EXHIBIT (d)(1)
ACQUISITION AGREEMENT AND
AGREEMENT AND PLAN OF MERGER
among
SBI AND COMPANY
a Utah corporation ("Parent")
and
SBI PURCHASE CORP.
a Delaware corporation and a wholly-owned
Subsidiary of Parent ("Purchaser")
and
RAZORFISH INC.
a Delaware corporation ("Razorfish")
DATED AS OF
November 21, 2002
ACQUISITION AGREEMENT AND
AGREEMENT AND PLAN OF MERGER
ACQUISITION AGREEMENT AND AGREEMENT AND PLAN OF MERGER (the "Agreement") dated
as of November 21, 2002 by and among SBI AND COMPANY, a Utah corporation
("Parent"), SBI PURCHASE CORP., a Delaware corporation and a wholly-owned
subsidiary of Parent ("Purchaser"), and RAZORFISH INC., a Delaware corporation
("Razorfish", and together with Purchaser, the "Constituent Corporations").
Reference is made to Article XI for the definitions of certain terms used in
this Agreement.
BACKGROUND
This Agreement provides for the Parent to acquire Razorfish by (i) causing the
Purchaser to make a tender offer for all Class A Shares and Class B Shares of
Razorfish for $1.70 per share, in cash, and (ii) as promptly as practicable
after the closing of such tender offer, causing the Purchaser to merge with and
into Razorfish, with each then issued and outstanding Class A Share and Class B
Share being converted into the same amount of cash per share as paid in the
tender offer, upon the terms and conditions set forth herein.
The Boards of Directors of each of Razorfish, the Parent and the Purchaser
accordingly have duly adopted resolutions approving this Agreement and the
transactions contemplated hereby.
NOW, THEREFORE, in consideration of the mutual agreements contained in this
Agreement, and for other good and valuable consideration, the value, receipt and
sufficiency of which are acknowledged, the parties agree as follows:
ARTICLE I
THE TENDER OFFER
1.1 The Offer.
1.1.1 Offer. Provided that this Agreement has not been terminated
pursuant to Section 9.1 hereof, as promptly as reasonably practicable, but in
any event within ten (10) "business days" (as defined in Rule 14d-1(g) under the
Securities Exchange Act of 1934, as amended (together with the rules and
regulations promulgated thereunder, the "Exchange Act")) following the date
hereof, the Purchaser will, and the Parent will cause the Purchaser to, commence
(within the meaning of Rule 14d-2 under the Exchange Act) a tender offer (as it
may be amended from time to time as permitted by this Agreement, the "Offer") to
purchase all of the Razorfish Shares at a price of U.S. $1.70 per share, in cash
(such price, or the highest price per Razorfish Share as may be paid in the
Offer, being referred to herein as the "Offer Price"). The obligation of the
Purchaser to accept for payment and pay for Razorfish Shares tendered pursuant
to the Offer will be subject only to the following conditions: (i) that there
will be validly tendered and not withdrawn prior to the final expiration of the
Offer that number of Razorfish Shares, together with Razorfish Shares then owned
by the Parent, the Purchaser and their respective Subsidiaries that represents
at least a majority of Razorfish Shares outstanding on a Fully Diluted Basis (as
defined below) (the "Minimum Condition") and (ii) the satisfaction or
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waiver by the Purchaser as permitted hereunder of the other conditions set forth
in Annex I hereto. For purposes of this Agreement, "Fully Diluted Basis" means
the number of Razorfish Shares issued and outstanding at the time of
determination, after taking into account all Razorfish Shares issuable upon
conversion or exercise of outstanding options, warrants or rights to purchase
Razorfish Shares. The Offer will be made by means of an offer to purchase (the
"Offer to Purchase") and a related letter of transmittal, each in form
reasonably satisfactory to Razorfish, containing the terms set forth in this
Agreement and the conditions set forth in Annex I. Without limiting the
foregoing, effective upon the first acceptance for payment of Razorfish Shares
by the Purchaser pursuant to the Offer, the holder of such Razorfish Shares will
sell and assign to the Purchaser all right, title and interest in and to all of
Razorfish Shares tendered (including, but not limited to, such holder's right to
any and all dividends and distributions with a record date before, and a payment
date after, the scheduled or extended expiration date) (such time being referred
to as the "Consummation of the Offer").
1.1.2 Waiver; Extension of Offer. The Purchaser expressly reserves the
right, subject to compliance with the Exchange Act, to waive any of the
conditions to the Offer and to make any change in the terms of or conditions to
the Offer, provided that (i) the Minimum Condition may not be waived or changed
without the prior written consent of Razorfish and (ii) no change may be made
that changes the form of consideration to be paid, decreases the Offer Price,
decreases the number of Razorfish Shares sought in the Offer, adds additional
conditions to the Offer, modifies any of the conditions to the Offer in a manner
adverse to holders of Razorfish Shares, makes any other change in the terms of
the Offer that is in any manner adverse to the holders of Razorfish Shares or
(except as provided in the next sentence and in Section 1.1.3) extends the Offer
beyond the date that is twenty (20) business days after commencement of the
Offer (the "Initial Expiration Date"), without the prior written consent of
Razorfish. Notwithstanding the foregoing, the Purchaser may, without the consent
of Razorfish, and will, at Razorfish's request (x) from time to time, extend the
Offer beyond the then current expiration date if at such date, or if applicable
any extension thereof, any of the conditions to the Offer set forth in clauses
(i) through (v) of Annex I will not be satisfied or waived, until such time as
such conditions are satisfied or waived; provided that if any of the conditions
to the Offer set forth in clause (ii) of Annex I will not be satisfied or
waived, the Purchaser may, but will not be required to, extend the expiration
date of the Offer beyond the then current expiration date; provided further,
that if all conditions other than the Minimum Condition are satisfied or waived,
the Purchaser may on one occasion for a period not to exceed twenty (20)
business days, extend the Offer beyond the then current expiration date, and (y)
extend the Offer for any period required by any rule, regulation, interpretation
or position of the Securities and Exchange Commission or the staff thereof (the
"SEC") applicable to the Offer; provided, however, that the Offer, as it may be
extended from time to time, may not be so extended beyond February 28, 2003 (the
"Outside Date").
1.1.3 Payment; Subsequent Offering Period. As soon as practicable after
the expiration date of the Offer, assuming the prior satisfaction or waiver of
the Minimum Condition and the other conditions of the Offer set forth in Annex I
as contemplated hereby, the Purchaser will accept for payment and pay for all
Razorfish Shares that have been validly tendered and not withdrawn pursuant to
the Offer. The Parent will provide or cause to be provided to the Purchaser on a
timely basis the funds necessary to purchase all Razorfish Shares that the
Purchaser becomes obligated to purchase pursuant to the Offer, and will be
liable on a direct and
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primary basis for the performance by the Purchaser of its obligations under this
Agreement. If, on the expiration date of the Offer, the Minimum Condition has
been satisfied or, with the consent of Razorfish, waived, and all other
conditions to the Offer have been satisfied or waived, but less than 90 percent
(90%) of Razorfish Shares then issued and outstanding, together with Razorfish
Shares beneficially owned by the Parent, the Purchaser and their Subsidiaries,
have been validly tendered and not withdrawn, the Purchaser may extend the Offer
for a further period of time, after it has accepted and paid for (in accordance
with the first sentence of this section) all of Razorfish Shares tendered in the
Offer, by means of a "subsequent offering period" of at least three (3) but no
more than twenty (20) business days in accordance with Rule 14d-11 under the
Exchange Act to meet the objective (which is not a condition to the Offer) that
there be tendered prior to the expiration date of the Offer (as so extended) and
not withdrawn a number of Razorfish Shares that, together with Razorfish Shares
beneficially owned by the Parent, the Purchaser and their Subsidiaries,
represents at least ninety percent (90%) of the then issued and outstanding
Razorfish Shares. During the subsequent offering period, the Purchaser will
immediately accept for payment and promptly pay for all Razorfish Shares as they
are tendered pursuant to the Offer in accordance with Rule 14d-11 under the
Exchange Act.
1.1.4 Joint Press Release. No later than the first business day
following execution of this Agreement and subject to the conditions of this
Agreement, the Parent will issue a joint press release with Razorfish (the
"Joint Press Release") regarding this Agreement and Parent and Purchaser's
intent to make the Offer, and will file with the SEC the Joint Press Release,
under cover of Schedule TO, indicating on the front of such Schedule TO that
such filing contains pre-commencement communications.
1.1.5 Schedule TO. On the date of commencement of the Offer, the Parent
and the Purchaser will file with the SEC a Tender Offer Statement on Schedule TO
(together with all amendments, supplements, and exhibits thereto, the "Schedule
TO") with respect to the Offer. The Schedule TO will include the summary term
sheet required thereby, and as exhibits thereto, the Offer to Purchase and forms
of the letter of transmittal, summary advertisement and all other ancillary
offer documents (the Schedule TO and the other documents pursuant to which the
Offer is made, together with any supplements, amendments or exhibits thereto,
are referred to as the "Offer Documents"). The Parent and the Purchaser will
take all steps necessary to cause the Offer Documents to be disseminated to
holders of Razorfish Shares to the extent required by applicable federal
securities laws. Razorfish, the Parent and the Purchaser each agree promptly to
correct any information provided by it for use in the Offer Documents if and to
the extent that such information becomes false or misleading in any Material
respect. The Parent and the Purchaser agree to take all steps necessary to cause
the Offer Documents as so corrected to be filed with the SEC and to be
disseminated to holders of Razorfish Shares, in each case as and to the extent
required by applicable federal securities Law. Razorfish and its counsel will be
given a reasonable opportunity to review and comment on the Offer Documents
prior to their being filed with the SEC or disseminated to the holders of
Razorfish Shares. The Parent and the Purchaser also agree to provide Razorfish
and its counsel in writing with any comments the Parent, the Purchaser or their
counsel may receive from the SEC or its staff with respect to the Offer
Documents promptly after the receipt of such comments, and will consult with and
provide Razorfish and its counsel a reasonable opportunity to review and comment
on the response of the Parent and the Purchaser to such comments prior to
responding.
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1.1.6 Terminate Offer. If this Agreement has been terminated pursuant
to Section 9.1 hereof, the Purchaser will promptly terminate the Offer without
accepting any Razorfish Shares for payment.
1.2 Actions by Razorfish.
1.2.1 Provide Information. Razorfish was advised at its November 21,
2002 Board of Directors meeting that all of its directors and Executive Officers
who own Razorfish Shares intend to tender their Razorfish Shares pursuant to the
Offer so long as such action would not result in liability under Section 16(b)
of the Exchange Act. In connection with the Offer, Razorfish will, or will cause
its transfer agent to, promptly furnish the Purchaser with a list of its
stockholders, mailing labels and any available listing or computer file
containing the names and addresses of all record holders of Razorfish Shares and
lists in Razorfish's possession or control of securities positions of Razorfish
Shares held in stock depositories, in each case as of a recent date, and will
provide to the Purchaser such additional information (including updated lists of
stockholders, mailing labels and lists of securities positions) and such other
assistance as the Purchaser may reasonably request in connection with the Offer
and Purchaser will be subject to the provisions of the confidentiality agreement
between Razorfish and the Parent dated as of August 6, 2001 (the
"Confidentiality Agreement"); provided that the provisions of the
Confidentiality Agreement shall not be deemed to limit or restrict the
information to be included in the Offer Documents pursuant to applicable
securities laws. The information provided pursuant to the preceding sentence
will be used only by the Parent and the Purchaser solely in connection with the
Offer and the Merger; provided, that the Parent and the Purchaser may take such
actions as are necessary to disseminate the Offer Documents and any other
documents necessary to consummate the Offer and the transactions contemplated by
this Agreement.
1.2.2 Joint Press Release. No later than the first business day
following execution of this Agreement, and subject to the conditions of this
Agreement, Razorfish will issue the Joint Press Release with the Parent and the
Purchaser and file with the SEC the Joint Press Release, under cover of Schedule
14D-9, indicating on the front of such Schedule 14D-9 that such filing contains
pre-commencement communications.
1.2.3 Schedule 14D-9. On the day that the Offer is commenced, Razorfish
will file with the SEC and disseminate to holders of Razorfish Shares, in each
case as and to the extent required by applicable federal securities Law, a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with any
amendments or supplements thereto, the "Schedule 14D-9") that will reflect the
recommendations of Razorfish's Board of Directors with respect to the Offer and
the Merger; provided that such recommendation need not be made or, if previously
made, may be withdrawn, modified or amended to the extent Razorfish's Board of
Directors has determined that the failure to take such action would be
inconsistent with their fiduciary duties under applicable Laws in accordance
with Section 6.1.5. Razorfish, the Parent and the Purchaser each agree promptly
to correct any information provided by it for use in the Schedule 14D-9 if and
to the extent that it will have become false or misleading in any Material
respect. Razorfish agrees to take all steps necessary to cause the Schedule
14D-9 as so corrected to be filed with the SEC and to be disseminated to holders
of Razorfish Shares, in each case as and to the extent required by applicable
federal securities Law. The Purchaser and its counsel will be given a reasonable
opportunity to review and comment on the Schedule 14D-9 prior to its being filed
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with the SEC or disseminated to holders of Razorfish Shares. Razorfish also
agrees to provide the Purchaser and its counsel in writing with any comments
Razorfish or its counsel may receive from the SEC with respect to the Schedule
14D-9 promptly after the receipt of such comments, and will consult with and
provide the Purchaser and its counsel a reasonable opportunity to review and
comment on the response of Razorfish to such comments prior to responding.
1.3 Directors.
1.3.1 Designation; Independent Directors. Promptly upon the purchase of
and payment for Razorfish Shares by the Parent or the Purchaser representing at
least a majority of Razorfish Shares on a Fully Diluted Basis, the Purchaser
will be entitled to designate for appointment or election to Razorfish's then
existing Board of Directors, upon written notice to Razorfish, such number of
directors, rounded up to the next whole number, on the Board of Directors such
that the percentage of its designees on the Board will equal the percentage of
the outstanding Razorfish Shares on a Fully Diluted Basis owned of record by the
Parent and its direct or indirect Subsidiaries. In furtherance thereof,
Razorfish will, upon request of the Purchaser, use commercially reasonable
efforts promptly to cause the Purchaser's designees (and any replacement
designees in the event that any designee will no longer be on the Board of
Directors) to be so elected to Razorfish's Board of Directors, and, to the
extent necessary, use commercially reasonable efforts to obtain the resignation
of such number of its current directors as is necessary to give effect to the
foregoing provision. At such time, Razorfish will also, upon the request of the
Purchaser and in accordance with applicable Laws, use commercially reasonable
efforts to cause the Persons designated by the Purchaser to constitute at least
the same percentage (rounded up to the next whole number) as is on Razorfish's
Board of Directors of (i) each committee of Razorfish's Board of Directors, (ii)
each board of directors (or similar body) of each Subsidiary of Razorfish and
(iii) each committee (or similar body) of each such board. Notwithstanding the
foregoing, until the Effective Time, the Board of Directors of Razorfish will
have at least three directors who are directors of Razorfish on the date of this
Agreement and who are not officers of Razorfish or any of its Subsidiaries (the
"Independent Directors"); provided, however, that (x) notwithstanding the
foregoing, in no event will the requirement to have at least three Independent
Directors result in the Purchaser's designees constituting less than a majority
of Razorfish's Board of Directors unless the Purchaser will have failed to
designate a sufficient number of Persons to constitute at least a majority and
(y) if the number of Independent Directors is reduced below three for any reason
whatsoever (or if immediately following Consummation of the Offer there are not
at least three then-existing directors of Razorfish who (1) are Qualified
Persons (as defined below) and (2) are willing to serve as Independent
Directors), then the number of Independent Directors required hereunder will be
one, unless the remaining Independent Director is able to identify a person, who
is not an officer or Affiliate of Razorfish, the Parent or any of their
respective Subsidiaries and who is reasonably acceptable to the Parent (any such
person being referred to herein as a "Qualified Person"), willing to serve as an
Independent Director, in which case such remaining Independent Director will be
entitled to designate any such Qualified Person or Persons to fill such
vacancies, and such designated Qualified Person will be deemed to be an
Independent Director for purposes of this Agreement, or if no Independent
Directors then remain, the other Directors will be required to designate three
Qualified Persons to fill such vacancies, and such persons will be deemed to be
Independent Directors for purposes of this Agreement.
