EXHIBIT 2
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
ANSWERTHINK CONSULTING GROUP, INC.,
THINK NEW IDEAS, INC.
AND
DARWIN ACQUISITION CORP.
DATED AS OF JUNE 24, 1999
TABLE OF CONTENTS
Page
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ARTICLE I. THE MERGER
SECTION 1.1. The Merger........................................................ 2
SECTION 1.2. Effective Time.....................................................2
SECTION 1.3. Effect of the Merger...............................................2
SECTION 1.4. Certificate of Incorporation; Bylaws...............................3
SECTION 1.5. Directors and Officers.............................................3
SECTION 1.6. Closing........................................................... 3
SECTION 1.7. Subsequent Actions.................................................3
SECTION 1.8. Tax and Accounting Treatment of the Merger.........................4
ARTICLE II. CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 2.1. Conversion of Securities...........................................4
SECTION 2.2. Exchange of Certificates...........................................5
SECTION 2.3. Assumption of Obligations to Issue Stock...........................8
SECTION 2.4. Stock Transfer Books..............................................12
SECTION 2.5. Certain Adjustments...............................................12
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 3.1. Organization and Qualification; Subsidiaries......................12
SECTION 3.2. Certificate of Incorporation and Bylaws...........................13
SECTION 3.3. Capitalization....................................................13
SECTION 3.4. Authority........................................................ 15
SECTION 3.5. No Conflict; Required Filings and Consents........................15
SECTION 3.6. SEC Filings; Financial Statements.................................16
SECTION 3.7. No Undisclosed Liabilities........................................17
SECTION 3.8. Absence of Certain Changes or Events..............................17
SECTION 3.9. Absence of Litigation.............................................17
SECTION 3.10. Licenses and Permits; Compliance with Laws.......................18
SECTION 3.11. Unlawful Payments................................................18
SECTION 3.12. Taxes........................................................... 18
SECTION 3.13. Intellectual Property............................................19
SECTION 3.14. Material Contracts...............................................20
SECTION 3.15. Employee Benefit Plans...........................................21
SECTION 3.16. Properties; Assets...............................................24
SECTION 3.17. Labor Relations..................................................24
SECTION 3.18. Environmental Matters............................................24
SECTION 3.19. Insurance....................................................... 25
SECTION 3.20. Board Approval; Vote Required....................................25
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SECTION 3.21. Opinion of Financial Advisor.....................................25
SECTION 3.22. Brokers..........................................................25
SECTION 3.23. Takeover Provisions Inapplicable.................................26
SECTION 3.24. Pooling; Tax Matters.............................................26
SECTION 3.25. Registration Statement; Proxy Statement/Prospectus...............26
SECTION 3.26. Disclosure.......................................................27
ARTICLE IV. REPRESENTATIONS AND WARRANTIES
OF ACQUIROR AND MERGER SUB
SECTION 4.1. Organization and Qualification....................................27
SECTION 4.2. Certificate of Incorporation and Bylaws...........................27
SECTION 4.3. Capitalization....................................................28
SECTION 4.4. Authority........................................................ 28
SECTION 4.5. No Conflict; Required Filings and Consents........................28
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF ACQUIROR
SECTION 5.1. Organization and Qualification; Subsidiaries......................29
SECTION 5.2. Certificate of Incorporation and Bylaws...........................30
SECTION 5.3. Capitalization....................................................30
SECTION 5.4. Authority........................................................ 31
SECTION 5.5. No Conflict; Required Filings and Consents........................31
SECTION 5.6. SEC Filings; Financial Statements.................................32
SECTION 5.7. No Undisclosed Liabilities........................................33
SECTION 5.8. Absence of Certain Changes or Events..............................33
SECTION 5.9. Absence of Litigation.............................................33
SECTION 5.10. Licenses and Permits; Compliance with Laws.......................34
SECTION 5.11. Unlawful Payments................................................34
SECTION 5.12. Taxes............................................................34
SECTION 5.13. Intellectual Property............................................35
SECTION 5.14. Material Contracts...............................................36
SECTION 5.15. Employee Benefit Plans...........................................36
SECTION 5.16. Labor Relations..................................................38
SECTION 5.17. Board Approval; Vote Required....................................38
SECTION 5.18. Opinion of Financial Advisor.....................................38
SECTION 5.19. Brokers......................................................... 38
SECTION 5.20. Pooling; Tax Matters.............................................38
SECTION 5.21. Registration Statement; Proxy Statement/Prospectus...............39
SECTION 5.22. Environmental Matters............................................39
SECTION 5.23. Disclosure...................................................... 40
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ARTICLE VI. COVENANTS
SECTION 6.1. Affirmative Covenants of the Company..............................40
SECTION 6.2. Negative Covenants of the Company.................................40
SECTION 6.3. Affirmative Covenants of Acquiror.................................44
SECTION 6.4. Negative Covenants of Acquiror....................................44
ARTICLE VII. ADDITIONAL AGREEMENTS
SECTION 7.1. Access and Information............................................45
SECTION 7.2. Confidentiality...................................................46
SECTION 7.3. Joint Proxy Statement and Registration Statement;
Stockholders Meetings...........................................46
SECTION 7.4. HSR Act Matters...................................................48
SECTION 7.5. Public Announcements..............................................48
SECTION 7.6. Indemnification...................................................49
SECTION 7.7. Further Action; Commercially Reasonable Efforts...................50
SECTION 7.8. No Solicitation...................................................51
SECTION 7.9. Nasdaq Listing....................................................52
SECTION 7.10. Blue Sky........................................................ 52
SECTION 7.11. Affiliates.......................................................53
SECTION 7.12. Event Notices....................................................53
SECTION 7.13. Option Agreement.................................................54
SECTION 7.14. Tax Treatment....................................................54
SECTION 7.15. Pooling of Interests.............................................54
SECTION 7.16. Merger Sub.......................................................55
SECTION 7.17. Board of Directors of Acquiror..................................55
SECTION 7.18. Publishing Financial Results.....................................55
ARTICLE VIII. CLOSING CONDITIONS
SECTION 8.1. Conditions to Obligations of the Parties to Effect the Merger.....55
SECTION 8.2. Additional Conditions to Obligations of Acquiror and Merger Sub...57
SECTION 8.3. Additional Conditions to Obligations of the Company...............59
ARTICLE IX. TERMINATION, AMENDMENT AND WAIVER
SECTION 9.1. Termination.......................................................59
SECTION 9.2. Effect of Termination.............................................61
SECTION 9.3. Amendment........................................................ 62
SECTION 9.4. Extension; Waiver.................................................62
SECTION 9.5 Transaction Fees, Expenses and Other Payments......................62
SECTION 9.6 Termination Fees...................................................63
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ARTICLE X. GENERAL PROVISIONS
SECTION 10.1 Effectiveness of Representations, Warranties and Agreements......64
SECTION 10.2. Notices......................................................... 64
SECTION 10.3. Certain Definitions..............................................65
SECTION 10.4. Headings........................................................ 69
SECTION 10.5. Severability.....................................................69
SECTION 10.6. Entire Agreement.................................................70
SECTION 10.7. Specific Performance.............................................70
SECTION 10.8. Assignment.......................................................70
SECTION 10.9. Third Party Beneficiaries........................................70
SECTION 10.10. Governing Law...................................................70
SECTION 10.11. Counterparts....................................................71
EXHIBITS
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Exhibit A Company Affiliate Agreement
Exhibit B Acquiror Affiliate Agreement
SCHEDULES
---------
Schedule 1.5 Officers and Directors of Surviving Corporation
Schedule 3.1 Subsidiaries and Ownership Interests of the Company
Schedule 3.3 Capitalization of the Company
Schedule 3.5 Required Filings and Consents
Schedule 3.9 Litigation
Schedule 3.10 Licenses and Permits
Schedule 3.12 Taxes
Schedule 3.13 Company Intellectual Property
Schedule 3.14 Material Contracts
Schedule 3.15 Employee Benefit Plans
Schedule 3.19 Insurance
Schedule 5.1 Subsidiaries and Ownership Interests of Acquiror
Schedule 5.3 Capitalization of Acquiror
Schedule 5.5 Required Filings and Consents
Schedule 5.9 Litigation
Schedule 5.10 Licenses and Permits
Schedule 5.12 Taxes
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Schedule 5.13 Acquiror Intellectual Property
Schedule 5.14 Material Contracts
Schedule 5.15 Employee Benefit Plans
Schedule 6.2 Negative Covenants of the Company
Schedule 6.2(a) Directors, Officers and Key Employees of the Company
Schedule 7.11 Affiliates of the Company and Acquiror
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INDEX OF DEFINED TERMS
Section
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Acquiror.......................................................... PREAMBLE
Acquiror Benefit Plans............................................ 5.15(a)
Acquiror Common Stock............................................. RECITALS
Acquiror Commonly Controlled Entity............................... 5.15(a)
Acquiror ERISA Plan............................................... 5.15(b)
Acquiror Financial Statements..................................... 5.6(b)
Acquiror Intellectual Property.................................... 5.13(a)
Acquiror Material Contracts....................................... 5.14
Acquiror Permits.................................................. 5.10
Acquiror Preferred Stock.......................................... 5.3(a)
Acquiror Principal Holders........................................ RECITALS
Acquiror SEC Reports.............................................. 5.6(a)
Acquiror Stock Option Plan........................................ 5.3(a)
Acquiror Stock Purchase Plan...................................... 5.3(a)
Acquiror Stockholder Approval..................................... 5.4
Acquiror Stockholders Meeting..................................... 7.3(c)
Acquiror Subsidiary and Acquiror Subsidiaries..................... 5.1
Acquiror Voting Agreement......................................... RECITALS
Acquisition Proposal.............................................. 10.3
Affiliate......................................................... 10.3
Affiliate Agreement............................................... 2.2(c)
Agreement......................................................... PREAMBLE
beneficial owner, beneficial ownership or beneficially own........ 10.3
benefit liabilities............................................... 3.15(c)
Benefit Plans..................................................... 3.15(a)
Business Day...................................................... 10.3
Certificate and Certificates...................................... 2.1(a)
Certificate of Merger............................................. 1.2
Claim............................................................. 7.6(b)
Closing........................................................... 1.6
Closing Date...................................................... 1.6
COBRA............................................................. 3.15(g); 5.15(e)
Code.............................................................. RECITALS
Commonwealth Associates Warrants.................................. 10.3
Company........................................................... PREAMBLE
Company Benefit Plans............................................. 3.15(a)
Company Common Stock.............................................. RECITALS
Company Commonly Controlled Entity................................ 3.15(a)
Company ERISA Plan................................................ 3.15(a)
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Company Financial Statements...................................... 3.6(b)
Company Intellectual Property..................................... 3.13(a)
Company Material Contracts........................................ 3.14(b)
Company Permits................................................... 3.10
Company Preferred Stock........................................... 3.3(a)
Company Principal Holders......................................... RECITALS
Company SEC Material Contracts.................................... 3.14(a)
Company SEC Reports............................................... 3.6(a)
Company Stock Option Plans........................................ 2.3(a)
Company Stockholder Approval...................................... 3.4
Company Stockholders Meeting...................................... 7.3(b)
Company Subsidiary and Company Subsidiaries....................... 3.1
Company Voting Agreement.......................................... RECITALS
Confidentiality Agreement......................................... 7.2
control, controlled by, under common control with................. 10.3
controlled group of corporations.................................. 3.15(a); 5.15(a)
D&O Insurance..................................................... 7.6(b)
Delaware Law...................................................... RECITALS
Director Option................................................... 2.3(d)
Earnout Agreements................................................ 10.3
Effective Time.................................................... 1.2
employee benefit plans............................................ 3.15(a); 3.15(e)
employee pension benefit plan..................................... 3.15(a); 5.15(b)
employer securities............................................... 3.15(h); 5.15(f)
Encumbrance....................................................... 10.3
Environmental Laws................................................ 10.3
Environmental Permits............................................. 3.18
ERISA............................................................. 3.15(a)
Exchange Act...................................................... 3.5(b)
Exchange Agent.................................................... 2.2(a)
Exchange Fund..................................................... 2.2(a)
Exchange Ratio.................................................... 2.1(a)
GAAP.............................................................. RECITALS
Governmental Entity............................................... 3.5(b)
group............................................................. 9.1(i)
Hazardous Materials............................................... 10.3
HIPAA............................................................. 3.15(g); 5.15(e)
Holder and Holders................................................ 2.1(a)
HSR Act........................................................... 3.5(b)
incentive stock options........................................... 2.3(a)
Indemnified Parties............................................... 7.6(b)
Intellectual Property............................................. 10.3
Interim Period.................................................... 7.1
Joint Proxy Statement............................................. 3.25
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Legal Opinion..................................................... 8.1(i)
March 1999 Financing.............................................. 10.3
Material Adverse Effect........................................... 10.3
Merger............................................................ RECITALS
Merger Consideration.............................................. 2.1(a)
Merger Sub........................................................ PREAMBLE
Merger Sub Stock.................................................. 2.1(c)
Multiemployer Plan................................................ 3.15(d)
NASD.............................................................. 3.5(b)
Nasdaq............................................................ 3.5(b)
Option............................................................ 2.3(a)
Option Agreement.................................................. RECITALS
Order............................................................. 8.1(c)
Other Company Material Contracts.................................. 3.14(b)
Outside Date...................................................... 9.1(e)
Person............................................................ 10.3
pooling of interests.............................................. 3.24; 5.20; 6.2(o); 6.3(d); 7.11(b); 7.15;
8.1(g); 8.1(h)
qualified......................................................... 3.15(b); 5.15(a)
qualified foreign plan............................................ 3.15(j); 5.15(h)
Real Property Leases.............................................. 3.14(b)
reasonable efforts................................................ 10.3
Receiving Party................................................... 7.2
Registration Statement............................................ 3.25
Representation Letters............................................ 7.14
Representatives................................................... 7.8(a)
SEC............................................................... RECITALS
Securities Act.................................................... 3.5(b)
Securities Litigation............................................. 10.3
Stock Issuance.................................................... RECITALS
Subsidiary........................................................ 10.3
Superior Proposal................................................. 10.3
Surviving Corporation............................................. 1.1
Tax, Taxable and Taxes............................................ 10.3
Tax Returns....................................................... 3.12
Terminating Acquiror Breach....................................... 9.1(c)
Terminating Company Breach........................................ 9.1(b)
Termination Fee................................................... 9.6
Treasury Stock.................................................... 2.1(b)
unfunded current liability........................................ 3.15(c); 5.15(b)
Warrant........................................................... 2.3(c)
Year 2000 Meeting................................................. 7.17
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is entered into
this 24th day of June, 1999, by and among THINK NEW IDEAS, INC., a Delaware
corporation (the "Company"), ANSWERTHINK CONSULTING GROUP, INC., a Florida
corporation ("Acquiror"), and DARWIN ACQUISITION CORP., a Delaware corporation
("Merger Sub").
WHEREAS, Merger Sub is a newly formed corporation, organized and
existing under the laws of the State of Delaware;
WHEREAS, each of the Boards of Directors of the Company, Acquiror and
Merger Sub has each determined that it is fair to, advisable, and in the best
interests of, its respective stockholders that Merger Sub, a wholly-owned
subsidiary of Acquiror, be merged with and into the Company (the "Merger")
pursuant to and subject to the terms and conditions of this Agreement and the
Delaware General Corporation Law ("Delaware Law");
WHEREAS, concurrently with the execution and delivery of this
Agreement and as a condition and inducement to the willingness of Acquiror to
enter into this Agreement, certain holders (the "Company Principal Holders") of
common stock, par value $.0001 per share, of the Company ("Company Common
Stock"), have entered into an agreement with Acquiror (the "Company Voting
Agreement"), pursuant to which, among other things, the Company Principal
Holders have agreed to vote their shares of Company Common Stock in favor of
this Agreement, the Merger and the other transactions contemplated by this
Agreement;
WHEREAS, concurrently with the execution and delivery of this
Agreement and as a condition and inducement to the willingness of the Company to
enter into this Agreement, certain holders (the "Acquiror Principal Holders") of
common stock, par value $.001 per share, of Acquiror ("Acquiror Common Stock"),
have entered into an agreement with the Company (the "Acquiror Voting
Agreement"), pursuant to which, among other things, the Acquiror Principal
Holders have agreed to vote their shares of Acquiror Common Stock in favor of
the issuance of Acquiror Common Stock pursuant to the terms of this Agreement
(the "Stock Issuance");
WHEREAS, concurrently with the execution and delivery of this
Agreement and as a condition and inducement to the willingness of Acquiror and
Merger Sub to enter into this Agreement, the Company and Acquiror have entered
into a Stock Option Agreement (the "Option Agreement"), pursuant to which the
Company has granted to Acquiror an irrevocable option to purchase from the
Company up to a number of authorized but unissued shares of Company Common
Stock representing 19.9% of the outstanding shares of Company Common Stock, upon
the terms and subject to the conditions set forth therein;
WHEREAS, for United States federal income tax purposes, it is intended
that the Merger will qualify as a reorganization within the meaning of Section
368(a)2(E) of the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, for financial accounting purposes, it is intended that the
Merger shall be accounted for as a pooling of interests under United States
generally accepted accounting principles ("GAAP") and the rules and regulations
of the Securities and Exchange Commission (the "SEC").
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement, the parties hereto agree as follows:
ARTICLE I.
THE MERGER
SECTION 1.1. THE MERGER.
Upon the terms and subject to the conditions set forth in this
Agreement, and in accordance with Delaware Law, at the Effective Time (as
defined in Section 1.2) the Merger shall be effected pursuant to which Merger
Sub shall be merged with and into the Company. As a result of the Merger, the
separate corporate existence of Merger Sub shall cease and the Company shall
continue as the surviving corporation of the Merger (sometimes referred to
herein as the "Surviving Corporation") and shall become a wholly-owned
subsidiary of Acquiror.
SECTION 1.2. EFFECTIVE TIME.
As promptly as practicable on the Closing Date (as defined in Section
1.6), the parties hereto shall cause the Merger to be consummated by filing a
certificate of merger (the "Certificate of Merger") with the Secretary of State
of the State of Delaware, as required by, and executed in accordance with the
relevant provisions of, Delaware Law and in such form as approved by the Company
and Acquiror prior to such filing (the time of the filing of the Certificate of
Merger or the time specified therein being the "Effective Time").
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SECTION 1.3. EFFECT OF THE MERGER.
At the Effective Time, the effect of the Merger shall be as set forth
herein and as provided in the applicable provisions of Delaware Law. Without
limiting the generality of the foregoing, and subject thereto, at the Effective
Time, except as otherwise provided herein, all the rights, privileges, powers
and franchises of Merger Sub and the Company shall vest in the Surviving
Corporation, and all debts, liabilities and duties of Merger Sub and the Company
shall become the debts, liabilities and duties of the Surviving Corporation.
SECTION 1.4. CERTIFICATE OF INCORPORATION; BYLAWS.
At the Effective Time: (a) the certificate of incorporation of Merger
Sub, as in effect immediately prior to the Effective Time and as amended by the
Certificate of Merger, shall become the certificate of incorporation of the
Surviving Corporation, and (b) the bylaws of Merger Sub, as in effect
immediately prior to the Effective Time, shall become the bylaws of the
Surviving Corporation.
SECTION 1.5. DIRECTORS AND OFFICERS.
The officers and directors of the Surviving Corporation immediately
upon effectiveness of the Merger shall be as set forth on Schedule 1.5 hereto
(as may be modified by Acquiror in its sole and absolute discretion). Each such
officer and director shall hold office in accordance with the certificate of
incorporation and bylaws of the Surviving Corporation and until his or her
respective successors is duly elected or appointed and qualified in accordance
with the certificate of incorporation and bylaws of the Surviving Corporation.
SECTION 1.6. CLOSING.
Subject to the terms and conditions of this Agreement (including,
without limitation, the satisfaction or, if permissible, waiver of the
conditions set forth in Article VIII hereof) the parties agree to consummate the
Merger and the other transactions described herein (the "Closing") on a date
mutually agreed upon by Acquiror and the Company which shall be within two (2)
Business Days after the later of (a) the date on which the Company shall have
obtained the Company Stockholder Approval pursuant to Section 7.3(b) and (b) the
date on which Acquiror shall have obtained the Acquiror Stockholder Approval
pursuant to Section 7.3(c), unless the Company and Acquiror shall agree in
writing to another date (the date of the Closing is referred to herein as the
"Closing Date"). The Closing shall take place at 10:00 a.m., local time, on the
Closing Date at the offices of ▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P., ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, unless another place is agreed to in writing
by the Company and the Acquiror.
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SECTION 1.7. SUBSEQUENT ACTIONS.
If, at any time after the Effective Time, the Surviving Corporation
shall consider or be advised that any deeds, bills of sale, assignments,
assurances or any other actions or things are necessary or desirable to continue
in, vest, perfect or confirm of record or otherwise in the Surviving Corporation
its right, title or interest in, to or under any of the rights, properties,
privileges, franchises or assets of either of its constituent corporations
acquired or to be acquired by the Surviving Corporation as a result of, or in
connection with, the Merger or otherwise to carry out this Agreement, the
officers and directors of the Surviving Corporation shall be directed and
authorized to execute and deliver, in the name and on behalf of either of the
Company or the Merger Sub, all such deeds, bills of sale, assignments and
assurances and to take and do, in the name and on behalf of each of such
corporations or otherwise, all such other actions and things as may be necessary
or desirable to vest, perfect or confirm any and all right, title and interest
in, to and under such rights, properties, privileges, franchises or assets in
the Surviving Corporation or otherwise to carry out this Agreement.
SECTION 1.8. TAX AND ACCOUNTING TREATMENT OF THE MERGER.
