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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 3, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
COMMISSION FILE NUMBER 0-24343
ANSWERTHINK CONSULTING GROUP, INC.
(Exact Name Of Company as specified in its charter)
FLORIDA 65-0750100
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
1001 BRICKELL BAY DRIVE, SUITE 3000
MIAMI, FLORIDA 33131
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(305) 375-8005
(COMPANY'S TELEPHONE NUMBER, INCLUDING AREA CODE)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirement for the past 90 days. Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:
As of July 3, 1998, there were 33,971,692 shares of common stock
outstanding.
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<PAGE>
ANSWERTHINK CONSULTING GROUP, INC.
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets as of July 3, 1998 and January 2, 1998 3
Consolidated Statements of Operations for the Quarter and Six Months ended
July 3, 1998 and for April 23, 1997 (inception) to June 30, 1997 4
Consolidated Statements of Cash Flows for the Six months ended July 3, 1998
and April 23, 1997 (inception) to June 30, 1997 5
Notes to Consolidated Financial Statements 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS 9
PART II OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS 12
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 13
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 14
SIGNATURES 15
EXHIBIT INDEX 16
2
<PAGE>
ANSWERTHINK CONSULTING GROUP, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JULY 3, JANUARY 2,
1998 1998
--------------- ---------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 18,806,414 $ 3,173,262
Short-term investments 5,850,000 --
Accounts receivable and unbilled revenue, net 20,868,651 10,157,720
Prepaid expenses and other current assets 598,464 412,388
--------------- ---------------
Total current assets 46,123,529 13,743,370
Property and equipment, net 2,816,844 2,495,295
Other assets 1,938,889 467,370
Goodwill, net 20,497,561 11,943,610
--------------- ---------------
Total assets $ 71,376,823 $ 28,649,645
=============== ================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,163,168 $ 1,437,292
Accrued expenses and other liabilities 6,933,440 4,126,254
Notes payable to shareholders, current portion 2,239,000 --
--------------- ---------------
Total current liabilities 11,335,608 5,563,546
--------------- ---------------
Obligations under capital leases 266,782 --
Borrowings under revolving credit facility -- 8,150,000
Notes payable to shareholders 1,896,000 4,050,000
--------------- ---------------
Total long-term liabilities 2,162,782 12,200,000
--------------- ---------------
Total liabilities 13,498,390 17,763,546
--------------- ---------------
Commitments and contingencies
Convertible preferred stock -- 10,040,196
--------------- ---------------
Shareholders' equity
Preferred stock, $.001 par value, 1,250,000 authorized, none issued and
outstanding -- --
Common stock, $.001 par value, authorized 125,000,000 shares; issued and
outstanding: 33,971,692 shares at July 3, 1998; 23,378,592 shares at
January 2, 1998 33,972 23,379
Additional paid-in capital 108,601,603 13,569,279
Unearned compensation-restricted stock (1,516,668) (656,303)
Accumulated deficit (49,240,474) (12,090,452)
--------------- ---------------
Total shareholders' equity 57,878,433 845,903
--------------- ---------------
Total liabilities and shareholders' equity $ 71,376,823 $ 28,649,645
=============== ================
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
3
<PAGE>
ANSWERTHINK CONSULTING GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
---------------- --------------- ----------------
QUARTER ENDED SIX MONTHS APRIL 23, 1997
JULY 3, ENDED (INCEPTION)
1998 JULY 3, TO JUNE 30,
1998 1997
---------------- ---------------- ----------------
<S> <C> <C> <C>
Net revenues $ 23,043,386 $ 41,575,156 $ 62,090
Costs and expenses:
Project personnel and expenses 13,834,359 25,028,165 1,616,402
Selling, general and administrative 6,730,220 12,384,238 1,289,457
Compensation related to vesting of restricted shares -- 40,843,400 --
Settlement costs -- -- 1,755,541
---------------- ---------------- ----------------
Total costs and operating expenses 20,564,579 78,255,803 4,661,400
---------------- ---------------- ----------------
Income (loss) from operations 2,478,807 (36,680,647) (4,599,310)
Other income (expense):
Interest income 103,250 131,297 251,016
Interest expense (278,907) (600,672) --
---------------- ---------------- ----------------
Net income (loss) $ 2,303,150 $ (37,150,022) $ (4,348,294)
================ ================ ================
Basic net income (loss) per common share $ 0.13 $ (2.69) $ --
---------------- ---------------- ----------------
Weighted average common shares outstanding 17,386,528 13,806,429 --
---------------- ---------------- ----------------
Diluted net income (loss) per common share $ 0.07 $ (2.69) $ --
---------------- ---------------- ----------------
Weighted average common and common equivalent shares
outstanding 32,195,324 13,806,429 --
---------------- ---------------- ----------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
4
<PAGE>
ANSWERTHINK CONSULTING GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS APRIL 23, 1997
ENDED (INCEPTION)
JULY 3, TO JUNE 30,
1998 1997
---------------- ----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net loss $ (37,150,022) $ (4,348,294)
Adjustments to reconcile net loss to net cash used in operating
activities:
Compensation related to vesting of restricted shares 40,843,400 --
Depreciation and amortization 1,419,052 15,450
Changes in assets and liabilities, net of effects from acquisitions:
Increase in accounts receivable and unbilled revenue (9,735,222) (63,000)
Increase in prepaid expenses and other current and non-current assets (346,616) (141,141)
Increase in accounts payable 174,182 1,422,915
Increase in accrued expenses and other liabilities 1,353,904 1,011,177
---------------- ----------------
Net cash used in operating activities (3,441,322) (2,102,893)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (1,133,519) (500,793)
Sale of property and equipment under sale/leaseback arrangement 456,041 --
Purchase of short-term investments (5,850,000) --
Other, net (142,919) --
---------------- ----------------
Net cash used in investing activities (6,670,397) (500,793)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 38,711,790 57,917
Repurchase of common stock (1,160) --
Proceeds from issuance of convertible preferred stock 1,099,639 20,400,000
Proceeds from revolving credit facility 3,000,000 --
Repayment of revolving credit facility (11,150,000) --
Repayment of shareholders notes (6,340,035) --
Proceeds from capital lease obligation 507,015 --
Repayment of obligation under capital lease (82,378) --
---------------- ----------------
Net cash provided by financing activities 25,744,871 20,457,917
---------------- ----------------
Net increase in cash and cash equivalents 15,633,152 17,854,231
Cash and cash equivalents at beginning of period 3,173,262 --
---------------- ----------------
Cash and cash equivalents at end of period $ 18,806,414 $ 17,854,231
================ ================
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
Cash paid for interest $ 738,142 $ --
Cash paid for income taxes $ -- $ --
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
5
<PAGE>
ANSWERTHINK CONSULTING GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying consolidated financial statements of AnswerThink Consulting
Group, Inc. (the "Company") include the accounts of the Company and all of its
wholly owned subsidiaries. All material intercompany transactions and balances
have been eliminated in consolidation. In the opinion of management, the
consolidated financial statements reflect all normal and recurring adjustments,
which are necessary for a fair presentation of the Company's financial position,
results of operations, and cash flows as of the dates and for the periods
presented. The consolidated financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information. Consequently, these statements do not include all the disclosures
normally required by generally accepted accounting principles for annual
financial statements. Accordingly, these financial statements should be read in
conjunction with the Company's audited financial statements and notes thereto
for the period ended January 2, 1998, included in the Form S-1 filed by the
Company with the Securities and Exchange Commission. The condensed balance sheet
data as of January 2, 1998 was derived from audited financial statements but
does not include all disclosures required by generally accepted accounting
principles. The consolidated results of operations for the quarter and six
months ended July 3, 1998, are not necessarily indicative of results for the
full year.
2. SHORT TERM INVESTMENTS
Short-term investments, consisting of interest bearing, investment-grade
securities, are available-for-sale securities which are recorded at fair market
value. Any unrealized holding gains or losses on available-for-sale securities
are reported as a separate component of shareholders' equity. The difference
between fair market value and cost was not material at July 3, 1998. There were
no realized gains or losses from sales of available-for-sale securities for any
period presented.
3. NET INCOME (LOSS) PER COMMON SHARE
Basic net income (loss) per common share is computed by dividing net income
(loss) by the weighted average number of common shares outstanding during the
period. The calculation includes only the vested portion of common shares issued
to employees under employment agreements and does not include shares that have
not yet vested. Accordingly, common shares outstanding for the basic net income
(loss) per share computation, is significantly lower than actual shares issued
and outstanding. During the period from April 23, 1997 (inception) to June 30,
1997, the only common shares outstanding were unvested shares issued pursuant to
employment agreements. Therefore, for the basic net loss per common share
calculation, there were no common shares outstanding during that period.
Diluted net income per share is computed using the weighted average number of
common shares outstanding plus the dilutive effect of common stock equivalents
(using the treasury stock method). Potentially dilutive shares as of July 3,
1998, which have not been included in the diluted per share calculation for the
six months ended July 3, 1998, include 14,198,448 unvested shares issued
pursuant to employment agreements. These shares were excluded from the
calculation because their effects would be anti-dilutive due to the loss
incurred by the Company for the six months ended July 3, 1998. Accordingly, for
the six months ended July 3, 1998, diluted net loss per common share is the same
as basic net loss per common share.
6
<PAGE>
ANSWERTHINK CONSULTING GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
3. NET INCOME (LOSS) PER COMMON SHARE (CONTINUED)
The following table presents the calculation of earnings per share:
<TABLE>
<CAPTION>
FOR THE FOR THE SIX
QUARTER ENDED MONTHS ENDED
JULY 3, 1998 JULY 3, 1998
--------------- ---------------
<S> <C> <C>
Net income (loss) $ 2,303,150 $ (37,150,022)
=============== ===============
Basic:
Weighted average common shares outstanding 17,386,528 13,806,429
=============== ===============
Net income (loss) per share $ 0.13 $ (2.69)
=============== ===============
Diluted:
Weighted average common shares outstanding 17,386,528 --
Dilutive effects of unvested shares and stock options 14,808,796 --
--------------- ---------------
Weighted average common and common equivalent shares outstanding 32,195,324 --
=============== ===============
Net income (loss) per share $ 0.07 $ (2.69)
--------------- ---------------
</TABLE>
4. NEW ACCOUNTING PRONOUNCEMENTS
In July 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131, DISCLOSURES ABOUT SEGMENTS OF AN
ENTERPRISE AND RELATED INFORMATION ("SFAS 131"), which specifies revised
guidelines for determining an entity's operating segments and the type and level
of financial information to be disclosed. This statement is effective for fiscal
years beginning after December 15, 1997. Interim reporting disclosures are not
required in the first year of adoption. The Company will adopt SFAS 131 in the
fourth quarter of 1998 and is currently determining the impact of such adoption
on its reporting as currently presented.
5. ACQUISITION AND NON-CASH ACTIVITIES
On May 20, 1998, the Company acquired all the outstanding shares of Legacy
Technology, Inc. ("Legacy") for $2.6 million in promissory notes, which were
paid during June 1998, plus 248,461 shares of the Company's common stock valued
at $3.0 million. The sellers are also entitled to contingent consideration of
approximately $1.3 million, payable in cash and the Company's common stock, if
certain performance targets are met over the 12-month period ending April 30,
1999. Legacy is a Massachusetts-based provider of decision support and data
warehouse solutions to Fortune 1000 companies.
The Company's acquisition of Legacy has been accounted for using the purchase
method of accounting. Accordingly, the results of operations of the acquired
company are included in the Company's consolidated results of operations from
the date of acquisition. Contingent consideration, to the extent earned, will be
recorded as additional goodwill.
7
<PAGE>
ANSWERTHINK CONSULTING GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
5. ACQUISITION AND NON-CASH ACTIVITIES (CONTINUED)
The consideration for the Company's acquisition of Legacy has been allocated to
the assets and liabilities acquired based upon their respective fair values. The
components of the purchase price allocation, including fees and expenses, are as
follows:
<TABLE>
<S> <C>
Fair value of net liabilities assumed (including transaction costs) $ (194,011)
Goodwill 5,758,043
Common stock issued (2,981,532)
Note payable issued to Legacy shareholders (2,582,500)
----------------
Cash used in acquisition of Legacy $ --
----------------
</TABLE>
The following information presents the unaudited pro forma condensed results of
operations for the period January 3, 1998 through July 3, 1998 as if the
Company's acquisition of Legacy had occurred on January 3, 1998. The pro forma
adjustments include additional amortization and interest expense in the amount
of approximately $128,000 and $72,000, respectively. The pro forma results are
presented for informational purposes only and are not necessarily indicative of
the future results of operations of the Company or the results of operations of
the Company had the acquisition occurred on January 3, 1998.
<TABLE>
<CAPTION>
PRO FORMA
RESULTS OF
OPERATIONS
----------------
<S> <C>
Net revenues $ 43,604,293
Net loss $ (37,320,367)
Net loss per common share--basic and diluted $ (2.70)
</TABLE>
On March 12, 1998, the Company amended the purchase agreement pursuant to which
it acquired The Hackett Group, Inc. ("Hackett") to waive the earn-out provisions
of the note payable and restricted shares that were issued at the time of the
Hackett acquisition. In connection with such amendment, the Company recorded
additional goodwill amounting to approximately $3.1 million, notes payable to
shareholders totaling $1.4 million, accrued expenses and other liabilities of
$338,000 and shareholders' equity of $1.3 million.
In May 1998, 1,790,026 shares of the Company's convertible preferred stock
totaling $11.1 million were converted on a four-for-one basis into 7,160,104
shares of common stock.
6. INITIAL PUBLIC OFFERING
In May 1998, the Company completed its initial public offering whereby the
Company sold 3,324,500 shares of common stock. Net proceeds to the Company,
after expenses, aggregated $38.5 million. The Company used $15.3 million of the
proceeds from the offering to repay outstanding indebtedness, including $9
million for borrowings under the working capital line of credit and $6.3 million
for notes payable to shareholders. The Company has invested the remainder of the
net proceeds in short-term, interest bearing, investment-grade securities.
8
<PAGE>
ANSWERTHINK CONSULTING GROUP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
AnswerThink Consulting Group, Inc. ("AnswerThink" or the "Company") is
a rapidly growing provider of knowledge-based consulting and IT services to
Fortune 1000 companies and other sophisticated buyers. The Company addresses its
clients' strategic business needs by offering a wide range of integrated
services or solutions, including benchmarking, process transformation, software
package implementation, electronic commerce, decision support technology,
technology architecture and integration and Year 2000 solutions. These solutions
target a client's specific business functions (finance and administration, human
resources, IT, sales and customer support, and supply chain management) and
allow a business to reach beyond the enterprise and link the people, processes
and technologies of the extended organization or "Interprise." AnswerThink
markets its services to senior executives in organizations where business
transformation and technology-enabled change can have a significant competitive
impact.
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, the
Company's results of operations and the percentage relationship to net revenues
of such results.
<TABLE>
<CAPTION>
APRIL 23, 1997
(INCEPTION) QUARTER ENDED
-----------------------------------------
TO JUNE 30, 1997 APRIL 3, 1998 JULY 3, 1998
------------------ ------------------ -------------------
(IN THOUSANDS, EXCEPT PERCENTAGE DATA)
<S> <C> <C> <C> <C> <C> <C>
Net revenues $ 62 100.0% $ 18,532 100.0% $ 23,043 100.0%
Costs and expenses:
Project personnel and expenses 1,616 nm 11,194 60.4% 13,834 60.0%
Selling, general and administrative 1,290 nm 5,654 30.5% 6,730 29.2%
Compensation related to vesting
of restricted shares -- -- 40,843 220.4% -- --
Settlement costs 1,756 nm -- -- -- --
--------- -------- ---------- -------- ---------- --------
Total costs and operating
expenses 4,662 nm 57,691 311.3% 20,564 89.2%
--------- -------- ---------- -------- ---------- --------
Income (loss) from operations (4,600) nm (39,159) 211.3% 2,479 10.8%
Other income (expense):
Interest income (expense), net 252 406.5% (294) 1.6% (176) nm
--------- -------- ---------- -------- ---------- --------
Net income (loss) $(4,348) nm $(39,453) 212.9% $ 2,303 10.0%
--------- -------- ---------- -------- ---------- --------
</TABLE>
QUARTER AND SIX MONTHS ENDED JULY 3, 1998 COMPARED TO INCEPTION PERIOD
(APRIL 23, 1997 TO JUNE 30, 1997)
Net revenues for the second quarter and six months ended July 3, 1998
were $23.0 million and $41.6 million, respectively. Net revenues totaled $62,000
during the period from April 23, 1997 to June 30, 1997 (the "Inception Period").