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1.3.2 Compliance with Exchange Act. Razorfish's obligations to appoint
the Purchaser's designees to Razorfish's Board of Directors will be subject to
compliance with Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder. Razorfish will promptly take all actions required pursuant to
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder in order
to fulfill its obligations pursuant to Section 1.3.1, including mailing to
stockholders the information required by such Section 14(f) and Rule 14f-1
(which Razorfish will mail together with the Schedule 14D-9 if it receives from
the Parent and the Purchaser the information below on a timely basis to permit
such mailing) as is necessary to fulfill Razorfish's obligations pursuant to
Section 1.3.1. The Parent or the Purchaser will supply Razorfish in writing any
information with respect to either of them and their nominees, officers,
directors and Affiliates required by such Section 14(f) and Rule 14f-1 as is
necessary in connection with the appointment of any of the Purchaser's designees
pursuant to Section 1.3.1. The provisions of Section 1.3.1 are in addition to
and will not limit any rights that the Parent, the Purchaser or any of their
Affiliates may have as a holder or beneficial owner of Razorfish Shares as a
matter of Law with respect to the election of directors or otherwise.
1.3.3 Action by Independent Directors. Following the election or
appointment of the Purchaser's designees as set forth above, the approval by
affirmative vote or written consent of all of the Independent Directors then in
office (or, if there is only one Independent Director then in office, the
Independent Director) will be required to authorize (and such authorization will
constitute the authorization of Razorfish's Board of Directors and no other
action on the part of Razorfish, including any action by any committee thereof
or any other director of Razorfish, will, unless otherwise required by Law, be
required or permitted to authorize) (i) any amendment or termination of this
Agreement by Razorfish, (ii) any other action of Razorfish's Board of Directors
under or in connection with this Agreement that in any manner adversely affects
the holders of Razorfish Shares, as determined by any of the Independent
Directors, or (iii) any waiver or exercise of any of Razorfish's rights under
this Agreement. The Independent Directors will have the authority to retain such
counsel and other advisors at the expense of Razorfish as reasonably deemed
appropriate by the Independent Directors. In addition, the Independent Directors
will have the authority to institute any action, on behalf of Razorfish, to
enforce performance of this Agreement.
ARTICLE II
THE MERGER
2.1 The Merger. Subject to the terms and conditions of this Agreement, at the
Effective Time the Purchaser will be merged with and into Razorfish (the
"Merger") in accordance with the provisions of the General Corporation Law of
the State of Delaware (the "Delaware Act"). Following the Merger, Razorfish will
continue as the surviving corporation (the "Surviving Corporation") and the
separate corporate existence of the Purchaser will cease. Razorfish and the
Purchaser are sometimes referred to collectively as the "Constituent
Corporations."
2.2 The Closing. Unless this Agreement has been terminated pursuant to Section
9.1, the closing of the Merger contemplated by this Agreement (the "Closing")
will take place at 10:00 a.m., local time, on a date to be specified by the
parties that is no later than the third business day following satisfaction or
waiver of the conditions set forth in Section 8.1 (the "Closing Date"), at
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the offices of Xxxxxxxx & Xxxxxxxx LLP, 0000 0xx Xxxxxx, 00xx Xxxxx, Xxx Xxxx,
XX, unless another date, time or place is agreed to in writing by the parties.
2.3 Effective Time. Upon the terms and subject to the conditions of this
Agreement, on the Closing Date (or on such other date as the parties may agree)
Razorfish will file with the Delaware Secretary of State an appropriate
certificate of merger (or certificate of ownership and merger, as the case may
be) (the "Certificate of Merger") and make all other filings or recordings
required by the Delaware Act in connection with the Merger. The Merger will be
consummated on the later of the date on which the Certificate of Merger has been
filed with the Delaware Secretary of State or such time as is agreed upon by the
parties and specified in such Certificate of Merger. The time the Merger becomes
effective in accordance with the Delaware Act is referred to in this Agreement
as the "Effective Time."
2.4 Effects of the Merger. The Merger will have the effects set forth in this
Agreement and Section 259 of the Delaware Act. Without limiting the generality
of the foregoing, as of the Effective Time the Surviving Corporation will
succeed to all the properties, rights, privileges, powers, franchises and assets
of the Constituent Corporations, and all debts, liabilities and duties of the
Constituent Corporations will become debts, liabilities and duties of the
Surviving Corporation.
2.5 Organizational Documents. At the Effective Time, the certificate of
incorporation and bylaws of the Purchaser (as in effect immediately prior to the
Effective Time), will become the certificate of incorporation and bylaws of the
Surviving Corporation until thereafter amended in accordance with their
respective terms and the Delaware Act.
2.6 Directors and Officers. The directors and the officers of the Purchaser at
the Effective Time will be the initial directors and officers of the Surviving
Corporation and will hold office from the Effective Time in accordance with the
certificate of incorporation and bylaws of the Surviving Corporation until their
respective successors are duly elected or appointed and qualified.
2.7 Merger Without Meeting of Razorfish Stockholders. If following the
Consummation of the Offer or any subsequent offering period, the Purchaser owns
at least ninety percent (90%) of the outstanding Razorfish Shares, each of the
parties hereto will take all necessary and appropriate action to cause the
Merger to become effective as soon as reasonably practicable after such
acquisition, without a Razorfish Stockholders Meeting, in accordance with
Section 253 of the Delaware Act.
2.8 Conversion of Shares. As of the Effective Time, by virtue of the Merger and
without any action on the part of Razorfish, the Parent or the Purchaser or
their respective stockholders:
2.8.1 Right to Receive Merger Consideration. Each Razorfish Share
(other than shares to be canceled in accordance with Section 2.8.2 and any
Dissenting Shares) issued and outstanding immediately prior to the Effective
Time will be converted into the right to receive the Offer Price in cash,
payable to the holder thereof, without interest (the "Merger Consideration"),
upon surrender of the Certificate formerly representing such Razorfish Share in
the manner provided in Section 3.2. All such Razorfish Shares, when so
converted, will no
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longer be outstanding and will automatically be canceled and will cease to
exist, and each holder of a Certificate will cease to have any rights with
respect to such Razorfish Shares, except the right to receive the Merger
Consideration, without interest, upon the surrender of such Certificate in
accordance with Section 3.2.
2.8.2 Cancellation of Razorfish Shares Held by Parent and Purchaser.
Each Razorfish Share owned immediately prior to the Effective Time by Razorfish,
the Parent, the Purchaser or any of their respective Subsidiaries, including
without limitation, any such shares held as treasury stock of Razorfish, will be
canceled and extinguished and no consideration will be delivered in exchange
therefor. For purposes of this section, Razorfish Shares owned beneficially or
held of record by any plan, program or arrangement sponsored or maintained for
the benefit of any current or former employee of Razorfish, the Parent, the
Purchaser or any of their respective Subsidiaries, will not be deemed to be held
by Razorfish, the Parent, the Purchaser or any such Subsidiary, regardless of
whether Razorfish, the Parent, the Purchaser or any such Subsidiary has the
power, directly or indirectly, to vote or control the disposition of such
shares.
2.8.3 Conversion of Purchaser Shares. Each Purchaser Share issued and
outstanding immediately prior to the Effective Time will, by virtue of the
Merger and without any action on the part of the holder thereof, be converted
into one Class A Share of the Surviving Corporation.
2.8.4 Cancellation of Razorfish Options. Each Razorfish Option that is
unexercised and outstanding immediately prior to the Effective Time will, by
virtue of the Merger and without any action on the part of the holder thereof,
fully vest, be canceled, and represent only the right to receive an amount in
cash equal to the excess, if any, of the Merger Consideration less the exercise
price for each Razorfish Share purchasable pursuant to such Razorfish Option
immediately prior to the Effective Time, less any amounts as are required to be
deducted and withheld under the Code or any provision of state, local or foreign
tax law in connection with such payment (such net amount, the "Option Spread
Payment"), and all other rights of a holder associated with the Razorfish
Options shall be terminated and canceled.
ARTICLE III
PAYMENT
3.1 Surrender of Certificates. From and after the Effective Time, each holder of
a certificate that immediately prior to the Effective Time represented an
outstanding Razorfish Share (a "Certificate") will be entitled to receive in
exchange therefor, upon surrender thereof to the Paying Agent), the Merger
Consideration into which the Razorfish Shares evidenced by such Certificate were
converted pursuant to the Merger. No interest will be payable on the Merger
Consideration to be paid to any holder of a Certificate irrespective of the time
at which such Certificate is surrendered for exchange.
3.2 Paying Agent; Certificate Surrender Procedures.
3.2.1 Paying Agent. On or prior to the Effective Time, the Parent will
designate (with the approval of Razorfish, not to be unreasonably withheld) and
enter into an agreement with an
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institution or trust company to act as paying agent for the Merger Consideration
(the "Paying Agent").
3.2.2 Payment Fund. As soon as reasonably practicable after the
Effective Time, the Parent will deposit, or cause to be deposited, with the
Paying Agent, an amount in cash sufficient to provide all funds necessary for
the Paying Agent to make payment of the Merger Consideration (the "Payment
Fund"). Pending payment of such funds to the holders of Certificates, the
Payment Fund will be held and may be invested by the Paying Agent as the Parent
directs (so long as such directions do not impair the rights of holders of
Razorfish Shares) in: (i) the direct obligations of the United States for which
the full faith and credit of the United States is pledged to provide for the
payment of principal and interest; (ii) commercial paper maturing not more than
270 days after the date of issue and rated P-1 by Xxxxx'x Investors Services,
Inc. or A-1 by Standard & Poor's Corporation, (iii) certificates of deposit
maturing not more than 270 days after the date of issue issued by, or in money
market or demand deposit accounts maintained at, a commercial banking
institution, which is a member of the Federal Reserve System and has a combined
capital and surplus and undivided profits of not less than $500,000,000; (iv)
money market accounts maintained with mutual funds having assets in excess of
$2,500,000,000; and (v) tax exempt securities rated A or better by Moody's or A+
or better by Standard & Poor's. Any net profit resulting from, or interest or
income produced by, such investments will be payable to the Parent or its
designee, in the Parent's sole discretion. The Parent will promptly replace any
monies lost through any investment made pursuant to this Section 3.2.2.
3.2.3 Transmittals. As soon as reasonably practicable after the
Effective Time, the Parent will instruct the Paying Agent to mail to each record
holder of a Certificate (i) a letter of transmittal (which will specify that
delivery will be effected, and risk of loss and title to such Certificates will
pass, only upon delivery of the Certificate to the Paying Agent and will be in
such form and have such other provisions as the Parent will reasonably specify)
and (ii) instructions for use in effecting the surrender of Certificates for the
Merger Consideration. Upon the surrender to the Paying Agent of such
Certificates together with a duly executed and completed letter of transmittal
and all other documents and other materials required by the Paying Agent to be
delivered in connection therewith, the holder will be entitled to receive the
Merger Consideration into which the Certificates so surrendered have been
converted in accordance with the provisions of this Agreement. Until so
surrendered, each outstanding Certificate will be deemed from and after the
Effective Time, for all corporate purposes, to evidence the right to receive the
Merger Consideration into which the Razorfish Shares represented by such
Certificate have been converted in accordance with the provisions of this
Agreement.
3.3 Transfer Books. The stock transfer books of Razorfish will be closed at the
Effective Time, and no transfer of any Razorfish Shares will thereafter be
recorded on any of the stock transfer books. In the event of a transfer of
ownership of any Razorfish Shares prior to the Effective Time that is not
registered in the stock transfer records of Razorfish at the Effective Time, the
Merger Consideration into which such Razorfish Shares has been converted in the
Merger will be paid to the transferee in accordance with the provisions of
Section 3.2 only if the Certificate is surrendered as provided in Section 3.2
and accompanied by all documents required
9
to evidence and effect such transfer (including evidence of payment of any
applicable stock transfer taxes).
3.4 Termination of Payment Fund. Any portion of the Payment Fund that remains
undistributed one hundred eighty (180) days after the Effective Time will be
delivered to the Parent upon demand, and each holder of Razorfish Shares who has
not previously surrendered Certificates in accordance with the provisions of
this article will thereafter look only to the Parent for satisfaction of such
holder's claims for the Merger Consideration.
3.5 Appraisal Rights. Notwithstanding anything in this Agreement to the
contrary, Razorfish Shares outstanding immediately prior to the Effective Time
and held by a holder who has not voted in favor of the Merger or consented
thereto in writing and who has complied with all of the relevant provisions of
Section 262 of the Delaware Act regarding appraisal for such shares ("Dissenting
Shares"), will not be converted into a right to receive the Merger
Consideration, unless such holder fails to perfect or withdraws or otherwise
loses its right to appraisal. Razorfish will give the Parent prompt written
notice of any and all demands for appraisal rights, withdrawal of such demands
and any other communications delivered to Razorfish pursuant to Section 262 of
the Delaware Act, and Razorfish will give the Parent the opportunity, to the
extent permitted by applicable Law, to participate in all negotiations and
proceedings with respect to such demands. Except with the prior written consent
of the Parent, Razorfish will not voluntarily make any payment with respect to
any demand for appraisal rights and will not settle or offer to settle any such
demand. Each holder of Dissenting Shares who becomes entitled to payment for
such Dissenting Shares under the provisions of Section 262 of the Delaware Act,
will receive payment thereof from the Surviving Corporation and such Dissenting
Shares will no longer be outstanding and will automatically be canceled and
retired and will cease to exist.
3.6 Lost Certificates. If any Certificate has been lost, stolen or destroyed,
upon the making of an affidavit (in form and substance reasonably acceptable to
the Parent) of that fact by the person making such a claim, and, if required by
the Parent, the posting by such person of a bond in such reasonable amount as
the Parent may direct as indemnity against any claim that may be made against or
with respect to such Certificate, the Paying Agent will deliver in exchange for
such lost, stolen or destroyed Certificate the Merger Consideration pursuant to
Section 3.2.
3.7 No Rights as Stockholder. From and after the Effective Time, the holders of
Certificates will cease to have any rights as a stockholder of the Surviving
Corporation except as otherwise expressly provided in this Agreement or by
applicable Laws, and the Parent will be entitled to treat each Certificate that
has not yet been surrendered for exchange solely as evidence of the right to
receive the Merger Consideration into which the Razorfish Shares evidenced by
such Certificate have been converted pursuant to the Merger.
3.8 Withholding. The Parent will be entitled to deduct and withhold from the
Merger Consideration otherwise payable to any former holder of Razorfish Shares
all amounts required by Law to be deducted or withheld therefrom. To the extent
that amounts are so deducted and withheld and paid to the appropriate
Governmental Entity, such amounts will be treated for all purposes of this
Agreement as having been paid to the holder of the Razorfish Shares in respect
of which such deduction and withholding was made by the Parent or the Purchaser.
10
3.9 Escheat. Neither the Parent, the Purchaser nor Razorfish will be liable to
any former holder of Razorfish Shares for any portion of the Merger
Consideration delivered to any public official pursuant to any applicable
abandoned property, escheat or similar Law. In the event any Certificate has not
been surrendered for the Merger Consideration prior to the sixth anniversary of
the Closing Date, or prior to such earlier date as of which such Certificate or
the Merger Consideration payable upon the surrender thereof would otherwise
escheat to or become the property of any governmental entity, then the Merger
Consideration otherwise payable upon the surrender of such Certificate will, to
the extent permitted by applicable Law, become the property of the Surviving
Corporation, free and clear of all rights, interests and adverse claims of any
person.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Parent and the Purchaser hereby represent and warrant jointly and
severally to Razorfish as follows:
4.1 Corporate Organization. Parent is a corporation duly organized, validly
existing and in good standing under the laws of the State of Utah and has full
corporate power and authority to carry on its business as now conducted.
Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has full corporate power and
authority to carry on its business as now conducted. Parent directly owns and
has power to vote all of the outstanding capital stock of Purchaser. Each of
Parent and Purchaser is duly qualified to do business as a foreign corporation
and is in good standing under the laws of each state or other jurisdiction in
which either the ownership or use of the properties owned or used by it, or the
nature of the activities conducted by it, requires such qualification, except
for where the failure to be so qualified would not, taken together, have a
Material Adverse Effect. Purchaser was formed for the purpose of effecting the
Offer and the Merger and has not conducted, and will not conduct, any business
prior to the Effective Time other than that which is necessary to effectuate the
Offer and the Merger. True and complete copies of the certificate of
incorporation and the bylaws of each of Parent and Purchaser have been provided
to Razorfish.