It is intended by the parties hereto that the Merger shall (a)
constitute a reorganization of Merger Sub and the Company within the meaning of
Section 368(a)2(E) of the Code, and (b) be accounted for as a pooling of
interests under GAAP and the rules and regulations of the SEC. The parties
hereby adopt this Agreement as a "plan of reorganization" of Merger Sub and the
Company within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the United
States Treasury Regulations.
ARTICLE II.
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 2.1. CONVERSION OF SECURITIES.
At the Effective Time, by virtue of the Merger and without any action
on the part of Acquiror, Merger Sub, the Company or the holders of any of the
securities referred to in this Section 2.1:
(a) Common Stock. Each share of Company Common Stock (excluding any
shares of Treasury Stock (as hereinafter defined)) 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 0.70 (the "Exchange
Ratio") share of Acquiror Common Stock. The shares of Acquiror Common Stock
issuable to the holders of Company Common Stock outstanding
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immediately prior to the Effective Time (each, a "Holder" and collectively, the
"Holders") pursuant hereto, together with payments of cash in lieu of fractional
shares as provided in Section 2.1(d), shall be referred to hereinafter as the
"Merger Consideration". All such shares of Company Common Stock shall
automatically be canceled and retired and shall cease to exist, and each
certificate previously evidencing any such shares (a "Certificate" and
collectively, the "Certificates") shall thereafter represent only the right to
receive the Merger Consideration. At the Effective Time, the Holders shall cease
to have any rights with respect to such shares of Company Common Stock, except
the right to receive the Merger Consideration and as otherwise provided herein
or afforded by applicable law;
(b) Treasury Stock. All shares of capital stock of the Company held in
the treasury of the Company immediately prior to the Effective Time ("Treasury
Stock") shall be canceled and extinguished without any conversion thereof and no
amount or other consideration shall be delivered or deliverable in exchange
therefor;
(c) Merger Sub Stock. Each share of common stock, par value $.01 per
share, of Merger Sub issued and outstanding immediately prior to the Effective
Time ("Merger Sub Stock") shall be converted into and exchanged for one (1) duly
and validly issued, fully paid and nonassessable share of common stock of the
Surviving Corporation; and
(d) No Fractional Shares. No certificate representing any fractional
part of a share of Acquiror Common Stock shall be issued pursuant to Section
2.1(a) and, other than the right to receive a payment pursuant to this Section
2.1(d), any such fractional interest to which any Holder would otherwise be
entitled pursuant to Section 2.1(a) shall not entitle such Holder to any rights
as a securityholder of Acquiror. Notwithstanding any other provision hereof, all
Holders otherwise entitled to receive fractional shares of Acquiror Common Stock
pursuant to Section 2.1(a) shall be entitled to receive, in lieu thereof, cash
(without interest) in an amount equal to the product of (i) such fractional part
of a share of Acquiror Common Stock to which the Holder would otherwise be
entitled under Section 2.1(a) multiplied by (ii) the closing price per share of
Acquiror Common Stock as reported on Nasdaq on the Closing Date.
SECTION 2.2. EXCHANGE OF CERTIFICATES.
(a) Exchange Agent. Prior to the Effective Time, Acquiror shall
deposit with BankBoston, N.A. (the "Exchange Agent") for the benefit of the
Holders for issuance and payment in accordance with this Article II: (i) the
shares of Acquiror Common Stock issuable pursuant to Section 2.1(a), and (ii)
cash in an amount sufficient to make payment for fractional parts of shares
under Section 2.1(d) (such shares of Acquiror Common Stock and cash being
hereinafter referred to as the "Exchange Fund"). At the Effective Time, Acquiror
shall cause
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the Exchange Agent, pursuant to irrevocable instructions delivered to the
Exchange Agent prior thereto, to deliver Acquiror Common Stock (and cash for
fractional parts of shares thereof) contemplated to be issued and paid pursuant
to Sections 2.1(a) and (d) out of the Exchange Fund. The Exchange Fund shall not
be used for any purpose other than as set forth in this Section 2.2(a).
(b) Payment Procedures. Promptly after the Effective Time, Acquiror
shall cause the Exchange Agent to mail to each Holder who, as of the Effective
Time, holds a Certificate or Certificates that immediately prior to the
Effective Time evidenced outstanding shares of Company Common Stock (excluding
any Treasury Stock): (i) a form letter of transmittal; and (ii) instructions for
use in effecting the surrender of the Certificates for cancellation and delivery
in exchange therefor of the Merger Consideration. Upon surrender to the Exchange
Agent and cancellation of a Certificate, together with such letter of
transmittal duly executed and any other reasonably required documents, the
Holder of such Certificate shall be entitled to receive in exchange therefor the
applicable amount of the Merger Consideration as determined pursuant to Section
2.1(a) and Section 2.1(d). In the event of a surrender of a Certificate
representing shares of Company Common Stock which are not registered in the
transfer records of the Company under the name of the Holder surrendering such
Certificate, a certificate representing the proper number of shares of Acquiror
Common Stock may be issued to a Person other than the Holder in whose name the
Certificate so surrendered is registered if such Certificate shall be properly
endorsed or otherwise be in proper form for transfer and the Person requesting
such issuance shall pay any transfer or other Taxes required by reason of the
issuance of shares of Acquiror Common Stock to a Person other than the Holder of
such Certificate or shall establish to the satisfaction of Acquiror that such
Taxes have been paid or are not applicable. Until surrendered in accordance with
the provisions of this Section 2.2, each Certificate shall represent for all
purposes only the right to receive the applicable amount of the Merger
Consideration with respect thereto as determined pursuant to Section 2.1(a) and
Section 2.1(d), in each case without any interest thereon.
(c) Issuances to Affiliates. Notwithstanding anything herein to the
contrary, any Certificate surrendered for exchange by any Affiliate of the
Company shall not be exchanged until Acquiror shall have received a signed
agreement from such Affiliate (an "Affiliate Agreement") as provided in Section
7.11 hereof.
(d) No Further Rights in Stock. All shares of Acquiror Common Stock
issued upon the surrender for exchange of Certificates pursuant to Section 2.1
and in accordance with this Section 2.2 (and any cash paid pursuant hereto)
shall be deemed to have been issued (and paid) in full satisfaction of all
rights pertaining to the shares of Company Common Stock theretofore represented
by such Certificates, and there shall be no further registration of transfers on
the
6
stock transfer books of the Company as the Surviving Corporation of the shares
of Company Common Stock represented by such Certificates which were outstanding
immediately prior to the Effective Time. If, after the Effective Time, any
Certificates are presented to Acquiror, the Surviving Corporation or the
Exchange Agent for any reason, they shall be canceled and exchanged as provided
herein, except as otherwise provided by law.
(e) Investment of Exchange Fund. The Exchange Agent shall invest any
cash included in the Exchange Fund, as directed by Acquiror, on a daily basis.
Any interest and other income resulting from such investments shall be paid to
Acquiror.
(f) Termination of Exchange Fund. Any portion of the Exchange Fund
that remains undistributed to the Holders for twelve (12) months after the
Effective Time shall be delivered to Acquiror, upon demand, and any Holder that
has not theretofore complied herewith shall thereafter look only to the
Surviving Corporation and Acquiror for the applicable amount of the Merger
Consideration and cash payments in lieu of fractional shares, if any, to which
such Holder is entitled pursuant hereto.
(g) No Liability. Neither Acquiror nor the Surviving Corporation shall
be liable to any Holder for any Acquiror Common Stock or cash delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law.
(h) Withholding of Tax. Acquiror or the Exchange Agent shall be
entitled to deduct and withhold from the applicable amount of the Merger
Consideration otherwise issuable to, and any cash payments in lieu of fractional
shares otherwise payable to, any Holder such amounts as Acquiror (or any
Affiliate thereof) or the Exchange Agent are 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. To the extent that amounts are so withheld by
Acquiror (or any Affiliate thereof) or the Exchange Agent, such withheld amounts
shall be treated for all purposes of this Agreement as having been paid to the
Holder in respect of whom such deduction and withholding was made by Acquiror
(or any Affiliate thereof) or the Exchange Agent.
(i) Lost, Stolen or Destroyed Certificates. In the event any
Certificate shall have been lost, stolen or destroyed, upon the making of an
affidavit setting forth that fact by the Person claiming such loss, theft or
destruction and, the granting of a reasonable indemnity against any claim that
may be made against Acquiror or the Exchange Agent with respect to such
Certificate (and, if required by Acquiror in the case of any Certificate or
Certificates from any Holder representing more than Ten Thousand (10,000)
7
shares of Company Common Stock, the posting by such Person of a bond, in such
reasonable amount as Acquiror may direct). Acquiror shall cause the Exchange
Agent to issue to such Person the applicable amount of the Merger Consideration
and any cash payments with respect to such lost, stolen or destroyed Certificate
to which the Holder thereof may be entitled pursuant to this Article II.
SECTION 2.3. ASSUMPTION OF OBLIGATIONS TO ISSUE STOCK.
(a) Company Options. As of the Effective Time, each outstanding Option
(as hereinafter defined) shall be converted into an option to acquire Acquiror
Common Stock as provided in this Section 2.3(a). The term "Option" shall mean
any option to purchase or acquire shares of Company Common Stock granted under
the Company's 1997 Stock Option Plan or 1998 Stock Option Plan, each as amended
(collectively, the "Company Stock Option Plans"), and any option to acquire or
purchase shares of Company Common Stock granted in connection with the March
1999 Financing. Following the Effective Time, each Option shall continue to
have, and shall be subject to, the terms and conditions of each agreement
pursuant to which such Option was subject immediately prior to the Effective
Time (including, in the case of each Option granted under either of the Company
Stock Option Plans, the terms and conditions of the Company Stock Option Plan
under which such Option was granted, and, in the case of each Option granted in
connection with the March 1999 Financing, the terms and conditions of the March
1999 Financing), except that: (i) each Option (as converted pursuant to this
Section 2.3(a)) shall be exercisable for that number of whole shares of Acquiror
Common Stock equal to the product of (A) the aggregate number of shares of
Company Common Stock for which such Option was exercisable at the Effective
Time, multiplied by (B) the Exchange Ratio, provided, however, that no
fractional shares of Acquiror Common Stock shall be issued upon the exercise of
any Option (as converted pursuant to this Section 2.3(a)) and (1) the holder of
any Option (as converted pursuant to this Section 2.3(a)) granted under either
of the Company Stock Option Plans otherwise exercisable for a fractional share
of Acquiror Common Stock shall be entitled to receive, upon exercise thereof,
cash (without interest) in such amount to which such holder would otherwise be
entitled as determined pursuant to the provisions of the applicable Company
Stock Option Plan and the agreement under which such Option was granted
(provided that all references in such Company Stock Option Plan and such
agreement to the Company shall be references to Acquiror and references to the
Company's Common Stock shall be references to Acquiror Common Stock), and (2)
the holder of any Option (as converted pursuant to this Section 2.3(a)) granted
in connection with the March 1999 Financing otherwise exercisable for a
fractional share of Acquiror Common Stock shall be entitled to receive, upon
exercise thereof, cash (without interest) in an amount equal to the product of
(x) such fractional part of a share of Acquiror Common Stock to which the holder
would otherwise be entitled multiplied by (y) the closing price per share of
Acquiror Common Stock as reported on Nasdaq
8
on the date of exercise of such Option (as converted pursuant to this Section
2.3(a)); and (ii) the exercise price per share of Acquiror Common Stock issuable
pursuant to each Option (as converted pursuant to this Section 2.3(a)) shall be
equal to the exercise price per share of Company Common Stock under such Option
at the Effective Time divided by the Exchange Ratio, rounded to the nearest
whole cent. The assumption and substitution of Options as provided herein shall
not give the holders of such Options additional benefits or additional (or
accelerated) vesting rights which they did not have immediately prior to the
Effective Time or relieve the holders of such Options from any obligations or
restrictions applicable to their Options or the shares obtainable upon exercise
of the Options. The adjustment provided herein with respect to any Options that
are "incentive stock options" (as defined in Section 422 of the Code) shall be
and is intended to be, effected in a manner that is consistent with continued
treatment of such Options as "incentive stock options" under Section 424(a) of
the Code. Each Company Stock Option Plan shall be assumed by Acquiror with
respect to all outstanding Options granted under such Company Stock Option Plan
as of the Effective Time, provided, however, that no further options to purchase
or acquire shares of Company Common Stock or other awards or rights shall be
granted under either of the Company Stock Option Plans after the Effective Time.
The duration and other terms of the converted options provided for in this
Section 2.3(a) shall be the same as the Options except that all references to
the Company shall be references to Acquiror and references to the Company's
Common Stock shall be references to Acquiror Common Stock. Acquiror shall take
all corporate action reasonably necessary to reserve for issuance, at all times
any converted options provided for in this Section 2.3(a) are outstanding, a
sufficient number of shares of Acquiror Common Stock for delivery upon the
exercise of such converted options.
(b) Form S-8. Acquiror shall: (i) promptly following the Effective
Time, file one or more registration statements on Form S-8 (or amend existing
registration statements on Form S-8) to become effective as soon as practicable
after the Effective Time with respect to the shares of Acquiror Common Stock
subject to Options outstanding as of the Effective Time (as converted pursuant
to Section 2.3(a)) that were granted under the Company Stock Option Plans; (ii)
use reasonable efforts to maintain the effectiveness of such registration
statement(s) (and maintain the current status of the prospectus or prospectuses
contained therein) for so long as such Options (as converted pursuant to Section
2.3(a)) remain outstanding; and (iii) promptly following the Effective Time
prepare and submit to Nasdaq the Notification of Additional Listing of Shares
relating to inclusion for quotation on Nasdaq the shares of Acquiror Common
Stock subject to such Options (as converted pursuant to Section 2.3(a)) and use
reasonable efforts to cause such securities to be approved for quotation on
Nasdaq as soon as practicable after the Effective Time, subject to official
notice of issuance.
9
(c) Warrants. As of the Effective Time, each outstanding
Warrant (as hereinafter defined) shall be converted into a warrant to acquire
shares of Acquiror Common Stock as provided in this Section 2.3(c). The term
"Warrant" shall mean any warrant to purchase shares of Company Common Stock
issued or issuable pursuant to the March 1999 Financing and each Commonwealth
Associates Warrant. Following the Effective Time, each Warrant shall continue to
have, and shall be subject to, the terms and conditions of each agreement or
other instrument pursuant to which such Warrant was subject immediately prior to
the Effective Time (including, in the case of each Warrant granted issued or
issuable pursuant to the March 1999 Financing, the terms and conditions of the
March 1999 Financing, and in the case of each Commonwealth Associates Warrant,
the terms and conditions of the applicable Commonwealth Associates Warrant),
except that: (i) each such Warrant (as converted pursuant to this Section
2.3(c)) shall be exercisable or convertible for that number of whole shares of
Acquiror Common Stock equal to the product of (A) the aggregate number of shares
of Company Common Stock for which such Warrant was exercisable or convertible at
the Effective Time, multiplied by (B) the Exchange Ratio; provided, however,
that no fractional shares of Acquiror Common Stock shall be issued upon the
exercise or conversion of any Warrant (as converted pursuant to this Section
2.3(c)) and (1) the holder of any Warrant (as converted pursuant to this Section
2.3(c)) issued or issuable under the March 1999 Financing otherwise exercisable
for or convertible into a fractional share of Acquiror Common Stock shall be
entitled to receive, upon exercise or conversion thereof, cash (without
interest) in an amount equal to such fractional share to which such holder would
otherwise be entitled multiplied by the Market Price (as defined in and
determined pursuant to the terms of the March 1999 Financing except that all
references therein to the Company or Company Common Stock shall be interpreted
as references to Acquiror and Acquiror Common Stock) of a share of Acquiror
Common Stock on the date of such exercise or conversion, and (2) the holder of
any Commonwealth Associates Warrant (as converted pursuant to this Section
2.3(c)) otherwise exercisable for or convertible into a fractional share of
Acquiror Common Stock shall be entitled to receive, upon exercise or conversion
thereof, cash (without interest) in an amount equal to such fractional share of
Acquiror Common Stock to which such holder would otherwise be entitled
multiplied by the fair market value (as determined pursuant to the provisions of
the applicable Commonwealth Associates Warrant except that all references
therein to the Company or Company Common Stock shall be interpreted as
references to Acquiror and Acquiror Common Stock) of a share of Acquiror Common
Stock on the date of such exercise or conversion, and (ii) the exercise or
conversion price per share of Acquiror Common Stock issuable pursuant to each
such Warrant (as converted pursuant to this Section 2.3(c)) shall be equal to
the exercise or conversion price per share of Company Common Stock under such
Warrant at the Effective Time divided by the Exchange Ratio rounded to the
nearest whole cent. The assumption and substitution of Warrants as provided
herein shall not give the holders of such Warrants additional benefits or
additional
10
(or accelerated) vesting rights which they did not have immediately prior to the
Effective Time or relieve the holders of the Warrants of any obligations or
restrictions applicable to their Warrants or the shares obtainable upon exercise
or conversion of the Warrants. The duration and other terms of the converted
warrants provided for in this Section 2.3(c) shall be the same as the Warrants
except that all references to the Company shall be references to Acquiror and
references to the Company's Common Stock shall be references to Acquiror Common
Stock. Acquiror shall take all corporate action reasonably necessary to reserve
for issuance, at all times any converted warrants provided for in this Section
2.3(c) are outstanding, a sufficient number of shares of Acquiror Common Stock
for delivery upon the exercise or conversion of such converted warrants.
(d) Director Options. As of the Effective Time, each outstanding
Director Option (as hereinafter defined) shall be converted into an option to
acquire Acquiror Common Stock as provided in this Section 2.3(d). The term
"Director Option" shall mean any option to purchase or acquire shares of Company
Common Stock granted to any director of the Company in such individual's
capacity as a director (specifically excluding any Options granted under either
of the Company Stock Option Plans). Following the Effective Time, each Director
Option shall continue to have, and shall be subject to, the terms and conditions
of each agreement pursuant to which such Director Option was subject immediately
prior to the Effective Time, except that: (i) each Director Option (as converted
pursuant to this Section 2.3(d)) shall be exercisable for that number of whole
shares of Acquiror Common Stock equal to the product of (A) the aggregate number
of shares of Company Common Stock for which such Director Option was exercisable
at the Effective Time, multiplied by (B) the Exchange Ratio, provided, however,
that no fractional shares of Acquiror Common Stock shall be issued upon the
exercise of any Director Option (as converted pursuant to this Section 2.3(d))
and the holder of any Director Option (as converted pursuant to this Section
2.3(d)) otherwise exercisable for a fractional share of Acquiror Common Stock
shall be entitled to receive, upon exercise thereof, cash (without interest) in
an amount equivalent to the fair market value (at the time of exercise) of the
fractional share of Acquiror Common Stock to which such holder would otherwise
be entitled (as determined pursuant to the provisions of the applicable Director
Option agreement); and (ii) the exercise price per share of Acquiror Common
Stock issuable pursuant to each Director Option (as converted pursuant to this
Section 2.3(d)) shall be equal to the exercise price per share of Company Common
Stock under such Director Option at the Effective Time divided by the Exchange
Ratio, rounded to the nearest whole cent. The assumption and substitution of
Director Options as provided herein shall not give the holders of such Director
Options additional benefits or additional (or accelerated) vesting rights which
they did not have immediately prior to the Effective Time or relieve the holders
of such Director Options from any obligations or restrictions applicable to
their Director Options or the shares obtainable upon exercise of their Director
Options. Each agreement pursuant to
11
which any Director Option was granted shall be assumed by Acquiror with respect
to all outstanding Director Options granted under such agreement as of the
Effective Time, provided, however, that no further options to purchase or
acquire shares of Company Common Stock or other awards or rights shall be
granted to any director of the Company after the date hereof except as permitted
pursuant to Section 6.2(d)(i) of this Agreement. The duration and other terms of
the converted options provided for in this Section 2.3(d) shall be the same as
the Director Options except that all references to the Company shall be
references to Acquiror and references to the Company's Common Stock shall be
references to Acquiror Common Stock. Acquiror shall take all corporate action
reasonably necessary to reserve for issuance, at all times any converted
Director Options provided for in this Section 2.3(d) are outstanding, a
sufficient number of shares of Acquiror Common Stock for delivery upon the
exercise of such converted Director Options.
SECTION 2.4. STOCK TRANSFER BOOKS.
At the Effective Time, the transfer books of the Company with respect
to all shares of capital stock or other securities of the Company shall be
closed and no further registration of transfers of such shares of capital stock
or other securities shall thereafter be made on the records of the Company.
SECTION 2.5. CERTAIN ADJUSTMENTS.
If between the date hereof and the Effective Time, the outstanding
shares of Company Common Stock or Acquiror Common Stock shall be changed into a
different number of shares by reason of any reclassification, recapitalization,
split-up, combination or exchange of shares, or any dividend payable in stock or
other securities shall be declared thereon with a record date within such
period, the Exchange Ratio shall be adjusted accordingly to provide the same
economic effect as contemplated by this Agreement prior to such
reclassification, recapitalization, split-up, combination, exchange or dividend.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Acquiror and Merger Sub,
subject to the exceptions set forth herein and in the Company's disclosure
schedules (which exceptions shall specifically identify a section, subsection or
clause of a single section or subsection hereof, as applicable, to which such
exception relates, it being understood and agreed that each such exception shall
be deemed to be disclosed both under such section, subsection or clause hereof
and any other section, subsection or clause hereof to which such disclosure
reasonably relates) that:
12
SECTION 3.1. ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
Each of the Company and each Subsidiary (as defined below) of the
Company (each a "Company Subsidiary" and collectively, the "Company
Subsidiaries") is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization. Each of the
Company and each Company Subsidiary is duly qualified to conduct its business,
and is in good standing, in each jurisdiction where the character of its
properties that are owned, operated or leased or the nature of its business
makes such qualification necessary, except for such failures which would not
have a Material Adverse Effect on the Company. Each of the Company and each
Company Subsidiary has the requisite corporate power and authority to own,
operate, lease and otherwise to hold its assets and properties and to carry on
its business as now being conducted, except for such failures which would not
have a Material Adverse Effect on the Company. The Company has no Subsidiaries
other than those listed in Schedule 3.1, each of which is wholly-owned by the
Company, or any direct or indirect beneficial ownership of any securities,
equity or other ownership interest in any Person other than those listed in
Schedule 3.1.
