EXHIBIT 10.7
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AGREEMENT AND PLAN OF MERGER
Dated as of August 1, 1997
AMONG
ANSWERTHINK CONSULTING GROUP, INC.
RELATIONAL TECHNOLOGIES, INC.
AND
ALL OF THE SHAREHOLDERS
OF
RELATIONAL TECHNOLOGIES, INC.
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TABLE OF CONTENTS
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Page
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ARTICLE I
THE MERGER.................................................................................. 1
SECTION 1.1. The Merger............................................................... 1
SECTION 1.2. Closing.................................................................. 1
SECTION 1.3. Effective Time........................................................... 1
SECTION 1.4. Effects of the Merger.................................................... 1
SECTION 1.5. Articles of Incorporation and By-Laws.................................... 1
SECTION 1.6. Directors................................................................ 2
SECTION 1.7. Officers................................................................. 2
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES.......................................... 2
SECTION 2.1. Effect on Capital Stock.................................................. 2
SECTION 2.2. Exchange of Certificates and Actions at Closing.......................... 2
SECTION 2.3. Appointment of Seller's Agent............................................ 3
ARTICLE III
REPRESENTATIONS AND WARRANTIES.............................................................. 4
SECTION 3.1. Representations and Warranties of the Company............................ 4
SECTION 3.2. Representations and Warranties of Purchaser.............................. 11
SECTION 3.3. Representations and Warranties of Sellers................................ 13
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS................................................... 14
SECTION 4.1. Conduct of Business; Other Actions; and Certain Tax Matters.............. 14
SECTION 4.2. No Solicitation.......................................................... 15
ARTICLE V
ADDITIONAL AGREEMENTS....................................................................... 16
SECTION 5.2. Accounting and Tax Matters............................................... 16
SECTION 5.3. Access to Information.................................................... 16
SECTION 5.4. Reasonable Efforts....................................................... 17
SECTION 5.5 Public Announcements..................................................... 17
SECTION 5.6. Affiliates............................................................... 17
SECTION 5.7. Employment Agreements.................................................... 17
SECTION 5.8. Employee Restricted Stock Plan........................................... 17
SECTION 5.9. Expenses................................................................. 17
SECTION 5.10. Restrictions on Transfer of Purchaser Common Stock....................... 17
SECTION 5.11. Tax Matters.............................................................. 19
SECTION 5.12. Indemnification Waiver................................................... 20
SECTION 5.13. Shareholders' Agreement.................................................. 20
SECTION 5.14. Bonus Plans.............................................................. 20
ARTICLE VI
CONDITIONS PRECEDENT........................................................................ 21
SECTION 6.1. Conditions to Each Party's Obligation To Effect the Merger............... 21
SECTION 6.2. Conditions to Obligations of Purchaser................................... 21
SECTION 6.3. Conditions to Obligations of the Company................................. 21
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ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER...............................................................22
SECTION 7.1. Termination..................................................................22
SECTION 7.2. Effect of Termination........................................................22
SECTION 7.3. Amendment....................................................................22
SECTION 7.4. Extension; Waiver............................................................23
ARTICLE VIII
GENERAL PROVISIONS..............................................................................23
SECTION 8.1. Survival of Terms; Indemnification...........................................23
SECTION 8.2. Notices......................................................................25
SECTION 8.3. Definitions..................................................................26
SECTION 8.4. Interpretation...............................................................28
SECTION 8.5. Counterparts.................................................................28
SECTION 8.6. Entire Agreement; No Third-Party Beneficiaries...............................28
SECTION 8.7. Governing Law................................................................28
SECTION 8.8. Assignment...................................................................28
SECTION 8.9. Enforcement..................................................................28
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THE AGREEMENT AND PLAN OF MERGER (the "Agreement") is made as of August 1,
1997, among AnswerThink Consulting Group, Inc., a Florida corporation (the
"Purchaser"), Relational Technologies, Inc., a Georgia corporation (the
"Company"), and all of the shareholders of the Company as listed on Exhibit "A"
attached hereto (collectively, the "Sellers").
WHEREAS the respective Boards of Directors of the Purchaser and the Company
have approved the merger of the Company into the Purchaser (the "Merger"), upon
the terms and subject to the conditions set forth in this Agreement, whereby
each issued and outstanding share of common stock, no par value, of the Company
("Company Common Stock") will be converted into the right to receive common
stock, par value $.001 per share, of the Purchaser ("Purchaser Common Stock");
and
WHEREAS the Purchaser and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger, said representations, warranties, covenants and agreements made and
given to induce the other party to enter into this Agreement and consummate the
transactions contemplated by this Agreement in reliance thereon, and also to
prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties hereto agree
as follows:
ARTICLE I
THE MERGER
SECTION 1.1. The Merger. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the Florida Business Corporation
Act (the "FBCA") and the Georgia Business Corporation Code (the "GBCC"), the
Company shall be merged with and into the Purchaser at the Effective Time (as
hereinafter defined in Section 1.3). Following the Merger, the separate
corporate existence of Company shall cease and the Purchaser shall continue as
the surviving corporation (the "Surviving Corporation").
SECTION 1.2. Closing. The closing of the Merger (the "Closing") will take
place at 10:00 a.m. on a date to be specified by the parties, which shall be no
later than the second business day after satisfaction or waiver of the
conditions set forth in Article VI (the "Closing Date"), at the offices of
Greenberg, Traurig, Hoffman, Lipoff, Xxxxx & Xxxxxxx, P.A., 0000 Xxxxxxxx
Xxxxxx, Xxxxx, Xxxxxxx, 00000, unless another date, time or place is agreed to
in writing by the parties hereto, provided that the Closing shall not occur, in
any event, after August 5, 1997.
SECTION 1.3. Effective Time. As soon as practicable on the Closing Date,
the parties shall deliver articles of merger or other appropriate documents (the
"Certificate of Merger"), complying with the relevant provisions of the FBCA to
the Florida Department of State for filing as required under the FBCA and shall
make all other filings or recordings required under the FBCA, and the parties
shall deliver the Certificate of Merger and such other appropriate documents
complying with the relevant provisions of the GBCC to the Georgia Secretary of
State for filing under the GBCC and shall make all other filings or recordings
required under the GBCC. The Merger shall become effective at such time as the
Certificate of Merger is duly filed with the Florida Department of State and the
Georgia Secretary of State, or at such other time as the Purchaser and the
Company shall agree should be specified in the Certificate of Merger (the time
the Merger becomes effective being the "Effective Time").
SECTION 1.4. Effects of the Merger. (a) The Merger shall have the effects
set forth in Section 607.1106 of the FBCA.
(b) The parties intend that the Merger qualify as a tax-free
reorganization pursuant to Section 368 of the Internal Revenue Code of 1986, as
amended (the "Code").
SECTION 1.5. Articles of Incorporation and By-Laws. (a) The Articles of
Incorporation of the Purchaser, as in effect at the Effective Time shall be the
Articles of Incorporation of the Surviving Corporation until thereafter changed
or amended as provided therein or by applicable law.
(b) The By-laws of the Purchaser as in effect at the Effective
Time shall be the By-laws of the Surviving Corporation until thereafter changed
or amended as provided therein or by applicable law.
SECTION 1.6. Directors. The directors of the Purchaser at the Effective
Time shall be the directors of the Surviving Corporation, until the earlier of
their resignation or removal or until their respective successors are duly
elected and qualified, as the case may be.
SECTION 1.7. Officers. The officers of the Purchaser at the Effective Time
shall be the officers of the Surviving Corporation, until the earlier of their
resignation or removal or until their respective successors are duly elected and
qualified, as the case may be.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
SECTION 2.1. Effect on Capital Stock. As of the Effective Time, by virtue
of the Merger and without any action on the part of the holder of any shares of
Company Common Stock or any shares of Purchaser Common Stock:
(a) Cancellation of Treasury Stock. Each share of Company Common
Stock that is held in treasury of the Company immediately prior to the Effective
Time shall automatically be canceled and retired and shall cease to exist, and
(b) Conversion of Company Common Stock. Notwithstanding the
following or the provisions of Section 2.2(c), in no event shall the Purchaser
be required to issue more than 1,444,900 shares of Purchaser Common Stock (the
"Merger Consideration") pursuant to the provisions of this Section 2.1(b).
Subject to Section 2.2(e), each issued and outstanding share of Company Common
Stock (other than shares to be canceled in accordance with Section 2.1(a)) shall
be converted into the right to receive 14.449 issued, fully paid and
nonassessable shares of Purchaser Common Stock (the "Exchange Ratio"). As of the
Effective Time, all such shares of Company Common Stock shall no longer be
outstanding and shall automatically be canceled and retired and shall cease to
exist, and each holder of a certificate representing any such shares of Company
Common Stock shall cease to have any rights with respect thereto. If prior to
the Effective Date, the Purchaser should split or combine the shares of
Purchaser Common Stock, or pay a stock dividend or other stock distribution in
shares of Purchaser Common Stock, then the Exchange Ratio will be appropriately
adjusted to reflect such split, combination, dividend or other distribution.
SECTION 2.2. Exchange of Certificates and Actions at Closing. (a) At the
Closing, the Company and Sellers shall deliver to the Purchaser:
(i) the various certificates, instruments and documents
required to be delivered to the Purchaser as a condition precedent to the
Purchaser's obligations hereunder, including certificates representing all of
the outstanding shares of Company Common Stock (the "Certificates") duly
endorsed (or accompanied by duly executed stock powers), for transfer to
Purchaser;
(ii) the certificate as required by Section 6.2(a); and
(iii) employment agreements executed by those persons listed on
Exhibit "B", attached hereto, and substantially in the form of Exhibit "C",
attached hereto, on said terms as shall be set forth by Purchaser (collectively,
the "Employment Agreements").
(b) At Closing, the Purchaser shall deliver to the Company and the
Sellers:
(i) the various certificates, instruments and documents
required to be delivered to the Company and the Sellers by the Purchaser as a
condition precedent to the Company's obligations hereunder;
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(ii) the certificate as required by Section 6.3(a);
(iii) the Registration Agreement in the form attached hereto as
Exhibit "E";
(iv) the Merger Consideration in accordance with Section 2.1;
and
(v) the Employment Agreements.
(c) Exchange Procedures. Upon surrender of a Certificate for
cancellation and subject to the limitation of Section 2.1(b), the holder of such
Certificate shall be entitled to receive in exchange therefor a certificate
representing that number of shares of Purchaser Common Stock (rounded to the
nearest number of whole shares, with any one-half share being rounded up) which
such holder has the right to receive pursuant to the provisions of this Article
II after taking into account all the shares of Company Common Stock then held by
such holder under all such Certificates so surrendered, and the Certificate so
surrendered shall forthwith be canceled. Until surrendered as contemplated by
this Section 2.2(c), each Certificate shall be deemed at any time after the
Effective Time to represent only the right to receive upon such surrender the
certificate representing shares of Purchaser Common Stock.
(d) No Further Ownership Rights in Company Common Stock. All shares
of Purchaser Common Stock issued upon the surrender for exchange of shares of
Company Common Stock in accordance with the terms hereof shall be deemed to have
been issued in full satisfaction of all rights pertaining to such shares of
Company Common Stock, subject, however, to the Surviving Corporation's
obligation to pay any dividends or make any other distributions with a record
date prior to the Effective Time which may have been declared, made or accrued
by the Company on such shares of Company Common Stock in accordance with the
terms of this Agreement or prior to the date of this Agreement and which remain
unpaid at the Effective Time, and there shall be no further registration of
transfers on the stock transfer books of the Surviving Corporation of the shares
of Company Common Stock which were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates are presented to the
Surviving Corporation for any reason, they shall be canceled and exchanged as
provided in this Article II.
(e) No Fractional Shares. No certificates representing fractional
shares of Purchaser Common Stock shall be issued upon the surrender for exchange
of Certificates, and such fractional share interests will not entitle the owner
thereof to vote or to any rights of a stockholder of Purchaser.
(f) Lost Certificates. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
the Surviving Corporation, the posting by such person of a bond in such
reasonable amount as the Surviving Corporation may direct as indemnity against
any claim that may be made against it with respect to such Certificate, the
Surviving Corporation will issue in exchange for such lost, stolen or destroyed
Certificate the shares of Purchaser Common Stock pursuant to this Agreement.
(g) Tax-Free Reorganization. The parties intend that the Merger
qualify as a tax-free reorganization pursuant to Section 368 of the Code. Each
party agrees to report the transaction to the Internal Revenue Service and any
other relevant taxing authority authorities consistent with such treatment.
