Exhibit 2.1
EXECUTION COPY
AGREEMENT AND PLAN OF
MERGER
BY AND AMONG
INVESTMENT TECHNOLOGY GROUP,
INC.,
HEDGEHOG ACQUISITION
INC.,
THE MACGREGOR GROUP,
INC.
AND
STEVEN D. LEVY,
AS REPRESENTATIVE
OF THE SECURITYHOLDERS
OF
THE MACGREGOR GROUP,
INC.
Dated as of July 12, 2005
TABLE OF CONTENTS
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AGREEMENT AND PLAN OF
MERGER
This AGREEMENT AND PLAN OF MERGER
(the “ Agreement ”), dated as of July 12,
2005, is made by and among INVESTMENT TECHNOLOGY GROUP, INC., a
Delaware corporation (“ Parent ”), HEDGEHOG
ACQUISITION INC., a Delaware corporation and wholly-owned
subsidiary of Parent (“ Acquisition Sub ”), THE
MACGREGOR GROUP, INC., a Delaware corporation (the “
Company ”), and Steven D. Levy (the “
Representative ”), on behalf of the Company Holders
(as hereinafter defined).
WHEREAS, the Boards of Directors of
Parent, Acquisition Sub and the Company have each approved, and
declared it to be advisable and in the best interests of their
respective stockholders, for Parent to acquire the Company upon the
terms and subject to the conditions set forth herein;
WHEREAS, in furtherance of such
acquisition, the Boards of Directors of Parent, Acquisition Sub and
the Company have each approved and declared advisable this
Agreement and the merger (the “ Merger ”) of
Acquisition Sub with and into the Company, in accordance with the
General Corporation Law of the State of Delaware (the “
DGCL ”), upon the terms, and subject to the
conditions, set forth herein, which Merger will result in, among
other things, the Company becoming a wholly-owned subsidiary of
Parent; and
WHEREAS, simultaneously with the
execution and delivery of this Agreement, Parent is entering into
employment agreements and noncompetition agreements with certain
officers of the Company, to be effective as of the
Closing.
NOW, THEREFORE, in consideration of
the foregoing and the mutual representations, warranties, covenants
and agreements herein contained, and intending to be legally bound
hereby, the parties hereto agree as follows:
“ 2004 Financials
” has the meaning set forth in Section 4.9
below.
“ Acquisition Proposal
” means any inquiry, proposal or offer from any Person (other
than Parent, Acquisition Sub or any of their Affiliates) relating
to any merger, consolidation, recapitalization, liquidation or
other direct or indirect business combination or reorganization,
involving the Company or any Subsidiary of the Company or the
issuance or acquisition of shares of capital stock or other
securities of the Company or any Subsidiary of the Company or any
tender or exchange offer that if consummated would result in any
Person, together with all Affiliates thereof, beneficially owning
shares of capital stock or other securities of the Company or any
Subsidiary of the Company, or the sale, lease, exchange, license
(whether exclusive or not), or other disposition of any significant
portion of the business or other assets of the Company or any
Subsidiary of the Company, or any other transaction, the
consummation of which could reasonably be expected to impede,
interfere with, prevent or materially delay the consummation of the
transactions contemplated hereby or which would reasonably be
expected
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to diminish significantly the benefits to Parent
or its Affiliates of the transactions contemplated
hereby.
“ Acquisition Sub
” has the meaning set forth in the introductory paragraph
above.
“ Action ” means
any suit, arbitration, cause of action, claim, complaint, criminal
prosecution, investigation, governmental or other administrative
proceeding, whether at law or at equity, before or by any Court or
Governmental Authority, before any arbitrator or other
tribunal.
“ Affiliate ”
means, with respect to any Person, 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 “ control ” (including the terms
“ controlled by ” and “ under common
control with ”) means the possession, directly or
indirectly, of the power to direct or cause the direction of the
management or policies of a Person, whether through the ownership
of stock or other securities, as trustee or executor, by contract
or otherwise.
“ Antitrust Laws
” has the meaning set forth in
Section 6.2(c) below.
“ Approval ”
means any license, permit, consent, approval, authorization,
registration, filing, waiver, qualification or
certification.
“ Audited December 31
Balance Sheet ” has the meaning set forth in
Section 4.9 below.
“ Audited Financial
Statements ” has the meaning set forth in
Section 4.9 below.
“ Business Day ”
means any day other than a Saturday, Sunday or day on which banks
are permitted to close in the Commonwealth of
Massachusetts.
“ Certificate of
Incorporation ” means, with respect to any corporation,
those instruments that at the time constitute its corporate charter
as filed or recorded under the general corporation law of the
jurisdiction of its incorporation, including the articles or
certificate of incorporation or organization, and all amendments
thereto, as the same may have been restated, and all amendments
thereto (including any articles or certificates of merger or
consolidation, certificate of correction or certificates of
designation or similar instruments which effect any such amendment)
which became effective after the most recent such
restatement.
“ Certificate of Merger
” has the meaning set forth in Section 2.2
below.
“ Certificates ”
has the meaning set forth in Section 3.2(i)
below.
“ Claims ” has
the meaning set forth in Section 10.1 below.
“ Class A Common
Share ” has the meaning set forth in
Section 3.2(d) below.
“ Class B Common
Liquidation Amount ” shall be equal to the sum of the
Class B Common Liquidation Preferences with respect to the
total number of issued and outstanding Class B Common Shares
immediately prior to the Effective Time.
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“ Class B Common
Liquidation Preference ” shall be equal to the
liquidation preference of each Class B Common Share determined
in accordance with the Company’s Certificate of
Incorporation, as currently in effect immediately prior to the
Effective Time.
“ Class B Common
Participating Amount ” shall be equal to the amount to be
distributed to each Class B Common Share after payment of the
Series A Liquidation Preference, Class B Common
Liquidation Preference and Class C Common Liquidation
Preference determined in accordance with the Company’s
Certificate of Incorporation, as currently in effect immediately
prior to the Effective Time.
“ Class B Common
Share ” has the meaning set forth in
Section 3.2(b) below.
“ Class C Common
Liquidation Amount ” shall be equal to the sum of the
Class C Common Liquidation Preferences with respect to the
total number of issued and outstanding Class C Common Shares
immediately prior to the Effective Time.
“ Class C Common
Liquidation Preference ” shall be equal to the
liquidation preference of each Class C Common Share determined
in accordance with the Company’s Certificate of
Incorporation, as currently in effect immediately prior to the
Effective Time.
“ Class C Common
Participating Amount ” shall be equal to the amount to be
distributed to each Class C Common Share after payment of the
Series A Liquidation Preference, Class B Common
Liquidation Preference and Class C Common Liquidation
Preference determined in accordance with the Company’s
Certificate of Incorporation, as currently in effect immediately
prior to the Effective Time.
“ Class C Common
Share ” has the meaning set forth in
Section 3.2(c) below.
“ Client ” shall
mean any Person to whom the Company provides services.
“ Closing ” has
the meaning set forth in Section 2.2 below.
“ Closing Balance Sheet
” has the meaning set forth in
Section 3.11(a)(i)
“ Closing Date ”
has the meaning set forth in Section 2.2
below.
“ Closing Merger
Consideration ” means the Merger Consideration less the
Escrow Fund.
“ Code ” means
the Internal Revenue Code of 1986, as amended, and all Regulations
promulgated thereunder.
“ Common Merger
Consideration ” shall be equal to the amount to be
distributed to each Class A Common Share determined in
accordance with the Company’s Certificate of Incorporation,
as currently in effect immediately prior to the Effective
Time.
“ Common Stock ”
has the meaning set forth in Section 4.4(a)
.
“ Common Warrants
” has the meaning set forth in Section 3.4(b)
.
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“ Common Warrant Holder
” has the meaning set forth in Section 3.4(b)
.
“ Common Warrant
Payments ” has the meaning set forth in
Section 3.4(b) .
“ Company ” has
the meaning set forth in the introductory paragraph
above.
“ Company Board ”
has the meaning set forth in Section 3.2(k)
below.
“ Company Equity Incentive
Plan ” means the Company’s 1999 Stock Option and
Purchase Plan, as amended and currently in effect.