SECTION 3.2. CERTIFICATE OF INCORPORATION AND BYLAWS.
The Company has heretofore delivered to Acquiror a complete and
correct copy of the certificate or articles of incorporation and the bylaws of
the Company and each Company Subsidiary, each as amended to date. Each such
certificate or articles of incorporation and bylaws is in full force and effect.
Neither the Company nor any Company Subsidiary is in violation of any of the
provisions of its respective certificate or articles of incorporation or bylaws.
SECTION 3.3. CAPITALIZATION.
(a) The authorized capital stock of the Company consists of fifty
million (50,000,000) shares of Company Common Stock and five million (5,000,000)
shares of preferred stock, par value $.0001 per share ("Company Preferred
Stock"). As of the date hereof: (i) ten million ninety-one thousand nine hundred
two (10,091,902) shares of Company Common Stock are issued and outstanding
(which includes all shares issued into escrow as of the date hereof); (ii) no
shares of Company Preferred Stock are issued and outstanding; (iii) two million
four hundred sixty-two thousand eight hundred seventeen (2,462,817) shares of
Company Common Stock are reserved for issuance upon the exercise of the Options
granted under the Company Stock Option Plans; (iv) five hundred thirty thousand
five hundred four (530,504) shares of Company Common Stock are reserved for
issuance upon the exercise of the Options granted in connection with the March
1999 Financing; (v) one hundred forty thousand (140,000) shares of Company
Common Stock are reserved for issuance upon the exercise of the Director
Options; (vi) two hundred eighty thousand three hundred thirty one (280,331)
shares of
13
Company Common Stock are reserved for issuance upon exercise of the Warrants
issued or issuable pursuant to the March 1999 Financing; (vii) twelve thousand
one hundred twenty (12,120) shares of Company Common Stock are reserved for
issuance upon exercise of the Commonwealth Associates Warrants; (viii) no shares
of Company Common Stock are reserved for issuance (and not already issued into
escrow) pursuant to the Earnout Agreements (as hereinafter defined); and (ix) no
shares of Company Common Stock are held in the Company's treasury as Treasury
Stock. Schedule 3.3 sets forth a complete and correct list, as of the date
hereof, of the number of shares of Company Common Stock subject to the Options,
Director Options and the Warrants and the number of shares of Company Common
Stock issuable pursuant to the Earnout Agreements, in each case including the
dates of grant and exercise or conversion prices thereof and, in the case of
shares issuable pursuant to the Earnout Agreements, the terms of issuance of
such shares.
(b) All outstanding shares of Company Common Stock are, and all shares
which may be issued pursuant to the Options, Director Options, Warrants and
Earnout Agreements will be, when issued in accordance with the respective terms
of such Options, Director Options, Warrants and Earnout Agreements (without
taking into account the effects of the consummation of the Merger), duly
authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights. Except for the shares of Company Common Stock outstanding as
of the date hereof and the shares of Company Common Stock issuable pursuant to
the Option Agreement, Options, Director Options, Warrants and Earnout
Agreements: (i) there are not issued, reserved for issuance or outstanding (A)
any shares of capital stock or other voting securities of the Company or any
Company Subsidiary, (B) any securities of the Company or any Company Subsidiary
convertible into or exchangeable or exercisable for shares of capital stock or
voting securities or ownership interests of the Company or any Company
Subsidiary, (C) any warrants, calls, options or other rights to acquire from the
Company or any Company Subsidiary, or any obligation of the Company or any
Company Subsidiary to issue, any capital stock, voting securities or other
ownership interests in, or securities convertible into or exchangeable or
exercisable for capital stock or voting securities of or other ownership
interests in, the Company or any Company Subsidiary, and (ii) there are no
outstanding obligations of the Company or any Company Subsidiary to repurchase,
redeem or otherwise acquire any such securities or to issue, deliver or sell, or
cause to be issued, delivered or sold, any such securities.
(c) Except the Option Agreement and except as described in Schedule
3.3, neither the Company nor any Company Subsidiary is a party to any agreement
restricting the purchase or transfer of, relating to the voting of, requiring
registration of, or granting any preemptive or, except as provided by the terms
of the Company Stock Option Plans, antidilutive rights with respect to, any of
the securities of the Company or any of the Company Subsidiaries that are
14
outstanding or that may be subsequently issued upon the conversion or exercise
of any instrument or otherwise.
(d) The Company represents and warrants to Acquiror and Merger Sub
that as of the Effective Time, the aggregate number of outstanding shares of
Company Common Stock (assuming full exercise of the Options, Director Options,
Warrants and the issuance of all Company Common Stock issuable under the Earnout
Agreements) shall not exceed fifteen million five hundred thousand (15,500,000)
shares.
SECTION 3.4. AUTHORITY.
The Company has the necessary corporate power and authority to enter
into this Agreement and, subject to obtaining the requisite approval of this
Agreement, the Merger and the other transactions contemplated hereby by the
Company's stockholders as required by Delaware Law and as contemplated in
Section 7.3(b) ("Company Stockholder Approval"), to perform its obligations
hereunder and to consummate the transactions contemplated hereby. Except for
Company Stockholder Approval, the execution and delivery of this Agreement by
the Company and the consummation by the Company of the transactions contemplated
hereby have been duly and validly authorized by all necessary corporate action
and no other corporate proceedings on the part of the Company are necessary to
authorize this Agreement or to consummate the transactions contemplated hereby.
This Agreement has been duly executed and delivered by the Company and, assuming
the due authorization, execution and delivery by Acquiror and Merger Sub,
constitutes a legal, valid and binding obligation of the Company, enforceable in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and other similar laws of
general applicability relating to or affecting creditors' rights generally and
by the application of general principles of equity (it being understood that,
with respect to the Company's obligation to consummate the Merger, the Company
Stockholder Approval is required as set forth herein and that nothing in this
Agreement shall be construed or interpreted as a guaranty by the Company that
such approval will be obtained).
SECTION 3.5. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by the Company do
not, and the performance by the Company of its obligations under this Agreement
will not: (i) conflict with or violate the certificate or articles of
incorporation or bylaws of the Company or any Company Subsidiary; (ii) subject
to obtaining the approvals and compliance with the requirements set forth in
Section 3.5(b), conflict with or violate any Order applicable to the Company or
any Company Subsidiary or by which any of their respective properties or assets
is bound or affected; or (iii) except as set forth in Schedule 3.5, result in
any breach of
15
or constitute a default (or an event which with or without notice or lapse of
time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of an Encumbrance on any of the properties or assets of the Company or
any Company Subsidiary pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which the Company or any Company Subsidiary is a party or by which
the Company, any Company Subsidiary or any of their respective properties or
assets is bound or affected, except, in the case of clauses (ii) and (iii)
above, for any such conflicts, violations, breaches, defaults or other
alterations or occurrences that would not: (x) prevent or, to the knowledge of
the Company, delay in any material respect, consummation of the Merger; (y)
otherwise prevent the Company from performing its obligations under this
Agreement in any material respect; or (z) have a Material Adverse Effect on the
Company.
(b) The execution and delivery of this Agreement by the Company do
not, and the performance of this Agreement by the Company will not, require by,
with respect to or on behalf of the Company or any Company Subsidiary any
consent, approval, authorization or permit of, or filing with or notification
to, any governmental or regulatory authority, domestic or foreign (each a
"Governmental Entity"), except: (i) for (A) applicable requirements, if any, of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the
Securities Act of 1933, as amended (the "Securities Act"), state takeover laws,
the National Association of Securities Dealers, Inc. (the "NASD"), the Nasdaq
National Market ("Nasdaq") and the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act
of 1976, as amended (the "HSR Act"), (B) applicable requirements, if any, of the
consents, approvals, authorizations or permits described in Schedule 3.5, and
(C) filing and recordation of appropriate merger documents as required by
Delaware Law; or (ii) where failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would not:
(x) prevent or, to the knowledge of the Company, delay in any material respect
consummation of the Merger; (y) otherwise prevent the Company from performing
its obligations under this Agreement in any material respect; or (z) have a
Material Adverse Effect on the Company.
SECTION 3.6. SEC FILINGS; FINANCIAL STATEMENTS.
(a) The Company has filed all forms, reports, statements and other
documents required to be filed with the SEC since November 26, 1996, and has
heretofore furnished to Acquiror, in the form filed with the SEC since such
date, together with any amendments thereto, all of its: (i) Annual Reports on
Form 10-KSB; (ii) Quarterly Reports on Form 10-QSB; (iii) proxy statements
relating to meetings of stockholders (whether annual or special); (iv) reports
on Form 8-K; and (v) other reports or registration statements filed by the
Company and such Company Subsidiaries (collectively, the "Company SEC Reports").
As of their
16
respective filing dates, the Company SEC Reports: (x) complied as to form in all
material respects with the requirements of the Exchange Act and the Securities
Act, as applicable; and (y) did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading.
(b) The audited consolidated financial statements and unaudited
interim financial statements of the Company (including the notes and schedules
thereto) contained or incorporated by reference in the Company SEC Reports (the
"Company Financial Statements") complied in all material respects with
applicable GAAP accounting requirements and with the rules and regulations of
the SEC with respect thereto. The Company Financial Statements present fairly in
all material respects the consolidated financial position of the Company and the
Company Subsidiaries at the respective dates thereof and the consolidated
results of operations and cash flows of the Company and the Company Subsidiaries
for the periods indicated, in accordance with GAAP applied on a consistent basis
throughout the periods involved (except as may be noted therein) and subject in
the case of interim financial statements to normal year-end adjustments.
SECTION 3.7. NO UNDISCLOSED LIABILITIES.
Neither the Company nor any of the Company Subsidiaries has any
liabilities or obligations of any nature, whether or not accrued, contingent or
otherwise, except: (a) liabilities or obligations reflected in the Company SEC
Reports; (b) liabilities or obligations incurred since March 31, 1999 in the
ordinary course of business consistent with past practices which have not had
and are not reasonably likely to have a Material Adverse Effect on the Company
(without taking into account the effects of the consummation of the Merger,
except for liabilities or obligations the Company has knowledge of as of the
date hereof); and (c) liabilities or obligations which have not had and are not
reasonably likely to have a Material Adverse Effect on the Company (without
taking into account the effects of the consummation of the Merger, except for
liabilities or obligations the Company has knowledge of as of the date hereof).
SECTION 3.8. ABSENCE OF CERTAIN CHANGES OR EVENTS.
Except as disclosed in the Company SEC Reports, since March 31, 1999,
there has not been any Material Adverse Effect on the Company.
SECTION 3.9. ABSENCE OF LITIGATION.
Except as set forth in the Company SEC Reports or in Schedule 3.9,
there are: (a) no claims, actions, suits, investigations or proceedings pending
or, to the Company's knowledge, threatened against the Company or any of the
Company
17
Subsidiaries before any court, administrative, governmental, arbitral, mediation
or regulatory authority or body, domestic or foreign, that have had or would be
reasonably likely to have a Material Adverse Effect on the Company (without
taking into account the effects of the consummation of the Merger, except for
claims, suits, investigations or proceedings the Company has knowledge of as of
the date hereof) or that would prevent or enjoin, or, to the knowledge of the
Company, delay in any material respect, consummation of the Merger or any of the
other transactions contemplated hereby or by the Option Agreement; and (b) no
Orders of any Governmental Entity or arbitrator outstanding against the Company
or any Company Subsidiary that have had or would be reasonably likely to have a
Material Adverse Effect on the Company (without taking into account the effects
of the consummation of the Merger, except for Orders the Company has knowledge
of as of the date hereof) or that would prevent or enjoin, or, to the knowledge
of the Company, delay in any material respect, consummation of the Merger or any
of the other transactions contemplated hereby or by the Option Agreement.
SECTION 3.10. LICENSES AND PERMITS; COMPLIANCE WITH LAWS.
Set forth on Schedule 3.10 is a true and complete list of all material
permits, licenses, franchises, authorizations and approvals (none of which has
been modified or rescinded and all of which are in full force and effect) from
all Governmental Entities held by the Company and the Company Subsidiaries that
are required for the operation of the businesses of the Company and the Company
Subsidiaries as presently conducted and the ownership, operation, lease and
holding by the Company and the Company Subsidiaries of their respective
properties and assets (the "Company Permits"). The Company and the Company
Subsidiaries are in compliance with the terms of the Company Permits and all
applicable statutes, laws, ordinances, rules and regulations, except where the
failure so to comply would not have a Material Adverse Effect on the Company.
SECTION 3.11. UNLAWFUL PAYMENTS.
None of the Company, any Company Subsidiary, nor, to the knowledge of
the Company, any stockholder, officer, director, employee, agent or
representative of the Company or any Company Subsidiary has made, directly or
indirectly, any bribe or kickback, illegal political contribution, payment from
corporate funds which was incorrectly recorded on the books and records of the
Company or any Company Subsidiary, unlawful payment from corporate funds to
governmental or municipal officials in their individual capacities for the
purpose of affecting their action or the actions of the jurisdiction which they
represent to obtain favorable treatment in securing business or licenses or to
obtain special concessions of any kind whatsoever, or illegal payment from
corporate funds to obtain or retain any business.
18
SECTION 3.12. TAXES.
Except as set forth in Schedule 3.12, the Company and the Company
Subsidiaries have prepared and filed on a timely basis with all appropriate
Governmental Entities all material returns, reports, information statements and
other documentation (including extensions) required to be filed by the Company
and the Company Subsidiaries in respect of Taxes (the "Tax Returns") and all
such Tax Returns are correct and complete in all material respects. Except as
set forth in Schedule 3.12, the Company and the Company Subsidiaries have paid
in full all Taxes due (other than Taxes the failure of which to pay have not had
and are not reasonably likely to have a Material Adverse Effect on the Company
(without taking into account the effects of the consummation of the Merger,
except for Taxes the Company has knowledge of as of the date hereof)) and, in
the case of material Taxes accruing but not due, the Company has made adequate
provisions for such payments in the Company Financial Statements contained in
the Company's Quarterly Report on Form 10-QSB in respect of the Company's fiscal
quarter ending March 31, 1999. Except as set forth in Schedule 3.12, the Company
and the Company Subsidiaries have withheld from payments made to its present or
former employees, contractors, officers and directors, creditor or other third
party, all amounts required by law to be withheld except where the liability for
which has not had and would not have a Material Adverse Effect on the Company,
and has, where required, remitted such amounts within the applicable periods to
the appropriate Governmental Entities. In addition, except as set forth in
Schedule 3.12: (a) there are no outstanding assessments of, or claims against,
the Company or the Company Subsidiaries with respect to Taxes, the liability for
which would have a Material Adverse Effect on the Company; (b) no Governmental
Entity is conducting an examination or audit of the Company or any Company
Subsidiary in respect of Taxes and neither the Company nor any Company
Subsidiary has received notice of any such examination or audit from any
Governmental Entity; and (c) neither the Company nor any Company Subsidiary has
executed or filed any agreement extending the period of assessment or collection
of any Taxes which remain in effect.
SECTION 3.13. INTELLECTUAL PROPERTY.
(a) Attached hereto as Schedule 3.13 is a list and brief description
of all material Intellectual Property owned, utilized or licensed by the Company
and the Company Subsidiaries (all of the foregoing items collectively referred
to as the "Company Intellectual Property"). The Company and the Company
Subsidiaries have good title to or the right to use all the Company Intellectual
Property and all material inventions, processes, designs, formulae, trade
secrets and know-how necessary for the conduct of the businesses of the Company
and the Company Subsidiaries, as presently conducted. Except where there would
be no Material Adverse Effect on the Company, to the Company's knowledge, none
of the
19
Company or any of the Company Subsidiaries is infringing on any Intellectual
Property right of others, and the Company has no knowledge of any infringement
by others of such rights owned by the Company or any of the Company
Subsidiaries.
(b) Except as set forth on Schedule 3.13, with respect to each item of
Company Intellectual Property necessary for the conduct of the business of the
Company and the Company Subsidiaries as heretofore and as currently conducted:
(i) the owner thereof (if such owner is the Company or any Company Subsidiary)
possesses all right, title and interest in and to the item; (ii) the item is not
subject to any outstanding Order or charge; (iii) no charge, complaint, action,
suit, proceeding, hearing, investigation, claim or demand is pending or, to the
knowledge of the Company, is threatened which challenges the legality, validity,
enforceability, use or ownership of the item; and (iv) neither the Company nor
any of the Company Subsidiaries has agreed to indemnify any Person for or
against any interference, infringement, misappropriation or other conflict with
respect to the item.
(c) The Company's disclosure in the Company's SEC Reports with respect
to all of the computer software, computer firmware, computer hardware (whether
general or special purpose), and other similar or related items of automated,
computerized, and/or software system(s) that are developed and sold by the
Company or any of the Company Subsidiaries (other than third-party software) or
that are used or relied on by the Company or any Company Subsidiary in the
administration and conduct of their respective businesses does not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
SECTION 3.14. MATERIAL CONTRACTS.
(a) The Company has filed all contracts and agreements required to be
filed by the Company and the Company Subsidiaries as material contracts, as
defined in Item 601(b)(10) of Regulation S-B under the Securities Act. All
agreements filed as exhibits to the Company SEC Reports together with each
agreement that would have been required to be filed as an exhibit to the Company
SEC Reports if such agreement had been entered into prior to the date of filing
any such Company SEC Report are referred to herein as the "Company SEC Material
Contracts."
(b) To the Company's knowledge (after reasonable due investigation),
set forth in Schedule 3.14(b) is a complete and correct list, as of the date of
this Agreement, of all agreements of the following type to which the Company or
a Company Subsidiary is a party or may be bound (collectively, the "Other
Company Material Contracts"): (i) employment, severance, termination,
20
consulting and retirement agreements; (ii) loan agreements, indentures, letters
of credit, mortgages, notes and other debt instruments evidencing indebtedness
in excess of One Hundred Thousand Dollars ($100,000), other than those relating
to intercompany debt among the Company and the Company Subsidiaries or
guarantees of any of the foregoing; (iii) agreements that require aggregate
future payments of more than One Hundred Thousand Dollars ($100,000); (iv)
agreements involving payments in excess of Twenty-Five Thousand Dollars
($25,000) concerning any provisions with respect to a "change in control"; (v)
material agreements with any key employee, director, officer or beneficial owner
(as determined pursuant to Rule 13d-3 promulgated under the Exchange Act) of
five percent (5%) or more of Company Common Stock; (vi) agreements or
arrangements concerning a partnership or joint venture; (vii) agreements or
arrangements requiring noncompetition or material agreements or arrangements
requiring confidentiality; (viii) any written agreement (including any purchase
order, letter agreement or other writing evidencing the Company's arrangements
with customers) whereby the Company or the Company Subsidiaries provided
services in fiscal year 1999 for aggregate payments in excess of Three Hundred
Fifty Thousand Dollars ($350,000) per annum; (ix) all leases (or subleases) with
respect to real property leased by the Company as lessee or sublessee ("Real
Property Leases"); and (x) agreements for a remaining term of five (5) years or
more with any customer of the Company or any Company Subsidiary. The Company SEC
Material Contracts and the Other Company Material Contracts are collectively
referred to herein as the "Company Material Contracts". The parties acknowledge
and agree that the condition precedent to Acquiror's obligation to consummate
the Merger in Section 8.2(a) shall be satisfied with respect to the Company's
representations and warranties set forth in this Section 3.14(b) if such
representations and warranties are substantially true and correct in all
material respects as of the Closing Date.
(c) Except as set forth in Schedule 3.14(c), all Company Material
Contracts are valid and in full force and effect on the date hereof except to
the extent they have previously expired in accordance with their terms, as the
same may have been amended from time to time, and neither the Company nor any
Company Subsidiary has (or has any knowledge that any other party thereto has)
violated any provision of, or committed or failed to perform any act which with
or without notice, lapse of time or both would constitute a default under the
provisions of any Company Material Contract, except for defaults which have not
had and which would not be reasonably likely to have a Material Adverse Effect
on the Company. True and complete copies of all Company Material Contracts have
been delivered to Acquiror or made available for inspection by Acquiror.
21
SECTION 3.15. EMPLOYEE BENEFIT PLANS.
(a) Schedule 3.15 sets forth a list of all of material pension,
retirement, profit-sharing, deferred compensation, stock option, employee stock
ownership, severance pay, vacation or bonus plans or agreements or other
material incentive plans or agreements, all other material written employee
programs, arrangements or agreements and all other material employee benefit
plans or fringe benefit plans, including, without limitation, all "employee
benefit plans" as that term is defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") (collectively,
"Benefit Plans"), currently adopted, maintained by, sponsored in whole or in
part by, or contributed to by the Company or any entity required to be
aggregated with the Company which is a member of the "controlled group of
corporations" which includes the Company within the meaning of Section 414(b) or
(c) of the Code (each, a "Company Commonly Controlled Entity") for the benefit
of present and former employees or directors of the Company and of each Company
Subsidiary or their beneficiaries, or providing benefits to such persons in
respect of services provided to any such entity (collectively, the "Company
Benefit Plans"). Any Company Benefit Plan which is an "employee pension benefit
plan", as that term is defined in Section 3(2) of ERISA, is referred to herein
as a "Company ERISA Plan".