SECTION 2.3. Appointment of Seller's Agent (a) Each of the Sellers hereby
irrevocably appoints Xxxxx Xxxxx (the "Seller's Agent") as such Sellers'
representative, attorney-in-fact and agent, with full power and authority to
execute and deliver and to receive, on behalf of such Sellers, all certificates,
statements, notices, approvals, extensions, waivers, undertakings and amendments
to this Agreement required or permitted to be made, given or delivered hereunder
or in connection with the transactions contemplated hereunder. Upon the
resignation of the foregoing person, whether by death, disability or otherwise,
such person shall be replaced by another person selected by the affirmative vote
of the Sellers holding a majority of the Sellers' shares in Purchaser. Any
person who becomes a replacement Sellers' Agent shall execute a counterpart of
this Agreement to evidence his or her agreement with the terms and conditions of
this Agreement.
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(b) The Sellers' Agent shall, after the Closing, (i) receive all
information and notices required under this Agreement on behalf of Sellers; (ii)
take, on behalf of Sellers, any action it may deem appropriate with respect to
any dispute arising out of or relating to this Agreement; and (iii) execute and
deliver all instruments and documents of every kind incident to the foregoing.
(c) The Sellers' Agent may confer with counsel with respect to any
question relating to his duties or responsibilities under this Agreement. The
Sellers' Agent shall not be liable or responsible for anything done or omitted
to be done by it in good faith or on the advice or counsel.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Representations and Warranties of the Company. Each of the
Sellers and the Company jointly and severally represents and warrants to the
Purchaser as follows:
(a) Organization, Standing and Corporate Power. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the state of Georgia and has the requisite corporate power and authority to
carry on its business as now being conducted. To the best knowledge of the
Company, the Company is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification or licensing
necessary, other than in such jurisdictions where the failure to be so qualified
or licensed or to be in good standing (individually or in the aggregate) would
not have a material adverse effect on the Company. The Company has delivered to
the Purchaser complete and correct copies of its articles of incorporation and
by-laws (or similar organizational documents), as amended to the date hereof.
The Company does not own, directly or indirectly, any capital stock or other
ownership interest in any corporation, partnership, joint venture or other
entity.
(b) Capital Structure. The authorized capital stock of the Company
consists of 1,000,000 shares of Company Common Stock and no shares of preferred
stock. As of the date of this Agreement, 100,000 shares of Company Common Stock
were issued and outstanding, and no shares of Company Common Stock were held by
the Company in its treasury. Except as set forth above, as of the date of this
Agreement, no shares of capital stock or other voting securities of the Company
were issued, reserved for issuance or outstanding. All outstanding shares of
capital stock of the Company are, when issued, duly authorized, validly issued,
fully paid and nonassessable and not subject to preemptive rights. There are no
bonds, debentures, notes or other indebtedness of the Company having the right
to vote (or convertible into securities having the right to vote) on any matters
on which shareholders of the Company may vote. Except as set forth above, as of
the date of this Agreement, there are no securities, options, warrants, calls,
rights, commitments, agreements, arrangements or undertakings of any kind to
which the Company is a party or by which any of them is bound obligating the
Company to issue, deliver or sell, or cause to be issued, delivered or sold,
additional shares of capital stock or other voting securities of the Company or
obligating the Company to issue, grant, extend or enter into any such security,
option, warrant, call, right, commitment, agreement, arrangement or undertaking.
As of the date of this Agreement, there are no outstanding contractual
obligations of the Company to repurchase, redeem or otherwise acquire any shares
of capital stock of the Company.
(c) Authority; Noncontravention.
(i) The Company has the requisite power and authority to enter
into this Agreement and to consummate the transactions contemplated by it. The
execution and delivery of this Agreement by the Company and the consummation by
the Company of the transactions contemplated by this Agreement have been duly
authorized by all necessary corporate action on the part of the Company. This
Agreement has been duly executed and delivered by the Company and each of the
Sellers and constitutes a valid and binding obligation of the Company and each
of the Sellers, enforceable against the Company and each of the Sellers in
accordance with its terms.
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(ii) Except as set forth on Schedule 3.1(c), the execution and
delivery of this Agreement does not, and the consummation of the transactions
contemplated by this Agreement and compliance with the provisions of this
Agreement will not, conflict with, or result in any violation of, or constitute
a default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any obligation or to
loss of a material benefit under, or result in the creation of any Lien upon any
of the properties or assets of the Company under, any provision of (A) the
articles of incorporation or by-laws of the Company (B) any loan or credit
agreement, note, bond, mortgage, indenture, lease, contract or other agreement,
instrument, permit, concession, franchise or license applicable to the Company
or its properties or assets or (C) subject to the governmental filings and other
matters referred to in the following sentence, any (x) statute, law, ordinance,
rule or regulation or (y) judgment, order or decree applicable to the Company or
its properties or assets, other than, in the case of clauses (B) and (C), any
such conflict, violation, default or failure to file which would not have a
material adverse effect on the Company. To the best knowledge of the Company, no
consent, approval, order or authorization of, or registration, declaration or
filing with, any Federal, state or local government or any court, tribunal,
administrative agency or commission or other governmental authority or agency,
domestic or foreign (a "Governmental Entity"), is required by or with respect to
the Company or any the Sellers in connection with the execution and delivery of
this Agreement by the Company or the Sellers or the consummation by the Company
or any of the Sellers of the transactions contemplated by this Agreement to be
consummated by it, except for (i) to effectuate the Merger, the filing of the
Certificate of Merger with the Florida Department of State and the Georgia
Secretary of State and appropriate documents with the relevant authorities of
other states in which the Company is qualified to do business, and (ii) such
other consents, approvals, orders, authorizations, registrations, declarations
and filings as may be required, the failure of which to be obtained or made
would not, individually or in the aggregate, have a material adverse effect on
the Company or any of the Sellers or prevent or materially delay the
consummation of any of the transactions contemplated by this Agreement.
(d) Financial Statements. Attached as Schedule 3.1(d) hereto are
audited year-end balance sheets and statements of operations, changes in
shareholders' equity and cash flow of the Company as of December 31, 1996 for
the fiscal year 1996 and an unaudited balance sheet for the 3-month period
commencing January 1, 1997 and ending March 31, 1997 and unaudited statements of
operations of the Company for the 3-month period then ended. The December 31,
1996 balance sheets and the notes thereto fairly present the financial position
of the Company at the respective dates thereof, and such statements of
operations, changes in shareholders' equity and cash flow and the notes thereto
fairly present the results of operations for the periods and the financial
condition at the end of the period therein referred to, all in accordance with
generally accepted accounting principles ("GAAP") (except as stated therein or
in the notes thereto and permitting normal year end adjustments for interim
statements). The balance sheet for the 3-month period commencing January 1, 1997
and ending March 31, 1997 were internally prepared by management of the Company
and fairly present the financial position of the Company. The balance sheet and
statements of operations, changes in shareholders' equity and cash flow as at
December 31, 1996 and the notes thereto are herein collectively referred to as
the "Financial Statements" and December 31, 1996 is herein referred to as the
"Financial Statement Date."
(e) Liabilities. Except as set forth in Schedule 3.1(e) hereto, the
Company does not have any indebtedness, obligation or liability (whether
accrued, absolute, contingent, unliquidated or otherwise, known or unknown to
the Company, whether due or to become due) arising out of transactions entered
into at or prior to the date of this Agreement, or any state of facts existing
at or prior to the date of this Agreement, other than: (i) liabilities set
forth in the Financial Statements (including any notes thereto), or (ii)
liabilities and obligations which have arisen after the Financial Statement Date
in the ordinary course of business (none of which is a liability resulting from
a breach of contract, breach of warranty, tort, infringement or other claims).
All liabilities of the Company are, and as of the Closing Date, will have been
incurred in the ordinary course of the Company's business.
(f) Absence of Certain Changes or Events. Except as expressly
contemplated by this Agreement or in Schedule 3.1(f), since the Financial
Statement Date, the Company has conducted its business only in the ordinary
course, and there has not been (i) any material adverse change with respect to
the Company, (ii) any declaration, setting aside or payment of any dividend or
other distribution (whether in cash, stock or property) with respect to any of
the Company's capital stock, (iii) combination or reclassification of any of its
capital stock or any issuance or the authorization of any issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock, (iv) (x) any granting by the Company to any officer of the
Company of any increase in compensation, (y) any granting by the Company to any
officer of any increase in severance or termination pay or (z) any entry by the
Company into any employment, severance or termination agreement with any
officer, (v) any
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change in accounting methods, principles or practices by the Company, except
insofar as may have been required by a change in GAAP, or (vi) any sale,
agreement to sell or option to purchase or sell the Company or any of its assets
other than in the ordinary course of business in a manner consistent with past
practices.
(g) Litigation. Except as disclosed in Schedule 3.1(g), there is no
suit, action or proceeding pending or, to the best knowledge of the Company,
contemplated or threatened against the Company, nor is there any judgment,
decree, injunction, rule or order of any Governmental Entity or arbitrator
outstanding against the Company.
(h) Compliance with Laws. The Company is, to the best knowledge of
the Company, in compliance with all applicable statutes, laws, ordinances,
regulations, rules, judgments, decrees and orders of any Governmental Entity
applicable to its business or operations, except when such failure to comply
would not have a material adverse effect. The Company has in effect, to the best
knowledge of the Company, all Federal, state, local and foreign governmental
approvals, authorizations, certificates, filings, franchises, licenses, notices,
permits and rights ("Permits"), necessary for it to own, lease or operate its
properties and assets and to carry on its business as now conducted, and, to the
best knowledge of the Company, there has occurred no default under any such
Permit which, individually or in the aggregate, would have a material adverse
effect on the Company.
(i) Benefit Plan Compliance.
(i) Schedule 3.1(i) contains a list and brief description of all
"employee pension benefit plans" (as defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) (sometimes
referred to herein as "Pension Plans"), "employee welfare benefit plans" (as
defined in Section 3(1) of ERISA) and all other Benefit Plans (as defined in
Section 3.1(j)) maintained, or contributed to, or required to be contributed to,
by the Company or any other person or entity that, together with the Company, is
treated as a single employer under Section 414(b), (c), (m) or (a) of the Code
(the Company and each such other person or entity, a "Commonly Controlled
Entity") for the benefit of any current or former employees, officers or
directors of the Company. The Company has delivered or made available to the
Purchaser true, complete and correct copies of (1) each Benefit Plan (or, in the
case of any unwritten Benefit Plans, descriptions thereof), (2) the most recent
annual report on Form 5500 filed with the Internal Revenue Service with respect
to each Benefit Plan (if any such report was required), (3) the most recent
summary plan description for each Benefit Plan for which such summary plan
description is required and (4) each trust agreement and group annuity contract
relating to any Benefit Plan. Each Benefit Plan has been administered in all
material respects in accordance with its terms and is in compliance with the
applicable provisions of ERISA, the Code, all other applicable laws and all
applicable collective bargaining agreements except where the failure to comply
would not be reasonably expected to result in a material adverse effect on the
Company.
(ii) Except as disclosed in Schedule 3.1(i), all Pension Plans
have been the subject of determination letters from the Internal Revenue
Service, or have filed a timely application therefor, to the effect that such
Pension Plans are qualified and exempt from Federal income taxes under Section
401 (a) and 501 (a), respectively, of the Code, and no such determination letter
has been revoked nor has any such Pension Plan been amended since the date of
its most recent determination letter or application therefor in any respect that
would adversely affect its qualification or materially increase its costs.
(iii) No Commonly Controlled Entity has incurred any liability
which has not been fully paid to a Pension Plan under Title IV of ERISA (other
than for contributions not yet due) or to the Pension Benefit Guaranty
Corporation (other than for payment of premiums not yet due) that, when
aggregated with other such liabilities, would result in a material adverse
effect on the Company.
(iv) As of the most recent valuation date for each Pension Plan
that is a "defined benefit pension plan" (as defined in Section 3 (35) of ERISA
subject to Title IV of ERISA (other than a multiemployer plan) (hereinafter a
"Defined Benefit Plan")), there was not any material amount of "unfunded benefit
liabilities" (as defined in Section 4001(a)(18) of ERISA) under such Defined
Benefit Plan, and the Company is not aware of any facts or circumstances that
would materially adversely change the funded status of any such Defined Benefit
Plan. The Company has furnished or made available to Purchaser the most recent
actuarial report or
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valuation with respect to each Defined Benefit Plan and has no reason to believe
that the conclusions expressed in those reports or valuations are incorrect.
(v) No Commonly Controlled Entity has been required at any
time within the five calendar years preceding the date hereof or is required
currently to contribute to any "multiemployer plan" (as defined in Section
4001(a)(3) of ERISA) or has withdrawn from any multiemployer plan where such
withdrawal has resulted or would result in any "withdrawal liability" (within
the meaning of Section 4201 of ERISA) that has not been fully paid.