“ Company Holders
” means (i) holders of Series A Preferred Shares,
(ii) holders of Class A Common Shares; (iii) holders
of Class B Common Shares; (iv) holders of Class C
Common Shares; (v) Preferred Warrant Holders with an exercise
price per share less than the Series A Liquidation Preference;
(vi) Common Warrant Holders with an exercise price per share
less than the Common Merger Consideration; and (vii) Option
Holders with an exercise price per share less than the Common
Merger Consideration.
“ Company Material Adverse
Effect ” means (a) a material adverse effect on the
business, assets, properties, results of operations or financial
condition of the Company and its Subsidiaries (taken as a whole),
or (b) a material adverse effect on the ability of the Company
to consummate the transactions contemplated by this Agreement;
provided , however , that, in determining whether
there has been a Company Material Adverse Effect, any effect
resulting from an Excluded Matter shall be disregarded.
“Excluded Matter” means any one or more of the
following: (i) the effect of any change in the United States
or foreign economies or securities or financial markets in general;
(ii) the effect of any change that generally affects any
industry in which the Company or any of its Subsidiaries operates
that does not disproportionately affect the Company or its
Subsidiaries; (iii) the effect of any action taken by Parent
or its Affiliates (provided such action was without the
participation or consent of the Company) with respect to the
transactions contemplated hereby or with respect to the Company or
its Subsidiaries; (iv) the effect of any changes after the
date hereof in applicable Laws or accounting rules not
uniquely relating to the Company or its Subsidiaries; (v) any
effect resulting from the public announcement of this Agreement,
compliance with the terms of this Agreement or the consummation of
the transactions contemplated by this Agreement, including but not
limited to any such resulting action or threatened action taken by
any Person who is a party to a current or terminated Contract with
the Company or its Subsidiaries; and (vi) the indirect or
consequential effect of any outbreak of hostilities, acts of war,
sabotage or terrorism or military actions or any escalation or
material worsening of any such hostilities, acts of war, sabotage
or terrorism or military actions existing or underway as of the
date hereof.
“ Company
Representatives ” has the meaning set forth in
Section 6.6 below.
“ Company Shares
” means, collectively, the Series A Preferred Shares,
Class A Common Shares, Class B Common Shares and
Class C Common Shares.
“ Company Third Party
Consents ” has the meaning set forth in
Section 6.2(e) below.
“ Confidential
Information ” has the meaning set forth in
Section 6.3 below.
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“ Confidentiality
Agreement ” has the meaning set forth in
Section 6.3 below.
“ Continuing Employee
” has the meaning set forth in Section 6.9
below.
“ Continued Employee
Plan ” has the meaning set forth in
Section 6.9 below.
“ Contract ”
means any written contract, agreement, license, lease or other
instrument, and all amendments, modifications and supplements
thereto.
“ Controlled Group
Liability ” means any and all liabilities (i) under
Title IV of ERISA, (ii) under Section 302 of ERISA,
(iii) under Sections 412 and 4971 of the Code, or (iv) as
a result of a failure to comply with the continuation coverage
requirements of Section 601 et seq. of ERISA and
Section 4980B of the Code.
“ Copyright ”
means the protection afforded works of authorship under the United
States Copyright Act of 1976, as amended and corresponding
protections in other countries.
“ Copyright Application
” means a formal written application for a copyright with the
United States Copyright Office or an equivalent governmental
authority in another country.
“ Copyright
Registration ” means a registration issued by the United
States Copyright Office or equivalent governmental registration in
another country.
“ Court ” means
any court or arbitration tribunal of the United States, any
domestic state, or any foreign country, and any political
subdivision thereof.
“ December 31 Balance
Sheet ” has the meaning set forth in
Section 4.9 below.
“ Deductible ”
has the meaning set forth in Section 10.3(b)
below.
“ Defense ” has
the meaning set forth in Section 10.3(b)
below.
“ DGCL ” has the
meaning set forth in the Recitals above.
“ Disabling Devices
” means any “Trojan horse,” “worms,”
“trap doors,” “back doors,” or other
“viruses”, that significantly adversely affect or
impair the functionality of the Software as described in any
relevant documentation relating thereto.
“ Dissenting Shares
” has the meaning set forth in Section 3.9
below.
“ Dissenting
Stockholders ” has the meaning set forth in
Section 3.9 below.
“ Domain Names ”
means any alphanumeric designations which are registered with or
assigned by any internationally recognized domain name registrar,
domain name registry, or other domain name registration authority
as part of an electronic address on the Internet.
“ Effective Time
” has the meaning set forth in Section 2.2
below.
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“ Employee Benefit Plan
” means any employee benefit plan, program, policy,
practices, or other arrangement providing benefits to any current
or former employee, officer or director of the Company or any of
its Subsidiaries or any beneficiary or dependent thereof that is
sponsored or maintained by the Company or any of its Subsidiaries
or to which the Company or any of its Subsidiaries contributes or
is obligated to contribute, whether or not written, including
without limitation any employee welfare benefit plan within the
meaning of Section 3(1) of ERISA, any employee pension
benefit plan within the meaning of Section 3(2) of ERISA
(whether or not such plan is subject to ERISA) and any bonus,
incentive, deferred compensation, vacation, stock purchase, stock
option, severance, employment, change of control or fringe benefit
plan, program or policy.
“ Employment Agreement
” means a contract, offer letter or agreement of the Company
or any of its Subsidiaries with or addressed to any individual who
is rendering or has rendered services thereto as an employee or
consultant pursuant to which the Company or any of its Subsidiaries
has any actual or contingent liability or obligation to provide
compensation and/or benefits in consideration for past, present or
future services.
“ Environmental
Liabilities ” has the meaning set forth in
Section 4.21 below.
“ ERISA ” means
the Employee Retirement Income Security Act of 1974, as
amended.
“ ERISA Affiliate
” has the meaning set forth in Section 6.9
below.
“ Escrow Agent ”
has the meaning set forth in Section 3.2(g)
below.
“ Escrow Agreement
” has the meaning set forth in
Section 3.2(g) below.
“ Escrow Fund ”
means Ten Million Dollars ($10,000,000).
“ Exchange Act ”
means the Securities Exchange Act of 1934, as amended.
“ GAAP ” means
U.S. generally accepted accounting principles consistently applied
and maintained throughout the periods indicated.
“ Governmental
Authority ” means any governmental agency, authority,
department, commission, board, bureau, Court or instrumentality of
the United States, any domestic state, locality or any foreign
country, and any political subdivision or agency thereof, and
includes any authority having governmental or quasi-governmental
powers, including any administrative agency or commission, and any
Self-Regulatory Organization.
“ Historical Financial
Statements ” has the meaning set forth in
Section 4.9 below.
“ HSR Act ” has
the meaning set forth in Section 4.6 below.
“ Indebtedness ”
means Liabilities (i) for borrowed money, or with respect to
deposits or advances of any kind (other than deposits, advances or
excess payments accepted in connection with the sale of products or
services in the ordinary course of business); (ii) evidenced
by bonds, debentures, notes or similar instruments; (iii) upon
which interest charges are customarily paid
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(other than obligations accepted in connection
with the purchase of products or services in the ordinary course of
business); (iv) under conditional sale or other title
retention agreements; (v) issued or assumed as the deferred
purchase price of property or services (other than accounts payable
to suppliers incurred in the ordinary course of business and paid
when due); (vi) of others secured by (or for which the holder
of such Liabilities has an existing right, contingent or otherwise,
to be secured by) any Lien or security interest on property owned
or acquired by the Person in question whether or not the
obligations secured thereby have been assumed; or (vii) under
leases required to be accounted for as capital leases under
GAAP.
“ Indemnification
Matter ” has the meaning set forth in
Section 10.3 below.
“ Indemnification
Notice ” has the meaning set forth in
Section 10.3 below.
“ Indemnitee ”
has the meaning set forth in Section 10.3
below.
“ Indemnitor ”
has the meaning set forth in Section 10.3
below.
“ Independent
Accountants ” shall have the meaning set forth in
Section 3.11(a)(iii) below.
