<PAGE>
As filed with the Securities and Exchange Commission on September 17, 1999
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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AnswerThink Consulting Group, Inc.
(Exact name of registrant as specified in its charter)
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Florida 8748 65-0750100
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(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization) Classification Code Number) Identification No.)
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AnswerThink Consulting Group, Inc.
1001 Brickell Bay Drive, Suite 3000
Miami, Florida 33131
Phone: (305) 375-8005
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
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Ted A. Fernandez
President, Chief Executive Officer and Chairman
c/o AnswerThink Consulting Group, Inc.
1001 Brickell Bay Drive, Suite 3000
Miami, Florida 33131
Phone: (305) 375-8005
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
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With Copies to:
David B. H. Martin, Jr., Esq. Victoria A. Baylin, Esq.
HOGAN & HARTSON L.L.P. AKIN, GUMP, STRAUSS, HAUER & FELD L.L.P.
555 Thirteenth Street, N.W. 1333 New Hampshire Avenue, N.W., Suite 400
Washington, D.C. 20004 Washington, D.C. 20036
(202) 637-5600 (202) 887-4000
Approximate date of commencement of proposed sale of the securities to the
public: As soon as practicable after this Registration Statement becomes
effective.
If the securities being registered on this Form are being offered in connection
with the formation of a holding company and there is compliance with General
Instruction G, check the following box. [_]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
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Calculation of Registration Fee
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Title of each class of Proposed maximum Proposed maximum
securities to be Amount to be offering price per aggregate offering Amount of
registered registered unit price registration fee
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Common Stock, par value 8,281,469 $10.07(a) $119,134,837(a) $33,120(b)
$.001 per share
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(a) Estimated pursuant to Rule 457(f)(1) and Rule 457(c) under the Securities
Act of 1933 based upon the average of the high and low prices for shares of
common stock of Think New Ideas, Inc. as reported on the Nasdaq Stock
Market and calculated as of September 15, 1999 and the 0.70 exchange ratio
prescribed by the Agreement and Plan of Merger.
(b) A fee of $31,172 was previously paid by AnswerThink pursuant to Securities
Exchange Act of 1934 Rule 14a-6 in connection with the filing of the
preliminary Joint Proxy Statement/Prospectus on August 13, 1999. Pursuant
to Securities Act of 1933 Rule 457(b), such fee is being credited against
the registration fee.
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The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said section 8(a), may determine.
<PAGE>
[LOGO OF ANSWERTHINK] [LOGO OF THINK NEW IDEAS]
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8,281,469 Shares of AnswerThink Common Stock
----------------------
Dear Stockholders:
The AnswerThink Consulting Group, Inc. and Think New Ideas, Inc. boards
of directors have each approved a merger agreement dated June 24, 1999,
providing for a strategic business combination of Think New Ideas and
AnswerThink. We believe the combined company will be able to create
substantially more stockholder value than the companies can achieve
individually.
If we complete the merger, holders of Think New Ideas common stock will
receive 0.70 shares of AnswerThink common stock for each Think New Ideas share.
AnswerThink stockholders will continue to own their existing shares after the
merger.
AnswerThink will issue up to 8,281,469 shares of its common stock to
Think New Ideas stockholders in the merger, based on outstanding shares,
warrants and vested options on September 15, 1999. These shares will represent
approximately 24% of the outstanding AnswerThink common stock after the merger.
AnswerThink shares that AnswerThink stockholders own before the merger will
represent approximately 76% of the outstanding AnswerThink shares after the
merger.
We are asking
. AnswerThink stockholders to approve AnswerThink's issuance of
shares in the merger; and
. Think New Ideas stockholders to approve and adopt the merger
agreement and approve the merger.
We cannot complete the merger unless both of these proposals are
approved.
The dates, times and places of the meetings are:
For AnswerThink stockholders: For Think New Ideas stockholders:
November 3, 1999, 11:00 a.m. November 3, 1999, 9:00 a.m.
Hotel Inter-Continental Miami Hyatt Regency
100 Chopin Plaza 265 Peachtree Street, NE
Miami, Florida 33131 Atlanta, Georgia 30303
Ted A. Fernandez Ronald Bloom
President, Chief Executive Officer Chairman and Chief Executive Officer
and Chairman
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved the shares of AnswerThink common stock
to be issued in the merger or determined if this joint proxy
statement/prospectus is truthful or complete. Any representation to the
contrary is a criminal offense. This joint proxy statement/prospectus does not
constitute an offer to sell or solicitation of an offer to buy any securities
in any jurisdiction where such an offer or solicitation would be illegal.
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This joint proxy statement/prospectus is dated September 22, 1999 and
first being mailed to stockholders on September 30, 1999.
<PAGE>
AnswerThink Consulting Group, Inc.
1001 Brickell Bay Road, Suite 3000
Miami, Florida 33131
Phone: (305) 375-8005
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
Time:
11:00 a.m.
Date:
Wednesday, November 3, 1999
Place:
Hotel Inter-Continental Miami
100 Chopin Plaza
Miami, Florida 33131
Purpose:
to approve AnswerThink's issuance of shares in the proposed merger with Think
New Ideas, Inc.
Only stockholders of record on September 15, 1999 may vote at the meeting. Only
stockholders or their proxy holders and AnswerThink guests may attend the
meeting.
Your vote is important. Please complete, date, sign and return your proxy card
in the enclosed envelope promptly.
By Order of the Board of Directors
Ted A. Fernandez
Chairman
Miami, Florida
September 30, 1999
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Think New Ideas, Inc.
45 West 36th Street, 12th Floor
New York, New York 10018
Phone: (212) 629-6800
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
Time:
9:00 a.m.
Date:
Wednesday, November 3, 1999
Place:
Hyatt Regency
265 Peachtree Street, NE
Atlanta, Georgia 30303
Purpose:
to approve and adopt the merger agreement and approve the merger with
AnswerThink Consulting Group, Inc., as described in more detail in the
accompanying joint proxy statement/prospectus and to consider and act upon such
other proposals as may properly be brought before the meeting.
Only stockholders of record on the close of business on September 15, 1999 may
vote at the meeting. Only stockholders or their proxy holders and Think New
Ideas guests may attend the meeting.
Your vote is important. Please complete, date, sign and return your proxy card,
which is solicited by the board of directors of Think New Ideas, in the enclosed
envelope promptly.
By Order of the Board of Directors
Ronald Bloom
Chairman
New York, New York
September 30, 1999
<PAGE>
TABLE OF CONTENTS
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Page
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QUESTIONS AND ANSWERS ABOUT THE ANSWERTHINK/THINK NEW IDEAS MERGER................................. 1
SUMMARY OF THE JOINT PROXY STATEMENT/PROSPECTUS.................................................... 4
The Companies..................................................................................... 4
Summary of the Transaction........................................................................ 4
Conditions to Completion of the Merger............................................................ 4
Votes Required for Approval....................................................................... 5
Termination of the Merger Agreement............................................................... 5
Termination Fee................................................................................... 6
No Other Negotiations Involving Think New Ideas................................................... 6
The Stock Option Agreement........................................................................ 7
The Voting Agreements............................................................................. 8
Opinions of Financial Advisors.................................................................... 8
Accounting Treatment of the Merger................................................................ 8
Interests of Think New Ideas' Directors and Executive Officers in the Merger...................... 8
Restrictions on the Ability to Sell AnswerThink Stock............................................. 8
Comparative Market Price Information.............................................................. 8
THE ANSWERTHINK MEETING............................................................................ 10
Date, Time, Place and Purpose of AnswerThink's Meeting............................................ 10
Record Date and Outstanding Shares................................................................ 10
Vote and Quorum Required.......................................................................... 10
Share Ownership of Management and Other Affiliates................................................ 10
Broker Non-Votes; Abstentions..................................................................... 10
Expenses of Proxy Solicitation.................................................................... 10
Voting of Proxies................................................................................. 11
No Appraisal Rights............................................................................... 11
THE THINK NEW IDEAS MEETING........................................................................ 12
Date, Time, Place and Purpose of Think New Ideas' Meeting......................................... 12
Record Date and Outstanding Shares................................................................ 12
Vote and Quorum Required.......................................................................... 12
Share Ownership of Management and Other Affiliates................................................ 12
Broker Non-Votes; Abstentions..................................................................... 12
Expenses of Proxy Solicitation.................................................................... 12
Voting of Proxies................................................................................. 13
No Appraisal Rights............................................................................... 13
RISK FACTORS....................................................................................... 14
Risks Relating to the Merger...................................................................... 14
Risks Relating to AnswerThink's Business.......................................................... 15
ANSWERTHINK CONSULTING GROUP, INC. UNAUDITED SELECTED PRO FORMA COMBINED CONDENSED FINANCIAL DATA.. 21
ANSWERTHINK SELECTED CONSOLIDATED FINANCIAL DATA................................................... 22
THINK NEW IDEAS SELECTED CONSOLIDATED FINANCIAL DATA............................................... 23
THE MERGER......................................................................................... 24
The Companies..................................................................................... 24
Background of the Merger.......................................................................... 25
AnswerThink's Reasons for the Merger.............................................................. 26
Recommendation of AnswerThink's Board of Directors................................................ 28
Opinion of AnswerThink's Financial Advisor........................................................ 28
Financial Valuation Analyses...................................................................... 29
Factors Considered by the AnswerThink Board of Directors.......................................... 31
Think New Ideas' Reasons for the Merger........................................................... 31
Recommendation of Think New Ideas' Board of Directors............................................. 33
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TABLE OF CONTENTS
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Page
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Opinion of Think New Ideas' Financial Advisor..................................................... 33
Interests of Think New Ideas' Directors and Executive Officers in the Merger...................... 41
Completion and Effectiveness of the Merger........................................................ 42
Structure of the Merger and Conversion of Think New Ideas Common Stock............................ 42
Exchange of Think New Ideas Stock Certificates for AnswerThink Stock Certificates................. 42
Federal Income Tax Consequences of the Merger..................................................... 42
Accounting Treatment of the Merger................................................................ 44
Restrictions on Sales of Shares by Affiliates of Think New Ideas and AnswerThink.................. 44
Regulatory Filings and Approvals Required to Complete the Merger.................................. 44
Listing on the Nasdaq National Market of AnswerThink Common Stock to be Issued in the Merger...... 44
Operations after the Merger....................................................................... 45
THE MERGER AGREEMENT............................................................................... 46
Representations and Warranties.................................................................... 46
AnswerThink's and Think New Ideas' Conduct of Business Before the Merger's Completion............. 48
Other Agreements.................................................................................. 49
No Other Negotiations Involving Think New Ideas................................................... 49
Treatment of Think New Ideas Stock Options and Warrants........................................... 50
Conditions to Completion of the Merger............................................................ 50
Termination of the Merger Agreement............................................................... 52
Payment of Termination Fee........................................................................ 53
Extension, Waiver and Amendment of the Merger Agreement and Expenses.............................. 54
RELATED AGREEMENTS................................................................................. 55
The Stock Option Agreement........................................................................ 55
Think New Ideas Stockholders' Voting Agreement.................................................... 56
AnswerThink Stockholders' Voting Agreement........................................................ 57
COMPARATIVE MARKET PRICE AND PER SHARE DATA........................................................ 58
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION....................................... 60
COMPARISON OF RIGHTS OF HOLDERS OF ANSWERTHINK COMMON STOCK AND THINK NEW IDEAS COMMON STOCK....... 67
Authorized Capital Stock.......................................................................... 67
Dividends......................................................................................... 67
Election, Number, Classification and Removal of Directors......................................... 68
Advance Notice Requirements....................................................................... 68
Special Meetings of Stockholders.................................................................. 69
Stockholder Action by Written Consent............................................................. 69
Anti-Takeover Provisions.......................................................................... 70
Amendment of Charter and Bylaws................................................................... 72
Dissenters' and Appraisal Rights.................................................................. 72
Indemnification of Directors and Officers......................................................... 73
Directors' Liability.............................................................................. 74
Stockholder Approval of Mergers................................................................... 74
OTHER MATTERS...................................................................................... 75
STOCKHOLDER PROPOSALS.............................................................................. 75
DOCUMENTS INCORPORATED BY REFERENCE IN THIS JOINT PROXY STATEMENT/PROSPECTUS....................... 75
WHERE YOU CAN FIND MORE INFORMATION................................................................ 76
STATEMENTS REGARDING FORWARD-LOOKING INFORMATION................................................... 77
EXPERTS............................................................................................ 77
LEGAL MATTERS...................................................................................... 78
JOINT PROXY STATEMENT/PROSPECTUS
ANNEX A -- AGREEMENT AND PLAN OF MERGER............................................................ A-1
ANNEX B -- STOCK OPTION AGREEMENT.................................................................. B-1
ANNEX C -- OPINION OF RAYMOND JAMES & ASSOCIATES, INC.............................................. C-1
ANNEX D -- OPINION OF SALOMON SMITH BARNEY INC..................................................... D-1
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<PAGE>
QUESTIONS AND ANSWERS ABOUT THE ANSWERTHINK/THINK NEW IDEAS MERGER
Q: What is the merger?
A: In the merger, Think New Ideas will become a wholly owned subsidiary of
AnswerThink.
Q: What will the stockholders of Think New Ideas receive in the merger?
A: Think New Ideas stockholders will receive 0.70 shares of AnswerThink common
stock for each share of common stock of Think New Ideas that they own.
Q: What happens to fractional shares?
A: No fractional shares of common stock of AnswerThink will be issued in the
merger. Instead, stockholders of Think New Ideas who would be entitled to
receive a fractional share of common stock of AnswerThink will receive a
cash payment based on the market price of common stock of AnswerThink.
For example, a holder of 121 shares of Think New Ideas common stock would
receive 84 shares of AnswerThink common stock. That holder would also
receive $10.28 in cash, assuming the AnswerThink common stock market price
at the closing equals $14.69, which was the market price on September 15,
1999.
Q: What happens to options and warrants?
A: Holders of options or warrants to purchase shares of Think New Ideas common
stock will receive options or warrants, as applicable, to purchase shares of
AnswerThink common stock after the merger closes. The price for and number
of shares of AnswerThink common stock these holders will be able to purchase
under their options and warrants will be adjusted for the 0.70 exchange
ratio.
Q: What happens to existing AnswerThink stockholders?
A: AnswerThink stockholders will continue to own their shares of AnswerThink
common stock after the merger.
Q: Do the boards of directors of AnswerThink and Think New Ideas recommend
voting in favor of the merger?
A: Yes. The board of directors of Think New Ideas unanimously recommends that
its stockholders vote in favor of the merger agreement and the merger.
Likewise, the board of directors of AnswerThink unanimously recommends that
its stockholders vote in favor of the issuance of AnswerThink common stock
in the merger. For a more complete description of the recommendations of the
boards of directors of Think New Ideas and AnswerThink, see the sections
entitled "AnswerThink's Reasons for the Merger" on page 26, "Recommendation
of AnswerThink's Board of Directors" on page 28, "Think New Ideas' Reasons
for the Merger" on page 31 and "Recommendation of Think New Ideas' Board of
Directors" on page 33.
Q: Are there risks that stockholders of Think New Ideas should consider in
deciding whether to vote in favor of the merger?
A: Yes. For example, the value of the shares of AnswerThink that stockholders
of Think New Ideas will receive in the merger may go up or down as the
market price of AnswerThink common stock goes up or down. The exchange ratio
to determine the number of shares of AnswerThink common stock that Think New
Ideas stockholders will receive in the merger is fixed and will not change.
As a result, the value of the AnswerThink shares received in the merger will
not be known prior to the time of the merger. We urge you to obtain current
market quotations of AnswerThink common stock and Think New Ideas common
stock.
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In evaluating the merger, stockholders of Think New Ideas should carefully
consider these and other factors discussed in the section entitled "Risk
Factors" on page 14.
Q: What do I need to do now?
A: Vote by marking your proxy card, sign and mail it in the enclosed return
envelope as soon as possible so that your shares may be represented at your
meeting. If you do not include instructions on how to vote your properly
signed proxy, shares represented by the proxy will be voted:
. "FOR" approval and adoption of the merger agreement and approval of the
merger, for Think New Ideas stockholders; and
. "FOR" approval of the issuance of shares of AnswerThink common stock in
the merger, for AnswerThink stockholders.
For a more complete description of voting, see the sections entitled
"Voting of Proxies" on pages 11 and 13.
Q: What do I do if I want to change my vote after I mail my proxy card?
A: If you want to change your vote, send the secretary of Think New Ideas or
AnswerThink, as applicable, a later-dated, signed proxy card before your
meeting or attend your meeting in person and vote. You may also revoke
your proxy by sending written notice to the secretary of Think New Ideas or
AnswerThink, as applicable, before your meeting.
For a more complete description of how to change your vote, see the
sections entitled "Voting of Proxies" on pages 11 and 13.
Q: If my shares are held in "street name" by my broker, will my broker vote my
shares for me?
A: Your broker will vote your shares only if you provide instructions on how
to vote by following the information your broker will provide you.
For a more complete description of voting shares held in "street name," see
the sections entitled "Voting of Proxies" on pages 11 and 13.
Q: Should stockholders of Think New Ideas send in their stock certificates
now?
A: No. After the merger is completed, AnswerThink will send written
instructions for exchanging Think New Ideas stock certificates for
AnswerThink stock certificates.
Q: When do you expect the merger to be completed?
A: We are working toward completing the merger as quickly as possible. We hope
to complete the merger during the fourth quarter of 1999.
For a more complete description of the conditions to the merger, see the
section entitled "Conditions to Completion of the Merger" on page 50.
Q: Will stockholders of Think New Ideas recognize a gain or loss on the
transaction?
A: If the merger is completed, stockholders of Think New Ideas should not
recognize gain or loss for United States federal income tax purposes,
except for any gain or loss that results from cash received instead of
fractional shares. However, Think New Ideas stockholders should consult
their own tax advisors to determine their particular tax consequences.
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For a more complete description of the tax consequences, see the section
entitled "Federal Income Tax Consequences of the Merger" on page 42.
Q: Am I entitled to dissenters' or appraisal rights?
A: Neither AnswerThink stockholders nor Think New Ideas stockholders are
entitled to dissenters' or appraisal rights in the merger.
Q: Whom should I call with questions about the merger?
A: Think New Ideas stockholders should call Think New Ideas Investor Relations
at (212) 216-0146. AnswerThink stockholders should call AnswerThink
Investor Relations at (305) 375-8005.
You may also obtain additional information about AnswerThink and Think New
Ideas from documents each of us files with the Securities and Exchange
Commission by following the instructions in the section entitled "Where You
Can Find More Information" on page 76.
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SUMMARY OF THE JOINT PROXY STATEMENT/PROSPECTUS
The Companies
AnswerThink. AnswerThink provides integrated consulting and technology
enabled solutions focused on the Internet and the electronic commerce
marketplace. AnswerThink delivers a wide range of integrated services as part of
its solutions.
Think New Ideas. Think New Ideas provides integrated marketing,
communications and technology solutions to large organizations. Think New Ideas'
solutions enable its clients to utilize the Internet and other interactive
technologies to enhance their competitive positions.
Summary of the Transaction
In the merger, Think New Ideas will become a wholly owned subsidiary of
AnswerThink. We have attached a copy of the merger agreement to this joint proxy
statement/prospectus as Annex A. We encourage you to read the merger agreement
carefully. We discuss the merger agreement more fully beginning on page 46.
We believe the merger will provide us with the opportunity to realize
several benefits, including the following:
. the merger will combine the "front end" marketing strategy and creative
Internet design resources of Think New Ideas with the "back end"
Internet development and integration, and process redesign resources of
AnswerThink to create a powerful "end-to-end" service provider for
existing and prospective customers;
. the merger will create a larger, more diverse consulting firm, enabling
us to compete more effectively against other large, integrated
consulting firms, and technology and interactive marketing solutions
providers by providing us with the capacity necessary to undertake
larger projects;
. the merger will combine the particular strengths of our companies and
will provide opportunities for generating significant incremental
revenue through cross-selling of services to our existing clients;
. the merger adds talent and depth to our respective practices; and
. the merger is expected to result in the elimination of some duplicative
costs and the achievement of some operating efficiencies.
There are also potential detriments to the merger, including the
following:
. operational and strategic challenges to integrating the two companies;
and
. the effect of the merger on key third party relationships.
We believe the merger's potential benefits outweigh the potential
detriments. However, the merger's potential benefits may not be achieved. See
the sections entitled "Risk Factors" on page 14, "Risks Relating to the Merger"
on page 14, "AnswerThink's Reasons for the Merger" on page 26, and "Think New
Ideas' Reasons for the Merger" on page 31.
Conditions to Completion of the Merger
Our respective obligations to complete the merger are subject to the
prior satisfaction or waiver of conditions. The conditions that must be
satisfied or waived before we can complete the merger include the following,
subject to exceptions and qualifications:
. Think New Ideas' stockholders must approve and adopt the merger
agreement and approve the merger;
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. AnswerThink's stockholders must approve the issuance of shares of
AnswerThink common stock in the merger;
. no injunction or order preventing the merger's completion may be in
effect;
. any applicable waiting periods under antitrust laws must expire or be
terminated;
. each of us must obtain all material permits, authorizations, consents
and approvals needed to complete the merger;
. each of our respective independent accountants must have delivered to
each of us a letter to the effect that the merger will qualify for
pooling-of-interests accounting treatment;
. Think New Ideas and its stockholders must receive an opinion of tax
counsel to the effect that the merger will qualify as a tax-free
reorganization;
. no material adverse effect may have occurred with respect to Think New
Ideas or AnswerThink;
. we must have complied in all material respects with our respective
agreements in the merger agreement;
. there must be no changes in the current securities litigation involving
Think New Ideas which would increase the likelihood in any material
respect that Think New Ideas or any of its directors or officers will
be liable for damages or losses, or that they will be found to have
engaged in fraudulent actions, not covered by Think New Ideas'
insurance policies; and
. there must be evidence that the current Think New Ideas directors' and
officers' insurance policies regarding matters occurring before the
merger will be extended and remain in full force and effect.
If either AnswerThink or Think New Ideas waives any conditions, we will
each consider the facts and circumstances at that time. We will then make a
determination as to whether we should resolicit proxies from you.
For a more complete description of the conditions to completion of the
merger, see the section entitled "Conditions to Completion of the Merger" on
page 50.
Votes Required for Approval
The holders of a majority of the outstanding shares of Think New Ideas
common stock owned as of September 15, 1999, the Think New Ideas record date,
must approve and adopt the merger agreement and approve the merger. Think New
Ideas stockholders are entitled to cast one vote per share of Think New Ideas
common stock. Think New Ideas stockholders holding approximately 18% of Think
New Ideas common stock as of the Think New Ideas record date have already agreed
to vote in favor of the merger.
The holders of a majority of the voting power of the shares of
AnswerThink common stock owned as of September 15, 1999, the AnswerThink record
date, which are represented in person or by proxy at the AnswerThink meeting
must approve the issuance of shares of AnswerThink common stock in the merger.
AnswerThink stockholders are entitled to cast one vote per share of AnswerThink
common stock. AnswerThink stockholders holding approximately 35% of AnswerThink
common stock as of the AnswerThink record date have agreed to vote in favor of
the merger.
For a more complete description of the votes required for approval of
the merger see the sections entitled "Vote and Quorum Required" on pages 10 and
12, and "Voting of Proxies" on pages 11 and 13.
Termination of the Merger Agreement
The merger agreement may be terminated at any time before the
completion of the merger, as summarized below.
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The merger agreement may be terminated by our mutual consent.
In addition, subject to qualifications, either of us may terminate the
merger agreement if:
. the conditions to completion of the merger are not satisfied because,
subject to a materiality qualification and an opportunity to cure: (1)
the other fails to perform any of the covenants or obligations under
any agreements in the merger agreement or (2) a representation or
warranty of the other in the merger agreement was or becomes untrue;
. a final court order prohibiting the merger is issued and is no longer
subject to appeal;
. the merger is not completed by March 20, 2000, without the fault of the
terminating party;
. the Think New Ideas stockholders do not approve the merger at the Think
New Ideas special meeting; or
. the AnswerThink stockholders do not approve the issuance of AnswerThink
shares at the AnswerThink special meeting.
AnswerThink may terminate the merger agreement and collect a $6.0
million termination fee from Think New Ideas if:
. Think New Ideas' board of directors withdraws or adversely modifies its
recommendation of the merger agreement;
. a person makes a tender offer or exchange offer for 20% or more of
Think New Ideas' common stock and the Think New Ideas board of
directors, within 10 business days after the offer is made, either (a)
does not recommend that the offer be rejected or (b) takes no position
as to the offer;
. Think New Ideas materially breaches the option agreement, which we
describe on page 55; or
AnswerThink may also terminate the merger agreement, without collecting
a termination fee from Think New Ideas, if any person, or any group which may be
formed, other than AnswerThink, Think New Ideas and their affiliates,
beneficially owns 50% or more of Think New Ideas' outstanding capital stock.
Think New Ideas may terminate the merger agreement if its board of
directors (a) determines to recommend a superior acquisition proposal to its
stockholders, (b) gives notice to AnswerThink and (c) pays a $6.0 million
termination fee and one half of the expenses related to printing, filing and
mailing of this joint proxy statement/prospectus.
For a more complete description of the manner in which the merger
agreement may be terminated, see the section entitled "Termination of the Merger
Agreement" on page 52.
Termination Fee
Think New Ideas has agreed to pay AnswerThink a termination fee of $6.0
million in some cases, and, in other cases, we have each agreed to pay to the
other a termination fee of $3.0 million, if the merger agreement is terminated.
We describe the circumstances that will give rise to each of these payments in
the section entitled "Payment of Termination Fee" on page 53.
No Other Negotiations Involving Think New Ideas
Until the merger is completed or the merger agreement is terminated,
Think New Ideas has generally agreed not to initiate, solicit, encourage or
facilitate any inquiries or engage in discussions that could be expected to
result in a proposal to acquire a significant portion of the securities or
assets of Think New Ideas. Think New Ideas has agreed to promptly inform
AnswerThink if it receives any acquisition proposal. Think New Ideas has also
agreed to inform AnswerThink of the status and details of any acquisition
proposal. Generally, if Think New Ideas
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receives a proposal that is superior to the AnswerThink merger, it may recommend
the superior proposal to its stockholders, provided it gives notice and makes
required payments to AnswerThink, and would breach its fiduciary duties by not
recommending the superior proposal. Notwithstanding such a superior proposal to
Think New Ideas, AnswerThink will retain its option to purchase Think New Ideas
common stock under the option agreement and the termination fees under the
merger agreement will still apply.
For a more complete description of these limitations on Think New
Ideas' actions, see the sections entitled "Termination of the Merger Agreement"
on page 52, "Payment of Termination Fee" on page 53 and "No Other Negotiations
Involving Think New Ideas" on page 49 of this joint proxy statement/prospectus.
The Stock Option Agreement
Think New Ideas granted AnswerThink an option to buy up to 2,008,288
shares of Think New Ideas common stock, subject to adjustment. The exercise
price of the option is $18.50 per share. The option is not currently
exercisable. Generally, AnswerThink may exercise the option in whole or in part
if the merger agreement is terminated because:
. the Think New Ideas board of directors withdraws, or adversely
modifies, its recommendation of the merger agreement or announces or
discloses its intention to do so;
. Think New Ideas' board of directors recommended or resolved to
recommend to Think New Ideas' stockholders an Acquisition Proposal;
. a person makes a tender offer or exchange offer for 20% or more of
Think New Ideas' common stock and the Think New Ideas board of
directors, within 10 business days after the offer, does not recommend
that the offer be rejected or takes no position as to the offer;
. Think New Ideas materially breaches the stock option agreement;
. Think New Ideas' board of directors determines to recommend a superior
proposal to Think New Ideas' stockholders, and Think New Ideas gives
required notice and pays the required termination fee to AnswerThink;
. Think New Ideas' stockholders do not approve the merger;
. Think New Ideas fails to perform any of its obligations under the
merger agreement;
. Think New Ideas materially breaches a representation or warranty in the
merger agreement; or
. the merger does not close on or before March 20, 2000, because Think
New Ideas does not fulfill an obligation under the merger agreement,
subject to Think New Ideas' right to request an additional 90 days to
fulfill its obligations.
AnswerThink required Think New Ideas to grant the option as a condition
to entering into the merger agreement. AnswerThink did this to increase the
likelihood that the merger will be completed. The option may discourage third
parties from acquiring a significant stake in Think New Ideas because if the
merger agreement is terminated and the option becomes exercisable, Think New
Ideas would be unable to account for future transactions as a
pooling-of-interests for a period of two years.
For a more complete description of the stock option agreement, see the
section entitled "The Stock Option Agreement" on page 55. The stock option
agreement is attached to this joint proxy statement/prospectus as Annex B, and
you are urged to read it in its entirety.
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The Voting Agreements
Eleven Think New Ideas stockholders, who owned 1,819,397 shares of Think
New Ideas common stock as of the Think New Ideas record date, have entered into
a voting agreement with AnswerThink. Under the voting agreement, these
stockholders have given AnswerThink an irrevocable proxy to vote all shares of
Think New Ideas common stock they own in favor of the merger. Twenty-two
AnswerThink stockholders, who owned 12,145,788 shares of AnswerThink common
stock as of the AnswerThink record date, have entered into a similar voting
agreement with Think New Ideas under which Think New Ideas can vote all of their
AnswerThink common stock in favor of AnswerThink's issuance of shares in the
merger. For a more complete description of these voting agreements, see the
sections entitled "Think New Ideas Stockholders' Voting Agreement" and
"AnswerThink Stockholders' Voting Agreement" on pages 56 and 57.
Opinions of Financial Advisors
In deciding to approve the merger, our boards of directors considered
opinions from our respective financial advisors as to the fairness of the
exchange ratio from a financial point of view. AnswerThink received an opinion
from its financial advisor, Raymond James & Associates, Inc., and Think New
Ideas received an opinion from its financial advisor, Salomon Smith Barney Inc.
For a more complete description of the financial advisors' opinions see the
sections entitled "Opinion of AnswerThink's Financial Advisor" on page 28 and
"Opinion of Think New Ideas' Financial Advisor" on page 33. These opinions are
attached as Annexes C and D, respectively. We urge you to read them.
Accounting Treatment of the Merger
We intend to account for the merger as a "pooling-of-interests" for
financial accounting purposes, in accordance with generally accepted accounting
principles and SEC rules. To help ensure that we can account for the merger as
a pooling-of-interests, affiliates of AnswerThink and Think New Ideas have
entered into agreements that restrict their ability to sell or encumber their
shares of AnswerThink or Think New Ideas common stock, as applicable, for a
period of time beginning 30 days before the closing of the merger. For a more
complete description of the accounting treatment of the merger see the section
entitled "Accounting Treatment of the Merger" on page 44. For a more complete
description of the affiliate agreements, see the section entitled "Restrictions
on Sales of Shares by Affiliates of Think New Ideas and AnswerThink" on page 44.
Interests of Think New Ideas' Directors and Executive Officers in the Merger
When considering the recommendations of Think New Ideas' board of
directors, you should be aware that Ronald Bloom, Think New Ideas' Chairman and
Chief Executive Officer, has interests in the merger that are different from, or
are in addition to, yours. Mr. Bloom will become a director of AnswerThink if
the merger closes and an executive officer of the combined company.
Restrictions on the Ability to Sell AnswerThink Stock
All shares of AnswerThink common stock received by Think New Ideas
stockholders in the merger will be freely transferable unless the holder is
considered an affiliate of either of AnswerThink or Think New Ideas under the
federal securities laws or the transfer is restricted by an affiliate letter
signed by the holder.
For a more complete description of transfer restrictions applicable to our
affiliates, see the section entitled "Restrictions on Sales of Shares by
Affiliates of Think New Ideas and AnswerThink" on page 44.
Comparative Market Price Information
Shares of common stock of both AnswerThink and Think New Ideas are listed
on the Nasdaq National Market. On June 24, 1999, the last full trading day
prior to the public announcement of the merger, AnswerThink's common stock
closed at $27.75 per share, and Think New Ideas' common stock closed at $16.50
per share. On
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September 15, 1999, AnswerThink's common stock closed at $14.69 per share, and
Think New Ideas' common stock closed at $9.88 per share. We urge you to obtain
current market quotations.
For a more complete description of market price information, see the
section entitled "Comparative Per Share Market Price Data" on page 58.
This summary may not contain all of the information that is important to
you. You should read carefully this entire document and the other documents we
reference for a more complete understanding of the merger. In particular, you
should read the documents attached to this joint proxy statement/prospectus,
including the merger agreement, which is attached as Annex A, the stock option
agreement, which is attached as Annex B, the opinion of Raymond James which is
attached as Annex C, and the opinion of Salomon Smith Barney Inc., which is
attached as Annex D.
In addition, we incorporate by reference important business and financial
information about AnswerThink and Think New Ideas into this joint proxy
statement/prospectus. See "Documents Incorporated by Reference in this Joint
Proxy Statement/Prospectus" on page 75. You may obtain the information
incorporated by reference into this joint proxy statement/prospectus without
charge by following the instructions in the section entitled "Where You Can Find
More Information" on page 76.
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THE ANSWERTHINK MEETING
Date, Time, Place and Purpose of AnswerThink's Meeting
AnswerThink's special meeting of stockholders will be held at 11:00 a.m.,
local time, on Wednesday, November 3, 1999 at the Hotel Inter-Continental Miami,
100 Chopin Plaza, Miami, Florida 33131. At the meeting, stockholders will be
asked to approve the issuance of AnswerThink's shares in the merger. The merger
agreement is attached as Annex A to this joint proxy statement/prospectus.
Record Date and Outstanding Shares
Only holders of record of AnswerThink common stock at the close of business
on September 15, 1999, the AnswerThink record date, are entitled to notice of
and to vote at the meeting. As of the close of business on the AnswerThink
record date, there were 34,796,733 shares of AnswerThink common stock
outstanding and entitled to vote. These shares were held of record by
approximately 390 stockholders, although AnswerThink has been informed that
there are in excess of 5,200 beneficial owners.
Vote and Quorum Required
Holders of AnswerThink's common stock are entitled to one vote for each
share held. Approval of the share issuance in the merger requires the
affirmative vote of the holders of a majority of the shares of AnswerThink
common stock present in person or by proxy at the meeting and entitled to vote
on the share issuance. Holders of a majority of the AnswerThink common stock
issued, outstanding and entitled to vote at the meeting must be present in
person or by proxy to constitute a quorum.
Share Ownership of Management and Other Affiliates
Directors, executive officers and their affiliates owning 12,137,506 shares
of AnswerThink common stock, or approximately 35% of the outstanding shares, on
the AnswerThink record date, have executed a voting agreement with Think New
Ideas, under which they have given Think New Ideas an irrevocable proxy to vote
their shares in favor of the share issuance. See "AnswerThink Stockholders'
Voting Agreement" on page 57.
Broker Non-Votes; Abstentions
Broker non-vote shares and abstentions will be included in determining the
number of shares represented at the meeting. Because the share issuance must be
approved by a majority of the shares present and entitled to vote at the
meeting, broker non-votes will not count as votes for or against the share
issuance, and abstentions will count as votes against the share issuance. A
broker, bank, custodian, nominee or other record holder of AnswerThink common
stock may indicate on a proxy that it does not have discretionary authority to
vote some shares on a particular matter. This is a broker non-vote.
Expenses of Proxy Solicitation
AnswerThink will pay the expenses of soliciting proxies to be voted at the
meeting. Following the original mailing of the proxies and other soliciting
materials, AnswerThink and its agents also may solicit proxies by mail,
telephone, telegraph or in person. AnswerThink has retained a proxy
solicitation firm, Corporate Investor Communications, Inc., to aid it in the
solicitation process. AnswerThink will pay that firm a fee equal to $5,500,
plus an additional amount for each stockholder contacted plus expenses.
Following the original mailing of the proxies and other soliciting materials,
AnswerThink will request brokers, custodians, nominees and other record holders
of AnswerThink common stock to forward copies of the proxy and other soliciting
materials to persons for whom they hold shares of AnswerThink common stock and
to request authority for the exercise of proxies. In such cases, AnswerThink,
upon the request of the record holders, will reimburse these holders for their
reasonable expenses.
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Voting of Proxies
The AnswerThink proxy accompanying this joint proxy statement/prospectus is
solicited on behalf of the AnswerThink board of directors for use at the
AnswerThink special meeting. Please complete, date and sign the accompanying
AnswerThink proxy and promptly return it in the enclosed AnswerThink envelope.
All properly signed proxies received by AnswerThink prior to the vote at the
meeting that are not revoked will be voted at the meeting according to the
instructions indicated on the proxies or, if no direction is indicated, to
approve the share issuance.
You may revoke your AnswerThink proxy at any time before it is exercised at
the meeting by taking any of the following actions:
. delivering to AnswerThink's secretary a written notice bearing a date later
than the date of the proxy, stating that the proxy is revoked;
. signing and delivering a proxy relating to the same shares and bearing a
later date prior to the vote at the meeting; or
. attending the meeting and voting in person, although attendance at the
meeting will not, by itself, revoke a proxy.
Please note, however, that if your shares are held of record by a broker,
bank or other nominee and you wish to vote them at the meeting, you must bring
to the meeting a letter from the broker, bank or other nominee confirming your
beneficial ownership of the shares.
No Appraisal Rights
Holders of AnswerThink common stock are not entitled to dissenters' rights
or appraisal rights with respect to the share issuance.
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THE THINK NEW IDEAS MEETING
Date, Time, Place and Purpose of Think New Ideas' Meeting
Think New Ideas' special meeting of stockholders will be held at 9:00 a.m.,
local time, on Wednesday, November 3, 1999 at the Hyatt Regency, 265 Peachtree
Street, NE, Atlanta, Georgia 30303. At the meeting, stockholders will be asked
to approve and adopt the merger agreement and approve the merger. The merger
agreement is attached to this joint proxy statement/prospectus as Annex A.
Record Date and Outstanding Shares
Only holders of record of Think New Ideas common stock at the close of
business on September 15, 1999, the Think New Ideas record date, are entitled to
notice of and to vote at the meeting. As of the close of business on the Think
New Ideas record date, there were 10,106,327 shares of Think New Ideas common
stock outstanding and entitled to vote. These shares were held of record by
approximately 180 stockholders, although Think New Ideas has been informed that
there are in excess of 400 beneficial owners.
Vote and Quorum Required
Holders of a majority of the Think New Ideas common stock issued,
outstanding and entitled to vote at the meeting must be present in person or by
proxy to constitute a quorum. If a quorum is not present, the meeting may be
adjourned until a quorum is obtained. Each stockholder is entitled to one vote
for each share of Think New Ideas common stock held. The affirmative vote of a
majority of the outstanding shares of Think New Ideas common stock is required
to approve and adopt the merger agreement and approve the merger. If no
instructions are indicated on an otherwise properly executed proxy, the shares
of common stock represented by the proxy will be voted as recommended by the
board of directors of Think New Ideas.
Share Ownership of Management and Other Affiliates
Directors, executive officers and their affiliates owning 1,780,507 shares
of Think New Ideas common stock, or approximately 18% of the outstanding shares,
on the Think New Ideas record date, have executed a voting agreement with
AnswerThink, under which they have given AnswerThink an irrevocable proxy to
vote their shares in favor of approval and adoption of the merger agreement and
approval of the merger. See "Think New Ideas Stockholders' Voting Agreement" on
page 56.
Broker Non-Votes; Abstentions
Abstentions and broker non-votes will be counted for purposes of
determining the presence (or absence) of a quorum for the transaction of
business at the special meeting but will not be counted as an affirmative vote
for purposes of determining whether the merger has been approved.
Expenses of Proxy Solicitation
Think New Ideas will pay the expenses of soliciting proxies to be voted at
the meeting. Following the original mailing of the proxies and other soliciting
materials, Think New Ideas and its agents also may solicit proxies by mail,
telephone, telegraph or in person. Think New Ideas has retained the services of
Georgeson & Company Inc. to assist in the solicitation of proxies and will pay a
fee of $6,500 plus reimbursement of expenses for such services. Following the
original mailing of the proxies and other soliciting materials, Think New Ideas
will request brokers, custodians, nominees and other record holders of common
stock to forward copies of the proxy and other soliciting materials to persons
for whom they hold shares of common stock and to request authority for the
exercise of proxies. Upon the request of the record holders, Think New Ideas
will reimburse them for their reasonable expenses.
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Voting of Proxies
The Think New Ideas proxy accompanying this joint proxy
statement/prospectus is solicited on behalf of the Think New Ideas board of
directors for use at the Think New Ideas special meeting. Please complete, date
and sign the accompanying Think New Ideas proxy and promptly return it in the
enclosed Think New Ideas envelope. All properly signed proxies received by
Think New Ideas prior to the vote at the meeting that are not revoked will be
voted at the meeting according to the instructions indicated on the proxies or,
if no direction is indicated, to approve and adopt the merger agreement and
approve the merger.
You may revoke your Think New Ideas proxy at any time before it is
exercised at the meeting, by taking any of the following actions:
. delivering to the Think New Ideas secretary a written notice bearing a date
later than the date of the proxy, stating that the proxy is revoked;
. signing and so delivering a proxy relating to the same shares and bearing a
later date prior to the vote at the meeting; or
. attending the meeting and voting in person, although attendance at the
meeting will not, by itself, revoke a proxy.
Please note, however, that if your shares are held of record by a broker,
bank or other nominee and you wish to vote them at the meeting, you must bring
to the meeting a letter from the broker, bank or other nominee confirming your
beneficial ownership of the shares.
No Appraisal Rights
Holders of Think New Ideas common stock are not entitled to dissenters'
rights or appraisal rights with respect to the merger.
Holders of Think New Ideas common stock should not send any certificates
representing Think New Ideas common stock. Following the effective time of the
merger, holders of Think New Ideas common stock will receive instructions for
the surrender and exchange of their stock certificates.
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RISK FACTORS
The terms of the merger involve certain risk factors. By voting in
favor of the merger, Think New Ideas stockholders will also be choosing to
invest in AnswerThink common stock, which in itself involves risks. In addition
to the other information contained or incorporated by reference in this joint
proxy statement/prospectus, you should carefully consider the following risk
factors in deciding whether to vote for the merger.
Risks Relating to the Merger
The Value of the AnswerThink Common Stock Received in the Merger Could
Be Reduced If the Market Value of AnswerThink's Common Stock Decreases.
If we complete the merger, each share of Think New Ideas common stock
will be exchanged for 0.70 shares of AnswerThink common stock. This exchange
ratio is fixed and will not be adjusted if the market price of AnswerThink's
common stock changes. A drop in AnswerThink's stock price before the closing of
the merger will result in a drop in the value that Think New Ideas stockholders
will receive in the merger. Also, Think New Ideas is not permitted to abandon
the merger or resolicit its stockholders' approval solely because of changes in
the market price of AnswerThink common stock. Accordingly, the specific value of
AnswerThink common stock that Think New Ideas stockholders will receive may
decrease between now and completion of the merger.
We May Not Realize the Merger's Potential Benefits.
We entered into the merger agreement with the expectation that the
merger will result in benefits including incremental revenues and potential cost
savings. We can only achieve these benefits and savings if we can integrate our
culture, processes, technology, operations and personnel timely and efficiently.
If we fail to do this, we may lose customers or key employees, or expected cost
savings may not be achieved. This integration could also divert our attention
from operations. Among the challenges involved in this integration is
demonstrating to our customers that the merger will not result in adverse
changes in client service standards or business focus and persuading our
personnel that our business cultures are compatible. We may not be able to
integrate our businesses timely or successfully and may not be able to realize
any of the merger's anticipated benefits or cost savings. If we fail to do these
things, it could effect the value of AnswerThink's common stock, impair
AnswerThink's finances and business prospects after the merger.
Think New Ideas' Chairman and Chief Executive Officer Has Different
Interests from You in Connection with the Merger.
Ronald Bloom, Think New Ideas' Chairman and Chief Executive Officer,
will become a director and executive officer of AnswerThink if the merger
closes. As a result, Mr. Bloom could be more likely to vote to approve the
merger agreement and the merger than if he did not hold these interests.
We May Lose Rights Under Our Contracts with Third Parties If We Do Not
Obtain Consents and Waivers.
We each have contracts with many of our suppliers, customers,
licensors, licensees, and other business partners. Under some of these
contracts, we have to obtain the consent, waiver, or approval of these other
parties in connection with the merger agreement. If we cannot do so, we may lose
the right to use intellectual property or other rights that are necessary for
the operation of our business. We have agreed to use all reasonable efforts to
secure the necessary consents, waivers and approvals. However, we cannot assure
you that we will be able to obtain all of the necessary consents, waivers, and
approvals. Our failure to do so could impair AnswerThink's finances and business
prospects, as well as Think New Ideas' client relationships.
If We Fail to Complete the Merger, We Might Suffer Financial Harm.
If Think New Ideas does not complete the merger, it may be subject to a
number of material risks, including the following:
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. Think New Ideas may be required to pay AnswerThink a termination fee of
either $6 million or $3 million, depending on the circumstances;
. an option granted to AnswerThink to purchase up to 19.9% of the
outstanding shares of Think New Ideas' common stock for $18.50 per
share may become exercisable; and
. the market price of Think New Ideas common stock may decline to the
extent that its current market price reflects a market assumption that
the merger will be completed.
Also, the public announcement of our failure to complete the merger could have
an adverse effect on both of our:
. sales and operating results;
. stock values; and
. abilities to attract and retain key management, marketing, and
technical personnel.
You should note that we will both have to pay the costs related to the merger,
such as legal, accounting, and financial advisor fees, even if we do not close
the merger.
If the merger is terminated and the Think New Ideas board of directors
determines to seek another merger or business combination, because of
AnswerThink's option to acquire Think New Ideas common stock and the termination
fee Think New Ideas may be required to pay AnswerThink, we cannot assure you
that Think New Ideas will be able to find a partner willing to pay an equivalent
or more attractive price than the merger consideration. In addition, while the
merger agreement is in effect and, subject to exceptions, Think New Ideas is
prohibited from soliciting, initiating, knowingly encouraging, or entering into
extraordinary transactions such as a merger, sale of assets, or other business
combination with any party other than AnswerThink. Furthermore, if the merger
agreement is terminated and the AnswerThink option to purchase Think New Ideas
common stock becomes exercisable, Think New Ideas will not be able to account
for future transactions as a "pooling-of-interests" for a period of two years.
This inability to obtain pooling-of-interests accounting treatment could
adversely affect Think New Ideas' ability to enter into future transactions.
Risks Relating to AnswerThink's Business
AnswerThink has a limited combined operating history and a history of
losses.
AnswerThink was formed in April 1997. AnswerThink has grown
substantially since then, both internally and through acquisitions. Although
some businesses AnswerThink has acquired have operated for some time,
AnswerThink has a limited history of combined operations. Consequently, its
historical financial information is not a good predictor of its future financial
condition and performance. AnswerThink had a net loss of $31.7 million for the
year ended January 1, 1999. AnswerThink has been expending significant funds to
build its infrastructure and hire consultants. AnswerThink's operating results
and financial condition will be adversely affected if its revenue does not
increase to cover its operating expenses. AnswerThink cannot assure you that it
will successfully increase its revenue or generate net income.
AnswerThink's quarterly operating results may vary.
AnswerThink's financial results may fluctuate from quarter to quarter.
In future quarters, AnswerThink's operating results may not meet public market
analysts' and investors' expectations. If that happens, the price of
AnswerThink's common stock may fall. Many factors can cause these fluctuations,
including
. the number, size, timing and scope of projects;
. customer concentration;
. long and unpredictable sales cycles;
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. contract terms of projects;
. degrees of completion of projects;
. project delays or cancellations;
. competition for and utilization of employees;
. how well we estimate the resources we need to complete projects;
. the integration of acquired businesses;
. pricing changes in the industry; and
. economic conditions specific to information technology consulting.
A high percentage of AnswerThink's operating expenses, particularly personnel
and rent, are fixed in advance of any particular quarter. As a result, if
AnswerThink experiences unanticipated changes in projects or in employee
utilization rates, AnswerThink could experience large variations in quarterly
operating results and losses in any particular quarter. Due to these factors, we
believe you should not compare AnswerThink's quarter-to-quarter operating
results to predict future performance.
AnswerThink is growing quickly. Future growth of AnswerThink's business
could make it difficult to manage resources.
AnswerThink is experiencing substantial growth which it may not be able
to manage effectively. AnswerThink's business, financial condition and results
of operations will be materially and adversely affected if AnswerThink fails to
manage growth effectively. AnswerThink plans to continue to expand its
consulting organization, both internally and through acquisitions. Growth has
stretched and will continue to stretch AnswerThink's resources. We expect that
AnswerThink will need to continue to hire and retain management personnel and
other employees. In addition, we must set fixed-price fees accurately, maintain
high employee utilization rates and maintain project quality, particularly if
the average size of our projects continues to increase.
AnswerThink has risks associated with potential acquisitions or
investments.
Since AnswerThink was founded, it has significantly expanded through
acquisitions. In the future, AnswerThink plans to pursue additional
acquisitions. AnswerThink will do this to:
. recruit well-trained, high-quality professionals;
. expand its service offerings;
. gain additional industry expertise;
. broaden its client base; and
. expand its geographic presence.
AnswerThink may not be able to integrate successfully recent or future acquired
businesses without substantial expense, delays or other operational or financial
problems. AnswerThink may not be able to identify, acquire or profitably manage
additional businesses. AnswerThink may also require debt or equity financing for
future acquisitions that may not be available on terms favorable to AnswerThink,
if at all. Also, acquisitions may involve a number of risks, including:
. diversion of management's attention;
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. failure to retain key acquired personnel;
. unanticipated events or circumstances;
. legal liabilities; and
. amortization of acquired intangible assets.
AnswerThink cannot assure you that client satisfaction or performance problems
at a single acquired firm will not have a material adverse impact on
AnswerThink's reputation as a whole. Further, AnswerThink cannot assure you that
its recent or future acquired businesses will generate anticipated revenues or
earnings. Any one of these risks could harm AnswerThink's business.
AnswerThink may not be able to hire, train, motivate, retain and manage
professional staff.
To succeed, AnswerThink must hire, train, motivate, retain and manage
highly-skilled employees. Competition for skilled employees who can perform the
services AnswerThink offers is intense. AnswerThink might not be able to hire
enough of them or to train, motivate, retain and manage the employees it hires.
This could hinder AnswerThink's ability to complete existing projects and bid
for new projects. Hiring, training, motivating, retaining and managing employees
with the skills AnswerThink needs is time-consuming and expensive.
AnswerThink could lose money on its contracts.
As part of its strategy, AnswerThink enters into capped or fixed-price
contracts, in addition to contracts based on payment for time and materials. If
AnswerThink miscalculates the resources or time needed for these projects, its
business could be harmed.
AnswerThink's markets are highly competitive.
AnswerThink competes in markets that are intensely competitive and
rapidly changing. We may not compete successfully with our competitors. We
currently compete for client assignments and experienced personnel principally
with the following:
. large accounting firms;
. systems consulting and implementation firms;
. service functions of application software firms;
. service functions of computer equipment companies;
. outsourcing companies;
. systems integration companies; and
. general management consulting firms.
Many of these competitors have significantly greater financial, technical and
marketing resources and greater name recognition than AnswerThink. AnswerThink
also competes with its clients' internal resources, particularly where these
resources represent a fixed cost to the client.
Competition may impose additional pricing pressures on AnswerThink. We
cannot assure you that AnswerThink will compete successfully with existing
competitors or with any new competitors.
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AnswerThink may lose large clients or significant projects.
AnswerThink generates much of its revenue from a limited number of
major clients. As a result, if we lose a major client or large project, our
revenues will be adversely affected. For example, during 1998, AnswerThink's 10
most significant clients accounted for approximately 21%, and four clients
accounted for approximately 11%, of net revenues. AnswerThink performs varying
amounts of work for specific clients from year to year. A major client in one
year may not use our services in another year. In addition, we may derive
revenue from a major client that constitutes a large portion of total revenue
for particular quarters. If we lose any major clients or any of our clients
cancel or significantly reduce the scope of a large project, our business,
financial condition and results of operations could be materially and adversely
affected. Also, if we fail to collect a large account receivable, we could be
subjected to significant financial exposure.
AnswerThink depends largely on its principal service offerings to
generate revenue.
AnswerThink has derived a substantial portion of its revenues from
projects based primarily on package software implementation and, to a lesser
degree, Year 2000 issue consulting. Any factors negatively affecting the demand
for package software implementation could have a material adverse effect on
AnswerThink's business, financial condition and results of operations. In
addition, the demand for Year 2000 consulting services is likely to decline as
Year 2000 issues are resolved. There can be no assurance that AnswerThink will
be successful in generating any additional business as part of its Year 2000
issue consulting service offering.
The Year 2000 issue may adversely affect AnswerThink.
Year 2000 problems could require AnswerThink to incur delays and
unanticipated expenses. These delays and expenses could have a material adverse
effect on AnswerThink's business, financial condition and results of operations.
AnswerThink may experience operations difficulties because of undetected errors
or defects in the technology used in its solutions or internal systems.
AnswerThink may become involved in disputes regarding year 2000 problems
involving solutions it developed or implemented or the interaction of its
solutions with other applications.
Lack of growth or decline in Internet usage could cause our business to
suffer.
AnswerThink expects to derive a significant portion of its revenue from
projects involving the Internet. The Internet is new and rapidly evolving. Our
business will be adversely affected if Internet usage does not continue to grow.
A number of factors may inhibit Internet usage. These factors include:
. inadequate network infrastructure;
. security concerns;
. inconsistent service quality; and
. lack of cost-effective, high-speed service.
On the other hand, if Internet usage grows, the Internet infrastructure
may not support the demands this growth will place on it. The Internet's
performance and reliability may decline. In addition, outages and delays have
occurred throughout the Internet network infrastructure and have interrupted
Internet service. If these outages or delays occur frequently in the future,
Internet usage could grow at a slower rate or decline.
We may also incur substantial costs to keep up with changes surrounding
the Internet. Unresolved critical issues concerning the commercial use and
government regulation of the Internet include the following:
. security;
. cost and ease of Internet access;
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. intellectual property ownership;
. privacy;
. taxation; and
. liability issues.
Any costs we incur because of these factors could harm our business.
AnswerThink has risks associated with technology and technological
change and depends on third-party software offerings.
AnswerThink's success will depend in part on its ability to develop
information technology solutions that keep pace with continuing changes in
information technology, evolving industry standards and changing client
preferences. We cannot assure you that AnswerThink will be successful in
adequately addressing these developments timely. We cannot assure you that
AnswerThink will be successful in the marketplace even if it addresses these
developments. Also, we cannot assure you that products or technologies others
develop will not render AnswerThink's services uncompetitive or obsolete.
AnswerThink derives a significant portion of its revenue from projects
in which it implements software developed by third parties, such as PeopleSoft,
Inc. and Oracle Corporation. AnswerThink's future success in its package
implementation consulting services depends largely on its relationship with
these organizations. We cannot assure you that AnswerThink will continue to
maintain a favorable relationship with these software developers. In addition,
if PeopleSoft and Oracle are unable to maintain their leadership positions
within the business applications software market, if AnswerThink's relationship
with these organizations deteriorates, or if these organizations elect to
compete directly with AnswerThink, AnswerThink's business could be harmed.
AnswerThink depends on its key personnel.
AnswerThink's future success depends in large part on the continued
services of a number of its key personnel, including its Chairman, President and
Chief Executive Officer, Ted A. Fernandez. The loss of the services of Mr.
Fernandez or any of its other key personnel could have a material adverse effect
on AnswerThink's business, financial condition and results of operations.
AnswerThink might not be able to prevent key personnel, who may leave its employ
in the future, from disclosing or using its technical knowledge, practices or
procedures. One or more of AnswerThink's key personnel might resign and join a
competitor or form a competing company. As a result, AnswerThink might lose
existing or potential clients.
The market price of AnswerThink common stock may fluctuate widely.
The market price of our common stock could fluctuate substantially due
to:
. future announcements concerning us or our competitors;
. quarterly fluctuations in operating results;
. announcements of acquisitions or technological innovations; or
. changes in earnings estimates or recommendations by analysts.
In addition, the stock prices of many technology companies fluctuate
widely for reasons which may be unrelated to operating results. Fluctuations in
our common stock's market price may affect our visibility and credibility.
-19-
<PAGE>
AnswerThink relies on its intellectual property rights.
AnswerThink relies upon a combination of nondisclosure and other
contractual arrangements and trade secret, copyright and trademark laws to
protect its proprietary rights and the proprietary rights of third parties from
whom AnswerThink licenses intellectual property. Although AnswerThink enters
into confidentiality agreements with its employees and limits distribution of
proprietary information, there can be no assurance that the steps AnswerThink
has taken in this regard will be adequate to deter misappropriation of
proprietary information or that AnswerThink will be able to detect unauthorized
use and take appropriate steps to enforce its intellectual property rights.
Although AnswerThink believes that its services do not infringe on the
intellectual property rights of others and that it has all rights necessary to
utilize the intellectual property employed in its business, AnswerThink is
subject to the risk of claims alleging infringement of third-party intellectual
property rights. Any claims could require AnswerThink to spend significant sums
in litigation, pay damages, develop non-infringing intellectual property or
acquire licenses to the intellectual property which is the subject of asserted
infringement.
We may be negatively affected by the pending Think New Ideas litigation.
If the class action lawsuit pending against Think New Ideas results in a
significant judgment, the combined company could be harmed. Think New Ideas and
certain of its officers and directors are defendants in a consolidated class
action lawsuit. The consolidated class action seeks to recover unspecified
damages, including punitive damages and other relief, as well as recovery of
costs and expenses, stemming from allegedly false and misleading statements made
by Think New Ideas and certain of its officers and directors concerning the
financial position and results of operations of Think New Ideas. Think New
Ideas has filed a motion to dismiss the lawsuit which has not been ruled upon as
of the date of this joint proxy statement/prospectus. Litigation poses inherent
risks and uncertainties and a substantial judgment in this litigation could
significantly harm AnswerThink.
-20-
<PAGE>
ANSWERTHINK CONSULTING GROUP, INC.