4.2 Authority Relative to this Agreement; No Violation.
4.2.1 Authority. Parent and Purchaser each has the corporate power to
enter into this Agreement, to carry out its obligations hereunder, to perform
and comply with all the terms and conditions hereof to be performed and complied
with by it, and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement, the performance and compliance with
all the terms and conditions hereof to be performed and complied with, and the
consummation of the transactions contemplated hereby, by Parent and Purchaser
have been duly authorized by all requisite corporate action on the part of each
of Parent and Purchaser. This Agreement has been duly and validly executed and
delivered by each of Parent and Purchaser and is the legal, valid and binding
obligation of each of Parent and Purchaser enforceable against each of them in
accordance with its terms, except as such enforceability may be limited by (i)
laws of general application relating to bankruptcy, insolvency, reorganization,
moratorium and the relief of debtors, and similar laws affecting creditors'
rights and remedies generally, and
11
(ii) the availability of specific performance, injunctive relief and other
equitable remedies, regardless of whether enforcement is sought in a proceeding
at law or in equity.
4.2.2 Compliance with Charter and Laws. Neither the execution and
delivery of this Agreement by Parent and Purchaser, the performance and
compliance by Parent and Purchaser of and with the terms and conditions hereof
to be performed and complied with by Parent and Purchaser, nor the consummation
by Parent and Purchaser of the transactions contemplated hereby will (i)
violate, conflict with or result in a breach of, any provision of the
Organizational Documents of Parent or Purchaser or (ii) assuming that the
approvals referred to in Section 4.3 are obtained, (A) violate, conflict with or
result in a breach of any Law applicable to Parent or Purchaser or any of the
respective properties or assets of Parent or Purchaser, which violation,
conflict or breach is Material to Parent or Purchaser or could prevent or
materially delay Parent or Purchaser from consummating the transactions
contemplated hereby or (B) except as set forth in Schedule 4.2.2 attached
hereto, violate, conflict with, result in a breach of, result in the impairment
of, constitute a default (or an event which, with notice or lapse of time, or
both, would constitute a default) under, result in the termination of,
accelerate the performance required by, result in the creation or imposition of
any Lien upon any of the respective properties or assets of Parent or Purchaser,
or require any consent, approval, waiver, exemption, amendment, authorization,
notice or filing under, any of the terms, conditions or provisions of any
agreement or other instrument or obligation to which Parent or Purchaser is a
party or by which any of their respective properties or assets may be bound or
affected, which agreement or other instrument is Material to Parent or
Purchaser, as the case may be, or any two or more such agreements, instruments
or obligations which, taken together, are Material to Parent or Purchaser, as
the case may be.
4.3 Consents and Approvals. There are no consents, approvals or authorizations
of or designations, declarations or filings with any Governmental Entities on
the part of Parent or Purchaser required for the validity of the execution and
delivery by each of Parent and Purchaser of this Agreement or the performance
and compliance by either of them of and with the terms and conditions of this
Agreement or the consummation of the transactions contemplated hereby, except
for the filings referred to in Section 1.1 and the filing and in connection with
the Merger, recordation of the Certificate of Merger or the Certificate of
Ownership and Merger as the case may be, as required by the Delaware Act.
4.4 Capitalization. All of the outstanding shares of capital stock of Purchaser
have been or shall be prior to the Effective Time validly issued, fully paid and
nonassessable. There are no options, warrants, or other derivative securities of
Purchaser outstanding.
4.5 Broker's Fees. Neither Parent nor Purchaser nor any of their respective
officers or directors or affiliates has employed any broker, finder or
investment banker or incurred any liability for any broker's fees, investment
banker's or finder's fees in connection with any of the transactions
contemplated by this Agreement for which Razorfish or any of the Subsidiaries or
any of their respective officers, directors or stockholders shall be liable.
4.6 No Capital Ownership in Razorfish. Neither the Parent nor any of its
Subsidiaries owns any Razorfish Shares.
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4.7 Absence of Defaults. Neither Parent nor Purchaser are in default under or in
violation of any provision of its Organizational Documents, or in default or
violation of any Material contract and, to the Knowledge of Parent or Purchaser,
no event has occurred which, with notice, lapse of time and/or action by a third
party, would constitute or result in such a default or violation, except where
such default or violation would not have a Material Adverse Effect.
4.8 Litigation. Except as set forth in Schedule 4.8 hereto, there are no
outstanding orders, judgments, injunctions, awards or decrees of any court,
governmental agency or authority or arbitration tribunal by which Parent or
Purchaser is bound, or to which any of either Parent or Purchaser's assets,
properties, securities or businesses are subject that, taken together, shall
have a Material Adverse Effect or that would prevent the consummation by Parent
or Purchaser of the transactions contemplated hereby. Except as set forth in
Schedule 4.8 hereto, as of the date hereof there are no actions, suits, claims,
legal, administrative or arbitral proceedings or investigations, pending or, to
the Knowledge of Parent or Purchaser threatened against Parent or Purchaser or
any of either Parent or Purchaser's assets or properties.
4.9 Financial Ability. The Parent has adequate resources for obtaining and
providing the aggregate Offer and Merger Consideration in cash in the amount and
at the times required under this Agreement.
4.10 Authorizations; Compliance with Laws. Parent holds all authorizations,
permits, licenses, variances, exemptions, orders and approvals required by
Governmental Entities for the lawful conduct of its business taken as a whole,
to own or hold under lease the properties and assets it owns or holds under
lease and to perform all of its obligations under the agreements to which it is
a party (the "Parent Permits"), except for such authorizations, permits,
licenses, variances, exemptions, orders and approvals which the failure to hold,
taken together, would not have a Material Adverse Effect. Parent is in
compliance with the terms of the Parent Permits except where the failure to be
in such compliance will not, taken together, have a Material Adverse Effect.
Since January 1, 1999, Parent has not been and is not in violation of or default
under any Law of any Governmental Entity, except for any such violation or
default which will not have a Material Adverse Effect. To Parent's Knowledge, as
of the date of this Agreement, no investigation or reviews by any Governmental
Entity with respect to Parent is pending nor has any Governmental Entity
notified Parent of an intention to conduct the same nor do any facts exist which
may give rise to such an investigation or review.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF RAZORFISH
In this Article V and in Articles VI, VII and VIII hereof, references to
"Razorfish" shall be deemed to include the Subsidiaries unless the context in
which it is being used would reasonably require otherwise. Except as set forth
on the Disclosure Schedule, Razorfish hereby represents and warrants to Parent
and Purchaser as follows:
5.1 Organization and Qualification. Razorfish is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has full corporate power and authority to carry on its business as now being
conducted. Razorfish is duly qualified
13
as a foreign corporation to do business, and is in good standing, in each
jurisdiction wherein the character of its properties owned or leased or the
nature of its activities makes such qualification legally required, except where
the failure to be so qualified would not, taken together, have a Material
Adverse Effect. Set forth in Section 5.1 of the Disclosure Schedule is a list of
all of the jurisdictions in which Razorfish is qualified as a foreign
corporation to do business. Copies of the Razorfish Organizational Documents, as
in effect on the date hereof, including all amendments thereto, have been
previously delivered by Razorfish to Parent.
5.2 Capitalization.
5.2.1 Capital Stock. There are 200,000,000 duly authorized Class A
Shares, 50 duly authorized Class B Shares, and 10,000,000 duly authorized shares
of Preferred Stock, $.01 par value, of Razorfish (the "Preferred Shares"). As of
November 19, 2002, there were 4,834,974 Class A Shares issued and outstanding,
50 Class B Shares issued and outstanding, and no Preferred Shares issued and
outstanding. All of the issued and outstanding Razorfish Shares have been duly
authorized and are validly issued, fully paid, and nonassessable. Except as set
forth in Section 5.2.2 below, Razorfish does not have any outstanding securities
convertible into or exchangeable for any shares of capital stock. Razorfish has
2,453 shares of treasury stock. The number of Razorfish Shares outstanding on a
Fully Diluted Basis required to be validly tendered to satisfy the Minimum
Condition, calculated as of November 19, 2002, is 2,783,599.
5.2.2 Outstanding Options. Except as to Razorfish Options (as defined
in Section 7.6.2) and Warrants (as defined in Article XI), there are no other
options, warrants, calls, stock appreciation rights or other rights, or
convertible debt or security, or any share reserved for issuance or any
arrangement, subscription agreement, plan, or commitment, relating to the issued
(including treasury stock) or unissued capital stock or other securities of
Razorfish granted or made by Razorfish or to which Razorfish is a party. Section
5.2.2 of the Disclosure Schedule sets forth the Razorfish Options and the
Warrants held by each Option Holder and Warrant Holder and their exercise prices
and expiration dates.
5.3 Subsidiaries.
5.3.1 Subsidiaries; Organization; Capital Stock; Authority. Section
5.3.1 of the Disclosure Schedule contains a complete and accurate list for each
Subsidiary of its name, its jurisdiction of incorporation, other jurisdictions
in which it is authorized to do business, and its capitalization (including the
identity of each stockholder and the number of shares held by each). Except as
set forth in Section 5.3.1 of the Disclosure Schedule, each Subsidiary is a
direct or indirect subsidiary of Razorfish. Each Subsidiary is a corporation
duly organized, validly existing, and in good standing under the laws of its
jurisdiction of organization or incorporation, with full corporate power and
authority to conduct its business as it is now being conducted and to own or use
the properties and assets that it purports to own or use, and to perform all its
obligations under its contracts. Each Subsidiary is duly qualified to do
business as a foreign corporation and is in good standing under the laws of each
state or other jurisdiction in which either the ownership or use of the
properties owned or used by it, or the nature of the activities conducted by it,
requires such qualification, except for where the failure to be so qualified
would
14
not have a Material Adverse Effect. Razorfish has delivered to Parent copies of
the Organizational Documents of each Subsidiary, as currently in effect.
5.3.2 Outstanding Options. There is no outstanding option, call,
warrant or other right, convertible debt or security, or arrangement,
subscription, agreement, plan or commitment, relating to the issued (including
treasury stock) or unissued capital stock of, or other interests in, any
Subsidiary to which Razorfish or any Subsidiary is a party. Except as set forth
in Section 5.3.2 of the Disclosure Schedules, there is no agreement,
arrangement, commitment or plan restricting voting or dividend rights with
respect to any shares of capital stock or other securities of any Subsidiary to
which Razorfish is a party. Razorfish does not directly or indirectly own any
equity or similar interest in, or any interest convertible into or exchangeable
or exercisable for any equity or similar interest in, any corporation,
partnership, limited liability company, joint venture or other business
association or entity except for any of its Subsidiaries and except as set forth
in Section 5.3.2 of the Disclosure Schedule.
5.4 Authority Relative to this Agreement; No Violation.
5.4.1 Authority; Approval; Due Execution. Razorfish has the corporate
power to enter into this Agreement, to carry out its obligations hereunder, to
perform and comply with all the terms and conditions hereof to be performed and
complied with by it, and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement by Razorfish, the performance and
compliance with all the terms and conditions hereof to be performed and complied
with by Razorfish, and the consummation by Razorfish of the transactions
contemplated hereby have been duly authorized by all requisite corporate action
on the part of Razorfish subject, in the case of the Merger, to approval by the
holders of a majority of the Class A Shares and Class B Shares, voting together
as a single class. The approval by the holders of a majority of the Class A
Shares and Class B Shares, voting together as a single class, at the Razorfish
special meeting to be held to consider and vote upon the Merger will be
sufficient to approve the Merger in accordance with the requirements of the
Delaware Act and Razorfish's Organizational Documents. The Board of Directors of
Razorfish at a meeting held on November 21, 2002 (i) determined that this
Agreement, the Merger and the transactions contemplated thereby are advisable
and in the best interests of the Razorfish Stockholders, and (ii) resolved to
recommend to the Razorfish Stockholders that the Razorfish Stockholders approve
and adopt the Merger and this Agreement. This Agreement has been duly and
validly executed and delivered by Razorfish and is a legal, valid and binding
obligation of Razorfish enforceable against Razorfish in accordance with its
terms. Any reference in this Article V to an agreement being "enforceable" shall
be deemed to be qualified to the extent such enforceability is subject to (i)
laws of general application relating to bankruptcy, insolvency, reorganization,
moratorium and the relief of debtors, and similar laws affecting creditors'
rights and remedies generally, and (ii) the availability of specific
performance, injunctive relief and other equitable remedies, regardless of
whether enforcement is sought in a proceeding at law or in equity.
5.4.2 Compliance with Charter and Laws. Except as disclosed in Section
5.4.2 of the Disclosure Schedule, neither the execution and delivery of this
Agreement by Razorfish, the performance and compliance by Razorfish of and with
the terms and conditions hereof to be performed and complied with by it, nor the
consummation by Razorfish of the transactions
15
contemplated hereby will: (i) violate, conflict with or result in a breach of,
any provision of the Organizational Documents of Razorfish or any of its
Subsidiaries; or (ii) assuming that the approvals referred to in Section 5.6 are
obtained, (A) violate, conflict with or result in a breach of any Law applicable
to Razorfish or any of the properties or assets of Razorfish, which violation,
conflict or breach is Material to Razorfish or could prevent Razorfish from
consummating the transactions hereby or (B) violate, conflict with, result in a
breach of, result in the impairment of, constitute a default (or an event which,
with notice or lapse of time, or both, would constitute a default) under, result
in the termination of, accelerate the performance required by, result in the
creation or imposition of any Lien upon any of the properties or assets of
Razorfish under, or require any consent, approval, waiver, exemption, amendment,
authorization, notice or filing under, any of the terms, conditions or
provisions of, any Material agreement or other Material instrument or Material
obligation to which Razorfish is a party or by which any of its properties or
assets may be bound or affected, except, in the case of clauses (ii)(A) and
(ii)(B) above, (1) for violations, conflicts, breaches, impairments, defaults,
terminations, accelerations, or Liens as would not, taken together, have a
Material Adverse Effect or (2) for Liens created by or through Parent or the
Purchaser.
5.5 Financial Statements and Books and Records of Razorfish.
5.5.1 Financial Statements. Razorfish has delivered to Purchaser the
following financial statements as filed with the SEC (collectively the
"Financial Statements"): (i) the audited consolidated balance sheet of Razorfish
and Subsidiaries and the related consolidated statement of operations,
stockholders' equity and cash flows as of and for the year ended December 31,
2001 (the "Audited Financial Statements"); (ii) the unaudited consolidated
balance sheet of Razorfish and Subsidiaries, (the "Most Recent Balance Sheet"),
and the related consolidated statement of operations and cash flows as of and
for the nine months ending September 30, 2002 (collectively, the "Most Recent
Financial Statements"). The Financial Statements have been prepared in
conformity with GAAP applied on a consistent basis (except for changes, if any,
required by GAAP and disclosed therein), and the statements of income present
fairly in all Material respects the results of operations of Razorfish and the
subsidiaries included therein for the respective periods covered and the balance
sheets present fairly in all Material respects the consolidated financial
condition of Razorfish and the subsidiaries included therein as of their
respective dates; provided however that the Most Recent Financial Statements are
subject to year-end adjustments which will not be Material.
5.5.2 Books and Records. The books of account, minute books, stock
record books, and other records of Razorfish are complete and correct in all
Material respects and Razorfish has an adequate system of internal controls. The
minute books of Razorfish contain accurate and complete records of all meetings
held of, and corporate action taken by, the stockholders, Boards of Directors,
and committees of the Board of Directors of Razorfish, and no meeting of any
such stockholders, Board of Directors, or committee has been held for which
minutes have not been prepared and are not contained in such minute books. At
the Effective Time, all of those books and records will be in the possession of
the Surviving Corporation.
5.6 No Consents. There are no consents, approvals or authorizations of or
designations, declarations or filings with any Governmental Entities or any
other person on the part of
16
Razorfish required for the validity of the execution and delivery by Razorfish
of this Agreement or the performance and compliance by it of and with the terms
and conditions of this Agreement to be performed and complied with by it or the
consummation of the transactions contemplated hereby, other than as set forth in
Section 5.6 of the Disclosure Schedule, or as provided for in Section 4.3 of
this Agreement.