“ Intellectual Property
” shall mean all Copyrights, Patents, Trademarks, Domain
Names, and Trade Secrets.
“ Intellectual Property
Licenses ” has the meaning set forth in
Section 4.18(e) below.
“ Knowledge of the
Company ,” “ Company’s Knowledge
” and all permutations thereof, shall mean the actual
knowledge of Steven D. Levy, Adam Taylor, Stephen Alepa and John G.
O’Brien.
“ Latest Balance Sheet
” has the meaning set forth in Section 4.9
below.
“ Latest Financial
Statements ” has the meaning set forth in
Section 4.9 below.
“ Laws ” means
all laws, statutes, codes, written policies, licensing
requirements, ordinances and Regulations of any Governmental
Authority, including all Orders having the effect of law in each
such jurisdiction.
“ Liabilities ”
means any debts, obligations and other liabilities (whether known
or unknown, absolute or contingent, liquidated or unliquidated, due
or to become due, accrued or not accrued, asserted or unasserted or
otherwise), losses, claims, damages, Taxes, interest obligations,
deficiencies, Orders, assessments, fines, fees, penalties, expenses
(including amounts paid in settlement, interest, Court costs, costs
of investigators, fees and expenses of attorneys, accountants,
financial advisors, consultants and other experts, and other
expenses of litigation), any incidental or consequential damages
and any punitive damages payable to third parties that may be
imposed or otherwise incurred or suffered .
“ Licensed Software
” means the Object Code version of the non-commercially
available software of the Company listed on
Schedule 4.18(e).
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“ Lien ” means
any mortgage, pledge, security interest, attachment, easement,
restriction, encumbrance, lien (statutory or otherwise), option,
conditional sale agreement, right of first refusal or right of
first offer (including any agreement to give any of the
foregoing).
“ Material Employment
Agreement ” means an Employment Agreement pursuant to
which the Company or any of its Subsidiaries has or could have any
obligation to provide compensation and/or benefits (including
without limitation severance pay or benefits) in an amount or
having a value in excess of $150,000 per year.
“ Merger ” has
the meaning set forth in the Recitals above.
“ Merger Consideration
” has the meaning set forth Section 3.1
below.
“ Multiemployer Plan
” means any “multiemployer plan” within the
meaning of Section 4001(a)(3) of ERISA.
“ Object Code ”
means computer programming code in binary form which is intended to
be directly executed by a computer after suitable processing but
without intervening steps of compilation or assembly.
“ Option ” has
the meaning set forth in Section 3.3 below.
“ Option Agreement
” has the meaning set forth in Section 3.3
below.
“ Option Holder ”
has the meaning set forth in Section 3.3
below.
“ Option Payments
” has the meaning set forth in Section 3.3
below.
“ Order ” means
any judgment, order, writ, injunction, ruling, decision or decree
of, or any settlement under the jurisdiction of any Court or
Governmental Authority.
“ Outside Date ”
has the meaning set forth in Section 9.1(b)
below.
“ Parent ” has
the meaning set forth in the introductory paragraph
above.
“ Parent/Acquisition Sub
Third Party Consents ” has the meaning set forth in
Section 6.2(e) below.
“ Parent Group ”
has the meaning set forth in Section 10.1
below.
“ Patents ” means
all patents and industrial design registrations, including any
continuations, divisionals, continuations-in-part, renewals
and reissues of the foregoing issued by the United States
Patent and Trademark Office, and all similar registrations issued
by an equivalent governmental authority in another country, under
the Laws of any jurisdiction.
“ Patent Application
” means a formal written application for a Patent with the
United States Patent and Trademark Office or equivalent
governmental authority in another country.
“ Payment Agent ”
has the meaning set forth in Section 3.2(g)
below.
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“ Payment Agent
Agreement ” shall have the meaning set forth in
Section 3.2(g) below.
“ Payment Fund ”
has the meaning set forth in Section 3.2(h)
below.
“ Permits ” shall
mean any and all permits, authorizations, approvals, registrations,
certificates, orders, waivers, variances or other approvals and
licenses relating to compliance with any Law.
“ Permitted Liens
” means (i) statutory Liens for Taxes, assessments and
other governmental charges which are not yet due and payable or are
due but are being contested in good faith by appropriate
proceedings, (ii) statutory or common law Liens to secure
landlords, sublandlords, licensors or sublicensors under leases or
rental agreements, (iii) deposits or pledges made in
connection with, or to secure payment of, workers’
compensation, unemployment insurance, old age pension or other
social security programs mandated under applicable Laws,
(iv) statutory or common law Liens in favor of carriers,
warehousemen, mechanics, workmen, repairmen and materialmen to
secure claims for labor, materials or supplies and other like
Liens, arising in the ordinary course of business and not from any
breach, default or violation of Contract or Law,
(v) restrictions on transfer of securities imposed by
applicable state and federal securities Laws, (vi) any other
encumbrance affecting any asset which does not materially impede or
otherwise affect the ownership or operation of such asset,
(vii) Liens resulting from a filing by a lessor as a
precautionary filing for a true lease, (viii) deposits to
secure the performance of bids, trade contracts, leases, statutory
obligations, surety and appeal bonds, performance bonds an other
obligations of a like nature incurred in the ordinary course of
business and not from any breach, default or violation of Contract
or Law, (ix) vendor’s Liens to secure payment which are
not yet due and payable or are due but are being contested in good
faith by appropriate proceedings, and (x) all licenses granted to
third parties to use Intellectual Property owned by the Company and
disclosed in Section 4.18 of the Company Disclosure
Schedule.
“ Person ” means
an individual, corporation, partnership, association, trust,
unincorporated organization, limited liability company or other
legal entity.
“ Plan ” means
any Employee Benefit Plan other than a Multiemployer
Plan.
“ Preferred Warrants
” has the meaning set forth in Section 3.4(a)
.
“ Preferred Warrant
Holder ” has the meaning set forth in
Section 3.4(a) .
“ Preferred Warrant
Payments ” has the meaning set forth in
Section 3.4(a) .
“ Purchaser Benefit
Plans ” has the meaning set forth in
Section 6.9 below.
“ Qualified Plan
” has the meaning set forth in
Section 4.15(b) below.
“ Regulation ”
means any rule or regulation of any Governmental
Authority.
“ Related Agreements
” means the Payment Agent Agreement and the Escrow
Agreement.
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“ Representative
” has the meaning set forth in the introductory paragraph
above.
“ Restricted Stock
” has the meaning set forth in Section 3.2(k)
below.
“ Self-Regulatory
Organization ” shall be as defined in
Section 3(a)(26) of the Exchange Act.
“ Series A Liquidation
Amount ” shall be equal to the sum of the Series A
Liquidation Preferences with respect to the total number of issued
and outstanding Series A Preferred Shares immediately prior to
the Effective Time and the Preferred Warrant
Payments.
“ Series A Liquidation
Preference ” shall be equal to the liquidation preference
of each Series A Preferred Share determined in accordance with
the Company’s Certificate of Incorporation, as currently in
effect immediately prior to the Effective Time.
“ Series A Preferred
Share ” has the meaning set forth in
Section 3.2(a) below.
“ Software ”
means any and all computer programs, including any and all software
implementations of algorithms, models and methodologies, whether in
Source Code or Object Code.
“ Source Code ”
means any version of any developed Software written in human
readable programming language, capable of being translated into
Object Code for operation into computer equipment through assembly
or compiling.
“ Stockholder Approval
” has the meaning set forth in Section 4.8
below.
“ Subsidiary ”
means, with respect to any Person, any corporation, partnership,
joint venture, limited liability company, trust or other legal
entity of which such Person (either alone or through or together
with any other Subsidiary) owns, directly or indirectly, at least a
majority of the stock or other equity interests in such entity, or
which is consolidated with such Person for financial reporting
purposes.
“ Surviving Corporation
” has the meaning set forth in Section 2.1
below.
“ Target Amount ”
means Three Million, Eight Hundred Thousand Dollars
($3,800,000).
“ Tax Authority ”
shall mean any Governmental Authority or any quasi-governmental or
private body having jurisdiction over the assessment,
determination, collection or imposition of any Tax.