UNAUDITED SELECTED PRO FORMA COMBINED CONDENSED FINANCIAL DATA
The following tables present unaudited selected pro forma combined
condensed financial data for AnswerThink after giving effect to the merger with
Think New Ideas. The selected pro forma financial data presented below reflect
the operations of AnswerThink and Think New Ideas for the six-month periods
ended July 2, 1999 and July 3, 1998, and for the years ended January 1, 1999,
January 2, 1998, and December 31, 1996. The selected pro forma financial data
are presented for illustrative purposes only and are not necessarily indicative
of the results that would have been obtained if the merger had occurred at the
beginning of the periods presented (in the case of income statement items) or at
the dates of the balance sheet (in the case of balance sheet items), or that may
be obtained in the future. The selected unaudited pro forma combined condensed
financial data should be read in conjunction with the Unaudited Pro Forma
Combined Condensed Financial Information appearing elsewhere in this joint proxy
statement/prospectus. Pro forma operating results do not include estimated
merger related costs of $7.5 million.
<TABLE>
<CAPTION>
Six-Month Period Ended
---------------------------------
July 2, July 3,
1999 1998
---------- ----------
Consolidated Statement of (in thousands, except share and per share data)
Operations Data:
<S> <C> <C>
Net revenues......................................................... $ 120,370 $ 75,922
Costs and expenses:
Project personnel and expenses.................................... 67,758 38,062
Selling, general and administrative............................... 44,331 33,243
Settlement costs.................................................. -- --
Stock compensation expense(3)..................................... 180 63,886
Restructuring costs............................................... -- 921
Purchased research and development expense........................ -- 5,200
Impairment of capitalized software................................ 989 --
Merger related expenses........................................... 2,500 --
--------- ---------
Total costs and operating expenses.............................. 115,758 141,312
--------- ---------
Income (loss) from operations..................................... 4,612 (65,390)
Other income (expense):
Litigation settlement........................................... -- --
Interest income................................................. 479 316
Interest expense................................................ (415) (759)
--------- ---------
Income (loss) before income taxes and extraordinary loss............. 4,676 (65,833)
Income taxes......................................................... 3,148 227
--------- ---------
Income (loss) before extraodinary item............................... 1,528 (66,060)
Extraordinary loss on early extinguishment of debt................... 2,113 --
--------- ---------
Net loss............................................................. $ (585) $ (66,060)
========= =========
Net loss per diluted common share ................................... $ (0.01) $ (3.43)
========= =========
Weighted average common and common equivalent shares outstanding..... 42,550,216 19,287,458
========== ==========
<CAPTION>
Year Ended
-----------------------------------------------
January 1, January 2, December 31,
1999(1)(2) 1998(1) 1996
----------- ----------- ------------
Consolidated Statement of (in thousands, except share and per share data)
Operations Data:
<S> <C> <C> <C>
Net revenues......................................................... $ 167,517 $ 77,144 $ 28,930
Costs and expenses:
Project personnel and expenses.................................... 101,501 48,825 16,768
Selling, general and administrative............................... 60,162 33,376 17,882
Settlement costs.................................................. -- 1,903 --
Stock compensation expense(3)..................................... 63,886 23,043 --
Restructuring costs............................................... 921 921 1,732
Purchased research and development expense........................ 5,200 9,200 --
Impairment of capitalized software................................ -- -- --
Merger related expenses........................................... -- -- --
--------- --------- ---------
Total costs and operating expenses.............................. 231,670 117,268 36,382
--------- --------- ---------
Income (loss) from operations..................................... (64,153) (40,124) (7,452)
Other income (expense):
Litigation settlement........................................... 2,500 -- --
Interest income................................................. 958 796 306
Interest expense................................................ (1,589) (240) (140)
--------- --------- ---------
Income (loss) before income taxes and extraordinary loss............. (62,284) (39,568) (7,286)
Income taxes......................................................... (1,220) 340 246
--------- --------- ---------
Income (loss) before extraodinary item............................... (61,064) (39,908) (7,532)
Extraordinary loss on early extinguishment of debt................... -- -- --
--------- --------- ---------
Net loss............................................................. $ (61,064) $ (39,908) $ (7,532)
========= ========= =========
Net loss per diluted common share ................................... $ (2.46) $ (3.46) $ (1.88)
========= ========= =========
Weighted average common and common equivalent shares outstanding..... 24,844,497 11,520,653 4,004,609
========== ========== =========
</TABLE>
<TABLE>
<CAPTION>
July 2, January 1,
1999 1999
---------- ----------
(in thousands)
<S> <C> <C>
Balance Sheets Data:
Working capital.................................................................. $ 45,909 $ 49,707
Total assets..................................................................... 169,649 153,744
Total long-term liabilities...................................................... -- 6,833
Convertible preferred stock...................................................... -- --
Total shareholders' equity....................................................... 116,294 101,135
<CAPTION>
January 2, December 31,
1998 1996
---------- ------------
(in thousands)
<S> <C> <C>
Balance Sheets Data:
Working capital.................................................................. $ 15,349 $ 7,949
Total assets..................................................................... 86,686 25,002
Total long-term liabilities...................................................... 12,215 527
Convertible preferred stock...................................................... 10,040 --
Total shareholders' equity....................................................... 35,351 12,370
</TABLE>
(1) AnswerThink completed three purchase acquisitions during 1997 and two
during 1998. The results of operations of the acquired companies are
included in AnswerThink's consolidated results of operations from the
respective dates of the acquisitions.
(2) The pro forma combined operating results for the year ended January 1, 1999
include the historical operating results of Think New Ideas for the
six-month period ended June 30, 1998, which are also included in the pro
forma combined operating results of AnswerThink for the year ended January
2, 1998. The historical net revenues, total costs and operating expenses,
and net loss of Think New Ideas for the six-month period ended June 30,
1998 were $25,621, $53,578 and $28,086, respectively.
(3) Represents charges in connection with accelerated vesting of common stock
upon attainment of certain performance criteria.
-21-
<PAGE>
ANSWERTHINK SELECTED CONSOLIDATED FINANCIAL DATA
The tables below contain selected historical financial data for
AnswerThink. In February 1999, AnswerThink merged with triSpan, Inc. in a
transaction accounted for as a pooling-of-interests. All financial data
presented in the tables below have been restated to include the operating
results and financial position of triSpan. The information as of and for the
six-month periods ended July 2, 1999 and July 3, 1998 and for the years ended
January 1, 1999, January 2, 1998 and December 31, 1996 has been derived from
AnswerThink's consolidated financial statements, which are incorporated herein
by reference. The information as of and for the years ended December 31, 1995
and 1994 has been derived from the historical information of triSpan.
<TABLE>
<CAPTION>
Six-Month Period Ended Year Ended
------------------------ -----------------------------------------------------------------
July 2, July 3, January 1, January 2, December 31, December 31, December 31,
1999 1998 1999 (1) 1998 (1) 1996 1995 1994
---------- ---------- ---------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Consolidated Statement of (in thousands, except share and per share data)
Operations Data:
Net revenues........................... $ 94,314 $ 50,301 $ 118,156 $ 34,500 $ 11,493 $ 8,221 $ 5,206
Costs and expenses:
Project personnel and expenses...... 55,999 30,601 71,890 24,627 6,560 4,904 2,868
Selling, general and administrative. 26,119 16,289 38,517 16,682 4,909 2,672 2,259
Compensation related to vesting of
common shares(2).................. -- 40,843 40,843 -- -- -- --
Settlement costs.................... -- -- -- 1,903 -- -- --
Purchased research and
development expense............... -- -- -- 4,000 -- -- --
Merger related expenses............. 2,500 -- -- -- -- -- --
--------- --------- --------- --------- --------- --------- ---------
Total costs and operating expenses 84,618 87,733 151,250 47,212 11,469 7,576 5,127
--------- --------- --------- --------- --------- --------- ---------
Income (loss) from operations.......... 9,696 (37,432) (33,094) (12,712) 24 645 79
Other income (expense):
Litigation settlement.................. -- -- 2,500 -- -- -- --
Interest income........................ 293 140 680 509 20 15 14
Interest expense....................... (356) (681) (1,418) (152) (5) (15) --
--------- --------- --------- --------- --------- --------- ---------
Income (loss) before income taxes and
extraordinary loss.................. 9,633 (37,973) (31,332) (12,355) 39 645 93
Income taxes........................... 4,917 -- 325 -- -- -- --
--------- --------- --------- --------- --------- --------- ---------
Income (loss) before extraordinary loss 4,716 (37,973) (31,657) (12,355) 39 645 93
Extraordinary loss on early
extinguishment of debt.............. 2,113 -- -- -- -- -- --
--------- --------- --------- --------- --------- --------- ---------
Net income (loss)...................... $ 2,603 $ (37,973) $ (31,657) $ (12,355) $ 39 $ 645 $ 93
========= ========= ========= ========= ========= ========= =========
Net income (loss) per common share:
basic............................... $ 0.10 $(2.61) $(1.62) $(1.74) $ 0.05 $ 0.85 $ 0.12
========= ====== ====== ====== ========= ========= =========
Weighted average common shares
outstanding......................... 26,757,194 14,555,875 19,602,520 7,100,092 757,773 757,773 757,773
========== ========== ========== ========= ========== ========== ==========
Net income (loss) per common share:
diluted............................. $ 0.07 $ (2.61) $ (1.62) $ (1.74) $ 0.05 $ 0.85 $ 0.12
========= ========= ========= ========= ========= ========= =========
Weighted average common and common
equivalent shares outstanding....... 35,668,695 14,555,875 19,602,520 7,100,092 757,773 757,773 757,773
========== ========== ========== ========= ========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
July 2, January 1, January 2, December 31, December 31, December 31,
1999 1999 1998 1996 1995 1994
--------- ---------- ---------- ------------ ------------ ------------
Consolidated Balance Sheets Data: (in thousands)
<S> <C> <C> <C> <C> <C> <C>
Working capital.................................... $37,639 $45,107 $ 8,843 $ 340 $ 937 $ 394
Total assets....................................... 98,945 96,010 34,433 3,599 3,146 1,507
Total long-term liabilities........................ -- 6,833 12,215 12 -- --
Convertible preferred stock........................ -- -- 10,040 -- -- --
Total shareholders' equity......................... 76,824 68,959 2,848 996 1,302 656
</TABLE>
(1) AnswerThink completed three purchase acquisitions during 1997 and two
during 1998. The results of operations of the acquired companies are
included in AnswerThink's consolidated results of operations from the
respective dates of acquisitions.
(2) Represents charges in connection with accelerated vesting of common stock
upon attainment of certain performance criteria.
-22-
<PAGE>
THINK NEW IDEAS SELECTED CONSOLIDATED FINANCIAL DATA
The table below contains selected consolidated financial data of Think
New Ideas. The historical information of Think New Ideas for the fiscal years
ended June 30, 1999, 1998, 1997 and 1996 has been derived from Think New Ideas'
consolidated financial statements which are incorporated herein by reference.
The information as of and for the years ended June 30, 1995 and 1994 has been
derived from Think New Ideas' historical financial information.
<TABLE>
<CAPTION>
Years Ended June 30,
----------------------------------------------------------------------------------
Consolidated Statement of 1999 1998(1) 1997(1) 1996 1995 1994
Operations Data: ---- ------- ------- ---- ---- ----
(in thousands, except share and per share data)
<S> <C> <C> <C> <C> <C> <C>
Revenues....................................... $ 49,797 $ 42,644 $ 17,437 $ 9,823 $ 9,556 $ 8,479
Operating profit (loss)........................ (8,250) (27,412) (7,477) (937) 405 (549)
Income (loss) before income taxes.............. (8,049) (27,213) (7,325) (1,274) 290 623)
Net income (loss).............................. $ (8,308) $ (27,553) $ (7,571) $ (1,415) $ 58 $ (519)
Net loss per share: basic (2)................. $ (0.94) $ (4.36) $ (1.63) - - -
Weighted average shares outstanding (2)........ 8,844,708 6,315,087 4,638,337 - - -
Net loss per share: diluted (2)............... $ (0.94) $ (4.36) $ (1.63) - - -
Weighted average shares outstanding (2)........ 8,844,708 6,315,087 4,638,337 - - -
<CAPTION>
June 30,
----------------------------------------------------------------------------------
1999 1998 1997 1996 1995 1994
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Consolidated Balance sheet Data: (in thousands)
Working capital.............................. $ 8,456 $ 6,870 $ 8,079 $ 342 $ (319) $ (174)
Total assets................................. 66,904 52,253 21,402 7,109 3,268 2,494
Total long-term liabilities.................. 186 364 986 2,879 - 36
Total shareholders' equity................... 35,670 32,503 11,374 1,230 283 343
</TABLE>
(1) Think New Ideas completed acquisitions during 1997 and 1998. The results of
operations of the acquired companies are included in Think New Ideas'
consolidated results of operations from the date of each of the respective
acquisitions.
(2) Loss per share data for the periods through June 30, 1996 are not
considered meaningful and, therefore, are not presented.
-23-
<PAGE>
THE MERGER
This section of the joint proxy statement/prospectus describes our businesses
briefly and certain aspects of the proposed merger. While we believe that the
description covers the material terms of the merger and the related
transactions, this summary may not contain all of the information that is
important to you. You should read this entire document and the other documents
we refer to carefully for a more complete understanding of the merger. In
addition, we incorporate by reference important business and financial
information about each of us into this joint proxy statement/prospectus. See
"Documents Incorporated by Reference in this Joint Proxy Statement/Prospectus"
on page 75. You may obtain the information incorporated by reference in this
joint proxy statement/prospectus without charge by following the instructions in
the section entitled "Where You Can Find More Information" on page 76.
The Companies
AnswerThink Consulting Group, Inc.
1001 Brickell Bay Drive, Suite 3000
Miami, Florida 33131
Phone: (305) 375-8005
http://www.answerthink.com
AnswerThink provides integrated consulting and technology enabled solutions
focused on the Internet and web-enabled electronic commerce marketplace.
AnswerThink delivers a wide range of integrated services as part of its scalable
solutions. These services and solutions include
. benchmarking best practices;
. business process transformation;
. packaged software implementation;
. Internet commerce;
. decision support technology; and
. Year 2000 solutions.
These solutions span multi-entity business functions including
. finance and administration;
. human resources;
. information technology;
. sales and customer support; and
. supply chain management.
Think New Ideas, Inc.
45 West 36th Street, 12th Floor
New York, New York 10018
Phone: (212) 629-6800
http://www.thinkinc.com
Think New Ideas provides integrated marketing, communications and technology
solutions to Fortune 1000, e-business and ".com" companies. Think New Ideas'
solutions help its clients to utilize the Internet and other interactive
technologies to enhance their competitive positions, add new channels of
distribution, capture new market segments, build long-term customer
relationships and reduce operating costs. Think New Ideas focuses on
identifying opportunities for companies to restructure their marketing and
distribution strategies around interactive technologies and implementing
creative solutions to deliver their messages with the greatest impact. Think
New Ideas incorporates various technologies including customized interactive
applications, electronic commerce and electronic catalog technology, consumer
modeling and response technology and database development. Think New Ideas
integrates its core expertise through a standardized process that begins with
strategic planning and consulting and continues through implementation and post-
implementation review and maintenance. Think New Ideas'
-24-
<PAGE>
solutions help its clients determine and implement their business strategies,
build brand awareness, and effectively communicate information to their internal
and external constituents.
Background of the Merger
On March 24, 1999, the management of Think New Ideas and some members of
the Think New Ideas board of directors discussed Think New Ideas' corporate
strategies, technology vision, internal product development and acquisition
plans, as well as the impact on Think New Ideas of trends in the market place.
This discussion also included an assessment of various alternatives for
expanding Think New Ideas' geographic reach and strengthening Think New Ideas'
market position relative to both its traditional competitors and new entrants
into the integrated marketing communications services sector. The result of the
discussions led management to seek a financial advisor.
During the month of April 1999, representatives of the management and board
of directors of Think New Ideas met with Hambrecht & Quist, Broadview Capital
and Salomon Smith Barney to discuss possible corporate strategies.
During the second week of April 1999, Ron Bloom of Think New Ideas asked
Ted A. Fernandez of AnswerThink to meet with him to discuss the two companies'
service offerings and strategies. On April 16, 1999, Messrs. Fernandez and
Bloom held an initial meeting in Miami. Mr. Bloom wanted to introduce Think New
Ideas' skills and capabilities and wanted to learn more about AnswerThink and
its long-term strategy. This initial discussion led to a series of meetings
amongst other senior management at AnswerThink and Think New Ideas.
On April 22, 1999, representatives of Think New Ideas' management reported
the results of meetings with the aforementioned financial advisors to the full
board of directors of Think New Ideas. After careful consideration, the board
of directors of Think New Ideas determined to engage the services of Salomon
Smith Barney. Think New Ideas engaged Salomon Smith Barney to assist in
evaluating the financial aspects of strategic alternatives for Think New Ideas.
During the week of May 4, 1999, the management of Think New Ideas had
further telephonic conversations with Salomon Smith Barney regarding the terms
of a business combination between Think New Ideas and AnswerThink. On May 12,
1999, the parties entered into a mutual confidentiality agreement.
Beginning on May 17, 1999, certain members of AnswerThink's management
began their due diligence review of Think New Ideas. During AnswerThink's due
diligence review, representatives of AnswerThink had several discussions with
certain members of Think New Ideas' management. On May 27, 1999, Think New
Ideas signed an agreement with AnswerThink to negotiate exclusively with
AnswerThink until June 11, 1999. AnswerThink's counsel, Hogan & Hartson L.L.P.,
began their legal due diligence review of Think New Ideas at the offices of
Think New Ideas' counsel, Akin, Gump, Strauss, Hauer & Feld, L.L.P. on May 28,
1999. On June 8, 1999, Akin, Gump, Strauss, Hauer & Feld, L.L.P. began its due
diligence examination of AnswerThink at AnswerThink's executive offices. During
this period, AnswerThink's legal counsel distributed to Think New Ideas and its'
legal counsel a draft merger agreement and ancillary agreements. The parties and
their respective legal counsel had a number of telephone and electronic
communications regarding the draft merger documents and the terms of the merger.
On June 17, 1999, the full board of directors of Think New Ideas convened
to discuss the progress of and the timetable for the possible merger with
AnswerThink. Prior to that meeting, the management of Think New Ideas furnished
the board of directors of Think New Ideas with materials regarding AnswerThink,
including a draft of the merger agreement. The board of directors of Think New
Ideas discussed AnswerThink and its business and the potential benefits of a
business combination of AnswerThink and Think New Ideas. A report was presented
to the board of directors of Think New Ideas regarding the findings of Think New
Ideas' due diligence review of AnswerThink. At this meeting, the board of
directors of Think New Ideas also approved the engagement of Salomon Smith
Barney to render its opinion as to the fairness to the stockholders of Think New
Ideas, from a financial point of view, of the exchange ratio.
On June 17, 1999, AnswerThink senior management reviewed with the
AnswerThink board of directors the merger agreement and discussed the
negotiations with Think New Ideas which resulted in the draft merger
-25-
<PAGE>
agreement. AnswerThink's counsel attended the board meeting and answered
questions from the board of directors regarding terms of the merger agreement.
Raymond James, whom AnswerThink had previously engaged as its financial advisor,
also reviewed the draft merger agreement and provided its analyses. Raymond
James then formally advised the AnswerThink board of directors as to its
fairness opinion and stated that, as set forth in its draft fairness opinion and
subject to the provisions and qualifications thereof, Raymond James concluded
that the exchange ratio was fair to the holders of AnswerThink common stock from
a financial point of view. Raymond James provided its written opinion to the
same effect dated as of June 24, 1999. Following a review and discussion of the
definitive terms of the transaction, the fairness opinion of Raymond James and
numerous other relevant factors the AnswerThink board of directors preliminarily
approved the merger subject to the resolution of certain issues.
On June 18, 1999, the board of directors of Think New Ideas reconvened.
Akin, Gump, Strauss, Hauer & Feld, L.L.P. summarized the terms of the draft
merger agreement and reviewed certain issues raised by the merger agreement.
After the meeting, Mr. Fernandez was advised of the results of the meeting of
the Think New Ideas board of directors.
During the week following the meeting, certain members of Think New Ideas'
management and AnswerThink's management, along with their respective legal
counsel, continued negotiations of the terms of a possible merger. On June 21,
1999, at a special meeting of the board of directors of Think New Ideas, Think
New Ideas' management and counsel reviewed with the board of directors the
status of negotiations and identified the remaining issues to be resolved.
Following the meeting, revised drafts of the merger documents were distributed.
On June 22, 1999, pursuant to a unanimous written consent of the board of
directors of AnswerThink, the board of directors of AnswerThink authorized and
approved the merger agreement and the transactions contemplated thereby. The
board of directors also determined that the issuance of shares contemplated by
the merger agreement be submitted to a vote of AnswerThink stockholders and
unanimously recommended that such stockholders approve such issuance.
On June 23, 1999, the board of directors of Think New Ideas convened a
telephonic meeting to review the merger agreement. Mr. Bloom reviewed the
progress of negotiations and the benefits of the merger to Think New Ideas and
its stockholders. Akin, Gump, Strauss, Hauer & Feld, L.L.P. reviewed the terms
of the final merger agreement. Salomon Smith Barney presented its analysis
regarding the fairness of the merger from a financial point of view. Salomon
Smith Barney also rendered its oral opinion (which was subsequently confirmed in
writing) that, as of June 23, 1999, the exchange ratio was fair, from a
financial point of view, to the holders of Think New Ideas common stock. The
board of directors unanimously approved the merger agreement and related
agreements and determined to recommend that the Think New Ideas stockholders
vote in favor of approval and adoption of the merger agreement and the merger.
On June 24, 1999, each of AnswerThink and Think New Ideas executed the
merger agreement and the other related agreements, including the stock option
agreement and the voting agreements. AnswerThink and Think New Ideas then
issued a joint press release announcing the execution of the merger agreement.
AnswerThink's Reasons for the Merger
On June 22, 1999, the board of directors of AnswerThink concluded
unanimously that the merger was in the best interests of AnswerThink and its
stockholders, authorized and approved the merger and the merger agreement and
the issuance of shares of AnswerThink common stock in connection with the
merger, and determined to recommend that its stockholders approve the issuance
of shares of AnswerThink common stock in connection with the merger.
The decision of the board of directors of AnswerThink was based upon
potential benefits of the merger, including the following:
. the merger will combine the "front end" marketing strategy and creative
Internet design resources of Think New Ideas with the "back end" Internet
development and integration, and process redesign resources of AnswerThink
to create a powerful "end-to-end" service provider for existing and
prospective customers;
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<PAGE>
. the merger will create a larger, more diverse consulting firm, enabling
AnswerThink to compete more effectively against larger, integrated
consulting firms;
. the merger will combine the particular strengths of our companies and will
provide opportunities for significant cross-selling of services to our
existing clients and for generating significant incremental revenues;
. the merger will give AnswerThink access to Think New Ideas' specific skills
and depth of technical talent; and
. the merger is expected to result in the achievement of some operating and
revenue efficiencies.
In its evaluation of the merger, the AnswerThink board reviewed several
factors, including the following:
. historical information concerning AnswerThink's and Think New Ideas'
respective businesses, financial performance and condition, operations and
management, including reports filed with the SEC;
. AnswerThink management's view of the financial condition, results of
operations and businesses of AnswerThink and Think New Ideas before and
after giving effect to the merger and information regarding the merger's
effect on stockholder value;
. current financial market conditions and historical market prices,
volatility and trading information;
. the consideration Think New Ideas stockholders will receive in the merger
in light of comparable merger transactions;
. the opinion of Raymond James that, as of the date of its opinion and
subject to the considerations described in the opinion, the exchange ratio
in the merger is fair from a financial point of view to AnswerThink and its
stockholders;
. the belief that the terms of the merger agreement and the stock option
agreement are reasonable;
. the potential impact of the merger on AnswerThink's clients and employees;
. reports from management and legal, financial and accounting advisors as to
the results of the due diligence investigation of Think New Ideas; and
. the expectation that the merger will be accounted for as a pooling-of-
interests and will be a reorganization for federal income tax purposes.
The AnswerThink board also identified and considered a number of
potentially negative factors in its deliberations concerning the merger
including the following:
. the risk that the potential benefits of the merger may not be realized
fully;
. the possibility that the merger may not be closed, even if AnswerThink's
and Think New Ideas' security holders approve it;
. the risk that integrating Think New Ideas with AnswerThink might be more
difficult than anticipated;
. the risk of management and employee disruption associated with the merger,
including the risk that despite the efforts of the combined company, key
technical, sales and management personnel might not remain employed by the
combined company; and
. other applicable risks described in this joint proxy statement/prospectus
under "Risk Factors."
-27-
<PAGE>
The board concluded however, that on balance, the potential benefits of the
merger to AnswerThink and its stockholders outweighed the risks associated with
the merger.
The discussion of the information and factors considered by the AnswerThink
board is not intended to be exhaustive. In view of the variety of factors
considered in connection with its evaluation of the merger, the AnswerThink
board did not find it practicable to, and did not quantify or otherwise assign
relative weight to, the specific factors considered in reaching its
determination.
Recommendation of AnswerThink's Board of Directors
After careful consideration, the AnswerThink board of directors has
unanimously determined the merger agreement and the merger to be advisable and
fair to and in the best interests of AnswerThink and its stockholders.
AnswerThink's board of directors unanimously recommends approval of the issuance
of shares of AnswerThink common stock in connection with the merger.
Opinion of AnswerThink's Financial Advisor
AnswerThink retained Raymond James to render an opinion to its board of
directors as to the fairness, from a financial point of view, to the AnswerThink
stockholders, of the financial terms and conditions of the merger. With respect
to the investigations made or procedures followed by Raymond James in preparing
and rendering the fairness opinion, neither the AnswerThink board of directors
nor the AnswerThink management imposed any limitations on Raymond James.
AnswerThink and Think New Ideas and their management cooperated fully with
Raymond James in connection therewith. Raymond James rendered its written
opinion that as of June 24, 1999, the consideration to be paid for the common
stock of Think New Ideas was fair, from a financial point of view, to the
stockholders of AnswerThink.
The full text of the written opinion of Raymond James, dated June 24, 1999,
which sets forth assumptions made, matters considered and limits on the scope of
review undertaken, is attached as Annex C to this joint proxy
statement/prospectus and is incorporated by reference herein. AnswerThink
stockholders are urged to read this opinion in its entirety. Raymond James'
opinion, which is addressed to the AnswerThink board of directors, is directed
only to the fairness of the consideration paid to AnswerThink's stockholders
from a financial point of view. Raymond James' opinion does not constitute a
recommendation to any AnswerThink stockholder as to whether such stockholder
should vote his or her shares in favor of the issuance of AnswerThink common
stock in connection with the merger, nor does the Raymond James opinion address
any other aspect of the proposed merger or any related transaction. Raymond
James did not determine the amount of such consideration but merely evaluated
the consideration to be paid from a financial point of view. Raymond James
consents to the summarization of its opinion in, and attachment of its opinion
to, this joint proxy statement/prospectus. The summary of the opinion of
Raymond James set forth in this joint proxy statement/prospectus is qualified in
its entirety by reference to the full text of such opinion.
In connection with Raymond James' review of the proposed consideration to
be paid and the preparation of its opinion, Raymond James has, among other
things:
1. reviewed the AnswerThink annual report to stockholders on Form 10-K as
of and for the year ended January 1, 1999, the quarterly report to
stockholders as of and for the quarter ended April 2, 1999, and other
publicly available financial information of AnswerThink;
2. reviewed the Think New Ideas annual report to stockholders on Form 10-
K as of and for the year ended June 30, 1998, the quarterly reports to
stockholders on Form 10-Q as of and for the quarters ended September
30, 1998, December 31, 1998, and March 31, 1999, and other publicly
available financial information of Think New Ideas;
3. reviewed certain non-public information prepared by the management
teams of both AnswerThink and Think New Ideas, including financial
statements, financial projections, and other financial and operating
data concerning the companies;
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4. discussed the past and current operations and financial condition and
the prospects of both AnswerThink and Think New Ideas with the senior
executives of both companies;
5. reviewed the merger agreement and associated schedules and the
financial terms and conditions therein;
6. reviewed publicly available financial and stock market data with
respect to certain other companies in lines of business Raymond James
believes to be generally comparable to those of AnswerThink and Think
New Ideas;
7. reviewed the pro forma effects of the merger on the projected results
of AnswerThink; and
8. conducted other such financial studies and analyses as Raymond James
deemed relevant and necessary for the purposes of this opinion,
including a review of (a) historical and projected revenues, operating
earnings and net income of Think New Ideas and certain other publicly
held companies in businesses it believed to be comparable to Think New
Ideas; (b) the current and projected financial position and results of
operations of Think New Ideas; and (c) the general condition of the
securities markets.
As described in its opinion, Raymond James assumed and relied upon the
accuracy and completeness of all information that AnswerThink and Think New
Ideas or any other third party supplied or otherwise made available to Raymond
James and did not attempt to verify independently any such information. In
addition, Raymond James did not make or receive any independent evaluation or
appraisal of any of the assets or liabilities (contingent or otherwise) of
AnswerThink or Think New Ideas, nor has Raymond James been furnished with any
such evaluation or appraisal. Raymond James assumed that the financial
forecasts, estimates, projections and other information that AnswerThink and
Think New Ideas provided to it were prepared in good faith on reasonable bases
reflecting the best currently available estimates and judgments of the
management teams of AnswerThink and Think New Ideas. Raymond James relied upon
each party to advise it promptly if any such information previously provided to
or discussed with Raymond James became inaccurate or was required to be updated
during the period of its review.
Raymond James' opinion was based on economic, market, and other conditions
as in effect on, and the information available to it as of, the date of its
opinion, June 24, 1999. Raymond James is not obligated to reevaluate its
opinion. Raymond James did not express any opinion as to the range of prices at
which the AnswerThink stock might trade subsequent to the merger.
Financial Valuation Analyses
The following summarizes the material financial analyses and opinion that
Raymond James presented telephonically to the AnswerThink board of directors at
its meeting on June 17, 1999, and as updated in writing as of June 24, 1999, the
date on which the merger agreement was finalized and executed. Raymond James
considered these financial analyses in rendering the opinion described below.
This summary is not a complete description of the analyses underlying the
opinion of Raymond James or of information presented at meetings between Raymond
James and representatives of AnswerThink held in advance of the AnswerThink
board of directors meeting to consider and evaluate the merger.
Precedent Transaction Analysis. Raymond James presented to the AnswerThink
board of directors a summary of a precedent transaction analysis, which compared
four key financial ratios for five selected precedent Internet services company
combinations completed during 1999 prior to June 24, 1999 to the same four key
financial ratios projected for the proposed merger. The precedent combination
transactions consisted of: Proxicom combining with the adhoc Group; Sapient
combining with Adjacency Inc.; 24/7 Media Inc. combining with Sift Inc.; Think
New Ideas combining with Envision Group; and Razorfish Inc. combining with Spray
Network AB.
Raymond James examined the following four key financial ratios for these
five selected precedent Internet services company combinations: target company
enterprise value to target company gross sales; target company enterprise value
to target company earnings before interest, taxes, depreciation and amortization
("EBITDA"); target company enterprise value to target company earnings before
interest and taxes ("EBIT"); and target company equity value to target company
net income. Gross sales, EBITDA, EBIT and net income were calculated by
utilizing
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the financial statistics for the trailing twelve month period reported prior to
the consummation of the precedent company combinations.
Comparable Companies Analysis. Raymond James also presented to the
AnswerThink board of directors a summary financial comparison of Think New Ideas
to six public Internet services companies Raymond James deemed to be reasonably
comparable to Think New Ideas. The comparable companies consisted of: iXL
Enterprises Inc., Proxicom, Inc., Razorfish, Inc., Scient Corporation, USWeb
Corporation, and Modem Media.Poppe Tyson Inc.
Raymond James then compared the twelve key financial ratios for these
comparable companies to the same corresponding ratios for Think New Ideas under
the proposed merger. These twelve financial ratios consisted of four key
financial ratios calculated for three different time periods. The four key
financial ratios were enterprise value to gross sales; enterprise value to
EBITDA; enterprise value to EBIT; and equity value to net income. Raymond James
calculated gross sales, EBITDA, EBIT and net income for Think New Ideas by
utilizing (a) the latest trailing twelve months financial statistics that have
been publicly reported, (b) projections for calendar year 1999 results as
estimated by equity research analysts which report on each of the comparable
companies, and (c) projections for calendar year 2000 as estimated by these same
analysts.
Premium Analysis. Raymond James presented to the AnswerThink board of
directors an analysis of the premiums paid over the stock price of acquired
companies in selected merger transactions of comparable size which were
completed since the beginning of 1999, based on stock prices one day, one week
and four weeks prior to the announcement of the transaction. This analysis
demonstrated that, on average, the acquired company received a 26.9%, 34.2% and
52.5% premium over its stock price one day, one week and four weeks prior to the
announcement of the transaction, respectively. Raymond James noted that based
upon AnswerThink's closing stock price on June 24, 1999, the then equivalent per
share consideration offered in the merger represented a premium of 14%, 20% and
39% to Think New Ideas' closing price one day, one week, and four weeks prior to
the date (June 25, 1999) that the proposed merger was announced.
Discounted Cash Flow Analysis. Raymond James presented to the
AnswerThink board of directors the results of a discounted cash flow analysis
for calendar years 1999 to 2003 to estimate the present value of the stand-alone
unleveraged free cash flows that Think New Ideas is expected to generate if
Think New Ideas performs in accordance with certain internal management
forecasts. For purposes of this analysis, unleveraged free cash flows were
defined as unleveraged net income plus depreciation plus amortization less
capital expenditures less investment in working capital. Raymond James
performed its analyses based on financial forecasts and assumptions provided to
it by Think New Ideas and discussed with the management teams of both
AnswerThink and Think New Ideas. Raymond James used the year 2003 as the
terminal year for the analysis and calculated terminal values for the Company by
applying a range of multiples of revenues to the projected calendar year 2003
revenues for Think New Ideas. The unleveraged projected free cash flows and
terminal values were then discounted using a range of discount rates.
Opinion of Raymond James. During the June 17, 1999 telephonic meeting of
the AnswerThink board of directors, Raymond James gave its oral opinion that, as
of such date and based upon and subject to various qualifications and
assumptions described with respect to its opinion, the consideration to be
received by the Think New Ideas stockholders in the proposed merger was fair
from a financial point of view to the AnswerThink stockholders. Raymond James
subsequently updated its analysis and gave its written opinion that as of June
24, 1999, (the date on which the merger agreement was signed), the consideration
to be received by the Think New Ideas stockholders in the proposed merger was
fair from a financial point of view to the AnswerThink stockholders, subject to
various qualifications and assumptions described in its opinion.
The summary set forth above does not purport to be a complete description
of the analyses of data underlying Raymond James' opinion or its presentation to
the AnswerThink board of directors. The preparation of a fairness opinion is a
complex process and is not necessarily susceptible to a partial analysis or
summary description. Raymond James believes that its analyses must be
considered as a whole and that selecting portions of its analyses, without
considering the analyses taken as a whole, would create an incomplete view of
the process underlying the analyses set forth in its opinion. In addition,
Raymond James considered the results of all such analyses without assigning
relative weights to any of the analyses. Consequently, the ranges of valuations
resulting from any
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particular analysis described above should not be taken to be Raymond James'
view of the actual value of Think New Ideas.
In performing its analyses, Raymond James made numerous assumptions with
respect to industry performance, general business, economic and regulatory
conditions and other matters, many of which are beyond the control of
AnswerThink and Think New Ideas. The analyses that Raymond James performed are
not necessarily indicative of actual values, trading values or actual future
results which might be achieved, all of which may be significantly more or less
favorable than suggested by such analyses. Such analyses were prepared solely
as part of Raymond James' analysis of the fairness of the financial terms and
conditions of the merger to the AnswerThink stockholders from a financial point
of view and were provided to the AnswerThink board of directors. The analyses
do not purport to be appraisals or to reflect the prices at which businesses or
securities might be sold. In addition, as described above, the opinion of
Raymond James was one of many factors taken into consideration by the
AnswerThink board of directors in making its determination to approve the
merger. Consequently, the analyses described above should not be viewed as
determinative of the AnswerThink board of directors' or AnswerThink management's
opinion with respect to the value of Think New Ideas. AnswerThink placed no
limits of the scope of the analysis performed, or opinion expressed, by Raymond
James.
In connection with the merger, AnswerThink contracted with Raymond James
to provide the fairness opinion summarized herein. AnswerThink retained Raymond
James because of Raymond James' qualifications, expertise, and reputation.
Raymond James is actively involved in the investment banking business and
regularly undertakes the valuation of investment securities in connection with
public offerings, private placements, business combinations and similar
transactions. AnswerThink has agreed to pay Raymond James the following fees:
(1) $50,000, upon execution of the Raymond James engagement letter, (2)
$162,500, payable upon the delivery by Raymond James of its opinion, and (3) an
additional $112,500 upon the closing of the merger. AnswerThink will reimburse
Raymond James for its reasonable travel and other out-of-pocket expenses
incurred in connection with its engagement (including the reasonable fees and
disbursements of its counsel) and will indemnify Raymond James against certain
liabilities and expenses relating to or arising out of its engagement, including
certain liabilities under the federal securities laws. In the ordinary course
of business, Raymond James may trade in the securities of AnswerThink for its
own account and for the accounts of our customers and, accordingly, may at any
time hold a long or short position in such securities.
Factors Considered by the AnswerThink Board of Directors
The discussion of the information and factors considered and given weight
by the AnswerThink board of directors is not intended to be exhaustive. See the
section "AnswerThink's Reasons for the Merger" for a listing of some of the
factors that the AnswerThink board of directors considered in deciding to
recommend that the stockholders approve the issuance of shares of AnswerThink
common stock in connection with the merger. In view of the variety of factors
considered in connection with its evaluation of the merger agreement, the
AnswerThink board of directors did not find it practicable to, and did not,
quantify or otherwise assign relative weights to the specific factors considered
in reaching its determination. In addition, individual members of the
AnswerThink board of directors may have given different weights to different
factors in their consideration of the merger and merger agreement.
Think New Ideas' Reasons for the Merger
On June 23, 1999, the board of directors of Think New Ideas concluded
unanimously that the merger, the merger agreement and the transactions
contemplated thereby are advisable and fair to, and in the best interests of,
Think New Ideas and its stockholders, and determined to recommend that the
stockholders approve the merger agreement and the merger.
The decision of the board of directors of Think New Ideas was based upon
several potential benefits of the merger, including the following:
. the merger is expected to help position the combined company as a market
leader as a provider of total e-business solutions;
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. the merger is expected to generate strategic benefits for the combined
company;
. the merger is expected to benefit Think New Ideas employees by creating a
more opportunistic work environment enabling employees to develop new
skills and to work on more complex projects;
. the merger is expected to give Think New Ideas immediate access to
AnswerThink's specific skills and depth of technical talent;
. the merger is expected to enhance Think New Ideas' opportunity to realize
its strategic objective of becoming a leading end-to-end e-solutions
provider;
. the merger is expected to expand sales of Think New Ideas' marketing,
communications and technology services to current AnswerThink customers;
. the merger is expected to help Think New Ideas achieve greater market share
and access to the capital markets that are more difficult to achieve
through organic growth;
. the merger is expected to result in a combined company with the potential
for a higher blended growth rate than Think New Ideas as a stand-alone
company;
. the merger is expected to benefit Think New Ideas' customers by responding
to their increasing complex needs and by providing a broader range of
services and product offerings; and
. the merger is expected to reduce Think New Ideas' stockholders' risk as a
result of the diversification of service offerings and revenue bases.
In its evaluation of the merger, the Think New Ideas board reviewed several
factors, including the following:
. the terms and conditions of the merger agreement and the merger, including
the consideration Think New Ideas stockholders will receive in the merger
and the fairness of the terms and conditions;
. the complementary characteristics of the respective businesses, management
philosophies and corporate cultures of AnswerThink and Think New Ideas;
. the benefit of AnswerThink's experienced management and operational
infrastructure;
. an analysis of market opportunity for a company offering the combined
services of Think New Ideas and AnswerThink;
. AnswerThink's successful integration of its previously acquired companies;
. historical information concerning AnswerThink's and Think New Ideas'
respective businesses, financial performance and condition, operations and
management, including reports filed with the SEC;
. noticeable trends in the evolution of the competitive sector including the
market positions of new entrants into the public company arena;
. current and historical market conditions and market prices, volatility and
trading information;
. reports from management, legal, financial and accounting advisors as to the
results of due diligence investigations of AnswerThink;
. the opinion of Salomon Smith Barney that, as of the date of its opinion and
subject to the considerations described in the opinion, the exchange ratio
is fair to the holders of Think New Ideas common stock from a financial
point of view;
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. the expectation that the merger will qualify as a reorganization; and
. the expectation that the merger will be accounted for as a pooling-of-
interests.
The Think New Ideas board also identified and considered a number of
potentially negative factors in its deliberations concerning the merging
including the following:
. the risk that the potential benefits of the merger might not be fully
realized;
. the risk that integrating Think New Ideas and AnswerThink might be more
difficult than anticipated or might be delayed;
. the risk of market confusion and potential delay or reduction in or
cancellation of project engagements;
. the risk that the combined company would be unable to sustain profitability
after the merger;
. the risk that the combined company would experience slow growth relative to
AnswerThink's prior growth rate; and
. other applicable risks described in this joint proxy statement/prospectus
under "Risk Factors."
Think New Ideas' board believed that certain of these risks were unlikely
to occur or unlikely to have a material impact on the combined company, while
others could be avoided or mitigated by Think New Ideas or by AnswerThink, and
that, overall, the risks associated with the merger were outweighed by the
potential benefits.
The discussion of the information and factors considered by the Think New
Ideas board is not intended to be exhaustive. In view of the variety of factors
considered in connection with its evaluation of the merger, the Think New Ideas
board did not find it practicable to, and did not quantify or otherwise assign
relative weight to, the specific factors considered in reaching its
determination.
Recommendation of Think New Ideas' Board of Directors
After carefully evaluating these factors, both positive and negative, the
board of directors of Think New Ideas has unanimously determined that the merger
is advisable and in the best interests of Think New Ideas and its stockholders
and unanimously recommends that Think New Ideas stockholders vote for approval
and adoption of the merger agreement and approval of the merger.
In considering the recommendation of the Think New Ideas board of directors
with respect to the merger, you should be aware that certain directors and
officers of Think New Ideas have certain interests in the merger that are
different from, or are in addition to, the interests of Think New Ideas
stockholders generally. Please see the section entitled "Interests of Think New
Ideas' Directors and Executive Officers in the Merger" on page 41.
Opinion of Think New Ideas' Financial Advisor
Think New Ideas retained Salomon Smith Barney in a letter agreement dated
May 17, 1999 to review the fairness of the exchange ratio to the Think New Ideas
stockholders. Salomon Smith Barney rendered an opinion to the Think New Ideas
board of directors on June 23, 1999 to the effect that, based upon and subject
to the considerations and limitations set forth in such opinion, as of such
date, the exchange ratio was fair, from a financial point of view, to the Think
New Ideas stockholders.
The full text of Salomon Smith Barney's opinion, which sets forth the
assumptions made, general procedures followed, matters considered and limits on
the review undertaken, is included as Annex D to this document. The summary of
Salomon Smith Barney's opinion set forth below is qualified in its entirety by
reference to the full text of such opinion. You are urged to read the Salomon
Smith Barney opinion carefully and in its entirety.
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In connection with rendering its opinion, Salomon Smith Barney reviewed,
among other things, the following:
. the merger agreement;
. certain publicly available information concerning Think New Ideas and
AnswerThink;
. certain other financial information concerning Think New Ideas and
AnswerThink, including financial forecasts, furnished to Salomon Smith Barney by
the management of Think New Ideas and AnswerThink, respectively;
. certain publicly available information concerning the trading of, and the
trading market for, Think New Ideas common stock and AnswerThink common stock;
. certain publicly available information with respect to certain other
companies that Salomon Smith Barney believed to be comparable to Think New Ideas
or AnswerThink and the trading markets for certain of such other companies'
securities; and
. certain publicly available information concerning the nature and terms of
certain other transactions that Salomon Smith Barney considered relevant to its
inquiry.
Salomon Smith Barney also considered such other information, financial studies,
analyses, investigations and financial, economic and market criteria that it
considered relevant. Salomon Smith Barney also discussed the past and current
business operations and financial condition of Think New Ideas and AnswerThink,
as well as other matters Salomon Smith Barney believed relevant to its inquiry,
with certain officers and employees of Think New Ideas and AnswerThink,
respectively.
In its review and analysis and in arriving at its opinion, Salomon Smith
Barney assumed and relied upon the accuracy and completeness of all of the
financial and other information provided to it or publicly available and neither
attempted independently to verify nor assumed any responsibility for verifying
any of such information. Salomon Smith Barney did not conduct a physical
inspection of any of the properties or facilities of Think New Ideas or
AnswerThink, did not make or obtain or assume any responsibility for making or
obtaining any independent evaluations or appraisals of any of such properties or
facilities or any intellectual property owned, licensed or used by Think New
Ideas or AnswerThink, and Salomon Smith Barney was not furnished with any such
evaluations or appraisals. With respect to financial forecasts regarding Think
New Ideas and AnswerThink, Salomon Smith Barney relied on estimates provided by
the management of Think New Ideas and AnswerThink, respectively, and assumed
that the estimates had been reasonably prepared and reflected the best currently
available estimates and judgments of the management of Think New Ideas and
AnswerThink, respectively, as to the future financial performance of Think New
Ideas and AnswerThink, respectively. Salomon Smith Barney expressed no view
with respect to those financial forecasts or the assumptions on which they were
based. Salomon Smith Barney assumed that the merger will qualify as a tax-free
reorganization for United States federal income tax purposes, will be accounted
for as a pooling-of-interests for financial reporting purposes, and will be
consummated in a timely manner in accordance with the terms of the merger
agreement, without waiver of any of the conditions to the merger contained in
the merger agreement.
In conducting its analysis and arriving at its opinion, Salomon Smith
Barney considered such financial and other factors as it deemed appropriate
under the circumstances including, among others, the following:
. the historical and current financial position and results of operations of
Think New Ideas and AnswerThink;
. the business prospects of Think New Ideas and AnswerThink;
. the historical and current market for Think New Ideas common stock,
AnswerThink common stock and the equity securities of certain other companies
that Salomon Smith Barney believed to be comparable to Think New Ideas or
AnswerThink; and
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. the nature and terms of certain other merger and acquisition transactions
that Salomon Smith Barney believed to be relevant.
Salomon Smith Barney also took into account its assessment of general economic,
market and financial conditions as well as its experience in connection with
similar transactions and securities valuation generally. Salomon Smith Barney
was not asked to consider, and its opinion does not address, the relative merits
of the merger as compared to any alternative business strategy that might exist
for Think New Ideas. Salomon Smith Barney's opinion necessarily was based on
conditions as they existed and could be evaluated on the date of its opinion,
and Salomon Smith Barney assumed no responsibility to update or revise its
opinion based upon circumstances or events occurring after that date. Salomon
Smith Barney's opinion does not constitute an opinion or imply any conclusion as
to the price at which AnswerThink common stock will trade following consummation
of the merger. Salomon Smith Barney's opinion was, in any event, limited to the
fairness, from a financial point of view, of the exchange ratio to the holders
of Think New Ideas common stock and did not address Think New Ideas' underlying
business decision to effect the merger or constitute a recommendation of the
merger to Think New Ideas or a recommendation to any holder of Think New Ideas
common stock as to how such holder should vote with respect to the merger.
In connection with rendering its opinion, Salomon Smith Barney made a
presentation to the Think New Ideas board of directors on June 17, 1999, with
respect to certain analyses performed by Salomon Smith Barney in evaluating the
fairness of the exchange ratio to the holders of Think New Ideas common stock.
The following is a summary of that presentation. The summary of certain of the
financial analyses includes information presented in tabular format. In order
to understand the financial analyses used by Salomon Smith Barney, the tables
below must be read together with the text of each summary. The tables alone do
not constitute a complete description of the financial analyses. The following
quantitative information, to the extent it is based on market data, is, except
as otherwise indicated, based on market data as it existed at or prior to June
15, 1999 and does not necessarily reflect current or future market conditions.
Historical Trading Analyses.
Salomon Smith Barney performed analyses based on the historical trading
prices of Think New Ideas common stock and AnswerThink common stock and the
relationship between the two.
Implied Historical Exchange Ratios. Salomon Smith Barney derived implied
historical exchange ratios by dividing the closing price per share of Think New
Ideas common stock by the closing price per share of AnswerThink common stock
for each trading day in the calendar period from June 14, 1998 through June 14,
1999. Salomon Smith Barney calculated that the latest implied exchange ratio
(as of June 14, 1999) was 0.59, the highest implied exchange ratio during the
period was 1.67, and the lowest implied exchange ratio during the period was
0.22. Salomon Smith Barney also calculated the average implied exchange ratios
for each of the following calendar periods ending June 14, 1999:
---------------------------------------------------------
Last 12 Months 0.60
---------------------------------------------------------
Last 6 Months 0.43
---------------------------------------------------------
Last 3 Months 0.53
---------------------------------------------------------
Last Month 0.58
---------------------------------------------------------
Salomon Smith Barney noted that in each case described above, other than
the highest implied exchange ratio during the twelve-month period, the implied
exchange ratio or average implied exchange ratio was lower than the exchange
ratio of 0.70.
Implied Premium Analysis. Salomon Smith Barney analyzed the implied
premiums to a holder of a share of Think New Ideas common stock represented by
the exchange ratio of 0.70 and certain closing and average prices of Think New
Ideas common stock and AnswerThink common stock. By multiplying the exchange
ratio by the price of a share of AnswerThink common stock on June 15, 1999
($24.50) and comparing it to the price of a share of Think New Ideas common
stock, Salomon Smith Barney noted that the merger would yield a 22.5% premium to
a holder of Think New Ideas common stock with respect to the closing price of
Think New Ideas common stock as of June 15, 1999, a 21.6% premium to the average
closing price of Think New Ideas common stock for the 30-day period ending
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June 15, 1999 ($14.11), and a 61.6% premium to the average closing price of
Think New Ideas common stock for the 180-day period ending June 15, 1999
($10.61).
Implied Valuation Analyses.
Salomon Smith Barney performed analyses using publicly available
information concerning certain comparable companies and transactions, as well as
historical and projected financial information for Think New Ideas and
AnswerThink to derive certain implied valuation information for Think New Ideas
and AnswerThink.
Comparable Company Analysis. Salomon Smith Barney reviewed certain
publicly available financial, operating and stock market information for Think
New Ideas and seven other publicly traded companies that operate in the Internet
commerce and consulting and related sectors that Salomon Smith Barney deemed
comparable to Think New Ideas (Diamond Technology Partners Incorporated, iXL
Enterprises, Inc., Modem Media Poppe Tyson Inc., Proxicom Inc., Razorfish Inc.,
USWeb Corporation, and Xceed, Inc.). For Think New Ideas and each of these
companies, Salomon Smith Barney derived and compared, among other things:
. the ratio of each company's closing stock price on June 15, 1999 to (a) its
estimated earnings per share for 1999, and (b) its estimated earnings per share
for 2000; and
. the ratio of each company's firm value to (a) its revenue for the last
twelve months, (b) its annualized revenue for the latest fiscal quarter, (c) its
estimated revenue for 1999, (d) its estimated revenue for 2000, (e) its
estimated earnings before taking into account interest expense and taxes (EBIT)
for 1999, and (f) its estimated EBIT for 2000.
For the purposes of this analysis, forecasted financial information for the
comparable companies was derived from equity research reports published by
certain investment banks. Firm value was calculated as the sum of the value of:
. all shares of common stock, assuming the exercise of all in-the-money
options, warrants and convertible securities, less the proceeds from such
exercise; plus
. non-convertible indebtedness; plus
. non-convertible preferred stock; plus
. minority interests; plus
. out-of-the-money convertible securities; minus
. investments in unconsolidated affiliates and cash.
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The following table sets forth the results of these calculations:
- ----------------------------------------------------------------------
Ratio of Closing Price Comparable Companies
on June 15, 1999 to:
- ----------------------------------------------------------------------
Range Mean Median
-----------------------------------------
(a) Estimated 27.9x to 47.0x 37.5x 37.5x
Earnings Per
Share for 1999
(b) Estimated 21.5x to 29.6x 25.5x 25.5x
Earnings Per
Share for 2000
Ratio of Firm Value to:
(a) Revenue for the 3.5x to 19.9x 8.9x 5.9x
Twelve Months
(b) Last Quarter 3.2x to 14.6x 7.4x 5.6x
Annualized
Revenue
(c) Estimated 2.8x to 14.3x 7.2x 4.5x
Revenue for 1999
(d) Estimated 2.1x to 10.3x 5.2x 3.5x
Revenue for 2000
(d) Estimated EBIT 16.9x to 16.9x 16.9x 16.9x
for 1999
(d) Estimated EBIT 11.9x to 89.4x 50.7x 50.7x
for 2000
- ----------------------------------------------------------------------
N/C means that Salomon Smith Barney was unable to calculate the ratio because
Think New Ideas did not have positive earnings in the relevant period.
Salomon Smith Barney noted that the multiples that were calculated for
Think New Ideas were below the mean and median multiples derived for the
comparable companies in all cases, except for the ratio of closing stock price
on June 15, 1999 to estimated earnings per share for 2000. Using the data
calculated with respect to the comparable companies, Salomon Smith Barney
derived a reference range for the implied value of a share Think New Ideas
common stock of $14.00 to $19.00.
With respect to AnswerThink, Salomon Smith Barney reviewed certain publicly
available financial, operating and stock market information for AnswerThink and
four other publicly traded companies that operate in the Internet commerce and
consulting and related sectors that Salomon Smith Barney deemed comparable to
AnswerThink (Cambridge Technology Partners (Massachusetts), Inc., Diamond
Technology Partners, Incorporated, Sapient Corporation, and Whittman-Hart,
Inc.). For AnswerThink and each of these companies, Salomon Smith Barney
derived and compared the same ratios as discussed above with respect to Think
New Ideas. For the purposes of this analysis, forecasted financial information
for the comparable companies was derived from equity research reports published
by certain investment banks.
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The following table sets forth the results of these calculations:
- ----------------------------------------------------------------------
Ratio of Closing Price Comparable Companies
on June 15, 1999 to:
- ----------------------------------------------------------------------
Range Mean Median
-----------------------------------------
(a) Estimated 24.4x to 64.8x 40.4x 36.3x
Earnings Per
Share for 1999
(b) Estimated 17.1x to 45.3x 29.4x 27.5x
Earnings Per
Share for 2000
Ratio of Firm Value to:
(a) Revenue for Last 1.3x to 11.0x 4.9x 3.6x
Twelve Months
(b) Last Quarter 1.3x to 8.9x 4.1x 3.2x
Annualized
Revenue
(c) Estimated 1.3x to 7.7x 3.7x 2.9x
Revenue for 1999
(d) Estimated 1.0x to 5.5x 2.7x 2.1x
Revenue for 2000
(d) Estimated EBIT 13.1x to 42.8x 25.2x 22.5x
for 1999
(d) Estimated EBIT 8.2x to 28.7x 16.8x 15.2x
for 2000
- ----------------------------------------------------------------------
Salomon Smith Barney noted that the multiples for AnswerThink were above
the mean and median multiples derived for the comparable companies in all cases,
except for the mean ratio of closing stock price on June 15, 1999 to estimated
earnings per share for 2000. Using the data calculated with respect to the
comparable companies, Salomon Smith Barney derived a reference range for the
implied value of a share AnswerThink common stock of $25.00 to $33.00.
In presenting this analysis, Salomon Smith Barney noted that the comparable
companies used in this analysis were reasonably similar to Think New Ideas or
AnswerThink insofar as they participate in business segments similar to those of
Think New Ideas or AnswerThink, but noted that none of these companies has the
same technology, management, capital structure, operations and combination of
businesses and markets as Think New Ideas or AnswerThink.
Precedent Transactions Analysis. Salomon Smith Barney reviewed publicly
available information for nine completed merger or acquisition transactions in
the Internet commerce and consulting and related sectors announced since March
31, 1998, in which a public company acquired a privately held company. The
private company transactions included the following (in each case, the
acquiror's name is listed first and the acquired company's name is listed
second): (i) Keane, Inc./Jamison Gold, LLC; (ii) Sapient Corporation/Adjacency,
Inc.; (iii) AnswerThink/triSpan, Inc.; (iv) Sapient Corporation/Studio Achetype,
Inc.; (v) Rare Medium Group, Inc./ IO 360, Inc.; (vi) Rare Medium Group,
Inc./DigitalFacades Corporation; (vii) Platinum Technology International,
Inc./Vivid Studios; (viii) Computer Sciences Corporation/Onward Technologies
Inc.; and (ix) Renaissance Worldwide
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Inc./Neoglyphics Media, Inc. Salomon Smith Barney also reviewed publicly
available information for five completed or pending merger or acquisition
transactions in the Internet commerce and consulting and related sectors
announced since March 31, 1998, in which two publicly traded companies were
involved. The public company transactions included the following (in each case,
the acquiror's name is listed first and the acquired company's name is listed
second): (i) Aris Corporation/fine.com International Corp.; (ii) Computer
Associates International, Inc./Computer Management Sciences, Inc.; (iii) USWeb
Corporation/CKS Group, Inc.; (iv) Complete Business Solutions, Inc./Claremont
Technology Group, Inc.; and (v) Xerox Corporation/XL Connect Solutions, Inc.
For each of the private company transactions, Salomon Smith Barney derived
the ratio of the firm value of the target company based on the consideration
paid in the transaction to the target's revenue for the last twelve months prior
to the announcement of the transaction. Salomon Smith Barney noted that the
ratios ranged from 1.7x to 12.3x, with a mean of 4.1x and a median of 2.2x.
If the necessary data was available, Salomon Smith Barney derived the
following for each of the public company transactions:
. the ratio of the firm value of the acquired company based on the
consideration paid in the transaction to (a) revenue of the acquired company for
the last twelve months prior to the announcement of the transaction, (b) EBIT of
the acquired company for the last twelve months prior to the announcement of the
transaction, and (c) earnings before taking into account interest expense,
taxes, depreciation and amortization (EBITDA) of the acquired company for the
last twelve months prior to the announcement of the transaction; and
. the premium (or discount) paid in the transaction to the firm value of the
acquired company (a) one day prior to the announcement of the transaction, (b)
thirty days prior to the announcement of the transaction and (c) sixty days
prior to the announcement of the transaction.
With respect to certain financial information for the companies involved in the
precedent transactions, Salomon Smith Barney relied on information available in
public documents as well as equity research reports published by certain
investment banks.
