in Exhibit 4.8(d) .

 

(e)                                   On or before each of April 30, 2006 and April 30, 2007, Phase Forward, at its expense, shall prepare and deliver to the Securityholder Representative a report setting forth the determination of the Earnout payment due with respect to the prior calendar year (an “ Earnout Report ”), together with the Earnout payment shown to be due thereon.  Each Earnout Report shall be computed in accordance with Exhibit 4.8(a). The Earnout Report delivered to the Securityholder Representative shall be conclusive and binding upon the parties unless the Securityholder Representative, within 30 days from the date of receipt of the Earnout Report, delivers a written objection to Phase Forward specifying in reasonable detail the basis for the objection, and a computation of the Earnout payment asserted by the Securityholder Representative (an “ Earnout Objection ”).  The Securityholder Representative, and agents and representatives of the Securityholder Representative, shall upon two (2) business days’ advance notice, have a reasonable opportunity to review the working papers relating to the preparation of any Earnout Report and shall have reasonable access to employees or accountants of Phase Forward or the Surviving Corporation who prepared or assisted in the preparation of any Earnout Report.  Upon Phase Forward’s receipt of any Earnout Objection, Phase Forward and the Securityholder Representative shall negotiate in good faith to resolve the Earnout Objection, but if the Earnout Objection cannot be resolved by such negotiation within 15 days after Phase Forward’s receipt of the Earnout Objection, Phase Forward and the Securityholder Representative shall cause the Earnout Report, the Earnout Objection, and all work papers related thereto (collectively, the “ Earnout Determination Materials ”), to be submitted to the Accounting Expert.  Phase Forward shall immediately pay to the Securityholder Representative any amount which is no longer in dispute following such 15 day period.

 

(f)                                     The Accounting Expert shall review the Earnout Determination Materials and shall determine the Earnout payment to be made with respect to the calendar year which is the subject of such Earnout Report, which may not be outside the range of value defined by the Earnout payment reflected on the Earnout Report and the Earnout payment asserted in the Earnout Objection.  The Accounting Expert shall notify the parties in writing of its determination within 30 days following the receipt of the Earnout Determination Materials, which determination shall be final and conclusive. No such determinations shall result in adjustments to any items not in dispute and no adjustments shall be greater than claimed in any dispute by the Securityholder Representative.  In acting hereunder, the Accounting Expert shall act as experts and not as arbiters.  Phase Forward shall be entitled to offset one-half of the fees and expenses of the Accounting Expert from the Earnout payment which is the subject of the Earnout Report, or from the Escrow Amount.

 

** Confidential Treatment Requested.

 

15

 

ARTICLE 5

EXCHANGE OF SHARES

 

5.1                                  Exchange Procedures .

 

(a)                                   At the Closing, Lincoln shall deliver (i) a certificate or certificates which represented shares of Lincoln Common Stock immediately prior to the Effective Time (the “ Certificates ”) held by the Lincoln Shareholders (other than shares as to which statutory appraisal rights have been perfected as provided in Section 4.4) and (ii) a letter of transmittal substantially in the form attached hereto as Exhibit 5.1 (the “ Letter of Transmittal ”) (which shall specify that delivery shall be effected, and risk of loss and title to such Certificates shall pass, only upon proper delivery of such Certificates to Phase Forward) duly executed by each such Lincoln Shareholder.

 

(b)                                  At the Closing, Phase Forward will pay to the Securityholder Representative for further distribution to the Lincoln Securityholders in accordance with Sections 4.2 and 4.3, the amount of the Closing Date Consideration.  The Securityholder Representative shall not deliver the consideration to which any former holder of Lincoln Common Stock is entitled as a result of the Merger until such holder surrenders such holder’s Certificate or Certificates for exchange as provided in this Section 5.1.

 

(c)                                   The Certificate or Certificates of Lincoln Common Stock delivered to Phase Forward shall be duly endorsed as Phase Forward may reasonably require.  If any Certificate shall have been lost, stolen, mislaid or destroyed, the holder thereof shall deliver in lieu thereof (i) an affidavit of that fact from the holder claiming such Certificate to be lost, mislaid, stolen or destroyed, (ii) such indemnity as Phase Forward may reasonably require and (iii) any other documents reasonably necessary to evidence and effect the bona fide exchange thereof.

 

(e)                                   Each of Phase Forward and the Surviving Corporation shall be entitled to deduct and withhold from the Merger Consideration otherwise payable pursuant to this Agreement to the Securityholder Representative or any holder of shares of Lincoln Common Stock or Lincoln Rights such amounts, if any, as it is required to deduct and withhold with respect to the making of such payment under the Code or any provision of state, local or foreign Tax Law, provided, however, that concurrently with such deduction and withholding Phase Forward and the Surviving Corporation shall pay all amounts so deducted or withheld to the appropriate Tax Authority.  Any amounts so withheld shall be subject to the reasonable review and approval of the Securityholder Representative.  To the extent that any amounts are so withheld by Phase Forward and the Surviving Corporation, as the case may be, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to such Person in respect of which such deduction and withholding was made by Phase Forward or the Surviving Corporation, as the case may be.