(b) Each of the Company Benefit Plans intended to be "qualified"
within the meaning of Section 401(a) of the Code has been determined by the
Internal Revenue Service to be so qualified and, to the Company's knowledge, no
circumstances exist that could reasonably be expected by the Company to result
in the revocation of any such determination. Each of the Company Benefit Plans
is in compliance with the applicable terms of ERISA and the Code and any other
applicable laws, rules and regulations, the breach or violation of which could
result in a Material Adverse Effect to the Company or any Company Commonly
Controlled Entity.
(c) No Company ERISA Plan which is a defined benefit pension plan has
any "unfunded current liability", as that term is defined in Section
302(d)(8)(A) of ERISA, and the present fair market value of the assets of any
such plan equals or exceeds the plan's "benefit liabilities", as that term is
defined in Section 4001(a)(16) of ERISA, when determined under actuarial factors
that would apply if the plan terminated in accordance with all applicable legal
requirements.
(d) No Company Benefit Plan is or has been a multiemployer plan within
the meaning of Section 3(37) of ERISA (a "Multiemployer Plan"). Neither the
Company nor any Company Commonly Controlled Entity has completely or partially
withdrawn from any Multiemployer Plan. No termination liability to the Pension
Benefit Guaranty Corporation or withdrawal liability to any
22
Multiemployer Plan that is material in the aggregate has been or is reasonably
expected to be incurred with respect to any Multiemployer Plan by the Company or
any Company Commonly Controlled Entity.
(e) The Company has furnished to Acquiror complete copies, as of the
date hereof, of all of the Company Benefit Plans that have been reduced to
writing, together with all documents establishing or constituting any related
trust, annuity contract, insurance contract or other funding instrument, and
copies of all "employee benefit plans" as that term is defined in Section 3(3)
of ERISA, including a summary of such plans that have not been reduced to
writing. The Company has furnished to Acquiror complete copies of all current
plan summaries, employee booklets, personnel manuals and other material
documents or written materials concerning the Company Benefit Plans.
(f) The Company has not made, is not obligated to make, nor is party
to any agreement that under certain circumstances could obligate it to make, any
payments that will not be deductible to the Company under Section 280G of the
Code.
(g) All required reports and descriptions, if any (including Form 5500
Annual Reports, Summary Annual Reports, PBGC 1's and Summary Plan Descriptions)
have been filed or distributed appropriately with respect to each Company
Benefit Plan. The requirements of Part 6 of Subtitle B of Title I of ERISA and
of Section 4980B of the Code ("COBRA"), and the Health Insurance Portability and
Accountability Act of 1996 ("HIPAA") have been met with respect to each Company
Benefit Plan.
(h) No Company Benefit Plan is an ESOP or otherwise invests in
"employer securities" (as such term is defined in Section 409(l) of the Code).
(i) The Company has made all contributions and other payments required
by and due under the terms of each Company Benefit Plan and has taken no action
(including, without limitation, actions required by law) relating to any Company
Benefit Plan that will increase Acquiror's, the Company's or any Company
Commonly Controlled Entity's obligation under any Company Benefit Plan.
(j) No Company Benefit Plan is a "qualified foreign plan" (as such
term is defined in Section 404A of the Code), and no Company Benefit Plan is
subject to the laws of any jurisdiction other than the United States of America
or one of its political subdivisions.
(k) No Company Benefit Plan promises or provides post-retirement
medical life insurance or other benefits due now or in the future to current,
former
23
or retired employees of the Company or any Company Common Controlled Entity
other than benefits required pursuant to COBRA.
(l) Schedule 3.15 sets forth a list of all "pension plans," as such
term is defined in Section 3(2) of ERISA, maintained by the Company or a Company
Commonly Controlled Entity, that have been frozen or terminated in the last
three calendar years.
SECTION 3.16. PROPERTIES; ASSETS.
Neither the Company nor any of the Company Subsidiaries owns (of
record or beneficially) any real property or has any interest in any real
property other than the leasehold interests granted pursuant to the Real
Property Leases. The Company or one of the Company Subsidiaries is the lessee of
all leasehold estates granted pursuant to the Real Property Leases and is in
possession of the properties purported to be leased thereunder, and each such
Real Property Lease is valid without default thereunder by the lessee. The
assets and properties of the Company and the Company Subsidiaries, taken as a
whole, are in good operating condition and repair (ordinary wear and tear
excepted), and constitute all of the assets and properties which are required
for the businesses and operations of the Company and the Company Subsidiaries as
presently conducted.
SECTION 3.17. LABOR RELATIONS.
Neither the Company nor any Company Subsidiary is a party to any
collective bargaining agreement or other contract or agreement with any labor
organization or other representative of any of the employees of the Company or
any Company Subsidiary. The Company and each Company Subsidiary is in compliance
in all material respects with all laws relating to employment or the workplace,
including, without limitation, provisions relating to wages, hours, collective
bargaining, safety and health, work authorization, equal employment opportunity,
immigration and the withholding of income taxes, unemployment compensation,
worker's compensation, employee privacy and right to know and social security
contributions.
SECTION 3.18. ENVIRONMENTAL MATTERS.
Except as disclosed in the Company SEC Reports, (a) each of the
Company and each Company Subsidiary is in material compliance with all
applicable Environmental Laws and neither the Company nor any Company Subsidiary
has violated or infringed in any material respect any Environmental Law; (b)
neither the Company nor any Company Subsidiary has received any written
communication that alleges that the Company or any Company Subsidiary is not in
material compliance with any applicable Environmental Law; (c) all material
permits and other governmental authorizations currently held by the
24
Company and each Company Subsidiary pursuant to the Environmental Laws
("Environmental Permits") are in full force and effect, the Company and each
Company Subsidiary are in material compliance with all of the terms of such
Environmental Permits, and no other material Environmental Permits are required
by the Company or any Company Subsidiary for the conduct of their respective
businesses; and (d) there is no material liability under any Environmental Law
affecting the Company or any Company Subsidiary or any of their respective
properties or assets.
SECTION 3.19. INSURANCE.
Schedule 3.19 contains a list of all insurance policies of director
and officer liability, title, property, fire, casualty, liability, life,
workmen's compensation, libel and slander, and other forms of insurance in force
with respect to the Company and the Company Subsidiaries. All such insurance
policies: (a) are in full force and effect; and (b) are valid, outstanding, and
enforceable. Neither the Company nor any of the Company Subsidiaries has
received or given notice of cancellation with respect to any such insurance
policies.
SECTION 3.20. BOARD APPROVAL; VOTE REQUIRED.
The Board of Directors of the Company has determined that the
transactions contemplated by this Agreement, the Option Agreement, the Company
Voting Agreement and the Acquiror Voting Agreement are fair to, advisable and in
the best interests of the Company and its stockholders and has resolved to
recommend to such stockholders that they vote in favor of this Agreement. The
affirmative vote at the Company Stockholders Meeting of a majority of all
outstanding shares of Company Common Stock to adopt this Agreement is the only
vote of the holders of any class or series of the Company's capital stock
necessary to approve this Agreement and the transactions contemplated hereby,
including the Merger.
SECTION 3.21. OPINION OF FINANCIAL ADVISOR.
The Board of Directors of the Company has received the written opinion
dated the date hereof of ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc., the Company's financial
advisor, to the effect that the Exchange Ratio is fair from a financial point of
view to the Holders as of the date of such opinion. A copy of such opinion has
been delivered to Acquiror and such opinion has not been withdrawn or modified
in any material respect.
SECTION 3.22. BROKERS.
Except for ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc., no broker, finder or investment
banker is entitled to any brokerage, finder's or other fee or commission
24
in connection with the transactions contemplated by this Agreement and the
Option Agreement based upon arrangements made by or on behalf of the Company.
Prior to the date of this Agreement, the Company has provided to Acquiror a
complete and correct copy of all agreements between the Company and ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ Inc. pursuant to which such firm will be entitled to any payment
relating to the transactions contemplated by this Agreement and the Option
Agreement.
SECTION 3.23. TAKEOVER PROVISIONS INAPPLICABLE.
The Board of Directors of the Company has approved this Agreement and
the transactions contemplated by this Agreement (including those contemplated by
the Option Agreement, the Company Voting Agreement and the Acquiror Voting
Agreement). The Board of Directors has taken all action required by it in order
to exempt this Agreement and the transactions contemplated hereby and by the
Option Agreement and the Company Voting Agreement from Section 203 of Delaware
Law.
SECTION 3.24. POOLING; TAX MATTERS.
Neither the Company nor any of its Affiliates has taken or agreed to
take any action or failed to take any action that would prevent the Merger from
(a) being treated for financial accounting purposes as a "pooling of interests"
in accordance with GAAP and the regulations and interpretations of the SEC; or
(b) constituting a reorganization within the meaning of Section 368(a)2(E) of
the Code.
SECTION 3.25. REGISTRATION STATEMENT; PROXY STATEMENT/PROSPECTUS.
The information supplied by the Company or required to be supplied by
the Company (except to the extent revised or superseded by amendments or
supplements) for inclusion in the registration statement on Form S-4, or any
amendment or supplement thereto, relating to the registration under the
Securities Act of the shares of Acquiror Common Stock to be issued in the Merger
(including any amendments or supplements, the "Registration Statement") shall
not, at the time the Registration Statement is declared effective by the SEC,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The information supplied by the Company or required to be supplied
by the Company (except to the extent revised or superseded by amendments or
supplements) for inclusion in the proxy statement relating to the Company
Stockholders Meeting (as hereinafter defined) (such proxy statement, together
with the proxy statement relating to the Acquiror Stockholders Meeting (as
hereinafter defined), in each case
26
as amended or supplemented from time to time, the "Joint Proxy Statement") shall
not, on the date the Joint Proxy Statement is first mailed to the Holders, at
the time of the Company Stockholders Meeting and at the Effective Time, contain
any statement which, at such time, is false or misleading with respect to any
material fact, or omit to state any material fact necessary in order to make the
statements made therein, in light of the circumstances under which they are
made, not false or misleading, or omit to state any material fact necessary to
correct any statement in any earlier communication with respect to the
solicitation of proxies by or on behalf of the Company for the Company
Stockholders Meeting which has become false or misleading. Notwithstanding the
foregoing, the Company makes no representation, warranty or covenant with
respect to any information supplied or required to be supplied by Acquiror which
is contained in or omitted from any of the foregoing documents.
SECTION 3.26. DISCLOSURE.
No representation or warranty of the Company in this Agreement and no
statement in the Company's disclosure schedules contains any statement which is
false or misleading with respect to any material fact or omits to state a
material fact necessary to make the statements herein or therein, in light of
the circumstances in which they were made, not false or misleading.
27
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF
ACQUIROR AND MERGER SUB
Acquiror and Merger Sub jointly and severally represent and warrant to
the Company as follows:
SECTION 4.1. ORGANIZATION AND QUALIFICATION.
Merger Sub is a corporation duly organized, validly existing and in
good standing under Delaware Law. Merger Sub was formed solely for the purpose
of engaging in the transactions contemplated by this Agreement. As of the date
of this Agreement, except for obligations or liabilities incurred in connection
with its incorporation and organization and otherwise in connection with the
transactions contemplated by this Agreement, Merger Sub has not incurred,
directly or indirectly, any obligations or liabilities or engaged in any
business activities of any type or kind whatsoever or entered into any
agreements or arrangements with any Person.
SECTION 4.2. CERTIFICATE OF INCORPORATION AND BYLAWS.
Merger Sub has heretofore delivered to the Company a complete and
correct copy of the certificate of incorporation and the bylaws of Merger Sub,
each as amended to date. Such certificate of incorporation and bylaws are in
full force and effect. Merger Sub is not in violation of any of the provisions
of its certificate of incorporation or bylaws.
SECTION 4.3. CAPITALIZATION.
The authorized capital of the Merger Sub is as set forth in its
certificate of incorporation. As of the date hereof, there are 1,000 shares of
Merger Sub Stock issued and outstanding, all of which are owned by Acquiror
SECTION 4.4. AUTHORITY.
Merger Sub has the necessary corporate power and authority to enter
into this Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by Merger Sub and the consummation by Merger Sub of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action and no other corporate proceedings on the part of Merger Sub
are necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
Merger Sub and, assuming the due authorization, execution and delivery of this
Agreement by the Company and Acquiror, constitutes a legal, valid and binding
28
obligation of Merger Sub, enforceable in accordance with its terms, except as
such enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws of general applicability relating to or
affecting creditors' rights generally and by the application of general
principles of equity.
SECTION 4.5. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by Merger Sub do not,
and the performance by Merger Sub of its obligations under this Agreement will
not: (i) conflict with or violate the certificate of incorporation or bylaws of
Merger Sub; (ii) subject to compliance with the requirements set forth in
Section 4.5(b) below, conflict with or violate any Order applicable to Merger
Sub or by which any of its properties or assets is bound or affected; or (iii)
result in any breach of or constitute a default (or an event which with notice
or lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, or result in
the creation of any Encumbrance on any of the properties or assets of Merger Sub
pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which Merger Sub
is a party or by which Merger Sub or any of its properties or assets is bound or
affected, except, in the case of clauses (ii) and (iii) above, for any such
conflicts, violations, breaches, defaults or other alterations or occurrences
that would not: (x) prevent or, to the knowledge of Acquiror, delay in any
material respect consummation of the Merger; (y) otherwise prevent Merger Sub
from performing its obligations under this Agreement in any material respect; or
(z) have a Material Adverse Effect on Merger Sub.
(b) The execution and delivery of this Agreement by Merger Sub does
not, and the performance of this Agreement by Merger Sub will not, require by,
with respect to or on behalf of Merger Sub any consent, approval, authorization
or permit of, or filing with or notification to, any Governmental Entity,
except: (i) for (A) applicable requirements, if any, of the Exchange Act, the
Securities Act, state securities or blue sky laws, state takeover laws, the
NASD, and the HSR Act, (B) applicable requirements, if any, of the consents,
approvals, authorizations or permits described in Schedule 5.5, and (C) filing
and recordation of appropriate merger documents as required by Delaware Law; or
(ii) where failure to obtain such consents, approvals, authorizations or
permits, or to make such filings or notifications, would not: (x) prevent or, to
the knowledge of Acquiror, delay in any material respect consummation of the
Merger; (y) otherwise prevent Merger Sub from performing its obligations under
this Agreement in any material respect; or (z) have a Material Adverse Effect on
Merger Sub.
29
ARTICLE V.
REPRESENTATIONS AND WARRANTIES
OF ACQUIROR
Acquiror hereby represents and warrants to the Company, subject to the
exceptions set forth herein and in the Acquiror's disclosure schedules (which
exceptions shall specifically identify a section, subsection or clause of a
single section or subsection hereof, as applicable, to which such exception
relates, it being understood and agreed that each such exception shall be deemed
to be disclosed both under such section, subsection or clause hereof and any
other section, subsection or clause hereof to which such disclosure reasonably
relates) that:
SECTION 5.1. ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
Each of Acquiror and each Subsidiary of Acquiror (each an "Acquiror
Subsidiary" and collectively, the "Acquiror Subsidiaries") is a corporation or
partnership duly organized, validly existing and in good standing under the laws
of the jurisdiction of its organization. Each of Acquiror and each Acquiror
Subsidiary is duly qualified to conduct its business, and is in good standing,
in each jurisdiction where the character of its properties owned, operated or
leased or the nature of its business makes such qualification necessary, except
for such failures which would not have a Material Adverse Effect on Acquiror.
Each of Acquiror and each Acquiror Subsidiary has the requisite corporate power
and authority to own, operate, lease and otherwise to hold its assets and
properties and to carry on its business as now being conducted, except for such
failures which would not have a Material Adverse Effect on Acquiror. Acquiror
has no Subsidiaries other than those listed in Schedule 5.1, each of which is
directly or indirectly wholly-owned by Acquiror, or any direct or indirect
beneficial ownership of any securities, equity or other ownership interest in
any Person other than those listed in Schedule 5.1.
SECTION 5.2. CERTIFICATE OF INCORPORATION AND BYLAWS.
Acquiror has heretofore delivered to the Company a complete and
correct copy of the articles of incorporation and the bylaws of Acquiror, each
as amended to date. Such articles of incorporation and bylaws are in full force
and effect. Acquiror is not in violation of any of the provisions of its
articles of incorporation or bylaws.
SECTION 5.3. CAPITALIZATION.
(a) The authorized capital stock of Acquiror consists of one hundred
twenty-five million (125,000,000) shares of Acquiror Common Stock and one
million two hundred fifty thousand (1,250,000) shares of preferred stock, par
value $.001 per share ("Acquiror Preferred Stock"). As of May 28, 1999: (i)
thirty-four million seven-hundred eighteen thousand nine hundred thirty
seven(34,718,937) shares of
30
Acquiror Common Stock were issued and outstanding; (ii) no shares of Acquiror
Preferred Stock were issued and outstanding; (iii) nine million nine-hundred
seventy-one thousand eight hundred eighteen (9,971,818) shares of Acquiror
Common Stock were reserved for issuance upon the exercise of outstanding
employee stock options or other rights to purchase or receive Acquiror Common
Stock granted under Acquiror's 1998 Stock Option and Incentive Plan (the
"Acquiror Stock Option Plan"); (iv) six-hundred sixty-nine thousand three
hundred six (669,306) shares of Acquiror Common Stock were reserved for issuance
pursuant to Acquiror's Employee Stock Purchase Plan (the "Acquiror Stock
Purchase Plan"); and (v) no shares of Acquiror Common Stock were held by
Acquiror in Acquiror's treasury.
(b) All outstanding shares of capital stock of Acquiror are, and all
shares which may be issued pursuant to the Acquiror Stock Option Plan or
Acquiror Stock Purchase Plan will be, when issued, duly authorized, validly
issued, fully paid and nonassessable and not subject to preemptive rights.
Except as set forth in this Section 5.3 and except for changes since March 31,
1999 resulting from the issuance of shares of Acquiror Common Stock pursuant to
the Acquiror Stock Option Plan or the Acquiror Stock Purchase Plan or as
expressly permitted by this Agreement: (i) there are not issued, reserved for
issuance or outstanding (A) any shares of capital stock or other voting
securities of Acquiror, (B) any securities of Acquiror or any Acquiror
Subsidiary convertible into or exchangeable or exercisable for shares of capital
stock or voting securities of or ownership interests in Acquiror or any Acquiror
Subsidiary, (C) any warrants, calls, options or other rights to acquire from
Acquiror or any Acquiror Subsidiary, or any obligation of Acquiror or any
Acquiror Subsidiary to issue, any capital stock, voting securities or other
ownership interests in, or securities convertible into or exchangeable or
exercisable for capital stock or voting securities of or other ownership
interests in, Acquiror or any Acquiror Subsidiary; and (ii) there are no
outstanding obligations of Acquiror or any Acquiror Subsidiary to repurchase,
redeem or otherwise acquire any such securities or to issue, deliver or sell, or
cause to be issued, delivered or sold, any such securities.
(c) Except as described in Schedule 5.3, neither Acquiror nor any
Acquiror Subsidiary is a party to any agreement restricting the purchase or
transfer of, relating to the voting of, requiring registration of, or granting
any preemptive or, except as provided by the terms of Acquiror Stock Option
Plans or the Acquiror Stock Purchase Plan, antidilutive rights with respect to,
any securities of the type described in this Section 5.3.
SECTION 5.4. AUTHORITY.
Acquiror has the necessary corporate power and authority to enter into
this Agreement and, subject to obtaining the requisite stockholder approval
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(the "Acquiror Stockholder Approval") of the Stock Issuance, to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
Except for the Acquiror Stockholder Approval, the execution and delivery of this
Agreement by Acquiror and the consummation by Acquiror of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action and no other proceedings on the part of Acquiror are necessary
to authorize this Agreement or to consummate the transactions contemplated
hereby. Acquiror has taken all steps necessary, as the sole stockholder of
Merger Sub, to authorize and approve the execution, delivery and performance of
the terms of this Agreement by Merger Sub. This Agreement has been duly executed
and delivered by Acquiror and, assuming the due authorization, execution and
delivery by the Company, constitutes a legal, valid and binding obligation of
Acquiror, enforceable in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws of general applicability relating to or
affecting creditors' rights generally and by the application of general
principles of equity.
SECTION 5.5. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by Acquiror do not,
and the performance by Acquiror of its obligations under this Agreement will
not: (i) conflict with or violate the articles of incorporation or bylaws of
Acquiror; (ii) subject to obtaining the approvals and compliance with the
requirements set forth in Section 5.5(b) below, conflict with or violate any
Order applicable to Acquiror or any Acquiror Subsidiary or by which any of their
respective properties or assets is bound or affected; or (iii) except as set
forth in Schedule 5.5, result in any breach of or constitute a default (or an
event which with or without notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of an Encumbrance on
any of the properties or assets of Acquiror or any Acquiror Subsidiary pursuant
to, any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which Acquiror or any
Acquiror Subsidiary is a party or by which Acquiror, any Acquiror Subsidiary or
any of their respective properties or assets is bound or affected, except, in
the case of clauses (ii) and (iii) above, for any such conflicts, violations,
breaches, defaults or other alterations or occurrences that would not: (x)
prevent or, to the knowledge of Acquiror, delay in any material respect
consummation of the Merger; (y) otherwise prevent Acquiror from performing its
obligations under this Agreement in any material respect; or (z) have a Material
Adverse Effect on Acquiror.
