Exhibit 10.14
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "AGREEMENT") dated April 28, 1999
(the "EXECUTION DATE") by and between XXXXXX.XXX LTD., a New York corporation
("AGENCY") and INTERACTIVE SOLUTIONS INCORPORATED, a Massachusetts corporation
("ISI").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the respective Boards of Directors of each of the
parties hereto have determined that it is advisable and in the best interests of
their respective corporations and their respective shareholders to consummate,
and have approved, the business combination transaction provided for herein in
which ISI would merge with and into Agency (the "MERGER") upon the terms and
subject to the conditions of this Agreement;
WHEREAS, for federal income tax purposes, it is intended that
the Merger shall qualify as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "CODE");
NOW, THEREFORE, in consideration of the mutual
representations, warranties, covenants and agreements set forth herein, the
parties hereby agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1. THE MERGER. Subject to the terms and conditions of this
Agreement, at the Effective Time (as defined in Section 1.2 below), ISI shall be
merged with and into Agency and the separate corporate existence of ISI shall
thereupon cease. Agency (i) shall be the successor or surviving corporation in
the Merger (sometimes herein referred to as the "SURVIVING CORPORATION"), (ii)
shall continue to be governed by the laws of the State of New York, and (iii)
the separate corporate existence of Agency with all its rights, privileges,
immunities, powers and franchises shall continue unaffected by the Merger. The
Merger shall have the effects specified in Ch. 156B, ss.80 of the Massachusetts
General Laws (the "MGL") and Section 906 of the New York Business Corporation
Law (the "NYBCL").
SECTION 1.2. EFFECTIVE TIME. Agency and ISI will cause (i) an executed
original of an appropriate Certificate of Merger (the "CERTIFICATE OF MERGER" )
to be filed with the Secretary of State of the State of New York pursuant to
Sections 904-A, 907 and 104 of the NYBCL, and (ii) an executed original of an
appropriate Articles of Merger of ISI into Agency to be filed with the Secretary
of State of the Commonwealth of Massachusetts, pursuant to Ch. 156B, 79 of the
MGL. The Merger shall become effective on the date on which the Certificate of
Merger has been duly filed with the Secretary of State of New York, and such
time is hereinafter referred to as the "EFFECTIVE TIME."
SECTION 1.3. CERTIFICATE OF INCORPORATION AND BY-LAWS OF THE SURVIVING
CORPORATION. The Certificate of Incorporation of the Surviving Corporation shall
be at and as of the Effective Time, the Certificate of Incorporation of Agency
immediately prior to the Effective
Time. The By-laws of the Surviving Corporation shall be, at and as of the
Effective Time, the By-laws of Agency immediately prior to the Effective Time.
ARTICLE II
CONVERSION AND CANCELLATION OF SHARES AND OPTIONS
SECTION 2.1. ISI SHARES. Each share of the common stock, $0.01 par
value per share, of ISI (the "ISI Shares") issued and outstanding immediately
prior to the Effective Time of the Merger shall, by virtue of the Merger,
automatically and without any action on the part of the holder thereof, become
and be converted as follows: (a) into 0.6656917 shares of common stock, $0.001
par value per share, of Agency (the "AGENCY SHARES"), with respect to shares
held by a shareholder who prior to the conversion owned less than 50% of the
issued and outstanding ISI Shares; and (b) into 0.3049626 Agency Shares and
0.3607291 warrants to purchase Agency Shares, such warrants to be evidenced by a
warrant substantially in the form of EXHIBIT A hereto, with respect to shares
held by a shareholder who prior to the conversion owned more than 50% of the
issued and outstanding ISI Shares.
SECTION 2.2. AGENCY SHARES. Each share of common stock, $0.001 par
value per share, of Agency issued and outstanding immediately prior to the
Effective Time of the Merger shall, at the Effective Time, continue to be issued
and outstanding, be unchanged and remain as one fully paid and non-assessable
share of common stock, $0.001 par value per share, of Agency.
SECTION 2.3. SURRENDER OF ISI SHARES AND ISSUANCE OF AGENCY SHARES.
SCHEDULE 2.3 sets forth the following (i) a list of each holder of record of ISI
Shares at the Effective Time, (ii) the number of ISI Shares owned by each holder
of record of ISI Shares at the Effective Time, and (iii) the number of Agency
Shares to be received by each such holder of record of ISI Shares at the
Effective Time. At the Closing (as defined in Section 2.5 below), each holder of
record of ISI Shares at the Effective Time shall surrender the certificate(s)
representing such shares to Agency and in exchange therefor shall receive a
certificate registered in such holder's name representing that number of whole
shares of Agency Shares into which such holder's ISI Shares shall have been
converted pursuant to Section 2.1 above as set forth on SCHEDULE 2.3, provided,
however, any ISI shareholder who did not receive stock certificates evidencing
the ISI Shares issued in exchange for shares of common stock of Quadris
Consulting, Inc. ("QUADRIS") upon the merger of Quadris with and into ISI (the
"QUADRIS MERGER") shall not be required to deliver stock certificates.