The Company reported net income for the second quarter of 1998 of $2.3 million
and net loss for the first six months of 1998 of $37.2 million. The net loss in
the six-month period was attributable to a one-time $40.8 million charge for
compensation related to the vesting of restricted shares issued to the key
executives at the Company's inception. Excluding the effect of the compensation
charge the Company had net income of $3.7 million for the first six months of
1998. The net loss during the Inception Period totaled $4.3 million. The
Company's primary activities during its initial stages of 1997 consisted of
recruiting consultants and developing and building a service delivery model and
the underlying information systems to support the future growth of the business.
The Company also incurred settlement costs of $1.8 million during the Inception
Period. These expenses related to the settlement of litigation initiated against
the Company by an international accounting firm in connection with the
resignation of certain of the Company's executive and management employees and
the formation of the Company. The settlement costs consisted primarily of (i)
payments to certain employees of the Company relating to obligations assumed by
the Company for compensation earned during the period from December 1, 1996 to
the date of the Company's inception by such employees, and (ii) legal fees
incurred in connection with the litigation.
9
<PAGE>
In light of the Company's incorporation on April 23, 1997 and the
absence of significant operations during the Inception Period, the following
discussion presents a comparison of results for the second quarter of 1998
versus the first quarter of 1998 as management believes that this comparison
provides a more meaningful presentation and helps to address the continuation of
recent trends.
QUARTER ENDED JULY 3, 1998 COMPARED TO QUARTER ENDED APRIL 3, 1998
NET REVENUES. Net revenues for the second quarter of 1998 increased by
$4.5 million or 24.3% over the prior quarter as the Company continued to
increase the number of clients served. In addition to the new clients, the
Company also sold additional work to existing clients. The comparison of
revenues to the prior quarter was also positively impacted by the Company's
acquisition of Legacy Technology, Inc. ("Legacy") which was completed in May
1998. Legacy is a Massachusetts-based provider of decision support and data
warehouse solutions.
PROJECT PERSONNEL AND EXPENSES. Project personnel and expenses for the
second quarter of 1998 increased by $2.6 million or 23.6% over the first quarter
of 1998. The increase in project personnel and expenses over the prior quarter
was primarily the result of the additional consultants hired during the quarter
as well as the acquisition of Legacy. Project personnel and expenses as a
percentage of net revenues decreased slightly in the second quarter of 1998 to
60.0%, compared to 60.4% during the first quarter. The number of consultants
employed by the Company increased by 105 during the second quarter to 448 from
343 at the end of the first quarter.
SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and
administrative expenses for the second quarter of 1998 increased by $1.1 million
or 19.0% over the first quarter of 1998, but decreased as a percentage of
revenues to 29.2% from 30.5%. The increase in selling, general and
administrative expenses is primarily attributable to an increase in the number
of functional support personnel employed combined with the acquisition of
Legacy. The primary increases in support personnel were made in the finance,
service delivery and sales and marketing areas.
COMPENSATION RELATED TO VESTING OF RESTRICTED SHARES. The Company
recorded a charge in the first quarter of 1998 of approximately $40.8 million
relating to the vesting of restricted shares held by five of the Company's
senior managers, one director and two managing directors of business units that
were subject to certain performance vesting criteria. There are no additional
restricted shares outstanding that are subject to performance criteria for
vesting.
INTEREST EXPENSE, NET. Net interest expense totaled $176,000 in the
second quarter of 1998 compared to $294,000 in the first quarter of the year.
Net interest expense decreased by $118,000 from the first quarter of 1998
primarily as a result of the repayment of a significant portion of the Company's
debt during the quarter and an increase in interest earned on the Company's
investments. The Company paid debt and increased investments using the proceeds
of its initial public, which was completed during the second quarter.
AVAILABILITY OF NET OPERATING LOSSES
The Company did not record any tax provision in the first six months of 1998 as
a result of the utilization of net operating loss carryforwards. In light of the
recent organization of the Company and the loss experienced in fiscal 1997, a
valuation allowance has been established for the entire deferred tax asset
attributed to the remaining net operating loss carryforwards.
LIQUIDITY AND CAPITAL RESOURCES
At July 3, 1998, the Company had $18.8 million of cash and cash equivalents
compared to $3.2 million at January 2, 1998. Prior to its initial public
offering in May 1998, the Company's primary source of liquidity had been its
initial capitalization, operating cash flows and borrowings under the Company's
revolving credit facility. The Company has a revolving credit facility with
BankBoston for up to $20 million. The credit facility is secured by
substantially all of the Company's assets and contains certain restrictive
covenants. There were no borrowings under this agreement as of July 3, 1998.
Net cash used in operating activities was $3.4 million for the six months ended
July 3, 1998 compared to $2.1 million used during the Inception Period. During
the Inception Period, net cash used in operating activities was
10
<PAGE>
primarily attributable to the operating loss of $4.3 million. During the first
six months of 1998, the increase in cash used in operations related primarily to
an increase in accounts receivable and unbilled revenue.
Net cash used in investing activities was $6.7 million for the first six months
of 1998 compared to $501,000 during the Inception Period. The primary use of
cash in 1998 was to purchase short-term investments amounting to $5.9 million.
In May 1998, the Company acquired Legacy Technology, Inc. The purchase price
included the issuance of $2.6 million in promissory notes (which were paid
during June 1998) and $3.0 million (248,461 shares) of the Company's common
stock.
Net cash provided by financing activities was $25.7 million in the first six
months of 1998 compared to $20.5 million during the Inception Period. During the
Inception Period, the primary source of cash was $20.4 million raised through
the issuance of Series A Convertible Preferred Stock. In the first six months of
1998, $38.7 million of cash was provided from the issuance of common stock
primarily from the Company's initial public offering, $3.0 million represented
proceeds under the revolving credit facility and $1.1 million was provided from
the issuance of convertible preferred stock. The Company used the proceeds from
its initial public offering to repay $6.3 million in notes payable to
shareholders and to repay all outstanding amounts under the revolving credit
facility.
Based on the Company's current financial position and funds available under its
credit facility or that may be generated from operations, the Company believes
that it will be able to meet all of its currently anticipated short-term and
long-term financial requirements.
Certain statements in this Form 10-Q are "forward looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995 and involve
known and unknown risks, uncertainties and other factors that may cause the
Company's actual results, performance or achievements to be materially different
from the results, performance or achievements expressed or implied by the
forward looking statements. Factors that impact such forward looking statements
include, among others, the ability of the Company to attract additional
business, changes in expectations regarding the information technology industry,
the ability of the Company to attract skilled employees, possible changes in
collections of accounts receivable, risks of competition, price and margin
trends, changes in general economic conditions and interest rates.
YEAR 2000 ISSUE
Many existing computer programs were designed and developed without considering
the impact of the upcoming change in the century and consequently use only two
digits to identify a year in the date field. If not corrected, many computer
applications could fail or create erroneous results by or at the Year 2000 (the
"Year 2000 Issue"). All of the Company's systems have been recently implemented
and are Year 2000 compliant. The Company believes the Year 2000 Issue will not
have a material adverse impact on the Company's financial condition or results
of operations.
11
<PAGE>
ANSWERTHINK CONSULTING GROUP, INC.
PART II--OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
(c) During the period covered by this report, the Registrant effected the
following sales of securities, which were not registered under the Securities
Act of 1933. These transactions were effected without an underwriter.
On May 5, 1998, the Registrant declared a one-for-two reverse stock
split of all of its capital stock. As a result of this stock split, all shares
of the Registrant's Common Stock, par value $.001 per share ("Common Stock"),
Class A Convertible Preferred Stock, par value $.001 per share ("Class A
Preferred") and Class B Convertible Preferred Stock, par value $.001 per share
("Class B Preferred" and collectively with the Class A Preferred, the
"Preferred") were exchanged for one-half the number of such shares outstanding
of each respective class prior to the stock split, excluding fractional shares
resulting from such stock split, which were redeemed by the Registrant for cash.
These shares were issued without registration under the Securities Act in
reliance on an exemption contained in Section 3(a)(9).
On May 20, 1998, the Registrant issued 269,166 shares of Common Stock
to the former stockholders of Legacy Technology, Inc. ("Legacy") in connection
with the Registrant's acquisition of Legacy. Pursuant to the terms of the
Purchase Agreement, the former stockholders of Legacy subsequently returned
20,705 shares to the Registrant. These shares were issued without registration
under the Securities Act in reliance upon an exemption from registration under
Section 4(2).
(d) On May 27, 1998, the Registrant's Registration Statement on Form S-1 (No.
333-48123), registering the initial public offering of 3,850,000 shares of the
Registrant's Common Stock (including 1,000,000 shares held by selling
shareholders), plus an additional 577,500 shares (including 103,000 shares held
by selling shareholders) to be sold in the event that the underwriters exercised
the over-allotment option granted to them, became effective. The aggregate
offering price of the 3,850,000 shares registered and sold pursuant to the
Registration Statement was $50.1 million, of which $37.1 million represented the
aggregate offering price of securities sold by the Registrant, and of which $13
million represented the aggregate offering price of securities sold by selling
shareholders. The closing of the sale of all 3,850,000 shares occurred on June
2, 1998. On June 3, 1998, the underwriters exercised their over-allotment option
with respect to all 577,500 shares of Common Stock covered by such option. All
577,500 shares covered by the over-allotment option were sold by the
underwriters for an aggregate offering price of $7.5 million, of which $6.2
million represented the aggregate offering price of securities sold by the
Registrant, and of which $1.3 million represented the aggregate offering price
of securities sold by selling shareholders. The Registrant's initial public
offering terminated upon the closing of the over-allotment option on June 9,
1998. Morgan Stanley Dean Witter, Donaldson, Lufkin & Jenrette, NationsBanc
Montgomery Securities LLC and The Robinson-Humphrey Company acted as managing
underwriters for the Registrant's initial public offering.
Total underwriting discounts and commissions for the shares sold in the
initial public offering, including the over-allotment option, totaled $4.0
million of which $3.0 million represented underwriting discounts and commissions
for shares sold by the Registrant, and of which $1.0 million represented
underwriting discounts and commissions for shares sold by the selling
shareholders. In addition, in connection with the initial public offering the
Registrant will reimburse the underwriters approximately $150,000 of expenses
and incurred an estimated $1.6 million in additional expenses, resulting in
total estimated expenses to the Registrant of approximately $4.6 million. None
of the Registrant's expenses in connection with the offering were paid directly
or indirectly to directors or officers of the Registrant or their associates, or
to persons owning 10% or more of the Registrant's Common Stock or other
affiliates of the Registrant. After deducting expenses, the Registrant received
approximately $38.5 million in proceeds from the initial public offering.
Of the $38.5 million in estimated net proceeds to the Registrant, $15.3
million was used to repay outstanding indebtedness, including $9 million for
borrowings under the working capital line of credit and $6.3 million for notes
payable to shareholders. The Company has invested the remainder of the net
proceeds in short-term, interest bearing, investment-grade securities. The use
of the proceeds from the offering does not represent a material change in the
use of the proceeds described in the Registration Statement.
12
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
As of April 23, 1998, shareholders holding (i) at least 70% of the
Registrant's Common Stock then outstanding; (ii) 70% of the Registrant's Class A
Preferred Stock then outstanding; and (iii) 100% of the Registrant's Class B
Preferred then outstanding had consented in writing to the actions set forth
below.
1. The shareholders elected Fernando Montero to serve as a director to
fill the vacancy resulting from the expansion of the Registrant's Board of
Directors (the "Board"). After Mr. Montero's election to the Board, the
directors continuing in office included, in addition to Mr. Montero: Ted A.
Fernandez, Allan R. Frank, William C. Kessinger, Ulysses S. Knotts, III, Edmund
R. Miller and Bruce V. Rauner.
2. The shareholders consented to the amendment of the Registrant's
Amended and Restated Articles of Incorporation to (a) extend the period of time
which the Registrant has to deliver certificates representing shares of the
Registrant's stock that have not been redeemed by the Registrant in the event
the Registrant effects a redemption of its Preferred; (b) extend the period of
time which the Registrant has to deliver certificates representing shares of the
Registrant's Common Stock that are to be delivered to holders of Preferred in
the event the Preferred is converted into Common Stock; (c) add a provision
providing for the automatic conversion of Preferred in the event the Registrant
executes an underwriting agreement to conduct an initial public offering; and
(d) extend the period of time the Registrant has to notify holders of Preferred
that a holder of Preferred has demanded that the Registrant redeem his shares;
and
3. The shareholders approved of the Registrant's reincorporation merger
with and into a wholly-owned subsidiary of the Registrant, which merger was
subsequently abandoned by the Registrant's Board.
As of May 5, 1998, shareholders holding (i) at least 70% of the
Registrant's Common Stock then outstanding; (ii) 70% of the Class A Preferred
per share then outstanding; and (iii) 100% of the Class B Preferred then
outstanding; then outstanding had consented in writing to the actions set forth
below.
1. The shareholders approved of a one-for-two reverse stock split of
all of the Registrant's outstanding capital stock.
2. The shareholders approved the adoption of the Registrant's Second
Amended and Restated Articles of Incorporation, which amended the Registrant's
Amended and Restated Articles of Incorporation to (a) increase the Registrant's
authorized capital stock; (b) provide that amendments to the Registrant's bylaws
by shareholders require the affirmative vote of at least two-thirds of the
voting power of the outstanding shares of the Registrant's capital stock; (c)
increase the number of shareholders required to call a special meeting to 80% of
the voting power of all shares of each class of the Registrant's capital stock
entitled to vote on action to be taken at such a special meeting, or the minimum
number of votes of each class or series that would be necessary at such a
meeting to take such action; (d) expand the Registrant's indemnification of
directors, officers and agents of the Registrant to the fullest extent permitted
by law; (e) elect that the Registrant not be subject to the "affiliated
transaction" provision of the Florida Business Corporation Act, which prohibits
corporate transactions with "interested insiders"; (f) establish the number of
directors serving on the Board at a number from five to fifteen; (g) provide
that the Board be divided into three classes, each serving a staggered, three
year term; (h) provide that vacancies created by the expansion of the Board can
be filled only by an affirmative vote of a majority of the directors then in
office; and (i) provide that directors can only be removed from the Board for
cause by the affirmative vote of two-thirds of the entire voting power of all
then-outstanding shares of the Registrant voting as a class.
3. The shareholders approved the Registrant's 1998 Stock Option and
Incentive Plan.
4. The shareholders approved the Registrant's Employee Stock Purchase
Plan.
13
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
NUMBER EXHIBIT
------ -------
*3.1 Second Amended and Restated Articles of Incorporation
3.2 Amended and Restated Bylaws
**4.1 Specimen Common Stock Certificate
10.1 Form of Employment Agreement dated as of May 26, 1998 between
the Registrant and each of Ted A. Fernandez, Allan R. Frank
and Ulysses S. Knotts, III
10.2 Employment Agreement dated as of May 26, 1998 between the
Registrant and Luis E. San Miguel
*10.3 Registrant's 1998 Stock Option and Incentive Plan
*10.4 Agreement and Plan of Merger among the Registrant, ACG-Florida
Acquisition Sub, Legacy and the Shareholders of Legacy
11.1 Statement of Computation of Per Share Earnings
27.1 Financial Data Schedule
- -----------------------------
* Incorporated by reference to the Registrant's Registration Statement on
Form S-1, No. 333-48123, which was declared effective by the Securities
and Exchange Commission on May 27, 1998.
** Incorporated by reference to the Registrant's Registration Statement on
Form 8-A, No. 000-24343, which was filed with Securities and Exchange
Commission on May 23, 1998.
(B) REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the quarter ended July 3,
1998.