5.7 Absence of Certain Changes or Events. Except as disclosed in Section 5.7 of
the Disclosure Schedule, since the date of the Most Recent Balance Sheet
Razorfish has conducted its business only in the ordinary course (subject to
matters related to this Agreement and similar activities relating to a possible
sale of Razorfish), and since the date of the Most Recent Balance Sheet, there
has been no Material Adverse Effect on Razorfish's business. Without limiting
the generality of the foregoing, except as set forth in Section 5.7 of the
Disclosure Schedule, there has not been since the date of the Most Recent
Balance Sheet, any (i) transaction entered into by Razorfish not in the ordinary
course of business, which is Material; (ii) sale, transfer or other disposition
or subjection to any Lien of any of the assets or properties of Razorfish
(including the factoring or selling of accounts receivable), except for the sale
of services and assets in the ordinary course of business; (iii) Material
deviation from historical accounting and other practices in connection with the
maintenance of Razorfish's books and records, except as may be required by law,
regulation or GAAP; (iv) physical damage, casualty, destruction or loss to
property or assets of Razorfish, whether or not covered by insurance, which has
had or can reasonably be expected to have a Material Adverse Effect; (v)
declaration, setting aside or payment of any dividend or other distribution on
or with respect to the shares of capital stock of Razorfish, or any direct or
indirect redemption, purchase or other acquisition of any of such shares or any
split, combination or reclassification of shares of capital stock declared or
made by Razorfish; (vi) increase in, prepayment or delay of, or any other
Material change in, any payroll or payroll tax payment practices with respect to
the compensation (including benefits) payable or to become payable by Razorfish
to any of its directors, officers, employees or agents, or the making of any
bonus payment or similar arrangement to or with any of them; (vii) cancellation
of indebtedness due to Razorfish from others except for the write-off of
accounts receivable in the ordinary course of business consistent with past
practice; (viii) Material obligation or liability (whether absolute, accrued,
contingent or otherwise and whether due or to become due) created or incurred,
or any transaction, contract or commitment entered into, by Razorfish, other
than such items created or incurred in the ordinary course of business and
consistent with past practice; (ix) Material change in the manner in which
Razorfish collects accounts receivable, extends discounts or credits to
customers or otherwise deals with customers; (x) waiver or release of any
Material rights of Razorfish, except in the ordinary course of business and for
fair value, or any lapse or other loss of a Material right of Razorfish to use
its assets or conduct its businesses; (xi) commitments for or deferrals of any
capital expenditures of Razorfish in excess of amounts budgeted; (xii) change in
accounting policies by Razorfish, except as may be required by law, regulation
or GAAP; (xiii) Material change in Razorfish's policies with respect to the
payment of commission arrangements, accounts payable or other current
liabilities and the collection of accounts receivable, including, without
limitation, any acceleration or deferral of the payment or collection thereof,
as applicable (including, without limitation, any payment advances); (xiv)
Material changes in the payment terms (including, without limitation, any
advances) between Razorfish and any of its Material vendors; (xv) Material
change in any marketing or advertising plans of Razorfish or any deferral of any
costs or expenditures with
17
respect to such plans; (xvi) price discounts on Razorfish's services or products
outside the ordinary course of business and consistent with past practice; or
(xvii) any commitment or agreement to do any of the foregoing.
5.8 Taxes and Tax Returns.
5.8.1 Taxes; Returns. Except as set forth in Section 5.8.1 of the
Disclosure Schedule, Razorfish and, with respect to periods during which they
were included in any consolidated or combined return in which Razorfish has been
included, each other corporation which has been so included, has (i) duly filed
all Material Returns in a timely manner, including extensions granted for such
filing, consistent with applicable laws, as required to be filed by it (all such
Returns being accurate and complete in all Material respects) and has paid all
Taxes shown thereon to be due, and (ii) duly paid all Taxes required to be paid
by any of them through the date hereof, whether or not shown on a Return, other
than Taxes that are being contested in good faith and by appropriate proceedings
and as to which Razorfish has set aside on its books adequate reserves in
accordance with GAAP. Except as set forth in Section 5.8.1 of the Disclosure
Schedule, all Taxes attributable to all taxable periods ended on or before the
Closing Date, to the extent not required to have been previously paid will be
fully and adequately reserved for on Razorfish's financial statements in
accordance with GAAP. The amounts recorded as reserves for Taxes on the Most
Recent Balance Sheet are sufficient in the aggregate for the payment by
Razorfish of all unpaid Taxes (including any interest or penalties thereon)
whether or not disputed or accrued, for all periods ended on or prior to the
date of such statement. There are no Liens for Taxes upon the assets of
Razorfish, other than Liens for current Taxes not yet due and payable and Liens
for Taxes that are being contested in good faith by appropriate proceedings.
Since January 1, 2001, to the Knowledge of Razorfish, no claim has ever been
made by an authority in a jurisdiction where Razorfish does not file Returns
that it is or may be subject to taxation by that jurisdiction. Except as set
forth in Section 5.8.1 of the Disclosure Schedule, the Returns of Razorfish have
not been audited by the IRS or other appropriate tax authority. Except as set
forth in Section 5.8.1 of the Disclosure Schedule, since January 1, 2001, to the
Knowledge of Razorfish, (i) there are no deficiencies or claims asserted for
Taxes against Razorfish in the aggregate amount of $50,000, (ii) Razorfish has
not given any currently effective waivers extending the statutory period of
limitation applicable to any Return for any period, (iii) Razorfish does not
have in effect any power of attorney or authorization to anyone to represent it
with respect to any Taxes and (iv) Razorfish has not received written
notification of a Tax audit and, to the Knowledge of Razorfish there are no Tax
audits in progress of any Returns of Razorfish. Razorfish is not, and has not
been, a party to any tax allocation agreement or arrangement pursuant to which
it has any contingent or outstanding liability for Taxes to anyone other than
Razorfish. Razorfish has not filed a consent under Section 341(f) of the Code.
Razorfish has provided to Parent or its representatives complete and correct
copies of its Returns which have been filed on or subsequent to December 31,
2000 and all examination reports, if any, relating to the audit of such Returns
by the IRS or other tax authority. Except as set forth in Section 5.8.1 of the
Disclosure Schedule, Razorfish (i) has not agreed to, or is not required to,
make any adjustments under Section 481(a) of the Code (or any corresponding
provision of state, local or foreign Laws) by reason of a change in accounting
method or otherwise; (ii) is not, was not, or will not be at any time during the
five-year period ending on the date on which the Effective Time occurs, a
"United States real property holding corporation" within the meaning of Section
897(c) of the
18
Code; (iii) has not filed or been required to file any reports under Section 999
of the Code; (iv) has not failed to disclose on its federal income tax returns
all positions taken therein that could give rise to a substantial understatement
of federal income Tax within the meaning of Section 6662 of the Code; (v) other
than the consolidated group of which Razorfish is now the common parent, has not
ever been a member of an Affiliated Group filing a consolidated federal income
tax Return; (vi) is not a party to any joint venture, partnership, limited
liability company or other arrangement or contract which should be treated as a
partnership for federal income Tax purposes; or (vii) has not entered into any
gain recognition agreements under Section 367 of the Code and the Treasury
Regulations promulgated thereunder.
5.8.2 Tax Withholding. Except as disclosed in Section 5.8.1 of the
Disclosure Schedule, all monies required to be withheld by Razorfish from
employees, creditors, stockholders or other third parties for Taxes have either
been withheld or collected and paid, when due, to the appropriate governmental
authority, or an adequate reserve has been established and Razorfish has
otherwise complied in all Material respects with applicable laws, rules, and
regulations relating to Tax withholding and remittance.
5.8.3 Parachute Payments. Except as set forth in Section 5.8.3 of the
Disclosure Schedule, Razorfish has not made any payments, is not obligated to
make any payments, or is not a party to any agreement that under certain
circumstances could obligate it, Parent or Purchaser, to make any payment that
would constitute a "parachute payment" under Section 280G of the Code.
5.9 Employees.
5.9.1 Agreements; Benefit Plans. Section 5.9.1 of the Disclosure
Schedule contains a list of each compensation, consulting, employment,
termination or collective bargaining agreement, and each stock option, stock
purchase, stock appreciation right, recognition and retention, life, health,
accident or other insurance, bonus, deferred or incentive compensation,
severance or separation plan, fringe benefit plan or any agreement providing any
payment or benefit resulting from a change in control, profit sharing,
retirement, or other employee benefit plan, practice, policy or arrangement of
any kind, oral or written, covering employees, former employees, directors or
former directors of Razorfish or their beneficiaries, including, but not limited
to, any employee benefit plans within the meaning of Section 3(3) of ERISA,
which Razorfish maintains, to which Razorfish contributes, or under which any
employee, former employee, director or former director of Razorfish is covered
or has benefit rights and pursuant to which any liability of Razorfish exists or
is reasonably likely to occur (the "Benefit Plans"). Except as set forth in
Section 5.9.1 of the Disclosure Schedule, Razorfish neither maintains nor has
entered into any Benefit Plan or other document, plan or agreement which
contains any change in control provisions which would cause an increase or
acceleration of benefits or benefit entitlements to employees or former
employees of Razorfish or their beneficiaries, or other provisions which would
cause an increase in the liability to Razorfish or to Parent as a result of the
transactions contemplated by this Agreement or any related action thereafter
including, but not limited to, termination of employment or directorship (a
"Change in Control Benefit"). Except as provided in Section 5.9.1 of the
Disclosure Schedule, the execution of this Agreement does not constitute a
"change in control" for purposes of any Benefit Plan or any Change in
19
Control Benefits. The term "Benefit Plans" as used herein refers to all plans
contemplated under the preceding sentences of this Section 5.9.1, provided that
the term "plan" or "plans" is used in this Agreement for convenience only and
does not constitute an acknowledgment that a particular arrangement is an
employee benefit plan within the meaning of Section 3(3) of ERISA. Copies of the
Benefit Plans have been previously made available to Parent. There is no
liability under the Benefit Plan for employees of subsidiaries previously sold
or otherwise disposed of by Razorfish.
5.9.2 Documents Delivered to Parent. Razorfish has delivered to Parent
true and complete copies of the following documents, as they may have been
amended to the date hereof, relating to the Benefit Plans, other than any
multiemployer plan: (i) each of the Benefit Plans listed in Section 5.9.1 of the
Disclosure Schedule if in writing, including all amendments thereto, any related
trust agreements, group annuity contracts, insurance policies or other funding
agreements or arrangements; (ii) the most recent determination letter from the
Internal Revenue Service with respect to each Benefit Plan intended to be
qualified under Section 401(a) of the Code; (iii) the actuarial valuation
prepared for the most recent plan year for any Benefit Plan which is a "defined
benefit plan" (as defined in Section 3(35) of ERISA); (iv) the current summary
plan description for each Benefit Plan; and (v) the complete Form 5500, 5500-C
or 5500-R filings, for each of the Benefit Plan for the three (3) most recent
plan years.
5.9.3 Certain Representations Regarding Benefit Plans. Except as
disclosed in Section 5.9.3 of the Disclosure Schedule:
5.9.3.1 the written terms of each of the Benefit Plans and any
related trust agreement, group annuity contract, insurance policy or
other funding arrangement are in compliance with ERISA and the Code
where applicable and each of such Benefit Plans has been administered
in all Material respects in compliance with such requirements and in
accordance with the provisions of any applicable collective bargaining
agreement, if any;
5.9.3.2 each of the Benefit Plans that is intended to be a
pension, profit sharing, stock bonus, thrift, savings or employee stock
ownership plan that is qualified under Section 401(a) of the Code (the
"Qualified Plans") has been determined by the IRS to qualify under
Section 401(a) of the Code, an application for determination of such
qualification has been timely made to the IRS prior to the end of the
applicable remedial amendment period under Section 401(b) of the Code
(a copy of each such determination letter or pending application has
been provided to Parent by Razorfish), or is entitled to rely on an IRS
notification or opinion letter issued to the sponsor of an approved M&P
or volume submitter plan document, and to the Knowledge of Razorfish
there exist no circumstances that may adversely affect the qualified
status of any such Qualified Plan. All such Qualified Plans established
or maintained by Razorfish or to which Razorfish contributes are in all
Material respects in compliance with all applicable requirements of
ERISA, and are in all Material respects in compliance with all
applicable requirements (including qualification and nondiscrimination
requirements in effect as of the Effective Time) of the Code for
obtaining the tax benefits the Code thereupon permits with respect to
such Qualified Plans. All accrued contributions and other payments
required to be
20
made by Razorfish to any Benefit Plan have been made or reserves
adequate for such purposes have been set aside therefor and reflected
in the Most Recent Balance Sheet. Razorfish is not in default in
performing any of its contractual obligations under any of the Benefit
Plans or any related trust agreement or insurance contract in each
case, which could result in any Material liability, and there are no
Material outstanding liabilities of any such Plan other than
liabilities for benefits to be paid to participants in such plan and
their beneficiaries in accordance with the terms of such Plan;
5.9.3.3 Razorfish or its ERISA Affiliates have neither made
nor agreed to make, nor is it or they required to make (in order to
bring any of the Benefit Plans into substantial compliance with ERISA
or the Code), any change in benefits that would Materially increase the
costs of maintaining any of the Benefit Plans;
5.9.3.4 neither Razorfish nor its ERISA Affiliates, nor, to
the Knowledge of Razorfish, any other "disqualified person" or "party
in interest" (as defined in Section 4975 of the Code and Section 3(14)
of ERISA, respectively) with respect to a Benefit Plan has breached the
fiduciary rules of ERISA or engaged in any prohibited transaction which
could subject Razorfish or its ERISA Affiliates to any Material tax or
penalty imposed under Section 4975 of the Code or Sections 502(i) or
(l) of ERISA;
5.9.3.5 there are no actions, suits, disputes, arbitration or
claims pending (other than routine claims for benefits) or legal,
administrative or other proceedings or governmental investigations
pending or, to the Knowledge of Razorfish, threatened against any
Benefit Plan or against the assets of any Benefit Plan;
5.9.3.6 all bond coverage requirements and all reporting and
disclosure obligations under ERISA and the Code have been complied with
on a timely basis with respect to each of the Benefit Plans and the
related trust, group annuity contract, insurance policy or other
funding arrangement except for any instances of non-compliance that
could not reasonably be expected to result in Material liability for
Razorfish or, following the Closing Date, for Parent or Purchaser;
5.9.3.7 each Benefit Plan which is a "group health plan" (as
defined in Section 5000 of the Code) has been maintained in all
Material respects in compliance with Section 4980B of the Code and
Title I, Subtitle B, Part 6 of ERISA and no tax payable on account of
Section 4980B of the Code has been or is expected to be incurred;
5.9.3.8 no benefit payable or which may become payable by
Razorfish or its ERISA Affiliates pursuant to any Benefit Plan could
reasonably be expected to constitute an "excess parachute payment"
(within the meaning of Section 280G of the Code) which is subject to
the imposition of an excise tax under Section 4999 of the Code or which
would not be deductible by reason of Section 280G of the Code;
5.9.3.9 no Benefit Plan currently or previously maintained by
Razorfish or its ERISA Affiliates provides any post-retirement health
or life insurance benefits, and neither Razorfish nor its ERISA
Affiliates maintains any obligations to provide any post-
21
retirement benefits in the future (other than rights under Section
4980B of the Code or Section 601 of ERISA); and
5.9.3.10 none of the Benefit Plans which is an "employee
pension benefit plan," as that term is defined in Section 3(2) of
ERISA, is a multiemployer plan, as defined in Section 3(37) of ERISA, a
defined benefit plan, as defined in Section 3(35) of ERISA, or a plan
subject to the minimum funding standards set forth in Section 302 of
ERISA and Section 412 of the Code. Neither Razorfish nor any ERISA
Affiliate has ever sponsored, maintained or contributed to, been
obligated to contribute to, or incurred any Material liability in
connection with any such plans.