“ Taxes ” means
all taxes and governmental impositions of any kind in the nature of
(or similar to) taxes, payable to any federal, state, local or
foreign taxing authority or other Governmental Authority,
including, but not limited to, those on or measured by or referred
to as income, franchise, profits, gross receipts, capital, ad
valorem , custom duties, alternative or add-on minimum taxes,
estimated, environmental, disability, registration, value added,
sales, use, service, real or personal property, capital stock,
license, payroll, withholding, employment, social security,
workers’ compensation, unemployment compensation, utility,
severance, production,
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excise, stamp, occupation, premiums, windfall
profits, transfer and gains taxes, and interest, penalties
and additions to tax imposed with respect thereto.
“ Tax Return ”
shall mean any report, return, documents, declaration or other
information (and any supporting schedules or attachments thereto)
required to be supplied to any Tax Authority or jurisdiction with
respect to Taxes (including any returns or reports filed on a
consolidated, unitary, or combined basis).
“ Third-Party Software
” means all Software not owned by the Company but otherwise
used by the Company.
“ Trade Secrets ”
means information, including a formula, pattern, compilation,
program, device, method, technique, or process owned (i.e., not
licensed to), by the Company that (i) derives independent
economic value, actual or potential, from not being generally known
to, and not being readily ascertainable by proper means by, other
persons who can obtain economic value from its disclosure or use,
and (ii) is the subject of efforts by the Company that are
reasonable under the circumstances to maintain its
secrecy.
“ Trademarks ”
means all trademarks, service marks, trade names, designs, logos,
emblems, signs or insignia, slogans, other similar designations of
source or origin, and registrations relating to any of the
foregoing.
“ Trademark Application
” means a formal written application for registration of a
Trademark with the United States Patent and Trademark Office or
equivalent governmental authority in another country.
“ Trademark
Registration ” means the registration of a Trademark
issued by the United States Patent and Trademark Office or
equivalent governmental authority in another country.
“ Transaction Expenses
” has the meaning set forth in Section 9.3
below.
“ Voting Holders
” means the holders of Series A Preferred Shares,
Class A Common Shares and Class B Common
Shares.
“ Warrants ” has
the meaning set forth in Section 3.4(b)
below.
“ Warrant Agreement
” has the meaning set forth in
Section 3.4(c) below.
“ Warrant Holders
” has the meaning set forth in
Section 3.4(b) below.
“ Warrant Payments
” has the meaning set forth in
Section 3.4(b) below.
“ Withdrawal Liability
” means liability to a Multiemployer Plan as a result of a
complete or partial withdrawal from such Multiemployer Plan, as
those terms are defined in Part I of Subtitle E of Title IV of
ERISA.
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“ Working Capital
” means current assets minus current liabilities, calculated
in accordance with GAAP and in a manner consistent with the Audited
December 31 Balance Sheet.
“ Working Capital
Adjustment ” has the meaning set forth in
Section 3.11(b) below.
“ Written Consent
” has the meaning set forth in Section 4.8
below.
2.1.
The Merger . Upon the terms,
and subject to the conditions, set forth in this Agreement, and in
accordance with the DGCL, Acquisition Sub shall be merged with and
into the Company at the Effective Time. From and after the
Effective Time, the separate corporate existence of Acquisition Sub
shall cease and the Company, as the surviving corporation in the
Merger, shall continue its existence under the laws of the State of
Delaware as a wholly-owned subsidiary of Parent. The Company,
as the surviving corporation after the Merger, is hereinafter
sometimes referred to as the “ Surviving Corporation
.”
2.2.
Effective Time . Subject
to the terms and conditions hereof, the closing of the Merger and
the transactions contemplated by this Agreement (the “
Closing ”) will take place at the earliest time
following the date on which all of the conditions set forth in
Article VII have been satisfied or, if permissible, waived, at
the offices of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.,
One Financial Center, Boston, Massachusetts 02111, at
10:00 a.m. (Eastern Time) or remotely via the exchange of
executed documents and other closing deliverables, unless another
time or date is agreed to in writing by the Company and Parent;
provided , however , that in no event shall the
Closing occur prior to the 30 th day following the day
on which the Company delivers the Audited Financial Statements
pursuant to Section 6.2(g) unless Parent otherwise agrees
in writing. The date on which the Closing actually occurs is
herein referred to as the “ Closing Date
”. On the Closing Date, subject to the terms and
conditions set forth in this Agreement, the parties shall cause the
Merger to be consummated by filing with the Secretary of State of
the State of Delaware a certificate of merger (the “
Certificate of Merger ”) in substantially the form
of Exhibit A attached hereto and executed
in accordance with the relevant provisions of the DGCL (the date
and time of the acceptance of such filing, or such later date and
time as may be specified in the Certificate of Merger by mutual
agreement of Parent and the Company, being the “ Effective
Time ”).
2.3.
Effect of the Merger .
At the Effective Time, the effect of the Merger shall be as
provided in the applicable provisions of the DGCL. Without
limiting the generality of the foregoing, and subject thereto, at
the Effective Time, all of the assets, properties, rights,
privileges, immunities, powers and franchises of the Company and
Acquisition Sub shall vest in the Surviving Corporation, and all
debts, liabilities, duties and obligations of the Company and
Acquisition Sub shall become the debts, liabilities, duties and
obligations of the Surviving Corporation.
2.4.
Certificate of
Incorporation and By-Laws of the Surviving
Corporation . At the Effective Time and without further
action on the part of the parties hereto, the Certificate
of
12
Incorporation and the by-laws of the Surviving
Corporation shall be amended to read in their entirety to contain
the provisions set forth in the Certificate of Incorporation and
by-laws of Acquisition Sub, as in effect immediately prior to the
Effective Time, in each case, until thereafter amended as provided
by the DGCL.
2.5.
Directors and Officers
. From and after the Effective Time, (i) the directors
of Acquisition Sub immediately prior to the Effective Time shall be
the initial directors of the Surviving Corporation, and
(ii) the officers of Acquisition Sub immediately prior to the
Effective Time shall be the initial officers of the Surviving
Corporation, in each case, to hold office in accordance with the
Certificate of Incorporation and the by-laws of the Surviving
Corporation until their respective successors are duly elected or
appointed and qualified or until their earlier death, resignation
or removal in accordance with the Surviving Corporation’s
Certificate of Incorporation and by-laws or the terms of any
contract pursuant to which they may be serving as such.
2.6.
Taking of
Necessary Action; Further Acti on . If, at any
time after the Effective Time, any further action is necessary or
desirable to carry out the purposes of this Agreement and to vest
the Surviving Corporation with full right, title and possession to
all assets, property, rights, privileges, powers and franchises of
the Company and Acquisition Sub, the officers and directors of the
Company and Acquisition Sub are fully authorized in the name of
their respective corporations or otherwise to take all such lawful
and necessary action.
3.1.
Merger Consideration
. The aggregate amount to be paid by Parent or Acquisition
Sub pursuant to the terms of this Agreement with respect to
(i) all issued and outstanding Company Shares including, for
the avoidance of doubt, Dissenting Shares, (ii) all Options
and Warrants to acquire Company Shares (except for those cancelled
without payment therefore pursuant to Sections 3.3 or 3.4), and
(iii) all other rights, contingent or otherwise, to acquire
Company Shares shall equal Two Hundred Twenty-Eight Million Dollars
($228,000,000), as adjusted in accordance with Section 3.11
below (the “ Merger Consideration
”).
3.2.
Effect of Merger
on the Capital Stock of the Company . Subject
in all cases to the aggregate Merger Consideration to be paid in
accordance with Section 3.1:
(a)
Conversion of Series A Preferred Stock . At the
Effective Time, each share of Series A Preferred Stock, par
value $0.01 per share, of the Company (each, a “
Series A Preferred Share ”) that is issued and
outstanding immediately prior to the Effective Time, including,
without limitation, all shares of Series A Preferred Stock
issued upon exercise of any Preferred Warrants, shall, by virtue of
the Merger and without any action on the part of Parent,
Acquisition Sub, the Company, or the Company Holders, be canceled
and extinguished, and each such Series A Preferred Share shall
be converted into the right to receive the Series A
Liquidation Preference in cash, payable in accordance with and
subject to the conditions on payment as provided in this
Article III, other than with respect to Dissenting Shares and
without duplication with respect to Preferred Warrants cancelled
pursuant to Section 3.4(a).