(vi) With respect to any Benefit Plan that is an employee
welfare benefit plan, except as disclosed in Schedule 3.1(i), (1) no such
Benefit Plan is funded through a "welfare benefits fund," as such term is
defined in Section 419(e) of the Code, and (2) each such Benefit Plan that is a
"group health plan," as such term is defined in Section 5000(b)(1) of the Code,
complies substantially with the applicable requirements of Section 4980B(f) of
the Code.
(vii) Except as provided in Section 5.9(i) or as provided by the
Company's (S)401(k) plan, or as listed on Schedule 3.1(i), no employee of the
Company will be entitled to any additional compensation or benefits or any
acceleration of the time of payment or vesting of any compensation or benefits
under any Benefit Plan as a result of the transactions contemplated by this
Agreement.
(viii) Except as set forth in Schedule 3.1(i) or as contemplated
under Section 5.8, neither the Company nor any person acting on behalf of the
Company has, in contemplation of any corporate transaction involving Purchaser,
issued any written communication to, or otherwise made or entered into any
legally binding commitment with, any employees of the Company to the effect
that, following the date hereof, (i) any benefits or compensation provided to
such employees under existing Benefit Plans or under any other plan or
arrangement will be enhanced, (ii) any new plans or arrangements providing
benefits or compensation will be adopted, (iii) any Benefit Plans will be
continued for any period of time, or (iv) any plans or arrangements provided by
Purchaser will be made available to such employees.
(j) Absence of Changes in Benefit Plans; Labor Relations. There has
not been any adoption or amendment in any material respect by the Company of any
collective bargaining agreement or any bonus, pension, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock purchase, stock
option, phantom stock, retirement, vacation, severance, disability, death
benefit, hospitalization, medical or other plan, arrangement or understanding in
each case maintained or contributed to, or required to be maintained or
contributed to, by the Company for the benefit of any current or former
employee, officer or director of the Company (each, a "Benefit Plan" and,
collectively, "Benefit Plans"). Except as set forth in Schedule 3.1(j), there
exist no employment, severance, termination or indemnification agreements,
arrangements or understandings between the Company and any current or former
employee, officer or director of the Company or any consulting agreement with
the Company with respect to which the aggregate liability thereunder exceeds
$5,000 or which cannot be cancelled by the Company without penalty on 30 days'
or less notice.
(k) Taxes. Except as disclosed in Schedule 3.1(k), the Company and
each affiliated, consolidated, combined or unitary group of which the Company is
a member (an "Affiliated Group"), has filed all tax returns and reports required
to be filed by it and has paid (or the Company has paid on its behalf), all
taxes required to be paid by it (other than taxes, the failure to pay which
would not, individually or in the aggregate, have a material adverse effect on
the Company), for all taxable periods and portions thereof ending prior to the
date of this Agreement. The Company has not received any notice of a deficiency
for any taxes that have been proposed, claimed, asserted or assessed against the
Company or any Affiliated Group, and no requests for waivers of the time to
assess any taxes are pending. None of the assets or properties of the Company is
subject to any tax lien. As used in this Agreement, "taxes" shall include all
Federal, state, local and foreign income, property, sales, excise, intangible
and other taxes, tariffs or governmental charges of any nature whatsoever,
including any interest, penalties or additions with respect thereto.
(l) Certain Agreements. Except as set forth in Schedule 3.1(l)
hereto, as of the date of this Agreement, the Company is not a party to any
written or oral contract including:
7
(i) Contract relating to loans to officers, directors, or
affiliates of the Company;
(ii) Contract relating to the borrowing of money or the
mortgaging, pledging or otherwise placing a Lien on any asset of the Company;
(iii) Guarantee of any obligation, any "keep well" or other
agreement to maintain a financial condition of another person.;
(iv) Contract under which the Company has advanced or loaned or
is obligated to advance or loan any person amounts in the aggregate exceeding
$10,000;
(v) Contract under which the Company is lessee of or holds or
operates any property, real or personal, owned by any other party, except for
any lease of real or personal property under which the aggregate annual rental
payments do not exceed $5,000;
(vi) Contract pursuant to which the Company is lessor of or
permits any third party to hold or operate any property, real or personal, owned
or controlled by the Company;
(vii) Contract or group of related contracts with the same party
or group of affiliated parties the performance of which involves annual
consideration in excess of $5,000;
(viii) Retainer agreements or any similar contracts relating to
services provided, or to be provided, by the Company;
(ix) Assignment, license, indemnification or contract with
respect to any intangible property (including, without limitation, any
Proprietary Rights as defined in Section 3.1(p));
(x) Warranty contract with respect to its services rendered;
(xi) Contract under which it has granted any person any
registration rights (including piggyback rights) with respect to any of the
Company's securities;
(xii) Contract or non-competition provision in any contract
prohibiting it from freely engaging in any business or competing anywhere in the
world;
(xiii) Contract for the purchase, acquisition or supply of
property, whether for resale or otherwise in excess of $10,000;
(xiv) Employment, consulting, sales, commissions, advertising or
marketing contracts; or
(xv) Shareholder agreements or contracts relating to the equity
of the Company.
The Company has performed in all material respects all obligations required
to be performed by it and is not in default in any respect under or in breach of
nor in receipt of any claim of default or breach under any contract to which it
is subject; no event has occurred which with the passage of time or the giving
of notice or both would result in a default, breach or event of noncompliance
under any contract to which the Company is subject; the Company has a present
expectation or intention of fully performing all such obligations; the Company
has no knowledge of any breach or anticipated breach by the other parties to any
contract to which it is a party.
(m) Brokers. No broker, investment banker, financial advisor or other
person is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of the Company.
8
(n) Investment Company. The Company is not an "investment company" as
defined in Section 368(a)(2)(F)(iii) and (iv) of the Code.
(o) Title and Related Matters. (i) Except as set forth in Schedule
3.1(o) hereto, the Company has and as of the Closing Date will have good and
marketable title to all real and personal property and other assets reflected in
the Financial Statements or acquired after the Financial Statement Date, free
and clear of all Liens, except Permitted Liens. All properties used in the
Company's business operations as of the Financial Statement Date are reflected
in the Financial Statements and are reflected therein in accordance with and to
the extent required by GAAP, except as to those assets which are leased. There
has not been since the Financial Statement Date and will not be prior to the
Closing Date, any sale, lease, or any other disposition or distribution by the
Company of any of its assets or properties, now or hereafter owned by it, except
transactions in the ordinary and regular course of business or as otherwise
consented to by the Purchaser. After the Closing, the Purchaser will own, or
have the unrestricted right to use all properties and assets that are currently
used in connection with the Company's business.
(1) All the Company's leases are in full force and effect,
and valid and enforceable in accordance with their respective terms. The Company
has not received any notice of any, and to the best knowledge of the Company
there exists no event of default or event which constitutes or would constitute
(with notice or lapse of time or both) a default by the Company or any other
person under any lease.
(2) All rent and other amounts due and payable with respect
to the Company's leases have been paid through the date of this Agreement and
all rent and other amounts due and payable with respect to the Company's leases
which are due and payable on or prior to the Closing Date will have been paid
prior to the Closing Date.
(3) All lessors under the Company's real property leases
have consented (where such consent is necessary) or prior to Closing will have
consented (where such consent is necessary) to the consummation of the
transactions contemplated by this Agreement without requiring material
modification in the rights or obligations thereunder.
(4) The Company has received no written notice that the
landlord with respect to any real property lease would refuse to renew such
lease upon expiration of the period thereof upon substantially the same terms,
except for rent increases consistent with past experience or market rentals.
(ii) Except as set forth in Schedule 3.1(o) hereto, the
buildings, structures and improvements included within the real property owned
by the Company (collectively, the "Improvements") comply in all material
respects with all applicable restrictions, building ordinances and zoning
ordinances and all regulations, and no material alteration, repair, improvement
or other work which could give rise to a Lien has been performed in respect to
such Improvements within the last 120 days. The Improvements and the mechanical
systems situated therein, including without limitation the heating, electrical,
air conditioning and plumbing systems, are in good operating condition and
repair, ordinary wear and tear excepted, and are adequate and suitable for the
purposes for which they are presently being used, and the roof of each
Improvement is in satisfactory condition and is not in need of current repair.
The real property owned by the Company and its continued use, occupancy and
operation as currently used, occupied and operated does not constitute a
nonconforming use under any regulation or order affecting the real property
(other than possible set back violations, none of which will have a material
adverse effect on the Company's real property or its continued use, occupancy
and operation as currently used, occupied and operated), and the continued
existence, use, occupancy and operation of each Improvement, and the right and
ability to repair and/or rebuild such Improvements in the event of casualty, is
not dependent on any special permit, exception, approval or variance. There is
no pending, and to the best knowledge of the Company, there is no threatened or
proposed proceeding or governmental action to modify the zoning classification
of, or to take by the power of eminent domain (or to purchase in lieu thereof),
or to classify as a landmark, or to impose special assessments on, or otherwise
to take or restrict in any way the right to use, develop or alter, all or any
part of the Company's real property which would have a material adverse effect.
There are no encroachments upon any of the Company's real property, and no
portion of any Improvement owned by the Company, encroaches upon any property
not included within the Company's real property or upon the area of any easement
affecting the Company's real property. Each Improvement has direct access,
adequate for the operation of the business of the Company, in the ordinary
course, to a public street adjoining the Company's real property on which such
9
Improvement is situated, and no existing way of access to any Improvement
crosses or encroaches upon any property or property interest not owned by the
Company.
(p) Intellectual Property.
(i) Schedule 3.1(p) hereto sets forth a complete and accurate
list of all of the Company's Proprietary Rights. "Proprietary Rights" means all
(1) patents, patent applications, patent disclosures and all related
continuation, continuation-in-part, divisional, reissue, reexamination, utility,
model, certificate of invention and design patents, patent applications,
registrations and applications for registrations, (2) trademarks, service marks,
trade dress, logos, trade names and corporate names and registrations and
applications for registration thereof, (3) copyrights and registrations and
applications for registration thereof, (4) mask works and registrations and
applications for registration thereof, (5) computer software, data and
documentation, (6) trade secrets and confidential business information, whether
patentable or unpatentable and whether or not reduced to practice, know-how,
manufacturing and production processes and techniques, research and development
information, copyrightable works, financial, marketing and business data,
pricing and cost information, business and marketing plans and customer and
supplier lists and information, (7) client or customer and prospective client or
customer lists or information relating to the same, (8) other Proprietary Rights
relating to any of the foregoing, and (9) copies and tangible embodiments
thereof. The Company has delivered to the Purchaser correct and complete copies
of all Proprietary Rights (that are in written form) as amended to date and has
made available to the Purchaser correct and complete copies of all other written
documentation evidencing ownership of, and any claims relating to, each such
item. The Company has taken all reasonable measures to protect the proprietary
nature of each Proprietary Right, and to maintain in confidence all trade
secrets and confidential information that it owns or uses.
(ii) No person has made any claim or demand that challenges the
rights of the Company with respect to the Proprietary Rights or claims that the
same infringes on the rights of others. To the best knowledge of the Company,
except as specified in Schedule 3.1(p) hereto, (x) no other person has any
rights to any of the Proprietary Rights owned or used by the Company, (y) no
other person is infringing, violating or misappropriating any such proprietary
right that the Company owns or uses, and (z) no Proprietary Right is subject to
any outstanding order or claim.
(iii) The current software applications used by the Company in
the operation of its business, as set forth and described on Schedule 3.1(p)
hereto (the "Software"), to the extent they have been designed or developed by
the Company's management information or development staff or by consultants on
the Company's behalf, is original and capable of copyright protection in the
United States, and the Company has complete rights to and ownership of such
Software. No part of any such Software is an imitation or copy of, or infringes
upon, the software of any other person or violates or infringes upon any common
law or statutory rights of any other person, including, without limitation,
rights relating to defamation, contractual rights, copyrights, trade secrets,
and rights of privacy or publicity. The Company has not sold, assigned,
licensed, distributed or in any other way disposed of or encumbered the
Software.
(iv) The Software, to the extent it is licensed from any third
party licensor or constitutes "off-the-shelf" software, is held by the Company
legitimately and is fully transferable to the Purchaser without any third party
consent. All of the Company's computer hardware has legitimately-licensed
software installed therein.
(v) The Software is free from any significant software defect
or programming or documentation error, operates and runs in a reasonable and
efficient business manner, conforms to the specifications thereof, and, with
respect to owned Software, the applications can be recreated from their
associated source code.
(vi) The Company has not knowingly altered the data or any
Software or supporting software which may, in turn, damage the integrity of the
data stored in electronic, optical or magnetic form.
(vii) The Company has furnished all documentation relating to the
use, maintenance and operation of the Software, all of which, to the knowledge
of the Company, is true and accurate.
10
(q) Insurance. The Company currently has, and through the Closing
Date will have, policies in full force and effect which provide for coverages
that are usual and customary as to amount and scope in the business of the
Company. All premiums with respect thereto covering all periods up to and
including the Closing Date have been paid or accrued therefor, and no notice of
cancellation or termination has been received with respect to any policy.