 

5.2                                  Rights of Former Lincoln Shareholders .  Until surrendered for exchange in accordance with the provisions of Section 5.1, each Certificate theretofore representing shares of Lincoln Common Stock (other than shares as to which statutory appraisal rights have been perfected as provided in Section 4.4) shall from and after the

 

** Confidential Treatment Requested.

 

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Effective Time represent for all purposes only the right to receive the Merger Consideration provided in Section 4.2 in exchange therefor.

 

ARTICLE 6

REPRESENTATIONS AND WARRANTIES OF PHASE FORWARD

 

Phase Forward represents and warrants to Lincoln as of the date hereof that:

 

6.1                                  Organization .  Phase Forward is a corporation duly organized, validly existing and in good standing under Delaware law.  Sub is a corporation duly organized, validly existing and in good standing under Massachusetts law.  Phase Forward has heretofore delivered to Lincoln true and complete copies of the articles of organization and bylaws of Sub as currently in effect.  Sub is not in violation of any provisions of such documents, nor is Phase Forward in violation of its Certificate of Incorporation or bylaws as currently in effect.  At or prior to the Effective Time, Sub shall not have conducted any business and shall not have any material Assets or Liabilities.

 

6.2                                  Authority; Enforceability; No Violation .  Each of Phase Forward and Sub has the corporate power, capacity and authority to execute, deliver and perform its obligations under all Purchase Documents to which it is a party.  Execution, delivery and performance by each of Phase Forward and Sub of all Purchase Documents to which it is a party have been authorized by all necessary corporate action on the part of Phase Forward and Sub.  All such Purchase Documents constitute legal, valid and binding obligations of Phase Forward and Sub, each enforceable in accordance with their terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting enforcement of creditors’ rights or by principles of equity (collectively, the “ Enforceability Exceptions ”).  Execution, delivery and performance by each of Phase Forward and Sub of each of the Purchase Documents, and consummation of transactions contemplated by this Agreement, including the Merger, do not conflict with any of Phase Forward’s or Sub’s Certificate of Incorporation or Articles of Organization or bylaws, violate any Law, or breach any Contract to which Phase Forward or Sub is a party or by which the Assets of Phase Forward or Sub are bound.

 

6.3                                  Governmental Consents/Filings .  Other than the filing of the Articles of Merger with the Secretary of State of the Commonwealth of Massachusetts, no Consent of or filing with any Governmental Authority is required in connection with execution, delivery or performance of this Agreement by Phase Forward or Sub or the consummation of the transaction contemplated by this Agreement, including the Merger.

 

6.4                                  Brokers and Finders .  Neither Phase Forward nor Sub, nor any of their respective officers, directors, employees or other Affiliates, has employed any broker or finder or incurred any liability for any brokerage fees, commissions or finders’ fees in connection with the Merger or the other transactions contemplated by this Agreement.

 

ARTICLE 7

REPRESENTATIONS AND WARRANTIES OF LINCOLN

 

Lincoln represents and warrants to Phase Forward as of the date hereof that:

 

** Confidential Treatment Requested.

 

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7.1                                  Organization; Capitalization .

 

(a)                                   Lincoln is a corporation duly organized, validly existing and in good corporate standing under Massachusetts Law.  Each of Lincoln’s Subsidiaries is duly organized, validly existing and in good standing under the Law of its jurisdiction of incorporation.  Lincoln and each of its Subsidiaries is duly qualified to do business and is in good standing as a foreign corporation or other business entity in all jurisdictions listed on Schedule 7.1 , which are all of the jurisdictions where Lincoln and each of its Subsidiaries is required to be qualified, except where the failure to so qualify would not result in a Lincoln Material Adverse Effect.  Lincoln has delivered a complete and correct copy of the articles of organization and bylaws and other charter and organizational documents of Lincoln and each of its Subsidiaries and neither Lincoln nor any of its Subsidiaries is in violation of any provisions of such documents.  The minute books of Lincoln and each of its Subsidiaries contain complete and correct records of all actions of the Board of Directors (or other governing body) and Shareholders (or other equity holders) of Lincoln and each of its Subsidiaries since its respective formation date.  Lincoln’s stock transfer ledger accurately reflects record ownership of all capital stock of Lincoln.  Complete and accurate copies of such minute books and stock transfer ledger have been provided or made available to Phase Forward.