Thereupon, the certificates representing the ISI Shares shall be canceled. No
fractional shares shall be issued and no cash in lieu of fractional shares shall
be paid to a holder of ISI Shares.
SECTION 2.4. ISI STOCK OPTION PLAN. At the Effective Time, (i) the ISI
1996 Stock Option Plan (the "ISI STOCK OPTION PLAN"), and all options to
purchase ISI Shares then outstanding under the ISI Stock Option Plan, and (ii)
the Quadris 1998 Incentive Stock Option Plan (the "Quadris Stock Option Plan")
and all options to purchase ISI Shares then outstanding under the Quadris Stock
Option Plan, shall be assumed by Agency. SCHEDULE 2.4 hereto sets forth (i) a
complete list as of the date hereof of all holders of outstanding options under
the ISI Stock Option Plan, (ii) a complete list as of the date hereof of all
holders of outstanding options under the Quadris Stock Option Plan assumed by
ISI and (iii) the number of ISI Shares subject to
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each such option. Each such option so assumed by Agency under this Agreement
shall continue to have, and be subject to, the same terms and conditions set
forth in the ISI Stock Option Plan or the Quadris Stock Option Plan, as
applicable, and the applicable stock option agreement immediately prior to the
Effective Time, except that (i) such option will be exercisable for that number
of whole Agency Shares equal to the product of the number of ISI Shares that
were issuable upon exercise of such option immediately prior to the Effective
Time multiplied by 0.6656917 and rounded up to the nearest whole number of
Agency Shares, and (ii) the per share exercise price for the Agency Shares
issuable upon exercise of such assumed option will be equal to the quotient
determined by dividing the exercise price per ISI Share at which such option was
exercisable immediately prior to the Effective Time by 0.6656917, rounded up to
the nearest whole cent. Consistent with the terms of the Quadris Stock Option
Plan and the documents governing the outstanding options under such Plan, the
Merger will not terminate any of the outstanding options under the Quadris Stock
Option Plan or accelerate the vesting of such options or the Agency Shares which
will be subject to those options upon Agency's assumption of the options.
Consistent with the terms of the ISI Stock Option Plan and the documents
governing the outstanding options under such Plan, the Merger will not terminate
any of the outstanding options under the ISI Stock Option Plan upon Agency's
assumption of the options. Consistent with the terms of the ISI Stock Option
Plan and the documents governing certain of the outstanding options under such
Plan, the Merger will accelerate the exercisability or vesting of certain of
such options. It is the intention of the parties that the options so assumed by
Agency qualify, to the maximum extent permissible, following the Effective Time
as incentive stock options as defined in Section 422 of the Code to the extent
such options qualified as incentive stock options prior to the Effective Time.
Within 20 business days after the Effective Time, Agency will issue to each
Person (as defined in Section 7.4 below) who, immediately prior to the Effective
Time was a holder of an outstanding option under the ISI Stock Option Plan or
the Quadris Stock Option Plan, a document evidencing the foregoing assumption of
such option by Agency.
SECTION 2.5. CLOSING. The Closing under this Agreement (the "CLOSING")
shall take place simultaneously with the execution and delivery of this
Agreement, or such other time and date agreed upon by the parties, at the
offices of Xxxxx & Xxxxxxx LLP, 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000. The
date of the Closing is herein referred to as the "CLOSING DATE". Notwithstanding
the foregoing, it is the intention of the parties that for the purposes of
providing Agency with an interest in the profits and losses of ISI, the
effective date of this Agreement shall be the opening of business on April 1,
1999.
ARTICLE III
REPRESENTATIONS OF ISI
ISI represents and warrants to Agency as follows:
SECTION 3.1. EXECUTION AND VALIDITY OF AGREEMENT. ISI has the full
corporate power and authority to enter into this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
The execution, delivery and performance of this Agreement by ISI and the
consummation by ISI of the transactions contemplated hereby have been duly and
validly authorized by the Board of Directors of ISI and the holders of all of
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the issued and outstanding ISI Shares. This Agreement has been duly and validly
executed and delivered by ISI and, assuming due authorization, execution and
delivery by Agency, constitutes the legal, valid and binding obligation of ISI
enforceable against it in accordance with its terms.