Schedule 3.1(q) hereto sets forth a complete and accurate summary of all
policies, including name of insurer, the types, dates and amounts of coverage,
expiration date and any material coverage exclusion. The Company has not
breached or otherwise failed to perform in any material respects its obligations
under any of the policies nor has the Company received any adverse notice or
communication from any of the insurers party to the policies with respect to any
such alleged breach or failure in connection with any of the policies. All
policies are sufficient for compliance with all regulations and all contracts to
which the Company is subject, are to the Company's knowledge valid, outstanding,
collectible and enforceable policies, and will not in any way be affected by, or
terminate or lapse by reason of, the execution and delivery of this Agreement or
the consummation of the transactions contemplated hereby. The Company has never
been denied any insurance with respect to its assets or operations, nor has
coverage ever been limited by any insurance carrier to which the Company has
applied for any policy or with which it has carried a policy.
(r) Accounts Receivable; Inventories. Except as provided in Schedule
3.1(r), the accounts receivable of the Company reflected in the Financial
Statements and all additional accounts receivable arising prior to the date of
this Agreement are good and collectible within either the contractually agreed
period for payment or, where no such agreement exists, within the period normal
and customary for such accounts, except to the extent reserved against thereon.
All such accounts receivable (except to the extent so reserved against) are
valid, genuine and subsisting, arise out of bona fide performance of services or
other business transactions and are not subject to defenses, set-off or
counterclaims. All unbilled work-in-progress or uncollected xxxxxxxx based on
past or future services have arisen under enforceable contracts, written or
implied, which contracts continue to be in full force and effect. The Company
has no reason to believe that such contracts will not continue to be fully
enforceable and that such work-in-progress will not be completely billed and
such xxxxxxxx will not be collected in their entirety within the periods
described in the first sentence of this section.
(s) Disclosure. Neither this Agreement nor any of the exhibits,
attachments, written statements, documents, certificates or other items which
were prepared for or supplied to the Purchaser by or on behalf of the Company
with respect to the transactions contemplated hereby contains any untrue
statement of a material fact or omits a material fact necessary to make each
statement contained herein or therein not misleading in light of the
circumstances when made.
(t) No Redemptions or Issuances. Since the Financial Statement Date,
the Company has not (i) redeemed or repurchased, directly or indirectly, any
shares of capital stock; (ii) issued, sold or transferred any notes, bonds or
other debt securities or any equity securities, securities convertible,
exchangeable or exercisable into equity securities, or warrants, options or
other rights to acquire equity securities, of the Company; or (iii) made any
payments or other forms of consideration (whether for services, property or
otherwise) to any insiders (as defined in Section 3.1(u)).
(u) Affiliate Transactions. No executive officer, director or
shareholder of the Company or any affiliate thereof or any person related by
blood or marriage to any such person in which any such person owns any
beneficial interest (collectively, the "insiders") is a party to any agreement,
contract, commitment or transaction with the Company or which is pertaining to
the business of the Company or has any interest in any property, real or
personal or mixed, tangible or intangible, used in or pertaining to the business
of the Company.
SECTION 3.2. Representations and Warranties of Purchaser . Purchaser
represents and warrants to the Company and the Sellers as follows:
(a) Organization Standing and Corporate Power. Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of Florida and has the requisite corporate power and authority to carry on its
business as now being conducted. Purchaser is duly qualified or licensed to do
business and is in good standing in each jurisdiction in which the nature of its
business or the ownership or leasing of its Properties makes such qualification
or licensing necessary, other than in such jurisdictions where the failure to be
so qualified or licensed or to be in good standing (individually or in the
aggregate) would not have a material adverse effect on
11
Purchaser. Purchaser has delivered to the Company complete and correct copies of
its articles of incorporation and by-laws, as amended to the date hereof.
(b) Capital Structure. The authorized capital stock of Purchaser
consists of 100,000,000 shares of Purchaser Common Stock and 7,200,000 shares of
preferred stock, par value $.001 per share, ("Purchaser Preferred Stock"). As of
the date hereof (i) 31,813,072 shares of Purchaser Common Stock were issued and
outstanding (subject to adjustment for shares issued hereunder), (ii) 13,386,928
shares of Purchaser Preferred Stock were issued and outstanding, and (ii) not
more than 5,000,000 and 10,000,000 shares of Purchaser Common Stock were
reserved for issuance under the Purchaser's Stock Option Plan and Restricted
Stock Plan, respectively. All outstanding shares of capital stock of the
Purchaser are, and all shares which may be issued pursuant to this Agreement
will be, when issued in accordance with the terms hereof, duly authorized,
validly issued, fully paid and nonassessable.
(c) Authority; Noncontravention. Purchaser has the requisite power
and authority to enter into this Agreement and to consummate the transactions
contemplated by it. The execution and delivery of this Agreement, and the
consummation of the transactions contemplated by this Agreement have been duly
authorized by all necessary corporate action on the part of Purchaser. This
Agreement has been duly executed and delivered by Purchaser, and constitutes a
valid and binding obligation, enforceable in accordance with its terms. The
execution and delivery of this Agreement does not, and the consummation of the
transactions contemplated by this Agreement and compliance with the provisions
of this Agreement will not, conflict with, or result in any violation of, or
constitute a default (with or without notice or lapse of time, or both) under,
or give rise to a right of termination, cancellation or acceleration of any
obligation or to loss of a material benefit under, or result in the creation of
any Lien upon any of the properties or assets of Purchaser under, any provision
of (i) the articles of incorporation or by-laws of Purchaser, (ii) any loan or
credit agreement, note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise or license applicable to Purchaser or
its properties or assets, or (iii) subject to the governmental filings and other
matters referred to in the following sentence, any (A) statute, law, ordinance,
rule or regulation or (B) judgment, order or decree applicable to Purchaser or
its properties or assets, other than, in the case of clause (ii) and clause
(iii), any such conflict, violation, default, or failure to file which would not
have a material adverse effect on Purchaser. To the best of the knowledge of the
Purchaser, no consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity is required by or with
respect to Purchaser in connection with the execution and delivery of this
Agreement by Purchaser or the consummation by Purchaser of the transactions
contemplated by this Agreement to be consummated by Purchaser, except for (i)
the filing of the Certificate of Merger with the Florida Department of State and
the Georgia Secretary of State and appropriate documents with the relevant
authorities of other states in which the Company is qualified to do business,
and (ii) such other consents, approvals, orders, authorizations, registrations,
declarations and filings as may be required, the failure of which to be obtained
or made would not, individually or in the aggregate, have a material adverse
effect on Purchaser or prevent or materially delay the consummation of any of
the transactions contemplated by this Agreement.
(d) Accounting Matters. Purchaser has taken or agreed to take any
action that (without regard to any action taken or agreed to be taken by the
Company or any of its affiliates) would enable the transaction contemplated by
this Agreement to be accounted for as a "pooling of interests."
(e) Litigation Matters. There is no suit, action or proceeding
pending or, to the best knowledge of the Purchaser, contemplated or threatened
against the Purchaser, nor is there any judgment, decree, injunction, rule or
order of any Government Entity or arbitrator outstanding against the Purchaser.
(f) Incorporation of Previous Representations. Purchaser hereby
restates the representations and warranties made by Purchaser in Section 5 of
that certain Purchase Agreement dated April 23, 1997, among Purchaser, Golder,
Thoma, Xxxxxxx, Xxxxxx Fund V, L.P. ("GTCR"), MG Capital Partners II, L.P.
("MG"), Gator Associates, Ltd. ("Gator") and Xxxx Ventures, Ltd. ("Xxxx")(the
"Purchase Agreement"), herein and such representations and warranties are
incorporated by reference and are true and correct as of the date of this
Agreement, except as set forth on Schedule 3.2(f) hereto. The Company and the
Sellers may rely upon such representations and warranties as if made herein.
12
SECTION 3.3. Representations and Warranties of Sellers . Each of the
Sellers individually, represents, warrants and covenants to Purchaser as
follows:
(a) Such Seller is acquiring the shares of Purchaser Common Stock
to be issued to him pursuant to the Merger (the "Merger Shares") for his own
account and not on behalf of any other person; the Seller is aware and
acknowledges that the Merger Shares have not been registered under the
Securities Act of 1933 (as amended) (the "Securities Act") and may not be
offered or sold unless the Merger Shares are registered under the Securities Act
or an exemption from the registration requirements of the Securities Act is
available;
(b) Such Seller has received and carefully reviewed all provisions
of this Agreement; and the Seller has not been furnished with any offering
materials or literature relating to the offer and sale of the Merger Shares;
(c) Such Seller has been furnished all information that he deems
necessary to enable him to evaluate the merits and risks of an investment in the
Purchaser; such Seller has had a reasonable opportunity to ask questions of and
receive answers from Purchaser concerning Purchaser and the Merger Shares, and
all such questions, if any, have been answered to the full satisfaction of such
Seller;
(d) No person or entity other than such Seller has (i) any rights
in and to the Merger Shares, which rights were obtained through or from such
Seller or (ii) any rights to acquire the Merger Shares, which rights were
obtained through or from such Seller;
(e) Such Seller has such knowledge and expertise in financial and
business matters (including knowledge and expertise in the Purchaser's business)
that he is capable of evaluating the merits and risks involved in an investment
in the Merger Shares; and such Seller is financially able to bear the economic
risk of the investment in the Merger Shares, including a total loss of such
investment;
(f) Such Seller represents that he has adequate means of providing
for his current needs and has no need for liquidity in its investment in the
Merger Shares; such Seller has no reason to anticipate any material change in
its financial condition for the foreseeable future;
(g) Such Seller is aware that the acquisition of the Merger Shares
is a speculative investment involving a high degree of risk and that there is no
guarantee that the Seller will realize any gain from this investment, and that
such Seller could lose the total amount of his investment;
(h) Such Seller understands that no United States federal or state
agency had made any finding or determination regarding the fairness of the
offering of the Merger Shares for investment, or any recommendation or
endorsement of the offering of the Merger Shares;
(i) Such Seller is acquiring the Merger Shares for investment, with
no present intention of dividing or allowing others to participate in such
investments or of reselling, or otherwise participating directly or indirectly,
in a distribution of the Merger Shares, and shall not make any sale, transfer,
assignment or pledge thereof, except (i) pursuant to an effective registration
statement under the Securities Act, (ii) in a transaction which, in the opinion
of counsel reasonably satisfactory to Purchaser, is not required to be
registered under the Act;
(j) No representations or warranties have been made to such Seller
by the Purchaser or any agent, employee or affiliate of the Purchaser, and in
entering into this transaction such Seller is not relying upon any information,
other than the results of independent investigation by such Seller;
(k) Such Seller understands that the Merger Shares are being
offered to him in reliance on specific exemptions from the registration
requirements of United States federal and state securities laws and that the
Purchaser is relying upon the truth and accuracy of the representations,
warranties, agreements, acknowledgments and understandings of the Seller set
forth herein in order to determine the applicability of such exemptions and the
suitability of such Seller to acquire the Merger Shares; and
13
(l) Such Seller is the shareholder of record and the owner of the
shares of Company Common Stock set forth opposite such Sellers' name provided in
Exhibit "A", free and clear of any claims, security interests, liens or other
restrictions on title or transferability of the Company Common Stock. Such
Seller has full power and authority to enter into this Agreement and transfer
such shares of Company Common Stock without the need for any consent of any
other person. Such Seller does not oppose the Merger, has not and will not vote
against the consummation of any transactions contemplated by this Agreement, and
has not and will not seek to exercise any dissenter rights or other rights in
opposition to, or disagreement with, the transactions contemplated hereunder.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 4.1. Conduct of Business; Other Actions; and Certain Tax Matters.