The following table sets forth the results of these calculations:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
Ratio of Firm Value to: Range Mean Median
----------------------------------------------------
<S> <C> <C> <C>
(a) Acquired Company's Revenue for Last 12 2.0x to 4.8x 3.4x 3.4x
Months Prior to Announcement
- ---------------------------------------------------------------------------------------------------
(b) Acquired Company's EBIT for Last 12 25.9x to 49.6x 41.3x 48.5x
Months Prior to Announcement
- ---------------------------------------------------------------------------------------------------
(c) Acquired Company's EBITDA for Last 12 21.9x to 36.9x 30.2x 31.0x
Months Prior to Announcement
- ---------------------------------------------------------------------------------------------------
Premium/Discount Paid to Acquired
Company's Firm Value:
(a) 1 Day Prior to Announcement (11.1)% to 102.2% 30.4% 19.2%
- ---------------------------------------------------------------------------------------------------
(b) 30 Days Prior to Announcement (15.1)% to 127.5% 63.2% 77.9%
- ---------------------------------------------------------------------------------------------------
(c) 60 Days Prior to Announcement (13.1)% to 95.3% 42.6% 38.3%
- ---------------------------------------------------------------------------------------------------
</TABLE>
Using the data calculated with respect to the precedent transactions,
Salomon Smith Barney derived a reference range for the implied value of a share
of Think New Ideas common stock of $15.00 to $18.00. Salomon
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Smith Barney noted that the implied value of the per share consideration to be
paid in the merger derived by multiplying the exchange ratio by the closing
price of AnswerThink common stock on June 15, 1999 ($24.50) is $17.15, which is
within the reference range.
In presenting the results of its precedent transaction analysis, Salomon
Smith Barney noted that the merger and acquisition transaction environment
varies over time because of, among other things, macroeconomic factors such as
the availability of financing and conditions in equity markets. In addition, no
precedent transaction reviewed was identical to the merger because of, among
other things, differences in the subject companies and the form of consideration
paid. As a result, Salomon Smith Barney noted that an evaluation of the results
of its precedent transaction analyses necessarily involves judgments beyond the
purely mathematical, such as an assessment of macroeconomic factors and the
evaluation of differences between the financial and operating characteristics of
the subject companies involved in the precedent transactions, on the one hand,
and those of Think New Ideas and AnswerThink, on the other hand.
Discounted Cash Flow Analyses. Using cash flow projections provided by the
management of Think New Ideas and AnswerThink, respectively, Salomon Smith
Barney performed discounted cash flow analyses with respect to each company,
without taking into account synergies forecasted by management to result from
the merger. Based on information concerning each company's weighted average cost
of capital, Salomon Smith Barney utilized a range of discount rates from 13.0%
to 15.0% for Think New Ideas and 12.0% to 14.0% for AnswerThink. Salomon Smith
Barney utilized terminal value multiples for forecasted 2002 revenue ranging
from 1.0x to 3.0x for both companies. Based on this analysis, Salomon Smith
Barney derived a range for the implied equity value per share of Think New Ideas
common stock of $14.00 to $21.00 and a range for the implied equity value per
share of AnswerThink common stock of $27.00 to $34.00.
Merger Consequences Analysis.
Contribution Analysis. Salomon Smith Barney analyzed the relative
contributions of each of Think New Ideas and AnswerThink to the pro forma
combined company with respect to certain market and financial data. The
following table describes the relative contributions of Think New Ideas and
AnswerThink, respectively, to the pro forma combined company. The computations
in the table were based on historical financial data for each of Think New Ideas
and AnswerThink at, or for the twelve months ended, December 31, 1998,
forecasted financial information for each of Think New Ideas and AnswerThink for
1999, 2000 and 2001 as provided by management, and the closing prices of Think
New Ideas common stock and AnswerThink common stock as of June 15, 1999. In
performing this analysis, Salomon Smith Barney did not take into account any
anticipated cost savings, revenue enhancements or other potential effects of the
merger.
<TABLE>
<CAPTION>
Think
AnswerThink New Ideas
Contribution Contribution
------------ ------------
<S> <C> <C>
Firm Value 82.7% 17.3%
Estimated Revenue for 1999 78.9% 21.1%
Estimated Revenue for 2000 81.1% 18.9%
Estimated Revenue for 2001 83.2% 16.8%
Estimated EBITDA for 1999 88.5% 11.5%
Estimated EBITDA for 2000 81.6% 18.4%
Estimated EBITDA for 2001 83.7% 16.3%
Estimated Net Income for 2000 84.6% 15.4%
Estimated Net Income for 2001 86.4% 13.6%
</TABLE>
Salomon Smith Barney compared each of these percentage contributions to the
pro forma 17.6% ownership stake holders of Think New Ideas common stock would
have in the combined company based on the exchange ratio.
* * *
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The foregoing is a summary of the material financial analyses furnished by
Salomon Smith Barney to the Think New Ideas board of directors, but it does not
purport to be a complete description of the analyses performed by Salomon Smith
Barney or of its presentations to the Think New Ideas board of directors. The
preparation of financial analyses and fairness opinions is a complex process
involving subjective judgments and is not necessarily susceptible to partial
analysis or summary description. Salomon Smith Barney made no attempt to assign
specific weights to particular analyses or factors considered, but rather made
qualitative judgments as to the significance and relevance of the analyses and
factors considered. Accordingly, Salomon Smith Barney believes that its
analyses (and the summary set forth above) must be considered as a whole, and
that selecting portions of such analyses and of the factors considered by
Salomon Smith Barney, without considering all of such analyses and factors,
could create a misleading or incomplete view of the processes underlying the
analyses conducted by Salomon Smith Barney and its opinion. In its analyses,
Salomon Smith Barney made numerous assumptions with respect to Think New Ideas,
AnswerThink, industry performance, general business, economic, market and
financial conditions and other matters, many of which are beyond the control of
Think New Ideas and AnswerThink. Any estimates contained in Salomon Smith
Barney's analyses are not necessarily indicative of actual values or predictive
of future results or values, which may be significantly more or less favorable
than those suggested by such analyses. Estimates of values of companies do not
purport to be appraisals or necessarily to reflect the prices at which companies
may actually be sold. Because such estimates are inherently subject to
uncertainty, none of Think New Ideas, AnswerThink, the Think New Ideas board of
directors, the AnswerThink board of directors, Salomon Smith Barney or any other
person assumes responsibility if future results or actual values differ
materially from the estimates. Salomon Smith Barney's analyses were prepared
solely as part of Salomon Smith Barney's analysis of the fairness of the
exchange ratio to the holders of Think New Ideas common stock and were provided
to the Think New Ideas board of directors in that connection. The opinion of
Salomon Smith Barney was one of the factors taken into consideration by the
Think New Ideas board of directors in making its determination to approve the
merger agreement and the merger.
Salomon Smith Barney is an internationally recognized investment banking
firm engaged in, among other things, the valuation of businesses and their
securities in connection with mergers and acquisitions, restructurings,
leveraged buyouts, negotiated underwritings, competitive biddings, secondary
distributions of listed and unlisted securities, private placements and
valuations for estate, corporate and other purposes. Think New Ideas selected
Salomon Smith Barney to act as its financial advisor on the basis of Salomon
Smith Barney's international reputation and Salomon Smith Barney's familiarity
with Think New Ideas. Salomon Smith Barney and its predecessors and affiliates
had previously rendered investment banking and financial advisory services to
Think New Ideas and AnswerThink, for which they received customary compensation.
In addition, in the ordinary course of business, Salomon Smith Barney and its
affiliates may actively trade the securities of Think New Ideas and AnswerThink
for their own accounts and for the accounts of customers and, accordingly, may
at any time hold a long or short position in such securities. Salomon Smith
Barney and its affiliates (including Citigroup Inc. and its affiliates) may have
other business and financial relationships with Think New Ideas and AnswerThink.
Pursuant to Salomon Smith Barney's engagement letter, Think New Ideas
agreed to pay Salomon Smith Barney the following fees: (i) $50,000, payable
upon execution of the engagement letter, (ii) $200,000, payable upon the
delivery by Salomon Smith Barney of its opinion, and (iii) 1% of the total
proceeds or other consideration paid or received (including any debt assumed or
repaid) in connection with the merger less the amounts described in clauses (i)
and (ii) above. Think New Ideas has also agreed to reimburse Salomon Smith
Barney for its reasonable travel and other out-of-pocket expenses incurred in
connection with its engagement (including the reasonable fees and disbursements
of its counsel) and to indemnify Salomon Smith Barney against certain
liabilities and expenses relating to or arising out of its engagement, including
certain liabilities under the federal securities laws.
Interests of Think New Ideas' Directors and Executive Officers in the Merger
When considering the recommendations of Think New Ideas' board of directors,
you should be aware that Ronald Bloom, the Chairman and Chief Executive Officer
of Think New Ideas, will become AnswerThink's Chief Strategic Officer and a
member of the AnswerThink board of directors. As a result, Mr. Bloom could be
more likely to vote to approve the merger agreement and the merger than if he
did not hold these interests.
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<PAGE>
Completion and Effectiveness of the Merger
The merger will be completed when all of the conditions to completion of the
merger are satisfied or waived. This includes approval and adoption of the
merger agreement and approval of the merger by the Think New Ideas stockholders.
It also includes approval of the share issuance by the AnswerThink stockholders.
The merger will become effective upon the filing of a certificate of merger with
the State of Delaware.
Structure of the Merger and Conversion of Think New Ideas Common Stock
In the merger, a newly formed and wholly owned subsidiary of AnswerThink will
be merged with and into Think New Ideas. As a result of the merger, Think New
Ideas will become a wholly owned subsidiary of AnswerThink.
When we complete the merger, each outstanding share of Think New Ideas common
stock, will be converted into the right to receive 0.70 shares of AnswerThink
common stock. The number of shares of AnswerThink common stock issuable in the
merger will be proportionately adjusted for any stock split, stock dividend or
similar event with respect to Think New Ideas common stock or AnswerThink common
stock effected between the date of the merger agreement and the completion of
the merger. Also, options and warrants to purchase shares of Think New Ideas
common stock outstanding and unexercised immediately before the closing of the
merger will be converted into options or warrants, as applicable, to purchase
shares of AnswerThink common stock equal to the number of shares of Think New
Ideas common stock subject to the option or warrant multiplied by 0.70 with the
exercise price being divided by 0.70.
No certificate or scrip representing fractional shares of AnswerThink common
stock will be issued in the merger. Instead, stockholders of Think New Ideas
who would be entitled to receive a fractional share of common stock of
AnswerThink will receive a cash payment based on the market price of common
stock of AnswerThink.
Exchange of Think New Ideas Stock Certificates for AnswerThink Stock
Certificates
When the merger is completed, AnswerThink's exchange agent will mail to Think
New Ideas stockholders a letter of transmittal and instructions for use in
surrendering Think New Ideas stock certificates in exchange for AnswerThink
stock certificates. When you deliver your Think New Ideas stock certificates to
the exchange agent along with an executed letter of transmittal and any other
required documents, your Think New Ideas stock certificates will be canceled.
You will receive AnswerThink stock certificates representing the number of full
shares of AnswerThink common stock to which you are entitled under the merger
agreement. Think New Ideas stockholders will receive payment in cash, without
interest, in lieu of any fractional shares of AnswerThink common stock which
would have been otherwise issuable to them in the merger equal to the closing
price of AnswerThink common stock on the day that the merger is completed
multiplied by such fractional shares.
Think New Ideas stockholders are not entitled to any rights as stockholders
of AnswerThink, including the rights to receive any dividends or other
distributions on AnswerThink common stock, until the merger is completed and
they have surrendered their Think New Ideas stock certificates in exchange for
AnswerThink stock certificates.
AnswerThink will only issue Think New Ideas stockholders an AnswerThink stock
certificate or a check in lieu of a fractional share in a name in which the
surrendered Think New Ideas stock certificate is registered. If you wish to
have your certificate issued in another name you must present the exchange agent
with all documents required to show and effect the unrecorded transfer of
ownership and show that you paid any applicable stock transfer taxes.
Federal Income Tax Consequences of the Merger
The closing of the merger is conditioned upon the delivery of an opinion
from Think New Ideas' counsel stating the merger will constitute a
reorganization within the meaning of Section 368(a) of the Internal Revenue Code
of 1986, as amended. The opinion is subject to assumptions, limitations and
qualifications, and is based on the truth and accuracy of factual
representations made in the merger agreement and in exhibits to the registration
statement of which this joint proxy statement/prospectus is a part. Assuming
the merger qualifies as a tax-free
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<PAGE>
reorganization, then subject to the assumptions, limitations and qualifications
referred to in the opinion, the merger should result in the following federal
income tax consequences:
. No gain or loss will be recognized by the Think New Ideas stockholders upon
the exchange of Think New Ideas common stock solely for AnswerThink common
stock. The cash payment to Think New Ideas stockholders in lieu of fractional
shares of AnswerThink common stock will be treated as if the fractional shares
were issued as part of the exchange and then redeemed by AnswerThink. Under
section 302(a) of the Code, those cash payments will be treated as distributions
in full payment in exchange for the fractional AnswerThink shares hypothetically
redeemed. Therefore, Think New Ideas stockholders receiving cash in lieu of
fractional shares generally will recognize gain (or loss) to the extent that the
amount of cash exceeds (or is exceeded by) the portion of their adjusted tax
basis of Think New Ideas common stock that is allocable to the fractional
shares;
. Each Think New Ideas stockholders' aggregate tax basis in the AnswerThink
common stock received in the merger will equal the aggregate tax basis of the
Think New Ideas common stock it surrendered in the merger. If an exchanging
Think New Ideas stockholder recognizes gain or loss upon receiving cash in lieu
of fractional shares in the merger, that stockholder's basis in AnswerThink
common stock actually received will be reduced. The amount of the reduction
will equal the portion of the stockholder's tax basis in its surrendered stock
that is allocable to the fractional share interest considered to be exchanged
for cash;
. A Think New Ideas stockholder's holding period for AnswerThink common stock
received in the merger will include the time period during which it held the
Think New Ideas common stock, provided the Think New Ideas common stock is held
as a capital asset at the time of the merger;
. Neither AnswerThink nor Think New Ideas will recognize gain or loss solely
as a result of the merger.
The Internal Revenue Service has not issued a ruling in connection with the
merger. The tax opinion delivered by Think New Ideas' counsel does not bind the
IRS and the IRS is not precluded from asserting a contrary position.
Think New Ideas stockholders will be required to attach a statement to
their tax returns for the year of the merger that contains the information
listed in Treasury Regulation Section 1.368-3(b). The statement must include
each stockholder's tax basis in the stockholder's Think New Ideas common stock
and a description of the AnswerThink common stock received.
This tax discussion does not deal with all tax considerations that may be
relevant to you, such as (a) stockholders who are dealers in securities; (b)
foreign persons; (c) stockholders who acquired their shares in connection with
previous mergers involving Think New Ideas or an affiliate; or (d) stockholders
who acquired their shares in connection with stock option or stock purchase
plans or in other compensatory transactions.
This tax discussion also does not address the tax consequences of other
transactions effectuated before or after the merger (whether or not these
transactions are in connection with the merger). The discussion does not
address foreign, state or local tax considerations. ACCORDINGLY, THINK NEW
IDEAS STOCKHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE SPECIFIC TAX
CONSEQUENCES OF THE MERGER, INCLUDING APPLICABLE FEDERAL, STATE, LOCAL AND
FOREIGN TAX CONSEQUENCES TO THEM.
This tax discussion is based on the interpretation of the Code, applicable
Treasury Regulations, judicial authority and administrative rulings and
practice, all as of the date of this joint proxy statement/prospectus. We
cannot assure you that future legislative, judicial or administrative changes or
interpretations will not adversely affect the accuracy of the statements and
conclusions. Any changes or interpretations could be applied retroactively and
could affect the tax consequences of the merger to the Think New Ideas
stockholders.
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Accounting Treatment of the Merger
AnswerThink intends to account for the merger as a pooling-of-interests for
financial reporting and accounting purposes, under generally accepted accounting
principles. One of the merger's closing conditions is that each of our
independent accountants must have delivered to both of us a letter to the effect
that the merger will qualify for pooling-of-interests accounting treatment.
Under the pooling-of-interests method of accounting
. Think New Ideas' recorded assets and liabilities will be carried forward
to the combined company at their recorded amounts;
. the combined company's revenues and expenses will include Think New
Ideas' revenues and expenses for the entire fiscal year of the combined
company and Think New Ideas in which the merger occurs; and
. Think New Ideas' reported revenues and expenses for prior periods will be
combined with those of AnswerThink, whose financial statements will then
be restated.
Restrictions on Sales of Shares by Affiliates of Think New Ideas and AnswerThink
AnswerThink will register under the Securities Act the sale of the
AnswerThink common stock to be issued in the merger. These shares will be
freely transferable under the Securities Act, except for shares of AnswerThink
common stock issued to any person who is an affiliate of either of us. Persons
who may be deemed to be affiliates include individuals or entities that control,
are controlled by, or are under common control with, either of us and may
include our executive officers and directors, as well as our principal
stockholders. Affiliates may not sell their shares of AnswerThink common stock
acquired in the merger except under
. an effective registration statement under the Securities Act covering the
resale of those shares;
. Rule 145 under the Securities Act; or
. an exemption under the Securities Act.
Also, each of us must deliver to the other no later than 31 days before
the closing date, affiliate agreements. Under these agreements, our affiliates
may not dispose of or encumber any of their shares of AnswerThink common stock
until financial results covering at least 30 days of post-merger combined
operations of our companies are publicly reported. The affiliates are entering
these agreements to help assure that the merger qualifies as a pooling-of-
interests.
Regulatory Filings and Approvals Required to Complete the Merger
The merger is subject to the requirements of the Hart-Scott-Rodino
Antitrust Improvements Act, which prevents certain transactions from being
completed until required information and materials are furnished to the
Antitrust Division of the Department of Justice and the Federal Trade Commission
and the appropriate waiting periods end or expire. We have filed the required
information and materials with the Department of Justice and the Federal Trade
Commission and the applicable waiting period has terminated.
Neither of us is aware of any other material governmental or regulatory
approval required for completion of the merger.
Listing on the Nasdaq National Market of AnswerThink Common Stock to be Issued
in the Merger
It is a condition to the closing of the merger that the shares of
AnswerThink common stock to be issued in the merger be approved for listing on
the Nasdaq National Market, subject to official notice of issuance. We expect
this to occur upon closing of the merger.
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Operations after the Merger
Following the merger, Think New Ideas will operate as a wholly owned
subsidiary of AnswerThink. Think New Ideas' stockholders will become
AnswerThink stockholders. The AnswerThink amended and restated certificate of
incorporation and bylaws and Florida law govern the rights as stockholders of
AnswerThink. See "Comparison of Rights of Holders of AnswerThink Common Stock
and Think New Ideas Common Stock" on page 67.
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THE MERGER AGREEMENT
In this section of the joint proxy statement/prospectus, we describe
the merger agreement. While we believe that our description covers the merger
agreement's material terms, our summary may not contain all of the information
that is important to you. We have attached the merger agreement to this joint
proxy statement/prospectus as Annex A. We urge you to read it carefully, in its
entirety.
Representations and Warranties
We each made a number of representations and warranties in the merger
agreement. The representations and warranties cover aspects of our respective
businesses, financial condition, structure and other facts pertinent to the
merger. The representations and warranties in the merger agreement are
complicated and not easily summarized. You are urged to carefully read the
articles of the merger agreement entitled "Representations and Warranties of the
Company" and "Representations and Warranties of Acquiror and Merger Sub."
Think New Ideas' Representations and Warranties
Think New Ideas' representations and warranties include representations
as to:
. its corporate organization and qualification to do business;
. the effectiveness of, and its compliance with provisions of, its
certificate of incorporation and bylaws;
. its capitalization, including its common stock, preferred stock and
options and warrants to purchase its common stock;
. its board's approval of and authority to enter into the merger and
stock option agreements and the binding obligation on it of those
agreements;
. the non-existence of conflicts between the merger agreement's
provisions and (1) its certificate of incorporation and bylaws, (2)
other Think New Ideas agreements and (3) applicable law;
. the filing of, and the veracity of the information contained in, its
SEC filings, including its financial statements;
. its disclosure of material liabilities and lack of material adverse
effects having occurred that are not otherwise disclosed in its SEC
filings;
. litigation involving Think New Ideas;
. its licenses and permits;
. its compliance with applicable law, no unlawful payments having been
made and the payment of taxes;
. its intellectual property;
. its material contracts;
. its title to or right to use the properties it owns and leases, and its
assets;
. its employee benefit plans and labor relations and compliance with
employment and workplace related laws;
. environmental matters;
. its insurance coverage and policies;
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<PAGE>
. Think New Ideas' financial advisor and the financial advisor's fairness
opinion;
. the inapplicability of Delaware's anti-takeover statute to the merger;
. its and its affiliates actions as they pertain to the merger's proposed
accounting and tax treatment;
. information supplied by Think New Ideas in this joint proxy
statement/prospectus and the related registration statement filed by
AnswerThink; and
. the veracity of information it provided in connection with the merger.
AnswerThink's Representations and Warranties
AnswerThink's representations and warranties include representations as
to:
. its corporate organization and qualification to do business;
. the effectiveness of, and its compliance with provisions of, its
articles of incorporation and bylaws;
. its capitalization, including its common stock, preferred stock,
options to purchase its common stock and its employee stock purchase
plan;
. its board's approval of and authority to enter into the merger and the
binding obligation on it of the merger agreement;
. the non-existence of conflicts between the merger agreement's
provisions and (1) its articles of incorporation and bylaws, (2) other
AnswerThink agreements and (3) applicable law;
. the filing of, and the veracity of the information contained in, its
SEC filings, including its financial statements;
. its disclosure of its material liabilities and no material adverse
effect having occurred which is not disclosed in its SEC filings;
. litigation involving AnswerThink;
. its licenses and permits;
. its compliance with applicable law, no unlawful payments having been
made and the payment of taxes;
. its intellectual property;
. its material contracts;
. its employee benefit plans and its labor relations and compliance with
employment and workplace related laws;
. environmental matters;
. AnswerThink's financial advisor and the financial advisor's fairness
opinion;
. its and its affiliates' actions as they pertain to the merger's
proposed accounting and tax treatment;
. information supplied by AnswerThink in this joint proxy
statement/prospectus and the related registration statement it filed;
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<PAGE>
. brokers in connection with the merger; and
. the veracity of information it provided in connection with the merger.
AnswerThink's and Think New Ideas' Conduct of Business Before the Merger's
Completion
Each of us has agreed that, until the merger closes or unless the other
of us consents in writing, each of AnswerThink and Think New Ideas will:
. operate its business in the usual and ordinary course consistent with
past practices and applicable laws and licenses;
. timely prepare and file tax returns and materially accurate SEC
reports;
. preserve intact its present business organization;
. maintain its rights, franchises and insurance;
. retain the services of its principal officers and key employees;
. maintain its relationship with its respective principal customers and
suppliers; and
. keep its properties and assets in good repair and condition.
In addition, we have both agreed that, until the merger closes or
unless the other of us consents in writing, each of us will conduct our business
in compliance with specific restrictions relating to the following:
. declaring or paying dividends or making other distributions;
. splitting, combining, reclassifying, repurchasing and redeeming
securities;
. changing accounting methods in any material respect;
. taking actions which are intended or would likely make the party's
representations and warranties in the merger agreement untrue;
. taking actions that would likely prevent pooling-of-interests
accounting treatment for the merger; and
. not satisfying or violating the merger agreement's conditions.
Think New Ideas also agreed that, until the merger closes or unless
AnswerThink consents in writing, Think New Ideas will conduct its business in
compliance with specific restrictions relating to the following:
. employees and employee benefits;
. issuing and encumbering securities;
. liquidating, dissolving, reorganizing, consolidating, recapitalizing,
restructuring or merging;
. acquiring, disposing of and encumbering assets;
. modifying Think New Ideas' certificate of incorporation and bylaws;
. changing tax elections;
. borrowing money;
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. entering into transactions and agreements with affiliates;
. entering into or amending material contracts; and
. settling material claims.
The agreements related to the conduct of AnswerThink's and Think New
Ideas' business in the merger agreement are complicated and not easily
summarized. You are urged to carefully read the section of the merger agreement
entitled "Covenants."
Other Agreements
We have also reached additional agreements regarding
. providing reasonable access to one another's personnel, advisors,
properties and information;
. confidentiality;
. holding the special meetings;
. making public announcements regarding the merger;
. indemnification;
. using commercially reasonable efforts and taking further action to
complete the merger;
. complying with state securities laws; and
. publishing combined financial results after the closing of the merger.
No Other Negotiations Involving Think New Ideas
Until the merger is completed or the merger agreement is terminated,
Think New Ideas has agreed not to directly or indirectly take any of the
following actions:
. initiate, solicit, encourage or facilitate any inquiries or proposals
that constitute or may lead to an Acquisition Proposal (as defined
below);
. participate in any discussions or negotiations regarding any
Acquisition Proposal; and
. agree to, approve, recommend or endorse any Acquisition Proposal.
Think New Ideas has also agreed to (a) inform AnswerThink promptly of any
inquiries and proposals related to these matters, (b) provide to AnswerThink
copies of any written Acquisition Proposal and a summary of its material terms
and (c) keep AnswerThink informed as to any discussions or negotiations
regarding any activities relating to any Acquisition Proposal.
Under the merger agreement, if Think New Ideas' board of directors
receives an unsolicited bona fide written Acquisition Proposal, the board may
furnish information to, or discuss or negotiate with, the person who made the
proposal. The board may recommend this type of Acquisition Proposal to Think New
Ideas' stockholders if it:
. concludes in good faith after consulting with its financial advisor
that the proposal is a Superior Proposal (as defined below);
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. determines in good faith after consulting with its outside legal
counsel that it would breach its fiduciary duties to its stockholders
if it did not recommend the proposal to them;
. provides prompt written notice to AnswerThink, prior to negotiating or
discussing the proposal with, or providing information to, the
proposal's proponent; and
. enters a confidentiality agreement no less favorable to Think New Ideas
than the confidentiality agreement we have regarding the merger, prior
to providing information to the proposal's proponent.
Under the merger agreement, the term:
. "Acquisition Proposal" means an inquiry, offer or proposal regarding
any of the following (other than the transactions contemplated by the
merger agreement or the stock option agreement) involving Think New
Ideas or its subsidiaries: (a) any merger, reorganization,
consolidation, share exchange, recapitalization, business combination,
liquidation, dissolution, or other similar transaction involving, or,
any sale, lease, exchange, mortgage, pledge, transfer or other
disposition of, all or any significant portion of the assets or 10% or
more of the equity securities of, Think New Ideas or any of its
subsidiaries, in a single transaction or series of related transactions
which could reasonably be expected to interfere with the completion of
the merger; (b) any tender offer or exchange offer for 20% or more of
the outstanding shares of capital stock of Think New Ideas or any of
its subsidiaries or the filing of a registration statement under the
Securities Act in connection therewith; or (c) any public announcement
of a proposal, plan or intention to do any of the foregoing or any
agreement to engage in any of the foregoing; and
. "Superior Proposal" means a bona fide Acquisition Proposal made by any
person that the Think New Ideas board of directors determines in its
good faith judgment to be more favorable to the Think New Ideas
stockholders than the merger (based on the written opinion, with only
customary qualifications, of Think New Ideas' independent financial
advisor that the value of the consideration to Think New Ideas
stockholders provided for in the proposal exceeds the value of the
consideration to the stockholders provided for in the merger) and for
which financing, to the extent required, is then committed or which, in
the good faith judgment of the board of directors (based on the written
advice of Think New Ideas' independent financial advisor), is
reasonably capable of being obtained by such person.
Treatment of Think New Ideas Stock Options and Warrants
When we complete the merger, each outstanding option or warrant to
purchase Think New Ideas common stock will be converted, in accordance with its
terms, into an option or warrant, as the case may be, to purchase AnswerThink
common stock. Upon conversion, each option or warrant will be exercisable for a
number of shares of AnswerThink common stock equal to 0.70 times the number of
shares of Think New Ideas common stock which could have been obtained upon
exercise of the option or warrant before the merger. After conversion and upon
exercise, holders of these options and warrants, as the case may be, will
receive cash in lieu of fractional shares in each case as provided in the
applicable option or warrant. The exercise price will be equal to the exercise
price per share of Think New Ideas common stock subject to the option or warrant
before conversion divided by 0.70, rounded to the nearest whole cent. The other
terms of each option and warrant and the Think New Ideas option plans and
warrant agreements, as applicable, under which the options and warrants were
granted, will continue to apply.
After the merger is completed, AnswerThink will register on Form S-8
the sale by AnswerThink of the shares of AnswerThink common stock issuable with
respect to options granted under the Think New Ideas 1997 and 1998 stock option
plans. AnswerThink will use reasonable efforts to maintain the effectiveness of
that registration statement for as long as any of the options remain outstanding
and cause the securities to be approved for quotation on the Nasdaq National
Market.
Conditions to Completion of the Merger
Our respective obligations to complete the merger and the other
transactions contemplated by the merger agreement are subject to the
satisfaction or waiver of each of the following conditions before completion of
the merger:
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. AnswerThink's registration statement must be effective, no stop order
suspending its effectiveness may be in effect and no proceedings for
suspension of its effectiveness may be pending before or threatened by
the SEC;
. the merger agreement must be approved and adopted and the merger must
be approved by the holders of a majority of the outstanding shares of
Think New Ideas common stock;
. the issuance of shares of AnswerThink common stock in the merger must
be approved by a majority in total voting power of the shares of
AnswerThink common stock represented in person or by proxy at the
AnswerThink meeting;
. no law, regulation or order may be enacted or issued which has the
effect of preventing or prohibiting completion of the merger;
. the shares of AnswerThink common stock to be issued in the merger must
be authorized for listing on Nasdaq National Market, subject to notice
of issuance;
. all applicable waiting periods under applicable antitrust laws must
have expired or been terminated;
. Think New Ideas and its stockholders must receive from Think New Ideas'
tax counsel an opinion to the effect that the merger will constitute a
tax-free reorganization within the meaning of Section 368(a) of the
Internal Revenue Code. However, if counsel to Think New Ideas does not
render this opinion, this condition will be satisfied if counsel to
AnswerThink renders the opinion;
. each of us must obtain all material permits, authorizations, consents
and approvals needed to complete the merger; and
. each of our respective independent accountants must have delivered to
each of us, respectively, a letter to the effect that the merger will
qualify for pooling-of-interests accounting treatment.
Each of our obligations to complete the merger and the other
transactions contemplated by the merger agreement is subject to the satisfaction
by the other or the waiver of each of the following additional conditions before
completion of the merger:
. representations and warranties must have been true and correct as of
June 24, 1999 and at and as of the date the merger is to be
completed at and as if made as of such time, except to the extent
the representations and warranties address matters only as of a
particular date or time, in which case they must be true and correct
as of that date or time;
. all respective obligations under agreements and covenants in the
merger agreement must be performed; and
. no material adverse effect shall have occurred, or be reasonably
likely to occur, since June 24, 1999.
AnswerThink's obligations to complete the merger and the other
transactions contemplated by the merger agreement are subject to the
satisfaction or waiver of each of the following additional conditions before
completion of the merger:
. no litigation may be pending or threatened which would impede the
merger's closing, seek damages that may be material to Acquiror,
materially adversely affect the combined company's operations or
would have a material adverse effect on either of us;
. there must be evidence that the current Think New Ideas directors'
and officers' insurance policies regarding matters occurring before
the merger will be continued and remain in full force and effect;
and
. there must be no changes in the current securities litigation
involving Think New Ideas which would increase the likelihood in any
material respect that Think New Ideas or any of its directors or
officers will be
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liable for damages or losses, or that they will be found to have
engaged in fraudulent actions not covered by Think New Ideas'
insurance policies.
Termination of the Merger Agreement
The merger agreement may be terminated at any time prior to the
merger's completion, whether before or after either of our stockholders approve
the proposals at the respective special meetings, in the circumstances we have
listed below.
The merger agreement may be terminated by both AnswerThink and Think
New Ideas if we both consent in writing.
The merger agreement may be terminated by either AnswerThink or Think
New Ideas if any of the following events occur:
. the other materially breaches any of its representations,
warranties, covenants or agreements contained in the merger
agreement and causes the conditions to closing relating to those
representations, warranties, covenants and agreements to be
unsatisfied, provided, that if a breach is curable, the
non-breaching party may not terminate if the party in breach is
exercising reasonable efforts to cure the breach;
. there exists any final and nonappealable order preventing the
merger, provided, the party seeking to terminate the merger
agreement has used reasonable efforts to vacate or lift the order;
. without the fault of the terminating party, the merger is not
completed by March 20, 2000, provided, that if Think New Ideas fails
to fulfill its obligations under the merger agreement, generally,
Think New Ideas may have an additional 90 days to fulfill its
obligations if it is capable of doing so during that 90-day period;
. the Think New Ideas stockholders do not approve and adopt the merger
agreement and approve the merger at the Think New Ideas special
meeting; or
. the AnswerThink stockholders do not approve the issuance of
AnswerThink shares at the AnswerThink special meeting.
AnswerThink may terminate the agreement if:
. the board of directors of Think New Ideas withdraws, or modifies in
a manner adverse to AnswerThink, its recommendation of the merger
agreement or resolves, or publicly announces or discloses to a third
party its intention, to do any of the same;
. the board of directors of Think New Ideas recommends or resolves to
recommend to Think New Ideas' stockholders an Acquisition Proposal;
. a person makes a tender offer or exchange offer for 20% or more of
Think New Ideas' common stock and the Think New Ideas board of
directors, within 10 business days after the offer is made, either
(a) does not recommend that the offer be rejected or (b) takes no
position as to the offer;
. Think New Ideas materially breaches the option agreement; or
. any person, or any group which may be formed, other than
AnswerThink, Think New Ideas and their affiliates, beneficially owns
50% or more of Think New Ideas' outstanding capital stock.
Think New Ideas may terminate the merger agreement if its board of
directors (a) determines to recommend a Superior Proposal to its stockholders,
(b) gives notice to AnswerThink and (c) pays a $6.0 million termination fee and
one half of the expenses related to the merger.
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Payment of Termination Fee
Think New Ideas will pay AnswerThink a termination fee of $6.0 million:
(a) promptly, but not later than two business days after AnswerThink
terminates the merger agreement if
. Think New Ideas' board of directors withdraws, or modifies in a
manner adverse to AnswerThink, its recommendation of the merger
agreement or the merger or resolves, or publicly announces or
discloses to a third party its intention, to do any of the same,
. Think New Ideas' board of directors recommends or resolves to
recommend to Think New Ideas' stockholders an Acquisition Proposal
that constitutes a Superior Proposal,
. a person makes a tender offer or exchange offer for 20% or more of
Think New Ideas' outstanding common stock and the Think New Ideas
board of directors, within 10 business days after the offer is made,
either (a) does not recommend that the offer be rejected or (b)
takes no position as to the offer, or
. Think New Ideas materially breaches the option agreement;
or
(b) if either of us terminates the merger agreement
. because Think New Ideas failed to fulfill timely any obligation
under the merger agreement, and
. the merger was not completed by March 20, 2000, or the end of the
additional 90 day period Think New Ideas may have had to fulfill its
obligations,
and
. Think New Ideas closes an Acquisition Proposal or enters a
definitive agreement regarding an Acquisition Proposal within 12
months after the merger agreement is terminated.
In the case of (b), Think New Ideas will pay the $6.0 million termination fee to
AnswerThink at or prior to the closing of the Acquisition Proposal transaction
or within two business days of the signing of a definitive agreement in
connection with the Acquisition Proposal, whichever happens first.
If the merger agreement is terminated by:
. either of us because the Think New Ideas stockholders have not
approved and adopted the merger agreement and approved the merger at
the Think New Ideas special meeting; or
. AnswerThink because Think New Ideas (a) materially breached any of
its representations, warranties, covenants or agreements contained
in the merger agreement which caused the conditions to closing
relating to those representations, warranties, covenants and
agreements to be unsatisfied and (b) failed to exercise reasonable
efforts to cure the breach;
then Think New Ideas will pay AnswerThink a $3.0 million termination fee within
30 days after termination. If Think New Ideas closes an Acquisition Proposal or
enters a definitive agreement regarding an Acquisition Proposal within 12 months
after the merger agreement is terminated for either of these reasons, Think New
Ideas will pay AnswerThink an additional $3.0 million.
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If Think New Ideas terminates the merger agreement because AnswerThink:
. materially breached any of its representations, warranties,
covenants or agreements contained in the merger agreement, which
caused the conditions to closing relating to those representations,
warranties, covenants and agreements to be unsatisfied; and
. failed to exercise reasonable efforts to cure the breach;
then AnswerThink will pay Think New Ideas a $3.0 million termination fee within
30 days after termination.
Extension, Waiver and Amendment of the Merger Agreement and Expenses
We may amend the merger agreement before we complete the merger
provided we comply with applicable law.
Either of us may extend the other's time for the performance of any of
the obligations or other acts under the merger agreement, waive any inaccuracies
in the other's representations and warranties and waive compliance by the other
with any of the agreements or conditions contained in the merger agreement.
Each of us will pay our own costs and expenses including attorney's
fees, accounting fees and expenses. However, if we do not complete the merger,
we will share costs and expenses related to printing, filing and mailing this
joint proxy statement/prospectus, the registration statement of which it is a
part and regulatory applications.
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RELATED AGREEMENTS
This section describes agreements related to the merger agreement,
including the stock option agreement and the voting agreements. While we
believe that these descriptions cover the material terms of these agreements,
these summaries may not contain all of the information that is important to you.
The stock option agreement is attached as Annex B. We urge you to read it
carefully.
The Stock Option Agreement
The stock option agreement grants AnswerThink the option to buy up to
2,008,288 shares, but in no event more than 19.9% of the issued and outstanding
shares, of Think New Ideas common stock at an exercise price of $18.50 per
share. The number of shares issuable upon exercise of the option and the
exercise price of the option are subject to adjustment to prevent dilution.
AnswerThink required Think New Ideas to grant this stock option as a
prerequisite to entering into the merger agreement.
The option is intended to increase the likelihood that the merger will be
completed. The stock option agreement may have the effect of discouraging
persons who might now or in the future be interested in acquiring all of, or a
significant interest in, Think New Ideas' securities or its assets before the
completion of the merger. If the merger agreement is terminated and
AnswerThink's option to purchase Think New Ideas common stock becomes
exercisable, Think New Ideas will not be able to account for future transactions
as a "pooling-of-interests" for a period of two years. Consequently, this
inability to obtain pooling-of-interests accounting treatment could adversely
affect Think New Ideas' ability to enter into future transactions.
Subject to conditions, AnswerThink may exercise the option in whole or in
part if the merger agreement is terminated because:
. Think New Ideas' board of directors withdrew, or modified in a manner
adverse to AnswerThink, its recommendation of the merger agreement or
resolved, publicly announced or disclosed to any third party its intent to
do so;
. Think New Ideas' board of directors recommended or resolved to recommend to
Think New Ideas' stockholders an Acquisition Proposal;
. a person made a tender offer or exchange offer for 20% or more of Think New
Ideas' common stock and the Think New Ideas board of directors, within 10
business days after the offer was made, either (a) did not recommend that
the offer be rejected or (b) took no position as to the offer;
. Think New Ideas materially breached the stock option agreement;
. Think New Ideas' board of directors determined to recommend a Superior
Proposal to its stockholders and Think New Ideas provided notice to
AnswerThink and made required payments to AnswerThink;
. Think New Ideas' stockholders did not approve the merger or the merger
agreement;
. Think New Ideas failed to perform any of its covenants or obligations in
the merger agreement;
. Think New Ideas materially breaches any of its representations or
warranties in the merger agreement; or
. the merger did not close on or before March 20, 2000 (or June 18, 2000, if
extended as permitted under the merger agreement) because Think New Ideas
did not fulfill an obligation under the merger agreement.
Generally, AnswerThink may exercise the option within 18 months following any of
these events. However, if the option becomes exercisable because of the event
described in the last bullet point immediately above, AnswerThink has only 12
months to exercise it. The option terminates at the effective time or
termination of the merger other than under circumstances that would make it
exercisable.
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If, after the option becomes exercisable but before the option terminates,
any person or group:
(a) makes a bona fide proposal regarding:
(i) a tender offer or exchange offer for 50% or more of the then
outstanding shares of Think New Ideas common stock,
(ii) a merger, consolidation or other business combination with Think
New Ideas, or
(iii) an acquisition of a material portion of Think New Ideas'
assets;
or
(b) acquires 50% or more of the then outstanding shares of Think New
Ideas common stock;
then AnswerThink, instead of exercising the option, may request that Think New
Ideas pay AnswerThink an amount of cash equal to the Cancellation Amount, as
defined below. However, Think New Ideas will not have to pay the Cancellation
Amount if the merger agreement is terminated because the Think New Ideas
stockholders did not approve and adopt the merger agreement and approve the
merger, unless Think New Ideas consummates an Acquisition Proposal or enters a
definitive agreement regarding an Acquisition Proposal within 12 months after
the merger agreement is terminated. If Think New Ideas pays AnswerThink the
Cancellation Amount in full, the option will be canceled.
The "Cancellation Amount" is an amount equal to:
the excess over $18.50 (as adjusted, if applicable) of the greater of:
. the closing sale price of a share of Think New Ideas common stock as
reported on the Nasdaq on the day AnswerThink requests that Think New
Ideas pay the Cancellation Amount, or
. the highest price per share of Think New Ideas common stock offered or
proposed to be paid or paid by any person or group in connection with a
proposal under (a)(i), (a)(ii) or (b) above; or
. the aggregate consideration offered to be paid or paid in any
transaction or proposed transaction under (a)(iii) above, divided by the
number of shares of Think New Ideas common stock then outstanding;
multiplied by
the number of shares then covered by the option.
The Cancellation Amount and the amount of any profit AnswerThink receives from
selling shares of Think New Ideas common stock underlying the option will be
reduced by an amount equal to any termination fee Think New Ideas pays to
AnswerThink.
The stock option agreement grants registration rights to AnswerThink
with respect to the shares of Think New Ideas common stock covered by the
option.
Think New Ideas Stockholders' Voting Agreement
In connection with the merger, AnswerThink required 11 Think New Ideas
stockholders to enter into a voting agreement. The voting agreement gives
AnswerThink an irrevocable proxy to vote all of the shares of Think New Ideas'
common stock owned by these stockholders in favor of the merger.
As of the Think New Ideas record date, the Think New Ideas
stockholders who entered into the voting agreement collectively owned 1,819,397
shares of Think New Ideas common stock. Their share ownership represented
approximately 18.0% of the outstanding Think New Ideas common stock. None of
the Think New Ideas stockholders
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who are parties to the voting agreement were paid additional consideration for
entering into the agreement. Subject to restrictions in the affiliate
agreements, these Think New Ideas stockholders may sell any of their shares of
Think New Ideas common stock before the Think New Ideas special meeting.
The Think New Ideas stockholders' voting agreement will terminate upon the
earliest to occur of:
. the date and time that the merger becomes effective;
. the date the merger agreement is terminated; or
. if the merger agreement is terminated under certain circumstances and
Think New Ideas is obligated to pay AnswerThink a termination fee, the
date the fee is paid.
AnswerThink Stockholders' Voting Agreement
In connection with the merger, Think New Ideas required twenty-two
AnswerThink stockholders or persons who beneficially own AnswerThink common
stock to enter into a voting agreement. The voting agreement gives Think New
Ideas an irrevocable proxy to vote all of the shares of AnswerThink's common
stock owned by these stockholders in favor of issuance of shares of AnswerThink
common stock in connection with the merger.
As of the AnswerThink record date, the AnswerThink stockholders who
entered into the voting agreement collectively owned 12,145,788 shares of
AnswerThink common stock. Their share ownership represented approximately 34.9%
of the outstanding AnswerThink common stock. None of the AnswerThink
stockholders who are parties to the voting agreement were paid additional
consideration for entering into the agreement. Subject to restrictions in the
affiliate agreements, these AnswerThink stockholders may sell any of their
shares of AnswerThink common stock before the AnswerThink special meeting.
The AnswerThink stockholders' voting agreement will terminate upon the
earliest to occur of:
. the date and time that the merger becomes effective; or
. the date the merger agreement is terminated.
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COMPARATIVE MARKET PRICE AND PER SHARE DATA
AnswerThink common stock has been traded on the Nasdaq National Market
under the symbol ANSR since May 1998, when AnswerThink completed its initial
public offering. Think New Ideas common stock has been traded on the Nasdaq
National Market under the symbol THNK since November 1996, when Think New Ideas
completed its initial public offering.
The following table sets forth, for the quarters indicated, the high
and low sale prices per share of AnswerThink common stock and Think New Ideas
common stock as reported on the Nasdaq National Market.
<TABLE>
<CAPTION>
AnswerThink Think New Ideas
----------- ---------------
High Low High Low
---- --- ---- ---
<S> <C> <C> <C> <C> <C>
Quarter Ended: Quarter Ended:
September 30, 1997 N/A N/A September 30, 1997 $10.88 $4.06
December 31, 1997 N/A N/A December 31, 1997 13.00 7.25
March 31, 1998 N/A N/A March 31, 1998 17.94 7.63
July 3, 1998 $21.75 $13.00 June 30, 1998 39.25 13.00
October 2, 1998 28.00 15.75 September 30, 1998 33.25 5.56
January 1, 1999 27.31 13.38 December 31, 1998 16.13 3.00
April 2, 1999 36.63 24.50 March 31, 1999 18.75 6.13
July 2, 1999 28.94 18.75 June 30, 1999 18.00 9.63
</TABLE>
The following table sets forth per share closing prices of
AnswerThink's and Think New Ideas' common stock on the Nasdaq National Market as
of the dates specified and the pro forma equivalent market value of the
AnswerThink common stock to be issued for the Think New Ideas common stock in
the Merger.
<TABLE>
<CAPTION>
Think New Ideas
Last Reported Sale Price Common Stock
------------------------------------------- Pro Forma
Date AnswerThink Think New Ideas Equivalent Market
- ---- Common Stock Common Stock Value (a)
------------ ------------ ---------
<S> <C> <C> <C>
June 24, 1999 (b).............. $27.75 $16.50 $19.43
September 15, 1999 (c)......... $14.69 $ 9.88 $10.28
</TABLE>
(a) Determined by multiplying the closing sales prices of AnswerThink common
stock, as reported in the Wall Street Journal, on each date specified by
0.70, the exchange ratio.
(b) Last trading date prior to announcement of the execution of the merger
agreement.
(c) The most recent practicable date prior to the date of this joint proxy
statement/prospectus.
Think New Ideas stockholders are advised to obtain current market
quotations for AnswerThink common stock and Think New Ideas common stock. We
cannot give you any assurance as to the market prices of AnswerThink common
stock or Think New Ideas common stock at any time before the merger closes or
the market price of AnswerThink common stock at any time after the merger.
Because the exchange ratio is fixed, the exchange ratio will not be adjusted to
compensate Think New Ideas stockholders for decreases in the market price of
AnswerThink's common stock which could occur before the merger closes. If the
market price of AnswerThink common stock decreases or increases before the
merger closes, the value of the AnswerThink common stock to be received in the
merger in exchange for Think New Ideas common stock would correspondingly
decrease or increase.
Neither of us has ever paid cash dividends on our respective shares of
capital stock. Under the merger agreement, each of us has agreed not to pay cash
dividends before the closing of the merger, without written consent of the
other. If the merger is not completed, Think New Ideas board intends to continue
its policy of retaining all earnings to finance the expansion of its business.
The AnswerThink board intends to retain all earnings for use in its business and
has no present intention to pay cash dividends before or after the merger.
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The table below presents comparative selected historical per share data
of AnswerThink and Think New Ideas, pro forma combined per share data for
AnswerThink and Think New Ideas and equivalent pro forma per share data of Think
New Ideas. The financial data is based on, and should be read in conjunction
with, the historical consolidated financial statements and the notes to those
financial statements of AnswerThink and Think New Ideas. All per share data of
AnswerThink, Think New Ideas and pro forma are presented on a diluted basis. The
pro forma data is not necessarily indicative of results which will be obtained
on a combined basis. Think New Ideas equivalent pro forma per share amounts are
calculated by multiplying the pro forma combined amounts by an exchange ratio of
0.70.
<TABLE>
<CAPTION>
At or for
the Six-Month At or for the Year Ended
Period Ended ------------------------------------------------
------------- January 1, January 2, December 31,
July 2, 1999 1999 (a) 1998 (b) 1996 (c)
------------- ------------- ------------- ---------------
<S> <C> <C> <C> <C>
Net Income per Diluted Common Share:
AnswerThink - Historical...................... $ 0.07 $ (1.62) $ (1.74) $ 0.05
Think New Ideas - Historical.................. (0.55) (4.17) (4.36) (1.63)
Pro Forma Combined (d)........................ (0.01) (2.46) (3.46) (1.88)
Think New Ideas Equivalent Pro Forma (e)...... (0.01) (1.72) (2.42) (1.32)
Book Value per Common Share:
AnswerThink - Historical...................... 2.21 2.01 0.12 1.31
Think New Ideas - Historical.................. 3.53 3.54 3.85 1.74
Pro Forma Combined (d)........................ 2.78 2.51 1.18 2.32
Think New Ideas Equivalent Pro Forma (e)...... 1.95 1.76 0.83 1.62
</TABLE>
(a) Net income per diluted common share and book value per common share for the
year ended January 1, 1999 include the results of Think New Ideas as of and
for the 12-month period ended December 31, 1998.
(b) Net income per diluted common share and book value per common share for the
year ended January 2, 1998 include the results of Think New Ideas as of and
for the year ended June 30, 1998.
(c) Net income per diluted common share and book value per common share for the
year ended December 31, 1996 include the results of Think New Ideas for the
year ended June 30, 1997.
(d) Pro forma combined amounts shown above reflect the proposed merger with
Think New Ideas on a "pooling-of-interests" basis for each period shown as
if the merger had occurred as of January 1, 1996.
(e) Think New Ideas equivalent pro forma per share amounts are calculated by
multiplying the pro forma combined amounts by the 0.70 exchange ratio.
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UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION
The following unaudited pro forma combined condensed financial information
gives effect to the proposed merger between AnswerThink and Think New Ideas. We
will account for the merger as a pooling-of-interests, and the historical
financial position and operating results of AnswerThink and Think New Ideas will
be combined. The pro forma combined condensed financial information reflects
the financial position of AnswerThink and Think New Ideas as of July 2, 1999 and
the operating results of AnswerThink and Think New Ideas for the six-month
periods ended July 2, 1999 and July 3, 1998 and for the years ended January 1,
1999, January 2, 1998 and December 31, 1996.
The unaudited pro forma combined condensed statements of operations assume
that the merger occurred at the beginning of the periods presented. The
unaudited pro forma combined condensed balance sheet assumes the merger occurred
as of July 2, 1999. The historical financial information of AnswerThink as of
July 2, 1999 and for the six-month periods ended July 2, 1999 and July 3, 1998,
and the years ended January 1, 1999, January 2, 1998 and December 31, 1996 has
been derived from AnswerThink's historical consolidated financial statements
which are incorporated by reference. The historical financial information of
Think New Ideas as of June 30, 1999 and for the six-month periods ended June 30,
1999 and 1998 and for the years ended June 30, 1998, June 30, 1997 and June 30,
1996 has been derived from Think New Ideas' historical consolidated financial
statements, which are incorporated by reference. The historical financial
information of Think New Ideas has been re-classified to conform to
AnswerThink's historical presentation. The unaudited pro forma combined
condensed financial information should be read in conjunction with the
historical consolidated financial statements of AnswerThink and Think New Ideas
incorporated by reference.
The pro forma combined operating results for the year ended January 1, 1999
include the historical operating results of Think New Ideas for the six-month
period ended June 30, 1998 which are also included in the pro forma combined
operating results of AnswerThink for the year ended January 2, 1998. The
historical net revenues, total costs and operating expenses, and net loss of
Think New Ideas for the six-month period ended June 30, 1998 were $25,620,519,
$53,578,154 and $28,086,490, respectively. Pro forma weighted average common
shares outstanding for all periods presented represent the historical average
shares for AnswerThink combined with the historical average shares for Think New
Ideas after giving effect to the conversion of all outstanding shares of Think
New Ideas common stock into AnswerThink common stock by the exchange ratio
contemplated in the merger. Pro forma operating results do not include
estimated merger-related costs of $7.5 million.
The unaudited pro forma combined condensed financial information has been
included for comparative purposes only and does not purport to show what the
financial position or operating results would have been if the merger had been
consummated as of the dates indicated, nor should it be construed as
representative of future financial position or operating results.
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<PAGE>
ANSWERTHINK CONSULTING GROUP, INC.
PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
FOR THE SIX-MONTH PERIOD ENDED JULY 2, 1999
(unaudited)
<TABLE>
<CAPTION>
Historical Historical Think Pro Forma
AnswerThink New Ideas (1) Adjustments Pro forma
----------- ------------- ----------- ---------
<S> <C> <C> <C> <C>
Net revenues...................................................... $94,313,595 $26,056,173 $ -- $120,369,768
Costs and expenses: --
Project personnel and expenses................................. 55,999,110 11,759,563 -- 67,758,673
Selling, general and administrative............................ 26,119,027 18,211,665 -- 44,330,692
Merger related expenses........................................ 2,500,000 -- -- 2,500,000
Impairment of capitalized software............................. -- 988,566 -- 988,566
Stock compensation expense..................................... -- 180,400 -- 180,400
----------- ----------- ---------- ------------
Total costs and operating expenses......................... 84,618,137 31,140,194 -- 115,758,331
----------- ----------- ---------- ------------
Income (loss) from operations.................................. 9,695,458 (5,084,021) -- 4,611,437
Other income (expenses): --
Interest income................................................ 293,030 186,230 -- 479,260
Interest expense............................................... (355,673) (59,323) -- (414,996)
----------- ----------- ---------- ------------
Income (loss) before income taxes................................. 9,632,815 (4,957,114) -- 4,675,701
Income taxes...................................................... 4,917,279 230,482 (2,000,000)(2) 3,147,761
----------- ----------- ---------- ------------
Income (loss) before extraordinary loss........................... $ 4,715,536 $(5,187,596) $2,000,000 $ 1,527,940
=========== =========== ========== ============
Basic and diluted net income (loss) before extraordinary loss:
Basic.......................................................... $ 0.18 $ (0.55) $ 0.05
=========== =========== ============
Diluted........................................................ $ 0.13 $ (0.55) $ 0.04
=========== =========== ============
Weighted average common shares outstanding........................ 26,757,194 9,351,708 33,303,390
=========== =========== ============
Weighted average common and common equivalent shares outstanding.. 35,668,695 9,351,708 42,550,216
=========== =========== ============
</TABLE>
(1) Think New Ideas' historical statement of operations represents the
six-month period ended June 30, 1999.
(2) To reduce Think New Ideas' valuation allowance on its net deferred tax
asset due to the assumed utilization of its net operating loss
carryforwards after the proposed merger with AnswerThink.
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<PAGE>
ANSWERTHINK CONSULTING GROUP, INC.
PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
FOR THE SIX-MONTH PERIOD ENDED JULY 3, 1998
(unaudited)
<TABLE>
<CAPTION>
Historical Historical Think
AnswerThink New Ideas (1) Pro forma
----------- ------------- ---------
<S> <C> <C> <C>
Net Revenues............................................................ $50,301,212 $25,620,519 $75,921,731
Costs and expenses:
Project personnel and expenses....................................... 30,600,981 7,460,835 38,061,816
Selling, general and administrative.................................. 16,289,534 16,953,259 33,242,793
Stock compensation expense........................................... 40,843,400 23,043,450 63,886,850
Restructuring costs.................................................. -- 920,610 920,610
Purchased research and development expense........................... -- 5,200,000 5,200,000
------------ ------------ ------------
Total costs and operating expenses............................... 87,733,915 53,578,154 141,312,069
------------ ------------ ------------
Loss from operations................................................. (37,432,703) (27,957,635) (65,390,338)
Other income (expenses):
Interest income...................................................... 140,429 175,656 316,085
Interest expense..................................................... (681,089) (77,663) (758,752)
------------ ------------ ------------
Loss before income taxes............................................. (37,973,363) (27,859,642) (65,833,005)
Income taxes............................................................ -- 226,848 226,848
------------ ------------ ------------
Net loss................................................................ $(37,973,363) $(28,086,490) $(66,059,853)
============ ============ ============
Basic and diluted net loss per common share:
Basic................................................................ $ (2.61) $ (4.16) $ (3.43)
============= ============ =============
Diluted.............................................................. $ (2.61) $ (4.16) $ (3.43)
============= ============ =============
Weighted average common shares outstanding.............................. 14,555,875 6,759,404 19,287,458
============ ============ ============
Weighted average common and common equivalent shares outstanding........ 14,555,875 6,759,404 19,287,458
============ ============ ============
</TABLE>
(1) Think New Ideas' historical statement of operations represents the
six-month period ended June 30, 1998.
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<PAGE>
ANSWERTHINK CONSULTING GROUP, INC.
PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JANUARY 1, 1999
(unaudited)
<TABLE>
<CAPTION>
Historical Historical Pro Forma
AnswerThink Think New Ideas (1) Adjustments Pro forma
----------- ------------------- ----------- ---------
<S> <C> <C> <C> <C>
Net revenues......................................... $118,155,676 $ 49,361,578 $ -- $167,517,254
Costs and expenses: --
Project personnel and expenses.................... 71,889,880 29,610,935 -- 101,500,815
Selling, general and administrative............... 38,515,933 21,646,136 -- 60,162,069
Stock compensation expense........................ 40,843,400 23,043,450 -- 63,886,850
Restructuring costs............................... -- 920,610 -- 920,610
Purchased research and development expense........ -- 5,200,000 -- 5,200,000
------------ ------------ ----------- ------------
Total costs and operating expenses............ 151,249,213 80,421,131 -- 231,670,344
------------ ------------ ----------- ------------
Loss from operations.............................. (33,093,537) (31,059,553) -- (64,153,090)
Other income (expenses): --
Litigation settlement............................. 2,500,000 -- -- 2,500,000
Interest income................................... 679,018 278,745 -- 957,763
Interest expense.................................. (1,418,021) (170,575) -- (1,588,596)
------------ ------------ ----------- ------------
Loss before income taxes............................. (31,332,540) (30,951,383) -- (62,283,923)
Income taxes......................................... 324,820 255,549 (1,800,000)(2) (1,219,631)
------------ ------------ ----------- ------------
Net loss............................................. $(31,657,360) $(31,206,932) $ 1,800,000 $(61,064,292)
============ ============ =========== ============
Basic and diluted net loss per common share.......... $ (1.62) $ (4.17) $ (2.46)
============ ============ ============
Weighted average common shares outstanding........... 19,602,520 7,488,538 24,844,497
============ ============ ============
</TABLE>
(1) Pro forma operating results for the year ended January 1, 1999 include the
operating results of Think New Ideas for the 12-month period ended December
31, 1998.
