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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): March 31, 1998
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RENAISSANCE WORLDWIDE, INC.
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(Exact name of registrant as specified in charter)
MASSACHUSETTS 0-28192 04-2920563
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(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
189 Wells Avenue, Newton, MA 02159
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (617) 527-6886
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This is page 1 of 5 pages.
Exhibit Index appears on page 5.
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ITEM 2. ACQUISITION OF ASSETS
(a) On March 31, 1998, pursuant to an Agreement and Plan of Merger dated March
31, 1998 (the "Neoglyphics Merger Agreement") among the Registrant, Neoglyphics
Media Corporation, an Illinois corporation ("Neoglyphics") and NGMC Acquisition
Corp., a Delaware corporation and a wholly-owned subsidiary of the Registrant
("NGMC Acquisition"), the Registrant acquired Neoglyphics through the merger of
NGMC Acquisition with and into Neoglyphics. Pursuant to the Neoglyphics Merger
Agreement, the 16,888,500 shares of Neoglyphics common stock outstanding were
converted collectively into the right to receive 2,240,260 shares of the
Registrant's common stock. The Registrant also assumed all 959,909 outstanding
Neoglyphics stock options which were converted into options for the Registrant's
common stock on the same conversion ratio as applied to the Neoglyphics common
stock. The amount and nature of the consideration was determined by arms-length
negotiation among the parties.
The foregoing description is qualified in its entirety by reference to the
Neoglyphics Merger Agreement, a copy of which is attached hereto as Exhibit 2.1
and incorporated herein by reference.
On April 2, 1998, pursuant to an Agreement and Plan of Merger dated
April 2, 1998 (the "Triad Merger Agreement") among the Registrant, Triad Data,
Inc., a New York corporation ("Triad"), TDI Acquisition Corp., a Delaware
corporation and a wholly-owned subsidiary of the Registrant ("TDI Acquisition"),
and Harley Lippman, the sole Stockholder of Triad, the Registrant acquired Triad
through the merger of TDI Acquisition with and into Triad. Pursuant to the Triad
Merger Agreement, the 100 shares of Triad common stock outstanding were
converted collectively into the right to receive 2,440,920 shares of the
Registrant's common stock. The amount and nature of the consideration was
determined by arms-length negotiation among the parties.
The foregoing description is qualified in its entirety by reference to the
Triad Merger Agreement, a copy of which is attached hereto as Exhibit 2.3 and
incorporated herein by reference.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
Financial Statements of the Acquired Businesses
(a) It is currently impracticable for the Registrant to provide the
required one year financial statements with respect to the acquired
businesses referred to in Item 2 of this Report. The Registrant will
file the required financial information by amendment as soon as
practicable and in any event no later than 60 days from the date
hereof.
(b) It is currently impracticable for the Registrant to provide the
required pro forma financial information with respect to the acquired
business referred to in Item 2. The Registrant will file the required
pro forma financial information by amendment as soon as such
information is available and in any event no later than 60 days from
the date hereof.
(c) Exhibits:
2.1 Agreement and Plan of Merger dated March 31, 1998 among Renaissance
Worldwide, Inc., Neoglyphics Media Corporation and NGMC Acquisition
Corp.
2.2 Agreement to furnish copies of omitted annexes, schedules and
exhibits to the Neoglyphics Merger Agreement.
2.3 Agreement and Plan of Merger dated April 2, 1998 among Renaissance
Worldwide, Inc., Triad Data, Inc., TDI Acquisition Corp. and Harley
Lippman.
2.4 Agreement to furnish copies of omitted annexes, schedules and
exhibits to the Triad Merger Agreement.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
RENAISSANCE WORLDWIDE, INC.
By: /s/ Richard L. Bugley
_______________________________________________
Name: Richard L. Bugley
Title: Vice President and General Counsel
Date: April 14, 1998
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibits Page
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<S> <C> <C>
2.1 Agreement and Plan of Merger dated March 31, 1998
among Renaissance Worldwide, Inc., Neoglyphics
Media Corporation and NGMC Acquisition Corp.
2.2 Agreement to furnish copies of omitted annexes,
schedules and exhibits to the Neoglyphics Merger
Agreement.
2.3 Agreement and Plan of Merger dated April 2, 1998
among Renaissance Worldwide, Inc., Triad Data, Inc.,
TDI Acquisition Corp. and Harley Lippman.
2.4 Agreement to furnish copies of omitted annexes,
schedules and exhibits to the Triad Merger Agreement.
</TABLE>
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EXHIBIT 2.1
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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
RENAISSANCE WORLDWIDE, INC.
AND
NGMC ACQUISITION CORP.
AND
NEOGLYPHICS MEDIA CORPORATION
Dated as of March 31, 1998
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TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I
THE MERGER................................................................... 1
SECTION 1.1 The Merger.................................................. 1
SECTION 1.2 Escrow; Shareholder Representative; Company
Closing Certificate...................................................... 2
SECTION 1.3 Effective Time.............................................. 3
SECTION 1.4 Effect of the Merger........................................ 3
SECTION 1.5 Articles of Incorporation; By-Laws.......................... 3
SECTION 1.6 Directors and Officers...................................... 3
SECTION 1.7 Effect on Capital Stock..................................... 4
SECTION 1.8 Deliveries at the Closing................................... 5
SECTION 1.9 Stock Transfer Books........................................ 5
SECTION 1.10 No Further Ownership Rights in Company Common Stock......... 6
SECTION 1.11 Lost, Stolen or Destroyed Certificates...................... 6
SECTION 1.12 Tax and Accounting Consequences............................. 6
SECTION 1.13 Taking of Necessary Action; Further Action.................. 6
SECTION 1.14 Material Adverse Effect..................................... 6
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY................................ 7
SECTION 2.1 Organization, Qualification and Other Equity Interests...... 7
SECTION 2.2 Articles of Incorporation and By-Laws....................... 7
SECTION 2.3 Capitalization.............................................. 7
SECTION 2.4 Authority Relative to this Agreement........................ 8
SECTION 2.5 No Conflict; Required Filings and Consents.................. 8
SECTION 2.6 Compliance, Permits......................................... 9
SECTION 2.7 Financial Statements........................................ 10
SECTION 2.8 Absence of Certain Changes or Events........................ 10
SECTION 2.9 No Undisclosed Liabilities.................................. 10
SECTION 2.10 Absence of Litigation....................................... 10
SECTION 2.11 Employee Benefit Plans, Employment Agreements............... 10
SECTION 2.12 Labor Matters............................................... 12
SECTION 2.13 Restrictions on Business Activities......................... 12
SECTION 2.14 Title to Property........................................... 12
SECTION 2.15 Taxes....................................................... 12
SECTION 2.16 Environmental Matters....................................... 14
SECTION 2.17 Intellectual Property....................................... 15
SECTION 2.18 Immigration Compliance...................................... 15
SECTION 2.19 Insurance................................................... 15
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<TABLE>
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SECTION 2.20 Accounts Receivable......................................... 16
SECTION 2.21 Pooling Matters............................................. 16
SECTION 2.22 Brokers..................................................... 16
SECTION 2.23 Change in Control Payments.................................. 16
SECTION 2.24 Expenses.................................................... 17
SECTION 2.25 Full Disclosure............................................. 17
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB...................... 17
SECTION 3.1 Organization and Qualification; Subsidiaries................ 17
SECTION 3.2 Charter and By-Laws......................................... 17
SECTION 3.3 Capitalization.............................................. 18
SECTION 3.4 Authority Relative to this Agreement........................ 18
SECTION 3.5 No Conflict, Required Filings and Consents.................. 18
SECTION 3.6 SEC Filings; Financial Statements........................... 19
SECTION 3.7 Pooling Matters............................................. 19
SECTION 3.8 Absence of Certain Changes or Events........................ 20
SECTION 3.9 Ownership of Merger Sub; No Prior Activities................ 20
SECTION 3.10 Validity of Parent Common Stock............................. 20
SECTION 3.11 Full Disclosure............................................. 20
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER....................................... 20
SECTION 4.1 Conduct of Business by the Company Pending the Merger....... 20
SECTION 4.2 No Solicitation............................................. 22
ARTICLE V
ADDITIONAL AGREEMENTS........................................................ 23
SECTION 5.1 Shareholder Meeting......................................... 23
SECTION 5.2 Access to Information; Confidentiality...................... 23
SECTION 5.3 Consents; Approvals......................................... 23
SECTION 5.4 Agreements with Respect to Affiliates....................... 24
SECTION 5.5 Shareholder Agreement and Investment Letter................. 24
SECTION 5.6 Notification of Certain Matters............................. 24
SECTION 5.7 Further Action/Tax Treatment................................ 24
SECTION 5.8 Public Announcements........................................ 25
SECTION 5.9 Conveyance Taxes............................................ 25
SECTION 5.10 Pooling Accounting Treatment................................ 25
SECTION 5.11 Listing of Parent Shares.................................... 25
SECTION 5.12 Tax Certificates............................................ 25
SECTION 5.13 Release of Shareholder Guarantees........................... 26
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<TABLE>
<S> <C>
ARTICLE VI
CONDITIONS TO THE MERGER..................................................... 26
SECTION 6.1 Conditions to Obligation of Each Party to
Effect the Merger........................................................ 26
SECTION 6.2 Additional Conditions to Obligations of Parent
and Merger Sub........................................................... 26
SECTION 6.3 Additional Conditions to Obligation of the Company.......... 28
ARTICLE VII
TERMINATION.................................................................. 29
SECTION 7.1 Termination................................................. 29
SECTION 7.2 Effect of Termination....................................... 30
SECTION 7.3 Fees and Expenses........................................... 30
ARTICLE VIII
GENERAL PROVISIONS........................................................... 30
SECTION 8.1 Indemnification............................................. 30
SECTION 8.2 Survival, Etc............................................... 33
SECTION 8.3 Notices..................................................... 34
SECTION 8.4 Certain Definitions......................................... 35
SECTION 8.5 Non-solicitation............................................ 36
SECTION 8.6 Amendment................................................... 36
SECTION 8.7 Waiver...................................................... 36
SECTION 8.8 Headings.................................................... 36
SECTION 8.9 Severability................................................ 36
SECTION 8.10 Entire Agreement............................................ 37
SECTION 8.11 Assignment; Guarantee of Merger Sub Obligations............. 37
SECTION 8.12 Parties in Interest......................................... 37
SECTION 8.13 Failure or Indulgence Not Waiver; Remedies Cumulative....... 37
SECTION 8.14 Governing Law............................................... 37
SECTION 8.15 Counterparts................................................ 37
</TABLE>
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of March 31, 1998 (this
"Agreement"), among Renaissance Worldwide, Inc., a Massachusetts corporation
("PARENT"), NGMC Acquisition Corp., a Delaware corporation and a wholly owned
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subsidiary of Parent ("MERGER SUB"), and Neoglyphics Media Corporation, an
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Illinois corporation (the "COMPANY").
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WITNESSETH:
WHEREAS, the Boards of Directors of Parent, Merger Sub and the Company have
each determined that it is advisable and in the best interests of their
respective shareholders for Parent and Merger Sub to enter into a business
combination with the Company upon the terms and subject to the conditions set
forth herein;
WHEREAS, in furtherance of such combination, the Boards of Directors of
Parent, Merger Sub and the Company have each approved the merger of Merger Sub
with and into the Company (the "MERGER") in accordance with the applicable
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provisions of the Delaware General Corporation Law (the "DGCL") and the Illinois
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Business Corporation Act of 1983, as amended (the "IBCA") upon the terms and
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subject to the conditions set forth herein;
WHEREAS, Parent, Merger Sub and the Company intend, by approving
resolutions authorizing this Agreement, to adopt this Agreement as a plan of
reorganization within the meaning of Section 368(a) of the Internal Revenue Code
of 1986, as amended (the "CODE"), and the regulations promulgated thereunder;
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and
WHEREAS, pursuant to the Merger, all of the outstanding shares (the
"SHARES") of the Company's common stock, no par value per share (the "COMPANY
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COMMON STOCK"), shall be converted into the right to receive the Merger
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Consideration (as defined in Section 1.8(b)), upon the terms and subject to the
conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby,
Parent, Merger Sub and the Company hereby agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1 The Merger.
(a) Effective Time. At the Effective Time (as defined in Section 1.3),
and subject to and upon the terms and conditions of this Agreement, the DGCL and
the IBCA, Merger Sub shall be merged with and into the Company, the separate
corporate existence of Merger Sub shall cease,
<PAGE>
and the Company shall continue as the surviving corporation. The Company as the
surviving corporation after the Merger is hereinafter sometimes referred to as
the "SURVIVING CORPORATION."
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(b) Closing. Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to Section
7.1 and subject to the satisfaction or waiver of the conditions set forth in
Article VI, the consummation of the Merger (the "CLOSING") will take place as
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promptly as practicable after satisfaction or waiver of the conditions set forth
in Article VI, at the offices of Ropes & Gray, One International Place, Boston,
Massachusetts, unless another date, time or place is agreed to in writing by the
parties hereto (the "Closing Date").
SECTION 1.2 Escrow; Shareholder Representative; Company Closing
Certificate.
(a) Escrow. At the Effective Time, Parent shall deliver to State Street
Bank and Trust Company, or any successor escrow agent appointed pursuant to the
Escrow Agreement (as hereinafter defined) (the "ESCROW AGENT"), 102,634 of the
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Parent Shares (as hereinafter defined) issued to the shareholders pursuant to
Section 1.7(a) (the "ESCROW SHARES") to be held and applied in accordance with
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the Escrow Agreement.
(b) Shareholder Representative. The shareholders, by virtue of their
approval of the Agreement, will be deemed to have constituted and appointed,
effective as of the Effective Time, Gilbert G. Zoghlin (together with his or its
permitted successors, the "SHAREHOLDER REPRESENTATIVE"), as their true and
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lawful agent and attorney-in-fact to enter into any agreement in connection with
the transactions contemplated by this Agreement and any transactions
contemplated by the Escrow Agreement, to exercise all or any of the powers,
authority and discretion conferred on him or it under any such agreement, to
waive any terms and conditions of any such agreement (other than the Merger
Consideration), to give and receive notices on their behalf and to be their
exclusive representative with respect to any matter, suit, claim, action or
proceeding arising with respect to any transaction contemplated by any such
agreement, including, without limitation, the defense, settlement or compromise
of any claim, action or proceeding for which the Parent or the Merger Sub may be
entitled to indemnification and the Shareholder Representative agrees to act as,
and to undertake the duties and responsibilities of, such agent and attorney-in-
fact. This power of attorney is coupled with an interest. The Shareholder
Representative shall not be liable for any action taken or not taken by him or
it in connection with his or its obligations under this Agreement (i) with the
consent of shareholders who, as of the date of this Agreement, owned a majority
in number of the outstanding shares of the Company Common Stock or (ii) in the
absence of his or its own gross negligence or wilful misconduct. If the
Shareholder Representative shall be unable or unwilling to serve in such
capacity or if the shareholders of the Company otherwise desire to replace the
Shareholder Representative, his or its successor shall be named by those persons
holding a majority of the shares of the Company Common Stock outstanding at the
Effective Time who shall serve and exercise the powers of Shareholder
Representative hereunder.
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(c) Company Closing Certificate. At the Closing, the Company shall
deliver to Parent a certificate, in form and substance reasonably satisfactory
to Parent and signed by its Chief Executive Officer and Chief Financial Officer
(the "COMPANY CLOSING CERTIFICATE"), certifying (i) the number of outstanding
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shares of Company Common Stock and (ii) the number of outstanding stock options
for the purchase of Company Common Stock, in each case, as of the Closing Date.
SECTION 1.3 Effective Time. As promptly as practicable after the
satisfaction or waiver of the conditions set forth in Article VI, the parties
hereto shall cause the Merger to be consummated by filing a duly executed and
delivered copy of the Merger Agreement substantially in the form attached hereto
as Exhibit 1.3 (the "MERGER AGREEMENT") as contemplated by the DGCL and the IBCA
----------------
(each a "CERTIFICATE OF MERGER"), with the respective offices of the Secretary
---------------------
of State of the State of Delaware and the Secretary of State of the State of
Illinois, in such form as required by, and executed in accordance with the
relevant provisions of, the DGCL and the IBCA (the time of the later of such
filings being the "EFFECTIVE TIME").
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SECTION 1.4 Effect of the Merger. At the Effective Time, the effect of
the Merger shall be as provided in this Agreement, the Merger Agreement and the
applicable provisions of the DGCL and the IBCA. Without limiting the generality
of the foregoing, and subject thereto, at the Effective Time all the property,
rights, privileges, powers and franchises of the Company and Merger Sub shall
vest in the Surviving Corporation, and all debts, liabilities and duties of the
Company and Merger Sub shall become the debts, liabilities and duties of the
Surviving Corporation.
SECTION 1.5 Articles of Incorporation; By-Laws.
(a) Articles of Incorporation. Unless otherwise determined by the Parent,
at the Effective Time the Articles of Incorporation of the Company, as amended
pursuant to the Merger Agreement, shall be the Articles of Incorporation of the
Surviving Corporation until thereafter amended in accordance with the IBCA and
such Articles of Incorporation.
(b) By-Laws. The By-Laws of the Company, as in effect immediately prior
to the Effective Time, shall be the By-Laws of the Surviving Corporation until
thereafter amended in accordance with the IBCA, the Articles of Incorporation of
the Surviving Corporation and such By-Laws.
SECTION 1.6 Directors and Officers. The directors of Merger Sub
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Articles of
Incorporation and By-Laws of the Surviving Corporation, and the officers of
Merger Sub immediately prior to the Effective Time shall be the initial officers
of the Surviving Corporation, in each case until their respective successors are
duly elected or appointed and qualified.
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SECTION 1.7 Effect on Capital Stock. At the Effective Time, by virtue of
the Merger and without any action on the part of the Parent, Merger Sub, the
Company or the holders of any of the following securities:
(a) Conversion of Securities. Each share of Company Common Stock shall be
converted into the right to receive that number of shares of Parent's common
stock, no par value ("PARENT COMMON STOCK", and, in the aggregate, the "PARENT
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SHARES") as is equal to the quotient of (x) $65,482,796 divided by the average
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of the closing price of the Parent Common Stock for the ten trading days ending
on March 26, 1998 (the "AVERAGE PRICE") divided by (y) the total number of
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shares of Company Common Stock (on a fully diluted basis including all issued
and outstanding stock options and other common stock equivalents) issued and
outstanding at the Effective Time (the "EXCHANGE RATIO"); provided, however,
-------------- -------- -------
that in no event shall more than 2,705,900 Parent Shares nor fewer than
2,000,086 Parent Shares be issued pursuant to this Agreement. The Parent
Shares, Average Price and Exchange Ratio are 2,240,260, $29.23 and .124948904,
respectively.
(b) Stock Options. Certain employees of the Company have been granted
options to purchase Company Common Stock under the Neoglyphics Stock Option Plan
(the "COMPANY STOCK OPTION PLANS"). At the Effective Time, the Company Stock
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Option Plans shall be assumed by Parent. At the Effective Time, by virtue of
the Merger and without any further action on the part of the holders thereof
each stock option issued under the Company Stock Option Plans shall be assumed
by Parent, and shall constitute an option to acquire the number (rounded down to
the nearest whole number) of shares of Parent Common Stock equal to the product
of (i) the number of shares of Company Common Stock issuable upon exercise of
such stock option immediately prior to the Effective Time (not taking into
account whether or not such stock option was in fact exercisable, but excluding
any Company Common Stock issued prior to the Effective Time pursuant to such
stock option), multiplied by (ii) the Exchange Ratio, at a price per share
(rounded up to the next highest cent) equal to (x) the exercise price per share
for the shares of Company Common Stock issuable upon exercise of such stock
option immediately prior to the Effective Time divided by (y) the Exchange
Ratio. Parent shall take all corporate action necessary to reserve for issuance
a sufficient number of Parent Shares for delivery pursuant to the terms set
forth in this Section 1.6(b)
(c) Cancellation. Each Share, if any, held in the treasury of the
Company, by virtue of the Merger and without any action on the part of the
holder thereof, shall cease to be outstanding, be canceled and retired without
payment of any consideration therefor and cease to exist.
(d) Shares of Dissenting Holders. Notwithstanding anything to the
contrary contained in this Agreement, any holder of Company Common Stock with
respect to which dissenters' rights, if any, are granted by reason of the Merger
under the IBCA and who does not vote in favor of the Merger and who otherwise
complies with the IBCA ("COMPANY DISSENTING SHARES") shall not be entitled to
-------------------------
receive shares of Parent Common Stock pursuant to Section 1.7(a) hereof, unless
such holder fails to perfect, effectively withdraws or loses his right to
dissent from the Merger under the IBCA. Such holder shall be entitled to
receive only the payment provided for by the IBCA. If any such holder so fails
to perfect, effectively withdraws or loses his or her dissenters'
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rights under the IBCA, his or her Company Dissenting Shares shall thereupon be
deemed to have been converted, as of the Effective Time, into the right to
receive shares of Parent Common Stock pursuant to Section 1.7(a). Any payments
relating to the Company Dissenting Shares shall be made solely by the Surviving
Corporation and no funds or other property have been or will be provided by
Parent, Merger Sub or any of Parent's other direct or indirect subsidiaries for
such payment.
(e) Capital Stock of Merger Sub. Each share of common stock, par value
$.01, of Merger Sub issued and outstanding immediately prior to the Effective
Time shall be converted into and exchanged for one validly issued, fully paid
and nonassessable share of common stock, no par value, of the Surviving
Corporation.
(f) Fractional Shares. No certificates or scrip representing less than
one Parent Share shall be issued upon the surrender or exchange of a certificate
or certificates which immediately prior to the Effective Time represented
outstanding Shares (the "CERTIFICATES"). In lieu of any such fractional share,
------------
each holder of Shares who would otherwise have been entitled to a fraction of a
Parent Share upon surrender of Certificates for exchange shall be paid upon such
surrender cash (without interest) determined by multiplying (i) the Average
Price by (ii) the fractional interest of Parent Common Stock to which such
holder would otherwise be entitled.
(g) Adjustments to Exchange Ratio. The Exchange Ratio shall be adjusted
to reflect fully the effect of any stock split, reverse split, reclassification,
stock dividend (including any dividend or distribution of securities convertible
into Parent Common Stock), reorganization, recapitalization or other like change
with respect to Parent Common Stock occurring after the date hereof.
SECTION 1.8 Deliveries at the Closing. At the Closing (i) the Company
shall deliver to Parent the various certificates, instruments, and documents
referred to in Section 6.2 below, (ii) Parent will deliver to the Company the
various certificates, instruments, and documents referred to in Section 6.3
below, (iii) each of the shareholders of the Company shall deliver to Parent
stock certificates representing all of his or her Shares of Company Common Stock
endorsed in blank or accompanied by duly executed assignment documents, and (iv)
Parent will deliver to each of the shareholders of the Company, in exchange for
such Shares of Company Common Stock so delivered, the number of shares of Parent
Common Stock to which such shareholder is entitled pursuant to Section 1.7(a)
hereof (less the Escrow Shares) and the amount of cash, if any, to be paid to
the shareholders of the Company with respect to any fractional shares of Parent
Common Stock, pursuant to Section 1.7(f) hereof. Parent shall also deliver to
the Escrow Agent the Escrow Shares.
SECTION 1.9 Stock Transfer Books. At the Effective Time, the stock
transfer books of the Company shall be closed, and there shall be no further
registration of transfers of Company Common Stock thereafter on the records of
the Company.
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<PAGE>
SECTION 1.10 No Further Ownership Rights in Company Common Stock. The
Merger Consideration delivered upon the surrender for exchange of Shares in
accordance with the terms hereof shall be deemed to have been issued in full
satisfaction of all rights pertaining to such Shares, and there shall be no
further registration of transfers on the records of the Surviving Corporation of
Shares 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 I.
SECTION 1.11 Lost, Stolen or Destroyed Certificates. In the event any
Certificates shall have been lost, stolen or destroyed, Parent shall issue in
exchange for such lost, stolen or destroyed Certificates, upon the making of an
affidavit of that fact by the holder thereof, such Parent Shares as may be
required pursuant to Section 1.7(a) (less the Escrow Shares) as well as the
other Merger Consideration as provided in this Article; provided, however, that
Parent may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed Certificates to
deliver a bond in such sum as it may reasonably direct as indemnity against any
claim that may be made against Parent with respect to the Certificates alleged
to have been lost, stolen or destroyed.