(b) The execution and delivery of this Agreement by Acquiror does not,
and the performance of this Agreement by Acquiror will not, require by, with
respect to or on behalf of Acquiror or any Acquiror Subsidiary any consent,
32
approval, authorization or permit of, or filing with or notification to, any
Governmental Entity, except (i) for (A) applicable requirements, if any, of the
Securities Act, state securities or blue sky laws, Exchange Act, state takeover
laws, the Nasdaq, the NASD and the HSR Act, (B) applicable requirements, if any,
of the consents, approvals, authorizations or permits described in Schedule 5.5,
and (C) filing and recordation of appropriate merger documents as required by
Delaware Law, or (ii) where failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would not:
(x) prevent or, to the knowledge of Acquiror, delay in any material respect
consummation of the Merger; (y) otherwise prevent Acquiror from performing its
obligations under this Agreement in any material respect; or (z) have a Material
Adverse Effect on Acquiror.
SECTION 5.6. SEC FILINGS; FINANCIAL STATEMENTS.
(a) Acquiror, and each Acquiror Subsidiary required to file, has filed
all forms, reports, statements and other documents required to be filed with the
SEC since May 28, 1998, and has heretofore furnished to the Company, in the form
filed with the SEC since such date, together with any amendments thereto, all of
its (i) Annual Reports on Form 10-K; (ii) Quarterly Reports on Form 10-Q; (iii)
proxy statements relating to meetings of stockholders (whether annual or
special); (iv) reports on Form 8-K; and (v) other reports or registration
statements filed by Acquiror and such Acquiror Subsidiaries (collectively, the
"Acquiror SEC Reports"). As of their respective filing dates, the Acquiror SEC
Reports: (x) complied as to form in all material respects with the requirements
of the Exchange Act and the Securities Act, as applicable; and (y) did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
(b) The audited consolidated financial statements and unaudited
interim financial statements of Acquiror (including the notes and schedules
thereto) contained or incorporated by reference in the Acquiror SEC Reports (the
"Acquiror Financial Statements") complied in all material respects with
applicable GAAP accounting requirements and with the rules and regulations of
the SEC with respect thereto. The Acquiror Financial Statements present fairly
in all material respects the consolidated financial position of Acquiror and the
Acquiror Subsidiaries at the respective dates thereof and the consolidated
results of operations and cash flows of Acquiror and the Acquiror Subsidiaries
for the periods indicated, in accordance with GAAP applied on a consistent basis
throughout the periods involved (except as may be noted therein) and subject in
the case of interim financial statements to normal year-end adjustments.
33
SECTION 5.7. NO UNDISCLOSED LIABILITIES.
Neither Acquiror nor any of the Acquiror Subsidiaries has any
liabilities or obligations of any nature, whether or not accrued, contingent or
otherwise, except: (a) liabilities or obligations reflected in the Acquiror SEC
Reports; (b) liabilities or obligations incurred since March 31, 1999 in the
ordinary course of business consistent with past practices which have not had,
and are not reasonably likely to have (without taking into account the effects
of the consummation of the Merger), a Material Adverse Effect on Acquiror; and
(c) liabilities or obligations which have not had, and are not reasonably likely
to have (without taking into account the effects of the consummation of the
Merger), a Material Adverse Effect on Acquiror.
SECTION 5.8. ABSENCE OF CERTAIN CHANGES OR EVENTS.
Except as disclosed in the Acquiror SEC Reports, since March 31, 1999,
there has not been any Material Adverse Effect on Acquiror.
SECTION 5.9. ABSENCE OF LITIGATION.
Except as set forth in the Acquiror SEC Reports or in Schedule 5.9,
there are: (a) no claims, actions, suits, investigations, or proceedings pending
or, to Acquiror's knowledge, threatened against Acquiror or any of the Acquiror
Subsidiaries before any court, administrative, governmental, arbitral, mediation
or regulatory authority or body, domestic or foreign, that would be reasonably
likely to have a Material Adverse Effect on Acquiror or that would prevent or
enjoin, or delay in any material respect, consummation of the Merger or the
transactions contemplated hereby or by the Option Agreement; and (b) no Orders
of any Governmental Entity or arbitrator outstanding against Acquiror or any
Acquiror Subsidiary that would reasonably be likely to have an Material Adverse
Effect on Acquiror or that would prevent or enjoin, or delay in any material
respect, consummation of the Merger or the transactions contemplated hereby or
by the Option Agreement.
SECTION 5.10. LICENSES AND PERMITS; COMPLIANCE WITH LAWS.
Except as set forth in Schedule 5.10 or disclosed in the
Acquiror SEC Reports, Acquiror and Acquiror Subsidiaries hold all permits,
licenses, franchises, authorizations and approvals (none of which has been
modified or rescinded and all of which are in full force and effect) from all
Governmental Entities (collectively, the "Acquiror Permits") necessary for
Acquiror and Acquiror Subsidiaries to own, lease and operate their respective
properties and assets and to carry on their respective businesses as presently
conducted, except where the failure to have any such permits, licenses or
approvals would not have a Material Adverse Effect on Acquiror. Acquiror and
Acquiror Subsidiaries are in compliance with the terms of
34
the Acquiror Permits and all applicable statutes, laws, ordinances, rules and
regulations, except where the failure so to comply would not have a Material
Adverse Effect on the Company.
SECTION 5.11. UNLAWFUL PAYMENTS.
None of the Acquiror, any Acquiror Subsidiary, nor, to the knowledge
of Acquiror, any stockholder, officer, director, employee, agent or
representative of Acquiror or any Acquiror Subsidiary has made, directly or
indirectly, any bribe or kickback, illegal political contribution, payment from
corporate funds which was incorrectly recorded on the books and records of
Acquiror or any Acquiror Subsidiary, unlawful payment from corporate funds to
governmental or municipal officials in their individual capacities for the
purpose of affecting their action or the actions of the jurisdiction which they
represent to obtain favorable treatment in securing business or licenses or to
obtain special concessions of any kind whatsoever, or illegal payment from
corporate funds to obtain or retain any business.
SECTION 5.12. TAXES.
Except as set forth in Schedule 5.12, Acquiror and the Acquiror
Subsidiaries have prepared and filed on a timely basis with all appropriate
Governmental Entities all Tax Returns required to be filed by Acquiror and the
Acquiror Subsidiaries and all such Tax Returns are correct and complete in all
material respects. Except as set forth in Schedule 5.12, Acquiror and the
Acquiror Subsidiaries have paid in full all Taxes due (other than Taxes, the
failure of which to pay have not had and are not reasonably likely to have a
Material Adverse Effect on Acquiror) and, in the case of material Taxes accruing
but not due, Acquiror has made adequate provision in its books and records and
financial statements for such payment. Except as set forth in Schedule 5.12,
Acquiror and the Acquiror Subsidiaries have withheld from payments made to its
present or former employees, officers and directors all amounts required by law
to be withheld, except where the liability for which has not had and would not
have a Material Adverse Effect on Acquiror, and has, where required, remitted
such amounts within the applicable periods to the appropriate Governmental
Entities. In addition, except as set forth in Schedule 5.12: (a) there are no
assessments of, or claims against, Acquiror or the Acquiror Subsidiaries with
respect to Taxes, the liability for which would have a Material Adverse Effect
on Acquiror, that are outstanding; (b) to Acquiror's knowledge, no Governmental
Entity is conducting an examination or audit of Acquiror or any Acquiror
Subsidiary in respect of Taxes and neither Acquiror nor any Acquiror Subsidiary
has received notice of any such examination or audit from any Governmental
Entity; and (c) neither Acquiror nor any Acquiror Subsidiary has executed or
filed any agreement extending the period of assessment or collection of any
Taxes which remain in effect.
35
SECTION 5.13. INTELLECTUAL PROPERTY.
(a) Except as described on Schedule 5.13, Acquiror and the Acquiror
Subsidiaries have good title to or the right to use all material Intellectual
Property owned, utilized or licensed by Acquiror and the Acquiror Subsidiaries
(all of the foregoing items collectively referred to as the "Acquiror
Intellectual Property") and all material inventions, processes, designs,
formulae, trade secrets and know-how necessary for the conduct of the businesses
of the Acquiror and the Acquiror Subsidiaries, as presently conducted or
currently proposed to be conducted. Except as set forth on Schedule 5.13 or
where there would be no Material Adverse Effect on Acquiror, to Acquiror's
knowledge, none of Acquiror or any of the Acquiror Subsidiaries are infringing
on any Intellectual Property right of others, and Acquiror has no knowledge of
any infringement by others of such rights owned by the Acquiror and the Acquiror
Subsidiaries. Except as set forth on Schedule 5.13, with respect to each item of
Acquiror Intellectual Property necessary for the conduct of the business of
Acquiror and the Acquiror Subsidiaries as heretofore and as currently conducted:
(i) the owner thereof (if such owner is Acquiror or any Acquiror Subsidiary)
possesses all right, title and interest in and to the item; (ii) the item is not
subject to any outstanding Order or charge; (iii) no charge, complaint, action,
suit, proceeding, hearing, investigation, claim, or demand is pending or, to the
knowledge of Acquiror, is threatened which challenges the legality, validity,
enforceability, use or ownership of the item; and (iv) neither Acquiror nor any
of the Acquiror Subsidiaries has agreed to indemnify any Person for or against
any interference, infringement, misappropriation or other conflict with respect
to the item.
(b) Acquiror's disclosure in the Acquiror SEC Reports with respect to
all of the computer software, computer firmware, computer hardware (whether
general or special purpose), and other similar or related items of automated,
computerized, and/or software system(s) that are developed and sold by Acquiror
or any of the Acquiror Subsidiaries (other than third-party software) or that
are used or relied on by Acquiror or any Acquiror Subsidiary in the
administration and conduct of their respective businesses does not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
SECTION 5.14. MATERIAL CONTRACTS.
The Acquiror has filed all contracts required to be filed as material
contracts, as defined in Item 601(b)(10) of Regulation S-K under the Securities
Act. Except as set forth in Schedule 5.14, all agreements filed as exhibits to
Acquiror SEC Reports and each agreement that would have been required to be
filed as an exhibit to Acquiror SEC Reports if such agreement had been entered
into prior to
36
the date of filing any such Acquiror SEC Report (collectively, the "Acquiror
Material Contracts") are valid and in full force and effect on the date hereof
except to the extent they have previously expired in accordance with their
terms, as the same may have been amended from time to time, and neither Acquiror
nor any Acquiror Subsidiary has (or has any knowledge that any other party
thereto has) violated any provision of, or committed or failed to perform any
act which with or without notice, lapse of time or both would constitute a
default under the provisions of any Acquiror Material Contract, except for
defaults which have not had and which would not be reasonably likely to have a
Material Adverse Effect on Acquiror.
SECTION 5.15. EMPLOYEE BENEFIT PLANS.
(a) Except as disclosed on Schedule 5.15, each of the Benefit Plans
currently adopted, maintained by, sponsored in whole or in part by, or
contributed to by Acquiror or any entity required to be aggregated with Acquiror
which is a member of the "controlled group of corporations" which includes
Acquiror within the meaning of Section 414(b) or (c) of the Code (each, an
"Acquiror Commonly Controlled Entity") for the benefit of present and former
employees or directors of Acquiror and of each Acquiror Subsidiary or their
beneficiaries, or providing benefits to such persons in respect of services
provided to any such entity (collectively, the "Acquiror Benefit Plans"),
intended to be "qualified" within the meaning of Section 401(a) of the Code has
been determined by the Internal Revenue Service to be so qualified and, to
Acquiror's knowledge, no circumstances exist that could reasonably be expected
by Acquiror to result in the revocation of any such determination. Each of the
Acquiror Benefit Plans is in compliance with the applicable terms of ERISA and
the Code and any other applicable laws, rules and regulations the breach or
violation of which could result in a Material Adverse Effect to Acquiror or any
Acquiror Commonly Controlled Entity.
(b) No Acquiror Benefit Plan which is an "employee pension benefit
plan", as that term is defined in Section 3(2) of ERISA (an "Acquiror ERISA
Plan"), which is a defined benefit pension plan has any "unfunded current
liability", as that term is defined in Section 302(d)(8)(A) of ERISA.
(c) No Acquiror Benefit Plan is a Multiemployer Plan. Neither Acquiror
nor any Acquiror Commonly Controlled Entity has completely or partially
withdrawn from any Multiemployer Plan. No termination liability to the Pension
Benefit Guaranty Corporation or withdrawal liability to any Multiemployer Plan
that is material in the aggregate has been or is reasonably expected to be
incurred with respect to any Multiemployer Plan by Acquiror or any Acquiror
Commonly Controlled Entity.
37
(d) Acquiror has not made, is not obligated to make, nor is party to
any agreement that under certain circumstances could obligate it to make, any
payments that will not be deductible to Acquiror under Section 280G of the Code.
(e) All required reports and descriptions, if any (including Form 5500
Annual Reports, Summary Annual Reports, PBGC 1's and Summary Plan Descriptions)
have been filed or distributed appropriately with respect to each Acquiror
Benefit Plan. The requirements of Part 6 of Subtitle B of Title I of ERISA and
of Section 4980B of the Code ("COBRA"), and the Health Insurance Portability and
Accountability Act of 1996 ("HIPAA") have been met with respect to each Acquiror
Benefit Plan.
(f) No Acquiror Benefit Plan is an ESOP or otherwise invests in
"employer securities" (as such term is defined in Section 409(l) of the Code).
(g) Acquiror has made all contributions and other payments required by
and due under the terms of each Acquiror Benefit Plan and has taken no action
(including, without limitation, actions required by law) relating to any
Acquiror Benefit Plan that will increase Acquiror's or any Acquiror Commonly
Controlled Entity's obligation under any Acquiror Benefit Plan.
(h) No Acquiror Benefit Plan is a "qualified foreign plan" (as such
term is defined in Section 404A of the Code), and no Acquiror Benefit Plan is
subject to the laws of any jurisdiction other than the United States of America
or one of its political subdivisions.
(i) No Acquiror Benefit Plan promises or provides post-retirement
medical life insurance or other benefits due now or in the future to current,
former or retired employees of Acquiror or any Acquiror Common Controlled Entity
other than benefits required pursuant to COBRA.
SECTION 5.16. LABOR RELATIONS.
Neither Acquiror nor any Acquiror Subsidiary is a party to any
collective bargaining agreement or other contract or agreement with any labor
organization or other representative of any of the employees of Acquiror or any
Acquiror Subsidiary. Acquiror and each Acquiror Subsidiary are in compliance in
all material respects with all laws relating to employment or the workplace,
including, without limitation, provisions relating to wages, hours, collective
bargaining, safety and health, work authorization, equal employment opportunity,
immigration and the withholding of income taxes, unemployment compensation,
worker's compensation, employee privacy and right to know and social security
contributions.
38
SECTION 5.17. BOARD APPROVAL; VOTE REQUIRED.
The Board of Directors of Acquiror has determined that the
transactions contemplated by this Agreement, the Option Agreement and the
Company Voting Agreement are advisable and in the best interests of Acquiror and
its stockholders and has resolved to recommend to such stockholders that they
vote in favor of the Stock Issuance. The affirmative vote at the Acquiror
Stockholders Meeting of a majority of all outstanding shares of Acquiror Common
Stock to approve the Stock Issuance is the only vote of the holders of any class
or series of the Acquiror's capital stock necessary for consummation by Acquiror
of the Merger and the other transactions contemplated hereby.
SECTION 5.18. OPINION OF FINANCIAL ADVISOR.
The Board of Directors of Acquiror has received the written opinion of
▇▇▇▇▇▇▇ ▇▇▇▇▇ Financial, Inc., Acquiror's financial advisor, addressed to the
stockholders of Acquiror, to the effect that, as of the date of such opinion,
the Exchange Ratio is fair from a financial point of view to the holders of
Acquiror Common Stock. A copy of such opinion has been delivered to the Company
and such opinion has not been withdrawn or modified in any material respect.
SECTION 5.19. BROKERS.
No broker, finder or investment banker is entitled to any brokerage,
finder's or other fee or commission in connection with the transactions
contemplated by this Agreement and the Option Agreement based upon arrangements
made by or on behalf of Acquiror.
SECTION 5.20. POOLING; TAX MATTERS.
Neither Acquiror nor any of its Affiliates has taken or agreed to take
any action or failed to take any action that would prevent the Merger from: (a)
being treated for financial accounting purposes as a "pooling of interests" in
accordance with GAAP and the regulations and interpretations of the SEC; or (b)
constituting a reorganization within the meaning of Section 368(a)2(E) of the
Code.
SECTION 5.21. REGISTRATION STATEMENT; PROXY STATEMENT/PROSPECTUS.
The information supplied by Acquiror or required to be supplied by
Acquiror (except to the extent revised or superseded by amendments or
supplements) for inclusion in the Registration Statement shall not, at the time
the Registration Statement is declared effective by the SEC, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated
39
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The information
supplied by Acquiror or required to be supplied by Acquiror (except to the
extent revised or superseded by amendments or supplements) for inclusion in the
Joint Proxy Statement shall not, on the date the Joint Proxy Statement is first
mailed to Acquiror's stockholders, at the time of the Acquiror Stockholders
Meeting and at the Effective Time, contain any statement which, at such time, is
false or misleading with respect to any material fact, or omit to state any
material fact necessary in order to make the statements made therein, in light
of the circumstances under which they are made, not false or misleading, or omit
to state any material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies by or on behalf of
Acquiror for the Acquiror Stockholders Meeting which has become false or
misleading. Notwithstanding the foregoing, Acquiror makes no representation,
warranty or covenant with respect to any information supplied or required to be
supplied by the Company which is contained in or omitted from any of the
foregoing documents.
SECTION 5.22. ENVIRONMENTAL MATTERS.
Except as disclosed in the Acquiror SEC Reports, (a) each of Acquiror
and each Acquiror Subsidiary is in material compliance with all applicable
Environmental Laws and neither Acquiror nor any Acquiror Subsidiary has violated
or infringed in any material respect any Environmental Law; (b) neither Acquiror
nor any Acquiror Subsidiary has received any written communication that alleges
that Acquiror or any Acquiror Subsidiary is not in material compliance with any
applicable Environmental Law; (c) all material Environmental Permits currently
held by Acquiror and each Acquiror Subsidiary pursuant to the Environmental Laws
are in full force and effect, Acquiror and each Acquiror Subsidiary are in
material compliance with all of the terms of such Environmental Permits, and no
other material Environmental Permits are required by Acquiror or any Acquiror
Subsidiary for the conduct of their respective businesses; and (d) there is no
material liability under any Environmental Law affecting Acquiror or any
Acquiror Subsidiary or any of their respective properties or assets.
SECTION 5.23. DISCLOSURE.
No representation or warranty of Acquiror or Merger Sub in this
Agreement and no statement in the Acquiror's disclosure schedules contains any
statement which is false or misleading with respect to any material fact or
omits to state a material fact necessary to make the statements herein or
therein, in light of the circumstances in which they were made, not misleading.
40
ARTICLE VI.
COVENANTS
SECTION 6.1. AFFIRMATIVE COVENANTS OF THE COMPANY.
The Company hereby covenants and agrees that, prior to the Effective
Time, unless otherwise expressly contemplated by this Agreement or the Option
Agreement or consented to in writing by Acquiror (which consent shall not be
unreasonably withheld, delayed or conditioned), the Company shall, and shall
cause each Company Subsidiary to: (a) operate its business in the usual and
ordinary course consistent with past practices; (b) use its reasonable efforts
to preserve substantially intact its business organization, maintain its rights
and franchises, retain the services of its respective principal officers and key
employees and maintain its relationship with its respective principal customers
and suppliers; (c) use its reasonable efforts to maintain and keep its
properties and assets in as good repair and condition as at present, ordinary
wear and tear excepted; (d) use its reasonable efforts to keep in full force and
effect insurance comparable in amount and scope of coverage to that currently
maintained; (e) prepare and file all Tax Returns required to be filed in a
timely manner, and in a manner consistent with past practices and applicable
laws and regulations; (f) timely file with the SEC all reports required to be
filed under the Exchange Act, which reports (including the unaudited interim
financial statements included in such reports) shall comply in all material
respects with the Exchange Act, the rules and regulations promulgated thereunder
and all applicable accounting requirements; and (g) operate its business in
accordance with the terms of its licenses and in all material respects with all
applicable laws.
SECTION 6.2. NEGATIVE COVENANTS OF THE COMPANY.
Except as set forth in Schedule 6.2 or as expressly contemplated by
this Agreement or the Option Agreement or otherwise consented to in writing by
Acquiror (which consent shall not be unreasonably withheld, delayed or
conditioned), from the date hereof until the Effective Time the Company shall
not, and shall cause each Company Subsidiary not to, do any of the following:
(a) (i) increase the periodic compensation payable to or to become
payable to any of its directors, executive officers or any key employees listed
on Schedule 6.2(a); (ii) grant any severance or termination pay (other than
pursuant to existing severance arrangements or policies as in effect on the date
of this Agreement) to, or enter into or modify any employment or severance
agreement with, any of its directors, officers or employees; (iii) adopt or
amend any employee benefit plan or arrangement, except as may be required by
applicable law; or (iv) pay any cash bonuses; provided, however, without the
prior written consent of Acquiror, the Company shall be permitted during each
full fiscal quarter of the Company, beginning with the fiscal quarter of the
Company beginning on
41
July 1, 1999, between the date hereof and the Effective Time to pay cash bonuses
and increase periodic compensation as described in clause (i) hereof as long as
the aggregate amount of any such cash bonuses and the annualized effect of such
compensation increases does not exceed Two Hundred Fifty Thousand Dollars
($250,000) per any fiscal quarter of the Company.