SECTION 3.2. NON-CONTRAVENTION; APPROVALS AND CONSENTS.
3.2.1. NON-CONTRAVENTION. Except as set forth on SCHEDULE 3.2, the
execution, delivery and performance by ISI of its obligations hereunder and the
consummation of the transactions contemplated hereby, will not conflict with,
result in a violation or breach of, constitute (with or without notice or lapse
of time or both) a default under, result in or give to any Person any right of
payment or reimbursement, termination, cancellation, modification or
acceleration of, or result in the creation or imposition of any mortgage, lien,
security interest, encumbrance, claim, charge and restriction of any kind or
character (collectively, "LIENS") upon any of the assets or properties of ISI
under, any of the terms, conditions or provisions of (a) the Articles of
Organization or By-laws of ISI, or (b) any statute, law, rule, regulation or
ordinance (collectively, "LAWS"), or any judgment, decree, order, writ,
citation, permit or License (collectively, "ORDERS"), of any court, tribunal,
arbitrator, authority, agency, commission, official or other instrumentality of
the United States, any foreign country or any domestic or foreign state, county,
city or other political subdivision (a "GOVERNMENTAL OR REGULATORY AUTHORITY"),
applicable to ISI or any of its assets or properties, or (c) any note, bond,
mortgage, security agreement, indenture, license, franchise, permit, concession,
contract, lease or other instrument, obligation or agreement of any kind
(collectively, "CONTRACTS") to which ISI is a party or by which ISI or any of
its assets or properties are bound.
3.2.2. APPROVALS AND CONSENTS. Except as set forth on SCHEDULE 3.2.2
and for the filings pursuant to the MGL and NYBCL, no consent, approval or
action of, filing with or notice to any Governmental or Regulatory Authority or
other Person is necessary or required under any of the terms, conditions or
provisions of any Law or Order of any Governmental or Regulatory Authority or
any Contract to which ISI is a party or by which ISI or any of its assets or
properties are bound for the execution and delivery of this Agreement by ISI,
the performance by ISI of its obligations hereunder or the consummation of the
transactions contemplated hereby.
ARTICLE IV
REPRESENTATIONS OF AGENCY
Agency represents and warrants to ISI as follows:
SECTION 4.1. EXECUTION AND VALIDITY OF AGREEMENT. Agency has the full
corporate power and authority to enter into this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
The execution, delivery and performance of this Agreement by Agency and the
consummation by Agency of the transactions contemplated hereby have been duly
and validly authorized by all required corporate action on behalf of Agency and,
to the extent required by applicable law, its shareholders. This Agreement has
been duly and validly executed and delivered by Agency and, assuming due
authorization, execution and delivery by ISI, constitutes the legal, valid and
binding obligations of Agency enforceable against it in accordance with its
terms.
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SECTION 4.2. NON-CONTRAVENTION; APPROVALS AND CONSENTS.
4.2.1. NON-CONTRAVENTION. The execution, delivery and performance by
Agency of its obligations hereunder and the consummation of the transactions
contemplated hereby, will not conflict with, result in a violation or breach of,
constitute (with or without notice or lapse of time or both) a default under,
result in or give to any Person any right of payment or reimbursement,
termination, cancellation, modification or acceleration of, or result in the
creation or imposition of any Lien upon any of the assets or properties of
Agency under, any of the terms, conditions or provisions of (a) the Certificate
of Incorporation or By-laws of Agency, or (b) subject to the taking of the
actions described in Section 4.2.2, any Laws or Orders of any Governmental or
Regulatory Authority, applicable to Agency or any of its assets or properties,
or (c) any Contracts to which Agency is a party or by which Agency or any of its
assets or properties are bound.
4.2.2. APPROVALS AND CONSENTS. Except as set forth on SCHEDULE 3.2 and
for the filings pursuant to the NYBCL and MGL, no consent, approval or action
of, filing with or notice to any Governmental or Regulatory Authority or other
Person is necessary or required under any of the terms, conditions or provisions
of any Law or Order of any Governmental or Regulatory Authority or any Contract
to which Agency is a party or by which Agency or any of its assets or properties
are bound for the execution and delivery of this Agreement by Agency, the
performance by Agency of its obligations hereunder or the consummation of the
transactions contemplated hereby.
SECTION 4.3. AGENCY SHARES. The Agency Shares to be delivered to the
shareholders of ISI pursuant to this Agreement have been duly authorized for
issuance by all requisite corporate action by Agency, and when delivered as
provided herein, will be validly issued and outstanding shares of voting common
stock of Agency, fully paid and non-assessable, and will not be subject to
preemptive rights of any Person.