SECTION 1.12 Tax and Accounting Consequences. It is intended by the
parties hereto that the transaction effected by the Merger shall (i) constitute
a reorganization within the meaning of Section 368(a) of the Code and (ii)
qualify for accounting treatment as a pooling of interests under generally
accepted accounting principles and the applicable rules and regulations of the
Securities and Exchange Commission (the "SEC"). The parties hereto hereby adopt
---
this Agreement as a "plan of reorganization" within the meaning of Sections
1.368-2(g) and 1.368-3(a) of the United States Treasury Regulations.
SECTION 1.13 Taking of Necessary Action; Further Action. Each of Parent,
Merger Sub and the Company will take all such reasonable and lawful action as
may be necessary or appropriate in order to effectuate the Merger in accordance
with this Agreement as promptly as possible. If, at any time after the
Effective Time, any such further action is necessary or desirable to carry out
the purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of the Company and Merger Sub, the officers and directors of the
Company and Merger Sub immediately prior to the Effective Time are fully
authorized in the name of their respective corporations or otherwise to take,
and will take, all such lawful and necessary action.
SECTION 1.14 Material Adverse Effect. When used in connection with the
Company, or Parent or any of its subsidiaries, as the case may be, the term
"MATERIAL ADVERSE EFFECT" means any change, effect or circumstance that,
- ------------------------
individually or when taken together with all other similar or related changes,
effects or circumstances that have occurred prior to the date of determination
of the occurrence of the Material Adverse Effect, is or is reasonably likely to
be materially adverse to the business, prospects, assets (including intangible
assets), financial condition or results of operations of the Company or Parent
and its subsidiaries, as the case may
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<PAGE>
be, taken as a whole, as applicable based on the party making the
representation, warranty or disclosure.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Merger Sub that,
except as set forth in the written disclosure schedule delivered on or prior to
the date hereof by the Company to Parent that is arranged in paragraphs
corresponding to the numbered and lettered paragraphs contained in this Article
II (the "COMPANY DISCLOSURE SCHEDULE"):
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SECTION 2.1 Organization, Qualification and Other Equity Interests. The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Illinois and has the requisite corporate power
and authority necessary to own, lease and operate the properties it purports to
own, operate or lease and to carry on its business as it is now being conducted.
The Company is duly qualified or licensed as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the character of
its properties owned, leased or operated by it or the nature of its activities
makes such qualification or licensing necessary, except where the failure to be
so duly qualified or licensed and in good standing would not have a Material
Adverse Effect. The Company does not directly or indirectly own any equity or
similar interest in, or any interest convertible into or exchangeable or
exercisable for, any equity or similar interest in, any corporation,
partnership, joint venture or other business association or entity.
SECTION 2.2 Articles of Incorporation and By-Laws. The Company has
heretofore furnished to Parent a complete and correct copy of its Articles of
Incorporation and By-Laws as amended to date. Such Articles of Incorporation
and By-Laws are in full force and effect. The Company is not in violation of
any of the provisions of its Articles of Incorporation or By-Laws.
SECTION 2.3 Capitalization. The authorized capital stock of the Company
consists of shares of Company Common Stock. As of December 31, 1997, (a)
16,888,500 shares of Company Common Stock were issued and outstanding, all of
which are validly issued, fully paid and nonassessable, and zero shares were
held in treasury, and (b) 959,909 shares of Company Common Stock were reserved
for future issuance pursuant to outstanding stock options. No change in such
capitalization has occurred between December 31, 1997 and the date hereof.
Except as set forth in Section 2.3 of the Company Disclosure Schedule, there are
no options, warrants or other rights, agreements, arrangements or commitments of
any character relating to the issued or unissued capital stock of the Company or
obligating the Company to issue or sell any shares of capital stock of, or other
equity interests in, the Company. All shares of Company Common Stock subject to
issuance as aforesaid, upon issuance on the terms and conditions specified in
the instruments pursuant to which they are issuable as of the date hereof and
immediately prior to the Effective Time, shall be duly authorized, validly
issued, fully paid and nonassessable. Except as disclosed in Section 2.3 of the
Company Disclosure Schedule, there are
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<PAGE>
no obligations, contingent or otherwise, of the Company to repurchase, redeem or
otherwise acquire any shares of Company Common Stock.
SECTION 2.4 Authority Relative to this Agreement. (a) The Company has
all necessary corporate power and authority to execute and deliver this
Agreement and to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by the Company and the consummation by the Company of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action (other than the Requisite Approval as hereinafter defined), and
no other corporate proceedings on the part of the Company are necessary to
authorize this Agreement or to consummate the transactions so contemplated. The
Board of Directors of the Company has determined that it is advisable and in the
best interest of the Company's shareholders for the Company to enter into a
business combination with Parent upon the terms and subject to the conditions of
this Agreement, and has unanimously recommended that the Company's shareholders
approve and adopt this Agreement and Merger. This Agreement has been duly and
validly executed and delivered by the Company and, assuming the due
authorization, execution and delivery by Parent and Merger Sub, as applicable,
constitutes a legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms.
(b) The affirmative vote of the holders of a majority of the outstanding
shares of Company Common Stock are the only votes (the "REQUISITE APPROVAL") of
------------------
any series of the Company's capital stock necessary to approve this Agreement
and the Merger. The Stockholder Agreements delivered to Parent as of the date
of this Agreement have been signed by the holders of a majority of the
outstanding shares of Company Common Stock (assuming the exercise of all
outstanding stock options).
SECTION 2.5 No Conflict; Required Filings and Consents.
(a) Section 2.5(a) of the Company Disclosure Schedule includes a list of
(i) all loan agreements, indentures, mortgages, pledges, conditional sale or
title retention agreements, security agreements, equipment obligations,
guaranties, standby letters of credit, equipment leases or lease purchase
agreements to which the Company is a party or by which it is bound and (ii) all
contracts, agreements, commitments or other understandings or arrangements to
which the Company is a party or by which it or any of its properties or assets
are bound or affected, but excluding contracts, agreements, commitments or other
understandings or arrangements entered into in the ordinary course of business
and involving, in each case, payments or receipts by the Company of amounts
reasonably expected to be less than $50,000 in any single instance but not more
than $150,000 in the aggregate.
(b) Except as disclosed in Section 2.5(b) of the Company Disclosure
Schedule, (i) the Company has not breached, is not in default under, and has not
received written notice of any breach of or default under, any of the
agreements, contracts or other instruments referred to in clauses (i) or (ii) of
Section 2.5(a), (ii) to the knowledge of the Company, no other party to any of
the agreements, contracts or other instrument referred to in clauses (i) or (ii)
of Section 2.5 (a) has breached or is in default of any of its obligations
thereunder, and (iii) to the knowledge of the
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<PAGE>
Company, each of the agreements, contracts and other instruments referred to in
clauses (i) or (ii) of Section 2.5(a) is in full force and effect, except in any
such case for breaches, defaults or failures to be in full force and effect that
would not, individually or in the aggregate, have a Material Adverse Effect.
(c) The execution and delivery of this Agreement by the Company does not,
and the performance of this Agreement by the Company and the consummation of the
transactions contemplated hereby will not, (i) conflict with or violate the
Articles of Incorporation or By-Laws of the Company, (ii) conflict with or
violate any federal, foreign, state or provincial law, rule, regulation, order,
judgment or decree (collectively, "LAWS") applicable to the Company or by which
----
any of its properties is bound or affected, or (iii) result in any breach of or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or impair the Company's rights or alter the
rights or obligations of any third party under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a security interest, lien, claim, encumbrance or any other
restriction on any of the properties or assets of the Company pursuant to, any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which the Company is a party or
by which the Company or any of its properties is bound or affected, except for
such breaches or defaults which would not have a Material Adverse Effect.
(d) The execution and delivery of this Agreement by the Company does not,
and the performance of this Agreement by the Company will not, require any
consent, approval, authorization or permit on the part of the Company of, or
filing with or notification on the part of the Company to, any federal, foreign,
state or provincial governmental or regulatory authority except for (i)
applicable requirements, if any, of the Securities Act of 1933, as amended, and
the rules and regulations thereunder (the "SECURITIES ACT"), the Securities
--------------
Exchange Act of 1934, as amended, and the rules and regulations thereunder (the
"EXCHANGE ACT"), state securities laws ("BLUE SKY LAWS"), and Nasdaq and the
------------ -------------
filing and recordation of appropriate merger or other documents as required by
the DGCL or the IBCA and (ii) where the failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or notifications,
would not prevent or delay consummation of the Merger, or otherwise prevent the
Company from performing its obligations under this Agreement, and would not have
a Material Adverse Effect.
SECTION 2.6 Compliance, Permits.
(a) Except as disclosed in Section 2.6(a) of the Company Disclosure
Schedule, the Company is in compliance, in all material respects, with Laws
applicable to the Company or by which any of its properties is bound or
affected.
(b) Except as disclosed in Section 2.6(b) of the Company Disclosure
Schedule, the Company holds all material permits, licenses, easements,
variances, exemptions, consents, certificates, orders and approvals from
governmental authorities which are necessary for the operation of the business
of the Company as it is now being conducted (collectively, the
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"COMPANY PERMITS"). The Company is in compliance with the terms of the Company
---------------
Permits, except where the failure to so comply would not have a Material Adverse
Effect.
SECTION 2.7 Financial Statements.
(a) Attached to the Company Disclosure Schedule are (i) the audited
consolidated balance sheet of the Company as of December 31, 1997, together with
the related consolidated statements of income, cash flows and shareholders'
equity for the fiscal year then ended, (the "AUDITED FINANCIAL STATEMENTS").
----------------------------
(b) Each of the Audited Financial Statements was prepared in accordance
with generally accepted accounting principles applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes
thereto), and each fairly presents in all material respects the consolidated
financial position of the Company as at the respective dates thereof and the
consolidated results of its operations, cash flows and stockholder equity for
the periods indicated.
SECTION 2.8 Absence of Certain Changes or Events. Since December 31,
1997, the Company has conducted its business in the ordinary course and there
has not occurred: (a) any Material Adverse Effect; (b) any amendments to the
Articles of Incorporation or By-laws of the Company; (c) any damage to,
destruction, sale or loss of any asset of the Company (whether or not covered by
insurance) that has had or could reasonably be expected to have a Material
Adverse Effect; (d) any material change by the Company in its accounting
methods, principles or practices; (e) any material revaluation by the Company of
any of its assets, including, without limitation, writing off notes or accounts
receivable other than in the ordinary course of business; or (f) any sale of any
material property or assets of the Company, except in the ordinary course of
business.
SECTION 2.9 No Undisclosed Liabilities. Except as disclosed in Section
2.9 of the Company Disclosure Schedule, the Company has no liabilities
(absolute, accrued, contingent or otherwise), except liabilities (a) adequately
provided for in the Audited Financial Statements, (b) incurred since December
31, 1997 in the ordinary course of business consistent with past practice, or
(c) incurred in connection with this Agreement.
SECTION 2.10 Absence of Litigation. Except as disclosed in Section 2.10
of the Company Disclosure Schedule, there are no claims, actions, suits,
proceedings or investigations pending or, to the knowledge of the Company,
threatened against the Company or any properties or rights of the Company before
any federal, foreign, state or provincial court, arbitrator or administrative,
governmental or regulatory authority or body.
SECTION 2.11 Employee Benefit Plans, Employment Agreements.
(a) Section 2.11 (a) of the Company Disclosure Schedule lists all employee
pension plans (as defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")), all employee welfare plans (as
-----
defined in Section 3(1) of ERISA), and all other
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material bonus, stock option, stock purchase, incentive, deferred compensation,
supplemental retirement, severance and other similar fringe or employee benefit
plans, programs or arrangements, and any current employment, executive
compensation, consulting or severance agreements, written or otherwise, for the
benefit of, or relating to, any present or former employee (including any
beneficiary of any such employee) of, or any present or former consultant
(including any beneficiary of any such consultant) to the Company, any trade or
business (whether or not incorporated) which is a member of a controlled group
including the Company or which is under common control with the Company (an
"ERISA AFFILIATE") within the meaning of Section 414 of the Code (all such
---------------
plans, practices and programs are referred to as the "COMPANY EMPLOYEE PLANS").
----------------------
There have been made available to Parent copies of (i) the most recent annual
report on Form 5500 series, with accompanying schedules and attachments, filed
with respect to each Company Employee Plan required to make such a filing, and
(ii) the most recent Internal Revenue Service determination letter with respect
to each Company Employee Plan intended to be qualified under Section 401(a) of
the Code. For purposes of this Section 2.11(a), a Company Employee Plan shall be
deemed material if it involves payments by or grants of options or other
securities with a value in excess of $5,000 .
(b) (i) none of the Company Employee Plans promises or provides retiree
medical or other retiree welfare benefits to any person, and neither the Company
nor any ERISA Affiliate has ever maintained, contributed to, or been required to
contribute to, any plan that is or was a "multiemployer plan" as such term is
defined in Section 3(37) of ERISA, a pension plan subject to Title IV of ERISA
or a plan subject to Part 3 of Title I of ERISA; (ii) there has been no
"prohibited transaction," as such term is defined in Section 406 of ERISA and
Section 4975 of the Code, with respect to any Company Employee Plan, which could
result in any material liability of the Company; (iii) all Company Employee
Plans are in compliance in all material respects with the requirements
prescribed by any and all Laws (including ERISA and the Code), currently in
effect with respect thereto (including all applicable requirements for
notification to participants or the Department of Labor, Internal Revenue
Service (the "IRS") or Secretary of the Treasury), and the Company has performed
---
all material obligations required to be performed by it under, is not in any
material respect in default under or violation of, and have no knowledge of any
default or violation by any other party to, any of the Company Employee Plans;
(iv) each Company Employee Plan intended to qualify under Section 401(a) of the
Code and each trust intended to qualify under Section 501(a) of the Code is the
subject of a favorable determination letter from the IRS, and nothing has
occurred which may reasonably be expected to impair such determination; and (v)
there are no lawsuits or other claims (other than claims for benefits in the
ordinary course) pending or, to the best knowledge of the Company, threatened
with respect to any Company Employee Plan.
(c) Section 2.11(c) of the Company Disclosure Schedule sets forth a true
and complete list of each current or former employee, officer or director of the
Company who holds (i) any option to purchase Company Common Stock as of the date
hereof, together with the number of shares of Company Common Stock subject to
such option, the option price of such option (to the extent determined as of the
date hereof), whether such option is intended to qualify as an incentive
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<PAGE>
stock option within the meaning of Section 422(b) of the Code (an "ISO"), and
---
the expiration date of such option; (ii) any other right, directly or
indirectly, to acquire Company Common Stock, together with the number of shares
of Company Common Stock subject to such right. Section 2.11(c) of the Company
Disclosure Schedule also sets forth the total number of such ISOs, such
nonqualified options and such other rights.
(d) Section 2.11(d) of the Company Disclosure Schedule sets forth a true
and complete list of: (i) all employment agreements with officers of the Company
or; (ii) all agreements with consultants who are individuals obligating the
Company to make minimum annual cash payments in an amount exceeding $75,000
(iii) all employees of, or consultants to, the Company who have executed a non-
competition agreement with the Company; (iv) all severance agreements, programs
and policies of the Company with or relating to its employees, in each case with
outstanding commitments exceeding $75,000, excluding programs and policies
required to be maintained by law; and (v) all plans, programs, agreements and
other arrangements of the Company with or relating to its employees which
contain change in control provisions.
SECTION 2.12 Labor Matters. (i) To the knowledge of the Company, there
are no controversies pending or threatened between the Company and any of its
employees; (ii) the Company is not a party to any collective bargaining
agreement or other labor union contract applicable to persons employed by the
Company, nor does the Company know of any activities or proceedings of any labor
union to organize any such employees; and (iii) the Company has no knowledge of
any strikes, slowdowns, work stoppages, lockouts, or threats thereof, by or with
respect to any employees of the Company, in each case as would not have a
Material Adverse Effect.
SECTION 2.13 Restrictions on Business Activities. Except for this
Agreement, to the Company's knowledge, there is no agreement, judgment,
injunction, order or decree binding upon the Company or any other person which
has or could reasonably be expected to have the effect of prohibiting or
impairing any material business practice of the Company or the acquisition of
property by the Company, except where the failure to acquire such property would
not have a Material Adverse Effect.
SECTION 2.14 Title to Property. The Company has good and marketable title
to all of its material properties and assets, free and clear of all liens,
charges and encumbrances, except liens for taxes not yet due and payable and
such liens or other imperfections of title, if any, which would not have a
Material Adverse Effect; and, to the knowledge of the Company, all leases
pursuant to which the Company leases from others real or personal property, are
in good standing, valid and effective in accordance with their respective terms,
and there is not, to the knowledge of the Company, under any of such leases, any
existing material default or event of default (or event which with notice or
lapse of time, or both, would constitute a material default). The Company does
not own any real property.
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<PAGE>
SECTION 2.15 Taxes.
(a) For purposes of this Agreement, "Tax" or "Taxes" shall mean taxes,
fees, levies, duties, tariffs, imposts, and governmental impositions or charges
of any kind in the nature of (or similar to) taxes, payable to any federal,
state, local or foreign taxing authority, including, without limitation, (i)
income, franchise, profits, gross receipts, ad valorem, net worth, value added,
sales, use, service, real or personal property, special assessments, capital
stock, license, payroll, withholding, employment, social security (or similar),
workers' compensation, unemployment compensation, environmental (including Taxes
under Code section 59A) utility, severance, production, excise, stamp,
occupation, premiums, windfall profits, transfer and gains taxes, and (ii)
interest, penalties, additional taxes and additions to tax imposed with respect
thereto; and "Tax Returns" shall mean returns, reports, declarations, forms and
information statements with respect to Taxes required to be filed with the IRS
or any other federal, foreign, state or provincial taxing authority, domestic or
foreign, including, without limitation, consolidated, combined and unitary tax
returns, including any amendments thereto.
(b) (i) all Tax Returns of, relating to or which include the Company which
are required to have been filed have been filed on a timely basis with the
appropriate authorities and all such Tax Returns are true, correct and complete
in all material respects, (ii) all material Taxes required to have been paid by
the Company (whether or not shown on any Tax Return) have been paid in full on a
timely basis to the appropriate authorities, and (iii) all Taxes or other
amounts required to have been collected or withheld by the Company have been
timely and properly collected or withheld and paid to the appropriate
authorities.
(c) Except as disclosed in Section 2.15(c) of the Company Disclosure
Schedule, (1) no claim has ever been made by an authority in a jurisdiction
where the Company does not file Tax Returns that the Company is or may be
subject to Tax by that jurisdiction, (2) no Taxing authority has asserted in
writing any adjustment, deficiency, or assessment that could result in
additional Tax for which the Company is or may be liable, (3) there is no
pending audit, examination, investigation, dispute, proceeding or claim for
which the Company has received notice relating to any Tax for which the Company
is or may be liable, (4) no statute of limitations with respect to any Tax for
which the Company is or may be liable has been waived or extended, (5) the due
date of any Tax Returns that the Company is required to file has not been
extended, and (6) the Company is not a party to any Tax sharing or Tax
allocation agreement, arrangement or understanding and (7) there are no powers
of attorney with respect to Taxes of the Company currently in force.
(d) There are no liens on any of the assets of the Company which arose in
connection with any failure or asserted failure to pay any Tax, other than liens
for current Taxes not yet due and payable.
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<PAGE>
(e) The Company is not a party to any contract, agreement, plan or
arrangement that, individually or collectively, could give rise to any payment
in the nature of compensation that would not be deductible by reason of Sections
162, 280G or 404 of the Code. No consent has been filed under Section 341(f) of
the Code with respect to the Company.
(f) The Company has not been a member of an affiliated group filing a
consolidated federal income Tax Return, and the Company is not liable for the
Taxes of any person under Treasury Regulation 1.1502-6 (or any similar provision
of state, local, or foreign law) as transferee or successor, by contract or
otherwise. The Company is not a party to any joint venture, partnership or
other arrangement that could be treated as a partnership for Tax purposes.
(g) Copies of (i) any Tax examinations, (ii) extensions of statutes of
limitations, (iii) the federal, state, local and foreign income Tax Returns of
the Company, and (iv) substantive correspondence between the Company and all
Taxing authorities for its last three (3) taxable years have previously been
furnished to the Parent and such Tax Returns are true, correct and complete.
(h) Schedule 2.15(h) lists (A) the Company's Tax basis in its assets as of
December 31, 1997 and as utilized in the Tax Returns, (B) the amount of any net
operating loss, net capital loss, unused investment or other credit, unused
foreign Tax, excess charitable contribution, adjustments under Section 481 of
the Code and other Tax attributes allocable to the Company as shown on the Tax
Returns, and (C) the amount of any deferred gain or loss allocable to the
Company arising out of any deferred intercompany transaction and any excess loss
account attributable to the Company.
(i) The unpaid Taxes of the Company (A) did not as of December 31, 1997
exceed the reserve for Taxes (other than deferred Taxes established to reflect
book-tax timing differences) set forth on the Company's Audited Financial
Statements and (B) do not exceed that reserve as adjusted for the passage of
time through the Closing Date in accordance with the past custom and practice of
the Company in filing its Tax Returns.
(j) No Tax is required to be withheld by Parent as a result of the
payment of the Merger Consideration pursuant to this Agreement.
SECTION 2.16 Environmental Matters. The Company: (i) has obtained all
material approvals which are required to be obtained under all applicable
federal, state or local laws or any regulation, code, plan, order, decree,
judgment, notice or demand letter issued, entered, promulgated or approved
thereunder relating to pollution or protection of the environment, including
laws relating to emissions, discharges, releases or threatened releases of
pollutants, contaminants, or hazardous or toxic materials or wastes into ambient
air, surface water, ground water, or land or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants or hazardous or toxic
materials or wastes by the Company ("ENVIRONMENTAL LAWS"); (ii) is in material
------------------
compliance with all terms and conditions of such required approvals, and also is
in material compliance with all
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other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in applicable
Environmental Laws; and (iii) as of the date hereof, is not aware of nor has
received notice of any past or present violations by the Company of
Environmental Laws or any event, condition, circumstance, activity, practice,
incident, action or plan which is reasonably likely to interfere with or prevent
continued material compliance with or which would give rise to any material
common law or statutory liability, or otherwise form the basis of any material
claim, action, suit or proceeding, against the Company based on or resulting
from the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling, or the emission, discharge or release into the
environment, of any pollutant, contaminant or hazardous or toxic material or
waste.
SECTION 2.17 Intellectual Property. Except as disclosed in Section 2.17
of the Company Disclosure Schedule, the Company owns or licenses all patents,
patent applications, trademarks, service marks, trade names, corporate names,
copyrights, trade secrets or other proprietary rights necessary to the conduct
of the business of the Company. Except as listed in Section 2.17 of the Company
Disclosure Schedule, the Company has not licensed from any third party any
proprietary rights or, to the knowledge of the Company, infringed,
misappropriated or otherwise conflicted with any proprietary rights of any third
parties. To the Company's knowledge, no activity of any third party infringes
upon the rights of the Company to the items listed in Section 2.17 of the
Company Disclosure Section.
SECTION 2.18 Immigration Compliance. (a) The Company is in compliance in
all material respects with all applicable foreign, federal, state and local
laws, rules, directives and regulations relating to the employment authorization
of its employees (including, without limitation, the Immigration Reform and
Control Act of 1986, as amended and supplemented, and Section 212(n) and 274A of
the Immigration and Nationality Act, as amended and supplemented, and all
implementing regulations relating thereto), and the Company has not employed nor
is it currently employing any unauthorized aliens (as such term is defined under
8 CFR 274a.1(a)).
(b) The Company has not received any notice from the Immigration and
Naturalization Service (the "INS") or the U.S. Department of Labor (the "DOL")
--- ---
of the disapproval or denial of any visa petition pending before the INS or
labor certification pending before the DOL on behalf of any employee or
prospective employee of the Company.
(c) Section 2.18 (c) of the Company Disclosure Schedule contains a true,
complete and accurate list of all non-immigrant or immigrant visa petitions
pending before the INS and labor certifications pending before the DOL on behalf
of any of the employees or prospective employees of the Company.
(d) Since the approval of each of their respective visa petitions, there
has been no material change in the terms and conditions of employment of any
employees of the Company, provided that it is acknowledged that certain
employees from time to time unilaterally breach the terms of their employment
with the Company.
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SECTION 2.19 Insurance. Section 2.19 of the Company Disclosure Schedule
lists each material insurance policy maintained by the Company with respect to
the Company's properties, assets and operations and sets forth the date of
expiration of each such insurance policy. All of such insurance policies are in
full force and effect. The Company is not in default with respect to its
obligations under any of such insurance policies, except for such defaults which
would not have a Material Adverse Effect.