5.9.4 Employees; Compensation. Razorfish has furnished to Parent a true
and correct list of each employee of Razorfish together with such employee's
annual rate of compensation (excluding bonus). Except as set forth in Section
5.9.4 of the Disclosure Schedule: (i) as of the date of this Agreement, no
officer or employee of Razorfish has obtained any binding and effective
commitment of Razorfish to pay to him or her in respect of any future year
aggregate remuneration in excess of the rate of compensation set forth in such
list, (ii) Razorfish is not obligated to provide health or welfare benefits to
retirees or other former employees, directors or their dependents (other than
rights under Section 4980B of the Code or Section 601 of ERISA), (iii) except as
set forth in Section 5.9.4 of the Disclosure Schedule, no officer or director of
Razorfish is eligible to receive a Change in Control Benefit, (iv) Razorfish is
not a party to (A) any management, employment, deferred compensation, severance,
bonus or other contract for personal services with any officer, director or
employee, (B) any consulting contract with any consultant who prior to becoming
a consultant was a director or officer of Razorfish or (C) any plan, agreement,
arrangement or understanding similar to any of the foregoing, (v) Razorfish is
not a party to any agreement to loan any amount to or guarantee a loan of any
amount to any employee, (vi) Razorfish has not been or is not a party to any
Plan, contract or arrangement providing for insurance or for any indemnification
of any officer, director or employee of Razorfish, (vii) Razorfish is not a
party to any collective bargaining agreement or other labor agreement with any
union or labor organization or to any conciliation agreement with the Department
of Labor, the Equal Employment Opportunity Commission or any federal, state or
local agency which requires equal employment opportunities or affirmative action
in employment, (viii) there is no unfair labor practice or other complaint
against Razorfish pending or, to the Knowledge of Razorfish, threatened, before
the National Labor Relations Board, or any complaint before the Equal Employment
Opportunity Commission, or any state, local or foreign agency similar to either
thereof, (ix) there is no strike, dispute, slowdown, work stoppage or lockout
pending, or to the Knowledge of Razorfish, threatened against or involving
Razorfish, and (x) there is no legal, administrative, arbitral or other
proceeding, claim, suit, action or governmental investigation of any nature
pending or, to the Knowledge of Razorfish, threatened in respect of which any
director, officer, employee or agent of Razorfish is or may be entitled to claim
indemnification from Razorfish.
5.10 Broker's Fees. Except as set forth in Section 5.10 of the Disclosure
Schedule, neither Razorfish nor any of its officers or directors has employed
any broker, finder or investment banker or incurred any liability for any
broker's fees, financial advisory fees, investment
22
banker's or finder's fees in connection with any of the transactions
contemplated by this Agreement.
5.11 Litigation. Except as set forth in Section 5.11 of the Disclosure Schedule,
there are no outstanding orders, judgments, injunctions, awards or decrees of
any court, governmental agency or authority or arbitration tribunal by which
Razorfish is bound, or to which any of its assets, properties, securities or
businesses is subject that individually require the payment by Razorfish of the
sum of $50,000 or more. Except as set forth in Section 5.11 of the Disclosure
Schedule, as of the date hereof there are no Material actions, suits, claims,
legal, administrative or arbitral proceedings or investigations, pending or, to
the Knowledge of Razorfish threatened against Razorfish or any of its assets or
properties.
5.12 Authorizations; Compliance with Laws. Razorfish holds all authorizations,
permits, licenses, variances, exemptions, orders and approvals required by
Governmental Entities for the lawful conduct of its business taken as a whole,
to own or hold under lease the properties and assets it owns or holds under
lease and to perform all of its obligations under the agreements to which it is
a party (the "Razorfish Permits"), except for such authorizations, permits,
licenses, variances, exemptions, orders and approvals which the failure to hold,
taken together, would not have a Material Adverse Effect. Razorfish is in
compliance with the terms of the Razorfish Permits except where the failure to
be in such compliance will not, taken together, have a Material Adverse Effect.
Except as set forth in Section 5.12 of the Disclosure Schedule, since January 1,
1999, Razorfish has not been and is not in violation of or default under any Law
of any Governmental Entity, except for any such violation or default which will
not have a Material Adverse Effect. To Razorfish's Knowledge, except as set
forth in Section 5.12 of the Disclosure Schedule, as of the date of this
Agreement, no investigation or reviews by any Governmental Entity with respect
to Razorfish is pending nor has any Governmental Entity notified Razorfish of an
intention to conduct the same nor do any facts exist which may give rise to such
an investigation or review.
5.13 Environmental Matters. Except as set forth in Section 5.13 of the
Disclosure Schedule, and except for such violations, notices and Releases as
would not, taken together, have a Material Adverse Effect: (a) Razorfish is not
in violation of any applicable Environmental Law; (b) no Hazardous Material has
been disposed of or Released by Razorfish in violation of applicable
Environmental Law; and (c) Razorfish has not received any notice from any
governmental body alleging that Razorfish is in violation of, or liable for
investigation or cleanup of any Release of Hazardous Material under, any
Environmental Law
5.14 Absence of Defaults. Razorfish is not in default under or in violation of
any provision of its Charter or Bylaws, or in Material default or violation of
any Material Contract and, to the Knowledge of Razorfish, no event has occurred
which, with notice, lapse of time and/or action by a third party, would
constitute or result in such a default or violation, except where such default
or violation would not have a Material Adverse Effect.
5.15 Material Contracts; Insurance.
23
5.15.1 Material Contracts. Section 5.15.2 of the Disclosure Schedule
lists all Material Contracts as of the date of this Agreement. True copies of
such Material Contracts, including all amendments and supplements thereto, have
been delivered to Parent.
5.15.2 List of Material Contracts. Except as set forth in Section
5.15.2 of the Disclosure Schedule, as of the date of this Agreement, Razorfish
is not a party to any of the following (the "Material Contracts"):
5.15.2.1 any contract or agreement with any current or former
officer, director, or principal stockholder, or any partnership,
corporation, limited liability company, joint venture, or other entity
with which any such person is an Affiliate requiring payments in excess
of $100,000 over the remaining term of the contract;
5.15.2.2 any contract or agreement with any labor union or
association representing any employee;
5.15.2.3 any indenture, mortgage, promissory note, loan
agreement or other agreement or commitment for the borrowing of money
or for a line of credit;
5.15.2.4 any lease, sublease or other agreement pursuant to
which it is a lessee of or holds or operates any real or personal
property owned by any third party requiring payments in excess of
$100,000 over the remaining term of the contract;
5.15.2.5 any option or other executory agreement or other
agreement with remaining obligations thereunder to purchase or acquire
any interest in assets or property other than in the ordinary course of
business;
5.15.2.6 any option or other executory agreement or other
agreement with remaining obligations thereunder to sell or dispose of
any interest in assets or property other than in the ordinary course of
business;
5.15.2.7 any contract or agreement relating to joint ventures
or similar arrangements by which the assets, properties, rights, or
business is affected;
5.15.2.8 any guaranty, keepwell, makewhole or similar
agreement of or with respect to the obligations of third parties;
5.15.2.9 any agreement which restricts Razorfish from doing
business anywhere in the world or limits the business in which it may
engage;
5.15.2.10 any agreement or arrangement under which Razorfish
agrees to indemnify any person or to share Tax liability of any person
;
5.15.2.11 any license of Material rights (including use of the
name Razorfish or any similar name) of or by Razorfish other than in
the ordinary course of business.
24
5.15.2.12 any contract or agreement which could reasonably be
expected to result in a payment by Razorfish of $100,000 or more;
5.15.2.13 any contract or agreement under which Razorfish has
the obligation to issue or sell any security; and
5.15.2.14 any Material contract or agreement under which
Razorfish provides services or sells or distributes products to others.
5.15.3 Insurance Policies. True copies of the insurance policies now in
effect with respect to the owned and leased real properties, businesses,
employees, officers and directors of Razorfish and with respect to any Benefit
Plan or a fiduciary thereof and the amounts and types of casualties and
contingencies insured against thereunder, including all amendments and
supplements thereto, have been delivered to Parent.
5.16 Intellectual Property Rights. Section 5.16 of the Disclosure Schedule sets
forth all Material trade names, patents, trademark registrations, service xxxx
registrations, copyright registrations and all pending applications for and
registrations of any of the foregoing, owned by Razorfish identified by country
in which they have been filed or registered with applicable serial or
registration numbers (the "Intellectual Property"). Other than as set forth in
Section 5.16 of the Disclosure Schedule Razorfish is the owner of all right,
title and interest in and to the Intellectual Property. Other than as set forth
in Section 5.16 of the Disclosure Schedule Razorfish has, and will continue to
have after the Merger, the exclusive right to use such Intellectual Property
(which, subject to the disclosures in Section 5.16 of the Disclosure Schedule,
constitutes all Material Intellectual Property rights necessary for the conduct
of its business) and, to Razorfish's Knowledge, the use thereof by Razorfish
does not violate or infringe the rights of any other person, and to Razorfish's
Knowledge the transfer to the Surviving Corporation pursuant to the Merger, will
not violate or infringe the rights of any other person. To the Knowledge of
Razorfish, no other person is infringing the right of Razorfish in any such
Intellectual Property. To Razorfish's Knowledge, Razorfish is not in default
(nor with the giving of notice or lapse of time or both would be in default)
under any license to use such Intellectual Property.
5.17 Fairness Opinion. Razorfish has received an opinion from Xxxxxx Xxxxxx
Xxxxxxxx & Co., Inc. to the effect that the Offer Price is fair from a financial
point of view to the Razorfish Stockholders (the "Fairness Opinion").
5.18 Customers. Section 5.18 of the Disclosure Schedule sets forth a list of the
20 largest customers of Razorfish and the amount of business transacted with
such customers during the year ended December 31, 2001 and the nine months ended
September 30, 2002. Except as provided in Section 5.18 of the Disclosure
Schedule, since December 31, 2001 to the date hereof, there has been no
termination, cancellation or curtailment of the business relationship of
Razorfish with any customer or group of affiliated customers, and Razorfish has
not received written notice of any such termination, cancellation or curtailment
that would have a Material Adverse Effect; provided, that completion or
termination of work on a project in accordance with
25
a statement of work or similar agreement will not be considered as a
termination, cancellation or curtailment of the business relationship by a
customer or group of affiliated customers.
5.19 Accounts Receivable. All of the receivables (the "Accounts Receivable")
including accounts receivable, loans receivable and advances of Razorfish which
are reflected in the Most Recent Balance Sheet and all such Accounts Receivable
which have arisen since the Most Recent Balance Sheet, have arisen only from
bona fide transactions in the ordinary course of business. Section 5.19 of the
Disclosure Schedule hereto accurately lists as of September 30, 2002, all
Accounts Receivable, the amount owing and the aging of such receivable, the name
and last known address for the party from whom such receivable is owing, and any
security in favor of Razorfish for the repayment of such receivable which
Razorfish purports to have. Subject to the reserves shown on the Most Recent
Balance Sheet with respect to the Accounts Receivable which have been
established in accordance with GAAP and in a manner consistent with the prior
practice of Razorfish, the Accounts Receivable as of September 30, 2002 are
collectible in accordance with their terms. Except as disclosed in Section 5.19
of the Disclosure Schedule, there are no contests, claims, warranty claims,
failure of performance claims, or other asserted claims or rights of set-off
under agreements with obligors of the Accounts Receivable as of September 30,
2002 relating to the amount or validity of such Accounts Receivable in excess of
$50,000 in the aggregate.
5.20 Capitalized Lease Obligations. Razorfish has no Capitalized Lease
Obligations.
5.21 Razorfish SEC Documents. Razorfish has filed all Material forms, reports
and documents with the SEC required to be filed by it after January 1, 2000 and
prior to the date of this Agreement (together with the amendments and
supplements to such filings filed prior to the date of this Agreement, the
"Razorfish SEC Documents"). Each Razorfish SEC Document, as of its filing date
(or if amended, as of the date of its last amendment) complied as to form in all
Material respects with the applicable requirements of the Securities Act and the
Exchange Act, as the case may be. No Razorfish SEC Document filed pursuant to
the Exchange Act, as of its filing date (or if amended, as of the date of its
last amendment), contains any untrue statement of a Material fact or omitted to
state any Material fact necessary in order to make the statements made therein,
in the light of the circumstances under which they were made, not misleading. No
Razorfish SEC Document filed pursuant to the Securities Act, as of the date such
document or amendment became effective (or if amended or supplemented, as of the
date of its last amendment or supplement), contained any untrue statement of a
Material fact or omitted to state any Material fact required to be stated
therein or necessary to make the statements therein not misleading. No
Subsidiary of Razorfish is required to file any forms, reports, or other
documents pursuant to the Securities Act or the Exchange Act.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
6.1 Conduct of Business by Razorfish Pending the Merger. Razorfish covenants and
agrees that from the date of this Agreement to the earlier of the Effective Time
or the termination of this Agreement, unless Parent otherwise agrees in writing
or as otherwise contemplated by this Agreement, Razorfish will cause its
business to be conducted only in the ordinary course of
26
business. Without limiting the generality of the foregoing, Razorfish covenants
and agrees that from the date of this Agreement to the earlier of the Effective
Time or the termination of this Agreement:
6.1.1 Business Relations. Razorfish will use its commercially
reasonable best efforts to (i) preserve intact the business and organization of
Razorfish; (ii) keep available to itself and Parent the present services of the
employees of Razorfish; (iii) preserve to itself and Parent the goodwill of the
customers and clients of Razorfish and others with whom business relationships
exist; and (iv) maintain in full force and effect at the same levels of coverage
all the currently existing insurance.
6.1.2 Capitalization. Razorfish will not (i) sell or pledge or
otherwise encumber any stock owned by it in the Subsidiaries, (ii) amend its, or
permit the amendment of the Subsidiaries' Organizational Documents, (iii) split,
combine or reclassify any shares of its capital stock; (iv) declare, set aside,
make or pay any dividend or other distribution payable in cash, stock or
property or any combination thereof with respect to its capital stock, or (v)
enter into any agreement, commitment or arrangement with respect to any of the
foregoing.
6.1.3 Sell or Purchase Capital Stock; Mergers; Joint Ventures.
Razorfish shall not (i) issue, authorize the issuance of or sell any additional
shares of, or issue, reissue or grant any option, warrant, call, commitment,
subscription, stock appreciation right, right to purchase or agreement of any
character to acquire any shares of, its capital stock, except for the vesting of
Razorfish Options and the exercise of vested Razorfish Options and vested
Warrants; (ii) redeem, purchase or otherwise acquire or offer to acquire,
directly or indirectly, any of its capital stock; (iii) use commercially
reasonable efforts to avoid any Material amendment or termination of any
Material contract, agreement or license to which it is a party other than in the
ordinary course of business; (iv) acquire (by merger, consolidation, or
acquisition of stock or assets) any corporation, partnership or other business
organization or division or substantial part thereof; (v) sell or otherwise
dispose of any of its assets other than in the ordinary course of business,
excluding the sale of immaterial assets of Razorfish that in the good faith
belief of Razorfish are not necessary to the operation of its business; (vi)
enter into any joint venture or partnership or acquire majority ownership of any
business entity which involves an investment by Razorfish in the aggregate in
excess of $75,000; (vii) incur any indebtedness for borrowed money or guarantee
any obligation of a third party other than trade payables in the ordinary course
of business; (viii) issue any debt securities; or (ix) enter into any contract,
agreement, commitment or arrangement with respect to any of the foregoing.
6.1.4 Compensation. Except in the ordinary course of business and
except as required by existing agreements, Razorfish shall not grant any
increase in compensation or pay or agree to pay or accrue any bonus or like
benefit to or for the credit of any director, officer or employee, except as set
forth in Section 6.1.4 of the Disclosure Schedule or grant any severance or
termination pay (other than pursuant to policies or agreements of Razorfish in
effect on the date hereof and previously disclosed in the Disclosure Schedule)
or pay any "parachute payment" within the meaning of Section 280G of the Code
to, or enter into any Material employment, consulting, compensation, severance,
termination or other form of agreement with, any executive officer, director,
employee or independent consultant or advisor, whether past, present or future,
27
for Razorfish. Razorfish shall not Materially increase benefits payable under,
or broaden eligibility for, its current severance or termination pay policies,
and except as required by applicable Law, regulations or court order Razorfish
shall not adopt, enter into or amend to increase the benefits payable under, or
broaden eligibility for, any Benefit Plan.
6.1.5 Alternative Transaction.
6.1.5.1 Razorfish and the Subsidiaries and the respective
directors, officers, agents, representatives, affiliates, stockholders
and any other persons acting on any of their behalf shall not directly
or indirectly, (a) solicit offers, inquiries or proposals for, or
entertain any offer, inquiry or proposal to enter into, any transaction
that has as a purpose a business combination or merger, a sale of all
or a substantial portion of the assets of Razorfish or any Subsidiary,
an issuance or sale of all or a substantial portion of debt or equity
of Razorfish or any Subsidiary or a transaction comparable to or
similar to the Merger or one that would prevent or materially impede
the Merger (any of the foregoing, an "Alternative Transaction"), (b)
provide information to any other Person regarding Razorfish or any
Subsidiary (except in the ordinary course of business), except as
required by Law, regulation or court order, (c) conduct any discussions
or negotiations regarding, or enter into any agreement, arrangement or
understanding regarding, or approve, recommend or propose publicly to
approve or recommend, an Alternative Transaction, or (d) agree to do
any of the foregoing. Razorfish shall promptly notify Parent if it
receives any offer, inquiry or proposal relating to an Alternative
Transaction and the details thereof, and shall keep Parent fully
informed with respect to each such offer, inquiry or proposal.