14
<PAGE>
SIGNATURES
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 thereunto duly authorized.
ANSWERTHINK CONSULTING GROUP, INC.
Date: August 14, 1998 By: /s/ Luis E. San Miguel
--------------------------------
Luis E. San Miguel
Executive Vice President,
Finance and Chief Executive
Officer
15
<PAGE>
EXHIBIT INDEX
-------------
NUMBER EXHIBIT
------ -------
*3.1 Second Amended and Restated Articles of Incorporation
3.2 Amended and Restated Bylaws
**4.1 Specimen Common Stock Certificate
10.1 Form of Employment Agreement dated as of May 26, 1998 between
the Registrant and each of Ted A. Fernandez, Allan R. Frank
and Ulysses S. Knotts, III
10.2 Employment Agreement dated as of May 26, 1998 between the
Registrant and Luis E. San Miguel
*10.3 Registrant's 1998 Stock Option and Incentive Plan
*10.4 Agreement and Plan of Merger among the Registrant, ACG-Florida
Acquisition Sub, Legacy and the Shareholders of Legacy
11.1 Statement of Computation of Per Share Earnings
27.1 Financial Data Schedule
- ---------------------------------
* Incorporated by reference to the Registrant's Registration Statement on
Form S-1, No. 333-48123, which was declared effective by the Securities
and Exchange Commission on May 27, 1998.
** Incorporated by reference to the Registrant's Registration Statement on
Form 8-A, No. 000-24343, which was filed with Securities and Exchange
Commission on May 23, 1998.
16
Exhibit 3.2
TABLE OF CONTENTS
PAGE
1. OFFICES..................................................................1
1.1. Registered Office and Agent.........................................1
1.2. Other Offices.......................................................1
2. MEETINGS OF SHAREHOLDERS....................................................1
2.1. Place of Meetings...................................................1
2.2. Annual Meetings.....................................................1
2.3. Special Meetings....................................................3
2.4. Notice of Meetings..................................................3
2.5. Waivers of Notice...................................................3
2.6. List of Shareholders................................................4
2.7. Quorum at Meetings..................................................4
2.8. Voting and Proxies..................................................4
2.9. Required Vote.......................................................5
2.10. Inspectors.........................................................5
3. DIRECTORS...................................................................6
3.1. Powers..............................................................6
3.2. Number and Election.................................................6
3.3. Meetings............................................................6
3.3.1. Regular Meetings.........................................6
3.3.2. Special Meetings.........................................6
3.3.3. Telephone Meetings.......................................7
3.3.4. Action Without Meeting...................................7
3.3.5. Waiver of Notice of Meeting..............................7
3.4. Quorum and Vote at Meetings.........................................7
3.5. Committees of Directors.............................................7
3.6. Compensation of Directors...........................................8
4. OFFICERS....................................................................8
4.1. Positions...........................................................8
4.2. Chairman............................................................9
4.3. President...........................................................9
4.4. Vice President......................................................9
4.5. Secretary...........................................................9
4.6. Assistant Secretary.................................................9
4.7. Treasurer..........................................................10
4.8. Assistant Treasurer................................................10
4.9. Term of Office.....................................................10
4.10. Compensation......................................................10
4.11. Fidelity Bonds....................................................10
5. CAPITAL STOCK..............................................................10
5.1. Certificates of Stock; Uncertificated Shares.......................10
5.2. Lost Certificates..................................................11
5.3. Record Date........................................................11
5.3.1. Actions by Shareholders.................................11
5.3.2. Payments................................................12
5.4. Shareholders of Record.............................................12
6. INDEMNIFICATION; INSURANCE.................................................12
6.1. Authorization of Indemnification...................................12
6.2. Right of Claimant to Bring Action Against the Corporation..........13
6.3. Non-exclusivity....................................................14
6.4. Survival of Indemnification........................................14
6.5. Insurance..........................................................14
7. GENERAL PROVISIONS.........................................................14
7.1. Inspection of Books and Records....................................14
7.2. Dividends..........................................................15
7.3. Reserves...........................................................15
7.4. Execution of Instruments...........................................15
7.5. Fiscal Year........................................................15
7.6. Seal...............................................................15
<PAGE>
AMENDED AND RESTATED
BYLAWS
OF
ANSWERTHINK CONSULTING GROUP, INC.
1. OFFICES
1.1. REGISTERED OFFICE AND AGENT
The registered office of the Corporation shall be as
designated from time to time by the appropriate filing by the Corporation in the
office of the Secretary of State of the State of Florida.
1.2. OTHER OFFICES
The Corporation may also have offices at such other places,
both within and without the State of Florida, as the Board of Directors of the
Corporation (the "BOARD") may from time to time determine or as the business of
the Corporation may require.
2. MEETINGS OF SHAREHOLDERS
2.1. PLACE OF MEETINGS
All meetings of the shareholders shall be held at such place
as may be fixed from time to time by the Board, the Chairman or the President.
2.2. ANNUAL MEETINGS
(a) The Corporation shall hold annual meetings of
shareholders, commencing with the year 1999, on such date and at such time as
shall be designated from time to time by the Board, the Chairman or the
President. At each annual meeting, the shareholders shall elect by a plurality
vote (as provided in SECTION 2.9 hereof) directors to succeed those whose terms
expire at the time of the annual meeting. The nomination of persons for election
to the Board and the proposal of any other business to be transacted at an
annual meeting may be made only (i) by or at the direction of the Board or (ii)
by any shareholder of record who gives notice in accordance with the procedures
set forth in paragraph (b) of this SECTION 2.2 and who is a shareholder of
<PAGE>
record both on the date of giving such notice and on the record date for the
determination of shareholders entitled to vote at such annual meeting; only
persons thereby nominated shall be eligible to serve as directors and only
business thereby proposed shall be transacted at an annual meeting. The
presiding officer of the annual meeting shall determine whether a nomination or
any proposal of business complies or complied with this SECTION 2.2.
(b) For nominations and other business to be brought properly
before an annual meeting by a shareholder pursuant to clause (ii) of paragraph
(a) of this SECTION 2.2, the shareholder must deliver notice to the Secretary of
the Corporation at the principal executive offices of the Corporation in
accordance with this SECTION 2.2(B). The notice must be received by the
Secretary not less than 60 days nor more than 90 days prior to the first
anniversary of the preceding year's annual meeting; PROVIDED, HOWEVER, that in
the event that the date of the annual meeting is advanced by more than 30 days
or delayed by more than 60 days from such anniversary date, the shareholder must
so deliver the notice not earlier than the 90th day prior to such annual meeting
and not later than the close of business on the later of the 60th day prior to
such annual meeting or the tenth day following the day on which public
announcement of the date of such meeting is first made; PROVIDED FURTHER,
HOWEVER, that in the event that the number of directors to be elected to the
Board is increased and there is no public announcement naming all of the
nominees for director or specifying the size of the increased Board made by the
Corporation at least 70 days prior to the first anniversary of the preceding
annual meeting, with respect to nominees for any new position created by the
increase, the shareholder must so deliver the notice not later than the close of
business on the tenth day following the day on which such public announcement is
first made. The shareholder's notice must set forth: (i) as to each person whom
the shareholder proposes to nominate for election or reelection as a director,
all information relating to such person that is required to be disclosed in
solicitations of proxies for election of directors pursuant to Section 14(a) of
the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and the
rules and regulations thereunder (together with such person's written consent to
being named in the proxy statement as a nominee and to serving as a director if
elected), whether or not the Corporation is then subject to Section 14(a) and
such rules and regulations; (ii) as to any other business that the shareholder
proposes to transact at the meeting, a brief description of the business desired
to be brought before the meeting, the reasons for conducting the business at the
meeting and any material interest in the business of the shareholder and of the
beneficial owner, if any, on whose behalf the proposal is made; and (iii) as to
the shareholder giving the notice and the beneficial owner, if any, on whose
behalf the nomination or proposal is made, the name and address of the
shareholder, as they appear on the Corporation's books, and of such beneficial
owner, the class and number of shares of the Corporation that are owned
beneficially and of record by such shareholder and such beneficial owner and a
representation that the shareholder intends to appear in person or by proxy at
the annual meeting to bring such business before the meeting. For purposes of
this SECTION 2.2 and SECTION 2.3 hereof, a "public announcement" means
disclosure in a press release reported by the Dow Jones News Service, Associated
Press or comparable news service, in a document publicly filed with the
Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the
2
<PAGE>
Exchange Act (or their successor provisions), or in a notice of meeting or proxy
statement mailed generally to the Corporation's shareholders. In giving notice
under this SECTION 2.2, a shareholder must also comply with state law and the
Exchange Act (and the rules and regulations thereunder). Nothing in this SECTION
2.2 shall be deemed to affect the rights of a shareholder to request inclusion
of proposals in the Corporation's proxy statement pursuant to Rule 14a-8 (or its
successor provision) under the Exchange Act.
2.3. SPECIAL MEETINGS
Special meetings of the shareholders, for any purpose or
purposes, unless otherwise prescribed by statute, may be called only by the
Board, the Chairman or the President or by the shareholders as set forth in the
Corporation's Articles of Incorporation (as amended and amended and restated
from time to time, the "ARTICLES OF INCORPORATION"). Business transacted at any
special meeting of shareholders shall be limited to the purposes stated in the
notice relating to such meeting (or to the purposes for which the meeting is
called if such notice is waived or is not required as provided in the Florida
Business Corporation Act (the "FLORIDA BUSINESS CORPORATION ACT") or these
Bylaws). In the case of a special meeting of shareholders called for the purpose
of electing directors, nominations may be made only (i) by or at the direction
of the Board or (ii) by any shareholder of record who delivers to the Secretary,
no later than the tenth day following the day on which public announcement of
the special meeting is made, a notice that complies with and is delivered in
accordance with SECTION 2.2(B) above.
2.4. NOTICE OF MEETINGS
Written notice of any meeting of shareholders, stating the
place, date and hour of the meeting, and (if it is a special meeting) the
purpose or purposes for which the meeting is called, shall be given to each
shareholder entitled to vote at such meeting not less than ten nor more than 60
days before the date of the meeting (except to the extent that such notice is
waived or is not required as provided in the Florida Business Corporation Act or
these Bylaws). Such notice shall be given in accordance with, and shall be
deemed effective as set forth in, Section 687.084 (or any successor section) of
the Florida Business Corporation Act.
2.5. WAIVERS OF NOTICE
Whenever the giving of any notice is required by statute, the
Articles of Incorporation or these Bylaws, a waiver thereof, in writing and
delivered to the Corporation, signed by the person or persons entitled to said
notice, whether before or after the event as to which such notice is required,
shall be deemed equivalent to notice. Attendance of a shareholder at a meeting
shall constitute a waiver of notice (1) of such meeting, except when the
shareholder at the beginning of the meeting objects to holding the meeting or
transacting business at the meeting, and (2) (if it is a special meeting) of
3
<PAGE>
consideration of a particular matter at the meeting that is not within the
purpose or purposes described in the meeting notice, unless the shareholder
objects to considering the matter at the beginning of the meeting.
2.6. LIST OF SHAREHOLDERS
After the record date for a meeting of shareholders has been
fixed, at least ten days before such meeting, the officer or other agent of the
Corporation who has charge of the stock ledger of the Corporation shall make a
list of all shareholders entitled to vote at the meeting, arranged in
alphabetical order and showing the address of each shareholder and the number of
shares registered in the name of each shareholder. Such list shall be open to
the examination of any shareholder for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place in the city where the meeting is to be held, which
place is to be specified in the notice of the meeting, or at the place where the
meeting is to be held. Such list shall also, for the duration of the meeting, be
produced and kept open to the examination of any shareholder who is present at
the time and place of the meeting.
2.7. QUORUM AT MEETINGS
Shareholders may take action on a matter at a meeting only if
a quorum exists with respect to that matter. Except as otherwise provided by
statute or by the Articles of Incorporation, a quorum shall exist if there are
present in person or represented by proxy the holders of a majority of the
shares entitled to vote at the meeting. Where a separate vote by a class or
classes is required, a majority of the outstanding shares of such class or
classes, present in person or represented by proxy, shall constitute a quorum
entitled to take action with respect to that vote on that matter. Once a share
is represented for any purpose at a meeting (other than solely to object (1) to
holding the meeting or transacting business at the meeting or (2) (if it is a
special meeting) to consideration of a particular matter at the meeting that is
not within the purpose or purposes described in the meeting notice), it is
deemed present for quorum purposes for the remainder of the meeting and for any
adjournment of that meeting unless a new record date is or must be set for the
adjourned meeting. The holders of a majority of the voting shares represented at
a meeting, whether or not a quorum is present, may adjourn such meeting from
time to time.
2.8. VOTING AND PROXIES
Unless otherwise provided in the Florida Business Corporation
Act or in the Articles of Incorporation, and subject to the other provisions of
these Bylaws, each shareholder shall be entitled to one vote on each matter, in
person or by proxy, for each share of the Corporation's capital stock that has
voting power and that is held by such shareholder. No proxy shall be voted or
acted upon after three years from its date, unless the proxy provides for a
4
<PAGE>
longer period. A duly executed appointment of proxy shall be irrevocable if the
appointment form states that it is irrevocable and if, and only as long as, it
is coupled with an interest sufficient in law to support an irrevocable power.
2.9. REQUIRED VOTE
When a quorum is present at any meeting of shareholders, all
matters shall be determined, adopted and approved by the affirmative vote (which
need not be by ballot) of the holders of a majority of the shares present in
person or represented by proxy at the meeting and entitled to vote with respect
to the matter, unless the proposed action is one upon which, by express
provision of statutes or of the Articles of Incorporation, a different vote is
specified and required, in which case such express provision shall govern and
control with respect to that vote on that matter. Where a separate vote by a
class or classes is required, the affirmative vote of the holders of a majority
of the shares of such class or classes present in person or represented by proxy
at the meeting shall be the act of such class. Notwithstanding the foregoing,
directors shall be elected by a plurality of the votes of the shares present in
person or represented by proxy at the meeting and entitled to vote on the
election of directors.
2.10. INSPECTORS
Prior to any meeting of shareholders, the Board or the
President shall appoint one or more inspectors to act at such meeting and make a
written report thereof and may designate one or more persons as alternate
inspectors to replace any inspector who fails to act. If no inspector or
alternate is able to act at the meeting of shareholders, the person presiding at
the meeting shall appoint one or more inspectors to act at the meeting. Each
inspector, before entering upon the discharge of his or her duties, shall take
and sign an oath faithfully to execute the duties of inspector with strict
impartiality and according to the best of his or her ability. The inspectors
shall ascertain the number of shares outstanding and the voting power of each,
determine the shares represented at the meeting and the validity of proxies and
ballots, count all votes and ballots, determine and retain for a reasonable
period a record of the disposition of any challenges made to any determination
by the inspectors and certify their determination of the number of shares
represented at the meeting and their count of all votes and ballots. The
inspectors may appoint or retain other persons to assist them in the performance
of their duties. The date and time of the opening and closing of the polls for
each matter upon which the shareholders will vote at a meeting shall be
announced at the meeting. No ballot, proxy or vote, nor any revocation thereof
or change thereto, shall be accepted by the inspectors after the closing of the
polls. In determining the validity and counting of proxies and ballots, the
inspectors shall be limited to an examination of the proxies, any envelopes
submitted therewith, any information provided by a shareholder who submits a
proxy by telegram, cablegram or other electronic transmission from which it can
be determined that the proxy was authorized by the shareholder, ballots and the
regular books and records of the Corporation, and they may also consider other
reliable information for the limited purposes of reconciling proxies and ballots
submitted by or on behalf of banks, brokers, their nominees or similar persons
5
<PAGE>
that represent more votes than the holder of a proxy is authorized by the record
owner to cast or more votes than the shareholder holds of record. If the
inspectors consider other reliable information for such purpose, they shall, at
the time they make their certification, specify the precise information
considered by them, including the person or persons from whom they obtained the
information, when the information was obtained, the means by which the
information was obtained and the basis for the inspectors' belief that such
information is accurate and reliable.