(a) Conduct of Business. During the period from the date of this Agreement to
the Effective Time, the Company shall, except as expressly contemplated or
permitted by this Agreement or to the extent that Purchaser shall otherwise
consent in writing, carry on its business in the usual, regular and ordinary
course in substantially the same manner as heretofore conducted and, to the
extent consistent therewith, use reasonable efforts to preserve intact its
current business organizations, keep available the services of its current
officers and employees and preserve its relationships with customers, suppliers,
licensors, licensees, distributors and others having business dealings with it
to the end that its goodwill and ongoing businesses shall not be impaired in any
material respect at the Effective Time. Without limiting the generality of the
foregoing, during the period from the date of this Agreement to the Effective
Time, the Company shall not (except as expressly contemplated or permitted by
this Agreement or to the extent that Purchaser shall otherwise consent in
writing):
(i) (x) declare, set aside or pay any dividends on, or make any
other distributions (whether in cash, stock or property) in respect of, any of
its capital stock; provided, however, that the Company may declare and pay
dividends in the cumulative amount of $416,340 [CONFIRM] with respect to its S
Corporation income for the period January 1, 1997 through the Effective Date,
(y) split, combine or reclassify any of its capital stock or issue or authorize
the issuance of any other securities in respect of, in lieu of, or in
substitution for, shares of its capital stock, or (z) purchase, redeem or
otherwise acquire any shares of its capital stock or any other securities
thereof or any rights, warrants or options to acquire any such shares or other
securities;
(ii) issue, deliver, sell, pledge or otherwise encumber any
shares of its capital stock, any other voting securities or any securities
convertible into, or any rights, warrants or options to acquire, any such
shares, voting securities or convertible securities (other than the issuance of
shares of Company Common Stock upon the exercise of options outstanding on the
date of this Agreement and in accordance with their present terms);
(iii) amend its articles of incorporation, by-laws or other
comparable charter or organizational documents;
(iv) acquire or agree to acquire (x) by merging or consolidating
with, or by purchasing a substantial portion of the assets of, or by any other
manner, any business or any corporation, partnership, joint venture, association
or other business organization or division thereof or (y) any assets that are
material, individually or in the aggregate, to the Company;
(v) sell, lease, license, mortgage or otherwise encumber or
subject to any Lien or otherwise dispose of any of its properties or assets
other than in the ordinary course of business consistent with past practices;
(vi) (y) incur any indebtedness for borrowed money or guarantee
any such indebtedness of another person, issue or sell any debt securities or
warrants or other rights to acquire any debt securities of the Company,
guarantee any debt securities of another person, enter into any "keep well" or
other agreement to maintain any financial statement condition of another person
or enter into any arrangement having the economic effect of any of the
foregoing, except for short-term borrowings incurred in the ordinary course of
business consistent with past practice, or (z) make any loans, advances or
capital contributions to, or investments in, any other person, other than to the
Company or advances to employees in accordance with past practice;
14
(vii) except for the items listed on Schedule 4.1(a)(vii), make
or agree to make any new capital expenditure or expenditures which,
individually, is in excess of $10,000 or, in the aggregate, are in excess of
$25,000;
(viii) make any tax election or settle or compromise any tax
liability;
(ix) pay, discharge, settle or satisfy any claims, liabilities
or obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge, settlement or satisfaction, in
the ordinary course of business consistent with past practice or in accordance
with their terms, of liabilities reflected or reserved against in, or
contemplated by, the Financial Statements of the Company or incurred in the
ordinary course of business consistent with past practice;
(x) waive any material benefits of, or agree to modify in any
material respect, any confidentiality, standstill or similar agreements to which
the Company is a party;
(xi) modify, amend or terminate any material contract or
agreement to which the Company is a party or waive, release or assign any
material rights or claims;
(xii) except as required to comply with applicable law, (A)
adopt, enter into, terminate or amend any Benefit Plan or other arrangement for
the benefit or welfare of any director, officer or current or former employee,
(B) increase in any manner the compensation or fringe benefits of, or pay any
bonus to, any director, officer or employee (except for normal increases or
bonuses in the ordinary course of business consistent with past practice), (C)
pay any benefit not provided-for under any Benefit Plan, (D) except as permitted
in clause (B), grant any awards under any bonus, incentive, performance or other
compensation plan or arrangement or Benefit Plan (including the grant of stock
options, stock appreciation rights, stock based or stock related awards,
performance units or restricted stock, or the removal of existing restrictions
in any Benefit Plans or agreement or awards made thereunder) or (E) take any
action to fund or in any other way secure the payment of compensation or
benefits under any employee plan, agreement, contract or arrangement or Benefit
Plan;
(xiii) make any change in any method of accounting or accounting
practice or policy other than those required by GAAP;
(xiv) take any action that (without regard to any action taken
or agreed to be taken by Purchaser or any of its affiliates) would prevent
Purchaser from accounting for the business combination to be effected by the
Merger as a pooling of interests; or
(xv) authorize any of, or commit or agree to take any of, the
foregoing actions.
(b) Other Actions. The Company and Purchaser shall not take any
action that would, or that could reasonably be expected to, result in (i) any of
the representations and warranties of such party set forth in this Agreement
that are qualified as to materiality becoming untrue, (ii) any of such
representations and warranties that are not so qualified becoming untrue, or
(iii) any of the conditions to the Merger set forth in Article VI not being
satisfied.
(c) Certain Tax Matters. From the date hereof until the Effective
Time, (i) the Company will accurately prepare and timely file (within applicable
periods of extension) with the relevant taxing authority all tax returns and
reports required to be filed; (ii) the Company will timely pay all taxes due and
payable; (iii) the Company will make adequate provision on its books and
records, to the extent required in accordance with GAAP, for all taxes due and
payable after the Effective Time; and (iv) the Company will promptly notify
Purchaser of any action, suit, proceeding, claim or audit pending against or
with respect to the Company in respect of any tax where there is a reasonable
possibility of a determination or decision which would reasonably be expected to
have a material adverse effect on the Company's tax liabilities or tax
attributes.
SECTION 4.2. No Solicitation. (a) The Company and its officers, directors,
executive employees, representatives and agents shall immediately cease any
discussions or negotiations with any parties that may be ongoing with respect to
a takeover proposal. The Company shall not, nor shall it authorize or permit any
of its
15
officers, directors or executive employees or any investment banker, attorney or
other advisor or representative retained by it to, (i) solicit, initiate or
knowingly encourage the submission of, any takeover proposal, or (ii)
participate in any discussions or negotiations regarding, or furnish to any
person any non-public information with respect to, or take any other action
knowingly to facilitate any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any takeover proposal.
For purposes of this Agreement, "takeover proposal" means any inquiry, proposal
or offer from any person relating to any direct or indirect acquisition or
purchase of 15% or more of the consolidated assets of the Company or of any
equity securities of the Company or any merger, consolidation, business
combination, sale of substantially all assets, recapitalization, liquidation,
dissolution or similar transaction involving the Company, other than the
transactions contemplated by this Agreement, or any other transaction the
consummation of which could reasonably be expected to impede, interfere with,
prevent or materially delay the Merger or which would reasonably be expected to
dilute materially the benefits to Purchaser of the transactions contemplated
hereby.
(b) The Company promptly shall advise Purchaser in writing of any
request for information or of any takeover proposal or any inquiry with respect
to or which reasonably could be expected to lead to any takeover proposal, and
the material terms and conditions of such request, takeover proposal or inquiry.
The Company will keep Purchaser informed in all respects of the status and
details (including amendments or proposed amendments) of any such takeover
proposal or inquiry.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.1. [INTENTIONALLY DELETED]
SECTION 5.2. Accounting and Tax Matters. No party shall take or fail to
take any action that (without regard to any action taken, not taken or agreed to
be taken or not taken by any other party or any of its affiliates) that would
prevent Purchaser or Sellers from accounting for the business combination to be
effected by the Merger as a "pooling of interests" transaction and merger which
is tax free pursuant to Section 368 of the Code.
SECTION 5.3. Access to Information. (a) The Company shall, upon
reasonable notice from Purchaser, afford to Purchaser, and to Purchaser's
officers, employees, accountants, counsel, financial advisors and other
representatives, reasonable access during normal business hours during the
period prior to the Effective Time to all their respective properties, books,
contracts, commitments, personnel, records and all other information concerning
its business, properties and personnel as Purchaser may reasonably request.
(b) Purchaser shall, upon reasonable notice from the Company,
afford to the Company, and to Company's officers, employees, accountants,
counsel, financial advisors and other representatives, reasonable access during
normal business hours during the period prior to the Effective Time to all their
respective properties, books, contracts, commitments, personnel, records and all
other information concerning its business, properties and personnel as Company
may reasonably request.
(c) Each of the Company and Purchaser may make copies of
documents provided to them pursuant this Section 5.3 at their own expense. The
parties shall, and shall cause their respective officers, employees,
accountants, counsel, financial advisors and other representatives to, hold any
such information which is nonpublic in confidence. The Purchaser agrees that
unless and until the transactions contemplated hereby have been consummated, the
Purchaser, including its representatives, will hold in strict confidence all
data and information obtained from the Company and the Sellers in connection
with the transactions contemplated hereby, except any of the same which (i) was,
is now, or becomes generally available to the public (but not as a result of a
breach of any duty of confidentiality by which the Purchaser is bound); (ii) was
known to the Purchaser prior to its disclosure, or (iii) is disclosed to the
Purchaser by a third party not subject to any duty of confidentiality owed to
the Company or the Sellers prior to its disclosure. The Purchaser will use such
data and information solely for the specific purpose of evaluating the
transactions contemplated hereby. The Company and each of the Sellers agrees
that unless and until the transactions contemplated hereby have been
consummated, the Company and the Sellers, including their representatives, will
hold in strict confidence all data and information obtained from the Purchaser
in connection
16
with the transactions contemplated hereby, except any of the same which (i) was,
is now, or becomes generally available to the public (but not as a result of a
breach of any duty of confidentiality by which the Company and each of the
Sellers are bound); (ii) was known to the Company or the Sellers prior to its
disclosure, or (iii) is disclosed to the Company or the Sellers by a third party
not subject to any duty of confidentiality owed to the Purchaser prior to its
disclosure. The Company and each of the Sellers will use such data and
information solely for the specific purpose of evaluating the transactions
contemplated hereby. If this Agreement is terminated, the party that obtained
such data, information and other written material (including all copies thereof)
in connection with contemplating the Merger shall promptly return such data,
information and other written material to the party that provided it and
thereafter will make no further use whatsoever of any of such data, information
or other written material or information derived therefrom.
SECTION 5.4. Reasonable Efforts. Upon the terms and subject to the
conditions set forth in this Agreement, each of the parties agrees to use all
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, and to assist and cooperate with the other parties in doing,
all other things necessary, proper or advisable to consummate and make
effective, in the most expeditious manner practicable, the Merger and the other
transactions contemplated by this Agreement, including (i) the obtaining of all
other necessary actions or nonactions, waivers, consents and approvals from
Governmental Entities and the making of all necessary registrations and filings
(including filings with Governmental Entities, if any) and the taking of all
other reasonable steps as may be necessary to avoid an action or proceeding by
any Governmental Entity, (ii) the obtaining of all necessary consents, approvals
or waivers from third parties, (iii) the defending of any lawsuits or other
legal proceedings, whether judicial or administrative, challenging this
Agreement or the consummation of the transactions contemplated hereby, including
seeking to have any stay or temporary restraining order entered by any court or
other Governmental Entity or reversed, and (iv) the execution and delivery of
any additional instruments necessary to consummate the transactions contemplated
by, and to fully carry out the purposes of, this Agreement.
SECTION 5.5. Public Announcements. Purchaser and the Company will
consult with each other before issuing, and give each other the opportunity to
review and comment upon, any press release or other public statements with
respect to the transactions contemplated by this Agreement, including the
Merger, and shall not issue any such press release or make any such public
statement prior to such consultation except as may be required by applicable law
or court process. The parties agree that the initial press release to be issued
with respect to the transactions contemplated by this Agreement shall be in the
form heretofore agreed to by the parties.
SECTION 5.6. Affiliates. Prior to the Closing Date, the Company shall
deliver to Purchaser Schedule 5.6, which identifies all persons who are, at the
Closing Date, "affiliates" of the Company for purposes of qualifying the Merger
for "pooling of interests" accounting treatment under Opinion 16 of the
Accounting Principles Board and applicable SEC rules and regulations.
SECTION 5.7. Employment Agreements. The Company shall use its
reasonable efforts to cause the Employment Agreements to be executed by those
persons whose names are set forth on Exhibit "B."
SECTION 5.8. Employee Restricted Stock Plan. [INTENTIONALLY DELETED].
....SECTION 5.9. Expenses. Each of the Purchaser, the Company and the
Sellers shall pay all of its and their respective costs and expenses, including
legal and accounting fees, in connection with its and their execution and
performance of, and compliance with, this Agreement, it being understood that
the Company will pay the fees of the Company and the Sellers up to a maximum of
$30,000 and the Sellers shall pay all fees in excess thereof without
reimbursement from the Company. To the extent that fees are incurred by the
Sellers which (i) are not in excess of the limitation set forth in the preceding
sentence, the Purchaser shall promptly pay or reimburse any Seller for such
expenses paid by him upon presentation of proof of payment thereof.
SECTION 5.10. Restrictions on Transfer of Purchaser Common Stock.
(a) Transfer of Purchaser Common Stock. Until the fourth
anniversary of this Agreement, no Seller shall Transfer any interest in any
shares of Purchaser Common Stock received pursuant to this Agreement, except
pursuant to (i) a Public Sale or a Sale of the Company ("Exempt Transfers") or
(ii) the provisions of this Section 5.10; provided that in no event shall any
Transfer pursuant to this clause (ii) be made for any consideration
17
other than cash payable upon consummation of such Transfer. No Seller may
consummate any Transfer permitted by clause (ii) of the preceding sentence until
60 days after the Sale Notice has been given to the Purchaser, the Investors and
the Other Executives, unless the parties to the Transfer have been finally
determined pursuant to this Section 5.10 prior to the expiration of such 60-day
period. (The date of the first to occur of such events is referred to herein as
the "Authorization Date").