(b) declare or pay any dividend on, or make any other distribution in
respect of, outstanding shares of Company Common Stock;
(c) (i) redeem, repurchase or otherwise reacquire any shares of
Company Common Stock or any securities or obligations convertible into or
exchangeable for any shares of Company Common Stock or other securities or
obligations of the Company, or any options, warrants or conversion or other
rights to acquire any shares of Company Common Stock or any such other
securities or obligations (except in connection with the exercise of the
Options, Director Options and Warrants in accordance with their terms); (ii)
effect any merger, consolidation, restructuring, reorganization or
recapitalization or adopt a plan of complete or partial liquidation or
dissolution; or (iii) split, combine or reclassify any shares of Company Common
Stock or issue or authorize or propose the issuance of any other securities in
respect of, in lieu of, or in substitution for, shares of Company Common Stock
or other securities;
(d) (i) issue, pledge, deliver, award, grant or sell, or register
under the Securities Act or the Exchange Act or otherwise file any registration
statement under any such statute covering, or authorize or propose the issuance,
pledge, delivery, award, grant or sale of (including the grant of any
Encumbrances on) or registration of or filing of any registration statement
covering, any shares of any class of its capital stock (including shares of
Treasury Stock) or other securities (except in connection with the Options,
Director Options and Warrants), any securities convertible into or exercisable
or exchangeable for any such shares or other securities, or any rights, warrants
or options to acquire any such shares or other securities (except for the
issuance of options to acquire shares of Company Common Stock: (A) to new
employees of the Company that are hired after the date hereof; (B) to employees
of the Company on a quarterly basis pursuant to the Company's performance-based
equity incentive program; provided that the number of shares of Company Common
Stock subject to options issued by the Company pursuant to this clause (B) shall
not exceed one hundred thousand (100,000) in the aggregate per any fiscal
quarter of the Company beginning with the fiscal quarter of the Company
beginning on July 1, 1999; and (C) to directors of the Company (in their
capacity as directors) in connection with annual grants of stock options by the
Company to the members of the Company's Board of Directors; provided that the
number of shares of Company Common Stock subject to options issued by the
Company pursuant to this clause (C) shall not exceed options covering one
hundred forty thousand (140,000) shares of Company Common Stock; provided, that
any
42
issuances of options by the Company pursuant to clauses (A), (B) and (C) shall
only be to the extent such issuances are in the ordinary course of business and
consistent with past practice); or (ii) amend or otherwise modify the terms of
any such rights, warrants or options (including, without limitation, any Option,
Warrant, Director Option or Earnout Agreement);
(e) acquire or agree to acquire, by merging or consolidating with, by
purchasing an equity interest in or a portion of the assets of, or by any other
manner, (i) any business or any corporation, partnership, association or other
business organization or any division (other than a Company Subsidiary) thereof
or (ii) make or commit to make any investments or capital expenditures, other
than investments or capital expenditures not exceeding in the aggregate Two
Hundred Fifty Thousand Dollars ($250,000) per any fiscal quarter of the Company,
beginning with the fiscal quarter of the Company beginning on July 1, 1999, and
which are solely for purposes related to computer hardware and software,
leaseholds, furniture and fixtures;
(f) sell, lease, exchange, mortgage, pledge, transfer or otherwise
encumber or dispose of, or agree to sell, lease, exchange, mortgage, pledge,
transfer or otherwise encumber or dispose of, any of its assets, except for
dispositions in the ordinary course of business and consistent with past
practice which do not exceed One Hundred Thousand Dollars ($100,000) in the
aggregate;
(g) propose or adopt any amendment to its certificate or articles of
incorporation or its bylaws;
(h) (i) make any change in any of its methods of accounting; or (ii)
make or rescind any express or deemed election relating to Taxes, settle or
compromise any claim, action, suit, litigation, proceeding, arbitration,
investigation, audit or controversy relating to Taxes (except where the amount
of such settlements or controversies, individually or in the aggregate, does not
exceed One Hundred Thousand Dollars ($100,000)), or change any of its methods of
reporting income or deductions for federal income tax purposes from those
employed in the preparation of the federal income tax returns for the taxable
year ended December 31, 1998, except, in the case of clause (i) or clause (ii),
as may be required by applicable law or regulations or GAAP;
(i) incur any obligation for borrowed money, whether or not evidenced
by a note, bond, debenture or similar instrument, or any guarantee of any
obligation for borrowed money, other than purchase money indebtedness not to
exceed One Hundred Thousand Dollars ($100,000) in the aggregate, except in the
ordinary course of business under existing loan agreements or capitalized
leases, or prepay, before the scheduled maturity thereof, any of its long-term
debt;
43
(j) engage in any transaction with, or enter into any agreement,
arrangement, or understanding with, directly or indirectly, any Affiliate which
involves the transfer of consideration or has a financial impact on such entity,
other than pursuant to such agreements, arrangements, or understandings existing
on the date of this Agreement;
(k) except in the ordinary course of business, enter into any
contract, agreement, commitment, arrangement, lease (including with respect to
personal property), policy or other instrument which, had it been entered into
as of the date hereof, would have been included as a Company Material Contract;
(l) adjust, split, combine or reclassify any capital stock;
(m) except for transactions in the ordinary course of business,
terminate or amend in a material way, or waive any provision of, any Company
Material Contract; provided that this provision shall not prohibit the Company
from entering into customer and service contracts in the ordinary course of
business;
(n) settle any material claim, action or proceeding involving money
damages, except any settlement in the ordinary course of business where the
amount of such settlement individually does not exceed Two Hundred Fifty
Thousand Dollars ($250,000);
(o) take any action which would, or would be reasonably likely to,
prevent the Merger from being accounted for as a "pooling of interests" in
accordance with GAAP and the rules and regulations of the SEC;
(p) take any action that is intended or would reasonably be expected
to result in any of the Company's representations and warranties set forth in
this Agreement being or becoming untrue in any material respect at any time
prior to the Effective Time, or in any of the conditions to the Merger set forth
in Article VIII not being satisfied or in a violation of any provision of this
Agreement; or
(q) agree in writing or otherwise to do any of the foregoing.
SECTION 6.3. AFFIRMATIVE COVENANTS OF ACQUIROR.
The Acquiror hereby covenants and agrees that, prior to the Effective
Time, unless otherwise expressly contemplated by this Agreement or the Option
Agreement or consented to in writing by the Company (which consent shall not be
unreasonably withheld, delayed or conditioned), the Acquiror shall, and shall
cause each Acquiror Subsidiary to: (a) operate its business in the usual and
ordinary course consistent with past practices; (b) use its reasonable efforts
to preserve
44
substantially intact its business organization, maintain its rights and
franchises, retain the services of its respective principal officers and key
employees and maintain its relationship with its respective principal customers
and suppliers; (c) use its reasonable efforts to maintain and keep its
properties and assets in as good repair and condition as at present, ordinary
wear and tear excepted; (d) use its reasonable efforts to keep in full force and
effect insurance comparable in amount and scope of coverage to that currently
maintained; (e) prepare and file all Tax Returns required to be filed in a
timely manner, and in a manner consistent with past practices and applicable
laws and regulations; (f) timely file with the SEC all reports required to be
filed under the Exchange Act, which reports (including the unaudited interim
financial statements included in such reports) shall comply in all material
respects with the Exchange Act, the rules and regulations promulgated thereunder
and all applicable accounting requirements; and (g) operate its business in
accordance with the terms of its licenses and in all material respects with all
applicable laws.
SECTION 6.4. NEGATIVE COVENANTS OF ACQUIROR.
Except as expressly contemplated by this Agreement or the Option
Agreement, from the date hereof until the Effective Time, without the written
consent of the Company (which consent shall not be unreasonably withheld,
delayed or conditioned) Acquiror shall not, and shall not permit any Acquiror
Subsidiary to, do any of the following:
(a) (i) declare or pay any dividend on, or make any other distribution
in respect of, outstanding shares of Acquiror Common Stock, other than dividends
or distributions by wholly-owned Subsidiaries; (ii) repurchase, redeem or
otherwise acquire any outstanding shares of capital stock or other securities
of, or other ownership interests in, Acquiror or any Acquiror Subsidiary, other
than intercompany acquisitions of stock and other than repurchases of unvested
shares of Acquiror Common Stock in connection with the termination of the
employment relationship with any employee pursuant to stock option or repurchase
agreements in effect on the date hereof; or (iii) except to the extent not
accounted for in Section 2.5 hereof, split, combine or reclassify any shares of
Acquiror Common Stock or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of, or in substitution for, shares of Acquiror
Common Stock or other securities;
(b) change in any material way any method of accounting or accounting
practice, except for any such change required by GAAP, applicable law or any
change by a Subsidiary to conform its accounting practices to the Acquiror's;
(c) take any action that is intended or would reasonably be expected
to result in any of Acquiror's representations and warranties set forth in
45
this Agreement being or becoming untrue in any material respect at any time
prior to the Effective Time, or in any of the conditions to the Merger set forth
in Article VIII not being satisfied or in a violation of any provision of this
Agreement;
(d) take any action which would, or would be reasonably likely to,
prevent the Merger from being accounted for as a "pooling of interests" in
accordance with GAAP and the rules and regulations of the SEC;
(e) engage, in any material respect, in any type of business other
than (i) the businesses conducted by Acquiror or any Acquiror Subsidiary on the
date hereof, or (ii) in any business or businesses related thereto; provided,
however, nothing in this Section 6.4(e) shall be deemed or interpreted to
prevent or otherwise limit Acquiror's ability to take actions in accordance with
Acquiror's business plans and objectives as set forth in the Acquiror SEC
Reports; or
(f) agree in writing or otherwise to do any of the foregoing.
ARTICLE VII.
ADDITIONAL AGREEMENTS
SECTION 7.1. ACCESS AND INFORMATION.
During the period from the date hereof to the Effective Time (the
"Interim Period"), the Company and Acquiror shall, and shall cause the Company
Subsidiaries and the Acquiror Subsidiaries, respectively, to, afford to each
other and their respective officers, employees, accountants, consultants, legal
counsel and other representatives reasonable access during normal business hours
(and at such other times as the parties may mutually agree) to the properties,
executive personnel and all information concerning the business, properties,
contracts, records and personnel of the Company and the Company Subsidiaries or
Acquiror and the Acquiror Subsidiaries, as the case may be, as such other party
may reasonably request; provided that no investigation pursuant to this Section
7.1 shall effect any representations or warranties made herein or the conditions
to the obligations of the respective parties to consummate the Merger.
SECTION 7.2. CONFIDENTIALITY.
Acquiror and the Company each acknowledge and agree that all
information received by it (the "Receiving Party") from or on behalf of the
other party in connection with the transactions contemplated under this
Agreement shall be deemed received pursuant to the confidentiality letter
agreement, dated as of May 12, 1999, between the Company and Acquiror (the
"Confidentiality Agreement"), and such Receiving Party shall, and shall cause
its officers, directors,
46
employees, Affiliates, financial advisors and agents to, comply with the
provisions of the Confidentiality Agreement with respect to such information,
and the provisions of the Confidentiality Agreements are hereby incorporated
herein by reference with the same effect as if fully set forth herein, provided,
however, that the term of the Confidentiality Agreement shall be and hereby is
extended until the second anniversary of the later of the Closing Date or the
date on which this Agreement is terminated pursuant to Article IX.
SECTION 7.3. JOINT PROXY STATEMENT AND REGISTRATION STATEMENT;
STOCKHOLDERS MEETINGS.
(a) As soon as practicable following the date of this
Agreement, the Company and Acquiror shall prepare and file with the SEC the
Joint Proxy Statement and Acquiror shall prepare and file with the SEC the
Registration Statement in which the Joint Proxy Statement will be included as a
prospectus. Each of the Company and Acquiror shall use reasonable efforts to
have the Registration Statement declared effective under the Securities Act as
promptly as practicable after such filing. The Company shall use reasonable
efforts to cause the Joint Proxy Statement to be mailed to the Company's
stockholders, and Acquiror shall use reasonable efforts to cause the Joint Proxy
Statement to be mailed to Acquiror's stockholders, in each case as promptly as
practicable after the Registration Statement is declared effective under the
Securities Act. Acquiror also shall take any action (other than qualifying to do
business in any jurisdiction in which it is not now so qualified or filing a
general consent to service of process) required to be taken by the SEC, Nasdaq
or under any applicable state securities laws in connection with the issuance of
Acquiror Common Stock in the Merger and the Company shall furnish all
information concerning the Company and the holders of Company Common Stock as
may be reasonably requested in connection with any such action. No filing of, or
amendment or supplement to, the Registration Statement or the Joint Proxy
Statement will be made by Acquiror without the Company's prior consent (which
shall not be unreasonably withheld, delayed or conditioned) and without
providing the Company the reasonable and adequate opportunity to review and
comment thereon. Acquiror shall advise the Company, promptly after it receives
notice thereof, of the time when the Registration Statement has become effective
or any supplement or amendment has been filed, the issuance of any stop order,
the suspension of the qualification of Acquiror Common Stock issuable in
connection with the Merger for offering or sale in any jurisdiction, or any
request by the SEC for amendment of the Joint Proxy Statement or the
Registration Statement or comments thereon and responses thereto or requests by
the SEC for additional information. If at any time prior to the Effective Time
any information relating to the Company or Acquiror, or any of their respective
Affiliates, officers or directors, should be discovered by the Company or
Acquiror which should be set forth in an amendment or supplement to any of
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the Registration Statement or the Joint Proxy Statement, so that any of such
documents would not include any misstatement of a material fact or omit to state
any material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, the party which
discovers such information shall promptly notify the other parties hereto and an
appropriate amendment or supplement describing such information shall be
promptly filed with the SEC and, to the extent required by law, disseminated to
the stockholders of the Company and Acquiror.
(b) The Company shall, as promptly as practicable after the
Registration Statement is declared effective under the Securities Act, duly
call, give notice of, convene and hold a meeting of its stockholders (the
"Company Stockholders Meeting") in accordance with Delaware Law and its
certificate of incorporation and bylaws for the purpose of obtaining the Company
Stockholder Approval as required by Delaware Law and otherwise, and shall,
through its Board of Directors, declare that this Agreement is advisable and
recommend to its stockholders the approval and adoption of this Agreement, the
Merger and the other transactions contemplated hereby; provided, however, that
the Board of Directors of the Company shall submit this Agreement to the
Company's stockholders, whether or not the Board of Directors of the Company at
any time subsequent to the date hereof determines that this Agreement is no
longer advisable or recommends that the stockholders of the Company reject it,
but further provided, that nothing contained in this Section 7.3 shall prohibit
the Company's Board of Directors from failing to make or from withdrawing or
modifying its recommendation to the Company's stockholders hereunder if the
Board of Directors of the Company, after consultation with and based upon the
written advice of independent legal counsel, determines in good faith that such
action is necessary for such Board of Directors to comply with its fiduciary
duties to its stockholders under applicable law. Unless the Board of Directors
of the Company has withdrawn its recommendation of this Agreement in compliance
herewith, the Company shall use reasonable efforts to solicit from its
stockholders proxies in favor of the approval and adoption of this Agreement and
the Merger and to secure the vote or consent of stockholders required by the
Delaware Law and its certificate of incorporation and bylaws to approve and
adopt this Agreement and the Merger.
(c) Acquiror shall, as promptly as practicable after the
Registration Statement is declared effective under the Securities Act, duly
call, give notice of, convene and hold a meeting of its stockholders (the
"Acquiror Stockholders Meeting") in accordance with Florida Law, its articles of
incorporation and bylaws for the purpose of obtaining the Acquiror Stockholder
Approval of the Stock Issuance, and shall, through its Board of Directors,
declare that the Stock Issuance is advisable and recommend to its stockholders
the approval of the Stock Issuance pursuant to this Agreement.
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(d) Acquiror and the Company shall use reasonable efforts to
hold the Acquiror Stockholders Meeting and the Company Stockholders Meeting on
the same date and as soon as reasonably practicable after the date hereof.
SECTION 7.4. HSR ACT MATTERS.
Acquiror, Merger Sub and the Company (as may be required
pursuant to the HSR Act) promptly will complete all documents required to be
filed with the Federal Trade Commission and the United States Department of
Justice in order to comply with the HSR Act and, not later than fifteen (15)
calendar days after the date hereof, together with the Persons, if any, who are
required to join in such filings, shall file such documents with the appropriate
Governmental Entities. Acquiror, Merger Sub and the Company shall promptly
furnish all materials thereafter required by any of the Governmental Entities
having jurisdiction over such filings, and shall take all reasonable actions and
shall file and use all reasonable efforts to have declared effective or approved
all documents and notifications with any such Governmental Entity, as may be
required under the HSR Act or other federal or state antitrust laws for the
consummation of the Merger and the other transactions contemplated hereby and by
the Option Agreement. Acquiror and the Company shall each pay one half (1/2) of
all filing fees related to compliance with the HSR Act in connection with the
transactions contemplated hereby.
SECTION 7.5. PUBLIC ANNOUNCEMENTS.
Acquiror and the Company shall consult with each other before
issuing any press release or otherwise making any public statements with respect
to the transactions contemplated hereunder and shall not issue any such press
release or make any such public statement prior to such consultation, except as
may be required by law or any listing agreement with Nasdaq.
SECTION 7.6. INDEMNIFICATION.
(a) The certificate of incorporation and bylaws of the
Surviving Corporation shall contain the provisions with respect to
indemnification set forth in the certificate of incorporation and bylaws of the
Company on the date of this Agreement, which provisions shall not be amended,
repealed or otherwise modified for a period of six (6) years after the Effective
Time in any manner that would adversely affect the rights thereunder of persons
who at any time prior to the Effective Time were identified as prospective
indemnitees under the certificate of incorporation or bylaws of the Company in
respect of actions or omissions occurring at or prior to the Effective Time
(including, without limitation, the transactions contemplated by this
Agreement), unless such modification is required by applicable law.
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(b) From and after the Effective Time, Acquiror shall cause
the Surviving Corporation to indemnify, defend and hold harmless the present and
former officers, directors and employees of the Company and the Company
Subsidiaries (collectively, the "Indemnified Parties") against all losses,
expenses, claims, damages, liabilities or amounts that are paid, with the
approval of Acquiror, in settlement of or otherwise in connection with, any
claim, action, suit, proceeding or investigation (a "Claim"), based in whole or
in part on the fact that such person is or was such a director, officer or
employee and arising out of actions or omissions occurring at or prior to the
Effective Time (including, without limitation, the transactions contemplated by
this Agreement), in each case to the fullest extent permitted under Delaware Law
(and shall pay expenses in advance of the final disposition of any such action
or proceeding to each Indemnified Party to the fullest extent permitted under
Delaware Law upon receipt from the Indemnified Party to whom expenses are
advanced of the undertaking to repay such advances contemplated by Section
145(e) of Delaware Law), provided, however, that no Indemnified Party shall be
entitled to any indemnification or expenses pursuant to this Section 7.6 in
respect of any Claim, issue or matter as to which such Indemnified Party shall
have been adjudged to be grossly negligent or to have committed or engaged in
willful misconduct. To that end, Acquiror shall maintain the Company's existing
officers' and directors' liability insurance policy ("D&O Insurance") for a
period of not less than six (6) years after the Effective Time, but only to the
extent related to actions or omissions prior to the Effective Time; provided,
however, that Acquiror may substitute therefor policies of substantially similar
coverage and amounts containing terms no less advantageous to such former
directors or officers of the Company.
(c) In the event any Claim or Claims are asserted or made
within such six-year period, all rights to indemnification in respect of any
such Claim or Claims shall continue until disposition of any and all such
claims. Any determination required to be made with respect to whether an
Indemnified Party's conduct complies with the standards set forth under Delaware
Law, the Company's certificate of incorporation or bylaws or such agreements, as
the case may be, shall be made by any method permitted under Delaware Law.
Nothing set forth herein shall impair any rights or obligations of any
Indemnified Party. In the event that any Claim or Claims are brought against any
Indemnified Party (whether arising before or after the Effective Time), Acquiror
may select counsel for the defense of such Claim, which counsel shall be
reasonably acceptable to such Indemnified Party.
(d) Any Indemnified Party seeking indemnification under this
Section 7.6, promptly upon learning of any such Claim, shall notify Acquiror and
the Surviving Corporation (although the failure so to notify Acquiror and the
Surviving Corporation shall not relieve Acquiror and the Surviving Corporation
from any liability which Acquiror and the Surviving Corporation may have under
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this Section 7.6, except to the extent such failure prejudices Acquiror or the
Surviving Corporation), and shall deliver to Acquiror and the Surviving
Corporation the undertaking contemplated by Section 145(e) of Delaware Law.
SECTION 7.7. FURTHER ACTION; COMMERCIALLY REASONABLE EFFORTS.
(a) Each of the parties hereto shall use all reasonable
efforts to take, or cause to be taken, all appropriate action, and do, or cause
to be done, all things necessary, proper or advisable under applicable laws or
otherwise to consummate and make effective the transactions contemplated by this
Agreement as promptly as practicable, including, without limitation, using all
reasonable efforts to obtain all licenses, permits, consents, approvals,
authorizations, qualifications and orders of Governmental Entities and parties
to contracts with the Company, Acquiror or any Company Subsidiary or Acquiror
Subsidiary as are necessary for the transactions contemplated herein. In case at
any time after the Effective Time any further action is necessary or desirable
to carry out the purposes of this Agreement, the proper officers and directors
of each party to this Agreement shall use all reasonable efforts to take all
such action. Without limiting the generality of the foregoing, Acquiror shall
use all reasonable efforts to cause Merger Sub to perform its obligations under
this Agreement and to effect the transactions contemplated hereby.
(b) During the Interim Period, each of the parties hereto
shall promptly notify the other in writing of any pending or, to the knowledge
of such party, threatened action, proceeding or investigation by any
Governmental Entity or any other Person: (i) challenging or seeking damages in
connection with the Merger or the conversion of Company Common Stock into the
Merger Consideration pursuant to the Merger; or (ii) seeking to restrain or
prohibit the consummation of the Merger or any of the transactions contemplated
by this Agreement or the Option Agreement or otherwise to limit the right of
Acquiror to own or operate all or any portion of the business or assets of the
Company.