SECTION 2.20 Accounts Receivable. The accounts receivable of the Company
as reflected in the most recent Financial Statements, to the extent uncollected
on the date hereof, and the accounts receivable reflected on the books of the
Company are valid and existing and represent monies due, and the Company has
made reserves reasonably considered adequate for receivables not collectible in
the ordinary course of business, and (subject to the aforesaid reserves) are
subject to no refunds or other adjustments and to no defenses, rights of setoff,
assignments, restrictions, encumbrances or conditions enforceable by third
parties on or affecting any thereof, except for such refunds, adjustments,
defenses, rights of setoff, assignments, restrictions, encumbrances or
conditions as would not have a Material Adverse Effect.
SECTION 2.21 Pooling Matters. Neither the Company nor any of its
affiliates has, to the Company's knowledge and based upon consultation with its
independent accountants, taken or agreed to take any action that could affect
the ability of Parent to account for the business combination to be effected by
the Merger as a pooling of interests under generally accepted accounting
procedures. Without limiting the generality of the foregoing sentence, and
except as set forth in Section 2.21 of the Company Disclosure Schedules, (i) the
Company has not had any treasury stock transactions and none are planned during
the period between the date hereof and the Closing Date, (ii) the Company has
not adopted any new or amended any existing stock option or stock purchase
plans, (iii) the Company has not disposed of any assets other than in the
ordinary course of business, and (iv) none of the shareholders of the Company
have entered into any agreement that would restrict such shareholders' voting
rights with respect to the Parent Shares to be issued pursuant to this
Agreement. The failure of this representation to be true and correct, shall, if
the Merger is not able to be accounted for as a pooling of interests, constitute
a breach of this Agreement by the Company for the purposes of Section 7.1(f).
SECTION 2.22 Brokers. No broker, finder or investment banker, other than
Hambrecht & Quist ("H&Q"), the fees and expenses of which will be paid by the
---
Company, is entitled to any brokerage, finder's or other fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company or its affiliates. The Company
has heretofore furnished to Parent a complete and correct copy of all agreements
between the Company and H&Q pursuant to which such firm would be entitled to any
payment relating to the transactions contemplated hereunder.
SECTION 2.23 Change in Control Payments. Except as set forth on Section
2.11(d) or Section 2.23 of the Company Disclosure Schedule, the Company has no
plans, programs or
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agreements to which they are parties, or to which they are subject, pursuant to
which payments may be required or acceleration of benefits may be required upon
a change of control of the Company.
SECTION 2.24 Expenses. Section 2.24 of the Company Disclosure Schedule
attached hereto sets forth a description of all of the estimated third party
expenses of the Company, including those payable to auditors, consultants and
other professionals, as of the date hereof which the Company expects to incur,
or has incurred, in connection with the transactions contemplated by this
Agreement. Notwithstanding anything else to the contrary herein, the
information set forth in Section 2.24 of the Company Disclosure Schedule shall
not act as a limitation on such third party expenses or otherwise limit the
rights of such third parties against the Company.
SECTION 2.25 Full Disclosure. No representation or warranty made by the
Company contained in this Agreement and no statement contained in any
certificate or schedule furnished by the Company to Parent or Merger Sub in, or
pursuant to the provisions of, this Agreement, including without limitation the
Company Disclosure Schedule, contains any untrue statement of a material fact or
omits or will omit to state any material fact necessary, in the light of the
circumstances under which it was made, in order to make statements herein or
therein not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub hereby, jointly and severally, represent and warrant
to the Company and the shareholders of the Company that, except as set forth in
the written disclosure schedule delivered on or prior to the date hereof by
Parent to the Company that is arranged in paragraphs corresponding to the
numbered and lettered paragraphs contained in this Article III (the "PARENT
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DISCLOSURE SCHEDULE"):
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SECTION 3.1 Organization and Qualification; Subsidiaries. Each of Parent
and its subsidiaries is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation and has
the requisite corporate power and authority necessary to own, lease and operate
the properties it purports to own, operate or lease and to carry on its business
as it is now being conducted. Each of Parent and each of its subsidiaries is
duly qualified or licensed as a foreign corporation to do business, and is in
good standing, in each jurisdiction where the character of its properties owned,
leased or operated by it or the nature of its activities makes such
qualification or licensing necessary, except for such failures to be so duly
qualified or licensed and in good standing that would not have a Material
Adverse Effect.
SECTION 3.2 Charter and By-Laws. Each of Parent and Merger Sub has
heretofore furnished to the Company a complete and correct copy of its Articles
of Organization and By-Laws, as amended to date. Such Articles of Organization
and By-Laws are in full force and effect.
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SECTION 3.3 Capitalization. The authorized capital stock of the Parent
consists of (i) 99,000,000 shares of Parent Common Stock, and (ii) 1,000,000
shares of preferred stock, par value $0.10 per share ("PREFERRED STOCK"). As of
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December 31, 1997, there were (i) 25,055,632 shares of Parent Common Stock
issued and outstanding, (ii) no shares of Preferred Stock outstanding, and (iii)
[ ] shares of Parent Common Stock reserved for future issuance
pursuant to Parent's stock plans (the "PARENT STOCK PLANS"). Except for awards
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outstanding under the Parent Stock Plans or as otherwise set forth in Section
3.3 of the Parent Disclosure Schedule, there are no options, warrants or other
rights, agreements, arrangements or commitments of any character relating to the
issued or unissued shares of capital stock of the Parent or obligating Parent to
issue or sell any shares of capital stock of, or other equity interests in, the
Parent.
SECTION 3.4 Authority Relative to this Agreement. Each of Parent and
Merger Sub has all necessary corporate power and authority to execute and
deliver this Agreement and to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by Parent and Merger Sub and the consummation by Parent and
Merger Sub of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action on the part of Parent and Merger
Sub, and no other corporate proceedings on the part of Parent or Merger Sub are
necessary to authorize this Agreement or to consummate the transactions
contemplated thereby. This Agreement has been duly and validly executed and
delivered by Parent and Merger Sub and, assuming the due authorization,
execution and delivery by the Company, constitutes a legal, valid and binding
obligation of Parent and Merger Sub enforceable against each of them in
accordance with its terms.
SECTION 3.5 No Conflict, Required Filings and Consents.
(a) Except as set forth in Section 3.5(a) of the Parent Disclosure
Schedule, the execution and delivery of this Agreement by Parent and Merger Sub
do not, and the performance of this Agreement by Parent and Merger Sub will not,
(i) conflict with or violate the Articles of Incorporation or By-Laws of Parent
or Merger Sub, (ii) conflict with or violate any Laws applicable to Parent or
any of its subsidiaries or by which its or their respective properties are bound
or affected, or (iii) result in any breach of or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or impair Parent's or any of its subsidiaries' rights or alter the rights or
obligations of any third party under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any of the properties or assets of Parent
or any of its subsidiaries pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which Parent or any of its subsidiaries is a party or by which
Parent or any of its subsidiaries or its or any of their respective properties
are bound or affected.
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(b) The execution and delivery of this Agreement by Parent and Merger Sub
does not, and the performance of this Agreement by Parent and Merger Sub will
not, require any consent, approval, authorization or permit on the part of the
Parent or Merger Sub of, or filing with or notification on the part of the
Parent or Merger Sub to, any federal foreign, state or provincial governmental
or regulatory authority except (i) for applicable requirements, if any, of the
Securities Act, the Exchange Act, the Blue Sky Laws and Nasdaq and the filing
and recordation of appropriate merger or other documents as required by the DGCL
or IBCA, and (ii) where the failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would not
prevent or delay consummation of the Merger, or otherwise prevent Parent or
Merger Sub from performing their respective obligations under this Agreement,
and would not have a Material Adverse Effect.
SECTION 3.6 SEC Filings; Financial Statements.
(a) Parent has filed all forms, reports and documents required to be filed
with the Securities and Exchange Commission (the "SEC") and has heretofore
---
delivered to the Company, in the form filed with the SEC, (i) its Annual Report
on Form 10-K for the fiscal year ended June 29, 1997, (ii) its Quarterly Report
on Form 10-Q for the quarter ended September 27, 1997, (iii) its proxy statement
relating to Parent's annual meeting of shareholders held November 20, 1997, (iv)
its proxy statement relating to Parent's special meeting of shareholders held
December 30, 1997, (v) its Current Reports on Forms 8-K filed with the SEC on
December 5, 1997 and December 11, 1997 and its Forms 8-K/A filed with the SEC on
December 12, 1997 and February 9, 1998 and (vi) all amendments and supplements
to all such reports and statements filed by Parent with the SEC (collectively,
the "PARENT SEC REPORTS"). The Parent SEC Reports (i) were prepared in all
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material respects in accordance with the requirements of the Securities Act or
the Exchange Act, as the case may be, and (ii) did not at the time they were
filed (or if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing) contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. None of Parent's
subsidiaries is required to file any forms, reports or other documents with the
SEC.
(b) Each of the consolidated financial statements (including, in each
case, any related notes thereto) contained in the Parent SEC Reports has been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis throughout the periods involved (except as may be indicated
in the notes thereto) and each fairly presents in all material respects the
consolidated financial position of Parent and its subsidiaries as at the
respective dates thereof and the consolidated results of its operations and cash
flows for the periods indicated, except that the unaudited interim financial
statements were or are subject to normal and recurring year-end adjustments
which were not or are not expected to be material in amount.
SECTION 3.7 Pooling Matters. Neither Parent nor any of its affiliates
has, to Parent's knowledge and based upon consultation with its independent
accountants, taken or agreed to take
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any action that could affect the ability of Parent to account for the business
combination to be effected by the Merger as a pooling of interests under
generally accepted accounting procedures. The failure of this representation to
be true and correct shall, if the Merger is not able to be accounted for as a
pooling of interests, constitute a breach of the Agreement by Parent for the
purposes of Section 7.1(f).
SECTION 3.8 Absence of Certain Changes or Events. Except as set forth in
Section 3.8 of the Parent Disclosure Schedule, between June 29, 1997 and the
date hereof, except as disclosed in the Parent SEC Reports, there has not been
any Material Adverse Effect or any change, or any development or combination of
developments which would be required to be disclosed as a material change in
response to Item 11 of Form S-3.
SECTION 3.9 Ownership of Merger Sub; No Prior Activities. Merger Sub is
a newly formed corporation which has conducted no business activity and was
formed solely for the purpose of engaging in the transactions contemplated by
this Agreement. As of the date hereof and the Effective Time, except for
obligations or liabilities incurred in connection with its incorporation or
organization and the transactions contemplated by this Agreement and except for
this Agreement and any other agreements or arrangements contemplated by this
Agreement, Merger Sub has not and will not have incurred, directly or
indirectly, through any subsidiary or affiliate, any obligations or liabilities
or engaged in any business activities of any type or kind whatsoever or entered
into any agreements or arrangements with any person. Parent has no present plan
or intention to sell or otherwise dispose of any of the assets of the Company
acquired in the Merger, except for dispositions in the ordinary course of
business or transfers described in Section 368(a)(2)(C) of the Code.
SECTION 3.10 Validity of Parent Common Stock. The shares of Parent Common
Stock to be issued pursuant to this Agreement will be, when issued, duly
authorized, validly issued, fully paid and nonassessable and subject to no
preemptive rights.
SECTION 3.11 Full Disclosure. No representation or warranty made by Parent
contained in this Agreement and no statement contained in any certificate or
schedule furnished by Parent or Merger Sub to the Company in, or pursuant to the
provisions of, this Agreement, including without limitation the Parent
Disclosure Schedule, contains any untrue statement of a material fact or omits
to state any material fact necessary, in the light of the circumstances under
which it was made, in order to make the statements herein not misleading.
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ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 4.1 Conduct of Business by the Company Pending the Merger. The
Company covenants and agrees that, during the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
or the Effective Time, unless Parent shall otherwise agree in writing, which
agreement shall not be unreasonably withheld, the Company shall conduct its
business only in, and the Company shall not take any action except in, the
ordinary course of business and in a manner consistent with past practice other
than actions taken by the Company in contemplation of the Merger; and the
Company shall use all reasonable commercial efforts to preserve substantially
intact the business organization of the Company, to keep available the services
of the present officers, employees and consultants of the Company and to
preserve the present relationships of the Company with customers, suppliers and
other persons with which the Company has business relations. By way of
amplification and not limitation, except as contemplated by this Agreement, the
Company shall not, during the period from the date of this Agreement and
continuing until the earlier of the termination of this Agreement or the
Effective Time, directly or indirectly do, or propose to do, any of the
following without the prior written consent of Parent:
(a) amend the Articles of Incorporation or By-Laws of the Company except
pursuant to the Merger Agreement;
(b) issue, sell, pledge, dispose of or encumber, or authorize the
issuance, sale, pledge, disposition or encumbrance of, any shares of capital
stock of any class, or any options, warrants, convertible securities or other
rights of any kind to acquire any shares of capital stock, or any other
ownership interest (including, without limitation, any phantom interest) in the
Company;
(c) except in the ordinary course of business, sell, pledge, dispose of
or encumber any assets (tangible or intangible) of the Company except for (i)
dispositions of obsolete or worthless assets and (ii) sales of assets not in
excess of $50,000 in the aggregate;
(d) (i) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination thereof) in
respect of any of its capital stock, (ii) split, combine or reclassify any of
its capital stock or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock or (iii) amend the terms or change the period of exercisability
of, purchase, repurchase, redeem or otherwise acquire, any of its securities
including without limitation, shares of Company Common Stock or any option,
warrant or right, directly or indirectly, to acquire shares of Company Common
Stock, or propose to do any of the foregoing;
(e) (i) acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership or other business organization or division
thereof; (ii) except in the
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ordinary course of business and only under the Company's revolving line of
credit, incur any indebtedness for borrowed money or issue any debt securities
or assume, guarantee or endorse or otherwise as an accommodation become
responsible for, the obligations of any person or, except in the ordinary course
of business consistent with past practice, make any loans or advances; (iii)
enter into or amend any material contract or agreement; (iv) authorize any
capital expenditures or purchases of fixed assets which are, in the aggregate,
in excess of $100,000; or (v) enter into or amend any contract, agreement,
commitment or arrangement to effect any of the matters prohibited by this
Section 4.1(e);
(f) increase the compensation payable or to become payable to its
officers, increase compensation payable or to become payable to its employees
other in the ordinary course of business, or grant any severance or termination
pay to, or enter into any employment or severance agreement with any director,
officer or other employee of the Company, or establish, adopt, enter into or
amend any collective bargaining, bonus, profit sharing, thrift, compensation,
stock option, restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, agreement, trust, fund, policy
or arrangement for the benefit of any current or former directors, officers or
employees, except, in each case, as may be required by law;
(g) take any action to change accounting policies or procedures
(including, without limitation, procedures with respect to revenue recognition,
payments of accounts payable and collection of accounts receivable);
(h) make any material tax election inconsistent with past practice or
settle or compromise any material federal, state, local or foreign tax liability
or agree to an extension of a statute of limitations;
(i) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction in the ordinary course of business and
consistent with past practice of liabilities reflected or reserved against in
the Financial Statements or incurred in the ordinary course of business and
consistent with past practice; or
(j) take, or agree in writing or otherwise to take, any of the actions
described in Sections 4.1 (a) through (i) above, or any action which would make
any of the representations or warranties of the Company contained in this
Agreement untrue or incorrect or prevent the Company from performing or cause
the Company not to perform its covenants hereunder.
SECTION 4.2 No Solicitation.
(a) The Company shall not, directly or indirectly, through any officer,
director, employee, representative or agent of the Company, (i) solicit,
initiate or encourage the initiation of any inquiries or proposals regarding any
merger, sale of substantial assets, sale of shares of capital stock (including
without limitation by way of a tender offer) or similar transactions involving
the
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Company other than the Merger (any of the foregoing inquiries or proposals
being referred to herein as an "ACQUISITION PROPOSAL"), (ii) engage in
--------------------
negotiations or discussions concerning, or provide any nonpublic information to
any person relating to, any Acquisition Proposal or (iii) agree to, approve or
recommend any Acquisition Proposal.
(b) The Company shall immediately notify Parent after receipt of any
Acquisition Proposal, or any modification of or amendment to any Acquisition
Proposal, or any request for nonpublic information relating to the Company in
connection with an Acquisition Proposal or for access to the properties, books
or records of the Company by any person or entity that informs the Board of
Directors of the Company that it is considering making, or has made, an
Acquisition Proposal. Such notice to Parent shall be made orally and in
writing.
(c) The Company shall immediately cease and cause to be terminated any
existing discussions or negotiations with any persons (other than Parent and
Merger Sub) conducted heretofore with respect to any of the foregoing. The
Company agrees not to release any third party from the confidentiality
provisions of any confidentiality agreement to which the Company is a party.
(d) The Company shall ensure that the officers, directors and employees
of the Company and any investment banker or other advisor or representative
retained by the Company are aware of the restrictions described in this Section
4.2.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.1 Shareholder Meeting. The Company shall call and hold a
meeting of the shareholders of the Company, or in lieu thereof cause an
effective written action of the shareholders to be executed (the "COMPANY
-------
SHAREHOLDERS MEETING"), which meeting shall be held or written action obtained
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as promptly as practicable after the date of this Agreement and in accordance
with applicable laws for the purpose of obtaining the approval of the Merger,
this Agreement and the transactions contemplated hereby. The Company shall use
its reasonable efforts to obtain the approval of all of its shareholders in
respect of the Merger, this Agreement and in respect of the transactions
contemplated hereby.
SECTION 5.2 Access to Information; Confidentiality. Upon reasonable
notice, the Company and Parent shall each afford to the officers, employees,
accountants, counsel and other representatives of the other, reasonable access,
during the period from the date of this Agreement to the Effective Time, to all
its properties, books, contracts, commitments and records and, during such
period, the Company and Parent each shall furnish promptly to the other all
information concerning its business, properties and personnel as such other
party may reasonably request, and each shall make available to the other the
appropriate individuals (including attorneys, accountants
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and other professionals) for discussion of the other's business, properties and
personnel as either Parent or the Company may reasonably request.
SECTION 5.3 Consents; Approvals. The Company and Parent shall each use
their reasonable efforts to obtain all consents, waivers, approvals,
authorizations or orders (including, without limitation, all United States
governmental and regulatory rulings and approvals), and the Company and Parent
shall make all filings (including, without limitation, all filings with United
States governmental or regulatory agencies) required in connection with the
authorization, execution and delivery of this Agreement by the Company, on the
one hand, and Parent and Merger Sub, on the other hand, and the consummation by
them of the transactions contemplated hereby, in each case as promptly as
practicable. The Company and Parent shall furnish promptly all information
required to be included in any application or other filing to be made pursuant
to the rules and regulations of any United States or foreign governmental body
in connection with the transactions contemplated by this Agreement.
SECTION 5.4 Agreements with Respect to Affiliates. The Company shall
deliver to Parent a letter (the "AFFILIATE LETTER") identifying all persons who
----------------
are, at the time of the Company Shareholders Meeting, "affiliates" of the
Company under the Securities Act. The Company shall use reasonable efforts to
cause each person who is identified as an "affiliate" in the Affiliate Letter to
deliver to Parent, prior to the Effective Time, a written agreement (an
"AFFILIATE AGREEMENT") in connection with restrictions on affiliates in respect
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of pooling of interests accounting treatment, in substantially the form of
Exhibit 5.4.
SECTION 5.5 Stockholder Agreement and Investment Letter. The Company
shall use reasonable efforts to cause each shareholder of the Company to execute
a Stockholder Agreement and Investment Letter (each a "STOCKHOLDER AGREEMENT")
---------------------
in the form of Exhibit 5.5 concurrently with the execution of this Agreement or
as promptly as practicable after (a) the date of this Agreement (with respect to
shareholders as of the date of this Agreement) or (b) the date such persons
become shareholders prior to the Effective Time.
SECTION 5.6 Notification of Certain Matters. The Company shall give
prompt notice to Parent, and Parent shall give prompt notice to the Company, of
(i) the occurrence or nonoccurrence of any event the occurrence or nonoccurrence
of which would be likely to cause any representation or warranty contained in
this Agreement to become materially untrue or inaccurate, or (ii) any failure of
the Company, Parent or Merger Sub, as the case may be, materially to comply with
or satisfy any covenant, condition or agreement to be complied with or satisfied
by it hereunder; provided, however, that the delivery of any notice pursuant to
this Section shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice; and provided further that failure
to give such notice shall not be treated as a breach of covenant for the
purposes of Sections 6.2(a) or 6.3(a) unless the failure to give such notice
results in material prejudice to the other party.
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SECTION 5.7 Further Action/Tax Treatment. Upon the terms and subject to
the conditions hereof each of the parties hereto shall use all reasonable
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all other things necessary, proper or advisable to consummate and make
effective as promptly as practicable the transactions contemplated by this
Agreement, to obtain in a timely manner all necessary waivers, consents and
approvals and to effect all necessary registrations and filings, and otherwise
to satisfy or cause to be satisfied all conditions precedent to its obligations
under this Agreement. None of Parent, Merger Sub and the Company will knowingly
(both before and after consummation of the Merger) take any actions, other than
those contemplated by this Agreement, which would prevent the transaction
effected through the Merger from qualifying as a reorganization under the
provisions of Section 368 of the Code. Notwithstanding anything to the contrary
in this Agreement, Parent shall not have any liability for the Taxes of any
shareholder of the Company resulting from the failure of the transaction
effected through the Merger to qualify as a reorganization under the provisions
of Section 368(a) of the Code, except that Parent shall be liable for breaches
of the representations and warranties contained in Section 3.9 hereof to the
extent set forth in Section 8.1(h) hereof.
SECTION 5.8 Public Announcements. Parent, Merger Sub and the Company
shall consult with each other before issuing any press release with respect to
the Merger or this Agreement and shall not issue any such press release or make
any such public statement without the prior consent of the other party, which
shall not be unreasonably withheld; provided, however, that Parent may, without
the prior consent of the Company, issue such press release or make such public
statement as may upon the advice of counsel be required by law or the rules and
regulations of the Nasdaq National Market if it has used reasonable efforts to
consult with the Company prior thereto.
SECTION 5.9 Conveyance Taxes. Parent, Merger Sub and the Company shall
cooperate in the preparation, execution and filing of all returns,
questionnaires, applications, or other documents regarding any gains, sales,
use, transfer, value added, stock transfer and stamp taxes, any transfer,
recording, registration and other fees, and any similar taxes which become
payable in connection with the transactions contemplated hereby that are
required or permitted to be filed at or before the Effective Time.
SECTION 5.10 Pooling Accounting Treatment. Each of Parent, Merger Sub and
the Company agrees prior to the Closing not to take any action that to its
knowledge could reasonably be expected to adversely affect the ability of Parent
to treat the Merger as a pooling of interests, and each of Parent and the
Company agrees to take such action as may be reasonably required to negate the
impact of any past actions which to its knowledge could reasonably be expected
to adversely impact the ability of Parent to treat the Merger as a pooling of
interests. The taking by Parent or the Company of any action prohibited by the
previous sentence, or the failure of Parent or the Company to take any action
required by the previous sentence, shall, if the Merger is not able to be
accounted for as a pooling of interests as a result of such action or inaction,
constitute a breach of this Agreement by Parent or the Company, as the case may
be, for the purposes of Section 7.1(f). If requested, the President or Chief
Financial Officer of each of the Company and
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Parent will execute any documentation on behalf of the Company or Parent, as the
case may be, reasonably required by Parent's independent public accountants with
respect to pooling of interest accounting issues.
SECTION 5.11 Listing of Parent Shares. Parent shall promptly file
additional share listing applications with the Nasdaq Stock Market for the
listing of the Parent Shares to be issued in connection with the Merger and the
assumption of the Company Stock Option Plans and Parent shall use its
reasonable efforts to have such applications accepted.
SECTION 5.12 Tax Certificates. The Company shall use reasonable efforts to
cause each of the shareholders of the Company to deliver to Parent, prior to the
Closing Date, an affidavit (in form and substance reasonably satisfactory to
Parent) meeting the requirements necessary to establish that the shareholders
are eligible for the exemption from the withholding provided by Section
1445(b)(2) of the Code.
SECTION 5.13 Release of Shareholder Guarantees. Parent shall use all
reasonable efforts prior and subsequent to the Closing Date to assume the
obligations and to cause the release of Gilbert Zoghlin as guarantor under the
agreements set forth on Schedule 5.13.
ARTICLE VI
CONDITIONS TO THE MERGER
SECTION 6.1 Conditions to Obligation of Each Party to Effect the Merger.