(b) First Refusal Rights. The Purchaser may elect to purchase all
(but not less than all) of the shares of the Purchaser Common Stock to be
transferred by the Seller upon the same terms and conditions as those set forth
in the Sale Notice by delivering a written notice of such election to the
Seller, the Investors and the Other Executives within 20 days after the Sale
Notice has been given to the Company. If the Purchaser has not elected to
purchase all of the shares to be transferred, each Investor and each Other
Executive may elect to purchase all or any portion of the shares to be
transferred upon the same terms and conditions as those set forth in the Sale
Notice by giving written notice of such election to the Seller within 40 days
after the Sale Notice has been given to the Investors and each Other Executive.
If the Investors and the Other Executives elect to purchase an aggregate number
of shares greater than the number of such shares specified in the Sale Notice,
such number of shares shall be allocated among the Investors pro rata based upon
the number of shares of Common Stock of the Purchaser (including the Underlying
Common Stock) owned by each such Investor and Other Executive (but in no event
shall the pro rata share of any Investor or Other Executive result in such
Investor or Other Executive acquiring a number of shares in excess of the number
of such shares requested by such Investor or Other Executive). If neither the
Company nor, in the aggregate, the Investors and the Other Executives elect to
purchase all of the shares specified in the Sale Notice, the Seller may transfer
the shares specified in the Sale Notice, subject to the provisions of subsection
(c) below, at a price and on terms no more favorable to the transferee(s)
thereof than specified in the Sale Notice during the 60-day period immediately
following the Authorization Date. Any shares not transferred within such 60-day
period will be subject to the provisions of this subsection (b) upon subsequent
transfer. The Purchaser may pay the purchase price for such shares by
offsetting amounts outstanding under any bona fide debts owed by Seller to the
Purchaser with the balance, if any, by check or wire transfer of funds.
(c) Participation Rights. If neither the Purchaser nor, in the
aggregate, the Investors and Other Executives have elected to purchaser all of
the shares specified in the Sale Notice pursuant to subsection (b) above, each
Investor and Other Executive may elect to participate in the contemplated
Transfer by delivering written notice to the Seller and the Company within 50
days after receipt by such Investor or Other Executive of the Sale Notice. If
any Investor or Other Executive has elected to participate in such sale, the
Seller and such Investor or Other Executive will be entitled to sell in the
contemplated sale, at the same price and on the same terms, a number of shares
of the Purchaser's equity securities equal to the product of (i) the quotient
determined by dividing the percentage of the Underlying Common Stock held by
such Person, by the aggregate percentage of the Underlying Common Stock owned by
the Seller and the Investors and the Other Executives participating in such sale
and (ii) the number of shares of equity securities to be sold in the
contemplated sale. Seller will use his best efforts to obtain the agreement of
the prospective transferee(s) to the participation of each Investor and Other
Executive desiring to participate in the contemplated Transfer and will not
transfer any shares to the prospective transferee(s) if such transferee(s)
refuses to allow the participation of such Investor and Other Executive.
(d) Certain Permitted Transfers. The restrictions contained in this
Section 5.10 will not apply with respect to (i) transfers of shares pursuant to
applicable laws of descent and distribution or (ii) transfer of shares among
Seller's Family Group; provided that such restrictions will continue to be
applicable to the shares after any such transfer and the transferees have agreed
in writing to be bound by the provisions of this Agreement. In addition,
following the completion of an underwritten Public Offering, Seller, in his sole
discretion, may pledge any of his shares of Purchaser Common Stock as collateral
for a loan so long as the pledgee of such stock and the Seller enter in a pledge
agreement in form and substance reasonably satisfactory to the Purchaser,
pursuant to which pledgee, among other things, agrees that pledgee may only sell
such shares in a Public Sale.
(e) Termination of Restrictions. The restrictions on the Transfer of
shares set forth in this Section 5.10 will continue with respect to each such
share until the date on which such share has been transferred in a transaction
permitted by this Section 5.10 (except in a transaction contemplated by
subsection (d)); provided that in any event such restrictions will terminate on
a Sale of the Company.
18
(f) Legend. The certificates representing the Purchaser Common Stock
will bear a legend in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS
CERTIFICATE WERE ORIGINALLY ISSUED AS OF
_______ __, 1997, HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), AND MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT OR AN
EXEMPTION FROM REGISTRATION THEREUNDER. THE
SECURITIES REPRESENTED BY THIS CERTIFICATE
ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS
ON TRANSFER, CERTAIN REPURCHASE OPTIONS AND
CERTAIN OTHER AGREEMENTS SET FORTH IN AN
AGREEMENT AND PLAN OF MERGER DATED AS OF
______ __, 1997 AMONG ANSWERTHINK CONSULTING
GROUP, INC., RELATIONAL TECHNOLOGIES, INC.
AND THE THEN SHAREHOLDERS OF RELATIONAL
TECHNOLOGIES, INC. A COPY OF SUCH AGREEMENT
MAY BE OBTAINED BY THE HOLDER HEREOF AT THE
PRINCIPAL PLACE OF BUSINESS OF ANSWERTHINK
CONSULTING GROUP, INC. WITHOUT CHARGE."
SECTION 5.11. Tax Matters. The following provisions shall govern the
allocation of responsibility as between the Purchaser and the Sellers for
certain tax matters following the Effective Date:
(a) Tax Periods Ending on or Before the Effective Date. Purchaser
shall prepare or cause to be prepared at its expense and file or cause to be
filed all tax returns for the Company for all periods ending on or prior to the
Effective Date which are filed after the Effective Date. The Purchaser shall
permit the Sellers' Agent to review and comment on each such tax return
described in the preceding sentence prior to filing. Each of the Sellers will
jointly and severally reimburse Purchaser for the amount of all taxes relating
to any taxable period ending on or prior to the Effective Date, regardless of
the time for filing the tax returns for such taxable period (but only to the
extent such taxes exceed an amount equal to $50,000 plus the reserve for tax
liability (rather than any reserve for deferred taxes established to reflect
timing differences between book and tax income) shown on the face of the
Financial Statements). Such payments shall be made within five (5) business days
of payment by the Purchaser of such taxes, and shall be paid by each of the
Sellers on a pro rata basis. In the event a refund is provided for such taxable
period, such refund shall be paid to each of the Sellers on a pro rata basis.
(b) Tax Period Beginning Before and Ending After the Effective Date.
The Purchaser shall prepare or cause to be prepared at its expense and file or
cause to be filed any tax returns of the Company for tax periods which begin
before the Effective Date and end after the Effective Date. Each of the Sellers
will jointly and severally reimburse Purchaser for that portion of the taxes
with respect to any such period which relates to the portion of such taxable
period ending on the Effective Date (but only to the extent such taxes exceed an
amount equal to $50,000 plus the reserve for tax liability (rather than any
reserve for deferred taxes established to reflect timing differences between
book and tax income) shown on the face of the Financial Statements). Such
payment shall be made within five (5) days of the date on which such taxes are
paid by the Purchaser, and shall be paid by each of the Sellers on a pro rata
basis. In the event a refund is provided for such taxable period, such refund
shall be paid to each of the Sellers on a pro rata basis. For purposes of this
Section, in the case of any taxes that are imposed on a periodic basis and are
payable for a taxable period that includes (but does not end on) the Effective
Date, the portion of such tax which relates to the portion of such taxable
period ending on the Effective Date shall (x) in the case of any taxes other
than taxes based upon or related to income, be deemed to be the amount of such
tax for the entire taxable period multiplied by a fraction the numerator of
which is the number of days in such taxable period ending on the Effective Date
and the denominator of which is the number of days in the entire taxable period,
and
19
(y) in the case of any tax based upon or related to income, be deemed equal to
the amount which would be payable if the relevant taxable period ended on the
Effective Date. All determinations necessary to give effect to the foregoing
allocations shall be made in a manner consistent with prior practice of the
Company.
(c) Cooperation on Tax Matters.
(i) The Purchaser, the Company, and each of the Sellers
shall cooperate fully, as and to the extent reasonably requested by other party,
in connection with the filing of tax returns pursuant to this Section 5.11 and
any audit, litigation or other proceeding with respect to taxes. Such
cooperation shall include the retention and (upon the other party's request) the
provision of records and information which are reasonably relevant to any such
audit, litigation or other proceeding and making employees available on a
mutually convenient basis to provide additional information and explanation of
any material provided hereunder. The Purchaser, the Company and each of the
Sellers agree (x) to retain all books and records with respect to tax matters
pertinent to the Company relating to any taxable period beginning before the
Effective Date until the expiration of the statute of limitations (and, to the
extent notified by the Purchaser or the Sellers' Agent, any extensions thereof)
of the respective taxable periods, and to abide by all record retention
agreements entered into with any taxing authority, and (y) to give the other
party reasonable written notice prior to transferring, destroying or discarding
any such books and records and, if the other party so requests, the Purchaser or
the Sellers, as the case may be, shall allow the other party to take possession
of such books and records.
(ii) The Purchaser, the Company and each of the Sellers
further agree, upon request, to use their best efforts to obtain any certificate
or other document from any government authority or any other person as may be
necessary to mitigate, reduce or eliminate any tax that could be imposed
(including, but not limited to, with respect to the transactions contemplated
hereby).
(d) Tax Sharing Agreements. All tax-sharing agreements or similar
agreements with respect to or involving the Company shall be terminated as of
the Effective Date and, after the Effective Date, the Company shall not be bound
thereby or have any liability thereunder.
(e) Expenses. The Sellers will pay all expenses (including, but
not limited to, fees and expenses of legal counsel, accountants and other
consultants) incurred in connection with the provisions of this Section 5.11,
including, but not limited to, the preparation of all tax returns for periods
ending on or before the Effective date.
(f) Relation to Section 8.1. The provisions of this Section shall
be in addition to the provisions of Section 8.1; provided, however, that payment
by Sellers shall only be required once and further provided that any amounts
which Sellers would be required to pay under this Section but for the amount
being less than $50,000 shall be included when determining whether amounts are
payable under Section 8.1.
SECTION 5.12. Indemnification Waiver Each of the Sellers hereby agrees
that he will not make any claim for indemnification against the Purchaser, by
reason of the fact that Seller was a director, officer, employee or agent of the
Company (whether such claim is for expenses, judgments, fines, amounts paid in
settlement or otherwise, and whether such claim is pursuant to charter
documents, by-laws, statute or otherwise) with respect to any claim, action,
suit or proceeding brought by the Purchaser or any other person against such
Seller (whether such claim, action, suit or proceeding is pursuant to this
Agreement, applicable laws or otherwise).
SECTION 5.13. Shareholders' Agreement. Prior to the Effective Date,
each of the Sellers shall become parties to the Shareholders' Agreement made as
of April 23, 1997, among the Purchaser, Golder, Thoma, Xxxxxxx, Xxxxxx Fund V,
L.P., MG Capital Partners II, L.P., Gator Associates, Ltd. and Xxxx Ventures,
Ltd.
SECTION 5.14. Bonus Plans. Any Benefit Plan or other arrangement
whereby compensation is owing or payable to any of the employees of the Company,
including the compensation set forth in Schedule 3.1(i) hereof, shall terminate
as of the date of Closing and the Purchaser shall not assume any obligations or
liabilities with respect
20
ARTICLE VI
Conditions Precedent
SECTION 6.1. Conditions to Each Party's Obligation To Effect the Merger.
The respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Shareholder Approval. This Agreement shall have been approved by
the affirmative vote of the holders of all of the outstanding shares of Company
Common Stock and each such holder shall have waived any dissenters' rights or
rights of approval.
(b) No Injunctions or Restraints; Illegality. None of the parties
hereto shall be subject to any statute, rule, regulation, decree, ruling,
injunction or other order issued by any Governmental Entity of competent
jurisdiction which prohibits, restrains, enjoins or restricts the consummation
of the transactions contemplated by this Agreement.
SECTION 6.2. Conditions to Obligations of Purchaser. The obligations of
Purchaser to effect the Merger are further subject to the following conditions:
(a) Representations and Warranties. The representations and
warranties of the Company set forth in this Agreement that are qualified as to
materiality shall be true and correct, and the representations and warranties of
the Company set forth in this Agreement that are not so qualified shall be true
and correct in all respects, in each case as of the date of this Agreement and
(except to the extent such representations and warranties speak as of an earlier
date) as of the Closing Date as though made on and as of the Closing Date,
except as otherwise contemplated by this Agreement, and Purchaser shall have
received a certificate signed on behalf of the Company by the chief executive
officer and the chief financial officer of the Company to such effect.