3. DIRECTORS
3.1. POWERS
The business and affairs of the Corporation shall be managed
by or under the direction of the Board, which may exercise all such powers of
the Corporation and do all such lawful acts and things, subject to any
limitation set forth in the Articles of Incorporation or as otherwise may be
provided in the Florida Business Corporation Act.
3.2. NUMBER AND ELECTION
Within the limits set forth in the Articles of Incorporation,
the number of directors shall be determined by resolution of the Board. The
directors shall be elected at the annual meeting of the shareholders in
accordance with the Articles of Incorporation. Vacancies on the Board shall be
filled in accordance with the Articles of Incorporation. Once elected or chosen
pursuant to the Articles of Incorporation, a director shall hold office until
the director's successor is elected and qualified or until the director dies,
resigns or is removed; PROVIDED, HOWEVER, that if the Board decreases the number
of directors constituting the Board and designates a particular directorship to
be eliminated due to the decrease, a director in the eliminated directorship
shall cease to hold office after the next election of such directorship, unless
the director is nominated and elected to another directorship on the Board.
3.3. MEETINGS
3.3.1. REGULAR MEETINGS
Regular meetings of the Board may be held without notice at
such time and at such place as shall from time to time be determined by the
Board.
3.3.2. SPECIAL MEETINGS
Special meetings of the Board may be called by the Chairman or
President on one day's notice to each director, either personally or by
telephone, express delivery service (so that the scheduled delivery date of the
notice is at least one day in advance of the meeting), telegram or facsimile
6
<PAGE>
transmission, and on five days' notice by mail (effective upon deposit of such
notice in the mail). The notice need not describe the purpose of a special
meeting.
3.3.3. TELEPHONE MEETINGS
Members of the Board may participate in a meeting of the Board
by any communication by means of which all participating directors can
simultaneously hear each other during the meeting. A director participating in a
meeting by this means is deemed to be present in person at the meeting.
3.3.4. ACTION WITHOUT MEETING
Any action required or permitted to be taken at any meeting of
the Board may be taken without a meeting if the action is taken by all members
of the Board. The action must be evidenced by one or more written consents
describing the action taken, signed by each director, and delivered to the
Corporation for inclusion in the minute book.
3.3.5. WAIVER OF NOTICE OF MEETING
A director may waive any notice required by statute, the
Articles of Incorporation or these Bylaws before or after the date and time
stated in the notice. Except as set forth below, the waiver must be in writing,
signed by the director entitled to the notice, and delivered to the Corporation
for inclusion in the minute book. Notwithstanding the foregoing, a director's
attendance at or participation in a meeting waives any required notice to the
director of the meeting unless the director at the beginning of the meeting
objects to holding the meeting or transacting business at the meeting and does
not thereafter vote for or assent to action taken at the meeting.
3.4. QUORUM AND VOTE AT MEETINGS
At all meetings of the Board, a quorum of the Board consists
of a majority of the total number of directors comprising the full Board as
established pursuant to SECTION 3.2 of these Bylaws. The vote of a majority of
the directors present at any meeting at which there is a quorum shall be the act
of the Board, except as may be otherwise specifically provided by statute or by
the Articles of Incorporation or by these Bylaws.
3.5. COMMITTEES OF DIRECTORS
The Board may designate one or more committees, each committee
to consist of two or more directors who serve at the pleasure of the Board. The
Board may designate one or more directors as alternate members of any committee,
who may replace any absent or disqualified member at any meeting of the
committee. If a member of a committee is absent from any meeting, or
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disqualified from voting thereat, the remaining member or members present and
not disqualified from voting, whether or not such member or members constitute a
quorum, may, by unanimous vote, appoint another member of the Board to act at
the meeting in the place of such absent or disqualified member. Any such
committee, to the extent provided in the resolution of the Board, and to the
extent permitted by law and the Articles of Incorporation, shall have and may
exercise all the powers and authority of the Board in the management of the
business and affairs of the Corporation, and may authorize the seal of the
Corporation to be affixed to all papers that may require that such seal be
affixed. Such committee or committees shall have such name or names as may be
determined from time to time by resolution adopted by the Board. Each committee
shall keep regular minutes of its meetings and report the same to the Board,
when required. Unless otherwise specified in the Board resolution appointing the
Committee, all provisions of the Florida Business Corporation Act and these
Bylaws relating to meetings, action without meetings, notice (and waiver
thereof) and quorum and voting requirements of the Board apply, as well, to such
committees and their members.
3.6. COMPENSATION OF DIRECTORS
The Board shall have the authority to fix the compensation of
directors. No such payment shall preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor.
4. OFFICERS
4.1. POSITIONS
The officers of the Corporation shall be a Chairman, a
President and a Secretary, and such other officers as the Board (or an officer
authorized by the Board) from time to time may appoint, including a Treasurer,
one or more Vice Presidents (any of whom may be designated Senior Vice President
or Executive Vice President), Assistant Secretaries and Assistant Treasurers.
Each such officer shall exercise such powers and perform such duties as shall be
set forth below and such other powers and duties as from time to time may be
specified by the Board or by any officer(s) authorized by the Board to prescribe
the duties of such other officers. Any number of offices may be held by the same
person, except that in no event shall the President and the Secretary be the
same person. Each of the Chairman, President and/or any Vice President may
execute bonds, mortgages, contracts and other instruments and documents under
the seal of the Corporation, if required, except where required or permitted by
law to be otherwise executed and except where the execution thereof shall be
expressly delegated by the Board to some other officer or agent of the
Corporation.
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4.2. CHAIRMAN
The Chairman shall (when present and unless otherwise provided
by resolution of the Board or delegated by the Chairman) preside at all meetings
of the Board and shareholders, and shall ensure that all orders and resolutions
of the Board and shareholders are carried into effect.
4.3. PRESIDENT
The President shall be the Chief Executive Officer of the
Corporation and shall have full responsibility and authority for management of
the operations of the Corporation and shall have and perform such other duties
as may be prescribed by the shareholders, the Board or the Executive Committee
(if any).
4.4. VICE PRESIDENT
In the absence of the President or in the event of the
President's inability or refusal to act, the Vice President (or in the event
there be more than one Vice President, the Vice Presidents in the order
designated, or in the absence of any designation, then in the order of their
election) shall perform the duties of the President, and when so acting shall
have all the powers of, and be subject to all the restrictions upon, the
President. Unless the order is otherwise designated, an Executive Vice President
shall come in order before any Senior Vice President and any Vice President, and
a Senior Vice President shall come in order before any Vice President.
4.5. SECRETARY
The Secretary shall have responsibility for preparation of
minutes of meetings of the Board and of the shareholders and for authenticating
records of the Corporation. The Secretary shall give, or cause to be given,
notice of all meetings of the shareholders and special meetings of the Board.
The Secretary or an Assistant Secretary may also attest all instruments signed
by any other officer of the Corporation.
4.6. ASSISTANT SECRETARY
The Assistant Secretary, or if there be more than one, the
Assistant Secretaries in the order determined by the Board (or if there shall
have been no such determination, then in the order of their election), shall, in
the absence of the Secretary or in the event of the Secretary's inability or
refusal to act, perform the duties and exercise the powers of the Secretary.
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4.7. TREASURER
The Treasurer, if one is appointed, shall have responsibility
for the custody of the corporate funds and securities and shall see to it that
full and accurate accounts of receipts and disbursements are kept in books
belonging to the Corporation. The Treasurer, if one is appointed, shall render
to the Chairman, the President and the Board, upon request, an account of all
financial transactions and of the financial condition of the Corporation.
4.8. ASSISTANT TREASURER
The Assistant Treasurer, or if there shall be more than one,
the Assistant Treasurers in the order determined by the Board (or if there shall
have been no such determination, then in the order of their election), shall, in
the absence of the Treasurer or in the event of the Treasurer's inability or
refusal to act, perform the duties and exercise the powers of the Treasurer.
4.9. TERM OF OFFICE
The officers of the Corporation shall hold office until their
successors are chosen and qualify or until their earlier resignation or removal.
Any officer may resign at any time upon written notice to the Corporation. Any
officer elected or appointed by the Board may be removed at any time, with or
without cause, by the affirmative vote of a majority of the Board.
4.10. COMPENSATION
The compensation of officers of the Corporation shall be fixed
by the Board or by any officer(s) authorized by the Board to prescribe the
compensation of such other officers.
4.11. FIDELITY BONDS
The Corporation may secure the fidelity of any or all of its
officers or agents by bond or otherwise.
5. CAPITAL STOCK
5.1. CERTIFICATES OF STOCK; UNCERTIFICATED SHARES
The shares of the Corporation shall be represented by
certificates, provided that the Board may provide by resolution that some or all
of any or all classes or series of the Corporation's stock be uncertificated
shares. Any such resolution shall not apply to shares represented by a
certificate until the certificate is surrendered to the Corporation.
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Notwithstanding the adoption of such a resolution by the Board, every holder of
stock represented by certificates, and upon request every holder of
uncertificated shares, shall be entitled to have a certificate (representing the
number of shares registered in certificate form) signed in the name of the
Corporation by the Chairman, President or any Vice President, and by the
Treasurer, Secretary or any Assistant Treasurer or Assistant Secretary of the
Corporation. Any or all the signatures on the certificate may be facsimile. In
case any officer, transfer agent or registrar whose signature or facsimile
signature appears on a certificate shall have ceased to be such officer,
transfer agent or registrar before such certificate is issued, it may be issued
by the Corporation with the same effect as if such person were such officer,
transfer agent or registrar at the date of issue.
5.2. LOST CERTIFICATES
The Board, Chairman, President or Secretary may direct a new
certificate of stock to be issued in place of any certificate theretofore issued
by the Corporation and alleged to have been lost, stolen or destroyed, upon the
making of an affidavit of that fact by the person claiming that the certificate
of stock has been lost, stolen or destroyed. When authorizing such issuance of a
new certificate, the Board or any such officer may, as a condition precedent to
the issuance thereof, require the owner of such lost, stolen or destroyed
certificate or certificates, or such owner's legal representative, to advertise
the same in such manner as the Board or such officer shall require and/or to
give the Corporation a bond or indemnity, in such sum or on such terms and
conditions as the Board or such officer may direct, as indemnity against any
claim that may be made against the Corporation on account of the certificate
alleged to have been lost, stolen or destroyed or on account of the issuance of
such new certificate or uncertificated shares.
5.3. RECORD DATE
5.3.1. ACTIONS BY SHAREHOLDERS
In order that the Corporation may determine the shareholders
entitled to notice of or to vote at any meeting of shareholders, the Board may
fix a record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board, and which record date
shall not be more than 60 days nor less than ten days before the date of such
meeting. If no record date is fixed by the Board, the record date for
determining shareholders entitled to notice of or to vote at a meeting of
shareholders shall be the close of business on the day next preceding the day on
which notice is given, or, if notice is waived, at the close of business on the
day next preceding the day on which the meeting is held. A determination of
shareholders of record entitled to notice of or to vote at a meeting of
shareholders shall apply to any adjournment of the meeting, unless the Board
fixes a new record date for the adjourned meeting.
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5.3.2. PAYMENTS
In order that the Corporation may determine the shareholders
entitled to receive payment of any dividend or other distribution or allotment
of any rights or the shareholders entitled to exercise any rights in respect of
any change, conversion or exchange of stock, or for the purpose of any other
lawful action, the Board may fix a record date, which record date shall not
precede the date upon which the resolution fixing the record date is adopted,
and which record date shall be not more than 60 days prior to such action. If no
record date is fixed, the record date for determining shareholders for any such
purpose shall be at the close of business on the day on which the Board adopts
the resolution relating thereto.
5.4. SHAREHOLDERS OF RECORD
The Corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares to receive
dividends, to receive notifications, to vote as such owner and to exercise all
the rights and powers of an owner. The Corporation shall not be bound to
recognize any equitable or other claim to or interest in such share or shares on
the part of any other person, whether or not it shall have express or other
notice thereof, except as otherwise may be provided by the Florida Business
Corporation Act.
6. INDEMNIFICATION; INSURANCE
6.1. AUTHORIZATION OF INDEMNIFICATION
Each person who was or is a party or is threatened to be made
a party to or is involved in any threatened, pending or completed action, suit
or proceeding, whether civil, criminal, administrative or investigative and
whether by or in the right of the Corporation or otherwise (a "PROCEEDING"), by
reason of the fact that he or she is or was a director or officer of the
Corporation or is or was serving at the request of the Corporation as a
director, officer, employee, partner (limited or general) or agent of another
corporation or of a partnership, joint venture, limited liability company, trust
or other enterprise, including service with respect to an employee benefit plan,
shall be (and shall be deemed to have a contractual right to be) indemnified and
held harmless by the Corporation (and any successor to the Corporation by merger
or otherwise) to the fullest extent authorized by, and subject to the conditions
and (except as provided herein) procedures set forth in the Florida Business
Corporation Act, as the same exists or may hereafter be amended (but any such
amendment shall not be deemed to limit or prohibit the rights of indemnification
hereunder for past acts or omissions of any such person insofar as such
amendment limits or prohibits the indemnification rights that said law permitted
the Corporation to provide prior to such amendment), against all expenses,
liabilities and losses (including attorneys' fees, judgments, fines, ERISA taxes
or penalties and amounts paid or to be paid in settlement) actually and
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reasonably incurred or suffered by such person in connection therewith if such
person acted in good faith and in a manner such person reasonably believed to be
in or not opposed to the best interests of the Corporation, and, with respect to
any criminal proceeding, had no reasonable cause to believe such person's
conduct was unlawful; PROVIDED, HOWEVER, that the Corporation shall indemnify
any such person seeking indemnification in connection with a proceeding (or part
thereof) initiated by such person (except for a suit or action pursuant to
SECTION 6.2 hereof) only if such proceeding (or part thereof) was authorized by
the Board. Persons who are not directors or officers of the Corporation and are
not so serving at the request of the Corporation may be similarly indemnified in
respect of such service to the extent authorized at any time by the Board. The
indemnification conferred in this SECTION 6.1 also shall include the right to be
paid by the Corporation (and such successor) the expenses (including attorneys'
fees) incurred in the defense of or other involvement in any such proceeding in
advance of its final disposition; PROVIDED, HOWEVER, that, if and to the extent
the Florida Business Corporation Act requires, the payment of such expenses
(including attorneys' fees) incurred by a director or officer in advance of the
final disposition of a proceeding shall be made only upon delivery to the
Corporation of an undertaking by or on behalf of such director or officer to
repay all amounts so paid in advance if it shall ultimately be determined that
such director or officer is not entitled to be indemnified under this SECTION
6.1 or otherwise; and PROVIDED FURTHER, that such expenses incurred by other
employees and agents may be so paid in advance upon such terms and conditions,
if any, as the Board deems appropriate.
6.2. RIGHT OF CLAIMANT TO BRING ACTION AGAINST THE CORPORATION
If a claim under SECTION 6.1 is not paid in full by the
Corporation within 60 days after a written claim has been received by the
Corporation, the claimant may at any time thereafter bring an action against the
Corporation to recover the unpaid amount of the claim and, if successful in
whole or in part, the claimant shall be entitled to be paid also the expense of
prosecuting such action. It shall be a defense to any such action (other than an
action brought to enforce a claim for expenses incurred in connection with any
proceeding in advance of its final disposition where the required undertaking,
if any is required, has been tendered to the Corporation) that the claimant has
not met the standards of conduct that make it permissible under the Florida
Business Corporation Act for the Corporation to indemnify the claimant for the
amount claimed or is otherwise not entitled to indemnification under SECTION
6.1, but the burden of proving such defense shall be on the Corporation. The
failure of the Corporation to have made a determination (in the manner provided
under the Florida Business Corporation Act) prior to or after the commencement
of such action that indemnification of the claimant is proper in the
circumstances because he or she has met the applicable standard of conduct set
forth in the Florida Business Corporation Act shall not be a defense to the
action or create a presumption that the claimant has not met the applicable
standard of conduct. Unless otherwise specified in an agreement with the
claimant, an actual determination by the Corporation (in the manner provided
under the Florida Business Corporation Act) after the commencement of such
action that the claimant has not met such applicable standard of conduct shall
not be a defense to the action, but shall create a presumption that the claimant
has not met the applicable standard of conduct.