SECTION 4.4. CAPITALIZATION. Agency has an authorized capitalization
consisting of 25,000,000 shares of common stock, $0.001 par value per share,
issued and subject to issuance as follows:
(i) Immediately prior to the transactions contemplated by this
Agreement, there were issued and outstanding 8,712,909 shares, and there were
allocated to the 1999 Xxxxxx.Xxx Stock Option/Stock Issuance Plan (the "1999
AGENCY PLAN"), an aggregate of 4,800,589 shares (of which options to purchase an
aggregate of 426,456 shares are outstanding under the 1999 Agency Plan as a
result of grants under predecessor plans of Agency, and options to purchase an
aggregate of 1,116,550 shares were granted since the adoption of the 1999 Agency
Plan, such that options to purchase an aggregate of 1,543,006 were outstanding
under the 1999 Agency Plan).
(ii) In connection with the Quadris Merger and ISI Merger, Agency will
issue a total of 2,085,923 shares and warrants to purchase 1,535,624 shares. In
addition, it will assume outstanding options under the Quadris Stock Option Plan
and the ISI Stock Option Plan, which will result in 701,191 Agency Shares being
issued upon the exercise of such assumed options.
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(iii) In connection with the merger of Eagle River Interactive with and
into Agency pursuant to a Merger Agreement of even date herewith (the "ERI
MERGER AGREEMENT"), Agency will issue a total of 1,870,119 shares and warrants
to purchase 2,164,376 shares.
(iv) As a result of all such transactions, there will be issued and
outstanding 12,668,951 shares, warrants to purchase an aggregate of 3,700,000
shares, and there will be 2,244,197 shares issuable upon the exercise of
outstanding options.
No other class of capital stock or series of any class of capital stock or
securities convertible into capital stock of Agency is authorized or
outstanding. Except for the Agency Shares and warrants to be issued and
delivered pursuant to this Agreement, the merger agreement relating to the
Quadris Merger, the ERI Merger Agreement, and except for the options outstanding
under the 1999 Agency Plan and the options assumed pursuant to this Agreement,
the merger agreement relating to the Quadris Merger and the ERI Merger
Agreement, there are no (a) outstanding subscriptions, options, warrants, rights
(including "phantom" stock rights), calls, preemptive rights, or other
contracts, commitments, understandings or arrangements, including any right of
conversion or exchange under any outstanding security, instrument, plan or
agreement (collectively, "OPTIONS"), obligating Agency to issue or sell any
shares of the capital stock of Agency, or to grant, extend or enter into any
Option with respect thereto, or (b) outstanding Options providing for settlement
in cash. Agency has sufficient shares reserved for issuance upon exercise of all
outstanding options under the ISI Stock Option Plan and the Quadris Stock Option
Plan.
ARTICLE V
ACTIONS AT CLOSING BY ISI
Simultaneously herewith:
SECTION 5.1. CERTIFIED RESOLUTIONS. ISI shall have delivered to Agency
a copy of the resolutions of its Board of Directors and shareholders authorizing
the execution, delivery and performance of this Agreement and the transactions
contemplated hereby, certified by an officer of ISI.
SECTION 5.2. INVESTMENT REPRESENTATION CERTIFICATE. Each of the
shareholders of ISI shall have executed and delivered an Investment
Representation Certificate substantially in the form of EXHIBIT B hereto.
SECTION 5.3. RIGHT TO INDEMNIFICATION. Communicade and Agency shall
have entered into an agreement relating to certain indemnification rights
substantially in the form of EXHIBIT C hereto.
SECTION 5.4. EMPLOYMENT AGREEMENTS. Xxxxxxxx X. Xxxxxxxx shall have
entered into an Employment Agreement with Agency substantially in the form of
EXHIBIT E hereto.
SECTION 5.5. NON-SOLICITATION/NON-SERVICING AGREEMENT. Each of the
persons listed on EXHIBIT D-1 hereto shall have executed and delivered a
Non-Solicitation/Non-Servicing Agreement with Agency substantially in the forms
of EXHIBITS D-2 through D-6 hereto.
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ARTICLE VI
ACTIONS AT CLOSING BY AGENCY
Simultaneously herewith:
SECTION 6.1. CERTIFIED RESOLUTIONS. Agency shall have delivered to ISI
a copy of the resolutions of the Boards of Directors and shareholders of Agency
authorizing the execution, delivery and performance of this Agreement and the
transactions contemplated hereby, certified to by the Secretary of Agency.