(c) Each of the parties hereto shall use reasonable efforts to
refrain from taking any action, or entering into any transaction, which would
cause any of its representations or warranties contained in this Agreement to be
untrue or which would result in a breach of any covenant made by it in this
Agreement.
SECTION 7.8. NO SOLICITATION.
(a) From the date of this Agreement until the Effective Time
or the termination of this Agreement pursuant to the terms of this Agreement,
the Company shall not and shall not permit any of its Subsidiaries, Affiliates,
directors, officers, employees, agents or representatives, including, without
limitation, any investment banker, attorney or accountant of the Company or any
of its Subsidiaries (collectively, "Representatives"), directly or indirectly,
to: (i) initiate,
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solicit, encourage or otherwise facilitate (including by way of furnishing
information), any inquiries or the making of any proposal or offer that
constitutes, or may reasonably be expected to lead to an Acquisition Proposal
(as defined below); (ii) enter into or maintain or continue discussions or
negotiate with any Person in furtherance of such inquiries or to obtain an
Acquisition Proposal; or (iii) agree to, approve, recommend or endorse any
Acquisition Proposal, or authorize or permit any of its or their Subsidiaries or
Representatives to take any such action, and the Company shall promptly notify
Acquiror of any such inquiries and proposals received by the Company or any of
its Subsidiaries or Representatives, relating to any of such matters; provided,
however, that the foregoing shall not prohibit the Board of Directors of the
Company from (A) furnishing information to, or engaging in discussions or
negotiations with, any Person in response to an unsolicited bona fide written
Acquisition Proposal; or (B) recommending such an unsolicited bona fide written
Acquisition Proposal to the stockholders of the Company, if and only to the
extent that: (w) the Board of Directors of the Company concludes in good faith
(after consultation with its financial advisors) that such Acquisition Proposal
would constitute a Superior Proposal (as hereinafter defined); (x) the Board of
Directors of the Company determines in good faith (after consultation with
outside legal counsel) that the failure to take such action would result in a
breach by the Board of Directors of the Company of its fiduciary duties to the
Company's stockholders under applicable law; (y) prior to furnishing such
information to, or entering into discussions or negotiations with, such Person
the Company provides prompt written notice to Acquiror to the effect that it is
furnishing information to, or entering into discussions or negotiations with,
such Person (which notice shall identify the nature and material terms of the
proposal); and (z) prior to providing any information or data to any Person in
connection with an Acquisition Proposal by any such Person, the Board of
Directors of the Company receives from such Person an executed confidentiality
agreement with provisions no less favorable to the Company than the
Confidentiality Agreement. The Company agrees that it will immediately cease any
existing activities, discussions, or negotiations with any parties regarding any
Acquisition Proposal. The Company shall as promptly as practicable provide
Acquiror with a copy of any written Acquisition Proposal received and a written
statement with respect to any nonwritten Acquisition Proposal received, which
statement shall include the identity of the Person making the Acquisition
Proposal and the material terms thereof. The Company shall inform Acquiror as
promptly as practicable of any change in the price, structure, form of
consideration or material terms and conditions regarding the Acquisition
Proposal. The Company agrees to keep Acquiror fully and timely informed of the
status of any discussions, negotiations, furnishing of non-public information,
or other activities relating to an Acquisition Proposal.
(b) Nothing contained in this Section 7.8 shall prohibit the
Company from: (i) taking and disclosing to its stockholders a position
contemplated
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by Rule 14e-2 promulgated under the Exchange Act; (ii) making a recommendation
in compliance with Rule 14d-9 promulgated under the Exchange Act; or (iii)
making any disclosure to the Company's stockholders which, in the good faith
judgment of the Board of Directors of the Company based on the advice of outside
counsel, is required under applicable law; provided that in any of such cases
the Company does not withdraw or modify, or propose to withdraw or modify, its
position with respect to the Merger or approve or recommend, or propose to
approve or recommend, an Acquisition Proposal unless the Company and its Board
of Directors have complied with all the provisions of this Section 7.8.
SECTION 7.9. NASDAQ LISTING.
Acquiror shall, prior to the Closing Date file with Nasdaq a
Notification for Additional Listing of Shares providing for inclusion for
quotation on Nasdaq of the shares of Acquiror Common Stock issuable pursuant to
Section 2.1(a) and shall use reasonable efforts to cause the shares of Acquiror
Common Stock to be issued pursuant to Section 2.1(a) of this Agreement to be
approved for quotation on Nasdaq, subject to official notice of issuance, prior
to the Closing Date.
SECTION 7.10. BLUE SKY.
Acquiror shall use reasonable efforts to obtain prior to the
Closing Date any necessary permits and approvals under all applicable state
securities or blue sky laws required to permit the distribution of the shares of
Acquiror Common Stock to be issued in accordance with the provisions of Section
2.1(a) of this Agreement.
SECTION 7.11. AFFILIATES.
(a) Each of the Company and Acquiror: (i) has disclosed to the
other in Schedule 7.11 hereto all Persons who are, or may be, as of the date
hereof its Affiliates; and (ii) shall use all reasonable efforts to cause each
Person who is identified as an Affiliate of it in Schedule 7.11 to deliver to
the other as promptly as practicable but in no event later than thirty-one (31)
days prior to the Closing Date, a signed Affiliate Agreement substantially in
the form attached hereto as Exhibit A, in the case of the Company, and Exhibit
B, in the case of Acquiror. The Company and Acquiror shall notify each other
from time to time of all other Persons who then are or may be such an Affiliate
and use all reasonable efforts to cause each additional Person who is identified
as an Affiliate to execute an Affiliate Agreement as set forth in this Section
7.11(a).
(b) Shares of Company Common Stock and shares of Acquiror
Common Stock held by such Affiliates of the Company or Acquiror, as the case may
be, shall not be transferable during the thirty (30) day period prior to the
Effective Time, and shares of Acquiror Common Stock issued to, or as of the
Effective Time
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held by, such Affiliates shall not be transferable until such time as financial
results covering at least thirty (30) days of combined operations of the Company
and Acquiror have been published within the meaning of Section 201.01 of the
SEC's Codification of Financial Reporting Policies, regardless of whether each
such Affiliate has provided the signed Affiliate Agreement referred to in
Section 7.11(a), except to the extent permitted by, and in accordance with, SEC
Accounting Series Release 135 and SEC Staff Accounting Bulletins 65 and 76. Any
Company Common Stock and any Acquiror Common Stock held by any such Affiliate
shall not be transferable, regardless of whether such Affiliate has provided the
applicable signed agreement referred to in Section 7.11(a), if such transfer,
either alone or in the aggregate with other transfers by Affiliates, would
preclude the ability of the parties hereto to have the Merger and the
transactions contemplated hereby and by the Option Agreement accounted for as a
"pooling of interests" in accordance with GAAP, Accounting Principles Board
Opinion No. 16 and all rules, regulations and policies of the SEC. Neither the
Company nor Acquiror shall register the transfer of any shares of Company Common
Stock or Acquiror Common Stock, as applicable, unless such transfer is made in
compliance with the foregoing.
SECTION 7.12. EVENT NOTICES.
From and after the date of this Agreement until the Effective
Time, each party hereto will promptly notify the other parties hereto of (a) the
occurrence or nonoccurrence of any event the occurrence or nonoccurrence of
which would be likely to cause any condition to the obligations of such party to
effect the Merger and the other transactions contemplated by this Agreement or
the Option Agreement not to be satisfied and (b) the failure of such party to
comply with any covenant or agreement to be complied with by it pursuant to this
Agreement which would be likely to result in any condition to the obligations of
such party to effect the Merger and the other transactions contemplated by this
Agreement or the Option Agreement not to be satisfied. No delivery of any notice
pursuant to this Section 7.12 will cure any breach of any representation or
warranty, covenant, condition or agreement of such party contained in this
Agreement or otherwise limit or affect the remedies available hereunder to the
party receiving such notice.
SECTION 7.13. OPTION AGREEMENT
Concurrently with the execution of this Agreement, the Company
shall deliver to Acquiror an executed Option Agreement. The Company agrees to
perform to the fullest extent permitted under applicable law its obligations
under the Option Agreement.
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SECTION 7.14. TAX TREATMENT.
Each of Acquiror and the Company shall use all reasonable
efforts to cause the Merger to qualify as a reorganization under the provisions
of Section 368(a)2(E) of the Code and will characterize the Merger as such a
reorganization for purposes of all Tax Returns and other relevant filings. The
Company and Acquiror shall cooperate and use their best efforts in obtaining the
Legal Opinion. In connection therewith, each of the Company, Acquiror and Merger
Sub shall deliver to Akin, Gump, Strauss, ▇▇▇▇▇ & ▇▇▇▇, L.L.P. (or Acquiror's
legal counsel, if applicable) a representation letter (collectively, the
"Representation Letters"), dated as of the Closing Date, in form and substance
to be reasonably agreed upon by the Company, Acquiror and Merger Sub, on which
Akin, Gump, Strauss, ▇▇▇▇▇ & ▇▇▇▇, L.L.P. (or Acquiror's legal counsel, if
applicable) shall be entitled to rely in rendering its Legal Opinion pursuant to
Section 8.1(i); provided, however, that the failure of any of the Company,
Acquiror or Merger Sub to make any statement in a Representation Letter because
of an event, or a change in facts or law, in either case outside of such party's
control, shall not constitute a breach of this covenant.
SECTION 7.15. POOLING OF INTERESTS.
Each of the Company and Acquiror shall use all reasonable
efforts to cause the Merger to be accounted for as a "pooling of interests" in
accordance with GAAP, Accounting Principles Board Opinion 16 and applicable SEC
rules, regulations and policies and shall take no action that would cause such
accounting treatment not to be obtained.
SECTION 7.16. MERGER SUB.
Acquiror shall cause Merger Sub to approve and adopt, and to
perform its obligations in accordance with, this Agreement and shall take any
and all steps necessary to cause Merger Sub to effect the transactions
contemplated hereby.
SECTION 7.17. BOARD OF DIRECTORS OF ACQUIROR.
Promptly following the Effective Time, the Board of Directors
of Acquiror will take all actions necessary such that ▇▇▇▇▇▇ ▇▇▇▇▇, who as of
the date hereof is the Chief Executive Officer of the Company, shall be
appointed to Acquiror's Board of Directors with a term expiring at the annual
meeting of Acquiror's stockholders to be held in calendar year 2000 (the "Year
2000 Meeting") and shall include ▇▇▇▇▇▇ ▇▇▇▇▇ in the slate of nominees
recommended by Acquiror's Board of Directors to the stockholders of Acquiror at
the Year 2000 Meeting.
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SECTION 7.18. PUBLISHING FINANCIAL RESULTS.
Acquiror shall prepare and publicly release, as soon as
practicable following the end of the first complete accounting month ending at
least thirty (30) days after the Closing Date, a report filed with the SEC on
Form 8-K or any other public filing, statement or announcement which includes
the combined financial results (including combined sales and net income) of the
Acquiror and the Company for a period of at least thirty (30) days of combined
operations of the Acquiror and the Company following the Closing Date; provided,
however, that the Acquiror shall not be obligated to make such public release if
the Acquiror determines based on Acquiror's good faith business judgment that
such public release would be reasonably likely to (a) limit in any material
respect the Acquiror's ability to undertake a planned underwritten public
offering of Acquiror's securities to be covered by a registration statement to
be filed with the SEC, or (b) cause a Material Adverse Effect on Acquiror.
ARTICLE VIII.
CLOSING CONDITIONS
SECTION 8.1. CONDITIONS TO OBLIGATIONS OF THE PARTIES TO EFFECT
THE MERGER.
The respective obligations of the parties hereto to effect the
Merger and the other transactions contemplated herein shall be subject to the
satisfaction at or prior to the Effective Time of the following conditions, any
or all of which may be waived, in whole or in part, to the extent permitted by
applicable law:
(a) Stockholder Approval. Each of the Company Stockholder
Approval and Acquiror Stockholder Approval shall have been obtained.
(b) Effectiveness of Registration Statement. The Registration
Statement shall have been declared effective by the SEC under the Securities Act
prior to the mailing of the Joint Proxy Statement by each of the Company and
Acquiror to their respective stockholders and no stop order suspending the
effectiveness of such registration statement shall have been issued by the SEC
and no proceedings for that purpose shall have been initiated or, to the
knowledge of Acquiror or the Company, threatened by the SEC.
(c) No Order. No Governmental Entity or federal or state court
of competent jurisdiction shall have enacted, issued, promulgated, enforced or
entered any law, statute, rule, ordinance, regulation, executive order, decree,
judgment, stipulation, injunction or other order (whether temporary, preliminary
or permanent) (collectively, an "Order"), in any case which is in effect and
which
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prevents or prohibits consummation of the Merger or any other transactions
contemplated in this Agreement; provided, however, that the parties shall use
their reasonable efforts to cause any such Order to be vacated or lifted.
(d) Nasdaq Listing. Acquiror Common Stock issuable to the
holders of Company Common Stock pursuant to Section 2.1(a) of this Agreement
shall have been included for quotation on Nasdaq upon official notice of
issuance.
(e) HSR Act. Any waiting period with any extensions thereof
under the HSR Act shall have expired or been terminated.
(f) Permits. Each of the Company and Acquiror shall have
obtained such permits, authorizations, consents and approvals required to
consummate the transactions contemplated hereby except for such permits,
authorizations, consents and approvals the failure of which to obtain would not
have a Material Adverse Effect on the Company or Acquiror.
(g) Company Pooling Letter. There shall have been delivered to
Acquiror and the Company a letter from the Company's independent accountants,
dated as of the Closing Date and addressed to Acquiror and the Company,
reasonably satisfactory in form and substance to Acquiror, setting forth the
concurrence of the Company's independent accountants with the conclusion of the
Company's management that the transactions contemplated herein will qualify as a
"pooling of interests" and to the effect that (i) after reasonable
investigation, the Company's independent accountants are not aware of any fact
concerning the Company or any of the Holders or any Affiliates of the Company
that could preclude Acquiror from accounting for the Merger as a "pooling of
interests" in accordance with GAAP, Accounting Principles Board Opinion No. 16
and all rules, regulations and policies of the SEC, and (ii) the Merger is
eligible to be accounted for as a "pooling of interest" in accordance with GAAP,
Accounting Principles Board Opinion No. 16 and all rules, regulations and
policies of the SEC;
(h) Acquiror Pooling Letter. There shall have been delivered
to Acquiror and the Company a letter from Acquiror's independent accountants,
dated as of the Closing Date and addressed to the Company and Acquiror,
reasonably satisfactory in form and substance to Acquiror, to the effect that
(i) after reasonable investigation, Acquiror's independent accountants are not
aware of any fact concerning Acquiror or any of its Affiliates that could
preclude Acquiror from accounting for the Merger as a "pooling of interests" in
accordance with GAAP, Accounting Principles Board Opinion No. 16 and all
published rules, regulations and policies of the SEC, and (ii) the Merger is
eligible to be accounted for as a "pooling of interest" in accordance with GAAP,
Accounting Principles Board Opinion No. 16 and all rules, regulations and
policies of the SEC; and
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(i) Legal Opinion. The Company and the Holders shall have
received a legal opinion addressed to the Company and the Holders from Akin,
Gump, Strauss, ▇▇▇▇▇ & ▇▇▇▇, L.L.P., counsel to the Company, dated as of the
Closing Date, on the basis of facts, representations and assumptions set forth
in such opinion and the Representation Letters, all of which are consistent with
the state of facts existing as of the Effective Time, to the effect that the
Merger will constitute a reorganization within the meaning of Section 368(a)2(E)
of the Code (it being understood that, if such counsel to the Company does not
render such opinion, the condition set forth in this Section shall nonetheless
be deemed to be satisfied if Acquiror's legal counsel renders such an opinion to
the Company and the Holders). The legal opinion to be delivered by Akin, Gump,
Strauss, ▇▇▇▇▇ & ▇▇▇▇, L.L.P. or Acquiror's legal counsel pursuant to this
Section 8.1(i) shall be referred to herein as the "Legal Opinion."
SECTION 8.2. ADDITIONAL CONDITIONS TO OBLIGATIONS OF ACQUIROR AND
MERGER SUB.
The obligations of Acquiror and Merger Sub to effect the
Merger and the other transactions contemplated in this Agreement (except the
transactions contemplated in the Acquiror Voting Agreement) shall be subject to
the satisfaction at or prior to the Effective Time of the following conditions,
any or all of which may be waived by Acquiror, in whole or in part, to the
extent permitted by applicable law:
(a) Representations and Warranties. The representations and
warranties of the Company made in this Agreement shall be true and correct in
all material respects when made and on and as of the Closing Date (except for
representations and warranties that speak as of a specific date or time, which
need only be true and correct in all material respects as of such date or time);
provided, however, that, notwithstanding the foregoing, the representations and
warranties of the Company set forth in Section 3.3(d) shall be true and correct
in all respects. Acquiror shall have received a certificate of the Chief
Executive Officer or Chief Financial Officer of the Company to such effect.
(b) Agreements and Covenants. The agreements and covenants of
the Company required to be performed on or before the Effective Time shall have
been performed in all material respects. Acquiror shall have received a
certificate of the Chief Executive Officer or Chief Financial Officer of the
Company to such effect.
(c) No Material Adverse Changes.
(i) There shall have been no Material Adverse Effect
on the Company since the date of this Agreement (it being understood that a
decline in
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the price of a share of Company Common Stock shall not constitute a Material
Adverse Effect on the Company for purposes of any provision of this Agreement).
(ii) There shall have been no development, change,
event or effect with respect to the Securities Litigation that individually or
in the aggregate (taking into account all other such developments, changes,
events or effects with respect to the Securities Litigation) which has
increased, or would be reasonably likely to increase, the likelihood in any
material respect that either the Company or any of the officers or directors of
the Company will be found or determined to be liable for damages or other
losses, or to have engaged in any fraudulent or other actions not otherwise
covered under the Company's insurance policies, in each case with respect to the
Securities Litigation.
(d) No Litigation. There shall not be pending or threatened
any suit, action, proceeding or investigation: (i) challenging or seeking to
restrain or prohibit the consummation of the Merger or any of the other
transactions contemplated by this Agreement; (ii) relating to the Merger and
seeking to obtain from Acquiror or any Acquiror Subsidiary any damages that may
be material to Acquiror, (iii) seeking to prohibit or limit in any material
respect Acquiror's ability to vote, receive dividends with respect to or
otherwise exercise ownership rights with respect to the stock of the Surviving
Corporation; (iv) which would materially and adversely affect the right of the
Surviving Corporation to own the assets or operate the business of the Company;
or (v) which, if adversely determined, could have a Material Adverse Effect on
the Company or Acquiror.
(e) Directors and Officer's Insurance. There shall be evidence
that the current policies of the directors' and officers' liability insurance
and fiduciary liability insurance maintained by the Company with respect to
matters occurring prior the Effective Time shall have been extended and shall
remain in full force and effect.
SECTION 8.3. ADDITIONAL CONDITIONS TO OBLIGATIONS OF THE COMPANY.
The obligations of the Company to effect the Merger and the
other transactions contemplated in this Agreement (except the transactions
contemplated in the Company Voting Agreement or the Option Agreement) are also
subject to the following conditions any or all of which may be waived by the
Company, in whole or in part, to the extent permitted by applicable law:
(a) Representations and Warranties. The representations and
warranties of Acquiror and Merger Sub made in this Agreement shall be true and
correct in all material respects when made and on and as of the Closing Date
(except for representations and warranties that speak as of a specific date or
time, which need only be true and correct in all material respects as of such
date and
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time). The Company shall have received a certificate of the Chief Executive
Officer or Chief Financial Officer of Acquiror to such effect.
(b) Agreements and Covenants. The agreements and covenants of
Acquiror and Merger Sub required to be performed on or before the Effective Time
shall have been performed in all material respects. The Company shall have
received a certificate of the Chief Executive Officer or Chief Financial Officer
of Acquiror to such effect.
(c) No Material Adverse Change. There shall have been no
Material Adverse Effect on Acquiror since the date of this Agreement (it being
understood that a decline in the price of a share of Acquiror Common Stock shall
not constitute a Material Adverse Effect on Acquiror for purposes of any
provision of this Agreement).
ARTICLE IX.
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.1. TERMINATION.