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6.3. NON-EXCLUSIVITY
The rights to indemnification and advance payment of expenses
provided by SECTION 6.1 hereof shall not be deemed exclusive of any other rights
to which those seeking indemnification and advance payment of expenses may be
entitled under any Bylaw, agreement, vote of shareholders or disinterested
directors or otherwise, both as to action in his or her official capacity and as
to action in another capacity while holding such office.
6.4. SURVIVAL OF INDEMNIFICATION
The indemnification and advance payment of expenses and rights
thereto provided by, or granted pursuant to, SECTION 6.1 hereof shall, unless
otherwise provided when authorized or ratified, continue as to a person who has
ceased to be a director, officer, employee, partner or agent and shall inure to
the benefit of the personal representatives, heirs, executors and administrators
of such person.
6.5. INSURANCE
The Corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee, partner (limited or general) or agent of
another corporation or of a partnership, joint venture, limited liability
company, trust or other enterprise, against any liability asserted against such
person or incurred by such person in any such capacity, or arising out of such
person's status as such, and related expenses, whether or not the Corporation
would have the power to indemnify such person against such liability under the
provisions of the Florida Business Corporation Act.
7. GENERAL PROVISIONS
7.1. INSPECTION OF BOOKS AND RECORDS
Any shareholder, in person or by attorney or other agent,
shall, upon written demand under oath stating the purpose thereof, have the
right during the usual hours for business to inspect for any proper purpose the
Corporation's stock ledger, a list of its shareholders, and its other books and
records, and to make copies or extracts therefrom. A proper purpose shall mean a
purpose reasonably related to such person's interest as a shareholder. In every
instance where an attorney or other agent is the person who seeks the right to
inspection, the demand under oath shall be accompanied by a power of attorney or
such other writing that authorizes the attorney or other agent to so act on
behalf of the shareholder. The demand under oath shall be directed to the
Corporation at its registered office or at its principal place of business.
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7.2. DIVIDENDS
The Board may declare dividends upon the capital stock of the
Corporation, subject to the provisions of the Articles of Incorporation and the
laws of the State of Florida.
7.3. RESERVES
The directors of the Corporation may set apart, out of the
funds of the Corporation available for dividends, a reserve or reserves for any
proper purpose and may abolish any such reserve.
7.4. EXECUTION OF INSTRUMENTS
All checks, drafts or other orders for the payment of money
and promissory notes of the Corporation shall be signed by such officer or
officers or such other person or persons as the Board may from time to time
designate.
7.5. FISCAL YEAR
The fiscal year of the Corporation shall be fixed by
resolution of the Board.
7.6. SEAL
The corporate seal shall be in such form as the Board shall
approve. The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or otherwise reproduced.
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EXHIBIT 10.1
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") is entered into as of this 26th
day of May, 1998, by and between AnswerThink Consulting Group, Inc., a Florida
corporation (the "Company"), and [EXECUTIVE] (the "Executive").
WHEREAS, the Company and the Executive have entered into a Senior
Management Agreement dated as of April 23, 1997, as amended (the "Senior
Management Agreement");
WHEREAS, the Company and the Executive desire to amend the Senior
Management Agreement to delete the "Provisions Relating to Employment" therein
and the Company desires to employ the Executive, and the Executive desires to be
employed by the Company, on the terms and conditions set forth herein from and
after the completion of the initial public offering of the Company's Common
Stock (the "Offering Date"); and
WHEREAS, the board of directors of the Company (the "Board") has
approved and authorized the entry into this Agreement with the Executive.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein and other good and valuable consideration, the receipt and
sufficiency of which hereby are acknowledged, the parties hereto agree as
follows:
1. EMPLOYMENT AGREEMENT. On the terms and conditions set forth in this
Agreement, the Company agrees to employ the Executive and the Executive agrees
to be employed by the Company for the Employment Period set forth in Section 2
hereof and in the position and with the duties set forth in Section 3 hereof.
Terms used herein with initial capitalization are defined in Section 21 below.
2. TERM. The initial term of employment under this Agreement shall be
for a three-year period commencing on the Offering Date (the "Initial Term").
The term of employment shall be automatically renewed for an additional
consecutive 12-month period (the "Extended Term") as of the first and every
subsequent anniversary of the Offering Date, unless and until either party
provides written notice to the other party in accordance with Section 11 hereof
not less than 90 days before such anniversary date that such party is
terminating the term of employment under this Agreement, which termination shall
be effective as of the end of such Initial Term or Extended Term, as the case
may be, or until such term of employment is otherwise terminated as hereinafter
set forth. Such Initial Term and all such Extended Terms are collectively
referred to herein as the "Employment Period." The parties' obligations under
Sections 7, 9 and 10 hereof shall survive the expiration or termination of the
Employment Period.
3. POSITION AND DUTIES. The Executive shall serve as [TITLE] of the
Company during the Employment Period. As the [TITLE], the Executive shall render
executive, policy and other management services to the Company of the type
customarily performed by persons serving in a similar [CAPACITY] capacity. As
Chief Executive Officer, the Executive shall be responsible for implementing the
policies of the Board and shall report only to the Board. All other officers of
the Company shall report directly to the Executive, except as the Executive
shall otherwise determine, and except that the internal auditor shall report
directly to the Board. The Executive shall also perform such duties as the Board
may from time to time reasonably determine and assign to the Executive. During
the Employment Period, there shall be no material change in the duties and
responsibilities of the Executive from those previously in effect, other than as
provided herein, unless the parties otherwise agree in writing. The Executive
shall devote the Executive's reasonable best efforts and substantially full
business time to the performance of the Executive's duties and the advancement
of the business and affairs of the Company.
4. PLACE OF PERFORMANCE. In connection with the Executive's employment
by the Company, the Executive shall be based at the principal executive offices
of the Company, except as otherwise agreed by the Executive and the Company and
except for reasonable travel on Company business. If the Executive is required
to relocate his place of employment to a location more than 50 miles from its
location as of the date of this Agreement, the Company shall pay or reimburse
the Executive for the reasonable moving and relocation expenses incurred by him
to establish a personal residence at the new location, including reasonable
traveling and temporary living expenses.
5. COMPENSATION.
(a) BASE SALARY. During the Employment Period, the Company
shall pay to the Executive an annual base salary (the "Base Salary"), which
initially shall be at the rate of $500,000 per year. The Base Salary shall be
reviewed no less frequently than annually and may be increased at the discretion
of the Board. If the Executive's Base Salary is increased, the increased amount
shall be the Base Salary for the remainder of the Employment Period. Except as
otherwise agreed in writing by the Executive, the Base Salary shall not be
reduced from the amount previously in effect during the Employment Term. The
Base Salary shall be payable biweekly or in such other installments as shall be
consistent with the Company's payroll procedures.
(b) BONUS. During the Employment Period, the Executive may
also be eligible to earn an annual bonus pursuant to a bonus plan adopted by the
Board for each fiscal year.
(c) BENEFITS. During the Employment Period, the Executive will
be entitled to such other benefits approved by the Board and made available to
employees. Nothing contained in this Agreement shall prevent the Company from
changing carriers or from effecting modifications in insurance coverage for the
Executive.
(d) VACATION; HOLIDAYS. The Executive shall be entitled to all
public holidays observed by the Company and vacation days in accordance with the
applicable vacation policies for senior executives of the Company, which shall
be taken at a reasonable time or times.
(e) WITHHOLDING TAXES AND OTHER DEDUCTIONS. To the extent
required by law, the Company shall withhold from any payments due Executive
under this Agreement any applicable federal, state or local taxes and such other
deductions as are prescribed by law or Company policy.
6. EXPENSES. The Executive is expected and is authorized to incur
reasonable expenses in the performance of his duties hereunder, including the
costs of entertainment, travel, and similar business expenses incurred in the
performance of his duties. The Employers shall reimburse the Executive for all
such expenses promptly upon periodic presentation by the Executive of an
itemized account of such expenses.
7. CONFIDENTIALITY; WORK PRODUCT.
(a) INFORMATION. The Executive acknowledges that the
information, observations and data obtained by the Executive concerning the
business and affairs of the Company and its Subsidiaries and their predecessors
during the course of the Executive's performance of services for, or employment
with, any of the foregoing persons (whether or not compensated for such
services) are the property of the Company and its Subsidiaries, including
information concerning acquisition opportunities in or reasonably related to the
business or industry of the Company or its Subsidiaries of which the Executive
becomes aware during such period. Therefore, the Executive agrees that he will
not at any time (whether during or after the Employment Period) disclose to any
unauthorized person or, directly or indirectly, use for the Executive's own
account, any of such information, observations or data without the Board's
consent, unless and to the extent that the aforementioned matters become
generally known to and available for use by the public other than as a direct or
indirect result of the Executive's acts or omissions to act or the acts or
omissions to act of other senior or junior management employees of the Company
and its Subsidiaries. The Executive agrees to deliver to the Company at the
termination of the Executive's employment, or at any other time the Company may
request in writing (whether during or after the Employment Period), all
memoranda, notes, plans, records, reports and other documents, regardless of the
format or media (and copies thereof), relating to the business of the Company
and its Subsidiaries and their predecessors (including, without limitation, all
acquisition prospects, lists and contact information) which the Executive may
then possess or have under the Executive's control.
(b) INVENTIONS AND PATENTS. The Executive acknowledges that all
inventions, innovations, improvements, developments, methods, designs, analyses,
drawings, reports and all similar or related information (whether or not
patentable) that relate to the actual or anticipated business, research and
development or existing or future products or services of the Company or its
Subsidiaries that are conceived, developed, made or reduced to practice by the
Executive while employed by the Company or any of its predecessors ("Work
Product") belong to the Company and the Executive hereby assigns, and agrees to
assign, all of the above to the Company. Any copyrightable work prepared in
whole or in part by the Executive in the course of the Executive's work for any
of the foregoing entities shall be deemed a "work made for hire" under the
copyright laws, and the Company shall own all rights therein. To the extent that
any such copyrightable work is not a "work made for hire," the Executive hereby
assigns and agrees to assign to Company all right, title and interest, including
without limitation, copyright in and to such copyrightable work. The Executive
shall promptly disclose such Work Product and copyrightable work to the Board
and perform all actions reasonably requested by the Board (whether during or
after the Employment Period) to establish and confirm the Company's ownership
(including, without limitation, assignments, consents, powers of attorney and
other instruments).
(c) ENFORCEMENT. The Executive acknowledges that the
restrictions contained in Section 7(a) hereof are reasonable and necessary, in
view of the nature of the Company's business, in order to protect the legitimate
interests of the Company, and that any violation thereof would result in
irreparable injury to the Company. Therefore, the Executive agrees that in the
event of a breach or threatened breach by the Executive of the provisions of
Section 7(a) hereof, the Company shall be entitled to obtain from any court of
competent jurisdiction, preliminary or permanent injunctive relief restraining
the Executive from disclosing or using any such confidential information.
Nothing herein shall be construed as prohibiting the Company from pursuing any
other remedies available to it for such breach or threatened breach, including,
without limitation, recovery of damages from the Executive.
8. TERMINATION OF EMPLOYMENT.
(a) PERMITTED TERMINATIONS. The Executive's employment
hereunder may be terminated during the Employment Term without any breach of
this Agreement only under the following circumstances:
(i) DEATH. The Executive's employment hereunder shall
terminate upon the Executive's death;
(ii) BY THE COMPANY. The Company may terminate the
Executive's employment:
(A) If the Executive shall have been unable
to perform all of the Executive's duties hereunder by reason of illness,
physical or mental disability or other similar incapacity, which inability shall
continue for more than three consecutive months; or
(B) For Cause; or
(iii) BY THE EXECUTIVE. The Executive may terminate
employment for Good Reason.
(b) TERMINATION. Any termination of the Executive's employment
by the Company or the Executive (other than because of the Executive's death)
shall be communicated by written Notice of Termination to the other party hereto
in accordance with Section 11 hereof. For purposes of this Agreement, a "Notice
of Termination" shall mean a notice which shall indicate the specific
termination provision in this Agreement relied upon, if any, and shall set forth
in reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so indicated.
Termination of the Executive's employment shall take effect on the Date of
Termination.
9. COMPENSATION UPON TERMINATION.
(a) DEATH. If the Executive's employment is terminated during
the Employment Term as a result of the Executive's death, the Company shall pay
to the Executive's estate, or as may be directed by the legal representatives of
such estate, the Executive's full Base Salary through the Date of Termination
and all other unpaid amounts, if any, to which the Executive is entitled as of
the Date of Termination in connection with any fringe benefits or under any
bonus or incentive compensation plan or program of the Company pursuant to
Sections 5(b) and (c) hereof, at the time such payments are due, and the Company
shall have no further obligations to the Executive under this Agreement.
(b) DISABILITY. If the Company terminates the Executive's
employment during the Employment Term because of the Executive's disability
pursuant to Section 8(a)(ii)(A) hereof, the Company shall pay the Executive the
Executive's full Base Salary through the Date of Termination and all other
unpaid amounts, if any, to which the Executive is entitled as of the Date of
Termination in connection with any fringe benefits or under any bonus or
incentive compensation plan or program of the Company pursuant to Sections 5(b)
and (c) hereof, at the time such payments are due, and the Company shall have no
further obligations to the Executive under this Agreement; PROVIDED, that
payments so made to the Executive during any period that the Executive is unable
to perform all of the Executive's duties hereunder by reason of illness,
physical or mental illness or other similar incapacity shall be reduced by the
sum of the amounts, if any, payable to the Executive at or prior to the time of
any such payment under disability benefit plans of the Company and which amounts
were not previously applied to reduce any such payment.
(c) BY THE COMPANY WITH CAUSE OR BY THE EXECUTIVE WITHOUT GOOD
REASON. If the Company terminates the Executive's employment during the
Employment Term for Cause pursuant to Section 8(a)(ii)(B) hereof or if the
Executive voluntarily terminates the Executive's employment during the
Employment Term other than for Good Reason, the Company shall pay the Executive
the Executive's full Base Salary through the Date of Termination and all other
unpaid amounts, if any, to which Executive is entitled as of the Date of
Termination in connection with any fringe benefits or under any bonus or
incentive compensation plan or program of the Company pursuant to Sections 5(b)
and (c) hereof, at the time such payments are due, and the Company shall have no
further obligations to the Executive under this Agreement.
(d) BY THE COMPANY WITHOUT CAUSE OR BY THE EXECUTIVE FOR GOOD
REASON. If the Company terminates the Executive's employment during the
Employment Term other than for Cause, disability or death pursuant to Section
8(a)(i) or (ii) hereof, or the Executive terminates his employment during the
Employment Term for Good Reason pursuant to Section 8(a)(iii) hereof, the
Company shall pay the Executive (A) the Executive's full Base Salary through the
Date of Termination and all other unpaid amounts, if any, to which the Executive
is entitled as of the Date of Termination in connection with any fringe benefits
or under any bonus or incentive compensation plan or program of the Company
pursuant to Sections 5(b) and (c) hereof, at the time such payments are due and
(B) subject to Sections 9(e) and 9(f) hereof:
(i) NO CHANGE OF CONTROL. Except as provided in
Section 9(d)(ii) hereof, during the one-year period commencing on the Date of
Termination (the "Initial Period"), the Company shall pay the Executive an
aggregate amount equal to Executive's Base Salary, payable in equal installments
on the Company's regular salary payment dates, and any other amounts that would
have been payable to or on behalf of the Executive under Section 5(c) hereof
(the "Severance Payments"). In addition, the Company shall have the option, by
delivering written notice to the Executive in accordance with Section 11 hereof
within 90 days after the Date of Termination, to extend the severance period to
the second anniversary of the Date of Termination (the "Extended Period").