13
(b)
Conversion of Class B Common Stock . At the
Effective Time, each share of Class B Common Stock, par value
$0.01 per share, of the Company (each, a “
Class B Common Share ”) that is issued and
outstanding immediately prior to the Effective Time, shall, by
virtue of the Merger and without any action on the part of Parent,
Acquisition Sub, the Company, or the Company Holders, be canceled
and extinguished and each such Class B Common Share shall be
converted into the right to receive the Class B Common
Liquidation Preference and the Class B Common Participating
Amount, in cash, payable in accordance with and subject to the
conditions on payment as provided in this Article III, other
than with respect to Dissenting Shares.
(c)
Conversion of Class C Common Stock . At the
Effective Time, each share of Class C Common Stock, par value
$0.01 per share, of the Company (each, a “
Class C Common Share ”) that is issued and
outstanding immediately prior to the Effective Time, shall, by
virtue of the Merger and without any action on the part of Parent,
Acquisition Sub, the Company, or the Company Holders, be canceled
and extinguished and each such Class C Common Share shall be
converted into the right to receive the Class C Common
Liquidation Preference and the Class C Common Participating
Amount, in cash, payable in accordance with and subject to the
conditions on payment as provided in this Article III, other
than with respect to Dissenting Shares.
(d)
Conversion of Class A Common Stock . At the
Effective Time, each share of Class A Common Stock, par value
$0.01 per share, of the Company (each, a “
Class A Common Share ”) that is issued and
outstanding immediately prior to the Effective Time, including,
without limitation, all shares of Class A Common Stock issued
upon exercise of any Options or Common Warrants, shall, by virtue
of the Merger and without any action on the part of Parent,
Acquisition Sub, the Company, or the Company Holders, be canceled
and extinguished and each such Class A Common Share shall be
converted into the right to receive the Common Merger Consideration
in cash, payable in accordance with and subject to the conditions
on payment as provided in this Article III, other than with
respect to Dissenting Shares and without duplication with respect
to Options and Common Warrants cancelled pursuant to
Section 3.3 and Section 3.4(b), respectively.
(e)
Treasury Stock . Each Company Share held in the
treasury of the Company immediately prior to the Effective Time
shall be canceled and extinguished without any conversion thereof,
and no payment shall be made with respect thereto.
(f)
Tax Withholding Obligation . With respect to all
payments or distributions to the Company Holders, Parent reserves
the right to make any withholdings required by applicable Tax laws
and to appropriately reduce the Merger Consideration payable to any
such Company Holders by the amount of any withholdings or payments
that are required to be made by Parent or the Surviving Corporation
on behalf of such Company Holders (including, without limitation,
withholding obligations of the Company arising from the
cancellation and settlement of any Options or Warrants to acquire
Class A Common Shares or Series A Preferred Shares, as
applicable, pursuant to Section 3.3,
Section 3.4(a) and Section 3.4(b),
respectively).
(g)
Payment Agent(s) and Escrow Agent(s) . Prior to the
Effective Time, Parent shall designate (i) a company
reasonably acceptable to the Company to act as payment
14
agent in the Merger (the “ Payment
Agent ”) pursuant to a payment agency agreement to be
executed by and among the Company, the Representative, the Parent
and the Payment Agent in form and substance reasonably satisfactory
to the parties thereto (the “ Payment Agent Agreement
”); and (ii) a company reasonably acceptable to the
Company to act as escrow agent in the Merger (the “ Escrow
Agent ”) pursuant to an escrow agreement to be executed
by and among the Company, the Representative, the Parent and the
Escrow Agent in substantially the form of
Exhibit B hereto (the “ Escrow
Agreement ”).
(h)
Payment of Merger Consideration . At the
Closing, Parent or Acquisition Sub shall deposit or shall cause to
be deposited with (i) the Payment Agent, for the benefit of
the Company Holders, an amount equal to the Closing Merger
Consideration (collectively, the “ Payment Fund
”), to be distributed to the Company Holders as set forth in
this Section 3.2, and (ii) the Escrow Agent, an amount
equal to the Escrow Fund. Each Company Holder’s respective
right to receive payment from the Payment Fund and Escrow Fund
shall be based upon the same percentage as its pro rata portion of
the total Merger Consideration. Any Working Capital Adjustment
shall be paid pursuant to Section 3.11 below. Any right
of a Company Holder to receive a portion of the Escrow Fund shall
be determined in accordance with the provisions of the Escrow
Agreement.
(i)
Surrender of Certificates . The Payment Agent shall
deliver the Merger Consideration contemplated to be paid to the
holders of Company Shares pursuant to this Section 3.2 out of
the Payment Fund for each Company Share that is surrendered in
accordance with this Section 3.2(i). As soon as
practicable, but in no event later than fifteen (15) days after the
Effective Time, the Payment Agent shall mail to each holder of
record of a certificate representing outstanding Company Shares
(the “ Certificates ”) (x) a letter of
transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to the Certificates shall pass, only
upon proper delivery by such holder of Company Shares of his, her
or its Certificates to the Payment Agent, and shall be in customary
form), and (y) instructions for use in effecting the surrender of
the Certificates in exchange for the Merger Consideration
contemplated to be paid to the holders of Company Shares pursuant
to this Section 3.2. Upon surrender of a Certificate to
the Payment Agent for cancellation, the holder of such Certificate
shall be entitled to receive in exchange therefor the Merger
Consideration represented by such Certificate as set forth above,
of which the Closing Merger Consideration shall be payable upon
such proper surrender by the Payment Agent by delivery of a
certified or bank cashier’s check or by wire transfer, and
the portion of the Escrow Fund represented by such Certificate
shall be payable by the Escrow Agent in accordance with the Escrow
Agreement, and the Certificate so surrendered shall forthwith be
canceled upon delivery thereof to the Payment Agent. No
interest will be paid or accrued on any cash payable to holders of
Certificates. In the event of a transfer of ownership of
Company Shares that is not registered in the transfer records of
the Company, payment may be made to a transferee if the Certificate
representing such Company Shares is presented to Parent,
accompanied by all documents required to evidence and effect such
transfer and by evidence that any applicable stock transfer taxes
have been paid.
(j)
Cancellation of Company Shares . From and after the
Effective Time, all Company Shares shall no longer be outstanding
and shall automatically be canceled and retired and shall cease to
exist, and each holder of a Certificate representing any such
Company Shares
15
shall cease to have any rights with respect
thereto, except the right to receive the Merger Consideration
represented by such Certificate (other than with respect to
Dissenting Shares).
(k)
Treatment of Restricted Stock . Prior to the Effective
Time, the Board of Directors of the Company (the “ Company
Board ”) (or, if appropriate, any committee thereof) may,
in its sole and absolute discretion, adopt appropriate resolutions
and take all other actions necessary to provide that, at the
Effective Time, to the extent not already fully vested pursuant to
their terms, all Company Shares awarded or issued pursuant to a
restricted stock agreement, either pursuant to the Company Equity
Incentive Plan or otherwise (the “ Restricted Stock
”), shall be deemed fully vested and shall be treated, for
all purposes of this Agreement, in the same manner as such shares
would be treated if they were not subject to any restricted stock
agreement.
3.3.