SECTION 6.2. EMPLOYMENT AGREEMENTS. Each of Chan X. Xxx and Xxxx X.
Xxxxxxx shall have entered into an Employment Agreement with Agency
substantially in such forms as agreed to by them and Agency.
SECTION 6.3. NON-SOLICITATION/NON-SERVICING AGREEMENT. Each of Chan W.
Sub and Xxxx X. Xxxxxxx shall have executed and delivered a
Non-Solicitation/Non-Servicing Agreement with Agency substantially in the forms
of EXHIBITS F-1 and F-2 hereto.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1. SURVIVAL. Notwithstanding any right of any party hereto
fully to investigate the affairs of any other party, and notwithstanding any
knowledge of facts determined or determinable pursuant to such investigation or
right of investigation, each party hereto shall have the right to rely fully
upon the representations, warranties, covenants and agreements of any other
party contained in this Agreement or in any Schedule furnished by another party
or in any certificate delivered at the Closing by any other party. The
respective representations and warranties of ISI and Agency contained in this
Agreement or in any Schedule, or in any certificate delivered at the Closing,
shall expire with, and be terminated and extinguished by, the Merger, and
thereafter, neither ISI nor Agency, nor any officer, director or shareholder
thereof shall be under any liability with respect to any such representation or
warranty or condition or covenant. This Section 7.1 shall have no effect upon
any other obligation of the parties hereto, whether to be performed before or
after the Closing.
SECTION 7.2. EXPENSES. Agency and ISI shall pay all of their own
expenses relating to the transactions contemplated by this Agreement, including,
without limitation, the fees and expenses of their respective counsels,
financial advisors and accountants.
SECTION 7.3. GOVERNING LAW. The interpretation and construction of this
Agreement, and all matters relating hereto, shall be governed by the laws of the
State of New York without reference to its conflict of laws provisions.
SECTION 7.4. "PERSON" DEFINED. "PERSON" shall mean and include an
individual, a partnership, a joint venture, a corporation, a limited liability
company, a trust, an unincorporated organization and a government or other
department or agency thereof.
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SECTION 7.5. CAPTIONS. The Article and Section captions used herein are
for reference purposes only, and shall not in any way affect the meaning or
interpretation of this Agreement.
SECTION 7.6. PUBLIC ANNOUNCEMENTS. Agency and ISI will consult with
each other and Omnicom Group Inc. ("OMNICOM") before issuing any press releases
or otherwise making any public statements with respect to this Agreement or any
of the transactions contemplated hereby and shall not issue any such press
release or make any public statement without the prior consent of the other
party and Omnicom which shall not be unreasonably withheld, except as may be
required by Law or by obligations pursuant to any listing agreements with any
national securities exchange to which Omnicom or Agency is a party.
SECTION 7.7. PARTIES IN INTEREST. This Agreement and the rights and
obligations of the parties hereunder shall not be assignable to any Person
without the written consent of all parties.
SECTION 7.8. SEVERABILITY. In the event any provision of this Agreement
is found to be void and unenforceable by a court of competent jurisdiction, the
remaining provisions of this Agreement shall nevertheless be binding upon the
parties with the same effect as though the void or unenforceable part had been
severed and deleted.
SECTION 7.9. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, all of which taken together shall constitute one instrument.
SECTION 7.10. ENTIRE AGREEMENT. This Agreement, including the Schedules
and Exhibits, and other documents referred to herein which form a part hereof,
contains the entire understanding of the parties hereto with respect to the
subject matter contained herein and therein. This Agreement supersedes all prior
oral and written agreements and understandings between the parties with respect
to such subject matter.
SECTION 7.11. AMENDMENT. This Agreement and the Schedules heretofore
delivered may be amended, supplemented or modified by the parties hereto only by
an agreement in writing signed on behalf of each of the parties hereto following
due authorization at any time.
SECTION 7.12. THIRD PARTY BENEFICIARIES. Each party hereto intends that
this Agreement shall not benefit or create any right or cause of action in or on
behalf of any Person other than the parties hereto and their respective
successors and assigns as permitted under Section 7.7 and for purposes of
Section 7.6, Omnicom.
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IN WITNESS WHEREOF, Agency and ISI have each caused its corporate name
to be hereunto subscribed by its officer thereunto duly authorized on the day
and year first above written.
XXXXXX.XXX LTD.
By: /s/ Xxxxxxx Xxxxx
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Xxxxxxx Xxxxx
Chief Financial Officer
INTERACTIVE SOLUTIONS
INCORPORATED
By: /s/ Xxxxx Xxxxxxx
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Xxxxx Xxxxxxx
Vice President
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