The respective obligations of each party to effect the Merger shall be subject
to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) Requisite Approval. This Agreement and the Merger shall have
received the Requisite Approval;
(b) No Injunctions or Restraints; Illegality. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger shall be in effect, nor shall any proceeding brought
by any administrative agency or commission or other governmental authority or
instrumentality, seeking any of the foregoing be pending; and there shall not be
any action taken, or any statute, rule, regulation or order enacted, entered,
enforced or deemed applicable to the Merger, which makes the consummation of the
Merger illegal; and
(c) Governmental Actions. There shall not have been instituted, pending
or threatened any action or proceeding (or any investigation or other inquiry
that might result in such an action or proceeding) by any governmental authority
or administrative agency before any governmental authority, administrative
agency or court of competent jurisdiction, nor shall there be in effect any
judgment, decree or order of any governmental authority, administrative agency
or court of competent jurisdiction, in either case, seeking to prohibit or limit
Parent from exercising all
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material rights and privileges pertaining to its ownership of the Surviving
Corporation or the ownership or operation by Parent or any of its subsidiaries
of all or a material portion of the business or assets of Parent or any of its
subsidiaries, as a result of the Merger or the transactions contemplated by this
Agreement.
SECTION 6.2 Additional Conditions to Obligations of Parent and Merger Sub.
The obligations of Parent and Merger Sub to effect the Merger are also subject
to the following conditions:
(a) Representations and Warranties. The representations and warranties of
the Company contained in this Agreement shall have been true and correct in all
material respects at and as of the date made, and shall be true and correct in
all material respects as of the Closing Date with the same effect as though made
on and as of the Closing Date. In addition, all representations and warranties
of the Company that are qualified by materiality or similar words shall have
been true and correct (giving effect to such qualification) in all respects when
made and as of the Closing Date. Parent shall have received a certificate to
such effect signed on behalf of the Company by the President and the Chief
Financial Officer of the Company;
(b) Agreements and Covenants. The Company shall have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by it at or prior to the
Effective Time, and Parent and Merger Sub shall have received a certificate to
such effect signed on behalf of the Company by the President and the Chief
Financial Officer of the Company;
(c) Consents Obtained. All consents, waivers, approvals, authorizations
or orders required to be obtained, and all filings required to be made, by the
Company for the due authorization, execution and delivery of this Agreement and
the consummation by it of the transactions contemplated hereby shall have been
obtained and made by the Company;
(d) Opinion of Counsel to the Company. Parent shall have received an
opinion of Katten Muchin & Zavis, counsel to the Company, in substantially the
form attached hereto as Exhibit 6.2(d);
(e) Opinion of Accountant. Parent shall have received from Price
Waterhouse LLP, independent accountants, an opinion to the effect that the
Merger, if consummated in accordance with the provisions of this Agreement, will
qualify for pooling of interests accounting treatment in accordance with GAAP
and the rules and regulations of the SEC;
(f) Affiliate Agreements. Parent shall have received from each person
who is identified in the Affiliate Letter as an "affiliate" of the Company, an
Affiliate Agreement and such Affiliate Agreement shall be in full force and
effect;
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(g) Escrow Agreement. Each of Escrow Agent, the Company and the
Shareholder Representative shall have executed and delivered to Parent an Escrow
Agreement substantially in the form of Exhibit 6.2(g);
(h) Registration Rights Agreement. The Company's shareholders shall have
entered into a Registration Rights Agreement with the Parent in substantially
the form attached hereto as Exhibit 6.2(h);
(i) Stockholder Agreement and Investment Letter. Parent shall have
received executed Stockholder Agreements from all of the holders of the
Company's Common Stock; and
(j) Noncompetition Agreements. Each of Gilbert Zoghlin, Alex Zoghlin,
Melissa Moore and Nathan Schrenk shall have entered into noncompetition
agreements substantially in the form of Exhibit 6.2(j); and
(k) Company Dissenting Shares. There shall be no Company Dissenting
Shares at the Effective Time.
SECTION 6.3 Additional Conditions to Obligation of the Company. The
obligation of the Company to effect the Merger is also subject to the following
conditions:
(a) Representations and Warranties. The representations and warranties
of the Parent and Merger Sub contained in this Agreement shall have been true
and in all material respects at and as of the date made, and shall be true and
correct in all material respects as of the Closing Date with the same effect as
though made on and as of the Closing Date. In addition, all representations and
warranties of the Parent and Merger Sub that are qualified by materiality or
similar words shall have been true and correct (giving effect to such
qualification) in all respects when made and as of the Closing Date. The
Company shall have received a certificate to such effect signed by the President
and the Chief Financial Officer of the Parent;
(b) Agreements and Covenants. Parent and Merger Sub shall have performed
or complied in all material respects with all agreements and covenants required
by this Agreement to be performed or complied with by them on or prior to the
Effective Time, and the Company shall have received a certificate to such effect
signed by the President and the Chief Financial Officer of Parent;
(c) Consents Obtained. All consents, waivers, approvals, authorizations
or orders required to be obtained, and all filings required to be made, by
Parent and Merger Sub for the due authorization, execution and delivery of this
Agreement and the consummation by them of the transactions contemplated hereby
shall have been obtained and made by Parent and Merger Sub;
(d) Opinion of Counsel to Parent. The Company shall have received an
opinion of Ropes & Gray, counsel to Parent, in substantially the form attached
hereto as Exhibit 6.3(d);
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(e) Opinion of Accountant. The Company shall have received a copy of the
opinion referred to in Section 6.2(e) above; and
(f) Registration Rights Agreement. The Parent shall have entered into a
Registration Rights Agreement with the Company's shareholders in substantially
the form attached hereto as Exhibit 6.2(h).
(g) Payment of Loans and Advances. Subject to Section 5.10 and the other
provisions of this Agreement, the Company (i) shall have repaid all loans or
advances, together with accrued but unpaid interest, made to the Company by the
shareholders of the Company, such amounts to be paid in a number of shares of
Parent Common Stock equal to the quotient of (x) the aggregate principal amount
of each such loan outstanding as of the Closing Date, plus accrued but unpaid
interest, and (y) the Average Price and (ii) shall have paid out in cash any
accrued, but unpaid salaries to employees of the Company, in each case in the
amount outstanding as of the Closing Date as certified to Parent in a
certificate signed on behalf of the Company by the President and Chief Executive
Officer.
ARTICLE VII
TERMINATION
SECTION 7.1 Termination. This Agreement may be terminated at any time
prior to the Effective Time, notwithstanding approval thereof by the
shareholders of the Company or Parent:
(a) by mutual written consent duly authorized by the Boards of Directors
of Parent and the Company; or
(b) by either Parent or the Company if the Merger shall not have been
consummated by April 20, 1998 (provided that the right to terminate this
Agreement under this Section 7.1(b) shall not be available to any party whose
failure to fulfill any obligation under this Agreement has been the cause of or
resulted in the failure of the Merger to occur on or before such date); or
(c) by either Parent or the Company if a court of competent jurisdiction
or governmental, regulatory or administrative agency or commission shall have
issued a nonappealable final order, decree or ruling or taken any other action
having the effect of permanently restraining, enjoining or otherwise prohibiting
the Merger (provided that the right to terminate this Agreement under this
Section 7.1(c) shall not be available to any party who has not complied with its
obligations under Section 5.3 and such noncompliance materially contributed to
the issuance of any such order, decree or ruling or the taking of such action);
or
(d) by Parent or the Company, if the Requisite Approval shall not have
been obtained by March 31, 1998; or
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(e) by Parent or the Company, (i) if any representation or warranty of
the Company or Parent, respectively, set forth in this Agreement shall be untrue
when made, or (ii) upon a breach of any covenant or agreement on the part of the
Company or Parent, respectively, set forth in this Agreement, such that the
conditions set forth in Section 6.2(a) or 6.2(b), or Section 6.3(a) or 6.3(b),
as the case may be, would not be satisfied (either (i) or (ii) above being a
"TERMINATING BREACH"), provided, that, if such Terminating Breach is curable
- -------------------
prior to April 20, 1998 by the Company or Parent, as the case may be, through
the exercise of its reasonable efforts and for so long as the Company or Parent,
as the case may be, continues to exercise such reasonable efforts, neither
Parent nor the Company, respectively, may terminate this Agreement under this
Section 7.1(e); or
(f) by Parent, if any representation or warranty of the Company shall
have become untrue such that the condition set forth in Section 6.2(a) would not
be satisfied, or by the Company, if any representation or warranty of Parent
shall have become untrue such that the condition set forth in Section 6.3(a)
would not be satisfied, in either case other than by reason of a Terminating
Breach.
SECTION 7.2 Effect of Termination. In the event of the termination of
this Agreement pursuant to Section 7.1, this Agreement shall forthwith become
void and there shall be no liability on the part of any party hereto or any of
its affiliates, directors, officers or shareholders except (i) as set forth in
Section 7.3 hereof, and (ii) nothing herein shall relieve any party from
liability for any breach hereof.
SECTION 7.3 Fees and Expenses. All fees and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such expenses, whether or not the Merger is
consummated.
ARTICLE VII
GENERAL PROVISIONS
SECTION 8.1 Indemnification.
(a) Charters and By-Laws. Parent agrees that all rights to
--------------------
indemnification or exculpation now existing in favor of the employees, agents,
directors or officers of the Company (each a "COMPANY INDEMNIFIED PARTY") as
-------------------------
provided in its charter or By-Laws shall continue in full force and effect for a
period of not less than six years from the Closing Date; provided, however,
-------- -------
that, in the event any claim or claims are asserted or made within such six-year
period, all rights to indemnification in respect of any such claim or claims
shall continue until disposition of any and all such claims. Any determination
required to be made with respect to whether a Company Indemnified Party's
conduct complies with the standards set forth in the charter or By-Laws of the
Company or otherwise shall be made by independent counsel selected by the
Company
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Indemnified Party reasonably satisfactory to the Surviving Corporation (whose
fees and expenses shall be paid by the Surviving Corporation).
(b) Survival of Representations and Warranties. The representations and
------------------------------------------
warranties of the Company, Parent and Merger Sub made in this Agreement and in
the documents and certificates delivered in connection herewith shall survive
the Merger until Price Waterhouse LLP shall have released their report on the
Parent's financial statements for the fiscal year ending on December 26, 1998
or, if earlier, the first anniversary of the Closing Date (the "INDEMNITY
---------
PERIOD") and shall remain operative and in full force and effect through the end
of the Indemnity Period regardless of any investigation made by or on behalf of
any other party hereto, any person controlling any such party or any of their
officers or directors, whether prior to or after the execution of this
Agreement. No claim for indemnification under this Section 8.1 for breach of a
representation or warranty may be commenced after the Indemnity Period,
provided, however, that claims made within the applicable time period shall
- -------- ------
survive to the extent of such claim until such claim is finally determined and,
if applicable, paid.
(c) Escrow Fund. The shares to be held in Escrow (the "ESCROW SHARES")
----------- -------------
shall be registered in the names of the shareholders of the Company, but shall
be deposited (together with assignments in blank executed by the registered
holder(s) of the Company) with the Escrow Agent, such deposits, along with any
dividends or distributions in respect of such Escrow Shares deposited with the
Escrow Agent pursuant to the terms of the Escrow Agreement, to constitute an
escrow fund to be governed by the terms set forth herein and in the Escrow
Agreement (the "ESCROW FUND").
-----------
(d) Indemnification of the Parent and Merger Sub. By their approval of
--------------------------------------------
this Agreement and their acceptance of the Merger Consideration, the
Shareholders agree that the Escrow Fund established under the Escrow Agreement
shall be available to indemnify, defend, protect, and hold harmless each of
Parent, Merger Sub, the Surviving Corporation and each of their respective
subsidiaries and affiliates (each in its capacity as an indemnified party, an
"INDEMNITEE") at all times from and after the date of this Agreement from and
- -----------
against all claims, damages, actions, suits, proceedings, demands, assessments,
adjustments, costs and expenses (including specifically, but without limitation,
reasonable attorneys' fees and expenses of investigation) (collectively
"DAMAGES") incurred by such Indemnitee as a result of or incident to (i) any
-------
breach of any representation or warranty of the Company set forth herein or in
any certificate or other document delivered in connection herewith as of the
date made (as such representation or warranty would read if all qualifications
as to knowledge and materiality were deleted from it) with respect to which a
claim for indemnification is brought by an Indemnitee within the applicable
survival period, if any, described in Section 8.1(b), (ii) any breach or
nonfulfillment by the Company, or any noncompliance by the Company with, any
covenant, agreement, or obligation contained herein or in any certificate or
other document delivered in connection herewith, and (iii) any claim by a
shareholder or former shareholder of the Company or any other person, firm,
corporation or entity, seeking to assert, or based upon: (A) ownership or
rights of ownership to any shares of capital stock of the Company; (B) any
rights of a shareholder to receive the Merger Consideration
-31-
<PAGE>
pursuant to this Agreement, as well as any rights under any option, preemptive
rights, or rights to notice or to vote; (C) any rights of a shareholder arising
under the appraisal rights provisions of the IBCA; (D) any rights under the
charter or bylaws of the Company; or (E) any claim that his, her or its shares
were wrongfully repurchased by the Company, regardless of whether an action,
suit or claim can be or has been made against the Company.
(e) Third Person Claims. Promptly after an Indemnitee has received notice
-------------------
of or has knowledge of any claim by a person not a party to this Agreement
("THIRD PERSON") or the commencement of any action or proceeding by a Third
- --------------
Person, the Indemnitee shall, as a condition precedent to a claim with respect
thereto being made against the Escrow Agreement, give the Shareholder
Representative written notice of such claim or the commencement of such action
or proceeding; provided, however, that the failure to give such notice will not
-------- -------
effect the Indemnitees' right to indemnification hereunder with respect to such
claim, action or proceeding, except to the extent that the Shareholder
Representative has, or the Shareholders have, been actually prejudiced as a
result of such failure. If the Shareholder Representative notifies the
Indemnitee within thirty (30) days from the receipt of the foregoing notice that
he wishes to defend against the claim by the Third Person and if the estimated
amount of the claim, together with all other claims made against the Escrow Fund
that have not been settled, is less than the remaining balance of the Escrow
Funds, then the Shareholder Representative shall have the right to assume and
control the defense of the claim by appropriate proceedings with counsel
reasonably acceptable to Indemnitee, and the Shareholder Representative shall be
entitled to reimbursement out of the Escrow Funds for such defense. The
Indemnitee may participate in the defense, at its sole expense, of any such
claim for which the Shareholder Representative shall have assumed the defense
pursuant to the preceding sentence, provided, however that counsel for the
-------- -------
Shareholder Representative shall act as lead counsel in all matters pertaining
to the defense or settlement of such claims, suit or proceedings; provided,
--------
however, that Indemnitee shall control the defense of any claim or proceeding
- -------
that in Indemnitee's reasonable judgment could have a material and adverse
effect on Indemnitee's business apart from the payment of money damages. The
Indemnitee shall be entitled to indemnification for the reasonable fees and
expenses of its counsel for any period during which the Shareholder
Representative has not assumed the defense of any claim. Whether or not the
Shareholder Representative shall have assumed the defense of any claim, neither
the Indemnitee nor the Shareholder Representative shall make any settlement with
respect to any such claim, suit or proceeding without the prior written consent
of the other, which consent shall not be unreasonably withheld or delayed. It
is understood and agreed that in situations where failure to settle a claim
expeditiously could have an adverse effect on the party wishing to settle, the
failure of a party controlling the defense to act upon a request for consent to
such settlement within five business days of receipt of notice thereof shall be
deemed to constitute consent to such settlement for purposes of this Section
8.1.
(f) Limitations on Indemnification. No Indemnitee shall be entitled to
------------------------------
indemnification under this Section 8.1 for Damages relating to breaches of
representations and warranties set forth herein or in any certificate or
document delivered in connection herewith until the aggregate amount of Damages
incurred by such Indemnitee, together with Damages suffered with respect
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<PAGE>
to all other claims for indemnification pursuant to this Agreement by all other
Indemnitees, exceeds $400,000, at which time such Indemnitees shall be entitled
to indemnification for the entire aggregate cumulative amount of all Damages up
to a maximum aggregate liability equal to the Escrow Fund; provided, however,
-----------------
that with respect to the matters set forth in Section 2.15 and clause (iii) of
Section 8.1(d) above, the Parent shall be entitled to indemnification for the
entirety of such Damages (which indemnification amount shall not be included in
determining whether Damages exceed $400,000 for purposes of this Section
8.1(f)).
(g) Method of Payment. To the extent that Parent, Merger Sub, or the
-----------------
Surviving Corporation makes a claim against the Escrow Fund pursuant to the
Escrow Agreement, and such claim is paid in shares of Parent Common Stock, then
for purposes of such payment, the shares of Parent Common Stock shall be valued
at the Average Price.
(h) Indemnification by Parent. Subject to the provisions of this Section
-------------------------
8.1, Parent agrees to indemnify, defend, protect and hold harmless each of the
shareholders of the Company (the "SHAREHOLDER INDEMNITEES") from and against any
and all Damages incurred or suffered by such Shareholder Indemnitees as a result
of or incident to (i) any breach of any representation or warranty of Parent or
Merger Sub set forth herein or in any certificate or other document delivered in
connection herewith as of the date made (as such representation or warranty
would read if all qualifications as to knowledge and materiality were deleted
from it) with respect to which a claim for indemnification is brought by such
Shareholder Indemnitees within the applicable survival period, if any, described
in Section 8.1(b), (ii) any breach or nonfulfillment by Parent or Merger Sub, or
any noncompliance by Parent or Merger Sub with, any covenant, agreement, or
obligation of Parent contained herein or in any certificate or other document
delivered in connection herewith as of the date made (the "SHAREHOLDER
DAMAGES"). Parent shall reimburse the Shareholder Indemnitees for any
Shareholder Damages to which this Section 8.1 relates only if a claim for
indemnification is made by the Shareholder Indemnitees within the survival
period described in Section 8.1(b); provided, however, that the aggregate
-----------------
liability of Parent shall not exceed $10,000,000. Notwithstanding anything to
the contrary in this Agreement, Parent shall not have any liability for the
Taxes of any shareholder of the Company resulting from the failure of the
transaction effected through the Merger to qualify as a reorganization under the
provisions of Section 368(a) of the Code, except that Parent shall be liable for
breaches of the representations and warranties contained in Section 3.9 hereof
to the extent set forth in this Section 8.1(h).
SECTION 8.2 Survival, Etc.
(a) The agreements set forth in Section 8.1 shall survive independently
and Article I and Section 5.7 shall survive the Effective Time indefinitely and
those set forth in Section 7.3 shall survive such termination indefinitely.
(b) An item disclosed in one section of the Company Disclosure Schedule
or Parent Disclosure Schedule, as the case may be, as an exception to one
particular representation or warranty shall be deemed adequately disclosed on
another section of the Company Disclosure Schedule or Parent Disclosures
Schedule, as the case may be, as an exception to the
-33-
<PAGE>
representations and warranties corresponding thereto if the applicability of
such item to such other representation and warranty is reasonably apparent based
solely on the information contained in the Company Disclosure Schedule or Parent
Disclosure Schedule, as the case may be; provided, however, that each of the
-------- -------
Company and Parent shall use reasonable efforts to cross-reference as
appropriate.
SECTION 8.3 Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made if and when delivered personally or by overnight courier to the parties
at the following addresses or sent by electronic transmission, with confirmation
received, to the telecopy numbers specified below (or at such other address or
telecopy number for a party as shall be specified by like notice):
(a) If to Parent or Merger Sub:
Renaissance Worldwide, Inc.
189 Wells Avenue
Newton, MA 02159
Attention: Vice President,
Mergers & Acquisitions
Telephone No.: (617) 527-6886
Telecopier No.: (617) 527-6999
With a copy to:
Ropes & Gray
One International Place
Boston, MA 02110
Attention: Keith F. Higgins, Esq.
Telephone No.: (617) 951-7000
Telecopier No.: (617) 951-7050
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<PAGE>
(b) If to the Company:
Neoglyphics Media Corporation
1735 N. Paulina St.
Suite 200
Chicago, IL 60622
Attention: Gilbert G. Zoghlin
Chief Financial Officer
Telephone No.: (773) 395-6200
Telecopier No.: (773) 862-0296
With a copy to:
Katten Muchin & Zavis
525 West Monroe Street
Suite 1600
Chicago, Illinois 60661
Attention: David B. Desser, Esq. or
David R. Shevitz, Esq.
Telephone No.: (312) 902-5439
Telecopier No.:(312) 902-1061
SECTION 8.4 Certain Definitions. For purposes of this Agreement, the
term:
(a) "affiliates" means a person that directly or indirectly, through one
or more intermediaries, controls, is controlled by, or is under common control
with, the first mentioned person;
(b) "business day" means any day in which the New York Stock Exchange is
open for trading;
(c) "control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the management or
policies of a person, whether through the ownership of stock, as trustee or
executor, by contract or credit arrangement or otherwise;
(d) "knowledge" when used herein means the actual knowledge after
reasonable investigation of Gilbert Zoghlin, Alex Zoghlin, Vikas Rijsinghani and
Wendy Berger Shapiro.
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<PAGE>
(e) "person" means an individual, corporation, partnership, association,
trust, unincorporated organization, other entity or group (as defined in Section
13(d)(3) of the Exchange Act); and
(f) "subsidiary" or "subsidiaries" of the Company, Parent or any other
person means any corporation, partnership, joint venture or other legal entity
of which the Company, the Surviving Corporation, Parent or such other person, as
the case may be (either alone or through or together with any other subsidiary),
owns, directly or indirectly, more than 50% of the stock or other equity
interests the holders of which are generally entitled to vote for the election
of the board of directors or other governing body of such corporation or other
legal entity.
SECTION 8.5 Non-solicitation. Parent hereby agrees that if this Agreement
is terminated for any reason pursuant to Section 7 hereof, Parent will not for a
period of twelve (12) months (the "Non-solicitation Period") following the date
of such termination cause its affiliates, directors, officers, employees,
representatives and agent to, directly or indirectly, solicit or employ any
employee of the Company, or otherwise seek to influence or alter any such
employee's relationship with the Company during the Non-solicitation Period.
SECTION 8.6 Amendment. This Agreement may be amended by the parties
hereto by action taken by or on behalf of their respective Boards of Directors
at any time prior to the Effective Time; provided, however, that, after approval
of the Merger by the shareholders of the Company, no amendment may be made which
by law requires further approval by such shareholders without such further
approval. This Agreement may not be amended except by an instrument in writing
signed by the parties hereto.
SECTION 8.7 Waiver. At any time prior to the Effective Time, any party
hereto may with respect to any other party hereto (a) extend the time for the
performance of any of the obligations or other acts, (b) waive any inaccuracies
in the representations and warranties contained herein or in any document
delivered pursuant hereto, or (c) waive compliance with any of the agreements or
conditions contained herein. Any such extension or waiver shall be valid only
if set forth in an instrument in writing signed by the party or parties to be
bound thereby.
SECTION 8.8 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 8.9 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable
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<PAGE>
manner to the end that the transactions contemplated hereby are fulfilled to the
fullest extent possible.
SECTION 8.10 Entire Agreement. This Agreement constitutes the entire
agreement and supersedes all prior agreements and undertakings, both written and
oral, among the parties, or any of them, with respect to the subject matter
hereof.
SECTION 8.11 Assignment; Guarantee of Merger Sub Obligations. This
Agreement shall not be assigned by operation of law or otherwise, except that
Merger Sub may assign all or any of its rights hereunder to any affiliate
thereof, provided that no such assignment shall relieve the assigning party of
its obligations hereunder. Parent guarantees the full and punctual performance
by Merger Sub of all the obligations hereunder of Merger Sub or any such
assignees.
SECTION 8.12 Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement, including, without limitation, by way of subrogation.
SECTION 8.13 Failure or Indulgence Not Waiver; Remedies Cumulative. No
failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right preclude any other or
further exercise thereof or of any other right. All rights and remedies
existing under this Agreement are cumulative to, and not exclusive of, any
rights or remedies otherwise available.
SECTION 8.14 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of The Commonwealth of Massachusetts
without giving effect to the conflict of laws principles thereof.
SECTION 8.15 Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
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<PAGE>
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
RENAISSANCE WORLDWIDE, INC.
By: /s/ Richard L. Bugley
---------------------------------
Richard L. Bugley
Vice President
NGMC ACQUISITION CORP.
By: /s/ Richard L. Bugley
---------------------------------
Richard L. Bugley
Vice President
NEOGLYPHICS MEDIA CORPORATION
By: /s/ Gilbert G. Zoghlin
---------------------------------
Gilbert G. Zoghlin
Chief Financial Officer
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<PAGE>
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
RENAISSANCE WORLDWIDE, INC.
By:
---------------------------------
Richard L. Bugley
Vice President
NGMC ACQUISITION CORP.