Options . Prior to the
Effective Time, the Company Board (or, if appropriate, any
committee thereof) shall adopt appropriate resolutions and take all
other actions necessary to (a) provide for the cancellation,
effective at the Effective Time, of all outstanding stock options
or similar rights to purchase Class A Common Shares (each, an
“ Option ”) heretofore granted under the Company
Equity Incentive Plan, or granted pursuant to individual option
agreements outside of the Company Equity Incentive Plan, without
any consideration therefor except as otherwise provided in this
Section 3.3. Each vested Option, either vested pursuant
to its terms or vested by appropriate resolutions of the Company
Board (or, if appropriate, any committee thereof), in its sole and
absolute discretion, to the extent unexercised as of the Effective
Time, shall thereafter no longer be exercisable but shall entitle
each holder thereof (each, an “ Option Holder
”), in cancellation and settlement therefor, to a payment in
cash, at the times and in the manner described below in this
Section 3.3, equal to the product of (i) the excess, if
any, of (x) the Common Merger Consideration over (y) the exercise
price per Class A Common Share subject to such Option,
multiplied by (ii) the total number of Class A
Common Shares subject to such Option immediately prior to its
cancellation (such payment to be net of withholding taxes, if any,
and without interest), at the same time, in the same manner, and
subject to the same conditions under which other Company Holders
receive Common Merger Consideration (such amounts payable hereunder
being referred to as the “ Option Payments
”). At the Effective Time, Parent or Acquisition Sub
shall (as a part of, and not in addition to, depositing the Merger
Consideration in accordance with Section 3.1) deposit, or
cause to be deposited, into the Payment Fund and the Escrow Fund,
the aggregate Option Payments due pursuant to this
Section 3.3. As soon as practicable, but in no
event later than fifteen (15) days after the Effective Time, the
Payment Agent shall mail to each Option Holder (i) a letter of
transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to the agreement or instrument
evidencing an Option (an “ Option Agreement ”)
shall pass, only upon proper delivery by such Option Holder of his,
her or its Option Agreement to the Payment Agent, and shall be in
customary form), and (ii) instructions for use in effecting
the surrender of the Option Agreement in exchange for the Option
Payment contemplated to be paid to the Option Holder pursuant to
this Section 3.3. Upon surrender of an Option Agreement
to the Payment Agent, the Option Holder shall be entitled to
receive in exchange therefor the Option Payment represented by such
Option Agreement as set forth above, which Option Payment shall be
payable upon such proper surrender by the Payment Agent by delivery
of a certified or bank cashier’s check or by wire transfer,
less the portion of the Escrow Fund with respect to such Option,
which shall be payable
16
in accordance with the Escrow Agreement.
No interest will be paid or accrued on any cash payable to Option
Holders.
(a)
Prior to the
Effective Time, the Company Board (or, if appropriate, any
committee thereof) shall adopt appropriate resolutions and take all
other actions necessary to provide for the cancellation, effective
at the Effective Time, of all outstanding warrants to purchase
Series A Preferred Shares (the “ Preferred
Warrants ”), without any payment therefor except as
otherwise provided in this Section 3.4(a). Each vested
Preferred Warrant, either vested pursuant to its terms or vested by
appropriate resolutions of the Company Board (or, if appropriate,
any committee thereof), in its sole and absolute discretion, to the
extent unexercised as of the Effective Time, shall thereafter no
longer be exercisable but shall entitle each holder thereof (each,
a “ Preferred Warrant Holder ”), in cancellation
and settlement therefor, to a payment in cash (subject to any
applicable withholding taxes), at the Effective Time, equal to the
product of (i) the total number of Series A Preferred
Shares as to which that Preferred Warrant remains unexercised,
multiplied by (ii) the excess, if any, of (x) the
Series A Preferred Liquidation Preference over (y) the
exercise price per Series A Preferred Share subject to such
Preferred Warrant (such amounts payable hereunder being referred to
as the “ Preferred Warrant Payments
”).
(b)
Prior to the
Effective Time, the Company Board (or, if appropriate, any
committee thereof) shall adopt appropriate resolutions and take all
other actions necessary to provide for the cancellation, effective
at the Effective Time, of all outstanding warrants to purchase
Class A Common Shares (the “ Common Warrants
”, and together with the Preferred Warrants, the “
Warrants ”), without any payment therefor except as
otherwise provided in this Section 3.4(b). Each vested
Common Warrant, either vested pursuant to its terms or vested by
appropriate resolutions of the Company Board (or, if appropriate,
any committee thereof), in its sole and absolute discretion, to the
extent unexercised as of the Effective Time, shall thereafter no
longer be exercisable but shall entitle each holder thereof (each,
a “ Common Warrant Holder ”, and together with
the Preferred Warrant Holders, the “ Warrant Holders
”), in cancellation and settlement therefor, to a payment in
cash (subject to any applicable withholding taxes), at the
Effective Time, equal to the product of (i) the total number
of Class A Common Shares as to which that Common Warrant
remains unexercised, multiplied by (ii) the excess, if
any, of (x) the Common Merger Consideration over (y) the exercise
price per Class A Common Share subject to such Common Warrant
(such amounts payable hereunder being referred to as the “
Common Warrant Payments ”, and together with the
Preferred Warrant Payments, the “ Warrant Payments
”).
(c)
At the Effective
Time, Parent or Acquisition Sub shall (as a part of, and not in
addition to, depositing the Merger Consideration in accordance with
Section 3.1) deposit, or cause to be deposited, into the
Payment Fund and Escrow Fund the aggregate Warrant Payments due
pursuant to this Section 3.4. As soon as practicable,
but in no event later than fifteen (15) days after the Effective
Time, the Payment Agent shall mail to each Warrant Holder
(i) a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the agreement or
instrument evidencing a Warrant (a “ Warrant Agreement
”) shall pass, only upon proper delivery by such Warrant
Holder of his, her or its Warrant Agreement to the
17
Payment Agent, and shall be in customary form),
and (ii) instructions for use in effecting the surrender of
the Warrant Agreement in exchange for the Warrant Payment
contemplated to be paid to the Warrant Holder pursuant to this
Section 3.4. Upon surrender of a Warrant Agreement to the
Payment Agent, the Warrant Holder shall be entitled to receive in
exchange therefor the Warrant Payment represented by such Warrant
Agreement as set forth above, which Warrant Payment shall be
payable upon such proper surrender by the Payment Agent by delivery
of a certified or bank cashier’s check or by wire transfer,
less the portion of the Escrow Fund with respect to such Warrant,
which shall be payable in accordance with the Escrow
Agreement. No interest will be paid or accrued on any cash
payable to Warrant Holders.
3.5.
Return of Merger
Consideration . If, after eighteen
(18) months after the Effective Time, there remain any Company
Holders who have not surrendered their Certificates, Option
Agreements or Warrant Agreements for payment of the Merger
Consideration, the Payment Agent shall mail notices to such holders
at the address set forth in the records of the Company notifying
them of their right to receive the Closing Merger Consideration and
participate in the Escrow Fund. To the extent that any
Company Holders have not tendered their Certificates, Option
Agreements or Warrant Agreements within ninety (90) days after the
mailing of such notice, the Payment Agent shall return, to the
extent permitted by law, to Parent any funds held by it for the
benefit of Company Holders and deliver to Parent any Certificates
or other documents received by it from any Company Holder after
such time. Upon receipt, Parent shall hold the remaining
funds for the benefit of such holders and shall deliver to any
Company Holder who has properly surrendered Certificates, Option
Agreements or Warrant Agreements, the Merger Consideration to which
such holder is entitled pursuant to this Agreement with respect to
the Company Shares, Options or Warrants surrendered by such
holder.
3.6.
No Liability
. None of
Parent, Acquisition Sub or the Surviving Corporation shall be
liable to any Company Holder in respect of any Merger Consideration
delivered to a public official as required by and pursuant to any
applicable abandoned property, escheat or similar law.
Subject to Section 3.7, if any Certificate, Option Agreement
or Warrant Agreement shall not have been surrendered prior to the
date on which any Merger Consideration would otherwise escheat to
or become the property of any public official, any such Merger
Consideration shall, to the extent permitted by applicable law,
become the property of the Surviving Corporation, free and clear of
all claims or interests of any Person previously entitled
thereto.
3.7.
Lost, Stolen and Destroyed
Certificates . If any Certificate,
Option Agreement or Warrant Agreement shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the
Person claiming such document to be lost, stolen or destroyed, and,
if reasonably required by Parent or the Payment Agent, the posting
by such Person of a bond in such reasonable amount as Parent or the
Payment Agent may direct as indemnity against any claim that may be
made against it with respect to such Certificate, Option Agreement
or Warrant Agreement the Payment Agent will issue in exchange for
such lost, stolen or destroyed Certificate, Option Agreement or
Warrant Agreement, the Merger Consideration deliverable in respect
thereof pursuant to this Agreement.