Razorfish shall provide Parent with copies of all such offers,
inquiries or proposals that are in writing. Razorfish and its Board of
Directors shall not enter into any agreement with respect to, or
otherwise approve or recommend, any Alternative Transaction, unless
Section 6.1.5.4 of this Agreement has been complied with.
6.1.5.2 Notwithstanding Section 6.1.5.1, in response to an
unsolicited offer, inquiry or proposal from any Person with respect to
an Alternative Transaction, Razorfish (and its directors, officers,
agents, representatives, affiliates, stockholders and other persons
acting on its behalf) may furnish information to or participate in
discussions with such Person if Razorfish's Board of Directors
determines after consultation with counsel, that to fail to provide
such information and/or participate in discussions with such person
would constitute a breach of its fiduciary duties; provided, however,
that Razorfish shall, prior to providing such information or
participating in such discussions, advise Purchaser that Razorfish will
do so.
6.1.5.3 Razorfish shall immediately cease and cause to be
terminated any existing discussions or negotiations with any Person
(other than Parent) conducted heretofore with respect to any of the
foregoing. Razorfish agrees not to release any third party from the
confidentiality and standstill provisions of any agreement to which
Razorfish is a party, other than agreements with Razorfish's customers
and suppliers entered into in the ordinary course of business.
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6.1.5.4 If Razorfish proposes to enter into a definitive
agreement in connection with an Alternative Transaction, it shall first
provide Parent with the details thereof (including a copy of all
written agreements, correspondence and other documents relating
thereto) and a reasonable period of time (which shall not be less than
two (2) business days) during which Parent may propose changes to the
transaction provided for by this Agreement that if superior or
substantially similar to the Alternative Transaction shall be
recommended to Razorfish Stockholders by the Board of Directors of
Razorfish unless the Board of Directors determines, after consultation
with counsel, that such recommendation would constitute a breach of its
fiduciary duties. If Razorfish does enter into a definitive agreement
in connection with an Alternative Transaction, it shall concurrently
with the execution and delivery of such agreement, pay or cause to be
paid to Parent the fees required by Section 9.4 hereof.
6.1.5.5 Razorfish shall ensure that the officers and directors
of Razorfish and its Subsidiaries, and any investment banker, attorney
or other advisor or representative retained by Razorfish or any
Subsidiary, or providing services to Razorfish or any Subsidiary, in
connection with the transactions contemplated hereby are aware of the
restrictions described in this Section 6.1.5. It is understood that any
violation of the restrictions set forth in this Section 6.1.5 by any of
such Persons shall be deemed to be a breach of this Section 6.1.5 by
Razorfish.
6.1.5.6 Razorfish shall use all commercially reasonable
efforts to complete the Merger on an expeditious basis notwithstanding
the activities contemplated by this Section 6.1.5.
6.1.6 Violation of Law. Razorfish shall not take any action which
violates any statute, code, ordinance, rule, regulation, judgment, order, writ,
arbitral award, injunction or decree of any court, governmental agency or body
or arbitrator, domestic or foreign, having jurisdiction over its properties
which would have a Material Adverse Effect.
6.1.7 Books and Records. Razorfish shall maintain its books, accounts
and records in accordance with GAAP applied on a basis consistent with the Most
Recent Balance Sheet. Razorfish shall not make any change in any method of
accounting or accounting practice, or any change in the method used in
allocating income, charging costs or accounting for income, except as may be
required by law, regulation or GAAP.
6.1.8 Taxes. Razorfish will not (i) incur, pay or be subject to any
obligation to make any payment of, or in respect of, any Tax on or before the
Effective Time, except in the ordinary course of business or (ii) agree to
extend or waive any statute of limitations on the assessment or collection of
any Tax.
6.1.9 Payment of Liabilities. Razorfish shall pay or discharge its
current liabilities and accounts payable and properly accrue or provide for
deferred liabilities in the ordinary course of business consistent with past
practice, except for such liabilities as may be subject to a good faith dispute
or counterclaim and for which adequate reserves have been established.
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6.1.10 Collection of Accounts Receivable. Razorfish shall collect its
accounts receivable in the ordinary course of business consistent with past
practice. Razorfish shall not factor or sell or agree to factor or sell its
accounts receivable or any portion thereof.
6.1.11 Vendors and Suppliers. Razorfish shall not change or agree to
change any Material terms with any of its vendors or suppliers except in the
ordinary course of business. Razorfish shall pay all liabilities to vendors and
suppliers in the ordinary course of business consistent with past practice.
6.1.12 Payroll. Razorfish shall not make any Material change in its
payroll and payroll tax payment practices.
6.1.13 Capital Expenditures. Razorfish shall not make any capital
expenditures in excess of $50,000 in the aggregate per calendar quarter.
6.1.14 Additional Expenditures. Razorfish shall not make expenditures
or incur obligations with respect to the matters referenced in this Section
6.1.14 prior to the Consummation of the Offer (i) in excess of the aggregate
amounts set forth in Section 6.1.14A of the Disclosure Schedule for (A) the fees
of the Broker referred to in Section 5.10, (B) the fees for the Fairness Opinion
referred to in Section 5.17, (C) the legal, accounting and similar fees and
expenses in connection with the Consummation of the Offer (provided, however,
that this Section 6.1.14 shall not apply to limit any reasonable legal fees that
result from any shareholder or similar litigation that arises subsequent to the
Commencement of the Offer and that is a result of the Offer), and (D) the
insurance referred to in Section 7.5.3; and (ii) in excess of the aggregate
amounts set forth in Section 6.1.14B of the Disclosure Schedule for employee,
officer and director severance or termination payments with respect to the
employee categories identified in, and as specifically provided in Section
6.1.14B of the Disclosure Schedule. A breach or violation of this Section 6.1.14
shall be deemed to be Material and to be a Material Adverse Effect.
6.2 Razorfish Stockholders Meeting; Certain Filings.
6.2.1 Razorfish Stockholders Meeting. If, after the Consummation of the
Offer the Merger cannot be consummated under Section 253 of the Delaware Act in
accordance with Section 2.7, Razorfish will:
6.2.1.1 duly call, give notice of, convene and hold a special
meeting of its stockholders (the "Razorfish Stockholders Meeting") for
the purpose of obtaining Razorfish Stockholder Approval;
6.2.1.2 prepare and file with the SEC a preliminary proxy or
information statement in accordance with the Exchange Act relating to
the Merger and this Agreement, and use commercially reasonable efforts
to obtain and furnish the information required to be included therein
by the Exchange Act and the SEC and, after consultation with the
Parent, respond promptly to any comments made by the SEC with respect
thereto, and to cause a definitive proxy or information statement
(including any amendment or supplement thereto, the "Proxy Statement"),
to be mailed to its
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stockholders, provided that no amendment or supplement to the Proxy
Statement will be made by Razorfish without consultation with the
Parent and its counsel. The Proxy Statement will include the
recommendation of Razorfish's Board of Directors that the Razorfish
Stockholders approve and adopt this Agreement and the Merger (the
"Razorfish Recommendation"); and
6.2.1.3 use commercially reasonable efforts to secure
Razorfish Stockholder Approval, including, if necessary, using
commercially reasonable efforts to solicit proxies from its
stockholders.
6.2.2 Proxy Statement. In the event a Razorfish Stockholders Meeting is
required under applicable Law in order to consummate the Merger, the Parent will
provide Razorfish with the information concerning the Parent and the Purchaser
required to be included in the Proxy Statement, and will vote or cause to be
voted all Razorfish Shares held by the Parent or its Subsidiaries in favor of
the adoption and approval of this Agreement and the transactions contemplated
hereby. In addition, each of the Parent and the Purchaser agrees that from (and
including) the Consummation of the Offer through the Effective Time, it will not
sell, transfer, pledge, assign, exchange or otherwise dispose of any Razorfish
Shares, including those purchased in the Offer.
6.2.3 Information Provided by Razorfish. The information that is
supplied by Razorfish expressly for inclusion or incorporation by reference in
the Offer Documents, the Schedule 14D-9 or the Proxy Statement will not 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, at, (i) with respect to the Offer Documents, the time the Offer
Documents are filed with the SEC, (ii) with respect to the Schedule 14D-9, the
time the Schedule 14D-9 is filed with the SEC, and (iii) with respect to any
Proxy Statement, the time the Proxy Statement (or any amendment thereof or
supplement thereto) is first mailed to the Razorfish Stockholders, the time of
the Razorfish Stockholders Meeting and the Effective Time.
6.2.4 Information Provided by Parent. The information that is supplied
by the Parent or Purchaser expressly for inclusion or incorporation by reference
in the Offer Documents, the Schedule 14D-9 or the Proxy Statement will not
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, at, (i) with respect to the Offer Documents, the time the Offer
Documents are filed with the SEC, (ii) with respect to the Schedule 14D-9, the
time the Schedule 14D-9 is filed with the SEC, and (iii) with respect to any
Proxy Statement, the time the Proxy Statement (or any amendment thereof or
supplement thereto) is first mailed to the Razorfish Stockholders, the time of
the Razorfish Stockholders Meeting and the Effective Time.
6.2.5 Supplemental Information. If at any time prior to the Effective
Time, Razorfish or the Parent discovers any information relating to either party
or any of their respective officers or directors that should be set forth in an
amendment or supplement to the Offer Documents, the Schedule 14D-9 or the Proxy
Statement, so that such document would not include any misstatement of a
Material fact or omit to state any Material fact necessary to make the
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statements therein, in light of the circumstances under which they were made,
not misleading, the party that discovers such information will promptly provide
written notice to the other parties hereto and the parties will jointly prepare
an appropriate amendment or supplement describing such information that will be
promptly filed with the SEC and, to the extent required by Law, disseminated to
the Razorfish Stockholders.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 Access and Information. Razorfish hereby covenants and agrees that it will
afford to Parent and its representatives full access during normal business
hours throughout the period prior to the Effective Time to all of its properties
upon reasonable prior notice and shall use reasonable efforts to make its
directors, management, other employees and authorized representatives (including
counsel and independent public accountants) available to confer with Parent and
its authorized representatives (provided that Parent shall give the Chief
Executive Officer of Razorfish reasonable notice) and, during such period,
Razorfish will (i) make available all papers and records of Razorfish relating
to the assets, properties, operations, obligations and liabilities of Razorfish,
including but not limited to, all books of account (including the general
ledger), tax records and returns, minute books of directors', committees' and
stockholders' meetings, Organizational Documents, Material Contracts, filings
with and communications from any regulatory authority, accountants' work papers,
litigation files, plans affecting employees, and any other business activities
or prospects as Parent may from time to time reasonably request and that
Razorfish has, and (ii) promptly furnish to Parent all other information
concerning its business, properties and personnel as Parent may reasonably
request provided that the provision of such Materials does not require the
expenditure of a Material amount of money by Razorfish or the Subsidiaries.
Throughout the period prior to the Effective Time, Razorfish will cause one or
more of its designated representatives to be available to confer on a regular
and frequent basis with representatives of Parent and to report the general
status of the ongoing operations of Razorfish.
7.2 Regulatory Approvals. Parent, Purchaser and Razorfish shall make all filings
and requests for approval with any and all Governmental Entities as may be
necessary to permit or give effect to the transactions contemplated by this
Agreement.
7.3 Additional Agreements; Further Assurances. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to use
commercially reasonable best efforts to take, or cause to be taken, all action
and to do, or cause to be done, all things necessary, proper or advisable on the
part of such party, to consummate and make effective the transactions
contemplated by this Agreement at the earliest practicable date, including using
its commercially reasonable best efforts to obtain all required consents,
approvals, waivers, exemptions, amendments and authorizations, give all notices,
and make or effect all filings, registrations, applications, designations and
declarations; and each party shall cooperate fully with the other (including by
providing any necessary information) with respect to the foregoing. Razorfish
and Parent each will make commercially reasonable efforts to conduct its
business so that its representations and warranties shall be true and correct at
the Effective Time (except those representations and warranties which are
expressly limited to some other date, except those affected by actions
contemplated or permitted hereby and except those waived pursuant to
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Section 7.5) with the same force and effect as if such representations and
warranties were made anew at and as of the Effective Time. In the event any
claim, action, suit, investigation or other proceeding by any Governmental
Entity or other person is commenced which questions the validity or legality of
the Merger or any of the other transactions contemplated hereby or seeks damages
in connection therewith, the parties agree to cooperate and use commercially
reasonable efforts to defend against such claim, action, suit, investigation or
other proceeding and, if an injunction or other order is issued in any such
action, suit, or other proceeding, to use all reasonable efforts to have such
injunction or other order lifted, and to cooperate reasonably regarding any
other impediment to the consummation of the transactions contemplated by this
Agreement. Each party shall give prompt written notice to the other of (i) the
occurrence or failure to occur of any event which occurrence or failure has
caused or could reasonably be expected to cause any representation or warranty
of Razorfish or Parent as the case may be, contained in this Agreement to be
untrue or inaccurate at any time from the date hereof to the Effective Time or
that will result in the failure to satisfy any of the conditions specified in
Article VI and (ii) any failure of Razorfish or Parent as the case may be, to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by it hereunder.
7.4 Publicity. Subject to compliance with applicable Laws, so long as this
Agreement is in effect, neither Razorfish nor Parent will, prior to the
Effective Time, issue, or permit to be issued any press release or other
announcement or public disclosure of matters related to this Agreement or the
transactions contemplated hereby without the prior written consent of the other
party, except as may be required by applicable Law, court process or by
obligations pursuant to any listing agreement with The Nasdaq SmallCap Market.
7.5 Directors and Officers Indemnification and Insurance.
7.5.1 Bylaws Indemnification Provision. The Bylaws of the Surviving
Corporation shall contain provisions no less favorable with respect to
indemnification than are set forth in Article VI of the Bylaws of Razorfish,
which provisions shall not be amended, repealed or otherwise modified for a
period of six years from the Effective Time in any manner that would affect
adversely the rights thereunder of individuals who, at or prior to the Effective
Time, were directors, officers, employees, fiduciaries or agents of Razorfish,
unless such modification shall be required by law.
7.5.2 Indemnification. Except for the matters set forth in Section
7.5.2 of the Disclosure Schedule, Parent shall cause the Surviving Corporation,
to the fullest extent permitted under applicable law to indemnify, defend and
hold harmless, each present and former director, officer or employee of
Razorfish or any Subsidiary (collectively, the "Indemnified Parties") against
any costs or expenses (including attorneys' fees), judgments, fines, losses,
claims, damages, liabilities and amounts paid in settlement in connection with
any actual or threatened claim, action, suit, proceeding or investigation,
whether civil, criminal, administrative or investigative, (x) arising out of or
pertaining to the transactions contemplated herein or (y) otherwise with respect
to any acts or omissions occurring at or prior to the Effective Time, to the
same extent as provided in the Razorfish Organizational Documents or any
applicable contract or agreement as in effect on the date hereof, in each case
for a period of six years after the date hereof. In the event of any such claim,
action, suit, proceeding or investigation (whether arising before or after the
Effective Time) and subject to the specific terms of any
33
indemnification contract, (i) any counsel retained by the Indemnified Parties
for any period after the Effective Time shall be reasonably satisfactory to the
Surviving Corporation, (ii) after the Effective Time, the Surviving Corporation
shall pay the reasonable fees and expenses of such counsel, promptly after
statements therefor are received and (iii) the Surviving Corporation will
cooperate in the defense of any such matter; provided, however, that the
Surviving Corporation shall not be liable for any settlement effected without
its written consent (which consent shall not be unreasonably withheld or
delayed); and provided, further, that, in the event that any claim or claims for
indemnification are asserted or made within such six-year period, all rights to
indemnification in respect of any such claim or claims shall continue until the
disposition of any and all such claims. The Indemnified Parties as a group may
retain only one law firm (plus local counsel, if applicable) to represent them
with respect to any single action unless there is, under applicable standards of
professional conduct, a conflict on any significant issue between the positions
of any two or more Indemnified Parties, in which case each Indemnified Person
with respect to whom such a conflict exists (or group of such Indemnified
Persons who among them have no such conflict) may retain one separate law firm.
7.5.3 Insurance. The Surviving Corporation shall maintain in effect for
six years from the Effective Time the current directors' and officers' liability
insurance policies maintained by Razorfish (provided that the Surviving
Corporation may substitute therefor policies of at least the same coverage
containing terms and conditions that are substantially similar) with respect to
matters occurring prior to the Effective Time; provided, however, that in no
event shall the Surviving Corporation be required to expend pursuant to this
Section 7.5.3 more than $1,500,000 for such insurance.