By:
---------------------------------
Richard L. Bugley
Vice President
NEOGLYPHICS MEDIA CORPORATION
By:
---------------------------------
Gilbert G. Zoghlin
Chief Financial Officer
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<PAGE>
EXHIBIT 2.2
April 14, 1998
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Ladies and Gentlemen:
Reference is made to the Agreement and Plan of Merger dated as of March 31,
1998, (the "Merger Agreement"), among Renaissance Worldwide, Inc. (the
"Registrant"), Neoglyphics Media Corporation, an Illinois corporation and NGMC
Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of the
Registrant, which is an exhibit to the Registrant's Current Report on Form 8-K
(the "Current Report") filed today with the Securities and Exchange Commission
(the "Commission"). The Company hereby agrees to furnish to the Commission,
upon request, a copy of any annex, schedule or exhibit to the Merger Agreement
omitted from the copy of such agreement filed as an exhibit to the Current
Report.
Very truly yours,
RENAISSANCE WORLDWIDE, INC.
By: /s/ Richard L. Bugley
_______________________________
Richard L. Bugley
Vice President and General Counsel
<PAGE>
EXHIBIT 2.3
================================================================================
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
RENAISSANCE WORLDWIDE, INC.
AND
TDI ACQUISITION CORP.
AND
TRIAD DATA, INC.
AND
STOCKHOLDER
Dated as of April 2, 1998
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I
THE MERGER................................................................... 2
SECTION 1.1 The Merger.................................................. 2
SECTION 1.2 Effective Time.............................................. 2
SECTION 1.3 Effect of the Merger........................................ 2
SECTION 1.4 Certificate of Incorporation; By-Laws....................... 3
SECTION 1.5 Directors and Officers...................................... 3
SECTION 1.6 Effect on Capital Stock..................................... 3
SECTION 1.7 Exchange of Certificates.................................... 4
SECTION 1.8 Stock Transfer Books........................................ 5
SECTION 1.9 No Further Ownership Rights in Company Common Stock......... 5
SECTION 1.10 Tax and Accounting Consequences............................. 5
SECTION 1.11 Taking of Necessary Action; Further Action.................. 5
SECTION 1.12 Material Adverse Effect..................................... 5
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THECOMPANY
AND THE STOCKHOLDER........................................................ 6
SECTION 2.1 rganization, Qualification and Other Equity Interests...... 6
SECTION 2.2 Certificate of Incorporation and By-Laws................... 6
SECTION 2.3 Capitalization............................................. 6
SECTION 2.4 Authority Relative to this Agreement....................... 7
SECTION 2.5 No Conflict; Required Filings and Consents................. 7
SECTION 2.6 Compliance, Permits........................................ 8
SECTION 2.7 Financial Statements....................................... 9
SECTION 2.8 Absence of Certain Changes or Events....................... 9
SECTION 2.9 No Undisclosed Liabilities................................. 9
SECTION 2.10 Absence of Litigation...................................... 9
SECTION 2.11 Employee Benefit Plans, Employment Agreements.............. 9
SECTION 2.12 Labor Matters.............................................. 11
SECTION 2.13 Restrictions on Business Activities........................ 11
SECTION 2.14 Title to Property.......................................... 11
SECTION 2.15 Taxes...................................................... 12
SECTION 2.16 Environmental Matters...................................... 14
SECTION 2.17 Intellectual Property...................................... 14
SECTION 2.18 Immigration Compliance..................................... 14
</TABLE>
i
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<TABLE>
<S> <C>
SECTION 2.19 Insurance.................................................. 15
SECTION 2.20 Accounts Receivable........................................ 15
SECTION 2.21 Pooling Matters............................................ 15
SECTION 2.22 Brokers.................................................... 16
SECTION 2.23 Change in Control Payments................................. 16
SECTION 2.24 Expenses................................................... 16
SECTION 2.25 Triad Data Systems......................................... 16
SECTION 2.26 Full Disclosure............................................ 16
SECTION 2.27 No Existing Discussions.................................... 16
SECTION 2.28 No Other Representations................................... 16
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB..................... 17
SECTION 3.1 Organization and Qualification; Subsidiaries............... 17
SECTION 3.2 Charter and By-Laws........................................ 17
SECTION 3.3 Capitalization............................................. 17
SECTION 3.4 Authority Relative to this Agreement....................... 17
SECTION 3.5 No Conflict, Required Filings and Consents................. 18
SECTION 3.6 SEC Filings; Financial Statements.......................... 19
SECTION 3.7 Pooling Matters............................................ 19
SECTION 3.8 Ownership of Merger Sub; No Prior Activities............... 19
SECTION 3.9 Validity of Parent Common Stock............................ 20
SECTION 3.10 Absence of Certain Changes or Events....................... 20
SECTION 3.11 Representations in Connection with the Merger
Qualifying as a Reorganization.......................................... 20
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER...................................... 21
SECTION 4.1 Conduct of Business by the Company Pending the Merger....... 21
SECTION 4.2 No Solicitation............................................. 23
SECTION 4.3 Conduct of Business by Parent Pending the Merger............ 24
ARTICLE V
ADDITIONAL AGREEMENTS....................................................... 24
SECTION 5.1 Stockholder Meeting........................................ 24
SECTION 5.2 Access to Information...................................... 24
SECTION 5.3 Consents; Approvals........................................ 24
SECTION 5.4 Stockholder Agreement, Investment and Affiliate
Agreement............................................................... 25
SECTION 5.5 Financial Results.......................................... 25
SECTION 5.6 Registration Rights Agreement.............................. 25
SECTION 5.7 Notification of Certain Matters............................ 25
</TABLE>
ii
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<TABLE>
<S> <C>
SECTION 5.8 Further Action/Tax Treatment............................... 25
SECTION 5.9 Public Announcements....................................... 26
SECTION 5.10 Conveyance Taxes........................................... 26
SECTION 5.11 Pooling Accounting Treatment............................... 26
SECTION 5.12 Listing of Parent Shares................................... 26
SECTION 5.13 Leases..................................................... 26
SECTION 5.14 Tax Certificates........................................... 27
SECTION 5.15 Contribution of Triad Data Systems Stock................... 27
SECTION 5.16 Fees and Expenses.......................................... 27
SECTION 5.17 Preparation of Tax Returns................................. 27
ARTICLE VI
CONDITIONS TO THE MERGER.................................................... 28
SECTION 6.1 Conditions to Obligation of Each Party to
Effect the Merger....................................................... 28
SECTION 6.2 Additional Conditions to Obligations of Parent
and Merger Sub.......................................................... 28
SECTION 6.3 Additional Conditions to Obligation of the Company......... 29
ARTICLE VII
TERMINATION................................................................. 30
SECTION 7.1 Termination................................................ 30
SECTION 7.2 Effect of Termination...................................... 31
ARTICLE VIII
GENERAL PROVISIONS.......................................................... 31
SECTION 8.1 Indemnification............................................ 31
SECTION 8.2 Survival, Etc.............................................. 34
SECTION 8.3 Notices.................................................... 34
SECTION 8.4 Certain Definitions........................................ 35
SECTION 8.5 Amendment.................................................. 36
SECTION 8.6 Waiver..................................................... 36
SECTION 8.7 Headings................................................... 36
SECTION 8.8 Severability............................................... 36
SECTION 8.9 Entire Agreement........................................... 37
SECTION 8.10 Assignment; Guarantee of Merger Sub Obligations............ 37
SECTION 8.11 Parties in Interest........................................ 37
SECTION 8.12 Failure or Indulgence Not Waiver; Remedies Cumulative...... 37
SECTION 8.13 Governing Law.............................................. 37
SECTION 8.14 Counterparts............................................... 37
</TABLE>
iii
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of April 2, 1998 (this "AGREEMENT"),
---------
among Renaissance Worldwide, Inc., a Massachusetts corporation ("PARENT"), TDI
------
Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of
Parent ("MERGER SUB"), Triad Data, Inc., a New York corporation (the "COMPANY")
---------- -------
and Mr. Harley Lippman, an individual and owner of all of the issued and
outstanding capital stock of the Company ("STOCKHOLDER").
-----------
WITNESSETH:
WHEREAS, the Boards of Directors of Parent, Merger Sub and the Company have
each determined that it is advisable and in the best interests of their
respective stockholders for Parent and Merger Sub to enter into a business
combination with the Company upon the terms and subject to the conditions set
forth herein;
WHEREAS, in furtherance of such combination, the Stockholder and the Boards
of Directors of Parent, Merger Sub and the Company have each approved the merger
of Merger Sub with and into the Company (the "MERGER") in accordance with the
------
applicable provisions of the Delaware General Corporation Law (the "DGCL") and
----
the New York Business Corporation Law, as amended (the "NYBCL") upon the terms
-----
and subject to the conditions set forth herein;
WHEREAS, Parent, Merger Sub and the Company intend, by approving
resolutions authorizing this Agreement, to adopt this Agreement as a plan of
reorganization within the meaning of Section 368(a) of the Internal Revenue Code
of 1986, as amended (the "CODE"), and the regulations promulgated thereunder;
----
and
WHEREAS, pursuant to the Merger, all of the outstanding shares (the
"SHARES") of the Company's common stock, no par value per share (the "COMPANY
------ -------
COMMON STOCK"), shall be converted into the right to receive the Merger
- ------------
Consideration (as defined in Section 1.7(b)), upon the terms and subject to the
conditions set forth herein.
WHEREAS, as the date hereof, Parent and Stockholder shall enter into a
Registration Rights Agreement (the "REGISTRATION RIGHTS AGREEMENT").
-----------------------------
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby,
Parent, Merger Sub, the Company and the Stockholder hereby agree as follows:
<PAGE>
ARTICLE I
THE MERGER
SECTION 1.1 The Merger.
(a) Effective Time. At the Effective Time (as defined in Section 1.2),
and subject to and upon the terms and conditions of this Agreement, the DGCL and
the NYBCL, Merger Sub shall be merged with and into the Company, the separate
corporate existence of Merger Sub shall cease, and the Company shall continue as
the surviving corporation. The Company as the surviving corporation after the
Merger is hereinafter sometimes referred to as the "SURVIVING CORPORATION."
---------------------
(b) Closing. Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to Section
7.1 and subject to the satisfaction or waiver of the conditions set forth in
Article VI, the consummation of the Merger (the "CLOSING") will take place as
-------
promptly as practicable (and in any event within two business days) after
satisfaction or waiver of the conditions set forth in Article VI, at the offices
of Ropes & Gray, One International Place, Boston, Massachusetts, unless another
date, time or place is agreed to in writing by the parties hereto
(the "CLOSING DATE").
------- ----
(c) Escrow. At the Effective Time, Parent shall deliver to State Street
Bank and Trust Company, a Massachusetts bank and trust company, or any successor
escrow agent appointed pursuant to the Escrow Agreement (as hereinafter defined)
(the "ESCROW AGENT"), 10% of the Parent Shares (as hereinafter defined) issued
------------
to the Stockholder pursuant to Section 1.7(a) to be held and applied in
accordance with the Escrow Agreement, provided, that, on the six month
-------- ----
anniversary of the Effective Time (or if such anniversary date is a non-business
day for Massachusetts banks, the next following day which is a business day for
Massachusetts banks), if the number of Parent Shares remaining in the escrow
account is more than 5% of the Parent Shares issued to the Stockholder pursuant
to Section 1.7(a), the Escrow Agent shall release to the Stockholder the number
of Parent Shares in excess of the number of Parent Shares equal to 5% of the
Parent Shares issued to the Stockholder pursuant to Section 1.7(a).
SECTION 1.2 Effective Time. As promptly as practicable after the
satisfaction or waiver of the conditions set forth in Article VI, the parties
hereto shall cause the Merger to be consummated by filing a duly executed and
delivered copy of the Certificate of Merger substantially in the form attached
hereto as Exhibit 1.2 as contemplated by the DGCL and the NYBCL (each a
"CERTIFICATE OF MERGER"), with the respective offices of the Secretary of State
- ----------------------
of the State of Delaware and the Secretary of State of the State of New York, in
such form as required by, and executed in accordance with the relevant
provisions of, the DGCL and the NYBCL (the time of the later of such filings
being the "EFFECTIVE TIME").
--------------
SECTION 1.3 Effect of the Merger. At the Effective Time, the effect of
the Merger shall be as provided in this Agreement, the Certificate of Merger and
the applicable provisions of the
2
<PAGE>
DGCL and the NYBCL. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time all the property, rights, privileges,
powers and franchises of the Company and Merger Sub shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and Merger Sub
shall become the debts, liabilities and duties of the Surviving Corporation.
SECTION 1.4 Certificate of Incorporation; By-Laws.
(a) Certificate of Incorporation. Unless otherwise determined by the
Parent, at the Effective Time, the Certificate of Incorporation of the Company,
as amended pursuant to the Certificate of Merger, shall be the Certificate of
Incorporation of the Surviving Corporation until thereafter amended in
accordance with the NYBCL and such Certificate of Incorporation.
(b) By-Laws. The By-Laws of the Company, as in effect immediately prior
to the Effective Time, shall be the By-Laws of the Surviving Corporation until
thereafter amended in accordance with the NYBCL, the Certificate of
Incorporation of the Surviving Corporation and such By-Laws.
SECTION 1.5 Directors and Officers. The directors of Merger Sub
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Certificate of
Incorporation and By-Laws of the Surviving Corporation, and the officers of
Merger Sub immediately prior to the Effective Time shall be the initial officers
of the Surviving Corporation, in each case until their respective successors are
duly elected or appointed and qualified.
SECTION 1.6 Effect on Capital Stock. At the Effective Time, by virtue of
the Merger and without any action on the part of the Parent, Merger Sub, the
Company or the holders of any of the following securities:
(a) Conversion of Securities. Each share of Company Common Stock shall be
converted into the right to receive that number of shares of Parent's common
stock, no par value ("PARENT COMMON STOCK", and, in the aggregate, the "PARENT
------------------- ------
SHARES") as is equal to the quotient of (x) $70,000,000 (minus the amount of
- ------
Excess Expenses, if any, as defined in Section 5.16 hereof) divided by the
average of the closing price of the Parent's common stock for the ten (10)
trading days ending one day prior to the date of this Agreement (the "AVERAGE
-------
PRICE") divided by (y) the total number of shares of Company Common Stock (on a
- -----
fully diluted basis including all issued and outstanding stock options and other
common stock equivalents) issued and outstanding at the Effective Time (the
"EXCHANGE RATIO").
- ---------------
(b) Cancellation. Each Share, if any, held in the treasury of the
Company, by virtue of the Merger and without any action on the part of the
holder thereof, shall cease to be outstanding, be canceled and retired without
payment of any consideration therefor and cease to exist.
3
<PAGE>
(c) Capital Stock of Merger Sub. Each share of common stock, par value
$.01, of Merger Sub issued and outstanding immediately prior to the Effective
Time shall be converted into and exchanged for one validly issued, fully paid
and nonassessable share of common stock, no par value, of the Surviving
Corporation.
(d) Fractional Shares. No certificates or scrip representing less than
one Parent Share shall be issued upon the surrender or exchange of a certificate
or certificates which immediately prior to the Effective Time represented
outstanding Shares (the "CERTIFICATES"). In lieu of any such fractional share,
------------
each holder of Shares who would otherwise have been entitled to a fraction of a
Parent Share upon surrender of Certificates for exchange shall be paid upon such
surrender cash (without interest) determined by multiplying (i) the Average
Price by (ii) the fractional interest of Parent Common Stock to which such
holder would otherwise be entitled.
(e) Adjustments to Exchange Ratio. The Exchange Ratio shall be adjusted
to reflect fully the effect of any stock split, reverse split, reclassification,
stock dividend (including any dividend or distribution of securities convertible
into Parent Common Stock), reorganization, recapitalization or other like change
with respect to Parent Common Stock occurring after the date hereof and prior to
the Effective Time.
SECTION 1.7 Exchange of Certificates.
(a) Exchange Agent. At the Effective Time, Parent shall give to the
Stockholder certificates evidencing the Parent Shares issuable pursuant to
Section 1.6 in exchange for outstanding Shares.
(b) Exchange Procedures. Upon surrender by the Stockholder of a
Certificate for cancellation, the Stockholder shall be entitled to receive in
exchange therefor (A) certificates evidencing that number of whole Parent Shares
which such holder has the right to receive in accordance with the provisions of
Section 1.6(a) in respect of the Shares formerly evidenced by such Certificate,
(B) any dividends or other distributions to which such holder is entitled
pursuant to Section 1.7(c), and (C) cash in respect of fractional shares as
provided in Section 1.6(e) (the Parent Shares, dividends, distributions and cash
being, collectively, the "MERGER CONSIDERATION"), and the Certificate so
--------------------
surrendered shall forthwith be canceled. Until so surrendered, each outstanding
Certificate that, prior to the Effective Time, represented Shares of Company
Common Stock will be deemed from and after the Effective Time, for all corporate
purposes, other than the payment of dividends and subject to Section 1.6(e), to
evidence the ownership of the number of full Parent Shares into which such
shares of Company Common Stock shall have been so converted.
(c) Distributions With Respect to Unexchanged Parent Shares. Subject to
applicable law, following surrender of any such Certificate, there shall be paid
to the record holder of the certificates representing whole Parent Shares issued
in exchange therefor, without interest, at the time of such surrender, the
amount of dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to such whole Parent Shares.
4
<PAGE>
SECTION 1.8 Stock Transfer Books. At the Effective Time, the stock
transfer books of the Company shall be closed, and there shall be no further
registration of transfers of Company Common Stock thereafter on the records of
the Company.
SECTION 1.9 No Further Ownership Rights in Company Common Stock. The
Merger Consideration delivered upon the surrender for exchange of Shares in
accordance with the terms hereof shall be deemed to have been issued in full
satisfaction of all rights pertaining to such Shares, and there shall be no
further registration of transfers on the records of the Surviving Corporation of
Shares 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 I.
SECTION 1.1 Tax and Accounting Consequences. It is intended by the
parties hereto that the transaction effected by the Merger shall (i) constitute
a reorganization within the meaning of Section 368(a) of the Code and (ii)
qualify for accounting treatment as a pooling of interests under generally
accepted accounting principles and the applicable rules and regulations of the
Securities and Exchange Commission (the "SEC"). The parties hereto hereby adopt
---
this Agreement as a "plan of reorganization" within the meaning of Sections
1.368-2(g) and 1.368-3(a) of the United States Treasury Regulations.
SECTION 1.1 Taking of Necessary Action; Further Action. Each of Parent,
Merger Sub, the Company and the Stockholder will take all such reasonable and
lawful action as may be necessary or appropriate in order to effectuate the
Merger in accordance with this Agreement as promptly as possible. If, at any
time after the Effective Time, any such further action is necessary or desirable
to carry out the purposes of this Agreement and to vest the Surviving
Corporation with full right, title and possession to all assets, property,
rights, privileges, powers and franchises of the Company and Merger Sub, the
officers and directors of the Company and Merger Sub immediately prior to the
Effective Time are fully authorized in the name of their respective corporations
or otherwise to take, and will take, all such lawful and necessary action.
SECTION 1.1 Material Adverse Effect. When used in connection with the
Company, or Parent or any of its subsidiaries, as the case may be, the term
"MATERIAL ADVERSE EFFECT" means any change, effect or circumstance that (a) is
- ------------------------
or is reasonably likely to be materially adverse to the business, assets
(including intangible assets), financial condition or results of operations of
the Company or Parent and its subsidiaries, as the case may be, or (b) is
delaying or preventing the consummation of the transactions contemplated hereby.
5
<PAGE>
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE
COMPANY AND THE STOCKHOLDER
Each of the Company and the Stockholder hereby represents and warrants to
Parent and Merger Sub that, except as set forth in the written disclosure
schedule delivered on or prior to the date hereof by the Company to Parent that
is arranged in paragraphs corresponding to the numbered and lettered paragraphs
contained in this Article II (the "COMPANY DISCLOSURE SCHEDULE"):
---------------------------
SECTION 2.1 Organization, Qualification and Other Equity Interests. The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of New York and has the requisite corporate power
and authority to own, lease and operate the properties it purports to own,
operate or lease. Except as disclosed in Section 2.1 of the Company Disclosure
Schedule, the Company is duly qualified or licensed as a foreign corporation to
do business, and is in good standing, in each jurisdiction where the character
of its properties owned, leased or operated by it or the nature of its
activities makes such qualification or licensing necessary, except where the
failure to be so duly qualified or licensed and in good standing would not,
individually or in the aggregate, have a Material Adverse Effect. The Company
does not directly or indirectly own any equity or similar interest in, or any
interest convertible into or exchangeable or exercisable for, any equity or
similar interest in, any corporation, partnership, joint venture or other
business association or entity. The Company does not currently and has not
since its inception and formation had any subsidiaries. The Stockholder does
not own or control any other corporation or legal entity other than the Company
whose operations or business activities are in any way integral to the
operations or business activities of the Company.
SECTION 2.2 Certificate of Incorporation and By-Laws. The Company has
heretofore furnished to Parent a complete and correct copy of its Certificate of
Incorporation and By-Laws as amended to date. Such Certificate of Incorporation
and By-Laws are in full force and effect. The Company is not in violation of any
of the provisions of its Certificate of Incorporation or By-Laws.
SECTION 2.3 Capitalization. The authorized capital stock of the Company
consists of 200 shares of Company Common Stock. As of the date hereof, 100
shares of Company Common Stock are issued and outstanding, all of which are
validly issued, fully paid and nonassessable, and zero shares are held in
treasury. Except as set forth in Section 2.3 of the Company Disclosure
Schedule, there are no options, warrants or other rights, agreements,
arrangements or commitments of any character relating to the issued or unissued
capital stock of the Company or obligating the Company to issue or sell any
shares of capital stock of, or other equity interests in, the Company. All
shares of Company Common Stock subject to issuance as aforesaid, upon issuance
on the terms and conditions specified in the instruments pursuant to which they
are issuable, shall be duly authorized, validly issued, fully paid and
nonassessable. Except as disclosed in Section 2.3 of the Company Disclosure
Schedule, there are no obligations, contingent
6
<PAGE>
or otherwise, of the Company to repurchase, redeem or otherwise acquire any
shares of Company Common Stock.
SECTION 2.4 Authority Relative to this Agreement. The Company has all
necessary corporate power and authority to execute and deliver this Agreement
and to perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by the
Company and the consummation by the Company of the transactions contemplated
hereby have been duly and validly authorized by all necessary corporate action
on the part of the Company and the Stockholder, and no other corporate
proceedings on the part of the Company are necessary to authorize this Agreement
or to consummate the transactions so contemplated. The Board of Directors of
the Company has determined that it is advisable and in the best interest of the
Company's Stockholder for the Company to enter into a business combination with
Parent upon the terms and subject to the conditions of this Agreement, and has
unanimously recommended that the Company's Stockholder approve and adopt this
Agreement and Merger. This Agreement has been duly and validly executed and
delivered by each of the Company and the Stockholder and, assuming the due
authorization, execution and delivery by Parent and Merger Sub, as applicable,
constitutes a legal, valid and binding obligation of each of the Company and the
Stockholder.
SECTION 2.5 No Conflict; Required Filings and Consents.
(a) Section 2.5(a) of the Company Disclosure Schedule includes a list of
(i) all loan agreements, indentures, mortgages, pledges, conditional sale or
title retention agreements, security agreements, equipment obligations,
guaranties, standby letters of credit, equipment leases or lease purchase
agreements to which the Company is a party or by which it is bound and (ii) all
contracts, agreements, commitments or other understandings or arrangements to
which the Company is a party or by which it or any of its properties or assets
are bound, but Section 2.5(a) of the Company Disclosure Schedule excludes
contracts, agreements, commitments or other understandings or arrangements
entered into in the ordinary course of business and involving, in each case,
payments or receipts by the Company of amounts reasonably expected to be less
than $200,000.