This Agreement may be terminated at any time prior to the
Effective Time, whether before or after approval of this Agreement and the
Merger by the stockholders of the Company or the stockholders of Acquiror:
(a) by mutual written consent of Acquiror and the Company;
(b) by Acquiror, upon a material breach of any representation,
warranty, covenant or agreement on the part of the Company set forth in this
Agreement such that the conditions set forth in Section 8.2(a) or Section 8.2(b)
would not be satisfied (a "Terminating Company Breach"); provided, that, if such
Terminating Company Breach is curable by the Company through the exercise of
reasonable efforts and for so long as the Company continues to exercise such
reasonable efforts, Acquiror may not terminate this Agreement under this Section
9.1(b);
(c) by the Company, upon material breach of any
representation, warranty, covenant or agreement on the part of Acquiror set
forth in this Agreement such that the conditions set forth in Section 8.3(a) or
Section 8.3(b) would not be satisfied (a "Terminating Acquiror Breach");
provided, that, if such Terminating Acquiror Breach is curable by Acquiror
through the exercise of their reasonable efforts and for so long as Acquiror
continues to exercise such reasonable efforts, the Company may not terminate
this Agreement under this Section 9.1(c);
(d) by either Acquiror or the Company, if there shall be any
Order which is final and nonappealable preventing the consummation of the
Merger;
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provided, that the party seeking to terminate this Agreement pursuant to this
Section 9.1(d) shall have used reasonable efforts to cause any such Order to be
vacated or lifted;
(e) by either Acquiror or the Company, if the Merger shall not
have been consummated on or before that date which is two hundred seventy (270)
calendar days after the date hereof (the "Outside Date"); provided, however,
that the right to terminate this Agreement under this Section 9.1(e) shall not
be available to any party whose material breach of its obligations under this
Agreement has been the cause of the failure of the Merger to occur on or before
the Outside Date; and provided further, that in the event that the failure of
the Merger to have been consummated on or before the Outside Date is the result
of the failure of the Company to timely fulfill any obligation of the Company
under this Agreement and Acquiror has notified the Company in writing that it
intends to terminate this Agreement pursuant to this Section 9.1(e) as a result
of such failure by the Company (which termination will result in the occurrence
of a Triggering Event (as defined in the Option Agreement) pursuant to Section
2(b)(iii) of the Option Agreement), then the Company may, by providing written
notice to Acquiror within five (5) days after receipt of such notice from
Acquiror, extend the Outside Date to that date which is no more than ninety (90)
days after the Outside Date (so long as such obligation is capable of being
satisfied and fulfilled by such date);
(f) by either Acquiror or the Company, if the requisite vote
of the stockholders of the Company or of Acquiror required by this Agreement
shall not have been obtained at the Company Stockholders Meeting or the Acquiror
Stockholders Meeting, as the case may be (including any adjournment or
postponement thereof); provided, that the right to terminate this Agreement
under this Section 9.1(f) shall not be available to any party who has not
complied with its obligations under Section 7.3(b) or Section 7.3(c), as the
case may be;
(g) by Acquiror, if: (i) the Board of Directors of the Company
withdraws or modifies its recommendation of this Agreement or the Merger in a
manner adverse to Acquiror or shall have resolved or publicly announced or
disclosed to any third party its intention to do any of the foregoing or the
Board of Directors of the Company shall have recommended to the stockholders of
the Company any Acquisition Proposal or resolved to do so; (ii) a tender offer
or exchange offer for twenty percent (20%) or more of the outstanding shares of
Company Common Stock is commenced or a registration statement with respect
thereto shall have been filed and, in each such case, the Board of Directors of
the Company, within ten (10) Business Days after such tender offer or exchange
offer is so commenced or such registration statement is so filed, as the case
may be, either fails to recommend against acceptance of such tender or exchange
offer by its stockholders or takes no position with respect to the acceptance of
such tender or
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exchange offer by its stockholders; or (iii) the Company breaches in any
material respect the Option Agreement;
(h) by the Company, if the Board of Directors of the Company
shall have determined to recommend an Acquisition Proposal to its stockholders
after determining, pursuant to Section 7.8, that such Acquisition Proposal
constitutes a Superior Proposal, and the Company gives Acquiror at least three
(3) Business Days prior notice of its intention to effect such termination
pursuant to this Section 9.1(h), and the Company makes the payment required
pursuant to Section 9.6(a) of this Agreement and pays the expenses for which the
Company is responsible under Section 9.5 of this Agreement; or
(i) by Acquiror, if any Person (other than Acquiror or any
Affiliate of Acquiror pursuant to the Option Agreement) shall have acquired
beneficial ownership or the right to acquire beneficial ownership of, or any
"group" (as such term is defined under Section 13(d) of the Exchange Act and the
regulations promulgated thereunder), other than a "group" comprised of all of
the Persons listed on the signature pages to the Company Voting Agreement, shall
have been formed which beneficially owns, or has the right to acquire beneficial
ownership of, fifty percent (50%) or more of the then outstanding shares of
capital stock of the Company.
The right of any party hereto to terminate this Agreement
pursuant to this Section 9.1 shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any party hereto, any
Affiliate of such party or any of their respective officers, directors,
representatives or agents, whether prior to or after the execution of this
Agreement.
SECTION 9.2. EFFECT OF TERMINATION.
Except as provided in Section 9.5 and Section 9.6 of this
Agreement, in the event of the termination of this Agreement pursuant to Section
9.1, this Agreement shall forthwith become void, there shall be no liability on
the part of Acquiror or the Company or any of their respective officers,
directors, stockholders or Affiliates to the other, and all rights and
obligations of any party hereto shall cease, except that nothing herein shall
relieve any party from liability for any willful breach by a party of any of its
representations, warranties, covenants or agreements in this Agreement; and
provided that the Option Agreement and the provisions of Section 7.2, Section
9.5 and Section 9.6 of this Agreement will remain in full force and effect and
survive any termination of this Agreement.
SECTION 9.3. AMENDMENT.
This Agreement may be amended by the parties hereto by action
taken or authorized by their respective Boards of Directors at any time prior to
the
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Effective Time; provided, however, that, after approval of the Merger by the
stockholders of the Company or stockholders of Acquiror, no amendment may be
made which by law or rule of Nasdaq requires further approval by such
stockholders without such further approval. This Agreement may not be amended
except by an instrument in writing signed by each of the parties hereto.
SECTION 9.4. EXTENSION; WAIVER.
At any time prior to the Effective Time, any party hereto may
(a) extend the time for the performance of any of the obligations or other acts
of any other party hereto, (b) waive any inaccuracies in the representations and
warranties of any other party contained herein or in any document delivered
pursuant hereto and (c) waive compliance by any other party with any of the
agreements or conditions contained herein. Any such extension or waiver shall be
valid only if set forth in an instrument in writing signed by the party or
parties to be bond thereby.
SECTION 9.5 TRANSACTION FEES, EXPENSES AND OTHER PAYMENTS.
Except as otherwise set forth in this Section 9.5, all costs
and expenses incurred by the parties hereto shall be borne solely and entirely
by the party which has incurred such costs and expenses, whether or not the
Merger is consummated; provided, however, that in the event that the
transactions hereby are not consummated, Acquiror and the Company shall share
equally all costs and expenses (other than attorney's and accountants' fees and
expenses) incurred in relation to printing and filing and, as applicable,
mailing the Registration Statement and the Joint Proxy Statement and any
amendments or supplements thereto and all SEC and other regulatory filing fees
incurred in connection with the Registration Statement and the Joint Proxy
Statement and the fees required under the HSR Act and applicable foreign laws,
if any, incurred in connection with the transactions contemplated under this
Agreement.
SECTION 9.6 TERMINATION FEES.
(a) If this Agreement is terminated (i) by Acquiror pursuant
to Section 9.1(g), or (ii) by the Company pursuant to Section 9.1(h), the
Company shall pay to Acquiror a termination fee of Six Million Dollars
($6,000,000) in cash (the "Termination Fee"), within two (2) Business Days after
any such termination.
(b) If this Agreement is terminated pursuant to Section 9.1(e)
as a result of the failure of the Company to timely fulfill any obligation under
this Agreement, and if an Acquisition Proposal involving the Company is
thereafter consummated or the Company enters into a definitive agreement with
respect to an Acquisition Proposal, in either case, within twelve (12) months
after such termination of this Agreement, the Company shall pay to Acquiror the
Termination
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Fee, at or prior to the consummation of such Acquisition Proposal, or within two
(2) Business Day following the date of execution of such definitive agreement,
whichever is earlier.
(c) If this Agreement is terminated (i) by either Acquiror or
the Company pursuant to Section 9.1(f) as a result of the failure to receive the
requisite vote for approval of this Agreement and the Merger by the Stockholders
of the Company at the Company Stockholders Meeting, or (ii) by Acquiror pursuant
to Section 9.1(b) as a result of a Terminating Company Breach that has not been
cured by the Company pursuant to Section 9.1(b), then, in either such case, the
Company shall pay to Acquiror a termination fee of Three Million Dollars
($3,000,000) in cash, within thirty (30) days after such termination. If an
Acquisition Proposal involving the Company is thereafter consummated or the
Company enters into a definitive agreement with respect to an Acquisition
Proposal, in either case, within twelve (12) months after any such termination
of this Agreement, the Company shall pay to Acquiror an additional termination
fee of Three Million Dollars ($3,000,000) in cash, at or prior to the
consummation of such Acquisition Proposal, or within two (2) Business Day
following the date of execution of such definitive agreement, whichever is
earlier.
(d) If this Agreement is terminated by the Company pursuant to
Section 9.1(c) as a result of a Terminating Acquiror Breach that has not been
cured by Acquiror pursuant to Section 9.1(c), then Acquiror shall pay to the
Company a termination fee of Three Million Dollars ($3,000,000) in cash, within
thirty (30) days after such termination.
(e) Any payment required to be made by the Company pursuant to
Section 9.6 of this Agreement shall be made by wire transfer of immediately
available funds to an account designated by Acquiror. Any payment required to be
made by Acquiror pursuant to Section 9.6(d) of this Agreement shall be made by
wire transfer of immediately available funds to an account designated by the
Company.
ARTICLE X.
GENERAL PROVISIONS
SECTION 10.1 EFFECTIVENESS OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS.
(a) Except as set forth in Section 10.1(b) of this Agreement,
the representations, warranties, covenants and agreements of each party hereto
shall remain operative and in full force and effect up to the Effective Time
regardless of any investigation made by or on behalf of any other party hereto,
any Person
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controlling any such party or any of their officers, directors, representatives
or agents whether prior to or after the execution of this Agreement.
(b) The representations and warranties in this Agreement will
terminate at the Effective Time; provided, however, that the covenants and
agreements of the parties which by their respective terms contemplate
performance after the Effective Time or after the termination of this Agreement
pursuant to Article IX shall survive the Effective Time or the termination, as
applicable.
SECTION 10.2. NOTICES.
All notices and other communications given or made pursuant
hereto shall be in writing and shall be deemed to have been duly given or made
as of the date delivered, mailed or transmitted, and shall be effective upon
receipt, if delivered personally, mailed by registered or certified mail
(postage prepaid, return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
changes of address) or sent by electronic transmission to the telecopier number
specified below:
(a) If to Acquiror or Merger Sub:
ANSWERTHINK CONSULTING GROUP, INC.
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Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
With a copy (which shall not constitute notice) to:
▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P.
Columbia Square
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Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇. ▇▇▇▇▇ ▇▇▇▇, Esq.
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(b) If to the Company:
THINK NEW IDEAS, INC.
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Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
With a copy (which shall not constitute notice) to:
Akin, Gump, Strauss, ▇▇▇▇▇ & ▇▇▇▇, L.L.P.
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Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
SECTION 10.3. CERTAIN DEFINITIONS.
For purposes of this Agreement, the term:
"Acquisition Proposal" means an inquiry, offer or proposal
regarding any of the following (other than the transactions contemplated by this
Agreement or the Option Agreement) involving the Company or its Subsidiaries:
(a) any merger, reorganization, consolidation, share exchange, recapitalization,
business combination, liquidation, dissolution, or other similar transaction
involving, or, any sale, lease, exchange, mortgage, pledge, transfer or other
disposition of, all or any significant portion of the assets or ten percent
(10%) or more of the equity securities of, the Company or any of its
Subsidiaries, in a single transaction or series of related transactions which
could reasonably be expected to interfere with the completion of the Merger; (b)
any tender offer or exchange offer for twenty percent (20%) or more of the
outstanding shares of capital stock of the Company or any Company Subsidiary or
the filing of a registration statement under the Securities Act in connection
therewith; or (c) any public announcement of a proposal, plan or intention to do
any of the foregoing or any agreement to engage in any of the foregoing;
"Affiliate" of any Person means: (a) a Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, the first mentioned Person; and (b) as the context
requires (including, without limitation, for purposes of Section 7.11 hereof),
any Person who is or may be an "affiliate" of such Person for purposes of Rule
145 under the Securities Act or SEC Accounting Series Release 135;
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"beneficial owner" (including the terms "beneficial ownership"
and "beneficially own") means with respect to any shares of capital stock, a
Person who shall be deemed to be the beneficial owner or have beneficial
ownership of such shares (a) which such Person or any of its Affiliates or
associates beneficially owns, directly or indirectly, (b) which such Person or
any of its Affiliates or associates (as such term is defined in Rule 12b-2 of
the Exchange Act) has, directly or indirectly, (i) the right to acquire (whether
such right is exercisable immediately or subject only to the passage of time),
pursuant to any agreement, arrangement or understanding or upon the exercise of
conversion rights, exchange rights, warrants or options, or otherwise, or (ii)
the right to vote pursuant to any agreement, arrangement or understanding, (c)
which are beneficially owned, directly or indirectly, by any other Persons with
whom such Person or any of its Affiliates or associates has any agreement,
arrangement or understanding for the purpose of acquiring, holding voting or
disposing of any such shares or (d) pursuant to Section 13(d) of the Exchange
Act and any rules or regulations promulgated thereunder;
"Business Day" means any day other than a day on which banks
in the State of New York are authorized or obligated to be closed;
"Commonwealth Associates Warrants" means (a) that certain
Warrant to Purchase Common Stock of THINK NEW IDEAS, INC. dated November 26,
1996, granted to Commonwealth Associates pursuant to an underwriting agreement
by and between Commonwealth Associates and the Company, which warrant is
exercisable for 215,000 share of Company Common Stock, and (b) each and every
other warrant to purchase Company Common Stock into or for which said warrant
has been or will be transferred, exchanged or divided pursuant to the terms and
provisions of said warrant;
"control" (including the terms "controlled by" and "under
common control with") means the possession, directly or indirectly or as trustee
or executor, of the power to direct or cause the direction of the management or
policies of a Person, whether through the ownership of stock or as trustee or
executor, by contract or credit arrangement or otherwise;
"Earnout Agreements" means (a) that certain Agreement and Plan
of Merger dated November 3, 1997, by and between, inter alia, the Company and
BBG New Media, Inc., (b) that certain Agreement and Plan of Merger dated June
27, 1998, by and between the Company and UbiCube Group, Inc., and (c) that
certain Asset Purchase Agreement, dated as of March 10, 1999, by and between,
inter alia, Envision Group and the Company;
"Encumbrance" means any lien, pledge, charge, security
interest or other Encumbrance of any nature;
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"Environmental Laws" means all applicable foreign, federal,
state and local laws (including the common law), rules, requirements and
regulations relating to pollution, the environment (including, without
limitation, ambient air, surface water, groundwater, land surface or subsurface
strata) or protection of human health as it relates to the environment
including, without limitation, laws and regulations relating to releases of
Hazardous Materials, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials or relating to management of asbestos in buildings;
"Hazardous Materials" means wastes, substances, or materials
(whether solids, liquids or gases) that are deemed hazardous, toxic, pollutants,
or contaminants under any Environmental Laws, including, without limitation,
substances defined as "hazardous substances", "toxic substances", "radioactive
materials, including sources of ionizing and nonionizing radiation", "petroleum
products or wastes" or other similar designations in, or otherwise subject to
regulation under, any Environmental Law;
"Intellectual Property" means all (a) trademarks, service
marks, trade dress, logos, trade names, and corporate names and registrations
and applications for registration thereof, (b) copyrights and registrations and
applications for registration thereof, (c) computer software, data, and
documentation, (d) trade secrets and confidential business information
(including formulas, compositions, inventions (whether patentable or
unpatentable and whether or not reduced to practice), know-how, manufacturing
and production processes and techniques, research and development information,
drawings, specifications, designs, plans, proposals, technical data,
copyrightable works, financial, marketing, and business data, pricing and cost
information, business and marketing plans, and customer and supplier lists and
information, (e) other proprietary rights, and (f) copies and tangible
embodiments thereof (in whatever form or medium);
"March 1999 Financing" means the transactions contemplated by
that certain Securities Purchase Agreement dated March 4, 1999, by and among the
Company, Capital Ventures International and ▇▇▇▇▇▇▇▇ Capital Management and the
documents and instruments delivered in connection therewith;
"Material Adverse Effect" means, with respect to a specified
Person, any event, change, circumstance, condition, development, effect or
occurrence that individually or in the aggregate (taking into account all other
such events, changes, circumstances, conditions, developments, effects or
occurrences) has had, caused or resulted in (or with the passage of time would
be reasonably likely to have, cause, or result in) a material adverse effect on
the business, operations, earnings, assets, properties, results of operations or
condition (financial or otherwise) of such Person and its Subsidiaries, if any,
taken as a whole, except to the extent that any such
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event, change, circumstance, condition, development, effect or occurrence is
directly caused by: (a) conditions generally affecting national, regional or
world economics; (b) conditions generally affecting the industry of such Person;
(c) the announcement, pendency or process of effectuating the Merger or the
transactions contemplated hereby which directly results in a delay of, reduction
in or cancellation or change in the terms of customer engagements, projects or
relationships; or (d) a change in the market price or trading volume of the
securities of such Person; which conditions (in the case of clauses (a) and (b)
do not affect such Person in a disproportionate manner as compared with other
Persons in such Person's industry). For purposes of this Agreement, the parties
acknowledge and agree that (i) the industry of the Company is the interactive
marketing industry, and (ii) the industry of Acquiror is the information
technology services industry.
"Person" means an individual, corporation, partnership,
association, trust, unincorporated organization, other entity or group (as
defined in Section 13(d) of the Exchange Act);
"reasonable efforts" means, as to a party hereto, an
undertaking by such party to perform or satisfy an obligation or duty or
otherwise act in a manner reasonably calculated to obtain the intended result by
action or expenditure not disproportionate or unduly burdensome in the
circumstances, which means, among other things, that such party shall not be
required to (a) expend funds other than for payment of the reasonable and
customary costs and expenses of employees, counsel, consultants, representatives
or agents of such party in connection with the performance or satisfaction of
such obligation or duty or other action or (b) institute litigation or
arbitration as a part of its reasonable efforts;
"Securities Litigation" means any and all actions, suits,
proceedings, claims, arbitrations or investigations relating to any matters
alleged in connection with the shareholders litigation involving the Company
filed in the U.S. District Court for the Southern District of New York (In re
Think New Ideas, Inc., Consolidated Securities Litigation, ▇▇. ▇▇ ▇▇▇. ▇▇▇▇
(▇▇▇));
"Subsidiary" of any Person means any corporation, partnership,
joint venture or other legal entity of which such Person (either alone or
through or together with any other Subsidiary of such Person) (a) owns, directly
or indirectly, fifty percent (50%) or more of the capital stock, partnership
interests or other equity interests the holders of which are generally entitled
to vote for the election of the board of directors or other governing body of
such corporation, partnership, joint venture or other legal entity; or (b)
possesses, directly or indirectly, control over the direction of management or
policies of such corporation, partnership, joint venture or other legal entity
(whether through ownership of voting securities, by agreement or otherwise);
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"Superior Proposal" means a bona fide Acquisition Proposal
made by any Person that the Board of Directors of the Company determines in its
good faith judgment to be more favorable to the Company's stockholders than the
Merger (based on the written opinion, with only customary qualifications, of the
Company's independent financial advisor that the value of the consideration to
the Company's stockholders provided for in such proposal exceeds the value of
the consideration to the Company's stockholders provided for in the Merger) and
for which financing, to the extent required, is then committed or which, in the
good faith judgment of the Board of Directors of the Company (based on the
written advice of the Company's independent financial advisor), is reasonably
capable of being obtained by such Person;
"Tax" (including, with correlative meaning, the terms "Taxes"
and "Taxable") shall include, except where the context otherwise requires, all
federal, state, local and foreign income, profits, franchise, gross receipts,
payroll, sales, employment, use, property, withholding, excise, occupancy and
other taxes, duties or assessments or claims of any nature whatsoever, together
with all interest, penalties and additions imposed with respect to such amounts.
SECTION 10.4. HEADINGS.
The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
SECTION 10.5. SEVERABILITY.
If any term or other provision of this Agreement is deemed
invalid, illegal or incapable of being enforced pursuant to any rule of law or
public policy or other Order by a court of competent jurisdiction or otherwise,
all other conditions and provisions of this Agreement shall nevertheless remain
in full force and effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that transactions contemplated hereby are fulfilled to the extent possible.
SECTION 10.6. ENTIRE AGREEMENT.
This Agreement (together with the Exhibits, the disclosure
schedules of the parties and the other documents specified herein and delivered
pursuant hereto) and the Option Agreement and the Confidentiality Agreement
constitute the entire agreement of the parties with respect to the subject
matter contained
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herein and therein and supersede all prior agreements and undertakings, both
written and oral, between the parties, or any of them, with respect to the
subject matter hereof and, except as otherwise expressly provided herein, are
not intended to confer upon any other Person any rights or remedies hereunder.
SECTION 10.7. SPECIFIC PERFORMANCE.
The transactions contemplated by this Agreement are unique.
Accordingly, the parties acknowledge and agree that, in addition to all other
remedies to which they may be entitled, each shall be entitled to a decree of
specific performance.
SECTION 10.8. ASSIGNMENT.
Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto without the
prior written consent of the other parties hereto. Subject to the preceding
sentence, this Agreement shall be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and permitted
assigns.
SECTION 10.9. THIRD PARTY BENEFICIARIES.
Subject to Section 10.8, this Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
Person any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement except for (a) the Indemnified Parties under Section 7.6, and
(b) the rights of the Holders to receive the Merger Consideration and any cash
in lieu of fractional shares payable in the Merger pursuant to Sections 2.1(a)
and (d).
SECTION 10.10. GOVERNING LAW.
This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of law.
SECTION 10.11. COUNTERPARTS.
This Agreement may be executed and delivered in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed and delivered shall be deemed to be an original but all
of which taken together shall constitute one and the same agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement and Plan of Merger to be executed and delivered as of the date first
written above.
THINK NEW IDEAS, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Chief Executive Officer
ANSWERTHINK CONSULTING GROUP, INC.
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Chairman of the Board, President
and Chief Executive Officer
DARWIN ACQUISITION CORP.
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Chairperson of the Board
and President