(2) To reduce Think New Ideas' valuation allowance on its net deferred tax
asset due to the assumed utilization of its net operating loss
carryforwards after the proposed merger with AnswerThink.
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<PAGE>
ANSWERTHINK CONSULTING GROUP, INC.
PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JANUARY 2, 1998
(unaudited)
<TABLE>
<CAPTION>
Historical Historical
AnswerThink Think New Ideas (1) Pro forma
----------- ------------------- ---------
<S> <C> <C> <C>
Net revenues...................................... $ 34,499,746 $ 42,644,405 $ 77,144,151
Costs and expenses:
Project personnel and expenses................. 24,626,831 24,199,048 48,825,879
Selling, general and administrative............ 16,681,885 16,693,636 33,375,521
Settlement costs............................... 1,902,608 -- 1,902,608
Stock compensation expense..................... -- 23,043,450 23,043,450
Restructuring costs............................ -- 920,610 920,610
Purchased research and development expense..... 4,000,000 5,200,000 9,200,000
------------ ------------ ------------
Total costs and operating expenses......... 47,211,324 70,056,744 117,268,068
------------ ------------ ------------
Loss from operations........................... (12,711,578) (27,412,339) (40,123,917)
Other income (expenses):
Interest income................................ 508,470 287,940 796,410
Interest expense............................... (151,668) (88,666) (240,334)
------------ ------------ ------------
Loss before income taxes....................... (12,354,776) (27,213,065) (39,567,841)
Income taxes...................................... -- 339,834 339,834
------------ ------------ ------------
Net loss.......................................... $(12,354,776) $(27,552,899) $(39,907,675)
============ ============ ============
Basic and diluted net loss per common share $ (1.74) $ (4.36) $ (3.46)
============ ============ ============
Weighted average common shares outstanding........ 7,100,092 6,315,087 11,520,653
============ ============ ============
</TABLE>
(1) Pro forma operating results for the year ended January 2, 1998 include the
operating results of Think New Ideas for the year ended June 30, 1998.
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<PAGE>
ANSWERTHINK CONSULTING GROUP, INC.
PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(unaudited)
<TABLE>
<CAPTION>
Historical Historical
AnswerThink Think New Ideas (1) Pro forma
----------- ------------------- ---------
<S> <C> <C> <C>
Net revenues.................................................. $ 11,492,825 $ 17,436,847 $ 28,929,672
Costs and expenses:
Project personnel and expenses............................. 6,559,278 10,209,202 16,768,480
Selling, general and administrative........................ 4,909,191 12,972,777 17,881,968
Restructuring costs........................................ -- 1,732,000 1,732,000
------------ ------------ ------------
Total costs and operating expenses..................... 11,468,469 24,913,979 36,382,448
------------ ------------ ------------
Income (loss) from operations................................. 24,356 (7,477,132) (7,452,776)
Other income (expenses):
Interest income............................................ 19,898 286,358 306,256
Interest expense........................................... (5,280) (134,489) (139,769)
------------ ------------ ------------
Income (loss) before income taxes.......................... 38,974 (7,325,263) (7,286,289)
Income taxes.................................................. -- 245,900 245,900
------------ ------------ ------------
Net income (loss)............................................. $ 38,974 $ (7,571,163) $ (7,532,189)
============ ============ ============
Basic and diluted net income (loss) per common share.......... $ 0.05 $ (1.63) $ (1.88)
============ ============ ============
Weighted average common shares outstanding.................... 757,773 4,638,337 4,004,609
============ ============ ============
</TABLE>
(1) Pro forma operating results for the year ended December 31, 1996 include
the operating results of Think New Ideas for the year ended June 30, 1997.
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<PAGE>
ANSWERTHINK CONSULTING GROUP, INC.
PRO FORMA COMBINED CONDENSED BALANCE SHEET
JULY 2, 1999
(unaudited)
<TABLE>
<CAPTION>
Historical Historical Pro Forma
AnswerThink Think New Ideas Adjustments Pro forma
----------- --------------- ----------- ---------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................................ $ 12,034,567 $ 7,791,363 $ -- $ 19,825,930
Short-term investments............................................... 500,000 -- -- 500,000
Accounts receivable and unbilled revenue, net........................ 45,782,096 30,749,411 -- 76,531,507
Prepaid expenses and other current assets............................ 1,443,124 963,133 -- 2,406,257
------------ ----------- ---------- ------------
Total current assets............................................. 59,759,787 39,503,907 -- 99,263,694
Property and equipment, net............................................. 4,306,956 5,298,736 -- 9,605,692
Other assets............................................................ 3,380,732 1,782,623 3,800,000(1) 8,963,355
Goodwill, net........................................................... 31,497,468 20,318,499 -- 51,815,967
------------ ----------- ---------- ------------
Total assets..................................................... $ 98,944,943 $66,903,765 $3,800,000 $169,648,708
============ =========== ========== ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable..................................................... $ 2,632,212 $ 3,310,262 $ -- $ 5,942,474
Accrued expenses and other liabilities............................... 14,676,676 3,397,231 -- 18,073,907
Media payable........................................................ -- 23,220,723 -- 23,220,723
Income taxes payable................................................. 2,916,050 110,472 -- 3,026,522
Current portion of borrowings under revolving credit facility and
other debt payable................................................. 1,896,000 1,194,647 -- 3,090,647
------------ ------------ ---------- ------------
Total current liabilities........................................ 22,120,938 31,233,335 -- 53,354,273
Long-term liabilities................................................... -- -- -- --
Total liabilities................................................ 22,120,938 31,233,335 -- 53,354,273
Shareholders' equity.................................................... 76,824,005 35,670,430 3,800,000(1) 116,294,435
------------ ------------ ---------- ------------
Total liabilities and shareholders' equity....................... $ 98,944,943 $ 66,903,765 $3,800,000 $169,648,708
============ ============ ========== ============
</TABLE>
(1) To reduce Think New Ideas' valuation allowance on its net deferred tax
asset due to the assumed utilization of its net operating loss
carryforwards after the proposed merger with AnswerThink.
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<PAGE>
COMPARISON OF RIGHTS OF HOLDERS OF ANSWERTHINK COMMON STOCK AND
THINK NEW IDEAS COMMON STOCK
This section of the joint proxy statement/prospectus describes differences
between AnswerThink common stock and Think New Ideas common stock. We believe
that the description covers the material differences between the two. However,
this summary may not contain all of the information that is important to you,
including each of our charters and bylaws. You should read this entire document
and the other documents we refer to carefully for a more complete understanding
of the differences between AnswerThink common stock and Think New Ideas common
stock. You may obtain the information incorporated by reference into this joint
proxy statement/prospectus without charge by following the instructions in the
section entitled "Where You Can Find More Information" on page 76.
After the merger, the holders of Think New Ideas common stock who receive
AnswerThink common stock will become stockholders of AnswerThink. Because Think
New Ideas is a Delaware corporation and AnswerThink is a Florida corporation,
the Florida Business Corporations Act, or FBCA, will govern the rights of Think
New Ideas stockholders after the merger. The Think New Ideas certificate of
incorporation and the Think New Ideas bylaws currently govern the rights of the
stockholders of Think New Ideas. As stockholders of AnswerThink, the
AnswerThink articles of incorporation, as amended and restated, and the
AnswerThink bylaws, as amended and restated, will instead govern their rights
following the merger. The following paragraphs summarize differences between
the rights of AnswerThink stockholders and Think New Ideas stockholders under
the charter documents and bylaws of AnswerThink and Think New Ideas, as
applicable. They also summarize the material differences between the Delaware
General Corporation Law, or DGCL, and the FBCA.
Authorized Capital Stock
Under its articles of incorporation, AnswerThink is authorized to issue up
to 125,000,000 shares of common stock and 1,250,000 shares of preferred stock.
As of May 28, 1999:
. 34,718,937 shares of common stock were issued and outstanding; and
. no shares of preferred stock were issued and outstanding.
AnswerThink's board of directors is authorized, subject to the FBCA's
limitations, to:
. authorize the issuance of the shares of preferred stock in series;
. establish the number of shares of preferred stock to be included in any
series;
. fix the powers, designations, preferences and rights of the shares of
preferred stock of any series; and
. to fix the qualifications, limitations or restrictions of any series.
Think New Ideas' certificate of incorporation authorizes the issuance of up
to 50,000,000 shares of Think New Ideas common stock and 5,000,000 shares of
preferred stock. As of June 24, 1999:
. 10,091,902 shares of common stock were issued and outstanding; and
. no shares of preferred stock were issued and outstanding.
The board of directors of Think New Ideas has authority to fix voting powers,
designations, preferences and rights, and the qualifications, limitations or
restrictions, of the preferred stock, in one or more series.
Dividends
Under the FBCA, subject to restrictions in a corporation's articles of
incorporation, a corporation's board of directors may authorize and the
corporation may make a distribution to its stockholders unless after giving
effect to
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<PAGE>
the distribution, (a) the corporation would not be able to pay its debts as they
become due in the usual course of business, or (b) the corporation's total
assets would be less than the sum of its total liabilities plus (unless the
corporation's articles of incorporation permit otherwise) the amount that would
be needed, if the corporation were to dissolve at the time of distribution, to
satisfy the preferential rights of stockholders upon distribution whose
preferential rights are superior to those receiving the dividend. The
AnswerThink articles of incorporation contain no restrictions on the payment of
dividends except that they require that dividends on any outstanding preferred
stock be paid before any dividends are paid on common stock.
The DGCL provides that a corporation, subject to any restrictions in its
certificate of incorporation, may declare and pay dividends upon its shares of
capital stock either out of its surplus or, if there is no surplus, out of its
net profits for the fiscal year in which the dividend is declared and/or for the
preceding fiscal year. Further restrictions on dividends may apply if a
corporation has issued shares which have a preference upon the distribution of
assets. The Think New Ideas certificate of incorporation contains no
restrictions on the payment of dividends.
Election, Number, Classification and Removal of Directors
Under the FBCA and DGCL, the directors of a corporation shall be elected by
a plurality of the votes cast by the holders of shares entitled to vote in the
election of the directors at a meeting of stockholders at which a quorum is
present, unless the articles or certificate of incorporation provide for
cumulative voting. Neither the AnswerThink articles nor the Think New Ideas
certificate provide for cumulative voting.
AnswerThink's articles of incorporation provide for a board of directors of
not less than five nor more than 15 directors. The exact number is set by the
Board and is currently 10. The AnswerThink board is divided into three classes,
each to be as nearly equal to the others in number of directors as possible.
Directors serve three year terms. Vacancies and newly created directorships may
be filled only by the affirmative vote of a majority of the directors then in
office, although fewer than a quorum, or by a sole remaining director. If one
or more directors resigns from the board, a majority of the directors then in
office, including those who have resigned, may fill the vacancy or vacancies,
and the vote will take effect when the resignation or resignations become
effective. Directors may only be removed for cause if two-thirds of the entire
voting power of all the then outstanding shares of stock of AnswerThink entitled
to vote generally in the election of directors vote together as a single class
for removal.
Think New Ideas' certificate of incorporation provides for a board of
directors of not less than three nor more than 12 directors. The Think New
Ideas board is currently fixed at seven directors. The Think New Ideas board is
divided into three classes, each class to be as nearly equal to the others in
number of directors as possible. Directors serve three year staggered terms.
Board vacancies may be filled only by the affirmative vote of a majority of the
remaining directors then in office, regardless of whether a quorum exists.
However, vacancies resulting from a director's removal by a vote of the
stockholders may be filled only by the stockholders, provided that the holders
of not less than two-thirds of the outstanding shares of capital stock of Think
New Ideas entitled to vote upon the election of directors, voting together as a
single class, shall vote for each replacement director. Any director, class of
directors or the entire board of directors may be removed from office by
stockholder vote at any time for any reason, but only if the holders of not less
than two-thirds of the outstanding shares of capital stock of Think New Ideas
entitled to vote upon election of directors, voting together as a single class,
shall vote in favor of removal.
Advance Notice Requirements
Under AnswerThink's bylaws, written notice of any meeting of stockholders
must state the place, date and hour of the meeting, and, if it is a special
meeting, the meeting's purpose. The written notice must be given not less than
10 nor more than 60 days before the date of the meeting to each stockholder
entitled to vote at the meeting. For nominations and other business properly
brought before an annual meeting by a stockholder, the stockholder must deliver
notice to the Secretary of AnswerThink at the principal executive offices of
AnswerThink. The Secretary of AnswerThink must receive the notice not less than
60 days nor more than 90 days prior to the first anniversary of the preceding
year's annual meeting. If the date of the annual meeting has been changed to be
more than 30 days earlier or more than 60 days later than the previous year's
date, the stockholder's notice must be received not earlier than the 90th day
prior to the annual meeting and not later than the close of business on the
later of the 60th day prior to the annual meeting or the 10th day following the
day on which public announcement of the date of such meeting is first made. If
the number of directors to be elected to the board of directors is increased,
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<PAGE>
and the increased board or the nominees are not publicly announced at least 70
days before the first anniversary of the last annual meeting, stockholders must
deliver their nominations for any of the new board positions not later than the
close of business on the 10th day after the public announcement. Stockholders
who want to make director nominations at a special meeting called for that
purpose must deliver their notice to the Secretary of AnswerThink not later than
the 10th day after the day the special meeting is publicly announced.
The bylaws of Think New Ideas provide that written notice of each meetings
of stockholders, whether annual or special, stating the date, hour and place of
the meeting, must be sent to stockholders not less than 10 nor more than 60 days
before the meeting, to each stockholder of record entitled to vote at the
meeting. Notice of a special meeting must also state the purpose of the meeting
and who is issuing the notice. A stockholder desiring to present proposals for
vote at an annual meeting must provide the board of directors or the secretary
of Think New Ideas with written notice of its intention to present a proposal
for action at the meeting not later than the close of business on the last
business day of January. For proposals to be presented for vote at a special
meeting, the stockholder must provide the board of directors or the secretary of
Think New Ideas written notice of its intention to present a proposal not later
than the close of business on the fifth calendar day following the date on which
notice of the special meeting is first given to stockholders.
Special Meetings of Stockholders
The articles of incorporation and bylaws of AnswerThink provide that
special meetings of stockholders may be called only
. by the board of directors;
. the Chairman of the board of directors;
. the President; or
. holders of not less than 50% of the shares of capital stock entitled to
vote on any issue proposed to be considered at the special meeting.
The Think New Ideas bylaws provide that special meetings of stockholders
may only be called by:
. the written resolution or other request of a majority of the members of the
board of directors;
. the chairman of the board of directors;
. the President;
. any executive vice-president; or
. holders of not less than 25% of the shares of capital stock of the
corporation entitled to vote at such meeting on the matters that are the
subject of the proposed meeting.
Stockholder Action by Written Consent
Under the FBCA, any action to be taken at an annual meeting or special
meeting of stockholders may be taken without a meeting, without prior notice and
without a vote, if a consent or consents, setting forth the action taken, are
signed by the holders of outstanding stock having not less than the minimum
number of votes with respect to each voting group that would be necessary to
authorize the action at a meeting at which all shares entitled to vote were
present. AnswerThink's articles of incorporation provide that any action
required or permitted to be taken at a meeting of stockholders may be taken
without a meeting, without prior notice and without a vote, if the action is
taken by persons who would be entitled to vote at a meeting and who hold shares
having voting power equal to not less than the greater of:
(a) 80% of the voting power or
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<PAGE>
(b) the minimum number of votes of each class or series that would be
necessary to authorize or take the action at a meeting at which all
shares of each class or series entitled to vote were present and
voting.
The action must be (a) evidenced by one or more written consents describing
the action taken, (b) signed by the stockholders entitled to take action without
a meeting, and (c) delivered to AnswerThink. No consent to take the corporate
action specified will be effective unless the number of consents required to
take the action are delivered to AnswerThink within 60 days of the delivery of
the earliest-dated consent. Written notice of the action taken must then be
given within 10 days to all stockholders who did not participate in taking the
action.
The DGCL provisions regarding stockholder action by written consent are
materially the same as the FBCA provisions. Think New Ideas certificate of
incorporation provides that the stockholders may take action by written consent
if they follow the DGCL and 75% or more of the shares entitled to vote on the
matter consent.
Anti-Takeover Provisions
Section 607.0901 of the FBCA, informally known as the "Fair Price Statute,"
provides that the approval of the holders of two-thirds of the voting shares of
a company, other than the shares owned by an Interested Stockholder (as defined
below) would be required in order to effectuate certain transactions, including,
without limitation, a merger, sale of assets, sale of shares and
reclassification of securities involving a corporation and an Interested
Stockholder (an "Affiliated Transaction"). An "Interested Stockholder" is
defined under the FBCA as the beneficial owner of more than 10% of the voting
shares outstanding. This special voting requirement is in addition to the vote
required by any other provision of the FBCA or a corporation's articles of
incorporation. The special voting requirement does not apply in any of the
following circumstances:
. the Affiliated Transaction is approved by a majority of the corporation's
disinterested directors;
. the corporation has not had more than 300 stockholders of record at any
time during the three years preceding the announcement of the Affiliated
Transaction;
. the Interested Stockholder has beneficially owned 80% of the corporation's
voting shares for five years;
. the Interested Stockholder beneficially owns 90% of the corporation's
voting shares; or
. all of the following conditions are met:
(A) the consideration paid by the interested stockholder in the
Affiliated Transaction is cash or in the same form of consideration
the Interested Stockholder has previously paid for the shares;
(B) during the portion of the three year period preceding the
announcement date that the Interested Stockholder has been an
Interested Stockholder, except as approved by a majority of the
disinterested directors, there shall have been no failure to declare
and pay at the regular date thereof for any periodic dividends, no
reductions in the annual rate of dividends, no increase in the voting
shares owned by the interested stockholder, and no benefit to the
interested stockholder from loans, guaranties or other financial
assistance or tax advantages provided by the corporation; and
(C) the corporation must mail a proxy statement to the voting
stockholders of the corporation.
A corporation may "opt out" of the Fair Price Statute by electing to do so
in its original articles of incorporation or by adopting an amendment to its
articles of incorporation or bylaws opting out and having such amendment
approved by the holders of a majority of the voting shares not held by the
interested stockholder, its affiliates or associates. The amendment will not be
effective until 18 months after such vote, and will not apply to any Affiliated
Transaction with someone who is an Interested Stockholder on or prior to the
effective date of the amendment. AnswerThink has not opted out of the
provisions of the Fair Price Statute.
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<PAGE>
AnswerThink has elected not to be governed by Section 607.0902 of the FBCA,
informally known as the "Control Share Acquisition Statute," which provides that
the voting rights to be accorded Control Shares (as defined below) of a Florida
corporation that has:
(1) 100 or more stockholders,
(2) its principal place of business, its principal office, or substantial
assets in Florida and
(3) either:
(A) more than 10% of its stockholders residing in Florida,
(B) more than 10% of its shares owned by Florida residents, or
(C) 1,000 stockholders residing in Florida,
must be approved by a majority of each class of voting securities of the
corporation, excluding those shares held by interested persons, before the
Control Shares will be granted any voting rights.
"Control Shares" are defined in the FBCA to be shares acquired in a Control
Share Acquisition (as defined below) that, when added to all other shares of the
issuing corporation owned by a person, would entitle a person to exercise,
either directly or indirectly, voting power within any of the following ranges:
. 20% or more but less than 33% of all voting power of the corporation's
voting securities,
. 33% or more but less than a majority of all voting power of the
corporation's voting securities, or
. a majority or more of all of the voting power of the corporation's voting
securities.
A "Control Share Acquisition" is defined in the FBCA as an acquisition,
either directly or indirectly, by any person of ownership of, or the power to
direct the exercise of voting power with respect to, outstanding Control Shares.
The Control Share Acquisition Statute also states that, if provided in the
articles of incorporation or bylaws of a corporation prior to their acquisition,
Control Shares may be redeemed by the corporation for fair value in certain
circumstances. Finally, unless otherwise provided in a corporation's articles
of incorporation or bylaws prior to a Control Share Acquisition, in the event
Control Shares are accorded full voting rights and the acquiring person has
acquired Control Shares with a majority or more of all voting power, all
stockholders will have dissenters' rights. The Control Share Acquisition
Statute further provides that, in certain circumstances, an acquisition of
shares that otherwise would be governed by its provisions does not constitute a
Control Share Acquisition. Among such circumstances are acquisitions of shares
approved by the corporation's board of directors and mergers effected in
compliance with the applicable provisions of the FBCA, if the corporation is a
party to the agreement of merger.
Section 203 of the DGCL applies to Delaware corporations with a class of
voting stock listed on a national securities exchange, authorized for quotation
on the Nasdaq Stock Market, or held of record by 2,000 or more persons, and
restricts transactions which may be entered into by the corporation and some of
its stockholders. Section 203 of the DGCL provides, in essence, that a
stockholder acquiring more than 15% of the outstanding voting stock of a
corporation subject to the statute and that person's affiliates and associates,
referred to in this section as an interested stockholder, but less than 85% of
its shares may not engage in specified business combinations with the
corporation for a period of three years subsequent to the date on which the
stockholder became an interested stockholder unless (a) prior to that date the
corporation's board of directors approved either the business combination or the
transaction in which the stockholder became an interested stockholder or (b) at
or subsequent to that time the business combination is approved by the
corporation's board of directors and authorized at an annual or special meeting
of stockholders by the affirmative vote of at least two-thirds of the
outstanding voting stock of the corporation not owned by the interested
stockholder. Section 203 defines the term business combination to include a
wide variety of transactions with or caused by an interested stockholder in
which the interested stockholder receives or could receive a benefit on other
than a pro rata basis with other stockholders, including mergers,
consolidations, specified types of asset sales, specified issuances of
additional shares to the interested stockholder, transactions with
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the corporation which increase the proportionate interest of the interested
stockholder or transactions in which the interested stockholder receives
specified other benefits. Under its certificate of incorporation, Think New
Ideas expressly elects to be governed by Section 203 of the DGCL regarding
business combinations with interested stockholders.
Amendment of Charter and Bylaws
AnswerThink's articles of incorporation may be amended by a majority of the
votes entitled to be cast by each voting group, including the directors and
stockholders, entitled to vote on the amendment. Under the FBCA, a
corporation's bylaws may be amended by the board of directors or the
stockholders, provided that the board of directors may not amend or repeal any
bylaw adopted by stockholders if the stockholders specifically provide that such
bylaw is not subject to amendment or repeal by the board of directors.
Under Delaware law, an amendment to a corporation's certificate of
incorporation requires the approval of the board of directors and the majority
of the outstanding shares entitled to vote on the amendment. The holders of the
outstanding shares of a class are entitled to vote as a separate class on a
proposed amendment that would increase or decrease the aggregate number of
authorized shares of the class, increase or decrease the par value of the shares
of the class or alter or change the powers, preferences or special rights of the
shares of the class so as to affect them adversely. The Think New Ideas
certificate of incorporation may be amended if the board of directors adopts a
resolution by affirmative vote of at least two-thirds of the directors then in
office, at a meeting called for that purpose, setting forth the proposed
amendment and declaring its advisability. In order to be adopted, a proposed
amendment must be approved by the affirmative vote of a majority of the
outstanding shares of each class and series, if any, entitled to vote on the
amendment. Under the DGCL, bylaws may be amended by the stockholders, or, if
provided for in the certificate of incorporation, by the board of directors.
The Think New Ideas bylaws may be altered, amended or repealed and new bylaws
may be adopted at any meeting of the board of directors by the affirmative vote
of at least a majority of the members of the board of directors or by the
affirmative vote of the holders of at least two-thirds of the outstanding shares
of each class and series, if any, of capital stock of Think New Ideas entitled
to vote in the election of directors cast at a meeting of the stockholders.
Dissenters' and Appraisal Rights
Under the FBCA, stockholders of a Florida corporation have the right, in
certain circumstances, to dissent from some types of corporate actions,
including the closing of a plan of merger to which a Florida corporation is a
party and which requires the approval of the corporation's stockholders.
However, this right to dissent does not apply to a plan of merger involving
holders of a security that on the record date is either registered on a national
securities exchange or designated as a national market system security on an
inter-dealer quotation system by the National Association of Securities Dealers
or held of record by not fewer than 2,000 stockholders. Stockholders who are
entitled to dissent are also entitled to obtain payment in the amount of the
fair value of their shares.
Under the DGCL, a stockholder of a corporation who does not vote in favor
of or consent in writing to some types of merger transactions and who demands
appraisal of his or her shares may be entitled to appraisal rights. The
appraisal rights entitle the stockholder to cash in the amount determined by a
Delaware court to be the fair value of his or her shares together with a fair
rate of interest instead of the consideration he or she would have received in
the merger transaction. Unless the corporation's certificate of incorporation
provides otherwise, these appraisal rights are not available in some
circumstances, including
(a) the sale, lease or exchange of all or substantially all of the assets
of a corporation;
(b) the merger or consolidation of a corporation whose shares are either
listed on a national securities exchange or on Nasdaq or are held of
record by more than 2,000 holders if the stockholders receive only
shares of the surviving company in the merger or shares of any other
corporation which are either listed on a national securities exchange
or on Nasdaq or held of record by more than 2,000 holders, plus cash
instead of fractional shares; or
(c) to stockholders of a corporation surviving a merger if no vote of the
stockholders of the combined company is required to approve the merger,
each share of the surviving company outstanding prior to
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the merger is an identical outstanding or treasury share after the
merger, and the number of shares to be issued in the merger does not
exceed 20% of the shares of the surviving company outstanding
immediately prior to the merger and if certain other conditions are
met.
The concept of "fair value" in payment for shares upon exercise of appraisal
rights, under the DGCL, must be determined exclusive of any element of value
arising from the accomplishment or expectation of the relevant transaction.
Indemnification of Directors and Officers
The FBCA permits a corporation to indemnify officers, directors, employees
and agents for actions taken in good faith and in a manner they reasonably
believed to be in, or not opposed to, the best interests of the corporation. As
to any criminal action, these people can be indemnified if they had no
reasonable cause to believe their actions were unlawful. The FBCA provides that
a corporation may advance reasonable expenses of defense (upon receipt of an
undertaking to reimburse the corporation if indemnification is ultimately
determined not to be appropriate) and must reimburse a successful defendant for
expenses, including attorneys' fees, actually and reasonably incurred. The FBCA
also permits a corporation to purchase liability insurance for its directors,
officers, employees and agents. The FBCA provides that indemnification may not
be made for any claim, issue or matter as to which a person has been adjudged by
a court of competent jurisdiction to be liable to the corporation, unless and
only to the extent a court determines that the person is entitled to indemnity
for such expenses as the court deems proper.
The AnswerThink articles of incorporation provide for indemnification to
the fullest extent authorized or permitted by law. Persons who are not
directors or officers of AnswerThink may be similarly indemnified in respect of
service to AnswerThink to the extent the board of directors approves. The
AnswerThink articles of incorporation further grant AnswerThink the power to
purchase and maintain insurance for any of the above-mentioned persons whether
or not AnswerThink would have the power to indemnify them under its articles of
incorporation, bylaws or the FBCA.
Under Delaware law, a corporation may indemnify any person made a party or
threatened to be made a party to any type of proceeding (other than an action by
or in the right of the corporation) because he is or was an officer, director,
employee or agent of the corporation or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation or
entity, against expenses, judgments, costs and amounts paid in settlement
actually and reasonably incurred in connection with such proceeding:
(a) if he acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the corporation, or
(b) in the case of a criminal proceeding, he had no reasonable cause to believe
that his conduct was unlawful.
A Delaware corporation may indemnify any person made a party or threatened to be
made a party to any action or suit brought by or in the right of the corporation
because he was an officer, director, employee or agent of the corporation, or is
or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation or other entity, against expenses
actually and reasonably incurred in connection with the action or suit if he
acted in good faith and in a manner he reasonably believed was in or not opposed
to the best interests of the corporation. However, there may be no
indemnification if the person is found liable to the corporation unless, the
court determines the person is entitled to indemnification.
A Delaware corporation must indemnify a director, officer, employee or
agent against expenses actually and reasonably incurred by him who successfully
defends himself in a proceeding to which he was a party because he was a
director, officer, employee or agent of the corporation. Expenses incurred by
an officer or director (or other employees or agents as deemed appropriate by
the board of directors) in defending a civil or criminal proceeding may be paid
by the corporation in advance of the final disposition of such proceeding upon
receipt of an undertaking by or on behalf of such director or officer to repay
such amount if it shall ultimately be determined that he is not entitled to be
indemnified by the corporation. The Think New Ideas certificate of
incorporation provides for the indemnification of any person who was or is a
director, officer, agent and/or employee to the fullest extent allowed by the
DGCL.
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Directors' Liability
The FBCA provides that a director will not be personally liable for
monetary damages to the corporation or any other person for any statement, vote,
decision or failure to act, regarding corporate management or policy, by a
director unless: (a) the director breached or failed to perform his duties as a
director, and (b) the director's breach of or failure to perform those duties
constitutes:
(1) a violation of the criminal law, unless the director had reasonable cause
to believe his conduct was lawful or had no reasonable cause to believe
his conduct was unlawful;
(2) a transaction in which the director derived an improper personal benefit;
(3) a payment of certain unlawful dividends and distributions;
(4) in a proceeding by or in the right of the corporation to procure judgment
in its favor or by or in the right of a stockholder, conscious disregard
for the best interests of the corporation, or willful misconduct; or
(5) in a proceeding by or in the right of someone other than the corporation
or a stockholder, recklessness or an act or omission which was committed
in bad faith or with malicious purpose or in a manner exhibiting wanton
and willful disregard of human rights, safety or property.
This provision of the FBCA would absolve directors of the corporation of
personal liability for negligence in the performance of their duties, including
gross negligence. It would not permit a director to be exculpated, however,
from liability for actions involving conflicts of interest or breaches of the
traditional "duty of loyalty" to AnswerThink and its stockholders, and it would
not affect the availability of injunctive and other equitable relief as a
remedy. The AnswerThink articles of incorporation provide that to the fullest
extent permitted by the FBCA, a director of AnswerThink shall not be liable to
AnswerThink or its stockholders for monetary damages for a breach of fiduciary
duty as a director.
Under Delaware law, a corporation may adopt a provision in its certificate
of incorporation eliminating or limiting the personal liability of a director to
the corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director; provided, however, that such provision may not eliminate or
limit director monetary liability for (a) breaches of the director's duty of
loyalty to the corporation or its stockholders; (b) acts or omissions not in
good faith or involving intentional misconduct or knowing violations of law; (c)
the payment of unlawful dividends or unlawful stock repurchases or redemptions;
or (d) transactions in which the director received an improper personal benefit.
The Think New Ideas certificate of incorporation mirrors this language.
Stockholder Approval of Mergers
Under the FBCA, the principal terms of a merger generally require the
approval of the stockholders of each corporation party to the merger. Unless
required by the corporation's articles of incorporation, action by the
stockholders of the surviving corporation is not required if
. the articles of incorporation of the surviving corporation will not differ
from its articles before the merger;
. each stockholder of the surviving corporation whose shares were
outstanding prior to the effective date of the merger will hold the same
number of shares immediately after the merger; and
. the number of voting shares outstanding immediately after the merger, plus
the number of voting shares issuable as a result of the merger, will not
exceed by more than 20 percent the total number of voting shares of the
surviving corporation outstanding immediately before the merger.
Under the DGCL, the principal terms of a merger generally require the
approval of the stockholders of each of the merging corporations. Unless
otherwise required in a corporation's certificate of incorporation, the DGCL
does not require the vote of stockholders of a constituent corporation surviving
the merger if:
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. the merger agreement does not amend the existing certificate of
incorporation;
. each share of the surviving corporation outstanding before the merger is an
identical outstanding or treasury share after the merger; and
. either no shares of the surviving corporation and no securities convertible
into such stock are to be issued in the merger or the number of shares to
be issued by the surviving corporation in the merger does not exceed 20% of
the shares outstanding immediately prior to the merger.
OTHER MATTERS
We do not expect that any matters other than those described in this joint
proxy statement/prospectus will be brought before either of the special
meetings. If any other matters are presented, however, it is the intention of
the persons named in the respective AnswerThink and Think New Ideas proxy cards,
to vote proxies in accordance with the determination of a majority of
AnswerThink's or Think New Ideas' board of directors, as applicable, including,
without limitation, a motion to adjourn or postpone the applicable meeting to
another time and/or place for the purpose of soliciting additional proxies in
order to approve the merger agreement or otherwise.
STOCKHOLDER PROPOSALS
Any proposal which an AnswerThink stockholder wishes to have included in
the proxy materials for AnswerThink's 2000 annual meeting under SEC Rule 14a-8
must be received by AnswerThink at its principal executive offices at 1001
Brickell Bay Drive, Suite 3000, Miami, Florida 33131 by December 17, 1999. Any
other proposal for consideration by stockholders at AnswerThink's 2000 annual
meeting must be received by AnswerThink by March 1, 2000.
If the merger agreement is approved and the merger takes place, Think New
Ideas will not have an annual meeting of stockholders in 2000. If the merger
does not take place, Think New Ideas anticipates that its 2000 annual meeting
will be held in January 2000. Any proposal intended to be presented by a Think
New Ideas stockholder for inclusion in Think New Ideas' proxy statement for its
2000 annual meeting must have been received by Think New Ideas at its principal
executive offices at 45 W. 36th Street, 12th Floor, New York, New York 10018 by
January 29, 1999.
DOCUMENTS INCORPORATED BY REFERENCE IN THIS JOINT PROXY STATEMENT/PROSPECTUS
THIS JOINT PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE
WHICH ARE NOT PRESENTED IN OR DELIVERED WITH THIS DOCUMENT.
All documents filed by either or both of us under Section 13(a), 13(c), 14
or 15(d) of the Securities Exchange Act, after the date hereof and before the
date of the Think New Ideas special meeting and the AnswerThink annual meeting
are incorporated by reference into and to be a part of this joint proxy
statement/prospectus from the date of filing of those documents.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR THAT
WE HAVE REFERRED YOU TO. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT.
Think New Ideas' annual report on Form 10-KSB for the fiscal year ended
June 30, 1999 filed with the SEC on September 15, 1999 is incorporated by
reference into this joint proxy statement/prospectus.
The following documents, which AnswerThink has filed with the SEC, are
incorporated by reference into this joint proxy statement/prospectus:
. annual report on Form 10-K for the fiscal year ended January 1, 1999
filed on April 1, 1999;
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.quarterly reports on Form 10-Q for the periods ended April 2 and July 2,
1999 filed on May 17 and August 16, 1999, respectively; and
.current reports on Form 8-K filed on July 1 and 21, August 12, and
September 13, 1999.
Any statement contained in a document incorporated or deemed to be
incorporated in this document by reference will be deemed to be modified or
superseded for purposes of this joint proxy statement/prospectus to the extent
that a statement contained in this document or any other subsequently filed
document that is deemed to be incorporated in this document by reference
modifies or supersedes the statement. Any statement so modified or superseded
will not be deemed, except as so modified or superseded, to constitute a part of
this joint proxy statement/prospectus.
WHERE YOU CAN FIND MORE INFORMATION
AnswerThink and Think New Ideas file annual, quarterly and special reports,
proxy statements and other information with the Securities and Exchange
Commission. You may read and copy any reports, statements or other information
that either of us files with the SEC at the SEC's Public Reference Room at 450
Fifth Street, N.W., Washington, D.C. 20549. You may obtain information on the
operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
The SEC maintains an Internet site that contains reports, proxy and information
statements and other information about issuers that file electronically with the
SEC. The address of the SEC's Internet site is http://www.sec.gov. AnswerThink
can be found on the Internet at http://www.answerthink.com. Think New Ideas can
be found on the Internet at http://www.thinkinc.com. Each of AnswerThink's and
Think New Ideas' common stock is traded on the Nasdaq Stock Market's National
Market Tier under the trading symbols ANSR and THNK, respectively.
AnswerThink has filed with the SEC a registration statement on Form S-4
under the Securities Act of 1933 relating to AnswerThink's common stock to be
issued to Think New Ideas' stockholders in the merger. As permitted by the
rules and regulations of the SEC, this joint proxy statement/prospectus does not
contain all the information set forth in the registration statement. You can
obtain that additional information from the SEC's principal office in
Washington, D.C. or the SEC's Internet site as described above. Statements
contained in this joint proxy statement/prospectus or in any document
incorporated by reference into this joint proxy statement/prospectus about the
contents of any contract or other document are not necessarily complete and, in
each instance where the contract or document is filed as an exhibit to the
registration statement, reference is made to the copy of that contract or
document filed as an exhibit to the registration statement, with each statement
of that kind in this joint proxy statement/prospectus being qualified in all
respects by reference to the document.
The documents incorporated by reference into this joint proxy
statement/prospectus are available from us upon request. We will provide a copy
of any and all of the information that is incorporated by reference in this
joint proxy statement/prospectus not including exhibits to the information
unless those exhibits are specifically incorporated by reference into this proxy
statement prospectus, to you, without charge, upon written or oral request. YOU
SHOULD MAKE ANY REQUEST FOR DOCUMENTS BY WEDNESDAY, OCTOBER 27, 1999 TO ENSURE
TIMELY DELIVERY OF THE DOCUMENTS.
THIS DOCUMENT DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN
OFFER TO PURCHASE, THE ANSWERTHINK COMMON STOCK OR THE SOLICITATION OF A PROXY,
IN ANY JURISDICTION TO OR FROM ANY PERSON TO WHOM OR FROM WHOM IT IS UNLAWFUL TO
MAKE THE OFFER, SOLICITATION OF AN OFFER OR PROXY SOLICITATION IN THAT
JURISDICTION. NEITHER THE DELIVERY OF THIS JOINT PROXY STATEMENT/PROSPECTUS NOR
ANY DISTRIBUTION OF SECURITIES MEANS, UNDER ANY CIRCUMSTANCES, THAT THERE HAS
BEEN NO CHANGE IN THE INFORMATION SET FORTH OR INCORPORATED IN THIS DOCUMENT BY
REFERENCE OR IN OUR AFFAIRS SINCE THE DATE OF THIS JOINT PROXY
STATEMENT/PROSPECTUS. THE INFORMATION CONTAINED IN THIS DOCUMENT WITH RESPECT
TO THINK NEW IDEAS AND ITS SUBSIDIARIES WAS PROVIDED BY THINK NEW IDEAS AND THE
INFORMATION CONTAINED IN THIS DOCUMENT WITH RESPECT TO ANSWERTHINK WAS PROVIDED
BY ANSWERTHINK.
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STATEMENTS REGARDING FORWARD-LOOKING INFORMATION
This joint proxy statement/prospectus and the documents incorporated in
this document by reference contain forward-looking statements within the "safe
harbor" provisions of the Private Securities Litigation Reform Act of 1995 with
respect to our financial condition, results of operations and business, and on
the expected impact of the merger on AnswerThink's financial performance. Words
such as "anticipates," "expects," "intends," "plans," "believes," "seeks,"
"estimates" and similar expressions identify forward-looking statements. These
forward-looking statements are not guarantees of future performance and are
subject to certain risks and uncertainties that could cause actual results to
differ materially from the results contemplated by the forward-looking
statements. These risks and uncertainties include:
. the possibility that the value of the AnswerThink common stock to be
issued to Think New Ideas stockholders in the merger will decrease prior
to completion of the merger and no corresponding adjustment to the number
of shares of AnswerThink stock to be received by Think New Ideas
stockholders will be made,
. the possibility that the merger will not be closed,
. the possibility that the anticipated benefits from the merger cannot or
will not be fully realized,
. the possibility that costs or difficulties related to the integration of
our businesses are greater than expected,
. the impact of competition on revenues and margins and
. other risk factors as may be detailed from time to time in Think New
Ideas' and AnswerThink's public announcements and filings with the SEC.
In evaluating the merger, you should carefully consider the discussion of
these and other factors in the section entitled "Risk Factors" on page 14.
EXPERTS
The consolidated financial statements as of and for the years ended
January 1, 1999 and January 2, 1998 incorporated in this joint proxy
statement/prospectus by reference to AnswerThink's current report on Form 8-K
filed with the SEC on August 12, 1999, except as they relate to triSpan, Inc.
and triSpan Software, Inc., have been audited by PricewaterhouseCoopers LLP,
independent accountants, and, insofar as they relate to triSpan, Inc. and
triSpan Software, Inc., by Arthur Andersen LLP, independent accountants, whose
report appears in that current report. These financial statements have been
included in reliance on the reports of these independent accountants given on
the authority of these firms as experts in auditing and accounting.
The combined financial statements of triSpan, Inc. for the year ended
December 31, 1996 incorporated by reference in this joint proxy
statement/prospectus and elsewhere in this registration statement have been
audited by Arthur Andersen LLP, independent public accountants, as indicated in
their report for the year ended December 31, 1996 with respect to those
financial statements, and are included in this joint proxy statement/prospectus
in reliance upon the authority of that firm as experts in giving that report.
The financial statements of CFT Consulting, Inc. for the year ended
December 31, 1998 incorporated by reference to AnswerThink's current report on
Form 8-K filed with the SEC on September 13, 1999 in this joint proxy
statement/prospectus have been audited by Eaton Honick Pellegrino & McFarland,
P.A., independent public accountants, as indicated in their report for the year
ended December 31, 1998 with respect to those financial statements, and are
included in this joint proxy statement/prospectus in reliance upon the authority
of that firm as experts in giving that report.
The consolidated financial statements of Think New Ideas at June 30, 1999
and 1998 and for the years then ended appearing in Think New Ideas Annual Report
on Form 10-KSB for the year ended June 30, 1999, and incorporated by reference
in this joint proxy statement/prospectus, which are referred to and made a part
of this
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joint proxy statement/prospectus and registration statement, have been
audited by Ernst & Young LLP, independent auditors, as set forth in their report
incorporated by reference. Think New Ideas consolidated financial statements
are incorporated by reference in reliance upon that report given on the
authority of that firm as experts in accounting and auditing.
LEGAL MATTERS
The validity of the AnswerThink common stock to be issued in the merger has
been passed upon by Frank A. Zomerfeld, Corporate Counsel of AnswerThink. Akin,
Gump, Strauss, Hauer & Feld L.L.P., Washington, D.C., will be passing upon
certain tax matters in connection with the merger.
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ANNEX A
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
ANSWERTHINK CONSULTING GROUP, INC.,
THINK NEW IDEAS, INC.
and
DARWIN ACQUISITION CORP.
DATED AS OF JUNE 24, 1999
<PAGE>
TABLE OF CONTENTS
Page
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ARTICLE I. THE MERGER
SECTION 1.1. The Merger........................................................2
SECTION 1.2. Effective Time....................................................2
SECTION 1.3. Effect of the Merger..............................................2
SECTION 1.4. Certificate of Incorporation; Bylaws..............................3
SECTION 1.5. Directors and Officers............................................3
SECTION 1.6. Closing...........................................................3
SECTION 1.7. Subsequent Actions................................................3
SECTION 1.8. Tax and Accounting Treatment of the Merger........................4
ARTICLE II. CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 2.1. Conversion of Securities..........................................4
SECTION 2.2. Exchange of Certificates..........................................5
SECTION 2.3. Assumption of Obligations to Issue Stock..........................8
SECTION 2.4. Stock Transfer Books.............................................12
SECTION 2.5. Certain Adjustments..............................................12
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 3.1. Organization and Qualification; Subsidiaries.....................12
SECTION 3.2. Certificate of Incorporation and Bylaws..........................13
SECTION 3.3. Capitalization...................................................13
SECTION 3.4. Authority........................................................15
SECTION 3.5. No Conflict; Required Filings and Consents.......................15
SECTION 3.6. SEC Filings; Financial Statements................................16
SECTION 3.7. No Undisclosed Liabilities.......................................17
SECTION 3.8. Absence of Certain Changes or Events.............................17
SECTION 3.9. Absence of Litigation............................................17
SECTION 3.10. Licenses and Permits; Compliance with Laws......................18
SECTION 3.11. Unlawful Payments...............................................18
SECTION 3.12. Taxes...........................................................18
SECTION 3.13. Intellectual Property...........................................19
SECTION 3.14. Material Contracts..............................................20
SECTION 3.15. Employee Benefit Plans..........................................21
SECTION 3.16. Properties; Assets..............................................24
SECTION 3.17. Labor Relations.................................................24
SECTION 3.18. Environmental Matters...........................................24
SECTION 3.19. Insurance.......................................................25
SECTION 3.20. Board Approval; Vote Required...................................25
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SECTION 3.21. Opinion of Financial Advisor....................................25
SECTION 3.22. Brokers.........................................................25
SECTION 3.23. Takeover Provisions Inapplicable................................26
SECTION 3.24. Pooling; Tax Matters............................................26
SECTION 3.25. Registration Statement; Proxy Statement/Prospectus..............26
SECTION 3.26. Disclosure......................................................27
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF ACQUIROR AND MERGER SUB
SECTION 4.1. Organization and Qualification...................................27
SECTION 4.2. Certificate of Incorporation and Bylaws..........................27
SECTION 4.3. Capitalization...................................................28
SECTION 4.4. Authority........................................................28
SECTION 4.5. No Conflict; Required Filings and Consents.......................28
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF ACQUIROR
SECTION 5.1. Organization and Qualification; Subsidiaries.....................29
SECTION 5.2. Certificate of Incorporation and Bylaws..........................30
SECTION 5.3. Capitalization...................................................30
SECTION 5.4. Authority........................................................31
SECTION 5.5. No Conflict; Required Filings and Consents.......................31
SECTION 5.6. SEC Filings; Financial Statements................................32
SECTION 5.7. No Undisclosed Liabilities.......................................33
SECTION 5.8. Absence of Certain Changes or Events.............................33
SECTION 5.9. Absence of Litigation............................................33
SECTION 5.10. Licenses and Permits; Compliance with Laws......................34
SECTION 5.11. Unlawful Payments...............................................34
SECTION 5.12. Taxes...........................................................34
SECTION 5.13. Intellectual Property...........................................35
SECTION 5.14. Material Contracts..............................................36
SECTION 5.15. Employee Benefit Plans..........................................36
SECTION 5.16. Labor Relations.................................................38
SECTION 5.17. Board Approval; Vote Required...................................38
SECTION 5.18. Opinion of Financial Advisor....................................38
SECTION 5.19. Brokers.........................................................38
SECTION 5.20. Pooling; Tax Matters............................................38
SECTION 5.21. Registration Statement; Proxy Statement/Prospectus..............39
SECTION 5.22. Environmental Matters...........................................39
SECTION 5.23. Disclosure......................................................40
ARTICLE VI. COVENANTS
SECTION 6.1. Affirmative Covenants of the Company.............................40
SECTION 6.2. Negative Covenants of the Company................................40
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SECTION 6.3. Affirmative Covenants of Acquiror................................44
SECTION 6.4. Negative Covenants of Acquiror...................................44
ARTICLE VII. ADDITIONAL AGREEMENTS
SECTION 7.1. Access and Information...........................................45
SECTION 7.2. Confidentiality..................................................46
SECTION 7.3. Joint Proxy Statement and Registration Statement; Stockholders
Meetings...................................................46
SECTION 7.4. HSR Act Matters..................................................48
SECTION 7.5. Public Announcements.............................................48
SECTION 7.6. Indemnification..................................................49
SECTION 7.7. Further Action; Commercially Reasonable Efforts..................50
SECTION 7.8. No Solicitation..................................................51
SECTION 7.9. Nasdaq Listing...................................................52
SECTION 7.10. Blue Sky........................................................52
SECTION 7.11. Affiliates......................................................53
SECTION 7.12. Event Notices...................................................53
SECTION 7.13. Option Agreement................................................54
SECTION 7.14. Tax Treatment...................................................54
SECTION 7.15. Pooling of Interests............................................54
SECTION 7.16. Merger Sub......................................................55
SECTION 7.17. Board of Directors of Acquiror.................................55
SECTION 7.18. Publishing Financial Results....................................55
ARTICLE VIII. CLOSING CONDITIONS
SECTION 8.1. Conditions to Obligations of the Parties to Effect the Merger....55
SECTION 8.2. Additional Conditions to Obligations of Acquiror and Merger Sub..57
SECTION 8.3. Additional Conditions to Obligations of the Company..............59
ARTICLE IX. TERMINATION, AMENDMENT AND WAIVER
SECTION 9.1. Termination......................................................59
SECTION 9.2. Effect of Termination............................................61
SECTION 9.3. Amendment........................................................62
SECTION 9.4. Extension; Waiver................................................62
SECTION 9.5. Transaction Fees, Expenses and Other Payments....................62
SECTION 9.6. Termination Fees.................................................63
ARTICLE X. GENERAL PROVISIONS
SECTION 10.1. Effectiveness of Representations, Warranties and Agreements.....64
SECTION 10.2. Notices.........................................................64
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SECTION 10.3. Certain Definitions.............................................65
SECTION 10.4. Headings........................................................69
SECTION 10.5. Severability....................................................69
SECTION 10.6. Entire Agreement................................................70
SECTION 10.7. Specific Performance............................................70
SECTION 10.8. Assignment......................................................70
SECTION 10.9. Third Party Beneficiaries.......................................70
SECTION 10.10. Governing Law..................................................70
SECTION 10.11. Counterparts...................................................71
EXHIBITS
- --------
Exhibit A Company Affiliate Agreement
Exhibit B Acquiror Affiliate Agreement
SCHEDULES
- ---------
Schedule 1.5 Officers and Directors of Surviving Corporation
Schedule 3.1 Subsidiaries and Ownership Interests of the Company
Schedule 3.3 Capitalization of the Company
Schedule 3.5 Required Filings and Consents
Schedule 3.9 Litigation
Schedule 3.10 Licenses and Permits
Schedule 3.12 Taxes
Schedule 3.13 Company Intellectual Property
Schedule 3.14 Material Contracts
Schedule 3.15 Employee Benefit Plans
Schedule 3.19 Insurance
Schedule 5.1 Subsidiaries and Ownership Interests of Acquiror
Schedule 5.3 Capitalization of Acquiror
Schedule 5.5 Required Filings and Consents
Schedule 5.9 Litigation
Schedule 5.10 Licenses and Permits
Schedule 5.12 Taxes
Schedule 5.13 Acquiror Intellectual Property
Schedule 5.14 Material Contracts
Schedule 5.15 Employee Benefit Plans
Schedule 6.2 Negative Covenants of the Company
Schedule 6.2(a) Directors, Officers and Key Employees of the Company
Schedule 7.11 Affiliates of the Company and Acquiror
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Index of Defined Terms
----------------------
Section
-------
Acquiror.................................................... PREAMBLE
Acquiror Benefit Plans...................................... 5.15(a)
Acquiror Common Stock....................................... RECITALS
Acquiror Commonly Controlled Entity......................... 5.15(a)
Acquiror ERISA Plan......................................... 5.15(b)
Acquiror Financial Statements............................... 5.6(b)
Acquiror Intellectual Property.............................. 5.13(a)
Acquiror Material Contracts................................. 5.14
Acquiror Permits............................................ 5.10
Acquiror Preferred Stock.................................... 5.3(a)
Acquiror Principal Holders.................................. RECITALS
Acquiror SEC Reports........................................ 5.6(a)
Acquiror Stock Option Plan.................................. 5.3(a)
Acquiror Stock Purchase Plan................................ 5.3(a)
Acquiror Stockholder Approval............................... 5.4
Acquiror Stockholders Meeting............................... 7.3(c)
Acquiror Subsidiary and Acquiror Subsidiaries............... 5.1
Acquiror Voting Agreement................................... RECITALS
Acquisition Proposal........................................ 10.3
Affiliate................................................... 10.3
Affiliate Agreement......................................... 2.2(c)
Agreement................................................... PREAMBLE
beneficial owner, beneficial ownership or beneficially own.. 10.3
benefit liabilities......................................... 3.15(c)
Benefit Plans............................................... 3.15(a)
Business Day................................................ 10.3
Certificate and Certificates................................ 2.1(a)
Certificate of Merger....................................... 1.2
Claim....................................................... 7.6(b)
Closing..................................................... 1.6
Closing Date................................................ 1.6
COBRA....................................................... 3.15(g); 5.15(e)
Code........................................................ RECITALS
Commonwealth Associates Warrants............................ 10.3
Company..................................................... PREAMBLE
Company Benefit Plans....................................... 3.15(a)
Company Common Stock........................................ RECITALS
Company Commonly Controlled Entity.......................... 3.15(a)
Company ERISA Plan.......................................... 3.15(a)
Company Financial Statements................................ 3.6(b)
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Company Intellectual Property............................... 3.13(a)
Company Material Contracts.................................. 3.14(b)
Company Permits............................................. 3.10
Company Preferred Stock..................................... 3.3(a)
Company Principal Holders................................... RECITALS
Company SEC Material Contracts.............................. 3.14(a)
Company SEC Reports......................................... 3.6(a)
Company Stock Option Plans.................................. 2.3(a)
Company Stockholder Approval................................ 3.4
Company Stockholders Meeting................................ 7.3(b)
Company Subsidiary and Company Subsidiaries................. 3.1
Company Voting Agreement.................................... RECITALS
Confidentiality Agreement................................... 7.2
control, controlled by, under common control with........... 10.3
controlled group of corporations............................ 3.15(a); 5.15(a)
D&O Insurance............................................... 7.6(b)
Delaware Law................................................ RECITALS
Director Option............................................. 2.3(d)
Earnout Agreements.......................................... 10.3
Effective Time.............................................. 1.2
employee benefit plans...................................... 3.15(a); 3.15(e)
employee pension benefit plan............................... 3.15(a); 5.15(b)
employer securities......................................... 3.15(h); 5.15(f)
Encumbrance................................................. 10.3
Environmental Laws.......................................... 10.3
Environmental Permits....................................... 3.18
ERISA....................................................... 3.15(a)
Exchange Act................................................ 3.5(b)
Exchange Agent.............................................. 2.2(a)
Exchange Fund............................................... 2.2(a)
Exchange Ratio.............................................. 2.1(a)
GAAP........................................................ RECITALS
Governmental Entity......................................... 3.5(b)
group....................................................... 9.1(i)
Hazardous Materials......................................... 10.3
HIPAA....................................................... 3.15(g); 5.15(e)
Holder and Holders.......................................... 2.1(a)
HSR Act..................................................... 3.5(b)
incentive stock options..................................... 2.3(a)
Indemnified Parties......................................... 7.6(b)
Intellectual Property....................................... 10.3
Interim Period.............................................. 7.1
Joint Proxy Statement....................................... 3.25
Legal Opinion............................................... 8.1(i)
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March 1999 Financing..................................... 10.3
Material Adverse Effect.................................. 10.3
Merger................................................... RECITALS
Merger Consideration..................................... 2.1(a)
Merger Sub............................................... PREAMBLE
Merger Sub Stock......................................... 2.1(c)
Multiemployer Plan....................................... 3.15(d)
NASD..................................................... 3.5(b)
Nasdaq................................................... 3.5(b)
Option................................................... 2.3(a)
Option Agreement......................................... RECITALS
Order.................................................... 8.1(c)
Other Company Material Contracts......................... 3.14(b)
Outside Date............................................. 9.1(e)
Person................................................... 10.3
pooling of interests..................................... 3.24; 5.20; 6.2(o);
6.3(d); 7.11(b);
7.15; 8.1(g);
8.1(h)
qualified................................................ 3.15(b); 5.15(a)
qualified foreign plan................................... 3.15(j); 5.15(h)
Real Property Leases..................................... 3.14(b)
reasonable efforts....................................... 10.3
Receiving Party.......................................... 7.2
Registration Statement................................... 3.25
Representation Letters................................... 7.14
Representatives.......................................... 7.8(a)
SEC...................................................... RECITALS
Securities Act........................................... 3.5(b)
Securities Litigation.................................... 10.3
Stock Issuance........................................... RECITALS
Subsidiary............................................... 10.3
Superior Proposal........................................ 10.3
Surviving Corporation.................................... 1.1
Tax, Taxable and Taxes................................... 10.3
Tax Returns.............................................. 3.12
Terminating Acquiror Breach.............................. 9.1(c)
Terminating Company Breach............................... 9.1(b)
Termination Fee.......................................... 9.6
Treasury Stock........................................... 2.1(b)
unfunded current liability............................... 3.15(c); 5.15(b)
Warrant.................................................. 2.3(c)
Year 2000 Meeting........................................ 7.17
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<PAGE>
Execution Copy
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is
---------
entered into this 24th day of June, 1999, by and among THINK NEW IDEAS, INC., a
Delaware corporation (the "Company"), ANSWERTHINK CONSULTING GROUP, INC., a
-------
Florida corporation ("Acquiror"), and DARWIN ACQUISITION CORP., a Delaware
--------
corporation ("Merger Sub").
----------
WHEREAS, Merger Sub is a newly formed corporation, organized
and existing under the laws of the State of Delaware;
WHEREAS, each of the Boards of Directors of the Company,
Acquiror and Merger Sub has each determined that it is fair to, advisable, and
in the best interests of, its respective stockholders that Merger Sub, a
wholly-owned subsidiary of Acquiror, be merged with and into the Company (the
"Merger") pursuant to and subject to the terms and conditions of this Agreement
------
and the Delaware General Corporation Law ("Delaware Law");
------------
WHEREAS, concurrently with the execution and delivery of this
Agreement and as a condition and inducement to the willingness of Acquiror to
enter into this Agreement, certain holders (the "Company Principal Holders") of
-------------------------
common stock, par value $.0001 per share, of the Company ("Company Common
--------------
Stock"), have entered into an agreement with Acquiror (the "Company Voting
- ----- --------------
Agreement"), pursuant to which, among other things, the Company Principal
- ---------
Holders have agreed to vote their shares of Company Common Stock in favor of
this Agreement, the Merger and the other transactions contemplated by this
Agreement;
WHEREAS, concurrently with the execution and delivery of this
Agreement and as a condition and inducement to the willingness of the Company to
enter into this Agreement, certain holders (the "Acquiror Principal Holders") of
--------------------------
common stock, par value $.001 per share, of Acquiror ("Acquiror Common Stock"),
---------------------
have entered into an agreement with the Company (the "Acquiror Voting
---------------
Agreement"), pursuant to which, among other things, the Acquiror Principal
- ---------
Holders have agreed to vote their shares of Acquiror Common Stock in favor of
the issuance of Acquiror Common Stock pursuant to the terms of this Agreement
(the "Stock Issuance");
--------------
WHEREAS, concurrently with the execution and delivery of this
Agreement and as a condition and inducement to the willingness of Acquiror and
Merger Sub to enter into this Agreement, the Company and Acquiror have entered
into a Stock Option Agreement (the "Option Agreement"), pursuant to which the
----------------
Company has granted to Acquiror an irrevocable option to purchase from the
Company up to a number of authorized but unissued shares of Company Common Stock
representing 19.9% of the outstanding shares of Company Common
<PAGE>
Stock, upon the terms and subject to the conditions set forth therein;
WHEREAS, for United States federal income tax purposes, it is
intended that the Merger will qualify as a reorganization within the meaning of
Section 368(a)2(E) of the Internal Revenue Code of 1986, as amended (the
"Code"); and
----
WHEREAS, for financial accounting purposes, it is intended
that the Merger shall be accounted for as a pooling of interests under United
States generally accepted accounting principles ("GAAP") and the rules and
----
regulations of the Securities and Exchange Commission (the "SEC").