(b) Except as disclosed in Section 2.5(b) of the Company Disclosure
Schedule, (i) the Company is not in breach of, is not in default under, nor has
it received written notice of any breach of or default under, any of the
agreements, contracts or other instruments referred to in clauses (i) or (ii) of
Section 2.5(a), (ii) to the knowledge of the Company and the Stockholder, no
other party to any of the agreements, contracts or other instrument referred to
in clauses (i) or (ii) of Section 2.5 (a) is in breach of or is in default of
any of its obligations thereunder, and (iii) each of the agreements, contracts
and other instruments referred to in clauses (i) or (ii) of Section 2.5(a) is in
full force and effect, except in any such case for breaches, defaults or
failures to be in full force and effect that would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
7
<PAGE>
(c) The execution and delivery of this Agreement by the Company does not,
and the performance of this Agreement by the Company and the consummation of the
transactions contemplated hereby will not, (i) conflict with or violate the
Certificate of Incorporation or By-Laws of the Company, (ii) conflict with or
violate any federal, foreign, state or provincial law, rule, regulation, order,
judgment or decree (collectively, "LAWS") applicable to the Company or any of
----
its subsidiaries or by which any of its properties is bound or affected, or
(iii) result in any breach of or constitute a default (or an event that with
notice or lapse of time or both would become a default) under, or impair the
Company's rights or alter the rights or obligations of any third party under, or
give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a security interest, lien, claim,
encumbrance or any other restriction on any of the properties or assets of the
Company pursuant to, any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to which the
Company is a party or by which the Company or any of its properties is bound,
except, in the case of clauses (ii) and (iii) of this Section 2.5(c), for any
such conflicts, violations, breaches, defaults or other occurrences that would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(d) The execution and delivery of this Agreement by the Company does not,
and the performance of this Agreement by the Company will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any federal, foreign, state or provincial governmental or regulatory
authority except for applicable requirements, if any, of the Securities Act of
1933, as amended, and the rules and regulations thereunder (the "SECURITIES
----------
ACT"), the Securities Exchange Act of 1934, as amended, and the rules and
regulations thereunder (the "EXCHANGE ACT"), state securities laws ("BLUE SKY
------------ --------
LAWS"), the pre-merger notification requirements of the Hart-Scott-Rodino
- ----
Antitrust Improvements Act of 1976, as amended (the "HSR ACT"), and the filing
-------
and recordation of appropriate merger or other documents as required by the DGCL
or the NYBCL and where the failure to obtain such consents, approvals,
authorizations or permits, or make such filings or notifications, would be,
individually or in the aggregate, reasonably expected to have a Material Adverse
Effect.
SECTION 2.6 Compliance, Permits.
(a) Except as disclosed in Section 2.6(a) of the Company Disclosure
Schedule, the Company is in compliance, in all material respects, with Laws
applicable to the Company or by which any of its respective properties is bound
or affected.
(b) Except as disclosed in Section 2.6(b) of the Company Disclosure
Schedule, the Company holds all franchises, grants, authorizations, covenants,
permits, licenses, easements, variances, exemptions, consents, certificates,
orders and approvals from governmental authorities which are necessary for the
operation of the business of the Company as it is now being conducted
(collectively, the "COMPANY PERMITS") except where failure to hold such Company
---------------
Permits would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect. The Company is in compliance with the
terms of the Company Permits, except where the failure to so comply would not
reasonably likely to have a Material Adverse Effect.
8
<PAGE>
SECTION 2.7 Financial Statements.
(a) Attached to the Company Disclosure Schedule are the audited
consolidated balance sheet of the Company as of December 31, 1997 and 1996,
together with the related consolidated statements of income, cash flows and
stockholders' equity for the fiscal years then ended, (the "FINANCIAL
---------
STATEMENTS").
- ----------
(b) Each of the Financial Statements was prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes
thereto), and each fairly presents in all material respects the consolidated
financial position of the Company as at the respective dates thereof and the
consolidated results of its operations, cash flows and stockholder equity for
the periods indicated.
SECTION 2.8 Absence of Certain Changes or Events. Since December 31,
1997, the Company has conducted its business in the ordinary course and there
has not occurred: (a) any Material Adverse Effect; (b) any amendments to the
Certificate of Incorporation or By-laws of the Company; (c) any damage to,
destruction, sale or loss of any asset of the Company (whether or not covered by
insurance) that has had or could reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect; (d) any material change by the
Company in its accounting methods, principles or practices; (e) any material
revaluation by the Company of any of its assets, including, without limitation,
writing off notes or accounts receivable other than in the ordinary course of
business; or (f) any sale of the property or assets of the Company, except in
the ordinary course of business.
SECTION 2.9 No Undisclosed Liabilities. Except as disclosed on Schedule
2.9 of the Company Disclosure Schedule, the Company has no liabilities
(absolute, accrued, contingent or otherwise), except liabilities (a) in the
aggregate adequately provided for in the Financial Statements, (b) incurred
since December 31, 1997 in the ordinary course of business consistent with past
practice, (c) incurred in connection with this Agreement or (d) which would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
SECTION 2.1 Absence of Litigation. Except as disclosed in Section 2.10
of the Company Disclosure Schedule, there are no claims, actions, suits, or
proceedings or, to the knowledge of the Company or the Stockholder, threatened,
or, to the knowledge of the Company or the Stockholder, any investigations
pending or threatened, against the Company or any properties or rights of the
Company before any federal, foreign, state or provincial court, arbitrator or
administrative, governmental or regulatory authority or body that would,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
SECTION 2.1 Employee Benefit Plans, Employment Agreements.
(a) Section 2.11 (a) of the Company Disclosure Schedule lists all employee
pension plans (as defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended
9
<PAGE>
("ERISA")), all employee welfare plans (as defined in Section 3(1) of ERISA),
-----
and all other bonus, stock option, stock purchase, incentive, deferred
compensation, supplemental retirement, severance and other similar fringe or
employee benefit plans, programs or arrangements written or otherwise, for the
benefit of, or relating to, any present or former employee (including any
beneficiary of any such employee) of, or any present or former consultant
(including any beneficiary of any such consultant) to the Company, any trade or
business (whether or not incorporated) which is a member of a controlled group
including the Company or which is under common control with the Company (an
"ERISA AFFILIATE") within the meaning of Section 414 of the Code which is
---------------
maintained by, contributed to or required to be contributed to by the Company or
any of its ERISA Affiliates on the date hereof (all such employee benefit plans,
practices and programs are referred to as the "COMPANY EMPLOYEE PLANS"). There
----------------------
have been made available to Parent copies of (i) the most recent annual report
on Form 5500 series, with accompanying schedules and attachments, filed with
respect to each Company Employee Plan required to make such a filing, and (ii)
the most recent Internal Revenue Service determination letter with respect to
each Company Employee Plan intended to be qualified under Section 401(a) of the
Code.
(b) (i) None of the Company Employee Plans promises or provides retiree
medical or other retiree welfare benefits to any person, and neither the Company
nor any ERISA Affiliate has ever maintained, contributed to, or been required to
contribute to, any plan that is or was a "multiemployer plan" as such term is
defined in Section 3(37) of ERISA, a pension plan subject to Title IV of ERISA
or a plan subject to Part 3 of Title I of ERISA; (ii) there has been no
"prohibited transaction," as such term is defined in Section 406 of ERISA and
Section 4975 of the Code, with respect to any Company Employee Plan, which could
result in any material liability of the Company, and for which an exemption is
not available under Section 408(a) or 408(b) of ERISA; (iii) all Company
Employee Plans are in compliance in all material respects with the requirements
prescribed by any and all Laws (including ERISA and the Code), currently in
effect with respect thereto (including all applicable requirements for
notification to participants or the Department of Labor, Internal Revenue
Service (the "IRS") or Secretary of the Treasury), and the Company has performed
---
all material obligations required to be performed by it under, is not in any
material respect in default under or violation of, and have no knowledge of any
default or violation by any other party to, any of the Company Employee Plans;
(iv) each Company Employee Plan intended to qualify under Section 401(a) of the
Code and each trust intended to qualify under Section 501(a) of the Code is the
subject of a favorable determination letter from the IRS, and nothing has
occurred which may reasonably be expected to impair such determination; (v)
there are no lawsuits or other claims (other than claims for benefits in the
ordinary course) pending or, to the best knowledge of the Company, threatened
with respect to any Company Employee Plan; and (vi) all liabilities with respect
to Company Employee Plans have been appropriately accrued on the Company's
financial statements in accordance with GAAP, and the Company does not have any
material liability with respect to any employee benefit plans, practice or
programs which are not Company Employee Plans.
(c) Section 2.11(c) of the Company Disclosure Schedule sets forth a true
and complete list of each current or former employee, officer or director of the
Company or any subsidiary of
10
<PAGE>
(d) the Company who holds (i) any option to purchase Company Common Stock
as of the date hereof, together with the number of shares of Company Common
Stock subject to such option, the option price of such option (to the extent
determined as of the date hereof), whether such option is intended to qualify as
an incentive stock option within the meaning of Section 422(b) of the Code (an
"ISO"), and the expiration date of such option; (ii) any other right, directly
- ----
or indirectly, to acquire Company Common Stock, together with the number of
shares of Company Common Stock subject to such right. Section 2.11(c) of the
Company Disclosure Schedule also sets forth the total number of such ISOs, such
nonqualified options and such other rights.
(e) Section 2.11(d) of the Company Disclosure Schedule sets forth a true
and complete list of: (i) all employment agreements with officers or employees
or consultants of the Company or any subsidiary of the Company that provide a
base salary in excess of $100,000 or that provided for a total compensation
during the Company's most recent fiscal year in excess of $100,000; (ii) all
agreements with consultants who are individuals obligating the Company to make
minimum annual cash payments in an amount exceeding $100,000; and (iii) all
severance agreements, programs and policies of the Company or any subsidiary of
the Company with or relating to its employees, in each case with outstanding
commitments exceeding $75,000, excluding programs and policies required to be
maintained by law; and (iv) all plans, programs, agreements and other
arrangements of the Company or any subsidiary of the Company with or relating to
its employees which contain change in control provisions.
SECTION 2.12 Labor Matters. (a) There are no actions or proceedings
pending or, to the knowledge of the Company, threatened in writing between the
Company and any of its respective employees; (b) the Company is not a party to
any collective bargaining agreement or other labor union contract applicable to
persons employed by the Company and the Company does not know of any activities
or proceedings of any labor union to organize any such employees; and (c) the
Company does not have knowledge of any strikes, slowdowns, work stoppages,
lockouts, or threats thereof, by or with respect to any employees of the Company
which would, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
SECTION 2.13 Restrictions on Business Activities. Except for this
Agreement, to the Company's knowledge, there is no agreement, judgment,
injunction, order or decree binding upon the Company or any other person which
has or could reasonably be expected to have the effect of prohibiting or
materially limiting the business of the Company as currently conducted or as
proposed to be conducted by the Company.
SECTION 2.14 Title to Property. The Company has good and marketable
title to all of its owned properties and assets, free and clear of all security
interests, liens, claims, pledges, agreements, limitations in respect of voting
rights, charges or other encumbrances of any nature whatsoever (collectively,
the "LIENS"), except Liens for taxes not yet due and payable and such Liens or
-----
other imperfections of title, if any, as do not materially detract from the
value of or interfere with the present use of the property affected thereby or
which would not have, individually or in the aggregate, a Material Adverse
Effect; and, to the knowledge of the Company, all leases pursuant to which the
Company leases from others real or personal property,
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are in good standing, valid and effective in accordance with their respective
terms, and there is not, to the knowledge of the Company, under any of such
leases, any existing material default or event of default (or event which with
notice or lapse of time, or both, would constitute a material default) except
where the failure to be in good standing, valid and effective or where such
default under such leases would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. Neither the Company
nor any of its subsidiaries owns any real property.
SECTION 2.15 Taxes.
(a) For purposes of this Agreement, "Tax" or "Taxes" shall mean taxes,
fees, levies, duties, tariffs, imposts, and governmental impositions or charges
of any kind in the nature of (or similar to) taxes, payable to any federal,
state, local or foreign taxing authority, including, without limitation, (i)
income, franchise, profits, gross receipts, ad valorem, net worth, value added,
sales, use, service, real or personal property, special assessments, capital
stock, license, payroll, withholding, employment, social security (or similar),
workers' compensation, unemployment compensation, environmental (including Taxes
under Code section 59A) utility, severance, production, excise, stamp,
occupation, premiums, windfall profits, transfer and gains taxes, and (ii)
interest, penalties, additional taxes and additions to tax imposed with respect
thereto; and "Tax Returns" shall mean returns, reports, declarations, forms and
information statements with respect to Taxes required to be filed with the IRS
or any other federal, foreign, state or provincial taxing authority, domestic or
foreign, including, without limitation, consolidated, combined and unitary tax
returns, including any amendments thereto.
(b) Except as disclosed in Schedule 2.6 of the Company Disclosure Schedule,
(i) all material Tax Returns of, relating to or which include the Company or any
of its subsidiaries which are required to have been filed have been filed on a
timely basis with the appropriate authorities and all such Tax Returns are true,
correct and complete in all respects, (ii) all Taxes required to have been paid
by the Company (whether or not shown on any Tax Return) have been paid in full
on a timely basis to the appropriate authorities, and (iii) the Company has
timely and properly paid to the appropriate authorities, all Employment Taxes
(as defined below) that it is required to have paid. For the purposes of this
Agreement, "Employment Taxes" shall mean all Taxes due with respect to payments
made to persons properly classified as employees of the Company under applicable
federal income tax law.
(c) Except as disclosed in Section 2.15(c) of the Company Disclosure
Schedule, (1) no claim has ever been made by an authority in a jurisdiction
where neither the Company nor any of its subsidiaries files Tax Returns that the
Company or any of its subsidiaries is or may be subject to Tax by that
jurisdiction, (2) no Taxing authority has asserted in writing any adjustment,
deficiency, or assessment that could result in additional Tax for which the
Company or any of its subsidiaries is or may be liable, (3) there is no pending
audit, examination, investigation, dispute, proceeding or claim for which the
Company has received notice relating to any Tax for which the Company or any of
its subsidiaries is or may be liable, (4) no statute of limitations with respect
to any Tax for which the Company or any of its subsidiaries is or may be liable
has been waived or extended, (5) the due date of any Tax Returns that the
Company or any of its subsidiaries is
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required to file has not been extended, and (6) neither the Company nor any of
its subsidiaries is a party to any Tax sharing or Tax allocation agreement,
arrangement or understanding and (7) there are no powers of attorney with
respect to Taxes of the Company or any of its subsidiaries currently in force.
(d) There are no liens on any of the assets of the Company or any of its
subsidiaries which arose in connection with any failure or asserted failure to
pay any Tax, other than liens for current Taxes not yet due and payable.
(e) Neither the Company nor any of its subsidiaries is a party to any
contract, agreement, plan or arrangement that, individually or collectively,
could give rise to any payment that would not be deductible by reason of
Sections 162, 280G or 404 of the Code. No consent has been filed under Section
341(f) of the Code with respect to the Company or any of its subsidiaries.
(f) Neither the Company nor any of its subsidiaries has been a member of
an affiliated group filing a consolidated federal income Tax Return, and neither
the Company nor any of its subsidiaries is liable for the Taxes of any person
under Treasury Regulation 1.1502-6 (or any similar provision of state, local, or
foreign law) as transferee or successor, by contract or otherwise.
(g) Copies of (i) any Tax examination reports, (ii) extensions of statutes
of limitations, (iii) the federal, state, local and foreign income Tax Returns
of the Company and each of its subsidiaries, and (iv) substantive correspondence
between the Company and each of its subsidiaries and all Taxing authorities for
its last three (3) taxable years have previously been furnished to the Parent
and such Tax Returns are true, correct and complete.
(h) The Company has made no adjustments under Section 481 of the Code,
however the Company will be required to make a Section 481 adjustment due to the
change in accounting method required to be made in connection with the Merger.
(i) The unpaid Taxes of the Company and its subsidiaries (A) did not as of
December 31, 1997 exceed the reserve for Taxes set forth on the Company's and
its subsidiaries' Financial Statements and (B) do not exceed that reserve as
adjusted for the passage of time through the Closing Date in accordance with the
past custom and practice of the Company and its subsidiaries in filing its Tax
Returns.
(j) Each of the Company and any predecessor to the Company has been a
qualified S corporation (or Subchapter S corporation), within the meaning of the
Code and for state Tax law purposes, except in those states which do not
recognize S corporation status, at all times and has filed all forms and taken
all actions necessary to maintain such status. Neither the Company, any
predecessor to the Company nor the Stockholder has taken any action, or omitted
to take any action, which action or omission could result in the loss of
qualified S corporation or Subchapter S corporation status for such period prior
to the Closing Date, other than the loss of S corporation status anticipated to
occur as a result of the Merger pursuant to this Agreement.
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SECTION 2.16 Environmental Matters. Except in all cases as, in the
aggregate, would not have a Material Adverse Effect, the Company: (i) has
obtained all material approvals which are required to be obtained under all
applicable federal, state or local laws or any regulation, code, plan, order,
decree, judgment, notice or demand letter issued, entered, promulgated or
approved thereunder relating to pollution or protection of the environment,
including laws relating to emissions, discharges, releases or threatened
releases of pollutants, contaminants, or hazardous or toxic materials or wastes
into ambient air, surface water, ground water, or land or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants or hazardous or toxic
materials or wastes by the Company or any of its subsidiaries ("ENVIRONMENTAL
-------------
LAWS"); (ii) is in material compliance with all terms and conditions of such
- ----
required approvals, and also is in material compliance with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in applicable Environmental
Laws; and (iii) as of the date hereof, has not received notice of any past or
present violations by the Company or any of its subsidiaries of Environmental
Laws or any event, condition, circumstance, activity, practice, incident, action
or plan which is reasonably likely to interfere with or prevent continued
material compliance with or which would give rise to any material common law or
statutory liability, or otherwise form the basis of any material claim, action,
suit or proceeding, against the Company or any of its subsidiaries based on or
resulting from the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling, or the emission, discharge or release
into the environment, of any pollutant, contaminant or hazardous or toxic
material or waste.
SECTION 2.17 Intellectual Property.
(a) The Company, directly or indirectly, owns, or is licensed or otherwise
possesses legally enforceable rights to use, all trademarks, trade names,
service marks, copyrights, and any applications therefore know-how, computer
software programs or applications, and tangible or intangible proprietary
information or material that are material to the business of the Company as
currently conducted (the "COMPANY INTELLECTUAL PROPERTY RIGHTS"), except where
------------------------------------
the failure to do so would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. Section 2.17 of the Company
Disclosure Schedule lists the Company Intellectual Property Rights which have
been federally registered or for which registration has been applied.
(b) No claims have been asserted to the Company or, to the knowledge of
the Company, are threatened by any person nor are there any valid grounds, to
the knowledge of the Company, for any bona fide claims (i) against the use by
the Company of the Company Intellectual Property Rights, or (ii) challenging the
ownership by the Company, or the validity or effectiveness of any of the Company
Intellectual Property Rights, except for such claims that would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
SECTION 2.18 Immigration Compliance. (a) The Company is in compliance in
all material respects with all applicable foreign, federal, state and local
laws, rules, directives and regulations relating to the employment authorization
of its employees (including, without
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limitation, the Immigration Reform and Control Act of 1986, as amended and
supplemented, and Section 212(n) and 274A of the Immigration and Nationality
Act, as amended and supplemented, and all implementing regulations relating
thereto).
(b) Since January 1, 1995, the Company has not received any notice from
the Immigration and Naturalization Service (the "INS") or the U.S. Department of
---
Labor (the "DOL") of the disapproval or denial of any visa petition pending
---
before the INS or labor certification pending before the DOL on behalf of any
employee or prospective employee of the Company.
(c) Section 2.18 (c) of the Company Disclosure Schedule contains a true,
complete and accurate list of all non-immigrant or immigrant visa petitions
pending before the INS and labor certifications pending before the DOL on behalf
of any of the employees or prospective employees of the Company or any of its
subsidiaries.
SECTION 2.19 Insurance. Section 2.19 of the Company Disclosure Schedule
lists each insurance policy maintained by the Company and each of its
subsidiaries with respect to the Company's properties, assets and operations and
sets forth the date of expiration of each such insurance policy. All of such
insurance policies are in full force and effect. The Company is not in default
with respect to its obligations under any of such insurance policies.
SECTION 2.20 Accounts Receivable. The accounts receivable of the Company
as reflected in the most recent Financial Statements, to the extent uncollected
on the date hereof, and the accounts receivable reflected on the books of the
Company are valid and existing and represent monies due from services actually
performed in the ordinary course of business.
SECTION 2.21 Pooling Matters. Neither the Stockholder nor the Company
nor any of its affiliates has, to the best of the Stockholder's and the
Company's knowledge and based upon consultation with its independent
accountants, taken or agreed to take any action that could affect the ability of
Parent to account for the business combination to be effected by the Merger as a
pooling of interests under generally accepted accounting procedures. Without
limiting the generality of the foregoing sentence, (i) the Company has not had
any treasury stock transactions and none are planned during the period between
the date hereof and the Closing Date, (ii) the Company has not adopted any new
or amended any existing stock option or stock purchase plans, (iii) the Company
has not disposed of any assets other than in the ordinary course of business,
and (iv) the Stockholder has not entered into any agreement that would restrict
the Stockholder's voting rights with respect to the Parent Shares to be issued
pursuant to this Agreement. If requested, the Stockholder and the President or
Chief Financial Officer of the Company will execute any documentation on behalf
of the Stockholder and the Company reasonably required by Parent's independent
public accountants with respect to pooling of interest accounting issues. The
failure of this representation to be true and correct, shall, if the Merger is
not able to be accounted for as a pooling of interests, constitute a breach of
this Agreement by the Stockholder and the Company for the purposes of Section
7.1(f).
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SECTION 2.22 Brokers. No broker, finder or investment banker, other than
Donaldson, Lufkin & Jenrette, the fees and expenses of which will be paid by the
Company, is entitled to any brokerage, finder's or other fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company or its affiliates. The Company
has heretofore furnished to Parent a complete and correct copy of all agreements
between the Company and Donaldson, Lufkin & Jenrette pursuant to which each such
firm would be entitled to any payment relating to the transactions contemplated
hereunder.
SECTION 2.23 Change in Control Payments. The Company has no plans,
programs or agreements to which it is a party, or to which it is subject,
pursuant to which payments may be required or acceleration of benefits may be
required upon a change of control of the Company.
SECTION 2.24 Expenses. Section 2.24 of the Company Disclosure Schedule
attached hereto sets forth a description of all of the estimated expenses of the
Company, including those payable to auditors, consultants and other
professionals, as of the date hereof which the Company expects to incur, or has
incurred, in connection with the transactions contemplated by this Agreement.
SECTION 2.25 Triad Data Systems. Except for obligations or liabilities
incurred in connection with the office leases listed on Section 2.25 of the
Company Disclosure Schedule, Triad Data Systems, Inc., a New York corporation
("Triad Data Systems") has not (i) incurred, directly or indirectly, through any
- --------------------
subsidiary or affiliate, any obligations or liabilities (absolute, accrued,
contingent or otherwise), or (ii) engaged in any business activities of any
type or kind whatsoever or (iii) entered into any agreements or arrangements
with any person. For the purposes of Sections 2.10, 2.15 and 2.16 hereof, the
term "Company" shall be read and interpreted to include both the Company and
Triad Data Systems.
SECTION 2.26 Full Disclosure. No representation or warranty made by the
Company contained in this Agreement and no statement contained in any
certificate or schedule furnished by the Company to Parent or Merger Sub in, or
pursuant to the provisions of, this Agreement, including without limitation the
Company Disclosure Schedule, contains any untrue statement of a material fact or
omits or will omit to state any material fact necessary, in light of the
circumstances under which it was made, in order to make statements herein or
therein not misleading.
SECTION 2.27 No Existing Discussions. As of the date hereof, neither the
Stockholder nor the Company is engaged, directly or indirectly, in any
discussions or negotiations with any other party with respect to an Acquisition
Proposal (as defined in Section 4.2).
SECTION 2.28 No Other Representations. Except as specifically set forth
herein and in any certificate or schedule furnished by the Company or the
Stockholder to Parent or Merger Sub in, or pursuant to the provisions of, this
Agreement, including without limitation the Company Disclosure Schedule, the
Company and the Stockholder make no other representations or warranties, whether
express or implied with respect to this Agreement.
16
<PAGE>
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub hereby, jointly and severally, represent and warrant
to the Company and the Stockholder that, except as set forth in the written
disclosure schedule delivered on or prior to the date hereof by Parent to the
Company that is arranged in paragraphs corresponding to the numbered and
lettered paragraphs contained in this Article III (the "PARENT DISCLOSURE
-----------------
SCHEDULE"):
- --------
SECTION 3.1 Organization and Qualification; Subsidiaries. Each of Parent
and its subsidiaries is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation and has
the requisite corporate power and authority necessary to own, lease and operate
the properties it purports to own, operate or lease and to carry on its business
as it is now being conducted. Each of Parent and each of its subsidiaries is
duly qualified or licensed as a foreign corporation to do business, and is in
good standing, in each jurisdiction where the character of its properties owned,
leased or operated by it or the nature of its activities makes such
qualification or licensing necessary, except for such failures to be so duly
qualified or licensed and in good standing that would not have a Material
Adverse Effect.
SECTION 3.2 Charter and By-Laws. Each of Parent and Merger Sub has
heretofore furnished to the Company a complete and correct copy of its Articles
of Organization and By-Laws, as amended to date. Such Articles of Organization
and By-Laws are in full force and effect.