(b) Performance of Obligations of the Company. The Company shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date, and Purchaser shall
have received a certificate signed on behalf of the Company by the chief
executive officer and the chief financial officer of the Company to such effect.
(c) No Material Adverse Change. At any time on or after the date of
this Agreement there shall not have occurred any material adverse change in the
business, properties, assets, financial condition or results of operations of
the Company, taken as a whole.
SECTION 6.3. Conditions to Obligations of the Company. The obligation
of the Company and the Sellers to effect the Merger is further subject to the
following conditions:
(a) Representations and Warranties. The representations and
warranties of Purchaser set forth in this Agreement that are qualified as to
materiality shall be true and correct, and the representations and warranties of
Purchaser set forth in this Agreement that are not so qualified shall be true
and correct in all respects, in each case as of the date of this Agreement and
(except to the extent such representations and warranties speak as of an earlier
date) as of the Closing Date as though made on and as of the Closing Date,
except as otherwise contemplated by this Agreement, and the Company shall have
received a certificate signed on behalf of Purchaser by the chief executive
officer and the chief financial officer of Purchaser to such effect.
(b) Performance of Obligations of Purchaser. Purchaser shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date, and the Company shall
have received a certificate signed on behalf of Purchaser by the chief executive
officer and the chief financial officer of Purchaser to such effect.
21
(c) Value of Assets. The fair market value of the assets of the
Company as of the Closing Date is not less than the fair market value of the sum
of (i) the liabilities of the Company and (ii) any other liabilities to which
the assets of the Company are subject, each determined as of such date.
(d) No Material Adverse Change. At any time on or after the date of
this Agreement there shall not have occurred any material adverse change in the
business, properties, assets, financial condition or results of operations of
the Purchaser, taken as a whole.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.1. Termination. This Agreement may be terminated, and the
Merger contemplated hereby may be abandoned, at any time prior to the Effective
Time:
(a) by mutual written consent of Purchaser and the Company;
(b) by either Purchaser or the Company:
(i) if the Merger shall not have been consummated on or before
August 5, 1997, unless the failure to consummate the Merger is the result of a
breach of this Agreement by the party seeking to terminate this Agreement;
provided, however, that the passage of such period shall be tolled for any part
thereof during which any party shall be subject to a nonfinal order, decree,
ruling or action restraining, enjoining or otherwise prohibiting the
consummation of the Merger; or
(ii) if any Governmental Entity of competent jurisdiction shall
have issued an order, decree or ruling or taken any other action permanently
enjoining, restraining or otherwise prohibiting the Merger and such order,
decree, ruling or other action shall have become final and nonappealable;
(c) by Purchaser:
(i) if the representations and warranties of Sellers and the
Company set forth in this Agreement that are qualified as to materiality shall
not be true in all material respects or the representations and warranties that
are not so qualified shall not be true in all respects as at any date prior to
Closing, or if any of the conditions specified in Section 6.2 hereof shall have
been waived by Purchaser; or
(ii) if each of the Sellers do not approve the Merger and waive
all dissenter's rights (the "Approval") prior to the Closing Date; and
(d) by Company and the Sellers if the representations and warranties
of Purchaser contained in this Agreement that are qualified as to materiality
shall not be true and correct in all material respects or the representations
and warranties that are not so qualified shall not be true in all respects as at
any date prior to Closing, or Purchaser shall have breached its covenants
contained in this Agreement in any material respect or if any of the conditions
specified in Section 6.3 hereof shall not have been fulfilled by the time
required and shall not have been waived by Sellers.
SECTION 7.2. Effect of Termination. In the event of termination of
this Agreement by either the Company or Purchaser as provided in Section 7.1,
this Agreement shall forthwith become void and have no effect, without any
liability or obligation on the part of Purchaser or the Company, other than as
provided in this Agreement, or except to the extent that such termination
results from the breach by a party of any of its representations, warranties,
covenants or agreements set forth in this Agreement.
SECTION 7.3. Amendment. This Agreement may be amended by the parties
hereto at any time before or after any required approval of matters presented in
connection the Merger by the shareholders of the Company, provided, however,
that after any such approval, there shall be made no amendment that by law
requires further
22
approval by such shareholders without the further approval of such shareholders.
This Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.
SECTION 7.4. Extension; Waiver. At any time prior to the Effective
Time, the parties may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties contained herein or in any document delivered
pursuant hereto or (c) subject to the provisions of Section 7.3, waive
compliance with any of the agreements or conditions contained herein. Any
agreement on the part of a party to any such extension or waiver shall be valid
only if set forth in an instrument in writing signed on behalf of such party.
The failure of any party to this Agreement to assert any of its rights under
this Agreement or otherwise shall not constitute a waiver of such rights.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.1. Survival of Terms; Indemnification.
(a) Survival. All of the terms and conditions of this Agreement,
together with the representations, warranties and covenants contained herein or
in any instrument or document delivered or to be delivered pursuant to this
Agreement, shall survive the execution of this Agreement and the Closing Date
notwithstanding any investigation heretofore or hereafter made by or on behalf
of any party hereto; provided, however, that (a) the agreements and covenants
(other than the indemnification provisions set forth in this Article VIII, which
shall survive as provided below) set forth in this Agreement shall survive and
continue until all obligations set forth therein shall have been performed and
satisfied; and (b) all representations and warranties, and the agreements of the
Company, Sellers and the Purchaser to indemnify each other set forth in this
Article VIII, shall survive and continue for, and all claims with respect
thereto shall be made prior to the end of, one year from the Closing Date,
except for (i) the representations and warranties set forth in Section 3.1(b)
hereof shall survive without limitation, (ii) claims for misrepresentations or
breaches of warranty relating to Section 3.1(k) (Taxes) may be asserted until 60
days after the running of the applicable statute of limitations with respect to
the taxable period to which the particular claims relate and (iii)
representations, warranties and indemnities for which an indemnification claim
shall be pending as of the end of the applicable period referred to above, in
which event such indemnities shall survive with respect to such claim until the
final disposition thereof.
(b) Indemnification by Sellers. The Sellers agree to, and shall,
indemnify the Purchaser, its respective officers, directors, employees,
shareholders, representatives and agents and hold each of them harmless at all
times after the date of this Agreement, against and in respect of any and all
Damages resulting from, or in respect of, any of the following (provided,
however, that Sellers shall not be liable hereunder unless the cumulative total
of Damages exceeds $50,000, net of insurance proceeds or other indemnity or
contribution and net of any tax benefit arising therefrom and then only to the
extent of such excess):
(i) Any misrepresentation, breach of warranty, or non-
fulfillment of any obligation on the part of the Company or the Sellers under
this Agreement, any document relating hereto or thereto or contained in any
exhibit to this Agreement or from any misrepresentation in or omission from any
certificate, schedule, other agreement or instrument by the Sellers or the
Company hereunder.
(ii) Any claim by a stockholder or former stockholder of the
Company or any other person seeking to assert: (A) ownership or rights to
ownership of any shares of capital stock of the Company; (B) any rights of a
stockholder (other than the right to receive the Merger Consideration in
accordance with the terms of this Agreement) including any option, preemptive
rights or rights to receive notice or to vote; (C) any rights under the
Company's charter, bylaws or other constituent documents; or (D) any claim that
his shares of capital stock were not repurchased by the Company.
(iii) All demands, assessments, judgments, costs and reasonable
legal and other expenses arising from, or in connection with, any action, suit,
proceeding or claim incident to any of the foregoing.
23
(c) Indemnification by the Purchaser. The Purchaser agrees to, and
shall, indemnify the Company, and its officers, directors, employees,
shareholders, representatives and agents and the Sellers and hold each of them
harmless at all times after the date of this Agreement, against and in respect
of any and all Damages resulting from, or in respect of, any of the following
(provided, however, that Purchaser shall not be liable hereunder unless the
cumulative total of Damages exceeds $50,000 and then only to the extent of such
excess):
(i) Any misrepresentation, breach of warranty or non-fulfillment
of any obligation on the part of the Purchaser under this Agreement, any
document relating hereto or thereto or contained in any exhibit to this
Agreement or from any misrepresentation in or omission from any certificate,
schedule, other agreement or instrument by the Purchaser hereunder.
(ii) All demands, assessments, judgments, costs and reasonable
legal and other expenses arising from, or in connection with, any action, suit,
proceeding or claim incident to any of the foregoing.
(d) Limitation on Indemnification Amount. In the event that a claim
for indemnification is made by Purchaser against any of the Sellers, the amount
for which such Seller shall be liable based on such claim shall be limited to
the lessor of (i) the Fair Market Value of the Merger Consideration received by
such Seller on the date that Seller becomes obligated to make payment with
respect to such claim, and (ii) $7,000,000.00 multiplied by the percentage of
the Merger Consideration received by Seller from Purchaser. In the event that a
claim for indemnification is made by Sellers against Purchaser, the amount for
which Purchaser shall be liable based on such claim shall be limited to the Fair
Market Value of the Merger Consideration received by Purchaser from such Seller.
In no event shall any of the parties to this Agreement provide indemnification
in an amount in excess of the Fair Market Value of the Merger Consideration
received by such party. Any liability pursuant to this Section 8.1 may be
satisfied by a Seller by delivering shares of Purchaser Common Stock, the number
of shares thereof to be determined based upon the Fair Market Value as
calculated from the date that Seller becomes obligated to make payment with
respect to such claim.
(e) Third-Party Claims.
(i) Except as otherwise provided in this Agreement, the
following procedures shall be applicable with respect to indemnification for
third-party claims. Within ten days after receipt by the party seeking
indemnification hereunder (hereinafter referred to as the "Indemnitee") of
notice of the commencement of any (a) tax audit or proceeding for the assessment
of tax by any taxing authority or any other proceeding which may result in the
imposition of a tax liability or obligation or (b) any action or the assertion
of any claim, liability or obligation by a third party (whether by legal process
or otherwise), against which claim, liability or obligation the other party to
this Agreement (hereinafter the "Indemnitor") is, or may be, required under this
Agreement to indemnify such Indemnitee, the Indemnitee will, if a claim thereon
is to be, or may be, made against the Indemnitor, notify the Indemnitor in
writing of the commencement or assertion thereof and give the Indemnitor a copy
of such claim, process and all legal pleadings; provided, however, that the
failure to give such notice shall not impair the right to indemnification to the
extent such failure has not prejudiced the Indemnitor. The Indemnitor shall have
the right to participate in the defense of such action with counsel of reputable
standing. The Indemnitor shall have the right to assume the defense of such
action unless such action (i) may likely result in injunctions or other
equitable remedies in respect of the Indemnitee or its business; (ii) may result
in liabilities which, taken with other then existing claims under this Article
VIII, would not be fully indemnified hereunder; or (iii) may likely have a
substantial adverse impact on the business or financial condition of the
Indemnitee after the Closing Date (including an effect on the tax liabilities,
earnings or ongoing business relationships of the Indemnitee) or (vi) is for an
alleged amount of less than $5,000. The Indemnitor and the Indemnitee shall
cooperate in the defense of such claims. In the case that the Indemnitor shall
assume or participate in the defense of such audit, assessment or other
proceeding as provided herein, the Indemnitee shall make available to the
Indemnitor all relevant records and take such other action and sign such
documents as are reasonable necessary to defend such audit, assessment or other
proceeding in a timely manner. If the Indemnitee shall be required by judgment
or a settlement agreement to pay any amount in respect of any obligation or
liability against which the Indemnitor has agreed to indemnify the Indemnitee
under this Agreement, the Indemnitor shall promptly reimburse the Indemnitee in
an amount equal to the amount of such payment plus all reasonable expenses
(including legal fees and expenses) incurred by such Indemnitee in connection
with such obligation or liability subject to this Article VIII. No Indemnitor,
in the defense of any such claim, shall, except with the consent of the
Indemnitee, consent to entry of any judgment or enter into any settlement which
does
24
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnitee of a release from all liability with respect to
such claim. In the event that the Indemnitor does not accept the defense of any
matter for which it is entitled to assume such defense as above provided, the
Indemnitee shall have the full right to defend against any such claim, and shall
be entitled to settle or agree to pay in full such claim or demand, in its sole
discretion. With respect to any matter as to which the Indemnitor is not
entitled to assume the defense pursuant to the terms of this paragraph, the
Indemnitee shall not enter into any settlement for which an indemnification
claim will be made hereunder without the approval of the Indemnitor, which will
not be unreasonably withheld.
(ii) Prior to paying or settling any claim against which an
Indemnitor is, or may be, obligated under this Agreement to indemnify an
Indemnitee, the Indemnitee must first supply the Indemnitor with a copy of a
final court judgment or decree holding the Indemnitee liable on such claim or
failing such judgment or decree, must first receive the written approval of the
terms and conditions of such settlement from the Indemnitor. An Indemnitor or
Indemnitee shall have the right to settle any claim against it, subject to the
prior written approval of the other, which approval shall not be unreasonably
withheld.