---
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth in
this Agreement, the parties hereto agree as follows:
ARTICLE I.
THE MERGER
SECTION 1.1. The Merger.
Upon the terms and subject to the conditions set forth in this
Agreement, and in accordance with Delaware Law, at the Effective Time (as
defined in Section 1.2) the Merger shall be effected pursuant to which Merger
-----------
Sub shall be merged with and into the Company. As a result of the Merger, the
separate corporate existence of Merger Sub shall cease and the Company shall
continue as the surviving corporation of the Merger (sometimes referred to
herein as the "Surviving Corporation") and shall become a wholly-owned
subsidiary of Acquiror.
SECTION 1.2. Effective Time.
As promptly as practicable on the Closing Date (as defined in
Section 1.6), the parties hereto shall cause the Merger to be consummated by
- -----------
filing a certificate of merger (the "Certificate of Merger") with the Secretary
---------------------
of State of the State of Delaware, as required by, and executed in accordance
with the relevant provisions of, Delaware Law and in such form as approved by
the Company and Acquiror prior to such filing (the time of the filing of the
Certificate of Merger or the time specified therein being the "Effective Time").
--------------
SECTION 1.3. Effect of the Merger.
At the Effective Time, the effect of the Merger shall be as
set forth herein and as provided in the applicable provisions of Delaware Law.
Without
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<PAGE>
limiting the generality of the foregoing, and subject thereto, at the Effective
Time, except as otherwise provided herein, all the rights, privileges, powers
and franchises of Merger Sub and the Company shall vest in the Surviving
Corporation, and all debts, liabilities and duties of Merger Sub and the Company
shall become the debts, liabilities and duties of the Surviving Corporation.
SECTION 1.4. Certificate of Incorporation; Bylaws.
At the Effective Time: (a) the certificate of incorporation of
Merger Sub, as in effect immediately prior to the Effective Time and as amended
by the Certificate of Merger, shall become the certificate of incorporation of
the Surviving Corporation, and (b) the bylaws of Merger Sub, as in effect
immediately prior to the Effective Time, shall become the bylaws of the
Surviving Corporation.
SECTION 1.5. Directors and Officers.
The officers and directors of the Surviving Corporation
immediately upon effectiveness of the Merger shall be as set forth on Schedule
--------
1.5 hereto (as may be modified by Acquiror in its sole and absolute discretion).
- ---
Each such officer and director shall hold office in accordance with the
certificate of incorporation and bylaws of the Surviving Corporation and until
his or her respective successors is duly elected or appointed and qualified in
accordance with the certificate of incorporation and bylaws of the Surviving
Corporation.
SECTION 1.6. Closing.
Subject to the terms and conditions of this Agreement
(including, without limitation, the satisfaction or, if permissible, waiver of
the conditions set forth in Article VIII hereof) the parties agree to consummate
------------
the Merger and the other transactions described herein (the "Closing") on a date
-------
mutually agreed upon by Acquiror and the Company which shall be within two (2)
Business Days after the later of (a) the date on which the Company shall have
obtained the Company Stockholder Approval pursuant to Section 7.3(b) and (b) the
--------------
date on which Acquiror shall have obtained the Acquiror Stockholder Approval
pursuant to Section 7.3(c), unless the Company and Acquiror shall agree in
--------------
writing to another date (the date of the Closing is referred to herein as the
"Closing Date"). The Closing shall take place at 10:00 a.m., local time, on the
------------
Closing Date at the offices of Hogan & Hartson L.L.P., 8300 Greensboro Drive,
Suite 1100, McLean, Virginia 22102, unless another place is agreed to in writing
by the Company and the Acquiror.
SECTION 1.7. Subsequent Actions.
If, at any time after the Effective Time, the Surviving
Corporation shall consider or be advised that any deeds, bills of sale,
assignments, assurances or any other actions or things are necessary or
desirable to continue in, vest, perfect or
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<PAGE>
confirm of record or otherwise in the Surviving Corporation its right, title or
interest in, to or under any of the rights, properties, privileges, franchises
or assets of either of its constituent corporations acquired or to be acquired
by the Surviving Corporation as a result of, or in connection with, the Merger
or otherwise to carry out this Agreement, the officers and directors of the
Surviving Corporation shall be directed and authorized to execute and deliver,
in the name and on behalf of either of the Company or the Merger Sub, all such
deeds, bills of sale, assignments and assurances and to take and do, in the name
and on behalf of each of such corporations or otherwise, all such other actions
and things as may be necessary or desirable to vest, perfect or confirm any and
all right, title and interest in, to and under such rights, properties,
privileges, franchises or assets in the Surviving Corporation or otherwise to
carry out this Agreement.
SECTION 1.8. Tax and Accounting Treatment of the Merger.
It is intended by the parties hereto that the Merger shall (a)
constitute a reorganization of Merger Sub and the Company within the meaning of
Section 368(a)2(E) of the Code, and (b) be accounted for as a pooling of
interests under GAAP and the rules and regulations of the SEC. The parties
hereby adopt this Agreement as a "plan of reorganization" of Merger Sub and the
Company within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the United
States Treasury Regulations.
ARTICLE II.
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 2.1. Conversion of Securities.
At the Effective Time, by virtue of the Merger and without any
action on the part of Acquiror, Merger Sub, the Company or the holders of any of
the securities referred to in this Section 2.1:
-----------
(a) Common Stock. Each share of Company Common Stock
------------
(excluding any shares of Treasury Stock (as hereinafter defined)) issued and
outstanding immediately prior to the Effective Time shall cease to be
outstanding and shall be converted into and exchanged for the right to receive
0.70 (the "Exchange Ratio") share of Acquiror Common Stock. The shares of
--------------
Acquiror Common Stock issuable to the holders of Company Common Stock
outstanding immediately prior to the Effective Time (each, a "Holder" and
------
collectively, the "Holders") pursuant hereto, together with payments of cash in
-------
lieu of fractional shares as provided in Section 2.1(d), shall be referred to
--------------
hereinafter as the "Merger Consideration". All such shares of Company Common
--------------------
Stock shall automatically be canceled and retired and shall cease to exist, and
each certificate previously
-4-
<PAGE>
evidencing any such shares (a "Certificate" and collectively, the
-----------
"Certificates") shall thereafter represent only the right to receive the Merger
Consideration. At the Effective Time, the Holders shall cease to have any rights
with respect to such shares of Company Common Stock, except the right to receive
the Merger Consideration and as otherwise provided herein or afforded by
applicable law;
(b) Treasury Stock. All shares of capital stock of the Company
--------------
held in the treasury of the Company immediately prior to the Effective Time
("Treasury Stock") shall be canceled and extinguished without any conversion
--------------
thereof and no amount or other consideration shall be delivered or deliverable
in exchange therefor;
(c) Merger Sub Stock. Each share of common stock, par value
----------------
$.01 per share, of Merger Sub issued and outstanding immediately prior to the
Effective Time ("Merger Sub Stock") shall be converted into and exchanged for
----------------
one (1) duly and validly issued, fully paid and nonassessable share of common
stock of the Surviving Corporation; and
(d) No Fractional Shares. No certificate representing any
--------------------
fractional part of a share of Acquiror Common Stock shall be issued pursuant to
Section 2.1(a) and, other than the right to receive a payment pursuant to this
- --------------
Section 2.1(d), any such fractional interest to which any Holder would otherwise
- --------------
be entitled pursuant to Section 2.1(a) shall not entitle such Holder to any
--------------
rights as a securityholder of Acquiror. Notwithstanding any other provision
hereof, all Holders otherwise entitled to receive fractional shares of Acquiror
Common Stock pursuant to Section 2.1(a) shall be entitled to receive, in lieu
--------------
thereof, cash (without interest) in an amount equal to the product of (i) such
fractional part of a share of Acquiror Common Stock to which the Holder would
otherwise be entitled under Section 2.1(a) multiplied by (ii) the closing price
--------------
per share of Acquiror Common Stock as reported on Nasdaq on the Closing Date.
SECTION 2.2. Exchange of Certificates.
(a) Exchange Agent. Prior to the Effective Time, Acquiror
--------------
shall deposit with BankBoston, N.A. (the "Exchange Agent") for the benefit of
--------------
the Holders for issuance and payment in accordance with this Article II: (i) the
----------
shares of Acquiror Common Stock issuable pursuant to Section 2.1(a), and (ii)
------------------------
cash in an amount sufficient to make payment for fractional parts of shares
under Section 2.1(d) (such shares of Acquiror Common Stock and cash being
--------------
hereinafter referred to as the "Exchange Fund"). At the Effective Time, Acquiror
-------------
shall cause the Exchange Agent, pursuant to irrevocable instructions delivered
to the Exchange Agent prior thereto, to deliver Acquiror Common Stock (and cash
for fractional parts of shares thereof) contemplated to be issued and paid
pursuant to Sections 2.1(a) and (d) out of the Exchange Fund. The Exchange Fund
-----------------------
shall not be used for any purpose other than as set forth in this Section
-------
2.2(a).
- ------
-5-
<PAGE>
(b) Payment Procedures. Promptly after the Effective Time, Acquiror
------------------
shall cause the Exchange Agent to mail to each Holder who, as of the Effective
Time, holds a Certificate or Certificates that immediately prior to the
Effective Time evidenced outstanding shares of Company Common Stock (excluding
any Treasury Stock): (i) a form letter of transmittal; and (ii) instructions for
use in effecting the surrender of the Certificates for cancellation and delivery
in exchange therefor of the Merger Consideration. Upon surrender to the Exchange
Agent and cancellation of a Certificate, together with such letter of
transmittal duly executed and any other reasonably required documents, the
Holder of such Certificate shall be entitled to receive in exchange therefor the
applicable amount of the Merger Consideration as determined pursuant to Section
-------
2.1(a) and Section 2.1(d). In the event of a surrender of a Certificate
- ------ --------------
representing shares of Company Common Stock which are not registered in the
transfer records of the Company under the name of the Holder surrendering such
Certificate, a certificate representing the proper number of shares of Acquiror
Common Stock may be issued to a Person other than the Holder in whose name the
Certificate so surrendered is registered if such Certificate shall be properly
endorsed or otherwise be in proper form for transfer and the Person requesting
such issuance shall pay any transfer or other Taxes required by reason of the
issuance of shares of Acquiror Common Stock to a Person other than the Holder of
such Certificate or shall establish to the satisfaction of Acquiror that such
Taxes have been paid or are not applicable. Until surrendered in accordance with
the provisions of this Section 2.2, each Certificate shall represent for all
-----------
purposes only the right to receive the applicable amount of the Merger
Consideration with respect thereto as determined pursuant to Section 2.1(a) and
--------------
Section 2.1(d), in each case without any interest thereon.
- --------------
(c) Issuances to Affiliates. Notwithstanding anything herein to the
-----------------------
contrary, any Certificate surrendered for exchange by any Affiliate of the
Company shall not be exchanged until Acquiror shall have received a signed
agreement from such Affiliate (an "Affiliate Agreement") as provided in Section
------------------- -------
7.11 hereof.
- ----
(d) No Further Rights in Stock. All shares of Acquiror Common Stock
--------------------------
issued upon the surrender for exchange of Certificates pursuant to Section 2.1
-----------
and in accordance with this Section 2.2 (and any cash paid pursuant hereto)
-----------
shall be deemed to have been issued (and paid) in full satisfaction of all
rights pertaining to the shares of Company Common Stock theretofore represented
by such Certificates, and there shall be no further registration of transfers on
the stock transfer books of the Company as the Surviving Corporation of the
shares of Company Common Stock represented by such Certificates which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, any Certificates are presented to Acquiror, the Surviving Corporation or
the Exchange Agent for any reason, they shall be canceled and exchanged as
provided herein, except as otherwise provided by law.
-6-
<PAGE>
(e) Investment of Exchange Fund. The Exchange Agent shall invest
---------------------------
any cash included in the Exchange Fund, as directed by Acquiror, on a daily
basis. Any interest and other income resulting from such investments shall be
paid to Acquiror.
(f) Termination of Exchange Fund. Any portion of the Exchange
----------------------------
Fund that remains undistributed to the Holders for twelve (12) months after the
Effective Time shall be delivered to Acquiror, upon demand, and any Holder that
has not theretofore complied herewith shall thereafter look only to the
Surviving Corporation and Acquiror for the applicable amount of the Merger
Consideration and cash payments in lieu of fractional shares, if any, to which
such Holder is entitled pursuant hereto.
(g) No Liability. Neither Acquiror nor the Surviving Corporation
------------
shall be liable to any Holder for any Acquiror Common Stock or cash delivered to
a public official pursuant to any applicable abandoned property, escheat or
similar law.
(h) Withholding of Tax. Acquiror or the Exchange Agent shall be
------------------
entitled to deduct and withhold from the applicable amount of the Merger
Consideration otherwise issuable to, and any cash payments in lieu of fractional
shares otherwise payable to, any Holder such amounts as Acquiror (or any
Affiliate thereof) or the Exchange Agent are required to deduct and withhold
with respect to the making of such payment under the Code, or any provision of
state, local or foreign tax law. To the extent that amounts are so withheld by
Acquiror (or any Affiliate thereof) or the Exchange Agent, such withheld amounts
shall be treated for all purposes of this Agreement as having been paid to the
Holder in respect of whom such deduction and withholding was made by Acquiror
(or any Affiliate thereof) or the Exchange Agent.
(i) Lost, Stolen or Destroyed Certificates. In the event any
--------------------------------------
Certificate shall have been lost, stolen or destroyed, upon the making of an
affidavit setting forth that fact by the Person claiming such loss, theft or
destruction and, the granting of a reasonable indemnity against any claim that
may be made against Acquiror or the Exchange Agent with respect to such
Certificate (and, if required by Acquiror in the case of any Certificate or
Certificates from any Holder representing more than Ten Thousand (10,000) shares
of Company Common Stock, the posting by such Person of a bond, in such
reasonable amount as Acquiror may direct). Acquiror shall cause the Exchange
Agent to issue to such Person the applicable amount of the Merger Consideration
and any cash payments with respect to such lost, stolen or destroyed Certificate
to which the Holder thereof may be entitled pursuant to this Article II.
----------
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<PAGE>
SECTION 2.3. Assumption of Obligations to Issue Stock.
(a) Company Options. As of the Effective Time, each outstanding
---------------
Option (as hereinafter defined) shall be converted into an option to acquire
Acquiror Common Stock as provided in this Section 2.3(a). The term "Option"
-------------- ------
shall mean any option to purchase or acquire shares of Company Common Stock
granted under the Company's 1997 Stock Option Plan or 1998 Stock Option Plan,
each as amended (collectively, the "Company Stock Option Plans"), and any option
--------------------------
to acquire or purchase shares of Company Common Stock granted in connection with
the March 1999 Financing. Following the Effective Time, each Option shall
continue to have, and shall be subject to, the terms and conditions of each
agreement pursuant to which such Option was subject immediately prior to the
Effective Time (including, in the case of each Option granted under either of
the Company Stock Option Plans, the terms and conditions of the Company Stock
Option Plan under which such Option was granted, and, in the case of each Option
granted in connection with the March 1999 Financing, the terms and conditions of
the March 1999 Financing), except that: (i) each Option (as converted pursuant
to this Section 2.3(a)) shall be exercisable for that number of whole shares of
--------------
Acquiror Common Stock equal to the product of (A) the aggregate number of shares
of Company Common Stock for which such Option was exercisable at the Effective
Time, multiplied by (B) the Exchange Ratio, provided, however, that no
-------- -------
fractional shares of Acquiror Common Stock shall be issued upon the exercise of
any Option (as converted pursuant to this Section 2.3(a)) and (1) the holder of
--------------
any Option (as converted pursuant to this Section 2.3(a)) granted under either
--------------
of the Company Stock Option Plans otherwise exercisable for a fractional share
of Acquiror Common Stock shall be entitled to receive, upon exercise thereof,
cash (without interest) in such amount to which such holder would otherwise be
entitled as determined pursuant to the provisions of the applicable Company
Stock Option Plan and the agreement under which such Option was granted
(provided that all references in such Company Stock Option Plan and such
agreement to the Company shall be references to Acquiror and references to the
Company's Common Stock shall be references to Acquiror Common Stock), and (2)
the holder of any Option (as converted pursuant to this Section 2.3(a)) granted
--------------
in connection with the March 1999 Financing otherwise exercisable for a
fractional share of Acquiror Common Stock shall be entitled to receive, upon
exercise thereof, cash (without interest) in an amount equal to the product of
(x) such fractional part of a share of Acquiror Common Stock to which the holder
would otherwise be entitled multiplied by (y) the closing price per share of
Acquiror Common Stock as reported on Nasdaq on the date of exercise of such
Option (as converted pursuant to this Section 2.3(a)); and (ii) the exercise
--------------
price per share of Acquiror Common Stock issuable pursuant to each Option (as
converted pursuant to this Section 2.3(a)) shall be equal to the exercise price
--------------
per share of Company Common Stock under such Option at the Effective Time
divided by the Exchange Ratio, rounded to the nearest whole cent. The assumption
and substitution of Options as provided herein shall not give the
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<PAGE>
holders of such Options additional benefits or additional (or accelerated)
vesting rights which they did not have immediately prior to the Effective Time
or relieve the holders of such Options from any obligations or restrictions
applicable to their Options or the shares obtainable upon exercise of the
Options. The adjustment provided herein with respect to any Options that are
"incentive stock options" (as defined in Section 422 of the Code) shall be and
is intended to be, effected in a manner that is consistent with continued
treatment of such Options as "incentive stock options" under Section 424(a) of
the Code. Each Company Stock Option Plan shall be assumed by Acquiror with
respect to all outstanding Options granted under such Company Stock Option Plan
as of the Effective Time, provided, however, that no further options to purchase
or acquire shares of Company Common Stock or other awards or rights shall be
granted under either of the Company Stock Option Plans after the Effective Time.
The duration and other terms of the converted options provided for in this
Section 2.3(a) shall be the same as the Options except that all references to
- --------------
the Company shall be references to Acquiror and references to the Company's
Common Stock shall be references to Acquiror Common Stock. Acquiror shall take
all corporate action reasonably necessary to reserve for issuance, at all times
any converted options provided for in this Section 2.3(a) are outstanding, a
--------------
sufficient number of shares of Acquiror Common Stock for delivery upon the
exercise of such converted options.
(b) Form S-8. Acquiror shall: (i) promptly following the Effective
--------
Time, file one or more registration statements on Form S-8 (or amend existing
registration statements on Form S-8) to become effective as soon as practicable
after the Effective Time with respect to the shares of Acquiror Common Stock
subject to Options outstanding as of the Effective Time (as converted pursuant
to Section 2.3(a)) that were granted under the Company Stock Option Plans; (ii)
--------------
use reasonable efforts to maintain the effectiveness of such registration
statement(s) (and maintain the current status of the prospectus or prospectuses
contained therein) for so long as such Options (as converted pursuant to Section
-------
2.3(a)) remain outstanding; and (iii) promptly following the Effective Time
- ------
prepare and submit to Nasdaq the Notification of Additional Listing of Shares
relating to inclusion for quotation on Nasdaq the shares of Acquiror Common
Stock subject to such Options (as converted pursuant to Section 2.3(a)) and use
-------------
reasonable efforts to cause such securities to be approved for quotation on
Nasdaq as soon as practicable after the Effective Time, subject to official
notice of issuance.
(c) Warrants. As of the Effective Time, each outstanding Warrant
--------
(as hereinafter defined) shall be converted into a warrant to acquire shares of
Acquiror Common Stock as provided in this Section 2.3(c). The term "Warrant"
-------------- -------
shall mean any warrant to purchase shares of Company Common Stock issued or
issuable pursuant to the March 1999 Financing and each Commonwealth Associates
Warrant. Following the Effective Time, each Warrant shall continue to have, and
shall be subject to, the terms and conditions of each agreement or other
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<PAGE>
instrument pursuant to which such Warrant was subject immediately prior to the
Effective Time (including, in the case of each Warrant granted issued or
issuable pursuant to the March 1999 Financing, the terms and conditions of the
March 1999 Financing, and in the case of each Commonwealth Associates Warrant,
the terms and conditions of the applicable Commonwealth Associates Warrant),
except that: (i) each such Warrant (as converted pursuant to this Section
-------
2.3(c) shall be exercisable or convertible for that number of whole shares of
- ------
Acquiror Common Stock equal to the product of (A) the aggregate number of shares
of Company Common Stock for which such Warrant was exercisable or convertible at
the Effective Time, multiplied by (B) the Exchange Ratio; provided, however,
-------- -------
that no fractional shares of Acquiror Common Stock shall be issued upon the
exercise or conversion of any Warrant (as converted pursuant to this Section
-------
2.3(c) and (1) the holder of any Warrant (as converted pursuant to this Section
- ------ -------
2.3(c) issued or issuable under the March 1999 Financing otherwise exercisable
- ------
for or convertible into a fractional share of Acquiror Common Stock shall be
entitled to receive, upon exercise or conversion thereof, cash (without
interest) in an amount equal to such fractional share to which such holder would
otherwise be entitled multiplied by the Market Price (as defined in and
determined pursuant to the terms of the March 1999 Financing except that all
references therein to the Company or Company Common Stock shall be interpreted
as references to Acquiror and Acquiror Common Stock) of a share of Acquiror
Common Stock on the date of such exercise or conversion, and (2) the holder of
any Commonwealth Associates Warrant (as converted pursuant to this Section
-------
2.3(c) otherwise exercisable for or convertible into a fractional share of
- ------
Acquiror Common Stock shall be entitled to receive, upon exercise or conversion
thereof, cash (without interest) in an amount equal to such fractional share of
Acquiror Common Stock to which such holder would otherwise be entitled
multiplied by the fair market value (as determined pursuant to the provisions of
the applicable Commonwealth Associates Warrant except that all references
therein to the Company or Company Common Stock shall be interpreted as
references to Acquiror and Acquiror Common Stock) of a share of Acquiror Common
Stock on the date of such exercise or conversion, and (ii) the exercise or
conversion price per share of Acquiror Common Stock issuable pursuant to each
such Warrant (as converted pursuant to this Section 2.3(c) shall be equal to
--------------
the exercise or conversion price per share of Company Common Stock under such
Warrant at the Effective Time divided by the Exchange Ratio rounded to the
nearest whole cent. The assumption and substitution of Warrants as provided
herein shall not give the holders of such Warrants additional benefits or
additional (or accelerated) vesting rights which they did not have immediately
prior to the Effective Time or relieve the holders of the Warrants of any
obligations or restrictions applicable to their Warrants or the shares
obtainable upon exercise or conversion of the Warrants. The duration and other
terms of the converted warrants provided for in this Section 2.3(c) shall be the
--------------
same as the Warrants except that all references to the Company shall be
references to Acquiror and references to the Company's Common Stock shall be
references to Acquiror Common
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<PAGE>
Stock. Acquiror shall take all corporate action reasonably necessary to reserve
for issuance, at all times any converted warrants provided for in this Section
-------
2.3(c) are outstanding, a sufficient number of shares of Acquiror Common Stock
- ------
for delivery upon the exercise or conversion of such converted warrants.
(d) Director Options. As of the Effective Time, each outstanding
----------------
Director Option (as hereinafter defined) shall be converted into an option to
acquire Acquiror Common Stock as provided in this Section 2.3(d). The term
--------------
"Director Option" shall mean any option to purchase or acquire shares of Company
---------------
Common Stock granted to any director of the Company in such individual's
capacity as a director (specifically excluding any Options granted under either
of the Company Stock Option Plans). Following the Effective Time, each Director
Option shall continue to have, and shall be subject to, the terms and conditions
of each agreement pursuant to which such Director Option was subject immediately
prior to the Effective Time, except that: (i) each Director Option (as converted
pursuant to this Section 2.3(d)) shall be exercisable for that number of whole
shares of Acquiror Common Stock equal to the product of (A) the aggregate number
of shares of Company Common Stock for which such Director Option was exercisable
at the Effective Time, multiplied by (B) the Exchange Ratio, provided, however,
-------- -------
that no fractional shares of Acquiror Common Stock shall be issued upon the
exercise of any Director Option (as converted pursuant to this Section 2.3(d))
--------------
and the holder of any Director Option (as converted pursuant to this Section
-------
2.3(d)) otherwise exercisable for a fractional share of Acquiror Common Stock
- ------
shall be entitled to receive, upon exercise thereof, cash (without interest) in
an amount equivalent to the fair market value (at the time of exercise) of the
fractional share of Acquiror Common Stock to which such holder would otherwise
be entitled (as determined pursuant to the provisions of the applicable Director
Option agreement); and (ii) the exercise price per share of Acquiror Common
Stock issuable pursuant to each Director Option (as converted pursuant to this
Section 2.3(d)) shall be equal to the exercise price per share of Company Common
- --------------
Stock under such Director Option at the Effective Time divided by the Exchange
Ratio, rounded to the nearest whole cent. The assumption and substitution of
Director Options as provided herein shall not give the holders of such Director
Options additional benefits or additional (or accelerated) vesting rights which
they did not have immediately prior to the Effective Time or relieve the holders
of such Director Options from any obligations or restrictions applicable to
their Director Options or the shares obtainable upon exercise of their Director
Options. Each agreement pursuant to which any Director Option was granted shall
be assumed by Acquiror with respect to all outstanding Director Options granted
under such agreement as of the Effective Time, provided, however, that no
further options to purchase or acquire shares of Company Common Stock or other
awards or rights shall be granted to any director of the Company after the date
hereof except as permitted pursuant to Section 6.2(d)(i) of this Agreement. The
-----------------
duration and other terms of the converted options provided for in this Section
-------
2.3(d) shall be the same as the Director Options except that all references to
- ------
the Company shall be
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<PAGE>
references to Acquiror and references to the Company's Common Stock shall be
references to Acquiror Common Stock. Acquiror shall take all corporate action
reasonably necessary to reserve for issuance, at all times any converted
Director Options provided for in this Section 2.3(d) are outstanding, a
--------------
sufficient number of shares of Acquiror Common Stock for delivery upon the
exercise of such converted Director Options.
SECTION 2.4. Stock Transfer Books.
At the Effective Time, the transfer books of the Company with
respect to all shares of capital stock or other securities of the Company shall
be closed and no further registration of transfers of such shares of capital
stock or other securities shall thereafter be made on the records of the
Company.
SECTION 2.5. Certain Adjustments.
If between the date hereof and the Effective Time, the
outstanding shares of Company Common Stock or Acquiror Common Stock shall be
changed into a different number of shares by reason of any reclassification,
recapitalization, split-up, combination or exchange of shares, or any dividend
payable in stock or other securities shall be declared thereon with a record
date within such period, the Exchange Ratio shall be adjusted accordingly to
provide the same economic effect as contemplated by this Agreement prior to such
reclassification, recapitalization, split-up, combination, exchange or dividend.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Acquiror and
Merger Sub, subject to the exceptions set forth herein and in the Company's
disclosure schedules (which exceptions shall specifically identify a section,
subsection or clause of a single section or subsection hereof, as applicable, to
which such exception relates, it being understood and agreed that each such
exception shall be deemed to be disclosed both under such section, subsection or
clause hereof and any other section, subsection or clause hereof to which such
disclosure reasonably relates) that:
SECTION 3.1. Organization and Qualification; Subsidiaries.
Each of the Company and each Subsidiary (as defined below) of
the Company (each a "Company Subsidiary" and collectively, the "Company
------------------ -------
Subsidiaries") is a corporation duly organized, validly existing and in good
- ------------
standing under the laws of the jurisdiction of its organization. Each of the
Company and
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<PAGE>
each Company Subsidiary is duly qualified to conduct its business, and is in
good standing, in each jurisdiction where the character of its properties that
are owned, operated or leased or the nature of its business makes such
qualification necessary, except for such failures which would not have a
Material Adverse Effect on the Company. Each of the Company and each Company
Subsidiary has the requisite corporate power and authority to own, operate,
lease and otherwise to hold its assets and properties and to carry on its
business as now being conducted, except for such failures which would not have a
Material Adverse Effect on the Company. The Company has no Subsidiaries other
than those listed in Schedule 3.1, each of which is wholly-owned by the Company,
------------
or any direct or indirect beneficial ownership of any securities, equity or
other ownership interest in any Person other than those listed in Schedule 3.1.
------------
SECTION 3.2. Certificate of Incorporation and Bylaws.
The Company has heretofore delivered to Acquiror a complete
and correct copy of the certificate or articles of incorporation and the bylaws
of the Company and each Company Subsidiary, each as amended to date. Each such
certificate or articles of incorporation and bylaws is in full force and effect.
Neither the Company nor any Company Subsidiary is in violation of any of the
provisions of its respective certificate or articles of incorporation or bylaws.
SECTION 3.3. Capitalization.
(a) The authorized capital stock of the Company consists of
fifty million (50,000,000) shares of Company Common Stock and five million
(5,000,000) shares of preferred stock, par value $.0001 per share ("Company
-------
Preferred Stock"). As of the date hereof: (i) ten million ninety-one thousand
- ---------------
nine hundred two (10,091,902) shares of Company Common Stock are issued and
outstanding (which includes all shares issued into escrow as of the date
hereof); (ii) no shares of Company Preferred Stock are issued and outstanding;
(iii) two million four hundred sixty-two thousand eight hundred seventeen
(2,462,817) shares of Company Common Stock are reserved for issuance upon the
exercise of the Options granted under the Company Stock Option Plans; (iv) five
hundred thirty thousand five hundred four (530,504) shares of Company Common
Stock are reserved for issuance upon the exercise of the Options granted in
connection with the March 1999 Financing; (v) one hundred forty thousand
(140,000) shares of Company Common Stock are reserved for issuance upon the
exercise of the Director Options; (vi) two hundred eighty thousand three hundred
thirty one (280,331) shares of Company Common Stock are reserved for issuance
upon exercise of the Warrants issued or issuable pursuant to the March 1999
Financing; (vii) twelve thousand one hundred twenty (12,120) shares of Company
Common Stock are reserved for issuance upon exercise of the Commonwealth
Associates Warrants; (viii) no shares of Company Common Stock are reserved for
issuance (and not already issued into escrow)
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<PAGE>
pursuant to the Earnout Agreements (as hereinafter defined); and (ix) no shares
of Company Common Stock are held in the Company's treasury as Treasury Stock.
Schedule 3.3 sets forth a complete and correct list, as of the date hereof, of
- ------------
the number of shares of Company Common Stock subject to the Options, Director
Options and the Warrants and the number of shares of Company Common Stock
issuable pursuant to the Earnout Agreements, in each case including the dates of
grant and exercise or conversion prices thereof and, in the case of shares
issuable pursuant to the Earnout Agreements, the terms of issuance of such
shares.
(b) All outstanding shares of Company Common Stock are, and
all shares which may be issued pursuant to the Options, Director Options,
Warrants and Earnout Agreements will be, when issued in accordance with the
respective terms of such Options, Director Options, Warrants and Earnout
Agreements (without taking into account the effects of the consummation of the
Merger), duly authorized, validly issued, fully paid and nonassessable and not
subject to preemptive rights. Except for the shares of Company Common Stock
outstanding as of the date hereof and the shares of Company Common Stock
issuable pursuant to the Option Agreement, Options, Director Options, Warrants
and Earnout Agreements: (i) there are not issued, reserved for issuance or
outstanding (A) any shares of capital stock or other voting securities of the
Company or any Company Subsidiary, (B) any securities of the Company or any
Company Subsidiary convertible into or exchangeable or exercisable for shares of
capital stock or voting securities or ownership interests of the Company or any
Company Subsidiary, (C) any warrants, calls, options or other rights to acquire
from the Company or any Company Subsidiary, or any obligation of the Company or
any Company Subsidiary to issue, any capital stock, voting securities or other
ownership interests in, or securities convertible into or exchangeable or
exercisable for capital stock or voting securities of or other ownership
interests in, the Company or any Company Subsidiary, and (ii) there are no
outstanding obligations of the Company or any Company Subsidiary to repurchase,
redeem or otherwise acquire any such securities or to issue, deliver or sell, or
cause to be issued, delivered or sold, any such securities.
(c) Except the Option Agreement and except as described in
Schedule 3.3, neither the Company nor any Company Subsidiary is a party to any
- ------------
agreement restricting the purchase or transfer of, relating to the voting of,
requiring registration of, or granting any preemptive or, except as provided by
the terms of the Company Stock Option Plans, antidilutive rights with respect
to, any of the securities of the Company or any of the Company Subsidiaries that
are outstanding or that may be subsequently issued upon the conversion or
exercise of any instrument or otherwise.
(d) The Company represents and warrants to Acquiror and Merger
Sub that as of the Effective Time, the aggregate number of outstanding shares of
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<PAGE>
Company Common Stock (assuming full exercise of the Options, Director Options,
Warrants and the issuance of all Company Common Stock issuable under the Earnout
Agreements) shall not exceed fifteen million five hundred thousand (15,500,000)
shares.
SECTION 3.4. Authority.
The Company has the necessary corporate power and authority to
enter into this Agreement and, subject to obtaining the requisite approval of
this Agreement, the Merger and the other transactions contemplated hereby by the
Company's stockholders as required by Delaware Law and as contemplated in
Section 7.3(b) ("Company Stockholder Approval"), to perform its obligations
- -------------- ----------------------------
hereunder and to consummate the transactions contemplated hereby. Except for
Company Stockholder Approval, the execution and delivery of this Agreement by
the Company and the consummation by the Company of the transactions contemplated
hereby have been duly and validly authorized by all necessary corporate action
and no other corporate proceedings on the part of the Company are necessary to
authorize this Agreement or to consummate the transactions contemplated hereby.
This Agreement has been duly executed and delivered by the Company and, assuming
the due authorization, execution and delivery by Acquiror and Merger Sub,
constitutes a legal, valid and binding obligation of the Company, enforceable in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and other similar laws of
general applicability relating to or affecting creditors' rights generally and
by the application of general principles of equity (it being understood that,
with respect to the Company's obligation to consummate the Merger, the Company
Stockholder Approval is required as set forth herein and that nothing in this
Agreement shall be construed or interpreted as a guaranty by the Company that
such approval will be obtained).
SECTION 3.5. No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by the
Company do not, and the performance by the Company of its obligations under this
Agreement will not: (i) conflict with or violate the certificate or articles of
incorporation or bylaws of the Company or any Company Subsidiary; (ii) subject
to obtaining the approvals and compliance with the requirements set forth in
Section 3.5(b), conflict with or violate any Order applicable to the Company or
- --------------
any Company Subsidiary or by which any of their respective properties or assets
is bound or affected; or (iii) except as set forth in Schedule 3.5, result in
------------
any breach of or constitute a default (or an event which with or without notice
or lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, or result in
the creation of an Encumbrance on any of the properties or assets of the Company
or any Company
-15-
<PAGE>
Subsidiary pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which the Company or any Company Subsidiary is a party or by which the
Company, any Company Subsidiary or any of their respective properties or assets
is bound or affected, except, in the case of clauses (ii) and (iii) above, for
any such conflicts, violations, breaches, defaults or other alterations or
occurrences that would not: (x) prevent or, to the knowledge of the Company,
delay in any material respect, consummation of the Merger; (y) otherwise prevent
the Company from performing its obligations under this Agreement in any material
respect; or (z) have a Material Adverse Effect on the Company.
(b) The execution and delivery of this Agreement by the
Company do not, and the performance of this Agreement by the Company will not,
require by, with respect to or on behalf of the Company or any Company
Subsidiary any consent, approval, authorization or permit of, or filing with or
notification to, any governmental or regulatory authority, domestic or foreign
(each a "Governmental Entity"), except: (i) for (A) applicable requirements, if
-------------------
any, of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
------------
the Securities Act of 1933, as amended (the "Securities Act"), state takeover
--------------
laws, the National Association of Securities Dealers, Inc. (the "NASD"), the
----
Nasdaq National Market ("Nasdaq") and the Hart-Scott-Rodino Antitrust
------
Improvements Act of 1976, as amended (the "HSR Act"), (B) applicable
-------
requirements, if any, of the consents, approvals, authorizations or permits
described in Schedule 3.5, and (C) filing and recordation of appropriate merger
------------
documents as required by Delaware Law; or (ii) where failure to obtain such
consents, approvals, authorizations or permits, or to make such filings or
notifications, would not: (x) prevent or, to the knowledge of the Company, delay
in any material respect consummation of the Merger; (y) otherwise prevent the
Company from performing its obligations under this Agreement in any material
respect; or (z) have a Material Adverse Effect on the Company.
SECTION 3.6. SEC Filings; Financial Statements.
(a) The Company has filed all forms, reports, statements and
other documents required to be filed with the SEC since November 26, 1996, and
has heretofore furnished to Acquiror, in the form filed with the SEC since such
date, together with any amendments thereto, all of its: (i) Annual Reports on
Form 10-KSB; (ii) Quarterly Reports on Form 10-QSB; (iii) proxy statements
relating to meetings of stockholders (whether annual or special); (iv) reports
on Form 8-K; and (v) other reports or registration statements filed by the
Company and such Company Subsidiaries (collectively, the "Company SEC Reports").
-------------------
As of their respective filing dates, the Company SEC Reports: (x) complied as to
form in all material respects with the requirements of the Exchange Act and the
Securities Act, as applicable; and (y) did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the
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<PAGE>
statements therein, in the light of the circumstances under which they were
made, not misleading.
(b) The audited consolidated financial statements and
unaudited interim financial statements of the Company (including the notes and
schedules thereto) contained or incorporated by reference in the Company SEC
Reports (the "Company Financial Statements") complied in all material respects
----------------------------
with applicable GAAP accounting requirements and with the rules and regulations
of the SEC with respect thereto. The Company Financial Statements present fairly
in all material respects the consolidated financial position of the Company and
the Company Subsidiaries at the respective dates thereof and the consolidated
results of operations and cash flows of the Company and the Company Subsidiaries
for the periods indicated, in accordance with GAAP applied on a consistent basis
throughout the periods involved (except as may be noted therein) and subject in
the case of interim financial statements to normal year-end adjustments.
SECTION 3.7. No Undisclosed Liabilities.
Neither the Company nor any of the Company Subsidiaries has
any liabilities or obligations of any nature, whether or not accrued, contingent
or otherwise, except: (a) liabilities or obligations reflected in the Company
SEC Reports; (b) liabilities or obligations incurred since March 31, 1999 in the
ordinary course of business consistent with past practices which have not had
and are not reasonably likely to have a Material Adverse Effect on the Company
(without taking into account the effects of the consummation of the Merger,
except for liabilities or obligations the Company has knowledge of as of the
date hereof); and (c) liabilities or obligations which have not had and are not
reasonably likely to have a Material Adverse Effect on the Company (without
taking into account the effects of the consummation of the Merger, except for
liabilities or obligations the Company has knowledge of as of the date hereof).
SECTION 3.8. Absence of Certain Changes or Events.
Except as disclosed in the Company SEC Reports, since March
31, 1999, there has not been any Material Adverse Effect on the Company.
SECTION 3.9. Absence of Litigation.
Except as set forth in the Company SEC Reports or in Schedule
--------
3.9, there are: (a) no claims, actions, suits, investigations or proceedings
- ---
pending or, to the Company's knowledge, threatened against the Company or any of
the Company Subsidiaries before any court, administrative, governmental,
arbitral, mediation or regulatory authority or body, domestic or foreign, that
have had or would be reasonably likely to have a Material Adverse Effect on the
Company (without taking into account the effects of the consummation of the
Merger, except for
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<PAGE>
claims, suits, investigations or proceedings the Company has knowledge of as of
the date hereof) or that would prevent or enjoin, or, to the knowledge of the
Company, delay in any material respect, consummation of the Merger or any of the
other transactions contemplated hereby or by the Option Agreement; and (b) no
Orders of any Governmental Entity or arbitrator outstanding against the Company
or any Company Subsidiary that have had or would be reasonably likely to have a
Material Adverse Effect on the Company (without taking into account the effects
of the consummation of the Merger, except for Orders the Company has knowledge
of as of the date hereof) or that would prevent or enjoin, or, to the knowledge
of the Company, delay in any material respect, consummation of the Merger or any
of the other transactions contemplated hereby or by the Option Agreement.
SECTION 3.10. Licenses and Permits; Compliance with Laws.
Set forth on Schedule 3.10 is a true and complete list of all
-------------
material permits, licenses, franchises, authorizations and approvals (none of
which has been modified or rescinded and all of which are in full force and
effect) from all Governmental Entities held by the Company and the Company
Subsidiaries that are required for the operation of the businesses of the
Company and the Company Subsidiaries as presently conducted and the ownership,
operation, lease and holding by the Company and the Company Subsidiaries of
their respective properties and assets (the "Company Permits"). The Company and
---------------
the Company Subsidiaries are in compliance with the terms of the Company Permits
and all applicable statutes, laws, ordinances, rules and regulations, except
where the failure so to comply would not have a Material Adverse Effect on the
Company.
SECTION 3.11. Unlawful Payments.
None of the Company, any Company Subsidiary, nor, to the
knowledge of the Company, any stockholder, officer, director, employee, agent or
representative of the Company or any Company Subsidiary has made, directly or
indirectly, any bribe or kickback, illegal political contribution, payment from
corporate funds which was incorrectly recorded on the books and records of the
Company or any Company Subsidiary, unlawful payment from corporate funds to
governmental or municipal officials in their individual capacities for the
purpose of affecting their action or the actions of the jurisdiction which they
represent to obtain favorable treatment in securing business or licenses or to
obtain special concessions of any kind whatsoever, or illegal payment from
corporate funds to obtain or retain any business.
SECTION 3.12. Taxes.
Except as set forth in Schedule 3.12, the Company and the
-------------
Company Subsidiaries have prepared and filed on a timely basis with all
appropriate Governmental Entities all material returns, reports, information
statements and
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other documentation (including extensions) required to be filed by the Company
and the Company Subsidiaries in respect of Taxes (the "Tax Returns") and all
-----------
such Tax Returns are correct and complete in all material respects. Except as
set forth in Schedule 3.12, the Company and the Company Subsidiaries have paid
-------------
in full all Taxes due (other than Taxes the failure of which to pay have not had
and are not reasonably likely to have a Material Adverse Effect on the Company
(without taking into account the effects of the consummation of the Merger,
except for Taxes the Company has knowledge of as of the date hereof)) and, in
the case of material Taxes accruing but not due, the Company has made adequate
provisions for such payments in the Company Financial Statements contained in
the Company's Quarterly Report on Form 10-QSB in respect of the Company's fiscal
quarter ending March 31, 1999. Except as set forth in Schedule 3.12, the Company
-------------
and the Company Subsidiaries have withheld from payments made to its present or
former employees, contractors, officers and directors, creditor or other third
party, all amounts required by law to be withheld except where the liability for
which has not had and would not have a Material Adverse Effect on the Company,
and has, where required, remitted such amounts within the applicable periods to
the appropriate Governmental Entities. In addition, except as set forth in
Schedule 3.12: (a) there are no outstanding assessments of, or claims against,
- -------------
the Company or the Company Subsidiaries with respect to Taxes, the liability for
which would have a Material Adverse Effect on the Company; (b) no Governmental
Entity is conducting an examination or audit of the Company or any Company
Subsidiary in respect of Taxes and neither the Company nor any Company
Subsidiary has received notice of any such examination or audit from any
Governmental Entity; and (c) neither the Company nor any Company Subsidiary has
executed or filed any agreement extending the period of assessment or collection
of any Taxes which remain in effect.
SECTION 3.13. Intellectual Property.
(a) Attached hereto as Schedule 3.13 is a list and brief
-------------
description of all material Intellectual Property owned, utilized or licensed by
the Company and the Company Subsidiaries (all of the foregoing items
collectively referred to as the "Company Intellectual Property"). The Company
-----------------------------
and the Company Subsidiaries have good title to or the right to use all the
Company Intellectual Property and all material inventions, processes, designs,
formulae, trade secrets and know-how necessary for the conduct of the businesses
of the Company and the Company Subsidiaries, as presently conducted. Except
where there would be no Material Adverse Effect on the Company, to the Company's
knowledge, none of the Company or any of the Company Subsidiaries is infringing
on any Intellectual Property right of others, and the Company has no knowledge
of any infringement by others of such rights owned by the Company or any of the
Company Subsidiaries.
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<PAGE>
(b) Except as set forth on Schedule 3.13, with respect to each
-------------
item of Company Intellectual Property necessary for the conduct of the business
of the Company and the Company Subsidiaries as heretofore and as currently
conducted: (i) the owner thereof (if such owner is the Company or any Company
Subsidiary) possesses all right, title and interest in and to the item; (ii) the
item is not subject to any outstanding Order or charge; (iii) no charge,
complaint, action, suit, proceeding, hearing, investigation, claim or demand is
pending or, to the knowledge of the Company, is threatened which challenges the
legality, validity, enforceability, use or ownership of the item; and (iv)
neither the Company nor any of the Company Subsidiaries has agreed to indemnify
any Person for or against any interference, infringement, misappropriation or
other conflict with respect to the item.
(c) The Company's disclosure in the Company's SEC Reports with
respect to all of the computer software, computer firmware, computer hardware
(whether general or special purpose), and other similar or related items of
automated, computerized, and/or software system(s) that are developed and sold
by the Company or any of the Company Subsidiaries (other than third-party
software) or that are used or relied on by the Company or any Company Subsidiary
in the administration and conduct of their respective businesses does not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
SECTION 3.14. Material Contracts.
(a) The Company has filed all contracts and agreements
required to be filed by the Company and the Company Subsidiaries as material
contracts, as defined in Item 601(b)(10) of Regulation S-B under the Securities
Act. All agreements filed as exhibits to the Company SEC Reports together with
each agreement that would have been required to be filed as an exhibit to the
Company SEC Reports if such agreement had been entered into prior to the date of
filing any such Company SEC Report are referred to herein as the "Company SEC
-----------
Material Contracts."
- ------------------
(b) To the Company's knowledge (after reasonable due
investigation), set forth in Schedule 3.14(b) is a complete and correct list, as
----------------
of the date of this Agreement, of all agreements of the following type to which
the Company or a Company Subsidiary is a party or may be bound (collectively,
the "Other Company Material Contracts"): (i) employment, severance, termination,
--------------------------------
consulting and retirement agreements; (ii) loan agreements, indentures, letters
of credit, mortgages, notes and other debt instruments evidencing indebtedness
in excess of One Hundred Thousand Dollars ($100,000), other than those relating
to intercompany debt among the Company and the Company Subsidiaries or
guarantees of any of the foregoing; (iii) agreements that require aggregate
future
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<PAGE>
payments of more than One Hundred Thousand Dollars ($100,000); (iv) agreements
involving payments in excess of Twenty-Five Thousand Dollars ($25,000)
concerning any provisions with respect to a "change in control"; (v) material
agreements with any key employee, director, officer or beneficial owner (as
determined pursuant to Rule 13d-3 promulgated under the Exchange Act) of five
percent (5%) or more of Company Common Stock; (vi) agreements or arrangements
concerning a partnership or joint venture; (vii) agreements or arrangements
requiring noncompetition or material agreements or arrangements requiring
confidentiality; (viii) any written agreement (including any purchase order,
letter agreement or other writing evidencing the Company's arrangements with
customers) whereby the Company or the Company Subsidiaries provided services in
fiscal year 1999 for aggregate payments in excess of Three Hundred Fifty
Thousand Dollars ($350,000) per annum; (ix) all leases (or subleases) with
respect to real property leased by the Company as lessee or sublessee ("Real
----
Property Leases"); and (x) agreements for a remaining term of five (5) years or
- ---------------
more with any customer of the Company or any Company Subsidiary. The Company SEC
Material Contracts and the Other Company Material Contracts are collectively
referred to herein as the "Company Material Contracts". The parties acknowledge
--------------------------
and agree that the condition precedent to Acquiror's obligation to consummate
the Merger in Section 8.2(a) shall be satisfied with respect to the Company's
--------------
representations and warranties set forth in this Section 3.14(b) if such
---------------
representations and warranties are substantially true and correct in all
material respects as of the Closing Date.
(c) Except as set forth in Schedule 3.14(c), all Company
----------------
Material Contracts are valid and in full force and effect on the date hereof
except to the extent they have previously expired in accordance with their
terms, as the same may have been amended from time to time, and neither the
Company nor any Company Subsidiary has (or has any knowledge that any other
party thereto has) violated any provision of, or committed or failed to perform
any act which with or without notice, lapse of time or both would constitute a
default under the provisions of any Company Material Contract, except for
defaults which have not had and which would not be reasonably likely to have a
Material Adverse Effect on the Company. True and complete copies of all Company
Material Contracts have been delivered to Acquiror or made available for
inspection by Acquiror.
SECTION 3.15. Employee Benefit Plans.
(a) Schedule 3.15 sets forth a list of all of material
-------------
pension, retirement, profit-sharing, deferred compensation, stock option,
employee stock ownership, severance pay, vacation or bonus plans or agreements
or other material incentive plans or agreements, all other material written
employee programs, arrangements or agreements and all other material employee
benefit plans or fringe benefit plans, including, without limitation, all
"employee benefit plans" as that term is defined in Section 3(3) of the Employee
Retirement Income Security Act of
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<PAGE>
1974, as amended ("ERISA") (collectively, "Benefit Plans"), currently adopted,
----- -------------
maintained by, sponsored in whole or in part by, or contributed to by the
Company or any entity required to be aggregated with the Company which is a
member of the "controlled group of corporations" which includes the Company
within the meaning of Section 414(b) or (c) of the Code (each, a "Company
-------
Commonly Controlled Entity") for the benefit of present and former employees or
- --------------------------
directors of the Company and of each Company Subsidiary or their beneficiaries,
or providing benefits to such persons in respect of services provided to any
such entity (collectively, the "Company Benefit Plans"). Any Company Benefit
---------------------
Plan which is an "employee pension benefit plan", as that term is defined in
Section 3(2) of ERISA, is referred to herein as a "Company ERISA Plan".
------------------
(b) Each of the Company Benefit Plans intended to be
"qualified" within the meaning of Section 401(a) of the Code has been determined
by the Internal Revenue Service to be so qualified and, to the Company's
knowledge, no circumstances exist that could reasonably be expected by the
Company to result in the revocation of any such determination. Each of the
Company Benefit Plans is in compliance with the applicable terms of ERISA and
the Code and any other applicable laws, rules and regulations, the breach or
violation of which could result in a Material Adverse Effect to the Company or
any Company Commonly Controlled Entity.
(c) No Company ERISA Plan which is a defined benefit pension
plan has any "unfunded current liability", as that term is defined in Section
302(d)(8)(A) of ERISA, and the present fair market value of the assets of any
such plan equals or exceeds the plan's "benefit liabilities", as that term is
defined in Section 4001(a)(16) of ERISA, when determined under actuarial factors
that would apply if the plan terminated in accordance with all applicable legal
requirements.
(d) No Company Benefit Plan is or has been a multiemployer
plan within the meaning of Section 3(37) of ERISA (a "Multiemployer Plan").
------------------
Neither the Company nor any Company Commonly Controlled Entity has completely or
partially withdrawn from any Multiemployer Plan. No termination liability to the
Pension Benefit Guaranty Corporation or withdrawal liability to any
Multiemployer Plan that is material in the aggregate has been or is reasonably
expected to be incurred with respect to any Multiemployer Plan by the Company or
any Company Commonly Controlled Entity.
(e) The Company has furnished to Acquiror complete copies, as
of the date hereof, of all of the Company Benefit Plans that have been reduced
to writing, together with all documents establishing or constituting any related
trust, annuity contract, insurance contract or other funding instrument, and
copies of all "employee benefit plans" as that term is defined in Section 3(3)
of ERISA, including
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<PAGE>
a summary of such plans that have not been reduced to writing. The Company has
furnished to Acquiror complete copies of all current plan summaries, employee
booklets, personnel manuals and other material documents or written materials
concerning the Company Benefit Plans.
(f) The Company has not made, is not obligated to make, nor is
party to any agreement that under certain circumstances could obligate it to
make, any payments that will not be deductible to the Company under Section 280G
of the Code.
(g) All required reports and descriptions, if any (including
Form 5500 Annual Reports, Summary Annual Reports, PBGC 1's and Summary Plan
Descriptions) have been filed or distributed appropriately with respect to each
Company Benefit Plan. The requirements of Part 6 of Subtitle B of Title I of
ERISA and of Section 4980B of the Code ("COBRA"), and the Health Insurance
-----
Portability and Accountability Act of 1996 ("HIPAA") have been met with respect
-----
to each Company Benefit Plan.
(h) No Company Benefit Plan is an ESOP or otherwise invests in
"employer securities" (as such term is defined in Section 409(l) of the Code).
(i) The Company has made all contributions and other payments
required by and due under the terms of each Company Benefit Plan and has taken
no action (including, without limitation, actions required by law) relating to
any Company Benefit Plan that will increase Acquiror's, the Company's or any
Company Commonly Controlled Entity's obligation under any Company Benefit Plan.
(j) No Company Benefit Plan is a "qualified foreign plan" (as
such term is defined in Section 404A of the Code), and no Company Benefit Plan
is subject to the laws of any jurisdiction other than the United States of
America or one of its political subdivisions.
(k) No Company Benefit Plan promises or provides
post-retirement medical life insurance or other benefits due now or in the
future to current, former or retired employees of the Company or any Company
Common Controlled Entity other than benefits required pursuant to COBRA.
(l) Schedule 3.15 sets forth a list of all "pension plans," as
-------------
such term is defined in Section 3(2) of ERISA, maintained by the Company or a
Company Commonly Controlled Entity, that have been frozen or terminated in the
last three calendar years.
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<PAGE>
SECTION 3.16. Properties; Assets.
Neither the Company nor any of the Company Subsidiaries owns
(of record or beneficially) any real property or has any interest in any real
property other than the leasehold interests granted pursuant to the Real
Property Leases. The Company or one of the Company Subsidiaries is the lessee of
all leasehold estates granted pursuant to the Real Property Leases and is in
possession of the properties purported to be leased thereunder, and each such
Real Property Lease is valid without default thereunder by the lessee. The
assets and properties of the Company and the Company Subsidiaries, taken as a
whole, are in good operating condition and repair (ordinary wear and tear
excepted), and constitute all of the assets and properties which are required
for the businesses and operations of the Company and the Company Subsidiaries as
presently conducted.
SECTION 3.17. Labor Relations.
Neither the Company nor any Company Subsidiary is a party to
any collective bargaining agreement or other contract or agreement with any
labor organization or other representative of any of the employees of the
Company or any Company Subsidiary. The Company and each Company Subsidiary is in
compliance in all material respects with all laws relating to employment or the
workplace, including, without limitation, provisions relating to wages, hours,
collective bargaining, safety and health, work authorization, equal employment
opportunity, immigration and the withholding of income taxes, unemployment
compensation, worker's compensation, employee privacy and right to know and
social security contributions.
SECTION 3.18. Environmental Matters.
Except as disclosed in the Company SEC Reports, (a) each of
the Company and each Company Subsidiary is in material compliance with all
applicable Environmental Laws and neither the Company nor any Company Subsidiary
has violated or infringed in any material respect any Environmental Law; (b)
neither the Company nor any Company Subsidiary has received any written
communication that alleges that the Company or any Company Subsidiary is not in
material compliance with any applicable Environmental Law; (c) all material
permits and other governmental authorizations currently held by the Company and
each Company Subsidiary pursuant to the Environmental Laws ("Environmental
-------------
Permits") are in full force and effect, the Company and each Company Subsidiary
- -------
are in material compliance with all of the terms of such Environmental Permits,
and no other material Environmental Permits are required by the Company or any
Company Subsidiary for the conduct of their respective businesses; and (d) there
is no material liability under any Environmental Law affecting the Company or
any Company Subsidiary or any of their respective properties or assets.
-24-
<PAGE>
SECTION 3.19. Insurance.
Schedule 3.19 contains a list of all insurance policies of
-------------
director and officer liability, title, property, fire, casualty, liability,
life, workmen's compensation, libel and slander, and other forms of insurance in
force with respect to the Company and the Company Subsidiaries. All such
insurance policies: (a) are in full force and effect; and (b) are valid,
outstanding, and enforceable. Neither the Company nor any of the Company
Subsidiaries has received or given notice of cancellation with respect to any
such insurance policies.
SECTION 3.20. Board Approval; Vote Required.
The Board of Directors of the Company has determined that the
transactions contemplated by this Agreement, the Option Agreement, the Company
Voting Agreement and the Acquiror Voting Agreement are fair to, advisable and in
the best interests of the Company and its stockholders and has resolved to
recommend to such stockholders that they vote in favor of this Agreement. The
affirmative vote at the Company Stockholders Meeting of a majority of all
outstanding shares of Company Common Stock to adopt this Agreement is the only
vote of the holders of any class or series of the Company's capital stock
necessary to approve this Agreement and the transactions contemplated hereby,
including the Merger.
SECTION 3.21. Opinion of Financial Advisor.
The Board of Directors of the Company has received the written
opinion dated the date hereof of Salomon Smith Barney Inc., the Company's
financial advisor, to the effect that the Exchange Ratio is fair from a
financial point of view to the Holders as of the date of such opinion. A copy of
such opinion has been delivered to Acquiror and such opinion has not been
withdrawn or modified in any material respect.
SECTION 3.22. Brokers.