During the Extended Period, the Company will continue to make Severance Payments
at the same annual rate to the Executive. Notwithstanding the foregoing and
without in any way modifying the provisions of Sections 7 and 10 hereof, from
and after the first date that Executive becomes employed with another Person or
provides services as a consultant or other self-employed individual, the
Company, at its option, may eliminate or otherwise reduce the amount of
Severance Payments otherwise required to be made pursuant to this Section
9(d)(i) to the extent of the compensation and benefits received by the Executive
from such other employment or self-employment; or
(ii) CHANGE OF CONTROL. If such termination is in
anticipation of, in connection with or within one year after the date of a
Change of Control, the Company shall pay the Executive an aggregate amount equal
to Executive's Base Salary, payable in equal installments on the Company's
regular salary payment dates, and any other amounts that would have been payable
to or on behalf of the Executive under Section 5(c) hereof (the "Severance
Payments") from the Date of Termination through the second anniversary of the
Date of Termination at the time such payments would otherwise have been due in
accordance with the Company's normal payroll practices, and the Company shall
have no further obligations to the Executive under this Agreement. In addition,
in such event, the Executive's rights with respect to stock options and shares
of restricted stock previously granted by the Company, deferred and incentive
compensation or bonus amounts awarded by the Company and other contingent or
deferred compensation awards or grants made by the Company, or otherwise made in
connection with the Executive's employment hereunder, shall be fully vested and
nonforfeitable as of the Date of Termination, except to the extent inconsistent
with the terms of any such plan or arrangement that is intended to qualify under
Section 401(a) or 423 of the Code. For purposes of Section 10 hereof, the
"Initial Period" shall be the first 24 months following the Date of Termination.
(e) PARACHUTE LIMITATIONS. Notwithstanding any other provision
of this Agreement or of any other agreement, contract or understanding
heretofore or hereafter entered into by the Executive with the Company or any
subsidiary or affiliate thereof, except an agreement, contract or understanding
hereafter entered into that expressly modifies or excludes application of this
Section 9(e) (the "Other Agreements"), and notwithstanding any formal or
informal plan or other arrangement heretofore or hereafter adopted by the
Company (or any subsidiary or affiliate thereof) for the direct or indirect
compensation of the Executive (including groups or classes of participants or
beneficiaries of which the Executive is a member), whether or not such
compensation is deferred, is in cash, or is in the form of a benefit to or for
the Executive (a "Benefit Plan"), if the Executive is a "disqualified
individual" (as defined in Section 280G(c) of the Internal Revenue Code of 1986,
as amended (the "Code")), the Executive shall not have any right to receive any
payment or benefit under this Agreement, any Other Agreement or any Benefit Plan
(i) to the extent that such payment or benefit, taking into account all other
rights, payments or benefits to or for the Executive under this Agreement, all
Other Agreements and all Benefit Plans, would cause any payment or benefit to
the Executive under this Agreement, any Other Agreement or any Benefit Plan to
be considered a "parachute payment" within the meaning of Section 280G(b)(2) of
the Code as then in effect (a "Parachute Payment") AND (ii) if, as a result of
receiving a Parachute Payment, the aggregate after-tax amount received by the
Executive under this Agreement, all Other Agreements and all Benefit Plans would
be less than the maximum after-tax amount that could be received by the
Executive without causing any such payment or benefit to be considered a
Parachute Payment. In the event that the receipt of any such payment or benefit
under this Agreement, any Other Agreement or any Benefit Plan would cause the
Executive to be considered to have received a Parachute Payment that would have
the adverse after-tax effect described in clause (ii) of the preceding sentence,
then the Executive shall have the right, in the Executive's sole discretion, to
designate those rights, payments or benefits under this Agreement, any Other
Agreement and any Benefit Plan that should be reduced or eliminated so as to
avoid having the payment or benefit to the Executive under this Agreement be
deemed to be a Parachute Payment.
(f) MITIGATION. The Company's obligation to continue to
provide the Executive with benefits pursuant to Section 9(d)(i) or (ii) above
shall cease if the Executive becomes eligible to participate in benefits
substantially similar to those provided under this Agreement as a result of the
Executive's subsequent employment during the period that the Executive is
entitled to receive Severance Payments.
(g) LIQUIDATED DAMAGES. The parties acknowledge and agree that
damages which will result to the Executive for termination by the Company
without Cause or by the Executive for Good Reason shall be extremely difficult
or impossible to establish or prove, and agree that the Severance Payments shall
constitute liquidated damages for any breach of this Agreement by the Company
through the Date of Termination. The Executive agrees that, except for such
other payments and benefits to which the Executive may be entitled as expressly
provided by the terms of this Agreement or any applicable Benefit Plan, such
liquidated damages shall be in lieu of all other claims that the Executive may
make by reason of termination of his employment or any such breach of this
Agreement and that, as a condition to receiving the Severance Payments, the
Executive will execute a release of claims in a form reasonably satisfactory to
the Company.
10. NONCOMPETITION AND NONSOLICITATION.
(a) NONCOMPETITION. The Executive acknowledges that in the
course of his employment with the Company and its Subsidiaries and their
predecessors, he has and will continue to become familiar with the trade secrets
of, and other confidential information concerning, the Company and its
Subsidiaries, that the Executive's services will be of special, unique and
extraordinary value to the Company and its Subsidiaries and that the Company's
ability to accomplish its purposes and to successfully pursue its business plan
and compete in the marketplace depend substantially on the skills and expertise
of the Executive. Therefore, and in further consideration of the compensation
being paid to the Executive hereunder, the Executive agrees that, during the
Employment Period and any Initial Period or Extended Period, so long as
Severance Payments are being made or during any portion of the Initial or
Extended Period that Severance Payments are not required to be made pursuant to
the last sentence of Section 9(d)(i) hereof (the "Noncompete Period"), he shall
not directly or indirectly own, manage, control, participate in, consult with,
render services for, or in any manner engage in any business competing with the
businesses of the Company, its Subsidiaries, or any business in which the
Company or its Subsidiaries has commenced negotiations or has requested and
received information relating to the acquisition of such business within
eighteen months prior to the termination of the Executive's employment with the
Company, in any country where the Company, its Subsidiaries, or other
aforementioned business conducts business.
(b) NONSOLICITATION. During the Employment Period and for two
years following the Date of Termination, the Executive shall not directly or
indirectly through another entity (i) induce or attempt to induce any employee
of the Company or any Subsidiary to leave the employ of the Company or such
Subsidiary, or in any way willfully interfere with the relationship between the
Company or any Subsidiary and any employee thereof, (ii) induce or attempt to
induce any customer, supplier, licensee or other business relation of the
Company or any Subsidiary to cease doing business with the Company or such
Subsidiary, or in any way interfere with the relationship between any such
customer, supplier, licensee or business relation and the Company or any
Subsidiary or (iii) initiate or engage in any discussions regarding an
acquisition of, or the Executive's employment (whether as an employee, an
independent contractor or otherwise) by, any businesses in which the Company or
any of its Subsidiaries has entertained discussions or has requested and
received information relating to the acquisition of such business by the Company
or its Subsidiaries upon or within the 18-month period prior to the Date of
Termination.
(c) ENFORCEMENT. If, at the time of enforcement of this
Section 10, a court holds that the restrictions stated herein are unreasonable
under circumstances then existing, the parties hereto agree that the maximum
duration, scope or geographical area reasonable under such circumstances shall
be substituted for the stated period, scope or area and that the court shall be
allowed to revise the restrictions contained herein to cover the maximum
duration, scope and area permitted by law. Because the Executive's services are
unique and because the Executive has access to confidential information, the
parties hereto agree that money damages would be an inadequate remedy for any
breach of any provision of this Agreement. Therefore, in the event a breach or
threatened breach by the Executive of any provision of this Agreement, the
Company may, in addition to other rights and remedies existing in its favor,
apply to any court of competent jurisdiction for specific performance and/or
injunctive or other relief in order to enforce, or prevent any violations of,
the provisions hereof (without posting a bond or other security).
11. NOTICES. All notices, demands, requests or other communications
required or permitted to be given or made hereunder shall be in writing and
shall be delivered, telecopied or mailed by first class registered or certified
mail, postage prepaid, addressed as follows:
(a) If to the Company:
AnswerThink Consulting Group, Inc.
1401 Brickell Avenue, Suite 350
Miami, Florida 33131
ATTN: General Counsel
Fax: 305/373-0911
WITH A COPY (WHICH SHALL NOT CONSTITUTE
NOTICE) TO:
David B.H. Martin, Jr., Esq.
Hogan & Hartson, L.L.P.
555 13th Street, N.W.
Washington, D.C. 20004-1190
Fax: 202/637-5910
(b) If to the Executive:
[EXECUTIVE]
AnswerThink Consulting Group, Inc.
1401 Brickell Avenue, Suite 350
Miami, Florida 33131
or to such other address as may be designated by either party in a notice to the
other. Each notice, demand, request or other communication that shall be given
or made in the manner described above shall be deemed sufficiently given or made
for all purposes three days after it is deposited in the U.S. mail, postage
prepaid, or at such time as it is delivered to the addressee (with the return
receipt, the delivery receipt, the answer back or the affidavit of messenger
being deemed conclusive evidence of such delivery) or at such time as delivery
is refused by the addressee upon presentation.
12. SEVERABILITY. The invalidity or unenforceability of any one or more
provisions of this Agreement shall not affect the validity or enforceability of
the other provisions of this Agreement, which shall remain in full force and
effect.
13. SURVIVAL. It is the express intention and agreement of the parties
hereto that the provisions of Sections 7, 9 and 10 hereof shall survive the
termination of employment of the Executive. In addition, all obligations of the
Company to make payments hereunder shall survive any termination of this
Agreement on the terms and conditions set forth herein.
14. ASSIGNMENT. The rights and obligations of the parties to this
Agreement shall not be assignable or delegable, except that (i) in the event of
the Executive's death, the personal representative or legatees or distributees
of the Executive's estate, as the case may be, shall have the right to receive
any amount owing and unpaid to the Executive hereunder and (ii) the rights and
obligations of the Company hereunder shall be assignable and delegable in
connection with any subsequent merger, consolidation, sale of all or
substantially all of the assets of the Company or similar reorganization of a
successor corporation.
15. BINDING EFFECT. Subject to any provisions hereof restricting
assignment, this Agreement shall be binding upon the parties hereto and shall
inure to the benefit of the parties and their respective heirs, devisees,
executors, administrators, legal representatives, successors and assigns.
16. AMENDMENT; WAIVER. This Agreement shall not be amended, altered or
modified except by an instrument in writing duly executed by the parties hereto.
Neither the waiver by either of the parties hereto of a breach of or a default
under any of the provisions of this Agreement, nor the failure of either of the
parties, on one or more occasions, to enforce any of the provisions of this
Agreement or to exercise any right or privilege hereunder, shall thereafter be
construed as a waiver of any subsequent breach or default of a similar nature,
or as a waiver of any such provisions, rights or privileges hereunder.
17. HEADINGS. Section and subsection headings contained in this
Agreement are inserted for convenience of reference only, shall not be deemed to
be a part of this Agreement for any purpose, and shall not in any way define or
affect the meaning, construction or scope of any of the provisions hereof.
18. GOVERNING LAW. This Agreement, the rights and obligations of the
parties hereto, and any claims or disputes relating thereto, shall be governed
by and construed in accordance with the laws of the State of Florida (but not
including the choice of law rules thereof).
19. ENTIRE AGREEMENT; SENIOR MANAGEMENT AGREEMENT AMENDED. By mutual
consent, effective as of the Offering Date, the parties hereby amend the Senior
Management Agreement by deleting Sections 7, 8 and 9 thereof and this Agreement
shall supersede the Provisions Relating to Employment set out in the Senior
Management Agreement. This Agreement constitutes the entire agreement between
the parties respecting the employment of Executive, there being no
representations, warranties or commitments except as set forth herein.
20. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be an original and all of which shall be
deemed to constitute one and the same instrument.
21. DEFINITIONS.
"AGREEMENT" means this Employment Agreement.
"BASE SALARY" is defined in Section 5(a) above.
"BENEFICIAL OWNER" means a beneficial owner within the meaning
of Rule 13d-3 under the Securities Exchange Act of 1934, as amended.
"BENEFIT PLAN" is defined in Section 9(e) above.
"BOARD" means the board of directors of the Company.
"CAUSE" means (i) the commission of a felony or a crime
involving moral turpitude or the commission of any other act or omission
involving dishonesty or fraud with respect to the Company or any of its
Subsidiaries or any of their customers or suppliers, (ii) conduct tending to
bring the Company or any of its Subsidiaries into substantial public disgrace or
disrepute, (iii) substantial and repeated failure to perform duties of the
office held by the Executive as reasonably directed by the Board, and such
failure is not cured within 30 days after the Executive receives notice thereof
from the Board, (iv) gross negligence or willful misconduct with respect to the
Company or any of its Subsidiaries or (v) any breach of Section 7 or 10 of this
Agreement.
"CHANGE IN CONTROL" means (A) any Person, other than any
Person who is a Beneficial Owner of the Company's securities before the Offering
Date, becomes, after the Offering Date, the beneficial owner, directly or
indirectly, of securities of the Company representing 40% or more of the
combined voting power of the Company's then outstanding securities; (B) during
any two-year period, individuals who at the beginning of such period constitute
the Board (including, for this purpose, any director who after the beginning of
such period filled a vacancy on the Board caused by the resignation, mandatory
retirement, death, or disability of a director and whose election or appointment
was approved by a vote of at least two-thirds of the directors then in office
who were directors at the beginning of such period) cease for any reason to
constitute a majority thereof; (C) notwithstanding clauses (A) or (E) of this
paragraph, the Company consummates a merger or consolidation of the Company with
or into another corporation, the result of which is that the Persons who were
stockholders of the Company at the time of the execution of the agreement to
merge or consolidate own less than 80% of the total equity of the corporation
surviving or resulting from the merger or consolidation or of a corporation
owning, directly or indirectly, 100% of the total equity of such surviving or
resulting corporation; or (D) the sale in one or a series of transactions of all
or substantially all of the assets of the Company; (E) any Person has commenced
a tender or exchange offer, or entered into an agreement or received an option
to acquire beneficial ownership of 40% or more of the total number of voting
shares of the Company, unless the Board has made a determination that such
action does not constitute and will not constitute a material change in the
Persons having control of the Company; or (F) there is a change of control in
the Company of a nature that would be required to be reported in response to
Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Exchange Act
other than in circumstances specifically covered by clauses (A) through (E)
above.
"CODE" is defined in Section 9(e) above.
"COMPANY" means AnswerThink Consulting Group, Inc. and its
successors and assigns.
"DATE OF TERMINATION" means (i) if the Executive's employment
is terminated by the Executive's death, the date of the Executive's death; (ii)
if the Executive's employment is terminated because of the Executive's
disability pursuant to Section 8(a)(ii)(A) hereof, 30 days after Notice of
Termination, provided that the Executive shall not have returned to the
performance of the Executive's duties on a full-time basis during such 30-day
period; (iii) if the Executive's employment is terminated by the Company for
Cause pursuant to Section 8(a)(ii)(B) hereof or by the Executive for Good Reason
pursuant to Section 8(a)(iii) hereof, the date specified in the Notice of
Termination; or (iv) if the Executive's employment is terminated during the
Employment Term other than pursuant to Section 8(a), the date on which Notice of
Termination is given.
"EMPLOYMENT PERIOD" is defined in Section 2 above.
"EXECUTIVE" means [EXECUTIVE].
"EXTENDED PERIOD" is defined in Section 9(d)(i) above.
"EXTENDED TERM" is defined in Section 2 above.
"GOOD REASON" means (i) the Company's failure to perform or
observe any of the material terms or provisions of this Agreement, and the
continued failure of the Company to cure such default within 30 days after
written demand for performance has been given to the Company by the Executive,
which demand shall describe specifically the nature of such alleged failure to
perform or observe such material terms or provisions; or (ii) a material
reduction in the scope of the Executive's responsibilities and duties.
"INITIAL PERIOD" is defined in Section 9(d) above.
"INITIAL TERM" is defined in Section 2 above.
"NONCOMPETE PERIOD" is defined in Section 10(a) above.
"NOTICE OF TERMINATION" is defined in Section 8(b) above.
"OFFERING DATE" means the date of the completion of an initial
public offering of the Company's Common Stock.
"OTHER AGREEMENTS" is defined in Section 9(e) above.
"PARACHUTE PAYMENT" is defined in Section 9(e) above.