3.8.
Effect of Merger on Capital
Stock of Sur viving Corporation
. At the
Effective Time, each share of Acquisition Sub’s common stock,
par value $0.01 per share, that is issued and outstanding
immediately prior to the Effective Time, shall, by virtue of the
Merger and
18
without any action on the part of Parent,
Acquisition Sub, the Company or the Company Holders, be converted
automatically into and exchanged for one share of common stock of
the Surviving Corporation.
3.9.
Appraisal
Rights . Notwithstanding
anything in this Agreement to the contrary, Company Shares (the
“ Dissenting Shares ”) that are issued and
outstanding immediately prior to the Effective Time and are held by
the holders of Company Shares who have not voted in favor of the
Merger, consented thereto in writing or otherwise contractually
waived their rights to appraisal and who have complied with all of
the relevant provisions of Section 262 of the DGCL (the
“ Dissenting Stockholders ”), shall not be
converted into or be exchangeable for the right to receive the
Merger Consideration, unless and until such Dissenting Stockholders
shall have failed to perfect or shall have effectively withdrawn or
lost their rights to appraisal under the DGCL. The Company
shall give Parent (a) prompt notice of any written demands for
appraisal of any Company Shares, attempted withdrawals of such
demands and any other instruments served pursuant to the DGCL and
received by the Company relating to Dissenting Stockholders’
rights of appraisal, and (b) the opportunity to direct all
negotiations and proceedings with respect to demands for appraisal
under the DGCL. Neither the Company nor the Surviving
Corporation shall, except with the prior written consent of Parent,
voluntarily make any payment with respect to, or settle or offer to
settle, any such demand for payment. If any Dissenting
Stockholder shall fail to perfect or shall have effectively
withdrawn or lost the right to dissent, then (i) as of the
occurrence of such event, such holder’s Dissenting Shares
shall cease to be Dissenting Shares and shall be converted into and
represent the right to receive the Merger Consideration issuable
pursuant to Section 3.2, and (ii) promptly following the
occurrence of such event, Parent shall deposit into the Payment
Fund and Escrow Fund the Merger Consideration to which such holder
is entitled pursuant to Section 3.2.
3.10.
Distributions Prior to the
Effective Tim e . Prior to the
Effective Time, the Company will declare and pay to its
stockholders of record (or a trust or other entity for their
benefit) one or more dividends equal to an aggregate of
(i) the amount of cash and cash equivalents, if any, in excess
of the Target Amount (provided that such dividend would not
reasonably be expected to result in a reduction of the Merger
Consideration pursuant to Section 3.11 hereof); and
(ii) the shares of common stock of Liquidnet
Holdings, Inc. held of record by the Company and any
registration or other rights associated therewith. In the
event such distributions have not been completed prior to the
Effective Time, each party hereto shall use reasonable best efforts
to take, or cause to be taken, all actions to complete such
distributions promptly following the Effective Time.
(a)
Closing
Balance Sheet .
(i)
Parent shall
cause to be prepared a consolidated balance sheet of the Company
and its Subsidiaries as of the Closing Date, together with
calculations of the Working Capital as of the Closing Date
(collectively, the “ Closing Balance Sheet ”),
all of which shall be prepared in accordance with GAAP and in a
manner consistent with the Audited December 31 Balance Sheet.
Parent shall deliver the Closing Balance Sheet to Representative
within ninety (90) days following the Closing Date.
19
(ii)
If within
forty-five (45) days following delivery of the Closing Balance
Sheet, Representative has not given Parent written notice of its
objection as to any amounts set forth on the Closing Balance Sheet
(which notice shall state the basis of Representative’s
objection in reasonable detail), then the Closing Balance Sheet
shall be final, binding and conclusive on the parties.
(iii)
If Representative
duly gives Parent such notice of objection within the forty-five
(45) day period, and if the Representative and Parent fail to
resolve the issues outstanding (after good faith discussions) with
respect to the Closing Balance Sheet within thirty (30) days of the
Parent’s receipt of Representative’s objection notice,
the Representative and Parent shall submit the issues
remaining in dispute to Deloitte & Touche, LLP,
independent public accountants, or such other accountants as
mutually agreed by Parent and Representative (the “
Independent Accountants ”) for resolution. If
issues are submitted to the Independent Accountants for resolution,
then:
(A)
the Representative and Parent shall
execute any agreement(s) required by the Independent Accountants to
accept their engagement;
(B)
the Representative and Parent shall
promptly furnish or cause to be furnished to the Independent
Accountants such work papers and other documents and information
relating to the disputed issues as the Independent Accountants may
request and are available to that party or its accountants or other
agents, and shall be afforded the opportunity to present to the
Independent Accountants, with a copy to the other party, any
written material relating to the disputed issues;
(C)
the determination by the Independent
Accountants, as set forth in a written notice to be delivered by
the Independent Accountants to both the Representative and Parent,
shall be final, binding and conclusive on the parties and shall be
used by Parent to prepare the final Closing Balance Sheet, which
shall become binding on the parties as of the date of the
determination notice sent by the Independent Accountants;
and
(D)
the fees and costs of the
Independent Accountants for such determination shall be borne 50%
from Parent and 50% out of the Escrow Fund; provided ,
however , that the engagement agreement(s) referred to in
subpart (A) above may require the parties to be bound jointly
and severally to the Independent Accountants for those fees and
costs, and in the event the Escrow Agent or Parent pays to the
Independent Accountants any amount in excess of 50% of the fees and
costs of their engagement, the other party(ies) agree(s) to
reimburse the Escrow Agent or Parent, as applicable, to the extent
required to equalize the payments made by the Escrow Agent and
Parent with respect to the fees and costs of the Independent
Accountants.
(b)
Adjustment to
Merger Consideration . The Merger
Consideration shall be decreased or increased, as the case may be,
by the amount that the Working Capital of the Company and its
Subsidiaries on the Closing Date, as finally determined in
accordance with Sections 3.11(a), is less than or greater than, as
the case may be, the Target Amount (such difference referred to as
the “ Working Capital Adjustment ”). For
the avoidance of doubt, the Working Capital of the Company shall
not include any accruals or liabilities for Transaction
20
Expenses, except for the amount of Transaction
Expenses, if any, in excess of Five Million Dollars
($5,000,000). If the Working Capital Adjustment constitutes a
decrease in the Merger Consideration, then the amount of the
Working Capital Adjustment shall be paid to Parent out of the
Escrow Fund (and the Representative and Parent shall promptly
deliver a joint instruction letter to the Escrow Agent authorizing
the release of such amount from the Escrow Fund). If the
Working Capital Adjustment constitutes an increase in the Merger
Consideration, then Parent shall deposit the amount of the Working
Capital Adjustment with the Payment Agent for distribution to the
Company Holders in accordance with the Payment Agent Agreement. Any
payment under this Section 3.11(b) shall be made within
fifteen (15) business days after the Closing Balance Sheet is
finalized in accordance with Section 3.11(a).
The Company makes the following
representations and warranties to Parent and Acquisition Sub,
except as disclosed by the Company in the disclosure schedule,
dated as of the date of this Agreement and delivered by the Company
to Parent and the Acquisition Sub simultaneously herewith (which
disclosure schedule shall contain specific references to the
representations and warranties to which the disclosures contained
therein relate and an item on such disclosure schedule shall
be deemed to qualify only the particular subsection or
subsections specified for such item; provided ,
however , that any item that is disclosed in a particular
section or subsection of the disclosure
schedule shall be deemed to be disclosed and incorporated into
any other section or subsection of the disclosure
schedule where such disclosure would otherwise be appropriate,
but only to the extent that it is clearly apparent from the express
language of such disclosure that it applies to such other
section or subsection) (the “ Disclosure Schedule
”):
4.1.