Except for Salomon Smith Barney Inc., no broker, finder or
investment banker is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by this Agreement
and the Option Agreement based upon arrangements made by or on behalf of the
Company. Prior to the date of this Agreement, the Company has provided to
Acquiror a complete and correct copy of all agreements between the Company and
Salomon Smith Barney Inc. pursuant to which such firm will be entitled to any
payment relating to the transactions contemplated by this Agreement and the
Option Agreement.
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<PAGE>
SECTION 3.23. Takeover Provisions Inapplicable.
The Board of Directors of the Company has approved this
Agreement and the transactions contemplated by this Agreement (including those
contemplated by the Option Agreement, the Company Voting Agreement and the
Acquiror Voting Agreement). The Board of Directors has taken all action required
by it in order to exempt this Agreement and the transactions contemplated hereby
and by the Option Agreement and the Company Voting Agreement from Section 203 of
Delaware Law.
SECTION 3.24. Pooling; Tax Matters.
Neither the Company nor any of its Affiliates has taken or
agreed to take any action or failed to take any action that would prevent the
Merger from (a) being treated for financial accounting purposes as a "pooling of
interests" in accordance with GAAP and the regulations and interpretations of
the SEC; or (b) constituting a reorganization within the meaning of Section
368(a)2(E) of the Code.
SECTION 3.25. Registration Statement; Proxy Statement/Prospectus.
The information supplied by the Company or required to be
supplied by the Company (except to the extent revised or superseded by
amendments or supplements) for inclusion in the registration statement on Form
S-4, or any amendment or supplement thereto, relating to the registration under
the Securities Act of the shares of Acquiror Common Stock to be issued in the
Merger (including any amendments or supplements, the "Registration Statement")
----------------------
shall not, at the time the Registration Statement is declared effective by the
SEC, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The information supplied by the Company or required to be
supplied by the Company (except to the extent revised or superseded by
amendments or supplements) for inclusion in the proxy statement relating to the
Company Stockholders Meeting (as hereinafter defined) (such proxy statement,
together with the proxy statement relating to the Acquiror Stockholders Meeting
(as hereinafter defined), in each case as amended or supplemented from time to
time, the "Joint Proxy Statement") shall not, on the date the Joint Proxy
---------------------
Statement is first mailed to the Holders, at the time of the Company
Stockholders Meeting and at the Effective Time, contain any statement which, at
such time, is false or misleading with respect to any material fact, or omit to
state any material fact necessary in order to make the statements made therein,
in light of the circumstances under which they are made, not false or
misleading, or omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of
proxies by or on behalf of the
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<PAGE>
Company for the Company Stockholders Meeting which has become false or
misleading. Notwithstanding the foregoing, the Company makes no representation,
warranty or covenant with respect to any information supplied or required to be
supplied by Acquiror which is contained in or omitted from any of the foregoing
documents.
SECTION 3.26. Disclosure.
No representation or warranty of the Company in this Agreement
and no statement in the Company's disclosure schedules contains any statement
which is false or misleading with respect to any material fact or omits to state
a material fact necessary to make the statements herein or therein, in light of
the circumstances in which they were made, not false or misleading.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF
ACQUIROR AND MERGER SUB
Acquiror and Merger Sub jointly and severally represent and
warrant to the Company as follows:
SECTION 4.1. Organization and Qualification.
Merger Sub is a corporation duly organized, validly existing
and in good standing under Delaware Law. Merger Sub was formed solely for the
purpose of engaging in the transactions contemplated by this Agreement. As of
the date of this Agreement, except for obligations or liabilities incurred in
connection with its incorporation and organization and otherwise in connection
with the transactions contemplated by this Agreement, Merger Sub has not
incurred, directly or indirectly, any obligations or liabilities or engaged in
any business activities of any type or kind whatsoever or entered into any
agreements or arrangements with any Person.
SECTION 4.2. Certificate of Incorporation and Bylaws.
Merger Sub has heretofore delivered to the Company a complete
and correct copy of the certificate of incorporation and the bylaws of Merger
Sub, each as amended to date. Such certificate of incorporation and bylaws are
in full force and effect. Merger Sub is not in violation of any of the
provisions of its certificate of incorporation or bylaws.
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<PAGE>
SECTION 4.3. Capitalization.
The authorized capital of the Merger Sub is as set forth in
its certificate of incorporation. As of the date hereof, there are 1,000 shares
of Merger Sub Stock issued and outstanding, all of which are owned by Acquiror
SECTION 4.4. Authority.
Merger Sub has the necessary corporate power and authority to
enter into this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by Merger Sub and the consummation by Merger Sub of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action and no other corporate proceedings on the part of
Merger Sub are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by Merger Sub and, assuming the due authorization, execution and
delivery of this Agreement by the Company and Acquiror, constitutes a legal,
valid and binding obligation of Merger Sub, enforceable in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws of general applicability
relating to or affecting creditors' rights generally and by the application of
general principles of equity.
SECTION 4.5. No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by Merger Sub
do not, and the performance by Merger Sub of its obligations under this
Agreement will not: (i) conflict with or violate the certificate of
incorporation or bylaws of Merger Sub; (ii) subject to compliance with the
requirements set forth in Section 4.5(b) below, conflict with or violate any
--------------
Order applicable to Merger Sub or by which any of its properties or assets is
bound or affected; or (iii) result in any breach of or constitute a default (or
an event which with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of any Encumbrance on any of the
properties or assets of Merger Sub pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which Merger Sub is a party or by which Merger Sub
or any of its properties or assets is bound or affected, except, in the case of
clauses (ii) and (iii) above, for any such conflicts, violations, breaches,
defaults or other alterations or occurrences that would not: (x) prevent or, to
the knowledge of Acquiror, delay in any material respect consummation of the
Merger; (y) otherwise prevent Merger Sub from performing its obligations under
this Agreement in any material respect; or (z) have a Material Adverse Effect on
Merger Sub.
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<PAGE>
(b) The execution and delivery of this Agreement by Merger Sub
does not, and the performance of this Agreement by Merger Sub will not, require
by, with respect to or on behalf of Merger Sub any consent, approval,
authorization or permit of, or filing with or notification to, any Governmental
Entity, except: (i) for (A) applicable requirements, if any, of the Exchange
Act, the Securities Act, state securities or blue sky laws, state takeover laws,
the NASD, and the HSR Act, (B) applicable requirements, if any, of the consents,
approvals, authorizations or permits described in Schedule 5.5, and (C) filing
------------
and recordation of appropriate merger documents as required by Delaware Law; or
(ii) where failure to obtain such consents, approvals, authorizations or
permits, or to make such filings or notifications, would not: (x) prevent or, to
the knowledge of Acquiror, delay in any material respect consummation of the
Merger; (y) otherwise prevent Merger Sub from performing its obligations under
this Agreement in any material respect; or (z) have a Material Adverse Effect on
Merger Sub.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES
OF ACQUIROR
Acquiror hereby represents and warrants to the Company,
subject to the exceptions set forth herein and in the Acquiror's disclosure
schedules (which exceptions shall specifically identify a section, subsection or
clause of a single section or subsection hereof, as applicable, to which such
exception relates, it being understood and agreed that each such exception shall
be deemed to be disclosed both under such section, subsection or clause hereof
and any other section, subsection or clause hereof to which such disclosure
reasonably relates) that:
SECTION 5.1. Organization and Qualification; Subsidiaries.
Each of Acquiror and each Subsidiary of Acquiror (each an
"Acquiror Subsidiary" and collectively, the "Acquiror Subsidiaries") is a
------------------- ---------------------
corporation or partnership duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization. Each of Acquiror and
each Acquiror Subsidiary is duly qualified to conduct its business, and is in
good standing, in each jurisdiction where the character of its properties owned,
operated or leased or the nature of its business makes such qualification
necessary, except for such failures which would not have a Material Adverse
Effect on Acquiror. Each of Acquiror and each Acquiror Subsidiary has the
requisite corporate power and authority to own, operate, lease and otherwise to
hold its assets and properties and to carry on its business as now being
conducted, except for such failures which would not have a Material Adverse
Effect on Acquiror. Acquiror has no Subsidiaries other than those listed in
Schedule 5.1, each of which is directly or indirectly wholly-owned by Acquiror,
- ------------
or any direct or indirect beneficial ownership of any securities, equity or
other ownership interest in any Person other than those listed in Schedule 5.1.
------------
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<PAGE>
SECTION 5.2. Certificate of Incorporation and Bylaws.
Acquiror has heretofore delivered to the Company a complete
and correct copy of the articles of incorporation and the bylaws of Acquiror,
each as amended to date. Such articles of incorporation and bylaws are in full
force and effect. Acquiror is not in violation of any of the provisions of its
articles of incorporation or bylaws.
SECTION 5.3. Capitalization.
(a) The authorized capital stock of Acquiror consists of one
hundred twenty-five million (125,000,000) shares of Acquiror Common Stock and
one million two hundred fifty thousand (1,250,000) shares of preferred stock,
par value $.001 per share ("Acquiror Preferred Stock"). As of May 28, 1999: (i)
------------------------
thirty-four million seven-hundred eighteen thousand nine hundred thirty
seven(34,718,937) shares of Acquiror Common Stock were issued and outstanding;
(ii) no shares of Acquiror Preferred Stock were issued and outstanding; (iii)
nine million nine-hundred seventy-one thousand eight hundred eighteen
(9,971,818) shares of Acquiror Common Stock were reserved for issuance upon the
exercise of outstanding employee stock options or other rights to purchase or
receive Acquiror Common Stock granted under Acquiror's 1998 Stock Option and
Incentive Plan (the "Acquiror Stock Option Plan"); (iv) six-hundred sixty-nine
thousand three hundred six (669,306) shares of Acquiror Common Stock were
reserved for issuance pursuant to Acquiror's Employee Stock Purchase Plan (the
"Acquiror Stock Purchase Plan"); and (v) no shares of Acquiror Common Stock were
----------------------------
held by Acquiror in Acquiror's treasury.
(b) All outstanding shares of capital stock of Acquiror are,
and all shares which may be issued pursuant to the Acquiror Stock Option Plan or
Acquiror Stock Purchase Plan will be, when issued, duly authorized, validly
issued, fully paid and nonassessable and not subject to preemptive rights.
Except as set forth in this Section 5.3 and except for changes since March 31,
-----------
1999 resulting from the issuance of shares of Acquiror Common Stock pursuant to
the Acquiror Stock Option Plan or the Acquiror Stock Purchase Plan or as
expressly permitted by this Agreement: (i) there are not issued, reserved for
issuance or outstanding (A) any shares of capital stock or other voting
securities of Acquiror, (B) any securities of Acquiror or any Acquiror
Subsidiary convertible into or exchangeable or exercisable for shares of capital
stock or voting securities of or ownership interests in Acquiror or any Acquiror
Subsidiary, (C) any warrants, calls, options or other rights to acquire from
Acquiror or any Acquiror Subsidiary, or any obligation of Acquiror or any
Acquiror Subsidiary to issue, any capital stock, voting securities or other
ownership interests in, or securities convertible into or exchangeable or
exercisable for capital stock or voting securities of or other ownership
interests in, Acquiror or any Acquiror Subsidiary; and (ii) there are no
outstanding obligations of Acquiror or any Acquiror
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Subsidiary to repurchase, redeem or otherwise acquire any such securities or to
issue, deliver or sell, or cause to be issued, delivered or sold, any such
securities.
(c) Except as described in Schedule 5.3, neither Acquiror nor
------------
any Acquiror Subsidiary is a party to any agreement restricting the purchase or
transfer of, relating to the voting of, requiring registration of, or granting
any preemptive or, except as provided by the terms of Acquiror Stock Option
Plans or the Acquiror Stock Purchase Plan, antidilutive rights with respect to,
any securities of the type described in this Section 5.3.
SECTION 5.4. Authority.
Acquiror has the necessary corporate power and authority to
enter into this Agreement and, subject to obtaining the requisite stockholder
approval (the "Acquiror Stockholder Approval") of the Stock Issuance, to perform
-----------------------------
its obligations hereunder and to consummate the transactions contemplated
hereby. Except for the Acquiror Stockholder Approval, the execution and delivery
of this Agreement by Acquiror and the consummation by Acquiror of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action and no other proceedings on the part of Acquiror are
necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. Acquiror has taken all steps necessary, as the sole
stockholder of Merger Sub, to authorize and approve the execution, delivery and
performance of the terms of this Agreement by Merger Sub. This Agreement has
been duly executed and delivered by Acquiror and, assuming the due
authorization, execution and delivery by the Company, constitutes a legal, valid
and binding obligation of Acquiror, enforceable in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws of general applicability
relating to or affecting creditors' rights generally and by the application of
general principles of equity.
SECTION 5.5. No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by Acquiror
do not, and the performance by Acquiror of its obligations under this Agreement
will not: (i) conflict with or violate the articles of incorporation or bylaws
of Acquiror; (ii) subject to obtaining the approvals and compliance with the
requirements set forth in Section 5.5(b) below, conflict with or violate any
--------------
Order applicable to Acquiror or any Acquiror Subsidiary or by which any of their
respective properties or assets is bound or affected; or (iii) except as set
forth in Schedule 5.5, result in any breach of or constitute a default (or an
------------
event which with or without notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of an Encumbrance on
any of the properties or assets of Acquiror or any Acquiror Subsidiary pursuant
to, any note, bond, mortgage, indenture, contract, agreement,
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lease, license, permit, franchise or other instrument or obligation to which
Acquiror or any Acquiror Subsidiary is a party or by which Acquiror, any
Acquiror Subsidiary or any of their respective properties or assets is bound or
affected, except, in the case of clauses (ii) and (iii) above, for any such
conflicts, violations, breaches, defaults or other alterations or occurrences
that would not: (x) prevent or, to the knowledge of Acquiror, delay in any
material respect consummation of the Merger; (y) otherwise prevent Acquiror from
performing its obligations under this Agreement in any material respect; or (z)
have a Material Adverse Effect on Acquiror.
(b) The execution and delivery of this Agreement by Acquiror
does not, and the performance of this Agreement by Acquiror will not, require
by, with respect to or on behalf of Acquiror or any Acquiror Subsidiary any
consent, approval, authorization or permit of, or filing with or notification
to, any Governmental Entity, except (i) for (A) applicable requirements, if any,
of the Securities Act, state securities or blue sky laws, Exchange Act, state
takeover laws, the Nasdaq, the NASD and the HSR Act, (B) applicable
requirements, if any, of the consents, approvals, authorizations or permits
described in Schedule 5.5, and (C) filing and recordation of appropriate merger
------------
documents as required by Delaware Law, or (ii) where failure to obtain such
consents, approvals, authorizations or permits, or to make such filings or
notifications, would not: (x) prevent or, to the knowledge of Acquiror, delay in
any material respect consummation of the Merger; (y) otherwise prevent Acquiror
from performing its obligations under this Agreement in any material respect; or
(z) have a Material Adverse Effect on Acquiror.
SECTION 5.6. SEC Filings; Financial Statements.
(a) Acquiror, and each Acquiror Subsidiary required to file,
has filed all forms, reports, statements and other documents required to be
filed with the SEC since May 28, 1998, and has heretofore furnished to the
Company, in the form filed with the SEC since such date, together with any
amendments thereto, all of its (i) Annual Reports on Form 10-K; (ii) Quarterly
Reports on Form 10-Q; (iii) proxy statements relating to meetings of
stockholders (whether annual or special); (iv) reports on Form 8-K; and (v)
other reports or registration statements filed by Acquiror and such Acquiror
Subsidiaries (collectively, the "Acquiror SEC Reports"). As of their respective
--------------------
filing dates, the Acquiror SEC Reports: (x) complied as to form in all material
respects with the requirements of the Exchange Act and the Securities Act, as
applicable; and (y) did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading.
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(b) The audited consolidated financial statements and
unaudited interim financial statements of Acquiror (including the notes and
schedules thereto) contained or incorporated by reference in the Acquiror SEC
Reports (the "Acquiror Financial Statements") complied in all material respects
-----------------------------
with applicable GAAP accounting requirements and with the rules and regulations
of the SEC with respect thereto. The Acquiror Financial Statements present
fairly in all material respects the consolidated financial position of Acquiror
and the Acquiror Subsidiaries at the respective dates thereof and the
consolidated results of operations and cash flows of Acquiror and the Acquiror
Subsidiaries for the periods indicated, in accordance with GAAP applied on a
consistent basis throughout the periods involved (except as may be noted
therein) and subject in the case of interim financial statements to normal
year-end adjustments.
SECTION 5.7. No Undisclosed Liabilities.
Neither Acquiror nor any of the Acquiror Subsidiaries has any
liabilities or obligations of any nature, whether or not accrued, contingent or
otherwise, except: (a) liabilities or obligations reflected in the Acquiror SEC
Reports; (b) liabilities or obligations incurred since March 31, 1999 in the
ordinary course of business consistent with past practices which have not had,
and are not reasonably likely to have (without taking into account the effects
of the consummation of the Merger), a Material Adverse Effect on Acquiror; and
(c) liabilities or obligations which have not had, and are not reasonably likely
to have (without taking into account the effects of the consummation of the
Merger), a Material Adverse Effect on Acquiror.
SECTION 5.8. Absence of Certain Changes or Events.
Except as disclosed in the Acquiror SEC Reports, since March
31, 1999, there has not been any Material Adverse Effect on Acquiror.
SECTION 5.9. Absence of Litigation.
Except as set forth in the Acquiror SEC Reports or in Schedule
--------
5.9, there are: (a) no claims, actions, suits, investigations, or proceedings
- ---
pending or, to Acquiror's knowledge, threatened against Acquiror or any of the
Acquiror Subsidiaries before any court, administrative, governmental, arbitral,
mediation or regulatory authority or body, domestic or foreign, that would be
reasonably likely to have a Material Adverse Effect on Acquiror or that would
prevent or enjoin, or delay in any material respect, consummation of the Merger
or the transactions contemplated hereby or by the Option Agreement; and (b) no
Orders of any Governmental Entity or arbitrator outstanding against Acquiror or
any Acquiror Subsidiary that would reasonably be likely to have an Material
Adverse Effect on Acquiror or that would prevent or enjoin, or delay in any
material respect,
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consummation of the Merger or the transactions contemplated hereby or by the
Option Agreement.
SECTION 5.10. Licenses and Permits; Compliance with Laws.
Except as set forth in Schedule 5.10 or disclosed in the
-------------
Acquiror SEC Reports, Acquiror and Acquiror Subsidiaries hold all permits,
licenses, franchises, authorizations and approvals (none of which has been
modified or rescinded and all of which are in full force and effect) from all
Governmental Entities (collectively, the "Acquiror Permits") necessary for
----------------
Acquiror and Acquiror Subsidiaries to own, lease and operate their respective
properties and assets and to carry on their respective businesses as presently
conducted, except where the failure to have any such permits, licenses or
approvals would not have a Material Adverse Effect on Acquiror. Acquiror and
Acquiror Subsidiaries are in compliance with the terms of the Acquiror Permits
and all applicable statutes, laws, ordinances, rules and regulations, except
where the failure so to comply would not have a Material Adverse Effect on the
Company.
SECTION 5.11. Unlawful Payments.
None of the Acquiror, any Acquiror Subsidiary, nor, to the
knowledge of Acquiror, any stockholder, officer, director, employee, agent or
representative of Acquiror or any Acquiror Subsidiary has made, directly or
indirectly, any bribe or kickback, illegal political contribution, payment from
corporate funds which was incorrectly recorded on the books and records of
Acquiror or any Acquiror Subsidiary, unlawful payment from corporate funds to
governmental or municipal officials in their individual capacities for the
purpose of affecting their action or the actions of the jurisdiction which they
represent to obtain favorable treatment in securing business or licenses or to
obtain special concessions of any kind whatsoever, or illegal payment from
corporate funds to obtain or retain any business.
SECTION 5.12. Taxes.
Except as set forth in Schedule 5.12, Acquiror and the
-------------
Acquiror Subsidiaries have prepared and filed on a timely basis with all
appropriate Governmental Entities all Tax Returns required to be filed by
Acquiror and the Acquiror Subsidiaries and all such Tax Returns are correct and
complete in all material respects. Except as set forth in Schedule 5.12,
-------------
Acquiror and the Acquiror Subsidiaries have paid in full all Taxes due (other
than Taxes, the failure of which to pay have not had and are not reasonably
likely to have a Material Adverse Effect on Acquiror) and, in the case of
material Taxes accruing but not due, Acquiror has made adequate provision in its
books and records and financial statements for such payment. Except as set forth
in Schedule 5.12, Acquiror and the Acquiror Subsidiaries have withheld from
-------------
payments made to its present or former employees,
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officers and directors all amounts required by law to be withheld, except where
the liability for which has not had and would not have a Material Adverse Effect
on Acquiror, and has, where required, remitted such amounts within the
applicable periods to the appropriate Governmental Entities. In addition, except
as set forth in Schedule 5.12: (a) there are no assessments of, or claims
-------------
against, Acquiror or the Acquiror Subsidiaries with respect to Taxes, the
liability for which would have a Material Adverse Effect on Acquiror, that are
outstanding; (b) to Acquiror's knowledge, no Governmental Entity is conducting
an examination or audit of Acquiror or any Acquiror Subsidiary in respect of
Taxes and neither Acquiror nor any Acquiror Subsidiary has received notice of
any such examination or audit from any Governmental Entity; and (c) neither
Acquiror nor any Acquiror Subsidiary has executed or filed any agreement
extending the period of assessment or collection of any Taxes which remain in
effect.
SECTION 5.13. Intellectual Property.
(a) Except as described on Schedule 5.13, Acquiror and the
-------------
Acquiror Subsidiaries have good title to or the right to use all material
Intellectual Property owned, utilized or licensed by Acquiror and the Acquiror
Subsidiaries (all of the foregoing items collectively referred to as the
"Acquiror Intellectual Property") and all material inventions, processes,
------------------------------
designs, formulae, trade secrets and know-how necessary for the conduct of the
businesses of the Acquiror and the Acquiror Subsidiaries, as presently conducted
or currently proposed to be conducted. Except as set forth on Schedule 5.13 or
-------------
where there would be no Material Adverse Effect on Acquiror, to Acquiror's
knowledge, none of Acquiror or any of the Acquiror Subsidiaries are infringing
on any Intellectual Property right of others, and Acquiror has no knowledge of
any infringement by others of such rights owned by the Acquiror and the Acquiror
Subsidiaries. Except as set forth on Schedule 5.13, with respect to each item of
-------------
Acquiror Intellectual Property necessary for the conduct of the business of
Acquiror and the Acquiror Subsidiaries as heretofore and as currently conducted:
(i) the owner thereof (if such owner is Acquiror or any Acquiror Subsidiary)
possesses all right, title and interest in and to the item; (ii) the item is not
subject to any outstanding Order or charge; (iii) no charge, complaint, action,
suit, proceeding, hearing, investigation, claim, or demand is pending or, to the
knowledge of Acquiror, is threatened which challenges the legality, validity,
enforceability, use or ownership of the item; and (iv) neither Acquiror nor any
of the Acquiror Subsidiaries has agreed to indemnify any Person for or against
any interference, infringement, misappropriation or other conflict with respect
to the item.
(b) Acquiror's disclosure in the Acquiror SEC Reports with
respect to all of the computer software, computer firmware, computer hardware
(whether general or special purpose), and other similar or related items of
automated, computerized, and/or software system(s) that are developed and sold
by Acquiror or
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any of the Acquiror Subsidiaries (other than third-party software) or that are
used or relied on by Acquiror or any Acquiror Subsidiary in the administration
and conduct of their respective businesses does not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
SECTION 5.14. Material Contracts.
The Acquiror has filed all contracts required to be filed as
material contracts, as defined in Item 601(b)(10) of Regulation S-K under the
Securities Act. Except as set forth in Schedule 5.14, all agreements filed as
-------------
exhibits to Acquiror SEC Reports and each agreement that would have been
required to be filed as an exhibit to Acquiror SEC Reports if such agreement had
been entered into prior to the date of filing any such Acquiror SEC Report
(collectively, the "Acquiror Material Contracts") are valid and in full force
---------------------------
and effect on the date hereof except to the extent they have previously expired
in accordance with their terms, as the same may have been amended from time to
time, and neither Acquiror nor any Acquiror Subsidiary has (or has any knowledge
that any other party thereto has) violated any provision of, or committed or
failed to perform any act which with or without notice, lapse of time or both
would constitute a default under the provisions of any Acquiror Material
Contract, except for defaults which have not had and which would not be
reasonably likely to have a Material Adverse Effect on Acquiror.
SECTION 5.15. Employee Benefit Plans.
(a) Except as disclosed on Schedule 5.15, each of the Benefit
-------------
Plans currently adopted, maintained by, sponsored in whole or in part by, or
contributed to by Acquiror or any entity required to be aggregated with Acquiror
which is a member of the "controlled group of corporations" which includes
Acquiror within the meaning of Section 414(b) or (c) of the Code (each, an
"Acquiror Commonly Controlled Entity") for the benefit of present and former
-----------------------------------
employees or directors of Acquiror and of each Acquiror Subsidiary or their
beneficiaries, or providing benefits to such persons in respect of services
provided to any such entity (collectively, the "Acquiror Benefit Plans"),
----------------------
intended to be "qualified" within the meaning of Section 401(a) of the Code has
been determined by the Internal Revenue Service to be so qualified and, to
Acquiror's knowledge, no circumstances exist that could reasonably be expected
by Acquiror to result in the revocation of any such determination. Each of the
Acquiror Benefit Plans is in compliance with the applicable terms of ERISA and
the Code and any other applicable laws, rules and regulations the breach or
violation of which could result in a Material Adverse Effect to Acquiror or any
Acquiror Commonly Controlled Entity.
(b) No Acquiror Benefit Plan which is an "employee pension
benefit plan", as that term is defined in Section 3(2) of ERISA (an "Acquiror
--------
ERISA Plan"),
- ----------
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<PAGE>
which is a defined benefit pension plan has any "unfunded current liability", as
that term is defined in Section 302(d)(8)(A) of ERISA.
(c) No Acquiror Benefit Plan is a Multiemployer Plan. Neither
Acquiror nor any Acquiror Commonly Controlled Entity has completely or partially
withdrawn from any Multiemployer Plan. No termination liability to the Pension
Benefit Guaranty Corporation or withdrawal liability to any Multiemployer Plan
that is material in the aggregate has been or is reasonably expected to be
incurred with respect to any Multiemployer Plan by Acquiror or any Acquiror
Commonly Controlled Entity.
(d) Acquiror has not made, is not obligated to make, nor is
party to any agreement that under certain circumstances could obligate it to
make, any payments that will not be deductible to Acquiror under Section 280G of
the Code.
(e) All required reports and descriptions, if any (including
Form 5500 Annual Reports, Summary Annual Reports, PBGC 1's and Summary Plan
Descriptions) have been filed or distributed appropriately with respect to each
Acquiror Benefit Plan. The requirements of Part 6 of Subtitle B of Title I of
ERISA and of Section 4980B of the Code ("COBRA"), and the Health Insurance
-----
Portability and Accountability Act of 1996 ("HIPAA") have been met with respect
-----
to each Acquiror Benefit Plan.
(f) No Acquiror Benefit Plan is an ESOP or otherwise invests
in "employer securities" (as such term is defined in Section 409(l) of the
Code).
(g) Acquiror has made all contributions and other payments
required by and due under the terms of each Acquiror Benefit Plan and has taken
no action (including, without limitation, actions required by law) relating to
any Acquiror Benefit Plan that will increase Acquiror's or any Acquiror Commonly
Controlled Entity's obligation under any Acquiror Benefit Plan.
(h) No Acquiror Benefit Plan is a "qualified foreign plan" (as
such term is defined in Section 404A of the Code), and no Acquiror Benefit Plan
is subject to the laws of any jurisdiction other than the United States of
America or one of its political subdivisions.
(i) No Acquiror Benefit Plan promises or provides
post-retirement medical life insurance or other benefits due now or in the
future to current, former or retired employees of Acquiror or any Acquiror
Common Controlled Entity other than benefits required pursuant to COBRA.
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SECTION 5.16. Labor Relations.
Neither Acquiror nor any Acquiror Subsidiary is a party to any
collective bargaining agreement or other contract or agreement with any labor
organization or other representative of any of the employees of Acquiror or any
Acquiror Subsidiary. Acquiror and each Acquiror Subsidiary are in compliance in
all material respects with all laws relating to employment or the workplace,
including, without limitation, provisions relating to wages, hours, collective
bargaining, safety and health, work authorization, equal employment opportunity,
immigration and the withholding of income taxes, unemployment compensation,
worker's compensation, employee privacy and right to know and social security
contributions.
SECTION 5.17. Board Approval; Vote Required.
The Board of Directors of Acquiror has determined that the
transactions contemplated by this Agreement, the Option Agreement and the
Company Voting Agreement are advisable and in the best interests of Acquiror and
its stockholders and has resolved to recommend to such stockholders that they
vote in favor of the Stock Issuance. The affirmative vote at the Acquiror
Stockholders Meeting of a majority of all outstanding shares of Acquiror Common
Stock to approve the Stock Issuance is the only vote of the holders of any class
or series of the Acquiror's capital stock necessary for consummation by Acquiror
of the Merger and the other transactions contemplated hereby.
SECTION 5.18. Opinion of Financial Advisor.
The Board of Directors of Acquiror has received the written
opinion of Raymond James Financial, Inc., Acquiror's financial advisor,
addressed to the stockholders of Acquiror, to the effect that, as of the date of
such opinion, the Exchange Ratio is fair from a financial point of view to the
holders of Acquiror Common Stock. A copy of such opinion has been delivered to
the Company and such opinion has not been withdrawn or modified in any material
respect.
SECTION 5.19. Brokers.
No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement and the Option Agreement based upon
arrangements made by or on behalf of Acquiror.
SECTION 5.20. Pooling; Tax Matters.
Neither Acquiror nor any of its Affiliates has taken or agreed
to take any action or failed to take any action that would prevent the Merger
from:
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(a) being treated for financial accounting purposes as a "pooling of interests"
in accordance with GAAP and the regulations and interpretations of the SEC; or
(b) constituting a reorganization within the meaning of Section 368(a)2(E) of
the Code.
SECTION 5.21. Registration Statement; Proxy Statement/Prospectus.
The information supplied by Acquiror or required to be
supplied by Acquiror (except to the extent revised or superseded by amendments
or supplements) for inclusion in the Registration Statement shall not, at the
time the Registration Statement is declared effective by the SEC, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
information supplied by Acquiror or required to be supplied by Acquiror (except
to the extent revised or superseded by amendments or supplements) for inclusion
in the Joint Proxy Statement shall not, on the date the Joint Proxy Statement is
first mailed to Acquiror's stockholders, at the time of the Acquiror
Stockholders Meeting and at the Effective Time, contain any statement which, at
such time, is false or misleading with respect to any material fact, or omit to
state any material fact necessary in order to make the statements made therein,
in light of the circumstances under which they are made, not false or
misleading, or omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of
proxies by or on behalf of Acquiror for the Acquiror Stockholders Meeting which
has become false or misleading. Notwithstanding the foregoing, Acquiror makes no
representation, warranty or covenant with respect to any information supplied or
required to be supplied by the Company which is contained in or omitted from any
of the foregoing documents.
SECTION 5.22. Environmental Matters.
Except as disclosed in the Acquiror SEC Reports, (a) each of
Acquiror and each Acquiror Subsidiary is in material compliance with all
applicable Environmental Laws and neither Acquiror nor any Acquiror Subsidiary
has violated or infringed in any material respect any Environmental Law; (b)
neither Acquiror nor any Acquiror Subsidiary has received any written
communication that alleges that Acquiror or any Acquiror Subsidiary is not in
material compliance with any applicable Environmental Law; (c) all material
Environmental Permits currently held by Acquiror and each Acquiror Subsidiary
pursuant to the Environmental Laws are in full force and effect, Acquiror and
each Acquiror Subsidiary are in material compliance with all of the terms of
such Environmental Permits, and no other material Environmental Permits are
required by Acquiror or any Acquiror Subsidiary for the conduct of their
respective businesses; and (d) there
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is no material liability under any Environmental Law affecting Acquiror or any
Acquiror Subsidiary or any of their respective properties or assets.
SECTION 5.23. Disclosure.
No representation or warranty of Acquiror or Merger Sub in
this Agreement and no statement in the Acquiror's disclosure schedules contains
any statement which is false or misleading with respect to any material fact or
omits to state a material fact necessary to make the statements herein or
therein, in light of the circumstances in which they were made, not misleading.
ARTICLE VI.
COVENANTS
SECTION 6.1. Affirmative Covenants of the Company.
The Company hereby covenants and agrees that, prior to the
Effective Time, unless otherwise expressly contemplated by this Agreement or the
Option Agreement or consented to in writing by Acquiror (which consent shall not
be unreasonably withheld, delayed or conditioned), the Company shall, and shall
cause each Company Subsidiary to: (a) operate its business in the usual and
ordinary course consistent with past practices; (b) use its reasonable efforts
to preserve substantially intact its business organization, maintain its rights
and franchises, retain the services of its respective principal officers and key
employees and maintain its relationship with its respective principal customers
and suppliers; (c) use its reasonable efforts to maintain and keep its
properties and assets in as good repair and condition as at present, ordinary
wear and tear excepted; (d) use its reasonable efforts to keep in full force and
effect insurance comparable in amount and scope of coverage to that currently
maintained; (e) prepare and file all Tax Returns required to be filed in a
timely manner, and in a manner consistent with past practices and applicable
laws and regulations; (f) timely file with the SEC all reports required to be
filed under the Exchange Act, which reports (including the unaudited interim
financial statements included in such reports) shall comply in all material
respects with the Exchange Act, the rules and regulations promulgated thereunder
and all applicable accounting requirements; and (g) operate its business in
accordance with the terms of its licenses and in all material respects with all
applicable laws.
SECTION 6.2. Negative Covenants of the Company.
Except as set forth in Schedule 6.2 or as expressly
------------
contemplated by this Agreement or the Option Agreement or otherwise consented to
in writing by Acquiror (which consent shall not be unreasonably withheld,
delayed or
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<PAGE>
conditioned), from the date hereof until the Effective Time the Company shall
not, and shall cause each Company Subsidiary not to, do any of the following:
(a) (i) increase the periodic compensation payable to or to
become payable to any of its directors, executive officers or any key employees
listed on Schedule 6.2(a); (ii) grant any severance or termination pay (other
---------------
than pursuant to existing severance arrangements or policies as in effect on the
date of this Agreement) to, or enter into or modify any employment or severance
agreement with, any of its directors, officers or employees; (iii) adopt or
amend any employee benefit plan or arrangement, except as may be required by
applicable law; or (iv) pay any cash bonuses; provided, however, without the
-------- -------
prior written consent of Acquiror, the Company shall be permitted during each
full fiscal quarter of the Company, beginning with the fiscal quarter of the
Company beginning on July 1, 1999, between the date hereof and the Effective
Time to pay cash bonuses and increase periodic compensation as described in
clause (i) hereof as long as the aggregate amount of any such cash bonuses and
the annualized effect of such compensation increases does not exceed Two Hundred
Fifty Thousand Dollars ($250,000) per any fiscal quarter of the Company.
(b) declare or pay any dividend on, or make any other
distribution in respect of, outstanding shares of Company Common Stock;
(c) (i) redeem, repurchase or otherwise reacquire any shares
of Company Common Stock or any securities or obligations convertible into or
exchangeable for any shares of Company Common Stock or other securities or
obligations of the Company, or any options, warrants or conversion or other
rights to acquire any shares of Company Common Stock or any such other
securities or obligations (except in connection with the exercise of the
Options, Director Options and Warrants in accordance with their terms); (ii)
effect any merger, consolidation, restructuring, reorganization or
recapitalization or adopt a plan of complete or partial liquidation or
dissolution; or (iii) split, combine or reclassify any shares of Company Common
Stock or issue or authorize or propose the issuance of any other securities in
respect of, in lieu of, or in substitution for, shares of Company Common Stock
or other securities;
(d) (i) issue, pledge, deliver, award, grant or sell, or
register under the Securities Act or the Exchange Act or otherwise file any
registration statement under any such statute covering, or authorize or propose
the issuance, pledge, delivery, award, grant or sale of (including the grant of
any Encumbrances on) or registration of or filing of any registration statement
covering, any shares of any class of its capital stock (including shares of
Treasury Stock) or other securities (except in connection with the Options,
Director Options and Warrants), any securities convertible into or exercisable
or exchangeable for any such shares or other securities, or any rights, warrants
or options to acquire any such shares or
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other securities (except for the issuance of options to acquire shares of
Company Common Stock: (A) to new employees of the Company that are hired after
the date hereof; (B) to employees of the Company on a quarterly basis pursuant
to the Company's performance-based equity incentive program; provided that the
--------
number of shares of Company Common Stock subject to options issued by the
Company pursuant to this clause (B) shall not exceed one hundred thousand
(100,000) in the aggregate per any fiscal quarter of the Company beginning with
the fiscal quarter of the Company beginning on July 1, 1999; and (C) to
directors of the Company (in their capacity as directors) in connection with
annual grants of stock options by the Company to the members of the Company's
Board of Directors; provided that the number of shares of Company Common Stock
--------
subject to options issued by the Company pursuant to this clause (C) shall not
exceed options covering one hundred forty thousand (140,000) shares of Company
Common Stock; provided, that any issuances of options by the Company pursuant to
--------
clauses (A), (B) and (C) shall only be to the extent such issuances are in the
ordinary course of business and consistent with past practice); or (ii) amend or
otherwise modify the terms of any such rights, warrants or options (including,
without limitation, any Option, Warrant, Director Option or Earnout Agreement);
(e) acquire or agree to acquire, by merging or consolidating
with, by purchasing an equity interest in or a portion of the assets of, or by
any other manner, (i) any business or any corporation, partnership, association
or other business organization or any division (other than a Company Subsidiary)
thereof or (ii) make or commit to make any investments or capital expenditures,
other than investments or capital expenditures not exceeding in the aggregate
Two Hundred Fifty Thousand Dollars ($250,000) per any fiscal quarter of the
Company, beginning with the fiscal quarter of the Company beginning on July 1,
1999, and which are solely for purposes related to computer hardware and
software, leaseholds, furniture and fixtures;
(f) sell, lease, exchange, mortgage, pledge, transfer or
otherwise encumber or dispose of, or agree to sell, lease, exchange, mortgage,
pledge, transfer or otherwise encumber or dispose of, any of its assets, except
for dispositions in the ordinary course of business and consistent with past
practice which do not exceed One Hundred Thousand Dollars ($100,000) in the
aggregate;
(g) propose or adopt any amendment to its certificate or
articles of incorporation or its bylaws;
(h) (i) make any change in any of its methods of accounting;
or (ii) make or rescind any express or deemed election relating to Taxes, settle
or compromise any claim, action, suit, litigation, proceeding, arbitration,
investigation, audit or controversy relating to Taxes (except where the amount
of such settlements or controversies, individually or in the aggregate, does not
exceed One Hundred
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<PAGE>
Thousand Dollars ($100,000)), or change any of its methods of reporting income
or deductions for federal income tax purposes from those employed in the
preparation of the federal income tax returns for the taxable year ended
December 31, 1998, except, in the case of clause (i) or clause (ii), as may be
required by applicable law or regulations or GAAP;
(i) incur any obligation for borrowed money, whether or not
evidenced by a note, bond, debenture or similar instrument, or any guarantee of
any obligation for borrowed money, other than purchase money indebtedness not to
exceed One Hundred Thousand Dollars ($100,000) in the aggregate, except in the
ordinary course of business under existing loan agreements or capitalized
leases, or prepay, before the scheduled maturity thereof, any of its long-term
debt;
(j) engage in any transaction with, or enter into any
agreement, arrangement, or understanding with, directly or indirectly, any
Affiliate which involves the transfer of consideration or has a financial impact
on such entity, other than pursuant to such agreements, arrangements, or
understandings existing on the date of this Agreement;
(k) except in the ordinary course of business, enter into any
contract, agreement, commitment, arrangement, lease (including with respect to
personal property), policy or other instrument which, had it been entered into
as of the date hereof, would have been included as a Company Material Contract;
(l) adjust, split, combine or reclassify any capital stock;
(m) except for transactions in the ordinary course of
business, terminate or amend in a material way, or waive any provision of, any
Company Material Contract; provided that this provision shall not prohibit the
--------
Company from entering into customer and service contracts in the ordinary course
of business;
(n) settle any material claim, action or proceeding involving
money damages, except any settlement in the ordinary course of business where
the amount of such settlement individually does not exceed Two Hundred Fifty
Thousand Dollars ($250,000);
(o) take any action which would, or would be reasonably likely
to, prevent the Merger from being accounted for as a "pooling of interests" in
accordance with GAAP and the rules and regulations of the SEC;
(p) take any action that is intended or would reasonably be
expected to result in any of the Company's representations and warranties set
forth in this Agreement being or becoming untrue in any material respect at any
time prior to the Effective Time, or in any of the conditions to the Merger set
forth in
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Article VIII not being satisfied or in a violation of any provision of this
- ------------
Agreement; or
(q) agree in writing or otherwise to do any of the foregoing.
SECTION 6.3. Affirmative Covenants of Acquiror.
The Acquiror hereby covenants and agrees that, prior to the
Effective Time, unless otherwise expressly contemplated by this Agreement or the
Option Agreement or consented to in writing by the Company (which consent shall
not be unreasonably withheld, delayed or conditioned), the Acquiror shall, and
shall cause each Acquiror Subsidiary to: (a) operate its business in the usual
and ordinary course consistent with past practices; (b) use its reasonable
efforts to preserve substantially intact its business organization, maintain its
rights and franchises, retain the services of its respective principal officers
and key employees and maintain its relationship with its respective principal
customers and suppliers; (c) use its reasonable efforts to maintain and keep its
properties and assets in as good repair and condition as at present, ordinary
wear and tear excepted; (d) use its reasonable efforts to keep in full force and
effect insurance comparable in amount and scope of coverage to that currently
maintained; (e) prepare and file all Tax Returns required to be filed in a
timely manner, and in a manner consistent with past practices and applicable
laws and regulations; (f) timely file with the SEC all reports required to be
filed under the Exchange Act, which reports (including the unaudited interim
financial statements included in such reports) shall comply in all material
respects with the Exchange Act, the rules and regulations promulgated thereunder
and all applicable accounting requirements; and (g) operate its business in
accordance with the terms of its licenses and in all material respects with all
applicable laws.
SECTION 6.4. Negative Covenants of Acquiror.
Except as expressly contemplated by this Agreement or the
Option Agreement, from the date hereof until the Effective Time, without the
written consent of the Company (which consent shall not be unreasonably
withheld, delayed or conditioned) Acquiror shall not, and shall not permit any
Acquiror Subsidiary to, do any of the following:
(a) (i) declare or pay any dividend on, or make any other
distribution in respect of, outstanding shares of Acquiror Common Stock, other
than dividends or distributions by wholly-owned Subsidiaries; (ii) repurchase,
redeem or otherwise acquire any outstanding shares of capital stock or other
securities of, or other ownership interests in, Acquiror or any Acquiror
Subsidiary, other than intercompany acquisitions of stock and other than
repurchases of unvested shares of Acquiror Common Stock in connection with the
termination of the employment
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relationship with any employee pursuant to stock option or repurchase agreements
in effect on the date hereof; or (iii) except to the extent not accounted for in
Section 2.5 hereof, split, combine or reclassify any shares of Acquiror Common
- -----------
Stock or issue or authorize or propose the issuance of any other securities in
respect of, in lieu of, or in substitution for, shares of Acquiror Common Stock
or other securities;
(b) change in any material way any method of accounting or
accounting practice, except for any such change required by GAAP, applicable law
or any change by a Subsidiary to conform its accounting practices to the
Acquiror's;
(c) take any action that is intended or would reasonably be
expected to result in any of Acquiror's representations and warranties set forth
in this Agreement being or becoming untrue in any material respect at any time
prior to the Effective Time, or in any of the conditions to the Merger set forth
in Article VIII not being satisfied or in a violation of any provision of this
------------
Agreement;
(d) take any action which would, or would be reasonably likely
to, prevent the Merger from being accounted for as a "pooling of interests" in
accordance with GAAP and the rules and regulations of the SEC;
(e) engage, in any material respect, in any type of business
other than (i) the businesses conducted by Acquiror or any Acquiror Subsidiary
on the date hereof, or (ii) in any business or businesses related thereto;
provided, however, nothing in this Section 6.4(e) shall be deemed or interpreted
- -------- ------- --------------
to prevent or otherwise limit Acquiror's ability to take actions in accordance
with Acquiror's business plans and objectives as set forth in the Acquiror SEC
Reports; or
(f) agree in writing or otherwise to do any of the foregoing.
ARTICLE VII.
ADDITIONAL AGREEMENTS
SECTION 7.1. Access and Information.
During the period from the date hereof to the Effective Time
(the "Interim Period"), the Company and Acquiror shall, and shall cause the
--------------
Company Subsidiaries and the Acquiror Subsidiaries, respectively, to, afford to
each other and their respective officers, employees, accountants, consultants,
legal counsel and other representatives reasonable access during normal business
hours (and at such other times as the parties may mutually agree) to the
properties, executive personnel and all information concerning the business,
properties, contracts, records and personnel of the Company and the Company
Subsidiaries or Acquiror
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<PAGE>
and the Acquiror Subsidiaries, as the case may be, as such other party may
reasonably request; provided that no investigation pursuant to this Section 7.1
-----------
shall effect any representations or warranties made herein or the conditions to
the obligations of the respective parties to consummate the Merger.
SECTION 7.2. Confidentiality.
Acquiror and the Company each acknowledge and agree that all
information received by it (the "Receiving Party") from or on behalf of the
---------------
other party in connection with the transactions contemplated under this
Agreement shall be deemed received pursuant to the confidentiality letter
agreement, dated as of May 12, 1999, between the Company and Acquiror (the
"Confidentiality Agreement"), and such Receiving Party shall, and shall cause
-------------------------
its officers, directors, employees, Affiliates, financial advisors and agents
to, comply with the provisions of the Confidentiality Agreement with respect to
such information, and the provisions of the Confidentiality Agreements are
hereby incorporated herein by reference with the same effect as if fully set
forth herein, provided, however, that the term of the Confidentiality Agreement
-------- -------
shall be and hereby is extended until the second anniversary of the later of the
Closing Date or the date on which this Agreement is terminated pursuant to
Article IX.
- ----------
SECTION 7.3. Joint Proxy Statement and Registration Statement;
Stockholders Meetings.
(a) As soon as practicable following the date of this
Agreement, the Company and Acquiror shall prepare and file with the SEC the
Joint Proxy Statement and Acquiror shall prepare and file with the SEC the
Registration Statement in which the Joint Proxy Statement will be included as a
prospectus. Each of the Company and Acquiror shall use reasonable efforts to
have the Registration Statement declared effective under the Securities Act as
promptly as practicable after such filing. The Company shall use reasonable
efforts to cause the Joint Proxy Statement to be mailed to the Company's
stockholders, and Acquiror shall use reasonable efforts to cause the Joint Proxy
Statement to be mailed to Acquiror's stockholders, in each case as promptly as
practicable after the Registration Statement is declared effective under the
Securities Act. Acquiror also shall take any action (other than qualifying to do
business in any jurisdiction in which it is not now so qualified or filing a
general consent to service of process) required to be taken by the SEC, Nasdaq
or under any applicable state securities laws in connection with the issuance of
Acquiror Common Stock in the Merger and the Company shall furnish all
information concerning the Company and the holders of Company Common Stock as
may be reasonably requested in connection with any such action. No filing of, or
amendment or supplement to, the Registration Statement or the Joint Proxy
Statement will be made by Acquiror without the Company's prior consent (which
shall not be unreasonably withheld, delayed or
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<PAGE>
conditioned) and without providing the Company the reasonable and adequate
opportunity to review and comment thereon. Acquiror shall advise the Company,
promptly after it receives notice thereof, of the time when the Registration
Statement has become effective or any supplement or amendment has been filed,
the issuance of any stop order, the suspension of the qualification of Acquiror
Common Stock issuable in connection with the Merger for offering or sale in any
jurisdiction, or any request by the SEC for amendment of the Joint Proxy
Statement or the Registration Statement or comments thereon and responses
thereto or requests by the SEC for additional information. If at any time prior
to the Effective Time any information relating to the Company or Acquiror, or
any of their respective Affiliates, officers or directors, should be discovered
by the Company or Acquiror which should be set forth in an amendment or
supplement to any of the Registration Statement or the Joint Proxy Statement, so
that any of such documents would not include any misstatement of a material fact
or omit to state any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, the party
which discovers such information shall promptly notify the other parties hereto
and an appropriate amendment or supplement describing such information shall be
promptly filed with the SEC and, to the extent required by law, disseminated to
the stockholders of the Company and Acquiror.
(b) The Company shall, as promptly as practicable after the
Registration Statement is declared effective under the Securities Act, duly
call, give notice of, convene and hold a meeting of its stockholders (the
"Company Stockholders Meeting") in accordance with Delaware Law and its
----------------------------
certificate of incorporation and bylaws for the purpose of obtaining the Company
Stockholder Approval as required by Delaware Law and otherwise, and shall,
through its Board of Directors, declare that this Agreement is advisable and
recommend to its stockholders the approval and adoption of this Agreement, the
Merger and the other transactions contemplated hereby; provided, however, that
-------- -------
the Board of Directors of the Company shall submit this Agreement to the
Company's stockholders, whether or not the Board of Directors of the Company at
any time subsequent to the date hereof determines that this Agreement is no
longer advisable or recommends that the stockholders of the Company reject it,
but further provided, that nothing contained in this Section 7.3 shall prohibit
------- -------- -----------
the Company's Board of Directors from failing to make or from withdrawing or
modifying its recommendation to the Company's stockholders hereunder if the
Board of Directors of the Company, after consultation with and based upon the
written advice of independent legal counsel, determines in good faith that such
action is necessary for such Board of Directors to comply with its fiduciary
duties to its stockholders under applicable law. Unless the Board of Directors
of the Company has withdrawn its recommendation of this Agreement in compliance
herewith, the Company shall use reasonable efforts to solicit from its
stockholders proxies in favor of the approval and adoption of this Agreement and
the Merger and to secure the vote or consent of stockholders
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<PAGE>
required by the Delaware Law and its certificate of incorporation and bylaws to
approve and adopt this Agreement and the Merger.
(c) Acquiror shall, as promptly as practicable after the
Registration Statement is declared effective under the Securities Act, duly
call, give notice of, convene and hold a meeting of its stockholders (the
"Acquiror Stockholders Meeting") in accordance with Florida Law, its articles of
-----------------------------
incorporation and bylaws for the purpose of obtaining the Acquiror Stockholder
Approval of the Stock Issuance, and shall, through its Board of Directors,
declare that the Stock Issuance is advisable and recommend to its stockholders
the approval of the Stock Issuance pursuant to this Agreement.
(d) Acquiror and the Company shall use reasonable efforts to
hold the Acquiror Stockholders Meeting and the Company Stockholders Meeting on
the same date and as soon as reasonably practicable after the date hereof.
SECTION 7.4. HSR Act Matters.
Acquiror, Merger Sub and the Company (as may be required
pursuant to the HSR Act) promptly will complete all documents required to be
filed with the Federal Trade Commission and the United States Department of
Justice in order to comply with the HSR Act and, not later than fifteen (15)
calendar days after the date hereof, together with the Persons, if any, who are
required to join in such filings, shall file such documents with the appropriate
Governmental Entities. Acquiror, Merger Sub and the Company shall promptly
furnish all materials thereafter required by any of the Governmental Entities
having jurisdiction over such filings, and shall take all reasonable actions and
shall file and use all reasonable efforts to have declared effective or approved
all documents and notifications with any such Governmental Entity, as may be
required under the HSR Act or other federal or state antitrust laws for the
consummation of the Merger and the other transactions contemplated hereby and by
the Option Agreement. Acquiror and the Company shall each pay one half (1/2) of
all filing fees related to compliance with the HSR Act in connection with the
transactions contemplated hereby.
SECTION 7.5. Public Announcements.
Acquiror and the Company shall consult with each other before
issuing any press release or otherwise making any public statements with respect
to the transactions contemplated hereunder and shall not issue any such press
release or make any such public statement prior to such consultation, except as
may be required by law or any listing agreement with Nasdaq.
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SECTION 7.6. Indemnification.
(a) The certificate of incorporation and bylaws of the
Surviving Corporation shall contain the provisions with respect to
indemnification set forth in the certificate of incorporation and bylaws of the
Company on the date of this Agreement, which provisions shall not be amended,
repealed or otherwise modified for a period of six (6) years after the Effective
Time in any manner that would adversely affect the rights thereunder of persons
who at any time prior to the Effective Time were identified as prospective
indemnitees under the certificate of incorporation or bylaws of the Company in
respect of actions or omissions occurring at or prior to the Effective Time
(including, without limitation, the transactions contemplated by this
Agreement), unless such modification is required by applicable law.
(b) From and after the Effective Time, Acquiror shall cause
the Surviving Corporation to indemnify, defend and hold harmless the present and
former officers, directors and employees of the Company and the Company
Subsidiaries (collectively, the "Indemnified Parties") against all losses,
-------------------
expenses, claims, damages, liabilities or amounts that are paid, with the
approval of Acquiror, in settlement of or otherwise in connection with, any
claim, action, suit, proceeding or investigation (a "Claim"), based in whole or
-----
in part on the fact that such person is or was such a director, officer or
employee and arising out of actions or omissions occurring at or prior to the
Effective Time (including, without limitation, the transactions contemplated by
this Agreement), in each case to the fullest extent permitted under Delaware Law
(and shall pay expenses in advance of the final disposition of any such action
or proceeding to each Indemnified Party to the fullest extent permitted under
Delaware Law upon receipt from the Indemnified Party to whom expenses are
advanced of the undertaking to repay such advances contemplated by Section
145(e) of Delaware Law), provided, however, that no Indemnified Party shall be
-------- -------
entitled to any indemnification or expenses pursuant to this Section 7.6 in
-----------
respect of any Claim, issue or matter as to which such Indemnified Party shall
have been adjudged to be grossly negligent or to have committed or engaged in
willful misconduct. To that end, Acquiror shall maintain the Company's existing
officers' and directors' liability insurance policy ("D&O Insurance") for a
-------------
period of not less than six (6) years after the Effective Time, but only to the
extent related to actions or omissions prior to the Effective Time; provided,
--------
however, that Acquiror may substitute therefor policies of substantially similar
- -------
coverage and amounts containing terms no less advantageous to such former
directors or officers of the Company.
(c) In the event any Claim or Claims are asserted or made
within such six-year period, all rights to indemnification in respect of any
such Claim or Claims shall continue until disposition of any and all such
claims. Any determination required to be made with respect to whether an
Indemnified Party's
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<PAGE>
conduct complies with the standards set forth under Delaware Law, the Company's
certificate of incorporation or bylaws or such agreements, as the case may be,
shall be made by any method permitted under Delaware Law. Nothing set forth
herein shall impair any rights or obligations of any Indemnified Party. In the
event that any Claim or Claims are brought against any Indemnified Party
(whether arising before or after the Effective Time), Acquiror may select
counsel for the defense of such Claim, which counsel shall be reasonably
acceptable to such Indemnified Party.
(d) Any Indemnified Party seeking indemnification under this
Section 7.6, promptly upon learning of any such Claim, shall notify Acquiror and
- -----------
the Surviving Corporation (although the failure so to notify Acquiror and the
Surviving Corporation shall not relieve Acquiror and the Surviving Corporation
from any liability which Acquiror and the Surviving Corporation may have under
this Section 7.6, except to the extent such failure prejudices Acquiror or the
-----------
Surviving Corporation), and shall deliver to Acquiror and the Surviving
Corporation the undertaking contemplated by Section 145(e) of Delaware Law.
SECTION 7.7. Further Action; Commercially Reasonable Efforts.
(a) Each of the parties hereto shall use all reasonable
efforts to take, or cause to be taken, all appropriate action, and do, or cause
to be done, all things necessary, proper or advisable under applicable laws or
otherwise to consummate and make effective the transactions contemplated by this
Agreement as promptly as practicable, including, without limitation, using all
reasonable efforts to obtain all licenses, permits, consents, approvals,
authorizations, qualifications and orders of Governmental Entities and parties
to contracts with the Company, Acquiror or any Company Subsidiary or Acquiror
Subsidiary as are necessary for the transactions contemplated herein. In case at
any time after the Effective Time any further action is necessary or desirable
to carry out the purposes of this Agreement, the proper officers and directors
of each party to this Agreement shall use all reasonable efforts to take all
such action. Without limiting the generality of the foregoing, Acquiror shall
use all reasonable efforts to cause Merger Sub to perform its obligations under
this Agreement and to effect the transactions contemplated hereby.
(b) During the Interim Period, each of the parties hereto
shall promptly notify the other in writing of any pending or, to the knowledge
of such party, threatened action, proceeding or investigation by any
Governmental Entity or any other Person: (i) challenging or seeking damages in
connection with the Merger or the conversion of Company Common Stock into the
Merger Consideration pursuant to the Merger; or (ii) seeking to restrain or
prohibit the consummation of the Merger or any of the transactions contemplated
by this Agreement or the
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<PAGE>
Option Agreement or otherwise to limit the right of Acquiror to own or operate
all or any portion of the business or assets of the Company.
(c) Each of the parties hereto shall use reasonable efforts to
refrain from taking any action, or entering into any transaction, which would
cause any of its representations or warranties contained in this Agreement to be
untrue or which would result in a breach of any covenant made by it in this
Agreement.
SECTION 7.8. No Solicitation.