"PERSON" means an individual, a partnership, a limited
liability company, a corporation, an association, a joint stock company, a
trust, a joint venture, an unincorporated organization and a governmental entity
or any department, agency or political subdivision thereof.
"SENIOR MANAGEMENT AGREEMENT" means the Senior Management
Agreement dated as of April 23, 1997, as amended, by and between the Company and
the Executive.
"SEVERANCE PAYMENTS" is defined in Section 9(d) above.
"SUBSIDIARY" means any corporation of which the Company owns
securities having a majority of the ordinary voting power in electing the board
of directors directly or through one or more subsidiaries.
"SUBSIDIARY" means any corporation of which the Company owns
securities having a majority of the ordinary voting power in electing the board
of directors directly or through one or more subsidiaries.
"WORK PRODUCT" is defined in Section 7(b) above.
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement,
or have caused this Agreement to be duly executed on their behalf, as of the day
and year first hereinabove written.
ANSWERTHINK CONSULTING GROUP, INC.
By:/S/ TED A. FERNANDEZ
-------------------------------
Name: T. Fernandez
Title: CEO
THE EXECUTIVE:
/S/ [EXECUTIVE]
----------------------------------
<PAGE>
SCHEDULE TO EMPLOYMENT AGREEMENT
EXECUTIVE TITLE CAPACITY
Ted A. Fernandez President, Chief Executive chief executive
Officer and Chairman officer
Allan R. Frank Executive Vice President and officer
Chief Technology Officer
Ulysses S. Knotts, III Executive Vice President, officer
Sales and Marketing
EXHIBIT 10.2
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (Agreement) is entered into as of this 26th
day of May, 1998, by and between AnswerThink Consulting Group, Inc., a Florida
corporation (the Company), and Luis San Miguel (the Executive).
WHEREAS, the Company and the Executive have entered into an Employment
Agreement dated as of July 22, 1997 (the Employment Agreement);
WHEREAS, the Company and the Executive desire to terminate and replace
the Employment Agreement by entering into this Agreement and the Company desires
to employ the Executive, and the Executive desires to be employed by the
Company, on the terms and conditions set forth herein from and after the
completion of the initial public offering of the Companys Common Stock (the
Offering Date); and
WHEREAS, the board of directors of the Company (the Board) has approved
and authorized the entry into this Agreement with the Executive.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein and other good and valuable consideration, the receipt and
sufficiency of which hereby are acknowledged, the parties hereto agree as
follows:
1. EMPLOYMENT AGREEMENT. On the terms and conditions set forth in this
Agreement, the Company agrees to employ the Executive and the Executive agrees
to be employed by the Company for the Employment Period set forth in Section2
hereof and in the position and with the duties set forth in Section3 hereof.
Terms used herein with initial capitalization are defined in Section 21 below.
2. TERM. The initial term of employment under this Agreement shall be
for a three-year period commencing on the Offering Date (the Initial Term). The
term of employment shall be automatically renewed for an additional consecutive
12-month period (the Extended Term) as of the first and every subsequent
anniversary of the Offering Date, unless and until either party provides written
notice to the other party in accordance with Section 11 hereof not less than 90
days before such anniversary date that such party is terminating the term of
employment under this Agreement, which termination shall be effective as of the
end of such Initial Term or Extended Term, as the case may be, or until such
term of employment is otherwise terminated as hereinafter set forth. Such
Initial Term and all such Extended Terms are collectively referred to herein as
the Employment Period. The parties obligations under Sections 7, 9 and 10 hereof
shall survive the expiration or termination of the Employment Period.
3. POSITION AND DUTIES. The Executive shall serve as Executive Vice
President, Finance and Chief Financial Officer of the Company during the
Employment Period. As the Executive Vice President, Finance and Chief Financial
Officer of the Company, the Executive shall render executive, policy and other
management services to the Company of the type customarily performed by persons
serving in a similar officer capacity. The Executive shall report to the Chief
Executive Officer of the Company, except as otherwise determined by the Chief
Executive Officer or the Board. The Executive shall also perform such duties as
the Chief Executive Officer or the Board may from time to time reasonably
determine and assign to the Executive. During the Employment Period, there shall
be no material change in the duties and responsibilities of the Executive from
those previously in effect, other than as provided herein, unless the parties
otherwise agree in writing. The Executive shall devote the Executives reasonable
best efforts and substantially full business time to the performance of the
Executives duties and the advancement of the business and affairs of the
Company.
4. PLACE OF PERFORMANCE. In connection with the Executives employment
by the Company, the Executive shall be based at the principal executive offices
of the Company, except as otherwise agreed by the
<PAGE>
Executive and the Company and except for reasonable travel on Company business.
If the Executive is required to relocate his place of employment to a location
more than 50 miles from its location as of the date of this Agreement, the
Company shall pay or reimburse the Executive for the reasonable moving and
relocation expenses incurred by him to establish a personal residence at the new
location, including reasonable traveling and temporary living expenses.
5. COMPENSATION.
(a) BASE SALARY. During the Employment Period, the Company shall pay to
the Executive an annual base salary (the Base Salary), which initially shall be
at the rate of $175,000 per year. The Base Salary shall be reviewed no less
frequently than annually and may be increased at the discretion of the Board. If
the Executives Base Salary is increased, the increased amount shall be the Base
Salary for the remainder of the Employment Period. Except as otherwise agreed in
writing by the Executive, the Base Salary shall not be reduced from the amount
previously in effect during the Employment Term. The Base Salary shall be
payable biweekly or in such other installments as shall be consistent with the
Companys payroll procedures.
(b) BONUS. During the Employment Period, the Executive may also be
eligible to earn an annual bonus pursuant to a bonus plan adopted by the Board
for each fiscal year.
(c) BENEFITS. During the Employment Period, the Executive will be
entitled to such other benefits approved by the Board and made available to
employees. Nothing contained in this Agreement shall prevent the Company from
changing carriers or from effecting modifications in insurance coverage for the
Executive.
(d) VACATION; HOLIDAYS. The Executive shall be entitled to all public
holidays observed by the Company and vacation days in accordance with the
applicable vacation policies for senior executives of the Company, which shall
be taken at a reasonable time or times.
(e) WITHHOLDING TAXES AND OTHER DEDUCTIONS. To the extent required by
law, the Company shall withhold from any payments due Executive under this
Agreement any applicable federal, state or local taxes and such other deductions
as are prescribed by law or Company policy.
6. EXPENSES. The Executive is expected and is authorized to incur
reasonable expenses in the performance of his duties hereunder, including the
costs of entertainment, travel, and similar business expenses incurred in the
performance of his duties. The Employers shall reimburse the Executive for all
such expenses promptly upon periodic presentation by the Executive of an
itemized account of such expenses.
7. CONFIDENTIALITY; WORK PRODUCT.
(a) INFORMATION. The Executive acknowledges that the information,
observations and data obtained by the Executive concerning the business and
affairs of the Company and its Subsidiaries and their predecessors during the
course of the Executives performance of services for, or employment with, any of
the foregoing persons (whether or not compensated for such services) are the
property of the Company and its Subsidiaries, including information concerning
acquisition opportunities in or reasonably related to the business or industry
of the Company or its Subsidiaries of which the Executive becomes aware during
such period. Therefore, the Executive agrees that he will not at any time
(whether during or after the Employment Period) disclose to any unauthorized
person or, directly or indirectly, use for the Executives own account, any of
such information, observations or data without the Boards consent, unless and to
the extent that the aforementioned matters become generally known to and
available for use by the public other than as a direct or indirect result of the
Executives acts or omissions to act or the acts or omissions to act of other
senior or junior management employees of the Company and its Subsidiaries. The
Executive agrees to deliver to the Company at the termination of the Executives
employment, or at any other time the Company may request in writing (whether
during or after the Employment Period), all memoranda, notes, plans, records,
reports and other documents, regardless of the format or media (and copies
thereof), relating to the business of the Company and its Subsidiaries and their
predecessors (including,
<PAGE>
without limitation, all acquisition prospects, lists and contact information)
which the Executive may then possess or have under the Executives control.
(b) INVENTIONS AND PATENTS. The Executive acknowledges that all
inventions, innovations, improvements, developments, methods, designs, analyses,
drawings, reports and all similar or related information (whether or not
patentable) that relate to the actual or anticipated business, research and
development or existing or future products or services of the Company or its
Subsidiaries that are conceived, developed, made or reduced to practice by the
Executive while employed by the Company or any of its predecessors (Work
Product) belong to the Company and the Executive hereby assigns, and agrees to
assign, all of the above to the Company. Any copyrightable work prepared in
whole or in part by the Executive in the course of the Executives work for any
of the foregoing entities shall be deemed a work made for hire under the
copyright laws, and the Company shall own all rights therein. To the extent that
any such copyrightable work is not a work made for hire, the Executive hereby
assigns and agrees to assign to Company all right, title and interest, including
without limitation, copyright in and to such copyrightable work. The Executive
shall promptly disclose such Work Product and copyrightable work to the Board
and perform all actions reasonably requested by the Board (whether during or
after the Employment Period) to establish and confirm the Companys ownership
(including, without limitation, assignments, consents, powers of attorney and
other instruments).
(c) ENFORCEMENT. The Executive acknowledges that the restrictions
contained in Section7(a) hereof are reasonable and necessary, in view of the
nature of the Companys business, in order to protect the legitimate interests of
the Company, and that any violation thereof would result in irreparable injury
to the Company. Therefore, the Executive agrees that in the event of a breach or
threatened breach by the Executive of the provisions of Section7(a) hereof, the
Company shall be entitled to obtain from any court of competent jurisdiction,
preliminary or permanent injunctive relief restraining the Executive from
disclosing or using any such confidential information. Nothing herein shall be
construed as prohibiting the Company from pursuing any other remedies available
to it for such breach or threatened breach, including, without limitation,
recovery of damages from the Executive.
8. TERMINATION OF EMPLOYMENT.
(a) Permitted Terminations. The Executives employment hereunder may be
terminated during the Employment Term without any breach of this Agreement only
under the following circumstances:
(i) DEATH. The Executives employment hereunder shall terminate
upon the Executives death;
(ii) BY THE COMPANY. The Company may terminate the Executives
employment:
(A) If the Executive shall have been unable to
perform all of the Executives duties hereunder by reason of
illness, physical or mental disability or other similar
incapacity, which inability shall continue for more than three
consecutive months; or
(B) For Cause; or
(iii) BY THE EXECUTIVE. The Executive may terminate employment
for Good Reason.
(b) TERMINATION. Any termination of the Executives employment by the
Company or the Executive (other than because of the Executives death) shall be
communicated by written Notice of Termination to the other party hereto in
accordance with Section11 hereof. For purposes of this Agreement, a Notice of
Termination shall mean a notice which shall indicate the specific termination
provision in this Agreement relied upon, if any, and shall set forth in
reasonable detail the facts and circumstances claimed to provide
<PAGE>
a basis for termination of the Executives employment under the provision so
indicated. Termination of the Executives employment shall take effect on the
Date of Termination.
9. COMPENSATION UPON TERMINATION.
(a) DEATH. If the Executives employment is terminated during the
Employment Term as a result of the Executives death, the Company shall pay to
the Executives estate, or as may be directed by the legal representatives of
such estate, the Executives full Base Salary through the Date of Termination and
all other unpaid amounts, if any, to which the Executive is entitled as of the
Date of Termination in connection with any fringe benefits or under any bonus or
incentive compensation plan or program of the Company pursuant to Sections5(b)
and (c) hereof, at the time such payments are due, and the Company shall have no
further obligations to the Executive under this Agreement.
(b) DISABILITY. If the Company terminates the Executives employment
during the Employment Term because of the Executives disability pursuant to
Section 8(a)(ii)(A) hereof, the Company shall pay the Executive the Executives
full Base Salary through the Date of Termination and all other unpaid amounts,
if any, to which the Executive is entitled as of the Date of Termination in
connection with any fringe benefits or under any bonus or incentive compensation
plan or program of the Company pursuant to Sections5(b) and (c) hereof, at the
time such payments are due, and the Company shall have no further obligations to
the Executive under this Agreement; provided, that payments so made to the
Executive during any period that the Executive is unable to perform all of the
Executives duties hereunder by reason of illness, physical or mental illness or
other similar incapacity shall be reduced by the sum of the amounts, if any,
payable to the Executive at or prior to the time of any such payment under
disability benefit plans of the Company and which amounts were not previously
applied to reduce any such payment.
(c) BY THE COMPANY WITH CAUSE OR BY THE EXECUTIVE WITHOUT GOOD REASON.
If the Company terminates the Executives employment during the Employment Term
for Cause pursuant to Section8(a)(ii)(B) hereof or if the Executive voluntarily
terminates the Executives employment during the Employment Term other than for
Good Reason, the Company shall pay the Executive the Executives full Base Salary
through the Date of Termination and all other unpaid amounts, if any, to which
Executive is entitled as of the Date of Termination in connection with any
fringe benefits or under any bonus or incentive compensation plan or program of
the Company pursuant to Sections5(b) and (c) hereof, at the time such payments
are due, and the Company shall have no further obligations to the Executive
under this Agreement.
(d) BY THE COMPANY WITHOUT CAUSE OR BY THE EXECUTIVE FOR GOOD REASON.
If the Company terminates the Executives employment during the Employment Term
other than for Cause, disability or death pursuant to Section 8(a)(i) or (ii)
hereof, or the Executive terminates his employment during the Employment Term
for Good Reason pursuant to Section 8(a)(iii) hereof, the Company shall pay the
Executive (A)the Executives full Base Salary through the Date of Termination and
all other unpaid amounts, if any, to which the Executive is entitled as of the
Date of Termination in connection with any fringe benefits or under any bonus or
incentive compensation plan or program of the Company pursuant to Sections5(b)
and (c) hereof, at the time such payments are due and (B)subject to Sections
9(e) and 9(f) hereof:
(i) NO CHANGE OF CONTROL. Except as provided in Section 9(d)(ii)
hereof, during the six-month period commencing on the Date of Termination (the
Initial Period), the Company shall pay the Executive an aggregate amount equal
to Executives Base Salary, payable in equal installments on the Companys regular
salary payment dates, and any other amounts that would have been payable to or
on behalf of the Executive under Section5(c) hereof (the Severance Payments). In
addition, the Company shall have the option, by delivering written notice to the
Executive in accordance with Section 11 hereof within 90 days after the Date of
Termination, to extend the severance period to the first anniversary of the Date
of Termination (the Extended Period). During the Extended Period, the Company
will continue to make Severance Payments at the same annual rate to the
Executive. Notwithstanding the foregoing and without in any way modifying the
provisions of Sections 7 and10 hereof, from and after the first date that
Executive becomes employed with another Person or provides services as a
consultant or other self-employed individual, the Company, at its option, may
eliminate or otherwise reduce the amount of Severance Payments otherwise
required to be made pursuant to this Section9(d)(i) to the
<PAGE>
extent of the compensation and benefits received by the Executive from such
other employment or self-employment; or
(ii) CHANGE OF CONTROL. If such termination is in anticipation of, in
connection with or within one year after the date of a Change of Control, the
Company shall pay the Executive an aggregate amount equal to Executives Base
Salary, payable in equal installments on the Companys regular salary payment
dates, and any other amounts that would have been payable to or on behalf of the
Executive under Section5(c) hereof (the Severance Payments) from the Date of
Termination through the first anniversary of the Date of Termination at the time
such payments would otherwise have been due in accordance with the Companys
normal payroll practices, and the Company shall have no further obligations to
the Executive under this Agreement. In addition, in such event, the Executives
rights with respect to stock options and shares of restricted stock previously
granted by the Company, deferred and incentive compensation or bonus amounts
awarded by the Company and other contingent or deferred compensation awards or
grants made by the Company, or otherwise made in connection with the Executives
employment hereunder, shall be fully vested and nonforfeitable as of the Date of
Termination, except to the extent inconsistent with the terms of any such plan
or arrangement that is intended to qualify under Section 401(a) or 423 of the
Code. For purposes of Section 10 hereof, the Initial Period shall be the first
12 months following the Date of Termination.