SECTION 3.3 Capitalization. The authorized capital stock of the Parent
consists of (i) 99,000,000 shares of Parent Common Stock, and (ii) 1,000,000
shares of preferred stock, par value $0.10 per share ("PREFERRED STOCK"). As of
---------------
December 31, 1997, there were (i) 25,055,632 shares of Parent Common Stock
issued and outstanding, (ii) no shares of Preferred Stock outstanding, and (iii)
4,184,116 shares of Parent Common Stock reserved for future issuance pursuant to
Parent's stock plans (the "PARENT STOCK PLANS"). Except for awards outstanding
------------------
under the Parent Stock Plans or as otherwise set forth in Section 3.3 of the
Parent Disclosure Schedule, there are no options, warrants or other rights,
agreements, arrangements or commitments of any character relating to the issued
or unissued shares of capital stock of the Parent or obligating Parent to issue
or sell any shares of capital stock of, or other equity interests in, the
Parent. No material change in such capitalization has occurred between December
31, 1997 and the date hereof, except for the issuance of Parent Common Stock
pursuant to Parent Stock Plans and a two-for-one stock split the record date of
which was March 2, 1998.
SECTION 3.4 Authority Relative to this Agreement. Each of Parent and
Merger Sub has all necessary corporate power and authority to execute and
deliver this Agreement, the Registration Rights Agreement, and the Escrow
Agreement and to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery
17
<PAGE>
of this Agreement, the Registration Rights Agreement and the Escrow Agreement by
Parent and, if applicable, Merger Sub and the consummation by Parent and Merger
Sub of the transactions contemplated hereby and thereby have been duly and
validly authorized by all necessary corporate action on the part of Parent and
Merger Sub, and no other corporate proceedings on the part of Parent or Merger
Sub are necessary to authorize this Agreement or to consummate the transactions
contemplated thereby. As of the date of this Agreement, the Board of Directors
of Parent has determined that it is advisable and in the best interest of Parent
to enter into this Agreement, the Registration Rights Agreement, and the Escrow
Agreement and has approved this Agreement, the Registration Rights Agreement and
the Escrow Agreement and the transactions contemplated hereby and thereby. The
Merger, this Agreement, the Registration Rights Agreement and the transactions
contemplated hereby and thereby do not require the approval or consent of the
Parent's stockholders. This Agreement, the Registration Rights Agreement and the
Escrow Agreement have been duly and validly executed and delivered by Parent and
Merger Sub and, assuming the due authorization, execution and delivery by the
Company, constitute a legal, valid and binding obligation of Parent and Merger
Sub enforceable against each of them in accordance with its terms.
SECTION 3.5 No Conflict, Required Filings and Consents.
(a) Except as set forth in Section 3.5(a) of the Parent Disclosure
Schedule, the execution and delivery of this Agreement, the Registration Rights
Agreement and the Escrow Agreement by Parent and, if applicable, Merger Sub do
not, and the performance of this Agreement, the Registration Rights Agreement,
and the Escrow Agreement by Parent and Merger Sub will not, (i) conflict with or
violate the Articles of Incorporation or By-Laws of Parent or Merger Sub, (ii)
conflict with or violate any Laws applicable to Parent or any of its
subsidiaries or by which its or their respective properties are bound or
affected, or (iii) result in any breach of or constitute a default (or an event
which with notice or lapse of time or both would become a default) under, or
impair Parent's or any of its subsidiaries' rights or alter the rights or
obligations of any third party under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any of the properties or assets of Parent
or any of its subsidiaries pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which Parent or any of its subsidiaries is a party or by which
Parent or any of its subsidiaries or its or any of their respective properties
are bound or affected.
(b) The execution and delivery of this Agreement, the Registration Rights
Agreement and the Escrow Agreement by Parent and Merger Sub does not, and the
performance of this Agreement, the Registration Rights Agreement and the Escrow
Agreement by Parent and Merger Sub will not, require any consent, approval,
authorization or permit on the part of the Parent or Merger Sub of, or filing
with or notification on the part of the Parent or Merger Sub to, any federal
foreign, state or provincial governmental or regulatory authority except (i) for
applicable requirements, if any, of the Securities Act, the Exchange Act, the
Blue Sky Laws and Nasdaq and the filing and recordation of appropriate merger or
other documents as required by the DGCL or NYBCL, and (ii) where the failure to
obtain such consents, approvals, authorizations or permits,
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<PAGE>
or to make such filings or notifications, would not prevent or delay
consummation of the Merger, or otherwise prevent Parent or Merger Sub from
performing their respective obligations under this Agreement, and would not have
a Material Adverse Effect.
SECTION 3.6 SEC Filings; Financial Statements.
(a) Parent has filed all forms, reports and documents required to be filed
with the Securities and Exchange Commission (the "SEC") and has heretofore
---
delivered or made available to the Company, in the form filed with the SEC, its
Annual Report on Form 10-K for the transition period ended December 27, 1997,
filed with the SEC on March 27, 1998 and all amendments and supplements to all
such report filed by Parent with the SEC (collectively, the "PARENT SEC
----------
REPORTS"). The Parent SEC Reports (i) were prepared in all material respects in
accordance with the requirements of the Securities Act or the Exchange Act, as
the case may be, and (ii) did not at the time they were filed (or if amended or
superseded by a filing prior to the date of this Agreement, then on the date of
such filing) contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. None of Parent's subsidiaries is required to file any
forms, reports or other documents with the SEC.
(b) Each of the consolidated financial statements (including, in each
case, any related notes thereto) contained in the Parent SEC Reports has been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis throughout the periods involved (except as may be indicated
in the notes thereto) and each fairly presents in all material respects the
consolidated financial position of Parent and its subsidiaries as at the
respective dates thereof and the consolidated results of its operations and cash
flows for the periods indicated, except that the unaudited interim financial
statements were or are subject to normal and recurring year-end adjustments
which were not or are not expected to be material in amount.
(c) Parent is eligible to file a registration statement on Form S-3.
SECTION 3.7 Pooling Matters. Neither Parent nor any of its affiliates
has, to Parent's knowledge and based upon consultation with its independent
accountants, taken or agreed to take any action that could affect the ability of
Parent to account for the business combination to be effected by the Merger as a
pooling of interests under generally accepted accounting procedures. The
failure of this representation to be true and correct shall, if the Merger is
not able to be accounted for as a pooling of interests, constitute a breach of
the Agreement by Parent for the purposes of Section 7.1(e).
SECTION 3.8 Ownership of Merger Sub; No Prior Activities. Merger Sub was
formed solely for the purpose of engaging in the transactions contemplated by
this Agreement. As of the date hereof and the Effective Time, except for
obligations or liabilities incurred in connection with its incorporation or
organization and the transactions contemplated by this Agreement and except for
this Agreement and any other agreements or arrangements contemplated by this
Agreement,
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Merger Sub has not and will not have incurred, directly or indirectly, through
any subsidiary or affiliate, any obligations or liabilities or engaged in any
business activities of any type or kind whatsoever or entered into any
agreements or arrangements with any person.
SECTION 3.9 Validity of Parent Common Stock. The shares of Parent Common
Stock to be issued pursuant to this Agreement will be, when issued, duly
authorized, validly issued, fully paid and nonassessable and subject to no
preemptive rights.
SECTION 3.10 Absence of Certain ChangEs or Events. Except as set forth in
Section 3.10 of the Parent Disclosure Schedule, between December 31, 1997 and
the date hereof, except as disclosed in the Parent SEC Reports, there has not
been any change, or any development or combination of developments which would
be required to be disclosed as a material change in response to Item 11 of Form
S-3 or which has had or would reasonably be expected to have a Material Adverse
Effect on Parent.
SECTION 3.11 Representations in Connection with the Merger Qualifying as a
Reorganization.
(i) Parent has no plan or intention to redeem or otherwise reacquire
any Parent Common Stock issued in the Merger.
(ii) Parent has no plan or intention to liquidate the Company, to
merge the Company with or into another corporation, to sell or otherwise
dispose of the Company Common Stock acquired in the Merger, except for
transfers of the Company Common Stock to corporations controlled by Parent,
or to cause the Company to sell or otherwise dispose of any of its assets
or of any of the assets acquired from Merger Sub, except for dispositions
made in the ordinary course of business or transfers to a corporation
controlled by the Company. For purposes of this representation, control
means the direct ownership of stock in a corporation possessing at least
80% of the total combined voting power of all classes of stock entitled to
vote and at least 80% of the total number of shares of each other class of
stock of that corporation.
(iii) Prior to the Merger, Parent will be in control of Merger Sub.
For purposes of this representation, control means the direct ownership of
stock in Merger Sub possessing at least 80% of the total combined voting
power of all classes of stock of Merger Sub entitled to vote and at least
80% of the total number of shares of each other class of stock of Merger
Sub.
(iv) Following the Merger, Parent intends to cause the Company to
continue its historical business or use a significant portion of its
historic business assets in a business.
(v) Parent is not an investment company as defined in section
368(a)(2)(F)(iii) and (iv) of the Internal Revenue Code.
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(vi) The liabilities of the Merger Sub assumed by the Company and the
liabilities to which the transferred assets of Merger Sub are subject were
incurred by Merger Sub in the ordinary course of its business.
(vii) The payment of cash in lieu of fractional shares of Parent
Common Stock in the Merger is solely for the purpose of avoiding the
expense and inconvenience of Parent issuing fractional shares of Parent
Common Stock and does not represent separately bargained-for-consideration.
The total cash consideration that will be paid in the transaction to the
Company Stockholder, instead of issuing fractional shares of Parent Common
Stock, will not exceed 1% of the total consideration that will be issued in
the transaction to the Company Stockholder in exchange for Company Common
Stock. The Company Stockholder will not receive cash in an amount greater
than the value of one full share of Parent stock.
(viii) Parent has no plan or intention to issue additional shares of
Company stock that would result in Parent losing control of the Company.
For purposes of this representation, control means the direct ownership of
stock in a corporation possessing at least 80% of the total combined voting
power of all classes of stock entitled to vote and at least 80% of the
total number of shares of each other class of stock of that corporation.
(ix) There are no written or oral agreements between Parent and Merger
Sub regarding the Merger, other than the Merger Agreement.
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 4.1 Conduct of Business by the Company Pending the Merger. The
Company covenants and agrees that, during the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
or the Effective Time, unless Parent shall otherwise agree in writing or as
otherwise contemplated by this Agreement, the Company shall, and the Stockholder
shall cause the Company to, conduct its business only in, and the Company shall
not, and the Stockholder shall cause the Company not to, take any action except
in the ordinary course of business and in a manner consistent with past practice
other than actions taken by the Company in contemplation of the Merger; and the
Company shall, and the Stockholder shall cause the Company to, use all
reasonable commercial efforts to preserve substantially intact the business
organization of the Company, to keep available the services of the present
officers, employees and consultants of the Company and to preserve the present
relationships of the Company with customers, suppliers and other persons with
which the Company has business relations. By way of amplification and not
limitation, except as contemplated by this Agreement, the Company shall not, and
the Stockholders shall cause the Company not to, during the period from the date
of this Agreement and continuing until the earlier of the termination of this
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Agreement or the Effective Time, directly or indirectly do, or propose to do,
any of the following without the prior written consent of Parent:
(a) amend the Certificate of Incorporation or By-Laws of the Company
except pursuant to the Merger Agreement;
(b) issue, sell, pledge, dispose of or encumber, or authorize the
issuance, sale, pledge, disposition or encumbrance of, any shares of capital
stock of any class, or any options, warrants, convertible securities or other
rights of any kind to acquire any shares of capital stock, or any other
ownership interest (including, without limitation, any phantom interest) in the
Company;
(c) sell, pledge, dispose of or encumber any assets (tangible or
intangible) of the Company except for (i) dispositions of obsolete or worthless
assets, (ii) sales of assets not in excess of $25,000 in the aggregate and (iii)
sales of assets in the ordinary course of business and in a manner consistent
with past practice;
(d) (i) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination thereof) in
respect of any of its capital stock, (ii) split, combine or reclassify any of
its capital stock or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock or (iii) amend the terms or change the period of exercisability
of, purchase, repurchase, redeem or otherwise acquire, any of its securities
including without limitation, shares of Company Common Stock or any option,
warrant or right, directly or indirectly, to acquire shares of Company Common
Stock, or propose to do any of the foregoing;
(e) (i) acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership or other business organization or division
thereof; (ii) except in the ordinary course of business and only under the
Company's revolving line of credit, incur any indebtedness for borrowed money or
issue any debt securities or assume, guarantee or endorse or otherwise as an
accommodation become responsible for, the obligations of any person or, except
in the ordinary course of business consistent with past practice, make any loans
or advances; (iii) enter into or amend any material contract or agreement; (iv)
authorize any capital expenditures or purchases of fixed assets which are, in
the aggregate, in excess of $50,000 for the Company and its subsidiaries taken
as a whole; or (v) enter into or amend any contract, agreement, commitment or
arrangement to effect any of the matters prohibited by this Section 4.1(e);
(f) increase the compensation payable or to become payable to its
officers, increase compensation payable or to become payable to its employees
other in the ordinary course of business, or grant any severance or termination
pay to, or enter into any employment or severance agreement with any director,
officer or other employee of the Company or its subsidiaries, or establish,
adopt, enter into or amend any collective bargaining, bonus, profit sharing,
thrift, compensation, stock option, restricted stock, pension, retirement,
deferred compensation, employment, termination, severance or other plan,
agreement, trust, fund, policy or arrangement
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for the benefit of any current or former directors, officers or employees,
except, in each case, as may be required by law;
(g) except as required under a new pronouncement that constitutes
generally accepted accounting principles, take any action to change accounting
policies or procedures (including, without limitation, procedures with respect
to revenue recognition, payments of accounts payable and collection of accounts
receivable);
(h) make any material tax election inconsistent with past practice or
settle or compromise any material federal, state, local or foreign tax liability
or agree to an extension of a statute of limitations;
(i) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction in the ordinary course of business and
consistent with past practice of liabilities reflected or reserved against in
the Financial Statements or incurred in the ordinary course of business and
consistent with past practice; or
(j) take, or agree in writing or otherwise to take, any of the actions
described in Sections 4.1 (a) through (i) above, or any action which would make
any of the representations or warranties of the Company contained in this
Agreement untrue or incorrect or prevent the Company from performing or cause
the Company not to perform its covenants hereunder.
SECTION 4.2 No Solicitation.
(a) Neither the Stockholder nor the Company shall, directly or indirectly,
through any officer, director, employee, representative or agent of the Company,
(i) solicit, initiate or encourage the initiation of any inquiries or proposals
regarding any merger, sale of substantial assets, sale of shares of capital
stock (including without limitation by way of a tender offer) or similar
transactions involving the Company other than the Merger (any of the foregoing
inquiries or proposals being referred to herein as an "ACQUISITION PROPOSAL"),
--------------------
(ii) engage in negotiations or discussions concerning, or provide any nonpublic
information to any person relating to, any Acquisition Proposal or (iii) agree
to, approve or recommend any Acquisition Proposal.
(b) The Company and the Stockholder shall immediately notify Parent after
receipt of any Acquisition Proposal, or any modification of or amendment to any
Acquisition Proposal, or any request for nonpublic information relating to the
Company in connection with an Acquisition Proposal or for access to the
properties, books or records of the Company by any person or entity that informs
the Stockholder or the Board of Directors of the Company that it is considering
making, or has made, an Acquisition Proposal. Such notice to Parent shall be
made orally and in writing.
(c) The Company and the Stockholder shall immediately cease and cause to
be terminated any existing discussions or negotiations with any persons (other
than Parent and Merger Sub)
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conducted heretofore with respect to any of the foregoing. Each of the Company
and the Stockholder agrees not to release any third party from the
confidentiality provisions of any confidentiality agreement to which the Company
or the Stockholder is a party.
(d) The Company and the Stockholder shall ensure that the officers,
directors and employees of the Company and its subsidiaries and any investment
banker or other advisor or representative retained by the Company are aware of
the restrictions described in this Section 4.2.
SECTION 4.3 Conduct of Business by Parent Pending the Merger. During the
period from the date of this Agreement and continuing until the earlier of the
termination of this Agreement or the Effective Time, Parent covenants and agrees
that, unless the Company shall otherwise agree in writing, Parent shall conduct
its business, and cause the businesses of its subsidiaries to be conducted, in
the ordinary course, other than actions taken by Parent or its subsidiaries in
contemplation of the Merger, and shall not, without the prior written consent of
the Company, amend or otherwise change Parent's Restated Articles of
Organization or By-Laws, or take or agree in writing or otherwise to take any
action which, directly or indirectly, would make any of the representations or
warranties of Parent contained in this Agreement untrue or incorrect or prevent
Parent from performing or cause Parent not to perform its covenants hereunder.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.1 Stockholder Meeting. By his execution hereof, the Stockholder
hereby irrevocably acknowledges his approval of the Merger, this Agreement and
the transactions contemplated hereby.
SECTION 5.2 Access to Information. Upon reasonable notice, the Company
and Parent shall each afford to the officers, employees, accountants, counsel
and other representatives of the other, reasonable access, during the period
from the date of this Agreement to the Effective Time, to all its properties,
books, contracts, commitments and records and, during such period, the Company
and Parent each shall furnish promptly to the other all information concerning
its business, properties and personnel as such other party may reasonably
request, and each shall make available to the other the appropriate individuals
(including attorneys, accountants and other professionals) for discussion of the
other's business, properties and personnel as either Parent or the Company may
reasonably request. Each party shall keep such information confidential in
accordance with the terms of the Confidentiality and Nondisclosure Agreement,
dated July 18, 1997, and the nonsolicitation letter agreement, dated July 22,
1997, each between the Parent and the Company.
SECTION 5.3 Consents; Approvals. The Company, the Stockholder and Parent
shall each use their reasonable efforts to obtain all consents, waivers,
approvals, authorizations or orders (including, without limitation, all United
States governmental and regulatory rulings and approvals), and the Company and
Parent shall make all filings (including, without limitation, all
24
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filings with United States governmental or regulatory agencies) required in
connection with the authorization, execution and delivery of this Agreement and
the Registration Rights Agreement by the Company, on the one hand, and Parent
and Merger Sub, on the other hand, and the consummation by them of the
transactions contemplated thereby and hereby, in each case as promptly as
practicable. The Company, the Stockholder and Parent shall furnish promptly all
information required to be included in any application or other filing to be
made pursuant to the rules and regulations of any United States or foreign
governmental body in connection with the transactions contemplated by this
Agreement.
SECTION 5.4 Stockholder Agreement, Investment and Affiliate Agreement.
The Stockholder shall execute a Stockholder Agreement, Investment and Affiliate
Agreement (the "STOCKHOLDER AGREEMENT") in the form of Exhibit 5.4 concurrently
---------------------
with the execution of this Agreement.
SECTION 5.5 Financial Results. Parent shall use reasonable efforts to
publish the post-merger financial results of the Parent, covering a 30-day
period during which the combined results of the Parent and the Company are
included as promptly as practicable and in any event within sixty (60) days
following the Effective Date.
SECTION 5.6 Registration Rights Agreement. Parent and the Stockholder
shall execute a Registration Rights Agreement in the form of Exhibit 5.6
concurrently with the execution of this Agreement.
SECTION 5.7 Notification of Certain Matters. The Company shall give
prompt notice to Parent, and Parent shall give prompt notice to the Company, of
(i) the occurrence or nonoccurrence of any event the occurrence or nonoccurrence
of which would be reasonably likely to cause any representation or warranty
contained in this Agreement to become materially untrue or inaccurate, or (ii)
any failure of the Company, Stockholder, Parent or Merger Sub, as the case may
be, materially to comply with or satisfy any covenant, condition or agreement to
be complied with or satisfied by it hereunder; provided, however, that the
delivery of any notice pursuant to this Section shall not limit or otherwise
affect the remedies available hereunder to the party receiving such notice; and
provided further that failure to give such notice shall not be treated as a
breach of covenant for the purposes of Sections 6.2(a) or 6.3(a) unless the
failure to give such notice results in material prejudice to the other party.
SECTION 5.8 Further Action/Tax Treatment. Upon the terms and subject to
the conditions hereof each of the parties hereto shall use all reasonable
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all other things necessary, proper or advisable to consummate and make
effective as promptly as practicable the transactions contemplated by this
Agreement, to obtain in a timely manner all necessary waivers, consents and
approvals and to effect all necessary registrations and filings, and otherwise
to satisfy or cause to be satisfied all conditions precedent to its obligations
under this Agreement. None of Parent, Merger Sub, the Stockholder and the
Company will knowingly (both before and after consummation of the Merger) take
any actions, other than those contemplated by this Agreement, which would
prevent the
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transaction effected through the Merger from qualifying as a reorganization
under the provisions of Section 368 of the Code. Notwithstanding anything to the
contrary in this Agreement, Parent shall not have any liability for the Taxes of
any stockholder of the Company resulting from the failure of the transaction
effected through the Merger to qualify as a reorganization under the provisions
of Section 368(a) of the Code.
SECTION 5.9 Public Announcements. Parent and the Company shall consult
with each other before issuing any press release with respect to the Merger or
this Agreement and shall not issue any such press release or make any such
public statement without the prior consent of the other party, which shall not
be unreasonably withheld; provided, however, that Parent may, without the prior
consent of the Company, issue such press release or make such public statement
as may upon the advice of counsel be required by law or the rules and
regulations of the Nasdaq National Market if it has used reasonable efforts to
consult with the Company prior thereto.
SECTION 5.10 Conveyance Taxes. Parent, Merger Sub, the Stockholder and
the Company shall cooperate in the preparation, execution and filing of all
returns, questionnaires, applications, or other documents regarding any real
property transfer or gains, sales, use, transfer, value added, stock transfer
and stamp taxes, any transfer, recording, registration and other fees, and any
similar taxes which become payable in connection with the transactions
contemplated hereby that are required or permitted to be filed at or before the
Effective Time.
SECTION 5.11 Pooling Accounting Treatment. Each of Parent, Merger Sub,
the Stockholder and the Company agrees prior to the Closing not to take any
action that to its knowledge could reasonably be expected to adversely affect
the ability of Parent to treat the Merger as a pooling of interests, and each of
Parent and the Company agrees to take such action as may be reasonably required
to negate the impact of any past actions which to its knowledge could reasonably
be expected to adversely impact the ability of Parent to treat the Merger as a
pooling of interests. The taking by Parent or the Company of any action
prohibited by the previous sentence, or the failure of Parent or the Company to
take any action required by the previous sentence, shall, if the Merger is not
able to be accounted for as a pooling of interests as a result of such action or
inaction, constitute a breach of this Agreement by Parent or the Company, as the
case may be, for the purposes of Section 7.1(e). If requested, the President or
Chief Financial Officer of each of the Company and Parent will execute any
documentation on behalf of the Company or Parent, as the case may be, reasonably
required by Parent's independent public accountants with respect to pooling of
interest accounting issues.
SECTION 5.12 Listing of Parent Shares. Parent shall promptly file
additional share listing applications with the Nasdaq Stock Market for the
listing of the Parent Shares to be issued in connection with the Merger and
Parent shall use its reasonable best efforts to have such applications accepted.
SECTION 5.13 Leases. The Parent shall take all actions necessary or
appropriate to remove the Stockholder as a party or guarantor pursuant to any
Leases entered into on behalf of the Company or shall indemnify and hold the
Stockholder harmless from any loss incurred or
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resulting from the failure of the Parent to remove the Stockholder as a party or
guarantor to any such lease.
SECTION 5.14 Tax Certificates. The Stockholder shall deliver to Parent,
prior to the Closing Date, an affidavit (in form and substance reasonably
satisfactory to Parent) meeting the requirements necessary to establish that the
Stockholder is eligible for the exemption from the withholding provided by
Section 1445(b)(2) of the Code.
SECTION 5.15 Contribution of Triad Data Systems Stock. The Stockholder
shall contribute all of the capital stock of Triad Data Systems and any other
ownership rights regarding the capital stock of Triad Data Systems to the
Company prior to the Closing Date.
SECTION 5.16 Fees and Expenses. All fees and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such expenses, whether or not the Merger is
consummated; provided that if the aggregate amount of the fees and expenses of
--------
the Company and its subsidiaries incurred in connection with this Agreement and
the transactions contemplated hereby ("COMPANY EXPENSES") is in excess of
----------------
$1,000,000, the Stockholder shall be responsible and liable for and shall pay
for a portion of the Company Expenses equal to the aggregate amount of such
Company Expenses minus $1,000,000 to the extent such expenses were not deducted
-----
from the calculation set forth in Section 1.6(a) hereof prior to Closing
("EXCESS EXPENSES"). Immediately prior to the Closing, the parties hereto shall
- -----------------
agree on the amount of Company Expenses incurred through the Closing. The
amount of the Excess Expenses, if any, shall be deducted from the calculation
set forth in Section 1.6(a) of the Agreement as indicated in such Section
1.6(a).