(a) From the date of this Agreement until the Effective Time
or the termination of this Agreement pursuant to the terms of this Agreement,
the Company shall not and shall not permit any of its Subsidiaries, Affiliates,
directors, officers, employees, agents or representatives, including, without
limitation, any investment banker, attorney or accountant of the Company or any
of its Subsidiaries (collectively, "Representatives"), directly or indirectly,
---------------
to: (i) initiate, solicit, encourage or otherwise facilitate (including by way
of furnishing information), any inquiries or the making of any proposal or offer
that constitutes, or may reasonably be expected to lead to an Acquisition
Proposal (as defined below); (ii) enter into or maintain or continue discussions
or negotiate with any Person in furtherance of such inquiries or to obtain an
Acquisition Proposal; or (iii) agree to, approve, recommend or endorse any
Acquisition Proposal, or authorize or permit any of its or their Subsidiaries or
Representatives to take any such action, and the Company shall promptly notify
Acquiror of any such inquiries and proposals received by the Company or any of
its Subsidiaries or Representatives, relating to any of such matters; provided,
--------
however, that the foregoing shall not prohibit the Board of Directors of the
- -------
Company from (A) furnishing information to, or engaging in discussions or
negotiations with, any Person in response to an unsolicited bona fide written
Acquisition Proposal; or (B) recommending such an unsolicited bona fide written
Acquisition Proposal to the stockholders of the Company, if and only to the
extent that: (w) the Board of Directors of the Company concludes in good faith
(after consultation with its financial advisors) that such Acquisition Proposal
would constitute a Superior Proposal (as hereinafter defined); (x) the Board of
Directors of the Company determines in good faith (after consultation with
outside legal counsel) that the failure to take such action would result in a
breach by the Board of Directors of the Company of its fiduciary duties to the
Company's stockholders under applicable law; (y) prior to furnishing such
information to, or entering into discussions or negotiations with, such Person
the Company provides prompt written notice to Acquiror to the effect that it is
furnishing information to, or entering into discussions or negotiations with,
such Person (which notice shall identify the nature and material terms of the
proposal); and (z) prior to providing any information or data to any Person in
connection with an Acquisition Proposal by any such Person, the Board of
Directors of the Company receives from such Person an executed confidentiality
agreement with provisions no less favorable to the Company than
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<PAGE>
the Confidentiality Agreement. The Company agrees that it will immediately cease
any existing activities, discussions, or negotiations with any parties regarding
any Acquisition Proposal. The Company shall as promptly as practicable provide
Acquiror with a copy of any written Acquisition Proposal received and a written
statement with respect to any nonwritten Acquisition Proposal received, which
statement shall include the identity of the Person making the Acquisition
Proposal and the material terms thereof. The Company shall inform Acquiror as
promptly as practicable of any change in the price, structure, form of
consideration or material terms and conditions regarding the Acquisition
Proposal. The Company agrees to keep Acquiror fully and timely informed of the
status of any discussions, negotiations, furnishing of non-public information,
or other activities relating to an Acquisition Proposal.
(b) Nothing contained in this Section 7.8 shall prohibit the
-----------
Company from: (i) taking and disclosing to its stockholders a position
contemplated by Rule 14e-2 promulgated under the Exchange Act; (ii) making a
recommendation in compliance with Rule 14d-9 promulgated under the Exchange Act;
or (iii) making any disclosure to the Company's stockholders which, in the good
faith judgment of the Board of Directors of the Company based on the advice of
outside counsel, is required under applicable law; provided that in any of such
--------
cases the Company does not withdraw or modify, or propose to withdraw or modify,
its position with respect to the Merger or approve or recommend, or propose to
approve or recommend, an Acquisition Proposal unless the Company and its Board
of Directors have complied with all the provisions of this Section 7.8.
-----------
SECTION 7.9. Nasdaq Listing.
Acquiror shall, prior to the Closing Date file with Nasdaq a
Notification for Additional Listing of Shares providing for inclusion for
quotation on Nasdaq of the shares of Acquiror Common Stock issuable pursuant to
Section 2.1(a) and shall use reasonable efforts to cause the shares of Acquiror
- --------------
Common Stock to be issued pursuant to Section 2.1(a) of this Agreement to be
--------------
approved for quotation on Nasdaq, subject to official notice of issuance, prior
to the Closing Date.
SECTION 7.10. Blue Sky.
Acquiror shall use reasonable efforts to obtain prior to the
Closing Date any necessary permits and approvals under all applicable state
securities or blue sky laws required to permit the distribution of the shares of
Acquiror Common Stock to be issued in accordance with the provisions of Section
-------
2.1(a) of this Agreement.
- ------
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SECTION 7.11. Affiliates.
(a) Each of the Company and Acquiror: (i) has disclosed to the
other in Schedule 7.11 hereto all Persons who are, or may be, as of the date
-------------
hereof its Affiliates; and (ii) shall use all reasonable efforts to cause each
Person who is identified as an Affiliate of it in Schedule 7.11 to deliver to
-------------
the other as promptly as practicable but in no event later than thirty-one (31)
days prior to the Closing Date, a signed Affiliate Agreement substantially in
the form attached hereto as Exhibit A, in the case of the Company, and Exhibit
--------- -------
B, in the case of Acquiror. The Company and Acquiror shall notify each other
- -
from time to time of all other Persons who then are or may be such an Affiliate
and use all reasonable efforts to cause each additional Person who is identified
as an Affiliate to execute an Affiliate Agreement as set forth in this Section
7.11(a).
(b) Shares of Company Common Stock and shares of Acquiror
Common Stock held by such Affiliates of the Company or Acquiror, as the case may
be, shall not be transferable during the thirty (30) day period prior to the
Effective Time, and shares of Acquiror Common Stock issued to, or as of the
Effective Time held by, such Affiliates shall not be transferable until such
time as financial results covering at least thirty (30) days of combined
operations of the Company and Acquiror have been published within the meaning of
Section 201.01 of the SEC's Codification of Financial Reporting Policies,
regardless of whether each such Affiliate has provided the signed Affiliate
Agreement referred to in Section 7.11(a), except to the extent permitted by, and
---------------
in accordance with, SEC Accounting Series Release 135 and SEC Staff Accounting
Bulletins 65 and 76. Any Company Common Stock and any Acquiror Common Stock held
by any such Affiliate shall not be transferable, regardless of whether such
Affiliate has provided the applicable signed agreement referred to in Section
-------
7.11(a), if such transfer, either alone or in the aggregate with other transfers
- -------
by Affiliates, would preclude the ability of the parties hereto to have the
Merger and the transactions contemplated hereby and by the Option Agreement
accounted for as a "pooling of interests" in accordance with GAAP, Accounting
Principles Board Opinion No. 16 and all rules, regulations and policies of the
SEC. Neither the Company nor Acquiror shall register the transfer of any shares
of Company Common Stock or Acquiror Common Stock, as applicable, unless such
transfer is made in compliance with the foregoing.
SECTION 7.12. Event Notices.
From and after the date of this Agreement until the Effective
Time, each party hereto will promptly notify the other parties hereto of (a) the
occurrence or nonoccurrence of any event the occurrence or nonoccurrence of
which would be likely to cause any condition to the obligations of such party to
effect the Merger and the other transactions contemplated by this Agreement or
the Option Agreement not to be satisfied and (b) the failure of such party to
comply with any
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covenant or agreement to be complied with by it pursuant to this Agreement which
would be likely to result in any condition to the obligations of such party to
effect the Merger and the other transactions contemplated by this Agreement or
the Option Agreement not to be satisfied. No delivery of any notice pursuant to
this Section 7.12 will cure any breach of any representation or warranty,
------------
covenant, condition or agreement of such party contained in this Agreement or
otherwise limit or affect the remedies available hereunder to the party
receiving such notice.
SECTION 7.13. Option Agreement
Concurrently with the execution of this Agreement, the Company
shall deliver to Acquiror an executed Option Agreement. The Company agrees to
perform to the fullest extent permitted under applicable law its obligations
under the Option Agreement.
SECTION 7.14. Tax Treatment.
Each of Acquiror and the Company shall use all reasonable
efforts to cause the Merger to qualify as a reorganization under the provisions
of Section 368(a)2(E) of the Code and will characterize the Merger as such a
reorganization for purposes of all Tax Returns and other relevant filings. The
Company and Acquiror shall cooperate and use their best efforts in obtaining the
Legal Opinion. In connection therewith, each of the Company, Acquiror and Merger
Sub shall deliver to Akin, Gump, Strauss, Hauer & Feld, L.L.P. (or Acquiror's
legal counsel, if applicable) a representation letter (collectively, the
"Representation Letters"), dated as of the Closing Date, in form and substance
to be reasonably agreed upon by the Company, Acquiror and Merger Sub, on which
Akin, Gump, Strauss, Hauer & Feld, L.L.P. (or Acquiror's legal counsel, if
applicable) shall be entitled to rely in rendering its Legal Opinion pursuant to
Section 8.1(i); provided, however, that the failure of any of the Company,
- --------------
Acquiror or Merger Sub to make any statement in a Representation Letter because
of an event, or a change in facts or law, in either case outside of such party's
control, shall not constitute a breach of this covenant.
SECTION 7.15. Pooling of Interests.
Each of the Company and Acquiror shall use all reasonable
efforts to cause the Merger to be accounted for as a "pooling of interests" in
accordance with GAAP, Accounting Principles Board Opinion 16 and applicable SEC
rules, regulations and policies and shall take no action that would cause such
accounting treatment not to be obtained.
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SECTION 7.16. Merger Sub.
Acquiror shall cause Merger Sub to approve and adopt, and to
perform its obligations in accordance with, this Agreement and shall take any
and all steps necessary to cause Merger Sub to effect the transactions
contemplated hereby.
SECTION 7.17. Board of Directors of Acquiror.
Promptly following the Effective Time, the Board of Directors
of Acquiror will take all actions necessary such that Ronald Bloom, who as of
the date hereof is the Chief Executive Officer of the Company, shall be
appointed to Acquiror's Board of Directors with a term expiring at the annual
meeting of Acquiror's stockholders to be held in calendar year 2000 (the "Year
----
2000 Meeting") and shall include Ronald Bloom in the slate of nominees
- ------------
recommended by Acquiror's Board of Directors to the stockholders of Acquiror at
the Year 2000 Meeting.
SECTION 7.18. Publishing Financial Results.
Acquiror shall prepare and publicly release, as soon as
practicable following the end of the first complete accounting month ending at
least thirty (30) days after the Closing Date, a report filed with the SEC on
Form 8-K or any other public filing, statement or announcement which includes
the combined financial results (including combined sales and net income) of the
Acquiror and the Company for a period of at least thirty (30) days of combined
operations of the Acquiror and the Company following the Closing Date; provided,
--------
however, that the Acquiror shall not be obligated to make such public release if
- -------
the Acquiror determines based on Acquiror's good faith business judgment that
such public release would be reasonably likely to (a) limit in any material
respect the Acquiror's ability to undertake a planned underwritten public
offering of Acquiror's securities to be covered by a registration statement to
be filed with the SEC, or (b) cause a Material Adverse Effect on Acquiror.
ARTICLE VIII.
CLOSING CONDITIONS
SECTION 8.1. Conditions to Obligations of the Parties to Effect
the Merger.
The respective obligations of the parties hereto to effect the
Merger and the other transactions contemplated herein shall be subject to the
satisfaction at or prior to the Effective Time of the following conditions, any
or all of which may be waived, in whole or in part, to the extent permitted by
applicable law:
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(a) Stockholder Approval. Each of the Company Stockholder
--------------------
Approval and Acquiror Stockholder Approval shall have been obtained.
(b) Effectiveness of Registration Statement. The Registration
---------------------------------------
Statement shall have been declared effective by the SEC under the Securities Act
prior to the mailing of the Joint Proxy Statement by each of the Company and
Acquiror to their respective stockholders and no stop order suspending the
effectiveness of such registration statement shall have been issued by the SEC
and no proceedings for that purpose shall have been initiated or, to the
knowledge of Acquiror or the Company, threatened by the SEC.
(c) No Order. No Governmental Entity or federal or state court
--------
of competent jurisdiction shall have enacted, issued, promulgated, enforced or
entered any law, statute, rule, ordinance, regulation, executive order, decree,
judgment, stipulation, injunction or other order (whether temporary, preliminary
or permanent) (collectively, an "Order"), in any case which is in effect and
-----
which prevents or prohibits consummation of the Merger or any other transactions
contemplated in this Agreement; provided, however, that the parties shall use
-------- -------
their reasonable efforts to cause any such Order to be vacated or lifted.
(d) Nasdaq Listing. Acquiror Common Stock issuable to the
--------------
holders of Company Common Stock pursuant to Section 2.1(a) of this Agreement
shall have been included for quotation on Nasdaq upon official notice of
issuance.
(e) HSR Act. Any waiting period with any extensions thereof
-------
under the HSR Act shall have expired or been terminated.
(f) Permits. Each of the Company and Acquiror shall have
-------
obtained such permits, authorizations, consents and approvals required to
consummate the transactions contemplated hereby except for such permits,
authorizations, consents and approvals the failure of which to obtain would not
have a Material Adverse Effect on the Company or Acquiror.
(g) Company Pooling Letter. There shall have been delivered to
----------------------
Acquiror and the Company a letter from the Company's independent accountants,
dated as of the Closing Date and addressed to Acquiror and the Company,
reasonably satisfactory in form and substance to Acquiror, setting forth the
concurrence of the Company's independent accountants with the conclusion of the
Company's management that the transactions contemplated herein will qualify as a
"pooling of interests" and to the effect that (i) after reasonable
investigation, the Company's independent accountants are not aware of any fact
concerning the Company or any of the Holders or any Affiliates of the Company
that could preclude Acquiror from accounting for the Merger as a "pooling of
interests" in accordance with GAAP, Accounting Principles Board Opinion No. 16
and all rules, regulations and policies of the SEC, and (ii) the Merger is
eligible to be accounted for as a
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<PAGE>
"pooling of interest" in accordance with GAAP, Accounting Principles Board
Opinion No. 16 and all rules, regulations and policies of the SEC;
(h) Acquiror Pooling Letter. There shall have been delivered
-----------------------
to Acquiror and the Company a letter from Acquiror's independent accountants,
dated as of the Closing Date and addressed to the Company and Acquiror,
reasonably satisfactory in form and substance to Acquiror, to the effect that
(i) after reasonable investigation, Acquiror's independent accountants are not
aware of any fact concerning Acquiror or any of its Affiliates that could
preclude Acquiror from accounting for the Merger as a "pooling of interests" in
accordance with GAAP, Accounting Principles Board Opinion No. 16 and all
published rules, regulations and policies of the SEC, and (ii) the Merger is
eligible to be accounted for as a "pooling of interest" in accordance with GAAP,
Accounting Principles Board Opinion No. 16 and all rules, regulations and
policies of the SEC; and
(i) Legal Opinion. The Company and the Holders shall have
-------------
received a legal opinion addressed to the Company and the Holders from Akin,
Gump, Strauss, Hauer & Feld, L.L.P., counsel to the Company, dated as of the
Closing Date, on the basis of facts, representations and assumptions set forth
in such opinion and the Representation Letters, all of which are consistent with
the state of facts existing as of the Effective Time, to the effect that the
Merger will constitute a reorganization within the meaning of Section 368(a)2(E)
of the Code (it being understood that, if such counsel to the Company does not
render such opinion, the condition set forth in this Section shall nonetheless
be deemed to be satisfied if Acquiror's legal counsel renders such an opinion to
the Company and the Holders). The legal opinion to be delivered by Akin, Gump,
Strauss, Hauer & Feld, L.L.P. or Acquiror's legal counsel pursuant to this
Section 8.1(i) shall be referred to herein as the "Legal Opinion."
- -------------- -------------
SECTION 8.2. Additional Conditions to Obligations of Acquiror and
Merger Sub.
The obligations of Acquiror and Merger Sub to effect the
Merger and the other transactions contemplated in this Agreement (except the
transactions contemplated in the Acquiror Voting Agreement) shall be subject to
the satisfaction at or prior to the Effective Time of the following conditions,
any or all of which may be waived by Acquiror, in whole or in part, to the
extent permitted by applicable law:
(a) Representations and Warranties. The representations and
------------------------------
warranties of the Company made in this Agreement shall be true and correct in
all material respects when made and on and as of the Closing Date (except for
representations and warranties that speak as of a specific date or time, which
need only be true and correct in all material respects as of such date or time);
provided, however, that, notwithstanding the foregoing, the representations and
- -------- -------
warranties of
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the Company set forth in Section 3.3(d) shall be true and correct in all
--------------
respects. Acquiror shall have received a certificate of the Chief Executive
Officer or Chief Financial Officer of the Company to such effect.
(b) Agreements and Covenants. The agreements and covenants of
------------------------
the Company required to be performed on or before the Effective Time shall have
been performed in all material respects. Acquiror shall have received a
certificate of the Chief Executive Officer or Chief Financial Officer of the
Company to such effect.
(c) No Material Adverse Changes.
---------------------------
(i) There shall have been no Material Adverse Effect on
the Company since the date of this Agreement (it being understood that a decline
in the price of a share of Company Common Stock shall not constitute a Material
Adverse Effect on the Company for purposes of any provision of this Agreement).
(ii) There shall have been no development, change, event
or effect with respect to the Securities Litigation that individually or in the
aggregate (taking into account all other such developments, changes, events or
effects with respect to the Securities Litigation) which has increased, or would
be reasonably likely to increase, the likelihood in any material respect that
either the Company or any of the officers or directors of the Company will be
found or determined to be liable for damages or other losses, or to have engaged
in any fraudulent or other actions not otherwise covered under the Company's
insurance policies, in each case with respect to the Securities Litigation.
(d) No Litigation. There shall not be pending or threatened
-------------
any suit, action, proceeding or investigation: (i) challenging or seeking to
restrain or prohibit the consummation of the Merger or any of the other
transactions contemplated by this Agreement; (ii) relating to the Merger and
seeking to obtain from Acquiror or any Acquiror Subsidiary any damages that may
be material to Acquiror, (iii) seeking to prohibit or limit in any material
respect Acquiror's ability to vote, receive dividends with respect to or
otherwise exercise ownership rights with respect to the stock of the Surviving
Corporation; (iv) which would materially and adversely affect the right of the
Surviving Corporation to own the assets or operate the business of the Company;
or (v) which, if adversely determined, could have a Material Adverse Effect on
the Company or Acquiror.
(e) Directors and Officer's Insurance. There shall be evidence
---------------------------------
that the current policies of the directors' and officers' liability insurance
and fiduciary liability insurance maintained by the Company with respect to
matters occurring prior the Effective Time shall have been extended and shall
remain in full force and effect.
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SECTION 8.3. Additional Conditions to Obligations of the Company.
The obligations of the Company to effect the Merger and the
other transactions contemplated in this Agreement (except the transactions
contemplated in the Company Voting Agreement or the Option Agreement) are also
subject to the following conditions any or all of which may be waived by the
Company, in whole or in part, to the extent permitted by applicable law:
(a) Representations and Warranties. The representations and
------------------------------
warranties of Acquiror and Merger Sub made in this Agreement shall be true and
correct in all material respects when made and on and as of the Closing Date
(except for representations and warranties that speak as of a specific date or
time, which need only be true and correct in all material respects as of such
date and time). The Company shall have received a certificate of the Chief
Executive Officer or Chief Financial Officer of Acquiror to such effect.
(b) Agreements and Covenants. The agreements and covenants of
------------------------
Acquiror and Merger Sub required to be performed on or before the Effective Time
shall have been performed in all material respects. The Company shall have
received a certificate of the Chief Executive Officer or Chief Financial Officer
of Acquiror to such effect.
(c) No Material Adverse Change. There shall have been no
--------------------------
Material Adverse Effect on Acquiror since the date of this Agreement (it being
understood that a decline in the price of a share of Acquiror Common Stock shall
not constitute a Material Adverse Effect on Acquiror for purposes of any
provision of this Agreement).
ARTICLE IX.
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.1. Termination.
This Agreement may be terminated at any time prior to the
Effective Time, whether before or after approval of this Agreement and the
Merger by the stockholders of the Company or the stockholders of Acquiror:
(a) by mutual written consent of Acquiror and the Company;
(b) by Acquiror, upon a material breach of any representation,
warranty, covenant or agreement on the part of the Company set forth in this
Agreement such that the conditions set forth in Section 8.2(a) or Section 8.2(b)
-------------- --------------
would not be satisfied (a "Terminating Company Breach"); provided, that, if such
--------------------------
Terminating Company Breach is curable by the Company through the exercise of
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reasonable efforts and for so long as the Company continues to exercise such
reasonable efforts, Acquiror may not terminate this Agreement under this Section
-------
9.1(b);
- ------
(c) by the Company, upon material breach of any
representation, warranty, covenant or agreement on the part of Acquiror set
forth in this Agreement such that the conditions set forth in Section 8.3(a) or
--------------
Section 8.3(b) would not be satisfied (a "Terminating Acquiror Breach");
- -------------- ---------------------------
provided, that, if such Terminating Acquiror Breach is curable by Acquiror
through the exercise of their reasonable efforts and for so long as Acquiror
continues to exercise such reasonable efforts, the Company may not terminate
this Agreement under this Section 9.1(c);
--------------
(d) by either Acquiror or the Company, if there shall be any
Order which is final and nonappealable preventing the consummation of the
Merger; provided, that the party seeking to terminate this Agreement pursuant to
this Section 9.1(d) shall have used reasonable efforts to cause any such Order
--------------
to be vacated or lifted;
(e) by either Acquiror or the Company, if the Merger shall not
have been consummated on or before that date which is two hundred seventy (270)
calendar days after the date hereof (the "Outside Date"); provided, however,
------------
that the right to terminate this Agreement under this Section 9.1(e) shall not
--------------
be available to any party whose material breach of its obligations under this
Agreement has been the cause of the failure of the Merger to occur on or before
the Outside Date; and provided further, that in the event that the failure of
----------------
the Merger to have been consummated on or before the Outside Date is the result
of the failure of the Company to timely fulfill any obligation of the Company
under this Agreement and Acquiror has notified the Company in writing that it
intends to terminate this Agreement pursuant to this Section 9.1(e) as a result
--------------
of such failure by the Company (which termination will result in the occurrence
of a Triggering Event (as defined in the Option Agreement) pursuant to Section
2(b)(iii) of the Option Agreement), then the Company may, by providing written
notice to Acquiror within five (5) days after receipt of such notice from
Acquiror, extend the Outside Date to that date which is no more than ninety (90)
days after the Outside Date (so long as such obligation is capable of being
satisfied and fulfilled by such date);
(f) by either Acquiror or the Company, if the requisite vote
of the stockholders of the Company or of Acquiror required by this Agreement
shall not have been obtained at the Company Stockholders Meeting or the Acquiror
Stockholders Meeting, as the case may be (including any adjournment or
postponement thereof); provided, that the right to terminate this Agreement
under this Section 9.1(f) shall not be available to any party who has not
--------------
complied with its obligations under Section 7.3(b) or Section 7.3(c), as the
-------------- --------------
case may be;
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(g) by Acquiror, if: (i) the Board of Directors of the Company
withdraws or modifies its recommendation of this Agreement or the Merger in a
manner adverse to Acquiror or shall have resolved or publicly announced or
disclosed to any third party its intention to do any of the foregoing or the
Board of Directors of the Company shall have recommended to the stockholders of
the Company any Acquisition Proposal or resolved to do so; (ii) a tender offer
or exchange offer for twenty percent (20%) or more of the outstanding shares of
Company Common Stock is commenced or a registration statement with respect
thereto shall have been filed and, in each such case, the Board of Directors of
the Company, within ten (10) Business Days after such tender offer or exchange
offer is so commenced or such registration statement is so filed, as the case
may be, either fails to recommend against acceptance of such tender or exchange
offer by its stockholders or takes no position with respect to the acceptance of
such tender or exchange offer by its stockholders; or (iii) the Company breaches
in any material respect the Option Agreement;
(h) by the Company, if the Board of Directors of the Company
shall have determined to recommend an Acquisition Proposal to its stockholders
after determining, pursuant to Section 7.8, that such Acquisition Proposal
-----------
constitutes a Superior Proposal, and the Company gives Acquiror at least three
(3) Business Days prior notice of its intention to effect such termination
pursuant to this Section 9.1(h), and the Company makes the payment required
--------------
pursuant to Section 9.6(a) of this Agreement and pays the expenses for which the
--------------
Company is responsible under Section 9.5 of this Agreement; or
-----------
(i) by Acquiror, if any Person (other than Acquiror or any
Affiliate of Acquiror pursuant to the Option Agreement) shall have acquired
beneficial ownership or the right to acquire beneficial ownership of, or any
"group" (as such term is defined under Section 13(d) of the Exchange Act and the
regulations promulgated thereunder), other than a "group" comprised of all of
the Persons listed on the signature pages to the Company Voting Agreement, shall
have been formed which beneficially owns, or has the right to acquire beneficial
ownership of, fifty percent (50%) or more of the then outstanding shares of
capital stock of the Company.
The right of any party hereto to terminate this Agreement
pursuant to this Section 9.1 shall remain operative and in full force and effect
-----------
regardless of any investigation made by or on behalf of any party hereto, any
Affiliate of such party or any of their respective officers, directors,
representatives or agents, whether prior to or after the execution of this
Agreement.
SECTION 9.2. Effect of Termination.
Except as provided in Section 9.5 and Section 9.6 of this
----------- -----------
Agreement, in the event of the termination of this Agreement pursuant to Section
-------
9.1, this
- ---
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Agreement shall forthwith become void, there shall be no liability on the part
of Acquiror or the Company or any of their respective officers, directors,
stockholders or Affiliates to the other, and all rights and obligations of any
party hereto shall cease, except that nothing herein shall relieve any party
from liability for any willful breach by a party of any of its representations,
warranties, covenants or agreements in this Agreement; and provided that the
Option Agreement and the provisions of Section 7.2, Section 9.5 and Section 9.6
----------- ----------- -----------
of this Agreement will remain in full force and effect and survive any
termination of this Agreement.
SECTION 9.3. Amendment.
This Agreement may be amended by the parties hereto by action
taken or authorized by their respective Boards of Directors at any time prior to
the Effective Time; provided, however, that, after approval of the Merger by the
-----------------
stockholders of the Company or stockholders of Acquiror, no amendment may be
made which by law or rule of Nasdaq requires further approval by such
stockholders without such further approval. This Agreement may not be amended
except by an instrument in writing signed by each of the parties hereto.
SECTION 9.4. Extension; Waiver.
At any time prior to the Effective Time, any party hereto may
(a) extend the time for the performance of any of the obligations or other acts
of any other party hereto, (b) waive any inaccuracies in the representations and
warranties of any other party contained herein or in any document delivered
pursuant hereto and (c) waive compliance by any other party with any of the
agreements or conditions contained herein. Any such extension or waiver shall be
valid only if set forth in an instrument in writing signed by the party or
parties to be bond thereby.
SECTION 9.5 Transaction Fees, Expenses and Other Payments.
Except as otherwise set forth in this Section 9.5, all costs
-----------
and expenses incurred by the parties hereto shall be borne solely and entirely
by the party which has incurred such costs and expenses, whether or not the
Merger is consummated; provided, however, that in the event that the
-------- -------
transactions hereby are not consummated, Acquiror and the Company shall share
equally all costs and expenses (other than attorney's and accountants' fees and
expenses) incurred in relation to printing and filing and, as applicable,
mailing the Registration Statement and the Joint Proxy Statement and any
amendments or supplements thereto and all SEC and other regulatory filing fees
incurred in connection with the Registration Statement and the Joint Proxy
Statement and the fees required under the HSR Act and applicable foreign laws,
if any, incurred in connection with the transactions contemplated under this
Agreement.
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SECTION 9.6 Termination Fees.
(a) If this Agreement is terminated (i) by Acquiror pursuant
to Section 9.1(g), or (ii) by the Company pursuant to Section 9.1(h), the
-------------- --------------
Company shall pay to Acquiror a termination fee of Six Million Dollars
($6,000,000) in cash (the "Termination Fee"), within two (2) Business Days after
any such termination.
(b) If this Agreement is terminated pursuant to Section 9.1(e)
--------------
as a result of the failure of the Company to timely fulfill any obligation under
this Agreement, and if an Acquisition Proposal involving the Company is
thereafter consummated or the Company enters into a definitive agreement with
respect to an Acquisition Proposal, in either case, within twelve (12) months
after such termination of this Agreement, the Company shall pay to Acquiror the
Termination Fee, at or prior to the consummation of such Acquisition Proposal,
or within two (2) Business Day following the date of execution of such
definitive agreement, whichever is earlier.
(c) If this Agreement is terminated (i) by either Acquiror or
the Company pursuant to Section 9.1(f) as a result of the failure to receive the
--------------
requisite vote for approval of this Agreement and the Merger by the Stockholders
of the Company at the Company Stockholders Meeting, or (ii) by Acquiror pursuant
to Section 9.1(b) as a result of a Terminating Company Breach that has not been
--------------
cured by the Company pursuant to Section 9.1(b), then, in either such case, the
--------------
Company shall pay to Acquiror a termination fee of Three Million Dollars
($3,000,000) in cash, within thirty (30) days after such termination. If an
Acquisition Proposal involving the Company is thereafter consummated or the
Company enters into a definitive agreement with respect to an Acquisition
Proposal, in either case, within twelve (12) months after any such termination
of this Agreement, the Company shall pay to Acquiror an additional termination
fee of Three Million Dollars ($3,000,000) in cash, at or prior to the
consummation of such Acquisition Proposal, or within two (2) Business Day
following the date of execution of such definitive agreement, whichever is
earlier.
(d) If this Agreement is terminated by the Company pursuant to
Section 9.1(c) as a result of a Terminating Acquiror Breach that has not been
- --------------
cured by Acquiror pursuant to Section 9.1(c), then Acquiror shall pay to the
--------------
Company a termination fee of Three Million Dollars ($3,000,000) in cash, within
thirty (30) days after such termination.
(e) Any payment required to be made by the Company pursuant to
Section 9.6 of this Agreement shall be made by wire transfer of immediately
- -----------
available funds to an account designated by Acquiror. Any payment required to be
made by Acquiror pursuant to Section 9.6(d) of this Agreement shall be made by
--------------
wire transfer of immediately available funds to an account designated by the
Company.
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ARTICLE X.
GENERAL PROVISIONS
SECTION 10.1 Effectiveness of Representations, Warranties and
Agreements.
(a) Except as set forth in Section 10.1(b) of this Agreement,
---------------
the representations, warranties, covenants and agreements of each party hereto
shall remain operative and in full force and effect up to the Effective Time
regardless of any investigation made by or on behalf of any other party hereto,
any Person controlling any such party or any of their officers, directors,
representatives or agents whether prior to or after the execution of this
Agreement.
(b) The representations and warranties in this Agreement will
terminate at the Effective Time; provided, however, that the covenants and
-------- -------
agreements of the parties which by their respective terms contemplate
performance after the Effective Time or after the termination of this Agreement
pursuant to Article IX shall survive the Effective Time or the termination, as
applicable.
SECTION 10.2. Notices.
All notices and other communications given or made pursuant
hereto shall be in writing and shall be deemed to have been duly given or made
as of the date delivered, mailed or transmitted, and shall be effective upon
receipt, if delivered personally, mailed by registered or certified mail
(postage prepaid, return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
changes of address) or sent by electronic transmission to the telecopier number
specified below:
(a) If to Acquiror or Merger Sub:
ANSWERTHINK CONSULTING GROUP, INC.
1001 Brickell Bay Drive
Suite 3000
Miami, Florida 33131
Telecopier No.: (305) 379-8810
Attention: Ted A. Fernandez
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<PAGE>
With a copy (which shall not constitute notice) to:
Hogan & Hartson L.L.P.
Columbia Square
555 Thirteenth Street, N.W.
Washington, DC 20004
Telecopier No.: (202) 637-5910
Attention: J. Hovey Kemp, Esq.
(b) If to the Company:
THINK NEW IDEAS, INC.
45 West 36th Street
12th Floor
New York, NY 10018
Telecopier No.: (212) 629-6850
Attention: Ronald Bloom
With a copy (which shall not constitute notice) to:
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
1333 New Hampshire Avenue
Suite 400
Washington, DC 20036
Telecopier No.: (202) 887-4288
Attention: Victoria A. Baylin, Esq.
SECTION 10.3. Certain Definitions.
For purposes of this Agreement, the term:
"Acquisition Proposal" means an inquiry, offer or proposal
--------------------
regarding any of the following (other than the transactions contemplated by this
Agreement or the Option Agreement) involving the Company or its Subsidiaries:
(a) any merger, reorganization, consolidation, share exchange, recapitalization,
business combination, liquidation, dissolution, or other similar transaction
involving, or, any sale, lease, exchange, mortgage, pledge, transfer or other
disposition of, all or any significant portion of the assets or ten percent
(10%) or more of the equity securities of, the Company or any of its
Subsidiaries, in a single transaction or series of related transactions which
could reasonably be expected to interfere with the completion of the Merger; (b)
any tender offer or exchange offer for twenty percent (20%) or more of the
outstanding shares of capital stock of the Company or any Company Subsidiary or
the filing of a registration statement under the Securities Act in connection
therewith; or (c) any public announcement of a proposal, plan or
-65-
<PAGE>
intention to do any of the foregoing or any agreement to engage in any of the
foregoing;
"Affiliate" of any Person means: (a) a Person that directly or
---------
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, the first mentioned Person; and (b) as the context
requires (including, without limitation, for purposes of Section 7.11 hereof),
------------
any Person who is or may be an "affiliate" of such Person for purposes of Rule
145 under the Securities Act or SEC Accounting Series Release 135;
"beneficial owner" (including the terms "beneficial ownership"
---------------- --------------------
and "beneficially own") means with respect to any shares of capital stock, a
----------------
Person who shall be deemed to be the beneficial owner or have beneficial
ownership of such shares (a) which such Person or any of its Affiliates or
associates beneficially owns, directly or indirectly, (b) which such Person or
any of its Affiliates or associates (as such term is defined in Rule 12b-2 of
the Exchange Act) has, directly or indirectly, (i) the right to acquire (whether
such right is exercisable immediately or subject only to the passage of time),
pursuant to any agreement, arrangement or understanding or upon the exercise of
conversion rights, exchange rights, warrants or options, or otherwise, or (ii)
the right to vote pursuant to any agreement, arrangement or understanding, (c)
which are beneficially owned, directly or indirectly, by any other Persons with
whom such Person or any of its Affiliates or associates has any agreement,
arrangement or understanding for the purpose of acquiring, holding voting or
disposing of any such shares or (d) pursuant to Section 13(d) of the Exchange
Act and any rules or regulations promulgated thereunder;
"Business Day" means any day other than a day on which banks
------------
in the State of New York are authorized or obligated to be closed;
"Commonwealth Associates Warrants" means (a) that certain
--------------------------------
Warrant to Purchase Common Stock of THINK NEW IDEAS, INC. dated November 26,
1996, granted to Commonwealth Associates pursuant to an underwriting agreement
by and between Commonwealth Associates and the Company, which warrant is
exercisable for 215,000 share of Company Common Stock, and (b) each and every
other warrant to purchase Company Common Stock into or for which said warrant
has been or will be transferred, exchanged or divided pursuant to the terms and
provisions of said warrant;
"control" (including the terms "controlled by" and "under
------- ------------- -----
common control with") means the possession, directly or indirectly or as trustee
- -------------------
or executor, of the power to direct or cause the direction of the management or
policies of a Person, whether through the ownership of stock or as trustee or
executor, by contract or credit arrangement or otherwise;
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<PAGE>
"Earnout Agreements" means (a) that certain Agreement and Plan
------------------
of Merger dated November 3, 1997, by and between, inter alia, the Company and
----- ----
BBG New Media, Inc., (b) that certain Agreement and Plan of Merger dated June
27, 1998, by and between the Company and UbiCube Group, Inc., and (c) that
certain Asset Purchase Agreement, dated as of March 10, 1999, by and between,
inter alia, Envision Group and the Company;
"Encumbrance" means any lien, pledge, charge, security
-----------
interest or other Encumbrance of any nature;
"Environmental Laws" means all applicable foreign, federal,
------------------
state and local laws (including the common law), rules, requirements and
regulations relating to pollution, the environment (including, without
limitation, ambient air, surface water, groundwater, land surface or subsurface
strata) or protection of human health as it relates to the environment
including, without limitation, laws and regulations relating to releases of
Hazardous Materials, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials or relating to management of asbestos in buildings;
"Hazardous Materials" means wastes, substances, or materials
-------------------
(whether solids, liquids or gases) that are deemed hazardous, toxic, pollutants,
or contaminants under any Environmental Laws, including, without limitation,
substances defined as "hazardous substances", "toxic substances", "radioactive
materials, including sources of ionizing and nonionizing radiation", "petroleum
products or wastes" or other similar designations in, or otherwise subject to
regulation under, any Environmental Law;
"Intellectual Property" means all (a) trademarks, service
---------------------
marks, trade dress, logos, trade names, and corporate names and registrations
and applications for registration thereof, (b) copyrights and registrations and
applications for registration thereof, (c) computer software, data, and
documentation, (d) trade secrets and confidential business information
(including formulas, compositions, inventions (whether patentable or
unpatentable and whether or not reduced to practice), know-how, manufacturing
and production processes and techniques, research and development information,
drawings, specifications, designs, plans, proposals, technical data,
copyrightable works, financial, marketing, and business data, pricing and cost
information, business and marketing plans, and customer and supplier lists and
information, (e) other proprietary rights, and (f) copies and tangible
embodiments thereof (in whatever form or medium);
"March 1999 Financing" means the transactions contemplated by
--------------------
that certain Securities Purchase Agreement dated March 4, 1999, by and among the
Company, Capital Ventures International and Marshall Capital Management and the
documents and instruments delivered in connection therewith;
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<PAGE>
"Material Adverse Effect" means, with respect to a specified
-----------------------
Person, any event, change, circumstance, condition, development, effect or
occurrence that individually or in the aggregate (taking into account all other
such events, changes, circumstances, conditions, developments, effects or
occurrences) has had, caused or resulted in (or with the passage of time would
be reasonably likely to have, cause, or result in) a material adverse effect on
the business, operations, earnings, assets, properties, results of operations or
condition (financial or otherwise) of such Person and its Subsidiaries, if any,
taken as a whole, except to the extent that any such event, change,
circumstance, condition, development, effect or occurrence is directly caused
by: (a) conditions generally affecting national, regional or world economics;
(b) conditions generally affecting the industry of such Person; (c) the
announcement, pendency or process of effectuating the Merger or the transactions
contemplated hereby which directly results in a delay of, reduction in or
cancellation or change in the terms of customer engagements, projects or
relationships; or (d) a change in the market price or trading volume of the
securities of such Person; which conditions (in the case of clauses (a) and (b)
do not affect such Person in a disproportionate manner as compared with other
Persons in such Person's industry). For purposes of this Agreement, the parties
acknowledge and agree that (i) the industry of the Company is the interactive
marketing industry, and (ii) the industry of Acquiror is the information
technology services industry.
"Person" means an individual, corporation, partnership,
------
association, trust, unincorporated organization, other entity or group (as
defined in Section 13(d) of the Exchange Act);
"reasonable efforts" means, as to a party hereto, an
------------------
undertaking by such party to perform or satisfy an obligation or duty or
otherwise act in a manner reasonably calculated to obtain the intended result by
action or expenditure not disproportionate or unduly burdensome in the
circumstances, which means, among other things, that such party shall not be
required to (a) expend funds other than for payment of the reasonable and
customary costs and expenses of employees, counsel, consultants, representatives
or agents of such party in connection with the performance or satisfaction of
such obligation or duty or other action or (b) institute litigation or
arbitration as a part of its reasonable efforts;
"Securities Litigation" means any and all actions, suits,
---------------------
proceedings, claims, arbitrations or investigations relating to any matters
alleged in connection with the shareholders litigation involving the Company
filed in the U.S. District Court for the Southern District of New York (In re
-----
Think New Ideas, Inc., Consolidated Securities Litigation, No. 98 Civ. 6809
- ---------------------------------------------------------
(SHS));
"Subsidiary" of any Person means any corporation, partnership,
----------
joint venture or other legal entity of which such Person (either alone or
through or together with any other Subsidiary of such Person) (a) owns, directly
or indirectly,
-68-
<PAGE>
fifty percent (50%) or more of the capital stock, partnership interests or other
equity interests the holders of which are generally entitled to vote for the
election of the board of directors or other governing body of such corporation,
partnership, joint venture or other legal entity; or (b) possesses, directly or
indirectly, control over the direction of management or policies of such
corporation, partnership, joint venture or other legal entity (whether through
ownership of voting securities, by agreement or otherwise);
"Superior Proposal" means a bona fide Acquisition Proposal
-----------------
made by any Person that the Board of Directors of the Company determines in its
good faith judgment to be more favorable to the Company's stockholders than the
Merger (based on the written opinion, with only customary qualifications, of the
Company's independent financial advisor that the value of the consideration to
the Company's stockholders provided for in such proposal exceeds the value of
the consideration to the Company's stockholders provided for in the Merger) and
for which financing, to the extent required, is then committed or which, in the
good faith judgment of the Board of Directors of the Company (based on the
written advice of the Company's independent financial advisor), is reasonably
capable of being obtained by such Person;
"Tax" (including, with correlative meaning, the terms "Taxes"
--- -----
and "Taxable") shall include, except where the context otherwise requires, all
-------
federal, state, local and foreign income, profits, franchise, gross receipts,
payroll, sales, employment, use, property, withholding, excise, occupancy and
other taxes, duties or assessments or claims of any nature whatsoever, together
with all interest, penalties and additions imposed with respect to such amounts.
SECTION 10.4. Headings.
The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
SECTION 10.5. Severability.
If any term or other provision of this Agreement is deemed
invalid, illegal or incapable of being enforced pursuant to any rule of law or
public policy or other Order by a court of competent jurisdiction or otherwise,
all other conditions and provisions of this Agreement shall nevertheless remain
in full force and effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in
-69-
<PAGE>
an acceptable manner to the end that transactions contemplated hereby are
fulfilled to the extent possible.
SECTION 10.6. Entire Agreement.
This Agreement (together with the Exhibits, the disclosure
schedules of the parties and the other documents specified herein and delivered
pursuant hereto) and the Option Agreement and the Confidentiality Agreement
constitute the entire agreement of the parties with respect to the subject
matter contained herein and therein and supersede all prior agreements and
undertakings, both written and oral, between the parties, or any of them, with
respect to the subject matter hereof and, except as otherwise expressly provided
herein, are not intended to confer upon any other Person any rights or remedies
hereunder.
SECTION 10.7. Specific Performance.
The transactions contemplated by this Agreement are unique.
Accordingly, the parties acknowledge and agree that, in addition to all other
remedies to which they may be entitled, each shall be entitled to a decree of
specific performance.
SECTION 10.8. Assignment.
Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto without the
prior written consent of the other parties hereto. Subject to the preceding
sentence, this Agreement shall be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and permitted
assigns.
SECTION 10.9. Third Party Beneficiaries.
Subject to Section 10.8, this Agreement shall be binding upon
------------
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
Person any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement except for (a) the Indemnified Parties under Section 7.6, and
-----------
(b) the rights of the Holders to receive the Merger Consideration and any cash
in lieu of fractional shares payable in the Merger pursuant to Sections 2.1(a)
---------------
and (d).
- -------
SECTION 10.10. Governing Law.
This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of law.
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<PAGE>
SECTION 10.11. Counterparts.
This Agreement may be executed and delivered in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed and delivered shall be deemed to be an original but all
of which taken together shall constitute one and the same agreement.
[The remainder of this page intentionally left blank.]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement and Plan of Merger to be executed and delivered as of the date first
written above.
THINK NEW IDEAS, INC.
By: /s/ Ronald Bloom
---------------------------------------------
Name: Ronald Bloom
Title: Chief Executive Officer
ANSWERTHINK CONSULTING GROUP, INC.
By: /s/ Ted A. Fernandez
---------------------------------------------
Name: Ted A. Fernandez
Title: Chairman of the Board, President
and Chief Executive Officer
DARWIN ACQUISITION CORP.
By: /s/ Ted A. Fernandez
---------------------------------------------
Name: Ted A. Fernandez
Title: Chairperson of the Board
and President
<PAGE>
ANNEX B
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT (this "Agreement"), dated as of June 24, 1999,
---------
between THINK NEW IDEAS, INC., a Delaware corporation (the "Company"), and
-------
ANSWERTHINK CONSULTING GROUP, INC., a Florida corporation ("Grantee").
-------
WHEREAS, the Company, Grantee and Darwin Acquisition Corp., a Delaware
corporation and a newly-formed wholly-owned direct subsidiary of Grantee
("Merger Sub"), have contemporaneously with the execution of this Agreement
- ------------
entered into an Agreement and Plan of Merger dated as of the date hereof (the
"Merger Agreement") which provides, among other things, that Merger Sub shall be
- -----------------
merged with and into the Company pursuant to the terms and conditions thereof;
and
WHEREAS, as an essential condition and inducement to Grantee's
entering into the Merger Agreement and in consideration therefor, the Company
has agreed to grant Grantee the Option (as hereinafter defined).
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained herein and in the Merger Agreement, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound hereby, the parties
hereby agree as follows:
1. Grant of Option. The Company hereby grants to Grantee an
---------------
irrevocable option (the "Option") to purchase up to two million eight thousand
------
two hundred eighty eight (2,008,288) validly issued, fully paid and non-
assessable shares of Company Common Stock (such shares being referred to herein
as the "Option Shares"), at a purchase price of eighteen dollars and fifty cents
-------------
($18.50) per share, as adjusted in accordance with the provisions of Section 7
---------
of this Agreement (such price, as adjusted if applicable, the "Option Price");
------------
provided, however, in no event shall the number of Option Shares for which this
- -------- -------
Option is exercisable exceed nineteen and nine-tenths percent (19.9%) of the
number of shares of Company Common Stock issued and outstanding (before giving
effect to the exercise of the Option) at the time this Option is exercised.
2. Certain Terms of the Option.
---------------------------
(a) Exercise of Option. Grantee may exercise the Option, in whole
------------------
or part, and from time to time, if, but only if, a Triggering Event (as
hereinafter defined) shall have occurred prior to the occurrence of an Option
Termination Event (as hereinafter defined), provided that Grantee shall have
sent the written notice of such exercise (as provided in Section 2(e) hereof) on
------------
or prior to
<PAGE>
the last date of the eighteen (18) month period following such Triggering
Event (the "Option Expiration Date"); provided, however, if a Triggering Event
---------------------- -------- -------
arises from a termination of the Merger Agreement pursuant to Section 9.1(e)
--------------
thereof, the Option Expiration Date hereunder shall be the last date of the
twelve (12) month period following such Triggering Event. The right to exercise
the Option shall terminate upon the first to occur of the Option Expiration Date
or an Option Termination Event.
(b) Triggering Events. The term "Triggering Event" shall mean the
------------------ ----------------
occurrence of any of the following:
(i) a termination of the Merger Agreement pursuant to which a
Break-Up Fee (as hereinafter defined) becomes or will become payable to Grantee
pursuant to Section 9.6(a) of the Merger Agreement;
--------------
(ii) a termination of the Merger Agreement pursuant to which an
initial Break-Up Fee pursuant to Section 9.6(c) of the Merger Agreement becomes
--------------
or will become payable to Grantee;
(iii) the termination of the Merger Agreement by Grantee pursuant
to Section 9.1(e) of the Merger Agreement as a result of the failure of the
--------------
Company to timely fulfill any obligation of the Company under the Merger
Agreement.
The term "Break-Up Fee" shall mean any amount (including, without
------------
limitation, the Termination Fee) payable by the Company to Grantee pursuant to
Section 9.6 of the Merger Agreement.
- -----------
(c) Option Termination Events. The term "Option Termination Event"
------------------------- ------------------------
shall mean any of the following events:
(i) the Effective Time; or
(ii) the termination of the Merger Agreement other than under
circumstances which constitute a Triggering Event under this Agreement.
(d) Notice of Triggering Event. The Company shall notify Grantee in
--------------------------
writing as promptly as practicable following its becoming aware of the
occurrence of any Triggering Event, it being understood that the giving of such
notice by the Company shall not be a condition to the right of Grantee to
exercise the Option or for a Triggering Event to have occurred.
-2-
<PAGE>
(e) Notice of Exercise; Closing. In the event that Grantee is
---------------------------
entitled to and desires to exercise the Option (in whole or in part), it shall
send to the Company a written notice (such notice being herein referred to as an
"Exercise Notice" and the date of issuance of an Exercise Notice being herein
---------------
referred to as the "Notice Date") specifying (i) the total number of shares (or
-----------
other Option Securities (as hereinafter defined)) it will purchase pursuant to
such exercise and (ii) a place and date not earlier than three (3) Business Days
nor later than sixty (60) Business Days from the Notice Date for the closing of
such purchase (the "Option Closing Date"); provided, that if the closing of the
------------------- --------
purchase and sale pursuant to the Option (the "Option Closing") cannot be
--------------
consummated, by reason of any applicable Order, the period of time that
otherwise would run pursuant to this sentence shall run instead from the date on
which such restriction on consummation has expired or been terminated; provided,
--------
further, without limiting the foregoing, that if, in the reasonable opinion of
- -------
Grantee, prior notification to or approval of any Governmental Entity is
required in connection with such purchase, the Company or Grantee, as the case
may be, shall promptly file the required notice or application for approval and
shall expeditiously process the same and the period of time that otherwise would
run pursuant to this sentence shall run instead from the date on which any
required notification periods have expired or been terminated or such approvals
have been obtained and any requisite waiting period or periods shall have
passed.
(f) Purchase Price. Subject to Section 2(k), at any Option Closing,
-------------- ------------
Grantee shall pay to the Company the aggregate Option Price for the number of
Option Shares and Option Securities to be issued at such Option Closing, in
immediately available funds by wire transfer to a bank account designated by the
Company; provided that failure or refusal of the Company to designate such a
--------
bank account shall not preclude Grantee from exercising the Option.
(g) Issuance of Company Common Stock. Subject to Section 2(k), at any
-------------------------------- ------------
Option Closing, simultaneously with the delivery of immediately available funds
as provided in Section 2(f) hereof, the Company shall deliver to Grantee a
------------
certificate or certificates representing the number of shares of Company Common
Stock (or other Option Securities) purchased by Grantee at such Option Closing
and, if the Option should be exercised in part only, a new Option evidencing the
rights of Grantee thereof to purchase the balance of the Option Shares (or other
Option Securities) purchasable hereunder. If at the time of issuance of any
Option Shares pursuant to an exercise of all or part of the Option hereunder,
the Company shall have issued any rights or other securities which are attached
to or otherwise associated with Company Common Stock, then each Option Share
issued pursuant to such exercise shall also represent such rights or other
securities with terms substantially the same as and at least as favorable to
Grantee as are provided under any shareholder rights agreement or similar
agreement of the Company then in effect.
-3-
<PAGE>
(h) Legend. Certificates for Company Common Stock (or other Option
------
Securities) delivered at an Option Closing hereunder may be endorsed with a
restrictive legend that shall read substantially as follows:
"THE TRANSFER OF THE SHARES REPRESENTED BY THIS CERTIFICATE IS SUBJECT
TO RESALE RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS
AMENDED."
It is understood and agreed that the reference to the resale restrictions of the
Securities Act in the above legend shall be removed by delivery of substitute
certificate(s) without such reference if Grantee shall have delivered to the
Company a copy of a letter from the staff of the SEC, or an opinion of counsel,
reasonably satisfactory to the Company, to the effect that such legend is not
required for purposes of the Securities Act.
(i) Record Grantee; Expenses. Upon the delivery by Grantee to the
------------------------
Company of the Exercise Notice and the tender of the applicable Option Price in
immediately available funds, Grantee shall be deemed to be the holder of record
of the shares of Company Common Stock (or other Option Securities) issuable upon
such exercise, notwithstanding that the stock transfer books of the Company
shall then be closed or that certificates representing such shares of Company
Common Stock (or other Option Securities) shall not then be actually delivered
to Grantee or that the Company shall have failed or refused to designate the
bank account described in Section 2(f). The Company shall pay all expenses that
------------
may be payable in connection with the preparation, issuance and delivery of
stock certificates under this Section 2 in the name of Grantee. Grantee shall
---------
pay all expenses that may be payable in connection with the issuance and
delivery of stock certificates or a substitute option agreement in the name of
any assignee, transferee or designee of Grantee.
(j) Consents. The obligation of the Company to issue Option Shares
--------
(or other Option Securities) to Grantee hereunder is subject to the conditions
that (i) any waiting period under the HSR Act applicable to the issuance of the
Option Shares (or other Option Securities) hereunder shall have expired or been
terminated; (ii) all material consents, approvals, orders or authorizations of,
or registrations, declarations or filings with, any Governmental Entity, if any,
required in connection with the issuance of the Option Shares (or other Option
Securities) hereunder shall have been obtained or made, as the case may be; and
(iii) no preliminary or permanent injunction or other Order prohibiting or
otherwise restraining such issuance shall be in effect. It is understood and
agreed that at any time during which the Option is exercisable, the parties will
use their respective best efforts to satisfy all such conditions to closing, so
that an Option Closing may take place as promptly as practicable.
-4-
<PAGE>
(k) Cancellation Amount. If prior to an Option Termination Event, any
-------------------
Person or group (other than Grantee or its Affiliates) (i) shall have made a
bona fide proposal with respect to (A) a tender offer or exchange offer for
fifty percent (50%) or more of the then outstanding shares of Company Common
Stock (a "Share Proposal"), (B) a merger, consolidation or other business
--------------
combination with the Company (a "Merger Proposal") or (C) any acquisition of a
---------------
material portion of the assets of the Company (an "Asset Proposal"), or (ii)
--------------
shall have acquired fifty percent (50%) or more of the then outstanding shares
of Company Common Stock (a "Share Acquisition"), then Grantee, in lieu of
-----------------
exercising the Option, shall have the right at any time thereafter (for so long
as the Option is exercisable under Section 2(a)) to request in writing (a
------------
"Cancellation Notice") that the Company pay, and promptly (but in any event not
- --------------------
more than five (5) Business Days) after the giving by Grantee of such
Cancellation Notice, the Company shall pay to Grantee, in cancellation of the
Option, an amount in cash equal to the Cancellation Amount (as defined below);
provided, however, the Cancellation Amount shall not be payable by the Company
- -------- -------
if either Grantee or the Company shall have terminated the Merger Agreement
pursuant to Section 9.1(f) as a result of the failure to receive the requisite
--------------
vote for approval of the Merger Agreement and the Merger by the Stockholders of
the Company at the Company Stockholders Meeting; provided, further, if after any
-------- -------
such termination pursuant to Section 9.1(f) of the Merger Agreement, an
--------------
Acquisition Proposal involving Grantee is thereafter consummated or the Company
enters into a definitive agreement with respect to an Acquisition Proposal
within twelve (12) months after any such termination of the Merger Agreement,
the Cancellation Amount shall become payable in accordance with the terms
hereof. Notwithstanding anything to the contrary in this Agreement, in the
event of any closing involving the payment of a Cancellation Amount, Grantee
shall deliver to the Company for cancellation the Option, and the Company shall
make payment to Grantee of the Cancellation Amount by wire transfer of
immediately available funds pursuant to Grantee's instructions.
As used herein, the "Cancellation Amount" shall mean an amount equal
-------------------
to:
(i) the excess over the Option Price of the greater of (A) the last
sale price of a share of Company Common Stock as reported on the Nasdaq on
the last trading day prior to the date of the Cancellation Notice, or
(B)(x) the highest price per share of Company Common Stock offered or
proposed to be paid or paid by any such Person or group pursuant to or in
connection with a Share Proposal, a Share Acquisition or a Merger Proposal
or (y) the aggregate consideration offered to be paid or paid in any
transaction or proposed transaction in connection with an Asset Proposal,
-5-
<PAGE>
divided by the number of shares of Company Common Stock then outstanding,
multiplied by (ii) the number of Option Shares then covered by the Option.
-------------
The parties acknowledge and agree that the Cancellation Amount payable
hereunder shall be reduced by the Offset Amount (as defined below). If all
or a portion of the price per share of Company Common Stock offered, paid
or payable or the aggregate consideration offered, paid or payable for the
assets of the Company, each as contemplated by this Section 2(k), consists
------------
of non-cash consideration, such price or aggregate consideration shall be
the cash consideration, if any, plus the fair market value of the non-cash
consideration as determined by the investment bankers of the Company and
the investment bankers of Grantee (or, if such investment bankers cannot
agree within ten (10) Business Days of such question being submitted for
such determination, then promptly by an independent investment banker
chosen by Grantee's investment bankers and reasonably acceptable to the
Company's investment bankers).
As used herein, the "Offset Amount" shall mean an amount equal to (i)
-------------
any amount actually paid to Grantee by the Company as a Break-Up Fee under the
Merger Agreement less (ii) any amount remitted to the Company by Grantee
pursuant to Section 2(l).
------------
(l) Termination Fee Reduction. Following exercise of the Option
-------------------------
(in whole or in part) by Grantee, in each event that Grantee sells or otherwise
disposes of (including, without limitation, by merger or exchange) any of the
Option Shares (a "Sale"), then Grantee shall immediately remit to the Company
----
any Option Share Profit (as hereinafter defined) from such Sale until Grantee
shall have reimbursed the Company for the amount of any Break-Up Fee(s)
previously paid by the Company to Grantee pursuant to Section 9.6 of the Merger
-----------
Agreement.
As used herein, the term "Option Share Profit" shall mean an
-------------------
amount equal to (x) the amount received by Grantee in a Sale (less customary
brokerage commissions), less (y) the aggregate Option Price paid by Grantee for
the Option Shares sold in such Sale.
3. Evaluation of Investments. Grantee, by reason of its knowledge
-------------------------
and experience in financial and business matters, believes itself capable of
evaluating the merits and risks of an investment in the Option and the
securities to be purchased/sold pursuant to this Agreement (collectively, the
"Option Securities").
- ------------------
4. Investment Intent. Grantee represents and warrants that it is
-----------------
entering into this Agreement and is acquiring and/or will acquire the Option
Securities for its own account and not with a view to resale or distribution of
all or any part of the Option Securities in violation of applicable law.
-6-
<PAGE>
5. Reservation of Shares. The Company agrees (a) that it shall at
---------------------
all times maintain, free from preemptive rights, sufficient authorized but
unissued shares of Company Common Stock (and other Option Securities) issuable
pursuant to this Agreement so that the Option may be exercised without
additional authorization of Company Common Stock (or such other Option
Securities) after giving effect to all other options, warrants, convertible
securities and other rights to purchase Company Common Stock (or such other
Option Securities); (b) that it will not, by charter amendment or through
reorganization, consolidation, merger, dissolution or sale of assets, or by any
other voluntary act, avoid or seek to avoid the observance or performance of any
of the covenants to be observed or performed hereunder by the Company; and (c)
promptly to take all action as may from time to time be required in order to
permit Grantee to exercise the Option and the Company to duly and effectively
issue shares of Company Common Stock (or other Option Securities) pursuant
hereto.