7.5.4 Successors. In the event the Surviving Corporation or any of its
successors or assigns (i) consolidates with or merges into any other person and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any person, then, and in each such case, proper
provision shall be made so that the successors and assigns of the Surviving
Corporation, or at Parent's option, Parent, shall assume the obligations set
forth in this Section 7.5.
7.6 Razorfish Options.
7.6.1 Section 16(b) Exemption. As soon as practicable following the
date of this Agreement, Razorfish's Board of Directors or any committee
administering Razorfish's Amended and Restated 1997 Stock Option and Incentive
Plan, 1999 Stock Incentive Plan, 2000 Non-Officer Stock Incentive Plan and 2002
Stock Incentive Plan (collectively, the "Razorfish Option Plans") will adopt
such resolutions or take such other actions as may be required or appropriate in
the sole discretion of Razorfish to effect the provisions of this section and to
cause the transactions contemplated by this section to be exempt from the
provisions of Section 16(b) of the Exchange Act.
7.6.2 Acceleration and Vesting. As soon as practicable following the
date of this Agreement, the Board of Directors or any committee administering
the Razorfish Option Plans will adopt such resolutions or take such other
actions as may be required or appropriate in the sole discretion of Razorfish to
provide that, immediately prior to the earlier to occur of (a) the Consummation
of the Offer provided that more than 80% of the Razorfish Shares have been
34
validly tendered and not withdrawn prior to the final expiration of the Offer
and (b) the Effective Time, each unexercised and outstanding option to purchase
Razorfish Shares under any Razorfish Option Plan (individually a "Razorfish
Option" and collectively the "Razorfish Options") will fully vest and become
exercisable.
7.6.3 Razorfish Option Payments. Each unexercised and outstanding
Razorfish Option shall be canceled without any action on the part of the holder
thereof upon the earlier to occur of (a) the Consummation of the Offer provided
that more than 80% of the Razorfish Shares have been validly tendered and not
withdrawn prior to the final expiration of the Offer and (b) the Effective Time.
The unexercised and outstanding Razorfish Options shall be identified
immediately prior to the earlier to occur of the two events described in the
preceding sentence.
The holder of each Razorfish Option so cancelled shall thereupon become entitled
to receive an amount in cash equal to the Option Spread Payment, and each holder
of a Warrant that has been duly exercised shall thereupon become entitled to
receive an amount in cash equal to the excess, if any, of the Merger
Consideration less the exercise price for each Razorfish Share purchasable
pursuant to such cancelled Warrant, less any amounts as are required to be
deducted and withheld under the Code or any provision of state, local or foreign
tax law in connection with such payment (such net amount, the "Warrant Spread
Payment"), and thereafter all rights of such holder associated with the
Razorfish Option or Warrant shall be terminated and canceled. On or about the
commencement of the Offer, Razorfish shall provide written notice to the holders
of unexercised and outstanding Razorfish Options and unexercised and outstanding
Warrants regarding the possible cancellation of the Razorfish Options (as a
result of the Offer and Merger) and Warrants and the possible receipt of an
Option Spread Payment or Warrant Spread Payment. The obligation of Razorfish to
make the Option Spread Payment and Warrant Spread Payment shall be subject to
the satisfaction of the Minimum Condition and the occurrence of the Effective
Time. Razorfish will make any such payments promptly following the Effective
Time.
7.6.4 Termination of Razorfish Option Plans; Razorfish Options. As of
the Effective Time, the Razorfish Option Plans will terminate. Razorfish will
use its commercially reasonable efforts to ensure that, at and after the
Effective Time, no person will have any right under Razorfish Options or
Razorfish Option Plans with respect to equity securities of the Surviving
Corporation or any Subsidiary thereof, except the right to receive the Option
Spread Payment.
7.6.5. Warrants. Razorfish will use its commercially reasonable efforts
to terminate all outstanding and unexercised Warrants at and after the Effective
Time.
ARTICLE VIII
CONDITIONS
8.1 Conditions to Each Party's Obligations to Effect the Merger. The respective
obligations of each party to effect the Merger shall be subject to the following
conditions, except, to the extent permitted by applicable Law, as such condition
may be waived in writing pursuant to Section 8.5 by the joint action of Parent
and Razorfish:
8.1.1 Approval of Razorfish Stockholders. Razorfish shall have obtained
all approvals of holders of shares of capital stock of Razorfish necessary to
approve the Merger, this
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Agreement and all the transactions contemplated hereby to the extent required by
The Delaware Act.
8.1.2 Injunction; Compliance With Law. No preliminary or permanent
injunction or other order by any foreign court having appropriate jurisdiction
or of any federal or state court preventing consummation of the Merger having
been issued and continuing in effect, and the Merger and the other transactions
contemplated hereby not being prohibited under any applicable Law.
8.1.3 Legal Proceedings. No Law or injunction shall have been enacted,
entered, promulgated or enforced by any Governmental Entity which prohibits,
restrains, enjoins or restricts the consummation of the Merger.
8.1.4 Consummation of Offer. The Minimum Condition shall have been
satisfied and the Consummation of the Offer shall have occurred.
ARTICLE IX
TERMINATION AND WAIVER
9.1 Termination. This Agreement may be terminated at any time prior to the
Effective Time, whether before or after approval by the Razorfish Stockholders:
9.1.1 By Mutual Agreement. By mutual written agreement of the Parent
and Razorfish, provided that any such agreement that occurs after the
Consummation of the Offer must have been duly and unanimously authorized by all
of the Independent Directors.
9.1.2 By Parent or Razorfish. By either the Parent or Razorfish, if:
9.1.2.1 the Consummation of the Offer has not occurred by the
Outside Date, provided that the party seeking to terminate this
Agreement pursuant to this clause has not breached in any Material
respect its obligations under this Agreement in any manner that has
contributed to the failure of the Consummation of the Offer on or
before the Outside Date;
9.1.2.2 there is any Law that prohibits or makes the
Consummation of the Offer or the Merger illegal, or if an order,
decree, ruling, judgment or injunction has been entered by a
Governmental Entity of competent jurisdiction permanently restraining,
enjoining or otherwise prohibiting the Offer or the Merger and such
order, decree, ruling, judgment or injunction has become final and
non-appealable; or
9.1.2.3 at the Razorfish Stockholders Meeting (including any
adjournment or postponement thereof), Razorfish Stockholder Approval
has not been obtained, if required by applicable Law, unless such
failure to obtain Razorfish Stockholder Approval is the result of a
Material breach of this Agreement by the party seeking to terminate
this Agreement.
9.1.3 By Razorfish. By Razorfish prior to the Consummation of the Offer
if:
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9.1.3.1 the Parent or the Purchaser (A) fails to commence the
Offer within the period of time specified in Section 1.1.1 or (B) makes
any change to the Offer in contravention of the provisions of this
Agreement;
9.1.3.2 (A) the representations and warranties of the Parent
and/or the Purchaser contained in Article IV of this Agreement fail to
be true and correct in any Material respect either (x) as of the date
referred to in any representation or warranty that addresses matters as
of a particular date or (y) as to all other representations and
warranties, as of the date of determination, or (B) the Parent or the
Purchaser Materially breaches or Materially fails to perform its
covenants and other agreements contained herein; provided that, in each
of the foregoing clauses (A) and (B), such breach or failure cannot be
or has not been cured in all Material respects within ten (10) days
after Razorfish's written notice thereof to the Parent or the
Purchaser; or
9.1.3.3 Razorfish's Board of Directors has withdrawn the
Razorfish Recommendation or has recommended or entered into a
definitive agreement with respect to an Alternative Proposal in
accordance with Section 6.1.6.
9.1.4 By Parent. By the Parent prior to the Consummation of the Offer,
if:
9.1.4.1 (A) the representations and warranties of Razorfish
contained in Article V of this Agreement fail to be true and correct in
any Material respect (or if the representation or warranty already is
qualified as to Materiality, shall fail to be true and correct as so
qualified) either (x) as of the date referred to in any representation
or warranty that addresses matters as of a particular date or (y) as to
all other representations and warranties, as of the date of
determination, or (B) Razorfish Materially breaches or Materially fails
to perform its agreements that causes a failure of the conditions set
forth in clause (ii) of Annex I, which breach or failure cannot be or
has not been cured in all Material respects within ten (10) days after
the Parent's written notice thereof to Razorfish; or
9.1.4.2 Razorfish's Board of Directors has withdrawn Razorfish
Recommendation or has recommended or entered into a definitive
agreement with respect to an Alternative Proposal.
9.2 Effect of Termination. If any party terminates this Agreement pursuant to
Section 9.1 above, all rights and obligations of the parties hereunder will
terminate without any liability of any party to any other party, except for any
liability of any party then in breach, provided that the provisions of this
Article IX and Article X will remain in full force and effect and survive any
termination of this Agreement.
9.3 Fees and Expenses. Except as set forth in Section 9.4, all fees and expenses
incurred in connection with the transactions contemplated hereby will be paid by
the party incurring such expenses, whether or not the Merger is consummated.
9.4 Termination Fee and Expense Reimbursement. Notwithstanding any other
provision of this Agreement:
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9.4.1 Termination Fee; Expense Reimbursement. If this Agreement is
validly terminated pursuant to Section 9.1.3.3 or Section 9.1.4.2, then
Razorfish shall (i) pay to the Parent a fee of $400,000 (the "Termination Fee"),
and (ii) reimburse up to an aggregate of $500,000 for the Parent's documented
out-of-pocket expenses in connection with the transactions contemplated by this
Agreement (the "Expense Reimbursement") provided that such Alternative Proposal
results in an Alternative Transaction within six months of termination of this
Agreement. Notwithstanding the foregoing, if a court having jurisdiction of the
matter should finally determine that either the Termination Fee or the Expense
Reimbursement is not permissible, or is in excess of the amount permissible,
under applicable law, then the full amount determined by the court to be
permissible under applicable law shall be paid to the Parent.
9.4.2 Alternative Proposal. If this Agreement is validly terminated
pursuant to Section 9.1.4.1, then (i) Razorfish shall pay to the Parent the
Expense Reimbursement, and, if (ii)(A) prior to such termination there exists an
Alternative Proposal (whether or not such offer or proposal has been rejected or
has been withdrawn prior to the time of such termination), and (B) within six
(6) months of such termination, Razorfish or any of its Subsidiaries accepts a
written offer for, or otherwise enters into an agreement to consummate or
consummates, that Alternative Proposal, then upon the signing of a definitive
agreement relating to such Alternative Proposal, or, if no such agreement is
signed, then upon consummation of any such Alternative Proposal, Razorfish shall
pay to the Parent the Termination Fee.
9.5 Other Termination Fee and Expense Reimbursement Matters. Razorfish shall
make all payments required by Section 9.4 promptly (and in any event within five
(5) business days of receipt by Razorfish of written notice from the Parent) by
wire transfer of immediately available funds to an account designated by the
Parent in writing. Razorfish acknowledges that the agreements regarding the
Termination Fee and Expense Reimbursement contained in this Agreement are an
integral part of the transactions contemplated hereby, and that in the absence
of such agreements, the Parent and the Purchaser would not have entered into
this Agreement. The parties hereby agree and acknowledge that, except in the
event of a breach by Razorfish of Section 6.1.6 or a willful Material breach by
Razorfish of any of the representations or warranties set forth in Article V or
any of the other covenants set forth in Article VI, the amounts payable pursuant
to Section 9.4 will constitute liquidated damages and not a penalty and will be
the sole and exclusive remedy for any loss, liability, damage or claim arising
out of or related to any termination of this Agreement on the bases specified in
this Article IX.
9.6 Waiver. At any time, the parties hereto may (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto or (iii) except as
prohibited by law, waive compliance with any of the agreements or conditions
contained herein the benefit of which such party or its stockholders is entitled
to. Any agreement on the part of a party hereto to any such extension or waiver
shall be valid if set forth in an instrument in writing signed on behalf of such
party.
9.7 Confidentiality. All information obtained by Parent pursuant to this
Agreement shall be kept confidential in accordance with the Confidentiality
Agreement.
38
ARTICLE X
GENERAL PROVISIONS
10.1 Notices. No notice or other communication shall be deemed given unless sent
in any of the manners, and to the attention of the persons, specified in this
Section 10.1. All notices and other communications hereunder shall be in writing
and shall be deemed given or delivered to any party (i) upon delivery to the
address of such party specified below if delivered personally, (ii) one business
day after being sent by reputable overnight courier (charges prepaid) or (iii)
five business days after being sent by registered or certified mail (return
receipt requested), in any case to the parties at the following addresses or
telecopy numbers (followed promptly by personal, courier or certified or
registered mail delivery) (or at such other addresses for a party as will be
specified by like notice):
10.1.1 To Parent or Purchaser:
SBI and Company
0000 X. Xxxxxxxxxx Xxxxxxx, #000
Xxxx Xxxx Xxxx, Xxxx 00000
Attn: Chief Financial Officer
Fax No.: 000-000-0000
with a copy to:
Xxxx X. Xxxxxx
Xxxx Xxxxxxxx Xxxxx Xxx & Xxxxxxxx
000 Xxxxx Xxxxx Xxxxxx, #0000
Xxxx Xxxx Xxxx, Xxxx 00000-0000
Fax No.: 000-000-0000
10.1.2 To Razorfish:
Razorfish Inc.
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx X. Xxxxxxx, CFO
Fax No.: 000-000-0000
with a copy to:
Xxxx Xxxxxxx
Xxxxxxxx & Xxxxxxxx
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax No.:000-000-0000
39
10.2 VENUE. EACH OF THE PARTIES SUBMITS TO THE EXCLUSIVE JURISDICTION OF ANY
STATE OR FEDERAL COURT SITTING IN DELAWARE IN ANY ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS AGREEMENT AND AGREES THAT ALL CLAIMS IN RESPECT OF
THE ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT. EACH
PARTY ALSO AGREES NOT TO BRING ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT IN ANY OTHER COURT. EACH OF THE PARTIES WAIVES ANY
DEFENSE OF INCONVENIENT FORUM TO THE MAINTENANCE OF ANY ACTION OR PROCEEDING SO
BROUGHT AND WAIVES ANY BOND, SURETY, OR OTHER SECURITY THAT MIGHT BE REQUIRED OF
ANY OTHER PARTY WITH RESPECT THERETO. ANY PARTY MAY MAKE SERVICE ON ANY OTHER
PARTY BY SENDING OR DELIVERING A COPY OF THE PROCESS (I) TO THE PARTY TO BE
SERVED AT THE ADDRESS AND IN THE MANNER PROVIDED FOR THE GIVING OF NOTICES IN
SECTION 10.1 OR THE GIVING OF NOTICES IN SECTION 10.1. EACH PARTY AGREES THAT A
FINAL JUDGMENT IN ANY ACTION OR PROCEEDING SO BROUGHT SHALL BE CONCLUSIVE AND
MAY BE ENFORCED BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW
OR IN EQUITY.
10.3 Specific Performance and Other Remedies. The parties hereto acknowledge
that the rights of each party to consummate the transactions contemplated hereby
are special, unique and of extraordinary character, and that, in the event that
any party violates or fails or refuses to perform any covenant or agreement made
by it herein, the non-breaching party may be without an adequate remedy at law.
The parties agree, therefore, that in the event that any party violates or fails
or refuses to perform any covenant or agreement made by such party herein, the
non-breaching party or parties may, subject to the terms of this Agreement and
in addition to any remedies at law for damages or other relief, institute and
prosecute an action in any court of competent jurisdiction to enforce specific
performance of such covenant or agreement or seek any other equitable relief.
The prevailing party in any such proceeding shall be entitled to reimbursement
for all its costs and expenses (including reasonable attorneys' fees) relating
to such proceeding from the non-prevailing party.
10.4 Interpretation. 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.
10.5 Miscellaneous. This Agreement (including the documents and instruments
referred to herein) (i) constitutes the entire agreement between the parties
hereto in respect of the subject matter hereof and supersedes all other prior
agreements and understandings, both written and oral, among the parties hereto
with respect to such subject matter, (ii) is not intended to confer upon any
other person any rights or remedies hereunder, (iii) shall be governed in all
respects, including validity, interpretation and effect, by the internal law,
not the law of conflicts, of the State of Delaware and (iv) may not be amended,
modified or supplemented except by written agreement of the parties hereto. This
Agreement may be executed in two or more counterparts each of which shall be
deemed an original but all of which together shall constitute but a single
agreement. The term "person" as used herein shall mean any individual,
partnership, corporation, limited liability company, trust or other entity.