(iii) An Indemnitee shall have the right to employ its own counsel
in any case, but the fees and expenses of such counsel shall be at the expense
of the Indemnitee unless (a) the employment of such counsel shall have been
authorized in writing by the Indemnitor in connection with the defense of such
action or claim, (b) the Indemnitor shall not have employed counsel in the
defense of such action or claim, or (c) such Indemnitee shall have reasonably
concluded that there may be defenses available to it which are contrary to, or
inconsistent with, those available to the Indemnitor, in any of which events
such fees and expenses of not more than one additional counsel for the
indemnified parties shall be borne by the Indemnitor.
(f) Exclusive Remedy. Other than Purchaser's right to specific
enforcement and injunctive relief for any breach of this Agreement, the remedies
provided in this Section 8.1 shall be exclusive and shall preclude assertion by
any party of any other rights or the seeking of any other remedies for any
breach of this Agreement.
SECTION 8.2. Notices. Except as otherwise provided in Section 4.2(e),
all notices, requests, claims, demands and other communications hereunder shall
be in writing and shall be deemed given if delivered personally or sent by
overnight courier (providing proof of delivery) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(a) if to Purchaser, to
AnswerThink Consulting Group, Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxx, Xxxxxxx 00000
Attention:Xxx X. Xxxxxxxxx, Chief Executive Officer and President
with a copy to:
Greenberg, Traurig, Hoffman, Lipoff, Xxxxx & Quentel, P.A.
0000 Xxxxxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000
Attention: Xxxx Xxxxxxxxx, Esq.
(b) if to the Company, to:
Xxxxx Xxxxx, Sellers' Agent
0000 Xxxxxxxx Xxxxxxxxx
Xxxxx X-0
Xxxxxxxx, Xxxxxxx 00000
25
with a copy to:
Xxxxxxxxx, Xxxxxxx & Xxxxx
The Xxxxxxx Xxxxxxxx
Xxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxx, Esq.
SECTION 8.3. Definitions. For purposes of this Agreement:
(a) "affiliate" of any person means another person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first person for purposes hereof, "control"
means the power to vote or direct the voting of sufficient securities or other
interests to elect a majority of the directors or to control the management of
such person;
(b) "Affiliate" means, in the case of a natural person, one or more
members of a group comprised of such person and such person's parents or
grandparents, children or grandchildren, siblings or any spouse of any of the
foregoing;
(c) "Benefit Plan" shall have the meaning set forth in Section 3.1(j);
(d) "Commonly Controlled Entity" shall have the meaning set forth in
Section 3.1(i)(i);
(e) "Employment Agreement" shall have the meaning set forth in Section
2.2(a)(iii);
(f) "Family Group" means, with respect to any Seller, such Seller's
spouse and descendants (whether natural or adopted), any trust solely for the
benefit of Seller and/or Seller's spouse and/or descendants and any retirement
plan for the Seller.
(g) "Fair Market Value" of each share of common stock constituting
Merger Consideration means the average of the closing prices of the sales of
such common stock on all securities exchanges on which such common stock may at
the time be listed, or, if there have been no sales on any such exchange on any
day, the average of the highest bid and lowest asked prices on all such
exchanges at the end of such day, or, if on any day such common stock is not so
listed, the average of the representative bid and asked prices listed in the
NASDAQ System as of 4:00 P.M., New York time, or, if on any day such common
stock is not quoted in the NASDAQ System, of the average of the highest bid and
lowest asked prices on all such day in the domestic over-the-counter market as
reported by the National Quotation Bureau Incorporated, or any similar successor
organization, in each such case averaged over a period of 21 days consisting of
the day as of which the Fair Market Value is being determined and the 20
consecutive business days prior to such day. If at any time such common stock
is not listed on any securities exchange or quoted in the NASDAQ System or the
over-the-counter market, the Fair Market Value will be the fair value of such
common stock determined in good faith by the Purchaser's Board of Directors. If
the recipient of the Merger Consideration subject to such determination (the
"Recipient") reasonably disagrees with such determination, the Board of
Directors and the Recipient will negotiate in good faith to agree on such Fair
Market Value. If such agreement is not reached within 30 days after the Board
of Directors made a determination of the Fair Market Value, Fair Market Value
shall be determined by an appraiser jointly selected by the Board of Directors
and the Recipient, which appraiser shall submit to both parties a report within
30 days of its engagement setting forth such determination. If the parties are
unable to agree on an appraiser, each party shall submit the names of four
nationally recognized investment banking firms, and each party shall be entitled
to strike to names from the other party's list of firms, and the appraiser shall
be selected by lot from the remaining four investment banking firms. The
expenses of such appraiser shall be borne by the Recipient unless the
appraiser's valuation is not less than 10% greater than the amount determined by
the Board, in which case, the costs of the appraiser shall be borne by the
Purchaser. The determination of such appraiser shall be final and binding upon
all parties.
(h) "GAAP" means generally acceptable accounting principles;
(i) "Government Entities" shall have the meaning set forth in Section
3.1(c)(ii);
26
(j) "Improvements" shall have the meaning set forth in Section
3.1(o)(ii);
(k) "Investors" mean Golder, Thoma, Xxxxxxx, Xxxxxx Fund V, L.P., MG
Capital Partners II, L.P., Xxxx Ventures, Ltd. and Gator Associates, Ltd. and
each of their successors and assigns.
(l) "knowledge" of any person means actual knowledge of the directors
and executive officers of such person;
(m) "Lien" means any security interest, lien, mortgage, pledge,
hypothecation, encumbrance, Claim, easement, restriction on transfer or
otherwise, or interest of another person of any kind or nature;
(n) "material adverse change" or "material adverse effect" means, when
used in connection with the Company or Purchaser, any change or effect that is
materially adverse to the business, properties, assets, financial condition or
results of operations of such party;
(o) "Other Executives" means Xxx X. Xxxxxxxxx, Xxxxx X. Xxxxx and
Xxxxxxx X. Xxxxxx, III.
(p) "Pension Plan" shall have the meaning set forth in Section
3.1(i)(i);
(q) "Permits" shall have the meaning set forth in Section 3.1(h)(i);
(r) "Permitted Liens" means (i) statutory Liens not yet delinquent,
(ii) such imperfections or irregularities of title, Liens, easements, charges or
encumbrances as do not materially detract from or interfere with the present use
of the properties or assets subject thereto or affected thereby, otherwise
impair present business operations at such properties, or do not detract from
the value of such properties and assets, taken as a whole, (iii) Liens reflected
in the Financial Statements or the notes thereto, (iv) the rights of customers
of the Company with respect to inventory or work in progress under orders or
contracts entered into by the Company in the ordinary course of business, (v)
mechanics', carriers', workers', repairmen's, warehousemen's, or other similar
Liens arising in the ordinary course of business in respect of obligations not
overdue or which are being contested in good faith and covered by a bond in an
amount at least equal to the amount of the Lien, and (vi) deposits or pledges to
secure workmen's compensation, unemployment insurance, old age benefits or other
social security obligations in connection with, or to secure the performance of,
bids, tenders, trade contracts not for the payment of money or leases, or to
secure statutory obligations or surety or appeal bonds or other pledges or
deposits for purposes of like nature in the ordinary course of business. All
properties used in the Company's business operations as of the Financial
Statement Date are reflected in the Financial Statements in accordance with and
to the extent required by GAAP;
(s) "person" means an individual corporation, partnership, joint
venture, association, trust, unincorporated organization or other entity;
(t) "Proprietary Rights" shall have the meaning set forth in Section
3.1(p)(i);
(u) "Public Offering" means the sale in an underwritten public
offering registered under the Securities Act of shares of the Purchaser's Common
Stock approved by the board of directors of the Purchaser;
(v) "Public Sale" means any sale pursuant to a registered public
offering under the Securities Act or any sale to the public pursuant to Rule 144
promulgated under the Securities Act effected through a broker, dealer or market
maker.
(w) "Sale of the Company" means any transaction or series of
transactions pursuant to which any person(s) or entity(ies) other than an
Investor and its affiliates in the aggregate acquire(s) (i) capital stock of the
Purchaser possessing the voting power (other than voting rights accruing only in
the event of a default, breach or event of noncompliance) to elect a majority of
the Purchaser's board of directors (whether by merger, consolidation,
reorganization, combination, sale or transfer of the Purchaser's capital stock,
shareholder or voting agreement, proxy, power of attorney or otherwise) or (ii)
all or substantially all of the Purchaser's assets determined on a consolidated
basis.
27
(x) "Software" shall have the meaning set forth in Section
3.1(p)(iii);
(y) "subsidiary" of any person means another person, an amount of the
voting securities, other voting ownership or voting partnership interests of
which is sufficient to elect at least a majority of its Board of Directors or
other governing body (or, if there are no such voting interests, 50% or more of
the equity interests of which) is owned directly or indirectly by such first
person;
(z) "Transfer" means to sell, transfer, assign, pledge or otherwise
dispose of (whether with or without consideration and whether voluntarily or
involuntarily or by operation of law); and
(aa) "Underlying Common Stock" means, at any time, the sum of (i) the
number of shares of Common Stock of the Purchaser outstanding as of such time
plus (ii) the number of shares of Common Stock of the Company issuable upon the
exercise or conversion of the Class A Convertible Preferred Stock of the
Purchaser at such time.
SECTION 8.4. Interpretation. When a reference is made in this Agreement
to a Section, Exhibit or Schedule, such reference shall be to a Section of, or
an Exhibit or Schedule to, this Agreement unless otherwise indicated. The table
of contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation."
SECTION 8.5. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signet by each of
the parties and delivered to the other parties.
SECTION 8.6. Entire Agreement; No Third-Party Beneficiaries. This
Agreement, including the Exhibits and Schedules thereto (a) constitutes the
entire agreement, and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter of this
Agreement, and (b) is not intended to confer upon any person other than the
parties any rights or remedies.
SECTION 8.7. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Florida, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
SECTION 8.8. Assignment. Neither this Agreement or any of the rights,
interests or obligations hereunder shall be assigned, in whole or in part, by
operation of law or otherwise by any of the parties without the prior written
consent of the other parties. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of, and be enforceable by, the
parties and their respective successors and assigns.
SECTION 8.9. Enforcement. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the State of Florida or in Florida state court, this being in
addition to any other remedy to which they are entitled at law or in equity. In
addition, each of the parties hereto (a) consents to submit itself to the
personal jurisdiction of any Federal court located in the State of Florida or
any Florida state court in the event any dispute arises out of this Agreement or
the transactions contemplated by this Agreement, (b) agrees that it will not
attempt to deny or defeat such personal jurisdiction by motion or other request
for leave from any such court, and (c) agrees that it will not bring any action
relating to this Agreement or the transactions contemplated by this Agreement in
any court other than a Federal court sitting in the State of Florida or a
Florida state court.
28
IN WITNESS WHEREOF, the Purchaser, the Company and each of the Sellers have
caused this Agreement to be signed personally or by their respective officers
hereunto duly authorized, all as of the date first written above.
ANSWERTHINK CONSULTING GROUP, INC.
By:/s/ Xxx X. Xxxxxxxxx
-----------------------------------------------
Name: Xxx X. Xxxxxxxxx
Title: Chief Executive Officer and President
RELATIONAL TECHNOLOGIES, INC.
By:/s/ Xxxxx X. Xxxxx
-----------------------------------------------
Name: Xxxxx X. Xxxxx
Title: Chief Executive Officer
SELLERS
/s/ Xxxxxx Xxxxxxx
--------------------------------------------------
Xxxxxx Xxxxxxx
/s/ Xxxxx X. Xxxxx, Pursuant to Power of Attorney
--------------------------------------------------
Xxxx Xxxx
/s/ Xxxxx X. Xxxxx
--------------------------------------------------
Xxx Xxxxx
/s/ Xxxx X. Xxxxxxx
--------------------------------------------------
Xxxx Xxxxxxx
/s/ Xxxxxx X. Xxxxxx
--------------------------------------------------
Xxxxxx Xxxxxx
/s/ Xxxxx X. Xxxxx, Pursuant to Power of Attorney
--------------------------------------------------
Xxxx Xxxxxxxxxx
/s/ Xxxxx X. Xxxxx
--------------------------------------------------
Xxxxx Xxxxx
/s/ Xxxxx X. Xxxx, III
--------------------------------------------------
Louis Xxxx
XXXXXXX AGENT
/s/ Xxxxx X. Xxxxx
--------------------------------------------------
Xxxxx Xxxxx
29
The Exhibits and Schedules to this Agreement and Plan of Merger are not included
with this Registration Statement on Form S-1. AnswerThink will provide these
exhibits and schedules upon the request of the Securities and Exchange
Commission.