(e) PARACHUTE LIMITATIONS. Notwithstanding any other provision of this
Agreement or of any other agreement, contract or understanding heretofore or
hereafter entered into by the Executive with the Company or any subsidiary or
affiliate thereof, except an agreement, contract or understanding hereafter
entered into that expressly modifies or excludes application of this Section9(e)
(the Other Agreements), and notwithstanding any formal or informal plan or other
arrangement heretofore or hereafter adopted by the Company (or any subsidiary or
affiliate thereof) for the direct or indirect compensation of the Executive
(including groups or classes of participants or beneficiaries of which the
Executive is a member), whether or not such compensation is deferred, is in
cash, or is in the form of a benefit to or for the Executive (a Benefit Plan),
if the Executive is a disqualified individual (as defined in Section 280G(c) of
the Internal Revenue Code of 1986, as amended (the Code)), the Executive shall
not have any right to receive any payment or benefit under this Agreement, any
Other Agreement or any Benefit Plan (i)to the extent that such payment or
benefit, taking into account all other rights, payments or benefits to or for
the Executive under this Agreement, all Other Agreements and all Benefit Plans,
would cause any payment or benefit to the Executive under this Agreement, any
Other Agreement or any Benefit Plan to be considered a parachute payment within
the meaning of Section280G(b)(2) of the Code as then in effect (a Parachute
Payment) and (ii) if, as a result of receiving a Parachute Payment, the
aggregate after-tax amount received by the Executive under this Agreement, all
Other Agreements and all Benefit Plans would be less than the maximum after-tax
amount that could be received by the Executive without causing any such payment
or benefit to be considered a Parachute Payment. In the event that the receipt
of any such payment or benefit under this Agreement, any Other Agreement or any
Benefit Plan would cause the Executive to be considered to have received a
Parachute Payment that would have the adverse after-tax effect described in
clause (ii) of the preceding sentence, then the Executive shall have the right,
in the Executives sole discretion, to designate those rights, payments or
benefits under this Agreement, any Other Agreement and any Benefit Plan that
should be reduced or eliminated so as to avoid having the payment or benefit to
the Executive under this Agreement be deemed to be a Parachute Payment.
(f) MITIGATION. The Companys obligation to continue to provide the
Executive with benefits pursuant to Section 9(d)(i) or (ii) above shall cease if
the Executive becomes eligible to participate in benefits substantially similar
to those provided under this Agreement as a result of the Executives subsequent
employment during the period that the Executive is entitled to receive Severance
Payments.
(g) LIQUIDATED DAMAGES. The parties acknowledge and agree that damages
which will result to the Executive for termination by the Company without Cause
or by the Executive for Good Reason shall be extremely difficult or impossible
to establish or prove, and agree that the Severance Payments shall constitute
liquidated damages for any breach of this Agreement by the Company through the
Date of Termination. The Executive agrees that, except for such other payments
and benefits to which the Executive may be entitled as expressly provided by the
terms of this Agreement or any applicable Benefit Plan, such liquidated damages
shall be in lieu of all other claims that the Executive may make by reason of
termination of his employment or any such
<PAGE>
breach of this Agreement and that, as a condition to receiving the Severance
Payments, the Executive will execute a release of claims in a form reasonably
satisfactory to the Company.
10. NONCOMPETITION AND NONSOLICITATION.
(a) NONCOMPETITION. The Executive acknowledges that in the course of
his employment with the Company and its Subsidiaries and their predecessors, he
has and will continue to become familiar with the trade secrets of, and other
confidential information concerning, the Company and its Subsidiaries, that the
Executives services will be of special, unique and extraordinary value to the
Company and its Subsidiaries and that the Companys ability to accomplish its
purposes and to successfully pursue its business plan and compete in the
marketplace depend substantially on the skills and expertise of the Executive.
Therefore, and in further consideration of the compensation being paid to the
Executive hereunder, the Executive agrees that, during the Employment Period and
any Initial Period or Extended Period, so long as Severance Payments are being
made or during any portion of the Initial or Extended Period that Severance
Payments are not required to be made pursuant to the last sentence of Section
9(d)(i) hereof (the Noncompete Period), he shall not directly or indirectly own,
manage, control, participate in, consult with, render services for, or in any
manner engage in any business competing with the businesses of the Company, its
Subsidiaries, or any business in which the Company or its Subsidiaries has
commenced negotiations or has requested and received information relating to the
acquisition of such business within eighteen months prior to the termination of
the Executives employment with the Company, in any country where the Company,
its Subsidiaries, or other aforementioned business conducts business.
(b) NONSOLICITATION. During the Employment Period and for two years
following the Date of Termination, the Executive shall not directly or
indirectly through another entity (i)induce or attempt to induce any employee of
the Company or any Subsidiary to leave the employ of the Company or such
Subsidiary, or in any way willfully interfere with the relationship between the
Company or any Subsidiary and any employee thereof, (ii)induce or attempt to
induce any customer, supplier, licensee or other business relation of the
Company or any Subsidiary to cease doing business with the Company or such
Subsidiary, or in any way interfere with the relationship between any such
customer, supplier, licensee or business relation and the Company or any
Subsidiary or (iii)initiate or engage in any discussions regarding an
acquisition of, or the Executives employment (whether as an employee, an
independent contractor or otherwise) by, any businesses in which the Company or
any of its Subsidiaries has entertained discussions or has requested and
received information relating to the acquisition of such business by the Company
or its Subsidiaries upon or within the 18-month period prior to the Date of
Termination.
(c) ENFORCEMENT. If, at the time of enforcement of this Section 10, a
court holds that the restrictions stated herein are unreasonable under
circumstances then existing, the parties hereto agree that the maximum duration,
scope or geographical area reasonable under such circumstances shall be
substituted for the stated period, scope or area and that the court shall be
allowed to revise the restrictions contained herein to cover the maximum
duration, scope and area permitted by law. Because the Executives services are
unique and because the Executive has access to confidential information, the
parties hereto agree that money damages would be an inadequate remedy for any
breach of any provision of this Agreement. Therefore, in the event a breach or
threatened breach by the Executive of any provision of this Agreement, the
Company may, in addition to other rights and remedies existing in its favor,
apply to any court of competent jurisdiction for specific performance and/or
injunctive or other relief in order to enforce, or prevent any violations of,
the provisions hereof (without posting a bond or other security).
11. NOTICES. All notices, demands, requests or other communications
required or permitted to be given or made hereunder shall be in writing and
shall be delivered, telecopied or mailed by first class registered or certified
mail, postage prepaid, addressed as follows:
(a) If to the Company:
AnswerThink Consulting Group, Inc.
1401 Brickell Avenue, Suite 350
Miami, Florida 33131
ATTN: General Counsel
Fax: 305/373-0911
<PAGE>
WITH A COPY (WHICH SHALL NOT CONSTITUTE NOTICE) TO:
David B.H. Martin, Jr., Esq.
Hogan & Hartson, L.L.P.
555 13th Street, N.W.
Washington, D.C. 20004-1190
Fax: 202/637-5910
(b) If to the Executive:
Luis San Miguel
AnswerThink Consulting Group, Inc.
1401 Brickell Avenue, Suite 350
Miami, Florida 33131
or to such other address as may be designated by either party in a notice to the
other. Each notice, demand, request or other communication that shall be given
or made in the manner described above shall be deemed sufficiently given or made
for all purposes three days after it is deposited in the U.S. mail, postage
prepaid, or at such time as it is delivered to the addressee (with the return
receipt, the delivery receipt, the answer back or the affidavit of messenger
being deemed conclusive evidence of such delivery) or at such time as delivery
is refused by the addressee upon presentation.
12. SEVERABILITY. The invalidity or unenforceability of any one or more
provisions of this Agreement shall not affect the validity or enforceability of
the other provisions of this Agreement, which shall remain in full force and
effect.
13. SURVIVAL. It is the express intention and agreement of the parties
hereto that the provisions of Sections7, 9 and 10 hereof shall survive the
termination of employment of the Executive. In addition, all obligations of the
Company to make payments hereunder shall survive any termination of this
Agreement on the terms and conditions set forth herein.
14. ASSIGNMENT. The rights and obligations of the parties to this
Agreement shall not be assignable or delegable, except that (i) in the event of
the Executives death, the personal representative or legatees or distributees of
the Executives estate, as the case may be, shall have the right to receive any
amount owing and unpaid to the Executive hereunder and (ii) the rights and
obligations of the Company hereunder shall be assignable and delegable in
connection with any subsequent merger, consolidation, sale of all or
substantially all of the assets of the Company or similar reorganization of a
successor corporation.
15. BINDING EFFECT. Subject to any provisions hereof restricting
assignment, this Agreement shall be binding upon the parties hereto and shall
inure to the benefit of the parties and their respective heirs, devisees,
executors, administrators, legal representatives, successors and assigns.
16. AMENDMENT; WAIVER. This Agreement shall not be amended, altered or
modified except by an instrument in writing duly executed by the parties hereto.
Neither the waiver by either of the parties hereto of a breach of or a default
under any of the provisions of this Agreement, nor the failure of either of the
parties, on one or more occasions, to enforce any of the provisions of this
Agreement or to exercise any right or privilege hereunder, shall thereafter be
construed as a waiver of any subsequent breach or default of a similar nature,
or as a waiver of any such provisions, rights or privileges hereunder.
17. HEADINGS. Section and subsection headings contained in this
Agreement are inserted for convenience of reference only, shall not be deemed to
be a part of this Agreement for any purpose, and shall not in any way define or
affect the meaning, construction or scope of any of the provisions hereof.
<PAGE>
18. GOVERNING LAW. This Agreement, the rights and obligations of the
parties hereto, and any claims or disputes relating thereto, shall be governed
by and construed in accordance with the laws of the State of Florida (but not
including the choice of law rules thereof).
19. ENTIRE AGREEMENT; EMPLOYMENT AGREEMENT TERMINATED AND SUPERSEDED.
By mutual consent, effective as of the Offering Date, the parties hereby
terminate the Employment Agreement and this Agreement shall supersede and
replace the Employment Agreement. This Agreement constitutes the entire
agreement between the parties respecting the employment of Executive, there
being no representations, warranties or commitments except as set forth herein.
20. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be an original and all of which shall be
deemed to constitute one and the same instrument.
21. DEFINITIONS.
"AGREEMENT" means this Employment Agreement.
"BASE SALARY" is defined in Section 5(a) above.
"BENEFICIAL OWNER" means a beneficial owner within the meaning of
Rule 13d-3 under the Securities Exchange Act of 1934, as amended.
"BENEFIT PLAN" is defined in Section 9(e) above.
"BOARD" means the board of directors of the Company.
"CAUSE" means (i)the commission of a felony or a crime involving moral
turpitude or the commission of any other act or omission involving dishonesty or
fraud with respect to the Company or any of its Subsidiaries or any of their
customers or suppliers, (ii)conduct tending to bring the Company or any of its
Subsidiaries into substantial public disgrace or disrepute, (iii)substantial and
repeated failure to perform duties of the office held by the Executive as
reasonably directed by the Board, and such failure is not cured within 30 days
after the Executive receives notice thereof from the Board, (iv)gross negligence
or willful misconduct with respect to the Company or any of its Subsidiaries or
(v)any breach of Section7 or 10 of this Agreement.
"CODE" is defined in Section 9(e) above.
"COMPANY" means AnswerThink Consulting Group, Inc. and its
successors and assigns.
"DATE OF TERMINATION" means (i)if the Executives employment is
terminated by the Executives death, the date of the Executives death; (ii)if the
Executives employment is terminated because of the Executives disability
pursuant to Section8(a)(ii)(A) hereof, 30 days after Notice of Termination,
provided that the Executive shall not have returned to the performance of the
Executives duties on a full-time basis during such 30-day period; (iii)if the
Executives employment is terminated by the Company for Cause pursuant to
Section8(a)(ii)(B) hereof or by the Executive for Good Reason pursuant to
Section 8(a)(iii) hereof, the date specified in the Notice of Termination; or
(iv)if the Executives employment is terminated during the Employment Term other
than pursuant to Section 8(a), the date on which Notice of Termination is given.
"EMPLOYMENT AGREEMENT" means the Employment Agreement dated as of
July 22, 1997, as amended, by and between the Company and the Executive.
"EMPLOYMENT PERIOD" is defined in Section 2 above.
"EXECUTIVE" means Luis San Miguel.
"EXTENDED PERIOD" is defined in Section 9(d)(i) above.
<PAGE>
"EXTENDED TERM" is defined in Section 2 above.
"GOOD REASON" means (i)the Companys failure to perform or observe
any of the material terms or provisions of this Agreement, and the continued
failure of the Company to cure such default within 30 days after written demand
for performance has been given to the Company by the Executive, which demand
shall describe specifically the nature of such alleged failure to perform or
observe such material terms or provisions; or (ii)a material reduction in the
scope of the Executives responsibilities and duties.
"INITIAL PERIOD" is defined in Section 9(d) above.
"INITIAL TERM" is defined in Section 2 above.
"NONCOMPETE PERIOD" is defined in Section 10(a) above.
"NOTICE OF TERMINATION" is defined in Section 8(b) above.
"OFFERING DATE" means the date of the completion of an initial
public offering of the Companys Common Stock.
"OTHER AGREEMENTS" is defined in Section 9(e) above.
"PARACHUTE PAYMENT" is defined in Section 9(e) above.
"PERSON" means an individual, a partnership, a limited liability
company, a corporation, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"SEVERANCE PAYMENTS" is defined in Section 9(d) above.
"SUBSIDIARY" means any corporation of which the Company owns
securities having a majority of the ordinary voting power in electing the board
of directors directly or through one or more subsidiaries.
"SUBSIDIARY" means any corporation of which the Company owns
securities having a majority of the ordinary voting power in electing the board
of directors directly or through one or more subsidiaries.
"WORK PRODUCT" is defined in Section 7(b) above.
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement,
or have caused this Agreement to be duly executed on their behalf, as of the day
and year first hereinabove written.
ANSWERTHINK
CONSULTING GROUP, INC.
By:/s/ Ted A. Fernandez
-----------------------
Name: T. Fernandez
Title: CEO
THE EXECUTIVE:
/s/ Luis E. San Miguel
----------------------
EXHIBIT 11.1
ANSWERTHINK CONSULTING GROUP, INC.
STATEMENT REGARDING COMPUTATION OF EARNINGS PER SHARE
(UNAUDITED)
<TABLE>
<CAPTION>
QUARTER ENDED
JULY 3, 1998
----------------
<S> <C>
Net income (loss) $ 2,303,150
================
Basic:
Weighted average common shares outstanding 17,386,528
================
Net income per share $ 0.13
================
Diluted:
Weighted average common shares outstanding 17,386,528
Dilutive effects of unvested shares and stock options 14,808,796
----------------
Weighted average common and common equivalent shares outstanding 32,195,324
================
Net income per share $ 0.07
================
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> JAN-01-1999 JAN-01-1999
<PERIOD-START> APR-04-1998 JAN-03-1998
<PERIOD-END> JUL-03-1998 JUL-03-1998
<CASH> 18,806,414 18,806,414
<SECURITIES> 5,850,000 5,850,000
<RECEIVABLES> 20,868,651 20,868,651
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 46,123,529 46,123,529
<PP&E> 2,816,844 2,816,844
<DEPRECIATION> 726,783 726,783
<TOTAL-ASSETS> 71,376,823 71,376,823
<CURRENT-LIABILITIES> 11,335,608 11,335,608
<BONDS> 0 0
0 0
0 0
<COMMON> 33,972 33,972
<OTHER-SE> 57,844,461 57,844,461
<TOTAL-LIABILITY-AND-EQUITY> 71,376,823 71,376,823
<SALES> 0 0
<TOTAL-REVENUES> 23,043,386 41,575,156
<CGS> 0 0
<TOTAL-COSTS> 20,564,579 78,255,803
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 278,907 600,672
<INCOME-PRETAX> 2,303,150 (37,150,022)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 2,303,150 (37,150,022)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 2,303,150 (37,150,022)
<EPS-PRIMARY> 0.13 (2.69)
<EPS-DILUTED> 0.07 (2.69)
</TABLE>