40
10.6 Assignment. This Agreement (including the documents and instruments
referred to herein) may not be assigned by any party. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
permitted successors and assigns, and any reference to a party hereto shall also
be a reference to a permitted successor or assign.
10.7 Language. The language used in this Agreement shall be deemed to be the
language chosen by the parties hereto to express their mutual intent, and no
rule of strict construction shall be applied against any person.
10.8 Severability. Any provision hereof which is prohibited or unenforceable in
any jurisdiction will, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction will not invalidate or render unenforceable such provision in any
other jurisdiction. To the extent permitted by law, the parties hereto waive any
provision of law which renders any such provision prohibited or unenforceable in
any respect.
10.9 Non-Survival of Representations and Warranties. All of the representations
and warranties of the parties contained in this Agreement shall terminate as of
the Effective Time.
ARTICLE XI
DEFINITIONS
As used in the Agreement, the terms below shall have the meanings set forth
below.
"Accounts Receivable" is defined in Section 5.19.
"Affiliate" shall mean any person (i) that directly or indirectly, through one
or more intermediaries, controls or is controlled by, or is under common control
with, an other person, (ii) that directly or beneficially owns or holds ten
percent (10%) or more of any equity interest in the other person or (iii) ten
percent (10%) or more of whose voting stock is owned directly or beneficially or
held by the other person.
"Affiliated Group" shall have the meaning ascribed to it under Section 1504 of
the Code.
"Alternative Transaction" is defined in Section 6.1.6.1.
"Audited Financial Statements" is defined in Section 5.5.1.
"Benefit Plans" is defined in Section 5.9.1.
"Capitalized Lease Obligations" shall mean all obligations or liabilities
created or arising under any capitalized lease of real or personal property, or
conditional sale or other title retention agreement, whether or not the rights
and remedies of the lessor, seller or lender thereof are limited to repossession
of the property giving rise to such obligations or liabilities.
41
"Certificate" is defined in Section 3.1.
"Certificate of Merger" is defined in Section 2.3.
"Class A Share" shall mean a share of the Class A Common Stock, par value $.01
per share, of Razorfish.
"Class B Share" shall mean a share of the Class B Common Stock, par value $.01
per share, of Razorfish.
"Closing" is defined in Section 2.2.
"Closing Date" is defined in Section 2.2.
"Code" shall mean the United States Internal Revenue Code of 1986, as amended.
"Constituent Corporations" is defined in Section 2.1.
"Consummation of the Offer" is defined in Section 1.1.1.
"Delaware Act" is defined in Section 2.1.
"Disclosure Schedule" shall mean the schedule delivered by Razorfish to Parent
simultaneously with the execution and delivery of this Agreement.
"Dissenting Shares" is defined in Section 3.5.
"DOJ" shall mean the United States Department of Justice.
"Effective Time" is defined in Section 2.3.
"Environmental Law" shall mean any and all existing federal, international,
state or local statutes, laws, regulations, ordinances, orders, policies, or
decrees and the like, relating to public health or safety, pollution or
protection of human health or the environment, including natural resources,
including but not limited to the Clean Air Act, 42 U.S.C. ss. 7401 et seq., the
Clean Water Act, 33 U.S.C. ss. 1251 et seq., the Resource Conservation Recovery
Act ("RCRA"), 42 U.S.C. ss. 6901 et seq., the Toxic Substances Control Act, 15
U.S.C. ss. 2601 et seq., and the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA"), 42 U.S.C. ss. 9601 et seq. and any
similar or implementing state or local law, or any common law, which governs:
(i) the existence, clean-up, removal and/or remedy of contamination or threat of
contamination on or about real property; (ii) the emission, discharge or
Release, of Hazardous Materials or contaminants into the environment; (iii) the
control of Hazardous Materials or contaminants; or (iv) the use, generation,
transport, treatment, storage, disposal, removal, recycling, handling or
recovery of Hazardous Materials.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
42
"ERISA Affiliate" shall mean Razorfish or any person which is or was a member of
the same controlled group of corporations as Razorfish or is or was under common
control with Razorfish within the meaning of Sections 414(b) and (c) of the
Code.
"Exchange Act" is defined in Section 1.1.1.
"Executive Officers" mean Xxxx-Xxxxxxxx Xxxxx, Xxxx X. Xxxxxxx and Xxxxxx X.
Xxxx.
"Fairness Opinion" is defined in Section 5.17.
"Financial Statements" is defined in Section 5.5.1.
"Fully Diluted Basis" is defined in Section 1.1.1.
"GAAP" shall mean the United States generally accepted accounting principles.
"Governmental Entities" shall mean, collectively, any court, tribunal,
arbitrator, authority, agency, commission, official or other instrumentality of
the United States, any foreign country or any state, county, city or other
political subdivision.
"Hazardous Materials" shall mean any material or substance: (i) which is now
defined as a "hazardous substance", "pollutant", "contaminant", "hazardous
material", "hazardous waste", "extremely hazardous waste", "restricted hazardous
waste", "infectious waste", "toxic substance" or any other formulation intended
to define, list or classify substances by reason of deleterious property, such
as ignitability, corrosivity, reactivity, carcinogenicity, toxicity, or
reproductive toxicity, under or pursuant to CERCLA, or other Environmental Law,
and existing amendments thereto and regulations promulgated thereunder; (ii)
containing gasoline, oil, diesel fuel or other petroleum products, or fractions
thereof; (iii) which is defined as a "hazardous waste" pursuant to RCRA and
existing amendments thereto and regulations promulgated thereunder; (iv)
containing polychlorinated biphenyls; (v) containing asbestos in any form that
is or could become friable; (vi) which is radioactive; (vii) which is
biologically hazardous; or (viii) the presence of which is regulated by or
subject to, or requires investigation or remediation under, any federal,
international, state, or local statute, regulation, ordinance, policy or other
Environmental Law.
"Indemnified Parties" is defined in Section 7.5.2.
"Independent Directors" is defined in Section 1.3.1.
"Initial Expiration Date" is defined in Section 1.1.2.
"Intellectual Property" is defined in Section 5.14.
"IRS" shall mean the United States Internal Revenue Service.
43
"Joint Press Release" is defined in Section 1.1.4.
"Knowledge" shall mean the actual knowledge of the officers and directors of a
party.
"Laws" shall mean, collectively, any domestic (federal, state, or local) or
foreign law, statute, ordinance, rule, regulation, judgment, decree, order,
writ, permit or license of any Governmental Entity.
"Liens" shall mean all mortgages, liens, pledges, claims, charges, security
interests or other encumbrances.
"Material" shall mean material to the business, assets, financial condition or
results of operations of such party and its subsidiaries, taken as a whole.
"Material Adverse Effect" means any change, effect, occurrence or state of facts
that is materially adverse to the business, financial condition, operations or
results of operations of a Person and its Subsidiaries, taken as a whole;
provided, however, that the following are excluded from the definition of
"Material Adverse Effect" and from the determination of whether such a Material
Adverse Effect has occurred: (i) changes in Laws (including without limitation,
common law, rules and regulations or the interpretation thereof) or applicable
accounting regulations and principles; (ii) any change in the relationship of a
Person and its Subsidiaries with their respective employees, customers and
suppliers, which change results from the announcement, pendency, or consummation
of the transactions and actions contemplated in this Agreement; or (iii) receipt
by the Person of any notice regarding the de-listing, or the actual de-listing,
of the Person's shares from The Nasdaq SmallCap Market.
"Material Contract" is defined in Section 5.13 hereof.
"Merger" is defined in the Section 2.1.
"Merger Consideration" is defined in Section 2.8.1.
"Minimum Condition" is defined in Section 1.1.1.
"Most Recent Balance Sheet" is defined in Section 5.5.1.
"Most Recent Financial Statements" is defined in Section 5.5.1.
"Offer" is defined in Section 1.1.1.
"Offer Documents" is defined in Section 1.1.5.
"Offer Price" is defined in Section 1.1.1.
"Offer to Purchase" is defined in Section 1.1.1.
44
"Option Holder" shall mean the holder of a Razorfish Option.
"Option Spread Payment" is defined in Section 2.8.4.
"Organizational Documents" shall mean the articles or certificate of
incorporation, articles or certificate of formation, bylaws, operating
agreement, limited liability company agreement or other similar formation and/or
governing documents.
"Outside Date" is defined in Section 1.1.2.
"Parent" is defined in the first page hereof.
"Parent Permits" is defined in Section 4.10.
"Paying Agent" is defined in Section 3.2.1.
"Payment Fund" is defined in Section 3.2.2.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Person" shall mean an individual, a corporation, a limited liability company, a
partnership, an association, a trust or any other entity or organization.
"Preferred Shares" is defined in Section 5.2.1.
"Proxy Statement" is defined in Section 6.2.1.2.
"Purchaser" is defined in the first page hereof.
"Purchaser Shares" shall mean the issued and outstanding shares of the common
stock, $.01 par value per share, of Purchaser.
"Qualified Person" is defined in Section 1.3.1.
"Qualified Plans" is defined in Section 5.9.2.2.
"Razorfish" is defined in the first page hereof.
"Razorfish Option" and "Razorfish Options" are defined in Section 7.6.2.
"Razorfish Option Plans" is defined in Section 7.6.1.
"Razorfish Share" shall mean a Class A Share or a Class B Share.
"Razorfish Stockholder" shall mean the holder of a Razorfish Share.
45
"Razorfish Stockholder Approval" shall mean the approval of the Merger, this
Agreement and the transactions contemplated hereby by the Razorfish Stockholders
in accordance with the Organizational Documents of Razorfish and the Delaware
Act.
"Razorfish Stockholders Meeting" is defined in Section 6.2.1.1.
"Razorfish Stockholders Notice" shall mean the notice of a special meeting
including the proxy card, letter of transmittal and information statement in the
form to be delivered to the Razorfish Stockholders in connection with the
approval of this Agreement and the Merger at a special meeting of the Razorfish
Stockholders.
"Release" shall mean any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, ejecting, injecting, escaping, leaching, migrating,
dumping or disposing into the indoor or outdoor environment, including without
limitation the abandonment or discarding or disposal of barrels, drums,
containers, tanks and other receptacles containing or previously containing any
Hazardous Materials.
"Returns" shall mean all federal, state, county, local and foreign returns,
reports, declarations, claims for refund, information returns and statements
with respect to Taxes including any schedule or attachment thereto, and
including any amendment thereof.
"Schedule 14D-9" is defined in Section 1.2.3.
"Schedule TO" is defined in Section 1.1.5.
"SEC" is defined in Section 1.1.2.
"Subsidiary" shall mean an entity that is controlled either directly or
indirectly by the Person or in which the Person directly or indirectly owns or
controls more than fifty percent of its equity.
"Surviving Corporation" is defined in Section 2.1.
"Taxes" shall mean (i) all federal, state, county, local, foreign and other
taxes of any kind whatsoever (including, without limitation, income, profits,
premium, estimated, excise, sales, use, occupancy, license, gross receipts,
franchise, ad valorem, severance, capital levy, production, transfer, payroll,
stamp, occupation, withholding, employment, unemployment, disability, social
security, real property, personal property, transfer import duties and other
governmental charges and assessments), whether or not measured in whole or in
part by net income, and including deficiencies, interest, additions to tax and
penalties with respect thereto, whether disputed or not and (ii) any liability
for the payment of any amount of the type described in the immediately preceding
clause (iii) as a result of being (A) a "transferee" within the meaning of
Section 6901 of the Code (or any other applicable law) of another person, (B) a
member of an affiliated or combined group or (C) pursuant to a tax sharing, tax
allocation, or tax indemnity agreement.
"Warrant Holder" shall mean the holder of a Warrant.
46
"Warrant" shall mean a warrant, and "Warrants" shall mean the warrants, set
forth on Exhibit 5.2.2(b) of the Disclosure Schedule.
"Warrant Spread Payment" is defined in Section 7.6.3.
[SIGNATURE PAGE FOLLOWS]
47
IN WITNESS WHEREOF, Razorfish, Parent and Purchaser have caused this
Agreement to be signed as of the date first written above by their respective
officers or representatives thereunto duly authorized.
RAZORFISH INC.
By: /s/ Xxxx X. Xxxxxxx
--------------------
Name: Xxxx X. Xxxxxxx
Title: CFO
SBI AND COMPANY
By: /s/ L. Xxx Xxxxxx
------------------
Name: L. Xxx Xxxxxx
Title: EVP
SBI PURCHASE CORP.
By: /s/ L. Xxx Xxxxxx
------------------
Name: L. Xxx Xxxxxx
Title: EVP
48
ANNEX I
CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer, the Purchaser will not be
required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-l(c) promulgated under the
Exchange Act (relating to the Purchaser's obligations to pay for or return
tendered Razorfish Shares promptly after termination or withdrawal of the
Offer), pay for any Razorfish Shares tendered pursuant to the Offer, and
may (subject to Section 1.1 of the Agreement) terminate or amend the Offer
in accordance with the Agreement; if immediately prior to any scheduled or
extended expiration date of the Offer (a) the Minimum Condition will not
have been satisfied, or (b) any of the following conditions exists as of
the expiration date of the Offer or as of the Closing Date (as the case may
be):
(i) any order, decree, ruling, judgment, injunction, statute, rule or
regulation has been promulgated, entered, enforced, enacted or issued
by any Governmental Entity of competent jurisdiction, that has the
effect of (A) prohibiting or Materially limiting the ownership or
operation by Razorfish, the Parent, the Purchaser or any of their
Subsidiaries of all or any Material portion of the business or assets
of Razorfish or any of its Subsidiaries or compelling Razorfish, the
Parent, the Purchaser or any of their Subsidiaries to dispose of or
hold separate all or any Material portion of the business or assets of
Razorfish, the Parent, the Purchaser or any of their Subsidiaries, (B)
prohibiting or making illegal the Consummation of the Offer or
consummation of the Merger or the other transactions contemplated by
the Agreement, or (C) Materially limiting the rights of ownership of
the Parent, the Purchaser or any other Affiliate of the Parent with
respect to Razorfish Shares (and Parent shall have received a
certificate duly executed on behalf of Razorfish to the effect that
the conditions set forth in this clause have been satisfied);
(ii) (A) the representations of Razorfish contained in Article V of the
Agreement will not be true and correct in all Material respects (or if
the representation already is qualified as to Materiality, shall fail
to be true and correct as so qualified) as of the expiration date of
the Offer or if such representations speak as of an earlier date, as
of such earlier date, or (B) Razorfish will have failed to comply in
all Material respects with its covenants and agreements contained in
the Agreement, except, in either such case to the extent that the
breach thereof would not reasonably be expected to have a Material
Adverse Effect (and Parent shall have received a certificate duly
executed on behalf of Razorfish to the effect that the conditions set
forth in this clause have been satisfied);
(iii)all Material consents, approvals and authorizations required to be
obtained prior to the consummation of the Offer and the Merger, by the
parties hereto from any Governmental Entity, will not have been
obtained (and Parent shall have received a certificate duly executed
on behalf of Razorfish to the effect that the conditions set forth in
this clause have been satisfied);
(iv) (A) any general suspension of, or limitation on prices for, trading in
securities on the New York Stock Exchange or on the Nasdaq National
Market, (B) a declaration of a banking moratorium or any suspension of
payments in respect of banks in the United
49
States, (C) a commencement of or Material acceleration or worsening of
a war, armed hostilities, acts of terrorism or other national or
international crisis involving the United States, that taken together,
has a Material Adverse Effect, or (D) a Material limitation (whether
or not mandatory) by any Governmental Entity that Materially and
adversely affects the extension of credit by banks or other lending
institutions in the United States;
(v) Razorfish shall not have entered into a payment plan with the Internal
Revenue Service related to previously unremitted withholding tax in
the amount of approximately $5,000,000 as of November 19, 2002 that
provides for equal payments over a period of three years or more; or
(vi) the Agreement will have been terminated in accordance with its terms;
which, in any such case, make it inadvisable, in the reasonable discretion of
the Parent and the Purchaser, to proceed with such acceptance for payment of or
payment for Razorfish Shares.
Subject to the provisions of the Agreement, the foregoing conditions are
for the sole benefit of the Parent and the Purchaser and may be asserted by the
Purchaser or, subject to the terms of the Agreement, may be waived by the Parent
or the Purchaser, in whole or in part at any time and from time to time in the
reasonable discretion of the Parent or the Purchaser.
50