SECTION 5.17 Preparation of Tax Returns. The Stockholder will prepare and
file, or cause to be prepared and filed, on a timely basis at his own cost and
expense, all income Tax Returns with respect to the Company for taxable periods
ending on or prior to the Closing Date ("PRE-CLOSING DATE RETURNS"), and will
------------------------
have discretion to make all decisions relating to the preparation of such Pre-
Closing Date Returns; provided that such Pre-Closing Date Returns shall be
--------
prepared on a basis that is consistent with Tax Returns filed by the Company
prior to the Closing Date and shall be subject to the review and consent of the
Parent which shall not be unreasonably withheld or delayed. The Stockholder
will pay or cause to be paid all unpaid liability for Taxes due with respect to
such Pre-Closing Date Returns, to the extent that such liability exceeds the
amount reserved such Taxes (other than deferred Taxes established to reflect
book-tax timing differences) on the December 31, 1997 Financial Statements as
adjusted for the passage of time through the Closing Date in accordance with the
past custom and practice of the Company in filing its Tax Returns. Parent will
provide the Stockholder (and the Stockholder's agents) with such cooperation and
information as may be reasonably requested in filing any Pre-Closing Date
Return, amended Pre-Closing Date Return or claim for refund, determining a
liability for Taxes or a right to a refund of Taxes, or participating in or
conducting any audit or other proceeding in respect of Taxes, in each case
relating to any taxable period ending on or prior to the Closing Date.
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ARTICLE VI
CONDITIONS TO THE MERGER
SECTION 6.1 Conditions to Obligation of Each Party to Effect the Merger.
The respective obligations of each party to effect the Merger shall be subject
to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) No Injunctions or Restraints; Illegality. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger shall be in effect, nor shall any proceeding brought
by any administrative agency or commission or other governmental authority or
instrumentality, seeking any of the foregoing be pending; and there shall not be
any action taken, or any statute, rule, regulation or order enacted, entered,
enforced or deemed applicable to the Merger, which makes the consummation of the
Merger illegal;
(b) Governmental Actions. There shall not have been instituted, pending
or threatened any action or proceeding (or any investigation or other inquiry
that might result in such an action or proceeding) by any governmental authority
or administrative agency before any governmental authority, administrative
agency or court of competent jurisdiction, nor shall there be in effect any
judgment, decree or order of any governmental authority, administrative agency
or court of competent jurisdiction, in either case, seeking to prohibit or limit
Parent from exercising all material rights and privileges pertaining to its
ownership of the Surviving Corporation or the ownership or operation by Parent
or any of its subsidiaries of all or a material portion of the business or
assets of Parent or any of its subsidiaries, as a result of the Merger or the
transactions contemplated by this Agreement;
(c) HSR Act. The waiting period applicable to the consummation of the
Merger under the HSR Act shall have expired or been terminated.
SECTION 6.2 Additional Conditions to Obligations of Parent and Merger Sub.
The obligations of Parent and Merger Sub to effect the Merger are also subject
to the following conditions:
(a) Representations and Warranties. The representations and warranties of
the Company and the Stockholder contained in this Agreement shall have been true
and correct, individually and in the aggregate, in all material respects both
when made and as of the Closing Date In addition, all representations and
warranties of the Company and the Stockholder that are qualified by materiality
or similar words shall have been true and correct, individually and in the
aggregate, in all respects when made and as of the Closing Date. Parent shall
have received a certificate to such effect signed on behalf of the Company by
the President and the Chief Financial Officer of the Company and by the
Stockholder;
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(b) Agreements and Covenants. The Company and the Stockholder shall have
performed or complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by it or them at or
prior to the Effective Time, and Parent and Merger Sub shall have received a
certificate to such effect signed on behalf of the Company by the President and
the Chief Financial Officer of the Company and by the Stockholder;
(c) Consents Obtained. All consents, waivers, approvals, authorizations
or orders required to be obtained, and all filings required to be made, by the
Company for the due authorization, execution and delivery of this Agreement and
the consummation by it of the transactions contemplated hereby shall have been
obtained and made by the Company except where the failure to receive such
consents, waivers, approvals, authorizations or orders would not reasonably be
expected to have a Material Adverse Effect;
(d) Opinion of Counsel to the Company. Parent shall have received an
opinion of Paul Weiss Rifkind Wharton & Garrison, counsel to the Company, in
substantially the form attached hereto as Exhibit 6.2(d);
(e) Opinion of Accountant. Parent shall have received from Price
Waterhouse LLP, independent accountants, an opinion to the effect that the
Merger, if consummated in accordance with the provisions of this Agreement, will
qualify for pooling of interests accounting treatment in accordance with GAAP
and the rules and regulations of the SEC;
(f) Registration Rights Agreement. The Stockholder shall have entered
into a Registration Rights Agreement with the Parent;
(g) Stockholder Agreement and Investment Letter. Parent shall have
received an executed Stockholder Agreement from the Stockholder; and
(h) Noncompetition Agreements. The Stockholder shall have entered into a
noncompetition agreement substantially in the form of Exhibit 6.2(h).
SECTION 6.3 Additional Conditions to Obligation of the Company. The
obligation of the Company to effect the Merger is also subject to the following
conditions:
(a) Representations and Warranties. The representations and warranties
of the Parent and Merger Sub contained in this Agreement shall have been true
and correct, individually and in the aggregate, in all material respects both
when made and as the Closing Date. In addition, all representations and
warranties of the Parent and Merger Sub that are qualified by materiality or
similar words shall have been true and correct in all respects when made and as
of the Closing Date. The Company shall have received a certificate to such
effect signed by the President and the Chief Financial Officer of the Parent;
(b) Agreements and Covenants. Parent and Merger Sub shall have performed
or complied in all material respects with all agreements and covenants required
by this Agreement and the
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Registration Rights Agreement to be performed or complied with by them on or
prior to the Effective Time, and the Company shall have received a certificate
to such effect signed by the President and the Chief Financial Officer of
Parent;
(c) Consents Obtained. All consents, waivers, approvals, authorizations
or orders required to be obtained, and all filings required to be made, by
Parent and Merger Sub for the due authorization, execution and delivery of this
Agreement and the consummation by them of the transactions contemplated hereby
shall have been obtained and made by Parent and Merger Sub;
(d) Opinion of General Counsel to Parent. The Company shall have received
an opinion of Richard L. Bugley, Esq., general counsel of Parent, in
substantially the form attached hereto as Exhibit 6.3(d);
(e) Opinion of Accountant. The Company shall have received copies of the
opinions referred to in Section 6.2(e) above; and
(f) Registration Rights Agreement. The Parent shall have entered into a
Registration Rights Agreement with the Stockholder.
ARTICLE VII
TERMINATION
SECTION 7.1 Termination. This Agreement may be terminated at any time
prior to the Effective Time, notwithstanding approval thereof by the
stockholders of the Company or Parent:
(a) by mutual written consent duly authorized by the Boards of Directors
of Parent and the Company; or
(b) by either Parent or the Company if the Merger shall not have been
consummated by April 30, 1998 (provided that the right to terminate this
Agreement under this Section 7.1(b) shall not be available to any party whose
failure to fulfill any obligation under this Agreement has been the cause of or
resulted in the failure of the Merger to occur on or before such date); or
(c) by either Parent or the Company if a court of competent jurisdiction
or governmental, regulatory or administrative agency or commission shall have
issued a nonappealable final order, decree or ruling or taken any other action
having the effect of permanently restraining, enjoining or otherwise prohibiting
the Merger (provided that the right to terminate this Agreement under this
Section 7.1(c) shall not be available to any party who has not complied with its
obligations under Section 5.3 and such noncompliance materially contributed to
the issuance of any such order, decree or ruling or the taking of such action);
or
(d) by Parent or the Company, (i) if any representation or warranty of
the Company or Parent, respectively, set forth in this Agreement shall be untrue
when made, or (ii) upon a breach
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of any covenant or agreement on the part of the Company or Parent, respectively,
set forth in this Agreement, such that the conditions set forth in Section
6.2(a) or 6.2(b), or Section 6.3(a) or 6.3(b), as the case may be, would not be
satisfied (either (i) or (ii) above being a "TERMINATING BREACH"), provided,
------------------
that, if such Terminating Breach is curable prior to April 30, 1998 by the
Company or Parent, as the case may be, through the exercise of its reasonable
best efforts and for so long as the Company or Parent, as the case may be,
continues to exercise such reasonable best efforts, neither Parent nor the
Company, respectively, may terminate this Agreement under this Section 7.1(d);
or
(e) by Parent, if any representation or warranty of the Company shall
have become untrue such that the condition set forth in Section 6.2(a) would not
be satisfied, or by the Company, if any representation or warranty of Parent
shall have become untrue such that the condition set forth in Section 6.3(a)
would not be satisfied, in either case other than by reason of a Terminating
Breach.
SECTION 7.2 Effect of Termination. In the event of the termination of
this Agreement pursuant to Section 7.1, this Agreement shall forthwith become
void and there shall be no liability on the part of any party hereto or any of
its affiliates, directors, officers or stockholders except (i) as set forth in
Section 5.16 hereof, and (ii) nothing herein shall relieve any party from
liability for any breach hereof.
ARTICLE VII
GENERAL PROVISIONS
SECTION 8.1 Indemnification.
(a) Charters and By-Laws. Parent agrees that all rights to
indemnification or exculpation now existing in favor of the employees, agents,
directors or officers of the Company (each a "COMPANY INDEMNIFIED PARTY") as
-------------------------
provided in its charter or By-Laws shall continue in full force and effect for a
period of not less than six years from the Closing Date; provided, however,
-------- -------
that, in the event any claim or claims are asserted or made within such six-year
period, all rights to indemnification in respect of any such claim or claims
shall continue until disposition of any and all such claims. Any determination
required to be made with respect to whether a Company Indemnified Party's
conduct complies with the standards set forth in the charter or By-Laws of the
Company or otherwise shall be made by independent counsel selected by the
Company Indemnified Party reasonably satisfactory to the Surviving Corporation
(whose fees and expenses shall be paid by the Surviving Corporation).
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(b) Survival of Representations and Warranties. The representations and
warranties of the Company and the Stockholder made in this Agreement and in the
documents and certificates delivered in connection herewith shall survive the
Merger until Price Waterhouse LLP shall have released their report on the
Parent's financial statements for the fiscal year ending on December 26, 1998
or, if earlier, the first anniversary of the Closing Date (the "INDEMNITY
---------
PERIOD") and shall remain operative and in full force and effect regardless of
any investigation made by or on behalf of any other party hereto, any person
controlling any such party or any of their officers or directors, whether prior
to or after the execution of this Agreement. No claim for indemnification under
this Section 8.1 for breach of a representation or warranty or any other claim
for a breach of representation or warranty may be commenced after the Indemnity
Period, provided, however, that claims made within the applicable time period
-------- ------
shall survive to the extent of such claim until such claim is finally determined
and, if applicable, paid.
(c) Indemnification of the Parent and Merger Sub. The Stockholder (in his
capacity, and for the purposes of Section 8.3(e) below, an "INDEMNITOR") agrees
----------
that, on and after the Closing Date, the Escrow Account established under the
Escrow Agreement shall be available to indemnify, defend, protect, and hold
harmless each of Parent, Merger Sub, the Surviving Corporation and each of their
respective subsidiaries and affiliates (each in its capacity as an indemnified
party, an "INDEMNITEE") at all times from and after the date of this Agreement
----------
from and against all claims, damages, actions, suits, proceedings, demands,
assessments, adjustments, costs and expenses (including specifically, but
without limitation, reasonable attorneys' fees and expenses of investigation)
(collectively "DAMAGES") incurred by such Indemnitee as a result of or incident
-------
to (i) any breach of any representation or warranty of the Company or the
Stockholder set forth herein or in any certificate or other document delivered
in connection herewith as of the date made (as such representation or warranty
would read if all qualifications as to materiality were deleted from it) with
respect to which a claim for indemnification is brought by an Indemnitee within
the applicable survival period, if any, described in Section 8.1(b), (ii) any
breach or nonfulfillment by the Company or the Stockholder, or any noncompliance
by the Company or the Stockholder with, any covenant, agreement, or obligation
contained herein or in any certificate or other document delivered in connection
herewith, and (iii) any Excess Expenses (as defined in Section 5.16 hereof),
whether incurred prior to or after the Closing, to the extent such Excess
Expenses were not deducted from the calculation set forth in Section 1.6(a)
hereof prior to the Closing.
(d) Indemnification of the Company and the Stockholder. The Parent and
the Merger Sub (each in its capacity hereunder, and for purposes of Section
8.2(e) below, an "INDEMNITOR") agree to indemnify, defend, protect, and hold
----------
harmless each of the Company and the Stockholder and each of their respective
subsidiaries and affiliates (each in its capacity as an indemnified party, an
"INDEMNITEE") at all times from and after the date of this Agreement from and
- -----------
against all Damages incurred by such Indemnitee as a result of or incident to
(i) any breach of any representation or warranty of the Parent and the Merger
Sub set forth herein (or in any certificate or other document delivered in
connection with the Closing) as of the date made (as such representation or
warranty would read if all qualifications as to materiality were deleted from
it) and (ii) any breach or nonfulfillment by the Parent or the
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Merger Sub, or any noncompliance by the Parent or the Merger Sub with, any
covenant, agreement, or obligation contained herein, including but not limited
to the agreement contained in Section 5.13 hereof (or in any certificate or
other document delivered in connection with the Closing).
(e) Third Person Claims. Promptly after an Indemnitee has received notice
of or has knowledge of any claim by a person not a party to this Agreement
("THIRD PERSON") or the commencement of any action or proceeding by a Third
- --------------
Person, the Indemnitee shall give the Indemnitor written notice of such claim or
the commencement of such action or proceeding; provided, however, that the
-------- -------
failure to give such notice will not effect the Indemnitees' right to
indemnification hereunder with respect to such claim, action or proceeding,
except to the extent that the Indemnitor has been actually prejudiced as a
result of such failure. If the Indemnitor notifies the Indemnitee within thirty
(30) days from the receipt of the foregoing notice that he wishes to defend
against the claim by the Third Person, the Indemnitor shall have the right to
assume and control the defense of the claim by appropriate proceedings with
counsel reasonably acceptable to the Indemnitee. The Indemnitee may participate
in the defense, at its sole expense, of any such claim for which the Indemnitor
shall have assumed the defense pursuant to the preceding sentence, provided,
--------
however that counsel for the Indemnitor shall act as lead counsel in all matters
- -------
pertaining to the defense or settlement of such claims, suit or proceedings;
provided, however, that Indemnitee shall control the defense of any claim or
- -------- -------
proceeding that in Indemnitee's reasonable judgment could have a material and
adverse effect on Indemnitee's business apart from the payment of money damages.
The Indemnitee shall be entitled to indemnification for the reasonable fees and
expenses of its counsel for any period during which the Indemnitor has not
assumed the defense of any claim. Whether or not the Indemnitor shall have
assumed the defense of any claim, neither the Indemnitee nor the Indemnitor
shall make any settlement with respect to any such claim, suit or proceeding
without the prior written consent of the other, which consent shall not be
unreasonably withheld or delayed. It is understood and agreed that in
situations where failure to settle a claim expeditiously could have an adverse
effect on the party wishing to settle, the failure of a party controlling the
defense to act upon a request for consent to such settlement within five
business days of receipt of notice thereof shall be deemed to constitute consent
to such settlement for purposes of this Section 8.1.
(f) Limitations on Indemnification. No Indemnitee shall be entitled to
indemnification under this Section 8.1 for Damages relating to breaches of
representations and warranties set forth herein or in any certificate or
document delivered in connection herewith until the aggregate amount of Damages
incurred by such Indemnitee, together with Damages suffered with respect to all
other claims for indemnification relating to breaches of representations and
warranties pursuant to this Agreement by all other Indemnitees, exceeds
$250,000; provided, however, that with respect to the matters set forth in
-----------------
Sections 2.15 and 8.1(c)(iii) above, the Parent shall be entitled to
indemnification for the entirety of such Damages (which indemnification amount
shall not be included in determining whether Damages exceed $250,000 for
purposes of this Section 8.1(f)).
(g) Exclusive Method of Payment. Following the Closing, all claims by,
and Damages of, Parent, Merger Sub and Surviving Corporation for any breach of
this Agreement shall be paid
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solely from the Escrow Account and the Stockholder shall not have any personal
obligation or liability to Parent or Merger Sub or Surviving Corporation.
Following the Closing, all claims for any breach of this Agreement shall be
payable only in shares of Parent Common Stock and, for purposes of determining
the number of shares of Parent Common Stock to be transferred in respect of any
such claim, the shares of Parent Common Stock to be transferred shall be valued
at the Average Closing Price.
SECTION 8.2 Survival, Etc.
(a) The agreements set forth in Section 8.1 shall survive pursuant to the
terms thereof and Article I and Section 5.8 shall survive the Effective Time
indefinitely and those set forth in Section 7.3 shall survive such termination
indefinitely.
(b) Any disclosure made with reference to one or more sections of the
Company Disclosure Schedule or the Parent Disclosure Schedule shall be deemed
disclosed only with respect to such section or sections.
(c) Reference to the Company's "knowledge" in this Agreement refers to the
actual knowledge of Harley M. Lippman, Sharon MacDonald, Caron Katz, Glen Klein
and Helen Lubarski plus all facts and circumstances such persons would have
discovered upon a reasonable investigation of the subject matter; provided,
however, that with respect to Section 2.21 and 3.7 "knowledge" shall mean actual
knowledge of such individuals after consultations with their respective
independent auditors but without any independent investigation of the rules
relating to pooling of interest accounting.
SECTION 8.3 Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made if and when delivered personally or by overnight courier to the parties
at the following addresses or sent by electronic transmission, with confirmation
received, to the telecopy numbers specified below (or at such other address or
telecopy number for a party as shall be specified by like notice):
(a) If to Parent or Merger Sub:
Renaissance Worldwide, Inc.
189 Wells Avenue
Newton, MA 02159
Attention: Vice President,
Mergers & Acquisitions
Telephone No.: (617) 527-6886
Telecopier No.: (617) 527-6999
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With a copy to:
Ropes & Gray
One International Place
Boston, MA 02110
Attention: Keith F. Higgins, Esq.
Telephone No.: (617) 951-7000
Telecopier No.: (617) 951-7050
(b) If to the Company:
Triad Data, Inc.
515 Madison Avenue, Suite 1810
New York, NY 10022
Attention: Harley Lippman
Telephone No.: 212-758-1010
Telecopier No.: 212-838-6303
With a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, NY 10019
Attention: James M. Dubin, Esq.
Kenneth M. Schneider, Esq.
Telephone No.: 212-373-3000
Telecopier No.: 212-757-3990
(c) If to the Stockholder:
Harley M. Lippman
c/o Triad Data, Inc.
515 Madison Avenue
Suite 1810
New York, NY 10022
Telephone No.: 212-758-1010
Telecopier No.: 212-838-6303
SECTION 8.4 Certain Definitions. For purposes of this Agreement, the
term:
(a) "affiliates" means a person that directly or indirectly, through one
or more intermediaries, controls, is controlled by, or is under common control
with, the first mentioned person; including, without limitation, any partnership
or joint venture in which the first mentioned
35
<PAGE>
person (either alone, or through or together with any other subsidiary) has,
directly or indirectly, an interest of 10% or more;
(b) "business day" means any day other than a day on which banks in The
Commonwealth of Massachusetts are required or authorized to be closed;
(c) "control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the management or
policies of a person, whether through the ownership of stock, as trustee or
executor, by contract or credit arrangement or otherwise;
(d) "person" means an individual, corporation, partnership, association,
trust, unincorporated organization, other entity or group (as defined in Section
13(d)(3) of the Exchange Act); and
(e) "subsidiary" or "subsidiaries" of the Company, Parent or any other
person means any corporation, partnership, joint venture or other legal entity
of which the Company, the Surviving Corporation, Parent or such other person, as
the case may be (either alone or through or together with any other subsidiary),
owns, directly or indirectly, more than 50% of the stock or other equity
interests the holders of which are generally entitled to vote for the election
of the board of directors or other governing body of such corporation or other
legal entity.
SECTION 8.5 Amendment. This Agreement may be amended by the parties
hereto by action taken by or on behalf of their respective Boards of Directors
at any time prior to the Effective Time; provided, however, that, after approval
-------- -------
of the Merger by the Stockholder of the Company, no amendment may be made which
by law requires further approval by the Stockholder without such further
approval. This Agreement may not be amended except by an instrument in writing
signed by the parties hereto.
SECTION 8.6 Waiver. At any time prior to the Effective Time, any party
hereto may with respect to any other party hereto (a) extend the time for the
performance of any of the obligations or other acts, (b) waive any inaccuracies
in the representations and warranties contained herein or in any document
delivered pursuant hereto, or (c) waive compliance with any of the agreements or
conditions contained herein. Any such extension or waiver shall be valid only
if set forth in an instrument in writing signed by the party or parties to be
bound thereby.
SECTION 8.7 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 8.8 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal
36
<PAGE>
or incapable of being enforced, the parties hereto shall negotiate in good faith
to modify this Agreement so as to effect the original intent of the parties as
closely as possible in an acceptable manner to the end that the transactions
contemplated hereby are fulfilled to the fullest extent possible.
SECTION 8.9 Entire Agreement. This Agreement constitutes the entire
agreement and supersedes all prior agreements and undertakings, both written and
oral, among the parties, or any of them, with respect to the subject matter
hereof.
SECTION 8.10 Assignment; Guarantee of Merger Sub Obligations. This
Agreement shall not be assigned by operation of law or otherwise, except that
Merger Sub may assign all or any of its rights hereunder to any affiliate
thereof, provided that no such assignment shall relieve the assigning party of
its obligations hereunder. Parent guarantees the full and punctual performance
by Merger Sub of all the obligations hereunder of Merger Sub or any such
assignees.
SECTION 8.11 Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement, including, without limitation, by way of subrogation except
that all rights of the Company as an Indemnitee may be enforced by the
Stockholder.
SECTION 8.12 Failure or Indulgence Not Waiver; Remedies Cumulative. No
failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right preclude any other or
further exercise thereof or of any other right. All rights and remedies
existing under this Agreement are cumulative to, and not exclusive of, any
rights or remedies otherwise available.
SECTION 8.13 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York without giving
effect to the conflict of laws principles thereof.
SECTION 8.14 Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
[This space intentionally left blank.]
37
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IN WITNESS WHEREOF, Parent, Merger Sub, the Company and the Stockholder have
each caused this Agreement to be executed as of the date first written above by
their respective officers thereunto duly authorized.
RENAISSANCE WORLDWIDE, INC.
/s/ Richard L. Bugley
By: ____________________________
Richard L. Bugley
Vice President
TDI ACQUISITION CORP.
/s/ Richard L. Bugley
By: ____________________________
Richard L. Bugley
Vice President
TRIAD DATA, INC.
/s/ Harley Lippman
By: ____________________________
Harley Lippman
President
STOCKHOLDER
/s/ Harley Lippman
_____________________________
Harley Lippman
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Exhibits
--------
1.2 Form of Certificates of Merger to be filed in New York and Delaware
5.4 Form of Stockholder Agreement, Investment and Affiliate Agreement
5.6 Form of Registration Rights Agreement
6.2(d) Form of Opinion Paul, Weiss, Rifkind, Wharton & Garrison
6.2(h) Form of Noncompetition Agreement
6.3(d) Form of Opinion of Richard L. Bugley, Esq.
39
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EXHIBIT 2.4
April 14, 1998
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Ladies and Gentlemen:
Reference is made to the Agreement and Plan of Merger dated as of April 2,
1998, (the "Merger Agreement"), among Renaissance Worldwide, Inc. (the
"Registrant"), Triad Data, Inc. a New York corporation, TDI Acquisition Corp., a
Delaware corporation and a wholly-owned subsidiary of the Registrant, and Harley
Lippman, which is an exhibit to the Registrant's Current Report on Form 8-K (the
"Current Report") filed today with the Securities and Exchange Commission (the
"Commission"). The Company hereby agrees to furnish to the Commission, upon
request, a copy of any annex, schedule or exhibit to the Merger Agreement
omitted from the copy of such agreement filed as an exhibit to the Current
Report.
Very truly yours,
RENAISSANCE WORLDWIDE, INC.
By: /s/ Richard L. Bugley
_______________________________
Richard L. Bugley
Vice President and General Counsel