6. Division of Option; Lost Options. This Agreement (and the Option
--------------------------------
granted hereby) are exchangeable, without expense, at the option of Grantee,
upon presentation and surrender of this Agreement at the principal office of the
Company, for other agreements providing for Options of different denominations
entitling the holder(s) thereof to purchase, on the same terms and subject to
the same conditions as are set forth herein, in the aggregate the same number of
shares of Company Common Stock purchasable hereunder. Upon receipt by the
Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Agreement, and (in the case of loss, theft or
destruction) of reasonably satisfactory indemnification, and upon surrender and
cancellation of this Agreement, if mutilated, the Company will execute and
deliver a new Agreement of like tenor and date.
7. Adjustment Upon Changes in Capitalization. The number of shares
-----------------------------------------
of Company Common Stock purchasable upon the exercise of the Option shall be
subject to adjustment from time to time as provided in this Section 7.
---------
(a) Transaction Adjustment. In the event of any change in Company
----------------------
Common Stock by reason of stock dividends, splits, mergers, recapitalizations,
combinations, subdivisions, conversions, exchanges of shares or other similar
transactions, then the Option Shares that are then purchasable upon exercise of
the Option shall be appropriately adjusted so that Grantee shall receive upon
exercise of the Option and payment of the aggregate Option Price hereunder the
number and class of shares or other securities or property (including cash) that
Grantee would have owned or been entitled to receive after the happening of any
of the events described in this Section 7(a) if the Option had been exercised
------------
immediately prior to such event, or the record date therefor, as applicable.
-7-
<PAGE>
(b) Option Price Adjustment. Whenever the number of shares of
-----------------------
Company Common Stock subject to this Option are adjusted pursuant to Section
-------
7(a), the Option Price shall be appropriately adjusted, if applicable, by
- ----
multiplying the Option Price by a fraction, the numerator of which shall be
equal to the aggregate number of shares of Company Common Stock purchasable
under the Option prior to the adjustment and the denominator of which shall be
equal to the aggregate number of shares of Company Common Stock purchasable
under the Option immediately after the adjustment.
8. Registration Rights.
-------------------
(a) If requested by Grantee at any time and from time to time
within two (2) years of a Triggering Event, the Company agrees to use its best
efforts to effect as promptly as possible upon the request of Grantee and cause
to become and remain effective for a period of not less than six (6) months (or
such shorter period as may be necessary to effect the distribution of such
shares), the registration under the Securities Act, and any applicable state
securities laws, of all or any part of the Option Shares as may be specified in
such request; provided, however, that (i) Grantee shall have the right to select
-------- -------
the managing underwriter for any underwritten offering of such Option Shares
after consultation with the Company, (ii) the number of Option Shares requested
to be included in each such registration shall not be less than one percent (1%)
of the then outstanding shares of Company Common Stock and (iii) Grantee shall
be limited to two (2) such demand registrations pursuant to this Section 8(a). A
requested demand registration pursuant to this Section 8(a) may be rescinded
by written notice to the Company by Grantee and such rescinded registration
shall not count as a registration statement initiated pursuant to this Section
-------
8(a), if, notwithstanding Section 8(d) below, Grantee shall agree to reimburse
- ---- ------------
the Company for all out-of-pocket expenses incurred by the Company in connection
with such rescinded registration.
(b) The obligations of the Company hereunder to file a
registration statement and to maintain its effectiveness may be suspended for
one or more periods of time not exceeding ninety (90) days in the aggregate if
the Board of Directors of the Company shall have determined in good faith after
having consulted with outside counsel that the filing of such registration or
the maintenance of its effectiveness would require disclosure of nonpublic
information that would materially and adversely affect the Company or the
Company is required under the Securities Act to include audited financial
statements for any period in such registration statement and such financial
statements are not yet available for inclusion in such registration statement.
(c) In addition to such demand registrations, if the Company proposes
to effect a registration of Company Common Stock (other than a
-8-
<PAGE>
registration statement on Form S-4 or S-8 or any successor thereto) for its own
account (a "Company Registration") or for the account of any other stockholder
--------------------
of the Company (a "Stockholder Registration"), the Company shall give prompt
------------------------
written notice to all holders of Options or Option Shares of its intention to do
so and shall use its best efforts to include therein all Option Shares requested
by Grantee to be so included. No registration effected under this Section 8(c)
------------
shall relieve the Company of its obligations to effect demand registrations
under Section 8(a) hereof, and nothing in this Section 8(c) shall apply to a
------------
demand registration pursuant to Section 8(a). If (i) a registration pursuant to
------------
this Section 8(c) involves an underwritten offering of the securities so being
------------
registered to be distributed (on a firm commitment basis) by or through one or
more underwriters of recognized standing under underwriting terms appropriate
for such a transaction, and (ii) the managing underwriter of such underwritten
offering shall advise the Company in writing of its belief that the number of
securities requested to be included in such registration exceeds the number
which can be sold in (or during the time of) such offering without materially
adversely affecting the price to be received thereon, then the Company shall
include in such registration, to the extent of the number which the Company is
so advised by the managing underwriter can be sold in (or during the time of)
such offering, first, in the case of a Company Registration, all securities
proposed by the Company to be sold for its own account or, in the case of a
Stockholder Registration, the securities to be sold for the account of the
stockholders thereof; second, such Option Shares requested to be included in
such registration pro rata on the basis of the number of Option Shares so
proposed to be sold and so requested to be included; and third, other securities
requested to be included in such registration.
(d) Registrations effected under this Section 8 shall be effected at
---------
the Company's expense, including the fees and expenses of counsel to the holder
of Options or Option Shares, but excluding underwriting discounts and
commissions to brokers or dealers. In connection with each registration under
this Section 8, the Company shall indemnify and hold each holder of Options or
---------
Option Shares participating in such offering (a "Holder"), its underwriters and
------
each of their respective affiliates harmless against any and all losses, claims,
damages, liabilities and expenses (including, without limitation, investigation
expenses and fees and disbursements of counsel and accountants), joint or
several, to which such Holder, its underwriters and each of their respective
Affiliates may become subject, under the Securities Act or otherwise, insofar as
such losses, claims, damages, liabilities or expenses (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in any registration statement (including
any prospectus therein), or any amendment or supplement thereto, or arise out of
or are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, other than such losses, claims,
-9-
<PAGE>
damages, liabilities or expenses (or actions in respect thereof) which arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in written information furnished by a Holder to the
Company expressly for use in such registration statement.
(e) In connection with any registration statement pursuant to this
Section 8, each Holder agrees to furnish the Company with such information
- ---------
concerning itself and the proposed sale or distribution as shall reasonably be
required in order to ensure compliance with the requirements of the Securities
Act. In addition, each Holder shall indemnify and hold the Company, its
underwriters and each of their respective Affiliates harmless against any and
all losses, claims, damages, liabilities and expenses (including without
limitation investigation expenses and fees and disbursements of counsel and
accountants), joint or several, to which the Company, its underwriters and each
of their respective Affiliates may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) arise out of or are based upon an untrue statement
or alleged untrue statement of a material fact contained in written information
furnished by such Holder to the Company expressly for use in such registration
statement. In no event shall the liability of any Holder or any Affiliate
thereof under this Section 8 be greater in amount than the dollar amount of the
---------
proceeds (net of payment of all expenses) received by such Holder upon the sale
of the Option Shares giving rise to such indemnification obligation.
(f) Upon the issuance of Option Shares hereunder, Grantee shall
promptly file a Notification for Additional Listing of Shares providing for
inclusion for quotation on Nasdaq of the Option Shares and shall use reasonable
efforts to cause the Option Shares to be approved for quotation on Nasdaq.
9. Extension of Time for Regulatory Approvals. The periods related
------------------------------------------
to exercise of the Option and the other rights of Grantee hereunder shall be
extended (a) to the extent necessary to obtain all regulatory approvals for the
exercise of such rights, and for the expiration of all statutory waiting periods
and (b) to the extent necessary to avoid liability under Section 10(b) of the
Exchange Act by reason of such exercise; provided, however, in no event shall
--------- -------
any of the periods hereunder be extended for more than an additional six (6)
month period in the aggregate.
10. Representations and Warranties of the Company. The Company
---------------------------------------------
hereby represents and warrants to Grantee as follows:
(a) Authority. The Company has the necessary corporate power and
---------
authority to enter into this Agreement, to perform its obligations hereunder and
to consummate the transactions contemplated hereby. The
-10-
<PAGE>
execution and delivery of this Agreement by the Company and the consummation by
the Company of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action and no other corporate proceedings
on the part of the Company are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby. This Agreement has been duly
executed and delivered by the Company and, assuming the due authorization,
execution and delivery by Grantee, constitutes a legal, valid and binding
obligation of the Company, enforceable in accordance with its terms, except as
such enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws of general applicability relating to or
affecting creditors' rights generally and by the application of general
principles of equity.
(b) Corporate Action. The Company has taken all necessary corporate
----------------
action to authorize and reserve and to permit the Company to issue, and at all
times from the date hereof through the termination of this Agreement in
accordance with its terms will have reserved for issuance upon the exercise of
the Option, that number of shares of Company Common Stock equal to the maximum
number of shares of Company Common Stock at any time and from time to time
issuable hereunder, and all such shares of Company Common Stock, upon issuance
pursuant hereto, will be duly authorized, validly issued, fully paid, non-
assessable, and will be delivered free and clear of all Encumbrances and not
subject to any preemptive rights.
(c) No Conflict. The execution and delivery of this Agreement by the
-----------
Company do not, and the performance by the Company of its obligations under this
Agreement will not (i) conflict with or violate the certificate or articles of
incorporation, bylaws or partnership agreement of the Company or any Company
Subsidiary, (ii) conflict with or violate any law, statute, ordinance, rule,
regulation, order, judgment or decree applicable to the Company or any Company
Subsidiary or by which any of their respective properties is bound or affected,
or (iii) result in any breach of or constitute a default (or an event which with
or without notice or lapse of time or both would become a default) under, or
give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of an Encumbrance on any of the
properties or assets of the Company or any Company Subsidiary pursuant to, any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which the Company or any Company
Subsidiary is a party or by which the Company, any Company Subsidiary or any of
their respective properties or assets is bound or affected, except, in the case
of clauses (ii) and (iii) above, for any such conflicts, violations, breaches,
defaults or other alterations or occurrences that would not have a Material
Adverse Effect on the Company.
(d) Anti-Takeover Statutes. The provisions of Section 203 of the
-----------------------
General Corporation Law of the State of Delaware will not, prior to the
-11-
<PAGE>
termination of this Agreement, apply to this Agreement or the transactions
contemplated hereby and thereby. The Company has taken, and will in the future
take, all steps necessary to irrevocably exempt the transactions contemplated by
this Agreement from any other applicable state takeover law and from any
applicable charter provision containing change of control or anti-takeover
provisions.
11. Assignment. The Company may not assign any of its rights or
----------
obligations under this Agreement or the Option created hereunder to any other
Person, without the express written consent of Grantee. Grantee may not assign
any of its rights or obligations under this Agreement or the Option created
hereunder to any other Person.
12. Application for Regulatory Approval. Each of Grantee and the
-----------------------------------
Company will use its reasonable efforts to make all filings with, and to obtain
consents of, all third parties and Governmental Entities necessary to the
consummation of the transactions contemplated by this Agreement, including
without limitation making application to list the shares of Company Common Stock
issuable hereunder on the Nasdaq upon official notice of issuance.
13. Specific Performance. The Company acknowledges and agrees that
--------------------
damages would be an inadequate remedy for a breach of this Agreement by the
Company and that the obligations of the Company shall be enforceable by Grantee
through injunctive or other equitable relief.
14. Severability. If any term or other provision of this Agreement
------------
is invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that transactions contemplated hereby are fulfilled to the extent possible.
15. Notices. All notices, claims, demands and other communications
-------
hereunder shall be deemed to have been duly given or made when delivered in
person, by registered or certified mail (postage prepaid, return receipt
requested), by overnight courier or by facsimile at the respective addresses of
the parties set forth in the Merger Agreement.
16. Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the laws of the State of Delaware, regardless of the
-12-
<PAGE>
laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
17. Counterparts. This Agreement may be executed and delivered in
------------
one or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed and delivered shall be deemed to be an
original but all of which taken together shall constitute one and the same
agreement.
18. Definitions. Capitalized terms used and not defined herein shall
-----------
have the meanings set forth in the Merger Agreement.
19. Expenses. Except as otherwise expressly provided herein or in
--------
the Merger Agreement, each of the parties hereto shall bear and pay all costs
and expenses incurred by it or on its behalf in connection with the transactions
contemplated hereunder, including fees and expenses of its own financial
consultants, investment bankers, accountants and counsel.
20. Entire Agreement. This Agreement, the Merger Agreement, the
----------------
Confidentiality Agreement and any documents and instruments referred to herein
and therein constitute the entire agreement of the parties with respect to the
transactions contemplated hereunder and supersede all prior arrangements or
understandings with respect thereof, written or oral. The terms and conditions
of this Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective successors and permitted assigns. Nothing in this
Agreement, express or implied, is intended to confer upon any party, other than
the parties hereto, and their respective successors and permitted assigns, any
rights, remedies, obligations or liabilities under or by reason of this
Agreement, except as expressly provided herein. Any provision of this Agreement
may be waived only in writing at any time by the party that is entitled to the
benefits of such provision. This Agreement may not be modified, amended,
altered or supplemented except upon the execution and delivery of a written
agreement executed by the parties hereto.
21. Further Assurances. In the event of any exercise of the Option
------------------
by Grantee, the Company and Grantee shall execute and deliver all other
documents and instruments and take all other action that may be reasonably
necessary to the fullest extent permitted by law in order to consummate the
transactions provided for by such exercise. Nothing contained in this Agreement
shall be deemed to authorize the Company or Grantee to breach any provision of
the Merger Agreement.
[The remainder of this page intentionally left blank.]
-13-
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Stock
Option Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
THINK NEW IDEAS, INC.
By: /s/ Ronald Bloom
-----------------------------------
Name: Ronald Bloom
Title: Chief Executive Officer
ANSWERTHINK CONSULTING GROUP, INC.
By: /s/ Ted A. Fernandez
-----------------------------------
Name: Ted A. Fernandez
Title: Chairman of the Board, President
and Chief Executive Officer
<PAGE>
ANNEX C
Private and Confidential
- ------------------------
June 24, 1999
Board of Directors
AnswerThink Consulting Group, Inc.
1001 Brickell Bay Drive
Suite 3000
Miami, Florida 33131
Members of the Board:
You have requested our opinion as to the fairness, from a financial point of
view, to the shareholders of AnswerThink Consulting Group, Inc. ("AnswerThink"
or the "Company") of the consideration to be paid by AnswerThink in connection
with the proposed acquisition (the "Merger") of all of the outstanding common
stock of THINK New Ideas, Inc. ("THINK"). The Merger will be made pursuant and
subject to the Agreement and Plan of Merger dated June 24, 1999 (the
"Agreement") between the Company and THINK. The consideration offered by the
Company in the Merger will be 0.70 shares of AnswerThink Common Stock for each
issued and outstanding share of THINK New Ideas Common Stock (the "Exchange
Ratio"). We have assumed, with your consent, that the Merger will qualify for
pooling-of-interests accounting treatment and as a tax-free reorganization. You
have requested our opinion as to whether the Exchange Ratio is fair, from a
financial point of view, to the shareholders of AnswerThink.
Raymond James & Associates, Inc. ("Raymond James") has been engaged by the
Company to review the Merger and to deliver to the Board of Directors of the
Company our opinion regarding the fairness, from a financial point of view, of
the Merger to the shareholders of the Company. In connection with our review of
the Merger, and in arriving at our opinion, we have among other things:
1. reviewed the Agreement and associated schedules;
2. reviewed THINK's audited financial statements, as filed on Form 10-K
with the Securities and Exchange Commission (the "Commission"), as of
and for the years ended June 30, 1998 and 1997;
3. reviewed THINK's quarterly financial statements, as filed on Form 10-Q
with the Commission, as of and for the quarters ended September 30,
1998, December 31, 1998, and March 31, 1999;
4. reviewed other THINK financial and operating information requested from
and/or provided by THINK;
5. reviewed THINK's projected financial statements for the calendar years
ended December 31, 1999 and 2000;
6. discussed with the management of AnswerThink and THINK the financial
projections and anticipated growth rates and margins of THINK through
the year ended December 31, 2003;
7. discussed with the management of THINK certain information relating to
the business, cash flow, earnings, assets, financial condition and
prospects of THINK, including management's forecasts for the calendar
years ended December 31, 1999 and 2000 and the prospects of the
AnswerThink-THINK combined company after the Merger;
<PAGE>
Board of Directors
June 24, 1999
Page 2
8. discussed with THINK's auditors the audited annual financial statements
as of and for the year ended June 30, 1998 and the unaudited quarterly
financial statements as of and for the quarters ended September 30,
1998, December 31, 1998, and March 31, 1999;
9. discussed with the Company's legal counsel the Merger;
10. reviewed AnswerThink's audited financial statements, as filed on
Form 10-K with the Commission, as of and for the year ended January 1,
1999;
11. reviewed AnswerThink's unaudited quarterly financial statements, as
filed with the Commission, as of and for the quarter ended April 2,
1999;
12. reviewed AnswerThink's initial public offering prospectus, as filed on
Form S-1 with the Commission, for the Company's offering on May 28,
1998;
13. discussed with management of AnswerThink certain information relating to
the business, cash flow, earnings, assets, financial condition and
prospects of AnswerThink, including management's forecasts for the years
ended December 31, 1999 and 2000, and the prospects of the AnswerThink-
THINK combined company after the Merger;
14. reviewed publicly available information concerning companies in
industries considered by Raymond James to be most comparable to
AnswerThink or THINK;
15. reviewed financial and other information concerning selected completed
business combinations deemed to be generally comparable to the Merger or
otherwise relevant to this opinion, in whole or in part, involving
AnswerThink and THINK;
16. reviewed the pro forma effect of the Merger on the projected results of
AnswerThink;
17. conducted other such financial studies and analyses, including a
relative contribution analysis, as Raymond James deemed relevant and
necessary for the purposes of this opinion.
In preparing our opinion, we have assumed and relied on the accuracy and
completeness of all information supplied or otherwise made available to us by
AnswerThink and THINK or any other third party and have not independently
verified any such information. With regard to the information provided to us by
AnswerThink or THINK, we have been assured by management of AnswerThink and
THINK respectively, that all such information is complete and accurate in all
material respects and that they are unaware of any facts or circumstances that
would make such information incomplete or misleading. We have not made an
independent evaluation or appraisal of the assets or liabilities of either
AnswerThink or THINK, and we have not been furnished with any such evaluation or
appraisal.
With respect to the financial projections and pro forma financial statements
provided to us by AnswerThink and THINK (including, without limitation, cost
savings and synergies projected to result from, and pro forma financial
statements with respect to, the Merger), we have assumed that such projections
and pro forma financial statements were prepared in good faith on reasonable
bases reflecting management's current best estimates and judgments of
AnswerThink's and THINK's future financial performance as independent
<PAGE>
Board of Directors
June 24, 1999
Page 3
companies and as a combined company. This opinion is based substantially upon
the aforedescribed financial projections and estimates. Further, without
limiting the foregoing, we have assumed, without independent verification, that
the unconsolidated historical, projected and pro forma historical and projected
financial information provided to us by AnswerThink and THINK accurately
reflects the independent historical and projected operations, as the case may
be, of the respective operations of AnswerThink and THINK. We have assumed that
the transaction will receive pooling of interests accounting treatment and will
qualify as a tax-free reorganization. We have made no independent investigation
of any legal matters involving AnswerThink or THINK, and we have assumed the
correctness of all legal advice given to you and us by your or THINK's counsel.
Our opinion is based on market, economic, financial and other circumstances and
conditions as they exist and can be evaluated as of the date of this letter, and
any material change in such circumstances and conditions would require a
reevaluation of this opinion, which we are under no obligation to undertake.
We express no opinion as to the underlying business decision of the Company to
effect the Merger, the structure or tax consequences of the Agreement or the
availability or the advisability of any alternatives to the Merger. Raymond
James did not structure the Merger or negotiate the terms of the Merger.
Further, we express no opinion as to the value of AnswerThink Common Stock upon
the consummation of the Merger or the price at which AnswerThink Common Stock
will trade at any time. Our opinion is limited to the fairness, from a
financial point of view, of the Exchange Ratio to the Company. We express no
opinion with respect to any other reasons, legal, business, or otherwise, that
may support the decision of the Board of Directors to approve or consummate the
Merger.
We have been engaged by AnswerThink in connection with the Merger, and, for our
rendering of this opinion, AnswerThink will pay us a fee, a substantial portion
of which is contingent upon the consummation of this Merger. In addition,
AnswerThink has agreed to indemnify us against certain liabilities arising out
of our engagement including the rendering of this opinion and other matters, all
as more fully described in the engagement and indemnity agreement dated June 16,
1999. In the ordinary course of business, Raymond James may trade the common
stock of AnswerThink for its own accounts and for the accounts of its customers
and, accordingly, may at any time hold a long or short position in such
securities.
It is understood that this letter is for the information of the AnswerThink
Board in evaluating the proposed Merger and does not constitute a recommendation
to any stockholder of the Company as to how such stockholder should vote on the
proposed Merger, nor is this letter intended to confer rights or remedies upon
THINK or the shareholders of the Company or THINK. Furthermore, this letter
should not be construed as creating any fiduciary duty on the part of Raymond
James to any such party. This opinion is not to be quoted or referred to, in
whole or in part, without our prior written consent, which shall not be
unreasonably withheld. We have consented to the inclusion of this letter in the
proxy statement to shareholders to be filed by the Company with the Commission.
Based on and subject to the foregoing, we are of the opinion that, as of the
date hereof, the Exchange Ratio is fair, from a financial point of view, to the
shareholders of AnswerThink.
Very truly yours,
/s/ RAYMOND JAMES & ASSOCIATES, INC.
<PAGE>
ANNEX D
[Salomon Smith Barney Letterhead]
June 23, 1999
Board of Directors
Think New Ideas, Inc.
45 West 36th Street, 12th Floor
New York, New York 10012
Ladies and Gentlemen:
You have requested our opinion as investment bankers as to the
fairness, from a financial point of view, to the holders of common stock, par
value $0.0001 per share (the "Company Common Stock"), of Think New Ideas, Inc.
(the "Company"), of the Exchange Ratio (as defined below) in connection with the
proposed merger (the "Proposed Merger") of Darwin Acquisition Corp. ("Merger
Sub"), a wholly owned subsidiary of AnswerThink Consulting Group, Inc.
("AnswerThink"), with and into the Company, pursuant to the Agreement and Plan
of Merger (the "Agreement") to be entered into among AnswerThink, Merger Sub and
the Company.
As more specifically set forth in the Agreement, and subject to the
terms and conditions thereof, Merger Sub will merge with and into the Company,
and each issued and outstanding share of Company Common Stock will be converted
in the Proposed Merger into the right to receive 0.70 (the "Exchange Ratio") of
a share of common stock, par value $0.001 per share (the "AnswerThink Common
Stock"), of AnswerThink.
In connection with rendering our opinion we have reviewed and
analyzed, among other things, the following: (i) a draft dated June 22, 1999 of
the Agreement; (ii) certain publicly available information concerning the
Company, including the Annual Reports on Form 10-KSB of the Company for each of
its fiscal years in the two-year period ended June 30, 1998, and the Quarterly
Reports on Form 10-QSB of the Company for the quarters ending September 30,
1998, December 31, 1998 and March 31, 1999; (iii) certain other internal
information, primarily financial in nature, including projections, concerning
the business, assets and operations of the Company, furnished to us by the
Company for purposes of our analysis; (iv) certain publicly available
information concerning the trading of, and the trading market for, Company
Common Stock; (v) certain publicly available information concerning AnswerThink,
including the Annual Report on Form 10-K of AnswerThink for the fiscal year
ended January 1, 1999 and the Quarterly Report on Form 10-Q of AnswerThink for
the quarter ended April 2, 1999; (vi) certain other internal information,
primarily financial in nature, including projections, concerning the business,
assets and operations of AnswerThink, furnished to us by AnswerThink for the
purposes of our analysis; (vii) certain publicly available information
concerning the trading of, and the trading market for, AnswerThink Common Stock;
(viii) certain publicly available information with respect to certain other
companies that we believe to be comparable to the Company or AnswerThink and the
trading markets for certain of such other companies' securities; and (ix)
certain publicly available information concerning the nature and terms of
certain other transactions that we consider relevant to our inquiry. We also
have considered such other information, financial studies, analyses,
investigations and financial,
<PAGE>
economic and market criteria that we deemed relevant. We also have met with
certain officers and employees of the Company and AnswerThink to discuss the
foregoing, as well as other matters we believe relevant to our inquiry.
In our review and analysis and in arriving at our opinion, we have
assumed and relied upon the accuracy and completeness of all of the financial
and other information provided to us or publicly available and have neither
attempted independently to verify nor assumed responsibility for verifying any
of such information. We have not conducted a physical inspection of any of the
properties or facilities of the Company or AnswerThink, nor have we made or
obtained, or assumed any responsibility for making or obtaining, any independent
evaluations or appraisals of any of such properties or facilities or any
intellectual property owned, licensed or used by the Company or AnswerThink.
With respect to projections, we have assumed that they have been reasonably
prepared on bases reflecting the best currently available estimates and
judgments of the management of the Company or AnswerThink, as the case may be,
as to the future financial performance of the Company or AnswerThink, as the
case may be, and we express no view with respect to such projections or the
assumptions on which they were based. We also have assumed that the Proposed
Merger will be consummated in a timely manner and in accordance with the terms
of the Agreement, without waiver of any of the conditions precedent to the
Proposed Merger contained in the Agreement. We understand, and have assumed,
that the Proposed Merger will qualify as a tax-free reorganization under the
Internal Revenue Code of 1986, as amended, and that the Proposed Merger will be
accounted for as a pooling of interests for financial reporting purposes.
In conducting our analysis and arriving at our opinion as expressed
herein, we have considered such financial and other factors as we have deemed
appropriate under the circumstances including, among others, the following: (i)
the historical and current financial position and results of operations of the
Company and AnswerThink; (ii) the business prospects of the Company and
AnswerThink; (iii) the historical and current market for Company Common Stock,
AnswerThink Common Stock and for the equity securities of certain other
companies that we believe to be comparable to the Company or AnswerThink; and
(iv) the nature and terms of certain other transactions that we believe to be
relevant. We have not been asked to consider, and our opinion does not address,
the relative merits of the Proposed Merger as compared to any alternative
business strategy that might exist for the Company. Our opinion necessarily is
based upon conditions as they exist and can be evaluated on the date hereof, and
we assume no responsibility to update or revise our opinion based upon
circumstances or events occurring after the date hereof. Our opinion is, in any
event, limited to the fairness, from a financial point of view, of the Exchange
Ratio to the holders of Company Common Stock and does not address the Company's
underlying business decision to effect the Proposed Merger. Nor does this
opinion constitute a recommendation of the Proposed Merger to the Company or a
recommendation to any holder of Company Common Stock as to how such holder
should vote with respect to the Proposed Merger. Nor does our opinion
constitute an opinion or imply any conclusion as to the likely trading range for
AnswerThink Common Stock following consummation of the Proposed Merger.
As you are aware, Salomon Smith Barney Inc. ("Salomon Smith Barney")
is acting as financial advisor to the Company in connection with the Proposed
Merger and will receive certain fees for our services, a substantial portion of
which is contingent on consummation of the Proposed Merger. In addition, in the
ordinary course of business, Salomon Smith Barney and its affiliates may
actively trade the securities of the Company and AnswerThink for their own
accounts and for the accounts of customers and, accordingly, may at any time
hold a long or short position in such securities. We or our predecessors or
affiliates previously have rendered certain investment banking and financial
advisory services to the Company and AnswerThink, for which we or such
predecessors or affiliates received customary compensation. Salomon Smith
Barney and its affiliates (including Citigroup Inc. and its affiliates) may have
other business and financial relationships with the Company and AnswerThink.
<PAGE>
This opinion is intended for the benefit and use of the Company
(including its management and directors) in considering the transaction to which
it relates and may not be used by the Company for any other purpose or
reproduced, disseminated, quoted or referred to by the Company at any time, in
any manner or for any purpose, without the prior written consent of Salomon
Smith Barney, except that this opinion may be reproduced in full in, and
references to the opinion and to Salomon Smith Barney and its relationship with
the Company (in each case in such form as Salomon Smith Barney may approve) may
be included in any proxy statement or prospectus relating to the Proposed Merger
that the Company files with the U.S. Securities and Exchange Commission and
distributes to holders of Company Common Stock in connection with the Proposed
Merger.
Based upon and subject to the foregoing, we are of the opinion as
investment bankers that, as of the date hereof, the Exchange Ratio is fair, from
a financial point of view, to the holders of Company Common Stock.
Very truly yours,
/s/ Salomon Smith Barney Inc.
SALOMON SMITH BARNEY INC.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers.
------------------------------------------
To the fullest extent permitted by the Florida Business Corporation Act
(the "Florida Act"), AnswerThink Consulting Group, Inc.'s ("AnswerThink's")
Articles of Incorporation provide that directors of AnswerThink shall not be
personally liable to AnswerThink or its shareholders for monetary damages for
breach of fiduciary duty as a director. Generally, the Florida Act permits
indemnification of a director or officer upon a determination that he or she
acted in good faith and in a manner he or she reasonably believed to be in, or
not opposed to, the best interests of the corporation and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his or her
conduct was unlawful. The Articles of Incorporation and Bylaws of AnswerThink
provide for the indemnification of AnswerThink's directors and officers and any
person who is or was serving at the request of AnswerThink 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 to the
fullest extent authorized by, and subject to the conditions set forth in, the
Florida Act against all expenses, liabilities and losses (including attorneys'
fees, judgments, fines, ERISA taxes, excise taxes, or penalties, charges,
expenses and amounts paid or to be paid in settlement), except that AnswerThink
will indemnify a director or officer in connection with a proceeding (or part
thereof) initiated by such person only if such proceeding (or part thereof) was
authorized by AnswerThink's Board of Directors.
The indemnification provided under the Bylaws includes the right to be paid
by AnswerThink the expenses (including attorneys' fees) of any proceeding for
which indemnification may be had in advance of its final disposition, provided
that the payment of such expenses (including attorneys' fees) incurred by a
director or officer in advance of the final disposition of a proceeding may be
made only upon delivery to AnswerThink of an undertaking by or on behalf of such
director or officer to repay all amounts so paid in advance if it is ultimately
determined that such director or officer is not entitled to be indemnified.
Pursuant to the Bylaws, if a claim for indemnification is not paid by
AnswerThink within 60 days after a written claim has been received by
AnswerThink, the claimant may at any time thereafter bring an action against
AnswerThink to recover the unpaid amount of the claim and, if successful in
whole or in part, the claimant will be entitled to be paid also the expense of
prosecuting such action. Under the Articles of Incorporation, AnswerThink has
the power to purchase and maintain insurance on behalf of any person who is or
was a director, officer, employee or agent of AnswerThink, or is or was serving
at the request of AnswerThink as a director, officer, employee or agent of
another corporation or of a partnership, joint venture, trust, employee benefit
plan 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, whether or not AnswerThink would have the power to indemnify
such person against such liability under the provisions of the Florida Act.
AnswerThink maintains director and officer liability insurance on behalf of its
directors and officers.
The foregoing indemnity and insurance provisions have the effect of
reducing directors' and officers' exposure to personal liability for actions
taken in connection with their respective positions.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
AnswerThink pursuant to the foregoing provisions, or otherwise, AnswerThink has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act of
1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by AnswerThink
of expenses incurred or paid by a director, officer or controlling person of
AnswerThink in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
securities being registered, AnswerThink will, unless in the opinion of its
counsel the matter has been settled
II-1
<PAGE>
by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
Item 21. Exhibits and Financial Statement Schedules.
-------------------------------------------
(a) Exhibits.
Exhibit
No. Exhibit
--- -------
2.1 Agreement and Plan of Merger by and among AnswerThink Consulting
Group, Inc., Think New Ideas, Inc. and Darwin Acquisition Corp.,
dated as of June 24, 1999.*
2.2 Company Voting Agreement by and among AnswerThink Consulting Group,
Inc., Darwin Acquisition Corp. and certain shareholders of Think
New Ideas, Inc., dated as of June 24, 1999.*
2.3 Acquiror Voting Agreement by and among Think New Ideas, Inc. and
certain shareholders of AnswerThink Consulting Group, Inc., dated
as of June 24, 1999.*
2.4 Stock Option Agreement by and between AnswerThink Consulting Group,
Inc. and Think New Ideas, Inc., dated as of June 24, 1999.*
5 Opinion of Frank A. Zomerfeld, Esq. as to the validity of the
securities registered hereunder, including the consent of Mr.
Zomerfeld.
8 Opinion of Akin, Gump, Strauss, Hauer & Feld, L.L.P. as to certain
tax matters, including the consent of that firm.
23.1 Consent of Frank A. Zomerfeld, Esq. (included as part of Exhibit
5).
23.2 Consent of Akin, Gump, Strauss, Hauer & Feld LLP (included as part
of Exhibit 8).
23.3 Consent of PricewaterhouseCoopers LLP.
23.4 Consent of Ernst & Young, L.L.P.
23.5 Consent of Arthur Andersen LLP.
23.6 Consent of Eaton Honick Pellegrino & McFarland, P.A.
23.7 Consent of Raymond James & Associates, Inc.
23.8 Consent of Salomon Smith Barney Inc.
24 Power of Attorney.
99.1 Form of AnswerThink Consulting Group, Inc. proxy card.
99.2 Form of Think New Ideas, Inc. proxy card.
II-2
<PAGE>
99.3 Consent of Ronald Bloom.
- ------------
* Incorporated by reference to AnswerThink's current report on Form 8-K filed
with the SEC on July 1, 1999.
(b) Not required.
(c) See Appendices C and D to the Joint Proxy Statement/Prospectus.
------------------
Item 22. Undertakings.
-------------
(a) AnswerThink hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total
dollar value of the securities offered would not exceed
that which was registered) and any deviation from the low
or high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the
Securities and Exchange Commission pursuant to Rule 424(b)
((S) 230.424(b) of this chapter) if, in the aggregate, the
changes in volume and price represent no more than a 20%
change in the maximum aggregate offering price set forth
in the "Calculation of the Registration Fee" table in the
effective registration statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) AnswerThink hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, each filing of
AnswerThink's annual report pursuant to section 13(a) or section 15(d)
of the Securities Exchange Act of 1934 (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to
II-3
<PAGE>
section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(c) AnswerThink hereby undertakes as follows: that prior to any public
reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any
person or party who is deemed to be an underwriter within the meaning
of Rule 145(c), AnswerThink undertakes that such reoffering prospectus
will contain the information called for by the applicable registration
form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other
Items of the applicable form.
(d) AnswerThink undertakes that every prospectus (i) that is filed
pursuant to paragraph (c) immediately preceding, or (ii) that purports
to meet the requirements of section 10(a)(3) of the Securities Act of
1933 and is used in connection with an offering of securities subject
to Rule 415 ((S) 230.415 of this chapter), will be filed as a part of
an amendment to the registration statement and will not be used until
such amendment is effective, and that, for purposes of determining any
liability under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
(e) The undertaking concerning indemnification is included as part of the
response to Item 20.
(f) AnswerThink hereby undertakes to respond to requests for information
that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11, or 13 of this Form, within one business day of
receipt of such request, and to send the incorporated documents by
first class mail or other equally prompt means. This includes
information contained in documents filed subsequent to the effective
date of the registration statement through the date of responding to
the request.
(g) AnswerThink hereby undertakes to supply by means of a post-effective
amendment all information concerning a transaction, and the company
being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Miami, State of Florida,
on September 17, 1999.
ANSWERTHINK CONSULTING GROUP, INC.
By: /s/ Ted A. Fernandez
------------------------------------------
Ted A. Fernandez
Chairman of the Board, President and Chief
Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on September 17, 1999.
Name: Title:
---- -----
/s/ Ted A. Fernandez Chairman of the Board, President and
- ------------------------------- Chief Executive Officer
Ted A. Fernandez (Principal Executive Officer)
/s/ John F. Brennan Executive Vice President, Chief Financial
- ------------------------------- Officer (Principal Accounting
John F. Brennan and Financial Officer)
* Executive Vice President, Chief
- ------------------------------- Technology Officer and Director
Allan R. Frank
* Executive Vice President, Sales and
- ------------------------------- Marketing and Director
Ulysses S. Knotts, III
* Director
- -------------------------------
Robert J. Bahash
* Director
- -------------------------------
Fernando Montero
* Director
- -------------------------------
Edmund R. Miller
II-5
<PAGE>
* Director
- -------------------------------
Bruce V. Rauner
* Director
- -------------------------------
William C. Kessinger
* Director
- -------------------------------
Jeffrey E. Keisling
* Director
- -------------------------------
Alan T.G. Wix
* By: /s/ John F. Brennan
--------------------------
John F. Brennan
Attorney-in-fact
II-6
<PAGE>
EXHIBIT INDEX
Exhibit
No. Exhibit
--- -------
2.1 Agreement and Plan of Merger by and among AnswerThink Consulting
Group, Inc., Think New Ideas, Inc. and Darwin Acquisition Corp.,
dated as of June 24, 1999.*
2.2 Company Voting Agreement by and among AnswerThink Consulting
Group, Inc., Darwin Acquisition Corp. and certain shareholders of
Think New Ideas, Inc., dated as of June 24 1999.*
2.3 Acquiror Voting Agreement by and among Think New Ideas, Inc. and
certain shareholders of AnswerThink Consulting Group, Inc., dated
as of June 24, 1999.*
2.4 Stock Option Agreement by and between AnswerThink Consulting
Group, Inc. and Think New Ideas, Inc., dated as of June 24, 1999.*
5 Opinion of Frank A. Zomerfeld, Esq. as to the validity of the
securities registered hereunder, including the consent of Mr.
Zomerfeld.
8 Opinion of Akin, Gump, Strauss, Hauer & Feld, L.L.P. as to certain
tax matters, including the consent of that firm.
23.1 Consent of Frank A. Zomerfeld, Esq. (included as part of Exhibit
5).
23.2 Consent of Akin, Gump, Strauss, Hauer & Feld LLP (included as part
of Exhibit 8).
23.3 Consent of PricewaterhouseCoopers LLP.
23.4 Consent of Ernst & Young, L.L.P.
23.5 Consent of Arthur Andersen LLP.
23.6 Consent of Eaton Honick Pellegrino & McFarland, P.A.
23.7 Consent of Raymond James & Associates, Inc.
23.8 Consent of Salomon Smith Barney Inc.
24 Power of Attorney.
99.1 Form of AnswerThink Consulting Group, Inc. proxy card.
99.2 Form of Think New Ideas, Inc. proxy card.
99.3 Consent of Ronald Bloom.
* Incorporated by reference to AnswerThink's current report on Form 8-K filed
with the SEC on July 1, 1999.
<PAGE>
Exhibit 5
---------
September 17, 1999
Board of Directors
AnswerThink Consulting Group, Inc.
1001 Brickell Bay Drive, Suite 3000
Miami, Florida 33131
Ladies and Gentlemen:
I am Corporate Counsel to AnswerThink Consulting Group, Inc. (the
"Corporation"), a Florida corporation. This opinion letter has been prepared in
connection with the Corporation's registration statement on Form S-4 (the
"Registration Statement") filed with the Securities and Exchange Commission
relating to the proposed offering of shares of common stock, par value $.001 per
share, all of which shares (the "Shares") are to be issued by the Corporation in
accordance with the terms of the Agreement and Plan of Merger, dated as of June
24, 1999, by and between the Corporation, Think New Ideas, Inc. and Darwin
Acquisition Corp. (the "Agreement"). This opinion letter is furnished to you at
your request to enable you to fulfill the requirements of Item 601(b)(5) of
Regulation S-K, 17 C.F.R. (S) 229.601(b)(5), in connection with the Registration
Statement.
For purposes of this opinion letter, I have examined copies of the
following documents:
1. An executed copy of the Registration Statement;
2. An executed copy of the Agreement;
3. The Restated Articles of Incorporation of the Corporation, with
amendments thereto;
4. The Bylaws of the Corporation, as amended to date; and
5. Resolutions of the Board of Directors of the Corporation adopted
by unanimous written consent on June 22, 1999 and September 15,
1999, relating to, among other things, the issuance of the Shares
and arrangements in connection therewith.
In my examination of the aforesaid documents, I have assumed the
genuineness of all signatures, the legal capacity of natural persons, the
authenticity, accuracy and completeness of all documents submitted to me, and
the conformity with the original documents of all documents submitted to me as
certified, telecopied, photostatic, or reproduced copies. This opinion letter
is given, and all statements herein are made, in the context of the foregoing.
This opinion letter is based as to matters of law solely on the
Florida Business Corporation Act. I express no opinion herein as to any other
laws, statutes, regulations, or ordinances.
Based upon, subject to and limited by the foregoing, I am of the
opinion that following (i) effectiveness of the Registration Statement, (ii)
issuance of the Shares pursuant to the terms of the Agreement, and (iii) receipt
by the Corporation of the consideration for the Shares specified in the
Agreement and resolutions of the Board of Directors, the Shares will be validly
issued, fully paid and nonassessable under the Florida Business Corporation Act.
<PAGE>
I assume no obligation to advise you of any changes in the foregoing
subsequent to the delivery of this opinion letter. This opinion letter has been
prepared for your use in connection with the filing of the Registration
Statement on the date of this opinion letter and should not be quoted in whole
or in part or otherwise be referred to, nor filed with or furnished to any
governmental agency or other person or entity, without my prior written consent.
I hereby consent to the filing of this opinion letter as Exhibit 5 to
the Registration Statement. In giving this consent, I do not thereby admit that
I am an "expert" within the meaning of the Securities Act of 1933, as amended.
Very truly yours,
/s/ Frank A. Zomerfeld, Esq.
Frank A. Zomerfeld, Esq.
<PAGE>
Exhibit 8
---------
[LETTERHEAD OF AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P.]
September 15, 1999
Think New Ideas, Inc.
45 West 36th Street, 12th Floor
New York, New York 10018
AnswerThink Consulting Group, Inc.
1001 Brickell Bay Road, 30th Floor
Miami, Florida 33131
Dear Sir or Madam:
We have acted as tax counsel for Think New Ideas, Inc. ("Think New
Ideas") in connection with the proposed merger between AnswerThink Consulting
Group, Inc. ("AnswerThink") and Think New Ideas.
In rendering our opinion, we have examined copies of such documents as
we deemed relevant and necessary, including the Agreement and Plan of Merger
(the "Merger Agreement"), the registration statement including all exhibits
attached thereto (together, the "Registration Statement"), and various other
documents, including all proxies and voting agreements, related thereto.
Accordingly, our opinion is conditioned on the truth and accuracy of all factual
statements made in the Merger Agreement, the Registration Statement, and all
documents relevant hereto, and upon timely and full compliance with the terms of
the Merger Agreement by all relevant parties. In rendering our opinion, we also
have relied upon the representations made on behalf of Think New Ideas in a
letter to us dated September 15, 1999 and upon representations made on behalf of
AnswerThink in a letter to us dated September 15, 1999 (together, the
"Representation Letters").
Our opinion is based on the Internal Revenue Code of 1986, as amended
(the "Code"), U.S Treasury regulations (including proposed regulations)
promulgated thereunder, administrative rulings and pronouncements of the
Internal Revenue Service (the "IRS") and judicial decisions, all as of the date
hereof. We cannot assure that future legislative, judicial or administrative
changes or interpretations will not adversely affect the accuracy of the
statements and conclusions. Any changes or interpretations are subject to
change at any time, possibly with retroactive effect, and could affect our
opinion. Additionally, Think New Ideas has not requested, nor has the IRS
issued, a ruling in connection with the merger. Accordingly, while our opinion
represents our best legal judgement, there can be no assurance that the IRS will
not successfully challenge our opinion.
Subject to assumptions, limitations, and qualifications set forth
herein, and in reliance on the Representation Letter, it is our opinion that the
proposed merger will constitute a tax-free reorganization within the meaning of
Code Section 368(a)(1)(A) by reason of Code Section 368(a)(2)(E). Accordingly,
subject to the assumptions, limitations and qualifications referred to in our
opinion, the proposed merger should result in the following federal income tax
consequences:
1. No gain or loss will be recognized by the Think New Ideas
stockholders upon the exchange of Think New Ideas common stock solely for
AnswerThink common stock. The cash payment to Think New Ideas stockholders in
lieu of fractional shares of AnswerThink common stock will be treated as if the
fractional shares were issued as part of the exchange and then redeemed by
<PAGE>
AnswerThink. Under Code Section 302(a), those cash payments will be treated as
distributions in full payment in exchange for the fractional AnswerThink shares
hypothetically redeemed. Therefore, Think New Ideas stockholders receiving cash
in lieu of fractional shares generally will recognize gain (or loss) to the
extent that the amount of cash exceeds (or is exceeded by) the portion of the
adjusted tax basis of Think New Ideas common stock that is allocable to the
fractional shares.
2. Each Think New Ideas stockholder's aggregate tax basis in the
AnswerThink common stock received in the merger will equal the aggregate tax
basis of the Think New Ideas common stock it surrendered in the merger. If an
exchanging Think New Ideas stockholder recognizes gain or loss upon receiving
cash in lieu of fractional shares in the merger, that stockholder's basis in
AnswerThink common stock actually received will be reduced. The amount of the
reduction will equal the portion of the stockholder's tax basis in its
surrendered stock that is allocable to the fractional share interest considered
to be exchanged for cash.
3. A Think New Ideas stockholder's holding period for AnswerThink common
stock received in the merger will include the time period during which it held
the Think New Ideas common stock, provided the Think New Ideas common stock is
held as a capital asset at the time of the merger.
4. Neither AnswerThink nor Think New Ideas will recognize gain or loss
solely as a result of the merger.
Our opinion is limited to the United States federal income tax matters
specifically addressed herein. This opinion does not address the federal income
tax consequences of other transactions effectuated before or after the merger
(whether or not these transactions are in connection with the merger). This
opinion also does not address foreign, state or local tax considerations. Think
New Ideas stockholders should consult their own individual tax advisors as to
the specific tax consequences of the merger, including applicable federal,
state, local and foreign tax consequences, if any.
We consent to your referring to this opinion letter in a manner
consistent with the Merger Agreement and Registration Statement, and as a
condition precedent to the closing of the proposed merger between AnswerThink
and Think New Ideas.
Very truly yours,
/s/ Akin, Gump, Strauss, Hauer & Feld, L.L.P.
AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P.
<PAGE>
Exhibit 23.3
------------
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-4 of AnswerThink Consulting Group, Inc. of our report dated
February 1, 1999, except for Note 15, as to which the date is February 26, 1999,
relating to the financial statements, which appear in AnswerThink Consulting
Group, Inc.'s Annual Report on Form 10-K for the year ended January 1, 1999. We
also consent to the incorporation by reference of our report dated February 26,
1999, except for Note 16, as to which the date is June 24, 1999, relating to the
financial statements, which appear in the Current Report on Form 8-K dated
August 12, 1999. We also consent to the reference to us under the heading
"Experts" in such Registration Statement.
/s/ PricewaterhouseCoopers LLP
Miami, Florida
September 16, 1999
<PAGE>
Exhibit 23.4
------------
CONSENT OF INDEPENDENT AUDITORS
Re: THINK New Ideas, Inc.
Registration Statement on Form S-4/joint proxy/prospectus
We consent to the reference to our firm under the caption "Experts" in
the Registration Statement (Form S-4) and related joint proxy/prospectus of
THINK New Ideas, Inc. and AnswerThink Consulting Group, Inc. for the
registration of 8,281,469 shares of common stock and to the incorporation by
reference therein of our report dated August 13, 1999, with respect to the
consolidated financial statements of THINK New Ideas, Inc. included in its
Annual Report (Form 10-KSB) for the year ended June 30, 1999, filed with the
Securities and Exchange Commission.
/s/ Ernst & Young, L.L.P.
New York, New York
September 16, 1999
<PAGE>
Exhibit 23.5
------------
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated February 26, 1999
included in AnswerThink Consulting Group, Inc.'s Form 8-K filed August 12, 1999
and to all references to our Firm included in this registration statement.
/s/ ARTHUR ANDERSEN LLP
Philadelphia, Pa.
September 16, 1999
<PAGE>
EXHIBIT 23.6
------------
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-4 of AnswerThink Consulting Group, Inc. of our report dated
May 21, 1999, relating to the financial statements of CFT Consulting, Inc. which
appeared in Amendment No. 1 to the Current Report on Form 8-K of AnswerThink
Consulting Group, Inc. dated September 13, 1999.
/s/ Eaton Honick Pellegrino & McFarland, P.A.
Eaton Honick Pellegrino & McFarland, P.A.
Sarasota, Florida
September 16, 1999
<PAGE>
EXHIBIT 23.7
------------
CONSENT OF RAYMOND JAMES & ASSOCIATES, INC.
We hereby consent to the use of our name and to the description of our opinion
letter, dated June 24, 1999, and to the inclusion of such letter as an exhibit
to the registration statement on Form S-4 and related joint proxy / prospectus
of AnswerThink Consulting Group, Inc. and THINK New Ideas, Inc.
/s/ Raymond James & Associates
RAYMOND JAMES & ASSOCIATES, INC.
St. Petersburg, Florida
September 14, 1999
<PAGE>
Exhibit 23.8
------------
CONSENT OF SALOMON SMITH BARNEY INC.
We hereby consent to the use of our name and to the description of our
opinion letter, dated June 23, 1999, under the caption "THE MERGEROpinion of
Think New Ideas' Financial Advisor" in, and to the inclusion of such opinion
letter as Annex D to, the Joint Proxy Statement/Prospectus of AnswerThink
Consulting Group, Inc. ("AnswerThink"), which Joint Proxy Statement/Prospectus
is part of the Registration Statement on Form S-4 of AnswerThink. By giving
such consent we do not thereby admit that we are experts with respect to any
part of such Registration Statement within the meaning of the term "expert" as
used in, or that we come within the category of persons whose consent is
required under, the Securities Act of 1933, as amended, or the rules and
regulations of the Securities and Exchange Commission promulgated thereunder.
Dated: September 16, 1999
SALOMON SMITH BARNEY INC.
By: /s/ Salomon Smith Barney
------------------------
<PAGE>
Exhibit 24
----------
POWER OF ATTORNEY
for the Acquisition of Think New Ideas, Inc.
Each director whose signature appears below appoints Ted A. Fernandez
or John F. Brennan, jointly and severally, each in his own capacity, as true and
lawful attorneys-in-fact, with full power of substitution in such director's
name, place and stead, in any and all capacities to sign the Registration
Statement on Form S-4 and any amendments to the Form S-4, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
said attorney-in-fact, or their substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
This Power of Attorney may be signed in counterparts.
[Signatures on following page]
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Power of Attorney on
September 15, 1999.
/s/ Allan R. Frank /s/ Robert J. Bahash
- ------------------------------- --------------------------------
Allan R. Frank Robert J. Bahash
/s/ Ulysses S. Knotts, III /s/ Jeffrey E. Keisling
- ------------------------------- --------------------------------
Ulysses S. Knotts, III Jeffrey E. Keisling
/s/ Fernando Montero /s/ Alan T.G. Wix
- ------------------------------- --------------------------------
Fernando Montero Alan T.G. Wix
/s/ Edmund R. Miller /s/ Ted A. Fernandez
- ------------------------------- --------------------------------
Edmund R. Miller Ted A. Fernandez
/s/ Bruce V. Rauner
- -------------------------------
Bruce V. Rauner
/s/ William C. Kessinger
- -------------------------------
William C. Kessinger
<PAGE>
Exhibit 99.1
------------
REVOCABLE PROXY
ANSWERTHINK CONSULTING GROUP, INC.
This Proxy is Solicited on Behalf of The Board of Directors
The undersigned shareholder of AnswerThink Consulting Group, Inc. ("ACG")
hereby appoints Ted A. Fernandez and John F. Brennan or any of them, with full
power of substitution in each, as proxies to cast all votes which the
undersigned shareholder is entitled to cast at the special meeting of
shareholders (the "ACG Meeting") to be held at 11:00 a.m. on November 3, 1999,
at the Hotel Inter-Continental Miami, 100 Chopin Plaza, Miami, Florida 33131
and at any adjournments thereof, upon the following matters. The undersigned
shareholder hereby revokes any proxy or proxies heretofore given.
This proxy will be voted as directed by the undersigned shareholder.
UNLESS CONTRARY DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED: (1) TO APPROVE THE
ISSUANCE OF ADDITIONAL SHARES OF ACG COMMON STOCK TO SHAREHOLDERS OF THINK NEW
IDEAS, INC. ("TNI") AS PART OF ACG'S ACQUISITION OF TNI AND (2) IN ACCORDANCE
WITH THE DETERMINATION OF A MAJORITY OF THE BOARD OF DIRECTORS OF ACG AS TO
OTHER MATTERS. The undersigned shareholder may revoke this proxy at any time
before it is voted by (i) delivering to the Corporate Secretary of ACG a written
notice of revocation prior to the ACG Meeting, (ii) delivery to ACG prior to the
ACG Meeting a duly executed proxy bearing a later date, or (iii) attending the
ACG Meeting and voting in person. The undersigned stockholder hereby
acknowledges receipt of ACG's Notice of Special Meeting and Joint Proxy
Statement/Prospectus.
If you receive more than one proxy card, please sign and return all cards
in the accompanying envelope.
(continued and to be signed and dated on reverse side)
----------------
See
Reverse Side
----------------
<PAGE>
----------------
X
----------------
Please mark your
votes as this.
-----------
Shares of Common Stock
Proposal 1: To approve the issuance of additional shares of ACG Common Stock
to stockholders of TNI as part of ACG's acquisition of TNI.
FOR AGAINST ABSTAIN
[_] [_] [_]
Other Matters: The proxies are authorized to vote upon such other business as
may properly come before the ACG Meeting, or any adjournments or
postponements thereof, in accordance with the determination of a
majority of ACG's Board of Directors.
Date:
-------------------------------------
-------------------------------------
-------------------------------------
Signature of Stockholder or
Authorized Representative
Please date and sign exactly as name appears hereon. Each executor,
administrator, trustee, guardian, attorney-in-fact and other fiduciary should
sign and indicate his or her full title. When stock has been issued in the name
of two or more persons, all should sign.
<PAGE>
Exhibit 99.2
------------
REVOCABLE PROXY
THINK NEW IDEAS, INC.
This Proxy is Solicited on Behalf of The Board of Directors
The undersigned stockholder of Think New Ideas, Inc. ("TNI") hereby
appoints Ronald Bloom and Daniel Nicholas, or any of them, with full power of
substitution in each, as proxies to cast all votes which the undersigned
stockholder is entitled to cast at the special meeting of stockholders (the "TNI
Meeting") to be held at 9:00 a.m. on November 3, 1999 at the Hyatt Regency, 265
Peachtree Street, NE, Atlanta, Georgia 30303 and at any adjournments thereof,
upon the following matters. The undersigned stockholder hereby revokes any
proxy or proxies heretofore given.
This proxy will be voted as directed by the undersigned stockholder.
UNLESS CONTRARY DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED: (1) TO APPROVE
AND ADOPT AN AGREEMENT AND PLAN OF MERGER, DATED AS OF JUNE 24, 1999, AND THE
MERGER PROVIDED FOR THEREIN, AMONG ANSWERTHINK CONSULTING GROUP, INC. ("ACG"),
DARWIN ACQUISITION CORP. ("MERGER SUB") AND TNI, PURSUANT TO WHICH (i) MERGER
SUB, A WHOLLY OWNED SUBSIDIARY OF ACG, WILL BE MERGED WITH AND INTO TNI, WITH
TNI SURVIVING THE MERGER AS A WHOLLY OWNED SUBSIDIARY OF ACG AND (ii) EACH SHARE
OF TNI COMMON STOCK WILL BE CONVERTED INTO THE RIGHT TO RECEIVE A NUMBER OF
SHARES OF ACG COMMON STOCK EQUAL TO 0.70, AND (2) IN ACCORDANCE WITH THE
DETERMINATION OF A MAJORITY OF THE BOARD OF DIRECTORS OF TNI AS TO ANY OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING, OR ANY ADJOURNMENTS OR
POSTPONEMENTS THEREOF. The undersigned stockholder may revoke this proxy at any
time before it is voted by (i) delivering to the Corporate Secretary of TNI a
written notice of revocation prior to the TNI Meeting, (ii) delivery to TNI
prior to the TNI Meeting a duly executed proxy bearing a later date, or (iii)
attending the TNI Meeting and voting in person. The undersigned stockholder
hereby acknowledges receipt of TNI's Notice of Special Meeting and Joint Proxy
Statement/Prospectus.
If you receive more than one proxy card, please sign and return all cards
in the accompanying envelope.
(continued and to be signed and dated on reverse side)
----------------
See
Reverse Side
----------------
<PAGE>
----------------
X
----------------
Please mark your
votes as this.
-----------
Shares of Common Stock
Proposal: To approve and adopt the Agreement and Plan of Merger, dated as
of June 24, 1999, among ACG, Merger Sub and TNI, and the Merger
provided for therein, pursuant to which (i) Merger Sub will be
merged with and into TNI, with TNI as the surviving corporation
and a wholly owned subsidiary of ACG, and (ii) each share of TNI
Common Stock will be converted into the right to receive a
number of shares of ACG Common Stock equal to 0.70.
FOR AGAINST ABSTAIN
[_] [_] [_]
Other Matters: The proxies are authorized to vote upon such other business as
may properly come before the meeting, or any adjournments or
postponements thereof, in accordance with the determination of a
majority of TNI's Board of Directors.
Date:
-------------------------------------
-------------------------------------
-------------------------------------
Signature of Stockholder or
Authorized Representative
Please date and sign exactly as name appears hereon. Each executor,
administrator, trustee, guardian, attorney-in-fact and other fiduciary should
sign and indicate his or her full title. When stock has been issued in the name
of two or more persons, all should sign.
<PAGE>
Exhibit 99.3
------------
CONSENT OF DIRECTOR NOMINEE
To AnswerThink Consulting Group, Inc.:
Pursuant to Rule 438 promulgated under the Securities Act of 1933, as
amended, I hereby consent to the references in the Registration Statement of
AnswerThink Consulting Group, Inc. (the "Company") on Form S-4 and any
amendments thereto, which indicate that I have accepted a nomination to become a
director of the Company following the closing of the merger of Think New Ideas,
Inc. with the Company.
/s/ Ronald Bloom
----------------------------
Ronald Bloom
Dated: September 8, 1999