Organization, Good Standing,
Qualificati on and Power
. The
Company (a) is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware,
(b) has all requisite corporate power and authority to own,
lease and operate its properties and to carry on its business as it
is now being conducted to enter into this Agreement, the
Certificate of Merger, each of the Related Agreements and any other
agreement, certificate or instrument to be executed and delivered
pursuant to the terms of this Agreement, to perform its obligations
hereunder and thereunder, and to consummate the transactions
contemplated hereby and thereby, and (c) is duly qualified and
in good standing to do business in those jurisdictions listed in
Section 4.1 of the Disclosure Schedule and in all other
jurisdictions where the character of the properties owned, leased
or operated by it or the nature of its activities makes such
qualification necessary, except where the failure to be so
qualified or in good standing would not have a Company Material
Adverse Effect.
(a)
Section 4.2(a) of
the Disclosure Schedule, sets forth a true and complete list of all
of the Company’s direct and indirect Subsidiaries, together
with the jurisdiction of incorporation or organization of each
Subsidiary and the percentage of each Subsidiary’s
outstanding capital stock or other equity or similar interest owned
by the Company or another direct or indirect Subsidiary of the
Company. Except as set forth in Section 4.2(a) of
the Disclosure Schedule, neither the Company nor any of its
Subsidiaries owns any equity or
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similar interest in, or any interest convertible
into or exchangeable or exercisable for, directly or indirectly,
any equity or similar interest in, any Person.
(b)
Each Subsidiary
of the Company is an entity, incorporated or duly organized,
validly existing and in good standing under the laws of its
respective jurisdiction of incorporation or organization as set
forth in Section 4.2(b) of the Disclosure
Schedule and has all the requisite corporate power and
authority to own, lease and operate its properties and to carry on
its business as it is now being conducted. Each Subsidiary is
duly qualified and in good standing to do business in those
jurisdictions set forth in Section 4.2(b) of the
Disclosure Schedule and in all other jurisdictions where the
character of the properties owned, leased or operated by it or the
nature of its activities makes such qualification or good standing
necessary, except where the failure to be so qualified or in good
standing would not have a Company Material Adverse
Effect.
4.3.
Organizational
Documents . The Company has
heretofore delivered to Parent a complete and correct copy of each
of its and each Subsidiary’s Certificate of Incorporation and
by-laws or other equivalent organizational documents, each as
amended or restated to the date hereof. Such Certificates of
Incorporation and by-laws or other equivalent organizational
documents of the Company and each Subsidiary are in full force and
effect.
(a)
The total number
of shares of capital stock that the Company has authority to issue
is 20,787,991, consisting of (i) 20,203,704 shares of Common
Stock, par value $.01 per share (the “ Common Stock
”), of which 20,000,000 shares have been designated as
Class A Common Stock, 111,111 shares have been designated as
Class B Common Stock, 55,556 shares have been designated as
Class C-1 Common Stock, and 37,037 shares have been designated
as Class C-2 Common Stock, and (ii) 584,287 shares of
Preferred Stock, par value $.01 per share, all of which have been
designated as Series A Preferred Stock.
(b)
As of the date
hereof, (i) 7,413,912 shares of Class A Common Stock are
issued and outstanding; (ii) all of the shares of Class B
Common Stock are issued and outstanding; (iii) all of the
shares of Class C-1 Common Stock and 23,870 shares of
Class C-2 Common Stock are issued and outstanding;
(iv) 581,564 of the shares of Series A Preferred Stock
are issued and outstanding; (v) 50,000 shares of Company
Shares are held in the treasury of the Company; (vi) 3,999,978
shares of Class A Common Stock are reserved for future
issuance under the Company Equity Incentive Plan, of which
3,651,890 shares are subject to Options that are currently
outstanding and 348,209 shares remain available for grant;
(vii) 27,222 shares of the Series A Preferred Stock are
reserved for future issuance pursuant to Preferred Warrants; and
(viii) 75,000 shares of the Class A Common Stock are
reserved for future issuance pursuant to Common Warrants.
Each share of Series A Preferred Stock, Class B Common
Stock, Class C-1 Common Stock and Class C-2 Common Stock
is convertible or deemed to be convertible into ten
(10) shares of Class A Common Stock for certain purposes
under the Company’s Certificate of Incorporation.
Section 4.4(b) of the Disclosure Schedule sets forth
a table of all holders of Company Shares together with the number
of shares by class held by each such holder on an issued and
as-converted basis.
22
(c)
Section 4.4(c) of
the Disclosure Schedule lists all outstanding Options and
Warrants, the record holder thereof and the exercise price
thereof. Except as set forth in
Section 4.4(c) of the Disclosure Schedule, there are no
other outstanding securities, options (whether vested or unvested),
warrants, calls, rights, commitments or agreements to which the
Company or any Subsidiary is a party or by which any of them is
bound obligating the Company or any Subsidiary to issue, deliver or
sell, or cause to be issued, delivered or sold, additional shares
of capital stock or other securities or equity interest of the
Company or of any Subsidiary. Except as described in
Section 4.4(c) of the Disclosure Schedule, there are no
outstanding contractual obligations of the Company or any
Subsidiary to repurchase, redeem or otherwise acquire any shares of
capital stock (or options to acquire any such shares) or other
securities or equity interests of the Company or any
Subsidiary. All outstanding shares of capital stock of the
Company and each Subsidiary are, and all shares which may be issued
upon the exercise of Options or Warrants will be, when issued in
accordance with their terms, duly authorized, validly issued, fully
paid and nonassessable and not subject to any preemptive or similar
rights.
(d)
Except as set
forth in Section 4.4(d) of the Disclosure Schedule, there
are no voting trusts, proxies or other agreements to which the
Company or any Subsidiary or, to the Knowledge of the Company, any
of the stockholders of the Company, is a party or by which any of
them is bound with respect to the issuance, holding, acquisition,
voting or disposition of any shares of capital stock or other
securities or equity interests of the Company or any
Subsidiary.
4.5.
Authorization; Binding
Obligation . Subject to
Stockholder Approval and the filing and recordation of the
Certificate of Merger in accordance with the DGCL, the execution
and delivery by the Company of this Agreement and each Related
Agreement to which it is a party, the performance of its
obligations hereunder and thereunder, and the consummation by the
Company of the transactions contemplated hereby and thereby, have
been duly and validly authorized by all necessary corporate action
on the part of the Company Board and, other than the Stockholder
Approval, no other corporate proceedings on the part of the Company
or any Subsidiary are necessary to authorize this Agreement or any
Related Agreement to which it is a party or to consummate the
transactions contemplated hereby and thereby. This Agreement
has been, and each of the Related Agreements to which the Company
is a party, when executed and delivered by the Company (and
assuming the due authorization, execution and delivery by the other
parties hereto and thereto), will be, duly and validly executed and
delivered by the Company, and this Agreement constitutes, and each
Related Agreement to which the Company is a party, when executed
and delivered, will constitute, a legal, valid and binding
obligation of the Company enforceable against the Company in
accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting
creditors’ rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity).
4.6.
Consents and
Approvals . Except as set forth
in Section 4.6 of the Disclosure Schedule, the execution and
delivery by the Company of this Agreement, the Related Agreements
to which it is a party and any other instrument or document
required by this Agreement to be executed and delivered by the
Company do not, and the performance of this Agreement, the Related
Agreements to which it is a party and any other instrument or
document required by this Agreement to be executed and delivered by
the Company shall not, require the
23
Company or any Subsidiary to obtain any Approval
of any Person or Approval of, observe any waiting period imposed
by, or make any filing with or notification to, any Governmental
Authority, except for (a) Stockholder Approval, (b) the
filing of the Certificate of Merger in accordance with the DGCL,
(c) such other Approvals, filings or authorizations which if
not obtained or made would not individually or in the aggregate
have a Company Material Adverse Effect or impair in any material
respect the ability of the Company to consummate the transactions
contemplated by this Agreement and the Certificate of Merger,
including, without limitation, the Merger, (d) any request
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the “ HSR Act ”), from the United
States Federal Trade Commission or the United States Department of
Justice or any other Governmental Authority for additional
information, documents or other materials relating to the
pre-merger notification requirements of the HSR Act, and
(e) such Approvals as may be required from the National
Association of Securities Dealers, Inc. (also known as
NASD, Inc.) and/or its regulatory affiliate and the Financial
Services Authority with respect to the