 

(b)                                  Except as set forth on Schedule 7.1(b) , Lincoln has not had, and does not have, any Subsidiaries, and, has not owned, and does not own, directly or indirectly, of record or beneficially, any equity or voting interest in any other Person.     Neither Lincoln nor any of its Subsidiaries has ever engaged in any securitization transactions or “off-balance sheet arrangements” (as defined in Item 303(a)(4)(ii) of Regulation S-K of the SEC).

 

(c)                                   The authorized capital stock of Lincoln consists of 1,500,000 shares of common stock, par value $0.01 per share, of which 740,750 shares are issued and outstanding as of the date hereof.  All issued and outstanding shares of capital stock of Lincoln are duly authorized, validly issued, fully paid and non-assessable, and were issued pursuant to a valid exemption from registration under the Securities Act of 1933, as amended, and in compliance with all applicable securities Laws.  Except as set forth on Schedule 7.1(c) , there are no other shares of capital stock or Lincoln Rights outstanding and Lincoln is not obligated to issue additional shares of its capital stock or any Lincoln Rights.  Except as set forth on Schedule 7.1(c) , no Person has rights to demand or participate in registration of shares of capital stock of Lincoln under the Securities Act of 1933, as amended.  No capital stock of Lincoln has been issued in violation of any preemptive rights of the current or past Lincoln Securityholders.

 

(d)                                  The authorized and outstanding equity interests in each of Lincoln’s Subsidiaries are as set forth on Schedule 7.1(d) .  All of such outstanding equity interests are duly authorized, validly issued, fully paid and non-assessable.  Except as set forth on Schedule 7.1(d) , there are no other equity interests or securities convertible into or exercisable for equity interests in any Subsidiary of Lincoln.

 

** Confidential Treatment Requested.

 

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7.2                                  Authority; Enforceability; No Violation .

 

(a)                                   Lincoln has the corporate power, capacity and authority to execute, deliver and, subject to the adoption and approval of this Agreement and the Merger by the Lincoln Shareholders, perform its obligations under all Purchase Documents to which it is a party. Execution, delivery and performance by Lincoln of all Purchase Documents to which it is a party have been authorized by all necessary corporate action, subject to the adoption and approval of this Agreement and the Merger by the Lincoln Shareholders.  As of the Closing Date, the Purchase Documents to which Lincoln is a party will have been duly executed and delivered by Lincoln and constitute legal, valid and binding obligations of Lincoln, enforceable in accordance with their respective terms, subject to the Enforceability Exceptions.

 

(b)                                  Execution, delivery and, subject to the adoption and approval of this Agreement and the Merger by the Lincoln Shareholders, performance by Lincoln of each of the Purchase Documents to which it is a party, and consummation of transactions contemplated by this Agreement, including the Merger, do not (i) conflict with Lincoln’s articles of organization or bylaws, or the charter or other organizational documents of any Lincoln Subsidiary, (ii) violate any Law, or (iii) except as described on Schedule 7.2 , breach or give rise to any right (whether subject to notice or lapse of time or both) of acceleration, termination, cancellation, Consent, imposition of fees or penalties under any material Contract or Permit to which Lincoln or any of its Subsidiaries is a party or by which Lincoln’s or any of its Subsidiaries’ Assets are bound.

 

(c)                                   The Board of Directors, at a meeting duly noticed and convened, has unanimously adopted resolutions approving and adopting this Agreement and the other Purchase Documents and declared this Agreement advisable.  These resolutions have not been amended, rescinded or repealed.  The Board of Directors has recommended to the Lincoln Shareholders that they vote to approve and adopt this Agreement and the Merger.

 

7.3                                  Governmental Consents/Filings .  Other than the filing of the Articles of Merger with the Secretary of State of the Commonwealth of Massachusetts, no Consent of or filing with any Governmental Authority is required in connection with execution, delivery and performance of this Agreement by Lincoln or the consummation of the transactions contemplated by this Agreement, including the Merger.

 

7.4                                  Ownership and Sufficiency of Assets .  Except as set forth on Schedule 7.4 , Lincoln and each Subsidiary thereof owns all of its Assets free and clear of Liens other than Permitted Liens. All tangible Assets of Lincoln and its Subsidiaries are in good operating condition, subject to normal wear and tear.  The Assets of Lincoln and its Subsidiaries include all Assets required to operate the business of Lincoln and its Subsidiaries as presently conducted.  All Assets that are material to the business of Lincoln and its Subsidiaries held under leases, subleases or licenses by Lincoln and its Subsidiaries are held under valid Contracts enforceable in accordance with their respective terms, subject to the Enforceability Exceptions.  To the Knowledge of Lincoln, the other parties to such Contracts are not in breach of their obligations thereunder.

 

** Confidential Treatment Requested.

 

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7.5                                  Financial Information .

 

(a)                                   The Lincoln Financial Statements, complete and correct copies of which are attached as Schedule 7.5 , except as set forth in Schedule 7.5(a) , (i) were prepared in accordance with the